저자: Kevin · 외국인
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초보자 vs 전문가 관점에서 첫 임대용 부동산 구매 절차를 설명. 신용점수 620~640이면 주택 구매 가능, 740 이상이면 추가 이득 거의 없음, 신용조회는 90일 점수 고정. 계약금 3~5%면 가능, 20% 미만은 모기지보험 필요. 소득 증빙은 2년 세금신고서 기준이며 자영업자는 감가상각 활용 가능. 가족 공동차입(non-occupant co-borrower)로 무소득 구매 가능하다고 주장. 수리는 항목별 견적, 임차인 품질 우선. 마지막에 자체 부동산 투자 강의 홍보.
다듬은 글
Hi everyone, I'm Kevin. In this video, I will show you the step-by-step process for buying your first rental property, beginner vs. expert style. I will share with you some incredible industry secrets that no one talks about, because most people don't know them. And the reason I know them is because I am many things at once.
Not only am I a real estate investor who controls over $12 million in single-family and multi-family properties without partners, but I am also a licensed real estate agent. I was a licensed lender and a licensed contractor, working in all these different fields. So I have tons of secrets that will help you make money.
And we're going to make it very simple. I'll tell you, this is what beginners do and this is what experts do. If you like this format, let me know in the comments if you want more beginner vs. expert content. Consider sharing this with friends or anyone who might benefit from this information, because these secrets are guaranteed to make you money.
Okay, let's get started . But first, a quick note from our sponsors in the video. If you want two shares completely free, sign up at Webull using the link below, deposit just $100 and they will give you two free shares worth up to $1,400 for signing up. You can also get life insurance in as little as 5 minutes through the link below.
They can pay with Apple Pay or Android Pay. It's very easy to get . It's not as if they were intermediaries. It's that company and it's fantastic. Now, let's get into the real estate sector. The first thing, the very first thing you should think about when you start planning or considering buying a house or any type of property, is credit.
Credit is a tool, a tool that you should use. Don't let your credit use you. And this is what I mean by that. You can usually buy a house with a credit score as low as 620 or 640. Although, you'll generally pay more than someone with a 740 credit score. But it's a myth, and many beginners get the impression, that you can't buy a house unless you have excellent credit.
And that is completely incorrect. Yes, a credit score of 740 usually gets them the best prices. In fact, I have many clients who ask me, "Kevin, I have a credit score of 850. I've worked hard my whole life without using my credit so I could get the best possible price. What benefits do I get from having an 850 score if I already have one?" And my answer is always : none.
In other words, they were deceived. That's the new move. The rookie move is to say, "I'm going to get a score of 850." It's a number for vanity. It's no use. Once you go past 740, or in some lower cases 760, you don't really get any additional benefits in real estate . And this is very important for two reasons.
First, you want to go in and find a great deal, because even if you have to pay a little more because your score is below 740, finding a great deal can make it worthwhile. Professionals know this. Professionals always view real estate from the perspective of the entire transaction. They don't dwell on things like, "Oh well, I don't want to pay mortgage insurance, so I'm not going to buy." Professionals don't get stuck thinking, "Oh, well, my score isn't 740.
It's 730. I'd better not buy." No , professionals don't stop for that. They analyze the entire package. And that's what I'm going to teach you in this video. We're going to learn a lot about packages. And second, know that you don't have to be perfect. So , if you're worried about applying for a loan because you don't want your credit score to drop or something like that, big mistake.
Remember, professionals know that your credit score is designed to help you make money. Use it. Incidentally, the most common reason I see low credit scores on reports—and I see a lot of them—is late payments. The easiest thing you can do to avoid a low credit score is simply to make your payments on time.
The easiest trick to achieve this is to literally make a small spreadsheet that you review every month. You don't need a sophisticated application. You do n't need anything else. Take a spreadsheet and put each bill that you have associated with your social security number . Make sure to check it twice a month.
As long as you check it twice a month, there's no way you'll be 30 days late. Even if you skip a check-up, at least you 'll be checking once a month. And that helps him avoid missing a payment. Do you have a credit card? Include it on the list. If they asked for your social security number, put it on the list.
Social security is the danger, because that's how you risk a lower credit rating if you miss a payment. Also, if you haven't already , go to annualcreditreport.com . This isn't sponsored, at least not by them. It is sponsored by Life Insurance and Weeble, but not by these companies. You can get a free credit report from all three agencies: Experian, TransUnion, and Equifax.
And I recommend that you make sure you get all three reports immediately. Don't tell them, "Oh, I want one now and the other later." Uh-huh. Get all the reports right now and make sure all the information is accurate . If there is anything there that you don't recognize, call the agency. Call the company whose name appears on that report and resolve the problem.
Professionals know that real estate depends on your credit score. And you could even use Credit Karma to track your score once you're sure everything is in order. But Credit Karma, I believe, only reports to two agencies. And when you get a mortgage, they'll check all three. So start with annualcreditreport.com.
And, by the way, they usually choose the average score. So if you have a 720, a 740, and a 760, you qualify with the 740. Step number two, assets. The easiest way to buy your first rental property is to start by living in it for a year. That's why I think it's disheartening when newbies say, "Well, I'm going to start a family before I buy a house." Oh, moving out on your own is hard enough.
If you want to move with children, I have two. She won't want to move with children now. Don't worry if you already have children. Listen, you can still start like that , but it's more difficult. The easiest way to get started in real estate is to buy a place to live and agree to live there for a year.
Even if you want to rent out all the rooms to roommates and sleep in the living room because you're doing whatever it takes to get into real estate and have others pay for you, that's fine. He has to do whatever it takes to get started in real estate. The good thing is that in the United States it can offer a down payment as low as 3 to 5%.
And in some cases you might not have to make any down payment. You could get grants from your state or, if you're a veteran, use a VA loan and put down zero down. For many people, the starting point will be 3 to 5%. So, if you're looking for a $300,000 house, that would be between $9,000 and $15,000.
And if you put down less than 20% , you generally have to pay for mortgage insurance. However, this is usually worth it if you get a really good deal. I'll show you all about that in the rest of this video. So, if you're worried, "Oh, Kevin, wo n't I be overleveraged if I put down 0% ?" or "isn't it risky to give 5% or what about mortgage insurance?" Don't worry about that.
We're going to talk about that in this video, so by the end you'll understand everything. Keep in mind that novices tend to focus on small amounts, such as mortgage insurance. Professionals focus on big money. Professionals focus on where the money is, not on the instant gratification of saving about $50 a month.
Professionals seek high profits. And we're going to break that down. But first, let's talk about revenue. And here are some really cool tricks. Lenders will typically want to see that you have income to qualify for a loan. And this makes sense. You must have the ability to repay the loan. That is, in fact, a legal phrase.
Ability to pay is a mandatory requirement. I say this because there are also incredible tricks you can use to prove you can pay. Here's the general rule. First, you generally need 2 years of tax returns to qualify. If your income increases, they will average the last two years, which means they will assume it is slightly less than last year.
That's good, because they're both averaging. If your income decreases, lenders do the opposite and use the lowest year to qualify you. They don't average your tax returns from the last two years. They assume there is a problem with declining income. They use the worst possible scenario. So, keep that in mind.
This is obviously easier for people employed by a company. Also, here's a really great trick. If you've just graduated from college and get a job in the same field you studied, you could have the equivalent of two years' worth of tax returns from day one. Yes, think about it carefully. You just graduated with a degree in computer science from, I don't know, UC Santa Barbara.
Great, you just graduated. On the first day, you get a job and are paid $60,000 a year. Let's say it's your first year programming computers in Southern California. Incredible. You go to a lender and you could literally qualify from day one, even if you do n't have two years of tax returns. This is because they will consider your two years of study as work experience with the same salary .
Come on, that's crazy. In fact, this is one of the best advantages of going to university. If you are self-employed, you might want to learn about the double-edged sword that this can be . But I have a trick for that too. I have a trick for everything. This is what I do professionally. Self-employed borrowers.
Let's say you earn $70,000 a year, but then you say, "IRS, I'm not going to pay you that much in taxes." "I'm going to deduct $45,000." Brilliant. Well , now when the lender looks at your tax returns, he'll say, "Hey , you earned 70, but you deducted 45, buddy ." "I can't qualify you with an income of $25,000." This is where newbies think they're lost and that they need to pay more taxes to qualify for a loan.
Mistake. Professionals know how to solve this . Here's the secret. If you're planning to buy a house and you're self-employed , depreciate your deductions. The lenders will then not count that money against you. So, here 's an example. Let's say I buy this MacBook Pro. There's a MacBook Pro right here.
You can't actually see it. You see the small edge there. Very good. MacBook Pro. I'll pay $2,000 or you know what? Let's say I pay $3,000 for this MacBook Pro because I need it for work or whatever, right? What I'll do is, instead of deducting everything this year, I'll deduct this computer over the next three years.
Talk to your accountant about this. Obviously, I'm not your accountant, so I can't give you tax advice, but you can deduct this laptop over three years. $1000 this year, $1000 next year, and $ 1000 the following year. That way you literally get the same tax deduction, but lenders see it and say, "Oh, you depreciated a computer." No problem.
We don't consider that an expense ." So if instead of earning $70,000 and deducting $45,000, you earned $ 70,000 and depreciated $45,000 over 3 years, the lender sees: $70,000, $45,000 depreciation. Oh, it looks like you earned $ 70,000. Very good. What do you want to buy? Boom! By the way, I'm going to share a lot of tricks like this with you in this video.
So, if you're liking the video so far, could I ask you to share it with someone? It might help. I really appreciate you considering sharing it. It really helps a lot. And, uh, it motivates me to keep bringing you as many tricks as possible. But what do you do now if you don't have any income? I have a trick for that too.
And I'm not talking about that private lender money nonsense. That's going to bankrupt you. Check this out. And this doesn't work for everyone, but I'm going to mention it. If you don't have any income, that could be Okay. Let's say you've just become a real estate agent and you know you're going to make money, or you've just started making it, but you don't have enough to qualify yet.
Like not having two years of self-employed tax returns . Sometimes they use one year's tax returns and then your year-to-date profit and loss statement. But, you know , that gets complicated. If you're just starting out , it's hard to buy, especially if you see a good deal. So what do you do ? Well, you could ask around.
And if you have someone, consider yourself lucky. This is good. A lot of people have this. A lot of people don't, but I'm going to mention it anyway. You could ask a parent or relative to co-sign an FHA loan. That is, they would come in as what's known as a non-occupant co-borrower. That means they can literally co-sign an owner-occupied home loan with you and they don't have to live there.
So, let's say you and your girlfriend want to move into a house, you split the down payment, and your dad is going to co-sign for You. Your dad could literally be listed as owning 1% in the deal. You found the deal. You got the money for the deal. You're making the payments on the deal . All you do is tell the lender, "Hey, let's use your income just so you'll give me the loan." Now, you buy the property with a 3.5 percent down payment.
Your dad owns 1 percent. You own maybe 49 percent . Your girlfriend owns 50 percent. Boom! You just walked into a 3.5 percent down deal with no income. Come on. What a crazy world we live in now. I know for some people this is like, "Kevin, seriously?" Isn't that really risky? Like, a 3.5 percent down payment, really?
And you have no income. Well, obviously you'd only want to do this if you're really expecting your income to increase. Like some people who are star salespeople, but they just ca n't prove that to lenders, and that's the problem. So, Obviously, you have to be comfortable with the payment you're making.
Sure, if you and your girlfriend are making $5,000 a month , you shouldn't have a $4,500 monthly mortgage payment . You have to be reasonable with your expectations, too. Maybe if you and your girlfriend, husband, boyfriend, or whatever are making $5,000 a month, you might have a $2,000 monthly payment.
That's more or less how I started. Anyway, step number four: talk to a lender. The easiest way is to go on Yelp and search for loan officer in your area. Forget about Chase, Wells Fargo, and all that stuff. Just type in " loan officer in your area." Contact a few and find someone who's a good fit for you.
You could even try online lenders like Rocket Mortgage. Generally, when you 're starting out, I highly recommend a local lender. They'll help you get a deal accepted when it comes to writing offers. Usually, when a real estate agency looks at an online lender, unless they've had a good experience with them, they won't consider it.
In my experience with them, it's sometimes difficult when agents suggest, "Hey seller, let's take this offer." They're using some random online lender as opposed to, "Hey seller, you should take this offer." They're using a local professional who has excellent online reviews. I know them. I've done deals with them before.
Look, there's a lot more to it than just writing an offer and getting a pre-approval letter, but I'm giving you a quick rundown here. When you talk to a lender, please don't make the rookie mistake so many people make; as a lender, this is the stupidest thing you can do. And a lot of people do this.
Rookies say, "I want to get pre-approved for a loan." " Oh, but please don't check my credit because I don't want my score to drop." No. All that does is these two things. It sends a huge red flag to the lender that you're not serious. And there are enough serious borrowers out there for lenders. So, not letting them check your credit is the perfect way to signal to a lender that you're not a serious buyer, which means they'll put you on the back burner.
That's why it's no surprise that they might not return your calls and texts, that it takes weeks to get a pre-approval letter, and that offer you wanted is gone. The pros know this. The pros also know that, yeah, so what? A credit inquiry will lower your credit score a few points after the lender checks your history.
However, the benefit is that once they check your credit, you lock in your score for 90 days. So it's like, boom, they check your credit. Okay, you're covered for 90 days. So what if it drops a little in the meantime? By the time the 90 days are up, your Your score will go back up. And professionals know that if you apply for loans with multiple lenders within a few weeks, the credit bureaus understand that you're a savvy consumer looking for the best deal.
They don't want to rip you off. So, it's unlikely the inquiries will affect you too much. I know people like to say, "Oh, but Kevin, that's a rigorous inquiry." I don't care. The most important thing about your credit is making your payments on time. That's the main thing that's going to set you on the right track.
The only time it's bad is if, for some reason, they think you're desperate and you apply for, say, 10 different credit cards because you're having trouble. That's when the inquiries really start to affect you. Anyway, what you're going to do is get a 30-year fixed-rate mortgage. If you're in another country, you'll probably have to get a 10-year fixed-rate mortgage and then an adjustable-rate loan.
That's fine too . Generally, I don't recommend getting the 15-year fixed-rate mortgage when you're starting out. Get The 15-year mortgage is the perfect time to get a 15-year mortgage when you're ready to retire and are in the last 15 years of your wealth-building phase . For now, get a 30-year mortgage.
You have the option to make more payments, but you're not obligated to make additional payments. Plus, a lender will help you calculate what your payments will be, which is very convenient. So there are some very simple tricks you can use here. The easiest thing you can do, which I'm going to show you right now, is something I recommend, and I'll teach you exactly how to use it in a simple way.
I recommend going to the Zillow mortgage calculator. And this isn't sponsored, but this is exactly what you're going to do. You're going to open the calculator, which looks a lot like this once you download the app. It's not my app. I'm not sponsored. Don't worry about that. Uh, you put in a price. So let's say $300,000.
Now, let's say, uh, let's make a 10% down payment. Initial. That's good. Great. Zillow automatically set this interest rate of around 3.2%. But what I'm going to do is, for every 5% that I put below 20%, I'm going to add a quarter of a point to my rate. Is that okay ? So, let me calculate that. It's really easy.
We're 10% below 20% by putting down 10% . That means we're going to add half a percent to my interest rate, and we'll call that mortgage insurance. So, instead of 3.2, I'm going to put in 3.7 as the interest rate. It's a rough approximation for mortgage insurance. It's not perfect, but it's a good way to estimate it.
Then, for property taxes, most states and cities pay between 1.2% and 2.4% in taxes. California is close to 1.2%. Texas is close to 2.4%. Now, here's a really cool pro trick. You're paying $300,000 for a house, and you're putting down 10% . Here's the great thing about the 1.2%. For every 1.2% you pay in property taxes, your monthly payment is exactly the purchase price minus the last three digits.
So, look at this. We're buying a house for $300,000, and it says the monthly property tax is $300. If I now change this to Texas and double it to 2.4%, you'll see the property taxes jump to $600. This trick, by the way, works across all price ranges . So, look, I went back to a 1.2% tax rate and now changed the price to $400,000.
And look at that. The monthly property taxes are $400. A great way to estimate this. If we're in Texas and the tax rates are double, double it. That's $800. So, the purchase price minus three Digits works in many areas. Just find out what the tax rate is in your area. Obviously, if your tax rate is in the middle and not close to 1.2 or 2.4, it's going to be a little more complicated.
So, what we're going to do is come back here and enter $300,000 again. But, let's go ahead and scroll down to change the interest rate. Okay, we'll leave the interest rate with mortgage insurance at 3.75. Homeowner's insurance, $50 a month. That's reasonable. And if you have HOA fees, you could include those as well .
Personally, I don't like Zillow adding mortgage insurance . I prefer to do it manually. It gives me a little more control. Although you could try playing around with that, too. Step number five, find an agent. The easiest way to find an agent is to literally go to zillow.com, search "agent finder," type in your zip code, and see what happens.
I'm going to put 9303 here. Let's choose here. Look at this Ms. Heidi Golf. 21 local reviews, six recent sales. Okay, great. Let's click on her profile and take a look. I get an exact map of where she sells real estate. And now what I can do is zoom in on the map and, let's say, I want to buy a property around here.
I want to buy a property between Johnson and Bristol. Wow, Heidi Golf sells just about everything in this neighborhood . I could call Heidi because that's where she sells properties. Am I going to call Heidi to help me buy a property in Los Angeles and in a condo complex? Probably not, because it's like an hour and a half away.
And this is where Heidi sells properties. That's just one example. I'm sure she's more than willing to help you in many different areas. But that's what I look for when I choose an agent: someone who sells properties in the area where I want to buy. Now, the best way to start looking for a house is to look within a 30-minute radius of where you live and find your favorite neighborhoods.
Then, on purpose, look for something small . Look for a two- bedroom house and A bathroom to start with. This makes it very easy for you, after a year, to move to a three-bedroom, two-bathroom house and turn the first one into a rental property. That's called "bank hacking ," because you can put a 5% down payment on the first property and then move and put another 5% down on the next one.
The beginner ends up buying a big house from day one because they think, "Well, if I'm going to buy, I want my dream house." And they don't realize that if they buy a three-bedroom, two-bathroom house, it's very difficult to convince a lender that you're going to buy a smaller one to live in. That's why a professional starts small, and we'll talk about good deals in a moment, so you don't worry about over-indebtedness when putting down 5% .
A professional starts small, gets good deals, and always looks for decent neighborhoods. A professional defines a decent neighborhood very simply. This is the question you should ask yourself: Would you feel comfortable making a transaction of Craigslist at 9:00 p.m. in that neighborhood? If the answer is yes, you're on the right track.
If not, don't buy there. When you narrow your search area, it's easy to find agents in your area thanks to this Zillow trick. So keep that in mind. Also, it's a really good idea, especially in today's highly competitive market, to contact an agent and say, "Hey, agent." I am [ name]. I'm looking to buy in this price range.
Here is my pre-approval letter from a local lender. Oh, by the way, here's my proof of funds." Which is just a screenshot of your bank statement or something similar, showing that you have the money for the down payment. And guess what this accomplishes? It instantly shows the agent that you're a serious buyer.
That you're ready to act and won't waste their time. Very, very, very important. Even if you're new, make sure you cover the basics and stand out among the top first-time buyers. That will help you get the best deals. So have this ready before you start looking for properties. Now, here's the next rookie mistake.
Many beginners start by looking for the cheapest house available. In my opinion, this is a huge mistake because you usually end up with something called a "yahe butt." A "yahabah butt" property is exactly what you don't want. And the professionals know this. Professionals are always looking for properties that aren't "yahe butts." The "yes, buts" are things like, "Hmm, wow, this is a great house, honey." What do you think of her?
"." "Yes, but it's under a freeway." See? Yes, but yes, but it's under high-voltage power lines, and I'm going to glow in the dark when I sleep. Or, great, you have to walk through this bedroom to get to another one, or worse, it has illegal, unpermitted additions. You should avoid them like the plague.
That way, you won't fall for these kinds of nonsense that novices fall for. Novices also often fall into the classic trap of looking for things that are pretty because of the decor and smell nice. These are classic tricks to trick you into paying more for things you're not going to get. When you move in, the smell will be gone, and the furniture will be gone .
Don't pay more just because things look nice and pretty. Be very careful. Even if you're buying new construction, the model home will look very different from what you're going to buy. Be careful. Don't be fooled by the glitz and glamour. It's worse than at car dealerships. It's worse because in real estate, improvements are a rip-off.
Especially if you're looking at properties known as "move-in ready " or renovated homes. for sale. They tend to be problem properties. In my experience, when you see renovated homes for sale, you often find properties that were fixed up just for the purpose of selling . Not always, but often the work is done by low- quality labor, using low- quality materials, and not doing the job properly.
And not always. There are some high-quality renovators out there who would rather lose money than sell a bad product . But it's very difficult to tell which is good and which is bad. Sometimes you do n't know if they skimped on code requirements behind the walls because you can't see what's there. And this is sadly very common; I find it devastating to see novices get ripped off this way.
And that's why I'm warning you. Instead, if you want to buy something because you do n't want to do the work, buy new construction. Because when you buy a renovated home , you're buying the deal "as is." Which means if there are problems with the walls, it's your problem. If you buy new construction and there are problems with the walls, you generally get a 10-year construction warranty and You have a claim to protect yourself.
That's how professionals view the real estate market. Professionals also search for properties with the goal of getting a good deal. Let's talk about getting a deal now, because that's what I've been alluding to here for a while. Professionals look for single-family and multi-family properties, but there are different things to consider in each case.
Let's start with single-family homes. In single-family properties, look for outdated cosmetic elements. Things like old paint, smelly carpeting, a lot of trash, popcorn ceilings, or an overgrown yard. This is the ideal property to buy, provided , preferably, that it has a new roof. Maybe the foundation is sound and the electrical and plumbing systems are up to date.
You want to steer clear of anything expensive . I prefer expensive things to be done, like windows, a solid roof, and a solid foundation, even if it smells bad, rather than the other way around . Sometimes you walk into a remodeled house and they didn't fix the electrical or plumbing, but they did paint and put down carpeting.
It's... Literally, the worst place to buy. If you follow these rules, it's quite common to be able to buy a house for $300,000 in a $400,000 neighborhood. This is known as getting a " wedge deal." Because of cosmetic flaws, you can buy below market value. You paid more than investors because, to beat a cash buyer, like with the first house I bought, I simply paid a little more.
Even so, you get a great deal. In my case, I was up against two cash offers of $290,000 and $287,000. And I said, "I want the deal." " I'll pay $305,000." After investing $50,000 in the house, it was already worth $450,000, and within a year, it was worth $550,000. That's an example of how to get a wedge offer.
That's how I bought a foreclosure against cash buyers. And this is the kind of thing I do regularly. The great thing about this is, if you buy a house, say for $300,000 in a $400,000 neighborhood, and put down 5%, your loan is only $285,000. I mean, think about it. 5% of $300,000 is $15,000. So, your loan is $285,000.
You fix it up, which will require extra money or effort on your part—you know, painting or whatever is needed. But wait a minute. If you're in a Imagine a $400,000 neighborhood property. You finish remodeling and only owe $285,000. Now you have $115,000 of equity in the property, which means you can refinance and eliminate the mortgage insurance instantly.
That's why I say do n't worry so much about mortgage insurance. It's better to do what the pros do and focus on getting a good deal. If you get a good deal, options will open up. If you get ripped off and get a terrible deal, guess what mortgage insurance will do for you ? Nothing. It's not there to protect you.
It's there to protect the lender. So don't get me wrong. I don't like mortgage insurance either. But I'm not going to pass up a great opportunity just because I have to pay mortgage insurance. I'd rather make sure I get a great deal. Now, again, if you don't want to do renovations, just buy new construction.
Don't buy a remodeling property. Buy new construction. Rent out the rooms. Do house hacking. Reduce your costs. Now, if you want to buy multifamily real estate, you enter a different playing field. Instead of looking for fixer-upper properties, look for properties with low rents. This means you should compare the current rent of the property to what the market could bear.
It's generally a good idea to talk to your real estate agent or a property manager to find out: Hey, I'm buying a duplex. Both units are two bedrooms and one bathroom, let's say around 700 or 800 square feet. How much can I charge in rent for these? Be careful. Don't overpay for multifamily real estate.
And the best way to overpay for a multifamily property is when rents are $800, the market price is $800, and then you get into a bidding war for the property. You're not winning there. Instead, look for a multifamily business where the rent is $ 600 per unit and the market rent is $800. Now, you can get in and you'll have room to increase the rental price over time.
You can take your Time to do it, and that increases the property's value, and remember, the great thing is you can always move out and do it again. Step seven: write the offer and get inspections. When it comes to writing the offer, the secret to negotiation is information. You can't negotiate if you don't know what the other offers are and where the game is at.
So you need to get the answers. There isn't a single transaction I've done in my career that I went into sight . I always knew what I was up against. And you'll always lose in multiple-offer situations if you have less information. You have to figure out what the seller's wants and motivations are , how quickly they want to close, and what certainty they're looking for.
Do they want to deal with the termites or not? What can you do to negotiate your offer without always offering the highest price? I win a lot of deals because I offer better terms, and I don't always pay more. Just last week, I had an offer accepted that was $30,000 below what others were paying for a property in need of repair, simply because I improved my terms and gave the sellers more certainty.
That's how it is now. I put net worth in my pocket. That's what professionals do. And you want to act like a professional. Be a professional out there , even if you're just starting out. And work this out with your agent . Once you're in, professionals know you'll use the home inspection to look for serious problems like warning signs in the foundation, drain lines, and roof.
Those are your biggest expenses and structural issues , right? Or illegal additions. That's where the most expensive items are . Electrical and plumbing supplies follow, but they 're usually not as serious. And avoid illegal additions when you can. Your home inspection is the first step. You don't want to send every contractor out and spend, you know, $500 on 10 different inspections on day one.
Start with the home inspection. That way, you don't spend all that money on a property you 're not ready to buy yet. Get your home inspection done. If the inspector says, "Hey, it looks like we have some issues with the drain lines," guess what you do? Yelp. Plumber. Hi, plumber. I'm having some issues with the drainage system at a house I'm buying .
Is there any way you could inspect the drain lines under the house for me? No problem. We can open up a toilet. We can remove the toilet, run a camera down the line, and tell you how healthy your drainage is. It'll cost $200. Does that sound good? Sounds perfect. Come by anytime. There you go. You deal with problems when red flags come up during your inspections, and then you get the actual quotes before closing.
You want to know what you're getting into. It's very common for people to say things like, " Oh, you're going to buy a house." "You're going to have to replace the roof." Wait, didn't you inspect the roof when you bought it? You know, that's a rookie thing people say about buying a house. So be careful.
You don't want to fall for that. It's better to do what the pros do and get quotes based on the warning signs. Also, if you're getting quotes to renovate a property , never, ever, ever make this mistake. Don't ask for one quote for the entire job. It's very common for a contractor to come and say, "Do you want me to give you a quote for everything?" Come on.
I will do everything for you. I'll take care of the electricity, plumbing, kitchen, bathroom, roof, and foundation. I'll do everything. Did you know? "I'll rebuild the house for you." No. That's the wrong way to do it. That's exactly how you'll spend $100,000 to $ 150,000 on a contractor when you shouldn't have spent more than $ 30,000.
You're better off buying new construction if you're going to do that and don't want to do the work. Seriously, it's fine to buy new construction if you don't want to do the work. But if you're going to do the work, do it the right way. Instead, the way to do it is this: If you need flooring, you go to a flooring store.
If you have an electrical or roofing problem, guess who you call? Yelp. Electrician. Oh, wow. There are 20 in the area. "Hey, electrician, I have a problem. I'm about to buy this house. It's a rental property, and I really want to make sure it's safe for a tenant. Can I hire you to fix my home inspection issues in the safest and most cost-effective way possible?" And guess what they're going to say?
"Yeah, sure. We'll go there." You know, and that way when they say, "This is a system..." old electrician. Are you sure you don't want to replace all the wiring? "You know, I don't have the money to do that. Is there any way to make the current electrical system safe because it's a lease? And 99% of the time they say, 'Oh, yeah, totally.'" No problem.
It's a rental. Don't worry. We'll make this rental safe for you." Boom! This is how you save money. It's something like, "Should you replace the roof?" "Well, I don't know." Hey roofer, if we spend $800 on maintenance for this roof, can it last another four years? "If the answer is yes, do it. If the answer is no, well, then you should probably budget for a new roof.
You don't want to be a negligent landlord who does nothing. That 's the difference. A negligent landlord does nothing. A professional maximizes their money's worth. And a novice replaces everything and builds a new property. Okay, just keep in mind that your goal is to build wealth, not spend. Now, two big rookie mistakes that come up a lot.
Don't go for the custom stuff when remodeling. It's very common for people to say, 'Well, I really want this midnight green countertop or this fancy Brazilian floor or this crazy tile with patterns and weirdness because we think it's cool.' I like some of that stuff too. I like crazy, trendy, and custom.
But if it's going to be a rental property, why waste the money? It'll just end up looking dated. You want things that appeal to 95% of people. And don't overspend in the future. This is a rental. It's not your forever home. Build your forever home." When you have a net worth exceeding $5 million. Until then, everything you do should be rental-grade.
Step number eight, during the escrow period , which occurs after negotiating the deal and after the inspections, if you find necessary repairs you were n't expecting, I strongly encourage you to politely and reasonably ask the seller for a repair credit. So, after the home inspection, I don't suggest writing to the seller saying, "Hey, you know, the carpet is awful." " I want $2,000 to replace the carpet." You pretty much knew that going into the deal, right?
That's not going to work. Instead, if there are $3,000 in electrical bills and other things to do, maybe ask the seller for $5,000 and hope to negotiate down to three. This will help cover your closing costs. Closing costs are usually between 1 and 2 percent, depending on the loan you get. If you choose a lower interest rate, you'll generally pay more in closing costs.
If you take a higher interest rate , you'll usually pay less in closing costs. Sometimes it makes sense to take a higher interest rate if you know you'll be refinancing in the next few years because you want to get rid of mortgage insurance or something. There are also ways to get rid of mortgage insurance without refinancing.
Talk to your lender about them. Step number nine, when working on the property, follow a very simple order. A beginner comes in and rips everything out instantly. Don't do that. Big mistake. Don't remove the Don't keep the cabinets until you have a plan. Instead, create a plan and ask yourself, " Can I keep this?
Can I keep the kitchen cabinets? Can I keep the vanities? Can I keep the bathtubs, showers, and bathroom tiles?" Those are the important things. Install new carpeting, put down luxury vinyl flooring , apply new paint, scrape the ceilings, and clean the property. By the way, the best order to do the work is, first, plan.
Second, do minimal demolition. Then, have your plumbers and electricians prepare the valves and electrical wiring, such as adding brackets for ceiling fans. Scrape the ceilings and repair drywall as needed to get the walls and cabinets ready for painting. Install countertops and flooring. Then, put in light fixtures, plumbing fixtures, and your appliances, finishing with the toilets.
By the way, you should generally keep at least one working toilet in the project. Leave landscaping until last and don't overspend on it. Mulch And the stones look great with a little grass. You don't have to overspend. You'll usually be living in the property the first year, so you can do a lot of these repairs in the evenings and on weekends.
Heck, some people even seed their own grass to save money. There are a lot of things you can do. Step 10. When it comes time to rent the property, make sure you always prioritize a high-quality tenant over a higher rent. Look, I'd much rather have a quality tenant with job stability, guaranteed income, good credit, and all the guarantees than one who pays me $50 or $100 more but is risky.
Hmm, big mistake. Well, there you have it. Now, what you need to do is repeat this process, and you'll literally build your own empire. You build your fortune by buying real estate and starting by living in your first property. When you move out, you go for the second. Then, you repeat the process. Now, you don't always have to move out.
You could start building wealth. You could use a cash-out refinance. To get cash from your first property and expand your real estate portfolio without moving. You usually need a 25% down payment for that. That's why "bank hacking" is so appealing. Finally, if you'd like more information and details on any of these steps, I have a complete real estate investing course dedicated to teaching you how to value properties and ensure you get a good deal.
I highly recommend you check it out . Use the coupon code in the description below. Also, check out the other programs. And friends, you won't regret it. I can't wait to see you there, and I'll see you next time .
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