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Today, I'm going to share with you five awesome real estate hacks that could not only save you a ton of money, but help you get a sick deal in real estate so that when you implement these throughout your life, you can continuously hack real estate the way the pros do. So, what have I been doing lately?
Well, look, last week I was in Park City. You saw me meet Brian and Sierra and how they bought their first property with zero money out of pocket and they're now up over $80,000. Again, buying a house with zero money out of pocket. Well, this time I visited somebody called Drew. He runs this awesome real estate brokerage in downtown Park City, a place where the median home price is $1.4 million.
Like, Drew, how do you kill it out here? What things are you doing to crush it and make money in real estate? And today we're going to talk about five things that he does when it comes to buying in Park City, Utah. And these are five things you can apply not only around the United States, but around the world.
Let's get into them. The first trick is buying what's known as first-phase new construction. See, when builders sell houses, they have to sell them in phases. The reason is every time a house sells, the builder frees up more debt and the bank will essentially say who's financing the whole development, "Okay, we'll give you some more money so you can go build some more units." So, houses in new construction developments are sold in phases.
So, you'll have usually like phase one through let's say phase 10. The best property to buy is a property in the first phase because the builders, to keep financing easy, to keep appraisals easy, to keep everything moving in a streamlined way, want to keep increasing the prices. So, first phase might sell for say $200,000.
Then you get phase two that'll get released for say $208,000. Then 216, phase three. It sort of keeps going up until phase 10, which always tends to be the most expensive phase. Now, even if market value falls a little bit, doesn't really matter. All the builder will do is they'll just throw in more upgrades to incentivize you to keep buying the other phases.
I heard about this development and put it under contract before they even broke ground. They're building in a spot that's close to the ski lift. It's in a part of town that's going to keep developing and and we're getting in early, right? So So you bought first phase new construction because you know they're raising the prices every subsequent phase.
phase is coming up. So these buildings here, they're actually building phase two and three right now. So that kind of game only really works with something that's that's new and upcoming. It's it's the first phase. It's because people don't see it yet. When people drive by and they see this, which you don't see in first phase, they don't even have the models often times.
buyers, they're putting in a couple hotels and and a lot of our investment buyers are are doing exactly that, right? So they're putting it under contract 12 months before the product's delivered. Yeah. But they're getting it at a rate that's just a construction deposit down. It's free appreciation basically.
Exactly. By the time you close you've already appreciated and you and a lot of people do flip them, right? So could put it on the market the day you close almost. Yeah. The second trick is finding an advertising mistake or something that went wrong that basically enables you as a buyer to force getting a wedge deal even on something like new construction.
Look, I talk about advertising mistakes all the time, especially in our private live streams where I'll analyze your deals personally twice a week and I I'm constantly in there like, "Oh my gosh, they listed this as a zero bedroom accidentally." Meanwhile, it's like a duplex, two bedroom, one bath, two bedroom, one bath and it's listed as a zero bedroom.
Totally cuts out a big buyer pool. Well, much the same, Drew went into the new construction builder's office and said, "Hey, you know what? Can I go over to your construction department and can I see your blueprints for the model that I'm interested in?" And they're like, "Oh yeah, sure. Here you go.
Here are the blueprints." And Drew looks knowing that, "Oh yeah, this is going to be a a unit with 9-ft ceilings and it's going to have crown molding or whatever. Looks at the blueprints and he's reading them and he's like, "Oh my gosh, they have this style of window and these are the dimensions of the window." Like, "Oh, this has a vaulted ceiling with 18-ft ceilings.
This has a vaulted ceiling with like way, way higher ceilings and these big view windows that are going to let in a whole lot of extra light." And those weren't even priced in because the way it was advertised was basic 9-ft ceiling, not this vaulted ceiling. So, Drew was like, "This is an opportunity to basically get a wedge deal on a new construction build and I'm getting first phase new construction right out of the gate.
Cha-ching, cha-ching by making a move like this." And I did my homework to the point where I chose a unit that they had mispriced, right? Since they'll let you look at the blueprints, right? So, this specific unit has pretty high windows and it's it's small, but in a good location, good for nightly rentals.
When did you put your deposit down is the better question. So, I put the deposit down on the unit like 12 months before they were promising delivery, so they hadn't even broken ground yet. And they're always late. They're always late. Yeah, so got delayed from like December to March of 2018. It was supposed to close in 2017.
There was a rendering on the floor and it showed windows and then we went across the street to the construction building. Yeah. And and they pulled out the blueprints and there it was. So, They priced this as if it had normal ceilings. Correct. But you saw in the construction building that it actually had these A little bit of homework is all it took.
The sales staff didn't even know. So, that's how you got that equity. Not only did you lock in first phase new construction, but you also found disparity within new construction because you took the effort to look at the blueprints. Yeah. Fact that you've even got the crown going up to here, that's beautiful.
Great job. Wow, look at this. You've actually got a double row of cabinets. I just realized that. I mean, you obviously need a step ladder to get up there, but what a great extra storage for the things you use once a year, like when you get into juicing for a week and then you never do it again. So the third trick that Drew does is he follows around builders that he knows have a reputation for quality.
See, so many builders, they throw these new construction houses together and they don't really care in terms of giving you big freebies. Instead, what you're getting a lot of is like carpet and linoleum. Let's get off the street. What what am I doing on the street? You're you're getting like carpet and linoleum as your basic upgrade and uh which I mean isn't really an upgrade, right?
And then they're charging you an arm and a leg to have like custom appliances, custom countertops, custom cabinets, cabinets that go all the way to the ceiling, a second row of cabinets. Whatever, like all of those things. Upgrade, upgrade, upgrade, upgrade. In this case, Drew found a builder who does so many of these things standard, which what's great about so many upgrades standard is everybody has them and now you're not having your value depressed because your neighbor bought a place with carpet linoleum, sold it and he's now setting essentially a low comp, devaluing all your upgrades.
So Drew follows around these quality builders and says, "Here's a builder with a reputation. They give me good decent upgrades from the get-go without me having to pay extra. And when they go into a new region and they start developing somewhere else, he follows them there as well because he already knows they have such a good reputation and then says, 'Well, if they're betting on that new area, I'm going to take their research for free and go bet where they're placing bets.'" first phase and look for the mistakes as well in the builder office again because, well, even though they got a good reputation, everybody makes mistakes, right?
You just got to find them. This only has $4,000 in upgrades in it. This, the way it is here, has $4,000 in upgrades. included in the in the purchase price. Is that just because you bought first phase or how did you pull this off? this developer builds um quite a bit of things in our market. So that way when Mark 25 Homes sells properties, nobody's getting the carpet linoleum standard grade, which is oh yeah, here's my carpet linoleum Mark 25 homes.
Instead, no, no, it comes with most of the inclusions, so it actually looks exclusive. And I mean, think about it, it's rent ready for you now. Right. Because of these three tricks so far, and Drew's already up like $200,000 just closing this thing. Meanwhile, he was pretty much able to get into the deal risk-free for a solid year while they were building it, because what's the cool thing about buying new construction is you put in like a refundable deposit until they build the place, and then if the market falls or bottoms out or whatever, it's like, well, either give me my deposit back or you know what, keep it.
You know, it's kind of like you're making this free bet. Two bedroom, two bath, $780,000. Right. And in a year and a half, you're still up 220 grand. Just because of a little bit of dumb luck, yeah. And as a rental property, the second bedroom would be a bunk room. You'd look at the map dot on VRBO, you'd look at the photos, the view, and then you'd say, "Hey, it sleeps six people.
Let's book that." Just because it works, right? So, those are the three main factors for for the nightly rental. And how much did you have to put down as a deposit to lock this deal up? Uh so, $15,000 construction deposit, then you pay for any upgrades, Which was $4,000. and the earnest money so I paid.
So, you basically put in 25 grand before you closed. And what did you have to put down on the financing for this? Could you get a conventional 20% down? 10% we we did conventional and uh marked it as a primary for the first 2 years. Nice. And uh And now your house hacking it because over here you've got somebody paying $1,200 a month, paying off your loan for you.
There's all your interest almost. What's up? The really cool thing is because Drew's now up $200,000 buying with the three things we mentioned before, all of these little tricks, I call them Drew tricks. Drew's really nice guy. If you're ever buying in Park City, make sure to buy from Drew. Awesome guy, really cares about his clients.
Really prepares, too. So, But other thing is after Drew gains this equity and he lives in this property for 2 years, he can now decide, if he wanted to, could sell it and sell it tax free. So, all that money he made from these gains and benefits. Oh, this place is under construction. I always love looking into like Oh, look at that.
That's so cool. Sometimes they have signs, too. Oh, look at that. Alcohol. This is probably going to be a restaurant. Anyway, uh it's always good to know what's going on in your hood, too, because you know, if this is like a thrift store or something like that, you're like, is that good for the area or bad for the area?
Nothing against thrift stores, just saying. Direction, right? You want to see like an Apple store going in here and I'll be like, I'm going to buy more stuff in Ventura tomorrow, okay? Uh you know, that's another thing. You don't have to just follow around builders, you can follow around big companies like Apple.
But anyway, but anyway, see, I'm like getting all choked up because I'm totally off topic now. But getting back onto point, the cool thing Drew can do now is he can take advantage of the United States tax law that says you can exclude $250,000 of gain if you've lived in a property for two out of the last five years.
So, what in theory he could do is, let's say he's got a $200,000 gain now, he could live there for 2 years, then he could rent it out for up to say 3 years, probably 2 and 1/2 to be safe, then sell it. So, he's selling it right before his 5-year mark and hopefully maximize $250,000 of tax-free gains.
Look, so many of us are like, should I put money into a Roth IRA or a simple IRA or this kind of IRA or whatever? Who cares if you can milk real estate and get all this money tax free by milking the homeowner's exemption? Do it. Awesome. You could now sell this after 5 years if you've lived in it for at least two.
Exactly. And and sack 250 grand as a single person. Live in it off and on and have a roommate for a little bit of it and yeah. Wow. Amazing. It's how the how the local realtors do it. I had leased this as a rental property before I decided to to move into it. Wow. to hold that primary status. Exactly.
Step five, use birthday 2019 to buy the course. Okay. All right. I I had to do it. No, that's not really step five. Step five is use a pro. Look, so many of us are like, "I don't want a pro. I want to go do it myself. I don't want, you know, big government. I don't want, uh, you know, this whole team of people helping me or whatever." No, I'm going to go find my own deal.
When when I was traveling to Utah, guess what I consistently heard from everybody? Get a professional that can help you find these mistakes. I mean, look, two people helping you, that's you and an agent or an agent and their team helping you find disparity, wedge deals, mistakes in construction, whatever, is better than you trying to figure it out out yourself.
You connect with a local realtor, you make money. You want to find deals, you got to find people like Drew in your local markets. What I always say, you know, people so much they're like, "Oh, I want to just go to open houses and figure out how to invest myself." It's like, "No, no, you still need the connections.
You still need them." So, phase two right now, almost exactly the same model is listed for sale for 1.049. Bought this for 780, first phase and disparity. Good job. And house hacking. So, stop being a baby, pick up the phone, get on the phone with a lender, buy the investment course. Guaranteed, I mean, basically guaranteed, uh, you're going to save way more than you spend by listening to even a fraction of the advice in there.
I had somebody leave me a comment. They said, "My gosh, I've only gone through the first like five lectures, and I feel like I've already gotten my values worth for the course." Like, just get in and use the birthday coupon code, too. Link below. So, that we're back at the car, full circle, and what did we learn?
We learned buy first phase new construction. Get in because they're going to raise the price every phase anyway. So, you may as well lock in that first phase where people aren't so comfortable yet cuz they're like, you know, I don't know what this is going to look like yet. I'm not comfortable. I just see a bunch of dirt.
I just see a bunch of gravel. Like, how am I supposed to envision this? Past the first phase when the models go up, you know, then people start getting excited about a development and it gets even more expensive sometimes than just like $8,000. Sometimes it's a whole lot more than that as the phases go on.
Number two, even on new construction, look for the wedge. Find that disparity by finding builder mistakes. Number three, follow a builder around that has a reputation for quality. That's going to be really important when it comes time to that warranty period as well. So, remember, buying new construction can be great.
It's getting those builder warranties. Then, get familiar with tax laws and understand that you can take advantage while living in a place for 2 years and renting it out for almost 3 years and take advantage of the homeowner's exemption in the United States where you can exclude as a single person up to $250,000 in capital gains.
If you're married, it's up to $500,000. Tax-free, folks. Then, number five, get with a pro cuz if you're not with a pro, you're not going to know tax advice, you're not going to know agent advice, you're not going to get a good deal. The odds of you succeeding in real estate without surrounding yourself and finally being willing to have a pro around you, very low. Stop trying to do it all yourself. Oh, yeah, and buy the course, too.
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