저자: Kevin · 외국인
요약 보기
부동산 투자에서 높은 수익은 높은 위험이 아니라 위험 회피에서 나온다고 주장. 'CORE' 방법론(C: 상태 나쁘지만 외관 문제인 매물 할인 매수, O: 과잉 개량된 모델하우스 할인 매수, R: 임대료가 낮게 관리된 다가구 매수 후 임대료 인상)을 소개. 주식에도 가치투자 원리를 적용 가능하다고 언급. 특정 자산 가격 방향 예측 발언은 없음.
다듬은 글
Hey everyone! It's Meet Kevin. It's very cold here, but today I want to tell you what most people think. And most people believe that higher returns on their money come from higher risks. And I used to think that all the time too. But now I want to tell you a little about the story of how I discovered, how I learned, and how you can implement the idea that higher returns don't come from higher risks.
In fact, they stem from risk mitigation and having fewer risks. So today we're going to talk about the main method for closing real estate deals. The three main methods and how they can be applied to any type of investment. Let's begin. Oh, and now many of you have really liked the timestamps, at least the people who have been messaging me on Instagram saying that they really liked the fact that I provided you with an analysis of the timestamps of what's in the videos, not just in the video, but in the description and the comment at the top below.
Hmm, thank you first of all for sending me a direct message and giving me this feedback. But let's talk about those deadlines here. The first thing we're going to do is talk about some important background on how this works, how you can get higher returns with less risk, and how I was scared at first and never believed in it.
I always thought that high returns were definitely high risk. And then we'll talk about the CORE method. We will talk about the C method of investing in real estate, the O method of investing in real estate, and the R method how you can apply the CORE method to real estate or stocks. We 'll see how it goes.
I hope I don't fall too far. So, wish me luck in this scenario. So, here's something about me. I was terrified of everything as a child. I was hit in the face with a baseball. I never played baseball again, except for the first day I tried out for baseball. So, that didn't last long, and I wasn't climbing the walls, I wasn't doing anything.
And that's probably what led me to play video games, because I've always been very scared. And the same thing happened with money. And when I started in the real estate market, I was very afraid of everything. So, I was always looking for, you know, how I could do something with the least amount of risk?
And you know, the fear of money probably came from the fact that, when I was growing up , my parents divorced when I was 6 years old. I had advisors who would come and take me out of the classroom for interviews and court matters. And all of this in the first or second grade, constantly changing locations.
Divorce is unpleasant. It's a disaster. I'll never forget being in a car with my dad and he withdrew 20 from the ATM at the Washington Mutual drive-thru and said, "Yeah, I still have nine." I was like, "What the heck, seriously? Here I am at 7 years old and you're telling me we still have nine of these?
Like, what is this? Like , I know this is bad. I know this is a bad place to be. And I'm 7 years old and I'm already afraid of everything. Now, I'm also afraid of money? So, I was always looking for the easiest way to go up or down in terms of money and success. But, I guess since this is a ski analogy, let's choose the downside.
So, it was no surprise when it came to starting to learn about money, and I started earning my first money, you know, even at 10, 12 years old, just trying to figure out how to do odd little jobs for five dollars an hour, whatever. It didn't matter. I was really fascinated by saving and accumulating money because, well, there was nobody in the family.
Like, this would have been so much easier. And then, you know, when I started opening my mind to stocks, I immediately thought, " Wow, stocks, that's risky." What if I... What if I... What if I lose everything? "And that was, you know, even before the recession. I was thinking, 'Stocks , that sounds like a gamble.' And then, when I started in the real estate market, I 'll never forget that first house we bought, which you can watch in the video of the first house we bought.
But, uh, that first house, I'll never forget the same feeling I had when I was 7 years old . The floor guy called me and said, ' Kevin, I have bad news.'" This is not good. There is asbestos under the old tile. "And I thought:" Ah, that's it. And that. I knew. I always knew I would lose all my money.
I always knew I was going to go bankrupt. And that's it. This is the time to go bankrupt. " So, needless to say, I felt like a victim during school. I thought the only way to progress was by saving money, and that there was no real way to invest safely without losing everything. So, whenever I started something like, 'Here we go again,' I knew.
Bad news. Bad news." It was only when I learned about the CORE method for investing in real estate that, while doing it, I started to realize things like: " Wait a minute. This is safe." This fuels my childhood insecurities, such as: "I want to feel safe. I want to feel safe. This is good. This is good.
I should do this . I don't want to lose money." And here we go . Let's talk about the COR method. So, what the heck is the COR method? C O R, I mean, come on, Kevin. There's a letter missing here. Or maybe I can think of the last letter, but let's stick with COLOR for now. So, here we go. Okay, everyone.
So, here's the first step in the condition method for buying wedge-shaped properties, which reminds us that our goal is to protect ourselves from risk, prevent risks, minimize the risk of losses, but also obtain a high return on the property. So, the number one rule is: don't buy a property to renovate it.
In other words, find something that's, like, nice, but has that awful smell—I mean, I hate to stereotype here, but grandma's carpet, which is like a palm leaf carpet from the 1950s, and you kind of don't want to touch the floor because it's so smelly. But you know what ? Do you know what else Grandma used to do?
Grandma would go there and want double-glazed windows and the asbestos pipes removed. You know those things that you can't see so clearly , obviously? Like, you know, when it 's snowing and you can't see that there's a drop or a crazy path you're not used to taking, "Wow, that sounds like a good idea.
Let's go that way." You know, things like that . Wow! So, the number one principle is not to look for the biggest fix you can get. Stay away from expensive things like foundation problems, major electrical problems, and major plumbing issues. You'd be surprised how quickly expenses add up on these major renovations.
Wow! Here I am, really proud of what I did, and this group of six-year-olds shows up. Okay. So, the number one principle is that you want to stay away from major reforms. Principle two is that you want to look for smelly and disgusting things, but remember principle one. So, remember the analogy I made about my grandmother?
I'm serious about this. Many of the properties I bought were properties where the owners had made expensive renovations: new windows, a duct system, a new furnace that sits in a cupboard somewhere. You don't even know it was made. They screwed in the foundation. They implemented earthquake-resistant reforms.
They built a new driveway . All these things. Extremely expensive. And yet they kept the shaggy carpet and kept the old original kitchen, and they have the old rusty, disgusting white appliances , and everything smells of cat and dog because they love their pets, and they think they keep the house clean, but they don't because the smell of poop is always there because there's a litter box in every room.
There are fleas everywhere. Termites are everywhere. There is mold in the bathroom near the shower. Like, all those things. Money for my ears. Here's why. The reason you want to avoid principle one is because if you spend $10,000 on a new air conditioning system with new ductwork and a new furnace, you might get $ 4,000 back in market value.
So, a quick calculation will tell you that you have $0.00 - $6,000 going into this expense. Well, if you're a buyer and you buy a house that has a brand new $10,000 air conditioner, furnace, and ductwork system, you just got $10,000 in value for only $4,000. This happens because comparators raise everything to the average value.
I just posted some lectures from the real estate investment course; the link is below, in case you're not familiar with it. We talk about this in our private live streams all the time, where everything is brought to its average value. And then, when you make all these expensive new upgrades, no problem.
I can buy them at a discount. But the opposite happens, and that's exactly where the issue of condition comes in when you buy a smelly property with all these improvements. So, she has all these upgrades at a discount. Now, they have smelly, disgusting carpets, and I know I could probably replace the carpet in the entire house for $2,500, and the house sells for $10,000 less because it stinks and is disgusting, and many first-time homebuyers, who are your biggest competitors when you 're buying houses, say, "Ew, this is disgusting, honey.
Like, let's go. This is just stinky. I ca n't see myself living here." Okay, these are quotes from clients, and I hope they don't see this video. But anyway, when I hear things like lead, mold, asbestos, smelly, disgusting, old, I get excited because I know I could fix and remedy all those problems very cheaply.
And that's when I learned to be less afraid, because after I learned what it takes to solve the problem of asbestos and mold, which is what I teach in the investment course, and after I learned not to be afraid of these things, I began to realize how the market incorrectly prices these things because people are afraid of them.
So, this gives you a small idea of how part C, which is the part with bad conditions, of the wedge works. Well, let's take it a step further because there's another type of property you can buy that isn't smelly, but is actually quite the opposite. And this will be called a super-enhanced wedge. So, there's your O.
And here's an example of the super-improved wedge. Let's say someone bought a new property under construction in 2010 and purchased the model home. All competing properties that were not highly renovated model homes with $100,000 in renovations ended up selling for $300,000. These are the normal houses that sell for 300,000.
The one that had $100,000 in extra improvements as a model home was sold for $ 400,000 because the builder will keep all the money. Don't be fooled. When the builder makes improvements, he keeps the money. Well, now, 5 years later, the same plot of land, instead of having houses sold for $300,000, they've gone up in value to, say, $ 400,000.
How much do you think this model home is selling for now? Stop for a second and think: "Wait a minute. The model home sold for $ 400,000 with $100,000 in renovations in 2010. Now, all the normal homes without all those renovations, which are 5 years old, are selling for $400,000. Just basic real estate appreciation .
The model home, well, you 'd think it would probably sell for how much? $90,000 to $100,000 more, right? No. The market pulls it towards the median. Then, as it pulls it back, what happens when it pulls it back? That house would probably sell. That old model home with $100,000 in renovations would probably sell for $410,000.
So, remember how we talked about leaving the property in terrible condition, the C? That is, they spend 10 on a furnace, and the value drops to four by market value, right? And the opposite is true with smelly carpet and things you can see. The same is true with model homes. You find properties Overpriced items or vendors who spend a lot of money on Brazilian hardwood floors and Italian marble.
People think they justify it to themselves. They think, "Wow, I spent a lot of money." " I'll be able to sell the house for more." "Wrong." You won't be able to sell it for much more. In effect, you're giving the next buyer free updates, basically. Or upgrades with big discounts . So, when I'm a buyer, I love to buy a place with, say, shutters.
Because these things are very expensive, but I barely paid a cent for them. So, to quickly recap. Remember, you have C, buying those smelly and unpleasant properties that have many upgrades. They aren't major renovations, but you can get a great deal on them. Why? Because they made the expensive things, but they didn't make the cosmetic changes that matter.
It has an odor, and it has problems that are easy to solve, such as lead, asbestos, and mold. It has, you know, ugly carpet, ugly paint, whatever. So you have "Oh," which is, they spent a lot on the property because it was a model home or because they simply improved it too much and now they are selling it.
Like, let's go. People think that if they spend $150,000 on a swimming pool, the value of their property will increase by at least that much. Wrong. The appraisers offer a $20,000 bonus for a swimming pool. I want to see you build a swimming pool for $20,000. So, we talked about the first two ways to close a deal in the real estate market.
And just to remind you, the goal of closing a deal in the real estate market is to get a discount. Well, we'll talk a little more about exactly how we're going to do that. But these are the strategies for acquiring discounted properties, whether they have significant improvements or improvements disguised by poor cosmetic fixes.
And there's another way to do this, and then I'll show you a little bit about how this applies to investing and why, if you internalize these principles, you can be a little timid like me and still do very, very well investing. Because look, I understand. Like, the first time I had a tenant, I was like, "Oh my God, what's going to happen if the toilet leaks, or if the roof leaks, or if something unexpected happens?" Like, "Ah, I'll have to think about it, it's going to be Pacific Heights again.
I got ice in my eye." "I just ... Ah! So, the last real estate investment method is what I call the real estate investment method. So, this won't work on single-family homes. So, don't try this on single-family homes. This will only work on multi-family homes, anything above two units. It does n't matter if it's a duplex, it doesn't matter if it's 100 units, it doesn't matter if it's 500 units.
It's the same principle. If you find a property that someone has owned for, say, 20, 30 years, it's totally depreciated. You don't need to know what that means, don't worry. Basically, they just need to sell it for tax purposes or they want to get out of the real estate market. They're tired of working on it .
And it wasn't professionally managed, or maybe you know , it was professionally managed, but the manager just wanted things a little easier and didn't raise the rent. So, the rent stayed quite low compared to current market rents. For example, you go into an apartment building with 20 units, and all the rents should be...
$1,000 per unit, but in reality they're only $600 per unit or some of them have been increased to $900 per unit. You know, basic things like that. Well, now you come in being the kind of expert that you are, you're surrounding yourself, which is what I recommend, with real estate brokers and experienced people who can help you analyze, you know, what a wedge deal is, a wedge rental deal .
So you go into a deal and you think, "Oh yeah, the rents are low here." You know, everything costs 600 dollars. I know I could increase all of these things to $1,000. Even if it takes a while, you know, I evict one tenant at a time, paint, clean a bit, and raise the rent. Now, suddenly, you can often buy a property , a multi-family property, for a price that is based on the capitalization rate and the gross rent multiplier, which are based on low rents.
So, without getting into capitalization rates and gross rental multipliers, basically, the rental income a property receives creates the property's value. So, if you have low rents, you generally have a low-value property. And then, you find something like this. You find a low- value property, look at it, and think, "Wait a minute.
Low rents and poorly managed. Okay. Let's do the math with market rents. Let's buy it for what they're asking. Let's give them what they want. Let's buy it. Then, when we raise the rents, you might as well walk in and close the deal, because maybe you're buying a, I don't know , a $600,000 10-plex for $60,000 a door and everything is renting for $600 a month.
You raise the rent to $1,000 a door, suddenly everything is now worth $ 100,000 per unit and guess what? You bought a property for $600,000 that's now worth $1 million. And so, that's just a quick little example, an overview of the principle. We do these real analyses, obviously, in the real estate investment course, and I teach you, if you're a broker, uh , in the Real estate agent course, how to teach your clients to do this , because if you are educated as an investor or educated as a real estate agent, you will make money.
And many people just want to get in, they don't want to educate themselves. But anyway, what's the point of all this? Why do you care about locking a property because it's in bad or very bad condition or because the rents are low? Why do you care about getting into this kind of thing? Because if you're a baby like me, it makes you feel better.
Now, let me explain this part. I hate this part because I'm a baby and I'm always worried about falling. This is the worst part, folks. Okay. So, if you're a baby, why does this matter ? Well, here's why, folks. If you're investing in real estate, you're investing in stocks. Think about what Warren Buffett and Charlie Munger advocate when you're a stock investor.
They recommend that you find a property. Oh my God. They recommend that you find a company that you can buy for a low price because it is It might be misvalued by a Mr. Market somehow, but it's actually worth more because you know something that maybe other people don't. Or maybe the market is just punishing a certain real estate company for a while.
The same thing is true in the real estate market, like with stocks, with Warren Buffett and Charlie Munger, some of the greatest investors of the time, always recommending it. The same thing can be done today. I would buy a house and finance it with a 30-year mortgage, and it's a great deal. And if I literally, if I were a skilled investor, which I'm not, and I could buy some of them at low prices, and find tenants, I guess that's it, and, and, and again, taking out a 30-year mortgage is a way to effectively short-sell dollars.
Because you can, you can take out a 30-year mortgage, and if the interest rate is too high the following week, you refinance for a lower amount; and if it's too low, the other guy gets it for 30 years. So, it's a very attractive asset class. It's quite easy. It's quite regular in the real estate market.
It doesn't take 6 months or a year to find a deal like that. I find those deals probably every 2 or 3 weeks. That's how many come up. But anyway , when you buy a property in any of these cases, let's go to example C, for example, you could buy, and I just closed deals with just these. I'll give you real numbers here.
Here's a deal we bought for $495,000, put $50,000 into it, and it's worth $650,000. How do we know it's worth $650,000? Because we had to resell it twice because the deal kept falling through. We kept reselling at full price. I think it was on the third holding that we finally closed. So, we knew it was worth $650,000, but we bought it for $ 495 after $50,000 in cosmetic upgrades.
That's example C. What 's example O? The model home. I have a video. Here. Let's play some clips of me walking through this super-upgraded model home, selling for just over $5,000 to $10,000 more than all the other properties are selling for. Even so, I examine it. It has recessed lighting in every room, ceiling fans in every room.
It has wainscoting. It has crown molding. It has all that nonsense stuff. The builder probably invested $50,000 to $80,000 in extra design upgrades and here it is selling for $5,000 to $10,000 more than everything else. Rental properties ? Last time I was in the snow, I got a whole video dedicated to buying rental properties in the wedge.
This multifamily. Watch this video with Chandler David Smith where Chandler showed us how he does it regularly. You can do the same thing. You just need to educate yourself and surround yourself with the right people. So, folks, there you have it. But I really hope that I hope you enjoyed the basic method of investing in real estate.
But I want to know, leave a comment below if you made it this far or send me a DM on Instagram. I like to answer you in videos whenever I can, and tell me below what other topics you'd like to see . What's stopping you from buying real estate, buying stocks, or investing your money? What's stopping you from going out there and getting a job and increasing your income?
But also, tell me, what do you think of the video style? Do you like the "Meet Kevin" report? Do you like this? Tell me. Give me some feedback. We'll give you whatever you want. And now I want some food, so I'm going to get some food.
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