The 5 Rules of Real Estate.

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부동산 투자 5대 규칙을 제시. 대형 리노베이션(기초공사 등)은 기회비용이 커 피하고, 머니핏 스케일상 비싼 수리일수록 ROI가 낮다고 설명. 지루함에서 매수하지 말 것, 비교가 쉬운 트랙하우스 선호, 가까운 지역 투자 권고. 최근 두 건(약 61만5천달러, 61만9천달러)의 기초공사 필요 매물을 규칙 위반으로 포기한 경험을 언급.

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01. what's up everybody it's me Kevin today I'm gonna tell you how I lost the one point a two million dollars and five must follow rules of real estate oh and quick reminder make sure to check the coupon code down below it expires in a few days and then the prices going up for the next season see in case you haven't figured it out already I'm a real estate broker oh that's wet s where I make a lot of money so when I come up with rules these are rules that come out of experience so let's get right into the list a rule number one you should always follow when you're looking at investing in real estate is unless you're a real estate developer don't get tempted by very expensive fixer uppers C we know fixer uppers are desirable because you can get them below market value the fact oftentimes you can get deals for $300,000 that might be worth 425 or 450 just by doing a simple 30 $40,000 worth of work the cool thing too is if you wanted to do that work yourself you could probably get all of that work done for $15,000 that's where you buy something for 300 you put 15 in and your own work you're making big money really fast however that benefit goes away really fast as well once you start getting into fixer-upper projects that start costing you in the neighborhood of $100,000 $200,000 to fix up because it's a big redo you have to do additions you have to do foundation work at that point you've got to ask yourself a very simple question how many other opportunities are you missing out on because you're dumping so much cash into a deal consider this if you buy a house for $300,000 you put 20% down that's $60,000 coming out of your pocket or maybe you're borrowing it from the credit line or from a friend or whatever or you're putting less down because you're going to move into it but then you got to put in that $30,000 a fix-up that now means you're out of pocket $90,000 unless of course you put 5% down and then you did the work yourself then you're really only out of pocket $30,000 so that's scenario you're out of pocket 30 and 90 thousand dollars depending on how much you put down and if you're gonna live there knew the work or not the flipside if you now find a property that needs $100,000 worth of work you're out-of-pocket 115 to $160,000 and that is basically the amount of money that you would need to do another deal think about it you could do two basic $30,000 remodels do some work yourself or one big project but the problem with big projects is a you're stuck with that one project you can only finance that one deal because you don't have enough cash in where it's tied up to another stuff but to your return on investment goes in the toilet on more expensive projects unless you're a developer and you've been doing this for years and you really know what you're doing you're just starting out or you've done less than 10 renovations you probably don't want to do these big projects and that's where we get to rule number two the money pit scale now we've talked about the money pit scale before in other videos but here is the money pit scale let's just give you the bottom line of it because it's a really good reminder the most expensive things in real estate give you the lowest ROI foundations rooves electrical systems sewage systems give you the lowest return on your money often times you're not even getting a full return of your money that is you spend a hundred thousand dollars doing a foundation maybe you'll get fifty thousand dollars in value back man that's one way to move drywall so remember rule number one stay away from really big projects that ruin your opportunity cost of getting other deals rule number two always follow the money pit scale you're going to make the most money doing the most basic stuff that that's like a double benefit simple more money more complicated less money cool rule number three you don't want to buy out of boredom I get a lot of real estate clients that come to me and say Kevin you know what I'm gonna buy a lot I'm gonna buy a lot that burned down there's fire or whatever and I'm gonna buy this redevelopment opportunity and this is where you have to realize all right you might not be bored anymore if you do it but you'll be miserable see here's a new scale I call it the misery scale the first week of your renovation when you're running around with a sledgehammer or breaking stuff we're pulling up the carpets fun really good week two three and four are starting to get a little boring again it's like alright yeah the fun of its over like I just want this done now and ideally by week five and six you're done with the project because if you're not done with the project then you get to the misery part of the deal so part one yay everything in between up to week five and six man week five at six beyond oh this sucks so you want to keep that in mind because you don't want to be in oh this sucks for really any amount of time and unfortunately if you get into doing crazy things like loss or additions or really expensive work unless you want to pay massive premiums to architects and contractors to do the work for you keep in mind you still have to live with them and make sure they're doing their job properly follow rule number three and don't buy out a boredom go find some entertainment instead sometimes it just comes to you rule number four let's do an analogy for this looking at this parking lot ask yourself how much is that red pickup truck worth compared to that gray pickup truck compared to that blue one compared to that white one over there compared to the one with with the larger wheels we're actually a surprising amount of pickup trucks over there but you have to start asking yourself okay well there are different ages they're different mileages they're different makes they've got different features in them and basically you have to do a lot of research on every one of those cars and then compare that to what other similar cars to that particular car is selling for and then take that knowledge and apply it to the car that you actually want to buy to see if you're getting a good deal that's gonna take a little bit of effort now fortunately with cars we've got Kelly Blue Book and that makes things really easy but now let me make another analogy over here let's say you wanted to buy this chair right here there's no difference between this chair and this chair in this chair then that one that one that one and our these benches over here are different but the benches can be compared two other benches they're literally the same thing if I now go over here and find this chair on Craigslist for $20 that I know okay cool the market value on Craigslist is $20 for a used chair if I go over here and go okay it's new it's selling for 50 bucks cool market value is 50 bucks I know if I'm paying more than $50 for a new chair I'm getting ripped off if I'm paying more than $20 for use chair I'm getting ripped off starts getting a little bit more complicated with the cars right I'm gonna take Kelly Blue Book out of this now let's relate this to real estate those cars over there are your unique custom own where you have to compare it on every spec square footage age location the different amenities the different upgrades it's a lot more complicated the more complicated things get in real estate guess what the more your risk goes up because your uncertainty goes down the more uncertain you are the more risk you have with these chairs if somebody wants to sell me a $50 chair for $50 I'm pretty certain I'm paying market value for the new chair so what's the secret for real estate anytime you can buy tract homes where the comps you use or the other comparable sales you use are not different makes and models and different ages instead they're literally this same model 3 & 2 2,000 square feet cool where's another 3 into up here's another 3 & 2 mm square feet this one's on the market for $620,000 this one sold for $800,000 here's another one 3 into 2,000 square feet same age same tract same builder sold for $825,000 whoa 625 once started to look like a deal i'ma go shopping for the 625 one because it's probably got value in or needs work obviously that's when you start applying the other rules now I know a lot of people get frustrated because look as a real estate agent I hear it all the time people well I want something unique I don't just want another tract home keep it there are a ton of really quality older tract homes just because it's a 1940's property and it's a cute little spanish-style home doesn't mean you don't have the same exact floor plan on the other Street three times that sold last year I would venture to say the vast majority of properties that sell are tract homes so lways remember tract homes are going to give you more certainty they're easier to compound out what are these things going to rent for whether they get a sell for how fast do they rent them sell how good's the neighborhood it's very easy it's simple and the simpler it is the more certain do you have so if you're worried about risk keep it simple tracts this is unfortunately why multi-family gets a little bit more difficult even though in an area you could look at a gross rent multiplier or a cap rate by the way I teach you all the tricks for thiat link down below if you have not yet already it's a lot harder to adjust cap rates and gross rents for different neighborhoods mostly because the volume of sales is significantly lower so there's usually more of a risk margin with multifamily last tip about real estate by close to where you live it's a big mistake in my opinion to have to fly somewhere like Nashville Tennessee just because you think hey the markets booming let's go buy over there that's kind of like oh let's go buy some Tesla stock because it's at all-time highs keep in mind if you're not familiar with the area it's not only a lot harder to reduce your uncertainty that is you're more likely to take more risk in areas you're not familiar with you don't know which streets are the good streets in the bad streets but local investors also tend to get preferential treatment that is if you're investing far away you're usually either getting ripped off or you're buying in areas you're not familiar with which basically relates to getting ripped off and that's usually because local agents like working with local investors now that's not always the case now here's where these five rules that came from I've recently been in escrow to transactions worth over 1.2 million dollars a foundation fixer-upper that I didn't know was a foundation fixer-upper for $615,000 and an auction that was in escrow for $619,000 both of these properties cosmetically looked like excellent Steel's and if I only had to do my rule number 2 money pit scale cosmetic level style work these would have both been extremely profitable deals they would have probably both created over a hundred twenty-five to 150 thousand dollars of profit unfortunately the money pit scale ended up becoming a massive problem with both of these properties because well both of the minute of being foundation fixer-uppers and despite substantial price reductions on both of the deals I decided it's not worth disobeying the other rules we've talked about in this video and I'm saying goodbye to these and I'm moving on to following these rules specifically because I broke a lot of the rules not only did I break the money pit rule but I also broke the boredom rule and on one of them I broke the tract rule these are a lot of mistakes and now I'm summing them up by realizing my mistakes realizing the money that I spent on inspections that I shouldn't have for properties that didn't qualify with these rules anyway now by making this video at the very least I hope to convince myself to always follow these 5 rules thanks so muc]