BUYING YOUR FIRST INVESTMENT PROPERTY (Introduction to Investing in Real Estate!)

welcome back to the VIP financial edy channel where we help you go further faster financially and we do that by helping you understand the ins and outs of how to bank and borrow properly and for today's episode which is how to buy your very first investment property we've got mr. Joseph Massey back in the studio with us and we're going to be talking today about how you guys can get started if you've ever looked at real estate as a potential solution for yourself of a way that start kind of diversifying your revenue start creating those income streams that are more residual perceived to be more passive than real estate might be a great option for you certainly Joe and I have both had a lot of luck with real estate investing over the years he and I have actually both been involved in the real estate investing world now for about the same amount of time almost two decades now is that is that really Jesus and we both been prominent here in the Denver Metro area known each other a long long time have a lot of the same mutual connections and Joe is actually the in-house mortgage professional for the your castle real estate community which is one of the fastest-growing real estate agencies here in the Denver area they just acquired another 200 in reality it's 200 something agents unbelievable they're there at something like 6 or 650 agents now big company but Charles Roberts has been featured here on this channel a number of times make sure you check out the real estate investing 101 training with both Charles and Josh Hansen where we walk through some of the subjects that joseph has been brought in to teach with us a number of times – which is how do you build your portfolio and then own these pieces of real estate completely free and clear and we do that through kind of a collective group of techniques one of which involves the debt weapon utilization process so today we want to kind of dovetail onto that if you if you're not quite that far along if you're looking at it and saying you know it does sound really amazing to have 10 houses free and clear yeah but I haven't even started with one yet yep what do we need to do to get you past that first one so that we can get you to the 2nd 3rd 4th all the way up to 10 or 20 or 50 some of our close friends one of my closest in fact Christian has followed this process now on somewhere around 80 properties 80 single families around the Denver metro area makes hundreds of thousands and gross monthly rents so there is a lot of potential when you start understand how all this comes together so I want to try to connect some of these dots for those of you that are just getting started so what would you say is one of the first key steps to getting in your first investment property sure so you know I put a class together about a year ago on exactly this everyone that I meet talks about I want to have ten properties I want to have all this passive real estate I could say great how many properties do you have right now well none right now I'm just getting started and so after hearing that for several years it's like you know I do need to put together a class on how to buy that first property and so that the very first thing that I want to talk about is think about what you want to buy do you want to buy a single-family home do you want to buy a condo a townhome a huge apartment building do you want to buy a two to four unit property what do you want to buy and I'm gonna encourage you start small for your very first property don't try and buy a 10 unit apartment complex that's gonna cost a lot of money it's gonna take a lot of time it's gonna be really hard to do buy something really easy for your first one Maya condo you don't have to worry about the exterior maintenance you'd have to worry about the roof you don't have to worry about the plumbing buy something really easy condo townhome maybe you're more of a handy person you're good with your hands good with rehabbing property ok maybe buy something that needs a little bit of light fix up but don't start your very first property buying something that it has structural damage and mold and meth and you've got to go in there and tear half of the thing apart just to get it rent ready buy something easy for your first one don't try and you know swing for the fences on your very first deal there's always gonna be plenty of busted homes that you can buy for profit later buy one now to get started I love that yeah keep it simple I think simplicity is such a huge element to wealth creation spend my experience anytime we try and incorporate unnecessary moving pieces it doesn't necessarily correlate to a significant jump in reward so the whole risk versus reward relationship should be more closely analyzed I think that you can get into a fairly stable amount of consistent reward or income without taking all of those unnecessary risks and keep that risk percentage really really low yeah so a good piece of advice what would be another piece of advice that you would offer getting into your first piece of real estate next thing I would tell you is think about how much money you want to invest alright do you have a thousand dollars do you have five thousand you have to point hundred thousand all right any of those numbers you can use to get started maybe I've got $5,000 and then we're gonna use some debt weapons to maybe take some advances on a home equity line of credit that I've got on my house to buy my first investment property or maybe I have a life insurance policy that I can borrow against for my down payment or you know what maybe I've got a family member that wants to partner and go in on this with me I've got the time to invest in finding the property finding the right deal and managing the property and my uncle has the money to invest we're gonna go both go on the loan and beyond the title together think creatively about how much money you want to invest but also think about how much risk you're willing to take the more of your own money you put down the more risky that investment is for you the less of your own money you put down the less risky that investment is for you however you might not make as much money if you're not putting your own money down so what's your take on risk versus reward well you know one thing that I've always attempted to do is invest with little or none of our own money I've always been fascinated by the infinite ROI concept and that works out pretty well for us but it does require additional servicing I mean if you're Betar owing money to use for your source of investing you've got to pay back what you borrowed but I agree with you I think probably the best piece of advice that I could offer you know having had thousands of calls like you have is everybody's different you know and so probably one of the best things you can do is is get in and have one-on-one time with people that know the right questions to be asking to help you determine the roadmap that's best for you and so I would just encourage you to check out the description below and there's gonna be a link in there an email contact us at VIP financial education com go ahead and send us an email and we'll I'll personally make a warm introduction to Joe and you know you could spend some time with him or he can refer you to somebody in your state that's an expert that we feel confident can answer these questions for you or help you answer these questions correctly for yourself and I think that's the biggest thing when Joe's giving you these hypotheticals and saying well maybe you've got this uncle and maybe you've got this life insurance policy that's all it is those are hypotheticals that who knows – you know very small select percentage of people listening it's probably not you so what is best for you is the question that has to be thoroughly investigated and that's why conversations with people like Joe conversations with people like us are imperative to your success so I would send an email to us so that we can introduce you to Joe and then also get you a one free coaching session that we promised you here through VIP if you haven't done that yet already and that link will be in the description below as well so I guess that's how I would answer the question the the age or at least popular answer which is it depends right yep nobody likes that answer but it really applies in this case I teach probably 10 different investment property courses that range from one hour to four hour class and in all of them at the end of the class I get the same feedback well I think really it just comes back to exactly what I want to do and like that's exactly right my whole job is to give you all the options and maybe there's five options for you or a hundred options for you my job is to give you all the options the pros and cons of each and then you pick the one that makes the most sense for you and you know it's really interesting maybe option a works for this property and on the next property option C is the right one under the next property maybe it's option F and the next property maybe it's back to option a it all depends on the investor the particular property the pros and cons of that property the timing in the market there's a lot of different variables and anybody that tells you this is the only way you should have s this is the only way you should do it it should always be done like this I've got a real problem with that it shows a lack of experience because it's impossible there are too many things outside of your control that you have to factor in each and every deal and so you may ask yourself how do friends of ours like Christian get to an 80 property portfolio of long term buy and hold when that far surpasses what the traditional investor sees as being possible because my typical traditional conventional Freddie Mac Fannie Mae lending guidelines restrict investors to a specific maximum number of financed properties so if that were true then these people would not be able to purchase wouldn't be able to be on ten properties so somebody that has gotten to 60 70 80 houses has had to think out of the box and structure each deal completely different from one to the next so build a great team yeah what would be another key piece of advice that you would give a first-time it's exactly what you just said build a great team who's gonna manage this property all right we're buying this rental property we figured out we want a condo or single-family home we've figured out how we're gonna pay for it we're gonna get a tenant who's gonna manage it am I gonna manage it should be paid a management fee if I am the owner should I also take some portion for managing it am I gonna hire a property manager how much do I pay that property manager are they good what do they do how much authority do they have do they have authority that they have to call me every time they spend five dollars or can they spend up to $250 and they don't have to call me who's who's screening the tenant to have a background tenant screening service do I have a tenant placement service that's doing it for me am i finding the tenants but then they screen them there's a million different questions right it comes back to what you said have a great team think about how you're gonna do it who's gonna management manage it and how much time are you gonna put it do I have enough time to screen tenants do I have enough time to meet with people and say boy this person seems like a legit person and I think they're gonna you know pay the bills or boy I've got a no smoking policy and I'm sorry I noticed you were smoking in the car when you came up are you gonna be comfortable turning that person away there's a lot of things that folks don't realize until they get started renting those properties that boy it might be easier to have a manager more you know what why I really hate my manager I don't feel like I get my money's worth maybe you should do it yourself what's it work for you what's your option I manage my own do you manage yours I do not manage my own I have a property manager and I don't do anything with them except collect a check a lot of guys lots and lots of ways to do this one way that you might want to look into a resource of have you ever researched the the Jeffrey Taylor stuff to mr. landlord no we're not one way with the tone so Jeffrey Taylor is he calls himself mr. landlord I've seen him on the speaking circuit now for boy he was coming into the Colorado Association real estate investor community back 15 17 years ago really terrific educator and he's got this amazing tenant empowerment process and you may want to look into that as well great resource but that would be how I would recommend going about almost anything in life is to try your best to systemize as you know so the more processes and systems that you can plug into the more effective you're going to be the more you're going to be able to optimize yourself the fewer expenses you'll have because you'll avoid the mistakes so guys I again try and plug in with a great team I cannot reinforce I'll reinvent the wheel there's experts out there that have done it before read the books read their manuals call them email them they'll help you the biggest mistake I ever made was on the very first multi-unit property I ever bought and this was a property that I chose not to include my team with certainly I had my mortgage professional helping me get access to the mortgage but I did not choose to include the key coaches and mentors that I have been working with for years and years in the decision and man did I regret it that property ended up costing about $180,000 unnecessarily so you cannot see everything for yourself that's right stop trying to convince yourself that you'd know it all the more you can admit up front that you know very little the more success you can have over time and the more successful you become over time it seems the easier and easier it is to begin to recognize the fact that you know very little and I find that to be a little ironic but here I am the most successful I've ever been professionally arguably the most knowledgeable I've ever been in my life and I still have realized lately more than ever before that I'm clueless and this is why we have to bring in people that know more than us in the areas where were the weakest so that's another point that we recently talked about on a video that we dropped regarding how to shark tank your business so make sure you check out that video it's a it's a good one so what would you say is the next thing that people are going to need to do to get themselves into a position can I comment on that last oh that's that's why companies have board of directors right because it's an outside point of view saying hey Matt you're the CEO of this company what are you up to why do we have this why do we have that have somebody this is kind of a side note have somebody or two or three people that you can talk to about your real-estate investments your spouse of course I have somebody outside maybe a family member maybe somebody that's done it before maybe your coach over at VIP financial maybe your mortgage lender people call me all the time and say hey Joe I'm buying this property you know I know you're doing the loan but can you take your lending hat off for a minute and tell me what you think of this and what would you do right exactly what would you do and you know what sometimes my answer is completely different than what they said because I say you know what I wouldn't manage it I put more money down and you know I would buy down the rate a lot of times they said well Joe when I manage my property myself I'm like I know but the question was what would I do right and so have that outside party that you can talk to one two three people know maybe you're gonna do what they say maybe you're not but you want to get that outside perspective because I think you're right as we get older and more mature we realize you know what sometimes I'm clueless about this and those outside parties are gonna see things that you can't see you're too close to the transaction that sometimes you miss it and that emotional attachment as well I mean you're gonna care you're gonna care about the properties you're buying and frankly your coaches and mentors are a lot more impartial than you are and I think that's key I would also argue one one element here you know at the risk of sounding offensive to your entire industry it's impossible for a mortgage professional to feel entirely impartial because frankly they're not neither is your real estate professionals right either is your financial planner guys understand that certain people have that certain skin in the game interest and what I really really like about people like Joe and working with people that have a long long history of reputable success especially with massive volume because Joe you know you're somewhere in the 250 265 transaction per year range right now yeah guys very few very few mortgage professionals hit these types of numbers so somebody like Joe doesn't necessarily have the financial dependency urgency I'll pay my bills if you close your transaction with me or not that's exactly what you need to find you need to find somebody that there tomorrow has absolutely no dependency on you closing on a loan with them and my experience in the mortgage professional world is that very few can say that most mortgage professionals count on each and every single transaction in the month in order to make sure that things are going smoothly and that the numbers are being met and that frankly there's food on their plates not just you know exceeding quotas and financial objectives I'm talking about paying the bills so work with somebody that has a long history of really really successful reputation that is reputable in many different communities and that's what I can say about got here he knows all the same people we know been in the same real estate investment associations for years and years and years you got to work with somebody who cares about their reputation absolutely so go ahead well that last point that I want to cover about buying your first properties you've got to know the market now I know we're talking to a national audience but I'm gonna talk just a moment about things here in Denver so what we're seeing here in Denver is properties are skyrocketing in price and we're finding it very difficult to find properties that cash flow to a six seven or eight percent cap rate so I've seen a lot of investors going outside the market they're saying you know what there's no deals in Denver anymore I'm gonna go look in Omaha okay what you find in Omaha I found a property that has a 20% cap rate I'm making 20% year-over-year I'm buying it for $100,000 renting it out for 15 16 18 hundred month I'm like that's terrific and then we go back and we look at what's the long-term appreciation of that property all right it's $100,000 today guess what it was ten years ago ninety seven thousand dollars yes so it was ten years prior to that ninety-three thousand dollars so yes you have a great cash flow on a property to pay very much for but that property is not appreciating are you okay with that and that comes back to what we talked about in a separate video is your exit strategy are you planning to sell this property for a huge profit at some point in the future if no maybe that's a good market if yes I want to sell it I want to make $200,000 when I sell that property maybe Omaha is not the right place maybe you need to look at a property a place like Denver that has a little bit lower cash flow but more appreciation upside I'm not saying one is better or worse than the other what I am saying and you need to understand your market you need to understand you're investing goals and if I've got to go to Omaha to manage a property that's a heck of a lot further drive than if I've got to go from Denver to Aurora and so think about that too even though you might have a property manager in Omaha what happens if the property manager goes on the wagon or off the wagon whichever ones the bad and I have to go to Omaha to manage the property that's gonna be trouble right I personally advocate for investing in your market and understanding your market because if something happens it's right in your backyard not for everybody but just think about it and think what makes sense for you and your goals and I guess if I was speaking from a personal standpoint you know I've always been a cash flow buyer rather than a speculated buyer and again I think that's completely subjective yeah and and the only reason I think I've been swayed to that side of my investing strategies is because of the volatility that we inevitably are going to face economically no matter when this video is on your screen you could be watching this video two years after the date we publish it and this is still completely relevant because in the next downturn you know a property that you bought for a hundred thousand dollars that suddenly declines to fifty thousand dollars you know well what happens if you bought one in a high speculated appreciation area that drops really suddenly as well it may take years and years for that to come back and then go back into that high appreciation above what your original purchase price was whereby you could have been earning a lot more cash flow over that short term period my personal take by for cash flow and you're always safe by for speculative depreciation there's gonna be a bit of a gamble to that but I agree who knows so that's a really great point guys we're gonna go ahead and include an investment property analysis worksheet for you courtesy mr. Joseph Massey guys and this is one of the single best gifts that we've ever given away on this channel along with the cash flow cruncher worksheet which you'll get when you schedule your one free complimentary free complement a little redundant their coaching session with VIP we do offer one to every viewer here who has at least five hundred dollars per month on average in leftover cash flow we're also going to be happy to introduce you to Joe if you guys are in the market for a new property and you need a great mortgage professional Joe has connections across the country if you're here in Colorado you'll be able to work with him directly so this is a perk guys for you guys we'd love you very very much thank you so so much for being a part of this cash flowing community check out the description below for those links also if you have not yet subscribed to the channel consider doing so as well make sure you turn on the bail notifications that will alert you every time that we you know that we drop another video Joe and I are going to be sharing a lot of really cool topics in the coming weeks months and even years so be on the lookout for him he is a core piece to our family here and certainly make sure you throw a thumbs-up down there to if you like this type of content you want us to continue to share with you ways of getting started in real estate investing ways if you're already in real estate investing to succeed at an even higher level ways to avoid tens or even hundreds of thousands of dollars worth of unnecessary banking expenses interest costs how to own real estate completely free and clear guys how would you like to have a 10-10 property portfolio completely free and clear most people that I've seen in the 15 years of working with people one on one could easily afford their ideal lifestyle with that type of a portfolio so and you know how you get to 10 I start with one start with one that's right so we started a company back 2008 art Vasquez and I arts well-known as one of the most active real estate wholesalers here in Colorado at one point did somewhere around four or five hundred transactions in a three or four year period of time absolute animal and we started this process called the power of plus one which is just worry about one next property if all you did was bought one property more than what you have right now and you're worried about fast-tracking the payoff of that using the techniques that we teach on this channel and you owned it along with your primary residence with absolutely no debt at all what would that do to change your financial future and the math behind that conversation is quite ordinary I love the story that aren't you to tell about his parents Oh parents retired he thought man if they would have just bought one property that they would have rented out and had cash flowing and paid off how much of an impact would that have made to their retirement and then I think about my parents and other people's parents that I know and I'm like I need to start buying property even if it's just one so that I don't fall into that same trap and it goes beyond your lifetime so don't think of it selfishly enough to where you think it's only there to impact you up until the day you passed guys this is legacy this is stuff you can leave behind to your offspring or to your other loved ones to your spouse this this is a big deal and and we're in it for the long run I mean I'm gonna start getting hold shirts printed up to hold on for dear life because guys I ride this stuff out you want you want to see somebody that goes down with the cryptocurrency ship you keep your eyes on this channel as I'm gonna ride this thing to the top possibly all the way back down but we want to see what's what's possible where these wheels are what has legs real estate always has legs guys just look at history and it'll tell the story but we really appreciate you being here on this chain on this video and until we see on the next one make it a great day today and take care thanks Matt thanks Joe

28 Replies to “BUYING YOUR FIRST INVESTMENT PROPERTY (Introduction to Investing in Real Estate!)”

  1. RE: Omaha. By observing the migratory patterns of Hipsters I'm betting that Omaha is going to see a boom in property values relatively soon.

    I've seen evidence of chain migration from the Atlanta Hipsters to Omaha. They're being drawn in by low rent and the new frontier of being someplace before it's cool. If the current pattern holds then it's just a matter of time before they transform the city into a "Hip" destination, attract an emerging market with rich Yuppie employees, then complain about the rent when they can no longer afford to live there and are forced to migrate again. I predict that the pattern is speeding up and won't take as long as previous cycles thanks to social media and an upcoming economic downturn. Keep an eye on the San Francisco Bay Area and Portland for Hipster migration to Omaha to support my theory. I'm seeing scouts from those areas exploring different markets but no chain migration yet.

  2. Would you guys invest in low income housing property. It would be my first house and I would barely meet the qualifications. Then I would like to rent it out after about a year or so?

  3. On your investment properly especially rentals. Fo you yourself manage them has 100% hands on dealing with renters, repairs ect.. or part time, or have a management company take care of those matters? All that can and could be real headache.

  4. There are different lending requirements for buying an Investment property vs. purchasing a second home, right? I spoke to my lender (from my original property) who said I'd need a 3% Downpayment on a Conventional loan for a second home and use 75% of the gross rental income in order to offset the mortgage or a portion of the mortgage payment. but the investment property requires a minimum of 15% down payment, which is not necessary to your advantage. It would be better, if we put 20% to 25% down payment in order to obtain the best terms possible.  so this is where you use other people's money right? I think it'd be a smarter move for us who have a property already, to upgrade into a new home to live in and use the existing property as PROGRESSIVE income😉 my question is, what does your financial health have to look like in order to get a second home? Ideally be debt free right? In Vegas, the opportunities to buy are great, but I feel like I need another year to pay off CC debt, tackle student loans, try to bring down the principal on my existing mortgage, and save $17k for a 3% Downpayment. I feel like waiting a whole year is a lost opportunity! A year ago I bought my house for $218k, the house down the street from me (which doesn't have as much square footage or upgrades I did to mine) sold for $253k! I don't want to miss out on the appreciation. But…. I have a goal to get out of CC debt and payoff my car. All my extra money is going towards that and I probably should be saving for a Downpayment too….help!

  5. Matt is part of a small group of people that have reached the point of financial success where true satisfaction comes by helping others. He is the real deal.

    Matt, keep em comin.

    Love ya

  6. Why would you want a free and clear property? That puts a bulls eye on your back. Equity only insures the lender and ties up money… Why not use the original mortgage.. Interest only… You never own… Only control… Whats your view

  7. Awesome stuff, I 100% agree with having a good property manager. In a rental property, I generally choose cash flow over appreciation. Only time I consider appreciation is buying my home. I wrote a blog about how to buy a rental property. check it out!

  8. Hello Guys, great video very informative. Every day I learn something new from you guys, I am currently studying and increasing my cash flow so I can be in good shape for our first session in November.
    I have learned from you about how to monitoring my finances (Mint), how to make my check paid to work for me (HELOCS and LOC), how to manage my credit score (Credit cards) and How to get out of debt and banking on a better way with the IBC. Although I will wait to get the session with you guys so I can do everything in the best way possible.
    Thanks a lot, guys really change my way to see my finances.
    LOl, funny story, all my coworkers look at me at lunch when I told about all this news ways to baking, like "What in world is this guy talking about".

    y the way the excell sheet is great

  9. Great job guys, the excell sheet is freaking awesome.
    I learn with you guys how to manage my money and no buy more liabilities until I can afford them, your help with how to bank and how to follow my spends (Mint), help me every single day. Look forward to having a session with you guys. I am currently working on getting my 800 USD (500 cash flow + 300 VIP membership) cash flow and 750 credit score.

  10. My New Year's Resolution is to buy my first investment property in 2018. Great video – love the channel!

  11. Hi Matt. I've scheduled a phone coach, but I'm from the UK. Could you still give me advice as rules and procedures may be different here?

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