After selling a couple homes in 2020, I'm anticipating a housing crisis in order to buy inexpensively. As a backup plan, I've been thinking about purchasing stocks. What recommendations do you have for the best time to buy? On the one hand, I keep reading and seeing trader earnings of over $500k each week. On the other side, I keep hearing that the market is out of control and experiencing a dead cat bounce. Why does this happen?
Most people are unable to handle a fall since they are accustomed to bull markets, but if you know where to look and how to get around, you can profit handsomely. It depends on your entry and exit strategy.
The fact that the US stock market had been on its longest bull run ever makes the widespread worry and enthusiasm understandable given that we are not used to such unstable markets. As you pointed out, it wasn't tough for me to earn over $780k in the last 10 months, so there are chances if you know where to go. I hired a portfolio advisor since I was aware that I needed a solid and trusted plan to survive these trying times.
I tried looking into new strategies to profit in the current market because my portfolio has been in the dumps for the entire year, but everything I tried just seemed to miss the point. Please let us know who your asset manager is by name.
Rather than to have dozens of properties with a lot of overhead, tenant problems, differrent cities, etc. I have one property paid off in full which functions like another retirement payment to add to my other retirement income. Easy to track and many less headaches.
What's the return on your paid-off property? What makes you keep this property and manage it, compared to selling the house, and investing it in the stock market? Thank you!
I have 3 properties rented out and I am already retired. I am overpaying the mortgage every month. Freedom of being controlled by a Job is the best feeling in the world .
@John Griffith My 3 properties are brand new hence I don't think I will require any plumbing soon. However if I do I will call a plumber. Also I don't manage my properties I leave for an agency to do that Job. If the tenants don't pay I have insurance to pay all costs while I kick them out. And yes freedom the best feeling in the world.
@John Griffith I am sorry to hear all that it must have been heartbreaking for you. Is not easy to deal with these kind of stuff. Wish you better times ahead , peace 🤗
I know that feeling, man. I love it! Do what you want to, when you want to and if you want to. I don't exchange that feeling for nothing, they call it freedom.
My cost of living is so low, my house is paid off. I can live off my 2 rental incomes of 3,500 a month easily, 1st rental is about to be paid off, then the 2nd will come quickly after. Plus I'm single with no kids.
1 MAN CAN MANGE 35 RENTAL PROPERTIES BY HIMSELF AND TAKE A 2 HOUR LUNCH AND MAKE 10000.00 PER MONTH!!!!!!!!!!!I DONT WORK WEEK ENDS !!!!!!!!!!! THAT IS THE SABBETH!!!!!!!!!!!!JESUS IS LORD!!!!!!!!!!!!!!!!
Love this video, I have 4 rentals in CA and 12 rentals on Oklahoma, the gross rents are $18,000 per month; but even with that I have at least 4 evictions and people who don’t pay rent every month, in reality I probably make $6,000 per month that I can spend on my life, what can I do to improve my situation? I have about $1m in equity in CA and about $680,000 in equity in OK
You need to learn property management. Finding the right company is tough until you learn yourself. I have a few more units than you and have only had one eviction since 2008.
If you’re going to do rentals without a mortgage, it would be better to just invest in the stock market… the roi on investment properties come from using leverage. A return on a property at 100 K with 5% appreciation outright will give you a 5% return. On that same property with 20 K into it and a 5% appreciation will give you a 25% roi. If I had to deal with real estate and all the headaches of it and get less of a return in the stock market... oh man. Good videos thanks for info.
Thanks for the comment J L. The beautiful thing about investing is that everyone has their own unique approach and willingness to invest in something (or not). the only thing I'd add to your analysis is that free-and-clear rentals don't just produce appreciation - they also have a return from the income. For example, a $100k purchase could produce a 7% yield/return from the rent after all expenses. Then if you get a 3-5% appreciation, that's a 10-12% return. Right in line or perhaps a little better than long-term stock market return in that case. And with real estate in retirement, you can actually live off that 7% income return, whereas stocks at 2% dividend rates (or less in many cases) force you to sell your stock in order to live off it. This is problematic in a falling price market. I definitely like leverage, especially early on when I'm trying to grow a portfolio. And it's also a nice hedge when done safely if you can borrow money at 3% and use the income from the property to more than pay it off. But leverage only makes an already good deal better (or a bad deal worse) - it doesn't itself make it good or bad. So, investing in real estate with no leverage is perfectly reasonable in my opinion. Lower return but also lower risk.
@@CoachChadCarson I get what you mean by risk associating with getting “foreclosed” But without leverage you don’t get the tax breaks, and sometimes it’s easier to be sued when you have a property completely paid off. On top of that you’re not getting Inflation Debt destruction. Also, As you know, It is tax free to to extract equity using refinances. Personally, I would rather have the cash liquid than in equity. But I see your points as well. But nowadays with our interest rates the way they are and with the amount of money printed, not using that seems to be a major disadvantage. And leverage is one of the major reasons why real estate is the best investment imo. Again, I’d rather be in stocks, and not have all the headaches without it.
I think I’ll need a min of 9 rental properties. Now I’m wondering if at some point it would make sense to trade rental houses for a 8 or 16 unit place.
Yes! Currently have 5 on 15 year notes that we intend to snowball in the next five years. We need to get another $1000 a month in cash flow and we will have enough to meet our monthly expense needs. Excellent video Coach!
6 rental properties (in NYC?), each condo costing 150k and making 1500 per month (1% rule) which collectively is 108k per year without tax and expenses. It'll take me 10 years after college ends. Can someone tell me if this is reasonable? I'll be a software developer in Manhattan, so I'm assuming I'll start with 70k a year. After taxes, it's a little above 50k. If I can save enough, I should have 30k a year left. But I'll also work part-time and I'm already in the stock market, so I can save 50k a year in total. Once I buy rental properties, all the income will go back to buying more rental properties. That's how I think it'll take 10-11 years.
@@JT0007 there are pluses and minuses. Trading might get you more cash flow, but having all your eggs in one basket may make you less flexible (like you couldn't sell off 1 or 2 properties at a time). Thanks for sharing! I love the goal.
One immediate goal to financial freedom is to pay off your personal mortgage. Use the banks money for smart debt on your properties but scale down your personal debt to as little as possible.
Great video Chad! Most of our 16 units still have debt and we are about half way to financial independence. If we paid them all off I believe we would roughly hit our number but we are looking to grow our unit count before paying anymore off. Thanks for the information!
Coach, your videos are very informative and easy to follow!! Is there a certain sequence you recommend that we watch your videos for us beginners? Thank you!!!
Thank you for the feedback, Paul! As a beginner I recommend starting with this playlist: ru-vid.com/group/PL5F-I4oW-y2GSa4B55DgpGOXFwhqMcCAm . Let me know what you think or if you have questions in the comments.
Coach, thank you for the time and effort you took to put together this video. Regarding the two examples that you provided, I recognize that your goal was to do an apples to apples comparison showing two different scenarios for achieving an annual income of $84,000. I think a third example also would’ve been useful. I would like to have seen you do an apples to apples comparison between 10 houses purchased free and clear and 10 houses purchased with 75% debt to show the difference in annual income that the two different strategies would yield. Using your $450 per month mortgage per house, I calculate that the real estate investor buying 10 houses with debt would derive only $30,000 per year in income versus $84,000 per year in income when purchased without debt. To be fair, such an investor would only need to come up with $300,000 as opposed to $1.2 million, but nevertheless, I think this is also an apples to apples comparison that provides your viewers with useful information.
Thank you for the feedback. It's a very good point and will give me some ideas for future videos. Would you say that more videos that give case studies for retirement would be well received?
@@CoachChadCarson They would absolutely be well received by me since relying on rental property income is a full 50% of my retirement strategy. The equation you provided in this video helped to make much more concrete the general thoughts that had been floating around in my head. I had simply been looking at what my monthly expenses have been with my goal being to keep buying rental properties until I derived enough monthly income from the rental properties to replace that monthly income. The equation you provided has helped me to calculate an actual goal rather than simply employing the trial and error approach I had been using up until now. If you have more information relating to retirement, I’m sure I would benefit from that as well. And case studies would help drive home the teachings.
@@MrSethmo13 Thanks for the feedback. I'll plan to do more videos soon. I also wrote a book that has a lot of case studies and an in-depth strategy for retiring with rentals. www.coachcarson.com/retirementbook Hope that's helpful!
Man Chad , at 613 time stamp you ask if anyone needs even more clarification or has questions, I thought first thing, With total confidence,. No. You will answer all my questions or concerns by the the end of this video and cover everything I'm not sure about, as you always do . Thanks again. I am getting excited now to put this into action. Thanks again. Had to edit this after watching whole video and, ummm , my answer is still no, think you covered it. i mean how can that not make sense ? Oh maybe one question , I live in Canada, will your strategies work here too ? Nvm I answered it myself. Of course it will. Your awesome bro.
Thank you for watching and commenting! Regarding investing in Canada, the core principles still work. The financing and prices are definitely different though, depending on where you live. So you may have to save more cash and adjust your strategy a bit.
It's a good question, Robert. It's definitely not easy to get 10 free and clear houses overnight. It takes some time, disciplined saving, and patience. I talk about one particular strategy to do this - the rental debt snowball - in this video: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-_hUIoK6Pz7I.html
If you don’t need the income now but want it for retirement, you could have your Roth IRA own the rental, and when you are 59 1/2 years of age then take rent payments out to cover your income tax-free or sell it and avoid the capital gains tax, assuming in both cases there is no leverage. Or do the same but with an HSA and use the income to cover qualified medical expenses now.
Do you think it would be best to build new homes to rent out? You can build a 300k home and the value would be more around 400k. Less chance of unexpected maintenance bc everything is new. Just looking for other peoles thoughts on this
Im thinking of selling our house and buying a storage facility just to bump up our income. I think we just need two storage facilities and we are retired from 9-5.
I have a 9 unit building and It's paid off. Yearly net income is $46k. I have a silent partner who wants to cash out. There is roughly $700k equity. This is a rent control property with low dollar rents. What's your thought on this.
Good evening coach I’ve been watching your videos for about two years now I’ve been a student since like 2015 so I got my FHA I have a realtor I have a lender he ran my numbers and he said I can borrow between 100,000 to 200,000 if you can give me any advice what would it be moving forward I really will appreciate it oh and by the way yes this is my first time ever looking into getting a multi family property
This video should be sent to politicians, because this is why the housing market is the way it is. People using housing as a way to get rich and retire. It's absurde.
Should be cashflowing an average of 5750 per month after I stabilize the last purchases next month with a total of 28 doors in suburbs of Milwaukee WI. That should be enough to live off of but semi retiring at 25 would be boring!
Colin Merrill may I ask how did you get started? Also what property type was your first (multi family sfh etc). Congratulations! I’m hoping to start very soon
@@deja7832 Hey Deja, it was a run down foreclosed 4 family in a blue collar neighborhood. Purchased for 90k boarded up and had friends help me fix it up for beer/pizza. Paying one of them back now by helping them with their first house.. rents ended up being around 3100 minus 900 for the one we lived in. I brrr'd that to another couple deals, did some wholetaling, and plenty of flips, and bought rentals as they came available for a good price in blue collar areas. Good luck and have fun! Make sure you make money on the buy
Colin Merrill wow this is awesome very inspiring. I just found me a partner who is interested in doing multiple flips. I’m extremely nervous and I don’t want to be the reason for them losing money. Sooooo now I’m like omg what house will be make the most for us etc lol.
I love this. I'm coming into an inheritance in one to two years, I'd love to invest this in real estate and care for all details resulting in a 6% - 10% annual income. My credit score should be above 700, I have 0 liabilities, and no people or debts to consider, and I will have cash, would love to invest, work my investment, and reap the rewards to include negative.. Do you ever work directly with investors ( including first time homeowner/owner occupied...) to share progress in your pod cast.?
I loved your bio coach. What an amazing and gratifying life you have lived for such a young man. Congratulations 🎈🎊 you’re family must be very proud of you. I’m a small time landlord with 6 doors. I am also a new subscriber to you vlog now. Can you do a vlog on your experience on acquiring rental properties via subject to existing financing. Thanks
Thanks for the suggestion. I actually don't do a lot of subject-to investing now, but I do have a video explaining the approach I like: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-ydN34A1VjBg.html&feature=emb_title
all the operating expenses - management, maintenance, taxes, insurance, vacancy, misc. But it varies for every property. Some, I have a lot higher expenses than this. A few others are less.
@@CoachChadCarson Thank you. You mentioned at 10:30, the $8400 does not include taxes; would those be income taxes, versus property taxes? Also, noticed you gave a list of expenses on your video :) sorry, I missed that the first time; thanks again!
Good question. Many new investors use owner occupant loans with 5% or 10% down. They either buy a 2, 3, or 4 unit so they can rent other units. Or they buy a simple house that will work as a rental later when they move up to another home. This is a great way to get started and buy your first few rentals
Thank you so much for all the information you put out. You earned the title of coach. Do you have a video where you further go in detail on all the taxation from the rentals and the income. I seen a few of your videos but I haven't found one about that. Also I'm 50 years old. Hope to retire from my job at 65. Do you think I still have time to build some wealth. I have no debt, home is paid off and will be getting a pension when I retire. Hope you can give me your honest feedback.
Thanks for asking, Kevin. I'm not doing any consulting right now. I plan to start back with my online course/community later this year, and I do a little 1-1 coaching for students of the course. If you're on my free newsletter (coachcarson.com/newsletter) I can let you know when that starts.
You could probably easily get 3-4 as long as your debt to income ratio and cash reserves are also good. From there 10 seems to be another cutoff for traditional mortgages. You have to switch to private or commercial sources.
Hi Coach, thank you for this informative video, especially for a beginner like me. What do you advise for someone like me who's new in the realty state? I bought a new house and would love to turn this first house into my investment in the future by two or five years.
Thanks for watching! I made this video for people in your situation who are considering renting their home: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-xGzEbAZpWi0.html
No! Not too late. How you invest will depend on other factors, like your time, interest in real estate, savings, etc. But I have definitely worked with people who started in their 60s successfully.
thank you so much Willie! I've taken a little break from my normal RU-vid videos this past month, but the podcast is still coming out on Mondays. And I've got plans for more videos in 2023!
@@CoachChadCarson Just saying that having payed off properties by someone like me just trying to get their first rental is so far out there. I'm 42 and just going to take one house at a time while attempting to buy as fast as I can to get to that magical cash flow number that gets me free. I'm not a millionaire and don't no millionaires who just going to team with me up to pay cash for any of properties 99% of people are like me. We all going to draw from HELOC or 401ks to get our first deal for that first (30year)downpayment plus repairs ,rent out, refinance and if deal was good hope to have at least $200 cash flow. Then go to next one. When or how is someone like me making just decent money suppose to be thinking about paying off any of those properties ..It's just not going to happen unless I get some fix and flips, some cash here and there and continue to throw at them, but for the most part those are just buy and holds for at least 20+ years ..I'm just trying to think realistically .
I appreciate keeping it real. And I am on same page. Just get those first properties bought however you can. I did the same because I had very little money. But once you get close to your target number of leveraged properties (or perhaps more than you need) then you can sell a few properties and plow back those profits into debt pay off. And/or you can use excess cash flow from rentals and your job to do the debt snowball. This may be 10 years or more after you start, so it takes time to build up. But low risk income in 10-15 years (some of which is debt free) is definitely possible. And having fewer properties with a safer debt structure is very resilient for long run so that you can live off it during any economic environment.
Seems to me you have it backwards. One can ask for any expected return they want, but ultimately the market determines the return. One has to start with the house price and estimated rents. Fairly hard numbers. For whatever area you are thinking of investing in. Then calculate R. Then decide if the calculated R is worth the hassle managing rental properties. But starting with R is kinda a pipe dream. I want R of 20%, good luck with that.
Actually, the price you pay isn't set. You always have a say on that. You can either pay someone's asking price or walk away. That's what happens every day in the investing market. The ability to negotiate custom real estate terms is one of the beautiful parts of this asset class because you only have to buy properties that meet your goals. So yes, net rents are a constant. But $7,000 net operating income on a $100,000 purchase is 7% value for r. While $7,000 net operating income on a $140,000 purchase is 5% value for r. If your expected return is 7% you won't buy the $140,000 property. You'll offer something less or walk away and find another deal.
I don't see how you come up with an accurate "r" number. How do I figure that out? Do I factor in depreciation to that calculation? For example, I have a rental home with a rent of $2000/mo and the mortgage (PITI) is $1000/mo. So i'm cash-flowing $1k/mo (before any repairs or vacancy). What would be my annual return ("r")? The house was purchased 15 years ago for 310k, and is now worth 420k (15 years into the mortgage). Mortgage Balance 117k.
Hey Mark. There are a couple of ways to think about r - one a property by property basis and for your entire portfolio when estimating your wealth needed to retire. In your case with this property, you have $303,000 of equity/wealth ($420,000 - $117,0000) and $12,000/year of income. So, r = I / W = $12,000 / $303,000 = 3.96%. But you can also think about r as a goal of what you think is reasonable for your entire retirement portfolio. For example, I used 6% in the video at one point. But as you can see, sometimes individual properties have an r that's lower, particularly when the price increases and debt pays down like you have done. In the future if you want to maximize your income for retirement, you may want to sell this property (perhaps with a 1031 exchange) and use your equity to buy another property with a higher income return. Does that make sense? I hope I addressed your question.
@@CoachChadCarson Thanks Coach for the quick reply... I did my entire portfolio and it seems like my 'r' is barely 4.5%. Yes, I could do 1031's into other properties, but it's tough where I'm located to get anywhere near the 1% rule with all the price appreciation. Thanks for your formula, and for the comments. I don't know how I'll ever get 6% or 10% return though for awhile unless I make some drastic changes.
Great instruction! I've been living on rental income in Ecuador, but I recently had to sell my home. Can I buy another rental property even though I'm not in the states? And why did you leave Ecuador?
Yes, you can buy another rental property. Financing is usually the biggest challenge, but there are a lot of "non QM lenders" who make loans now based on the income of the property and not necessarily personal income. If you can document income that makes it even easier. We left Ecuador because of some family and other roots we still had back in SC. It was a tough choice because we LOVED living there and had so many good friends in Cuenca. Where do you live?
@@CoachChadCarson Thanks for the feedback! I'm learning a lot from your RU-vid videos and your super simple breakdown on how all this works! I live in Cuenca and I'm just a few blocks away from el centro. I've lived in several country-side locations over the years, all around Cuenca, but I sold my car a few years ago and now I just walk everywhere throughout the city. I love the people here and can't imagine what it would be like if I had to go back to the states. 😆
You can also buy out of state and hire property managers to manage for you. It's a little more work up front to build the team, but it can work. Here's an example of someone who did that: www.coachcarson.com/real-estate-investing-military-overseas/
at around the 15:48 mark you have 500$ exp AND the mortgage ?? that seems really high.. I have 7 houses and all around the dollar value but my insurance etc is WAY less than that...i roughly net 600 to 800 per house... but insurance is around 60ish per month and taxes about the same...
i think around 10 or so at my current rate. unfortunately housing prices here in WYO have gone way up since last summer making finding deals difficult...
Hey Frank. There is certainly variation in property expenses from place to place and property to property. But on my own properties and from studying portfolios of others, about a 40-45% expense ratio is typical (although I've had some lower and higher). So, on this example with $1,200 in rent 40% = $480/mo. 45% = $540. So, that's where I got my number. Those operating expenses include taxes, insurance, maintenance/repairs (often 10-15%/month), vacancy (about 5%/month), and management fees (~10% in my case). So, those usually add up to that 40-45% I used.
@@CoachChadCarson I am certain that it varies, but damn, that seems really high to me. at that i wouldn't be able to make any money maybe 2 300? that's rough sledding... i think i feel pretty fortunate about now...
The biggest problem I have is what you already mentioned but did not fully address and change your numbers accordingly. The fact that an average home can cost way way more than $120,000 in many places, like...uh here in Canada. Where mortgage payments run beyond $1,500 monthly. Given a number like that, you barely have a positive monthly cash flow (in many cases negative) in examples that exceed your number of 120k.
The issue is less that the prices are higher and more that the rents do not rise with prices accordingly. If you buy a $1.2 million unit that rents for $12,000/mo, it still works. But when it rents for $4,000/mo, there is very little cash flow. You either have to play the appreciation game, which is more speculative or invest in another area out of town. I get that this is a problem. I plan to do another video to share those numbers in more detail.
@@CoachChadCarson Your presentation is good, coach. I would be more interested to see when you do upload those videos. I still watched the entirety of this one. You remind me of Paula Pant. She's got a great podcast and channel Afford Anything, you probably already know.
