you completely skipped the important stuff, you had 87% of your house paid off in supposedly 4 years, you weren't clear on that, then sure, you had plenty of equity for a 1031 exchange, which btw you skipped realtor / title fees etc to list it... this video is why people get in trouble in real estate...
It’s hard to go into every detail in a video. The few percent in transactions costs are pretty insignificant. Happy to share any details you want 1031ing into a higher cap rate property at a 25% down payment. Isn’t typically what causes people to get into trouble
Obviously there are fees throughout the real estate process. They can’t hold your hand and spend every video explaining every detail. Do some due diligence, it’s your investment after all.
As a Finance MBA I have to say that this is a much watch video for anyone that has owned an investment property for 2+ years and is focused on equity/wealth growth. Return on Equity is the #1 metric to measure and is often times forgotten about. Thanks for the reminder and simple overview.
I'm confused how you did $100m yearly from 9 properties and 4 businesses. It seems pretty vague. can you explain further details in the income from each business and real estate property. I somewhat understand you start small real estate and 1031 into bigger and bigger. I just dont get how you do $100m yearly.
I'll try my best to explain a RU-vid comment. The goal of the video is to teach about ROE and how it helped me scale from 1-9 doors. I used the ROE concept and my ability to teach and model. to help others. Which drove a lot of biz growth and other opportunities. The businesses are separate entities and income: Brokerage - $100mm/yr in sales - the majority are investors. Every month I have clients optimize ROE. We do a lot of transactions in Colorado.
From the concepts and brokerage, that lead to being recruited as General Partner for capital raising in a RE Private Equity firm. In our first year, we raised about $40mm, with a lot of it coming from investors equities in their properties.
ROE is an efficiency of capital metric but also is a risk measurement. High equity is low risk low return, low equity is often high risk, high return. So depending on how eager you are to grow, should determine your equity approach.
Yes. It depends what phase of life you're in: INCOME or GROWTH. I'm in growth, as are most people watching the video. I wanted growth. Always keep high cash reserve es to offset any bumps or crashes
Foruntately the concept of ROE can be applied to any property you buy. The hard part IS just getting into your first property. But there are lot's of options out there to get into a property for very little down.I know Chris has had some clients get in for under 5k. So it IS possible. Don't get discouraged! :)
Karen, I understand it can seem unrealistic, but a lot of people routinely do if. My point in the video wasn’t to talk about the amazing deal… but that no matter how you buy, you always run into the ROE problem!
FYI since then I’ve bought zero properties with zero down. I got a little lucky on this one. Take it when you can. Also a friendly suggestion, don’t close off your mindset to finding amazing deals!
I like having just one maximum size property at any given time. Different locations more paperwork more overhead imo. Next step will end up being 2 fourplexes into a commercial 12+ units ideally.
Devi's advocate: I've had the same thought for efficiency and scale, but then no diversification. All the eggs are in one basket if something happens to property or specific neighborhood. How to balance that risk?
@@BuildingWealthWithRealEstate neither, it's $130k purchase and has a valuation of $900k based on rents, but it's vacant currently so time to value add to raise rents!
I am not a fan of this video. Why would you just not get a heloc and keep your first place. This method assumes very good appreciation also. I think I will stick with commercial real estate.
@@BuildingWealthWithRealEstate I’m sure because I’m still new to this I also live in Denver and it just seems difficult here to get a deal like you have. It’s great content wouldn’t mind a longer video as well. Thanks for responding!
It was a deal off the MLS. I had a private investor give me a 15 yr note at 5%. Combination of relationship and low yields at the time 2011 ish. Me and the condo were an attractive investment
Great video, Chris. ROE is extremely important for people to understand...took me a long time to really understand and one thing that helped is just looking at it from the perspective of opportunity cost (seems like people generally understand that concept but rarely apply it to REI). In other words, the equity tied up in a property has an opportunity cost, so you should regularly (once/yr) be re-evaluating that property's performance from the perspective of opportunity cost (or in other words, would your money be working harder for you in some other way). Another concept that you preach that you mention but gloss over is when you are regularly re-evaluating your property's performance, you need to look at it in today's numbers and answer the question: "would I re-buy this property today with these numbers?"... Keep up the great work Chris!
Great video but I don't see how you count depreciation as income. Maybe if you calculated your tax savings per year because of the depreciation that could be counted as income. But you don't get a dollar-for-dollar tax-saving for depreciation it just lowers your taxable income. I could probably benefit from a more in-depth video on that topic.
Yes, that’s how you want to calculate. It’s the most complicated part of real estate. It’ll save you paying taxes, Or if you do some advance strategies, you can get a tax refund with it. Look up the cost seg video with Yonah Weiss I did on here a year or two ago
I did the same thing when I was 22. Thank god for the Rich Dad book. Great video. I'm glad you clarified the difference between $10,000 a month (Gross) and $10,000 a month NET, spendable dollars!
Hi what were your other business ? I’m new to this community . I have two businesses and one rental and a W-2 job. How do I get to 100million like you ? I need to set passive income goals, thank you .
I'm asking BP if I can do a full video on it. In our first recording, I tried to go into details on the business side too. but it turned into "a numbers soup" that even my own editing team couldn't figure out. haha The ROE concept is one that very few investors understand. As an entrepreneur, I always look for ways to find untapped niches. ROE is a big one. I have a brokerage team in CO that does about $100mm a year in sales. The majority of transactions are investments, with many being equity optimization deals. Once the light bulb went off, I started telling every investor I could connect with.
It buiild an amazing niche that lead me to building software to model it and becoming a General Partner in a RE Private Equity firm. We raised $40mm in our first year. With a lot coming from equity from rentals.
It was part luck, market conditions, and having wealth individuals TRUST me It was an MLS deal. I couldn't get a traditional loan at the time. I started tapping into my network. An older, wealthier couple who wanted income jumped at at the chance. INCOME was their focus. At the time, bonds / CD's weren't paying much. a 5% return fro them on a real estate asset that was $200k 3 years before with someone they highly trusted (me), was a great investment for me. It was all about finding a win/win.. FYI - this was the only deal I bought for $0 down. I'm not a creative finance buying guy
ha! I debated not putting that in there. I wanted people to focus on ROE. It was part luck, market conditions, and having wealthy individuals TRUST me It was an MLS deal. I couldn't get a traditional loan at the time. I started tapping into my network. An older, wealthier couple who wanted income jumped at at the chance. INCOME was their focus. At the time, bonds / CD's weren't paying much. a 5% return fro them on a real estate asset that was $200k 3 years before with someone they highly trusted (me), was a great investment for me. It was all about finding a win/win.. FYI - this was the only deal I bought for $0 down. I'm not a creative finance buying guy
I invested $0 into the condo. After 7 years, the condo has $180,000 in equity (appreciation+ debt paydown) I sold the condo to unlock the $180,000 to use as a 25% downpayment on.a fourplex. I posted a lot of numbers above in another comment. Check those out
@@MeltingRubberZ28 0% down private loan at 5%, 15 year Amortization. About 35-40k from debt paydown. The rest from market appreciation. 2011-2018 period
I have 2 rentals that I bought in the 2008/10 recession in Reno NV. $170k property with $40 down from my equity in my home. Now I want to invest $200k on 2 properties but the cheaper 3bed,2bat,2car is $340k in a minus fair shape 20 minutes out of the city & very little inventory. My payments would be around $2000 a month & the rent will be that much so no cash flow. Does not make $ sense. Those are real numbers & real reality here in Reno NV.
Great video! And contrary to the nagative comments in here, you really encourage people to go study it more and more, and that this was just a quick video so you could start to grasp the concept. Keep up the good work!
I know that there are lending programs with banks that will allow you to get a property with 0 down and no PMI. Only certain properties in certain areas that are designated by the bank will be approved for that type of financing. Then typically one of the requirements is that you don’t own any other property.
