We’re talking about multifamily real estate. We’re talking about the best real estate investment theory –multiple doors, two units, four units or eight units, 12 units, 16 units. We’re not talking about single-family homes. We’re not talking about renting your house out. That is not what I’m talking about. I’m talking about scaling out. Scaling out multifamily.

I made the mistake with single family residence and trying to rent them out. Look, we all start in this same place – usually where you go out and buy a single-family house and you think you’re going to make a lot of money. The problem is the economies of scale. They just don’t work because you buy one house and then you want to buy 20 houses – and most of the time you can’t buy that scale.

Having a single-family or a small number of units mean that you are doing all of the management yourself and being hit with all the tenant problems and repairs. The dog that urinated on the carpet and you got to change that. You’re not counting the fact that somebody has got a mow the grass. So at the end of the day, you had to do everything and you can’t do it 100 times that. You need scale so it makes it affordable to hire a management company.

The first deal I did was 38 units the next deal with 48 units and next it was 92. It’s the same energy to close a small deal as a bigger deal. It doesn’t require anything more to go bigger.

That’s why I tell you guys leave four alone. Leave the eight alone. Leave the 12 alone. 16 units is what your minimum first purchase should be.

You get enough scale to where the plumber’s not going to rip you up, or the manager that hires the plumber won’t steal from you.

So what do you do when you find a deal? First you need to want the deal. Are you willing to pay full-asking price? That’s a great indicator if you want it.

Then you need to sell the real estate agent on the fact that you’re super, super excited about the deal. You do not negotiate on price at this step.

Your first job is to know the market. Your first job is to know real estate, to understand real estate, to know you want multifamily, lots of units producing revenue. You got to be looking at deals every day to make this happen, to build upon the great deals, you got to be looking at every single deal.

You got to have a commitment. I make the time to find the deals because I know this is a way for me to get something real for my future and my family.

Once you get into making your offer, you’ll want to create an LOI. An LOI is a Letter of Intent. A letter of intent basically just tells someone you want to buy their property, who you are, some basic terms and how you are going to pay for it. I’m not worried about the bank right now. I am not worried about the lawyer. I’m not worried about all this other stuff. I’m not worried about operating agreements or a LLC. Don’t worry about any of that. You don’t need a lawyer, you don’t need to do a title search. There’s going to be a bank involved in your deal and they do a lot of that anyway so don’t worry about all that.

Make sure you love the deal and then sell yourself. You’re selling the whole time. Don’t be negative. When you call you as a buyer, why do you want to immediately knock the value down? But that’s what we do.

Change people’s attitudes. Once you get somebody positive, then you can deal with them. It is difficult to deal with negative people. Once you attack price, then the seller has to defend his price. This position is terrible.

In my LOI I would say that there is no financing contingency and that the purchase agreement will become not fundable. That means that you can’t back out. Yeah, if you can’t get financing you can’t back out. You don’t need money to make money. You need confidence to make money.

That’s basically all that I put into an LOI. I always look for a property that I can improve.

If I can improve the property enough in 18 months or whatever it is and go back to the bank and get another long-term loan. I might of used a bridge loan to get the deal done. A Bridge loan is a short-term loan. You go to your bank and you’re basically signing your name. If you can’t do that right now, find somebody that can.

After I fixed the property, I went back to the bank and said I raised the rents, I fixed the property. Everything’s good. How much money will you give me now?

And today it’s worth maybe $10,000,000 based on the numbers.

So what do you take away from this? Number one, you need to be all in on real estate. You need to be committed. You got to be committed. You have to understand there’s a mental game. First mental, and then mechanical. First you’ve got to know multifamily, not single family, not shopping centers, not storage. You got to focus on some product. Multifamily. Focus on one product. Understand the game. Number two, you got to be looking every day. If you’re not making time to look every day, you’re not committed.

Once you’re committed to real estate, once you know it’s a good deal, you’ll find the money. If you’re not sure, you won’t find the money. Know more about real estate investment theory to understand it better.

You need to be in this real estate game. Don’t worry about the price. Don’t worry about the loan and do not worry about the legal until you get the deal. Don’t worry about spending a little bit of money. Don’t worry about it. Get rid of your money because it’s going down in value.

I started and bought one house. I learned from that one house that that was not investing. That was just me investing in a piece of real estate on a budget. When you invest in real estate, it has got to have a lot of doors and a lot of windows. The more doors and windows, by the way, the better. Of course, that holds true only up to a point. You have to be careful with any investment because you could have too many units in one place and that would put to high of risk on your investment.

People need to be involved in real estate. Start investing your extra money in real estate. Invest in real estate that produces income. I’m not talking shopping centers here. We’re buying apartments. We’re buying something indestructible, something people will have to live in.

For example, someone moves from Houston to Miami, Miami to Oakland Park, to Orlando. The first thing they do is not buy a house. The first thing they do is they rent a place to live.

So if you’re interested in real estate, there are four ways to buy real estate.

1. You can do it yourself.

If you attempt to buy multifamily real estate on your own, you need to know the market, know the deals, have your financing in place, know who is managing it. You do not want to invest in anything smaller than 16 units. 32 units would be your ideal first deal. Why? Because anything smaller than that won’t weather any kind of market downturn, won’t give you the scale to appreciate, leverage debt, won’t be large enough to have a management company to take care of the day to day and vacancies or produce positive monthly cash flow. How much time do you think you need to do it yourself? A lot, it’s a full-time job.

2. Wall Street.

This is the simplest, easiest way to do it. And the dumbest! You can buy stocks in companies like Equity Residential. Which is a publicly traded real estate investment trust that invests in apartments. You aren’t actually buying property or realizing any of the tax benefits that go along with it. You don’t get the benefits of real estate. You’re getting stocks. That is an investment in a stock that is not an investment in real estate. Your returns on a stock are dictated by the market. Not something I would recommend at all.

3. Syndication.

You could call somebody up and say, “Hey, I want to syndicate into your deal.” What a syndicator means is they basically, let’s say they’re going to buy a deal that takes $5,000,000. They raised all $5,000,000, okay? They raised all $5,000,000 from people like yourself. It’s called other people’s money. And then they go buy a piece of real estate and they make money on the fees of running that piece of real estate.  I can pretty much guarantee your money’s going to go away. These people are buying a deal. They won’t buy with their own money. Here’s another way to look at it. It’s like the first time I got on the plane, I said, to the captain, do you feel good about the trip? If he’s willing to get on the plane, I’m willing to get on it.

Basically, you give the syndicator your money. They go buy real estate that you didn’t have the courage or intelligence to by yourself. They run it, they manage it, and they charge you for that.

4. The Anomaly. Investing with someone.

There’s a fourth way to do it. This is what I do. I backfill a deal so we can control the property, own the property. We do the deal, and then I allow accredited investors to come into the deal.

I basically buy property. We look at property every day. We buy it, we own it, we closed on it, we get the financing on it, and then we allow accredited investors to come back into the deal. We have a fund that can do that. If you’re an accredited investor and you want to invest with us, we know what we’re doing. We have the time, we have the money, we’re buying the property. I’m putting my own money in a deal saying I’ll buy this deal whether we raise the money or not. I don’t care because I know that the property that I’m buying will be worth more money 30 years from now than it is today.

I do what I can to make real estate investing made simple.

Be great,

GC

The best real estate investment theory is owning multiple doors – two-units, four-units, eight-units, twelve-units, sixteen-units. We’re not talking about single family homes here. We’re not talking about renting your house out. That is not what I’m talking about. I’m talking about scaling out. Scaling out multifamily. I made the mistake when I started out investing and bought a single-family residence and trying to rent it out.

We all start in this same place where you go out and you buy a single-family house and you think you’re going to make a lot of money. The problem is the economies of scale. They just don’t work because you have only one house and then want to buy 20 houses and you won’t be able to. And on top of that, you need to deal with the renters and any problems they have as well as vacancy. Most people calculate their income based on collecting rent twelve months in a row.  Doesn’t happen.

2. Don’t Worry About the Price

If you got $400,000 you are now in a position to buy multifamily real estate. $400,000 will buy you $1.6 million. A $100,000 will buy you a $400,000 deal.  This is called the rule of four. For every dollar you have, you could probably buy four dollars of real estate. $100,000 buys $400,000 and $400,000 buys $1.6 million. That’s where I’d like to see you start. If it was a perfect situation, your first deal would take $400,000.

You should be able to pay the price they’re asking in the deal for it to work. If you got to get the price down for the deal to work, that deal doesn’t work. You the want the deal or not. At some point over the next 30 years the deal is going to be overpriced. Right? And if you look at economies, they can go down and fluctuate. Things happen. Something’s gonna happen for some period of time, whether it’s two weeks, two months, or two years, the property is going to probably go down in value, but not over 30 years.

Thirty years from now, and this is the first thing you’ve have to know about real estate– is that the rent on the deal in the year 2048 is going to be more than it is today.

3. Don’t Worry About the Loan and Don’t Worry About the Legal Until You Get the Deal

I use an incredibly simple LOI (Letter Of Intent) This is not a Purchase Sales Agreement. That comes later. All a LOI says is I want to buy your property and here is my offer. I’m not worried about the bank right now. I am not worried about the lawyer. Not Worried about operating agreements LLC. A bunch of people will tell you to worry about that. They’ll say you gotta get your lawyer involved. No, you don’t. You got to do a title search. No, you don’t. There’s going to be a bank involved in this deal unless you pay for all of it yourself and the bank is going to protect their asset and be doing a lot of this.

4. Get Rid of Your Money Because It’s Going Down in Value

Once you get a little money, what do you do? Learn to keep it. Then learn to multiply it. Most people don’t know how to make it. Fewer people know how to keep it and almost nobody knows how to multiply. You don’t multiply that by just doing your business over and over. You need to invest.

You got to figure out sooner or later how to reach, how to manage something passively. Maybe you’re running a company, and it’s producing a lot of money after taxes, you’ve got money leftover and it’s sitting in the bank. That money is dying. That money’s done. It’s done.

There are apartments in every city in the United States and they are going to be the single best investment you can make over the next 25 years.

I do not invest in anything other than in multifamily because I don’t know anything else. I don’t understand anything else. I don’t put my money in mutual funds because it’s like me putting my money out into space. I can’t touch it. I can’t feel it and I can’t get money from it every month.

If you want to be part of the expansion we are doing right now, maybe you don’t have the time but you have the money. You might not have the knowhow but you want to invest in a real asset. Look at Cardone Capital for more information on what funds you can invest in.