Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. -Ayn Rand
Many of you out there I am sure have heard of Bigger
Pockets. It is the place to be for anyone interested in Real Estate (RE).
Basically, they are the Facebook of Real Estate.
Bigger Pockets (BP) is the real estate social network. You
can find out all types of things such as how to finance rental properties, find
property management companies, and how to invest in real estate.
While on my journey to learn ALL THINGS MONEY, I came across an interesting post called House Hacking.
For readers of my blog, you know I am a fan of Millennial Money (MM). Grant Sabatier is the money genius behind that site and because I was a fan of his is how I came to learn about Bigger Pockets. I learned so much from Grant that I wrote a blog post about how he inspired me to save more money.
It was on his website that I read about House Hacking, which is when you live in one of the multiple units of your investment property as your primary residence, and have renters from the other units pay your mortgage and expenses.
Like I stated on my last post, one of the biggest expenses
in any budget is housing. The trifecta of expenses is housing, food, and
transportation. If you can cut your expenses in this area, you are g2g (Good to
Go). đ
It just so happened that he did an interview with Scott Trench
from Bigger Pockets. I am not the best when it comes to listening to podcasts,
as I prefer to read books! However, the podcast is transcribed so I read
through that. Great idea there Grant. The transcription was so good that I
listened to the podcast and just like that a fan of BP was born.
That is what made me decide to pick up the book How to
Invest in Real Estate from Bigger Pockets authored by Josh Dorkin and Brandon
Turner.
I just so happened to post a tweet and saw FINCON ask what books am I reading? So I answered and tagged the authors of the book. To my surprise, Josh Dorkin replied to my tweet and said thank you for reading and asked if I would post a review on Amazon.
Since he was polite in asking for this small request, I not only did the Amazon review (still pending as of this writing), but I also decided to review the book on my site. They say ask and you shall receive. So, I gave him a 2-for-1 and posted a review and did this blog post. One tweet did all of that.
So, without further adoâŚ
How to Invest in Real Estate: The Ultimate Beginner’s Guide to Getting Started
THE #1 QUESTION
The reason Brandon and Josh wrote this book was to help
people. One of the most asked questions they get is, “How Do I Get Started
in Real Estate Investing?”
Well, guess what? They say ask and you shall receive, right?
Then Brandon and Josh answered.
They wrote this guide to help people along their way.
Although, the Bigger Pockets forum and blog is filled with tons of information,
it can be overwhelming. Where do you begin?
This book packs many of the interviews they do on the podcast and brings it together in one place as a reference guide.
WHAT WILL YOU LEARN
The guide contains eight chapters but my three favorites are: Chapters 1, 4, and 7.
The book will show you the following:
How to get started in Real Estate?
How to invest with no money, bad credit, and
with a full-time job?
Why you should save cash reserves?
What is an LLC? Do you even need one?
Real Estate Niches (as the riches are in niches)
đ
12 Ways to Finance your Real Estate Deals
Real Estate Exit Strategies
I think the reason people choose to invest in RE is not only
to get rich (obviously), but to have more financial control over their lives.
In addition, real estate is tangible. Unlike stocks, bonds, and CDâs you can drive by and visit with your investment. Have a cup of coffee in it. Heck, you can even live in it!
THE REAL WORLD OF INVESTING
Remember the television show âThe Real Worldâ on MTV. Well,
that was a lot of fiction and made up drama for ratings. This book provided
insight directly from RE investors with real world experience.
One of my favorite stories actually came from Chad Carson of the Coach Carson blog site. Chad decided the go big or go home route to RE was the best route for him. His niche was house flipping.
He tested this hypothesis and decided to change courses. Instead
of trying to flip 50 properties, he then decided to do less for the sake of his
sanity. This method worked.
This taught me that flipping is NOTHING like the television shows portray. We are getting the Campbell Soup version (condensed). I need the đŻ real.
You must find out what works for you. Although, you can
learn from the mistakes of others, usually trial and error will show you the
way. Fail fast, early, and hard. Then you can start to profit from your
knowledge and experience.
The book is filled with tons of stories. I just shared one.
If you want to learn more about Real Estate, then hop on over to Bigger Pockets. You can also look up some real estate blogs and books. Just like I did with this one.
Have you recently wrote a book? Are you looking for a review? Do you want to be Greenback’d? Tweet me. I’ll be here @mjp2520
âThere are only the pursued, the pursuing, the busy and the tired.â â F. Scott Fitzgerald, The Great Gatsby
For many people out there I am sure you have heard of shows like Flip this or Sell that house. Many of them are broadcast on A&E. One of these gems was a show called Flipping Vegas.
The show starred real estate investor Scott Yancey and his
interior designer wife, Amie Yancey. What made this show stand out was the
outrageous personality of its star, Scott Yancey. He could regularly be seen
losing his mind over the tiniest of overages to his immensely short time table
he gave to flip any house. It made for great television. I felt it was the
funniest of all the house flipping shows out there.
Scott would regularly drive around in his Porsche (he loves
cars) and go from house to house that he had invested in to inspect properties.
His wife, Amie, could usually be found at places like Walker Zanger to purchase
materials for all of the homes they were flipping. The couple were constantly
bickering about house design, location, and finances. They were a riot.
What I remember most is that Scott was always very concerned
about the budget as where Aime was not. She believed that a well-designed home
sold itself. However, Scott did not always agree. He would regularly have a fit
if she spent extra money or over-improved a house. It was hilarious.
“When you have a
foreclosure sign on the house, it’s saying, ‘Vandals, homeless: Welcome. Please
strip it,’ ” Scott told The Las Vegas Review-Journal of the properties he
purchases. “We’re in a race to get it done and get it sold.”
So, without further ado, I give you what itâs like to flip
Vegas.
WHAT IS FLIPPING VEGAS?
“The houses that are the worst to buy are the ones we save for TV because we know there’s a great storyline with it.” â Scott Yancey
Flipping Vegas was an American reality television series that aired in the United States on the A&E network for 5 seasons from June 18, 2011 â September 27, 2014. Featuring the husband and wife team, Scott and Aime Yancey. The couple would fix and flip homes in Las Vegas, Nevada. It aired on Saturdays. And ran for 41 episodes.
Meet the real estate players
Vegas was hit hard by the housing crash of 2007-2009. Where
most saw disaster, Scott saw opportunity. He would buy low-priced and
dilapidated homes in Vegas, fix and flip them quick for a profit.
Setting a quick timetable of about 4 weeks and even shorter budgets of approximately $10,000. A quick fix schedule and low budget is called flipping. Spend less money equals more or maximum profit. His opposite is Aime, who buys high-end finishes that are not in the budget, without telling Scott. Let the fights over the checkbook begin.
Here is some of the banter on this show.
Real estate agent: Can you all this done in a week? Itâs a
lot to do?
Scott: I turn and burn these suckers!
Aime: Scott, youâre so cheap.
Scott: Once again you are unconcerned with deadlines and bottom
lines.
Aime: Give the house a great design.
Scott: This house is an ugly girl. Put lipstick on her, weâre
not giving it plastic surgery.
Thatâs Scott, always keeping it classy. He works hard and
lives his life fast. He likes quick wins and flips. Iâll give him this, at
least he always kept it real.
In an interview with the Vegas
Sun, Aime said, âI mean, I feel like Iâm giving birth to each of them. I
know Scott has timelines to turn them around fast, and we butt heads. He sees
the bottom line, and I fall in love with the transformation. I canât stop
myself; I really need rehab for designers.â
They generally work with the same contractors and real estate agents to sell their houses. In addition, will also have multiple trades working on one house at the same time to keep up with Scottâs insane open house schedule (think buying a home, renovating it, and putting it on the market in 7 days). And yes, there was an episode that he tried to do this.
The show got is start from a conversation Scott had with some show business friends where he recounted how he had to pull out his Glock (heâs licensed to carry) on some homeless people that came at him with needles in a boarded up house. They recorded some footage of him (Scott paid for their expenses) at work and it got into the hands of someone at Lionsgate. That is how his reality show career got started.
Finance Lesson 101: You have to spend money to make money.
ALWAYS EXPAND
Expand. Never contract. â Grant Cardone
One of the best times to start a business is during a
downturn. Scott is a businessman who owns a real estate brokerage called
Goliath Company. He invests sells, and flips houses. In addition, Scott also
was an executive producer of the show and an author. Reality television star is
also one of his many titles.
When asked what it was like doing the show Scott stated, âItâs reality TV for a reason, but try working with your wife for 12-14 hours a day. [The producers] know our fans. They love it when I break shit, and thatâs my favorite part. If I could take a bulldozer and knock out a shed, thatâs great. Take a chainsaw to a wall, thatâs great. Demolition is No. 1; drama is No. 2. And then education.â
The best episode I saw and my favorite was the Season 2 Episode
10 show entitled, âYanceyâs Elevenâ which aired on February 16, 2013. Scott
purchases 11 unfinished villas at Lake Las Vegas for a total of $380,000 and
takes on the gargantuan task of getting them all fixed up at the same time.
A&E episode description(www.aetv.com): Scott takes on
the biggest flip of his life having purchased 11 unfinished villas in upscale
Lake Las Vegas with hopes of flipping all 11 in less than 45 days! It’s a risky
gamble that could have a huge payoff…if Scott can manage to bulldoze through
some unexpected and high-priced construction roadblocks.
Show me the money honey.
The couple then began doing seminars. A no-strings attached
sort of deal. It started out for free with a preview, but then morphs into a sales
pitch. Over three-hours attendees are enticed to pay a $2,000 fee for a second,
more intensive three-day seminar. Those who paid and made the investment in the
three-day event received yet another pitch to invest in the next level that
costs a whopping $30,000.
I, personally, can confirm the first part. I was invited to a Yancey seminar. I went and it was basically someone coaxing and goading you to spend money (not the Yanceyâs as they were not there). Basically, it was a high-pressure sales pitch. The free part was just to get butts in the seats. The free meal was a cold sandwich, chips, and a stale cookie. Although, it sounded good, and everyone acted professional. I refused to spend money going to yet-another seminar. After that experience, I swore off all seminars for good.
They said most people did not complete the problem because there was work involved. So, they quit. Customers cry foul. That they were not properly trained. Scam???
Finance Lesson 102: If you are going to expand and ask people for money, then you better bring youâre A-game and deliver. Â Better to write a book and sell it for a reasonable price, that provide the details of how you became successful then give people false hope and empty promises. A book is at least tangible.
A GOLIATH OF A TASK
“The main thing is that in TV land, they speed everything up. They [the viewers] think, ‘Oh, wow, it’s a breeze. They come in, and it’s done.’ It takes a long time to put them together, to pick out the fit and finish and work on the quality. They only see a glimpse of it.” â Amie Yancey
Scott started in real estate at a young age. He got advice
from a friend to invest his $30,000 settlement from a car crash into real
estate as his family was doing. Scott took the advice.
Forgoing finishing college he still found a way to make a
million dollars. Even though he almost quit real estate after the downturn,
overhearing a conversation between patrons made him change his mind. When he
heard how little people were paying for properties in Las Vegas only to start
renting them out to tenants, Scott saw a golden opportunity to profit. Why not
buy at the bottom?
“At the next table, the discussion revolved around the Las Vegas real estate market and the fact that there were homes available to buy for as little as $36,000 that would rent out for $900/month. Just hearing those two numbers put Scott’s real estate brain into gear. Two things came to mind immediately, ‘You make your money on the buy in Real Estate’ and ‘fortunes are made in bad economies.'” â Scott Yancey
His task was to buy real estate at the bottom. Things have to hit rock bottom become they come back up. You can capitalize on that. It was risky and things were rough. Like me, quotes were in Scottâs mind: âNothing great is easyâ and âDebt equals drive.â Those helped him. He had this epiphany and ran with it.
Similar to the money epiphany I had in 2017. Once I figured out a way to save more, I began to do so massively. Start where I was at and work my way up. I started by saving $50 a month and then slowing increased my savings every day or month. Now, I save over $13,000 a year and increase that number every year.
Finance Lesson 103: Best time to start a business is in an economic downturn as fortunes are made in bad economies. For instance, when the stock market crashes, that is the time to buy.
COLLEGE DROPOUT TURNED MULTI-MILLIONAIRE REAL ESTATE INVESTOR
“I’m not a college graduate.” Scott told Vegas
Seven. “I went to probably five colleges, and I dropped out of them all. I
have ADD. I didn’t come from money. But you don’t need money to be a real
estate investor, and that’s what I teach people. I did my first land deal on my
own without any of my own money, and I netted $2.3 million. I can relate to
most of the people who write to me and say, ‘I’d love to do what you’re doing.
I don’t like my job, but I don’t have any money.’ Great, you don’t have to.
You’re right where I started.”
Scott was hired as a real estate runner for a real estate
attorney named Walther (Walt) J. Plumb III. His salary at that time was
$5/hour. Walt ultimately became Scottâs mentor. He also convinced Scott to get
his real estate license as his last 3 runners had all become millionaires. He
ended taking his advice and making so much money in real estate, that he left
college. He was making hundreds of thousands of dollars, which is a lot of
money for a guy in his 20s.
He was making so much money for Walt that he decided to
strike out on his own.
The $2.3-million-dollar deal allowed him to pay off all his
credit cards and buy the care of his dreams, the Porsche. And put a million in
the bank. He used his big payday to pay off debt. This is similar to what John
Legend did.
You can also regularly hear Scott complain about amateurs on
his show.
In an interview with the Vegas
Sun, Scott said, âbut I think there are a lot of amateur-type flippers who
have gotten in in the last little while, and they have short fuses because
theyâve borrowed money to their properties. Scott usually pays all cash.
This is what Warren Buffet says about borrowing: “I’ve
seen more people fail because of liquor and leverage â leverage being borrowed
money.â
He says, âif you donât know what youâre doing, leave it to
the professionals.â He stills relies on
him and asks his mentor for advice. Looking up the couple net worth online
yields results of $5 million each.
Finance Lesson 104: You can be successful without college. However, you need to decide early and when you are young what vocation you are going to do to try and make a living.
THINGS WILL AND ALWAYS DO CHANGE SO PREPARE
âFlipping is great at first to generate capital, but as an investor, the goal is to take your capital and invest it in rental properties. The rental properties pay you every month. Flipping, you make one payday; youâll make $100,000 on a good flip. [Investing] that in a rental property [can} make you $5,000 a month. ⌠Itâs a lot less work to collect a rent check than to renovate a house.â â Scott Yancey
At one point, in an interview with Vegas Seven, Scott thought that the real estate market would change as it always did. In addition, that there is a false send of high-fiving.
Most purchases are all cash deals being done by investors.
Lots of flippers have left and are out of the flipping market. People are
buying and holding, which should be the real estate investorâs endgame. As far
as renters for his homes go, he wants good tenants that resign every year and
he only takes cash as payment. He also buys near hospitals so many of his
renters are ER doctors and nurses. Basically, those with steady reliable
incomes and paychecks.
I hear that.
I also read a real estate investing book that said a great place
to buy was near college campuses. Get those college rentals going. Not bad
advice. Pretty similar to what Scott has done.
I recently read that the government shutdown has closed up
shop 4 times within the last 10 years. That is a huge problem for RE owners.
Especially, if this trend keeps up and considering that furloughed contractors
donât get back pay when the government reopens.
Not surprising. A home is only an asset if it can or does
feed you. You can only get access to the equity when itâs sold. The only other
way to make money is to rent it out. Either by the unit, home, or room. If you
want to start a profitable real estate business and become a landlord, then you
better have the funds to handle downturns, bad tenants, vacancies, and repairs.
Finance Lesson 105: All businesses need capital.
You can take that piece of advice all the way to the bank.