5 Things to Do Now to Buy Your First Rental Property

Hello friends, thanks for joining me. How are you doing today? Just real quick, this channel is dedicated to real estate investors trying to understand how to get started, and how to move forward. We do a lot of things like walkthroughs, looking at projects, review deals, answer subscriber questions, and of course the very popular investor interviews. But today I wanted to kind of step back and realize that we have roughly 120 days left in 2019 and I wanted to sort of talk about what the five things are that you could do now over the next 120 days to be ready to make your first acquisition. That’s really what I challenged myself with. I wanted to create five really action-oriented things, things that you could do on your own and things that you could do kind of in parallel, if appropriate. So, I created a presentation.

Let’s take a look at it and see what you think. Do me a quick favor before we go through this. If you enjoy reading these blogs and watching my videos, do me a favor, and just hit that subscribe button. I know it’s a vanity metric, but it’s something that I like to track to encourage myself to keep moving forward. I like to see that subscriber count grow. It kind of tells me I’m doing something interesting. Also, hit the like button if you happen to like these tips because I always like to understand what topics you all are interested in. And as always, if you have a question go ahead and leave a comment below as I like to take subscriber questions. In fact, our subscriber question videos are one of our most popular playlists on YouTube. Now let’s go ahead and get started.

First things first, if you followed our story at all in the book we wrote, then you know that one of the credits that I give to Olivia and me is that we truly sacrificed for 15 years. We came into real estate investing and spent every penny we made. And over the course of the first five or six years, we kept ratcheting down our expenses. Sure, maybe our income had increased a little, but we were focused on reducing monthly expenses and we went from spending 100% of our income to nearly 50%. By doing that, you’re able to lower your monthly expenses and in turn, you’re going to need less passive income to get out of the rat race if and when the time comes. It also allows you to save a lot more and buy an extra asset or two a year as you go forward. So do yourself a favor, look at your monthly expenses and then challenge yourself.

You could reduce them by 10 (I picked 10% arbitrarily- I was originally going to say 20% or 25%, but I figured that might scare you) and really when that happens, you do nothing. I didn’t think 5% was interesting, so I thought 10% was a good number. I want you to challenge yourself: Could you and your family reduce monthly expenses by 10% and when I say reduce what I really mean is add to savings. You take those savings and just put it away somewhere. So challenge yourself and pick your number, right? I put 10% on the board, but I encourage you to sit down with your significant other and think about it. What would you do?

I’ve been very clear on my channel. I think we are either in or heading into a recession. I think that it’s going to be like the 2000 or 2003 recession, whatever that was. I don’t believe that it’s going to be catastrophic like in 2008. I think it could have a disproportionate impact on tech jobs for sure, but as we head into this you still have time to evaluate your job. Are you in a job that is safe from the initial cuts that happen in a recession or are you at risk? Are you working on a brand new product? Perhaps that’s very early and has no revenue. If job cuts come, you could see some spreadsheet monkey going, “slash that,” because it’s not adding to the bottom line. I advise you to take a look at your job and put yourself in the best situation to at the very least survive the first cut or two that typically happens in a recession. This one shouldn’t be deep. It may be long, but I don’t know that it will be deep.

Take a look at your job and if you’re at risk then consider looking for a job transfer. Look change jobs, right? All of these things are possible, but be sensitive to the fact that maybe many of you may not have seen job cuts before. But I’ve been through them and I’ve had to deliver them, and they’re not fun. You know, I think you have 120 days to evaluate where you are and do yourself and your family a favor and see if you can’t be more secure. Next, why don’t you go ahead and visit your financial institution? Maybe where your checking or saving is, whatever that looks like for you, and ask them to get pre-approved for an investment loan. Take whatever the median is in your market and say, “Hey, I’m looking to buy (if the medium is 250) a $250,000 house. I think it’ll rent for X. I’m going to put 25% down.”

Figure out if you have the credit and assets, and if you can qualify for these ridiculously low-interest rates. Go ahead and get pre-approved. You walk in and say, I want to buy something. They look at your bank account and go, “Here’s a letter. I want you to go through the full approval process.” You’re going to be filling out financial information and you’re essentially just going to create a balance sheet and income statement. Then you’re going to figure out from the loan officer if you get a yes or no. You won’t get that in minutes though, it should take a day or two for the financial institution to give you a pre-approval letter. So once again, go figure it out and then learn about what the rates and fees and all of those things are. Then you’ll know the information for the next two steps.

Number four for me is real estate investing should not be hard and confusing. However, there is some basic math you need to be aware of. I call it comparing deals or general generating yield. I use a simple spreadsheet that allows me to compare a condo, house, fourplex, apartment building, anything. I do not believe in all this nonsense and noise put out there about, “Hey for apartments, you’ve got to use cap rates and for houses, you have to use comparables.” I think part of the industry tries to confuse people in an attempt to show that they have some sort of leg up on you, but don’t let that happen. I truly believe you just need to be able to compare deals and make decisions on your own. Again, something I give all my students is the spreadsheet. We go through the basic math in great detail with every single variable.

I don’t necessarily care what you use, but if you, the investor, are getting ready to make your 2020 acquisition then you need to be able to compare deals. You should be able to look at 10 deals and say, “This is the best, and this is the worst, I choose to use yield.” Maybe some people might call it cash on cash, but I want to know exactly how much cash I’m putting out versus how much cash is coming back. If you’re interested, I teach it, and it’s very simple. I’ve done plenty of videos on this topic on my channel, so go take a look. That’s number four- understand the best basic math. It’s not hard, it’s not calculus. It should be very straightforward.

The final one is the one I perhaps harp on the most. I believe as an investor heading into 2020 that you’re getting ready to make your first investment. You need to spend the next 90 to 120 days learning your market. You should also be able to figure out what is an average deal looks like in your market. I typically say that the average deal is 5%, but that’s just an example. You should look at themlsorrealtor.com, Redfin, Zillow, and others for the next 90 days. I teach you how to do this, defined scope, and all of the important things. I’m teaching you a skill, and I do not believe real estate investing is some kind of DNA or genetics and that some people are just born to do it. It’s a skill, which means that it’s something that can be learned. It’s something that can be transferred. Once you learn it, you’ll never lose it, kind of like riding a bike.

So once you learn how to get to know a market and you can learn something like Dallas, Texas, three-bedroom, two-bath homes, for example. You can take that and go learn Ohio, Florida or even California for heaven sakes. But again, it’s important. This is the one thing that I don’t think I really appreciated when we got started. We were busy professionals and only had a little bit of time, so we got myopic and we got focused and we learned our market. Then we looked at it every day for 10 years, and that’s what made us successful. So I think this is something you need to be doing if you’re eager to make your first investment, and you have the money and the credit like we talked about.

Number three, if you don’t learn your market, I believe you’re gambling. If you spend the next 90 to 120 days learning your market, you’re going to know what is on sale. Most importantly, you’re only going to take action on good and great deals. If you learned anything from our one-rail-at-a-time book it’s that you don’t have to overcomplicate real estate investing, it really is that easy. Focus on doing good in great deals, and sure enough, over time with conservative financing and the like, you’ll be just fine and you’ll be in a great spot financially. Ultimately, if you do these simple things then I think you’ll be ready to make your first investment in 2020.

Hopefully, these five things make sense. I really think that saving and reducing your expenses by 10%, double-checking your job and making sure you’re in a safe position heading into what could be a recession, going into the bank and filling out a financial packet and seeing if you qualify, understanding the math behind comparing deals, and finally learning your market.

If you need help with four or five, that’s what I do. I’ve done some videos on the channel, but most importantly, we have a course. If you do sign up for the course, please use the coupon code BOOK20 and you’ll save $20, along with an autographed copy of the book. You can also get this on Amazon for $14.99 if you want to check me out first. It’s our story of 15 years of everything I’ve just talked about. So at the end of the day, have a great day, take care, and have fun.

📘Grab Your Copy of My Book on Amazon https://amzn.to/2X41yzh

✅ Learn More About Our Course Here! http://bit.ly/oraatcourse

❓Questions Get in Touch and Drop Us A Line! http://bit.ly/askzuber

📱Let’s Connect!

Facebook: https://www.facebook.com/onerental.at...
Twitter: https://twitter.com/ZuberGoToMarket
LinkedIn: https://www.linkedin.com/in/michaelzu...
Website: https://onerentalatatime.com/
Podcast: https://podcasts.apple.com/us/podcast...