\n<\/p>\n
Knowing how to buy your first rental property<\/strong><\/a> can be the difference between you building a life of financial freedom<\/strong><\/a> or merely treading water working for active income. The life of a real estate investor isn\u2019t glamorous, but it leads to generational wealth<\/strong>, time freedom<\/strong>, and the ability to do what you want<\/strong>, when you want, with who you want. The first step to becoming a real estate investor is buying your first real estate deal<\/strong>. This first step is where ninety-nine percent of people stop, but it\u2019s where you will start.<\/p>\n Dave Meyer<\/strong>, VP of Data and Analytics and host of On The Market<\/em><\/a>, has built a financial freedom-permitting property portfolio over the last decade. He doesn\u2019t have thousands of units<\/strong>, but even with his medium-sized portfolio, he\u2019s been able to travel the world, live abroad, and continuously build wealth<\/strong>. He\u2019s here to teach you exactly how to do the same by buying your first, second, or third real estate deal in the next 365 days!<\/p>\n If you\u2019re able to do so, you will see your life start to change before your eyes. Money will be easier to find, deals will come your way, and passive income streams <\/strong>will be dug in your direction. If you\u2019re able to buy your first (or next) deal like Dave describes, put systems in place for future purchases, and slowly build a team around you, your dream rental property portfolio <\/strong>won\u2019t be too far away.<\/p>\n David: Dave: David: Dave: David: Dave: David: Dave: David: Dave: David: Dave: David: Dave: David: Dave: David: Dave: David: Dave: David: Dave: David: \u00a0<\/p>\n \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Check out our\u00a0<\/em>sponsor page<\/em><\/a>!<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is The BiggerPockets Podcast show 640. What\u2019s up everyone. This is David Greene, your host of The BiggerPockets real estate podcast, here today with my sidekick, with my co-host, with my buddy, Dave Meyer, bringing you a special episode. Look, we realize the market is shifting. And that means a lot of different things, one of which, you should be listening to as much content as you possibly can to stay abreast of changes so you can position yourself to be in the best place possible. Much like Brandon Turner, trying to catch a wave, you want to know what waves are rolling in, what they look like and how they\u2019re different than the wave before so you can pick the right one and be in the right spot when it breaks. Also, if you have not yet got into real estate, or maybe you own one or two properties, this is a very good time to scale your portfolio. Now, of course you want to be investing from a position of financial strength. We don\u2019t want anyone to go and buy real estate they can\u2019t afford. But if you have been saving, waiting, this could be your moment to shine. And in today\u2019s show, Dave is going to give a presentation of just what you can do to get your first, second or third rental property. Dave, what do you think?<\/p>\n
That\u2019s a beautiful explanation of what we\u2019re talking about because it is a really interesting time to start investing. And I understand that a lot of people are fearful about the market because there\u2019s a lot of hype and there\u2019s some scary headlines out there. And in no way, am I, or is David saying that you should go out there and buy just anything. But if you are someone who knows how to analyze deals and how to get good leads, this is a really, really interesting time to start looking into the market right now, because competition is going down. We\u2019re starting to see prices look a little bit wobbly. And although I personally think prices might decline a little bit, there\u2019s not going to be a crash, but sellers are willing to negotiate right now. I don\u2019t know if you\u2019re seeing that in your own real estate investing David, but \u2026 Yeah? A lot?<\/p>\n
Yeah. A lot.<\/p>\n
People are a little bit fearful. The sellers want to get in before they think things are going to go down. And again, that doesn\u2019t mean every property\u2019s going to be great and every seller\u2019s going to be willing to negotiate, but it does mean that unlike the last two years where sellers had this just iron grip on the housing market and they dictated terms, they dictated price and it was just a complete seller\u2019s market. Now we are starting to see some balance get restored back and buyers have a little bit of power right now.<\/p>\n
Yeah. I haven\u2019t bought this many houses since I was doing the BRRRR strategy in Northern Florida and I was buying four to five houses a month. And I probably messed up talking about that on the podcast because then everybody else moved out to that area and it got really hard to buy them. But I\u2019ve got 14 houses in escrow right now and they\u2019re probably averaging right around a million dollars each. So these are not cheap properties that I\u2019m buying. And I\u2019ve never seen the ability to negotiate like what we can do right now. It\u2019s actually fun to be investing in real estate again. The interest rates aren\u2019t fun, but when interest rates were low, we were constantly complaining that you can\u2019t get a house and they\u2019re getting overbid and it\u2019s a bidding war and everyone\u2019s overpaying. And so now we finally see an adjustment to that and the complaints are well, interest rates are really high. It just goes to show there\u2019s always going to be something that pops in that makes you think I don\u2019t want to invest into real estate. We\u2019re already at the top of the market or the market\u2019s going to keep dropping. The reality is none of us know. That\u2019s why we rely on the fundamentals. We analyze a property to make sure it\u2019s going to cash flow. Go ahead.<\/p>\n
No. I was just going to say this idea that there\u2019s going to be a perfect time is wishful thinking. Is there ever going to be a time where interest rates are super low and prices are super low and rent is really high and there\u2019s no competition?<\/p>\n
And there\u2019s no risk. Yeah.<\/p>\n
No. And there\u2019s no risk. That\u2019s never going to happen. And people are like, \u201cOh, back in 2008, it was so easy. Everything was cheap.\u201d Well, interest rates in 2008, 2009 are about the same as what they were today, just for the record. And secondly, it was super hard to get a loan back then. Credit was super tight. So even though prices were low, credit was high. There\u2019s always something that you\u2019re going to have to overcome. And so I think this to me and to you represents an opportunity because no longer are there just no houses to buy. Now there are actually things you can go look at and you can interact with people. A lot of what the presentation I\u2019m about to go into goes into is all about momentum. And it\u2019s like, no, it doesn\u2019t have to be the perfect deal.
It\u2019s about getting a deal that A, improves your financial position. Not saying to go buy anything. But find something that is going to make a demonstrable difference in your financial position and use it as an opportunity to learn. So hopefully everyone listens to this. I think there\u2019s some really good practical tips that can help you go take action right now. And as David and I were just alluding to, that\u2019s really what it comes down to is getting ready and taking action and committing yourself to investing. And hopefully what we\u2019re going to talk about today gives you some practical tips on how to do that.<\/p>\n
Amen. That\u2019s some good stuff there. Now, for today\u2019s quick tip, if you like what you hear, if you decide, \u201cHey, this is the right time for me to get a little bit more serious about my investing. I want to take advantage of the soft points in this market and find a great deal.\u201d, we have some help for you. If you go pro with BiggerPockets, there\u2019s a lot of resources you can use that will help you analyze properties, help you find what the rents are going to be, discounts to use different vendors that you\u2019re going to need in your investing journey. We have a discount code for you because you listened to this podcast and you took action. So you will get 20% off of a pro membership, as well as some goodies. Dave, what is the discount code that they need to use?<\/p>\n
They can use discount code prorental. That\u2019s P-R-O-R-E-N-T-A-L. I don\u2019t know why I just spelled that. I think people know how to spell pro rental. But if you don\u2019t already know how, there you go.<\/p>\n
Yeah, it doesn\u2019t hurt right? Never hurts. So we hope you guys enjoyed this episode. If you\u2019ve been thinking about jumping into real estate, nobody knows for sure what\u2019s going to happen. Could the market drop more? Yes. Will the market continue to correct if interest rates continue to go up? Yeah, it very well could. But will real estate become more expensive as interest rates go up? Yep. That\u2019s probably true too. And is it going to go back at some point when interest rates go down again? Yes, that\u2019s probably going to happen. Real estate is a fluctuating beast, and that is why we listen to podcasts like this. That is why we follow BiggerPockets and we talk to other investors to find out what is happening in the market at the place in time when we\u2019re looking to buy. So it\u2019s our pleasure to bring you this information. We hope you like it. Let us know in the comments what you think.<\/p>\n
Hey, everyone. Welcome to this BiggerPockets webinar. How to you buy your first, second or third rental property. My name is Dave Meyer. I will be your host today. And if you don\u2019t already know me, I\u2019ll get into this in a little bit, but I\u2019ve been a real estate investor for over 12 years now. I work full-time at BiggerPockets in data and analytics and I\u2019m the host of BiggerPockets\u2019 newest podcast called On The Market. And I\u2019m super excited to talk to you all today because financial freedom has been a passion of mine for years and I have been fortunate enough to find it through rental property investing and I\u2019m super excited to help each and every one of you today find that financial freedom that we all yearn for through the power of rental property investing.
Now, if you are here today, it\u2019s probably because you want to take some positive action in your life. You want to make a change. And maybe that\u2019s because you want some more income or perhaps you want to retire early, get out of your job, whatever it is. And maybe you\u2019ve heard, hopefully you\u2019ve heard by this point, that real estate is the best possible way to pursue financial freedom and to live the life that you want and that you deserve. And I believe all of that is true. I genuinely, genuinely believe that real estate is the best way to pursue financial freedom. I\u2019ve lived it. I\u2019ve seen tens of thousands of people do this. But not that many people actually get there. So let me ask you a question. Why is it that so many people think about getting into real estate, but don\u2019t actually pull the trigger, start investing, get those first couple of deals and wind up pursuing the financial freedom that they want so badly? Or maybe you have one deal. Why do so many people just have one or two deals and never scale up? Actually, that\u2019s a problem I had early in my career. I took way too long to scale up. So why does this happen?
I like to call it the three D\u2019s. Again, the three D\u2019s, sorry, are three things. The most common things that I hear over and over again that prevent people from pursuing their financial goals. And they\u2019re simple. One is dollars. And I know a lot of people are probably out there thinking, \u201cI don\u2019t have the money to invest in real estate.\u201d That is a common objection I hear from people. Two is deals. Everyone\u2019s saying that these days, right? All the deals are in the past. Oh, there\u2019s nothing good to buy anymore. Everything is overpriced. We\u2019ll talk about that. I don\u2019t think so. So we\u2019ll talk about that. And then third, direction. This is all about the purpose that you take. People don\u2019t know how to pursue the goals in a consistent focused way. They may be interested. They\u2019ve read a little bit, or they\u2019ve watched a podcast or a webinar or something, but they don\u2019t know the system for pursuing financial freedom consistently day in and day out.
And this direction one, I know it\u2019s a little bit less obvious than dollars and deals, but it is super important. Maybe the most important, because it\u2019s all about your mindset. And it\u2019s important to know that success in almost all cases is not a secret or an accident. It\u2019s not just something that happens to you. It\u2019s something that you have some control over and it\u2019s all about your action and your mindset and your ability to consistently show up every day and follow a system that honestly I\u2019m going to teach you today. I\u2019m going to teach you how to do it. All you have to do is show up and take action. But it\u2019s hard so you\u2019re going to have to commit yourself to doing that.
I think a really good example of this and a good parallel to what it takes to be in real estate investing is actually trying to lose weight or getting in shape. Everyone wants to lose weight. Everyone wants to be in great shape. But are you going to actually follow the system and process that everyone knows works. It\u2019s diet and exercise. Not a lot of people know this. I actually used to weigh 40 or 50 pounds more than I do now. And I didn\u2019t know any secret. There\u2019s nothing I did differently than what anyone else did. It\u2019s common knowledge. All I did was show up every day because I really, really wanted it. I wanted to be healthier. And so I pursued that every single day and I got there and real estate is basically the same thing.
You just have to show up and follow the systems that hundreds of thousands of people have done before and it\u2019s not a secret. We\u2019re going to teach you all about it today. That\u2019s what we\u2019re here for. That\u2019s what this webinar is about. We\u2019re going to talk about getting the dollars, getting the deals and finding that direction you need to be a successful real estate investor and get that financial freedom. I\u2019m sure you\u2019re with me, right? Everyone wants this financial freedom. It\u2019s amazing. It\u2019s such an incredible powerful force in your life and I really want to help all of you get there.
Now, actually, I made this webinar a while ago and there\u2019s actually a fourth hurdle. I just couldn\u2019t think of a D word to come up with it. But that\u2019s basically the economy. We all know it\u2019s pretty wild right now. It\u2019s very confusing. And luckily, this is my job. I talk about macroeconomics in the housing market pretty much all day. So I am going to address that later in the webinar as well, because it is confusing and a little bit scary, but it doesn\u2019t have to be if you actually understand what\u2019s going on. So in addition to the three normal hurdles, I\u2019ll also put some economy stuff there.
Before we get to that, let\u2019s just talk about why this webinar is even called the first three deals. Three\u2019s just some arbitrary number. Why did I pick that? Well, it\u2019s because the goal of the first few deals is not to build wealth. Yes, it\u2019s going to hopefully improve your financial position. But three deals, let\u2019s be honest, is not going to get you to financial freedom unless you have three grand slams. But it\u2019s probably going to take you more than three deals. So why are we focused here on three deals? Well, the first three deals are all about building momentum. That is what we are here for. This is about building your network. About building systems and processes that will take you really anywhere that you want to go with your investing career. It\u2019s all about building this strong foundation and moving forward consistently.
I said this earlier. I made a mistake earlier in my investing career and I reflected on it a lot. And that\u2019s why I talk about momentum so much is because I got my first deal in 2010 and then I didn\u2019t do another deal for four years. I was doing work and all this other stuff, but I didn\u2019t really think about it and I didn\u2019t build a system that enabled me to scale my business at the same time as having a career. And I was in my 20s, I was trying to have some fun. But I could have done that and I should have done that. If I had put the systems in place at that time, I would\u2019ve had a much bigger portfolio now. I\u2019ve caught up since, but I really want you to focus on momentum because that is really the most important thing when you\u2019re first getting those first couple of deals.
Okay. So that\u2019s what we\u2019re going to talk about today. It\u2019s about how to get to those first few deals and from there you can move on to your financial freedom goals, because you\u2019ll have the systems and foundation that you need to really reach anything. It doesn\u2019t change fundamentally after three deals. I just think after you\u2019ve gotten those first three deals, you\u2019re going to be so good at this that you can scale to pretty much any size that you want.
If you don\u2019t know BiggerPockets, let me just take one second and explain why I\u2019m here talking to you. BiggerPockets is a massive community and resource for real estate investors. We have podcasts. We have webinars. We have blogs. We have all sorts of things. But underlying all of that, let me just tell you what we at BiggerPockets believe. We believe that real estate investing is the greatest wealth building strategy out there. We have helped hundreds of thousands of people. There are 2.5 million people who have used BiggerPockets systems to pursue real estate wealth. But we also believe that this is not a get rich quick scheme. Listen, this is not going to make you wealthy overnight. This is, again, about a system and process that if you dedicate yourself for not that long, for a couple of years, you can find yourself anywhere you want to be.
And third, we firmly believe that anyone can do this. Whoever you are out there. Any credit, any income, any circumstances. Of course, people come from different backgrounds and have different challenges to overcome but I am confident that no matter who you are, if you are listening to this, you can make this happen if you really want it. We can help you with these systems. That\u2019s what we\u2019re here for today. And again, I\u2019m not just saying this. I know it\u2019s possible because I have seen it. I\u2019ve worked at BiggerPockets for seven years. I\u2019ve seen so many people become successful through real estate investing and that\u2019s what you\u2019re here to do today.
All right. So let me just quickly explain who I am and why I am even qualified to lead this webinar. My name\u2019s Dave Meyer. I\u2019ve been working at BiggerPockets for seven years. I\u2019ve been investing for 12. First couple years when I was investing I had no idea what I was doing. I was just making it up as I went along. I had never heard of BiggerPockets. And then one day I decided I wanted to take the two things I\u2019m passionate about, which are data and analytics and real estate, looked for a job, found one at BiggerPockets. My life has changed dramatically since then. I\u2019ve been able to scale my real estate portfolio. I am mostly a rental property investor. I now invest passively. I have one short term rental. And I still love data analysis and do that as well. So my new podcast called On The Market goes into macroeconomics, data analysis and all basically all the trends and news and things that you need to know as an investor that\u2019s going on in the world right now. So check that out if you haven\u2019t already.
I wrote a book with J. Scott. If you know J, he is an incredible real estate investor and he and I wrote a book together called Real Estate by the Numbers. It\u2019s coming out this October. All about the math and how to really just be a great deal analysis. And we\u2019ll talk about that today, but that book is coming out. And just as a reminder, I was once a newbie too. I really didn\u2019t know what I was doing. But once I hit that three deal mark, I really started to understand my systems, my process better. And that\u2019s why today we\u2019re talking about building that stack so that you can get to that financial freedom. I do live in Amsterdam. It was a lifelong dream of mine to live abroad. And luckily, through real estate, through BiggerPockets, I\u2019ve been able to pursue that. And it\u2019s been an absolutely wonderful experience.
If after this, you want to reach out to me, you want to connect with me, the best place to do that is on Instagram. I am @TheDataDeli. If you don\u2019t know already, I love sandwiches. That\u2019s why I love data deli. So I talk all about real estate, economics, and of course, sandwiches. So, okay, with that out of the way, now you understand who I am. Let\u2019s talk about our first few deals. Because in some ways it really matters a lot about your first few deals. And in other ways they just don\u2019t really matter at all. Because again, we are talking about momentum here. So in the ways that they do matter, it matters just that you show up and actually do them. And I\u2019m not saying that you should just go buy anything. We\u2019re going to talk about how to find a good deal for your first deal today.
But what matters is that you jump in the ring, you get in the arena and you start learning. Because you don\u2019t learn by watching and you certainly can learn here in a webinar about a podcast, but the way you really learn and understand it at your core is by actually getting in there and doing that. So that\u2019s why the first deals matter. But why they don\u2019t really matter is because you don\u2019t need to hit a home run. As I said before, three deals, not going to get you to financial freedom. So don\u2019t put so much pressure on yourself. You don\u2019t need it to be a home run. You want to hit a double. Maybe a triple. Even a single is fine. Like a house hack where you just reduce your monthly expenses. That is getting in the game. You are going to learn so much.
So that\u2019s what I want to talk to you about today is just getting started. Because once you do, the impact is going to cascade and is going to compound and is going to grow to whatever you want it to be. So let me share this concept with you. And this is a super important concept for what we\u2019re talking about today and why the first few deals are so important. It\u2019s a system and a concept that we call the stack here at BiggerPockets. And the concept here is something that you need to understand. Is that you don\u2019t build wealth by getting a single property or by any property. The way you build wealth is by building a portfolio. You need a lot of assets. Not even that many. But you need more than one asset to actually build that wealth that you\u2019re talking about.
And listen, I know that sounds probably intimidating, right? Maybe you\u2019re sitting here thinking, \u201cI\u2019m just getting started. I don\u2019t even have one. How am I supposed to start thinking about a whole portfolio?\u201d Well, it\u2019s the same to buy one as it is to buy two or to buy four, or to buy five. It\u2019s about this system and we\u2019re going to talk about this system and we\u2019re calling it the stack. This is basically a blueprint for you to pursue for financial freedom. So just imagine you commit yourself today to in the next six months you\u2019re going to buy your first rental property. Let\u2019s call it a single family home. Most people start with single families. And a single family is a great deal. It\u2019s a great way to get started. And no matter who you are and who you\u2019re \u2026 Whatever it is. You can do this. A single family residence is entirely possible.
If you want a house hack, you can put as little as 3.5% down or maybe you have enough to put 20 or 25% down. I promise you, by the end of this webinar, you will know that you are capable of buying a single family home in the next three to six months as long as you dedicate yourself to that. So there you did it. Congratulations. That was the hardest part. One deal is the hardest thing you ever have to do. I admit it. I know it is scary to do that first deal. Honestly, I still get a little nervous on every deal I do. That\u2019s okay. But after that first time, everything just keeps getting easier and easier and easier. So wherever you are, whatever you\u2019re doing, please just focus on that first one.
A couple years from now, then you buy a duplex. It\u2019s still only one unit, right? It\u2019s still only one purchase. So first year, you buy one single family residence. Second year, you buy a duplex. Maybe in your third year, you buy a fourplex. All of a sudden you have seven units. All you did is buy three things. One per year. And now you have seven units. Imagine if you made a couple hundred bucks per unit off that, that\u2019s in three years. Then you go to eight. Maybe then in 16. And all of a sudden in five years you have 31 units. And listen, don\u2019t get caught up in the details of making it exactly one, two, four, eight. This is just about exponential growth. It\u2019s that if you learn how to do a single family, then you can easily buy a duplex, you can easily buy a fourplex.
By the time you have seven units, you can buy an eight unit. You\u2019re going to have these systems in place that allow you to scale to any size. The way you start is with one. So stop worrying about your third deal. I\u2019m just showing you this to show where we\u2019re going. But you don\u2019t need to worry about your third deal or your fifth deal right now. This is about momentum and momentum starts with your next deal. That is the thing that matters most and that\u2019s what we\u2019re going to talk about right now. So what is stopping you from getting to this first deal or your next deal? Maybe you have a deal already and you\u2019re like me and you bought one and now you\u2019re just slowing down. I don\u2019t know. But I imagine these are roadblocks that most people face because I\u2019ve heard it so many times.
And again, we talked about them. They\u2019re dollars, deals and direction. But I\u2019m first going to just talk about market conditions because I said I would. And listen, home prices are at an all time high. Rents, also at an all time high, which is good if you already own some properties. And rising interest rates have been \u2026 Interest rates have been going up for a while now and it is slowing down the housing market. So that seems a little scary. On the other side, there are other things going on. Like stock market and cryptocurrency have been getting hammered over the last couple of months and there are valid fears of a recession. I do think there\u2019s a good chance that there is a recession in 2022 or in 2023. So that begs the question you\u2019re sitting on this webinar and I\u2019m telling you all these scary things, is now a good time to buy? Overwhelmingly I can say yes. I\u2019ve already done several deals this year and literally every experienced investor I know is continuing to buy right now.
But let\u2019s talk about why because I\u2019m not just saying this because I\u2019m boosting something. I genuinely believe this. Number one, it is always a good time to invest if your numbers work. If you know how to analyze a deal, it doesn\u2019t matter what the market conditions are. If you can find an 8% cash on cash return, I will buy it in any single market. Or if you know how to find a good deal and negotiate a good price, that works in any single market. Transitionary markets, which is what we\u2019re in right now \u2026 We saw this huge run up in prices. That\u2019s over I think. But we are still likely going to see probably appreciation over the next couple of years. And even if you don\u2019t, transitionary markets offers opportunity to buy below market value.
If you listen to my podcast, James Dainard and Kathy and Jamil and Henry are always talking about this because basically sellers now in this type of economy are willing to sell. They\u2019re willing to negotiate. They\u2019re willing to talk to you. That didn\u2019t happen the last couple years. There was crazy competition. Even as an investor, you had to bid aggressively, you had to waive contingencies. That is changing. You\u2019re going to have much more leverage as a buyer. That means there\u2019s opportunity. Third, this is true of any investment, but it\u2019s true in real estate. Time in the market is more important than timing the market. And they say this in the stocks because it\u2019s true. The longer you own assets, the better off you\u2019re going to be. Listen, I look at macroeconomics literally every single day for hours and I don\u2019t try to time the market.
And I know people probably think that\u2019s not true, but it\u2019s 100% true. I don\u2019t try to time the market. Instead, I try to buy good deals consistently when I have the cash available to do that. And that\u2019s because I know what a good deal is. I know how to analyze good deals and you will too by the end of this webinar. But as I said, every experienced investor I know is buying right now and that\u2019s because they have systems. They know what a good deal is. They\u2019re getting good leads. They are seeing really good opportunities and they\u2019re pouncing on that. I\u2019ll just leave you with some words that Warren Buffet \u2026 I\u2019m not leaving you. I\u2019ll end this section with some words from Warren Buffet. Where he said, \u201cBe greedy when others are fearful and fearful when others are greedy.\u201d And I really take that to heart. That means there are opportunities when everyone else is afraid. And I\u2019m not saying buy anything. Absolutely do not buy just anything. Buy a good deal. You\u2019re going to teach you what a good deal is and only buy that.
Okay, so let\u2019s get into the traditional three D\u2019s. Number one is dollars. All right. Real estate finance honestly is really all about mindset. You can find financing if you really want to. First way to do that is the traditional loan. This is when you put 20 or 25% down and get a traditional mortgage. This is the easy thing to do. If you have a W2 job or if you are a contractor and you have two years of pay history, you can probably get a traditional loan. Or if you want to owner occupy, do a house hack, that\u2019s a great way to get started as well and you can put as little as 3.5% down.
So you can do this a lot. You can get five or even 10 mortgages just by using traditional mortgages. We talked about the stack. You could get to seven units or you could even buy more than that just by using traditional loans. So this isn\u2019t super complicated, but there are probably people out there who don\u2019t have 20 or 25% to put down so there are other options out there. And the number one option I recommend if you don\u2019t have dollars is to do a partnership. Honestly, so many people overlook the value of partnerships. They look at their own financial situation and think I don\u2019t have the money to do that. Well, someone you know might. And if you don\u2019t, maybe you just put sweat equity into a deal. There are so many different ways that you can structure a partnership that whatever your financial situation is, you can figure this out. And I know people are maybe skeptical so let me just tell you the story of my first deal.
So let me tell you about the story of my first deal. When I was 23 years old, I was a year out of college. I was waiting tables and I had no money at all. Really, no money to my name. But what I knew was that real estate prices had just gone down a lot. And I had done some data analysis in college and I was able to figure out that this would cash flow. I knew it would cash flow. I didn\u2019t really honestly know how much it would cash flow. I didn\u2019t really know how to analyze a deal. But luckily I figured it out. I went to some people I knew and was able to convince three other people to go in on it with me. And the deal we had, we needed just over 100 grand to put down on this apartment. Four units. And we each needed to bring 26K. But I didn\u2019t have it.
So I went to one of the other partners and said, \u201cListen, if you put in my 26K, in addition to all the benefits you\u2019re getting for being an owner of the property already, I will also pay you 6% interest on the 26K you loan me.\u201d So now this partner has a lot of equity and they\u2019re getting cash flow basically from me paying them 6% every year on that 26K. So I did all the property management and the partnership basically paid me for my property management, what you would pay normal property management. And then I used that cash to pay off the secondary loan. So this is what I mean about getting creative. No one told me to do this, but I figured it out with some people I knew. I managed to be the property manager to generate cash.
And at first, did this make me a ton of money? No. But over the years I actually bought out two of my partners. I was able to figure out how to generate more cash flow and it wound up being an excellent, excellent deal for me. But at the time it was a single. It wasn\u2019t a home run. But it did help me learn the business. And again, I didn\u2019t follow this up as fast as I should, but in retrospect, over the years when I was managing this property, I learned a ton and I am so glad that I got into this, even though it wasn\u2019t the financial home run that it might have been had I just bought it on my own. But it got me into the game.
So let me just get back to that. Partnership\u2019s an amazing way for you to find the dollar. So far we have a traditional loan. We have a partnership. And then the last thing I want to say \u2026 This isn\u2019t really its own way of financing. It\u2019s a little bit different. But the BRRRR strategy is an amazing way to build a portfolio. When you do a BRRRR, it\u2019s basically like flipping a house, but you actually keep it, which is the opposite of flipping a house. But you buy a house that needs work, you renovate it, but then instead of flipping it to someone else, you do a cash refinance and you can take out a lot of the money that you put down and take it out of that property and put it into the next property.
I\u2019m not going to get too far into that. David Greene wrote a great book about BRRRR. We actually have a couple of resources I\u2019m going to talk about here in a second, where you can learn more about this. But it is a great way to build a whole portfolio when you don\u2019t have a lot of cash. So if you want to learn more about that after this, check that out and we have an awesome giveaway for you. If you\u2019re a pro member, we have a full workshop that David Greene and Brandon Turner put together for nine strategies to invest when you have no money. I mean, Brandon wrote the book, How To Invest With Low Or No Money Down so he is the ultimate resource for this. And if you are a pro member \u2026 Which we\u2019ll talk about later. If you\u2019re not, if you want to go pro, we\u2019ll talk about that in a little bit. But you\u2019ll get nine strategies on how to do this. And believe me, I did it. I had no money when I got started investing in real estate. And you can absolutely do it too. Dollars are not a hurdle that you should really be considering. And I\u2019ll explain that more in just a little bit here.
So the secret here \u2026 Well, not that little bit. I\u2019ll explain it right now. The secret to financing real estate \u2026 I said it was a mindset and I want to convince you not to get so hung up on dollars because no matter what, the secret to financing real estate is having a great deal. The whole reason I was able to convince those partners to go in on me, even though I had no experience, was because I had an amazing deal and I was able to analyze the numbers and show them how much money they were going to make, even with a lot of contingencies. And that is true for you. If you have good deals, people will invest in it. No investor turns down an excellent deal. It\u2019s just not going to happen. So that is really what it\u2019s all about.
So it\u2019s helpful to know what financing strategies are out there. But if you can learn to identify excellent deals, that is going to help you with financing a million times over. But let\u2019s just talk a few ways to get deals right now. The MLS. I know it\u2019s not sexy. It\u2019s not the cool way to do it. But so many people find deals on the MLS. Honestly, I\u2019ve found the majority of my deals on the MLS. And according to a lot of friends of mine who are super active real estate investors, they\u2019re getting more deals on the MLS right now than off market right now because sellers \u2026 Again, it\u2019s a transitionary market. Sellers are motivated right now and they are willing to cash in. They are willing to negotiate and there are great ways to find these deals.
One of them is of course a real estate agent. So if you don\u2019t have one, you want to find an investor friendly agent. You can do that for free on BiggerPockets, biggerpockets.com\/agent. You can find an agent who can help you find really good deals. Now, you can do this. You can go on Zillow, but not every deal on Zillow is going to be great. So don\u2019t get discouraged. We\u2019re going to talk about this in a little bit. How to whittle down. If you go on Zillow, how to funnel it down to find a great deal. We\u2019ll talk about this in a minute, but just for now know that the MLS \u2026 Don\u2019t listen when people say the MLS doesn\u2019t have good deals. There are good deals on the MLS. You just have to be patient and figure out how to find them.
The next one is driving for deals. This is also called driving for dollars. It is extremely common because it works. But it takes a little bit of work. You\u2019re going to have to do a bit of legwork here to actually find these deals. Now, if you\u2019ve never heard of driving for deals this is basically a process of identifying properties that have a likely seller, but they haven\u2019t put it on the market. So they have \u2026 Maybe it\u2019s someone who had an unfortunate situation with their family and they need to get out of the house or you hear a lot about hoarders who want to move, but they don\u2019t have the energy or the money to clean up their house to put it on the market. So a lot of people just don\u2019t wind up putting it on the market.
But if someone comes along and says, \u201cHey, I\u2019m an investor. I would love to buy this deal from you.\u201d, then that\u2019s a great opportunity for both parties. And I love the way that James Dainard says this or Henry Washington. People who are on my podcast say it. That you\u2019re not buying a deal when you\u2019re driving for deals, you\u2019re buying a situation. Some people might just need cash now and they\u2019re afraid to put it on the market. They don\u2019t want people coming into their house. The house needs a lot of work. Maybe it needs a new foundation and they\u2019re not prepared to do that. These are all situations. And going back to the idea of market conditions, situations happen in any kind of economic climate. These types of deals never go away. Yes, you\u2019re going to have to do some work, but there are great tools out there.
Deal hub \u2026 DealMachine. Sorry. Is a good one. I have no affiliation, but I\u2019ve used it before. It\u2019s a really good tool. And this is a very good way to find deals. If you want to find things under value, if you\u2019re willing to do value add and do some construction and rehab work, driving for deals works all day. There\u2019s a ton of resources. Again, we\u2019re going to share with you guys, that you can learn more about this for free. But don\u2019t forget about driving for deals. It is an excellent way to find deals. There\u2019s other ways to do it. We call it driving for dollars, but you can do direct mail letters, direct cold calls. This is similar to driving for deals, but rather than actually driving around and finding a house and being like, \u201cOh, that one. It\u2019s a little rundown. Maybe I\u2019ll call those people.\u201d You can actually just send them mail or you can cold call them by buying lists.
There\u2019s all sorts of services that do this. You can basically go on people who are in pre foreclosure or maybe people who live out of state. It\u2019s not owner occupied and you know that they\u2019re a landlord renting it out. And maybe the place is a little run down and needs some work. Maybe you can take it off their hands. And guys, this is a numbers game. Not everyone\u2019s going to respond to you. You might send out a thousand mailers, you might cold call a thousand people, and you might get a couple responses. But all it takes is one deal and it\u2019s entirely worth it. It\u2019s about getting that momentum. So you just need one deal. Maybe you get one deal a year doing this. It would still be worthwhile. And there are all sorts of companies that can help you do this so you don\u2019t have to do it alone. You don\u2019t have to figure out how to do this. There are resources to help real estate investors do this exact thing because it works.
The last is relationships. I mean, real estate is such a \u2026 It\u2019s just a relationship game. I get called, I get talked to by people all the time, because I am friends with a lot of real estate investors. So make friends with a lot of real estate investors. Make friends with real estate agents or property managers or lenders. Because they hear about deals all the time and they can pass them along to you. And this isn\u2019t a quick thing. This does take some time. But it\u2019s something to think about. Maybe it won\u2019t work for you in the next three months but if you\u2019re trying to build that stack, if you\u2019re trying to get couple deals in the next few years, start building those relationships now, because they\u2019ll start bearing fruit a couple years from now.
So that\u2019s deals. Remember, if we have pro, you can get a masterclass hosted by Brandon Turner on how to find great deals. It talks all about relationships. Like I said, driving for dollars. The MLS. Brandon talks about going on Facebook, using Craigslist, all these really creative strategies to find deals. And like I said, if you can find deals, you will find the financing. So make sure you know how to find a good deal and how to analyze a good deal, which we\u2019ll talk about in just a minute.
The last thing here is direction. We talked about this earlier, and this is about following the purpose and being really focused on where you spend your time and your attention. I actually listened something the other day where Warren Buffet and Bill Gates were both independently asked to write down in one word why they were successful. And they both \u2026 They didn\u2019t know they were talking to each other. They both wrote down the same word and it was focus. It\u2019s not direction. Didn\u2019t have a D. But it\u2019s the same kind of idea. It\u2019s all about pointing yourself with intention where you want to go. So how do you find direction? Well, you\u2019ve already taken the first step. You are educating yourself, which is the most important thing. You want to start really broad at the education phase. So you\u2019re doing it by being on this webinar. You need podcasts. You need books. We have forums, blog posts on BiggerPockets. You get most of this stuff for free. So you need education. And this doesn\u2019t stop even when you have a first deal or second deal. I\u2019m still learning. I am still constantly talking to investors, watching webinars, reading the forums to learn more and more and more. And you want to do that as broad as possible.
Next is focus. Like I said, it\u2019s sort of a subset of direction. But you need to be able to focus to support your long term goal. It\u2019s so easy to get that shiny object syndrome. Maybe you\u2019re looking for a short term rental, but then someone tells you about wholesaling. You\u2019re like, \u201cOh, I want a wholesale.\u201d Or, \u201cI\u2019m going to flip.\u201d Or, \u201cI\u2019m going to do note investing.\u201d Or whatever it is. There\u2019s so many things. But specifically at the beginning you have to focus. Otherwise, you\u2019re going to get overwhelmed. So you need to pick an area. Pick a market. Pick where you live. Pick somewhere close by and be specific. Pick the actual block or the zip code or the neighborhood that you want to buy in because that\u2019s going to help you focus your brain on what exactly you need to do instead of being distracted by all the things that are going on around you.
Pick your property type. Do you want single family? Do you want a short term rental? We\u2019re talking about rentals today because I think it\u2019s the best way to build long term wealth. I started doing short term and large multifamily later in my career so if you\u2019re talking about first, second or third, I do think buy and hold, house hacking, great way to do it, but just pick one. Pick a condition. Do you want to buy A class properties? Do you want turnkey? Do you want to do value add? There\u2019s so much resources about this and we\u2019ll talk about this more, but that focus is so important because it gets you to your buy box.
And I\u2019m going to talk about that in a little bit. But your buy box is basically what are you looking for in a deal? If you know I\u2019m looking for a traditional rental in Denver, Colorado that has at least an 8% cash on cash return in a good neighborhood, then when you see that you are ready to buy. You\u2019re not going to be worried. You\u2019re not going to have analysis paralysis. You\u2019re not going to be worried about macroeconomic conditions. You\u2019re going to be like, \u201cThis is what I\u2019ve been looking for and I\u2019m ready to buy it because I know exactly what I want.\u201d And so this focus helps you create that buy box. We\u2019ll talk about that more in just a little bit.
And then lastly, this is about process. Guys, we\u2019ve been talking about this, but process is what you need to get the results. So even if you\u2019re focused, even if you know what you\u2019re doing, if you don\u2019t show up every day and do the work, you\u2019re not going to get anywhere. We talked about losing weight, going to the gym. If you don\u2019t show up to the gym, you\u2019re still not going to lose weight even if you think about it all the time and you get educated about yourself. You actually have to show up and do the work and that is what we are hopefully helping you do today.
In this process, you might be thinking, \u201cWhat is the process? What do I do? What do I show up? How do I do this?\u201d Well, that\u2019s what we\u2019re going to teach you right today. It\u2019s all about the deal funnel. Okay. Deal funnel. We have an analogy for it at BiggerPockets. We call it lapse. And that\u2019s the process I want you guys to focus on here. To get over that direction fear. The deal funnel is all about a numbers game. We talked about the buy box. So how do you find a deal that\u2019s in your buy box? Well, you need to start with a lot of leads. There\u2019s a reason this slide, it looks like a funnel. It\u2019s because at the top of the funnel, you need to start with a lot of leads. It might be hundreds of leads. It\u2019s probably not thousands. But let\u2019s just say it\u2019s 100. I don\u2019t know. I\u2019m just going to make up a number. Then if you\u2019re looking at 100 leads on Zillow, not everything\u2019s going to be great. But maybe 10 of them are kind of interesting. You\u2019re like, \u201cOh, maybe this could work.\u201d
That\u2019s when you analyze the deal. You actually underwrite it. You figure out what the cash flow is going to be, what the appreciation might be, what your important return metrics are going to be and decide if any of them are worth pursuing. And maybe only 10%, maybe one of them is actually worth pursuing and succeeding. But that\u2019s the game, right? I keep saying that all you need to do is follow a process that thousands of people have done. This is the process. All you need to do, get a lot of leads, analyze the ones that look good, and pursue the ones that look good from there. That\u2019s all it takes. And even if those numbers \u2026 I just made them up. I said, out of a hundred leads, you get one good deal. That\u2019s totally worth it. I was showing you before that to get a stack, all you need to do is really buy one, maybe two deals a year for a couple of years and you\u2019ll get to that financial freedom.
Would do you not analyze 10 deals, analyze 20 or 30 deals to get that one deal a year? I know I would because analyzing deals is not really that hard. I\u2019m going to show you how to do it in five minutes. I\u2019ll show you in five minutes how to actually analyze a deal in five minutes. So that\u2019s what I want to make sure you understand here is that real estate is just a numbers game. Follow this process. Leads, analysis, pursue, success. Just do it over and over again. If you do the leads and you are able to analyze deals and you find deals that are good, you\u2019re going to find that financing. Like I told you, you\u2019re going to know exactly what you need to be doing. So memorize this, guys. Memorize the deal funnel. It is not complicated. It is proven. And I know each and every one of you can do this, because I\u2019ve seen so many people do it. But just remember it is a numbers game. Do not get discouraged if you look at 10 deals and none of them work. Good. You should be looking at hundreds of deals to know that you are getting the best possible deal.
We\u2019ve talked a little bit about how to find those leads, driving for dollars, MLS, relationships. You can watch that masterclass I just told you about. So let\u2019s talk about the next one. Because so many of those deals, so many of the leads that you\u2019re going to get are not good deals, you need to be able to find the right ones. This is really important and this is where it takes a little bit of skill and I\u2019m going to talk to you about how to do it. You have to be able to analyze those leads to pick out the best ones.
That\u2019s why people are going to invest with you, that\u2019s why partners are going to partner with you, and that\u2019s why you\u2019re going to find financial freedom. Is because out of all the properties in the United States, there are 140 million of them, out of all of those, you\u2019re going to be able to find the ones that best support your strategy and best help you reach your financial goals. Here\u2019s what experts know. Again, I\u2019ll say this again. I said it earlier. But it\u2019s not about timing the market, it is about time in the market and you need to focus on what your portfolio looks like 10 years from now. So those are the important things to keep in mind when we are analyzing deals in just a second, because it is easy to get distracted by the market. I know it is a confusing time. But if you have your buy box and if you follow this process of deal analysis I\u2019m about to show you, and you keep in mind where you want to be 10 years from now, I promise you this is going to work.
Okay. So we\u2019re going to try this in real time together. We\u2019re going to actually analyze a deal together. And to help me with this, I am going to use the BiggerPockets calculators. Just so you guys know, this is a pro benefit, but if you\u2019re not a pro yet you can actually use this five times for free. So go check it out because it\u2019s a really useful tool. I picked this deal because it\u2019s in Alabama. I actually just did a deal in Alabama recently. In Birmingham, not in Huntsville, but I\u2019m interested in the market and so I like this deal.
It\u2019s a three bed, one full bath, two half bath, 1700 square feet, two car garage. Looks great. Nice curb appeal. I like the look of the house. So I don\u2019t really know that much about it, but we are going to analyze it. I just found this on BiggerPockets. I just went to find deals, real estate listings. You can go check it out there. That\u2019s another good place to find deals. I didn\u2019t even mention BiggerPockets tools of the finding deals part but that\u2019s another good place to find deals. And to do this, we are going to go analyze a deal. And while I\u2019m pulling this up \u2026 I\u2019ll just show you. I just go here to tools to rental property. Again, this is for pro members but you can start for free. Just hit start a new report.
I\u2019ll just tell you guys, the reason I\u2019m doing it on the BiggerPockets calculator is because it\u2019s easy. And let\u2019s just start doing this. I\u2019m going to show you how to do it and you\u2019ll see that in about five minutes you\u2019ll be able to analyze a deal once you get good at this, but I\u2019ll explain this all to you. First, let\u2019s just start by copying and pasting our address. That sounds pretty easy. Look, you can just auto fill it. Great. I\u2019m going to add a photo actually. Before this just did this so I didn\u2019t have to awkwardly do it while I was doing the webinar. But what do we got here? All right. Here we got our image. You can add as many image as you want, especially if you\u2019re going to show this to a lender or partner at one point, which I\u2019ll show you later how to do. You might want to add some good pictures.
For the purposes of this, I\u2019m just going to do one. And then what was our zip code here? 35810. Let\u2019s put that in. Great. So now all we need to do is hit next. Let\u2019s talk about our purchase. Let\u2019s just assume for now we\u2019re going to buy it at full price. And we might not be able to do that. That might not be a good deal. But for now, let\u2019s just start that way, because you\u2019re going to learn and you\u2019re going to see that using the calculators, you can sort of iterate on the deal and if it\u2019s not a good deal at first, you can put in different purchase prices and see what you should be offering to make that deal. So let\u2019s just assume that we\u2019re at 140,000, easy. Closing costs. What are closing costs? This is starting to get hard. Everything easier before Dave. It was just copying and pasting everything and now we have to think. Purchase closing costs.
Well, BiggerPockets on the calculators have these little tips. So if you don\u2019t already know what your closing costs are, first you can do that by talking to a lender if you want to. But you\u2019ll see that it\u2019s just one to 2% of the purchase price of the property. If unsure, one and a half percent. So I\u2019m just going to do one and a half percent. What is that? That\u2019s $2,100 bucks. And let\u2019s just say we\u2019re going to rehab it. It did look like it needed a little work. So let\u2019s just say we\u2019re going to rehab it. Listen guys, I\u2019m going to make up some numbers here. I\u2019m not going to do a full analysis. I want to show you how easy this is. And I\u2019m pretty good at estimating this after many years of doing this. So let\u2019s just say that we\u2019re going to put in 25 grand and we think that will make 40 grand in value.
So instead of the purchase price, it was worth 140. Now it\u2019s worth 180. That\u2019s amazing. And for that, it costs us 25 grand. Again, I don\u2019t know exactly what it\u2019s going to be. Obviously I\u2019ve never been to this property. I don\u2019t know. But I\u2019m just going to make some ballpark estimates because I want to show you how easy this is. Again, we don\u2019t want you to get stuck. What I want for you is to be able to get good at these deal analyses so you can do the lapse. You\u2019re going to have all these leads and you need to be able to analyze these deals accurately and quickly so that you can identify the ones that are good.
So if you get stuck, don\u2019t be too worried. There\u2019s resources here. How do I get ARV? We\u2019ve got tons of resources for you built in right there for free. That\u2019s it. Now we know what our purchase price are. Moving on. Loan details. I\u2019m going to say we\u2019re putting 25% down. For me, as an investor, normally that\u2019s what I put down is about 25%. Sometimes you can get 20% or if you\u2019re house hacking, you can put as little as 3.5% down. And interest rates, they\u2019re high right now. They\u2019re actually \u2026 Let\u2019s just say they\u2019re about 5.7%. Points charged, none. I\u2019m assuming that since I\u2019m putting 25% down, my lenders aren\u2019t going to charge points. What are points? You can learn right there.
Loan term, 30 years. I love me a 30 year fixed rate mortgage. One of the most amazing things about the American housing market is that there are 30 year fixed rate mortgages. That does not exist in many countries around the world. It\u2019s incredible that you can lock in your interest rate for that long. So I\u2019m going to do that. And if interest rates go down in the future, I\u2019ll just refinance. That will be great. So again, show you what we\u2019ve done so far. We\u2019re flying through this because it\u2019s easy and I\u2019m doing this because I know it well. But I just want to show you, once you get good at this, that you could be doing this quickly. So that when I talk about this funnel where you have a hundred leads, you can run these 10 analyses in an hour, maybe an hour and a half even when you\u2019re really thinking about it. So we\u2019ve gone through all these, now it\u2019s time to get to rental income. How do you find rental income? How do you figure it out? Well, there\u2019s a couple of ways.
One, talking to property managers. That\u2019s a great way to do it in your market or perhaps you actually rent right now in a market that you\u2019re going to invest in and you have a good idea of what rent is going to be. But if you don\u2019t, I\u2019m actually going to pop over to this other tool that we have here on BiggerPockets. It\u2019s called the rent estimator that will do exactly what we needed to do. So what was our address here? I\u2019m going to just copy and paste this. And guys, this is a tool that I built. Honestly, it\u2019s pretty darn accurate. And you still might want to double check with a property manager or someone in the area. Maybe you know another investor in the area is a great way to also check rent. But if you want to analyze a lot of deals, this is an excellent way for you to get information quickly. Because we want to get our rent up quickly.
So what we see here is median rent about 1215 a month. I\u2019m liking that. And our confidence \u2026 The thing I love about this tool is that it tells you how confident it is. Sometimes it\u2019ll say it\u2019s low and you\u2019re like, \u201cAll right, I got to call a property manager.\u201d But now it\u2019s saying confidence is high because there\u2019s a lot of comps in the area. Look how many different properties are around here. This was a three bed, one full bath and two half baths. So I think a one and a half bed, three bath comp is pretty good. And it\u2019s saying 1215 and I think that sounds pretty good just based off what I\u2019m doing. So rent, we are going to scroll back down here and put 1215 in there. Oops. Now we\u2019re going to put 1215 in there. And we\u2019re moving on. We\u2019re almost done guys.
We\u2019ve already done loan assumptions. We\u2019ve talked about price. We\u2019ve talked about rent. Hopefully you can see this is pretty easy. Property taxes. What are our property taxes going to be? Let\u2019s see. Let\u2019s go back to the listing. Maybe they list what property taxes are going to be. It doesn\u2019t but usually it\u2019s about half a percent. So I\u2019m actually just going to estimate. Let\u2019s just say it\u2019s $1,000. I don\u2019t know. That sounds good. Insurance, I\u2019m also going to do about 1200. That\u2019s about average. Actually, in Alabama, I know it\u2019s in hurricane alley. Let\u2019s jack it up. Let\u2019s just say 1500. I don\u2019t really know. For these two, property taxes, that\u2019s public record. So if you\u2019re going through the calculator and you want to see property taxes, just go to public record. You can do that very easily. And insurance, you can just google that as well. Those are both really easy.
Now, repairs, vacancy, and CapEx. This is going to depend heavily on every property. But what I like to do is 5%, 5%, five, five. And are you going to manage it yourself? If so you can put 8%. That\u2019s about 10%. You can say 10%. But we\u2019ll adjust this all in a minute. I like repairs and CapEx at about 10% combined. And the only difference between these by the way, repairs and maintenance are repairing something that\u2019s broken. Capital expenditures is something that\u2019s really big like a roof or maybe renovating. It\u2019s just treated differently in the tax code. But for all intents and purposes, it\u2019s maintaining, repairing, improving your property. You always want to have some vacancy in there. And again, you can learn how to more accurately represent these. I just want to show you how easy to run the numbers are, but you\u2019re going to want to work with those inputs.
Next. Honestly, I personally love to just bill back. Just let the tenants pay their own utilities. It works better for everyone. They just pay what they owe and I don\u2019t have to worry about it. So I put those in. I\u2019m not a big HOA guy. I don\u2019t like HOAs so I stay away from those. And so I\u2019m going to put zero in all these and we\u2019re done. I know I did it quickly, but I want to show you how quickly it could go. I\u2019m doing this intentionally. Because honestly I can run deals this quick. I can do it in four or five minutes. It\u2019s not because I\u2019m some master of this. It\u2019s just the calculator\u2019s super easy. And once you get enough reps in, once you analyze deals \u2026 I\u2019ve analyzed thousands of deals in my life. And that\u2019s why I can do it so quickly.
But if you do 100, I promise you \u2026 If you sit down today and decide \u2026 We talked about showing up every day. If you show up and analyze five deals a day for the next month, you are going to be a master at analyzing deals. You\u2019re going to know your buy box. Because I\u2019m going to show you how easy it is to do, but commit yourself to that. That\u2019s what it\u2019s about. It\u2019s about showing up every day and this is an easy way to show up every day. All right, let\u2019s see who we got. All right. So 93 bucks a month. So it\u2019s positive cash flow. 12% annualized return. Pretty good. Cash on cash return, 2%. Not great. That\u2019s not where I\u2019d really want it to be. That\u2019s okay. You\u2019re going to analyze 100 deals and you might only find one. If I know my buy box, that\u2019s why I know that this deal isn\u2019t right for me.
Personally, I actually usually take a lower cash on cash return than a lot of investors would if there\u2019s good value add opportunity, good appreciation opportunity. I usually like 4% or 5% minimum, but still this deal would be a little too thin for me. But something that experienced real estate investors know that a lot of people don\u2019t understand is that deals aren\u2019t just found. Deals are often made. And I know that sounds confusing, but it\u2019s true. I just put in random numbers here. So what if instead of 140 grand \u2026 Remember I said, sellers are willing to negotiate right now. All I need to do is \u2026 I don\u2019t know. Maybe they\u2019d take 130. All right. Now it went up to 216. Remember, when I put in my rent income, that was the median. That just means it\u2019s the middle. So there are some higher than that, there are some lower than that.
I also said that I was willing to put in 25K to upgrade that property. Maybe that turns it into $1,400 a month. All of a sudden, now it\u2019s 5.3% cash on cash return and I\u2019m looking good. Now it\u2019s a good deal. Will I be able to buy it at 130 and to raise the rents to 1400? I don\u2019t know. I\u2019m just trying to show you that deals \u2026 This is the time to get creative and this is the time to go make a deal for yourself. This is the great opportunity in this type of market because people are willing to negotiate. Rent is really high. Sellers are getting scared and they want to sell while it\u2019s still perceived at the top. And so you can maybe find these deals. Will this deal work? I don\u2019t know. I\u2019m just trying to show you how to run these deals.
Honestly, if I could find a deal like this, this wouldn\u2019t be bad for me. An 18% annualized return. Sign me up. Sounds pretty good. All right. So that\u2019s just something you need to know. Obviously I also just made up these expenses. Oh, one other thing I should show you. If you\u2019re new, a great way to make something cash flow, drop these management fees down. Manage your property yourself. I did that myself. You\u2019re not going to want to do it forever. I think after three properties, you got to stop. You can manage maybe five units yourself. But at first, if you just want to get in the game and start building that momentum, just drop that down to zero. Look, you\u2019re at an 8.5% if you do some sweat equity yourself.
A few other things about the calculator you should know. If you scroll down, you can see all these important metrics that every investor wants to know. Which is NOI cash on cash return, expenses. Everything in here is great. And something I really like to look at because I\u2019m not a pure cash flow guy, I really like just looking at my total annualized return. Because you can see how much money you\u2019d be making over time. Over five years on this deal, as I have it configured right now. 20% per year, basically for five years. You know what the stock market averages? 8% or 9%. So you\u2019re almost doubling that on this deal that I randomly just threw together. Let\u2019s just put this back at 140. Management fees at 8%. Let\u2019s just go back to \u2026 What was it? 1215. Still 11.6%. Still better than the stock market. So just think about that when you\u2019re thinking about timing the market.
What I love about this calculator is that it just makes it so easy for you to analyze a deal. It took me five minutes to do it in the first place. And then I can make my deal. I don\u2019t know if the seller will accept that. But I have the tool now to be able to decide what I am willing to offer. Now, I know that I am willing to offer 120. That is such an empowering tool because now you can find things and you can build your buy box around this entire calculator. One other thing I like here is that this sharing setting \u2026 So you can actually enable report settings and then you can download your PDF. And I think this is super important, especially if you\u2019re going to be doing partnerships. Because if you approach me as a partner and you send me an Excel file, I don\u2019t really want to learn the way you made your Excel file. But if you hand me a BiggerPockets calculator report where I know the math is right, and I know that this is done correctly, I am much more willing to partner with you to take you seriously, because you know what you\u2019re doing. You\u2019ve proven to me that you know what you\u2019re doing.
You can use this for your spouse. A lot of times you\u2019ve got to get your spouse on board. You can bring this to a lender, to a partner. It is such a valuable tool to be able to show how to do it. So that\u2019s why I love the BiggerPockets calculators. I literally use it for all of my deals. I really recommend you do it. Again, you can do five free deals on BiggerPockets so go check that out. You can do a spreadsheet too. You definitely can. I\u2019ve done that in the past. But over time, I\u2019ve learned that just using a tool that is built specifically to do this is easier.
Okay. Let\u2019s start to wrap things up with three simple questions here, guys. Are you committed to buying your first, second or third deal in the next 12 months? Are you? I mean, be honest. If not, that\u2019s okay. That\u2019s fine. I just want to you to think about this. Because if you are sitting there thinking, \u201cOh, I don\u2019t know. Maybe, maybe not.\u201d, that\u2019s okay. But if you\u2019re sitting there enthusiastically saying, \u201cYes. I want this. This is for me. I can feel the financial freedom. I know the process I need to follow and I can get started right there.\u201d Because if you want it bad enough, you\u2019re going to get it. I promise you. This is not rocket science. So many people can do this. So if you want it, you can have it.
Second. Are you prepared to follow a process towards success? We\u2019ve talked about this weight loss analogy, or getting fit analogy in the past. Are you prepared to follow the process? Are you going to show up every day? Because that\u2019s all it takes. Do you want it? Are you willing to show up? And three. Are you willing to execute your plan every single day so that you can reach your full potential? Are you willing to be consistent? Because this is a numbers game. And if you are consistent and you follow that plan, I assure you that financial freedom that we are all striving for is possible for every single one of you. I\u2019ll leave you with this quote by Jim Rohn. He\u2019s a great speaker. He said, \u201cLife doesn\u2019t get better by chance, it gets better by change.\u201d
So decide. Are you ready to make that change? If not, that\u2019s okay. But maybe you are ready to make that change. That little change. It\u2019s not some big dramatic thing. It\u2019s about showing up and following a proven process. So if you are ready to start that, good for you. I am excited for you. I\u2019m so happy for you. I really hope this webinar has helped you get there because this moment right now could be the start of the momentum that we talked about at the beginning of this webinar. So I hope it has been for you. If you are ready to make that change, and if you want that financial freedom, then let\u2019s talk about one of the best ways that you can do that. It\u2019s not for everyone, but it is one of the easiest ways and it\u2019s one of the logical next steps for you if you are ready to take action, and that is a BiggerPockets Pro account.
Listen, it is not necessary. You can succeed in real estate without it, but we have designed it for real estate investors to succeed and it makes everything a whole lot easier. So if you want to know what BiggerPockets Pro is all about, it is about finding financial freedom faster. If you could shave off three or five years so that you can get to that financial freedom sooner, how valuable is that? That is worth anything. So you can do whatever it is that you are passionate about. Like for me, that\u2019s about travel. That is about my time with my family. I actually moved to Europe. I live in Europe. I love traveling and it\u2019s something I\u2019m super passionate about. And now I get to do the things that I want to do every single day.
Not because I\u2019m retired. I still work. But it\u2019s because I\u2019ve been able to engineer the life that I want for myself, because I was able to get that financial freedom at a relatively young age. And maybe that\u2019s not it for you. Maybe it\u2019s not travel. Maybe it\u2019s about spending more time with your kids or being around when they show up. Or maybe it\u2019s starting a business or giving more to charity, whatever it is, what are you waiting for? Don\u2019t you want it faster? And that\u2019s honestly what we\u2019ve tried to build here at BiggerPockets. So what does it do? First and foremost, it gives you unlimited access to those calculators. I don\u2019t know how many times it has saved me from a terrible deal and help me identify a great deal. You can go try it again for free, by the way. And you should.
And so nothing is more valuable than that calculator, honestly. Being able to analyze deals is the key to running that system. Again, if you want to do it in an Excel spreadsheet, you can, but this is a really easy way for you to do it. Next. You can get the rent estimator I just showed you. So if you want to analyze deals and know what something costs in rent, you need a good data source. And we have that data source for you with the rent estimator tool. Super valuable. And this is honestly, one of the most important things is showing the community that you mean business. Being a pro member, honestly unlocks a lot of networking opportunities for you. It shows people that you\u2019re serious, that you have skin in the game. Remember the first question I asked you today is why so many people get interested but only a few actually take action and get started?
Well, this is a way to show that you are taking action and that you\u2019re analyzing deals and that you are trying, and that you are putting your time and your money on the line to pursue what you want. So another great thing that we have at pro, something that\u2019s super exciting is boot camps. This is an accountability program where for 12 weeks you\u2019ll be working with cohorts and expert real estate investors to learn and get to your first deal. We have a rookie boot camp that will get you to your first deal. You can get that for 199 bucks and only pro members can get that so that is extremely valuable. You can learn from the best. We have incredible webinars, archives of hundreds of webinars you can watch completely for free. We have landlord forms. I use these for all of my properties.
These are worth hundreds of dollars all by themselves. On any single state. They\u2019re rewritten every single year. We have lawyers look at them. They\u2019re excellent. So you should definitely check those out. We have partnership deals with Mashvisor, AirDNA, Foreclosure. Some of the best data providers, some of the best marketing companies in the business all give discounts to BiggerPockets pro members. But really guys, I just listed a bunch of features. All of them super important, super helpful. But really the reason to go pro is because it works. I know it sounds silly or stupid, but it just straight up works. I\u2019ve seen it tens of thousands of time over the last seven years. Just listened to some of our members. Aaron said, \u201cThe BiggerPockets calculators are my go-to for analyzing properties. There\u2019s no way I could analyze the volume of properties I do without being a pro member. I locked up my first 33 unit almost a year ago and now selling for almost a 70K profit that\u2019ll go towards something larger. BiggerPockets calculators were a huge factor in making sure my numbers were right.\u201d
That\u2019s exactly what I\u2019ve been talking about everyone. You have to be able to analyze. I love that he says analyze the volume of properties I do because that\u2019s what we\u2019re talking about. It\u2019s a numbers game. You have to be able to run these deals a lot of times. Patrick says, \u201cBack in June, I attended a webinar. Right after, I signed up for pro. Next couple weeks, I analyzed a bunch of deals. Eventually I found a fourplex, got it under contracts three weeks later after signing up for pro.\u201d That\u2019s amazing, right? He ran a bunch of deals. He was patient and found the fourplex, got under contract. That\u2019s amazing. Super proud of Patrick.
So just for being here today, if you want to go pro \u2026 Again, not for everyone. We want people who are ready to take action to do this. If you\u2019re not, that\u2019s okay. But if you are ready, if you want to take action, make this change, you can do that. Just use the code pro rental and you\u2019ll get 20% off, which is a screaming deal. That\u2019s 20% that you can use towards other stuff. So how much is it? I\u2019m sure you\u2019ve seen some people on the internet who sell their training courses for 10,000 bucks. Hell, I\u2019ve seen 25,000 bucks. So what does BiggerPockets Pro cost? Costs $390. That\u2019s it. It\u2019s not because it\u2019s worth less than the other ones. It\u2019s because what I told you at the beginning, BiggerPockets genuinely believes that everyone can pursue financial freedom through real estate and should.
And so we have priced it at the point where everyone who wants to take action and to get into real estate investing can do it. And actually with the 20% off, it actually goes down to 312. So that\u2019s an even better deal. Use the code of pro rental. 20% off, and you will get off pro annual membership. And we actually have a couple of bonuses here. I mentioned this earlier, but if you\u2019re stuck on one of the three D\u2019s, which is dollars, we have a investing with no or low money down workshop hosted by Brandon Turner and David Greene. That\u2019s a $200 value for your pro membership. So you can get that completely for free. You can also get the finding great deals. So if the other D is bothering you, finding deals, you can get the finding great deals masterclass with incredible real estate investors.
We have Elliott Smith, Nate Robbins, Lance Wakefield. That is a thousand dollar value is what we assign that as. And you\u2019ll get that entirely for free if you sign up for pro right now using that code. And so just look at what a deal is. It\u2019s over a thousand dollars in bonuses and you can get that all today. And if you\u2019re already pro, good for you. Hopefully you\u2019re enjoying it. I\u2019m sure you are. You can get these bonuses as well. Spread the love. Go to BiggerPockets.com\/proupgrade and just enter the same code and you\u2019ll get that as well if you are already pro. You actually have to be annual to get all of these bonuses. That is just part of the deal. 20% off. We don\u2019t want people to just take the bonuses and run. But I just want you to know you can also get your money back.
We just want people who are ready to take action to do this. So if you\u2019re one of those people, go pro right now and we\u2019ll give you your money back if you don\u2019t like it. If you decide this isn\u2019t for me or something came up or whatever it is, no questions asked, give you a 100% refund. We just want people to go check it out. Hopefully you\u2019re excited. You\u2019re ready to take that action to build that momentum. And this is a logical next step if you\u2019re ready for it. So again, as Jim said, if you really want to do something, you\u2019ll find a way. If you don\u2019t, you\u2019ll find an excuse. Hopefully this webinar has shown you some things that you can do today to get over the fear of the market, of not being able to find dollars or deals or direction.
We\u2019ve taught you a process to do the lapse system, to find leads, to analyze deals, to pursue them. You can do this. Tens of thousands, hundreds of thousands of people have done this before. I\u2019ve seen it with my own eyes and I am confident that you could do this as well. So if you\u2019re ready to do that and you want to go pro, great. BiggerPockets.com\/proupgrade. And I hope you all learned a lot from this. Again, if you want to interact with me, if you have any questions about this webinar, I am happy to answer and I\u2019m very active on Instagram. Again, my handle is @TheDataDeli. Hopefully this has been useful to you guys. If you want to go pro, again, BiggerPockets.com\/proupgrade. I hope you all had fun and I will see you all again in the future. I put out these webinars pretty regularly, and if you want to learn, I do one on multifamily, I do a couple other ones. So definitely come check those out in the future. Thanks again for watching and good luck to you all on your path to financial freedom.<\/p>\n
All right. That was our show. Dave, what are you thinking?<\/p>\n
Well, I hope you liked it. I would love to hear your thoughts on it. Yeah, I mean, I hope people take away, obviously the practical tips and tools, but just wanted to get back to what we were talking about at the top of the show. And there\u2019s something that I mentioned in the presentation is that I think every single experienced investor I know is pretty excited to be buying right now and is feeling pretty good about the market right now. Do you feel the same way? And is that true? Are most of your investor friends also pretty active right now?<\/p>\n
Yeah. I would say that the people that are, I don\u2019t want to say full-time or professional real estate investors, but I\u2019d say the people whose identity is most closely tied to investing in real estate versus a job they have or something else they do. There\u2019s a lot of people that kind of do this just on the side, right? They love running marathons and they buy real estate every once in a while. But the people that are hardcore about it are buying a lot of real estate right now. And I\u2019m one of those people. So I have not been this excited or having this much fun buying real estate in years. It has been a long time, probably since 2015 or so, where I was this gung ho and excited. And most of the deals I\u2019m buying, I was happy about it.
Usually it\u2019s, \u201cWell, I\u2019ll take it, but I don\u2019t love it.\u201d The that\u2019s how it\u2019s been for the last couple years. I was still buying, I just wasn\u2019t buying as often. And I wasn\u2019t putting as much energy into looking at real estate because so many other people were doing it. I didn\u2019t want to go compete with 11 other people for the same house and burn all the energy you have to spend analyzing deals and then it doesn\u2019t work out. Well now, there\u2019s much less competition. There\u2019s a lot of people that have stepped out thinking that we\u2019re going to have a crash. There\u2019s a lot of gurus. Now I will say this. The majority of the gurus that I hear calling for a crash are not real estate people. They are stock people, they\u2019re crypto people, they\u2019re business owners that don\u2019t understand the lack of supply in our market, that are just thinking about what happened in 2010 and assuming that when there\u2019s a recession, that means that the real estate market crashes.
If you understand the fundamental of real estate, you know that\u2019s not necessarily true. Do I think there\u2019s going to be a correction? Yes. Do I think that if rates continue to go up, demand\u2019s going to continue to go down, which will in many cases bring prices down? Yes, I absolutely do think that. I just buy in areas where that\u2019s less likely to happen. I look for value add opportunities so even if that happens, I\u2019m okay. I\u2019m aware of the fact that even if the value of the asset goes down, whoever is buying it is probably going to have the same or a higher payment than me because they have a higher interest rate in that situation. So it\u2019s okay. The value of the asset doesn\u2019t really matter. The cash flow that it brings in matters and eventually it\u2019s going to turn around. So I\u2019ve made peace with the fact that there\u2019s always a hurdle in every market and you need to be grateful for those hurdles because that\u2019s what keeps all your competition out.<\/p>\n
Yeah, absolutely. Going back to the presentation, you are familiar obviously with the lapse system. Just think about it. If you\u2019re getting into it right now, as David was just saying, you can always find deal flow. You can always identify leads. But right now is an easier time to identify leads than it has been at least in the last two or three years and maybe longer. And that\u2019s just a great way to be able to get started. You\u2019re going to be able to look at a lot more deals. You\u2019re going to be able to analyze a lot more potential deals. And when you do offer on properties, you\u2019re going to be facing a lot less competition. So hopefully that\u2019s going to encourage people, whether you\u2019re just getting into real estate or maybe you\u2019ve been waiting to see what\u2019s going to happen. You heard it from David, who\u2019s one of the most prolific investors out there, that he\u2019s excited to buy and that there\u2019s good deals to be had.
So yeah, totally get it and agree with you that there is likely going to be a correction. I don\u2019t know if that\u2019s going to happen in every market. I think when I look at some of the fundamentals, I see specific markets that nothing\u2019s really changed. They look really strong, to be honest. Some look pretty scary. I think it\u2019s going to be really hit or miss and that\u2019s why you have to be an expert on your local market. I actually just wrote an article about this on BiggerPockets. You can go check it out and you can actually download all the data for local markets. But I\u2019m with you. I\u2019m excited. I\u2019m not at the same quantity as you are, but I\u2019m definitely excited to be active in this type of environment.<\/p>\n
So what are some of the markets that you\u2019ve been exploring? I know I was watching one of your videos and you talked about, \u201cI\u2019m a Denver investor, but now I\u2019m looking outside of Denver.\u201d And of course you\u2019re the data guy so what\u2019s going on in the data guy\u2019s big brain?<\/p>\n
Totally. I do mostly invest in Denver, but ever since I moved to Europe, I mostly invest in a lot of syndications. If you\u2019re not familiar, it\u2019s passive style investments. And it suits me pretty well because I get to just nerd out and pick markets because that\u2019s the nature of syndications is you get to pick your operator, you get to pick your market. And I still think parts of central Texas and north Texas are really strong. There are parts of Florida. Miami\u2019s market is still really good. I think Tampa\u2019s still a really strong, long term market. And I\u2019ve actually just to invested in a syndication, one in Alabama, one in Virginia. So I think there\u2019s good places all around right now. It really depends city to city, not just state to state. You look at certain states, I think, especially in the south where some markets are really overheated and some are really fundamentally sound. So definitely recommend you look into the Southeast in particular, but even the Midwest is starting to look good. So there\u2019s definitely good opportunities.<\/p>\n
What is it you like about the south that you think is leading to those being good opportunities for people?<\/p>\n
Mostly population. You look at migration trends and you see that people are moving primarily from the Northeast and the west coast to certain areas. A lot of them in Texas, Florida, North Carolina are all big net gainers of population. And that\u2019s just simple supply and demand. If there is more people moving there, that is more demand that\u2019s going to push up prices. And so that\u2019s the most fundamental thing. And then you and I have talked about this before, but I think just looking at economic growth and you can measure that in a lot of different ways. GDP. Personally, I like to look at job growth, just seeing what kind of jobs people are getting, high paying jobs, are companies moving there. That kind of stuff is really important to me.<\/p>\n
I love that you\u2019re saying that, and we can wrap up with this. Nobody knows what\u2019s going to happen in the future. But one mistake that a real estate investor will make, especially when they\u2019re afraid, is \u2026 And new people are often afraid. Is when you\u2019re afraid, certainty becomes much more valuable than when you\u2019re confident. When you feel really good about things, you don\u2019t need to know every detail, but when you\u2019re scared, you\u2019re like, \u201cI need to know this is going to work.\u201d So think about right before you jump out of a plane. All you\u2019re thinking about is, \u201cDid my parachute get packed correctly?\u201d You\u2019re just running through it in your head over and over and over is that. Or you\u2019re about to jump off with a bungee cord. You\u2019re going to be looking at every single piece of equipment. Is that thing set up the right way? Well, it\u2019s very similar to the world that we live in.
The problem is the snapshot of what you\u2019re looking at as far as analyzing a deal, seeing the cash flow, that is very important. You need to know this. This is a fundamental piece of being a real estate investor. But odds are it\u2019s not going to stay five years later what it looked like right now. And that\u2019s one of the things that the BiggerPockets calculators will help, but they\u2019ll actually project out if we just have 3% rent growth, this is what your cash flow will look like in five years and 10 years and 15 years. Well, if you invest in the right areas, you\u2019re going to see much more than a 3% growth. I mean, inflation right now is climbing and it was at 9.1 at the last point. And that\u2019s not including housing I don\u2019t think. So it\u2019s probably higher in the real estate market than it was in the CPI. Point is, investing in the right markets.
Even if things go wrong you didn\u2019t expect. You have the typical toilet problem, you have a bad tenant, you have something that goes wrong. You will be bailed out by increasing rents, increasing home values and increasing demand for people that want to live in or buy your asset. So pay attention to the information. BiggerPockets is putting out there, particularly through Dave, about markets that we like, places that we\u2019re investing, why we like them, population growth, businesses moving to the area. Pair that with the basic X\u2019s and O\u2019s of knowing how to analyze a deal and it should do a lot to take away your fear of getting started.<\/p>\n
I love it. Beautiful way to end. Couldn\u2019t agree more.<\/p>\n
All right. Thank you everybody for your attention. We know you could be getting this information from multiple sources and we really appreciate that you\u2019re coming to us to get it. We will continue to do our best to serve you right. Please leave us a comment if you\u2019re listening to this on YouTube and let us know what you thought about this, and if you\u2019re listening to it as a podcast, leave us a review. Whether it\u2019s iTunes, Spotify, Stitcher, wherever you listen, we would really appreciate that and we love you for it. This is David Greene for David, the data deli Meyer, signing off.<\/p>\n