How to Invest in Real Estate in 2024 (Step by Step for Beginners)

trading stocks is a blast here's a

screenshot of being up over 25% in a

week and a half on trading a 30-day long

put on an overblown Tech stock but

stocks aren't for everyone and so the

question is can you still become a

millionaire in

2024 in real estate and never pay taxes

on it in this video we're going to

review not just if it's possible but how

to make it possible note this video is

brought to you by my real estate and

finance with Innovation event coming up

June 21st to 23rd in Vegas this year so

make sure to meet us at the millionaire

Symposium go to meetkevin.com to learn

more and book your calendar for June

21st to June 23rd Ben Mala will be there

the $250 Million Man and many others

stay tuned for more speaker

announcements as more announcements come

out the price will be going out now

quick note this video was posted a few

days after I expected it was going to be

posted which means when you hear about

summer later in the video summer already

had her surgery which is really exciting

and I'm just happy to report that she is

a happy little baby

she's I don't know how to easily say

this but it's like the most exciting

thing I could possibly say she's going

potty this is really really good her her

insides were detached okay so this is a

really really big moment for us in the

family so we're really really happy and

I wanted to share that with all of you

so if you hear reference is to Sumer in

her surgery coming up the Good News by

the time we've fit post on this thumbs

up so far so good can you still become a

multi-millionaire in real estate in 2024

as a financial adviser real estate

broker former licensed contractor former

license mortgage loan originator rare to

be all of those things by the way my

answer is absolutely hands down

absolutely in fact I think it's one of

the best ways to build wealth you got to

get your money out of cash and into

assets because cash is going to become

worthless to inflation I study the

Federal Reserve like crazy and if

there's one thing we can all guarantee

it's that they won't be pausing their

money printing regime anytime soon in

fact they purposefully engineer

inflation so you have to get your wealth

out of cash into the assets that could

be ownership in businesses or ownership

in property or what I encourage is both

now this is obviously a real estate

video but I like to be balanced with

everything that I do I'm a big fan of 50

% property 50% business ownership which

could be in your own businesses or

stocks so the first thing that you want

to do is check the local per capita

income in the area that you want to

invest in so look zip code by ZIP code

per capita income usually what we find

is per capita incomes that are most

stable are going to be in excess of

$30,000 per capita that means per head

so when you're in excess of $30,000 a

family of four would be somewhere around

$120,000 of income above 30,000 you

usually have more stability so higher

credit scores higher incomes easier to

manage and potentially you're going to

go for some more premium improvements on

the property that doesn't mean it's bad

or you have instability if you go lower

if you go under 30,000 so between maybe

22 to 29,000 pretty common range what

you're going to be looking for is stable

incomes stable credit maybe a lower

credit score you might be instead of 72s

on the 30k plus you might be 650 plus

stable job but what you're going to do

is you're going to change the quality of

improvements now we'll talk about that

because most areas in those income

thresholds aren't going to require as

much of a renovating budget first know

your location are you comfortable there

and then what is your per capita income

what is your clientele in that

particular area that's going to guide

you through the rest of this video of

course you could check crime statistics

you could check Megan's Law database

just to understand are sex offenders not

because maybe you care but because your

prospective tenants might care because

keep in mind there are people that are

on the sexual predator list that you

know I'm not trying to like defend being

on the list but I'm just saying some

people get on the list for kind of go

and pee uh behind a tree and then

they're on the list but it doesn't

matter it doesn't matter how minor or s

it was what matters is that when people

are on the list it's going to affect the

ability for you to attract tenants to

your property so check Megan's Law check

crime but frankly if you have to check

the crime stats it means you don't

actually know if it's a good or bad area

and so generally if you know the area

you can even skip this instead use that

per capita guide to help you for the

rest of this video once you've picked

that sort of the zip codes that you're

interested in the regions that you're

interested in within 30 minutes you need

a car that can get you within 30 minutes

you got to be there why City inspections

utility issues tenant issues property

management issues vacancy issues dealing

with repairs making sure the

neighborhood's not going to poop you

want to keep an eye on what's going on

in the hood so to speak best way to do

that is by living there and seeing is

the area getting worse or is it getting

better are people investing are people

taking care of their Landscaping this

person we've got solar panels nicely

kemped yard this person solar panels

nicely kemped yard that's great they put

in artificial turf over here that's

wonderful new paint job solar panels as

well awesome this is wonderful uh you

know then we've got uh this house over

here needs a little bit more love who

knows I don't really taking care of the

Landscaping but we got a mix over here

so we're like 50/50 the more of those

higher quality Renovations we're seeing

the better I like seeing more

Renovations because it means people want

to live in the neighborhood if people

are adding on to properties it's also a

really good sign because cuz it means

people want to stay there if nobody's

adding on to the homes like that TW

story we saw then it's a sign that

people want to leave the neighborhood

well what is that mean more turnover for

your tenants see one of the things you

have to think of is you have to think

like a tenant when you want to be a

landlord landlord is such a dirty word

but if you're a good landlord it

shouldn't be a dirty word you're

providing housing to people see this car

looks like it's been here for a hot

minute but we've got an addition over

there too which is nice still got the

Christmas lights so I feel like it's

like a plus and a minus this one's a

little better got some nice Landscaping

over here look at that brand spanking

new roof they painted uh the protrusions

coming through the roof new paint shop

garage door looks new uh nice wreath

everything's well manicured this one's

well manicured too see I feel like I

could conduct a Craigslist transaction

here at 9:00 at night and you want to

ask yourself are you comfortable with

your mom your boyfriend your girlfriend

conducting a Craigslist transaction

where you want to rent at 9:00 at night

if the answer is no you

probably don't want to be a landlord

there it's going to be a lot harder for

you to have tenants that want to stay

because everybody's using your housing

as transitory housing and they want to

get in and get out because it sucks uh

or if you have a high quality

neighborhood maybe you never have

turnover see another thing to consider

is you have a lot of choice you can not

only pick a location but you have single

family versus multi we'll talk about

that separately but you got to get the

location right first look at this souped

up Tesla over here brick on the side

added on this whole section in the front

is added on I actually think it has a

separate entrance uh those are custom

colored dual paint vinyl retrofit

windows I can see that from here the

wind those lights that they put next to

the garage door and that custom garage

door that's nice that's a nice garage

door they probably spent 1,500 bucks

just on the garage door not including

the opener those lights are custom

that's pretty nice all the one of the

light bulbs is out they added the solar

panels as well driveways a new pore they

added the Ada handy so that they made a

mother-in-law sweet there maybe for you

know well their mother-in-law or

whatever very nice job see that's the

kind of stuff I want to see I feel

comfortable doing a craz transaction

there and you know what kind of house I

want to buy the house right across the

street from it look at this one so what

do we got here original garage door see

that look at that original driveway see

all the staining and how it's not

patterned it's the older kind of style

concrete it's ancient it's this

50-year-old concrete see the weeds

coming out of the gutter come on

nobody's been maintaining this look at

the windows original windows The

original window in fact if you look at

Megan in the latest uh photoshopped a

photo of them or whatever one of the

people one of the people who was sort of

going viral circling things that were

wrong in the photo they circled the

window because they're like oh the lines

of the window aren't straight now don't

get me wrong I think the the photo was

photoshopped but one thing I didn't

think was photoshopped were the windows

cuz look at those windows again look at

how funky and and wavy that is that's

because of years of paint jobs uh and

quite frankly just age so roof is old

here doors are old windows are old

landscaping's tattered uh I mean this

this this is the kind of wedge deal you

probably want to get if it came up for

sale that right across from the other

one I love that kind of house something

that you should know about your

neighborhoods is if you're comfortable

there you don't even have to do what

everybody tells you to do everybody says

oh look up the crime report if you know

the neighborhood you don't need to look

up the crime report because you know

what the crime is like is the crime good

the crime in good or is it bad you're

going to deal with the tenants in that

area you're going to deal with the

complaints you're going to deal with the

headache everything

about property management has to do with

how happy your tenants are living there

the happy they are living there the L

they complain now even within good

neighborhoods there are properties you

don't want to buy such as properties

right next to the freeway which is right

next to the railroad truck which is

right next to the gas pipeline

infrastructure okay maybe that's not

that big of a deal but look at all this

over here what what do we got over here

I don't even know what we got over here

I mean what looks like a nice bike trail

but anybody in the neighborhood can take

advantage of this bike trail this looks

cool but what is this we got oh some

kind of like storage units over here

with barbed wire I mean it's that I

don't want to be right next to this so

these are things where a tenant's going

to look and go oh is the crime really

bad they got all these you got all the

noise ah I'll pick a different rental

you want to get rid of those yeah butts

because something can look like a good

deal but then you look at the price you

go Ah that's a really good deal yeah

right on the free yeah it's right next

to Railroad Track yeah it's right next

to the explosive uh Cliff or the gas

pipeline or the barbed wire or whatever

it is the graffiti and sometimes even

you you get this idea of oh but it's a

nice Trail in the background well you

know who likes being on the trails in

the background especially in California

yeah crime a lot of different things to

evaluate you know it doesn't surprise me

at all that the property next to the

railroad track uh the storage area the

barbed wire the walking trail and the

highway has this going on old van old

electrical panel single car garage no re

driveway two cars in the whatever you

would call this thing a dead roof

flowers coming out of the gutters you've

got multiple cats living under the front

of this car it actually looks like

they're like four or five cats I see

under that car car and there's they're

actually little um feed trays so they're

feeding yeah I see five cats in this

shot they're feeding the cats under

their car we've got the thrown in Tire

park bench couple wheelbarrows trash I

got see ladders thrown in the backyard

weird shed that looks

rotten uh it's not a surprise that this

quality of living is what's attracted to

being okay living next to this

unfortunately it's probably because they

had to because of affordability issue uh

and and this is this is one of the

things

where stay away from yuts that's all I

like to say because it the people who

are okay with yuts might not necessarily

take care of your property the way you

would expect them to so if you want to

be the yah but landlord that's fine just

understand you're going to have to price

lower much lower and then not only

you're going to have to price lower but

then the people you will attract to that

unit will potentially require more

maintenance or intervention now it's

very important to remember that the

quality of your property will determine

the quality of your management it starts

with a property nobody thinks of it that

way I've been doing this for over 14

years now and I want you to know that I

love what I do but it's also been very

successful for me I became a

multi-millionaire in real estate before

I ever started YouTube now keep in mind

that means I myself with my wife bought

27 different properties each of them a

wedge deal that increased our net worth

by over

$100,000 many of them2 to

$300,000 you multiply that by 27

properties you can see we made a pretty

penny investing in real estate and I

think the same thing can still be done

going forward that's why I created a

real estate startup doing exactly what I

preach not somebody telling you how to

do something and then I never do it I

did it and now I'm doing it at greater

scale and there's no shortage of

opportunity now let's get into actually

talking improvements for a property and

Property Management let's start with the

sub 30,000 per capita income renovation

usually you're going to find these

single panel doors in the oak color

along with Ivory wall switches for your

lights Ivory outlets and most of the

time you're not going to do much here

you're going to go usually with simple

paint and carpet we like to call it that

is your basic style renovation for an

under 30,000 per capita income rental

unit often times you're not painting

kitchen cabinetry maybe you're replacing

some door hardware but really what

you're trying to do is make the property

livable in a more expensive style

renovation over 30k usually what we like

to do is we like to paint any of the oak

wood a nice Swiss coffee semigloss prime

it first with a nice non sand primer and

then Swiss coffee semigloss I personally

prefer contrasting wall paint like this

we call this Edgecomb gray it's a color

match Benjamin Moore we also like to

replace all of the old light switches

like this which you might not on a sub

30k with the newer switches and the

newer Decora tamper resistant Outlets

usually get that GFCI protection going

as well especially if the property is

ungrounded this is a case where you

actually take a two-prong outlet and

turn it into a three-prong Outlet the

only way to appropriately do that is if

these are GFCI protected and then

labeled no equipment ground GFCI

protected in this case I believe we have

a ground we'll make sure we verify with

the electrician something that we like

to do in almost all of our rental

properties is quality of life

Improvement like a ceiling fan in this

case we have an electrician run the four

wire cable that's ground plus three

others 3 plus one so that way you could

switch the light and the fan separately

we like an electrician to do that so

that way it's switch controlled right by

the door and that way we have properly

done conduit here since we don't

actually have a ceiling in this property

we go straight to the roof essentially

that's the way this property was

designed and we can switch that right

here this is a quality of life

Improvement we'll actually do in both

types of properties that way we have one

Central source of light and some Cooling

in each room and they have to be

professionally installed make sure they

have the ceiling fan box otherwise those

fans come crashing down it's your

liability speaking of liability

everybody when it comes to rental

property is afraid of liability one of

the most important things that you have

when you get into real estate is a good

relationship with an insurance agent it

is the most important thing frankly if

the house burns down and everybody's

alive and safe which is the most

important thing property can always be

replaced that's the most important thing

to remember now some properties will

require additional earthquake or flood

insurance but most on a basic level

require fire and liability insurance

basically the way it works is if you

take the building and you kind of turn

it upside down and shake it everything

that's attached to the building is

generally covered by insurance I verify

that with your insurance agent what that

means is a pipe burst in your attic

you're like oh no the liability well

everything that didn't move the

insurance company will place for you

subject to your deductible now don't get

me wrong you don't want to go down that

road CU it's still a headache you deal

with insurance and adjusters and

contractors it's a pain in the butt but

insurance is really designed to prevent

you from having a massive catastrophe

that really hurts you and so what I

generally recommend is make sure you

have a good landlord policy and then on

personal rental real estate you have get

an umbrella insurance policy to extend

the coverage usually you'd go for like a

$300 or $300,000 landlord policy and

then you'll get an umbrella that'll

boost everything to an extra million

bucks which is kind of cool for all your

rental properties to have so you have

sort of an umbrella over all your

various everybody likes to get into

llc's and all that good stuff let's be

real the only real benefit to an LLC is

in the event you get sued on a property

like this that you're willing to let

that LLC go bankrupt lose the property

and try to protect your other assets or

your other personal wealth from being

attached so to speak in a lawsuit good

luck with that first of all best first

line of defense Insurance second

umbrella Insurance uh next and this is

probably even before insurance but we'll

put insurance in there because there are

times during renovation you might want

insurance but you want to make sure you

actually properly maintain and renovate

your properties so for example here

we're replacing the roof we're replacing

the windows we're updating the plumbing

the electrical we want it to be a safe

property for people to live in so

they're actually we're replacing the

water heater as well for ex I'll show

you the water heater moment and the

point of that is to make sure that we

have a Quality Property we're giving to

a tenant so there aren't actually many

leftover liability issues that could

happen because we've updated a lot of

the property that reduces our liability

being a good landlord reduces your

liability substantially not being a slim

Lord having Insurance an umbrella

insurance that helps you a lot having

entity protection for the vast majority

of people not necessary it's a great way

though for a ha say it attorneys and

CPAs to sell you more tax filings more

complicated tax structures under the

benefit or guys of liability protection

and I know the attorneys and CPA is

watching this are like come on Kevin

like you got to have it you got to have

it I'm not saying don't have it I'm just

saying it it would be like much lower on

my priority list yes are there benefits

if you actually operate these better uh

or effectively like separate books and

records and you really operate it like a

separate entity sure most people ain't

going to do that so make sure you're a

good landlord you're in a good

neighborhood you're getting great

tenants and you're doing good work for

your properties see in here this is an

example of what I hate this is like a

slum Lord level right here okay so let

me show you a few things first of all

this is a natural gas water heater we're

in California where there earthquakes

see

this when this happens in an earthquake

guess what happens your pipe Burse your

gas line ruptures the exhausts come out

it's bad and I'm barely putting pressure

on this I feel like I'm putting less

pressure on this than a 5B trigger on a

gun that's bad imagine a real earthquake

in addition to that oh by the way way

you fix that is proper blocking this is

obviously improper blocking blocking is

is like this and then strapping look how

not tight this is if this was tight now

I can't really shake it anymore so

really it could be as simple frankly as

getting in here and tightening the bolts

to make sure it's snug up against the

blocking anyway then we've got corrosion

right here uh this is basically ready to

blow I don't want to deal with this mess

so this I've already said we're

replacing everything here looks janky

whoever did the plumbing and the

soldering got everything burned over

there it's nasty you've got two gas

lines over here you got a gas line

sticking out over here a new gas line

over here the bonding wire looks like

absolute crack look at that look at this

this is the bonding

wire can almost pull it out I guess you

can't really see it cuz I just pulled

the part that was loose but I just

yanked on it and I got that bonding wire

to move about this much felt it might

not have seen that on the camera but

that means the bonding wire is not even

tight an option and don't worry you

don't have to know all this stuff for

electric you know electrical world or

Plumbing world you just have to know to

surround yourself with good contractors

let's talk about that in the kitchen

here's an example of a kitchen style

that I like using for 30k plus quartz

countertops wouldn't do that in sub 30k

white cabinets wouldn't necessarily do

that in sub 30k and then of course we'll

be adding Hardware new stainless sink

and these windows the reason we painted

over them is because we are replacing

them with retrofits don't worry that's

all planned and it's all in the schedule

this particular Kitchen By the way was

super closed off before we could show

you before and after here and obviously

this is still in progress but uh opening

this up was a big win we did lose the

refrigerator spot here but that's okay

because we just decided to move the

refrigerator to over here and added some

beautiful new Cabinetry white Cabinetry

that we didn't even have to paint to

match uh the rest of the kitchen

waterline electricals in here so we're

looking pretty good now we're going to

throw up on screen some Afters of

projects we've done this right here on

screen is going to be a matterport it

shows you what our kitchen looks like

with the white cabinets look at the

flooring we've got the colors this is a

30k plus median income area this is what

this project is going to look like that

we're standing in right now we use

pretty much the same formula every time

and as you can see we try to make it

very nice very livable now what I'm

going to show you over over here is

usually a kind of project that I don't

like getting involved in I usually don't

like getting involved in big projects

where we're doing things like new

electrical panels they still got to be

labeled we've got the arc faal circuit

interruptor right here which is great

those are two code we've got permits

Galore on this property uh and we're

thinking about adding an accessory

dwelling unit now one of the biggest

risk factors when it comes to real

estate and most people screw this

up is doing too much

the problem with real estate is it is so

easy especially on older real estate to

overspend the best way to save money is

to say no to certain projects and in

many properties you can get away with we

don't need a new panel we don't need a

new roof let's patch the roof let's fix

the panel let's fix the AC versus

replacing this one was just so bad we

had to do it all and that's okay we can

do that but you have to surround

yourself with a network of contractors

they going to help you out so how do you

do that well you start you pick up the

phone you call five different

electricians you get quotes and every

single one of those electricians you ask

him hey got a good drywall guy every

electrician knows a good drywall guy

because who's going to patch up the

house after the electrician does their

work this is how you get vendors and you

start becoming known in your

neighborhood as somebody who hires

people pays a decent price you don't

grind them down to zero it is better to

do less work and pay fairly than to pay

re unreasonably low and request more

work that's dangerous bad for your

long-term reputation people want to want

to work for you or they'll cut corners

on your house somewhere else that's bad

so you got to be careful with that and

there's a balce you don't want to get

overcharged either there have been

plenty of times where all we had this

joke in the office the other day which I

loved but we had a contractor a new

contractor come in with this $118,000

proposal for a forair unit AC and

ducting and wanted to do all this this

work listed it all out I looked at the

pro proposal and said this is maybe a

$10,000 job but I don't even want to pay

that because I feel like we're getting

ripped off here this is absolutely

ridiculous for what the size of the

house is and so I told the team here's

what we're going to do we're going to

get on the phone with them we're going

to call them up and we're going to say

hey we have a budget for this project of

10K that's all we got we got 10K on this

project and while we appreciate your bid

we're going to have to call other

vendors so what happens

after we hung up the phone said that the

team within 24 hours we'll hear back

well it was just 24 minutes later and we

got a revised quote of under $10,000 for

the entire project now that is not

necessarily a sign of oh my gosh this is

like amazing negotiating it's a sign of

being aware of when you're getting

ripped off versus not see if they came

in with a quote at 10,500

hey okay well that sounds reasonable

that's the market price for this project

how do you know what the market price of

a project is you have to talk to a lot

of people if you go to a general

contractor you're going to get sold a

lot more than if you go to specific

vendors every specific vendor though is

also going to try to upsell you oh you

need to replace the Ducks because they

have the asbest oh you need a new panel

you always need a new panel every

electrician's going to sell you a new

panel every roofer is going to sell you

a new roof every plumber is going to

sell you a new water heater every HVAC

person's going to sell you new Duck

and so many times these systems are

totally fine and we need to tell

contractors hey we're going to Sho

string budget here this is a rental

property what's what do we need to do to

make this a reasonably safe property so

we can get a tenant to move in we don't

get a lot of complaints because we're

calling you for service calls because we

want to build a relationship with you

they want projects not service calls so

they want to get you into the next

rental property where we can get to

doing more projects that's the

relationship you want to build now that

vendor now knows hey we're not going to

roll on high prices so you either play

ball with us at market prices but don't

try to rip us off that's hard becoming

an expert in those valuations is hard

becoming an expert in knowing are you

actually getting a good deal is also

hard and you're not always going to get

a great deal but your goal is to

continuously hit singles and doubles

over and over and over again and most

importantly get started let's get to the

next section I'm going to give you a

very quick formula if you spend $500,000

on a house say $450,000 plus 50 fix up

you're usually trying to aim at aund

$100,000 wedge so you want it to be

worth 600 when you're done you spend a

million on a property all in you want it

to be worth about one two that's usually

the goal problem is the higher you go in

price usually the lower rental cap or

yield you're going to get cap rate is

your yield on real estate usually this

is another rule of thumb most real

estate is going to average between a 3

and 1 12 to a 5% cap rate now that would

be taking your gross income subtracting

a percentage for taxes Insurance

maintenance management utilities

reserves and then what's left is your

net rental income divide that into the

price boom you got your cap rate now

keep in mind different states have

different cap rates

and different states have different

expenses so if you look at a Texas you

might be using a 50% expense ratio

because You' got high property taxes

California you might be closer to a 65%

expense ratio so see what's normal in

your area and then you can actually

appropriately evaluate what the cap

rates are in the area usually what

you'll find is the higher cap rates will

be associated with higher rates of

poverty lower cap rates will be

associated with coastal towns high

quality

properties high quality locations

locations that are always going to be

supported by jobs and that's the next

piece we get to talk about people always

ask me why is real estate priced

different in different areas what is the

one driving factor and the answer is

always the same jobs often times you'll

see small towns that have one jobs

provider and you get this 10% cap rate

oh my gosh 10% what happens when that

one jobs provider that one school closes

that one Factory closes down what

happens to the town turns into a ghost

town so the market does a really good

job at telling you if the cap rate is

too good to be true there's probably an

external reason for that we were looking

at a 14 cap rate in Kansas a few weeks

ago right next to Hospital Medical

Center we're like this is great doctors

you name it well why was it a 14 cap so

it turned out that hospital had actually

closed down and been converted into a

mental institution which look there are

people who definitely need mental health

and there are plenty of those in

California so we need those sort of

support services but that is a different

type of animal compared to what it used

to be it actually turned out doctors

were selling that project so usually

when you're looking at high caps it

looks too good to be true often is the

Market's really good at telling you when

something's too good to be true now

here's one way to get a good look at

real estate fly over

it now one of the biggest mistakes

people make when it when it comes to

real estate is over improving see a rule

of thumb I like to do is if you're going

to spend 25k of work you probably want

to make at least 50 you're going to

spend 50 in work you want to make at

least 100 you get that kind of theme

Here the worst thing people do over

inprove they they improve too much crown

molding is not necessary the most

expensive appliances aren't necessary

the most expensive HVAC isn't necessary

the most expensive furnace isn't

necessary most expensive water he heater

isn't necessary most of the stuff that's

available in stock at Lowe's is

available in stock at Lowe's and is not

a special order for a reason it's the

most common stuff you want to go with

stuff you special order that's where you

start getting ripped off now a lot of

people hate landlords and there's a real

reason for that landlords have a really

bad reputation for not wanting to take

care of their properties because they're

pinching pennies problem is real estate

is a customer service business if you

have a really good quality building good

quality property and you take care of

your tenants you have way less Property

Management headache and you end up

saving more money and making more money

in the long run now a lot of property

management companies fight with

landlords because landlords are looking

for that net operating income and the

reason for that is they want to sell

these buildings to somebody else that

doesn't necessarily mean you get the

best tenants see landlords who are

trying to get the highest pop for their

rental get the the most management

intensive tenants landlords who want the

best quality tenants the best

conditioned property for the long term

don't necessarily go for the most

expensive rent they might actually even

go slightly below Market we prefer to do

that we might rather go $50 below market

value or even $100 below market value

higher quality tenant take takes care of

the property longer and less turnover

see turnover is a big risk factor in

real estate every time a property turns

especially a single family probably

spend more money than that security

deposit so if you can keep a tenant for

7 to 10 years that's glorious because

now you're buttering out your renovation

cost over multiple Years you'll actually

end up with more money in the long term

so for me property management is

customer service and quality of product

first and then you have happy tenants a

lot easier to manage takes a lot less

labor see we have a real estate startup

called House Haack we're actually

fundraising for that right now if you're

interested in it learn about it at

house.com 2024 link down below as well

and this company is what I believe will

be the greatest democratizer of real

estate rental income in the country

think about this for a moment right now

only about 3% of tax returns so about 6%

of actual Americans when you consider a

lot of these are joint filings receive

income from rental properties so in

other words very very few people

actually make money from rental real

estate most people don't over 94 4% of

people don't make money from rental real

estate we want to make real estate so

accessible that you could simply swipe

up and invest in a slice of a rental

property at market value with no fees

for the asset management acquisition

renovation none of that bull crap just

the basic property expenses are

obviously built into the yield of that

property we make it that simple to own

real estate and take advantage of the

appreciation without even splitting a

share of that future appreciation that's

what house hack is all about so that's

my real estate startup we're basically

doing what I talk about at scale we make

money on the wedge anybody who invests

in the properties themselves makes money

on the properties so if you like what we

what I talk about with the wedge you

like our property management philosophy

and our real estate investing philosophy

you think we're going to make money

considering investing in house Haack

house.com

2024 but as far as how this applies to

you think about this if we can scale

this model to thousands of properties

you can acquire 1 2 3 maybe five of

these over the next 10 years and have

way more wealth likely if you do it in

the right way than anyone else again

only 6% of people receive income from

rental property that means if you just

have $1 rental property income coming in

you're already in the top 6% do that

five or six times you're quickly in the

top 1% of Americans now a lot of people

have a reputation or have this feeling

that landlords and corporate landlords

suck or whatever but here's the reality

people need a place to rent people are

always going to need rentals whether

they're in an area for a shorter period

of time they can't qualify to buy they

don't want to buy they want to rent by

choice if nobody wanted to rent they

wouldn't be landlords but the most

important thing to remember is that

while my goal is to become and create

the biggest landlord in America we don't

want to just create the biggest landlord

we want to create the best landlord the

best landlord who does the best service

for tenants who takes care of their

tenants and lets the vast majority of

Americans invest in real estate at scale

now what's super important when it comes

to real estate investing is not paying

taxes look nobody wants to pay taxes and

in real estate there's a way to never

pay taxes now that seems wild but let's

talk about that two types of Tax

Strategies for Real Estate two main ones

first one has to do with defer your

capital gains forever so let's do an

example let's say that you bought

property throughout your entire life and

you kind of every 2 three years bought

another and eventually you had $10

million of real estate gains capital

gains you have a few choices you can

keep the property a lot of folks are

like what good does it do me if I have

all these gains and equity and property

how do I live off of it well easy if you

want to you can take a credit line or

refinance your real estate where your

tenants are paying your debt

and that's not a taxable event you don't

pay taxes when you take a loan against

property it's not taxable which is great

because you could functionally use your

Equity with tenants paying your loans

for you without actually having to pay

taxes which is fantastic now of course

always talk to a CPA about this but what

you could also do is take that $10

million portfolio and sell it and be

done with real EST estate but the

problem is if you do that you probably

have to pay taxes maybe somewhere

between 15 or likely 30% because of

state taxes and long-term capital gains

taxes plus how much you're realizing in

gains well that means you're left with

seven at the end of the day so you just

paid $3 million in taxes what's a way to

avoid that well there are two ways you

could permanently avoid that one is

unfortunately you get hit by a bus and

your family inherits those properties at

a stepped up basis which means they

don't have to pay taxes so if you sell

on March 31st you pay $3 million taxes

or you don't sell you get hit by a bus

on April 1st your family sells on April

2nd no taxes kind of incredible now

obviously verify all those strategies

with a CPA over a certain amount

obviously you're going to start hitting

estate tax issues but here's something

else to consider there's something known

as a Delaware statutory trust a Delaware

statutory trust enables you to sell your

real estate and 1031 it into a real

estate fund it's actually something

we're doing with house Haack if if

you're interested in this email us at

Kevin house.com or IR house.com and let

us know you're interested but what's

remarkable is you could sell your real

estate 1031 exchange your capital gains

into a real estate

fund and defer your taxes while still

getting the upside of

appreciation cash flow and not having

the headache of dealing with tenants and

toilets so two big ways you can avoid

taxes with capital gains now what else

can you do everybody always wants to

know how to wash their hands of real

estate you know get rid of the liquidity

or the liquidity problem with real

estate people like oh real estate isn't

liquid real estate is pretty liquid if

you have a good quality project and you

price it right same thing goes with

renting properties if you price it right

it rents it's overpriced it doesn't rent

pretty simple actually now when it comes

to understanding selling real estate my

general rule of thumb is don't do it

because it costs 7 to 10% so every time

you transition on that 1031 exchange

you're spending a lot of money now if

you want to get completely out of the

real estate industry the fact that you

can get into a DST 1031 into something

and have none of the headaches of owning

real estate anymore is a game changer

and a 1031 can also eventually be moved

into a publicly listed security now

again email us at IR house.com if you

want more details for that we're just

setting up these uh procedures now and

the fact fact that you can avoid taxes

like that or differ I should say is

pretty incredible and obviously we'll be

involving a lot of CPAs for this but

what I want you to know is there are

ways to defer taxes forever in real

estate and it is one of the best ways to

build your wealth since you can take

liquidity out without ever paying taxes

hey so we're in the niku with summer I

just wanted you to see her she goes in

for surgery on the 20th so make sure to

pray for

her

Summer She's a beautiful identical girl

that has a little a to me bag right now

her small intestine is actually detached

right now from her large intestine got

to put them back together we love summer

and I'm going to be hanging out with her

all day today but first I'm going to go

grab a little food and coffee finish out

our video and I'm going to hang out with

Summer she's sleeping now anyway we'll

let her rest okay now the next thing is

depreciation depreciation is one of the

big tax benefits of real estate it's a

non-cash expense that's a fancy way of

saying you kind of tell the IRS your

building's losing value you're not

actually losing value more in a moment

now one of the big things that I love

about real estate tax benefits and

depreciation is you work with your CPA

most people are going to go straight

line depreciation but what a lot of

people do is they go for accelerated

depreciation cost segregation those

video topics are really past this video

we go into a lot more detail of the

courses on building weth link down below

but really most importantly the idea is

whatever income you're getting you want

to shelter the cash flow as well so not

just the long-term appreciation of the

property the actual cash flow you're

getting you want to pay less taxes on

that as well now a lot of people ask me

about single family versus multif family

real estate or even commercial real

estate let's walk and talk about this

because we're walking up to a building

we've been looking at here's the Scoop

multif family different animal from

single family usually single family

you're competing against home buyers 80%

of the time it's a home buyer who wants

to live there 20% of the time it's

somebody trying to provide housing for

somebody wanting to rent that property

we when we buy we like to buy distressed

properties that wouldn't otherwise be

livable or the owners having massive

management issues or a loan coming do or

whatever with single family style real

estate or one to four Style real estate

mostly mom and CS single family

specifically though

80% home buyers as soon as you get to

like duplex Triplex 4lex you start

getting closer to

50% non-owner occupants soon as you get

to 5 plus the vast majority of the

people you're competing against are

people who have done this before so when

we look at a building like this a mom

and pop isn't buying this to live in

there this is a multif family building

with retail attached let's go through

some of the pros and cons of each of

these so multifam with retail attached

biggest red flag to me is what happens

when that retail goes vacant what

happens when I got to find a new tenant

willing to sign a 7 to 10year lease oops

and then I'm taking a gamble on that

business because that business might

sign a 7 to 10e lease but what if they

go bankrupt and they can't pay it's a

different ball game and that's why most

of the time these particular retail

style

properties at least in this market today

in 2024 are actually going to sell for a

discount now that creates an opportunity

because you might say

hey if I can get a multif family

building with retail and because it has

retail it's going to go for a discount

maybe I can kind of get the Department

building for a good deal and the retail

for free if I negotiate it correctly now

that's not always going to be the case

but in this market there's a potential

for that so what are some of the pros

and cons here single family let's go

through single family least headache

once you renovate a single family

property lowest Property Management

headache you could possibly ask for

these are easy properties to manage one

person could probably manage two to 300

single family units Alone Now go to an

apartment building and one person might

struggle to manage 100 100 units and

these are units that might have 1/3 to

1/ half the rent why because you have

shared walls anytime you have shared

walls which is true of duplexes

triplexes and fourplexes generally as

well you have noise complaints pet

issues people making noise in the middle

of night people moving furniture people

scraping the walls people smoking and

doing stuff they shouldn't be doing

people parking in other people's places

it's a headache it's like you're playing

a mom to tennants it's a lot of work so

the management intensity of multif

family is really high relative to single

family though it doesn't compare to the

management intensity of room rentals

which would be the highest room rentals

highest management intensity that's like

the drama of roommates and college dorms

very challenging High management

intensity but you get rewarded with a

higher cash flow but it's a job that's

kind of up there with short-term rentals

right High management intensity property

managers property managers excuse me for

this will usually charge $30 to 40%

because it's high intensity multif

family buildings usually have an on-site

manager that on-site manager is going to

take a salary and so your management

expenses are probably somewhere around

12 to 14% once you incorporate that

on-site rent discount or salary single

family management might be closer to 6%

see the differences now retail

management when you have a tenant on a

triple net lease where basically they're

covering their share of things like

property taxes or otherwise and

maintenance there's almost no main it's

there's almost nothing you have to do

but the risk that comes with retail is

what if what do you do rather when it's

vacant

so what's my favorite and how do you get

deals on these different properties all

right here's a straight scoop you got to

write this one down this is really

important how do you get a deal on a

single family there's only one way

condition mom and pop don't want stinky

carpet ugly paint nasty kitchens nasty

bathrooms nasty nasty Landscaping it's

very simple if there's mold if there's a

leak we can solve those problems

everything in real estate is solvable

with some dollars now you might think oh

come on Kevin everything's solvable with

dollars wrong just came from a hospital

because I've got a daughter going in for

surgery it doesn't matter how much

freaking money you have they're going to

survive or they're not doesn't matter so

that's intense real estate way less

intense in my opinion because it's all

solvable either the insurance is going

to help you and bail you out or it's

going to cost some dollars and even at

the end of the day you still get your

life even if things go bad but we don't

want to go down that direction so single

family is all condition based we got to

get a condition wedge we call it needs

to be a fixer uper got to have something

we can fix up TLC I want to put a dollar

in and get $2 worth of value that's the

goal paint carpet kitchens bathrooms

Basics don't over improve the more

structural things you do foundations

roofs yes we did a roof earlier today

you're really only getting a buck to

maybe 8 80 cents back per dollar you're

spending but sometimes it's necessary

okay single family what about multif

family multif family like this how am I

going to get a deal on something like

this well the only way I can get a deal

on something like this frankly there's

only one

way it's if somebody's got a lot of debt

coming du or the building's being

mismanaged let's say half of these units

are vacant and they can't get them

filled they don't have the time they

don't have the patience they got a loan

coming do they got to move on to the

next project they just built the project

they got to move on well what do you do

then hey cash we can close in 5 days

take our number that's an opportunity to

get a multif family deal now can you get

a multif family deal like a one like a

two to three to four unit deal and house

hacket traditional house hack where

you're renting out the other units yes

but keep in mind you're competing

against more sophisticated investors so

the odd odds of you getting a wedge are

generally smaller so yes some of your

payment can get covered which is nice

you're usually not always usually having

a harder time getting a really good deal

on multif family unless you could really

come in guns blazing with cash it's

harder because you're competing against

more sophisticated investors so that fix

up isn't going to get you far there you

got to get a mismanaged building with

low rents that you can raise or some

other Factor like a developer loan

coming to great place to go

retail get a vacant retail unit man you

better know what you're doing to get

that thing filled so often times vacant

retail is a risk I generally don't

recommend people starting out touch so

that's a little bit of a difference

between singles and multi now people say

oh but Kevin you know if I have a 4unit

building versus one house and one tenant

leaves in the house one tenant leaves in

the multi oh I'm only 25% vacant on the

multi I'm 100% vacant on the single

family it's such a the reality

is the single family house is probably

worth a lot more it's probably worth two

or three of the units of the multi

anyway so you get a couple houses and

versus a 4unit I'd rather have two

houses than a 4 unit Why management

intensity Zero versus high management

intensity no shared walls big difference

now I also have less turnover on the

single family so the odds are I'm going

to have less vacancy and it's easier to

rent them faster in single so when a

tenant gives me notice what do I do I

start advertising it for rent so I could

get it rented right away and minimize my

vacancy factor it's very important it's

also easier to have people with pets

which is very desirable in America

people love their dogs people love you

know we got a golden doodle my father

has a golden doodle it's it's beautiful

we love it it's a family

M houses are conducive to that multif

Family come on man you're bothering

everyone else so they're pros and cons

I'm not pooping on Multi versus single

we own both I manage both I know what

it's like but I want you to be really

aware that they're pros and cons of each

I think the best way you get a condition

wedge single family if you can get a

rent wedge or a developer default wedge

that's multif family but don't go for a

condition wedge on multif family unless

you're also getting a really good deal

on top of that that the only way I want

to fix it up all right let's get to the

next topic now something else you got to

know is especially when you're looking

at these larger multifamilies you better

be picking good areas or at least know

what you're getting into because let's

just say not too many minutes or less

from where we just checked out some real

estate we also looked at a deal it was

technically five units so we were

looking at a four Plex so one building

with four units and then a single family

it was sort of a package deal that they

were selling we're looking at going hm

the numbers on this seem pretty good

wonder what's going on so we go there

and we've got footage of this go through

the vacant unit that they have in the

fourplex looks pretty good but what do

you have oh right next door the single

family house smashed in window in the

back you got a magician in the back

alley doing crazy things shooting

lightning bolts through the glass place

smells like mold it was a

disaster uh and you kind of look around

and go huh there's some interesting uh

uh locks you got and not only that does

this look like some crowbar damage so

now steps we should talk steps on

actually getting into real estate most

important things let's just make it

simple income you got to have income a

lot of people hate the WT job they

working for an hourly rate or salary but

it's the best way to buy real estate

because makes it so easy to qualify you

have your own business hardest way to

qualify want to be able to qualify for a

loan got to get that credit score

ideally above a 740 that's going to be

your max best pricing some credit unions

will let you go to about 760 although

their lending has tightened a lot with

the whole small Bank crisis we've been

through so usually you're looking 740

plus so stable income credit and ideally

limited debt every single dollar of debt

that you have is unfortunately going to

reduce your buying power for a home by

about

$2.34 per month so think about that if

you've got $10 of debt you can make $2

$23.40 less of housing payments that's

how they're going to qualify you so

obviously you can extrapolate that

however you'd like now as far as

actually starting should you start with

hiring a real estate agent or should you

become a real estate agent usually what

I

recommend is work with an agent work

with an agent and a great property

manager just to get your feet wet you

can always become an agent in the future

in the long term I know that's an

ambition most investors have you could

always pull it off in the long run but

start with an expert somebody's going to

teach you how to do with the forms the

local practices do we include

refrigerators do we not what about

washer and dryers what's normal in the

area what's not all of those things are

critically important because otherwise

you're walking in and your tenants are

going to qualify you they're going to go

hey well what landlording experience do

you have are you going to be a a bad

landlord what reputation do you have if

you don't have a reputation it's

actually harder to get tenants you need

a reputation of being a good landlord

and that's hard when you're just getting

started let's talk more on the plan so

this has been a dramatic amount of

information and there's a whole lot more

to cover in fact that's exactly why

we're holding the event June 21st to

June 23rd in Vegas come join us go to

meetkevin.com buy a ticket because we're

going to go deep on all of this you can

learn in person how to do real estate

now not only that we're also going to do

finance and Innovation speakers and all

the other good things so it's going to

be a really fun Finance event I think

the biggest of the year now if you

decide for whatever reason just doing it

yourself isn't for you because I mean

look out of the window there is a lot of

real estate out there and it's a lot of

hard work and if you decide that doing

it isn't for you that's okay maybe

investing in a real estate related

company or in real estate indirectly

like slices of real estate is for you

and that's where I encourage you to read

our PPM at house hack.com

2024 you can learn all about what we're

doing with my real estate startup house

hack how you can be involved and

diversify from this crazy Tech AI stock

market into some good old American Real

Estate check it out see all the links

down below make sure to subscribe share

and follow for more thanks so much and

we'll see you soon by can not advertise

these things that you told us here I

feel like nobody else knows about this

we we'll try a little advertising and

see how it goes congratulations man you

have done so much people love you people

look up to you Kevin PA there financial

analyst and YouTuber meet Kevin always

great to get your

take even though I'm a licensed

financial adviser licensed real estate

broker and becoming a stock broker this

video is not personalized advice for you

it is not tax legal or otherwise

personalized advice tailor to you this

video provides generalized perspective

information and commentary any third

party content I show shall not be deemed

endorsed by me this video is not and

shall never be deemed reasonably

sufficient information for the purposes

of evaluating a security or investment

decision any links or promoted products

are either paid affiliations or products

or Services we may benefit from I also

personally operate an actively managed

ETF I may personally hold or otherwise

hold long or short positions in various

Securities potentially including those

mentioned in this video however I have

no relationship to any issuer other than

house act nor am I presently acting as a

market maker make sure if you're

considering investing in housec to

always read the PPM at house hack.com