A lack of credit and money is considered by some real estate investors to be a disadvantage, but is that really the case? Could it be viewed as a crisis, or is it in truth an opportunity? Certainly cynics all feel that real estate investing without cash is a problem, but once you hear what Matt has to say on the matter, you may find yourself agreeing with Robert Kiyosaki that it’s your unfair advantage.
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(Voice Over): Epic Real Estate Investing Podcast Episode 29. Without further delay, your guru. Sorry. Your guide to a better life, the real estate investor, Matt Theriault.
Matt Theriault: Hello. Greetings from The Epic Real Estate Investing Podcast. The podcast that will show you how to build wealth through creative real estate investing.
That’s what we will discuss today and for a long time to come so you’ll have the option to realistically retire in the next 10 years or less. And enjoy the good life while you’re still young enough to do so.
My name is Matt Theriault, author, full time real estate investor and family man. Now if this is your first time listening to the show. I want to welcome you personally but you’re going to want to do two things.
One, you want to go back and listen to episode one for the ground rules of the show. Two, download the Free Real Estate Investing Course – How to Do Deals, No Money Required.
You can get that for free at FreeRealEstateInvestingCourse.com. Very unique creative name. Right? FreeRealEstateInvestingCourse.com. It’s a step-by-step course of where I unveil the mystery around doing deals with no money or credit.
Finally right? Okay. So I’ve been away for awhile. Missed you guys but I am back and the show will be back on schedule effective immediately. Probably going to pick up the pace a little bit as well.
Maybe like, I don’t know, maybe like three episodes every two weeks instead of just one a week. I haven’t quite figured it out yet but I definitely want to do more.
Just, uh, I enjoy this part of my day and I’ve missed it and so I want to, uh, just record more, produce more for you. Also if you noticed I throw in a little short episode titled “The Epic Pro Quick Tip.” That was the download just before this or the episode just before this.
Now I’m going to continue to do those also. I got some great feedback from that. It’s really funny how polarized the audience is. I mean some people like the long podcasts and some people love the short and quick to the point ones.
So I’ll keep mixing it up. And, uh, we’ve got a few announcements. You got a few announcements. Some new developments since last episode. First, my Memphis rehab is complete. And we’re putting the first five tenants in at the end of this week. That’s only a couple of days away.
Also, I would like to bring everyone up to speed I guess. I purchased a 14-unit building in Memphis in January. It was completely inhabitable. It’s a total mess but I got a smokin’ deal. A really smokin’ deal and I haven’t revealed the numbers yet because I just couldn’t believe it.
I didn’t want to jinx it but since we’ve got tenants moving in now. And as soon as they get settled, I’ll go ahead and I’ll post all the details of the deal on the Epic Professionals website.
So you’ll look out for that. I’ll let you know on when that’s up. You can then see how you can actually buy a multi-family building using zero dollars of your own money and you can still cash flow a couple thousand dollars a month.
That’s what this has turned out to be. Just a sweet deal, I am excited. I’m actually little bit proud of this one too. I got another one, an 18-unit basically right next door that we’re probably going to do as well. So future is bright.
Also while I’ve been away, I’ve created a connection in Memphis to acquire rehabbed and placed tenants creating 16% to 20% cash on cash returns with absolutely no debt. It’s basically a one stop shop if you will. You know I know there’s really nothing special about this because there are a lot of people doing this especially in that area.
You know Memphis is a really hot market right now. Just since January, I mean the Spring has been on fire in Memphis but I did come up with a unique selling proposition of which I think allows us to stand out a bit.
We’re doing something that I’ve never heard in another company like us do. We’re guaranteeing, guaranteeing the property’s cash flow for the first year. Yep.
For example, if you purchased one of these properties and you are tenant moved out on month six. I’d picked up the slack and I make sure you still get your cash flow.
You know, most of I’ve ever seen anyone offer on something like this is like 4 months and then there’s all kinds of disclaimers and fine print and how you’re suppose to recoup that or get that guarantee to cash in a guarantee.
I mean don’t you get annoyed when you see an awesome headline of a guaranteed type of cash flow and they have this little asterisks next to it. Noting that there is fine print below and you better read that for the details. I hate that.
And so I am not doing that. I am guaranteeing the cash flow for one year from the close of escrow. 30 days from the close of escrow you will start receiving cash flow. There is no fine print. I am just going to make it very simple. It is what it is.
Property management free for the first year also. That’s awesome too. Right? It gets better. The rehab comes with a 100% guarantee for the first year also these properties should have very little or any maintenance costs on the first year.
So what it makes such a bold guarantee? Am I out of my mind? Some people think so. But as I mentioned on the show before you know the two places where investors typically get stung where they lose money is in either of that or the rehab and/or bad property management.
So I’m making such bold guarantees because I’ve done my homework. I did the do diligence for my clients and I got a top notch rehab. And I got a top notch management team. And how do I know they are top notch?
Well they just finished crushing it. I mean they absolutely crush it with for me with my project and they’re starting another one for me right now.
And also because I am giving them work in volume. I’m getting great pricing. I’m not taking the discount. I’m passing it on to my clients. My clients are just going to benefit from the volume I am doing in there not me. They’re going to benefit.
Lastly, I’ve put my incentive in the right place meaning the better we perform for our clients, the more money we make. So if I do better, I make more money but if I do better, my client makes more money as well.
So put this on the same team. So the structure with all these guarantees in place just puts us both on the same team. It puts us on the same side. I think it’s a good way to do business so I did that intentionally.
So if you’re intrigued and you want some more information on that, go to CashFlowSavvy.com. CashFlowSavvy.com. Savvy has two Vs in it. And there you can download a little information packet. I don’t know. Who knows maybe you and I have properties right next door to each other.
Okay. Now final announcement, well final announcement for today and then we will get to the meat of the show, the Epic Pro Academy is back open. It’s been closed for several months as I’ve been finishing up the lessons, trying to stay one step ahead of the members.
Thankfully I’ve completed that. And also I’ve put together a free training on the homepage of the Academy as well. It’s free training, Webinar-style. You can go to the homepage and register of which I conduct several times a week this Webinar. Several times a week.
The training is titled “Three Principles to Prosperity.” They are the three very principles that I committed to about 23 months ago. And in just 12 months from then, I’ve successfully got my butt out of the rat race.
I got my cash flow to exceed my monthly expenses. It’s something I had been unable to do for 20 years prior and so I share with you in this training how I was able to do it so fast. You can register for that for free at EpicProAcademy.com.
A lot of websites today but I, I have, I haven’t been here for a while so there is a lot of news to share. But I think that’s it. You see, while I was taking a break I received a lot of emails.
The correspondents are ramping up so the free real estate investing course, it inspires a lot of questions so I am happy to answer all of those.
And I think I responded to just about all of them. But there was one in particular from a Mr. Joseph Turdelly out of Utah. And he sent me a really cool and timely email. That’s a long email so I’ll read it to you but I might edit it a bit. Okay?
Joseph writes, “Matt, I can echo sentiments from others who have felt the same way I have about the information you’ve provided. It is indeed refreshing to hear from someone who isn’t tried to make a fortune off of every piece of information on real estate.
Your direct approach and not charging for much of your material is a pleasant change from the typical guru strategy. My somewhat unique question for you, how would you tailor all of these for someone who isn’t broke and has an 800 plus credit score.
So much of the draw to people to real estate is trying to make money with no money, bad credit, and get rich quick. I’m not one of those three and have wondered how the picture changes you would recommend an alternative for people who have cash upfront. What are your thoughts?”
So that is what Joseph wrote and it was very timely message for me. It’s a timely email that really stood out. It hit me at the right time. It hit the right time for two reasons. First, because I was thinking somewhat of the exact same thing just the night before I received the email.
I was thinking how the majority of my broadcast and lessons are around doing deals with no money. I was just thinking the night before how was the audience who has money, how are they perceiving this information?
And I’ll touch on that in just a second. The second reason that it was timely is the email is timely it was because the very next day I was actually scheduled to be in Utah of all places. (laughing)
So Joseph and I hooked up the following day and talked real estate over a beer and hot wings. By the way, if you happen to ever be in the LA area and you want to connect and talk, I can be easily bribed with hot wings and beer.
All right. So the topic of discussion among other things but the topic of discussion was regarding his question, how does the picture change or the approach for people who have cash to invest?
So first, you know creating so much content around investing in real estate with no money wasn’t really or isn’t necessarily directed at people with no money. It’s for everybody. And it’s really more about using your noodle, using your brain in thinking you’re way too deals to maximize your returns, to be a shopper rather than to be a buyer of real estate.
To be a creative thinker rather than a conventional one and this is the way that I conduct my business. And since I got started using none of my own money or credit because I didn’t have any I just used to doing it that way.
And I got addicted to my infinite returns. Don’t get me wrong I mean there’s nothing wrong with 10%, 15%, and 20% returns. Those are awesome. I just prefer infinite. The more of your own money that you use, the lower your returns get.
So I’m not opposed to using my own money. I just don’t do it unless I have to. And you know I really doubt that I would change much about my approach or what I do with regard to finding deals and if I had abundance funds and credit.
I mean for sure I would hold more and I would flip less but I’m at a point where I am already flipping a lot less. I am flipping less and less by the month seemingly. And I would definitely use as much of my credit as possible.
I mean we have all time low interest rates. I don’t know how much longer they’re going to last. They’ll probably last for a while but I mean if I had a great credit score. I would take full advantage of the interest rates to create more cash flow for myself.
So I would definitely leverage as much as possible in long term, low interest loans, and looking for deals that would produce at least minimum 33% cash on cash return.
I like that number, 33%. I like it because it means after year three, I’ve made all my money back. I’ve really got nothing to lose and I’ve got everything to gain. I mean everything from that point forward is a 100% profit so 33% that’s kind of my magic number.
I mean every one has their own personal preference. Maybe yours is higher or maybe yours is lower. Certainly there is nothing wrong with the 25% return. That’s better than darn near anything else you can get out there but 33% that is just kind of my magic number.
And I would then cash flow. I would take the cash flow from these investments. Now commit that to paying down the debt of my highest grossing properties. One at a time. And then I would refinance every chance that I have so I could purchase more property keeping my overall portfolios internal rate of return between say, 20% and 30%.
That’s what I would do if I had abundance of money and credit. I would, uhm, I would still use as little money as possible that wouldn’t change much. But I would leverage my credit score as much as I possibly could to get long term low interest loans.
And I would look for 33% cash on cash. That is my magic number and then once I had acquired as much as I possibly could and I was holding on to it. I would start taking my cash flow and commit it to paying down the debt of my highest grossing properties.
That’s what I would do. You know, because just the price at the end of the day is cash flow. If you don’t have to flip properties to create cash first before creating cash flow then why do it?
I mean unless you enjoy it of course but you know that is just really philosophy. Flipping houses is work. It’s hard work. It’s stressful work. And it can be a lot of fun but it’s never without the stress. Maybe you know you get a thrill out of the stress. I don’t know. I’ve had enough of it to where I’m kind of over it.
I mean everyone should have the experience at least once. But no one will achieve financial freedom flipping properties. Believe that. No one will achieve financial freedom flipping properties. Flipping is simply a means to the end.
It’s to create cash and then to take that cash and convert it to cash flow. That’s where the freedom comes in. That’s where the freedom comes from. That’s where you actually have financial freedom. It’s not just mythical work. It’s a mythical concept.
Cash flow that’s where financial freedom comes from. And you know that’s my position but who knows? I guess if you ask 10 other investors you probably get 10 different answers but that’s, but that’s where I am coming from.
Now having said that, I think every one should force themselves to invest in real estate with no money. And it shouldn’t matter whether you have money to invest or not. You see, most people think that you’d be a disadvantage investing in real estate with no money but it’s not necessarily true.
In fact, I don’t think there is very much truth in there at all. I mean the disadvantage comes from being a novice, being an inexperienced, and being uneducated. It has nothing to do with your money or lack thereof. I mean don’t get me wrong. Money can certainly offer advantages in real estate investing.
But I don’t think it’s a big disadvantage to not have it especially in the beginning of your investing career. It’s definitely not the make or break aspect of the business that cynics and the pessimists and dream stealers or the “hey, I’m just keeping it real” people think that it is.
In fact, you should go to great lengths in avoiding using your own money to invest in real estate. You know and besides the obvious, here’s why. You see, by forcing yourself to be creative and use as little money as possible. Invaluable skills that’s of creative real estate investing. They’re going to develop for you. They’re going to develop in a way that the other wise might not.
Actually they almost definitely will not. I mean they won’t develop because you won’t use them. You don’t have to. And you’re just going to end up using your money as a crutch. You are going to use your mindset to bail you out of bad deals. You use your money to compensate for bad decisions and bad negotiations.
You know if too much of that goes on, you know, you probably aren’t going to be around very long. Well I guess it depends on how much money you’ve got to lose. But you know if you go through that, you’re going to, your money, the mistakes aren’t going to be noticeable because you will be able to always save yourself.
You see, by investing in the proper education and then forcing yourself to do deals with no money and no traditional or conventional financing, going out there and implementing what you’ve learned and getting real world experience. You’re going to develop invaluable skills that you will not learn anywhere else.
And there are skills that will pay you. These skills will pay you tenfold. If not 100% fold of your real estate investing career. I mean here are some examples. First, your lead generation skills, you know, your success in investing in real estate will be indirect proportion to your ability to generate leads.
I mean the quality of your leads as we’ve mentioned will be in the quantity of them. Now money, that can buy lots of leads but when you are forced to generate just as many leads as the investor who has a budget for it, you get really good at generating leads with no money.
And here’s what you’re going to find out when you start generating leads with no money. As many investors, they’ll agree to the fact as well. Typically, the leads that come for free are generally the better leads.
Do you get that? The leads that come for free are generally the better leads. A lot of people try to buy their way into this business. They buy their way into this business with doing big giant marketing campaigns.
That’s what most people do. If you do what most people do, you’re going to do what most people do. You’re going to get what most people got. And that’s like deadly squat really. (laughing)
Right? I mean look around you. Look at what most people got. But the people that are really excelling and the people that succeeding the long term are the ones who figure out how to generate their leads for free. And because those leads that are free are better leads. They typically end up in a better position down the road.
I mean think about that. You know you spend a bunch of money say, on a billboard (for) $5,000 a month or you go out to the real estate clubs and you go out to your community and you have lunch and coffee with the real estate industry professionals and you create amazing network. A $5,000-billboard or a giant network of people that you have personal relationship with.
Something to think about, okay? Second your people skills. That’s another. I mean every piece of real estate that you ever buy or sell will be from or to another person. It’s a people business. If you have poor people skills, your experience in investing in real estate will be poor.
I mean money can be compensating for poor people skills but when you are forced to do a deal using no money and your livelihood depends on it. Your people skills develop really fast but your people skills are another one.
Third, your negotiating skills. Now your job as a real estate investor is to buy low and sell high. And the better you are at buying low and selling high, the more money you are going to make. I mean money can always cover up or bail you out of a bad negotiation.
But again, when you are forced to buy real estate with no money, let alone buy it low enough to create a profit; your negotiating skills will develop in a way that will be impossible in any other way. Here’s why. Because there is a saying, the saying is, “necessity is the mother of invention.”
When you have to make it happen but when you got no money to make it happen with, you get creative. Your brain starts working in a way that it would never be called upon to do. So your negotiating skills are going to develop far greater, far faster, and being much better when you get started with no money.
Fourth, your money raising skills you know, Robert Kiyosaki, the author of “Rich Dad, Poor Dad,” everyone’s favorite book or the book that started it all for so many people. Robert Kiyosaki is on record in many different forms stating that the number one skill of an investor in today’s economy is their ability to raise capital.
And if you have money to invest in real estate, you don’t that skill. Right? Why would you ever need to develop that skill if you had money to invest in real estate? Well when you are forced to invest in real estate with no money, you must learn how to raise money.
The number one skill (of) raising money, the number one skill raising money, the number one skill of an investor in today’s economy. Now why would you want to use other people’s money if you have your own? Good question. Here’s why.
It’s my fifth example. Your deal structuring skills, you see, investing subject to, subject to the financing or with investing with lease options. Whether that’s your acquisition strategy or your exit strategy, contract for deed, seller financing, among, you know, among many other real estate investing terms.
You see these are terms that an investor with money might not ever hear. Or if they do hear of them, they rarely if ever use them.
When you are forced to invest in real estate with no money, these types of terms along with their implementation will be the difference between you succeeding or not.
And when you can incorporate these skills with money, returns of 10% or 15% or even an awesome 25%, those types of returns that you could create with money with these types of skills, those can easily turn into infinite returns.
I’m not embellishing by using the word “infinite.” That’s not, what’s the word? Hyperbole. It’s not exaggeration for effect. I mean what is your cash on cash return?
If you collect $200 a month of cash flow, you got a deal and pay you $200 a month of cash flow. What is your return on that deal if you put zero dollars into it?
Yep. Infinite. Literally. You can’t calculate it. People that have money don’t get to experience that. They never learn how. They never learn how because they never had a need to put a deal like that together so they settle for a 15% return, of which, hey, if there is nothing wrong with 15% return. I’m just very attached to my infinite returns.
Who’s going to hide that financial freedom far quicker, the person with the 15% return or the infinite return? And I consistently create infinite returns myself because I know how to structure creative deals.
I had to learn, I had to figure it out. I was forced to. I know how to raise money from other people and use it in my deals.
I had to learn how to do that. I was forced to learn how to do that. And I would have never ever learned any of that how to do any of those things if I started with money to invest. I mean having no money in the beginning is the very reason I believe that I am a successful real estate investor today.
So if you’re getting started in this game with no money or limited money, consider your long term advantage. And if I may borrow Robert Kiyosaki’s term, consider your unfair advantage.
‘Cause once you’ve got money and you couple it with the skills that you learn in the beginning when you are grinding and grinding your way through on day-to-day basis, trying to make it work. Once you’ve got money and then you can combine it with those skills and add experience.
It is an unfair advantage. All of a sudden that 15% return that every one would find acceptable becomes an infinite return so stick with it. You’re going to be, you’re just going to be wiser and more adept than your counterparts that have money.
Now if you do have money to invest and you want to level out the long term playing field forcing yourself to conduct your investing with no money. Make a game out of it. Pretend you don’t have any and I think you got to be pretty darn surprise with some of your outcomes.
It might be it might be a struggle. It might be a challenge. It’s like so many of us experienced in the beginning but when you stick it out and you start accumulating that experience and you start accumulating that intellectual currency we talked about a couple of episodes ago.
You start realizing how much power you actually have. So that’s my advice for you today. What you got money or you don’t. Force yourself to invest with no money. The long term advantage far outweighs the immediate gratification.
All right. That’s all I’ve got for you today. So until next time. As a very wise person once said, “every advantage has its disadvantage.” Someone actually said that. I just found it. Awesome. So to your success, I’m Matt Theriault. Living the dream.
(Voice Over): Thank you for spending this time with Matt Theriault and the Epic Real Estate Investing podcast. When you have time, stop by iTunes to leave your comments and let us know what you think of this show.
And if you haven’t done so already, get started investing today by visiting FreeRealEstateInvestingCourse.com to access Matt’s free course on how to deals, no money required. Until next time. To your success, to your success, to your success.
All right. That’s all I’ve got for you today. So until next time. As a very wise person once said, “every advantage has its disadvantage.” Someone actually said that. I just found it. Awesome. So to your success, I’m Matt Theriault. Living the dream.[End of Transcript]