Investing In Real Estate With Lex Levinrad

  🎙️ The Investing in Real Estate Show Sellers Are Capitulating Hosted by Lex Levinrad Hey everyone, and welcome to the Investing in Real Estate Show. I'm your host, Lex Levinrad, and on today's episode, I want to talk about what's happening right now in the real estate market — because things are changing very rapidly. For the first time in a while, we're beginning to see signs of capitulation. Now, capitulation is a term that comes from the stock market. It describes the point when investors give up — when stocks have been falling and people finally throw in the towel and start selling. We're starting to see that same kind of behavior in certain areas of the real estate market today, and I expect we'll see even more of it in the months ahead. Year-over-year, foreclosures are up 17%, bank-owned properties are up 34%, and there's a noticeable increase in short sales, pre-foreclosures, and REO listings on the MLS. Many of my students are now finding deals on auction sites like Auction.com and Hubzu.com, and I believe that trend will continue throughout the next year or two. So, the big question is: Where are we in the cycle, and where might the market bottom out? Historically, the real estate cycle runs about 18 years — roughly 13 to 14 years up, followed by 4 to 5 years down. If we peaked around July 2022, then that would suggest a bottom sometime between mid-2026 and mid-2027. Now, real estate is hyper-local. Condos behave differently from single-family homes, and markets like South Florida don't move the same as the Midwest. Condos in South Florida, for example, have been hit hard — partly due to the unresolved Surfside law, with only about half of buildings having completed inspections. That's why, in our training programs, we focus primarily on single-family homes. It's also important to understand that not all single-family markets are the same. The $350,000–$400,000 "median" home that a typical family buys is a completely different product from a $150,000 starter home — and both are worlds apart from the $5 million waterfront properties here in Deerfield Beach. The luxury market remains relatively resilient because those homes are scarce, and many are purchased with cash by wealthy buyers. But that's not the market I teach or invest in. My focus is middle America — the average family earning $70,000–$80,000 a year, buying a modest 3-bedroom, 2-bath home. For that family, affordability is the key issue. At today's prices and rates, that household can typically afford around $2,000 to $2,100 per month, including taxes and insurance. The challenge is that, with 11 rate hikes since 2022, those numbers often don't make sense for buyers — it's often cheaper to rent than to buy. For affordability to return, home prices and interest rates both need to drop by about 20%. Now, the economy itself is in a strange place — a mix of stagnation and inflation. We've got gold, silver, and stocks rising while more Americans are falling behind on car payments, credit cards, and mortgages. It's a divided economy — the haves and the have-nots. The wealthier segment owns assets like real estate, stocks, and Bitcoin. But 75–80% of Americans fall into the lower or middle-income bracket, and they're feeling the squeeze: higher rents, higher food prices, higher everything — without matching wage growth. We're also seeing record levels of credit card and auto loan defaults, and foreclosures are climbing. Many people are struggling to keep up with mortgage payments, and businesses — including trucking companies — are shutting down at record rates. Given that, I believe the Federal Reserve will have little choice but to cut rates soon, even if inflation remains a concern. Now, let's talk about what this means for real estate investors. Some markets — particularly in the Midwest — remain relatively steady. They don't see huge gains, but they also don't experience massive losses. In contrast, "boom and bust" states like Florida and Texas swing more dramatically in both directions. For example, in markets like Austin, Texas or Phoenix, Arizona, we've seen homes that sold for $420,000 just three years ago now selling for around $240,000 — nearly half the price. In parts of Florida, such as Cape Coral, prices and rents have both fallen, while insurance and property taxes have risen — squeezing investor returns. So, what works right now? The answer is simple: focus on affordability. Forget the luxury market, forget high-priced areas, and concentrate on properties with an ARV (After Repair Value) of $300,000 or less. If you can buy at 60 cents on the dollar, that means targeting homes you can purchase for around $180,000 that are worth about $300,000 fixed up. That's where my students are finding success. For example, one of my students recently bought a home for $105,000 in a market where comps were $220,000, and another paid $107,000 in that same market. We're not seeing deals like that materialize yet in hot markets such as Miami, but they exist within an hour or two of Miami. If you want to be successful, focus on affordability. When evaluating deals, I always tell my students to run the numbers carefully — use a mortgage calculator like the one on Bankrate.com and compare monthly payments including taxes and insurance versus what it would cost to rent that same home. Also, for rentals, check Section 8 fair market rents on HUD's website to estimate cash flow. Right now, the Buy, Repair, Rent, Refinance strategy works extremely well. You can buy deeply discounted properties, fix them up, rent them out, and hold them as rentals with positive cash flow. Then you can refinance to pull your cash back out, and do it again!  We'll be covering this in depth at our upcoming Inner Circle Coaching event this weekend, where I am teaching my students both long-term rentals and short-term Airbnbs. Now, some of you may be wondering: where are these deeply discounted properties? How are you finding properties at such low prices? The answer is motivated sellers. Our deals come from distressed sellers — people behind on property taxes or in foreclosure, or owners who inherited homes they can't maintain. Some properties are in terrible condition — drug houses, hoarder homes, or abandoned rentals. They need full rehab, which scares off many other buyers, but that's exactly where the opportunity lies for us as investors. We're also seeing a rise in short sales, where homeowners owe more than their house is worth. When they realize they can't sell for what they owe, and that they will not get anything from the sale of their house they often walk away — and that's where investors can negotiate with banks for big discounts. As an investor, your job is to identify affordable, high-demand rental markets — typically where ARVs are under $300,000 — and where you can buy at 50–60 cents on the dollar. In South Florida, that usually means driving an hour or two north or west from Miami Dade and Broward County to find the right price points where houses are more affordable.  We're seeing the early stages of capitulation — landlords giving up, foreclosures rising, and more motivated sellers entering the market. Over the next 12–18 months, I expect those opportunities to grow significantly. There will be many opportunities to make money. If you're new to investing, now is the time to educate yourself, get trained, and learn how to identify, evaluate, and buy the right properties. This window of opportunity will not be open forever and you need to take advantage of it. In my training programs, we teach students how to calculate ARV, estimate repairs, calculate their offer price, calculate cash flow, and use private lenders and hard money to fund deals. Our strategy which is the Buy Repair Rent Refinance Strategy is simple: ✅ Buy below market value at 50 to 60 cents on the dollar ✅ Repair the property using money from private lenders ✅ Rent the property to a tenant for positive cash flow ✅ Refinance and pay off the private lender - and then do it again The Goal is Financial freedom. Ten rentals owned free and clear within 15 years means you'll never need to work again. Ten rentals at $5,000 per month in rent can provide you with a $50,000 monthly cash flow for life. And this is indexed for inflation meaning every year you can raise rents, and over time your properties increase in value.  This is one of the easiest ways that I know to create wealth. I've seen countless students of mine become millionaires by following this plan. Many of my students now earn six and seven figures annually from their rental portfolios. So, if you're ready to change your financial future, I invite you to join me at one of my upcoming real estate training events (boot camps). Learn how to buy bank-owned properties, how to buy foreclosures and short sales and how to bid on online auction sites and buy properties for 50 cents on the dollar. Learn how to use private lenders to fund your deals and how to use other people's money to build wealth through real estate. You can download a free copy of my book, Wholesaling Bank-Owned Properties, at lexlevinrad.com/getyourcopy. I hope to see you soon at one of my live real estate training events.  Thanks for listening to The Investing in Real Estate Show.  To learn more about my real estate training program, boot camps and coaching visit lexlevinrad.com.  If you would like to schedule a call to speak to one of our Student Support Managers book a free strategy session at lexlevinrad.com/bookacall

TRANSCRIPT: Hey everyone, welcome to the Investing in Real Estate Show. This is your host, Lex Levinrad. In today's episode, I want to talk about the changing real estate market. And I've got to tell you—things are changing quickly. I had a Boot Camp event a couple of weeks back, the Buying Rentals and Building Wealth Boot Camp. We were showcasing some case studies, and one of our students, Manny and Haley, had acquired a property for just $105,000 in Palm Bay. They decided to wholesale and flip that property. I was actually the buyer—I ended up purchasing that property for $110,000. Now, what's interesting is when I went to look at the property and the surrounding neighborhood, I saw three houses listed for sale on Realtor.com. One was listed at $270,000, another at $275,000, and another at $330,000. I looked at the ARV. They told me they thought the ARV was around $210,000 to $220,000. That's probably accurate. Let's say $220,000. At my previous Boot Camp, I even pulled this up on the screen and showed everyone how they found the house—by using Driving for Dollars and direct mail. Ironically, this house actually hit two lists: it was both on a tax-delinquent list and a Driving for Dollars list. Originally, they offered around $125,000 to $130,000, but they negotiated down to $105,000 and the seller accepted. Then they just turned around and flipped that house to me. So when I hear people saying things like, "You can't find deals right now," or "Fixing and flipping is dead," or "Rentals are dead"—I've got to push back. If you're only looking at surface-level information (what you see on social media or in an article), you'll never dig deep enough to see what's really going on. I actually made a public Facebook post about this about a week ago. I talked about how many investors were buying at the bottom of the market in 2009, when I was buying in Miami. Back then, there were about 300 investors active. Fast forward to the peak of 2022, and according to Redfin data, there were 4,400 investor buyers. The numbers correlate inversely: when the market was cheapest, the fewest people wanted to buy. When the market was the most expensive, the most people wanted to buy. On the surface that makes no sense, but if you study history, it makes perfect sense. Back when I worked on the trading floor in Chicago, one of the required books was Extraordinary Popular Delusions and the Madness of Crowds. It explains why people buy the most at the top and why no one wants to buy at the bottom. Think about it: Tesla stock at $200, then $300, then $400, then $500, and people say, "Man, I should have bought it." By the time it's at $800 or $900, they finally jump in—and then it crashes back down to $300 or $400. Same story with Bitcoin. Same story with real estate in 2006–2007, when people were lining up all night in Boynton Beach to buy houses. Why? Because people felt they couldn't go wrong—it had worked in the past. That's the fallacy: investing by looking in the rearview mirror. "It worked last year, so it'll work this year." But markets ebb and flow. For example, rental properties are normally priced when they sell at about 100 times monthly rent. At 200–250 times rent, they're overpriced. At 50 times rent, they're underpriced. At the peak of 2022–2023, many deals were selling at 250 times rent—clearly overpriced. During the 2008 financial crisis, we were buying at 30 times rent. We bought houses in Port St. Lucie—three-bed, two-bath homes—for $36,000 or $37,000 that had previously sold for $200,000, and they rented for $975 a month. That's instant cash flow. So why wasn't everyone buying then? And yet, when those same houses went back up to $325,000 or $350,000, then everybody wanted to buy. That's human psychology. Fast forward to today: I've seen these cycles over 23 years in real estate. We just turned the corner from a seller's market into a buyer's market. Inventory is up, prices are down, and sellers are slashing prices. Yet investors are fleeing. Why? Because they're listening to the noise instead of the numbers. At my Foreclosures Boot Camp in February 2022, there were only 15,000 houses listed on our local MLS. By February 2023, that doubled to 30,000. By 2024, it was 45,000. Today, it's close to 70,000. Inventory has quadrupled in just a few years. At the same time, prices have fallen 15–20% on average, and in some markets like Miami or Kissimmee, as much as 25–30%. That's a massive pullback. Yet most people still think real estate is "fine." They don't realize investors stopped buying in 2022—the hedge funds, Zillow, Opendoor, all the iBuyers—they pulled back first. The average mom-and-pop investor only started to realize in 2024 and 2025 that prices weren't going up anymore. That's why right now, this is a better environment to buy than it was a year or two ago. Deals at 60 cents on the dollar are increasing. But only the real buyers—the ones who understand value—are still in the game. If you rely on social media or the news, you'll end up buying at the top and selling at the bottom. If you study cycles, you'll know when to buy. We're in 2025 now. The market peaked in 2022. The average real estate cycle is 18 years: about 14 up and 4 down. We're about three years into the down cycle, and I believe it's going to get worse before it gets better. Expect more foreclosures, short sales, and bank-owned properties. If you want to build wealth, this is the time to sharpen your sword. Learn. Educate yourself. If you buy at the right time, fix and rent houses, and hold long-term, you will become a multimillionaire in real estate. That's all I have for you today. I've got a Fix and Flip Boot Camp coming up, so I'll be focusing on that. I just wanted to get this podcast out and give you an update on the market. Lots of changes, lots of opportunities. Start marketing to motivated sellers, learn how to buy houses at a discount, and I look forward to seeing you at my next training event. Until next time, I'll see you on the next podcast.  

TRANSCRIPT   Hi everyone, welcome to the Investing in Real Estate Show. This is your host, Lex Levinrad. On today's episode, I want to talk to you about the opportunities in today's market with rental properties. We have a very unique set of circumstances that have led us to where we are now. The first thing we saw was the absolutely crazy increase in prices that happened after COVID, from 2020 to 2022. There was a huge jump—most areas increased at least 50%. In some areas, prices went up as much as 70%, 80%, even 100%. With this huge price increase, it became nearly impossible to find cash flow. It just didn't exist. But there was another thing that happened after COVID—a direct result of COVID—and that was the inflation effect. The government pumped a lot of money into the economy with EIDL loans and PPP loans, and people were flush with cash. This is one of the reasons prices went up so much. And it wasn't just real estate—everything went up. Even the prices of Rolex watches increased. There was simply too much money floating around in the system. The net result of that was inflation, which we were all aware of. Suddenly, rents were going up, along with the price of food, gas, and everything else. The concept of rents going up is very important. Regular market rents increased quite a bit. Looking at my own rentals, for example, a property that rented for $1,300 went to $1,475, then the following year to $1,550, and the next year to $1,675. That's a significant increase. I have a HUD Fair Market Rent tool on my website at www.lexlevinrad.com/hud. You can use it to see fair market rents. You simply select your state and city, and then you can view all the ZIP codes in that city. For example, if you're in Florida, you could choose Broward County, then Fort Lauderdale, and then view the rents HUD pays for a three-bedroom in each ZIP code. This tool works nationwide. One thing to note is that the number you see is the maximum amount, including utilities. If HUD lists the maximum at $2,100, my experience is that actual Section 8 rents end up around $1,900. I generally deduct $200–$250 from the HUD number to get a realistic rent amount. Before buying a property, I recommend calling the housing authority in the area. If you're thinking about renting a property with Section 8 in Deerfield Beach, Florida, for example, call the Deerfield Beach Housing Authority and say, "I'm a landlord with a three-bedroom, two-bathroom rental. What rent could I get for Section 8?" Even better, visit them in person. Many times, they have flyers or TV monitors showing current rental listings. You must first understand what you can get for rent because cash flow is your top priority when buying rental properties. Many people in real estate have heard the phrase "location, location, location." I think this is often misleading. You can buy in the best location in the world—even Beverly Hills—but if you overpay or it doesn't have cash flow, you'll lose money. Yes, location is important, but if you had to choose between a great location with a bad return or a less desirable location with a strong return, I would choose the strong return. For example, I lived in Boca Raton, Florida, for 20 years. It's an upscale, highly desirable area. If you're buying for appreciation potential, that makes sense. But if you're buying rentals, you're not living in the property—your tenant is. When you buy rentals, what matters most is how much rent you can get and whether it will cash flow. Cash flow is rule number one. If you're starting out, Section 8 is a good place to begin. I'm not saying you'll stay there forever—eventually, you may want to own rentals in higher-quality neighborhoods with higher-quality tenants—but when starting, cash flow is key. Areas with low prices and high rents give the best returns. A great place to start is by checking Section 8 rent amounts with the HUD tool at www.lexlevinrad.com/hud. You enter your state, city, and ZIP code to see what HUD will pay for a three- or four-bedroom. That's tool number one. Tool number two is price. We currently have an unusual set of circumstances making rentals an especially good opportunity. First, real estate prices peaked in 2022. In Florida—especially the condo market—prices have since dropped significantly. In some areas, I've seen 30% declines from the peak. Some markets, like Boca Raton, are holding strong, but others—Palm Bay, Kissimmee, and similar—have dropped more. It's not just Florida. Markets like Houston, Las Vegas, and Phoenix have cooled considerably. The second factor is how much rent you are getting. Section 8 rents are set by the government, and because of inflation, HUD's rent amounts have increased dramatically. Properties renting for $1,500 two years ago may now rent for $2,000. This means that while prices have come down, rents have gone up, creating cash flow opportunities. For example, in Florida, a $200,000 ARV (after-repair value) house might rent for $2,000 on Section 8. That meets the "1% rule"—rent is 1% of purchase price. Traditionally, the rule of thumb was not to pay more than 100 times monthly rent. If you buy at full retail price, put 25% down, and get a conventional mortgage, you might have cash flow. But I teach my students not to buy retail. Instead, I teach the Buy, Repair, Rent, Refinance (BRRR) method—buy at a discount, fix it up, rent it out, and refinance. We typically buy at 50–60 cents on the dollar. For a $200,000 ARV house, that means paying around $100,000–$110,000. This is possible if you find motivated sellers—people in foreclosure, probate, tax delinquency, bad tenants, fire or flood damage, etc. Once repaired and rented, you refinance at 75% of appraised value. If it appraises at $200,000, the bank will lend $150,000. If you bought and renovated for $150,000 total, you get your money back. If it appraises higher, you may even pull cash out. The challenge for new investors is finding these discounted deals. That's why I focus on teaching motivated seller marketing. If you don't have the cash to buy and repair, there are creative ways to raise it—private lenders, partners, 401(k) loans, home equity lines, even credit cards for materials. I often lend my coaching students money for their first deal if it's a good one. Your mindset is key. Many people think they can't do it because they don't have the cash. But with the right deal, money is not the problem—finding the deal is. Now is a rare opportunity: prices are down, rents are up, and foreclosures, short sales, and bank-owned properties are increasing. With the BRRR method, you can buy with little or no money down, create equity, and generate monthly cash flow.  We have the Buying Rentals and Building Wealth Boot Camp coming up next weekend. To learn more visit https://www.lexlevinrad.com/buying-rentals-building-wealth-boot-camp/  We have 3 preview tickets left for the Buying Rentals and Building Wealth Boot Camp.  To grab one of those tickets call my office now at (561) 948-2127  

On today's podcast episode I talk about how to make more money.  I talk to some students at my real estate training events who are looking for ways to increase their income. Not everyone is interested in waiting years to build wealth and equity with rental properties. Some people are looking to make more money now. And that is what today's podcast episode is about.  Many new real estate investors are attracted to real estate investing and specifically wholesaling and flipping houses, because they are looking for an easy way to make more money. But I have noticed that these people who are looking to make more money usually have either a spending issue or an income issue.   People that are looking for more income usually have a few things in common. They have too much credit card debt, may have student loans, have too many expenses, and not enough income to cover all of those expenses.  The net result is a struggle to pay the bills every month. What we call the "rat race". How do you get out of that struggle of living paycheck to paycheck?  For some it's a spending issue where they simply spend too much money relative to their income. For other's it's an income issue where they simply need to learn how to make more money. For most people it's a combination of both too much spending and not enough income.  And what is surprising is that I see this even with people who have relatively high incomes of $150,000 or more. People tend to increase their expenses as they increase their income. And that is what keeps them stuck in the rat race. Keeping up with the Joneses, buying new cars and nicer houses to impress your neighbors is a poverty cycle that will keep you broke forever. So how does one learn how to make more money? Is the answer to get a better job? Or is it to switch jobs or even get a second job?  The answer lies with none of these. Instead what is needed in order to make more income is to gain specialized knowledge. A person working at a fast food restaurant does not have specialized knowledge and that is why they make $13 an hour. Anyone could do their job. Few want to. They have no specialized knowledge. The more specialized knowledge you have, the more money you will make. You need to learn specialized skills. A good example of a specialized skill is learning how to be a property scout or deal locator. We call these people "real estate bird dogs" in the industry. If I paid you $5,000 or $10,000 for every house that you found for me, then how many houses would you need to find per month to exceed the income from your job? The answer is not many at all. If you knew how to find houses you would have a specialized skill that could make you a lot more money than what you are currently making.   If you become good at locating wholesale real estate deals at discounted prices, then getting paid to find these deals by an investor like me will make you a lot of money. Learning how to flip these deals to other investors for a profit is a specialized skill called "wholesaling" which can make you a lot more money than what you are getting paid at your job. It's a specialized skill. And it's a skill that you can learn. I teach this skill at the Wholesaling Real Estate Boot Camp. Learning how to buy foreclosures and bank owned properties is a specialized skill too. I teach this at the Foreclosures and Bank Owned Properties Boot Camp. Even learning how to buy rental properties at a discount and how to employ the Buy, Repair, Rent and Refinance Method is a specialized skill. I teach my students how to do this at the Buying Rentals and Building Wealth Boot Camp. These specialized skills will make you a lot of money because most people do not possess this knowledge.  Regardless of your real estate investing strategy, whether you want to buy and rent, fix and flip, or wholesale and flip you need to know how to find deals. The more deals you can find, the more money you will make. And that skill set of knowing how to find deals is very valuable.  Doctors and dentists, and other busy professionals that want to buy rental properties don't have time to search for and locate deals. They want someone to bring deals to them. That is why wholesalers get paid so much to locate deals. The skill set of learning how to locate deals is a skill set that you can learn. I have taught over 7,000 students these skill sets at my real estate training events.  Learn how to buy foreclosures and bank owned properties at the Foreclosures and Bank Owned Properties Boot Camp. Learn how to be a deal finder and get paid to find deals with my Real Estate Bird Dog and Partnership Program. Learn how to find wholesale deals at the Wholesaling Real Estate Boot Camp. Learn how to fix and flip houses at the Fixing and Flipping Houses Boot Camp. Learn how to buy rental properties and build wealth at the Buying Rentals and Building Wealth Boot Camp. These are all specialized skills that can be learned.  If you learn these specialized skills you will have specialized knowledge, and you will make more money, increase your income and increase your net worth.  If you want to learn more about my real estate training programs, boot camps and coaching call my office at (561) 948-2127 and speak to one of my Student Support Managers.  

On today's podcast episode I talk about the Buy, Repair, Rent and Refinance strategy commonly referred to as the BRRR Method. This is one of my favorite real estate strategies and one of the easiest ways that I know to create long term wealth with real estate.  The Buy, Repair, Rent and Refinance Strategy was the method that I used to make my first million dollars in real estate. It has helped me, and many of my students become multi millionaires. Ironically, out of all the real estate investing strategies that there are, it's the easiest strategy to employ for a beginner and requires the least amount of effort. The BRRR Method consists of four components BUY REPAIR RENT REFINANCE BUY The first step is to find a rental property that would work using the BRRR Method. Your goal is to find a property that you can buy, repair, rent and refinance where all of the costs of the purchase and renovation of the property are covered. Once you locate a property, you purchase it using a loan from a private lender. I teach my students how to get private lender loans at my real estate training events.  REPAIR  The second step is to repair and renovate the property. We call this stage the "rehab" stage. Before you can rent the house to a tenant, you will need to make the property rent ready. How much work is required to make the property rent ready depends on the property. Some houses only need a new coat of paint and fresh carpets. Others require more renovation like updating the flooring, the kitchen, and the bathrooms. Some houses require major renovation like new roofs, central air conditioning, plumbing or electrical work. In some cases you may be able to buy a property that is already rented (with a tenant in place). In this scenario you can skip the repairs because the house is already rented and does not need to be repaired. However, usually, for the BRRR Method to work, you would need to buy the property at a substantial discount to market value. And that means that most of the time the property would require repairs. RENT  The third step is to rent the property. You will need to have a tenant in place in order to be able to refinance your mortgage. The bank will want to see the amount of rent that the tenant is paying, and will want to verify this by getting a copy of the lease, and also by confirming that the rent is being deposited into your bank account. You would typically collect the first month's rent, last month's rent and a security deposit from the tenant when renting out the house. REFINANCE The fourth step is to refinance the mortgage to a lower interest rate fixed mortgage. In order to refinance the mortgage the bank will require an appraisal. For investment properties, banks will typically lend 75% of the appraisal value. A house that appraises for $200,000 would be able to get a mortgage for $150,000.  The goal with the refinance is to get enough money from the bank in the refinance to pay off the private lender and to cover the purchase price and the repairs plus all closing costs and other fees like points, interest, and insurance. Done correctly, (like in the example I used in this podcast episode) you can buy a house with no money down using the BRRR Method.  EXAMPLE On the podcast episode I spoke about a house that could be purchased for a purchase Price $80,000. Assume you could get a private lender loan from someone like me for $70,000. If this property required repairs of $30,000 and fees and points and closings costs were $10,000 then your total cost to purchase and repair this property would be $120,000.  After the house was repaired, let's say you rented it to a tenant for $2,000 which is the going market rate. Now that the house is rented, your goal would be to refinance the mortgage so your mortgage broker orders and appraisal and the house appraises for $200,000. The bank is willing to lend you 75% of the appraisal amount which is $150,000. I recommend the 15 year fixed rate mortgage so that your house is paid off in 15 years (or less if you pay a little extra each month). You have to pay back the private lender loan of $70,000. You also want to pay yourself back the cost of the repairs ($30,000) plus the cost of the fees and points and closing costs from when you purchased the house ($10,000). In some cases you may have used Home Depot cards to pay for materials and you may have paid your contractor with a credit card.  HERE IS THE BREAKDOWN Purchase Price $80,000 Private Lender Loan $70,000 Fees and Points $10,000 Total Cost $90,000 Repairs $30,000 Total Cost Including Repairs $120,000 Your Cash Out of Pocket (or credit cards used or a combination of both) would be the $10,000 down payment, plus $10,000 in closing costs, points, fees and insurance plus the $30,000 in repairs. The total cash out of pocket would be $50,000. This could be borrowed from a relative or friend or it could be a combination of credit cards, savings and Home Depot cards.   APPRAISAL Appraisal $200,000 Bank Loan: $150,000  Pay off Private Lender $70,000 (you are left with $80,000) Pay yourself back the $10,000 down payment Pay yourself back for the repairs $30,000 (or pay off the Home Depot Card) Pay yourself back for the fees, points, closing costs and insurance $10,000 Refinance Fees $5,000 Cash left over $25,000 EQUITY At this point you would have a house that is appraised at $200,000 with a mortgage of $150,000. Your equity would be $50,000. You also have the cash left over from the refinance which is $25,000. You would have increased your net worth by $75,000 by buying this property.  HOLD THE PROPERTY UNTIL THE MORTGAGE IS PAID OFF Assuming that the value of the house doubles in 15 years, and the rent doubles in 15 years then you would own a $400,000 house free and clear (with no mortgage) and you would have $4,000 per month in rent coming in (in 15 years). This is how you become wealthy. If your goal was to have $20,000 per month coming in, then all you would need to have is 5 of these houses. What makes this such a powerful strategy is that you are not limited and can buy as many houses as you want. As long as they fit the formula, you can buy unlimited real estate. So in the example above if you borrowed the $50k from a combination of your savings, a relative and credit cards then when you refinance you would have that money back and would be able to do it again and again and again. And if you get 15 year mortgages, then no matter what happens in those 15 years, your mortgage will get paid off and you will own the property free and clear. And if you pay a few hundred dollars extra each month you can have your mortgage paid off in as little as 10 years. CREATING WEALTH AND FINANCIAL FREEDOM The BRR Method is the easiest way to create wealth and financial freedom. This is the easy way to get wealthy but it does require patience. And it works, as so many of my students can tell you!  If you want to learn how to get started with the BRRR Method I encourage you to attend the Buying Rentals and Building Wealth Boot Camp where I teach the BRRR Method. You can find out more information about that boot camp at this link: https://www.lexlevinrad.com/buying-rentals-building-wealth-boot-camp/ If you want to increase your returns by 3 to 5 times and pay off your mortgage quicker, then you can rent the properties to short term tenants using the Airbnb platform instead of long term tenants. We teach this Airbnb method at our Airbnb and Short Term Rentals Boot Camp. If you want to learn more about my real estate training program, and more about our upcoming events, boot camps and my coaching program visit www.lexlevinrad.com or call my office and speak to one of our Student Support Managers at (561) 948-2127.

On today's podcast episode I talk about how to buy houses in 2025 and what to look out for as an investor when buying in today's market.  The past 3 years have been an interesting time for real estate investors - especially in Florida. We have seen interest rates move up from a low of 2.65% in 2022 to above 7% by October 2023. This rapid increase in interest rates which was orchestrated by the Fed to reduce inflation had a very sobering effect on the real estate market.  Prices peaked around July 2022 and have been on a gradual decline ever since. Over the past year, the market has shifted from a seller's market where it was easy to sell, to a buyer's market where buyers can be very selective. Sellers have been slashing prices on properties listed on the MLS and inventory has been rapidly increasing in many areas. In some areas like Southwest Florida, in some cities the number of listings on the MLS has quadrupled over the past few years. Some of the notable changes that have occured over the past few years are: Hedge Funds, Private Equity Funds and iBuyers stopped buying houses. These same hedge funds and private equity funds are now selling houses. Builders have had to slash prices and provide incentives to lure buyers in. Higher interest rates and prices means less buyers can qualify for a mortgage. Banks and mortgage lenders are becoming much more cautious on lending.  So how have these changes affected real estate investors who are wholesaling and flipping houses, fixing and flipping houses, and buying rentals and Airbnb's? The first major change is you have to be very weary of sold comps (comparable sales). A house that sold 3 months ago may have gone under contract 5 months ago, and prices may have been ten percent higher. If you are planning on fixing and flipping and it usually takes you four to six months from purchase to sale, it may now take you longer to sell, and you may have to decrease the asking price. During that longer holding period, you will have additional interest payments. You may also be looking at an additional ten percent decline in pricing by the time the house sells.  For investors that are fixing and flipping, they have a situation where prices are coming down and they may continue to come down. I recommend that you build in a profit margin of 10% from sold comps, and then add an additional 10% for potential price declines. This is a very conservative assumption, but it will help you stay profitable and out of trouble. It will also make you reject almost all deals that are presented to you. In this market you will need to buy at deep discounts. Keep an eye on home builders and the pricing of new homes because that is also putting downward pressure on comparable sales. If a brand new 1,800 square foot home that was built in 2025 is selling for $380,000 then why would someone pay $350,000 for your 1989 house that you fixed up which is only 1,200 square feet? Don't only look at sold comps because if you do you will over estimate the ARV and what the house could be sold for. Always pay attention to the home builders because their pricing puts a ceiling on comparable sales. If you are watching the builders, then you will know when they are slashing prices and you will be able to adjust your comparable sales and ARV accordingly. In today's market it is more important to look instead at current listings on the MLS than comparble sales. Pay attention to how long homes have been listed (days on market) and how much sellers are slashing their asking prices. Sold comps may tell you a house is worth $350,000, but if there are 3 houses listed for sale at $320,000 then ask yourself if you called the realtor and made an offer would the seller accept $310,000 or $300,000?. If the answer is yes, then the ARV today is $300,000 (not $350,000). And yes that is a shocking price decline. But it's also reality. If you are fixing and flipping, if today's ARV is $300,000 what will it be in six months?  I recommend that you consider reducing your ARV estimate by an additional 10% to account for potential additional price declines and you run your offer price off of those numbers. If you are fixing and flipping be very conservative and buy at deep discounts! This means you probably will need to reject most deals that are presented to you. You won't find a great deal from a wholesaler who is marking up their price by $50,000 or $100,000. Also watch out for ARV estimates from wholesalers (they are probably too high). If you are wholesaling, consider that your cash buyer investors are the fixers and flippers described above. If they are buying deep, you will need to get houses under contract at deeper discounts in order to be able to flip them to those buyers for a profit. If you are buying at 60 cents on the dollar, you will not have a problem flipping houses. The days of paying 80% of ARV and flipping a house for 90% of ARV are over. Wholesalers will have less cash buyers to flip houses to because their cash buyers are more conservative now. If you are wholesaling, learn how to buy at deeper discounts and get better at estimating rehab costs and ARV.  For investors that are landlords buying rental properties, the game is a little easier. Since your time horizon is long term, you don't have to worry about short term price declines over the next year or two. If your goal is to buy rental properties and get 15 year fixed rate mortgages then what happens over the next year or two is irrelevant. Think longer term and focus on properties that cash flow where you can employ the Buy, Repair, Rent, and Refinance method. Your goal should be to buy as many rentals as possible with no money down using the BRRR Method. Any price declines over the next year or two will be your opportunity to buy more houses at better prices and deeper discounts. Make sure you only buy properties that cash flow by at least $500 per month and you will do well in this market. At some point, prices will bottom and start going back up. When that day comes, the investor that purchased the most rental properties wins. The more rental properties that you can buy before the market bottoms and turns back up the better. Your net worth and your financial future depend on it. If you want to become a millionaire focus on buying ten rental properties and holding them long term.  If you want to learn how to build wealth with rental properties, I strongly recommend that you join my real estate training program and attend the Buying Rentals and Building Wealth Boot Camp. At this boot camp, I teach my students how to buy houses with no money down, using the Buy, Repair, Rent, Refinance Strategy. This strategy has made myself and many of my students millionaires. It can do the same for you. I also recommend that you learn how to to employ this BRRR method with Airbnb short term rentals as an exit strategy instead of only focusing on long term rentals. Instead of Buy, Repair, Rent, Refinance you can Buy, Repair, Airbnb and Refinance.  I teach my students how to do this at the Airbnb and Short Term Rentals Boot Camp and is part of my real estate training program . Many of my students have transitioned from being landlords with long term rentals to Airbnb. The cash flow is 3 to 5 times higher and I have students that are making $130,000 a year from just one Airbnb. One of my students made $ $100,000 last month on Airbnb. If you want financial freedom, learning how to buy rentals and how to build wealth long term with the buy, repair, rent refinance strategy is a game change. If you employ buy, repair rent, refinance together with Airbnb you will create your financial freedom much faster.  One last note. You may think that based on what you just read (and heard) that you should "hold off" on buying real estate and wait for prices to come down. That is not the case. Many of my students are finding great deals right now that cash flow like crazy. I purchased 4 houses last week. We are in buying mode and any price dips will result in us buying even more aggresively. Buy anything that makes sense and that cash flows. Just remember to buy at a deep discount!   

On today's podcast episode, I talk about bidding on online auction sites, and buying bank owned properties and foreclosures.  In order to understand buying foreclosures and bidding on bank owned properties on online auction sites, it's important that you understand the foreclosure process and how it works. I will be covering this in detail at the Foreclosures and Bank Owned Properties Boot Camp next weekend. You can learn more about the Foreclosures and Bank Owned Properties Boot Camp at the link below:  https://www.lexlevinrad.com/foreclosures-bank-owned-properties-boot-camp/  There are 4 stages to foreclosure: Pre-Foreclosure Foreclosure Foreclosure Auction Bank Owned Property Pre-Foreclosure In the pre-foreclosure stage, the homeowner is late on their mortgage payments. They can be 30 days, 60 days, 90 days or 120 days late. According to the Dodd Frank Act, banks cannot pursue a foreclosure lawsuit until a homeowner is 120 days late so any homeowner who is late up to 120 days (or until the bank initiates a foreclosure lawsuit) is considered in pre-foreclosure. You can market to these homeowners by accessing  30 60 90 day late mortgage lists from data providers and marketing to these homeowners before they go into foreclosure.  Foreclosure After the bank has initiated a foreclosure lawsuit (known as "Lis Pendens" in Judicial States like Florida), the homeowner is now in foreclosure. Foreclosure is public record and you can get access to this data by using data providers like Propstream (you can get a free 7 day trial at https://www.lexlevinrad.com/propstream/) Many real estate investors download the foreclosure list and market to homeowners in foreclosure by mailing postcards and letters. Investors can purchase these properties before the foreclosure auction directly from the homeowner. On new foreclosure filings, a foreclosure auction date has not yet been scheduled, but after a few months, a foreclosure auction date may have already been set. It's very important to understand this and to know if there is a foreclosure auction date and what that date is. Any investor can buy the property for cash directly from the homeowner up to theoretically the day of the foreclosure auction. In reality if you were using a title company and you were going to do a lien search, you would want to close at least a few days before the foreclosure auction which means you would need to sign a contract with the homeowner no later than 3 weeks before the foreclosure auction date.   Foreclosure Auction Investors can register to bid on the property at the foreclosure auction which is held online by the County Clerk in most counties. I do not recommend buying at the foreclosure auction since you are not guaranteed to receive free and clear title and the property may have liens and building violations attached to it.  At the foreclosure auction, the property is sold to the highest bidder. The bank will have a representative who is usually an attorney who will bid up to or very close to the amount of the original mortgage that was owed by the homeowner. This is done to protect the bank's interest for the amount of the money owed. In the event that the bank is the highest bidder (because other investors don't want to bid that high), then the property will go back to the bank. At this point the mortgage is wiped out and the bank now owns the property and it becomes a bank owned property.  Bank Owned Property (REO) Once the property goes back to the bank it becomes a bank owned property or REO (which stands for real estate owned by the bank). The goal of the bank is to get rid of this property as fast as possible. They do this by only selling to cash investors. They do not allow mortgages because the bank wants a quick sale and does not want to wait to see if the house will appraise or if the buyer can get approved. The bank only accepts cash offers and requires all offers to have a proof of funds letter showing that the buyer has the funds available to purchase the property. We provide a proof of funds letter to all students that are in our real estate training program.  The ideal buyer for a bank is an investor that will pay cash and waive all contingencies including inspections. Why is this ideal for the bank? Because the buyer cannot back out. There are no appraisals, surveys, inspections or requirements to be approved for a mortgage, so for the bank this type of offer is the one that is most likely to close and sell fast for cash (which is what the bank wants).  Once the bank owns the property, they assign an asset manager in their loss mitigation department to oversee the sale of the property. This asset manager hires a few local real estate agents and requests a BPO which is a broker's price opinion on what the property should be listed for and what the current value of the property is.    The asset manager then chooses one of these agents to be the listing agent and list the property on the MLS. Investors can see these bank owned properties on the MLS and make an offer to purchase the property by contacting the listing agent.  Online Auction Sites In some cases, the bank chooses to use an online auction site like www.hubzu.com, www.auction.com or www.xome.com to sell the property. While the property is still listed on the MLS, all buyers are required to bid online using the online auction platform that the bank chooses (instead of contacting the listing agent). This information about what auction platforms is being used is readily available in the comments section of the MLS Listing and can even be visible on www.realtor.com  and www.zillow.com  Anyone can go to these online auction sites and register to bid. The key thing to understand is that the price on the MLS may be the starting bid price and not the price that the bank is willing to accept. On all online auctions there is a "reserve price" which is the minimum price that the bank is willing to sell the property for. If a property does not sell or does not meet the reserve price then it is listed again until it is sold. In order to bid on online auction sites you will be required to register. Part of the registration process is for them to verify your identity and for them to require you to provide a credit card for the bid deposit. If you bid on a property and you are the winning bidder, the auction site will deduct the amount of the auction deposit from your credit card. This amount will only be refunded to you if you close on the property.  If you do not sign the purchase contract or if you choose not to buy the property you will lose the bid deposit. Each site has different bid deposits and the bid deposits change often. Most of the properties listed on online auction sites have a bid deposit of around 3% to 5% of the purchase price. Each online auction specifically states the required bid deposit in the listing. Make sure you pay attention to that before you bid.  Proof of Funds Letter You will also be required to upload a proof of funds letter to show the bank that you have the funds available to purchase the property for cash. If you have a bank account statement with the funds readily available use that. If you don't then you can use a proof of funds letter. We provide all of our students in our training program with a proof of funds letter for them to bid on online auctions and bank owned properties. Government Sponsored Entities (GSE's) Another set of online auction sites are Government Entity Sites like HUD, Fannie Mae and Freddie Mac. You can see HUD Homes on www.hudhomestore.com. Fannie Mae Homes are listed on www.homepath.com, and Freddie Mac Homes are listed on www.homesteps.com although Freddie Mac currently has a partnership with www.auction.com  where the Freddie Mac properties are listed on their platform instead. Learn How To Buy Foreclosures and Bank Owned Properties Foreclosures are skyrocketing. 1 in every 247 homes in Florida had a foreclosure filing in 2024. There are millions of homeowners that are in pre-foreclosure and foreclosure. There will be many opportunities to buy properties at huge discounts from homeowners that are in some stage of the foreclosure process. Foreclosures that are sold at the foreclosure auction will become bank owned properties. Learning how to buy and bid on these bank owned properties on the MLS and on bank owned property websites will be critically important in 2025. If you are looking to buy your first rental or fix and flip or if you are looking to wholesale and flip your first house then you need to learn how to buy bank owned properties.  Understanding how to bid on government entity websites like HUD, Fannie Mae and Freddie Mac will open up your options to buy more properties at a discount. Some bank owned properties sell for as low as 50 cents on the dollar (or less). If you want to get started buying foreclosures and bank owned properties, make sure you register to attend the Foreclosures and Bank Owned Properties Boot Camp which is coming up next weekend. There are only a few seats left. If you want to attend, call my office at (561) 948-2127.

On today's podcast episode, I talk about how to find deals in 2025. The market has shifted and 2025 will be a big year for change in real estate.  The Current Real Estate Situation Real estate prices are up by more than 50% since 2020. The 30 year mortgage rate has increased from a low of 2.65% in 2021 to above 7% today. Anyone who purchased real estate before 2020 is sitting on a lot of equity, and most likely refinanced into a very low interest rate mortgage. These homeowners have no incentive to sell. This is one of the main reasons why inventory has been so low.  But what about homeowners that need to sell their house because they are relocating, downsizing, or for any other reason? What about sellers that have lost their job, are in foreclosure, have become sick or disabled, or are unable to afford their monthly mortgage payments?  Sellers Are Delusional We have sellers like this calling our office every day. And I can tell you that in my opinion most of these sellers are in denial and delusional. They still think that their house is worth what Zillow said it was worth two years ago. However the reality is very different. In order to sell a house you need a buyer. And that is where the problem lies. At the current prices and interest rates, the average American can no longer afford to buy a home. So buyers wait, while sellers slowly start facing the reality that real estate prices in Florida have declined.  Investors that fix and flip houses for a living are feeling the pressure too. Price declines means they may flip the house for less than originally anticipated. Refinancing from a hard money loan means higher interest rates and higher payments. Many of these fix and flip buyers are sitting on the sidelines waiting for deals to materialize. If you are buying fix and flips in this market, make sure you are buying deep. If you were buying previously at 70 cents on the dollar, build in a margin of safety and buy at 60 cents on the dollar now. I am seeing amazing fix and flip deals with damaged properties. Focus on that if you are fixing and flipping. If you want to learn how to fix and flip make sure you attend my Fixing and Flipping Houses Boot Camp. Increased Inventory and Lower Prices The inventory of MLS listings has substantially increased over the past two years. Sellers that are motivated to sell are slashing the prices on their listings. Foreclosures are increasing and I am starting to see more and more short sales and bank owned properties on the MLS and on online auction sites.  Some markets have already had substantial price drops of 20%. There have been a number of negatives for real estate over the past few years including higher prices, higher interest rates, more inventory, rising property taxes, higher insurance and higher HOA fees.  Where To Find Deals Sellers that are truly motivated to sell are facing a market with less buyers. A seller that is motivated to sell because of property damage, fire, flood, or hurricane damage is having a hard time finding a buyer. Some of these damaged properties can be purchased at a low enough price that makes sense for a rehabber looking to fix and flip or for a landlord looking for a cheap rental. Look for damaged properties.  Short Sales Sellers that have lost the equity in their home, (which is anyone who purchased after 2022) who want to sell are having a very difficult time too. They are realizing that they cannot get enough from the sale of their house to pay their mortgage off. They have already lost their down payment and some of these sellers are simply starting to walk away. This is an opportunity for you as an investor to purchase their property at a discount by having the bank agree to a short sale where they accept less than the balance owed on their mortgage. I am currently working on a few deals like this that are short sales. They were all purchased at the peak of the market. Foreclosures and Bank Owned Properties I anticipate that as more negative equity homeowners walk away, we will see more and more foreclosures and short sales. Many of these homes will become bank owned properties that will be listed on the MLS and on online auction sites like auction.com, and Hubzu.com.  This is why you need to learn how to buy and bid on bank owned homes. I will be teaching how to buy and flip bank owned properties at the Bank Owned Properties Boot Camp which is coming up in a few weeks.  Buying Subject To The Existing Mortgage Homeowners that purchased at the peak have lost the equity in their home. But they may have a really low mortgage rate of less than 3% and they may be willing to let you assume their mortgage. There are literally thousands of deals out there where you can buy a house from a seller and assume the mortgage. Learn how to buy houses "subject to the existing mortgage" and you will find many deals like this in 2025. I teach buying "subject to" at the Creative Financing Boot Camp. Seller Financing Older homeowners that want to sell or relocate may be willing to consider seller financing. Look for sellers who have been trying to sell for a long time and who have become more motivated to reduce the price of their house. Seller Financing is a strategy that you need to learn how to deploy if you are looking to buy real estate in 2025. I teach seller financing at the Creative Financing Boot Camp as well. Wholesalers  Wholesalers are realizing that they need to make offers at lower prices. If they want to entice buyers like me, they have to buy at a low enough price for the deal to make sense. The days of wholesalers marking up deals by substantial amounts is coming to an end. Wholesalers will need to adapt by buying low or they will go out of business.  I am seeing some decent deals coming out from wholesalers over the past few weeks. We are currently negotiating to buy a $200,000 ARV house for $70,000 and a $370,000 ARV house for $215,000. Both of those deals are from wholesalers. If you are looking to learn how to wholesale, now is a great time to start because as sellers get more motivated, they become more desperate to sell and are more likely to sell at a discount. You can learn how to flip these houses to other investors for a profit. I teach how to wholesale at the Wholesaling Real Estate Boot Camp. HUD and Government Entities I am seeing some deals on Hud Homes, Fannie Mae and Freddie Mac Homes. I am currently working on negotiating a $400,000 ARV house to purchase at $250,000 that was listed by a Government Entity Site. While there are not a lot of deals now, they are steadily increasing. Pay attention to this and learn how to buy and bid on these homes. I teach how to buy and bid on Hud Homes, Fannie Mae Homes and Freddie Mac Homes at the Bank Owned Properties Boot Camp. Direct Mail Marketing To Motivated Sellers This will be the number one way for you to find deals in 2025. Direct mail (postcards) to targeted lists of motivated sellers is one of the most consistent ways for you to reach homeowners that are truly motivated to sell. Learn how to buy lists of motivated sellers who are in foreclosure, delinquent on their property taxes, in probate, have code enforcement violations, vacant properties, liens and absentee landlords. Market to them consistently and the ones that are truly motivated will be willing to sell their house at a substantial discount.   Pay Per Lead Providers Learn how to buy and source motivated seller leads directly from Pay Per Lead Providers like I Speed To Lead,  Motivate Seller Leads, Property leads and other PPL providers. If you are a new investor this is a great way for you to practise talking to sellers without spending a lot of money marketing. This is also a great way for you to get comfortable with your script and how to talk to sellers over the phone.  I teach my coaching students how to do this live at the Wholesaling Inner Circle. We have one coming up next weekend. Pay Per Click and Facebook Ads If you want unlimited inbound motivated seller leads then consider learning how to market to sellers using Google Pay Per Click Ads and Facebook Ads. While this is more difficult to set up, the reward is more highly motivated sellers. Online marketing with Google Pay Per Click and Facebook Ads is the easiest way to get yourself in front of sellers who are truly motivated to sell. I teach my coaching students at the Wholesaling Inner Circle how to deploy these online marketing strategies to have motivated seller leads on autopilot. If you want to up your game in 2025 and buy more deals at deeper discounts then learn how to employ this strategy.  Driving For Dollars and Bandit Signs If you have the time, driving for dollars and bandit signs still work. But I would rather see you trade your money for your time versus trading your time for money. Remember the phrase "Stop Trading Your Time for a Paycheck". This principle is clear. You are better off spending money to have inbound leads coming to you, than you are spending your time soliciting and calling and driving around looking for deals. Buying Properties on the MLS Listings on the MLS are visible to everyone, so there is a lot of competition for MLS listings. But we still find deals all the time on the MLS. Remember that every bank owned home, online auction, HUD, Fannie Mae or Freddie Mac home is also listed on the MLS. Get into the habit of searching your target market daily for deals. When you find something you like, call the listing agent and make an offer.  Strategies that I Do Not Recommend Texting, cold calling and any form of outbound marketing to seller's cell phones is not a good idea. If you are reaching out to consumers on their cell phones in 2025 you run the risk of getting in serious trouble that comes along with hefty fines. The Telecommunications Privacy Act and the Florida Telephone Solicitation Act essentially prohibit reaching out to consumers on their cell phones. This applies to both cold calling and texting. This may have wel

BUYING BANK OWNED PROPERTIES On today's podcast episode I talk about buying bank owned properties. This is an important episode because pre-foreclosures and foreclosure auctions are sky rocketing in 2024, and many of these foreclosures that we are seeing now will ultimately end up as bank owned properties. It is important for you to understand how the foreclosure process works in your State so that you can better understand how many of these foreclosures will become bank owned properties and the timeline of how that happens. Typically, when you have not made your mortgage payment for 120 days, the bank can sue you and initiate foreclosure proceedings. But there is a substantial backlog of people who have not made their mortgage payments who are still not in foreclosure because the bank has not pursued a foreclosure filing yet. No one knows how many of these properties exist but an inside source that I have at one of the largest lenders tells me that it is a very substantial number. So anticipate many more foreclosures. Another thing to note is that now that prices have declined, there are many homeowners who purchased a property in 2022 or 2023 that have lost their down payment and lost the equity that they had in their home. Some of these homeowners may even be negative equity, meaning they could owe the bank more than what they can sell their property for. In situations like this, people have less incentive to keep paying their mortgage when there is no equity in their home. Add to that financial hardship like a job loss or a disability and it's easy to see how many of these homeowners will simply walk away and stop paying their mortgage. Every one of these properties will ultimately be foreclosed on and end up as a bank owned property. This is why you need to know how this process works and how to bid on these bank owned properties. Real estate prices peaked in Mid 2022 in most areas. Since then, prices have declined quite substantially. This has become a real problem for many homeowners. As an example, if prices are down 10% year over year, and you purchased a property for $500,000 one year ago, and you put 10% down you would have had a $50,000 down payment and a $450,000 mortgage. But now with prices down by 10% your house is only worth $450,000, which is the amount that you owe the bank. Even worse, if you were to sell your home for $450,000, after paying commissions and closing costs you may only net $405,000. So you effectively have no equity in your home and are actually negative equity. This is what has been happening to many homeowners over the past 2 years since the peak in 2022. If this homeowner has a low interest rate on their mortgage and likes their home and still has their job then they will most likely continue to make their mortgage payment. But you must understand that they will feel way better about this decision if their property had gone up in value since they purchased it. And if they have any type of financial hardship like divorce, job loss or a disability, then if there is no equity they will be more likely to stop paying their mortgage and walk away. Previously, lower interest rates helped because a home owner was able to refinance their mortgage and pull money out of their property. Because interest rates had gone down, and the value of their house had gone up many homeowners were able to do cash out refinances where they kept the same payment. But now the inverse is happening. Interest rates have gone up, and the value of their house has gone down. So they can no longer use their house as an ATM to refinance and pay off their credit card bills. With no equity, and a financial difficulty, you will find more and more people that will start walking away and will stop paying their mortgage. This will add even more to the number of foreclosures. And all of these foreclosures will end up as bank owned properties. As an investor, you can bid on and win the auctions on these bank owned properties. In some cases you may be able to buy a bank owned property for 60 cents on the dollar (or less). As an investor, you want to make sure that you have this strategy in your toolbox. Regardless of whether you are looking to buy your first rental property, your first fix and flip property, your first Airbnb or your first Wholesale flip, understanding how to bid on and buy properties on online auction sites will help you find better deals at better prices. Banks are not the only sellers. Government entities like Fannie and HUD that insure mortgages are required to buy back those mortgages if the homeowner defaults on their mortgage payments. These Government Entities have their own websites that they use to post these properties for sale. You can bid on these government entity sites and bid on Fannie Mae Homes, Freddie Mac Homes, and HUD Homes. However these sites will require you to have a real estate license to bid. For this reason, I always recommend to my students that they get their real estate license in order to bid on these government entity websites. if you are serious about becoming a real estate investor, consider getting your real estate license. I am seeing a substantial increase of bank owned properties on sites like Auction.com. In fact, the number of auctions has more than doubled in Florida over the past six months. You don't need to have a real estate license to bid on properties on www.auction.com but they will ask you for a credit card to register to bid and they will charge your credit card a bid deposit fee. If you win the auction, you will be required to place the deposit in escrow with your title company. If you fail to do so, then they will keep the charge on your credit card. Other online sites like www.Hubzu.com work in a similar way. I anticipate that in the next 6 to 18 months there will be more and more foreclosures, as more and more homeowners stop paying their mortgage. I think that this will be the net result of a weaker economy, with more people losing their job, higher mortgage interest rates and lower real estate prices. Many of these foreclosures will ultimately turn in to bank owned properties. As an investor it behooves you to learn how to buy these bank owned properties. Make sure you learn NOW before there is an abundance of properties to bid on. Imagine finding the perfect rental property at 60 cents on the dollar in your perfect target market and not being able to bid on the property because you don't know how the process works. Make sure you learn how to bid on and buy properties on these online auction sites now. One way to learn is by attending my Foreclosures and Bank Owned Properties Boot Camp which is coming up. You can click on this link for more information about that boot camp. https://www.lexlevinrad.com/foreclosures-bank-owned-properties-boot-camp If you would like to learn more about my real estate training program call (561) 948-2127 and speak to one of my Student Support Managers. To apply for my real estate training program please complete an application at https://www.lexlevinrad.com/application 

On today's podcast episode, I talk about buying houses subject to the existing mortgage. This investment strategy is also known as "assuming the mortgage" or buying "subject to".  As prices have pulled back around 15% from the peak, many sellers are realizing that they will not be able to get their Zillow estimate if they sell their house. There are a lot of people who purchased houses 3 years ago when interest rates were as low as 2.5% or 3% (on a 30 year fixed rate mortgage). Today the rate is 6.5% which is more than double what the rate was just 3 years ago. This has created an opportunity with many motivated seller leads where sellers are calling us and trying to sell their house. As an example, let's look at one of the leads that called my office recently. This was a young couple who had purchased their house for $225,000 a few years ago. They had put down $25,000 and their original loan balance was $200,000. Their interest rate was 3%. The interest component on their 30 year mortgage was a monthly payment of $843. With taxes and insurance the payment was $1,443. This seller was trying to sell their house and had it listed on the MLS for $250,000. This is what Zillow said the house was worth. However the house had been listed for over 90 days and other than a few low ball offers from wholesalers, there was only one real legitimate offer for $225,000. You may be wondering how I got in touch with this seller. I reached this seller by mailing a postcard campaign to a list that was NOT motivated and was just a broad mailing to all of the 3 bedroom, 2 bathroom home owners in this specific city. Not all sellers that are motivated to sell are on a motivated seller list. There are many sellers who may be paying their mortgage payments on time, who are not in foreclosure and who appear to have no distress at all. But some of these sellers really want to sell their house. Their motivation to sell as soon as possible makes them a motivated seller. In this scenario, this young couple had moved to Florida from the Northeast during the pandemic when they could work from home. Now a few years later, they want to sell their house and move back home to the North East which is where they are from. Zillow says their house is worth $250,000. That is the amount that they listed their house for, but all they have received is a bunch of low ball offers at around $200,000. They also received one potential offer of $225,000 but their realtor was concerned the buyer would not qualify for a mortgage. I asked them why they don't lower the asking price on the MLS and they said that they were sick and tired of showing the property every weekend and just wanted it sold. They were reviewing that one offer that came in for $225,000 but they realized that after paying the commission and closing costs, they would not be making any money from the sale and would be walking away and simply paying off the loan. They were looking at a scenario of maybe netting only $5,000. Even worse, they did not think the buyer would qualify and they could not afford to pay for any repairs that would be required after the inspection. They had discussed this scenario and were trying to figure out how to get a better offer or a little more.  That is where my postcard came in. And that is what prompted them to call me.  Their mortgage payment was $1,443. If I were to be taking over their mortgage payment that is what I would be paying per month to the bank.  Market rents in this area are around $2,000 per month. It's in a desirable area where there are many potential renters so it would be easy to find a tenant for $2,000. The house may even rent for $2,100 or $2,200 with some new paint and a cosmetic clean up.  So the first question I asked them is "why don't you rent the house out"? This is a key question to ask because it puts the seller on a footing where they start wondering why you are not interested in their house. Why would you advise them to keep it instead of buying it yourself? This is a great question to ask a seller.  Their answer was that they did not want to be landlords. I told them that there was no way I would be willing to pay $225,000 cash for this house. The only way I would possibly consider buying their house would be if I were taking over their mortgage payments. This is called buying a house "subject to the mortgage" or "assuming the mortgage". This is known in legal terms as a "quiet assumption" because you are not telling the bank that you are taking over the mortgage.  My offer was $5k cash and I would take over their mortgage payments. This scenario is very common because anyone who purchased 3 years ago when interest rates were really low, is looking at a price decline of 15% from what they paid for their house. So they are finding that their house is not as easy to sell for what they originally wanted to get for it. The reason for this is because while prices have pulled back, interest rates have more than doubled from 3% to 6.5%. The monthly mortgage payments don't make sense to buyers with interest rates at these levels. So there are less buyers, and sellers are having a harder time selling.  One interesting point is that 3 years ago people asked me "why would anyone sell when they have such a low payment"? Why wouldn't they just keep the house to keep that low interest rate locked in? The answer is because people sell when they need to sell. People sell because they want to move. People sell because they can't afford the mortgage payments because they lost their job. People sell for many different reasons. So this couple wanted to sell their house and  move back to the North East.  If I offer them $5,000 cash and I take over their $200,000 loan, my cost on the house is $205,000. If it is worth $250,000 that would be $45,000 of equity that I would be getting. If I rent out the house, I would make $600 a month in cash flow. That is $7,200 per year on a $5,000 investment. That's not a bad rate of return. If I paint the interior and brighten up the house, I may be able to even get a little more for rent and my cash flow could be $700 or $800 per month.  If they had multiple offers above asking price they would not be thinking about accepting my offer. But the problem for them, is that they have no offers other than the 225k offer and even that is not certain because the buyer may not qualify for a mortgage.  So they are seriously considering my offer. You can see that the market has changed. Buyers are now skittish and very reluctant to buy. In fact, there are now more sellers than buyers so the market has turned into a buyers market. Buyers are reluctant to buy for a number of reasons. The first reason is because they see that prices have come down, and conventional wisdom is that prices will continue to come down. I don't disagree with this logic (for now) as inventory is increasing it makes sense that prices would come down. If interest rates stay where they are, it is understandable that there will be fewer buyers. The second reason that buyers are hesitant to buy is because prices have increased by more than 50% in the last few years. Buyers have sticker shock at how high prices are relative to where they were just a few years ago. Finally, the number one reason why buyers are reluctant to buy is because when they go to their mortgage broker and price out a loan, they are effectively needing to pay 50% more to buy a house with a mortgage that is double the interest rate of what it was before. To put that into perspective a $200,000 mortgage at 6.5% is $1,264 per month in interest versus $843 per month in interest. That is 50% more per month in interest. Considering that property taxes and insurance have gone up dramatically too you can see how this creates an affordability issue. Even if the buyer is willing to pay, will the mortgage company approve the borrower? Will their debt to income ratio be in line? What if the buyer has just okay credit and their mortgage rate is 7.5%? Now their payment with taxes and insurance is over $2,000 and they are thinking they would rather just rent.     The net result is that the buyer looks at that mortgage payment with taxes and insurance and concludes that they are better off renting. Sellers are slowly starting to realize that their house may not be worth what Zillow says it is worth. Or to put it more accurately, buyers are no longer willing to pay that amount. That is why prices are declining. That is why you see so many price cuts on the MLS. There are now more sellers than buyers and it's becoming more and more difficult to sell. I anticipate that this will be the case for the rest of this year and going into next year too. As prices come down, I anticipate more foreclosures too. Many of these foreclosures will end up as bank owned properties.  So in this environment, where sellers may have a very low interest rate mortgage, and are wanting to sell but are not able to, you may be able to buy their house for substantially less than what they paid by simply buying the house and assuming their mortgage. Buying houses subject to is a very valuable strategy in today's market. If I can get the seller to agree to sell me their house with just $5,000 down then I could buy a $250,000 asset with just $5,000 down. This strategy allows me to buy multiple properties with very little money down. If the seller is really motivated, they may even accept an offer where I give them no money down at all and just take over the mortgage payments. In that scenario I would be buying with no money down. If you are looking to buy rental properties, and you are looking to buy with no money down (or very little money down) then buying houses subject to is a very powerful strategy for you to learn and add to your toolkit as an investor. Look for situations where you can pick up cash flow from the spread, where the monthly mortgage payment is quite a bit less than what the house could rent for. Also look for equit

On today's podcast episode, I talk about fixing and flipping houses and understanding how fixing and flipping houses works.  When you want to fix and flip a house, before you get started it is important to understand who you are selling the house to. I always teach my students to look at a fix and flip in reverse - meaning understand who you are selling the house to first.  Your biggest pool of buyers are going to be first time FHA buyers. Those first time home buyers are buying a home with just 3.5% down. The demographic of a first time home buyer is a couple looking to move from an apartment to a house. The average age for an FHA buyer according to FHA is 31 or 32 years old.  The next thing you need to look at is affordability. A lot of beginners mess this up because they figure if they are going to be fixing and flipping then they may as well go for a higher priced house with bigger profit potential to make as much money as possible. I don't advise that you do this, because as you go up in price point there is a lot more risk. If you want to make $40,000 or $50,000 on a fix and flip, then fixing and flipping just two houses per year could replace your job. The type of fix and flip you should be focusing on is the entry level bread and butter homes that are affordable. You should understand that these are the types of homes that first time home buyers are looking for. If you are fixing and flipping houses to first time home buyers who your potential buyers are, and what they look like is all about affordability. The median household income in the U.S for a couple is approximately $70,000. Mortgage brokers say you should not spend more than 30% of your gross income on your mortgage so that works out to be around $22,000 per year. Let's round that up to $24,000 per year and that means that the average couple with the median U.S household income can afford a $2,000 per month mortgage payment.  Imagine yourself as that buyer looking to buy a house with a $2,000 monthly payment. Use Google's free Mortgage Calculator, and calculate what the house price would be with today's 30 year fixed rate mortgage rate that would result in your having a mortgage of $2,000 a month. Maybe they can afford $2,100 or $2,200 or even $2,400. This is the price range you should be focusing on.  This affordability issue is very important to understand. That is why you should look at in reverse focusing on your buyer (not you). As you go up in price there are less people that can afford a home. There are way more people that can afford a $500,000 home versus a million dollar home. And there are a lot less people that can afford a $500,000 home than a $300,000 home. Many people simply don't earn enough income to be able to afford a higher priced home. So if you are fixing houses to flip or sell to other people, then consider where your biggest pool of buyers would be. When you look at it this way, you realize how important affordability is.  So the first thing you need to understand if you are looking to fix and flip houses is affordability You need to focus on finding a neighborhood or city or target market where houses are more affordable. Based on current 30 year fixed mortgage rates, A couple earning the median income of $70,000 per year can afford a home that is priced no higher than $250,000. You may live in a big city where prices are quite a bit higher than that amount. But if you move away 30 to 45 minutes, in most cities you will find other neighborhoods that are more affordable that are not as close to downtown.   Imagine you are the buyer and ask yourself this question. If I made $70,000 a year, where could I afford to live? You may have purchased your home years ago, and it may have increased in price substantially so you may view your neighborhood as affordable. But what you need to understand is a new buyer, buying today is looking at today's prices (and today's mortgage rates) not what you paid. So a neighborhood which may have been affordable ten years ago is no longer affordable today. So the key question is where can they afford to buy based on their current income? Affordability goes hand in hand with understanding where people are moving to. You can look at demographic data from the U.S Census Bureau and companies like U-Haul that provide moving data to analyze where people are moving to. You are looking for cities that are growing, that have population growth, and that have job growth. For example, in the State of Florida, according to U-Haul more people are moving to the Melbourne, Palm Bay area of Brevard County than anywhere else in Florida. If you wonder why, look no further than affordability. People will move to places that are affordable where there are jobs. These places are growing. The Space Coast of Florida is a perfect example of this. It's more affordable than South Florida, the population is growing, and there are many jobs being driven by employers in the Aerospace Industry.  So based on household income, the target market audience that can afford to have a monthly mortgage payment of $2,220 a month can afford to buy houses up to $250,000. So the question is where do you find houses like this? That takes us to the discussion on target markets. As I mentioned above, Brevard County is affordable relative to where I live. Unfortunately it's a 3 hour drive from me but that is where I see buyers moving to.  The next thing to focus on is the spread between what you are paying for a house and what you are flipping it for. If you know you want to flip a house to a first time home buyer for $250,000, then a spread of $100,000 would mean you paying no more than $150,000 to buy this house.  If you are buying houses from motivated sellers at a discount, then you can find houses like this. You are looking for vacant, boarded up houses, hoarder houses, and houses that have been inherited and have been neglected. These houses may be completely outdated and vacant for many years. Inherited and Probate Houses are usually our best deals. These houses fixed up nicely could sell to a first time home buyer for $250,000. You should be paying no more than $150,000 to buy these houses from motivated sellers. Another more exact way to calculate your maximum offer price is by using the ARV Formula. ARV stands for After Repair Value, or what a house would be worth fixed up. This is another way of saying what you could sell the house for or what it would appraise for.  The ARV Formula for purchasing is  ARV x 65% Less Repairs = Your Maximum Offer Price For example let's look at a $200,000 ARV house that could sell for $200,000 (or that would appraise for $200,000). That's the ARV. So you take that ARV of $200,000 and multiply it by 65% and that would be $130,000. If it cost $30,000 to fix up this house, then $130,000 less $30,000 would give you a maximum offer price of $100,000. This is exactly $100,000 less than the ARV of $200,000. The sweet spot that I like to buy at (and teach my students to buy at) is these lower priced houses that you can flip for $200,000 to $250,000. So these houses you are paying around $100,000 to $130,000 to buy them. And you have a spread of about $100,000 from your purchase price and what you could sell them for. If you are buying these types of houses at a discount, you are not buying them with a mortgage. Since these houses need work, you would not be able to get approved for buying a house like this with a mortgage. It's doubtful that a motivated seller would wait that long to see if you could get approved for a mortgage. And if the house needs any repairs then you can definitely not get a mortgage. Also, your postcard that you mailed to the seller says something like "We Buy Houses For Cash" or "Cash Offer For Your House" so they are anticipating a cash offer and they know it will be lower than a regular conventional mortgage offer. That is why they called you and not a real estate agent. So your offer needs to be all cash.   To buy these houses, you would need to use your own cash, or you would be borrowing money from a private lender like me who is using their own private funds as a private lender. Typically these private lenders are going to want you to have some form of a down payment (at least $10,000). If the amount of repairs is $30,000 then that would be a total of $40,000 out of pocket, but keep in mind that these are not the only costs that you will have. You will have closing costs, points, fees, insurance, which may add up to $10,000 so that would put your out of pocket cash at $50,000.  Also when you own the property while you are repairing it and before you sell it, you will have to pay monthly costs for mowing the lawn, paying the water, and paying the electric bill. You will also have a monthly interest payment to the lender which may be $1,000 per month. So you need to budget for, and factor all of these costs in to the equation. A house with no damage that just requires cosmetic cleaning will cost less out of pocket. If repairs are $10,000 instead of $30,000, then in the above example you would only need to come out of pocket $30,000 instead of $50,000. Conversely, if the house needed a new roof, new air conditioner, plumbing or electrical, the repairs could be substantially higher. For this reason, if you are a beginner, I recommend you stick with cosmetic fix and flips only. Look for houses that have a good roof with no leaks, no plumbing or electrical issues and houses that already have central air conditioning. That way you only need to focus on repairing the interior (cosmetic repair).  One self limiting belief that stops new investors is them reading this and saying to themselves "Well I don't have $30,000 to $50,000 so I can't fix and flip houses". I like to get my students to think creatively and I review their entire financial situation. When I meet with a new coaching student, I look at them like I would look at a company. I do this for all of my coaching students. I

On today's podcast I talk about how to get started investing in real estate. I read an article today online which was called "5 Ways To Get Started Investing in Real Estate". This article had some really bad advice for new investors. So I thought I would record this podcast episode on that topic of how to get started investing in real estate. The Article That I Read Recommended These 5 Things. 1. Buy REIT's (I don't recommend that) 2. Online Real Estate Investing Platforms (I don't recommend that either) 3. Buying rental properties (I recommend that you learn how to buy rentals) 4. Consider learning how to flip houses (I recommend that you learn how to flip houses) 5. Rent out a room (recommended if you are on a budget and need to come up with more money to invest) As far as getting started investing in real estate, I only agree with two of the above strategies. Learning how to flip houses and buying rental properties. If you are thinking about getting into real estate investing, then you have probably considering learning more about how to flip houses and you are interested in investing in rental properties.  If you have a job and decent credit I would highly recommend that you learn how to buy rental properties because if you want to get started investing in real estate, buying rental properties is the easiest strategy to learn - especially if you have a full time job. Learning How To Buy Rentals Only Requires You to Have 3 things: 1. A Job 2. A Paycheck 3. Decent Credit Since most of my audience and students that are listening to this podcast have a job and have a paycheck, and I assume that many of you have decent credit, learning how to buy rentals is hands down the best strategy to focus on.   WHY IS BUYING RENTALS THE BEST STRATEGY FOR BEGINNERS? There are many reasons why you want to focus on buying rental properties. The long term appreciation potential, the wealth building effect of owning real estate, the tax deductions, the amortization and principal loan paydown and of course the cash flow from the rental income which increases over time. Those reasons are well known to many aspiring real estate investors. But what is not so well known is the secret way that you can use the Buy, Repair, Rent, Refinance Method to acquire these properties without having to use any of your own cash.   Let me explain how this works.  When you go to a mortgage broker, and tell them you want to get approved for a mortgage on an investment property they tell you that you need to put 25% down. That would mean you would be required to put down $50,000 on a $200,000 investment property. That would be great if you had $50,000 but what do you do if you don't have $50,000? What if all you had saved up was $50,000 and once you purchased that one rental property you had no money left to buy another? This is where understanding the BRRR Method becomes so important. This is also where many aspiring real estate investors quit and say "I will get started when I have saved up $50,000".  That is not the right approach. If you understand the BRRR Method and you really understand how the Buy, Repair, Rent, Refinance Method works then you will understand. That mortgage broker that told you that you need 25% down probably omitted to tell you one very important detail. And that detail is that if you refinance an investment property, they will also lend you 75% of the appraisal value. Why would they not tell you that? Because you asked them about getting a loan for purchasing a property (not refinancing). Since you don't already own a rental, why would the topic of refinancing even come up in the conversation? And that is where you miss the most important fact which is that banks will lend you 75% of the appraisal value of an investment property. So the question is, is there a way for you to get the bank to finance your investment property without coming up with the $50,000. And the answer is yes. If you can buy a property at a deep discount to what it would appraise for, then you could potentially refinance it and have the bank put up the cash for you. To simplify, if a bank will lend 75% of appraisal value, then if you could purchase a property at 75% of appraisal value, then when you went to refinance you would not need to have any money since the bank would lend you all of the money.  Let's use a real life example of a house that I purchased. A motivated seller in Seattle inherited a property from their dad that passed away. This individual was not on good terms with their dad and had not spoken to them in almost 20 years. They were very surprised to learn that they had inherited their dad's house. How did I find this motivated seller that inherited his dad's houses? I purchased an "inherited list" which is a type of motivated seller list. You can learn more about motivated seller lists here: https://www.lexlevinrad.com/propstream  Motivated sellers are people who want to sell their house fast for cash. In this example, the son wanted a fast cash offer. He called me from a postcard that I had mailed to him which was mailed to everyone that was on the "inherited list" that I purchased. He wanted to know how much I would offer him for the property. I told him I could only give him an exact offer amount after I saw the property. However he had no keys or any way of gaining access to the property. And he was in Seattle so he could not show me the property. I Ultimately had to get a letter from him proving that he was the owner and had to get a locksmith to open up the property for me. When I saw this property, it was not in great shape and had been neglected. But for a rental property it just needed some paint and some cosmetics and it would make a decent rental. I figured that after I did that and had a tenant in place it would probably appraise for $200,000. Market rents in this area were around $2,000 per month. The typical real estate investor would try and buy properties like this for 65% of what they estimated the Appraisal Value would be (less the repairs). We call that estimated value "After Repair Value" or ARV. It's the amount that the house would appraise for after we had repaired it. So if an investor would pay 65% of the estimated appraisal value of $200,000, that investor would offer around $130,000 (less the repairs). I estimated that this property needed around $10,000 to make it rent ready. So that would put my offer at around $120,000. To give myself some room to negotiate I started out by offering $100,000 for a quick cash close in 21 days. To my surprise the seller accepted my offer and did not counter me.  In the real estate investment business there are individuals known as "private lenders". These are people who lend their own cash to other investors where the property is collateral in exchange for receiving interest. Sometimes these lenders charge points and fees too. The typical interest rates of a private lender is around 12%. These private lenders would lend using the same ARV Formula that I described above. ARV x 65% Less Repairs. So in this example, a lender would be willing to lend $120,000 since that is 65% of the $200,000 ARV less the $10,000 in estimated repairs. But I was buying this for $20,000 less than what the lender would be willing to lend. In a scenario like this, the lender typically wants you as the buyer to put down some money (usually at least $10,000). So the lender agrees to a loan amount of $90,000 on a $100,000 purchase price. This would require you as the buyer to put down $10,000.   Let Me Show You How The Math Breaks Down: Purchase Price $100,000 Loan from a private lender $90,000 Down Payment $10,000 Closing costs and fees $5,000 repairs to make it rent ready $10,000 Cash out of pocket Needed $25,000 The house had a good roof and central air that was in decent condition. It was a solid CBS House in a decent rental area. I figured that if I replaced the carpets for laminate flooring, resurfaced the kitchen cabinets and reglazed the old tile in the bathroom I could get away with making this house rent ready for just $10,000.  Cash Out of Pocket on This house:  Down Payment $10,000 Closing Costs $5,000 Repairs $10,000 Total Cash $25,000 Now you would not necessarily need to pay all cash for. You could purchase materials on a Home Depot Credit Card. You could pay your contractor or handyman with a credit card. So you would only need to come out of pocket on the $15,000. If you did not have this $15,000 cash you would be able to find maybe a family member who would be willing to help out or you could get a partner in the deal who put up the cash in exchange for a return when you refinance. The key thing to understand is that you must not make lack of cash an obstacle to buying your first rental.   So let's say you purchased this house and market rents in this area are $2,000 per month. After the house was ready to rent, you found a tenant that paid you first last and security deposit which was a total to move in of $6,000. Your out of pocket cash would now be only $9,000 ($15,000 less $6,000).  Now that the house is rented to a tenant, you call your mortgage broker and tell him that you want to refinance your private lender loan with the private lender who is charging you 12%. The private lender loan is a non amortizing interest only loan at a high interest rate of 12%. Your goal is to refinance into a fixed rate mortgage where your payment is fixed and where the loan is also amortizing where your principal balance is going down every month. So you would want to get a 15 year fixed rate mortgage or a 30 year fixed rate mortgage. I recommend the 15 year fixed rate mortgage.  The mortgage broker orders an appraisal and the house appraises as you expected for $200,000. Remember that the bank is willing to lend you 75% of appraisal value. This is the secret to this Buy, Repair, Rent, Refinance Strategy. 75% of the $200,000 Appraisal Value is $150,000. That is how much the bank is willing to lend

New investors are drawn to wholesaling. Wholesaling is the one area of real estate where most new investors gravitate to. You can start wholesaling without having and cash or credit and it appeals to people who need to make more money and it also appeals to people who don't have money.  So it appears to be very easy. The concept of wholesaling is very straightforward. You make an offer to buy a property, get an executed contract, and then assign the contract to another investor. That investor is the one who is going to close on the house, fix and flip it or turn it into a rental or Airbnb.  But wholesaling is not for everyone and it's not the only place to start out as a new real estate investor. For example, when my student Andy came into my real estate training program, he was adamant that he wanted to learn how to wholesale. When I asked him why he wanted to learn how to wholesale his answer was so that he could "quit his job and flip houses for a living". But he had a good corporate job with a Fortune 500 Company, he had a good salary, and he had health benefits, stock options and a 401k. He also had good credit. And he was young (only 27). I suggested that he consider buying and holding rental properties and learning how to implement the Buy, Repair, Rent, Refinance Method. It took around 6 months for me to persuade him that this is the strategy he should pursue (instead of wholesaling). And it has worked out very well for him. Now, 7 years later he has North of 2 million in equity and is making $80,000 a month in income from Airbnb (he has 10 Airbnb's).  He was able to quit his corporate job, and he makes his income full time from real estate. But he doesn't make his income from wholesaling. So there are multiple ways to make income from real estate, and they are not all from wholesaling which is a perception that I see a lot of beginners gravitating towards. Another thing I often see is when I give new students a choice of which area of real estate they want to focus on. I give them a choice and ask them to pick one of these:  1. Wholesaling 2. Buying rentals 3. Fixing and flipping 4. Buying Airbnb's Everyone answers that question the same way. They say "I want to learn all of them". And when pressed further they say that they want to learn how to wholesale to make money, and then after they are making money, they want to learn how to fix and flip houses and then ultimately buy rentals. But if your ultimate goal is to own rental properties, why not focus on that goal and buy rentals?  Wholesaling and learning how to be a deal finder is a great way to start for new real estate investors. But in order to wholesale and get a house under contract, you have to understand the product (houses). You need to now how much you would be willing to pay to buy a specific house. And the way you do that is by knowing what the house is worth fixed up (we call that ARV). You also need to know how much it will cost to repair the house, and the maximum amount you would be willing to pay. We call that "Maximum Offer Price".  If you knew for a fact that I would buy a house for $100,000, and you offered a seller $90,000, then you would know that you could make $10,000 flipping that house to me. So the key variable is what would an investor like me pay to buy that house? The beauty of wholesaling is that if you can learn how to get houses under contract at a discount, you can flip those houses to other investors without risking any of your own cash or credit. That is very appealing. There is no risk for you. There are other benefits to wholesaling too. For example, as a wholesaler, your lifestyle is very flexible. You don't have to work if you don't want to. Andd you can take a vacation whenever you want to. As a wholesaler all you have to do is make offers on properties, get them under contract, and then flip those contracts (assign them) to other investors. The issue is that many late night TV infomercials, online Webinars, YouTube Videos etc. make it seem so easy like there is nothing too it. And that is not true.  In a way wholesaling is very easy. For example if I search the site www.hubzu.com and I find a property, and I bid on it and win the auction I will get an email from them with a contract to sign. If I sign that contract then I know have a house "under contract". I can then put that house out on my daily email list to my cash investors. If I paid $150,000 for the house I can easily put it out on my email list for $179,900. And if someone offers me $170,000 then I just made that spread. I just made that profit.  If you reviewed how long that took, me, logging into Hubzu, finding the property, bidding on it, and signing the contract, it could be less than an hour of my time. But yet the profit could be $20,000. So from that perspective it is easy and it is very profitable. In fact, wholesaling is the highest profit potential per hour that I know of. Even brain surgeons don't make $20,000 for an hour of work.  But the key thing to understand is that in order to bid on properties, you need to KNOW HOW MUCH TO BID. And to know how much to bid, you would need to know what the house would be worth fixed up, what it would cost to repair it, and the maximum amount that you would be willing to pay.  As an example, today we had a seller call in with a flood damaged house that he was looking to sell. His asking price was $330,000. His goal is to sell the house for cash and to walk away and keep the insurance money. The ARV on this house (what it is worth fixed up) is $450,000. as an investor (or a wholesaler) you need to instantly know what an investor like me would be willing to pay to buy this house.  As a wholesaler, theoretically you could make offers on properties by offering really low like say 50% of the Zillow Estimate. Eventually you would find a seller who is so desperate and motivated to sell that they would sell their house to you. And you could flip that house to an investor like me and make a profit. But you would NOT be a real estate investor because you would not understand your product (the house).  I teach my real estate students to become "Complete Real Estate Investors". I teach them to understand what the house is worth, what they could sell it for, what it would cost to repair, and the maximum amount that they should be willing to pay to buy it. The reason I teach it this way is because many of my students may start out as wholesalers, but ultimately they want to buy and own rental properties.  When you understand the numbers, and you know what a house is worth fixed up, and you know what it would cost to repair the house, then you can very easily assess how much you would be willing to pay for it. For example with the flood damaged house that I mentioned above, with an ARV of $450,000, I can do some basic math and see that $330,000 would never make sense. As a beginner you might think there is a $120,000 profit potential and why would that not make sense?  I will break it down for you The house is 1,600 square feet under air. If it cost me $30 per square foot to renovate the interior of the house that is $48,000. If the house needed a new roof that is another $20,000. That is already $68,000 in repairs, and we have not yet factored in the exterior of the house, Air Conditioning, Fences, Landscaping or anything else. We also have not factored in holding costs like monthly interest payments, the cost of the monthly water and electric bills, mowing the lawn, insurance, property taxes and any other expenses. So basic math purchasing at $330,000 and spending $70,000 in repairs would put my cost at $400,000. To sell that house at $450,000, if you did not have a real estate license could be 6% in commission and 3% or 4% in closing costs. Let's round that up to 10%. That works out to be $45,000 off of the $450,000 sales price (assuming we could sell it at $450,000). That would net us $405,000 on a $400,000 investment. And this does not even factor in interest payments, holding costs, insurance, property taxes, mowing the lawn and paying the water and electric bills. So clearly there is no profit potential for an investor to buy this property for $330,000.   If your goal was to make $50,000, fixing and flipping this house then your offer would probably need to be around $260,000 for the numbers to make sense.    I see many wholesalers that just throw a number out there when they talk to seller. They often offer too much because they don't understand all of the costs involved in rehabbing a property. And these same wholesalers always end up cancelling the contract when they cannot flip it to another investor.  When that same seller talks to me, and I offer way lower (say $260,000) initially the seller will usually reject my offer. But what will happen is that he will sign a contract to sell his house to a wholesaler, and then that wholesaler will ultimately cancel the contract when they realize they offered too much. That seller will then reach out to other wholesalers and people who mail him postcards and the process will repeat itself. Those wholesalers will cancel on him as well. At this point the seller will be really frustrated (and sick of wholesalers). If a significant period of time passes, like 3 or 6 months, the seller might get very discouraged. At this point he will be much more agreeable to selling at a lower price and he may agree to sell it to me for my offer price of $260,000. The ability to close is very powerful.  If the seller comes to me and says I will sell it at $260,000 and I agree then I will close. I won't haggle. I won't reduce him. I will just close like I said I would. And when I close I have more options. I can close on it, put a lockbox on it and list it on the MLS. I can also do basic repairs like fix up the drywall, do the flooring and paint, and then list on the MLS. The third option is I could do a full remodel, and then list the house on the MLS. A lot of wholesalers, are makin

On today's podcast episode I talk about why you should buy rental properties. I explain why investing in real estate (specifically rentals) is such a great investment compared to other investments like stocks, bonds and mutual funds. The first thing you need to understand about investing in real estate is the five main benefits which are: 1. Appreciation 2. Cash Flow 3. Amortization 3. Tax Deductions 4. Depreciation APPRECIATION  HUD has been keeping track of single family house prices since 1964. The typical house in 1985 was worth $85,000. Today it is $420,000. That is 5 times the initial price!  To put that into perspective, imagine buying a house today at $420,000 and having it be worth 2.1 million dollars in 40 years (if you got one of those new 40 year mortgages).  That's an example of long term appreciation in real estate. Do you know what the price of the Median Single Family Home in the U.S was in 1975? A New Single Family Home was just $39,000! That's appreciation. In 1963 it was just $18,000. But we don't need to go back that far. The year I started investing in real estate (2003) the median home price in the U.S was $161,500. It's now $420,000. CASH FLOW If a house today rents for $2,000 per month, and rents were raised at 5% per year what would the rent be 15 years from now? The answer is $4,157. If you kept that house for 30 years what would the rent be? The answer is $8,643 per month in rent.  You may find it hard to believe that rent can double in 15 years and then double again 15 years after that. But that is exactly what happens. That is why you want to own rental properties. It's also why you want to own your own property and not rent. When you own one rental property like this with a 15 year mortgage then after 15 years the mortgage is paid off and you own the property free and clear. That means all that rent goes into your pocket. But what if instead of owning 1 rental you owned 10? That is how you become a millionaire. That's how I did it and it' how you can do it too. This is the surest way that I know to create income for life and financial freedom.     AMORTIZATION Every month that you pay that mortgage payment, a certain portion is allocated to principal, and a certain portion is allocated to interest. I discussed on the podcast how on one of my rental properties the mortgage payment is $1,300 but $500 of that is applied to the principal loan balance. This is called amortization and that is how the loan balance gets paid down over time. It's a forced saving plan that means every month that goes by you owe the bank less on the mortgage (until it is paid off completely). TAX DEDUCTION When you own a rental property, everything related to that property is deductible. Property taxes, insurance, repairs, maintenance are all deductible. So is travelling to your property, your property manager, Home Depot, and anything related to that rental property. So by owning rental properties you will pay less in taxes.   DEPRECIATION  Depreciation is a phantom expense whereby the Government allows you to deduct 1/27 of the value of the property (minus the land) every single year. But since the Tax Act of 2017 there is Bonus Depreciation which allows you to deduct much more upfront creating a very nice tax deduction. Consult with your CPA on this one, but suffice it to say that if you have a job where a lot of taxes are being taken out of your paycheck, owning a rental property will reduce the amount of taxes you pay (in addition to increasing your net worth). YOU DON'T NEED TO USE YOUR OWN MONEY There are a lot of long term benefits to investing in real estate and buying rental properties. But the most important thing to understand is that you DO NOT NEED TO USE YOUR OWN MONEY to buy real estate or rental properties. You can borrow money from private lenders (like me). This is what completely separates real estate investing from other assets and makes it far superior to any other investment out there. The fact that you can buy unlimited real estate with other people's money is the biggest benefit. BUY, REPAIR, RENT, REFINANCE If you learn how to buy properties at 50 cents on the dollar using private lender money, then you can refinance into a conventional mortgage and pay that lender off by using the buy, repair, rent, refinance strategy. This is called the BRRR Method. It's a very powerful strategy that helped me make millions of dollars in real estate and has also helped so many of my students become wealthy (some of them are now millionaires).  If you understand the long term benefits of real estate, the tax deductions, the appreciation potential, the increase in cash flow from rents, and the depreciation then that just the basics. But when you learn how to combine all of these to your advantage by learning how to buy real estate with other people's money, and then refinance into a conventional mortgage with the buy, repair, rent, refinance strategy then you have what is hands down the best investment known to man.  If you want to learn how to do this make sure you attend my real estate training events. I have 10 live training events per year where I teach my students how to invest in real estate. To learn more about the Lex Levinrad Real Estate Training Program, visit my website at www.lexlevinrad.com or call my office at (561) 948-2127.  

On today's podcast I talk about the opportunity in buying foreclosures and bank owned homes.  In order to understand why this opportunity is presenting itself, it is first important to understand what got us into this situation. The answer is record low interest rates, and the fastest and quickest rate cuts in U.S History as a result of the epidemic of March 2020. Interest rates were quickly lowered and effectively kept at zero for almost two years. Keeping interest rates that low for that long had many uninted consequences. The fact that the government was handing out EIDL Loans and PPP Loans and sending checks to everyone just added more fuel to the fire. There was too much cash floating around, and not enough goods available. The net effect is that these interest rate cuts fueled inflation. Prices of every day items, groceries, real estate and rent all increased substantially.  The economy was over stimulated to the point that we had rampant inflation. This inflation presented itself in higher real estate prices, higher rents, and higher prices for basic goods and groceries. Even luxury goods like Rolexes substantially increased in value. 2022 was the year that everything peaked. Commerical real estate, residential real estate, luxury goods, rolexes, Art, NFT's and Crypto all peaked in 2022.   This all changed when the Federal Reserve began aggressively increasing interest rates in 2022. With higher rates, mortgages became much less affordable. This put the brakes on the rapid price appreciation which was happening in the real estate market. It also created a dilemna for home builders who were suddently stuck with too many homes to sell and not enough buyers. These home builders were forced to start lowering prices and offering incentives like rate buy downs and seller credits to lure more buyers. As the home builders slashed prices, this effected the comparable sales and the prices of houses in the surrounding areas and prices began declining in earnest. Real estate prices peaked in July 2022 and are down around 15% to 20% (or more) in some areas.  Hedge funds and private equity funds who had been buying properties when interest rates were low were now discovering that they were not making much money on their rentals. Borrowing money at 2% or 3% and investing it into a rental that yields 7% is a great deal - especially if home prices are increasing. But when prices start declining, and you are borrowing at 7% and yielding less than 7% and rents are declining then that is not a great formula. The result is that these private equity funds and hedge funds started listing properties for sale. They were afraid of how much inventory they were holding and that prices would decline further. Large entities like Blackrock and many Hedge Funds started listing many properties for sale. In some cases the asking price is LOWER than what they paid for the property. I am seeing this everywhere. There are now more sellers than buyers and we are gradually shifting to a buyer's market.   The Federal Reserve managed to tame inflation by increasing rates. They managed to cool down the housing market. But they may have acted too fast too quickly. People who had credit card debt had to suffer for too long at high interest rates. Consumers who were looking to purchase cars could not afford the high payments. Now we have a situation where buyers are reluctant to buy. And savier investors who see prices declining have to build a margin of safety into their purchases and must be willing to buy deeper and at larger discounts. This has created a dilemna for wholesalers who are no longer seeing the huge profit spreads that they were seeing as recently as just one year ago when they were flipping and assigning contracts for huge profits. And the economy is slowing down. Now the Federal Reserve has a different concern. They are worried about the U.S Economy going into recession. The most recent jobs data in August was so concerning that the Federal Reserve decided to lower interest rates for the first time since 2020. Across the economy we are seeing signs of weakness with increasing layoffs, less hiring and more people losing their jobs. In this uncertain environment, and with higher prices, consumers are being very careful with how they spend their money. Luxury good prices have collapsed. Louis Vutton Moet Hennesy, the largest luxury goods company in the world which owns brands like Dior, Tiffany, Givenchy, Fendi, and many others just reported terrible earnings. People are not buying luxury items. Rolex prices have declined by 30% since mid 2022. The economy has changed. There is no more EIDL and PPP money floating around. There are no more checks arriving in our mailboxes. People are being careful with how they spend their money and only buying things that they have to (like groceries). Consumers are not buying new cars, new furniture and are not going on vacation as often.  Hotel bookings are down, Airbnb bookings are down, and less people are spending money. There are also less people buying houses. Less people are choosing to refinance and remodel their homes. Less people are buying real estate, and there are far less fix and flip investors than there were just one year ago. Home Depot just released a very bad earnings report which illustrates this fact.  And what is the net result of all this interest rate stimulus and then cuts? People are losing their jobs and unemployment numbers are up. Mortgage brokers, real estate agents, even Amazon workers and truckers are losing their jobs. Consumers are seeing the equity in their homes going down, and they are having a harder time paying their mortgage. Consumers are tapped out. We see this in the record number of foreclosure filings. As more and more of these homeowners stop paying their mortgage, there will be an opportunity for you as an investor to purchase these properties. This opportunity is presenting itself very rapidly But you will need to know how to market to homeowners in foreclosure. I teach this at the Foreclosures and Bank Owned Properties Boot Camp which is coming up. Many of these homeowners that are in foreclosure will lose their homes. These homes will be sold at the courthouse foreclosure auction and these houses will become bank owned properties. This represents another opportunity for you as a real estate investor to buy these properties. Some bank owned properties sell for as little as 40% to 50% of their market value. As a real estate investor you need to learn how to buy these bank owned properties. You need to know how to bid on online auction sites like www.auction.com and www.hubzu.com. You need to understand how to buy HUD Homes, Fannie Mae Homes, Freddie Mac Homes and how to buy houses directly from the bank. I will be teaching this at the Foreclosures and Bank Owned Properties Boot Camp. I encourage you to attend this event and to learn how to get started investing in real estate by buying foreclosures and bank owned properties. This is an opportunity that will not be around forever. You need to learn how to do this now. If you want to learn more about the Lex Levinrad Real Estate Training and Coaching Programs visit my website at www.lexlevinrad.com or call my office at (561) 948-2127.  Enjoy the podcast. Make sure you subscribe to be notified about the next episode.    

On today's podcast episode I talk about understanding what a wholesale deal is.  Would you be able to recognize a wholesale deal from a house for sale? They are not the same.   Regardless of whether you want to wholesale real estate, fix and flip houses or buy rental properties you need to be able to understand what a wholesale deal is, and why someone would sell their house at a discount. If you have limiting beliefs or excuses of why you cannot own a rental property, then I will share with you a mind exercise that I sometimes use with my students that will help you overcome limited belief mindsets (like not having enough money to buy a rental property).  Here is the exercise Imagine your own mother inherited a million dollars and she wants you to buy single family rental properties for her. So you don't have to worry about having the money to buy rentals because she has the money. And you don't need to worry about having credit since you are paying cash (with her money). So now all you need to do is go out and look for a rental property. In your mind it sounds easy because in your mind there are now no obstacles to you buying that rental because you don't need money and you don't need credit.   But the exercise is a little bit more tricky than that. Your mom gave you specific instructions. She said that It's very important that you maximize the income that she gets because she needs that income to live and pay her bills. And she also told you that she does not want to lose any money. Start off with eliminating the excuse in your mind that says "I can't buy rental properties because I don't have any money". Eliminate the excuse in your mind that says "I would like to buy rentals but I don't have good credit. Money is not the obstacle to you building wealth or buying rental properties. Neither is having good credit. The obstacle is understanding how to find a good wholesale deal at a discount.   If mom has $1 million to spend, why can't you just pick up the phone and call a real estate agent and buy some rentals for her?  Because she told you: "I don't want to lose my money, and I need to get as much income as I can because I am using this money to pay my bills". You can't leave the money sitting in cash at the bank since at 5% inflation your million dollars would be worth just $950,000 next year. She told you that you cannot leave the money in cash or buy stocks bonds and mutual funds. You have to buy single family rental properties. So you could buy one property for $1 million or 5 properties for $200,000. Which one would you do? Most people who want to buy rental properties would call up a real estate agent. But can a real estate agent help you? Remember mom said: I don't want to lose my money I want to get as much income as possible I cannot invest in anything other than single family rentals Why can you not call a real estate agent and get a good deal on a rental? Because the agent will go on the MLS and look for rental properties for sale. They will be showing you RETAIL properties listed at RETAIL PRICES (or higher). So for example they may show you a $200,000 house that has a tenant in place that you could purchase.  But if you purchased this property at a retail price, and then decided you wanted to get rid of it a few months later, you would immediately lose 10 percent (4% closing costs plus commission). So paying retail will not work. Let's say that you like this particular neighborhood where this $200,000 house is located. In that neighborhood, and on that street, let's assume that all the houses are identical and were all built in the same year by the same builder. They are all 3 bedroom, 2 bathroom houses. They are all 1,200 square feet. And they were all built in 1989. Would all of these houses sell for $200,000? No they would not. Why? because a house that is upgraded and remodeled would sell for a lot more than an outdated house that has not been upgraded or remodeled. How much would that same house sell for if it was vacant for 5 years, and had not been remodeled since 1989? Obviously for much less than the remodeled house. What about if in addition to being vacant for 5 years, the house had bad urine odors from cats, had rats running around, and was infested with cockroaches and was a hoarder house with tons of boxes, trash and newspapers? What would it sell for then?  What if in addition to all of the above, the house needed a new roof, new electrical and new plumbing. What would it sell for then? The point that I am making is that the exact same house can sell for substantially less because of damage to the property. But that is not the only reason why a house can sell for less. Another reason is seller motivation and how motivated the seller is to sell their house fast for cash. Why would a motivated seller sell a house that was worth $200,000 to me for $100,000? Why would that seller sell that house for 50 percent of fair market value? Because he inherited the house, had to go through probate, had not seen the house, and lived on the other side of the country in Seattle. He was motivated to sell as is for cash. He received one of my postcards in the mail (because I mail to inherited properties). When he asked me how much he can get for the house I said let me go take a look at it. And when I called him back I told him it was in really bad shape, texted him some pictures showing him the condition and told him I was not really that interested in buying the house and could offer him $100,000. He accepted my $100,000 cash offer. He was willing to sell the house that he had inherited for $100,000 when identical houses on the same street had sold for $200,000. Why? Because he was motivated to sell fast for cash. Don't overthink this part. He was a motivated seller.  Now If I purchased that house for $100,000 and spent $30,000 putting in new flooring, new paint, new appliances, new kitchen and new bathroom, and then I listed it for $200,000, I would get multiple offers on this property and sell it for above asking because is is remodeled, so it is nicer than the comparable sold properties. Let's say I sell it for $210,000. After paying the commissions, and all repair costs, and interest, fees and points, I would make $50,000 to 60,000 profit on this house (from mailing a postcard). Let's assume that instead of me mailing a postcard, you were the one that mailed the postcard. Imagine that the seller called you. You spoke to the seller, and you got the seller to agree to sell it to you for $100,000. If you called a lender like me and said "I am buying this house for $100,000, and I can put down $10,000 can you lend me the $90,000?" The answer would be yes. Why, because earning 12% in interest is better for me than earning zero in my checking account. Earning 12% in interest for me is better than 5% in Treasury Bills. It's a good return on my money and I would be very happy to lend $90,000 on a $200,000 house. What's the worst that could happen? As the lender I have a first mortgage on the property. That means if you don't pay me a get the house! So then I would own a house for $90,000 that with just $30,000 in repairs would be worth $210,000. That's a win. So I win whether you pay me interest or not. That's why I would do the loan. I am not lending based on your credit. I am lending based on the collateral (the house). So with this example we have just established that lack of capital is not what would prevent you from buying this property. You could probably figure out how to come up with $10,000 down by borrowing from a family member, selling something, using credit cards or whatever you needed to do to get that deposit money. If you didn't have the rehab money you could borrow that too. That is what I did on my first house. I borrowed the money to buy the house and I borrowed the money to repair the house. So lack of money is not the obstacle. Lack of money is not stopping you from buying that rental . Lack of credit is not what is stopping you either because you don't need credit to get a collateral based loan like this from a private lender. What is stopping you is the limited mindset belief that you have (which says I can't do this). The other thing stopping you is lacking the knowledge of knowing how to find a wholesale deal like this probate property at a discount of 50 cents on the dollar. That is what is stopping you. Lack of knowledge (information). The other thing stopping you is fear.  By buying at a discount, you are buying with a margin of safety. If instead of flipping the house you rented it to a tenant, then after the house is rented, you could call a mortgage broker and refinance your loan. You would pay off the private lender loan to me and you would get a conventional mortgage. This is called the Buy, Repair, Rent & Refinance Method (BRRR for short). If the house appraises for $200,000 and the bank is willing to lend you 75% of that amount ($150,000) then you would net $140,000 after refinance fees. After you paid me back the $90,000 loan, and you paid yourself back the $30,000 for the repairs on the property you would still have $20,000 left over. Assume that when you purchased the property your down payment was $10,000 and closing costs, points and fees was $10,000.  You use the $20,000 left over from the refinance to pay yourself back and you have effectively purchased the property for no money down. You would have a cash flowing rental property that was appraised at $200,000 with a mortgage of $150,000 leaving you with equity of $50,000. This means you just added $50,000 to your net worth. And now every year that goes by, you get to raise rents, and your mortgage balance goes down. Every year that goes by, the value of the property goes up. This is how you become wealthy.   This Buy, Repair, Rent and Refinance strategy works because there are motivated sellers everywhere. Every day, people have fires, floods, hurricanes, tornadoes, storm damage, water damage from

On today's podcast episode I talk about the Buy, Repair, Rent and Refinance Method (BRRR).  On the last podcast episode, we talked about buying rental properties and the wealth creation effect of buying and holding rental properties for the long term.  Today, we are talking about how to employ the Buy, Repair, Rent and Refinance Method, how it works, and how it enables you to buy real estate with no money down (or with almost no money down).  I use as a case study on this podcast episode, my student Dale who recently purchased a rental property for $94,000. I loaned him $80,000 to purchase the property which was a private lender loan (using my own funds). This is definitely one of the advantages of being a coaching student.  At the Airbnb Boot Camp this past weekend, we covered the Buy, Repair, Rent and Refinance Strategy in detail and we showed our students how to effectively use the BRRR Strategy. We will be covering this again in a few weeks at the Buying Rentals and Building Wealth Boot Camp so make sure you don't miss that boot camp! Here is a link to that boot camp: https://www.lexlevinrad.com/buying-rentals-building-wealth-boot-camp/ At the boot camp this past weekend, we showed our students 4 different actual student case studies of the Buy, Repair, Rent and Refinance Strategy. On today's podcast I am discussing one of those which is my student Dale. Here are the numbers on this rental property that Dale purchased: Purchase Price: $94,000 Loan Amount: $80,000 (from me) Down Payment: $14,000  Closing Costs & fees: $5,000 Insurance: $2,000 Repairs: $12,000 Dale purchased this property with the goal of making it a Section 8 Rental Property and he utilized the BRRR Method. After he repaired the property, he found a Section 8 Tenant that is paying $1,805 per month in rent. His private lender loan with me had an interest payment of only $800 so he was cash flowing over $1,000 a month even with a high interest rate loan! After the house was rented, he went to another student of ours who is a mortgage broker to do the refinance. The house appraised for $195,000 which is $101,000 higher than his purchase price. You might be wondering how he found this house. He mailed out $7,000 worth of postcards (around 14,000 postcards) until he found a seller that was truly motivated to sell. The seller had a partner who had moved into an assisted living facility and they needed to sell the house in order to get access to cash since they had run out of money. This is a text book example of a motivated seller. The house appraised for $195,000. The bank was willing to lend 75% of the appraisal value which was $146,250 (75% of $195,000 is  $146,250). The refinance fees were around $6,000 leaving Dale with $140,000. From that $140,000 he used the proceeds to do the following: Pay off his private lender loan to me $80,000 Pay himself back on his $14,000 down payment Pay himself back the $5,000 in closing costs and fees Pay himself back the $2,000 for insurance. Pay himself back on the $12,000 he spent repairing the property Pay himself back on the $7,000 he spent mailing postcards.  There was still a lot of money left over. So at this point, Dale owns a rental property that is appraised for $195,000 which has a mortgage of $146,250. He has almost $50,000 in equity in the property. He also has the cash left over which even after accounting for interest payments, taxes, insurance etc is still more than $20,000.  After refinancing his mortgage payment to the bank with his new loan is $1,200 a month. That includes taxes and insurance. And the property is rented for $1,805. So he has $600 a month of positive cash flow. The net end result is that for Dale this property: Created $50,000 worth of equity Created $7,200 a year of cash flow Was Purchased With No Money Down Had $20,000 Cash Left Over The best part is now Dale can start looking for rental property number two. And he can repeat the above process as many times as he needs to because he does not need to come up with cash to buy additional properties. He just repeates the BRRR process above over and over. This is exactly why I urge you to learn how to employ this strategy.  I have one student (Andy) who purchased 10 Section 8 Rental Properties using this exact strategy. Then in 2020 he converted one of them to an Airbnb and his cash flow went from $2,500 per month to $10,000 a month (just on that one rental). He started converting his next rental into an Airbnb, and over the past few years has converted all 10 of his rental properties into Airbnb's. He now makes $80,000 per month in cash flow on Airbnb. A few years ago, Andy quit his job. The crazy part is that he is only 34 years old! So if you want to learn how to build wealth and become a millionaire then you need to learn how to employ this strategy. Dale will be there. So will Andy. I want you to come to one of my real estate training events and meet my students who are buying rental properties using this strategy. The easiest way to learn is to attend my upcoming Buying Rentals and Building Wealth Boot Camp. Here is a link to that event: https://www.lexlevinrad.com/buying-rentals-building-wealth-boot-camp/ Enjoy the podcast episode. Make sure you subscribe to the "Investing in Real Estate With Lex Levinrad" Podcast on Apple Podcasts so that you are notified of future episodes.  To your success. Lex          

On today's podcast episode, I talk about buying your first rental property. Buying a rental is a lot easier than you think, and you should consider doing it as soon as possible because buying rentals is the path to wealth and financial freedom. What prevents many new real estate investors from buying their first rental is limiting beliefs or obstacles that they believe that they have that prevent them from buying a rental property. This podcast episode will hopefully clear that up for you.  Another issue I see with rental properties is that some beginners think that buying a rental will create enormous amounts of cash flow for them. When they realize that they are only making a few hundred dollars a month and they are faced with maintenance, repairs, tenant headaches and evictions they get depondent and they quit and sell their property. I see this all of the time. And the reason that this happens is because they don't understand the long term wealth building that buying rental properties and holding those rental properties creates. They thought they would get rich from cash flow today. They didn't understand that the true benefit comes from buying the house at a discount, creating equity (wealth) and then holding the real estate long term to create more equity and more wealth until the house is owned free and clear with no mortgage. At that point ALL of the rental income is income for the owner of the property FOREVER.  I illustrate this by using an example of my coaching student Dale who purchased his first rental property a few months ago in Melbourne Florida for $94,000. He found this property by mailing out 7,000 postcards to motivated sellers. This was the only house that he purchased from that mailing. I loaned him $80,000 so his out of pocket cost was $14,000 plus closing costs and fees.  The repairs to make this property rent ready were around $12,000. After the property was repaired and ready to rent, Dale found a Section 8 tenant that would pay $1,850 per month. He then went to a mortgage broker to get an appraisal and the house appraised for $194,000 ($100,000 higher than his purchase price). On investment properties, most lenders lend 75% of appraisal so in this case it was $145,500. After he paid me back the $80,000 he had almost $60,000 in cash left over which was more than enough to pay himself back for the down payment and the repair costs and closing costs. Essentially this was a no money down deal for Dale.  Let's look at his current situation: Appraisal Value $194,000 Loan Amount $145,500 Equity in the Property $49,500 Dale has essentally increased his networth by $50,000 by buying ONE rental property. But it gets much better than that because if he holds that property the value of the property will double in just 15 years. So will the rent. So 15 years from now he will own a free and clear $400,000 property that is paying rent of $4,000 a month. That translates into almost $50,000 per year in income from ONE rental property. Imagine if he had 5 rental properties. Or 10! This is how you need to look at financial freedom. Calculate how much money you need per month or per year to be financially free forever and to not have a job. Then divide that amount by $4,000 (from Dale's example" and that is how many rentals you will need to own in order to achieve your goal of financial freedom. If you need $12,000 a month or $144,000 a year then that is just 3 rental properties!  The concept that I explained above is called Buy, Repair, Rent and Refinance or BRRR. It will benefit you financially to understand this concept because it is the foundation of investing in real estate. If you can find motivated sellers that will sell you a house for 50% of what that house is worth, you can buy unlimited real estate with no money down. And if you hold that real estate long term you will become a millionare. It's really that simple. I have a "Buying Rentals and Building Wealth Boot Camp coming up. Make sure you register to attend this event where I go through this entire BRRR method step by step.   

On today's podcast I talk about creating a life of financial freedom.  I think this is a very approriate time for me to be talking about this becauase last week I returned from a two month trip to the Bahamas where I was living on my catamaran.  I was interviewed by my students Fred and Andy on Sunday night on an IG Live that they were hosting, and one of their main questions on that interview revolved around how to create financial freedom, and what it means to build your life by design and to have a freedom lifestyle.   But their real question was "How do you manage to be off the grid in the Bahamas for two months and still have your real estate business run so efficiently? So I thought I would talk about this concept of financial freedom on today's podcast episode.  Building a life by design means having intent in how you want to live your life, and then creating that life and that lifestlye by purposely planning for it. Learning how to invest in real estate and building a real estate business that buys and sells real estate is the best vehicle to help you achieve financial freedom.  If you have any questions, leave them in the comments. Enjoy the podcast!