EPISODE #2 | NEW TO REAL ESTATE INVESTING | REACHING THE GOAL OF MAKING MONEY QUICKER | JARED JONES
Previously, Hey Jared, I'm finishing my last few months of school and graduating college soon, and I want to get into Let's investing right now. I'm searching the area of four homes on Zillow and realtor.com. What are my next steps? And should I get a real estate license? If you missed video number one, I'm going to post it right here. Check that out. That's kind of an introduction and what you need to do to start getting into the real estate investment game. But today we're going to dive a little bit further. We're going to talk particularly about what you can do when you have no cash at all. Like how can you make the most from your investment business using other people's money, make a fantastic living from it. The second thing we're gonna talk about is how you can amass a large investment portfolio with none of your own cash.
That is you are holding property. As you grow your investment business, some of these homes that you find these deals, you want to keep them, you want to invest in them. You want to put some, some sweat equity and make those things more valuable and get a rental return and hold them for life. But yet you can't really buy a bunch of properties if all your cash is tied up. So how can you buy several homes where none of your cash is tied up to any of them? I'm going to share that with you as well today. And lastly, I'm going to answer the question. How smart is it for an investor to have a real estate license? Should they actually do it? So let's get started. The number one thing I want to talk to you about is the idea that I want to get into real estate.
I might be able to buy my own first primary residence with nearly a hundred percent financing, which kind of talked about in video one, but how can I really start this process of making a profitable business where it's not tying up a ton of my own capital? The really the answer to this question is a process called wholesaling. So if you are familiar with the topic, wholesaling is basically where you do exactly what I talked about in the video. Number one, you execute, finding motivated sellers. So motivated sellers say I want to sell my house to you. You go to them and let's say the value is a hundred thousand dollars and you tie it up for 60. Okay. That contract then allows you to pass it off to investor B. Okay. So your investor a tied up for 60 investor B then says, I'll buy it for 80 for instance.
And they come in and they purchase the property and they close on it. And then you get the difference. So between the 60 and 80 is 20 yours, that guy makes 20, he's happy. That's how this process goes. Okay. So let me walk you through a couple of key steps on this particular piece because I don't want to move too fast and then you get lost. But when you're actually dealing with this process of wholesaling, you actually become versed at talking to sellers, knowing their motivations. You determine a pathway to buy their home. You give yourself time, okay? So you actually give yourself room to find this other buyer. So which you're actually flipping the home for them to purchase. And then they in turn close at the title company. So as we kind of walk through those particular steps, we've got to submit down a few different ideas here.
Okay? Number one, you've got a phenomenal system. That's finding you, motivated sellers. So, you know, you've got a system already there. That's building up this database of people who are looking, buy and sell. And then you're creating a process where you contract that, that house. And then you have another investor. And by the way, think about it this way. Just like you have a database of people who are looking to sell your homes because you have systems and tools pursuing them. Then on the other side, you're going to have a system of investors, and investors are obviously not impossible to find. There are many ways that investors gravitate towards, you know, investment groups, investment circles, there's networks of them. Most investors are highly networkable type people. So they're, they're the type of people that are very into interconnectivity they're into group meetings or into idea exchange.
And so they're not really hard to find, but there's, they're not all the same, right? So there's a lot of investors that talk out there and they don't have a penny or a pot too, you know, one and two. And so you'll want to make sure that you're talking to real people on that end because some of them really are not worth much. And they're worth a lot of air in conversation. But the point I'm making is if you have both systems working, you can make a lot of money. Now, one of the things that I like to digress to a second on the seller-motivated seller side is I like direct mail. I kind of share that in the beginning. One of the things that I would share with you is to get data for motivated sellers, get a good title partner. So if you get a large name brand title company, they have what's called marketing reps.
And those marketing reps have access because that company invests tons of money into data and they can get you mailing lists. Okay? So you can find motivated sellers that way that have equity, kind of what I described in video number one. And then in turn those people at the same level, a lot of times have access to investor lists, investor teams, companies that actually have investor resource buyers, and things of that nature. They know a lot of people. So, marketing reps at title companies are great people to know. The only thing that they're going to ask for a return is that you actually use their company to actually settle the closings of what you're buying. And you'll obviously, in turn, be glad to do that because they're a great resource to you. They're saving you money. So, so think about this. You, you have the system where you are really kind of getting the ball rolling on finding sellers.
Okay? When you do that, should be able to have all the income and revenues. You need to palate your business, whether you're buying them yourself, whether you're putting yourself on the contract and flipping it to another investor, however, you're doing it. And I would say a third way to monetize your business is as an investor, you're going to have people who you walk into. And they're going to say, yeah, I'm thinking about selling this year and they won't settle out a number that you'd be willing to pay. They want to sell more towards the market. What you should then do is actually create a business of selling those leads to, to real estate agents. Real estate agents will pay great money for a good seller lead. Now real estate agents cannot give you a commission that is illegal, but many real estate agents pay marketing firms for leads to generate in the market.
Those agents in the same ways I'm describing for you right now. So it's a great way to monetize your marketing business because you want money for postage stamps. You want money for direct mail campaigns. You want resources and advertising for all of these people to find it. I know that you're a great investor that wants to actually service the marketplace and buy homes when people are ready to sell it. The next thing I want to talk about is, uh, wholesaling features. So, if you are going into the wholesaling side of the business, you are going to want to connect with real estate brokers. You are going to want to connect with people who can help you and the attorney side one or the other. I mean, definitely, you're going to need contracts. You're gonna need to learn about how assignable contracts work, things of that nature.
I'm not here to go into deep dive on that particular training aspect, but there's plenty of it. And it's good that you know about it. And I'm also at the end of this video, I'm going to give you some of my favorite resources of who you should follow in the wholesale world to help you learn a ton much faster. Okay? So the second thing that I promised to tell you about is how you can acquire investment property without any of your own cash. So when you think about this, the limiting factor of most people being able to become very wealthy in real estate is money. Like I can't buy enough property. I can't acquire enough property to make myself very successful and as an investor. So think about this. One of the best methods for this, as you become more profitable as an investor is called the burn method, buy rehab, rent out, refinance, repeat that's the method.
Okay. Now let me walk you through it. Okay. Let's say that you find property sellers motivated to sell in this house in great condition. If it were completely remodeled while it's in bad shape right now, it would be worth $200,000. Let's say the seller only wants a hundred thousand dollars for it because it's in a rough shape as-is purchase. They're not on the market. You just go and buy the house from them, for example. Okay. Now that would be a phenomenal deal, but let's say it's worth 100 or you buy the deal at 100, you put in 30 grand. Okay. So you make it nicer. It needs a lot of work. So you put $30,000 into it. You're in it for 130,000. Okay. Then you put a tenant into the property. Who's paying you 1400 a month and you're in this for 130,000.
Then at the six-month mark, you get a loan to borrow back all of the money that you put into the property. Okay? So that's simple as that. And by the way, there are some people that do the burn method. They actually borrow back a much higher amount than they actually put into the property. So they have what's called negative ROI. They actually have a return from something that they got cash from to start. They actually didn't have net startup costs. They actually had a return. Initially, they actually didn't put me into it. The thing only paid the money out. So the, you know, the thing is, you know, they say that when something's too good to be true, probably is, that's not what this is. However, when something is too good to be true, it probably requires a lot of hard work.
That's the thing with the burn method. You do need door-knocking capability. You do need direct mail. You do need to reach people that are likely to sell a home. And you're talking about properties that are hard hit. You know, you're talking about properties that are, that would be great if they're shined and made nice and the investment world in our area, you could borrow 85% to value. So under that same scenario, I just gave you where you buy for, for a hundred you're in it for one 30, the value is 200. The lender in that scenario, we give you a $170,000 loan on that particular property that you're in for 130. Okay. Now the point is, do you want to borrow that much, right? Does it make sense to borrow all the equity back out? If your rent is 13 or 1400 a month, you don't want to create a mortgage payment that's above your rent.
In fact, you probably want a really good re you want a lot of room, 20, 30%, the margin between how much your monthly debt service is and how much the actual income is from rent. So that's how you do it. Now that does require some revenue, right? You could try and borrow the whole thing. So you could do that with partnerships. So you could buy a back of the book, property, me super cheap, and then you have someone help you with 30% down because you're gonna need hard money financing. And then you're going to need equity. You're gonna need money to put in for the repairs. And then, in the end, someone's to qualify for the mortgage. So if you can't qualify for financing, you can't get yourself out. Okay? So that's the thing too, is like when you're long-range planning to be rich in real estate financing becomes a part of the scenario.
So if you're in this game for the long run and you are not a person to who the bank would lend a pack of gum, you need to work on that over time. Okay. It's something that can be definitely easily managed a great lending partner who does things like credit simulation can do all kinds of things to make sure that you are ready to borrow as much money as you want. Okay. And if you're doing profitable business, you're not going to have, you're not gonna want for money at all. You'll get money from the bank. You'll get money from private investors. Someone's going to give to your cause. You just need to get good at finding deals and working with people because that is where the ticket is. Okay. Two more things I want to cover are number one, I'm going to tell you, should you get a real estate license?
And secondly, I'm going to give you some of my best players in the business. I think you should pay attention to that will help you grow and pay attention to what you need to know about, to become very successful in real estate and not get you, distracted investors, get distracted on meandering things that waste their time. They buy all kinds of courses and things that just take their cash waste their time and they don't become any better for it. So let me tell you this, should you get a real estate license to be a real estate investor? The answer is no. In fact, I would say that if you were to get a real estate license for free with no education requirements, I still would tell you not to have one because of the nature of how being a successful investor works and being a successful real estate agent, there are two different things.
I believe that there's a logical argument to be made that as a real estate agent, you could have your license endangered by the state. If you are a very good real estate investor, and here's what I'm saying, a real estate investor's goal is to buy property at deep discounts. So if you're trying to go out and help a person by making the sale painless and buy, but at the same time, making your life good, uh, enhancing it by buying the property at a discount. So you have a good exit strategy and you make money. You are at the same time flying against what the board of real estate has required real estate agents to do, which is to look out for the public interest and make sure they have maximized income from their property and to act for them in good faith and all these kinds of things that are tied to having a real estate license.
So if you have a real estate license and then you go out and buy a property Estee discount, you could end up with ethics complaints, all kinds of issues that I just don't think are necessary. For someone who is going to be a real estate investor, it doesn't add anything in my opinion. And as far as I'm concerned, the things that you would need a real estate license for, you can get those at a very reasonable cost you can end up. And I think the way the business is heading, those services are going to cost even less for the real estate investor. And so it's just to me, I would tell you to advise against that they can make your life a lot easier. The last thing I do want to share with you though is some of my favorites in the investment world.
Number one for wholesaling property, I would tell you if you're considering wholesaling, which I think is probably one of the earliest phases that a real estate investor's growth is going to go through, look up Steve Trang and his podcast, real estate disruptors. Steve Trang does a phenomenal job of interviewing some of the greatest guys that you never heard about that are doing phenomenal things in the wholesaling world. And I highly encourage you to go check them out. The other thing, a lot of people follow the bigger pockets podcast. I think there's a ton of people that, you know, you probably hear you probably already heard of them and the last thing that I would tell you is on the burn method. So the last thing I talked about is how to accumulate a lot of real estate without a lot of your money lookup FACHE new wind fashion.
probably one of the easiest ways to fall hymns on Instagram. I don't really watch him on other social platforms, but he does a phenomenal job of educating the public. He has a lot of resources that he provides and he is the real deal. And he's out there doing it. Now. He is unique. He's actually an investor who has a real estate license. I feel like I know him more as a real estate investor. I feel like he got his real estate license and transitioned into investing and that's more the beneficial aspect of his business. He's done a great job of balancing both, but I would tell most people don't even worry about doing it. However, I definitely recommend you follow his channel, and on this channel, if you enjoy this real estate information, keep up to date by hitting the subscribe button, hitting, hitting the bell icon. And also like this video would definitely love a share. If you know anybody that would enjoy the same content and continue the conversation below. Have you flipped the home? How are you finding your flips? Now? What has been a huge resource has benefited you in the process. It's you share with the world myself? Are there any other topics that you would like me to cover in future videos? Be happy to do it. Hope you're out there killing it, doing great in this economy. We'll talk to you real soon.
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