Notes from a webinar I watched with my wife.

Rich dad webinar 10-10-11


3 KEYS FOR SUCCESS:

Identifying the opportunity

-HUD has predicted 6-10 million foreclosures in next 2 years

*You never take ownership of anything unless its rented leased or sold!!!

1. Knowledge

-29-6-3-1 formula: for every 29 properties I run numbers on, only 6 are physically worth viewing. Of those 6 only 3 are worth writing contract on. Of those 3 I will only close on 1

-Residential/multi unit formula: YGRx 7 +/- 10% = MAO

YGR= yearly gross rents

MAO= Max allowable offer

7 is the gross rents multiplier, and is the number he uses based off of experience. Add 10% if it is in GREAT condition. If in OK condition ignore 10%. If in POOR condition subtract 10%.

1% rule: 1% of purchase price is monthly payment. This covers all worst-case costs and THEN SOME with wiggle room.

P.I.T.I (principal interest tax insurance)

EXAMPLE: (see MAO excel model)

725 rents

725

750 x 12 then multiply by 7

Condition needs work. POOR





- Biggest problem for a new real estate investor: EMOTION. How do you eliminate emotion?? Never look at another property again.

The Rich don’t use their own money

Banks are not loaning money to people who are flipping. They will lend to notes that are performing. In fact, banks need to lend out twice as much as they used to 3-4 years ago just to make the same amount of money because interest rates are so low.

OPM sources

1. Partnership

Never do business with friends and family. Unless you want to get rid of them =) it will go bad.

2. Seller Finance

Needing to get creative

3. Equity Line (HELOC)

“Don’t touch or leverage your equity so you can sleep at night.”- Old Way of thinking/brain training

Get home equity line of credit on everything because then when people come after you in a lawsuit they can’t get to the money because it has a lien to it and it is hard to get to.

A paid off house is a liquid asset that someone could get to in a lawsuit.

4. Hard Money Lending

“Stay away from it!!”- Old Way of thinking/brain training

REAL Hard money lender does not want money down. They do not do a credit check. They lend money within 48 hrs. They are asset-based lenders. If you Google “hard money lenders” all you’ll get for the first several pages are the hard money lenders who can afford advertising and those are the ones that will the first ones to appear in your search results.

**Investors don’t care about rates and fees. We care about the availability of the funds

“Get the 15% interest rate or stay broke!!!”

“JOB= just over broke” =)

“Right to show clause” in EVERY contract:

Buyer reserves the right to show the property prior to the settlement for the purpose of either renting it or re-selling it and seller agrees to permit access to the buyer at any time up to the date of settlement

- If I cant find anyone to lease buy or rent I will not close the deal. DO NOT SPECULATE

NUMBER ONE EXIT STRATEGY BY FAR #1 is Lease Option

Second: rent

Third: Wholesale.

When you get a property under contract then you sell the contract.

Fourth: fix up and leverage