V12 Bat

V12 Bat
بودكاست ‫V12 Bat‬

Learn how to maximize return on investment and finding high CAP rate properties. As a software engineer I was always interested in real estate and knew one day I would be fully immersed in investing in real estate. I am currently working on a real estate startup in Silicon Valley. Prior to this I worked as an engineer on self-driving cars and helped build Twitter in early 2010s.

الحلقات

  1. ١٣‏/٠٦‏/١٤٤٠ هـ

    How To Calculate CAP Rate

    Probably the most important number when it comes to real estate investing. CAP rate is the number that tells you whether you should invest in a property or not. Here is how you can calculate the CAP rate of any property: First let's imagine you purchase a property for $50k cash. And you rent it out for $500/mo. To find out how much you make in a year from the rent you multiply the $500 by 12 or $6,000, which is your annual gross income. You then take that amount and divide by the amount you invested so $6,000 / $50,000 = 0.1 and finally you multiply by 100 to get the percentage, in this case 10% is your gross CAP rate. But gross CAP is not what you're after because you also need to take into account the operating expenses for the property, things like maintenance fees, up front rehab costs, annual taxes, etc. So what most investors do instead of accounting for every single item that is an expense they instead subtract 30% from the gross CAP and call it a day. In our case $6,000 x 30% = $1,800 so we have $6,000 - $1,800 = $4,200 is your net annual income. So to get the net CAP rate you divide that number by how much you purchased the property for or $4,200 / $50,000 = 0.084 and to get the percentage you multiply by 100 so your net CAP rate is 8.4% This number is super handy when you're looking at hundreds of property to decide which one to purchase. This greatly simplifies the math needed to do the calculations. If you enjoyed this video please smash that like button. If you have any questions please leave them in the comments section below.

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    Real Estate Investing For Beginners 💁‍♀️

    You would want to start with a single family residential unit. A two or three bedroom single family house as opposed to a multi family property something like a duplex or triplex. This way you avoid the overhead of dealing with multiple units and keep things simple as you learn. You should also avoid commercial properties as your first step as they usually require more complicated financing methods and are just more involve more things to learn and are not a great way to get started. The reason you should focus on a single family house is simple, there is only one tenant you have to deal with so when things inevitably break you only need to deal with that one tenant. There is less paperwork involved and trust me there is a lot of paperwork to deal with even with one property so you want to minimize that as you are getting started and learning the major pitfalls. You will make mistakes in a fact, there is no avoiding the goal should to be lessen the impact of those mistakes as you get started so that why you should start with a small property to lower your risk and maximize your learn-to-cost ratio. Another reason why it is important to start with a single family house is because worse case scenario you can fix problems that come up or hire a contractor to do it for you. The benefit of hiring contractors is two fold first if you want to separate yourself from your investment projects. That means you should set them on auto-pilot in order for you to be able to scale up in the future and truly benefit the passive income from those investments. Secondly and probably more importantly is the tax benefits. When you hire a contractor you can write off that cost against your rental income whereas if you were to fix the property yourself you would not be able to write off that expense. Ultimately it is very important to outsource as much of the work of real estate investing as possible. That is why you should do your best to hire a property management company. I like to iterate this is not to be mistake with a property manager, because at the beginning when I was first getting started I always assumed it's an individual who will be taking care of your property for a fee. That is false. The property management is actually a team of experts who have managed hundreds of properties and have a network of contractors who they can tap into when something goes wrong quickly. Property management companies can be your biggest asset when investing in real estate. A good property management company is absolutely an invaluable asset. They can help you with inspect of the property before you buy it. They can refer you to banks they work with if you need financing or need to refinance if you're using a BRRRR strategy (I talk about this in another one of my videos for more advanced investors). And as I mentioned they can help ease the pain of when things break but tapping into their trusted network of contractors. The typical 10% property management fee is absolutely worth it specially if you're getting started in investing in real estate. Do you need a lot of money to start? I highly recommend for those trying to get started in real estate investing to start with an affordable area. There are parts of the country where you cannot purchase a property for less that several hundred thousand dollars you should stay away from those areas. There are on the other hand many parts of the country where you can buy a brick single family residential for less than $50K! For example Memphis, TN or Cincinnati, OH or Detroit, MI to name a few. Absolutely get started with cheaper areas before you work your way up to more expensive real estate markets so when you make mistakes they don't cost you as much. Once you're making solid income from your first property then it's time to move into multi-family home, maybe a duplex, triplex or quad-plex. At that point you should have enough experience to make sure at least you are not going to make basic mistakes.

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  3. ١٢‏/٠٦‏/١٤٤٠ هـ

    BRRRR Strategy Refinance

    A discussion about the BRRRR real estate investment strategy and its endless benefits. When we talk about real estate investing there is not a whole lot of other strategies that can be as powerful as BRRRR. Buy Rehab Rent Refinance Repeat is probably the end all be all of all types of investment strategies when it comes to real estate investing. It can exponentially contribute to your CAP rate and help you scale up very rapidly. Here is how it works. Let's imagine you start with $50k cash, you then find a property somewhere in Midwest or the South where prices are not astronomical like they are here in California. You purchase that property for $40k and put in $10k worth of rehab into it. Maybe you fix the flooring and the roof and do some landscaping and electrical. You turn the property to a shiny property that can be rented at market price, this should relatively be an easy task specially if you have contractors you trust and can work with efficiently. Next you find a tenant and collect that $500/$600 per month market rent. Once you have a solid tenant in place and the house looks great because of the rehab you put into to it you then go to a local bank and ask to refinance your property. In many cases banks allow you to refinance up to 75% of the property value if you own it out right and sometimes even up to 80%. The refinance loan is usually at around the same rate as a normal mortgage so that means you end up paying a relatively low interest rate and if you have purchased your property intelligently you should be already making a nice cash flow property at 15%-20% CAP rate. So now that you have take a loan on a portion of the value of the property you won't be making as much money on that 75% because some of it goes to the bank, but that's Ok because your CAP rate is now calculated based on the amount of equity or cash that you still have in the property which in this case is 25%. So if you do the numbers now the current CAP rate is higher than before. On top of that you have liquidity which you can use to purchase another property and repeat the cycle.

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  4. ١٢‏/٠٦‏/١٤٤٠ هـ

    How To Score A Fixer Upper

    The difference between two real estate investment strategies. What it boils down to is how long you’re looking to wait and what is your primary motive for investing in real estate. If you’re looking to have more control over the investments you make I suggest to go for cash flow. Cash flow investment strategy allows you to reduce the risk of market fluctuations and real estate price drops. You have a more or less predictable monthly income which stabilizes your cap rate and sort of gives you a guaranteed number before you go into a deal. That is because you know how tenants are paying for your property before you purchase it so that number is more or less fixed. Secondly if the tenant were to move you could still get tenants at the market rate which should be similar to what the previous tenant were paying. The expenses should also be pretty deterministic before you go into a deal. If the property doesn’t suffer from major problems like foundational issues or needing a new roof, etc. then you can be more assured that the expenses will not spike suddenly and this helps stabilize your cap rate. With appreciation strategy you’re looking to increase your property value by waiting for the market to move. This I compare to gambling specially if you’re not looking to hold on to that property long term, anything more than 5–10 years. Appreciation is uncertain because you’re waiting for the forces of the economy to act and that goes into the realm of study of macro economy, which in my opinion is very subjective and a non-intuitive or even counter-intuitive field to understand. In addition to a long term strategy appreciation could also work if you get into a very good deal at the beginning when you purchase the property. This of course also applies to cash flow strategy, but it can yield more rewards in the appreciation case as typically the investment figures are larger.

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  5. ١٢‏/٠٦‏/١٤٤٠ هـ

    Cash Flow Vs Appreciation - Make It Or Break It In Real Estate

    The difference between two real estate investment strategies. What it boils down to is how long you’re looking to wait and what is your primary motive for investing in real estate. If you’re looking to have more control over the investments you make I suggest to go for cash flow. Cash flow investment strategy allows you to reduce the risk of market fluctuations and real estate price drops. You have a more or less predictable monthly income which stabilizes your cap rate and sort of gives you a guaranteed number before you go into a deal. That is because you know how tenants are paying for your property before you purchase it so that number is more or less fixed. Secondly if the tenant were to move you could still get tenants at the market rate which should be similar to what the previous tenant were paying. The expenses should also be pretty deterministic before you go into a deal. If the property doesn’t suffer from major problems like foundational issues or needing a new roof, etc. then you can be more assured that the expenses will not spike suddenly and this helps stabilize your cap rate. With appreciation strategy you’re looking to increase your property value by waiting for the market to move. This I compare to gambling specially if you’re not looking to hold on to that property long term, anything more than 5–10 years. Appreciation is uncertain because you’re waiting for the forces of the economy to act and that goes into the realm of study of macro economy, which in my opinion is very subjective and a non-intuitive or even counter-intuitive field to understand. In addition to a long term strategy appreciation could also work if you get into a very good deal at the beginning when you purchase the property. This of course also applies to cash flow strategy, but it can yield more rewards in the appreciation case as typically the investment figures are larger.

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حول

Learn how to maximize return on investment and finding high CAP rate properties. As a software engineer I was always interested in real estate and knew one day I would be fully immersed in investing in real estate. I am currently working on a real estate startup in Silicon Valley. Prior to this I worked as an engineer on self-driving cars and helped build Twitter in early 2010s.

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