The Biggest Step: Going From 0 to 1. Today’s episode is for that person who has been wrestling with doing their first deal. While that might not be you, I’m sure you know of someone who fits this bill.

Let’s look at a realistic example of how you can make 500 per month while living for free.

Our example property is a $330,000 fourplex. You’re going to live in one unit and rent out the other three units.

Each unit rents for $1,100 per month, for a total of $3,300 in rents.

How to Find Deals We’re going to look at different resources for finding deals. When discussing how to find deals, we categorize the deals by how they are listed: either off-market or on-market. On market deals mean the deal has been listed with a real estate agent or broker. The real estate agent or broker…

Jason Morris is a real estate investor and agent in South Carolina. Jason has been involved in real estate in many aspects, from buy and hold investing, condo conversions, flips, and tax liens. Jason is also a full time real estate agent, who specializes in working with investors. Jason is the author of 53 Strategies To…

Lifestyle Engineering.

Let’s start by defining lifestyle engineering. Lifestyle engineering is a term that has been coined by people in different contexts. Lifestyle Engineering is the act of intentionally designing and building a life you want to live. That could be working for an employer and retiring by age 30 so that you can travel the world is a sail boat. Lifestyle Engineering could be building enough passive income through real estate and agricultural income producing land, which exceeds your living expenses, therefore allowing you to retire. Essentially Lifestyle Engineering is the approach to your freedom.

Freedom is an empowering emotion. Think how it feels when you know you don’t have to do something, but can do it only if you want to. Most people call this a hobby. If it’s not a hobby, they do it out of love. Let’s look at an example of this – one most can relate to. Everyone has to work to some extent. Most people “go to work”, meaning they drive to an office and work an 8 hour day for a company. Most people don’t feel inspired or fulfilled by doing this, because they have to do it. They have to keep that job in order to pay for their lifestyle – their housing, vehicle, food, insurance, etc. If they didn’t have that job, they couldn’t afford those things they have. The fact that this person has to continue to work makes them resentful towards it. Now imagine if you didn’t have to work, but chose to do so. How would you feel if you were working, only because you enjoyed it? You enjoyed the people, the company, the service or product you provide. You wouldn’t be stressed about raises, company politics, vacation, etc. Why? Because you’re choosing to be here because you like it. How do the latter of these scenarios sound to you?

I know you’re thinking something along the lines of “Sure Jacob, it would be nice to not have to work, but I’m not there yet.” That’s completely normal. In fact, that’s the whole premise of this podcast is to help you get to that point, and beyond!

People in this life aren’t given enough credit. Most people are great people. In fact, I don’t think I’ve ever met a person who isn’t a good person in their own way. Think of how many talented people you know, who aren’t pursuing their true passion, or their calling in this life. We all know that one person who is insanely talented at something other than what they’re doing. Think what the world would be like if it were full of people pursuing their passions! We would have ultra-successful companies creating products and services for people who are just as passionate as them. We would have people who are innovating, creating, teaching, and learning, what it is they want to. If everyone had the freedom to do this, the world would be a different place. It all starts with you. You can be that difference. You first have to be able to chase that passion.

That’s the mission of The Real Estate Way to Wealth and Freedom – to help people achieve financial freedom so they can build a life they want to live.

You can do whatever it is in this world you want, at any age. All you have to do is make it happen. Engineer your lifestyle so that you can do what it is in this life you want!

Andrew Campbell is an Austin, Texas native and the Managing Partner of Wildhorn Capital.

Andrew started four years ago, when he and his brother, Mark, bought their first investment property. That initial purchase totally changed the trajectory of their lives, going from hard charging corporate ladder climbers, to real estate entrepreneurs investing in apartment buildings full time.

Using the principals outlined in this episode, Andrew and Mark where able to go from 0 to 72 units within 4 years, with small multifamily properties ranging from duplexes to fourplexes.

Andrew’s background is in Market Research & Brand Strategy, spending time in both advertising agencies and emerging technology consultancies, where he was most recently a Partner at an award winning app developer. He has a BS in Advertising from The University of Texas at Austin and an MBA from Baylor University.

Key Points

Investing for cash flow
Forcing appreciation in multifamily properties
Third party management
Being successful with the right team and partner
Demographics of markets
Lifestyle engineering
Lightning Questions

What was your biggest hurdle getting started in real estate investing, and how did you overcome it?
Taking the first leap! With family hardships, Andrew knew he had to get started building passive income.
Do you have a personal habit that contributes to your success.
Constantly reading and learning. Andrew listens to a lot of books through Audible. Andrew often reflects on how grateful he is for the flexibility of this lifestyle he has built for himself and his family.
Do you have an online resource that you find valuable? BiggerPockets and other podcasts
What book would you recommend to the listeners and why?
Tribe by Sebastion Junger

Cashflow Quadrant by Robert Kiyosaki

Rich Dad Poor Dad by Robert Kiyosaki
If you were to give advice to your 20 year old self to get started in real estate investing, what would it be?
Get started as soon as possible!
Contact Andrew

www.wildhorncap.com

“We cannot become what we need by remaining what we are.” ― John C. Maxwell

Throughout life, you’re faced with countless decisions every day. Some are minor, and others are much more impactful on your life. Decisions range from hitting the snooze on you alarm clock, what to eat for lunch, when to go to sleep, what to wear, to consciously setting aside time to plan your day, think about your next step in your career, make plans to take on a new challenge.

All of these decisions have an impact on your life, but some are much more important than others. Yes, if you choose the bacon over oatmeal, I’m sure you’ll have some spikes in your cholesterol. Now what about those decisions that can have a domino effect in your life? Those are the decisions I want to talk about today – decisions which will improve yourself from the day before.

Throughout this life, you will grow as your experience new things, and make certain decisions that impact your life. It’s up to you to map out that growth by focusing on those decisions that have an impact on your tomorrow.

It’s hard to think about the task ahead when looking at where you eventually want to be. But if you focus on continuously improving each day, then you’ll make that huge gap from where you are now, to where you want to be seem much more achievable each and every day.

No one was born with the knowledge, experience, skill, passion, or whatever is they have today. People accrue these things by continuously working towards them.

Think about yourself. You weren’t born with what you know today. You didn’t even know last year what you know today. Think about that trajectory in the next 1 year, 5 years, and even 50 years. Imagine what your life will look like if you just continue to improve every day.

I know you’re already focusing on improving and learning every day because you’re taking the action to listen to this podcast, and that’s great!

I encourage you to continuously better yourself. Never quit learning. Take on new challenges that will force you to grow. Focus on being better today, than you were yesterday, and one day you’ll look back and thank yourself.

Scott is the Vice President of Operations at BiggerPockets. He is passionate about personal finance, financial freedom, and real estate investing. Scott is the author of Set for Life.

Scott started building his real estate portfolio by house hacking his first duplex in Denver, Colorado. He has since expanded his real estate through small multifamily properties.

Outside of real estate investing, Scott enjoys biking, rugby, and exploring Colorado. Scott prides himself on his Hawaiian shirt collection and has one rule when wearing a Hawaiian shirt. That is, you get only one button, it doesn’t matter wear, but you can only button one button.

Key Points

Saving your way to financial freedom
House hacking your first property
The first $25,000 is the hardest
Pursuing the path of financial freedom rather than the traditional path of retirement accounts

Lightning Round

What was your biggest hurdle getting started in real estate investing, and how did you overcome it? Saving up the down payment. Scott was able to save by optimizing his savings and living frugally.
Do you have a personal habit that contributes to your success? Scott sets our his goals every year, quarter, and week, and day. This keeps Scott accountable.
Do you have a favorite online resource? BiggerPockets and Mr. Money Mustache
What book would you recommend to the listeners and why?
The One Thing, by Gary Keller and Jay Papasan
The Compound Effect by Darren Hardy
If you were to give advice to your 20 year old self, what would it be? Do a house hack while in college.
Resources

Set for Life: Dominate Life, Money, and the American Dream by Scott Trench

The One Thing, by Gary Keller and Jay Papasan

The Compound Effect by Darren Hardy

Visit Audible for a free trail, and a free audio book download.

Contact Scott

https://www.biggerpockets.com/users/ScottTrench

Real Estate Investing, apartment investing, financial freedom, passive income, financial security, investing, Jacob Ayers, apartments, appreciation, cash flow, commercial real estate, investing in real estate, multifamily, podcast, real estate investor, buy and hold, rental income, entrepreneur, retirement, equity, syndication, raising money, duplexes, triplexes, fourplexes

Estimating Expenses

It’s important to be able to determine expenses of a property, since they directly impact the property’s cash flow. Some expenses are obvious and easy to calculate, whereas other expenses can be less intuitive and harder to accurately estimate.

Let’s look at what typical expenses are for almost every property.

1. The Principal and Interest. The principal and interest combined are known as your mortgage payment, or P&I. The P&I can vary greatly depending on the interest rate, loan amortization (or duration), and loan amount. It’s best to find an online amortization schedule which allows you to input each of these variables, like this one here by BankRate: Mortgage Calculator

2. Taxes. Property taxes can make up a significant portion of your expenses, and vary by state, county, and even city. Property taxes typically range from 1%-3% of the property value. You can check past property taxes on your local county tax assessor’s office. Most tax assessor’s offices will have a website or database you can search by name or address. Keep in mind that past tax assessments aren’t indicative of future tax assessments. A property will often be re-appraised by the county tax appraiser upon a sell. The new tax assessment is then based on the new appraisal. So if the property has been appraised under a current owner at $50,000, and then is sold for $100,000, expect the property taxes to increase. This is an important evaluation when looking at expense projections!

3. Maintenance. There are two types of maintenance costs: operating expenses and capital expenses. Operating expenses are every day repairs and maintenance, such as fixtures, locks, garbage disposals, cleaning, etc. Capital expenses are big ticket items which you repair less frequently, like a new roof, HVAV, kitchen remodel, flooring, etc. It’s recommended to set aside approximately 5% of rents for each expense, for a total of 10%.

4. Insurance. Insurance is one of those expenses that can vary, based on property type, location, the deductible, etc. It’s best to get an insurance quote from an insurance agent/broker.

5. Management. This is often an overlooked expense. Even if you plan to self manage, its still wise to build in property management in your projected expenses. You could change your mind after you have self-managed the property and will want to be able to afford to hire the property management out to a professional. Also when you sell the property, the buyer will likely price in property management in their analysis. Property management for single family properties and small multifamily properties typically ranges from 8%-10% of the rents.

6. Vacancy. When a property is vacant, you don’t receive rent on that unit. Even in strong markets with high demand, you will have turnover, leaving the property vacant for days or weeks with no income. You’ll also be turning that unit for the next tenant, during that time. Depending on your market and property type, vacancy can vary. For single family and small multifamily, 6-10% of rents is a fair estimate.

So typical expenses for a property are: P&I, Taxes, Insurance, Management, Maintenance, and Vacancy.
If you can quickly and accurately estimate these expenses, you can more easily analyze deals and make offers on properties, which will lead to you buying more deals and good deals!

For a great online calculator, I recommend starting with the rental property calculator on BiggerPockets.

So get out there and start analyzing deals. The more deals you look at, the more comfortable you’ll be estimating these expenses, and the more offers you can confidently make, which will lead to more properties for you!

Estimating Expenses, Real Estate Investing, apartment investing, financial freedom, passive income, financial security, investing, Jacob Ayers, apartments, appreciation, cash flow, commercial real estate, investing in real estate, multifamily, podcast, real estate investor, buy and hold, rental income, entrepreneur, retirement, equity, syndication, raising money, duplexes, triplexes, fourplexes

Ben Leybovich was born in Russia and is a career classical violinist. After being diagnosed with Multiple Sclerosis at an early, Ben had to go back to the drawing board and consider his other options. This led Ben to search for options to make a living, other than music.
Ben researched the world of money extensively, and came to realize that there are 3 types of income: Earned Income, Passive Income, and Portfolio Income. Ben didn’t need passive income. He HAD to have it.