The Real Estate Way to Wealth and Freedom Podcast
“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.
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
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.
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.
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
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.
Setting written goals is the single most powerful action one can take towards self-improvement, business, or anything which requires you to grow.
Many well-known and successful people attribute much of their success to having clearly defined goals.
As a human, you are shaped by your surroundings, your environment, the people who you surround yourself with. It’s a culmination of these things that make you who your are. Before all those, your life is a blank canvas, and through time, you are gradually shaped into who you are now.
Keith Weinhold is a Contributing Writer to Robert Kiyosaki’s Rich Dad Advisors blog.
He is the author of “7 Money Myths That Are Killing Your Wealth Potential”, an Amazon bestseller.
A real estate investor for 15 years, today he runs GetRichEducation.com and is the host of the very popular podcast called Get Rich Education.
Your financial security number is the amount of income you need to cover your basic needs – housing, food, transportation, utilities, and insurance. This is the amount of income it would take for you to cover your basic cost of living. Although it doesn’t account for luxuries, like vacation, travel, gifts, etc. Today we’re going to discuss the importance of this number and help you build a plan to achieving financial security for yourself.
Mike Alder is a real estate professional who invests in raw land. Prior to investing in raw land, Mike got his start investing primarily in single family homes. During the housing crisis in 2008, Mike lost it all. He didn’t let that get in the way of his vision. He then went on a personal development journey and learned from the most successful entrepreneurs in the world.
Mike has gone on to build a raw land investing business and teaches his passion to others.
Location independence in this context means you can earn income regardless of where you live. In an ever evolving world of social media, apps, ecommerce, and a connected world, more and more people are valuing things like flexible work schedules, alternative living arrangements (think expats living in foreign countries due to the cost of living) and more freedom.
Brian Burke is the President and CEO of Praxis Capital, a vertically integrated real estate private equity investment firm. Praxis currently manages a portfolio of active funds for the acquisition of multifamily and single-family residential assets nationwide.
"This podcast offers a great perspective for people who are just getting started in real estate investing. I HIGHLY recommend it!"
- Nathan B.
"Don't pass this podcast up! I was unsure about adding another podcast to my library, but this one has proven to be invaluable in my investing journey!"
- Ernest D.
La Porte, Texas
"I've tried my hand at stocks, and let's just say it didn't go as well as I planned. This podcast has helped me realize the multiple benefits of real estate investing. I just wish I would have started sooner!"
- Jonathan C.