5 Reasons To Buy Property - My $50 Million Dollar Mindset

There are five reasons why real estate investors buy houses. This is very important for you to write down - what are the five reasons why everybody buys houses? The number one reason is?cash flow. We want cash flow! We want more money coming in than what's going out every month. And that's what's got many people worried because most people look at cash flow as the only reason why people buy real estate. We're filming a TV show right now, right? So I've got 30 people on my crew from A&E that don't know anything about houses. So they're sitting here talking to us and say yeah, you bought the house because it cash flows, right??

Well, actually that property I bought was a pretty rare situation. But that property I just bought does not have cash flow. And they go what? Why would you buy a house that doesn't have cash flow? Isn't that the whole reason why you buy houses? I'm like, that is not the only reason why I buy houses.?

The second reason why we buy houses is?asset depreciation. It may be a different phase in the business, but for me, the first thing I look at is how much can I depreciate on that property. So depreciation, tax benefits. So, where that is different for maybe you or me is that I don't make as much money as an NBA starter, but I make enough money that you could see my paychecks come in as much as an NBA player, maybe like a six-man or a seven-man or maybe a 10th man. Essentially, I make good money. Like most real estate investors that have been around for a long time, we make good money. The main thing that we're looking at is we don't want to pay all of our income to the taxman.?

The third reason why real estate investors buy real estate is because of?appreciation. The value of the property is going to go up. So let’s say you've made roughly $60,000 in five years. So we're going to divide that by five years, which is about $12,000 per year. So that's about $1,000 per month. Okay, that's pretty cool. So right now, I'm looking at this, and I'm saying that my appreciation just over the last five years, we're not even talking about the last two, which has been crazy. Just last five years, I'm averaging about $1,000 a month in net worth growth per month. So I'm looking at $583 and I'm like, you know what, I would pay $583 to gain $1000 bucks.?

What's the fourth reason??Mortgage paydown?- If you’re five years into the loan that's pretty good because you're 1/6 of the way done.?

The fifth reason why people buy real estate, which is something I don't talk about as much, is?leverage. Okay, so let’s ask ourselves this question, how much money do we think we should be worth by the time we die? Let's figure that out. If you’re throwing numbers out there while reading this I hope you’re not saying low numbers like $5 million, yes, that’s a very low number and I'll be pissed. If you pushed that number up to $20 million, I can tell you that is incredibly easy by owning real estate. $50 million is the right number. $20 million is nothing. I can tell you all that $20 million is not enough money to live on, the way you want to live your life. I promise you, I promise you.?

It's not enough money to help the people that you want to help. College tuition, weddings, health expenses, your parents living in a home, I promise you $20 million ain't shit. You think it is! It's not! When you get there you go, oh my gosh, why wasn't I looking at $200 million, then you get to $200 million, which I have not gotten to $200 million…yet. But you get to $200M, I already see that in my path. Who are you trying to help with $20 million? You didn't help anybody.

So think about this, I can get sellers to finance me big multifamily projects, if I have collateral or equity that they can lien their interest against. So I technically don't need to refinance this property. I can go to a seller and say, hey, well, I've got $60,000 in equity on this property. So I'll give you this as collateral for allowing me to do XY and Z whatever that X, Y, and Z is. And the problem with not knowing that xy and z, I want to now tell you all the stories of what that x y, and z's are so you go holy crap. I have $60,000 of lightning power in my back pocket and I'm worried about a $500-a-month cash flow problem. So essentially putting yourself in a strong situation where people are going to come to you right now in multifamily. Here's what happens with multifamily, stuff like apartment complexes, I want to go get a loan and I want to acquire property, guess what that lender does, now they want to know what's your net worth. Okay, well, how do they derive your net worth? What do they look at? How many properties do I own, or how much equity do I have on those properties??

You have leverage and momentum building toward having stronger cards, right? So if we're sitting here trying to play cards, you've got a powerful card sitting in your deck and you're worried and you're thinking about how do I sell this card because it's not serving me today. I want it to serve me today.

Let's stay connected!

PACE