Welcome to Do the Talk podcast. This is your real estate podcast that we explain to regular people just like us I mean me and Ibrahim how to invest in real estate. You see, investing in real estate can be very secure. At the same time, it can be scary. So this is where we break it down to pieces on how to go about finding the deals, buying it, managing it, all the nitty gritty that you need to know. So if you are looking to invest in real estate, you have come to the right place. Ibrahim, how are you doing today?
Speaker 2:I'm doing well. By the way, for those that don't know the hostess I met, I'm the co-host, ibrahim. So today, like we've been saying this, this is not a get rich quiz scheme, but we are going to be teaching you all the theories we want you to put in the work, which is to the practical. Connect with us, get people that know how to do it, get advice from them, then take action, because there's no. The essence of gaining, acquiring knowledge or gathering knowledge is to put in action. If you don't put them in action, it's like you're just stacking knowledge and put it on top of your shelf and it has no meaning because at the end of it, it's of no value or there will be no return from doing that. So we don't want you to keep gathering this knowledge without taking action, and that is why we want to come today and tell you about a great topic, a great way to get started. Now.
Speaker 2:Today's topic is how to identify a good deal in real estate. It's a very big topic because it's like you want to buy a product and, at the same time, while you're buying that product, or before you buy that product, you need to know if that product is going to fetch you, if there's a profit in that business you're trying to get into. So you're buying a product, you need to know before buying it are you going to make money from this product? If you're not going to make money from that product, I 100% tell you no, don't buy it, because real estate has nothing to do with emotion. I mean, if it's a single family home where you want to leave your primary resident, a lot of times emotions comes with it.
Speaker 2:But here at Doody Talk we are focusing on investment. So what am I saying? I'm saying you need to know how to identify a good deal. So, ahmed, I've talked about how to identify, like I brought the topic, which is how to identify a good deal, but it is easier to be said than done or done to be able to identify it. I'm glad today you are going to bring a shared knowledge to this topic, because it's a very important topic. Ahmed, how can our audience or people out there, how can they identify a good deal?
Speaker 1:Absolutely, thank you. Thank you, brian. You see, just like you said, when you are investing, you don't want to bring emotion with you. You want to be able to go with data and you want to be able to make sure you are getting your facts right. Investing with emotion will never lead to any good result in real estate, because emotion can push you to buy a bad deal, which is a great thing that you guys are joining us today, because guess what? We're going to be explaining how you can take emotion out of investing in real estate. One of the ways to determine a good deal is to know what your end result is. What are you using it for? Is to know what your end result is. What are you using it for? And then walk your way back to the price and to the location. Walk your way back Because there is a saying that you make money when you are buying in real estate. You make money when you are buying in real estate and there's a saying that says that you can demolish your house, build it back up to your taste, but the funnest part is, you cannot move the location. There's nothing you can do about the location, but you can do whatever you want with the house to make sure it is like sparkly. It is the best house in the neighborhood. You can do whatever you want with the house, but you cannot change anything with the location. Location remain, it's out of your control and stuff like that. So what you are going to use the house for determine what price you're going to buy it from. If you are going to be doing Airbnb with the house, then you need to make sure that the area you are buying from it's not one only supporting the mid-term rent. It's not only the fanciest area, but also the Airbnb in that neighborhood is making money. So if you get a good deal in a neighborhood that Airbnb doesn't make money there, what good does that do? No, so I'm going to give you an example of that.
Speaker 1:So when I was starting up, I was doing arbitrage. I rented this three-bedroom area in Fort Creek, hoping that family would be traveling to Children's Museum, right, that they will need a place to stay. And I didn't follow data, I just follow emotion. I follow my own, thinking like, okay, this is what I feel like is right and all that, guess what. That house I end up dropping it after six months, just five blocks down the street. I'm doing arbitrage, with just single bedroom, one bedroom, one bath. Everything is just like a tiny place, and ever since 2022, that unit hasn't stayed vacant up to today. So I go into business with emotion, but one workout the other doesn't work out.
Speaker 1:If I had do my research, like see what is going on in that area, see what people are renting, see what the vacancies are, maybe instead of getting a three bedroom and one bedroom, I would have gone like three one bedrooms, because that one hasn't been profitable ever since. I've never, ever, used my money to pay rent. I've always make money, regardless of how small it is. It has always taken care of itself, which is what you want your business to do. So what I'm saying is, sometimes we look at things the wrong way, and if you let data guide you, that is a very, very great way to approach business, because data will tell you the history and we even project what the future looks like, and it will be able to guide you. So if you have a great deal in an area that doesn't support your strategy, what you are trying to use it for, then there's no good deal out of that, because, at the end of the day, even though it's cheap, even though it's nice house, even though you think this is the greatest house in the neighborhood, it's not going to support what you want to do with it and that is going to end up to be a bad business deal at the end of the day. So that would be my number one thing is, when you want to buy in real estate, after you make sure that the house you are buying at a good price, you need to make sure that location actually supports the kind of strategy you want to do, because, regardless of how good the deal is, if the location is wrong, it will turn out to be a bad business.
Speaker 1:Now straight to my point. When we, as an investor, are buying in real estate, we are buying for three things. Either you want to wholesale that house, you want to flip that house, or you are buying and holding. That is the three ways to make money in real estate. Every other thing falls under that category. If you want to do PAB, if you want to do middle-time renting that is under buy and hold Flipping you are buying it, you are holding it for a certain time, or you are forcing the equity to go up and you are selling it, or you are just wholesaling it. You are not even holding the house at all. You are just putting it under contract, move it to the end buyer and you get out of that deal right away. So that is an instant. So what I'm saying is wholesaling, basically is when you put a seller under contract at a discount amount, then you turn around, add your own fee and you sell it to the end buyer maybe someone that wants to live there, maybe a flipper, and stuff like that.
Speaker 1:So if you are buying anything in real estate, you need to first identify which of these three you are planning to do with it. So the very first one would be okay. Am I wholesaling it? So why would you wholesale a house? Because we've always preaching on this podcast that holding it is where you build wealth. You know wealth is being built by you accumulating assets that grows over time, that bring you money over time, that take care of itself over time. So, but why will you all sell a house?
Speaker 1:So let me give you an example. Let's say I, I buy a house. I am an abnb investor, I'm a middle-term rent-a-investor, that is my niche, that is what I do, but I saw this great deal in an area that's it's only good for long, right, that is not my niche. That is not my animal that I used to kill. So if you go into it, is it going to be a bad thing? No, but you want to make sure that you are not going into something that you don't have experience with, because that is where the risk comes in when you are investing in anything, be it stock. If you invest in stock that you know nothing about, it is risky. So you need to make sure you stay within your niche that is being profitable for you. But I saw this house. It's a very great house and I saw it at a discounted rate. Am I going to pass on that opportunity just because it doesn't fit into my buy box? No, guess what I can do. I can actually put that seller under a contract, turn around and find someone that invests in long leasing and then sell that with a price to that person. Now I'm making a chunk of 10, 15, 20,000 without anything, just by bringing the opportunity to someone that actually saw that. Okay, this is a great opportunity and they're going to buy it from me. So I'm making money just by being a middleman and working away with some cash that I can now bring into my own arena, into my own niche, and buy property there, rent it into my own niche and buy property there. So the following option would be okay, this house it's in a great location meets all my buy box.
Speaker 1:If you want to learn more about buy box, please go back on our YouTube channel and watch our past episode. We already explained what buy box is, but let me quickly go over. Buy box is pretty much things that you are looking for in an investment. So, do you want a two-bedroom? Do you want two-bedroom two-bath? Do you want two-bedroom one-bath? Do you want a certain cash flow? Is this house going to give me that certain cash flow? Things like that. Things like pretty much. You are going for a shopping, what you need in a product for you to be able to buy it. You want to go and buy a laptop. You're just not going to walk up into Best Buy and pick the first laptop you saw on the account. No, that's not how it works. You need to actually check the characteristics of that laptop for you to make sure that, okay, this is going to work for what I want to be using it for. So that is what? Buy boxes. So this investment property that you're about to buy, check those boxes.
Speaker 1:Next thing is okay, do I want to flip this house? Flipping is pretty much you buy a house, renovate it, bring it to 2020, 2024 standard and then sell it for a profit, so you are not holding it more than a year or a year and a half. You are actually anything within six months to a year and a half. In my own definition of flipping, that is a flip because you are not holding it for a duration of two years or more, so you had a value to it. Then you sell it back Someone else. So that is flipping.
Speaker 1:So what are your criteria for flipping? Do you want to make a certain amount of money? Are you looking for? Okay, if I sell this house, is it going to net me 20,000 right away so I can move on and use that 20,000 on the back end to buy another investment property? So you need to check all these things. If it doesn't check, just walk away. If it does check these things, if it doesn't check, just walk away. If it does check, buy it. If it doesn't check, now you can move on to the one that we actually preach on this podcast, which is buy and hold.
Speaker 1:Try to see if it's going to be a cash flowing asset, an asset that will be able to take care of itself. If you see that, okay, I cannot wholesale this or it's too good to wholesale. Okay, can I flip this? I cannot flip this. Okay, can I do a buy and hold on this? Can I do a long listing on it? Can I rent it out for someone I want to live in it? Can I do a short term or middle term on it? Can I do section rate with it? Can I do a short-term or middle-term on it? Can I do section 8 with it? All these exit strategies Can it work?
Speaker 1:If it can work and it's going to cash flow, that is the property we want you to hold in your portfolio. Right, that is the property we want you to hold in your portfolio. But because we want you to hold it in your portfolio doesn't mean you need to buy it at a price that doesn't work for you, but you need to make sure the strategy you want to do. That is why I said start from the end point and walk your way back. What I mean by the end point is make sure that the house is going to cash flow. Make sure that the appreciation is going to be there for you in the future to tap into so you can use that to buy more property. Make sure all these things check before you actually buy. And if it doesn't, that is why we say don't invest in real estate with emotion. Walk away. If the house you want to buy doesn't check your boxes, walk away. Don't try to buy that house.
Speaker 1:At the end of the day, you are taking money out of your pocket to actually pay the monthly mortgage. That is called a liability. When you are using your house that's supposed to be fetching you money. Now you are taking money from your hard-earned money now to be paying the mortgage. That is not what we preach on this podcast.
Speaker 1:And if the house is not going to cash flow the way it is right now, how about you do a creative financing? How about you come up with a term that will make this house cash flow? What do I mean by that? So let's say the house is not going to cash flow because the price that the seller wanted is not going to let the house cash flow, how about you get the house? You pay the seller the price they wanted. But you ask them. You know what. Can I take over your mortgage If they have a mortgage ongoing or if they own this house, free and clear? Can you become my bank Instead of you may become my seller. Can can you become my bank Instead of you may become my seller. Can I upgrade you to my bank Instead of me going to a bank? I'll just be paying you. We agree on a certain interest rate, we agree on certain amortization, we agree on the length of the amount you want, and stuff like that. I can actually give you your price if you let me do these things. So there are other ways you can go around it if a seller wants a huge amount of money that will not allow you to cash flow on a property. That is why you need to keep on listening to this podcast, because we've talked about all this strategy in the past. I don't want to dwell much into it right now, but these are certain ways that you can actually go around.
Speaker 1:Determine if this deal is going to work for you and separate your facts from emotion. Make sure the data supports what you're going to do. Make sure the house is going to appreciate over time. Make sure you are getting it at the right location. You are not just going to be doing the Airbnb and you go and get the house in the ghetto, where there's always robbery, burglary, there's record of sexual abuse. Nobody's going to come rent that house right. So these are the things you need to check before you actually conclude this house is a good deal. It's not only about price. People always, always mix that up when we talk about good deal.
Speaker 1:Another thing is what are the potential for this house? So let's say the property is just two acres of land, but the house is two bedrooms. There's huge potential. There's so much that you can do. So I'm working with a client right now where he purchased this huge house, but the house is sitting on a two-acre land. You went ahead and convert the house, the land, the zoning of that land to a multifamily zoning. Now it's allowed to build more property on that same house. So if someone wants to sell two acres, you know the property sitting on a two acre to me at a price. I'm probably seeing more than just the house that I want to buy. I'm seeing more. I'm seeing potential of what I can do with the rest of the land, with the rest of the property.
Speaker 1:Is the house sitting up front, at the back or in the middle of this land? You need to check all these things. Is there any house? Is there any multi-family in the neighborhood? Because if there's a multi-family in the neighborhood, that means they already granted a mortal family for a property before you. So it is possible you can cite that. Okay, this social social person has a C4, I believe it's C16 or C4 or whatever it is for mortal family in Indiana. This person already have this zone as mortal family. I want to do the same as well, and the city is probably going to grant you more than if you be the first person that wanted to do it. So this potential is very, very crucial.
Speaker 1:When you are looking at a deal, don't just look at a two-bedroom, one-bath and they want to sell it for $200,000. No, it's more than that. If there's a huge amount of land in the front, on the side or at the back, you can build ADU. It doesn't necessarily have to be a multifamily. It can be an ADU, another single family that you are building on that same lot of land and now you have two houses on this same lot. But it would be great if you can separate them and make them a multifamily. So if, in the future, you want to sell them, you can actually sell them separately, not as a bundle.
Speaker 1:But that would be things that me, as a person, look for when I'm checking if this is a good deal or not. First, I'm checking what am I using it for? Is the area in support of that? I'm checking what strategy is going to be the best. Am I wholesaling this? Am I flipping it, or am I buying and holding it? Or is it going to be a best candidate for creative financing?
Speaker 1:And, lastly, I want to see the potential. What can I do with this property in the future? Not just now, not just the house that is on it, but what are the things that I can do with? It Is even the house that is on it right now. Can I convert it? Maybe it's two bedroom, two bath? Can I convert it to three bedroom, two bath? Can I convert it to four bedroom, three bath? Is there any room for me to increase my profitability on this house? So look for potential, the things that this house can actually bring for you.
Speaker 1:So, ibrahim, I've been going on and on for like 20 minutes now. Are you there, ibrahim? Can you hear me? Yeah, I can hear you. All right, I can hear you. Now it looks like the picture kind of froze. Okay, now it's all good now. So what I'm saying is a lot of people, when they look at property they want to buy, they just look at what they are seeing in front of them. They don't visualize, they don't look at what might be the possibility in the future on this property. What are the other things aside from checking the use? Look at the strategies that you can formulate from it and the potential. What are the other things? What are the things that you actually let me put it that way you look for when you are buying investment property?
Speaker 2:Yes, thank you for that question and, by the way, you have given us a lot of information, very valuable ones, and I'm pretty sure everyone will be enjoying this and we appreciate you for that. So that's a great question. You asked me about what am I looking for personally? So, of course, you know I'm a real estate broker and also a managing broker at IBROTO, so I've been into this. So I kind of have like a list or I should say, a guided view of property, like when I go in. I'm not an inspector, but when I look at property I look at it holistically Because it's getting kind of tricky just because of or let me say, complicated, just because of the way the housing market is right now.
Speaker 2:The demand and supply it's kind of on the same, it's aligned. What I mean by that is we have we can call this seller market and you cannot call this buyer's market. It's like it's the same. It's just depends on the condition where the location and how beautiful the house is and all that, or how, if the house need a lot of work and all that, that will determine how much you can get from that particular property. So because of that, the price is still kind of high Like. It's still the way. There's no like like when in the buyer market it means the housing market it has less buyers and there are more property on the market. So it will change to buyer market. Now seller's market is when there are few houses on the market but there are more property on the market. So it will change to buyer's market. Now seller's market is when there are few houses on the market but there are a lot of buyers. That are seller's market. Well, this one is about the same, you know. In fact, some people will argue that there are more buyers than the properties out there, properties out there. So, anyway, what I'm saying is that the price has has been kind of steady or going up slightly. Not what we are expecting for it to really come, I mean what some people are speculating for, it probably come down.
Speaker 2:So the fact that it's in that range, it's tough for people when they approach a house and oh, this house is so priced and they'll be like why would this house to be so so priced? Just because the way you are looking at it, you are using maybe two years ago view or two years ago perspective towards that house at that particular time. We all know that during the COVID period, the interest rate went down and everything shot up, including groceries, real estate, everything went up. So let me go back to the main point. When I go to a house, or before I go there, I look at my comps and I don't just focus on comps, because comps is just going to guide you, to show you the range. However, the condition of the house, what you want to do with the property, the location, all that will determine if it's right for you.
Speaker 2:And the truth is that there's no like a price tag Like there's no like an exact price tag. It depends on the demand and supplies. What do I mean by that? When they crashed in 2008, when it happened, a lot of people are able to get property for less, like beautiful property for less, just because I mean somebody have to be willing to pay for your property for the kind of amount you are looking for before you can sell it. If nobody wants to pay that amount, you won't be able to sell it for that amount. So because of that, people have to lower their prices. And all that during the crash.
Speaker 2:So what am I saying here? I'm saying it is the value of what you get. I focus on that more than just capital, just the money that you pay. Paypal money is just like a paper, it's like a currency, okay. No, it's like current, electrical, current energy. As you said, it's like an energy. So you want to use that energy. You want to use it to get more power or more resources? Okay, if you use the energy right, you get a lot of resources. If you don't use it right, you can waste the energy, though you cannot kill the energy, but you can waste it because you can put it in the wrong place, okay. So what am I saying? I go in holistically, I look at what I'm going to do with that property. Even if I'm paying the exact price for that property, or I pay more than the listing price, guess what? It's still going to come back to your benefit if that property matches or works for the kind of strategy you are going for. Ahmed already bombarded us with the real gist, the real thing.
Speaker 2:You have to look for the critical aspect, which is look for whatever property you are trying to get, make sure it works for your strategy. I'm going to give you an example, which is a personal one, but before I go there, I want to say this If a property is sold to you for a dollar just $1, okay, and you have a strategy that fetch you $0, that you already see the strategy. You can only get $0 from this strategy, then I won't buy the property, even though it's a8. Because why would I waste $1 when the strategy that I'm trying to use will come back to be $0? It still doesn't make sense. But I would rather pay. If a property was $2 on the market, like the comps is telling me $2, I would rather pay $3. If my strategy is going to fetch me $7 or $8. At that point I won't care, because I mean, what's the point? If I'm going to get that property and because that house is in this kind of location that my strategy will get me $8, $9, $10, I don't care, I'm going to pay $4. In fact, I'm going to pay $4 for the house.
Speaker 2:Now, we're not telling you to go emotionally and just blindly and pay money, but what we are saying is that the demand and supplies you follow what is going on with demand and supplies. Okay, you see a house, beautiful, a lot of demand, a lot of people putting an offer and everything, and you have that resources. You've calculated this, you've looked at your strategy. You realize this house is going to work for your business. You realize it's going to be cash flowing and you know this property. It has a lot of potential. Don't hold back. If you have that resources, price this up accordingly. What I mean accordingly, it still means make sure you are able to get the property in a reasonable price. So if it takes you that you have to pay $5,000, $2,000 more just because you want to get that property, $10,000 more, yes, do it if it's going to work for you. Because if you don't do that, guess what?
Speaker 2:Some other people that realize that same potential, that know that this is going to get them you know way more than what they're going to spend on their monthly mortgage they will get a house. They say there's one real estate. What do I call her? In fact, I call her a real estate queen. Her name is Barbara. Barbara. She's in New York. Barbara, let me see her last name. Can you remember her last name?
Speaker 2:she said our main strategy is overpaying for property. But it's like she'll buy one, she'll pay for more. She'll buy another one in the same, she'll pay for more, she'll buy another one In the same. She'll try to target like a city. You buy more, you pay a little more. Now you get that one. The next one that shows up, you pay a little more. Again, you get that one.
Speaker 2:Before you know it, you are resetting the price of that neighborhood or that city, because we don't just sell a house by a single like. You cannot just isolate your property and say, hey, I want to sell it for 500K when in your neighborhood it is sold for 300,000 or 250,000. You cannot just do that. The house, I'm sorry, 15,000, 18,000, but it won't be so significant like, so huge, like 100, 200, 300. No, so what am I saying here? I'm saying what your strategy, what your strategy will get you. The end result matters more than just focusing on the paper. You will get to look at the value, the entire value, of what you are trying to get.
Speaker 2:Let me give you an example of my own personal experience. I wanted to buy a property and I used a DSCR loan and this property with DSCR. Of course, they use the debt service coverage ratio, which is the rent in that area. That's what they use. So before we even choose the property, they've already told me okay, I'm going to pay 50% Initially. They told me 50% down and all that already told me okay, I'm going to pay 50% Initially. They told me 50% down and all that. Later on, the lender told me it's going to be 20% because they changed it Recently. They just changed their policy. It used to be 15% because I already think my credit was maybe $730,000 or something Anyway. So I kept in mind that it's going to be 20%. However, the rent in the area, the house that I like, the location that I like, the rent in that area the average was $1,550, according to the appraisal. When I check it on, like Retometer and other resources, it was like $1,620 something, but the appraisal came back and says $1,620 something. But the appraisal came back and said it's $1,550. Now, because of that, I had to pay from 20%. They told me I have to do 30%. I put the 30%. I mean, sorry, from 20, they said 25. I changed it to 25. I said, yeah, that's fine. Now they told me, with the 25,. The problem is when they add the taxes and everything to it, it's still not working. I have to make it 30%. So I agreed I'll make it 30%. Now they told me again with this 30% it's still $90 more every month. So because of that I have to buy the rate. Same thing. I agreed again buy the rate. Same thing. I agreed again for the rate. Okay, I end up paying more out of pocket than what I was expected to or what I was expecting to pay. Okay, To the point.
Speaker 2:The lender called me and said no, we're talking. He said why do you still want to buy this house? Because this house the rent is about $1,550, but let's say you are lucky $1,750. But the mortgage is already $1,600. Why do you still want to buy it? I told him yeah, but it's because the strategy I'm trying to use this house for I will get more than that. He said what is that? He said are you trying to do this or Airbnb? I said it's part of it, but I'm going to try to leverage this house for as much as I can so I can get the most out of it. I said I might do me time. But I told him yeah, I'm going to do Airbnb with it. I said I might do mid-term, but I told them, yeah, I'm going to do Airbnb with it. So all right.
Speaker 2:So, long story short, I bought the property. The property I use it for Airbnb Now into mid-term, if I'm more than Airbnb. I'm doing mid-term, more now than Airbnb. This property is fetching me $ 5,500 monthly. Then if I minus the 1,006 something and the rent I mean the internet, the this, the that honestly I realized that I'm getting about 3,000 something.
Speaker 2:It depends on the usage of the electricity. Sometimes I get 33,292. Sometimes $3,129. It depends on the electricity and gas, because I kept it. However, sometimes they only use $2.99. Sometimes they use $3.34. Maybe they have a lot of kids come in and all that. So that's the only fluctuation, but the monthly payments already set the mortgages I know the price. The internet I know the price. The security camera I know the price. The only thing that I'm not sure, even though I already capped it, the worst case scenario is $600. But they are. Sometimes they only use fuel, just fuel electricity, fuel, water, fuel, fuel, gas, and it's cheaper for me.
Speaker 2:So my point is you can make the best out of any situation If you educate yourself, know what you look for and you will be fine, know what you look for and you will be fine. So the fact that he was crazy and he told me I had to pay huge amount of money I still went up and do it because when I look at my cash on cash return, I'm still safe and I'm making money from this property and this property is appreciating and I'm good. So don't be scared. I made already mentioned it. He already told us all the real factors, all the things you have to look at, the things you have to consider before you go for a deal. Make sure it's going to work for the strategy that you are going for. If you want to go to Section 8, that's fine. As long as that property works for Section 8, you are great, you are doing well. Just go for it. If it's not going to work for Section 8, think about another strategy that will work for you that you have the time to explore. And if that strategy is going to work for that strategy, give it a shot. You can.
Speaker 2:So they say that a step of 100 miles, I mean, or a journey of 100 miles. It starts with a step. You cannot know everything like. You just have to get started while you are doing it you start realizing or learning new stuff. So so nobody knows the beginning to the end. It's always cloudy from the beginning. You just have to get started.
Speaker 2:How do you know it's a good deal for me? I don't know if I should, because I'm a broker. It's kind of easier for me. When I just see the property like when I look at the street I look at the price tag on the house, I look at the potential. When I look at the price tag on the house, I look at the potential. When I look at going to the house up and down or, if it's bungalow, go around the house, I can tell this house it's a good deal or not. But what I'm saying is for you that you are not a broker. How do you identify if it's a good deal?
Speaker 2:First of all, I want you to keep in mind that a seller that is trying to sell his house or her house on the MLS they don't go too far away from the reality. Yeah, and they may see that. But in most cases, if a seller should put a house for 1,000, no, sorry, 200,000, for example, it means that seller has seen, or the agent has seen, maybe also $185,000, $180,000, $220,000 in that area. It might be, worst case scenario, $20,000 off. But if your strategy is going to fetch you a lot of money in that area and you try to negotiate down the price a little bit, the seller says no and you know you're going to make money in that area. Trust me, I will ignore that $20,000. Because I've made an attempt anyway to negotiate, or I negotiated, the seller counter my offer and said no, I want $200,000. And you do your math and it's still a lot of cash flow. Okay, I'm going to take it. But here's the thing I'm not going to guarantee any money. So it means I'm going to take that $200,000, but I'm not going to guarantee any money.
Speaker 2:So when the appraiser comes back, and if the appraiser says this house is $, house is 180, I'm going to tell the seller you see, I told you 180 and that's all I have. And the seller now would decide if he or she wants to move forward and sell the house to you or not. So at that point it's not like it's guaranteed that you're going to get the house. But you are in better shape than someone who is scared just because he or she believes it's 180. And that person did not fight to get the house because you're already on contract. It takes like one or two weeks before the appraiser comes out, sometimes three weeks.
Speaker 2:Now the satellite already kind of attached you emotionally like I got to sell this, I got, I gotta sell this. The pressure is there. Now you also, you are waiting to see what's gonna happen. At that point you have more leverage because now you can say okay, now it's 180. Do you mind if I just do 180 and just everybody go their way? They might say, okay, now you can come to the middle and say, okay, what about 185? I can give you 5,000 and that's all I have. So, and you'll know that you've already calculated 200,000. You've used 200,000 to do your math and it is working for you. Now the seller is forced to go down by 15,000. That means it's 100% going to even work better for you, because with 200,000, you are good.
Speaker 2:Now you can go back to 185. Now it's also, if it's a asset or you might be lucky, you might even take the 180. Look at that. You've taken extra steps that other people would have been scared and like it should be 180. I'm not buying the house.
Speaker 2:No, you cannot say that because, as long as you don't guarantee anything, when you offer a price for a house and you are getting a mortgage, the appraiser is going to appraise the house. Wherever the appraiser comes back to be, you can go back to the seller and say hey, I'm sorry, it's 180. I don't have extra. I didn't guarantee anything. So I've been using that strategy and it's working.
Speaker 2:But if there have been, or in the future would there be, a situation where the appraiser comes back a little low and if you guarantee to pay some amount, you have to pay the amount. Let's say, the house is $200,000. You know the house is $190,000. You say you want to pay $200,000 and you guarantee $5,000. If the appraiser comes back to be $190,000, you have to pay $5,000 because you guarantee $5,000. And the seller will get $195,000. That's it. So the seller is still short of $5,000, but at least they pick you because you make them feel like, okay, the appraiser does not come up to the $200,000. They're going to get some. Because of that, they will pick you first.
Speaker 2:And this is a negotiation strategy where, when things are tough, you can explore that because at the end of the day, it's going to work for you if, even if you pay that amount. So why don't you do that? To be to get extra edge towards other people. And in a good scenario you won't even pay anything. The appraiser may come back to be $200,000 and that's it and you get the house. And, by the way, because you pay $10,000 more doesn't mean you lose money, because now the next person who wants to sell in that neighborhood will start from $200,000. After that person eventually or successfully sold their property, the next one they get will start from that price or that person's thoughts. And when it comes to you in the future, maybe the next 20 years, you're going to benefit from that again, because now you follow the ladder Like you're just going to start from the last person. That's it.
Speaker 2:So I don't want us to get stuck too much on prices. Look at what's going to work for you. Look at the strategy. Is the strategy good for you? Yes, okay, if you don't have too much extra money in your pocket, you may.
Speaker 2:In some situation you may accept what the seller is asking for. All you have to do don't guarantee anything, just accept what they're asking for. Don't guarantee anything from your. Accept what they're asking for. Don't guarantee anything from your pocket. If it comes back low, then you pay for whatever it is. That's it.
Speaker 2:So, ahmed, I think you already hammered on all the factors. I'm just trying to add to it and just let people know that don't be scared when you see a price tag, as long as it's working for you. If the situation, the environment, the demand and supply is okay, negotiate as far as you can. But if the seller insisted, can't tell you that they want this price and you know, even with that price you are good, go for it. If it's in a good location, has potential, go for it, because in the future you might regret that, oh, I should have get this house because of $10,000, because of $5,000, because of you know, just go for it.
Speaker 2:I mean, what do you have to say about you know, some situation it's just hard to find the because maybe in that area it's hard. The last sale in that area has been like four years, two years ago, and it's just hard to find some comps and everything. I believe we'll still come back to all the factors we already mentioned, but sometimes it's just hard to really see the exact price just because of the way things are. So in that situation, if you want to buy a house. What do you do?
Speaker 1:Sorry, I left my saving email. So thank you for blessing us with all these great examples that you gave. I mean the deal you just explained to us you did last. It's no brainer, and when people see, typically when people don't understand things, they tend to run away because our brain is programmed to protect us. So when we see something that is new or we don't understand, we just tend to, you know, stay away from that thing or even target a name that is bad, just so because we don't understand it. So we don't want anybody else to go near it.
Speaker 1:So my belief with that still comes back to point number one what you are going to be using it for. Is it working for you? Is it going to work for you? So you can testify to this, Ibrahim, there is a deal that I did last year and you and I spent a lengthy time looking for comps, which is very difficult to find in that area, because a lot of the house that was sold in that area is their off-market deals, and we all know that off-market deals are not usually the regular price of the house, which later affects what the ARV of the house is supposed to be, but at the end of the day what I'm using the house for. Is it profitable? Yes, absolutely, it is profitable. I'm getting more than $1,000 every month from just one single deal. So that is to tell you that.
Speaker 1:Point number one supersede all of it. What are you going to be using it for? Is this still going to be cash flowing for you? What are you going to be using it for? Is this still going to be cash flowing for you? Is this still going to be working for you? If it is, then look at the price. Is the price something that's going to work for you? If your answer is yes to those two things and maybe you do an appraiser An appraiser is not too far.
Speaker 1:I think we are fighting for like 10,000. Then, if you remember correctly, we are fighting for just like 10,000. But what I'm trying to point out is 10,000 is not going to kill anything. I've made more than 10,000 on that house since we closed on it. So 10,000 is not going to kill the deal.
Speaker 1:And I recently reappraised the house and it appraised for more about 175. Just a few months back, it was appraised for 145. Now it's appraised for 175. So what am I saying is, if I back out back then, because it doesn't appraise to what I want. Who is at loss? It's me. The cash flow that is coming in now will not be coming in, but I saw the future with the house. I know what is the potential of this house, what this house can bring for me. Literally all the what's it called August months has been booked out right now as we speak. And it's not just booked out, it's like pretty high. I didn't even expect anyone to book it at that price because I want to scare people away. So I inflicted the price, I doubled the price, and someone still come to book that property because of the location, because it was situated at the right location where people need housing at. So what am I saying is, even if you find yourself at the crossroad of the house, you don't have the good count to justify what you see, what the house can bring in, Don't quit. If you have 100%, not 99%, not 90%, not 80%, you are 100% sure that this house is going to cash flow positive and cash flow enough to satisfy my needs, to satisfy my return on investment. If this is going to give you that, I will still go for it, Because sometimes appraisers are human.
Speaker 1:They can make a mistake. They can make an error. So don't clinch too much on appraiser, especially when you are starting up. When you are starting up, what should be your priority is cash flow. I mean, if you already make money in one industry maybe you already own your business or you are like a physician or stuff like that and you just want one somewhere to put that money, to store that money, Maybe you can buy a house that you don't need too much cash flow because you have enough cash flow coming in already. But in a situation where you are starting up, you are trying to invest and stuff like that, don't clinch too much on the value of the property. What you should be clinching on is the cash flow.
Speaker 1:You and I worked a property a few weeks back and I literally told the guy like bro, buy this more than the listed price Because that is what I will do. And the appraiser came in today just before we step on here, Ibrahim, and the price is just exactly how much we offer and we end up getting the how. So if we kind of be like we want to offer the same price or we get too scared, we don't see the potential and this house works for mid-term renting, short-term renting, long-listing, Section 8, even Section 8. So that is to tell you that you have to see more than the price. You have to look more than the price. You have to look more than the price. It is good to buy a discounted house. That is not agreeable. It's not something that I will look for discount as well Anytime I'm doing these books. You need to see the potential to perceive the price. In a nutshell, what you can actually the return you can get to perceive the price. So if the return is huge, I will do the deal over price at any time. So that is one.
Speaker 1:Another thing I want to add is this might be a little off topic, but the people that the key to wealth building is owning assets. The key to wealth building is owning assets. The key to wealth building is owning assets. If you don't own anything, you don't have anything. Honestly, you are not wealthy, regardless of how much you are making right now. You are not Because think about it this way People that own things thrive during COVID.
Speaker 1:Why? Because there's an influx of money from the government into the system and when they inject that money, guess where the money is coming from. Everybody pay their house, rent, Everybody go to shopping at the store. So the people that own business, that own real assets, that is where the money is coming to Setswood, the money will end up in their hand. So if you don't own anything, you own nothing. So when you don't do analysis, paralysis too much, that you overlook the potential of the house, what the return on your investment can be, and even if it is not super great right now, think long term. That is what Do the Talk stands for. Think long term in such a way that you will be looking like a genius in the next five, 10 years. Ibrahim, we don't have too much questions. Our audience doesn't have any questions today. Any final words for our audience or any final words?
Speaker 2:Yeah, I just want to thank our audience. I mean, today we have on and off audience, but it's okay. We appreciate everyone. We want to make sure you are still following us. Please share, subscribe to our channel. We've been appreciating you guys. I mean, the channel is growing gradually. We want it. We can all do better. We can you guys. You have that magic wand. You can make it miraculously and I know I can just, you know bump up, as you know, in a short period of time. So I know your support is what we are seeking right now. We want you guys to go there, subscribe, share with your friends, your family, your co-worker, your neighbor.
Speaker 2:Everyone needs to be educated and informed concerning real estate investment. We are dedicated to doing this and we guarantee every Friday we'll come around and educate you guys anything concerning real estate. We are passionate about this and we are happy to keep coming every Friday. All we need from you guys is to keep motivating us. We don't need money, we just need you subscribing, liking, you call this Some constructive comments, constructive comments and ask your questions and we'll try our best to answer you as soon as possible. And, by the way, so, ahmed, since we don't have any questions. How can our audience reach out to you? You know if they want to reach out?
Speaker 1:Yes, absolutely. You can reach me on Instagram, Fisher Hamed Lawal, and you can reach me on 317-689-7075. Quickly, I want to mention something that you say All we care about on this podcast is education and information. And guess what? Knowledge is the only thing that can give you hedge in life. If you don't know, you don't know. So that is what we do on this podcast. So, please, please, share this content and subscribe to our YouTube channel. Thank you, ibrahim, for pointing that out. That is actually our motto. That is what we stand for. So, saying it out loud, even, remind me of our value, right? So if people want to reach out to you, ibrahim, as a broker, as a real estate agent, as a dominant real estate agent I'm now a broker in indiana place how can people reach out to you?
Speaker 2:oh yeah, you can. They can call me 317-728-0213. Go to iB-Rotors on Instagram. Ib-rotors on WhatsApp. Just, you know, direct message to me and I will reply you as soon as possible. Thank you so much.
Speaker 1:So that concludes today's episode. Please, guys, if you are just joining, go back and watch this episode. Go back and watch last week episode as well and go back and watch I believe it's around episode 43 or 42 where we talk about taxes. These are fire episodes that you don't want to miss If you want to invest in real estate. These are basic that you need to understand to be able to feel comfortable going into real estate. So, without further ado, we'll see you, guys, next week. Thank you for joining, thank you.