All right, it's another Friday. Welcome guys to Do the Talk podcast. This is a real estate podcast. We talk about investing in real estate, we educate and we make sure that we show up here every Friday to do this live. I am your host. Hamed Ibrahim is going to be my host today. Like we always say, this is not a get rich quick scheme. You have to work it before it actually works for you. So if you're ready to learn how to scale up, this is the show to do that. Ibrahim, how are you doing today?
Speaker 2:I am doing well. Thank you for asking. This is another Friday. You said that, and I'm kind of excited because this topic is it's always in the mind of everyone.
Speaker 2:Okay, but some people don't know what to talk to about this, because it's one thing to have one property and you get stuck, or two or three and you get stuck and you don't know how to move skill up and all that. So today is going to be an interesting topic. Just because we are here to break it down, this deteriorates, and now you can get there. Of course, we want you to put all the knowledge that you're going to get today, put it in action. It doesn't make any sense or it's not going to benefit you or I or us I do the talk If we dish out all this knowledge and you only keep it in your closet or your drawer. We don't want that. We really want you to put in the action, just as we are doing so today.
Speaker 2:The topic is ways to scale your real estate portfolio. It is a big topic because, as I said, it comprises of a lot of factors, a lot of strategies, a lot of ways to get it done, and I'm so excited we have someone here, of course, my host is very knowledgeable about this. He's going to break it down to us, step by step, on how to really scale up. So, ahmed, we can't wait to hear from you. What do people need to do? What are the ways to scale up in real estate investment?
Speaker 1:Thank you, yeah, ibrahim, thank you for even showing up today. It's not easy. The hardest thing to do in this world is to show up. Once you do that, the other things will follow. Back to the topic.
Speaker 1:Scaling real estate portfolio is just like scaling any other businesses. And what do I mean by scaling? How Scaling it means you buy the first property and now you are thinking of buying the second one. Then everything seems daunting. You are not clear on where to go, you are not sure what to do and you just get stuck on that first property. You can't move past it.
Speaker 1:This episode is for you because we are going to be discussing ways, how you can get past those hurdles, how you can get past those obstacles. So the number one thing is a lot of people get stuck when it comes to finances. I have a client of mine that was asking me a few weeks back, like I just buy this property, how can I buy the next one? He started thinking about it early, which is good. However, he doesn't know how, so I asked the right questions. This episode is going to be focused on the things that I discussed with him, and scaling is quite tough. Well, if you work with the people that are knowledgeable. It is easy. Number one thing that I see that people get stuck on is finance. How can I get money from my previous houses? How can I go past this? What will be taxes and all that? So the easy way around financing in, because you can use all these government loans to buy the first one, but it doesn't work on the second one. It does work, but now you will need a huge down payment, which makes a significant difference. But there's a way around it. We talked about creative financing on this podcast last year. If you don't know what that is, I will advise that you go back to that episode, but I'm going to discuss a little bit about it.
Speaker 1:Creative financing is how you can buy anything, not just real estate, how you can buy anything without using the 3C. The first one is cash, your credit share, and you don't need cash credit share. What's the other? Credit, yeah, credit. Thank you, brian. So credit is the third one. So where you don't need those three Cs. In some instances you might need one or the other, but the idea is for you to be able to go around normal banking, be able to negotiate your way with the seller in such a way that you guys can work something out that you don't need to go to bank to get money to finance that deal. So creative finance is divided into so many ways. I can only mention a few because of our time, just so we can move quickly.
Speaker 1:The most popular one is seller financing. Ibrahim have a house. I like the house. I want to purchase it. Ibrahim want to sell it. How can we both of us reach an agreement whereby it makes sense to Ibrahim and me? I don't have to go to bank to actually buy that house from Ibrahim. That is what seller financing is. So I can easily go to Ibrahim and say Mr Ibrahim, I want to buy your house. But what if, instead of me going to the bank and get the loan to just come and pay off your loan or to buy this house from you, how about I started making payments, I make a down payment just to commit to this. Then I started making monthly payments, weekly payments, towards this loan and pay it down directly to you, and Ibrahim can decide to charge me interest. He can decide to do it interest free. That is Ibrahim's decision. But I'm using Ibrahim as a seller here. He has the power to decide. If you want to go that route or not.
Speaker 1:One good thing about creative financing is you can actually pay any price. This company is worth a million dollars. You can actually pay $2 million using creative financing and still be okay. Because, come to think about it, if you buy a house of $200,000, by the time you pay everything off in 30 years with the bank, you're going to be paying around $300,000, $400,000. Right, so what if I give Ibrahim $350,000 now, instead of the value of the house, which is $200,000, and he gives me 10 years' balance to pay? Balance is when I have to pay it off Right Within that 10 years. In my own calculation, I already foresaw that this house is going to be worth more than $350,000. And even if not, I'm cash flowing on that house the entire time. You see how it can work for Ibrahim, because now he can sell the house more than it works. And it works for me, because now I can cash flow from that house without no stress, without going through bank, without having to bring cash, without having to have a two-year working experience and without having a credit score. So that is the beauty of creative financing.
Speaker 1:Another one is subject to where I have to take over the existing mortgage. This is not absorption. Assumption is different from subject to. So subject to is I'm taking over the loan, the deed comes to me and I started making payments that you already arranged with the bank. I keep making that payment and that is how simple it is. People complicate it. People have a lot of questions. I understand it sounds too good to be true, but it does exist and people do it every day. I mean people close subject to transaction every day. So that is another one.
Speaker 1:Another one is lease option. You know that is another creative way to buy a house. The only downside for this option is the deed doesn't transfer to your name until you actually pay that house off, or you actually maybe you finally go get a loan and pay it off. So this option is where you, the owner, gets a chunk of that payment from you, typically around $10,000 to $15,000. Get a chunk of damp payments from you, typically around 10,000 to 15,000. Then you started making monthly payments towards that house. Some of the monthly payment goes towards your principal, while the rest go to the normal rent and at some point you will have to go get a loan and just buy a buy out the seller. So these are other ways you can get around the financing constraint when it comes to scaling up. So the next one is going to be partnership. So I just discussed how financing is a problem in scaling and how you can go around financing. Now the next one is going to be partnership.
Speaker 1:A lot of people don't want to do this, especially in our community that we serve, because we always see the problem in partnership. We don't always see the good side of it. Ibrahim and I have been a partner on this show for a year now and we are still doing it. Believe it or not, we are partners, right? So if I'm not here, the show still continues, because Ibrahim will show up. If Ibrahim is not here, we have been managing to be here every single time.
Speaker 1:But what I'm trying to point out is having a partner has enormous benefit. So let's say you have the knowledge and you have the time, but you don't have the money. If you can find yourself someone that has money, wants to invest in real estate as well, but they don't have the knowledge or they don't have the time Both of you or it can be three or four people Now you can come together, partner on a deal, make some money together, move on to another one and started building your portfolio that way. This is what edge funds do. This is what all these huge real estate company black rock and all that this is what they do. They gather money from other people. We can do it among ourselves as well. So partnership is very, very huge. It is powerful, especially if you can structure it the right way. If you structure it the right way, you have the right paperwork, you have everything going, even if someone decides to walk away, you guys already have everything planned. But guess what? If everything works fine now, with your knowledge and time, you can get into owning a property, owning a house without having the money. And if you continue that way, you can end up having three, four, five houses and started making huge cash flow coming in for you monthly, just by providing the time and the knowledge that you have. And the other guy that have a very good job, doesn't have the time, doesn't have the knowledge, now have a house because both of you can partner. So you can scale up your portfolio by partnering with anyone that have what you lack. It's as simple as that. So, by finding someone that you guys share the same goal, the same drive, the same energy. You can build a real estate empire, real estate portfolio by doing that. So we talk about how you can get around the financing and we've talked about partnership.
Speaker 1:The next one is upcoming market investing in upcoming markets. This will require a lot of patience, but if you can do it, it is very rewarding. Let me explain what I mean If you invest in an upcoming market. What I mean by market. Let's take Danvi for an example. Danvi is an upcoming market. It is very close to Indy. It is very close to some good areas like Avon, brasburg, bloomfield, on the west side of Indy. So it is very strategically there right now and it's still qualifying for USDA. If you are looking for what I mean by USDA, you can go back and watch some of our episodes. We explain USDA so many times.
Speaker 1:But what I'm saying is, if you can buy a house in Danville today, you can be rest assured that in the next few years it's going to appreciate significantly, because not so many people are moving there right now, but some people are moving there. But in the next few years, all these other areas that I've mentioned that Danville is close to are going to get saturated and people are going to be moving out and towards that area and that's we increase the value of the house that you buy 100,000 now. In the next five, 10 years it's going to be three times or five times more than that and with that now you can refinance and take that money out and keep investing or keep buying in upcoming market. That is one example. Another example of upcoming markets is finding a distressed community, distressed area where other investors are moving in, buy a property there. Because when all of you guys I mean the investors when you guys all renovated the houses in that area, guess what will happen? The value of houses in that area will increase. The value of the quality of people in that area will change because it's no longer distressed. It is now a really nice neighborhood to live in and the quality of people determine what neighborhoods look like. I'll save it is and all that. So there's so many ways you can go into upcoming markets and there are some financing that is even available for you. Part of it is using ad money, Part of it is USDA that I mentioned earlier. So this is another way you can get your feet inside the real estate and scale up your portfolio. So upcoming markets is a very good one.
Speaker 1:Another one that we always, always scream about on this podcast is house hacking. When you house hack, it is just you have like, oh, when they always say the ceiling is the limit, you have no limits. You can keep building and building on that as much as long as you want. Because what do I mean by house hacking? House hacking is where you buy multi-units. It can be over. It can be small multi, it can be larger multi and you live in one unit. If you want to use regular financing, like FHA conventional, it has to be below five units, which is what's called a small multifamily, which is what is categorized as a small multifamily, small multifamily, which is what is categorized for as a small multifamily.
Speaker 1:But if you have the breadth, the capacity to go and get into commercial financing arena, go for it. You have a good credit score, you have enough dampenments, you know how to negotiate, because when you cross that boundary to commercial real estate, you are working with service. You are working with people that know what they are doing. They've been investing in real estate for a long time. Probably by now a lot of them are not looking for cash flow again. They are well stabilized already. They already have multiple streams of income coming for them. So they will be looking for a way to save on taxes, how they are not going to pay capital gain right now. So a lot of time. They will negotiate with you so that you can get into that deal with seller financing or something, an arrangement of that sort where you can get into that without even involving the bank at all.
Speaker 1:So what else is happening is you live in one of those units. It is multiple units. You live in one of those units and you rent out the rest, but it is your primary resident so you have some benefits on it, like homestead tax. Ibrahim can explain further on that. I know what it is, but it is not my arena by enemy. If you live in a house, it is your prior resident and you own that property, you can claim homestead tax on that property. You don't know what that means until you move out of that property. That is when you're going to know like, hey, I've been saving a whole lot of money this time because your taxes is going to skyrocket once you move out of the house, but living in it is saving you money. Now, if it's a primary resident and you are also making money. You are living free in your house. I would say expense takes 30% of everybody's paycheck. If you can save that 30%, that means you can scale up fast. You can buy multiple properties fast, as quickly as you want. That is what we are discussing today. That is the power that house hacking has Now.
Speaker 1:Finally, this final one is going to be on the tax side. So let's say you have a property that is worth $500,000 and the loan that you have on it is let's use $200,000 for an example. So you have a loan of $200,000, the house is valued at $500,000. Now this last one is called 1031 exchange. You can sell that your house of 500,000. You pay off the load of 200,000. Now you have a gain of 300,000. Instead of you paying capital gain on that 300,000, you can use that same proceed to get into something of equal value or standard or higher. What do I mean by that? You have to buy a house that is within the range of that 500,000 that you just sold, or something that is more. With 300,000, that means you can buy a property that is worth 1.5 million, because 300,000 is going to be 20% of 1.5 million, right I believe so. Yes, so now you can buy a property that is worth 1.5 million with 300,000, 20% down right. You see the power of equity. So this doesn't just happen. You must have bought that property for a long time to have such a huge equity in it. But that is what we are encouraging on Do the Talk podcast Build wealth by real estate.
Speaker 1:Buy it, stabilize it, hold it. At some point you can take your equity and use it to buy a bigger property. This is how the rich get rich. But the poor think about buying shoe, bag, things like that, things that doesn't really have, because we want to look good now. But what about the future? What about? Because we've seen it so many times things have gone all skyrocketed out of the roof. For you to be ahead of those things, you really need to plan now. What we are preaching is how to scale your portfolio. But really, real estate solve everybody's problem if you are patient enough. Really, real estate solves everybody's problem if you are patient enough. We always say that this is not something that will make you rich tomorrow. You have to be patient, you have to be ready, you have to be determined, because we are going to run into challenges as well. So I've discussed five things, or five ways you can scale your real estate portfolio. The number one is leverage need creative financing. Number two is partnership. Number three is investing in upcoming markets. Number four is house hacking. Number five is using the tax deduction call 1031-SG. Tax strategy call 1031-SG to buy a bigger property.
Speaker 1:Now, ibrahim, I know this is a very dear topic to you as well and our audience actually tuned in today. Thank you, guys. Please make sure you drop your comments If you have any questions. This is why we are doing this live. Drop it in the chat box and we are going to actually answer your question live and direct. We could have recorded this, but we used to do this live. Now. These are not the only strategies you can use to scale up your real estate portfolio. There are so many other ones. You just need to stay glued to real estate. Do the thought podcast. We discuss this every Friday. This is what we do, so you need to know that we are not playing. We are not keeping all this information to ourselves. It is something we've done and we've seen the result. Ibrahim, what are the other ways that you think, yes, good, go ahead.
Speaker 2:Okay, thank you, sorry for not letting you to land before I picked it up, sorry. So, folks, I want to go back to the homestead that you mentioned because it is very important. I mean, I'm sure some of our audience already they are aware of it, but it is a big task cut so. So I feel like it won't be a bad idea to go over it again, just like you advised. So homestead is like a tax break that the government gives the residents in that state or in that city, so it's said. It's everywhere in the US. So it's a way to kind of decrease the amount that you pay on taxes just because you live there, like an incentive. But when you use that property for investment, then the tax becomes commercial, like a regular tax, so it will double technically. So homestead is a big one. You want to make sure you get it, if you. And again, the good thing is the way they kind of systemize homestead now, where if you buy a home today, automatically the title company will file homestead for you, but they would like you to verify it just in case. I mean, nobody's perfect, the system is not perfect, so there might be an error or anything, but they will file it for you. That way you can get your homestead. Now for folks that have two properties now the homestead would drop on the other property, so that other property, the taxes will go up. For some people they might not notice it right away, just because in Indiana we are taxed in areas. So the tax for this year I mean the money they collected, I think April. Around April they collected some money we made that was for last year, so the one we're going to pay next year it will be for this year. So that's how it is in Indy. So you want to make sure you have your homestead. So for some people they don't know. Just because they bought one home, now they bought the second home and the homestead takes a while to kick in. They bought one home, now they bought the second home and the homestead takes a while to kick in. And so you might. When your tax letter comes in it might look so huge just because you might not be expecting that search. Because each person can only get one homestead each family. So when you are married you and your spouse can only get one homestead. Of course, if you are not married everyone is living separately then you can get your partner can one homestead. Of course, if you are not married everyone is living separately then you can get your partner can get homestead. So, by the way, make sure you get a homestead. It's good for you, it's going to help lower your taxes and at the same time it will make you scale up faster, just because you save about average of 500 to 1000 something every month.
Speaker 2:Now let's I digress. Let me go back to the main. I shouldn't say main. It's part of what we are talking about. Even the homestead is part of it. So I should go to all the factors that you can leverage on so you can scale up fast.
Speaker 2:One of it I'm not trying to make Ahmed feel special or flatter Ahmed, but that's the truth you need to have a property manager. I said that for a reason because, let's say, you have a business okay and you are not making sufficient amount of money. You don't know how to get more money, okay, you don't know what strategy to do, and this and that, and you are still doing that business and you are taking a loss all the time. Technically, your business will not grow fast or your business will be slowing down just because you are losing money. Let's assume you are still the tenant is's. Assume you are still the tenant is paying and you are still getting some money. You may not have enough leverage just because you are getting the bare minimum Nobody wants to do a business and you are getting just bare minimum. But when you know that you don't have the time, you don't know the strategy, you don't know the ways to get more money, not to even talk about if you have a problem with your tenant maybe they're not paying or whatever that's. Those are like another level of challenges, but I'm talking about the basic. You don't have time, you don't know what strategy to use.
Speaker 2:You need to reach out to a property manager that knows how to leverage all corners of real estate investment, knows how to leverage all corners of real estate investment. That way you can get a lot of money and the money you are getting every month, you can easily save them, and maybe for a few. I mean, depending on how many properties you have and if you actually take action. Depending on if you take action and follow my advice tonight with the timing out, quickly determine how quickly you'll get there. But if you have a lot of property, like maybe three or two, and you work with a property manager that knows how to fetch you more cash flow. Now you have a lot of money to save monthly versus when you were doing it by yourself and you are getting their minimum. When you do that for some years, okay, depending on how aggressive you are, you'll be able to buy more property. And, by the way, when you are working with a property manager as well, now you build a relationship with that person. If that person comes across a deal, guess what he will be thinking about you. Okay, since this person has been a good client with me. This person has shared his aspiration, motivation, everything with me. I know this person will be able to do it. Let me call this person. So eventually you're building that network. That connection Also, you're getting more cash flow will make your business scale up faster.
Speaker 2:We always look at the commission. We pay to someone. You shouldn't care too much about that. When you can make money from the old transaction, like when you know this person will get you more money, then I won't worry too much about that. If you are getting to a business where you're not going to make money and somebody wants to charge you, that's different. I mean, I understand that totally fine. But when you are going to make more money because you don't know how to do that strategy or you're just hearing it on YouTube or whatever and you are not confident initiating that strategy, now you saw someone who is ready to do that strategy and show you how you can get more cash flow, it's better you work with that person so you can get to where you are going faster.
Speaker 2:Okay, so the first one is the homestead. I may have talked about it, but I can't explain, elaborate a little bit on it. The second one is get a property manager, because it will help you grow faster. Get a good one, by the way, so I can say I'm here Confidently. I can say I'm here to take care of you.
Speaker 2:Now, the third one I want to talk about is look at all your expenses. See what you are paying for necessary expenses. I should say that, for example, we pay for insurance. We pay for people, we pay for, um, people cutting the grass. We pay for people. I mean, if you are doing midterm, you might have a cleaner, you might have a. Or if you want to renovate, you might have it. I have to call a painter, you might have to call electrician and all those professions. They are charging you and these are expenses.
Speaker 2:Let's be clear. I'm not saying go and get a non-professional person and damage your house. That's not what I'm saying here. I'm saying that get a professional person and also try to make sure you are not overpaying for that service. You can get a professional person, but the fact that you, even if you have one single house, the fact that you are working with a property manager, you can say, hey, I want to do this electrical problem, or let's say, the wire is bad or socket outlet is not working, I want to do this outlet. The person charges a particular amount. You can actually tell that person if you can fix this out from this outlet for me. I know a property manager I can connect you with and technically, if you work in hand with that person, you might be their preferred electrician and for that reason I will appreciate it if you can give me some discount. What you have done is that you have let that person know that you are resourceful because you know someone that can fetch that person more deals or more jobs. Yes, so you are saying, just because you have one property, now you need to look for a way to make that person feel like, okay, even though it's just one job, allow to get them more jobs. Okay, get that person more job.
Speaker 2:If you have multiple properties, you join like kind of combine the services. Like, if you have three houses have issue, kind of make them, bundle them together and leverage on that and say, okay, I'm going to give you three deals If you can give me some discount this and that. So a good and a professional person who understands a good customer service, understands the value of building a relationship, he or she will give you a discount, just because that person sees that you actually you are trying to grow and you are trying to negotiate as much as possible so you can have more money in your pocket. Of course, that person wants money as well, but professionals, people that understand the value of relationship, will try to work with you just because they also want consistent, oriented job. Okay, so don't be scared to negotiate, don't be scared to explain your situation. Okay.
Speaker 2:And worst case scenario I mean not everybody will accept that the person will go and you look for another professional. There are tons of professionals out there, you just have to know where to go. And this scenario I'm painting right now. I'm painting the scenario of you approaching that person yourself, approaching that person yourself. How about this? If you cannot do it, use a property manager to let that property manager help you navigate and get someone to help you fix that issue for less. Moreover, I mean, that person has more knowledge than you anyway, like in that field, just because that's what he does. He knows how to get things done. Just because he has multiple property that he's managing Him himself. Probably he's also an investor. So you want to tap into people's knowledge, you want to benefit from your circle.
Speaker 2:Nobody will get rich independently, like without working with other people. It's not. You have to really get close to as you're providing value to them. Try to receive value to them. Try to receive value from them. Okay, and people will not have problem returning value to you if you give them value. Yeah, some of the issue or some of the complaint or the unfair treatment that we people talk about around, is that many people want to receive value but they are not ready to give out value. That is the unfair part of it. But if you are willing to give out value, people will see it and they would like to reciprocate. It's a normal human response. Okay, so there's nothing like something for nothing. You'll definitely have to give out something to get something back, and we are not even talking about money here.
Speaker 2:It can be as little as oh, I know somebody that can help you do this, I know someone that can guide you. Just, for example, share, do the top podcast to your friends, your family, your cousin, your neighbor, your coworker. That's one value alone because you are technically passing the channel where they can get real estate knowledge, where they can be independent in investing in real estate, where they can see how they can practically put in action of whatever they've learned. I mean, I've talked, I said that earlier. It's not about just learning. Learning you have to get into work and every Friday we always I'm out on this Put in the work, you're going to be financially independent. Putting the work, you will be financially successful. So, sharing duty, talk with them. It's one value that you are spending with your family, your friend, your coworker, because now you give them a channel where they can learn how to invest in real estate and eventually they will see that value. And, of course, if you need anything concerning real estate now, they know that you are passionate about real estate. You want them to be financially independent, so they would love to give back that same value or even more.
Speaker 2:Create in a greater. It lends to you, so it doesn't have to be money. When we say so, it doesn't have to be money. When we say, give value, it doesn't have to be money, it can be anything, okay. So how do you scale up? Be approachable, be friendly to people, be a resource to people, give out value to people. Know your limit. Know your limit.
Speaker 2:If you don't know how to make money with real estate, just because you are still learning or you have some challenges, just because of your other job is demanding, get a property manager that knows how to get you enough cash flow and that cash flow is what you will save. And when you save that money, of course, with time that will become enough for you to secure more property. Look inward, check your expenses. See how you can leverage on that. Look at, for example, if you have midterm rental. You have to cut the grass, you have plow the snow, you have to pour some salt or sand during the winter All those expenses. There are always somewhere you can get something a little more affordable. So try to go that route. Save money as much as you can. Some little damage like, let's say, a bulb, is bad, a little outlet is bad. If you have that knowledge, if you know how you can do it, dui, there's nothing wrong with that. Do your DUI, save money.
Speaker 2:Diy, sorry, diy, I don't know how to say DIY. Do your DIY, save money, and when you do that, that will become something. It might be little from the start, but when you do that consistently and you save this money, you can use that to scale up. I may not have touched on the big, big ones. I'm just trying to go over the little, little ones that we kind of overlook, or majority of people overlook, and it becomes something. A dollar can become a million. If you are consistent and you keep saving, saving, saving, it'll become big. So so what am I saying here? I'm saying try to keep your cost in a reasonable length. Do not overspend on your investment. The good news, though if you overspend on real estate real estate if you stay with it and you're consistent, you will still be fine. That's one goodness I'll share with you. However, we don't want you to overspend because we want you to scale up faster.
Speaker 2:Okay, let's say I may mention Denville. You want to buy a home in Denville. You find a home that is $300,000. You pay $300,000 or you negotiate less than $300,000. It's possible that if that person the seller is desperate the seller needs money fast. They can sell it for 280. Okay, now let's say somebody got it for 280.
Speaker 2:Now you got to Denville, but at that time the seller isn't desperate. There are a lot of people on that house and you have to get it for 302, 305, or even 300,000. If you look at the math, you've overpaid than the other guy. However, if you are patient and stay in that den view same den view with the other guy that paid $20,000 less you are going to be fine. The reason is because, in that same den view, when any of you want to sell your house, you guys have to use the data to sell. So the guy that bought it 280, he has to use whatever sales that is in that neighborhood to sell his property in the nearest future or whenever he or she is ready. The same thing with you. So, even if it's seven years later, if you want to sell, you're still going to use the data.
Speaker 2:Now you started from 300,000 because that's, I mean, the last transaction. That's 300,000. It means anybody that wants to sell after you will start from 300K. So technically you are just resetting the value of that neighborhood. So it's not really a loss. It's just that you pay a little more. You pay more but that's not considered a loss because when the fact that when you want to sell your property, you're not going to sell it for 280. No, you start from that same 300,000 and whatever the sales in that neighborhood, that's where you go.
Speaker 2:So what am I getting into? I'm saying, with real estate, if the situation calls for it, if that's what it is in that area, you do your numbers, your number is working. You are able to make money in that area, it is okay to pay the exact price. If you are not able to negotiate the price down, it is okay to pay the exact. In fact, it is okay to pay a little more more than the listing price if that's the situation. So real estate is great because it's tangible, it's always reliable in most cases. Okay. So don't be afraid to ask questions, get to know people, try to see how you can get better and better in your investment and, of course, when you associate yourself with people that are knowledgeable, you will get that information that you are striving to get.
Speaker 2:Ahmed, this is a kind of topic that people have to really put in the action and try to see.
Speaker 2:Oh, how can I?
Speaker 2:For example, the insurance I was told that after like three years, or in some cases, two years, it's good to shop around and see if there's any insurance out there that is cheaper. Okay, but you all you know that sometimes we are just busy and nobody wants to be calling around and all that. I kind of have the answer to that. Well, I don't know if you are okay to really mention that, but this is where I think the answer to that is to get a property money, someone that can do that for you, because, if you can know, if you don't have the time to do, someone that can do that for you, because if you don't have the time to do that, someone that can be like your second high out there making sure your investment is okay. So, ahmed, am I correct or do you think there's another angle that people maybe I'm over emphasizing on property management, because I feel like property, when you have something, the way you manage it it matters a lot, so go ahead yeah, thank you, ibrahim, for sharing all the knowledge.
Speaker 1:So, property manager people kind of don't know what it is. A lot of time I have to even tell my clients like I can do this for you, right, you don't have to do it, I can do it. That is part of the service that we provide, and they'll be like oh, you do that too. Yes, I do it, we do it. So what I? What you just mentioned is one of the numerous things that a property manager can do, and some, some people that actually understand what a property manager can do also think more of I can just let it go and that is it. No, the check just come to me. No, so there are some other things that the owner will have to be involved in. Let's say, I want to make a rehab in your house. Before I spend your money, I want to let you know, because I don't want to make that rehab. And you come back and you start questioning. Of course, it must be something that is obvious that we have to fix, but it is what it is when it comes to things like that. So, yeah, property manager helps a lot when it comes to making sure that you are saving money and you are making a lot of money too. They are your eyes and ears, where you are not. They take care of a lot of things that you have no clue about, but that is why they are there. That is why so that you can focus on something that matters Focus on finding deals. So that you can focus on Making sure that your investment is growing. You are not just stagnant, right, you are the brain, you are strategizing. When you finish all the planning and you already make the investment. That is where property manager come. It's just like financial advisor, financial counselor people that help you manage your money. So they do basically the same thing. When they see good thing happening out there, they call you to it right. So that is what property managers do as well.
Speaker 1:But one final point before we started answering the question. We kind of have a couple of questions in the chat today, which is a good thing. Thank you guys for dropping in. This really relates directly to the topic of today, which is how to scale up your real estate portfolio. Talk about what you want. You want 10 houses. Talk about it. Be open about it, even if you don't have a solid plan or how to get to that point. Now start talking about it, because you don't know If Ibrahim drove by a four-unit apartment that they want to sell today I don't know If I don't say I want to buy four units Ibrahim will not probably think about telling me oh, I drove past a property today.
Speaker 1:So publicly talk about your goals, publicly talk about what you want and be flexible. Don't be rigid. When you see something that don't 100% fit that box, you can play around those things and wiggle around it and make sure at the end of the day, you get to the point that you are getting to. So quickly talk about your goals. This is another way to scale up. So I always tell people oh, in my next year I want it to be four units, eight units or more. I keep an open mind. I want it to happen, but I still tell people this is what I want. I publicly discuss it and I am very flexible about it.
Speaker 1:So this is not something that a lot of people pay attention to, but it is a strategy to grow as well, because where you are talking about it, a lot of people that know how to get that thing around that place, because people want to be boastful. I told him that, so they will tell you. It's okay to be the dumbest in the room. It's actually okay when you are around people that are smart to you. Just keep quiet, tell them what they need, what you need, and a lot of time they will find you the solution. Ibrahim solved my problem a lot of time, but if I don't talk, if I don't say anything, he probably don't know what I'm struggling with.
Speaker 1:Right, that is what coming around people that are like-minded do. When you're around people that are thinking the same thing you are thinking, even when you're about to get stuck, we call ourselves to attention like hey, bro, maybe you should be flexible, you know on that, and I'll be like yeah, I'll think about it. Things like that happens when you are around people. So make sure you surround yourself with people that progressive talk doesn't look like boasting to them Because they are some friend.
Speaker 1:If you are talking you want to buy a four-unit property, it looks like you are boasting to them. It looks like you are showing off. You are showing off like you have a lot of money, but for a progressive mind. They know that is a challenge for you. What comes to their brain is how they can help you solve that problem. So you want to keep a progressive mind around you and when they see opportunity, they will be calling you anytime because you've talked about it around them. So, ibrahim, let's go quickly to the questions. So, donad, I have a lot to the questions. So, donat, I have a lot of questions for us tonight.
Speaker 2:Yeah, I can, I texted. I can ask you one of it. So he mentioned when you, after doing a reno, can you reach out to the insurance company to lower insurance coverage, like the payment? So my answer to that is I'm not sure that would help because the insurance let's say a house is dilapidated and is distressed, the value of that house is very low, okay, so most of the time they won't even cover that house. But let's say they cover that house, they really go with the value of that house. Most of the time it's going. They cover that house. They really go with the value of that house. Most of the time it's going to be low value, okay, and when it's low value the payment is probably going to be cheaper. But when you renovate the house and you now do an appraiser that shows that this house has more value, an appraiser that shows that this house has more value, now they want you to pay more because they cannot cover a house that the value was 150. Now that is 250. They cannot cover the same price.
Speaker 2:What I think will help is to show a proof that you have fixed all the problems or the major problem in the house. For example, you have a proof of you repaired the furnace. You have a proof of you repaired the water heater. You have a proof of you changed the roof or you changed the drywall or this or that. All those proofs send it to the insurance company. But you're not sending it to them to get money from them, you're just sending it to them for them to know that, hey, I fixed all the mechanicals and everything. Now your insurance may go down because now the way they look at your house before it's more stable, that's how they look at it, so you might get a discount on that just because. Or if there's a sprinkler like a fire-savvy sprinkler in front of your house and everything.
Speaker 1:So you can make a system?
Speaker 2:Yes, but when you are trying to use a value of the house, the higher the value, the more you pay on insurance Because they have to cover that coverage of that price if anything happens. So that's why all these new, all these big, big houses, their insurance is different. It's more expensive than the smaller ones and I'm talking almost. It's not the same thing but with experience, but it's closer, because mine it's not like fixed out, it's not like it's dead fixed out part, but the smallest house that I own the insurance is cheaper than other ones.
Speaker 2:One of them, I'm paying just 570 and this is it not regular insurance? This is a landlord insurance. I'm just paying 570, but I have some that I'm paying nine something. Why? Because, excuse me, those have more value than this one. So I don't know if that answers this question, but that is what I believe the insurance I mean. There are other factors like the area, is the security system, how old is the property, different kind of factors. Some people, in fact some people, are saying your race also count. I don don't know about that, but different kind of facts will determine how much you pay every month.
Speaker 1:All right. So let's go to the next question. I'm going to take this one too. It's also from Donald. Donald bombarded us with a lot of questions. So he said on subject two, do I keep the interest rate and when is my name put? We get put on the deal. So the day you are closing, that is when you get your name on the deed, Subject two gives you the half.
Speaker 1:So there's two different things that makes a transaction the deed and the loan. They are two separate things. I always tell people they mix it up. They think the loan is directly related with the house. It is directly related with the house. I don't know how to explain this. Hopefully you guys get it. But the house is on its own. The loan, the house is securing the loan. I don't know if that makes sense. So the house is securing the loan. I don't know if that makes sense. So the house is securing the loan. Just like a husband can only be the one, the only person that qualifies for a loan, but on the deed, which shows who owns the house, the name of the husband and the wife might be on it. So the deed proves who owns the house. The loan shows who qualifies for the house to belong to the person that is on the deed. I'm not sure if that is clear.
Speaker 2:I can help you. So the loan is showing that this person is the person that takes the credit, that owns that property in the bank side of it. The banking side of it now the title it's really saying this person owned this house in the government side of it. So it's two different things the banking separate, even though some loan is associated with the government, like fht, because they insure the loan. However, it's still separate because did is saying this person registered this house on their name with the city in that state.
Speaker 2:Yeah, yeah which one has more power. They both have power. But here's the thing someone who's on the loan if you ask me, it's not as it's the same thing, but I would prefer to be on title. I was people where you go to you go to end that.
Speaker 1:Yeah, I prefer to be on title. I was people where you're going to end up.
Speaker 2:I prefer to be on title than be on the Lord.
Speaker 1:Yes, the title take precedence.
Speaker 2:Put me on the title and put yourself on the Lord Alright.
Speaker 1:I think it's a two-part question. The first question is am I keeping the rates? Yes, so, subject to, you are taking the already parted loan, you are taking over that loan, so the interest rates stay the same, every agreement on that side stay the same, everything stay the same. Only thing that is changing is the deed, the loan side. Nothing happened, in fact. The bank doesn't have to know that you are transferring, they don't need to know. The only thing that needs to change is the government side, like Ibrahim explained. So let's move quickly. Because we are coming up on Ibrahim, I'm going to let you take this one. Would you recommend new build in Danvi as an investment property or an existing home, f home focusing on our Hindi market?
Speaker 2:Thank you so it's kind of tricky because it depends on what you are trying to do with that property, because we always advise here that you want some cash flow, especially when you want to scale faster. If let's say you don't need that cash flow, you just want equity, then you can buy a new build without even thinking about it twice. As long as you are able to lease it out, then you are good. But if you also want cash flow and you want that equity as well, you have to make sure that area is good for it. So let's assume you want to do midterm leasing in Denver. Let's assume you want to do mid-term leasing in denver. So the middle term leasing that you might be thinking about that I am assuming because I don't have a property in denver for any kind of investment that I'm assuming that it might be okay is you have to kind of include temporary housing with your middle term. You cannot just stay on one strategy. You have to kind of mix the strategies. Because with temporary housing it has nothing to do with the airbnb thing. It's there for whoever needs a temporary housing in that damn view, because it's that same school zone, so you benefit from that. At the same, you are open to short-term like VRB, Airbnb, bookingcom and all that. So, to answer your question, I believe if you buy a new home in Danville new construction, and you are patient enough, you will benefit from that because the builders they try to keep the value like, in fact, they try to keep the value like, in fact, they try to keep increasing their price. And while they are increasing their prices, it's helping your like, it's helping your equity. Your house would keep getting appreciation every time they increase the price of their home because, of course, you you have to look at it as your house is still new. Anything less than 10 years or less is considered brand new. So you're going to benefit from all those equity. The fact that they are I look at them as they are greedy they just want to keep that high price, even though the interest rate is high. They will rather give you money to buy down the rate than lower the price of the house.
Speaker 2:So my answer to that is if you find a good deal in Denville, you don't have to buy the biggest house in Denville. You can build a house there that is reasonable, matter of fact. You don't even need to build it. You can just go for a house that someone else has built, need to build it. You can just go for a house that someone else has built but he or she could not close just because of various reasons.
Speaker 2:Then you buy that and before while you're buying it, you negotiate with the builder that okay, hey, I'm gonna grab this, I have the down payment, but can I pay so, so amount? And you show them a pre-approval that you are qualified to get the property. The fact that you show them that you have enough down payment, you qualify to get that particular loan. In most cases you get more discount. And the fact that the house is ready and they're ready to push it out I mean sell it they will give you a discount. That way you can. But don't forget you need to check the covenant in that area, check their CCR. Make sure you are able to do middle-term leasing, short-term or long-term, depending on what strategy you are going for. Here we are preaching all the strategy, depending on what works for you in that area and how aggressive you want to scale up. So I hope that answers the question. You can buy a pre-existing house if that works for you as well.
Speaker 1:Yeah, I think we answered his question. Every other thing is comment and acknowledgement of the answer we gave. Thank you, he is actually boasting of the property management. He is a property manager. By the way, guys, donut is ACU Proposal Clients. Thank you for always joining this podcast. Donut, you're going to be on here very soon, so don't worry about it. We're going to interview you and you share your experience on this podcast. So, ibrahim, if people want to buy a house, they want your knowledge on what to buy, where to buy, how to qualify and all that. How can people reach out to you?
Speaker 2:Yes, they can DM me at IBRotos on Instagram. On TikTok, ibrotos, you can text me there. You can call me 317-7280-213. If you would like to make some research before calling me, you can go to ibrotosus, search for your home and give me a shot. Whichever you like, send it to me and we'll go from there. Okay, ibrotosus. So, ahmed, how can they reach out?
Speaker 1:to you. That is what is scrolling up on top. Yeah, I have the ibrotosus up running running already, so it should. It should be easy to see on the screen. Let me take down the the comments from the top. But that is his website up top. You can always go there and search for houses. I was actually amazed on what is on there. You're looking for off markets or on deals distressed property to rehab in a good location. We always encourage you to buy distressed property in a good location. It's going to perform because it's in a good location.
Speaker 1:You can reach me on 765-240-7932. I always forget that number. I don't know why you can reach me on there. You can DM me on Instagram official Ahmed Lawal. Anything real estate at all. If I don't know the answer, I will make sure I find you the answer. If I don't have the resources I don't have the bandwidth for the resources I will make sure I show you someone that have the resources. A lot of people reach out to me, share the number of contractors, share the number of things that they made today so that we work together and grow together. That is what this podcast represents. So until next week, be safe. We'll see you next week, friday.