I REALLY enjoyed this and it’s a very quick read. Mostly conceptual, you should definitely read the Multi Family Millions Book (Of which I posted detailed notes if you search for them) if you like this.
Chapter 1: Importance of Mentors
“Successful people take action”
“Successful people continue to educate themselves”
Fear is cured by action and education.
The biggest value in mentorship are guidance along with learning from their BIG mistakes.
Chapter 2: Nuts and Bolts
“Fools say experience is the best teacher, but I prefer to learn from the experience of others”
First deal was at 25 Newton in Brockton, MA. Bought it for 140k and it cash flowed $572.
WIth SFH you are at the mercy of comps. With Multi Family, valuation is based off of "income approach" and "cap rates". He calls it the "Times 10 Valuation Approach".
This is what you do: You take the yearly income, and you subtract the yearly expenses not including mortgage. Yearly income minus yearly expenses equals your net operating income, or "NOI".
Income $34,000 - Expenses of $15,300 = $18,700
$18,700 X 10 = $187,000 Value. But he only paid $140K, immediate profit of $47K.
Does the 10 Times Valuation always work and if so, why do you see different cap rates?
For every $1 you increase the net operating income, you increase the value of the property by $10.
In his seminars he goes over 23 ways to improve NOI (What are those 23 ways?)
Chapter 3: Financing Multi Family Properties.
Banks don't look at you personally, easier than SFH in that sense. All they care about are the financials of the building.
Banks looks at the NOI and give YOU a 75% credit towards your income to help you qualify for the loan. (Ask Michael if this is true)
His first deal he had to use credit cards for. The others, he started partnering at his REIA's on. He would bring the deal, they would bring the cash, and they split it 50/50.
“For instance, I might have a three-family property that was selling for $500,000 and I could buy it for $350,000. It needed $20,000 in repairs and I needed $20,000 to get into the deal. The profit on the deal was $98,000.”
The Wealth Formula: The More Deals you can get into with the least amount of money down, the wealthier you become.
He has created 27 different ways to get deals with No Money Down. What are they?
Chapter 4: The Importance of Systems
His Chunker Strategy:
Buy a SFH
Use some money to live
Use the rest as a down on MF
Suggests always getting a management property and never self managing.
Three Reasons to invest in RE:
Money Today (Flipping)
Money Later (Loan pay down)
He believes you can get started by investing 30 Minutes a Day, 4 days a week, 2 hours a week.
Chapter 5: Managing Properties to Win
Www.irem.org and look for specific titles such as CPM (Ceritified Property Manager) or ARM (Accredited)
Make sure you ask them, “How many properties do you MANAGE that are like mine, instead of, how many properties do you OWN that are like mine.” Only go with the folks that MANAGE your type of property. If they OWN your type of property, they will prioritize the good tenants for themselves.
ALways get detailed reporting on a monthly basis an keep an eye out on profits and expenses.
Fees: 10% of rents COLLECTED, not Pro Forma.
Chapter 6: Getting Great Deals
Touches one 1031 Exchanges.
Must know what a Like Kinded Exchange it.
Must use an intermediary.
Multi Family Flips much more lucrative than SFH Flips.
More units = less risk.
Leverage your Management Company to put together a package that explains what the business plan is and you give that to the banker. Use their resume, marketing plan, projections for next 3 to 5 years.
Chapter 7: Financial Plan for your Future.
Basically putting “retirement” into perspective. It’s about a number, not your age.
Chapter 8: Market Cycles
Four Types of Cycles:
Seller’s Market 1
Seller’s Market 2
Buyer’s Market 1
Buyer’s Market 2
The phases never skip each other.
In a Seller's Market 1, the supply of properties dwindles. Properties are selling fast. Unemployment is low. Prices of rents are rising and demand is at its highest point in a Seller's Market 1.
This is the only phase you can do both major strategies: buy and hold long term, or flip.
For example, I bought a three-family property in an early Seller's Market 1. I bought it for $224,000, sold it for $320,000 13 months later, and profited $86,000. Specifically held it for 13 months. Much higher taxes for anything under 12 months.
How are investments taxes in general depending on class or time held?
Get lists of buildings where there are evictions going on. Housing court, small claims, or district court. Get what’s called the “Summary process list”. Mail those people.
One lady mailed 86 letters, get 6 responses, costs her $60. Created $147,000 in Equity.
He gives you specific letters to use. Try and get some of those. He also provides a script, get that.
Seller’s Market Phase 2: Market starts to turn down. Properties start staying unsold on the market for longer. The number of properties on the market increases. Sellers are still getting inflated prices but it's taking longer to get there.
If this is the phase you’re in, Flip. Don’t hold anything very long. Create Cash. Cash is King in a down market. Or you shift that money into a new emerging market. Markets turn over every 8 to 15 years, each phase lasting 3 to 5 years each.
Buyer’s Phase 1: Rents fall, prices fall, jobs start moving out. In this phase, ONLY buy cash flowing properties. Always follow the jobs.
He provides 14 sources to determine where the jobs are going. Www.cencus.gov is one of them. Bureau of Labor Statistics.
Buyer’s Market Phase 2: Market starts picking up again, time on market decreases, job growth picks up and so do rents. This is when you buy and hold for a few years and become a millionaire.
You never have to leave your house. Find out where jobs are going, call the chamber of commerce and see how white collar jobs in particular are changing. Then you make contacts over the phone with brokers, property managers, appraisers. They’ll start sending you deals. Do a little negotiating, sign offer all over a fax machine. At this point seller gives you all of the facts and you start your due diligence. Confirm all income and expenses.
If he can't supply you with those facts, or if those facts don't come in right, then you negotiate for a lower price. Sixty percent of them will negotiate; forty percent will just say “take it or leave it”, in which case you leave it.
First you negotiate for the lower price (if the facts dictate it) and only then do you go down and do a property inspection.
You go through the property, using the system I give you. You’ll take a look at it with your property inspector, banker, and your management company. They'll meet you there. Then you go home.
The bank will do just about all the paperwork. They will FedEx you a package. Sign it in front of a Notary and you send it back. In his live event he gives you 20 to 25 emerging markets happening now.
Chapter 9: You can do it too.
Lots of success stories.
Chapter 10: Will you come join the fun?
He gives you a dozen techniques for marketing to get leads. Shows you how to pre screen and analyze at lightning speed.
27 No Money Down Techniques