All Forum Posts by: Tom Cafarella

Hi Brad,

I am not local to the San Fran area, but my market(Boston) is very similar.  I've done over 500 investment deals in the last 5 years. 

Doing deals with none of your own money is not the easiest thing in the world but 100% doable. I have been a real estate investor and have done over 500 deals in the last 5 years without any of my owner money.

You are going to need to get really good at raising private capital. There is an enormous opportunity right now to raise money from private investors who are sick of getting paid nothing for keeping their money in the bank and are also not that interested in putting their money in the stock market.

In general, you need to offer a rate of return that is high enough to get them excited, which means anywhere from 8-15%. If you are buying your properties correctly, you should have no problem paying this rate.

The best place to start for this is to go out to your centers of influence and let them know about the investment opportunities that you have. You will need to put together a nice presentation that explains the benefits to them, but if you meet with enough people, you will be able to find investors.

As you grow, and do more deals these investors will eventually seek you out and you will be able to fund any deal that you have.  

Doing deals with none of your own money is not the easiest thing in the world but 100% doable. I have been a real estate investor and have done over 500 deals in the last 5 years without any of my owner money.

You are going to need to get really good at raising private capital. There is an enormous opportunity right now to raise money from private investors who are sick of getting paid nothing for keeping their money in the bank and are also not that interested in putting their money in the stock market.

In general, you need to offer a rate of return that is high enough to get them excited, which means anywhere from 8-15%. If you are buying your properties correctly, you should have no problem paying this rate.

The best place to start for this is to go out to your centers of influence and let them know about the investment opportunities that you have. You will need to put together a nice presentation that explains the benefits to them, but if you meet with enough people, you will be able to find investors.

As you grow, and do more deals these investors will eventually seek you out and you will be able to fund any deal that you have.  

The steps to take are below. In terms of things not to do/are wasteful in the beginning:

Doing any activities except for getting your marketing system set up. These include trying to find investors to buy your deals, finding contractors, partners, worrying about anything legal or accounting etc. Your singular focus in the very beginning has to be getting 1 on 1 appointments with motivated sellers.  So as far as lessons learned, I would say the most important lesson is to try to do anything besides the marketing and lead generation on day 1.  I see this trip people up all the time.  

In order to find motivated sellers you must:

1. Determine what kinds of properties you want to buy. This may sound simplistic, but you need to get laser focused on exactly what you want so that you can then plan your marketing campaigns.

2. Build a database of all of these properties in a CRM preferably

3. Find all of the owners contact information(cell phones, correct mailing addresses, emails, etc)

4. Market to these people on a consistent basis:

a. Calling them(either you can do this or you can hire someone to)

b. Mailing them

c. Emailing them

d. Using facebook ads to stay in front of them

e. Using google adwords to target them.

If you are going to generate all of these leads, you need to properly monetize all of them, meaning that you make sure that you are making as much money on all of them that you can so that you are getting back all of the dollars you are spending and then some. This means that you are:

1. Buying the absolute best deals that come from these leads(you cherry pick the best ones)

2. Wholesale the deals that are just "ok" to other investors who are desperate for deals and are sick of buying on the MLS

3. Have an agent partner that you are referring the deals to that are not interested in a true investor offer(this will be 80% of your leads)

4. Have an agent partner who can help you generate and profit from generating buyer leads on all of the listings that you have(there is big money in this if you do it right and it is pretty easy to do)

Regarding the agent partner: when you are marketing for motivated sellers, you are going to end up getting one on one appointments with a lot of sellers. The reality is that roughly 80% of sellers are not going to want to take an investor offer.

When you meet with a seller that does not want to take an investor offer, almost all of the time, they still want to sell. The better option for these kinds of people is to refer them to an agent partner of yours to help them get top dollar for their house. If you are a licensed agent yourself, you can take a referral fee on this.

It is important to make sure you montetize(make money on) every single lead that you get because if you don't you will be throwing marketing dollars out the window.  

The steps to take are below.  In terms of things not to do/are wasteful in the beginning:

Doing any activities except for getting your marketing system set up.  These include trying to find investors to buy your deals, finding contractors, partners, worrying about anything legal or accounting etc.  Your singular focus in the very beginning has to be getting 1 on 1 appointments with motivated sellers.  

In order to find motivated sellers you must:

1. Determine what kinds of properties you want to buy. This may sound simplistic, but you need to get laser focused on exactly what you want so that you can then plan your marketing campaigns.

2. Build a database of all of these properties in a CRM preferably

3. Find all of the owners contact information(cell phones, correct mailing addresses, emails, etc)

4. Market to these people on a consistent basis:

a. Calling them(either you can do this or you can hire someone to)

b. Mailing them

c. Emailing them

d. Using facebook ads to stay in front of them

e. Using google adwords to target them.

If you are going to generate all of these leads, you need to properly monetize all of them, meaning that you make sure that you are making as much money on all of them that you can so that you are getting back all of the dollars you are spending and then some. This means that you are:

1. Buying the absolute best deals that come from these leads(you cherry pick the best ones)

2. Wholesale the deals that are just "ok" to other investors who are desperate for deals and are sick of buying on the MLS

3. Have an agent partner that you are referring the deals to that are not interested in a true investor offer(this will be 80% of your leads)

4. Have an agent partner who can help you generate and profit from generating buyer leads on all of the listings that you have(there is big money in this if you do it right and it is pretty easy to do)

Regarding the agent partner: when you are marketing for motivated sellers, you are going to end up getting one on one appointments with a lot of sellers. The reality is that roughly 80% of sellers are not going to want to take an investor offer.

When you meet with a seller that does not want to take an investor offer, almost all of the time, they still want to sell. The better option for these kinds of people is to refer them to an agent partner of yours to help them get top dollar for their house. If you are a licensed agent yourself, you can take a referral fee on this.

It is important to make sure you montetize(make money on) every single lead that you get because if you don't you will be throwing marketing dollars out the window.  

Do you already have a deal under contract?

You should 100% get a real estate license if you are a real estate investor.  A short summary of benefits include:

1.  Get commission on any deal that you buy that is on the mls
2. Access to mls: for both what is on the market, running comps and doing data research
3. Building a team to hunt deals for you( I have a 100 person team scouting deals for me daily)
4. Listing properties that you can’t buy direct or hand those over to a team member that you can legally take a referral on(you can’t legally take a referral if you aren’t licensed)
5. Generating buyer leads from your flip listings and turning them over to a team member who you get a referral fee on

If you do not get your license you are leaving EASY money on the table

I would throw the ROI calculator out of the window. What you want to do in order to amass wealth through rental properties is to get infinite ROI. You get infinite ROI when you put as little down as possible(preferably nothing) and buy properties that cash flow from day one. If you can do this, you will have infinite ROI and will build massive wealth over time. The calculation that I do use in my business is the 100 times rent, which allows me to calculate very quickly whether or not a rental deal is worth buying and will cash flow.

Anytime I buy a rental property I am always shooting to make sure that my purchase price is equal to or less than 100 times monthly rents(once the property is in rent ready condition)

What I mean by that is that if you have a property that is in rent ready condition when you buy it and it generates $3,000 a month in rents, than I want to buy the property for $300,000 or less

If I have to put $50,000 into that same property to get it rent ready than my max price needs to be $250,0000 or less.

If you use the rule of 100 and put down as little as possible, you will always cash flow and will be in a good position.  

100% jump in right now, but you don't have to do it while taking risk.  What I would recommend doing in the beginning would be to market for and find great deals and wholesale them to other investors until you are 100% ready to close on a deal yourself.  The name of the game as a real estate investor is learning how to market for and get great deals under contract.  The sooner you learn how to master that the better.  

I would take the following steps:

1. Determine what kinds of properties you want to buy. This may sound simplistic, but you need to get laser focused on exactly what you want so that you can then plan your marketing campaigns.

2. Build a database of all of these properties in a CRM preferably

3. Find all of the owners contact information(cell phones, correct mailing addresses, emails, etc)

4. Market to these people on a consistent basis:

a. Calling them(either you can do this or you can hire someone to)

b. Mailing them

c. Emailing them

d. Using facebook ads to stay in front of them

e. Using google adwords to target them.

If you are going to generate all of these leads, you need to properly monetize all of them, meaning that you make sure that you are making as much money on all of them that you can so that you are getting back all of the dollars you are spending and then some. This means that you are:

1. Buying the absolute best deals that come from these leads(you cherry pick the best ones)

2. Wholesale the deals that are just "ok" to other investors who are desperate for deals and are sick of buying on the MLS

3. Have an agent partner that you are referring the deals to that are not interested in a true investor offer(this will be 80% of your leads)

4. Have an agent partner who can help you generate and profit from generating buyer leads on all of the listings that you have(there is big money in this if you do it right and it is pretty easy to do)

Regarding the agent partner: when you are marketing for motivated sellers, you are going to end up getting one on one appointments with a lot of sellers. The reality is that roughly 80% of sellers are not going to want to take an investor offer.

When you meet with a seller that does not want to take an investor offer, almost all of the time, they still want to sell. The better option for these kinds of people is to refer them to an agent partner of yours to help them get top dollar for their house. If you are a licensed agent yourself, you can take a referral fee on this.

It is important to make sure you montetize(make money on) every single lead that you get because if you don't you will be throwing marketing dollars out the window.  

I would never strive for ROI in that sense.

Anytime I buy a rental property I am always shooting to make sure that my purchase price is equal to or less than 100 times monthly rents(once the property is in rent ready condition)

What I mean by that is that if you have a property that is in rent ready condition when you buy it and it generates $3,000 a month in rents, than I want to buy the property for $300,000 or less

If I have to put $50,000 into that same property to get it rent ready than my max price needs to be $250,0000 or less.

If you use the rule of 100 and put down as little as possible, you will always cash flow and will be in a good position.