WHO MAKES MORE MONEY? Traditional Real Estate Investor VS. Creative Real Estate Investor
Hi gang, this is mike with MyRealEstateDOJO, and today i want to talk about a very important subject to help you guys understand why the grass is so green in America and the subject is in comparison between a traditional real estate investor versus a creative real estate investor.
So again, I’m going to do comparison between a traditional real-estate investor vs. a creative real-estate investor like myself. Alright so I kind of just did a quick sketch, I always freestyle, but I want to make sure I don’t miss any of my points, it’s like little doodles, no PowerPoint anything like that, I like to speak out up with my heart.
So let’s talk about the traditional okay the way to traditional real estate investor buys properties for a couple of examples would be they go the foreclosure auction okay and what they stand there with a bunch of other investors and they basically fish at the same exact pond, looking at the same exact fishes in a small container and they bid whoever ever pays the most gets. It’s kind of like a car auction, if you guys ever went to the car auction.
Another way in traditional investor gets their deals is through a realtor you know they go out there and they offer a bunch of low ball offers on real estate properties and hopefully they’ll find a motivated seller okay. A third way they get properties is for example to buy, let’s say off of HUDs or REIs bank owned properties, again they hire a realtor and they just put offers in into a system so the way they find deals, it’s not very sophisticated you know that’s why I call it the traditional way, they all line up in a certain way like a machine and if you do these little mechanical moves you may find the deal, okay.
Now let’s compare that traditional real estate investor to create a real estate investor and how creative real estate investor finds deals. The way I find deals is that the people that I target is one type of person, I’m only dealing with the seller or the property owner, again, I only deal with the property owner or the seller. I don’t really deal with Realtors again I don’t deal with Realtors I don’t hire a realtor to go find a property. I don’t need that kind of crap, what I do is, I target, I market specifically to sellers and I use different lists, different types of marketing strategy to find motivated sellers.
okay your question is, “Well Mike how do I do that?” that’s a very good question, get on my YouTube channel, youtube.com/MyRealEstateDOJO and then search for, I have two videos that teaches you how to market video number one is if you’re an investor you don’t have money search for 42 ways to find a motivated seller for free or almost for free I tell you to 42 ways that I’ve used in the past where you don’t have to spend any money or very small amount of money like dollars to get a deal. If you’re an investor that has money then search for 38 ways to find a motivated seller and I tell you 38 ways where you can spend money to get return on your investment, okay.
So now what I’m doing is, I’m comparing how traditional real estate investor finds deals compared to how a creative real-estate investor like myself finds a deal. A creative a real estate investor does not deal with the realtor absolutely not, nothing they don’t do what other traditional people do don’t take the traditional path they take path like this where there is no highways and you have to go off-roading and you got to have the right equipment but on the end you get a lot much bigger return of your investment, there’s much more or less risk and your totally in control, okay, which is a great thing. So creative real estate investor only deals with motivated sellers they target define motivated sellers and they catch the fish before at the very top before it goes to a HUD before it goes to n REI before the bank forecloses on it, before it’s at the auction so that’s the difference. With the creative real estate investor, you’re able to find a seller before the house close to foreclosure and work crazy crazy return on your money even not use your own money use the sellers existing loan or use other creative financing strategies which I do have videos all on my YouTube channels, okay for example the seven different types of owner financing that you can use with these motivated sellers.
Now these creative financing options where you don’t have to use your money, you don’t have to use your own credit, only work with the creative side of investing they don’t work with the bank or go to a bank or HUD and say well “Mr Bank, I want to just give you a dollar up front and let you do owner financing without a non-recourse loan, I don’t want to use my credit” and then they get to laugh at you can say “get the fuck out of here” does that make sense? So where the creative side your able to do all these anything you can imagine that’s why it’s called creative, to turn nothing into something, it’s like the Alchemist formula, okay.
Now I talked about basic, how do you find it deals versus a traditionally versus a creative way, how do they find deals? okay creative they don’t use Realtors, you know, they don’t use the traditional way to find deals, they use guerrilla marketing tactics, or if they have money, that they do other types of marketing, you may just deal with the shelves. Now the next point is very very important okay which is “how to get, how to get funds for deals?” for example a traditional investor, how does he fund his deals versus a creative investor okay now a traditional investor will use basically you know basically three different ways to fund the deal. A, they’ll have all cash which very few amount of people have it but let’s say some people do. B, they’ll do a traditional loan, what I mean is, they’ll go to a bank of America maybe get a home for themselves and lie to the banks and then turn around and rent it out or they may not lie and get it a legitimate commercial loan that says hey I’m not going to live in here you know and I’m going to rent it out and they’re going to get traditional loan, okay, which is the second way.
The third way is what I call untraditional which means that they’re going to go to a hard money lender, okay we’re just going to charge them like anywhere from 14% to 18% they’re going to charge them points like you got to pay if you’re going to borrow this $100,000 they want four points I mean he’s got to pay four thousand dollars up front 18%etc. Another traditional way to fund or to get money is to use for example your friends and family for them to get all together to give the sum of money, or another way is to get bunch of investors together and use pool of money, okay. so a traditional investor when they get a loan basically whats going to happen is that they have to put their social security up in jeopardy okay and what I mean is they have to sign a personal note and if they get a loan on the lender and what happens is their debt to income ratio is affected by that okay or they have to have all cash okay now its traditional investor is it in advisability because if they only have so much cash you can only buy so many property or if their disability because there at the mercy of the lender like please can I get another house please come and they have to wait for the lenders to approve them to to do the inspection to do the evaluation of the property what is what is the value of it before the bank says yay or nay so there’s a lot of like begging and you’re like babysitted by your older brother which is like the bank in this case so you don’t have much freedom dude okay and same thing with if you partner up.
With people but a creative investor the way they fund their money is first if you use all cash were usually for example with me I don’t use all my cash to buy a deal unless it’s a home run unless it’s like for example, the market is hot and I’m going to buy the houses fifty cents on a dollar minus repairs, I’m going to buy that forty-five cents on the dollar minus repairs I’m going to buy something that’s crazy hot then I’ll use my all my cash but usually what what I do is, I use whats called owner financing or seller carry and I use those strategies to buy properties and what that does that for me is a lot of advantages.
Okay I want to run through a couple of them number one is that it doesn’t affect my social or it doesn’t affect my debt to income ratio because I never put my social security of or my company EON number of employee identification up to get a loans when somebody runs my company credit runs my credit, that debt is not associated with me okays that’s a very very powerful thing number two is that I get a non-recourse loan which means that if I default on the property the seller agrees to not come sue me for you know deficiency or anything like that all there going to do is just take the collateral back which is in this case the property very very powerful way to structure deal, which you could not get with the traditional investor they could never get a non-recourse loans okay very very very small probability small percentage of banks do that okay, so there couldn’t never negotiate any of this stuff we’re going to negotiate on this side okay like creative financing.
Now on the seller side some of you might be thinking well if you can do create financing both small percent of people have on the house link clear, what happens if they have a loan? very good question we need to create a financing there’s basically two ways did that happen you talked to a seller, they own the house clear okay or you talk to a seller, the house has a mortgage, either way I’ve learned how to structure deal to still be one or financing. If they own the house plain and clear, perfect, beautiful. If they have a mortgage on the property, perfect, beautiful. There are different strategies that I’ve showed all my YouTube channel to how to get these properties ,ok, so the way creative real estate investor funds the deals is not by using his own money, they don’t use their own credit what they do is they use the sellers underlined mortgage if the seller has a loan or if the seller doesn’t have a loan they have the seller carried a note okay and some of you will say well Mike why would the seller want to sell their house this way and I’ve done many different videos about what is motivated seller and why sellers like this are going to be out there no matter the economy is good like today or shitty as hell, they’re always going to be out there because of the level of motivation I could run through some of them, like death in the family, job loss, divorce some of these things cause motivations okay and sellers now for willing to do things that they wouldn’t do before because they want to get out of the situation emotionally or financially okay I don’t want to go really deep into because i have videos that explain that alright excuse me.
Now I talked about the two different ways in real estate investors fund their properties. if they’re traditionally they go with a bank hard money lender or something like that they sign up their social security, they put their name on the line, they put their credit on the line they have to borrow the money or I’ll just pay cash okay they got to come with all the money, in creative real-estate investor, they don’t use their own money or they know they use very little of it they don’t use their own social security or the company credit, they’re not going to, they’re going to structure the deal with it put the least amount of money into the property as possible their third full control on how to close that when they’re going to close it try to get our negotiated so they’re.We’re on the traditional side, you’re like a little bitch and you’re like oh please think can you please qualify me for another loan in a sense okay so I talked about the funding difference.
Okay now let’s talk about this side effect, okay I’ve already hit on this a couple of times but I want to explain just little bit more. The side effect of traditional investor is that you know even though there on the not in the box type of individuals their outside, they don’t have a job, they’re out there making a grind, they’re not getting the best deals out of there, there having them highest amount of risk because they have to put all their money, big sums or they have to sign their own credit and it’s a traditional way to do it, they have to pay all these realtor fees, they have to be at the mercy of the bank, I have to hope this happens ,that happens so some of the side effects is that there’s so many loops. There’s so much risk right but you can make good money but you’re going to need a lot of money to make good money and it eliminates, it closes the door of opportunity for the average person like a college high school kid or a college kid or you know a mom, single mom or you know some immigrants that came here it closes that opportunity because most people were not going to have that 150 or 200 or half a million or million you know depends what part of stay you are and how much house is called in their bank to buy property.
Okay but this other way that I’ve created in that i can summon called creative financing okay the signoff thing on this one is really not much it’s all positive it’s like you have nothing to lose and everything to gain because the side effects is that your able to buy your property it doesn’t matter if you want to do fix and flips if you want to do a be a landlord like me buy and hold whatever the fuck you want to do your able to buy properties without using your own credit without using you know and large sum of money so if the house is worth 200 you don’t have to give the sale of 200 you might be able to get the seller zero dollars for dollar or hundred bucks or a thousand bucks or two grand down or whatever okays you don’t think I’m old sum of money you don’t have to use your own credit you don’t have to go to a bank and please please or thank other family members if they’re willing to give you money so you could buy some property and put other people’s money in wrist like your family members so you’re total control and most importantly the risk factor is so little so for example if you as a traditional investor if you go by a fix and flip, let’s say the property’s worth a hundred, okay and you buy for fucking 50 and and you got to put 30,000 into it and you’re at 80 there’s so many factors, you have so much of your money into it and there’s so many factors that you’re hoping the market doesn’t crash, it sells very fast, it’s not in the market for a very long time, because all those things cost money, so if there’s so many variables that can decrease your profit, where if you go on the other side as a real creative real estate investing, you could buy the same exact house doing fix and flip instead of coming in with the 50 and then 30 to fix it, you could probably negotiate some kind of deal works well you know you give the seller no money, they give you the property, you rehab the property and then when you sell it then you give them some money. That way you don’t have to come up with the 50, the seller just lends you the money and you don’t make any payments until he sells the property not just one way to structure a deal or you can just structure then gives you the deed and you start making the monthly payments and then you turn it around and fix it up and sell it and you make all the profit or you know you give them a couple of grand in this pocket, I mean there’s so many different ways to structure depends on the deal of the house in the location in PITI you know the rent call, but I’m just giving you
So on a creative real estate investor category or side your ability to have lower amount of rest is just crazy I mean I’m so little risk now of course you’re going to have rested to be an entrepreneur tube your host investor its fucking risky dude I mean for me to come out here and enjoy this beautiful view this risk fall down hearing fucking die dude but sometimes you have to take risk if you want to enjoy the fruits of mother earth a purpose on earth ok so I’m not telling you to take a risk but I’m just letting you’re the fact that said you know if you want to go to the gym and you want to lose weight there’s a chance that you might strain a muscle, you might pull your muscle so there is those things ok but the benefits in my mind compared to where my muscle is so much more by working out I get so much more benefits than hurting myself okay
so that’s why i done same thing was real-estate investing there’s always a risk no matter which one you do if you redoing traditional wherever you do creative but in my mind the risk on thesis so little compared to this because Don’t have to come up with all my money up front I have to put my own creditor up there and so on its own so as a real-estate has a creative real estate investor you don’t have to credit it, you don’t think most all the large sum of money you’re in total control when you want to close on the deal how you’re going to close it are you going to have an inspection are you going to find title policy you know accessory accessory ecetera how much money going are you to get resettled non-recourse loan ok and then the return is so much because for example have you watched my videos Overdone many deals now that I’ve closed where I give the seller a dollar and then asked and I rent the property ID made like five hundred dollars monthly cash flow I rented it out five six years and then sold it and easily made sixty thousand dollars seventy thousand dollars and then that doesn’t even include the monthly cash flow because if add that on top of it you could see that just a couple of grand you know dollar or thousand bucks into thousands less than three thousand bucks you know to put the deal together for the silicate a win-win situation after babysitting it for certain period of time i was able to make easily hundred thousand dollars where the guy here traditional investor he’s going to go to the auction there’s going to be so many other fucking news out there bidding on the shitter girls
Been in on the hijacking up the fucking price the risk is so much again you have to have you have to do your own title search before you go up there you got to make sure are you buying the first node are you buying the second note there’s so complex in such short period of time. we’re on this side is that likes s you have all the time in the world you want it is going on you rein total control were talking about the rest this guy’s going to have to put money to buy the property money to rehab is the carrying fees put as much credit upon line and it is probably only going to make you know if he’s going to pick some flip 10-20 where the example I was just giving you with on a deal that I’ve done, give this to learn a dollar babysit this house for fucking me anywhere from like four to seven years fucking by the time you selling me 60 grand 70 grand and equity because the renter paid off the fucker man meanwhile you have 400 300200 500 monthly cash flow depends on the property and you add that shit up forth amount of times you owned it thits after paying your taxes after paying your insurance after paying principal actor paying interest PITI you have a positive cash flow of 400 500 so you do that x 12 x 5 years so you just have to big chunk of money dude and meanwhile you’re getting the depreciation you’re getting into interest right off because every year the bank sends you a 1099 in your going to get the right off especially if you bought are subject to so there’s so many different benefits the renters clean off your fucking dead liability and so this appreciation that happening I teach you to buy in pretty areas so appreciations happening the renters paying off your debt and your equity just go alone up sure there’s a lot of fucking headaches dealing with that bead renters I’m not going to lie to you.
But hey do you want to invest dollar and then wait five six seven years make four or five hundred dollars month for five six seven years and then make 60 70 thousand does that sound like a good plan to you versus going in you know getting in-depth 100,000 to make 20 grand which one sounds better? which is you think is more risk for dude? okay now you can do the same exacting what the fix and flip the same exact thing if the guy owes 50 you know divine it for 50 at the auction of this guy almost 50 then you can just buy subject to you can do it no like I talked about earlier where you pay him later you pay now whatever someone how are we going to structure it and then you know you don’t have to come up with the 50 you just may a couple with the fencing repair cost the 20 grand or 30grand okay so this guy has composed of50 at a 30 that’s 80,000 you only have to go about 30 we should do you think can we make more money off of all righter you can structure we don’t have to come up with anything you just hold sell out to somebody it depends on which your exit strategy is so when I’m trying to tell you guys is you guys live in the best country over America there’s a lot of people going to tell you no you can to this like Realtors like your friends your family you know and you have the opportunity to listen to those people but look around see where they are in life while there Dream chasers for they just in there now where you can do it this is the best country ever people want to migrate here you live here go chase your dreams and don’t take no for answer guys go ahead if you like my videos please like we share please format.
See you later gang.