how to make $1,000,000 from real estate
TRANSCRIPT
How to Make
$1,000,000 Through Real Estate Investing!
The Webinar Will Begin Shortly…
How to Make
$1,000,000 Through Real Estate Investing!
Thank You!
My Mission: To help real estate investors take
action and start building their own dreams rather than
spending their time building someone else’s.
About BiggerPockets
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About MeReal Estate Investor
VP, Growth at BiggerPocketsMath Nerd
Animal Lover!
About Me
Lost Money
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What We’re Going to Talk About Today:
Two Different Methods People Use to Try and Build Wealth Through Real Estate
What We’re Going to Talk About Today:
Two Different Methods People Use to Try and Build Wealth Through Real Estate
A step by step mathematical plan to build $1,000,000 in wealth in 10 years or less.
What We’re Going to Talk About Today:
Two Different Methods People Use to Try and Build Wealth Through Real Estate
A step by step mathematical plan to build $1,000,000 in wealth in 10 years or less.
5 must-have steps to making this goal a reality.
What We’re Going to Talk About Today:
\
Two Different Methods People Use to Try and Build Wealth Through Real Estate
A step by step mathematical plan to build $1,000,000 in wealth in 10 years or less.
5 must-have steps to making this goal a reality.
How you can take your plans to the next level using some of the tools available on BiggerPockets
What We’re Going to Talk About Today:
Two Different Methods People Use to Try and Build Wealth Through Real Estate
A step by step mathematical plan to build $1,000,000 in wealth in 10 years or less.
5 must-have steps to making this goal a reality.
How you can take your plans to the next level using some of the tools available on BiggerPockets
Q&A Plus Pro Membership Giveaway
What We’re Going to Talk About Today:
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Does that sound reasonable?
Two Different Methods People Use to Try and Build Wealth
Through Real Estate
Two Different Methods People Use to Try and Build Wealth
Through Real Estate
1.) Buy and Pray
Two Different Methods People Use to Try and Build Wealth
Through Real Estate
1.) Buy and Pray2.) Plan and Take
Action
Which Method Will You Take?
Let’s get to it…
A few things before we start…
A few things before we start…• This is not a “get rich quick” plan.
• This is not the only way to make money in real estate.
• This is not a guaranteed plan. This is based on ideal round numbers. You might find things better or worse, depending on your location.
• This is not legal advice
A few things before we start…
The math concept is more important than the
specifics.
A few things before we start…
If ——-> Then
5 Assumptions for This Plan to Work
1.) Buying incredible multifamily properties with great cash flow
5 Assumptions for This Plan to Work
2.) Each property cash flows at $150 per unit, per month and cash flow is
saved and reinvested.
5 Assumptions for This Plan to Work
3.) Property must be able to be purchased for 80% of the value
5 Assumptions for This Plan to Work
4.) Property must be able to be improved and the value increased 10%
during the first year through Forced Appreciation
5 Assumptions for This Plan to Work
5.) Property will appreciate at 3% per year after year one.
Purchase 123 Main Street 4-plexValue: $150,000.00
You buy for $120,000.00 Down payment: $24,000 Loan Amount: $96,000
Beginning of Year One:
123 Main Street 4-plexValue: $150,000.00
You buy for $120,000.00 Down payment: $24,000 Loan Amount: $96,000
Value: $165,000
Equity: $69,000
End of Year One:
123 Main Street 4-plexValue: $150,000.00
You buy for $120,000.00 Down payment: $24,000 Loan Amount: $96,000
Value: $165,000
Equity: $69,000
Cash FlowTotal Units: 4
Total Monthly Cash Flow: $600
Total Annual Cash Flow: $7200
End of Year One:
123 Main Street 4-plexValue: $150,000.00
You buy for $120,000.00 Down payment: $24,000 Loan Amount: $96,000
Value: $165,000
Equity: $69,000
Cash FlowTotal Units: 4
Total Monthly Cash Flow: $600
Total Annual Cash Flow: $7200
End of Year One:
123 Main Street 4-plexValue: $150,000.00
You buy for $120,000.00 Down payment: $24,000 Loan Amount: $96,000
Value: $165,000
Equity: $69,000
Cash FlowTotal Units: 4
Total Monthly Cash Flow: $600
Total Annual Cash Flow: $7200
Net Worth: $76,200
End of Year One:
123 Main Street 4-plexValue: $150,000.00
You buy for $120,000.00 Down payment: $24,000 Loan Amount: $96,000
Value: $165,000
Equity: $69,000
Cash FlowTotal Units: 4
Total Monthly Cash Flow: $600
Total Annual Cash Flow: $7200
Net Worth: $76,200
End of Year One:
Beginning of Year Two:
Repeat This Same Process Again
Beginning of Year Two:
123 Main Street 4-plex Elm Street 4-plex
End of Year Two:
123 Main Street 4-plex
Value: $169,950 Loan : 94,500
Equity: $75,450
Elm Street 4-plexValue: $150,000.00
You buy for $120,000.00 Down payment: $24,000 Loan Amount: $96,000
Value: $165,000 Equity: $69,000
End of Year Two:
123 Main Street 4-plex
Saved Cash Flow: $7200Cash Flow: $7200
Elm Street 4-plex
Cash Flow: $7200
End of Year Two:
123 Main Street 4-plex
Saved Cash Flow: $7200Cash Flow: $7200
Elm Street 4-plex
Cash Flow: $7200
End of Year Two:
123 Main Street 4-plex
Saved Cash Flow: $7200Cash Flow: $7200
Elm Street 4-plex
Cash Flow: $7200
$21,600
End of Year Two:
• Own Two 4-plexes • Each producing $7200 a year in cash flow • Have $21,600 in savings • Have $75,450 in Equity in Property 1 • Have $69,000 in Equity in Property 2
Total Net Worth: $166,050
Beginning of Year Three:
Rinse and Repeat
Beginning of Year Three:
Use the Cash Flow We’ve Saved
Needed: $25,000Have: $21,600Out of Pocket: $3,400 + closing costs
End of Year Three:
123 Main Street4-plex
Elm Street 4-plex
3rd Street4-plex
Value: $169,950 Loan : 94,500
Equity: $75,450
Loan: $96,000 Value: $165,000 Equity: $69,000
Value: $175,000 Loan : 93,000
Equity: $82,000
End of Year Three:
123 Main Street4-plex
Elm Street 4-plex
3rd Street4-plex
Value: $169,950 Loan : 94,500
Equity: $75,450
Loan: $96,000 Value: $165,000 Equity: $69,000
Value: $175,000 Loan : 93,000
Equity: $82,000
Cash Flow: $7200 Cash Flow: $7200 Cash Flow: $7200
End of Year Three:
123 Main Street4-plex
Elm Street 4-plex
3rd Street4-plex
Value: $169,950 Loan : 94,500
Equity: $75,450
Loan: $96,000 Value: $165,000 Equity: $69,000
Value: $175,000 Loan : 93,000
Equity: $82,000
Cash Flow: $7200 Cash Flow: $7200 Cash Flow: $7200
$21,600
End of Year Three:
• Own Three 4-plexes • Each producing $7200 a year in cash flow • Have $21,600 in savings • Have $82,000 in Equity in Property 1 • Have $75,450 in Equity in Property 2 • Have $69,000 in Equity in Property 3
Total Net Worth: $248,050
Year Four
Relax
Year Four
Manage Effectively
End of Year Four:
123 Main Street4-plex
Elm Street 4-plex
3rd Street4-plex
Value: $169,950 Loan : 94,500
Equity: $75,450
Value: $175,000 Loan : 93,000
Equity: $82,000
Cash Flow: $7200 Cash Flow: $7200 Cash Flow: $7200
$21,600
Value: $180,000 Loan : 91,500
Equity: $88,500
End of Year Four:
123 Main Street4-plex
Elm Street 4-plex
3rd Street4-plex
Value: $169,950 Loan : 94,500
Equity: $75,450
Value: $175,000 Loan : 93,000
Equity: $82,000
Cash Flow: $7200 Cash Flow: $7200 Cash Flow: $7200
$21,600
Value: $180,000 Loan : 91,500
Equity: $88,500
+ $21,600 Saved
End of Year Four:
• Own Three 4-plexes • Each producing $7200 a year in cash flow • Have $43,200 in savings • Have $88,500 in Equity in Property 2 • Have $82,000 in Equity in Property 2 • Have $75,450 in Equity in Property 3
Total Net Worth: $289,150
End of Year Four:
Time To Trade Up!
End of Year Four:
Time To Trade Up!
End of Year Four:
Time To Trade Up!
End of Year Four:
Time To Trade Up!
End of Year Four:
Sales Costs: 10% of Sale Price
Value: $169,950 Loan : 94,500
Equity: $75,450
Value: $175,000 Loan : 93,000
Equity: $82,000
Value: $180,000 Loan : 91,500
Equity: $88,500
End of Year Four:
Sales Costs: 10% of Sale Price
Value: $169,950 Loan : 94,500
Equity: $75,450
Value: $175,000 Loan : 93,000
Equity: $82,000
Value: $180,000 Loan : 91,500
Equity: $88,500
$70,500 $64,500 $58,455
End of Year Four:
Profit from #1: $70,500
Profit from #2: $64,500
Profit from #3: $58,455
Saved Cash Flow: $43,200
Total Profit to Trade Up: $236,655
1031 Exchange
Start of Year Five:
Purchase Rock St Apts(24 units)
Value: $1,000,000.00 You buy for $800,000.00
Down payment: $200,000 Loan Amount: $600,000
Start of Year Five:
Purchase Rock St Apts(24 units)
Value: $1,000,000.00 You buy for $800,000.00
Down payment: $200,000 Loan Amount: $600,000
Cash Flow
Total Units: 24 Total Monthly Cash
Flow: $3,600 Total Annual Cash
Flow: $43,200
End of Year Five:
Purchase Rock St Apts(24 units)
Value: $1,100,000 Loan: $588,000
End of Year Five:
Purchase Rock St Apts(24 units)
Value: $1,100,000 Loan: $588,000
Cash Flow: $43,200
Years 6-10
Manage Effectively. (No Purchases)
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
1,133,000 1,166,990 1,201,990 1,238,060 1,275,201
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
575,000 562,000 547,000 532,000 517,000
1,133,000 1,166,990 1,201,990 1,238,060 1,275,201
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
86,400 129,600 172,800 216,000 259,200
575,000 562,000 547,000 532,000 517,000
1,133,000 1,166,990 1,201,990 1,238,060 1,275,201
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
86,400 129,600 172,800 216,000 259,200
644,400
575,000 562,000 547,000 532,000 517,000
1,133,000 1,166,990 1,201,990 1,238,060 1,275,201
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
86,400 129,600 172,800 216,000 259,200
644,400 734,590
575,000 562,000 547,000 532,000 517,000
1,133,000 1,166,990 1,201,990 1,238,060 1,275,201
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
86,400 129,600 172,800 216,000 259,200
644,400 734,590 827,790
575,000 562,000 547,000 532,000 517,000
1,133,000 1,166,990 1,201,990 1,238,060 1,275,201
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
86,400 129,600 172,800 216,000 259,200
644,400 734,590 827,790 922,060
575,000 562,000 547,000 532,000 517,000
1,133,000 1,166,990 1,201,990 1,238,060 1,275,201
Growth Years 6-10Year 6 Year 7 Year 8 Year 9 Year 10
Value
Loan
Saved Cash
Net Worth
86,400 129,600 172,800 216,000 259,200
644,400 734,590 827,790 922,060 1,017,401
575,000 562,000 547,000 532,000 517,000
1,133,000 1,166,990 1,201,990 1,238,060 1,275,201
You Just Made
$1,000,000 Through Real Estate Investing!
Is This Really Possible?
What Do You Need?
Start with $25,000 plus reserves
Find properties for 20% discount
Force 10% appreciation in year 1
Achieve 3% appreciation per year
Get $150 per month, per unit cash flow
If you only had to buy one property, anywhere in the
country, using all the tools at your fingertips that met this
requirement, could you?
Do you say “I can’t do it.”
Or
Do you ask “How can I do it?”
5 Must-Have Steps to Making This Goal a Reality
5 Must-Have Steps to Making This Goal a Reality
Right Eduction
5 Must-Have Steps to Making This Goal a Reality
Right EductionRight Math
5 Must-Have Steps to Making This Goal a Reality
Right EductionRight MathRight Plan
5 Must-Have Steps to Making This Goal a Reality
Right EductionRight MathRight PlanRight Deal
5 Must-Have Steps to Making This Goal a Reality
Right EductionRight MathRight PlanRight DealRight Networking
Let me tell you a story…
I didn’t do the numbers right.
“A Great Plan Begins with Great Math.”
The BiggerPockets Property Analysis Software
BiggerPockets.com/analysis
“A Great Plan Begins with Great Math.”
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