“The question is: Are you taking advantage of it?
Are you actually getting these rates of return like these people are getting?
And what I’d like for you to first do is review with me the way that every dollar that you put into a piece of real estate makes you money…
…For every dollar you and your family put into a real investment—in other words, a business or in our case real estate which is a business…
…you make money a bunch of different ways.”
Business Models
I want to talk about a new film we just put up at the website that I think is going to generate questions, and there’s multiple reasons why. One, the guy’s business model is slightly different from what I’m always preaching here on the show. And there’s also some questions I bet about how this guy went from single-family to multi-family almost instantaneously.
2009 is over. You know we have got a couple weeks left in the year, but it’s over. The question is: Are you in a better financial position than you were last year at this time or worse? If the answer is you’re in the same or worse, the question for you is what are you going to do differently in 2010?
Well, I want you to see what David Fisher is doing differently than the average American so you can see why he’s getting results like this. He captured $29,000 equity in this little single-family house — $29,000 equity.
Equity Capture
By the time he refinances this thing he will have zero dollars in it and about $150 a month cash flow, and as I said have captured $29,000 equity. I want you to ask yourself this in the last year two years, three years, four years, five years have you done anything to capture $29,000 worth of equity?
How many of you even have $29,000 saved up? Unfortunately between age 45 and 65 the average person only has like $45,000 saved up. That’s their total net worth actually. It’s worse than that. That’s their total net worth. That doesn’t mean they have 45,000 in savings. They have less than 45 in savings. That’s their net worth. It is $45,000. And this guy picks up $29,000 in a matter of a couple of months?
This is something I want you asking questions about because it’s got to strike you that man here you are working hard, you’re scrimping, you’re saving, you’re doing what your financial planner has told you to do, you’re doing what your CPA has told you to do, yet you’re not getting results like this. I want you to understand why you’re not.
Making Money
This all occurred and I believe this is Dallas/Fort Worth where this member is investing. It’s really irrelevant. Texas is brutally consistent from top to bottom. We’re making money in every city we’re involved in, which is almost probably every city in the state but primarily Dallas, Fort Worth, Austin, San Antonio, Houston. But as I mentioned we have got members in probably every city in the state and the same thing is going on across the state.
The question is: Are you taking advantage of it? Are you actually getting these rates of return like these people are getting? And what I’d like for you to first do is review with me the way that every dollar that you put into a piece of real estate makes you money.
There’s five main ways that we’re going to discuss. The one that I discuss is discussed in detail in this particular 3-minute video. It’s only a 3-minute video. I don’t want you guys thinking it’s like a 30-minute class.
Speculation
This is exactly what you can do by getting out of speculation like the stock market, mutual funds and things like that and actually becoming an investor like what David has done. For every dollar you and your family put into a real investment—in other words, a business or in our case real estate which is a business—when you put it into a business, piece of real estate, you make money a bunch of different ways.
What most of you are doing is you’re used to handing your money to the stock market or mutual funds or CD’s or whatever and hoping for the best. You hope it goes up in value. The only way you make money is if it goes up in value and so on.
Well, as you know, especially from ‘97, 2000, 2001, 2008, that doesn’t always work, does it, because of all those crashes. You get slaughtered in the marketplace every time your stocks bottom out.
Five Ways
But we make money in both the up and down market as business owners as real estate owners. Why? Because for every dollar we’ve got into a piece of real estate we’re making money five ways.
Let’s look at the first one, the one that David Fisher’s really excited about here. He’s a big-picture guy. I can tell by the way that he focuses. I always focus on cash flow. I always love the cash flow. I actually love the $150 a month that he’s getting after he refinances it. Right now he’s getting way more than that ‘cause he paid it in full $81,000.
Property’s worth 110,000, he captured $29,000 equity, for him that’s his big deal. Well, my big deal’s the $150 a month cash flow because that’s what you need to retire, that’s what you’ve got to start generating if you’re ever going to become financially independent.
Now, bear with me. I know that some of you are going, “You’re more interested in the 150 than you are the 29,000?” Yes. I’m a cash flow guy. I want the cash flow. But let’s look at equity capture first.
The Numbers
What this particular individual did—David Fisher did is he took $81,000, and I’m not sure where he got it from. He had it in savings or IRA or 401(k) or something like that. But he took the $81,000, bought the house, rehabbed it and paid all his closing costs.
Be very careful here. Some of you are used to hearing stuff on late night TV where they don’t tell you the total number, for lack of a better phrase. This is the total number. When you watch that little 3-minute video it will make sense to you.
That’s the total number—that’s the total out-of-pocket David had. He captured $29,000 equity because the house appraises and the comparable sales are $110,000. So the 81 from the 110 leaves him with the $29,000 equity.
So when you divide the $29,000 by 81, when you run that ratio you’re looking at in excess of 30 percent rate of return. Yeah, it’s going to be a 30-plus percent rate of return even paying cash for the deal, if that makes sense. So I want you to ask yourself have you gotten a 30-percent rate of return instantly on anything you’ve ever done, and the answer for most people is going to be no.
