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SHOW NOTES FOR EPISODE 224: ASK BILL! REI SEMINARS, USING YOUR EQUITY & QUICK QUESTIONS
This is our monthly Fun Fact Friday “Ask Bill!” episode, where I answer specific real estate investing questions received during the month from e-mails, in-person conversations, phone calls or through online portals such as BiggerPockets.com and Quora.
One of our goals here at the Old Dawg’s REI Network is to help to educate/enlighten fellow real estate investors to share what little knowledge by answering your questions, to help other investors to just broaden their understanding of real estate investing and to, hopefully, avoid some of the mistakes that can set you back a bit.
In today’s Ask Bill episode, Bill answers questions on whether real estate seminars are worth the investment, should a couple pull equity from their home to invest and leverage rental properties, and answers a series of short questions on resources of value to investors.
Introduction
I receive a lot of questions through emails, calls, live meetings, etc. But Quora.com is a major international forum where you can ask or answer questions on pretty much any topic you can conceive of. Bizarre questions like:
- How do you know that you are self-aware?
- How do you know if you know something?
- What does it feel like to eat a book? Or the ultimate in strange questions…
- Imagine you are a 10x nun in a bear costume from outerspace with opposable thumbs about to engage in a fight to the death with another nun, who may or may not be a bear in disguise. In front of you two lie a hunting knife and a baseball bat. If you pick one, the other nun will choose the other weapon. Which one would you pick and why?
Ok… before I totally loose you. I just answer maybe the less exciting questions on real estate. At least the ones I think I can answer. Each week I am presented with a specific list of questions that I can choose to answer… or not.
So I will draw on questions that are frequently asked or address an area we may not have on the podcast. Let’s start with a question from a guy named Bob Mueller. OK, I know what you are thinking… is that the same Bob Mueller who heading the Russia election tapering investigation. I don’t think so, however…
Question #1 – Worth Time and Money to Attend REI Seminars
Bill,
I am approaching retirement, and I am interested in investing in real estate. I have a little experience and I am wondering if attending some real estate education seminars would be worth my time and money. I have read quite a few books on real estate investing. Do you or your listeners have any suggestions?
Best Regards,
Bob
Answer to Question #1
Hey Bob.
You don’t have to have special training or pay enormous amounts of money to get a good education on real estate investing. Everything you need to know is already available from a handful of excellent books (we list Top 20 Real Estate Investing Books in our Resources Page at olddawgsreinetwork.com.) A link will be provided in our show notes. And FREE resources. There’s a ton of great content on our website from our free podcast episodes and free blog articles. And there’s a ton of other excellent podcasts and websites out there like BiggerPockets.com and on YouTube.
Don’t get me wrong. I’m not saying seminars, webinars, boot camps, special coaching, etc. are a waste of time nor money. All I’m saying is, if you are looking for education, is a lot of great FREE resources that can teach you much of the same things.
Why do people pay for special coaching, boot camps, seminars and webinars, and mentoring?
I think there are a number of reasons but a few common reasons are:
- To have someone to push and prod you on to actually DO IT – to apply what you have learned. The element of motivation. Preferring not to so it solo.
- Others are seeking community – others who are struggling with the same things who can encourage and share what they’re learning
- Networking – to rub elbows and establish contacts with others who are more experienced, and even successful real estate investors
- People want a step-by-step system that teaches, covers all basics and helps you through your first deal
- Sometimes people think there is a “secret formula” to real estate investing success and that if I do it “his way” or “her way,” of course, I’ll have the same success
I don’t have anything against these program and so-called gurus. I’ve seen numerus success stories! But maybe what I don’t like is when people are taken advantage of. They sell one thing and when you go to buy it, they UPSELL you to the better thing and, before you know it, the $995 seminar becomes the $20,000 coaching, you have to take out a second on your home to pay for. . they make a ton of money off people by preying on their insecurities and fears about doing it wrong.
But when I’ve seen the success stories, sure they have done it the way the guru said to do it but the ones who do well, were already set to do well before they started.
So, to answer your question, “are the seminars worth my time and money?” – My answer is this, get as much out of the great books and free stuff first! There’s tons of it! Then, if you still feel you need to pay for the “other stuff,” be wise. Set a budget on how much you want to spend and stick to it! Don’t be a victim of the upsell. They can be but you really need to check them out very carefully and vet them well BEFORE you spend one dime! You can extract great info from almost any real estate investing seminar. The question is, will you apply what you’ve learned.
After all, you still need money to invest, right! I may sound like a broken record because I’ve send this a thousand times on my show, but I honestly believe your REAL education begins the day you sign the escrow papers for your first property purchase.
Here is a link to training programs I recommend: http://olddawgsreinetwork.com/services/
Question #2 – Using Home Equity to Buy Rental Properties
Answer to Question #2
Yes, one of the beautiful aspects of real estate is “leverage.” Leverage is how you can go from one rental property to a portfolio of properties, worth multi-millions, in a relatively short period of time. You can over-leverage yourself and buy the wrong properties at the wrong time and find yourself in a very messy situation as well.
My first three rental properties were “turn-key” properties in Memphis and Atlanta, two single family homes and one duplex. I paid cash. Later, I did a cash-out re-fi to pull enough cash for a down payment to purchase a 22-unit apartment in Indianapolis. That 22-unit brings me more than $100,000 a year in rental income. That is leverage at work! However, a few years ago, both properties in Memphis started to having issues and were declining in value. I had to open up to section 8 tenants just so I could get rental income. Tenants trashed the places, A/C units were stolen, multiple evictions and more challenges followed. If I can break-even in a year on those properties I am ecstatic. Unfortunately, if I tried to sell the properties, I would take a big loss and, I may be foolish, but I’m still trying to tough it out. Fortunately, the Atlanta property has done well and so has the 22-unit (although it’s also not without its challenges) and another duplex I have in Indianapolis is doing well, too. If I had not leveraged those properties, I would be stuck with those properties and very little cash flow. However, the leverage play worked to my advantage. My next goal, after I purchased the 100-unit, is to sell the single family homes and possibly one of the duplexes.
My problem is, I should have never bought turn-key properties in the first place, and without being better educated on how to pick good properties. You need to be ready for mistakes — because they WILL happen.
The good news is, I have almost doubled the value in my 22-unit and can now tap into the equity to buy a 100 plus unit apartment building. B ut, again, I need to be wise and buy conservatively because a market correction is just around the corner. I need to have my other properties stabilized and profitable, I need to have good loans at a good rate and the property I buy will have to allow for decreased rents, if the market corrects itself, if necessary. I also need to buy below market on that apartment so I will have “built-in equity” in the deal when I sign the escrow papers (and that’s not easy).
If I were you, I would pull equity out to purchase a rental but I would do so wisely and only AFTER you’ve well-educated yourself, found a mentor and written a smart strategic plan.
I had a great guest on my podcast who did use leverage the right way. He started off with $50,000 (cash-out refi) he and his wife pulled from equity in their home and then he leveraged it into a $56,000,000 real estate portfolio in just 5 years. Now, this is not typical and not always likely, but it is one person’s true success story. Here is a link to the podcast if you want to hear it: 217: Husband & Wife Turn $50K Home Equity Loan into $56 Million Real Estate Portfolio in Just 5 Years. Also, if you want to know more about how to best prepare yourself for your first rental property purchase, listen to this podcast on “How to Get Started in Real Estate Investing.” 006: How to Get Started in Real Estate Investing
Quick Questions
I also have recently had a series of quick short questions that I think will also be helpful to many of you listening. Here goes..
Question #3 – AirBNB
Listened to your Airbnb podcast and it intrigued me. I am going thru same vacancy pain. Would you be willing to spend some time on the phone to teach me how to set this up and any other relevant info. You can also point me to where I will be able to gather more info on this.
Hope to hear from you
joseph
Answer to Question #3
I would be happy to speak with you regarding AirBNB and answer your questions. Keep in mind, I am no expert and am still learning myself. I would like to refer you to a person who is an expert, Al Williamson, who was the one who got me interested in AirBNB and rental arbitrage. You can listen to that episode here: http://olddawgsreinetwork.com/109-creative-strategies-to-increase-your-rental-property-net-income/. I also have a number of episode where I have discussed what I am doing with AirBNB. Just do a site search at olddawgsreinetwork.com and type in AirBNB for your search term.
Question #4 – Link to Small Multifamily Properties Mentioned in Podcast
Bill:
I stumbled on a link to wholesale MF (multifamily) properties for sale and I believe it was on your website. I can’t find it. Would you please send to me? Many thanks. Michael
Answer to Question #4
I mentioned that sight on the interview with Lance Edwards (http://olddawgsreinetwork.com/make-big-money-in-small-apartments/). The specific site is: www.SmallApartmentDeals.com.
Question #5 on Family Offices
Family Funds, I thought you had an episode that went over family funds basically where to find the richest people. I don’t see it anywhere are you able to provide a link or the info to find the list.
Thanks,
John
Answer to Question #5
John,
(I think what you’re referring to here are what are called Family Offices). Family Offices are individuals or an organization that manages the private investment funds of multimillionaires and billionaires.
John, here’s the link: http://olddawgsreinetwork.com/015-where-to-find-100-million-net-worth-investors/
Question #6 – Where Are the Show Notes?
Hello Bill,
I love your show, listen often and use it as a resource. However, I listen while I drive and when I try to refer back to the information shared, it is far too difficult to find the show notes. Would it be possible to have a link easily accessible?
Thank you for the show!
Answer to Question #6
Hi Pyrrrha!
Thanks for listening to the Old Dawg’s REI Network Podcast.
I’m not sure how you are listening to the show but if you are listening through iTunes, you just have to scroll down the screen and you’ll see an area called “Episode Notes.” Just click on that area and you will see a description of the show and a link to the entire Show Notes.
Also, when listening to the podcast from our website your computer, click “Blog” on the website menu and then look for the show you want to listen to or do a search. You will see the show notes in the Blog section.
Well, that’s it for today…
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1 comment. Leave new
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