How to buy real estate with zero money out of your own pocket 🅾️
Hi Income Flippers,
In 2008, I was a recently self-employed real estate agent hustling to make ends meet during the worst economic crises since the great depression.
That year, I purchased 1 rental property every month with none of my own cash or credit as the real estate world was imploding all around me.
What that experience taught me was that you didn’t need money to make money, instead, you needed 3 things:
You need to be able to evaluate a good deal and asses risk.
You need a partner that has cash and believes in your vision.
You need to take action.
Today, that small portfolio is fully paid off, spits out $182,000 in free cash flow a year, and takes less than 1 hour a month to manage (we manage the manager).
Plus, we have a 2 million dollar line of equity against it that we use to flip properties or lend money which generates several hundred more a year.
Since then, I have created other portfolios with other partners which is a key concept I want to unpack today.
In this newsletter in five minutes or less I am going to cover:
✅ Income Flip Framework: The Power of Partnerships.
✅ Why YOU need to buy more real estate and hold for the long term.
✅ What I learned from Barbara Corcoran
Rule #1: No One Succeeds Alone - The Power of Partnerships
The truth is that there are no “self-made” millionaires. Everyone along the way had a mentor, friend, family member, coach, teacher, or hater that helped them get there.
The teachers inspire us and so do the haters, they give us the fuel to keep going when times get hard. More importantly, many of the people who are rooting for us might just fund our deals.
Today, I want to give you the 10 steps I use to structure my partnerships but before I do that, I want to talk to you about your reputation, AKA your brand.
Finding partners is so much easier when you have a brand (reputation) that does what it says it’s going to do. Everything you do is stored and calculated in the minds of people and it spits out YOUR BRAND.
🤔 Does your brand say you are reliable?
🤔 Does your brand say you have integrity?
🤔 Does your brand say you are a hard worker?
Finding partners is easy when you have built a brand that people can count on. At some point, I will deep dive into the power of "brand" in a later newsletter (it’s a big deal).
Ok, enough on brand…
Here are the steps:
You find the property and analyze its potential.
You negotiate the deal and ratify the contract under the name of your LLC "and/or Assigns."
Your partner puts up the money to purchase the property.
You set up a partnership LLC with an operating agreement that makes you equal 50/50 partners.
You assign your contract to the partnership LLC prior to settlement.
You close (and get paid a commission).
You fix up the property (if necessary)
You refinance the property into a new long-term loan using your partner's credit.
You manage the property or turn it over to a property manager.
You do it again.
This is called the BRRR Method (Buy, Renovate, Refinance, Repeat)
Now you know.
If you want to deep dive and mastermind with me on how you can accomplish this, join me for our next Income Flip training coming in January. You can pre-register here.
Why you need to buy MORE.
If inflation has taught us anything, it's that real estate is an AWESOME place to hedge against inflation and increase your wealth.
In a 9-year period, real estate values have never gone down. Even during The Great Recession, real estate values bounced back quickly. It’s only in hindsight that things make sense.
My biggest regret is that I didn’t buy more from 2012-2018. Why? Because I thought things were overpriced.
Values had bounced back so quickly and the market felt on fire again that it made me nervous.
Dumb.
If I just studied the data I would have realized that values were still way below the historical mean.
Lesson learned —If I can find a way to create a positive cash flow, I will buy as much as I can.
I am going to encourage you to do the same.
What I learned from Barbara Corcoran:
This past week, I found myself in Miami at the National NAHREP Convention and I had the opportunity to hear Barbara Corcoran speak so I thought I would share my biggest takeaways with you.
1). Perception creates reality.
She used the media to get her message out.
She created a loud microphone.
3rd party endorsement.
Steal limelight.
The power of the press.
Blow up your brand.
2) People are either a container or an expander.
You need both in an office.
This was her version of the book Rocket Fuel.
Hire an expander and a container with each office.
Essentially you need a promoter and an operations director at each location.
She hired happy people.
She got rid of negative people.
She eliminated complainers.
3) Have fun.
Create fun.
Spend money on having fun.
Get people engaged.
4) Recognition is more important than money.
Reinforce.
Create a system.
Publicly recognize everyone.
Golden Ribbon story.
5) Recognize the power to get back up.
Winners bounce back faster.
6) Work with high-end international investment money.
7) She picks people that are in it for the long run.
Can they get back up quickly when things go wrong? Are they fighters?
Thank you for your time and attention.
Keep moving forward!
Rob
P.S.: Are you an investor who wants to convert your active income to passive income? Pre-register for our Income Flip Course coming in early January 2024.
