Lets talk about how to retire early by investing in real estate, and this will will cover it all: real estate, passive income, financial independence, retiring early…and smashing the like button. Enjoy! Add me on Instagram: GPStephan
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So lets start here…this is where it all begins:
Add up ALL of your expenses. Then come up with an average number that you NEED to replace in income every month. Here’s your challenge: For the next 4 months, TRACK EVERYTHING you spend money on. Your goal AT FIRST should be to earn enough rental income JUST to cover your NECESSARY expenses.
Next, save up a down payment of about 10-20% of the properties purchase price.
And in terms of saving this amount of money, you NEED to make it a priority. If that means you cut back on vacations, take up a part time job, or scale back on your expenses just to save a little more – do it.
Now once you’ve got that down payment saved, the second step is to buy a 2-4 unit building that you can move into yourself.
Here’s why this step is so important:
When you buy a property as a PRIMARY RESIDENCE – meaning you’re going to move in and personally live there – you can qualify for what’s called conventional owner occupant financing. This means you’ll get a lower interest rate and you’ll qualify for a lower down payment, compared to buying an INVESTMENT property. The ONLY requirement when doing this is that you MUST live in the property for 12-24 months. After that, you can do whatever you want with the property – and meanwhile, you’ve locked in a low interest rate and a low down payment.
Third, IDEALLY you should fix up the property.
Any time you’re looking to not only increase the properties value, but also increase the cashflow…fixing it up is the way to go. My favorite places to buy are just the ones that look a little out dated. For someone just starting out, I don’t recommend you take on too big of a project. This should be something that would take any handyman or contractor under one month to do, from start to finish.
So now, what do you do once you’re done fixing it up? RENT OUT THE OTHER UNITS!
This is where the cost of the other units should ideally cover ALL of your property expenses…this includes your mortgage, property taxes, insurance, repairs, maintenance, and anything else that comes up.
You’re now going to do what’s called a CASH OUT REFINANCE.
This means your bank will give you a NEW loan, based on the new, HIGHER value of your property after you fixed it up…and you profit the difference in CASH.
This means you now can use that money to find ANOTHER place to buy because you have your money back!
The GENIUS with this concept is that if you just keep taking this extra rental income, and re-investing BACK into more real estate, you can start to see these numbers grow VERY, very quickly. Because now, in addition to re-using your own equity to buy more properties, you’ll have extra rental income every month to invest in EVEN MORE REAL ESTATE. This is just compound interest working on a very extreme level.
The ONLY requirement on your end, is to save up the initial down payment and renovation budget…NEVER spent the rental income while you’re re-investing it back into your portfolio, and put in the work to do this consistently until you’ve made enough rental income to cover your expenses.
So as you can see, this is such a great method for retiring early…as long as you decide to dedicate ONE DECADE of your life to doing this part time, you can be set for EVERYTHING after that, just by this!
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
Where did the $7,000 come from at 14:10 ?
Smash the like button for you ☺️
Lol forgot to mention the disadvantage of taking on such a large amount of debt and having such a huge leverage has very high risk. Something goes wrong, and You’re being f***** financially
Does this work in the UK? Because I don’t think so.
How can rent cover mortgage, rent is way less than mortgage
Hey Graham. What if you purchase the property with the intent to live in one of the units (to qualify for this type of mortgage/put 10% down and have the other 10% as working capital for renovations). You renovate the home and when done, before “moving in yourself” you have bank reassess property value and refinance to a loan that will allow you to rent both units (in a duplex) You then use the increased value as the additional 10% to make your downpayment the full 20% therefor getting rid of PMI and now having a rentable duplex…..
Lol. Working 80 hours a week on not being retired
If I’m a Purple Heart recipient and a disabled veteran do I still have to pay property taxes on income properties??
Depends on the state and depends on the disability rating. Google it.
No thanks i rather rent out my stocks each month without the headache (renting out stocks is a strategy called selling coverd calls)
300 000$ triplex? With 2 x 900$ rent? lol
This guy is hilarious. His numbers are miles upon miles off. It’s very possible to make a lot of money owning investment properties, but lawl this was a bad video.
Details?
Until the big boys come in and build 10000 new units. In related news 1+1=2
And right now if you were renting with a lien, tenant not paying, could not evict, you would be toast.
In 2020 the only people that live in 4 plexs are Jigs. Have fun living with them. All of your advice is best case on EVERYTHING.
I’m confused because now that you are positive cash flow on the first property, won’t the second one be negative cash flow assuming the same numbers as the first one? This means that every other year you’re being cash flow positive? Please clarify
They hard part is the initial $60K he is talking about. That alone takes a lot of time to save up.
Yes it does, but while everyone else is taking monthly vacations and posting their $500 bottle service on Instagram, you’re working to build your wealth. When they’re 65 and working at Walmart you’ll be on the beach.
Graham, does it make sense to incorporate as a rental company?
Do you have a video where you break down numbers and scenarios of having rental properties paid off cash vs financed and the biggest difference?
Brother. You speak me language! Thanks for the advice!
Graham, I know you did a video on rootstocks, but can you do another video on turnkey providers? Meaning they buy/sell/rehab the house and property manage. Numbers in my area are not viable for this method.
Dropping Gems ..Thank You
I am wanting to get into real estate. I love the concept and your method. I am fairly new to everything and I have a few questions. How do you find duplexes? What web page is your go to?
Lacey Hamilton you just need to YouTube all the info you looking for and google
👍
I’m watching exact the next year 2 May 20
is it a real dinosaur skull?
Hello Graham! Step No.1 done 🙂 (I used my own excel spreadsheet). In 2 months I will have my emergency fund done (6 months of expenses) and then is when I’m going to start my journey to have that 20% down payment. Hopefully will have it ready on dec. 2021 to start with my first duplex! Thank you!
It’s a legit “blueprint’l but why did you lower the value so much? What am I missing? 300k won’t even get you a condo in LA, where you live.
Hypothetical exam!!!
https://youtu.be/VdsDYH-5sxg how to make 6figures in your 20s
What if it doesn’t rent? 😂
DISCIPLINE…… what a word that most people don’t live by
Sorry but isn’t a cash out refi 80-90% of the Homes equity, not the value of the home?
Thank you for putting this out, wasn’t click bait and very informative. I really appreciate your videos and will continue to watch along my journey!
Stephan, can you plz make a Real Example for your Math in german real estate market?
In our market you never get 900 rent for 1 unit, max. 400-500, so how does the math work here if the property with 3 Units is still 300.000?
Thanks so far
Mint is dope!
It’s all good until the Coronavirus and rent strikes. How many units does it take to not pay before you are bankrupt?
omg this about to be a strong video !!!
I’m not even good at golf😂
This plan definitely works if you buy properties in a great location and definitely someone will rent them
At 13:40 you forgot to mention how your $2700 profit from Triplex 1, is actually only $680 profit to apply towards Triplex 2. This is because while you do have 3 units making you $2700, but there is still the Triplex 1’s cashout refinance loan that you are making monthly payments to, and if we round the 1300 monthly mortgage + insurance, property tax, etc…we only have about $680 made from Triplex 1 to give over to Triplex 2. So Triplex 2’s monthly cost is 2320 – 680 = 1640 per month. And at triplex 2 lets say you make 1800 from those 2 units, so you are only making 1800 – 1640 = 160 a month. Basically I am going through all this trouble to make such little profit only to see the results in 30 years. If I got any of this information wrong please, let me know as I was very excited after watching the video, but after doing the math it was just too good to be true.
F this douche
Discipline!
Cantt move into properties dude
How can i do this in india where interest rates are 8.5%-10% after smashing the LIKE button.
NamaN buy stocks
Can I apply all the points that you mentioned being a foreigner?
Hey Graham, what about the interest rates of the second or more property as the first one was with low interest rate?? this might increase dramatically the monthly cost
He just explained to us the path towards retiring in 10 years time. Truly mind blowing when you’re explaining it to commoner like me who might not even retire after working my 9 – 5 for 40+ years… So this is what the “path less taken” means. O___O
Would it be a good idea to pay a house in cash then rent it out? Would that avoid the interest? I’m new to this but trying to get into passive income
Id starve on $3500 a month…. But I get yr point 😉
Have you ever considered to fly someone out for a week to learn from you first hand? If it’s a contest I would love to be entered I’ve been watching your content for a while and love learning it I hope to be this successful by 25 I’m 18 now
That’s expensive and not efficient at all dude, plus teaching someone takes time.
The problem is the multi unit properties are becoming an Urban Legend.. very hard to find in Atlanta. May have to build one 🤦🏾♀️
hard part is getting that first $30,000 + $30,000
How do you do that in a city like NY or SF
I legit am glad he tells me to smash the like button cuz i would have forgot
I always SMASH the like button before your videos start thank you for your time and effort for giving us FREE education!
Where the $375 mortgage equity came from? I don’t really understand how mortgage loans work also where did the $380,000 number come from after fixing the property at the beginning? Was this just an arbitrary number? Thanks!
So i need 10% down payment and 30.000$ on top of that to fix the house up
That means i need to save up 60.000 dollars, or do you take the 30.000 dollars to fix it up from the loan?
Also, what is 2 – 4 units?, is that a big building with 2 – 4 appartments in it?
Thanks for sharing this information, you covered this subject brilliantly. I done something very similar with the aim of settling the bond in 4 years opposed to the full 30 year term. We need to consider compound interest and find ways and means to save in that regard.
Do you live in each new property you acquire?
This sounds great on the surface, and is very factual in part. The problem occurs when you get to the 3rd or 4th property with increased debt, and the bank simply won’t give another loan due to your now very high debt to income ratio.
Your income will go up with your debt linearly, and you should have enough income in the first place to cover your back. That combined with a good credit score should allow you to take the loans. A 200 usd difference between income and expenses on housing alone per property is not big, your “normal” income should be able to cover that
@Juan Sambucetti I’m sure bank approvals work out fine for some investors, but in many cases including my own, people have personal real estate debt (no rental income) as well as a fair amount of revolving debt — both can drastically affect your DTI. Also for me — one of my properties is a short term rental property (vacation home — seasonal rental only). You combine this with tax returns that take full advantage of the allowed write-offs, and it can bring your bottom line really low causing banks to turn you down. At this stage until I can pay one of them down or entirely off…I’m stuck without being able to add more to my investment portfolio. And I think many other investors would have similar situations…not everyone has lucrative day jobs to keep DTI’s low.
Hey Graham, I’ve been watching your videos for a year or so now and basically what you’ve outlined here is what I’ve been doing. However, I ran into the wall of debt/income ratio where lenders won’t lend you the money because you’re over leveraged, how do you pass that hurtle? besides obviously paying off some of the debt.
I used pen and paper. I calculated my monthly budget before COVID-19 affected my income and also when it did, I’m still over paying all of my debts each month and have a separate budget per month for Uber eats cause I can’t fight my addiction 😂
how do you get a triplex for 300k more like 500k maybe and than what about vacancy costs?
As long as I get a decent house and a huracan evo (rwd) then I’m straight
Well, hope I can start this when I turn 18.😁
21 Units and I’ve totally gotten away from the basics. I have income to do every month from my rentals with no problems. The basics are knowing what you spend. Know what you spend !! I’ve had bumps in the road of income last month – April Taxes Mortgage and some tenants that can’t pay. Added to that not keeping a personal budget and hello not enough money for the month. My white board is coming out again Grant
I can’t believe this video is FREE! Thank you, Graham.
damn graham u receeding really badly
One question, when do you do a cash out refinance?
I am wondering the same
yeah well not in california.. not gonna happen buddy
FIND ME a 3 unit place for 300k… come on dude.
If you live basically any where in the us outside of the 5 biggest cities it’s pretty common.
If I don’t plan on living anywhere near where I do right now (with my mom because I’m 18), should I wait to buy rental properties until I get a place to live where I plan on staying my whole life?
Also if I plan to live in LA, are there any places in the area where rental properties are cheaper?
no thanks
Please share with us where you’re buying2-4 unit buildings with$20-$40 saved up?
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Graham, what do you think about building a 4plex instead of buying one? could that work as well? Not many multi units to buy in my location (Germany).
Ah yeah, time wasted. I am from Germany, this doesnt work here.
Well done
The only part I didn’t understand is that you used the same numbers on the first property as all the others, but the first property should have different numbers because you were living in that property so you benefited from lower interest rates and other things like that because it was a property you lived in right? Probably not a huge deal maybe, IDK, maybe I missed that portion.
How easy would this be to do somewhere like San Francisco where the housing market is aggressive
How would these calculations work for LA? Let’s say we can get a triplex at 800k.
800K Property – 3 Units
10% Down – 80,000
Finance 720k 4% 30 Years – 3437 per month
Renovation
– 30k
Per Month
Mortgage – 3400
Property tax – 800
Insurance – 300
Misc – 500
Total – 5000
Rent: One unit for 2k, one unit for 1k
Costs: 2k
Out of pocket: 110k
+5k (first month renovations expense without rent)
Mortgage Equity is around 1k per month.
Or more realistically a duplex at 600k
600k Property – 2 units
10% down – 60k
Finance 540K 4% 30 years – 2578 per mont
Renovation: 20k
Per Month
Mortgage – 2.6k
Property tax – 600
Insurance – 200
Misc – 300
Total – 3.8k
Rent: 2k
Costs: 1.8k
Out of pocket: 80k + (3.8k first month renovation expense without rent)
Mortgage Equity is about 800 per month
I follow the 1% rule , im not good with numbers but a rich landlord told me follow this number and you will be fine. So thats what im doing.
Your arms are so little I love you thank you for your content
What is wrong with you cell!!!
Is it possible to avoid PMI with a downpayment less than 20%?
Basically do a dang budget people first couple mins. How do you know what your money is doing if you don’t track it?
I’m 25 and going to be financially independent by 35-40ish through my 401k. I need to get my renovation fund together and I’ll also give this a shot. Double retirement income = me super balling at 45
I find it extremely unlikely that you are going to reply but here it goes,
a 2 unit apartment costs about 100 grand USD(90 lakh Indian rupees) in India(no option of buying a whole property due to population issue or only rich can afford)
and the rent for that apartment is about $250-300 dollars- a maximum of $400 if you are lucky.
Now there are 2 problems in India
1) in India mortgage interest is about 10%
2) with that amount of rent, ill never be able to cover up for the property.
What is one supposed to do in such a situation. You’ve are been my favourite YouTuber related to finance so far. I hope you can read this and help me with this.
Relocate. Find a solution
@Calum Nolan yea i prefer investing in stocks, returns are better than real estate. Though about that relocate part. Its hard for indians to get a citizenship of any country especially if you dnt have any money. You see india is strong on paper, but in reality it is very poor and hard to get citizen ship of say us or canada. Thanks tho♥️
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What kind of vacancy rate do you calculate, and are you using this rate as an expense for the property?
1:32 I was actually ready and waiting for the most important thing again which I though was going to be smashing the like button again… but no. It’s adding up all your expenses. What a let down.
Great and clear advice! Thank you for making the real state investment REAL!
Are multi unit properties cheap in the US? As you need a £800k in my city. Unless you convert a house into a HMO!
Graham i was confused. When you refinanace the first property and the new mortgage is $1600/month..and then when you bought the 2nd property, why is it that in your computation the mortgage is still $1600/month? Why didnot you add the mortgage for the 2nd property and only consideres the $1600/month for the refinancing?
@graham stephan
Love this video. Any thoughts on getting a long term tenant vs. following a short term rental (Airbnb) strategy for your rental units?
Wow
“retire early” is a myth.
You should do a video called “Smashing That Like Button”. Show all relevant data about how smashing such a button has affected your channel development.
why do I love the way you say “Smashing that like button” so much?😂
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