xhv8mzw7ge79waga35o97s2wbzpfr6 How to Replace Your Income with Investment Property | IREI Summit 2019
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Matt Atkinson

– MJA Real Consulting –

For more information contact:

mjarealconsulting.com or matkinson@intercaplending.com

  Video Length: 56 min

How to Replace Your Income with Investment Property.

- Matt Atkinson, Founder & CEO, MJA Real Consulting

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Background:

Matt Atkinson started his career in real estate 17 years ago as a mortgage professional and has been investing for the last 14 years. He purchased his first investment property in 2004, a single-family home through a short sale, which is a rental unit he still owns today. However, he over-improved the property, spent too much money on the renovation, and mismanaged his tenants. Throughout this process he learned the struggle of having a full-time job and being a landlord, and how to effectively utilize other industry professionals to improve his investing. Matt credits this experience with getting him addicted to local real estate investing and now owns over 14 million of rental properties personally and with partners.  He has accumulated 25,500 hours experience – nearly 7 years round the clock – and has personally invested over $1.87 million dollars in rehabbing rental properties since 2004, and an additional $4.55 million on flip properties since 2008. After making only $500 on his first flip project, he reevaluated the strategies others were using and learned how to effectively buy the property, get the most bang for his buck during the remodel, and how to price the home for the quickest and most profitable return. In 2012, Matt and his team added real estate consulting to their services.

 

Matt has focused consulting on a local level with his expertise ranging from rentals, land lording, hard money lending, fix and flipping, assignments and building wealth as an investor.  He has served as the President of the Utah Valley Real Estate Investors Association (UVREIA) for 6 years, a board member of the Salt Lake Real Estate Investors Association (SLREIA) for 8 years, a member of the National Association of Hispanic Real Estate Professionals (NAHREP) for 4 years, and is a member of the Utah Association of Mortgage Professionals (UAMP) for the last 3 years.

Text:

0:01  
so again, better idea, raise your hand if you guys actually have a full time career and you're looking to do real estate like passive to like,
because you're bored, raise your hand if that's you can raise your hand if you're interested in doing real estate full time because you don't like your job.

0:17  
Okay?

0:18  
And then raise your hand if you're just looking to dabble in real estate you don't know much about in this your first event.

 

0:24  
Okay, cool, has an idea of where as we're coming from. So blah, blah, blah, blah, blah, blah, blah, blah.

 

0:31  
That was all about me who's all about you. So if you guys want to write this down, we're going to give you a couple of sheets of paper to take notes I like real estate is for me as a real estate investment lifestyle. So dominance gonna pass out a couple of papers that you guys can write.

 

0:45  
To help you raise your hand if you already have at least one rental property, raise your hand high. Cool, keep your hands high with this five rental properties 10 rental properties 20 rental properties 40 rental properties.

 

0:58  
Alright, cool. So I've got

 

1:00  
91 rental properties here in Utah, I have a mix between single family residences and multi units. I have one eight Plex. When I first started, I had no strategy. I literally just started buying properties because it was cool in 2004 actually really wasn't that cool. I just like had a property that was a short sale that the borrower was trying to do a refinance at that time is an internet lead, I totally remember the scenario. They had what's called the subprime loan or 228. They should have never been able to buy a house during the time, but they were able to they made five payments, and then they unfortunately started to default. So they wanted to refinance. And they'd already gone so far along that they couldn't, so I ended up buying the property in short sale to magnet, Utah. I bought it for $90,000, which I still own. It's worth about maybe 250. Now to cool little split level house. So what I want you guys to focus on is the one two and three part. A lot of people who do real estate investing that I chat with on a daily basis, are always looking to do trying to figure out like how to get started.

 

2:00  
Know that this is a different group Raise your hand if you guys have ever done a fix and flip before like he actually bought a property sold it within 12 months three four people okay

 

2:10  
so I have a better idea what what is the purpose that you guys came today? brainstorm

 

2:16  
come on come on come on come sir

 

2:19  
find out from the experts

 

2:22  
cares a lot of experts Could I would have gone to mark Kohler if I wasn't speaking ok so the good example will also become learn from experts without

 

2:32  
networking. What are you trying to Who are you trying to network with?

 

2:37  
Gary lucky looking to like network with people to lend money to or people to do deals with. Okay, cool. What type of deals are you looking for?

 

2:46  
What type of investments are you looking for? So you're looking to do fix and flips. Cool. Do you Are you looking to the already have your own money? Okay, cool. So, can you buy a property within five days or less great.

 

3:00  
Can you buy a property within three days or less? Cool? If I provided you the right information with a scope of work and the video could you buy the property without a home inspection? Or would you need to have a home inspection? Alright cool.

 

3:14  
I will connect with you after so good some quote I'm qualified I don't know right? I'm can give you what you want. I bought about 130 fix and flips myself assignments that means we put properties under contract in the senate other people have done about 300 so I have a good idea within Salt Lake like who combined who can't Okay, what else are we here today?

 

3:38  
Yes, sir.

 

3:43  
Cool. You want to build up more power more passive portfolio so you can retire? Okay, good. Have you determine what your burn rate is? burn rate is how much you need to live off. Because when I sat down, what's your burn rate? So like we can learn about IRAs, and we can do it learn about all these taxes.

 

4:00  
codes and how to build a rental portfolio or how to do fix and flips or how to be a hard money lender or how to buy insurance and pay the least amount of taxes possible. But we got to know what our monthly nut is. So our burn rate is something that you take into consideration now for you to live and live not like live like eating Top Ramen like we were in college or living modestly because we want to but living you also got to take into consideration inflation right gotta take into consideration inflation, future taxes, different things like that. Okay, let's give one other example why we came today

 

4:33  
no one else wants to share really

 

4:37  
beautiful Bueller. Oh, go ahead. We give a headache. We're doing better today. Alright cake Okay good.

 

4:48  
Okay,

 

4:50  
cool. Alright, so you want to see Wizard of Oz.

 

4:54  
Alright, cool. I love I have a couple of Wizard of Oz employs Alright, so good example. This is a

 

5:00  
Real Estate Investing, you need to consult your tax attorney CPA advisor blah blah blah blah. My background is a mortgage lender been a mortgage lender since the end of 2001. I survived the crash I was very fortunate started buying properties in 2004.

 

5:14  
I've done loans at about 45 states on a national basis primarily focusing with veterans. I also have gone to a lot of different states to go vet and buy properties. I've chosen not to do that because I just don't want the risk versus the upside and then having the team it's cumbersome in and of itself to do it here in Utah. So a little bit about myself. I love characters characters, I'm a character I wear my shoes on purpose that hadn't tagged

 

5:41  
Okay, I want you guys oh, this guy's a real guy. He's not just wearing a suit, blah blah blah. Come on guys. It looks like but I'm a little bit gay.

 

5:50  
So a little bit more with why we why I decided to help and share with this is this is my family. fig

 

5:58  
is super important. You can make all the money in the

 

6:00  
world if you get divorced, you can lose half of it. half my friends who are I'm 40 have been divorced. It makes a lot of money, they get divorce half it goes away, their heart gets ripped out. I think it's super important to have a balance in life, right? Different things happen. So this is taking a couple years ago. That is my wife. Those are my kids. That's my step daughter. She's ironically was born the day when the MTC 1997. It's kind of a funny comment, right? So there's kind of gives you a background with me.

 

6:32  
I love experiences. So does anyone like soccer? A couple people. So last year I went to the Real Madrid FC Barcelona game saw Christian Ronaldo play against Lionel Messi. I like sharing this example because my friend Dominic in the back. We were talking about goals for 2017. And he said I always wanted to go to this game. I'm like, Oh, this is a cool thing. I'd like to go to this game. So like wrote it down and then like take some action items and the way

 

7:00  
went on a trip. So why I'm giving this as an example is I think a lot of people that I talked to at least want to do real estate investing, because they don't like what they're doing or some other reason they're trying to figure it out. I think it's really important to utilize real estate investing to enhance your lifestyle. Because if you have a better lifestyle, then it's a lot more rewarding. So my kind of opinion is I don't want to go and like just save up and save up and save up and wait until I'm 50 years old and or six years old and say, Okay, now I want to do stuff. I like to do things while I live. Because it's important because life is short. So I'm going to focus on a couple of things with this one right down starter builder and under.

 

7:37  
A starter is a real estate investor who's been investing less than 10 years. They do not know what they're doing because they're all over the place. They normally haven't survived a cycle. And we just get like deal like, we just get excited about squirrel right? Most people who are real estate investors have short attention spans that I noticed where they like to do a lot of different things. That's my style, but your friends

 

8:00  
10 years is you're establishing a track record. Okay, a builder is yours 11 through 13. I learned this from a gentleman named Peter Fortunato. He lives in Florida. A builder is when you've actually established two different ways of of passive income, you're either going to have real estate as rentals, or you're gonna have cash flowing notes. Okay, so they both generate revenue. So you'd have rentals, right after expenses, operating expenses, management, depreciation, stuff like that, or you're going to be a cash flow investor that you lend money with notes. Right? Does that make sense? So you want to be the bank on years 31 through 40.

 

8:40  
You're considered an Ender. And Ender has two concerns in life, preserving capital because they don't want to lose and pay the least amount of taxes possible. So if you think about your parents,

 

8:53  
my parents are 65 My dad is semi retired. He has about a three

 

9:00  
million dollar real estate portfolio he makes about a 6% cap rate on that he can live pretty comfortably, but their insurance premiums and their the the cost of my mom's health is super expensive. It's about four, four grand a month. So he's concerned that I gotta help him out to like, generate extra revenue. So he lends hard money and other things like that. Okay, so preserving capital and pay the least amount of taxes because most people in their 60s don't want to go and hustle more or work. They want to be able to relax. So that's kind of gives you my perspective of how I look at real estate investing. So I can help you guys out too. So there's my background with this. So how to start So number one is long term planning. So there's three questions. I like writing this down. The question number one is, how much in assets Do you want guys want? How much in assets do you want? At what age do you want those assets? Or what do you want your ROI to be? So how much in assets do you want? At what age What do you want your ROI to be? So every time I'm looking at deals or apartment

 

10:00  
Answer, doing a fix and flip or whatever I'm doing that has to do with real estate is I've established those goals. So for example, my goal is I want 200,000,200 million in assets at the age of 65, earning a 10% rate of return. Now, that doesn't mean everyone else needs to do that most people can get 10 million. I already have about 17 million in real estate right now.

 

10:24  
I'm not a professional speaker that travels the world. I live in South Jordan, Utah, but I love sharing this information. Because a lot of you guys can learn how to do this yourself. Why I'm giving this as an example, a couple years ago, when I started thinking about man, I'm going to build up this portfolio but I'm gonna pay tons of taxes, right? No one likes writing big checks to the IRS. We want to learn how to make as much money and keep it you guys agree. So what kind of kind of made me shift is learning Okay, how do I do things better now so I can build up my portfolio still earn an awesome rate of return to pay less tax.

 

11:00  
Raise your hand if you'd like to make a lot of money and pay less tax. That's why we're all here. And we're in Provo, Utah, the most conservative city in the whole wide world, right. Okay, so, I went to VHS. I wasn't smart enough to go to BYU. So I'm gonna throw a little jokes in Provo, so.

 

11:14  
So good job. Okay, so little more of that I started investment strategy. So as we talked about your first 10 years, we're all over the place is because we're establishing a track record. I want to talk to the audience and be considered with this. If you've been investing for more than 10 years, please raise your hand.

 

11:30  
We got three people. Cool. Okay. So,

 

11:33  
a couple ideas of how to utilize real estate investing. I like having a full time career and investing. So my full time career as a mortgage professional, I've been a mortgage professional since the end of 2001. I still enjoy it. It's the only time I feel like I can talk to normal people and not be on the clock. When I do real estate consulting, I charge 1700 dollars an hour. I prefer not to do hourly consulting like that, because I'd rather have people learn collectively versus me trying to help you how to figure out

 

12:00  
The first 358 years. So the reason with that I'm very, very, very conscientious of my time. While I'm at work, I got what's called the work mode, Matt, and then fun, Matt, work mode that's really disciplined. I got a lot of things going on. And then afterwards, I'm like, I don't really care and just have a good time. Because I know time is the only thing that we can't replace, right? Life is short. Couple years ago, my business partner, the mortgage company that I worked with, passed away in an ATV accident he saw on Thursday broke his neck on a Friday 43 years young. It really gave a shift in my life of like, holy cow. There's way more to work. And that's why I started like traveling more spending more time with my family and other things like that. And hopefully, I can give you guys some ideas that you guys can implement while you work and be disciplined with your time so you can build wealth for yourself. You guys agree with that? So here's my background. These are all these different ways to invest. I'm going to focus on to primarily right now once fix and flipping and why one is doing rentals. The reason I want to talk about

 

13:00  
Fixing flipping as most people want to do fix and flips because they need more money to buy rentals, right? So if you had a bunch of money, you're not going to go do a bunch of fix and flips because your taxes ordinary income, you're going to do probably more passive. Like I don't want to pay a lot of tax. I was the complete opposite. I started buying rentals first because I didn't think about doing fix and flips I owned 26 rentals before I bought my first fix and flip in 2008. I was just a really, really good saver. And I knew how to leverage really well. So then I was like, oh, man, that's why when he shared the bio, of like, I literally just made 500 bucks on my first fix and flip and I did everything wrong. I'm gonna share three quick tips that everyone does wrong the first time. Tip number one, don't over improve the property. Okay, so establish a budget, write it out, brainstorm who your listing agent is ahead of time. And then go with your budget. Okay, in our market since 2011. What's the market done in Utah? Just go up right you

 

14:00  
You haven't invested before 2011 you don't know any difference, you just see going up going up going up, and it makes a lot of us look really good even though we don't know what you're doing as much. Okay?

 

14:10  
Tip number two, you need to make price adjustments quick enough before the market makes you do it. So I thought this spring, we would soften more. I'm wrong, which I'm totally okay with this. So I chose to buy less fix and flips in the fall because what you buy in the fall, you know, and we carry it through the winter and listen the spring. So we've had some good pops. I just listed a house about three weeks ago, we got five offers in Murray. And then we're about to list the house today. So we're going to list it really competitive. So we get multiple offers, because I want to move my inventory quickly. Okay, here's tip number three.

 

14:47  
Don't sit on the property during the winter. Okay, so if you've sat on it through a cycle, you're gonna have a lot of different deferred maintenance, water damages, roof challenges, slip and falls, different things like that.

 

15:00  
That I currently have a $1 million lawsuit that I'm in that I get to go to court. And in about a month for it's nothing that I did. On purpose. Someone just happened to slip and fall and one of my properties and they're suing me, for my insurance policy, I like to be super transparent so you guys can learn what to do differently. So I think insurance is really important. I also think having an LLC is really important. Because it's important to know like, Hey, what's the upside? what's the downside? And can I live with it? Right? So it's not like we're learning these things in books, this is just real life experience that you guys can get better results. So hopefully, if I didn't scare you out of investing, we're gonna get to some good stuff. Okay. So here's two examples of how people buy most properties. And I'm going to focus on most of us have been doing it less than 10 years except for the three people that raised their hand if that's okay. So I think I'll give you guys a couple extra tips. So you can normally buy a property put 20% down, you can do that all day long. I think that's a great way to get started. I also think you're going to run out of cash really quickly. So how I bought my properties, when

 

16:00  
My first started is I would buy a distressed property that needed a bunch of fix up. So this is echoing. I would buy a distressed property today. Can you fix it?

 

16:11  
Not you. It's me. That's what my wife says too. Alright, cool. No big deal. Yeah, yeah, I think so I'm buy a property that would needs a bunch of work we would normally buy at the auction or a short sale or private sell. All these opportunities are all over the place. You just don't know that they're there. Okay, there's tons of people that you can buy these properties from. The reason we would buy them with a private loan versus getting an institutional loan is normally you gotta close quick. And the second thing is the house is not loanable, the roof could be beyond repair. The furnace might not be functional, different things like that. Okay. So I think that's important for you to take into consideration of what type of properties you want to buy. It's you can see on the left, you buy a property in today's market for 250 grand, you can totally still do that in Utah.

 

17:00  
Utah County, you can still buy solid counties pretty challenging to buy a property for 250 right now, but I love Weaver and Davis county because I would rather buy in Salt Lake because of the overall economy versus going to the Midwest. I've been to Kansas, Kansas City, I've been to Tennessee, I've been to Kentucky, I've been to Detroit, Michigan, been a lot of different places to go vet properties. And I just really love the local Utah economy. So with this by hard money, or you can buy traditional, I'm going to give you guys some access later that you can watch this in a two hour versus a 45 minute presentation. Because I want to try to give you as much information to spark different ideas for you. But these are different ways to buy properties. The starter method is I like buying rentals up front. And I also like buying fix and flips but before you decide to buy the property, you need to decide which one you're going to do. Because the improvements you do on a rental or not normally the same improvements you're going to do on a fix and flip. I personally put another

 

18:00  
products in my rentals because they're rentals. That makes sense. Like if you have a toilet, this is a great example. We put like really nice toilets in our rentals so they don't plug because calling a plumber when they plug is totally a pain in the you know what, right? So I'd rather spend the extra hundred bucks but this is not until I learned like 14 years later saying, Oh, I should just spend $100 extra for a nicer toilet versus me having to mess around with that every year. Okay. Another example is cabinets in the kitchen. I normally put Maple cabinet maple wood or oak wood versus a soft wood and you don't know that until you start buying rentals because the doors get beat in and then just the durability of the property. We're on a fix and flip. We're putting in thermal foil white doors and no one cares what they are. They just care that it looks cute. Okay, so there's a difference of what you do. A lot of newer investors who've been only doing this for four or five years don't know the difference and they're getting deferred maintenance a lot higher because

 

19:00  
They're not getting better quality materials. Different example real quick is on exterior property. So I love before and after properties. This is a property we bought a couple years ago. The reason I like it is I bought it for $90,000. It was on 1048, South 400 East in Salt Lake City. We bought it for 98 and sold it for 315. That is not normal. It was totally needed. everything done. I sat on it on a whole year. So I was like emotionally over it was like, Oh, this property sucks. made like 60 grand is pretty good. But what's good is when I first started over here on the right, that's how we would fix up our rentals, which we totally over improved it because I didn't know any better. But that gives you a good example of like just like a before and after on a flip. So this is a property that we flipped. Okay. So maximizing flips a couple things with this. Your ARV means after repair value so what that means is was the property worth

 

20:00  
Next up with before you're going to put a bunch of money into it. So ARV is after repair value, you normally take 10% off the top of the ARV, and I'll break this down for you guys real quick so you guys can be like, Oh, we got this down. 3% for buyers agent closing costs 3% for seller's agent closing costs 3% for buyers closing costs, a lot of people got to get paid and 1% for sellers so basically 10% Okay, I've audited about 130 of my files and it's always 10% within like one basis point okay, this is really good for you to you normally you're going to borrow money from other people's called OPM other people's money, the more often you borrow money from other people, your actually rate of return increases because you have less cash out of the deal. So that's a really cool thing that I can share with you guys later. I'll send you some articles to read if you guys would like I love leveraging my I love leveraging other people's money because that means I can make more with my own that I have myself. Personally I'm looking to make 20% of my money personally.

 

21:00  
So if I'm putting money into a deal, that's the type of returns I'm getting. When I borrow money from other people, I'm normally paying six to 10%. Depends on how long the note is for or what type of opportunity they're looking for. Just to kind of give you an example. Most people are super happy earning 7% compounding all the time because they're not going to lose. That's why some real estate investors prefer notes because they're collateralized or lending, borrowing their they're loaning another property. Okay? So, a cool example on this, if you fix and flip a property that you buy for 160, put $30,000 into it and make a net profit of 25 grand, that's pretty good. You can do that about three to four months.

 

21:41  
People are doing it in today's market. I saw five of my clients that are consulting clients that are here that it's awesome that if you learn how to do it, you can you can totally make those returns. Some people make more some people like me, yes, yes, gods are.

 

21:57  
You look like you look at sean penn By the way, good looking guy.

 

22:00  
You're welcome.

 

22:04  
That's okay. I didn't say you have to have his actions, I'd say you look like them. All right, go ahead.

 

22:15  
Sure.

 

22:17  
3% for seller's closing costs are sorry, 1% for seller's closing costs 3% for buyers closing costs. Yep. So I'm budgeting that I'm paying for most of my buyers closing costs, because as a lender for 17 years, I know, most people don't have 5% down then an extra five grand for closing costs these days. So I just price my houses accordingly so I can move them. So I kind of factor those in up front. You're welcome. Great question. So here's what I like about

 

22:47  
rentals versus fix and flips. Basically, you're going to create create longer wealth by holding rentals, because three things work in your favor. One, as long as you do this correctly.

 

23:00  
One normally the markets going to go up on average conservatively 3%. Okay, in Utah, it's been going up 10% the last seven years. So that's not normal, I'm super excited for it to slow down, because it's going to get a lot of people out of the market. And that'll just be provide more way, way more opportunities for me and for you guys do okay. Number two is most of the time you're gonna have your tenants paying down the mortgage for you. And you're so paying down the mortgage over time and the properties go ups going to give you some really cool juice or extra money when you need to sell in 10 years that what you put into the property initially could be like 25,000 $50,000,

 

23:39  
but then you can make $150,000 10

 

23:41  
years later, because as the value goes up, and the property gets paid down, that happens. The third thing is monthly cash flow. I personally don't really bank on my monthly cash flow right now I use the extra money just to buy more real estate because I'm 40 years old, I'm not looking to retire. I don't think I'll ever retire. I love what I do. And I

 

24:00  
An amazing lifestyle that I've been able to work with. With that being said is I think as long as we have income working towards our favor and be able to do cool things, then we can make really good decisions financially. Right? So there's the upside. The biggest downside with rentals is property management. The most of the time why people get out is because they're mismanaging the property. So I think it's really important for you guys to vet a qualified property manager. Here's three quick questions that I would share with them not on here. Question number one is what do you do to maximize my profit as a as a investor? Okay, question number one. What do you do to maximize my profit as an investor? It's a pretty high level question, right? Not what are your fees? Not what your management is, what do you do to maximize my profit as an investor? Okay, question number two. What does your own portfolio look like?

 

25:00  
Because those that own properties themselves are gonna be way more empathetic to what you're going through. And in my experience, they do a way better job of keeping money in your pocket.

 

25:10  
Okay, so what is your own portfolio Look, look look like? Question number three, what's your real estate? exit strategy? Because if they don't have an exit strategy, they're probably not thinking far enough.

 

25:24  
So I think you could ask those four other qualified professionals to real estate agent, mortgage lender, financial planner, different things like that. You just change them a little bit based on what the question is.

 

25:35  
All right back to beautiful photos. This is the same house I showed you before.

 

25:41  
It's really cool. That was a bedroom. We totally change the whole configuration to make it a kitchen. That means we had to like pull up the floorboards run new plumbing underneath the layout was bad from 1915 I don't know what the pioneers weren't planning back then about today's style K. Boats gives you a cool example.

 

26:00  
of like, you'll notice right here, we brought the windows up right from right here over here, we put a hood in and did a bunch of other cool stuff. So this is obviously not your first or 10th, or probably even 40 a fix and flip we did about probably 70 when we done this one, maybe 80. So we keep learning on how to do things better reduce our costs, and also have a better product.

 

26:24  
Yes.

 

26:29  
Yeah, great question. The question is, when as a starter phase, did I manage the properties myself? Or did I hire property manager? So I had eight rental properties until I hired my first assistant. And

 

26:41  
I don't think anyone here really knows me. I'm all over the place gay. So as I've gotten older, I've gotten more disciplined. So I was a commingling full of receipts all over the place. Like I'm in your shoe box investor who has all this shit everywhere and you like here you go CPA on the 15th day of October and they're like, Who are you?

 

27:00  
And like, Oh, just helped me out. Okay, that was totally me for like five years. And then as I build up more of my God, I gotta get more organized for me to be able to do this. So I personally, we manage our own properties, so 9191, and then we manage like 10 other properties for some like, really, really, really,

 

27:19  
really good friends of mine who live out of state now. So great question. Um, I think that you should, I think everyone should manage it a little bit on their own, do some training and then if you're like, this is not me, if you don't think you're going to be able to follow through on rent and you're going to let them talk you into like, not paying for a couple months. Give it to someone else. So great question. Here's fix and flips.

 

27:48  
I love hazardous substances, math. So funny story. Has anyone ever gone to jail before? Okay, I did. Okay. So I love telling transparent stories because it's real versus like, Oh, nothing ever happens again.

 

28:00  
So I bought a property that was condemned by the health department for alleged meth in West Valley, Utah a couple years ago. Okay, so at a sign on it. So I took all not me personally, I've actually still never been in this house. I had my team dispose of all the stuff inside the house. Okay, just take it to the dump.

 

28:20  
I then tested for meth because it was a lead from health department. It came back positive. I said, Okay, cool. I gotta hire company paid 4000 bucks, no big deal. They've cleaned it up, then fixed up the property and rented it out. And I bought this property with seller financing with 10 grand out of my pocket. Really cool way to buy real estate. Ok. So the health department's like, Hi. What did you do with all the stuff that was in the house? Did you properly dispose of it? I'm like, I don't know. That was like nine months ago. And they're like, well, as the owner, you personally can dispose of it. I'm like, I didn't dispose it. I've actually never been in the house, which is totally true. She's like, we're

 

29:00  
All the receipts and like I don't know they're actually I didn't know there was my there with my account I'm all over the place I got a shoe box K. So I didn't want to put put my contractors under the bus because they dispose of the stuff. So basically I got prosecuted with the class sci fi, what's a no see felony is really cool got prosecutor with a classy felony

 

29:24  
and they like to play in abeyance and did some really cool Community Services good for me. But the reason I'm sharing this with you is we always hear about like all these good things and like it's all hunky dory is really what has happened is I did 25 hours of community service in is a really good things that a homeless shelter helped me get really grounded in Salt Lake. So it's not a big deal. We can always learn from different scenarios. If you guys want to Google me, I think I might have a mug shot. I can find it. So either way. It's a great story because then you're like, wow, this guy's a transparent guy. So I like doing both rentals and fix and flips because overall you're making the neighborhood better

 

30:00  
legitimately, it's cool. Today I spoke at 12 o'clock in Sandy, because we were driving, we're driving through a neighborhood. I was like, Oh, I fix and flip that property. And one of the people in the cars like I remember that in one of your presentations, this is what color it was before and it's just cool that you're like making the overall economy a better place. And you can make a couple bucks and go to soccer games. Okay, so I like fixing and flipping. I like rentals over fixing and flipping. Now if you don't have the capital, I understand you need to do both. So we wrote down burn rate so you guys will write this down again burn rate. So your burn rate is what's your monthly not to live. So I want all of you guys to write down how much you think it costs you to live.

 

30:43  
That includes taxes, charitable contributions, eating out at Goodwood barbecue the Cooper club, to the club. What's the to know? The cream raises the Creamery. The Cougar Creamery

 

30:59  
trying to think

 

31:00  
All this stuff from a long time ago, okay, so write down your burn rate. Now put your monthly burn rate times 12, please.

 

31:11  
So I'm a simple math guy, let's just do 10 grand a month to live and some of you guys might Holy cow, I'd love to make that live where other users or other viewer like that's not enough old you 10 grand. So 10 times 12 10,000

 

31:24  
times 12 is 120,000. Right? You should have a burn rate of at least 220 times what you need to live. So 20 times 120,000 is how much

 

31:37  
2.4 million.

 

31:40  
So for you to live off your assets, you should have 20 times what your burn rate is to retire at a minimum.

 

31:51  
So let's talk about that. 2.4 million if you live off 5% on your money is 120,000

 

31:57  
it's not super aggressive, right?

 

32:00  
You should be able to make at least 5% of your money.

 

32:04  
Okay, why I'm bringing this up? Remember how I said what are the three questions up front? How much do you want assets? At what age? What do you want your ROI to be? Right? So I've established my financial goals for my own lifestyle and just because when I hit goals, I get super bored again, I'm like, Oh, I hit my goal. I literally like get bored. I'm like, I gotta keep hitting bigger goals. But I think if you guys can come across come out of this meeting this afternoon with some action items that you can do so establish your burn rate. If you don't know how much it costs for you to live each month. You should probably start budgeting not to live frugally but Lisi know what it's going to cost you to get where you want to go. Okay? Different comment with this. We will for those at the end will email you this I really reinforced like these financial numbers. So like as you guys can see on your your sheet One, two and three. Before I do any remodel, I'd type I asked Hey, how much will this improvement increase?

 

33:00  
My rent, how much will this improvement increase the value of my asset? And then will this improvement increase the value, increase my rent and the value of my asset? If I get and if I get yeses on both, I'm normally going to make that type of improvement in my property. You heard earlier how much I've already spent on fix and flips. Like I literally pulled it up from my controller, this didn't want to make up numbers. I spent $4.8 million out of my pocket fixing and flipping houses. If I'm giving you suggestions, as I've already spent the money like, just listen to me, or, or do it on your own and not get the results you want. There you go. Right. Now on the rentals, I've spent that much money remodeling properties, I don't get that money back. So over time, I've started establishing these questions. So then before I put money into projects, I know if it's worth the money or not, if you have a water heater real quick that goes out. You're obviously not gonna be like, well, I don't know if I want hot water or not. You're going to make those improvements but you guys get what I'm saying. Yes, ma'am.

 

34:01  
really light? Yeah, I know, we talked about it earlier, Steve Bond said, because we are not getting paid that we could have a little mistakes to make it better. So the first question is how much does this improvement increase my rent? How much does this improvement increase my rent?

 

34:19  
The second one is how much does this improvement increase my value? So how much does the property go up? putting in a new roof really doesn't increase your rent? You got to have a roof that's doesn't leak that. Question three, is does the improvement increase my rent and my value? If the answers are both? Yes, that I'm probably going to do that.

 

34:44  
Spalding concrete is going to give me no increased rent, but it could prohibit a trip and fall. Right? Just to give you different examples. I'm not super concerned with trip and falls, but I'm going to go to court about it in a couple months. So I'll let you know that

 

35:00  
Okay, so this is a form that you guys can get on my MJ real consulting website literally when where people are analyzing deals and they write these out of awesome results because they go through the homework. Okay?

 

35:13  
I like does anyone like baseball?

 

35:17  
Yes board.

 

35:19  
Now? Yes, this is okay. All right. I need it. I feel like I need a Red Bull. Alright, so

 

35:26  
I love sports analogies. I like baseball. It's small ball, right? You want to get singles, just base its base hits basis. I think a lot of people who've been investing less than 10 years are still trying to go for the home runs, and you're just chances are not as likely to hit home runs versus base hits. So I like building long term cash flow by building a portfolio. Obviously, there's a gentleman that speaking I don't know which speaker he is. He's like a keynote. But he shared last night at the dinner he's about to close on his 2000 door and

 

36:00  
As 150 million dollars in real estate, I'm like, Yeah, I could learn from that guy. It's just progress, right? Just the progress with how we want to go. But that's still probably a value add play that people need to take into consideration. Okay, so I like face hit real estate investing. So when people bring deals to me if you guys want to write these questions down real quick, the question is, what can I get it for and what is it worth? So anytime any investor brings any opportunity to me is what can I get it for and what is it worth? So you can do that for a storage unit condo complex strip mall, a four Plex duplex I don't think you can do that with Bitcoin. I'm not a Bitcoin expert. Okay, but with real estate is how how does this investment help generate cash because most of us want cash flow to live on. Most of us are not just buying land in the sticks and letting it sit for a long long time. Let's see what I want to put your trailer there.

 

36:58  
Spring city is it spring city

 

37:00  
I saw I got like five clients that have trailers in spring city. Okay, so what is it worth and what can I get it for? When we're analyzing properties? I love the technology, Utah's very, it's pretty easy for us as consumers who are not real estate professionals to look at the data once you learn how to do it. This is the tax data on a property that we move last week or last month.

 

37:23  
Sorry, last year had to remember which house was now elected comps. Here's an example of how I look at comps This is not what's a CMA. This is called a brief report. Because when I like who's a realtor, I want brief reports. No, CMS got it big like smiley face brief report. I liked the brief reports. I'm more confident in me vetting the data than your manipulation of the CMA. That makes sense. I want to vet the data, please send it to me and then and then I'll determine what the numbers are. But this is a good version, the others the other way of looking at it.

 

38:00  
If you're a hard money lender, this is how you underwrite also. So I'm showing two different spectrums, that if you can learn how to analyze comps for 510 1520

 

38:10  
years as you build up a portfolio, you're probably going to lend money to other people. And then you're going to underwrite it yourself. So being an investor for seven being a mortgage lender, 17 years and an investor for 15 years. Yep. 15 years Don't exaggerate. I've looked at a lot of appraisal. So I've been able to determine, hey, where the values at, right? Obviously, every markets different you have different dividing lines that you literally have a 20% bump up, depending where it is really common in Salt Lake like Sugar House area, different things like that. Not as common down here, I think. So just different things to take into consideration. Oops, well, that was weird. Ooh, love this one. Alright, so here's a good example. These are both split level homes. You guys know to split level you literally walk in, go up the stairs, go down the stairs. Okay. So this is a split level home.

 

39:00  
Both has a two car attached garage as you guys could tell, different format both as a fireplace. Let's say they live there across the street from each other. Property a

 

39:13  
is 1400 square feet on the main floor. 600 square feet in the basement to total of 2000 square feet. Do we agree?

 

39:20  
Alright cool UV HS high school math. Okay, property B

 

39:26  
is 1000 square feet on the main floor and 1000 square feet in the basement 2000 square feet right? Let's say they're the same year built.

 

39:35  
Which one do you think's worth more property or property be if you mean property is worth more Raise your hand.

 

39:42  
If you property bees worth more, raise your hand. Holy cow if you're not going to raise your hand Don't raise your hand. Alright, cool.

 

39:50  
Who's this?

 

39:52  
No, no, no.

 

39:56  
Alright, cool. She's like you already talked to me earlier. I don't want any more attention. I gotcha.

 

40:00  
k. A has what's called gross living area. This is a huge difference that most people don't know. The gross living area is the square footage above grade. Would when you're looking at an appraisal that will comp or determine the values. Most realtors do not know this. There is pulling total comps and they're going off What's the price per square foot? The gross living area makes a huge, huge difference of values. There are people that will bring me deals because they don't know this. And they might have property a house but giving me property be comps. And I'm like, Yeah, you're right. The values only 320 where it's really 360. So I'm not going to tell them hey, it's 360. So it to me for more. I'm like yeah, that's cool. Yeah, you're right.

 

40:46  
Right. Alright, cool. So this is a good example of knowing what your numbers are based on improvement. Okay.

 

40:52  
So how do I increase my value? Here's three simple ways. Paint strategically. Painting strategically means

 

41:00  
Don't do what is super trendy. Do what's very thoughtful. I like to tone paint jobs on all my properties. Two tone means the ceiling and the ceiling and the walls one color base case indoors a separate color. I paint all my rentals, the same freakin color called desert Fon.

 

41:21  
Since 2007 I got a bunch of real estate investors who copy me which I love it. So it's like oh, that means you learned that from Matt Atkinson because no one else does desert fun in Utah. But what's easy as you have turnover with your rent, it's way easier to touch up the paint and then just move your inventory way quicker. Okay. Long term kitchen planning. Why called it long term kitchen planning is what's trendy is now is not going to be trendy in 10 years. Right? So what we try to do on our rentals is make what

 

41:50  
makes the most sense functionality wise and then also in 10 to 15 years when we sell it, we might just pick the cabinets or do something else like that. Okay.

 

42:00  
And then modern bathroom trends like we got tile that's like this way right on the walls going up and down. It's kind of weird cool right now cuz it says it's cool that you have these weird strips. Like we just want to put nice basic stuff in. So in 10 years, you're not like, Oh, that was the 2019 Sears model that went out of business because Sears went out of business. You know what I mean? That's bad to Sears out of business.

 

42:26  
They got bought back. Okay,

 

42:29  
all right. Either way. I don't watch a lot of TV so I tried to be a Sears Okay, so those are some good things to take into consideration also on your fix and flips. Okay,

 

42:39  
so Oh man, I gotta go back to this photo. This photo is awesome.

 

42:45  
So I bought this from a realtor which was in a pocket listing. A pocket listing means that she wants to he or she wants to double side the commission. Happy to have realtors double side commissions. We love doing that. Okay. So

 

43:00  
Can you believe two people of the mouse like that? They lived in an owner occupied not rentals.

 

43:07  
It's crazy, huh? There's feces everywhere. Unfortunately, they plugged the toilets. It was a senior citizen mom and her handicapped daughter. So we bought it from the realtor we refinished the cabinets. We put new granite on we extended the cabinet over here, put some new laminate in some new lights in.

 

43:31  
Guess can tell it the microwave. What I would have done different here is I would have actually just popped that cabinet up to have be what's called

 

43:38  
staggered, I would have done a different so I spent 150 bucks and after like I should have made it staggered, didn't think about it. I'm sharing these little tips, the things you learn over time. But what's cool is when we sold the property, I never post before and after photos on current listings. Gay

 

43:56  
we do it after like a year. All right. So but it's cool because you're

 

44:00  
Making the property way better, right. And this is in Western New Thought.

 

44:04  
So good way that you can increase value for you guys that are investing in real estate is to is adding square footage or changing the configuration of the property. So a couple I'm going to give three quick tips with this number one is if you can add an extra bedroom to increase rent, or resell ability that's really good to do. Number two, if you could make the bathroom from like a half a bath to a three quarter bath or a full bath, and it doesn't cost you an arm and a leg that's probably pretty good to do. Because you're the longer you have the tenants that staying in the property, the more money you're going to make. Every time we turn a 10 it over based on 2018 numbers it cost us 30 $100.

 

44:42  
So take the crappy crappy tenant to beat the hell out of the house and the tenant you're like, whew, this was amazing. This college student that lived in our basement so heavenly threats are the big stuff in there. Okay. Those are just kind of gives an example of like the difference Okay, so adding on second thing so adding an extra bedroom or bedroom

 

45:00  
Making the configuration better for the bathroom adding on right? The third thing is making the Floor Plan more functional. That does not mean I'm blowing out all the walls because that's really cool. You got to be strategic with what you're doing and think about Do I need to bring a structural engineering? No Yes, different things like that because I don't want to just spend money for fun. on real estate, I'm cool to spend money for fun for fun, but not for other stuff. Okay, builder kind of tie this all together. So builder Think about this. If you've been investing for 10 1520

 

45:36  
years, you're gonna know a lot of this. You're gonna do tax planning, other different things in your life. I think a quick comment or compliment with this event is all of you guys should maximize your Roth IRAs as often or as much as possible. Is anyone here under

30?

 

45:54  
We've got a bunch under 25

 

45:57  
Whoa, and keep u2f ready. Yes.

 

46:00  
Brothers, because like both looking guys, yeah, okay. 20 520-423-2221

 

46:10  
to 25 Okay, all right, cool. Okay, good. So write this down YouTube that everyone else Roth IRAs max fund for 10 years, how much will you have in 30 years when I sit down, you have to tell me. This is a good exercise. I have Roth IRAs for my kids, they're eight and five, we started using them when they were born. My kids are going to love me when they're older, because we're putting in money now and it's just growing and growing and growing and it will stop it'll just grow some more.

 

46:42  
You can buy real estate, doing it also, which is really, really cool. It's a different class, different style, different things like that. Okay. So this is another form that we're going to

 

46:55  
will email you guys if you guys would like but every time

 

47:00  
Before I buy a property, I like questions and threes for some reason, a lot of trading that I've gone to, they always do questions the threes is how does this investment assist my short term goals? How does this investment assist my long term goals? And how does this investment assist my short and long term goals? I like making things I like writing things out to get the results I want to get. That makes sense. When I showed you guys the photo of the soccer game,

 

47:25  
got an idea wrote out I wanted to go why I wanted to go three action items. I wrote up the action items I needed to do and then like a week later, we're like, cool, we're going to soccer game, right? Like that's how life should be if we can create it for yourself. If you'll notice on the bottom, it has how much you want assets at what age and what do you want your ROI to be? Because each time I'm buying or selling real estate, I got to make sure it's checking the boxes of what my long term goals are. Right? Part of planning.

 

47:53  
Okay. So, kind of I'm going to tie this in wrap up in a couple minutes. So we covered a lot of stuff

 

48:00  
Right, covered, fixing and flipping, buying and holding, we identified most of you guys in here are wanting to build a passive portfolio to compliment you're not looking to necessarily quit your job.

 

48:13  
I'll give you guys access, you guys can watch this condensed version for two hours, there's a class called buy and hold and versus fix and flip. That's an actual hour long that just covers that. Then there's another class of how to turn 15,200 thousand it gives an example of fixing and flipping and buying and holding berries of hands who would want to be able to watch that later on their own? Alright, cool, Dominic, here's what we'll do then. We're gonna just pass out a quick survey that if you guys want to chat later, I just wanted to keep open ended questions for seven minutes of general stuff or ideas or impressions. You guys got shotgun style? Who has questions or feedback? Yes, sir.

 

48:53  
That's okay.

 

48:54  
Since I bought my first property in 2004, I've been a mortgage lender since the end of two

 

49:00  
One.

 

49:01  
Yeah, I enjoy it. I got a team of five people that work with me that help support my production. Question. Yes, yeah. You talked about

 

49:12  
10% rate?

 

49:16  
Uh huh. Yeah.

 

49:18  
Since you're kind of a mortgage lender as well.

 

49:26  
Cool. So the question was, is where do I get capital funding for six to 10% cycle? So most of them are personal relationships based on me being involved with those organizations that he shared earlier. So I would say a lot of people now just approached me because I've have established a track record and either people like me or they prefer other people. So as a starting out, you're going to develop your own relationships with people I don't know, actively go out and solicit it. It just comes to me now. Great question. Couple other questions, right? Yes, yes, sir. Sean Penn

 

50:00  
Sorry, Sean Penn doesn't date young girls and doesn't smoke. Gotcha. Go ahead.

 

50:12  
So when I like if I buy an apartment complex? Yeah, so if I was gonna buy an apartment complex right now, I would probably sell three of my single family residences. Probably for probably have to sell for single families that have $100,000 in equity, do a 1031 exchange. So if I buy it for 2 million put down 400,000, finance 1.6 a lot of people a lot of commercial lenders will do that.

 

50:37  
Yeah, yeah.

 

50:41  
I try to get the longest term possible. So most uncommercial is between probably 20 to 25 year terms, but they normally have about 10 to 15 year balloons.

 

50:52  
Good question. We'll do three more questions real quick on your survey, if you guys would like to fill it out. Basically, you can just write your name, your phone number, how much you

 

51:00  
Expect to make this year. The reason I like to know what you expect to make this year, it gives me an idea of where you're at. I like to know what people like to make next year. And I know what kind of person you're thinking of my goal this year is 4.4 million in gross revenue sales, that includes mortgages, rental portfolio, before expenses, assignments, other stuff like that. So it gives me an idea of like, where you are, and like what type of dreams or things you're doing. And then if you can put your three year income goal, most people can't beat past three years, right? So kind of see where you are three years where you want to go, then you can just do one through five with the questions. And then what we'll do is for those of you guys who filled it out, we will contact you email you guys the two workshops and the access to the forums on Monday. And then and then if it makes sense, we can do a 15 minute 20 minute evaluation over the phone to see how I can help you guys get farther along if you'd like. There's a couple other people that raised their hands real quick as we wrap sir

 

52:01  
Yeah,

 

52:03  
yeah, not just real estate in him. Yep. Thanks. Good question. Yes ma'am.

 

52:07  
How am I finding them?

 

52:09  
Good question. So I just taught a class at 12 o'clock was how to buy real estate or not on the multiple listing service. Was it here? Is it a different event in Salt Lake? Well, you can you can learn more where I different talk on topics.

 

52:23  
Three

 

52:24  
okay.

 

52:29  
So how so if How do you if you wanted to how would you find business now?

 

52:35  
Besides MLS Yeah.

 

52:38  
Okay, how long you been a realtor for?

 

52:41  
Okay, so you got two months of experience? Who do you work with?

 

52:46  
Cool. Okay, cool. Does your broker have a lot of income properties?

 

52:51  
Okay, does anyone in your office have a lot of income properties?

 

52:56  
Yeah.

 

52:57  
Okay, cool. Then I'll share three tips with you having to

 

53:00  
experienced in your broker doesn't have a lot said, Okay, good. Number one is that called property managers? I'm sharing this with everyone. A lot of property managers have inventory that here's the questions asked them, would you be interested in selling a property where you can keep the management and make a fee commission for me to be the buyer? Like that one? Would you be interested in selling a property where you keep the management and you are in a commission? For me as a buyer? So a lot of property

managers have burned out, landlords.

 

53:30  
Number two, is I would go start going to the Ria meetings will email that to you on Monday if you fill it out.

 

53:36  
Awesome. Are you showing up? I've ever met you before.

 

53:42  
Okay, well, those are the two months I wasn't there then.

 

53:47  
Oh, you're going to the luncheon. Gotta go the night meeting. Okay, cool. The third one, so Ria meetings, property management. And the third one. If I this is me, effectively, I call cast I would call PSL. I would develop prospecting skills.

 

54:01  
PSL lamb words and by the properties from them

 

54:05  
yeah psle hasn't okay SLS? Yeah rattler kisser k SL. No, no, no. Yeah, no, no Craigslist carousel That is correct. So most landlords, are you open to having similar cash flow without the headaches of management maintenance? Because when I sit down, would you like to have similar cash flow without the headaches of maintenance and management? Do I have one minute left?

 

54:29  
Yeah, of course. You like to Vanna White of the seminar.

 

54:35  
Fantastic. Okay, cool. So

 

54:39  
I think there was one more helpful to give you three tips. Okay, cool. Don't give me more than three because we won't do them. Okay. I like threes. Okay, last tip of the day ready? You guys all had time to fill out your form. You guys had time to write down the questions on assets. You guys flip this over real quick. I'm going to share this independently on my own. I just printed

 

55:00  
500 of these for this month, I do a bus tour once a year that I go and look at real estate, it's already halfway full. It's in the end of it's in March, it's in

 

55:09  
May. And if you guys want to jump on it, there's on the website. But what you guys can do in closing is I would, I would invite you to invite three people to meet with fig about how you can work with them as real estate investors, because they are super legit. And I've been watching Steve for about seven years. So if you guys are newer, or you're already established, you guys can just give a referral to fig. That's an awesome way that you can, because when you bring your friends along, then you'll make more progress because you guys will learn together. And then you guys build portfolios and go on trips and other stuff like that in five or 10 years you'd like some so help. I'm so glad you got me along. Because I got most of my friends involved with real estate investing. We have a pretty fun myself. So you guys want to pass in your eval inside. I appreciate your time. I want to stay on schedule. And thank you very much and hope you guys have an amazing weekend. Go jazz. Thank you very much round of applause for everyone else for being here.

– Fourplex Investment Group –

IREI SUMMIT 2019