Best Property For A 1st Time Buy
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Best Property For A 1st Time Buy

Hey YouTub, Kris Krohn here. Welcome back. Today, I’ve got Alex Wallas who’s submitted
a video and ultimately, he’s got two options placed in front of them. To buy the single family home or does he go
all out and actually start with the 4-plex. I’m going to share my response on them. Hi, I’m just wondering what property would
be the best decision for a first time buy? One of them is $25,000 house. Fixed up for 10 grand or a four apartments
under finance for a 120 grand. Already has 4 tenants in it paying rent right
now. I live in West Texas where it’s all field
is booming like crazy. Not even as much as going in the next year
or two. And rent houses are very hard to come buy
so by owning one, I almost guarantee that someone’s going to be in no matter what it
looks like. My wife takes a $190,000, that’s too much
to risky for a first time buy. But, so if she go with the, just buy a $25,000
house to fix it up. So, my heart says “get this ding 4 apartments”. But I need to ask some professional opinions
and it’ll be great to find out what the best of the best. Okay, Alex, if I understand this correctly,
first of all, I get, you;re married. You got a wife and one option looks more conservative,
one option looks more aggressive. Kind of yourself like you can’t even entertain
one of the two of these if not both of them. But lets actually talk about this. what I understand, what you’re sharing here,
and I’m going to have to imply some things but looks like option A is there’s a single
family home, it costs $25,000 that needs $10,000 of repairs.And of your options is to do this
and get this guy rent it out, okay? Option B, you could actually do a 4-plex and
if you a 4-plex, you can rent them out each for a thousand dollars a month. There’s going to be more cash flow. But it’s also going to be a $190,000 purchase
and it doesn’t look like you have repairs on it. So the questions is which do you want to do
right now. Your wife is certainly leaning towards the
more conservative too.And I just want to start with a little bit of marriage advise if I
can. When you’re in a committed relationship and
you get into the game of finance, almost always, there’s going to be the more aggressive risk
taker and the more conservative person. If you don’t have both of those in your relationship,
you’re probably…If you’re both conservative, you’re screwed. If you’re both conservative, you’re really
screwed. It’s good to be in a relationship with someone
who’s conservative, keeps the kite string and keep you grounded because she’s going
to pause you to ask really valuable questions. Make sense? So, when you’re looking at these two, let
me give you my personal perspective on this. I hope this ends up being super helpful for
you. First of all, let’s just look at what totally
out of pocket might be. And again I’m going to make some assumptions
here but often, you can;t get a mortgage for under $50,000.. No bank wants write that. So here you might want to have buy the house
$25,000 cash and you have to come up with the repairs. So here, you might be $35,000 out of pocket. On the 4-plex, let’s just assume that the
bank is going to put the 20% down. That’;s roughly, $35-40,000. So what I am going to do here is I’m just
going to make the more less equal to start by making a point. Which is between the two of these, you have
the same money out of pocket. You’re getting 4 doors, here you’re getting
1 door. Is one of those better than the other? Well, when you have the experience under your
belt and you become a master of a certain niche, you’ll know the answer between the
two of these. What’s going to take care of yo better. This might have way more potential but it
could also have four time the risk. When one thing breaks sometimes 4 things breaks,
right? And so, I think it would be really important
to find someone in your area that could be a mentor to you. That owns several 4-plexes and I would also
find someone that has bought several single family homes. And have conversations with the two of them. That has nothing to do with the house but
I promise you, it’ll actually help you understand your area a little bit better. So you can make a better decision. One of the thing that I want to share with
you is, money is roughly the same on both of these. As far as debt, here you;re going to be debt
free. Here you’re going to have maybe a $140,000
a debt and I just want to say this for your benefit. That debt never bothers me because this is
what is called the good debt. The debt free option is not a better option. Anytime I can use leverage, I will use leverage. Because I’m leveraging more of somebody else’s
money and that leverage allows me to have a greater arm of getting ahead significantly
faster. So when I look at this two options, I definitely
have a draw more to that. But if you want to know what really is going
to make the decision for me, what I’m going to do is I’m going to look at what my real
ROI looks like. Now that hasn’t been supplied yet. So I’m going to make something up, okay?Let’s
just say on the single family home that it’s all paid off and you can rent it out for $500
a month. It’s a make up figure, sorry friend. So I’m putting, 35 grand in and if I’m getting
500 net back every month, over the course of the year, I’m getting 6,000 back. 35 grand in, 6 grand back. We can actually do that math. I”m going to pull up my calculator. Based on that scenario, if I put in $35,000. So if I take the $6,000 a possible gain. I’m assuming I’m going to net and keep $500
a month. There’s 12 month in a year. After surrendered out. Maybe there’s a vacancy but let’s just say
I’m making 6,000 a month. If I divide that by my total all in which
is $35,000, that’s going to show that I’m making 17% on my money, okay? Now I’m also going to be making the numbers
up here. You’re getting a thousand dollars on each
door, that’s a total of $4,000 if it’s all rented out. But let’s just say with real occupancy and
everything down there. Let’s say that you’re actually collecting
$3,500 a month. Now your mortgage, let’s say it’s going to
cost you, $1,200 a month. So the difference between $3,500 and $1,200,
is roughly $2,300. Now if I take $2,300 a month and I multiply
that by my 12 months, that’s $27,000. So if I put 35 in and I get 27 back if I take
that number I divide it by 35,000, I’m making 78.8 so &9% on my money. Now your numbers in real life, we’ll going
to look a little different than this because I am assuming some things. But I’m showing you the math that I’m doing
so you can understand. I can make one investment of 35 grand and
make 17% on my money. I can make another investment of 35 grand
and I can make 79% on my money. The math – you still need to take actually
all expenses which I did not do, vacancies which I didn’t do. You got to be realistic. You got to look what your expenses are. But when you factor that all in on both sides,
and you compare these two numbers. Do you know what I’m going to make my decision
by? I’m going to make my decision back based on
what am I getting on my money that I’m putting out. I’m not looking at the debt and I’m not looking
at the size. I’m looking at which one of these is going
to have make my money more. Once you know which one your money is going
to make more on, the last thing you need to do is you need to evaluate the risk which
is what is the risk in this scenario, what is the risk in that scenario. I’m going to tell you right now, your single
family is going to have less risk. But it might not be worth getting a much lower
ROI. At some point, you’re going to say, the risk
is worth that much more of a return on my money. In this fictitious example, with half trues
and half information if I’m making 80% of mirror. If I’m making 50%. Friends anytime you’re making money over 20%,
you’re crushing it in the game of real estate. But because you;re brand new, you got to get
realistic. You got to talk to those mentors. You got to say, what are the expenses? What are the things that I’m getting in? what happened when the coolers break down? What happens when I need to replace the carpet. What kind of people are going to live in this
house? And if you could say what you conservatively
or aggressively think all that might cost you, in fact on those expenses, run these
numbers, get them side by side and that should help you make a really good informed decision. Best wishes Alex. I hope you and your wife crush it. Alex and wife, keep us posted. We definitely wanted to know what you ended
up doing and honestly how it turned out. It’s all going to be learning on making your
money or some of both, okay? Listen appreciate you guys are watching today. If you’ve got a question, then you can get
go ahead and submit it down below. Drop into the comment box and we might end
up making a video for you. For the rest of you that are watching and
say- “Kris, that was really awesome! Can I mentor with you? Can I join your team? Can you actually take me to the very best
deals around the country? The answer is yes. Go ahead and click the link in the description
below. Request to speak with a member of my team
and we’ll all break it down for you. Best wishes. Happy hunting and crush it.


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