How Real Estate Investing REALLY Works – Real Estate Investing 101
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How Real Estate Investing REALLY Works – Real Estate Investing 101


What’s up everybody,
I am Jaspreet Singh, and welcome to the Minority Mindset. If you’ve been
watching our channel, you understand that the best way to build your wealth is not
by listening to your math teacher and just saving 10% of your income in your savings
account. Keep saving, Johnny, you’ll be wealthy one day, hopefully. The truth is,
the real secret to building wealth is investing. With investing, you’re not
buying things that lose you money and make you poorer, like cars, and shoes, and
clothes, you’re using your money to buy things like real estate, which will, one,
pay you with cash, and they’ll make you wealthier. So today, I’m going to give you
a crash course on real estate investing because, I wish somebody would have told
me these things when I was getting started in real estate, but, before we get
into it, make sure you hit that thumbs up button below, and subscribe to the
Minority Mindset YouTube channel, right below the screen, and make sure you hit
that little bell too, because if you don’t, then YouTube doesn’t tell you when our
new videos are released. First, so we’re all on the same page:
how does real estate investing work? Real estate investing is when you buy a
property—not to live in yourself—but to rent out to somebody else. You’re buying
property like a house, an office building, a real estate building, a strip plaza,
this way, you can let other people live in, or use this property, and in exchange
they’re going to pay you rent every single month. That’s what real estate
investing is, but let’s talk really briefly about what real estate investing
is not. As much as your banker and all of your friends want you to believe this,
real estate investing is not going out and buying a big beautiful fancy home
for you to live in, because you think you’ll be able to sell it for a profit in
a few years. That’s buying a liability. You’re buying something where your money
is going out, and your money’s not coming back. Real estate investing is also not
buying a property, fixing it up, and then they’re trying to sell it three months
later for a profit. That’s flipping. It’s very active, and
it’s cool, and you can make money doing it, but it’s not real estate investing.
Second, why should you be investing in real estate? The simple answer is: so you
can make money. The complex answer is: so you can be financially free. Real estate
is a tangible investment, and it is robot proof, because people will always need a
place to sleep, people always need a place to eat, and
people will always need a place to work. When you are a real estate investor, you
will be getting rent checks every single month, even if you’re sitting on the
beach in Hawaii. Plus, real estate investors get tax breaks. Now, while I am
a licensed attorney, I’m not your attorney, so if you have
specific tax questions, talk to a tax professional in your area, but, have you
ever wondered why people like Donald Trump can own a bunch of real estate, and
they can make millions of dollars a year in rental income, and then they can turn
around and pay close to zero dollars in taxes? It’s because the tax code says
that real estate investors get tax breaks. And yes, it is legal. Let me show
you what I mean with some numbers. If you are a highly skilled, and highly educated,
and highly talented heart doctor, you might be able to make—my heart is
lopsided, sorry—1 million dollars a year from all the heart surgeries you do. Now, a
million dollars a year is a lot of money, but, because you are making this money
from your job, you don’t get to keep all 1 million dollars, because that’s what
the tax code says, you will get to keep somewhere between 500,000, and 600,000
dollars after paying your taxes. Still a lot of money, but you didn’t get to keep
all 1 million dollars. Now, on the other hand, let’s say you are a real estate
investor, and you bought this property for $100,000, and a few years later this
property goes up in value to 1.1 million, so you sell it. You have a profit of 1
million dollars, and now, you think that you have to pay taxes on this 1 million
dollars of profit, right? Well, the tax code says: if you take this 1 million
dollars and you reinvest it into a bigger piece of property, you don’t have
to pay any money in taxes today. It’s called the 1031 exchange, and now you own
a bigger piece of property, and you’re going to get bigger rent checks every
single month, and now if you go back to your beach in Hawaii, you’re going to
continue getting paid vs. if you were this heart doctor, and you go to a beach
in Hawaii, you won’t be getting paid anymore because, well, if you’re on the
beach, you’re not doing heart surgeries, and
you’re not getting paid. And in case you were wondering, you also get a bunch of
special tax breaks for the rental income that you get, so if you make a million dollars
a year in rent, you get a bunch of special tax breaks for that too. Third, let’s talk
about some of the kinds of real estate you can invest in. You have single-family
homes, apartment complexes, shopping plazas, land, mixed use properties, mobile
home parks, office buildings, retail, hotels… There’s a lot, but, what you have
to remember is that each piece of real estate has two different businesses
involved. You first have the business of owning the real estate, and then you have
the business inside of the real estate. Look, you can own a CVS building without
operating a drugstore, and you can own a hospital without being a doctor, or you
can own an apartment complex without managing the tenants inside. When you own
the building that CVS is renting, now you own the property, and CVS is doing the
work to find customers, and manage inventory, and hire staff, and sell their
stuff, your job is to collect the rent. When you are a real estate investor, your
job is to own the real estate, not run the business inside. Now, this is easy to
understand when we’re talking about investing in a CVS building, or investing in a
hospital, but what about when you invest in a house, or an apartment complex?
Instead of being the person who gets the phone calls when the tenant says: Hey, I
didn’t eat something too good last night and I clogged the toilet. Can you come and
fix this? You want to be the real estate investor. You can hire a property manager
who will get paid a percentage of your rental income, and they will handle all
the management work. So, they will pay your bills,
they’ll make sure the tenant’s paying on time, and if they have to kick out a
tenant, they will handle it for you, this way you can focus on being the
real estate investor. Number four, how do you get in? If you want to invest in real
estate, you need money. Okay, you can buy
properties with cash, you can go to the bank and get a loan, or you can get a
bunch of friends who have money, and you can pool your money together to go and
buy a bigger property. And then beyond these three, you have this whole world of
creative financing, but you need to understand that the numbers have to make
sense. You do not want to buy a property where you’re losing money every single
month. Crunch the numbers, make sure that the income that you’re getting is enough
to cover the expenses and put some money in your pocket every single month. Once
you’ve got your numbers down, make sure, this is not a recommendation, this is a
must, make sure you have a real estate attorney, and you have property insurance
for all of your real estate. You have to do this, this is coming from somebody
who’s not just an attorney, but from somebody who’s a real estate investor
who’s been sued by a tenant because they claimed that the bathtub got too
slippery when it was wet. This is a true story, so make sure you have an attorney
and insurance. And number 5, you need to understand the real estate market. Not
only do you need to understand where you’re buying, which is the micro-level,
but you have to understand the macro level, which is that real estate has
cycles. There are times when the real estate market is booming, and then
there’s times when the real estate market is coming down. Remember, when
you’re a real estate investor you’re not buying property so you can flip it in 6
months for a profit, you’re buying it so you can create a positive passive income,
this way you can make money each and every month, so when you’re buying real
estate, make sure the numbers make sense. And second, you want to buy in a location
where people are moving to. I have paid premiums for real estate in locations,
while still being profitable, because people were moving into a location, and
over the long run, this has proven to be much more profitable. I’ve talked about
this before and I’ll link it in the description below.
The key here is to make smart money decisions, and in order to do that, you
have to understand what’s happening in the finance and business world, which is
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videos are released, and as always, KEEP HUSTLIN’ *

100 Comments

  • Capoeiristadiogo

    Hi Jaspreet, which is better…LLC or S corp? Thanks for the information on your clips, true enlightenment and entertaining as well. Keep hustling !_!

  • Edgar T.

    Hello Minority Mindset team and Jaspreet! Thank you so much for all the great content! Been a long time subscriber!

    I’m curious, if this is the beginner video, what would an intermediate or advanced real estate video look like?

    Thank you again!

  • Minority Mindset

    Thank you for watching! If you enjoyed this video, you should watch – How To Build Wealth Without Making A Lot Of Money: https://youtu.be/zRQ2g4Qlv44

  • Chris Invests - Personal Finance Videos

    Real estate can be such a good investment when done correctly. It does require a fair amount of work though 🤷‍♂️ 🏡

  • Dora Shelton

    Hello Jaspreet. I love your content..It is inspiring for me because I'm a beginner in Real Estate Investing. I do Appreciate you and your team for caring enough to show people like me a better way to make 💰 Money and in this process you have to grow. You encourage me to KEEP HUSTLING! I LIKE THAT PART..Thanks again. Oh yes don't listen to the Negativity out there. Some people Just hate to See other people doing something they are too lazy to do..They need to Get A Real Life. Anyway Peace and Love ❤️💜💙

  • BboyPaki96

    How can I dominate in a competitive real estate market? I’m trying to house hack, but i can’t seem to find anything. If they do find a multi family home, they are overvalued. I feel like everyone is investing in Real Estate and there isn’t any pieces of the pie left! Advice?

  • California's Music Channel

    Can you please do a video on what is going on with this new trend of people or scammers randomly calling and saying that they are interested in my property and sending post cards saying they want to buy my house is this a scam? Are they just trying to throw out a low ball cash offer? Are they trying to get personal information from you? Other people are telling me they get the same mail and calls and know their name when they call. By the way i don't live in a prime location where oprah's real estate agent is trying to throw me an offer at me. Houses go up for sale they sell within a couple of months. Thank you! I enjoy your videos!

  • Kandake’s Korner

    I’m excited to get started. I’m already saving for my first rental property. I’m gonna live in one of the units and then rent out the other ones.

  • Sola Scriptura

    Love love love this video!
    Thank you, so much.
    I've been needing a beginner tutorial for real estate, so I can jump into the market here in Atlanta.

  • Hustle Williams

    Thank you so much for always being the key knowledge to the table, it is a pleasure to always learn from you keep up with the amazing content!

  • Kahnica Cole

    Ok Jaspreet. PLEASE DON'T USE DONALD TRUMP AS AN EXAMPLE! Do you know he just had to pay out money to the charities he used his Trump foundation to steal money from to buy pictures of himself and sports pariphinelia? There are OTHER people that you can use as an example. When you use him as an example, it becomes political. I haven't even listened to the rest of this because you used him. I will unsubscribe if you are gonna use that awful human being. It makes me think you support him, and if you do, I just loose all respect for you. Just how I feel.

  • GenExDividendInvestor

    Real estate can be a great investment. I personally liked NNN commerical real estate more than residential because it was far more passive (and way less headaches). It can be very profitable and has the best tax advantages of most investments out there. That being said, after dealing with real estate for years I came to realize that dividend investing was far more passive, less stressful, and way more enjoyable. That being said, its good to try things out for yourself and see what aligns to your own personality and life goals.

  • baru luz

    Hey i just want to say thank you for everything you've helped me get out of debt save money and put money aside to start investing

  • super nerd

    please start posting on BITCHUTE , I am spending more time on BITCHUTE and I have to remember to switch back to watch your channel!

  • Rillawhat

    As a contractor, I've worked on hundreds of units for multiple property owners, that I've never met, because they're probably on the beach in Hawaii or some other beautiful place. I work with the property managers so that the real estate investors can sit back and enjoy that passive income. So now I'm building my real estate portfolio, so I can sit on the beach in Hawaii🌅

  • Black Vito - Moneyology

    I was just watching a video yesterday of a former wall street worker turn comedian say (& i paraphrase,) that the 2008 crisis made her lose confidence in our financial system so she keeps it all in cash. & there i was thinking about all thoughs unemployed dollars who just want to work and make a family 💪🌚

  • STR8 JATT

    Hey Jaspreet, I’m only 15 and love watching your videos, but I was just wondering what I could start doing to make money and better my future?

  • Marcus M.

    I remember in my early 20s when I bought my first house, I was so excited about my investment. Then one day I picked up Rich Dad Poor Dad my whole thoughts changed about what is and what isn’t a investment.

  • Mad_DentistHD

    What makes more sense: renting out a home while living in a rented home. Or buying a home then wait to buy another then start renting to tenants?

  • Travis Williams

    Real estate is a great way to build wealth. I’ve struggled finding good tenants so I plan on just having a property manager for the coming year so I don’t have to screen anymore

  • Remedy

    In all fairness to get started in real estate investment having a stable stream of income, say like that of a heart surgeon, is also a good message to send to potential lenders that youre reliable that if you default and they have a heart attack you can help with that too 🤔

  • Erika Kullberg - A Lawyer's Personal Finance Tips

    Excellent video! As a real estate investor myself, as you mentioned, I highly RECOMMEND using a property manager. It makes the process a lot closer to passive income, otherwise you're dealing with all of the pesky calls and it starts to feel like active income haha.

  • Bree Bell

    All of your content is 🔥any way we can get a new background track for 2020? I binged watch at least 20 videos back to back and it’s hard not to unhear that background music now lol
    Keep doing your thing and changing lives 💯

  • jonny gage

    6:58 "this is coming from somebody who has been sued by a tenant because the bathtub was too slippery!" I'm 💀 lol😂😂😂😂😂

  • Rick Shaw

    Jaspreet, how do you feel about REITs (real estate investment trusts)? Due to financial issues I cant afford to buy property and my credit isn't that good, so I was looking into group funding. Are these types of companies worth investing a small amount ($500-$5K ) as a start in real estate?

  • Satish Srinivas

    You did not address a location question. Does it have to be local.?. If you live in a area where it takes 200k to get into a condo, can you start in a place at 50 but not local?

  • shaylas78

    Hi Jaspreet! I have been MIH. I am going though closing right now. Am purchasing a single family home and it cost a bit but there are $300K being built around the corner where I am purchasing my first piece of property. Charlotte NC is hot and people are moving here and inventory is low. I also bought my interest down a little and the house has been totally remodeled on the inside. I believe I can get $1800-$2000 worth of rent out of the house. I will be interviewing property management groups to see who will not over charge and under deliver on expected services. Your videos are the best.

  • Gump Groot

    Looks I’m hardly likely to take advice from from a guy who can’t get a haircut because he thinks a universe creating deity cares about the length of his hair.

  • alan headrick

    The problem now is 300 million people want to invest in property. This forces the prices all out of wack and blocks out people on the bottom. Unless you have a couple hundred K siting in a bank your screwed.

  • R3D-1 Truth

    Thank you for your content and information. I’m exciting to see and continue to learn more in future. I was curious to know, how can I use my 401k to invest in real estate? I want to move some of my assets to use to invest in rental property, but have not been able to find anyone who can do this. I’ve read many articles and IRS codes about it, but not able to locate a business or organization that does this or knows how to do this. Are there any leads I can use to accomplish this? Thanks

  • Sponge Bro

    Well this was a totally useless video. Should be titled ‘ how to waste 8 minutes of your life, while I waffle on about the damming obvious.’

  • XCurrent Breeze

    0:14 lol but my precalc teacher had a whole unit on how investing early will make you way more money than investing later and we did a bunch of stuff with interest rates

  • Cody Steck Real Estate Videos

    Great video! As a "real" real estate investor I enjoyed how you broke this down! You are inspiring and helping many people to become more financially secure!

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