How To Find Equity – Uncover Hidden Real Estate Deals
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How To Find Equity – Uncover Hidden Real Estate Deals


Today on Limitless TV, I’m gonna be
talking to you about how you treasure hunt for equity. We got some naysayers in
the market saying that it is not possible to buy homes with equity. Today,
we’re about to prove them wrong. Hands down, one of the biggest questions
that I get asked, “how do you find homes with equity?” You know, there’s a lot of
people out there, new investors that don’t even know you’re supposed to do
that and so I make a pretty big deal about it because buying a home without
equity, what it’s doing is, it’s decreasing your margin of safety and it
is exponentially increasing your margin for risks, so if I can find a home with a
10% or a 15% or 20% equity position, that’s like a pretty huge head start,
like for just a moment imagine that you were buying a home with a 30-year
mortgage and you wanted to like pay off 20% of the house, it’d take you a decade
to do that with a 30-year mortgage, so we can, we’re trying to skip a decade by
just walk into a home with equity. What that specifically means is, I’ve got a
house worth a hundred thousand that I buy for 80,000, well between eighty and a
hundred thousand there’s twenty thousand dollars and it’s also twenty percent,
that’s the equity that we’re looking for. Before we talk about how you find these
homes with equity, let’s just talk about why it’s important that you do. Here’s a
house that I sold and I got a check for $95,789 this year, after selling it. Now, there was a down payment
of probably $40,000 in there and then maybe a little bit in
repairs but the rest got to be split. So that was a really nice check for me and
it was a really nice check for my partner. Part of that $95,000 is because the original equity that we found the house with.
Here’s one with $77,493. Again, testament to equity. $49,000 equity.
$55,000 equity. $90,000 equity. $77,000 equity.
All of these homes had equity and a part of the profits was
cash flow, a part of the profits was tax benefits and a part of it was equity. So
how you find a home with equity? In today’s world, it’s not hard at all.
Number one, get realtors doing it for you. How do you do that?
Target realtors that are representing investment properties, foreclosures,
handyman specials, if they’re doing that on a repeated basis, it means that
they’ve got access to pre foreclosed homes, means that they got access to
short sales, they got access to deals with equity. They’re the ones that you
want to network with and I would let them know that your standard is a
minimum 15% equity position. Watch
one of my other videos on how to verify that. But that way, if you’re walking into
a house that is purchased below the median with the 15% equity
position means that you’re looking minimally at probably $30,000+ that you just headhunted. Realtors are one of my
favorite ways but there’s other ways as well. You can go online to the
classifieds, craigslist, and get familiar with dollar per square foot which I’ll
do as a bonus in this next segment of the video, so that you can do a quick
evaluation on, oh is this a property that has some equity in it? Meaning, everything
in the area is selling at $120 a foot and this one is $90 a foot. Let’s try to
find out why and problem-solve and maybe it just has a pile of equity because 5%
of all real estate is always sold out of the norm, it has a reason, it’s an estate
sale, someone died, someone’s getting a divorce, there’s reasons why
people do what they do, I’m going for a quick sale because I’m moving and
relocating and I just want to sell the property. The equity is there, it’s
available, you just got to find it. So that’s the second means, it’s looking
online at some of the different social media. One of the third ways that I
really like to find equity is just through the system that I’ve built. By
the way, it’s a system that you can tap into. I actually put a power team
together of 200 experts and I go to the very best markets around the nation and
what my team does is, they’ll go risk somebody else’s money, they’ll buy a home
at auction, they’ll fix it up, they’ll guarantee the equity position and then
they’ll make it available. So they only deal with homes that have those spreads.
There’s three different ways right now that you can utilize to find equity. Just
make sure that you follow this rule, if you’re gonna do a deal, make sure it has
equity. Is there equity in the home? You need to be able to do the sniff test and
I do that with price per square foot. This is an exercise that you can do so
easily, select an area where you want to hone in on doing your first real estate
and you’ve got to get used to the price per square foot in that area for homes
underneath the median. Let me show you how simple this is, do not be afraid, the
calculator will do almost all of the work. Let’s say that we’re looking at a
house priced for $200,000 and I’m going to put that price in my phone $200,000.
Let’s say that the house just happens to be 2,000 square feet, I’m going to divide
it by the square feet. It’s $100 per square foot, $200,000 house, 2,000 square feet a hundred. Let’s do another one,
check this out. Let’s say that the house is $230,000 and
so you see that price right there, $230,000 and
let’s say that we now divide it by 2,400 square feet. This
house is $95 a square foot. Notice that it is different than a
$100 a square foot but still within 4% or 5% of that same
range. Let’s do another one, let’s say this is a $180,000 square foot home.
See how easy it is to put that in there? I’m gonna hit
the divide button and I’m gonna divide that by the square feet of 1,900 and I get $94 a square foot. So far I’ve looked at three
homes in my area, one was $100 a foot, one was $96 a foot, one was $95 a foot, and so I’m averaging somewhere between $94 and 100% and let’s say that I do 100 more homes just like this and
all of them are between $95 and $100 square foot, then all of a sudden, I find
this, here’s a house for this price: $220,000 but
this house has 3,000 square feet. Ding-ding-ding-ding-ding! $73 a square foot, what does that mean? It means the possibility of
equity. So when you get accustomed to your area and find out what price per
square foot is, but then all of a sudden, find one that stands out for being lower
than the rest, then you get to dig in deeper and say, why? Is there a problem
with this house? Did the foundation give out under half the house and it needs $30,000 of engineering work? Was it a meth lab? Like is there a reason? And
sure enough you check into it, it’s just like, actually there’s not a really good
reason, I mean, it needs some work it, needs some updating but that’s the price.
You find out, oh it was just listed on the market today, oh my goodness, you call, you
do some research you, run a CMA like I show you in one of my other videos, and
guess what, you find that this house has $380,000 of equity and you’re
thinking, score! And you should because guess what you just did, you found $38,000 of equity to play with. That’s what we’re doing here, price per
square foot, simple easy calculation, get used to the prices in your area and
you’re looking for, when you take the price of the home and divide it by the
square footage, you’re looking for something that is really off and then
you’re gonna put your critical thinking hat on and say, I wonder
why this is? And you’re gonna start doing research you and talk to the realtor,
you’re gonna start saying, what’s the problem? This one’s different, run a
comparable market analysis and let’s find out if we can decode and if
nothing’s wrong with it, guess what you found, you found a pile of
equity. Thank you for watching today. Be sure to subscribe because I got more
daily videos headed your way and you can also click the link below if you want to
get more information on how I can just give you a lot of my extra properties
that already have equity in them.

34 Comments

  • Jot Sall

    Hey limitless if I wanna buy a house worth 200 k and I brought it for 180 k ….do I alone need to arrange 180 k or what are the means by which I can have partner and what type of contract is in trend….peaceout

  • Green Green

    That's actually some solid & good advise, i still wonder why you are doing this youtube thing, if you earn big bucks in real estate…

  • Haus On Wheels

    Hey Kris, I just finished your strait path to real estate wealth book and I think the process seems really sound. Can you please do an in depth video on your compassionate financing model? I'd love to see some specific examples of how this works.

  • ZaterXDesigner

    Kris I am a international student is it okay for me to buy a real estate? What's your recommendation man thanks for spreading the word

  • Leumaxs

    How do you know what a house is worth? Say a house is for sale at 100k and you manage to get it for 80k. Is that 20k in equity? Because if that’s the case getting a foreclosures home would be the best thing to go for

  • No Compete Refrigeration Services - HVAC

    Limitless TV- You have have made $95,000.00 & $40,000.00 (Down) & split in half. Why are you not bringing this up??🤘

  • Chris P

    Love all the knowledge you’re passing around, been killing myself at work these past few years saving ‘enough to invest’, was really just procrastinating out of fear. You work is inspiring to get the ball moving.

  • Damian Rychlicki

    What is the meaning of the square foot ? Does it mean the whole property with garden and things like that or is the square foot of just the house area without the things like garden. I was reseraching in my area for houses and some of them were ridiciuosly under the square foot prize. The house was average but the whole property was imense. So what is more important in this situation the property or the size of the house?

  • Norah Pinkhas

    How would you be able to sell for what you want? Meaning negotiating with buyers to get the price you want

  • Maamoon khan

    Thank you so much. You know we can't even say just thank you for the knowledge what you shared. It's like someone giving us gift daly as a knowledge. Literally you owe me everything

  • daniel martino

    Hi! Thanks for your videos. I wanted to ask you just a quick question: basically you'r saying 1) buy your house ( in a way to stop paying the rent ) and 2) start to buy other houses where there is equity and sell them for their real value. Is this right?

  • Govind Balla

    so the whole plan is to buy with equity, control the property, and after a few years, you sell for market value essentially releasing that equity as cash. doesn't that mean you must sell the house for full market value otherwise you make the same mistake as the person that sold to you? If so why did the original seller sell for full market value?

  • Jermon C

    Wow, why am I just now seeing this video? Great tip I will be adding this to my real estate investing tool belt many thanks sir.

  • Jahel Odounga T.

    Questions: if I sale a house with a rent-2-own that house. For $100 000, with an equity of $30 000.
    If the house get appreciate over a period of 4 years, I Know for sure my equaty will rise but would my pay check also?

  • Tyler Bryant

    So if your house has equity, you’re allowed to take a line of credit worth 1/10th the worth of the home? At one point you had said $380,000 worth, then said “that’s $38,000 in equity”. Thanks.

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