Investing in Real Estate Through Home Ownership

Hands-down. One of my most favorite
topics. We’re talking about real estate investing through home ownership. So
today, I get to talk seriously about one of my favorite topics. Which is investing
in real estate through home ownership. And what’s really great about this
concept is, it’s a way to kind of tippy toe into the investing world without
necessarily starting out like a full-time committed investor. In fact, I
know I got a lot of young people watching this channel. It doesn’t matter
what age you are, what I’m about to share is a strategy you can do. This is what I
did to get my launched in real estate and so I think it’s really smart
intelligent. To do that, we got to understand the difference between a home
and a house. Can you spot the difference? When you buy a place that you call home,
there’s an emotional attachment to it right? It’s like I want it to be just
right for me and my family. I want the right like location, with like the school
district that I want and I want to have the right kind of neighborhood and
we’re all looking for what we would consider to be the best home. A house
is different. House is this idea of what’s going to make the most sense with
the numbers? Like can i buy it advantageously? Like can I use this to
my advantage? You know you need to understand that a house is the biggest
commodity that the average person will ever buy. Which means that it is where
you can leverage the most capital and technically make the most money. That’s
why I do it and relay you know instead of doing a lot of different things. And
so if you want to know how to advantageously get into home ownership
and actually have that house be a place that you call home, but also make you
some money. It’s because you want to find a house
that meets both of those criteria. Now, understand that if you were just an
investor, you would generally have to put 20% down on buying this house, but if
it’s a home, there’s so many bank programs out there called first-time
homeowner. And your first time home buying options are often a 3 to 5 %
percent down payment. Now just look at the difference here.
There’s a massive discrepancy. if we’re talking about a $200,000 home for
example, then 3% is going to be 6 grand. 20 % is going to be 40 grand. And
I don’t know about you, but there’s a lot of people are like, “I can come up with
6 grand with some savings. A lot faster and easier than I can $40,000.” And this
is what creates this awesome way for the… “I’d like to be an investor but I’m not
in a position to actually move towards that by actually starting with the home,
(in disguise, it’s also a house)” It actually is filled with money but
it’s also a place you can call home. Let me tell you about my first house. First
house that I did was this tiny little basic rambler and I bought this
particular house just to give you some numbers here. This is a house that had a
value of a 150,000 and I purchased it for a $110,000. Now do you see the discrepancy there? There is a $40,000
discrepancy. Which meant that when I actually bought this house on paper at
least, I became what? $40,000 richer.
Now just for the skeptic out there that’s like, “Kris $40,000
on paper, who cares?” I’ll tell you why you should care. My house had a little
basement apartment and I rented out that basement apartment. Now my original
mortgage was $800 a month when I bought this. And I bought it
with three percent down payment. So I basically brought $3,500 to the table
and that’s all I came out of pocket to step into 40 grand. Now is that $40,000 worth anything if just on paper? Let me show you. First of all, the $40,000 difference here meant that instead of a $1,200
our payment or an $1,100 payment. My payment was $800. So do I benefit from
$40,000 of equity of buying at below-market? Absolutely.
The rental from the basement was pulling in $500 a month. So guess what that did?
That meant that what I was really paying out the gate, was $300 a month. Now I was
renting a hole in the ground for $400 a month. So the ability to buy a house here
and actually only pay a net of 300 was a cool deal because then it got gooder.
Check this out. A matter of months later, I went back to the bank and I said, “bank,
I’ve got all this equity.” And you know what they did? They did what’s called a
refinance. That’s where they said, “wow! well based on all of that equity, let’s
do a couple of things here. Number one, let’s go ahead and lower your payment.”
They lowered my payment to $500 a month. And two, I got a home equity line of
credit – HELOC – for 18,500 bucks. Let me tell you what that
means. It meant that first of all, the moment I
moved in this house with only $3,500, which to me was a
lot of money as a college kid. I wasn’t always working full-time and that took me
14 months for me and my wife to save that money up, but when we actually
bought this house, we went to only paying 300 a month. Six months later,
only went to paying nothing a month and the home equity line was the bank’s way
of saying, “hey, here’s a checkbook, tied to the equity in your home and you can
spend $18,500 on whatever you want and I did. I
bought a BMW on eBay. I drove it around tried to sell it, make a few thousand
dollars. By the time I sold it, it was like driving the car with $400 a month
payments. It really didn’t work out and I said, “you know what, this real estate
thing really worked out for me. You know what I’m going to do? I’m going to buy a home.
So that’s what I did. I went and I bought my next house. This house. Bought my next
house. So all I needed was $3,500 to get in the game and then in the end I was
able to start my portfolio going. Later, my wife and I moved again. We bought a
house with a basement apartment. Bought a house with $30,000 of equity. We lived in
it for free and then when we built this house, we built this 10,000 square foot
house and we had so much money that we’re making real estate that we didn’t
care. Because all of our other real estate was paying for this house. So it
didn’t have a basement apartment. And so friends, this whole idea of getting into
the real estate investing game, all you got to do is be willing to take a home
and make room for also buying a house. And if you can do the two at the same
time, you can get yourself some equity, it’ll lower the price. Later, I moved out
of this house. I didn’t sell it right away. I guess what I did? I put someone
else in it and that person was paying 1,500 a month. My payment was still 500.
I was renting it out for 1,500. Guess who was making $1,000 a month on
this house? I was. I felt pretty smart but it all was possible that with all the
money I made on this by the time I sold it, if you were to say, “wow Kris, you made
$65,000 by the time you sold it, off of a $3,500 investment.”
I felt awesome. Now, if I had put 20% down on this house,
just want to throw this out there. If I had put 25 grand down and turn it into
65 grand. That still is a 300% or 200% return. It
still would have been awesome. But by getting that 3% down or 5% down, makes it even more awesome on your ROIs. And that’s how a lot of
people accidentally become investors and get in the game. What I would say is,
final advice, if you’re going to go out there and buy real estate and you want
to invest but you don’t have a home yet or you’re willing to move then buy a
home that is also a house. It’s also an investment. It’s got the numbers that add
up, make sense. You can put a little bit of money down and get ahead way faster
in life. Okay, thank you for watching today’s video. Hopefully, you can feel the
passion, the excitement and that the information was really useful for you.
You know one of the reasons why people will subscribe to this channel is
because they want to know how do you get into the game of real estate? How do you
invest successfully? How do you think and cultivate a mindset for success when
it comes to everything related to money? Limitless Wealth TV is all about that. So
if you’re not, please go ahead and subscribe. Ring the bell and we’ll look
forward to getting you more juicy information on those topics. You

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