What To Know if You Want To Get Into Real Estate

[Music] brought to you by the every dooll app start budgeting for free today Jason is in San anonio Texas love your town Jason what's up thank you sir first I will start off by thanking you you've uh changed my life um on our last three real estate transactions we've definitely been blessed and we are on baby step 7 uh thank God way to and um thank you sir um we are in a position where we could potentially be looking at a real estate investment and uh I know you have prolific experience in investing and I wanted to ask your opinion on um setting up potentially a business to uh invest in like an LLC or under my name and then how to properly find uh investment properties to invest in and then uh obviously uh you know how do we how do we manage it um you know do we do flips do we do rentals uh what's your opinion on stuff like that okay um well there's a lot of different things you can do there that's a whole real estate course you're talking about in a sense but the uh um I as you probably have already figured out I'm unusual and I pay cash for all mine or I don't buy it so that's thing one uh I do put all of our properties uh in an LLC we don't buy residential houses anymore in our situation we've got a bunch of them but we're not adding any when we were buying those we uh would put uh up to $5 million worth into an LLC and then we would form another LLC the reason for that is if an LLC owns the rental house the tenant gets drunk and falls off the porch and decides it's your fault and sues you they have to sue the owner of the house which is the LLC exactly okay and if they were to win they can take what that LLC owns but nothing else so your other assets like your personal residence are then protected so by putting your properties up to a certain point in an LLC and then it if once the Target on the LLC gets too big you do another LLC so I've got a bunch of them um like I've got one building that's a $15 million office building it's its own LLC okay you see what I'm doing but if somebody Falls over there the worst case scenario if they get past the insurance they get past me pipe paying lawyers to sue them for being stupid and so on the most they're going to get is that building you follow me yes that makesense so if you're going to buy a house or two form an LLC throw them in there now then as far as whether you're flipping them or whether you're um uh uh holding them then that's a completely different strategy in in terms of what you're looking for uh and what you want to do and that kind of stuff flipping is um been made famous of course by cable television everybody thinks they're chipping Joanna and um I probably done 2,500 flips in my life but mostly in another life before I did this I hardly ever cele piece of real estate now I buy it and hold it forever and so uh flips are a pain in the butt um because you're basically in the business of renovating properties and reselling them finding another one renovating it and reselling it if you want to do that as your business that's okay but it it's time consuming you know you're running Subs you're running paint colors picking faucets it's like building a dadgum house you know I mean you're you're gonna pick roofs you're going to do all these things and then pull building permits you're gonna have to do all this stuff depending on how much work is being done to the house and in in the proximity to a to a a city the the municipality that you got to do that so you got to go through all that stuff um and after you get through all of that you can make some money doing it if you bought the thing right so um you just decide if you want to do that or not on rentals the best rates of return are cheap properties but they're the highest hassle in other words the more expensive the rent typically the classier the tenant right more stable yeah and they more stable but if you got lower income property you know you're having to fight all kinds of other misbehaviors and other stuff in the properties but the returns are excellent uh now fact 12 125,000 is about what we have left over from the most recent sale okay and I I just parked it in an S&P not knowing what to do with it we can take that and buy you know buy one or if you want to buy one and flip it or you and and roll it up into something but think about what it is you want to own for 10 years if you're buying a rental right and from personal experience I'll tell you you you know you're a brand new landlord you don't want to deal with lower income property it's pay in the butt I mean you it's it becomes its own business it's your own you have to have a a a a brain adjustment when you do it because you have to think different um but it you know all the all the residential I have today is is really high-end single families and I don't have I got 10 or 15 of them I don't have a bunch of them most of our stuff is commercial but uh but uh uh so all of that to say you just got to decide what you want to do the but the more um don't underestimate the hassle factor of what you're stepping into a flip is a big hassle I'm telling you you make some money but it's a job uh you know dealing with lower income people you make a great rate of return but it's a hassle it becomes a job and it requires a cultural adjustment in your brain because they're it's a different um psyche that you're dealing with as a customer and so um you know by and large not all the time but as a generalization uh call it a stereotype if you want to but then uh uh and then the same thing on the other end so but if you're going to buy something to hold look at it and go how's this going to age in 10 years is it already 50 years old O then it's going to be 60 years old when it's 10 years from now you're going to start to you know so how old are you Dave I know but I'm talking about houses I mean I look at the house I grew up in and I think that's stinking house how old it is now oh yeah you know I mean wow I wouldn't buy that house oh yeah you know that's that's old yeah same the one I grew up in yeah you know so that that's the thing but it's a great question um and uh and but I think the biggest mistake this frenzy we have John a people and Jason the people we have out here wanting to buy real estate right now the biggest mistake is is that they they probably understand about 10% of how hard it's going to be well I like the way you're framing it because you're saying you're asking what life do you want and then we're going to we're going to buy a house or flip a house based on that because if you want to get in there and get your hands dirty and deal with knocking on doors and hey you can't do this you can't light fires in the yard what that's a life right and people you can't run drugs out of our house that's right and if you want to mess with subs and have fun with doing that and flipping it and pick faucets and that brings you or your whoever your business partner Joy knock your lights out but that's a different kind of life right yeah if you want to set it but this idea on Tik Tok that you can just buy houses and I've got this passive income people who say passive income on real estate are morons right there's nothing passive about owning real estate it's active right it's very active there's not I don't own a single piece of property that's passive right and I own about several hundred million dollars worth oh my God it's not passive there's nobody there's nothing that what passive is is mutual funds they send me a statement in my inbox that's all I deal with there's that's passive but no there's not any there's no real estate passive income that's a that's a that's somebody trying to sell you a get rich quick seminar on Tick Tock or Tic Tac or whatever the flip it is you know so that that's the you know you just real estate is a wonderful investment but do not go into it folks with rosecolor glasses think it's going to be easy it's a process you're going to get rich quick it's not quick it's not easy there's a hassle not a pro it's a problem it's you know it's like starting your own business it's the it's the meanest boss you'll ever work for in your life the guy will work you into the ground you know don't start your own business and think it's going to fix all your problems it just makes all your problems come home to on your plate create your free every dollar budget today the simplest way to budget for your life