Discussion: How to invest in Real Estate

In this discussion, I share EXACTLY what I look for when investing in real estate. This comes as firsthand experience of my own investing strategies, both from what I’ve learned as a landlord of multiple rental-properties and as a high-end Realtor.

Since clickbait sucks…here’s the entire video summed up:

1:00 – Loan options. I generally recommend a residential loan and sticking with 1-4 units. After 4 units, the loan is considered commercial and carries a higher interest rate, higher down payment, and more qualifying restrictions.

2:12 – Single family residence vs multi family building. I generally prefer multi-family residences, but be wary of future rent control restrictions depending on your location and city regulations. I also explain how to live for free – live in one of the units and rent out the others. Generally this will cover almost all of your costs. Free housing!

4:40 – Conventional vs FHA loan. I prefer a conventional loan over FHA, as convention loans have lower fees, lower interest rates, and generally offer better terms than an FHA loan. FHA loans could work depending on your situation, but it ultimately comes down to the term and interest rate of the loan.

6:53 – How I search for properties. Everything I find is through the multiple listing service (MLS). I personally like to see everything as soon as it comes on the market, but I also look at properties that have been on the market awhile as they might be more flexible in price.

10:55 – What times of homes I look for. I personally go for homes that just need cosmetic remodeling. Kitchens, bathrooms, floors, landscape, and paint are very easy to do and doesn’t take a lot of time to do. It also adds a lot of instant value by remodeling these areas – plus, many buyers overlook homes that need minor remodeling.

12:57 – What areas I invest in. I invest in areas that are surrounding other high-priced areas, since development generally moves outwards with time. I do my best to predict the next “boom” areas where development and business money is moving in.

15:15 – How i calculate if a home is a good investment. I like a mix of cash on cash return and appreciation. In addition to this, I like a home where I can add value through cosmetic remodeling. This way I make an immediate return on equity, I can make some passive income from rent, and future appreciation on the home’s value.

20:30 – What area I like to buy in. I make sure the home isn’t on the same block as an apartment building, a business, a busy street, or a street with speed bumps.

21:40 – How to calculate your rents. I like to use craigslist to compare what other units are renting for.

22:30 – Out of state investments. Personally, I wouldn’t do it.

23:11 – Is a property manager worth it? Sometimes – I don’t really use one, but I would in the future.

24:50 – BUILD YOUR CREDIT SCORE. This is so important.

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Suggested reading:
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq

20 Responses to Discussion: How to invest in Real Estate

  1. Alpha Logic

    How do know what classifies as cosmetic repairs vs something that needs a lot of repairs? Would the seller need to disclose this information?

  2. Arous Decor

    Best video ever!!!!

  3. Ayman Nimer

    These are some of the questions i was having im glad i stubled across this. My main question was the "how do you find good locations". I live in Kansas City, mo so i was trying to relate by thinking of new constructions and developing areas

  4. Ty

    I agree with you on having sufficient downpayment. Over here in Canada, anything less than 20% and you have to pay CHMC insurance as well and most people fold that in to the mortgage as well. trying to save up on my first 25% to take my plunge into the real estate. It sucks that the real estate in Canada is quite on the high side making having a signficant downpayment taking a longer time.

  5. kervinson joseph

    Hey my name is kervinson and im 17 going to be 18 in two months and i need some advice about getting to real estate and the step and since i know you got into it at young you'll be the best person to ask for advice

  6. Daniel Satalino

    First off thank you for your videos! I'm currently a nurse thinking of investing in rental properties for passive income but if you don't have enough money saved up for a down payment, would you recommend investing in SP500 until you have enough for a down payment ? Also would you recommend hiring property managers to deal with leases/rent/maintenance if you don't have real estate experience ?

  7. nick jamesc

    have to ask, lol what is the watch!?!? I'm a huge lover of watches and loving some of the ones you have in your videos (loving the videos btw) but i have to ask which watch is that? I'm dying to know!!! keep up the epic work and great content

  8. Modia Nefer Ra

    This is a wealth of information!

  9. Billy Reed Music

    This video was awesome, Graham. Please do more QA's.

  10. ballietbran

    Graham, the company I work for has an auto-update/responder too for new listings coming out on the market. Or anyone in the comments that's interested feel free to PM me and I'll send you to an Agent's website where you can have that feature for free!

    Not advertising just trying to help those out there! Don't go on sites like Zillow or Trulia because a lot of the listings are not updated and not accurate cause the site is not IDX-based. Thanks!

  11. Alvin Marday

    Do a video on how to understand real estate please… I really want to become a real estate agent but I don't understand most of the videos. You could also suggest a book to read.

  12. Alvin Marday

    Am I the only one who doesn't understand anything?

  13. Math Pirate

    thank you for those Graham

  14. cameron green

    can you generally get a property cheaper if you pay fully in cash?

  15. alex parrish

    I've been creating a huge plan for success and you are one of my inspirations along with grant cardone and some others. Could I email you and talk to you about it? I'm sure you would have some very useful tips. My twin brother and I are creating a real estate team to start. Our end goal will be to own a chain of apartment complexes named after our company. I have the steps to make this happen but I am still relatively new to this so I'm sure there are flaws and important info I'm missing. Really appreciate all your videos!

  16. jdouglas8585

    Man you're growing quickly Graham. Any advice for what I should use for a webpage?

  17. Neon Dots

    I'm finally ready to buy my first investment property and this was the first video I had to revisit for all the valuable advice. Thanks Graham!

  18. FlushMasterData

    Very helpful thank you for making this video , god bless

  19. Yiting Chen

    Hi Graham,
    Thank you so much it is a really nice video. You are very unselfish and did explain lots of details. You are very awesome.
    Graham can I ask that i did see property on the market on trulia or zillow all the time, but it seems they only have the agents' number there. How can I directly contact the buyer? What do you mean that you can do it on your own that you don't hire a buyer's agent, does that mean you talk to the owner directly?
    Have a nice weekend!

  20. Case White

    why pay 18% on money that's (mine)