This is something I catch myself doing ALL THE TIME so I thought I’d share - this simple change in perspective can really help to take it to the next level when it comes to growing your money. Enjoy! Add me on Snapchat/Instagram: GPStephan
Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: https://goo.gl/UFpi4c
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
So what I catch myself doing is this…I recently deposited a $20,000 check for a deal I did, and I didn’t think to myself “Oh, awesome, another $20,000.” Instead, I thought to myself “Oh, awesome, this means I can buy an extra $100,000 in real estate.” And this is the same with EVERYTHING I do…because I generally put 20% down on a property, this means that for every $1 I have, means I can buy a property worth $5 MORE. So that $100 pair of shoes I could’ve bought is worth $500 extra as a purchase price in real estate. Or the $130,000 I just pulled out as equity from a renovation equals an extra $650,000 in property.
And this can be viewed in EVERYTHING. So you get the idea…basically, if you’re ever going to invest your real estate…you’re $1 is never worth $1. It’s really worth $5 invested in Real Estate. And once you see this, you won’t look at $1 the same way ever again. And when you put things in this perspective, your money suddenly has a lot more significance and impact.
Just as one quick example using dollar amounts to show the important of leverage in Real Estate:
You have a $100,000 Home that makes a 6% net return after all expenses, which works out to $6000 per year
You put $20,000 as a down payment
You finance $80,000 at a 4% interest rate
Within 12 months, you earned:
$6000 Profit from Rent
You paid a total of $4,572 in mortgage payments
You paid down your loan by a total of $1408
Your pet profit was $1428 in rent and $1408 in equity by paying down the loan
This means your $20,000 just made you $1428 in cash, which is a 7.14% return, and 1408 in equity, a 7% return…
Bringing your total “ROI” at a 14.14% return your first year.
Had you bought the property outright in cash, your return would’ve been 6%…so just by leveraging your money, you more than doubled your return for the money you invested. This is the power of using long term, low-interest rate debt when investing. This is also why, in real estate, you should look at every single dollar you have as ACTUALLY being worth $5…because this is how much it’s truly worth. So start looking at your money the same way, it’s really worth 5x more than you think it is.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
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
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: https://goo.gl/UFpi4c
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
So what I catch myself doing is this…I recently deposited a $20,000 check for a deal I did, and I didn’t think to myself “Oh, awesome, another $20,000.” Instead, I thought to myself “Oh, awesome, this means I can buy an extra $100,000 in real estate.” And this is the same with EVERYTHING I do…because I generally put 20% down on a property, this means that for every $1 I have, means I can buy a property worth $5 MORE. So that $100 pair of shoes I could’ve bought is worth $500 extra as a purchase price in real estate. Or the $130,000 I just pulled out as equity from a renovation equals an extra $650,000 in property.
And this can be viewed in EVERYTHING. So you get the idea…basically, if you’re ever going to invest your real estate…you’re $1 is never worth $1. It’s really worth $5 invested in Real Estate. And once you see this, you won’t look at $1 the same way ever again. And when you put things in this perspective, your money suddenly has a lot more significance and impact.
Just as one quick example using dollar amounts to show the important of leverage in Real Estate:
You have a $100,000 Home that makes a 6% net return after all expenses, which works out to $6000 per year
You put $20,000 as a down payment
You finance $80,000 at a 4% interest rate
Within 12 months, you earned:
$6000 Profit from Rent
You paid a total of $4,572 in mortgage payments
You paid down your loan by a total of $1408
Your pet profit was $1428 in rent and $1408 in equity by paying down the loan
This means your $20,000 just made you $1428 in cash, which is a 7.14% return, and 1408 in equity, a 7% return…
Bringing your total “ROI” at a 14.14% return your first year.
Had you bought the property outright in cash, your return would’ve been 6%…so just by leveraging your money, you more than doubled your return for the money you invested. This is the power of using long term, low-interest rate debt when investing. This is also why, in real estate, you should look at every single dollar you have as ACTUALLY being worth $5…because this is how much it’s truly worth. So start looking at your money the same way, it’s really worth 5x more than you think it is.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
Can someone explain why the principle is 1408$?
Thanks, Graham! I was cheap before, I am so much cheaper now. ))) First thing first, stop wasting money on useless things (subscriptions, amazon (actually Chinese cheap crap), snacks, iphones, shoes, etc).
I dont understand it because I’m from Germany. Can someone explain it a bit more easy?
Watched all the way through
Wish I could like this twice !!
Great video
But Graham I live in Toronto and you live in la. Finding a net positive cash flow property with only a twenty percent downpayment is almost next to impossible. The only way I can do this is if I leave something like a 35% downpayment which will dilute my overall return. Thoughts?
Can you over leverage? What's the down side of leverage?
Do you finance the loans personally or do you borrow business loans from your company?
what about repairs? vacancy?
Please guys can you help me I have no clue of what he just said please explain to me if you can I'm new and trying to learn
I'm from Norway and I think the housing market is way better in some places in USA than Norway in term of cash low.
I wonder if somebody can refer me to a website to see listing in and around the USA
Great information, I’m learning a lot from your videos. Seems like we have many of the same frugal habits. Congrats on your early success. I’m 20 and hope to get to where you are
I don't understand why paying down your $1408 principle is another 7%?
Great! I never saw it like that and lots of people does not see it like! Awesome video 🙂 as always.
If u have the cash is better to buy the property cash no matter what anybody tells says.
isnt it 3200 ? what am i missing?
well said Graham
If i wanted to buy a multi family house that would generate income, enough income to pay off 10% of the loan i need to purchase the house, and i can only afford to put 2 percent down… i know i dont meet the 5 percent requirement (but is it a requirement/a minimum) but since it provides income and a way for me to show i can pay off the loan, can i get a loan? Would i be eligible, and what kind of loan am i asking for? Personal, can i do a business loan cuz that’s better somehow?
I own a business at the age of 20 and i want to own the whole place (6 stores). Prob worth 1-2 million. How much you think i would need and how do i go about it?
Okay bro, we're gonna be friends now k….. you're gonna teach me more (Everything you know) about life and mistakes and how to do better. Right decisions, and understanding why that is the right decision. You are the real deal, honest truthful guy who is humble af about where he is today i bet. True man.
Dude i want to say "You dont know how much all this information on this channel has helped my life, and will help my life….. but you do
Thank you for teaching this
– mike
If $1=$5 I would have 50 cents
I feel like I should understand this but I'm missing something.
Amazing. Forever my favorite youtube now on my road to get my license. Just saving up to buy my classes. 18 has never been a bigger advantage then NOW.
Hey Graham.. hope all's well,
Hey so have some questions for ya –
And first off, if I'm veering into what you teach in your real estate course and this is pay to learn stuff, I'll respect the time and effort you put into that course and understand if you point me to that.
So my questions are –
What's the best way to find house hack opportunities like duplexes 3plexes and 4plexes? Is there a way to target in on foreclosures and save that way on purchase price, or is it not worth saving a few bucks scouring for those from your experience?
And last 1 – in this vid… youre saying you can take the rental income, pay down the loan, and then are allowed to deduct what you paid towards the loan from your gross… like a business expense on a schedule c.. or can you only deduct payments toward the interest but not what you paid toward the principle? If the latter, can it not be set up as a sole prop or incorporated LLC or… ?
How much above the down payment should one have before purchasing?
I'm too dumb for this stuff
What is the best way to buy a house with no money
But when the prices drop you're also down 5x, or is it called being negative in a modern world?
Love to have a mindset like that. It makes me not buying useless stuff and save. This makes it easier!
What a great way to summarize how the 20% basically makes every dollar worth 5x as much in real estate. Also – I'm really happy to hear that you decided to buy another rental vs. a lambo, at least for now!
So I spent $150 on PubG smh
I love you Graham and your mindset give me a fucking heart on my comment
Im late….
Graham do you invest in individual stocks (excluding ROTH IRA)? Obviously the $1=$5 in real estate makes this investment vehicle king, but lots of opportunity in market, we know you are into crypto..