If you have ever wanted to know the best ways to make money investing in real estate, here is your chance.
Jorge and Rafi explore the six best ways to make money investing in real estate, discussing pros and cons of different methods, while giving advise based on years of experience.
00:02 Rafi: Okay, let’s see if this is working. We’ve been having issues with the…
00:08 Jorge: Yeah.
00:12 Rafi: Let’s see. We’re trying to make sure that it is working, because we’re having issues with the internet connection, so bear with us one second, until we can confirm that it’s actually live. And I think it’s live now. Let’s see. We just need to confirm this.
00:38 Jorge: Also, I think you need to share it.
00:41 Rafi: And let’s see, click on here. There you go. We are live. [00:50] ____ already. Yeah.
00:54 Jorge: Okay.
00:54 Rafi: Okay. Well, again, thank you very much for staying with us for a couple of minutes there. We were having some difficulties with the network, so we appreciate your patience. Welcome to the Brown Bag sessions for Graystone. I am Rafi.
01:13 Jorge: My name is Jorge.
01:15 Rafi: And remember, you can find us where?
01:18 Jorge: You can always find us at homes4income.com, Rafi. That’s homes, the number four, income.com.
01:25 Rafi: Quatro. Four. Income.com.
01:27 Jorge: That’s right.
01:27 Rafi: And make sure that when you reach out to our session, you share the session to your timeline. So please, Allan, Caesar, please share in your timeline. And also, follow us. So you can hit the follow link, I think it’s somewhere over there? Where is it? Where is it? Over here? There?
01:49 Rafi: Just follow us, and even more important, make sure you like our Graystone Investment Group page in Facebook. And if you’re there, I see we have six people. I know Caesar is there, I know Allan is there, but if you are there, please, just give us a shout out in the comments, that way we know you’re there. And go from there. You know what? I wanna share something. Today is a perfect example of things that happen in business, that you have to roll with the punches. We were preparing for this session all week. Looking to tweak it, how to make it better, all that kind of stuff. And then we were here at 12:30, 30 minutes in advance, all that kind of stuff, and guess what? The internet was not working. So it’s important that you prepare for the worst and plan ahead, but at the same time, sometimes you have to roll with the punches.
02:43 Jorge: Absolutely.
02:45 Rafi: I think the key thing, it’s keeping the cool, keeping the calm, make sure that you reach out to your resources. Stephanie, thank you. And roll with the punches. It will happen in business, it will happen in real estate. Sometimes you have that property that you think is the best and then, hey, you throw down a wall…
03:04 Jorge: Something happens, something comes up.
03:05 Rafi: And electrical, stuff like that, so you have to roll with the punches. So that’s the one learning from today. It took us a while.
03:12 Jorge: At least we’re here. [chuckle]
03:13 Rafi: Hey, we’re here. So, thank you very much again. I know there’s seven people out there watching, Abe, Cleese.
03:19 Jorge: Come on guys, say hi. Let’s make sure you’re there. Let’s see you.
03:20 Rafi: Say hi. That way we know you are there. Now today, again, remember, we have these Brown Bag sessions once a week, every Friday. And Erina… There you go, Erina. Hey, Erina, in the comments, make sure that you put there, what is the play?
03:40 Rafi: Erina has a… Man, you have to go. It’s so fun, it’s so fun, it’s so fun.
03:42 Jorge: She invited me a few times. It’s awesome.
03:44 Rafi: But this time you’ll go. So today, again, we always answer one question, 15, 20 minutes. And today we have a great question from one of our newest VIPs. You know Milan, and her question was, “Hey, is there only one way to make money in real estate?” And I’m like, “No, of course not. There are several.” There’s a lot of ways, but this guy, the expert here, decided, “You know what?” Amy, the best admin ever. So we picked what we think are the top six ways to make money in real estate. Okay, so Erina, you want to make money? Right now. Okay?
04:31 Jorge: That’s right.
04:31 Rafi: So, the number one, and this is the one that we consider… Oh, drum roll.
04:40 Rafi: Tell me the number one way you think you can make money in real estate?
04:45 Jorge: One of the easiest, most accessible, fastest way to be wealthy, is through owning rental properties.
04:52 Rafi: Got it.
04:53 Jorge: Owning rental properties.
04:54 Rafi: Okay, why? Because again, flip is the one that people out there… Is the most glamorous, whatever, but why you think single family rentals are the best way to do?
05:06 Jorge: In my opinion, any time you looking at flip, you’re speculating on how that asset is gonna do. And that speculation is gonna be tied to the market, you don’t know what’s gonna happen tomorrow. So unlike a rental property, is easier to determine, “Okay, how much can we get for rent?” And be able to make a more sound decision when you’re investing in a property. Because you can focus on, “Alright, this is how much I need a month.” It’s more quantifiable, easier to know, than how much are you gonna get on a flip. And a lot of things could come up. So, for a rookie investor, obviously going with renting, buying a property for rent, should be the number one. Once they get their feet wet and they get going, perhaps a flip.
06:02 Rafi: And I think the important thing here, it’s, guys, we’re not saying just do one of this.
06:07 Jorge: Absolutely not.
06:07 Rafi: I think we’re ranking them in the way that we would do it. But a savvy investor has a mix of everything. In our case, we do rentals, we do flips, we’re gonna talk about flips later.
06:22 Jorge: Absolutely.
06:23 Rafi: We do other stuff. But again, like Erina was asking, “Hey, what’s the best way?” We think rentals is the best way to start.
06:29 Jorge: Absolutely, absolutely.
06:30 Rafi: And then you add into the mix other stuff.
06:32 Jorge: Absolutely.
06:33 Rafi: For example, number two. What would be the second top way that you will say, you can make money in real estate?
06:40 Jorge: Alright, so once you figure this rental thing out, then you move on to the next level, which is flipping properties. So I feel that getting your rental first, it will give you the schooling you need to then move into the flips. Flipping, in other terms, rehabbing and flipping, what it means, is buying a property, fixing it, and selling it for profit.
07:03 Rafi: Guys, that’s what banking on the equity, we create.
07:06 Jorge: Banking on the equity, yes.
07:07 Rafi: By rehabbing and by… Let me tell you, there’s two ways. I think a lot of people misunderstand flips. You can make money in two ways in flips.
07:17 Jorge: Right.
07:18 Rafi: The one that I think a lot of people miss, it’s, you need to get… It’s either the price of the property, the acquisition price, or the rehab. So some people, “Oh my God, I’m saving a lot on rehab,” but then you brought the property at the MLS retail price. No. Or, you get a great price on the property, but then you decide to build a Lexus where everyone in the neighborhood has Corollas. No. You need to do a very good job, and for example, in our case, we’re very good at finding properties off-market, at a low price. But then, you need to do a rehab that makes sense for that price and that neighborhood. Is that right?
08:03 Jorge: Absolutely, absolutely, absolutely. You don’t wanna over-improve, at the same time you don’t want to under-improve. You need to understand what that neighborhood calls for…
08:11 Rafi: Got it.
08:12 Jorge: In order to maximize your profit. We get so many investors, Rafi, saying to us, “Can you find us flips?” But as a matter of fact, if we find a good flip, we’ll do it ourselves. [chuckle] We’ll do some joint ventures with investors that have already proven themselves, they’ve done a couple of deals with us. But it’s a different animal.
08:36 Rafi: It is.
08:36 Jorge: So many things could go wrong. You know what I’m saying?
08:37 Rafi: And the way I see it, for those of you gamblers out there, you can go with blackjack, where you can make some money, almost… But then you can go roulette. Where, yes, you can make a lot of money, but it’s one in a 100 chance.
08:58 Jorge: Absolutely.
09:00 Rafi: From that perspective, that’s the way you can understand one or the other. And with flips, especially, you need to make sure that you have the right partners. Someone like Sam from HIS, he’s here with us. Partners like Sam are the ones that you need, because you may need partners on the finance side, you need partners on the acquisition side, you need partners on the rehab side.
09:25 Jorge: Let me add more to that. Sam has been one that has said to me, “That’s not a good deal. That’s not a good deal.”
09:33 Rafi: Yeah.
09:34 Jorge: So even though he’s your lender, he’s also a partner.
09:37 Rafi: Absolutely.
09:39 Jorge: Because he’s worked with me in the past. What a better way to get a yes or no, than from your bank? Because your bank is gonna be looking out for you, and he’s going to be looking out for themselves as well.
09:52 Rafi: And that’s important. And again, that’s why we have talked a little bit more about flips than rentals, because flips have so many landmines in the process…
09:58 Jorge: So many people are interested. They don’t do it themselves.
10:00 Rafi: That can get into it. But again, you need someone, you need a good partner on the acquisition side, on the financing side, on the rehab side, and on the sales side. We have, for example, Jason from Graystone Real Estate. Great knowledge in the San Ped area, he’s expanding out to this area. But if I’m going to put something in the San Ped area, I want someone that knows the market in the San Ped area. So you need these partners. So flips… I know this show’s in HDTV and that kinda stuff, make it… You see a show that is 25 minutes and you go, “Oh my God, they did a flip!” It’s very complex and very risky, the rewards are high. So again, it’s like gambling, you can go with the safe bet and win 50% or 20%. You can go with higher risk, and you can make triples. So we mentioned number one, single family rentals. Number two, we talk about flips. What would be the third top way to make money in real estate?
11:06 Jorge: The third way is wholesaling properties. The easiest way to describe that is, you find a deal, you could be somebody else’s bird dog. Find a deal, and assign it to a potential buyer.
11:17 Rafi: What do you mean bird dog? When you say ‘someone’s bird dog’?
11:20 Jorge: Well, you could be the person, in your spare time, that is out there visiting vacant properties, looking at properties, REO properties. Identifying deals, ideally off-market, and assigning those deals to potential investors.
11:38 Rafi: Okay.
11:39 Jorge: And that’s what most wholesalers do. They’ll find a property, and…
11:43 Rafi: So finding vacant properties, but then how do you… Again, it sounds simple, but it’s more complicated.
11:51 Jorge: It is complicated.
11:52 Rafi: Because you don’t know who’s owner, you have to find ways… In terms of being a bird dog, it’s not just saying, “Hey, the grass is tall in that house. Let me call someone.” It takes much more than that, correct?
12:04 Jorge: It takes years of the right connections. Knowing exactly what markets to farm, to understand what type of direct mail campaigns you’re gonna do, what type of marketing…
12:19 Rafi: Oh! Oh, so these are the guys that put the signs, “Hey, I buy your home for cash,” and stuff like that? Oh, okay, okay.
12:28 Jorge: So wholesaling, it’s true. You could go in with no money, and you could find a property without no money. At one point somebody has to put that deposit. And that could be your… Any investor buying the property from you.
12:44 Rafi: Okay, okay.
12:44 Jorge: So a little more complex, but it could be done.
12:48 Rafi: Got it, got it. There’s people that live from that. We have some wholesaling partners that, that’s all they do. And they make a good living. But again, they have the infrastructure set up, they have the right partners, title company, in the banks, because some of these are foreclosures, stuff like that. So it’s definitely one that you have to have the right partners, and know what you’re doing. Because it sounds easy, again, “Oh, I knock on the door, vacant… ” You can get shot [chuckle] if you go to the wrong place, but if you do it right, you can make some money there, definitely. So what will be the next way of making money in real estate? We talked about already single family rental homes, flips, wholesaling assignments. What will be the next one?
13:40 Jorge: The next one will be investing in multi-family investment properties.
13:46 Rafi: Okay!
13:47 Jorge: And I guess as we go on, it gets more and more complex. [chuckle]
13:50 Rafi: Right, right, right. So when you say multi-family, are you talking about big buildings or duplexes? Define multi-family rentals.
13:57 Jorge: In this case I am referring to big buildings, stuff like that.
14:01 Rafi: Okay, so apartment complex, basically?
14:03 Jorge: Apartment complexes.
14:04 Rafi: Okay.
14:04 Jorge: I think apartment complexes, you obviously could gain more income, because you have more units. Requires more cash to be able to do that, but if you’re creative, you find the right partners, and you find the right… Maybe a friend or a co-worker, somebody that has interest in investing in real estate, you could put a pool of money, and go and seek multi-family properties. It’s not as easy. We’re not gonna stay on that topic too long, but it’s another option. I think people go… And we did it ourselves. They go through stages. I think they first buy their single family home, then once they master that, then they move into the commercial arena.
14:55 Rafi: Which is ultimately where everybody wants to be at. And let me tell you something. And for those of you cooks out there, you know what I mean. It’s not the same cooking for one or two, than cooking for 100, okay? Shout out to my brother, Chef Castro, Piquant. But it’s the same with single family homes and multi-family complex. You think that, “Oh my God, I have two or three single family homes, let me get that 50-unit complex.” It’s different, guys. Watch out. Again, it’s not the same. It’s not doing the same thing 50 times, I think that’s what I mean. Because what happens is, in a single family home, something breaks, that one home gets impacted. “Hey, the… ” I don’t know, “The drain got clogged,” that one, probably. If something like that happens in an apartment complex, now you have potentially five, 10, 50 units impacted, and the investment in fixing that is bigger. The other thing, it’s most of the time, not always, but most of the time in general, the quality of the tenant of an apartment complex, it’s a little bit lower. And by quality, I mean how good they pay, how good their credit is…
16:07 Jorge: Absolutely.
16:08 Rafi: That kind of stuff. So not the people, but the quality of the tenant. You have to factor in higher vacancy. You have to factor in potentially higher repair expenses. So again, the rewards can be higher, but the risks is higher too as well.
16:23 Jorge: I will suggest a lot of education, like Sam said, if you wanna go for commercial properties, a lot of education, a lot of research to do it, but it’s definitely doable. I see people that went from three houses to owning 100 units in a few years, but you gotta do your due diligence, and really understand what you’re doing. You’re gonna need to surround yourself with a lot of professionals, commercial appraiser, commercial broker, people that could give you at least an idea before you put in too much money into the assets.
16:56 Rafi: Absolutely.
16:56 Jorge: And understand, what’s the market asking for, what is the type of cap rate the unit is typically asking for, for the area. Okay?
17:05 Rafi: Absolutely. Now, again, we’re getting more cumbersome or complex as we go. So what will be the next one that you will suggest as a way of making money?
17:16 Jorge: Well, this one is not super complex, the next one it is. But number five, vacation rentals or second homes, okay?
17:27 Rafi: Wait, wait, wait. So what’s the difference between a vacation rental, and just getting a single family home rental?
17:34 Jorge: So pretty much, for those people that are typically, if they’re up north, coming to Florida in a yearly basis, they’re spending a lot of money staying in a hotel, and they’d rather put their money into an equity, they typically buy either… They could either buy a vacation home, which is a vacation, that they could come into once a year. A second home, if I’m not mistaken, has to be 100 miles from your current residency to be considered a second home.
18:15 Rafi: And that’s something that we can get into the details, but I think the key thing here is…
18:19 Jorge: For lending purposes.
18:20 Rafi: Yeah, for lending purposes. So to reach out to people like Sam to get that information. But I think then, the main difference, it’s when you buy that single family rental that we talked as the top reason, you buy it strictly for the cash, the cap rate that’s it’s going to generate. If you buy a vacation rental, or a second home rental, you want to live in it at one point. So you will want something that you will be okay staying a week or two. Okay. Because you will want to use it. For example, in my case, I will buy something in Rincon, Puerto Rico, something like that. But I want something nice that I can say, “You know what? I can take the family, the wife, Darling, and stay there a week or two.” Yes, I’m interested in the cap rate, but again, I know the cap rate is gonna be lower because I’m gonna be spending a little bit more on what I want in that home, it’s a little bit nicer than maybe what I get in a single family rental.
19:20 Jorge: And to add more to that, if you have a vacation home, you might rent it periodically, a week here, a week there, like you said, ultimately, when you have a vacation home, don’t look at it as income, it’s not gonna be income, but at least, can you get enough income to cover your bases?
19:36 Rafi: Right.
19:37 Jorge: While the property continues to appreciate.
19:39 Rafi: And I have friends that actually, like you said, they have a beach front condo in, for example the one I know, they have it in Coquina Beach, which is south of Tampa. And again, they use it a couple of weeks a year, but then they rent it, like $100 a night, something like that. And now with websites like Airbnb, you can easily rent…
20:00 Jorge: There’s a lot of websites out there.
20:01 Rafi: A lot of websites that can do it. And actually in his case, because it’s in a prime location, he actually pays his mortgage and more. He makes like $400, $500 a month, because it’s high rental. But, again, if he wants to really maximize it, the weeks that he would like to use it, maybe 4th of July or Labor Day, guess what? He doesn’t use it those weeks, because that’s where he gets a lot of money for that beach front condo. So you have to have that in mind and again, it’s a numbers game, but in a vacation rental, not as much as if it was strictly a single family rental, that you have a long-term lease for seven, 12 months, stuff like that.
20:40 Jorge: When it comes to lending, Rafi, one of the benefits of having the vacation home is that… Or a second home, typically, there is softer, I’m sorry, the lending requirements are softer, because it’s still considered a primary home, second primary home.
21:01 Rafi: Go it.
21:02 Jorge: Versus a rental property.
21:04 Rafi: Okay, okay. Excellent. Well, and the last one, and again, although I said we were more complex, he said it is not, but this one is more complex. What would be the last way that we think you can make money in real estate?
21:18 Jorge: The last one is buying a commercial building and doing a triple net lease. Typically, I encourage investors that buy commercial properties to always do a triple net lease, because that way the tenant is the one responsible for utilities, the tenant is the one responsible to keep up with the building, and stuff like that.
21:40 Rafi: Taxes, insurance.
21:43 Jorge: I used to have a building in Kennedy, I used to have a triple net lease with some lawyers that we used to lease the property to.
21:52 Rafi: Okay.
21:53 Jorge: Little more complex, the same thing, same as multi-units, you need somebody to help you appraise the place. Aside from the business, you need a business appraisal, and you need a property appraiser, if you’re buying a property with a business inside.
22:12 Rafi: Got it.
22:13 Jorge: If you use [22:13] ____.
22:14 Rafi: Okay. So just to go over the top six pretty quick. The number one is single family home rentals. The number two is rehab and flips, the most common, one of the most known ones. And number three will be wholesaling assignments of contracts. Number four will be multi-family rental homes, apartment complex, etcetra. Number five, vacation rentals, second home rentals. And number six, triple net leasing, which is basically commercial real estate and stuff like that. Please make sure that you share this video in your timeline. If there is any questions, please, in the comments. Make you share the video in your timeline. Also make sure that you go to our Graystone Investment Group page in Facebook. Actually, I think it’s part of the live video post, you can go there, the link is there. And besides Facebook, where can they find us?
23:11 Jorge: They can find us at homes4income.com. That is homes, the number four, income.com.
23:17 Rafi: Excellent. And remember, every week around lunchtime, we’re gonna be here answering your questions about real estate investment. I am Rafi.
23:26 Jorge: I am Jorge.
23:28 Rafi: Don’t forget to share. Don’t forget to share. Don’t forget to share. Thank you very much for everyone that… And again, I saw Caesar, Allan, Sam, Erina, thank you very much for sharing.
23:37 Jorge: I wanna throw out something. I wanna throw out something real quick for those of you, I had this question last week. How much experience do you guys have? La, la, la, la. Our staff has been doing it for 15 years. I wanted to throw that out there, because you see these two guys just answering questions, you guys don’t know who we are. Funny looking with the sun glasses. But we have, as an office, we have about probably close to 40 years of total experience. And we’ve done probably more than 1,500 deals in the past 15 years, so we know what we’re doing.
24:14 Rafi: Yeah. Absolutely, absolutely. So yes, Caesar, I will reach out to you so that we can sit down and definitely do a one-on-one, and understand what you’re doing. You can, again, reach us here through Graystone Investment Group.
24:27 Jorge: Thank you for the question.
24:28 Rafi: Homes4income.com. Normally it’s 15 minutes, but I think today the topic was great, and it took us a little bit longer. So I apologize if you’re running late, but thank you very much for staying with us.
Graystone Investment Group
Graystone Investment Group is an experienced real estate wholesaler in Tampa Bay. We serve clients who flip homes in as little as 30 days, as well as clients who hold high cash flowing rental properties.
Unlike other wholesaling groups, we provide clients with a turnkey process at no extra charge. We find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years.