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welcome to get rich education i'm your host keith weinhold how do you get the money for real estate whether it's your first property or your 21st property you don't have to trade your time for money at a job to save up for a down payment for every property that you buy in fact you probably shouldn't it's a mindspring of ideas on where you can find that real estate capital with ken mcelroy and i today on get rich education you know starting in real estate seems hard for some even experienced investors can find it difficult to achieve the success that they had hoped for what if there was one small change everyone could make that would solve these challenges ali boone offers a book that really no one else has it's an easy to understand glimpse into the real estate investing industry and your mindset it's life lessons on hacking your mind before you hack your wallet her book to grab on amazon is called not your how to guide to real estate investing most toronto property investors choose 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you do that with your own money and i'll tell you that's probably how most people do it and that's how i bought my first property all with my own money in that down payment that i earned from a day job at an engineering company yes it was that three and a half percent down for that seminal fourplex but i didn't do that again i had learned that it's better to use other people's money for my deal so what i did is i took equity that i had accumulated in that first four plex after owning it for three years which was a blue fourplex i pulled it out and then i used it as a down payment on a second fourplex rather than using my own money well that second fourplex and it was a bigger one a green colored building where everyone had their own one car garage i remember i was pretty proud of that building but in any case this way you can think of it as that market appreciation made the payment on that second four-plex for me i was leveraged so if you understand that you'll understand that in a circuitous or perhaps unintentional way the bank actually made much of my down payment for me from leverage in that first four plex into that second four-plex well let's talk about some other ways that you can get your seed money to invest in real estate it's not just your down payment that you typically need to make to begin owning real estate it is those loan closing costs and prepaids that often total about four percent of the purchase price that you need to make on top of your down payment well a way to start using other people's money on your very first deal is to offer the seller a strong price for their property but you ask the seller to pay some or all of your closing costs for you so say they paid three thousand dollars of your closing costs for you and then you in turn offer them three thousand dollars more for the property than you would have otherwise well that's a wash for the seller but for you that's three thousand dollars less that you have to pay at the closing table at the time you buy and now you get to finance that three thousand dollars for thirty years well that's a great deal for you so to help you answer the question how do you come up with the money then don't forget that the seller can help you be mindful though that there are some limits typically as to how much of your closing costs your seller can help you with it's usually two to three percent of the total purchase price that is set as the maximum now when it comes to the property seller you can perhaps obtain something called seller financing seller financing it confuses some people but it really just means how it sounds you get a loan for the property from your seller and then over time you make payments to your seller that's right i didn't say anything about a bank there because there's no bank involved at all with seller financing so it's an agreement between you and the seller and you make the payments to them over time so then both buyer and seller sign a promissory note and that should outline the interest rate the repayment schedule and the default consequences now you might be able to get in with a smaller down payment with seller financing but few sellers that agree to do seller financing are gonna give you a loan as long as 30 years i mean really what normal person would give a 30-year loan anyway i mean would you give any kind of loan to a 34-year-old friend and trust that he'll make every single monthly payment until he's age 64. no way at any interest rate that might be kind of nuts well largely 30-year loans exist because they are government-backed so to get back to seller financing your seller is likely going to want to be paid back in less than 30 years seller financing isn't common because a lot of people just don't know about it and they just sort of assume that a bank needs to be involved every time another reason that you haven't heard about it is that a lot of sellers they need the full sale proceeds in a lump sum all at once in order to buy their next home so a lot of sellers don't want to offer it at all and most sellers haven't even heard of seller financing either but for sellers that do know about it and they do want to do it they should put seller financing in the listing it makes their listings stand out sometimes you'll see a listing with that in it and also with seller financing one advantage is that you and your seller can often close faster for buyers seller financing lowers your closing costs now if there's ever a property that you want to buy and you don't have the money and you need some flexibility you might ask the seller if they can offer this for you and it would be whovue to educate the seller on how seller financing could help them because oftentimes this means that the seller can report the transaction as an installment sale if you make them payments over time and see therefore the seller gets some preferential tax treatment rather than just that one lump sum that they would get if they sold it more conventionally through a bank so if you can educate the seller on that now you're starting to win and it's not only about what you want it's about helping the other side get what they want and point that out to your seller but one word of warning with seller financing is that you do want to make sure that the seller owns the property outright and that they don't have any outstanding mortgages on the property well that is seller financing it might help make a deal happen for you because you might be able to make a smaller down payment and have lower closing costs than what a bank can offer you another way that you can get money for your property is to take a loan from the equity in your existing property and just because you can do that doesn't always mean that you should do that often you can borrow against your primary residence up to an eighty percent loan to value ratio if you get say a second loan on your home at a four percent interest rate against that equity in your property well that's going to generate a new monthly payment that you now have to make so your job and therefore your risk is that you need to take that borrowed money go out into the market and generate a return that meets or exceeds your payment on that four percent and once you do now you're dollars ahead now when you take a loan against your home this way often with something like a heloc a home equity line of credit you now have the ability to basically write yourself a check for say 50k or 250k and understand that that is a non-taxable event and not only is this loan a non-taxable event but in some cases depending on how you spend the money the interest paid is even tax deductible to you check that with your cpa because there are a number of instances where it's not tax deductible now once you buy and control a property a way to have others make your payment for you is with what we call house hacking that effectively means bringing on roommates you might remember that a few weeks ago gre listener ryan shaw of california did this beautifully by renting out rooms to college students now a lot of times if you're buying a duplex triplex or fourplex and you think that you don't make enough income to qualify for it because it's just a larger purchase price overall well what you can do before you even own the property is you can take 75 percent of the existing tenants income a lot of times so yes the tenants that already live in that building before you even buy it and you can use that income toward your income to qualify and gosh i really love that particular premise conceptually because think about it you're actually using other people's money before you even own that property when you get to use 75 of those existing residence income in order to qualify for it in the first place now another way to get the money for real estate is something called a lease purchase agreement the term lease purchase is usually seen as a hyphenated phrase i've seen some people call this a rent to own property three hyphenated words together there so lease purchase and rent to own they sort of mean the same thing and i am only trying to be grammatically prim and proper here because if you can visualize a word or phrase it helps you retain it so what a lease purchase agreement is is often something that you can use for a primary residence that you really want but you can't afford the down payment so what you basically do is you sign a pretty standard lease so you would be a renter yourself that's the least part of the lease purchase but the purchase part that means along with signing the lease as a renter yourself you also sign an agreement that gives you an option to purchase the property later so that's the lease purchase always hyphenated so the landlord retains the title to the property and how this works is that you're usually going to pay the landlord above market rent while you're renting from them and then that extra amount above the market rent that gets applied to the principal if you decide to exercise your option to buy the property later on so at the beginning of the lease period you do negotiate a sale price up front typically and you put down something called an option fee and this option fee compensates the landlord if you decide to back out of the deal and not buy the property so this gives you some flexibility if you decide to buy the property down the road then your above market rent paid effectively becomes equity that you get to have in the property but if you don't buy the property you lose both your option fee and that equity that would have been put into the property that is a lease purchase agreement also known as a rent to own property and i'll tell you that that particular arrangement is not common you just don't often see this in real estate on the subject of not common but certainly possible one way to get into a property with absolutely nothing down is to assume a seller's mortgage you just take possession of the property and start making payments for the seller to the lender but one reason that mainstream mortgage companies do not allow this assuming this seller's mortgage like this is of course that bank loan terms are tied to the credit worthiness of a borrower they just can't let anyone come in and take that over another way to get money for a property although it's also not common is to negotiate a seller held second mortgage this would sort of be a hybrid to seller financing this means that to get into the property what you would do is borrow say 80 from the bank and you would borrow another 10 or 20 percent from the seller meaning that you would now only need to come up with zero to ten percent yourself depending on what you've negotiated there so again that is called a seller held second mortgage but yeah we're really getting into some methods that are not common or just aren't allowed by mainstream banks yet in some instances it might help to ask a seller if it is available to you if you can't remember those names or techniques and you want to read more about all these later i will list each of these techniques that i talked about in the show notes for you and if you don't know how to see that since this is episode 335 you can simply go to get rich education dot com slash 335 and there they are ken mcelroy joins me in a few minutes here when we talk about getting the money he's going to talk to us about how you get money from other investors since he's such a master of that we'll discuss borrowing from your retirement funds for investing in real estate and the pros and cons of that and more i think you know that from listening to me over the years my favorite way to get money for real estate deals is not having partners and it certainly isn't trading my time for dollars to get the down payments it's using leverage to my advantage love the leverage love it so much it makes something that sounds heretical until you understand it and that is that compound interest is lame leverage is what makes you wealthy since the return from home equity is always zero take it out of one property move it into another reset your leverage ratio and watch your wealth grow rapidly over the long term just copy me if you want to do what i do now for turnkey property those providers likely aren't going to do seller financing or certainly not a lease purchase agreement those aren't the businesses that they're in but i'll tell you what if you take debt equity from your home or another property and convert that into a down payment that works for them all day so do what i do i do my own property buying at gre turnkey.com so get qualified for a mortgage with a company that specializes in income property loans like a ridge lending group or whomever you prefer there and then buy through gre turnkey what's happening with the providers there now is that the florida providers have a number of new construction single family homes up to four plexes available in alabama they are working to get more inventory online as they're seeing a lot of demand in the huntsville alabama market mid-south home buyers they operate in both memphis and little rock they keep turning out the inventory and that specifically is a great resource for beginners there in those two markets with mid-south home buyers also there are new construction single-family rentals in texas and elsewhere yeah you can just do what i do and buy where i buy at gre turnkey.com ken mcelroy and i next hey is your ira in a real estate syndication yikes a 37 ubit tax could hit you but you still have a chance to set up your eqrp and avoid this did you make too much money in 2020 and need more deductions now federal law lets you set up an eqrp in 2021 and get deductions for last year yeah retroactively even put all the ira and 401k money in bitcoin gold or your own business get control of all of your retirement money tax and penalty free text eqrp in all capital letters to 72 000. the people that our listeners can't stop talking about our ridge lending group and mls42056 they provided you with more loans than anyone it's where i got my last few loans and they finance single-family income property up to four plexes they're the number one lender for both beginners and veterans start your pre-qualification chat with president chaletridge personally and you'll end up with your custom plan for expanding your cash flowing portfolio start at ridgelendinggroup.com hi this is rich dad advisor garrett sutton you're listening to the always valuable get rich education with keith weinhold don't quit your daydream [Music] you're already familiar with today's guest i think because he is one of the most recurrent guests that we've ever had here at get rich education he's the risk that advisor for real estate he's written a lot of influential books like the abcs of real estate investing and others all of which i've read and you know something about him he's just really approachable even though he's been doing this for a long time and he does a lot of really high dollar deals he's just really someone that you can relate to he really deals very much in the multi-family investing space big apartment buildings he runs mc companies they're a real estate syndicator what a syndicator really does is they go out and identify a bigger apartment deal and you could ever afford yourself and you can participate with mc companies in one share of that he is based in scottsdale arizona he really does a lot with community and giving he's a really giving guy so it's great to have back on get rich education ken mcelroy hey thanks keith great to see you as always hey it's so good to have you here ken because when it comes to real estate investing people come up they read your books they get interested in real estate investing but it's quite common for a person to feel intimidated some of the prices for real estate seem unapproachable to a beginner and you don't always just have to come up with a down payment in your own money there's so many other ways to find investment money so a beginner really has more options for investment money oftentimes they're thinking about funds that they would have to go out and work for and trade their time for dollars for and save up for that's certainly one way to do it but i think oftentimes you as a beginning investor or even an intermediate investor you have more funds to work with right now than you even realize yeah and i would go even further keith to say that i actually don't know any real estate investor that started with money i didn't yeah i started out with that three and a half percent down payment on a four plex i just scraped it together but i understand the question i understand the mental hurdle i do my parents they scrapped it together they saved whatever they could and they bought the house that i grew up in and that was the house that we never moved out of actually my mom still uh has it from the time i was a young boy and that's the way most people think of real estate and we're talking about is something very different the key to real estate is finding the deal that works because it's been my experience like if i called you up keith and i said hey i found an incredible duplex and you're gonna make ten percent on your money you would raise your i'll go okay i'll take a look at that right and so that's what people don't understand it's the education is in the deal that you see and then the money follows and there's a lot of ways to get money i know that's what we're going to talk about but it's the deal itself generates the interest just like you guys i mean we've all lend people money before you know sometimes you lend it you're like okay i'll never see that again and sometimes you just know that person's gonna pay you back well it's the same with real estate in my opinion is some deals are great and some deals are not great and so what is the person that's bringing the dlc is it a good deal or not a good deal i think there's a tremendous amount of money chasing stuff that makes a return for them one hundred percent and one doesn't just need to come up again with that down payment their own money i was able to put it together because i could get an fha loan a lot of people were thinking about that 20 percent down payment but yeah when you've been around the game a long time like you have you have a network if you identify a 275 unit apartment building people are thinking well ken's got the network he's been in the game for a while he's got a great reputation he's going to find the money for it what would you tell a beginner that just can't seem to get over that hurdle of say just getting a 20 down payment together for a 150 000 rental single family home i'll tell you what i first did i had a rich uncle like we all have rich uncles right he's in his 90s now he's still alive he lives in lincoln nebraska but i'll never forget i was like okay like i'm going to get into this real estate game this is just after college and so i brought him a deal and he's very sophisticated and that was one of the best that he of course said no because he saw what i didn't see it was a small little property he educated me as i was pitching him that deal and showed me what i didn't see and so the next deal i went out i looked and i saw something a little bit better and i think what happens is you build your network for me i started with friends and family who do i know with money and at that time there's maybe two people so then from there if you have something that can make people money when you start asking questions you'll be surprised at how many people are looking how many people are sitting on a lot of savings how many people are afraid of the stock market how many people have a lot of cash flow coming out i was with a friend of mine yesterday at dinner this is a friend of mine i've had for years and his company's killing it i've never even asked him to be in any of my deals he's like hey why don't you ever ask me to be in any of your deals i'm like i go i don't know he's like well i want to be in your next deal and i'm like okay what happens is you start to get into these circles and by the way 10 years ago his company wasn't doing well and i actually led him some money so it's just one of those things where you just immerse yourself in it and then you start to put the deal out and people educate you on what they see or what they don't see okay so say that someone finds a an eight unit apartment building that seems to be a good deal you're talking about pooling other people's resources together in order to secure call it the down payment for that deal just the equity portion of that deal is there a difference between a partner and an investor can you speak to us from that perspective because of course the sec the securities and exchange commission have certain rules around who's a partner who's an investor when are you really aggregating things in a syndication when are you just partnering with a friend can you tell us about that when it comes to other people's money for the down payment i will that was a great question so let's say we're looking at an eight unit deal what's going to get an investor interested and what's going to get the lender interested and what's going to get a partner interested so the first thing the lender is going to look at are the numbers period and they're going to look at you as a borrower sure but they're going to look at the number because what's going to pay them back that property they're going to have that property as collateral so they're going to decide how much they're going to lend against that property based on how the cash flow is so if you find that eight unit building and let's say you have tennis that have been in there 10 years and they're 150 or 200 above market that's going to make the investor excited because you're going to say hey when these people renew there's an opportunity to raise up to market not above market and therefore it's going to increase the value and the cash flow or maybe there's some stuff inside of the operations where they've been spending too much money on certain things and you can save on the expense side so that's what excites investors they're looking at it from two very different things when we put a deal in front of an investor we don't just put a deal in there that's going to be the same or maybe it's going to increase because the market goes up a little bit we're trying to force equity so when i'm making money for the money that's when investors get excited on the partner side of it that's entirely different that's like somebody that has a partnership that's actually as a developer maybe they're doing stuff together that's even more complicated it's actually the hardest of the three because sometimes you have partners that don't do anything or maybe you're not aligned on just so many levels i mean we could do a whole show on this issue but the investors in a lot of ways are much much easier the lenders they look at the numbers and the facts the investors look at the numbers and the facts especially if there's an opportunity for if you're going to make them money on their money they're going to be very interested so they're three very very different people oh you bring up some great points yeah they say the most difficult ship to sail is a partnership i really don't invest that way myself but i like that you brought up the point that okay if you're an investor that doesn't have money or doesn't have much money and you want to bring people alongside you to invest in your deal the thing that excites them is seeing meat on the bone in a deal like buying that eight unit property where we know that we can raise rents when we get new tenants in there because the existing ones are paying 150 to 200 per month under the market on an apartment building that i bought i spent about twenty thousand dollars on a new more efficient heating system well that lowered my natural gas bill by four hundred dollars therefore increasing my cash flow by four hundred dollars that really made a lot of sense in adding value to the building so this is a great point in what would get someone interested in your deal it's showing them where you're going to add the value and how you're going to do it right so one of the strategies that we did back in say 8 9 10 when we started buying properties when they after they crashed a bit is i said one of the strategies then was okay i want you to go out and find every single property that's over 200 units that has washer and dryer hookups but no washers and dryers that was our strategy and we went to texas and we found thousands of those thousands we bought i don't know how many maybe eight or nine or ten thousand of those think about how simple this is the washer and dryer set is 600 bucks for the unit we give it to the tenant it doesn't matter if they're in their rent uh in the middle of the rental or not they're happy because they don't have to go down and get coins and go down to the laundry mat or the prepaid card or whatever it is so now they're in their unit they have this brand new washer and dryer cost me 600 bucks when their lease renews i say listen now you know we're saving you a ton of money on the laundry and so we think that's worth 50 to 75 a month they agree because really for them there's no additional expense i mean there's no additional revenue they're just saving from having to spend it and walk down and sit down with the load while it's going so that was a strategy that we did for years that fifty dollars a month let's say pays for itself in one year 50 times 12. so we paid for the washers and dryers in one year and then after that we had every single unit at 50 more a month that's what investors get excited about when you start outlining strategies like that and you could do it with flooring you could do it with renovations you could do it with putting in backyards for pets you can do it all kinds of ways and so when you start to build your rent roll and you show income that can and value that you can increase for the investor then all of a sudden the investor gets excited that's a great example with what you did with the washers and dryers in texas not only did you increase the income from the property as we know apartment buildings are based on the noi the net operating income of the property so therefore you increase the value at the same time i think it's so interesting that you found that narrow niche this is exploiting an opportunity what has washer and dryer hookups but no washer and dryer but it's not exploiting people in the end you're actually making your tenants life better you're thinking about how you can improve the lives of others first and then creating value from that making it easier for them to do their laundry right and at the end of the day i mean if you take a look at for a hundred units times fifty dollars a month times 12 or 200 units you've now increased that debt operating income a lot and all of a sudden you've created in some cases two three four million dollars in value to the property just by buying those washers and dryers so for you know 100 to 150 000 investment you're making a three or four million dollar value add that's the type of thing that interests and attracts investors we talk about how to find investment money i think one place can that people are scared to look is using the equity from their primary residence doing a cash out refinance and then redeploying that money into an income property but just because one has the ability to do that that does not mean that they should always do that but if that scares someone i think the way to think about that is you're not losing any equity what you're doing is you're just making an equity transfer from your home into a second property you want to talk about some more strategies for using home equity for someone's first rental property investment and when they should and shouldn't do it a couple things one when you do that it's tax-free so you're actually scooping your own equity so it's not tax because it's debt i think that's important great point the second thing is you actually do pay for that so you have to calculate the payment on that additional equity but in a lot of cases as we're starting to see now is we've had a massive refinance year some people were sitting in four even i was sitting at a four and a half percent interest rate way back in the day on a loan on a second home that i had and uh you know i refinanced it that sub um below three percent i didn't do a cash out but i could have i could have done a cash out and actually kept my payment to say and so the point is is that it's not always bad what i always tell people to do is be careful you don't want to leverage up that too high and you don't want to get into a situation where if the property over here that you put the money in isn't doing well and now you're having a tough time paying your primary residence you got to be very very careful in that regard i say but typically i like to tell people to do that if they have it in other investment properties they have a lot of equity then those are really really that's good low-hanging fruit to be able to scoop that kind of equity and continue that momentum it's a great way to harvest your own money and not have to go after new investors so i think the risk when you do a cash out refinance from say your primary residence in order to get a seed to places a down payment in a new property you touched on it yes you do need the cash flow from that investment property to service the debt from that home equity line of credit or second mortgage or whatever you're doing or then you might find yourself under water a lot of people especially from the rich dad school can robert kiyosaki likes to say your home is a liability not an asset because an asset pays you but the primary residence is a liability because it takes money out of your pocket every month rather than put money into it i think one can make the case though that your primary residence is less of a liability if you intelligently harvest the equity and reset your leverage ratio and think about it that way you're exactly right i think what rob was trying to say and i agree with if you look at the balance sheet it's actually the bank's asset the bank's giving you the money so it's actually their asset and i think that's what he was trying to say around that but you're right if you've got you know good savings you've got let's say a good income and today keith we don't always know what's that going to look like moving forward as a lot of these jobs are being moved over to ai as an example and we're tarting to see things that are declining so you got to be careful on that side if you're reliant on your salary or your w-2 job you know your paycheck to pay that primary residence i always tell people to be careful make sure you have lots of reserves if you're going to do this of course your home your primary residence is the bank's asset because you've created and you're giving an income stream to the bank that's why it's an asset to them and when it comes to finding investment money maybe from some of those non-traditional places are there anything else you would like to cover for investors whether that is borrowing from retirement funds or house hacking or seller financing or any other strategies when it comes to getting money all those are great keith at the end of the day this is just about using other people's money so the bird technique is a great technique house hacking the seller financing one of the things that i found i was talking to somebody the other day they had no idea we have this big 401k issue we have a lot of people sitting on these big 401ks if they just move the money over to a self-directed ira as an example they can actually control how that money's being invested we actually have a lot of people doing that in our deals in other words they're they're sitting on all this 401k money and so they're moving it from say a financial advisor or a wealth advisor into a self-directed ira and that became a vehicle for them they didn't have any clue that they could even do that so some of it is just educating other people if they're sitting on savings for example educating them about the pending inflation or if they're sitting on a big 401k account educating them that how's their returns did they know that they could invest it on their own through a self-directed plan some of it's just jumping in and finding solutions for other people because a lot of people are even my parents you know you kind of get caught and i have a lot of friends that are professional athletes and all their money is in savings and for lots of reasons and we can get into all the reasons behind that mostly around trust but the truth is they're comfortable with it in savings so if you can sit down and just say listen i understand this is where you are but this is the forces that are happening right now so you just need to understand where everything's heading so it's just educating people with money and even if they don't invest with you if you're just helping them understand the bigger picture and helping them period see something that maybe they didn't see i found that there's that's a great way to raise capital it's just is to teach some financial education that maybe you read in a book maybe you saw on a youtube video maybe you heard the podcast and help everybody have what they've worked so hard to earn you mentioned the self-directed ira or one might use that with an eqrp vehicle like we talked about with damien lupo here but a lot of people just don't understand that those options are available to them people are getting increasingly concerned about the stock market valuations being high on a p e ratio so maybe they want to take some of those 401k based funds and put them into an eqrp sort of thing so that they can invest in real estate in real assets you mentioned the 401k some people don't realize and again this doesn't always mean that they should do it it's just something to look at the pros and cons of is simply borrowing from your 401k borrowing from your retirement plan when you're borrowing from yourself you pay interest back to yourself the risk there is you need to repay the loan on time or you could be subject to a 10 penalty but borrowing against your plan is another way to go for finding the investment money for real estate yeah and another area that's emerging right now it's the same thing through life insurance you get a life insurance plan on yourself you pay into it and then you borrow against it and there's a lot of financial planners putting people on those kinds of products there's a ton of stuff out there even if people don't have the savings that they've been building up these nest eggs through 401ks or through life insurance plans or whatever and they do have control over that they don't know what to do with it yeah so there are more money sources again ones that you already have not that you have to save yourself and wait for all the time well can any last thoughts about finding the investment money for real estate it's everywhere and i really mean that there's not a day that goes by we don't read something about a stock market bust and i was actually playing golf over the weekend and i was talking to a friend of mine who's right in the middle of all this he does ipos and and he's pulling a lot of his clients out of their positions into cash for whatever reason you know i didn't get into the details but the point is a lot of people are concerned about the longevity of the stock market as an example and i'm not saying it's going to go up i'm not saying it's going to go down the point is is that there's a lot of people pulling back right now and they're sitting in cash and they're wondering what to do and i'm telling you guys they're looking for guys like you they're looking for deals they're looking for solid people that are finding deals that's the way all the big money works i've gone to goldman sachs i've gone to blackstone i've gone to lehman brothers back in the day and all that managed money they're looking for guys like me boots on the ground putting it to work for them that's how the system works so if people understood that there's a lot of cash up there that you can't see that is looking for a home and a good investment and just people pulling out of the stock market is one example yes there are a lot of instances of found money out there you just have to find out what avenue is best for you well ken you've been really an inspiration to a generation of real estate investors especially with all of your rich dad advisor books and ones that you've written outside of rich dad advisor series you have videos and a lot of people learn from you that way what's the best way for get rich education nation to contact you today keith thank you so the best way to reach me is kenmackery.com get rich education as you know we've put up a video for just your audience a 2021 real estate predictions video and show notes so that they can kind of learn for themselves and kind of take a look at some of the things that we're trying to put out there to help people make good decisions that's ken mcilroy.com get rich education can you've been of such value to our audience over the years thanks so much for coming back under the show my pleasure keith as always yeah great stuff from ken as usual to attract money for bigger deals show investors how you're going to add value say to a big apartment building and to riff off of the example that he gave if you have a 200 unit apartment building and you add washers and dryers to them which gives you only a 50 monthly rent increase per unit well if you spread that over 200 units that's now your rent increase of 10 000 per month multiply that 10k per month by 12 to get your annual net operating income that answer is 120k and your additional 120k noi divided by your prevailing cap rate in that area say it's eight percent there you go that gives you a one and a half million dollar valuation increase that's how you attract investors it's showing them that right there when it comes to qualifying to buy more property it's keeping in mind what are you interested in versus what is your lender interested in that's a great reminder that ken brought up there one to four unit property values they are based on comparables and the lender looks at you and your own personal credit profile in you qualifying for those properties and conversely five plus unit property values they're based on how much income they generate and the lender looks primarily at the building's risk profile more than they do at you as an individual borrower but even for larger buildings the lender often will look at your credit profile to make sure that you are not a threat to the building and if you think about it that makes sense because a person working for a typical wage at their w-2 job well their income level probably is not going to have much effect on the ballast that they can offer on a giant loan amount for say a 5 million apartment building that building needs to have a debt coverage ratio from the rent so that debt can be serviced that way hey learn more from ken he's got the housing predictions video for you and a lot of good material there at ken mcelroy.com get rich education next week as always i'll be back here to help you build your wealth don't quit your daydream [Music] nothing on this show should be considered specific personal or professional advice please consult an appropriate tax legal real estate financial or business professional for individualized advice opinions of guests are their own information is not guaranteed all investment strategies have the potential for profit or loss the host is operating on behalf of get rich education llc exclusively [Music] the preceding program was brought to you by your home for wealth building [Music] getricheducation.com