How to Make a High Return on Real Estate

54 Replies to “How to Make a High Return on Real Estate

  1. great info
    I currently live in vegas and i am looking to invest in rental properties but the houses here are too expensive and the ROI is not there. what are your top states to invest in? considering ROI, state laws,etc?

  2. Does your price range include repair and renovation costs? Or is that just the sales price of the property?

  3. Great info on the rental aspect of investing, I always try to stick with the old rule, buy low and sell high, however I'm careful of how I analyze the property if I'm trying to sell to the end buyer. pricing is critical

  4. Why using the percentage formula assumption and not just take out a phone, download a rental calculator to plug in the numbers for a precise ROI?

  5. So all of these rules you showed us if calculated correctly should prevent us from purchasing property that's way too expensive right?

  6. where in the world are you going to build a brand new 3/2 home for $60k ?
    can that be done in the midwest? Shoot me some contacts for builders I got a couple new rentals I want to build

    nevermind the fact that the land to build it on isnt free

  7. Good stuff as always Clayton. We spoke with your team last month and we're ready to take the next steps. Will be in touch very soon.

  8. It's funny how I am about to get in touch with Lima One then I get the email from you Clayton, leading me to this video….

  9. Good job summarizing high vs low return, but I think a few things were missed. 1) These higher return cheaper properties often have higher risk and capex expenses that will be realized longterm and novice investor miss out on. 2) Your area may be different, but most properties I analyze have 50% expenses from a longterm buy and hold perspective. A cheaper home has similar maintenance expenses as a more expensive one (ie, water heater cost the same), meaning the maintenance to rent ratio is higher…depending on the property, you'd need to assume 150-300 per month for saving for big repairs. The lower quality tenant will have other invisible costs. 3) Instead of focusing one 1-3 years, calculate all in a 5-20 year view. Your high return might suddenly become a low return, or similar to those 'more expensive' properties you avoid. 4) The better 150k+ homes will more than likely appreciate and your tenant is paying off your mortgage in the meantime. 5) You can't finance small run down houses unless you're doing something like portfolio loan for many. Your turnkey clients will have to pay cash. 6) Power of leverage wasn't mentioned. Instead of buying the cheap properties, you can put down 35k to leverage a nicer 150k property. 20-30 years later you own a 300k property, which you can always refinance to pull equity out. It starts to cash flow 3k per year and rent is raised so yearly. Your return is 400k+ instead of using that same cash to buy 1/2 of a cheaper property that earned you 2k per year (60k after 30 years). 7) A better house in a better neighborhood will likely be still standing and in good condition 30 years later, while the cheap slums might be bulldozed by then.

  10. Also, the real high returns come from 1mil + apartment complexes/ mobile home parks. Buying many cheap small single family homes doesn't scale. Instead you could be spending 20-30k per unit that rents for 500 per month in nice huge multi family building.

  11. I'm enjoying your shows and have a question. On your buy and hold rentals, do you primarily work with one bank or have loans with many community banks? I'd like to keep all my loans at one place for ease, but a lot of community banks will not venture out of their "lending area". Thanks

  12. If you were going to spend 150K + why wouldn't you suggest purchasing multi tenant (apartment) type buildings to maximize that ROI?

  13. Hey Clayton, I was wondering what you know about block vs poured foundation. I know in my area water levels are high (Hence "Clay county") Should block foundation be a deal breaker. Basement are a must in my area and houses without are very odd. Thanks in advance.

    Brady Tran

  14. Good stuff. Just recently found your channel and subscribed to the podcast. I am an over-thinker (holds me back) but I like to analyze things and the numbers don't lie. High return real estate would be better than shocks/401k (my current focus). By using your spreadsheet to freedom my houses would be around 30 properties for my goal. 30 SFHs at around 40k at 25% and closing costs (considering financing just to equally compare) would be 12k per house which would be cost on investments of 360k. Investing 360k in stocks over 30 years (with the past 7% return) would be less ROI even with your conservative 60% net over 30 years. Hoping to buy my first rental property soon!

  15. I'm 23, just bought a house for 191k because I wanted to move back out of my parents but I didn't want to rent. 191k is about average for my area by the way. Fortunately I have 2 room mates who are paying most of my mortgage.
    Anyways, I'm looking at cities with good cap rates and I see Cincinnati looks to be the best. If I could keep my job and work remotely, which I think I could, would you recommend I move to a city like Cincinnati and start investing in cheap houses? I only make about 45k a year but I'm assuming it would be hard to find a job that pays any better in a city like that.

  16. Thanks for all the info. It's so true that doctors don't think "numbers" the way you do!!! I'm a very busy practicing medical doctor and after watching your videos I realized that I've been doing all things real estate THE WRONG WAY!!! I, too, am located in the west coast where my rental houses cost a fortune RELATIVELY speaking. Just to illustrate:. For relatively the same cost number wise on the west coast, I COULD HAVE BOUGHT 15+ (maybe 20+?) of the type of rental houses you are talking about and have 15 X $700/month rent = $10500/month of PASSIVE INCOME!!! THIS IS AFTER TAKEN THAT 40% CONSERVATIVE RESERVE SET ASIDE FOR A RAINING DAY!!! So the real numbers per month is likely higher!! And I've been doing this ALL WRONG for the last 15+ years!!! If I had done it RIGHT from the get go, I most likely will have just work as a volunteer doctor and travel with my wife and enjoy life without having to deal with all that red tape with insurance and government BS!!!


    I'M READY to take the next step in joining you!!

  17. Just booked my phone call with you! Look forward to talking with him, learning so much from you guys! There is still so much I don't know but I'm happy to keep learning with your videos.

  18. Rental property investment is very underappreciated in the US maybe partly due to 2008 crisis that made people scared of real estate. But people don't understand the value of property; not only is it an income producing asset, but it holds value through inflation. People just need to be careful with loans and leverage. I personally only buy cash when I can afford, otherwise I save up for it. Not having a loan helps a lot during next crisis.

  19. Thanks for all your videos Clayton. I am new to the real estate investment game and the only thing that's stopping me from taking the first step of purchasing property is making sure I know how to analyze a deal to make sure it's a good investment. If there is anyone on here that can look over this property i'm looking at and give me their thoughts I would be much appreciated. This property is located in south eastern PA. about 40-45 minutes outside Philadelphia. 
    Sale price $144,900
    Assessed value $73,880
    Prop. Taxes $3919/2017
    Built: 1925
    4-plex(single building)
    4 kitchens
    4 beds
    4 baths
    2054 sq ft
    4200 sq ft lot
    Unit 1 rent $595
    Unit 2 rent $350
    Unit 3 rent $595
    Unit 4 rent $595
    Heating: gas, forced air
    Hot water: electric
    Tenants pay heat and electric 
    Each unit has separate utilities 
    Leases are month to month
    I would pay trash, water and sewer
    Full unfinished basement
    Zoning: Rmhd
    Property has been on for about 100 days. 
    If there's any red flags or things I need to consider that may not be obvious let me know.
    I would ideally like to live in one unit and rent out the rest considering it would be my first real estate investment.
    Sale stars says it's "under contract" and local listing status says "pending", not sure wha that means.
    Thanks for taking the time to read this.

  20. Perfect. This is sooo much easier than before, now that I see it. I only have 2 properties but my wheels have been turning recently and I got the real estate fever now. I luckily bought a property via auction for 20,500 back in 2008. Didn't know anything about the market, I just knew that was pretty dam cheap. It was a 6 yr old house! All brick. It is now rented out for 850 a mnth! Guaranteed section 8 check, say what you cash flows!

  21. I don't understand what wholesale means and to buy properties without a realtor. How do you find these cheap properties if they're not on the market and what does it mean when you say wholesale? Thanks for all your help!

  22. I live in upstate NY far 15 min from Pennsylvania, i heard u invest in pa , what do you think about it, is it friendly? I know taxes are cheaper than NY

  23. So living in southern California where can we find homes in that price range or are we just screwed? How about Vegas market

  24. i thought the rule was the 50% rule. Also i assume your 50k was just an easy number to play with. you actually probably would have purchased for around 46k then went all in at 46k + closing cost + rehab cost putting your all in at 50k. Excellent video as per usual, btw

  25. I LOVE watching your videos, but I do have one question.

    When buying a property with Morris Invest, am I buying at market value or will there be any upside equity once the project is rehabbed?

  26. and when is it with a mortgage? with the first formula? Would you deduct the 9,000 payments for 12 months? or how do you do it? Thank you

  27. Thank you so much for all your videos and advice! We're in a great spot and looking forward to getting into the game ourselves!!!

    Sorry if I've missed it…but as newbies is there any advice on how to search out sellers and real estate managers when we don't live in that state? Same with LLC creation…hard to research attorneys if I don't live in those areas I'm looking to shop in or have friends/contacts there. Did ya'll run into the same as you were starting out? Many Thanks!!! =)

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