Real Estate Riches

Brian: Hello, hello. Welcome to another edition of our show, Easy Money New England, where every week, we bring you money making opportunities or money saving ideas all in the areas around real estate and investing, and anything that has to do with money.

Today we just got the numbers back. We want to thank everybody for watching our show, downloading our show. Our numbers are going up. If anybody wants to get in touch with us to do any certain types of shows, feel free to just email me at Info@newfed.com. Again, I-N-F-O at NewFed.com and we’ll bring on some guests that are gonna further help our education and find us ways to make and save money.

Today’s show is very interesting. Basically, we published a book. It’s called “Real Estate Riches, Take the First Step in Buying Your First Home.

The reason why I did this book, really, was to take all the years of my experience from, really, the age of probably 12, but really, I didn’t really get started til maybe age 18, and kind of pack it all into a book. It’s not so much on how large the book is, ’cause it’s probably 40 or 50 pages when it’s all said and done. Here’s a copy right here. Again, it’s called Real Estate Riches, and it’s the content in the book.

If you’re looking to get into a home and really start to be a real estate landlord or a fix-and-flip, there are some real principles that you should know about before you start your journey. I’m just gonna read the back cover, and maybe this will solve what the show’s gonna be about today. Again, the cover, Real Estate Riches, Take the First Step in Buying Your First Home, by Brian D’Amico, that’s me.

Here’s how to take the first step to buying your own home and building true wealth. So you’ve been thinking about getting into real estate, but aren’t sure it’s for you. You see a lot of people around the country who have made a tremendous amount of money by being a real estate owner and landlord. It’s great that you see all this, but you just don’t know where to start.

This is where we came up with this book because I come from a real estate family. I’ve lived through the high and low times. I own a mortgage company called New Fed Mortgage that we started back in 2000. We do this weekly podcast bringing everything together and really, I’ve learned a lot just by doing this podcast every single week. With some of the people that we’ve interviewed have been really eye-opening and very interesting.

Obviously, like they say, there’s no such thing as easy money, because I’ve never found it. You see everything on the Internet. The information age today, everyone’s saying how easy it is and you just gotta do this, you just gotta do that. There are infomercials out there that make it sound like it’s just, call and you’re gonna make money. It’s just not true.

Again, we always like to say, “Send me an email if you know some way how to make easy money, ’cause it’s just not out there.”

But I’d like to share strategies and find ways to win, no matter what the market’s doing, because we’ve seen some major ups and downs, and people still profited in a down market. Sometimes that’s where fortunes are made, is in a down market.

Again, I just shared my years, and I’m no guru. Believe me, I’m no guru. I just, sharing my trials and tribulations and failures. If one person found out about how I failed a few times and they can learn from that, it just gets them closer to their goal quicker.

Really, this book’s all about getting started on your path to real estate riches. Hands-down, real estate is the best investment you’ll ever make. You could see it every day, it’s tangible. When you buy a piece of property, you’re basically self-employed, because that building, you’re the CEO of that building.

Many people start businesses, and as you probably are aware, most small businesses, they fail within the first three years. It’s a very difficult thing. On real estate, it’s basically your own business. You could do whatever you want with that property. You could find different ways to make money. I know last week we had a show where we were talking about commercial real estate and how you can have different income streams from that property. It could be laundry. It could be parking. It could be different things.

You always have the ability to control that asset. You can see it. You can drive by it. You can paint it. You can make it look good. It’s tangible. When you invest in stocks, you can’t see it, you can’t control it. You actually don’t know when the next bust is gonna happen. You have zero control. It’s nothing about cashflow really, with the stock market, unless you’re buying stocks that are very high and a return every month. But that’s, it’s still an investment, so you can’t control it.

That was one of the things in my, earlier on in my life, that I said, you know what? I don’t want to invest in real estate, I want to invest in stocks. I don’t want to have to get a call saying, “Hey, change my boiler,” or “My heat isn’t working,” or “I found a mouse in the basement,” or something silly that you have to be responsible for.

A lot of no heat calls, a lot of no hot water calls, and I’m saying to myself, “Well, I could invest in stocks.”

Remember, this is me back when I was 18. I could invest in stocks and forget about all of this. If you put them side by side, real estate is a great way to leverage. You can leverage stock, your stock account. You can leverage that. But leveraging real estate and the cash flow that you receive from it, I think is the best investment, just by going through it for the last, sheesh, what am I now? 35 years now.

Let’s keep going with the back cover. But the stocks, you just never know what’s gonna happen. You have no control.

The other problem when I was younger is real estate can be slow moving. There’s no, there’s just no instant gratification when it comes to real estate. You probably get that high when you buy the property. You go in, you’re like, oh, this is great. Fix it up, paint it, but then you lose that high in that action.

When you’re young, I was always looking for action, action, action. Real estate just didn’t give you that. It was just slow moving. You had one property. What do you do now? What do you do during the day to fill up your time?

That’s when you really get into business, and that’s how I started my mortgage company, is I needed action, and wow, did I get a lot of action. If that’s what you’re looking for, I got plenty of action. You gotta be careful what you wish for. But the mortgage business is very good. It’s been good to me. But it’s fast moving.

It’s not like real estate. Real estate is an investment class. It could be very rewarding, but you hear horror stories. Everyone hears about how so-and-so made so much money and real estate’s the best thing out there. Well, there’s still a lot of people out there that don’t know how to do it. They buy it, they buy a piece of property, they’re miserable, and they lose money at it.

I’ve done it a few times, I’ve lost a good chunk of change on things because I didn’t have time for it. But you don’t hear the stories of the people losing in real estate. When you talk to these people that actually lose money on real estate, they’ll say, oh, well so-and-so makes it look so easy, and it’s not easy. They think they’re gonna buy a property and it’s gonna be easy, but it’s not.

You have to have a real foundation before you get started. You have to understand what you have to do to become successful. It’s not that you just buy a piece of property and collect money and go to the bank. It’s not like Monopoly, not even close. Getting into that knowing this is a very, you get a leg up on your competition, ’cause you know what to expect. Again, that’s, Real Estate Riches: Take the First Step and Buy Your First Home.

The other part of this is homeownership has many tax advantages. Right now, if you’re renting, that money is not tax deductible. I know people right now that are renting 1500, $2000 a month. Not tax deductible, they’re not building anything. I see many graphics where, when you’re renting, you’re just throwing that money right out the window. There’s really no value there. Yet, you have to live and you have to find a place that you like to live in. But if you can find something with that same type of money, 1500 to 2000 and find a house, now you’re on your way to what your goals are if you want to become a landlord, if you want to be in the real estate industry, if you want to become financially stable.

Again, homeownership has many tax advantages, and it allows you to create wealth without having to pay the amount of taxes every time you sell. There are different strategies where if you were to sell a home or sell an investment property, where you can, what’s called an exchange, an exchange for like-minded or bigger properties. Well, not like-minded, but the same like property as an investment property, and defer those taxes to when you actually sell that property.

Again, let’s just review there. If I had a $300,000 piece of property, it was an investment property, and I sold it for 500,000, in this market that’s not uncommon. Say you sold it for 500,000. Well, I’m gonna get taxed on that 200,000, plus all the depreciation that I accrued over the years that I’ve had it. That’s a big, taxable game. Again, check with your accountant, but that’s a big taxable gain.

If you didn’t want to pay taxes, you could take all of those proceeds, and we talk about all proceeds, going to your next property. Say it was a three-family property, all those proceeds can now go into maybe a six-unit property. Maybe depending on the city that you bought it in, maybe you could find something in a different city that has more cash flow. Because you’re not paying the taxes on that money right when you sell it, you’re building your cash flow, and that’s the name of the game.

That’s what we talk about in the book, is about cash flow. Cash flow is king, and anytime that you can increase your cashflow you have to look at it because that’s what’s gonna get you financially secure. Let’s make no mistake, there’s gonna be a lot of people out there that says, “Don’t listen to Brian D’Amico, don’t listen to his book.”

My strategy, for 30 years, I have my pension, or I had my social security, these people, they just chip away at their 30-year mortgage, and they want to be safe. They are risk-averse. I’m not a financial planner. Most financial planners would probably say, “I could not recommend this book,” because we’re talking about leveraging. We’re talking about leveraging your assets. We’re talking about getting started and finding ways to build equity in your home that you can tap into to create more streams of income.

Let’s face it, everyone who has a job today, including me, we have a lot of expenses. You know what you gotta spend, especially if you have a family. College education and insurance, life insurance, these are things that you’ll have later on in life. If you’re just getting started and you’re renting right now, say you’re a single guy or a single girl and you want to start, well, we’re gonna be getting into the first chapter now, because this is a synopsis of the book.

We’re gonna get in the first chapter. But, now remember, there’s a lot of people out there that are very risk-averse. This isn’t for them. We’re talking about ways to aggressively go after your goals. You can always backtrack. If you have a goal and say, look it, I want to make $10,000 a month, this is how you’re gonna start, and you can always reverse-engineer it.

Many people on our podcast, Easy Money New England, many people that I bring on the show actually have the same background or mentality of how to build wealth. It always comes around cash flow. It’s always about increasing cash flow.

We’re gonna have a guest on the show in a few weeks that talks about reverse engineering. What’s your goal, and you give them the number, and then there’s coaching around it on how to get there, and everything will be in this book to get you on your way. Brian D’Amico.com will be the Website that you go to, and I’ll be tapping you into all these area professionals who can help you get to your goal. Again, we’re gonna be leveraging your assets. This is to be on your way to becoming wealthy.

Let’s start with the first chapter. If I’m brand new [into 00:13:38] investing and real estate, I think the most important thing is to get yourself set up. If you’re still living at home or you’re renting, you need to buy your first home. You want to set yourself up right because you want to be able to build from … Some people say, “I still live at home,” or “I’m renting, but I want to buy an investment property first.”

I have to say, “Well, maybe you can do both.”

When it comes to the first chapter, take care of your living situation first and buy your first home. Again, just a synopsis, but let’s face it, you gotta be in the game to win. You gotta buy your first property, and what I would highly recommend, and it really helps you get to, and I’ve done it myself, is buy a multi-family. Your first home, I believe, should be a multi-family.

Let me tell you the reasons for that. When I bought a multi-family, I want to say I was probably a little later, maybe 24-ish, and it was a two family. We did a lot of work to it. The other tenant was paying for most of my mortgage. It was great. I was basically living for free. Now, I’m not saying you could do that today, it all depends on what cities that you buy in. But when you look at, if you’re a single guy or a single girl and you want to buy a two-family, the benefits are great. Because, if you know you want to be a real estate investor, but you have no experience, that unit, that other unit that you have in your home, or it could be a three-family, you have two other units plus your own. You’re gonna start getting calls and saying hey, I need to get this fixed or, I got a leak in the basement, and you’re gonna really start building your team.

You’re gonna have your electrician, you’re gonna have your plumber, you’re gonna have, who else is there? Stu, who else we got when you’re a landlord, right? You have your, it could be pest control, hopefully that’s not the case. But you got electricians, you got plumbers, floor installers.

[Stu]: All sorts of contractors.

Brian: All sorts of contractors.

[Stu]: Cable TV people.

Brian: Cable TV people.

[Stu]: Chimney maintenance.

Brian: Yeah, today is, your wifi, everything’s gotta be hooked up. What type of value can you give to your tenants that they want to live there? Maybe it’s access to a pool or not a pool, or can you add value to create more rental income in your property? These are the things that you’ll learn, and let’s face it, if you buy a single-family straight out of the gate, it’s great. You live there. Some people will say it’s an investment. But it’s truly not an investment because an investment is things that make you money every month, not things that you spend money on.

I try to have this conversation with many people that, a lot of people will say, “Hey, it’s an investment.”

How’s it an investment if it’s just taking money from you every month as opposed to making money? That other unit in that two-family or three-family, that’s truly an investment, ’cause you’re getting money every month, and you’re probably offsetting your mortgage payment with it, but that’s okay. You’re still bringing in money. It becomes an investment.

When you’re building out your team, and granted, we talk about this in the book, but you want to make sure, first things first if you have your team to find this house too. You have a realtor, you have a loan office, you have an attorney. You want to make sure that that team is in place because when that right property hits, you want to make sure that you have the first shot at it. You want to make sure that you have a pre-approval in-hand. You want to make sure that the buyer of that, the seller of that property knows that you’re gonna be, your offer is gonna stand up. You want to do all of that work ahead of time.

Loan officers, realtors, attorneys, very important in your transaction. You might be looking, and I know it took me a long time. I actually, I was very depressed. I thought I had a house before the one I actually got, and it worked out that I didn’t get that house, and it worked out much better, ’cause I had a much better location. Some things just don’t happen, and sometimes it works out better that it hasn’t happened. The one that I got actually worked out better for me, personally. You can’t get caught up on it personally. You can’t get in the dumps that you didn’t get one property. You just gotta keep looking. You gotta find them, and you gotta act quickly when you do find the property that you want.

After you have that team in place and you actually do find the property, you go into a purchase and sale agreement and you do a home inspection. You make sure that you get a good home inspector. You want to go through it thoroughly. Make sure there are no major issues, like a new roof, or something like that, that you’ll need a new roof. Make sure that all the mechanical systems are up-to-date, that you won’t have to go through something new right when you get out of there, right when you close on the property.

Again, the first step, get yourself set up. Don’t let people talk you out of your strategy. You’ll have people say, “Oh, just get a condo. There’s no maintenance. Just get a single family.”

You don’t want to live next to anybody. You don’t want them to hear you through the walls when you’re yelling at people or anything. Put soundboard. Do other things. But don’t listen to other people saying you don’t want to get a multi. Because, when that time is right, you’ll be able to leverage that two-family quicker than you would, maybe, a single-family. Not saying that that’s always the case, but it’s been the case for me.

When you’re ready to move out to that single family, say for example, your spouse wants to stop living in a multi, and you want to start moving somewhere else, it’s a good opportunity for you to keep that house, especially if you have no mortgage on it if you follow the strategies in this book. If you can buy down that 30-year mortgage and keep on working on that principle, there are many different ways, there are many different ideas through this book on how to do that, then you can keep this property, and now it can be an income producer for you when you move out.

It’s, again, it’s not get rich quick scheme. It does take time. But there is a strategy behind it. If you look at your strategy and say look, [I want 00:19:52] to have 10 units, 10 units in five years or 10 years, yeah, it’s a slow-moving goal, but I’m sure you could find things to be busy on with your work and everything else. ‘Cause you still have to work building a career. Whatever profession you’re in, you’re still building that career. This is on the side getting you ready for passive income. You want to build passive income and cash flow. By the time this starts building, maybe your strategy is to start winding down more with your 9-to-5 job or getting paid hourly versus more on income, becoming an investor, becoming a real estate investor.

Not a get rich quick scheme, it doesn’t happen that way. You will hear the stories of people fixing homes and selling them quickly. It does happen, and someone found a good deal, maybe someone had, they had to do a quick seal. They went in, they painted it, they dressed it up a little bit, and they made some money. But they’re paying taxes on that money. It’s not like it’s just free money. They gotta pay taxes on it, and there’s no cash flow after that. They gotta find another property.

As you go through my book, you’ll understand that I’m a very big believer in buy-and-hold strategy and not fix-and-flip. ‘Cause the way I do it, it’s called fix-and-flop, ’cause you have to have time, you should be, have a trade under your belt. You have to really understand what goes on in that house to make money in the fix-and-flip world. There are some people that really do a great job at it. I’m not one of them. I know I’ll never be one of those guys, just by the last two projects I’ve done.

It’s not that I couldn’t do it, but you have to have time and you have to be committed to it. That’s what you’ll find, that if you can’t be committed to something, it’s never gonna happen.

Again, buy-and-hold, it’s a great strategy. I’m not gonna go through the whole part of the book. But at the end of the day, you want to have more cash flow coming in than expenses. Pretty simple, right? What is the income on that property? The rent roll, how much money are you taking in? It could be laundry, parking, you could also bring in some more money that way. But how much money is that investment property actually producing? Then, what are your expenses?

You go through your expenses, and you’ll see that you have real estate taxes, you’ll have insurance, you’ll have maintenance costs. What you’ll also see is, many people hire a property manager. But again, this isn’t gonna happen on your two-family or three-family that you’re living in on your first step. Maybe you’ll get into that once you get to that second investment property, where you say look it, I’ve done this in my own home. Where’s a better place to start than your own home? Because you’re right there. As long as that tenant that you select isn’t very difficult, then it’s the best place to do it. The best place is to just do it in your home, ’cause you can get your team going.

When that time is right and we leverage that two-family or three-family that you live in, then you can then now take that money and buy that true investment property. That’s when you’ll decide if this, what the maintenance costs are gonna be, the property manager, if you’re gonna have one, or if you’re gonna do it yourself. If you’re in the trades, comes to you naturally.

It’s just so much easier for people that have a trade under their belt to become a real estate investor, because of obvious reasons. If you have to do an electrical service and you’re an electrician, between from one guy charging this versus another guy charging that and trying to keep people honest. That’s why you want to come up with your team early on in your career.

Again, plumbers, I just got a price, I just price something out. Three different prices, and it was something for architecture, the architecture. Anywhere from 19,000, for this, for something that we were trying to draw up, 19,000 to 45,000. I would think that’s a pretty large gap. You don’t know what you don’t know, and you have to do a lot of research. But if you’re not in the trades, you have to make sure your right team is in place, or you have to … there’s a lot of work that goes into it to make sure that you’re not getting, you get the right person.

There are other podcasts in other places where you can actually learn and tap into … But again, when you have your own home you’re gonna know your team, because you’re gonna need to be doing things daily, monthly, making sure that your tenants are happy.

Let’s talk about tapping into your equity. We just talked about buying your first home or how we really believe that buying a multi-family will get you on your way. But you’re saying right now, “Oh, that’s fine, but I’m barely making all my payments now. I have cable, I have television.”

That’s getting ridiculous. A lot of people are just cutting that out and just going to a straight antenna, or however they’re doing it. But there’s many services now where you can save at, what’s it, like 170, $200 a month, it’s crazy.

When you go through your expenses, you want to be … Now, remember there are different things between cheap and there are different things from frugal. I consider myself frugal, not cheap. Frugality is a good thing. You want to make sure that you know what your expenses are. You don’t want to live above your means. You want to make sure that every month, you’re making more money than you’re spending. It’s a pretty simple strategy. No one does it. Some people might say they do it, but it’s very simple, but not a lot of people do it.

It could be as simple as an Excel spreadsheet. These are my expenses, this is that I make, and you want to make sure that it’s not a negative number. If it’s not a negative number, well, at least 10% of that number, I would say more like 20, should be invested. There are different ways to invest. There’s the stock market, there’s real estate, there are different ways to invest, but you gotta realize that your mortgage is really an investment. If you can buy down that principal balance and you have extra money to do that, I believe you should do it.

Again, you’ll people out there that say, “Oh, no, no, no. You don’t want to do that, ’cause you can’t get it back.”

Right. If I have a 30-year mortgage, say I owed 200,000, if I put 10,000 down on that principle, but I need that $10,000 the next month, well I can’t get that back because I already paid down the mortgage without refinancing. And you really don’t want to refinance if you don’t have to. Or if you’re getting a better interest rate then fine, but if you’re putting a chunk of money down on that property, no one, a lot of people don’t do that, ’cause they can’t just, can’t take it back if they have a bad month. But, what I’ve found is, if you stop paying down that principle, you’re buying down the amortization schedule.

In my book you’ll learn, again, “Real Estate Riches, Take The First Step, Buy Your First Home,” you’ll learn that how to tap on your equity is, if you were to make a $10,000 payment or a $5,000 pay-, even a thousand dollar payment, all your doing is buying down your amortization schedule. You’ll see it in the book that, you’ll see an amortization schedule over 30 years, and you’ll see that if you made that payment that you just, say for example there’s 5,000. You may have just paid, based on your amortization schedule, 60 payments, you would’ve saved.

From a 30-year mortgage, say it’s 360 payments, you now only have 300 payments left, because you just bought down your amortization schedule. Again, this is such a simple strategy, but no one knows and on one does it. I actually belong to a group called Strategic Coach. I go to it every 90 days and it keeps me on track. Most of the things they teach there, which I follow, is just simple. It’s just things that are very simple, but you just don’t realize it until you do it.

To know and not to do is not to know. Again, these are simple strategies, but you just gotta follow them. When I go to my class every 90 days, they just tell me what to do and I just do it. It’s amazing how something that you think you know but you don’t do, when you actually start doing it, you’re like, alright, now I get it because I actually do it now. Again, that’s just one strategy to tap into your equity. Some people are in place to do that, some people aren’t. There are other ways to tap into your equity, which a lot of people don’t know about.

There’s a company out there called Speed Equity. I know the owner, Hodge Gill, it’s basically a mortgage acceleration program. I’ve met Hodge probably about eight years ago, and at that time, it was very difficult to use his program, because the equity in America was very low, and getting an equity line was nearly impossible.

But todau, equity lines are very easy to get. I’m not gonna go into the whole program because you can go to BrianDAmico.com, it should be up in a week or two, we’re getting there, and this book should be on Amazon in about a week or two. It’s getting there. But if you’re watching this, by the time you see it, it should be all set. But again, it’s a mortgage acceleration program. I’m not gonna get into the meat of it, ’cause Hodge does a much better job than I could ever do.

But I did a one-on-one session with Hodge, and he could take your 30-year mortgage, and everyone’s different, it all depends what you make, what you spend, but my 30-year mortgage will be paid off in six years, possibly five to six years. I’ve been using it now for probably a couple of years. I wish I’d started sooner, like everybody else. I knew about it but just never did it. I was just like, “Oh yeah, I know about that.”

But did I really know about it, ’cause if I started when I met him, I would have no mortgage today. Now granted, I have a mortgage today. There are many different reasons to have a mortgage. You want that tax-deductibility. Mortgages are still tax-deductible. You have the deductibility, plus I leverage my house every chance I get. Some people will say it’s good, some people will say that’s bad. But again, this isn’t for the risk-averse people. This is for people that are going after it, and they know what they want, and whatever it takes to get there, they’re gonna do it.

Again, it’s not for everybody, but again, the mortgage accelerator program, if you don’t have disposable and you don’t think you can start paying down your principal without being more riskier, then you look at this program called Mortgage Acceleration, called Speed Equity. Again, you go to BrianDAmico.com, click on the link, and I will point you to the video that really changed my way of thinking about mortgages.

But very simply put, you have a checking account, you have an equity line, and you have your first mortgage. The way that these three things work together is brilliant and very simple, and it’s very popular in Australia. I think that Australian people, Australia’s the happiest country in the world, this might be why, because no one’s holding a mortgage balance as much as they do in America.

Very simply put, I know what I got coming in at the end of the month, say, for income. I have my equity line and I have my first mortgage balance. Whatever I know I’m gonna have coming in for my income, I’m gonna take that from the equity line, I’m gonna draw against that equity line, and then put it towards my first balance.

When my income comes in, I’m gonna pay off that equity line every month, and just keep doing that. It doesn’t sound like a huge savings, ’cause it’s basically pennies, but those pennies add up over time. Instead of keeping money in your checking account, you’re using that money to pay down your first balance, because a mortgage is computed on your average daily balance. It doesn’t get calculated until the 30-day period.

For example, if you make your payment on the first on a mortgage, you’re getting charged from that first all the way through that 30 days where your average daily balance is. By continually buying down that … Now, remember, your mortgage payment won’t change, but your amortization schedule will drastically reduce and you’ll be paying it off in a much shorter period of time.

Without getting into all the specifics, make sure you read that chapter. This chapter is probably one of the most powerful chapters that I’ve learned in my life. It is, How to Tap Into Your Equity and Create Wealth. They’re not gonna teach you that in school. They’re not gonna teach you that in … financial advisors aren’t gonna tell you that because I think it’s against the rules if you are a licensed financial planner to tell people to tap their equity to try to build wealth.

They’re not gonna tell you cash out of your house. Don’t do what I did, actually, when, in 2006 or 2007, I cashed out of my house dramatically, ‘because I was doing so well in the stock market. I cashed out, put it in the stock market, and then saw that money go away pretty quickly. It was the wrong strategy. No one told me to do it. It was my own idea. I wouldn’t do it again. But if I did it in real estate and not mortgages, I’d still have that real estate today, and I’d have more cash flow.

That’s the combination of why we’re saying real estate’s the best strategy. If I had that property today, what would it be worth today versus I put it in the stock market and just see it go away? I had no control. There are other strategies in the stock market for when the market is going down. You talk about options, put-options, you can bet that the stock market goes down. There are always ways to make money, even in a down market.

But we’re not gonna go into stocks today. I may add some things to my website. Again, it’ll be BrianDAmico.com. There’ll be strategies for when the market’s going down. There’ll be strategies for when the market’s going up. But one thing that will always ring true is buy-and-hold real estate to create cash flow. That’s really what you want to do. You want to become successful and build passive income.

With that being said, we talked a little bit about the mortgage acceleration program, and I think it’s brilliant. When you go to the site, there’s a way to do it yourself, where you could just watch the video, do it yourself, and that’s it. Or you could do one-on-one coaching. I highly recommend doing the one-on-one coaching, because I’m in the business, I’m in the mortgage business. Even trying to do it myself, it was very complicated to me, and I do this stuff every day.

When I did the one-on-one coaching, it really made sense. We went through my plan, and once it set, it’s just, you just gotta follow it. This software is available to everybody. They put in all their expenses, they see all their income. That plan, you can print out or you can log in. If anything changes you can always update it. But you have access to the software program, which is, if anyone could pay off their mortgage in seven years when they thought they were gonna be 30 years, you gotta look at it. It’s life-changing. It’s a game changer.

Now you bought your first house, it’s a multi-family, you’re building your team. You are a landlord on those other property units, or maybe one other unit. One to four-family is residential. Anything over that is commercial. Stick with the one to four-family market. What I’m saying is two to four-family, because you want that other unit to help pay for that rent, to help pay for your mortgage. But when the time is right and you get some growth, say you’re doing the mortgage acceleration program, or say you’re buying down your principal schedule, you’re amortization schedule, and you’re putting extra money down every month, you’re creating equity in your own home.

Once you have that equity, what are you gonna do? There’s a couple ways to do it. You could buy your first investment deal. This chapter’s about finding your first investment property deal. I won’t take long until you start building equity in your home. When that new property comes up, it could be a three-family, it could be a four-family, and you know that you want to put, you have to put 20, 25% down, you have to find that down payment.

Just because you’ve been paying down your mortgage and you’re saying, “Well, I don’t have any down payment, because I’ve been putting it down on my first property.”

Well, that’s fine. There are banks out there that will give you an equity line and a second position on your home. Say you need $60,000 for your down payment, you could take a second mortgage, get $60,000, close on that equity line, and you can use that money for your down payment of your second property. Again, you already have your first property, you’re living there. Your second property, you need the down payment. You can get that from a second line, like a [heloc 00:36:39], and you may already have a [heloc 00:36:40] open, because if you’re doing the mortgage acceleration program, you just want to make sure that you have enough there for the down payment.

Or you could always refinance your first if the interest rate environment is better, and now you owe a lot less. You might be able to shorten the term, maybe do a 15-year fixed. But again, a good loan officer will walk you through this. We do have a team of loan officers that understand this book and understand these strategies. You have also realtors that understand this.

It all depends. It all depends on your strategy, what you’re trying to do. But you want to sit down on the kitchen table, go through your strategy. You could do it through the phone too, I know everyone’s busy. But you want, you really want to understand your options when that time is right for that second property.

some of your options are just to cash out of your first, just do one first mortgage cash-out. Or that equity line that you got through mortgage acceleration, if you did or not, make sure that there’s enough there. Maybe you could just increase the balance, increase the amount that they’ll lend you because you’ll have increased equity in your first mortgage. That’s another option.

You just want to make sure you have enough to do that investment. If I were to take that 60,000 from a second mortgage or a first mortgage, and I buy that second property, what am I bringing in now on that property? It’s very important you buy the right property. You want to just make sure that that rental income that’s coming in is more than what you’re paying out. Let’s just say for example, on that $60,000 investment that you took out of your home, 60,000, and say you make $1,500 a month, well, that’s a pretty good return. I don’t have a calculator in front of me, and I need a calculator for everything.

Say you’re making $1,500 a month, that’s good debt. If I take on debt, but I’m gonna make $1,500 a month because I took on that debt, that’s called good debt. People could learn that from the [Kiyosaki 00:38:32] books, “Rich Dad, Poor Dad,” or “The Cashflow Quadrant.” This is all stuff that I read when I was, very early on. It sticks with you because it’s true. Good debt versus bad debt, making sure that, if in fact … Let’s face it, there are people out there that’s like, “Oh, I don’t want to owe $300,000 on my house.”

Well, I wouldn’t want to either if I had no strategy around that. If I have a 300, if I had a zero mortgage, I don’t have a mortgage on my house, that’s great. Everyone likes to be there. But that equity is just locked up in your house and there’s no way to get at it, and you’re not using it, so it’s great, no expenses. But what if, if you were more, a little risky and understand the value of time and money, you took that 300,000 and you, say you cashed out 80% of it and you bought three or four investment properties. Now your home just built you an income of what, seven, eight, nine, $10,000 a month in income?

I would much rather be the person who says, “You know what? I want to have a mortgage on my house.”

I don’t want to be the person that says, “Oh, I paid off my mortgage.”

Well, that’s great. That’s a great strategy, but do you have any other income coming in beside your job, or do you have any kind of strategy that is gonna get you to where you want to be. Let’s face it, this world’s not getting easier, it’s getting harder. The only thing that’s not changing is people always need a place to live. Maybe it’ll be like the Jetsons, and we’ll be up in the sky soon, but you still need a place to live.

That first investment deal is very important. It’s gonna set you up. It’s gonna set you up for passive income, and you already have income coming in on your second unit or third unit or your primary. Now you have income coming in on your investment property. Now you’re building some kind of consistency. You know that you can count on, ’cause things do pop up, and that’s why it’s important. When we talk about risk, it’s still important to have access to money, because you may have a leak, and you may have to do something over on the property or you may have to … There are some horror stories that I’ve heard, that it could have an oil spill. Geez, the home could get condemned.

You have to be ready for some of the things that could happen. You have to have enough income. Let’s face it. Things are gonna happen. Those people that say, “Oh, I told you now to buy a property,” something’s always gonna happen, you just gotta be ready for it. There’s insurance for things like this, but you have to be ready, and your place gotta be safe, secure, and you gotta make sure you’re investing in the right areas. But you do want to have that cushion. Equity lines can do that. Having access to cash could always do that. Having equity is always the best position to be in. But again, you want that equity to make money for you, you don’t want it just sitting there.

Again, we already talked a little bit about 10-31 exchanges. But say, for example, you bought a three-family, and you’re really not loving it anymore, it’s not the best property for you. It’s done what it was supposed to do, which say, is making a thousand, 1,500, or 2,000 a month, which is great, great income. But you want to get something bigger. But you don’t have a lot of money laying around. That’s just the way of the world. There’s not a lot of money just hanging around, ’cause people leverage what they got.

If you said, “I don’t want to buy another three-family,” and that you actually want to get rid of this three family, well, you could take that three-family, put it on the market, and there’s a lot of realtors that understand this concept. It’s called 10-31 exchange. Say you were using these strategies on your investment property that you were on your initial property purchase, and you were paying down the equity, and you have a lot of equity in this home. Who knows? Maybe the market just increased and you’ve gained equity that way.

That’s a little luck there, you’re buying at the right time or whatever. But if you could sell that property, and it’s not uncommon today that someone bought a property for 300,000, sold it for 500,000, that you take that 500,000 that you just sold it for and exchange that for a bigger property. This is a great strategy. I go into how I’d learned this through a mentor of mine way back in the day, and we’ve done this with a few people.

I know one of these gentleman, he started with a three-family. He got all the way up to a, I want to say 36 unit building, by just using this strategy. That three-family, which was making him $1,500 a month got him into a 36-unit building by trading it from a three. Then he went to a six. Then he went to a nine. Then he went to a 12. Then when that 12=unit, he was able to trade that into a 36.

There are strategies around. Maybe you just want one property, you don’t want 10 properties. You can do that. It turns from residential, remember, anything after residential, one to four units goes to commercial after five plus. But it can be done because you have the equity, you have the landlord experience. You know what it takes at this point because you been trading, you been managing. All this stuff, it can all happen. It all starts with a goal. Again, you just have to understand what your goal is, and then you can reverse engineer what you’re trying to do.

Going to next chapter, this is my synopsis, Stu. We were a little bit into it. But this next chapter, we talk about breaking down an opportunity.

Real estate is a very broad industry. There’s a lot of different areas. You can get confused pretty easily. I’ve been in the industry for a long time, and there are so many different things that you can sink your teeth into. But you gotta pick one and ride that horse. Maybe you don’t want to be a landlord, but there are still other ways that you can prosper and make money in real estate.

Here are a few ways that you can find strategies to buying homes though, alright? If you want to buy a home, say you want a fix-and-flip, or you want to keep it for a buy-and-hold strategy, again, I say buy-and-hold, you gotta talk to sellers. You gotta talk to realtors. You gotta see if people are motivated to move out of that home. If they’re motivated, you may get a better deal. If they want to close quickly, and you can set it up where it’s a cash deal, or you can close quickly based on you’re already pre-approved, or whatever it is, you will get a better deal for time if you could find those people that are motivated by speed, a short sale.

Many times, a borrower can’t make their payments anymore, but they owe the mortgage company or the bank, they owe them, say they owe them 200,000. They haven’t really been making their payments, they haven’t been able to. The market may have gone down. That’s what’s called a short-sell. They put their house on the market and say they owe 200,000, but the market’s calling for 170. Well, they have to get approval from the bank that says, hey, will you let me sell this house for 170 and wipe me clean of my debt basically?

They make a 1099, then they may not. It all depends on the attorney that they have. But the bank is approving that because that’s the market. Many times, you can get a good deal based on the short sale area. Sometimes you can’t. But it’s, it’s just another thing that you need to be aware of. Foreclosures, there are pre-foreclosures, and then there are foreclosures that come up at auction. There are two different ways of getting it. If you get to the person pre-foreclosure, you might be able to get a short sale approved. You might be able to do things like, you can make a deal with them where you could take over the property or the note. But it’s really not assumable, really not my subject matter. But pre-foreclosure verse foreclosures, just another way to get a deal.

Many people, what you’re finding today though, is the auctions are much more, the attendance is there. But when I used to go on auctions, there would’ve been three or four people there. Today, with all the HGTV and people buying homes the way that they are, it’s getting more and more competitive.

Another strategy, you could pay for real estate tax liens. You can go to your courthouse, we had a show on this, if there’s something you want to look into, go to the podcast with, the last name was Cohen. You’ll see his name on the screen, I believe it was John Cohen. But the tax liens, you can go to the courthouse and say, “Who owes money on their taxes?”

If they’re not paying their taxes, you’re basically in that … Tax liens, if they don’t pay their taxes, that’s basically the first lien-holder, is the taxes. Which means if you pay for them, there’s a way for you to get that property yourself, just by making those payments on the taxes. You become the real estate owner.

From what I’d learned, most city halls are different. Every city is different, the way that they handle these. If you want to brush up on this, you might want to look at my last podcast about tax liens. Again, there are infomercials on this, and I personally have not seen anybody do this, but with the last name Cohen, he’s been successful doing this, and this was in New York. Again, you may want to just look into this, do some education, be educated on that process.

Then you have for sell by owners. The thing about for sale by owners is if they don’t think they need a realtor, most of the times they do. Because, what they do is, they put a for sale by owner on the grass, they put their sign up, and they let everybody in, and a lot of times someone will say, oh, I’ll give you this amount of money for it. But they were never pre-approved, and a lot of times, that communicator between the deal, between the buyer and the seller, is just non-existent. You have no communication, and then the deal goes awry.

Many times, a realtor can get you more money for what that house is worth than just doing it yourself. There are a lot of benefits of having a real estate agent. Having a for sale by owner, they don’t know the industry. They’re probably most likely putting it on the market for more than what it’s worth. But you may want to call on them and tap to see why they’re doing it themselves, see if there’s any motivation there to get out of there quicker, and it may get you a better deal.

Real estate [REOs 00:48:29]. These are properties, you’ll hear the term REOs, there’s are properties that are bank-owned. The bank already took them over on a foreclosure process. They own these properties. They have realtors trying to sell them and keeping up with the work that the house needs to be, so they can actually be sold.

Many banks have many REOs. They have big REO portfolios. There’s many agents that specialize just in REOs. They do a great job with them. But that’s another one that we’re, you might be able to get a better deal based on the REO. It all depends on what that bank wants to let go of that property.

Again, we mentioned auctions, but there are many auctions and foreclosure auctions that you can go to. Some places actually just auction it off just as a way to get that property sold quicker, just so they don’t have to show the property. Or it’s just an auction, and you can go to the auction and make sure you qualify for it first. Then you have basically 30 days to close on it after you get that property after you win that bid.

That’s basically a synopsis to, I went through mostly every chapter. The last chapter of the book is “Goal Setting Strategies and Keeping Score,” which I’m gonna talk about a little bit. But do you have any questions, for our listeners out there? If there are any questions under the first, I want to say five or six chapters that we went through … As someone who always wanted to invest in real estate but couldn’t do it until I had an inheritance some years ago, I would ask, for those who are interested in real estate but don’t have a lot of money, don’t earn a lot of money, what would you suggest? Or is it covered in the book?

I didn’t go into specifics so much, because, the reason being is I could’ve made this book this big and bore people with how to do different loan programs. How to really, basically slice a nickel. But what I’d rather them do, and I think it’s much more valuable, is to find that right loan officer, find that right realtor, find that right attorney, get their team together. ‘Cause today’s day and age, everyone would love to put down 20%, because they have no issues with private mortgage insurance or their payment’s gonna be a little bit low. The interest rate is a little bit lower, maybe, wherever it is.

But when we talk about getting in a home today, there are programs with no money down, and there are programs with 20, 25% down. But if you’re just getting started, there are two things to look at. If you’re looking at a, people can get homes with no money down. To get a home with no money down is a VA loan. If you’re a veteran, you can get into a home with no money down. The other part is USDA loans. Any rural homes.

New Hampshire has a huge map of USDA eligible homes. No money down, again, it has to be rural. You’re not gonna get in the city. Massachusetts, there are some areas like [Boxford 00:51:33], [Topsfield 00:51:33], and those areas. If you go all the way down to the Cape, it’s also a lot of different areas that are USDA eligible, which a lot of people don’t know.

But if you look at the north shore area, besides Boxford, [Rowley 00:51:46], more rural, you won’t find a lot of USDA. New Hampshire, it’s a huge area where you can get no money down on USDA homes. Again, no money down on USDA, no money down on VA. FHA loans really help you get into a home. It’s a government-backed program, 3.5% down payment. As I’m talking about mortgages, let me say my mortgage is, my MLO number is 20400, and company, NMLS New Fed Mortgage, NMLS number 1881, for all those regulators out there.

We’re talking about no money down, FHA is 3.5% down payment. There are different programs out there today that have bond programs where you might put one percent down and the bond program will pick up the other 2.5%. Or there’s down payment assistance, where they’ll get involved and help you with your down payment. Ideally, the more money you put down, the better the rate, the better the terms. But USDA and VA, definitely take advantage if you fall into one of those things. If your property falls into that, no money down, and if you’re a veteran, definitely take advantage of that.

Those are things that people don’t realize. Even Fannie Mae and Freddie Mac, they have programs down to three percent down. But again, if you’re gonna buy a multi-family, say 3.5% down, FHA, 3% down for … 3.5% down for FHA for a multi-family is a pretty good deal. Then if you go to Mass Housing, or the state agencies or New Hampshire Housing, you gotta look at those guidelines. But as you could see how my mind’s working right now, there are so many different programs, and they change all the time. By the time you read this book and you are ready, and you say, “Alright, I want to find a loan officer that knows about all these programs.”

You want to call our number, 877 NEWFED1. You want to say that, hey look at, I read Brian D’Amico’s book. I want someone that understands his concept and wants to walk me through every step of the way. We’ll tap you into a loan officer and he’ll be talking the same lingo. He’ll be the one that is up to date on all these programs. ‘Cause they do, they change drastically. Just before I came here today I was signing up with another lender investor who has a different type of program that’s gonna kind of open us up with a 1% down payment. I don’t know all the guidelines particular right now, but I’m gonna sign up with it and take a look at it, and then we’ll release that program, so people like our listeners can buy properties with 1% down versus 3.5% down.

Investment’s a little different. Investment property, you’re gonna put down 25, 25%. That’s the … Did that answer your question, Stu?

[Stu]: Yes it did, actually. It just makes me want to read the book more.

Brian: I didn’t want to bore everybody with all the different programs because that’s not what this book is about. This book is about concise strategy and concise information that you need to know before you get started. There are experts in every different area. There are experts as loan officers, there are experts in real estate, there are experts in attorneys. You’ll also need an expert accountant down the road, as you start getting going, and you’ll have to understand the accounting side of things.

But with that team in place … even insurance. Insurance agencies, you definitely want to have your insurance company. You want to make sure you can work with that insurance agency. Today, everything’s Nationwide, and you really don’t have that one-on-one. We refer to insurance companies like New Fed Insurance, LLC, actually, we have an affiliate business arrangement with, and my sister runs that company, and she does a very good job. She’s the person that if something happens insurance-wise, you’re gonna call her and she’s gonna lead you right through it. The GEICOs of the world, you’re not gonna get that same customer service.

Just finishing up on our book, goal setting strategies and keeping score. Really, we already talked about goal setting. We talked about reverse engineering. What do you want to get out of real estate? Then you reverse engineer it. Then, keeping score is, every time you have a mortgage, banks are gonna ask you, what’s your financial statement? I need the financial statement from you. We show you how to set up your financial statement because what people don’t realize when they first get in is how to keep score, which is a profit and loss and a net worth financial statement.

You want to be able to understand your financial statement. You want to be able to review that financial statement once a year. Some people do it once a month, but once a year is plenty. Your net worth, you want to know what you’re worth. It’s a very simple strategy, what you have for assets could be stocks, bonds, mutual funds, real estate. Whatever you have for assets, bank accounts, 401ks, retirement accounts, and what you have for debts. That could be mortgages, that could be, mostly mortgages, or maybe you leveraged an account. Maybe you have a contingent liability versus a non-contingent liability.

These are things that you can actually download. I basically just gave you a standard financial statement in the book, but you’ll be able to go to BrianDAmico.com and get a more sophisticated one as you need. We’ll be putting those up on the Website very shortly. And that’s it. That’s really the synopsis of the book, and if anybody got anything or information out of this, would they like to see me add anything? Again, this is our first publication, which will be finalized in the next few weeks, and then it will be up on Amazon. It will be up on my Website. You can download it from BrianDAmico.com. If you’re a realtor, loan officer, or you want to learn more about this stuff, just give me a call or email us the info at NewFed.com. Again, BrianDAmico.com. [crosstalk 00:57:40]

Like they say, and the name of the book, for our listeners, Real Estate Riches, Take the First Step and Buy Your First Home. Again, Easy Money New England, every week we come to you with money making opportunities and money saving ideas.

Like we always like to say, there’s no such thing as easy money. Thank you.

Join us next time for more Easy Money New England on the United Podcast Network.

Speaker 1: The views and opinions expressed by the host, guests, or callers of this program do not necessarily reflect the opinions of the Studio 21 Podcast Café. The United Podcast Network, it’s partners, or affiliates.