Real Estate Q&A
Every Monday at noon I’ll be doing a real estate show on GrantCardoneTV.com where I answer viewer questions. Here are some from past episodes.
What do you think of Austin real estate? It’s hot. I was there for 6 or 7 months and made 2.6 million on a 4 million investment—about a 60% return in 6 months, and it cash flowed while I was there. I sold it because I couldn’t add scale. When you go someplace you need scale. Don’t bother with 2, 4, or 8 units. Be thinking about 16 or 32 before pulling the trigger.
How do you become a top realtor? You take the top 2 or 3 agents in your area—disregard everyone else—and take market from those top 2 or 3. Don’t compare yourself to the other 99% of realtors. That would be an invalidation of your ability. Take the top 3 real estate agents in your market and take them out. It’s a pure domination mentality—not competition. That’s right out of If You’re Not First, You’re Last.
How do you find off-market properties? Start sending emails out. “I’m in the market, I’m a buyer, and I don’t want to use a real estate agent. I’m interested in buying property in Nashville and I want to offer the seller a great price and an easy close but I refuse to deal with real estate agents and pay them a percentage.” That’s how you find off-market deals. If a real estate agent calls you and tells you they’ve got an off-market deal, that isn’t an off-market deal and it’s not even a good deal.
What do you think of flipping houses? I don’t really like it. Your timing has to be perfect. You have to get in and out very quickly.
What are the best cities to invest in real estate? The best cities are the ones that you understand. Personally, I love Savannah, Georgia, and Nashville, Tennessee. I also love Florida.
Purchase a home to flip or build new construction? Neither. But I would do the flip thing before I’d do new construction.
How do you find a real estate mentor or coach? You need to go shop real estate, talk to brokers, walk the properties and look, look, look. You should look at 100 deals before you buy your first one. I shopped real estate every weekend for 5 years before buying my first deal. I bought my second deal 60 days later, and my third deal a few months after that. I went from owning no units to over 500 units in the course of about 9 months. But remember I spent 5 years building up to that run. The way to reduce your risk to zero is one word—KNOW. You either know something or you don’t know something, there’s no in between. I know a good real estate deal when I see it.
Are you interested in Dallas real estate? Yes, I’m moving to larger portfolios and I’m looking to go from 4,000 apartments to 8,000. The only way I would go to Dallas—and I love the Dallas market—is if I could get at least 1,500 to 2,000 units.
What do you think about a 14-acre development in downtown Dallas? I don’t do those—I don’t care how good the deal is. I don’t build. I buy what I can rent and be paid on this month. If I closed in August, I want to be paid in September.
I have a distribution company, should I build my own office building or just rent an office? Dude, just rent a nice office.
How can you invest in flipping homes with bad credit? First, do you even want to do the home flip thing? Be careful with that, because when it’s good it’s good—but when the music stops it gets ugly because you are left holding something you don’t want to be holding. But to answer your question, I have a friend who invests in his friend who actually flips the homes. That way he isn’t actually the one doing it. The friend pays him a 30% return on his money. If he puts up 30K he gets 39K back. The problem is when the cycle is over you get stuck with a house.
Refinance equity or sell? I can’t answer without knowing the whole deal.
Is it better to partner with someone or just do it all yourself? Just get an investor and pay him out a bunch, make him a big promise to pay him out, and do all the work. Most guys who want to buy real estate, particularly guys already running companies, they don’t have the time. That’s why I’m beginning to let accredited people into some of my deals. I have friends all over who just don’t have the time. They want to ride on my deals and let me manage it.
What are your thoughts on commercial compared to residential? I buy things that don’t need to be explained. I don’t want to have to figure it out. I think apartment buildings will be around a lot longer than office or even retail. I know a lot of people have made a lot of money in office and retail strip centers. I just think the easier, longer term, better return, is that people need a place to rent—and the worse the economy gets the better it will get for apartment buildings. When the economy goes bad retail shopping centers suffer along with the offices.
Apartments or houses? Don’t buy a house. Do not buy single family.
Can you explain the math behind real estate? Yes, you can buy 4 units for the price of 1. If I pay for 1 unit, the bank will pay for the other 3. The income from the 4 units will pay for all your expenses and debt, and give 10 or 12% of your money.
What’s your take on real estate in Africa? I don’t know anything about it except for where it’s at on a map.
If you have any real estate questions, ask me next Monday on my new show. And if you need to increase your sales, closing, cold call, prospecting, handling objections or any aspect of your business, get on Cardone University today for $199. This is my lowest price ever. The deals ends August 31st.