How To Do Your First Deal In Your Backyard

You’ve been watching videos on doing
real estate. You’ve been taking courses, you’ve been reading books. But guess what?
It hasn’t happened yet. You haven’t taken action. Today, we’re talking about doing
deals in your backyard and at some point, you’ve got to take the leap of faith to
go out there and make it happen. So, you’re ready to do your first real
estate deal in your backyard. So, guess what? Today, I’m going to share with you what
kind of strategy you should be looking at. I’m going to share with you the
strategies that you should not be looking at. And then I’m going to share with
you how to actually go about doing it. Because your first deal is all about
setting you up for making that first 50 thousand, 100 thousand dollars
to launch your real estate career. Take notes, buckle up. We’re going to be taking
some serious action. So, you’re about to do some deals in your backyard and
there’s a number of strategies that I want you to be aware of. First of all, fix
and flip. It’s probably like top of mind… Sorry, did you see how I actually wrote
“fix and flop”? Okay, seriously. That’s how I feel about fixing flip. It shouldn’t be
your first deal. Unless you have an expert that’s done it 50 or 100
times actually walking you through it. Because you could likely turn into a
flippity flop, flop. You could also get into apartment complexes. These things
usually take millions of dollars. Do I recommend that for someone to in their
first deal in their backyard? No, I don’t recommend that one either. Then you could
say, “Hey, Kris. What about multifamily?” Cool thing about multifamily is that I
could actually get a four-plex and live in one side and rent the other 3. You
could do that. Problem with me with multiplex is that it’s a very elastic
market. You don’t really get a good deal on that stuff. You will likely be
cashflow positive but I hate having three renters that all trash the house
altogether. It’s like they band up against you. I’m not saying that it
happened is just 3 times more likely or 4 times more likely with that many
tenants of having that problem. So, multifamily is not the game that I would
recommend for you. You could do a rental and just say, “Kris, awesome.” Single-family
home. Let’s start with something super simple here. This will be great and you
know what? I’m going to strike that from the list, too. Why? Because a rental usually
just creates too little of a cash flow. You know, if you have an entry-level
house and you have a $200 month cash flow, something breaks, it’s probably
going to cost you more than $200 to fix. See, feel strapped. It’s
not good for the brain. What I am going to share, what I do think you should do is
what I call a lease option. And a lease option, if you’ve ever heard of like rent to own.
It’s this idea that I’m buying a property and I’m going to put a family in
it that has the intention of purchasing it and then living in it during that
period of time and buying it from me. I love the lease option for a few reasons
that I’ll just share with you first right now. On average, they give me a
$5,000 non-refundable down payment. I mean, so that’s a big deal. The second
thing is they give me a premium on rent because I’m giving them the opportunity
to buy the home. And some of that will cut back into their payment. You know, but
that premium on rent means that instead of a $200 cash flow, I might be a 4 or
$500 a month cash flow. And then the other thing that I love is that
management on a lease option is way different than a rental. Management, these
people are actually coming and saying, “I’m going to buy this house. I’m going to treat
it like it’s my own. So, it’s my responsibility to take care of this
house.” And that means that they do fix ups and repairs. They do maintenance. And
it also means that I save money on P-M. Property management. I’m not paying
10% of my gross rents collected to them. That’s money that still gets to
come to me and my bottom line. So, a lease option is really a perfect way to go if
you’re getting started. I am going to throw out an alternative to that that I want
you to be aware of. I will do rentals and I don’t want you to think that I don’t
believe in the rental market. But doing a rental is different. I’ll show you why.
See, most of the time rental isn’t good because I said you’re not collecting
enough cash flow and the people can also mess the place up.
But in America at least, we have 324 different
opportunities. Meaning, 324 different markets. They are
all not created equal. In fact, if you could stack all 324 markets against each
other, you’re going to find that some are better than others. So, what I do is I
evaluate all these markets and I find the top five markets that I really want
to be in. Right now, I’m in Florida, Memphis, Indianapolis. 5 years from now,
those names will change. But right now, the reason why I’m in them is because
with just doing a straight rental process. This allows me to be hands-off. A
lease option… This is a hands-on process. You’re basically saying, “I’m going to do all
this work and it’s in my backyard.” But if I am actually doing rentals, it’s
actually hands-off. You can put up the money and work with a team like mine
or other teams that I can expose you to. And these teams typically say put 20%
down and then you’re basically done with doing all the work. And this is where the
pros come in. What’s great about these rental markets is they don’t perform the
way most of them do. They actually have greater appreciation, greater growth and
greater cash flow. So, typically on these markets, we’re doing between 20 and 30
percent annual ROI. Doing a rental in your backyard
literally the equivalent might be 5%, 6%, 7%. It can be double triple or more in
the best market. And so, it’s hands-off because you don’t want to get on
airplanes. You want to work with the trusted team that can bring you to the
best markets. You really have a couple of options. So, if you’re doing a deal in
your backyard, 100 percent lease option is the way to go. If it’s not in your
backyard, you can say, “Hey, I’ve got some money in 401k, IRA. I just want to get
with a team. And let’s just go to the best market.” We’re not going to be able to
lease option there because it doesn’t translate nationwide with the way that
we’ve set up our team and most other teams the way they’re set up. So, instead,
you can actually go up and get in the game and just say, “I want it done for me.”
And this is what you should know. The rentals can produce 20 to 30
percent ROI. Lease option can produce 20 to 30 percent ROI which means
all things similar. They’re basically the same. What the big difference is do you
want to get your hands dirty or not and that’s up to you. You should absolutely
get started in lease option for doing something in your backyard. And I
actually created a short series of 4 short videos that actually take you
through what is the lease option, how does it work. All the ins and outs. It’s
like very powerfully educational and I’ve actually created it for you. And so,
what you want to do is click the link right over here. Watch the first video.
It’s going to give you an overview of exactly how that system works so that
you can get your first steps of how to start making real estate happen right
now in your backyard.

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