How He Bought A $1 Million Dollar Property For $0 #Best Education Page #Online Earning

- How's it going today guys?

Welcome back to the channel.

So I am here with a friend of mine, Vitaliy.

So you guys probably are familiar with him.

He's the guys who helped me out with my couch lawsuit

on Craigslist with that person who was trying

to scam me out of my deposit.

But Vitaliy is also a real estate investor,

and he was telling me about this property that he purchased.

And I said,

"I gotta get you to talk to me about this on video."

Because effectively, they were able to buy a property

worth a million dollars with $0 of their own money.

So, Vitaliy also has a YouTube channel.

He's starting up talking about real estate investing.

And I'll have a card for that as well,

and I'll link up to it in the description below.

Lots of great resources for investing in real estate

for beginners.

And you also are a full-time attorney as well, right?

- Attorney.

That's right yeah.

- So if you wanna talk a little bit about that for sure.

- Yeah.

- Yeah, absolutely guys.

So, I'm really excited to be here on the channel with Ryan.

One of the things is, I'm a huge fan of him.

Been following him for a while.

Part of the reason I'm on YouTube at all,

is really because of him.

He and I met together a few months ago,

went over things and I got started with it.

But I am a full-time attorney.

I don't do couch lawsuits very much.

(Ryan laughs)

- It's pretty much just because I was trying

to help him out. - Just a favor.

- Yeah. - Yeah.

- Do you think we could get a quick look

at the property now? - Yeah abs...

- Then we can talk about the numbers.

- Absolutely, yeah let's take a look.

- All right, let's go ahead.

So this is a 10 unit property it looks like?

- Right, yeah it's a 10 unit.

We bought it probably about two or three months ago.

We bought it off-market, so it's not anything

that was on the MLS or anything like that.

It was kinda a personal connection

between one of our investors and us.

And, we were able to buy it for $375,000.

- [Ryan] Okay.

- Which is a huge discount for what it is,

what it's actually worth.

And, we've being doing a remodel on it.

Pretty light remodel at this point.

And, we're upping the rent significantly.

- [Ryan] Sure.

- [Vitaliy] And we're renting it out to new tenants now.

- [Ryan] Okay, so are most of your tenants sticking around?

Or are a lot of people moving, or are you not sure yet?

- I think we're probably gonna cycle them out.

- Yeah.

- So the idea is to kind of go slowly.

- Okay.

- Because you still wanna be able to make cash flow

from the property...

- Mm-Hm. - While you're doing that.

But, you don't wanna do it too quickly.

The building had three units that were vacant

from the beginning.

- Mm.Hm.

- So when we bought it, three out of the 10 were vacant.

- Okay.

- So, we went right in and did a remodel with those.

That took a couple of months,

and now we're re renting those.

And we gave notice to a couple of the other tenants...

- Gotcha. - That their lease it up.

- Yeah, so is the unit we're seeing now

one that's been remodeled?

- Yes. - Okay.

- This is a remodeled unit, yes.

- Sounds good. - So we can take a look.

- [Ryan] Let's check it out.

- Might be a little dark in here to see,

but it's a three bedroom, one bathroom unit.

- Mm-Hm.

- And it was previously renting for about $550

according to the prior owner,

and we're able to re rent it for $1100, so.

- [Ryan] So, just by doing the basic remodel, which is what?

Carpet, flooring, paint?

- Yeah, so all we did here is basically replace the carpets,

did some painting.

We added a little bit more in the kitchen.

We put in a granite countertop, we replaced the faucet

and the sink, and all those things.

But other than that, it was very much a light remodel.

- Wow. - Pretty easy rehab for us.

- So, what was your remodel cost on this apartment here?

- Yep, so actually you're gonna think this is crazy,

but we did the whole thing, probably for about under $5000.

- Wow. - For the whole apartment.

And part of that is because my business partner

is really good with contractors.

That's his side of the business.

As you guys know, as I said, I'm an attorney.

So I do a lot of the contracts, all the leases,

the financing on the building, we work all that stuff out.

He takes care of the property management side of things,

and the contracting side of things.

So he's got guys he gets for cheap

because they're working for him full-time.

- Mm-Hm.

- So it was a pretty cheap remodel for us.

- So basically for a $5000 investment,

you've doubled the rent from 550 to 1100.

- Yep, yep.

- So that's like a less than 10 month

payback on your investment, right?

- That's right, that's right, exactly right.

And the best part,

that we're gonna get into in a little bit,

is that this didn't even come from our pockets.

Nothing that we did in this building had come from my pocket

or my business partner's pocket.

It's basically private investors

that have financed the entire thing for us.

- Man, I can't wait to hear about it.

- Yeah.

So the bedrooms are pretty big,

and actually this used to be a living room.

We actually turned it into an extra bedroom in here.

One of three bedrooms in here,

and I think someone who moves in

is gonna like the space in here.

- So by making this a bedroom,

you can now charge more rent wise?

- Absolutely, yeah.

- Also goes from a two bedroom to a three bedroom.

- Yeah. - Okay.

- So actually...

Right so, the bedrooms in the building are,

every first floor apartment was two bedrooms,

and every second floor apartment is already three bedrooms.

- Okay.

- So we didn't need to really do anything upstairs

to the bedrooms in order to make the apartments bigger,

living space bigger.

But here, you had this huge open area

that wasn't particularly utilized very well.

So we are improving the space in order to charge more rent.

- Yeah, did you put in any walls, or how did this..?

- We did, yeah actually, so this wall right here,

this entire wall is new.

- Okay. - With the door.

- So before, this would have been wide open?

- Correct.

- And this was the living room.

- Correct.

- But now by putting in that wall, it becomes a...

- Kind of like a big bedroom.

- Yeah, okay.

- A parents bedroom maybe for.

- So then this middle area becomes your living room?

- Right, exactly.

- Okay, makes sense. - Yep, yep.

And then we have two other bedrooms, we've got one here.

- Okay.

- And we got one down the hall.

They're smaller.

- [Ryan] Yeah, this is smaller.

- [Vitaliy] More like kids bedrooms.

- Oh, that's nice that this has a window too though,

that's got... - Right, and it's...

- Window to the outside, yeah.

- It's a little different there because it's like

you have this open space, this well of whatever...

- Oh, wow.

- In the building where you have other apartments.

- Yeah.

- So people probably have to put shades down,

or blinds or whatever but...

- What was the point, why did they do this?

- I don't know. - Do you have any idea?

- I don't know, but this building was designed

as a 10 unit originally...

- Yeah.

- And that's how they designed it.

I think part of it is, is that where we are,

the town actually requires every bedroom to have a window.

- Oh.

- That's one of the main requirements to make it a bedroom.

So I think they had to...

- So this may have just been something they had to do

for code.

- They had to do, for code.

- Yeah. - Yeah.

- Is that also a window? (mumbles)

- That is also a window, yep.

That's a window, it goes to the back.

There's a back entrance there so...

- Okay.

- So there's a window,

like a picture window going out there.

- Oh, okay.

Then that's the back entrance for the apartments?

- Back entrance, yeah. - Yeah.

- So another thing, by code, at least in New York here,

you're required to have two exits to every unit.

- Mm-Hm.

- So every apartment has to have a front entrance

and a back entrance.

- Okay.

- Sometimes they're grandfathered in

and it doesn't have to happen.

But a lot of times you will have to have that

as a requirement which is why they built that.

- Gotcha, yeah. - That way.

- And then last spot will be the kitchen?

- Yes.

- All right, let's check it out.

So this is the kitchen?

- This is the kitchen, yeah.

- Did you end up putting in the...

This is new I'm sure?

- Yes, so the appliances are new.

- Mm-Hm.

- We have a new granite countertop in here.

And we have the sink,

you got a nice little pull down for the sink

that the tenants can use.

So just a nice little touch.

- Yeah.

- This isn't a Class A area,

and it's not necessarily a Class A property.

So, we're talking about middle of the road, middle income.

- Yeah.

- Working folks that are gonna be renting these apartments.

But because they're three bedrooms,

family of four can live here

and they can afford the $1100 in rent that we can charge.

- Yeah, did you guys put in new cabinets,

or just paint them?

- These are pretty much existing cabinets.

- Oh.

- They were here before, we painted them.

New hardware.

- It's amazing how much of a difference,

like this is probably, what 20 bucks worth of paint?

- Yes.

- And maybe 20 buck worth of hardware.

- That's right, yeah.

- And it completely changes the look from the old wood.

- Absolutely, absolutely.

- Really easy fix there, yeah.

- Yeah, yeah, for sure.

- All right, so now I think everybody's dying to understand,

even myself included, how is it

that you go about buying this property

without using your own money?

- Right.

Yeah, so I guess the first thing I wanna say is,

you see a lot of guys, even on YouTube

we're talking about the buy, rehab, rent, refinancing...

- The BRRR Model, okay.

- The BRRR Model, right. - Okay, yeah.

- And some of them talk about, you have to save up

for a down payment for non-owner occupied loans.

Most of the time the down payment in 20%,

so it may take you a couple years to save $50,000...

- Yeah.

- To buy a property, and then you do that,

you put the money in, the money sits in the property,

it's stuck.

And you can't do anything else until you recoup,

until you build that down payment up again.

- Mm-Hm.

- We're able to shortcut that whole process...

And by the way, if you do that,

that takes you years to get to a point

where you can have a portfolio,

you might buy one property...

- Yeah, 'cause for most people,

you'd be having to save up for that 20-25% down,

that would take you like three to four years.

- Exactly, exactly.

- So it'd take you ages.

- Right. - Yeah.

- Yeah, so it would take you three years

to buy one property, then you might accelerate a little bit

because hopefully you're making a profit

from that first property you bought.

So maybe you're saving a little bit quicker,

but then maybe it still takes you

another two and a half years...

- Mm-Hm.

- To save the next down payment.

And so, you're only buying one property every three years

for the first 10 years.

We are able to shortcut that

because we work with a bunch of private investors.

These are folks who have some money,

and they're not necessarily hedge fund brokers

or anything like that.

Some of them are average people,

who maybe are closer to retirement,

or maybe they're in retirement.

And they have nice, decent chunks of change

that they can invest.

And they're looking to place their money somewhere.

We offer them a good rate of return, pretty high interests,

pretty good returning profits for them,

and basically it's an interest-only loan

that we get from these folks

for a period of two, three years typically.

And we pay them monthly.

And we use their money to buy properties like this

where we know that we're going in with a ton of equity,

so it's a safe play for us.

We buy the property using their money.

We use their money to do the rehab.

And once we're done rehabbing, we go to a commercial lender

and we refinance it at 80%.

So instead of us putting 20% down,

we're putting zero money down

and we're using their money to do the deal.

Refinance, pull their money back out,

still have a cash flowing property for us,

and then able to use their money on the next deal

within a month or two.

- Mm, gotcha.

So I know you're in and out of real estate on a daily basis,

maybe we can explain it in a slightly simpler way

just for people. - Sure, sure.

- Because I know, even myself,

understanding this concept of rehabbing and refinancing,

and pulling your money out,

it just was a crazy concept for me.

- Okay, sure.

- So, you bought this for 375, right?

- Correct.

- And you said it's worth, after it's all been rehabbed,

about a million.

- A million dollars, yep.

- So, can you explain the refinancing aspect,

and how you pull your money out of it, and how that works?

- Yep, sure.

So, the refinancing process, you go to a bank and you say,

"I own a property.

My property, I think, is worth x number of dollars."

You say to the bank, "I don't have a loan on it," or

"I have a loan on it, and I want to get money.

I want you to refinance, put your loan on it."

So the bank is putting their loan, their money,

into the deal and repaying you,

or repaying a lender if the lender is gonna be cashing out.

And they will go, they will use an appraiser,

the appraiser will come in,

and they will appraise the property,

confirm that it's worth what you're saying that it's worth.

And they will give you a percentage

of what it's worth as a loan,

and they give you that much money

at the end of the process.

- Gotcha, okay so that makes sense.

So basically, that is a way to free up your money

so it's not stuck in the property.

- Exactly.

- Because like you said, if you're doing 20 or 25% down...

- Right.

- That equity and that property

is essentially just dead money

that you can't use for something else.

- Right, right, right.

And to be fair, you could still do the BRRR method

putting your own money into it.

It's just you still have to find a property

that is undervalued meaning you bought it for less

than what it's actually worth.

And then you could still use your own money

and you go in there.

You could still go to a bank and do the refinance process,

it's just it frees you up so much more

when you have other people's money.

The OPM... - Mm-hm.

- Working for you, doing those deals.

You can do them much quicker,

and less risky for you in the sense that

you're not leaving money in the deal most of the time.

It's not your money.

- Gotcha, yeah.

So, just to walk the whole process again.

You find outside investors, who give you basically a loan.

- Right.

- So they're not equity owners in the property.

- Correct.

- They are just basically your debt, so you owe them money.

- Correct.

- And you're paying them monthly interest.

- Correct, yeah.

- So rather than going to a bank for a loan,

you just go to private lenders.

- Exactly.

- 'Cause you're getting more attractive rates.

- That's right.

- And then, once you actually do the rehab

and the refinance, and they pay for that rehab.

You pay them back after two or three years,

or whenever you're done with their money.

- Correct, correct.

- And then you effectively own a cash flow producing

piece of real estate,

that you didn't put any of your money into.

- That's right. - Okay.

- That's the concept in a nutshell.

The one correction I would say,

is the interest rates that we pay them

are actually higher than anything that they would get

anywhere else pretty much.

- Oh, okay, 'cause it's gotta be appealing for them.

- It's gotta be appealing for them, right.

- Yeah, mm-hm. - Because most of the time,

I don't know if this is gonna be too technical for folks

or not, but if you're in the real estate game

you will know what this is.

But basically, you are getting a mortgage interest

in the property as a lender.

So, if something were to happen,

you know goes into foreclosure,

somebody wasn't gonna pay you.

You'll get paid if you have that recorded interest

in the property, as the lender for the property.

So you're mortgaging. - Ah, okay.

- You're essentially acting as the bank.

If you're the lender,

you're essentially acting as the bank for the investor, so.

- So, once your loan is paid back to your investors,

or let's assume the cash is no longer tied up

in this property. - Right.

- What is your numbers look like on this property?

So what are you expecting your monthly cash flow to be

once they're all appropriately rented and renovated?

- Right, yeah.

With this property, because it's 10 units,

we're gonna be renting them for $1100 per unit, per month.

We're looking at, after all the expenses,

debt service, taxes, insurance, and repairs, maintenance,

and capital expenditure, all those things together.

My business partner and I are estimating we're gonna get

about, between two to three thousand dollars per month each

from this one property.

- Wow, and that's your cash flow? (mumbles)

- That's our cash flow, yeah.

That goes right into our pockets at that point,

in perpetuity.

And we're building equity in the building as well,

because...

And a million dollar asset that's still growing in value.

- Yeah, yeah, yeah.

- That's unbelievable, yeah. (Ryan laughs)

- So, I'm excited about this guys.

I've been doing this now for couple of years.

This particular strategy, I didn't start with that.

But it's something you end of eventually getting to

most of the time.

If you are in the real estate game for enough years,

you end up graduating to this,

and this is what most good real estate investors do.

- Right, yeah.

And I know a lot of people are probably thinking,

oh it's not technically no money 'cause it's somebody else's

money but...

And obviously, not everybody...

If you got a 20-year-old,

like I wouldn't have as good of a success rate

with going out and getting private money

'cause I don't have the experience you have.

- Right.

- But, it is good to have this as the long-term goal.

- Right.

- And, understanding you don't have to just sit there.

'Cause I was also under the impression

that to grow with real estate,

you just had to keep building up your own money,

getting 20 to 25% down. - Yeah.

- Then saving up for a couple years,

and then maybe as you have cash flow producing properties,

it's slightly less time involved.

But it would still, like you said,

it would take you a decade

to get your first two or three properties for most people.

- Yeah, yeah. - Yeah.

- For me, so I started out with a duplex.

You might see it in some of my videos

if you go check out my channel.

My first property was a duplex

where I was renting one of the apartments,

I was living in the other apartment.

And that was my starting point.

And I did that with the standard, regular financing.

Went to a bank.

The next property, or two or three that I bought,

were also the same way.

So you have to start small, you have to start slow.

But you should know that there are other ways

that you can really scale this up.

- Mm-Hm.

- Once you build up the experience, the connection,

the knowledge, all those things.

So, if you're willing to dedicate yourself to the process

and real estate, and if you're interested in doing that,

the sky is really the limit.

You can definitely make really serious money doing it.

- Wow, that's phenomenal.

Well I think that pretty much wraps up this video guys.

Like I said, Vitaliy's got his YouTube channel,

he's just got up and running here.

Besides that, where would people go

if they're looking to learn more about you,

I know you have a Blog going as well.

- Yeah so I have a Blog, it's suceedrei.com.

You can also find me on my law firm's website,

it's wwwoh.com.

Whitman Osterman and Hanna is the law firm.

And, that's pretty much it from me.

- All right, sounds good.

Well thanks so much for coming on man.

- Yeah. - I really appreciate it.

- Thanks Ryan, appreciate it.

- And thanks for helping me with the Craigslist scammer

there. - Yeah, you got it.

You got it.

- And definitely guys, check out Vitaliy's channel.

He's providing a ton of awesome content there.

One of my favorite video's you've done recently

was a full analysis on house hacking

which is basically how you started.

- Exactly.

- That's what I'm doing too, house hacking.

So, he did a whole video analyzing different,

potential house hack properties.

So, if that's a strategy that interests you guys,

for getting your foot into real estate,

I would highly recommend that video.

But thanks so much for watching guys,

and I hope to see you in the next video.

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