1.2 Billion Dollar Real Estate Investor: "Buying your house is the dumbest investment you can make"

[Arithmetic]

He owns the properties so you don't have to

 

[UberEatsDriver]

I swear what he said went over the heads of the majority of the commenters in here.

He's not saying don't buy real estate properties, rather don't think of your own house as an investment and look for additional properties that you can rent out. Robert Kiyosaki will tell you the same thing, houses aren't assets in the way that most Americans think of them. Rent where you live, and buy additional properties that you can rent out to generate streams of income. Commercial properties are good too.

Exactly

 

[Aprogressivone]

Lol yeah dudes will get hype about a raise not realizing that they got booted into a higher tax bracket and are taking less % home

Okay this is my entry point. It does not work that way. In america we have a graduated tax system. Getting a pay raise and going into another tax bracket does not lower your take home pay. Tax rate is not flat. Lets focus on the single filers tax rate for 2018. I'm not gonna start at the bottom of this but lets start with the 12-24% tax range. 12% is $9526-38700. 22% is $38701-82500. 24% is 82501-15700. If you are making $ 38700 you are getting taxed at 12% a year. Lets say you get a 10k raise which "pushes you into the next bracket". You now make $48700 a year. The only thing taxed at 22% is that 10 thousand dollar raise. Your entire income is not taxed at 22%. Anything below $38700 is still taxed at 12%.

Now lets move to real estate. Grant is a bit aggressive in his ideas but the main idea is that you can buy properties that generate you cash flow on a monthly basis. What some people put down on a down payment for their personal home could be used elsewhere to get you cash on a monthly basis. Lets look at this property in Petersburg VA for example. 25 S Jefferson St, Petersburg, VA 23803 - 4 beds/3 baths

This is a 6 unit building for $127k. I am going to be really conservative with my numbers here to prove a point. 5 out of these 6 units are currently rented. Let's say you moved into the 6th unit which means it is your primary residence and not an investment property. This is a house hack I am showing you. A primary residence only needs 3-5% vs 20-25% an investment property would. The down payment on this at 5% would be $6350. The Mortgage, Interest and Insurance would be about $811 a month. Petersburg does not have high rents but at a minimum you can rent each unit for $500 dollars a month. 500X5 is 2500. $2500-811 is $1689. $1689 x 12 is $20268. Lets be ultra conservative and say we keep 50% in profits for maintenance when first starting out until we know what the building really costs to run. it could actually only be 20-30%. We are left with an extra $10,134 a year that you didn't have without doing this deal. You could move out after a year or two and get another property just off the cash you created from this first deal. Rinse and Repeat. If you are lazy like me lets take out an extra 10% for a property manager. That is giving you a total take home of $9120 a year. It could be higher in the tune of 2-4k depending on maintenance for the year. That is called house hacking.

Without being so conservative, even shytty ass Petersburg has rents at the $600-700 dollar mark. Lets rent them at $625. using the same formula as above you are left with $12495 a year now. When you move out you can now rent all 6 units at $625. You are are generating $15870 a year after mortgage and maintenance.

So many Americans have their only asset as their house. They have zero stocks or mutual/index funds and weak ass funded 401k's. I'm talking so called middle class. While home ownership is important technically. That house does not pay you until you sell it or rent it. By thinking outside of the box and be willing to sacrifice for a few years you can generate some serious monthly cash flow. Lower your standards and you have the potential to really do some serious stuff. This is what really buying up the block is. We don't need a celebrity to do this. You can buy property and just start collecting rents man. At least its black owned still.

 

[Serious]

@String Bell as the CEO of B&B enterprises what's your take?

 

[Tres Leches]

keep floyds name out of your mouth

 

[NatiboyB]

that's what I am saving for I am trying to buy land...they have these connex houses/buildings/office space that can be used as homes/business and I think if I had the land and could get a couple of those connex joints popping off it could be a good look for me once I retire. But what I'm thinking is with the land people can rent the connex...It makes sense to me they have electric/gas/water/ac/heat all of that and you can stack multiple of them together or use them as a set of one.

 

[jadillac]

it's funny b/c I was watching a Vlad video with Godfrey and Vlad said he's not a fan of real-estate. Now he has this guy on there to back him up.

Sounds sketchy to me. Owning properties is always a good investment. Just dont pay too much trying to fix up a house that's not worth the cost

 

[CreepyMcCreeperson]

You don’t pay property taxes?

Yes, but I don’t pay a mortgage or rent

 

[BlackBall]

Yes, but I don’t pay a mortgage or rent

Motor home?

 

[CreepyMcCreeperson]

Motor home?

No

 

[Jack Trippa 3z company ho]

Okay this is my entry point. It does not work that way. In america was have a graduated tax system. Getting a pay raise and going into another tax bracket does not lower your take home pay. Tax rate is not flat. Lets focus on the single filers tax rate for 2018. I'm not gonna start at the bottom of this but lets start with the 12-24% tax range. 12% is $9526-38700. 22% is $38701-82500. 24% is 82501-15700. If you are making $ 38700 you are getting taxed at 12% a year. Lets say you get a 10k raise which "pushes you into the next bracket". You now make $48700 a year. The only thing taxed at 22% is that 10 thousand dollar raise. Your entire income is not taxed at 22%. Anything below $38700 is still taxed at 12%.

Now lets move to real estate. Grant is a bit aggressive in his ideas but the main idea is that you can buy properties that generate you cash flow on a monthly basis. What some people put down on a down payment for their personal home could be used elsewhere to get you cash on a monthly basis. Lets look at this property in Petersburg VA for example. 25 S Jefferson St, Petersburg, VA 23803 - 4 beds/3 baths

This is a 6 unit building for $127k. I am going to be really conservative with my numbers here to prove a point. 5 out of these 6 units are currently rented. Let's say you moved into the 6th unit which means it is your primary residence and not an investment property. This is a house hack I am showing you. A primary residence only needs 3-5% vs 20-25% an investment property would. The down payment on this at 5% would be $6350. The Mortgage, Interest and Insurance would be about $811 a month. Petersburg does not have high rents but at a minimum you can rent each unit for $500 dollars a month. 500X5 is 2500. $2500-811 is $1689. $1689 x 12 is $20268. Lets be ultra conservative and say we keep 50% in profits for maintenance when first starting out until we know what the building really costs to run. it could actually only be 20-30%. We are left with an extra $10,134 a year that you didn't have without doing this deal. You could move out after a year or two and get another property just off the cash you created from this first deal. Rinse and Repeat. If you are lazy like me lets take out an extra 10% for a property manager. That is giving you a total take home of $9120 a year. It could be higher in the tune of 2-4k depending on maintenance for the year. That is called house hacking.

Without being so conservative, even shytty ass Petersburg has rents at the $600-700 dollar mark. Lets rent them at $625. using the same formula as above you are left with $12495 a year now. When you move out you can now rent all 6 units at $625. You are are generating $15870 a year after mortgage and maintenance.

So many Americans have their only asset as their house. They have zero stocks or mutual/index funds and weak ass funded 401k's. I'm talking so called middle class. While home ownership is important technically. That house does not pay you until you sell it or rent it. By thinking outside of the box and be willing to sacrifice for a few years you can generate some serious monthly cash flow. Lower your standards and you have the potential to really do some serious stuff. This is what really buying up the block is. We don't need a celebrity to do this. You can buy property and just start collecting rents man. At least its black owned still.

Major Key folks

 

[diggy]

keep floyds name out of your mouth

Word. Like Floyd ain't spending gambling and Girl Collection money.

 

[sosaa]

i think folks in this thread getting things twisted. dude never said owning a house or property was bad. he just said he wants income being generated and looks for multiple streams rather than depending on a family home to raise in value over a # of years like most folks do. plan accordingly

 

[BlackBall]

No

Boat house?

 

[Jhoon]

it's funny b/c I was watching a Vlad video with Godfrey and Vlad said he's not a fan of real-estate. Now he has this guy on there to back him up.

Sounds sketchy to me. Owning properties is always a good investment. Just dont pay too much trying to fix up a house that's not worth the cost

I’m sitting back reading some of the responses in this thread. I see why some of us are screwed.