How to Make $1 Million in Real Estate in a Year

In this Deal Structure Sunday, I'm going to walk you through the kind of the highlights of what I call the 1-year, $1 million plan. This is not a guarantee that you're going to go make $1 million your first year. Let me start with that disclosure. Okay. Cause I'll get that from you guys. I know I will. If you're brand new, especially. I'm going to give you some assumptions I made here. Some of you are going to go, that's too aggressive. I'm looking to make $300 grand a year. Great. You can key it down by a third. Others will say, I want to be more aggressive. Where this came from is we used to have what's called a 3-year, $1 million plan. It was very conservative. And in the last few Deal Labs that we ran, and I'll explain that in a second, each time there were one or two people in the room that were getting into this business aggressively. They had some time on their hands. They weren't afraid to get their hands dirty and get after it. And they joined at the highest levels in our community. And they said, can you show me a more aggressive? And we backed into this 1-year, $1 million plan. So again, you're, I don't know you, your results may differ, but I'm going to give you a model that you can scale up or down with some assumptions. Okay. The first assumption is that you're going to have a ramp-up period. And that ramp-up period, especially if you've never been in creative, is going to be somewhere between 90 and 180 days. Okay, that means this plan is not going to be your first 12 months. Okay, fair enough. You're going to have 90 to 180 days to ramp up to get here. Okay, that's assumption number one. Assumption number two is I'm going to use payday number one of only $40,000. Now I say only because in our community, that's not obnoxiously high. I'm going to keep everything I do here conservative and you see how this runs. I'm going to use payday number 2, which is— I should define 1 for those of you that might be new. Payday 1 is the tenant buyer comes to the table with a non-refundable down payment. That's yours as an investor. Okay. Unless you're doing what we call an AO deal. This is not the video for that, but there are some exceptions. Payday number 2, I'm going to use $400 monthly spread. What is that? That's the difference between what I'm paying the seller Or their underlying debt and what my tenant buyer is paying me, that delta is payday 2. In this case, I'm using $400. Assumption number 3, payday number 3, I'm only using $35,000. Out of all the assumptions, that's the most conservative, Craig Prangell, because some of our payday 3s are in the 6 figures. So this is very conservative. All right, here's how this works. This whole model. Of 1 million in 1 year based on 24 deals. In the Deal Lab, which we hold in our classroom in Newport, Rhode Island, we break down, well, what does it take for you to get to 24? How many calls? How many sellers you have to speak with? How many appointments you have to go on? What's the ratio of the metrics and conversion? I'm not going to dive into all that here, but we do that in the Deal Lab. And if you want to learn more about that, so I don't forget to tell you, go to dealabnewport.com. DealLabNewport.com. It's an awesome experience. Encourage you all to be here. Here's how this looks. Year 1. Let's get to this above us here. Year 1. I'm going to do 2 years, even though it's a 1-year one, like it just repeats itself, but it ramps up. If you're doing 24 deals and your payday ones are $40,000, year 1 payday ones is $960,000. Just payday ones. Now payday 2s for year 1, I based it on, okay, 2 deals in month 1, by month 2 you have 4 deals, by month 3 you have 6 deals, and so on and so forth. Okay. So payday 2s in year 1 equal, this is payday 1s, year 1 payday 1, year 1 payday 2s equal $62,000, just payday 2s. Now there's all kinds of nuances here. We'll talk about. Should you decide to come to Deal Lab, but I encourage you to keep your payday 2s in the bank. We used to call it our lease account and it would leave all the payday 2s in there because when you have that occasional default, 2 to 10% of the time it happens, do you really care? Not if you have that kind of payday 2 sitting in the bank. We had a time, it's right before COVID actually, where our payday 2s monthly, meaning the net-net Was about $28,000, just payday 2s monthly. So you leave those aside and you, and you set that up for either future deals or, you know, a problem deal, et cetera. There's your little over a million, right? What happens in year 2? In year 2, you still generate the $960,000, right? You also generate 24 new deals at the payday 2 of $62,000, but You now have a full year of the original payday 2s, which is totaling like 177. So I don't know, whenever that one, one five, but another 115,000 in your last year's payday 2s. Okay. But then I said very conservatively, out of these 24 deals. We're gonna have 8 payday number 3s. 8. That's it. So in other words, 8 buyers out of the 24 so far in year 2 got to the finish line. That's what we're saying with this one. And those 8 buyers, you remember, are payday 3s. Payday 3s then would be $280 grand. $280K. I know these are summarizing, guys, but you gotta see how this thing ramps up. It's pretty cool. So in year 1, in this box. You're at like a little over a million. In year 2, you're actually at $1.4 million as this thing ramps up. And as some of these deals— hey, 2 to 10% are going to maybe default, but some of them are actually going to go longer. And this is based on these averages. You start doing owner financing deals with free and clear properties and monthly principal only payments. Your paydays are going to be enormous and some of these deals are going to get extended and life happens. So it gets better. I want to give you guys, if nothing else, the clear path to see that, yes, it's possible. Yes, some people will go after this. Is that the norm? Does every person come in the community and go after $1 million? No, they don't. That's not the norm. But also, let me tease this. Is society full of people That get up every single day, no matter how hard it is, no matter how long it takes, and they do whatever it takes to accomplish all their goals? No. So that our, our community, Smart Real Estate Coach community, is like a microcosm of society, right? So it behaves the same way, right? With a little more prodding and accountability and nudging from us, perhaps it betters the odds, but that's just reality. Not sure where to get started? Go to smartrealestatecoach.com/getgoing for free books, strategy calls, and a whole bunch more. We're going to help you get going the wicked smart way. We've been after this for over a decade doing exactly that. All right. So, so far that's deal 1, cash only in your pocket, right? So because you have your payday 1s, uh, disclosure, some payday 1s might be overtime. So this $40,000 might be, well, I'm going to give you $30,000, but because of my tax refunds next year, I'm going to give you my other $10,000. Sometimes we spread that out. That's all part of what we can walk you through in the 3 Paydays Mastery Course. What happens here though is what else did you do besides get the cash on payday 1s and 2s? You sort of what I call banked payday 3s, didn't you? For the future. Well, 24 deals at $35,000 apiece. You just banked $840,000. Guys, I hope that's an eye-opener. $840,000. Do you care? I said 2 to 10% default. Do you care if 10% of that defaults? Come on. That's, that's all that you lose, the payday 3. So let's go with the full amount, not the default. $840,000. That's bait. That's for future cash outs. Now we go to year 2. I know it's a 1-year, $1 million, but I want to show you what happens in year 2. Because in year 2, you have what? You have the same $960,000 because you generated the same 24 more deals, right? But you then had, instead of only $62,000, you had the $62,000 for the new payday 2 deals. But now you've had a chance to have all those original 24 deals, the payday 2s. They, you had 12 months of those. So total payday 2s in year 2 is $177,000. So this is payday 1, payday 2, $177,000. Now, out of the 24 payday 3s here that got sort of banked, I'm going to say that 8, only 8, are going to cash out in year 2. So you have 8 payday number 3s. 8 payday number 3s are going to total $280,000. So in year 2, not counting that you just banked $840,000 more in future payday 3s, you actually got about $1.4 million there, cash, cash. Less these 8 deals though, you have 48, so minus 8, you have 40 deals banked for payday 3s. Future cash outs, $1.6, $1.5 million on top of what you already had. You just now created an entirely different business model than any other real estate investor out there who are trying to do the wholesale, the flip, and they're spinning wheels. That's a job, guys. Sorry to say, that's all they did is they created another J-O-B. This created a different quality of income that no other investors are tapping into. None. It's the trademarked 3 Payday System and it's yours. You can have it. Let me give you some direction here. I mentioned Deal Lab, dealabnewport.com. That would allow you to come into the classroom here, meet myself, my son-in-law and partner Zach, my son Nick, at least one, if not two of our certified coaches, bring leads, have us call them for you, then structure deals on this very whiteboard, and then actually make appointments and offers. We would do it right here with you. You bring them, we'll get the deals done for you. They're your deals. Secondly, some of you have not even gone through what I call the 3 Paydays Mastery Course. Just go to smartrealestatecoach.com/qls and use the coupon code TUBE. T-U-B-E. That'll give you 50% off. I want to make this an easy path for you because once you get your feet into that, you get your fingers into that course, you're going to want to be here at Deal Lab. We'll see you next week on the next Deal Structure Sunday.