Three Approaches to Buy Your FIRST Rental Property

What's up guys, this is Cody, and in today's video I'm going over how you get into your first property. With that said, there are 3 trains of thought for getting into your first rental property, start getting passive income. And number 1, this is the only strategy that works 100% of the time. Granted, it is also the slowest strategy on this list. It's with Dave Ramsey. Now Dave Ramsey's Total Money Makeover is by far the least risky of strategies on this list to get your first rental property. Now the idea behind this is you're saving cash, you're gonna pay cash for your first rental, it's probably gonna be a duplex or a fourplex, and you're gonna get 100% cash flow on that property. You're not gonna have a mortgage. Now if you're in a state like California, New York, Washington, this may not be feasible. It may take you way too long to get into your first property. Now if you are in the Midwest and you've got the opportunity to get into a deal for $30,000 to $40,000 and you have a good high-paying job and you've got your finances in order, then maybe it's more feasible for you to go in and take that deal down. Maybe it's possible for you to save up $30,000 over the next 5, 6, 7 years and pay cash and have your first cash-flowing rental. Granted, if you are doing either of these strategies, you should still read this book. This book is phenomenal for getting your finances straight. But with that, the second strategy on this list, this is something that I did was 100% leverage, was Robert Kiyosaki's Rich Dad Poor Dad book. Now, whichever way you go, you should read this book too. This will get your mindset right, getting your money right, and getting the mindset of how could I do this if I wanted to. And for those of you kind of in the middle, this is where most people watching this video are gonna settle out. You're gonna be somewhere in the middle. You're gonna be between Rich Dad Poor Dad and between Dave Ramsey. With the idea that you're going to get a loan, a 30-year fixed-rate mortgage on a fourplex with 3.5% down. If you're buying a fourplex for $500,000, you're going to be putting $15,000 to $20,000 down, and you're going to live in one unit while you rent out the other and cover all your expenses. One day you move out and you're going to cash flow $800 to $1,000 a month, and that's a relatively easy way to get into it. Now, your strategy for doing something like that, you're gonna need a stable job. You need stability, number one. So the first thing you should focus on is growing that income. You're gonna have to be able to qualify for the loan. The second thing you need to think about, how do I start building my credit? One thing that I did to build my credit score up was every single month I'd throw all my gas bills when I'm driving my car on a little credit card. It was a secured credit card. That's all I qualified for in the beginning. I secured it with $500 cash that I earned from a job. And at the end of every month, I paid it off. I would never let a balance carry over. And that would build my score. Now, you do this over a long enough period of time, you're just gonna start getting results. And what a banker's looking at is they wanna make sure that you can pay back your debt. The only time you need a credit score is when you're borrowing money. So if you do plan to be like Dave Ramsey, you can disregard all that and it's not gonna matter. If you want to be like Robert Kiyosaki and you're gonna borrow all the way to the roof, it's gonna be very important. Something that you need to keep in mind. There are special ways to do it. There's a lot of ways to borrow money, raise money, fund deals. But if you're gonna be in the middle, you're gonna want to focus on number one, build your credit score, getting your income stable, and then getting the work history. We need to show history to the bank. Now let's say that you are working towards Robert Kiyosaki's model. That is the model that I used. I was 100% debt in the beginning. I've been able to build a substantial amount of equity doing this, but it was also riskier. What you're gonna need to focus on is, number one, you're gonna really need to hone in your skills on finding deals. It's gonna be most important. Don't focus on the money. Don't focus on where you're gonna get the money. Focus on the deal and understand why it is a great deal and it is the one deal. If you only have one, this is the one you're going to do. What I've learned from talking with investors, raising money, putting together deals, is that regardless of how much money somebody has, to an extent, they're just looking for a safe place to put it. They want to earn a solid return and they want it to be secure. Now, when you're looking at deals, you have to be able to pitch. If you're really going towards the Robert Kiyosaki model, 100% liability in the beginning, you need to be able to pitch a sound, secure, and logical investment for that investor. If they're putting their money in a deal, even if the deal gets delayed, gets pushed back a little bit longer than you hoped, is their money secure? That's what people want to know. When I'm looking at a deal, if I'm pitching it, if I'm raising money, I make sure 100% of the time that deal is secure. I don't want to be liable for losing their cash. As soon as I lose their cash, my ability to raise money is done. It's, it's over. And so for you guys, it's super important that you really start getting knowledgeable about this. And you can refer to my mentorship videos on my YouTube channel, but get a mentor who is well-versed in this, who's done it and has the legal structures in place to actually raise money, to structure these deals, and who has been through it enough times so that they can guide you safely to avoid those potholes. Now, the other method, if you are gonna go Dave Ramsey and go that route, focus on growing your income and keeping your expenses low. You can cut your expenses only so low, and so you might have to look at growing your income. If you're making $12 an hour, you can only work so many hours in a day. You might need to find an opportunity to grow that to $15 an hour or $18 an hour or get a sales gig where you start getting commissions. The most important thing, if you're gonna go that cash route, get some stability, start saving up cash, save up your reserves and your emergency fund, and then anything above that, throw it aside and get ready to go on your first deal. You're gonna live like you have no money at this point in time. If you are going to pay cash for your first deal, there's gonna be a lot of sacrifices that folks who aren't doing these other methods that you aren't gonna have to go through. You're not gonna have the liability that they do, but it's gonna take some sacrifice on the other end, and it's gonna take some time. Either way that you go, whether you're going 100% debt, you're going no debt like Dave Ramsey, or you're somewhere in the middle, there are ways to put this together, but you have to think for the long term. And regardless of which way you go, make sure you have a mentor who can coach you through this, someone who's done it enough times Whether you're going to be taking on the liability of debt or not, make sure that you get a couple words of advice from folks who have done this longer than you have, who own real estate like the real estate you want to own, so that you know that the advice you're getting is credible. And then put the deal together. With that, I want to cut off the video so it doesn't run too long. Hope you guys have a great night. If you like the channel, please do subscribe, and I will see you guys next time.