Episode Transcript
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Speaker 1 (00:00):
The following is a paid commercial program on ninety four
to three WSC. The views expressed by the host of
this program do not necessarily reflect the views of iHeartMedia
ninety four to three WSC it's advertisers, sponsors, or management.
This is the Real Estate Show with Rick Willis, a
show about home sales, mortgage issues, investing in everything about
the American dream and that means a lot someone who
(00:23):
enjoys radio and really enjoys your program. And now The
Real Estate Show with Rick Willis on ninety four to
three WSC.
Speaker 2 (00:33):
Hello Charleston, Welcome to the Rick Willis Real Estate Show.
I am Rick Willis, I'm your host. And the combination
of more inventory and interest rates down, anybody that has
been thinking of buying a home should not be waiting
any longer. Now. If you think the interest rates might drop,
(00:55):
and they might drop, you don't wait until they drop.
And here's why. When you go out and your contract
to buy a home, the contract of sale that you
sign is going to require that you apply for a
loan within a few days of getting your contract signed.
(01:15):
And when you apply for a loan, the lender that
you work with is going to ask you a question.
They're going to say, do you want to lock your
interest rate or float it? Locking it means you're going
to get a preset interest rate that you and your
lender determined. If you say float the rate, that means
(01:38):
you're not locking in the rate because you're betting on
the interest rate declining some more. So, if you have
an offer on a property and you believe the interest
rates will decline, you float the interest rate and you
don't lock it in, and then you watch what the
Federal Reserve does, you listen to what your lender tells you,
(02:01):
and at the right time, you locked the loan in. So,
for example, if you're going to go out and buy
a home and it's going to be the first week
of October, and you find it property you like, you
sign a contract, you apply for the loan, and you
might have built in there a forty five to sixty
(02:22):
day closing period just to allow the interest rate to
decline some more. That would be a wise decision to
make to buy now, float your rate and bet on
the fact that maybe there'll be another quarter or a
half a percent decline in the interest rate before you
actually have to lock in your rate. My personal belief
(02:44):
is that once we reach the calendar year twenty twenty five,
all the floodgates are going to open and there's going
to be sales left and right. Remember what happened during
the pandemic, all the people that came out of the
woodwork to buy I believe the same thing is going
to happen in twenty twenty five. There's been such a
(03:06):
great number of people that have been waiting for the
interest rates to decline, and woe and behold, the Federal
Reserved did us a favor here this past week, and
they did help us with a declining interest rate, and
you want to take advantage of that. I personally have
(03:27):
a VA loan on the house that I live in.
My interest rate when I bought the house close to
a year ago was a little over six percent. I
contacted my lender this past week just to say, if
I wanted to refinance, what could I get as an
interest rate? And they told me I could get as
(03:49):
low as five point two five percent, which is exactly,
by the way, one full percentage point less than what
my existing rate is. And the interesting thing is, because
it was a VA loan, they said, no appraisal, no
(04:09):
credit check, and we don't even need to know your
income or expenses. Automatic they can reduce the interest rate.
So anybody out there that is a veteran, either that
has a current loan or will be buying a home,
know that it's very easy and very favorable to reduce
(04:31):
the interest rate when the rates come down. So again
I say to you, don't wait. So let's talk about
financing a little bit. When you buy a home. There's
two items that require cash. One is the down payment
and the other is what is called closing costs. And
(04:52):
I want to speak to you about both of those.
First of all, let me say that as a realtor
when I'm not here on the radio, I'm an active
practicing realder. A seller can pay all of the closing costs.
Seller can't pay your down payment, but the seller has
(05:14):
the ability to cover all of your closing costs up
to about six percent of the purchase price. If you're
VA or FAHA or USDA conventional loan, they can go
up to three percent of the purchase price. So down payment.
Several different ways to buy with the no down payment.
(05:37):
If you're a veteran or National Guard past present, you
can buy with VA financing zero down payment required, one
of the big benefits of having been in military service.
If you're not eligible for VA, you can buy one
hundred percent financing through something called USDA Financing United States
(06:02):
Department of Agriculture, and that's primarily for homes that are
on the periphery of the suburbs or out in rural areas.
But rural areas could mean Carnes Crossroads. Rural areas could
be the outer areas of Summerville, so it doesn't have
to be way out, just on the periphery. USDA financing
(06:27):
zero down payment sellers can pay the closing costs. How
else do you get your down payment? Well, if you
obviously have savings, I don't have to tell you about that,
but your retirement account, those of you that have a
four to oh one K, you have the ability to
either withdraw money from your retirement account or you can
(06:51):
borrow against the assets in your account. You have to
make the decision as to what's best for you. But
I would tell you make sure that you don't stop
buying a house because you'd rather put money in the
stock market, which is what a four oh one K
is now. If you don't have access to a savings account,
(07:17):
and you don't have the retirement account, but you still
need some money. I would tell you tap the parents, grandparents,
or relatives that you know and see if they'll give
you a friendly, good old boy private loan. And they
can also give you a gift. Better to have a
(07:38):
gift than a loan, right, yep, I'd agree with that.
Some of you actually have the ability with your credit
cards to get a cash withdrawal from your credit cards.
I'm not telling you that's a great thing to do,
but I'm just trying to give you some sources of
where you can get money for a down payment. And
(07:58):
one of the newer things that's come along that wasn't
around years ago is something called equity sharing. There are
people that will put up a down payment or a
portion of the down payment and claim an equity in
the home. And although you want to own your home
(08:19):
completely yourself, better to use one of these equity sharing
situations than not buy at all. Now, you might want
to be in a very very nice, plush home in
a very very nice area with a great school system,
but if you look at what the monthly payments would
(08:40):
be or the cash requirement you're going to say, I
really can't afford that. Don't wait and start saving money
until you can buy your ideal home. You want to
make sure you buy something now. The key to real
estate is getting started young. Get started early and buy
some thing that's going to build equity through a combination
(09:03):
of your monthly payments combined with appreciation. If you have
to go to a different type of property than what
you wanted, will do that. Better to have a condo
or a townhouse than wait for the ideal single family detached.
Buy something it's smaller than what you wanted, or go
(09:24):
to a different part of town than where you thought
you wanted to be. But get in the game. That's
the secret. Younger, the better buy a house. I see
a commercial on television with a young couple talking to
their financial advisor, and their choices are to take a
honeymoon to Africa or to go buy a property a
(09:46):
ranch in Montana, and I would say to you, go
for the real estate.
Speaker 3 (09:54):
Now.
Speaker 2 (09:55):
We're going to talk more about buying a home and
selling a property after we come back from the break.
But I want to make sure you know my name
is Rick Willis. I do help buyers buy as a
buyer's agent, and I also list property and if you're
thinking of selling, I'd love to come over like I
did yesterday to a homeowner and give them tips and
(10:16):
pointers on what they can do to make their property
more saleable. Pick my brain. It's free of charge. Call
me at eight four three three two seven three zero
one seven. Email me please Rick at Rickwillis dot com.
And if you want to know more about me, visit
my website Rickwillis dot com. Read my bio and you
(10:39):
can access our local multiple listing service directly from my
website Rickwillis dot com. Folks will be right back after
this break. Hello, this is Rick Willis. I assume you've
been listening to the Rick Willis Real Estate Show. If so,
are you considering buying, selling, or investing in real life state?
(11:01):
If so, you want to make sure you request a
copy and read my special reports designed especially for those
people looking to buy or sell or invest in real estate.
Special Report number one is about buying real estate, and
you'll discover how to get your best buy and avoid
the ten biggest mistakes home buyers make. Special Report number
(11:26):
two is for those people thinking of selling their property.
You'll discover how to get your home sold quickly and
net the most money. And if you're thinking of investing
in real estate, you'll discover why you want to own
income producing property and what to buy for the safest
(11:46):
place to put your money. You'll also discover how to
use your retirement account for a one k and ira
without having to pay a penalty to buy and own
income producing property. Please note I'm saying income producing property,
I'm not simply saying investment property. To get a free
(12:07):
copy of any of the special reports I just mentioned
about buying, selling, or investing in real estate, please text
me at eight four three three two seven three oh
one seven or email me at Rickatrickwillis dot com. Additionally,
please visit my website at Rickwilis dot com. You'll learn
(12:32):
about my background as well as accessing multiple listing. Again,
I repeat, please don't buy, sell, or invest in real
estate without requesting and reading your special report on buying, selling,
or investing in real estate. Text eight four three three
two seven three zero one seven or email Rick Atrikwilis
(12:54):
dot com. When you text or email me, please make
sure you request a very paci special report on buying, selling,
or investing and I will turn around and email you
the special report. Thank you. The interest rates i've dropped,
I think they'll drop again before the first of the year.
(13:17):
But you don't wait on that. You go out and
your contract for something. Now float the rate where you
don't lock it in, and take advantage of the fact
that there's a good number of inventory out there. I
don't know how many of you were around during the pandemic,
even tracking what was happening in real estate, but there
were multiple offers on properties, properties sold for over asking price.
(13:42):
It was a great time if you were a seller,
and a nightmare if you were a buyer. I believe
theoretically that could get that way again after the first
of the year. So get ahead of the curve and
go shopping. Now, get yourself a house before the rush
comes after the first of the year. Now we were
(14:04):
talking about buy something even if you can't afford or
choose to pay what the monthly payments are for what
you'd like to have. Buy something. Now you've heard the
expression before when you got a lemon, make lemonade. Well,
I'm going to give you an example. In real estate,
(14:25):
you can't afford or you don't want to pay the
price of what the payments will be for what you
really like, So treat it like it's an opportunity for
you to go out and look for a completely different
kind of property. If you were to come to me
and say, Rick, you know, here's our goal. We really
want to have this kind of property. It costs five
(14:47):
hundred thousand dollars, but we don't today want to make
that monthly payment even though we're capable of it. I
would say, well, let's go out and find you something
in the two fifty to three fifty range that you
don't want to live in for a long time, but
can you tolerate it for a year. And if you
(15:09):
look at the other choice of continuing to rent or
live with mom and dad, that might not be a
bad choice. To have your own place. That's not what
you ideally want, But you and I are going to
have a conversation about the fact that the moment you
decide you don't want to live there anymore, we're going
to convert that property into a rental property and income
(15:31):
producing property, and it'll be part of your retirement portfolio.
So we're going to look at homes and you're going
to ask me even though you're going to live in it,
what would this house rent for after we're no longer
living in it. So we'll get you an ideal property
to live in short term, a house that you can
live in for a year and a day and then
(15:54):
either turn around and sell that property or refinance the property,
depending upon your timing and what the market value is,
and you have a rental property. As a matter of fact,
I talked to somebody yesterday who is a mature individual,
not a first time buyer, who said that sounded like
(16:14):
something interesting to do. Go out and find a multifamily
property where we can live in one unit and run
out the others, live there a year and a day,
move out of that into a home that we really
want to be in, and have an additional rental property
for only three percent down payment. That's right. If you
(16:38):
go out to buy a property for an investment with
no mortgage insurance, you're going to have twenty percent down
or twenty five percent down. If you buy the property
and live in one of the units of the multifamily property,
you can buy that for as little as three percent
(16:58):
of the purchase price as a down payment and use
the income from the other properties to help you qualify
for the loan. One of life's better deals. I've helped
a number of people do that over the years, and
it's amazing. People that were previously thinking they had to
save money. Now after several years, they have one hundred
(17:22):
thousand plus inequity and they can either refinance that property
and pull tax free cash out, or they can remain
in that property or move out and rent the unit
that they were living in. So anybody out there that
is single or married and the young kids are no
longer around, you might want to consider something like that.
(17:45):
Buy a multi family property, live in one unit, get
a thirty year fixed rate loan. You can buy that
property for as little as three percent down payment, and
depending upon the number of unites, you could buy up
to a million dollars for only three percent down thirty
(18:05):
thousand dollars down payment up to a million dollars. And
remember you're using the income from the other units you're
not living in to help pay for the mortgage. And
at certain point in time, you might choose to move
out of that property that you were in as an
owner occupant and rent those respect and rent that respective
(18:25):
unit out. You want to make sure as young as
possible that you start investing in real estate. How many
of you in the room? In the room, I feel
like I'm doing a seminar. How many of you listening
have ever heard of the name Charlie Munger or have
you heard the name Warren Buffett. Warren Buffett is one
(18:47):
of the fifth wealthiest person on the planet. Supposedly, Charlie
Munger was his business partner. They own a company called
Berkshire Hathaway and Warren Buffett encourages people to buy assets
that bring in income. His advice to people buy things
(19:09):
that bring in income. That's why when he buys a company,
he looks for the income that company can generate. He's
the stock market guy, not a real estate guy. Dave Ramsey.
Have you ever heard of Dave Ramsey. Well, he's a
guy that gives a lot of advice on getting out
of debt. Dave Ramsey, it is reported, owns over three
(19:33):
hundred million dollars of income producing real estate. He buys
his mutual funds. He invests in real estate. So your
people that are the smartest on the planet know the
difference between speculating and investing. Warren Buffett says, if you
(19:53):
buy real estate, you don't ever have to resell it
because it's got it built in income coming through it,
and its growth is automatic. So the ideal investment to
have is something like real estate, where you have income
coming in while you own it and it's still appreciating
in value. When you have to buy something and hope
(20:16):
it goes up in value and then resell it to
make a profit, you're not investing. You're speculating. People talk
about investing in the stock market. Not really, you're really
speculating in the stock market. You have a mutual fund,
you have a retirement account, but it's stock market based.
I'm sorry, but you're speculating. You have to buy it
(20:39):
at the right time, and even if you're in there
holding it for the long term, you still have to
resell it at some point in the future, don't you
To make a profit real estate, you never have to
resell it. The smartest people on the planet by income
producing real estate with the understanding that they may never
(21:00):
resell the property. And you might say, well, how do
you make a profit if you never resell it. Answer,
let's suppose you buy something and you have anywhere from
three to seven percent return on the cash that you invest,
and the property does appreciate automatically, because that's what happens
(21:23):
historically to real estate. At a certain point in the future,
you can refinance that property and pull money out of
the property after it's gone up in value, and refinance
proceeds are not even taxable. Why because it's your money
you're taking out tax free. When my kids were growing up,
(21:44):
I didn't save money for their college. My wife and
I bought a property and designated the property as their
respective college fund. And I know my son for the
property that we designated as his fund every now and then.
It was an old three unit property in Baltimore and
(22:05):
it needed painting. So we told my son, send your
college education needs painting. Can you round up some of
your buddies, let's go up there and get it done.
And he did and we got the painting done. The
bottom line of the bottom line, you want to teach
your kids as young as possible about investing in real estate.
(22:26):
My son at this moment owns about twelve separate income
producing properties. He's done a better job than his old
man has because he started young and he just keeps
buying and he keeps buying more. He doesn't sell. He
bought him with the right interest rate, at the right time,
in the right city, and has the right management. And
(22:49):
he also has his retirement account, but he takes money
periodically out of his retirement account to buy more real estate.
And he'll continue to do that forever and ever. He'll
buy a piece of property for his son's college education. Folks,
this is Rick Willis, and I am the guy that
(23:11):
is on the radio. But when I'm not on the radio,
I help people buy and sell property, commercial property, vacant land,
income property, primary residence, second home. How can I help you?
Please remember to reach me at Rickwillis dot com or
call me eight four three three two seven three zero
(23:33):
one seven email me Rick at Rickwillis dot com. And folks,
don't wait till after the show's over to call me.
Call me right here on this break. Leave me a
message on my voicemail or email or text, and let's
plan a time we can chat in greater depth this week.
We'll be right back after this break. Hello, this is
(23:57):
Rick Willis. I assume you've been listening to the Rick
Willis Real Estate Show. If so, are you considering buying,
selling or investing in real estate. If so, you want
to make sure you request a copy and read my
special reports designed especially for those people looking to buy,
(24:17):
or sell or invest in real estate. Special Report number
one is about buying real estate, and you'll discover how
to get your best buy and avoid the ten biggest
mistakes home buyers make. Special Report number two is for
those people thinking of selling their property. You'll discover how
(24:39):
to get your home sold quickly and net the most money.
And if you're thinking of investing in real estate, you'll
discover why you want to own income producing property and
what to buy for the safest place to put your money.
You'll also discover how to use your retirement account for
(24:59):
a one and IRA without having to pay a penalty
to buy and own income producing property. Please note I'm
saying income producing property, I'm not simply saying investment property.
To get a free copy of any of the special
reports I just mentioned about buying, selling, or investing in
(25:19):
real estate, please text me at eight four three three
two seven three oh one seven or email me at
Rick Atrickwillis dot com. Additionally, please visit my website at
Rickwillis dot com. You'll learn about my background, as well
(25:41):
as accessing multiple listing. Again, I repeat, please, don't buy, sell,
or invest in real estate without requesting and reading your
special report on buying, selling, or investing in real estate.
Text eight four three three two seven three zero one
seven or email Rick Atwrequillis dot com. When you text
(26:03):
her email me, please make sure you request a very
specific special report on buying, selling, or investing, and I
will turn around and email you the special report. It's
important that you know that last year about this time,
I had a stroke and the blockage was on the
right side of my brain, which means that it negatively
(26:26):
impacted the left side of my body, my left leg,
my left arm, my left wrist, and the left side
of my mouth. So if I don't sound like the
same old guy that you're used to hearing from years ago,
you'll know why. But I'm still helping people buy and
sell real estate. I'm still alive and thank God that
(26:47):
I have the opportunity to share what I have learned
over a lot of time in the real estate business.
I'm currently writing a book on the subject of investing
in real estate, and every now and then I talk
to you about one of my chapters in the book,
And there's a whole chapter in the book that I'm
(27:08):
writing about saving versus speculating versus investing, and I want
to have that short conversation with you right now on air. Now,
everybody is taught from being a young person to save money,
save money. But you know what, saving money is not
(27:31):
the way to get rich. It's certainly not the way
to even become upper middle class. If you're making enough
money to have a sizeable savings, the question is why
aren't you investing it. See, people that do well financially
will save money and they get enough to invest thing,
(27:52):
and then they convert their savings to an investment. Now,
the best you're going to get in save it is
about five percent, and with the interest rates declining over
the next number of months, that amount is going to
continue to decline. So I'm going to suggest to you
that five percent, even when you can get it, is
(28:15):
not enough. You See, you pay taxes on your interest
that you get, don't you. And there's something called inflation.
So when you look at the reduced value of the
dollar based on inflation, combined with the taxes that you'll
pay on your small amount of interest, you're really not
making any money. You're really not getting in a head
(28:37):
by savings. It's an illusion by looking at the balance
sheet of what you have in a savings account. Now,
I said, I we're going to draw the distinction between
saving and speculating and investing. Speculating is where you put
your money into something and you have to buy it
(29:00):
the right time. Timing is important in speculating. Then what
you buy has to go up in value for you
to make a profit, and you have to look at
the timing of when you sell it, and you have
to sell it to make your profit. That's speculating. I
have speculated in real estate and made money. I have
(29:22):
speculated in real estate and lost money. Don't confuse speculating
with investing. There are people that speculate in bitcoin, people
that speculate in lots of different things. But at the
end of the day, you want to You don't want
to speculate with your money. You want to invest. Investment
(29:46):
means that you have income coming in from where you
put your money. Warren Buffett will invest in companies that
make a profit. You, as an individual investor, choose to
invest in a company that pays a dividend that would
be an investment. You can buy an income producing property
(30:10):
that gives you positive cash flow, that would be an investment.
So I'm going to suggest to you that you evaluate
only investments, not speculative ventures. You speculate with the amount
of money that you can lose, and you invest with
things that are going to bring you profit where you
(30:30):
don't lose. Warren Buffett's philosophy on money. Rule number one,
don't lose money. Rule number two. Reread rule number one,
don't lose money. Now, despite the fact that the stock
market has been increasing in value for many, many years now,
(30:52):
all the experts say that it's due for a correction.
Are you going to wait until there's a correction and
you lose ten, twenty, thirty forty percent of your stock's
value or your mutual funds value? Or are you going
to look at taking money out of your retirement account
that is stock market based, paper asset based and put
(31:15):
it in a tangible asset like real estate. Now most
of you don't know this, but you can take your
own four oh one K, your IRA or other retirement account,
and you have the ability if you change custodians to
what is called a self directed retirement account, self directed
(31:39):
four oh one k, self directed IRA, that you can
buy art, you can buy classic automobiles, you can buy bitcoin,
you can loan money to people. You can buy income
producing real estate with your retirement account, and you need
(32:01):
to make sure you're looking out for that. If you
want to get more educated on this, google the term
self directed retirement account or self directed four h one
K or self directed IRA. You see the financial advisor
(32:21):
that you go to or the company that advises you
on your selections for your mutual fund, they don't know.
I have a good friend of mine who's a financial advisor,
and I remember the first time I asked him. I said,
out of all the things that you can advise your
clients to buy or invest in, where do you put
(32:43):
your money? And he laughed and said in the bank.
And I thought to myself, if that doesn't make a statement.
Anybody that would tell you to put your money in
your bank, who's a financial advisor, maybe you shouldn't be
listening to that person. One of the nice things about
real estate is that even though it has from time
(33:06):
to time dropped in value, it only has done so
on a few occasions, and it always recovers The last
time there was any significant drop in real estate values
was two thousand and eight, and real estate market got
hit real hard as well as a stock market. The
(33:27):
difference is if real estate drops in value and you
own income producing real estate, the income does not stop.
So if you're retired, thinking of retiring, or want to
start your retirement savings, start it with real estate and
you don't want to try to get it paid off.
(33:48):
I had someone the other day say, well, I'm going
to take some money and pay off my property. I said,
what is the interest rate on your loan? And they
told me, and I said, why would you do such
a stupid thing? I didn't actually phrase it that way,
but at the end of the day, most of you
have never computed what it's possible to earn in real
(34:11):
estate compared to the stock market or anything else. My son,
when I had him on the phone with me one time,
I said, Chad, let's compare your real estate investment with
your four oh one K. And we went back and
looked at how many years he'd been contributing to his
four to oh one K where he started, how much
(34:32):
he contributed, and we figured he averaged about eight percent
per year after administrative fees in his retirement account. Now
there's a whole lot of people that would say that's
pretty darn good if you can average eight percent. Yeah,
but the correction is still coming. And what would that
(34:53):
look like compared to real estate? And you see, the
only people that would think that's good have never computed
the return on investment in real estate. Now, before I
go through this in detail, I want to do some
housekeeping with definitions. There's something called return on investment. There's
(35:16):
return of investment, and there's return on equity, and I
want to draw a distinction between those. If you put
money in a bank at a savings account at five percent,
your return on investment is five percent? Correct, the answer
is yes. But in real estate it's not that simple.
(35:38):
It actually is that simple. It's just the fact that
you get a return on investment more than just cash.
But let's go through the definitions here. Return on investment,
where do you put your money in? What are you
getting back in return as a dividend? What are you
getting as a distribution? Return of investment means that if
(36:03):
you put money and you invest it, what are your
chances of getting back what you put in? Warren Buffett says,
don't lose money. I don't know of a better place
to put your money to make sure you're going to
get a return of investment than income producing real estate
return of investment. And there's another concept called return on equity. Now,
(36:31):
some of you listening have houses that are paid for.
Some of you listening have investment properties that, if they're
not paid for, have a lot of equity in them.
You see, your property is going to grow and appreciate
at the same rate whether you have no equity in it,
a little equity, or a lot of equity in it.
(36:52):
Most of you should either be selling some of your
properties and reallocating your equity to other properties, or you
should be borrowing against it. And if you've got a
property with a lot of equity with a low first mortgage,
then you want to set up an equity line of
credit and borrow on the equity and still keep your
(37:14):
first mortgage in place and use that equity to buy
additional property. I had someone not very long ago said,
if I had a choice of paying cash for a
property or getting a mortgage, what would you advise? And
I said, well, it depends what is your goal? Is
(37:35):
your goal income today or is your goal future growth
of your asset or a little of each. And their
answer was, well, I don't need the income today to
live off of. And I said, well, in that case,
I would tell you to make sure you get a
mortgage and even if you have breaking even cash flow,
(38:01):
better to put fifty percent down payment on two separate
properties and own more assets that will appreciate than having
one property that's paid for.
Speaker 1 (38:15):
You.
Speaker 2 (38:16):
See, you never want to be adverse to debt in
real estate, providing you're not paying the debt. Said differently,
when you buy income producing real estate, you have a
tenant that is making your mortgage payment, So debt is
a good thing. So you're better off to buy two
properties with fifty percent down payment in buying one property
(38:40):
and have no mortgage at all. Why because you now
have two assets that are appreciating, two assets that you
have principal reduction working, and two assets that you can
take what is called depreciation and write off some ordinary
income passive losses and pay less an income. Text. Now,
(39:03):
I'm going over this kind of quickly, and if anybody
wants to call me during the week and have a
more detailed conversation on this or look at how it
applies to you personally. I welcome you to do so.
You know I do this show every week and I
invite you to contact me. I can't tell you the
number of people that eventually contact me and say I
(39:24):
wish I had done so long time ago. Well, I'm
inviting you right now to call me, right here, right now.
Leave me a message of my voicemail, leave me a text,
leave me an email eight four three three two seven
three zero one seven. Email me Rick Atrickwillis dot com.
(39:45):
Let's pick a time when we can chat about how
I can help you buy your primary home and income
producing property. Help you buy a property for your business
if you're in business for yourself. I know real estate.
I can save you money, I can make you money,
but you need to talk to me. A financial advisor
(40:06):
cannot educate you the way I can about real estate.
And you don't want your financial advisor attempting to educate
you about owning income producing property. That's not their area
of expertise. So reach out to me. I'll look forward
to hearing from you, and we'll finish up right after
this break. Hello, this is Rick Willis. I assume you've
(40:31):
been listening to the Rick Willis Real Estate Show. If so,
are you considering buying, selling, or investing in real estate?
If so, you want to make sure you request a
copy and read my special reports designed especially for those
people looking to buy, or sell or invest in real estate.
(40:52):
Special Report number one is about buying real estate, and
you'll discover how to get your best buy and avoid
the ten biggest mistakes home buyers make. Special Report number
two is for those people thinking of selling their property.
You'll discover how to get your home sold quickly and
(41:13):
net the most money. And if you're thinking of investing
in real estate, you'll discover why you want to own
income producing property and what to buy for the safest
place to put your money. You'll also discover how to
use your retirement account for a one K and ira
(41:33):
without having to pay a penalty to buy and own
income producing property. Please note I'm saying income producing property,
I'm not simply saying investment property. To get a free
copy of any of the special reports I just mentioned
about buying, selling, or investing in real estate, please text
me at eight four three three two seven three oh
(41:57):
one seven or email me at Rickatrickwilis dot com. Additionally,
please visit my website at Rickwillis dot com. You'll learn
about my background as well as accessing multiple listing. Again,
I repeat, please, don't buy, sell, or invest in real
(42:19):
estate without requesting and reading your special report on buying,
selling or investing in real estate. Text eight four three
three two seven three zero one seven or email Rick
Atriquilis dot com. When you text or email me, please
make sure you request a very specific special report on buying, selling,
(42:42):
or investing, and I will turn around and email you
the special report. Thank you. Welcome back quarter Back Charleston.
In the final segment of today's.
Speaker 3 (43:05):
Well real Estate, Well, we've talked a little bit about
buying them, a little bit about if your first time
buyer get out into the marketplace.
Speaker 2 (43:16):
I believe and I believe we're going to see pete
maybe not in depth, but we're going to pull lot
of people flocking into after the first of the year.
I'm thinking about it. While the selection is there, Go
(43:37):
out right now, contract for something. Float the interest rate
anywhere from thirty to if you believe the rates you're
going to drop so you can still take advantage of
the interest rate drop key is as possible game. The
(43:58):
younger you are, the more you want to jump into
real estate. I bought my first property in my life
when I was twenty four years old. I lived in
Time and the first property I bought was a four
bedroom brick house on sixty three acres in western Pennsylvania,
(44:20):
Somerset County, near Myersdale, not too far from where the
nine to eleven plane went down. Paid twenty thousand dollars
for the property, subdivided the house and three acres off
subdivided the balance of the land and two parcels. Made
a profit, went out and bought a sixty acre e
(44:42):
gives me a ninety acre parcel. Did the same thing
again at the end of the day. You want to
put your money in real estate, The key is to work,
make money, save the money until you have enough money
to invest in property. And remember, when you're young and
(45:04):
you don't have a lot of obligations, the best way
to get started in investing in real estate is to
buy a property that you intend to live in, very
minimal down payment, could be zero down payment, and then
buy that with the intention you're going to live there
one year and a day move out and you're going
(45:27):
to rent that property, and you can do the same
thing again, buy another property if you want, one year
in a day, zero down payment, live there a year
in a day, rent it and do it again. Or
you go out and you consider, as certain people have
done them with my help, a multi family property. Live
(45:51):
in one half of the duplex, rent out the other,
and much cheaper than trying to buy an individual single
family home, then turn around and move out of that
a year and a day later, or if you choose,
stay there for the long term and live very frugally.
Before I finish today's show, I want to make sure
(46:13):
I educate you on what the total return on investment
can be. Last segment, I talked about definition of return
on investment, return on equity, return of investment. You put
your money in a savings account at five percent, you're
getting five percent return. You buy a stock that has
(46:36):
a dividend, and the dividend is four point three percent,
that's your return on investment. In real estate, it's easy
to get twenty to thirty percent or more return on
investment safely. Now you might want to take some notes
on this so you can tell your spouse if she's
(46:57):
not listening if he's not listening. But there's four different
ways you get a return on investment in real estate.
One of those four is called a cash return. You
buy a property, you have it rented, and you have
more income coming through that property than you have expenses,
(47:18):
and you get a return on investment. Now, depending upon
how much downpayment you put down, you could have as
little as two or three percent return to as much
as six or seven percent return on cash invested. And
(47:38):
it's not uncommon today if you're limited for cash, that
you're going to get a property today that would normally
be a very good income property. It's just that the
rates are a little high and you get zero return
on cash. Let me make an assumption that you get
zero return on cash. Why would you buy a property
(47:59):
like that? Answer? Keep listening. Let's assume for a minute
that you do get a loan and you have a
mortgage on that property. A portion of your mortgage is
paying the principal down every month. Might only be one
hundred and fifty dollars, It might be two hundred and
fifty dollars, it might be three hundred and fifty dollars
(48:21):
per month of principal reduction depends on your interest rate
and the price point. But let's look at what the
return is. You see, the tenant's paying that money and
it's your money. So your principal paydown, you can get
about a four percent return on your principal reduction. When
(48:42):
you own income producing property, you can do what is
called depreciate it. You can depreciate the portion of the
property that is real property, not the land. So you
buy a property and it's priced at three hundred thousand,
seventy five thousand of them, for talking purposes, is the land.
(49:03):
Two hundred and twenty five thousand is the sticks and
bricks residential property. The IRS says, you take that amount
of money, the amount for the sticks and the bricks,
and you divide it by twenty seven point five years,
and you can subtract that amount off your taxable income
every year I mean off your gross income. I'm sorry,
(49:28):
and thereby you save in taxes. That's going to be
another three to four percent return on investment. So I'm
telling you how to get seven to eight percent return
on investment if you had no cash flow. Now I
can't promise appreciation, but if we had the same appreciation
(49:49):
for the next five years that we've seen in the
last two years, it's going to be somewhere in the
four to five percent range per year that the property upates.
Let me make an assumption. If you bought an investment
property for positive cash flow, and you put down twenty
(50:09):
five percent down and it appreciated four percent a year,
you're getting a sixteen percent return on your investment based
on the cash that you invested in the property. Follow me, Now,
you're not getting your return on investment. You're getting because
(50:29):
it went up in value. It's the whole property that's
going up in value, not just the down payment that
you put in. So if you're getting a four percent
appreciation on a property you put twenty five percent down,
that's a sixteen percent return on investment through appreciation, principle,
(50:50):
pay down another four percent, tax deduction another three percent.
Now you have a total of a twenty three percent
annual return on investment. You hold that property for a
certain number of years, you refinance the property, you can
pull one hundred percent of all the cash out of
(51:10):
the property that you invested in. It still own the property,
still have the cash flow, and you now have an
infinite return on investment because you have none of your
own cash tied up into the property. It's the magic
of real estate, folks. I'm rather passionate about real estate.
I hope you can tell. And I want to be
(51:32):
of service to you. For the parents that are out
there listening, or grandparents who have kids or grandchildren that
have not bought real estate yet. You want to make
sure you set up a meeting, a phone meeting, a
personal meeting with you, me and your kids or your grandkids.
Let's get them owning some real estate. And if they
(51:53):
don't have the ability to do it on themselves, let's
get you as a participant so that they can be
the one to get the best owner interest rate, owner
financing rate, excuse me, owner occupant rate. And you just
help them out financially and they may refinance the property,
may resell the property, or repay you the proceeds at
(52:15):
some point in the future. But reach out to me
so we can have a conversation. Regardless of who you are,
it's listening to my show. If you have an interest
in real estate, let's have a conversation. Call me at
eight four three three two seven three zero one seven
or email me Rickatrickwillis dot com, text me, reach out
(52:39):
to me in whatever way works best for you, and
I'll be back in touch. And do that right now
while you're listening to the show, so you don't forget.
I have people that say, well, I didn't want to
contact you over the weekend. Well, guess what, I'm a realder.
I'm used to working weekends and if I choose not
to return your call, let that be on me. Don't
(53:01):
you wait and hesitate. I'll look forward to speaking with you.
Have a great weekend.
The following is a paid commercial program on ninety four
to three WSC. The views expressed by the host of
this program do not necessarily reflect the views of iHeartMedia
ninety four to three WSC it's advertisers, sponsors, or management.
This is the Real Estate Show with Rick Willis, a
show about home sales, mortgage issues, investing in everything about
the American dream and that means a lot someone who
(00:23):
enjoys radio and really enjoys your program. And now The
Real Estate Show with Rick Willis on ninety four to
three WSC.
Speaker 2 (00:33):
Hello Charleston, Welcome to the Rick Willis Real Estate Show.
I am Rick Willis, I'm your host. And the combination
of more inventory and interest rates down, anybody that has
been thinking of buying a home should not be waiting
any longer. Now. If you think the interest rates might drop,
(00:55):
and they might drop, you don't wait until they drop.
And here's why. When you go out and your contract
to buy a home, the contract of sale that you
sign is going to require that you apply for a
loan within a few days of getting your contract signed.
(01:15):
And when you apply for a loan, the lender that
you work with is going to ask you a question.
They're going to say, do you want to lock your
interest rate or float it? Locking it means you're going
to get a preset interest rate that you and your
lender determined. If you say float the rate, that means
(01:38):
you're not locking in the rate because you're betting on
the interest rate declining some more. So, if you have
an offer on a property and you believe the interest
rates will decline, you float the interest rate and you
don't lock it in, and then you watch what the
Federal Reserve does, you listen to what your lender tells you,
(02:01):
and at the right time, you locked the loan in. So,
for example, if you're going to go out and buy
a home and it's going to be the first week
of October, and you find it property you like, you
sign a contract, you apply for the loan, and you
might have built in there a forty five to sixty
(02:22):
day closing period just to allow the interest rate to
decline some more. That would be a wise decision to
make to buy now, float your rate and bet on
the fact that maybe there'll be another quarter or a
half a percent decline in the interest rate before you
actually have to lock in your rate. My personal belief
(02:44):
is that once we reach the calendar year twenty twenty five,
all the floodgates are going to open and there's going
to be sales left and right. Remember what happened during
the pandemic, all the people that came out of the
woodwork to buy I believe the same thing is going
to happen in twenty twenty five. There's been such a
(03:06):
great number of people that have been waiting for the
interest rates to decline, and woe and behold, the Federal
Reserved did us a favor here this past week, and
they did help us with a declining interest rate, and
you want to take advantage of that. I personally have
(03:27):
a VA loan on the house that I live in.
My interest rate when I bought the house close to
a year ago was a little over six percent. I
contacted my lender this past week just to say, if
I wanted to refinance, what could I get as an
interest rate? And they told me I could get as
(03:49):
low as five point two five percent, which is exactly,
by the way, one full percentage point less than what
my existing rate is. And the interesting thing is, because
it was a VA loan, they said, no appraisal, no
(04:09):
credit check, and we don't even need to know your
income or expenses. Automatic they can reduce the interest rate.
So anybody out there that is a veteran, either that
has a current loan or will be buying a home,
know that it's very easy and very favorable to reduce
(04:31):
the interest rate when the rates come down. So again
I say to you, don't wait. So let's talk about
financing a little bit. When you buy a home. There's
two items that require cash. One is the down payment
and the other is what is called closing costs. And
(04:52):
I want to speak to you about both of those.
First of all, let me say that as a realtor
when I'm not here on the radio, I'm an active
practicing realder. A seller can pay all of the closing costs.
Seller can't pay your down payment, but the seller has
(05:14):
the ability to cover all of your closing costs up
to about six percent of the purchase price. If you're
VA or FAHA or USDA conventional loan, they can go
up to three percent of the purchase price. So down payment.
Several different ways to buy with the no down payment.
(05:37):
If you're a veteran or National Guard past present, you
can buy with VA financing zero down payment required, one
of the big benefits of having been in military service.
If you're not eligible for VA, you can buy one
hundred percent financing through something called USDA Financing United States
(06:02):
Department of Agriculture, and that's primarily for homes that are
on the periphery of the suburbs or out in rural areas.
But rural areas could mean Carnes Crossroads. Rural areas could
be the outer areas of Summerville, so it doesn't have
to be way out, just on the periphery. USDA financing
(06:27):
zero down payment sellers can pay the closing costs. How
else do you get your down payment? Well, if you
obviously have savings, I don't have to tell you about that,
but your retirement account, those of you that have a
four to oh one K, you have the ability to
either withdraw money from your retirement account or you can
(06:51):
borrow against the assets in your account. You have to
make the decision as to what's best for you. But
I would tell you make sure that you don't stop
buying a house because you'd rather put money in the
stock market, which is what a four oh one K
is now. If you don't have access to a savings account,
(07:17):
and you don't have the retirement account, but you still
need some money. I would tell you tap the parents, grandparents,
or relatives that you know and see if they'll give
you a friendly, good old boy private loan. And they
can also give you a gift. Better to have a
(07:38):
gift than a loan, right, yep, I'd agree with that.
Some of you actually have the ability with your credit
cards to get a cash withdrawal from your credit cards.
I'm not telling you that's a great thing to do,
but I'm just trying to give you some sources of
where you can get money for a down payment. And
(07:58):
one of the newer things that's come along that wasn't
around years ago is something called equity sharing. There are
people that will put up a down payment or a
portion of the down payment and claim an equity in
the home. And although you want to own your home
(08:19):
completely yourself, better to use one of these equity sharing
situations than not buy at all. Now, you might want
to be in a very very nice, plush home in
a very very nice area with a great school system,
but if you look at what the monthly payments would
(08:40):
be or the cash requirement you're going to say, I
really can't afford that. Don't wait and start saving money
until you can buy your ideal home. You want to
make sure you buy something now. The key to real
estate is getting started young. Get started early and buy
some thing that's going to build equity through a combination
(09:03):
of your monthly payments combined with appreciation. If you have
to go to a different type of property than what
you wanted, will do that. Better to have a condo
or a townhouse than wait for the ideal single family detached.
Buy something it's smaller than what you wanted, or go
(09:24):
to a different part of town than where you thought
you wanted to be. But get in the game. That's
the secret. Younger, the better buy a house. I see
a commercial on television with a young couple talking to
their financial advisor, and their choices are to take a
honeymoon to Africa or to go buy a property a
(09:46):
ranch in Montana, and I would say to you, go
for the real estate.
Speaker 3 (09:54):
Now.
Speaker 2 (09:55):
We're going to talk more about buying a home and
selling a property after we come back from the break.
But I want to make sure you know my name
is Rick Willis. I do help buyers buy as a
buyer's agent, and I also list property and if you're
thinking of selling, I'd love to come over like I
did yesterday to a homeowner and give them tips and
(10:16):
pointers on what they can do to make their property
more saleable. Pick my brain. It's free of charge. Call
me at eight four three three two seven three zero
one seven. Email me please Rick at Rickwillis dot com.
And if you want to know more about me, visit
my website Rickwillis dot com. Read my bio and you
(10:39):
can access our local multiple listing service directly from my
website Rickwillis dot com. Folks will be right back after
this break. Hello, this is Rick Willis. I assume you've
been listening to the Rick Willis Real Estate Show. If so,
are you considering buying, selling, or investing in real life state?
(11:01):
If so, you want to make sure you request a
copy and read my special reports designed especially for those
people looking to buy or sell or invest in real estate.
Special Report number one is about buying real estate, and
you'll discover how to get your best buy and avoid
the ten biggest mistakes home buyers make. Special Report number
(11:26):
two is for those people thinking of selling their property.
You'll discover how to get your home sold quickly and
net the most money. And if you're thinking of investing
in real estate, you'll discover why you want to own
income producing property and what to buy for the safest
(11:46):
place to put your money. You'll also discover how to
use your retirement account for a one k and ira
without having to pay a penalty to buy and own
income producing property. Please note I'm saying income producing property,
I'm not simply saying investment property. To get a free
(12:07):
copy of any of the special reports I just mentioned
about buying, selling, or investing in real estate, please text
me at eight four three three two seven three oh
one seven or email me at Rickatrickwillis dot com. Additionally,
please visit my website at Rickwilis dot com. You'll learn
(12:32):
about my background as well as accessing multiple listing. Again,
I repeat, please don't buy, sell, or invest in real
estate without requesting and reading your special report on buying, selling,
or investing in real estate. Text eight four three three
two seven three zero one seven or email Rick Atrikwilis
(12:54):
dot com. When you text or email me, please make
sure you request a very paci special report on buying, selling,
or investing and I will turn around and email you
the special report. Thank you. The interest rates i've dropped,
I think they'll drop again before the first of the year.
(13:17):
But you don't wait on that. You go out and
your contract for something. Now float the rate where you
don't lock it in, and take advantage of the fact
that there's a good number of inventory out there. I
don't know how many of you were around during the pandemic,
even tracking what was happening in real estate, but there
were multiple offers on properties, properties sold for over asking price.
(13:42):
It was a great time if you were a seller,
and a nightmare if you were a buyer. I believe
theoretically that could get that way again after the first
of the year. So get ahead of the curve and
go shopping. Now, get yourself a house before the rush
comes after the first of the year. Now we were
(14:04):
talking about buy something even if you can't afford or
choose to pay what the monthly payments are for what
you'd like to have. Buy something. Now you've heard the
expression before when you got a lemon, make lemonade. Well,
I'm going to give you an example. In real estate,
(14:25):
you can't afford or you don't want to pay the
price of what the payments will be for what you
really like, So treat it like it's an opportunity for
you to go out and look for a completely different
kind of property. If you were to come to me
and say, Rick, you know, here's our goal. We really
want to have this kind of property. It costs five
(14:47):
hundred thousand dollars, but we don't today want to make
that monthly payment even though we're capable of it. I
would say, well, let's go out and find you something
in the two fifty to three fifty range that you
don't want to live in for a long time, but
can you tolerate it for a year. And if you
(15:09):
look at the other choice of continuing to rent or
live with mom and dad, that might not be a
bad choice. To have your own place. That's not what
you ideally want, But you and I are going to
have a conversation about the fact that the moment you
decide you don't want to live there anymore, we're going
to convert that property into a rental property and income
(15:31):
producing property, and it'll be part of your retirement portfolio.
So we're going to look at homes and you're going
to ask me even though you're going to live in it,
what would this house rent for after we're no longer
living in it. So we'll get you an ideal property
to live in short term, a house that you can
live in for a year and a day and then
(15:54):
either turn around and sell that property or refinance the property,
depending upon your timing and what the market value is,
and you have a rental property. As a matter of fact,
I talked to somebody yesterday who is a mature individual,
not a first time buyer, who said that sounded like
(16:14):
something interesting to do. Go out and find a multifamily
property where we can live in one unit and run
out the others, live there a year and a day,
move out of that into a home that we really
want to be in, and have an additional rental property
for only three percent down payment. That's right. If you
(16:38):
go out to buy a property for an investment with
no mortgage insurance, you're going to have twenty percent down
or twenty five percent down. If you buy the property
and live in one of the units of the multifamily property,
you can buy that for as little as three percent
(16:58):
of the purchase price as a down payment and use
the income from the other properties to help you qualify
for the loan. One of life's better deals. I've helped
a number of people do that over the years, and
it's amazing. People that were previously thinking they had to
save money. Now after several years, they have one hundred
(17:22):
thousand plus inequity and they can either refinance that property
and pull tax free cash out, or they can remain
in that property or move out and rent the unit
that they were living in. So anybody out there that
is single or married and the young kids are no
longer around, you might want to consider something like that.
(17:45):
Buy a multi family property, live in one unit, get
a thirty year fixed rate loan. You can buy that
property for as little as three percent down payment, and
depending upon the number of unites, you could buy up
to a million dollars for only three percent down thirty
(18:05):
thousand dollars down payment up to a million dollars. And
remember you're using the income from the other units you're
not living in to help pay for the mortgage. And
at certain point in time, you might choose to move
out of that property that you were in as an
owner occupant and rent those respect and rent that respective
(18:25):
unit out. You want to make sure as young as
possible that you start investing in real estate. How many
of you in the room? In the room, I feel
like I'm doing a seminar. How many of you listening
have ever heard of the name Charlie Munger or have
you heard the name Warren Buffett. Warren Buffett is one
(18:47):
of the fifth wealthiest person on the planet. Supposedly, Charlie
Munger was his business partner. They own a company called
Berkshire Hathaway and Warren Buffett encourages people to buy assets
that bring in income. His advice to people buy things
(19:09):
that bring in income. That's why when he buys a company,
he looks for the income that company can generate. He's
the stock market guy, not a real estate guy. Dave Ramsey.
Have you ever heard of Dave Ramsey. Well, he's a
guy that gives a lot of advice on getting out
of debt. Dave Ramsey, it is reported, owns over three
(19:33):
hundred million dollars of income producing real estate. He buys
his mutual funds. He invests in real estate. So your
people that are the smartest on the planet know the
difference between speculating and investing. Warren Buffett says, if you
(19:53):
buy real estate, you don't ever have to resell it
because it's got it built in income coming through it,
and its growth is automatic. So the ideal investment to
have is something like real estate, where you have income
coming in while you own it and it's still appreciating
in value. When you have to buy something and hope
(20:16):
it goes up in value and then resell it to
make a profit, you're not investing. You're speculating. People talk
about investing in the stock market. Not really, you're really
speculating in the stock market. You have a mutual fund,
you have a retirement account, but it's stock market based.
I'm sorry, but you're speculating. You have to buy it
(20:39):
at the right time, and even if you're in there
holding it for the long term, you still have to
resell it at some point in the future, don't you
To make a profit real estate, you never have to
resell it. The smartest people on the planet by income
producing real estate with the understanding that they may never
(21:00):
resell the property. And you might say, well, how do
you make a profit if you never resell it. Answer,
let's suppose you buy something and you have anywhere from
three to seven percent return on the cash that you invest,
and the property does appreciate automatically, because that's what happens
(21:23):
historically to real estate. At a certain point in the future,
you can refinance that property and pull money out of
the property after it's gone up in value, and refinance
proceeds are not even taxable. Why because it's your money
you're taking out tax free. When my kids were growing up,
(21:44):
I didn't save money for their college. My wife and
I bought a property and designated the property as their
respective college fund. And I know my son for the
property that we designated as his fund every now and then.
It was an old three unit property in Baltimore and
(22:05):
it needed painting. So we told my son, send your
college education needs painting. Can you round up some of
your buddies, let's go up there and get it done.
And he did and we got the painting done. The
bottom line of the bottom line, you want to teach
your kids as young as possible about investing in real estate.
(22:26):
My son at this moment owns about twelve separate income
producing properties. He's done a better job than his old
man has because he started young and he just keeps
buying and he keeps buying more. He doesn't sell. He
bought him with the right interest rate, at the right time,
in the right city, and has the right management. And
(22:49):
he also has his retirement account, but he takes money
periodically out of his retirement account to buy more real estate.
And he'll continue to do that forever and ever. He'll
buy a piece of property for his son's college education. Folks,
this is Rick Willis, and I am the guy that
(23:11):
is on the radio. But when I'm not on the radio,
I help people buy and sell property, commercial property, vacant land,
income property, primary residence, second home. How can I help you?
Please remember to reach me at Rickwillis dot com or
call me eight four three three two seven three zero
(23:33):
one seven email me Rick at Rickwillis dot com. And folks,
don't wait till after the show's over to call me.
Call me right here on this break. Leave me a
message on my voicemail or email or text, and let's
plan a time we can chat in greater depth this week.
We'll be right back after this break. Hello, this is
(23:57):
Rick Willis. I assume you've been listening to the Rick
Willis Real Estate Show. If so, are you considering buying,
selling or investing in real estate. If so, you want
to make sure you request a copy and read my
special reports designed especially for those people looking to buy,
(24:17):
or sell or invest in real estate. Special Report number
one is about buying real estate, and you'll discover how
to get your best buy and avoid the ten biggest
mistakes home buyers make. Special Report number two is for
those people thinking of selling their property. You'll discover how
(24:39):
to get your home sold quickly and net the most money.
And if you're thinking of investing in real estate, you'll
discover why you want to own income producing property and
what to buy for the safest place to put your money.
You'll also discover how to use your retirement account for
(24:59):
a one and IRA without having to pay a penalty
to buy and own income producing property. Please note I'm
saying income producing property, I'm not simply saying investment property.
To get a free copy of any of the special
reports I just mentioned about buying, selling, or investing in
(25:19):
real estate, please text me at eight four three three
two seven three oh one seven or email me at
Rick Atrickwillis dot com. Additionally, please visit my website at
Rickwillis dot com. You'll learn about my background, as well
(25:41):
as accessing multiple listing. Again, I repeat, please, don't buy, sell,
or invest in real estate without requesting and reading your
special report on buying, selling, or investing in real estate.
Text eight four three three two seven three zero one
seven or email Rick Atwrequillis dot com. When you text
(26:03):
her email me, please make sure you request a very
specific special report on buying, selling, or investing, and I
will turn around and email you the special report. It's
important that you know that last year about this time,
I had a stroke and the blockage was on the
right side of my brain, which means that it negatively
(26:26):
impacted the left side of my body, my left leg,
my left arm, my left wrist, and the left side
of my mouth. So if I don't sound like the
same old guy that you're used to hearing from years ago,
you'll know why. But I'm still helping people buy and
sell real estate. I'm still alive and thank God that
(26:47):
I have the opportunity to share what I have learned
over a lot of time in the real estate business.
I'm currently writing a book on the subject of investing
in real estate, and every now and then I talk
to you about one of my chapters in the book,
And there's a whole chapter in the book that I'm
(27:08):
writing about saving versus speculating versus investing, and I want
to have that short conversation with you right now on air. Now,
everybody is taught from being a young person to save money,
save money. But you know what, saving money is not
(27:31):
the way to get rich. It's certainly not the way
to even become upper middle class. If you're making enough
money to have a sizeable savings, the question is why
aren't you investing it. See, people that do well financially
will save money and they get enough to invest thing,
(27:52):
and then they convert their savings to an investment. Now,
the best you're going to get in save it is
about five percent, and with the interest rates declining over
the next number of months, that amount is going to
continue to decline. So I'm going to suggest to you
that five percent, even when you can get it, is
(28:15):
not enough. You See, you pay taxes on your interest
that you get, don't you. And there's something called inflation.
So when you look at the reduced value of the
dollar based on inflation, combined with the taxes that you'll
pay on your small amount of interest, you're really not
making any money. You're really not getting in a head
(28:37):
by savings. It's an illusion by looking at the balance
sheet of what you have in a savings account. Now,
I said, I we're going to draw the distinction between
saving and speculating and investing. Speculating is where you put
your money into something and you have to buy it
(29:00):
the right time. Timing is important in speculating. Then what
you buy has to go up in value for you
to make a profit, and you have to look at
the timing of when you sell it, and you have
to sell it to make your profit. That's speculating. I
have speculated in real estate and made money. I have
(29:22):
speculated in real estate and lost money. Don't confuse speculating
with investing. There are people that speculate in bitcoin, people
that speculate in lots of different things. But at the
end of the day, you want to You don't want
to speculate with your money. You want to invest. Investment
(29:46):
means that you have income coming in from where you
put your money. Warren Buffett will invest in companies that
make a profit. You, as an individual investor, choose to
invest in a company that pays a dividend that would
be an investment. You can buy an income producing property
(30:10):
that gives you positive cash flow, that would be an investment.
So I'm going to suggest to you that you evaluate
only investments, not speculative ventures. You speculate with the amount
of money that you can lose, and you invest with
things that are going to bring you profit where you
(30:30):
don't lose. Warren Buffett's philosophy on money. Rule number one,
don't lose money. Rule number two. Reread rule number one,
don't lose money. Now, despite the fact that the stock
market has been increasing in value for many, many years now,
(30:52):
all the experts say that it's due for a correction.
Are you going to wait until there's a correction and
you lose ten, twenty, thirty forty percent of your stock's
value or your mutual funds value? Or are you going
to look at taking money out of your retirement account
that is stock market based, paper asset based and put
(31:15):
it in a tangible asset like real estate. Now most
of you don't know this, but you can take your
own four oh one K, your IRA or other retirement account,
and you have the ability if you change custodians to
what is called a self directed retirement account, self directed
(31:39):
four oh one k, self directed IRA, that you can
buy art, you can buy classic automobiles, you can buy bitcoin,
you can loan money to people. You can buy income
producing real estate with your retirement account, and you need
(32:01):
to make sure you're looking out for that. If you
want to get more educated on this, google the term
self directed retirement account or self directed four h one
K or self directed IRA. You see the financial advisor
(32:21):
that you go to or the company that advises you
on your selections for your mutual fund, they don't know.
I have a good friend of mine who's a financial advisor,
and I remember the first time I asked him. I said,
out of all the things that you can advise your
clients to buy or invest in, where do you put
(32:43):
your money? And he laughed and said in the bank.
And I thought to myself, if that doesn't make a statement.
Anybody that would tell you to put your money in
your bank, who's a financial advisor, maybe you shouldn't be
listening to that person. One of the nice things about
real estate is that even though it has from time
(33:06):
to time dropped in value, it only has done so
on a few occasions, and it always recovers The last
time there was any significant drop in real estate values
was two thousand and eight, and real estate market got
hit real hard as well as a stock market. The
(33:27):
difference is if real estate drops in value and you
own income producing real estate, the income does not stop.
So if you're retired, thinking of retiring, or want to
start your retirement savings, start it with real estate and
you don't want to try to get it paid off.
(33:48):
I had someone the other day say, well, I'm going
to take some money and pay off my property. I said,
what is the interest rate on your loan? And they
told me, and I said, why would you do such
a stupid thing? I didn't actually phrase it that way,
but at the end of the day, most of you
have never computed what it's possible to earn in real
(34:11):
estate compared to the stock market or anything else. My son,
when I had him on the phone with me one time,
I said, Chad, let's compare your real estate investment with
your four oh one K. And we went back and
looked at how many years he'd been contributing to his
four to oh one K where he started, how much
(34:32):
he contributed, and we figured he averaged about eight percent
per year after administrative fees in his retirement account. Now
there's a whole lot of people that would say that's
pretty darn good if you can average eight percent. Yeah,
but the correction is still coming. And what would that
(34:53):
look like compared to real estate? And you see, the
only people that would think that's good have never computed
the return on investment in real estate. Now, before I
go through this in detail, I want to do some
housekeeping with definitions. There's something called return on investment. There's
(35:16):
return of investment, and there's return on equity, and I
want to draw a distinction between those. If you put
money in a bank at a savings account at five percent,
your return on investment is five percent? Correct, the answer
is yes. But in real estate it's not that simple.
(35:38):
It actually is that simple. It's just the fact that
you get a return on investment more than just cash.
But let's go through the definitions here. Return on investment,
where do you put your money in? What are you
getting back in return as a dividend? What are you
getting as a distribution? Return of investment means that if
(36:03):
you put money and you invest it, what are your
chances of getting back what you put in? Warren Buffett says,
don't lose money. I don't know of a better place
to put your money to make sure you're going to
get a return of investment than income producing real estate
return of investment. And there's another concept called return on equity. Now,
(36:31):
some of you listening have houses that are paid for.
Some of you listening have investment properties that, if they're
not paid for, have a lot of equity in them.
You see, your property is going to grow and appreciate
at the same rate whether you have no equity in it,
a little equity, or a lot of equity in it.
(36:52):
Most of you should either be selling some of your
properties and reallocating your equity to other properties, or you
should be borrowing against it. And if you've got a
property with a lot of equity with a low first mortgage,
then you want to set up an equity line of
credit and borrow on the equity and still keep your
(37:14):
first mortgage in place and use that equity to buy
additional property. I had someone not very long ago said,
if I had a choice of paying cash for a
property or getting a mortgage, what would you advise? And
I said, well, it depends what is your goal? Is
(37:35):
your goal income today or is your goal future growth
of your asset or a little of each. And their
answer was, well, I don't need the income today to
live off of. And I said, well, in that case,
I would tell you to make sure you get a
mortgage and even if you have breaking even cash flow,
(38:01):
better to put fifty percent down payment on two separate
properties and own more assets that will appreciate than having
one property that's paid for.
Speaker 1 (38:15):
You.
Speaker 2 (38:16):
See, you never want to be adverse to debt in
real estate, providing you're not paying the debt. Said differently,
when you buy income producing real estate, you have a
tenant that is making your mortgage payment, So debt is
a good thing. So you're better off to buy two
properties with fifty percent down payment in buying one property
(38:40):
and have no mortgage at all. Why because you now
have two assets that are appreciating, two assets that you
have principal reduction working, and two assets that you can
take what is called depreciation and write off some ordinary
income passive losses and pay less an income. Text. Now,
(39:03):
I'm going over this kind of quickly, and if anybody
wants to call me during the week and have a
more detailed conversation on this or look at how it
applies to you personally. I welcome you to do so.
You know I do this show every week and I
invite you to contact me. I can't tell you the
number of people that eventually contact me and say I
(39:24):
wish I had done so long time ago. Well, I'm
inviting you right now to call me, right here, right now.
Leave me a message of my voicemail, leave me a text,
leave me an email eight four three three two seven
three zero one seven. Email me Rick Atrickwillis dot com.
(39:45):
Let's pick a time when we can chat about how
I can help you buy your primary home and income
producing property. Help you buy a property for your business
if you're in business for yourself. I know real estate.
I can save you money, I can make you money,
but you need to talk to me. A financial advisor
(40:06):
cannot educate you the way I can about real estate.
And you don't want your financial advisor attempting to educate
you about owning income producing property. That's not their area
of expertise. So reach out to me. I'll look forward
to hearing from you, and we'll finish up right after
this break. Hello, this is Rick Willis. I assume you've
(40:31):
been listening to the Rick Willis Real Estate Show. If so,
are you considering buying, selling, or investing in real estate?
If so, you want to make sure you request a
copy and read my special reports designed especially for those
people looking to buy, or sell or invest in real estate.
(40:52):
Special Report number one is about buying real estate, and
you'll discover how to get your best buy and avoid
the ten biggest mistakes home buyers make. Special Report number
two is for those people thinking of selling their property.
You'll discover how to get your home sold quickly and
(41:13):
net the most money. And if you're thinking of investing
in real estate, you'll discover why you want to own
income producing property and what to buy for the safest
place to put your money. You'll also discover how to
use your retirement account for a one K and ira
(41:33):
without having to pay a penalty to buy and own
income producing property. Please note I'm saying income producing property,
I'm not simply saying investment property. To get a free
copy of any of the special reports I just mentioned
about buying, selling, or investing in real estate, please text
me at eight four three three two seven three oh
(41:57):
one seven or email me at Rickatrickwilis dot com. Additionally,
please visit my website at Rickwillis dot com. You'll learn
about my background as well as accessing multiple listing. Again,
I repeat, please, don't buy, sell, or invest in real
(42:19):
estate without requesting and reading your special report on buying,
selling or investing in real estate. Text eight four three
three two seven three zero one seven or email Rick
Atriquilis dot com. When you text or email me, please
make sure you request a very specific special report on buying, selling,
(42:42):
or investing, and I will turn around and email you
the special report. Thank you. Welcome back quarter Back Charleston.
In the final segment of today's.
Speaker 3 (43:05):
Well real Estate, Well, we've talked a little bit about
buying them, a little bit about if your first time
buyer get out into the marketplace.
Speaker 2 (43:16):
I believe and I believe we're going to see pete
maybe not in depth, but we're going to pull lot
of people flocking into after the first of the year.
I'm thinking about it. While the selection is there, Go
(43:37):
out right now, contract for something. Float the interest rate
anywhere from thirty to if you believe the rates you're
going to drop so you can still take advantage of
the interest rate drop key is as possible game. The
(43:58):
younger you are, the more you want to jump into
real estate. I bought my first property in my life
when I was twenty four years old. I lived in
Time and the first property I bought was a four
bedroom brick house on sixty three acres in western Pennsylvania,
(44:20):
Somerset County, near Myersdale, not too far from where the
nine to eleven plane went down. Paid twenty thousand dollars
for the property, subdivided the house and three acres off
subdivided the balance of the land and two parcels. Made
a profit, went out and bought a sixty acre e
(44:42):
gives me a ninety acre parcel. Did the same thing
again at the end of the day. You want to
put your money in real estate, The key is to work,
make money, save the money until you have enough money
to invest in property. And remember, when you're young and
(45:04):
you don't have a lot of obligations, the best way
to get started in investing in real estate is to
buy a property that you intend to live in, very
minimal down payment, could be zero down payment, and then
buy that with the intention you're going to live there
one year and a day move out and you're going
(45:27):
to rent that property, and you can do the same
thing again, buy another property if you want, one year
in a day, zero down payment, live there a year
in a day, rent it and do it again. Or
you go out and you consider, as certain people have
done them with my help, a multi family property. Live
(45:51):
in one half of the duplex, rent out the other,
and much cheaper than trying to buy an individual single
family home, then turn around and move out of that
a year and a day later, or if you choose,
stay there for the long term and live very frugally.
Before I finish today's show, I want to make sure
(46:13):
I educate you on what the total return on investment
can be. Last segment, I talked about definition of return
on investment, return on equity, return of investment. You put
your money in a savings account at five percent, you're
getting five percent return. You buy a stock that has
(46:36):
a dividend, and the dividend is four point three percent,
that's your return on investment. In real estate, it's easy
to get twenty to thirty percent or more return on
investment safely. Now you might want to take some notes
on this so you can tell your spouse if she's
(46:57):
not listening if he's not listening. But there's four different
ways you get a return on investment in real estate.
One of those four is called a cash return. You
buy a property, you have it rented, and you have
more income coming through that property than you have expenses,
(47:18):
and you get a return on investment. Now, depending upon
how much downpayment you put down, you could have as
little as two or three percent return to as much
as six or seven percent return on cash invested. And
(47:38):
it's not uncommon today if you're limited for cash, that
you're going to get a property today that would normally
be a very good income property. It's just that the
rates are a little high and you get zero return
on cash. Let me make an assumption that you get
zero return on cash. Why would you buy a property
(47:59):
like that? Answer? Keep listening. Let's assume for a minute
that you do get a loan and you have a
mortgage on that property. A portion of your mortgage is
paying the principal down every month. Might only be one
hundred and fifty dollars, It might be two hundred and
fifty dollars, it might be three hundred and fifty dollars
(48:21):
per month of principal reduction depends on your interest rate
and the price point. But let's look at what the
return is. You see, the tenant's paying that money and
it's your money. So your principal paydown, you can get
about a four percent return on your principal reduction. When
(48:42):
you own income producing property, you can do what is
called depreciate it. You can depreciate the portion of the
property that is real property, not the land. So you
buy a property and it's priced at three hundred thousand,
seventy five thousand of them, for talking purposes, is the land.
(49:03):
Two hundred and twenty five thousand is the sticks and
bricks residential property. The IRS says, you take that amount
of money, the amount for the sticks and the bricks,
and you divide it by twenty seven point five years,
and you can subtract that amount off your taxable income
every year I mean off your gross income. I'm sorry,
(49:28):
and thereby you save in taxes. That's going to be
another three to four percent return on investment. So I'm
telling you how to get seven to eight percent return
on investment if you had no cash flow. Now I
can't promise appreciation, but if we had the same appreciation
(49:49):
for the next five years that we've seen in the
last two years, it's going to be somewhere in the
four to five percent range per year that the property upates.
Let me make an assumption. If you bought an investment
property for positive cash flow, and you put down twenty
(50:09):
five percent down and it appreciated four percent a year,
you're getting a sixteen percent return on your investment based
on the cash that you invested in the property. Follow me, Now,
you're not getting your return on investment. You're getting because
(50:29):
it went up in value. It's the whole property that's
going up in value, not just the down payment that
you put in. So if you're getting a four percent
appreciation on a property you put twenty five percent down,
that's a sixteen percent return on investment through appreciation, principle,
(50:50):
pay down another four percent, tax deduction another three percent.
Now you have a total of a twenty three percent
annual return on investment. You hold that property for a
certain number of years, you refinance the property, you can
pull one hundred percent of all the cash out of
(51:10):
the property that you invested in. It still own the property,
still have the cash flow, and you now have an
infinite return on investment because you have none of your
own cash tied up into the property. It's the magic
of real estate, folks. I'm rather passionate about real estate.
I hope you can tell. And I want to be
(51:32):
of service to you. For the parents that are out
there listening, or grandparents who have kids or grandchildren that
have not bought real estate yet. You want to make
sure you set up a meeting, a phone meeting, a
personal meeting with you, me and your kids or your grandkids.
Let's get them owning some real estate. And if they
(51:53):
don't have the ability to do it on themselves, let's
get you as a participant so that they can be
the one to get the best owner interest rate, owner
financing rate, excuse me, owner occupant rate. And you just
help them out financially and they may refinance the property,
may resell the property, or repay you the proceeds at
(52:15):
some point in the future. But reach out to me
so we can have a conversation. Regardless of who you are,
it's listening to my show. If you have an interest
in real estate, let's have a conversation. Call me at
eight four three three two seven three zero one seven
or email me Rickatrickwillis dot com, text me, reach out
(52:39):
to me in whatever way works best for you, and
I'll be back in touch. And do that right now
while you're listening to the show, so you don't forget.
I have people that say, well, I didn't want to
contact you over the weekend. Well, guess what, I'm a realder.
I'm used to working weekends and if I choose not
to return your call, let that be on me. Don't
(53:01):
you wait and hesitate. I'll look forward to speaking with you.
Have a great weekend.
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