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Serial Entrepreneur Club – EP67: Million-Dollar Real Estate Tips & Tricks


Today we have two serial entrepreneurs who are gonna be joining us in the real estate industry. And if you’ve ever thought about running real estate or investing in real estate or, you know, simply understanding real estate and what impact it can have today is the show for you.

Now we are startup club and we are a closing in, on 1 million members. So if you’re not a member of startup club, please click on that little greenhouse above my head and Michele’s head and let’s get you. Uh, let’s get you a member of the club if you haven’t already done so as well, please go to

Michele, if you could pin the link. And, uh, sign up for that mailing list, cuz we get some phenomenal speakers like we have today and you would never even know these speakers came on if you were not on that mailing list. And uh, that’s something we send out maybe once every two weeks when we have a phenomenal speaker.

Um, today we have that, uh, with the gentleman that are coming [00:01:00] on to talk about real estate, uh, they are millionaires in their own, right? And they have, they’re gonna share with us a lot of secrets and we do that on this show. Sometimes we look at a particular area. We did that with Airbnbs. If you’re interested in Airbnbs, we did a great show.

You can check it out on We did it, um, with tokenizing real estate, uh, at show on that, which I thought was just fascinating, a new way of raising money for real estate. Uh, and uh, we do it from time to time. Uh, and today it’s all about real estate. Now don’t want kick it off here. Uh, and if we can pull Gorn and Hey Andrew, how you doing?

Gore’s there. If we can pull ’em up, Michele. Make Jeff a moderator and Olivia, that would be great, but I just wanted to read off, um, a stat that I had heard 90% of all millionaires become. So through owning real estate, think of this 90% more money’s been made in real estate than at [00:02:00] any other industrial investments combined.

So we often think of an entrepreneur as someone who, um, as there we go, we getting Gorn on stage go you’re there, Andrew? Yes, I’m here. Awesome check. And just check with you. Gorn you you’re you’re on stage there, the mutes on the bottom, right? So this is Gar, like, as we’ve seen before with some of our top tier guests, uh, speakers that are pretty new to club.

Awesome. Can you hear me? Great. Great. As I hear you perfectly, we hear you loud and clear. So we’ll kick, we’ll kick it off. Know I I’ve known go garden. For about 15 years. And, and here’s a guy who came to this country with virtually nothing. I mean, no money at all. Hundred dollars hundred dollars. Not, no.

Okay. Okay. You’re gonna tell a story. I’m I’m introducing you. So a hundred, you know, he comes with a hundred dollars. He comes into Fort Lauderdale and take it away. Goran. Just give us, tell us how you got started in real. So basically [00:03:00] as, uh, uh, a lot of immigrants, uh, the dream of, uh, living in the United States is to own a piece of real estate of us.

So, uh, all the immigrants that would like to have a house duplex TriFlex and, uh, that was my dream. So just quick story. So when I came, I didn’t have any money, so that was 1983. And, uh, uh, um, I met a smart guy, uh, who told me, I said, how did you become rich? I mean, you know, multimillionaire, he lived on a, on a water, one of the aisles in Miami beach, he said, buy a house on a water.

And, uh, in 30 years you pay off your mortgage and you become a millionaire because, uh, the house today you can buy for, let’s say 200,000, 30 years later is worth, uh, million dollars. You paid off your mortgage and you become a millionaire, very simple formula. And I really followed that footstep. So in 1983, when I came, I saved the money.

I still didn’t have a credit in 1985. I made my first purchase, [00:04:00] 490,000 zero money down, you know, just very, uh, like I, I got an option to purchase the house within a year. And in a year of time, the house had appreciated. So I basically bought a house with zero money down today. The house is worth, uh, 3 million.

So it was a little more than, than, uh, it’s, it’s a little more than 30 years, but that was the first, uh, that was the first, uh, uh, introduction into real estate. My first house, I was 25 years old. I bought a house. The closing bank handed me a check for $25,000. I said, God, bless America, have a house. Plus 25 K to start my, uh, other business.

So that’s a quick story, how I started. All right. Great. And Andrew, thank you for joining us. What kicked off your career in real estate? How’d you get started? Uh, well actually I got started in the bottom of, uh, the recession really. I, uh, I graduated, I went to school [00:05:00] in, um, I live in Illinois, lived in Chicago.

I went to U of I for undergrad, graduated there 2006, went to, um, graduate school at university of Illinois, Chicago and graduated there. Uh, in 2008, I was in city planning. And if you remember 2008, probably the worst time to graduate school. And so I was doing, um, unpaid internships and kind of looking for what I was gonna do for a job.

And, um, one of my friends. was starting a real estate brokerage. Um, this was about 2010 and they were looking for leasing agents and I said, I’ll give it a shot. Cause I got nothing else really going on. It was just, it was terrible time and people always knew a place to live. Right. So that was always kind of my, when I got into it, I was like, there’s gonna be people, you know, still renting places.

Um, I didn’t really think I was gonna get into so much of the sales side. Cause I thought it was gonna be something temporary, but it just kind of grew over the years. And then, um, I started doing sales [00:06:00] in 2013, so I’ve been doing real estate sales now for 10 years, um, have jumped around to couple different brokerages to grow.

I was part of a team for a while and um, went back to solo agent, um, in 2019, uh, with Keller Williams, um, still with the same company, Keller Williams over the last it’s almost been five years now. Um, love it. They do a lot of education on. How you can kind of grow your wealth and, and grow outside of just being an agent.

Right? So there’s a lot of talk of what else you can do to get involved, to, to build wealth, to, to, you know, get more involved with real estate outside of just being an agent and, you know, maybe being a managing broker someday. So, um, when pandemic hit, you know, at first it was, there was not a lot of activity and then keep things kind of exploded.

And everyone kind of see what happened to the market, you know, nationally, globally. Um, and a lot of stuff changed in the positive [00:07:00] for us. And we started getting more into the investment side and looking at different avenues to invest, not just in, um, a piece of real estate, but also like, um, private loans and, uh, like, um, invested in the title company that our, um, brokerage started.

So I’m looking into other avenues as well, but sales is still my primary, um, job and, and source of income. All that’s. That’s awesome. So if you’re in the audience and you have a question for either Andrew or Goran, please raise your hand. Or if you’re a real estate investor and you want to share your tip or trick, please raise your hand.

This is a fun Friday. It’s a discussion. Uh, we really want as many people on stage as possible. I know Michele myself and Jeff have a, and Olivia have a lot of questions as well for these two. Um, and we’ll kick some of those off, but feel free to raise your hand also, if you could everyone on stage, um, maybe except you born and Andrew, we don’t really wanna, you mess up your settings there, but if you could share the room on [00:08:00] clubhouse is that, or if you’re not on stage even, and if you think somebody would benefit from this, um, because it’s a topic where we’re really gonna learn these millionaire, these millionaire tips and tricks.

Um, and if you could just share the room, I just did it right now, myself. It’s that second button on the left. You could click it and share the room and we’ll get. We’ll get some more people in here in listening to this. Great. So my first question is, and forward to you Gorin, and I know you went, we talked about your story of how you started out, but they don’t know that you have 1100, I don’t know, 1200 doors today.

You’re probably one of the largest real estate owners in Fort Lauderdale area. What’s your secret sauce? Like what do, what, what do, what do you got? What do you got that you can share with us? So, um, I had a lot of businesses in the past and all the businesses will spread all over the place. So I made the rule that every purchase and every house or duplex or apartment building I purchased, uh, cannot be more than 10 minutes away from my [00:09:00] office.

And I’ve been very disciplined investor and I’ve been following that. So basically I did like a circle around my office. So, uh, in every direction, The east west, north, I would go maximum 10 minutes drive and that’s, that’s the area. Um, I focused on purchasing and I, I became an expert and whenever, uh, I tell the broker that, uh, I will, uh, close on the property.

I never missed. And most properties I purchased, uh, with, uh, my inspection only because, uh, a lot of properties, like what angel said earlier, I did really, really well in 2009, when I start accumulating a lot, I was buying on the average 15 houses a month. And because of proximity of distance between my office and the furthest house, I was utilizing my labor force to the max.

And we were turning every month, uh, [00:10:00] uh, 15 houses basically purchasing, uh, uh, fixing them up, ready for the rent and moving tenants in. So that was my, my, my, uh, focus and, uh, and, uh, you know, I succeeded in that. So. Uh, you know, I, I’m only in Fort Lauderdale and like Lauder hill, only in this small area, there were a lot of opportunities in the other markets, but I, I didn’t wanna lose my focus, especially if the plumbing goes down a roofing or electric, uh, I can, I can send, uh, my.

My guys within, within minutes and everybody who works for me is on my payroll BA basically W2. So I control all my labor force. That’s another very important aspect. So I don’t depend on subcontractors. Everybody who works in my organization works for me, and I manage all my properties. And, um, I have this beautiful software called portfolio where my tenants can go to seven 11 [00:11:00] or Walmart or, or, you know, Walgreens, C pharmacy and pay their rent.

If they don’t have a bank account or ACHs to complicate it, or they don’t have a credit card. So I made it very easy for the tenants, uh, on the payment. And right now I am running with zero vacancy. I think this is my eighth month in a row. Uh, I have zero, zero vacancy, and I have a waiting list of people, uh, uh, you know, waiting for the, for me to purchase more properties like this month alone.

I bought, I dunno, I, I have to calculate, I probably bought like close to 50 properties just in this month alone, 50 doors. So if it’s a duplex, it’s two doors that’s in real estate world. That’s how we count. Well, that’s incredible. Um, I had the same question for, you know, what, what are some of, if, if someone’s in the audience here today and they’re thinking of starting a real estate business or getting involved in an [00:12:00] investment, you know, what are some of the first things they might want to think about?

I mean, if they’re going to get involved in like investing from, from, you know, ground zero, I would say the best way is to look into different ways to house hack. Um, if you’re not familiar with that, it’s basically where you have some kind of way to supplement, um, Payment on your mortgage. And so the easiest way is to buy a duplex or Plex live in one unit, rent out the others or short term rent.

One of the units, um, depend. It depends on the city and the state you live in, but if you do the numbers, right, you focus on, you know, the, the cash flow after all the, after your mortgage payment, after taxes and maintenance expenses and all that. If you could be living for free, you’re on a really good start, um, to building wealth into, into [00:13:00] starting your investment journey.

And you can use the FHA loan, um, put three and a half percent down and, you know, basically get the house at a minimal cost. And then you can hang onto that one. You can rinse and repeat, um, or start looking for other properties. So. Really probably the, the fastest way. And I say that as I’m doing that process right now with my wife, I finally convinced her to kind of go down that road.

I try to get her on board years ago, but, um, she’s now just starting to come around. So, um, hopefully I can have, uh, more firsthand experience with that, but I am helping, I have had clients do it, um, previously and, and more and more people are starting to ask about it because they’re trying to figure out ways to kind of supplement because I mean, the house, you know, house costs have risen so much over the last year or two, especially with the interest rates rising.

So people are looking for different ways. They can kind of supplement that, or, you know, like [00:14:00] even having like an ADU on the property unit, accessory dwelling unit that you can rent out or short term rent or something. These are all, you know, there’s different ways. I mean, you can rent out a. Room in your place, you know, part of your house, there’s lots of different ways to kind of house hack, but that’s kind of like the fastest way to get started.

That’s cool. I never heard of house hack before, you know, and my, my 20, uh, one year old son who’s gone that completed two years of college for architecture. He’s been working at an Arctic architect firm. He’s got $15,000. He wants to use that to put a down payment on, on some type of house. And he’s asking me to help him out.

And I, I, I gave him these two pieces of advice. He said, when it comes to real estate, there two most important things are fi are the buy and the financing, uh, with respect to the buy, we wanna buy cheap. We want to try to get a deal. That’s what we make the most money on the buy. Um, and it’s interesting how Goren talked about the relationship with, um, agents and how that gives him sort of [00:15:00] an edge up.

And, and I’ve used his strategies too, on, in some of the real estate businesses. And properties that I own as well. And the second is the finance. And if you can find good finance, we’ll talk about that in a minute. I know Michele, you had a question you wanted to, uh, to ask. Yeah. Thank you. Gorin and Andrew for joining, um, Gorin, a question for you.

Um, you talked about the market, the location, you know, I know how successful you are. You’re here in our town. Um, I’m curious, like, you know, a lot of people are not buying real estate right now. You just said you bought 50 properties. Um, and as I think we kind of say in our group, like Colin just said, is that you make your money when you buy, meaning you, you know, need to buy low, obviously where it’s gonna go up.

Like, how are you navigating. That situation today, given that prices have been [00:16:00] high, um, they’re coming down a little bit. Interest rates are high. How are you leveraging and finding low properties Gordon? So, um, uh, I, I wanna. Tell something that’s really important in real estate, uh, uh, world I use it’s called 1% rule.

So if I purchase the house for a hundred thousand dollars, I should be able to rent it for thousand bucks a month, $200,000, 2000, $300,000, uh, you know, 3000 and so forth. So it’s 1% rule. It’s really important. Nobody really told me about it. I, I started. When I was really young in my twenties, um, I always followed that 1% rule.

That rule has changed Michele now, and the house is, are more expensive and, uh, the financing just increased. Like I was, I was borrowing money three months ago at 3.7%. And then I would say month ago I was borrowing money at 5%. My rate is now 5.5 [00:17:00] and I wouldn’t be surprised. Uh, if the rate goes up to 6.5% on, uh, let’s say, you know, uh, I have 25 year Amor amortization.

So, uh, it, it hurting it’s hurting the business, but because of the interest rate, uh, uh, get the higher, uh, the price of real estate start started really a lot. Coming down. So, um, I just, you know, I do a lot of homework. I mean, I, I, uh, you know, I, I look at a lot of houses, like, you know, nine, I would look at hundred houses and I wanna buy all hundred houses.

Now I look at, maybe let’s say, I look at 20 houses. I wanna buy maybe one, because what Colin said earlier, Key in real estate is, um, what you are buying, not what you’re selling it for when you purchase the property. That’s the key. And to set up a financing, I just tell you guys, quick story. When oh nine happened.

Uh, banks did not lend money on foreclosed, home period. [00:18:00] Not so, uh, I had eight 50 credit score. I had very big businesses. I owned, uh, big, uh, you know, ATM company, big payphone company with my eight 50 credit score with, you know, millions on the bank. I was not able to get financing. In purchasing, uh, uh, foreclosed homes or we call them Mario.

Uh, I invested six months of my life knocking on different banks. So I, I even have a list of my banks. I knocked on 23 doors. So I seen 22 banks and they told me immediately, no, and I went all the way, many times to the presidents of the banks. And I couldn’t understand why would they refuse me with such a no brainer buying houses so cheap, but they refused me.

So the 23 third bank told me, yes. So what co said earlier financing is very, very important. And at that time in oh nine, my financing was, I was paying around 6.5% interest rate [00:19:00] that history. Purchased my first house, the interest rates were 18%. So what I did in 1985, I took an adjustable rate with a negative amortization.

So basically every month I wanted fixed payment every month I had. Money that I owed extra to the bank going on the top of my principle. So there is always way to manipulate with the financing, but the key is to have a good banker, uh, somebody who, uh, trusts you and you trust them because at the last minute they can, you know, they can, you know, cancel the deal and, uh, FHA financing.

You just on the first time home buyers, you just have to put, you know, three and a 5% sometimes goes up to 10%, but, uh, you know, uh, between three and a half and, and 10%, so. You have to look at the cost of replacement value. That’s another very important factor. So although, uh, the real [00:20:00] estate prices have increased in past years, also, the cost of labor has increased and cost of raw material has increased.

So you have to always look at. Replacement value. So people will tell me, oh, I’ll wait for the prices to soften. You know, I wait for that, but they don’t look at the fun, fundamental thing is you have to look at the prices of the material and replacement value and price of real estate religiously follows that.

So there are a lot of factors. So I buy properties now, basically I pay much higher price than I used to pay, but I just have to buy it because, you know, I own so many properties and have a big cash flow. And I don’t want that money sitting in a bank, earning nothing, and I lose money through, through inflation.

So I put money, even sometimes I pay extra money, but I like to put money in the real estate because I feel it’s much safer than anything else. And historically, [00:21:00] when you look at least 90% of the millionaires invest money into real estate, simple reason to protect their wealth long run. So, yeah. And you know, I I’ll tell you a story that, so Gore’s been my advisor when it comes to real estate, quite frankly.

And he’s amazing. I mean, how, how you’ve helped me with so many buildings and units over the years and, uh, currently have about 20, 25 properties. Um, and I’ve, I’ve focused my formula on vacation rentals and we’ll talk about formula in a minute, but, um, I was trying to get financing for, um, these vacation rentals that I had and north Captiva.

And, uh, I called go up and said, go, I need a bank, da, da, cause I talked to, um, a host financial, I think they’re called. Cause they, they do vacation rentals and they wanted 2% generation fee and they did say, well, look, you know, what, if you get the quantity, I don’t origination fee I’m so I’m prob I’m I’m, I’m not an expert at real estate.

Sorry, origination fee. I believe it is. They wanted 2% and they said, well, [00:22:00] with quantity, maybe we could do one and a half and I called go and go says, no, no, no, go with this bank. They’ll give you the best rate. They’ll move quickly. And also on top of that, they only charge, I, I got the Gorin rate, they said a half percent.

Um, so you make money and there’s little tips like that. Just negotiating that origination fee. And I bet you, Andrew, I bet you people don’t know you can negotiate an origination fee. Am I correct Andrew? Yeah. I mean, they, you always have options, you know, like I, when I talk to my clients and, and you know, they shop around for financing, I mean, there’s, um, Lots of options out there they’re gonna compete.

You know, you can actually have lenders compete against each other and try to get a lower rate, not a lot like to do that. You know, they don’t feel comfortable doing it, but you can get better rates. You can get ’em to slash uh, origination fees and all that. And, um, you know, you can, you can save some money there for sure.

And the other thing I learned Andrew is that if you have an income, uh, that you can, if you buy units that are four [00:23:00] units or less, um, that you can get a traditional bank, which generally is your lowest financing option. So you can, if you have a nice income, a nice job, you can actually position yourself to get a pretty good interest rate.

Am I correct? Yeah. I mean the anything, four or less is gonna be still considered residential. If it’s a five unit or a greater, it’s a commercial loan. So if you have good income, you have good credit, you’re gonna get the best rates. Um, and, uh, you know, lately on, on. Multi units. That’s kind of jumping around.

They’ve been being a little, um, stricter with some of the guidelines and, and having people put more money down. So you’re gonna need 20%, a lot of the times, um, for like a four unit, um, at least here, that’s kind of what I’m seeing, unless you go FHA. But then if there’s, if you go to the FHA route, then you have, um, uh, limits on loans that you can get.

So if you’re in a high cost living area, um, it could be hard to go to FHA route, but [00:24:00] you’re gonna have to kind of look for those neighborhoods. You know, it’s, it’s, it’s a bit of a sacrifice too, you know, you can’t, you can’t have it all kind of thing. Um, and so if you’re kind of open and flexible and really, you know, willing to learn, you can get some better rates.

You can look into some different neighborhoods and get places that are, uh, less expensive, but still have good rental income and, uh, you know, make the numbers work. So it’s, it’s kind of about if you’re, if you’re really getting started into it, the best thing you can do is just start analyzing deals. and seeing if the numbers work and if the numbers work on a place, it doesn’t really matter if you’re, you know, where the market’s at as a whole, if it’s high, if the, if rates are high, if it, if the numbers make sense and you know, then you just pull the trigger and you go with it, you just don’t sell.

If something happens. If, if the market comes down, I know it’s crazy. I used to say, go on, go. You’re crazy why you steal some of your homes. You made so much money, such appreciation, but then you always can like, well, the cashflow is so good. Cashflow’s big part of [00:25:00] your story. Isn’t it go. I love cash flow.

Uh, all my businesses I started payphone was phenomenal. Cash flow ATMs, phenomenal CA I like to, I, I like the cash flow. That’s, that’s my formula. I’m not really in real estate business. I’m in a rental business because I love the rents receiving rents every single month. I really rarely sell properties. I mean, I do sell some properties, uh, but, uh, not that much.

And, uh, I, uh, also what I did is interestingly, I would go to a neighborhood like in one neighborhood, I have, let’s say a hundred homes and I would go and fix up the home, like to perfection, you know, plumbing, roofing, electrical, everything new, and then I would sell it. I just sold one. I paid 70,000 and I sold this for 3 25 and that came for over 400 square feet was like only 780 square foot house.

And yeah, I just wanted to bring the market where I have a lot of homes to the value that I like to have because when [00:26:00] the appraiser comes, he uses my recent sale as the comp. So all of a sudden on my balance sheet, I increase my net worth because those houses will appraise for the present, uh, market value.

So I do that as well. So I create basically the market in the certain neighborhoods. Geez, geez. The fix is in that’s for sure. You can see, you know, someone like yourself going very successful and really appreciate you sharing your, your tips and tricks. And I know Jeff, you recently bought a as an investment.

I don’t know it was an investment a second home, a. Uh, did you, you know, did you want to just talk about that, Jeff, if you’re there flash your mic? Yep. Me, me, Jeff, or Jeff. Ella. We got two. Sorry. I know Jeff. We’re gonna come to Jeff LL in a second. Matt, Matt, and it’s Jeff, you Matt. And then Jeff Al I don’t know same, but, but first we’ll start with Jeff.

Sorry, Jeff. Jeff, Matt, just give us a minute. Yeah, but the, the, the [00:27:00] place I bought was not intended to be rental. It was for my own use. We debated, um, doing short term rentals out of it and things like that. But for this first step just wanted something where we can leave our stuff and have it ready whenever we wanted it.

So it really, so it it’s a real estate investment, but it’s not a rental investment’s Gorin said he focuses on rental, but I, I like personally Gore’s model and focusing on cash flow makes a lot of sense. Um, but this is in an area in Michigan, not where I live here. So the goal would be to potentially get some rental properties in that area, cuz we like the area very much, but this first purchase was literally just for my own.

Yeah, it seems like there’s a lot of models, like, I guess in your case, it’s a second home. Um, Andrew is a second home, a good investment or not. I’m just curious if you have an answer to that. Uh, it, I mean, it depends on what you’re going to do with it. Like, you know, I, I tell people for their primary residents, I never consider it an investment.

It’s a, it’s a forced savings account at best. If [00:28:00] you’re buying a second home, you know, are you going to be, you know, short term, renting it part of the time when you’re not there or half the year, like, let’s say, if it’s in Florida where you might wanna use it only half the year, then you rent out the other half the year, you know, then it can be a good investment, but, um, you know, never, never bank kind appreciation.

That’s always just like the cherry on top, you know? And that’s what got a lot of people into trouble back, you know, 5 0 6, you know, all the way up to oh, Is everyone was just thinking, oh, housing always goes up and they were just banking on the appreciation until everything came crashing down because no one had any equity in their, these places.

They were just walking away. So, you know, I would say, have a plan with a second home. Um, you know, and just if, if you’re not gonna have any kind of income coming in, then, then it’s not an investment cuz don’t, don’t bake on the appreciation. I mean the last few years have been great, but that’s not normal and we should start seeing some stabilization soon.

Um, and you can, you [00:29:00] know, assume and hope for a general 3% per year. But that, like I said, it’s, it’s the cherry on top. Yeah. Tale of two stories here. Uh, I have a vacation a second home up in Canada and I do rent it out. Um, I’m part of that sharing economy generation and that just, I truly believe in it. Uh, and we may, we might get about 70, $80,000 a year and I use it five weeks a year as well.

Um, and then at the same time we have, um, about 20 vacation rental properties. Um, not all of them are built out yet, but, um, we get phenomenal return in Florida. It’s amazing. Um, I bought one house, a north Captiva it’s right on the beach, paid 1.7 million. And this month it’s generating $42,000 in, uh, rental income, vacation, rental income.

It’s almost sold out for the next eight months. Uh, and I think it hits your 1% rule. There go, you know, 42,000 much more than 1%, much more 1%. Yeah. Now, now it’s a headache. These, these things could be a [00:30:00] headache. But what I did is I partnered with a management firm that does all the work for me. And, uh, if it’s the, I, you know, I don’t want to make this a vacation rental show.

It’s really, it’s, there’s many different models we’re gonna talk about, you know, we’ve talked about flipping, we talked about cash flow. We’ve talked about vacation rental. We did a great show on this, um, and how to run an Airbnb two weeks ago. And, uh, but I will say that the, the return can be much higher, but the headaches can also be much higher in the wear and tear.

And there’s a lot of factors to consider, especially location for vacation rentals, which needs to be in our formula. It’s either very urban, ironically, not a good school district because we don’t wanna pay those high prices, but we know tourists want to be downtown or it’s on, on or near a beach, um, or at a vacation area.

So go on your scene. Something. Yeah. It’s uh, it’s no, it’s, it’s, uh, it’s a hundred percent correct. So, uh, for example, when you said on that vacation rental, you paid 1.7 million, you get like a 40, 43 40, you know, over [00:31:00] 40,000. What is your, uh, income, uh, after you pay all the dues, uh, uh, after you pay management fee?

So it’s, it’s, you know, uh, it’s completely different business model. I do also have vacation rental properties. And when, uh, when, uh, when a Corona came in, I converted them in regular annual rental, annual rental. You make less money. It’s much less work. Both, both, both, both businesses are great businesses, but, um, uh, what Warren buffet said, do one thing and do the one thing better than anybody else.

So, I mean, it’s real estate, same both ways. So you can diversify a little bit in real estate. What I do also, I have both vacation rental and my regular rentals, but I think with my regular rentals, I’m able to, uh, grow much faster. Uh, and as somebody said earlier, I never counted on appreciating of the asset.

I never cared about that. I just cared about rent. Monthly [00:32:00] rent. That’s all what I care my vacancy and that I never keep place vacant. So, uh, everything it’s about cash flow and it’s a gravy, it’s a, you know, gravy when the property appreciate, and then you sell it and you make a lot of money, but that’s not, um, that’s not why I’m in real estate.

Got it. All right, Matt, thank you for being patient. Do you have a, a story to share with us or a question for Andrew or gon? Yeah. Um, so I guess a question for Gorin and Andrew I would have is, um, what would you guys pay for people that give you leads on properties or potential, uh, seller. Like, is there a, obviously there’s the broker fee, um, for if a sale goes through, but just leads, um, kind of like a little bit.

What I do is I created a platform where, you know, people say what they’re looking for and then people all around the world will start looking for that for a fee it’s called finders fee. But as I’m [00:33:00] expanding, um, and kind of getting into the real estate market, kind of what have you guys seen that some of these real estate agents are willing to pay?

Um, just for a, a, a lead of a, a sit down with the lady that’s potentially gonna sell. so, uh, I can, I can answer just my own, my own experience. I hired this kid right from school and he start working for me and, you know, he’s a, you know, he’s a son of a friend of mine and, you know, he has a base salary, whatever, like $35,000 a year.

And I said, if you really wanna make money, uh, this is your duty during the day. But if you wanna make extra money, go and hustle and find me a deal, you know, find, go knock on doors, call people, just find the deal. Uh, the, the property was not listed and he found this deal for fourplex. Uh, I end up purchasing the fourplex and I gave him 10.

Bonus for that particular month. So I’ve been paying, you know, like , there’s all saying smear ORMA I, I, you know, [00:34:00] I pay people, you know, I give people bonuses, I give people money just to, uh, uh, you know, to be able to, to purchase the properties. But everything gets legal on paper, you know, 10 99 at the end of the year, everything goes through the books.

Uh, so there is no cash. It’s always, you know, 10 99 at the end of the. And then normally I pay brokers, whatever, you know, 6% that’s like a standard rate. And I try to buy properties always from the listing broker. So I would have so many people call me with the deals. And my first question to them is, are you a listing broker?

So if he tells me, no, I’m not, I’m not interested because I can get the access on MLS or to all the properties. I like to buy properties from listing broker, because I like the listing broker to make all the money, the reason why, because he will be loyal to me and he will tell me at what price I need to be to complete my purchase, because I’m not [00:35:00] there just for exercise.

When I like the property, I wanna complete that purchase and I wanna buy it. So my, my, my way to do it is I always buy from listing brokers. Gotcha. Thank you. To, to kind of touch on what go was saying right there. Um, I would say to. Um, if you haven’t bought real estate before, like his advice is good. If you’re, if you’re an experienced real estate investor, if you’ve bought and sold homes before, if you’re like a first time home buyer or you’re kind of new to real estate, um, I would say to have a buyer’s agent, but if you are experienced, I think it’s fine to go through the listing broker.

Um, as long as you kind of like, know what you’re doing. Cause a lot of times people that are new they’d have no idea what’s going on or they, they don’t know market value. And so they might not know if they’re overpaying or, um, not offering enough, whatever it is. Um, I just had, uh, a deal closed today and an inspection on another place where the, when that closed, we had to go $25,000 over asking [00:36:00] price.

And the other one, we got it for $10,000 under the asking price. So having that buyer’s agent can help guide you if you’re new. Um, but you might be able to, you know, save some money if you’re, if you’re more experienced. um, to go back to your original question though, and like what, you know, paying for leads.

I mean, it depends on, you know, how viable these leads are. I have known I’ve never did the, the Zillow route, um, because I kind of got in it at a point where Zillow was starting to get too expensive and you buy a piece of a certain zip code. And I knew of agents that were spending thousands upwards of thousands of dollars a month for pretty, pretty poor leads where, you know, they, they might not even be serious buyers.

They might have terrible credit, whatever it is. And if you don’t close a decent amount, then, then you’re really kind of just flushing money down the toilet. Um, I will look at different ways of bringing leads. Um, and if it’s not, if I don’t, if I don’t see the [00:37:00] ROI, I’ll drop it. I did a gym partnership earlier this year.

Um, I think it was somewhere around like $300 a month. I was not seeing. Like any good return with it. So I cut it off after six months. Cause I was like, this is, this is a waste of time. Um, but you know, if it’s a, if it’s a great source, you know, some of these companies that are coming out, um, you know, a lot of them would just wanna like kind of sell you the leads that, that you can already get through Zillow or through, you know, wherever.

But, um, a lot of ’em are starting to do a model where they are paid a certain percentage if the lead closes, which is really the best way to do it because, you know, paying for leads and then, you know, then they end up all being kind of crummier or not serious buyers then is then you’re just wasting money.

So you gotta be really careful about how much you’re spending and how quality of leads. Those are. Like, if it was a guaranteed, you know, like if somebody brought me a lead and I know for sure was gonna guarantee clothes, like I’m willing to pay very good money for that. If it’s proven to, you know, be [00:38:00] someone that’s going to close it’s, you know, it’s, it’s a matter of, you know, if somebody reasonably a lead.

you know, the commission’s like, you know, let’s say 5,000 and the person wants 20% all day. Sure. A thousand dollars for a $5,000 commission check. Yeah. But you can’t just bring me people in that close and I’m, you know, I’m going several months paying several thousand dollars and then have nothing to show for it.

You know, that’s a great way to go out of business. No. Yeah, of course. I mean like how, like, for example, I’m in Boca Raton right now. Um, and a gentleman knows of a house, um, on the water and the lady’s willing to sell. He’s like, well, how much should I charge someone to give them that lead, to have first dips that buy in this property?

And so, like, the reason why I’m asking is like, I have, you know, the platform has almost 7,000 users and these are questions that finders are asking and saying, Hey, like I found this, what should I charge? Um, and so like, that’s just kind of, you know, figuring [00:39:00] out what should someone get paid for the knowledge that they know.

And I, I guess that’s been a, a question that they’ve been asking in the real estate, um, section within that, I think it kind of depends on what the goal is. Cause it kind of sounds like you’re looking a little bit like the wholesale route, which is like basically finding a property and then. You know, it’s, it’s a good lead and are you selling it to, you know, another investor who’s going to, you know, flip it, rent it out.

Um, somebody else is gonna resell it on the market. I mean, then, you know, you could be saying it’s a, it’s worth about 10,000, 15,000 somewhere in that range. If you’re looking to like sell it to like, you know, or, or bring it up to an agent, you know, laws say we can’t pay people a commission, unless they’re licensed, you can pay, you know, finder’s fee.

I think for an agent, you know, that value is worth, I mean, depends on the property, you know, like [00:40:00] it can be worth thousand, 2000 somewhere in that range. It just, it really kind of depends on what’s the goal with the, with the property. And maybe gore can say if he’s, I don’t know if he’s had experience with on the wholesale side, I have not.

Um, but I know that that’s something that’s. Um, was a little more popular. It’s kind of lost. It’s lost touch a little bit, um, at least here in the Chicago market. Gotcha. Thank you. You mean, you mean, you mean the wholesale, uh, selling properties wholesale, right? It’s like we buy ugly houses type thing. You know that one?

Yes. Yes. I mean, that’s, you know, I, I have a, I have a, a, a, a little, uh, ownership in a company that does that. And, uh, business is actually doing phenomenal. Uh, and, uh, that is more for investors. So end users, uh, almost never buy, uh, houses, um, you know, like flip houses, it’s mostly investors, investors go in. [00:41:00] Uh, and you know, when I started, uh, uh, I, I bought from a lot of resellers, uh, uh, houses, uh, because I needed to grow and I just couldn’t, uh, you know, I, I, I had to grow really fast and my scaling was, as I said earlier, 15 houses a month.

So, um, and. The flippers, they make, you know, 5, 10, 20 grand on a house, but then investor comes in, uh, you know, fixes the house. All depends how much money the investor puts in. And they flip those houses and, um, and, uh, the, uh, the, the other way is they make them rent already and then they rent them. So now, uh, the company, uh, that I’m involved with, uh, they spend, I would say between 30 and, uh, 60,000, uh, in advertising on the mailers and everything else.

So it’s, it’s not that easy to, to do that business. Otherwise you can basically identify neighborhood knock on the doors and, but the, the, the wholesale business, uh, basically [00:42:00] flipping business, it’s mainly for the, for the investors who are seasoned real estate investors. If that answers the question. Yeah, that’s great.

That’s great. Um, yeah. Olivia, you had a question. Yes. I have a question in terms of. Investment. What’s a better investment at commercial real estate property or reside. I mean for me, um, I mean, I do have a lot of commercial properties, but for me, it’s residential, especially when you start, somebody said earlier the best ways to do it, let’s say you buy a duplex, you live in one side free of rent because the side that you rent covers.

You know, the mortgage, property, taxes, insurance, and so forth. So that’s, that’s like the best way to start now. The nice thing is you can buy duplex TriFlex or fourplex, and that consider residential soon as you go five units and more it’s considered commercial property. So [00:43:00] the best is to buy a fourplex, but, you know, TriFlex and duplex work.

So, uh, I, I’m only in residential because residential, uh, a lot of people with, uh, with COVID and zoom, uh, work, you know, working from the home, uh, commercial can be a little more tricky, uh, because, uh, uh, it just it’s, it’s, it’s much more challenging. So you have to be more seasoned to, you know, to start investing in a commercial list estate.

Although it’s, it’s, it’s a good investment too. I mean, I bought, I bought bunch of properties that appreciated. I bought one property for 500,000 and that today, that properties, I wouldn’t sell it for 5 million. I wouldn’t sell it. And soon as I purchased it, I put for rent in front of, I didn’t even use the broker.

I put myself for rent and the guy rented from me. Uh, I put 50,000 down. Actually I paid five 50. I put 50,000 down. I financed 500,000 and my first tenant paid me first loss in [00:44:00] security, 12, 12,000 each. So $36,000. He paid me up front. So almost I had a zero investment after, after a month because I received the check for $36,000 immediately.

So it can be also very, very, very rewarding. Yeah. So did you hit what you hit your 1% go on that or no? Oh yes, because I paid five 50 and my rent was 12,500 a month a month. Oh my gosh. Yeah. Yeah. So you’re, you’re you’re triple. All right, Andrew, actually 12,000, sorry, 12,000 a. Yeah, I was gonna say, so I don’t have really experience it on the commercial side.

I know people that do invest in on the commercial side and I know the returns can be phenomenal, but you really kind of have to be knowledgeable in that market. And, um, a lot of times the deals are much larger, so you can get involved in like a real estate syndication, um, or a group of investors to kind of get involved with that.

But, um, it, it, you know, it all kind of depends on, on your comfort [00:45:00] level and like, you know, kind of hitting on the point of the house hacking route. That’s gonna be your best bet to getting started. If you’re really looking to kind of build, um, like a real estate, an actual like investment business, that’s gonna be your fastest start and something that’s really manageable, especially since like you’re living in the property, you’re gonna be very familiar with it.

And you’re right there. If you need to address anything and you don’t even need to, you know, be the, the manager like or saying, like, you can hire a property manager, it’s gonna cost a fee, but you can be pretty hands off. And as long as you’re maintaining your property and taking care of them, you should be fine.

Um, there are gonna be those projects, um, that come up from time to time, a new roof, new air conditioning unit, new furnace, whatever it is, but you should be putting aside at least 5%, um, from that, uh, monthly income into a reserve account to, to handle those as they. I just wanna mention something really, uh, uh, quickly, uh, I like knowing everything.

[00:46:00] So, uh, uh, they have this beautiful YouTube videos. So any question you have any type of service, you can learn about it before you hire somebody else, because the contractors are known to take advantage of the end users. And I really learned everything even on my first house. Uh, you know, I, I did first roof repair because I had three roofers and they all charged me and roof was still working, uh, leaking at that time.

There were no YouTube videos, but I end up going on a top of the roof, putting it all apart and figuring it out and repairing it because I, I, I, I like the knowledge. And in order for you to become successful in real estate, not on one house, but if you wanna have that as the business, uh, you better learn, uh, what is going on and learn everything about the business and that way you can definitely become more successful.

Yeah. Great. Um, I have a question for you and Andrew [00:47:00] again is cuz you brought it up, go, you put $50,000 down and then you made, you know, then you financed the rest. So this concept of cash on cash return versus an ROI for real estate. Like, so for instance, if I buy a property for $500,000 and I make $50,000, I make a 10% ROI, right?

Yeah. What’s the, can you talk a little bit more of the cash on cash and how that could amplify and maybe that’s really the whole point about financing, right? Like you need to finance these properties so you can buy more properties, but, but can you talk to that a little bit about that? , uh, I mean, you know, everybody has different formulas and, uh, it’s really important to understand, uh, the interest rate and the amount of your payment, but not just amount of your payment, how much your insur insurance has double in past 12 months.

So that’s another very important factor and, uh, uh, Most properties that I purchase right now, I don’t get wind insurance because in [00:48:00] Florida, wind insurance is very expensive. So I look for me, I just look cash on cash return. That’s for me, most important thing. So the better financing you have, the, the, you know, better interest rate, you have the better financing you have in place.

You make better, better return. And, uh, and, uh, my rule is, uh, for example, uh, they have a cap rates and, and we can go into that later, but, uh, I use 1% rule, uh, and when you have on 1% rule and when you have a bank financing, you will make around 15% return cash on cash on your. But, uh, uh, I would, I would, if I like strategic property, um, and I bought strategic properties where my cap rate was like two or three that, that shows like I make like really small return on my investment, but, uh, I bought them because I can, I bought them strategically because I know that [00:49:00] the area will appreciate maybe not in two years, but five or 10 years.

And I think those investments would go 10 times up in value because of the, the way the city is growing. So, uh, cash on cash return is for me, most important part in a listed transaction. So you have to understand your expenses first and what somebody said earlier, you always have to, uh, uh, uh, account for, let’s say 5% vacancy, 5% reserves, 5% management, if you don’t manage the property yourself.

So you have to do your, your mathematic, uh, right. In order for you to see if it’s a good or bad. Andrew, any other thoughts on this cash on cash? Like how do you look at, like, if you have an investor, you have a client he’s an investor or she, and she wants to get, um, into something. How do you describe the return on investment?

Like are, is it all just appreciation? Is it, we talked about that, but how do you, how can you, how do you describe, [00:50:00] like, how do you explain that to people? Um, I mean, I just look at like cash on cash return. Um, I think that’s just the easiest way to, to look at this and, and, you know, kind of compare what you get in certain markets, or, you know, if it’s, or certain investments say, you know, if you have your money in the bank, you’re gonna get a terrible return on your money stock.

Market’s a little riskier. Um, and you don’t have as much control as you do with real estate. um, for me, I like seeing a 12% cash on cash return for like private loans. I think it’s just a, a good number, um, to shoot for. And, um, but you know, what I don’t understand is like, I mean, maybe people do leverage their stock investments, but I, you see massive leverage for real estate, but I don’t have the mentality of going and buying stocks and leveraging that going on margin and all that kind of stuff.

Cuz if it drops, you’re screwed, like you, you end up losing all your money. Yeah. But yet we do that with real estate. We, we, we, we [00:51:00] borrow out, we lend out or borrow out 75% or 80% of the real estate. The thing, the main difference keep in mind is that value can go to zero real estate is not gonna go to zero.

If the value of real estate goes to zero we’re in much bigger problems. Cuz that means like Armageddon, right? There’s only so much land available and that’s why you see places like San Francisco and Manhattan. Skyrocket and value and continue to go up is cuz there’s only so much land they’re water locked, right?

So you can’t build anymore properties, you know, there’s, they’re running outta land. They’re not gonna take over central park. You know, they’re they’re, they can go up, but there’s only so much room to, to that you, that you can build on. And so that’s the thing about real estate is that you’re willing to go on margin, you know, if having this leverage of the bank, um, [00:52:00] just because it’s just more secure, it’s not gonna go to zero.

Yeah. We had a, a time when it dropped 30%, the fundamentals were all out of whack. They’ve gotten back in order in my opinion. But, um, you know, that’s, that’s the reason I think Gordon said too, like, you know, 90% of millionaires have real estate. It’s just because it’s a real. Tangible asset that you can see that’s that’s there.

And you know, it’s always gonna hold some value, but it’s not gonna go to zero, you know? Okay. Let, let me give you a formula. So it’s really simple formula, very simple formula. So for example, uh, you buy a house for 300,000. You rent the Thai house for, for you, you, you put 20,000, 20% down. That’s 60,000. So you buy a house for 300,000.

You put down $60,000. That’s 20% you rent the house for $3,000. Uh, the mortgage, the 30 year amortized mortgage [00:53:00] on 5.5% return will be $1,363 a month. The property tax will be around 500 bucks a month. The insurance is going to be $300 a month and miscellaneous expenses. I put it at 3 37 just to keep numbers around.

So you will make on that house, $500 net a month to investment. Now that house you invested $60,000. You will make $6,000 a year. So it’s exactly 10% interest on your investment without counting appreciation on that asset. I just gave you like a simple scenario that anybody can understand. And just to add on that real quick, you know, the cash flow is one way to make money in real estate.

You get the principle pay down from the tenants in your units, too. You know, they’re helping you build your wealth, they’re paying into your equity and you also have tax savings. And then the [00:54:00] appreciation is the, um, like I said, the cherry on top. So it’s more than just the cash flow. And I know a lot of investors like to see a hundred dollars per door.

If you can get 500, that’s amazing, uh, a hundred, $200 per door after all, you know, expenses after all reserves and everything. That’s a good number, number to shoot for. Yeah. Can you talk, can you talk a little or both of you go on and Andrew, talk a little bit about the tax benefits of these types of businesses.

Cause I, I know there is a benefit, I guess, because you can depreciate the property, but you’re not actually paying out the money, but you’re getting a tax benefit. I know Trump’s figured this one out. I, I, I can tell you that it’s it’s the door and maybe pick it up. Yeah. It’s pretty simple. You can use, uh, to offset your taxes.

I said earlier you make on that house $6,000. Now you can depreciate that house over 27 and a half years. So [00:55:00] basically on the money that you’re making as an income, it’s not taxable event. So you don’t have any taxes on that money. That’s like a basically, uh, your CD or municipal bond that you, it’s not taxable.

If you are looking at that way. And then when you eventually sell it, or do you actually pay capital gain tax, you pay, you pay when you are professional. Like for example, if it’s your investment, And you are, you are, uh, you know, you are operating as an investor and you do oversee, uh, the management and everything else.

You are considered, uh, like a professional real estate investor. So you exempt from Obama tax that’s 3.8%. So your capital gain will be only a 20%, uh, 20% in today’s market. Basically it goes in a scaling start at 15%. If you have a lot of properties, you sell a lot. It goes up to 20%. So you, you, you know, you have the tax benefit when you [00:56:00] sell.

So for example, if you sold that property that you bought for, uh, third, uh, $300,000, you sold it for whatever, $500,000 you are. You, are you, you, first of all, you’re benefiting on an income, uh, before you sell it. And then when you sell it, you’re benefiting on the lower, uh, uh, uh, tax rate because it’s a capital gain.

That’s insane. All right, David, you’re our last guest on today. Uh, do you have a story or a question you can share with us today? Hey Colin. Yeah, actually I thought I could add some value. So Jeff, Jeff knows me. I was in, uh, first I’m a big fan of starter club. Awesome. A founder of a company. And Jeff knows me as sand Viper, but outside from the name game.

Is that from the name game? Show that, yeah, it’s a fun show. Yes, sir. Yes. If you ever, if you ever wonder about branding, they do a really cool show. Jeff, I don’t know when you run that show, but it’s, it’s all about, it’s all about the name. [00:57:00] It’s fun. Leave with your story. Monday nights at sixth grade. right.

That, that too. So actually my background actually is in commercial banking. So I’ve been a commercial banker for 20 plus years, specifically commercial real estate. And so I obviously have a wealth of knowledge in this space. I was, uh, an under underwriter, a lender also worked on special assets, which is basically when loans go, go sideways and nonperforming.

So I’ve seen all sides. Um, so I I’m obviously I’m wealth of information when it comes to this stuff in terms of the commercial side. So, but I just throw my hat in the ring and see if I could add some value to anybody that has a question. But one thing I’ll say about the investment stuff, um, from a commercial perspective.

So the IRR internal rate of return is something you use as metric for, uh, buy and hold. So most. Commercial professional investors on the commercial side, they buy it and they hold it right over time. They don’t just flip it. And so that IRR measures the interest, uh, that, that, that they’re gonna earn over time as those cash flows, you know, sh throw off whatever they’re gonna throw off over, over the [00:58:00] term of the, uh, period that they’re gonna hold the property.

Um, that’s, that’s the IRR. So that that’s the metric. When you think about a long term hold and ROI is. A flipping kind of metric where they buy it and they flip it, what they make on, on, on the, on the sale, uh, type of thing. So that’s one thing to think about, but as far as just so people understand as far as commercial lending and, and getting debt, it’s a different, different process altogether.

I mean, the, the REI side is, is credit score fi driven when you’re looking at getting a loan from a conventional bank, like I’ve worked for, for a number of years, from a commercial loan perspective. I mean, it’s a very, very detailed it’s, it’s an extensive analysis. You look at your financials, they look at the property in explicit detail.

You look at a bunch of different factors that they wouldn’t look at on, on a residential side. So if you’re looking at getting to a commercial and you need some debt to do that, or you’re gonna get dead at some point, understand that the process is much more involved. And, uh, you probably wanna speak to somebody about what you need to do to prepare your financial package, to present to that bank, to get that debt that you need.

Um, there’s a lot of, there’s so much stuff [00:59:00] I can talk about. I know we have have a lot of time, but if I can add value here, I would love to do that. Yeah, it’s interesting. It’s almost like I call it like an AI. The banks have this AI and all the, they all have the same rules when it comes to residential loans.

And pretty much it’s, as far as I can tell, it’s the paycheck, um, how much you make and you know, how much can you fund the, the income from the property doesn’t even seem to matter. Like when I go to a commercial side, it’s all about the income from the property and, and that kind of stuff. So you’re right.

Very different rules. And, uh, but I do agree. I, and you would agree, David, that if you are a, or, you know, first time investor getting a traditional loan, it can give you a much lower interest rate. If you do have the F I O or the credit and the, uh, the income. Yeah. And talking about REI. Yeah. So REI, absolutely.

That’s driven by the FICO, but if you’re looking at doing, uh, a commercial type of investment or getting involved in that, uh, of course credit score, your credit worthiness is of course, uh, analyzed, but it’s more about the property itself. If it’s income producing, what kind of cash flow is the support?

Can it cover the debt service on the, [01:00:00] on their proposed loan? And then, then we talk about construction. Construction’s a whole nother element and I I’m in Florida also column by the way. So construction’s big down here. And so there’s a lot of construction stuff going on, both commercial and re and residential speaking.

And that’s a whole nother different, uh, type of analysis and, and type of thing that, uh, you have to kind of understand it’s, it’s a much more complex, but the returns are great. Obviously if you do construction loan and you sell out and you do pre-sales whatever else, and you can make a lot of money, uh, in a short period of time, 1824 months over the term of the, uh, construction, when you sell out those different units, whether it’s, uh, houses, condo units, whatever that may be, uh, it can be very, very, very lucrative.

So you say you do construction loans. We do so I, I I’ve been, so what rate, I’m curious what rate, cause I’m, I’ve got seven development, lots, uh, in north Capt, but I’m just curious what, cause I’ve heard horror stories about this, the rates for construction loans. So I’m just curious what you normally actually not I’m I’m not on the lendings I’m on, I’m on the credit side.

So I couldn’t really tell you Colin, to be honest, I can find out I find out what our bank does. And generally what I’ve been hearing is they’re almost [01:01:00] like, you know, hard money lending, 9% type loans for construction. I D no, I will say no rates have gone up considerably. No question about it. When we do our analyses, now the rate, I mean, two basis points, which is two, two percentage points.

Um, I mean, it’s, it’s, it’s not uncommon, you know, for that, for that to, to be the case. Uh, so yeah, so race has definitely gone up. Yeah. But what if you’ve got an established property with the income and whatnot, we can get that five and a quarter, right? Or, well, hold on. I can answer that if you want. Yeah.

Can you, yes, I can I just ask because I’m doing a bunch of construction. Uh, my rate is 0.75 over prime rate. If that, so a prime rate, was it a 4.75 now? Uh, prime rate, uh, is I think it’s 4.754. So my rate will be 5.5% today. So you can actually get a 5.7, 5% on construction. No, 5.5%. So basically the rate it’s adjustable.

So the more prime rate goes up. So my base stays the same 0.75 [01:02:00] over prime rate. So it’s always adjusted every single month. So, uh, let’s say it takes you a year to do construction. So if the prime rate goes to, you know, 5% will be 5.75, if it goes to 6% will be 6.75. So every month the rate adjusts and that’s the rate with local Centennial banks.

So, you know, and it’s important. It’s important to know that’s interest only. So during construction interest only, correct, you pay interest only, you don’t pay a fully advertised, which is principle plus interest. Correct? So when it’s, when it’s construction, what go’s talking about, a floating rate that’s interest only.

So understand that as a, as a loan. The rate fluctuates. Now often oftentimes banks put in a floor. So what Gore’s talking about is fine, but sometimes banks have a floor rate that they don’t go below. So if, for example, that margin or, or, or that, that the index, which is the prime goes down below the, below the floor, you still won’t get the benefit of that.

The floor you’re you’re, you’re, you’re still paying the say state of force 5%. And your rate goes down below that you’re not gonna pay what’s below. You’re gonna pay with the floors, which is 5%. So most, most banks put a floor in to protect themselves. [01:03:00] When, when we’re in a downward rate environment, we’re not, we’re in a upward rate environment.

So floors don’t apply right now, but in a downward rate environment, typically banks put in floors, no, you’re a hundred percent. Right. And you can negotiate that floor. What the floor needs to be. I agree. A hundred percent. You’re totally right. Yeah. But right now, uh, construction loan, and I think it’s interest only.

And then soon as the construction is finished, uh, you can get the property reappraised and get like a fixed rate for next, whatever, five, 10 years, if you want to. Yeah.

All right. I think we’ve come to the end of our show today. This has been amazing information and I have a feeling that we could probably go on for several hours. And I think Colin, we should schedule maybe a follow on session. This is such a rich topic. [01:04:00] I agree. Yeah. So Goren, you know, we really are so grateful for you taking your valuable time to come here and talk to our members, Andrew, it was great to meet you and we appreciate your time as well.

Um, so, you know, just don’t forget, we have amazing content on www serial. I’m sorry, www Um, we encourage you to join the email list. Um, we only send emails out when there’s really compelling sessions, as well as, uh, content to share with you. So Colin, are you there?

Yeah, I think Colin has dropped, so don’t forget serial entrepreneur is here every week on startup club at two Eastern on Fridays. So please be sure to follow us on social media, check out the website and [01:05:00] we look forward to seeing you next week. Thank you so much. Thank you. Bye everyone. Thank you.


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