0:00 there's four different markets the a b c and d right one of my students came up with these uh initial for me he says the a is the uh affluence neighborhood which is like bever Hill ain't going to work well in there yeah like Arcadia those yeah B is the uh blue col neighborhood C is the contractor neighborhood and then D is a drug infested neighborhood [Music] get welcome back to another episode of careful boys you have to man with us today hey hey just before we cut out on the last episode Joe had a really important question to ask and what was that again so a lot of people will say to uh real estate Moguls like to attach be like hey you know you could your method only worked in your era because the homes
0:51 were like 50k 100K and there were so much more the barrier of Entry was more accessible what I see people doing now is like you make money and La New York or whatever and then you go to Tennessee you go to Oklahoma you go to these other states to get started but then what about the people that grew up there were the the houses like they skyrocketed so their burier of Entry is hard same with kids in La like for us like we got the money to do it but it's like man we got to put down 200k and we're like where do we even come up with that even 5% of a million is a lot so it's like what what do you say to uh them and like how do they how can they get started that's a good question and this is the kind of stuff that people ask every day what we got to know so one of the people don't realize is the expensive area like Seattle LA right we have the biggest
1:44 issue with which is uh housing inventory affordable housing most important so those cities they are constantly trying to figure out how to create more housing so they constantly proactively doing certain code in the city so they can actually help create more housing okay the most the biggest game changer code that just happened recently this is how everybody can take advantage of this right now then California is the Adu game M it's freaking stupid and for those who don't know what Adu is it's auxiliary dwelling unit right it's a second house in the back yard so it's like if you have a home now you could turn your shed or garage or IND into a second house right sell that Adu separately it's and this is where it's even going to get even better for you
2:34 guys in Seattle 3 years ago this how it worked you can build a Adu in the backyard Max 1,000 sare ft but you have to live in the front house to rent this house in the back out oh you have to be your primary residence has to be you live there okay and there's like a specific ratio too right like to no not has to be th000 ft under yeah yeah thousand Max so everybody was like w this how we're going to create more housing does that count for like vertical yes like two 500 500 okay right then what happened was a year later they said you don't have to actually leave in the front to rent the back out now oh so now I help people oh let me go ahead and
3:24 rent this and rent that and I go buy me that house and then the third year which is in the last year plus they came up with a new code now remember this is still single family zoning you guys not multif family single family zoning they said now you can have two separate tax parcel number that's address like you got have separate address but you still have one only one partial number that make sense now you can have two separate address and two separate partial number now you can sell it off wow so the state of California just got approved with this new code called 1033 1033 which allow the whole entire State of California when you put a Adu you can sell it separately now wow that's this is where the game changes to come in for people in California now you
4:15 ain't going to get this in Tennessee yeah you ain't going to get this in the rural area why they got a lot of land they only doing this in dense area MH and state the California got it now La depend on what jurisdiction you're in they got to work through it faster so they can get it going so to answer your question Joe here there's to play now MH if I was down here I'll give you a real live example right now I was waiting for my friend Eric to text he hasn't text back yet but I know the number cuz he said it last night he just bought a fixer in Long Beach for like I want to say 580 59 less than 600,000 wow it's a fixer so here the game the reason why everybody quote LA's expense because people are quot turn key houses in what I call um upper and neighborhood where
5:09 it's a million dollar plus you can find Turn Key houses in Long Beach that's worth a million bucks that's already ready to go but what I tell my student to do if you can find a property need some work let's use Long Beach for example my friend Eric just bought this for like 600 Grand it's going to cost him 80 grand to do this okay there is Bank out there right now that will do 5% down minimum on a rehab loan and then convert it into a 30-year loan back then they call them FHA rehab loan now they have conventional rehab loan oh so what they say is let's call it 600 plus 80 it's called 680 mhm all you got to do is put 5% down and the bank will lend you the money to buy it rehab it and when it's done it get turned into a 30-year fix so the money that you use to fix the house is included in the in the
5:59 in the loan so you don't have to come up with the low money do you just show them like a contractor's like bid and then you show them like okay yep and so what happened is this but then I want them to find a house with the garage in the back so after they get the house done with the intention for Adu yes so this is what Eric's doing he bought this house he's we have this house when it's done it's all remodeled now it's worth like 850 in Long beats turn key makes sense right so but he's only in it for 680 he can rent that out he's gon a negative cash flow of probably like 600 700 bucks which is okay but the game Chang is in the back he's going to put 2 Adu in the backyard 2 ad 2 Adu cuz the
6:49 lot's big enough that's right it's going to cost him 200 to 240,000 to build it but he can rent each Adu for two grand oh wow so you getting four grand for 240 Grand worth of investment so how the ru of thumb work in real estate guys is if you buy a property for 300,000 1% Ru of thumb is you get $3,000 off of rent M you ain't getting that in California yeah you 800,000 you get three grand right but the reason why Adu is a new Cash Flow game is it cost let's say it cost 250 grand for the building these two Adu out which is only about 500 SCP fit each mhm but you can run it for 2,000 each so if it cost you 250,000 1% will be 2500 right he's getting 4 grand yeah so now that negative on the
7:39 front will be compensated by the back mhm so what happen when you get this house all done you can get like a helck on it m or you can refi get some money out to build the back out later and this is how you go around expensive area and this is about all my students so for you guys this Saturday which is tomorrow at 10:00 a.m. in Long Beach we are having my meet up with all my students like 200 of them they all meeting at this site and we're going to show them this property I'm telling you right now so they can actually see it so that's that's how you do it that's how I do it in Seattle cuz Seattle La same thing so you don't only really need 5% on a so you don't go buy a million dollar house it won't make any sense you want to buy the right property in the right area where you can actually get in I see and once you get one going now you
8:29 want here crazy when Long Beach which is one of the fastest proactive area right now trying to get that 1033 to get done imagine later on house have his own tax partial number the Adu have it own tax the other Adu have it own tax he can sell each one of these separately wow but even if you don't sell it each one of them have their own partial number it will have a whole different value it has a value of individual property versus a value of a Triplex that's the game changer and that's how you become wealthy overnight in in California that's the new game plan is just what everybody's doing not everybody CU not everybody know the game they're prepping people understand it doing this but majority of the people don't understand this so here's the thing what's up guys if you do not know
9:19 we have a patreon I want you to click in our description and go over there and check out all the beautiful stuff we have for you it's super duper access for only are super duper exclusive lovers like yourselves you're going to be getting one never been released director's Cup every week but not only that you get another fresh to hot for YouTube videos we say some crazy ████ on there two videos a week but not only that you get to join our Discord and come chat with us direct access we're in there the whole careful boy in there jumping in dog piling on people laughing playing joking whatever and you can come talk to us directly so if you like what
10:09 we do and what we've been doing for the past 10 years please support our patreon and click the link below to get all the details there's so many different tiers you can see it when you click that if you understand this you do it now because what's going to happen is this 10 years from now there's going to be less property with backyard M CU people like understand it's already on it right let's say 5 years down the road it's become almost normal I go to Bain and I say hey man you want to sell your property and the probably should be worth a million bucks bar say I want 2 million 2 million yeah I know what you going to do in my backyard you going to put 80 Us in the backyard I think it's going to be worth a lot of money so give my Give Me 2 milon you can have it no but someone else will buy it and that's how price is going to spike CU they all know what they the back and that's how more it's going to get even more expensive so if you don't do it now when
11:00 most consumer don't understand mhm see that's the that's why I'm trying to get all my California Student by now by now by now because the price will hop crazy 5 years from now when everybody understand this that separate tax number is going to be here in about a year a year and a half it's already been approved by the state they just got to work it through jurisdiction and and some cities react faster than others you got it yeah Long Beach is one of the fastest one right now that's nice a that crazy yeah Seattle done in 3 years so we're ahead of the game right now so every time I build a house I put a house and an 80 unit backyard I get two separate parts number I have two houses value of individual houses and they Spike the value twice as fast so think about this yo you buy one house and by the time you done you have three house there that's Game Changer and a
11:50 cash flow in California now yeah that's crazy see that's how you do it you guys if they want to learn more about this stuff is there a website you could plug so they can go and just follow me on Instagram they can just get all my my the link is on my Instagram yeah you said you um how many students do you have now over 3,000 students wow all across America damn wow crazy right crazy Andy we got youngster yeah from vaa and Jason right here 22 23 doing it right now yeah all the way to people right now I got people that make $5 million a year this guy right now he's from cnia make 5 million a year and he like hook me up the one in San Diego this guy he just inherited his dad passed away him and his brother you know he's older gentleman he was making good money making 3 400,000 anyway but he
12:40 that passed away inherited all this money and stuff he got a Buu much of money he just bought his first one in San Diego he bought a house and put two Adu in the backyard wow he just bought it damn just bought it and he's working on it right now so your it sounds like your method is um identify like a fixer uper that people don't want to really touch and then find the one with the garage with the backyard so you can add more units create Adu same method in Seattle everywhere oh okay yeah so try to get Max cash flow value Pera per per property I see but here the thing a lot people don't realize there's four different markets a b c d right one of my student came up with these one of this uh uh uh initial for me he says the a is the uh affluence neighborhood which is like bever Hill ain't going to work well in
13:31 there yeah like Arcadia thosee yeah B is the uh blue col neighborhood C is the contractor neighborhood and indeed a drug infested neighborhood get the ████ out get the ████ out like but but where the money is at it's in the B's and the C's or the D transition to the C's so you can get in cuz the line is moving yeah yeah what's the D that you think is going to be a c pretty soon um I think like gentrifying area yeah right where you guys say the neighborhood is that's jying here it was probably like Echo Park yeah but now it's expensive I would say now it's a yeah a the scary thing about La though is it's gentrifying but the crackheads don't leave so it's a ad you have nice and then you still have yeah you still got people ████ in the front that's right that's right so
14:23 like Long Beach you know what I mean right Long Beach back there with the D yeah M right now Long Beach is like freaking like C's and B's wow see so so you can't go into a super Aid neighborhood cuz it won't work cuz you buy a house for $2 million and how how you ever see a fixer in a in a a neighborhood see right so I like to buy home in the C's and the B yeah because the line moves eventually those C become B's later and those B become a later yeah so you got to get in so you want to find fixer in the C's and the B's you transform them make them look nice add more unit to it cuz you buy one adding multiple unit to it see that's and the the ad the on but good for you guys is there's other things you that people don't realize yeah you can't go to the Midwest and buy house for 70 but the rent's only 800 bucks but I'm going to give you a scenario watch this I'm going do the number so they can
15:14 see oh it's even better look how much did you pay for that poppular long be 472,000 472 and it cost 80 grand to rehab it wow wow and it's worth like 850 he says wow okay and he's putting 280 Us in that one 280 in the back this is what we're going to go see how did he get a house that's like half off not half off it's a fixer oh so it's like a it was like a former meth lab it's all broken out it's vacant and then you work so you're not getting half off previous still there the the value of a nice house is worth 800 get it but you buy it you know it's like buy but it's only going to cost them 8 uh 80k to get it up to yeah don't cost much you know what I mean usually cost like you know you know usually 100 Grand to put the house back together you know what I mean I just don't want to do the work or spend the time yeah so you just have hire a good contractor or become a contractor see but look at this okay I'm
16:04 going show you this one of my students said to me that uh I bought this house in New Jersey for 380,000 5 years ago it just got a praise for 800,000 and this how much Equity he just created in 5 years that mean years so listen in Seattle that's how much I spend in a year God damn you're a baller but California and Seattle it doubles historically every seven years so but this one double in 5 years wow okay now watch so he made 420 Grand in 5 years so watch I asked him how much do you make a year he said 120 Grand I said how much didn't you save he said 15 yeah so I said let's say 20 grand yeah 20 grand time 5 is 100,000
16:55 it would take him five right 100 Grand okay so 5 years he make 100 Grand but from working but in 5 years he made 420,000 wow so what happen when you go to area that has no appreciation like the Midwest yeah you could buy a house for 80 grand and ran it for $700 you make better cash flow but area like us California 20 year down the road we have like 20 million those guys still trying to get their 80 grand the equity and then Rises quicker in a bigger city I see the appreciation is better so appreciation I'll perform cash flow down in the long run yeah it's a marathon yeah if you play the LA pound appreciation outperform sprinters so are you doing that cash flow is sprinter with most of your properties that you have out here are you now putting a I don't I don't buy out here I just teach
17:45 all my student out here I just do all in Seattle cuz Seattle is the same Market is there a reason why you stay in Seattle cuz like you know how some people they say once you start get into like uh like Building Wealth you want to diversify stuff is is there a reason why you're like I just want to stay in this one market and are you ever scared if let's say the Seattle Market turns then everything gets affected at once no seide California we got a lot of ████ politics you know what I mean but they need housing oh I see but as long as the demand for housing is always there everybody's always going to need it I see and is Supply demand it's all Supply demand they got they got jobs right they got big company up there and people pay good money we we are Adu we get four Grand Bro 4 grand for a,t unit and it cost me 350 Grand to build it
18:35 cost most of my student 350 right but it's worth 700 cuz he has own tax ID number so it's double moment you get done with it but remember 1% Ru 350 would be 3500 we get 4,000 we even cash flowing on those wow so in California it's even better cuz you guys only need a 500 foot garage it can be done within like 120 Grand wow but you can rent it for like 22200 bucks yeah say I I um I also live in Hawaii and they just approved a third Adu now so because there's even a worse housing shortage out there see so yeah I was out there and I was talking with uh Brandon Turner another guyy that Des you know uh was from Bigger Pockets yeah bigger pocket and him and I was talking and how you want a cash flow in Hawaii is ADD Adu to it wow yeah see Adu is the new
19:27 Cash Flow game m that's how you that's how you overcome expensive Market they're just like regular houses now though that's crazy cuz now has his own look in California Adu is normal everybody got Adu in backyard but 10 years from now you're going to see a less and less backyard so you got to get in it I've seen listings in like Highland Park where I think they've already done it and it'll be like a 900 squ ft yeah I don't even know what to call it 900 yeah and it's list for a million dollars yeah see and it's 900 foot do you teach your students if they're like if they just don't have any active income and then and then they just want to understand how to even get started with no money cuz I teach them how to identify where the ABC neighborhood is I teach them how to go find the ugly how with the garage and then they don't can't buy at
20:17 least find out if the owner want to sell they want to sell find how much they want oh you want $472 great when do you want to sell it I want to sell it right now awesome then I teach them how to go and write it up and get it under contract wow and then for 472 and then they go to you you go hey man I know you want to buy something hey give me 25 grand for this contract like just like you did with your commercial finders yeah finders fee that's like wholesal you got it just like what you did the guy who find the opportunity make money no money down that's it found a buyer that's why you hear people on the info commercial say no money without investing that's what they talking about they cuz they're trying to find yeah they not investing they wholeselling oh see so but in the info commercial they're like like oh you can invest in real estate no money no credit everything no that's not true right yeah it still takes work yeah what do you think about uh like that method
21:08 versus like Airbnb Airbnb now think about this imagine you still go buy this as Adu instead of rent $2,000 for longterm per unit airb andb it see how much money you're making then double soste a 4,000 for two it's 8,000 for two see so the game is to change one address into three or more and then you can do a longterm or you can do a shortterm you can do a midterm Rental Right longterm will give you you know still good money 4,000 for two midterm give you a little more shortterm give you a lot more and it's up to you but Airbnb is a lot of state now is now canceling Airbnb the rules change a lot for it too yeah I think Airbnb is going to get more regulated yeah yeah but as long as you cash on long term and you do Airbnb and it get cancelled you still will make money on long long term that's true see you
21:59 winning the key is to own the real estate so let the compound appreciate I wish I knew this 5 years God damn it man why didn't you get me on the show earlier too busy Bart what are you doing bro I was trying to bring you Bart's fault
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