I am going to show you how NOT to lose money in a potential crash or correction. I want you to protect yourself from the possible crash.
We can see that housing prices are going up, and if you recall the crash of 2008, housing prices just dropped quickly. I am going to share the essential tips to be protected if a crash happens. As I stated above, it could be tomorrow.
It could be five years from now. It is hard to pinpoint an exact time, but with the tips below, and the following Do’s and Don’ts, you will be ready!
We purchase single-family homes, which include four, three, two, and one unit. We buy these, and we rent them out to long-term tenants. We set the rent about $250 over what our costs are to ensure that as passive income.
The Dos and Don’ts of Real Estate Investing
Don’t #1: Do Not Invest For Appreciation
Appreciation is, for example, buying a home for $150,000 and waiting for it to be worth $175,000, and then trying to sell it. That is guessing that the market is going to go up. If the market drops, you could lose money while also not receiving passive income.
Don’t #2: Do Not Get Overextended On Mortgages
If the market goes down, you will still have large mortgage payments to pay out of your pocket. What we do at Master Passive Income is we don’t overextend on mortgages. We make sure the tenants are paying for the mortgage.
I don’t pay my mortgage, insurance, property management fee, or even repairs.
I calculate that all into the rental cost and then add the minimum of $250 on top of that. I teach this and a lot more in my free real estate investment course, which you can find here.
Don’t #3: Do Not Overpay For A Property
Many people I coach start to think that if a market is hot, they may want to offer above asking price. That is the opposite of what you should do. IF it is an excellent property, we may do that, but we likely won’t.
We want to capture equity, so do not offer more than asking.
We use realtors and wholesalers to help find good investments. My favorite is to use wholesalers because they find great deals well below the market value.
Let’s talk about what you should do to protect yourself. Because we don’t invest for appreciation, we want to make sure we invest for the minimum passive income of $250 a month.
Do #1: Calculate The Cost You Are Charging Tenants Correctly
You want to make it so that the down payment on the property is the only money you put in. The rest, such as principal, interest, fees, repairs, and more, are calculated into the amount you charge the tenant for, plus $250.
Your tenant is getting a nice place to live, and you do not have to work a job just to pay the mortgages on your properties.
Do #2: Capture Equity When Buying Properties
There is a saying that says, “You make money when you BUY the property.” You realize the money when you sell the property, but you make it when you buy it. You wouldn’t want to buy a property valued at $100,000 for $150,000.
You have already lost money. It would be similar to going to the store and purchasing a product by paying more than what it is labeled.
You just wouldn’t do that. As investors, we do not do that; in fact, we negotiate the prices down. If they are asking $100,000, we may offer $75,000. Even if it seems like a low-ball offer, it is up to them if they accept or not. No one is forcing them to take the offer.
In some instances, the seller may just want to get out of the property or owe little to nothing and accept the lower offers.
The people who capture equity when purchasing properties make money. The people who don’t will lose money. I like buying properties from people who don’t do this. They get fed up and just want to get rid of the property.
Start Investing in Real Estate NOW
Now that you know the do’s and don’ts, it is time to jump right into investing.
You should absolutely start investing in real estate right now. Don’t think that since there is a crash coming, that you should wait. The biggest question I get from everyone I talk to is, “Should I invest right now?”
Just because the prices have been so high on properties doesn’t mean you should wait for a crash or correction in the market. I tell them that they should start buying right now.
You should start investing now because an inevitable crash or correction is coming soon.
I will give you the reasons you should start investing in real estate TODAY and not waiting.
Reasons for Investing in Real Estate NOW
Reason #1: The Market Can Crash Or Correct At Any Time
The crash or correction could be tomorrow, or it could be five years from now. You do not want to wait five years to start investing. When I started investing in 2006, I had no idea there would be a crash in 2008.
I started buying properties that make me at least $250 a month in passive income.
Even though in 2008 the properties reduced in value, I still had my $250 a month coming in.
I thought that there was going to be a crash in 2017/2018. I was wrong, and the market kept going. It proves that you have no idea when it will happen, but if you start now, you will be ready for it when it does. There are great deals out there!
A student of mine bought six duplexes in 2020 that now make him $4,000 a month in passive income. All of this was in 15 months, during a pandemic. I have a video of an interview with this student where he explains how he did this here.
Reason #2: Learn How To Do This Business Right
Things you want to learn are building the business first and making money, and not losing money. You want to make sure you have a business that runs on its own where you have contractors, property managers, realtors, wholesalers, etc.
There are many ways to do this business wrong, and in fact, there are many people who will teach you how to do it wrong.
Most will teach the exact opposite of how I will teach you. You have to build the business first, find the right people to be in your network, and then buy the properties.
Treat each property as a piece of inventory that you put into your business. You want to learn now! If you wait for the correction, all of the properties could be purchased by investors like me and my students, who are ready now.
Reason #3: Build Your Business Right Now
You have to learn how to build the business but getting people in place for your team is essential.
I teach you the step-by-step process through my free real estate investing course and my wealth builders membership, where I teach you how to invest. After the step-by-step process and the courses, you will have the business ready and the people in place to start making you money.
You will already have people to find your properties, fix up the properties and manage them as well. You will not have to do a thing because you have set up your business the correct way.
Reason #4: Know What A Good Deal Is Before You Buy It
If you jump into buying a property without knowing YOUR market, you could end up with a lousy deal and possibly lose money.
My students and I invest all over the country. In specific cities, we know which properties are for sale because we are looking every day. We analyze the properties to decide if it is a good deal or not.
If there is a correction or crash, you will see the properties reduce in price by as much as a quarter.
When I started investing in 2006, I was living in California. Duplexes were selling for $300,000, and there was no room to receive passive income. So I started looking for places in Ohio, and I found duplexes going for $80,000.
If I had bought it, I would have lost money. It turns out the property was only worth $45,000 or so.
I didn’t lose money because I know the market there and didn’t buy. I am happy I paused and decided to build my business first rather than jump at the property to find out it wasn’t a good deal.
A huge benefit to building the business first is that you get EXPERTS on your team. In the market you are looking to invest in, the contractors, property managers, and realtors are experts in that specific market. I will show you how to find them to join your team.
Premium online courses for any level of investor: beginner-advanced. Completely go at your own pace and can be taken through “Self-Study” or through “Membership”.
Inside the membership, attend live 90-minute Group Coaching sessions with Coach Dustin Heiner as he and the MPI Coaches teach you how to build a successful real estate investing business.
Connect with the MPI Coaches and the other like-minded investors inside the MPI Mastermind Community. Ask questions about investing and get feedback how to be successful in your business.