Lessons From A Top Investor
Last week we had the pleasure of award-winning CEO of Keyspire, Michael Sarracini, joining the REC Brunch. The best-selling author presented a wealth of knowledge to investors new and old on how to tactically act on their goals. With over 100,000 people trained and an ever expanding investor community of over 40,000, he is one of the most valuable voices in the real estate community. Along with his business partner, Scott McGillivray, they’ve established themselves as some of the most influential voices in this industry. Here is a recap of the golden nuggets he provided to the REC Insiders.
This pandemic has negatively influenced so many businesses, but the real estate industry remains secure. If it dips, it will inevitably rise like it always does. Shelter is a necessity, therefore being a requirement, therefore maintaining stability. Uncertainty creates profit, meaning that people are too scared to enact on valuable investments when they present themselves during turbulent times. If you get educated and find the right area you can do a lot with going on the offensive; but if you’re uncomfortable or can’t afford it, remaining on the defensive is a wise course of action.
What originally appealed to Michael about this industry was the freedom it generated through financial success. He realized that with patience a financial empire that could be built in a decade. Initially real estate gave him hope, and then it gave him purpose, which he found invigorating. This became a gateway to do more things through income and security. He quickly discovered that success was completely scalable. If he was comfortable with what he had, he could keep it at that, but there will always be room to do more.
Real estate is the safest investment in order to leverage for more value. It’s a method of utilizing your debt or borrowed capital to develop a strong return on investment. If you put 5% down you will receive 5 times more on your return. This is also possible with stocks, but the risk level is rather high, when real estate is so minimal in risk; which is especially advantageous given the possible benefits.
You need to understand that you’re not going to make money right away. It took Michael, an exceptionally successful investor, 5 years to begin to develop his wealth. Every 5 years you have the ability to refinance to pull out the equity and get even more property. This creates a laddering effect to more and more wealth.
There are 4 ways to win in real estate as an investor. 1) Cashflow. 2) Principal recapture: On rental properties, every single month the tenant is paying down your mortgage. 3) Passive appreciation: Values increase over time. 4) Active appreciation: If you do the right renovations to increase the value, you can increase cashflow. Flipping to yourself is a strong way to quickly build your portfolio. Renovating the property and boosting the rent can greatly increase your cashflow and the value of the property. In order to maximize your profit margins, invest in the areas where returns are the strongest.
Getting educated will accelerate your results. The entire process is rather overwhelming when you begin, but when you get involved it becomes infinitely easier. Just jump in and you'll figure it out.
You can use other people’s money to build your own empire. Just because you don’t have enough for a down payment on a property doesn’t mean you can’t get one now. You can loan money or do a joint venture with friends and family. To start you need to have a sphere of influence that you trust and is looking to help you succeed. To get people on board, show them the results of what you can accomplish over time. It’s not about swindling anyone into a deal, but presenting the evidence of the fortune they can achieve.
Be present to create more opportunities. Get yourself involved more in the community by reaching out to people and building connections. If you want a strong sphere of influence for investors be aware that it’s about the quality of your group, not how large it is.
When it comes down to it, being successful in real estate is about taking action. Yes, passive appreciation has so much value over time, but going out and finding the right property in the right area that meets your needs is going to take effort. If you want to maximize your profits, it will require your due diligence. We are all capable of achieving success in this industry, it just takes patience and effort.
