Investing in the right finances for your real estate deals is one of the most important things you’ll do. Creating the right amount of debt, getting the best rates and determining cash flow on your deal is incredibly important.
Transcript
0:00
Investing in the right financing, "How do you get the right debt on a deal?" This is what Ryan calls, "The capital stack." He's got all these big words for stuff. But really, this is about how to get the best financing you can get out of a deal.
0:18
Financing works like this. Okay? Basically, I mean unless you're buying a house, if you look at the deal the house is when you're buying real estate, which we don't consider real estate, a house of actually real estate, just so you know.
0:30
I wouldn't consider a house any more real estate than that yacht I looked at this weekend. There was a big house there, that house is probably 30 million bucks. There's a there's a yacht next to it, it's $26 million. I wouldn't consider either one of them investments. They're unnecessary. You don't need them, right? Okay.
0:51
But if you were out buying a house, and I know some of you out there buying houses right now, you got a bunch of equity tied up in your house; taboo. You should not have that, okay? You're looking at 1 - 3% downpayment, right? Right? 1 to 3% downpayment. 0 - 5%, you can buy a house today in America.
1:12
Where can I get 0%? You shouldn't be buying a house if you're looking for 0%. Right? The only people that should get 0% are people that can call the bank and say, "Hey, I want 100% loan on my deal" and they're like, "Yeah, sure, whatever. You got a bunch of money in the bank."
1:27
Okay, so I'm gonna just give you a fact here, and again, the more I dig into this space particularly around us, I keep asking my attorney to let non-accredited investors invest with this CARDONE capital, and more I dig into this thing, the more I find out how stacked the deck is against the little guy. So "A" anybody, almost anybody with a credit score above Francisco. Yeah, he's from Venezuela, we're gonna go hold that against him. He's got a pulse, let's give him some money. He works for Grant Cardone, give him some more money. Okay?
2:05
So look, a house you can get like a 1 to 3% down payment. And that interest rate run, you want to pull up what the rates are today on a house loan? Because they're going to make it really appealing for you, by the way. And also, I've read an article just three days ago, Jared sent it to me about the 15 year mortgage, all of ya there like, "Oh, get a 15 year rather than a 30 year."
2:05
There's actually proof today that the 15 year mortgage is a loser. When you mortgage a house for 15 years, if you look at the 15 years, and what that investments were, it's a loser for those of you buying houses. I mean, the main reason this is a loser is because it doesn't pay you income, right? If the payments on that house are 800 a month, or 2500 a month, who's making em?
2:47
So this money is going to be 4.6%. Now, this is very important what I'm telling you right here, individual person can go get a loan today, okay, 5%, down 4.6%, interest, principal and interest. You're gonna be paying principal and interest. Also, they're going to add a bunch of stuff on here.
3:05
They're going to encourage you to do the 5% down and then they're going to charge you a premium for doing that on top to 4.6 that they never tell you about. It's a mortgage insurance.
3:15
It's like, "Buy some insurance, because we're not sure that you're actually any good. We think you're good. We'll give you a loan. Now we're going to force you, we're going to literally, like force feed you some insurance."
3:29
I remember a bank told me one day they're like, "Hey, you gotta get a loan." The deal was like 5 million bucks, it was an apartment deal. He's like, "You need to get a loan, you need to get insurance on the deal, on yourself." Different than PMI. They weren't worried about me not paying it. They're worried about me dying. They said, "We need to get you some more life insurance." I said, "Do you want me to buy life insurance, you buy it." If I'm dying, I don't need it.
3:53
Okay, now the second thing that you could borrow money on is zero, not zero, 1 to 4 units. Okay, and you're gonna get good terms right here too. You could also do this with 5% down, and probably 4.8% interest. Okay.
4:13
Now, let me show you what I'm getting my data from. This was sent to me this morning. It was a capital alert, latest debt marketing information on terms and rates. This market is focused on China these days. I was doing some research about the Chinese and the Saudis coming to America. I'm constantly researching the real estate game.
4:30
You guys are looking at flipping one deal and I'm trying to see how do I sell it to the Saudis. Why? Because the Saudis, 200 people got arrested over the weekend, the Saudis are trying to get money out of Saudi into other places where they can store their cash and they're coming to America, trust me.
4:47
So look today, okay. 10 year Treasury right here. 10 year treasuries 2.9%. Okay. When you go down here, you'll start seeing interest rate loans, multi family loan programs. Okay. 5 years, 7 year tenure, 55 to 80% leverage, 4.7 to 5.18, greater than $5 million dollars.
5:14
When I come back from break. This is not the money. I don't know if you guys can see this, you probably can't see it on your screen there. Maybe you can now. Okay, I get these updates every day.
5:25
Right now we're borrowing money for what Ryan? What's the loan we're gonna get? Okay, notice these guys have to put 45% down to get this money on these big deals. Okay, notice this right here, commercial loan programs 4.75, 4.85, 4.95, 4.75, all the way to five and a quarter. They give you this big spread.
5:46
You're like, "Oh, that's cool." 20 points. 20 points in a deal? I'm fighting right now over .006 points of a deal. That's called a BIP. I'm fighting. Why? Because it's money.
6:01
Now I know some of you right now, as soon as I started talking about the money right here in the financing, your lost. You're like, "I have no clue what we're talking about."
6:07
Because you know what we're talking about right now. We're talking about stuff that's made up. They making stuff up on you guys.
6:13
You figure it out. "I got to figure out the price." "I got to figure out my down payment." No, you need to figure it out what the money's coming from. The biggest partner you have in a real estate deal is the bank. And when I come back from break, I'm going to show you how to get money a lot cheaper than this and why it should matter to you.
Transcribed by https://otter.ai
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