Tom BrickMan Real Estate Investing 101 Special

Week’s Top Picks

Quick Entrepreneurial Tales, Investment Stories, Interesting Stuff & Resources to Spark Your Fire

First up, the best “average Joe or Sally turned rich” case studies from around the internet…and more from the web.

(1) OpenAI had its 2023 Dev Day this week and had some insane new AI releases that can be useful to your business

(2) RYSE, with a similar upcoming story to RING (Sold for $1 Billion) Received 2 offers from the Canadian shark tank “Dragon’s Den”. With a potential market larger than RING, will RYSE be the next 10-figure Exit?

(3) Want to learn AI in every day from the fastest-growing AI newsletter? Sign up for the Superhuman AI Newsletter - a free newsletter with 500,000+ readers.

Here's a sneak peek of what we’ll cover in today’s Real Estate Investing special:

✔️ Discover how Tom started investing in real estate from the ground up.
✔️ Real Estate “House Hacking”
✔️ Getting into your very own first property
✔️ Pros and Cons of Investing in Real Estate
✔️ Tom’s real estate property portfolio preference and suggestions
✔️ Dive into seller’s and buyer’s markets + emotional buying

Hey Cashflowers,

Welcome to this week's dive into the real estate investing world. We're bringing beginner real estate investing tactics, talking house hacking, spotlighting Tom Brickman's success story, explaining the real estate market change, and dissecting the pros and cons of real estate investing….

Where to start?

Getting into the Game: How Tom Got Started in Real Estate

For starters, Tom is 41 years of age and is based in Dallas, Texas. He started investing in Real Estate when he was 21 while working at the GAP for $8.50 an hour.

He’s been buying real estate in Toledo Ohio and Dallas Texas for almost 20 years now. He hit financial independence at 39 and left his job he had been working for 16 years at a movie theater and now focuses on buying one house every year from the profits of his eBay profits.

To start he could barely get approved for a $30,000 dollar house, but when the underwriter he spoke to suggested a multifamily or duplex in order to dedicate the rent towards his income, he could get approved for much more.

At the time he didn’t even know this was called “House Hacking” but it’s a great strategy to buy higher-valued properties, live in them, and cashflow them all at the same time.

Back to Tom’s story: He was able to qualify for a $100,000 property with that strategy and found a $90,000 duplex. He put 10% with his GAP stock and lived in one unit while renting the other.

At the time his mortgage, tax, and insurance summed up to $738, while his tenant paid him $600 a month in rent.

The primary goal when house hacking multi-unit properties is to actually live in one of the units, and rent out the other unit(s) to pay your own fees.

This strategy is useful for first-time home buyers because of the ability to qualify for a higher-valued property, while still being able to afford it and make a profit from it in the end

The goals of buying your first property should be:

  •  Introduction to the space: See what you like about real estate investing, the ups, and downs, what factors you can consider for the next homes, and whether or not it’s a good choice for your investing energy.

  • Learning to profit: Obviously, the goal with any investments is to actually make a profit, so buying your first house is a great way to understand what you’re going to have to do in the future to actually.

  • Finding ways to scale: Business and investing, in most cases, is about scale. If you can do more at a higher profit margin you’ll make more money. In real estate, that boils down to how you can buy more properties and cashflow each one more effectively than the last. Getting into your first property is one of the best ways to directly look into how you can go from one property to 10+ just like Tom!

Solo Ventures

The Upsides and Challenges of Owning Investment Properties

In today's age with constant fright and excitement about the real estate market, it’s often a throw-up on whether or not it’s a good idea to invest for beginners

Especially when considering your first investment property, as you’re going to be the one managing everything, working on everything, and dealing with all the issues that come up. All while you’ll most likely be living in the place.

But is it worth the time and energy to get into the market? Let’s weigh out some pros and cons to help guide your decision:

Pros of Buying an Investment Property:

  1. Lower Cost of Living: As Tom stated, he was paying a total of $138 each month after collecting rent. If you house-hack a duplex or triplex like he did, it’s entirely possible to live there cheaper than renting somewhere.

  2. Investing vs. Paying: Sure you are paying less each month, but the main difference is where that money is going. Your money is actually going towards the value of the home and its resale value, not to a landlord.

  3. Leverage: If you put down $9,000 on a property like Tom, and the value of the property increases by 10%, you’re getting a return on the value of the property, not your initial investment. In that case, it would be 10% of $90,000, which is another $9,000.

  4. Consistent Cashflow: As long as you have tenants paying rent, the investment properties will always be cash flowing.

Cons of Buying an Investment Property:

  1. Maintenance costs: If something breaks in your unit or your tenant breaks something in theirs, the cost is on you as you’re the landlord.

  2. Higher Initial Costs: You can’t just pay the first month’s rent when buying a property, you’re going to have to put some investment down.

  3. Dealing with tenants: While you’ll be paying less for rent, the amount of headaches you have with rather arrogant tenants can be frustrating, so be prepared for that.

Investing in real estate, especially at a young age, can be challenging, but the pros that come with it can lead to a lifelong successful investment journey.

As with any venture though, you’re going to have challenges at an early age, and real estate is no exception.

Real Estate Suggestions

Tom Brickman’s Portfolio and Property Suggestions

Since Tom has been investing in real estate for over 20 years, and from buying commercial properties to single-family properties to multi-family complexes, he’s found some preferences along the way.

One preference he looks for now is single-family properties, but not because of the profit. In his experience, they make less cash flow, but they are way less headache than multi-family properties.

This is something you also have to consider when investing in anything, especially real estate. Some returns can be higher than others, but what are they going to cost you in the end?

Another thing he suggests is that nothing is perfect, and you need to get outside of your comfort zone. Sometimes the house you want to buy is in the wrong neighborhood, or the right house is in a neighborhood you can’t afford. 

One of the properties he talks about specifically is a property that’s in the right neighborhood but needs some work to bring it up to the standard and value of the other properties.

This is something that’s totally fine and normal, and in his experience, he has fixed homes all the way from the foundation to the littlest things.

Now another great tip from Tom that goes along with his preferences is keeping up on costs and maintenance.

In the short term, skipping maintenance and cleanings for things like furnaces is a way to save a few bucks, but in the long term, Tom says he saves more money than other real estate investors by keeping up on it.

Buyers vs. Sellers Markets

How to Avoid Over-Paying For an Investment Property

Tom goes into depth multiple times over the course of the space about buyers and seller markets, and why he prefers certain times of the year to buy homes.

Tom prefers the times of the year when fewer people are buying homes, usually in the holiday months as many families don’t want to move when their kids start school or when Christmas is happening.

The problem with buying homes while everybody else is that others are buying homes because they want to live there, involving emotions that commonly cause people to want to pay more for homes upfront.

Emotional home buyers putting an extra 10k on their offer

When real estate investing, it’s a business, meaning you want to pay the least possible to get the home at the lowest cost. If you’re competing against others and the price gets driven up an extra $10,000, that’s a huge loss.

In the months between August and December, most people aren’t buying homes, allowing you to buy a home at a lower price without any competitors.

You can call it either way, but in this instance, we are going to call it a buyers market, as the buyer has more preference and negotiability. On the flip side when multiple offers are made and the seller has the up-side, it’s a seller’s market.

To finish off this section we will cover a couple tips Tom Gives about these markets, and how he deals with each one:

  •  Cold Callers: Tom pays cold callers during the busier months of the year when others are buying homes to try to find off-market homes before they end up on the market and receive other offers. Even though he pays nearly $1500 a month for this, he can save upwards of $10,000 on properties by finding them this way.

  • People in the space: A great way to know about houses before they actually hit the market is to know people who provide services pre-market. For example, Tom brings up a guy who takes pictures of houses before they go on the market and knows about houses because of that.

  • Avoid Busy Markets: Plain and simple: If you want to buy without other offers against your own, don’t buy when others are buying!

Thank you for diving deep with us into the world of real estate investing this week. Just like Tom, your real estate investing journey can start with just one property!

With the right information and investing strategy, real estate investing is easily attainable for anyone looking to get into the market.


Cashflow Chronicles

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