Why 80% of Millionaires Come From Real Estate

       

I had a real estate coaching student come to me recently and asked me if she should invest her equity of her home into other real estate.

And it's a question she was getting from her clients as well.

So I explained this to her in a story form, so she could explain it to her clients as well.

So let's assume that you had $400,000 in equity in your home. And you leave $200,000 equity in your home and you pull $200,000 out.

Now, how do I pull it out? I refinance it or I get a HELOC loan for that $200,000.

So now I have $200,000. Of course, I'm paying interest on it. It's not free money. Let's assume I'm paying 5.5% interest today.

With that 5.5% interest, I now have to beat that rate of return in order to make money.

So let's assume then I go out and I take that $200,000 and I find an investment property. Maybe it's a duplex or a triplex, and I spent $700,000 on it.

That's reasonable because they gotta put 25% down generally on investment...

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How Massive Equity Gains Unlock Even Bigger Opportunities

         

Some pretty amazing news from CoreLogic this week shows that the average American in the country had an equity gain of drum roll

$55,300.

That's more than a lot of people making a year with their normal wage.

So that's a huge increase. That's why real estate's one of the number one wealth pullers in America is this equity buildup.

Now, if you happen to be on the west coast where I live, it's even greater. And in a lot of areas of the country, it's even greater. For instance, in Washington state, that number was $95,000. Where I live here in Oregon, it was $59,000. And if you happen to live in California, one of the highest equity gains in the country, $117,000 in equity gain. Now, what do we do with this information?

Well, one thing we can do is do a social media post or an email out to our entire database.

And here's what we might say:

"Hey, your home is better than average, right? The average...

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Home Equity is Up 29.3% — Here’s What That Means

       

I have some good news for people that already own a home that are in your database.

Here's the stats:

According to the KCM blog, home equity is up 29.3% across the board — which equals $51,500 in added equity over the past 12 months.

So then the question is:

Well, what can people do with that equity?

And there are a lot of things they could do:

They could pull it out in cash with a refinance, of course. They could take that equity and use it as a way to move into their dream home by stepping up — and there's a lot of people out there that may not realize that they can step up into their dream home with very little changes in their payment because of their equity.

There are tons of conversations you can have here.

Take that data, repackage it, and push it out to your people in your sphere of influence and start having conversations with them.

You could say, "Hey, would you like to get a specific number for how much equity build...

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How To Convince The Most Skeptical Person To Buy Their First House

        

If you want a great marketing message that you can put out to your audiences today. I'm going to give you one right now.

And it's not from me. It actually comes from the NAR Economist Blog. If you haven't checked that out, check it out. I pull a lot of data out of there all the time.

But they had this great example of how much equity someone would have built up over a 30 year period.

And so they took an average home price and they went back 30 years ago and said, what was the average home price? What would be your guess?

The average home price 30 years ago was $103,333 — an odd number, but that's what it was.

Then they took somebody that put 10% down back then, had an average payment based on the interest rates at the time, and figured out how much equity they would have built up through equity appreciation and paying off their mortgage.

So what would they end up with net worth today just from their house?

The answer is...

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The $5 Billion “Hedge Fund Secret” You Can Steal For Your Business

        

The Wall Street Journal just put out an interesting article about a company called Invesco putting $5 billion into a hedge fund that's purchasing single family homes.

And they're not alone. There's another $6.5 billion dollars targeted with other hedge funds doing exactly the same thing.

Now, why are these hedge funds going after single family homes?

Well, they've identified that they can get a cap rate of as much as 6.8%. That's the target rate that they're comparing to apartment buildings and commercial — which is like the low sixes.

So what they're saying is: we're going to make money on this. And we're going to rent these houses to millennials that are choosing not to become homeowners.

What we need to do as an industry, number one is to recognize that we should be investing in single family homes as well. But also we need to encourage everybody that's not a homeowner today to get into the real estate arena and buy their...

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Why a Ton Of Foreclosures Aren’t About To Hit The Market

         

Are a ton of foreclosures about to hit the market?

The answer is absolutely not. Let me tell you why:

This is a myth that's happening among a lot of renters. People that don't own homes yet are all waiting for the shoe to drop and a bunch of foreclosures to hit the market. Let me tell you why it's not going to happen:

There is something called forbearance. And a lot of people did tap into it at the beginning of the pandemic. The experts thought that about 30% of mortgage holders would need to tap into it at the beginning of the pandemic. In other words, forbearance is where a lender gives you some level of grace.

They say, "Hey, you can stop making your payments for a while, or you can make a minimum payment or we'll tack on your payments to the end of the loan." There are a lot of different variations to it.

But the government said they want everybody to have a six-month opportunity if they've been struck by COVID or...

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This Little-Known Market Contains 38% of All Sellers

       

What percentage of Americans would you guess paid off their home?

Think about that for a second: Completely own their home, free and clear.

In other words, when you're driving down the street in your neighborhood, out of 10 homes, how many people have paid their home off and outright own it?

Would it be 2 homes, 3 homes, 4 homes?

The answer is 38% of Americans have paid off their home in full, which is absolutely amazing.

The equity for homes in America is off the charts. It's incredible. So that's good.

Now, why do I bring this up?

The reason I bring it up is because people that have equity in their home actually have a huge, powerful advantage when it comes to moving up to their dream home.

And here's why:

They can actually do something that a lot of sellers can't. They could go buy a home and finance their second home (what they're going to buy next). And they won't have two mortgages.

So they have no pressure on themselves when it...

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