10 Principles To Make Millions In Real Estate: Safety Margin

Welcome back, my friend.  Listen up.  Today, I'm going to be talking about the foundational principles of how it is that you actually make money in real estate.  And I'm going to talk about towards these 10 principles that I believe you need to have hands down, a total understanding of if you want to know how to make millions of dollars.  This is the deal: I get people blowing me up all the time saying, "What does equity mean and what does this mean? And what this discount price mean? And what's cash flow?" And you know what? I've taken you for granted.  I've taken for granted this for me now, this stuff is just like second nature.  And I'm going to slow it on down, I'm going to back it up, I'm going to give you the instruction on the principles you need to understand to make money.  Today, we're going to start with the principle of safety margin, buckle up. So, check it.  Safety margin.  We're going to talk about what this is, what this means. And it all hell's back to Mr.  Warren Buffett, right? He's a good man to study. Because at one point, he was the richest man in the world.  He's given tens of billions of dollars away.  And when you look at how he made all that money, he said, "First and foremost, it comes down to this principle. " Now, you and I..  We would understand this principle under different terminology.  You've heard it before.  Buy low, sell high.  Buy low, sell high.  This is a 5-dollar marker I can buy it for $2.  And I can sell it at a discount for $4.  So, I can make 100%on my money.  The lower I buy it. . .  If I could buy it for a buck instead of2 bucks, would I have more safety or less safety? I'd have more safety.  If I could buy it for a dime and sell it for $4, would I have more safety?You would have the most safety.  This is weird because Warren Buffett is talking about safety margin in a totally opposite way than you and I have been trained to understand the world.  We've been taught to fear this word right here: Risk. Because of it, we're not people, we're Bad people.  We've been trained just to do society says.  So what do? We do we work, hard we trade dollars for hours.  And then we take that money and then we put it in someone else's hands that control and gets paid on it.  401Ks, IRAs, the stock market.  And you know what? We're putting our money in places, where we're getting back such a low return.  That if you do that your entire working life, got news for you.  It's never going to be enough.  The whichthe safe thing is then ironically the what? The risky thing.  Imagine for a moment, if we could turn that on its head.  Warren Buffett is saying the deeper discount, the higher the safety.  Or the bigger the profit, the bigger the safety.  Which means we shouldn't be talking about earning 4, 5, 6percent returns.  We should be talking about earning returns way bigger than that.  Which is why in the game of real estate, most people, they're focusing on producing an ROI, stands for a return on investment.  This is a percentage that helps you know if you put this amount of money in what am I getting back.  Dude, most people are clearing 5 to 8 percent just like a 401k or stock market. Don't do that.  For me personally, when I build my portfolio and I go to really hot markets, I'm personally earning on average 25% on my money.  Now, I want to ask you.  What's riskier 5% or 25%? Earning little or earning a lot? Or let me put it in terms of dollars for some of you that are like, "I don't think. . .  I'm almost there rise.  Give me an example. " Let's say that you invested $100.  A single Benjamin.  And if you were earning 5% on $100 then your return would be $5.  If you were earning25%, your return would be $25.  Which one's bigger?25%, 25 bucks is bigger than 5.  Which one is safer? 25.  Which one is riskier? Well, in truth, this can be safer but if it's never going to get you what you need or where you want to go then how safe are you? Not enough.  Which means there's got to be a balance between low ROI.  And then you got to have some investments where you're willing to really go for it.  Now, I don't know of a place where you can do better than real estate investing.  Because check it out, let's apply this principle.  If I do this real estate transaction. . .  And this is where I'm going to show you how to make the big money.  So, I need you to get this.  When we talk about ROI, return, what does that come from? Well number 1, it comes down to getting a good price.  Number 2, it comes down to having good cash flow.  That means every month that you own this house, someone else is renting it or leasing it.  And you're earning money above and beyond the mortgage.  And your cash flow could be$50 or it could be $500.  And then the next thing is when you sell it, have you locked in a good margin so that you're going to make a lot of money? For me, when I actually do my deals, typically I got 3 things going on.  I make 5 grand up front.  I shoot for an average $500 a month cash flow when I'm doing a lease-option.  Locally in my backyard.  And tens of thousands of dollars when I sell that home.  Let's say it's 30 grand.  5 grand plus 30 grand is $35,000If I've been making 500 a month for 3 years, that another $18,000.  You add that all together and now I'm sitting at 35,000plus 18,000.  I'm sitting at $48,000.  That margin of 48,000 is safer than a margin of $10,000.  Does that make sense? If you're not making enough money, you should be striving to know this well enough to make a lot of money versus a little money.  Because when something goes wrong on a little money, it evaporates. When something goes wrong on a lot of money, only a little bit of it evaporates and it will make sure that you have more safety.  I hope this makes sense for you because of this principle, I'd love to spend the time going way deeper on it.  And the reality is, I've taken the ten core principles.  And I call it 10X real estate. Because these principles, this foundation will give you 10X or tenfold return on your money.  And I've created a very inexpensive basic foundation course that you can have.  And all you got to do is click the link below if you want to get all 10 of them.  Right now, I'm just scratching the surface on what the safety margin principle is.  There's a lot more to understand.  But for today, here's a big picture that I want you to get from this.  Number 1, when you buy a house, you should buy it at the right price, get paid up front.  Get paid along the way, get paid at the end.  And that ROI should be big enough that the bigger the number, the bigger the what? The bigger the safety.  Friends, that's principle number 1.  In the next video, I'm going to be touching base on another core principle you need for knowing how to make millions of dollars.  If you're ready to spend time with me and really get your basic real estate foundation in place, click the link and purchase 10X so that I can give you everything you need to know for going from nothing to making millions in real estate.  Otherwise, stay tuned.  Join me for part 2 where I'm going to share another one of these principles.