Phill Grove's Big Live Event

I recently attended The Big Live Event in Washington DC. By being part of the DC/NoVa Real Estate Networking Club, I was able to attend the 3 day event for free. Although there was an upsell for coaching, training, and tools, it was not pressured. I’ve captured my notes from the event and thought I’d share some morsels with you.

3 Essential REI Skills

When I started learning about real estate investing (REI), I assumed I should have a specific focus on what I want, yet a big takeaway from Phill is that you should focus on what they need by learning multiple strategies that can help the homeowner facing any of a number of hardships.

Phill outlined 3 skills that every investor must master or partner on:

Marketing -this should take 85% of your time. Get those leads!
Sales - convert those leads into transactions
Strategy - Do not be a one trick pony. Listen to the homeowner and use a strategy that can help solve their problem

The takeaway here is that every lead is valuable. Ryan Deis suggests...

If you do not completely 'make money on every lead', eventually you will go out of business.

Rules for Buy and Hold

Look for high migration areas = growing demand (people arriving > people leaving) Use haul.com took for quotes to/from locations
Primary considerations: maximum appreciation
Classic urban 3/2
Below to average median price
High migration areas
Fixed supply areas (not near buildable land) - use google satellite view
Secondary conditions FO cash flow
Discount
Location, schools, amenities
Competing rentals
Build quality, maintenance projections
What to buy
City center (downtown) - expensive houses
BUY AND HOLD Inner city - cheap (old) houses
FIX AND FLIP Farther out - cheap land but expensive new homes get 2x money in suburbs
It's all about the land - own the best land possible -own the inner city
Don't compete with builders

When you are buying a rental, focus on the dirt, not the house.

Top 10 Investor Mistakes

Buy new homes
Buy in areas that will have more construction (who wants to buy an old home when they can buy new?)
Buy in own neighborhood - bad leverage, bad cash flow
Buy for price "great deal" in rotten appreciation area - discount doesn't matter
Buy for cash flow in rotten appreciation areas
Buy in areas with lots of other rental properties
Buy for the "future potential" (urban crime area)
Buy for "themselves" (personal preference)
Buy based on advice from realtors rather than investors
Buy too big or too small

Maximum Allowable Offer (MAO)

The concept of Maximum Allowable Offer suggests that you need to calculate what you are willing to pay in order for the deal to make sense (for buy and hold). Phil's formula is:

Maximum Allowable Offer (MAO) = After Repair Value (ARV) x 70% - minus repair costs

For those new to investing, be sure to create a repair estimate that includes 15% contingency.

Stretch Goal Number 1: 20K/month Passive Income

So Phill proposed a challenge that we first seek to earn 20K of passive net income per month. He argues that you can live comfortably with the following breakdown:
Job Replacement: 10K/month
1M mortgage: 8K/month
Vacation, leisure: 2K/month
Total: 20k/month

Yes, it is a lot to digest. I was very skeptical going into the event because I knew there would be an upsell. But it did seem legit. Why work hard yourself to learn when you can copy a working method? What guru stories do you have? @gumshoeonline