Don't go down with the ship....a tale of 1 million dollars!

Facebook Live post: 4/4/2018

In this original FB live post, Cashflow Kris discusses the state of the economy as trade war loom and the stock market is taking a massive hit.

Kris talks about the history or the stock market, and discusses the topic of INSANITY! Finally Kris will break down a tale of a Million dollars, invested 2 different ways in 2018 and 2019.

Please leave a comment or question regarding this or any other topic.

Free REI online seminar tomorrow 4/5/18 https://events.genndi.com/register/169105139238471856/3024f855c6

How a down market can KILL your retirement plan!

How a down market can KILL your retirement plan!

Cashflow Kris explains how a down year in the stock market can set your retirement goals back in a big way. 

Do you have a plan to avoid the next stock market bust? 

#retirement #stockmarket #realestate #rei

Transcription: 
Hey everybody! How are you doing? It's Kris Ontiveros with Investors Edge Real Estate Group here in Phoenix, Arizona.
In our current market, which we are in February of 2018, we've had a couple of really bad down days. The stock market has had two 4+% losses in just the last week, so all of the gains that we had, which were awesome, the stock market has been doing fantastic, don't get me wrong; but all those gains that we had are just instantly wiped out. That is the problem, and that is the trouble with investing in the stock market. Majority of America dumped 96% of all retirement money is in the stock market. Only 4% is self-directed, and that's a major problem. 
On this video, I'm want to show you how one down year can really, really hurt your retirement plan. This is the problem, your financial adviser, they're not going to tell you about down years. One of the differences between real estate and the stock market is that with real estate, in cash flow, you're not going to have a down year. You're always going to be able to control the amount of income that you have, and so that cash flow is never going to be a negative. You're never going to lose money on a deal. Now, real estate values also go up and down. They're not nearly as volatile, but you might have a down year. But the beauty is when you're talking about retirement, the value of the real estate makes zero difference. It's all about the cash flow. Again, that's not something your financial advisor is going to tell you about, because he probably doesn't know anything about it.
Let's get started. This blue line here, this is what the stock market industry promises you. This is what Wall Street says is going to happen. Let's just do some math. If we start at 50,000, and we make 10% a year, over 15 years, you'll be over at 208,000. Really good. It's nice upward trend. When you look at the books, if you read the books, and you go on their sites, these are really the kind of lines that you're going to see, but this is not realistic with the stock market. I want to show you what one bad year could do because this year might be the bad year. I hope it's not. I hope the stock market continues to keep going up and up, but we all know it's not going to happen. It's been, what about, 10 years now since we've had the last down markets. We've got 10 up years, which is not common at all. 
Let's look at this. Here's what Wall Street tells you is going to happen with your 50,000 when you invest it. But here's the reality. Let's grab the red marker. This is what happens if you have a 10% down year. Let's just say you started last year with 50,000. Let's guess that in 2018, we're going to have a negative 10, which happens all the time. That's going to take us down to below 50. And now, our starting point is much lower. Assuming that there's only one down year, which it's not going to happen, but let's just look at it. We go, it goes up, up, up. Eventually, we're going to get up to around the 170,000. If we have one down year, it's going to set you back. Instead of 208,000, you're going to be almost $40,000 short of that; 20% short on one down year.
Here's the problem is the gap. Let's just say you don't even have a 10% down year. Let's just say you have only a 5%. If your projected 10, 10, 10, and you had a negative 5, if you want to catch up the next year, it's going to take a 27% return to get you back to even. If you go down here, and you want to get, and you're two back up to here, that's a 27% return that you're going to need to get the following year. Do you know how to make 27%? Better yet, does your financial adviser know how to make 27%? I highly doubt it.
The next line we're going to look at is cash flow. Strictly rental real estate. Our rental income from our real estate. This what is great about real estate. There's multiple ways to make money. This is for the passive investor in the stock market. The only way for them to make money is in an up market. Yes, if you get technical, and you know how to trade, you can make money in a down market. But that's not the passive investor. The passive investor has to have an up market to make money. 
Here's what cash flow looks like. As you start here with ... All we're going to do is assume a 3% appreciation rate in rent, and later on, we're only going to show a 3% appreciation rate in value, which we're not too worried about value, but I still want to show you the power of it. At 3% growth, real estate is not going to keep up with the stock market at 10%. It generally doesn't. It is a little bit less, but with all the many benefits of real estate, it makes it a much better return in the long run. Here's our cash flow. You can see it's going to be a nice 3% trend. Up, up, up, up. stock market is finally going to recover and surpass us, boom; 140,000. We took our 50,000, and we've taken it up, and now it's worth 140,000. That's just going to go. 
You can see, oh, stock market's got us beaten. Even with the down market, the stock market's got us beaten. That's not true. Let's look at a traditional stock market. A traditional stock market is going to have at least two down years in 15 years. Really that last year might be a third. Now, let's look at the stock market with two down periods. We're starting down here again. Stock market is going to go up. But then, we've hit the seven-year mark again, and so now we're going to have another down year. And then, it continues to recover, and boom. A little bit less than real estate at only 3%. Your traditional, this is what's going to happen. It doesn't go on a straight line. You have your down years in the stock market. 
A traditional stock market is going to hit you, get you up to about 140,000 opposed to 145,000 for your straight cash flow. But what if you have a down year? That's what I don't like about stock market. One of many things, is it's a financial roller coaster. When are you going to get off? Maybe I want to retire in 2030. What's the stock market going to be like? Any prognosticators out there? Anybody with that magic ball, that magic crystal ball? Tell me please where is the stock market going to be in 2030. Is it going to be an up market? Is it going to be a down market? Are we going to be higher? Lower? Where are we going to be? You don't know. Nobody knows. That's why I like real estate. 
What if you have a down year when you want to retire? Instead of up here at 140, another 10 negative, another bad year, you're down to 114,000. They promised you, "Oh yeah, just stick it in for the long term. You'll be at 208,000." When in reality, there's a really good chance you're going to be at 114,000. This is very common. A lot of people have their plan but it requires too many assumptions by your financial adviser, and a lot of times, you're not going to get there. The main reason is because they don't have a very good return on investment. 
This is just the cash flow in real estate. Now, we're going to get to the nitty-gritty on why real estate is so much better. As I've said in my previous videos, there's five reasons why real estate is a superior investment. Number one is leverage. With the same 50,000, we can leverage at 5 to 1, but we're just going to assume 4 to 1. For a $50,000 down payment, we can buy a $200,000 property. Now, we're only going to assume a 3% appreciation rate on this one. On this we're talking about equity. Two of the great things about real estate: First of all, that it goes up and you get to leverage, and so your larger asset is going up in value; but secondly, is with that leverage, your tenant is paying your loan down. Every single month, your loan gets smaller and smaller. The value goes up, the loan goes down, and so your equity grows. 
If you want to look at the equity portion, you put 50,000 down. This is assuming we're not getting a discount. You put 50,000 down, so you have 50,000 in equity. You owe 150. Watch it grow. It is going to grow so much that we're not even going to be able keep it on the chart. If we wanted to write this down, it would be way up there, because your equity in 15 years is going to be 311,000. That's only at a 3% appreciation rate. Historically, for the last 100 years, Arizona has appreciated at around the 6% to 7% clip. We're only going half on the valuation. We're only going half estimates on the cash flow as well. 
You can see, the difference is so clear. I don't understand why people are in the stock market when you have an investment like real estate. Again, let's look at it. Very, very best case scenario, you're up here. You turn your 50,000. There's a 15-year plan; it's a long time. You turn your 50 into 208. Great. What are you going to do with that? Next, most likely, you're going to be between 140,000 and 170,000 in the stock market. Your cash flow is going to take that 50 up, and you're going to make 145,000 in those 15 years. But just look at your equity, guys. 
Remember now, this property, you put it on a 15-year mortgage, so it started here. While the valuations were going up, the amount you owe is going down. After 15 years, you own nothing on the property. It's worth 311. It's probably going to be worth more than that. This is a very conservative number. You have 300,000 in equity. You've made a 145,000 in cash flow. And so now you have a value of over $450,000. That's going to be double. It's going to be triple. It's going to be a much better investment than the stock market. 
Here it is. If you want to protect your retirement account, don't worry about the stock market roller coaster. Worry about cash flow. Worry about passive income. And use all the benefits, the five benefits of real estate, to improve your retirement plan. If you to set up an individual retirement plan, and I'm talking here's where you are, here's where you need to be, we can get you there. We will set up an action plan so you can create the cash flow that you need to be able to retire wealthy, instead of just getting by.

West Phoenix Wholesale Property

Kris does a walk through in a West Phoenix wholesale deal. This property needs a lot of work and is being sold as-is. This is a typical deal you can buy well under fair market value. When purchasing a rental or personal home you should consider buying a wholesale deal from Investors Edge Real Estate Group. By purchasing and rehabbing a property (we have all the contractors you need), you will have instant equity. In this example, if you purchased at $115k and put 15k into the property, you would have $20k instant equity, as the property would sell for $150-$155k in today's market. 
If you want to discuss anything real estate or wealth building, send us a message and lets connect!

Kris Ontiveros
krisonti@gmail.com

Flip tip - Appliances

https://youtu.be/cvlBQ_V0wOI

Flip tip - 3 tips when buying appliances

When we are flipping homes we are looking for consistency. One of our consistent items has been our appliances. We use the same builder grade appliances all of our properties up to $300k. We will upgrade for higher priced properties since they are generally pickier buyers. Here are 3 tips to keep in mind when choosing your appliacnces. 

1. Use stainless steel: We use stainless steel appliances because it is very popular and is a big bang for the buck. We always want a few WOW!! factors with our properties. People buy based on emotions, so the more warm fuzzies they have while viewing our properties the better. 

2. Buy builder grade appliances at your local appliance wholesaler.
We use Frigidaire or GE appliances, depending on what is currently on sale. We receive investor prices at a local appliance store which saves us a little bit each purchase.

3. Skip the refrigerator.
There is alays differing opinions with this one. Many people believe in providing a refrigerator. I've always gotten away without putting them in my flips. Buyers won't be impressed with a cheap entry level refrigerator, and a good double door refrigerator is $1500 - $2,000. When you are flippin 20+ homes per year that really adds up. 
We always put in matching microwave, dishwasher, and stove combos. This generally runs around $1,200 installed and with all the installation kits. 

We found a system that works and we stick with it. Appliances is now one item we don't have to think about. We just order them and move on to the next issue. The more systems and processes you can incorporate into your business the more time you will have to grow and do more deals. 


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Wholesale Duplex for sale- Mesa Arizona - $85k

Property walk thru - South Phoenix fire damage

In this video Kris walks through our fire damaged property in South Phoenix. At this point we have gutted the property, removed all drywall, old electric, old ducts, and we are down to the studs. We've replaced the burned trusses and will be putting up the new wood for the roof.
Once we have the trusses and framing in place we will begin with the rough systems. We will be putting in all new duct work, electric wiring (including cable and speaker wire), and plumbing.
Follow us as we transform this burned mess into a beautiful home that will be the nicest home on the block.


Follow us on Instagram @azhomerenovator or @azflipguys and on Facebook @azflipguys and @investorsedgeaz.

Property walk thru - South Phoenix fire damage

In this video Kris walks through our fire damaged property in South Phoenix. At this point we have gutted the property, removed all drywall, old electric, old ducts, and we are down to the studs. We've replaced the burned trusses and will be putting up the new wood for the roof.
Once we have the trusses and framing in place we will begin with the rough systems. We will be putting in all new duct work, electric wiring (including cable and speaker wire), and plumbing.
Follow us as we transform this burned mess into a beautiful home that will be the nicest home on the block.


Follow us on Instagram @azhomerenovator or @azflipguys and on Facebook @azflipguys and @investorsedgeaz.

Flip tip - know what termites look like.

My home inspector always told me that there are 2 types of homes in Arizona, homes with termites, and homes that are GOING TO have termites! 
In Arizona we have a lot of homeowners that are originally from somewhere else. In a lot of parts of the country termites can cause a lot of damage. In Arizona, the can certainly cause damage but they are not as severe as other states. That said, it's important to know what termites look like and how to take care of the problem. 
Termites dig into wood and other building materials. They tunnel in and create tubes that are visible from the outside. In this video I show you what an active termite tube looks like. 
If you see termite tubes don't delay, contact us today and we can refer our top pest control companies to come out and take care of your problem. 

Contact us today.

602-292-5747 or krisonti@gmail.com

Flip tip - overcoming challenges

In this business we come across challenges on a daily basis. It's important to keep a calm head, break down the issue, run it by a few people, and come up with the best solution.
In this video we discuss a situation I had when my architect didn't have the right calculations, so I came up with a solution that did cost extra money, but ended up being an asset.

We have lots of free tips for real estate investors and flippers.  Follow us on Instagram @azflipguys or at www.Facebookcom/azflipguys


Kris Ontiveros
602-292-5747
krisonti@gmail.com

AirBnB tips

In this video I describe how I acquired an AirBnB rental for only $1200 down! You can create cashflow with this incredible system. You don't even need to be a homeowner to take advantage.

We have lots of free tips for real estate investors and flippers.

Follow us on Instagram @azflipguys or at www.Facebookcom/azflipguys

Finding hidden gem's - Antique Stove

The $30,000 land deal

This is a great example of making the most out of a small deal. Two local wholesalers brought this deal to my partner BP. They had it locked up for $8,000 and needed to close quickly. So they bought the property and immediately listed it for sale. After checking the comparables, I believed the lots were worth around $20 to $25k each. We listed them separately for $25k or both for $45k.
I received a call from a local investor who found my listings on Zillow. He is looking to place his cash into Avondale land. He just wants to hold onto the lots for the next 10 years or so. We negotiated and settled on $40k for both lots. It is an all cash offer with a 2 week close. So they will be making over 30k on a cheap double lot.
I hope this video motivates you to get out there and find those deals. We team up with beginner investors so they know they can make those offers and they have legit buyers backing them up. Bring us your deals and we will fund, flip, and split the profits.

www.facebook.com/azflipguys
http://phxcashflow.blogspot.com/

Flip tip - How to estimate repairs in under 10 minutes

How to estimate repairs in under 10 minutes

By: Kris Ontiveros

Real estate investing is a math equation. To come up with the correct outcome you need to have accurate numbers. The two most vital numbers are the ARV (after repair value), this is home much the home is worth once it is remodeled. This is usually going to be a top of the market value. The second of the two vital numbers is repairs, how much it will cost to remodel the property.

In our current real estate landscape, there is a lot of competition and the good deals go quickly. As a Real estate investor you have to make quick decisions when you come across a new deal. It is vital to be able to give a seller or wholesaler a quick yes or no decision when they bring you a deal.

We created a process to be able to quickly and accurately estimate repairs. We use several factors to quickly and safely estimate repairs. With this system we can walk through a property and within 10 minutes have a good idea what it will cost to remodel a property. We can take that information and the ARV (after repair value) to help create your offer.

Be aware, every market is different, these numbers represent single family homes, under $200,000, in the Phoenix, Arizona area in 2016. Markets are constantly changing, you will need to adjust this formula to match your particular market.

The first thing we do is find out how much a basic cosmetic remodel would cost. In an average neighborhood in my market, I estimate $10/sf. So an average 1500sf house would cost around $15,000.

A basic cosmetic remodel can include flooring, paint, lights, fans, faucets, light landscaping, and a few miscellaneous items.  

Next we add in all other major items like:

$4,000 for a new kitchen

$3,000 for a new bathroom

$5,000 for new shingles

$3,500 for a new AC unit

Anything on top of the cosmetic items need to be accounted for. Major remodels should be over estimated to make sure you don’t miss anything.

Example property:

1500sf 3 bedroom, 2 bathroom home. Needs a cosmetic remodel plus a kitchen, 2 bathrooms, and a new AC.

1,500sf x $10 = $15,000

Kitchen = $4,000

2 bathrooms = $5,000

HVAC = $3,500

Total estimate = $27,500

This is not going to be your final budget. This will give you a good idea of what the rehab will cost. Once you have this number you can plug it into your formula and make a solid offer on the property. Once you have it locked up you can get your contractor out to give you hard numbers. In this business you have to take calculated risks, estimating repairs should be one of your more reliable and consistent costs. It's important to get very good at estimating repairs so you can take your business to the next level.

Kris Ontiveros - Real Estate Investor - krisonti@gmail.com

Follow me on Twitter: https://twitter.com/azhomerenovator
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Flip tip - Don't trust your contractor!

By: Kris Ontiveros

In this video we are discussing a huge pet peeve of mine, cheap contractors! When you give 100% control to your contractor things can go wrong. In this scenario my contractor went cheap on me and didn't order a drawer bank for the master bathroom vanity. Now don't get me wrong, this is 100% my fault because I didn't have a detailed conversation with my contractor. Instead I was vague and let him run with it. Now the cabinets have granite and sinks installed so it's too late to add the drawers. Next time I'll be more specific and tell him exactly what I want, I can even provide him with a SKU or item number for him to order.

We have lots of free tips for real estate investors and flippers.  Instagram @azflipguys or  www.Facebookcom/azflipguys

Fix and flip tip - Master bedroom upgrades

By: Kris Ontiveros

In this video we are discussing some upgrades we like to add to our master bedrooms. This is a very important room since it's the room the decision makers will be spending a lot of their time in. It's important to have a large master bedroom. The larger the better but we like to have a minimum 12x12. When we build or add on square footage we go even bigger than that. This particular property is 16x16.

We like to add light so we include extra can (recessed) lights in addition to our fan/light. We always add an additional switch for everything (cans, fan light, fan). We are already in there, it doesn't cost much to add additional switches. We also like to add a raised outlet where we think the TV will be hung. On nicer properties it's even worth buying a 50" wall mount TV for staging. You can usually find a deal online or at Walmart for a cheap version around $400.

We also like to add in ceiling speakers so they can have surround sound. If you go to a regular electronic store they are expensive. I found a few great deals on Ebay. I can usually buy them for $20-$25 each. Here is my most recent purchase. (July 2016)

Another feature we added in this property was french doors. When possible, we open up the master bedroom to the outside patio by adding french doors. Having a bedroom open up to the outside is a huge plus.

We try to stand out from our competition. This is what we do in our master bedrooms. Adding a few "wow" features can make a house that much easier to sell. Buying a home is an emotional experience, you want your buyer to have a great feeling when they step into your fix and flip and get the warm fuzzies in their stomach. That's when you know it's SOLD!

We have lots of free tips for real estate investors and flippers.
Follow us on Instagram @azflipguys or at www.facebookcom/azflipguys

Maricopa County market update

When you are a real estate investor it is very important to know your market. I will provide market statistics based on the ARMLS (Arizona Regional MLS) so you can keep an eye on what is happening.

10/2/2016
20,198   Active listings
6,281     Pending listings
3,997     AWC 
3,596     Sold - September 2016

September was a fairly active month. We have been a very steady market, we've been in the 20,000 range for active listings for the last 8+ months. Pending have dipped slightly but AWC listings have maintained. It was a typical September for sold listings.
The Phoenix area market has remained very consistent and we are looking for a typical winter. Interest rates have not changed and it seems as if everything is on hold until the Presidential election. Many experts feel we will have interest rate changes in December or January. This remains to be seen.

6/28/2016

20,706 Active listings

7,874 Pending listings
4,154 Pending and accepting back up offers

3,785 Sold listings in last 30 days
*2,064 under $250k (54%)
*1,345 between $250-$500k (35%)
* 379 over $500k (10%)

                        

These numbers show that we are solidly in a seller's market. With over 12,000 pending properties, we have less than 2 months inventory. In a traditional market we have between 30,000 and 40,000 listings. So our inventory is very low. 

We should have an increased amount of closings next month, which is typical for Maricopa County, as many people are trying to get settled prior to the start of the new school year. 

The under 250k market is still very strong while the luxury market over 500k is not very active. If you are looking for a new fix and flip it is best to stay under $250k. 


Kris Ontiveros 
US Preferred Realty
602-292-5747
krisonti@gmail.com


Follow me on Twitter: https://twitter.com/azhomerenovator
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Visit me on Youtube: https://www.youtube.com/channel/UCaHF4097oEBtelEQHK25WrQ

Flip tip - Building your team

Flip tip - Building your team - Your Realtor

In this flip tip, Kris discusses the importance of having a great Realtor on your team. Your Realtor must be a pro. You need an experienced agent who is familiar with the needs of an investor, preferably an agent who is also a real estate investor.

A lot of investors try to save money by hiring newbie or discount brokers, this is a horrible mistake. You need a seasoned Realtor who can help you negotiate a great price and make sure you get the true value for your flip. Thousands can be lost with the wrong Realtor.

Follow me on Twitter: https://twitter.com/azhomerenovator
Follow me on Facebook: https://www.facebook.com/phxcashflow/
Follow me on Instagram: https://www.instagram.com/azhomerenovator/
Visit me on Youtube: https://www.youtube.com/channel/UCaHF4097oEBtelEQHK25WrQ



Transcription
"Hey how's it going, it's Kris with Phoenix Cashflow Properties. I'm here today at one of my listings. This is a fix and flip that one of my clients sold, that's why I'm here today, because we sold this baby! We are picking up the lockbox and we are clearing out because we will be closing escrow today. My client was able to close this property and get paid all while being on the beach, he's on the beach right now as we speak. So how did he do that? He did it because he has a great Realtor, and that's what you have to have if you want to be a successful investor. A good Realtor will know how to properly price a property, market it, negotiate offers as they come in, and do the little things like meeting the appraiser when he comes out because those are some of the most important things to get your price when you are doing your flip. So, the moral of the story, have a good Realtor on your team, they are worth more than their weight in gold, they will save you way more money than they will cost you. Dont' go with a discount broker because they don't really care, they don't work hard, you need someone who is also an investor and knows what you need. So...if you want to make money while YOU are on the beach,  just like my client is right now, follow us. At facebook we're at Phoenix Cashflow Properties, on Twitter and Instagram @azhomerenovator."

Flip tip - 10th st shower

Here is our latest shower remodel. This was part of a flip with a room addition.

We used 12x24 white subway tile, 3x6 grey glass tiles for design, and grey penny tile for the floor. we've attached a link for exact specifications.

We have a valve with 3 settings, showerhead, rain showerhead, or both.

Here are a few pics of the finished bathroom.






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