Dad TEACHES KID how to UNDERWRITE REAL ESTATE DEAL
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- เผยแพร่เมื่อ 28 ต.ค. 2023
- #realestate #success #motivation
Dad teaches kid how to underwrite a real estate deal using units, rents, vacancy, NOI & cap rates to determine prices paid. Also how to compare to replacement cost & improved value because of rent increases.
This is real estate MADE SIMPLE!
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We are about to enter the greatest real estate cycle in my lifetime. Get prepared for it. I’ll show you how to get in the game.
💸 💰 Join me: grantcardone.com/10xrei
Grant, you’re a great role model and father! I’m a dad of 8, self made too, and own a billboard company in Okc & Tulsa. My son underwrote real estate investment categories for his senior thesis. I use your videos as education for my kids. God bless America and God bless you, your family, and your business.
This is a great comment and an inspiration as well
Love this, man - keep it up!
You're a cringey mo ron
Unironically an inspiration
Have you read the book Lead, Follow or Get Out of the Way? I believe the author is Christian Williams. It's about Ted Turner and how he took over his dads billboard Co after his dad died and how Ted started other advertising companies including CNN
She's so lucky to have you to teach her that stuff!❤
Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them. Well, at least my advisor does too, jokingly
This is superb! Information, as a noob it gets quite difficult to handle all of this and staying informed is a major cause, how do you go about this, are you a pro investor?
Investors should exercise caution with their exposure and exercise caution when considering new investments, particularly during periods of inflation. It is advisable to seek guidance from a professional or trusted advisor in order to navigate this recession and achieve potential high yields
Through closely monitoring the performance of my portfolio, I have witnessed a remarkable growth of $508k in just the past two quarters. This experience has shed light on why experienced traders are able to generate substantial returns even in lesser-known markets. It is safe to say that this bold decision has been one of the most impactful choi
I've actually been thinking of reaching a portfolio-adviser, my 401k and stocks been losing everything it's gained since 2019, mind if I looked-up this one coach you use?
Honestly, How can I be part of this project I earnestly hope to build a strong financial future I'm interested to take part, who's the person behind your success?
From the bottom of my heart Grant thank you so much for helping so many people for free, you dont have to do any of this , love you man.
This is a great video learning the fundamentals of business!
00:00 🏢 The video focuses on underwriting a 500-unit real estate deal in Chicago worth $150 million.
01:11 🧮 The process involves calculating total gross possible income based on average rent, taking into account occupancy rates and additional income sources.
03:00 💰 The Net Operating Income (NOI) is derived by subtracting expenses from income, which helps determine the price to pay for the property.
03:46 🏗️ The property is considered a good deal, as it's estimated to be $150 million below the cost of replacement. Increasing rents can significantly raise the property's value.
05:22 💵 The strategy could potentially yield substantial returns for investors, with the property's value projected to increase by over $100 million if rent hikes are realized over a decade.
quick question, I have followed most GC flow, but I cant figure out how the 100$ extra on the rent does crank the property value by almost 11M $... can someone help with the logic/calculation... please?
@@matthieu8292over the course of 18 years ( i.e. for the factor 0.055) that $100 increase would provide around 11 million in total for all the 500 units : 100 * 500 * 12 * 18
I dint understand most of it. .howcome it is profitable. ?
@matthieu8292 if rents are increased by 100 per month x 500 units equals 50k per month x 12 months equals 600k more revenue in 1 year. Building values are determined by a cap rate (annual return) of about 5.5% in this case. 600k extra income / .055 (return rate) equals $10,909,000 additional value in one year. Increase rents each year over 10 years the building value increases $110,000,000
@@reubenvandenassem4301 thank you so much, I was stuck at the usage of cap rate to get to the actual new value. great loving the feedback and contribution !
I love this , Grants not only a great business man he’s also a great father for very inspirational.
Yall thought Rich kids don’t know nothing, what were you being taught at 14? Being rich makes you figure things out faster.
We are all taught by our parents
poor parents teach their kids poor things... can't fill up someone else's cup if your cup isn't full.
@@gbasilveirawhy u BROKIE then
Stop assuming you’re making yourself look stupid
Grant forced himself to learn this stuff though. He grew up with literally nothing.
Wish i had a father like that, most of us have to figure out everything by ourselfs
yes
We got TH-cam
Grant had to as well. Maybe we didn't have that kind of father but we can be one.
Same man, my dad was and still is useless. Used to piss me off but I’ve moved on. Thankfully we have TH-cam to learn from others
Pity you
First! Grant people understand how smart you are just because you speak simply. I appreciate your gems 💎 🙌🏾!
Grant I Love ya Grant , and Sabrina You rock ! My daughter Jamie worked with me Side by side in our business. People would say your daughter is smart and carries herself Well! This isn't luck Both of you work for this Good Job ! This video's real Value is in Dad and Daughter! The real estate class takes a 2nd position! Rock ON !
Im going to raise and treat my daughter like Grant treats his. ❤
Grant this is an incredible education for your Sarina. Warren Buffet's father taught him the importance of financial literacy and sound investment principles. His father encouraged him to be an independent thinker and to make his own decisions.
Love & Gratitude Brother Grant! As usual another great lesson. If our daughters can get it then there is no excuse for personal failure! I just binged watched Undercover Billionaire again to stay grounded, stay humble but stay hungry in the climb to 10X! Much 10X Chi-Town Love Blessings & Success your way always From Your Brother Noble in Chicago!
Sabrina will be super success and keep this legacy’s. can’t wait to see her do big things in the Future
Your plan seems solid, and the chance to make more money as the rent goes up is impressive. Can't wait to see how it goes!
Lucky and blessed kid man being able to get all that knowledge so young that’s dope
Very good idea. Taught my son how to underwrite multifamily deals. Made sure I kept it simple enough for an 11 year old to understand.
Thank you for this contact I always wondered how to underwrite a deal because I never understood where your values came from as far as the numbers, so thank you for sharing this I look forward to building with you in the future
This video was great to see, the education given/passed on is invaluable
This is not underwriting, however it’s called a Back Of An Envelope/Back Of A Napkin analysis which is a quick way to tell if you should do the deal or not.
If you do the deal then underwriting is way more intensive and includes a variety of metrics for acquisition, debt service, interest rates, cash flows and returns over the hold period.
So cool how you are showing your kid at such a young age!
I teach my kids chemistry, physics, electronics, and genetics 🧬 at 7 & 9.
Profit's fine.
No one likes extortion or the landlord hungry to Jack up rents. Think about that
Are people just economic units to be replaced, or do we have commitment & loyalty
Is this in place of... individuals owning their own property, keeping generations dirt poor?
Yes
Some people find it. Revolting
Smart man... securing his kids future and legacy..
This is so simple, thank you!!!
Grant you're phenomenal one of the for certain geniuses that I tend to study through. Most accurate and knowledgeable around today's housing market.
How do you figure replacement cost, Grant?
You’re an awesome role model. My husband and I are working to train our kids to have a healthy mindset around money! Thank you for all you do to help others in their journeys!
I do not see the link. Another great video. Thank you, Grant. You are honest, and you have more discipline than anyone I have come across.
GREAT FATHER AND A GREAT MAN.
Home schooling at its best! Math put into practical use aligning with money skills and understanding. Great!
God Bless your family Grant 🙏🏼 all love
You're a cringey mo ron
He never misses with this? What a business man
love the father daughter teaching!!! ❤
Buying a 5.5% yield resi complex in times of 8% mortgage rates. They don't teach that at Ivy League colleges or on Wallstreet for a reason.
Just stick the dough in a 5.4% savings account and save yourself all that trouble for a high-stakes 6-cap deal.
There's no greater thing, a long with love .that you can pass on to your kids.than knowledge that will teach them how to take care of them selves for life.
Amazing great papa love GC well done that you are getting in bussiness Yang lady!!!
Wow, she's gotten so big. She'll be assisting you with running the business for sure in a few years. 🙂
You're a cringey mo ron
Should make more of these please 🙏. Like just the super basics to know if a property is even worth calling on or at least knowing what numbers to work. This was solid asf 🎉
Our family is Durst. I was brought into the family by the late Edith Durst. Yes, rich kids are taught differently. I went to graduate school at age 18 to Yale University, after starting college at 13. No student debt . Thanks Durst family! Michael Oher pay attention to how I thank my family ..not with a lawsuit !
This is awesome Grant!
Great Insights and Parenting! You're a great role model which I would like to emulate in building wealth.
You're a cringey mo ron
Look at previous full cycle deals with exits for syndicators. That's where theory meets real world application and if what was proposed was delivered or more. Then look at where markets are at today with that past strategy. See if that still holds true if the syndicator is investing in same type deals at a different point in the economic cycle expecting the same result.
This is wonderful ❤
Good deal. Good parenting.
Finally a video from him where he isn't acting like an ass.. Good video with good info
Hey Grant thx for the tips
You make it sound so easy❤❤❤
Insane value! 💪👑💰✈
This is the Grant videos I fell in love with years ago
Interesting thanks a lot for sharing
Thank you Uncle G!
nice work Sabrina!
Love this, exposed my kids to all aspects of real estate as a broker and owner (since they where babies) … they are thriving professionally now.
I do think 40% expenses may be a little light. Would want to sharpen those line items just a little more. Good fundamentals.
He doesn’t like regulated markets like NYC… and I don’t blame him. I’m selling a beautiful 113k s f double elevator building with indoor parking built in 1955 at about $90/foot. Would cost over $500 per to build. And it’s still tight!!! Rent control/stabilization sucks.
Love this!
We're gonna make it 🥊
This is how generational wealth is created. It’s not only creating the wealth for the next generation but then teaching the next generation how to manage and create more wealth. This is what the average person in our society doesn’t get. Then they get upset that certain families have wealth to pass down from one generation to the next.
Grant kudos on teaching your kid, please post the video of the closing and the next 36 month performance.
Not many who made it on "financial top" would share info. Thank you.
Love or hate GC, this is the stuff that should be being taught in school. Sabrina is at the age where (even if she wasn’t around it all the time) she will stay engaged enough and put it together.
SC Capital is in the future.
they do teach you this stuff in schools. just go and study finance. you will be doing far larger, more complex deals. people like you are lazy pieces of sh*t who keep saying, this should be taught in schools when it literally is. stop spoiling america.
Taking notes
Real Estate advise/lesson on a G6, what a life!
I really hope to be like this with my daughter one day...
You actually showed equations to make sense of the investment. Thank you, Grant. Tactics > Philosophy
Amazing! Raise up a child!!
That's wonderful but I have to repeat it again
She is growing so fast
Wow ❤❤🔥🔥🙌🙌👏👏 great accumulation of experience and good vibes. That's the energy of the Rich Vibrant Dynamic Opportunistic positive energy much greatful thank you Grant
Hi Grant, thanks for the content. What would the formula look like if you needed to finance through the bank?
He is underwriting this at a 5.5 % return before paying loan. If he were to get a loan for 50% of the purchase price ($75,000,000) @ 8% (which is today’s rates), that would be $6,000,000/year just in interest. So now he only makes $2,000,000/year. With today’s interest rates it doesn’t make sense to buy anything unless you are paying all cash- which is why he is going that route.
Can someone please explain the divison by the 0.55 what was the meaning behind that. Thank you!
Yes I would like the formula
If you finance 80% of purchase with 8% interest, the annual interest cost is $9million. Are you going to pay cash for the property or financing it?
where can i get that book?
love the video!
1. You can't just keeping raising rents as you suggest. You are limited by market forces and therefore people may leave increasing your non occupationacy rate thus reducing to total income.
2. Rebuild costs are irrelevant in assessment of value (unless of course you want to burn it down and collect insurance like the mob did). The market decides the value of the property. If everyone assesses the rebuild costs as double the msrket value then every home noi would go up overnight.
ssh dont you dare bring reality into this :D
Doesn’t replacement cost also help you understand what it would take for someone to build a competitive, similar property though?
Great concept
@Grant, can I ask why you divided 9.24 by 0.55 please?
What makes it 300M replacement cost? How did you determine that?
Why did they consider the scenario of rebuilding the property? (300 M - 150 M = 150 M)
Triple 👍 👍 👍 !
I wish I had had someone teach me like that when I was a kid!
great education
Great video
Teach them young to be the successors of our future
I calculated up to the NOI. Got lost after that 😅😅😅
@3:25 what does the .055 represent dividing into the NOI?
cap rate to evaluate value of the property its a measure of risk google it uncle google
Greeeaaattt sir✌✌✌✌👍
Thank you so much for reply me sir 😇😇😇😇😇😇😇😇🙏🙏🙏🙏🙏🙏🙏you are the real legend 🌅🌅🌅🌅🌅🌄🌄🌄🌄🌄🌟🌟🌟⭐⭐⭐⭐⭐🌌🌌🌌🌠🌘🌘⚡⚡⚡⚡⚡⚡⚡⚡⚡⚡⚡⚡🌀🌀🌀🌀🌀🌀@GrantCardoneofficiall
This is great if you have $150m in cash. Interest on the mortgage of this building will probably be in excess of $10M right now your actual cash flows would be negative in this scenario.
Hold on 2628 avg rent on Michigan Ave? I dunno about that unless it’s 500 micro studios.
Hello!! What is the underwriting formula? 🙏🏻
Great
Wow she used to look a lot like dad now she looks identical to mama !! She seems like a real sweetheart, don’t turn her into a greedy person.
Was That 9.24 million considered as a perpetuity cash flow at a discount rate of 5.5%? somebody explain how did he arrive at the 5.5%?
Love it
At first I thought ‘that’s Sabrina!’; it’s been a while since I last saw a video; last I remember, she gave a speech as a little girl at a 10X Growth Con
Right ? Last video I watched too she was a little girl. Crazy how they are growing and subscribers who have been here when they were babies we are still here
Why divide by 0.055? Please someone explain I dont get it
Hell yeah boss. That’s fucking genius.
What is the multiply the NOI (9.24) by .055? What is the .055?
Cap rate
NOI÷COST OF DEAL= CAP RATE
Such an empowering lesson from Grant on the fundamentals of real estate, and the fact that it's with his kid makes it all the more relatable and inspiring! 🏡📈 Here are my top three takeaways:
1⃣ Start Early: Age is not a barrier when it comes to learning about real estate or any investment. Grant proves that even kids can understand the basics if taught in an accessible way. The earlier we start, the better equipped we are to make informed decisions in the future.
2⃣ The Power of Underwriting: Understanding the numbers is crucial. Grant emphasizes the importance of underwriting and how it's the backbone of any successful real estate deal. Proper analysis ensures you know the value and potential risks before diving in.
3⃣ Hands-on Learning: Theory is important, but nothing beats hands-on learning. Watching Grant and his kid go through an actual underwriting process brings the concepts to life and highlights the practical aspects of real estate investing.
Thanks, Grant, for this educational gem! It's lessons like these that remind us of the importance of financial literacy from a young age. 💰🧠
Wow I am a practical learner when can we and I meet
Why did he divide the NOI number by .55?
What if rents go down?
Where is the 0.055 from?
What is the 0.55 for?
What happens when the rent goes down?