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The 7 Steps To Wealth Creation Through Real Estate Investing Copyright © 2020 by Richard Garcia and CashFlowClub All rights reserved. Permission to reproduce or transmit in any form or by any means, electronic or mechanical, including photocopying, photographic and recording audio or video, or by any information storage and retrieval system, must be obtained in writing from the author. The 7 Steps To Wealth Creation Through Real Estate Investing is a registered trademark of Richard Garcia. To order additional copies of this title, e-mail: [email protected] The author may be contacted at the following e-mail address: [email protected] website: joincashflowclub.com First printing November 2020 Library of Congress Cataloging-in-Publication Data Garcia, Richard The 7 Steps To Wealth Creation Through Real Estate Investing / by Richard Garcia p. cm ISBN: 9798566598192 1. Real estate investing. 2. Real estate. 3. Wealth. 4. Properties. 5. Cash flow. 6. Co-investing. 7. Business. Published by Inky Press | A division of Incubate Media, LLC. | incubatemedia.us

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To whoever reads this book, the time is now.

Table of Contents The 7 Steps To Wealth Creation Through Real Estate Investing by Richard Garcia

Step 1: Introduction To Wealth Creation

p. 7

Step 2: What Led Me To Real Estate

p. 26

Step 3: Never Own Your Home

p. 46

Step 4: How I Got Started

p. 63

Step 5: Why Multi-Family Is The Best Investment p. 78 Step 6: Don’t Stop At One

p. 96

Step 7: Money Burning Mistakes

p. 109

Bonus Content: Cash Flow Club

p. 127

About the Author: Richard Garcia

p. 133

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STEP 1: Introduction To Wealth Creation

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H

ave you ever heard the term hindsight is 20:20? When you look back and reflect on your past, you see everything crystal clear

because you've already experienced it. You’ll see your mistakes, your failures, your successes, the opportunities that you took and the opportunities that you missed. Everything you went through appears with a new perspective. When I look back, I think to myself about all those missed opportunities. See, I grew up in a very rough neighborhood in Miami called Hialeah. Everyone in and around this neighborhood typically stayed for their entire lives. It’s because they all had one thing in common. They didn't live up to their full potential. Early on, growing up there, I always had a feeling that I wasn't cut out to simply live a mediocre life like the majority of the people around me. My mom was a single mom by the time I was eight years old after my father passed away from cancer at 32, the same age I am today. He died just six months after being diagnosed. In my eyes, it all happened so fast. It Richard Garcia

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not only traumatized me, it changed my life forever. Losing a loved one at a very young age changes you. Losing a loved one period, changes you. But losing your father makes you feel like you have to fend for yourself, like you're alone. I lost somebody extremely important that couldn’t give me guidance anymore. But I look back now and see how much stronger this made me. In fact, it made me the person that I am today. It's unfortunate that this event had to happen in order for me to have the life that I have. I was the oldest of three boys, so my mom needed to make ends meet in order for us to survive. I was fortunate to have family, but the family I had were immigrants from different countries that had come to Miami. Learning from them was a major challenge because the life they were living in the United States, wasn't the life that I wanted. At a young age I realized that I had a lot to figure out on my own. Therefore I decided to take advantage and improve my life. I remember the first time I made hundred dollars like it was yesterday. My mom had given me $20 and The 7 Steps To Wealth Creation Through Real Estate Investing

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told me to go buy some school supplies. I figured I'd go to the dollar store that was just around the block, so I went with my friends a couple of days later. I took the school supplies I bought, divided them into different boxes. Each box had a variety of different pencils, pens, paper and so forth. I sold each one for $10. I remember coming back to my mom with a hundred dollars in my hand at eight years old feeling so proud of myself, I was thrilled. Now looking back, I know that this is something most kids wouldn’t do. I guess that’s what sets entrepreneurs apart isn’t it? A will to be different from the norm. That was the first time I remembered making money on my own. Miami is fast paced, growing up there you have to be a different breed. It's a major city, top three in the country, with massive amounts of crime, and poverty. But if you know how to take advantage of it there’s a lot of opportunity too. You see, I had a lot of friends growing up, some of them had money, some of them didn't. That gave me perspective into other people's lives. I started to compare my life to theirs. I thought to myself, “it's unfair that these guys have such a good life. They have Richard Garcia

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both their parents, they have money, opportunity, materials, and I have none of that.” At least, that's the way I felt. That's the thing though. You can have all of that, and still not know your advantage in life. You begin to take things for granted when you grow up in a reality that is comfortable. From a kid in a poor area without my dad I had nowhere to go but UP! I recognized that early on, exploited that and started to find my path. I wasn't good at school, but I was good with people. I just took action. Someone would say, “Hey, let's go do this.” I always said yes, not for the thrill or the experience, but just out of sheer boredom. It always panned out into a memorable time. Your ambition is typically going to be based upon your hunger and your goal. If you don't have big enough goals, you're not going to be hungry enough. If you're not hungry enough, the ambition will be very difficult to manage, grow, and use to your advantage. If you're reading this right now, and feel like you have no ambition, it's because your goals are not big enough. The 7 Steps To Wealth Creation Through Real Estate Investing

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Fast forward to when I was sixteen years old and had just started my first business. Now, I didn't incorporate it or anything like that, but it was something I enjoyed doing at the time. I had been approached by a nightclub manager and he wanted me to sell presale tickets for what was considered back then a hot spot in Miami. So I went and started selling these presale tickets. But instead of being a one man team I was thinking bigger. After just a few days I realized the possibilities of the role. I brought on many of my friends so they could also sell the same tickets and I didn't have to. I just managed them. It was my first business, a very profitable business too. Until it eventually died-off. At seventeen I got my first job at Walmart, and as you can imagine this job was not fun. I hated it because I wasn’t able to control my time. While all of my friends were out on the beach, especially the ones that were rich, I was at Walmart collecting $7 an hour stocking the shelves.

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I hated it so much that I figured out a way around it. I offered one of my colleagues lunch everyday on me, so long as he would swipe me in and swipe me out at work. That allowed me to constantly take in checks while I was at the beach with my friends. The only thing I needed to do was send him some money so he could buy himself lunch. Obviously I got fired shortly after, but it taught me something. First thing you should know about me is that I don't like working. And second, I am happiest when I have full control of my time. Not long after getting fired I was spending time with a distant acquaintance and he said, “Hey, Richard, what do you do?” I said, “I don't do anything.” He told me, “Well, then what separates you from a homeless person?” I said, “Well, I'm not homeless.” He said, “Yeah, but you don't pay for your car, and you don't pay for your living since you don't work. How do you survive? You depend on people to give you money.” Which was true at that time. It was hard for me to hear that since I had just gotten fired from my first real job. I knew in that moment that I didn’t want to hear those words from anyone ever again. I wasn't going to let The 7 Steps To Wealth Creation Through Real Estate Investing

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myself go down the path of being homeless, going to jail or waste my life doing something meaningless. My goal instead was to figure out how to better my life. I needed to figure out a way to no longer work, and control my time a hundred percent while still making money. When it comes to your nine to five job YOU ARE STUCK. You're stuck being told what to do, what projects to work on, who your colleagues will be, how much you get paid, and how essential you are to the business. You’re stuck being told what vacations you can take, how much you can spend on your vacations, what type of hotel you can afford, what you can do on the weekends, what car you drive, and what house you live in. All of that is determined based on the exchange that you do every day between you and your employer. That exchange is an exchange of time that you contribute to that employer, equal to the amount that that employer is willing to pay you, given the job you're performing. Why would you want somebody to dictate nearly every aspect of your life? Why would you want someone to Richard Garcia

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dictate what your value is? And don't even get me started on dependency. With a job, you are dependent on a check that can stop at any time. Somebody else is feeding you, instead of you feeding yourself. This is where my ambition to become wealthy lead me down a path of research. The path I needed to take in order to find the opportunity that would take me to millionaire status. That was the wrong way of looking at it though. It’s kind of like being in college as a freshman. The first day you walk onto a massive campus, you're overwhelmed with joy, but also freaking out with anxiety. Most students don't even know what their major is going to be, because they have no idea what they like. What happens when you don't know what your major is? Well, you take a lot of different classes. You figure it out along the way. What I didn't realize early on was if you want to become a successful entrepreneur or investor, you have to start trying your luck and building small businesses. Start small side hustles that can help you bring in some capital. Many of those are going to fail, The 7 Steps To Wealth Creation Through Real Estate Investing

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and the next one you move to might fail as well. The one after that may be successful, and maybe you become a millionaire. Either way, you will find your business model similar to how you found your major. You will test the waters, and you're not going to give up. For me that was one part of it. The second part was thinking bigger. For example, once you pick a major like nursing, you can become a nurse. But why stop there? Why not become a doctor or a surgeon? Why not become the best? This is where my mind changed from thinking small to thinking bigger. When I realized this at 18, I told myself right then and there that I needed to figure out the exit strategy as soon as possible. All the other options that were there to me weren't fast enough. Working 20 years is not fast enough. I wanted to be out of the workforce in 10 years max. It took me 12 years instead but like Norman Vincent once said “Shoot for the moon. Even if you miss, you'll land among the stars.” I believe this way of thinking led me to a book called The Secret. I read that book from beginning to end. It Richard Garcia

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was based on the law of attraction. Meaning, if you want to achieve something, if you want to be somebody, you need to align your thoughts with your goal and you have to start taking action towards that goal. It was a basic but very powerful statement for me at the time. I was searching, I was lost, and felt like after I read that, I had found something. But I wasn't sure what it was yet. What I did know, was that I needed to do whatever I possibly could to get myself out of the hole I was in. I contacted as many people as I could in my contacts. One of them said, “I know a position that's far away, but it's working at a bank called Washington Mutual.” So I did the interview and got the job as a teller at Washington Mutual. Three months later, the bank failed and I had to find another job. The market was also crashing. Still only 18 years old I had no investments and no money in the market. I decided I had to get another job. I interviewed at Bank of America, and that's where I started my first real career. I joined as a sales and service specialist where I would sell products and services like loans, bank accounts and credit cards, half the time. The The 7 Steps To Wealth Creation Through Real Estate Investing

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other half, I was a teller. I sat at the back of the counter and helped people make deposits or withdrawals. I really hated that job, but it taught me something important. It taught me how to communicate with other people, how to sell, and how to be more professional. Until then, I didn't have any formal education, or formal training. This was a major turning point for me. I started doing more than what was asked of me and that's when I started to take off at Bank of America. If you are an employee, you need to become essential. The only way to do that is by taking on extra projects or work that your employer needs done. But most people are lazy, they don’t want to do that. Between my sales and the work I was taking on, I started to climb the ranks at Bank of America. I learned that money wasn't the end goal like most people believe it to be. It's actually what gets you that end result. I saw the projects and work at the bank like the water that I stocked on the Walmart shelves. The money, like the water, was just a product that I was providing to people. Richard Garcia

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This taught me to not cherish money. Cherishing money is actually the wrong thing to do. Instead, cherish what money can give you. Money can give you the life of your dreams and fulfill all of your big goals. People say they want the money, but it's not the money that truly makes you happy. It's the goal you want to achieve with the money that leads to a fulfilling life. Thus I do not cherish money since it is not the end all be all. It is simply a tool used to create a better life. At Bank Of America I saw all sorts of people. People that had money, and people that didn't have money. I saw people that you'd never imagine had millions of dollars in their bank account. I saw others that you would imagine had millions of dollars in their bank account, but had zero money. I noticed that anyone could do it. Anyone can become wealthy. It's just a matter of recognizing your full potential. I also realized that saving money takes way too long! The only time saving makes sense is when you’re saving to invest into something that can keep the money coming in bigger and bigger amounts. I believe that reinvesting it into your education is something that can The 7 Steps To Wealth Creation Through Real Estate Investing

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make you millions. In my experience it was trading stocks, but for others it may be starting your own small service business, turning your hobby into a side hustle or anything really. Starting stock trading was the move that I never expected would catapult me. It was the funds that I had built up from trading on the side while still working my 9-5, and it happened relatively fast. In a way, those stock trading profits still pay me to this day. Not only did I use that money to educate myself, it also allowed me to buy the real estate units that I now get checks from every single month. Becoming financially free only took a few years once my mindset changed. As my experience grew I started making a lot more than what I was expecting. Now let's not forget about the importance of time. In my opinion it’s the biggest lesson life eventually teaches us all. Something that seemed peculiar at first but I slowly started to realize that time is priceless. As much as people say that it is equal to money, it simply isn’t money. It is far more valuable. You can make more money, but you can't make more time. If you exchange time for money, then you're actually losing. Richard Garcia

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When money makes money for you, you end up getting all your time. I noticed that when I started to trade stocks while I was still working for Bank of America. This exposed me to an investment strategy that accelerated my savings account. It accelerated my growth, and I did this during a bad market when stocks were coming down. I was learning strategies to make money off of the market no matter how good or bad it was for others. By the time I was a junior in college, I already had $600,000 in my account, a job that was paying me about $65,000 a year, and I was just barely legal enough to buy my first alcoholic beverage. This is where things really start to take off. One thing I noticed with stock trading was that as much as I enjoyed it, it was a challenge. As much as I enjoyed making all the money I was making between my side hustle and my nine to five job, I wasn't building wealth. I was still living day to day. I had money saved up, but I didn't have equity that was being built in my life.

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Equity is a very important word that you’re going to see throughout this book. You will understand what equity is as you start hearing the story about the growth of that equity happening in my life. It will likely be the same for yours. Building equity sooner in your life will give you compounded equity later down the line, and that will explode your net worth. Running a business as an entrepreneur could produce equity for you since you can sell the business in the future, and it's the same thing with real estate. The path that I chose didn't provide that type of equity. I had to figure out how to build wealth the right way. That's where I came across the Rich Dad, Poor Dad series, which began expanding my mind as I was searching for a strategy to use my money on. I felt uncomfortable holding onto all that money because it was most of the time just sitting there. That's where I started educating myself in my early twenties about real estate. I even went overboard and got my real estate license. Although I didn't want to be a real estate professional, I just wanted to learn more about real estate. A real estate license doesn't actually teach you Richard Garcia

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more than just the transaction of exchanging the asset for money, but it still helped. It drove a better mindset that I could use in later conversations, negotiations, and opportunities. I have never once sold a house using my license, or walked somebody into a property to show a unit, because I knew that I did not want to be a real estate professional. I wanted to be a real estate investor, and there's a big difference there. Real estate investors want to know the numbers and the specifics. They own the asset. They take the risk, and the reward. A real estate professional shows properties and is the middle person between the buyer and the seller. They don't own the asset and they don't benefit long term from the appreciation or the cash flow. I wanted everything or nothing at all. After climbing the ranks at Bank of America during this time I started working at Merrill Lynch. For one full year I was in corporate working with the private wealth division, and managing clients with more than 50 million in assets. I was exposed to a different life The 7 Steps To Wealth Creation Through Real Estate Investing

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entirely, a life that I'd never seen before, a life that was bizarre to me. I had a client who called me one time because he bought a Ferrari the day before. But, on that day he called me, he was selling the Ferrari for a hundred thousand dollars less than what he had bought it for. He bought it online and he didn't fit in it once it arrived at his house. Hearing something like that gave me two feelings: I was intrigued and disgusted at the same time. How could people live a life where they don't even care about money? It's not a factor. They don't have to make decisions when it comes to money because they have so much of it. Imagine today you remove every financial decision that you have in your life because you have that much wealth. I wanted that when I saw that. I envied it. I also knew I could make it happen. Because of that, I got more aggressive trading stocks. Soon after I left Merrill Lynch and became an ultra high frequency trader for two years. This was all while I was learning about real estate. Keep in mind, stock trading isn’t for everyone. It’s a great way to make money from home but you may be better with something far different and just as profitable. The key is to generate an extra Richard Garcia

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income as soon as possible no matter what. So at that time for me, the market was changing, and there was volatility. I had already learned a skill that was producing profits, and I took advantage of that opportunity. That's when I bought my first real estate property with my trading profits. It's interesting how life works. If you see the opportunities written on the wall, you're going to take advantage of them. In this book, you're going to learn how to build wealth through real estate passively. You will learn how to control your emotions when conducting business, and how to replace your nine to five job with passive cash flow that comes in every month for the rest of your life. If that's not something you're interested in, it’s time to close this book and walk away. This book is not for the weak. Let's get started.

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STEP 2: What Led Me To Real Estate?

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eal estate wasn't actually my interest. When I first started, I didn't really have much of an idea about real estate either. I didn’t know it

worked, how to buy or sell. I was pretty new to the concept. I always lived in apartments and small houses. My mom did have a time in her life where she was buying a few properties, but it never went well for her. In fact, in 2008, she lost everything. But when I began educating myself through reading and research my perspective started to change. It's when I decided that passive income was really the ultimate goal and real estate was the best route for me to take to achieve that. If I had passive income from real estate, I could replace my working income and I would have the life of my dreams. Having that inspiration at such a dark time in my life was a very bright light. So I followed it, like a bug to a bulb. I followed it exactly the same. Continuous passive income that comes in every single month without doing a lot of physical activity is a goal that anybody and everyone should strive for. At that time, I made maybe three to five thousand a month from The 7 Steps To Wealth Creation Through Real Estate Investing

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my job. My goal was to try to replace that three to five thousand, depending on how much real estate I could buy. My first thought was “I need to find something that produces this amount of money every month for me, then I don't have to work anymore, and I can live the life that I want.” But, be careful. If you quit your job too soon without enough passive income from real estate you will be suffering. You won't have enough passive income as your responsibilities in life continue to increase. I didn't want just enough to survive. I wanted to thrive. Everyone has a different definition of surviving and thriving. I define survival as someone that is living paycheck to paycheck. Someone that is an average person, with an average job. If something were to happen to them today where they had an additional unexpected expense like a traffic ticket or car maintenance, it would set them back weeks, or maybe even months. At the time, when I first started this journey, I was surviving, and rightfully so. I was young, but I didn't Richard Garcia

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want to survive for the rest of my life. I had a family that was surviving, and I saw how they lived. I didn’t want that for myself. I asked myself, “what do I need to do to thrive, not just survive? Also, what is my definition of thriving?” Well, I first started thinking that it was just replacing my nine to five income, but after I calculated the numbers, I noticed that replacing my nine to five income was just not enough. If I had a child or if I wanted to go back to school, or if I got married I would only barely be surviving. All of these life changing events would alter my financial circumstance. If I wanted to thrive, I needed to make more passive income than what my nine to five was providing. I needed to surpass my nine to five income. That is my definition of thriving. Living above and beyond anything considered average. More importantly than that you start to think, now that I'm thriving, what else is there to do? It's building generational wealth, building wealth that gets passed down generations. There is a continued compounding effect of wealth creation in your lineage. You make it easier for the next person in your generational family The 7 Steps To Wealth Creation Through Real Estate Investing

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tree to succeed. These are your children, so I'd imagine that you would want to make it as easy as possible for them. At least that's the way I think about it. When attempting to thrive in life you must do so in all areas, at all times. Most people believe that they only live one life, but that is actually incorrect. You live three lives. You can eventually live one life, but as of right now, you need to use these strategies that I’m going to lay out to you to build your three lives. Your first life is your nine to five life. That's the life that you live working for somebody else, depending on a paycheck, hoping that the company never lets you go. That nine to five life is essential, it will help you build your second life which is your awake life. Your 6:00 PM to 12:00 AM life. That’s the life where you need to build a side hustle and make additional income. This might eventually turn into a business concept that you'll continue to make money from for years. The last and most important life, and you'll see why, is your sleeping life. Your sleeping life is one third of the life that you are still alive. But sadly, the vast majority aren't making Richard Garcia

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money while they’re asleep. You need to have cash coming in while you are at your nine to five, outside of your nine to five, and while you are asleep. Once you have mastered the ability to make money through all three of these lives, you have a system that will replace working, and will give you the life of your dreams. That's why I chose to use my nine to five money that I had saved and accumulated to invest into skills and opportunities that monetize outside of work. The first was stock trading. My stock trading side hustle became what helped me monetize, and what fueled my real estate investing. By buying real estate and becoming a landlord, I receive cash flow, which comes to me while I'm sleeping. It's money that comes into my bank account while I’m not doing anything. You've done the work in your nine to five, and your side hustle, so the work needed in your cash flow real estate isn't really that much. That allows you to make money while you're asleep. Figuring out these three things, and having these three lives monetized is extremely important.

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Now here's the thing, you must build and structure these three lives the right way. If you don’t structure them correctly at the beginning, you will actually have to work much more than you should. As I started to grow into my career I quickly realized this with my experience working for companies like Google, Facebook and Tesla which allowed me to work from home. Most of the people employed at those jobs aren’t very fond of real estate. Especially since for most people their goals in life are to become celebrities, musicians or high position executives.

Becoming a real estate investor is extremely conservative. It's actually one of the most conservative ways of building and establishing wealth. In today's world it seems everybody wants to get rich quickly. Everybody wants to make money today, right now, at this very moment. What they are not taking into consideration is that they're sacrificing the longer-term compounding value for the short term profit. They're sacrificing the future wealth creation for instant gratification. Which means they’re sacrificing

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generational wealth. What you must look for is a path to freedom, a path to remove yourself from the nine to five job. Nine to five jobs and the lifestyle associated with them is what really consumes the majority of people's time. Nine to five jobs are what takes you away from essentially everything else in life that you want to conquer and succeed in. Ask yourself, is your goal in life to simply do this job and that's it? Or is it to, at some point, surpass your ability of doing the bare minimum, and eventually move away from it because you've built a path to freedom that allows you to thrive not just survive. At some point, everybody has had to survive in order to thrive, but thriving is not what everybody ends up reaching. Most people, 99% of them, stay stuck surviving and dependent on a paycheck. Dependent on that income from an employer by exchanging their time for money. At the very least, the easiest thing you could possibly do in life is exchange time for money.

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You have to go from exchanging time for money to exchanging money for money. People like me are at a point where my money makes money for me. That's where I had a big gap when I started. I was missing out on an opportunity to level up from survivor to thriver and that's because I wasn't thinking big enough. I was only thinking about me. I was only thinking about myself. I wasn't thinking about the next fifteen to twenty years. I was thinking about the next one, two or three years. I was making short term decisions based off of a one, two, even a five year time period. That’s too small. You need to make the decision to do something that has the ability to still be paying you passively 10 years from now. For example, creating a business, a product, or buying real estate. If you are doing these things, then it's likely with the mindset of 10 years out, you're making the right choices. Which will prevent you from losing money, whether that be spending it on materialistic things, vacations, or anything in general that doesn’t get you closer to your goal. Instead, you're going to be looking at things and saying, "Wow, in order for me to get there Richard Garcia

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in ten to fifteen years from now, I need to start investing the right way today.” Not just get there with compounding cash flow, but also get there tomorrow with compounding appreciation. If you buy something today, you want to buy something that is so good, it rises in value within ten years. With real estate, in particular, you're going to learn in this book that you can buy properties that rise in value within 6 months that take normal investors up to a decade. That's how we're going to go from surviving to thriving faster and at a younger age. By doing this you're not just creating generational wealth for the future. You're creating generational wealth today, for the present. When I finally grasped this concept is when I went all in on real estate. We're in a new era. Everything is digital, and remote. Everybody can work from anywhere they want in the world. Why can't we buy real estate from anywhere we want in the world? Why can't we manage our portfolio from anywhere we want in the world? There really isn’t

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any reason why this can't be done other than your own personal reality limiting you. You see, I started buying real estate in San Francisco. I was 3,500 miles away from Miami. I noticed that Miami's data was showing significantly faster growth rates of population density, and gentrification. The values were significantly cheaper to buy real estate, and the rental returns were at the same or more than most other cities in the country. I also know Miami well enough since I grew up and lived there for a while. It only made sense to make money in an area where jobs were plentiful and paid high amounts to their employees. With just a quick Google search you can find that in Miami, if you invest a dollar, you are benefiting from receiving a dollar and three cents. If you invest a dollar in California, you only benefit off of seventy six cents. If you want to maximize your money, then you'll likely need to look outside of your local area. You have to think about where double digit, maybe even triple digit returns are coming from. It’s likely going to be outside of your own backyard. You have to think about a remote

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capacity of managing real estate. And buying in a different city only made sense because not only was I not getting the value in San Francisco, I didn’t want to stay there forever. If I bought just in San Francisco, I would be stuck in San Francisco since the real estate prices there are extremely inflated, making it harder for someone to scale at a rapid pace. However, remote real estate investing doesn’t work for everyone. If you want to live in a place for the next thirty to forty years, and work or invest in real estate there, it makes sense for you to buy in your backyard since you are buying where you are going to stay almost forever. If you're like me, and like 90% of the world at this point, everything is constantly changing. People are constantly moving to different states, or different countries for employment. If that's the case, then you don't want to invest where you are employed. It might not always be the most lucrative place to buy. Separate to that, management of these properties and of your portfolio can easily be done through remote connectivity. Using FaceTime, WhatsApp, Zoom, or

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any platform that allows you to connect with your team is very simple. It also helps you build a team that you can manage from a distance. Some of the biggest enterprises in the world right now, Google, Facebook, and Tesla, manage 90% of their employees from a distance. This pandemic we recently went through has caused the majority of the world to go remote. Most people are still making money from home. What's stopping you from investing in real estate and being able to manage your properties from a distance? You don't need to physically be onsite with your real estate, but you do need a team in order to make that happen. In fact you really shouldn’t be onsite at all. It creates more headaches and takes your vision off of scaling the overall portfolio. We will go through that entire process in the rest of this book. The final benefit of remote real estate investing is the ability to always be on. You need to be able to pick up the phone, and make a call. There's a plumbing issue, you make a call. There's an electric issue, you make a call. You want to fill a unit, you make a couple calls. Units are shown by having a realtor physically present at the property, or have a Richard Garcia

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property manager do it for you. You can even have a handyman do it for you, in the event that you need some help and you are able to pay them a little commission. The goal is to remove yourself from the physical transportation of you going to and from your properties, and constantly having to be onsite, which doesn't make you any money. Instead, you want to design a way where you only work remote, and manage your teams. Most of your time is still focused on your side hustle and your nine to five. The real estate day to day is primarily managed by the team you’ve built. That's what you call building a system. Building a system is essentially the creation of systems and operations within your business that allow you to manage your team from a distance. For example, automated invoicing. Every time a handyman comes and sends me a proposal for work, I have automatic invoicing that allows me to pay these partners. On the flip side, my property manager and tenants pay me and the invoices are automated directly to them. You need these systems that will help you manage your

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administration on the back end, without doing everything manually. Let’s say there's a unit you have and it goes vacant. Do you just let it sit there and then put it back on the market? No, you need operations in place. That way, when a tenant vacates, there's a checklist that your team follows to make sure it’s ready for the next tenant. How long should that take, and what are the things that need to be done? What's the checklist like, is it paint that needs to be done? Is there cosmetic damages that need to be covered? Do appliances need to be repaired or replaced? All these things need to be a part of your systems and operations. That's how you'll get to build a system that works well enough for you to live anywhere else you want in the world, while your team manages the real estate. You have to constantly be improving the operations of this system for it to become truly passive. I'll give you another example. Working at Tesla, a majority of goals in the factories revolve around creating faster automation while making sure nothing breaks. My main task when working at Tesla was to make the robots

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in the supply chain much quicker. I had to improve the overall operations and systems while making sure they run smoother and faster. All of this, while still getting vehicles out the door. That's the same thing you need when it comes to improving your real estate operations. This helped me in real estate because I saw the same need for a system I already had experience with. I used all this information I learned working at Tesla, Facebook and Google, and applied it to my real estate portfolio. If you structure your systems and operations early it will benefit you greatly long term. This is the whole reason why I built the Real Estate Fast-Track system which I also decided to make into a course. I felt that my strategy could help countless investors, especially beginners, that don’t know how to build their real estate into systems When I first got started with real estate, I didn't have any of this stuff. I didn't have operations or systems. I relied on family members to help me out. I relied on friends, or acquaintances to do the work of a handyman. Small meager things, even collecting rent for me. Whatever I needed help with, I relied on them, and I would The 7 Steps To Wealth Creation Through Real Estate Investing

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compensate these people for it, but you cannot grow like that when you're depending on random people. You could barely consider it a part time job. They weren’t really getting fair compensation for it, or they were doing less work than what I was paying them for. It's a lot of factors. The biggest thing is, you cannot scale like that. Depending upon people that don't have the right experience for these jobs is no way to grow a business. I had to learn that the hard way. At the beginning I made big mistakes. It was especially tough since I didn't have the systems and operations that I'm telling you to use to your advantage right now. When I started working at these big companies, I noticed that my real estate was no different than their businesses. It could have better operations, and systems, and it can run much smoother. Since I hadn't implemented anything, I was consumed by all of the very small tasks that my real estate required me to do. This meant that I couldn't think about buying my next property. The very thing that had led me to real estate, financial and time freedom was being suppressed because I was actually working more. My real estate wasn’t optimized. Richard Garcia

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All these factors were of extreme importance to me since the extra five minutes here, and ten minutes there with a full time job, and side hustle prevented me from scaling. When I started to implement systems and automation, things completely changed. What kept me going deeper was my fascination with the game. It was like a puzzle. It started to become something of a challenge. The business can always run better, faster, stronger. If it can do that, then why shouldn't I figure out how to continue to do this as I continue to add more real estate. If I add more real estate and I keep on figuring out better operations and systems that automate my management, and practices, then it allows me to replace myself. It allows me to focus on other things like my stock trading, my nine to five, or maybe buying more real estate, and that's exactly what I did. I created a system where I lowered my costs, and kept seeing more value come out of the portfolio. The only thing I wanted to do was repeat that again and again. Anything that you need to do to save time. If you have to spend money to save time, it's worth it. The time you save can be used to make more money than what you’re The 7 Steps To Wealth Creation Through Real Estate Investing

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spending. You should be trying to automate it, which in turn will end up making you more. This is that passive income mindset I developed more and more as I dove deeper into real estate. In a funny way my 9-5 jobs at Tesla, Google and Facebook really led to my growth in real estate from very small to a scaled portfolio. It allowed me to see the clear steps. As I said before I had to make the Tesla production better while still making Tesla’s. It’s the same with real estate. I had to make the real estate system stronger while still acquiring more. I saw the parallels and ran with it. Let’s recap. The first action that I ever took was to start making extra money. That extra money came from my side hustle, stock trading. And in turn all the money I was saving from my job and side hustle was used to create generational wealth through real estate investing. Just like I told you, in the third life. Real estate pays me while I'm sleeping. My nine to five job funded my trading habits which in return made me more money. When you are just getting started, the first step is to save

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at least thirty to forty percent of your paychecks. Use that thirty to forty percent to build your side hustle. When your side hustle starts producing for you, alongside your nine to five, you can then fuel the real estate and automate it with systems. That's how I got started, exactly to the tee. That's how I bought my first investment property, and my second. It’s not hard, it’s only a matter of consistency.

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STEP 3: Never Own Your Home

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ne thing I had to get over was this “American dream” when I lived in San Francisco. Everybody wanted to own real estate where

they lived. All my friends and colleagues. They wanted to buy their own home and live inside a property they owned. San Francisco doesn’t have many large properties with nice backyards that allow you to live a suburban life, let alone affordable ones. With the minivan in the driveway, the nice car, and the kids going to a good school district. There’s none of that. By not buying your own home you can have all those things, and more. I noticed this when I started researching how much of a return on my money I could get by investing in Miami, instead of investing in an area that is extremely overpriced, such as the Bay Area. I also noticed that I wasn't able to move without continuing to pay for my mortgage every month. If I bought a home for myself and my family, it would require capital for a down payment and along with debt. To be approved for that debt it is based on my income. More on that later when we talk about debt to income

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ratio. I would probably want to buy something that is close to my job, or at least not too far away. When you start to get really particular about what you need and where you're going to live, you end up paying for what you can, and you end up settling for what you can afford. In San Francisco, the average nice house is about one million dollars or more. The average person cannot just finance and buy a one million dollar house. That's hundreds of thousands of dollars, not to mention something at that price is probably a starter home. If it's a starter home, that means you've got to invest money into it, which means that investing money completely exhausts your liquidity. That’s why I decided to rent where I lived. It didn’t eat up all my money. When I ran the numbers for renting it didn’t impact my debt to income ratio or DTI. Why is that the case? Because when an investor like myself owns a rental unit the tenants in the properties are technically the ones that help me qualify the mortgage on the property. This means if I’m renting and my debt on the rental properties is offset by tenants it’s much easier to qualify

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for a loan. Instead of wasting hundreds of thousands of dollars on my own property that I live in, I use it as capital to rehab and force value in my investment properties. If I wanted to buy a house I would be stuck financially. I would have bought a fair market property in a suburban area that is about an hour away from my job but I’d have to rely on my job to pay me, so that I can pay the mortgage. I'm likely not going to stay there for more than 10 years, so it doesn't make any logical sense to buy a property like this. Most people are not aware of all the circumstances that increase your risk when owning a property and living in it. The rich rent wherever they go. Why? Very simply, we want to have flexibility. Rich people can go anywhere they want in the world. They're not tied down to one place, because they don't depend on a paycheck from a job that they have to go to every single day. They make money from money. That gives them freedom, and it allows them to become more mobile. The majority of the wealthy rent where they live like I do. And that extra capital is put into investments that create generational

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wealth. As you can already probably tell… real estate is my preferred investment. Here is where most average people confuse generational wealth. Commonly, generational wealth is confused by many as home ownership. Most people buy and live in their home, but they don't live in the home forever. They live in it for a few years, then they sell the home and take the profits to move elsewhere. That's not really building generational wealth, because you're constantly reusing the money to go and buy a house. But you’re not making money from it, you’re living in it. Buying a house to live in never really produces generational wealth because you were living in the investment instead of owning it as an asset that pays you monthly. Now, by living in it, you have to pay for it. But if you rent it out and don't live inside of the property, somebody pays you to live there. They pay your insurance, they pay your taxes, they pay your cost on that property. Plus they give you profits. I thought to myself, “well, this is much better than me living in a property where I have to put a significant amount of Richard Garcia

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money down then continue to pay for it every single month. If I rent my units out for profit and live in another place that I rent I’ll have extra capital. Then I would be able to continue buying real estate investments that produce cash flow.” That consistent revenue from properties is building generational wealth. As long as you buy these investments with the true intention of making them an investment, you are building compounding generational wealth that continues to spit out cash flow. It will pay itself down and appreciate over time. Not to mention the tax write-offs that you benefit from. That's the path I took, and I'm proud to have taken that path. It was faster than going down the route of falling for my emotions to settle down and buy my own house. That just takes too long. With investment properties you can cash out, and refinance a lot faster. I’m going to describe some of these strategies in the upcoming sections of this book. So stick with me.

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Now, when you think about it from a banking perspective, you have to remove all emotion. The reason why is because Banks are only using data to make this decision. This data is going to suggest to the bank that, if you're buying a property for yourself you are acquiring a liability, because that liability isn't producing money for you. It may not even be producing future appreciation. If you go over and over, investing in the property, the bank doesn't really care. If you have a marble kitchen, and your neighbor has a granite kitchen, it's the same thing to them. You both have kitchens. The bank isn't going to care about what you've invested into your property. Instead, the bank is going to care about whether you can pay for your property every month, or if somebody else is paying for your property every month. If you are paying for your property every month, then the debt is on you. That means you have the liability, but if you have a tenant paying for your property every month, the tenant is paying the debt. Now, you can show the bank that you have another source of income, and the bank will now acknowledge and recognize that money coming in from that tenant as a form of repayment towards the debt. It's a very powerful thing to do, to Richard Garcia

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replace yourself from being the person who is liable for this debt, to getting the benefit of the profit. You have tax write offs, if not the same, more than what you would have if you lived in your property. You get all the benefits of real estate, as if you were to buy your own property, but you're getting even more. If you buy an investment property, and these properties are extremely liquid, because you are now using the fast track strategy to be able to refinance cash out of your property, you no longer have to sit on stagnant equity in your home. When you go buy your own property, you have to sit on the money that you originally put into that property. Now, there are people that say you can take out home equity lines of credit. But here's the thing, if you take out a home equity line of credit, you are still responsible for that home equity line of credit on your personal income. This is because by taking out a line of credit, you will now have a second mortgage on the home that you live in. So not only do you have to pay the first mortgage, but now you have to pay the second mortgage too. If you use any of that money from the home equity line of credit to go buy a property, you're likely not going to The 7 Steps To Wealth Creation Through Real Estate Investing

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have all of the money you need to buy a property at all. If you go use a home equity line of credit as the down payment, the bank is most likely not going to approve you for more debt to acquire a new property. That is because the two mortgages you already have maxed out your debt to income ratio. You're stuck. You technically have no money because you can't use the bank's money to go buy more real estate. You only have enough of what you could take out of the home equity line of credit. That's only enough to put some value into your property. Even then it doesn't make sense, since you've already taken the home equity line of credit in the first place. You are completely capped. You can't move forward. When you extract yourself from your investment, it truly becomes an investment, not a liability. That’s when a property ends up producing more than what you ever expected. The banks know this, and they're not stupid. They're going to make sure that the property you buy is in the correct category that you're going to be using it for.

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On another hand we have people that like to claim that house hacking is a profitable way to grow your real estate. For those of you that aren't familiar with what house hacking means, it's when someone buys a duplex, lives on one side, and rents out the other side to a tenant. Majority of the people that I've talked to that do this or are thinking of doing it usually think that they can buy the property with an FHA, and stay in it for a year or two for free. Well again, you're still living in the property, but now worse, you're over-leveraged because you bought with an FHA loan. Which is why most people do house hacks in the first place, so that they can live in the unit while they're saving up money. Not only that, it's probably going to have a lot of issues you need to fix and even if you were to invest more money into that deal, you would still be over-leveraged. Now you have a liability because the debt to income ratio on the property is negative to your personal income. The first big mistake they're making is that they aren't really prepared to buy that duplex. So, if you don't have the twenty percent down, you should already tell yourself, I can't buy this yet. That's the first thing. The 7 Steps To Wealth Creation Through Real Estate Investing

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Secondly, if you want to get a loan in the future the bank will also see that since you live in the property, it's your primary residence. Since it's your primary residence, it's a liability to the bank, and the bank is going to recognize it as a liability. They're going to say that you, your income, is what qualifies for any other future loans that you want to take out with the bank. In turn, slowing you down from making future investments. Besides that, another mistake they are making is that after these house hackers buy their first property, they're technically lying by buying it as a duplex. Which in reality is an investment property but they're buying it as if it were their own primary residence. Now if they use an FHA mortgage to buy it and they decide to move out, the bank can call back the loan if they found out that you aren't actually living in this property. An FHA is for first time home buyers. It's not for investment style properties. If they found out that your property is an investment, and they find out that you're not living in the property, they can call back the entire amount of the loan, and even foreclose on your property.

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House hackers also like to think that they're living in their property for free, but what they're really doing is absorbing the cost of the property themselves. Instead with a true investment property your tenant absorbs the cost of the property, and pays you profit. You see if you live in the unit, not only do you sacrifice not making the rent but you're also sacrificing the profits or what we call the cash flow that comes from the property. I'll give you this example from a numerical standpoint. If it's a duplex and we have each unit rented out for $1,200 a month, 1200 on one side, 1200 on the other side, that's $2,400 a month. Your mortgage, taxes, insurance, and maintenance on that property might total about $2,000 a month. Your profit would have been $400 a month if you were to be taking net from this property. However, in a house hacking scenario because you're living in one of the units, you're only making $1,200 from one unit so you still have to pay 800 out of your own pocket to live in that property. You are technically paying money out of your pocket to live there. You're not making the additional cash flow on top of that. Which won't allow you to be profitable on the property. Yes, maybe you

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subsidized your rent, but you're not living for free and that is a lie. Now, if there's extra maintenance costs, extra taxes that go up in the price, extra appliances, anything that comes up that's extra, you have to pay for the tenants. That is because you don't have a legal binding contract with a tenant that could potentially pay, or add credits to whatever those issues are. If there's a leak, if there's a PR, if there's a problem, you can have your contract state that these tenants have to pay a certain amount after the cost of whatever that is. You can offset a lot of those costs by having real tenants inside of these units. If you don't have tenants in these units, you're absorbing that cost. You're absorbing that risk. Not to mention your tenants will literally be your neighbors. If you’re already a landlord you can imagine what a pain that would be. If there's an issue that happens at midnight, they're going to come knock on your door at that time. The inconvenience of living next to your tenants instead of treating your investment like an actual investment, creates massive headaches.

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If you only have a certain amount of income every year, then your debts to borrow more money to buy more real estate is going to be very limited. If you don't have any debt, since the debt is being offset by the monthly rental income that you're receiving from your tenants, then that will allow you to become free from the debt. You can still use all of your personal income, plus the existing profit from your first rental property as a way to show you actually have more income to qualify for another loan accelerating your growth instead of slowing you down. Look. I understand why people would want to buy a home and live in it. For many, that is their idea of success in America. Unfortunately it’s just not true. If you want to be a real investor, utilizing all your capital and renting is what you must do. Growth can happen at such a rapid pace if you can just get over this emotional barrier of what a home is. And by all means, stay the hell away from house hacking. That’s even worse than just living in your own property. Stop taking steps backward, look to the future. A home shouldn’t be a part of the equation. The 7 Steps To Wealth Creation Through Real Estate Investing

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Instead of house hacking or becoming a homeowner and using that home as primary residence with zero returns, just go all the way and buy an investment property while renting where you live. That is the best way to go, since that's how you avoid having a liability. You would have an asset that pays you every month, rather than you paying it every month. Now, one of the worst investments, as I've just mentioned, is sitting on static equity since it's not producing any returns. If you, right now, have money sitting in the bank, it's not doing anything. If you have money sitting in your property, it's not doing anything. I have friends of mine that tell me all the time: "Man, well I bought my property for $500,000 and it has $500,000 of equity". That's great, but you live in that property which means you don't have that money in your pocket. The money is still sitting in equity. It's just sitting there. If I gave you $500,000 right now, what would you do with it? You should start a business. You should create, or you should buy more real estate. You should do something with the money that makes more money on that existing, initial investment.

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If you have money sitting in equity and you're not using it, then the compounding effect of loss over time is massive. For example, you might have a hundred thousand dollars of equity in your property just sitting there. This year that money could have made $15,000 and next year $20,000. You've now lost $35,000 in a period of two years because you didn't use that money. Instead what you could do is use that hundred thousand to buy an investment property that immediately produces cash flow monthly. What happens is these properties end up becoming more valuable when you add value over time. From there it’s very simple to refinance and use that money to buy another investment property. Mastering the correct strategy makes it very easy to scale in real estate. You can buy multiple properties easily once you get a few under your belt because your income is no longer the factor for repayment on the debt. You also have tenants that are paying you and you're receiving cash flow along with your side hustle. All these different channels of monetization, support the bank's decision to lend you money for another property. The 7 Steps To Wealth Creation Through Real Estate Investing

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It becomes very straightforward and simple. That's how you start to scale. If you leave money sitting in equity, the money is dead. It isn't moving. It's not doing anything, it's not producing for you. When money doesn't produce it loses value fast! That’s why you lose by living in the house you own!

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STEP 4: How I Got Started

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n 2008 life changed for everyone. We went through a major market crash and recession. Everything from a financial perspective changed globally. In

2009, people were extremely hesitant about real estate. In fact, it was so difficult to acquire your first property that essentially no one was buying houses. Properties were now sitting, not just on the market, but they were basically going into a fire sale since the banks were holding onto so many bad assets. I was 21 years old at the time. In the college town that I lived in, it didn't make sense to buy real estate, but back in my hometown of Miami, it made a lot more sense because there were so many deals that I was familiar with. Properties there, just two years before, were going for hundreds of thousands of dollars more. In my opinion, these same deals were likely going to grow in appreciation quickly once the economy started to improve. That’s when I decided to find my first property in 2010. I found a property I really liked through an auction website, the property was listed for sale for just $80,000. Now, this auction was a tax lien auction, meaning the property didn't have its taxes paid for several years. Richard Garcia

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Seven years in this case. The owner had essentially defaulted on its payments to the government. So this auction held the property as a tax lien property. What do I mean by tax lien? If you go and look up what a tax lien is online, it shows that there is risk in buying the property. The property is sold without a warranty deed. A warranty deed essentially guarantees the property with a tax deed. The property would still be subject to the previous owner coming back within the first few years, and claiming the property as his own. Technically, he still owns the warranty deed, and he still technically owns the property. However, since he stopped paying the taxes, the government could not take the warranty deed from him. Instead, they applied a tax deed in place of the warranty deed. Unfortunately I wasn't able to get the property, even though I had the cash to buy it. So instead I followed the property after it was purchased. I was able to go and look at the registered owner that bought the property at the auction. Then right before they started construction and rehab, I made the auction buyers an offer. They were looking to just flip the deal. They flipped the deal to me The 7 Steps To Wealth Creation Through Real Estate Investing

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for $150,000 all cash. Now, the price was originally $180,000, and they bought the property with liens that were in the County records. Those liens mounted to about $30,000 worth of liens. They were selling the property at about $210,000 cash if I was to pay the liens. I decided I wasn't going to pay the liens. The only amount of money I had was $150,000 in cash that I had saved from making money in stock trading, and my nine to five jobs. That was my negotiation and top dollar price. $150,000 no more. The liens had to be taken care of by the attorneys that just bought it for $80,000. They decided they were going to take that offer. This was back in 2010. That was a phenomenal offer for them at the time. I was willing to spend more time and money to get that warranty deed because I would fully avoid all of the risk that comes with purchasing a property with a tax lien. But the biggest opportunity was the multi-family zoning on the property. The previous owner that lived in the property never took advantage of the updated zoning and never brought the zoning up to a triplex zone. He didn’t think of getting permits for rehabbing the property Richard Garcia

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to maximize his dollar. But that's exactly what I decided to do. In the first year, this investment cost me 70k and I was also able to fill the units relatively quickly after rehab. Before rehab, it had seven bedrooms and six bathrooms. But since it was now zoned triplex, I converted it into three different units. After those enhancements, the gross revenue was $3,250 a month. Since I did not have a mortgage, my profit was an average of $2,000 a month. That $2,000 adds up to cash flow of about $24,000 a year. In two years I would make almost $50,000 not including the tax write-offs I have on the property. After three years, I'd have almost 50% of my money back. After eight years, I would have made every single penny back with profit on top of that. In my mind I wanted to get back my money as quickly as possible, while also receiving a constant influx of monthly cash flow too. The added benefit was that I enhanced the property to become three apartments. This producer of cash flow income is an investor's dream. I'd bought it at such a low price with rehab, that the appreciation value was exponential looking forward. The 7 Steps To Wealth Creation Through Real Estate Investing

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In building this new asset, I also had to start building a team. When you are starting to build a team you have to start thinking, how could I rent the units quickly? What do I need to do every single time a tenant leaves to turn the unit over correctly? How much is that going to cost me every time I turn over a unit? All these small factors were mistakes that I had to overcome in my early stages since I didn't have a strategy. I lost a lot of money during that time. One of my most important team members was my property manager. My property manager could alleviate me from physically going down to Miami. He was there to manage my units, rent my units, turn over the units, and find me potential vendors that could help service the units. Things like air conditioning, plumbing, electricians or painters. He helped take care of everything. This person was an extremely important part of my first step in replacing myself in some capacity in the business. I still needed to manage the property manager, but I didn't need to manage the tenants. That's really important, because if you only need to manage one person instead of managing three families, it just Richard Garcia

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makes life a lot easier. If you're going to go to scale, when you're going to buy another two, three, four triplexes, you don't want to be managing 12 families. You want to be managing one manager that manages those 12 families. That's the way I thought about it. Its delegation and it's creating an operational hierarchy. That's why I decided to convert my real estate agent into a property manager. Since I could get the benefit of both a realtor that can help me find deals continuously and also lower their commission and property management cost to me. If that realtor has the responsibility of managing the properties, and the units, then since they're making commissions on new purchases and sales, they don't, or shouldn't require, the higher costs that a normal property management company would typically request. This property manager/realtor was my first critical team member. As time goes by, you will see that this team will start to expand. You'll start to have multiple agents and various other employees. As those agents start to manage your units, you'll start noticing that your units won't actually be kept up as much as you would want

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them to be, since you're using sales personnel to manage them. Sales are sales and management and maintenance, is management and maintenance. They're two very different things. You will be developing a strategy, you will evolve your team, and that team will start to become more centralized. You have to systemize and develop one method of conducting all property management, one method of doing sales, and you'll have a centralized system across each one of these teams that support your overall portfolio. In the beginning, you will need the jack of all trades. A person that can do it all. As time goes by and you continue to scale, you replace or move those original members of your team to new roles. This is more than real estate, this is business management. The strategy centers around hiring people that are going to grow with your business, and that are going to be proactive in what they do. For example let’s say you have a washer and dryer that are sitting outside one of your rentals, but they don't have covers on them so they’re getting wet because it's raining outside. If a situation like that happens, you need a good property manager that can find these things before they happen. Richard Garcia

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Real estate agents may be able to do that for you, but they're not looking at those things with a fine eye. They're mostly looking at how to fill the unit quickly and earn a commission. There has to be an evolution of your strategy and your team. The team has to grow as your portfolio grows. Note that in the beginning, it's going to be very easy to get team members to come in and help you. Also, the pledge you make to these team members is that you're a long-term investor with a long-term outlook, with more interest in buying future properties. It's important that they also have that same outlook. You need to almost over communicate your desire and your mission, because if you don’t, it will be very difficult for your team to stay engaged in the beginning. Eventually, as the team starts to become more full, you'll start seeing that you'll have separate divisions. Those divisions will actually end up specializing in what they're good at. The ideal situation is to not have overworked employees. Just have employees that are working specifically in the lines of business that they are most

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effective in. That's a very important thing because that's what leads to high retention, better output, higher quality service. Your assets end up staying well-maintained, and you don't have to physically be there for any of this. What is most important is, I was able to build a team from my computer and my phone in a different state. Today, I'm now in a different country, and it's all because I figured out how to manage people properly, and how to feed them business in a way that uses their strengths and refines their weaknesses. As a good manager of your portfolio or of any business, you need to understand how to do this as well. This is all part of the breakdown on how to build your team in the real estate fast track strategy course. One of the first mistakes I made was that I didn't have a strategy to begin with. I just went into it thinking to myself, if I buy real estate it's eventually going to go up. That was the number one problem. The other issue was that I bought real estate in all cash, with no intentions to use that equity effectively and continue building my portfolio. I just held onto it for many years since I wasn’t educated and didn’t understand how to use debt Richard Garcia

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to my advantage. I didn't have a strategy. Imagine if I did. My portfolio might be 10 times bigger than what it already is today. Not having a strategy was a real awakening to me because I realized it was taking longer than I should to scale. You must use and understand debt when acquiring properties. When I would buy all cash, I was the owner outright of property with multiple units, but I had one hundred percent risk since the property was fully paid off. Imagine if one of the units caught fire. Not only would I lose the very valuable equity in the property but I’d still have to come out of pocket to fix it. That would be a problem for me financially. Leaving my money just sitting there was a massive mistake! When you have money sitting, not being put to work, it's losing value. Just like when you buy a home to live in it. As much as the value of the property was rising, what I could do with the money that I originally put down was significantly more. You see, if the value of your property, when you paid in all cash, rises by just an average seven percent in one year, you could have used

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all that equity to go buy another property. Stagnant money is dangerous money. Money needs to flow and work. If you buy a property in all cash like I did, and don't refinance to go buy more real estate, you're sitting on a ton of money. It's going down in value because of the economy, printing of more money, inflation of basic costs, living adjustments, rising cost of home ownership, and interest rate fluctuations. All these things become a factor to your wealth creation if you're not constantly reusing your money, or recycling your money and putting it back to work. You see, the fast track is built off of the basis of the brrrr strategy. Which is buying a property, renovating the property quickly, and efficiently renting the property out. Once, you've rehabbed the property and made it more valuable, there's more curb appeal. It's more turnkey than refinancing right after you rent it. When you create this new value in your property it basically forces the property to appreciate in value. You can use that force appreciated value by doing a cash out refinance and

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buying another property. The last area in brrrr is repeating the process over again. When you can repeat the process all over again, you're now doubling your profits using the bank's money. If you buy one property and refinance it using the brrrr method, those funds can easily be used to buy another property shortly after. However, the typical brrrr strategy is different from the fast track strategy. It’s far simpler and based on basics to get to the refinancing. The difference between the fast track strategy and brrrr is that the fast track strategy is based on data that accurately finds the right neighborhoods and opportunities. We don’t just look for a property, we look for neighborhoods with extreme gentrification happening. Contrary to the typical brrr we are still looking to have affordable investment opportunities that are also zoned multi usage, whether it be through mixed use, commercial and residential, or larger multifamily. The fast track breaks down why these certain data points are extremely helpful for an investor to refinance their investments faster than if they were to just use the basic brrrr method. The brrrr method is just a general The 7 Steps To Wealth Creation Through Real Estate Investing

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framework, but the fast track strategy is the more in depth analysis of data usage that produces a maximum return on your investment. It also breaks down how to scale those investments within a six month interval from acquisition to cash out refinance. Then, how to use that cash out refinance to qualify for more leverage, and more good debt from the bank. Most will say, “wow, after you've just explained this entire strategy in depth, this sounds extremely complex. It sounds very much like a job.” I will tell you right now that when you are starting a business, it is a job. When I started real estate, it wasn't supposed to be just an investment. It was a replacement to my nine to five. It was expected to evolve into a business. It was expected to evolve into a job for me. That's only because the goal is to make it so large of a real estate portfolio that you don't have to work a nine to five for somebody else anymore. Your primary responsibility is now to manage your portfolio of real estate assets, and possibly a side hustle, or side business that allows you to keep flowing funds right back into your passive real estate portfolio.

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The goal must be to remove yourself from your nine to five. Then take this on as your next full time endeavor, until you get to a level where your portfolio is large, and you've delegated out a majority of your tasks and responsibilities to others in the business. Then they manage that for you. Invoicing, payroll, data collection, administrative duties, clerical duties, property management, project management, and construction management, can all be done by people within your team. That way you can use all the rest of your remaining time focusing on earning more, instead of maintaining the business. Remember that your investments can either remain investments, or become your job. The goal isn't to have a job, but it's also not possible to leave your investments fully in the hands of somebody else. You think that is going to remove a hundred percent of your responsibilities? You will still have responsibilities always. Nobody cares about your properties like you do.

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STEP 5: Why Multi-Family Is The Best Investment

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f you've ever played the game monopoly, then you know the power of multiple doors is how you win the game. In monopoly every time you pass go you

collect $200, and you use those $200 to buy land on the board. Then, as you build up more capital, you buy the green house, which is a single family home in this example, and you go around the board again. You continue by adding another door, so that's a second. Now it's a duplex. Then you go again and add another green piece and it's a triplex. Eventually you replace all those single family homes with a larger multifamily property. There is a mass amount of value in having multiple doors. It's not only the fact that you get paid by multiple people in the same month, but you also get the benefit of lowering your risk since you're benefiting off of multiple people paying you. If you are buying a single family home, then you are dependent on only one family paying you every month to sustain that property. If they don't pay you, you can't pay for the property. If you buy a multifamily property, then you are hedging against that one family, by having three families or four families paying you every month. The 7 Steps To Wealth Creation Through Real Estate Investing

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If one family can't pay you, you still have three other families that can. When it comes to investing, it is always a part of the formula to justify the purchase, or to justify the investment risk. Risk, cost and time are the three main factors to consider. Whenever you are looking at acquiring real estate, single family homes are going to take a lot longer to manage since you'll have many of them, and you'll have to jump from one property to the next. This stresses your management team and they might struggle to manage all the issues on every single one of these properties. You also have more maintenance due to the aspects of the property. Your single family home becomes much more of a burden down the road since you have many of them, and they're more risk prone due to the one door. If you had a multifamily, eight or ten door property, you would have a lot less to deal with. Instead of having three different single family homes in three different lots that you have to manage, you would manage one eight unit building with one lot that has very minimal responsibility. Every tenant and employee in the building can be held accountable. Everybody in the Richard Garcia

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building can be given guidelines for the building to make sure that they abide by the rules, and that they respect each other. There are more people in the property that can help manage the building. Since there's less yard, there's less maintenance. There’s also less travel time between properties when you own multifamily units. More units and less properties is the vision you should have long term. Centralize things. When you can centralize your operations the unit tasks get done faster, and there's a consolidation. When that consolidation happens from a cost standpoint, you're able to still benefit from the revenue. You’ll have lowered costs, increased revenue, and you're able to benefit from a better net operating income or what we call NOI. All by simply buying a multi-family property. Now, the problem that most people have, is that they think irrationally when it comes to buying a single family home versus a multifamily building just because it's cheaper. If you go and try to acquire a property today that is cheaper, does it make things better than if you waited a year to buy something that was in a better quality neighborhood with more units? Tenants have less The 7 Steps To Wealth Creation Through Real Estate Investing

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maintenance, and there’s more upside potential since the appreciation growth that happens with single family properties is very limited because of the values relative to that property. When you have a multifamily that is five units and above, you have a property that is qualified based on the bank as a commercial, or larger multifamily residential business. The lenders qualify this property as a business. It supports its own lending necessity. If you right now were to go and buy a single family home, your current income would be used as the qualification for you to buy that property. To get a property funded your debt to income ratio cannot be more than thirty six percent on average for institutions, especially during crisis periods. The higher the risk, the more likely you, as the borrower, will default on the single family property on the loan, even though it's an investment. With larger multifamily, the qualifying factor isn't the individual that's buying the property. It's the asset itself that is qualifying for the lending. Meaning, the bank is using the asset as its own form of collateral, and as its own separate entity and business. Which means that Richard Garcia

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there isn't a debt to income ratio that the investor needs to worry about since the bank isn't looking at the income as a factor of repayment from the borrower. They're using the income/revenue that comes from the multifamily asset as the form of repayment to the debt. This is a huge benefit and it allows you to get the debt off of your personal credit report. The larger multifamily is detached from any of your personal income or credit. Instead, that load is on the business entities credit report. As the borrower, you have every ability to scale up faster when you are buying properties that can pay for themselves. The banks love that. Now, the terms are a little bit less favorable in some ways. If you're a new investor in the commercial space you will have more restrictions and requests from the bank for information at the start. But just like in the residential space, as long as you keep on buying profitable real estate, the bank will lend you money continuously with a lot less requests of information and with much better terms over time.

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If you're going to invest in multi-families, there's different ways you can do so. First one is obviously doing it yourself, which is ideal at the start when you are buying real estate or any investment. If you do it yourself, there's a huge amount of value with that. For example, you get to learn through trial and error. That’s a big pro because you can learn a hell of alot, but you can also lose just as much in both time and money without proper guidance. Profiting, your taxes, and borrowing money is easier when you're doing it on your own. If you have all the qualifications, the bank will swiftly and easily let you move forward with the loan. If you are doing it yourself, you also have to consider the cost of funding the whole deal on your own. If you are taking on a big multifamily project by yourself without partners or employees you might have a hard time keeping up. If you don't have a team, it'll be very difficult to acquire, rehab and manage an entire multi-family property. This leads me to option number two, partnerships. Your partnerships are huge, especially in multi-families, since most times when you buy a larger multifamily property there's typically enough cash Richard Garcia

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flow to be comfortably spread across multiple investors. If you buy a big enough deal, with enough potential, a partner is also great because you're able to invest in the property without using all of your own money. You won’t have to take on all the risks. You also have the benefit of somebody else thinking about things that maybe you aren't thinking about. Two people that work well together can accomplish a lot more than a single person. Management responsibilities is another big one. Everything gets spread evenly across your partners in the business relationship. There's also easier access to more lending since you have others in the partnership that could potentially borrow with you and strengthen your qualifications. There's all types of benefits to having partnerships, but there are some downsides as well. The downsides start with the possibility of having too many decision makers and not enough action takers. That's an issue. Let's say, you have more experience than somebody else in managing real estate and that partner of yours wants to make a decision on something important that is opposite of your judgement. That partner is actually more of a The 7 Steps To Wealth Creation Through Real Estate Investing

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problem than they are a partner. A quick solution to this is making sure that somebody always has more percentage of ownership in the deal than the other. That way there is a final decision maker. You can still make decisions together, but there should always still be one person that makes the final decisions in a partnership. There is also risk when the timeline between you and your partner is not in sync. Meaning, you may want to get out of the deal in three months, but they may want to be in the deal for three years. How do you align that, and manage through that knowing that your partners want to sell the asset a lot later than you, since they don't need the money as fast as you do, or vice versa? Partnerships can become complicated, and they can become toxic quickly if something goes wrong. Because of that, everything that's done through a partnership needs to be done through a contract. It needs to be detailed on a contract prior to getting into business with each other. This is the only way to avoid real conflict.

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I have never done a partnership without having all of the legal documentation on the table before the deal is done. If you do it after the deal is done, that's where things can get very difficult. It's extremely important to have the partnership established prior to the deal closing, but nonetheless partnerships can be great as long as you have good reliable people, and the deal makes sense. I think one of the most exciting and beneficial, risk averse, but still nonetheless profitable methods of buying multifamily properties is by co-investing. For those that are new to co-investing, this is a fairly new term that has an evolved effect off of the partnership strategy; which is simply being a part of a group of investors that are each putting down a certain amount of investment to pre-fund the entire deal. Plus pre-fund the construction to do the renovations on that deal as well. Co-Investing has very detailed contracts, breaking down the exact percentage of ownership that each investor has in the multifamily.

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Co-Investing is also referred to as a syndication deal by many people. I have started to do many of these deals with my team. And I offer investment spots to any of my followers. With co-investing there is a strategy laid out in the deal by a manager that oversees the entire asset acquisition, rehab, renovation, and refinance. This makes it much easier from a partner perspective, when you consider what partners must go through normally. The co-investors do not become the manager, so there is no bias. There's a third party manager that oversees the raising of the funds, and the entire life cycle of that property. From beginning to end. The entire acquisition and during ownership. The manager is incentivized based off of the assets performance, and the execution strategy that was originally created. While the partners only have to contribute capital and watch it grow. With co-investing specifically in CashFlowClub my team acts as the manager of the co-investment properties. I am the manager that oversees the property, the CashFlowClub investors, and my team. We find the deals, bring the deals to the CashFlowClub, and the investors that are interested in becoming co-investors on that deal pledge via a letter of intent. We'll jump on a deal analysis, zoom Richard Garcia

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call, or a virtual call, and we will walk through detail by detail of the numbers pre and post rehab. At the end of that session, we raised the total acquisition and rehab amount to acquire the deal. We use those funds appropriately to fund the investment. Based on the amount contributed we establish the ownership percentage owned by each investor. This also includes the responsibilities of the manager. In this style of investing, the manager is the one who brings forth the team, which includes the title agent, the attorney, the CPA, the property manager, the administrative assistance, the construction crew, the superintendent and the project manager. All of these people are brought to help these co-investors. Now I’m not saying this is the best way to invest. For me personally it isn’t. I prefer to own my deals outright and manage my team. It's an easy profit for me because I have a system. But that takes a great deal of work that the average person and beginner investor can’t and won’t do. Instead of the co-investors having to take a lot of time to find all of these reliable people and deals on

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their own, co-investing offers a good option for someone who wants their money to grow without extra work. Although not as profitable, it is much easier. One thing to note here is that a co-investment is not owned by the property manager, and it's not owned by the CashFlowClub. The property is owned by the coinvestors, and the co-investors own it through a business entity. That entity is typically a limited liability company that they've created to limit their risk and also dictate what their percentage of ownership is on this asset. That way everyone benefits from the payouts and distributions that the property produces, based on their initial contribution. This is the future method for most investors that we will likely continue to see rise and dominate Now, all of these new multi-family properties are extremely exciting to me because multifamily is not so much based off of the market. Instead they are evaluated for financing and appreciation based on the net operating income, the cash flow, the amount of units the property has, and how consistent the rent has been.

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These are just a few ways that appreciation is considered on a larger multi-family property, since a larger multifamily property is its own individual. It is its own independent business as I explained before. The other beautiful thing about multi-family properties is that they are real. It's real estate. It's physical. It's not paper. You can literally go and stand on the land that the structure is located at. You can shake the hands of the people that are paying you monthly. You can manage the day to day expectations of the property. You are not at mercy to the market as much as paper assets are, since paper assets move based on the economy changing day in and day out. This can cause major risk to your money. You don't technically own something that's tangible and real, you own paper assets in a business, or in a commodity, or in some type of investment category that isn't exactly physical. For example, those that invested in oil when it plummeted during the beginning of 2020, had their asses handed to them. The barrel itself became more valuable than the actual liquid inside of the barrel. That's not a

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problem with real estate. It's likely impossible for that to happen because you cannot build up a mass amount of real estate overnight, it takes a long time. When it comes to oil, you can extract quickly in a matter of hours or days. With real estate, you cannot just build a house in a matter of hours or days. As population density rises, and as population growth continues, real estate becomes more in demand since it takes a lot longer for real estate to be built. Unlike paper assets or commodities. I like being able to physically hold onto my investments. I like being able to know that if the entire economy went down and my homes became fifty percent less valuable than what they are right now, I’d still have cashflow that's coming in monthly. I can still hold on to my real estate since it's inevitable that over time, land will continue to become extremely scarce. As population growth continues to rise, the demand for land will continue to rise. Which means that between supply and demand ratios changing, the value of property and land will just continue getting higher over long periods of time. That's not the same when it comes to buying paper assets that are leveraged off of businesses that could

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potentially fail in one, five, or ten years. Quite frankly many of these businesses can fail overnight. Investors in those businesses have zero control over the value of what that business will be in the next two years. You have all the control of what your property, especially your multi-family property will be valued at. You control the rent prices, the property management, the tenants and how you renovate the property. You can control the quality of the tenants, how many tenants you have, and what their rent price will be. You can shop around for debt to see which lender will provide you a cash out refinance. This means your money and your investment are in your control. I cannot stress enough the importance of having full control over your investments. If not, somebody else is controlling them for you. Again, to reiterate more on this, real estate is not just an investment. It is a real business. It is going to take a lot of your time at first. Time outside of your other responsibilities to build your business, your escape plan, your exit strategy from that nine to five job. Don't expect

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that your real estate portfolio is just going to manage itself. You're going to need to manage it, and you're going to need to manage the people that are in it. I will tell you right now, if you were managing somebody else's real estate, it probably wouldn't be that attractive. You would probably not be that excited or motivated or care for it as much. But since it's your own real estate, and you've worked really hard to own it, and to make the money to buy it; you're going to treat it so much better. You're going to put more work into it, more love into it, more respect, more appreciation etc. Because of that, you will likely need to commit a lot of time to your portfolio. That way, you can optimize it to a level where eventually your portfolio won't need you to be working in it all the time. That’s the beauty of multifamily. Not only is it easier to buy because of less competition and easier financing when it comes to the bank. It’s also much easier to automate and profit from multi-family units, especially a property with five or more units because the cash flow is so much stronger. If you want to purchase a multifamily then you need to start building a team. If that sounds like Richard Garcia

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too much of a headache then co-investing is probably the better route for you.

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STEP 6: Don’t Stop At One

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Don't stop at one. Most people buy one property and get stuck. They don't know how to buy the second. They don't know if they ever will, and most never do. It’s because they didn't evaluate their first deal in the correct way. When people get stuck in a property, it typically holds them back from becoming more wealthy, free, and happy. Your first deal is the most important one.

When you are reviewing your first deal, make sure it's a deal that is going to appreciate over time with the ability to become a value add deal. Meaning the property can become something more than what you bought it for. If you follow me on social media, you've heard me say this before. I talk about buying multi-family zoned properties that are currently in single family status. This means a family lives there, but they've lived there for 30 years or something like that. The property has now been rezoned, and there are multi-family buildings all around that home. These are the type of deals you need to look for because in the future, it can be rehabbed into a multifamily building that can generate more money and

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appreciate over time. That's what I mean by value. If you buy a property that was a single family home on a main street, and all of a sudden that property is zoned commercial, you can now re-permit it and restructure it into a commercial asset. Then you can sell or rent it as a commercial asset which gives you much more value. These are huge forward looking benefits alongside the appreciation of the new rental values that you can make off of that type of property. Your criteria should be specific. It should be specific to the next five or ten years out. If you only consider the first two years in and not the next five to ten years out, that's too short of a term to benefit as much as you would want to. You will typically see value add deals compound and grow exponentially only after a four to five year ownership period. Those first few years are really where you spend the time enhancing the property for growth. Let me now finish the first deal criteria. Value add deals are an extremely important method, and it's how you will continue to scale. When you're getting your feet wet, you have to make sure that the people you are going to work with also understand that this is the type Richard Garcia

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of strategy you're using. Most people in real estate only buy properties once, twice, or three times in their life. If you're going to work with a lender, property manager, or attorney, then you want to make sure you let them know that this isn't a one-time transaction. You're going to constantly be buying more real estate since the type of strategy you have is about consistently adding value and scaling. Which means that your intentions are to borrow money from the bank based off of borrowing again in the future. It’s important because the terms you get need to be favorable enough to help you qualify for the next deal. Your property manager needs to create a strategy and an operational process around collection of managing tenants, and doing all other types of management related responsibilities; so you have a scalable strategy across multiple properties. The same thing with your real estate attorney. Making sure the contracts your attorney is using are scalable, so that you can constantly use them over and over and over again. Everything you do needs to be repeatable. See, when I worked at Google, even Tesla and Facebook, they all had the same concept in The 7 Steps To Wealth Creation Through Real Estate Investing

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mind. It was that in order for them to become massive institutions, everything that was done in the business could not be unique. It needed to be replicable and repeatable by others. You need to make sure this process does not have any issues, especially when you begin scaling your investments. When you have a process that people can repeat over and over it allows your business to keep growing bigger. When you are investing, it is important to elaborate to your team, or future team, that you are buying with the intention to continue buying. You're not just going to invest one time, because my fast track strategy can help you buy multiple properties in one year. Now if you do decide to do this, you are in essence creating equity very quickly when you have a repeatable value add process. This equity you built helps you ask the bank to borrow that equity and extract that liquidity to go buy more real estate. When you are evaluating that first deal, make sure you evaluate it carefully with your team members, so that they are all on the same page. You're essentially buying this deal to leverage the immediate appreciation you capture when you add value Richard Garcia

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and renovate. This allows you to hit the ground running. It’s like a launchpad for your portfolio. Right now, by using my strategy, I went from having two properties that were worth just below a million dollars combined, to having more than twelve million in just the first two years of actively using the real estate fast track strategy. It's just an incredible way to get there quickly and efficiently. Now, the mind-set behind multiple properties, is that you're building a whole portfolio. You are not just buying one or two properties. That is not a portfolio. It’s actually more work when you are buying one or two properties that cannot scale. You're going to be stuck in a nine to five job while you're also self-managing your properties. If you plan to scale up by using the criteria I outlined above in this book, you won’t get stuck. And this forward momentum leads you to financial freedom. But in order to get there, you need to have multiple income streams from multiple properties. So if that means you have to start off with a co-investment deal, cash out refinance and continue the cycle to build cash The 7 Steps To Wealth Creation Through Real Estate Investing

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then do it. This may be a much more practical way for you to capitalize on larger amounts of money, by using a group and being able to buy deals constantly. With my co-investing strategy, the money you have in your deals is constantly being recycled. That same money from your first deal is now creating multiple streams of income every time you acquire a property with your partners. I'll give you an example of this. One of the properties we recently purchased is a big co-investing deal. We have seven investors on this property as co-investors. We prefunded up to $3 million at one point and closed the deal in thirty days. We did a full rehab from eight units to sixteen units. Bringing the cash flow from $8,000 a month when we bought it, to $17,000 a month at completion. This produced an immediate eight to ten percent return. The value on that property shot up from 1.3 million to 1.7 million because of the new rate of return. Since it has more return, it qualifies for a much larger cash out refinance. We were able to do a cash out

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refinance on this property for 1.2 million, leaving only a hundred thousand dollars of the original investment capital. So these seven investors received 90% of their original money back and still get paid every month from the cashflow. We were able to then take the $1.2 million and reuse it in all cash to buy again. That's where we were able to buy a second building, continue the cycle and increase the investors cash flow. This is how you scale a profitable portfolio! When you start to think about providing more housing for more people, that's when you start figuring out how many people you can really help out. When you start figuring that out, you'll notice it becomes infinite. The amount of opportunities that you can create for yourself just by thinking about how many people you can provide shelter for are limitless. Which means if you can provide a lot of people shelter, you can end up building a significantly large portfolio. Your mission isn't to just buy deals, it's to help people. Helping people is a far bigger mission in life. It's a much more impactful goal, which in turn, helps you stay motivated. That is of the

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utmost priority, staying motivated, consistent, and staying true to your goal. Most people have a concern with refinancing. Not just refinancing but using debt from banks in general. I will tell you right now, even when I first bought my two properties, I was extremely against using the bank's money. This is because I worked for the bank. At that time I believed the bank was taking advantage of the circumstances and funding over leveraged properties. They often provide financing for 3.5% down mortgages, or in some cases, 0% down mortgages. Which is crazy. They’re lending to somebody that doesn't have money. Probably because they don't have a very stable income, or it’s a property that they can't afford. The loan would be over leveraged because they didn't put enough money down when they originally bought the property. So, the property becomes a higher risk. Let's say that this person financing with the bank needs to leave and has to rent the property out, they will have a tough time being profitable. Why? Because it's over leveraged and they didn't put enough down payment.

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The mortgage is more than what these people could rent the property out for per month. And the banks allowed them to be in that situation. As I continued to grow as an investor I began to see why I was wrongfully against using the bank's money. Thankfully I learned the power of the banks and using their money to fund my deals. Using the refinancing strategy allows you to continue buying more and more real estate because you're always using the bank's money. How long would it take you to save up $1 million or $2 million? It's going to take you a long time, but if you use the bank's money you can do that in a matter of 30 days. The benefit is leveraging the bank's money to make more money than what the interest rate is on the loan. I'll give you an example. If the interest rate on your loan is 3%, we would find deals that are going to make around 15%. After all the extra absorbed costs and the 3% interest, you will likely be in a 7% or 8% profit scenario. Compared to simply leaving the money in equity on your home which leaves you with zero instant

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returns. Borrowing the bank's money the right way is a significantly faster way to build wealth instead of using all your hard earned saving. This is where it gets cool. There’s literally no reason why you wouldn’t want more than one unit. If you had somebody paying your loan off back to the bank with extra profit would you do it? Of course you would. That person is your tenant. The person renting from you. Plus as you pay the bank it gives you more ownership of the property. Every month you're getting more benefit because each payment gives you more ownership of your property, not to mention the increasing value of your property that grows over time. As I already mentioned, be clear from the start with your staff, your attorney and your lender. When you are clear that you plan to keep growing and refinancing your portfolio, then you get many added benefits. If you continue to do that, over time you will create priority for yourself with the lender. Naturally the bank will feel a greater sense of security as you continue working together. Today if I call my lender, he has my file sitting on his desk because he knows that Richard is going to contact him at any time to get funding for another deal. Richard Garcia

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You'll be in the stack of investors that he knows well enough to easily be able to pull money quickly. This is how the real estate game becomes fun and exciting. You can grow your portfolio at will as long as you can still find the profitable deals consistently. You're going to get to a level where you'll start to scale so fast that you will have bought your third and your fourth and your fifth property. That's because your lender is working with you and helping you. You are able to capture better deals because you're able to compete faster for funding. This allows you to get into these deals quicker and get returns on your money faster. Then this allows you to build your team faster, which optimizes your business, and helps you go back to borrowing more money to keep on buying deals. It's just a beautiful recycling process of scaling, refinances, and building your team. But truthfully, all along you’re just reusing the original funds you bought the first property with. Like i've said before, the first deal is crucial if you want to continue scaling without difficulty, instead of getting

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stuck. That first deal must be highly profitable and fuel your future deals. Get to a place where you’re constantly recycling that money out of the asset over and over and over again. I will never stop using this strategy. You will see that forced appreciated value will grow so fast in these properties. That's all because you’re using the fast track strategy, which leverages data, gentrification zoning aspects of the property, and also value add components. You will see that your property will continue to produce and quite possibly out perform what your expectations were all along.

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STEP 7: Money Burning Mistakes

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M

ost beginners make a lot of mistakes. You are going to believe that everyone cares about your property as much as you do. But

that's only in the beginning. After a few weeks, once you've seen the tenants in your place, you start getting feedback. You're understanding what is working and what's not working in your properties, and the general tasks you need to do. I will say this, not every tenant is the same, but most of them definitely do not care about your property as much as they care about their own wellbeing. Everybody's wellbeing is different. There are people that are extremely clean, and they make sure they maintain your property. Some even care about it as if it was their own property. However, there could be a caveat to that. Meaning people may take care of the property in a way that costs you a significant amount of extra money because you must keep it at their expected level. On the opposite side of the spectrum, you have tenants that don't really care about their living environment and quite frankly destroy their units. They leave a mess and

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leave trash outside. These are the people that you have to filter out and make sure you avoid renting to. Even then, you will still always have someone that slips by and becomes a bad tenant. In order to manage that you need to make sure you are doing a few things to help mitigate those mistakes. But first, let me tell you a story about a situation I recently went through. I was removing a tree from the front of one of my buildings and it so happened that this tree provided shade to one of my tenants' patio area. I needed this tree to come down since it was tangled in all of the electrical cables outside. If a hurricane were to happen in Florida, not only would it be a danger to my tenants but also all the electricity would be down for a while because the tree would likely have destroyed those cables. When the contracted company came out to do all of the required tree removal responsibilities, my tenant came outside and tied himself with a rope to the tree. He said over his dead body that he will let this tree be taken down. He loved seeing the tree outside of his window.

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That's what I would consider a bad tenant since they are not letting you perform your maintenance on your own property. When situations like that happen, you need to do everything you can to remove these negative tenants from your units as quickly as possible. With the least amount of cost and risk. Which is where protecting yourself comes into play. There are a few good ways you can protect yourself. One is that every investor in real estate needs to have their property structured under limited liability companies, or corporations. Having your property owned by an entity will protect you and limit your liability. Secondly, you must make sure your tenants are pre-screened diligently with background checks at the rental application stage. Letting somebody in that has financial issues, or mental issues could be a problem for you in the future. Not to create a bias, but if you have the ability to choose a great tenant, it's your fault for not doing it. If you end up having a bad one, you need to run your due diligence and potentially remove them.

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Next is having an attorney that can help you serve three day notices, folly evictions and follow up on late payments in the event that you need reinforcement. A good attorney is somebody that will always be looking out for your best interest. This will be saving you money consistently and a good attorney in some cases does really small things for free. For example, sending an email, or writing a quick response document that wouldn't take the attorney no more than 15 minutes to do. Maybe you could have even written it up yourself, and just have them put it on their letterhead. Nonetheless, you want to have an attorney on hand that can help you out at all times. One of the last ones, and I think the most important, is that your property manager needs to be able to not only fix issues swiftly but also avoid them. In being proactive, you see that the tree incident could have been prevented. Letting the tenant know before we were going to do it, even if they didn't agree, would have likely solved the issue of them tying themselves to the tree and putting everybody and themselves at risk. But since we did not properly notify them it caused some The 7 Steps To Wealth Creation Through Real Estate Investing

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complications. Even though we didn't technically need to since it didn't have anything to do with their unit. It’s still good to let your tenants know that work is being performed in the property, even if it's just something minor. You're letting them know out of courtesy and good faith, but it's not necessary. If you want to avoid problems, then just make sure to put that into practice going forward. That way you're aware of possible problems that could arise. Being proactive is a major key with real estate, not only when it comes to tenants but also when it comes to negotiation on a potential property. Now, when it comes to owning bad deals, it's all based on the fact that the numbers were not run properly before the purchase of the property. The second reason is likely because the property was purchased with a strategy that wasn't exactly defined yet. First, when you run the numbers, you are looking at potential random events that can happen to your property in both positive and negative ways.

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Maybe the timeline for your project can be cut down by three months by doing everything correctly and not encountering any issues, or maybe your timeline is going to take three months longer than what you were expecting. These are variables that need to be run before acquiring the property. So in the event that you run the numbers in two or three different ways, you have an idea of the worst and best case scenarios. If you were already at a very slim margin of profitability on a deal, failing to run the numbers can be devastating later down the line. Especially when your project’s margins have been eliminated because of the variables that you did not necessarily consider. Now, the variables that I routinely run are expenses, so for instance I look at my insurance costs for the year. I look at how much maintenance I expect to do per month after rehab. I assess how much I will pay in property management per door for the year. Also, what are my utility costs for the entire structure? Do I have to pay for water, electric, cable, or any broker's fees? Is there an HOA fee on the property? These are all important questions you have to ask yourself. The 7 Steps To Wealth Creation Through Real Estate Investing

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I always recommend staying away from homeowners associations, but if it has one, you have to factor the yearly cost of that home ownership into your expense variables. Property taxes are another expense variable that you want to consider. Then you want to look at the total equity that you're adding into your purchase. If you are adding in an additional hundred thousand dollars for your rehab, that is a variable that also should be calculated in your expenses. What is it going to take to get your money back on that deal, whether it be through a cash out refinance or not. These are all of the expense variables besides mortgages. I also look at revenue, which is my monthly rent for the year. This also includes my yearly rental increases, which is typically about 3% every year. The last factor is vacancy. Usually I factor in about a 5% vacancy rate on my properties. Then I look at the debt, which includes running the numbers on multiple things, so bare with me here. It's very important that you look at the purchase price of the property, the equity percentage that you have in that property, the loan amount that you have on that property, the annual interest rate and the term for the loan in how Richard Garcia

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many months. Then I'm calculating the interest costs on that debt over the course of the term. Whether it be ten or thirty years, you want to calculate what the interest cost on that is. In the CashFlowClub, I use the deal analyzer that my team created which allows me to break down all these variables quickly. This is especially helpful with our co-investors so we can invest appropriately in the right deals. Some of the bigger key numbers you need to make sure you're reviewing are the gross operating income, your total operating expenses for the year, your net operating income for the year, interest, depreciation, and amortization of points for the year. I know this is a lot, but after a while of doing this you'll know this process like the palm of your hand You also need to consider what your before tax cash flow, both yearly and monthly is. Then look at the opposite side which is the after tax cash flow, both yearly and monthly. With these variables, you'll be able to understand what your cash on cash return is before tax, and after tax. You'll also be able to know what your rent to purchase ratio is, and what your cap rate for this deal is. Again, we break down all of these numbers, how The 7 Steps To Wealth Creation Through Real Estate Investing

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to calculate them, and also how these formulas work in depth within the real estate fast track course. Here's the thing, most people think that deals magically grow on trees. That’s just not true. Deals are the commodity. They're extremely difficult to find. If you want to find a good deal, then you have to do everything possible to make sure the numbers make sense, but also lock the deal in, at least in some capacity. Whether it be through verbal offers, physical offers, through partners or through co-investors. There is going to be a strong need for you to lock the deal in since the really good deals will be taken off the market quickly. That's just the nature of how attractive deals work. Everybody wants it since everybody is looking for a good investment. You have to be very careful about losing the deal since it takes time and money to find them. If you are taking a long time to find a deal, you don't want to lose one once you find it. You have to lock them in which requires you to have a bit of patience and a lot of persistence. The patience is needed when working with multiple people to get the transaction under contract, but your

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persistence is making sure these people are moving forward quickly. You must be extremely persistent so you avoid getting stuck at any point where another competitor can come in and take the deal off your hands. That was hard for me since I am not a patient person, but I am definitely a persistent person. I needed to find a balance between patience and persistence that I didn't have before being an investor. Oftentimes patience comes from understanding. When you understand the process, and you have a strategy that you're able to write out step-by-step, you will realize the actual timetables to finish a deal. For example, it usually takes about 45 days for me to get funding from a lender, so i would get all my pre-approvals, pre-qualifications and documentations done beforehand. That way when I find the deal and run numbers, I'm able to quickly and swiftly fund the deal without having to delay. Because the longer the delay, the more likely a competitor can come in and buy the deal out from under you.

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Like I said, you do have to build a threshold of patience and foresight that you didn't have before. Because real estate is not just a transaction, it's a process. The process typically means it takes time, but you also need to be persistent enough to regulate that process. If possible, control the time that it takes. The better you are with both of these two terms the better you will be as an investor. This also makes it more likely you will always acquire great deals. That is how you will become not just a good investor, but a great investor. You're probably asking yourself, what differentiates a good deal from a bad one? In my experience, a bad deal is a deal that you can't control. A good deal is one that produces more than your expectations. It has very little risk for you, but all the while it actually self manages in its own capacity. It has very low maintenance costs and responsibility. A bad deal would be buying a turnkey multi family that already has the baked in cost of what you would have benefited from if you would have rehabbed it yourself. Instead, somebody else rehabbed it, and then force appreciated the value. Then they sold it to you probably at market value and your rental return on Richard Garcia

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that property is less than 10% net profit. With a good deal you will be cash flowing in double digit percent gains. You have the ability to force the appreciation of this possible fixer upper structure, which allows you to build equity in the property as I’ve explained before. In turn, you're able to cash out, refinance the value, and then go buy more. You see, a good deal allows you to buy more good deals. It actually empowers you to buy more good deals, unlike a bad deal that diminishes your ability to buy another investment. Even if you are an owner of a duplex or triplex that is making you an 8% or 10% return for the year, which is phenomenal, the property might not allow you to take forced appreciation. You might not be able to take equity because maybe you bought it as a turnkey property. That's where the deal becomes terrible and it’s a common beginner mistake for many investors. That is why you're reading this book. This is to help you understand that real estate used to be something where you buy a property, and you live in it for 30 years. Maybe you buy a secondary home, or maybe you buy a third home if you're rich, and that was really it. Then it The 7 Steps To Wealth Creation Through Real Estate Investing

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evolved in later decades to being an investment vehicle. Things have started to get more aggressive in the real estate market. The technology alongside it has also made it that much more competitive. Right now, if you are in a position to buy real estate, you must buy real estate in a way that aligns with current economic factors and timelines. Not the old school, 30 to 40 year mind-set where you were going to buy something and live in it for a long time. That's no longer the case anymore for the majority. There are people that still live in their house for 30 years, but in today's world, young adults are significantly less likely to own a home, compared to those born just ten to fifteen years earlier. Those that only own one or two properties could have paid that house off with a tenant living inside of it and bought more real estate over the years. That's the power of using banks money, and cash out refinances in the fast track strategy. If they would have gone the opposite route, they would have given their future generations a passive income stream and a massive amount of forced appreciation.

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There are also many scams in real estate. So don't for a second think that just because it's real estate you’re automatically safe. When you think about real estate, you don't normally think about too many scams or people stealing your money. Most times when you think about scams, you think about online scams, credit card scams, other types of scams that come from sending money online. With real estate, it's physical. You feel like you have the ability to mitigate any type of scam, but that's not true. You must be aware that scammers are in every line of business. In real estate, just like any other investment, there are a lot of people that want to take their cut. Normally you want an attorney that can help you navigate through any type of circumstance like this. An attorney is going to be extremely helpful to you since they can review contracts and mitigate any risks you have from a contractual standpoint. They can also protect you from getting hurt or sued financially from any other types of scams that tenants or vendors are trying to perform on your property. Maybe there was a vendor that didn't do the work right and somebody got hurt, then they put the blame on you. All these situations must be proactively managed. If you wait until the The 7 Steps To Wealth Creation Through Real Estate Investing

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situation happens, you're already too late. You need to protect yourself early on, with a resource that understands the law as your voice. Like the one time we were reviewing a property, and there was an attorney that was also the listing agent of the property. Although the attorney is an attorney in this transaction, he was performing the duties of a real estate agent and showing us the property. What he did was show us the property and then sent a bill for his time after he showed us the property, which is illegal. He then requested and demanded that we pay $400 for his time in showing us the property. This is coming from somebody who legally understands that it's a scam. Yet you as a beginner would never know this was a scam. When the email comes from an attorney that says, you owe me this, your initial reaction is almost a feeling of obligation to pay. This is just one example among many. Another example involves appraisers and inspectors. An inspector is a person that comes out and inspects your property for the sake of insurance. That way you understand what's

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going on in the property and what you need to do. An appraiser is one who inspects your property for the value. Appraisers can and always will work in the benefit of the banks. These appraisers that are licensed and the only ones that can justify real values with the bank, since they have a contract with them. What if you hired a random appraiser that doesn't have their certifications or has never worked with a specific bank before? You may get an incorrect appraisal and it may put your entire deal in jeopardy. There are so many more scams like these. Having an attorney and building a team you can trust is crucial. Even if it's a trusted team of one or two people in the early stages as you build your experience. Real estate is not the most difficult business. The process is very straightforward. However, it is very competitive. It will take a lot of trial and error to avoid these money burning mistakes. It will take time to develop a process that works seamlessly for you and your team. It will take time to develop a large team that is 100% trusted. So do your due diligence, because once it’s done and

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automated you will have a cash flow machine like no other!

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Bonus Content: Cash Flow Club

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S

o now that you've read through a world of information, I guess the biggest question to ask is why. Why did I decide to write a book and

produce content to help others get into real estate? It's because when I started looking at a lot of these strategies, I noticed most of them had flaws. And those flaws were costing people more than just money. Some investors are completely unaware they're losing money to begin with. That is because they're making $300 a month from their single unit. Most have no idea that with a little bit more understanding and a real strategy they could be making $30,000 a month. That is why I wrote this book. I want to help people understand the bigger possibilities. What I noticed when I started using the basic brrrr strategy was the lack of using data to speed the process up. It just gave you a baseline strategy to follow in any market. I didn't just want to buy real estate, and then maybe do a brrrr property every two years. I wanted to buy real estate properties every six months or less which is what I've been doing for years now. Where the general brrrr strategy fails, the fast track strategy picks it up using the Richard Garcia

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gentrification model. It uses the value add model to reconstruct the deal well enough so the forced appreciation will come sooner than the standard technique. Now you’ve seen me mention CashFlowClub throughout this book but you’re probably wondering what exactly is it? If you're reading this, you are already a part of the CashFlowClub because you've now made an investment in your real estate knowledge. I wanted to create an environment where my friends, family, and anybody else that was interested could come and learn about how to buy real estate the way that I did. I also wanted to provide guidance for those that needed help and did not understand how to do it alone. Let’s be honest, there are intricacies to the strategy that become difficult to understand without somebody formerly having experience with it. I started to post a lot of my properties and experience on LinkedIn and Instagram. A lot of the people who followed my posts decided to join CashFlowClub. It has now helped thousands of people become investors and buy good real estate on their own or by co-investing. CashFlowClub cuts down a massive The 7 Steps To Wealth Creation Through Real Estate Investing

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amount of the learning curve. It helps people like you bypass the problems that took me seven to eight years to master. Making time to learn is probably one of the most critical factors for success. You can learn something in a few weeks if you pay a mentor for the information or you can learn something in a few years by figuring it out yourself. It took me years because I learned everything about real estate on my own. I think if you are paying for information to learn it quickly, there's a mass amount of premium to that since you are learning something now in a much better way. You're learning from someone who already knows the pros and cons along with mistakes to avoid. If you're doing it over a few years time you've lost more than money. You've lost time, and time is what you can never get back. If you want to learn something, you should want to learn it as quickly as possible. You don't want to be trying to figure something out for three years and make a ton of financial mistakes along the path. Sometimes the little bit of money that you spend, gives you a lot of money, experience, and value in return. Richard Garcia

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Another beautiful thing about CashFlowClub is the community. Everybody in there is like minded and passionate about not just real estate, but financial freedom. People that are passionate about escaping a nine to five job, feeling liberated from their financial lives, and becoming close with other people that think the same way as you is massive. Now you are building a team, a resource network, and a connection with others who are on that same journey as you. They may have very similar questions that get answered inside the community, by other mentors, myself, or by other coinvestors that have already gone through those situations. It could essentially help that investor save, or make more than what they currently are. I’m very proud of the CashFlowClub community but I’m also proud of you for even reading to this point. Most people don’t have the energy or resolve to finish an entire book. If you did read this book, this was likely your first step towards becoming financially free. A small investment in yourself to open up your mind to the possibilities you have. Don’t squander this opportunity.

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Learn more about CashFlowClub at: joincashflowclub.com

Or apply to co-invest with me at: coinvesting.co

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About the Author Richard Garcia, ex Bank of America, Merrill Lynch, Tesla, Google, Facebook, father, husband, entrepreneur, nomadic, student and mentor.

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