Okay, so you bought a house with a primary like a conventional loan, then you turn around and rented it out and you’re not cashflow. So here’s there’s five reasons why real estate investors buy houses. This is very important for you to write down what are the five reasons why everybody buys houses. So tell them Well, let’s get specific, like build wealth is like when people say synergy, Mike, what was that mean? Right. So number one cashflow? Obviously, like we want cash flow, right? We want more money coming in than what’s going out every month.
And that’s what’s got you worried because number one, most people look at cash flow as the only reason why people buy real estate. We’re filming a TV show right now, right? So I’ve got 30 people on my the crew from a&e that don’t know anything about houses. And so they’re sitting here talking to us and like yeah, you bought the house because it cash flows. Right. It was like actually that property I bought pretty rare situation. But that property just bought does not cashflow. And they go What Why would you buy a house that doesn’t cash flow? Isn’t that the whole reason why you buy houses?
I’m I know, the second reason why we buy houses, is it maybe a different phase in the business. But for me, the first thing I look at right now just is how much can I depreciate on that property? Right? So depreciation tax benefits, okay, now where that is different for maybe a you or me is that I don’t make as much money as an NBA starter, but I make enough money that you could definitely see my paychecks come in as much as an NBA player, maybe like a six man or a seven man or maybe a 10th. Man, like I make good money, like most real estate investors that have been around for a long time make good money.
So what is the main thing that we’re really looking at is we don’t want to pay all of our income to the taxman. And the third reason why real estate investors buy real estate is because of appreciation, right? The value of the property is going to go up. And you’re telling me that you’ve made in five years, you’ve made roughly $60,000 In five years. So let’s say that we’re going to divide that by five years, which is about $12,000 per year. So that’s about $1,000 per month.
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Okay, that’s pretty cool. So right now, I’m looking at this, and I’m saying that my appreciation just over the last five years, we’re not even talking like just the last two, which has been crazy. Just last five years, I’m averaging about $1,000 a month in net worth growth per month. So I’m looking at 583. And I’m like, you know, I would pay 583 to gain 1000 bucks. All right. Okay. Well, now, what’s the fourth reason? Is anybody getting value out of this, by the way, anybody seen that? How I justify some of my purchases for some some things? Now, what’s the next thing? What’s the fourth reason why mortgage pay down? Now?
You’re five years into the loan? That’s pretty dope, you’re 1/6 of the way done, right? You’re 1/6 of the way done. The fifth reason why people buy real estate, I don’t talk about this as much. Okay, so we call this leverage. Okay, so, Jess, I’m gonna tell you some gangster stuff for a minute. Okay. The thing is, you have a freaking machine right now that can let you put yourself into really powerful situations. When you get into the multifamily space you get into like some commercials, like just how much money do you think you should be worth by the time you die? Let’s let’s figure that out. Throw out a number.
Don’t tell me 5 million I’ll be pissed. I said 20. Okay, 20 20 million. I can tell you is incredibly easy by owning real estate. $100 billion dollar All right, let’s go with 5050 is the right number. Do not even guys 20 million is nothing I can tell you guys, it’s $20 million is not enough money to live on the way you want to live your life. I promise you, I promise you. It’s not enough money to help the people that you really want to help. college tuitions, weddings, health expenses, your parents living in home, I promise you $20 million ain’t shit. You think it is? It’s not?
When you get there you go, Oh my gosh, why wasn’t I looking at 200 million then you get to 200 million, which I have not gotten to 200 million yet. But you get to 200 I already I can already see that in my path. Okay, you’re just you just who are you trying to help with $20 million. You didn’t help anybody especially with this The sixth reason why people are buying real estate now. Okay, but leverage. So think about this sellers a lot of times at a very high level multifamily etc. I can get sellers, some seller finance me big multifamily projects, if I have collateral or equity that they can lien their interest against.