During this HyperFast Wealth segment, host Dan Lesniak speaks with Marco Santarelli who runs a portfolio of hundreds of rental homes and has helped many people do the same. They discuss how to use real estate investing to build wealth by educating yourself, building a supportive team, and taking implementation seriously.
- Marco Santarelli bought his first property at 18 and knew at a young age that he wanted financial freedom.
- His first rule of success is to educate yourself.
- Many people don't take the time to educate themselves and look for quick fixes.
- Many people fall into the trap of analysis paralysis.
- The other trap is becoming an expert when you just need to start with a foundation of education.
- After gaining an education, you need to start building a support team.
- In 2003 Marco decided to attend a real estate investing event in California. He signed up for a boot camp that got him back into real estate investing full-time. He went out and executed on a high level.
- The first reason he thinks many people have a difficult time implementing is that they often want a lot of hand-holding.
- The next reason they fail to act is fear.
- Marco runs a brokerage. They have investors/buyers on one hand and then sellers on the other hand. Their compensation comes from the sale side of the transaction.
- They have 80% single-family homes. The other 20% is duplexes and four-plexes.
- Typically these are three-bedroom homes in B/B-/B+ neighborhoods.
- In 2020, cap rates are ranging from 6-8% as a general rule of thumb based on market and neighborhood.
- The ideal RV ratio is 10%.
- If you're chasing appreciation, then you're speculating. One of Marco’s rules is not to speculate.
- There's also the passive approach, which requires buying the right properties in the right markets.
- Both models work, but ask yourself if you want to be an active investor or a passive investor.
- Don’t manage your own properties. Focus on your career and your business. Don't be involved in the day-to-day of managing properties.
- Find highly recommended property managers in your area and don't take on that work.
- Include a vacancy factor and maintenance costs in your pro forma.
- Marco uses his podcast as an important educational tool.
- His biggest advice to a new real estate investor is to take action.
- His biggest challenge has been deal flow.
- His biggest advice to a seasoned real estate investor is to analyze your equity and know how to leverage it.
3 Key Points:
1. Educate yourself before becoming a real estate investor.
2. Commit to implementing. Don’t wait for someone to hold your hand and don’t let fear stop you.
3. Do not manage your own properties. Hire it out.
- “You don't need to know everything. You do need to educate yourself.” – Marco Santarelli
- “No matter how much you know, there's always more you could know if you want to learn.” – Marco Santarelli
- “Invest for cash flow, but intelligently invest so that way you have the cards stacked in your favor to gain the equity as time goes on." – Marco Santarelli
- “We don't recommend that you manage your own properties unless you really know what you're doing.” – Marco Santarelli
- “I want people to know what they should know and avoid the mistakes I've made, many of them costly.” – Marco Santarelli
Nothing Down (book)