Hey friends, today I'm talking about how
math can make you wealthy? My daughter is
going into 7th grade and she already
knows how to do all the math that can
help her make her first million dollars.
Check it out.
If you want to be successful in real
estate
then you need to memorize this equation.
Right now, screenshot this. Write this
down. And you need to learn how to do
this math. I'm joking. All the math that
you need to be crazy wealthy in the game
of business or real estate is right here.
That's it. So basically, if you made it
through elementary school, you learned
hopefully these 4 symbol,s right? This
is math, subtraction, multiplication,
division. This is the only math that I
use to make lots and lots of money.
In fact, my daughter, when she was in
elementary school, she started struggling
one year with math. We had switched
schools on her. And I got our math tutor.
And she's like, "Dad, I don't want a math
tutor. My grades are good enough." I said,
"Honey, I don't think you understand.
You've got a mind for business. And if
you want to be successful at business,
you've got to be comfortable with these
4 symbols like the back your hand." And
I want to give you some examples as to why.
Like, let me just help you understand the
basics there. Now by the way, if you're
watching this and you're like, "I'm kind of
uncomfortable with math." I'm going to tell
you right now to eat it, face it and
figure it out.
Eat it, face it, figure out. In those
orders because here's what you basically
are going to need to do. If we're talking
about the game of real estate. When I
bought my first house for a $110,000,
who cares what I
paid for it? I have to know if there's
some kind of value in there. And so, I
actually, this house even though this was
my purchase price, the value on this home
was a $150,000.
So, the first thing I did was some basic
math. One, I subtracted and add to figure
out. 150,000 minus 110,000
is $40,000
of equity. Now, by the way, that
was more than double what I made my
first year working full-time. So, $40,000.
It was enough for me to
say, "*Gulp* If I can do that deal." And if I
can make that $40,000. Right
now, I'm working, you know, I'd have to
work 2 years full-time. 50 hours, you
know, a week for the next 50 weeks.
Times 2 years, a hundred... Look at all
the time. I would have to give hundreds
and hundreds and hundreds and hundreds
and a hundred thousands of hours to make
this money under my old scenario. When I
bought this house, my net worth increased
$40,000. So, this took
subtraction.
The next thing I wanted to know is what
was my actual percentage of equity? This
is really important math that I'm about
to show you. So, I'm pulling out my
calculator here. Your phone probably has
one of these, too. And if I take 110 and I
divide it by 150. See, I'm... Even I still
struggle with this. I'm going to actually
divide the big number by the small
number. So, watch this. If I take
110,000, what I can get
it for. And I divide it by the value, what
it's worth. It shows me a number there.
0.73. If I subtract one from this number,
the number is 26%. This
house had 26% of equity. Which
represented $40,000. Both these are
really important because this, you can
get excited about a figure and say,
"That's a lot of money. But remember, a lot
of money is relative. Percentage is
really important. So, for example, when I
do a deal, I look for a house that has at
least 15% equity position under one of
my strategies.
This house has 26. Now I know act on that
house. So, this very basic math that I'm
showing you, math, subtraction, division,
multiplication. You know, let's say that
this house needed $7,000
worth of work. So, all of a sudden, I'm
going to be into it. Not 110. Now, I'm
going to be into it 117. What does that do
to my profits? Well, this $40,000, if I
said take 150,000 subtract 117,000. Now,
what does that turn into? That turns into
$33,000. What does that do to my
percentage? Let's find out because if I
were trying to flip this I would need to
know this. Now, I'm going to take 117,000.
I'm going to divide
it by 150,000 and
now I'm going to get 78. If I subtract one
from that, it's 22. So, 26% now
became 22%. Is it still a good
deal? A-R-V, after repair value. Before, I
had a net figure or a gross figure and
now I'm saying, well let's now factor in
you know, the repairs or I might say
maybe I'm going to hold this for a year and
rent it out. We'll shoot
how much even combine am I going to get.
Let's add that in. I'm able to do some
very, very basic but very important math.
Now, if you have standards, like I do. When
I go into my real estate, I'm looking for
a certain amount of equity that's got to
represent a certain percentage. For
example, let's get wild. Let's say that I
was going to buy a multiplex apartment
unit and I was going to buy it for 1.9
million dollars. That's my purchase price.
But let's say it has a value of 2
million. Well, 1.9 from 2 million, that is
$100,000 difference. If I've never made
$100,000 in my life I could get really
excited be like, "$100,000!"
But that hundred grand don't get
me excited, why? Because look at the
percentage. If I take what I'm buying it
for 1.9 million divided by 2.0, I'm
actually going to show that it's a 5%
position. This number is really small but
this number looks really big. Do you see
how they work in tandem together? Friends,
and the game of real estate, in the game
of Finance, in the game of business, if
you want to succeed, you got to be able
to perform some really basic math really
well. And you want to practice crunching
these simple numbers. These are the
numbers for me to know if the deal is
good or if a deal is bad. I can't tell
you how many people I've met that have
done bad deals because they didn't do
this really elementary math. So, I guess
what I'm saying is go back to elementary
school and whatever business you're in
or if you're in the game a real estate,
practice crunching the numbers. I'm just
going to show one more of these to you
because I hope this is helpful for you.
Let's say that I wanted to know if
something was a good deal. And it turns
out that I'm now performing my price per
square foot. So, there's a house that is
3,000 square feet and the price in the
area is 100 foot. 3,000 square feet and
$100 a foot. Now, I'm going to be using
this symbol. Multiplication. If I take
3000 and multiply it by 100, I don't even
need a calculator, it's going to equal
$300,000. In this area, this is what a
house is worth. So, I look at a house,
the next house I look at it's 2,000
square feet.
And at $100 a foot, it is a 2000 times
100, it is a $200,000
home. This is a $300,000
home this is a $200,000
dollar home. What's different?
This is a third bigger hence the price
is a third more. So, I get familiar with
my area and I find out that everything
is a hundred a foot. It's time for me to
look for an investment property. And I
look into dozens of deals. And everything
is roughly at a hundred a foot. But all
of a sudden, a 2,000 square foot home
comes on the market and it's priced at
$60 a foot. 2000 times 60 is a
$120,000. And
I'm saying, "Ding, ding, ding, ding, ding, ding,
ding!" Something does not add up, something
is wrong. This house, everything else is
selling at 100 a foot, this is selling at
60 a foot. What does that mean? Well, if it
were worth a hundred a foot, it would be
worth $200,000. Why is there
an $80,000 discrepancy? Remember, 200,000
minus 120, using basic.
And I went from multiplication to
subtraction. Why is there
$80,000 of possible equity? We should
investigate further. We go check out the
house and we found out that there was a
death in the family and the family just
wants to dump it but it has about
$5000 or $8000 worth of rehab work.
And now you can do the math and be like,
"Hmm, I may have found a really good deal
here." Now, you don't make your decisions
off of this alone. There's next-level
information. There's comparable market
analysis. There's different things that
you do to make sure that you can verify.
I think I've got a really good deal here.
And now I'm going to act on it. But this
is the map that kind of tells you
whether you're moving in the right
direction or not. So, those are 3
different examples of how I use everyday
math that allow me to do multi-million
dollar deals and small basic little
bungalows in my backyard. And I guess
what I'd say at the end of the day is if
you've ever criticized yourself for not
being good at math, listen, everyone has
one of these things on them. You all have
a calculator. Just learn the basic
equations. If you don't know if those are,
subscribe to my site. I teach them to
you. There's not much math you need to
know but knowing the math will make the
difference between doing good deals or
bad deals. Hey friends, thank you so much
for watching today's video. I thought I
would finish with some final math here.
This is the emotional math of life. Good
profits plus helping people by doing
good real estate equals good. It's
awesome, right? Well, math, subtraction,
division, multiplication. These are the
things that you need to rock it out in
real estate.
Listen, subscribe to the channel, check
out some of these other upcoming videos.
And if you haven't already, if you want a
shortcut like, I'm talking about the
ultimate unfair advantage.Then check out
my website in the link in the
description below and you can talk to a
member of my team and we'll show you how
I can be your mentor and actually get
you rockin and rollin in real estate
right now.
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