My Millionaire Real Estate Investing Strategy

What's up you guys? It's Graham here.

So about two weeks ago, I made a video explaining why I now own a little bit over four million dollars worth of real estate and why I choose to pretty much invest everything I make back into buying more property. If you're wondering why, because you haven't watched that video yet, then shame on you! Go and watch that video and hit the like button for the YouTube algorithm, of course.

But I will summarize that video in just like 20 seconds. Here you go: First, I could borrow a lot of cheap money by taking out a fixed 30-year loan at an interest rate that's just barely above inflation. Secondly, I can leverage my money to get an even higher return on my investment. Third, real estate just tends to make for some really good cash flow. Fourth, I can get a lot of great tax advantages. And number five, I'm a believer in long-term appreciation of property values.

So given all of that, it's pretty much been an unspoken goal of mine to try to buy a new property every single year, whether it be for myself or for an investment, whichever comes first. And this year is absolutely no exception! I have been grinding away every single day over the last year, pretty much saving 100 percent of my income in preparation to buy something new this year. This officially begins my home search again since last year.

So, I thought I would document my process and experience buying another property, go over exactly what I look for, and also go over some of my techniques to get the best deal possible anytime you buy or invest in real estate. This video is really meant for anyone who's thinking about buying a home or isn't sure what to do with all the market uncertainty or whether or not you should wait for a market drop. We're also just not sure how to find the best deal. This one is for you, as long as you just smash the like button for the YouTube algorithm. That's all I ask for in an otherwise free video.

So, anyway, thank you so much, and let's get right into it. First, for those who aren't aware, I've been working full-time as a real estate agent here in Los Angeles since 2008. I've been buying and investing in properties since 2011, and the real estate market is something that I've spent hours looking at every single day for now over a decade.

I see pretty much every property that comes on the market. I see exactly what sellers are expecting to get. I see what buyers are willing to pay, and I see where demand is growing and which areas are poised to rise in value. I feel that submerging myself this much in the real estate market gives me a huge advantage in terms of making money over many of the other people out there because I get to see all of this happening firsthand in real-time.

For that reason, I have absolutely noticed a shift in the real estate market this year, at least here in Los Angeles. The luxury real estate priced above two and a half million dollars or so is now taking significantly longer to sell. There just happens to be more properties in the higher price point, there are fewer buyers in that price point, and the buyers that are there tend to be a lot more selective about what they get.

However, once you get into the entry-level price points, it just becomes a bidding war free-for-all where buyers are willing to do anything to get a property. I am just shocked at the competitiveness of the properties in the entry-level price points. These are properties selling significantly over what I would ever realistically pay for the home. These are buyers who are willing to do anything just to find something, and there's just simply not enough inventory on the market to satisfy all the demand.

To me, this somewhat makes sense because here in California, the recent SALT deduction now impacts how much you can deduct from your property taxes, and also now you can only write off the interest on the first seven hundred and fifty thousand dollars on your mortgage as a primary residence. So now in the lower-end price points, where people could utilize more of these tax advantages, are seeing a lot more demand as buyers become a little bit more price-sensitive.

And that doesn't really bode well for me because I'm looking to buy something under about 1.8 million dollars or so, depending on what it is and what area it's in. For me, most of what I'm looking at just tends to be in an area that's high demand with a lot of competition, which means it's a lot harder for me to find a good deal and get something where I believe there's a lot of value.

Second, I know it's inevitable. When I say this, there are going to be people telling me to wait because there's about to be a massive market correction and I should just hold on to my money and not invest it at all. I would be a liar if I said that volatile market conditions were not on my mind or that I'm just uncertain about the short-term direction of all markets in general.

But I also realize that markets can oftentimes be completely irrational, and no one can predict the future. So it doesn't make any sense to sit on the sidelines and wait and play defense just out of fear. Here are my thoughts: I have absolutely no idea what's gonna be happening in the short term; I don't have a single clue. Last year, I made the prediction that interest rates were going to be rising until they hit about 5 percent, until the Fed decided a few months after that that I was going to be wrong and they were going to lower interest rates.

That housing prices continued their climb upwards and really encouraged a lot more people to start to buy. For me, during that time, I refinanced two of my mortgages and from that I ended up saving a few hundred dollars a month in cash flow just because interest rates went down. So that was a huge win for me.

But now, speaking of a bubble or a market correction in terms of people who are actually buying real estate right now, all of them tend to be extremely qualified. Banks just aren’t handing out loans to anybody who asks like they were in 2006 and 2007. The people who are buying right now usually have hefty down payments, great credit, verifiable income, they have equity in their home, they're buying with the intention of holding long-term, and they're also buying with fixed-rate 15 to 30 year mortgages.

These are just very few investors; almost all of them are owner-users, meaning they're not trying to buy the property and then flip it a few months later for profit like they were in 2005, 2006, and 2007. This type of buyer should have plenty of stability in the event the real estate market goes down because they're going to be unlikely to sell. They aren't going to be taking a loss in their home, and they have the finances to continue making the mortgage payments until the market eventually recovers.

I'm also seeing a lot of very wealthy people keeping cash on the sidelines, just praying and waiting for the market to drop in price. So I believe that if we do see a sudden drop in market prices, there's really no shortage of people out there who will need to buy back in, which should really add some level of support.

But overall, I have to say I'm really not too concerned. My intention is to buy a property that I'm going to be keeping for the rest of my life because ideally, I want to buy a property paid off over 30 years, live off the cash flow, give it off to my future kids one day, and hope that they don't spend that on drugs.

But anyway, to me, that means that the value of the property in the short term doesn't make a huge difference. It doesn't matter to me if the property values go up or if the property values go down. I just care about the rental value of the home and really what it's going to be worth 30 years from now. And that is long enough to weather through and get past any short-term market fluctuation in price.

Third, given all of that, I'm not naive and I still want to protect myself in the event the market does go down. You could only do that by getting a good enough deal where if the market does go down, your worst-case scenario is just breaking even.

Here's what I mean: Let's just say there's a property listed for 1.7 million dollars, but it needs a lot of work. Maybe they didn't market it correctly, and maybe they just need to sell it immediately to move on to something else. Those are the types of opportunities that I am interested in because maybe I might be able to buy it for 1 million three hundred and fifty thousand dollars, offer them a quick close, and then that way if the market goes down in price ten to fifteen percent, well, you know, I bought it at such a good deal where even if the market does go down, then I’m not really losing any money.

The same applies also to a home that I could fix up. Let's say I bought that home for one and a half million dollars, and then I spent two hundred thousand dollars fixing it up. Now I'm in at 1.7 million, and let's say the market value is two million dollars. That means even if the market goes down in price the next year by fifteen percent, my worst-case scenario is now I've just broken even on my money.

Yes, I realize this somewhat contradicts what I just said about not caring about the market value of your property, but that doesn't mean I still can't get a good deal and try to make some money on paper if at all possible. I still care about doing my best to make money because that's extra money that I could use towards buying something else or used towards a renovation or just have more money left over to go and spend on iced coffee.

Point being, in this market or any market in general, I am just looking for value. I want something in an area that I believe is going to be going up in value. I want something that I can add value to, and I want something with eventually a strong rental demand. I know it's a tall order here, but it's out there somewhere eventually with enough patience.

And that brings me to my current experience looking for a property, and that would just be patience. For the last two months, I've spent several hours a day looking at every single property that comes up within a six-mile radius of mid Los Angeles. I track every property that comes on the market, every property that has a price reduction, every property that enters escrow, every property that sells.

Out of the hundreds of homes that come on the market, I have only found two properties that were worth it for me to write an offer on. That's right, two properties out of hundreds, and neither one of those ended up working out. That just goes to show you that good deals are very hard to come by, and you have to be extremely selective about what you choose to make an offer on and purchase.

It's so important that you understand the property values of the area, know your limits, and most importantly, stick with it. Do not get sucked into an emotional purchase or fear missing out on something. If there's anything that I've learned over the last 12 years in real estate, it's that there's always another deal to be had.

Even though you considered it to be the perfect home out there, there will always be another perfect home just around the corner, as long as you just have the patience to wait for it. Having this type of mentality will help you not get too caught up about one home in particular, knowing that if it's over your budget it doesn't balance, there's no value there. It's okay to walk away knowing that another one eventually will come up that's even better.

Knowing all of that, and knowing when to walk away, and knowing the limits and knowing the value will help you long-term in terms of making money. Now, in terms of how I find a deal, I have two strategies. One would be to look every single day and find a property as soon as it hits the market.

Every now and then, you're going to find a listing that comes up that's absolutely horribly marketed. I'm talking wrong square footage, horrible pictures, or incorrect bedroom or bathroom counts. Sometimes, those properties are going to be priced under market value because the seller and the listing agent have absolutely no idea what they have.

So if you spot a listing like this, you gotta jump on it as soon as possible. This was actually my strategy when I bought my first duplex a few years ago. It came on the market, they had absolutely no idea what they had, and they priced it significantly below what it was worth. Their main picture was a picture of a picture of a screenshot.

Because I was the first one to see it come on the market, I was the first one to see it in person, and I was the first person to write an offer on it. I bought it about 15 percent below what it was worth within 24 hours of it coming to market. Those deals are extremely difficult to come across, but they do happen every now and then if you just wait long enough.

For some context, that one deal took me six months of searching to find. Six months for one property, and I'm an agent. I look for hours every single day, and that's how long it took me just to find one good deal. Secondly, my other tactic is to look at homes that have been listed on the market for a very long time because those homes are more likely to negotiate.

Here's what ends up happening: Sometimes they just list the property on the market way too high, and then they lose all the momentum of having a brand new, well-priced listing. Or sometimes it comes on the market priced well, but they have really bad pictures, or maybe they used incorrect square footage, or maybe they put the wrong bedroom or bathroom count.

A lot of these mistakes do happen, and then what happens is that after a while they decide to reduce the price a little bit. At that point, it's actually really well-priced, but because it's sat on the market a long time, it's seen as a stale listing, and no one is wanting to buy it. Then what happens is that another few months go by and they reduce the price again, and now it's actually a really well-priced listing.

But everyone is passing it up because they think, "Why is this place just sitting on the market? It's priced so low. If it was a good deal, someone else would have bought it." So I'm assuming there's something wrong with it, so I'm not gonna buy it either. And trust me, I want to say this, but those old listings could be such a huge opportunity!

Go through those old listings with really bad pictures, offer them a lower price for a quick close, and at that point, it's really just a numbers game. Just go into it knowing your limit, knowing what the property is worth, knowing what the upside is of that property, and then just have patience.

At this point, you really need to negotiate everything you possibly can. As a buyer right now, as long as there's not anyone else interested, you are the one with all the leverage! So right now, I'm a little over two months into my search, and I'm still looking for the right property. I'm very selective about the type of property and location I want, and also something that preferably has something where I can add some value to it, and that just doesn't come up on the market very often.

But I will continue looking, and I will continue making videos updating everyone on the progress and what I found along the way. I'll be sure once I actually find the property to document any renovations, what it's like to buy it, any inspections, and everything else that goes along with that. I will bring you guys along in the entire journey, and hopefully, all of this information can benefit you as well to one day become a multi-billion dollar real estate investor who just basically takes over the planet!

So anyway, with that said, you guys, thank you so much for watching. I really appreciate it. If you have not already smashed the like button, please do that! If this video gets 20,000 likes, it'll make my property search much easier because that's how likes work. So 20,000 likes would be great.

Also, make sure to subscribe, and also make sure to add me on Instagram. I post pretty much daily, so if you want to be a part of it there, feel free to add me there. Also, add me on my second channel; it is called The Graham Stefan Show. I post there every single day! Don't post here, so if you now want to see me every single day, make sure to add me on that channel as well—link in description.

So anyway, with that said, thank you again for watching, and until next time!