How to Get Started with Real Estate Investing Using the Rule of Two

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1:01And heck, why not? It's $20 a month, $67 pennies a day. Get around 560 other wealth builders, active forum, accountability groups, free education, and special sessions like this. Deon, thank you for the offer. Why don't you introduce when you came across this rule of two? How do you use it in real life? Tell us a little about it and the people need to join Saturday to see it in practice. Well, I know I appreciate the opportunity, Mike. One of the things that's important is when we share information like this, we want to help the people who are going to do something with it. The reason I want to do it in your school community is, you know, this is straight from Alex Ramosi, who's heavily involved in school, but if people who pay pay attention, the people that will actually be there in the meeting with me at the same time can ask questions live or ask questions at the end and take notes and be involved in the conversation. So it's not just me saying, here's how I do it, like, which is what the video is on YouTube or for. But I actually wanted to be productive. And for me, the rule of two is pretty much it contributed to me retiring early.

2:06If I didn't have this, I'd probably still be working. I use this for life, parenting, job decisions, investing. And part of it comes from Hicks law. And if you're familiar with it, like I use Occam's razor as a copy of the most simple explanation is probably the right one, but Hicks law is, and I'm going to butcher it for the smart people out there. But it's something like the more choices you have, the longer your decision makes. Yes. Yes, right. And so for me, I never want to be choosing between 10 things or five things. And in videos, I often say, I want to look at things apples to apples. So if I'm looking at five properties, I know which one to pick, but I've never actually done that. I've only picked from two properties. Now, I'll look at 100 properties in a year. But what I use is the rule of two to come up with what's called a current champion. Okay. So if I want to choose how I invest, I go, okay, I want to look at stocks versus crypto. Crypto is new.

3:06I'm too old to start over a few times. It's kind of all it's also stocks becomes the current champion. It's kind of forever. I can expect the return. I can diversify. I understand it a little easier. There's people who do better in stocks because they understand it better. And then I go, okay, stocks versus running a business. Running a business, I tried it twice and I failed this knockout. I'm going to retire long term stocks. I max out my retirement accounts for a while. Then I go, okay, now let me look at stocks because it's the current champion against real estate. I'm too old for compound interest to do its thing. I don't make enough to invest a significant amount. I have to live somewhere and get fixed rate debt. Real estate becomes a current champion. So I literally cycle through all my choices in life with my rule of two. I'm looking at two things. I didn't look at stocks, crypto, business, real estate. I never would have chose. Right. I'd be working thinking, oh, one of those would be great. Like everyone else, the shiny object. One looks great this week, but a VU2 video next week sent me down a different rabbit hole. So when it comes to real estate investing, the asset class that I chose, I use the same rule. And the idea is too many options means I wouldn't choose.

4:08So commercial versus residential, right? Easier to scale, less properties, more potential income, fixed rate debt, less turnover, less management, easier to buy with a house hack. So look at the two for me with my position, some people will choose the other. I chose residential. And then it goes, okay, now I'm looking at properties. Same thing, rule of two. What are my things that I'm looking at? So I want to look at a property and most people will go, here's my spreadsheet with 50 properties. This one has the best net operating income. Let me take a look at it. So I look at all of the properties. I pick two. I just look at two and I go, okay, let me compare the math because that's what everyone else cares about. But then which one has the best parking? Which one has the most storage for tenants? Which one do they both have pet friendly fence charge? Do they both have washer, dryer hookups? And I go through to eliminate as many as I can to get down to this is what I'm specifically

5:08looking at. This one wins. It's a current champion. And I'll cycle through those two and tell another one beats it. Now I know that one that beat it beat 15 others that I've already. And so I'm always only doing my rule of two. And that makes choosing so much easier and so much less loss sleep going. I made offer on this one, but those four others that I was looking at, any one of them could have worked. I should have made five offers. I've got a current champion. And I do have some I go, okay, I looked at it. I've dismissed it. But if it sits on the market long enough and the price dropped another 30%. That's the current champion. Right. I don't just dismiss them like they're gone. But then I might bring it back into the lineup of those that rule of two. Yeah, this is so powerful because I think there's a lot of things with the rule of two. It's going to help people with first and foremost is analysis paralysis. I think a lot of folks certainly in the beginning this, even if we give them the buy box and even if they're falling it. They're still 20 to 40 active listings. And they may look at all of those together.

6:09Maybe they sort them, right? They look at the highest yield. And maybe they intuitively say that the highest yield is the current champion. But to your point, there's there's more in your buy box, right? You want the fence jar. So maybe that's going to outdo a slightly higher yield because tenants will stay long. Maybe you want to garage because people put shit in their garage. Right. There's all these other factors that you get to pick up on when you start learning your market and what's important to your tenants. But this rule of two really does allow you to call a current champion. And again, that current champion is continually used until it's beat. And then like you said, that next one has already beaten 15 others because it was worse than that one that was just beat 9. I think this is pretty sexy and pretty alien. This is why it's so important to me, right? So I don't want to say traumatic brain injury, but I've got a problem with memory. You've had conversations with me where you remember, okay, I got a text down tomorrow because we've got this thing going on.

7:10This is what I sent the message so he knows to be there, right? Like you know what it's like to deal with me. Imagine if I was looking at all of my real estate and I had a buy box that said, okay, I look at the yield. I want the best cash on cash return. I want to beat the area average. But I also want these other metrics, friends yard washer, dryers side by side, nice neighborhood, not in a good school district like all of my metrics. Now keep that in your head and look at 10 properties. Yeah, blow up. Yeah. Right. You're never going to make a decision. You're never even going to know which one's the best one. Not even with a good spreadsheet. Not even with color coded spreadsheet that you probably made a mistake on when you made. But if I go, okay, these two properties, these seven metrics plus cash flow, wow, this one really stands out. Or if they don't, I'll make it two offers, right? Like if you're not close, then the buyer or the seller decides which deal I'm going to get. I like that as well, because again, if, quote unquote, what you're saying is if they're a tie, which can happen, right? Same yield, same, you know, they all check the same boxes. It can happen. Then you write the offer and you let the sellers decide.

8:12One of them is going to say yes or counter and the other one's not and, oh, you don't feel bad. You just go with the one that makes the most sense. It really does make it easy to churn through a long list of agent. It's sent. Oh, that's another beauty of this. By the, again, your ability to accelerate through a list just by doing two, like you say current champion and the, you know, what's it called? Not the competitor, whatever, the challenger, right? Current champion and challenger. Oh, challenger, challenger, oh, challenger one, current champion, challenger, challenger. It's so much faster than just looking at 40 line spreadsheet. All the color codes gone. Oh, shit. One of these is the best one. Again, I forget. It's genius. And the challenge to it is when you first start, you want to analyze all the properties because you're learning a skill. Of course. So you need to dig a deep into each one and go, okay, yes, this one doesn't work, but let me figure out why and the multiple reasons why. Okay. Now I know those reasons and I can use those another property.

9:13So learning the skill, but then using the skill while working full time, raising three kids, running a company, running a growing portfolio of rentals. I didn't have the time to deep, deep, deep dive every deal, but I could go, okay, this one has this many things and this return. This one only has two things and the returns the same. Okay, it's gone. Right. Like that quick. And you just cycle through until you get to the two where you've got to take a deeper looking. Okay, this one does beat it. Now this one's gone. And so it's like you said, that the current champion, the one that wins has already beat all of the other ones. Or you're only, you're only looking at two all of the time. And that makes life so simple. And the more, the more simple you make something, there's probably a law for this to the more simple you make something, the more likely you are to do it. No, I think that's absolutely right. So let's paint the picture for folks. It's assumed they are in school or will pony up the 20 bucks to join school before Saturday. You're going to get on it noon. You're going to probably give a little introduction of this to everybody's on the same page. And then you're actually going to do a real life, you know, walk through of multiple properties, right?

10:16You're going to actually show this in action. Is that true? Yeah. So I think I kind of gave wrong information when I said this is at the beginning, how it goes. It's the rule of two Saturday. We're not looking at two properties. We're using the ability to look at multiple properties, looking to. Right. So I'm actually going to open up my email. You'll see the email that I get from my agent with here's the listings that they've sent me on one or I've got a couple listing searches out there. So I'm going to look at them and we're going to pick one of we're going to look at the first two. We're going to pick the champion and eliminate one. Then we're going to look at one eliminate. Yeah, exactly what I thought you'd be doing. Yeah. How quick they swap and how far we can get. And so you can take a 10 to 20 minute thing. It will take longer in the video because I'm going to be explaining what I'm looking at and the reasoning behind it and all of what it matters and answering questions. But that way I can get an email in the morning with 30 properties and probably get through 10 to 15 of them within 30 minutes. Oh, easy. Yeah, once you get this down and you know the current champion, absolutely. That's the key. What you build up that muscle or memory in this, it's got to be really, really quick because you kind of eliminate some challengers without even putting them up because of this or that reason.

11:26And what I really like from Sean canell is confidence comes from competence. Yes. And so the more you use this skill, when you finally do go, okay, I'm going to make an offer. My brain is relaxed because it's like, yeah, you looked at hundreds. Yes. All of these properties. It's not the one that I found today that looks kind of nice and I don't know if the other ones are good or not, but I've looked at so many and this one beat all of them. Exactly. Maybe it got swapped out a few times, but I got ended up with the one that my brain says, yeah, of the ones that I had. This is the option to pursue. Yeah, it's got to take down the pressure, the risk profile because again, when you're when you make an offer so confidently on the current champion that's knocked out, I'll just say a hundred or 80 or 60. It's got to make you feel really good because according to you've done the work, right, competency comes from execution. So Alex, I'll, Alex, I'll expose he says something like this. Do so much work that it becomes, you know, unpopular to fail or something like that. So again, it's just repetition, it's consistency. It's in its execution.

12:27So I love this rule too. Yeah, and this is something that I would like to also reserve for school because this is not what you want to teach the brand new beginner. No, this is the person who's done the work, learn their market, can look at a deal, can look at, okay, it does actually take a long time to learn the skill to analyze the deal, but then once you have it down, yes, it can be fast. If we taught this on YouTube, if this is how you look at deals and they got 30 and they turned it down to one in like five minutes, that would probably be the worst property they could buy because they wouldn't know what they're looking at yet. Yeah, they haven't, they haven't, they don't have the muscle memory yet. They don't know where to buy box. They haven't looked at hundreds. They haven't figured out their criteria, what works, what doesn't work. They haven't talked to a hundred different people growing their networks. So I think you're absolutely right. This belongs inside school, right? If you pay pay attention and folks, I hope you join or I hope you're there so you can ask questions. Again, Deon's going to go as fast as you let him. But if you're doing this rule of two and he's going through 20 different properties, it's your job to ask questions or clarify, right? Sometimes Deon tells stories that make sense to him, but it doesn't make sense to me all the time.

13:29So again, stop him, ask questions, say try that again. Tell me, tell me that in a different way and he'll take care of you. Yeah, and that's this Saturday at 12 Pacific in the one rental at a time school community. Awesome. And tell everybody about your school community. So we wrap this up. So mine is new to school. I moved my course from Mighty Networks, which was not very user friendly, not a review on their thing. It just isn't the way social media went. Onto school because it functions a lot more like Instagram or Facebook because you actually have live feeds going on their questions. You have chat categories you can do. And so mine is Deon talk financial freedom where we do this every Tuesday at 6 p.m. I go over a topic like this, which is what I did this week and the thought why I want to share it in your school community to kind of give back to the people that have helped me retire early. It's kind of what I'm trying to do here. And so I hope to see everybody in school. See you there. All right. Again, folks tune in. If you haven't joined join and don't forget that if you buy tickets to our Vegas event this week, we are going to give you an

14:33a raffle to get an hour of one of our millionaires time. So again, we have four people. Deon, Matt, Cody and myself. So I guess we're going to have four winners. So we'll do that again, buy your tickets. Everybody that's bought already. You're already in that raffle. And if you buy in the next week, you'll be added. Thank you. Have you heard that McDonald's spicy chicken McNuggets made with spicy tempura and a blend of aged cayenne are back? Remember to grab a few extra napkins. For a limited time at participating McDonald's. Close your eyes, exhale, fill your body relax, let go of whatever you're carrying today. Well, I'm letting go of the worry that I wouldn't get my new contacts in time for this class. I got them delivered free from 1-800 contacts. Oh my gosh, they're so fast and breathe. Sorry. I almost couldn't breathe when I saw the discount they gave me on my first order. Oh, sorry. Namaste. Visit 1-800-contacts.com today to save on your first order.

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