Are you wanting to get into the real estate game but don't know any of the lingo? Parse through this plethora of lessons where you will learn the meaning and specific application of dozens of real estate terms taught by the incredibly successful Michael Burer.
Featured Coaching Excerpt - Notes & Transcript, Part 1
Lesson Nugget: The breakeven point is when the revenue covers all of the expenses incurred; no extra money is needed to sustain the business, but no profit is made either.
Breakeven Point: The stage at which an investment produces an income that is just sufficient to cover recurring expenditure. For an investment in real property, the point at which gross income is equal to normal operating expenses, including debt service. - Encyclopedia of Real Estate Terms 2nd Edition
[MUSIC PLAYING] real estate training on an alternative to lynda.com
-We are joined here today with Michael there-is-no-real-estate-topic-too-obscure Burer on Thrive15.com, an alternative to lynda.com and we're joined with on the ambiance of Eddie's Landscaping. We've got mowers, we've got all sorts of stuff going on in the background, we have the ocean view. It's hard to concentrate, but we're choosing to do it to talk about break even point.
I'm going to read definition, I'd love for you to provide an ample example. Here we go. "The stage at which investment produces an income is just sufficient to cover recurring expenditure. For an investment in real property, the point at which gross income is equal to the normal operating expenses, including debt service."
What are we talking about?
-Where your revenue equals your expenses. So where you don't have to put any money and to keep it going, and there's not enough excess revenue that you can't take anything out. So it's your default point.
-Do you feel like a lot of business owners who buy real estate don't factor this in adequately? They make errors when figuring this out?
-Yeah. So when you're buying a building, you may want to say, hey this is my kind of fixed cost. So this is the minimum occupancy I need to cover my operating expenses and my debt service. That would be your break point or your break even point.
-You are the CFO for a very large, fun-- you have a lot of different properties in Hawaii, in Phoenix. In where all? LA?
-And when you guys can get a good deal, when you can buy a property at a good deal-- correct me if I'm wrong, but isn't it usually when somebody may be under shot what their break even point is by a lot, and they're not really making any money with the property, and now they need to sell it?
-It's important to know your break even point if you're determining your cash flow. How much am I going to have to invest over the long period until I get this asset stabilized? So, I need to lease it up to a certain point. How hard is that going to be to get to the point where I'm not going have to put additional capital in.
-Now one thing the Thrivers out here wonder. Like, why do we have birds, why do we have landscapers, why do we have the ocean. We have tried to create an orchestra of ambiance. This is San Diego in it's rawest form, we want to bring that direct to you. Michael, I just want to tell you before we go. I appreciate you in the same way that that original instant oatmeal appreciates a healthy-- not too much-- but a healthy dose of brown sugar. Boom.