The Phases of Financial Freedom in Real Estate!

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This Money Monday$, find out about the different phases of financial freedom in real estate!

VIDEO TRANSCRIPTION

00:00
days and today’s episode whoa whoa whoa
00:03
whoa
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wait in today’s episode you will all
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learn the concept of financial freedom
00:07
and the pathway to get there through
00:08
real estate investment
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but really ben and i are just going to
00:11
kick around some ideas some topics and
00:13
share what we’ve seen kind of learned
00:14
along the way
00:15
so what’s the topic of today’s
00:16
presentation then the phases
00:19
of financial freedom in real estate
00:21
right so
00:22
like we said what is financial freedom
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though
00:25
before we do that we do this every
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monday 3 30 central
00:29
we kick off the meeting basically
00:30
presenting a bunch of different topics
00:31
like we said today is about financial
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freedom
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then we’ll make fun of ben’s lack of
00:34
hair and you know potential
00:36
opportunities to grow that hair back
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but then we’ll shift into q a and do an
00:40
open q a so if you have topics ideas
00:42
questions it doesn’t have to be about
00:43
today’s topic feel free to introduce
00:45
those so
00:46
monday mondays 3 30 central and with
00:48
that said ben
00:49
what is financial freedom i think it’s a
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it’s a position that somebody
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finds themselves in where they don’t
00:54
have to work unless they want to right i
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think
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you know a lot of people that’s the
00:58
allure of investing
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right it doesn’t even have to be real
01:01
estate investing maybe just investing in
01:02
general right to get away
01:04
from that w-2 income or dependence on
01:07
that income
01:08
and be able to essentially do whatever
01:10
you want right you know be able to
01:12
travel the world spend more time with
01:13
your friends and family
01:14
you know start a charity whatever it
01:17
might be
01:18
right it’s important so you know at the
01:20
end of the day
01:22
we’re all working towards this goal and
01:24
sometimes
01:25
people’s goals might be to just maybe
01:26
work less they still want to always work
01:28
like i think me and you are probably
01:30
never going to stop working yeah i’d
01:31
like to tell people i love
01:33
i love building businesses it’s fun you
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know working with people for better for
01:36
work sometimes
01:37
you might want to kind of lose your cool
01:39
but other times it’s it’s rewarding and
01:40
exciting to kind of
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see that right and build a place that
01:43
people love being part of no we love we
01:45
love
01:45
building stuff right you know whether
01:47
that be in real estate and actually
01:49
building buildings
01:50
or you know hypothetically and you know
01:52
and building systems and stuff that’s
01:54
gonna
01:55
ultimately make a business more
01:57
productive or effective right you know
01:59
so
02:00
all that kind of leads to obviously
02:02
income right and i think people
02:04
always need to overestimate how much
02:06
money they might need
02:08
in order to retire and completely right
02:10
a lot of people are rushing out of their
02:12
w-2s especially you know after a boot
02:14
camp they’re like oh i can do this
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and they’re really not taking into
02:17
consideration something like covid right
02:19
you know a lot we we actually know some
02:21
people that that retired q1 of 2020 and
02:23
then what ended up happening
02:25
cobot hits yep right so for for a whole
02:27
year you’re really not doing a whole lot
02:29
of deal flow
02:30
right so that that that income that they
02:32
were expecting never really ended up
02:34
materializing and then
02:36
you know they ultimately kind of got
02:37
stuck a little bit so you really need to
02:40
make sure that whatever you think that
02:41
you have set aside to be able to
02:44
ultimately walk away you’ve got probably
02:47
1.5 that maybe even 2x that right you
02:50
know that’s something important so
02:52
but before we get started let’s briefly
02:53
briefly discuss so many
02:55
uh choose real estate as their
02:57
investment vehicle to achieve financial
02:58
freedom but why
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right you know let’s talk about why is
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this one of the reasons why you can step
03:02
away and the first
03:03
why we should actually before we talk
03:04
about the why we talk about the why dots
03:07
yeah if you think it’s a get-rich-quick
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scheme that’s a why not right because i
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think a lot of people hop
03:11
in they think you know you’re going to
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do whether whatever it is if you’re on
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the residential side i’m going to buy 20
03:16
houses in the next year and
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retire and it’s just going to be a walk
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in the park no there’s a lot of effort
03:21
that goes into it and for those in
03:22
multi-family they think i’ll do two
03:24
deals and retire right it’s there’s a
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lot of work involved especially if you
03:28
are syndicating equity
03:29
right it’s other people’s money right
03:30
there you know you need to really care
03:32
about it and
03:33
it’s it’s it’s not a get-rich-quick
03:35
scheme now you do build wealth over time
03:36
there’s a lot of energy and effort that
03:38
goes into it but it’s not a
03:39
get-rich-quick scheme yeah
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yeah i mean i think you know the rat
03:42
race to retirement or five years and
03:44
you’re retired and all that stuff right
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that doesn’t
03:46
that’s that’s that’s good in theory but
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it doesn’t always happen for everybody
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and once again it goes back to how much
03:52
money do you need
03:53
to be you know um free
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to do whatever you want live your life
03:58
however you want for the next however
03:59
many years you’re going to live right
04:00
and i think each person’s in a different
04:02
phase of their life
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each person might have you know
04:04
different obligations right you know
04:06
somebody might have a more expensive
04:07
house or
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maybe has more kids or whatever it might
04:09
be right so one of the reasons one of
04:11
the vehicles that we like
04:13
is real estate right and i think some of
04:15
the reasons why we do
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like it is cash flow appreciation the
04:19
stability
04:20
of you know real estate i mean it’s
04:22
always you know somebody was talking to
04:24
me one time and it was a really
04:25
successful investor and
04:26
he ultimately started grilling me on the
04:28
cost of the land right
04:30
and and i was i finally just asked
04:32
himself why are you focusing so much on
04:34
that he’s like
04:35
because at the end of the day if that
04:36
thing burns to the ground you still got
04:38
the land
04:39
right and that’s not going to go away
04:40
they’re not making any more land
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so there’s some stability there on top
04:45
of you know what we love about it is you
04:46
can go out and actually kick the dang
04:47
thing
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you know it’s it’s a real thing versus
04:50
some mythical stock or
04:52
mythical cryptocurrency right you know
04:55
even though we both own
04:56
some of those too right and then usually
04:58
you know
04:59
if you’re smart you get cash flow right
05:02
and this is where you can do things
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you know there’s there’s a difference
05:05
between good debt and bad debt right
05:06
yeah
05:07
bad debt is hey buying a car that you
05:09
can barely afford and just getting it
05:10
all financed
05:10
so you get monthly payments right that’s
05:12
the reality of it but good debt is using
05:14
it to
05:15
basically bring cheaper money in to
05:18
replace more expensive money which is
05:19
yours or your investors
05:21
right in getting that cash flow right
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and so i ultimately like to tell people
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you know and even if you
05:25
even if you’re buying the nicest deal on
05:27
the corner of the street
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that deal can cash flow now you may not
05:30
go in 100 leveraged or at 80
05:32
leverage you’re probably going in 50
05:34
leverage right but you can all depending
05:36
on kind of what your investment criteria
05:37
is
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right if you’re investing for the long
05:39
term the short term the you know you can
05:41
play what i love about real estate you
05:42
can play with the structure structuring
05:44
is what it’s all about in real estate
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it’s all about
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buying the deal right and then
05:47
structuring it right those are probably
05:48
the two biggest things that you can do
05:50
and you can get that cash flow
05:51
absolutely right absolutely
05:53
so so to kind of finish out just kind of
05:55
we’re going broad here and then we’ll
05:56
get a little bit more specific right so
05:58
the stability right like we talked about
06:00
cash flow appreciation
06:01
the tax advantages we talk about that
06:03
all the time you know that’s one of them
06:05
i would say unspoken benefits i mean
06:08
some people will kind of talk about it a
06:09
little bit but
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i’d say if you if you structure your i
06:12
don’t know about the tax one a little
06:14
bit right
06:15
so people always ask hey you’re just
06:16
deferring your gains right
06:18
because you know with with real estate
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you’re getting losses
06:21
that you then roll over and at some
06:22
point uncle sam catches up
06:24
but i think one thing people usually
06:26
forget is that whenever you retire or
06:28
you get rid of your w-2 whatever it is
06:30
for you
06:30
right guess what your income is actually
06:32
very low so you’re in a much lower tax
06:34
bracket
06:34
would you rather pay taxes at a lower
06:36
tax bracket or a high tax bracket
06:37
where if you’re in kind of your prime
06:39
work you know working age
06:41
you’re getting new and so taxes are huge
06:44
and again what we’ve seen is
06:45
our most our most wealthy investors are
06:49
the ones that care about it the most
06:50
that’s right it’s a very powerful thing
06:52
if you understand how to rework it and
06:53
use it no no i mean we have people
06:55
literally just reach out to us about hey
06:56
i gotta gain on this
06:58
and yeah we had the last weekend two
07:00
different guys do it last week so i mean
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the you know one guy in that one
07:02
especially with what
07:03
what’s happened in the stock market and
07:05
with what’s happened with
07:05
cryptocurrencies people are having
07:07
massive gains and they’re they’re
07:08
looking to offset that through
07:10
some cost segregation and and some
07:13
passive losses that you’re gonna have on
07:14
commercial real estate right
07:15
you’re going to sell the 100 of your
07:16
bitcoins this year is that your plan
07:18
whoa whoa whoa whoa whoa whoa
07:19
no i forgot that i forgot that
07:23
but that’s the that’s the beauty of it
07:24
right you know i mean that’s not that’s
07:25
not meant
07:26
to be you know something that you
07:28
actively invest in right you know
07:30
you buy it at the right price and you
07:31
let it roll right absolutely
07:33
so scalability you know i think that the
07:35
one thing that we
07:36
that we got attracted to in multi-family
07:39
especially right
07:40
was the scalability of the whole thing
07:41
and i think that that allows you to
07:43
accelerate
07:44
maybe how much money is coming in yeah
07:47
right yeah the joke i have with ben is
07:49
we keep dumping it back in the business
07:50
because we want to continue to grow it
07:51
right and you can definitely do that
07:52
right you build out a team
07:54
and then you start having a team that
07:55
everybody’s doing their piece and you’re
07:57
not having to do it all
07:58
right and so that’s that’s what it’s all
07:59
about and so it’s um i love that part of
08:01
the business
08:02
yeah absolutely that’s what made me move
08:03
from residential to multifamily i felt
08:05
like
08:05
it the the scalability prospects are
08:07
much better in multi-family
08:09
yeah because you look at it like this
08:10
right to buy a hundred homes
08:11
single-family homes is going to take you
08:12
a lot longer so therefore
08:14
to get to your goal of achieving
08:15
financial freedom is probably going to
08:17
take a little bit longer right
08:18
so possibly just depends on how much
08:20
money you got to start off with right
08:22
so we’ve kind of broken it down you know
08:24
shannon if you want to kind of put this
08:25
up on the screen here
08:26
you know the phases of financial freedom
08:28
in real estate right and
08:29
you know everybody’s going to have their
08:30
own i encourage anybody that’s got
08:32
some tips or tricks or how they’ve done
08:34
it you know some stories case studies
08:36
whatever they might be drop those in the
08:38
comments
08:38
you know we want this to be interactive
08:40
you know just getting started outline
08:42
your why
08:43
you know i think that it’s important to
08:45
you know why do you want to retire early
08:47
why do you want to have financial
08:48
freedom right and if it’s just to
08:50
i don’t know go to vegas and party or
08:53
you know do something that doesn’t have
08:54
a whole lot of substance
08:56
then i think you’re doing it for the
08:57
wrong reasons right so whatever you do
08:59
in life you need to have a why
09:00
it needs to be more than just making a
09:01
bunch of money and going out and
09:02
partying and blowing it all right
09:04
so define your real estate investment
09:06
vehicle and get educated right
09:08
create a budget pay off debt and cut
09:10
down on your expenses right that’s just
09:12
a
09:12
you know anybody’s anybody could use
09:14
that advice right
09:15
set investment goals you know and
09:17
allocate funds to invest you know you’re
09:19
ultimately gonna have to put some money
09:20
to work
09:21
this is not gonna be like he said it’s
09:22
not a get-rich-quick scheme it’s not a
09:24
no money down i mean there is creative
09:26
ways to buy multi-family that i think
09:28
you know especially smaller multi-family
09:30
that maybe you can have
09:31
a little down or maybe you have somebody
09:32
bring the money for you so i can’t say
09:34
i’m not gonna rule it out completely
09:37
but i’m just gonna say that you’re gonna
09:38
need a little bit of money to get this
09:39
started right
09:40
and the more money that you have the
09:42
quicker you’re probably gonna be able to
09:43
achieve that financial freedom
09:45
so phase two you’re making some progress
09:47
right you know
09:48
you start receiving that passive income
09:50
you stay committed to the budget the
09:51
goals the investment strategy
09:53
you grow in your experience and your
09:55
knowledge in real estate investing and
09:56
then you ultimately try to avoid some
09:58
common investment mistakes right you
10:00
know i think you know there’s
10:02
there’s people that will you know
10:04
ultimately retire too early
10:06
or they dump all their money into just
10:07
one deal when they should have
10:08
diversified
10:09
there’s certain things that will slow
10:11
down your progress
10:13
and you need to you need to be able to
10:14
avoid those pitfalls right we’ve talked
10:16
about that on other previous money
10:18
mondays so please check those out you
10:20
know but keep you’re
10:21
going to make progress and like we do
10:23
right reinvest it
10:24
you know the the the power of
10:26
reinvesting is huge
10:28
you know the more that you leave your
10:29
money on the sidelines you’re just
10:30
you’re
10:31
you’re getting it chewed up by inflation
10:32
at this point so you need to be putting
10:34
your money to work
10:35
right growth mode and voi avoid
10:38
lifestyle inflation right you know
10:40
um you don’t want just because your
10:42
income grew doesn’t mean that the house
10:44
that you’re buying
10:44
should grow too right and everybody gets
10:47
guilty of that right at least a little
10:48
bit but if you can
10:49
if you can fight that urge i think that
10:53
ultimately you’ll you’ll first compound
10:54
later it will
10:56
right you know if you longer you hold
10:58
out and you just say okay i’m not going
11:00
to go buy that new sports car
11:01
i’m not going to buy that 10 000 square
11:04
foot house or i’m not going to buy that
11:05
third or fourth or fifth or second home
11:07
whatever it might be
11:09
and you reinvest those profits once
11:10
again reinvest
11:12
into new real estate investment
11:14
opportunities the better off you’ll be
11:16
the quicker you’ll you’ll meet your goal
11:18
and ultimately this goes back to
11:20
probably younger investors the earlier
11:23
on you you learn this the quicker on you
11:25
learn this
11:26
the faster i mean you’ll be you’ll be
11:27
retiring by age 30 or 35 maybe 40
11:30
right whereas it’s gonna take the guy
11:31
that started when they’re 40
11:33
to get to maybe you know a little bit
11:35
later in life right it’s just because
11:36
you’re starting off earlier the power of
11:38
compounding interest right it’s
11:39
important
11:40
finally you’ve reached financial freedom
11:44
you know your wealth is now covering
11:47
your living expenses right and then some
11:49
i always tell people don’t just cover
11:50
if you need five thousand dollars you
11:53
know because wifey’s working or
11:55
your husband’s working too what what
11:57
happens if they’re out of work
11:59
right i always have a buffer right if
12:01
you need five thousand a month because
12:02
you think that that’s gonna what then i
12:04
would say you need ten thousand dollars
12:05
a month
12:06
right because ultimately if you step
12:07
away from that job too
12:09
a lot of us are going to have health
12:10
insurance or some kind of benefits too
12:12
that’s typically 33
12:14
so don’t just look at what your salary
12:16
amount is
12:17
right you’ve got to have that burden on
12:19
top and then on top of that i would put
12:20
a little bit more just to have a little
12:22
bit extra cushion
12:23
because you just never know covid could
12:25
hit and you could go a whole year
12:26
without any income
12:28
right what are you gonna do then so you
12:30
know ultimately
12:31
you know that should be defined in your
12:33
plan way up front
12:35
and then you’re striving towards that
12:37
eventually get to that point and then
12:38
maybe you say hey
12:39
i can balance the two yeah you know and
12:41
that’s fine and we know people that do
12:43
they do it very very effectively yeah
12:44
it’s about having a plan
12:46
like i said all each each phase is a
12:47
different plan different
12:49
mindset different everything so
12:51
definitely keep that in mind
12:52
absolutely absolutely so before we keep
12:54
going boom
12:55
monday mondays are every monday 3 30
12:57
central if you have comments questions
12:59
please feel free to chime in
13:01
we’re happy to kind of go through those
13:02
um
13:04
there’s definitely some comments so
13:05
really quickly first one from trevor
13:08
our buddy trevor who i think we’re going
13:10
to see in miami says ben suttles
13:12
to make enough money that not having
13:14
hair does not bother you
13:16
i think that will continue to bother him
13:18
forever it doesn’t i will make sure it
13:20
continues to bother him
13:21
i’m just investing in real estate to
13:23
come up with a cure for baldness
13:24
okay and i haven’t found it yet i got to
13:26
keep making some more money absolutely
13:28
let’s see so jason contreras says
13:30
definitely not a get quick
13:32
get rich quick scheme that’s the
13:34
definite truth chris collins says yo
13:36
yo chris and he what’s up so yeah a long
13:39
time i see chris
13:40
and chris had a few comments i said
13:41
financial freedom for me is to spend
13:43
more time with my wife and son
13:45
because my job is freelance equals work
13:48
for pay no long-term benefits for me
13:50
real estate provides that long-term cash
13:52
flow and long-term benefit
13:53
sounds like a man with a plan no no
13:55
chris and you’ve always been a you know
13:56
guy with a plan and i think you need to
13:58
stick to it i think a lot of people
13:59
could learn from that right you know and
14:00
that goes back to you hit your why right
14:02
at the beginning of that statement which
14:03
is i want to spend more time with my
14:05
family yeah and that’s that’s totally
14:07
admirable but i think a lot of people
14:08
need to start from that
14:10
that footing or that that mindset and
14:13
then develop a plan for yeah and
14:15
i guess so you know and chris is a good
14:16
example he’s got his day job so to speak
14:18
yep right and he’s kind of building it
14:20
on the side he’s not just jumping all
14:22
in burn the bridges i think people try
14:24
that and i don’t think that’s a good way
14:25
to go about it right
14:26
make a concerted plan to transition over
14:29
right
14:30
i’m looking to build up this once this
14:31
gets to x amount then i can let go of
14:33
this right but don’t just say hey i’m
14:34
going all in
14:35
i’ll figure it out as i go that’s risky
14:37
well we’ve had we’ve had some people do
14:38
that
14:39
people try that and it’s not necessarily
14:40
a good idea they burn the ships and
14:43
and i think some people work like that
14:44
where they’re their backs against the
14:46
wall and so therefore they feel like
14:47
they’re gonna be more motivated and
14:49
um i’d say that that’s risky especially
14:51
if you have a family yeah
14:52
um but there might be some you know
14:54
singles what’s life without risk right
14:55
might be some single folks that or maybe
14:57
they’re young enough and they feel like
14:58
hey i can go and do this
15:00
you know then they can dedicate 100 of
15:01
their mind space so
15:03
everybody’s situation is different folks
15:04
right yeah and chris also said i’ve been
15:06
downtown my life to invest more like
15:08
ben suttles says don’t have lifestyle
15:11
inflation
15:12
yeah and it’s hard to not right i think
15:14
it’s so many people i do the same thing
15:15
guys i mean it’s it’s
15:16
it’s used to buy the aquafinas now he’s
15:19
got to buy the higher end waters man i
15:20
just don’t get it no i still you know i
15:22
still
15:22
you know i’ve got some vices right no
15:24
i’d like to say
15:27
but i like to say that’s my that’s a
15:29
cheap vice i like that vice because
15:31
guess what
15:32
even if i get it every single day it’s
15:34
really not that much money
15:35
right because i buy the cheap stuff i’m
15:37
not buying the six dollar drinks i’m
15:38
buying those two dollar
15:39
coffees right 2.65 cents now inflation
15:42
for the record i used to pay 201
15:44
oh 10 years ago back in seattle and i
15:46
was 265 so definitely uh significantly
15:48
more it’s gone up even in coffee but
15:50
no and everybody does it right and for
15:52
to kind of simplify that because that’s
15:54
a that’s kind of a new statement for a
15:55
lot of folks is
15:56
if you’re making more money then you
15:57
feel like you should be spending more
15:58
money too right so
16:00
don’t don’t don’t get caught up in that
16:02
trap everybody should
16:03
everybody tries to do yeah and maybe
16:05
pick up pick up something you know
16:07
enjoy life’s about enjoying it but don’t
16:08
like try to avoid the really bad vices
16:10
that will just completely kill you cause
16:12
remember otherwise right
16:13
yes whether it’s fancy cars depreciating
16:16
assets are never great but
16:17
maybe you know maybe hey now i can take
16:20
that you know that trip to hawaii
16:22
and pay first class right you know i
16:24
know a guy that did that
16:25
you know i mean and at the end of the
16:27
day that was an experience
16:29
and so but you know going and buying a
16:32
half a million dollar house when you
16:33
really could get away with buying a 300
16:35
000 house
16:36
maybe you should stick to the 300 000
16:37
and put that 200 000 of work
16:39
in another investment so it’s a good
16:41
segue some more questions that we have
16:42
so chris also said if someone is still
16:44
in wealth growth mode
16:45
do you typically suggest higher risks
16:48
higher
16:49
value innovation deals that cash flow
16:51
less
16:52
but have a larger overall return in a
16:53
shorter amount of time versus stable
16:55
lower amount return cash flow or how
16:57
does that conversation typically go with
16:59
investors
17:00
i always say that the younger folks are
17:01
going to go with the high risk high
17:03
return right you know think development
17:05
think redevelopment whereas our
17:07
our older investors that are working off
17:08
of a fixed income or off the retirement
17:10
account
17:11
might want to go with something that’s a
17:12
little bit more stable and consistent
17:14
and so but ultimately we’ve seen that
17:16
flip yeah
17:18
and to me it’s actually it’s more about
17:21
risk adjusted returns right that’s the
17:24
thing that i think
17:24
people really fixate on the returns but
17:26
there’s risk adjusted am i buying a
17:28
great deal in a great location and it’s
17:30
not going to
17:30
take much effort to screw it up so to
17:33
speak right for that
17:34
for that operator or is it a deal in the
17:36
hood and there’s a yeah i can make 20x
17:37
but it’s also 80
17:39
more likely to fail right it’s
17:41
understanding risk adjusted and then
17:43
you know to you chris if you’re halfway
17:45
down your your growth mode so to speak
17:47
i mean i’d say you got to just vary it
17:49
up right don’t go just one strategy
17:51
right again the markets are constantly
17:52
changing and to me
17:54
you know i mean i’m in that mode of just
17:55
diversification right having different
17:57
options different pools and
17:58
you know one will hit and maybe one will
18:00
be not as great and maybe one will be a
18:02
dud who knows right but just getting
18:03
variety
18:04
i think is the way to kind of continue
18:06
to maintain that forward growth
18:07
no i agree i agree no no i mean let’s
18:10
see we suggest it is a good it’s a good
18:11
term to have and keep in the back of
18:13
your pocket
18:14
so let’s see sir buddy rasul how’s it
18:15
going he says if i’m
18:17
consistently investing capital as lp
18:19
into deals theoretically there will come
18:21
a point
18:21
where the refinances and sale of assets
18:23
allow me to perpetually invest without
18:25
adding
18:25
additional capital right yes what’s the
18:27
reasonable time frame
18:28
for that to take hold five years ten
18:30
years fifteen thirty
18:32
three three yeah how’d you come up with
18:34
that number
18:35
because that’s typically what the
18:36
turnaround time on a lot of these deals
18:37
are no but that’s not his question his
18:39
question
18:39
is as an lp as an active lp investor
18:44
how long do i need to be investing to
18:46
where essentially i’m
18:47
i’m always breaking positive and
18:49
continuing to be able to reinvest
18:52
okay now i’m happy to where how long
18:54
until he has financial freedom
18:55
that’s kind of maybe to simplify it and
18:57
i i’d say that so yeah i thought i was
18:59
gonna say like you’re
18:59
when you start seeing like real money
19:01
yeah
19:03
i would say answer your question it
19:05
always starts with
19:06
how much you start with right so i mean
19:08
if you have 20 million dollars and your
19:10
expenses are
19:11
500 000 guess what on 20 million dollars
19:14
can you generate 500 000
19:15
of revenue i would hope so that’s about
19:17
20 ish
19:18
you know that’s about 20 million bucks i
19:20
i did five million
19:21
definitely yeah i don’t know you know i
19:23
i missed i was off by a digit
19:25
did you go to ut oh no i’m the smart one
19:28
here so if that if i screw that up
19:30
imagine this guy
19:32
no but you know it really to me that
19:34
answer is hard to answer because it
19:35
always starts with
19:36
what your lifestyle is how much you have
19:39
to start with and honestly
19:40
you brought up a point which is
19:42
theoretically you said theoretically
19:43
there will come a point and there’s
19:44
absolutely a point and you can
19:46
calculate that point today right start
19:48
with how much do i need to live off of
19:50
how much do i have to start right assume
19:53
you know there’s there’s a bunch of
19:54
things around there i don’t know if
19:55
you’ve heard of
19:56
fire right financial independence it’s a
19:57
whole kind of following
19:59
there’s a safe withdrawal rate so for
20:00
those that don’t know there’s this
20:02
concept of safe withdrawal rate meaning
20:03
if i have x amount of money
20:05
in my bank account and i withdraw y
20:07
amount
20:08
each year right at what point does that
20:10
never really like i have enough to live
20:11
for the rest of my life yes it’s called
20:13
the safe withdrawal right that number is
20:14
usually five percent
20:15
right so you can work back from it if
20:17
you want to have two hundred thousand
20:19
dollars that you pull
20:20
out each year to live right well you
20:22
need to have two hundred thousand
20:23
divided by
20:23
five percent which i can’t do that math
20:25
right now i had ten million dollars
20:26
maybe
20:27
um no maybe uh whatever that is uh i
20:30
don’t know what’s going on you can do
20:31
that you know it’s a thing you can
20:32
calculate so
20:32
similar to the real estate right you can
20:34
calculate out how much it brings in and
20:36
you can
20:36
so you can back into it you absolutely
20:38
can and there’s there’s a ton of
20:39
methodology around it i think
20:41
he hits on there’s there’s a lot of
20:43
information out there
20:44
but you need to know what you’re what
20:46
your overhead and how much money you’re
20:47
going to start off with right
20:48
but my to my i was answering that
20:51
question i was interpreting it
20:52
differently yeah right where i was like
20:54
how much
20:55
you know when’s the when’s the spot in
20:57
time if i invested a ton in year one
20:59
when am i gonna start seeing you know
21:00
those those two taxes
21:02
yeah the momentum it’s typically three
21:04
years right you know because
21:05
people start exiting start refinancing
21:08
and then you can redeploy that money and
21:09
then you really start getting momentum
21:10
from that point yeah
21:11
so also said yeah financial freedom
21:14
assuming maybe fifty thousand a year
21:16
to shoot for two hundred thousand a year
21:18
in returns all right so if you’re saying
21:19
if you put fifty thousand dollars a year
21:21
and that’s what you start with you
21:22
invest that each year when we start to
21:24
generate two hundred thousand return
21:26
well you can kind of back of the napkin
21:27
this right
21:28
so if you put fifty 000 a year right and
21:30
let’s just say it’s a safe deal it’s
21:32
only paying out let’s just say eight
21:33
percent return yeah
21:34
right uh what’s eight percent of fifty
21:37
thousand
21:38
uh four thousand dollars a year so
21:39
that’s four thousand dollars a year
21:41
right so now you you want to get to 200
21:43
000 a year in revenue
21:45
right so 200 divided by 4 is 50.
21:48
you need to make 50 of those investments
21:50
right so now if you’re
21:51
only doing one a year right because
21:53
you’re keeping the rest in your pocket
21:55
you know you’re actually spending that
21:56
four it’s gonna take you 50 years but
21:58
you’re you take that four and the next
22:00
year you had eight and
22:02
it starts to compound right another
22:03
quickly accelerate so back of the napkin
22:06
15 years i don’t know i need to build up
22:07
a spreadsheet to calculate there’s
22:08
actually you can actually calculate this
22:09
out right no you absolutely can
22:11
and um there’s a book that i actually
22:12
that was really insightful really opened
22:14
my eyes when i first got in real estate
22:15
called the millionaire real estate
22:16
investor oh you love it i highly
22:18
recommend this book because it goes
22:19
through a really good example kind of
22:20
like what school’s talking about which
22:22
is
22:22
in their example it’s a couple that
22:24
makes you know let’s say hypothetically
22:25
they make 60 000
22:26
a year right they start off with 20 000
22:29
savings
22:30
at what point in time can they retire as
22:32
millionaires
22:33
assuming all they did is they bought a
22:34
house each time they had the opportunity
22:36
to buy a house
22:37
right they had enough cash to buy it and
22:38
that has cash flow at x amount
22:40
and they bought it 80 percent of market
22:41
right there’s you know it’s a very
22:43
pretty conservative model
22:44
and you can quickly see that actually it
22:46
doesn’t really take that long to build
22:48
up enough cash flow so
22:49
highly recommend uh giving that book a
22:51
read it really goes through that yeah
22:52
check that book out it’s actually a good
22:53
book
22:54
you know so it might it might answer a
22:56
little bit more of your questions man
22:57
let’s see so chris also says or so also
23:00
consider cash flow during the hold
23:01
versus overall return once the deal goes
23:03
full cycle
23:04
yeah that’s kind of what i was getting
23:05
at chris right if he’s getting that 4
23:06
000 a year well that money can also be
23:07
reinvested
23:08
yes they said you can live off the cash
23:10
flow but if you’re looking at overall
23:11
growth then you can look at overall
23:12
return
23:13
yeah so chris i think maybe to simplify
23:14
what chris is saying is
23:16
don’t look at how much do i need to have
23:17
in the market to generate 200 000
23:19
right now it’s more about i can keep
23:21
reinvesting back in
23:23
right so at some point i can accelerate
23:24
that and then start to have 200 000 out
23:26
a year
23:26
yeah absolutely all right all right
23:30
wow got a little bit more action on that
23:32
one than i was expecting yeah and let’s
23:33
see one more one more comment so yeah
23:34
you know monday mondays are this every
23:36
monday 3 30 central people have comments
23:38
questions
23:39
ideas feel free to chime in we’ll talk
23:40
about anything and everything
23:42
we usually spend the last 10 minutes in
23:44
q a which we’re in right now we’re about
23:46
to finish up so if you have anything
23:47
please go ahead and ask it quickly
23:49
um one more question came in jason
23:51
contreras says what’s the name of the
23:52
book again
23:52
it’s called the millionaire real estate
23:54
investor what was it written by peter
23:56
keller
23:57
guy that started calling williams yeah
23:59
no he’s actually a good author he’s got
24:00
a couple good books yeah
24:02
i’m not i’m not a big believer in the
24:03
one thing but uh that’s the difference
24:04
that’s
24:05
everything that’s possible still very
24:06
popular book you know
24:09
wait one more rachel also had one other
24:11
question primary residence on a va loan
24:13
100 financing appreciated
24:15
about a hundred thousand i feel like i
24:17
can get that cash out and put it to work
24:19
for me
24:19
at a fairly low interest rate absolutely
24:22
right
24:22
regardless of how kind of loan if you
24:24
have real equity sitting in your house
24:26
and you could pull out like you said 100
24:28
of the money you put into that deal
24:29
guess what your loan is cheap especially
24:31
if it’s a va loan
24:33
right that interest rate even if it’s
24:34
not a vehicle this is where this is
24:35
where i tell people to understand
24:37
the deals the risk adjusted right so
24:39
russell you could look at it as this
24:41
kind of goes to the question that chris
24:42
asked earlier
24:43
you can look at it as okay you know do i
24:45
go in
24:46
lower risk high lower return deals or
24:49
higher risk return
24:50
you can say okay this bucket of money is
24:51
my house it’s my house saving
24:53
i can’t play this really risky because
24:54
if i screw up now i’ve lost all my
24:56
equity whatever
24:57
guess what go put that in the safest
24:58
deal the best deal in the best area
25:00
that’s generally let’s say it generates
25:01
only a five percent cash cash on cash
25:03
which is really low like we don’t even
25:04
look at deals at five percent let’s say
25:06
it’s the
25:06
safest deal five percent cash in cash
25:08
five percent is still significantly more
25:10
than probably the three percent or two
25:12
percent that you’re paying on your va
25:13
loan i don’t even know what the va loan
25:14
rates are like
25:15
it’s in that one to three range yeah
25:16
regardless that’s still that’s until two
25:18
three percent
25:19
less than what that what what what your
25:22
loan is so now your pocketing’s let’s
25:24
say it’s a hundred thousand dollars of
25:25
equity like
25:25
i think that’s what you said in your
25:26
example no you said 100 yeah you need to
25:28
say 100 000
25:29
guess what that’s three thousand dollars
25:31
extra you’re giving each year on a very
25:33
safe investment let alone
25:35
that that investment will pay down the
25:37
loan that investment will give you
25:38
losses that investment
25:39
will hopefully appreciate making it pop
25:41
on the exit too
25:43
right and what’s beautiful about for
25:44
those that don’t know a refi is always
25:46
more powerful than a cell
25:47
because you’re getting that money cash
25:49
tax-free anyways so 100 000
25:52
you’re not going to pay tax on it on the
25:53
refund you actually get that money out
25:55
and now that money you can keep
25:56
investing as long as you don’t sell the
25:57
asset you don’t pay taxes
25:58
because it’s a loan folks it’s not
26:00
proceeds from a sale
26:02
all right all right so i know we got to
26:03
wrap up yeah let’s call it so we get
26:05
let’s talk about
26:06
infant our conference miami july 24th
26:09
folks we’re running out of tickets
26:11
this is not something i mean so chris i
26:14
hope to see you there and everybody else
26:15
that was commenting
26:16
check out coupon code disrupt get your
26:19
hundred dollars off
26:20
we’re getting some more great speakers
26:22
line up some more great panels lined up
26:24
there’s a ton of demand for this stuff
26:26
you know i think everybody wants to go
26:27
to miami in july so
26:28
why not because it’s an awesome place to
26:30
go and you’re gonna get meet some
26:32
awesome people and learn a few things
26:33
about multi-family and investing in
26:35
general
26:36
so check that out mfinvestornetwork.com
26:39
coupon code disrupt get your hundred
26:41
dollars off what are we talking about
26:42
next week
26:43
we are talking about should you invest
26:44
in crypto or real estate in 2021
26:48
this is actually a big this is a big
26:49
topic you know i mean i think you know
26:51
crypto versus anything
26:53
you know but i think we’ll probably talk
26:54
about the disadvantages of crypto
26:58
and the disadvantages of real estate and
27:00
vice versa advantages and advantages
27:02
right yeah
27:03
i think that’s important because people
27:04
need to realize that there’s some real
27:05
risk there
27:06
so anyway gonna be a fun topic next week
27:09
check it out
27:10
should you invest in crypto or real
27:11
estate on money mondays 3 30 central

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