Epic Real Estate Investing - 4 Ideas for Improving Your Passive Income Portfolio | Episode 221

Episode Date: September 12, 2016

How would you like the financial freedom to spend your valuable time with family and friends? Do you dream of quitting the 9-to-5 rat race to lounge on the beach? Well, passive income investing is the fastest way to make those dreams a reality. Although there are many enterprises by which a person can achieve passive earnings, real estate investing is the path by which most millionaires realize the goal. On today's podcast Matt shares the qualities that make up a strong passive income portfolio and introduces you to the tools for securing long term wealth through real estate.   ______   The free course is new and improved! To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? E.ducation P.roperties I.ncome C.oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Hello, and welcome to Epic Real Estate Investing, the place where I show people how to escape the rat race using real estate. And if you're just getting started and or you're looking for new and creative ways of making money in real estate, I've put together a free course just for you, back by popular demand. it includes a checklist also on how to find motivated sellers being property owners that are willing and able to sell you their property at a discount. There's a checklist in there on how to find those particular people, those specific people. So to access that free course, you can go to free real estate investing course.com. That's free real estate investing course.com.

Now, if you notice anything different about the sound of my voice or the sound of this recording, it's because I'm in Hawaii. I'm on vacation, but I still have to record. the podcast because I do this for you each and every week just to show my gratitude. I love interacting with you. I'm so appreciative and grateful that you've shared this podcast with so many of your friends, family and associates. We do no promotion for this podcast. It's all 100% word of mouth and it's the most popular real estate investing podcast on iTunes

because of that because of you. So thank you. Quick announcement. Just added to the roster at the Epic Intensive is the king of California. If you don't know who that is, it's Mr. Todd Tobac. and at the intensive he is going to share with you how he is adapting to this shifting market. And I think that's really important. He's a really specific guest that I wanted to get out to the intensive to speak to you because,

you know, him being in probably the most competitive market in the entire country, being Southern California, and I wanted him to share how he continues to dominate his competition in this competitive market. And if he can dominate here, what he's doing, the tactics and the strategies that he's going to share with you will certainly work in your market and help you crush the competition where you live. So for more information, I know we're really low on available seating. We're getting close to the date, but if you'd like, give it a shot. Go to Epicintensive.com. Love to have you there. If there's anything available, go ahead and click that and join us, Epicintensive.com. Also,

a new podcast under the Terrio Media umbrella just launched last week, Epic Wealth. Everything about building wealth that your financial planner is not, nor will ever tell you. So go to epicwealth.net and click the subscribe button and never miss an episode. Epicwealth, that's dot net.com. I don't know where that's going to send you. Epicwealth.net, that's going to send you to the new podcast. Epic wealth. Everything about building wealth that your financial planner is not, nor will ever tell you.

Okay, so today's episode, four ways to increase the performance of your income portfolio, how to improve your passive income. passive income and I want to talk about passive income make sure that we're on the same page when it comes to passive income because what is it right and why do you want it and those are great questions and they deserve great answers we're going to get to those but first I'd like to ask you a few questions have you ever imagined living a life of leisure traveling the world spending your valuable time with family and friends do you dream of quitting that nine to five rat race to lounge on the beach sipping fruity drinks of course you've thought of that right it's what's so alluring

about passive income. It's why we get into real estate in the first place, right? Passive income is the best way to make those types of dreams a reality. So passive income is typically defined as income acquired through a business in which the investor's participation or the business owner's participation is mostly inactive. Mostly inactive. So passive income doesn't mean uninvolved income. I want that to be really clear. It's mostly inactive. As people earning passive income, are classified differently by the government. You know, the IRS provides substantial tax breaks for passive income recipients,

including depreciation write-offs for real estate investors. I'm going to talk a little bit more about that in a second. But simply put, those that work for money, if you're working for money, if you're actually exchanging time for dollars, you are paying the most in taxes. Now, if you step that up a level and you get your money to start working for you, then you pay less in taxes. So those that work for money pay the most in taxes, those that get their money to work for them,

pay less in taxes. And get this, those who get other people's money to work for their money, pay even less in taxes. And taxes being our biggest expense in life, that's really, it's a, tax is a boring subject. And it's something that just people are like,

yeah, but show me how to find motivated sellers or show me how to do a subject to transaction, Show me how to go out find cash buyers. Those are all important aspects of real estate investing, but you've got to understand at least 50% of your income over your lifetime is going to go right back to Uncle Sam. So rather than focusing 100% on trying to find a new deal to make more money, what if you could cut that expense in half?

50% of your income is going to go back to Uncle Sam. If you cut that expense in half, you've just increased your income by, what would that be? Like, by 50%, right? Without finding a new deal. By doing just the same amount of work that you're already doing. I mean, why don't they teach us this in high school? I don't understand why.

But if the reasons, those reasons aren't enough to convince you that investing in passive income is the path towards achieving your dreams, recognize that entrepreneurs who discover the benefits of passive income investing are much more likely to achieve non-business personal goals while also securing future retirement. So passive income, it solves all kinds of stuff. It solves your current lifestyle issues. It solves your wealth creation issues. It solves all of your non-business personal goals. And it also solves future retirement, securing that for yourself. In passive income, it delivers the best of all of those worlds. Both your professional and personal goals are more

easily achieved when pursuing passive income. That's why I'm such a big advocate of it. It's why it's so important to learn how to do to stop focusing on the amount of money that you've got to save for retirement and focus on the amount of passive income you want to produce to secure that retirement. Because not only does that secure your retirement far into the future, it secures your lifestyle right now. And when is life happening?

It's happening right now, right? So with that said, I continue to kind of scratch my head as to why wholesaling has become so popular. I mean, yes, you can make gigantic chunks of money wholesaling. Absolutely. But it's not going to set you free. You need to understand that part. It is not investing even because it's active income.

It's a job. If you want to be free, it's passive income that's going to set you free. That active income of wholesaling, the active income of fixing and flipping. It's great money and it has a purpose inside of your real estate. But you need to understand the bigger issue. the bigger goal, the bigger picture. The bigger picture is taking the money that you make by wholesaling, taking the money that you make by fixing and flipping, and making sure that you take that money and you turn it into passive income for yourself. That's the only way you will ever set yourself free.

It's the only way you're going to experience the type of lifestyle we talked about just a few minutes ago. So though there are many enterprises through which one can achieve passive earnings, real estate investing, it's a proven method for realizing this particular goal. And not only is it proven, it is the method by which most people have accomplished their passive income goals. 90% of millionaires made it in real estate. 90% they've made their money in real estate. And those that didn't make their money in real estate, they preserve their money in real estate. That's a big clue.

If you want what other people have got, you've got to do what they did in the manner that they did it to get somewhere close to that result. So if you make the choice to invest in rental properties, you're going to want to build and make maintain a functioning passive income portfolio as a way to not only liberate yourself from the rat race, but also there's another level of this to showcase your investments to potential partners, to potential clients, and to paint a bigger, better picture to those that will help you create the type of freedom only witnessed on, say, the Kardashians, that type of wealth, or The Wolf of Wall Street. I love that movie.

That was an obscene amount of wealth that was created there. Or Narcos. Well, I love that TV show, but it's probably not a great thing. example here. Or say the rich kids of Beverly Hills. Better example. That's what's available to you through the pursuit of passive income. Because once you get that passive income to a level where you've escaped the rat race and you've got everything that you need to live on, now you can take the excess and let that excess create your real wealth without you being really involved, without it requiring your time and effort. So that's the type of wealth that's available to you, but you've got to go about it in the

proper sequence. If you go through the sequence of let's flip as many houses as we can, let's wholesale as many houses as we can and save a bunch of money so we can eventually create some passive income, that's the really, that's the long way to go about it. It's certainly a much more exciting way to go about it. It's, it's exhilarating, it's more interesting, it's more fun even, but it is the slower way to go about it. Okay, so pursuing of passive income is what's going to get you there faster. And it might not seem like it at the beginning, but it will get you there faster. So here's some qualities in a passive income portfolio that experienced investors admire.

So as you're looking for new money partners, as you're looking for new investors, this is what they're going to be looking for. And the reason they're looking for this is because it positions you as a safe investment, a position of where they would want to park their money, where they want to invest their money, where they want to back you. Right. So the first part is diversity. Diversity in an investment portfolio, it's critical.

And in order to attract private lenders and investors, a diverse range of real estate properties should be present in your portfolio. And although a diversity in properties is important, a diversity in the location of those properties is perhaps even more important. That's how you diversify in real estate. Focus more on the diversity of the locations than anything else. Additionally, a diversity of deal types is going to be important. A diversity of deal type should be active within an established portfolio.

So real estate markets, they cycle up, they cycle down. So a variety of deals in the pipeline can provide investors a nice, confident or comfortable hedge against risk. All right. So diversity is one. Scaling your real estate investment business, it's really a matter of timing. You know, when the market is performing in a certain way, experienced real estate investors know that it is time to scale. This simply means it's time to take advantage of low risk and invest in more properties. You know, while still considering due diligence and strategies for diversification,

real estate investors, they tend to build their business bigger when interest rates are low, asset prices are relatively low, and the potential for growth is compelling. So when the going gets good, the good get going. And right now, interest rates are at an all-time low. Now it's just in the coffee shop here in the Maui Hotel that I'm staying. and on the front page of the Wall Street Journal, there's a lot of concern about interest rates starting their way back up. Now, nothing to be alarmed of, but they just can't go any lower, right? I mean, we're at an all-time low. They have to go up at some point. So I think we've got

a certain amount of time to seize the opportunity that's before us with these low interest rates. But right now, this is the time to get in. This is the time to start a quarter of a quarter of a It's time to start acquiring and utilizing whatever credit you have available to you. And that could be your credit or it could be a credit partner's credit, friends, family associates. It's time to get in and take advantage of these. And more wealth is going to be created right now with the assets that you acquire than any other time in history because of the interest rates alone. So interest rates right now at an all-time low. Asset prices in relation to building costs are still very low.

in most parts of the country, you can purchase properties for far less than what it would cost to build new properties. And that's really important because considering that 60% of the population is below the age of 30, we're going to have to build new houses. The population is bigger right now than it's ever been before, and 60% of that population below the age of 30. We're going to need new housing. But that new housing is not going to start being built until the builders, can profit from it. And what's going to increase that is this growing demand when that demand rises, so to the prices of property. So these properties that you can purchase right now at the below the

replacement costs, below building costs, are very good investments. It's not the potential for growth that is compelling right now. It is the imminent growth that makes real estate flat out exciting. Growth is going to happen. The demand to cause that growth is already walking the earth. It's already here. It's already born. They're already set to go and acquire properties because they're going to need a place to live. They're going to need a roof over their head. So is that going to happen in six months or six years? I don't know, but I know it's going to happen. And as long as you're investing for cash flow, it really doesn't matter when it happens because you're going to be safe and secure because of the cash flow. And then on the back end, you're going to experience that appreciation.

So you need to start acquiring as much as possible right now. All right, refinancing. Refinancing is potentially a huge opportunity for real estate investors. It's a little bit connected to what we're just talking about, the interest rates. You know, and although interest rates are currently at an all-time low, there is talk that they might increase in the near future, as I was just expressing through the Wall Street Journal front page that I saw this morning. I mean, they all have to at some point. They can't get any lower.

The only direction soon is going to be up. So if this is the case, refinancing right now and locking in a lower interest rate on your investment properties, it's going to make for a really good business. I mean, simply nailing down a lower interest rate allows you to pay less on your mortgage such that the extra cash flow can now be directed towards maintenance can be directed towards upgrades or even better additional investments, growing your investment portfolio. That's how important the interest rates are for you. All right. One way investors that are currently choosing to refinance right now is through a cash out refinance. And we've become experts of that here at cash flow savvy.

We've got a very specific special, I wouldn't call it proprietary, but we certainly came up with it ourselves where we put a couple different pieces of a puzzle in place to where we're able to get people next day cash out refinances through their turnkey properties. You know, after building equity in your home and or investment properties, a new mortgage can be established. That's what a cash out refinance is. And, you know, the difference between the old mortgage and the new mortgage that's cashed out and that becomes available for reinvestment. So that's what that is. It's this ability within real estate that makes it such a quick wealth builder, being able to pull money out of your properties after they've appreciated.

And what I was kind of mentioning there at Cashful Savvy, if you purchase through there, a lot of the times we're purchasing and passing on the savings to our investors at below market value. Once you close on that property, you can cash out the next day if you meet all the guidelines and the property and everything works. but that's one example. Or it's properties that you've owned for a long time that have built in equity.

And you can pull that out and go ahead and put that money to work in other places and increase your return on investment. I mean, my good friend Jason Hartman, he says to refi till you die. And I understand where he's coming from with this. I mean, I'm just a hair more conservative than he is. Just a hair, though. I subscribe more to the idea of refinancing or leveraging as much as you possibly can to build your wealth. I'm all about refinancing and leveraging and borrowing as much as you possibly can to build your wealth.

But then I like to look at let's eliminate your debt to sustain your wealth. Once you've had that wealth level hit to the level that you want, then let's start eliminating that debt to sustain your wealth. I think Jason's idea is that he'll just never have enough. So that's why he's refied until you die. And that makes sense to him. And if you do responsibly and carefully, I actually don't see anything wrong with that. I just have a little different approach to it. Just slightly, though. Not much, but just slightly. So refinancing, another way you can really increase the performance of your passive income portfolio.

The fourth one, managing liability. Managing liability, it's a necessary step for investors looking to protect themselves and their assets. You know, with real estate investing, as with any business, there is an amount of risk involved. Purchasing the proper insurance, establishing an LLC, being a limited liability company, that can mitigate most risks with the, dual benefit of legitimizing your company. So if you expect to grow your business to take on partners, hire employees, and service clients, setting up an LLC is critical.

Having the proper insurance is critical. It can provide various tax benefits and it can provide safeguard against damaging lawsuits. All right. So keep these tips in mind as you build your passive income portfolio and continue your move toward financial freedom. Keep these tips at front of mind being diversity,

scaling, refinancing, and managing your liability, and you're going to have a really strong income, passive income portfolio. All right, so I've been catching up with past clients recently and just to check in with them to see how they're doing.

And I recently caught up with McKenzie Kelly. And if you caught the frustrated to 30k.com training session, frustrated to 30k.com training session, it's still up and available if you missed it. But if you caught that, then you know McKenzie's story very well as she's been able to build a $15,000 stream of monthly income on the side, working just two to three hours a week in her real estate investing business,

as she's been running her full-time business, the remaining 38 hours of the week. And so in that training, I showed you how she was able to do that. And I wanted to just check in with her. It's been, I don't know, eight months an hour or so. So I want to check in and see how she's doing if things were still going as they were when she last shared with me. And, you know, a lot can happen in eight months. You know, we can be riding in high in May, shot down in June.

and I just wanted to see if she was still riding high, and she did bring me up to speed, and I recorded that call as well, and I'll play it for you right after this. You've got the knowledge. Now get the funding. It's simple, it's easy. Go to Epicfastfunding.com

and get up to $150,000 in revolving credit lines for your real estate business. Use your funds for property purchases, renovation expenses, marketing, and promotion, anything your business needs. Go to Epicfastfunding.com, fill out their 60-second application, and receive your funds in as little as seven days. Epicfastfunding.com. When you combine wisdom and leverage,

magic happens. Epicfastfunding.com. Hey, this is Matt Terrio with Epic Real Estate. And on the phone, I have one of my favorite clients, McKenzie Kelly. McKenzie, how are you? Hey, I'm good, Matt. Thanks. How are you? Very good. Thanks. Hey, real quick, as we're getting ready for the Epic Intensive, I had just a few questions I wanted to ask you. What was it about real estate that originally inspired you? Okay, the thing about real estate is the passive income that I absolutely love, you know, developing that true wealth that you can get from real estate. Real estate was actually what drove me to start my other businesses.

And I ended up actually venturing back in real estate, getting out of it a little bit, not quite ready. And now I am like full more going, you know, full speed ahead in the real estate. And I love it. So let me ask you, what was life like for you just before you found the Epipro Academy? I was working full-time in my other business. I own another business and pretty successful up in Northern California. And I realized that if I didn't start divesting my income, I would continue to be basically a slave to my business.

And so I ended up creating time for myself, you know, delegating a lot of my responsibilities to other people within the business so that I could start working on doing real estate investing. How has joining the EPIP Pro Academy impacted your real estate endeavors? You know what? You have to have a group of people around you that understand what you're doing. If you try to do this by yourself, it's going to be a lot more difficult to succeed. So you have to have a group of like-minded individuals that can support everything that you're doing. And you can ask any kinds of questions, whether it's, you know, long or short, you know, a seemingly stupid question is never stupid. So Epic Pro has been an amazing resource.

You know, Matt, obviously, you're really successful at what you do, and I admire that. You know, I've warned throughout the years to seek out people who have done it and who are successful. And so when I saw what you had done, I was attracted to the Epic Pro because of that, because I knew that if this guy can do it, and he's a pretty normal guy, that I can do it. Since joining the Epic Pro Academy, how has that impacted you personally? I am not working as much in my everyday business. I have created more time to do my real estate, you know, having a lot of successful deals every month, you know, just create a lot more space within my life to do real estate. It's cool.

It's fun. Well, let me ask you, let me rephrase the question. Who else in your life has been impacted by your experience? Who hasn't been impacted by my experience? My husband, actually, I would probably say, is number one. Actually, my sister, because my sister's coming to the academy as well, and she's been helping me in my business. So she is a, she's a nurse and has cut back her hours and nursing to help me

and stay home more with her girls. So doing real estate has definitely allowed her to have more flexibility that way. And eventually my husband, you know, my goal is to make enough money to her, his salary so that if he decides that he wants to retire, he can. And we're getting pretty close. With all that said, what would you say is the true value of your epic experience? Oh my gosh. You know, how can you answer, like, how valuable in education can be?

I would say that I'm a finance person. I do the finances for my other business. I look at R.O.Y on this has been, you know, 100 times. I have paid for the Academy, paid for the Epic Intensive. You know, it's hard to put an exact ROI on it. I can put a money ROI on it. You can put a time ROI on it, but it's fair for sure. I'll let you get back to your business.

Last question is you attended the Epic Intensive last year. Why are you coming back again this year? Oh, my God, because it was so fun. You know what? Like, to be honest with you, like, my hope was there's going to be, obviously, some new stuff to learn this year, but even if there isn't new stuff to learn this year, that's okay because I love networking with other folks that are just like me. It helps so much to be around people that are doing what you're doing and listen to them, get excited about real estate, and it

fires you up all over again. And like I said, I'm bringing my sister this year, and she's helping me in the business. And my hope is that she will also be inspired and meet some really cool people, you know, make new friends. And I love that. So thank you. You bet. That's fantastic. Well, I can't wait to see you. Cool.

Yep. It's going to be great. All right, so I'll let you get back. Thank you so much for taking a few minutes out of your time to talk with me. Of course. Okay, Matt. We'll see you soon. Okay, take care.

Bye-bye. All right. All right, so I'm heading down to the pool to enjoy my vacation. And until next week, God bless. And to your success, I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the fact. from the BS in real estate investing education.

If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. If opening up your financial statement each month is about as exciting as watching paint dry, the Epic Wealth Fund may be the next investment opportunity for you. The Epic Wealth Fund invests in distressed real estate and shares the profits with shareholders. If you're an accredited investor who has already enjoyed success elsewhere in their business or investing life, and you're seeking a broader exposure to real estate in your portfolio

on a passive basis, the Epic Wealth Fund's executive summary is available for your review. Go to EpicWealthfund.com to review the funds executive summary. Epicwealthfund.com. Real estate investments involve a high degree of risk. Residential income and returns may vary and are not guaranteed. Past performance is no indication of future performance. Nothing herein shall be construed as investment, tax, legal, or accounting advice. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.