Epic Real Estate Investing - Did He Just Say He's No Longer Investing in Real Estate? | 1115

Episode Date: January 14, 2021

In today’s episode, Matt shares his reaction to Graham Stephan’s recent YouTube video in which he describes why he stopped investing in real estate! Stay tuned as Graham makes a lot of good points, yet failing to recognize some very important reasons to invest in real estate! Moreover, you will find out how you can join the approaching Epic Intensive where we will be teaching on how to unmask the real estate market under the current conditions! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit REI.

iAse.com. Here's Matt. Hey there, Epic Investor. It's Matt Terrio from Epic Real Estate, where we show people how to invest in real estate with an emphasis on retiring early. If this is your first time here, really glad that you found us.

If you like what you hear, make sure you hit the subscribe button before you go. And if this is not your first time here, welcome back. And thank you for sharing this with your friends and family. You're the absolute best for doing that. I love that about you. So thank you.

Thank you again. Got the news for you, today, but I'm going to shift that to the end just in case you want to get right to the real estate stuff. I listen to a few podcasts and they do the news and I always enjoy that part. I almost listen for the news because it's always something new and different than what mainstream plays. But maybe you don't want to hear the news. I don't know. Maybe you just want to get right to the real estate stuff. That's why you're listening. I totally get it. So I want to still do the news, but I'm just going to wait until the end until I get further feedback.

from you. All righty. So we'll get right to that. But first, heads up. The Epic Intensive is coming up at the end of the month. Tickets are now on sale and they are ridiculously cheap at the moment, but they won't be for long. So go to Epicintensive.com and grab your seat, either your live seat or a virtual seat. So if you don't want to make the travel, you can still attend virtually. I've got a few of those live seats open. We can't do too big of a capacity. So it'll be a small, intimate gathering of those that attend live. And you can come in a day early and join us for the mastermind event. And that'll just be us sitting around the roundtable and me giving you my undivided attention as well as the others in attendance and helping you solve whatever ails you. So what you do is when you go to epicintensive.com, you buy the virtual seat.

And then if you'd like right after that, you can upgrade to your VIP seat. And you'll get all the information as far as the location goes and everything. potentially could change the physical location. I don't think so, but potentially just depending on what the registrations look like. All righty. So the Epic Intensive unmasking the market, certain real estate success strategies for uncertain times. That's January 28th through the 30th, 2021. It's the transformational event of the year for real estate investors.

So hopefully you can come and play real estate with us. Epicintensive.com. All righty. So this last week, I ran across a video by Graham Stefan. I don't know if you know who he is or not. He's a YouTube guy that I've watched grow for, from, I don't know, I've watched him for a couple years

from a couple hundred thousand subscribers to more than two million. And to go from a couple hundred thousand to two million in a couple years, that's a very short period of time. It's really fast. He's really popular. Good dude. He's a real estate agent in Los Angeles who invests on the side. And he's done pretty well for himself.

So he's from Los Angeles, but from what I have heard or what I've seen in his YouTube videos, he has followed the epic real estate investing show out here to Vegas. He's building a brand new house out here. So he kind of got the, I think got the impression that the 0% state tax in Nevada will be very beneficial to him. Anyway, he talks about real estate, obviously. And but he talks about some of the cool things. He's turned me on to some cool little online savings accounts that produce a decent interest, at least much bigger than the 0.1% that you're getting at Bank of America.

And then turn me on to different ways to use credit cards, so that's been interesting. But he is mostly a real estate guy. And so he posted a video recently, actually just this last week, that he's stopping his real estate endeavor. He's no longer investing in real estate. He's not going to do it anymore. And I really thought when I saw the headline that I was going to listen to what he had to say and I'd have to do a lot more with his predictions on the housing market.

Like he saw something coming, like maybe something I missed. So I had to watch. But I was wrong. And I think there's a really great lesson in there. And so what I did is I produced a reaction video commenting on his ideas. And I just wanted to play that audio for you here because I think there is a really good listen. So take a listen and then I'll be right back with the news. I'm Matt Terrio, CEO of Epic Real Estate, where I show people how to invest in real estate.

employing more mind than money, using creative financing strategies with an emphasis on retiring early. That's what we do here most of the time. But when one of the more prominent advocates of real estate investing on YouTube declares that they have stopped buying real estate, I had to detour a bit. But as it turns out, not by much. Graham Steppen is a Los Angeles-based real estate agent and YouTuber who has become internet famous for his videos about saving money and frugal spending and it hacking credit cards and investing in real estate. He invested aggressively in real estate in 2010 and 2011 when prices were at their rock bottom. And his goal was to create dependable residual income. And it worked out well for him. And it's obvious that he's really enjoyed the process. Or so he did. Being the

consummate student that I am, I'm always reading, listening and watching what other real estate investors are doing. I mean, I'll never know at all, but it's nice to try. Graham is one of the newer people I've been checking in on every now and then for, I guess, the last couple years or so. And I've picked up a few tips on using credit cards and different types of savings accounts, but he has indeed stopped buying real estate. And he gave three reasons for it. One, good deals are very difficult to come by. The reality is that it's not impossible to find something that makes sense to buy in today's market. But it's certainly a lot more difficult today than it was a year ago. It takes a lot more patience, a lot more searching, and a much higher cost

to find something that really works. Graham's right, sort of. The market is hot, and it is a lot more difficult today to find good deals, especially if the multiple listing service is your source, of which is where most real estate agents look for deals. They look for them on market. That's where Graham plays.

And there's nothing wrong with that. But as he mentioned, it has its limitations when the market is like it is right now. I mean, interest rates are low, demand is high, causing prices to rise and inventory to shrink. indeed will need more patience. You'll have to do more searching and you'll have to take on higher costs to find your good deals if you're looking on market. If you're looking off market, however, it's a different story. When I got started, I didn't have capital to purchase investment properties

on market, nor a credit score to speak of. So, I had to look off market for the seven off market deeds, death, disease, divorce, drugs, defaults, delinquencies, and distress, like financial distress and personal distress and property distress. These types of circumstances hit property owners on a daily basis, regardless of the market conditions. You know, life tends to kick everyone in the teeth every now and then,

and when it does, property owners frequently turn to their real estate for fast financial relief. And unfortunately, these seven Ds are hitting harder than normal right now. Of which translates to actually more deals. Exchanging equity for piece of mind is the transaction of the real estate investor. That's what we do. If you'd like to learn more about

how we do that here at Epic, you should see creative real estate investing 101 pop up here right about now. But just in case, I put it below in the comments in case that thing didn't work out. And I point this out, just as Graham did. And sure, it's not easy work and it definitely takes a lot of time up front. But when done right, you could potentially build your wealth faster than nearly anything else. I'd hate for you to stop pursuing real estate yourself because of Graham's decision. to stop because real estate will create wealth for the average person faster than anything else. If you aspire to be wealthy, quitting real estate could be a fatal mistake to your financial freedom. The deals are there in abundance, just not where Graham is used to finding his.

And Graham's not wrong. There's just another side to his thoughts. Now, his next reason to stop buying real estate. Now, too, this is something I really haven't talked much about here in the channel, but that would be the importance of diversification. For the last 10 years, I've invested nearly everything that I've saved into real estate. And for the longest time, that's made up almost the entirety of my portfolio. Now, sure, I've also been consistently investing in the S.P 500, but for the most part, that's only been a sliver compared to what I've been throwing into real estate.

For me, it just made sense to my real estate so I could have direct control over my money. I could force appreciation by fixing it up. I could get nearly guaranteed cash flow by renting it out. And best of all, I could depreciate that house against my taxes. By nearly all accounts, I could get a higher return for my leveraged real estate investment than I could from the stock market. So my thought was, may as well go for it. All the exact reasons you want to get into real estate.

And an additional profit center that didn't get mentioned is the amortization. That's the paying down of the debt that's used to purchase your real estate. And this is the most underrated aspect of investing in real estate. And it's the aspect that will have me never stop buying. It's like this. If you buy stock, that's you buying the stock. If you buy, say, cryptocurrency, that's you, buying it. Even if you buy your primary residence, that's you buying it by making the mortgage payments

every month. But with your income properties, it's your tenant that's buying it for you by way of paying you to make the mortgage payment. But back to diversification. But after a while, as I started earning more money and those properties started going up in value, I realized I am way too heavy into real estate relative to the rest of my portfolio. This is something even Shark Tank's Mr. Wonderful, Kevin O'Leary, told Graham recently. The only negative I can say about you is that you got too much real estate, but that's how you made your money in the first place. Working on it. If you've seen this video with Graham and Kevin O'Leary, there's some really good stuff in there. And I recommend taking a look. I put a link in the comments for you for your convenience. But it's obvious Kevin isn't a real estate guy. And I think

he was incorrect with some of his assessments about it. My point is, I don't know if it's possible to have too much real estate in your portfolio. And I'll tell you why. in just a second. But let's continue with Graham. Even though it was very profitable, I don't think it's that smart to hold 90% of your net worth in real estate in one city. I think it's just too big of a risk that something else could happen without having a hedge against that investment. Having 90% of your portfolio in real estate located in one city is risky. But it's not the 90% part that makes it risky. It's the all in one city that does. For example, if all your real estate was held in Detroit in 2000 and

held through, say, 2013. With no more music industry, no beer industry, no auto industry, essentially zero jobs, and then ultimately you have the city that files Chapter 9 bankruptcy, that would hurt the strongest of real estate holdings in Detroit. And here we are today. Could something similar happen to, say, Portland or New York or Seattle? And we can't forget mine and Graham's hometown of Los Angeles. Indeed, all of these cities are seemingly being primed to become the next Detroit. Maybe. I don't know. We'll see. The point here is, it's the all in one city that I find risky, not 90% of the portfolio being in real estate. If I were Graham looking into diversifying my portfolio, I would look to diversify

the location of my real estate before going into different asset classes. Yeah, Matt, but still, 90% is a lot, right? It is. But real estate, unlike a stock or a business or a bond, will never be worth zero. The value of real estate, it may fluctuate, it's going to go up and down, but if you purchase for income in the way that Graham does, and it's really the only way to invest in real estate, in my opinion, the market fluctuations don't matter that much. Let's keep going. But I think at a certain point, it becomes more important to try to preserve your wealth than try to grow as fast as possible. Now, this is where Graham is starting to make some points that not only do I agree with, I think they are inarguable. At a certain point, it becomes more

important to preserve your wealth than trying to grow it as fast as possible. At a certain point being the operative phrase here, and that will actually lead us into his next reason. Now, three, another revelation that I've come to understand over last year is the value of time. Listen, in my early 20s, my time was worth whatever I could get for it. Like, my thought was that in the evenings, if I wasn't doing anything, I may as well help out another agent to my office for $10 an hour, whereas otherwise I would be making nothing. So in that context, I'd much rather earn $10 an hour than stay at home and watch TV.

The same thinking also applies when I was renovating all of those properties. My thought was that if I spent my early mornings and late evenings managing a renovation, at the very least it would save me money from not hiring a manager. So by that metric, I would just take whatever I could possibly get for my off time. I did credit card churning, focus groups, renovations, work for other agents, literally whatever I could get. Up until that certain point, he had to do a lot that he wouldn't consider doing right now. now. And he says it again, I've gotten to a point. Here, listen. But now I've gotten to a point

where I just don't have enough time in the day to get everything done. His hard work has paid off, but the real estate focused hard work came first. And as he mentions it again, at a certain point, however, I think at a certain point, I had to take a step back and realize that I was too oriented towards real estate. And from a diversification standpoint, it makes sense to take a more hands-off approach and focus on other endeavors. This year, for example, I've invested three million dollars into the stock market. I've made three angel investments, including Yada Bank, link down below in the description for anyone who wants to try that out. And I'm in the process of continuing to grow this channel and several other startups alongside with it.

He used real estate as a vehicle to create his financial independence, to be at liberty, to focus on other things that he finds interesting. I get that. It makes perfect sense. My passive income portfolio freed me from the daily grind before I looked into other stuff, You know, teaching others how to do what I did was one of them, of which my education company now is a second business that matches my real estate revenue. And I'm now looking at a couple of other things. But we're no flukes. Private R-EIACE client, Josh Miller worked his butt off for 18 months, replaced his cozy day

job six-figure salary with passive income from real estate. And then at this certain point, he diversified his interest by starting a software company. My point in reacting to Graham's video is summed up here. And sure, it's not easy work and it definitely takes a lot of time up front. But when done right, you could potentially build your wealth faster than nearly anything else. And that's a fact. Stay focused on that work. And when you get to a certain point when you're financially independent,

then consider diversifying your assets and or your interests if you want. So what did you get out of that? Hopefully you recognize that real estate is the fastest vehicle to your financial free them. I say that here all the time. Graham said that in his video. I like real estate, but I don't love it. What I love is what real estate provides, right? It's residual income each and every month for my rental properties all the while. My wealth is being built for me underneath, right, via appreciation, amortization, and depreciation and deductions. And what's nice about real estate or specifically income producing real estate. It's not me doing all of that. Like,

that's just all happening. I did the hard work already when I found the deal and I secured the deal and I managed the deal. And now my tenants fuel that machine for me. Right? It's not me doing it. Once the hard work is done, then it just kind of goes on autopilot. All you have to do is manage the property or even manage the property manager that manages the property. And, and And all that stuff happens automatically. It's why it's produced more wealth than anything else. And so the income in that wealth creation that's now happening allows me, like Graham, to explore other things without the concern of money.

And I was just voxering back and forth yesterday with private RIAEA's client, Brendan McCaw. And he's been a train engineer for the last 11 years or so in his early 40s. And we've been working together. If I'd say the last two years, maybe right at two years, maybe just under, maybe just over. It's funny with 2020 kind of being the lost year where we were all in quarantine, I kind of losing track of time when I was speaking in years and how long I've been working with people. But he shared with me that he's just six months away from reaching his passive income goal. And that seems really, really fast based on what we talked about when we first got together and started working.

And he's going to be able to walk away from his day job driving trains. and he'll be able to stay home and he's tired of the travel and just do whatever's next, what he wants to do rather than what he has to do. The point being, put in the work. And when you get to a certain point, just as Graham was talking about, when he got to that certain point, when your income properties are supporting you, then venture off into your other interests. If you have other interests, if your interest or real estate,

then stay focused and do what you're doing. but if you've got other interests, venture off and go check it out. But don't quit real estate until you get to that certain point because it's real estate that will get you to that certain point the fastest. That's what I really wanted to take. I was really kind of hoping that people, he's got a lot, like he's got 2.5 million subscribers. I think he's about almost close to 2.5 million subscribers. That's a lot of fans.

and what I would really kind of, after I watched that, I said, I hope people don't watch this and walk away with that, okay, let's go try something else because Graham's trying something else. That would be a really sad outcome from that video. And he was very clear in saying it, but I just still feel like maybe someone walked away with, okay, well, maybe real estate's not that great. Let me go try and do this over here. But if there's something else that you want to do over there,

don't quit your real estate by any means because it's the real estate that's going to get you to that certain point the fastest and then you'll be free and clear without money concerns to go try that other thing, whatever that thing is for you. All righty, I just want to make sure that people didn't walk away with this idea that real estate is now out of fashion. We're going to go do something else. No, whatever that something else is for you, it's going to happen the fastest way by you sticking to real estate. Got it? All right. You got it. I already said that three times.

That is enough. Okay. news. First thing, really, I mean, all attention is on the president, President Trump's second impeachment, the only president to ever be impeached twice. A fun fact about impeachment, by the way, it's the process, the process by which a legislative body addresses legal charges against a top government official. So it's not just the president, it's any government official or a top government official, but it's the process. But it's the process. right? Many think impeachment is the removal from office. No, it's just a process. It's a legal process. You've got to be found guilty first from that impeachment and then consequences are handed down. And sometimes those consequences can be a removal from office. But it has yet to be done ever. No president has been removed from their office via impeachment. Had some people resign and step down.

but no one officially removed. Anyway, they're going after him. But all I got to say is, unless impeachment cures COVID, I don't really want to hear about it. I think it's a poor use of time and resources. I mean, the guy's going to be gone in six days, and this country has much bigger fish to fry. Don't they see that?

I mean, there are people, millions of people suffering. Their lives are suffering. Their livelihoods are suffering. I don't know. I just think our attention is, our government's attention is better served focused there. I mean, let's get a head start on doing what's necessary to get people back to work. Wishful thinking, though, apparently. I just, you know, I can't wait to turn on the TV again and hear something other than politics.

That may be wishful thinking too, but I can wish. All right? What else? Apple and Hyundai are nearing a deal to produce autonomous electric cars around 2024. The vaccine, about 6.7 million people have been vaccinated against the COVID-19 virus. And that's in the U.S., by the way, including four plus million in long-term care facilities. And over 22 million doses have been distributed to the United States. And then Pfizer and Biotech are raising their COVID-19 vaccine output goal by more than 50% to accommodate more demand.

So hopefully that gets accelerated and we get this economy back up. I just can't wait to return back to normal. I really miss normal. What do, in the entertainment news, what do Halo by Beyonce, rumor has it by Adele and Sucker by the, or Sucka, by the Jonas Brothers all have in common. One, they were played way too much on the radio. And two, one Republic frontman Ryan Teter wrote them all.

Remarkable. I find that extremely remarkable, having come from the music industry before real estate. You know, most songwriters hope to have just one big kind of household hit. But there was three huge ones right there for him. And yesterday, private equity, or as it was two days ago, private equity firm, KKR, bought a majority stake in Tedder's impressive songwriting catalog in a deal that values the 500 plus songs at around $200 million. Fantastic.

Congrats to him. Late night, or late Monday night, I should say, casino tycoon Sheldon Adelson died. due to complications related to his treatment for non-Hodgkins lymphoma. Tycoon, though, might be an understatement. Adelson ran the world's largest casino empire and was among the wealthiest people on earth. So rest in peace, Sheldon, and Elon Musk sells three more California homes for $41 million. This is three more. He already sold some last week and last month.

But he just sold three more that amounted to $41 million after a vow. to own no house. Maybe he's been listening to the Epic Real Estate show as he's moved to a no state tax as well. Certainly a trend over here at Epic. And Elon will now call Austin his new home. And I believe Tesla is there as well now. And then an over-the-top home that will likely be the most expensive house in the United States and among the priciest in the world is about to hit the market in Los Angeles.

The property nicknamed the one, recently wrapped up several years of construction, and it will be asking about a $340 million price tag. That's according to an architectural digest. And that may sound pricey, but it's been reduced in price. It's down a good amount from the $500 million original asking price that the developers shared. So, yeah, I guess that taxpayer is leaving as well. California, they can't stop the bleeding, can they? All righty, in sports, Alabama is once again the national champion.

So roll tied. And my Los Angeles Rams beat the Seahawks on their way to the NFC playoffs. And that's the news. If you found this episode valuable, who else do you know? There's a good chance you know someone else who would too. And if their name comes to mind, when it comes to mind, share with them and ask them to click the subscribe button when they get here and I'll take great care of them. All righty, that's it for today. God loves you and so do I.

Health, peace, blessings, and success to you. Take your vitamin C, take your zinc, and take your vitamin D. Stay out of the hospital. I'm Matt Terrio, living the dream. Yeah, yeah, we got the cash flow. You didn't know, home board, we got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.