Epic Real Estate Investing - Eliminating Debt? No. Do This Instead. | 798

Episode Date: October 7, 2019

This Monday, Matt explains why being debt-free is significantly prolonging your journey to financial freedom. Take a listen and find out more! 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 REA.

iAase.com. Here's Matt. All righty, so let's say that you've come to the conclusion, as I have, that real estate is the final frontier where the average person can build real wealth in a reasonable period of time. And you're excited about obtaining some cash flowing real estate, and you even like the idea of using a turnkey partner. Let's say all of this fits your situation right now.

But, you know, maybe you're a little stuck in the sense that you don't have to be. have the money to pick up this first or maybe this next property or more likely you don't think you have the money. So where do you find the money? Well, there are many places to look. But at the moment, let's just focus on one of those places, the equity. The equity that's already inside your house or maybe in other properties you own. Now, before you get all excited, whether it's a positive excitement in the sense that you didn't think of accessing that or maybe a negative excitement in a sense that no way, Jose, am I going to do that? I'm trying to pay my house off. That money is staying put. I want you to consider an alternative way of thinking about it.

You see, I'm in the mindset that my money should not get to retire before I do. And that's precisely what home equity is. It's literally retired money. It's no longer working for you anymore. But you still get up every day and you go to work for it, don't you? Yes. Me, I'm not okay with that. I'm going to retire before my money does. That's the decision I've made and my money will support me in retirement. I'm not on the face of this earth to support my money. My money is here to support me. Now, the idea of tapping into the equity of your primary residence is a topic that can generate a lot of confusion and even anger in some regards. And I'm not saying the strategy is right for everyone, but the only way to know for sure whether tapping into home equity is going to be

right for you or not is just to do the math. There's no room for emotions and investing. There's no room for feelings. It's just math. So focus on the math. You know, I spent a lot of time trying to instill the notion into people that debt freedom and financial freedom are two different things. You know, a lot of people, they collapse those two. But the truth is that being debt free does not mean you are financially free. No one ever retired on debt freedom alone. Placing so much focus on attacking your debt without building streams of income, it's kind of like a football team trying to win a game through defense alone. It's like focusing more on, you know, saving a nickel than making a buck. If you're going to win the game, you've got to score points. You need offense

for a complete game plan. And there's nothing wrong with being debt free, by the way. I'm not against it by any means, but it's just not enough. It's not going to get you to where you want to go. And people place so much focus on that and it's a main priority for so many. It's not going to be enough. And by working on eliminating debt or staying debt free, you're really significantly prolonging your travels to financial freedom. You know, being debt free is not going to get you to where you want to go in a time that you want to get there. There's still work to be done. and that work does not consist of eliminating debt, not yet. Of course you can eliminate debt.

I just suggest not doing it first. So here's what I mean. If I could take money out of a property that I own, especially at today's historically low interest rates and redeploy that money into another cash flowing property, I'm all over that every time I have the opportunity to do it. And this can be done by refinancing any of your property, that are carrying a mortgage, including your primary residence and taking cash out.

You know, depending on what interest rate you're refinancing out of, it is completely possible that your new personal home mortgage payment may stay about the same as it was before, or maybe even drop a little bit. And there alone, right there alone, you would be in a better position with regard to your monthly income to expense ratio. But there alone, you wouldn't be. You see, you'd also have the money to purchase and own a new income property via the cash that you refinanced out. And even if this refi did raise your monthly mortgage payment a little bit, the new income property would cover it and then some.

See, you unretired the money that you had in your property and you put it back to work. You put your money back out on the streets and now it's working for you. It has improved your situation by acquiring another. asset. By acquiring another asset that one, covers any debt that you may have experienced via the refinance, two, by depositing additional cash into your bank account each and every month, and three, the tenant is paying off that new asset for you. Now, if that's not having your cake and eating it too, I don't know what it is. But maybe the math isn't quite this perfect in your situation. I understand. And just one move like this might not be checkers.

mate on being financially free. But if using home equity to acquire this first property breaks a mental log jam for you, if it gets you in the gain, if it increases your monthly income, even if only by a little, and begins a snowball effect, helping you to acquire more and more assets, more and more properties, then it may be something to seriously consider. And once those streams of cash flow are established, by all means, you then may want to redirect them back to pay off that debt. I mean, think about it. That cash you borrowed out can be paid back.

And that debt will end. But your cash flow from the new property that you acquired, that's going to go on forever. It's a move that's responsible for many of my client's success. And it's this strategy that keeps my own personal portfolio growing. So as you look for ways to start on that path to financial freedom, this is a strategy that you may want to consider as well. That's it for now. God bless to your success.

I'm Matt Terrio. Live in the dream. The cash flow. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home for us. We got the cash flow. This podcast is a part of the C-suite Radio Network.

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