Epic Real Estate Investing - EPREI 002 : What's YOUR Number? And HOW Do You Get It?

Episode Date: July 2, 2011

If a group of any size were asked, "Do you want to be financially free?", you'd be hard pressed to find one person that would say no. However, if you asked that same group if they had a plan to become financially free... you'd be equally hard pressed to find one that did. If so many want it, why do so few achieve it? Why do most people spend more time planning their Summer vacation than they do their lives? That probably wouldn't be the case if they actually knew how. On this episode, the "how?" is revealed. It's easier, faster and safer than most people can imagine. Get your free real estate investing course at http://FreeRealEstateInvestingCourse.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Epic Real Estate Investing Podcast, episode two. You're about to meet a man that can show you how he took control of his life and financial future and how you can do the same. He's never been on TV. He's not a millionaire, and he does not know Donald Trump. He is a full-time real estate investor, newly discovered author, and family man. He does not report to a boss. He creates his own schedule and takes his family on a few vacations every year.

He got started investing in real estate with almost no money in a really crummy credit score. And he's going to show you exactly how he did it and how he continues to do it. You will have to work. You will have to be responsible. However, laying by the beach sipping fruity drinks is a reasonable goal without further delay. Your guru. Uh, sorry, your guide to a better life through real estate investing. Matt Terrio.

Hello and greetings from the Epic Real Estate Investing podcast, the podcast that will show you how to create wealth through conventional and creative real estate investing, so you will have the option to realistically retire in the next 10 years or less and enjoy the good life while you're still young enough to do so. My name is Matt Terrio, author, full-time real estate investor and family man. If this is your first time listening to this show, you'll want to do two things. One, go back and listen to episode one. Episode one is going to give you the gist of what this show is about and why it's here. I mean, everything we discussed is going to make a lot more sense after you do that. And two, download the free real estate investing course.

How to do deals, no money required. And you can get that at free real estate investing course.com. It's a step-by-step course of which I reveal everything that I do, everything that I say, everything that I use, including the documents and contracts, everything that you're going to need to invest in real estate using no money or credit. And that's yours for free at free real estate investing course.com. So over the next few episodes, I'll be laying the foundation for you to succeed in real estate investing and helping you create a game plan to get you up and running as soon as

possible. I mean, you've certainly heard the expression that time is money. And in real estate, that couldn't be more true. So let's begin by creating a plan that will work, preferably one that will work fast, but that's going to be mostly up to you how fast it works, and then we'll move through the process and work that plan. So we're going to plan the work, and then we're going to work the plan. Because in real estate investing, as with anything worthwhile, a plan is an integral part of what type of

results you're going to produce. In a nutshell, I've come to know, and unfortunately, the hard way a few times. Yes, I said a few times. If you fail to plan, you plan to fail. Don't make the same mistakes I've made. Learn from my mistakes. Don't underestimate the value of a plan. Hindsight is 2020, as I'm sure you'll agree.

So I invite you to take my hindsight and use it as your foresight. By doing so, your journey to real estate investing success will assuredly be faster than mine. But you've got to take action on what you hear if you ever expect to experience any results, let alone success. Knowledge, it's not necessarily power. Knowledge is not power. It is potential power. You will have to take action and put your knowledge to work for your. your knowledge to be powerful.

You see, people love to learn how to do things. But most don't love to do things. Don't be among the most. That's my request. Look at what everyone else is doing and do the opposite. That's a time-honored formula for success. And this is what I mean. And you'll hear me say this every now and then.

If you do for the next two years what most people won't do, you'll be able to do for the rest of your life what most people can't do. All right? So let's begin. My ultimate goal of being a real estate investor is to receive $1 million a year in passive income. Now, I'm assuming that you're here to learn how to do the same or something similar. Maybe you want more than a million or maybe you'd be okay with a fraction of that. It doesn't matter to me, it's your life, it's your goals.

But regardless of what your goals are, you'll want to identify what that number is for you. It's like the commercial for ING. I laugh every time I see this commercial. There's a guy walking the neighborhood holding his number under his arm. The exact number he's going to need to retire. and he walks up to his neighbor who's trimming the bushes, and sitting on top of the bushes is his number. And his number reads, a gazillion.

And the guy asks his neighbor, how do you plan to reach that? And the neighbor responds as he chuckles, oh, I'm just going to throw money at it and hope something good happens. And the neighbor admits, while he's still chuckling, but now obviously chuckling in a way to mask his pain, the neighbor admits he doesn't really have a plan. Now, that's a guy that is going to fail because he has failed to plan. He doesn't know what his number is. A gazillion is not a real number.

You've got to get specific. Because if you're not specific, it's really difficult to make a plan. So now, the number I'm speaking of is not just a number, though. It's a number followed by the term passive income. Now, if you're unclear as to what passive income is or why you want it, allow me to explain as it is one of the most important concepts you must understand as a real estate investor. Or for anyone ever expecting to achieve true financial freedom. You see, most of America was raised in a household where the road to wealth and success was paved with this ideology of going to school, getting good grades, graduating, and getting a good job.

I mean, if you were raised differently than that, it's my guess you were probably raised in a wealthy household and you probably already have a good grasp on how to create wealth. However, stay with me. You never know what you don't know. As well, most of us have grown up knowing a person described as wealthy as having a lot of money in the bank or a high net worth, regardless of how much money you have, unless that money, you have, unless that money, you have, unless that money, you're not. is working for you, it has an expiration date. That money has to be working for you for that money to support you indefinitely. Besides, saving a lot of money is a rather antiquated way of creating wealth, of which very few are ever capable of doing. In fact, the new economy, it's been said by many experts, that savers will be losers. But don't fret. There is another way to create wealth,

and you'll probably like to know that it's easier, it's faster, and it's more secure for the long term. Too good to be true? Well, stay with me. You see, most people with a lot of money are able to put their money to work for them. Therefore, it doesn't expire. The reason, however, why so few are able to create wealth in this way is they strive to make and save a lot of money before they actually put it to work. Making and saving, for example, $1 million for the average person, that's extremely difficult to do. And it takes a considerable amount of discipline, not to mention time. And for many of the few that actually do it, it takes a lifetime. So I'm going to ask you to modify the definition of wealth as you know it, the definition

you've likely known your entire life, from having a lot of money in the bank to having enough money to pay your expenses every month whether you go to work or not. That's your new definition. Wouldn't that definition of wealth give you the same time freedom, the traditional definition of being wealthy would? I mean, that really is essentially why we all strive to create wealth anyway, isn't it? Being wealthy is going to allow us the time to do what we please, when we please, and with whom we please.

It's not really the money that we want. It's what the money will allow us to do. That's what we want. So imagine your monthly expenses amount to $10,000 a month. What would allow you to manage those expenses more easily? $1 million in the bank or $10,000 showing up in your mailbox on the first of the month every month for the rest of your life? I mean, which one would allow you to manage your expenses the longest?

Which one sounds easier to create? $1 million of cash or $10,000 a month in cash flow? or passive income. Now, you know your situation better than I do, but $10,000 a month of passive income not only sounds more achievable, it will allow me to manage my expenses forever, meaning my lifetime,

my children's lifetime, and my children's children's lifetime. The $1 million it has an expiration date, the passive income does not. As long as it's managed and maintained responsibly, it does not have an expiration date. So, if it's easier and will last forever, why don't more people set out to create wealth in this way?

Well, for the most part, I just think most people don't know about it. They don't know anyone that's ever done it. So why would they even think of doing it? How can you even ask a question about something you don't know that you don't know? So that's the answer for the masses. But even for the sector of the population that is in the know, so to speak, why don't they do it? Earlier, I pointed out how most people think they have to save a lot of money before they can put their money to work for them. Not true. Not true at all.

There are plenty of passive income vehicles available, even in today's economy of which you could invest $10,000 to produce $200 a month in passive income. The issue is, most people won't do it because tying up $10,000 in exchange for $200 a month, that doesn't sound like a real life changer. And it doesn't on the surface. I mean, for most, there's no appeal to $200 a month. There's nothing sexy or fun about $200 a month. Most people would rather use that $10,000 for a family vacation, a new wardrobe, a new 3D TV, jet skis. Now, that's sexy, right? Vacationing and enjoying the jet skis, that's fun.

Whatever it is for you, those things have more appeal than investing that $10,000 to create a paltry $200 a month. Here's where most people miss the point. and it can be a devastating oversight. Most people confuse $200 in cash with $200 of monthly cash flow. They are not even remotely the same. I agree. $200 in cash has very little value today.

I mean, it's a pair of Air Jordans, or it's a nice steak dinner and a bottle of wine for two. But $200 of monthly passive income, however, has tremendous value and will make the difference in you creating wealth, or not. Here's what I mean. as I'm recording this podcast, the financial institution ING that I mentioned a little earlier, they are advertising a 1.1% return for their money market account.

You get a 1.1% return on the money that you deposit into that money market account. How much money would you need to deposit into that ING account to generate $200 of monthly passive income? that ING money market account balance would have to be $218,000. That's how much you'd have to deposit to generate $200 of monthly passive income. So, $200 in cash is worth $200 in cash. But $200 of monthly passive income in today's market, that's worth $218,000 sitting in a bank account, sitting in the most liberal and aggressive interest-bearing bank account that exists today.

So sticking with this example, one could invest $10,000 twice a year and achieve their financial freedom of $10,000 of monthly passive income in about, no, no, 25 years. If one were to deposit that same $10,000 a month into a money market account instead, do that twice a year, it would take twice as long, 50 years to save our $1 million. That example alone demonstrates it takes twice as long to create wealth per our traditional definition of what it means to be wealthy. Or does it? What the example doesn't demonstrate is that that money market account would have to have a balance of over $9 million to generate $10,000 of monthly passive income, our new definition of wealth. So although it would take 50 years to create wealth and become a millionaire, quote unquote, the traditional way,

It would take 461 years for that method to pay you $10,000 a month of passive income. That's 25 years per our new definition, verse 461 years per our traditional definition. Now, you choose the fastest path to creating wealth. It's pretty clear, isn't it? In order to keep this example simple, I didn't factor in fluctuating interest rates, I didn't factor in taxes or inflation,

but the results, they're relative, meaning the same difference would essentially apply regardless of those economic factors. And there are other factors inside of real estate that would enable you to achieve that $10,000 a month of passive income much quicker than 25 years. And we'll get to that later. But the point I'm trying to make right now is that people will put off building their passive income streams, the easier, faster, and smarter way of creating wealth, because $200 of monthly passive income isn't enough incentive for them to get started.

There's no appeal in such a small monthly amount. Hopefully you now understand how significant that small amount is to creating your wealth. You've got to get started. A great deal of the credit of my own successful investing and creating wealth belongs to my new understanding of money and how it works. Don't wait to save a bunch of money to start putting money to work for you. Don't wait to start creating your wealth. Create wealth by investing what you have right now.

The road to wealth is shorter and easier through building passive income. And the sooner you get started, the sooner you'll get there. And although there are multiple ways of generating passive income, real estate is the fastest and safest way for the average person. There isn't another vehicle that I know that allows the financially educated investor so much control over their investment than real estate. And I don't know about you, but I like control over my money. I'm not going to send it to somebody and hopefully they do it right. I like clarity around my finances. Real estate gives me that. Stick around and I'll give you that. too. Now, regardless of what your number is, the amount of monthly passive income that you want to

live the life that you want, we'll all have to take the same steps to get there. And for the sake of this lesson, or for the sake of this podcast, and just to make it easier, I'm going to use a nice round number of $1 million. Anytime you hear me say $1 million, just insert your number. Now, in order to get to your million dollars, you're going to have to move through the natural progression of becoming a millionaire real estate investor. One, you've got to think. You've got to think like a millionaire investor. Two, you have to buy a million dollars of real estate. Three, you've got to own a million dollars of real estate.

And four, you get to receive a million dollars of cash flow from your real estate. That's the ultimate goal. Now, I borrowed this progression from Gary Keller's book, Millionaire Real Estate Investor. And I've spent tens of thousands of dollars on my real estate investing education, and I never stop investing in my education. I am the consummate student. I am always investing in a new book, a new seminar, a new course. I mean, it keeps me abreast of what's going on in my industry.

It keeps me sharp. But Gary Keller's philosophy in his book, Millionaire Real Estate Investor, it seems to wrap everything up in a nice little package for me. So I tend to use it as a reference when I invest and when I teach. So if you haven't read the book, it's highly recommended reading. Now, in today's dollars at today's home prices, just using basic national averages and very conservative returns, in order for you to skip the first three steps in this progression,

I mean, in order for you to just avoid the progression and jump to step four and just start receiving a million dollars of your annual passive income, you'll need $13,888,888 to acquire enough real estate to generate a million dollars of annual cash flow. $13,88,88, $888, by today's averages. Average house price, average return on that house. Now, if you have that $13 plus million in the bank right now, I mean, you can stop listening to this show and just simply call your local real. real estate agent and poof, you're done. You do not need me. But I'm going to go out on a limb

here and assume you don't have 13 plus million dollars. And in that case, what we'll need to do is start working our way towards that, which means we'll have to go through the four stages of becoming a millionaire real estate investor. That's the foundation of the plan. One, think like a millionaire investor. Two, buy a million dollars of real estate. Three, own a million dollars of real estate. and four, receive a million dollars of annual cash flow from your real estate. Now, my current journey has me sitting somewhere in between steps two and three. I continue to buy and sell real estate, of which generates big chunks of money that I used to buy and hold real estate. I do the buying and selling here in California, and then I do the buy and hold in the Midwest.

That's just been my strategy, and it's working pretty well. And I've gotten to where I am without using any of my own money and a really crony credit score using what I've dubbed the epic approach. Now, I still use it as my primary approach to real estate investing today. And after 60 plus transactions in the last two years, I've still yet to use one dime of my own money or one point of my own credit in any transaction. And that's the approach I will continue to reference on this podcast, unless, you know, if something more efficient comes along. But I can't foresee anything like that. I mean, it's working really well. But, hey, I'm open.

I'm always open to new ideas and opportunities. What is the epic approach? And don't worry if you don't get this right away. It's new to you. It's unfamiliar. That's exactly how every learning experience begins, right? We'll be covering every step in great detail, and you'll become more familiar as we progress.

There are many real estate investing strategies to choose from. There's tons. But I'm speaking more of an approach than a strategy. And regardless of what real estate investing strategy you choose to embrace and implement, I mean, whether it's lease options or fix-and-flip or short sales or multifamily, seller finance notes, I don't know, what probates, tax deeds, tax liens, foreclosures, pre-foreclosures, regardless of what strategy you choose,

they all have four things in common. There are four steps that are unavoidable. These steps are inescapable. One, you've got to find the deal. Two, you've got to analyze the deal. Three, you've got to secure the deal. And four, you've got to find the money. And that's essentially the epic approach.

But I've broken down those steps to strategically flow like this. E, evaluate the deal and decide. P, present the offer and get consent. I, investigate and negotiate, and C, come in with the cash and close. That's our epic acronym. And that's the precise order of events. If you follow the steps in that order, you will position yourself to win every single time while virtually eliminating the risk from your investing.

I know that's a bold statement right now. And it might have brought up some emotions of skepticism for you. That's okay. I understand. As we go, however, you'll come to understand what I'm talking about and slowly realize that that statement, it's not so bold after all. All right, let's get back to the epic approach. Here's a big pitfall that most investors make,

and I don't want you to make this mistake. They focus on the C of our epic approach, come in with the cash and close. And because they don't have the cash, nor do they know where they're going to get the cash, they never take step one. They never go out to find deals or evaluate them. Don't do that.

You'll never get started if you do that, or you'll significantly limit the amount of deals that you do. Most investors, mostly new investors, but experienced investors alike, even I fall into this trap today. I mean, I teach this approach, and every once in a while I have to slap myself around a little and wake myself up to get back on track. But most investors, none of them are immune to it, none of them are exempt.

They try to secure financing before they ever try to find a deal. And what so many don't realize, I mean, even those that do realize, what they frequently forget is that the money or the financing it's infinitely easier to find once you have located a deal. And more specifically, once you've secured a deal, meaning having a deal under contract. Now, if you have a good deal under contract, the money, it'll essentially find you.

Again, I feel the skeptic alarm going off of you. Hang in there with me. You'll get it. If you have a good deal under contract, the money essentially finds you. I mean, who doesn't want to be a part of a good deal? You see, this is a big reason why so many fail at real estate investing. They're so scared of what's down the road a mile,

meaning that they don't know where the money is going to come from. They're so scared that they never travel the first 200 feet. They never even look for deals. Or maybe they look for deals, but they've got no real intent of doing anything about the deal if they were to find one. This is a very limiting approach, if not an overall approach leading to frustration and discouragement and failure.

So don't do that. Travel those first 200 feet. and when you get there, you will see further. I mean, how ridiculous would it be if you were parked in your driveway in the morning, getting ready to go to work, and you waited for every light between your home and the office to turn green before you ever pulled out of the driveway? I mean, you would never get to work, would you? And that's how most people conduct their real estate investing.

Most people wait for every light to turn green before they ever make the first move. The lights will never all be green at the same time. I promise you. travel as far as you can see and when you get there you will see further and then you too will be traveling that road to becoming a millionaire real estate investor from this episode today here's what you want to get what's the monthly passive income you will need that will allow you to live the life that you want a quick and easy way to figure that out is to add up your monthly expenses meaning your bills make sure all of your responsibilities are taken care of then add up the amount of money

you would need to enjoy some of the finer things in life maybe you you want a monthly clothing allowance maybe a monthly dining out allowance maybe a monthly weekend getaway allowance maybe you want to do that twice a month maybe a monthly discretionary allowance money you can just blow on whatever you want whenever you feel like it maybe an allowance for tithing or charity maybe an investment allowance for you or your children remember the college fund whatever it may be for you imagine an ideal month for you and your family and then add up how much that ideal month would cost and that would put you pretty close to what your number is is with the intent of once hitting that monthly passive income number you can live that ideal month

every month so first come up with your number and second commit to moving at the speed of instruction focus on the first 200 feet and have faith that once you travel those first 200 feet you'll clearly see the next 200 feet don't let the unknown that exists a mile down the road stop you all of the lights will never be green at the same time okay come up with your number and come commit to moving at the speed of instruction. And on the next episode, we'll take that information and cover the most important element to your real estate investing.

I mean, without it, you just don't have a chance. And because it's that important, we're going to cover it right in the beginning. We'll cover it next. So until next time, and as a very wise man once said, intellectual growth should commence at birth and cease only at death.

Never stop learning. To your success, I'm Matt Terrio, living the dream. Thank you for spending this. time with Matt Terrio and the epic real estate investing podcast. When you have a moment, stop by iTunes to leave your comments and let us know what you think of the show. And if you haven't done so already, get started investing today by visiting free real estate investing course.com to access Matt's free course, how to do deals, no money

required. Until next time, to your success. To your success. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.