Epic Real Estate Investing - How to Profit First Without Sacrificing Your Bills and Responsibilities | 1168

Episode Date: October 23, 2021

In today's episode, Matt is joined with David Richter, a founder and owner of Simple CFO and the author of the upcoming book Profit First for Real Estate Investing! Stay tuned and learn more about David's background, how he got inspired to write his book, and how to profit first without sacrificing your bills and responsibilities.   BUT THAT'S NOT ALL! In the crypto portion of today's show, Matt points out the mistakes young crypto millionaires are making by pumping their bitcoin profits into luxury real estate. Find out how you can avoid these mistakes and more importantly how YOU CAN DO IT in the right way!   Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Welcome. Glad you made it. I am back with a brand new episode. I took a little bit of a break last week for our Epic Intensive. And it was really great to meet you all in person here in Las Vegas. And I'm also back with a brand new podcast set up as I listened to the last episode and the audio quality was awful. It made me cringe. I don't even think my very first episode sounded that poorly.

And maybe you noticed, maybe you didn't. I don't know. But it stuck out like a sore thumb to me. And so I just moved into a new home and we had to say. set up a temporary office slash studio here in the house. And hopefully this will sound better. If it doesn't, I'm going to make changes next week. I'll just keep dialing it in until our new office, our whole brand new office space that's

being built until that's complete. All right. So in today's show, I am sitting down with the author of a new book. It's a book inspired by one of the more transformational books for me in the last four to five years. And what he did is he took that book and adapted it just for real estate investors. and he's showing them how to keep more of their money that they make without really making any sacrifices at all, not any sacrifices to their lifestyle, to their debts, to their responsibilities.

I would, I've been calling it a game changer for me for the last couple years. But in hindsight, over the last five years, I've been implementing the practices that are in this book, I would actually call it a lifesaver. And that is a really big game changer, right? If you're saving your life. So that's what it's done for me. I can't wait to introduce you to him. But first, young crypto millionaires across the United States are pumping their Bitcoin profits into luxury real estate and really completely missing the mark with every single investment.

I'm on the sidelines. I'm watching what they're doing. I'm like, wow. So I'm going to explain what they're doing, how you can avoid these very costly mistakes that they're making. But more importantly, how you can pull it off the right way. Even if Bitcoin's new all-time high this week didn't render you a crypto millionaire. Don't worry. You're not late. There's plenty of time. Just don't wait too long. All right? Let's go. Welcome to the all-new, Epic Real Estate Investing Show. The longest running real estate investing

podcast on the interwebs. Your source for housing market updates, creative investing strategies, and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require visual support. To get the full premium experience, check out Epic Real estate's YouTube channel, Epic rei.tv. If you want to make money in real estate, sit tight and stay tuned. If you want to go far, share this with a friend. If you want to go fast, go to r-eI-Ase.com. Here's Matt. All right, so please help me welcome to the show, author of the upcoming, very exciting book, Profit First for Real Estate Investing, Mr. David Richter. David, welcome to Epic Real Estate. Thanks, Matt, for having me on. I'm excited to be here.

Yeah, no, I'm super excited. And just wanted to acknowledge you, I mean, when you told me about this project that you're working on with Mike Mishlowitz, the profit first concept for real estate investing specifically. I was like, from what I knew of you, I was like, wow, this could have happened to a better person. There could be a better person in charge of this so important message. And so I want to hear all about how this all came together. But you know what? I want to know more about you. What can you give me a little bit of your background on what you're doing just before you decided to get involved in real estate investing?

Sure. So take you on that journey. So I read Rich Dad Poor Dad in college. I know it's like that book keeps coming up. Should I read that book? Is that a good book? Yeah, I think you should read it. Maybe. Yeah, it's pretty good. So someone handed me that book in college and it was off to the races. It bought my first house, fixed it up. It was off of HUD. Put a, you know, rented it out, did pretty well. And then I actually lived in it for like two years and then did a lease option after that, which was a great. thing when that and it was the weirdest thing like the first deal had super tenant he was paid early then six months later cashed me out and i got like tax free capital no capital gains because i had lived in the house so i was like i got to do more of this so that's where i started buying some more properties building a little portfolio i started working with a real estate investing company too and was buying deals from them on the side like to build my own little uh rental portfolio there and

And that's where we scaled a business from about five to six deals a month, wholesaling to about 25, 30 deals a month. And we were doing fix and flip, wholesale, hotel, retail, you know, like anything in between turnkeys and lease options, like everything. We had rentals. So it was a good learning experience because I also got to sit in every seat during that time, like acquisitions, dispositions, project management, property management, transaction coordination, the finance and accounting.

And that was one of the last seats I sat in was the finance and accounting. And I'm like, you know what, I like this. I like seeing finally, like why it was good for me to go out, find the seller, you know, lock down the deal, then all the way to the end when we sold it or, you know, we used to optioned it or rented it, just seeing how the money moved throughout the company. But it was also very telling too because I got to see us go from like five employees to like 25 and 30. And like we can make seven figures a month. But if you're spending seven figures a month, it's like not a happy, happy business.

So it was just very telling on the back end. That was what triggered me first. I was like, I like the finances. I like that side of the business. But I know there has to be a better way than just doing the same thing over and not gaining any ground. So needless to say, once we discovered that, the business had to make some pretty major changes. So my wife and I, because at this point, we had several rentals and could pretty much live wherever. We moved across the country and started we lived in Virginia.

working with an investor there and sold my portfolio. It was a fun time. And then start working with him. First thing I said, I got to open, open your books. Like, open your finances. I want to see what's going on. Because like, now I don't trust anyone when they say, you know, yeah, we're doing great and we're making this much of deal.

I'm like, that's great. That's great. Show me your numbers. So I dove in there. And it turns out, like most real estate investors, it was like, they didn't, he didn't have the actual numbers. He had the bookkeepers one putting it incorrectly. didn't have anything that he could actually go off of. So clean that up over the course of a couple

months, got him his numbers. And then we figured out right away that he was super under leveraged on a bunch of his rentals that he had. And he was right away able to refinance, pull several hundred thousand dollars out. And he looked at me and said, this has changed my life, like this process of just knowing where I stand because he was able to cut a ton of stuff and like make actual bottom line profit. I'm like, this is awesome. So I think I want to do this with more people and like help the real estate investing community. And that's what started the company that I started simple CFO. But I had a mentor at that time who I called and was telling him about this idea of what I had for a business of like what I had just done with this company. And he's like, yeah, that sounds great.

Have you read profit first? Because I think it deals a lot with what you're wanting to do. And I said, no, I've never read it. So he's like download it, read it. So I did that night, downloaded the audio book, which is if you've never read Mike's books on audio, they're hilarious. He's just, he's very real, very personable on there. So I read it in one sitting that evening, took 10 pages of notes and said, this is it. This is the framework that I want to teach with the company that I'm going to start to make sure that people are actually cash profitable and know where their money is flowing. So that's what really started in. So then I started actually helping real estate investors in about six to eight months in after seeing it work, you know, over several quarters with people,

I reached out to Mike and said to Mike McAowitz and said, hey, you know what? This is working. You know, it's working in the real estate investing community. And I said, I'd love to write a book Profit First for Real Estate Investing. And he was like, yeah, that sounds amazing. I've been speaking to some real estate investing communities and I think they need their own book. So that was kind of the whole start of my real estate investing career all the way to partnering up with Mike. to get this book out to build it's fantastic yeah we've had mike here on the show a couple times a really great dude and you're right all of his books are very entertaining he kind of makes what would normally be boring and mundane subjects he makes them very exciting and entertaining and

fun to listen to and so he's exceptional in that regard and just a really smart dude so all it took was to pick up the phone and make the connection huh yeah it was uh i emailed him and said hey you know like can we i'm thinking about writing this book can we do that Because I was also, I became a part of, he's got a community of people as well, too, that you can join Profit First Professionals. So I was a part of that. I wanted to get closer to him because this was like something that I wanted to do. So it was just, you know, providing value there back to him.

And then it was like, hey, do you think that this is a good idea? From there, it's history. And now I actually have the physical book behind me and it's going to be a launch in here soon. That's awesome. I want to talk all about it. You know, you just said something that I think is something worthy of being. shared in in high school but you know you probably not taught by anyone that has ever done this before so how could they teach it but just the fact of you know we you and i we met in a mastermind group

and i've been i don't know we probably spend at least mercedes and i spend at least a hundred thousand dollars a year oh yeah on masterminds and networking events and stuff like that easily and you know when you first get in they're exciting and you get at the first sessions you take a bunch of notes and you get a bunch of stuff. But then after a while, that that, that, that busyness, that flurry of activity kind of subdues a little bit. And then it gets down just to real relationships. And that's, you know, most people vote or vote.

Most people join for the purpose of, you know, getting in for all the tactics and the strategies and stuff like that. But after everything, all that calms down, you know, you really start to pay attention to the relationships and the resources and the resources that your relationships have access to. And that's where all the real difference is made. and you know, you join this. You want to get close to somebody like a Mike Mikulowitz. You call him McAulowitz?

I thought it was Michelowitz. Oh, no. Yeah, it's, yeah, Mike McAulitz. Okay. All right. Well, then I've been corrected. He also says, I just go to, what is it, Mike Motorbike. Mike Motorbike.com, yes, it's like, no one can say my name, so just go there.

It's hilarious. But, yeah, so it's like, it's such a shortcut and it's such a hack. And it takes some money, but when you evaluate the difference between time and money, it's actually, regardless of how expensive it may seem to be, it's always cheaper to spend the money. Right. The money is the renewable resource. The time is the unrenewable resource.

Yeah, I totally agree. And also at the beginning of my real estate career, like working with that investor, I work for free for like nights and weekends until I started with that company because I was like, I want to provide value to them. So it's almost like a progression of, okay, I'll work for free. Now I'm working in the company. now I'm going to these other masterminds and being able to. It was like, just how can I provide value wherever I am?

If I'm just starting out, then it might be, hey, I have a specific skill set. Are you looking for this and can I provide value for free, you know, for a little bit here and work together so I can learn and just being very upfront. And then you get to these other rooms like you said. And it's like, it's not about the tactics now. It's about the relationships that I can build inside of these rooms. For sure. All right.

So profit first. Obviously, you saw it make a difference. What are some of the major differences, say the three key differences you sought making real estate investors businesses? Sure. Number one, not living deal to deal anymore. So many people live deal to deal just like people with paycheck to paycheck. And being able to have a safety net and not have to live deal to deal and make decisions under stress and duress all the time. And like they need that next deal just to eat. and that just creates lots of havoc.

So that was definitely one of the big things that has come out of this. I would say also being able to, you know, like at tax time, having the money there, we just finished our quarterly with a lot of the clients. And a lot of them have said, you know, like we've seen that tax bucket grow. And like now we're prepared. Like next quarter in January, we're going to be able to, you know, it's the first year that we're ever going to be able to pay the tax without having to worry about it, just not have to lose sleep or do the three extra deals next April.

you know, or next October, whenever the next tax bill is going to come due. So that's been another big thing. And then one thing that I wasn't expecting or didn't even think about it until we started helping people was once you get to the point where you're profitable and you have money in your different accounts and you actually have this cushion of safety, we have clients now rethinking, do I want to scale or do I want a lifestyle business? Do I want to stay the small and very profitable and where I'm working five, ten hours a week in the business, but making a lot of money or do I want to invest in people and grow this thing? And like, is it the bigger, like people are asking themselves because some people are going both directions like people who are smaller thinking,

maybe I do want to grow in scale because now I can do it because I'm profitable and can do it from a place of actual cash. And some people have thought, oh, I always wanted to scale, but this is really nice. Like, I don't have to, you know, I can take Fridays off all the time. I can spend more time with the family, go on these vacations and not worry about the money. So that's been another thing that's been very telling over the last few years here, just people making those decisions too. Oh my gosh. Boy, that was that was a big one. That might be the biggest one for me, actually, specifically recently, we had already talked about this on your show and everything. I've read the book four years ago and implemented it almost immediately with total reckless abandon.

I got into just taking off all of the profit and paying and just kind of living off what was left over and automating that whole process and getting to a point where, okay, so everything, all of these, you know, important things that we all have to do, such as taxes and stuff like that and pay bills and eat and keep a roof over our head and do that for the people that we love. And there's still some left over. Then you do start deciding, do I really want a billion dollar real estate investing business? Right. Do I really want 10,000 units?

Do I want to be Grant Cardone? Do I want to be Don Trump? Do I want to be, you know, the Irvine company? Like, do I want to go, you know, do I want to be that big, which is what I thought I wanted to do, you know, just a few years previous? And now I'm like, eh, you know, this is kind of cool, just sitting around and not being pressured and living that deal to deal. And so good, good observation.

And it happens to be mine as well. Awesome. Yeah. Let's see. I guess going through this process, what surprised you the most? Are you talking about writing the book or going through the process of the business? I want to make sure I answer the best to help. I wasn't sure exactly what I meant either.

I started to decipher that in my head as the same time you were. I would say, and maybe you've already answered it, but as far as reading the book and then the practical implementation, what was to say the thing that's, you're most surprised by. Probably what I talked about there being able to choose between those two. But then the other thing I would say, too, is how much better it is to talk with people about their finances once they actually have a system and know those numbers and are confident in them, because then they can make an actual plan. Because what keeps people up at night is being fearful about the money. Usually it's not about do we have enough or whatnot. It's usually they don't have the specifics of, well, if I need this much more, I can either go find that or make that.

But a lot of people don't have that, the basic numbers of where they stand. But once they have that, they're able to have these communication and this dialogue with, you know, like we have our CFOs talking with them. But then also, another thing that surprised me was that when people talk, like they don't, a lot of people don't feel like they deserve as they grows, that they don't deserve to take out more or like, will this hurt the company or just a thousand, questions that go on in their head of, okay, we're doing well. Now I know the numbers. I know that where our expenses are. And now we're actually making extra. Do I take it? You know, and like profit

first, we're on the percentages. And the percentage might be staying the same from this month and next month. But we just did three more deals. You know, like, is it okay for me to take more? And having those conversations and just being open because a lot of people, unless they came from an entrepreneurial type family or had a mom and dad that talked about money, they've never talked about before with anyone. And it's very personal. It's very just, you know, they don't like to have those conversations or feel, you know, out of place, especially if they're doing successfully. So it's just getting that in there and saying, hey, this is where you are. We can see the cash right here in these accounts. We know that you're okay. It's okay for you to take money. We had someone, another thing that

surprised me, over six figures in his savings, you know, like when he first started with us and he was fearful to take out like $4,000 to buy a nice watch for himself. You know, like he was scared that like, is this going to ruins? You know, like, am I going to start down a slippery slope? And it's like, well, we just need to talk through that with him and say like, hey, you know, it's okay to do this because if you're already asking those types of questions, you're probably going to be okay doing it and not wreck the company. So it's just giving those people permission and permission from actual numbers that they can see

from their bank accounts. So that's been a lot of it. That's interesting. You know, I sit over here in Mercedes and I. We work on our own four little walls. We have a few employees. And then we get out here and there to the mastermind groups. And, you know, we mingle and interact and we always have a blast.

We end up doing more partying than we do learning. But I guess that's how the networking happens. Yeah. But, you know, at those events, you're always comparing, you know, what does your business look like? What are the challenges you're dealing with? Where are you getting your victories and the wins or where are they coming from? And we see things happen so differently on our end.

But then when I hear stuff that's like, oh, my gosh, we're experiencing that as well. And I thought that was just us with regard to, you know, when I was in the music business, I'd write $8,000, $10,000, $12,000 checks every month to like the source magazine or Vibe magazine for a full page ad to promote one of our records. But I would go to a foot locker and $100 bucks for Air Jordans was just way too much for me to even. You know what I mean? Right. Yeah. It's like you had to give yourself permission. And I found those same type of similarities when we got under real estate. But getting that, like knowing that everything's automated and everything's going to be okay and everything's above board, it is a very comforting thing. You know what? I think the most surprising thing for me going to this process was and I was very nervous to do it. Because as well as we were doing and as well as it appeared on the outside and as well as the gross receipts looked. Because we, you know, we made a lot of money. But we just, it just seemed to disliked. disappear every single month and in overhead. Now it does always be screaming about overhead.

I'd be screaming about payroll. I'd be screaming about all this. And they're like, Mercedes stopped buying so much stuff at home goods. You know, I was like, we're always talking about that. And then I started thinking like, gosh, we make a really good living by, you know, probably 99% of the country's standards and were effectively broke, you know, like we are living that deal to deal. So I was really nervous in implementing this thing, but I knew I needed to do it.

And it was a point, like we've done this for four or five years. and like a change had to happen. So I started really small with just, I went around and he says, go open these different bank accounts. There are places that are a little bit difficult to get to. Right. And so it makes it a little,

there's a little bit of a barrier there. So you can't just go take the money anytime that you want. I mean, get it anytime you want, but you got to, you got to burn some calories to get there. So I did that. And I just started these little deposits of $50 a week.

And that just seemed like all the money in the world at the time. Like, I'm going to need this $50. And after just a few weeks, I forgot it had even been set. I was like, oh, well, look how much, oh my gosh, I have $250 of disposable cash I could do anything I want with. It's like, and this might sound really funny on someone that owned, you know, up to 350 units. We're down to about 50 units now and 50 notes and those support us, but having that disposable cash at the ready, that was like, oh, my gosh, there's $250 or what could I do with that, you know?

Yeah. And so we bumped it up and to $100 a week and bumped it up. to 500 bucks a week and we just keep on bumping it up. Yeah. And what's been so surprising is how little do we actually need to pay our bills? Like we were telling ourselves some sort of story and living in some sort of, you know, crazy fog. And, you know, when you start looking at the numbers and it's just start being forced to live

on what's in your bank account, you tend to live on what's in your bank account. Right. You know? Exactly. Yeah. And so if you take some out, then you just make it work with less. Yes. And so it's been remarkable.

Well, it's been a total game change. And we were talking earlier on your show that, you know, I've talked about the same three books all the time that these have been the most transformational ones. And now I got four. And profit first is one of them. And do I dare say perhaps the most? You know, maybe it just seems like it's the most transformational and that's had the biggest

change because of when I found it. Like those other books got me to the point where, you know, I was in control of my own finances and control of my business and was able to build something really nice. But then once you get to that level, it's like, okay, now what? And I think that book is like, now what? Right. Exactly. That's why I love this.

That's why I went to Mike because I was like, you know, Robert Kiyosaki's books, great. Richest Man in Babylon, great. You know, like all these books that say pay yourself first, great. Now this is how you do it. This is how you do it consistently and automated. So yeah, that's why I love this book. Totally. So with that said, you know, and it might not have that big of an impact on somebody,

unless they've gone through the pain of living deal to deal. So let me ask you, like, who is the ideal person that should be reading this book? I will say the ideal person is, if you're just starting out, even if you haven't been living deal to deal, that's probably the ideal. You know, like starting from your very first deal. I remember I was interviewing someone else for the podcast and they said, if I would have started this when I first started real estate invests, I added $5 million more in my account right now. 100%. And it was like, so that's the ideal person. If you're just starting out, read it. But if you're at your thousandth deal and you are living deal to deal because you're doing a thousand

deals a year, but you're not making any money, that's probably the neck and neck for number one. If you've never done a deal or if you've done a ton of deals and you're feeling like you're just stuck in that rat race, those are the people that I feel I can get the most from this because it's like start off on the right foot or now transform your business from being this cash eating monster to actually serving you. 100%. So learn from others' mistakes because you won't be here long enough to make them all on your own.

Right. Right. I wish I could take credit for that. But that was Mr. Mark Twain that said that. And I just thought about that inside of my own do-over, so to speak, when I went from music to real estate. Yeah. I was like, okay, this time I'm going to listen to what other people are telling me.

Right. And so you that are listening, if, you know, you are just starting and you haven't done a deal yet. This is where you need to start. And I think I even said this several years when I first started the podcast when we started about building a team is this is who's the first person you should add to your team. And I said, this is not the answer. Everybody wants to hear. I'm going to say bookkeeper. I'm going to say bookkeeper because if you try to fix that stuff retroactively, it gets very complicated and very expensive, very fast to go untangle that, right? And so your profession, are you a CPA? Oh, no. That's where my story is very,

Very unusual. I have a real estate investor. I basically told you how I started the company. I went to college for secondary education to teach people. And so, no, I don't have a CPA license or anything. I have a team. My company is a fractional CFO service and I've got people much smarter than I, the actual CFOs and have their MBAs and graduated from MIT. And so that's who is on our team and providing the actual service to our clients of here. Here's how we implement this. And that's where I probably can teach. That's what I like to do. That's who I am.

And that's what I want to convey is just you don't have to live deal to deal. So yeah, no background in that. I just saw the school of Hard Knocks and real estate. And I saw like this is a huge need. People need to stop living deal to deal. Amen to that. So on that note, when will the book be available for people to go out and get?

The book is available for pre-order if you're listening to this before December 7th. If it's December 7th or past 2021, then it is available on Amazon. So you can go to simple CFO book. That's simple CFO like chief financial officer book.com. That's where I'm housing the actual page for the book, where you can see if you want more info on it. If you are bulk buy orders to save and discount,

you know, like if you want to give them away or whatnot too, this is where you would go as well. So, but you can pre-order right now on Amazon or order it from there. That's super. Thanks for mentioning the bulk buy, because I think I will start buying those in bulk. You said something about the fractional CFO service, and this is something that we've hired out about three years ago.

Is this something that this is a business you are actively running right now? Correct. So we have about eight CFOs on the team right now, have another 10 that are going through our certification to help more clients. So that's where we are. We're helping on a fractional basis. So what does that mean? What's a fractional CFO?

Or what the heck is a CFO? So chief financial officer. So if you're, we work with a lot of people who are making between 500,000 to 10 million, like in that in that pocket there because you're too small probably to have a full-time CFO, $150,000, $250,000, $250,000 full-time CFO on your staff, but too large not to have someone helping you with the finances and getting the cash flow in order and knowing your numbers and having regular meetings of like, you know,

are you taking enough money? Like, are you paying yourself? Like, are you going to be able? able to grow the business to where you want to grow it and not have these mental blocks and barriers. So that's what we do and what we provide in kind of that niche. So as a fractional CFO. So it's a fraction of the price and it's not a full-time staff member. It's usually either once a week meeting or once every other week depending on the owner and their business and the complexity. Super. Awesome. Well, David, it's been an absolute pleasure. Let's do this again. Keep us up to date.

And then, you know, once we get closer, I guess we're just, as we're recording this, we're just a couple months away from your business. So let's do something special for that. Awesome. Would it love to. Okay. Yeah, I'm totally down for that. Perfect.

And then I'll go pick up a bunch and then, yeah, we'll make a party out of it. Awesome. But I love that. Okay, David. For sure. You have a good one. Take care. You too.

Thanks. Bye. We'll be back with more right after this. Boating for flight 246 to Toronto is delayed 50 minutes. Oh. What? Sounds like Ojo time. Play Ojo?

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Concerned by your gambling or that if someone close, you call 186653300 or visit Comexonterio.ca. Hope is not a financial strategy. Let's get back to work. Young crypto millionaires across the United States are pumping their Bitcoin profits into luxury real estate and completely missing the mark with every investment they're making. I'll show you what they're doing, how you can avoid these very costly mistakes, but more importantly, how you can pull it off the right way, even if you're not already a crypto millionaire.

Let's look at what they're doing, the expensive mistakes that they're making, and most importantly, how you can get in on the action and do it the right way, even if you're starting from scratch with zero cryptocurrency to your name. It was this week. I stumbled upon an article on the real deal.com. Meet the 20-somethings funneling their crypto millions into real estate. Now, I didn't have any specific expectations before reading it, but I was shocked to see how much they've made, and I was even more shocked to see how they're painfully giving

so much of it back when diversifying it into real estate. I mean, they are losing millions. Maybe it'll even amount to billions once it's all said and done. You know, we've seen this play out with lottery winners, you know, where they win big, and then they're more likely to file bankruptcy in the next three to five years than the average American who never wins. So here, this article started with a young Hank Wu, who was an early adopter of cryptocurrency in 2010-ish. He invested heavily in made millions, writing the meteoric rise of Bitcoin.

Since then, he's sold around 80% of his crypto portfolio, putting his profits into other investments like backing startups and increasingly buying real estate. Seemingly, a smart move. But wait, there's more. In 2018, Wu bought seven garden-style rental units in West Palm Beach, and he's about to close on a condo in Manhattan. And during the pandemic, he went into contract for another one-bedroom unit in Manhattan for $1.8 million. dollars. He paid for it in all cash funds that he wouldn't have had if not for his adolescent crypto bets. You see, Wu likes real estate for the fact that he can rely on it never going to zero, of which I totally agree. In fact, I say that all the time. Real estate will never go to zero. Something you can't say about stocks or crypto. Now, Wu is just one of many who have made millions from cryptocurrency and are now looking to park their crypto riches

in the more stable and tangible asset class of real estate. According to brokers and crypto fund managers from New York to Miami to Los Angeles, crypto wealth is being pumped into luxury real estate properties by the wheelbarrels. Now, whether they're first converting their crypto into cash or using Bitcoin directly to buy property, they're creating three huge problems for themselves. For example, James Keough, a broker at Douglas Elliman in the Hamptons, recently bought a new four-bedroom home for $2.1 million. million dollars. Now, after putting 10% down in cash, he converted $250,000 worth of Ethereum to pay

another 15% down at closing. So problem number one, by converting his Ethereum to cash, just like Wu did, he created a significant taxable event. Per the article, Keo's earnings were classified as short-term capital gains and therefore subject to higher tax rates. So doing the quick and dirty math, based on the ability to purchase a $2.1 million home, we're likely talking about a 30-7. percent hit, amounting to $92,000. And that's just the federal tax. You see, James is a New York resident, so you can slap another 10% state tax on top of that. So, roughly speaking, federal and state tax combined, that's just shy of a $120,000 hit to the old net worth. Now, here's problem number two. Kio said of his Ethereum stash, if I had sold it a week later, it would have

been worth $400,000. So mistiming of the market took another $245,000 chunk out of the old war chest. So collectively, a $365,000 loss on a single real estate purchase. Ouch! Over the last year, cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin have seen explosive, unprecedented growth. Bitcoin jumped a staggering 800% from April 2020 to a high of 63,000 on April 15th, 2021. Even with its considerable backslide as of the recording of this video, it's still up 400% year over year. Now, I think it's wise to take some profit off the table and diversify into other assets, but it can easily be a foolish move if you do it wrong, like Wu and Keo did. And likely what

most of the others are doing too. And I'll get to the huge problem number three in just a second. But problem number one, they're paying through the nose in taxes and they don't have to. And problem number two, they've atrociously interrupted their investment growth by selling their crypto. They didn't have to do that either. Now, Problem number three, their portfolio has grossly slowed relatively to a crawl under the guise of diversification. And they don't have to put up with that either. You see, with just a few tweaks, this diversification play can still happen without the losses. And I'll show them to you in just a second.

But who knows? Maybe they've made so much money, they just don't care. And if they're okay with that, it doesn't bother me a bit. If their money, they can do with it what they please. But I will admit, I'm a little envious that they're half my. age and that I didn't start investing in crypto when they did because I could have. You see, I had the opportunity and I passed on it. But, gratefully, we're still very early in the game of this new asset class and I am catching up.

You know, perhaps being twice their age and having more life experience under my belt is actually an advantage. You know, I've learned firsthand more than once that life can just come along at any moment without notice and just kick you right in the teeth. And when it does, you can't help but think about the time and money that you've squandered in the past, wishing you had the opportunity to go back and do some things differently. Anyway, back to the reason for all of this, to show you how these profit-taking portfolio diversifying goals can be accomplished without the losses. You see, here at Epic, we build systems for aspiring investors and busy professionals that cause their money to work harder for them than they did for it. And here's an example of what that's looking like today.

Since 2017, I've been dollar cost averaging with post-tax dollars into Bitcoin and other alt coins. That decision four years ago has resulted in a 600% return today. Then, a year or so ago, I started depositing all of my coins into a decentralized finance bank account where I could borrow my profits without selling any of my coins. And because I borrowed my profits, there's no actualized profit to tax. I then use my borrowed profits to open a life insurance bank account that's very conservatively invested in the stock market, producing a 5% return. I have since borrowed against the capital in that account without selling any of those stocks to purchase income real estate. Again, because I borrowed my money, no taxes are due.

The income from the real estate then pays back the crypto and stock loans that I gave to myself, of which the interest that I paid on those loans is tax deductible. Next, I refinanced the property, pulling out a bunch of equity to buy more cryptocurrency where the process then repeats. So, let's break it down. What is actually happening here? First, I did pay my fair share in taxes on the money that was originally invested in the crypto. And at some point, I may have to pay tax on the income that the real estate produces. Likely not, though, due to how the tax code favors real estate. But I'll never have to pay capital gains tax on the crypto, the stocks, or the real estate because I'll never have to sell it, nor do I want to. Second, I've leveraged the velocity of money where my original dollar invested here in the

crypto is also working here in the stock market and also here in the real estate market. That $1 gets to experience uninterrupted growth in all three investment classes. It's like $1 working as if it were three. This is an extreme game of offense that very few people talk about. You see, if Keo would have done it this way, his $255,000 loss for mistiming his Ethereum sale would have never happened. He would have had the best of both worlds, the house and the appreciated value of his crypto. The article does address the other side of the coin, though. Pun intended, many sellers bullish on crypto are giving sweeter deals to buyers who make their offers in crypto.

For example, Timothy Brackett is selling his New Jersey home for $3.9 million, but will gladly knock off $50,000 if you pay him in cryptocurrency. Los Angeles-based developer Michael Chen is listing a spec home for $65 million under similar conditions, citing that the sale could have or double in value overnight. Chen doesn't see crypto as a currency, but rather as an investment and is willing to take the risk. You know, those who use Bitcoin to purchase property

may end up with a very 21st century kind of buyer's remorse. But back to this breakdown. The third thing I've got here is I'm diversified in three separate. uncorrelated investments, making this also an extreme game of defense. And fourth, as a bonus, I'm not only securely hedged against inflation in my portfolio. I'm positioned to profit from it. As one, inflation favors borrowers of fixed rate debt. Two, inflation favors real estate. And three, inflation favors adjustable income producing assets. Real estate works. And when done right, it works even better. And if this is the first time you've ever seen,

seen anything like this. I get it. You've got some questions like my ARIA A's clients did when I recently shared this with them during a private web class. So, I'd be happy to give you a copy of that class recording. I'll give you the names of all the resources and services that I use to make the system work. And I'll answer all of your questions personally as well. Likely, the most important thing that you'll get from this class recording is seeing that you don't already have to be a crypto millionaire for this to work. Thanks for sitting tight while we pay our light bill. We'll be back. Right after this. Canada can be a global leader in reducing the harm caused by smoking,

but it requires actionable steps. Now is the time to modernize Canadian laws so that adult smokers have information and access to better alternatives. By doing so, we can create lasting change. If you don't smoke, don't start. If you smoke, quit. If you don't quit, change. Visit unsmoke.ca.

Mainstream media is ripping us apart. This is news to bring us together and make some money in the process. Surprise. China launched a nuclear-capable hypersonic missile in August that sped around the globe and low Earth orbit before striking its target. So if a nuclear-capable hypersonic missile sounds kind of scary to you, well, it sounds even scarier to U.S. intelligence officials who were completely taken off guard by China's advancement in hypersonic weapons.

We have no idea how they did this, one government source. said, and I'd say that's not very comforting. What is a hypersonic missile, though? Well, it's a weapon that flies at five times the speed of sound. Now, that's slower than a ballistic missile, how fast a ballistic missile travels. But what makes hypersonic weapons more dangerous is that they can be maneuvered during their flight, whereas ballistic missiles travel on a fixed parabola. Therefore, China could evade the U.S. current defense systems and execute a nuclear strike on any target on earth with near impunity and very little warning. All right.

So let's zoom out. China's hypersonic flex is the latest sign of its growing military ambitions. Tensions are building near Taiwan after China sent about 150 aircraft into the democratically ruled island defense zone earlier this month. And I'd say the American people, this is something they need to, something to really consider to start something that we can all agree on to start rallying around. This could be it. We're all looking for that one common denominator that we all can, that's inarguable that we all agree with. And despite how you may feel about weapons and war, there are

evil people out there that want what we have. And we should not let this go unchecked while we're being distracted by COVID and the southern border and climate control on the supply chain and mandates and spending bills and all this stuff. Our enemies are very focused on the big picture. And I think the Americans, all of us, we can come together over this. So let's see how this plays out. Here's the stat of the week. The top 1% of households now hold a larger share of U.S. wealth, 27% than the entire

middle class, 26.6% as of June. This is according to Federal Reserve data. It's the lowest share of national wealth held by the middle class, defined as as the middle 60% of U.S. households by income on record. And on that note, mortgage applications and new listings both are down in September, and the supply chain crisis continues to concern builders. So get yourself some real estate while you can to make sure that you stay on the right side of that growing chasm between the haves and the have-nots.

You know, a retiree today who owns a single piece of real estate, doesn't even have to be an investment property, can just be their primary residence. So a retiree today who owns a single piece of real estate is on average 40 times 40 times wealthier than a retiree that does not own a piece of real estate. So invest in real estate and the rest will take care of itself. Good news for all of my friends down under Melbourne, Australia will lift its lockdown orders this week. It's spent more time under lockdown than any other place in the world during the pandemic. Interesting that they are lifting the lockdowns as their cases are actually rising. Makes you wonder what's really going on down under in Australia.

But I wish them all the best. I've got a lot of really good friends down there. And this just in turns out that even Zillow got sick of surfing Zillow. The online real estate agent said it'll stop flipping houses for the remainder of 2021. While it's best known as the platform for browsing home listings in Bozeman that you can't afford, Zillow has also bought and sold houses for the past three years in an automated process known as I buying. In I buying, a seller will input information about their property online. Then a company's algorithm will sort through the data and spit out an offer in as little as 24 hours.

But it's not a fully automated process. And that's where Zillow is in a pickle. The company that's doing the I buying sends a representative to inspect the property and do a gut check on the offer. But Zillow says it doesn't have enough of those people. given the historic labor shortage and whatnot, and therefore can't add any new houses on top of its current backlog. And this is a big deal. Zillow stock fell 9.4% its biggest drop in months in response to this news. That's because Zillow's house flipping unit called Zillow offers is a big deal,

accounting from more than 50% of the company's revenue last year. And it's growing. Zillow bought 3,805 homes and quarter to more than it had in any other quarter by far. And Zillow's rivals are seeing an opening. Open Door, for example, is grinning like a sprinter whose opponent just went down with the cramp. Following the Zillow news, the eye-buying startup boasted it was open for business. Open Door was already a busier house flipper than Zillow, more than doubling Zillow's home buying total in quarter two with 8,494 purchases. Another startup brimming with Chardon Freud.

Offer Pat, which recently went public and manages to squeeze more profits out of each home flip than Open Door. or Zillow. Bottom line, Zillow's flip-flop comes amid signs that the moonbound housing market might finally be parachuting back to Earth. The median home sale price increased 14% annually in September, its lowest growth rate since last December per redfin, but still 14% growth. That's pretty big. And from out of the blue, Facebook will change its name next week to reflect its plan to build a Metaverse. It's not a passing bad. It's the future of money.

What happened this week in cryptocurrency? Bitcoin made history yesterday breaking its previous all-time high, entering price discovery mode and surpassing $67,000 per Bitcoin. Co-founder of FundStrat and Wall Street strategist Tom Lee has revealed his expectations for Bitcoin before the year runs out. According to a Bloomberg report, Lee revealed that he had high expectations for the digital asset, which he believes would hit the $100,000 mark by the end of the year and added that the asset could go as high as $168,000 before the year runs out.

In other trading Bitcoin news, Bitcoin futures ETF debuted with the highest ever first day natural volume of $1 billion. ProShare's Bitcoin Strategy Exchange traded Fund BITO saw the highest ever first day natural volume for an ETF with the figure reaching a little over $1 billion by the, the end of the opening day. And so yes, Bitcoin ETFs are here. And this is significant. As in 2013, the Winkle Voss Twins filed the first application for a Bitcoin exchange traded fund in ETF. And eight years and countless rejections later, not to mention loads of ridicule, the first Bitcoin-based ETF began trading this week. The ETF, launched by the fund manager

pro shares, will give virtually any investor with a brokerage account the ability to to gain exposure to the world's largest crypto. Now, we didn't say buy the crypto because that's not what's happening here. The Bitcoin ETF is based on futures contracts, which allows investors to bet on the price swings of an underlying asset without owning it outright. The SEC Wall Street's top sheriff is much more comfortable allowing a future-based Bitcoin ETF to proceed than one that directly buys the tokens. Bitcoin futures have been trading on the regulated Chicago mercantile exchange since 2007.

Bitcoin itself, meanwhile, is bought and sold on many different exchanges that are outside the gaze of the SEC. It's unclear whether the ETF will be a hit. The first mutual fund based on Bitcoin futures, which launched in July, had only $15 million in assets under management two months later, basically negligible when put in the context of the $21.3 trillion U.S. mutual fund industry. And the ETF news was received by some crypto professionals with a big, eh, a BitT. Bitcoin futures ETF may not reliably track Bitcoin prices, while many investors are comfortable with the current options available for buying Bitcoin directly. And when asked by CNBC whether he would be investing in the ETF, Bitcoin Bullmarked

Cuban said, nope, I can buy BTC Bitcoin directly. Looking ahead, Bitcoin's price could be volatile in the next few weeks as four different Bitcoin future ETFs may begin trading this month, all of them. Personally, I see this as a really big deal, given that mainstream, adoption is what will drive cryptocurrency forward. And exposure to Wall Street gives crypto a new level of credibility, thereby moving widespread adoption even wider. In other trending Bitcoin news this week, Bitcoin RSI strength suggests Bitcoin price is still

far from its cycle top. Bitcoin has barely started its run to new all-time highs if its relative strength index repeats historical behavior. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance that you do know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them.

God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terry. Live in the big. Yeah, yeah, we got the cash flow. You didn't know home world. We got the cash flow. This podcast is a part of the C-suite Radio Network.

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