Epic Real Estate Investing - Inflation Unmasked: The Financial Thriller You Can't Afford to Miss! | 1286

Episode Date: December 7, 2023

Get ready for a heart-pounding journey into the complex world of finance with the Epic Real Estate Investing Podcast! In this episode, financial titans Matt Theriault and Mercedes Torres take center stage to unravel the mysteries of inflation, delivering a financial thriller that will have you at the edge of your seat. Strap in and brace yourself as Matt and Mercedes delve deep into the treacherous trenches of finance, dissecting the impact of inflation on both the economy and your hard-earned dollars. Through relatable examples, they'll pull you into the ring, making you nod in agreement and hungry for more insights. But that's just the beginning – embark on a captivating exploration of financial history as our hosts unveil the dark secrets behind inflation's past and its ongoing assault on your purchasing power. This isn't just a podcast episode; it's a gripping financial saga that promises to leave you craving for more knowledge. And just when you think you've absorbed it all, prepare for the knockout punch! Matt and Mercedes reveal a blueprint for turning the tables on inflation, unleashing the unparalleled power of real estate investment as the heavyweight champion in the financial battlefield. Are you ready to arm yourself with the strategies to conquer the inflation thriller? Hit play and let Matt and Mercedes guide you through a captivating journey to financial resilience! 🚀 P.S. Whenever you're ready to go deeper and further with your real estate investing, looking into my partner program to help you get your first deal might be the move... take the first step here for free 👉 https://epicearnwhileyoulearn.com/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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Hello, and welcome to the epic real estate investing podcast. The only show where your savings might just outgrow your waistline. Although this year I've been giving it that a run for its money. I'm your host, Matt, and this is Mercedes. And today we are talking about everyone's favorite economy mystery, inflation. It's kind of a boring subject, but it's something that we really need to take into consideration. So the thing that makes your money feel like it's on a diet, that's what we're talking. talking about, always shrinking in value while the prices are bulking up like they're on a high-carb,

high-fat meal plan. See what I did there? I see what you did there, Mr. Tereo. It's the reason that your grandparents' stories about nickel candy bars now sound like fairy tales. You know, I just saw something on Twitter. They had a poll. How much was a candy bar when you were a little? What's the lowest price you remember? I remember 25 cents, a quarter. I remember a quarter also. Wow. Snickers bar, Hershey bar, 25 cents. What is a Hershey? bar today. Oh my God. I went into the shell station, the gas station right here across the street, and they don't really sell regular size candy bars anymore. They sell the jumbo size. The king size. So it was this, I really like the new Reese's nutrageous thing. It's like a Snickers

and a Rees mixed up, I guess. It's delicious. But anyway, I got to the counter and they said $6. For a candy bar? Now, it was like double the size of what we would know as a regular candy bar. kids, but it was $6, I don't need it that bad. I really don't. I really don't. Well, it's a good thing, man, because you're complaining about your waist size. I know. I can certainly afford it, but I was like, I don't want to. I don't want to afford this. No. Now in days, these kids are all about these sour patch, all the like sweet and sour things that, you know, and then they, they're so sour that they just make your eyes twitch when you like put it in your mouth. But they don't sell a small package of that, like how they used to, at least where I'm from, I don't see that.

But that little bag of like what is Sour Patch Kids, watermelon, it's like $3 a bag. And it's no longer the little things that you and I used to do. I mean, that's another conversation, but that goes to the obesity of our country just because nothing is small anymore. And there's another conversation there too. All right, we're doing our partner. I am going to contribute to that one. So let's talk. What is inflation?

And, you know, inflation is subject that I've gotten really interested in in the last five, six years. I mean, I've always heard about it. I always knew what it was. And I thought, oh, those things get expensive over time. Yeah. And it's a very sophisticated concept. And it can get, we can really go down a rabbit hole with this. So I want to keep it kind of on the surface and explain it the best I can.

So at least you understand it in a way that you could take some action about it. Yeah. Right. I think it's really important for us to just that word inflation, it's so thrown around. So let's dive into specifically what does inflation mean and how how is it applied to just like our everyday life? Well, inflation, like the word is like the core board or the base word is inflate, right? So it's the increasing of prices. And that's what most people think.

That is what the layman thinks. That's what I thought in my entire life. But it's really not. Like things don't, the price is increasing, but it's not increasing. but it's not increasing in value. What's happening is the value of your money is shrinking. And it was explained to me, and this is where it really started to click, and I really started to understand it,

because if you went back 100 years and you just went and bought a really, really nice man's suit, that might cost you a $100 gold piece. Okay. Now, if you were to fast forward here 100 years and buy that same really nice suit, it might cost you $10,000. But did the suit change in value at all? No. It's made out of the same material, right?

It accomplishes and serves the same purpose. You know, it keeps you warm. It has you look nice at the next event. So the value is the same, but it just took more of our dollars to pay for it. Got it. So the value of the money is what shrink. And if you're a fan of Robert Kiyosaki, he says this in just about every interview that he does, is that, you know, in 1971, when Nixon took us off the gold standard, our money automatically

or instantly became debt. Yeah. And it's in a debt-based economy, inflation is needed for that economy to continue. Yeah. And that's where I can get really deep. And sometimes I confuse myself when I talk about it in that aspect. But because of that, just inflation rate of the Fed tries to keep it right around two, two and a half percent. the devaluing of your dollar is decreasing by two to two and a half percent a year.

That's their target. That's where they want it to be. And you could look at it from the other's perspective. Like prices increase to two and a half percent. That's true. Right. And so really the basic one-liner definition is you've got too many dollars chasing too few goods. And one thing that we can all probably relate to is when we went through our lockdowns during the pandemic.

and all of a sudden the government started issuing checks. Right? And I'm not talking about just the $650 checks or whatever they were that I don't got one out of three disbursements or something like that. I don't know what happened to the others. But what they call it, the PPP loan? Yeah. It was the payroll protection plan.

Oh, yeah, there you go. Payroll protection plan. So they were issuing out healthy six figure, seven figure checks to your LLCs. And so that was a huge injection of money. money into the system, right? But there was not an injection of goods. So everybody had a lot of cash buying all of the stuff that was available. And so what that did is it raised the price and that's what caused inflation. So that's when they talk about the printing of money and injecting the money into the system. And that's what causes inflation. So now, as they've been trying to pull back,

this is why we see interest rates going higher. That's one of the big controls that they have over inflation and the printing of money is what the interest rates are to borrow money. So if money is more expensive to borrow less people will borrow it. So if they're borrowing less, they're buying less. So that will cause prices to settle down. They won't rise as fast. Right. Well, that's what's happening to the housing market. Exactly. That's why prices are settling down. Exactly. Well, see, there's another aspect around the housing market that most people don't actually even consider. We talk about a lot here. So if you listen to the show, then you do know. But it's amazing. And how many people I talk to are in experts that don't even acknowledge this portion of it.

That's true. And we'll talk about that in a second because real estate is one of your big defense mechanisms against inflation. Historically, real estate has outpaced inflation. They're kind of neck and neck most of the time. But housing does edge out inflation just a little bit. But that's what inflation is. So if the target is 2.5%. I think the current CPI right now just released for October 1,000.

was 3.2%. So we brought that all the way down. What was our peak? Do you remember what the peak was? I don't remember. We were around 7, 8% six months ago, eight months ago. And it was kind of crazy. And this is when the Fed came out and really put his foot on the gas to stop it. And that's when rates started to skyrocket. And now we're seeing rates come back a little bit because they've gotten, they think, who knows, that they've gotten inflation under control. Right. Right. And I mean, just this week, there was another adjustment to the mortgage rate. So maybe cash flow is coming back really and be available for everybody. It creeped in a little bit for sure. Yeah. Yeah, it certainly helped. I mean, just a one-point

change. It was. Is the make or break difference line, right? It was exactly that, actually. Perfect. So at 3.2%, they're not going to lower the rates a whole bunch because they still want to get it down to the two and a half percent to where that's the manageable number for a society. But one thing is you need to understand is that whether it's 3%, 2% or 8%, it's always grow. Yeah. So even if it comes down to a level to where we're, okay, this is much better, it's still getting bigger and bigger and bigger. Right. Right. It's still increasing. So if inflation is, say, nice easy number, we'll just say 2%. That would be the target and that would be like everyone would be happy. So if you had $100 in your bank, you could today, you could buy $100 worth of stuff. Right. If we had 2% inflation for the next 12 months, 12 months from now, You're $100, you'd still have the $100 in the bank, but it could only buy $98 worth of stuff. Yeah, it would be worth less because of the value. Of course.

So if that's the case, then if you're going with your investments, you need to deduct 2% from all of your ROIs. Yeah. Because inflation took their share. Yeah. Right? It's the invisible tax, they call it. And I mean, because you didn't see the $100, that $2 subtracted from your bank account, but your $100 doesn't buy is $2 less.

It doesn't go that far anymore. Yep. So when you're looking at your investments, you want to make sure that you are outpacing whatever the CPI number is, whatever the inflation is. And right now it's 3.2. Right.

So if you're finding a deal that's giving you a 10% cash on cash return, once you subtract inflation, what's that 6.8%? Right. Right. So it's still good and respectable, but you have to do that.

And you have to really, I mean, that's a real, real thing. And we can experience in so many different ways in our lives and you might have experienced and didn't even know it. But if you think about when you bought your first car, or maybe your last car, who knows what type of car it was, or even

your house and you're sitting there and when you go to the car dealership, they sell you the car based on the payments. Correct. Right. So what payments can you afford? So you're not even caring about the price. You're just like, what's the monthly payment I can afford? And you typically will settle into a monthly payment that you can just barely

afford. Right. You don't know how you're going to afford it because you really want this car. Your motions are all the way up. And now you've spent three hours in the finance manager's office and you're tired and you just want to go home. And so you settle on that payment and you're kind of like, oh my God, what I do? I just have this big payment now. And it could be with a house or anything like that you buy with debt. And you don't know how you're going to do it. You have to budget here and scrimp there. But do we ever budget? Do we ever scrimp? Do we ever cut back? The average person does not. No. They don't. They just go on and you make the payments and you

figure it out and you just do it. And then about two or three, maybe two, three years down the road, you're making that car payment or that house payment. And it's not even a burden anymore. Like it's just like a normal part of normal life. You've adjusted. Correct. Well, have you adjusted? Well, your mind has adjusted or? Well, your mind is adjusted. But why is it not that much of a struggle anymore? It's because of inflation. Right. Right. Because you are now, because of inflation, you are earning more money through goods and services and salaries and rents and whatever it is, but your payment has stayed the same. So that's how inflation works in your favor by using long-term fixed debt to buy income-producing

inflation-hedged assets. Right. This is why I harm. That belongs in a fortune cookie. That was a tongue twister. That was a good one. But this is why I harp on, and when I have these conversations with our buyers, is, yes, you can have, you can lock in, when you're buying a cash flowing turnkey property, you can lock in a 30-year

fixed rate, or you can lock in a, you know, five-year adjustable rate. And I always say, and I do mean always, you want to lock your rate in for 30 years, because if you you locked it in just this last month, when rates dropped, they dropped it a little bit right at the high sixes. If you lock the high sixes and the rates go up to 10%, you've locked in a 6% for 30 years. Now, what's that doing for inflation? No, it totally works in your favor. Totally.

Yeah. Totally. So it preserves your investment, your money, your, and then it allows you to just continue to live as you just use this car payment as an analysis. same thing. You get used to that payment and the whole time you're renting this property, you get to increase the rents, generally speaking, more than what inflation currently is today. Yep, yep. And so I'm huge on increasing the rents. Of course. To a point that you don't lose your tenant.

Well, yeah, but the reality is it's not just me increasing rents. It's known that you have a one-year lease and generally speaking, when you re-eastern, up your lease, chances are it's going to increase. And it's just the average American expects it for the most part. Yep. And, you know, off the top of your head, what's the average rental increase? Don't think about our profession, just kind of the places that you lived in the past. And it's around 3%. It's kind of what you can always expect. And that 3%, where does that number come from? It comes from an anticipated inflation rate of 2.5 to 3% is what the economy runs on.

And so just the base is keeping, just that rent is having your money and your buying power staying, keeping pace with inflation. And that doesn't count the appreciation of the property. That's just the rent. The inflation, it's another tool. And I just, I released a couple videos on this because I'm trying to really share this with people because it was just such an eye opener for me. Yeah.

When I learned how inflation really works inside of an inflation-based system, an inflation-run economy. Yeah. You've heard the expression, don't fight the Fed. Yes. You've got this expression. That's kind of what it's saying is that right now the inflation is a little bit high. The economy seems like it's lagging.

And I don't know. I mean, it seems like it is, but is it really? I mean, because, boy, people around here are just spending money like crazy. It looks like no one's suffering around here at all. But I know a great number of the people are, and they're complaining and blaming it on the economy and for whatever reason, what they think is. is the cause of it. But when the inflation is high, people will save money because things are getting so expensive. And so when inflation is increasing, it decreases the value of your money.

So there's an expression that savers are losers. Yep. Right? So when you hold on your money. So when you start knowing that, like that's kind of fighting the Fed. You're going against inflation. When if you go went the opposite direction and started borrowing money to buy stuff, which seems like a risky thing and a scary thing to do.

And people don't want to do that. And they think you're an idiot for taking those risks and stuff like that. And oh, my God, wait a little the market crashes and you're going to be stuck with all this debt, blah, blah, blah. I mean, I hear it all the time. I see it in the comments. But if you look at how the rich get rich is they go with the Fed. Because the system always wins, right? So you don't want to bet against the system.

You want to do what the system is doing. And how do you think the country is still alive with truly? I don't know what the number is now. It's trillion in the deficit, right? Right? Are we ever going to pay that back? No. In our lifetime, it's never going to happen. It's a mathematical impossibility. We're not going to pay it back, but you know what is going to pay it back? Inflation is going to pay it back.

The government is borrowing money to buy income-producing inflation-haged assets. And you can look, I mean, a war could be that, right? That could be an income-producing asset. So we borrow money to do that and it generates the revenue that way. And so when you start looking at how that's how the economy works, that's how the wealth work. I mean, just this week, well, let's see, six months ago, Black Rock was, it came out that they were on pace to own 60% of all houses. Yep. 60% of all single families. Across America. Yep, by 2030. And then a few months later, Blackstone, how did we get Black Rock and Blackstone

to be the two big players in that thing? I wonder if they're the same company. But Blackstone went out and raised $30 billion to compete with Black Rock to buy as many single families of houses they did. And just last week, Jeff Bezos is coming out of retirement. Yeah. To, and he started a fund to buy just single family houses. Yeah, there's something to say about that. This is why we're constantly preaching, I mean, buy real estate. I mean, it is the number one object thing, and I'm going to call it a necessity of life, that hedges against inflation.

I mean, you just tapped on it yourself, Matt. You said, you know, what are the wealthy? do. They borrow money and buy assets that produce a return. Now, the key there is to borrow money, and I know people are just raving and not in a good way. Raging. Raging. Okay, great, great point about how high interest rates are. But the reality is, if you're borrowing money and you're buying an asset that's going to allow you to pay back the money that you borrowed, and then some, hence cash, then you're doing it right. You're doing what the rich do to create their wealth. You're going with the economy. Exactly. You're going with the Fed. Yep. And guess how these three

companies are buying these properties? They're borrowing money. And whose money are they borrowing? They're borrowing yours. Your money. Taxpayers. They are in funds. Not a taxpayers. They're in funds. So there are people that are investing on Wall Street. You're putting your money in there. You're loaning your money to them so they can go by the asset. Well, what happens to you as the lender? You actually lose the value of your money due to inflation. It's true. Because it eats up the debt. They call it inflation induced debt destruction. Inflation is an equal opportunity money destroyer. So it doesn't matter whose money it is. It could be your money, the cash you worked for, or it could be the money that you borrowed. So if that's the case, whose money would you rather

inflation destroy yours or somebody else's. You'd rather have it destroy somebody else's. But if you can use somebody else's, that money gets destroyed while you purchase the asset, invest in the asset that does not get destroyed and actually thrives in an inflationary environment. Yeah. That's how the whole system works.

It was funny, I posed a survey question, a poll question on the YouTube channel. And I'd ask, what is the more likely way to achieve success? Is it following the crowd or going against the crowd. Oh, I'm curious to know what the results are. It was 85 to 15%, 85 to 15%, 86 to 14%. So it was 86 to 14% in favor of going against the crowd. And so then I went ahead and I posted this video. Okay. Okay, now that you voted, now watch this. And the comments, people were going out of their mind in the exact opposite. And then what I asked. Well, actually what I posted was after they all said, yes, going against the crowd, that's going to make you wealthy.

Because if you do what the crowd does, you're going to get what the crowd gets and they ain't got nothing. So let's go do what the minority does and what the successful people are doing. And I pointed out the successful people are what Black Rock is doing, Blackstone is doing, and Bezos is doing. And there's many others. And I would like to throw us in that same category because we're doing the exact same thing. Because we're following what the wealthy people do. If you follow what they do, you're likely to get what they got. but the comments were, like, oh my God, this is the worst advice ever.

This is so irresponsible. You should be ashamed of yourself. This is the highest prices in history. The interest rates are so high. I was like, you guys didn't even watch the video. They were totally blind to, like, you just answered the question saying that you should follow, should go against the crowd. And then I have the whole crowd in the comments saying how foolish this it is.

And so it's the financial education and it's really kind of skis. Gary and the blindness that's there, like not blinded, but in their blind spot. They don't even realize you just contradicted yourself. You said, oh, yeah, that's obvious there. And oh, yeah, you're an idiot for that. And those two things contradict themselves. And so I think that's where a lot of people could potentially be in a little bit of trouble.

But if you're listening to this show, then all of us are like, oh, wait a minute. Yeah, that's what I used to think too, because I certainly was in the same boat. Well, the lack of financial education just across our country is something that is really, really sad. And it is up to us to share what we know and what we do and how we do it so that we can prevent this from happening to, you know, future generations. We'll be back with more right after this. Boarding for flight 246 to Toronto is delayed 50 minutes. What? Sounds like Ojo time.

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marries aesthetics. With two bedrooms and one bathroom, this home is designed. for comfort. It's not just a property. It's a canvass for your vision. For more information on this property and others just like it, grab a free investor package from cashflow savvy.com. Hope is not a financial strategy. Let's get back to work. All right. So let's get, I'm going to get off the soapbox over because it's something I get so passionate about all the time. It's so obvious, right? To me it is. I shouldn't say right. To me, it's very obvious now. But it took me a while to get there. So if you're not there yet, I get it. I wasn't there so fast either. But what can you do? Because definitely real estate. It is number one right now. And this is very much while we're in it. This is like, I mean, it's not because we're not promoting or suggesting or recommending or advising real estate because this is what we do. We do what we do because it's real estate. Yeah. Right? So, That's number one. That's one thing that you can invest in. Stocks also have historically outpaced inflation as well.

Give Wall Street a little bit of credit, depending on how you feel about that, whether it's a rigged system or not, which I tend to lean that way, the older I get. But the older I get, the more prodigy I get too. But during inflationary times, you really want to look at the basic needs, the essential needs of the human being, what they're going to spend their money on. Yeah. So they're going to spend their money on energy. food, water, shelter. So shelter, that's the obvious real estate. But let's look at what else we have available to us.

Water, I don't know if we can really invest in water. Can we, I guess, aquafina or something like that? But the other one would really be food. And that's where you start looking into and you get into soybeans and you get into wheat and you get into coffee beans. And like those are all commodities and those tend to do really well during inflationary times as well. That's true. Some of those things can be very volatile, though, based on weather in the region that they're grown and stuff like that.

And then there's the REITs, the Real Estate Investment Trusts here have performed actually pretty well. However, just because it says real estate doesn't mean it's real estate. It's really just a stock share. Different REITs will pay out their returns in different ways and maybe you get a share of the appreciation, maybe. but you're typically just going to be getting cash flow type returns. But still, those types of returns will outpace inflation. And there's not too many either. I mean, you could talk about cryptocurrency.

If you took a long view picture of the last 20 years, Bitcoin is definitely outpaced inflation, but it's extremely volatile. The highs and low. So you have to have the nerves for that. And then collectibles have actually appreciated outpaced inflation as well, like paintings. Oh, paintings. Yeah. Yep.

And I heard something about it. I heard something about, I don't know, I haven't stayed up with it, but the price of the supercars and the collectible cars. I've just skyrocketed. I mean, we have a friend who's got a car that's like tripled in value since he bought it. And he thought it was just his wife was going to kill him. He bought it three years ago. And all of a sudden it's tripled in value. But those are pretty much kind of what you're limited to when in high inflationary times.

It's going to be real estate. It's going to be your commodities. It's going to be stocks. And it's going to be your collectibles or probably the most dependent. one's in the most, the ones that have shown the greatest track record. One that we didn't talk about is gold. Because that historically has always been a big hedge against inflation. But what a lot of people, I don't think people saw it because we were dealing with COVID.

We were dealing with presidential campaign, the most divisive one in history. We were dealing with social justice. I mean, there were so many things going on on TV that were so big that this is it right under the radar. And that was when J.P. Morgan got busted. This is 2021 for manipulating the gold market. Oh, I forgot about that. Yeah. And they got a huge fine. And so although gold should outpace inflation, you can't really depend on it if that market is manipulatable. And even though they got a big fine, I don't doubt that they're still doing it. Then again, it's J.P. Morgan Chase, so it's huge. And there you go. Awesome.

So, Matt, you mentioned, you know, this is a real estate investing podcast. And one of the things that I mentioned just recently that during COVID, there were three essentials of life that was allowed to be open during the pandemic. And one was food-related items. The other was, you know, hospitals and clinics and medical. And then the third one was like shelter. So it was the shelters where homeowners and investments. that had investment properties, they cracked down on them and said, you know, someone can't afford to pay rent, they'll work with you. And there was a whole bunch of programs that served us homeowners. But from that perspective, you know, we talk about real estate being the number one hedge, or one of the number one hedges, how against inflation. How would you suggest to someone that just wants to dive in, but they're just paralyzed with fear? What would you say to them? All right.

So in high inflationary times, there's three things. High inflationary times when your money is losing its purchasing power, there's really three things that you can do. One is you should not be reckless with your money and you should have enough, I'd say six to 12 months is security blanket, six to 12 months of your expenses, right? But anything above that could potentially end up being a big loser as far as your money goes in your financial position.

Correct. Okay. And then you know budget and you're going to be careful with what you spend on, maybe not time to do the frivolous stuff. However, I'm going to come back to that in a second. Okay. There actually could potentially be a problem with that. But have six to 12 months.

I'm not saying be reckless. I'm not being, don't take unnecessary big giant risks. But that's one. The second thing is you want to focus on earning more income. Now, that could be a second. job or a side hustle. But you want to focus on more income. That's how you got, that's how you're going to beat inflation. But you can only work so many hours. Like you can only exchange so many time, much time for dollars. So that's not going to be the end all, be all. The third thing is to have

money working for you while you're working. Right. And ideally, you want to put your money to work so it works harder for you than you did for it. And if you put that money to work inside of an inflation hedged asset like real estate, that's really, you want to do. That's really, you want to work. where you're getting like the best bank for your buck. And then you can, the only of, out of all of those things that we mentioned, all of those investment opportunities, real estate is the only one that you can borrow long-term fixed debt to purchase. So not only do you get the hedge against inflation through the asset, the hedge against inflation through the cash flow. You also get the other side of the coin there by having the debt, the inflation-induced debt destruction, killing your

debt that way. So you're kind of burning the candle at both. ends, or I would say extending the candle at both ends, right? The opposite of burning. And so those would be your three things is, you know, you want to make sure you're safe and secure so you're not freaking out and making bad decisions. Second is focus on that side hustle, generating extra income where you can. And the third thing is put your money to work. Above those six to 12 months, put that money to work so it's working for you because you're not going to be able to outpace inflation. Yeah. You just don't have that many hours in the day. You can't work that hard. Yeah. You know, Matt, you did say something earlier today about when you use the analogy of the car lot, you go into a car lot, and you pick out the dream car and the salesperson says to you, okay, what can you afford? What's that payment? And then over time you adjust. But one thing we don't realize is the moment that you get this new car, the moment you literally drive off the lot, it starts to depreciate in value.

Yeah, I think 30% is the number. Oh, wow. Okay. So, depreciation. in value. But let's just say you took that same money, that same down payment that you were going to buy a car with, and you invested it in a piece of real estate, a single family residence, a duplex, and you held on to that duplex or that piece of real estate for 10 years, call it. Unlike the car that lost value the moment you were driving it off of the lot, with your piece of real estate, it just appreciated over time. For the most part, there are times. in history where the market has dropped, like in 2008, and then you held on to that piece of asset

and it corrected itself over time. But that, what an analogy of, you know, taking your money, buying a vehicle with a payment that you could afford and taking that same money, buying a single family residence, for example, that you're holding on for, I don't know, 10 years and how much it appreciates over time. that's pretty amazing when you think about what this asset can do for you and how it could preserve your money and make money for you. While you're owning this asset, you actually get to cash flow during, hopefully if you bought it right, you get to cash flow. And then over time, you get to look back and say, wow, imagine if I would have bought 10 properties 10 years ago, what would that do for me? Mm-hmm.

So. The thing there is, and I see this in the comments all the time, too. I've been so big on YouTube. Now I'm like, we'll do the comments. So I don't want to keep saying comments, comments, comments. But I will. In the comments, if the market, like, what if I buy all this real estate and I go out on all this debt and the market crashes tomorrow? I was like, well, were you going to sell it tomorrow?

No, you weren't going to sell it tomorrow. In fact, I mean, our favorite strategy is a holding forever, right? And so, yes, it might lost value and you might be illiquid for a moment. But, you know, say we're having this conversation in 2006, six months, 12 months before the market crashed. If you would have bought then and not sold, the house would still be worth double today. What it is was then despite the crash. So we flip real estate because it produces cash. It runs the business.

It makes the payroll. It pays for the marketing. Keep the lights on, right? But we take that cash, the excess, and we put it back into cash flow. Because that's where the wealth is built. That's where the freedom is built. And if we sell that property, we lose it, right? We lose that wealth because now we have it in our hand,

and now it's just going to get smaller and smaller until we buy something else with it. And here's another strategy. He's like you never sell. You just keep on refinancing. Refinance till you die. Refide till you die. Hello Jason Hartman. Now, we should have Jason on the show because although I'm a believer and I've got a great amount of conviction on how to use inflation to build wealth, that guy, he will blow your mind.

You're like, you wouldn't do that. And I was like, but the more I talk to him, the more I listen to him and, you know, we become really good friends. He's right on the money. He's hold on to the asset forever. Just keep refinancing. Keep refinancing. Do it responsibly. Do you want to make sure that's still cash flows.

But here's the other thing. You can now take all of the growth out of that property, but because you're borrowing it, now you're not even paying taxes on it. You go in and flip that house or hold on to a house and sell it in five years, ten years from now. It's a huge tax liability, unless you roll it into another house. Well, then you refinance, exactly. You refinance, you take that money that you pull out, and then you go buy another asset. And then in five years, you go do it again.

And sometimes you don't even have to wait five years. In three years, you can pull your money out. And it depends on what market you're in. But the reality is you can keep refinancing, pulling the cash out, putting it to work again. So now your money is working double for you. And inflation and everything else is working in your favor. Yeah. He's got a model that he's drawn out.

And I've repeated it a few times in my own way. But showing how just by the purchase of 20 properties, that's all anyone needs to be financially free indefinitely. Is if you just go off the basic appreciation rate, the basic rental rates, and you buy 20 houses, and every 10 years you reify that money out, and then just pay yourself a salary based off of what you were able to refy. It gets bigger and bigger and bigger every 10 years that doubles. And it's just, it's an amazing model. Now, it's a model, and there's a lot of variables in the world that go on

and things that can happen. But I always say this. When people say, that's so reckless to even recommend this, that's so risky to say this to people. I was like, okay, so what else should you do? What differently should you do? Because if real estate is produced more wealth for more people than anything else, okay, tell me where my odds are better. Right? And just by the nature, human nature of people that we all tend to take the path of least resistance. No one wants to take the long road or the

steep wall or anything like that. We all take the path of least resistance. And knowing that, and if real estate is produced more wealth than more people, it's not only your greatest chance. It's also the easiest. Yeah, this is true. It's not easy. Just to, easier than the alternative. And the reality is, you know, as we say often, takes one property a year. And let's just say you buy one property every two years. And at the end of the day, let's just assume you buy a property. And it's not what you think. Then all you have to do is sell the asset. And for the most part, if you've held on to an asset for two years, you would likely break even, but you might be surprised. You might even make a little bit of a profit.

And so, yeah, the alternative of not doing something or doing nothing is just insanity, in my opinion. There you go. Well, I say we sign off. I got two more things I want to say, but I'm going to save it until next week because I could do a whole episode. All right. We will do that. So to our listener, I hope that this was super, super helpful for you. I know Matt went on a little bit of a tangent.

He's truly passionate about it. So if you are wondering about the comments, I mean, follow us on YouTube. What's our YouTube channel, MT? Epic real estate. Epic real estate investing or epic real estate? The podcast is investing. Oh, got it. The YouTube is just real estate.

Well, there you go. That's where you get all of Matt's helpful tips, his secrets, and all of his amazing knowledge. And by the way, I want to do a shout out to a gentleman by the name of Carl. Carl R. We had a phone call by Carl. Carl reached out to us, and he thanked Matt specifically. He started with us when he said he was broke just 10 years ago. I just recently spoke to him, and he told me he has 148 properties in Tulsa, Oklahoma. So Carl, you are the reason why we do things like this. And ladies and gentlemen, you can be the next Carl. So feel free to read. out to us at Epic Real Estate Investing or give us a comment on our Spotify, Apple Podcast, whatever works for you. That's it. Have a great day. And we look forward to seeing you at our next episode. Take care. 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 you 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 Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home for us. We got to cash low. This podcast is a part of the C-suite Radio Network.

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