Epic Real Estate Investing - Is Your Home a Good Investment? | 1137

Episode Date: April 5, 2021

In today’s episode, Matt reveals whether a home, that you are living in, is a good investment or not and whether you should buy it or rent. Moreover, you will find out the most recent news and get updated on the cryptocurrency stats. Tune in and find out more! Learn more about your ad choices. Visit megaphone.fm/adchoices

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

Here's Matt. Hey there, rock star. Matt Terrio here from Epic Real Estate, where we show people how to invest in real estate using more of their mind than their money, using creative real estate investing strategies, all with the emphasis of escaping the daily grind and setting yourself up to retire early. And if this is your first time here, really glad that you found us. Welcome to our land, to our world and make yourself at home. And if you like what you hear, make sure you hit the subscribe button before you go. And if this is not your first time here, welcome back. and thank you, thank you, thank you for continuing to share this show with your friends and your family. I love that about you. You're the absolute best for doing that. So thank you.

I actually just got back from my spring break. So I'm a little late with this episode. But I got a great show for you today. And I'm going to talk about whether your home that you live in is a good investment or not. And whether you should buy it or should you rent your home. And I'll share with you what I'm doing and how I do it and why I do it that way. and so you'll have enough information to, you know, make the best decision for yourself. And I've got the news for you today and another great week in cryptocurrency. So today's sponsor of the show before we begin is launch control, the most effective and cost-effective tool to finding motivated sellers. As you know, the foundation of every real deal lies within the seller's motivation to sell.

If you can't find motivated sellers, you're not going to find deals. So this is the most cost-effective tool to do that. It's your all-in-one platform that equips. you up to text sellers, to manage deals, and stay miles ahead of the competition, which is important, isn't it? Because your market, it's competitive. It might even be saturated. There's a lot of real estate investors in your market. And this is one way you can stay ahead of them. So go to epic launch control.com, get started before a competitor beats you to it. Epiclaunchcontrol.com. All right. So back in February, I made a video on the YouTube channel, EpicR-E-I.TV.

That's a little fancy domain name that will forward you right to the YouTube channel. Epicurei.com. Check us out over there if you haven't. Or you can just stay here and we'll talk about a lot of the same type of stuff. But in the comments or this video that I made back in February was about the eviction moratorium. And actually just got extended again. Can you believe it? So to the end of June, the eviction moratorium is, is, is. in place. And that prevents you from evicting people for non-payment due to a loss of income by the pandemic. You still have the, what most people don't realize is you still have the ability in the legal right to evict on reasons outside of that, right? So it's really just for that one

condition. From what I hear is it's kind of a local thing. Different areas are enforcing it in different ways. But thank goodness we haven't had a whole lot of issues with that. I thought it would have been a bigger issue as far as being able to collect rent, but it just hasn't been that big of an issue. And for most people I talk to, it hasn't been for them either. You hear about it on the news that a lot of people aren't paying their rent. But if you look at the stats, and I think I've brought them up here before, it's about 20 percent, between 18 and 20 percent of people don't pay their rent on a regular basis. There's that many people, about 20 percent at any given time, are delinquent in their rents. And the numbers have only increased by it.

a couple points over this time last year pre-pandemic. So I guess we're not, we can't even say that anymore. We've been in the pandemic longer than a year now. So, but you know what I mean? Pre-pandemic. So it's not that big of a deal. And thank goodness. And hopefully it continues to be that way.

And I feel for you, if you're dealing with it, if it hasn't been as nice to you as been to myself, but we'll get through it. All right. Anyway, below that video, there was a comment, said, strange that you mentioned that you both own properties and also rent a property at the same time. Why? So I thought that was a good question. And it's something that people don't quite understand. And I've got an easy, not so strange answer. And I'll throw in a bonus and let you know in how I'm actually living in my current home for free. All right. So in this video,

I shared that I was both, or I am both a landlord and a tenant, which gives me the unique ability to understand both sides of that controversial issue about the eviction moratorium. And it's a subscriber picked up on that and asked me why I own rental properties and rent my home. All right. So here's the quick answer. I get to live a nicer lifestyle for a lower cost. And that's important to me because if you want to escape the rat race, then you know, you want to keep your costs down low so your passive income can cover those costs more efficiently,

I guess. And plus I get to live a nicer lifestyle. So here's how it works. There are five specific reasons to own real estate. The same five reasons. that has had real estate produce more wealth for more people than anything else on the planet. And number one is you've got the ability to leverage other people's money in a way that doesn't really exist for the average person in any other asset class.

You know, when most people buy real estate, they will typically put 20% down and they'll get the rest from a bank. And that five to one ratio of your money gives you a five X return on any appreciation of property experiences. And so that's number two, appreciation. you know, over time, real estate will appreciate. We've got more people than we've got houses. And we're continuing to make more people than houses we build.

And not to mention that the new open border policy of the current administration is expected to bring in one million new people to the population just through the southern border alone this year. So the law of supply and demand will always cause real estate to appreciate. Sure, it's going to go up and down over time, but it's always going to go up. Number three, income. When buying an income property correctly, it will produce a monthly, almost passive income for you. And with enough of this type of income, people set themselves financially free, never having to work because their property is working for them. That's what this show is all about. And we've had so many people do that right here in the epic community that Brad and Josh, that's like, that's like a, what they call them, Benefer. Brad, Josh, they're not related. They're not a couple, by the way.

Brad, Josh McKenzie, who else? Enrique, Brendan, most recently, Jeremiah, Parker. They've all put themselves in this position through our REI ACE program. And so the passive income and escaping the rat race, so to speak. That's how you do that with the income that real estate produces. Then number four are the deductions. You know, our biggest expense over our lifetime are going to be taxes, up to 50, maybe even 60%, depending on where you live. And real estate is the best and pretty much the last tax shelter that we have available to us. And, you know, tax deductions, people kind of discount that or don't give that as much credit.

Because it's not nearly as sexy as something like leverage and appreciation and income. But just wait until the day you've got to write a five or six figure checked Uncle Sam. And those tax deductions take on a whole new sex appeal. So number five would be amortization. And this is the paying down of the money that you borrowed to purchase the property. and then combine that with appreciation. This is how you build equity and ultimately your wealth. So when it's an income property,

it's not even you that pays this debt down. Your tenant does. And so those are the five primary reasons to own real estate. And everybody should have some, as most people really just don't stand a chance at ever achieving any sort of financial independence unless real estate is a part of their financial plan. But living in the real estate you own

is not required to get all of those benefits. In fact, for most people, it's probably not even a good idea. It's certainly not a good idea to place that as, you know, your priority for most people. And here's why. When you live in a property that you own, you lose two of the biggest reasons to own real estate.

So I just named five and you lose two of those biggest ones, the income, and that's what's going to set yourself financially free, and you lose the amortization. I mean, your loan will still be paid down, but it's you paying it down. With the income property, it's that tenant payment down. So they're buying the house for you. And those are two big, the biggest reasons that, I mean, that's the, it's going to set you financially free with the income.

It's going to build your wealth is that amortization. So without those two profit centers, real estate is really nothing more than a zero percent forced savings account. If you, if you do the math, then yes, it appreciates. And, you know, we've had a good couple years. and it seems like it's going really, really well. But, you know, over a 30-year loan period, that it might double or triple in value, which seems like you're doing really well.

But you've essentially spent that much money when you take an account in your loan and your interest rate and taxes and insurance. Like, you've spent two or three times more for the property than what you bought it for. So it's really just kind of equals out. They're a wash. And we've gone into that great detail here in the past,

but yeah, just contrary to popular belief, your primary residence, it's a terrible investment. It might be a good purchase. It might make you happy. It might feel good. I'm not saying you shouldn't buy a house, but you shouldn't look at it as an investment. Your home has an investment. And so for that reason, I rent the house that I live in. And there's the second reason to rent your home.

You get to live in a nicer place for less money. For example, right now I live in a $3 million home. And if I purchased it, I'd have to put down at least 20%. So that'd be $600,000 I'd have to put down to purchase the property. And I'd have a sizable monthly mortgage payment of around $12,000 or so. And then you'd have to add the taxes and insurance that add up to a monthly nut of about 15 grand that I'd be contributing to this investment that pays a 0% return. So instead, my family and I, we can live in the same house.

for half the money, and I can use that $600,000 to pick up a few more income properties to offset my rent even more. And I get all of the wealth benefits of real estate because I still own a bunch and I get to live in a nicer home. So that's why I do what I do. And the caveat there, when I say it's financially foolish, right, if you buy your house, it really isn't good. That's statement is 100% true, but it's going to depend on where you actually live. So the big caveat is, you have your shelter is a monthly expense for all of us. And so if escaping the rat race and becoming financially free is important to you, set yourself free first.

And you do that by keeping your costs low. And so if you live in a place where it's cheaper to buy than it is to rent, then you should buy. If you live in a place where it's cheaper to rent than to buy, then I think you should rent until you set yourself financially free and then you can go ahead and, you can go ahead and and purchase a house later if you wish. But it's kind of a priority thing. Now, the one thing that most people will also not factor in,

because that might not be 100% true what I just said, because the difference or another variable there is how much money you have to put down. And what are the opportunity costs of that down payment? Because in the comments of this particular video, there were people talking about, hey, it's, you know, I live in a house for a thousand bucks a month, mortgage was $1,000 a month and he could rent it out for $1,200. So that's why he chose to buy.

And that's fine. I have no problem with that because it would be cheaper monthly payment than to buy that way than it would be to rent. But I mean, I can't engage with them too much on the channel and have the conversation. But my question would be if we're in face to face and in person would be how much did you have to put down and what could you have done differently with that money that could have produced a better return? because if your house is a 0% in ROI, it's basically a forced savings account is how I look at it,

but it pays 0% in most cases. What could you have done with that down payment to produce better than a 0% return? So that's the other little caveat there that people don't really consider or underestimate are the opportunity costs. So that's why I choose to buy my, or excuse me, rent my house and buy the real estate that pays for my rent. And, you know, now how did I pull off living in this $3 million house for free? Because actually, it's actually better than free. I get paid to live here.

At least that's what it feels like. And here's how this works. You see, I was born and raised in Southern California. I am a fifth generation Californian. In fact, my son is a sixth generation Californian. And up until just a couple of years ago, I knew no difference. As in California, I had become accustomed to paying 13.5% or so of my income to the state tax. And that's 13.5% in addition to what the IRS asks for every year. So to put that in

context, my last year living in California, I wrote a six figure check to the state. And I still had to write another check to the IRS. And so that started to, I started to do the math there. And I started to really get upset when the politician of the day would demand that the rich pay their fair share. You're hearing our president right now say that a lot. We just want to the rich to pay their fair share. And I'm like, what are you talking about? I pay a whole lot. And then what's your name?

AOC has that sweatshirt tax the rich. You know those shirts are $58 for those sweatshirts? And I'm wondering like, I noticed that I couldn't help but notice the irony. It's a $50 sweatshirt. I mean, who's our customer that's going to wear tax the rich? Well, it seems like only the rich could afford the sweatshirt. Anyway, now my accounting team, what's going on right now? we're just finishing up the books for last year.

And it will be my first full year as a Nevada resident, where the tax here is 0%. So I've gone from 13.5% to 0%. So just by moving from California to Nevada, I get to keep 13.5% of my income that I work for. And that savings alone pays for this house by three times. So to me, coming from California, it feels like I get paid to live here.

At least in the bottom line, he actually even kind of shows it if you compare my last year in California to my first year in Nevada. So that's why I rent my home. And so look at your situation. If you want to set yourself financially free, think of just do the pluses and minuses,

do the math and see how you can get out, how you can set yourself free in this fastest way possible. If it's important to you, because for some people, it's not as important. They think it is, but their actions will dictate something differently, right? The emotions and the feelings of owning a home typically went out for a lot of people.

They'll buy their home, even though they might hate their job or they have their eyes on financial freedom in not recognizing that it's probably, most definitely, in my opinion, slowing them down in most cases. It depends on where you live and what the rent to purchase to your mortgage payment, ratio is. But that's why I do it. And if you live in a high tax state in financial freedom is important to you, maybe consider moving. It took me about seven or eight years to get Mercedes on board with this. But we finally got here. And this is our first year. We're actually getting to enjoy

the full benefit of not having to pay that California state tax. So that's that. And I'll go ahead and we'll get into the news right after this. When you go to work for your money, does it return the favor? If not, no worries. You do not have a money problem. You merely have an idea problem. We're cashflow savvy.com, and we'd like to share a new idea with you around income real estate that can transform your financial future and accelerate its arrival.

Go to cashflow savvy.com and download a free investors package. Cashflow savvy.com. You do not have a money problem, merely an idea problem. Cashflow savvy.com. More ideas, less worries. Cashflow savvy.com. All righty, in the news, the U.S. stock market is doing really, really well. It closed on Good Friday, but probably wished it could have kept the engine running. The S&P 500 climbed above 4,000 points for the first time ever to close at a record.

It was $2,300 about one year ago. Pretty remarkable. And then OPEC and its allies agreed to bump up oil output over the next three months, which is basically making a bet on a global economic rebound. Let's hope that bet wins. And the March Jobs Report released this last week was kind of like being on a 12-hour flight next to a crying baby when the captain says, we have begun our dissent. The economy had added 916,000 jobs, almost a million jobs in March.

That's the biggest gain since last August and way up from the $468,000 added in February. The unemployment rate also ticked down from 6.2. to about 6% its lowest level since before the pandemic. Now, the biggest winners in this job, boom, the leisure and hospitality jobs, 280,000 jobs were added there. Newton's third law says that the sector that was battered the most during the pandemic also has the most to gain from recovery. And construction, 110,000 jobs added there.

And you know, the housing market has been on fire since at least last summer. and in January, home prices posted their biggest annual gain in 15 years. So putting that in perspective, economists say this jobs report represents a turning point in the labor markets rode back to health because not only was this the third straight month of positive job growth, the future looks even brighter. The vaccination rollout has ramped up raising hopes that the public health crisis that forced businesses to close could come to an end in the next several months. And the economy basically just raised a one point.

$1.9 trillion Series E in the form of Biden's stimulus plan, flush with pandemic era savings and additional $49 stimulus checks. Consumers are ready to spend. But we haven't landed the plane yet. Of the 20 plus million jobs lost in March and April of 2020, 8.4 million have yet to be recovered. And the number of Americans who've been out of work for at least six months increased last month. So looking ahead with the wind at his.

back, Biden wants to proceed full sale. The $2.3 trillion infrastructure proposal he introduced this last week, literally called the American Jobs Plan, would create 13.5 million jobs by the end of his first term as opposed to 11.4 million without the plan. And that's per Moody's analytics. But with the GOP and corporate America wary of a tax hike, getting that done is not going to be easy. We will see. I actually think he cut some of these jobs a little bit too quickly. before having something like this in place. So those that lost their jobs as soon as he started with his flurry of executive orders, they would have had someplace to go, which I don't think was smart,

but he was making a statement, I guess. Anyway, Major League Baseball announced it was moving its All-Star game and the 2021 draft out of Georgia due to the state's new restrictive voting law. Don't know if you heard that. So the All-Star game, which was supposed to take place at Atlanta's Truest Park in July, had been planned since 2019, but the league said Georgia's law is at odds with its values. Come on, baseball.

That's my last sport that I was watching. And now you're going to go get all woke on us. The irony here is they're contemplating, moving it to New York and Illinois. Get this. You're not going to hear this on the news. At least not most of the channels, the mainstream media. They're just going to hear you, that you're just going to hear everybody bash Georgia so badly and how unfair this law is.

But New York and Illinois have more strict laws than the new law that was just passed in Georgia. Just I guess another part of the crazy world that we are living in at the moment. Hopefully it ends, but who knows? It just, stuff just gets more and more crazy where the reality is becoming stranger than fiction. Anyway, a capital police officer was killed and another was injured after a man rammed into a barrack. with the car. The suspect emerged with a knife and later died after being shot by authority. So RIP to that officer and peace and blessings and prayers to the families. And Google said it's moving up, reopening plans and allowing workers to return in a limited capacity this month.

Golden Sachs told summer interns they're headed to Tribeca. Wells Fargo told employees it's eyeing a return after Labor Day. Amazon said it's bringing Seattle headquarter employees back in time for sweat or weather. and Microsoft itself is already allowing some workers back with part-time remote as the new standard. And Citigroup CEO, Jane Frazier, also plans on three days a week in the office for most employees after the pandemic. So all of these are good signs that we are returning back to normal. And boy, I think we are all ready for it, aren't we? It's very much overdue.

But it looks like we have a few more months. Our governor here in Nevada just said he does not see. lifting the mask mandate in the foreseeable future, which was, I was like, come on, man. Like, let's get this thing off. But I understand we don't, we made a lot of progress and we don't want to regress. So I'm going to go ahead and comply for a little bit longer. But at some point, I don't know how much longer the population will be able to handle that. But all signs are moving forward. Let's go ahead and just kind of finish the home stretch. And we can have this thing behind us once and for all.

All righty, this week in crypto. Coinbase said it's going public via a direct listing on April 14th. If you don't know, Coinbase is the number one app for buying cryptocurrency. It's probably got the easiest to interface. It's the easiest thing to understand, the easiest thing to use. And so if you don't have the app, you might want to download that. This is not investment advice. I'm just suggesting that might be a good idea and just put some discretionary money into it.

And just kind of leave it there. just forget all about it. And then, I don't know, maybe we wake up in five, ten years and you're a multi-millionaire. That's how I see it because it's actually paid off pretty good for me in the last few years. And so if it continues to go on this trajectory, that's exactly what's going to happen. But again, it's all speculation. It's volatile. It can, so don't put any more in than you're willing to lose.

All righty. But that's the app. Get a little bit. I got my trainer on it. So she just put in a few bucks into it. I said, okay, just leave it there. Just don't do anything. And Mercedes opened up.

her little account. I got her and I'm sharing with a few of my friends because I don't want you to be left behind because if this thing takes off the way that they're predicting those that don't have it, it's going to be really tough to catch up with the distance between the halves and have-nots is going to get pretty darn wide. So just get a little bit of it and, you know, leave it there and go on about your business. But I think if you buy a little bit, then you'll watch it and you'll pay attention to it and you'll learn about it and then you might see what I see. So I'm going to be incorporating my cryptocurrency into my real estate investing strategy, which I will be sharing with you soon as soon as I execute the first cycle. I just want to kind of prove the theory.

I'll be the guinea pig for you and I'll let you know in on it. So that's why I'm talking about it. One, I think it's important because of the future. And two, I'm going to reveal what this strategy is I have as far as getting it and real estate to work together. And I will share with you whether it worked or if it didn't. And then I'll let you know what I'm going to do next. All righty. So that's about Coinbase. And then one cool thing about the cryptocurrency is that, you know, when the stock market closes,

crypto never rests. It just continues to go. And Ethereum is the second largest cryptocurrency behind Bitcoin, jumped to its all-time high this week. And then Mark Cuban, who has in the past compared Bitcoin to bananas. He says, at least I can eat a banana. I can't do anything with Bitcoin. Well, he certainly changed his tune.

and he's come out in great support of it and just revealed that he owns or 30% of his portfolio is invested in Ethereum. So 30%. So he didn't clarify if that's 30% of his crypto portfolio or 30% of his overall portfolio. I bet it says crypto portfolio. We owns a ton of it. And so if you don't know the difference, Bitcoin, that's kind of the common thing that most people hear. That's going to be kind of like they're comparing that as to replace gold.

So it's going to be a storage for your wealth. and they say Ethereum will act very much like, or the other coins that operate on top of Ethereum will become more of the currency. So we got gold and dollars, and now we've got Bitcoin and Ethereum. So that's the difference between the two. But there's like 5,000 coins.

Well, those are the two biggest. And then April, predicted by most, is to be the best month for Bitcoin. So here we are on, I'm recording this on the fourth. hasn't taken off yet, but historically April is always the biggest month. So if you wanted to get in, it might be a good time to do it now. But again, this is just for entertainment purposes. This is not investment advice.

Invest at your own risk. But here's the other really cool thing that I keep hearing stuff like this each and every week of making me a bigger believer in it. And that's PayPal. It took the next step to increase adoption of crypto. on its platform. They just did that this last week. And so users can now check out with crypto.

So those with enough cryptocurrency to cover a purchase will see a new payment option when they go to check out at any of the 29 million PayPal merchants across the web. That's pretty cool. Right? So now you actually get to use it and buy something with it. And that's this week in crypto. And that's the show.

And if you found this episode valuable, who else do you know that might too? There's a good chance 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. That's it for today. God loves you, and so do I. Health, Peace, Blessings, and Success to You. I'm Matt Terrio.

Look at the break. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. 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. For more top business podcasts, visit c-sweetradio.com. Thank you.