Epic Real Estate Investing - Real Estate Bubble, Maximizing Profits, Cryptocurrency for Real Estate Investors | 1133

Episode Date: March 19, 2021

This Friday, Matt reveals his insights on the current real estate bubble by sharing stats and data from a recent Wall Street Journal article. Particularly, you will learn how the 2021 market situation defers from the one in 2007 and what to do about it. Furthermore, Matt is joined by John Dwyer, the CEO of Solid Rock Financial Group, who shares alternative solutions to financial independence. 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 with an emphasis on retiring early. At the very least, let's escape that daily grind, escape the rat race, and set yourself at least financially independent so you don't have to rely on anybody for your well-being. And then ultimately reach that status of financial freedom. So if this is your first time here, really glad that you found us. If you like what you're here, make you sure that you hit the subscribe button before you go. And if this is not your first time here, welcome back. And thank you for sharing this with your friends and family.

You're the best. I love you for that. I really do appreciate it. So thank you. Right now, something about real estate. We're in an unprecedented bubble. I'm doing a lot of research on this. I'm really like digging into more micro and macroeconomics.

And that's why I had Jason Hartman on. and, you know, he's kind of led me down a path, and I'm following some other influencers and some bloggers and just really paying attention to the news. And we are in a bubble for sure. It's a big one too. But it's one with a very strong, and for now, an impenetrable surface,

meaning it's going to be really tough to pop. So those people that, are predicting 2021 to be a replay of 2007, you're going to be waiting for a while. And, you know, I've been saying this here for, at least on the YouTube channel. I don't know how much I've been talking about it here, a little bit here, right, for months. And, you know, there's a lot of pushback, a lot of confrontation. You can't really have it here on the podcast because it's just kind of a one-way street. But there's a lot of exchange and engagement on the YouTube channel.

And it's interesting. And by the way, there's no reason to get angry with me. I mean, it's just data statistics and math. I mean, you've got to keep your emotions out of it. This is investing. It's a numbers game, right? And all we can do is look at data statistics and math and do our best to put that together

and form some sort of, I don't know, educated risk where we can take some sort of calculated or educated guess and take some sort of calculated risk about what we should do next, right? we know standing still is not going to work if you're standing still, you're really moving backwards because everyone's just blown right by it because everyone else is going forward.

But it appears, though, that not alone in my analysis, there's a few people out there that are a little more optimistic than most and a lot of doomsdayers out there. But Nicole Friedman of the Wall Street Journal wrote an article this week and is titled,

The Pandemic Ignited a Housing Boom. But it's different from the last one. that's the title if you want to go look it up. The pandemic ignited a housing boom. And I was just thinking maybe she's a subscriber. Maybe she's been listening to the podcast here. But here's what she's talking about. And I think I agree 100% with what she's saying.

There's a couple of things that she maybe left out, but everything she did say was accurate. So she's saying that the real estate bubble is different than last. And I was saying that too. It's like if the market crashes, it's not going to be for the same reasons. So you better look at what could make it crash because anything that made it crash. Like there's no past evidence to reference. That doesn't exist right now.

And I'll go through that. There's six unique things that are happening. Number one, buyers have more cash and higher credit scores. You know, for example, right now and your major metropolitan is like a Boston for buyers to come in with, you know, $500,000. down, a half a million dollars is a down payment for a $1 million purchase. Because over this last year, contrary to popular opinion or belief, the rich have gotten richer. You know, the rally in stocks really boosted the U.S. households net worth by $7.6 trillion.

And the second quarter of 2020 alone was the biggest quarterly gain to the U.S. households net worth since 1952. So second quarter. So basically this time last year, and I'll touch on this in the news later on, that, you know, it's kind of the one-year anniversary of when the stock market crashed. Like we went into the pandemic lockdown and the stocks just, you know, hit the floor. Don't you wish you could have that day back? That would have been nice to have that day back to know what was coming up forward. But that really kind of set the stage for us to have this huge second quarter of 2020, something we've been.

never seen since the 50s, 1952 specifically. All right, so that's number one. Buyers have more cash. Number two, previously owned home sales surged to their highest level in 14 years during 2020. To a point where it has caused a supply crisis.

We talked about this last week specifically, meaning we're seriously short on supply. Now, the last crash in 2007 was the exact opposite. We had too many houses. They were everywhere. And right now, housing inventory has never been as low as it is.

And many economists are forecasting sales to keep rising and watching people just devour the leftovers because there's not a whole lot out there. So not a whole lot of selection. The number three, lending policy. And so pre-2007 market crash, we had very loose lending guidelines. You know, if you could fog a mirror, they say, you could buy a house and a really nice one, one that you probably shouldn't be buying, one that you couldn't afford. But it was easy to get in because mortgage programs made this possible by giving new

homeowners super low payments in the early years of the loan. Those low payments that you had up front, they weren't permanent. No, they had something called arms, like adjustable rate mortgage. That's what that stood for. I had to remind myself for saying. But after three years or five years, maybe a seven-year arm on a loan, it would have adjust. And they adjusted in a big way. And financial firms, what they did is they went and packaged these risky adjustable mortgages as securities and then sold those two investors on the secondary

market. And when those adjusted mortgage payments kicked in, homeowners started to default, drop like flies and foreclosures. They popped up everywhere. And so according to the National Association of Realtors, between 2006 and 2014, there were approximately 9.3 million households that either gave up their homes to foreclosure or sold under distressed conditions. So those are pretty much foreclosures and short sales is what we saw during that time period. To the point where the lenders suffered enormous losses causing the entire financial system to just freeze. And so lending guidelines since then, though, 2007 have been very tight and today are still very tight. You need a good credit score.

You've got to jump through some hoops. you got to issue a lot of LOEs, letters of explanation for various things that have gone on in your financial history. And because of these tight guidelines, banks and investors are sitting on probably the best paper they've ever had on their books. Because right now, it's the low interest rates driving the demand as opposed to the easy access to credit that drove the demand last time. And financial firms are still packaging their mortgages of securities. but the vast majority of those mortgages today, they've got government backing. So don't count on bad paper or, you know, secondary market shenanigans to bring the market down this time. Because it doesn't exist.

That's not here. All right. So number four, new construction. During the last housing market crash, you know, in 2007, the market, it was overbuilt. There were houses everywhere and they were all empty. There was just massive new construction because the builders got all, you know, they saw dollar signs in their eyes and they just wanted to build, build, build. They didn't seem to be an end in sight.

And it just led to a significant oversupply of houses. And the market had really no option but to crash. That's what happens when supply is really strong. And then the demand just disappears. Buyers are gobbling up previously owned homes as quick as they come on the market. And builders, they can't build new ones fast enough to fill. feed the demand. And right now, as of just this week, there are now growing hints of builders even having

the desire to try to keep up. And that sounds weird. But here's the reason. It's because, you know, since November builder confidence has been on a steady downward slide. Still high and still good, historically speaking, but it's been dropping a little bit. Because according to the National Association of Home Builders in an article posted March 16th, This was on Fox business.

New home contracts are being canceled because of the rising costs. Because the concern is that builders will have to pass on their rising costs to buyers in order to produce a profit and maintain steady production. You know, because the cost of lumber is tripled. We talked about flat steel, I think last week or the week before. It's not only is it expensive, like they can't find it. And if you don't have flat steel, it makes it really tough to pour a concrete foundation for a house.

And so with these increased costs, there's doubts that the demand will even be there by the time they finish the house, right? They're concerned that the buyers won't be there to support those costs when that new construction hits the market. And, you know, currently the demand is so high that many builders are just limiting the number of homes that they sell. They're kind of producing the houses like hamburgers,

made to order just to ensure that they don't sell more than they can build. So with all that said, that was a mouthful, over supply won't bring the market down this time. So that doesn't exist. The exact opposite. Those are two opposites. New construction is totally opposite. Lending policy is totally opposite. And the buyer is having more cash and higher credit score is totally opposite.

So it's not only that it's like it was back then. It's the pendulum has swung completely in the other direction. So number five, demand. you know, there's little argument right now from real estate analysts that the pandemic helped ignite the current housing boom as, you know, people that live in the city, they're leaving the city, they're leaving the major metropolitans for the rural areas, the cheaper cities because they don't need to be in the city because they're working from home, right? So when quarantine restrictions began to loosen in June, that's when home sales surged to 21%

over the previous month and then again by almost 25% more in July. So what that did is I made these two, back in June and July, I made these two months, the biggest monthly increases. And they came sequentially that were on record since 1968. And it was remarkable that we broke the record twice in back-to-back months. So between the mass urban exodus, the record low interest rates and millennials maturing into their home buying years, we'll talk about that in a sec, we're amidst a perfect storm of demand. and the storm, it ain't going to be blowing over any time soon. The skies are going to be kind of gray for a second.

The wind's going to be blowing. It's going to be sleet and hail and snow. This storm is going to be here for a while. And then number six, foreclosures. And this is everybody's trump card for a housing crash, particularly over there at YouTube, if you all are listening. They just hear foreclosures. or forbearance and eviction moratorium,

they're just like, that's the end. As soon as those expire, this thing is over. The market is going down. Right? Well, you'd think that because a lot of people do. And that's, you know, on the surface, it's, it makes sense. But when you consider everything else I just said,

that's a broad generalization that's probably going to be wrong. Because the shares of the mortgages in forbearance, Those continue to decline. We're down to 5.14% in February. It's ticking down a little bit, little bit, little bit. And this number will maintain this downward trend as the economy opens up and people go back to work. We've talked about that here as well, how the mortgage forbearance cases, they drop in almost perfect unison or synchronicity with the unemployment numbers. When people go back to work, it's a miracle.

their mortgage. And that's what we're seeing. And then you've got those mortgages that are remaining that still can't afford their payments will almost assuredly be able to sell their homes for a profit rather than face foreclosure. If you've owned your house longer than 12 months, you've almost certainly got some equity in there. So foreclosure isn't the only option. You could sell and put a profit in your pocket as well, even if you are behind on your payments. And then what's left of the homes that do ultimately go to foreclosure, the demand is so strong, those things are going to get gobbled up by the drooling homebuyers and investors. So don't count on foreclosures to bring the market down.

It's not like last time. There's so much people going back to work, they're going to pay those mortgages, and those that can't pay their mortgage, they're going to sell and make a profit. And then those of whatever's left over that do go to foreclosure are just going to get gobbled up by the demand because it's so low, it's that low that a flood of foreclosures would probably, at worst, bring our market levels back to normal. It might feel like a crash, but it would just be back to a normal. So what will crash the market is the big question.

Well, now that we're on our way out of the COVID-19 pandemic, there are still a number of longer-term trends at play that should continue to actually support the high. housing market. And most notably, that would be the millennials. They're entering their prime home buying years and will be in their prime for the next decade. And that demand is undeniable. It's inarguable.

And the reason I say that is because when they say history repeats itself, this is one that we can actually count on history repeating itself because when the baby boomers grew up, they impacted the housing market also. And the millennials are reaching that age. It's the ages between 30 and 39 years old. And the millennials are an even bigger generation. So we've already seen this movie play out before with the baby boomers. And we know how it ended.

We had a big giant housing boom. And now we've got a bigger generation. reaching that same age demographic, we're going to have a bigger housing boom. Not to mention as the baby boomers begin to pass, they're going to start passing down their wealth. There's going to be a transfer of wealth to the millennial generation like none we've ever seen.

And that transference of wealth translates to millennial buying power. People are wondering, where are they going to get all the money to buy these expensive houses? They keep going up and no one's going to be able to afford them. It's called inheritance. Baby boomers are rich. They got money and they can't take it with them. So unless more supply hits the market, much more supply,

we could be watching a rising housing market for a very long time to come. Now, the two things that she didn't mention that I've mentioned in the past, and I'll just touch on them again real quickly, that I'm watching, one obviously interest rates. you know, you push up that interest rate one point. It decreases your buying power or your purchase price power by 10%. And so they, even though the Fed, Jerome Powell recently said that he is not going to raise rates, he keeps inching them up a little bit.

So they're rising and ticking up very slightly, but they're going up. And that's why the stock market is doing what it's doing. I'm trying to understand this too, how the bonds and the treasure. and all that kind of stuff works. It's a little bit over my head. And I'm learning about that a little bit late in life because I've never had much interest in the stock market. I've always been a real estate person.

But now I'm interested in these macroeconomics, so I'm paying a little bit more attention. But this is kind of what's leading to so much volatility in the stock market. Because Jerome Powell will come out and make an announcement one day and the stock market does one thing. And then he actually takes action and something to the contrary happens. And then the market goes the other way. So that's what's going on. So you got to watch out for the interest rates because that could change everything.

I mean, right now we're at 3%. And even if they'd have bumped them up to 6%. That would still be a really good rate, by the way, historically speaking, but it would probably drop prices by 25, 30%. So that could feel very much like a crash. I don't think it's going to happen. But what do we know, right? We can think all we want.

But we're not in control. And frequently we're seeing there are leaders that are running things right now. I'm talking more about the monetary system, but I guess you could go all the way up to the White House. Or saying one thing and doing another. So who knows? We'll watch. But the biggest winners so far in today's boom are people, you and I, who already own homes. So congratulations if you own some real estate, even if it's just one.

because collectively people that own homes added $1.5 trillion of equity to their portfolio in 2020. That was, that's remarkable. And they have also saved money by refinancing their mortgages at record low rates. So if you got in on one of those 2% mortgages, congrats. Because we'll probably never see that again. That window's probably closed. And for all of those that did it and took some money out, they've been able to leverage their refis into investment properties and vacation homes.

So if you already had real estate, you won, definitely. I was just telling a group over at the follow-through crew tonight that we were talking about how much should you rehab and repair your rentals. And I was like, well, you just walk into another rental, look at what the competition is doing and do a little bit better than that. And we have this rental in one of our, not one of our portfolies, I mean, one of our markets in Cleveland. And it's not a great property. It's a duplex.

And we actually bought it back from a customer that was unhappy with it. That was like probably six years ago, four, maybe five years ago. Well, they weren't happy with it. And so we just bought it back and found them a different property. And so we've been holding onto it the whole time. And it actually performed really well. In hindsight, it was probably a bad move on their part because this, this has been a cash flowing property for us. It's had some repair issues, but it's been occupied the whole time,

and we've had two good tenants that pay on time, and they have for a very long time. So as we're hitting this peak, right, we're talking about this big boom and all this equity, Mercedes and I have been kind of looking at our portfolio, like, okay, so what can we do? Let's look at see where we have some equity, because we don't like sitting equity. Let's see how we can leverage that to buy some more products. properties, and this was one of the properties that came up with a ton of equity in it. So I think we bought this house back from our client for like $60,000, maybe $65,000, something like that.

And so, and we haven't even looked at it. We just collect the cash flow and we're not paying attention to anything else. We get a maintenance caller once in a while, and we fix it. And we have that property on the market right now, and we've got multiple offers. But I think we're in contract. I have to check with Mercedes. She's traveling right now. but we're in contract for $185,000 in three years, four years,

65K to 185. So that was a good deal. So we're trying to, we're going to go ahead and sell that and consolidate into one of our other three markets that we're liking a lot right now and take advantage of this 1031 exchange before that thing disappears. I'll talk about that a little bit later too. But, yeah,

Big winners if you already owned real estate. And then real estate brokers and home builders and mortgage lenders are also riding the wave. Because the S&P Home Builders Select Industry Index is up 96% over the past year. And that outpaced the S&P 500's 59% gain. It did almost double what the S&P 500 did. And we all know if you're watching the stock market, the S&P 500 did pretty darn good this year. Real estate works. And if you had some, you know it.

You're a believer now, that's for sure. And it's here at Epic that we know that most people are living this life of financial sacrifice and betrayal and focusing on the stock market. So, you know, we built a system that creates an opportunity for one's money to work harder for them than they did for it, saving them and their families, you and your families from a lifetime of financial worry. And it all begins with income producing real estate. So with market conditions, though, like these, what is one to do?

particularly if you don't have any real estate yet. Where does one begin or resume? Well, first place is everything I've talked about. This is all on-market news. We're real estate investors. We play off-market, right? We're looking for distress. We're looking for financial distress.

We're looking for personal distress. We're looking for property distress. And sadly, that type of distress is in an all-time high as well. So that's how we find our deals. We go straight to the source, straight to the sellers. And if you don't want to do that, then you can go and play the game on the retail market through a real estate agent that did that direct-to-seller marketing for you. But you'll have to pay a premium. And that's fine.

You're going to have to pay retail. And real estate will still work out for you even if you did. It's going to take a little bit longer. And you probably, yeah, you probably won't be able to go as fast or get as much. All right. But there is some hope if you're looking to get into real estate market-wise without paying through the nose. because as is usually the case with real estate, these trends look very different according to location.

And many of the areas that still have a strong housing inventory are places that have seen increased home construction to accommodate the growing population. So I looked at a few different markets, and if you'd like to get in on the action, whether that be with an investment property, or if you're looking for a new home, we're looking to move or relocate.

So at the state level, Florida is the clear leader in the number of homes for sale with 248 active listings per 10,000 homes. And number two, I bet you'll never guess. Number two states with the most active listings per 10,000 homes. That would be Hawaii. So maybe if you've wanted to escape to the tropics and head out to the islands, then this may be the opportunity. 229 homes per 10,000 active listings. And then Georgia, 210 there, 210 listings per 10,000 homes. And then not far behind my new home state of Nevada and then Wyoming.

Those two states also pose a decent amount of housing market opportunity. So those are five states where supply and demand are currently keeping pace with one another more than they are elsewhere. Not that there aren't deals elsewhere, not that you can't find real estate elsewhere, but just a little bit more balanced in those five states. And this makes them more favorable for home buyers and investors at the moment, just because while there are still a lot of competitors there, it's not like there's nobody there and it's a free for all for anybody that wants a house.

No, not the case. There are lots of competitors still in those markets. It's just also more options available. That's all. So the bottom line for all of the housing market crash predictors, the current housing boom right now, it's more stable than the previous by far, and it poses much fewer systemic risks.

This time, it's different. But that's not to say it's entirely without risks. I would say our lack of control for the interest rates and what happens there is something to watch out for. Oh, and the second thing, I didn't even touch on this. The employment numbers. because the official employment numbers have us at 6.2%. And Jerome Powell himself has said that those numbers are probably very inaccurate,

as he predicted or estimated at least 5 million people have left the job market permanently, which would bring those unemployment numbers up to 10%. And still about 700,000 jobless claims per week being filed. So that number, it feels like it's going down for the official number. But if you had 700,000 a week, you know, that starts to add up pretty quickly. But hopefully we find everybody a job and those new jobs that are promised by the new administration. Because he pronounced that the day he cut off the oil pipeline, he began his speech with, today at the White House is called Jobs Week, where we create new jobs.

And hopefully he produces those jobs pretty darn soon. but they weren't in place when he counted it, called it jobs week. He just slashed a bunch of jobs. That's another story. That's fact, though. Whether you believe me or not, it doesn't matter. It happened. Whether you like what I have to say or not, doesn't matter.

It happened. A lot of people lost a job, promised a new job, but the job doesn't exist yet. Anyway, we just hope those arrive. So unemployment, keep your eyes and ears on those numbers with regard to the housing market as well. Okay, so that. That's that about the housing market bubble, the real estate bubble. It's a big bubble. It's huge.

But it's really just because the supply is so low. It's just like there is nothing. So the demand is building up, building up, building up. The demand is huge right now. But with that type of bubble, it's going to take a lot to penetrate that and cause it to pop, is what I'm trying to say. I'm going to try and stick with the whole metaphor there with the bubble. So we got that.

All right. So my guest today, excited about this guest because as I've been exploring these macro economics and kind of bigger view, bigger picture angles looking at real estate and the real estate market, I've also been looking at bigger views and bigger angles in building wealth. You know, real estate is a great start. It still has produced more wealth than any other asset class or any other vehicle for the most people. But there are much more efficient ways about going about it where you can expand it even more. I've talked about you make money when you buy your real estate. You make money when

you sell real estate. And I've talked about the deal after the deal on how to expand your profits that way as well. Well, I've been exploring some other things. And actually this interview that I'm going to play for you is recorded. And we got to talking of lot after the interview about some other things I was thinking about combining it with what he's going to talk about. And it's pretty amazing of what we can do. And I can't believe that, I mean, I'm 50 years old and I'm just figuring this out. Like, who is going to tell me? I've had to be pretty proactive to stumble across this stuff and dig deep and study. And I'm so glad I get to share it with you and you can share this. But just kind of the idea of, and I think we talk about this

a little bit and I wasn't quite sure what it was when I was asking the question, but it's been a few days since we recorded this and I've gone even deeper into my research and just discover some amazing things that you can do. And I was like, oh, wow, that's how you do it. So just imagine taking $1 and being able to divide that up into $2 and deploy that in two separate and deploy that in two separate investments and have it work in both places. So you have actually said that incorrectly. So you have $1, and you can put that $1, $1 worth in two different investments as it's operating as $2.

But it's still just $1. And have them completely separate to where they're uncorrelated. So if one crashes, it doesn't mean the other one's going to crash. and vice versa. If one thrives and grows, doesn't mean. So it's not only multiplying the effort of your dollar, the return of your dollar, but it's also diversifying and saving and securing your dollar. Because you started with $1.

And if one of those investments went to zero, you still have your $1 in the other investment. So you totally had your loss. And so it's pretty remarkable when you start to put in that type of stuff to work. And it's available. to us too. It's not like there's some secret society or secret dark place on the web or some big giant book you got to read that's in the back of the library or anything like that or some high priced financial planner you need access to. Nothing like that. And so we're going to talk about that a little bit.

We're also going to go deeper into it on our Wednesday web class. This is going to be our last Wednesday web class for a little while. So that'll be this Wednesday. You can go to Wednesday webclass.com to register and I'll mention that again later. But I think you really need to be at this one. We've had some great guests. We've talked about some great stuff. I've handpicked all of them. And I really love what they were able to share.

And hopefully you got something out of it when you were there. But this is going to be unique. This is going to be special because no one else is going to tell you this. You're not going to learn this anywhere else. And I'm going to be talking about this more and more on the show and letting you know exactly what I am doing. Because there's one thing to be really good at finding off-market deals. There's one thing to be good at, you know, being able to buy them at a deep discount,

being able to buy them creatively using the sellers financing, all the things I love to do. And that's not going to change. But that can be done in a different way where you can double or triple your returns without finding another deal, without getting the property at a deeper discount. And I want to share that with you. expose that to you. So at least you know it's available. You don't have to do it. But I warn you, once you see it, you're going to want to. It's pretty cool. All right. So let's get on to my guest. He's the president and CEO of Solid Rock Financial Group. He leads the organization with incredible

passion and vision. He is instrumental in setting the pace and tone of what's truly possible through his dedication and commitment to advocate what he believes, not only for his own clients, but also through the mentorship of financial professionals within Solid Rock and throughout the U.S., it is with his singular focus to help people understand how money really works. You're going to love it. And he's positioned Solid Rock as a consistently growing group of thriving individual practitioners located across North Dakota, Minnesota, Colorado, and Ohio, but he can work with you in any state. And he's a proud husband and father of three. He and his wife Maria are board members of the

Lespao Lavi Academy in Bismarck. It's a unique foundation providing hope and opportunity to children and hardworking men and women in Haitian rural communities. Good dude, big heart, really smart, and he can make you rich if you listen to him. So please help me welcome to the show, Mr. John Dwyer. John, welcome to the epic real estate investing show. Hey, thanks, man. Thanks for having me. You bet. Glad we were able to do this.

And we've known each other for a little while, but mostly in social environments. It always seems to end up at happy hour. We try to talk business, but then we find much more fun things to talk about sometimes and we never really get there. So, you know, we've got a mutual friend in Jeremy. And he's always there as well. But when you're not around, he really speaks highly of your praises and talks. about what a money genius you are and how you can really maximize your dollars and how so many people like the masses are really missing out on some really cool stuff to, you know, just

overall build your wealth. And I want to talk about all of that. But first, can we just start with a little bit of your background? Yeah. So I've been in the financial space for a little over 20 years. And when I first got into the planning world, you know, I was doing things like everybody else was from a traditional planning perspective. And, you know, Matt, what's interesting is over the years of doing this, what I started to discover was that traditional planning is broken.

And so I've spent the last, you know, 15, 16 years of my career really helping clients understand how wealth really works. And, you know, there's big differences between math and money and wealth. And the institutions of the government have these rules and the games set up to where they benefit, not us as consumers or people that are trying to, you know, get ahead as it relates to our wealth. And so really what I help people understand is that, you know, do we want to just be a pawn in the game or do we want to take the rules in the game board and operate and function like the institutions, you are how they create wealth and understand money from that perspective. Or do we want to just keep doing what we're told to do? And so, you know, for the last 20 or 15 years is really what I've been doing and helping clients understand these strategies, right? It's all about strategy. Okay. So traditional planning is broken.

I couldn't agree more. but we have we come from two different worlds and may have different views on it. So tell me what traditional planning is and why you think it's broken. Yeah. So for me, traditional planning is, you know, you're putting your money into accounts, dollar cost averaging, leaving accounts and play to where you don't have access, control, or use of your money. And the reason why.

You speak like of a retirement account, right? Yeah, yeah, retirement account or I mean, just any, you know, mutual fund, any type of investing. But see, here's that here's why it's broken. It's not that you can't make money in the stock market or do different. things, but it's broken from a microeconomic perspective. Money is not micro, money's macro. And so every financial decision that you could make affects all the other decisions that you could have made. Right. So when we look at overall comprehensive wealth, I mean,

there is direct relations to how you fund or buy real estate compared to do you put money in a 401k plan. What I see a lot of times is that people are driving down the road and they have one foot on the gas and one foot on the brake and they're not even aware of it because what they're trying to do over here is affecting or contradicting what they're trying to do over here from a money perspective. Because in the traditional planning space, it's microeconomic and they only focus on accumulation and rates of return. And it's not just about what your rate of return is, is what you can spend. Right. And so helping people understand that it's, there's more to it. There's more to the game than just, you know, what is my rate of return and what in my account value say. I could care less what my

asset value is. I want to know what I can actually spend. And so it just has to helping people understand the differences and looking at it from a macro economic perspective really starts to peel the layers back on the onion of what we're trying to be told to do with our money because it doesn't benefit us. I mean, if we look at it from a perspective of, you know, I talk a lot about this. I mean, I believe that banks are in the business of making money, true? True. Yeah, right? But yet it seems like everything that we do from a financial perspective is complete opposite of what the banks tell us to do. And yet if we sit back and look at how the banks are making money and understand the economic concepts that they understand,

that is really how we should start to employ our own financial world. And so it's just helping people understand the truth about wealth and money. Got it. So before we go further, we call it traditional planning. It had to have worked at some point, right? Or if it didn't, or if it did, and if it did, what caused it to actually break? What was like the defining moment? And I think it's, yeah, to your point, right, I mean, it's important to save money and to do different things. But again, it's the things that we're told to do, it benefits the institutions, right? It benefits them by putting money in places that one, you can't access, you can't control. And the government, in a lot of cases, dictates, you know, tax rates and where you can take your money out, how you can take it out in time periods.

And so it really doesn't benefit you from a overall wealth perspective. It might allow you to accumulate some money, right, from that traditional standpoint. But yet there's so many, if you look around, I mean, just the conversations that you and I have had, right? From a standpoint of how do you really create wealth? Well, it's having access to capital. It's having opportunities. And, you know, there's something that I talk a lot about, too, as it relates to wealth and money is that there's these things called transferred money or transferred wealth. And this is what, you know, very few people understand.

And in fact, the institutions and the government have really made it clear that they don't want us to know anything about transferred money. And simply definition of that, Matt, is just, you know, the dollars that we're losing unknowingly and unnecessarily to the institutions and the government could be costing people hundreds, if not millions, if not thousands of dollars over their lifetime. To how do we make major capital purchases, to how do we buy real estate, to how do we put our kids through college, to, you know, all these different things. of transfers that we're just not aware of how to efficiently do and utilize our capital. What's one way that with the transferred money that we're unknowingly losing money? So, for example, in the state's tax code in retirement, about 60% of Americans will lose on average a quarter of a million dollars worth of wealth, just because the way the tax code is set up. And so think about that.

What if there were strategies and there are, right? I want to say that there was, but there are strategies to where if you can position yourself to where you don't have to have a guaranteed loss of $250,000. You're in a far better position than trying to rate or return your way out of that loss. But see, it's all about how the tax code and how it's written, especially in distribution from provisional income testing. And so there's areas like that all throughout our lifetime that we're making these decisions and we're just unaware of the unintended consequences.

So if someone is putting saving, as they were told to do by their financial planner, their traditional planner, inside of a tax-deferred vehicle or a tax-benefited vehicle, like an IRA or a 401K. So the way the tax code is written in that type of vehicle or that type of environment, there's this huge loss that they're going to take anyway? Yeah, because, well, if you think about it, right, it's a tax postponement plan.

It's not a tax savings plan. And if you believe that future tax is going to be higher, you're putting money into an account at a lower tax. tax bracket only to pull it out of the higher tax bracket. And if you think about that for a minute, the IRA component to it is, you know, there's only about 11 years where you get to dictate when you want to take the money out. But aside from that, you have no idea how much that money is yours. You know, we look at it from an asset value of, oh, I have a million dollars in my 401k

our IRA statement. That's just paper value. Go spend it. When you start to spend it, that's the real asset value that you have. after the tax. Right. Right. And so it's just helping people understand, you know, is that a good decision or a bad decision?

Because, again, we don't like to pay taxes today. I get that, right? But there's differences, too, between a reduction and a deduction in tax planning. And you are not saving taxes when you put money into a 401k or an IRA plan. All you're doing is postponing the tax and the tax calculation to some date in the future, which tax rates are probably only going to be high. My opinion is that taxes are going to go up. Yeah.

Yeah. particularly that seems to be a more true statement as each day passes by. Correct. Right. So it's just, again, it's just helping people understand. And if you think about it from a planning perspective, Matt, right? The financial advisors, why is it that they tell you to, the first thing you should do is max out your 401K. Right.

Well, think about it. You get to manage that money for all those years and you get the charge of management fee on the entire account balance and half of it's not even yours. And if you think about there's about $34 trillion in circulation that are in the qualified plans. I mean, it's a game changer for the institutions. Right, right, right. Yeah, I read an article in the Wall Street Journal. This is probably two years ago. And the person, like, kind of the mastermind behind the 401k was actually, actually built it with the intention.

at least so it said in the article of fighting Wall Street corruption and only to find out that he did the exact opposite. He was very regretful of what he'd put in place. I mean, think about it, you can't touch those dollars without penalty until you're 59 and a half and at 72, you have to take the money out. Now, it was 70, right? So actually it's not 11 years. It's 13 years now. But again, we have no access to that money. And I think one of the biggest things is that when I look around work with and the things that I do and I know that you know things that you and I have talked about is having liquidity use and control of your capital that's what's going to create opportunities and create rates return and so the things that I talk a lot about our clients is helping them realize that you're your

greatest asset right but how do we deplore capital to position it to where you can use it over and over and over again and to where you can utilize it to take advantage of those opportunities because that's really what creates wealth in this country and again you you know you can make money market. I did opportunistically. I do it opportunistically. Like, for example, when COVID hit, the market crashed, right? We had that little blip and I went out and bought individual stocks and did some things, but I have money sitting aside that's uncorrelated to any other market conditions. So when the market goes down, I'm not going down with it. I can really truly take advantage of those opportunities. And the same thing as in real estate, right? When there's a piece of property,

If you can get your hands on that capital to take advantage of maybe that that run down property, that someone calls you up and says, hey, I got this deal, right? If you have access to that capital, that's when you really start to take advantage of those opportunities versus trying to prove to the bank that you don't need the capital for them to give you the money. And so it's just a matter of helping people understand that, again, having liquidity use and control of your money is one thing. But then how do we utilize it to maximize and efficiently utilize it in retirement for tax code purposes and all these different things that we do.

Right. Yeah, it's from a totally different reasoning or rationale, but I think you and I come to the same conclusion that you want your money now, you're living now, right? Why do you want to postpone life to live it later when your best years of your life are behind you? And secondarily, for that math to work, I mean, we're living already 10 years longer than our grandparents.

And for that math to work, most people just don't save them. or excuse me, make enough to be able to save enough for that math to pan out. Right. Is that accurate? I mean, that's, yeah, I mean, and on the math over and over again. I'm just like, this is ridiculous. Yeah, and then that's when you look at, you know, traditional planning,

they'll either try to try to maximize a rate return, exposing to more and more risk in the hopes of a rate return, or they'll tell you to quit spending money on your lifestyle to so you can save more. But see, in my example of that $250,000 wealth transfer, or what if I could show a client to where they don't have to be exposed to a guaranteed loss of $250,000? They're that much further ahead. So by just by reducing, and so my belief, Matt, is this, is that it's more important to avoid losses than it is to pick the winners. Because if we can understand where these wealth transfers are occurring throughout our lifetime and plug the leaks, number one, there's really no risk at all because you're going to lose the money anyways.

But then we can deploy it and deplore it into better efficient strategies to which we'll actually create well. And so again, with traditional planning, it's all based on rate to return, rate to return, rate to return. It's not the rate of return. It really that matters is what you can spend. And so those are things that we just have to, and again, that's a paradigm shift to what we're taught. Right. Right. When did you realize?

What was the turning point when you realized that it was all going wrong and you could make a difference by sharing a new type of approach? You know, that's a good question because it was about five, six years. years into my career. And what I started to discover is that some of my own clients and especially clients that were coming to me that were getting closer to retirement age, right? And I talk about the miracle of compounding interest a lot. And they thought they should be up on some level of the compound note because this is audio. I'm using my hands here, right? But it's it's, they thought they should be up somewhere on that compounding curve, but they found themselves way below it and they couldn't figure out why because they, myself as a planner, I was

following the rule book, doing what I was taught to do, too, you know, learned. But yet we realize that it's broken because it's not the miracle of compounding interest that really matters. It's the miracle of uninterrupt the compounding interest that matters. So the institutions are doing things with our capital to where we lose that miracle of compounding interest because we give it away. And so it kind of hit me by between the eyes. It's just as I started to discover this, I was like, man, what we're doing just doesn't work and there's got to be a better way. And so I just started to read and dig into economics, 101, really. and just kind of remove myself from what I was taught from all the books and all the things that I read to get into the industry.

And then, you know, I've been fortunate with my level of production and things, meaning some really smart individuals and just rubbing shoulders. As you know, it's kind of like the whole thing of masterminds and learning from the best, right? And just really kind of having these think tank environments to where we just share our thoughts and processes and really just really started to explode my understanding of how wealth really worked. works. And so really just, you know, employing those and then just looking at what the institutions are doing. Again, they do the exact opposite of what they tell us to do. Give an example of that.

Well, so think about a bank for a minute, right? The bank's asset value and deposits and loans is really important to them. Do you think the bank takes their money and locks up most of their tier one capital and 401Ks and IRAs and let it sit there for 30 years? Do they turn it and move it? They turn it, move it for sure. Yeah. But yet, They tell us to go by their IRAs, their CDs and these accounts that you can't touch it because they just say, oh, look at the miracle of compounding interest, but we're going to go out here and implement the velocity and money concept. Right.

And so they do the exact opposite with their money as they do as what they tell us to do with our money. And that's an economic term, right? Velocity of money. Money and movement is what creates well. Right. Okay. So elaborate on that because I've heard that over and over my year through the years.

and I'm not sure if I could actually explain it. So when we deposit our money into a bank, right? So let's say you have a banking relationship. You deposit your money in the bank, right? They're going to give you basically one benefit. They're going to give you a small rate of return for your money. Okay. Now, I'm going to go to the bank and I'm starting a business and I'm going to borrow the bank's money.

Well, whose money are they going to lend me? They're not going to lend me their money. They're going to lend me your money. Right. Right. Now I take that money and I go and buy some equipment or some cap or some, some, um, some of the things that I need for my business. It just so happens the person that I buy it from banks at the same bank that you and I were working with.

So what happens? That money goes back into the banking system into their coppers. They get to loan it back out, right? So they're constantly moving money in and out through velocity. And they're only giving you one benefit with their dollar, but they're getting multiple benefits. Right. So they've got, go ahead. Does that make sense?

Yeah. So they got, they have a dollar at their disposal and they're getting it working in three different ways. as for $3. Exactly right. They're giving us one benefit for parking our money there. Right. And so how do we, now granted,

we don't have the Federal Reserve and we can't have Fiat money, but there's their strategies and there's ideas around your money can still be in movement and still can create velocity and to where you can utilize your dollars over and over and over again and never lose that miracle of compounding of interest. Got it. Super. All right. I'm following you now and I've been,

actually, this is a very timely conversation because I've been thinking about this a lot in these types of things. But I think one of maybe one of the reasons I haven't reached out to you before on from a personal or a private, on a private basis is that I'm just under the impression that everything you're talking about. We're talking about the transfer of wealth and we're talking about unknowing losses and the velocity of money and just more efficient ways of putting your money to work. it feels very much like it might be a game above my head. Like who is the ideal person for this? When should they start? That's a great question.

And the reality is that it doesn't have to be complicated, right? We're using big words and terminology, but really when I work with my clients, we really just break it down and help them understand these ideas. And there's no better time to start than now. I know that sounds salesy, right? But it's true because I have clients and people that I work with that are in their 60s and like, John, where were you 25 years ago?

Right? Or is it too late to start? And the answer is no. I mean, I have clients that are implementing some of these strategies at 65. You need a lot of money to make, to get started and make this work? No, because again, it's all about what I do is I look at where people are being inefficient. We're already putting money in places, right? And what if those, for example, what if someone's putting money into a 401k or an IRA account and they

realize that that could be a huge mistake. Well, all we're doing is redirecting where the money was already spending and saving the money. Let's just show them how to more efficiently use the same capital they're already using. So one of my commitments to clients is that most times that we can show you how to improve your scenario with what you're already doing without any more capital requirements. Now, with someone that just gets out of school and they're working on cash flow, that's a different scenario because we have to utilize cash flow to implement new different strategies. But at the same time, there's no magic, there's no magic number of how much wealth

you need to have because, again, we're trying to help people understand whether inefficiently utilizing their capital and redeploying it and making those dollars way just more efficient. Does that, does that help answer your question? Yeah, that's a little refreshing and maybe we'll be having a conversation much sooner than I thought. So I'm looking forward to that. I know we're getting together next Wednesday night for a Wednesday web class. And we're going to talk about some of these wealth transfer opportunities or missed opportunities, some more efficient alternatives to like the 401K, the traditional stuff we've been doing. Let's talk more about velocity of money. And now, you know, someone like an individual can apply that just like

the way a bank would. What else can they expect to learn, John? Yeah. So I mean, we'll show them how to be more efficient in purchasing real estate and how to utilize different strategies. Worth is just trying to get the bank to give you money or proving that you don't need the money, right? And to where it can be a benefit from a tax perspective just because of how we utilize it and how to make major capital purchases. And then, you know, I think maybe even digging into distribution because a lot of times what I find is that we're purchasing real estate, but what is our exit strategy? Do we have an exit strategy? How does that relate to, you know, when we can no longer depreciate property and we're trying to have all this cash flow, what are our choices from a tax perspective? So all those different things, I think, will be great conversations, Matt, that we'll have.

Okay, perfect. So I've got that Wednesday, March 24th. And we've been doing all of our sessions at 3 p.m. Pacific standard time, but for some reason, I have us on the calendar at 330 Pacific. Is that, did you request that or did we do that by accident? I'm looking at Mike. I have it on 530 Central standard time on the 24th. If we did it at 5 Central, would that be fine for you?

That would be just fine. Okay. I just want to make it consistent with all. our previous. I don't know how we got in there a half hour later. Okay. So go to Wednesday webclass.com March 24th. And we need a fancy name for this. What are we going to call it, John? How do, that's a good question. What should we call it? You're kind of the brain buster. I don't know. Yeah. I like this whole idea of velocity of money. Can we say using velocity of money to invest in real estate? That's perfect. All right. I like it. Using velocity of money to invest.

best in real estate. Super duper. All right. I'm really looking forward to it. I'm showing up with my pen and paper. I'm going to be taking notes. And if this is interesting, you, do the same. And just to kind of speak on that for you that are considering showing up and joining us.

This is a little, it's a strategy that I've been thinking about for a while. And it was introduced to me a long time ago. But I'm seeing some other opportunities to where you can take that $1 and get it to work in two different places without having to have $2. And I'm going to run that by John after we've done here. And if he gives it a thumbs up, maybe we'll talk about that too on Wednesday because I don't want to convolut the message here. But it's something that's, you know, it's higher level.

And you're not going to hear this on the flipping house show, right? This is something this is all about creating wealth and investing in real estate in the interest of retiring early. And what John's going to share with us are several different types of strategies that can help us do just that even faster than we thought we were going to do it before today's episode. All right. John, it's been a pleasure. And if you need anything between now and then, you know how to get in touch with me.

Otherwise, I'll see you next Wednesday. All right, man. I really appreciate it. It's fun being on. Yeah, likewise. Take care. All right. And we'll be right back with the news.

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Find motivated sellers ASAP.com. All right, in the news, the economy turns out people do less when it's freezing out. Retail sales fell 3% last month and factory production also dipped due to snow. plus brutally low temperatures. Analysts aren't too worried, though, since the economy is projected to bounce back this spring in historic fashion. Volkswagen. Their shares rose on the market, 10%.

And that was this week after execs detailed their master plan to be number one in the electric vehicle market by 2025. That's fast. It's ambitious. And this includes more than double the number of EV deliveries this year. They're going to build six new European battery factories. They're going to employ 10,000 developers making it the largest European software firm behind SAP. What's SAP?

SAP. I probably should have looked that up before I read it to you. But SAP, capital S, capital A, capital P. Oh, SAP must be the biggest European software firm. There it is. And so that makes Volkswagen the second largest by 2025. So cool. But will that be enough?

Who knows? Tesla might have something else to say about that. Moderna has begun testing its COVID-19 vaccine on children under 12. E. Toro, the Israeli trading platform and Robin Hood rival, is going public via SPAC in a $10.4 billion deal. Google reduced the commission it takes from Android developers on their first $1 million in revenue following a similar move by Apple. The teenager who gained control of Twitter accounts of some of the world's most powerful people last are pleaded guilty and agreed to serve three years in prison. LeBron James is joining Fenway Sports Group, the parent company of the Boston Red Sox and Liverpool Football Club as a partner.

I heard that he was going to own a baseball team, so he's going to be part owner of the Boston Red Sox. All righty. COVID, starting Monday, or excuse me, this was today, so probably a few days from after your listeners, starting this week. We'll just say that. Mississippi will become the second state after Alaska to open vaccine. and eligibility to all adults.

And the Sixers are becoming even bigger favorites in the East now that Pennsylvania is allowing numerous businesses, including sports venues, to increase capacity. I'm so excited about the economy opening back up. Don't you miss your life? I miss mine. All right. So President Biden, we've talked a little bit about this coming up. We're just going to rip the Band-Aid off and rip it off fast.

President Biden is aiming to raise taxes sooner rather than later. according to a new Bloomberg report. So what can you expect? Well, for individuals, bumping the income tax to 39.6% for those earning $400,000 plus. Now, that's not that many people, because that's going to be based on personal earnings, salary. There's not a whole lot of people make $400,000 a year on salary. And secondarily, it's not that much money either these days.

I know $400,000 a year sounds like a lot. That may be a lot more than what you make right now. But I got to tell you that, you know, you can live in a nicer house. You can drive a nicer car. Maybe you get two nicer cars. Take a couple of vacations. Maybe your kid goes to a nicer school. But that's about it.

There's not, it's not like you've risen into superstardom and now you're on lifestyles of the rich and famous. Nothing like that. And the third thing is, oh, I'll get to that in a second. We talk about businesses. Next, what else you can expect? Taxing capital gains like normal income if you earn one plus million dollars. And then increasing estate taxes to 45% for assets worth one plus million dollars. So if you still clip coupons, probably not going to expect any changes.

That's probably not true either because Mercedes is a coupon clipping queen. But these increases largely follow Biden's campaign proposals to only tax high earners. So that's kind of my point. Not necessarily high earners. The other part of that is I don't make $400,000 a year in personal income because we would like to show as entrepreneurs we make as little as possible for tax purposes, right? Legally, honestly, and ethically, of course, we still operate within the tax law. But don't pay ourselves a lot because it doesn't benefit us to. Now, it really won't benefit us to.

But he's going to get you in businesses, right? Because $400,000 a year, I don't know if there's a lot of salaries that pay that. I don't know. I've never had a job that paid anything like that before. It just doesn't feel like a lot of people. And I think they know that. So they're going to get you on the business side. And the headline proposal is raising the corporate rate to 28%.

Biden may also get rid of preferential tax treatment for pass-through businesses like LLCs and increase incentives to avoid offshoring. So that's potential. That could impact real estate investors for sure with the pass-through thing. You know, when Trump slashed the corporate rate to 21% in 2017, he wasn't the first to bat for business interests. You know, from 2000 to 2018, 76 countries reduced their corporate rates to attract investment. Now the average rate is right around 24%.

And then Treasury Secretary Janet, at Yellen wants to stop that race to the bottom, which some economists say has only benefited large companies. It benefited this small little company over here. So he's working with allies on establishing a global minimum tax for multinationals. So you see Berkeley economists estimate 40% of profits earned by multinational firms or 700 plus billion were located in tax havens in 2017. So I guess that's what they're going after.

And they say that. but it gets the little guy too. It really, they go after this big business, but then they put this number on there like, oh, I was just, like I guess if I was a business that owns a little hot dog stand on the corner, I'm not going to get taxed. But if you're doing even remotely good for yourself,

they're coming for you, that's for sure. And the critics, they argue this plan puts companies at risk for double taxation and the tax foundation estimates that some of the proposed changes to corporate taxes would reduce US GDP by 0.8% and wages by 0.7% in the long run. So why do they want to do this? Well, given that the last major tax hike happened in 1983,

it's not an easy play for hearts and votes. And groups with lots of money at stake are sure to lobby against the plan. But after funding his ambitious $1.9 trillion COVID package largely with government debt, Biden needs something more sustainable for the even more ambitious. infrastructure package he's eyeing, which could run anywhere from two to four trillion dollars. Brace yourself for what that's going to bring. On to much more happier news. Yesterday or this week, Rosalind Brewer became the only black woman,

currently serving as the CEO of a Fortune 500 company. She's the new head of Walgreens. Congrats to Rosalind. And then Deb Holland was confirmed as Interior Secretary. She makes history as the first Native American to lead a cabinet agency. That's remarkable. That that took this long.

And, yeah, the Native Americans need to be represented for sure. I don't know. I have a soft spot in my heart of what happened to the Native Americans. But glad there's progress there. And congrats for both of them and their promotions. Netflix, Mank. Mank tops the list for most Oscar nominations with 10. and let's see, U.S. Airlines execs reported glimmers of hope for a travel rebound at a conference yesterday.

Last weekend was the busiest at U.S. airport since the pandemic began. And Senator Mitt Romney called for an economic and diplomatic boycott of the Beijing Olympics in 2022. GM-backed Cruz is buying fellow self-driving company voyage as the industry consolidates around a few major players. and China glowed orange yesterday during the country's biggest sandstorm in a decade. And now something brand new I'm bringing to the show. This is the long episode. Anyway, we're going to keep going on. And I'll cut these down and where you do sit.

I don't know if you like the news. I like the news. I put it at last. So if you don't want to hear it, you can hear the real estate up front. And that'll be strategies and market stuff and all the real stuff that you've come to love Epic for. And then we'll have an interview or a guest there in the second part. And then we'll end with the news. So you'll always know that the news is coming at the end.

And if you don't want to hear it, then you don't have to. But I enjoy the news. I love staying up to date. And I just like to share some news without any sort of slant to it, although I haven't done very good with this episode, because you've probably been able to extract my leanings. Anyway, you know what? I'm just down for freedom.

I just want my freedom. I just love my country. I want my freedom. I want to say what I want, want to do what I want. I don't want anyone to really gut it. me for that and I want to work hard for my money and I want to keep as much of it as possible. And that's that. That's all I want. And I want honesty and I want fairness. So there. I don't know if that's a left or right thing. That feels like it's a normal American thing and

that's all I want. So interpret that how you may. So something new I'm going to bring to the show. And I'm going to do this last, very last, just in case you have zero interest in this. But I'm going to share news for this week in crypto. I'm going to call it this week in crypto. Cryptocurrency, if that's new to you. Because I am using, first of all, it is an investment. I'll tell you a little bit about it if you don't know what it is. But I'm also starting to combine it with my real estate.

And I'm going to start talking a little bit more about that. And it has a little bit to do with what John was talking about earlier. And I will share more and more with you about that in the coming months for sure. Because I'm attacking it pretty aggressively of how I'm making. and all of the stuff work together. So anyway, cryptocurrency, if you don't know what it is, it's a decentralized digital money. It's based on blockchain technology.

And you may be familiar with the most popular versions. You might have heard of Bitcoin. You might have heard of Ethereum. But there are more than 5,000 different cryptocurrencies in circulation. And you can use crypto to buy regular goods and services, although many people invest in cryptocurrencies as they would in other assets, like stocks or precious metals. And while cryptocurrency, it's a,

is a novel and exciting asset class. Purchasing it can be risky, as you must take on a fair amount of research to fully understand how each system works. So I will be telling you what I'm doing, but I'm not recommending or suggesting you do the same. But I do want you to know what's possible, what's available, and I'll share with you with the pros and cons

at every corner that I possibly can. All right? So how does cryptocurrency work? Well, a cryptocurrency is a medium of exchange that is digital, encrypted and decentralized. Unlike the US dollar of the euro, there is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among a cryptocurrency's users via the internet. So Bitcoin, this was the first cryptocurrency, first outlined in principle by Satoshi Nakamoto in a 2008 paper titled Bitcoin.

a peer-to-peer electronic cash system. And Nakamoto described the project as an electronic payment system based on cryptographic proof instead of trust. So that cryptographic proof comes in the form of transactions that are verified and recorded in a form of a program called a blockchain. We can go deep down that rabbit hole. And I'm not going to right now. You can look up blockchain and check it out yourself.

But what I've found is the best way to learn something is to teach it as soon as you have learned it. So that's what I'm kind of taking this outlet for. I'm teaching it to you just as I have learned it so I learn it better. Because I really believe that this is the future. And a lot of really smart, wealthy people do too. So how to invest in cryptocurrency? Well, cryptocurrency can be purchased on peer-to-peer networks and cryptocurrency exchanges, such as Coinbase and Bit Finax and Binance,

those are some popular apps that you can get. And keep an eye out for fees, though, as some of these exchanges charge what can be prohibitively high costs on small crypto purchases. Coinbase, for instance, charges a fee of half a percent of your purchase plus a flat fee of $99 to $2.99 cents, depending on the size of your transaction. So Coinbase is probably the one that place that everybody starts

and it's really easy to use. And I think it is a good place to start. But they're not kidding about these fees. I'm actually looking for some different. I've got like six or seven, maybe eight different of these exchanges on my phone right now, looking for lower fees. But every one of them is a little bit different,

got some pros and cons. So I haven't found the perfect one yet. Coinbase is still where I'm doing most of my, my investing, but I am actively looking for another option. So more recently, the investing app, Robin Hood, started offering the ability to buy several of the top cryptocurrencies, including Bitcoin, Ethereum, and Dogecoin without the fees of any, without many of the major exchanges. Sounds like a great, great solution for what I was looking for, but they don't operate in Nevada.

So, and there's always something like that. I'm trying all these different things and this doesn't have that or this doesn't have that. and Robin Hood, which seems like it's the perfect place. They have a limited supply of these coins. I think they just have maybe a half a dozen choices of coins there. But they don't operate in Nevada, so that's not an option for me. If you all know one, please send me an email and let me know.

One that works in the United States, one that works in Nevada. And what I'm looking for is one that will do recurring charges straight from your bank account, a recurring investments, recurring purchases, straight from your bank account with small fees. Coinbase does all of that, and they do it perfectly and easily to understand. Just their fees are kind of high. They're really high.

Okay, so it was once fairly difficult, but now it's relatively easy, even for crypto novices. And exchange like Coinbase caters to non-technical folks. It's very easy to set up an account there and link it to a bank account. That I will concur. But keep in mind that buying individual cryptocurrencies

is a little like buying individual stocks, Since you're putting all of your money into one security, you take on more risk than if you spread it out over hundreds or thousands like you could with a mutual fund or an ETF. Unfortunately, crypto funds are currently in short supply. So there is a Bitcoin mutual fund, the grayscale Bitcoin Trust, but it is currently only open to accredited investors, meaning most Americans aren't eligible to buy into it. There are no Bitcoin or crypto ETFs. However, there are blockchain ETFs. I think that is changing or that just changed. I think there's a few more out there.

I'm going to have to look that up. Got to go teach myself that too. So if you want exposure to the crypto market, you might invest in individual stocks of crypto companies. I will say this is something I've learned. Those crypto companies haven't done nearly as well as the coins themselves have done. So there's some skimming going on in those companies is what my interpretation is. As far as crypto-oriented stocks go,

Coinbase is expected to have an IPO sometime in 2021. So I will probably invest in Coinbase, the IPO on the stock market, because I think because of their ease of use, I think they're going to be easy to adapt and expose the masses to cryptocurrency investing and usage. And I think hopefully with the amount of exchanges that are out there, that competition will drive their prices down, hopefully. But anyway, there are also a few Bitcoin mining stocks such as Hive blockchain. And if you want some crypto exposure with less risk, you can invest in big companies that are adopting blockchain technology, such as IBM, Bank of America, and Microsoft. All right.

So I just wanted to give you a little bit of an oversight and give you a little bit of an idea what it is. I'm not going to break it down like that every week. That was just a one-time thing. I wanted to just provide a little bit of a summary what it is and just kind of bring you up to speed. And so when I start talking about it as I am combining, it with my real estate. It's so exciting. It's so exciting what's going to happen.

It won't be brand new to you, right? But do your own research. It is somewhat of a volatile investment, but it becomes more and more stable as the days go on. And the reason I'm probably excited about it most, because I've been investing very quietly for about three years. Put a small amount, some discretionary money in it about three years ago, money that I didn't care if I lost.

And if you're going to start, And if you're going to do this, I wouldn't put any money in there than you'd be willing to put on the roulette table in Vegas, although the odds aren't that bad. It's a little bit better game. No more than you'd be willing to take to the blackjack table, put it that way. The odds are much better at black check than there are roulette. So that's how I started. That's how I thought about it. What would I take to Vegas and be okay if I came home without?

That was my standard or my parameters. So I put that in about three years ago. That money is, now imagine whatever that number is for you. yeah, last time I went to Vegas, I took a thousand bucks. Or last time I went to Vegas, I took $5,000. Whatever maybe. Maybe you're a baller, high roller, and you took $50,000 to Vegas. Whatever that number is for you, that's the number I put in.

And in three years, it is multiplied by 12. So now it's a significant amount of money that I don't want to lose. So I've decided I better learn more about this, that actually came to fruition or what I was anticipating. And so what has been, excited about it is that it has grown, obviously, that would excite anybody when your investment grows by 12 times. But the adopters that are taking a mass mutual, the insurance company, and if you know anything about insurance companies, they're more of the, some of the more

conservative investments out there. They don't take a lot of risks. Everything is for sure thing for them. They just came into Bitcoin and added a percentage of their portfolio. I think it's just one percent of their portfolio, but they did it and they took it and put it into Bitcoin. that's a big one. And then Michael Saylor from Micro Strategy, Fortune 500 company, he has put just about 100% of his company's cash reserves into crypto. And then you have Mr. Wonderful from the Shark Tank, who's been saying is that crypto is a piece of crap

and you're wasting your time and you're a fool to invest in it. He just put 1% of his portfolio into crypto. He came back around and he said, you know what? I was wrong. Those guys are a motley fool. They've been promoting stocks and stuff for a very, very long time, and they've been down playing crypto for a long time. I think they just put personal $5 million of their personal funds in there.

I think they're doing something else with it. But that's exciting. And then Elon Musk, you know, you've heard of this guy, right? The Tesla guy. $1.5 billion he just put into Bitcoin. And then Visa just announced, it's opening up a brand new division just to service cryptocurrency. and then two weeks ago, MasterCard just announced its new endeavor involving cryptocurrency.

In fact, I have a cryptocurrency mastercard coming to me right now. I'm very excited to get it. And so I'll be able to, oh, it's so cool how it works. I'll tell you how it works. It's very cool. When you have your crypto in the exchange, you get your MasterCard, and then you can use it. Anywhere MasterCard is used. used, but they don't take out your crypto.

They take a loan against your crypto and your crypto is just collateral. So you don't actually use your crypto or lose it. And if you know anything about it, you know how cool that is because your crypto will continue to grow and then you use your credit against it. It's really cool. The next thing was, oh, and then, as I think I've mentioned here before, in almost every single gas station here in Nevada, there's a Bitcoin ATM. Now, I've never seen anybody at one, but they are powered on and they work.

I haven't even stepped up to one to see how they work, but they're everywhere. And I just feel like that's a sign. There's a lot of money and a lot of energy moving towards this that I believe in it now. I'm just, it's the evidence that I'm seeing. There's a lot smarter people than me with a lot more money that are going all in. and they're pushing in all of their chips. So that's exciting to me. So I'm in.

And I figured out a cool way to use what John was talking about today and combine that with real estate and use $1 and have it multiply as if it were $3. And have that $3 diversified and totally protected. And all three of them grow. It's going to be cool. All right. So I'm not going to break it down like that every week. Just letting you know what I'm talking about.

You can tell I'm excited about it. So we're just going long. And if you're not interested, you're not listening anymore anyway. But it's really cool. And then there was just a guy, Nick, if you're listening, Nick, he was at our RIAEA's summit this week, our implementation summit. And he's a crypto guy as well. And he sent me this long, cool thing on Voxer that I'm going to check out of some cool stuff that he's doing. So I'm going to check that out.

So I'll share that as it happens. Okay. Anyway, you can do them both together. This is still a real estate show. This is why what I'm talking about right now. This is why it's at the end of the episode. Okay. So here it goes.

Here's the first edition, this week in crypto. Ah, this is another good reason why you should be excited. Morgan Stanley allows access to Bitcoin funds to its consumers. 10 years of Bitcoin has been rendered the best performing asset over the last 10 years by overall gains of 900%. So if you invested any money, 10 years ago into Bitcoin, you are 900% better off. And then Barstool Sports Dave Portnoy admits he was wrong about Bitcoin as he is invested in it. And Google Trends Activity indicates that Bitcoin is searched more now than COVID-19.

And just this week, Bitcoin achieved its all-time high of $60,000. And that's the news. If you found this episode valuable, who else do you know that might too? There's a 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 tell them about Wednesday webclass.com. John and I will be there.

He's going to share with you the first level or first phase of getting your $1 to work like two. And then we'll do some sort of follow up where I'll show you what I'll probably just share this with you next weekend or I'm going to wait until I have it in place and I approve it first. Yeah, I'm going to do that. That's what I always do with anyone that I endorse anyway. So I've become a client of Johns.

We're setting the whole system up for me. If you want to take it on, check him out. And then, yeah. So if your friends or family, come over here, I'll take great care of them too. All righty, that's it for today. God loves you. And so do I. Health, peace, blessings, and success to you.

Amaterio. Living the drink. 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 for us. 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.