Epic Real Estate Investing - Secrets of Cash and Cash Flow | 908

Episode Date: January 25, 2020

Inspired by the last Epic Intensive, Matt reveals the secrets of cash and cash flow. Particularly, find out what are the benefits of $300 per month of cash stream and $30.000 of a cash pile. 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, Rockstar, welcome back to the epic real estate investing show. I appreciate you listening. I appreciate you sharing this with your friends, family, network. I would not be here if you weren't doing that. So I really, really appreciate you. So thank you. And so today, to show my appreciation, I want to discuss the difference between piles of

cash versus streams of cash. As that the answer, I mean, the actual answer, the secret, if you will, to achieving financial freedom lies in that comparison. And not only is that the secret to achieving the financial freedom, it's achieving that financial freedom quickly. Doing it sooner rather than later. And I'll explain what I mean in a minute. It's not what you think. So at the Epic Intensive, I saw a lot of light bulbs go off during this particular session, this particular conversation. And this was at the end. This was on day three towards the end of the day. It was rather impromptu. It was just kind of what the room was giving me the energy.

And it's kind of came up, kind of built by a number of different questions that had come out over the day. And there's some different conversations I had had in the breaks and stuff like that. And so I'd ask the room, you know, what's really important to you? Raise your hand if being financially free is important to you. And, of course, every hand went up in the room, as you would all expect it to. exactly what happened. And I said, keep them up if it's really,

really, really important to you. And every hand just stayed right on up. And I said, okay, we'll see. Let's check it out. Let's play a game.

So we played a game. And it was a game of imagination. He had to really use a vivid imagination for this game to be effective for this game to work. And so the game was, imagine that I went and placed $30,000 in

front of each and every one of you. A stack, three stacks of $10,000. So a pile of $30,000 to be a stack of $100 bills about somewhere between two, three inches high. And then right next to that stack of $30,000, I put a single little sheet of paper and it's a promissory note, good for $300 a month indefinitely for the rest of your life. Then I asked, all right, imagine. get a real clear picture of those two things sitting right in front of you,

a stack of $30,000 of cash and this promissory note, good for $300 a month. Which one would you take? And I said, raise your hand if you'd take the $30,000, and a couple hands went up. And then I asked, raise your hand if you'd take the promissory note, many more hands went up. And I said, okay, okay, you guys know this is a trick question because you've been hanging around the epic. community for a while, but really, which one would you take? Again, show of hands for the 30,000, and then more hands went up. And the promissory note, and a couple hands went up. So the point being is, we're human beings. And $30,000, that's a good chunk of change. You can do some real

good with $30,000. And I wasn't surprised. I'm never surprised, because we're human beings. And that has a greater appeal than $300 a month. I mean, $300 a month, does. even move the needle on someone's lifestyle. It doesn't make that much of an impact. So let's say you needed $5,000 to escape the rat race. Okay? That's not going to make you rich, not going to make you wealthy. It's just going to put you in a position to where you don't have to work. Most people in this country with $5,000 a month wouldn't have to work, right? They could escape. They would not longer be in the rat race. If they knew on the first of every month, they could go to their mailbox and boom, there'd be $5,000.

So let's say that's what you needed. And the very next deal you do, right? You left the epicintensive. You got your lead machine running and you made the phone call. You went and had your meeting with the seller. You got the contract signed. And now you've got this contract signed. And you've done your market analysis.

And you are recognizing that, hey, I could flip this property and make $30,000. of cash, or I could hold this property as a rental in my portfolio and make $300 a month of cash flow. Which one would you take? So it's the same dilemma. We're just applying the real estate elements to it. So let's see. If $5,000 a month is going to allow us to escape the rat race, and that is really, really important

to us because we all raised our hand said it's really, really, really important. I said, keep your hand up if it's really, really, really important and not a single hand went down. So we all said it's really, really, really important. So that $30,000 of cash. How much cash flow would that produce? So if you put that in the bank right now, and I'm going to choose a number of 5% interest, although that is a number that eludes most people, particularly the average person, particularly with that small of an amount, 5% would produce $125 a month of cash flow. And I use that 5% because that's what most financial planners will quote that you can expect when you're ready to retire. That's where you can expect to place your money in a nice

safe investment and you can get 5%. So I'm just going to use that number. I think it'll be a little lower than that these days. But who knows when you retire, it might change. Might be higher. It might be lower. Even lower. But that produced $125. And the reason I want to point that out is because when you're comparing $30,000 of cash and $300 a month of cash flow, you really are comparing apples and oranges. You can't compare the two. So you've got to turn that orange into an apple or that apple into an orange. So the $30,000 of cash actually equates to $125 of cash flow. So now we can compare the 125 to the $300 a month of cash flow. So you can see that that $30,000 actually has a value as a pertainer. to you escaping the rat race as it pertains to your financial freedom of less than half of that

house of holding that house so if we're going to turn the cash flow into uh turn that from an apple into an orange so now we compare that to cash so if i took three hundred dollars a month over a year that's thirty six hundred bucks at five percent that's seventy two thousand dollars So now that's a, you can flip the property for $30,000 of cash or you can flip it for $72,000 of cash. Now you got the other Apple to Apple, right? So you can see that $300 a month of cash flow is worth more than that $30,000 of cash at today's interest rate of a generous 5%. All right. So let's go ahead and look at this.

If we want to gain our financial freedom, it's going to take $5,000 a month to do it. We found a great savings account or very safe. investment at 5%, how much would you need to put into that account to generate the $5,000 a month? How big would your pile of cash have to be to generate $5,000 a month of cash flow? Well, I will let you in on the secret. It would be $1.2 million. You need $1.2 million. So how many of those $30,000 houses would you have to flip to make $1.2 million?

40. 40 of them. You'd have to do 40 deals. That's a lot of deals, right? But it's not that many. We all know we've got to be a little bit impatient, right? We can't expect overnight success. You know, real estate does not get rich quick. So we'd have to do 40 deals. That seems doable. We could flip 40 properties. But wait, you wouldn't be able to spend any of that $30,000. Because you need all $1.2 million in there to generate the $5,000 of cash flow. So what we'll do is we'll take $15,000. We'll cut it in half. We'll take $15,000 to live on. And then $15,000 will stash away to generate our pile of cash so we can eventually create that stream of cash of $5,000 a month. So we just went from 40 deals now since we're going to spend half, live off of half, and stash half.

Now we've got to do 80 deals. 80 deals. It's a lot more. It's like almost double. And so if you did one deal a month, let's just say you did one deal a month, we're not going to go crazy. That'd be 6.7 years before you escaped the rat race. 6.7 years. Now, that's not around the corner, but it kind of is.

And in the grand scheme of things, it's a lot better than the 40-year plan that most people are on. So 6.7 years. Let's say, though, that you decided to hold on to that $300 a month house, that $300 a month cash-flowing house. And you just did that. you're not going to flip properties at all. So every time you get a deal, you actually are going to hold the property. Well, you just went from 80 deals to escaping the rat race,

all the way down to just 16 deals. Yes, one, six compared to 80, 80. And so that's 80 flips, that's 6.7 years. And you compare that to holding the houses. That's less than a year and a half. What's that? A year in what? four months, a year and a third.

So to hold properties, if, this was the big caveat at the epicintensive, if escaping the rat race is important to you, it's less work and faster to hold properties than it is to flip them. You will escape faster with less effort by holding the properties than you will by flipping them, then you will by wholesaling them even. So raise your hand if you're down for make more money, do less work. Yeah, and do it faster, right?

Of course. And by the way, if you want to go deeper into what we talked about at the Epic Intensive and what inspired this little epic rant, you might want to head over to epic webclass.com. I still have the replay posted over there. I'll leave it up for another week or so. But it's not going to be up there forever because I'm going to have to use that domain name for something else. the next little class. So go over there and take a look.

And if you like what you see, tell me about it. Tell me what impacted you the most. All righty? So if you found anything here useful and or if you know anyone that might find the same, might find it just as useful,

feel free to share it. I really appreciate it. It's because of your sharing is why I am here and I do not take that lightly and I do not take you for granted. So thanks for listening. God bless to your success.

I'm Matt Terrio, Living the Dream. 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.