Epic Real Estate Investing - Step-by-Step Plan to Escape the Rat Race | 572

Episode Date: January 22, 2019

If your goal is to reach the financial freedom and make your current job optionable, stay with us because, today, we are laying out the step-by-step plan to escape the rat race. Furthermore,  it works for everyone regardless of the social standing! Learn what the lazy assets are, how you can employ them to produce the returns, and why our Escape Plan works better than other traditional plans. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. So you want to be a real estate investor, but you don't want to do the work. If there were only a way where someone else could do it for you, now there is. Tune in here each and every Tuesday on the epic real estate investing show for Turnkey Tuesdays with your host, Mercedes. Hello and welcome. Welcome to Turnkey Tuesdays, Real Estate for Busy people. glad you made it, make yourself at home. If this is not your first time here, welcome back. My name is Mercedes Torres and I am privileged enough to be partners in crime with Mr. Matt Terrio, the brains behind Epic Real Estate. So for those of you knew to Turnkey Tuesdays, just a little about the show.

Now, I created Turnkey Tuesdays because I noticed there was a rising demand in a small niche in real estate that caters to busy professionals who understand the importance of real estate, but they either don't have the time to do it all themselves, or they just don't want to learn every single detail there is to learn about acquiring real estate, or they're simply flat out too afraid to invest in real estate despite how lucrative it can be for them. So that is why I created this show. Now, if you haven't already done so, download the free Rat Race Escape Plan that's on our our website. It is a really useful tool. And I can tell you from personal experience, our rat race escape plan really, really works. Why do I know that? Well, because I did it myself. Matt and I were

able to escape the rat race in about four years, so a little less than four years. So I know that if you follow a step-by-step plan of which we created for you, you can also escape the rat race. So I invite you to go to cashflow savvy.com. That's two Vs in Savvy and download it there. It's a quick and easy plan for anyone that wants to escape the rat race. And our plan is a 10-year or less plan. Now, it's a very conservative plan at that. I mean, you can certainly execute that plan without any extraordinary more effort.

but in the interest of not being too overwhelming and not shooting for the too good to be true flag, it's a 10-year plan and I personally think that you can do it a little faster than 10 years. So over the years, I've spoken to so many people that just flat out asked me, Mercedes, how did you and Matt escape the rat race? So I thought it would be good if I took an episode to explain how this rat race, how this rat race plan works. And I'm going to explain it in a step-by-step manner. Okay?

So let's go over it. Now, when we first had the idea of this rat race escape plan, which, by the way, can also be found in our investor packet that talks about the top eight markets to invest in real estate, I felt I had a really good idea. But the challenge was making the plan universal and without making it theory-based. Well, I found that to be a little impossible. And here's why. There are just too many variables that play into real estate. Now, whether it's with the real estate itself or the market where the real estate is located, or even with the person that's managing the real estate, whether it's the

owner or the property manager, or flat out of you, the investor itself, your experience, your time, your resources. So that's why it's impossible to create a one-size-fits-all plan. But I did my best, and I think I did a good enough job so that anyone can take this plan and fit it to their own individual situation. Okay. So let's go through the steps. Okay. So first things first, you must, and I say you must shift your focus from making piles of cash to making streams of income. Now, I talk about this at nauseam. If you don't do that, I mean, you can struggle with the plan. And we've talked about this so much on this show. So I'm not going to go into more about your mindset, but mindset is important not just for this plan, for any plan that you plan to

follow. So the future belongs to residual income creators. No longer does saving money work. In fact, quite the opposite. You lose in the long run. You know, making 1% with your money sitting at just any old bank is really at the end of the day losing you money. If you, you can be making seven or eight percent with that same money. Again, that's something we've talked about last time. You will lose if you leave money sitting there. You just will. So that's first.

Shift your focus to making piles of cash to making streams of cash. Next, set a goal. And this goal is specifically the amount of money you need each and every month that will provide you with the opportunity to quit your J job. I mean, after all, that's freedom, right? Having option. And that's the goal here, to create additional options in your life around your finances.

Most people have the option Monday through Friday, and that's to get up and go to work. What if you had a second option? Like, to not go to work, right? That's freedom. the option of going to work or not to is absolute freedom. And that's the freedom that the rat racist K plan is all about. So decide on the amount of money that you need each month to create that option for yourself. Now, the example I used in the rat race escape plan was the national medium household income in the United States.

I found a few resources that had different numbers. And considering you're likely to be an aspiring success greater than the medium household income, I used the highest number I found. So I used $48,000 per year. Now, to some of you, that may not be very exciting, but like I said, it was impossible to create a one-size-fit-all type of scenario. So just plug in your number into that $48,000 a year place and follow the steps. Okay.

Cool. Now that your goal is set, I'd like to recommend that you look at your existing resources, specifically your lazy assets. You know, the assets that are underperforming or not performing at all, identify your low-yielding assets. Anything that is yielding less than a 4% annual return qualifies. That's what I mean by lazy assets. And I mean, I choose that number as the inflation rate.

Anything you have at 4% is barely standing steel. And anything less than that is losing value each year, meaning your ROI is negative. So, 4% or less automatically qualitative. as a lazy asset. Personally, Matt and I look at anything less than 6%, then that's an automatic qualifier for us. And depending on your situation, you may want to consider a higher number or maybe even a lower number. Whatever works for you, that's the number that you have to consider. And here's why. Acquiring investment grade income produces real estate at above 7% is not a very difficult thing to do at all. In fact, current assets are performing at less than 4%. You're not trying very

hard at all. Once you identify these lazy assets, now it's time to position yourself so that they're in transfer mode so that you're ready to transfer these funds so they can start producing a higher return for you. Maybe to convert your cash or have it ready to be, you know, that push the button thing where transfer funds and then you're now being able to cash flow. Now, that can be a bit of a stretch for the average person, especially if you're working full time. But that's why a turnkey operation might make sense for you, as that number isn't too difficult for us to target

when we're finding the deals for you. So at the very least, you can chip away $500 a month from your goal. your goal is $48,000 a year. That's $4,000 per month. Now, your goal is $3,500. Maybe you have enough in your lazy assets to pick up two or three of these properties, maybe even four. And you'd be halfway to your goal in just a few months. So let's keep this very basic and somewhat out of a slower scenario. Okay. So with this, this one property, you're going to sit on it and manage it, or better yet, have it managed, direct all the positive cash flow to a dedicated account. Very important. Not your regular

savings or checking account, a dedicated account that you have created solely for helping you escape the rat race. And save. Let's say you save $1,000 per month from your job and directed to this same dedicated account so that you have the cash flow from your property and an additional cash flow coming from your job that's going into this separate account preparing you for your next purchase. Now, maybe you can't afford $1,000 per month savings from your regular job, but think of the extra money that you make during the year, like bonuses at work or maybe your tax returns where you get a refund, take all of this and directed to this dedicated investment property account and don't touch it. I know it's hard to do, but don't touch it.

Not until you've got enough there, probably about 24 to 36 months later, and in two to three years, then you acquire another property that cash flows $500 a month, of which you now have two to three income properties in your portfolio generating anywhere from $1,500 to $1,500 a month in this dedicated account, along with your $1,000 per month that you're saving from your job, your bonuses, or your tax returns. And you do that for another 18 to 24 months, of which you should be able to save enough in that time frame to pick up at least one more property. Now, putting in the average of, roughly speaking, $3,000 per month. Going into this dedicated account, of course, along with the allocations from your job, your bonuses, tax returns, et cetera. And now is when it really starts to speed up.

after you pick up around two or three properties, they start to kick in and contribute more to this account, which in turn allows you to purchase your next property. So you keep doing that every 18 to 24 months. Heck, some of my investors get really aggressive and start buying properties every 12 months. I mean, just think about it. Think about it if you just bought one property a year for the next 20 years. Anyway, I'm getting a little off track here, but you pick up on average properties and now you're getting closer to that $4,000 a month goal that you've set. And all of a sudden, your goal. And this factors out to just about less than eight years. So that's the example.

And that's the example with real numbers. And of course, what I laid out here is in a perfect world. So keep that in mind. Remember, I use the round number of $500 a month of cash flow. And I just used it because it makes the math much easier. I do want to point out a few things. And I want to add some clarity to the plan that's really, really important. Okay?

So first, you can modify your portfolio growth by either your ROI percentage, as we started talking at the beginning of this conversation, where you convert any assets that are performing less than 4%, and then you switch them over to a cash flowing property that produces $500 a month in cash flow per se. So these are two different ways of monitoring how hard your money is working for you. I use the dollar amount example in the interest of demonstrating

how you can chip away at your monthly income goal. But ideally, you'll also want to monitor your ROI to know how hard your money is working for you. It's really important that you understand your return on investment. So, for example, you may find a property that generates $500 a month in passive income at a 5% ROI, or you may find a property that generates $250 a month in cash flow, at a 9% ROI. So, which one is a better investment? Well, it depends. It depends on you. It depends on your resources, your goals, your timeline for that goal. There are so many things that factor in there. There's no right or wrong answer here. But the target is to make your return on investment as high as

possible within reason, of course. So what you want to look at is constantly improving the performance of your money and assets. So if all your current investments are producing a 5% annual return, then converting all of this into an investment that produces 7% annual, that would be good, right? Or dare I say better investment for you? Or if collectively your investments are generating $5,000 a month of residual income for you and you converted all of those investments, the same investments, into something that's generating $7,000 a month in residual income. Now, that would be a good investment for you, right? So it all depends on where you're starting. and of course, your available resources.

So here's my rule of thumb. Keep your money moving. Always be looking for a step up from your current investments and use as much leverage as you're comfortable with. And of course, don't over leverage, leverage, you know, reasonably to build your cash flow. And once you've hit a cash flow goal, then you start focusing on a leverage eliminating the leverage, and that will help you sustain and preserve your cash flow. Cool.

Second. And this brings me to the second thing that I want to point out here. In this example that I gave you, I'm not discussing leverage or debt or bank loans or private loans or lines of credit. If you have a decent credit score, this eight to 10 year plan that I live, laid out can virtually be cut in half rather easily. Look at all of your resources and see what you have at your disposal. In the above example, I really just focused on lazy assets and the income and the bonuses and the tax return from your job. But your credit can be considered an absolute

lazy asset if you're not using it. There's a saying you can get rich using your own money, but you can get wealthy using other people's money. Keep that in mind when taking action on your plan. Your credit is as much, if not more of an asset to you than your lazy assets, especially now in this market where rates, although they're climbing, they're at an incredible low. So your low yielding assets and leverage, combining them both, you may be able to reach your goal so much faster than you think. And that brings me to my third point. What if? What if you don't have enough assets or credit scores to buy even potentially one property initially, or your current job doesn't afford you to save an extra $1,000 a month or, you know, you don't get bonuses and at the end of the

year you don't get a tax return. No problem. You're just going to have to move a little bit slower. That's it. Just move slower. Doesn't mean you can't do it. It just means that you have to do it at a slower rate. So that if you can't do it in eight to 10 years, maybe you'll do it in 15 to 20 years, buying one property a year will afford you 20 properties in 20 years. What if it did take you 20 years? Well, if that's the case, isn't that a lot better than the traditional route that you're currently traveling, that 40-year plan of saving in perhaps your company's IRA? You see, even if you're limited to your assets and your resources, the escape plan can still

be very easily done in half of the time where the traditional 40-year plan is currently working. So maybe it's not a 10-year plan for you, but what's wrong with 20-year plan if you're currently at a 40-year plan? And what if your 40-year plan doesn't pan out? You know, what if your employer lays you off after 25 years? I have spoken to many clients that that actually happens. You know, the plan originally set out for 95% of the population doesn't always pan out. By the time you'll be at least 60 years old, and then you'll have no choice but to follow the creating streams of hash approach, or you just keep working. Now, why do you think we have Walmart readers who are predominantly senior citizens and are working part-time? Nothing wrong with them.

They might be doing it as a hobby, but for the most part, if you have a conversation with them, because I often have, they will tell you they have to work. They have no other choice. I'm trying to cover every base here as broadly as I can. And I'll leave you with this. As you listen to this and you've come up with a bunch of ideas and questions as to how this won't work for your specific situation or how it's going to be. be really hard, then it probably won't work for you. And it is going to be really hard. Rather than focusing on why this won't work for you, shift your focus again and think how and why it will work for you. And imagine that. Imagine what that would be like if you were able to make this work. These are all the same words of wisdom that were shared with me 15 years ago.

And with some effort, some intention, and teamwork, Mr. Matt. Mr. Matt and I put our brains together. And we've created the focus. We created the vision. We created everything that we needed to create in our minds. And then we set the plan. And with proper focus, you can do it too. Matt and I were able to hit these exact goals that I,

laid out for you in this race, in this rat race, escape plan in less than four years. I almost had zero expendable cash at the time. And if you've listened to Matt's story, he had no money and no credit, very little money, absolutely no credit, zero assets to speak of. And, you know, I'm not sharing this with you to impress you. Rather, I'm sharing this with you because it's possible. I did it. did it. And I want to convey it's not about your resources. It's about your resourcefulness. If escaping the rat race is not a priority for you, you will come up with enough excuses as to why you can't do it. If it is important to you, you will come up with enough ideas as to why and how it is going to work for you. You see, as Matt always says, it's never a money problem. It's an idea problem. And if you need a

little help, thinking outside the box, reach out to me. I often say, if you email me, if you reach out to my office, I will be more than happy to connect with you and perhaps help you brainstorm on how we're going to get you out of the rat race. Ladies and gentlemen, the door is wide open for you at this point wide open. All you have to do is walk through it. Go to cashflow savvy.com. That's savvy with two Vs at the very least and download our rat race escape plan. Heck, if it worked for Matt and I, why wouldn't it work for you? Just plug in your own numbers, create a plan, and start working on that plan. Or email me, Mercedes at epic real estate. Now, mind you, I get a lot of emails, so I may not answer right away, but I promise you, I will answer.

So, whether it's with our support or not, that's not important. You working the plan, that's important. For that, it will make a difference for you, your family, and your legacy. You can work this plan in four, five, maybe eight years, or you can work the traditional plan 40 years. You pick. Working for piles of cash might make you rich, but creating streams of cash will make you wealthy and permanently. That's it for today, my friends. This is Mercedes-Torres, and I will see you on the next episode of Turnkey Tuesdays. Love you all. Your portfolio has seen better days. But this too shall pass.

And the best for you is yet to come. Together, we'll get you there faster. We're cash flow savvy. And we'd like to share some information with you that will show you how you can take control of your financial future and accelerate its arrival. Go to cashflowsavvy.com. More building, less waiting.

Cashflow savvy.com. This podcast is a part of the C-suite radio network. For more top business podcasts, visit C-Suite. weetradio.com.