Epic Real Estate Investing - The Secret to Surviving a Market Crash | 1165

Episode Date: September 23, 2021

After filing bankruptcy in 2001, Matt almost got his score to an 800. Tune in and find out how he did it! Moving forward, you will learn the difference between operating the business as a sole proprietor and an entity, what a business entity is, why and when you need one!  Ultimately, you will learn how to prepare to thrive during the imminent market crash. Warren Buffet, Robert Kiyosaki, gold bug Peter Schiff, and Michael Burry agree on the upcoming market collapse and there is stuff you can do to at least survive! BUT THAT’S NOT ALL! You will hear the latest in the news and crypto updates that bring us together and set modern ideas on creating wealth!   Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Time is running out for you to join the Epic team coming up very soon here, October 14th through the 16th live in Las Vegas, Nevada. You are invited to attend the next Epic Intensive, the creative cash flow event, how to create passive income using creative financing and real estate investing strategies. This is the transformational event of the year for real estate investors. And you will discover the secrets to revealing off-market deals hiding in plain sight, the art of how to influence sellers and win deals,

the secrets to crafting creative deal structure so you can maximize the ROI with every opportunity that crosses your desk and create passive income using more of your brains and less of your bread and the secrets to putting your money to work so that it works harder for you than you did for it. Plus, what's new, what's hot, and what's actually working in real estate investing today.

So if you are into those rah-rah real estate investing seminars, this is not for you. This is not the game we're playing here. No. But if you'd like to make real estate investing simple, fun, and most importantly profitable, be in Las Vegas, Nevada on October 14th through the 16th. There are still a few seats left. Go to Epicintensive.com.

Grab those final seats. Bring your spouse, bring your partner. Make a vacation out of it if you must and transform your financial future, epicintensive.com. All righty. So in today's show, if you're going to purchase a $150,000 rental property that rents for or $1,500 a month with a conventional loan from the bank of your choice, you'd be expected to bring $30,000 to the closing table as your down payment. And the bank would bring the balance of $120,000 in the form of a mortgage. And if you have an 800 credit score, right now you could expect a rate of

around 3.5% of which would calculate to a 14% cash on cash return on this property. Now, if you had a middle of the road credit score, your rate might bump up to 4.5% of which would calculate to an 11% cash on cash return. Now, if you just had the very minimum credit score that it takes to get approved right now, your rate might bump up to somewhere around 5.5% of which would calculate to an 8% cash on cash return. So all things being equal, except the credit score, that's a 6% swing in your ROI from a great credit score to the minimum credit score for a bank loan, resulting in a 57% difference in your property's performance. An 800 credit score. score can equate to you getting to your passive income goal 57% faster or with 50% fewer property

purchases. You know, after filing bankruptcy in 2001, I've almost got my score back to an 800 and I'll tell you exactly how I did it. And then our second session, it's one thing to make money. It's another thing to keep it and keep it away from the bad guys, from bad guy lawsuits, from bad guy taxation. And you can kill these two birds with one stone by just simply setting up the right business entity. So I, with the help from a special guest, will be covering the difference between operating your business as a sole proprietor and a business entity. What, we'll go over what a business entity is, why you need one. And to answer the most asked entity question that I ever get is when do you need one? And then in our final session,

yes, three sessions today, Warren Buffett started selling a massive amount of his stock holdings months ago. And he's sitting on billions of dollars of cash, even as the market has continued to grow. He's certain that this market is overvalued. And Robert Kiyosaki, he's convinced that this status quo, it's not going to last much longer and that the largest crash in history is about to happen. And then Goldbug, Peter Schiff, he recently said, no one is getting out of 2021 safely and 2022 is going to be even worse. And then Michael Burry, hedge fund manager made famous in the movie The Big Short, one of my all-time favorite movies. He recently warned that the mother of all crashes is is coming. Sooner or later, they're all going to be right. And the consensus among them is,

we're getting really, really close. However, they're not so concerned for their own well-being as they've been preparing and are positioned to profit from a market crash. I mean, you might even say that they're looking forward to it. So if you haven't gotten out in front of this and prepared to thrive during this imminent market crash, there is stuff you can do to at least survive. And I'll let you on on what that is. Lots to talk about today. Let's go. Welcome to all new Epic Real Estate Investing Show, the longest running real estate investing podcast on the interwebs, your source for housing market updates, creative investing strategies, and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require

visual support. To get the full premium experience, check out Epic Real Estate's YouTube channel, EpicR-EI.TV. If you want to make money in real estate, sit tight and stay tuned. If you want to go far, share this with a friend. If you want to go fast, go to rei-ace.com. Here's Matt. After a personal and professional do-over in 2003 at the age of 34, considering I had just gotten divorced and filed bankruptcy two years previously, I sort of rode off my credit score.

I mean, no banks are going to look at me for a really long time, and that's what forced me to learn and become an expert creative real estate investor. I built a cash flowing real estate portfolio of up to 300 units at one time, all off of seller financing and private money. A decade later, however, the bank's low interest rates began to catch my attention as they started to sink well below what I was getting from sellers and my private sources. So needless to say, it was worth looking into restoring my credit score, and so I did. And I was pretty surprised by taking a few easy actions how quickly it began to recover,

and I'll tell you exactly what I did. Before I do though, real quickly, let's run through a breakdown of how a credit score is calculated. If you didn't know, a credit score can range from 300 to 850. The higher, the better. Pretty much though, anything above 750 will put you in the very top bracket to where you'll get access to the best loan terms and credit cards. So the score is broken down like this. First, 35% is your payment history. This is the single biggest factor, how reliably you pay your bills.

So don't miss payments. Don't be late. I recommend automating your payments just to be safe. And a side note, consider automating your savings and your investments too. Automation has been a game changer for me. And my book recommendation for this is profit first. I mean, it totally changed my life. Second, 30% of your credit score is calculated by the amount owed or your credit utilization.

Divide your balance by your limit and that will give you your credit utilization ratio. Keeping this ratio low is a very close second to payment history and improving credit score. Creditors like to see that you can exercise restraint with regard to the maximum amount of credit available to you. For example, if you have two credit cards, each with a $5,000 limit and each of them is carrying a $4,900 balance, you look irresponsible and like someone who has an inclination to live beyond their means. This is a risky look to creditors. A good rule of thumb is to keep your credit card utilization at 10% or below and not to use more than 10% of any individual credit account. I'll lay out a strategy in just a minute on how to keep your

utilization ratio low while still leveraging your credits buying power. Third, 15% is comprised of your length of credit history. Time matters. For example, someone that opened up their first credit account six months ago doesn't score nearly as well as someone who has had their credit line open for six years. Creditors will look at your credit history accumulatively and then average it out. For example, if you open up your first credit card account, today and then open up another credit card account five years from now ten years from now one of your accounts will be ten years old and the other will be

five years old so the average age of your credit history will be seven and a half years it's generally better to have fewer older accounts rather than having a clutter of many newer accounts also it's almost never a good idea to close an old account those old accounts are your anchors that you should try to keep forever because they dramatically increase your overall length of credit history. Fourth, 10% of your credit score comes from your credit mix. There are two main types of credit, revolving credit and installment credit. And ideally, you want at least one of each because it shows creditors that you can handle multiple types of loans. Credit cards

are the main type of revolving credit. If you have at least one credit card, then you have some revolving credit. Student loans, auto loans, and mortgages are examples of installment credit. They have a natural end date and they expect regular payments each month of the same amount. Fifth, 10% is made up of new credit. If you open up a bunch of new cards or loans at once, it looks risky to creditors. Be conservative with the number of times you apply for new credit and spread them out. So now that you know what makes up your credit score, here are 12 tips to elevate it to 800 and above. One, if you don't have enough credit and you want to increase your score immediately,

the fastest way is to become what's called an authorized user on another person's good standing credit card. Two, if your credit score is very low or non-existent and you don't have any credit cards, consider getting a secured credit card. This is a low limit card that a bank can issue to you that requires you to pay them a security deposit up front. Many of the major issuers like Discover and Capital One have good offers on secured cards. Typically, the credit limits, they're tiny, like $200 or less. I mean, pretty much the only reason secured credit cards exist is to help people build credit. Once you get yours, start making some purchases with the card and then pay it back in full every month. Over time, you'll start building a positive credit history. Number three, as soon as you

can, apply for a low limit non-secured card, use it, and then make your payments there. Four, pay off the balances of what cards you do have so that your utilization ratio is below 10%. For most people, this would make the biggest difference in their score in the shortest amount of time. Number five, if your accounts are in good standing, call your credit card company to increase your limits. This will also decrease your credit card utilization ratio. Number six, open a couple of premium credit card accounts with great rewards. With that said, number seven, avoid opening up too many new accounts because they will reduce your average credit account age, of which makes up 15% of your score. And with that said, number eight,

whatever you do, don't close old accounts, including your secured card. Those old accounts add significant value to your score. Number nine, diversify your credit mix, as it accounts for about 10% of your score. Don't take out debt you don't need, however, you don't want an unnecessary payment, but you can be strategic with it. For example, consider paying off some existing credit card debt

by taking out a peer-to-peer loan with a service like Lending Club. This can help you pay off your higher interest rate credit cards while simultaneously diversifying your credit mix. Number 10, if you have late or pay, or pass due payments in your history, try to negotiate the terms of the debt and see if your creditor can adjust your account status back to current. Number 11, monitor your score over time to watch for areas of improvement. And number 12, check your credit reports regularly to ensure

there are no errors. Now, some of these actions will have an immediate impact on your score while others will take some time. But if nothing else, for the fastest impact to improving your credit score, optimize your credit utilization ratio. So if you already have one or more credit cards, This could be the biggest move to make if you want to get your score above 800. It's the second most important factor in your credit score. Ideally, you want a credit utilization ratio of below 10%. To do this, first, pay off any credit card balances that you have. Do that ASAP.

Second, if you can't pay them off right away, then try to balance them out. For example, let's say you have two cards that each have a $7,500 credit limit, and you have $6,000 in debt on one card, that's 80% utilization, and only $1,000 in debt on the other card, 13% utilization, move some of the balance from one card to the other, balancing out the balances. Third, even if you do pay off your credit card balance each month, your payment timing might be unfairly hurting you. You see, credit card issuers usually report your credit information

to the credit rating agencies once per month, around the end of your billing cycle. And so here's how responsible people can get punished. If you just paid for a major $3,500 car repair on your, $5,000 limit card right before they report your credit utilization, you're going to get reported as having a 70% credit utilization ratio, which is bad, even though you always pay your credit card off every month. So there are two main ways to fix that. One, pay your cards off two to three times per month instead of just once per month to keep your balance low at any one time.

Or two, split major purchases among multiple cards. The importance of having a high credit score cannot be overstated. In my opening example to you, it can be the difference of escaping the rat race in 10 years or 6 years. It's hard to fully escape the effects of having a low or mediocre score, especially if you don't understand how it impacts your financial future as a real estate investor. So putting some effort toward improving your credit score, it's as important as picking up that next income property. And now that you know why your credit score is important,

how it works, and how to increase it, you now know what there is to do. Thanks for sitting tight while we pay our light bill. We'll be back. after this. Canada can be a global leader in reducing the harm caused by smoking, but it requires actionable steps. Now is the time to modernize Canadian laws so that adult smokers have information and access to better alternatives. By doing so, we can create lasting change.

If you don't smoke, don't start. If you smoke, quit. If you don't quit, change. Visit unsmoked.ca. Remember that person that gave up on their real estate investing dreams? Neither do I. Let's keep going. Back to the show.

It's one thing to make money. It's another thing to keep it. And keep it away from the bad guys. And the bad guys I'm referring to the bad guys that are all out there to go and take what you've worked so hard to build. By either way of lawsuits, real estate. can be a very litigious practice or unnecessary taxation. We're all supposed to pay our fair share, and we all absolutely do,

but you certainly don't want to pay more than you're required to. And so with this one subject that we're talking about today, you can kill two birds with one stone, and that's with the right business entity. So let's talk business entities. And I've asked my new partner, Tommy Thornberg, to join me today from corporate services. So if you like what he has to say,

and this makes sense for you, and your business right now, I've made some special arrangements with Tommy and Prime Corporate Services just for epic listeners that you'll totally be able to appreciate. So Tommy, welcome to the show. What is going on? Thank you. Thank you so much for having me. I appreciate it. Right?

We finally made it. This is our second go-around and it took us 15 more minutes just to get here today. But we did it. Matt's downplaying the technical difficulties here. He's over there scrambling, unplugging stuff, chat with everyone in the. the company. Right. We made it happen. So thank, thank you for having me. I went through four virtual assistants on their end before I got the right answer. But that was a good one. It worked. So great. Tommy,

share with me a little bit about what you do and prime corporate services and kind of like your background and how you've come to be where you are today. For sure. Yeah, absolutely. I'm just, I'm going to share my screen. I'm going to share the slides right off the bat. Okay. We can stay on track and I know we're running a little bit late with the technical difficulties so that way everyone can still go through all the information and we can kill two birds with one stone here. Fantastic. My name is Tommy Thornberg.

Thank you so much again for having me. I'm happy to be here. I'm the president of prime corporate services. We have been in business for about 10 years now. And over those 10 years, we've put a large emphasis on helping the little guy, right? Startup business owners, entrepreneurs that are either just getting started. or don't have a full team of CPAs or a full team of attorneys and are keeping things a little bit of a smaller scale and don't have in-house counsels.

So like you said, it is not what you make. It is what you keep. When I was listening to your podcast, one of the things that I loved and part of the reason I was so excited to be here is I love that you preach the long game. There's so many groups out there that are get rich, quick type feel and anything that's worth having, take some work, take some time. So I appreciate that messaging from you as well. I think it's awesome. Sure. But a little bit about prime corporate services before I jump into it. Like Matt said, I'm going to talk about the different types of entities. When should you set up a business entity?

What's the best entity for you to have? But before we do that, prime corporate services, we've been in business 10 years, like I said, and over those 10 years, we've actually helped over a hundred thousand investors and entrepreneurs at this point. So real estate investors, stock investors, online businesses. Some of you watching this may have multiple streams of income that we're happy to talk on as well. Another area that I'm going to discuss business credit and corporate funding. So since COVID started, a lot of banks have really tightened up on lending from a personal aspect, but it's been a lot easier for whatever reason to get business credit and corporate funding. So on average, over $2 million a month of actual business credit and corporate funding that doesn't have to be tied to you personally.

One of the things that Matt preaches is creative finance. And I think in addition to that is the more that you can separate your personal from your business legally and financially, the easier it is long term to have that growth from a business aspect. So tax services, I've got a full team of CPAs, personal taxes, business taxes. We file over 5,000 returns a year. And last but not least, the one that we're most proud of, customer experience, right? A plus with the BBB, 4.9 with Google. I think that's the reason that Matt was even willing to talk to us in the first place

was just the feedback that we've had from the clients that we've already worked with. A fun stat for everyone, if you were to read every disclaimer that you included, I think it's nice to see how quickly tax benefits can compound whether you've done your first deal or not, and how quickly you can save thousands of dollars in taxes just by having the proper business entity in place. So why should you form a business? Keep in mind on this presentation.

I want to try and make sure that everyone is able to take something away, whether you are brand new and you haven't done a deal yet, or if you're a seasoned vet and have done multiple deals a week at this point is what you're pacing for, everyone can benefit from the tax code. There's over 72,000 pages of a tax code. So by having the wrong business entity or even worse yet, no business entity, all you're doing is leaving money on the table. by not making sure that you're taking advantage of the deductions that business entities have to offer.

So I got to give Matt a little bit of credit here. He's like, I don't have the horror story, right? A lot of people have when I got sued, when I lost a bunch of money in taxes. And Matt didn't want to necessarily talk about this, but I'm going to speak on it for them. If you're set up properly from the very beginning, you don't have to have these horror stories, right? nor do you want to have those in place. So to add to the why, why should I set up a business entity, how does it benefit me? A lot of you watching this are probably aware that it gives you some protection and gives you

some tax benefits. But here are seven reasons why we believe it is truly important to not only understand how you're structured, but what entity is best. So number one, legalization. Show yourself as a business. File everything properly with the state from a federal standpoint so that you're able to show your clientele. Just like you want to do business with legal entities, so does your clientele. We want to give you what you need to be able to show that from the beginning.

Number two, separation and protection. Personals, personal, business is business, right? Everyone watching this, you have a name, a social security number, a credit score. We want to be able to show you how to do the same thing with the business. Name it, EIN number, paydex profile or a business credit profile so that you're separating the personal and the business. Number three, tax status classification. This can be one that's tricky. Are you best as a sole proprietor, a partnership, S corporation?

everyone's situation is a little bit different. So like Matt said, he works up and need out for each and every one of you as far as a consultation is concerned. But understand what tax status is best for you and why. It may vary based off the business that you're in or the type of real estate you're investing in. Number four, tax deductions. Real estate investors, there's over 250 different deductible expenses that you're able to. You're able to. You're able to. You're, to take advantage of by having the proper business entity in place. Number five, pass-through functions. LLCs and S-corporations, work as flow-through entities. So the reason that I say, even if you haven't done a deal yet, understand what business entity is best for you, because as long as you have a taxable income, there's benefits you can take advantage of from a tax standpoint

by those passing through from a tax standpoint. So we'll talk a little bit more on that here shortly. Number six, startup provisions. It takes money to make money, right? We've all heard it. We all hate it. Every business has cost. Every business has startup expenses.

If you understand how to classify those the right way, you can make those 100% tax deductible depending on what those are for. Number seven, online compliance. who's got mailers, who's driving for dollars, how are you marketing, how are you showing yourself online? A lot of you have probably already gone to primecorporateservices.com to see what we offer, who we are as a business. We want to be able to do the same thing for you and make sure that you are showing yourself as a legal and legitimate business. So plenty more reasons.

In my eyes, those are the top seven as to why you should make sure that you're set up properly. Next question that we often get asked, when should I set up a business entity? Should I wait until I have my first deal under contract? Should I wait until I locate my first property? The time is now and the reason I put it that way is like I said previously, our goal and what we want to be able to do is make sure that each and every one of you, good or bad, profit or loss are maximizing from a tax standpoint. What the IRS is looking for is that you have shown the intent to start a business. What do I mean by that?

Each and every one of you has put in time to understand how to be a real estate investor by watching this. Now ask yourself, have you paid for subscriptions? Have you paid for coaching or education? Have you paid for a new computer to look for properties? Whatever that looks like, as long as you are genuinely showing the intent to treat this as a business and a long-term revenue stream, you open the doors to these additional deductions of being an actual investor. So once again, to elaborate on how that works, there are so many different types of entities

that it can be overwhelming if you're looking into the research of different types of entities and then different tax classifications. So to keep it simple, which is really what we want to do, we want to keep a complicated topic simple and allow you the ability to maximize from an asset protection standpoint and a tax standpoint. So LLCs, S corporations, fundamentally, they really have a lot of similarities. So as long as you have that taxable income, you can show profit and loss statements with your LLCs and your S corps. if you're showing the intent that allows you to either receive a larger tax return at the end of the year or pay less in taxes.

Okay? So the reason I thought it was beneficial for us to get on now is that way you don't get to the end of the year with a shoebox full of receipts and think to yourself, should have set up an entity. Could have saved money in taxes. Would have been more organized. I'll do it next year. Right. Every real estate investor that's been doing this for a long time, I'm sure has had a year that when they filed their taxes, they said, I am going to be more organized next year. I am going to make sure to charge all my business expenses to one card. I'm going to get a bookkeeper. If we can stay ahead of that now, allow yourself the ability to reap the rewards before the end of the year. Now, how does this work? Once again, like I said, the three primary goals, I know I went over the seven, but asset protection, tax benefits,

show yourself as a business. Each and every one of you as an investor should have interest in being able to take advantage of those areas. So from a separation standpoint, do you have partners? The operating agreement is one of the most crucial components of any business entity. If you set up your own entity, what did you do with the operating agreement? For those of you watching this that already have entities in place, right? It's better than nothing. How is it structured? Does it show what type of real estate you're looking to invest in?

Do you have owners or ownership percentages? Eventually, do you want to sell your business? Do you want to be able to give percentages of your business up to investors? And if you don't, that's okay as well. but make sure you clarify that within the actual agreements themselves. So here's a list of just a couple deductions. Like I said, there's over 250. So as exciting as asset protection and tax benefits are,

I know this isn't the most exciting topic in the world. But here's a couple that everyone pays, right? Phone, internet, power. A lot of these are just anyways expensive. or bills, you're paying these anyways by having the proper business entity in place. We want to show these as actual business expenses, right? Even the health insurance, right? Me being self-employed, I don't pay my health insurance.

My business pays my health insurance. I don't pay my phone bill. My business pays my phone bill, right? Why? Because I use those for my business expenses. and we want to make sure that you're able to do the same thing. So we'll go over those and we'll break those down in some greater detail when we speak with you one-on-one.

Going back to the legal disclaimer, here's the numbers. These are not your numbers, but I know a lot of this can be difficult information to comprehend. So let's break it down with some actual numbers to show you how quickly you can save thousands of dollars before you do your first deal. Okay. So the first thing, example that I'm going to give you here, the example that I used was $100,000, right? So put yourself in the shoes of an individual.

This example I use is a person that has not done a single deal in real estate. But they make $100,000 a year with a W-2 job or a 9-to-5 job. When you make $100,000, the tax deduction that I used is a standard deduction. So right now, the standard deduction for someone that's a single individual is just north of $12,000. If you're married, it's just over $24,000. But what you do here for a standard deduction for a single individual, all you're doing is subtracting the $12,200 from the $100,000, and you have to show that you made $87,800. That leaves you at a 24% federal tax rate. That doesn't even include state tax.

For those of you that are in New York or California, where you have the high state tax, you're getting hit again. But at 24% on a federal tax level, you're looking at paying $21,000 in federal taxes. What I try and help people understand is everyone should have a side hustle. Everyone should have a side business. Because if not, you didn't make $100,000, you're paying $21,000. in the form of taxation, right? So exact same example, same $100,000. No business income did not do

their first deal in real estate. They still get the standard deduction, but the organizational expenses, they invested into some sort of a coaching or education platform. They're paying to get leads, whatever it may be, they have additional business expenses that they can take advantage at. Very quickly between your phone, your internet, your power, startup expenses, business expenses, standard deductions, they add up very quickly to where now we subtract that from the $100,000, and you're looking at $57,450 that you have to pay taxes on. Okay. Federal tax rate at that income level, is 22%. So now you only have to pay the IRS 12,639. I shouldn't say only. It's still 12,639, but with no money made in the business, not a single deal done in real estate in one year by having

the proper business entity in place, $8,433 in one year in taxated. going back to Matt's podcast and what he talks about, I love how much he talks about how quickly these things can compound, right? He talks about the 12 years and the long-term vision. This is one year. Now look at five years, 10 years, 12 years. As you generate more income, taxes become a bigger concern in your day-to-day life. The more that you can understand your personal situation, and the more that you can understand,

more that this number can multiply as you generate more money or even as you don't, the easier it is to build that long-term legacy. So tax savings is one of the biggest areas that we will focus on in making sure that you are not leaving money on the table. A lot of you have probably even heard this, but one of the examples I've been talking about recently is Amazon paid zero dollars in federal tax last year. How? It's not because they didn't make any money.

They have a team of people, thousands or tens of thousands of people that are looking into that tax code of where they can reinvest or what deductions they're able to take to have that break-even point. So they're able to expand and grow. And it's smart investments that obviously help compound any business, Amazon being a ridiculous example. For sure. Well, to add another ridiculous example when Donald Trump finally had to reveal his tax returns and everyone wanted to. discovery, he only paid $700 in taxes, and everyone was totally outraged. And his response was, if you don't like it, changed the law. Yep. And the same law is applied to all of us equally. It's just whether you want to apply them to your situation or not. For sure. Yep, well said.

Thank you for that. Business credit, let's kind of pivot here a little bit from taxes. This is an area that a lot of our clients genuinely have a lot of interest in for long-term growth. Business credit is an excellent tool, not only for long-term growth, but for personal separation for the legal and the financial as well. As I mentioned earlier, your personal credit profile, everyone's probably had an idea or had a business venture that at some point in their lives, I know I have, they said, if I had more money, if I was able to do this now, shoulda, coulda, woulda us, if you will, right? it's so much easier if you could build business credit from the beginning of your business, then it will be long term.

And for those of you that have already been investors for five, 10, 30, 40 years, I still have clients that I talk to that say, I wish I would have known about this 30 years ago. It's not too late, right? The major difference, when you turn 18 and they start judging you off your credit history for student loans, personal loans, credit cars, how easy would it be if someone told you when you were 10 years old, they were going to get you an 800 credit score when you were 18.

If you could do that for your business and build a separate credit profile, that way you're not always having to leverage personal funds or personal credit to either get yourself started or to be able to grow and expand like you truly want to. So some benefits of business credit, one of the services that we do offer is teaching, people how to go through and apply for business credit. It doesn't happen just because you have a business. It's something you have to apply for. It's something you have to build and something you have to maintain. Now, it isn't rocket science. It's a process. It's just understanding the rules

to the game so that you can separate your personal and your business. You can give yourself more funding options and you can open the doors to higher limits, credit cards, with rewards, lines of credit with lower interest rates, right? Speaking of interest rates, one of the things I loved on the podcast, Matt, was talking about equity lines of credit. The creative financing that you teach and small percentages of 5% on an equity line, but 10% in profit from a rental, how do we write off the 5%? How do we write off more expenses to be able to turn that 5% margin into a 7% or an 8%?

those all really add up, right? So if it is built with the business, lower interest rates, even credit cards with 0% for 24 months, just like they offer with the personal on the intro rate, to get you into 0% for 12 months and then jack you up to 20%, right? We want to play that credit game because that really is what it is. It's a game based off of rewards and based off of interest. And one more way for you to keep more money in your corner.

Perfect. We're here about 28 minutes in, and we've got a little bit more to cover, and I want to share everything with you and make sure that we make the best use of Tommy's time that we've got together. But if you already decide, like, you know what, yes, I need a business entity, and I want to do this, and, you know, let's talk and let's see what's the best fit for me. You can go to free entity.com. I said something special up with Tommy and his company there.

So freeentity.com. It's essentially they're taking away. all of the customary expenses and the big expenses you'd expect to pay with setting up an entity. And they're taking that off. And then you just have to cover the bare minimum like with the state and the state filing fees and stuff like that. So anyway, just wanted to, if you were pressed for time and you had to run, go to free entity.com and you'll have that conversation with them. And if it makes sense for you, they'll tell you how to take the next step.

And if it doesn't make sense for you to say, no, thank you. And that's fine with us too. Thank you for that. Asset protection, right? The elephant in the room. the one that no one likes to talk about, but everyone knows is there. Any real estate investor has to be aware of making sure that they've separated their personal and their business.

A common question that we get asked, where is the best place to set up an entity, right? Wyoming, Nevada, Delaware, they oftentimes get thrown around in the real estate community of having additional privacies and protections and anonymity. and those are things that we can obviously talk to you about as well. But to what Matt said earlier as well, crawl before you walk, walk before you run, right? We don't want you to get in over your head and have to spend thousands of dollars for something that's unnecessary now. We want you to be able to have something that benefits you from a protection standpoint and

a tax standpoint. And then as you grow, those are what I like to call good problems to have. The more good problems to have that you can create, the better. and we can always plan accordingly from there. So just some statistics for those of you that are into this, 76 new lawsuits filed every minute, 40 million lawsuits every year. Here's a list of the top nine,

totally different list than it was five years ago, discrimination against employee, discrimination against customers. That was not on the list five years ago. I can tell you that. It's going to be totally different in another five years. So regardless of, like you said, the political landscape.

At the end of the day, it doesn't matter. Give yourself the protection. Give yourself the tax benefits and show yourself as a business, right? So one of the examples I use, I hate the scare tactic behind the lawsuit stuff, but I don't have car insurance expecting to go get into a car accident. Prepare before you get into a situation so that you have that separation from an asset protection standpoint. So before we wrap it up here, one of the things that I always like to preach when I'm speaking with the clients that I already work with,

what you are doing now is different than what you are going to be doing in five years. So as much as we want to crawl before we walk and walk before we run, your personal situation is always going to change, which means your business is going to change, right? A lot of you are doing this for your legacy, right? For me, it's for my family, for my kids. There's things that you want to be able to do yourself that regardless of who it's for or what it's for, even if it's just for yourself, asset protection is something that is never going to change, right?

It's always going to be there. It's always the elephant in the room. And we don't want it to be something that happens too late. So for those of you that wholesale, for those of you that fix and flip, let's talk about your active income, anything less than 12 months. For those of you that are more buy and hold strategy and are looking at more of the long-term investments, short-term capital gains and long-term capital gains are two totally different things. So not only do we want to separate them from an asset protection standpoint, but tax-wise, you want to make sure that you're in that position as well.

So this slide here is for those of you that are more experienced, have been doing this for a long time, full-time real estate investors. Trusts are so important to avoid probate, right? I know it's worst-case scenario that if something were to happen to you, but everyone's heard the horror stories. Everyone has an example of a cousin or an uncle that doesn't talk to their family because of a death in the family. Make sure you have the T's crossed and the eyes dotted.

And then as you continue to build multiple streams of income, have the health insurance pay. right have that paid from your corporation put money into an IRA if you feel like that's a good thing for you if you have money in the market if you're into cryptocurrency if you're into the stock market if you have multiple streams of income let's talk about that as well so that it's separate from your real estate and from your actual personal income so one thing about the trust and a lot of people will focus on on the death benefit of that but also there is an amazing life benefit to a trust, and that's just your anonymity.

And as you start to build a portfolio, whether that's in stocks or real estate or cryptocurrencies or collectively all of them together, the more that the target grows on your back in a sense. When someone has an issue and they look to sue somebody, they're going to look to see who has the most assets. And, you know, if people can't see your assets and can't find your assets, then you become less of a target. The more your assets start to build and the more people around you that start to know about that, the more that you need to consider this type of structure.

Yep, for sure. I totally agree. Yeah, Matt and I have a mutual friend that actually put us in touch and he is huge and preaches that the trust needs to own the holding company to own the subsidiaries, right? He's got over 80 different LLCs and has got just, I don't even know how he does it and how busy he stays and how much he has going on. But it's the same thing. The goal is to build well, but look as broke as possible on paper. Because as much as you can possibly separate those things, the better off it's going to be if or when something does happen. So perfectly. I totally agree. Thank you for that. And we must add right there, if anyone was thinking of anything different, that that all comes with the government's, that's all within the confines of the law. It's

moral, it's all legal, and it comes with the government's blessing. They put this out there, this roadmap for us to follow to have these types of protections around ourselves. I imagine they do it specifically for themselves, but they can't make it exclusive to themselves, so they have to make it equal to everybody. But I use need the right people on your team to make that happen for you. And they can guide you through that and whatever makes sense for you, then you can do that. Thanks, Tommy. Yeah, like you said, we've worked out a deal so our clients get a complimentary consultation with one of their experts to brainstorm some ideas around helping you keep more of what you make. And then, if it makes sense, they'll go ahead and they'll set up this business entity for you.

And the best part is that they've agreed to pick up most of the customary expense that you'd expect to pay when setting up an entity like this. And, you know, if you're thinking like, what's the catch, what's the sales pitch? Like, when are you going to hit me over the head with the big aha moment or anything like that? Because there's always one of those, right? No, because what they're doing is that they know that after they proved you how good they are and how well they're going to take care of you, you'll probably want to do more business with them in the future. So it's a bribe, essentially is what it is.

It's the old, show them how you can help them by actually helping them trick. They're just good people, and I wanted to introduce them to you. They're going to look at your situation. They're going to take care of all the complex nuances of setting up a business and make sure that you are structured the right way. Because when it's done correctly,

you can write off over, as he was kind of showing you, 250 different deductions, saving you potentially thousands, even if you are just starting out, even if you have not yet done your first deal. If you haven't closed that first deal, he showed you how just with the very first year

with setting up this entity, how you can essentially cut your tax liability in half. To book a time for your call so you can start keeping more of your hardened money, you're going to want to go to free entity.com. This is a one-time call, by the way. So pick a time that works for you. And don't miss it.

Be smart about it. Get set up the right way and save yourself thousands. Go to freeentity.com. and schedule your free call. Please stand by. We've got overhead to pay. We'll be right back. Boarding for flight 246 to Toronto is delayed 50 minutes.

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Boating will begin when passenger Fisher is done celebrate. 19 plus Ontario only. Please play responsibly. Concerned by your gambling or that if someone close to you, call 18665-3126-0 or visit Comex Ontario.ca. Good things may come to those who wait, but better things come to those who go out and get them. Let's get it. Back to the show. Now, the market crash is a reasonable concern, given how the United States has enjoyed 12 continuous years of economic growth. I mean, you'd think we were due, right? One side of the argument thinks, this time it's different. Michael Burry, who gained his notoriety in the movie The Big Short for being one of the very few that predicted the crash of 2007, and he bet big on it, says, no, this time it is not different.

If he's right, how do you protect your portfolio from the crash of all crashes that's followed by a potentially long and painful bare market? There's no single answer, no silver bullet that can fully protect your money from everything. And that's important to note, as many have dubbed our current market, as in everything bubble. Stocks, real estate, and bonds are all inflated and ready to burst. Although there's no perfect position that protects you from everything, there is a mix of some basic strategies that can make your portfolio quite resilient through all market conditions. The simple traditional approach to survive a downturn is to make sure your portfolio is diversified among asset classes and regions.

Rebalance regularly and maintain a high savings rate with low leverage. Don't panic and sell stocks after a stock market. a stock market crash, don't get over leveraged in mortgages, and occasionally take a step back and just kind of examine the big picture for vulnerabilities and single points of failure. Diversifying a portfolio into several asset classes and rebalancing annually or more regularly historically gives investors some security while enjoying strong investment returns over time. For example, the S&P 500 took about four and a half years to recover from its previous peak in 2007. However, a simple mix of just 60% stocks and 40% bonds experienced a much less severe crash

and took only three years to recover. And if you had an income and continued monthly investing, your net worth would have recovered even more quickly, like within a year or two, depending on how big your portfolio was compared to your income. In addition to the traditional stock bond split, you can also diversify into international stocks and investments to further reduce the probability of major portfolio declines. For example, in any given decade, the stocks of some countries do better than others. And if you have exposure to all of them, you can really smooth out your portfolio's results

and minimize the impact of stock market crashes. Other potential asset classes besides domestic stocks, foreign stocks and bonds are precious metals, real estate, collectibles, commodity producers, and more. Even digital currencies and assets are experiencing more mainstream adoption as viable investment classes. And some would say there are even essential elements to a well-rounded and hedged portfolio. Having some cash ready can be helpful and take an advantage of post-crash market conditions. For example, if you purchased an additional income property or two just after the 2007 crash, you'd be sitting in a much nicer place right now had the market not crashed and just experienced only a modest correction.

Most investors should stick to a diversified, regularly rebalanced portfolio. However, some people are more interested in being hands-on with their portfolio. So there are two general ways to go about this. One, use tactical asset allocation. And this is an investment approach in which you adjust your asset allocation to take advantage of unusually cheap or expensive assets. In other words, you just don't rebalance to the same exact asset allocation percentages each time. You adjust your asset allocation percentages based on market conditions.

If U.S. stocks are unusually expensive, you reduce your exposure a bit. If emerging markets are oddly inexpensive, you buy a bit extra. It helps to avoid major market crashes because you'll be holding less unreasonably expensive stocks. Even Jack Bogle himself, founder of Vanguard, and one of the earliest proponents of buy-and-hold index investing, sidestepped much of the dot-com bubble in his personal portfolio and has spoken about this before. He noticed correctly that the S&P was utterly, ridiculously overvalued while bonds were reasonably priced. So he actively reduced his equity exposure substantially, especially because at his advanced age, he wanted to avoid a major market crash.

Now, there are countless ways to do tactical asset allocation, and some are more complex than others. So an investment in your financial education would be a good allocation if you want to take this hands-on approach. The second way, focus on growing dividends, cash flow, and yield. Investors that focus on building passive investment income by buying dividend stocks, real estate, and other income-producing investments tend to weather bear markets quite well, because dividend and rental income are a lot more stable than the prices of the assets themselves. During the 2008 financial crisis, for example, the S&P 500 declined over 41% from year-in 2006 to year-in 2008, and a full intra-year peak to trough decline of over 55%.

while the decline of the S&P 500 dividends in any trailing 12-month period was only 21%. The same is true when it comes to income from real estate. As house values dropped 40 to 50% over a five-year period, rents from those houses maintained a steady upward trajectory. A more hands-on involved approach to managing your investment portfolio with a focus on dividends and income-producing assets will offer as much protection as any other approach. Specifically, investors should look for companies that continue to include increasing their dividend during previous recessions.

Focusing on investing in companies with a decent dividend yield and low dividend payout ratio also helps you avoid substantially overvalued stocks during a bubble. And as I've demonstrated countless times here over the last decade, most people don't stand a chance at creating any significant wealth, let alone surviving a market crash without incorporating real estate into their portfolio in some capacity. In addition, during a prolonged sideways bare market, having a substantial income yield, let your portfolio earned decent returns even if asset prices remain relatively flat. In a nutshell, there are both simple and complex methods to protect your finances and portfolio during a market

crash or prolonged bare market. Most of the results come from getting a few major things right. One, maintain a high savings rate and live below your means during prosperous times. Always be prepared. Two, diversify your portfolio among several asset classes in geographic regions. This usually improves risk-adjusted returns. Three, rebalance your portfolio regular And don't follow the herd. Don't panic sell after a crash or euphoria buy after a long bull market. And fourth, consider occasional active tactical moves to sidestep unusually large bubbles. I mean, this could mean, for example, trimming equity allocations during rare periods of extreme over-evaluation, like right now. Then there are some specific approaches like using hedging strategies, focusing on dividend stocks and income real estate.

A focus on dividend growth stocks and income-producing real estate is a good strategy. strategy for most investors. Overall, balance is key. So don't be a permabere or a permabull. The one thing that will never change is that there will always be change. And those are some of the things that you can do to survive when change happens. Mainstream media is ripping us apart. This is news to bring us together and make some money in the process. Google is exercising an option to purchase St. John's Terminal in New York City for $2.1 billion and what may be the most expensive sale of a single U.S. office building in years. The move comes as the tech giant prepares for a future of hybrid work,

with approximately 20% of its workforce expected to telecommute permanently. Last month, Google CEO said the company would be postponing its voluntary return to the office until January 10th. The National Association of Home Builders reported the Housing Market Index was at 76, up from 75 in August. Any number above 50 indicates that more. builders view sales conditions as more good than poor. Housing inventory is up 1.2% week over week, up 42% from low in early April. Seasonally, inventory has bottomed, but may be peaking for the year, the report says. The share of mortgage loans in forbearance decreased to 3%. The Mortgage Bankers Association

latest forbearance and call volume survey revealed that the total number of loans now in forbearance decreased by eight basis points from 3.08% of servicers portfolio volume in the prior week to 3% as of September 12th, 2021. According to MBA's estimate, one and a half million homeowners are in forbearance plans. Housing starts increased to 1.615 million annual rate in August. Private-owned housing starts in August were at a seasonally adjusted annual rate of 1.615 million. This is 3.9% above the revised. July estimate of 1.554 million and is 17.4% above the August 2020 rate of 1.376 million. Single family housing starts in August were at a rate of 1,076,000. This is 2.8% below the revised

July figure of 1,107,000. The August rate for units and buildings with five units or more was 530,000. Now, despite several indicators of a slowing housing market, prospective homebuyers should not get too excited. Inventory remains limited and changes are in line with the traditional seasonal slowdown, according to Remax's August National Housing Report. The report analyzes the MLS data from 51 U.S. metropolitan areas and includes all residential properties. In August, home sales dropped 3.5% from July's total, which is slightly larger than the 2015-2019 July to August drop of 2.1%. This is what the report found. Still, August 2021 home sales were up, 0.6% in a year-over-year comparison. The metros with the greatest increase in year-over-year sales

percentage were New York at 55.1%, Honolulu, 37.3% and Las Vegas at 12.5%. The median sales price of homes also decreased to 335,000, dropping 1.2% in August from July. Although this decrease is in line with the 2015-2019 average July to August drop of 1%. It still marks a 13th, 15.2% increase in medium home sale price from August 2020. In total, the report also found that 36 of the 51 metro areas had double-digit year-over-year percentage increases for August, with Boise, Idaho up 30.6 percent, Phoenix, 24.9 percent, and Salt Lake City, 22.3 percent, showing the greatest changes. This is consistent with other reports. House Canary recently found that Boise has been the fastest growing city in America since December 2000.

and Provo-Orum, Utah was second. The Case Shiller Index noted that in June, Phoenix had the highest price growth rate of any large city in America, a title it's held for 25 consecutive months. It's not a passing fad, it's the future of money. What happened this week in cryptocurrency? Coinbase CEO Brian Armstrong is detailing a new list of predictions for Bitcoin and the cryptocurrency industry at least. large. Armstrong says he believes a billionaire Bitcoin flippinging is coming that will boost science, tech, and charitable causes in the years ahead. Olaf Carlson Wee and Balaji Srinivason estimate that at a price of $200,000 per Bitcoin,

more than half the world's billionaires will be from cryptocurrency. Whether you think this is a good thing or a bad thing, it means there will be more pro-technology people with access to large amounts of capital in the 2020s. Presumably, this will increase the amount of investment made in science and technology, and I think we'll see more crypto folks turn to philanthropy, Armstrong said. Cuba is now officially using cryptocurrency payment options as the regulations go live. Resolution 215 of 2021 issued by the Banco Central de Cuba, my Spanish should be better than that. The country's central bank, recognizing cryptocurrencies like

Bitcoin is now in effect. So, according to Cuba's official state news agency, Prenza Latina, that was better, the order became official on Wednesday, with crypto legally recognized by the BCC. Bitcoin and other cryptocurrencies can now be used for commercial transactions and investments in Cuba. The number of people believing that Bitcoin

could top $100,000 by the end of the year continues to grow, with the latest being Bloomberg's senior commodity strategist, Michael McGlone. By outlining the growing mass adoption declining active supply, among other reasons. McGlone predicted that Bitcoin could more than double its value in the next three months. National Bitcoin adoption will drive a $1 million Bitcoin price with several governments adopting Bitcoin.

It is only a matter of time for the Bitcoin price to reflect the bullish sentiment. As more and more countries explore adopting Bitcoin in one way or another, it's become apparent that El Salvador has put the world on notice, whether these nations just legalize and regulate Bitcoin, adopt. opt it as legal tender or use it as an investment vehicle, their interest is undeniable and growing by the day. Veteran trader Tone Vase says Bitcoin is now in the process of targeting $100,000 per Bitcoin within the coming months. Vase says he sees Bitcoin threatening to take out its all-time highs potentially early next month

before making a parabolic move into the six-figure price range by the time 2022 rolls around. And more news in El Salvador, the Latin country now owns 700 Bitcoin as President Bucke, Kali buys the Bitcoin price dip again. El Salvador's president Naibu Keli confirmed via Twitter Monday that the Latin American nation has bought the Bitcoin price dip exchanging dollars for Bitcoin at a time he believes it remains undervalued by the global market. Bitcoin has the potential to push its prices to between $250,000 and $350,000 by the end of 2021. A longstanding fractal suggests. The analogy appeared in anticipation that Bitcoin could post a 2017-like bull run in which the Bitcoin,

Bitcoin price rose by more than 1,900 percent. First spotted by pseudonymous analyst Bit Harrington. The bullish setup drew its inspirations from Bitcoin's secular bull runs every time after halvings win the minor block reward gets cut in half. Coin Telegraph Markets analyst Michael Van de Pop reacted to Harrington's fractal theory, adding that it would lead the Bitcoin prices to the $250,000 to $350,000 range. This makes a ton of sense. And in line with my ideas, too, somewhere at 2017 we are.

Heavy breakout to come at a later stage to $250,000 to $350,000 and then landing on $65,000 in the bare market for Bitcoin. So translation, time to get in. And it was another week of institutional accumulation. Coin shares seized $42 million weekly crypto inflows. Institutional investors have kept accumulating cryptocurrencies for five weeks in a row now, according to CoinShare's latest report. digital asset investment products saw inflows totaling $42 million last week.

Infoes were seen across all digital assets and signals what we believe to be continued improving sentiment amongst investors. And that wraps up the epic show. And if you found this episode valuable, who else do you know that might too? There's a really good chance that you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'm going to take great care of them. All right.

God loves you. And so do I. Health, peace. Blessings and success to you. I'm Matt Terrio. Live in the drink. Yeah, yeah, we got the cash flow. You didn't know, home for it, we got the cash flow.

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