Epic Real Estate Investing - You Know Turnkey Investing is for You When... | 465

Episode Date: September 8, 2018

Did you know that a mere 5% of retirees can be described as financially stable? Moreover, only 1% ever achieve financial freedom! Today on Turnkey Saturday, Mercedes Torres shares a brief description of what turnkey investing is, why traditional financial advice isn't working anymore, and why creating streams of money instead of piles of money is the fastest way to financial freedom. 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 Saturday on the Epic Real Estate Investing show for Turnkey Saturdays with your host, Mercedes-Torres. Hello, hello, and welcome to the Turnkey portion of Epic Real Estate Investing. My name is Mercedes-Torres, and I am privileged. enough to be partners with Mr. Matt Terrio, the guy who created epic real estate. As many of you know,

our podcast is now on a daily release. And Saturdays, we've decided to focus on turnkey real estate investing, mainly because we've noticed quite a demand being brought by the shifting market. I mean, we get calls in our office every day about what the market is doing and more so about turnkey real estate. So this edition of our show is about that small niche in real estate, small but going rapidly in popularity. It's going rapidly in popularity because it's a solution for that larger sector of the population, specifically for three types of people. So first, I'm going to give you a brief description of what real estate investing is, and then we'll dive into a little bit more details about it and how it could possibly work for you. Now, if you ask a dozen or so investors the same

question of what is turnkey real estate investing, you're likely going to get a dozen different answers. But generally speaking, a turnkey real estate investment is a property that has been found, rehabbed and made rent ready in livable conditions, if you will, and then a tenant is placed and assigned to a property manager. The property is then sold as a package, as a cash flowing asset, if you will. But basically, the idea is that you buy a property and turn the key so that it produces passive income for its owners. Well, that's the idea. That's what the name implies. And for the most part, that's what most turnkey real estate investments are marketed and that's how they're presented. And my company, Cashflow Savvy, is no different.

That's exactly what we do. We buy properties for our investors. We fix them up. We place tenants. And more importantly, we place property management that collects the rents and then forwards it to our investors. Sounds great, right? Well, turn the key and the property spits out money every month. But as you could probably tell in my language, I said it was an idea because there's more to it than just the idea. There's another side to it indeed. There can be that unpleasant side to turn key investing like there could be with any other investment out there, like with stocks and bonds and nowadays with Bitcoin. And that unpleasant side is directly tied to the investors' expectation of what a passive income investment property is. To be clear, passive income doesn't mean

uninvolved income at all. Buying a turnkey investment property doesn't guarantee that the property will perform without your involvement or without some work. I mean, in an ideal world, it would be great if we just bought a property, it spit out income, and we wouldn't have to worry about it. It's like this. When you buy a new car, you buy the car, you start it by putting a key in the ignition, you turn the key and the car starts, right? But how long will that car work if you fail to fill it with gas or if you fail to change the oil or to rotate the tires? And even more important than the maintenance of the car, what about the operations? I mean, you still need a driver, the gas, brakes, a steering wheel, and keep both eyes on the road

or else you'll get nowhere, right? Makes total sense. And if you were to hire someone for the maintenance and the operation of the new car, you still have to keep your eye on the person that you hired. Well, a turnkey real estate investment is very much like that. The investment should start when you initially turn the key. But from that point on, it needs to be maintained and operated as well. The turnkey part of the investment ends when you turn the key for the first time. That would be an appropriate expectation when deciding to invest or not in a turnkey investment property.

Today, I want to discuss why this type of investing is growing and who are the three specific type of investors behind this growth. So, you know how some people want to invest in real estate investing, but they simply don't have time? I mean, they have a full-time job, or maybe they have a thriving career working 40 to 60 hours a week or they're running their own business working 60 to 80 hours a week. They likely have a family or family obligations like getting the kids to soccer practice on time or helping with the kids homework. And on weekends, you have your little league games, your karate tournaments or your

soccer games. You know, let's face it, people in society today are extremely busy. I know I am. And you know how some people want to invest in real estate investing, but they just don't know how, or even how to get started? I mean, they understand the importance of real estate investing, and they understand that real estate done right is one of the better ways of investments. I mean, they understand that real estate done right is one of the better investments available to the average person. It's becoming more and more evident that real estate is the answer as more wealth has been created via real estate investing than anything else. But when the decision is finally made to add real estate to their investment portfolio or even to get started, more questions than answers seem to arise. Like, where do you find good deals or who do you call to fix them?

or how do you find good tenants? Should I have property management or should I manage the property myself? I mean, with so many questions, people get so confused, and you know what happens when you get confused. Confused minds do nothing. Absolutely nothing, right? And you know when some people want to get involved in real estate investing, but they think it's like way too difficult, they don't want to do all the work. I mean, face it, from A to Z,

real estate investing can easily become a full-time job. And many people want real estate. They just don't want to do all the work involved. They don't want to will and deal with distressed sellers. They don't want to talk to real estate agents. They're not interested in swinging hammers or fixing up our property. They have no desire to interview, tenant after tenant to run credit reports, to verify employment. And all of us have heard the story where they get that phone call at 3 o'clock in the morning because of a clogged toilet or a broken water heater. I mean, most people just aren't interested or even have the desire to do the day-to-day tasks that accompanies with building a real estate investing portfolio or even buying

rental income. You see, when any or all of these things come together for a person, they don't have time and they don't know how or they simply aren't interested in getting involved in another full-time job. But at the end of the day, it really comes down to one thing. It's fear. Fear comes disguised in so many different levels. I mean, it's labeled with lack of time, lack of knowledge, lack of desire. And when fear is presented, it stops people dead in their tracks from just getting started. One of the greatest opportunities of our lifetime, one of the biggest things that you could ever do to bolster their investment portfolios, the average person will just pass on them

and it'll never come to be all because they're paralyzed, all because they're paralyzed, fear. All of these three issues in varying degrees and proportions are prevalent for a very large group of people in our society. It's a problem. I mean, it's a serious problem. For the Department of Health and Human Services, 95% of today's 65-year-old are unprepared to retire. And if they do retire, they do so on a fraction of the income they're accustomed to during their working years, or they're dependent on government or church or family or something else to make ends meet. 95%. That's a problem. I mean, that is a huge problem. The old ways of doing things, I mean, the traditional idea of getting to the place of financial independence, like going to college,

getting a good job, to work, work, work, then save, save, to spend 40 years of your life, saving and living below your means so that you can spend the last portion of your life financially comfortable, that's just not working for people anymore. If it were working, then 1% of the population would be considered wealthy. And then 4% of the population would be considered wealthy. And then 4% of the population would be considered financially independent. Combined, that's just 5% of the population that makes it to 65 years of age with the means to support themselves. People, that's a problem. The antiquated way of achieving financial independence, I mean, let's face it, it just isn't working anymore. Yet people today don't realize it until it's too late, until it's too late to

do anything about it. So they continue to work and that's exactly what's happening. Why do you think that Walmart greeters are generally senior citizens greeting you? Now, some of the senior citizens do it because it gives them something to do, maybe gives them a sense of independence, but most of them are doing it just because they need that little something to make ends meet. Why? Because they weren't prepared to retire. More and more people are having to work well into their 70s to survive. And if you're paying attention, there is serious talk about the retirement age to be eligible for Social Security to be increased to the age of 70. There are no. many different directions we can take this conversation, and I'm likely to do so in future episodes.

But what I want to point out here is that we have a problem, a serious problem. I'm sure much of what I'm sharing with you now is no surprise to you, as you likely know it's been a problem. But what can you do about it? Where most people think that they're stuck. They're stuck because they think that we have a money problem. Or they specifically think they have a money problem, meaning where will the money come from to support me in retirement? And will I have to wait until I'm 70 to receive my Social Security? Quite honestly, I wasn't too excited about waiting until 65 to receive them in the first

place. But what most people don't realize is that they do not have a money problem. As much as I may feel like money is a problem, it's not. It's an idea problem. Specifically, it's old ideas we were all raised on. The ideas that I mentioned earlier, like to go to school, to work, work, work, To save, save, save, it's those ideas of what we need to achieve financial freedom. Those are the ideas that are leading society to the poor house. And I do mean the poor house. So those ideas are based on a simple philosophy of work, work, work, so you can save, save, a pile of money so big that will eventually spin off residual income

to support you in retirement. Now, that sounds all fine and dandy until you start doing the math and calculating how big that pile of income has to be to just create the medium income in America. Now, the medium household income in the U.S. right now is $40,000 a year. That's household income, by the way.

And to generate $40,000 a year in passive income at the rate most financial planners will tell you to expect in retirement, somewhere between 3 and 5%. Now, for the sake of this conversation, we'll use 4%, that the pile of income will produce. The pile of income will have to be $1.2 million. Think about your current savings. Okay? Now, you don't have to tell me all about it, but take all that into account that you currently have right now. Take all of your assets, excluding your home. Now let's take your stocks and your bonds,

your savings. How close or how far are you from that number? Now, keep in mind, that's just to support yourself at the medium household income of $40,000. In some parts of our country, that might be just enough. I mean, if you're single or if you don't have a lot of needs, that might be enough. But for most people to live where they want to live, to afford some of life luxuries like taking a vacation every once in a while and, you know, some of likes comforts or driving a nice sports car, maybe to travel a little more than once a year, it usually will cost a family more than $40,000 a year. So $40,000 a year just isn't going to cut it. I know that you didn't work 40 plus years of your most active years of life to finish at least

20 to 25 percent of your life at $40,000 a year. I'm going to bump that number up to $100,000 a year. That would afford most people a decent and comfortable life in most parts of a country. I think you would agree. So to generate a residual income of $100,000 a year using the same rate of return, 4%, how much money would you have to save? How big would your pile of income have to be at 4% return to generate $100,000 a year? Think about it.

So I did the math for you. $2.5 million. $2.5 million we would have to have in reserves to generate $100,000. $1,000 a year in passive income. So again, I'll ask you to think about your current savings, your money market, your stocks, your bonds, you might invest in Bitcoin, you might have an Amazon business. Take all that into effect. Take account your assets, excluding your homes.

How close or how far are you from that number? Now, answer to yourself, you don't have to tell me, but allow me to guess. I can guess with almost 98 or 99% accuracy. Now, you and I are likely to have never met. I don't know a whole lot about you. In fact, I know nothing about you. But I'm willing to bet I can guess with almost 99% accuracy. And my guess is you're not even close.

Not even close. because the average 401K balance when a person reaches the age of 65 is $97,58, not even close. But that's just the average person. You know, you might be thinking to yourself, Mercedes, I'm not the average person. I'm above average. That number isn't necessarily true for me, right? Okay. So let's look at the average 401k balance of a household income that exceeds $100,000 a year. Now, that would be this country's elite earners. What's the average 401k balance for that group of people? Any ideas? Think about it. Do a little bit of research. So I did a little research. The average balance for that person in their 401k, is $350,576. Okay. Now, this is for the elite, the person that is making more than $100,000 a year.

That is just one-third of what they need to live at their median household income of $40,000 a year. just one-third of what you will need to be average in retirement. I mean, you seriously will have to cut your standards of living by at least 60%. And most people aren't even willing to do that. So they dip into the principle to maintain that lifestyle closer to what they had during their employment young years. And when you dip into your principle, that produces less, residual income that your account is going to spit out every month. So now your biggest concern is so that

you don't outlive your money. That's a problem. That's a huge problem. But again, it's not a money problem. It's an idea problem. Now, I'm going to share a new idea with you that can literally transform your financial future, change the direction of your life so that you, avoid the financial disappointment that 95% of the country's population is going to be faced with. I'm going to share that idea with you. Do you have doubts about your current plan for retirement actually panning out? Imagine revolutionizing your retirement plan so it pays you right now and in retirement. Change one thing, one time, and that revolution can be yours. That's bad news for Wall Street, but great news for you. We're cash flow savvy.

and we'd like to offer you free information that will show you how one simple tweak can cause your retirement plan to pay you right now and in retirement. And it's yours for free. For the secret your financial planner doesn't want you to know, go to cashflowsavvy.com. That's cashflow savvy.com. So the idea that a majority of our country is following in the pursuit of financial a defendant is to save a pile of money so high that it could spin

off streams of income to support them while they're having to work, that's the end game to create a stream of income. I mean, that would be an ideal world, right? If the ultimate goal is to create streams of money, here's a new idea. What would your future look like? Or better yet, how would it differ if you focused on creating streams of money first rather than piles of money first. Now, let me break that down just a bit. Let's just entertain the idea of flipping the equation around. What would be different about your financial future if you did? Well, let's look at it this way. Just a basic question. What sounds easier to do to create a monthly stream of income of $8,500 a month

that could give you $100,000 a year? Or is it easier to save $2.5 million that would give you $100,000 a year? I mean, already creating streams of income of $8,000. $500 a month sounds infinitely easier than saving $2.5 million. Now, is saving $2.5 million just a daunting task? It's a task that can almost proven to be impossible or highly improbable at best for 95% of the population, right? Okay. So based on the number, the small number of $8,500 a month sounds way easier than the huge number of $2.5 million. But now, now comes the question of, how do I do it?

Okay, so we all know that we've been talking about work, work, and save, save, and clip coupons and cut down on your Starbucks and live below your means and make sacrifices to save that pile of money. But how do you create this easier streams of income? Glad you ask. Here are three options. And these are options that, you know, I speak to people every day and I have these conversations daily and there's lots of ways of doing it. You just have to be privy to it. So here are a couple options. So option number one, you can go invent something and go licenses and go, you know, get it patented. You know, that's one. way of doing it. Or you can write a best-selling novel, a best-selling book, or I don't know, a hit

song, or even write a screenplay, or even write a screenplay and sell on Broadway. Something like that, something where you can collect royalties. You know, option number three, you can start a business or better yet, start an existing business, like a subway or a 31 favors or a Baskin-Robbins or a dairy crane, something like that, or even invest into a McDonald's. You know, you can eventually develop or even grow your own business. That would be another option. And really, option number four is real estate. I mean, there's income producing real estate.

There's also, you know, you can lend money in real estate, you can partner, or you can invest in a head fund that's specifically towards real estate investing, or you can buy and sell notes. That's another option. So remember, when I say 95% of today's 65-year-olds are unprepared to retire, I mean, think about that. 95% of today's 65-year-olds are completely unprepared to retire. Let's look at the 5% that are prepared to retire. Let's take our focus off of what's not working and now place our focus.

on what is working. There's a pretty good chance that if more of the country started doing the same thing as the 5% that does make it, the 95% wouldn't be so big, right?

That's just plain, simple logic. Now, I couldn't find good stats on the financial independent 4% that I discussed previously on this episode, but I did find good stats on the information with the Department of Health Services on that wealthy 1% of the population. And here's what, 74% of that 1% had in common.

They either made their money in business or they made their money in business and or real estate investing. Almost three quarters of our population either parked or preserved their money in real estate investing. Whether they're conscious of it or not, they're doing it. And I think, and I would argue,

that most of them are conscious about it. But whether they're conscious about it or not, they have flipped their equation from saving piles of money first to creating streams of money first. Then they let their streams of money create their piles of cash. And that's exactly what I did eight years ago. I took my focus off of creating piles of money and placed my focus on solely creating streams of money. I mean, in reality,

that's how cash flow savvy was born. We started to buy properties that spit out passive income, and we quickly learned that the passive income, these streams of money, was creating our piles of cash, so to speak. And that's probably the best part, is that Matt and I created our financial independence in just under four years, not the 40 years that 95% of our country is signed up for. And we're still actively participating in real estate every day. Not only is it a more reliable path to creating financial independent, it's a significantly faster pass. as well. Sounds great, right? You're now ready to get started and buy your first piece of real estate investing, right? Okay, not so fast. Before you get started, I really want to leave this

conversation with just really setting the right expectation. I think it's really important to set appropriate expectations. This way we're not disappointed or at least we're prepared if there's disappointment along the way. Although creating streams of income is a more reliable path to financial independence, it's not necessarily easy. It's easier for sure, but it's not easy. I mean, whether you subscribe to a 40-year plan of work, work, work, and save, save, or the four-year plan of creating streams of income, they're both work. They both come. They both come with their own unique challenges. You know, the big question to ask yourself is, how long do I want to work hard for?

40 years? Or do I want to do what Matt and Mercedes did and do it in four years? I mean, that's the real question that you have to ask yourself. And for most people to create financial independence via streams of income approach, it will likely take longer than four years. but even if it was to take you double that, eight years, eight years is significantly better than 40 years. I just use the four year numbers because that's how long it took us. And also, it sounds a lot better than going back and forth between 40 to four years. Just use the four to 40

years. It's a little more poetic that way. But in reality, regardless of how long it's going to take you to achieve financial freedom, it honestly doesn't have to take you. It honestly doesn't have to take you 40 years, if you incorporate real estate investing. Even if you were to just buy one property a year that spits up passive income, you're going to significantly reduce that 40-year plan. I mean, even half of it is pretty conservative, right? So think about it. What would it be like if you were to retire at the age of 45? Or retire at the age of 50 as opposed to 65? I mean, you will still have a significant portion of your life, of your very active years to actually enjoy as opposed to waiting until the last quarter of your life to enjoy living.

So when I say you don't have a money problem, you have an idea problem, this is just an example, a very good one at that, of a different idea that can cause you concerns about money, it can go away sooner rather than later. Again, you don't have a money problem. It's an idea problem. I'm sure there are other ideas out there that can go about the same thing. I just happen to subscribe to the book of not reinventing the wheel. I like to follow the clues.

I follow evidence. I like to do what works. This is how 1% of our wealthiest takes. have done in our country. So if it's good enough for them and if it works for them, why isn't it good enough for me? Why wouldn't it work for me? Now, like the wealthy 1%, I'm letting my streams of income create piles of money. I just flipped the equation around in my mind. I literally just flip the equation around. Streams first, then piles. My money works harder for me. now than I do to work for my money. So there's work to be done, right? A lot of work, actually.

And that brings me to how this episode got started. You know, a significant portion of our population, well, they just don't have time to do the work, or they don't know how to do the work. They don't know how to get started. Or quite honestly, they simply don't want to do the work. But they do want the results of the work. And they understand that passive income needs to be produced. And specifically, that real estate, turnkey real estate, is a viable option. And this is what I mentioned at the beginning of this episode. Turnkey real estate investing is a viable option for these people. That's how these type of people can take advantage and implement this particular new idea, this new idea that can deliver passive income and financial freedom at your doorstep

with a greater possibility while still being young enough to enjoy it. Again, ladies and gentlemen, it's not a money problem. It's never a money problem. It's merely an idea problem. If you just flip your thinking from creating piles of income to create, streams of income first, it can totally be a life changer. My name is Mercedes-Torres. I will see you on the next episode of Turnkey Saturdays from Epic Real Estate Investing. Till next time. Is Wall Street failing to meet your expectations? Has your 401k tragically turned into a 201k or worse? Don't panic. You don't

have a money problem. You have an idea problem. We're cash flow savvy.com. And we'd like to share with you a new idea how one small shift can transform your financial future and accelerate its arrival. Go to cashflow savvy.com to get this new idea that Wall Street doesn't want you to know about. Cashflow savvy.com. More control, less risk. Cashflow savvy.com. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.