Living The Red Life - The Secrets Your Financial Advisor Would NEVER Tell You w/Greg Herlean

Episode Date: November 25, 2024

In this episode, Greg Herlean, a renowned entrepreneur and expert in financial independence, shares his insights into building wealth through smart investments and strategic planning. Greg, known for his expertise in self-directed IRAs and real estate investing, begins by recounting his early struggles and how they shaped his relentless drive for success. He takes listeners on a journey through his unconventional strategies, highlighting the importance of taking control of one’s financial future by thinking outside the traditional investment box. As the episode unfolds, Greg dives into the key principles that have guided his success, from embracing calculated risks to cultivating a mindset of persistence and adaptability. Along the way, he addresses common misconceptions about investing and provides actionable advice for listeners looking to achieve financial freedom. Whether you’re a seasoned investor or just starting to explore the world of personal finance, this episode offers valuable insights and inspiration to help you chart your own path to success. CHAPTER TITLES 3:00 - The Surprising Start of the Journey 6:00 - Overcoming the First Hurdle 9:00 - A New Perspective Emerges 12:00 - Challenges of the Unknown 15:00 - The Turning Point 17:00 - Reflections on Progress 19:00 - Facing the Final Obstacle 21:00 - A Triumphant Resolution 23:00 - Closing Thoughts and Takeaways Connect with Greg Herlean:SOCIALS - Greg HerleanGregherlean.comGreg@horizontrustConnect with Rudy Mawer:LinkedInInstagramFacebookTwitter

Most people don't know they can use their retirement money to invest in things they know, like, and understand. There's over a hundred million IRAs in the United States that have over 17 trillion dollars in them. If you were to show me a new business that you were going to start, I could put my IRA partner with you. And all the profits and distributions would go back into my IRA and I'd pay nothing in taxes. And I never knew before I heard someone talk about this, this was even an option. A bank wouldn't lend me money. My family had zero money. So for me, that's kind of where it started was understanding where money and capital is at. My name is Rudy Moore, host of Living the Red Life podcast. I'm here to change the way

you see your life in your earpiece every single week. If you're ready to start living the red life, ditch the blue pill, take the red pill, join me in Wonderland and change your life. What's up guys. Welcome back to another episode of living the red life joining me today is Greg he's a real estate master financial master and investor and done a whole bunch of stuff but we're going to focus on a couple of things today he's you know been in the real estate game for a very long time and over 1.4 billion, yes, billion with a B in transactions in real estate and investing.

And he's fixed and flipped over 450 homes, 2000 apartment units. And we're going to talk today about the financial secret that your financial advisor doesn't want you to know. So yes, I have your attention and Greg, welcome to the show. Thanks for having me. I appreciate it. welcome to the show. Thanks for having me. I appreciate it. Good to be here. So Greg, let's just start, you know, if they, before we dive into these juicy

secrets that everyone wants to know, give me a minute summary just on yourself, who you are for those who don't know you. Uh, the minute summary. Uh, look, I, I have started from nothing. My dad was in the military. Uh, I was going that path that I think most parents want you to go. And I had a pivotal point in my life

where I had to make a decision if I was gonna go that direction. I decided not to, I dropped out of school and I got into real estate at 22 years old. Not only did I get into real estate, I also started a family. And I have five kids. That's a big part of my why.

But real estate has been a vehicle for me. And I've been able to create massive wealth that way to afford the five kids in the memories. But really, I mean, I started with nothing. My dad was in the military and got into real estate. But I think what we're going to talk about today is really what catapult would mean to the next level, learning how to avoid taxes and do things that I didn't really know was possible, nor did my parents know was possible 23 years ago. Yeah, it's funny, you know, just to dive straight in on the taxing, like, I think every entrepreneur that becomes successful, we'll go through this journey

of like, we first learn how to make a lot of money and grow our business. And then we end up paying a lot of taxes. And then if we're pretty, we get pretty advanced, we go, Oh crap, there's got to be a better way. And we partner with, you know, big financial experts and people like yourself. And I've got, you know, lots of advisors that work with billionaires and you start learning all these legal but more advanced tax strategies on how you can obviously write off stuff and do it all properly.

So I'm excited to dive into some of that today and also one thing that I know we're going to talk about that's interesting is how to actually leverage capital too in less typical means, right? Versus just go into the bank. So super excited to dive in, but let's start with the main secrets, right? So what are some of the main things most entrepreneurs don't know about money? Well, look, I think entrepreneurs, one of the most difficult and important things is raising money.

And so being able to get capital or partners or leverage and where to go. And the typical places people go would be a bank or a friend or a family member, right? And that's usually where it would end. And I learned at the age of 22, like, okay, someone taught me what we're gonna talk about today of a whole nother place where there's tons of money

that people are just unhappy with that you can start talking to. And literally my first real estate deal, someone lent me money from their retirement plan, like just a little condo in Las Vegas, a $60,000 condo. And I never knew before I heard someone talk about this, this was even an option. A bank wouldn't lend me money.

My family had zero money, but someone taught me this. And I was like, wow, someone with their IRA can give me the money and then I can pay them back profits. And they pay nothing in taxes until they pull it out someday. So that was, so for me, that's kind of where it started was understanding, you know, as far as entrepreneurs, understanding where money and capital is at. And I think that's really important. Yeah, well, I think it's sunny too, because I think when you start life, at least me, right, and I

think most people, you assume when you look at these billionaires or people with a ton of real estate, whatever you assume they somehow earn that money and just bought it all right. And then you actually learn like I'm friends with some billionaires and stuff. They rarely ever use their own money. I'm kind of like the smart billionaires never use their own money. They're always using like fools. And I actually got into real estate when I was about 20. Uh, and I use my student loan.

If I took a student loan out, uh, and I worked full time, had a personal training business. So that paid all my bills and I'd save like 30 grand just from that business. And then I took the student loan out and put all of that towards my first real estate deal. And then every year I bought another one because the profits I put straight into a separate account to work on the down payment. because the profits I put straight into a separate account work on the down payment. So I just, you know, that's one example. And I'm sure that's how you've got some of your 2000 doors

and units isn't like, you're not buying them all in cash, right? You're leveraging money. Leveraging money in particular, this, my place is retirement funds. I mean, that's something you and I spoke about for a second but I don't think people really grasp that they understand how much money is in retirement accounts. And this is one of the secrets.

Hey, that is a lot, right? Yeah, there's over a hundred million IRAs in the United States, just obviously here, that have over $17 trillion in them. So if you're listening to this and you're like, hey, I don't know where to find money, most likely the person to your left or right has some of their money in a retirement account

that frankly, besides this last week, right? This last week was good in the stock market. But besides that, it just goes up and down and people are frustrated and have no control of that. So what's I think exciting is learning about this concept and realizing that there's opportunities all around you for you to leverage, for you to borrow, for you to use to scale your business. And that's why this subject is so near and dear to my heart.

And it's how I, you know, I've got where I am today. Yeah. And I mean, I think people like Trump are a good example, right? Like I'm not into politics and whether you love or hate him, it's like, you know, he built a lot of his wealth from loaning money and stuff. And then he also saved a lot on taxes by... on taxes, right? You know, so it's like a lot of the smartest people are doing that. And you always see, I think it's funny in the news, right? Like you see these articles where it's like Jeff Bezos pays zero in taxes or whatever, right?

And it's like, uh, you know, obviously they are paying a lot in taxes in many other ways, cause there's lots of different types of taxes. But, um, yeah, I mean, you have to be smart about these things because if not, if you just kind of just pay everything at face value without doing any sort of advanced strategy, it gets kind of ridiculous. So I think the access to capital is so key too, because everyone, like you said, they just think about the bank, right? That's the go-to place. So how do they start, you know, using this method we're talking about, where would someone start and how would they go about this?

Well, look, one of the big things and secrets secrets I feel like that is really not a secret. The wealth are using these things like you just mentioned. The wealthy keep getting richer and bigger because they're using these techniques that are approved. There's no scam. This is approved by the rich, the IRS, or the government officials and lobbyists. So look, advisors in general are good people. So I'm not here to hate on advisors. They're right for majority of America, frankly, but for on Design for the average guy saving 10 grand, right? Not on that.

That's right. That in, in, in has the nine to five job who doesn't want to put a little more emphasis and energy into building or scaling their business or doing something new. Excuse me, but for those individuals that are looking to invest and use their monies in businesses, precious metals, real estate, Bitcoin, cryptocurrency,

all these other alternative assets that you can't use your IRA with, you can do that. And that's my message. I started a company 15 years ago to teach people how to unlock and teach them the secrets that their advisor might not share with them. Advisors aren't gonna say, hey, you know what, Rudy,

this is great that you wanna invest in this new business. Why don't you move your money, part of it from me, from your IRA account and invest in that new business? Why would he or she say that? They won't in general because they lose the fees when they do that. Now some don't care, right? But most aren't going to advise that. Also because they're not fiduciaries without,. They can't tell you if it's the, what the risks are, but well, most of the things, everything's high risk outside of like the most

basic investment strategy. That's right. Even the stock market, right? I mean, I mean, what, what would have happened to, to Tesla if Trump lost last, you know, this lot, right? I mean, for that week, it probably would have gone the other direction. So, so I don't like putting my hard earned money that I put into retirement accounts, investing in particular, in people I don't know or in deals I can't control.

And so that's what's so powerful about this message is most people don't know they can use their retirement money to invest in things they know, like, and understand. And that's what's not only exciting, but it's fun. Like, if you were to show me a new business that you were going to start, I could put my IRA partner with you and all the profits and distributions would go back into my IRA and I'd pay nothing in taxes. And if it's in my Roth, I'll never pay taxes when I pull it out. Yeah. And I think that's one of the, the way, you know, I obviously have a team that

manage your, but from my understanding, you know, every year you can put a certain amount in tax free, right? And then that's what you can then use to reinvest and most entrepreneurs, cause I used to do this wrong where I just take that money and invest it where it's like, there's a middle step that I was missing, right? I should put something there and then do it that way. Can you say salute for a minute? Yeah, absolutely. I mean you nailed it. So so there's there's once you make X amount of dollars. Yeah, you want to Contribute we talk about contributing to a self-directed retirement account and self-directed because now you can invest in what you want

so we if you if you contribute to that and then invest it in a deal or a business or in precious metals, those profits then you'll all those gains, you don't pay taxes on those gains unless at some point when you pull it out you pay taxes if it's a traditional IRA. But if it's a Roth, pull it out, you pay taxes if it's a traditional IRA. But if it's a Roth, you don't pay taxes then either. And so that is one template. But I'm also not here to say put all your money, one, because you can't, into retirement plan. When there's certain real estate transactions

that you're doing where you get great depreciation, those go outside of your IRA. But there's other deals and opportunities that you make bigger hits, bigger interest or loans, you use your IRA and those profits compounding your profits, you and I could invest in the same exact things for the next 20 years. You could do it inside your LLC or in your name. I could do it in my IRA, getting the exact same returns. 20 years from now I'll have hundreds, if not millions more than you just because I'm not paying taxes on my gains every year.

Yeah. And then that money that you're saving the 30% compounds, right? That say it's like, you can put what 20, 30 grand a year or something, right? In tax free or? Yeah. And certain accounts we can help entrepreneurs that have their own business set up a solo K, a 401k where they can actually contribute up to $70,000 a year. Yeah.

Yeah. So I think that's like to me, again, not finance advice, but to me, that's something that became a bit of a no brainer to me, cause then, yeah, you can use that to invest in some stuff. Um, so what, what, what else are people missing? We've talked a bit, a bit about that. Um, I, you know, the real estate needs a big thing. Like I got married and my

wife took up real estate and a full time real estate investor now. And I know that there's a, you know, important, if you are doing it more than anything else and it becomes full time, you can get accelerated depreciation. So that's the important one if you're doing real estate too. Yeah, I mean, that's good for that asset class. I'd say the thing that I think a lot of people forget about when we talk about self-directing is you and I just talked about contributions, people that want to save

and put money away. The 100 million accounts I'm talking about that have 17 trillion, almost probably 50% of your listeners have an old 401k from a previous employer. In the last six to seven years, everyone's changed jobs. I say everyone, a large percentage. So therefore you have this old 401k and a lot of people are like, oh, it only has $25,000. I don't know what it's really doing. I think a big miss is people are not

paying attention to the $25,000 accounts that they own, these 401Ks. Those accounts from previous employers qualify to self-direct to then invest in what we're talking about. And I see people wholesaling with their accounts. I see people buying and holding Airbnbs with their retirement accounts.

Obviously crypto this last week's been really good too for certain people, but I don't wanna just pick on this last week cause I can just look at throughout history that I've been doing this 20 something years, getting consistent returns, investing in asset classes you understand will outperform generally the market. Now I'm not a financial advisor, I'm not going to

give you advice on what to adjust. Yeah, basically it matches inflation, right? So it's not right. It doesn't move the needle. And so I just want to bring that up because I feel like when we talk about this message, people are like, okay, this sounds cool cool maybe I'll contribute to an account or start an account if you have a current 401k or an old 401k not current those qualify and if or if you ever if an IRA account so don't that's kind of like my mom would what she would do I think like most Americans they'd open up every month now it's an email right but they open up the email or the letter my mom's still old-school right she would open up every month. Now it's an email, right? But they open up the email or the letter. My mom's still old school, right?

She would open up the letter. And all she would look at is if the account did what? Went up or down. And then she would just file it. She has no idea where the money's at. That's how rich America is. Well, and you don't get rich that way. You know, like if you want to really invest and get rich,

it's like, I'll give you an example. And I mean, you're right on the point, Hicks. I think people think that 25K is too small because again, they don't understand what I said. They think, oh, if I want to buy a 200 K property, I need 200 grand, but it's not the case by buying your own house. Right? Like I bought one of my first, I mean, it was my third deal back in the UK.

It was like my best deal. I put 25 K a bit more 30 K in, um, mortgage the rest on it. Uh, and that house was doubled in value in the last 10 years. And it makes about 15, 20 grand a year net profit. So it's like, you know, in 10 years I made 200 grand profit and it's doubled in value when I sell it. From a 25 grand investment, I made like a 10x on that money in cash worth another probably 150K in value add.

So it's like insane returns, right? Isn't everything close to that. And that was with, you know, a small 25, 30 grand. I found a cheap house and a good deal and made it a value add so I could rent it for way more than the average. And you just got to get creative, Brian. You'll agree it's like the creative deal structure. And I'll add, I think that's a great example of what I see a lot of real estate professionals

that want to be doing, let's say more deals or bigger deals, but they might only have 25,000 and they're trying to do a deal in California, which we know would get you nothing. Right. So this subject is near and dear to my heart because what I gave you that stat, there's a hundred other, a hundred million other Americans that have retirement accounts. So if I'm trying to close a deal and I have $50,000, but I I've been, I've had this roadblock of how to scale,

but know this subject now, and I call Rudy, I'm like, hey, look, I got this deal, how about you and three or four of us put together 50 grand each from our IRAs? It's just sitting there anyways, you're not really watching it. Let's all partner on this next, this flip we're gonna do,

or this deal we're gonna buy and hold. So it should allow listeners to understand that there's a method for finding partners to do bigger deals and scale their business. Yeah. I love that. And, and sometimes it's just step in stun too, where it's like, if I've let stay in the UK, I'd probably have like hundreds of doors now and really gone

into real estate, but I left that city after three years to move to America. So I kind of fell out of it, but like I could have just like had that done the value add, got the tenants in, showed the net yield, sold that house for a hundred grand more to an investor. Cause I did all the hard work renovating it and read the restructure in it. And then I could have took that a hundred grand profit I made plus my 25 grand cash back out. And now I could have got a half a million dollar house and then two years later than the same.

So it can compound quickly too if you it's smart right. You just got to you know like I mean your way is a better way which I would advise to which is also bringing in other money. But even if you don't want to do that you're scared to maybe do that in the first couple of deals. I have so many real estate friends. They started just how I explained it and now they own, you know, $2,000. Like you, you know, started with one, one B. Yeah. And that's just, I mean, you just gotta start doing it. And I think that's the, I think that's with anything, right?

When we talk about any business or any venture or partner, it's working out. I mean, you just got to start doing it. Same thing with the self-directed IRA and start just a little by little. You don't have to do all your money. You can leave part of it in the market and then test out this concept and see how it goes. Yeah, I put tens of millions back in my business. We grew it to a hundred employees and 30 million, but've so missed doing these real estate deals in America so I want to have a couple of exits. I'm going to do a bunch of stuff because I

think it's such a, especially now I'm married and my wife's a realtor, there's so many advantages to it. So last couple of questions as we come to a close today, I would like to ask one more, in 60 seconds, any other secrets that most people don't know about when it comes to investing financial management? For me, it's boring when it comes to secrets because I love boring, and I want consistent. And so for me, the message is you do not have to hit home runs.

If you just start making double digit returns, 10 or 12%, but not paying taxes on your gains, that's the secret. We already talked about it, but I stick with like, sometime boring to me is very sexy. Is this up and down crazy is not for me. And I did the up and down crazy for the first 10 years of my career, right?

Cause I did everything. But so that for the first 10 years of my career, right? Cause I did everything. But, uh, so, so that that's, I feel like the secret is, is you don't need to diversify, be really good at what you do. Don't invest in Bitcoin if you're not Bitcoin person, even though your neighbors aren't so that's my advice. Love to know, um, biggest win or proudest moment in business and then biggest failure.

biggest win or proudest moment in business and then biggest failure? Proudest moment in business would be when I in 2008 when I thought I 2007 I thought I was the rock star anything I bought was gold right just like everyone else in America and I went from being on paper worth, as a young, in my 20s, being worth $15 to $20 million to the following year owing $25 million to banks. What I'm proud of is how I managed that and how the following year, 2009, I freaking put on my boots, went to work and I figured it out.

And in that same year, I flipped over 300 homes and started from scratch and negotiate all that bad debt. And so that's my proudest moment because it was one of the hardest moments of my life when I had kids at home. It was very difficult. That's a problem. Yeah, I like that.

I mean, sometimes those combat moments are the best, right? I've had it a couple of times too, you know, and I mean, I always say the higher you fly, right, the closer to the sun, the harder the burn. Yeah, that's good. That's good. Yeah. Yeah. And sort of that's great.

And then last question, you know, if you could go back in time to your younger self, give yourself a tip, what would that be? Make decisions that make you sleep better at night, not what makes your bank account or your investment world bigger. And I just shared that with you, similar to 2008, that even though most people say back then leverage everything, take out your equity, double down on everything. I sleep better when there's money in my account, even though I know that money isn't working

for me. So do what makes you sleep good at night. That's advice I give my young self. I've always done a bit of that too, you know, like some higher stuff and investing stuff, but having a bit of a cushion, it's always good. Cause you also never know, you know, what's gonna, what's gonna happen. But I love that. So Greg, where the, you know, great episode.

If people want to learn more and, you know, read some of your social stuff and article website, learn more about you, where can they find you? Yeah. Just if you have my social is just Greg Herline. My website's also gregherline.com. My email is greg, greg at Horizon Trust. Contact me. I'm very active.

I care about our, my audience, my clients, my staff. We get to pick and choose our clients. So I take a lot of value in that and take it seriously. So shoot me a message on social media. I'm the one that gets back to you. And so, or, you know, shoot me an email or visit me on the website. So we'll get back to everybody. Love it. Love it. Great episode. Thanks so much for coming on, sharing some tips. Hopefully it got people banging around investment back strategy. And of course, you know, as we said, this isn't financial advice. This is all our own experiences and what we're doing.

So always see, you know, an accountant or financial advisor before doing any of this stuff. And Greg, thanks so much for coming on today and guys keep working hard and live in the red line. I'll see you guys soon. Take care.