All Forum Posts by: Jonathon Weber

I watched one of DR's YouTube videos several months back and all I could do is shake my head. People don't realize it's about what you earn and the buying power that you have to earn even more. So many people all across the country are brainwashed into the mentality of a penny earned is a penny saved bull @#$%. 

People who "save" money to just let it sit in the bank until retirement are doing it completely wrong. The money you have in the bank should be for expenses and immediate purchases. The rest needs to be invested to grow it. 

Debt to grow your income is good debt. Debt that doesn't make you money is stupid and that is where a large percentage of people in our country do. 

The DR types make a living off of lecturing the financial stupidly of people. 

OP, you classify as an accredited investor? If not those options are not on the table. If so, you can look into syndications and still park the inheritance in a high yield fund. 

I'd just park it in a high yield fund. The amount of cash you are talking about may only last until age 60. Why risk losing a lot of it? 

Use your earned income to do real estate.

I'm not surprised there are people that don't get it. It's not about what can classify as a millionaire on paper. You can have 1 million dollars worth in the stock market on Monday and Tuesday it crashes. But I thought you were a millionaire? You can have 1 million dollars in equity in however many homes, home prices crash or you can't sell them for above the purchase price, you ain't no millionaire even though your accountant would say congrats to you for being a paper millionaire. 

A real millionaire is one that has a million dollars of immediate spending power, access to liquid funds. 

Who do you think beats you in cash purchases for property? The guy with 1 million tied up in other assets or the guy with 1 million dollars of money that can be spent this very second? 

Cash is king. If you don't have immediate access to the cash then you aren't king.  

All of the private mortgage lenders in my city require you to mail in a check every month. 

A lot of young people will go to YouTube and watch people who are multi-millionaires from buying real estate and think they can become that person without realizing it took those people 30 years to get to where they are now and none of them making that big money are young. Or they will see some young guy in their late 20's or 30's being a "paper millionaire" with limited buying power and they want the same "dream." Even for those in their late 20's or 30's took nearly a decade to get the "paper millionaire." 

Billionaire real estate moguls can be counted on two hands. And those guys built real estate as part of their real estate business. 

Why am I posting this? It's never been easy even for the super rich. You start small, you fail many times, you keep trying and build from what you learn. 

And don't be stupid and go out and buy a used lambo for $40k just because you made some money off of a sale. You reinvest it. You buy a lambo or lease a Rolls when the lease on a Rolls is nothing more than a week of cash flow. 

 That is how you do it. Now you can sell in a few years and do 1031 or keep it for a long time. Personally I like the idea of keeping property like a 62 unit property in your name and not doing a 1031 as long as the property is cash flow positive most months. 

1: They take any random person just to fill the place. 

2: They lack the understanding for the reserves needed for repairs, tax payments, etc. 

3: They think renting out a home is the golden path to early retirement while not realizing there are many months that you are likely to lose money, not make money. 

4: Cash flow is lower on home rentals than newbies realize. 

5: They think they can just sell it and buy another new home if things go wrong. 

6: When things go wrong they become weak minded and give up. 

7: They have good success with their first rental and think they are smarter than everyone else and this will be easy for them (not true as there will be some major flops). 

Start with the basics...

What is your credit history and credit score?

What income do you have?

What could you qualify for? 

How much cash do you have access to? 

I'm not asking for you to tell me those answers, just things where to start. Goals are nice to have once you know where the starting point is and how actionable it is. Things are never as easy as it may seem but real estate isn't complex either. 

 The costs to buy apartment complexes with a lot of units has been on the rise and there is a big reason for it -  millennials aren't buying homes. 

Multi-family is the easiest way to get super rich. In some markets you can find a 49-unit property priced at $35K per unit with an 8% cap for $1,75M.

If you pay cash for this deal at $1,75M, you would make roughly $140K for cashflow per year after expenses. With $450K down and financing $1,3M, the debt payment would likely be around $78K per year. This would make you $62K cash flow per year. This cannot be done without buying a ton of homes.

You could take the income from the cashflow, after taxes, and reinvest it into another purchase of another large apartment complex. You can also sell the apartment complex and do a 1031. Keep repeating this process until death and let your kids take things over. They will not have to pay taxes up to a certain amount. 

Multi-family is by far the world's best way to create legacy wealth. Cash itself eventually gets spent generation after generation, but if a large apartment complex stays in the family generation after generation, the cashflow remains in the family. 

When you get up to the 200+ unit properties you are competing against very wealthy individuals, funds, life insurance companies, and others like Blackstone.