U14 – Beginning Concepts for Taking Profits from Cryptos
0:01
All right, hi, everybody. I appreciate you joining us.
0:05
He was kind enough to do this recording with me.
0:07
And we’re going to cover what to do when it’s time to take profits and specifically we’re talking about cryptographic currency. I know a lot of people have these types of questions. So I want to cover some of the most important points.
0:18
And we’ll do a pretty good job, I think, of coming into lots of detail.
0:23
So you were asking about the question was, what do I do when I have enough profits? I’ve made enough money?
0:29
I did my short-term, taking short-term profits. I went back into my kryptos, and I finally got the profit, the numbers that look good to me.
0:37
And, now I’m back into my stable coin or whatever I did, so, my money’s out of kryptos and it’s just sitting there.
0:43
I’ve taken my profits in the interim.
0:46
And now, I want to figure out how do I manage that large amount of windfall in something else besides kryptos or something else that will produce some cash flow that I describe that and about the right way?
0:59
Accurately. Yes. And on top of that, if I want to take some cash out, how do I do that? OK.
1:06
Understand that there’s, in the United States, you can actually pay your credit card bill. And it’s not subject to an audit summons by the IRS. That’s what most people care about some. That’s why I’m saying it that way. Oh. Yeah, so, if you buy things with your credit card and then you pay for it, you’re actually paying a personal debt. So, if you sold some crypto in your LLC, that’s not going to be taxable but if you take money out of the LLC and pay yourself or pay off a personal debt, technically, that’s taxable. No one’s going to know about it though, unless you’re subject to audit.
1:37
So worst-case scenario, if you took money out of your LLC from selling kryptos, your LLC’s told the kryptos, you got your cash, and then you bought yourself a car that a dollar amount would be in taxable income.
1:49
Again, nobody would know unless you got audited. I don’t recommend that people make that risk.
1:55
But just the same, the reason why, the IRS would find out, is because all those records are subject to a summons.
2:03
Credit card statements are not, and the reason why is recently the IRS wanted to exclude credit card statements from allowing people to prove deductions. Instead, you stop that produced, the receipts for the items purchased, mm since. So because they did that the Congress said, OK, well if you’re going to exclude those documents, then you can’t summon them.
2:21
And the IRS said, OK, fine. So now we can use our credit cards, and those statements are not subject to audit.
2:27
Meaning that the IRS could not discover that you paid off a personal debt on credit cards with your LLC account, if you want to play it that way.
2:36
So on that note, if we, if we do plan on taking the kashyap, how, how do we show it? How do we show that income is taxable? You declare it.
2:47
There’s no pain LLC, right? Well, no, you don’t. You’re not going to file with the LLC. You’re going to file your 10 40, OK?
2:53
So if you took out $5000 to go on vacation or something, then just declare another $5000. In addition to your income. You do not need a 1099. You don’t need a paper trail. You just need to declare it on your 10 40, because remember, whenever you stay on your 10 40, it’s under penalties of perjury. So, that’s gonna be taken at face value.
3:11
Got it, OK, and there isn’t any document or additional supplements required to produce why you are showing that a 5000 or 50,010, 40, none at all.
3:22
And if someone ever wants to ask, you say, look, you’re lucky, I’m reporting it at all.
3:27
So, mean, that that should be your attitude, Look, taken to leave it. So you’re being honest, and you’re reporting it. If they want to ask for more documentation, you don’t have to create it. Because you’ve already, you’re the only one that’s testifying under penalty of perjury when you sign at 10 40.
3:43
So, there’s no one on the planet.
3:44
Unless you’ve made a false statement, and it triggers some audit, no process, like, you know, or an unusual transaction, which would trigger an audit process, or you were selected for audit at random.
3:56
So, Yeah, you don’t need to prove that you had more income. Just they should be lucky that you’re willing to confess, you know, Right, yes. So, so there’s a more sophisticated way to do it.
4:06
If you’d like the idea of the Infinite banking concept Where you’re going to open a whole life policy, and you can open 12 of these at 50 of them over whatever period of time.
4:16
You can open a whole life policy, can fund it with a single premium, or a series of premium payments, just like any life insurance contract, and then you can borrow the money from the contract.
4:25
now, Though, the insurance company will continue to pay interest to the beneficiary or to the principal, however they have it set up, while you borrowed the money out.
4:36
And then you can spend the money on an asset and make money on that asset and still make money on the whole life insurance policy.
4:44
You can either pay, make the payments to repay the loan under the terms of the loan, or you can make a lump sum payment in advance of the interest that would be due on the life of the loan you took out of the insurance policy. And that’s after tax money. So, that’s a better way, in my opinion, because you could do one of those a year.
5:02
Or keep cycling the same whole life policy every year.
5:05
And you could just fund your whole annual living expenses, tax free money. It’s after tax money, and then it’s not even a question.
5:13
So, if I want to spend $2200 on something, I don’t, doesn’t have to be reported at all.
5:19
It’s already considered.
5:20
Just add another way.
5:21
So, you’re saying, I just have to buy a life insurance policy and kind of go in that direction. You have to use a certain agent. Not all agents will do this, and let me know if you want to do that.
5:30
But, yeah, you would just set up your whole life policy, the first way, the first time you do it, you’re gonna want a blood sample, and they’re going to establish residency in the technical things, and you’re gonna take an application. Just, Like, always, you have to figure out who the beneficiaries going to be, who the insured is going to be, and who the owner of the policy is going to be, and you’ll understand how that all works. The two people I work with Seth and Dance, they’re very good at and they’ll, they’ll walk you through it all.
5:54
But, the answer is, yes.
5:56
You do a whole life policy. You can do 12 of them.
5:58
You can fund them, I think, up to $5 million.
6:01
Now, some of the larger ones.
6:03
It’ll take a year or two to be able to get access to all that money. But once you do that, you’ll be able to continually set up accounts. And for your whole life, you’ll be able to do that. In a tax free way.
6:14
You can have 100% tax free income for the rest of your life.
6:19
That’s amazing, OK, And do you have to pay a premium until the account? Yes, however, you find the account, you can use cash, you can do a single premium or you can do a monthly premium or even a quarterly premium.
6:31
Like, for example, if you’re in it, if you’re taking profits in a quarterly method, you’re kryptos which is probably advisable, then maybe you want to set up a whole a policy now.
6:42
So, in 18 months, you’ll be funding the policy every month, or every three months, and then it’ll breach it certain dollar amount.
6:48
And in that time, you’ll be encrypted, making money in the kryptos, and you’re funding your policies.
6:53
So you’re going to narrow that time when you can actually take the funds out, instead of waiting two years to get rich, and then do a single premium, and then, wait another two years to take all the money out. So it depends on how you want to work.
7:05
That totally makes sense, and it’s better to be proactive and be prepared now.
7:09
Can label them, set up a small policy, yeah, and just do a set of premiums, and then you know how it works.
7:15
Wonderful. And then how do you take the money out of that debt policy?
7:19
So you talked about like, Yeah, it’s just paperwork. They’ll do a wire. They’ll do certified funds, they’ll move it wherever you need it. Remember. It’s after tax money if you do it, right. So, it doesn’t matter where you put the money. You can put it in your personal account, and it’s after tax money, so.
7:31
You could spend however you want.
7:33
Got it, OK. Yeah.
7:34
Another way to do it is, you can sell kryptos, use your LLC account, um.
7:40
And then, let’s say you sell enough to make 100,000 in your LLC account and then go buy a car, and at the dealership, just simply title the card, a trust name or an LLC name, then the dealer will write up all the paperwork accordingly.
7:55
So, now, all you’ve done is moved property from here to there, and you have the same relationship with this LLC at your crypto account that you would with this trust or LLC, that owns the vehicle.
8:05
And then you just have the same insurance and all that. Because your beneficial interests remain the same.
8:10
No.
8:11
That’s, that’s a simple way.
8:12
Another way is like I tell people, you can have the dealer structured as a loan showing your LLC as the lender, and he’ll write up that documentation to that’s just as easy.
8:20
So it just depends on how you want to do things.
8:23
Got it, OK, and the same thing applies to words. Purchasing a real estate, whether it’s a commercial or residential real estate. Real estate, you’re typically gonna go throw an escrow contract.
8:33
So minimum example is, I have my personal account at Coinbase I, I have the money I want to spend and I’m going to move it over to Bitcoin because Bitcoin, everybody understands that. My Escrow agents will understand that. So, I move the money, I want to spend, let’s say it’s $250,000. I put it. My Bitcoin wallet, it’s still in Bitcoin.
8:54
I go to my escrow agent now not all of them do this So, I will have a list for you.
8:59
Of agents that will do that say that you open escrow put Bitcoin in there and then the escrow agent will source the dollars for the seller and Then do the closing in dollars or whatever the seller wants.
9:09
So, so that transaction is done under a trust, which is escrow.
9:14
Got it. OK, and will there be any taxable event incurred?
9:18
Because what we’re avoiding by what I just described, you will not have a taxable situation.
9:23
You’ll be, you’ll be able to move money from your, into your new principle into the next asset, and you’ll carry forward all the deferred status of any tax liability, OK? And would you be kind enough to share all those resources with me later on?
9:40
Sure. I mean really, definitely. whatever it takes to get you through a deal and once you see how it works, then yeah, absolutely, that’s just learning, but it’s not complicated. I mean, just once you understand that you can do it that way. It’s a matter of having a conversation with the dealer and it’s a matter of having a conversation with your escrow agent or attorney. They just tell them, look, I want to do it this way. And they’ll write up the contract accordingly.
10:00
That’s one. OK, yeah, I’ll walk you through it. Sure.
10:03
Thank you. I appreciate it. Another source that I was also looking into was precious metals, there are certain companies, gold, silver, whatever you want to buy, You can directly buy it through Bitcoin. You don’t really have to cash it out and dollars and then buy precious metals. Right.
10:19
one of them is Peter Shiff, so does that, I’m assuming that works a similar way.
10:24
Just like you described for auto industry or real estate?
10:28
It’s very similar.
10:29
It just depends on how the account is, is, if you have a third party account, like a Coinbase, but now you’re in precious metals with Peter Shiff, if he has a Vault service, make sure the account holder is your LLC. That’s probably the easiest way to do it. You just don’t have to do it that way.
10:45
I mean, you could probably get away without doing it that way, but my recommendation is, the same way you’re dealing with Coinbase through an LLC or a trust or a partnership, do that with your Vault service, where there’s precious metals.
10:57
Got it. Yeah, you just want to have your LLC as a shield for everything. OK?
11:02
And the other thing is if you, if you sold, let’s say you sold Bitcoin to your Uncle Bob and he’s sent you some gold, nobody knows about that. Nothing wrong with that transaction. It’s not necessarily taxable.
11:16
No one’s gonna report on each other.
11:18
So now you’ve converted Bitcoin to gold and it’s not in third party you’re holding in your hand. When you go to sell it, let’s say you sell the gold now.
11:26
A few months later you sell it to a **** shop, let’s say, which I’m not recommending.
11:29
But, as an example, the pawnshops kinda wanna know your name and your SSN. And instead, what you tell them is, the seller is this company name.
11:37
Which is your LLC, and you give the LLC name and EIN.
11:42
And that’s it, now the **** shop would want to know, and that’s a good example, because Pawnshop is it could definitely gonna send you 1099.
11:47
So instead of sending you the 1099 for selling your gold, Now notice the Gold was entitled My LLC there’s no title because there’s no third party I’m just using the LLC’s name in the transaction.
12:00
So when I sell my pawnshop, the LLC is the one selling it as far as they’re concerned and then my LLC gets 1099 which is no consequence to me.
12:08
Got it, OK.
12:09
So, Gold is similar to crypto. When it comes to, when it comes to selling them, it’s identical.
12:15
It’s identical. Gold is property, kryptos property, real estate is property, stock is property.
12:21
My boat is property, right? When I sell my car, that’s property, I’m selling property. It’s a disposition of assets as they call it, or property.
12:32
Yeah, it’s all the same. We had this conversation before.
12:35
So, you know, in this case, I would get 10 99 from the exchange, what do I do in that case? Just don’t get to tonight, make sure your LLC handles that transaction.
12:46
That LLC will also get thousand 99. That’s fine.
12:49
Well, yeah, that’s fine, because that LLC is not going to file. So it’s, like I said, it doesn’t create a tax liability.
12:55
Just because you get a 1099 doesn’t mean there’s a tax liability.
12:58
There’s only, OK. The tax liability comes when you report a tax liability?
13:05
Correct, OK, but Exchange will be reporting to the IRS about that LT track.
13:13
Would be one of the ways for IRS, the IRS to come down to me.
13:18
For that LLC, there’s nothing, the IRS wouldn’t respond, There’s nothing for the IRS to do.
13:24
It doesn’t trigger anything, it doesn’t cause an audit.
13:28
It’s like I explained before, OK, Because the LLC has never filed a tax return, It’s never created an account with the IRS because there’s no account with the IRS.
13:38
Anytime a report is sent to the IRS with that entity as the recipient of funds, the IRS accounting system does not do anything. It doesn’t care about the 1099.
13:50
Rarely, OK, so do you actually look at master accounts that has been created by the companies and they actually go by that instead of that, That gets sent to the front of the 1099 does not create that taxable situation.
14:05
But here’s what’s interesting, if the LLC account holder does not file a W nine isaan certification.
14:15
Know, everyone asked me up to this W nine that you send with the new account and they’re afraid to sign it and so I show them how to sign.
14:22
In fact, I have a video on how to sign this thing, It’s not hard.
14:27
What, what the Iris could do, well not the IRS what will happen is the third party exchange will liquidate some of your account and send that money into the IRS and it’ll sit in a suspense file.
14:40
Oh wow, you claim it.
14:41
Yeah, so you definitely want to do the W nine, because if you don’t, you’ll lose 30% of that account and then to get it back, guess what?
14:49
You have to do, file a return, so now your LLC will have to file a return, so definitely avoid that situation, Do not get into backup withholding.
14:57
So this is when you are creating your EIN and after, once you get the EIN and you open your third party account, you’re going to be requested to file a W nine where the LLC, the account holder will want to file a W nine. Sometimes just asked, sometimes you just send a W nine because you know they’re going to ask, you want to file a W nine.
15:16
I always recommend just do one, just go on the internet and just look up Form W nine PDF and download one.
15:22
I think the latest revision is like 2018, get it from the IRS website, though, OK, and then just send it to them.
15:30
Yeah, include it with your, what is it, your EIN approval letter?
15:34
Senate, later, I mean, I don’t make too much of a big deal, a big deal. It’s in my instructions when I send it when I send it out with a new structure.
15:41
But yeah. So the only time you’re gonna get into a reporting situation is when you are reporting something.
15:46
Again, even with backup withholding, don’t take your money and send it to the IRS just because you didn’t verify the accuracy and correctness of the EIN.
15:55
But, again, you don’t have to file a return, but if you want that money, you’re going to have to report. So, you want to avoid that.
16:01
Yeah, you want to prevent adverse shock mm, OK?
16:05
Any restrictions that you have seen from the bank, when you’re starting and taking the cash out and putting into bank and bank starting to get alarmed about, know, there’s post rainfall income coming in like out of nowhere, No, dollar amounts are not a problem.
16:23
Even in the millions, I believe.
16:26
I don’t know what, there are criteria, but just keep this in mind. Most people that have a bank account.
16:32
Almost everybody probably is getting currency transaction reports that are automatically sent to the Financial Crimes network.
16:39
Even grandma, putting her Social Security check isn’t that probably.
16:43
Because grandma puts her Social Security check in the account. And that’s the same amount every month.
16:49
And then maybe she sells something, and then there’s a big deposit in between that.
16:55
Or maybe she gets a birthday gift or something. And then that would generate a currency transaction report on grandma. Because it’s an unusual transaction and people say, oh my gosh, OK, well in that case, if I put my $5 million, that’s unusual.
17:07
Yeah, and so, what, let’s say, there’s a currency transaction report, so what there probably is, but it’s not going to freeze your account. Now, sometimes, what I’ve seen over the years is, it’s not so much that the IRS cares, IRS does not care, IRS does not see these transactions.
17:21
The only people who care is the bank, that will interfere with that transaction because the bank wants to hold the funds, tell you that it needs to hold the funds for some bogus reason. There’s no other reason, other than the bank wants to make money on your money, before it releases the funds to you.
17:36
So that’s the only thing I’ve been seeing over the years.
17:38
It’s not, just because you have a lot of money, all of a sudden, you’re gonna get, I mean, you might get a report, but the cops won’t show up. I hear door, if that’s what you’re concerned about. Yeah, that’s good, OK. What happened? All of a sudden, your bank is flooded with all this money. Where do they come from? But they’ve already, they’ve already done. I mean, just, I would, I mean, obviously, you’re not going to walk in there.
17:58
And so, the $5 million clears, then you come in there the next day with a suitcase and ask for it in cash.
18:06
Don’t do that. Yeah, OK.
18:08
I’ve heard horror stories where people go in, they’ll pay cash for a car, and then next thing you know, I mean, OK, when you do that at a dealership, you can ask for yourself. Find out for yourself.
18:18
If you pay cash for a vehicle or a vessel at a dealership, he’s he’s going to add a form as to your transaction, and he’s going to send it to the IRS. And lots of times the IRS will come to your house.
18:30
If you’re using your home address for that transaction, they will come and ask you where you got that money. That does happen.
18:36
So, that’s why, I mean, it doesn’t, you can avoid that situation.
18:40
But what I, what I tell people is, why pay cash for something when I could just make it look like a loan?
18:45
True, I mean, I went to look like the next guy, and I’ve made lots of mistakes over the years, went to my paid cash for a house. And then for the next 4 or 5 years, I was a drug dealer.
18:54
And when I went to try to sell it, it was a problem. And my partners are laughing at me, like, why are you tying up all your money?
19:01
So what I learned is, if I’m gonna pay cash for something, well, I’m definitely gonna put a lien on it afterwards. So it looks like I borrowed the money later. At least.
19:10
How, how long can you loan the amount for from the LLC? You can make the loan terms whatever you want.
19:18
But you want to avoid a scrutiny, you want to make the interest rate a fair market value.
19:26
So like today, I don’t know, Maybe it’s going to be five or 6% maybe it’s gonna be 8% on a vehicle, and on a home, it might be 4.5%. If you make your interest rate too low, you’ll have to justify that. So here’s an example.
19:38
I have some real estate investors that I work with and it, well don’t sometimes write a zero interest loan on a deal, I don’t know why they do that.
19:46
Maybe it’s for marketing, so what they’ll do is they’ll take 4.5% that they want on it and they’ll, they’ll read their amortize amortize it into the principal.
19:55
So the principle goes up.
19:57
So they’re gonna get the 4.5%, the interest rate is zero, but the interest rate has been amortized into the principle.
20:04
So if you can explain that to the IRS, which is real easy to do, then you can justify at 0% face value note.
20:11
So, you can do that. But, just the same, why not avoid the conversation, right?
20:16
Because you can make the, like I can, I can, If my income did, I want to show, for whoever wants to see it, right? If my income wants to be a certain amount, then I want to buy a house that is not justified by my income.
20:29
Let’s say the cost of the house is too much compared to my income, right?
20:35
So I can actually write the financing so that it’s justified by my income, and the way I do it is, let’s say, my payments would be 5000 a month, but my income on justify that, so what I’ll do instead is make my payments $2000 a month.
20:50
And I’ll put a balloon payment where like, all the money is due in three years.
20:54
So that way, I can write on paper, everything’s documented in every three years or 2.5 years, I will just rewrite the note and keep doing the same thing.
21:03
I just keep rolling it over.
21:05
So, you have a lot of power when you start writing your own debts.
21:10
Wow, that’s just the beginning, though. There’s a lot more.
21:12
But I’m just saying, this is a great learning opportunity, Everything that talk about the John, I’m, like, learning so much.
21:21
This is, this is amazing. And, what else have you seen your clients doing besides this? I love those ideas, and I think, you know, I will definitely have more questions once I get to that stage, but I love that whole life insurance policy and I’ll definitely get back to Yeah, the whole life is a great tool. Oh, there’s so many things you can use that for.
21:42
The the loan structuring is a great tool.
21:46
I mean, the really slick way to do it is the whole life.
21:49
But, if you just want to keep things simple, you know.
21:51
Pay cash for a thing, a property and asset, pay cash for it and don’t title in your name, OK, use your whole life policy, structure, the purchase as a loan, or and or use escrow to buy real estate. That’s the easiest thing to do. You can buy it, you can use escrow for anything, but the higher ticket items is where you want to use escrow. You’re not gonna use escorted by a ham sandwich, right.
22:13
I probably could, certainly to, I don’t know. But, yeah, So, that there are listed things, and there’s so many variations.
22:22
And what’s going to happen is this C, you’re asking me about how to do that initial profit taking and move away from kryptos and go on with my life, and you’re going to have, let’s say, $17 million. And let’s say you successfully re-allocate your $17 million into a whole list of nice assets. Let’s say you get three nice assets. They’re really good. They’re producing.
22:44
It looks great on paper.
22:45
And now, you’ve got your principle that you just one, all right.
22:51
And you’ve moved it successfully to your new asset portfolio, OK, But you have no financing.
22:58
So think about this, because it’s kinda like that idea where the dentist is really good at being a dentist, but he doesn’t know how to manage a business.
23:06
He doesn’t know how to hire people, right. Or he’s not good at it.
23:10
He doesn’t know how to take an application. He doesn’t know how to market his practice to professionals that want to work with him anesthesiologists and things like that.
23:18
He doesn’t have time for that. He’s really good denys, Everybody wants to go there, but he can’t manage the business.
23:23
So he needs a business manager, right?
23:26
So, when you buy an asset, you might have learned how to get the asset.
23:29
You might have a good team, and that’s awesome, but are you in the same business as a lender and chances are you’re not, and you probably should not be.
23:36
So, as a rule of thumb, when you get into an asset, Maybe it’s easy to pay cash for the asset, but you need to learn how to bring in some financing.
23:44
Even if you’re going to do it after the fact, it’s probably better to do it when you’re gonna buy the asset, but when you’re first assets, when you just need to get into the asset you know from from Kryptos, now, you’re gonna get into real estate and, OK? I’ve crossed that bridge now.
23:56
Then, you start looking for financing, and so that’s a whole new skill.
24:00
Then, investing in why do I want to do financing because I want to manage the risk, and I want people that are qualified to manage the risk a certain way. I’ve already figured out what the risk is going to be, and I took on some type of risk when I bought that hotel, and the apartment complex.
24:16
All right, and I paid cash for it. Now, all my cash is tied up in all these assets. So, now I want someone to come in who understands financing because that’s a different set of risks.
24:25
And he’s going to finance it for me and now I’m gonna take half of that capital and I’m gonna go buy yet one more asset.
24:32
Right. Because that’s what you want to understand. So, the eggs in one basket. And just go all in cash and just buy up the properties. And not managing risk, yeah.
24:42
Yeah, Because you got all your cash tied up, you’re missing opportunities because, again, you’ve got all your cash tied up and you’ve got your, your, let’s call it, this is the wrong term to use, but you’re over allocated because your cash is not being used more efficiently mm.
24:58
You’re making money, your books look good but you could be taken up 10%. You could just take 10% of your equity, OK? In a hotel, 10%.
25:08
And you can go into commercial real estate liens, right? Tax lien certificates.
25:14
And you can have hire a person to do this and you can roll those over and make 30% internal rate of return.
25:21
Now, must say that again, on the face value of my investment, my cash in, cash out on my hotel, in my single family. I mean, my mom, my apartment complex, I’m making, let’s say, 8.5%, pretty cool money. 0.5% on $17 million.
25:38
But I’m going to take a small group of dollars out of that, and I’m going to put it into another type of Asset that’s paper a paper asset, and I’m going to have someone manage it, and over here, my, my 10% of this holdings over here is now going to make me 30% internal rate of return.
25:53
So that the phrase I want you to understand, is that there’s an internal rate of return that you have control over.
25:59
So you want to get into a situation where 8.5% looks great, but my internal rate of return is gold over here, because I’m just managing this risk.
26:11
And again, you could, you could do this tax free.
26:13
Now, let’s take this to one more, one more level.
26:16
OK, OK, I have regular cash flow from an asset. that’s worth, OK, I’m just going to throw out a number.
26:23
10 times, whatever your cashflow is, that’s what your credit worthiness is.
26:29
So if your cash flow is one thousand dollars, it’s $10000 worth of credit worthiness.
26:33
For every thousand dollars, Let’s say, roughly, OK.
26:36
Imagine if you showed the bank or the lender.
26:39
Maybe it’s a hard money lender, your internal rate of return over here.
26:44
Now, you factor a 30% internal rate of return with your 8.5% over here.
26:49
And how much credit worthiness do you have now?
26:53
You see it just keeps going and going, and going.
26:56
So there’s a, There’s a lot more than just taking your, you know, take your money out. Yeah, it’s called Diversification of Your Own Cash Diversification is another subject you want to get into.
27:11
The thing you want to invest in is something you either have knowledge of, or can have knowledge, or that you can assemble a team that has knowledge.
27:16
You don’t want to invest in something, because it sounds cool.
27:19
It has to, it has to make sense for what you want to accomplish. So how do I diversifying that?
27:23
I’ll give you an example if I own a business, which is a sandwich shop, and I’m leasing a space in a strip mall.
27:31
My next step in diversifying in that asset if it is an asset and that would be an asset if I’m not the guy making the sandwich. Right?
27:39
If I, if I just own the business and I’m to have some people working for me, then it’s an asset.
27:44
My next step in diversifying would be to buy the strip mall as an example.
27:50
Not by a competitor Maybe it would be or not because I’m really good at the restaurant doesn’t mean I’m automatically good at buying commercial airliners, right? That’s not diversifying diversifying does it mean spread out your money in different things?
28:06
that, you know, shotgun approach, it means opening up your investment, Footprint in the Asset that you’re kind of having knowledge of.
28:15
Got it, OK.
28:17
That definitely helps.
28:19
Yeah, I would definitely Try to get more information on the credit nodes as well that you just mentioned because there is definitely a lot more opportunity as opposed to just a real estate.
28:29
Oh, yeah, Oh, yeah.
28:31
Do you have documentation on all of those, or are you, I know you mentioned, like you are, In the midst of creating it posts, all documentation, along with resources, Do you think it went?
28:43
It would make sense to kind of have that kind of a documentation for your clients. Yes, I do.
28:48
one of our members was very kind the, this weekend, or few days ago, to help me produce about an hour’s worth of content explaining how he spent six months failed twice and finally acquired a business for $200,000. He spent $200,000.
29:07
He got the seller to finance part of it, and he got a lender to finance the other part of it.
29:12
Yeah, and he never spent one dime of his own money.
29:16
In the process, though, he acquired a relationship with a list, a long list of professionals that will help him.
29:21
In fact, the people that helped them do this said in six months, there’ll be able to refinances entire operation into a business loan, worth a half a million dollars. He’s never done this before.
29:35
Unsecured, Without a guarantee on it, he will not have to guarantee that half a million dollars.
29:39
And the reason is he’s netting $13,000 a month.
29:43
Ah, ha, oh, can you just took them a few months and some paperwork and some handshakes?
29:47
And so, he, That’s a tool that people need to learn how to use.
29:51
So, now, I was, I was lucky enough to get him to agree, to, give us, to share with everyone the his contacts, how he got the financing, what he did, etcetera. And, he’s going to give me that documentation and it’s gonna go into one of our modules, and I’ll make that available pretty soon.
30:07
I’ve got at least one more interview or maybe two more interviews to do So, for some more content So I want to make it a series because it’s not, I don’t know how because I don’t like to teach somebody on like an MLM program.
30:18
I mean, That’s not really that I think Making more money is just about going with what someone likes to do. So, you’re gonna have to see 12 examples of what people have done to decide, OK, well, I liked this thing and that guy did it that way.
30:33
I think I could probably do something similar and that’ll help Yeah, absolutely, I think this will definitely help a lot of people who are still like in a limbo. We’re still, you know, pretty much thinking through and planning for, you know, those things. There are, there are going to happen, in, you know, let’s say, a year or two years down the road. This can come in very handy. Like I am learning, and I’m hearing all of this jargons and things for the first time in my life, so I’m very grateful to have met you virtually and talk with you.
31:01
Pick your brain and share ideas with yourself. Well, I’ll share this.
31:05
OK, so I Want you to think this, You probably don’t need to hear this, but I’m saying for this, this for everyone, Because you’ve spent your life learning, all these technical things about the tax system, Because you think you have to.
31:18
It’s probably a good idea to know some things, And you can speak the language, or I talked to a lot of you guys, and They all are pretty good at speaking the language and talking about this term and that term that tax people use and attorneys use.
31:30
You are Competent to do what we’re talking about here.
31:34
You are competent to do this, don’t think that you’re not, and if you told me that I had to go change the oil my car. I would hesitate, but you know what? If I really had to do it, I’d figure it out. I pretty much a YouTube video, but you have to first believe that you can do it.
31:48
I’m telling you, I’ve seen people do stuff like this.
31:50
I’ve seen I’ve seen Grandma I’m not exaggerating I’ve seen her conduct a trial in a mortgage foreclosure, Quite well. So you can do it.
32:01
It’s not even that difficult.
32:03
That’s a wonderful. The guy that you’ll you’ll meet was in the video.
32:07
Our member, I asked them at the end, I said, um, compare what you did with the effort it would take to buy a house like anybody has done. He said, Oh, yeah. It was easier to buy this business.
32:19
I said, Yep. That’s what he said. I knew he’d say that, but, yeah.
32:22
He said it was easier, then buying a house.
32:25
So, and a lot of you have done that, so there’s really no excuse. Why is it easy to buy a business? Is that OK? I’ll tell you what my thinking is.
32:36
The lenders that are involved, they want you to buy the business as opposed to buying the house. It’s almost like if you buy a house, they know that that money is coming from your your employment.
32:45
So if they’re gonna almost, it’s almost built into where you’re being penalized for doing that, because that’s actually a stupid thing to do. I’m not saying you’re stupid, I’m just saying.
32:55
It’s a consumer thing to do, I’ve done it.
32:57
The smart way to do it is by your asset first.
33:00
If you’re, if you’re just leaving college in, or the moment in your life, you’re thinking I’m gonna buy a house, you should just go buy a business in your neighborhood, or go buy an online business, Get that financing in place. Go to the struggles because it’s not that easy. Sometimes it is not, Yeah. You get that in place.
33:15
And then go buy your house because now you have your employment income. When I got this real asset over here and just realize your boat is not an asset, your house is not an asset, the money or borrowing to buy a house with does not make your house an asset. It’s definitely a liability. It’s the bank’s asset.
33:32
So when you win, you can buy an asset, then it becomes easier to buy a house. The bank wants you to buy the asset because it knows that the thing you’re buying is going to pay for the debt, it’s not betting on you keeping your job.
33:45
Yeah, that’s why, Absolutely, and I know you’re big into buying online businesses, and you have shared a couple of resources, but where can I find more resources too?
33:56
Started looking into it, because I feel like with Coronavirus going on, It’s best. In the best interests, to look for more virtual environment online businesses. As opposed to Physical, OK, um. Here’s the language you would look for, and you’d be in, that you’re searching things on the Internet, and before I tell you what, that is, the gentleman I interviewed he gave us all.
34:17
And I had them spell it out, he gave us all the website for, it’s called a, um?
34:22
What do you call it?
34:23
Like, um, a list broker of all business brokers.
34:28
Now many, many of them, I mean this is this is like what do you call it like the phone directory of all phone directories, right?
34:35
So you can go and look for business brokers on the internet, you can literally search on that term business brokers, website, brokers, things like that.
34:45
We use exchange marketplace dot com as an example. And just, I always tell everybody, I don’t have any deal with those guys. Never talk to them before. I just like the whole format, and it’s a great tutorial.
34:54
And, by the way, that was. that’s what the member used, I remember he used the exchange marketplace, those guys did a fantastic job.
35:00
Anyways, there is another service that has a list of all these brokers around the country and around the world you can find them, right? So what you’re looking for are brokers.
35:09
A lot of times the broker is online, But he only sells brick and mortar businesses. So it depends on what you want to do.
35:15
Millimeter, hm, got it.
35:18
This is great. Well, thank you so much again John, for your time and for sharing all this information.
35:23
Any, any other ideas, anything else that you would like to to share?
35:27
Well, I think that covers the main points, and I certainly appreciate. Let me record this. I’m going to make this available for our members and I’m sure we’ll do some more of these.
35:34
There’ll be some different questions, So we’ll probably do a couple more in the next few months.
35:39
Yeah, absolutely. Anytime you need me. You want me to jump on Zoom. I am happy to. I appreciate that.
35:45
Thanks so much already.