Listen Here
Today’s guest is Matt Theriault, renowned for his transformative insights 
into financial independence where he shares his remarkable journey from bagging groceries to achieving financial freedom through real estate investment.
In this engaging episode of the Wealth Strategy Secrets of the Ultra Wealthy podcast, Matt shares how an unexpected career switch, inspired by the book “Rich Dad, Poor Dad” by Robert Kiyosaki, completely reshaped his perspective on wealth building. Transitioning from a music industry downturn to real estate, Matt discovered the power of passive income and strategic investments.
Matt delves into strategies that go beyond traditional financial advice. He challenged the conventional 40-year saving plans involving stocks, bonds, and mutual funds by highlighting the effectiveness of generating passive income streams. Matt outlines how, through targeted education and mindset shifts, he managed to surpass his financial goals in just three and a half years.
Listeners will gain valuable insights into real estate as a practical vehicle for financial freedom, with Matt and Dave dissecting the nuances between active and passive investments, the tax benefits of real estate, and the importance of patience and discipline in building wealth. Matt also underscores the necessity of incorporating creative financial strategies like seller financing to maximize returns.
In This Episode
- Transitioning from traditional jobs to real estate investment
- The importance of passive income in achieving financial freedom
- Strategies for real estate investing and their tax benefits
- Creative financial techniques to accelerate wealth building
Matt, welcome to the show.
Thanks, Dave. Appreciate you having me. Nice to be here.
Yeah. Awesome to have you on the show, Matt. And for those folks who are not familiar with you, haven’t heard you on your podcast, or why don’t we start with your origin story and tell us, brother Marine, about how things really started for you and what was that transformational moment that really got you into real estate and passive investing?
Super, No thanks. Yeah, when I got out of the Marine Corps, I spent the next 15 years of my life in the actual music business. I had a small little record label, we had major label distribution, and it was great. It was like just living my dream life. And one day this little thing called the digital download came along and kind of disrupted the whole industry, turned everything upside down, and people stopped buying compact discs and they stopped buying albums. So that kind of put me out of business really, really fast. You know, in hindsight, it’s clear what happened, but at the time it was happening, it was like, why isn’t anybody buying anymore? Why are the stores sending all my products back? What’s going on? Right.
It was super fast because we had an independent hip hop label and any genre, whether it’s independent hip hop or independent rock or independent dance, whatever it may have been, that independent audience, they embraced that digital download far before the general population did. And so, you know, it just wiped us out. And no one had any idea what happened. Like, we’re doing this formula for years and everything works, and all of a sudden it didn’t. So that was at the age of 34 and, you know, I went out and tried to figure out what I was going to do next in my life. There wasn’t a whole lot of demand in the job market for an out of work music entrepreneur. So, I mean, I tried selling cars, I tried selling insurance.
I didn’t finish college. I didn’t need to. I was making so much money this didn’t make sense for me to do so. So I didn’t have, like, any sort of credentials or anything like that. And that’s what every single job of any sort of significance was demanding. And, you know, started to get a little hungry, literally, like, so I had to feed myself and ended up bagging groceries. So at the age of 34, doing that and starting life from scratch, that just wasn’t a place I’d ever really imagined myself being.
I was there for about six months and I was like, wait a minute, I guess I better do something. No one is coming to rescue me. No one is coming to save me. And I just never had to make those types of decisions before because everything with music, it just happened so naturally. And there was the one kind of. The turning point was this was the grocery store manager who was the same age as me, he was 34. And he had been there pushing shopping carts since he was 16. And he was only two years away from basically retiring.
So he would have had 20 years in, and he was going to be able to pull 70% of his salary for the rest of his life as his pension. And he said, “Matt, we got kind of close because we’re the same age and same.” A lot of common interests. And he said, “let me show you what I’m doing”. Like, I’m out of here in two years. And. But look what I’ve done along the way.
I’ve purchased a few of these apartment buildings, and the passive income from these apartment buildings is actually going to pay me more than what my salary is going to be paying me. So I’m going to have dual income here in two years. And, you know, that was exciting at one. At one point, and it was just like, depressing in another because I was starting from scratch there. But he shared this little book with me, I doubt you’ve never heard of it, called Rich Dad, Poor Dad. Have you heard of this little book, Purple Pill?
Yeah.
And it certainly, and what that did for me is it did two things. One, it was. It redefined wealth for me because having come from the entertainment industry, wealth was having a lot of money in the bank, and that’s what it was. And then when Kiyosaki kind of redefined it as, no, you just need more income coming each month greater than your monthly expenses. But that income is not to be dependent on your actual direct involvement. And so that was one thing changing my definition of wealth. Now, the second part was being taught this idea of passive income.
It was you know, I speak English. I can take the word passive, I can take the word income. I can put them together and kind of figure out what it means. But to actually be taught it as an intentional pursuit, that was a big, giant shift also. And, you know, so I did what I thought what the logical thing was to do is I went and became a real estate agent. And it took about three or four years to figure out, hey, this wasn’t what my grocery store manager was talking about. And so I made a huge investment in my education. At the time, this was in 2006, 2005 or 6, and it was $22,000.
And at the time, that was just a ridiculous number and I remember going home for the holidays and telling my grandma what I had done, that I was going to go be a real estate investor. And actually, so you know what type of family I came from. The whole time I was making millions in music, my grandma was just like, well, when are you going to get a real job, honey? You know what I mean? And it was the wealthiest person in my family at the time, and she just never got it. And when I actually ended up bagging grocery sales, she was like, oh, thank God. So do they have benefits? You know, so that’s the mindset of my family. When I said I was going to be this real estate investor and how much I had just paid, she was like, oh, okay, well, do they. You get a degree for that? Do you get a certificate of any sort? I said, no.
What do they have a good job placement program? And I was like, no, that’s not what this is. It’s like, it’s independent education. I need to teach myself how to go do this. And so that’s what I did and kind of basically taken the principles of what I just learned from Kiyosaki’s book, and then leveraging the mentors and the resources I had gotten in this educational program, I was able to escape the rat race in three and a half years where I got my passive income to exceed my monthly expenses. And I remember waking up and kind of experienced, having experienced that point in my life, both of those definitions of wealth. And you know, this second time around, I certainly wasn’t rich, but I didn’t have to work. And so that was a new experience because even when I had a bunch of money in the bank, I still had to keep pressing out new releases on the record label.
So I had to work still, even though I had a bunch of money, I had to work. But now, having experienced both, I really liked the freedom side better. Right, I couldn’t travel whenever I wanted to. I didn’t get to choose and buy whatever car I wanted to do and I still had to watch my, how many times I went out to eat, you know, and eat out and everything. But I liked it better.
It was just, it was a much nicer experience. And I just think about, gosh, if that total, you know, this digital download thing didn’t come along, would I have ever have learned this? I don’t know if I would have ever crossed paths with someone like that grocery store manager and I would have never had this conversation of like, what do average people do? What do normal everyday Joes do? How do they become wealthy? You know, if you’re not gifted with, with athletics and you’re not gifted with, you know, some, some extreme talent and you don’t have this brilliant business idea and you’re one of the few that actually succeed at it, like, how does the average person do it? And I just wouldn’t, I don’t know if I would have ever crossed paths with that.
And so, you know, naturally your friends and your family and your associates are all kind of like, well, how you were just bagging groceries a couple years ago, how are you now playing golf on a Tuesday when I have to go to work. And that was kind of like the next evolution. Like, oh, well, there’s a demand for this. And obviously because I don’t know if I would have ever discovered it. And I just think about high school, like, what if they just swapped out Catcher in the Rye for rich dad, poor dad, you know, how much of an impact would that have had on the next, on the future of your financial future specifically, but just your overall life. And I don’t, I mean, as great of a book as it is, and it’s a classic, we could have read it later on down the road, you know what I mean? Yeah, so that’s kind of where I am today.
So I’ve got this real estate company where I’m still actively investing in real estate. I’ve got, my wife does our turnkey operation, so she does investing on behalf of busy professionals. And then I have an education component where people that want to be hands on and do it themselves, like active investors, then they can come to us for that as well. And this is what we’ve been doing for the last 14, 15 years now.
Yeah, that’s quite a journey, Matt, for sure. And I think you really hit the nail on the head and really the root cause of the issue that’s out there is lack of education, because we were not taught this anywhere. And I don’t care what university you went to, you know, what part of the world, frankly you come from, but we’re really not taught this, you know, And I think Robert made such a massive contribution because it was really all about, you know, financial education and helping people understand things. And that. That was a pivotal moment for me as well. Understanding cash flow quadrant. You know, when I got out of the Marine Corps, I didn’t know. All I knew I wanted to invest for my future because that made sense.
But all we’re taught is to just, stocks, bonds, mutual funds is the only way to really invest. And if you’ve ever played the game, the cash flow game, it’s such a cool game, and we used to play it with our kids. And, you know, you are living proof of how important and how spot on that game is, right? Where you can actually. The role, if you’ve never played it, is to go around this board game and you can do single family deals, condos, all kinds of different deals. But what’s really cool is you can draw the card that says you’re a grocery manager or you’re a lawyer or a pilot. And what’s amazing is the grocery bag or the grocery manager can actually get out of the rat race quicker than the lawyer can, if you understand the fundamentals. And so my kids really got that lesson early on, and it’s really.
It’s really was an amazing lesson for them. And I think it’s so cool to see all these people now. After his work came out in 1999. Right. Over 20 years later, you know, where are all these people? Right? We’ve all taken these journeys, and it’s really cool to see the progress. Right. That we’ve all made.
Yep, yep. Yeah. It’s just a new way of looking at life. And you just. It’s kind of sad. I just met this lady over the weekend and she teaches a course on money management. And I’m just like, oh, you gotta find a different name for it. Money management just sounds terrible, right? And what makes me say that is you just said financial education.
Oh, my God. It just sounds terrible, right? No one wants to be financially educated like you just think, okay, I’m gonna teach me how to balance a checkbook. Is that what you’re gonna teach me how to do? You know, and just thank God for Robert of coming in and kind of sharing that with the world in such a unique way where it had such a huge impact. That, you know, would it have ever had that impact if he didn’t do what he did?
Yeah. The struggle that I had right was I was bought into the concepts and making the paradigm shift. However, there was no blueprint. Right. There was no blueprint to say, this is how I need to get there. Okay, we can invest in single family homes. And boy did I try. I tried really hard.
I had young kids at the time and we were driving around looking at properties at night, trying to crunch the numbers. But you’re competing against people who are doing that completely full time. So, you know, that’s really, you know, the genesis of my book is my 20 years of, of really going through this journey and then trying to create a systemized way for people to really take action and have a framework that they can make progress themselves. But why don’t you share with us? I mean, how were you able to achieve financial independence in only three and a half years?
Well, with just to go sounds like a promotion for the book, but I guess it’s deserving. The formula is you increase your passive income to exceed your monthly expenses and you can pursue that from both ends of the candle. And so you’re increasing your passive income. But if the goal is to get that passive income to exceed the expenses, you can also work on pressing down your expenses. So that was kind of my whole strategy after, you know, I filed bankruptcy from the record label in my music business. You know, the wife didn’t appreciate that, so she left. So I found myself single. So it was something kind of rather easy for me to do at the time was to press my expenses way down and go ahead and pursue and those deals.
And I’ve started with single family and I still invest in single family today. But it was just like every time I was able to acquire one of those properties, okay, there’s an extra 300 bucks towards the monthly passive income. There’s an extra 300 bucks. And it was just kind of slow and steady until I did that. But what I understood was that’s so unique about real estate. And you know, I was telling you before we started recording, like I really look at my whole platform, even my newest book, Escape, I consider it, it’s a money book disguised as a real estate book. And so it’s just real estate just happens to be the vehicle that checks so many boxes when you’re trying to escape the rat race. Right.
It produces the passive income and so we have the cash flow, it produces the appreciation, the long term appreciation. So you have this massive hedge against Inflation, you have this, the amortization thing. So you have the actual tenant that is buying the property for you. And so there’s an amazing part there. And then you have this huge profit center where it comes to the depreciation and the deductions. And so if you’re going to press your or suppress your expenses, Dave Ramsey and Susie Orman will tell you to cut out your daily latte. Right. Well, if you really want to attack a problem, I was like, let’s work from big to small.
So if the goal is to, you know, suppress those expenses, let’s start with the biggest expense in life, you know, and that’s your, that’s your tax bill. So just by investing in real estate, I mean, you create the cash flow, you create the appreciation. You have somebody else buying the asset for you and you’re suppressing your expenses, your biggest expense in life. So it’s like just that one action checks all these boxes and can set you on the path faster than any other asset class out there that’s available to the average person. So that was just the goal. I was slow and steady for the race for three, three and a half years. And I started looking at the stats. This was like when I started considered actually teaching what I had just done.
And I compared the traditional plan that you kind of mentioned. The stocks, bonds, mutual funds, live below your means, Save, Work, Sacrifice. That’s a 40 year plan, it’s a 40 year plan for most people, if it even works. And we just live in a society now where most people just don’t make enough to save enough for compound interest to work its magic. And then by the time it does work its magic, you know, the best years, most active years of your life are now behind you. And what the huge epiphany was for me was that in three and a half years, I accomplished what 99% of the population fails to do by following the traditional plan. And I was like, wow.
You know, the goal being to create passive income so it can support you. But the method on how you achieve that is what’s so bass backwards? You know, the whole traditional plan is to build this giant mountain of money. So at some point that mountain of money will spit off a residual monthly income, right? But the monthly income is the goal. So just forget the mountain and pursue that stream of cash first. And then once you have that going, it’s such a faster path. So I always say the way I draw it out for my students, it’s a 40 year plan versus a four year plan. And both of them, but I do emphasize that both are very, very hard work.
None of them, neither one of them are easy, but you just get to choose how long do you want to work hard? You want the 40 year plan or do you want the four year plan? And gosh, I mean, it’s this little epiphany. I just kind of change the equation and change what you pursue first. So I forget your original question because I go off on tangents, but yeah.
No, I couldn’t agree with you.
That’s how I did it.
Yeah, I couldn’t agree with you more there, Matt and it’s such a fallacy to go on that accumulation theory because I started asking questions, does this really make sense? Like you say you work all your life, you keep saving, saving, saving, trying to reach some kind of number, but then the model is then that you take 4% away from your nest egg at 65 and then you hope you don’t outlive your money, right?
Yes.
And oh, by the way, they never really talk to you about taxes, fees and inflation during that process. So that’s a tricky position to be in. I mean, if you’re 85 years old and you run out of money, right. Or you’re running short, this is going to be extremely challenging. So in this model, when you actually have enough passive income that’s exceeding your expenses, your asset base is going to continue to grow Even when you’re 65, which means your income is going to continue to grow as well. So, Matt. Yeah, I totally agree with you. The accumulation theory is just so wrong.
And really, education is at the source. So how have you been helping clients? You know, I know you have extensive coaching program and everything. So how are you helping people? You know, teach them about passive income and some of these alternative strategies.
Yeah, I mean, obviously we have the nuts and bolts and the strategies and the techniques and everything, but you know, the epiphany that I went through, like it’s the mindset that’s so important. You know, we’ll go ahead and you know, one of the demos that we do is I got, I always keep a stack of 30 grand around. And so because I want to always be able to do this demonstration and I’ll show them like the difference between the flipping a house and holding a house. So if you were to flip the house, you can have this 30 grand, right. Or you could hold this house and you could receive this $300 a month of passive income. Like which one would you actually choose, right? Because you can read the book Rich Dad, Poor dad, you can talk about it and believe everything that we’re saying. But until you’re actually faced, you know, with that decision on a frequent basis, which one do you choose? You know, most people are going to take the 30 grand because that’s going to move the needle in people’s lives. That, that can have an impact.
It can do something, right? 300 a month, you know, maybe it’s an extra night out with the missus, right, for dinner once a month. But if financial freedom is really important to you and you want to get your passive income to exceed your monthly expenses, you’re never going to get there until you start choosing the passive income, right? You can’t get $10,000 a month of passive income until you choose your first property. That gives you 300, $500 a month in passive income. But people will just always take this 30,000. What they’re doing is they’re constantly prolonging their journey. And we have this demo of how we lay it out. Like, okay, so if you’re on the financial planner plan, right, say, they say very conservatively, we can go ahead and take all of your money, put it somewhere and it’s going to give you a 5% return, 4% return, something like that. And that’s what you can depend on living on the rest of your life.
That’s kind of the plan that most financial planners will present to their clients. Well, if you do that, you’re going to need $2.4 million. You’re going to have to save that to be able to live off of that 4 or 5% to receive the $10,000 a month in passive income. So how many of those $30,000 houses do you have to flip to get to that to save $2.4 million? I mean it’s like 80 houses or something like that, right? But then flipping houses like that is a full time job. So you have to live on something. So let’s say you’re going to live off of 15k a month and then you’re going to invest the 15k. Well, now you’re at 160 houses, right? And you do that once a month. I mean you’re like a 10 year program.
I don’t have the exact numbers, but you’re getting the point. But if you chose that $300 a month property and just held one of those once a month, which can be a part time business, then now you’re looking at, you know, five, four or five Years. So, like, you can actually see, oh, my gosh, if financial freedom is really important to you, choosing that $300 a month is going to get you there so much faster than taking that $30,000 a month of actual active income. And so it’s drilling that into people’s heads. And that sometimes you’re going to need to take the cash. And that’s okay, you just need to understand the consequences of making those choices. Because sometimes I need the cash.
I got to make payroll, I got to redo my marketing budget. I got my own food and everything to buy, so sometimes I do have to take the cash. But every time you are at a crossroads or at a decision point, when you’re about to receive money and whether it’s real estate or anything else, once there’s going to be a financial transaction that’s going to happen, you really have to get in the mindset of, okay, is there any way that I can create a stream of income from this transaction? That’s just gotta be the first, always the intent, and most of the time it might be, no, okay, fine, take the money and move on to the next transaction. But that’s the real deal. If financial freedom is really important to you, choosing those small little increments of passive income is going to get you there significantly faster than taking the big giant cash days. And real estate just happens to be the vehicle that makes that available to the average person more easily and frequently than really anything else. So that’s when I say that, you know, real estate, it’s just a. It’s a money conversation disguised as an asset class.
If financial freedom is really important to you, choosing those small increments of passive income is gonna get you there significantly faster than taking the big giant cash days
Yeah, no, I, I think that’s really valid point there. And people, you’re right. I mean, I think people do. They do an investment and it’s, you know, a couple hundred bucks here, there. So it’s like, yeah, the cash flow doesn’t really move the needle. But I would also say it’s, yeah, it’s just that the learning lesson from that, right. And then starting to build that base and building wealth takes patience, right. And it takes discipline to kind of build out that system.
Like you say, once you get that first one going, you know, kind of gives you that momentum, right? And then before you know it, you’ve got two more. And now it’s, you know, 1,000 bucks a month, right? And then it’s a couple thousand, right. And then you kind of systematically start to work that. And all of a sudden it’s like, wow, my mortgage is actually paid for right now, and my asset base is growing. Right. And that starts to get pretty exciting. And I think one of the biggest misnomers out there that people just aren’t realizing as well is if you’re following the traditional model for that accumulation theory and you’re exposed a lot to, you know, stocks, bonds, mutual funds, the taxes, fees and inflation, that’s really going to get you. So you’re going to take that nest egg at whatever, 65, 67 and start to look at what that number is, and you’re going to be really surprised by how much lower the actual number is.
So not only are you taking the 300 right with real estate, but you’re offsetting that with depreciation and the tax benefits. So it’s actually a lot more right in reality.
Building wealths takes patience and it takes discipline to build out a system but once you get the first one going it gives you the momentum to continue further.
And the appreciation, just to keep on building on what you’re saying and the appreciation that outpaces inflation, right? So you’re hedged against inflation, you’re hedged against the taxes, the asset is buying itself. The debt that you’ve taken on, inflation is eating that up too. Inflation is an equal opportunity money destroyer. So not only is it destroying your cash, it’s also destroying the cash that you borrowed. So the longer you hold onto that debt, the easier that debt becomes to manage, right? So the real strategy, if you wanna put yourself on the right side of the financial system. Cause you’ve heard the expression maybe don’t fight the Fed, right? Cause the system always wins. So if the system always wins and you wanna put yourself on the right side of the system, the formula is to borrow a depreciating asset to purchase an appreciating asset. Because that’s how the government runs all governments.
That’s the society we live in. That’s the global economic system. Everyone has an inflationary currency. And what they do is they borrow against their own stuff to go buy other stuff that appreciates. And they let inflation erode away their debt. We’re never going to buy our way out of this and pay back this debt. That’s not the plan. The plan is to inflate it away.
So if that’s the plan and that’s what the powers that are to do, and for you to go and choose a high moral ground because Dave Ramsey said it’s the wrong thing to take on debt. And you’re like, yes, that’s the right thing to do because I’m going to that. I’m not going to do what these evil countries do. Well, you’re fighting the Fed. You’re going, you’re swimming upstream. You can play that same game by just getting bank loans, buying real estate and then just make sure it cash flows. And all of a sudden now you are doing the same thing that the government is doing. And the government ain’t going to lose, and if you play their same game, you’re not going to lose either.
Yeah, yeah. It’s such an important point. I think a lot of people don’t realize when they’re calculating ROI on a real estate investment or other hard asset, they’re not really looking at the devaluation of the dollar. Right. So if the bank is giving you that money now and you’re paying it down in future years. Right. It’s going to be worth less over time. Right.
So it’s just one more, you know, quiver, right and one more arrow in the quiver. That’s going to support that thesis, right. So, but Matt, how have you been like in this market? It’s been pretty challenging. We were involved mostly in, you know, multifamily projects and other other type assets, but on the single family side and everything, you know, how have you been managing, you know, rentals with higher interest rates and you know, I know it’s very unique, right, based on different geographies and everything.
But are you still seeing good opportunities? How are the trends in the single family market?
Yeah, one advantage, I mean there’s pros and cons to every asset class and every asset class insider real estate. I mean the thing I love about multifamily is how, how you can, how you can force appreciation on it and have an exponential return on the overall value of the property. You know, you can’t do that with the, with single family houses. But there’s other things you can do with single family that makes it that are really difficult multifamily. And one of those things is being able to market directly to distressed sellers. So to be marketing and buying property offline, basically. And when you can negotiate directly with the seller, interest rates don’t really matter all that much. I mean if you’re going to go to a bank and take a traditional loan, of course it’s going to, that has a, an impact.
But you know, the game that we play, being able to buy directly from sellers and arrange seller financing or taking over loans that already exist at a lower interest rate. That’s how we’ve been able to navigate this. But that’s how I’ve always bought property. So you know, the market shifts and it doesn’t really impact the way that I go about buying houses. Now, if you go to our, my wife’s side of the job where she does the turnkey operation, so she’ll go out, she’ll find the houses, she’ll fix them up, she’ll put a tenant in place, she’ll coordinate the property management and hand it over to her clients as a cash producing asset. But they’re paying retail for all of the work that she’s done. They’re going to have to go and get a traditional loan. So her business has been impacted a little bit because it’s hard for those properties to cashflow when the interest rate doubles.
Right. So there’s that there as well. But it’s coming down and it’s now because it’s come down that type of property that cash flows, the single family side, the prices have come down a little bit. So she’s getting the returns back again and her business is picking up again and people are getting it.
Yeah, Matt, we have a lot of investors who truly understand that time is their greatest asset. So, you know, getting involved in active real estate sometimes can be challenging. Right. Versus passive real estate. But how have you coached people to go through that thought process on does it make sense to, you know, purchase something active, you know, versus passive, like a syndication or a turnkey?
Well, every person is different, right? They have different intentions and goals, they have different resources available to them and then they have, you know, different desires and how they want to go about it. So that’s kind of why we have two heads of our business here is because some people don’t want to invest in real estate and get on the active side. They just want someone to do it for them. You know, and much of my wife’s clientele are doctors and their lawyers, their higher, highly paid salespeople and pharmaceutical sales and stuff like that that have the cash. They’re getting creamed on taxes. So they know they got to do something with it. Right. But they don’t have time or desire to go out and do what I do and sit at the kitchen table and buy a house from somebody.
So we have that and then. But even on the active side, like to be able to purchase properties in the creative ways that I do without involving a bank at all. It doesn’t have to be a full time job. I mean, if we go back to our little, my little demonstration or explanation, I should say, of the difference between $30,000 of cash and $300 of cash flow and how much quicker of a route that is to your financial freedom by choosing that $300 a month. You could do one or two deals like that a year part time. So it doesn’t have to be this full time job thing. And if you do that once or twice a year, I mean you just reduced your whole 40 year plan down to 10, you know what I mean? You’re going to have a significant impact. You know, the app real estate is just the final frontier where the average person has a legitimate shot at creating real wealth.
And I was, I want to say all people, of course people be able to find exceptions, but people just don’t have a chance at any sort of financial freedom these days unless they incorporate real estate in some shape, form or fashion into that plan. Yeah, and it’s. I’m of the opinion that you want to control as much of that real estate as you possibly can because there’s so many different profit centers. Now I know syndications are structured in different ways, but there’s a lot of them out there that are structured in a way that, you know, it’s kind of the same as buying into a mutual fund. Right. It’s kind of the same as buying a stock. But there are syndications out there that allow you to share in the depreciation and allow you to share in the cash flow and the appreciation and all that. So you have to be really selective on how you do that.
One thing I don’t like about where I would say what I like, I’m not going to say don’t like. The one reason I would prefer actually buying the asset myself is that you get the benefits of leverage. Right. Because that’s a 5x multiplier just on the appreciation scale. But then people like, “well, I don’t want to manage tenants.” Well, then maybe the syndication is a better choice for you then. Right. So there’s not a perfect one.
If you have a good mix of all of them, I think you’re probably adequately positioned for whatever you want to do. The other side would be like seller finance notes. Right. People like to go in person and buy notes. And I think this is great because this is passive income. No tenants, no toilets, no termites. I don’t have to deal with any of that. It’s a straight passive income.
Let’s just go do more of that. Well, then again you lose the ability to leverage or the second thing you lose is it’s a depreciating, not depreciating, but it’s an asset class that gets smaller and smaller and smaller because the more payments you receive, it’s becoming less and less valuable because they don’t owe you as much. And then that gets beat up by inflation because now you’re on the wrong side of holding the debt. And then what was the other. The other thing that it gets you with is the depreciation that inflation and Oh, God.
Oh and it’s taxed at a high. It’s taxed as ordinary income, not passive income. Right. So every single strategy has its pros and cons and so I think a good portfolio that’s diversified in a little bit of everything, I think is probably the best bet for most people.
What are a couple of examples of some creative financing that you’ve seen people use?
Well, this is what I do every day is where someone calls me and I deal with the people that need to sell, not the people that want to sell. Okay, so there’s a difference. That’s about 7% of the market, 93% are just going to call a real estate agent and sell their house the traditional way. That’s not who I deal with, but the people I deal with is, you know, they’ve got a house that might not be in the best shape. They don’t have the means to fix it up, and they just need to sell it. Right. So they’ll come to me and ask me to buy their house.
A lot of times they’re a little bit delusional in the sense that everyone thinks they live in the Taj Mahal when they think they have their own little castle, and so there’s other investors out there like me, that are going to try and buy that property at a deep discount. I’ll give you 60% of what it’s worth, 70% of what it’s worth, 50% of what it’s worth, depending on the condition we can offer, close to full price if they’ll take some money now and the rest later. Right. So rather than going to a loan bank and getting a loan and making payments to the bank over time, I can just make payments to the seller over time. So that’s one of the primary ways. There’s always some sort of structure around that concept. I’ll give you a little bit of money now, and I’m just going to pay you over time.
There’s a lot of benefits for a seller as well. Like they don’t have the big tax hit. They can disturb, distribute those taxes out over time because they’re not getting this big chunk of cash, depending on what they need the money for. You know, if they’re going to take that money and go put it into a money market account. What are they going to get? 3 or 4%. Right. But from us? Well, why don’t I just pay you 6%? And it’s actually secured by a tangible asset.
And that makes a lot of sense for a lot of people. And so that’s one of the ways seller financing is a huge one. The next big one would be call a purchasing property. Subject to. Subject to the existing financing. And that’s really nice because I think it’s what, 80% of all the mortgages out there right now are less than 5%. So I can offer someone a little bit more for their property if they allow me just to go ahead and continue making payments on their mortgage because it cost me. The monthly payment could be 20, 30, 40% more if I went and got a new mortgage.
But why don’t I just. Let’s cut the middleman out. The bank’s gonna make all the money. Why don’t we keep that profit between us and we’ll kind of split that. So I can give you a little bit more, but I’ll get a little bit of a discount by not having to go get a new loan. So those are the two primary things, and then like maybe a combination of those two things sometimes.
Yeah, nice, Matt, how about on the personal productivity side? I know you’re a big guru, right? In terms of habits and peak performance. Do you have any top habits that you use?
Top habits. I think if you enjoy what you do, you don’t really have to force yourself or be disciplined in any habits. Right. I know that was. Wow. It was for me with the music industry. I just went in the studio and made music every day, and I was just blessed that people liked it enough where they paid money for it. Doing what I do now, I’m so jazzed about the concept of passive income and getting that.
Constantly increasing that passive income and creating this gap between that. My monthly expenses. That’s exciting and exhilarating to me.
So I think, you know, I don’t want to say something so cliche as pursue your passions and you don’t have to worry about your habits because there needs to be financial viability to what you do as your passion for that to work, for that plan to work. But peak performance? Yeah. I just spent the weekend with a guy that’s a doctor of helping people get a bunch of sleep. It seems like if you get seven to eight hours of sleep, that cures a lot. What ails people these days regarding their performance.
Yeah, very huge for sure. Well, yeah, this has been super insightful, Matt. For sure. If you could give the listeners just one piece of advice about how they could accelerate their own passive investing journey, what would it be?
I think it’s going to be what kind of we lay I laid out earlier was every time you have the ability to conduct a financial transaction, just pause for a sec and ask, how can I create a stream of income out of this rather than adding this to the mountain of money? And if there’s no answer, no big deal, take the money and go do the next transaction. But always, if financial freedom is important to you, always choose the stream of cash first. You’re going to get there a lot faster.
Yeah, that’s solid. I think at the end of the day, it’s really all about freedom, right? We want freedom of money, right. To be able to live the lives that we want to have. But with that comes freedom of time. Right. To spend your time how you choose. It’s also freedom of purpose.
And that ties to your passion comment, right, about just really waking up every day and just being, I love the words, really fascinated and motivated about the work that you’re doing because then it doesn’t really seem like work, you know, and you’re creating impact in the world with what you’re doing. And then also I think, you know, freedom of relationships is important too, and choosing who you want to work with, who you want to spend your time with.
Because sometimes if you’re in a W2 job, you just have no choice, right. In what that is. So, you know, freedom, I think for a lot of, you know, entrepreneurial driven people and passive income, right. It’s all about creating that freedom in your life to really live your best life. So thanks for coming in today and sharing all your wisdom, Matt. I know it was really insightful.
And so many of our listeners have some active real estate, are thinking about buying some additional real estate. And one play that I’ll throw in, which I think is a really nice chess move too, is even if you don’t necessarily want to build a portfolio of 30 to 50 single family homes, one strategy that could be really cool is like you were saying, maybe just purchase, say two or three homes in a year and then potentially you could have your spouse manage those homes and then qualify as a real estate professional, which could be really huge tax breaks. In addition, you know, virtually wipe out.
Your entire tax liability by doing that for just a few years.
Exactly. Well, thanks again, Matt. Really appreciate it.
You bet, Dave. Thank you.
Except for five separate brother.
Thanks for listening to this episode of Wealth Strategy Secrets. If you’d like to get a free copy of the book, go to holisticwealthstrategy.com that’s holisticwealthstrategy.com if you’d like to learn more about upcoming opportunities at Pantheon, please visit pantheoninvest.com.