Real Estate Investing Lies.
BY KIM D. H. BUTLER WITH JIMMY VREELAND
Meet the Authors
Want to see a recorded presentation where Todd Langford of Truth Concepts shows “How you can sell your real estate without paying capital gains tax?”
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Surprising Secrets to Real Estate Success!
If you’re not investing in real estate, you’re probably slowing your journey to financial independence. Over the last two centuries, around 90 percent of the world’s millionaires have been created by investing in real estate, according to the TheCollegeInvestor.com. David Greene, a Forbes contributor and host of the Bigger Pockets podcast, contends that real estate builds wealth more consistently than any other asset class.
Appreciation, depreciation, leverage and inflation—they all work to the real estate investor’s advantage! Yet unfortunately, real estate investing lies sabotage the success of many — or keep them out of the game altogether!
In spite of my confidence in real estate as an asset class, some of my personal experiences as a real estate investor have been, well, disastrous. (I share some stories in the book.) One reason my husband Todd and I struggled in the past with real estate is that we didn’t yet understand what Jimmy Vreeland knows about investing in real estate successfully—with a minimum of headaches!
An unlikely combination—and a winning formula!
How Jimmy and I came to write a book together is a bit of a “peanut butter and chocolate” story. We have very different backgrounds and experiences. We now work in different—yet complementary—industries. What we have in common is the same passion for helping people succeed—in both finances and life. And we realized, when it came to investing, what we could offer together was so much more than either one of us could offer alone.
Jimmy knew that whole life was a great place to build liquidity, and I knew that real estate was a great place to invest. They complement each other well because one builds financial momentum and cash flow, while the other creates stability, liquidity and protection. I have advocated for years that people with whole life consider look for opportunities to create cash flow… and Jimmy had developed an effective system for real estate success.
I met Jimmy a few years ago at a “Truth Training,” which is the Truth Concepts software training I assist my husband, Todd Langford, with periodically. This training was at John Moriarity’s office in St. Louis. (Although designed for financial advisors and life insurance agents, the training is open to anyone who wants a greater understanding about how money works.) At that training, Jimmy gained a better understanding of how whole life insurance could be used to help fund real estate transactions—while strengthening an investor’s financial foundation. He also impressed us with his obvious smarts, insightful questions, and the success he was having with his uncommon approach to real estate investing.
In the years that have passed, Todd and I have stayed in close contact with Jimmy. We toured his company’s office and saw the pictures on the wall of families they had helped purchase homes—families who needed a little extra time or help to qualify for a mortgage. We met his wife, Susie. We saw him at other industry events. And we personally invested in a truly “turnkey” property with the company Jimmy co-founded—one of our real estate investing success stories! I have referred clients to Jimmy. Then, a couple years ago, Jimmy approached me with the idea of co-writing a book together. (I said yes!)
“What most people know about real estate investing is entirely false.”
We make that statement in the very first page of Busting the Real Estate Investing Lies. Then throughout the book, we name and obliterate the myths. We bust the lies that stop people from succeeding in—or even trying—real estate investing.
Perhaps you’ve had a bad experience that has turned you off to real estate investing. Maybe you’ve seen “house flipping” shows on TV—full of over-hyped profits and “too-good-to-be-true” scenarios. Or you’ve heard real estate gurus bragging of elusive, unrealistic deals mere mortals will never see.
This book is not like that. There’s no hype. We tell the “warts and all” stories of deals gone wrong. It’s told with humility and humor. We share the valuable lessons we’ve learned and the principles behind them. We show you how to sidestep the pitfalls and give you the foundation for further exploration and action.
Going “Back to the Future” with wealth-building
In the introduction, we explain the long proven history of both real estate investing and whole life insurance. However, the financial planning industry—which was literally created to sell mutual funds—introduced a retirement dream that many Americans just can’t reach. In just a few decades time, traditional ways of saving and investing (real estate and whole life insurance) have been all but replaced with now-typical advice to max out your 401(k) in the stock market. People put all of their dollars into the Wall Street Casino, then quit their jobs around age 65 and try to live off of their retirement accounts for decades to come.
Financial insecurity. Sleepless nights interrupted by market volatility. More unpredictability in future taxation, cash flow, and legacies.
What are the real estate investing lies? And what steps can be taken to alleviate the myths that keep many people from investing in real estate?
In this article, we’ll give you a “sneak peak” on what you’ll find in Busting the Real Estate Investing Lies. (But trust us—you’ll want to read the whole book for the details, the stories, and the solutions!)
Chapter 1: Set your strike number.
The lie: Real estate investing is all about speculating and buying for appreciation.
Your “strike number” is your ticket to financial independence and designing a life you love. In this chapter, you’ll learn what your number is, why it matters, and how to calculate it.
Real estate investing done right is about cash flow: reliable, predictable, gradually increasing cash flow! It’s not about big deals or accumulating a big net worth. Ultimately, it is about getting your time back!
Chapter 2: Establish your emergency/opportunity fund.
The lie: Qualified retirement plans are the best place to save money and store capital.
In this chapter, Kim describes a client who did everything “right” according to typical financial advice. He pre-paid his mortgage, maxed out has qualified plan contributions, got term life insurance and funded 529 plans for his kids. Unfortunately, when an opportunity came along, it almost passed him by. Following typical financial advice meant his family did not have the liquidity to act on the opportunity!
After adjusting their strategies with my help, now they have new assets, ownership and control of a business, and cash flow that would have never been possible with their old qualified plan retirement accounts!
The truth is that if your capital is inaccessible to you until a certain age (or if you have to pay penalties and taxes to get it), it’s in the wrong place.
Chapter 3: Embrace a cash flow mindset.
The lie: Appreciation and a high net worth is the means to achieving financial freedom.
This chapter drives home the point that cash flow matters much more than net worth! You can’t eat equity, and you can’t rely on the mutual fund industry to deliver steady cash flow. Real estate investing provides a realistic solution!
Chapter 4: Use leverage to buy.
The lie: All debt is bad.
If you had the cash available, wouldn’t it be smart to simply buy property with cash!? The truth is, you will actually earn a much lower rate of return if you do not utilize leverage properly! Your ability to leverage assets allows you to expand your assets more quickly and more profitably.
The truth is that using debt strategically is one of the most important keys of wealth-building! In this chapter you’ll learn:
- The difference between “being in debt” and “having debt.”
- Why a longer mortgage is better than a shorter one.
- Why you should NOT prepay your mortgage.
- How combining whole life insurance with real estate investing, gives you both the liquidity and the leverage you need.
Chapter 5: Partner with operators.
The lie: Real estate investing has to take a lot of time.
We share what an “operator” is and how an operator differs from experts, salespeople, and other service providers. You’ll also understand the critical importance of partnering with those who have “skin in the game.” This includes your tenants, too! You’ll learn how and why to avoid “professional tenants.”
You’ll love the stories in this chapter! We both share mistakes we’ve made and the importance of understanding and using our strengths and staying in our Unique Ability®, a concept articulated by Dan Sullivan of Strategic Coach.
Chapter 6: Velocity – Rinse and repeat and expand.
The lie: Paying down principle is a good thing.
In this chapter, Kim shares a harrowing story of a client who aggressively paid down his mortgages on multiple properties—only to almost lose it all! The authors explain:
- The importance of investing in new properties rather than “tying up money in the walls of your house” through pre-paying principle on a mortgage.
- How pre-paying your mortgages can actually put your properties at risk in the event of an economic downturn.
- Why mortgage debt (and life insurance loans) can be good and how the debt helps you expand your income-producing assets.
- The difference between what banks do and what they tell you to do!
The truth is that investing in real estate without also building up your liquidity can lead to disaster. And on the flip side, building up your equity without expanding your assets leads to stagnation. Learn how to increase you financial velocity by moving dollars through assets!
Chapter 7: Leveraging the tax system.
The lie: Taxes are an unavoidable certainty.
The highest lifetime expense most of us have is that of taxes, so tax-efficiency is crucial. Both real estate and life insurance are tax-advantaged—sometimes tax-free asset classes. Learn how this helps you get to financial independence faster!
We also share the critical difference between having a scarcity versus an abundance mindset when it comes to your financial decisions!
Another lie: Whole life insurance alone can provide you with ample tax free income. The truth is that it works much better in conjunction with real estate! I share why one popular “tax free income” strategy can backfire.
Chapter 8: Mitigating risk.
The lie: There has to be a lot of risk involved in investing, especially in real estate.
The truth is that cash flow real estate can actually be low risk! Working and middle class people will prioritize paying their rent whether the stock market is up or down, whether interest rates are high or low, no matter who is in the White House or what is happening with commodities and currencies. Additionally, whole life and real estate both give you a hedge against inflation – while your qualified retirement plan full of mutual funds does not!
These are just a sampling of the concepts you’ll learn in the book. As you’ll see in our Amazon.com reviews, different readers are gleaning different insights!
The book also includes a “bonus” chapter reprinted from Busting the Interest Rate Lies so that you can better understand the disadvantages of a shorter mortgage—or paying cash for a property.
Hear Kim Butler talk about the book in this episode of the Prosperity Podcast: “Busting the Real Estate Investing Lies.”
Busting the Real Estate InvestingLies.
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