If your goal is to reach the financial freedom and make your current job optionable, stay with us because, today, we are laying out the step-by-step plan to escape the rat race. Furthermore, it works for everyone regardless of the social standing! Learn what the lazy assets are, how you can employ them to produce the returns, and why our Escape Plan works better than other traditional plans.
What You Will Learn About Step-by-Step Plan to Escape the Rat Race:
- Where your focus should be
- What the lazy assets are and how to make them produce (the higher) returns
- The Rat Race Escape Plan example
- How to monitor your ROI to know how hard your money is working for you
- Why our plan works better than traditional plans
- The mindset for escaping the rat race
Whenever you’re ready, here are a few ways we can help:
Work with me One-on-One
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- Become an Epic community member at The Epic Real Estate Investing Show
One of my favorite things to do is share with investors the latest and greatest tactics and strategic friends I make. I do it every week and you can listen in by subscribing to The Epic Real Estate Investing Show podcast on iTunes – Click Here.
- Grab my book, Epic Freedom ($1)
I frequently hear from people looking into investing in real estate for the first time, “How long is it going to take?” So much so, I wrote a short book about the 2 easiest and fastest strategies to a paycheck in real estate. You can grab a copy for $1 and I’ll pay the shipping – Click Here.
- Join our Badass Investor Program and be a Case Study
I’m putting together a new Badass Investor case study group at Epic Real Estate this month… stay tuned for details. If you’d like to work with me on your real estate investing, go to FreeRealEstateInvestingCourse.com to get started.
- Also, check these out:
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Speaker 1: This is Theriault Media.
So, you want to be a real estate investor, but you don’t want to do the work? If there were only a way where someone else could do it for you. Now there is. Tune in here each and every Tuesday on The Epic Real Estate Investing Show for Turnkey Tuesdays, with your host Mercedes Torres.
Mercedes Torres: Hello, and welcome. Welcome to Turnkey Tuesdays, real estate for busy people. Glad you made it. Make yourself at home. If this is not your first time here, welcome back. My name is Mercedes Torres, and I am privileged enough to be partners in crime with Mr. Matt Theriault, the brains behind Epic Real Estate. For those of you new to Turnkey Tuesdays, just a little about the show. Now, I created Turnkey Tuesdays because I noticed there was a rising demand in a small niche in real estate that caters to busy professionals who understand the importance of real estate, but they either don’t have the time do it all themselves, or they just don’t want to learn every single detail there is to learn about acquiring real estate, or they’re simply flat out too afraid to invest in real estate despite how lucrative it can be for them, so that is why I created the show.
Now, if you haven’t already done so, download the free Rat Race Escape Plan that’s on our website. It is a really useful tool, and I can tell you from personal experience, our Rat Race Escape Plan really, really works. Why do I know that? Well, because I did it myself. Matt and I were able to escape the rat race in about four years, a little less than four years, so I know that if you follow a step-by-step plan of which we created for you, you can also escape the rat race. I invite you to go to cashflowsavvy.com. That’s two V’s in savvy and download it there. It’s a quick and easy plan for anyone that wants to escape the rat race. Our plan is a 10 year or less plan. Now, it’s a very conservative plan at that. You can certainly execute that plan without any extraordinary more effort, but in the interest of not being too overwhelming and not shooting for that “too good to be true” flag, it’s a 10-year plan.
I personally think you can do it a little faster than 10 years. Over the years, I’ve spoken to so many people that just flat out ask me, “Mercedes, how did you and Matt escape the rat race?” I thought it would be good if I took an episode to explain how this rat race plan works. I’m going to explain it in a step-by-step manner, okay? Let’s go over it. Now, when we first had the idea of this Rat Race Escape Plan which, by the way, can also be found in our investor packet that talks about the top eight markets to invest in real estate, I felt I had a really good idea, but the challenge was making the plan universal and without making it theory based. Well, I found that to be a little impossible and here’s why. There are just too many variables that play into real estate.
Now, whether it’s with the real estate itself, or the market where the real estate is located, or even with the person that’s managing the real estate, whether it’s the owner or the property manager, or flat out you, the investor itself. Your experience, your time, your resources. That’s why it’s impossible to create a one-size-fits-all plan, but I did my best. I think I did a good enough job so that anyone can take this plan and fit it to their own individual situation. Let’s go through the steps. First things first. You must, and I say you must shift your focus from making piles of cash to making streams of incomes. Now, I talk about this ad nauseam. If you don’t do that, you can struggle with the plan, and we’ve talked about this so much on this show, so I’m not going to go into more detail about your mindset, but the mindset is important not just for this plan, for any plan that you plan to follow.
The future belongs to residual income creators. No longer does saving money work. In fact, quite the opposite. You lose in the long run. Making one percent with your money sitting at just any old bank is really, at the end of the day, losing your money if you can be making seven or eight percent with that same money. Again, that’s something that we talked about last time. You will lose if you leave money sitting there. You just will, so that’s first. Shift your focus to making piles of cash to making streams of cash. Next, set a goal, and this goal is specifically the amount of money you need each and every month that will provide you the opportunity to quit your day job. I mean, after all, that’s freedom, right? Having option, and that’s the goal here, to create additional options in your life around your finances.
Most people have the option Monday through Friday, and that’s to get up and go to work. What if you had a second option like to not go to work. That’s freedom. The option of going to work or not to is absolute freedom, and that’s the freedom that The Rat Race Escape Plan is all about. Decide on the amount of money that you need each month to create that option for yourself. Now, the example I used in The Rat Race Escape Plan was the national median household income in the United States. I found a few resources that had different numbers and considering you’re likely to be an aspiring success greater than the median household income, I used the highest number I found, so I used $48,000 per year. Now, to some of you that may not be very exciting, but like I said, it was impossible to create a one-size-fits-all type of scenario, so just plug in your number to that $48,000 a year place and follow the steps, okay? Cool.
Now that your goal is set, I’d like to recommend that you look at your existing resources, specifically your lazy assets. You know, the assets that are underperforming or not performing at all? Identify your low yielding assets. Anything that is yielding less than a four percent annual return qualifies. That’s what I mean by lazy assets, and I choose that number as the inflation rate. Anything you have at four percent is barely standing steel, and anything less than that is losing value each year, meaning your ROI is negative. So, four percent or less automatically qualifies as a lazy asset. Personally, Matt and I look at anything less than six percent, then that’s an automatic qualifier for us, and depending on your situation, you may want to consider a higher number or maybe even a lower number. Whatever works for you, that’s the number that you have to consider, and here’s why.
Acquiring investment grade income produces real estate at above seven percent is not a very difficult thing to do at all. In fact, current assets are performing than less than four percent, you’re not trying very hard at all. Once you identify these lazy assets, now it’s time to position yourself so that they’re in transfer mode so that you’re ready to transfer these funds so they can start producing a higher return for you. Maybe to convert your cash or have it ready to be … You know that push the button thing where transfer funds and then you’re now being able to cash flow. Now, that can be a bit of a stretch for the average person, especially if you’re working full time, but that’s why a turnkey operation might make sense for you as that number isn’t too difficult for us to target when we’re finding the deals for you.
At the very least, you can chip away $500 a month from your goal. If your goal is $48,000 a year, that’s $4000 per month. Now your goal is $3500. Maybe you have enough in your lazy assets to pick two or three of these properties, maybe even four, and you’d be halfway to your goal in just a few months. Let’s keep this very basic and somewhat at a slower scenario. With this one property, you’re going to sit on it and manage it, or better yet, have it managed. Direct all the positive cash flow to a dedicated account. Very important. Not your regular savings or checking account. A dedicated account that you have created solely for helping you escape the rat race, and save. Let’s say you save $1000 per month from your job and direct it to this same dedicated account so that you have the cash flow from your property and additional cash flow coming from your job that’s going into this separate account preparing you for your next purchase.
Now, maybe you can’t afford $1000 per month savings from your regular job but think of the extra money that you make during the year like bonuses at work or maybe your tax returns where you get a refund. Take all of this and direct it to this dedicated investment property account, and don’t touch it. I know it’s hard to do, but don’t touch it. Not until you’ve got enough there, probably about 24 to 36 months later, and in two to three years, then you acquire another property that cash flows $500 a month, of which you now have two to three income properties in your portfolio generating anywhere from $1000 to $1500 a month in this dedicated account along with your $1000 a month that you’re saving from your job, your bonuses or your tax returns, and you do that for another 18 to 24 months, of which you should be able to save enough in that timeframe to pick up at least one more property.
Now, putting in the average of roughly speaking $3000 per month going into this dedicated account. Of course, along with the allocations from your job, your bonuses, tax returns, etc. Now, is when it really starts to speed up. After you pick up around two or three properties, they start to kick and contribute more to this account which, in turn, allows you to purchase your next property. You keep doing that every 18 to 24 months. Heck, some of my investors get really aggressive and start buying properties every 12 months. I mean, just think about it. Think about it if you just bought one property a year for the next 20 years. Anyway, I’m getting a little off track here, but you pick up on average properties and now you’re getting closer to that $4000 a month goal that you’ve set, and all of a sudden, your goal.
This factors out to just about less than eight years. So, that’s the example, and that’s the example with real numbers. Of course, what I laid out here is in a perfect world, so keep that in mind. Remember, I used the round number of $500 a month of cash flow, and I just used it because it makes the math much easier. I do want to point a few things, and I want to add some clarity to the plan that’s really, really important. First, you can modify your portfolio growth by either your ROI percentage as we started talking at the beginning of this conversation where you convert any assets that are performing less than four percent, and then you switch them over to cash flowing property that produces $500 a month in cash flow per se. These are two different ways of monitoring how hard your money is working for you.
I use the dollar amount example in the interest of demonstrating how you can chip away at your monthly income goal, but ideally, you’ll always want to monitor your ROI to know how hard your money is working for you. It’s really important that you understand your return on investment. For example, you may find a property that generates $500 a month in passive income at a five percent ROI, or you may find a property that generates $250 a month in cash flow at a nine percent ROI. Which one is a better investment? Well, it depends. It depends on you. It depends on your resources, your goals, your timeline for that goal. There are so many things that factor in there. There’s no right or wrong answer here, but the target is to make your return on investment as high as possible within reason, of course.
What you want to look at is constantly improving the performance of your money and assets. If all your current investments are producing a five percent annual return, then converting all of this into an investment that produces seven percent annual, that would be good, right? Or, dare I say better investment for you. Or, if collectively your investments are generating $5000 a month of residual income for you, and you converted all of those investments, the same investments, into something that’s generating $7000 a month in residual income. Now, that would be a good investment for you, right? It all depends on where you’re starting, and of course, your available resources.
Here’s my rule of thumb. Keep your money moving. Always be looking for a step up from your current investments, and use as much leverage as you’re comfortable with, and of course, don’t over-leverage. Leverage reasonably to build your cash flow. Once you’ve hit a cash flow goal, then you start focusing on eliminating the leverage, and that will help you sustain and preserve your cash flow. Cool. Second, and this brings me to the second thing that I want to point out here. In this example that I gave you, I’m not discussing leverage or debt or bank loans, or private loans, or lines of credit. If you have a decent credit score, this eight to 10-year plan that I laid out can virtually be cut in half rather easily. Look at all of your resources and see what you have at your disposal. In the above example, I really just focused on lazy assets and the income, and the bonuses and the tax return from your job, but your credit can be considered an absolute lazy asset if you’re not using it.
There’s a saying. You can get rich using your own money, but you can get wealthy using other people’s money. Keep that in mind when taking action on your plan. Your credit is as much, if not more of an asset to you than your lazy assets, especially now in this market where rates, although they’re climbing, they’re at an incredible low. Your low yielding assets and leverage, combining them both, you may be able to reach your goal so much faster than you think, and that brings me to my third point. What if? What if you don’t have enough assets or credit scores to buy even potentially one property initially? Or, your current job doesn’t afford you to save an extra $1000 a month? Or, you don’t get bonuses, and at the end of the year, you don’t get a tax return? No problem.
You’re just going to have to move a little bit slower. That’s it. Just move slower. It doesn’t mean you can’t do it. It just means that you have to do it at a slower rate. If you can’t do it in eight to 10 years, maybe you’ll do it in 15 to 20 years. Buying one property a year will afford you 20 properties in 20 years. What if it did take you 20 years? Well, if that’s the case, isn’t that a lot better than the traditional route that you’re currently traveling, that 40-year plan of saving in perhaps your company’s IRA? You see, even if you’re limited to your assets and your resources, The Escape Plan can still be very easily done in half of the time where the traditional 40-year plan is currently working. So, maybe it’s not a 10-year plan for you, but what’s wrong with a 20-year plan if you’re currently at a 40-year plan?
What if your 40-plan doesn’t pan out? What if your employer lays you off after 25 years? I have spoken to many clients that that actually happens. The plan originally set out for 95% of the population doesn’t always pan out. By the time you’ll be at least 60 years old, and then you’ll have no choice but to follow the creating streams of cash approach, or you just keep working. Now, why do you think we have Walmart greeters who are predominantly senior citizens and are working part-time? Nothing wrong with them. They might be doing it as a hobby, but for the most part, if you have a conversation with them because I often have, they will tell you they have to work. They have no other choice. I’m trying to cover every base here as broadly as I can, and I’ll leave you with this.
As you listen to this, and you’ve come up with a bunch of ideas and questions as to how this won’t work for your specific situation, or how it’s going to be really hard, then it probably won’t work for you and it is going to be really hard. Rather than focusing on why this won’t work for you, shift your focus again and think how and why it will work for you, and imagine that. Imagine what that would be like if you were able to make this work. These are all the same words of wisdom that were shared with me 15 years ago, and with some effort, some intention and teamwork, Mr. Matt … Mr. Matt and I put our brains together and we’ve created the focus, we created the vision, we created everything that we need to create in our minds, and then we set the plan, and with proper focus, you can do it, too.
Matt and I were able to hit these exact goals that I laid out for you in this Rat Race Escape Plan in less than four years. I almost had zero expendable cash at the time, and if you’ve listened to Matt’s story, he had no money and no credit … Very little money, absolutely no credit. Zero assets to speak of. I’m not sharing this with you to impress you. Rather, I’m sharing this with you because it’s possible. I did it. We did it, and I want to convey it’s not about your resources. It’s about your resourcefulness. If escaping the rat race is not a priority for you, you will come up with enough excuses as to why you can’t do it. If it is important to you, you will come up with enough ideas as to why and how it is going to work for you. You see, as Matt always says, it’s never a money problem. It’s an idea problem.
If you need a little help thinking outside the box, reach out to me. I often say if you email me, if you reach out to my office, I will be more than happy to connect with you, and perhaps help you brainstorm on how we’re going to get you out of the rat race. Ladies and gentlemen, the door is wide open for you at this point. Wide open. All you have to do is walk through it. Go to cashflowsavvy.com… That’s savvy with two V’s … at the very least and download our Rat Race Escape Plan. Heck, if it worked for Matt and I, why wouldn’t it work for you. Just plug in your own numbers, create a plan, and start working on that plan. Or, email me, [email protected]. Mind you, I get a lot of emails so I may not answer right away, but I promise you I will answer.
Whether it’s with our support or not, that’s not important. You working the plan, that’s important. For that will make a difference for you, your family and your legacy. You can work this plan in four, five, maybe eight years, or you can work the traditional plan for 40 years. You pick. Working for piles of cash might make you rich, but creating streams of cash will make you wealthy and permanently. That’s it for today, my friends. This is Mercedes Torres and I will see you on the next episode of Turnkey Tuesdays. Love you all.
Speaker 1: Your portfolio has seen better days, but this too shall pass and the best for you is yet to come. Together, we’ll get you there faster. We’re Cash Flow Savvy, and we’d like to share some information with you that will show you how you can take control of your financial future and accelerate its arrival. Go to cashflowsavvy.com. More building, less waiting. Cashflowsavvy.com.