If you don’t want to be a 70-year old person who still has to work, tune in! Learn how you should be using your 401K to buy cash flowing properties to secure a safe retirement, how to gain back the control over your money, and why you should concentrate on numbers and math instead of terminology as you do so.
What You Will Learn About Using Your 401K to Buy Cash Flowing Properties:
- What Wall Street Journal says about 401k and its impact on America
- How its creators admitted that they made a huge mistake
- Mercedes’ conversation with a listener who has a 401K with an old employer
- How your money is being controlled
- How to get it back and use it more effectively
- Why you should focus on the numbers instead of terminology
- How Mercedes used her 401K funds
Whenever you’re ready, here are a few ways we can help:
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- Become an Epic community member at The Epic Real Estate Investing Show
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- 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.
Mercedes Torres: So you wanna be a real estate investor, but you don’t wanna 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.
Hello, and welcome, welcome to Turn Key Tuesdays, brought to you by Epic Real Estate Investing. My name is Mercedes Torres. Some call me the Turn Key girl and I am privileged enough to be partners in crime with Mr. Matt Theriault, the guy who created The Epic Real Estate empire. For those of you just now tuning in to Turnkey Tuesday, this show was created for busy people. Busy people just like you who understand the importance of real estate investing, they just don’t have the time to do it all themselves. To either jump into their first investment property, or to grow their portfolio of existing properties. Now, the goal is to create cash flow, so our show is catering to that individual that just wants to know how to do it.
So, on this show, I share tricks and strategies and secrets on how Matt and I were able to build our portfolio in a little less than four years. You know, we have our share of properties, I’ve lost track, but I just wanna share all the things we were able to do to acquire and keep acquiring real estate. Cool? For our repeat listeners, welcome back. Glad to see you again, good to have you here. And make yourself comfy.
So, let’s see, what are we going to talk about today? Well way back in January, Matt did an episode on an article that he read from the Wall Street Journal, and the title of the article was called “401k Experts Have Changed Their Tune, and It’s Impacting America.” Now, this article got a lot of wheels turning and it really just talked about how 401k just doesn’t work anymore. The article was pretty enlightening. And most people, they embrace 401ks. And while there’s nothing wrong with 401ks, they are not working the way they used to.
So, the article was extremely eye-opening to many, specifically because the people that created it started to realize that they messed up. You know, it’s a plan that’s not working out or panning out the way that they intended it to work out. You know, I laugh about it, and I guess I shouldn’t be laughing, but you know on paper, the concept of a 401k looks amazing. I mean to be quite honest, if you really analyze it from afar, yeah, the concept is really, really great. But after years of implementation, they realize their goal was just, you know, not working. It was to accomplish something that virtually, the way it was set up it is impossible.
I guess they never factored in inflation or depreciation or the cost of living in California for example. I mean, it’s just the stupidest strategy for retirement because it makes no financial sense. Now, you can have your own opinion about your 401k, and gosh I respect your opinion. However, if you break down and do the math for 99 percent of America, the 401k will not work. There might be one percent, and I would argue that it’s less than one percent where the 401k or their IRA might work for their retirement. But for the vast majority, that is not the case. I mean even the actual earliest champion of the 401k, the guy who created it, who wrote this article, he admitted in this article that he is in his mid-70’s and he is still working for a living because he has to.
Oh my God! You can hear me getting heated about it just because I’m so passionate about it because it’s common sense. If you do the math, I mean even the guy who created the 401k is still working at 70. And, back in the day when it was created, retirement was not 70, it was 65. So, he’s having to work a little bit of overtime because the plan that he created is not working. Anyway, I gave you the name of the article because I’m not here to read it to you. Matt read it to you on a previous episode. You can Google it, you can read it for yourself. Develop your own opinion about it. And really, just do the math.
I always say saving for retirement is a losing strategy. It’s just not a proposition for retirement. In today’s economic environment, it is impossible for the 401k to actually work for you. Unless you deposit all of your paycheck into your 401k, maybe you’d have a chance. But for the most part, that’s not the case, and so it just doesn’t work. The stats have been shown for a while. I mean for a long while that 401ks cannot work for retirement. And finally, after years and years, the creators and the founders of this infamous 401k, they finally got it. They admitted that it’s a huge mistake. And I mean, I laugh about it, and I mentioned it already, it’s just simple math. Math reveals the truth. I mean, don’t take my word for it, do the math on your own 401k, or on your own retirement plan. Is it really going to help you in retirement? Just think about it for one second.
So, the reason why I decided to tap on this article and to do this show or this particular episode, is because yesterday, I had a phone call with one of our listeners by the name of Thomas. Thomas from Illinois. Actually, he told me to call him Tom. So Tom from Illinois reached out to me, and by the way, I love connecting with our listeners. I also got an email from our friend [Hetash 00:06:59]. Hetash is in the process of closing a property. Last week I did a podcast on inspections, and it really helped him he said. And so he sent me an email to thank me. Hetash and his wife, right back atcha, buddy.
You know, a couple of people I spoke to this week, Mike [Ustee 00:07:19] he’s a real estate investor in North Carolina. Hope to help you out buddy, I know you’ve already acquired your first property on your own. Love to help you with your second, third, ah maybe sixth property. How about that? And Maheen S.[00:07:32] she’s in the medical field in Colorado. She and her husband, her husband is a physician, and specifically, I believe a Cardiologist and works on heart valves. And she called me indicating that she works just way too much. They both work way too much. They have two small kids, so they’re jumping into real estate investing simply because it just is driving them crazy the amount of hours that they work and how much they’re missing away from their kids. Maybe I disclose too much information, but I know that there’s so many out you … like so many out there like my friend Maheen. And so it just takes a phone call to make a difference.
So, having said that, guys I hope to absolutely serve you and help you create wonders like I’ve done for so many others. But back on track. Back to my phone call with Tom. Tom has been a long-time listener he says. He has been studying real estate investing, and jumping into real estate. And he is a huge Rich Dad, Poor Dad follower. So, he’s followed the Rich Dad series and family and he’s all about listening and learning. And, he even kind of self-proclaimed that he was analysis/paralysis. And he’s done the math himself. And the reason why I’m doing this episode is to speak to all the Toms out there because you know he has a 401k with his current employer. He is in an old 401k with an old employer. And he has an IRA and a Roth IRA. So, he has vehicles set in place, but he called me and said “you know, Mercedes, I’ve got kids in school still, I’ve got a couple of them heading off to college, and I’ve done the math loosely, and I’m just not going to make it to retirement with what I have.”
So he reached out, because although he’s been listening for a while and studying, he’s completely new at real estate investing, but it dawned on him that if he was to take this money and put it to work into vehicles that are going to produce passive income for him, he may have a chance. What a concept. So the reason that I wanted to tap on this topic is because many of us that have worked for corporate America, or that are still working for corporate America, or even self-employed, we may have 401ks. And the reality of it is although it’s your 401k, if you’re working for an employer that is contributing and matching what you are contributing to your 401k, the 401k is really dictated by your employer.
Now, I say that loosely, because yes, technically, it is your money, it is your hard earned dollars. But, it is taken out of your paycheck, put into this account in never-never land, and it is controlled by your current employer. Now, sure you can borrow against your 401k, but you can only borrow what your employer dictates. Most employers will allow you to borrow 50 percent, however, they can dictate whatever percentage you can draw. And then you have to pay yourself back with interest. On your own money, that you have put into this account that your employer is holding in never-never land, and you can borrow your money, but with interest.
So, the conversation that I was having with Tom was listen, buddy, you’ve got money in this 401k that’s your money that you have set aside, that your employer is dictating. But you can borrow against it. Now, that’s for the existing 401k. So, my advice was check with your employer, see what your restrictions are, see how much you can borrow, and then determine how much of your paycheck is going to go to pay yourself back with interest of the money, by the way, your money that you borrowed, to do whatever you want with it. In this case, to buy an investment property that is going to produce a cash flow. So, that’s what I’m gonna say to all of you that work for corporate America, or that work or yourselves and you have your own 401k. Know your numbers. Know what you can borrow, and if you can borrow against, it, what’s it gonna cost you, what are the penalties, what are the fees. Would you have to pay yourself back with interest?
Remember, ladies and gentlemen, these are pluses and minuses that you just have to take into consideration. Forget the terminology, forget the fees, forget the taxes, forget the penalties. Just focus on the numbers. Because once we have the numbers, the numbers will set you free. I like that. The numbers will set you free. It’s a – the truth will set you free, but the numbers will tell you the truth and I’m just modifying it for this podcast.
Having said that, if you have an old employer where you had a 401k at one time, the beauty of that is that you can take that money and roll it into an IRA or a Roth, a different type of IRA. You can do that and there is no penalty to do that whatsoever. Or, you could decide to cash out on it. Now, of course, there are those nasty pluses and minuses that everyone thinks of. The terminology, the penalty, the taxes. Just do the math. Because in many cases, if you were to take those fees and penalties that you have to pay to Uncle Sam of to the IRS, or whatever it is you have to pay because you do have to pay penalties if you draw that. Remember, you have to pay minuses, so if you have to pay for it, just know that number. And then do the math and figure out how long it’s going to take you to make that number back. Okay? That’s it.
So let’s just say you have 100 grand in an old 401k. Figure out how much you have to pay in penalties and taxes and let’s see how much time it’s going to take us to pay yourself back. Just a minus. Just a minus. And then let’s think about how much plus we are going to make for the rest of your life with the money that you have left over in that old 401k that we are now producing cash flow with it. Because with that money, we are now buying single-family residences or cash flowing investment properties that are going to produce a cash-on-cash return to us, or for us.
And then, that money we’re going to be able to benefit and live and use as we currently live today. You don’t have to wait until you’re 69 1/2 and you’re retired. You don’t have to wait until somebody can tell you that you can touch that money penalty free. You don’t have to wait. You can benefit from the cash flow and everything a property can offer you because there are tax benefits. There’s appreciation, there’s depreciation. All that fun stuff that you can purchase with money from an old 401k if you just pay the penalty or the taxes, the minuses if you will. But you can use that money and get it to work for you today, instead of waiting until somebody can tell you that you can touch it.
Now, as you can tell, I get heated about this topic, because you work so hard for your money. Why does anybody have the right to tell you what you can do with it or not? Just do the math. Know your numbers. The numbers, the math will set you free. Here’s what I’m going to say about the final things about 401ks and IRAs. They’re not bad. If you have them, good that you have them. Just know what they really are. And more importantly, what they’re going to do for you. This is your hard-earned dollars. Don’t wait for your dollars to sit in an account for somebody to tell you what you can do with them. You tell the world what you’re gonna do with your hard-earned dollars.
In short, I say this often, I say this every time I’m on a phone call. I am not a financial consultant. I never said I was. I don’t consult people. I simply share what Matt and I have done for ourselves. Believe it or not, I worked for corporate America before I became a real estate investor. In fact, that’s how I became a real estate investor because I worked for corporate America. I used to work for the banks that would do sub-prime loans. I used to work for those banks that would do NegAm loans, negative amortizations during the sub-prime market. So back in 2000, I worked for corporate America for seven years. I had the 401ks, I had the IRAs. I would contribute extra money to it. And with one fix and flip that I did back in the day, I was able to double what I had to pay in taxes and in penalties for the money that I took from my own 401k.
So, I say it over and over again, I’m not a financial consultant. I’m just a real estate investor that has done it. I’ve done over 2,000 transactions. Over 100 of them have been for Matt and myself. So, I kind of have the clue as to how the numbers work. And I only share this with you because I don’t want you to be that 70-year old that still has to work for a living because you didn’t do what you should have done with your money that made financial sense for your retirement.
Man, I only have a degree in psychology with a minor in business, and I have a portfolio of properties that are working for me, while I’m still young. So I urge you to do the math. Figure out what your self-directed IRA is doing for you. What your Roth is doing for you. You know, do you have old 401ks with your employer? Even with your old employers. Just be real with yourself. And know, they are not going to be your retirement vehicle. Not alone they’re not. You can have a few of them. But alone they are not going to be your retirement vehicles.
So, at the very least, download the Frustrated Investor’s Guide to Passive Income. Go onto our website www.cashflowsavvy.com. That’s savvy with two vs. Click on The Frustrated Investor’s Guide to Passive Income because there you have a grid to help you get out of the rat race. And so many people tell me, I don’t have the money to get started. But if you have 401ks and IRAs and Roths, guess what you may have the money to get started. It’s going to be up to you to do the math to determine if those pluses and minuses can help you create passive income to get out of the rat race today.
Either that or send me a quick email. You know, it takes us a little bit to respond to emails, but I respond to every one of them and I welcome your comments, I welcome your questions. I am absolutely here to help you make a difference in your financial freedom.
All right, ladies and gentlemen, that’s it for today. My name is Mercedes Torres, I’m known as the Turnkey girl. And I will see you on the next episode of Turnkey Tuesdays. Have an epic day.
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