How to Maximize Your 401k Plan

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Did you know that most 401k plans allow you to take out a loan? This provides you a large chunk of money with which you can purchase an investment.

Most 401k plans allow this, under certain terms. Typically, there is a maximum amount that can be withdrawn, and the loan must be paid back within one to two years.

Many people are afraid of this idea. We’ve all heard it before; society tells us that we should not, under any circumstances, touch our 401ks.

The truth is, there is little risk in borrowing from your 401k, and it can be a resourceful way to purchase real estate investment properties. By doing so, you’re taking that money and turning it into a performing asset.

The repayment is automatically deducted from each paycheck. Not only are you borrowing from yourself, you’re also paying interest on the loan back to yourself.  It only makes your retirement account larger in the end!

Borrowing from your 401k is a surprisingly simple process. It only takes a few clicks, and you can have part of your balance transferred to your bank account within a couple weeks.

Although many investors warn that you shouldn’t mess with your 401k, it’s how we’ve built our real estate investing business. It’s worked for us, and it could be the right decision for you too.

Hear my experience utilizing this strategy on the Investing in Real Estate Podcast!

How to Stop Relying on a Paycheck

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Most of us have been conditioned to believe that we have to go to commute every day, work from 9-5, and rely on a paycheck. More often than not, that paycheck is allocated entirely to bills, and there isn’t much left over. In this scenario, you work for your money and you NEED that paycheck. 

That's not freedom. Achieving true financial freedom means making your money work for you. For most people, a paycheck just doesn't cut it. In order to be financially free, you must manage your money correctly and purchase cash-flowing assets. 

Passive income is so much more effective than working for a paycheck. In this instance, you're not working for your money; your money works for you. It's about having checks deposited into your bank account as you live your life the way you want.

This lifestyle allows me to make money as I vacation on the beach with my family. It's true freedom, and it's within your reach. I'm so passionate about buy and hold real estate, and I want to share this way of life with you. 

I’ve laid out a step-by-step plan that helped me reach my goal of financial freedom. It’s a simple, yet effective way to plan your way toward passive income, covering your expenses, and to stop being a slave to the man!

I call it the Freedom Cheat Sheet. It’s a PDF designed to help you calculate how many properties it would take for you personally to be financially free. The idea is simple—you add up your expenses, and then calculate how many rental properties you would need to cover your bases.

Most of us have been conditioned to believe that we have to go to commute every day, work from 9-5, and rely on a paycheck. That's not freedom. Achieving true financial freedom means making your money work for you. Here's how to stop relying on a paycheck!

The Legends Series: Featuring Robert Kiyosaki & The Rich Dad Advisors

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Part 1: How to Leverage Debt to Build Wealth - Interview with Robert Kiyosaki - On episode 191, Rich Dad author Robert Kiyosaki joined us to discuss the principles of wealth building, including leveraging debt appropriately, building a strong and successful team, and the tax implications of purchasing real estate investments. Robert is reflecting on 20-year anniversary of Rich Dad Poor Dad, and sharing information from his two new books. We also discussed the tax code, the future of the real estate market, and how you can get richer through gaining a financial education.

Part 2: The ABCs of Real Estate Investing - Interview with Ken McElroy - There are a lot of myths out there about real estate investing. And unless you’ve actually had experience as an investor, it can be easy to succumb to these misconceptions. On episode 194, Rich Dad Advisor Ken McElroy joins us to clear the air about some of the most commonly held beliefs about real estate investing. Ken is a legend in the world of real estate; he has done over $700 million in real estate deals. In this episode, Ken is sharing his insight into the world of real estate.

Part 3: The Legal Loopholes of Real Estate Investing - Interview with Garrett Sutton - As you establish and grow your real estate business, it’s important to consider how to protect your assets. This is something many investors overlook, and sadly most learn their lesson when it’s too late. That's why I brought in an expert: Garrett Sutton! Garrett is an attorney, best-selling author, and Rich Dad advisor. On episode 197, he’s demystifying legal issues, and breaking them down in an understandable and accessible manner.

Part 4: Why Building a Team Is More Important Than Money - Interview with Blair Singer - Investing in real estate is essentially building a business. Like any other business, you can’t do it alone. Many new investors quickly become overwhelmed when trying to do everything themselves. On episode 200, I interviewed sales expert, best-selling author, and Rich Dad Advisor, Blair Singer! Blair shared his expertise, including the importance of working with a team, and how to quiet the negative self-talk that stops you from reaching your goals.

Part 5: How to Maximize Depreciation - Interview with Tom Wheelwright - Taxes can be confusing, and when you’re investing in real estate, there’s even more to consider. That’s why we had Tom Wheelwright on the podcast to talk about how real estate investing can mitigate other tax burdens, and how you can make sure you’re getting the most benefits out of your investments. Tom Wheelwright is a tax genius, the founder and CEO of ProVision, as well as a Rich Dad Advisor!

Part 6: The Art of Raising Capital - Interview with Darren Weeks - There are many people who would invest in real estate if they only had the capital. Simultaneously, there are many people who have an excess of funds and would love to receive the high returns of real estate, but simply don’t want to do the heavy lifting. Darren Weeks has spent the last thirty years bridging that gap. He is the CEO of the Fast Track group, and one of Robert Kiyosaki’s Rich Dad advisors. Darren is an expert on raising capital, and has successfully put together nearly $500 million in deals in less than five years. On episode 260, Darren shared his best tips about raising capital for real estate. 

The legends series: Interviews with Rich Dad author Robert Kiyosaki, Rich Dad Advisor Ken McElroy, Garrett Sutton, Blair Singer, Tom Wheelwright, and Darren Weeks.

How Cultivating a Supportive Environment Can Help You Reach Your Goals

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Have you ever heard the saying, "You're the average of the five people you spend the most time with?" In my opinion, that adage is 100% true! When you start to invest in real estate, you'll  undoubtedly encounter naysayers and negativity. 

Years ago when I worked on a small television show, I noticed that all of my coworkers thrived on gossip. Every day these people spent their time and energy discussing insignificant matters. I quickly noticed how unproductive these conversations were, and I see the same thing in my real estate career now. 

If you take a look at popular Internet forums, you'll find an influx of people who are focused on negativity and drama. I've noticed there's a link between gossiping and being unsuccessful. These people are never action takers, but they sure seem to have a lot to say. And it's these same people who try to diminish others in their efforts to find financial freedom. You might even find that you are related to some of these individuals. 

If you want to be successful, you should take inventory of the people you spend time with. Are you surrounded by people who try to crush your dreams and discourage you? I want you to pay attention to these people. Do they have experience? If they've never purchased a rental property or achieved the goal you're striving toward, I would strongly suggest you find your counsel elsewhere.

Next, start to surround yourself with successful individuals. Seek out those who have accomplished goals similar to yours, and ask them to meet for coffee or lunch! Surround yourself with the action takers, attend local meet ups, and immerse yourself in a community of positive, encouraging people. 

It's also important that you start taking personal responsibility for any negativity that you personally contribute to your situation. Whether it is limiting beliefs or a negative mindset, you have to stop making excuses and start cultivating a mindset that will help you reach your goals.

If you want to be successful, you should take inventory of the people you spend time with.

Creating a Strategy to Reach Your Financial Goals (Free Download!)

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Goal setting is so important, and that’s why I'm passionate about sharing the message of finding your Freedom Number. However, it’s important to set short-term goals in order to reach your ultimate goal of financial freedom.

In our family, we try to stay vigilant about setting goals and meeting them. We recently decided to purchase three rental properties in a short period of time. And in order to meet this goal, Natali and I had to sit down and decide exactly how we could make it happen.

Tracking expenses can get complicated unless you have a system in place. Natali put together a spreadsheet in order to assess where we stand. It’s a way to lay out all of our cards on the table.

The spreadsheet has three main sections. The first is our upcoming purchases and expenses. This consists of the three properties we aim to purchase. It also accounts for other expenses such as our children’s private school tuition, and our quarterly tax payments.

Next, there is a section is labeled cash reserves. This includes funds we have in any of our accounts. In this section we have our LLC bank accounts, HELOC, and 401k loans.

The third portion accounts for the funding we’ve acquired through morrisinvest.com/funding. It has our credit limits, and the amounts that are available for cash transfers. We’ve also listed out interest rates and transfer fees.

Having all of this information in one place allows us to map out the best strategy possible to pay for our rental properties and other expenses. We are able to piece together funds from different areas in order to make the best decisions financially. If you’ve never mapped out your expenses in this way, or planned for a short-term financial goal, I highly recommend it. We’re giving away a sample spreadsheet so you can see exactly how we plan our short-term financial goals.

We’re giving away a sample spreadsheet so you can see exactly how we plan our short-term financial goals.

How to Effectively Manage Your Cash Flow

As your real estate portfolio grows, it becomes impossible to remember things like when you receive rent payments, when insurance is due, and other details about each individual property. That’s why it’s incredibly important to have a system in place to account for your cash flow.

Last year was a year of exponential growth in our real estate business. In fact, our portfolio doubled in one year! We were glad to have executed our goals beautifully, but we missed a few important steps in terms of managing those properties.

We didn’t know when our leases ended, when we collected rent payments, or when we had tax payments due. We were simply relying on bills coming in, and hoped that everything worked out. This is a terrible system! Without keeping track of these expenses and payments, it’s easy for things to spin out of control.

So we decided to put together a five-step system in order to keep track of our cash flow. The first tip is to set calendar notifications for insurance and tax payments. Especially since we moved to a new house, there was a huge margin for error. We could have easily forgotten to change our address, not received a bill, missed a payment, and suffered the consequences. When you have multiple properties, you simply have to have this kind of system in place. Any kind of calendar works, you can use Gmail, your phone, or an app.

The second tip is to set calendar alerts for payment days and lease expirations. This can easily fall through the cracks, unless you're proactive. Hopefully you’re working with a fantastic property management team who pays in a timely manner, and manages the leases, but you as a landlord still need to be cognizant about what is happening in your investment property.

Another practice is to set a budget for your next purchase. When your rent checks come in, know how much you plan to set aside in order to grow your portfolio. If your goal is to expand, focus on putting aside as much as you can. 

Next, consider creating a master spreadsheet. This is helpful because it allows you keep track of all the little things that can easily be overlooked. For example, our has columns for everything we want to track. Ours contains items like property address, LLC, if we have possession of the deed, current lease, current property management agreement, current insurance, tax payments, and more. 

Our last tip for managing your real estate cash flow is to share it with your business partner! This way, anytime a change is made or a question arises, everyone is in the loop. 

Please remember, this is simply the system we use for managing cash flow in our real estate business. Find a system that works for you, and stick with it! Be the advocate for your own wealth building. This is something we wish we had implemented back when we just had one or two properties. The sooner you have a solid system in place, the better.

It’s incredibly important to have a system in place to account for your cash flow. Here's how to manage it for real estate & other businesses.

Six Steps to Get Your Mind Right for Wealth Building

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If you to build a passive income and create financial freedom, there's a specific way to go about reaching that goal. It's not all about the money; wealth building is also about changing your thoughts and behaviors. In this post, I'm sharing six specific steps you can take in order to reach your goals

  1. If you're serious about building wealth this year, the first thing you need to do is get clear about your "why." Really consider why you have this goal in mind. Do you want to spend more time with your family? Are you trying to build legacy wealth? Is it your intention to eventually leave your day job? Whatever that motive is for you, grasp a strong understanding of why you want to build wealth.
  2. Focus on your "one thing." What is the path that will lead you to your goal? For me, it's been single-family rental real estate properties. Had I been easily distracted by other avenues and opportunities, I would have lost sight of my "one thing" and made virtually no progress at all. Don't get derailed. 
  3. Write your goal down somewhere you will see it. Whether that's on your fridge, in a planner, or on a whiteboard, keep that goal in a place you will constantly be reminded of it. Writing down your goal solidifies it in your mind. 
  4. Remember the importance of the mantra, "progress not perfection." If you are concerned with perfection, you'll never be satisfied. Don't try to have all of the answers before you get started, you'll learn as you go, and that's okay. 
  5. Consider the importance of practicing gratitude for your small steps and achievements. Reward yourself for taking actionable steps in the right direction. 
  6. Stop being a wimp. Stop feeling sorry for yourself. This attitude will get you nowhere. Understand that you will make mistakes, sometimes it will be difficult, but if you stick to your goal, you'll achieve it.

If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.

If you want to build a passive income and create financial freedom, there's a specific way to go about reaching that goal. Here are six specific steps you can take to get there.