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So when somebody is worth hundreds of millions of dollars, and tells me that I'm

0:43

selling financial cracker,

0:46

middle America doesn't feel good

0:46

at all. So what I did from that

0:49

moment on was really trying to

0:49

figure out a way to prove him

0:53

wrong. Because if I can prove

0:53

him wrong, that not only do I

0:56

earn his business, but also

0:56

prove to myself that what I've

0:59

been doing all these years was

0:59

the right thing.

1:03

Welcome to

1:03

the Average Joe Finances

1:06

podcast, are you trying to get

1:06

out of debt, invest or just not

1:10

sure where to start, then this

1:10

is the place for you. We

1:13

discussed different ways to get

1:13

out of the rat race and build

1:17

your wealth. Join us on this

1:17

wild ride to financial freedom.

1:22

Hey, how's it going, everybody.

1:22

So today's guest is Michael

1:25

Lush. And I'm really excited to

1:25

talk to him. I've actually seen

1:29

him on the news before with some

1:29

of the things that he's doing.

1:33

So Michael, for three nights a

1:33

week was teaching his friends,

1:37

neighbors past clients in live

1:37

classes on how to replace their

1:41

mortgage with a HELOC and start

1:41

saving 10s of 1000s of dollars

1:44

in interest. Now, it didn't all

1:44

just start for him like that

1:48

there there was there was a lot

1:48

of work to get there. He used to

1:51

be a mortgage mortgage loan

1:51

officer. And he always did what

1:55

he believed was best for his

1:55

clients. So he ran into a

1:58

wealthy mentor that showed him

1:58

what was wrong with what he had

2:01

been doing the last 15 years as

2:01

a mortgage officer. So instead

2:05

of landing his wealthy clients,

2:05

their mortgage business, he

2:09

discovered that the wealthy

2:09

financier homes using lines of

2:12

credit. So he had many late

2:12

nights to research this program

2:17

and how he's doing it. He's got

2:17

this this bank secret that he's

2:21

gonna share with us today that

2:21

we can learn a little bit. So

2:25

for those of you that are

2:25

listening, be prepared for some

2:27

pretty awesome stuff. Michael,

2:27

I'm really excited to have you

2:31

on the show with me today.

2:31

Thanks for joining me.

2:33

Yeah, thanks for having me. Pleasure.

2:35

All right,

2:35

right on. So I just gave a small

2:38

tidbit like wave top background

2:38

of who you are and what you do.

2:42

So if you could, can you share a

2:42

little bit more with us? Tell us

2:45

your story.

2:46

Yeah. So this

2:46

started. If I go way back,

2:50

really right out of college, my

2:50

first gig was in the mortgage

2:53

industry. And a buddy of mine,

2:53

who was a year ahead of me had

2:56

already started a year before I

2:56

did. And once I graduate, he's

2:59

like, you know what, you know,

2:59

you've got to check this out. So

3:02

what do you do? And he's like, I

3:02

work for this company. And I

3:05

thought they do investments,

3:05

because their name was very

3:07

similar to an investment firm,

3:07

was like, Yeah, I've always had

3:10

an interest in that. That's what

3:10

my mom's done for 42 years. And

3:13

he's like, no, that what we do,

3:13

we we do mortgages, I was like,

3:17

Okay, I don't know anything

3:17

about that. He's like, come on,

3:19

man. He's like, just come in for

3:19

an interview. And I kind of

3:24

brushed it off for a little bit.

3:24

And he finally came to my

3:28

apartment at the time and said,

3:28

Hey, take a look at what some of

3:31

the top guys are doing in the

3:31

office 20 3040 $50,000 month,

3:36

how much? Alright, sign me up. I

3:36

don't even know what a mortgage

3:40

is. I've never had one. I don't

3:40

own a home. But I'll figure this

3:44

out. So I go in, have an

3:44

interview. And it was funny,

3:47

because I'm kind of the guy that

3:47

will back myself into a corner

3:51

where I will say something so

3:51

outlandish that if I don't

3:56

achieve it, the embarrassment,

3:56

the fear of embarrassment, is

4:00

more of a motivating factor than

4:00

the excitement of success. So I

4:05

told the guy, the senior vice president who was interviewing me, I said, if you hire me, I

4:07

will be the best hire this year

4:11

in the entire company. And that

4:11

was in January. So I got started

4:15

in January. And it was in

4:15

October, we were a large

4:19

mortgage firm, publicly traded

4:19

ninth largest in the world, or

4:22

in the country at the time. And

4:22

so all of our trainings, he

4:26

would corral everyone in this

4:26

huge auditorium for training.

4:30

And he would randomly call on

4:30

people into an objection at

4:32

them, and see how well they

4:32

overcome it and kind of use that

4:35

as a training tool. So he called

4:35

on me to have an objection I

4:38

went through how we typically

4:38

overcome the objection when he

4:41

stopped right there. And he

4:41

said, If I see flaws in that,

4:44

maybe some people don't remember

4:44

perfectly what happened. But he

4:48

said, That's exactly why Michael

4:48

is now coming newcomers here for

4:53

the entire company. I was like,

4:53

Wow, I didn't even know. And

4:56

when he told me it was in

4:56

September. It wasn't December.

5:01

So my numbers were so far ahead

5:01

of everyone else that there was

5:04

no way that they were going to

5:04

catch up by the end of the year.

5:07

So they'd already given me the

5:07

titles Newcomer of the Year. And

5:09

I was as shocked as anyone else

5:09

it will, again, and trust me

5:13

from January to September, there

5:13

was some ups and downs and

5:16

rollercoasters, but I definitely

5:16

had some big, big month. And so

5:20

I became november of the year,

5:20

and did well with that company

5:24

rose through the ranks, System

5:24

Manager managers and senior

5:26

manager and running some

5:26

branches. And then 2000 APS. And

5:32

my wife was also working for the

5:32

company. So not only was I one

5:36

of the top senior managers, I

5:36

was number three in the company

5:38

out of 1500. She was number five

5:38

loan officer in the company out

5:43

of 1000s. So collectively, we

5:43

had really good income for folks

5:48

that were in our early 20s. And

5:48

what do you think we were doing

5:51

with that money? We weren't

5:51

investing not not smart. No,

5:56

absolutely not. I was the last

5:56

person you should give big

5:59

checks to. So not quite paycheck

5:59

to paycheck, but pretty doggone

6:03

close. Know that collectively,

6:03

we're making well over a half a

6:07

million dollars a year. And I'm

6:07

buying cars, Escalades denalis

6:11

four wheelers, because I'm a

6:11

redneck, motorcycles because I'm

6:14

a redneck, you know, big house

6:14

and things of a nice vacation is

6:18

going to why those fasteners it

6:18

was coming in, we were spending

6:22

in 2008 years, it was why they

6:22

pulled the brake on real estate,

6:25

right? So that locomotive that

6:25

we were driving, just suddenly

6:29

stopped and hit us in the rear

6:29

end, add lots of debt. Long

6:33

story short, went broke. But

6:33

that same company called me

6:37

probably nine months later, and

6:37

I took that as an opportunity to

6:40

move back to Nashville, my

6:40

hometown. And that same company

6:43

called and said, Look, we're

6:43

resurrecting again, we're not

6:46

going to do subprime stuff like

6:46

we used to do. We're getting

6:49

solely into government loans,

6:49

which really the only thing at

6:53

the time that was available FHA,

6:53

VA, USDA, Fannie and Freddie,

6:56

and we want you to head up

6:56

Nashville operations, we want to

6:59

make you director of operations.

6:59

I've got nothing else to do.

7:02

Absolutely. Yeah, give me back

7:02

in my former glory. Yes, I did

7:06

one more thing. Yeah. And where

7:06

they got their money was

7:10

actually from a hedge fund. And

7:10

so the hedge fund manager, his

7:14

mom and dad actually lived in

7:14

Nashville, he was out of

7:17

Connecticut at the time, or

7:17

upper hundreds of millions of

7:20

dollars now doing there. And so

7:20

he would fly into town to meet

7:25

with his mom and dad, but when,

7:25

you know, passing through, he

7:27

was stopped at my office and

7:27

mentor me. And it was after a

7:30

couple of visits, I took the

7:30

opportunity, so you know what I

7:33

need to get in this sphere of

7:33

influence. He's where I want to

7:36

be, at least financially, you

7:36

know, I didn't know all the

7:39

other things that were important

7:39

in life at the time, you know,

7:41

family faith, and all that. So I

7:41

said, Now I gotta get my

7:44

finances in order, and this

7:44

guy's got plenty of money. So

7:47

let me figure out what he's

7:47

doing. So I took the opportunity

7:50

said, Look, let's do this.

7:50

You're a hedge fund manager, you

7:52

by default, technically own this

7:52

company, because we got to pay

7:55

all this money back millions of

7:55

dollars, we got to pay back to

7:58

this hedge fund plus rate of

7:58

return. So why don't you

8:01

introduce me to your sphere of

8:01

influence? What I do I do really

8:04

well. So how about I do

8:04

mortgages for them. And if their

8:07

mortgage I'm sure they're big,

8:07

and big mortgages are big

8:09

paychecks, big paychecks, big

8:09

commissions, big profits, you

8:12

get your money back faster. This

8:12

is a fail proof plan, right? And

8:15

that's when he kind of hit me

8:15

with it. And he only spent 10

8:17

minutes explaining it to me, but

8:17

he said, Look, we don't do

8:20

mortgages. And I was like, okay,

8:20

that's what I thought you guys

8:24

pay cash for everything. So no,

8:24

we always use other people's

8:26

money, instead, but what we

8:26

typically will use is a home

8:30

equity line of credit.

8:30

Everything I had been taught in

8:33

the mortgage industry was a home

8:33

equity line of credit is a

8:36

credit card on your home, that's

8:36

not something you want. So when

8:39

we're on the phone with

8:39

customers, and we're doing a

8:41

cash out refinance, or just some

8:41

other type of refunds, okay,

8:44

we're going to roll in that home

8:44

equity line of credit and

8:46

rolling the credit card, those

8:46

are bad for you. And he's like,

8:49

No, No, they're not. He's like,

8:49

it just depends on what the

8:52

audience is. He said in my

8:52

audience, there's we're not

8:55

going to do mortgages in

8:55

mortgages. I don't know if he

8:58

knew this. mortgage is an old

8:58

French term. And it's basically

9:03

the definition of mortgage is

9:03

death pledge. That's what it is

9:06

an old French, it's a death

9:06

contract. So more being

9:09

mortality, gauged being a

9:09

certificate or contracts with

9:12

the Death Watch. He said,

9:12

Michael, to be honest with you,

9:15

what you're doing is you're

9:15

selling financial crap to middle

9:18

America. And that hurt, that

9:18

hurt bad, because I've always

9:22

had been a moral gap. And I've

9:22

always thought that I was doing

9:24

the best by my clients. So when

9:24

somebody is worth hundreds of

9:27

millions of dollars, and tells

9:27

me that I'm selling financial

9:30

crap, and Middle America doesn't

9:30

feel good at all. So what I did

9:33

from that moment on was really

9:33

trying to figure out a way to

9:37

prove him wrong, because if I

9:37

could prove him wrong, then not

9:39

only do I earn his business, but

9:39

also prove to myself that what

9:43

I've been doing all these years

9:43

was the right thing. And it took

9:47

about a year I hired a CPA and

9:47

actuary and a couple buddies of

9:51

mine that actually one of them

9:51

works with me today is my right

9:53

hand, man. He's a genius, and we

9:53

try to poke holes in it, and we

9:57

couldn't and more than we tried

9:57

to prove him wrong. We actually

9:59

proved Tim Ryan. And so in 2012

9:59

is when I took the leap of faith

10:03

until my wife were no longer

10:03

going to consume mortgages. She

10:07

said, Okay, well, how are we going to get it paid off? I said, we're gonna refinance the

10:08

whole thing into a home equity

10:11

line of credit first lien

10:11

position, home equity line of

10:13

credit. Now, secondly, big

10:13

difference. We'll get into that

10:15

here in a little bit. But long

10:15

story short, from 2012 to 2016,

10:21

early 2016, we paid our house

10:21

off, we didn't change anything

10:23

about our budget. Now, obviously, I was in the mortgage industry. So was I making the

10:25

money that I was making back in

10:29

the glory days? No, not by a

10:29

longshot. I was making good

10:32

money, I was providing a living,

10:32

I had two kids at the time and a

10:35

wife. So I wasn't going to go

10:35

back to the type of situation

10:39

that we were in. Prior to 2008

10:39

we were living paycheck to

10:43

paycheck. So you know, we were

10:43

making a good living, but we it

10:45

was, we weren't killing it so

10:45

on, you know what I would now

10:49

consider a modest income, we

10:49

were able to pay your home off

10:51

in three and a half years. And

10:51

from that moment on, I linked up

10:55

with a buddy of mine, Jimmy, who

10:55

was a marketing mentor who said,

10:59

Listen, you've got to turn this

10:59

into a business, there's a lot

11:02

of people out there that want to

11:02

know what you know, and they

11:06

will pay for it. So that's when

11:06

I created a business which now

11:11

called lush enterprises and a

11:11

form of it is replace your

11:13

mortgage and we've got other

11:13

entities that are passed to it

11:16

now that replace your mortgage

11:16

is what is most well known. And

11:19

now I've been teaching 1000s. So

11:19

we have about 6000 clients now

11:25

we've probably helped 10,000

11:25

people pay their home off and

11:28

accelerated fashion. Or some

11:28

folks find out that they can pay

11:33

their home off in accelerated

11:33

fashion and choose to actually

11:36

leverage it to grow wealth. Kind

11:36

of like you got the two

11:39

philosophies, right. Robert

11:39

Kiyosaki, Rich Dad, Poor Dad or

11:42

Dave Ramsey. We lean more

11:42

towards Robert Kiyosaki. Now, I

11:45

say that because the first thing

11:45

you have to be is you have to

11:51

understand your budget, you have

11:51

to be on a budget, you have to

11:53

be cashflow positive. So this

11:53

isn't for everybody. And I don't

11:57

want to exclude it to just those

11:57

who make good income, because

12:00

that's not really who it's for.

12:00

It's not just for those that

12:04

have a really good income or

12:04

educated or highly disciplined

12:07

or mastered their budget. It's

12:07

also for those that are in the

12:11

middle class, and sometimes even

12:11

a lower middle class, as long as

12:15

they're cashflow positive, and

12:15

they've mastered their budget.

12:18

So that the rest is, you know,

12:18

within 60 days of me abandoning

12:22

the mortgage industry, you know,

12:22

God really had my back, and the

12:26

income from this opportunity

12:26

skyrocketed. And it was more

12:31

than I was making in my heyday.

12:31

So it's like, okay, God, thank

12:33

you now don't have to worry

12:33

about finances, all I need to

12:36

focus on is one glorifying you,

12:36

but also loving all these people

12:40

and showing them how to best

12:40

utilize a home equity line of

12:43

credit more efficiently utilize

12:43

debt. And you know, in a little

12:46

bit, I want to get back into

12:46

history of where mortgage came

12:49

to be and how he law came to be.

12:49

Because in America, financing

12:53

real estate and mortgages is

12:53

extremely archaic, compared to a

12:57

lot of other countries. You

12:57

know, Australia, over 80% of

13:01

Australian citizens use what

13:01

they call a money merge account.

13:04

And a money merge account is

13:04

merging your real estate loan

13:07

into your bank loan. And what it

13:07

is, is it's their term for home

13:11

equity line of credit. So in

13:11

Australia, they've been doing

13:14

this for decades, most of the

13:14

country that most of this is

13:18

what they do. Ironically, the

13:18

average Australian will pay off

13:22

two homes in 14 years. What do

13:22

you think the average American

13:26

pays off? They're only home?

13:26

What's the average 26 years over

13:30

30? Even if they take a certain

13:30

that, why is that because every

13:34

five to seven years, we're

13:34

refinancing or selling for

13:37

another house, but we're

13:37

refinancing to a lower rate on a

13:40

longer term back to a 30 year

13:40

term. And we think that that

13:43

saving us money, and it may on a

13:43

monthly basis, but it doesn't

13:46

long term. And that's what we

13:46

got to get back to is we got to

13:48

get back to thinking long term

13:48

and not just short term of what

13:51

we can cram as Americans into

13:51

our budget. So Australians don't

13:55

think that way south africans

13:55

don't think that way. Both the

13:57

United Kingdom, they don't think

13:57

that way. You know, if you look

14:00

at a house, that's $400,000, and

14:00

you finance it on a 30 year

14:04

term, how much is that house

14:04

gonna cost you? Probably

14:07

$800,000. Right?

14:08

You know, let's

14:09

do it Australia.

14:09

Yeah. So what you're buying one

14:12

house for you and one for the

14:12

bank. So what Australians United

14:16

Kingdom, you know, South

14:16

Africans think is they look at

14:19

that house and say, okay, at

14:19

what point is that house if I

14:22

finance that that way? Am I able

14:22

to sell it and actually make

14:25

money the Americans think we

14:25

bought for 405 years later, if

14:28

we sell for 450, we made money

14:28

we didn't because you didn't

14:31

take into account all the

14:31

interest that you pay for the

14:33

five years. Keep in mind the

14:33

first five years of 30 year

14:36

mortgage are basically interest

14:36

only payments is front loaded

14:38

with interest. So when you go to

14:38

pay it off, you will get the

14:41

balance of what you owe, or like

14:41

Doggone it is the same as what I

14:44

owed five years ago. It's

14:44

designed to be that way, because

14:49

they know that we refinance or

14:49

sell every five to seven years.

14:53

So the banks are rushing in to

14:53

get their profits first before

14:55

you refinance. That that is in a

14:55

nutshell that now I would love

15:00

to get into the history of

15:00

mortgages.

15:03

Yeah,

15:03

sure. I mean, so it's it's, it's

15:05

fascinating though, because you

15:05

know, when you think about it,

15:08

when you look at your

15:08

amortization, right table, and

15:11

you're trying to figure out, you

15:11

know, looking at these 360

15:15

payments that you have to make

15:15

over the next 30 years. And it's

15:19

not until you hit that 15 year

15:19

mark, where you really start to

15:22

see that you're paying more

15:22

principal than you are paying

15:25

interest. And everything

15:28

It is, it is it's

15:28

archaic. It's very archaic. So

15:32

as far as the history of

15:32

mortgages, it didn't, wasn't

15:34

always that way here in this

15:34

country. Actually, prior to

15:37

1913, a mortgage was designed

15:37

very similar to a home equity

15:42

line of credit. So what I'm

15:42

actually teaching folks isn't

15:46

something that's new. It's

15:46

actually extremely old. It's

15:49

older than the modern day

15:49

mortgage here in this country.

15:52

So mortgage used to be something

15:52

that was open and money can move

15:54

in and out freely. It was

15:54

especially popular with farmers.

15:58

Because if you own the farm, say

15:58

it's worth 200,000. And you're

16:01

like, you know what, I need to go buy some equipment. So you run out to the bank that day, I

16:03

need to borrow $10,000, because

16:06

I got to buy equipment.

16:06

Obviously, these are inflated

16:09

numbers by till 1930, or 1912.

16:09

But any $10,000 to buy

16:13

equipment, no problem exchange

16:13

deed, here's your 10 grand Thank

16:17

you. And then you go sell your

16:17

crop, and then you pay back the

16:20

10 grand plus some so money can

16:20

move in and out of your your

16:24

mortgage very freely. What is it

16:24

today, the closed end product,

16:27

meaning the only way to get cash

16:27

out of your home is to

16:30

refinance, which is very

16:30

expensive, closing costs and

16:33

things of age and time consuming

16:33

30 to 45 days on average, for

16:37

sale. Neither one of those are

16:37

ideal. So we thought we'd look

16:41

at that generation prior to 1913

16:41

are great grandfathers and

16:45

grandmothers. And we always hear

16:45

the same stories, they bought a

16:48

house and paid off in five to 10

16:48

years. There's a couple of

16:51

reasons for that one, they were

16:51

a better generation. They didn't

16:54

have social media and TV and

16:54

things like that to distract

16:57

them. They were more educated

16:57

and more discipline. But they

16:59

also had better tools, because

16:59

the mortgage back then was

17:02

entirely different than a

17:02

mortgage is today. So why do I

17:05

keep talking about 1913? What do

17:05

you think happened in 1913? That

17:08

kind of changed that game

17:08

forever. for Americans,

17:10

the

17:10

government got involved, usually

17:12

with

17:13

almost not quite,

17:13

it's the Federal Reserve. And

17:16

it's a really cool name. People

17:16

think that because the Federal

17:19

Reserve is part of the government's not so neither federal nor is that a reserve.

17:21

But what the Federal Reserve is,

17:23

is a central bank. That is the

17:23

backstop of community banks and

17:27

national banks. And what it does

17:27

is it allows banks to execute a

17:31

really cool magic tricks called

17:31

fractional reserve lending. Now

17:34

what that means is for every

17:34

dollar, you put in a bank

17:37

account, they have $10, that

17:37

they can lend out sometimes 15.

17:40

So if you put 10 grand in, they

17:40

get 100 grand, put 100 grand in

17:42

there got a million so after,

17:42

you know that happened in 1913,

17:47

which by the way, the you know,

17:47

the history of the Federal

17:49

Reserve and the creature of

17:49

Jekyll Island. That's a great

17:52

book, by the way. Have you ever heard of that book?

17:54

No. What's What's the name of the book,

17:56

The creature of Jekyll Island?

17:58

The creature of Jekyll Island?

18:00

Yes, yeah, really

18:00

good book it out. It's basically

18:03

a biography. And it's a true

18:03

account of how the Federal

18:08

Reserve came to be. It was

18:08

actually created by JP Morgan.

18:12

So JP Morgan, and four or five

18:12

other individuals had a private

18:16

meeting off the coast of Georgia

18:16

on an island called Jekyll

18:18

Island that he owned, and so

18:18

private that the servants there

18:22

didn't know who was coming. So

18:22

and they were also so powerful

18:27

that those six individuals in

18:27

that meeting comprised of one

18:31

quarter of the world's GDP.

18:31

That's how wealthy they were. So

18:35

in that meeting, they came up

18:35

with a business plan of the

18:37

Federal Reserve. So after 1913,

18:37

the banks get together and say,

18:41

Look, if we get more deposits,

18:41

because every time somebody

18:45

deposit the dollar, we have pin,

18:45

and every time somebody deposit

18:47

$10, we have 100, we need more

18:47

deposits. How are we going to go

18:50

about doing that? So they looked

18:50

at how Americans were what was

18:55

called an operating account, how

18:55

are they executing their

18:58

operating account, they were

18:58

operating in and out of their

19:00

mortgage, there was almost their

19:00

checking account, they didn't

19:03

leave it under the mattress, they didn't go put it in a checking and savings account,

19:05

for the most part, they were

19:07

operating in and out of their

19:07

mortgage, which is why they were

19:09

able to pay it off so quickly.

19:09

So the banks got together and

19:13

change the mortgage forever. And

19:13

they made it a closed end

19:16

product, meaning money can only

19:16

go in freely, but not come out

19:20

freely. So think about that as

19:20

an individual. If you have an

19:24

account that's closed in, just

19:24

like today, you may have a

19:27

mortgage, how scary would it be

19:27

to put 100% of your income into

19:31

your mortgage? month one, you're

19:31

already freaking out at the end

19:34

of the month. Why? Because when

19:34

it's time to pay your bills,

19:38

your groceries or vacation, it

19:38

stuck in the bank's treasure

19:41

chest, you can't get it back

19:41

out. So what are you going to do

19:44

as a consumer? You're going to

19:44

say, Okay, well now I'm going to

19:47

put some of my money towards my

19:47

mortgage, and I'm gonna leave

19:51

the rest of it behind so that I

19:51

can pay those other bills. Where

19:54

are we leaving it? We're not

19:54

leaving it under the mattress.

19:57

Where do we put it? We put it in

19:57

a checking and savings account.

20:00

They pay us on national average

20:00

0.25% per year. So horrible rate

20:05

of return. Actually, it's not

20:05

even keeping up with inflation,

20:07

especially this year, not even

20:07

close your money. Yeah. So now

20:11

your money is actually going

20:11

backwards, right? So a checking

20:14

account, a savings account is a

20:14

liability. But what does that do

20:17

for the mortgage? So the

20:17

mortgage, if you only put some

20:20

of your money towards a mortgage, instead of all of it, well, you're going to pay on it

20:22

longer, right? So if you pay on

20:25

it longer, time and balance are

20:25

far more important than

20:27

interest, right? So if time and

20:27

balance are higher, over a

20:30

longer period of time, you're

20:30

going to pay more interest. But

20:33

that wasn't the number one goal

20:33

number one goal was to segregate

20:36

your income. They wanted to

20:36

separate you from your cash. So

20:40

since it became enclosed in

20:40

product, and you had to leave

20:42

money behind, you left it in

20:42

their coffers in the checking

20:45

and savings account, and that's

20:45

where they grow core deposits.

20:47

Why do I know this? Because I

20:47

sit on the board of the bank, I

20:51

sat on the boards of other

20:51

banks. I can tell you in those

20:54

meetings, the number one focus

20:54

is how do we grow core deposits.

20:58

That's what they want. They want

20:58

more depositors so that they can

21:01

lend more money out and it's

21:01

called velocity banking. So

21:04

that's a history lesson on

21:04

mortgages. And a HELOC is really

21:08

just going back to basics. It's

21:08

not teaching us something new.

21:12

It's going back to the way that

21:12

we use to finance real estate

21:14

more efficiently to become

21:14

financially independent. Because

21:17

a HELOC is an instrument that is

21:17

open ended money can move in and

21:21

out freely. A lot of these he

21:21

locks you get a debit card,

21:23

whether you get checks whether

21:23

you get all our bill pay, you

21:25

know i right now I can just

21:25

swipe my HELOC card and pull as

21:29

much cash out of it as I want to

21:29

tonight. I don't have to wait

21:32

until tomorrow. I can do it

21:32

tonight. Just like I said, if it

21:34

was a checking savings account,

21:34

but I don't do that, because

21:36

what is it doing is going to

21:36

work for me. So when we get off

21:39

this podcast, I go to bed. My

21:39

money is working for me, as

21:43

opposed to in a checking account

21:43

where it's working against me

21:45

right on

21:45

Yeah, so I I've, I've seen you

21:49

know some of your videos before.

21:49

So I kind of I kind of have like

21:53

the gist of it right where, you

21:53

know, you're pretty much

21:57

essentially you're taking a

21:57

HELOC out for the entire value

22:01

of your home the entire price of

22:01

your home for the mortgage,

22:03

right you're paying off your

22:03

mortgage with your HELOC or

22:07

while you work it to that point,

22:07

right you take the HELOC and you

22:09

just dump the entire thing into

22:09

it. And then you take your

22:12

paycheck right and you're taking

22:12

pretty much all of your pay and

22:16

just dumping it back into the

22:16

HELOC. And for any other bills

22:19

or expenses, you're using your

22:19

HELOC to pay those right, so

22:23

you're having like a much larger

22:23

upfront payment monthly payment

22:28

into that he locked versus, you

22:28

know what you're versus like,

22:33

you know, just making the

22:33

mortgage payment and then, you

22:36

know, budgeting your money to

22:36

the side for the other things,

22:38

your other bills that you have

22:38

to pay. Now, I totally get that.

22:43

But now how would somebody who

22:43

like you know, they've already

22:46

got their budget set up, like,

22:46

you know, they're paying their

22:49

mortgage, they're paying their

22:49

car payment. They're investing,

22:53

you know, 10 to 15% or more,

22:53

right? Whatever it is that

22:57

they're investing in separate

22:57

brokerage accounts, or they're

23:02

investing You know, this much

23:02

into real estate every month, or

23:05

Hey, I'm, I'm putting this much

23:05

to the side for my next down

23:07

payment on my next property. How

23:07

would that work for somebody in

23:12

a situation like that? Would

23:12

they would just would they still

23:15

put their stuff to the side and

23:15

then put everything else into

23:18

the HELOC? Like how does this work? Let's take a brief moment to

23:20

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editpods.com let's get back to

24:31

today's episode. You're

24:31

listening to the Average Joe

24:36

Finances podcast. Whether it's

24:36

single or multifamily real

24:40

estate, the stock market or side

24:40

hustles we discuss it all strap

24:45

in and enjoy the ride.

24:48

Think about how we

24:48

typically operate as Americans

24:50

so the scenario that you just

24:50

mentioned, where does Where's

24:53

their money when they earn

24:53

money? Where's it going first,

24:55

it's going into the checking

24:55

account right get in from the

24:58

checking account it may go to an

24:58

investment account They go to a

25:00

savings account. Some may go

25:00

towards bills that are right. So

25:04

really what we're doing is we're

25:04

not just replacing the mortgage

25:07

with a home equity line of

25:07

credit, we're also replacing the

25:09

checking account with a home

25:09

equity line of credit. Right. So

25:13

again, these he walks have the

25:13

same capabilities as a checking

25:15

account does online bill pay you

25:15

log on, you can see your

25:18

balance, you can move money

25:18

around all you want. So first

25:21

and foremost, the money goes

25:21

into the HELOC. Because again,

25:24

time and balance are far more important than interest right. Then from the HELOC, you deploy

25:27

your funds as you need to. So if

25:32

you're on a budget and you you

25:32

keep that budget, so whatever

25:35

you would typically save and put

25:35

in a savings account. You're not

25:37

putting in a savings account

25:37

anymore. It's a crappy rate of

25:39

return, right? Yeah, I'd rather

25:39

have it my HELOC. So that

25:42

becomes my savings account. Then

25:42

if I don't invest out of my

25:45

HELOC, which is what I do, then

25:45

you invest out of your he lock.

25:48

So you're you're not just

25:48

replacing the mortgage, you're

25:50

also replacing the check cancel

25:50

their their activities don't

25:53

change.

25:54

Okay, so

25:54

like so let's hypothetical

25:56

someone's making 10,000 a month,

25:56

they'll take that entire 10,000

26:01

a month and put it into the

26:01

HELOC. And then any other bills

26:05

or you know, let's say they were

26:05

putting, you know, $1,000 a

26:09

month into a brokerage account,

26:09

they would just pull it out of

26:12

the HELOC and put it into the

26:12

brokerage account that way.

26:16

Exactly, yep. Okay. Very

26:16

interesting. So, how come more

26:19

people aren't doing this? Or, or

26:19

why don't they know about this?

26:23

Ah,

26:23

good question. I

26:23

get that a lot. So one, think

26:27

about us the consumer, right? So

26:27

if you practice this, you pay a

26:33

lot, you pay a fraction of the

26:33

interest that you would on a

26:36

mortgage. Is that good or bad

26:36

for the bank? That's bad, right?

26:39

Yeah, yeah, less profit, less

26:39

profits to the bank. So it's bad

26:42

for the bank. So now, is it less

26:42

interest to the bank that they

26:46

are? But also what else? Are you

26:46

abandoning the checking and

26:50

savings account? I'm not saying

26:50

go close them, I'm just saying

26:52

don't use it. Because it's, it's

26:52

not benefiting you, it's

26:55

actually hurting you. So it's

26:55

not in the bank's best interest

26:58

to promote this and to educate

26:58

it right. On top of that, if you

27:03

look at the compensation plans

27:03

for bankers versus loan

27:06

officers, loan officers are

27:06

folks that do mortgages, right.

27:09

And bankers are folks that do

27:09

home equity lines of credit,

27:11

you're not going to get a home equity line of credit, for the most part from a mortgage

27:13

company, they don't offer they

27:15

offer mortgages. Banks are the

27:15

ones that offer home equity

27:18

lines of credit. And if you look

27:18

at the compensation plan of a

27:21

banker, they don't get paid to

27:21

do he walks. In fact, we've gone

27:26

through, you know, over the last

27:26

seven years, we've got

27:29

relationships with 1000s of

27:29

banks, and we've had some

27:31

bankers call us up and say, Hey,

27:31

please don't refer anybody over

27:34

to us anymore. like wow, like,

27:34

Look, we get paid the same if we

27:38

get two phone calls a week

27:38

versus 20. So we'd rather get

27:41

two oh my goodness, as an

27:41

entrepreneur, it's like, it's

27:45

like nails on a chalkboard,

27:45

right? Like how in the world if

27:48

your boss or the owner of this

27:48

only knew your attitude, that's

27:51

deplorable. But that's the

27:51

mentality, right? They don't get

27:54

paid to do it, he locks in

27:54

sometimes they do that when I

27:58

say that there might be 250

27:58

bucks. But if you look at the

28:01

compensation on a $400,000

28:01

mortgage, that can pay four or

28:06

five or $6,000 in compensation

28:06

to the loan officer, not to

28:11

mention probably 12,000 in

28:11

profit to the lender, right? So

28:16

what would you promote, you got

28:16

to put food on the table so

28:18

don't expect the bankers to know

28:18

this because the banks aren't

28:21

going to tell the bankers

28:21

educate the consumers on a

28:25

loophole is going to have them

28:25

paying a fraction of the

28:28

interest back to us that they

28:28

would own a mortgage Oh, by the

28:30

way, we're also not going to get

28:30

their deposit accounts. And you

28:33

know, that's the other half of

28:33

our business people think that

28:36

we only educate consumers which

28:36

is the bulk of our business, but

28:39

we also educate banks. So we

28:39

show banks a consumer friendly

28:44

way to do this, but also benefit

28:44

the balance sheet of the bank

28:48

that way it's a win win win and

28:48

that helps banks promote it now

28:51

that's a tall order and you

28:51

know, we've we've gone through

28:54

1000s of relationships and there

28:54

are some banks that have really

28:57

taken this on and said yep, this

28:57

is what we want to do. And we're

29:00

building programs around this

29:00

message in this strategy because

29:03

you just can't dispute the math

29:05

right on

29:05

so what about what about

29:08

somebody? People go through many

29:08

things right? You saw what

29:13

happened in 2008 with with the

29:13

mortgage crisis and what

29:17

happened with real estate what

29:17

what if somebody is in a

29:21

situation you know, cuz a lot of

29:21

people that listen to my show

29:23

that their focus is to get out

29:23

of debt and start saving up so

29:27

they can you know, buy their

29:27

initial home, or you know,

29:31

invest in real estate, buy some

29:31

more real estate, right? So what

29:35

happens to somebody you because

29:35

we always recommend having, you

29:38

know, three to six months of an

29:38

emergency fund a loss of income.

29:42

So when somebody is in a

29:42

situation where they're they're

29:45

doing this strategy, and they

29:45

lose their job or you know,

29:50

whatever, there's some type of

29:50

emergency and the loser income

29:53

for a few months, what would

29:53

happen to someone in that

29:55

situation?

29:56

Great question.

29:56

And in fact that we just went

29:58

through Not 2008 I didn't have a

29:58

business in 2008. But we had

30:03

something that was similar in

30:03

2008, we had a crisis, right? So

30:06

COVID-19. So lots of

30:06

unemployment, right, a lot of

30:10

folks lost their job furloughed.

30:10

Even that, so we had about a

30:15

dozen clients that we had had

30:15

for three or four years. And

30:19

those things happen, right? Life

30:19

happens. So this isn't just a

30:22

strategy that can be amazing in

30:22

times this are thriving, it can

30:27

also be a great strategy when

30:27

you need to survive. So think

30:31

about it this way. And I'll get

30:31

into the hedge fund balance

30:34

sheet statistics and default

30:34

rates on mortgages versus

30:36

Firstly, he walks here a little

30:36

bit, but once I explain this,

30:39

you'll know why the default

30:39

rates on first lien he locks is

30:42

115 times lower than mortgages

30:42

during the 2008 2009 crash. So

30:47

let's say you got a HELOC, you've been practicing the strategy for two or three years.

30:49

And you go from a $300,000

30:53

balance to 150. Because our

30:53

average client pays our home off

30:56

and are paying pay their home

30:56

off in five years. So half of

31:00

your balance is paid off in two

31:00

or three years. So you still

31:04

have access to the 300,000. You

31:04

don't have to get reapproved you

31:08

don't have to get income

31:08

qualified to access your equity.

31:12

If they're 24, seven, so if you

31:12

have 300,000, you paid half of

31:15

it all, your balance is 150. But

31:15

you still have access to 150. No

31:19

different than a credit card,

31:19

right? If you have a credit card

31:21

that has a limit of 10 grand,

31:21

you paid half of it down, don't

31:24

you have access to another five

31:24

grand? Absolutely. So it's the

31:27

exact same thing with a home

31:27

equity line of credit. And a lot

31:30

of these ebooks not all but a

31:30

lot of these e logs, you don't

31:34

even have to make a payment to.

31:34

So if you're struggling, and

31:38

you've had a loss of income, or

31:38

complete loss of income, and

31:43

you've got a minimum payment on

31:43

that 150. So there are a number

31:45

one, you know, weigh the pros

31:45

and cons. If I have a loss of

31:49

income, do I want a payment on

31:49

the lock? Which is interest only

31:52

on the new balance? Or do I want

31:52

a mortgage is pressable an

31:57

interest payment on the original

31:57

balance? Which one would I want,

32:01

I wouldn't want the lock, that's

32:01

going to give me more

32:03

flexibility, right? However, you

32:03

don't even have to make that

32:06

payment. Because a lot of these

32:06

he locks, they will make the

32:10

payment for you. So if you don't

32:10

make the payment, what they do

32:12

is they say okay, you are 150

32:12

the interest only portion was

32:16

500 bucks. So now you have

32:16

150 1500. So your own time until

32:21

the next month. Now if you have

32:21

a credit line of up to 300,000,

32:26

how many months Can you survive

32:26

doing that? A lot, quite a long

32:31

time. Now, it's not ideal. No

32:31

one would want that situation

32:35

because you want to completely

32:35

pay off your debt, and invest

32:38

and things of that nature. So

32:38

that's not ideal. But that's

32:41

that's the scenario that is

32:41

complete income elimination.

32:45

However, some folks just had

32:45

income reduction. So they might

32:49

have been making four $6,000 a

32:49

month, instead of $6,000 a month

32:53

now they're making four, right?

32:53

So they're still earning income

32:58

with you are whatever income

32:58

you're earning should still go

33:00

into the home equity line of

33:00

credit. And we can run through

33:03

some mathematical scenarios

33:03

where even that still pays down

33:06

the principal on the home equity

33:06

line of credit allows you to

33:10

survive. So this is a scenario

33:10

where you know if you've got

33:14

enough access, and that's why I

33:14

tell folks, if you owe 400,000,

33:18

and you got a million dollar

33:18

home, they'll get a 90% loan to

33:20

value home equity line of

33:20

credit. Because that doesn't

33:23

mean you're going and getting a

33:23

900,000 loan, you're getting

33:26

access to 900,000, your balance

33:26

is still 400 you're only going

33:30

to pay interest on the 400 that

33:30

you've used, you won't pay

33:33

interest on the other 500 unless

33:33

you use it. So in times like

33:37

this, whether it's surviving or

33:37

an opportunity have access to

33:42

your equity. So that's why folks

33:42

in 2008 2009 those that had a

33:47

first lien position he locked,

33:47

it's not like they were

33:50

completely shielded from the

33:50

real estate market. You know,

33:52

they still lost their job, they

33:52

still had a loss of income. But

33:56

why is the default rates so low

33:56

on both a first lien HELOC

34:00

versus those who had a mortgage

34:00

because of that they can

34:03

leverage the equity to pay

34:03

itself but he lock can

34:05

cannibalize itself and start

34:05

paying itself and not only that

34:08

it can start paying your bills for you too.

34:10

Yeah, so I

34:10

see what you're saying because

34:13

like that's, you know, a great

34:13

way to also put yourself in a

34:17

situation like you know, if you

34:17

owed $400,000 on a million

34:21

dollar home, you know, you take

34:21

out a 90% loan to value HELOC. I

34:25

mean you're you're sitting there

34:25

with about you know, another

34:28

400,000 with that you could

34:28

potentially invest if you needed

34:32

to, right or if something came

34:32

up like an opportunity. Another

34:36

real estate opportunity came up

34:36

and you needed the cash for it.

34:38

You've got it right. Yep, so

34:38

that's definitely interesting.

34:42

Now, I don't know too much about

34:42

HELOC. So I was actually looking

34:46

at getting one here soon myself.

34:46

But you know what I've been

34:50

looking at like the is the

34:50

different terms right? So the

34:53

one that I was looking at is you

34:53

can use it for the first 10

34:58

years but you have to pay it

34:58

back in 20 years is how that one

35:02

was particularly set up. And it

35:02

was actually offset loan to

35:06

value, which was really cool.

35:09

Yeah. So that's

35:09

ballsy of that lender or that

35:12

bank? Yeah, I was COVID. That

35:12

was, I would say to Procore, it

35:17

was still a bit on the risky

35:17

side prior to COVID, post COVID.

35:20

A lot of banks ration to back

35:20

how much they were willing to

35:23

lend on the C lock. So if you've

35:23

got one out there still willing

35:25

to do 100%? That's, that's

35:25

pretty good.

35:28

Yeah,

35:28

yeah, it's a local bank out here

35:30

in Hawaii. So it was pretty

35:30

interesting. But I was actually

35:34

looking at that to just pull

35:34

some equity out of my primary

35:37

residence. But I'm really like,

35:37

kind of digging in right now and

35:41

into the strategy. And I'm

35:41

trying to work the equation in

35:44

my head. So I think I'm going to

35:44

talk to you a little bit more

35:47

after this. But

35:48

it's this way. I

35:48

mean, very interesting. Having

35:51

inflation, you talked about

35:51

borrowing to invest, right? It's

35:56

not, even if you've got one of

35:56

the worst investments out there,

36:00

you're still going to quadruple

36:00

your money, versus what you're

36:03

getting as far as equity in your

36:03

home, right? I mean, with

36:05

interest rates the way they are

36:05

right now. And they're not going

36:08

to stay this way. They are

36:08

eventually going to go up. But I

36:11

mean, hey, we're at the bottom.

36:11

So even if they go up or coming

36:14

off of the bottom, they're still

36:14

going to be really low for years

36:17

to come. And then you tack on

36:17

the interest deductions for tax

36:22

deductions on the interest that

36:22

you're paying. You're almost

36:25

borrowing free money. Yeah. So

36:25

if you gave me money, and I

36:28

invested into something that had

36:28

a horrible rate of return, but

36:31

it did have a rate of return,

36:31

that's actually a great

36:34

investment. So why not borrow

36:34

almost free money during an

36:39

inflationary period to invest

36:39

in?

36:42

Well, yeah, especially with the way inflation is right now, you

36:43

know, what the announcement they had the other day with it, you

36:45

know, this year, they're saying

36:48

it's 4%. I mean, right now, my

36:48

current mortgage is two and a

36:53

quarter percent after my last

36:53

refinance, and I'm, I'm making

36:58

pretty much 1.75% a year, just

36:58

because I have a mortgage this

37:03

low, so I'm actually making

37:03

money off the inflation, which

37:06

is kind of scary when you think

37:06

about it. Yeah, that's

37:10

definitely very interesting.

37:10

Now, we kind of we briefly spoke

37:14

about this, right? And it was

37:14

when I, when I mentioned about

37:18

somebody taking that extra

37:18

equity in their line of credit

37:23

and using it to invest in more

37:23

real estate. Now, what if

37:25

somebody wanted to, instead of

37:25

their debt pay down, like, you

37:29

know, just keep everything

37:29

normal and keep making their

37:32

payments? But they want to take

37:32

a large chunk of that equity?

37:36

And strictly invest it? I know.

37:36

You know, your strategy is

37:41

mostly to help people get their

37:41

homes paid down in five to seven

37:44

years, right? But what if

37:44

somebody says, Hey, I want to

37:46

pay my, I want to pay my home

37:46

down in 15 years, but I want to

37:49

invest, you know, this much per

37:49

year, is something like that

37:53

possible,

37:54

not only possible,

37:54

it's great. You know, and I

37:57

would also say why 15 years? It

37:57

depends on your life cycle,

37:59

right? Yep. You know, let's say

37:59

you got somebody 35 years old,

38:02

why pay off in 15 years,

38:02

depending on what the cost of

38:06

debt is, you know, 30 years from

38:06

now, but the cost is really low,

38:10

and it's been low. The last time

38:10

it was skyrocketed, and really

38:14

high was 1981. Okay, so that was

38:14

40 years ago, is when it comes

38:19

to walk rates and also mortgage

38:19

rates. That's the last time

38:21

rates were really, really high.

38:21

Since 1981, it's been plummeting

38:25

ever since we've hit zero twice

38:25

now. Other countries went into

38:30

negative interest rate

38:30

territory. So I don't see that

38:33

changing. Yeah. Is it going to

38:33

fluctuate based on inflation

38:36

here, and they're absolutely but

38:36

REITs are going to be low. So

38:39

there's an argument to why even

38:39

pay it off. So think about it

38:42

this way. Let's say you've got

38:42

access to equity in your home.

38:46

And you leverage that equity to

38:46

go buy real estate, right? At

38:49

the cash flow asset? Well,

38:49

you're buying real estate that

38:52

is a cash flow asset. What does

38:52

that do? That increases your

38:55

monthly income, your monthly

38:55

income is going where it's going

38:58

into your house. So you actually

38:58

just accelerated the process of

39:02

paying down the equity because

39:02

your cash flows higher. Now you

39:04

can also get he locks on

39:04

investment properties. It's

39:07

rare, but you can there are

39:07

banks out there that do 80%

39:09

financing on a purchase. If you

39:09

want to buy a home starting out

39:13

with a HELOC not a mortgage. You

39:13

use there he lock on and say I'm

39:17

buying this home, you start out

39:17

with 20% down you've got a

39:19

rental property that's on an

39:19

interest only simple interest

39:23

interest only home equity line

39:23

of credit and first lien

39:25

position that now improves your

39:25

cash flow for that rental

39:28

property which improves your net

39:28

monthly income, which decreases

39:32

the balance at a more

39:32

accelerated fashion. And then

39:35

what do you do every time it's

39:35

accelerating? You find more

39:38

opportunities. So yeah, I didn't

39:38

know I mean, this is the Robert

39:41

Kiyosaki method. So when I say

39:41

you know pay your home off in

39:44

five to seven years, I'm gonna

39:44

be honest with a lot of folks

39:46

that the hook because some most

39:46

folks they just want to be debt

39:50

free, because they don't know

39:50

any better. However, once they

39:54

get into our strategy and our

39:54

education, they realize maybe

39:58

it's not right, the right Time

39:58

for me to be debt free. Maybe

40:02

it's time for me to accumulate

40:02

cash flow assets and then be

40:06

debt free later. So it's not an

40:06

either or situation. It can be a

40:10

both.

40:11

Okay,

40:11

yeah. No, I like that. Yeah,

40:13

there's like that the the two

40:13

different types of mentalities,

40:16

right you have the Dave Ramsey

40:16

mentality where it's, you know,

40:20

all debts, bad debt, get rid of

40:20

it. And, you know, I want to be

40:25

at zero and then you have the

40:25

Kiyosaki method where it's like,

40:28

Hey, I'm going to leverage my

40:28

debt to buy more income

40:31

producing assets. That that's

40:31

kind of where my head's at, you

40:34

know, and probably most people

40:34

listening to my show. You know,

40:37

it's funny because I talk about it,

40:39

and neither one of

40:39

them are wrong. Franklin, I'm in

40:43

Dave Ramsey's backyard,

40:43

actually, yeah, he's a member of

40:46

my church. So yeah, I know Dave

40:46

Ramsey. I actually taught

40:50

Financial Peace University in my

40:50

church. I understand his very

40:53

last week, but you have to

40:53

understand that they have two

40:56

different audiences. Dave Ramsey

40:56

is talking to hate to say it,

41:00

but it's true, a lower educated

41:00

and less disciplined audience,

41:04

right? And can you gain wealth

41:04

doing Dave Ramsey's method,

41:07

absolutely. slow and painful, it

41:07

hurts rice and beans, right? get

41:11

after it, like a user was long,

41:11

painful, but you can, it's going

41:14

to take longer mathematically,

41:14

Robert Kiyosaki is the faster

41:17

method. But his audience isn't

41:17

to a free radio show his

41:23

audience is to typically the top

41:23

three tax brackets, right? They

41:27

already get it, they already mastered their budget, their high income earners, they're

41:29

higher educated, and

41:31

mathematically, it's just a

41:31

faster method. So neither one of

41:35

them are wrong. It's just pick

41:35

which route you want to go.

41:38

Yeah, I mean, so like having a ton of things. It's one of the things I

41:39

talked about, you know, early on

41:42

in my podcast, too, when I, when

41:42

I did a couple solo episodes I

41:45

was talking about, you know, I

41:45

followed Dave Ramsey's baby

41:48

steps, you know, steps one, two,

41:48

and three. And then after I got

41:51

to that point where I was debt

41:51

free, and the only debt I had

41:54

left was my mortgage. That's

41:54

when I started looking at, okay,

41:57

what can I do to invest my money

41:57

elsewhere and start, you know,

42:00

leveraging the debt that I have,

42:00

and, and buying more income

42:04

producing assets. So that's kind

42:04

of where my mentality shifted.

42:08

So it's, you know, I say this,

42:08

because a lot of people that

42:12

listen to this show are people

42:12

that are looking to get out of

42:15

debt, right? They, or there's

42:15

people that have already gotten

42:19

to that point, they're like,

42:19

Hey, what do I do with my money?

42:22

So that's why I think this is a

42:22

very interesting strategy that

42:25

you can go into with either

42:25

mindset, right, depending on

42:28

what it is you want to do you

42:28

want to pay off your house in

42:30

five to seven years, awesome,

42:30

you can do that. You want to pay

42:33

it off in 30 years still, but

42:33

leverage that money to buy more

42:37

real estate? Sure, you can do

42:37

that. And that's what I think is

42:40

so interesting about this and

42:40

why I'm so excited to talk to

42:44

you about it's pretty cool, man.

42:45

And I want to answer that one question that you started to ask was the the

42:47

lot that you're looking at as a

42:50

10 year drop period, followed by

42:50

a 20 year repayment period. So

42:53

what that means is you have full

42:53

access to the equity in your

42:56

home based on the original

42:56

contract, right? So if you

42:59

current homes by the three,

42:59

we're in Hawaii, 3 million. So

43:04

it's currently valued at 3

43:04

million and you got a line of

43:07

credit, today based on 3

43:07

million, well, then that's going

43:10

to be your line of credit for 10

43:10

years, unless you change the

43:14

contract right? Now, after 10

43:14

years, if you have a balance

43:18

still remaining than what the

43:18

bank is going to do is allocate

43:21

that mouse to now on a 20 year

43:21

mortgage. It's a it's a, it's a

43:24

closed down fill a simple

43:24

interest with the close in

43:27

product that requires you to pay

43:27

it off in an installment loan

43:30

fashion for the next 20 years.

43:30

So how do we keep something like

43:35

that for 30 years, if there's

43:35

only a senior draw period, it's

43:38

real simple. Do what the

43:38

mortgage people do? refinance.

43:41

And then 10 years from now, what do you think the value of your property is going to be? Higher?

43:45

Typically

43:45

higher in Hawaii typically

43:47

doubles every 10 years. So yeah.

43:49

So now what do you

43:49

do in 10 years, you don't get

43:52

another he locks at the higher

43:52

valuation, and access to more

43:56

equity to go get more rental

43:56

properties. Maybe you get into

44:01

commercial at that point.

44:02

I like it.

44:02

Yeah. Oh, absolutely. Get into

44:04

commercial at that point. I'm

44:04

looking to get into commercial

44:07

right now.

44:08

Yeah, more doors.

44:10

Yeah.

44:10

Awesome, man. Okay, cool. Hey,

44:13

this, this has been awesome.

44:13

I've got a lot of great notes

44:17

here. And I think you answered

44:17

all the questions I wanted to

44:20

ask you. Um, yeah, I think I hit

44:20

about everything.

44:23

I know, this is something that you're looking at. Yeah. So let's work one on

44:25

one. After this. And I want to I

44:29

want to work with you one on

44:29

one. I want to, you know, answer

44:31

any questions or concerns that

44:31

you have and help you with the

44:34

bank and mechanize and all that

44:34

to get you off on the right

44:38

path? Sure.

44:39

Yeah. And it's really interested in chatting about that. Yeah. So

44:40

hey, real real quick. This one

44:44

of the things I like to ask

44:44

towards the end anyway, and

44:47

that's, you know, for my

44:47

listeners that are listening in

44:50

right now, and this is something

44:50

that interests them. Is there

44:54

anything like any last tips or

44:54

tricks that you would recommend

44:57

for them to look into? If this

44:57

is a strategy they'd like to

45:01

implement,

45:02

it's real simple.

45:02

Go to replace your mortgage

45:05

calm, there's nowhere on our

45:05

website that we asked you for

45:09

money. Nowhere. We're always

45:09

giving free information. So if

45:13

you go to replace your mortgage

45:13

calm, there's a couple things

45:16

that are lots of videos on

45:16

there, you can go to YouTube, we

45:18

have even more videos on YouTube

45:18

at replace your mortgage YouTube

45:22

channel. But if you go to

45:22

replace your mortgage calm, the

45:25

only call to action after you

45:25

pre educated yourself, I've got

45:28

a free book on the subject. So

45:28

you can just download it tonight

45:31

and read it, no charge, no

45:31

shipping, nothing, just download

45:34

it. But after you've kind of

45:34

convinced yourself like, Okay,

45:38

this is something that I need to

45:38

look further into. I have a

45:41

sales path that almost works

45:41

around the clock. You book an

45:44

appointment that the only call

45:44

to action on our website is to

45:47

book an appointment with us and

45:47

it's a free appointment. And

45:50

what we do for 45 minutes is

45:50

look at your situation and see

45:54

if this is a good fit for you

45:54

because it's not and want to

45:57

break a lot of hearts here. This

45:57

isn't the right fit for 70% of

46:01

Americans. Why? Because most

46:01

Americans are living paycheck to

46:04

paycheck. And if you are living

46:04

paycheck to paycheck and haven't

46:07

mastered your budget, this is

46:07

not going to work for you. And

46:10

in fact, it could be detrimental

46:10

to you. There is no sidestep to

46:15

budgeting. You have to master

46:15

your own personal finances. Now

46:19

if you have and you got a 660

46:19

plus credit score 10% equity in

46:23

your home and you're cashflow

46:23

positive, meaning you've

46:26

mastered your budget. Well then

46:26

yeah, we'll tell you what your

46:28

options are and what it looks

46:28

like and when you're debt free

46:31

date, or what is your net worth

46:31

look like if you were to adopt

46:34

our various strategies to

46:34

gaining wealth, all of that is

46:37

free.

46:38

Yeah, you

46:38

can't beat that. You know, free

46:40

free is my favorite price. And

46:40

I'm sure a lot of people

46:42

listening. It's their favorite

46:42

price, too. So yeah, let's say

46:44

you already mentioned your

46:44

website, but and I know you have

46:48

a YouTube channel too. Do you

46:48

have any other social media or

46:50

anything else like that, that people can check out?

46:52

I'm terrible on

46:52

Instagram. If you go to my

46:54

Instagram, which is Michaellush

46:54

13 you're going to find stuff

46:58

like this where I'm deer

46:58

hunting, I'm hanging out with

47:01

family. So yeah, on Facebook,

47:01

I'm I wouldn't say all business,

47:05

but I'm mostly business on

47:05

Facebook, Instagram. I haven't

47:08

tackled that one yet. Or at

47:08

least my team hasn't. And I'm

47:12

the one posting on there. And it

47:12

shows because it's about family.

47:15

It's about events. It's about

47:15

America, and it's about deer

47:19

hunting.

47:19

Yeah, good

47:19

stuff, man. All right, so I'm

47:22

gonna make sure we have all

47:22

those links in our show notes,

47:25

including your YouTube channel,

47:25

your website, all that goodness,

47:30

just to make it easier for the

47:30

folks that are listening to copy

47:33

and paste or just click away.

47:33

And go check out and see what

47:36

Michael wash is all about and

47:36

what his team's doing. And maybe

47:39

this might be a strategy that

47:39

might work for them. So pretty

47:42

excited man and excited to talk

47:42

to you after this. But

47:47

seriously, man, it was it was a

47:47

pleasure having you on the show

47:49

today. I really appreciate you

47:49

taking some time. Thanks

47:51

for having me.

47:51

Nine o'clock where I'm at and

47:53

there's nothing better to do

47:53

other than sleep. So Thanks,

47:55

Mike.

47:56

It's

47:56

almost 5pm here so it's all

47:58

good, actually.

47:59

Yeah, it's almost

47:59

10 Yeah, there we go. I'm a

48:03

night owl. appreciate my thanks.

48:05

Alright

48:05

take care. Thanks for listening

48:08

to the Average Joe Finances

48:08

podcast. Your source for beating

48:13

debt, saving money and investing

48:13

Learn more at

48:16

Averagejoefinances.com The

48:16

Average Joe Finances podcast is

48:23

for informational and

48:23

entertainment purposes only. Do

48:27

not use this for any real estate

48:27

for investment making decisions.