The second of five ways to stack up an extra million bucks. In this episode,
I'm going to address how to leverage safely to make 100%
more. Stay with me throughout this entire episode because
I'm going to talk about how to optimize assets and minimize taxes. We'll also talk about how
you could take a rental home let's say that's worth $500,000 and yeah you can suck away let's
say the rental income of 4,000 a month in my favorite instrument that I'll disclose is
called the laser fund and you could end up with a half a million bucks in as little as eight ten
years. But I'm going to show you how to leverage it safely and double that amount of money and
you'll accumulate an extra million bucks that can generate 80 to 100,000 a year of tax-free income
on top of the rental income. So, put on your seat belt I'm going to blow you away.
So, I'm Doug Andrew and I've been a financial strategist and a retirement planning specialist
now for more than 48 years and I've been very blessed in my career to have authored 12 books
thus far. Stay with me to the end because I want to gift you a copy of one of my
most recent best-selling books that will show you how to accomplish what I'm going to share
with you in this episode. What does leverage mean? Leverage is actually the third miracle
of wealth accumulation. The first is compound interest. The second is tax-free accumulation
which my favorite instrument the laser fund does. But the third miracle or marvel of wealth
accumulation a lot of people don't understand and it's called safe positive leverage. The ability to
access your money when you need it which is liquidity but also the ability to own and control
assets with very little or none of your money tied up or at risk in the asset.
Now, some people do a double-take they go, say what? Okay, I'm going to illustrate here.
Let's get simple we'll go from the milk to the meat. For 48 years, I've helped people
optimize their assets and minimize taxes. What do I mean by asset optimization? You've probably seen
a dam before like the hoover dam or glen canyon dam and so many times we look at those in awe
and we see that the dam is holding the water and so forth to generate and preserve water and
generate power down below. But it actually can give new life to the area because now you have
water in times of drought. You can generate power for a whole community or communities below. People
can still water ski and fish and everything else. So,
you actually give a new life out of an existing asset. So, like that with your money,
you can give your money or your assets a new life. Let's just start with a rental home. Let's say you
have a five bedroom home and you can rent it out for let's say four thousand dollars a month. So,
there's a lot of cities in America right now as the recording of this episode
where you have a rental property that's worth half a million bucks and you're able to rent
it out for maybe four thousand dollars a month. So, if you owned it outright and you did that
you could get that 4,000 but if you don't need that money to live on what should you do with
it? Most of the people that I coach I show them how to suck that away to accumulate that
money tax-free. So that if they ever need to dip into it, it's liquid for a repair or whatever
but sock away that rental income. That's what I
call the laser fund and I'll talk about that in just
a few minutes. But already if you're liking this episode be sure and click like or post a comment.
But let's say you suck away four thousand dollars a month and if you earn let's say eight percent
rate of return. No, I've actually averaged nine point six but at eight percent four thousand
dollars a month will accumulate in eight years to five hundred and thirty-five thousand four hundred
and seventy-four dollars. So, you'd have half a million dollars if that's what you did. You owned
the rental property outright. You're bringing in 4,000 a month you suck that away at eight percent.
You'll have half a million bucks in eight years. Do you know what savvy people do? Savvy people
leverage. Now, before I explain how to leverage this to double the amount of money you make make
sure you subscribe to this channel because I post a new in-depth educational video almost on a daily
basis on this channel and stay with me to the end because I'm going to connect the dots for you.
But let's say you took that 500,000 house and you went out and put a mortgage on it.
Now, some people go, "What? I've been working trying to get this mortgage paid down and now
I finally own this rental property free and clear", I go hmm you
just sort of ruined your ability to leverage safely.
Now, leverage without liquidity is stupidity. I've always leveraged by staying liquid. So,
if I go in and mortgage that rental property let's say 75 or 80% loan to value. Let's keep it simple,
let's say 80%. So, 80% loan to value you take out a 400,000 mortgage. Now, don't go put that 400,000
in unnecessary down payments on more rental properties because it gets tied up it's illiquid
and if something happens and we have a recession or the real estate market collapses for a while.
You're up a crick and that's where a lot of people got into trouble. You take
the four hundred thousand dollars and you keep it liquid and safe.
Put it where banks and credit unions put thirty to forty percent of their tier one assets
for liquidity and safety and that's into the multi-trillion dollar insurance industry and
if you structure it correctly it's called the laser fund. Laser means liquid assets safely
earning returns. You can access the money anytime you need it even with an electronic
funds transfer or a phone call, okay. So, stay with me here. You borrow 400,000 out of
the property. You put the 400,000 into the laser fund.
Now, you have a mortgage payment. So, you think oh golly, now I've got a payment on this thing.
Now, remember, you're renting it out for 4,000 a month. To service the mortgage just on the
surface let's say that's two thousand, okay. So, now you're bringing in four thousand of
rental income and you pay the mortgage payment and now you have a net of two thousand dollars.
You take that net of two thousand dollars and you can suck that away into the laser fund
on top of the four hundred thousand that you put in in one fell swoop a lump sum.
Now, you'll accumulate uh quite a bit of money but you're not calculating it
correctly. This is how you should be calculating doing this strategy.
See, if I take out a mortgage and let's say it's at four percent you're going to
have interest on that that you can write off on your tax return whether it's a schedule e
or an llc or whatever. You can deduct mortgage interest on a rental property.
So, if you have a two thousand dollar a month payment and that's interest and whenever I can I
do interest-only. You get to deduct that interest off in a 33 percent tax bracket between federal
and state which most Americans find themselves in. The net of the mortgage payment is 1333 dollars.
So, you're taking the difference between the 2,000 and the money you get back on your tax returns and
you sock that away. You don't go spend it. You don't go oh look at all this extra money I have.
So, when you suck away that extra 440 dollars into the laser fund on top of the 2,000 of rental
income you're investing the tax savings now. Guess what? In eight years instead of 535,000
guess what you'll have? Now, before I tell you get ready. post a comment on this channel if
this is resonating with you. Instead of 535,000 bucks, you will have 1,350,000 at the end of the
same time period by investing the difference between the mortgage payment and what you're
bringing in the rental income but you add in the money that you're saving in taxes.
By doing that you're leveraging. By taking 400,000 of lazy idle equity in the property that basically
is earning zip if you just leave it in there. You now can kick start your laser fund with 400,000
and you add the differential and you'll end up with a million 350 grand instead of just 535,000
in the same period. This is how you can earn eight percent and the cost the gross cost of
the mortgage is maybe four percent. But it's not really four percent because in a 33 tax bracket
you're really only shelling out a net of like 2.8 depending upon your tax bracket.
Is this making sense? Now, if you need to learn more about this, I've been telling you about
my most recent book called the laser fund that's flying off of our warehouse shelves
and this is actually two books in one. This white covered side is 14 chapters about 200 pages with
all the charts and graphs and explanations. If you learn more by stories that's when you flip it over
and read this one which is 100 pages 12 chapters and these talk about how to use the laser fund for
all kinds of financial goals. But for leveraging real estate you'll see some stories in here about
this. This is where I keep my working capital for my real estate investments. So, the point is you
can stack up an extra million dollars or more by leveraging safely instead of just investing
the rental income into the laser fund and having a half a million bucks at the end of eight years.
You can leverage borrow put in 400,000 and invest the difference because of the tax savings of the
mortgage debt service and the rental income and you'll end up with over a million bucks and
this is in less than 10 years. So, that is the second way to stack up an extra million bucks.
Be sure and check out the other episodes on this channel. I have four other episodes
that talk about how to stack up an extra million bucks. This is just the second way.