Joe Withrow's Blog, page 22

Answers to the Top Survey Questions Part Three

Today we’ve got part three of our ongoing Q&A series:

Q. How do we create financial freedom outside of the corrupt monetary system?

A. I love this question. It’s clearly coming from a libertarian angle. And in a world where price inflation is raging, it’s more important than ever before.

My answer here is a little bit nuanced. It starts with a strategic asset allocation model that includes both gold and Bitcoin.

I see both gold and Bitcoin as market-based money. Both are outside of the control of government and the central banks of the world. Nobody can duplicate or debase them.

Now, the powers that be can certainly manipulate the dollar-based price of both gold and Bitcoin. And they do. But if we hold both assets in self-custody, nobody can stop us from using them.

By the way, self-custody means we hold physical gold bullion in our possession and we hold Bitcoin on non-custodial wallets. I prefer the Edge smartphone wallet and the Trezor hardware wallet.

So we start there. But I think we have to go farther…

Obviously neither gold nor Bitcoin provide us with passive income. And if we desire financial independence, passive income is what we need.

That’s where rental real estate comes in.

If we finance our rental properties with a fixed-rate mortgage, we are effectively shorting the current monetary system. We are betting that the value of our fiat money will decline over time, thus reducing our debt burden on inflation-adjusted terms.

And for the record, I think this is a bet we won’t lose.

Now, real estate is still tied to the current system. No question about that. We’re using dollars and traditional financing to build our passive income portfolio.

BUT, we’re doing so in a manner that insulates us from inflation and the corruption of the monetary system. That’s the benefit of hard assets like real estate.

I’ll add that if you’re looking for additional ways to distance yourself from the system, I am a firm believer in home and local resiliency. We talk about these items more in our core training program.

The bottom line is that the more self-sufficient we are at the local level, the less exposed we are to corruption within the monetary system. And I think it’s easier today than ever before to achieve a base level of resilience locally.

Q. How safe is our cash in the banks? How safe is our cash in the credit unions? (high gov debt, reset to digital currency, what happened in Cypress, Lebanon, Greece…)

I am very concerned. I have cash in a solo 401K and I don’t know how to protect it. No real estate deals right now that I am finding…

A. Lots to unpack here!

For readers who may not be familiar with the reference, this person is referring to countries that imposed bank bail-ins in the recent past.

Those were instances where the bank was in trouble so it froze everybody’s account and then siphoned a percentage of their deposits right off the top. The banks then used the funds they stole from depositors to shore up their own finances.

I’m not too worried about bail-ins here in the U.S. That’s because the banks can always borrow money through the overnight window if they are in trouble. And the Federal Reserve can create that money from nothing to make it available if needed.

This dynamic wasn’t possible in Cypress or Greece because those countries ceded their monetary autonomy to the European Central Bank (ECB), which they don’t control.

So to me, the bigger risk to our cash in the bank is currency debasement. I fully expect inflation to devalue the purchasing power of our dollars tremendously in the years to come.

At The Phoenician League, we have a comprehensive approach to address this problem.

I’m less confident in the safety of our retirement accounts – 401(k)s, IRAs, etc.

What bothers me is that there are so many rules and restrictions around getting our money back out of these accounts. And those rules could change on us at any time without our consent.

Personally, I do not invest through retirement accounts at all. I don’t use them.

Instead, I use rental real estate as my cash flow wealth vehicle. And as we’ve already discussed, real estate is incredibly tax-advantaged. We don’t need a retirement account to minimize taxes on rental income. We also have mechanisms to defer real estate capital gains taxes indefinitely.

And to your last point about not finding real estate deals – please give our program a look this week. We can match investors up with properties producing anywhere from 7% to 19% cash on cash returns right now.

More information right here: The Phoenician League Membership Page

The post Answers to the Top Survey Questions Part Three first appeared on Zenconomics.

The post Answers to the Top Survey Questions Part Three appeared first on Zenconomics.

Answers to the Top Survey Questions Part Two

Today we’ve got part two of our ongoing Q&A series:

Q. What is the minimum amount that you can start with in your system?

Q. How to generate passive income when you don’t have a lot of money?

Q. How fast can you start making passive monthly income? Can I start with $500 and start getting $10 a month in passive income in the next month?

A. All great questions. 

Lenders require us to put at least 20% down on rental properties. So the minimum amount we need to start depends on the purchase price of the first property we want to buy. 

To quantify this, we have properties available anywhere from $80,000 to $750,000. We can get started with properties on the low end of that range for somewhere between $16,000 and $20,000.

That said, we also have strategies we use to help us produce income while we are saving up for real estate down payments. I have used one of these strategies to consistently generate an annual return of 9.2% with no market risk. 

Starting with $500, this rate of return would throw off $4 in passive income in the first month. Then it would compound from there. 

Of course, this process works best if we add to our pool of capital at the start of every month. Just for fun, let’s say we start with $500 and we add $250 every month.

Assuming a 9.2% return, this approach would turn our $500 into $19,550 in five years’ time. 

And by the way, that’s if we use no leverage. There are ways to accelerate this even further. 

Q. How to escape the rat race for real? No BS.

A. The answer here is simple… but it’s certainly not easy. If it were, everyone would do it.

To me, we start by building a strategic asset reserve. This ensures that we always have something to fall back on in case of emergency.

Once our reserves are in place, then we focus on building passive income. I prefer doing this with rental real estate because of the tax advantages. They help us build passive income much faster.

To break out of the rat race, we simply need our rental portfolio to replace our active income. And getting to that point is just a matter of adding properties. 

Let’s assume that we can build a portfolio over time such that on average each property produces $600 a month in cash flow for us. 

If our goal is $10,000 a month, we’ll need seventeen properties. If our goal is $5,000 a month, we’ll only need eight or nine properties.

The beauty here is that with every new property we buy, it becomes even easier to buy the next one. Our cash flow and our tax advantages build upon one another.

Q. How do you make money consistently bulletproof?

A. This is exactly what our approach is designed to do.

With a strategic asset allocation model in place we can build our reserves across several asset classes. Each asset class behaves differently in the face of different market conditions. 

We suggest allocations to cash, gold, stocks, Bitcoin, and early stage investments. Spreading capital strategically across these assets provides a strong base for us. No single event will impact each of these assets in the same way.

From there, we focus on building cash flow through rental real estate. This does several things.

First, it provides us with a robust income stream that’s less susceptible to economic downturns… because people have to live somewhere. It also moves our capital out of fiat money and into hard assets.

And we suggest locking in 30-year fixed rate mortgages to finance our real estate investments. This puts inflation to work for us. In a couple ways…

Inflation tends to drive up monthly rents over time. In fact, rents have gone up over 3% per year on average for several decades now.

At the same time, locking in fixed-rate mortgages ensures that our principal and interest payment never changes. So our rents go up… but our mortgage payment stays put. This makes real estate increasingly more profitable over time.

Finally, our mortgage balance is effectively reduced as inflation erodes the value of the dollar. The total amount we owe doesn’t change… but we can pay our mortgage back with devalued dollars as inflation takes its toll.

I should also add that real estate provides many great tax advantages for us. By default we shouldn’t owe taxes on our rental income. And with some advanced planning, it’s possible to use accelerated depreciation to offset our active income – thus reducing our overall tax burden.

Put it all together and we’ve got a comprehensive system for making our money bulletproof.

Q. How will you inform us when to buy and when to sell?

A. I think this question is geared more towards stocks. And we do maintain a small stock portfolio as part of our core asset allocation model. 

We provide updates on our portfolio every month. And we send out email alerts when it’s time to close out a position.

That said, this is a very small part of our system. We use a strategic stock portfolio simply to boost our liquid reserves. The core of our wealth strategy entails building monthly cash flow with rental real estate.

-Joe Withrow

P.S. Don’t forget that The Phoenician League is currently open to new members. 

And for those who join us this week, we’re taking 25% off our normal membership rate. Just use coupon code member25 at the checkout page to claim your discount.

For more information, just go here: The Phoenician League Membership Page

The post Answers to the Top Survey Questions Part Two first appeared on Zenconomics.

The post Answers to the Top Survey Questions Part Two appeared first on Zenconomics.

Answers to the Top Survey Questions Part One

Friends,

Just a quick follow-up on our passive income discussion this week.

We had some great questions come in through our passive income survey a few weeks ago. These are items we will address in our upcoming workbook series. It’s called How to Go From $0 to $10,000 a Month Passive Income.

But I would like to answer some of the top questions that came in as well. I’ll list them Q&A style below.

And by the way, I’m happy to answer any additional questions you may have. If you have a question that we haven’t addressed yet, just reply to this email and ask away.

Q. Can you make the system clear? I lose my way in complexity… thank you.

A. If I had to describe our approach in three steps, they would be:

UnderstandingFinancial SecurityPassive Income

We start with an honest assessment of the monetary system and the ongoing macroeconomic climate. This provides us with understanding.

Then we build a strategic portfolio of reserve assets. This portfolio will leverage our understanding of the macro climate. It provides us with financial security.

And in The Phoenician League, we help everyone craft their own customized asset portfolio with specific investments. We provide consistent updates on our investments as well.

From there we build a passive income portfolio. We use rental real estate as our vehicle. The tax advantages are just too good to pass up.

We also get members matched up with ideal rental properties and all the professionals they need to manage these properties and their overall portfolio.

Our goal is help everybody build a passive income portfolio that throws of $10,000 a month in extra income. And we have a systematic method for adding the properties we need to make this happen.

Q. How do you negotiate a good deal on a property?

A. We invest through a nationwide real estate network. The network’s brokers have relationships with new home builders and local rehabbers in every market that we invest in.

For the home builders, selling properties through our network is much easier than listing on the MLS and hosting retail buyers all day. They can simply move homes much faster by selling to investors.

The same goes for the rehabbers. Having the ability to sell into our network allows them to move properties consistently. That’s critical for their business.

As such, these professionals are willing to work with us on pricing and concessions much more so than they otherwise would be. Whatever they lose in margin, they know they’ll make up on volume. If they can sell into our investment network, that is. We have strict criteria.

Because of this, our network’s brokers can negotiate good deals on our behalf. Our network doesn’t accept any property that doesn’t produce strong cash flow. That is to say, every property has to be priced such that it will deliver great returns for investors.

Q. Is income truly passive? How much maintenance work is required?

A. This is a great question. Can income truly be passive? Don’t you have to do something for it?

From my perspective, our approach to building cash flow with real estate makes it as passive as it could possibly be. That’s because we have professionals in our network who handle every aspect of the transaction and property management for us.

That said, it does require a little bit of work. But not much. Most weeks I spend no more than ten minutes on my real estate portfolio.

These ten minutes consist of bookkeeping and corresponding with property managers. Of course I also go over the property management report every month.

We talk about exactly how to handle these items in our program.

Meanwhile, the rent checks just show up in the bank, month in and month out.

Q. Will you include tax strategies so we can safeguard our earnings?

A. Absolutely! This is the beauty of using real estate as our cash flow vehicle. The tax code treats real estate extremely favorably. We talk about this a lot in our program.

By default we should not owe taxes on our rental income. That’s just utilizing standard deductions and straight-line depreciation.

There are also some more advanced tax strategies we can use to offset other forms of income. Those require more planning… but they are available to us.

Q. Won’t I get put in a higher tax bracket?

A. Not with our approach. Real estate is incredibly tax-advantaged – as we just discussed. If used correctly, we won’t owe any taxes on our rental income.

What’s more, there are ways to use accelerated depreciation to reduce our overall tax bracket for our other income sources. This requires advanced planning. But we discuss the strategy in detail in our core content.

Q. What is the difference between different types of income according to the IRS? And how are they taxed differently?

A. Another great question. This one ties in with the previous.

Please know that the great CPAs in our network would break down this answer in even more detail than I will today. But I’ll give you what I believe is the most relevant answer for our purposes.

The IRS puts “active” and “passive” income in different buckets. And the two buckets are isolated from one another by default.

Active income refers to W2 income and any income we receive from businesses that require day-to-day activity.

Passive income is income that comes from our rental properties, limited partnerships (syndications), and any other source that doesn’t require day-to-day activity from us personally.

To me, what’s important here isn’t the tax rate.

The key is that we can’t use passive losses to offset active income or vice versa. This plays a major role in our tax planning.

For example, let’s say our real estate generated $10,000 a year in cash flow. And with our deductions and depreciation, we show $12,000 in expenses. That wipes out our tax liability and produces a loss of $2,000.

We then carry over this loss to the next year. That way it’s available to us to offset future passive income.

This all may sound complicated… but that’s why we have great CPAs in our network. We don’t have to worry about any of this – our CPA firm will handle it for us.

Now, keep in mind that the IRS says we cannot use this $2,000 passive loss to offset active income. It can only offset passive income.

That is, unless we employ some expert tax strategy. There is a way to cross the arbitrary barrier and use passive losses to offset our active income.

This strategy takes some advanced planning. And it requires us to meet strict IRS qualifications. But to me, it’s the equivalent of modern-day alchemy for those who can pull it off. It’s an incredibly powerful tool to eradicate our tax burden.

I don’t have the space to dive into the details around this strategy today. But we absolutely discuss it in length within our core content in The Phoenician League.

Okay, we’ll leave it here for today. Please be on the lookout for part two of our Q&A series tomorrow.

-Joe Withrow

P.S. Don’t forget that The Phoenician League is currently open to new members.

And for those who join us this week, we’re taking 25% off our normal membership rate. Just use coupon code member25 at the checkout page to claim your discount.

For more information, just go here: The Phoenician League Membership Page

The post Answers to the Top Survey Questions Part One first appeared on Zenconomics.

The post Answers to the Top Survey Questions Part One appeared first on Zenconomics.

My Two Favorite Holiday Traditions

The temperature has dipped below freezing up here in the mountains of Virginia. The first snow flurries of the season will happen in the morning. And Weather.com tells me that tomorrow night’s low will be precisely zero degrees Fahrenheit.

That can mean only one thing. The holiday season is here.

And in the holiday spirit, I would like to share with you my two favorite holiday traditions. They involve gold and spiked eggnog.

Every year at this time I buy my two kids physical gold and silver coins. And I write each of them a heartfelt note to go along with the gifts. The note is dated so that maybe one day they will come across them again and have fond memories of their childhood.

This year I purchased each of them a one-ounce gold Britannia. It’s a beautiful coin.

Of course, I get way more excited about these things than the kids do. But I figure they have plenty of toys as it is. They don’t need anymore.

Plus, the gold coins give me the chance to talk to them about the importance of sound money.

Sound money refers to a stable, reliable, and widely accepted medium of exchange that maintains its purchasing power over time.

That’s what gold is. It’s not really an investment. It’s a stable store of wealth. Has been for centuries.

My hope is that this plants some seeds in their young minds. I want them to think long-term.

As for my second favorite holiday tradition… well, I can’t exactly claim it as my own. Every year I make a batch of the Hill Family Spiked Eggnog.

I got the recipe from a gentleman by the name of Doug Hill. He was one of the publishers at Agora Financial and its Laissez Faire Letter.

I’m not sure if Doug is still there. Agora Financial is in rebuilding mode these days. But in its prime, I never missed an issue of the Laissez Faire Letter.

Doug would always issue a disclaimer when he talked about his family eggnog.

It’s a slice of heaven, he would say. And that’s where you’re headed if you drink too much of it in one sitting.

I can attest – it is heavenly. Here’s the recipe:

1 dozen eggs (yolks only)1 cups of sugar4 cups of blended whiskey — the Hill Family recipe uses Fleischmann’s, an inexpensive option. Higher-grade whiskey can be used but isn’t necessary1 pint of heavy whipping cream4 cups of whole milk

And here’s the step-by-step guide:

Break the 12 eggs and put the yolks ONLY into a large mixing bowl. You don’t want any egg whites in the mixture or the “nog” will be lumpy. You can save the whites for tomorrow morning’s omelet, if you choose.

With a mixer, beat the cup of sugar with the yolks until you have a creamy, smooth consistency.

Then slowly drip in the 4 cups of blended whiskey. This is a key part of the process. You must take your time mixing it in.

If you pour too quickly, the universe will implode upon itself and you won’t get to enjoy your delicious creation. That’s what Doug used to say, anyway.

So mixing in the whiskey should take about five minutes to complete.

Finally, pour the heavy whipping cream and milk into the bowl. Mix it all together… and you’re done.

The eggnog will be ready to drink immediately. But I find it’s best to chill it first. Oh, and add a dash of nutmeg to it when you’re ready.

And of course, the eggnog should be kept refrigerated when not in use. Be sure to shake the container every other day to keep it properly mixed.

So that’s it. The best spiked eggnog you’ll ever experience. That’s a promise.

In closing, I’d like to wish you a very merry Christmas and a wonderful holiday season. Cheers!

The post My Two Favorite Holiday Traditions first appeared on Zenconomics.

The post My Two Favorite Holiday Traditions appeared first on Zenconomics.

The Most Important Battle of Our Time

We talked about the Fed’s silent coup yesterday. It stems from the battle between the New York banking interests and the old-world European power structure.

What this battle is really about is control over the engines of finance.

As the Austrian economists have pointed out, the fractional reserve banking system allows the commercial banks to pyramid credit on top of base money at a 10-to-1 ratio.

This effectively gives the commercial banks the ability to create money from nothing as well. The central banks aren’t the only money-printing game in town.

And this allows the banks to determine what gets financed and what doesn’t. There’s an immense amount of power in this.

For example, should we finance oil exploration and small-module nuclear reactors… or acres upon acres of windmills and solar farms?

Should we finance small local farms… or push all agriculture into a few multinational corporations?

The ability to aggregate and allocate capital is absolutely critical to modern civilization. Those who control the engines of finance have an outsized ability to shape our world.

And here’s the thing – there’s fierce competition among the commercial banks. This ensures that each bank strives to make good credit decisions. Most of the time, anyway.

The better their loans perform, the more money, power, and influence they accumulate. So they want to finance promising companies and projects.

The European Deep State wants to usurp this power for themselves.

And they want to eliminate all competition so that there are no consequences for poor decisions. This would allow them to favor pet projects specifically designed to restructure society according to their aims.

That’s the heart of their “stakeholder capitalism”. That’s what the “Great Reset” is all about.

So the battle is on.

The Fed’s aggressive actions this year have been about beating back the old-world European powers. The “combatting inflation” meme was just a cover story.

And this is why the Fed is not going to pivot any time soon. It’s going to get the Federal Funds Rate back up between six and seven percent.

And I think they are content to let it stay there. The Fed isn’t raising rates now just to cut them dramatically later. Those days are over.

That means we’re living through an incredible macroeconomic shift. The Fed is not going to support the U.S. stock market anymore.

We better tailor our investment approach accordingly. What’s worked well for the last thirty years will not work so well going forward.

The solution? Strategic asset allocation.

More information right here: Finance for Freedom Masterclass

The post The Most Important Battle of Our Time first appeared on Zenconomics.

The post The Most Important Battle of Our Time appeared first on Zenconomics.

The Fed’s Silent Coup… And What It Means for Our Investment Strategy

The Federal Reserve (the Fed) executed a silent coup this year.

Fed Chair Jerome Powell and President of the New York Fed John Williams successfully replaced the London Interbank Offered Rate (LIBOR) with the Secured Overnight Financing Rate (SOFR) here in the U.S.

SOFR is now the benchmark interest rate for dollar-denominated loans and derivatives. That means it influences other dollar-based interest rates.

LIBOR previously held that role. And the key here is that LIBOR was heavily manipulated. We know that definitively thanks to one of the investigations into the 2008 financial crisis.

So for as long as U.S. rates were tied to LIBOR, European banks had some influence on monetary policy in the U.S.

In other words, the Fed was trapped in a box. If it tried to raise rates while LIBOR was still the benchmark, the European Central Bank (ECB) and the large European banks could have manipulated LIBOR lower.

That would ensure long-term rates could not rise too much, regardless of where the Fed set its target rate. Thus, the Fed wasn’t in the driver’s seat.

That’s why what happened this year was a silent coup. The Fed was determined to raise rates. And ousting LIBOR was the only way to do it.

Of course, this begs the question – why?

For over a decade now the Fed itself has cut its target rate to near-zero every time the U.S. stock market got the sniffles. Why the sudden change of heart?

Well, there’s a major power struggle happening just beneath the surface right now.

The Fed is owned and controlled by the New York banking interests. Their wealth and power is predicated upon the state-capitalist structure and the strength of the American economy.

Yet, the old-world European powers have set out to replace the capitalist model entirely. They want to install a grotesque form of neo-feudalism. That’s what their “Great Reset” agenda is all about.

They call their model “stakeholder capitalism”.

This may sound like a friendlier version of capitalism on the surface. But really it comes down to a key question. Who are the stakeholders?

Well, it’s them. In their vision, their organizations control everything. Sounds a lot like communism to me.

That’s why we are seeing so much commentary from the World Economic Forum (WEF), the World Health Organization (WHO), and the Centers for Disease Control (CDC). These institutions are beholden to the old-world European powers who control the ECB.

And a big pillar of their “Great Reset” plan is to make central banks the ultimate arbiter of everything when it comes to money and credit. That necessarily means that commercial banks need to be toned down or eliminated completely.

That’s what retail central bank digital currencies (CBDCs) are all about.

With retail CBDCs, our bank accounts would reside at the central bank. And that would give the central bank full control over our money and our transactions.

Then, when we need a loan, they are the folks we would have to go to. That’s huge.

Suddenly the European power structure would have direct control over which projects and activities could get financing, and which couldn’t. This alone would give these crazy people almost total control over the western world. More on that tomorrow.

But this plan requires the commercial banks to be neutered or eliminated. That’s the key.

And that’s why the Fed is fighting back. It’s fighting for the survival of the commercial banking system itself.

This is why we can be sure that the Fed will continue raising rates well in 2023 and beyond.

Yesterday the Fed raised its target rate to 4.5%. The market expects that number to peak at 5.1% next year… and then fall to 4.1% by late 2024.

The problem is, these projections are based on consumer price inflation (CPI) expectations. But the Fed raising rates has absolutely nothing to do with inflation. That’s just the cover story.

By raising rates, the Fed is draining the Eurodollar market of liquidity. That puts a ton of pressure on the ECB.

In fact, this forced the ECB to raise its own target rate this week. It’s a battle of survival.

So I would bet on the Fed’s target rate going to at least six percent. Probably seven. And then it’s going to stay in that range.

The big takeaway here is that the days of dramatic rate cuts and easy money are behind us.

And that means the Age of Paper Wealth is over. The Fed won’t backstop the equity markets every time there’s a downturn going forward.

That means we better have a sound asset allocation model in place. Anyone whose money is parked exclusively in stocks and funds will struggle mightily in the years to come.

For more information on how to build a strategic asset allocation model, and which assets we need to have exposure to, just go right here:

Finance for Freedom Masterclass

The post The Fed’s Silent Coup… And What It Means for Our Investment Strategy first appeared on Zenconomics.

The post The Fed’s Silent Coup… And What It Means for Our Investment Strategy appeared first on Zenconomics.

What AI Can Tell Us About Passive Income

The invasion of artificial intelligence (AI) is upon us.

The tech industry is buzzing about an AI called ChatGPT right now. This is a conversational AI that can also write stories, essays, and emails upon command.

Naturally curious, I gave ChatGPT a spin. To see what it could do, I asked the AI to write an email comparing real estate investing to investing in the stock market.

Here’s what it came up with:

Dear Reader,

When it comes to investing, many individuals are looking for ways to maximize their return on investment.

When deciding between real estate and stocks, it is important to understand the differences in terms of returns. In this email we will discuss four returns associated with real estate investments, as well as how they compare to stock investments.

When investing in real estate, investors can look forward to four main returns: cash flow, equity build-up, tax benefits, and appreciation. 

Cash flow refers to the income earned through a property’s rental payments or other sources of income generated from a property.

Equity build-up occurs when an investor pays off the mortgage or pays additional money toward principle. The equity build-up increases over time until the entire loan is paid off and any remaining funds are kept by the investor in addition to any profits made from selling the property.

Tax benefits refer to deductions that can be applied against rental income earned from an investment property such as depreciation expenses or interest paid on a loan used for purchase.

Finally, appreciation refers to increases in market value of a property that can be realized through capital gains when you sell it at a higher price than what was initially paid for it.

In comparison, stocks offer only two main types of returns: dividends and gains of appreciation.

Dividends are payments made by corporations that own stocks which are distributed amongst shareholders of those stocks in proportion with each shareholder’s ownership stake. Therefore larger shareholders receive more dividend income than smaller ones proportionately.

Capital gains refer to profits gained from buying low and selling high – meaning if you buy stocks at a lower price and then sell them at a higher one you have realized a profit through capital gain tax implications.

On the other hand if these same actions result in selling at a lower price than what was initially paid for them then there will be capital losses incurred instead. 

Thus investors who invest in stocks cannot benefit from cash flow or tax benefits whereas investors who invest in real estate can benefit from all four types of returns mentioned previously: cash flow, equity build-up, tax benefits and appreciation resulting from capital gains.

Thank you for taking the time to read this email comparing real estate investing with stock investing!

Hopefully this summary has helped shed some light on how these two differ not only quantitatively but also qualitatively speaking so that you may make an informed decision regarding your own investments based upon your individual goals and preferences!

All the best wishes with your investments!

There we have it. The AI spit this out in about five seconds.

As far as the content goes, ChatGPT is pretty spot-on with its comparison. The AI’s writing style could use a bit of work though. Its readability score is much higher than I typically shoot for.

Still, this is pretty impressive.

Going forward we won’t be able to know whether what we’re reading was written by a human or an AI. There’s something a little unsettling about that.

The good news is, we don’t have to deal with AI’s when investing in real estate. And for those looking for a great system that makes building passive income with real estate simple, check out our new program right here:

Rental Real Estate Accelerator

The post What AI Can Tell Us About Passive Income first appeared on Zenconomics.

The post What AI Can Tell Us About Passive Income appeared first on Zenconomics.

What AI can tell us about passive income

The invasion of artificial intelligence (AI) is upon us.

The tech industry is buzzing about an AI called ChatGPT right now. This is a conversational AI that can also write stories, essays, and emails upon command.

Naturally curious, I gave ChatGPT a spin. To see what it could do, I asked the AI to write an email comparing real estate investing to investing in the stock market.

Here’s what it came up with:

Dear Reader,

When it comes to investing, many individuals are looking for ways to maximize their return on investment.

When deciding between real estate and stocks, it is important to understand the differences in terms of returns. In this email we will discuss four returns associated with real estate investments, as well as how they compare to stock investments.

When investing in real estate, investors can look forward to four main returns: cash flow, equity build-up, tax benefits, and appreciation. 

Cash flow refers to the income earned through a property’s rental payments or other sources of income generated from a property.

Equity build-up occurs when an investor pays off the mortgage or pays additional money toward principle. The equity build-up increases over time until the entire loan is paid off and any remaining funds are kept by the investor in addition to any profits made from selling the property.

Tax benefits refer to deductions that can be applied against rental income earned from an investment property such as depreciation expenses or interest paid on a loan used for purchase.

Finally, appreciation refers to increases in market value of a property that can be realized through capital gains when you sell it at a higher price than what was initially paid for it.

In comparison, stocks offer only two main types of returns: dividends and gains of appreciation.

Dividends are payments made by corporations that own stocks which are distributed amongst shareholders of those stocks in proportion with each shareholder’s ownership stake. Therefore larger shareholders receive more dividend income than smaller ones proportionately.

Capital gains refer to profits gained from buying low and selling high – meaning if you buy stocks at a lower price and then sell them at a higher one you have realized a profit through capital gain tax implications.

On the other hand if these same actions result in selling at a lower price than what was initially paid for them then there will be capital losses incurred instead. 

Thus investors who invest in stocks cannot benefit from cash flow or tax benefits whereas investors who invest in real estate can benefit from all four types of returns mentioned previously: cash flow, equity build-up, tax benefits and appreciation resulting from capital gains.

Thank you for taking the time to read this email comparing real estate investing with stock investing!

Hopefully this summary has helped shed some light on how these two differ not only quantitatively but also qualitatively speaking so that you may make an informed decision regarding your own investments based upon your individual goals and preferences!

All the best wishes with your investments!

There we have it. The AI spit this out in about five seconds.

As far as the content goes, ChatGPT is pretty spot-on with its comparison. The AI’s writing style could use a bit of work though. Its readability score is much higher than I typically shoot for.

Still, this is pretty impressive.

Going forward we won’t be able to know whether what we’re reading was written by a human or an AI. There’s something a little unsettling about that.

The good news is, we don’t have to deal with AI’s when investing in real estate. And for those looking for a great system that makes building passive income with real estate simple, check out our new program right here:

Rental Real Estate Accelerator

The post What AI can tell us about passive income first appeared on Zenconomics.

The post What AI can tell us about passive income appeared first on Zenconomics.

The Cash Flow Vision

The Rich don’t work for money.

That was one of the key lessons from Robert Kiyosaki’s popular book Rich Dad, Poor Dad. And it made perfect sense to me…

I first read Rich Dad, Poor Dad about twenty years ago. I was living on the sixth floor of a college dorm at the time. And I got the book from a guy right down the hall. He told me I absolutely had to read it.

He was right. The book opened my mind to an entirely new world of possibilities.

After all, Kiyosaki made it sound easy. Don’t get a job. Buy rental properties and build passive income instead. What’s not to like?

But there was a problem…

The older I got, the less practical Kiyosaki’s advice seemed. I know many people have come to that same conclusion.

It all sounded great when I was nineteen. But then I graduated college… and my student loan payment schedule started.

That meant I needed to get a job. Which led me to move to a major city. Then I rented a house… bought furniture… made new friends… met my wife… And before I knew it, I was thirty years old and living a conventional life.

The magic of Rich Dad, Poor Dad had faded.

Several years and a few kids later I woke up one morning and realized I had fallen short. Every day I was rushing off to my office before the sun came up… only to come back home exhausted in the evenings.

Meanwhile, my kids were growing up by the day. I was missing all of it.

That’s when I decided to rekindle the magic.

I dusted off my old copy of Rich Dad, Poor Dad. I read it. And then I set aside thirty minutes every day to figure out how to break into real estate and start building monthly cash flow. I wanted the passive income.

It took some due diligence, but I plugged into an investment network down in Dallas. Then I bought my first investment property.

That was the start of my education. I had to scramble to learn everything I needed to know about being a real estate investor.

What should my LLC structure look like? How do I utilize depreciation? How should I go about my bookkeeping? How do I make sure I’m maximizing my tax situation without compromising on asset protection?

It was a steep learning curve at first. And I learned a little bit more with every new property I bought. It took me several years to really feel like I had it down.

And then one day I woke up and realized just how far I had come. My monthly cash flow had grown substantially… and suddenly I had far more financial security. I didn’t worry about the future.

Then when the stock market tanked this year, I hardly noticed it. It was liberating not to have the bulk of my assets tied to the market.

And the rent checks just kept coming in month after month too. They didn’t care about the stock market either.

My friends, that’s the cash flow vision.

Simply put, passive income is the ticket to financial security… then financial independence. It’s not as easy as Kiyosaki may have made it out to be… but it’s not overly complicated either.

If you have been looking for ways to start building passive income, I promise you rental real estate is the ticket.

It may not be flashy, but it’s by the far the most hands-off way to build extra income sources. No kidding – I spend no more than thirty minutes on my real estate business most months. It just doesn’t need me.

And here’s the best part – you don’t have to spend years getting plugged in and learning the ropes like I did. Instead, you can tap into existing networks and get started with all the good practices today.

That’s what our Rental Real Estate Accelerator program is all about. It’s the fast-track to passive income.

At the base level, this program details everything a new investor needs to know to start building passive income with real estate. And we take it much farther than that.

Rental Real Estate Accelerator will walk you through the entire process of buying an investment property. We’re talking step by step. Everything from how to find and analyze the property… to setting up your LLC and bank account… to closing on the property with a tenant in place. That way the rent checks start rolling in immediately.

This program was designed to show anyone how they can start earning $500-$800 a month in extra income immediately. That’s baked right into the cake.

And from there our process is geared towards helping everyone work up to $10,000 a month in passive income. For many people this can be done in six years or less.

So if you’re looking for ways to build passive income, you won’t find anything better than this. All the information you need is right here:

Rental Real Estate Accelerator program

The post The Cash Flow Vision first appeared on Zenconomics.

The post The Cash Flow Vision appeared first on Zenconomics.

What Black Friday Gets Wrong

I’ve got a bone to pick with Black Friday.

I spent the weekend wading through all the marketing emails that hit my inbox. I bet you did too.

Black Friday early sales… day-of sales… last chance sales… I lost count of how many there were.

Then, at a certain point, the headlines flipped. Now it was time for Cyber Monday sales. So I waded through all those emails too.

Of course, I don’t have any problem with these emails. I understand. I try to send out a couple emails every week myself.

But here’s the thing – the whole concept underlying Black Friday is a problem. That’s because it perpetuates the most common misconception we have around money.

It’s the consumerist view of money. The idea that the whole point of making money is to spend it on stuff. And then if we can make “good money”, we can buy even nicer stuff.

So many people view money in this way.

And as a result, they live their life on a treadmill. Constantly working for money… buying stuff… and working for more money.

I think it’s time we flipped the script.

I propose that the whole point of making money is to acquire assets that make their own money. Then when we have enough assets, they will produce all the money we need. We can get off the treadmill.

This is the key lesson in the timeless board game Monopoly. I think we would all be wise to heed it.

Of course, this raises the question – what assets should we buy?

For me, it’s simple. Old fashioned rental real estate is the way to go. For a few reasons.

To start with, real estate is a tried-and-true asset class.

People need a place to live. And these days there are a lot of people who can’t or don’t want to buy their own house. That’s why real estate investors are so important.

And the great thing about real estate investments is that we know what our return will be right up front. Before we buy.

Our return is how much rent we will receive each year divided by the down payment we need to make to buy the property. That gives us a percentage return.

And if the return isn’t good enough, we don’t buy. It’s that simple.

And get this – we generate that return regardless of whether our property goes up in price. That’s the power of cash flow investing. We make money no matter what.

Plus, we can finance 80% of each real estate investment with a fixed rate mortgage. This puts inflation to work for us, rather than against us. As inflation drives rents higher, our mortgage payment stays the same.

And finally, real estate investments provide us with tremendous tax benefits. I don’t think people realize just how powerful this is.

The U.S. tax code allows real estate investors to write off over 3.6% of a property’s total value every single year. This is a phantom expense that offsets our taxable income.

As a result, we’re unlikely to owe any taxes on our rental income. No kidding. This is baked into the cake.

So let’s put it all together here…

We’ve got an investment that’s going to produce a strong return for us whether or not it goes up in value.

But we don’t have to buy the investment outright. We can borrow 80% of the money we need… putting inflation to work on our side in the process.

Oh, and we don’t have to pay our loan back out of pocket. Somebody else will do that for us by paying us rent each month.

And to top it all off, we won’t owe any taxes on the rental income our investment generates. The money can pile up in our bank account tax-free.

If we were talking about a stock here, the entire world would be tripping over itself to make this investment. It would be the single best equity investment ever available.

But since we’re talking about boring old real estate, nobody notices.

Or, for those who do notice, they often think it’s too hard. And too time consuming. And they don’t even know where to begin.

That’s where our Rental Real Estate Accelerator program comes in.

This program walks through a tried-and-true system for building passive income with rental real estate. Our goal is to help everybody work up to $10,000 a month in extra income.

Of course, it all starts with knowledge.

Rental Real Estate Accelerator will cover everything one needs to know to start and scale a real estate investment business. Analyzing properties… financing… LLC structure… how to unlock massive tax advantages – we go over all of it.

What’s more, we systematize everything.

Most months I only spend 30-60 minutes on my own real estate business. That’s the power of having systems in place.

And here’s the kicker – Rental Real Estate Accelerator shows people exactly how to plug into existing investment networks.

This is how we find our rental properties. The networks bring them right to us. We aren’t going through listings or playing phone tag with brokers. We don’t have time for that.

What’s more, these networks link us up with the best property management firms in the markets we invest in. This is critical.

Simply put, property managers do all the work for us.

They screen and place our tenants. They collect security deposits and monthly rents. They take all phone calls. They handle all repair requests. And then every month they deposit the rent checks right into our bank account.

To me, this seems too good to be true.

Property managers provide an amazing service. And we’ve got the best ones in our networks.

The point is – our Rental Real Estate Accelerator program takes all the guess work and grunt work out of becoming a real estate investor. It makes building passive income with real estate simple. And systematic.

For those who have been looking for ways to start building passive income – this is the program for you. I’m confident anyone can work up to $2,000 – $3,000 a month in extra income in just a few years by following this blueprint.

For more information, just go right here:

Rental Real Estate Accelerator program details

-Joe Withrow

The post What Black Friday Gets Wrong first appeared on Zenconomics.

The post What Black Friday Gets Wrong appeared first on Zenconomics.