Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.

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Think of the equity in your property as if locked up in a bank account of bricks, right? You’ve got this money and it’s locked in the bricks. It’s like it’s in a safe sitting inside of the bricks and you can’t crack that combination. So the money that’s in there, it’s there, it’s yours. You technically own it, but there’s ways that you can crack the.

And use those dollars. What would your life look like if you could replace all of your working income with simple and conservative investments that could do it for you? Over the last 13 years, we’ve helped thousands of clients transact over half a billion dollars in simple and conservative real estate transactions, allowing them to begin replacing their work income with real estate investment income.

Each week, we’ll be pulling back the curtain on the ins and outs of real time retirement based real estate. That will transform your financial future even if you have no real estate experience. This is Replace Your Income with me, Kevin Clayson and Steve Earl. All right, everybody. Hello and welcome to Replace Your Income with me, Kevin and Steve Earl.

How you guys doing? Steve, how are you doing man? I’m doing great. I’m excited to be here. Oh man, this is, I’m excited about this. And we were just saying like we are. So, you know, we took kind of a hiatus, not necessarily cuz we needed to, but then the last few episodes that we’ve been able to put together and the guests that we’ve had on, we’ve been like, So just, we’re loving having this conversation with you as a listener because there is so much to talk about right now.

And so thank you for listening and giving us the ability to have these conversations cuz we love. You know, on that note, Kevin, like, I don’t know when, when you first introduce this idea to me of, of us doing this podcast, I was a, a little, I was a little bit concerned that is like, gosh, what are we gonna talk about all the time?

Because there is a lot of information to talk about, but there’s also, you know, potentially a limit to it. But the more we’ve had these conversations, I mean, this whole podcast is based on prior conversations that we’ve had, but, you know, you always worry that you’re gonna run out of material and content, but oh my goodness, it.

Maybe we ought to move this to two times a week because there is so much to dive into and to talk about, but in consideration of our listeners, we’ll, we’ll keep it at one because as exciting as this is for us, you know, perhaps, maybe on the other end people might get tired listening to us. I don’t know, man.

We don’t want you to feel obligated to have to listen to our voice. We don’t wanna. You know, what’s that? Uh, overstay our welcome. Yeah. That, so to speak. My wife’s dad always says to our kids, like, if our kids are playing around or they’re wrestling or they’re, you know, tickling each other, his phrase is always leave them wanting.

That’s what he says. So I think that’s a, a good core philosophy we wanna leave you wanting. But, Well, today’s a really cool episode because this is another one of those concepts where, And I’ll, I’ll be totally honest, Steve. The concept we’re gonna talk about today is how do we create liquidity inside of real estate investments?

Because that’s kind of counter to what most people think. Most people think real estate, they don’t really equate that with liquidity. And we did an episode, I don’t know how many months ago, with one of our awesome clients named Kelly Fastly, and she kind of brought up this idea of one of the things she loved about this kind of real.

Is that it created liquidity. And then she kind of talked about why. And I gotta be honest, I had never put it in that context in my brain before, but really honestly, the idea of liquidity is you should be able to get out and get liquid as quick as maybe you would want to. And the ideas with stocks, like there’s immediate liquidity, right?

I can sell right. And you know, that actually sounds like a really cool song. Get out and get liquid. Get out, get liquid. Yeah, I like it. That’s right. I like that. We should, maybe that should be the jingle. We could put that song, actually, that could just be the name of this podcast. Get Out and Get Liquid

And she talked about that and I’m like, Oh my gosh. The more I’ve been thinking about it and the, it’s added, uh, I think a little arrow to my quiver of understanding of why this real estate. Is so powerful because there is liquidity in real estate. If it’s done right now, it’s not as liquid as I can go to the bank and I can swipe my ATM card.

But there’s a couple ways to make real estate liquid, and one of those is buying the kind of real estate where there’s always a built in market that creates liquidity because there’s always a market available for you to sell that property and get your money back. Yeah, and that’s one way of creating liquidity.

In fact, it’s a great way of creating liquidity and utilizing those, you know, the cash that you get out or the capital gains that you get out after selling and putting it into additional real estate. And can I just make this comment, Kevin? I’ve been at this for a long, long time now. In our last episode, you talked about Mike turning 50.

Yeah. Well, I turned 96 last, last week. You look, you look great for 96. You really do. Yeah. . So, so 51. But I’ve been doing this, you know, since I was fairly young and I wish I knew then what I know today. And so I wanna share just a short more so of information, uh, with our listeners today that I wish I, I would.

Known this then, uh, and applied this concept. And I’m grateful that so many of you are applying this concept because we, we teach, we teach it. But I’m, I’m gonna talk about it right now for just one second. And that is when you buy real estate, the way that you become wealthy is by holding onto it forever.

Now, when I say holding onto it forever, I don’t necessarily mean that physical. But the assets that are created from that property in the form of equity, whether you pull it out, you know, if it’s a primary residence, you can do a HeLOCK. If it’s an investment property, you can, sometimes you can get a second on it, or you can refinance it and pull some money out.

Or of course you can sell it, but if you sell it, Please, please do not take that money out and just spend those dollars. The whole idea behind our concept at done for you real estate is to always take those proceeds, put ’em into another property and build residual income. What the real benefit of what we’re helping our clients create is ongoing cash flow.

You’re creating literally a money tree. You’re not just creating a pile of money that can. You know, spent and you put some back in and that kind of a thing. It’s you’re creating something that will continually generate revenue for you, for your family, wherever you’re holding that property indefinitely, because the moment you sell that property and you spend those dollars, one, you’re getting tax Number two, the IRS is recapturing that depreciation and you’re losing all of that benefit and you’re having.

Resend that money back to the IRS and you kind of lose that benefit. So there’s three ways of creating liquidity. Sell the property, create 10 31 exchange, put that money into another property. Number two, if you do need cash to spend on something else other than just reinvesting it. Refinance it, Pull some cash out, hold onto the asset, let that asset continue to grow in value.

But if you just sell that asset and you, and now it’s gone, like it doesn’t continue to work for you, you have the cash and now it’s not working for you. But if you refinance it, you get to keep that asset and it’s gonna continue to work for you. And you’ll have the cash to go do whatever you want with it.

We always suggest put it into more real. , but if you need to spend it on other things, cuz things come up, right? Sure, yeah. If, if you just have to generate, you know, some money to pay for something, maybe you had a for unforeseen expense or whatever, whenever possible. Refinance it, get a line of credit on it.

If it’s a primary, get a HeLOCK on it and use money that way. And once you’ve done that, it’s a little bit of work to get that done. But once you do, Kevin, it’s like you have a debit card that you literally can then take and spend as needed. And spending that money is as liquid or better than cash itself.

So I just wanted to give that little tidbit of information, Kevin, if I would’ve held onto more of the properties that I have bought over the years. I don’t even like to think about how much additional wealth and benefit that I would’ve had personally had to not just sold them off to create some liquidity to spend on something else.

So that’s kind of my, my tip for the day in terms of just the power of hanging onto that real estate and creating liquidity via those three method. I love that. And so, you know what I was thinking as you were talking is I always have this example that I use sometimes when I go and I talk about real estate.

And I talk about the fact that real estate’s one of the few things that allows your dollars to work in more ways than one. Like your same dollars increase in purchasing power in this way. And that what you just described is exactly it. And that’s really, at the end of the day, that’s the kind of liquidity that we’re talking about.

And I want you to think of it like this. We’ve used this analogy before, but I’m gonna remind you of. Think of the equity in your property as if locked up in a bank account of bricks, right? You’ve got this money and it’s locked in the bricks. It’s like it’s in a safe sitting inside of the bricks and you can’t crack that combination.

So the money that’s in there, it’s there, it’s yours. You technically own it, but there’s ways that you can crack. And use those dollars. But what Steve is saying is when you crack the safe, when you use the dollars they should be put to work in addition for your real estate portfolio. And here’s kind of the concept that I think of this kind of velocity of money concept.

And I love looking at like, I don’t know if you guys have ever done this, and I think we’ve talked about it briefly on the podcast, but it it as a refresher or for our new listen. If you take out a dollar bill or a $20 bill or a 10 or a five, and you look at it, I always like to use the example of a dollar bill cuz it’s just easy.

And you look at the serial number that’s on the dollar bill, that serial number is supposed to represent a hundred pennies of purchasing power. And now if you were to go take that dollar and you were to go exchange it at McDonald’s for a double cheeseburger, you’d give them the dollar with that cereal number, you’d get your a hundred pennies worth of value back in your double cheeseburger or whatever, right?

Well now the owner of the McDonald’s somewhere along the way has that same dollar and they may be go use it to go get a car wash, right? They give the dollar to the person who owns the car wash and the car wash owner gives them the car wash in return, and now the car wash owner may be. Takes that dollar to the dry cleaners and hands that dollar to the dry cleaners in order to pick up their dry cleaned uniform.

So the example there is that same dollar with that same cereal number that’s only supposed to represent a hundred pennies worth of purchasing power has now gone on and bought three sets of a hundred penny worth of goods, right? And so it’s almost like that same dollar that was only supposed to represent a hundred pennies worth of purchasing power, just represented 300 pennies worth of purchasing.

But for each individual that owned it, it only represented a hundred pennies where the purchasing power. Well, with real estate, you have the ability to take your value. That’s locked up. If we don’t say it’s a dollar, it’s an amount of money that’s used as a down payment on a leveraged purchase. Your first investment property, you’ve got that money.

Sometimes I like to think of it as color coded money, right? Like when you go, this is just a visual that helps. I’ll give you an example. I, I don’t gamble, right? But, but sometimes I’ll play slots at Vegas, right? So like, let’s say I have $20. And I just decided to maybe go play slots at Vegas. Well, I’m gonna spend that $20 and if I win money, cool.

That’s all I got. If I spend the 20 and the twenties gone, cool. That’s kind of my benchmark, right? I’ve allocated a use for that money and I keep that use sort of native to that. Allocated use? Well, in real estate, the way I like to think about it, or any investment is if I color coded my money and if I took money and I, I, you know, I don’t know, put a blue pen mark on each one of the dollars that I’m using.

And this is just an analogy, right? I just wanna a visual for you. And I put a blue pen mark on each one of the dollars that I used as a down payment on a purchase property. Those dollars with a blue mark should never be spent in the real world, right? They should stay in that property. And when that property grows over time and I decide to refinance some of those blue dollars back out of the property.

Plus maybe some of the equity growth, I’m now gonna go put it into another property, or I’m gonna sell that property and I’m gonna take those dollars and I’m gonna go invest them into another property. So the idea is the way money can move and become liquid and be utilized is you assign it a purpose and then you keep it native to that purpose and then you allocate it and use it within that framework.

And what it does is it multiplies over time as opposed to, I put those dollars in. They represent just a down payment purchase on a single property, and then I sell that property and I spend all the dollars, and now all my blue mark dollars are gone. If you keep those dollars native to the real estate environment, refinance them out, sell ’em, and then take those dollars and go reinvest them in additional real estate.

What happens is those dollars become employees. They now are purchasing multiple benefits, multiple pieces of real estate over time, as opposed to just being assigned one purchase action one time, and then that’s all you ever got out of it. And so that’s just kind of conceptually, maybe that didn’t make any sense to you guys, but conceptually what I want you to think of is that your dollar can have a specific purpose.

And what Steve is saying is in all of his, many, many, many, I. Many, many years of wisdom. I mean, many, many years. He’s saying that. Those just too many. Oh yeah. Just, Just maybe three. Many, many. Okay. Those dollars should stay native to your real estate investing environment once you decide to invest in real estate.

Let those dollars work in real estate, and what you’ll find is you invested in one property, it generates cash flow, it generates appreciation, it generates tax benefits. Those dollars are now generating profits for you in more ways than one. So why would you ever pull them out of that environment when in that environment your dollars are earning?

Returns in more ways than one. It’s like the $1 bill being able to purchase three times of the cheeseburger and the car wash and the dry cleaner, except you are the one owning all of that purchasing power real estate gives us the ability to do that. So this is probably a horrible example. I think that the example you just shared is a very powerful example.

I’m gonna share one more example and I. You know, for those who are more, you know, who, who might have kind of a scientific background or whatever this is for you. So, so if you think about like these dollars, if they are like a one cell organism that you’ve invested into the property and you know how one cell organism, you know, grows and multiplies, you take that one cell and it divides into two.

Yeah. And then those two divide into four. And before you know it, that $50,000, $60,000 investment in one property has now divided within that one. Has divided into the analogy is equity, right? It’s divided such that now there’s, on top of the original $60,000, it’s now divided into $120,000. Yeah. Within a few years.

That’s right. And now you take the surplus. And you take that and utilize that in purchasing additional real estate or you know, and I talk about sometimes some things happen, right? And you just have to have some cash for something. Well, you can refinance out those divided dollars, pull ’em out, but you keep the initial.

Dollars in there and let those continue to grow and to multiply within the brick and mortars of, of that property. So, I don’t know, we’re probably beating a dead horse here, but there’s different ways to kind of analogize and look at, you know, what real estate can do and how you can create that liquidity.

From those initial dollars that you, you know, put into that property. And what’s so cool is the reason why we’re talking liquidity and with real estate is you can become liquid in a variety of ways, right? The equity that grows, the equity that you’ve got in your bank account of bricks, you can access it by selling and putting it to work in additional properties.

But in order to sell, you have to have a built in market. Well, the good news is with single family residential real estate in really popular markets where there’s a really kind of hot, high demand for these homes. You know, middle income America, middle class Americans, these are the vast majority of homes out there.

Like I guarantee wherever you live, there’s a rich neighborhood, right? But there’s far fewer rich neighborhood homes than all of the other homes in your area, right? And in the neighborhoods that you drive through or that your kids walk through to go to school. And so the idea is if that’s the real estate that’s in the highest demand, It’s the most liquid, simply because it’s the easiest to sell and kind of get rid of.

But what we’re saying to add to that is if you understand that the dollars you invest in. Asset that can be liquid, continue to stay in an environment where they could continue to grow in additional quote unquote liquid assets. In real estate, you create a purchasing power for yourself and with real estate, what Steve mentioned earlier, it’s liquid cuz you could sell in 10 31 exchange it it’s liquid cuz you could do a refinance and pull some of the money outta the bank account of bricks.

It’s liquid because you could do a HeLOCK and you could just get a home equity line of credit. On that property. So there’s way, And there’s actually one more. Oh yeah. And that is on a monthly basis, you’re creating cash flow, which is liquidity in and of itself. Right. And what I was gonna say, thank you, cuz what I was gonna say is all of that, right?

All that liquidity, being able to sell, being able to refi. Being able to get a HeLOCK, those dollars staying inside of that native real estate environment so that they can grow and multiply. They grow and multiply like your one cell organism over time and along the way as that portfolio grows, if you keep those, that one initial bit of principle, those set of dollars that you put into that first investment property, and you let that grow over.

You can spend the cash flow along the way if you wanted to. That’s replace your income. That’s how one becomes many and many cash flows. Produce the kind of income that allow you to live the life that you want. But the principle, those initial set of dollars with that blue check mark, they’ve stayed inside of that native real estate environment and just grown and multiplied like your single cell organism.

Has, and that’s the idea. This kind of real estate gives you the ability to access the capital if necessary. But you ought keep that initial principle in that real estate for forever. Let it grow and produce cash flow that funds your life. Yeah, exactly. And you know, so. One of the reasons why we felt like we wanted to address this topic was, was based on the conversation that we had with Kelly a few episodes ago and how she brought up this concept of liquidity because she is also a financial planner, and so when she’s talking with people about their needs and their financial needs and their goals and dreams and so on, one of the questions that she asks.

On a regular basis is, you know, what type of liquidity do you need, uh, with the, with the money that you’re going to invest. And if you need liquidity today, now kind of a thing, then you know, she would recommend like a money market account. You’re not, not gonna get as big of a, a return, but the liquidity is more like a regular checking account, right?

You can put money in, you can take money out. And so as she kind of, you know, related this to real estate and how, uh, real estate can also. Fairly simply create liquidity. There is an initial kind of time requirement to, to set things up in the, in the form of a refinance or a helo or you know, a sale or something like that.

That part does take some time, but once it’s done and completed, you know, I mean, you’re looking at. 30 days to get something like that done. If it’s a sale, it might take a little bit more time, Might take less depending on the market. And so liquidity is something that isn’t necessarily always associated with real estate.

Correct. But rarely isn’t associated, I feel like. Right. But in today’s world, more so than ever before, and especially with single family homes. That liquidity is more of a real tangible asset in owning real estate than ever before. Well, and let’s touch on that briefly because part of the reason why we’re talking about liquidity with real estate is because it’s the kind of real estate that it is.

So, you know, one of the reasons we get asked often, do we do duplexes? Do we do fourplexes? Do we do multifamily units or commercial? And we specialize in single family residential real. One of the reasons I always explain to people is, is they’ll ask about, you know, a multifamily or something like that.

Well, number one, you know, while that you can make a lot of money doing that kind of real estate, it’s gonna require either you syndicate a bunch of people’s capital or it’s gonna cost you a lot more capital, a lot more dollars to be able to invest in something like that. But also, I always think about this.

If the liquidity in real estate can partially be achieved, because there’s always a market for your, If you’re doing this kind of real estate, there’s always a market where it could easily be listed, sold, or that you a bigger market. A bigger market, right. More demand. So that way you could, there’s more demand for that kind of real estate.

Well, if. And I would say this too, with this kind of real estate, there is this high demand, especially now more than ever. And if you’re going to sell that property, many times a lot of our clients are selling these properties to an end user, to a family that’s looking at going to move into this property and they’re gonna live there for.

Right, So you’re selling as an investor to somebody that’s making more of an emotional purchase with a multifamily, even with like a fourplex, you are an investor selling to another investor. If somebody’s buying anything that’s more than one unit, you know, they are an investor. Will. An investor selling to an investor.

Totally changes the nature of the transaction, right? Cause you’re an investor, you wanna get top dollar, they’re an investor. They want to get as cheap as possible, right? You’re viewing it through an entirely different set of lense. When you own a piece of real estate that you can sell to a family, when they’re walking through the home, they’re not crunching the numbers as much as they’re going.

I can see my son in that room and my daughter in that room, and we can put the big screen TV on this wall. That’s what they’re thinking of. It shifts the nature of the transaction, and frankly might mean that you can collect more on the sale of your property and have more people built in ready to buy your property, thus creating the.

Because it’s single family residential real estate as opposed to other forms of real estate. Well, and on top of that, what you des described there is, is very accurate. And additionally, there are just way more. Primary buyers of single family homes. Then there are buyers of investment, you know, commercial type real estate or multi-family homes like you.

Like if you’re not an investor, you’re not buying a multi-family property like, like you’re not buying it as a primary residence. Right. And there are, you know, 300 million of us, you know, single family, home owner, you know, potential primary buyers as opposed to, I don’t, I don’t know what the number is, but it’s significantly less.

Yeah. Number of investors. And for the higher priced properties, like, like the multifamily or commercial, like there’s even fewer Yeah. Investors with the type of funding and financing capabilities to purchase something like that. So your buyer base drops dramatically and therefore it just takes more time and therefore, A little less liquidity in terms of finding a buyer.

Anyways, so that’s why we love real estate because this type of real estate creates more liquidity than other types of real estate, and on top, just from the standpoint of having a larger pool of potential buyers. But on top of that, because it’s single family residential real estate, you get liquidity from the standpoint of I can go get money out through a refinance or through a HeLOCK.

You know, we did an episode on the ROI refi where doing a refinance. Can create a more positive position for you on an investment property in a variety of ways. It can increase your roi. There’s not that many things that give you the ability to use multiple financial tools in an asset that’s producing income for you in multiple ways.

All with in the same sort of pool of the kind of investment that is in the highest demand, kind of across the board. So you add all that up and that’s why we love single family. It is more liquid than other kinds of real. For those reasons. Now I have to bring up one more point. Why investing in single family homes is just like the way to go.

It’s like I know a lot of, you know, higher end, you know, real estate investors, multi-family, commercial, that kind of a thing. And a lot of them are like really good people, that kind of thing. But let me just say this, our clients. People who buy single family properties are just way, way more cool. Yeah, they are than any of the multifamily and big time, you know, high dollar investors like those guys are, they’re just way uptight.

They’re just way, you know, whatever. Whereas the single family buyers, like if you’re do, if you’re doing single family, you know, investing, you’re just way cool. You know, exclamation point, end of story. Yeah, it’s so true. So we wanted to do this episode just to kind of again, right. What’s our mission? We wanna help you understand that replacing your income one property at a time is possible over time with real estate.

Whether it’s replacing all of your income or a portion of your income, right? We have a lot of clients that they’re not gonna replace all their income, but they’re gonna replace a portion of their income because the real estate’s gonna give them the ability to do that cuz they’ve got some other means that are taking care of the rest of it or whatever.

The idea is utilizing simple and conservative real estate to. All or some of your income. And one of the easiest ways to do it when you’re looking at investment classes is this kind of real estate because it’s more liquid, because it generates profits for you in multiple ways because you can ize and, and get additional purchasing power out of these dollars because of the nature of the real estate.

The nature of the financial instruments and tools available to you with single family residential real estate on top of the fact that you’ve got a larger buyer pool. There’s higher demand and, and everything that we talked about on this episode. And so if you don’t know, we’re pretty passionate about single family residential real estate.

We kind of like it. For a whole variety of reasons. One of those being if you’re gonna invest in real estate and you’re seeking liquidity, I don’t know if there is a more liquid form of real estate investment than single family residences. And that’s kind of the moral of the story at the end of the day.

Yeah, no, that, that’s a great recap, Kevin. So thank you so much for joining us. As always, we hope this was beneficial and helpful. Again, if you’ve not gone on and, and got a chance to rate and review the podcast on Apple iTunes, please go do that. It helps us a lot and frankly, it just makes Steve feel good.

So that’s the, I mean, that’s the main reason that we do it. He prints off the reviews, he takes him home, he reads them to his family, and uh, I do the same thing and it’s the only time my kids think I’m cool. So, you know, look, help a couple dads out. Right. You know? Yeah, exactly. It’s all about just a pat on the back and now , they’re really like, I didn’t get this until, you know, you, you are our website developer.

You are kind of our technology guy is, is, you know, on the marketing side of things. And the more that I’ve learned about some of these different little things, I can’t tell you how much I appreciate each, you know, little five star review that comes in means a lot. It, it means a lot, you know, above and beyond, like making us feel good, which is really cool and really important.

It makes a difference in our ability to continue to grow and to, uh, to build this thing and, and to just, you know, be the best that we can be. And of course, we appreciate any and all feedback. Absolutely. Where we grow the most is when we get feedback that isn’t necessarily, you know, Positive. Sure. Like we take pretty dramatic steps when, you know, when somebody, it’s important to, you know, has, has an issue.

And, and certainly that happens on occasion. And so we’re, we’re super grateful for any and all feedback that everybody gives us. And really guys, you know, when you go leave a review or even just when you share the podcast with a friend or family member, We believe that we are all a part of something here that’s far bigger than a podcast, far bigger than any individual real estate transaction.

We believe that we are a part in many ways of delivering back the financial control that so many Americans have. Forfeited for so many years. You know, so many Americans have fallen victim to a system that was designed to hurt them, not help them. And little simple real estate transactions over time delivers back that financial control.

And the more people that know that and can recognize that and realize that they don’t have to be real estate experts, that they can get something like this done for. Through a system where a company like ours or others, it just means we’re delivering freedom back to Americans, one property at a time, one podcast at a time, one interaction at a time.

And that for us is really what fuels us and really what it’s all about. So thank you for joining us. Thank you for being a part of this family. We love you. We appreciate you. We hope you have a good week, and uh, we’ll talk to you real soon. Have a good night. Thanks so much for listening to replace Your Income with Kevin and Steve.

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