ASS-BACKWARDS! Why 'Conventional Wisdom' About Rental Properties KILLS Your Portfolio | Episode 151 - a podcast by Bryan Ellis - SelfDirected.org

Today you learn why the “wealth building” model you’ve been taught about rental property investing is – well, it’s totally ASS-BACKWARDS – and I’ll teach you a MUCH SMARTER way that can yield you a portfolio of 15 reliable, high-yielding rental properties for a one-time investment of ONLY $150,000.  I’m Bryan Ellis… get ready to have you mind blown right now in Episode 151.

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Hello, SDI Nation!  Welcome to the podcast of record for savvy self-directed investors like you!

I hope you’ll forgive my use of the mildly vulgar word in today’s introduction, but this one is worth shocking you to get your attention.

There’s a belief that’s pervasive… and it’s true.  The belief is this:  Rental property investing can make you wealthy over the long term.

That’s very, very true.  Folks, the advantages of owning rental real estate are almost too vast to mention… regular income, appreciation, tax benefits… it’s like the ultimate cornucopia of investment benefits.

But the way you’re taught to achieve it is, well… it’s totally backwards.  Here’s the prevailing ‘wisdom’ – and I use that word very loosely – on the topic:

Conventional wisdom tells you to go out and buy a house – ideally at below-market pricing.  You leverage your efforts by getting a loan to finance the property.  You place a tenant in the property, who pays rent, which you use to pay down your debt and to cover expenses like property taxes and maintenance.  And hopefully, you’ll have $200 a month or so left over after all expenses as your reward.

Then the hope is that one day into the future – probably 25-30 years into the future – the property will be totally free and clear of all debt, yielding you a substantial bump in income, and you’ll have an asset that you can then sell to finance your retirement.

Of course, you’ve got to do this 10-20 times in order to provide the kind of income and financial future you’ll need… and each time, it means shelling out another $100,000 to $150,000 to get a top-quality rental property.

Can this approach work?  Yes, it can.  But I know a whole lot of real estate investors… and not many who have had success with this approach.  The problem is that it takes SO LONG to get any benefit from doing this… it’s just terribly demotivating.  This is an example of a strategy that is very, very easy to sell rental properties to investors – particularly new ones – but it just doesn’t hold up under the strain of reality.  The payoff is too distant and too uncertain.

And frankly, it’s REALLY, REALLY dangerous.  If you’re clearing $200 or $300 per month… that won’t be enough to make a dent when an air conditioner goes out or a roof must be replaced.  You’ll go into the red very, very quickly.

The thing about rental property is this:  It does not make sense as a one-off investment.  The best scenario is to have a portfolio of multiple properties, all generating strong cash flow, so that you’re protected from the ebb and flow of natural variations in expenses like maintenance and vacancies.  But you can’t do that with one property only…

…and you can’t even do that with multiple properties, if they’re all leveraged and you’re only clearing a couple hundred dollars a month on them.

What’s the answer?

Do exactly the OPPOSITE of conventional wisdom… use the SDI Wealth Snowball strategy.

Using the SDI Wealth Snowball Strategy, you make a one-time investment into wise high-yielding properties… pay all cash for those properties… and you let the income generated buy you ever more property to repeat the process over and over… until some point in the future, when you have many, many properties… all free and clear, and all yielding a truly SUBSTANTIAL income… all as a result of a one-time investment.

This isn’t some wild, theoretical idea either.  Imagine this scenario with me:

You call me up and say “Bryan, I’ve got $150,000 available cash, and I’d like to build a large, very profitable cash flow portfolio from that money.”  Here’s what I’d do:

• First, I’d confirm your TIME HORIZON. If you have only 3-5 years, you’ll certainly get some benefit.  But if your time horizon is 10 years… or even better, 15-25 years, then you’re a great fit
• Next, I’d confirm your STRUCTURING. The SDI Wealth Snowball relies on certain tax advantages that are readily available to basically everyone… and the strategy assumes the accumulation of a very large portfolio of great value, and that you’ll want to pass that portfolio to future generations in a safe, favorable manner.  If your current legal structure can accommodate all of that, great!  If not, I advise you on how to make it happen.
• Finally, I’d confirm your FUNDING. This strategy requires $150,000.  Not $150,000 per property, but $150,000 total, one time, forever.  And it must be cash.

What’s possible using the SDI Wealth Snowball?  Well, here’s how it works:

We’d use your $150,000 to buy 3 high-quality, high-yielding rental properties that yield at least 8.5% net annual cash flow AFTER a very, very generous allowance for maintenance, vacancy, property taxes, insurance and property management.  So, after ALL of those expenses are handled – and handled with plenty of room to spare – you yield at least 8.5% annually.

If you heard me correctly, and you realized that I’m suggesting that you buy 3 DIFFERENT properties with your $150,000… and thus the average cost per property is only $50,000… well, you heard me right.  There are SEVERAL key markets across the country where very high-quality property can be acquired in that price range… and due to some very powerful advantages unique to these select local markets, there’s a huge preponderance of available renters.

Not all markets where you can buy a $50,000 property are the same.  Some of those places are downright dangerous and foolish.  But some of them – a few of them – are like absolute gold mines for investors who want to create strong cash flow.

So here’s the thing… with the SDI Wealth Snowball, all of your income is plowed back into buying more properties.  And with the EXTREMELY conservative model we use, it still takes only 4 years before your income has actually purchased ANOTHER ENTIRE RENTAL PROPERTY… at no additional cost to you!  Now you have 4 properties…  And then you get another free property somewhere during year 7 and year 10… and then about year 17… you start getting another free property EVERY SINGLE YEAR.

Where does this leave you?  After 25 years… that one-time investment of $150,000 is now bringing you an annual income of over $75,000 – and you own 18 different properties totally free & clear with a value of about $1,000,000… even if they haven’t appreciated by a single penny!

And my friends… there are 2 things I want you to know about what I’ve just told you:

• First, These estimates are CONSERVATIVE… truly conservative. If you saw the ACTUAL numbers rather than these hypotheticals, you’d be BLOWN AWAY.
• Second, this strategy leaves you with an overwhelmingly valuable portfolio which can PROFOUNDLY aid with your own financial needs… and is also very easy to pass down to future generations, and provide an amazing base of financial security for them as well!

This strategy, my friends, the SDI Wealth Snowball – it’s just proof that better thinking leads to better investing.

How does that feel to you, my friends… how would you like to invest a sum total of $150,000 – not 100 grand here and 100 grand there every few years, but $150,000 one and only one time – and then in just the right amount of time for your situation, you have a portfolio of many, many properties producing strong cash flow with absolutely no debt… suitable for funding your retirement and perfectly structured for building multi-generational wealth for your family…

...well, if that’s a worthy outcome for you, and if you’d like to learn more, check out my FREE webinar on this program by visiting SDIRadio.com/snowball.  Again, that’s SDIRadio.com/snowball.  I’ve got some EXTRAORDINARY options available right now that will simply blow your mind.  So if you’ve got $150,000 and the thought of building a grand portfolio of cash-flow producing assets appeals to you, without ever investing additional money beyond $150,000, then check out my special webinar at SDIRadio.com/snowball right now… you’ll be very, very glad you did.

My friends:  Invest wisely today, and live well forever!

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