How to Make Cash Flow from Your Assets – Episode 210

This transcript was auto-generated and may contain errors.

[00:03] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, best-selling author, Kim D.H. Butler and No BS Money Guy, Todd Strobel. Hey everybody, welcome back to the Prosperity Podcast. This is No BS Money Guy, Todd Strobel. Once again, we have the president of Partners for Prosperity and our co-host, Kim Butler, with us today. Today we’re going to be talking about how to make cash flow or how to receive cash flow from your asset base. I think so many of the financial institutions have sort of the save for a rainy day type mentality that you’re just stockpiling assets. It’s much more effective if you can have cash flow that continues to circulate that money

[01:03] and make that money do many jobs. I think, Kim, you’ve gotten what, as high as 15 jobs with $1? Yes, I like to count them up, that’s for sure. So welcome, Kim. Well thank you. You know, it is interesting. There are so many people that have developed good strategies to build wealth and then they don’t know how to take that asset base that they’ve built and make it create monthly income. You know, most people’s bills are monthly. We have mortgage payments. We have food that we, well, hopefully eat daily. We have other, you know, car payments or insurance or whatever it is and our situation requires monthly income and as I’ve indicated, it’s just very difficult for a lot of assets to create monthly income.

[01:52] The old way of doing it used to be dividends from stocks and a dividend paying stock is just far and few between these days and they’re not as reliable as they used to be and they’re not as really high, frankly, as they used to be so that’s an issue. Of course, people used to just put money in banks and spend the interest every month or sometimes quarterly, but there used to be a decent amount of interest paid from like a bank CD or something like that. Of course, people have turned to bonds for income and all of those environments in today’s world at 2017 when we’re recording this are very, very scary. Not only are interest rates incredibly low, but bonds because of the inverse relationship

[02:41] with interest rates, if you put a whole bunch of money in bonds expecting to get income from it and then interest rates rose, the value of those bonds would shrink and that would wreak havoc on your income. So we have just out of necessity developed what we find are way better, more effective ways to create income and it falls into the general category of real estate investing, which of course a lot of people are interested in, but have absolutely no time or ability to do it themselves. And so we’ve created relationships with what I’m going to call bridge loan providers and it’s a fairly broad term, but it’s a way to own real estate where you don’t have to do the work yourself. It’s a way to get monthly income.

[03:33] Interest rates are at seven or eight percent. Sometimes they can even be a little higher for accredited investors. And typically you don’t get any of the benefits of owning the real estate. We do have one situation where you can, you just get the benefits of the consistent monthly income and then you get your principal back, which is fabulous because then if you liked the deal, you get in there and do another one. If you don’t like the deal, you can go do something else. And that’s very different than the last typical way of creating income, which are annuities and a lot of people turn to annuities for income, but those are paying very low interest rates these days, I would say typically in the three,

[04:18] four, maybe five percent. And so you’ve got the additional challenge with an annuity of that money is now locked up. You don’t have control over it anymore. And there can be some good to that. And yet for a lot of our clients, they want to keep control of their money. So the bridge loan environment is a very handy tool and we’ve developed with our good programmer slash husband slash truth teller, Todd Langford and the truth concept software, a calculator that will help people figure out how to best create income from their asset base. Now this calculator is heavy duty. And so it’s only available inside our prosperity pathway that we offer to clients that want to pay a fee for advice, because this is going to be a

[05:14] calculator that takes a lot of work and has to come with a lot of advice. And yet interestingly enough, anybody can download it for free when we are able to release it to the public, which will probably be another couple of months or so. So of course we get the inside track and can use it now, but when it becomes available to the public, any one of our clients could download it for free for 10 days. So I’m really looking forward to having that out there in the public marketplace. And in the meantime, if a client that’s listening or a prospect is curious and you are listening to this podcast, you fall into one of those two categories and you’re ready to really take a look at your asset base and create income from it.

[05:59] Reach out to us because inside the prosperity pathway, we can help you not only conceptually figure it out, but numerically prove how to make it work. Is that making sense so far? Makes a, makes a ton of sense. Something that unfortunately is probably very visual and it’s tough to do on a podcast, but I think anybody who would want more information on that, what’s the best course of action for them now? So our special email for podcast listeners is hello at partners for prosperity.com. And if you’ll reach out to that, or you’re welcome to reply to any of our email newsletters that we send out as well, then we’ll happily share with you what the prosperity pathway looks like, what it costs, how it can benefit

[06:48] you, and then we’ll figure out the next step from there. Super. Now, if we could just get back to the bridge loan, I had a quick question, um, you were mentioning about being able to control the money more so than an annuity situation. What’s the timeframe commitment on this? Great question. So the bridge loans are typically one to three years. Occasionally they’re as high as five years, but it’s a relatively short timeframe. That’s a, I mean, to me, that’s incredible to be able to earn those type of rates and only have to make a one year commitment. I would agree. All right. And then we had mentioned the calculators just a little bit, and I know I’ve talked to you some off offline about these, and it really has some

[07:34] ability to do some unique, uh, things that I’ve never seen another calculator do, maybe you could just elaborate a little. Sure. So anybody’s welcome to go to truth concepts.com and take a look. There’s videos on there. There’s an entire series of articles in the blog that covers the calculators and how they get used and what they’re for, et cetera. And as I indicated, anybody can download the calculator suite for free for 10 days. If you do that now, the system will pick up your computer. And so if you’re interested in that asset flow calculator, you might want to wait, but you can do so much good learning, just watching the videos and looking through the blog and the tutorials that are there.

[08:19] And this is clearly a calculator that’s designed for financial advisors and the whole truth concepts website is directed at financial advisors, and yet one of the things I love about today’s world is our clients and the people listening to this podcast really care about their finances and they are spending time learning about their finances. And one of the things that truth concepts calculators do is tell the whole truth about all things financial. So whether it’s the real estate discussion that you’re having from an investment standpoint or your mortgage or your 401k plan or your life insurance or a particular loan that you’re looking at, the calculators can help you tell the whole truth about that.

[08:59] And they certainly are available to anybody. And so they are there for a price, but like I said, free 10 day trial available and lots of free learning that can occur just by reading the blog posts at truth concepts.com and also by watching the videos that are in the tutorial section. Now, again, full disclosure, this is my husband’s company. It’s his full-time work. And all he does is create these calculators and help financial advisors learn how to use them. And we have a special three day truth training that we do six times a year or so, typically in Houston, sometimes up in Canada or St. Louis or other areas. And it’s a fun three days with a lot of numbers and we’ve had clients attend those three days.

[09:47] So if that’s an interest for anybody, they’re welcome to check it out. That’s truth concepts.com slash truth training, and you can get the dates and costs and locations there. Now back to our bridge loan discussion. The term is broad enough that I think we need to make an understanding of if I’m interested in getting in the bridge loan market, what are some questions we need to ask? And I think one of the main ones that you explained to folks is that they need to be based on commercial mortgages, not residential. Yes. A lot of the bridge loans are commercial and the value there is that you’ve got a bigger building and potentially a more stable environment. Now we do have a new bridge loan environment that is residential.

[10:38] So there’s nothing inherently wrong with the residential environment, but we are conscious of the fact that if you have a residential bridge loan, it’s just on a single family home, one family home. And so you’re relying on a individual person, an individual renter or a lease to own buyer to make your bridge loan payment. And some people are totally comfortable with that and that’s great. And we believe that we’ve got a really good business model there that a friend of ours works the St. Louis area in. And so if somebody’s curious about that, they can reach out to us again. Hello at partnersforprosperity.com and we’ll send them information. The commercial deals are all over the country. They tend to be broken up into sections.

[11:29] So you can actually get into them for 25,000, a relatively small amount. They can be done with IRA money or regular money. And again, the nice thing about the commercial deals is you have a big property and you’re one portion of the owner. And a lot of the commercial deals are also backed up by the company that sources and manages these deals. So you have a little bit more assurity of getting your payments and making sure that you’re in a good situation for collateralizing your dollars, which is literally what a bridge loan is. You’re collateralizing with a first deed of trust. There’s occasional seconds. But as a general rule of thumb, you want to stay on the first deed of trust because that will protect your money more.

[12:17] All right. Anything else you want to add in about the bridge loans and then how they would compare to say something that you were looking for a longer term investment? Yeah, I think it’s very important to be clear that the best source of income is the bridge loans. But instead, if you’re looking for growth, then we like the life settlements for that. The time frame is a little longer. The interest rates are a little higher. And you don’t have monthly income. You know, if you’re 40 or 50 years old and you have an IRA, having monthly income in that IRA is not very helpful. You want to have that IRA just be growing. And so we use the senior life settlements for that. As I indicated, that’s a little higher interest rate,

[13:00] a longer time frame, more seven to 10 years. And most of the time, an accredited investor is required. So that’s a million dollar net worth or two to three hundred thousand of income, depending on whether you’re married or not. That’s the definition of accredited. We can make some exceptions on that, depending on the situation. There there’s space for a few suitable investors, which is just a two hundred fifty thousand dollar net worth. But the senior life settlements are a fabulous asset class to learn about, because in your future, you may be an accredited investor or you may have an opportunity to use them if you’re not right now. And for our clients, and this is good in all 50 states that are accredited,

[13:46] they are a fabulous way to get money to grow. Again, 70 10 year time frame, typically low double digit environment is our experience with this senior life settlement market. Variety of different ways to get it done. We have a couple of different companies that we use. And it is a really good asset to have as a mix for your overall environment that is not going to be affected by the stock market. It’s not going to be affected by who’s in the president’s office or interest rates or what the banks are doing or anything else. So, again, if you’re curious, senior life settlements, reach out to us, hello at partners, number four prosperity dot com. We’re happy to send you information. Super. And I guess that our book would be a good thing,

[14:36] maybe to get people a little more information as well. Absolutely. So we have a book called Financial Planning Has Failed, and it addresses the three main areas that people have concerns about their money. The income, which is the bridge loans that we’ve been talking about, the growth of their money, which is the life settlements, and then the liquidity or the cash storage of their money, which, of course, we like to use the whole life product with the pay to petition writer. So this booklet, Financial Planning Has Failed, has a lot of information about all three types of products. It talks about the service of financial planning and how it truly has failed as a service to our society. And then more importantly, what to do instead.

[15:24] So that is available. And there’s an audio version as well as a PDF. At partners number four, Prosperity dot com slash e-book. It’s Financial Planning Has Failed. It’s not available on Amazon. You can only get it at partners for Prosperity dot com slash e-book. Super. And again, that’s a great resource and available at no cost just to our listeners. And I think we’ve probably in less than 15 minutes poured a ton of information out there. So just enough to kind of what’s your whistle a little bit and let you know that there are some things out there that are probably not being shown to you by most financial planners. Why is that? Well, it’s such a good question, and it’s twofold. One, they just don’t know about it.

[16:14] Two, they’re inside a broker dealer that doesn’t allow it. So this arena, the broker dealer, it’s a weird term. But if you are a financial planner and you work inside a broker dealer, that broker dealer gets to tell you what to sell. And so as a listener, if you’re out there talking with your financial planner, your financial advisors, many, many of them are inside broker dealers. They essentially offer stocks, bonds and mutual funds. Sometimes they can get into the alternative investment arena. But they typically call things like a REIT an alternative investment. And to me, that’s not an accurate definition because a REIT is still affected by the stock market. And there are definitely some broker dealers

[16:58] that do have what I would call true alternatives. But the most important thing to remember when you’re talking to your financial planner or financial advisor is to ask them if they’re independent. And an independent advisor is going to give you better advice. And you might even go so far as asking them if they stand on the fiduciary platform. And those that do are going to, by law, have to tell you what’s best for you, regardless of what they sell as a product. And so those are good questions to ask the people that are giving you advice and providing you products and helping you with your personal finances. And we’re a big believer in just helping where we can. We’re not the type of financial advisor that needs to take all your assets.

[17:44] But we are big believers in going slow, starting small, getting your toe in the water, getting a chance to check out these areas. And then progress with them as you feel comfortable. Awesome. Not a lot enough. Not enough of that attitude in the marketplace. This is an OBS Money Guide Todd Strobel for the Prosperity Podcast. Again, you’ve been listening to Kim Butler and we thank you all so much. Look forward to seeing you again real soon. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.