Damion Lupo started off as a real estate investor before the housing crash in the mid 2000’s. He was able to by 150 houses while he was in his early 20’s and was smart enough to sell many of them before prices dropped. However, Damion decided to take his capital and invest it heavily in more real estate, which caused him to lose everything he had and then some. Damion came back strong after his collapse, but decided on a new path. He started Fintech Total Control Financial to help people retire better and faster. His company focuses on qualified retirement plans which are much more flexible than IRA’s or 401k’s. You can hear all about Damion’s rise, fall, and development of a new company on this episode of the InvestFourMore Real Estate Podcast.
How did Damion start buying houses in his early 20’s?
Damion was introduced to real estate when a friend asked him to partner on a subject-to deal. They were going to buy the house from a motivated seller, but keep the seller’s mortgage in place. Damion used his credit cards to come up with the cash needed to buy the house. He also did much of the work himself on the home causing a flood, electrocuting himself, and finding out how much paint fumes can affect your judgement.
Damion did not take it slow in the beginning of his real estate career. He bought more houses while he was working on the first house. He was not very careful with his finances and realized he was about a month away from bankruptcy if he did not change things. He focused on lease options to bring cash into his business and stabilize his finances. Damion ended up with 20 houses in his name very quickly, but he was doing the work himself and they were scattered all over. He realized he did not have a sustainable business.
How did Damion lose his real estate empire
Damion actually sold most of his 150 houses in 2005. Instead of sitting on the sidelines and enjoying his spoils, he decided to double down on huge flips, and multifamily projects. At one point he had 7 projects going at once that he assumed would make him over $1 million in profits each. That was when the market crashed and his huge profit projections turned into losses. He figured he owned $20 million worth of property when the market collapsed and had $5 million in net worth.
Damion tried to ignore the collapse and hope everything would turn around, but after a year he realized he could not pay back everyone he owed money to. He had lost everything and had to start over from scratch.
How did Damion bounce back from his real estate collapse?
Damion changed his attitude and fortunes when he realized everything that happened was his fault. He over-leveraged himself, took on too many risks and paid the price. He decided to take action and bounce back, not mope around wondering why the world had been so mean to him. He started a new company that would help others invest in real estate and other investments. He became an expert on qualified retirement plans (QRPs) and started his company to help others retire better.
How can a qualified retirement plan work better for retirement?
Damion created Fintech Total Control Financial to help people retire better. A QRP is much like an IRA or a 401k, except you have more flexibility with what you can invest in. You can buy houses, gold, or even businesses. When you buy gold with a QRP you can even keep the gold in your house. You can also borrow money from the QRP like you can with a 401k. To find out more on how QRPs work you can get a free book from Damion here: https://totalcontrolfinancial.com/mark.
[0:00:58.9] MF: Hey everyone, it’s Mark Ferguson with Invest Four More. Welcome to another episode of the Invest Four More real estate podcast. I have a really cool guest on for today’s show. Damion Lupo who is a founder and CEO of FinTech Total Control Financial. Damion is doing some really cool and exciting stuff now with real estate and retirement but he also has a pretty crazy background on buying houses.
Actually bought 150 houses, went through a little bit of a meltdown during the housing crisis, came back, really excited to talk to Damion, hear about everything he went through, what he’s doing now and hopefully we can all learn a little bit. Damion, thank you so much for being on the show, how are you?
[0:01:38.9] DL: Hey Mark, it’s good to be here, I’m doing well, I’m excited about sharing with you guys.
[0:01:42.9] MF: Great. First thing I want to know, I’m sure most people want to know too, how did you first start buying houses? I know you said you used a credit card, how did that all transpire right before the housing crisis, basically?
[0:01:56.8] DL: Yeah, well, it’s funny because when I first started, I used everything I had which was basically a Visa with about maybe a five or $10,000 limit. It was minimal, early 20’s, I really didn’t know anything, I didn’t have a college background. I had just kind of basic skills and a whole lot of ambition and what I knew is that I was willing to go figure it out on the fly and I had a Visa. So buddy of mine showed up one day and said, “Hey, I’ve got a deal.” And I’d read Rich Dad, Poor Dad and so did he, and he said, “I found a deal and you want to be my partner?” and I said, “What do I have to do?”
He said, “You put up the money. I found a deal, a lady wants to sell her house and we could take over her mortgage,” and it’s called “subject to”. For those who don’t know what that means, it basically means I took over their payments on a mortgage but didn’t have to go qualify. Then I put up a few thousand dollars to get her current on her mortgage and took over. At that point, I owned this house and that was like December 31st, 1999 and from there I thought, “Okay cool. I’m a real estate investor,” and I didn’t have a clue about what to do with the house, I knew I needed to lease it or sell it or something.
I had to go and fix it. That’s when I learned how to electrocute myself by becoming an electrician without a clue, I guess, super high off the paint because I didn’t realize you were supposed to open windows. I flooded the house repeatedly because I kept breaking the 60 year old pipes, not knowing how to deal with pipes. So it was a trial by fire and I think that’s a lot of what people end up doing in the middle of the real estate world. Maybe there’s a program in college or something for this, but I think what you end up doing is you learn about it by getting dirty.
[0:03:35.6] MF: Yeah, I did the same thing. I’ve worked on houses myself. When I first started I was like, “This is an awesome way to save money. I’m going to do all this work myself.” It didn’t work out that way but you learn a lot in the process, so it’s not like you waste your time. But yeah, it can be quite the experience. Did you end up flipping or renting that house? What happened to that first deal?
[0:03:53.4] DL: The first deal was exciting to get in the middle of and what I realize is that I didn’t really have a clue what I was doing so I was working it out. While I was working on it, going back and forth to Home Depot about twice, two, three times a day, one of the things I learned was my buddy was kind of my buddy that didn’t really want to help, he just wanted the money, and so he disappeared. I thought, “Okay, I don’t want this to be my only deal,” and I ended up going and found a couple more deals because I started studying the guru’s that are out there. Went to a conference and learned how to market and found other deals, I ended up buying two other deals.
In April, I remember I was excited because I had multiple properties, I had three houses and I decided after playing Cash Flow, Robert Kiyosaki’s game that I should really look at my own personal financial statement. I did that, realized I was 30 days away from bankruptcy. I mean, we’re talking less than six months into our real estate investing career. I wasn’t paying attention to the actual cash flow, cash, or anything and I went, “Holy crap.”
The problem wasn’t that my system wasn’t working because I had people calling me saying, “I’m interested,” and I didn’t call back. So I was sabotaging myself, my wealth thermometer was kind of jacked up and I went, “Oh, this is bad.” Something in me switched, I called people back, I had those three houses all lease optioned out and I bought eight more houses that next month. Because of me, I was going to go off the deep end and because of me and something switching, all of a suddenly found myself going from three vacant houses to a dozen houses that were lease optioned and had tenants in them. So it was a pretty monumental switch in a period of just 30 days.
[0:05:29.4] MF: Yeah, that’s quite the start to your career buying that many houses that quickly. Were they all kind of like subject to deals or were you doing a different type of transactions with them?
[0:05:40.7] DL: Typically, that’s what I did for about the first probably 40 or 50 houses, it was mostly subject to deals. Because I didn’t have a job and even at the height of the chaos, you still really couldn’t go out there and get 20 or 30 or 40 loans. You can get 10 or 15 at one point and a lot of our investors that we ended up bringing on did do that but in the beginning, there was no way for me to qualify.
The only way I could do things was pretty much taking something subject to or doing a lease option with somebody where I leased their house, had an option to buy it at a certain amount and then we fixed. Typically it was just a subject to deal, it was the cleanest deal, solved their problem and that’s really what I was doing. I was just going into people’s situations and solving their problem using my creativity.
[0:06:23.8] MF: Were you still fixing up houses at that point or did you figure out a way to avoid that with so many properties?
[0:06:30.1] DL: You know, I remember fixing and running around and one of my very first book I wrote a book on real estate called Maverick Mistakes in Real Estate Investing and one of the chapters was, I think it was called the star geography method and that meant that you basically find a big place like Phoenix and you pick a house in each one of the corners of the metropolis so that they’re at least two to three hours apart. This is literally the worst possible strategy for time efficiency.
I was buying stuff everywhere, there’s no focus and I was still fixing things up which meant that a lot of things sort of fell apart like landscaping didn’t get done because I was the landscaper and I did that for a while to the point where I went, “Wait a second, I cannot properly manage all this houses and I cannot do all the maintenance. I simply don’t have the time and there’s no scalability or leverage in doing that.”
Something switched probably after about 15 to 20, I said, I need help and that’s when I brought people on and started finding other people that could do this different tasks and quite honestly, that saved about half of my week just traveling around.
[0:07:30.6] MF: Yeah, I bet, no. I mean, that can be a huge time suck just driving through the properties and trying to fix them all.
[0:07:38.1] DL: Yeah, it’s huge.
[0:07:40.4] MF: How did you scale the business with those partners or people that you brought on to help you? It sounds like you grew very fast the very first few years.
[0:07:48.6] DL: Yeah, the first few years were literally like vertical. It was not an incremental thing. It’s what Grant Cardone and many people talk about when they talk about 10X and thinking big and Peter Thiel has mentioned this and the question is, whatever your goals are for five or 10 years out, ask yourself, how could you do those in six months? And that’s somehow kind of what I did, I was saying okay, how can I scale this from 10 houses to a hundred? How can I 10X it?
So I started bringing people on, my first couple of people were really just helping me organize; an office manager, answering calls and then somebody that was running out looking at deals and those people gave me some capacity to work with investors and start raising money to be able to do other deals that I couldn’t do unless I had someone getting new loans.
The investors who came on really, their job was and the partners, their job was just to put up the money and the credit to get new loans and then the other people were doing kind of the normal running around, doing the errands, cutting the deals and then I became kind of the puppet master just pulling strings in every direction. That all happened fairly quickly because I wasn’t, like I said, doing one or two new houses a year, I was doing one or two houses a week.
[0:09:04.0] MF: Were you doing like lease to own on all of those, were you selling some? What was the structure like?
[0:09:10.3] DL: Most of them I was doing lease to own, I was doing leased options, I was doing a contract for deed. It kind of depended on — they all ultimately made me the bank. In my mind, what I had in mind was that I was going to be the bank and not a landlord. Theoretically, that works; what is reality is that a number of people still treat you like a landlord even when you’re the bank and you still end up doing things.
But it did free me up a lot because I didn’t have to do it the typical landlord things and that’s well and good unless the property does what Arizona and a lot of places did in the early 2000’s, which was just go straight up. At that point, people started cashing me out and said, “Hey, I want to buy the house.” What I learned there is if you’re in an interest rate environment where the interest rates are dropping, which means their prices are typically going to go up in that environment, if you fix the option amount — so people came in and they wanted to lease option the house from me.
I didn’t have a floating option amount, I had a fixed amount and I thought that was good for them and it was good for me, people liked that and I got bought out. A lot of people cashed out because the properties went up 50 or 100% and they wanted to take me out of the equation that my 10% interest rates that I was charging and they went over to the bank and got a six or 7% interest rate loan and then they got 30 year financing with the Bank of America or something.
We’re in the opposite environment now where the interest rates are going to be moving up. Perhaps a fixed option, if I was going to do the same thing, would be useful because I don’t see property values going up. I see the property values doing the opposite, going down as rates go up.
[0:10:44.8] MF: How would you — I know how a fixed option works and you put a price in place when you first the lease option and say, “The house is worth $200,000 now.” You say, “Hey, in two years, you can buy for $220,000 or $230,000.” How would you do the floating option? How does that work?
[0:11:01.4] DL: Usually, the way that people did it that I knew and people do it now is they’ll just say whatever the value of the house is down the road with an appraisal, they’ll just say, “We’re going to have an appraisal done and that’s what your value’s going to be. So I’ll give you credit for every payment that you made, I’ll give you X number of dollars towards that purchase price eventually.”
It kind of turns into, I mean, it’s better for somebody that owns the house at the investor that owns the house now if properties are going up. I don’t think a lot of people necessarily love that idea because it’s just a moving target. In terms of the people that are moving into the house. So I didn’t think it was a very fair thing, I thought it was way too slanted in terms of in favor of the investor.
I like transparency, I like things that are very easy for everybody to keep track of. I just thought it was a fair deal and ultimately I made a ton of money and people did really well. It worked until the market crashed. And then all hell broke loose.
[0:11:58.8] MF: Great transition into that. What happened when the market crashed with your business, with all of these properties?
[0:12:06.5] DL: One of the things that I did, Mark, for a while was — for a short while — was I was focusing on Arizona and then I thought, “Well shoot, if I can make this work in Arizona, I should do this in all the states.” So I started expanding and moved into Alabama, moved into North Carolina, I had stuff in Oregon. So I was in seven different states and over the period of a few years doing this, I thought, “Hey, I’m pretty much invincible,” because everything was working.
It’s really fairly easy when markets are roaring, when there’s a great bull market and properties are increasing. You can make a lot of mistakes and they get covered up by the appreciation. This worked for a long time and then in 2004/2005, it became obvious there was a problem and the problem was properties were increasing in value at 10% to 15% a month. That is not rational, it’s not sustainable.
So I started selling everything and sold off pretty much all the property sin Arizona and most of the ones in Alabama. I did that and then I thought well shoot, I am the smartest guy in the world. I should just go do this again, I didn’t realize that a lot of this was just timing.
In fact, most of it was. Instead of taking a break and just being grateful, I thought, “I am going to go out there and kick the crap out of the next thing and I went and levered up and invested in apartment complexes, remodels near Graceland, I had a condo tower in Alabama. I had stuff all over the place and I started doing flips on multimillion dollar projects and houses because I thought it was just a function of if you build 4,000 square feet or if you remodel and it’s going to be X per foot.
The problem is, you have to actually present something to the market that they want and I was so full of myself that I thought I can give them anything and people will buy it. I was wrong. When the market stalled, I had a lot of debt that I had personally guaranteed. That’s also a huge problem. One of my mentors did not make that mistake, had a couple of hundred million dollars’ worth of stuff that was out when markets crashed. One of us got crushed, that would be me, and he basically just handed the stuff back and it was very orderly because he didn’t personally guarantee it.
A lot of people make that mistake and it’s something sometimes you really can’t avoid when you’re buying something, a bank is going to require it. But there’s also hard money and if your deals make sense, you can do a lot of deals. I loan off money now all the time and when I do it as a hard money lender, I’m okay with somebody not signing on the debt. If the deal works then it’s not something that’s going to kill the deal.
But Bank of America is never going to loan you money and neither will Freddy or Fannie if you don’t sign on the debt, unless it’s a giant apartment complex. That’s a totally different ball of wax but the houses, that’s a big danger when you’re signing on everything and the markets change because the markets take you with them when they go down.
[0:14:49.8] MF: Right. It is tough to avoid the personal liability with those big banks for sure. I’m in that same boat myself, a lot of my rentals. Even the small local banks, most of them personally guarantee it. There’s a few that don’t but it’s tough to find.
From what I read, you lost $20 million dollars, is that right? Or an equity value? How did that — what happened?
[0:15:12.0] DL: Yeah, that was the size of the portfolio, all the houses I have left, the apartment complexes. Everything that was in placed, it was about $20 million dollars’ worth of stuff, which it sounds like a big number. The net worth that got wiped out was about five million, I went from positive five million to about negative five million in less than 12 months.
The interesting thing is how right you think you are in the middle of doing lots of projects before you’ve been smacked around a little bit. There is a point where I had seven different projects in each one of them and these were like giant house flips; multimillion dollar house flips, partner remodels, development things.
I had seven of them that were supposed to each produce about a million dollars and I remember thinking, “This is awesome, I’m going to have another seven million dollars,” and a year later, every single one of those things went sideways. You just really can’t over estimate how wrong you can be and it’s important to ask those challenging questions when things are going right. What if things go wrong? Do I have a backup plan? Do I have any type of — like what is my plan if the markets do this or that? It’s just helpful to think and ask those questions. The challenge is not knowing what questions to ask and this where you’re having a coach or a mentor is so valuable and not just somebody that’s academically trained to be a coach but somebody that’s been out there.
One of my rules now is if I’m doing any investing or doing a business. I’m looking for grey hair that’s been through cycles that has actually gone into the trenches, that’s been bloodied and bruised and when I’m having a conversation with somebody now that’s investing novices, amateurs, it doesn’t make any difference. I have a different conversation because my lens is different.
It’s a lens through which I’m looking from a perspective of writing a major wave, making about every mistake you can make and I can see things that most people can’t see and that’s what you get with someone that’s really gone through this. Not just have made money but somebody that has had their teeth kicked in and gets it emotionally. That’ something you can’t train, you can’t learn in a book. You’re going to learn that when you’re in the street getting kicked around by the market and by cycles.
[0:17:11.7] MF: Right. How did you come through the crash? Did you lose lots of these properties to foreclosures? Did you give them back to the bank? What ended up happening?
[0:17:21.2] DL: I did what any rational person would do. I ignored it and pretended everything was fine. That did not work out very well. It was, for a while I was just working, trying to keep the ship floating and eventually I realized, “There is no way I can hold this much weight on my back.” There’s an irrational perspective that you’d like to do the right thing.
One of my thoughts was, “I’ve got investors and I would like to make them whole.” When I realized the magnitude of the collapse, I went, “There is no way that I can put together a five million dollar bail out. I don’t have the printing ability of the Federal Reserve here.” After a couple of years, I finally just went, “This thing has hit me with a restart requirement, I have to start over, and I have to be honest about things.” The biggest challenge was just being honest and owning 100% of everything and I really did reject that for a while. I had a lot of blame like justification.
Now, that’s one of the things that I look for with anybody, whether it’s a team, somebody that I’m working with, an investor I’m working with, my employees. I want to know that they own things. It’s not that they’re going to say it’s my fault, that they’re going to own responsibility for anything and everything and when I shifted into that during my transition where I had blown things up and I finally said, “Yeah, okay, it was totally me, it wasn’t just the market, it was my choices that led to this properties being leveraged the way that they were.”
When I said, “I am going to be 100% self-responsible,” everything change because I could actually do something different. I could become something different. I mean, this whole epiphany happened right after I got fired from a volunteer position in 2010 and for several months, I pretended I hadn’t. I pretended that I had resigned and I really wanted to ignore the fact that I had been fired because it’s kind of ridiculous that you get fired from a volunteer position. Who does that? Apparently, there’s a way to do it and I found it.
Going into the responsibility place was the big shift. It wasn’t necessarily that I was doing something different. I shifted my spiritual being, if that makes sense, and the emotional way that I was showing up. It wasn’t that low energy blame and justification and shame and everything, it was just saying, “Yeah, I did this,” and I think there’s a lot of value for us owning our lives exactly the way they are and never projecting that on to anybody or anything else.
[0:19:41.4] MF: No, that’s some great insight. I’m a strong believer in attitude and just the way you look at things is so important, you know? One person may think something is the end of the world as completely horrible, another person may see opportunity there. It was just such a huge difference in the way you perceive things and obviously it helps you get through the crash and this horrible time in your life.
How did you change things? What did you learn from all this to create kind of a new business and new model?
[0:20:10.0] DL: After I had moved through this, the question I had to figure out was when you move through it and major meltdown, you’ve got to really analyze yourself inside out because you can, if you don’t go inside first, and when I wrote Reinvented Life in 2012, the book was broken into two parts, the internal reinvention and the external reinvention. Most people just focus on the external.
They say, “Well if I make more money or if I go do deals then everything will be better,” and the truth is, that’s just going to give you a different version of the life you have now, you really have to figure out the inside first and go into the truth. So I spent a couple of years just asking a question, “What is true? What is true about me? What is true about my values?” and big learning opportunity.
When I was going through the first five, six years of real estate and business and cutting my teeth, I didn’t really have a structure set of values and I’m surprised at how often people go out even with companies that are five, $10, $20, $100 million dollar companies even, where there’s no structure of values to drive decision making, they might have a mission. It might be some squirrelly mission that they came up with on the back of a napkin. Maybe they have that but rarely do I see values based focus and where everything is based from those values and so I asked myself what were the values that really mattered?
Because when I was doing real estate, I didn’t have any. Maybe I did? And it was called “more”. My entire focus was, I want more money, I want more stuff, I want more consumption and I just kept doing more of that and it damn near killed me to the point where I was in the hospital and falling apart. Thought I had cancer, it was a mess. Today, the startup and a year ago when I started the company that I founded here in Austin. It started with the core values that were me and that that they were going to be the basis of every decision we make and every person that we come to contact with.
In fact, they’re so important that we will reject people being a customer or a client that are out of alignment with those. These are candor and transparency and self-responsibility and relationship. Those values, if somebody comes in and they’re — and I feel like they’re just out there to play games with the IRS or the federal government or they’re trying to figure out how to make more money and they’re going to screw people, I literally will tell them, “You need to go somewhere else.”
Because when you have those values in place, you won’t let somebody influence you with the toxic energy that violates them. That was a huge lesson and it can be incorporated and really should be incorporated into everybody’s lives where they figure out what matters to them most and then decide and make their decisions based on those values first instead of just arbitrarily shooting from the hip like I was for five or six years until the universe stepped on my face.
[0:22:48.4] MF: I’ve been reading the book Traction, it sounds very similar to the way that book says you should setup your business with values and making sure everybody’s on board, all your clients are on board with what the company really believes, not just winging it, as you said.
[0:23:01.8] DL: No, and it’s a huge value because you really, there’s an alignment and you get a lot of momentum from the people externally and internally all being on the same page. You’re not rowing in different directions thinking, “Okay, I’m going to grab this sale and I’m going to have this person doing this and that, chasing this.” It turns into chaos if you don’t have that real clear, that clarity on why you’re doing what you’re doing and what you’re doing and the value proposition is based on something more than just, “you’re going to make somebody’s life better”.
You actually know why you’re showing up in the morning and it’s so compelling that it will wake you up at 3 o’clock in the morning and make you excited and sometimes you don’t know why, it’s because you’re really clear on why you are doing what you’re doing and who you are. It’s very cool to be in that space as opposed to just running really fast which I think a lot of people are doing and they wonder why they’re exhausted.
[0:23:50.8] MF: Right. Do you mind sharing some of your company’s core values?
[0:23:54.8] DL: Yeah, we’ve got six. We’ve got transparency and candor, and this is being transparent about everything. So for example in financial services, there’s virtually no transparency around things that are going on. If you think that your mutual fund is only charging you 0.3%, the truth is they’re not being transparent and it’s because they’re not required to be. There are certain rules that allow them to be very dark around what their charging you on their internal churning and so we have an absolute transparency. You know exactly how much things are going to cost, you know what we’re going to deliver and there’s no surprise.
The candor is telling people what they don’t want to hear so I will do that with my team and when we have a customer, we’ll share with them what we see and sometimes they don’t like to hear it but that’s part of the directive that I learned from Jack Welsh and I remember him saying, “There’s something that’s sorely missing in business and that’s candor.” People just aren’t willing to say what needs to be said. So we’ve taken that on.
The other one is relationship. It’s all about the relationship and I think it might be cliché but it’s not about the transaction, it’s not about getting some money from somebody, it’s about going into a relationship and thinking about how we’re going to be, essentially neighbors and we’re going to be good neighbors for the next 10 or 20 years because you don’t treat your neighbor badly because you’re going to have to look at them every day.
You’re thinking about how can I treat them with respect and so our interactions with people are all about the relationship that we’re building long term and then 10X and growth are also massively important. We look at things and we ask the question constantly, “How can we create ten time more impact?” So when we’re looking at the growth of the company, we’re asking the question, not how do we create a billion, but how do we impact a billion people?
And the side effect ends up being that the wealth is created, financial wealth. I remember I think this was Peter Diamandis who wrote the book, Abundance, talking about the new version of a billionaire wasn’t somebody that had a billion dollars, it was somebody that was creating a solution for a billion people. So we’re constantly challenging what we’re doing. We’re thinking about ten times growth, how can we do things as much?
It forces us to really wipe out a lot of things that are legacy. That are legacy systems or legacy people or the wrong thinking or whatever and blank slate it and say, “Okay if we are going to rewrite the rules, how are we going to do that so that we can be 10 times better and bigger and more impactful?” Then the big one that drives everything is the self-responsibility. Self-responsibility, like I mentioned before, is something that you really have to become and it’s really obvious if you are self-responsible and people around you are not because you cringe with everything that they say.
It’s just blame and justification and so those are the key values that we have for everybody and everything that we do and they drive every decision. So people don’t have to wonder, “How are they making their decisions? Who are these people?” They just look at the values and it’s really obvious who we are and what we’re doing.
[0:26:47.9] MF: Well, that’s awesome. I may have to steal some of those, but I know we weren’t planning at talking about business structure and all of this the whole podcast, but really great information on — so many people don’t take their business, no matter how small it, is as serious as they should and that’s some great information. So of course you’ve got to have to tell us what your business is and what you do right now too.
[0:27:10.2] DL: All right, so the company is called Total Control Financial and it’s all about controlling your money and specifically we’re talking about your retirement money. Philosophically this is about you control and choosing what you’re going to do with your money, how your money is going to work for you and what we’ve decided to do is focus on the Wall Street rollercoaster and people’s money. So much of our money is stuck in these 401(k) and these IRA’s and they’re stuck in mutual funds.
And we just look at that as, “Okay maybe that’s money I can do something with later. Hopefully it won’t fall off a cliff and maybe I won’t get feed to death,” if we’re even thinking about that. The truth is, there is a way to pull that money out and one of the coolest things that we’re doing is we’re tapping into an opportunity for people to pull their money off the rollercoaster and be able to put it into real estate choosing to do it anyway they want to.
To where they end up with a checkbook where their money is sitting and they can say, “Okay, I want to invest in apartments or land,” or whatever instead of having to pick off among five mutual funds that are typically the options inside these 401(k)’s. We’ve created this opportunity for people to exit that rollercoaster and take control so that they can really define what their financial life, their financial security is going to be instead of leaving it up to the brokers in Wall Street who truly are not looking out for their clients as much as they are making sure that they have their paychecks, their bonuses.
That may seem harsh but when you think about who actually makes money every year is not the investor. It’s the people that are sitting there that are churning funds and my thinking is you’re going to be better than any broker’s going to be if you are willing to take responsibility and actively invest. It’s just the reality. Nobody is going to care more about your money than you are and so we give people an opportunity to take control of their money and do some pretty amazing things.
Especially when they are interested in real estate, most people that find out about what we do and this process cannot get started fast enough because they realize, “Wow, I can tap into not only my retirement money but when I am sharing this with other people now all of a sudden my friends, my neighbors, my family, all of these people have their retirement money that they can potentially be partners with me and we can do a lot more real estate stuff.”
We have all these options, some people are buying precious metals, which is amazing that you could switch out of stocks and bonds and move into precious metals. You’ve got options to have real assets and get off of the damn rollercoaster, which is crazy, it’s scary, and people are getting ripped off.
[0:29:46.4] MF: Right, so now what kind of real estate? Are they rental properties? Are they actually owning the property? Is it set up as REITs? How are they investing in real estate?
[0:29:56.5] DL: Yep. People typically, when they go to this transition really what they’re doing is they’re setting something up that’s called a QRP, which a Qualified Retirement Plan and people often times go, “Oh okay yeah. I’ve got an IRA and I’ve got a checkbook,” and the truth is what they don’t have is the ability to do the type of things that you can with the QRP. The QRP is a checkbook that holds all your cash that you have in your retirement vehicles.
Once it’s there, you could buy houses to rent out, you could buy land to speculate with, you could buy apartments, you can loan the money out to people, you could be a hard money lender, you can do about anything that you can make up in your mind. You could buy a land outside of the country. You could do just about anything. You can’t buy wine, you can’t buy collectible rugs, but you can do just about anything else.
[0:30:41.3] MF: Cool, can you buy a business with it?
[0:30:43.8] DL: You can. You can buy a business, there’s a lot of things that you can do. The IRS says you can’t do a couple of things. Like you can’t get a current benefit, meaning you can’t invest in a business that you’re going to run and pull money out of. It’s got to be where you’re an actual business owner you’re owning, let’s say you buy a Subway franchise or something, you can do that type of thing. If you have your own business, one of the neat things you can do that most people don’t realize is you can write yourself a check for $50,000 out of your account and use that for anything you want. It’s a loan to yourself.
So if you want to talk about the ultimate line of credit it’s where you have access to your retirement money to borrow money tax-free penalty-free anytime you want. Write yourself a check if you wanted to go open up an ice cream stand and you’re going to run it, you could invest that way with the money that you’ve borrowed from your own plan. So really, you’ve become your own bank. You’ve put yourself in control of your money and you’re not stuck in the paper assets and definitely you’re not stuck in things like REITs.
The funny thing is that most financial planners and advisers, the CFA’s, the CFP’s, and all these people of the world with their alphabet soup credentials will say, “Oh you want to invest in real estate? Great! I’ve got a REIT for you.” Or, “You want to invest in metals, I’ve got an ETF for you,” and the reason that they don’t tell you about the options to do things where you have control is because they lose control of all the fees and there’s no reason for them to ever want you to have checkbook control. They want to keep your money trapped inside their system. Once it’s there, it’s likely to be there forever and they can keep making money off of it as they play golf and go on vacation.
[0:32:16.0] MF: Right. I’ve never liked REITs. I had a lot of money in the stock market at one time and a lot of it was in REITs just because I didn’t like the stock market and that seemed like less of the stock market but it’s still way more like the stock market than actually investing in real estate. When you say borrowing money from it, is it like when you have a 401(k) and you’re allowed to borrow money from it, or is less restrictive? How does that work?
[0:32:37.9] DL: It’s fairly open. It’s the same basic rules with 401(k), they come from the IRS and Department of Labor and you’re able to borrow up to half of your money in there or $50,000 whichever is less. So you can just borrow the money, you’ve got to pay it back within five years unless it’s for your own house that you are living in and then you can pay it back over 30 years. So it’s pretty flexible.
If you think about it, there’s no faster loan than you writing a check and depositing it into your account or simply transferring it from your qualified plan, your QRP, into your own personal checking account. You can do this as fast as that and so I don’t know how to qualify faster than that. It’s the ultimate loan program.
[0:33:16.6] MF: Nice, very cool. Do you help people figure out what to invest in or is it more than just setting up the programs and then them figuring out what the best route for them is?
[0:33:27.0] DL: What we typically do is we set up their vehicle, their structure and then they have to decide whether they’re going to drive it. So between the time they say, “I’m interested,” they read about it, they read my book and then they say, “Okay, yeah I want to do this.” A few weeks later they’ve got their money sitting in their account and we’ve got real estate training that we do and that we offer and that’s part of what we give to people that are our customers.
It doesn’t cost them anything and it’s really exploring all these different types of real estate that people might want to go into and it’s all digital so they can consume it as they want and then they have access to my centurion team and that’s people, we’ve got a hundred years of actual in the trenches experience, that’s what we’re bringing to the table. It’s not just some random person that’s saying, “Hey, we’re going to teach you about something we learned about.”
We’re actually sharing our experiences and there’s a live interaction with people every month that’s part of being a customer, being part of our stuff that’s not open to the public, it’s just for our customer based. So we are focusing on that a lot and there’s also precious metals education that we do because I am big fan of it. I think it’s a powerful thing to have some type of real money, some real gold, real silver that you’re holding and so those are my two favorite things.
So we tend to focus on the things that we believe in and not just something that might make us money or there might be fees. We wholeheartedly believe in the metals and the real estate so we spend a lot of time educating and then people actually decide what’s best for them and then they go make the choice. We don’t do it for them. We just give them a lot of firepower and a lot of tools.
[0:34:58.4] MF: Well that makes sense. I am curious, I’ve never invested in gold or precious metals myself. When you invest in something like that, do you actually get it or do they hold it somewhere? How does that work?
[0:35:06.9] DL: Yeah, this is one of the coolest parts about the QRP man. When you buy silver and gold, you’re able to take delivery of it and so you want to talk about something that’s private and it cannot be manipulated. When you are holding your gold coins, your gold bars, your silver in your house, you literally have as much control as you’re ever going to have on any type of investment or asset. There’s nobody that can tweak it or twist it or manipulate it or steal from you.
It’s happened with me a few times with different people like John Corzine, the guy who used to run MF Global. He was stealing his trust money from people like me and farmers and things and betting on European debt and he ended up losing and I found out how manipulated and how much wonkiness is going on behind the scenes. It can’t happen if you have physical metals and it’s interesting because when people invest with their IRA’s a lot of times they think, “Oh I can invest in silver or gold.”
You can’t hold it. You have to put it into a depository or a vault somewhere and that just means that you don’t completely have it because let’s say you have it in a bank or a vault, you can’t just go grab it. Somebody else still has custody of it. So when you have your QRP, you’re able to hold it yourself and I don’t know that I would necessarily want to have a bunch of metals if I couldn’t put my arms around it and have it totally in my control and really off the grid. I think it’s a very private decision and it makes the most sense to have it under your own roof.
[0:36:32.7] MF: Right. I have one more question that I just thought. Now the Qualified Retirement Plan obviously it’ll give you some tax sheltering and benefits that way. If you have the gold in your physical possession, what’s to stop you from just cashing it in and using that money? Or technically would that trigger tax penalties if someone found out, how does all of that work?
[0:36:54.1] DL: Yeah, if you had an audit and the IRS came in and said, “Hey, we want to take a look at assets,” I’ve not ever heard of this happening but assuming that that did, if you had sold your gold, which you could certainly logistically sell any moment and you’re not on a regular basis going to be audited. But if you did, then it would be distribution and you would have to pay the taxes involved in the distribution.
So one of the nice things about it is if you have less than a quarter million dollars in assets, you do not have to file anything on an annual basis. So everything is really, really, really private. As it grows, it grows in value. It’s really off the grid and I think a lot of people love that because they would prefer less regulation, less oversight, less government in their lives than more.
[0:37:40.5] MF: Right. No that makes sense. Very interesting! So if people want to find out more about this, they want to learn more about this, I know you’ve obviously got a ton of resources, what’s the first step they should take?
[0:37:52.4] DL: The best thing for people to do is to get a copy of the book that I wrote on the QRP and we’ve got one of those available. In fact, I would love to give people a copy of it if they’ll go to the website to totalcontrolfinancial.com/mark and I’ll send a copy out to anybody who wants to take a look at it and see if it’s a good fit for them. If anybody that’s investing in real estate, this is a great book that is going to tap into open resources that you can’t even imagine.
There’s $7 trillion sitting dead, tied up, trapped in the retirement system in the 401(k) land and by becoming educated on this tool and starting to use it, you literally opened up unlimited resources to be able to build a real estate portfolio and become financially free and so that would be the best place for somebody to go to visit the website, get a copy of the book and I’ll send it out. It’s on me and it really will give people the first taste of what this might be like and an opportunity to use that tool to build their wealth.
[0:38:55.5] MF: Awesome, great resource. We’ll have a link to that on the show notes as well so people can find it easily. Really cool information on the Qualified Retirement Plan, are there any other restrictions on who can do it? Do you have to own your own business, can anybody pretty much set one up?
[0:39:09.0] DL: Yeah, it’s pretty much open to anybody that has a business and so the way we set it up, for somebody that’s thinking about or that they’re doing real estate, you’ve got a business. That’s what you’re doing, you’re in business to do real estate. So if that’s you’re only think, then you are totally qualified.
The only other qualifications really is that you need to make sure you are balancing your checkbook and you could be responsible because nobody is overseeing this. You literally have total control. So if you’re reckless and you’re not responsible, this would be the wrong thing for you. If you are responsible and you could balance your checkbook, this is totally a tool to use.
[0:39:44.8] MF: Great information. I’ve got one last question for you, we’ve been talking a while here but related to this, going through the crash, going through all the circumstances you did, if someone wants to start investing in real estate, they want to maybe use the QRP to do it, what advice do you have for them now in today’s market about investing in real estate that maybe you learned overall these years?
[0:40:07.4] DL: I will tell you one of the most valuable things that I’ve ever had is gray hair that was close to me that I was paying attention to and it’s people that have been through things that we listen to because even though things are different now, they’re really the same in a lot of ways and when I stopped listening to people that had been through it and thought I was smart enough and good enough to be able to make it up and move forward on my own, I got creamed.
I think one of the most powerful things that somebody can do is find a coach or a mentor right off the bat. I mean when we started this company, the first hire we made was a coach and it was a guy that had been out in the business world that had tactical experience for a lot of the stuff that we’re doing and we brought him in because he could see past the horizon and when we got in the weeds, which is pretty easy, get in the weeds or under a sink when you’re doing real estate and you just get lost and all that stuff, you missed the big picture and having somebody asking you the right questions on a regular basis makes all the difference in the world and it will keep you from blowing your knees off in a lot of ways.
[0:41:14.1] MF: Great advice and I know a lot of us, I did it when I first started out, you get a big ego and you think you could do everything yourself. You think you can rewrite all the rules and you end up wasting a lot of time and usually a lot of money not being willing to listen to those who have been in the same circumstances before you.
[0:41:32.7] DL: Yeah, I totally agree with that. There’s sometimes a hesitation for people to spend money on, whether it’s a coach or a mentor or the seminars. There were so many seminars that I spent three or four or $5,000 going to for two or three days and for most people, most of the population, that would be looked at as crazy. I think it’s crazy to go to college and spend a hundred or $200,000 getting a piece of paper that’s solely irrelevant by the time you leave.
But the truth is you’re going to spend far more on the mistakes you’ll make by making it up on your own without leveraging off of other people’s experience and that is the most expensive thing. Investing in other people’s wisdom and investing in a mentor, priceless and worth ten or a hundred times whatever you’re going to ever spend on it.
[0:42:18.3] MF: Yeah, I completely agree and I’ve experienced both of those myself so I know how that goes. Damion, thank you so much for being on the show. You’ve provided a lot of great information; insight on your real estate investing, going through a market crash, your attitude and perspective on things, and then also the QRP and how that can help people retirement smarter and better. I really appreciate it, anything else you want to add before we head out of here?
[0:42:44.6] DL: Just that one thing that I have learned that I learned from Buckminster Fuller is the fear of making mistakes is one of those things that can stall a lot of us and if we realize that mistakes are the universe giving us an opportunity wrapped up in this ugly giftwrap that looks like pain, if we realize that that’s really a gift from the universe and it’s the wisdom we need to grow and achieve and have a life that’s by design and not by default then we can start going out there and looking for ways to make mistakes and learn from them instead of avoiding them and fearing them.
[0:43:18.1] MF: Oh, great information, great insight, thank you again for being on the show. I really appreciate it and yeah, hopefully we can keep in touch as well. I think you have a lot of great insight and have a lot of great wisdom for people.
[0:43:29.6] DL: I appreciate it Mark, thanks for having me on here.