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BP Podcast 017 – Finding Mentors, Facing Retirement, and Note Investing with Jeff Brown

by Brandon Turner on May 9, 2013 · 22 comments

  
Jeff Brown

Real estate investing is about more than just making money in the here and now – it’s also about setting up your future for a solid retirement with minimal hassel and maximum wealth. However, planning for that time in your life is not always the most easy-to-understand task. To help, we sit down with investment specialist Jeff Brown, a very common face around the BiggerPockets Blog, to discuss some of the best ways to find mentors, what you can do to start preparing for retirement right now, and how to invest in notes using cash or your self directed IRA or 401K. This show is filled with a lot of really actionable, in-depth content so be sure to have your notepad ready – you’re going to need it!

Listen to The Show on iTunes

Click here to listen on iTunes.

Listen to the Podcast Here

In This Show, We Cover:

  • BiggerPockets Podcast _ Real Estate Investing and Wealth Building 9.42.11 AMHow to find mentors to help train and teach
  • Why real estate brokers make the best mentors
  • What CCIM is and why you should consider it
  • How much do you need to quit your job and go “Full Time?”
  • Why $1 million might not be enough for you for retirement
  • 3 paths to maximize after-tax income.
  • Why “cash flow” might be overrated when beginning
  • Why you should STOP investing in your 401K and IRAs – even with a “company match”
  • Investing in notes vs. property … why one is better than the other
  • How to find good notes to invest in
  • 3 Case studies – what should a 25 year old do, a 45 year old do, or a 60 year old do for retirement?
  • and more

Books Mentioned in the Show:

The E-Myth Revisited by Michael Gerber
The Basic Steps in Real Estate Exchanging by Royce Ringsdorf.

Links from the Show:

The BiggerPockets FilePlace
CCIM Training

Tweetable Topics

“The best mentoring you can get is often at the 19th hole around a plate of fries.” (Tweet This!)

“Don’t leave money on the table just because you want the pleasure of being able to drive by your investment.” (Tweet This!)

“When you retire, the one with the most options wins” (Tweet This!)

“I want to retire yesterday afternoon around 4:30!” (Tweet This!)

Learn More about Jeff

Jeff’s BiggerPockets Account
Jeff’s BiggerPockets’ Blog Posts

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{ 22 comments… read them below or add one }

Kyle May 9, 2013 at 5:48 pm

Once again, a very interesting Podcast. However, I have to point out one huge inaccuracy from the talk. Getting your employer to match your 401(k) contribution is one of the smartest investments you can make. It essentially allows you to double your investment without any risk. For example, my company will match my 401(k) contributions up to $2,000. So if I contribution $2k and invest it in a money market fund (very close to riskless with minimal yield), at the end of the year, my companies will put in another $2k into my account for a total of $4k – equating to a 100% return on my invested equity with nearly zero risk.

I thought it was worthwhile to point this out. Apart from this, I enjoyed the rest of the talk.

Reply

Brandon Turner May 9, 2013 at 5:53 pm

Hey Kyle,

Thanks for the comment. I think you are right- the math definitely works out and 100% ROI is better than most things we are ever going to get. I think Jeff was saying though (and he’ll pop in here, I’m sure!) is that despite the math – most people with employer matches still end up with very little at the end, which says something about relying on that strategy to build wealth. Just a thought! :) Thanks for listening Kyle and commenting!

Reply

Ruth C May 12, 2013 at 4:46 pm

Listened to Podcast 17 and learned a lot of good stuff via Jeff Brown on Retirement etc. He made a profound statement when he said old school taught him many things that was invaluable of which he asked these old school Real Estate Investment Professionals how he could pay them back for their valuable free training and they replied he could not repay them just pay it forward. This payment is mentioned here. http://viooz.co/movies/3265-magnificent-obsession-1954.html

Reply

Tony Tran May 15, 2013 at 7:24 pm

I agree with Kyle on this. 100% ROI is an awesome. But why just stop there. For me, I use that company match as a mean for leverage.

Knowing that a traditional tax-deferred 401k allows me to borrow up to half of investment dollars (that inclusive of company match funds), or up to $50k, as a loan. I can just “borrow” all the initially invested pre-tax dollars at a very low interest rate over the next 5 years and use it to purchase real property now.

The benefits are:
– Low interest rate (fixed).
– Your “actual” money earn before tax can be used. Means more money to invest with and compound long-term.
– Buy property now rather than later.
– All loan payments including interest goes straight back to the 401k. Pretty much paying yourself back.

The downsides are:
– Loan payments must be paid with “after tax” dollars.
– There is usually a trustee processing fee. Mine is $50.
– Must have money to pay leveraged 401k loan back.
– If you terminate with your employer, the trustee may ask for the whole loan to be paid back right away.

This has worked for me, but this may not be for everyone. Just a reminder, this is not a legal or tax advice, or of such. It is just an example of what has worked for me.

Any thoughts?

Reply

Adrian Tilley February 19, 2014 at 10:03 am

I don’t understand why everyone says that a downside of 401k loans is that they are paid back with “after tax” dollars. Doesn’t that make sense, as the money you get out is also “after tax”? Also, every loan you get (car loan, mortgage, etc) ALL have to be paid back with “after tax” dollars. Never understood this.

Reply

Mike T May 9, 2013 at 6:22 pm

The podcast has become the highlight of my Thursday. I stumbled across BP about 6 months ago from a google search that kicked out one of Jeff’s blog post. I was instantly a huge fan. While not contributing to your 401 k match can be a controversial topic. Relying on 50k of pretax income for retirement is a tragedy. I have spent a lot of time reading the blogs and forums on BP. But until I called Jeff a month ago I did not realize that anyone can utilize a solo 401 k and grow money tax free. I am 33 and working my rear off trying to make enough in a side business to make max 35000 contribution in solo 401k plan for the next five years (wife and I). This was a great motivating podcast!

Reply

Scott Meredith May 9, 2013 at 7:38 pm

I use my 401k and company match to get loans from. They don’t require any documentation, no qualifying, don’t show up on my credit report, and great interest rates (prime +1%). I have bought one house with these funds, funded my real estate business start up costs, and getting ready to buy a second house. I only put in enough to maximize the company match though….as an investment vehicle it does suck. As a source of cash it is great.

Reply

Ben Leybovich May 10, 2013 at 10:12 am

“It’s not about NEt Worth, but it’s about after-tax income” Right on!

Reply

Ben Leybovich May 10, 2013 at 12:07 pm

Jeff – WOW

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Michael May 10, 2013 at 5:21 pm

Great show! I am wondering if Jeff or anyone knows how to research about population change, migration trend in major cities in the US? Thanks.

Reply

Al Williamson May 10, 2013 at 11:16 pm

Dr. Brown,
I nearly had to pull over to listen to your interview. You hit some interesting angles that I as a 47 year old needed to hear. Thank you – I’ve got to replay this podcast a few times to soak in all the goodness out.

Reply

karol May 11, 2013 at 12:01 am

Great show! Great contents always!
One Podcast I wish I can hear someday is that the speaker will briefly lay out what is going to be covered and start speaking on those subjects in order of lists. At the end, summarize what was covered and offer follow-up questions by email etc. Often, great Podcast is given up due to lack up time to stay for the entire show and if one desires to replay later on, chit chats gets redundant and old. What I am desiring is like seminar type delivery on Podcast.
Thanks, Karol

Reply

Steve May 11, 2013 at 1:41 pm

His advice on 401Ks and IRAs was horrible. Having a diversified portfolio is very important. Growing money tax free in a Roth (post tax money) IRA or 401K, then taking it out tax free is huge. As is using a 401K it lower your current tax obligation and allowing that money to grow tax free.
Of course, real estate investing is additional diversification.

Reply

Eve May 13, 2013 at 4:16 pm

Eyes wide open episode! Will listen again just to digest the info.

Reply

vernon May 15, 2013 at 10:42 am

Great show, especially me being another young whipper snapper! It sparked some more thought about retirement and the different angles to maximize my ROI.

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Sean Brennan May 15, 2013 at 11:56 am

I feel like Jeff could easily right a book and I would love to see these retirement strategies in print. Some complex and very interesting stuff!

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Terry H May 19, 2013 at 12:01 pm

This podcast really covered a lot. Jeff clearly knows his stuff and makes clear that real estate investing is long term wealth building and not the “get rich quick” scheme that a lot of people may think it is. Good show!

Terry

Reply

Joshua Dorkin May 19, 2013 at 12:18 pm

Thanks Terry.

Reply

Mikhail Berlay June 17, 2013 at 8:37 am

Jeff, probably this is the book you talked about. I hope we can find copy of it. It was not mentioned in Books Mentioned in the Show
The Art of Professional Real Estate Counseling by C. Charles Chatham

Reply

Alain February 12, 2014 at 6:30 pm

The more I listen to these podcast, the more I realize how little I know. Thank you Jeff…

Reply

Vana G. February 13, 2014 at 11:09 pm

This was such a great podcast! I couldn’t help but feel as if I was listening to the plot of a Hollywood movie, with his description of the old greats teaching him about real estate. I agree with him that there is no better way to pay someone back then to pay it forward, and life is definitely more fulfilling that way. Also, he clarified and verbalized what I was thinking about my IRA vs REI, and also agree that in order to maximize ROI, REI is the way to go.

Thanks Jeff!

Reply

Ryan July 25, 2014 at 11:29 am

I was hopoing to get more information on the E.I.E. wells Jeff spoke about a little bit more. Can anyone go into a little bit more depth about them?

Reply

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