Following Trump's American Dream!!!

Following Trump's American Dream!!!

Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes

I just left this message below in reply to a forum post recently.  I thought I would share it with all here to document my path and to inspire others to follow a similar path and stay away from late night guru garbage, touting something for nothing, instant gratification, diseased mind thinking.  Lately, I have been receiving phone calls and messages from members that need to get their financial house in order, before investing in Real Estate.  

Donald Trump did it with 1 million seed money and I used my own money. I only used $300,000 (refinancing personal residence, savings, IRA money, stocks etc...) of my own money to build up a modest 2 million in equity and soon to be nearly 6 million in Real Estate after ONLY 5 short years of real estate investing. Here is my story below. I am no Trump. However, I only make combined family W2 earnings of $80,000.00 at my 2 teaching jobs and my wife working part time as a special Ed assistant. If a lowly paid teacher can achieve sooooooooo much and be financially free after such a short time, then anybody can!! Here we go!! This is my Easter gift to you. Read it and live it. I did and will continue to do so.

My path was to start with single family condos in San Diego that I purchased in 2011 and 2012 for less than 1/2 of what they were selling for during the peak. Dramatic appreciation happened from 2013 to 2015 and we started 1031 exchanging those condos for 8, 10, 12, and a 15 unit complex in Northeast Ohio. I basically traded in 4 condos cash flowing at about $6,000.00 each per year on 30 year loans for $15-$20,000 cash flow for each Apartment complex. The power of the 1031 exchange is amazing!!! I read Multifamily Millions by David Lindahl, listened religiously to Lifestyles Unlimited Inc. (LUI) podcasts on TUNEIN RADIO for 2 years and attended LUI’s 2 day seminar in Houston, Texas. On Day 2 of that seminar, I knew that eventually I will have Three or four 300-400 unit Apartment complexes. Right now our Tax deferred cash flow sits at $120,000 per year and in 10 years time, I will be sitting at $1,000,000.00 tax deferred cash flow coming in yearly. I still have 4 pricey rental condos here in San Diego that I expect to sell and 1031 exchange this summer when the current rental leases expire.

Check this out!!  I am currently fully executing my first purchase agreement for an Equity Partnership with friends. We are purchasing a 21 unit and my total doors will now be up to 78 front doors, with the 8 single family we also own in the same State as our Apartment complexes. In the equity partnership, I will be putting in 10% of the down payment and receive 20% of the cash flow and 20% of the equity for my connections, running the entire thing as the managing partner. The investors will be contributing 90% of the down payment. 

If a lowly paid teacher earning a combined family income, before taxes of $80,000 can do this. Anyone can!!  If you change the way you look at things, the things you look at, change right before your eyes!!  We are only limited by our self imposed limitations.  I once read and discovered the secret of a fantastic book called Think and Grow Rich and it was pivotal to my success so far and into the future.   Here is the secret discoverd by Napolian Hill back in the 1920's!!  

"Whatever the mind can conceive and believe it can achieve."  

I wonder if Donald Trump ever read this book.  I read it 6 times and am reading it for the 7th time now!

Swanny

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Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
10y

Believe me, I've heard the LU pitch on ripping the bandaid off your 401K and IRA and paying the taxes many times. I don't like that approach, at least not for me. Why?

1) First off, 401K's and IRA's are investment vehicles, not investments. Roth accounts especially have tax advantages that after-tax real estate can't touch. Every investment in my Roth accounts will be tax-free for life!

2) I have enough in my retirement accounts that I'd have to take about a 50% hit on taxes and penalties to liquidate. That's not acceptable to me. Instead, I set up a Solo 401K for my retirement funds, ex. for a relatively small portion of Roth IRA funds which can't be rolled into Solo 401K's per IRS regs. Both my Solo 401K and Roth IRA accounts are self-directed. My strategy is to convert a portion of my trad. Solo 401K funds to Roth every year according to my ability to pay the taxes on such conversions. I haven't had any money in the markets for over a year now - my retirement funds consist solely of passive MF interests, a seller-financed note, and private lending.

3) Retirement accounts offer great protection from creditors and judgments, at least here in Texas.    Liquidating per LU recommendations strips those protections away, creating a lot more exposure (and incentive for others to sue).   Having been recently threatened w/ a (admittedly frivolous) lawsuit, I sleep better at night knowing this nest-egg is judgment-proof.

My passive income is probably lighter than yours, as I've consciously invested primarily in value and hybrid, as opposed to yield, plays.    I'm self-employed as a full-time investor/realtor, and make enough to support myself doing that while continuing to build my passive streams of income.   I'm all set for retirement, just have to supplement w/ some active income for now!

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  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi @Cosmo Lee,

    Get your real estate and become financially free ASAP.  Teachers don't make a lot of money to be able to live in California.  If I didn't have my tax deferred cash flow, I would have had to change professions 5 years ago.

    Swanny

  • Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    10y

    Hi Swanny,

    Beyond the content of the post ( which is great), I like the humility that comes with your  great achievement...and the ease with which you share information to help those of us who are far way behind... :)

    Again, big thanks for posting..

    Ndy

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi @Ndy Onyido,

    I'm glad I could help you!!

    Swanny

  • James B.Pro Member
    Investor · Monterey Area, CA · Member since 2011 · 150 posts · 81 votes
    10y

    @Michael Swan

    I'm reading Dave Lindahl's Multifamily Millions now because you recently recommended it!

    Thanks for the inspiration!

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi @James B.

    When you combine Multifamily Millions with Lifestyles Unlimited Inc. (LUI) podcasts on TUNEIN Radio App and Loopholes of Real Estate by Garrett Sutton, while first reading Rich Dad Poor Dad and Think and Grow Rich by Hill, written in the 1920's, you will have the total package.  Gary Keller's the Milionaire Real Estate Investor was also a strong foundational book too.

    Swanny

  • Levi T.Pro Member
    Rental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
    10y

    Well done @Michael Swan, congrats. Keep on rocking!

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Thank you @Levi T..  You can do it too!!

    Swanny

  • Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
    10y

    @Michael Swan, thanks for sharing your inspirational story.    I've had much of the same education as you, only I started later so missed the opportunity to buy @ the dip in the cycle.    Still, I have MF positions that should have my retirement covered, w/ the main challenge being that most of them are in retirement accounts that I can't access (w/o penalties) for 9 more years.

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi @Chris Soignier,

    You can access those funds you speak of. I have had 100's of percent interest on my real estate. Every time you do a real estate deal, just take out approximately 30% more than the down payment money from your retirement account. I can never understand why a 10% stupid penalty for investing in that garbage from the beginning prevents anyone from purging theirs retirement accounts earlier. You will have to pay taxes anyway at some imaginary date. I am soooooooooooo glad that I have NO money in the stock market at all. All my money is under my control and I am guarding it with my life. Can you change what return your mutual funds or stocks give you. I can increase my NOI and increase the value of my apartments complex and I am getting $120,000 in tax deferred cash flow yearly. What kind of cash flow are you putting in your pocket with your IRA each month to use now and not at some imaginary date in the future. I have surpassed my W2 earned after taxes income after 5 years. If I lose my J-O-B tomorrow, how long can I survive? Forever!! That is the greatest feeling. I have done this on $80,000 family W2 earnings. You can do it too. 8-10 years from now $1,000,000.00 tax deferred income per year. Can you feel it!!!

    Swanny

  • Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
    10y

    Believe me, I've heard the LU pitch on ripping the bandaid off your 401K and IRA and paying the taxes many times. I don't like that approach, at least not for me. Why?

    1) First off, 401K's and IRA's are investment vehicles, not investments. Roth accounts especially have tax advantages that after-tax real estate can't touch. Every investment in my Roth accounts will be tax-free for life!

    2) I have enough in my retirement accounts that I'd have to take about a 50% hit on taxes and penalties to liquidate. That's not acceptable to me. Instead, I set up a Solo 401K for my retirement funds, ex. for a relatively small portion of Roth IRA funds which can't be rolled into Solo 401K's per IRS regs. Both my Solo 401K and Roth IRA accounts are self-directed. My strategy is to convert a portion of my trad. Solo 401K funds to Roth every year according to my ability to pay the taxes on such conversions. I haven't had any money in the markets for over a year now - my retirement funds consist solely of passive MF interests, a seller-financed note, and private lending.

    3) Retirement accounts offer great protection from creditors and judgments, at least here in Texas.    Liquidating per LU recommendations strips those protections away, creating a lot more exposure (and incentive for others to sue).   Having been recently threatened w/ a (admittedly frivolous) lawsuit, I sleep better at night knowing this nest-egg is judgment-proof.

    My passive income is probably lighter than yours, as I've consciously invested primarily in value and hybrid, as opposed to yield, plays.    I'm self-employed as a full-time investor/realtor, and make enough to support myself doing that while continuing to build my passive streams of income.   I'm all set for retirement, just have to supplement w/ some active income for now!

  • Seattle, WA · Member since 2016 · 81 posts · 43 votes
    10y

    @Michael Swan thanks for sharing your story, you've got a great thing going! I read one of your replies and I think it's great that you feel it's necessary to pay it forward first and foremost 😊

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Good for you @Chris Soignier

    I was tired of putting away sooooo much money in small cap, large cap, mid cap, and international and after 10 years, I had the same as I originally put in.  Who was making the money.  Not I.  I made hundreds percent return on real estate.  I am genuinely worried about anyone I know that has any money in the stock market at all and are nearing retirement and are counting on that money.  The correctiion in the stock market will be deep in the next 1-2 years.  Rich Dad's Prophesy will only be delayed from the 2016 year predicted due to the Feds stimulus. That 50% penalty you speak of may be forced by a 50% stock market drop for some people. Not for someone like you.  Smart guy!!  I will retire from my night time adjunct teaching job in one year and my daytime teaching gig in 4  years at my son's graduation from college.  He is just finishing his first year at San Diego State.  I will be 55 years old.  At that time I will have about $300,000 in passive tax deferred cash flow.  Then when most people begin to think about retirement at 59 or 60 years old, I will be approaching $1,000,000 in  cash flow.  What happens if I achieve 3/4 of my goals? $750,000 a year in cash flow wouldn't be bad!

    This is sooooo exciting!!

    Swanny

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi @Cassie Sherie,

    I follow an abundance mentality.  There is plenty for all to go around.  Others just need the right map to follow and get out of the Rat Race.

    Swanny

  • Investor · Woodbury, NY · Member since 2015 · 15 posts · 7 votes
    10y

      Hi @Michael Swan,

      Thanks for the inspirational story. I'm in a similar boat, though not at the same level of success as you do. Can you explain a bit about tax deferred cashflow? Is it because you used self directed IRA? If yes, would 1031 still be necessary?

    • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
      10y

      Hi @Mike Wire

      Right away read the book Loopholes of Real Estate by Garrett Sutton.  He is the adviser to Rich Dad Robert Kiyosaki.  He can explain it bette thanI can.  If you do real Estate right the government says real estate depreciates every year.  You write that off, interest on leveraged debt, you write off too.  All expenses related to the rentall, you write it of off.  When you use the power of the 1031 exchange and buy a larger property you defer the taxes and get another well leveraged loan and here we go again.  Defer, defer, defer, defer, and diie.  Then your kids inherit, depreciation starts all over again and they can defer, defer, defer, defer, and die too.

      What a country!!  Get that book right away!!!

      Swanny

    • Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
      10y

      @Michael Swan wonderful story - thanks for sharing. Love those 1031s too!

    • Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
      10y

      One bit of advice....be very careful about who you choose to be your 1031 intermediary.    If you wonder why, Google Millennium Title of Southlake, TX and Nancy Carroll.    She allegedly ran off w/ millions of $$$ of customers' escrow funds (including 1031 money), and the Texas Dept. of Insurance shut them down when they ran out of money.   The FBI got involved, and she was caught living a life of luxury near Chicago.

    • Real Estate Agent · Chicago, IL · Member since 2015 · 238 posts · 101 votes
      10y

      Congrats on your success @Michael Swan!

    • Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
      10y

      Thanks for sharing. My wife and I earn about the same so I need to get on it and accelerate my business

    • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
      10y

      Hi @Chris Soignier

      Thank you for that advice.  The 1031 guy I use in San Diego is solid and has done tons of business through the years with my friend that owns a Real Estate agency here in San Diego.  Solid character guy if you know what I mean.

      Take care,

      Swanny

    • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
      10y

      Hi @Joe Fairless

      Sorry I dropped the ball on being on your show.  With me still teaching in the daytime and 2 nights a week as an adjunct professor and managing my PM in Ohio, I am a little limited right now.  This summer, I will only have one teaching job on Mondays and Wednesdays.  At that times I will be selling my 4 remaining pricey San Diego Condos and 1031 exchanging them for more Apartments complexes.  Also, we should be in the thick of things on our first Equity partnership and increasing re tests on the 2015 apartment complexes we purchased in 2015-2016.  It should be an exciting time for a lowly paid W2 earner like myself.  Maybe @Joshua D. and @Brandon Turner will think about it too.

      I am 1 year away from retiring as an adjunct professor (night time gig) and approximately 4 school years from retiring from my daytime job teaching too.

      Swanny 

    • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
      10y

      Hi @Luka Milicevic,

      Reach out to me anytime if you need advice.

      Swanny

    • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
      10y

      Thank you @Gerardo Dominguez,

      I am originally from Glen Ellyn.  Moved out to San Diego at 12 years of age.

      Swanny

    • Commercial Property Manager/Facilities Manager · Boston, MA · Member since 2015 · 187 posts · 41 votes
      10y

      @Michael Swan This is an awesome story. $1M? That's an awesome goal. Any advice for someone like myself? (23 y/o) looking to get started in real estate THIS year to be self-employed/financially free no later than 30? Any advice is appreciated. I too will be reaching for the stars with my purchases. 100 units by the birth of my first born would be ideal.

    • Driftwood, TX · Member since 2016 · 23 posts · 6 votes
      10y
      I love you enthusiasm! Intoxicating! I love it! Can you tell me a little about how you set up your business plan and exactly what you did prior to your first purchase? One LLC? Or? Do you have a cpa? Or do it yourself? Im hoping to be ready in 6-8months.....
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