Real Estate Cashflow Conference
https://www.jayconner.com/learnreales…
Free Real Estate Webinar:
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $64,000 per deal.
JOHN DWYER is an eight-time recipient of Ohio National’s Inner Circle (top 1% of U.S. financial representatives), a five-time qualifier, and a four-time recipient of the Executive Counsel of Honor, and was elected by his peers to serve as a current member of the Ohio National Field Advisory Board.
John also qualified for the 2017 GAMA Silver International Management Award, currently serves on the Field Advisory Board of Ohio National, was elected “40 Under 40” Prairie Business Magazine in 2015, and is a Master Mentor of both Circle of Wealth and The Breakaway League.
As the President and CEO of Solid Rock Financial Group, John leads the organization with incredible passion and vision. He is instrumental in setting the pace and tone of what’s truly possible through his dedication and commitment to advocating what he believes – not only for his own clients but also through the mentorship of financial professionals within Solid Rock and throughout the U.S. It is with his singular focus to help people understand how money really works that he has positioned Solid Rock as a consistently growing group of thriving individual practitioners located across North Dakota, Minnesota, Colorado, and Ohio.
#RealEstate #PrivateMoney #FlipYourHouse
Timestamp:
0:01 – Teaser
0:31 – Introduction
1:38 – Jay’s new book: www.JayConner.com/Book “Where To Get The Money Now”
2:45 – Today’s Guest: John Dwyer
2:56 – John’s Awards and Accomplishments
4:24 – John’s Disclaimer
4:48 – John’s Qualifications & Experiences
5:44 – How Wealth Works
9:30 – How can we use the information of knowing the difference between Average Rate Returns & Actual Rate Return in investments?
13:52 – How to use other assets to invest in real estate
15:45 – Velocity of Money
19:43 – What is Self Directed IRA?
20:59 – Advantages of Real Estate
23:05 – What is one big revelation that your client learned from you?
27:05 – Connect with John Dwyer: www.NoPlanningFee.com
What is Real Estate Investing? Live Cashflow Conference
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Jay Conner:
If you are a real estate investor, and you're looking for more funding for your deals without relying on hard money lenders or any kind of institutional money, don't go anywhere because I'm getting ready to plug you into the money with my new free book, that I'm going to ship to you. Don't go anywhere.
Jay Conner:
Well, hello there and welcome to Real Estate Investing with Jay Conner. I'm your host, Jay Conner also known as The Private Money Authority. And what we do here on the show is we talk all things relating to real estate investing. We talk about how to find deals before other real estate investors know about the opportunities, how to fund your deals without using any of your own money without using any kind of institutional money, any kind of bank money, any kind of mortgages, anything like that. We talk about rehabbing. We talk about self storage. We talk about land deals. We talk about creative deals. We talk about controlling properties on terms. We talk about selling fast. We talk about automation and we talk about the real estate that exists between your ears. How do you have the right mindset before you actually get into real estate investing?
Jay Conner:
Or if you're already into real estate investing, how can you have a better mindset to control the future and your destiny? Well, as I mentioned a moment ago, I've got a free gift for you. My brand new book, it's on Amazon Best Seller. It was just released. This book is titled, as you can see, Where To Get The Money Now and the subtitle, How and Where to Get Money for Your Real Estate Deals Without Relying on Traditional (or Hard Money) Lenders. This book will show you step-by-step on how to attract hundreds of thousands and millions of dollars of real estate funding. And it is yours for free. All you do is go to www.JayConner.com/Book
Jay Conner:
And we'll get your actual hard copy autographed and shipped to you right away. Well, if you are new to Real Estate Investing with Jay Conner, you may not know that. First of all, we're getting ready to go right on through 300,000 downloads and listens since we started the show. But in addition to that, I've had some amazing guest here on the show, and today is no exception. My guest today has gotten many awards and accomplishments and achievements. He's an eight-time recipient of Ohio Nationals Inner Circle. What in the world is that? Well, that's the top 1% of U S Financial Representatives. He's a five-time qualifier and a four-time recipient of The Executive Council of Honor. And he has just got so many accomplishments. He qualified for the 2017 GAMA Silver International Management Award. And he is a Master Mentor of both Circle of Wealth and The Breakaway League. He's the President and CEO of Solid Rock Financial Group. And he leads the organization with incredible passion and vision. He's instrumental in setting the pace and tone of what's truly possible through his dedication and commitment to advocate what he believes, not only for his own clients, but also through the mentorship of financial professionals within Solid Rock and the U S. So with that, my friend, Mr. John Dwyer, welcome to the show! Hello, John.
John Dwyer:
Hey, Jay. Thanks man. Thanks for having me on, I really appreciate being here.
Jay Conner:
Absolutely. I'm glad we had you John. And, so John I don't know anybody better qualified than you to talk about how it is. You are qualified to do what you do. So what are your qualifications and your experience?
John Dwyer:
So I, you know, I've been, well before we start, I should probably start off just saying that, you know, because of the compliance issues that, you know, these discussions do not serve as legal advice or as or a tax consequences or any opinion, this is just a conversation about money and wealth. So if you need to have certain legal or tax advice, please seek out those professionals. So this is just more of a conversation. So now that we got that out of the way, Jake, I can answer your question.
Jay Conner:
Very good.
John Dwyer:
So, I've been in the financial planning industry for a little over 20 years. And my background is when I first got in this business, I was doing what everybody else was doing from a planning perspective and quickly on I started to realize that what I was helping clients understand and do from a traditional planning standpoint, was broken. And so, the last 13 years I've been working with and helping people understand how wealth works and how money works, and that's completely different than what we're taught to be true. And as it relates to traditional money management and finance, right? So, and to your point, the things that you're helping your audience with is looking at things from a different perspective, how to create wealth, utilizing other people's capital and different things like that. And so those are the things that we help our clients understand as it relates to how wealth works, because there's a huge difference between wealth and math and especially money.
Jay Conner:
So, you mentioned that most people really don't understand really how wealth works. So, how about take a few minutes and explain what are the big myths? What are the big misconceptions that people typically, or some people have in their mind about how wealth works and then after identifying those misconceptions, tell us how wealth really works.
John Dwyer:
So, yeah, so there's things that we talk to our clients about. And I think one of the biggest things is, you know, when I look at someone's overall position, it's something that I call a wealth transfer, right? And these are money that we're losing unknowingly and necessarily the government and the institutions on a daily or yearly or over a lifetime basis. And we've identified over 37 transfers of wealth that people incur throughout their lifetime. Now it doesn't mean everybody's going to have 37, they might have one or two, right? But it can equate to hundreds, if not thousands, if not millions of dollars to people over their lifetime, if they look at certain things of how they're positioning their assets or what they're doing. So, you know, one, of the big things that we talk about is there's a huge difference between average rate of return and actual rate of return.
John Dwyer:
And if you understand what we're taught in the financial industry, you know, everybody looks at their return on investment. So they typically look at money, from a rate of return perspective, and it's not so much the rate of return that matters. It's what you can spend, right? And so we help our clients understand that there's a huge difference between average rate of return and actual rate of return. And helping them evaluate that from an overall wealth perspective. So I'll give you an example. Okay. So in the traditional model Jay, let's just say that you and I were having a conversation. I said, Jay, you know what? I can guarantee you an average rate of return on investment over a two year time period of 20% now, would you typically invest your money in some, in a deal like that?
Jay Conner:
That sounds great on the surface.
John Dwyer:
Sounds great on the surface, right? So let's take a look and we're led to believe that, we're going to have more money because I guarantee you an average rate of return. Now, if we look at this from how this works, so let's just say the investment's going to be a hundred dollars Jay, right? And you give me a hundred dollars in the first year, I knock it out of the park, we get a hundred percent rate of return and we have another tech bubble, or, you know, another new stock that creates a huge rate of return. So that hundred dollars at a hundred percent rate of return for the first year is $200. The second year we start out with $200, we have an oops in the market, or we have a correction and we lose 60%. So that's a 60% loss on the $200, which means that's $120 loss and we're left with 80.
John Dwyer:
But if I look at the two year average rate of return, if I subtract, if I take the hundred percent subtract out the 60 that's 40% divided by two. What's your average rate of return, Jay?
Jay Conner:
I think I lost money. Your average, your average rate return is 20%, but your actual money, your, what you have your actual return. Yeah. You lost money. You ended up with $80. So there's a huge difference between average rate of return and actual rate of return. And math is the average and money is actual. And so when we look and help people understand how wealth works, those are the conversations that we're taught because in our industry, people always talk about what's your average rate of return. I don't care what your average rate of return is. I care what your actual rate of return is because the two are completely different.
Jay Conner:
That's really, that should be an aha moment for most people.
John Dwyer:
It's a huge aha moment there. Because we're led to believe right, 20%. That's how everybody talks. If you average 8%, 10%, you're going to have all this. No, you're not. You have to, in the actual returns will always be less than the average, always
Jay Conner:
Right? So once I understand, and I do. Once myself and the audience understands that difference, how can we use that information to our benefit when we're looking to invest?
John Dwyer:
And I think that's a great question, right? Because what we have to do is we have to remove the belief system. I call our BS. That averages really matter. And we need to start looking at what we contribute to the asset and what we're actually getting in return of net of fees, net of tax, net of all these different things to find out, even from a cashflow perspective, right? In real estate, we have the expenses, we have, you know, all these different things. And we have to look at what our cap rates are and all these different things of what the actual return on the investment is versus just, you know, what the modeling portfolio might look like from an average perspective. Go ahead. So it's just, you know, even in the real estate space, and I'm sure you've seen this Jay, right. Where people often think about what their returns are, but when they start to extrapolate all the expenses, the fees, and yes, the depreciation, sometimes they're like, man, this thing isn't as good as I thought it was.
Jay Conner:
Exactly. So what I just heard you say, or how to apply, what you just taught us is when you're looking at a potential investment, say in a mutual fund, in a stock or any other type of investment opportunity, the person looking to sell you that investment opportunity is telling you the average rate of return. What I would implement based on what you just say is, okay, that's the average rate of return? What is the actual rate of return? And if they can't tell you, you probably don't want to do business with them. Right?
John Dwyer:
That's right. And a lot of these deals with syndications and different things that we hear about they'll share what the rate of return is. But if you put a future value calculator to it, you find out what the real numbers are and it's off. And not that it's a bad opportunity, but it's not what they're promoting as far as average. Right? And so it's even comes into play for, when we look at, for me, I don't care what the rate of return on your money is. I care what you can spend. So let me quantify that for a little bit, right? So let's just say that Jay, you're working with somebody, you go to advisor A and they're saying, okay, Jay out retirement, you're going to have $5 million in asset value. Okay. You go to advisor B, they tell you they're going to have $3 million of asset value at retirement. Well, which one are you led to believe you're going to hire?
Jay Conner:
The one, the larger amount.
John Dwyer:
Yeah. The $5 million. Right? But what if that $5 million is going to generate $200,000 to you in retirement, but it's all taxable, versus the 3 million is going to generate a $180,000 tax exempt. Now, which number do you want?
Jay Conner:
The 3 million.
John Dwyer:
3 million. So what you just told me, Jay is a lower rate of return is better from a cashflow perspective in distribution. See, it's not just so much the asset value. It's what I can spend, but that's not
Jay Conner:
What all ties in is when you're considering an investment. One of the big questions is what is the tax consequence of that investment?
John Dwyer:
It's huge. And a lot of times that what we're taught to do is we're taught to put money into an account to lower our tax liability today. But all that's done is postpone the tax and the tax calculation is some date in the future. And if you believe what I believe that tax rates are only going to get higher, that's probably not a good decision, but see what we're taught is that we hate paying taxes, right? So CPA's and other legal strategies, don't want to do tax reductions to save the taxes today, but it's not a tax savings. All it is, is a postponement because all you're doing is postponing the tax and the tax calculation to some date in the future, which could be more painful later on. And so these things are the things that we just have to look at and help people navigate through as they make financial decisions, no matter what they're doing
Jay Conner:
Makes a lot of sense, changing the subject. John, one thing that you and I have talked about in the past is you are an expert when it comes to teaching people how to use other assets or leveraging other assets in order to invest in real estate. How about take a few minutes and talk with people about that as to, how they can do that and what that even means.
John Dwyer:
Yeah. So people that are generally involved, they're starting to get involved in real estate, really understand collateral, right? You understand collateral probably better than anybody, right? And so what we have to understand is that collateral can be a very valuable tool. And if we understand that collateral is a valuable tool, but how do we make it more efficient for ourselves is that we, when we look at utilizing liquidity, using control of capital, I never want to lose the forward momentum of my wealth. I never want to give up the miracle of under up the compounding interest. We all understand compounding interest, but we have to take it one step further. Because it's not the miracle of compounding interest that matters. It's the miracle of uninterrupted compounding interest that matters. We never want to lose the forward momentum of our wealth. So when you look at collateral, right? There's places that you can park and store wealth to where you can use that capital, allow that continue to compound and grow, and then go do something else with the money.
John Dwyer:
When you start to employ those types of strategies. Now you're getting more money in supply on their dollars because you're having your dollars do more than just one thing. You're having to do multiple things. And so when we look at this, we just want to help clients understand that their strategies and things set in place, that we can utilize to our benefit, to where we can leverage collateral. Right? And there's a big difference between having debt and being in debt. We don't want to be in debt. We want to have it. We want to have the collateral on the opportunity to go take advantage of opportunity. Does that help, Jay?
Jay Conner:
Yeah. You also talk about the importance of the velocity of money. What does that mean? And what's the consequences to an investor?
John Dwyer:
So if we think about, what traditional planning tells us to do, right? They'll tell us to put money in IRA's, 401k's, SAP plans, mutual funds. And you're supposed to leave that money in the accounts for how long?
Jay Conner:
Until you die.
John Dwyer:
Until you die, right? Because, When is a good time to take the money out? Well, the market's taken off, don't take it out now. Or the market just corrected. You want to buy back in, you know? So when is a good time to have liquidity is in control of your money, right? But when we talk about velocity of money, let's look at what the institutions do, because in my mind, the institutions know how to create well. And so when Jay, when you and I parked our money, our capital into a bank, right? What does the bank do with those dollars?
Jay Conner:
They loan it out.
John Dwyer:
They loan it out. So the bank doesn't take that money and they don't park it in their CD's, IRA's, or 403B's or 401k that they tell us to put our money into. Right? They actually take our money. They'll loan it. So if I take the money to the bank, I deposit my capital. You're a business owner that needs to buy a piece of equipment. You happen to bank at the same bank. I do. You're going to go to the bank and borrow their money, or actually my money. Right? And then in turn, you're going to turn around and you're going to purchase some equipment from the manufacturer who happens to bank at the same bank. Right? And so that deposit is going to come back into the bank. Well, how many uses that I get with my dollar? When I put the money into the bank.
Jay Conner:
One.
John Dwyer:
I got one, how many did the bank get?
Jay Conner:
Multiple.
John Dwyer:
Multiple, right? But see the loss. So this is the economic principle. Velocity of money is the money and movement. And if you understand collateral, and if you understand liquidity use to control of your money. Having access to capital is what allows you to create those opportunities, to where you can keep your money in movement, but you never want to interrupt the compounding curve. You will never want to lose that forward momentum of your money to go do other things, just like the banks do. See we're a pawn in their game. They have the rules. We just, we don't look at the playbook. We don't look to understand what the play code is and do what they do. We do the exact opposite. And what really boggles my mind. If, you know, I started to get passionate about this. It's like the banks do the exact opposite of what they tell us to do with our money. Yet, they're the ones making all the money. Why aren't we doing what they do? And it goes into exactly what you're coaching and teaching with your students.
Jay Conner:
Yeah. It's like, you don't have to look very far downtown. Who is it that owns the biggest buildings in the downtown cities, right? So, it's the banks.
John Dwyer:
It's the banks.
Jay Conner:
Perhaps we, as individuals should consider being the bank, which is sort of another conversation.
John Dwyer:
Yeah. And it's just, you're right. It's another conversation. But the whole point is, is that we, so the last 12 years is I've just helping people understand that's a paradigm shift, right? Because we've been ingrained in and taught to do certain things with our money, but it's the definition of insanity, Jay. It's doing the same thing over and over and over again, trying to get a different result. And if you look around, are people able to retire at the same standard of living that they had during their working career? No. So it's broken. I mean, it's broken. And if we help people understand how wealth works, right? That's, what's going to help them get to the next level of overall planning.
Jay Conner:
One of the most important in my opinion, strategies or investing tools that I know of today and have known of for years is this thing called self-directed IRA's. And I know you're an expert in this area when it comes to advising your clients on what a self-directed IRA is, how to take advantage of it. And of course that could easily be a full day seminar conversation, but just take a couple of minutes, tell people what self-directed IRAs are and why it is, they might want to consider talking with you about getting one set up if they don't have one set up.
John Dwyer:
Well, so a self directed IRA is where typically where you have money in the 401k and other type of retirement account, and you can move that money into an account to where you can manage and do different things with it. Right? And so it real simple terms, a self-directed IRA is you get to utilize the money inside the 401k arena or let me call it qualified plan money, and go do different things with that money. You can buy gold, you can buy different assets, can buy real estate. Now what I would say though, Jay is this. And I think where the important conversation is that when we look at future tax rates, maybe the self-directed IRA is not the best place to utilize a real estate deal. Because when we look at real estate, one of the reasons or advantages of real estate is what Jay?
Jay Conner:
Well, there's lots of benefits. It depends on what you're doing with it. If you are buying and holding it, and if you've sold it on rent to own, then of course you get to take advantage of depreciation on the tax advantages such as that. So that's just one big benefit if you're buying and holding,
John Dwyer:
Buying, and holding, right. And you also get the, like you said, the depreciation, we also get gap cap gains treatment. Right now, the under current administration who knows where that's going to go to, that's a whole another conversation, but the problem that I potentially see inside of a self-directed IRA, it's not that it's bad, but we just have to be aware of if, what, if you could get that money outside of the self-directed IRA. Now there's tax consequences of that. But see, when you buy real estate inside of a self-directed IRA, you're taking a tax advantage asset and moving into a qualified plan asset. And you're basically just postponing that tax to someday in the future. Now there's all different types of rules and things like that as relates to the self-directed IRA. But it's something that we should maybe consider thinking about because of the tax ramifications around holding that asset in that self-directed IRA.
John Dwyer:
And so it's not a matter of they're good or they're bad, or it's just, we have to look at what the overall plan is. And in my opinion of taxes are going to go up. I want to get as much money taxed out. I want to pay as much taxes as I can today, as crazy as that sounds, because I don't want it to come back to bite me in the future. I want to hold the real estate outside the assets outside of that self-directed IRA. So I have some of the tax benefits. Now, again, we have to look at current tax code. We have to look at what's going on. Like, current administration could change that. They're talking about moving cap gains rate up to 39.9, 39.6%. Right? You're talking about getting rid of the 1031 exchanges. They're talking about doing all these different things. So as it relates to tax strategies and where our money is held, again, it goes back to what I talked to you about it. I don't care what my asset value is. I care about what I can spend. And so those are the conversations that we have to have.
Jay Conner:
Yeah. So John, you consult with clients all the time. What is one aha moment? If you will, what is one big revelation, if you will, that your clients learn from you in conversations that is like a trend it's like, you know, I visit with, you know, 10 new clients and in my conversations with them, there's this one thing that most of them take away from your conversations? What is that big aha moment, that's sort of that commonality.
John Dwyer:
Yeah, I think, and that's, I mean, you know, everybody's a little bit different, but I think, you know I had, so here's another thing. I had three meetings before our call today, right. And one aha moment was is that future tax rates, if they go up, does it make any sense to postpone the tax and the tax calculation to somebody in the future? Right. And a difference between a reduction and a deduction. Another aha moment was the miracle of uninterrupted compounding interests. We never want to lose a forward momentum over of our wealth, and we never want to get up that compounding curve. And how do we utilize velocity of money in our strategy for us as consumers and another big one, Jay, I think, you know, there's a lot of aha moment is really understanding, you know, I call it my BS, my belief system is that it's more important to avoid losses and it is to pick the winners.
John Dwyer:
And that's not typically how we think about how wealth should work. Right. We're always trying to find the higher rate of return, but let me give you an example of that. Okay. So Jay, under current tax code, 60% of Americans will lose on average $250,000 of wealth, the way that tax code is set up in retirement. Okay. So if we look at what I call your accumulated money, and if you're in that position to where you're going to lose a guarantee of $250,000 of wealth in retirement, what rate of return would you have to get in your assets to recapture that $250,000 loss? It's almost impossible to do, right? But if we can avoid that loss altogether, legally, you're in a far greater position than it is what you earn, right? So if you can avoid the loss, that's going to have a greater impact on you than any rate of return.
Jay Conner:
Well, I'll tell you what John fear of loss always is a much bigger motivator than hope of gain,
John Dwyer:
It is. But in our industry, it's all about, you know, so, you know, I mean, if I, all I ever do is talk to you about rate of return, Jay, and you, and I'm managing your money. Who's taking them risks with the money me or you?
Jay Conner:
Yeah. It's my money.
John Dwyer:
You're taking the risk. I get paid regardless of the outcome. Now don't misunderstand what I'm trying to communicate. Rate return has its value in the overall wealth equation, but it's not to solve all be all answer. We have to look at many different factors, especially how do we minimize and avoid losses just in that example, if I can show you how to navigate and eliminate a $250,000 loss, the way the tax code is set up and provisional income testing, you could be way further ahead than trying to rate a return your way out of that loss
Jay Conner:
Makes a lot of sense, John, I know, go ahead.
John Dwyer:
So I didn't really give you one aha moment, but I just kind of gave you, aha moments actually. Cause I asked that question every time I meet with the client, I want to know on a scale of one to 10, how do we deal with meeting with what you wanted to accomplish today of what your outcome was? And number two, what had the biggest impact and what was your aha moment? That's how I end every conversation because we need to make sure that we're driving and connecting to what's important to the client.
Jay Conner:
Absolutely. John, I know we have got a lot of listeners here that are interested in connecting with you having a conversation with you taking care of that fear of loss, protecting what they've got talking about long-term wealth, so how can they continue the conversation with you and connect?
John Dwyer:
Hey, Jay, that I really appreciate that in fact, for this podcast or this broadcast, right? We created a personal landing page for everybody on this show called www.NoPlanningFee.com And if the listeners just want to go to that and mention the podcast and the broadcast I call it a broadcast, right? podcast, but you know, go there and you can schedule a call. You can have a 30 minute conversation consultation over the phone to see if it's something that you want to explore, or you can just say, you know what, let's schedule an hour and let's really dig in and go from there. But we created that a landing page just for this show today. And so I'm looking forward to hearing from, and again, you know, if you don't want to work with us, that's okay. Right. We're not for everybody, but at least if we can provide value or someone on my team can provide value, then log a time on. And we'll be happy to have a conversation with you.
Jay Conner:
Thank you for offering that, John. So everybody again, that is www.NoPlanningFee.com which is all spelled out www.NoPlanningFee.com John, parting comments.
John Dwyer:
Man. It was just a really honor to be on here with you, Jay and I know that you joined me on a podcast earlier, so I just appreciate being on and talking to you and your listeners. And again, I appreciate you and all the awesome things that you're doing. So thanks so much for having me on.
Jay Conner:
All right, John, thank you so much for joining me. And there you have it folks. Another episode of Real Estate Investing with Jay Conner, I'm Jay Conner, the Private Money Authority wishing you all the best here's to taking your business to the next level. And we'll see you on the next show.
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