How to Make Work Optional in 10 Years via Buy & Hold Real Estate Investing. Is Recycling Capital key

Video Closed Captioning:

good morning good afternoon good evening

folks michael zuber one wrestle at a

time it is tuesday the 18th of january

and we are lucky enough to have the

lumberjack with us how you doing buddy i

am super pumped to be here and ready to

talk about number two there you go man

so what i got here today is

uh you know you i dion a lot of my

experts we’ve earned financial freedom

uh we are all trying to help others at

least start or believe it’s possible

which i think we do a great job of one

thing i just want to hit here

is for most folks

it’s a 10-year journey to make work

optional right you don’t have to quit if

you love your job job like dion by all


keep it but it is very nice to get to a

point where work is optional where you

can go into a meeting and go you know


i don’t like this very much i’m done

uh as someone we know did so um why

don’t we talk about that journey uh

that that 10-year journey what are some

things people don’t understand because i

think there’s a couple of things that

people just don’t get

i mean i i you know i’d ask you to edit

this part and like slow it down to 100

speed not happening sorry don’t know how

to do that since that’s not going to

happen i’m going to say it grows

i’ll edit that for you mike there you go

yeah so i mean i think that yeah at the

end of the day it’s slow there’s nothing

it’s there

you know i’d say you learn a ton in the

beginning just a ton no matter what

you’ve read

and the experiences and failures and

successes that you try to take of other

people’s those are really important but

there are going to be things you’re

going to need to see with your own eyes

touch feel learn on your own right you

and i never dealt with product shortages

you and i until now you’re right when i

never you and i never dealt with dead

days largely speaking no we would have

some but no yeah i’d be a one-off

because you know so-and-so’s daughter’s

getting married or you know exactly very

rare dead days and dead days are days

that no work is being done on your site

if you’re doing a prayer

that is a regular occurrence now i have

a place that’s being painted right now

and it has taken

five weeks and it is a seven day paint

job it’s taken five weeks why the first

crew got in this that and the other was

splitting with another job coven next


in a couple days spread themselves too

thin coved

i got my third painter on this job and

it’s like i said we’re five weeks in

that’s not something i’ve ever had to

deal with before and i’m good at chaos

management and thank god i’ve got a

great network

my network is my net worth which we

always preach

um and thank god i’ve got that because

if i didn’t i’d be waiting on those guys

getting better from covid coming back

and then starting painting again

you know and that is something that you

cannot account for in a budget

and that is something you cannot account

for in any of the projects that you’re

doing so the thing that people need to

really understand is that it’s very slow

in the process

always ask a lot of questions don’t be

be as humble as be humble be humble

don’t be afraid to ask a question don’t

assume that you and a contractor on the

same page

don’t assume that ask the question

because if you don’t ask it and it turns

out it’s gonna cost you money not them

yeah contractors are really good at

making sure that the guy who didn’t ask

the question pays yeah

yeah you know and contractors are not

dishonest i mean most of them are most

of them are great guys

a ton of my friends are contractors um

or started off as contractors and became

friends but i think the thing that most

people don’t realize is that

this is a get rich for sure not a get

rich quick i like the way that we’ve

been saying that in the last few weeks

because i think that that’s that’s truth


so i don’t know this is why i need to

have a white board and i’m looking

forward to the office coming together

hopefully next week we’ll be there but

really again yeah so again it’s a

10-year journey i think it’s a bell

curve where people get lost in the first

five years right this is the this is the

most work

yeah the least amount of money

yep and you know somewhere around year

four year five you hit the peak of the

kind of the exchange and then it gets

better the so first off slow

yeah like if you’re in a 10-year journey

and you’re frustrated at year two

i don’t have much good news for you

right you gotta you got another two

years in most cases yeah i’d say zero to

twenty zero to uh

so the first few units are really hard

first few are really hard you’re

learning you think you know a good deal

it’s not a good deal your margin of

safety is not great

surprises happen your network’s not


not a lot of margin one of the things i

heard you talk about in one of the

videos was you know eight you were

eighty percent ltv in every deal in the

beginning yeah yeah

same thing for us in the beginning

everything and we’re still largely i

mean that’s the whole purpose of you

know doing 19 refi in the last six


is to get us to a point of percent ltv

because we had a lot of stuff that was

you know well paid and quite frankly

making too much money and the rates are

too high yeah no i don’t want to make

too much money uh i want to make sure

that we’re reinvesting that and so

i think people just fell off their chair

you don’t want to make too much money

yeah but trust me

and and and when people become investors

like us they’ll see why they don’t want

to make too much money because it’s just

that much more you pay in taxes yeah um

and you want to pay taxes you want to do

it legally but if i have the option of

you know getting 10 000 bucks back and

paying 10 000 or taking that 20 000

investing all of it i’ll invest all of

it thank you very much yeah you know so

i think that a lot of people need to

recognize it’s a slow burn it’s a lot of

work it’s i liken it to

uh a jetliner getting off the runway

okay that’s really what it is

you are full throttle all the way giving

you everything you’ve got expending all

the energy all the gas everything you

possibly can

and you’re doing that to just get that

huge massive weight off the runway yeah

and then you’re climbing climbing

climbing climbing climbing and then it’s

literally minutes or what equates to

years it’s literally years before you

finally kind of reach that cruising


and then you can kind of settle and then

your burn is a whole lot more steady

yeah it’s a whole lot more steady and

then when you hit turbulence and hit

turbulence at 30 thousand feet you go to

32 000 feet climb a little higher or you

go a little bit lower yeah so it really

is a lot like you know taking off on a

plane and mike i know that you and i

both were hated traveling and did those

100 000 miles a year and so how many

times did you do that and like in some

of these places like um

logan’s famous you get a crosswind and

you can really feel the plane shift

and you’re like is this it

well how about john wayne airport where

they throttle it up yeah you get i think

it’s about eight thousand ten thousand

feet then they back off you could always

know who’s the first time in john wayne

airport because they they take the they

rev it up and then they take it off

because of all those rich people by the

beach because of noise ordinances yeah

it’s like oh that’s your first time here

yeah and you’re like please please

please turn back on turn back on go back

please please please turn back on yeah

but i think it’s killing the first time

yeah very much so so yeah so i really

think that it really does come down to

you know

expending all that fuel expending all

that energy just so you can get up to

that cruising altitude and then often

it’s really smooth sailing and then it’s

just absorption of turbulence throughout

the course of your journey so one more

thing about airlines because again i’m

so glad i don’t fly i did no flights the

last two years so

me too yeah no uh the the world the

longest how long has it been since

you’ve done no flights in two years

oh i don’t know

18 20 25 exactly

20 years ago right yeah same here like

how about 25 years how about vegas in


when it’s like 110 degrees you get the

it’s actually get the heat coming off

the ground so those are some of my most

gnarly landings jesus vegas in the

summer well you’re not sure how much the

tires are to stick

like that you can hot tarmac and then i

was like


yeah so back to the curve right the

first five years inertia plane taking

off i’ve heard rocket ships like 95 of

the fuel is getting off you know the

first foot off the ground whatever it is

sure i want to now talk about where the

where it comes over and it becomes fun

this is a little bit different for

everyone i’ve never seen it be shorter

than four years i don’t think i’ve seen

it be longer than six

this is the point where you recycle

capital yes

too many people and this came with the

question yesterday too many people do

linear thinking

right i want 10 000 bucks i get 2 200

bucks a home i need 50 homes

mathematically that’s correct but if

you’re going to do one rental at a time

and you’re going to watch your market

know your market all of that you won’t

need 50 homes first and foremost

inflation will take rents up your margin

will expand as you share with us go get

30-year money but the magic the power

the sexiness of this strategy is at some

point four to six you can go back and do

a cash out refi if you want

pull that first capital back and use it

again this is not net new capital yep

you do a 1031 exchange go bigger again

we write about all this in the book so

the peak of this


is at the point where you go back and go

you know what i’m going to use that 20

grand again right i’ve talked about it

endlessly i’ve been i have an unfair

advantage i have a 21-year track record

now i have used that first 20 grand on

norris drive four or five times at least

at least

yeah at least i i was thinking about it

last night when we were because we’re

preparing all of our taxes and stuff

getting ready to hand hand the account

what i call the stack dude it’s the 18th

i haven’t even thought about taxes yet

oh dude yeah like well because we’re

doing all the new stuff this year right

oh yeah most appreciation and real

estate professional and cost segregation

oh yeah all this sexy that’s a double


oh yeah yeah it’s stacks on stacks and

so in kind of prepping all of that stuff

i think the thing that i saw

was last year i bought four million

dollars worth of real estate wow where’s

my four million and

yeah four million dollars annually

yeah so i bought four million bucks

worth of real estate last year okay how

much of that was brand new capital mike

would you like to guess

oh that’s a good question

yeah meaning meaning uh down payments

came from new money versus three five

how much how much down payment came from

new money

you know what i’m gonna say zero zero

not one dime

dude i haven’t put new money into a deal




six years seven years might be eight

yeah long time right oh here’s the other

crazy thing i actually went back and did

math for a video months ago you know how

much money i you know how much original

money i have in my portfolio today was

it like three hundred and eighty

thousand three so that’s i think i think

i’ve put over the course of time people

see the portfolio now and he was like

hey you’re a millionaire yeah i’ve been

i’ve total accumulated less than 200

grand right but what i have left in

deals is negative i don’t have any of my

original money in deals right cash out

refi sales

um 1031s yep none of that original money

that we none of that original money we

struggled for here

right is in a deal


recycling capital is magical and it

accelerates the journey so where i was

going with this is that linear thinking

right 200

need 50 units i don’t know whether it

will work out for you but you’ll need

less than half

right you won’t have to buy 50 you may

have to buy 18 or 22 because you’re

going to be able to recycle and the

money will it’s just the recycling

capital is amazing now you could be like

dion and always use new capital you will

just have a smaller portfolio it’s just

how it works right sure the income

snowball will mean you can acquire

faster but you will be capped out it

will be interesting to see what dion

does after his cash out refi

uh because that would be his first taste

of recycling capital and i have a

feeling it’s gonna feel really really

good i bet it’s gonna feel really good

and i also bet that when he brings that

to the tax man

he’s gonna need to start doing some

other deals like exactly like you got to

feed the beast you know and you don’t

want to keep on having all those profits

at the end of the day like you said you

know we often are running our massive



a couple hundred grand yeah

like i you our balance sheets are better

than they’ve ever been for one reason

because we pulled we pulled a bunch of

cash out to recycle it but that recycle

that i did this last year

i put over a million dollars worth of

down payments and deposits

1 000 it was all all recycled capital

not one dime a new capital yeah so i

just did some rough math very very rough

math on your ability to use cost

segregation and bonus depreciation yeah

somewhere between 750 800 000 you’ll be

able to write off

hopefully that’ll cover what i made this


i’m teasing i’m joking

we’re just fine


yeah the numbers the numbers are

absolutely crazy but that’s the other

thing too for us is that you got to feed

the beast you got to keep on feeding the

beast you got to keep on and that’s why

for us it’s like i can’t answer how many

more i want to go because i know as soon

as i stop i got to start paying a bunch

of money in taxes

so my other option is just keep on

growing yeah and let’s be clear folks

just in case you don’t you haven’t

realized uh matt’s wife is a real estate

professional which will allow them to

take advantage of this if she was still

a nurse in a w-2 practitioner this would

be no bueno no good oh bueno yeah yeah

talk to your account work it out

yeah there’s a ton i mean honestly mike

there’s a ton there and what’s really

funny is it’s turned us almost kind of

back to where we were in the beginning

which is tracking time yeah yeah they’re

tracking irs don’t play

yeah no joke i’m not i’m not going to

play i listen that is one group that’s

the one party i don’t want to go to no i

went through an audit that took 11 a

half months um

it’s intense

yes yeah i mean the worst case scenario

right is that you end up having to write

a big check

but that’s a pretty bad worst case

scenario yeah

yeah no that’s not no bueno yeah so in

the end this is uh this is a fun topic

again folks

recycling capital

comes about year five it may be

different plus or minus for you but

that’s where the magic happens

don’t don’t

be at year two

you know uh babies take nine months you

can’t have

one month nine times or whatever it is


folks how can they find you matt

lumberjack landlord on uh youtube all

the time and uh 11 30 a.m eastern time

on sundays

three hour part three hour cast uh live

crazy you’re still doing three hours


yeah still doing three hours people keep

on asking questions so i’ll keep on

answering them nice nice yeah so it’s

good but look forward to seeing people

there it was a lot of fun this last week

i think we had like 60 people on the

live stream it’s a lot of fun big time

man big time thanks buddy thanks

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