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Cash Flow Champs

Cash Flow Champs Real Estate Podcast

Damion is the best-selling author of a dozen books on personal finance, investment, and retirement strategies. He is on a mission to free 1 million people from financial bondage. He hosts the Financial Underdogs podcast, ripping conventional wisdom apart for the Main Street investor looking for the truth about money and investing. Not only has he started 50+ companies, he even founded his own martial art, Yokido®. He developed the ultimate investor retirement tool called the eQRP®. His strategy gives individuals total control of their retirement money to invest in real assets like real estate, gold, and crypto.

What You’re Going to Learn:

  • How can one open eQRP and transfer 401k?
  • What are the different options within eQRP?
  • Who are the individuals that typically go for eQRP?
  • Are there any compliance issues with retirement account companies?
  • What is the difference between eQRP and solo 401(k)?

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Show Highlights

How can one open eQRP and transfer 401k?

How can one open eQRP and transfer 401k?

Prashant Kumar, CCIM– Can a W2 employee open eQRP and transfer 401k from their current employer? How does that work?

Damion Lupo– Yeah, so it depends on how old you are. It depends on a lot of factors. Sometimes we can transfer it, sometimes you have to leave your job or sometimes we’ll transfer the whole 401K at your company, the company’s 401K to an eQRP so that everybody has options. What happens there is that employers end up saving a lot of money and they have a lot happier employees. It works well for everybody, so it depends. But there’s always an option, and it’s a question of which thing people want to do. But we generally say, yes, you can do it. Here’s how you can do it. There are an unlimited amount of options we can provide to everybody. 

Prashant Kumar, CCIM– There’s a need for consulting or if anybody wants to do something like that, they should set up a call with you or with your team to understand their options.

Damion Lupo– That’s it. It’s like if my friends that are CPAs will be asked a question by someone and they’ll say, well, can I write this off or can I do this thing? And the CPA, if it’s a smart CPA, a sophisticated one, they’ll say, well, it depends. And it’s the same thing here. It depends. There are a lot of things we can do because the tax code is tens of thousands of pages, so we understand how to use it. It depends on the situation, age, the different types of retirement accounts, and your goals. What are you trying to do? If you want to buy real estate with retirement money, you do not want to be using an IRA ever. You want to use an eQRP, because, as you said, if you have, say, 20% down, which is the cash you’re going to invest, and then you have debt, you don’t want to get hit with you but tax, which is like 37% tax inside of a retirement account. So we can avoid all that stuff if we structure it right and that’s why you do want to have the call with our team so that we can figure out where you’re at and where you’re going, and then we will suggest what tools would make the most sense for you.

Prashant Kumar, CCIM– You already answered my next question. The real fundamental advantage, which I tell my guys if you have eQRP or maybe solo 401k, is that whatever you buy and you take the leverage, you are not paying taxes on the money that you are earning, even on the leverage amount. 

Damion Lupo– Yeah, it’s an unrelated business income tax. Basically what happens, let’s say you invested $50,000 in a deal, an apartment, or something, and that particular deal had 70% leverage, meaning it was a $ 10 million deal, and there was $7 million of debt, and then $3 million of investors money. So what happens is if you’ve $50,000, let’s say it doubles over five years, which happens all the time in that deal when it was sold. The most likely scenario is you’re going to spend between $15-20,000 on taxes, even though you used an IRA. Now, if you used a 401k or eQRP, it’s a different part of the tax code. There’s no tax. So it’s the same investment. But if you use the wrong tool, you’re going to lose up to, say, a third of your return. That’s just simply because you didn’t know better and it can be fixed. It can be fixed up right before the property is sold. So even if you’re already invested in a deal and you’d say, well, I’m stuck, you’re not stuck, we can fix it. It’s just we can’t fix it after it’s sold. So it’s really important to structure things correctly and have people on your team that can help you navigate that. That’s what it’s all about. It’s about the team. Just like you help people and work with people, and you’re part of their team and that’s what everybody needs to be thinking about. Who’s missing from my team? Who do I need to have on my team? 

Prashant Kumar, CCIM– Awesome. This is the most important thing that investors or tech professionals should know because they are blindfolded, they don’t know anything about eQRP or any such vehicles. For years, my money would just go to one of these custodians, like Vanguard or Fidelity and all the options I had was I had restricted options to invest in only those five funds and here you have so much power. You can take that money, invest in real estate, and leverage it. You can leverage it as long as you don’t manage it yourself. As long as you don’t manage it yourself, leverage any returns that you make on that average asset goes back to your eQRP account. 

Damion Lupo– Yeah, the way to think about that, is because it’s a really important point, you can look over your money and you can manage it. I’ll give you an example. You can’t go and buy an apartment and manage it by going in there and managing your tenants and doing all the repairs yourself. You have to have managers, but you could be in charge of your assets and your money. You need to have other people. It’s meant to be passive, but that doesn’t mean you don’t know what’s going on and you don’t choose what’s going on. It just means that you’re forced to develop a team and that’s one of the most valuable things. Sometimes people say, I want to be in charge, a charge of everything, and I want to do the work. I will say, you’re going to stay small and probably broke and very tired, working 70 and 80 hours a week. Instead, why don’t you think about having a team where you can scale and you can grow and that is the only way you can do it? There’s no way to grow and be free if you’re doing all the work yourself.

What are the different options within eQRP?

What are the different options within eQRP?

Prashant Kumar, CCIM– Tell me the difference between eQRP and what are the different options within eQRP. Just help me understand a little bit more to make it more productive for our listeners. 

Damion Lupo– So eQRP has a dynamic system. So what that means is that you have options. You’ve got tax-deferred options, and you’ve got Roth options and Roth means your money is never taxed when you grow it or when you take it out. So you’ve got those, and it’s built differently depending on whether you have employees or kids or spouses, or you are an employee. There are all sorts of different ways of doing it, and it has all the different elements. A lot of the times, what we see, if you go to Charles Schwab, and you say, I want to sell a 401K, it’s very restrictive in the way that they’re built. So the eQRP has no restrictions other than what the law requires, whereas pretty much every other plan is restrictive. You can’t hire a part-time person, and you can’t invest outside of stocks, like most of the plans out there. Every other plan has restrictions that we don’t have. There’s not a single we don’t restrict people from doing things and that’s because we’ve built the plan differently. It’s kind of like comparing a Ford Tourist to a Ferrari. They’re both cars, but a Ferrari is the best you can get, and I guess you could argue that maybe a Bugatti, but that’s probably blow up on your launch into a rock. So the reality is, this is the Ferrari, it’s the gold standard in retirement accounts, and people use it because they’re serious.

Who are the individuals that typically go for eQRP?

Who are the individuals that typically go for eQRP?

Prashant Kumar, CCIM– Whom do you recommend? What is typically the net worth of the individuals who come and try to use eQRP?

Damion Lupo– Well, it’s interesting is we have all sorts of clients that have anywhere from 50,000 to we have people that have 10 million plus in their accounts. So it’s a variety. The most important thing is, what do you want to invest in? And somebody that says, I just want to invest in mutual funds. This is not the right thing for you. You wouldn’t want this. It would make no sense. If you say, I want to do real estate, then this is absolutely the thing that you want. We also understand it because the team here is all the real estate investors. We understand what you’re trying to do. We understand how to navigate things and it’s also meant the whole system. The eQRP system is built based on the idea of having a very skilled expert team around you and it’s not like an app. I know everybody’s into technology and things, but when we’re talking about our money, you must have experts. Google is not your expertise. Google just has all the information out there, but it will tell you what you want to hear, and what we’ll tell you is what you need to hear. And we’ll make sure that we guide you through the process and that’s one of the differences between eQRP, the team and the company, and the philosophy and the system. It’s structured for you so it’s a personalized system. It’s not just a size fit or cookie cutter and that’s what most systems are. It’s everything in a box and everybody gets the same thing, whereas this is meant for you.

Prashant Kumar, CCIM– I know everything is very good about eQRP. Is there a bad thing that anybody should know about it? 

Damion Lupo– I think it’s not going to do it for you if I gave you the keys to a Ferrari, it’s not going to raise itself. Like you have to do it. Sometimes people will get frustrated because they’re not doing anything and if you’re not going to be actively looking at investments and choosing, you should probably just have your money in some financial advisor’s hands. At least they’ll give you Wall Street something or other. But the downside is, it’s not something that’s done for you. We’ll build everything and we will guide you, keep you in compliance, give you ideas, help you with education, and your job is to be a good investor. Sometimes people are not, they’re too afraid of making a mistake. This is built for people that are okay with learning by growing, which means making mistakes and so the downside is, nobody’s going to stop you from making a mistake. We’re not going to shield you from making a dumb investment in some goofy thing like a Shiba coin or something. 

Prashant Kumar, CCIM– That’s a good point. People are afraid of doing anything, they just want their money put in and then forget about it. But to your point, unless you do it, how can you make returns that you typically make in real estate, in gold, or in crypto? you had to be a candid investor or in a limited partner capacity as long as you have connections with the right sponsors, people like us, My Realty Gains, or Cash Flow Champs and there are 100 sponsors out there who are willing to guide you, to guide them to go to the next level in their investment journey. So for people like us, companies like eQRP, are really helpful because they provide a tool to investors through which investors can take their money out from their 401 IRAs, put it in eQRP, and then able to invest wisely in assets like multifamily storage and medical offices. People can go and buy the assets, for all practical purposes, from these eQRP.

Are there any compliance issues with retirement account companies?

Are there any compliance issues with retirement account companies?

Prashant Kumar, CCIM– Are there any compliance issues? Why there are no other companies who are doing what you are doing?

Damion Lupo– It’s a complex space and unfortunately, there are a lot of individuals that try to set up retirement account companies and they think it’s really easy. I’ve spent eleven years in this. I’ve written a dozen books on this subject and my team, it’s a team of world-class experts. So other companies pretend to do it, and some of them do an okay job. But the reality is it’s complex and one of the things I’ve seen a lot is, it’s kind of like a Walmart environment where people will say, I want the cheapest product and so they shop but we are not the cheapest at all and there’s a reason for that. We have the best service and our clients will say over and over again that there’s a world-class service element because we’re here. When you call, you can get us, and you can speak with me and the team. Most companies don’t do that. They’re trying to figure out how to be the cheapest and that’s a losing game. It’s just you can’t be in that space. You have to decide what you’re going to do. Are you going to be a world-class provider or are you going to be a Walmart? And there’s only one Walmart. I mean, Kmart tried to be a Walmart and Kmart is out of business. So you’re not going to win that game. I think a lot of people are trying. It is very complex and we’ve built a system that allows us to support our investors and our clients and people are loving it. Most people stay here for years and years and years, and it’s not for everybody. I mean, I think we’ve been taught to be very cheap. My dad was like that. Unfortunately, he was taught that it was always about getting more for less money and he didn’t understand the value of having great teams. So he always tried to do his own investing within the stock market and he retired, basically broke and I watched him as he got older and eventually passed away, totally broke. It was because he didn’t understand the value of having a world-class team and how much of a difference that makes. There’s nobody rich out there that does not have a great team and I get it. Some people are rich that are also cheap, but nobody likes to be around them anyway. So I think it’s important to decide who you are and whether are you going to invest in a great team. It’s like a great CPA. That’s a strategist. Do they cost you money? No, they make you money. Same thing with our team. We will make you money because we will give you the right guidance and counsel and you’ll end up doing far better than whatever. 

Prashant Kumar, CCIM– I cannot agree more with what you just said, Damion. If you are trying to penny-pinch yourself, you will end up probably wasting your time and not getting the results. Trust me, 10-15 years ago when I chose my CPA, he was the most expensive CPA around the block and I ended up choosing him and I was crippled all these years that I was paying him so much. I’m just giving an example, even though I was paying, I knew in the back of my mind he was saving me a lot. All these years he has been my backbone. He was saving me so much that today I have a portfolio. I would give 50% credit to him because he was able to tell me all the policies, and all the things. He was not just my W2, filling up the W2 and filing a tax return kind of guy. He was a consultant and I was paying him. So there is an advantage to having that kind of team around you and you certainly come with that skill. I know that you guys are not the cheapest, but for our listeners, what does it look like for a small business? What is the structure of your fees? 

Damion Lupo– It varies, it’s funny because it does depend and it’s because we’re not an off-the-shelf type of product. It’s very much customized and even though it’s not life insurance at all, it’s kind of like if somebody says how much does life insurance cost? It depends. It depends on your blood pressure, it depends on your history. How old are you, do you smoke? There are all these things and so like this, it varies. You could be by yourself, you could have a spouse, or you could have 50 employees or 500 employees. What I can tell you is that you will end up, because you’ll have more power over choosing whether you pay the taxes.

For example, you’ll end up probably saving 5100 thousand dollars in the first five years because you did this, versus if you did anything else. That’s normal that people we’ll end up saving at least $50 to $100,000 that they would have lost if they did something like an IRA or solo 401K or something. 

Prashant Kumar, CCIM– I can vouch for that. I’m the prime example here myself, even though I don’t have an eQRP, but I can vouch that if you invest correctly, you can potentially save a lot of money.

What is the difference between eQRP and solo 401(k)?

What is the difference between eQRP and solo 401(k)?

Prashant Kumar, CCIM– I just have one last question. What is the difference between eQRP and solo 401(k)?

Damion Lupo– It’s kind of like what I said earlier, when you have two cars, a Ferrari and a Ford, they are both cars, and they both have four wheels most of the time unless one falls off of the Ford. But the engine is built differently, everything is built differently, and the options are different inside. So when you have a 401k, there’s a trust document and the way it’s structured, whether you have options for anonymity privacy liability, whether you can have employees, part-time, full time, all these different options are there. Whether you can even do anything other than stocks. What I can tell you is that I don’t know every plan that’s out there and how they’re limited, because I know everyone is limited. I can tell you the eQRP has no limits on it unless you tell us you want to put a limit on yourself, which nobody ever has. They always want all the options and this gives people all the options and it doesn’t force them to stay small. One of the problems with solo 401k, in general, is they never allow you to even hire a part-time person. So let’s say you need an assistant. You can’t hire an assistant. If you had a solo 401k with an eQRP, you can hire people and as you create wealth, the last thing you want to do is say, well, I can’t hire somebody because it’ll screw up my retirement account and the eQRP allows you to expand and grow. So there are no limits on that and that’s a really big difference. You’re not stuck being poor. Unfortunately, a lot of people that are solo 401k holders end up just being there. They’re kind of stuck and they can never really expand. They might make some money, but it’s going to be pretty exhausting because you’re going to be doing everything.

Prashant Kumar, CCIM– I know that very well and I can feel that people are stuck. They’re not able to hire people because of the sort of case. I appreciate that. Thanks for clarifying that for our listeners and Damion, it has been a pleasure having you on this podcast.