Chris Miles 00:00
Real Estate has better tax advantages than the stock market does. There are literally no tax advantages to the stock market. In real estate, you can actually look like a popper on your taxes, yet be raking in the dough and have a great lifestyle so incredible that people don’t realize. And again, it’s investing in real assets.
Greg Lyons 00:16
Welcome to the passive income brothers podcast.
Tim Lyons 00:19
Here we take the fear out of real estate investing using real life stories of everyday successful investors. Let’s go. Welcome to another episode of the passive income brothers podcast. My name is Tim wines and today I’m literally joined by two rockstars. How’re you doing today, buddy?
Greg Lyons 00:33
Tim? I’m doing great today. I’m really excited about today’s episode, we have the anti money advisor. I really think this is the one where you gotta buckle up a little bit. Because I know Tim, you and I have been listening to Chris for many years on his podcast, which is fantastic. But this is a lot of stuff that we subscribe to. And I’m just really excited to finally have Chris on the podcast.
Tim Lyons 00:56
Yeah, so we first heard Chris on a podcast by our good friends Annie and Julia from good egg investments. And immediately Greg sent me the text with the episode and God is required to listening right and that’s kind of what we do to each other. When we hear a good podcast, we tell each other it’s required listening. And I heard it and I just immediately resonated. And Chris, I am guilty of binging on the money ripples podcast, I mean, double speed right, I’ve definitely added some of your numbers. But So Chris, he is the cashflow expert and anti financial advisor. He’s a leading authority teaching entrepreneurs and professionals how to get their money working for them today. Chris has used his knowledge not once but twice to become financially independent where his passive income exceeded his monthly expenses. Not to mention he paid off $1 million in debt after the last recession without filing for bankruptcy. He has been featured in US News, CNN Money, entrepreneurs on fire bigger pockets, and he has a proven reputation with his company money ripples, getting his clients fast financial results. In fact, his personal clients have increased their cash flow by an astounding almost $300 million dollars in the last 12 years. Chris miles. Welcome to the passive income brothers podcast.
Chris Miles 02:11
It’s such a pleasure to be here. I really appreciate it.
Tim Lyons 02:14
So I think this is really timely, Chris, because as we record in mid May 2023, there is a lot of fear. There’s a lot of uncertainty. People, by and large, from our perspective have bury their heads in the sand. They’re not keeping up on the macro data. They’re not watching the way they’re probably you and I watch financial markets, interest rate inversions Eurodollar markets, right to see kind of where the puck is going. And for Greg and I at least we grew up in a modest background, and our parents did all they could to teach us to save money, go to school, get good grades, get a good job with a pension, if possible. Pay off your house as soon as possible, right that has been max out your 401 k and then one day, you’ll be able to start living right by peeling off 4% from your 401k when you’re 6065, something like that. And then your money will hopefully outlast you right. And you know what, I didn’t subscribe to that after a while I realized that I couldn’t save my way to wealth. And I was in New York City firefighter I still am. I used to be an ER nurse on the side. And I was fine. Right? I had two jobs. I was paying the bills, Chris, I wanted two vacations a year one with Greg and his family. And life was good and nothing to complain about until I realized and I was just stuck. And I think that’s where you come in. So Chris, can you kind of give us a little high level about your background? And then we’ll dive into some of the things that you do now.
Chris Miles 03:40
Yeah, you know, like my background. I’m like yours like varied in a lot of ways, right? I wasn’t raised around a lot of money. In fact, it was the scarcity of money I was raised around, you know, my dad would say things like, we can’t afford this. Do you think money grows on trees? I’m not made of money, you know, about all that kind of crap that you’d hear? And hey, I give up this Corvette. Have you kids, that’s the kind of father I am. Like, wow, thanks, Dad. I’m gonna go to my psychologist over that one after a while. And those kinds of things I get great guy taught me great values. He taught me to, to question everything have critical thinking, which I love. And my mom taught me to be more follow your passions and your loves. And so she was the heart while he was the brain. And having those two things together really created this weird, confused kid who wanted to have his own path. And the path I wanted, of course, was that path of freedom. I didn’t want people to determine my own, how much time I was going to work or not. I mean, heck, I had a job where they literally clocked how much time you went to the bathroom. They said you only have addition your breaks, you only have an additional six minute bathroom break. I was like I don’t want that life. That was stupid. And so I wanted something where I control my own time and my own destiny, my own money. And so I became an entrepreneur. And the first thing I really came up that intrigued me was being a financial adviser not knowing that all you do is pass a test with 70% and really just not have a criminal record and you can become a financial adviser. It’s that easy. And so I did that. And I love being entrepreneur, I love being my own boss. But after several years, instead of my dad giving me advice, the table’s turned. And he asked me for advice. He said, Chris, when you can become my financial advisor, I need help. So I sat down with him, flew back to Oregon, and sat down and looked at his finances. And as I looked at him, he said, Alright, Chris, I’m 61 years old, y2k was not friendly to my 401k. I’m debt free. I mean, he showed how he paid off his house in 18 years, he was completely debt free. It’s packed away money in his 401k. He says, Now, what can I do to retire? And as I looked at those finances, I said, Dad, to be honest, let’s just hope you die in five years, because that’s how much money you have left. And he said, All right, that’s not what I want to hear, Chris, what can I do? Then I said, I don’t know. Maybe you got equity in this house. But I wouldn’t dare put that stock market. And honestly, like your 401k, we can’t trust that’s going to work. And I really don’t have anything for you, you basically did everything right. And that shook me to the core, because this was actually the guy that kind of inspired me to go into financial advice in the first place. Because he always told me growing up that he was going to die working literally die working. And he already had strokes in his 40s, he had a couple of heart attacks. By that point, I thought for sure this guy is not going to make it. And so to hear that from him, it really put me in this place of what I call an integrity crisis. Right? It’s not so much an existential crisis, as it was an integrity crisis. Do I keep charting the same path even though I know it’s not just him, there was other clients had decades advice, they weren’t free. There was financial advisors. They’ve been working there since the late 1970s, as of that point, and they weren’t financially free. So if it’s proven not to work, why do I keep doing this? Just for a paycheck? And that’s really where I was stuck. I was like, Okay, do I keep doing this for the paycheck, put blinders on, like some of my friends have done? Or do I leave. And so I chose the latter, I left I said, I gotta keep my integrity intact, I can’t sell something that I know, doesn’t work. And so I just became a mortgage broker and 2006 was really easy to be a mortgage broker. Because there were given mortgages left and right, we had all those for Pay option arms, do negative am type of mortgages and stuff where you pay less than interest only and things like that, I went down the path I started learning, like you guys have, right, like started down that path of real estate investing, because I had friends that were financially independent, their 20s and 30s as real estate investors. So I charted that path instead. And by the end of 2006, or actually, by the end of it, really, by the summer of 2006. I found myself financially independent as well. 28 years old, able to retire, and then wondering what I’m gonna do with my life. And that’s where, you know, eventually it began in 2007. I came out of retirement because people kept asking me, how’d you do it, Chris? Even when people asked me what I did in 2006, I didn’t know what the answer I just said, I sell drugs. Because I didn’t know how to describe this world of alternative investing to people because that was a financial adviser. But now I’m not. But I’m still doing things with money and investing. But it’s completely different. It’s been more Main Street versus Wall Street.
Greg Lyons 07:47
Chris, such a familiar refrain, really, that we hear a lot when we meet new investors and stuff like that. But I think my high school coach, may he rest in peace, Jim Carr, I think he said it best. He goes lions one day, you’re gonna hear the pop. And I never knew what that was. And then like five years after high school, he goes Lyons, have you heard the pop yet? I said, No, he goes, I think it’s gonna take a lot of time. He goes, it’s the sound of your head coming out of your ass, right. And a lot of us in a variety of different socially, economically, whatever it is, sometimes we just take a little bit more time to learn. And I think this is a perfect example, Tim, and I really didn’t hear the pop until 2019 2020, where we’re like, we have to do something more to secure our futures, rather than just sock money away, put it into 401k. Tim, having a retirement with the firehouse Fire Department, that’s good, too. But I think the main question is, why does mainstream financial advice really suck?
Chris Miles 08:48
Well, I mean, the reason is, because besides the fact that it doesn’t work, if we go deeper, is because it’s not really engineered to help you. It’s engineered to pay the bills, or financial institutions, right? The companies like Merrill, Lynch, fidelity, Goldman Sachs, all these companies, and even when even think about it, like, in the 1970s, is really when the rise of the financial advisor came to be right. I mean, there was financial visor, but there were so few and far between, there’s more insurance agents than were financial advisors. And then as I started to realize that, hey, we can really start to market and sell these mutual funds. And then especially by the mid 80s, which is, wait a minute, we could take this 401k plan that was meant for people in the 89% tax bracket, right, which was horrible back then. And let’s use this 401 K for the whole population, even though it doesn’t make sense. Let’s give it to them too. And all the meanwhile, the financial institutions like those Merrill Lynch’s and the Fidelity’s, and whatnot, are rolling in the dough. Right? And so think about it financial advisors are taught by financial institutions. And I know this because I was one of them, right? All of our training got passed down from the companies are essentially having to sell as they call, quote, unquote, their products, right. They call them products in their financial product. their instruments, right, the really just things you sell. And it took me a while to really realize I was just a salesman and a suit. Right? That’s really all I was I wasn’t a financial expert in any way, shape, or form. And the truth is, financial advisors aren’t, and how I know because even when I go to like high level mastermind groups for financial advisors, there’s always at least one, they’ll pull me aside and quietly say, so Chris, how do I retire? How do I become financially free because I can’t do it, it doesn’t matter if they make millions of dollars, because they hold your assets under management. That’s how financial advisors get paid, right? Same way that those companies get paid, they just pass it on down to financial advisors, the more assets that you keep with that financial advisor, the more they make, if they make 1%, you give them a million bucks, they’re making $10,000 a year. That’s why you only have 100 or 200,000 bucks, or like I make 1000 or 2000 bucks a year. Who cares about you? Right? You don’t matter. That’s why some companies will insist that their financial brokers will have at least clients with at least a quarter million to a half million or more in assets. They’re like, don’t even waste your time with those people, those middle class people, you know, they don’t want you to do that. And so everything just follow the money. It’s just like medical field, right? I mean, the health and wellness space, come on. I mean, it’s not even health care. It’s sick care. Right? It was what kind of drugs? Can we sell you to do this? I mean, I actually just saw an article come out here in Utah, where they’re actually did a study last couple years and said, Hey, we need to back off are what are they called? The I was called the after our clinics. That’s how often I go to them. But you know, when you go to the after our clinics and stuff and prescribe medications are generally over places. Yeah. instacare. Thank you. Yeah. So yeah, they would over prescribe prescription medications. And so they kind of said, Hey, we’re doing people a disservice, we’re actually hurting people. So let’s back it off. In fact, even when they were monitoring how much they’re doing, even naturally, the doctors backed off a little bit on how much they were over prescribing on antibiotics. And we already know that that creates a whole nother health issue with antibiotics. It’s literally anti bio, right, it’s killing off the very things that help you fight disease. So it’s the same thing with financial advising. It’s the same kind of crap, it’s just follow the money. And so finance advisors, they don’t know any differently. It just hasn’t worked. Because they’re telling you to really just put your money, park it there, leave it there forever, so that they get paid forever. But the truth is that if you look at anything you read, Rich Dad, Poor Dad, it’s not about accumulation. It’s about acceleration. How do we get that money actually working for you? Now, right? How do we essentially do what the banks are already doing? Which is creating cash flow, right? How do we create that for ourselves versus just giving the money to them? turning a blind eye, just set it and forget it, as many people love to say, and put it away? And then find out that really, it’s been mismanaged, earning mediocre returns with high risks? Well,
Tim Lyons 12:43
Chris, everything you talk about really resonates with me, because it wasn’t until I became defiantly committed to education, that everything I heard the pop critic, and I love that. So thank you for sharing that with our listeners, by the way. Yeah, very visual. It really drove home. But anyway, wasn’t I thought I had it made right. I had a good solid job, I had a pension to look forward to add a 457 plan. I had a 403 b at the hospital, I could work the overtime. And once I educated myself about money, how to create it, how to make it work for you, how does money even work? How does it flow through the economy? I started to realize that as Greg and I got our series 82 and our series 63 licenses, that is the primary dealers, right that make the most amount of money during an IPO. Right? And then everybody else makes it on the secondary market. But if you don’t get in early, right, then you’re kind of out right. And then it gets down to the Joe and Jane who hears something. John Q. Public on CNBC. Welcome for their next hot stock tip from Mad Money, whatever his name is, and that’s their financial plan, or they give their money to a guy, right? I got a guy for that. And he’s taken one, one and a half percent, no matter if you do well, he takes it if you Morley do very poorly, right? I mean, 2022, right people down 20 plus percent. And I’ve heard you do a lot of math, a lot of public math on your podcast. And I’m not great at public math. But something that really struck me early on in my little education here was you know, if you had $100,000 in an IRA or any kind of account, and it goes down by 20%. Right now, you’re left with $80,000 in your capital account. Well, guess what, that next year, people feel great on January 1, because everything gets zeroed out right there year to date and zero down. You need to go back up by 25%. Just to get to where you were right. And that, to me was eye opening right to really think about I mean, I know there was percentages out there, Chris, but can you just expound upon that like little principle? So I’ve heard you to do it so many times. Yeah,
Chris Miles 14:46
that average return versus actual yield, right? It’s very different for sure. That was one thing I was woken up to actually as a financial advisor. It was actually one of those product guys that trained us and all of us advisors got this question wrong. You And so you’re absolutely right. Just like it’s funny you said 20%, because that’s what the market lost last year, right and 2022. Now it’s coming back up. And now depending on the day, it’s like six 7% or so you know, that’s up for the year. Well, that doesn’t mean much. Because, yeah, like you said, you dropped 20%. So you dropped from 100,000, that 80,000. If you go up 20%, which people think they make their money back, that’s not true. 20% of 80,000 is $16,000, you just went up to 96,000. You’re not there yet. So like you said that 80,000 has to make 20. That’s 25%. Same thing if you lost 50%, which is not likely to happen in a year in the market, but let’s just say it is 50% You lose in the market? Well, that’s down to 50,000, you need 100% rate of return to get back up. So if you lost 50%, one year, gained 100% The next year, that’s 100 minus 50. If you go back to your kind of your grade school math, right, 100 minus 5050 divided by two years is an average of 25% per year. That is exactly what financial institutions are legally allowed to show you. Right, they can show you the average return. That’s why when you see like the old Ibbotson charts that the financial visors pull out showing, like, what what happens if you had $1,000.19 26, and you invested it over time, you know, you see like inflation like that $1 becomes $16, right? Or whatever, you know, and Oh, that’s awesome. That sucks. And then you see the stock and it’s like $56,000, you’re like, Well, I want that I don’t want 16 bucks, and even real estate, they put real estate on there, too, is barely above, it’d be like, if you invested $1, it might be worth like 22 bucks today, right? So do I want $22 in real estate? Or do you want 56,000 In the small cap stocks, and they’ll show you like that 12% return. And that’s what everybody talks about that 10 12% return, it has never ever happened long term, that real actual yield has never happened. Once you have a negative year average, and actual yields become different. And so if you look for the last 30 years, the s&p 500 and I just redid it again last week, it’s about 7.65% for the last 30 years, to be exact. Now I’m saying as of the second week of May, right, because like somebody might challenge me is like, well, actually, Chris, I found out that it’s actually 7.57. Like whatever it was actually 7.656 When I did it, okay, I just made it easy round numbers. But think about it. 7.65% is not 10 or 12%. It’s way less. And I mentioned about people’s 401 K’s it’s even worse. I just did some new numbers recently on fidelity, right? The last 10 years, the s&p 500. If you go from the end of March of really April 1 2013 to end of March of 2023. The s&p 500 did 10.1% actual average yield. So better than the 7.65? Right? But worse, the last decade was awesome, especially with 2020 and everything else. Well, if you look at Fidelity’s retirement target date funds, which most millennials are actually putting their money into, like the 2045, or 2050, or 2055 funds, it actually average about 8%. And that’s before point seven 5% comes out in fees. So really, you made 7.25% While the market did 10.1. That’s almost a 3% difference. Think about if the market was back into balance again, right? You went back down, and you got to that seven point, it’s usually between seven and 8%, typically on a 30 year basis. So let’s just say is seven half percent, but you’re getting 3% Less, that means your mutual funds, making you four and a half percent after fees and everything. Why do you care about that match of your 401k that will only add longterm a total of maybe two or 3%. So maybe yeah, I got up to 7%, maybe 8%. It’s not enough, especially with inflation being hired, they actually say it is. And this is what I found as a financial advisor. Every time I put in the numbers, right, you put in the return of the mutual funds and how much you’re putting in per month or per year, and they put in inflation. And if I want to make people feel better, I would put inflation that like 2% instead of three, because 3% would get depressing if I put in, let’s say 8% on a mutual fund, which is better than what most people get anyways, right? But if I put in a percent it looks okay. But if I put 3% inflation off, forget it, like they’re not going to retire. And so it’s even worse if we save inflation is really at least I’d say conservatively 5% So if you’re 5% inflation, but your mutual fund, even with a match and a 401k is maybe getting seven 8% You’re barely exceeding inflation, which means you’re gonna be saving your whole life to pretty much live on whatever you’re saving per year you save $20,000 A year max fun your 401k you will be living after inflation, the lives of about 20,000 a year if you want to not run out of money. Well,
Greg Lyons 19:47
this has been nice and depressing. Chris, great to have you on I appreciate that.
That’s right Everybody go home and take your breath,
Tim Lyons 19:54
sucking my thumb and get my favorite blanket out Jesus as
Greg Lyons 19:58
soon as I get out of the corner he I’ll be fine. But this is the path that Tim and I heard in 2019. And we said, yes, it’s not the accumulation model. It’s more about the velocity of money, right. And you talk a lot about cash flow now, and why that’s important. And I think when you stop burying your head in the sand, you have to really kind of dive into it, you have to meet people like Chris miles, cityside, capital, all these different listen to the passive income brothers. And it starts to make sense, right? When you hear this, even with a lot of public math, I know it’s tough to follow. But when you hear this, you say, I have to take a look at what I’m doing with my own financial house. And sometimes it’s not pretty. And whether you’re 45, or you’re 65, or you’re 20. Like you have to get your financial house in order to be able to maybe retire one day, or enjoy the money now in your 40s and your 50s. So if you could just give us a couple of minutes on the concept of the velocity of money, and cash flow now.
Chris Miles 21:04
Yeah, everything, if you really dig down to for people, all they really want, for the most part is not to worry about money, not feel stressed, and have enough to at least pay their bills, if not even enjoy their life, right? I mean, that’s really what it comes down to. It has nothing to do with the amount that you save up. Understand that even as a financial advisor, my goal was to accumulate $2 million in mutual funds, and then live on 3% a year because the whole 4% rule doesn’t work in mutual funds. It’s already been debunked years ago, we were almost debunking it 20 years ago. So when you hear people talking about oh, I can be financially independent with 4% Not really not unless you die quickly. live under ramen, and maybe it’ll happen. So 3% I was hoping you’d live on 60,000 a year. That’s an awesome 20 years ago, not so much today, right? $60,000 A year is barely living at this point. And so that was the big thing for me. And so, like I said, it was kind of depressing conversation this first 20 minutes or so right? But I do that because that’s where I was as a financial advisor before I saw the light, because when I started meet guys like you and one of my friends who left being a financial adviser on my team actually got hired, quit to go do real estate investing. And it really like four or five months later, he’s raking in the cash. Now he was doing more active investing wasn’t as much passive. But his dad was more on the passive side because his dad was helping finance it. And what blew my mind was again, coming back to this cashflow about what kind of income does your money produce? That’s really what it comes down to. Because think about it, if you happen to be lucky enough to save up a million dollars in 401 K or an IRA, which does take a lot of work and time. I’ll tell you even a guy I know that saving $200,000 A year get up to $3 million. Finally, is that age 52. And even then it’s financial visor said Well, good. You can live on 90,000 a year. Like you’re a multimillionaire, like most people just so you know, there’s only 299,000 People with fidelity at a literally 10s of millions of 401k holders, right? Only tutor 99,000 that have at least a million bucks saved up and think about it. There’s like 70 plus million baby boomers right now. A lot of them have fidelity, yet. They don’t even have a million bucks. It’s not because they’re not savings because it hasn’t worked, right? Well, if you have a million dollars, even you live on 3%. That’s 30,000 year, 3 million, that’s 90,000 a year. Heck, you have 500,000 you live on 15,000 a year. That’s just not enough. What Olson put me on cloud nine was when I realized it was about cashflow. So for example, say that you have an investment war fund that you put money into that pays you 1% a month. So all you have to do is take whatever money you’re investing, drop off a couple zeros. And that’s what you get paid per month, if $100,000 you’re getting paid $1,000 a month, then remember $100,000 in mutual funds, you should only be pulling out $3,000 a year, or 250 bucks a month. By doing this even with 12% now you’re able to pull out four times more, and you’re still not consuming it right? The whole reason they talked about 3% is because with inflation a lot more and more, you’re gonna run out of money eventually like the returns just won’t keep up if you want to try to protect your money if you put in the market, you might even be in worse position. So to have 1% A month coming in for me was like, holy cow what’s possible. So I started like number crunching like crazy. This is before I left being a financial advisor because I thought what the heck like now some of the half million dollars could have 50,000 a year that person with a million dollars could have 5000 A month right with 500,000 Someone’s a million dollars could have 10,000 a month and all sudden like these new possibilities. It was like Aladdin. It’s like a whole new world like opens up you’re like yes, this is what I’ve wanted. This is what I hoped for as a financial adviser but it was never really delivering on its over promises. Right? It was drastically under delivering and then to see that happened and then see that you still have your assets right? You haven’t killed your golden goose. It’s still there and you’re making the income. It was just a whole different experience. And so like I had a guy on actually had him on twice my pocket So last year Dan marker, he was in the National Guard out in California, just retired as a colonel. And like he took his million bucks that he had, and it’s generating 11,000 a month for him. And in some of that’s even tax advantaged because real estate has better tax advantages than the stock market does. There are literally no tax advantages to the stock market. That’s why people have to have Roth IRAs just to pretend like they have tax advantages in the stock market, right? But in real estate, you actually do you can actually look like a popper on your taxes, yet be raking in the dough and have a great lifestyle. I think that’s some That’s so incredible that people don’t realize, and again, it’s investing in real assets. Because here’s the truth, if you got your money in mutual funds, what hope do you have? I mean, what kind of control do you have over your life? None. All you have to do is have Biden make another senile comment when the market drops 2% And you just lost some of your money, right? All you have to do is have inflation get report or the feds do something stupid again, and make wrong predictions again, as if they’re like the biggest morons on the planet, which we probably know, there’s probably more of an agenda than anything. And as a result, our markets tanked or retirement stops was happens, do we go back to work again, to help make up for that big loss in the market? I feel blessed in the fact that being a Gen X or you know, that I got to see in my 20s and into my 30s, to recessions, right? I saw y2k. And I saw the great recession, not like it created the Depression era mentality and me. But it got me to see the reality, especially as a financial guy to say, You know what, things go up, things go down? Can you really trust it? But what can I trust, I trust real estate, I trust real assets. Like there’s things that doesn’t mean that that’s infallible doesn’t mean it’s guaranteed. But if I’m going to bet on anything, I’m going to bid on something that’s historically held its value much, much better than a tech company that could go in and out of favor, right, or Tesla, which is like overvalued, so much that it can literally crashed 90%, and people say it’s still too much, it’s still not worth that much. That’s a scary place to be, you’re in a market like that, when it can literally be changed by AI and algorithms. I mean, this, you know, the market has traders, the trading is not even humans anymore. Over 90% of it is now machines doing all the trading for you based on keywords found in like news articles and things like that. It’s literally sending spiders searching the web to say, Should we buy or sell? That’s a crazy place to be. And we’ve never been in that place before. Even guys that trade in the market say this is a different game. I don’t know if I can trust it, I have to be more careful.
Greg Lyons 27:26
Yeah. And I think Chris, that’s what my wife and I got to in the accumulation model. We were going to accumulate as much as we could in retirement accounts, but we’d be depleting the day we stopped working, we would be depleting. And that’s where we said, that’s where we get to kind of the big timeout and said, Hold on, if we’re not making our money work for us. That’s where I felt we were going to have a problem. And I’m glad we realized that early 40 years old, we said, Whoa, we need to do something different. And that velocity of money became really, really important to us instead of just accumulating. What do you think, Tim?
Tim Lyons 27:59
Yeah, there’s a book, I think it’s by Michael Lewis, all about high frequency trading. And if you really want to get upset and get depressed about the frequency at which these trades occur, right, I mean, like they rip off percentages of one cent, but it happens so frequently, and the amount of money behind it. It’s just an arbitrage play at all points during the trading day. And this is before you even wake up and have your coffee. It’s happening right all across the globe. So well. I mean, at the end of the day, Chris, like most Americans, like you said, they want to not worry about money, no stress, and enjoy life, right. And I think that’s universal. And it’s hard to have a universal truth across this polarized society that we live in. But generally speaking, that’s what people want, right? And that’s kind of the lifestyle that we’re trying to build for ourselves. And we have to get our kids to school, make lunches, go to work, come home basketball practice, dance class, whatever it might be, who has the time, Chris to look at p&l statements and 10k quarterly reports, and the reading the board minutes of the apple earnings call before you actually take action and get educated on stock investing. What people have done is they wanted to these passive ETFs or passive mutual funds, right, passively managed, and the computers took over. And for the last decade or so, we’ve had a boom, there’s no doubt about it, right? fiscal spending, monetary policy was all very favorable to the passive vehicles just going up into the right. Unfortunately, I think where we find ourselves today is there’s an economic and geopolitical dislocation happening. Some people call it the fourth turning right? Where there’s going to be a lot of dislocation, right? And they’re saying that people I listen to at least are saying that maybe the passive vehicles aren’t going to be as good as they were, you’re gonna need to do some more active investing, really diving down into the companies, their cash flows, their prospects. You mentioned Tesla, I’m gonna throw it out there. I think they’re trading at like 70 80 times earnings. I mean, that’s pulling forward a lot of future cash flow into today. I mean, that’s pretty crazy, right? So let’s talk about what you’re doing now. Right? So now you have a course you have people, you do a lot of consultations, and you talk about a couple of things. Number one, you talk about Infinite Banking, where you can get paid in two places at once and using that money to invest, but I really want you to dive into some of the passive vehicles that you kind of do yourself, or the ones that you kind of do with your clients. What do they look like? Why do you do it? Talk about that golden goose again, right? And that tax advantaged cash flow? And then I mean, you’re on the other side?
Chris Miles 30:37
Yeah, it’s funny, because I just when you’re talking, I thought of an analogy of kind of the difference between porch taught with money traditionally, versus what we’re talking about here today, right, which is, it’s kinda like rationing food, it’s as if you know, it’s like the zombie apocalypse, and you’re trying to live off the grocery store and all the canned food, you know, you can only live on so much that you run out, versus growing your own food, having a farm, right, that’s what we do with real estate investing, right is that we’re not killing that golden goose, we’re growing our money, literally growing it and having it pay us out, it’s producing fruit for us to keep eating forever. We just don’t get that in the mutual fund market, because you keep consuming it. And so what I do is I try to help people figure out how to really get lean, get liquid and get out. That’s kind of the advice I’ve been given even since 2020, right? Is one manage your cash flow, be a wise steward of your money doesn’t mean you live cheap, don’t live on rice, and beans, all that kind of stuff. But definitely do get to a point where you’re watching the money’s coming in watching them. And it’s going out, like you’re being a wise steward of the resources and managing your own personal cashflow. Because the more you can put away towards these investments, the better it is for you. So really getting that under control. Getting liquid means you got to have some liquidity, you do not lock your money up. And this kind of goes along with getting out to write as being liquid and having reserves. But then getting out means getting equity out of your house. And even right now I actually showed a guy where he would improve his cash flow by over $10,000 a month, this year, just by refinancing his mortgage to a fixed rate higher than his first mortgage. Now, he has a couple of mortgages, but still a balance out to work out well. But lowering his payment, allowing cash to come out, he actually saves 300 bucks a month as mortgage payment and gets $400,000 in cash to invest. Right. And he paid off a bunch of you can consolidate some of his other debts. So manage that kind of cash flow is the kind of strategy that we’d like to look at it like how can we improve your cash flow, and then be able to invest the money, you have your resources, right? And that’s where we try to get it out, we get out of home equity do we get out of the markets, we’re not investment advisors, we don’t ever tell people you should sell off stocks or mutual funds and things like that, because I dropped that license in 2005. So I’m not gonna say those kinds of things. But we’re gonna say listen, here’s we have resources, here’s we can actually have this money work for you harder for you than it has been, and then get that money to have cash flow play. So there could be things. There’s a variety of things you could do, it could be like a fund, right? It could be a debt fund, even there’s investors out there saying I’m raising capital to do flips or to do renovation projects, or wherever it might be or build to rents. Well, can you lend that money to them, and they might pay you a contractual percentage, they might pay you 8%, they might pay you 10%, even 12%, right, they might pay you more, there’s even Short Term Lending, you can literally become the bank where you lend the money to them, and they pay you back the interest. There’s equity plays, you can do like syndications, right, where you go in pooling your money together with other people to go buy apartment buildings, not as easy to do right now. But there’s definitely still some good cherry picking you can do there. There’s self storage units you can be doing right, like self storage is known to be more recession resistant. And I’ve noticed that the cap rates are changing on those and they’re getting better to buy those lately. Heck, there’s even syndication in the oil and gas space, you can even get paid on the land, that you get paid on the lease, and you get the mineral royalties that come off of that too. So you can actually kind of double dip on that too. There’s turnkey real estate, right? If you don’t want to have to manage your own properties, like I don’t mean great. You can go find a turnkey company and get have them help you find a property that you already know the cash flow going in up front before you buy the property. They put the renters in, they do the property management, they do everything for you, you just literally buy it and own it, and then collect the rent checks, right? There’s even things of raw land. I mean, that’s one of my best investment plays going on right now. I’m making really good money on raw land currently. And it’s not that competitive, because there’s not many people doing it. Now I’m a passive investor. Again, on that front, I’m letting the active investors do it all where we have a partnership together, they’re the active investors on the past one financing it right. So if you want to be passive, definitely having cash helps. If you don’t have cash, then the fastest way to build cash is become more of an active investor, right? Where you could go and start doing your birth strategies like go and buy the property for very low downpayment and then rent out part of that unit or whatever you might be doing or multiple units depending on what you’re buying, right. I mean, there’s so many different ways to invest. Even in real estate people say, Well, should I be more diversified? Like, do you realize how many different ways you can invest in real estate that’s more diversified? And yeah, we’re not saying don’t put your money in paper assets, which is what every financial has you do is like you mentioned infinite banking, that’s a paper asset, you could hold money there, at least there’s no market fluctuations, you can make more than point nothing percent, it’s tax free and store your cash there while you’re also investing your money to create cash flow. Dude, I
Tim Lyons 35:15
love that. And here’s the thing, Chris, like, we used to first started our little private equity company cityside capital, I would hop on calls with potential investors who saw me on a podcast or speak on a stage or met me at a meetup. And I felt like I had to spend some time converting them on like, why real estate? Why passive investing? And one of the biggest things that I always heard from people were, how come my financial advisor, if it’s so good, if it’s so good, Chris, how come my financial advisor hasn’t told me about this, I got a guy I worked for at one of the top 10 financial firms. And look, that’s one way of doing it, I guess, if that’s what you learned about, and that’s what you’re comfortable with. And I guess stay with it. For me, at least you talked about unlocking the equity in your home, I took a home equity line of credit my home, and I simply arbitrage that capital into the real estate deals that I’m doing alongside my investors. I took the $100,000 from one of my retirement accounts from the hospital. When COVID hid under the Cares Act. I said, Oh, instant liquidity right there, boom, I spread out my tax liability over three years, no problem done. So there’s other ways to get creative. And listen, the counter argument to that is I’m going to pay my house off as fast as I can. So I can save all that money on interest. And I just don’t have an Emmy Chris to like, try to convert people on a one on one basis, which is why I think it’s so powerful to hear the money ripples podcast when you have people on and you talk about this specifically. Yeah. So just wrap this up, Chris. And then we’ll jump into our three questions. But you know, what do you kind of talk to people about when they say, Well, if this is so good, how come my financial advisor never told me about it? Because
Chris Miles 36:52
he doesn’t get paid for it. Plain and simple. I mean, to a hammer, everything looks like a nail when they want to sell you something. And I know because I was in that position, right? Give an example. I had a brother in law that was in business. He says, Chris, if I give you 10,000 to play with, if you make me 10% I make 1200 bucks a year. I was like, well, it’s not guaranteed. He’s like, Yeah, but that’s what you’re saying. But Chris, I can take that same $10,000 And that’s not my business, and a few months make $30,000 So why would I put my money with you? You should be diversified. You should put all your eggs in one basket besides businesses risky, which is dumb because I was in business myself as a financial advisor. I was commissioned only having my own business, but I’m telling him don’t do business. Because it hurts me. Right? Because I don’t make a commission off it. It’s like Liar Liar. If you remember Jim Carrey, when he couldn’t lie for this 24 hours. Spoiler alert, right? But obviously, that’s the whole premise of the movie. But when he’s in court, he’s like, objection. Why? Because it hurts my case, overruled. I know, that’s really what financial advisors are doing. But like either one, they don’t want to believe that real estate’s better or two, they just don’t know. Understand it. That’s the thing. Like I said, financial advisors came to me asking how to become financially free. They didn’t realize like I did, eventually that I can make more money, they didn’t understand that, like, I bought a property in Memphis five years ago, this month, right. And I did the tally up till this point I’ve made from a $32,000 downpayment, I’ve made $104,000, that same 32,000 in the stock market in that same period of time, what got me up to about $45,000, very different results, that they don’t see that they’re like, Oh, well, because I put 20% down on a property that bought me a bigger property. So when you put 20% down, you get a five time multiplier on that equity growth, right? So when the equity grows, even just 10%, you don’t make 10%, you make 50%. On that equity, growth, none, including all the cash flow and everything else that usually beats anything a financial visor offers. So when you really start to understand that you say, Oh, my goodness, the numbers almost seem too good to be true in real estate. And like you said, it’s hard to convince them that, but it’s true. And even if they don’t believe you, go look for the evidence. Go, you can Google and look up. Where do most millionaires make their money. And besides business, you’re gonna see almost all millionaires, 100% of them own real estate, you won’t see them say they have a 401k. Right, you will see the same thing. So just again, understand that common sense, just plain old common sense critical thinking would help you to understand that mutual funds have not worked, people aren’t becoming financially free from that. And even the people that are financially free, usually, because they have real estate in their portfolio, or they sold off a company for millions. And that’s where they really made their money not for the market, from either the business or from real estate or both.
Greg Lyons 39:31
Chris You know, it’s putting a podcast together each week or multiple times a week is a lot of work and this like we do, but I think for people to understand what’s out there is so important. And we could see this as a public service term, you know, like what we do, but if you just change one or two people’s minds, not to even invest with us, but to at least explore what real estate can do active or passive. I think That’s so important. But thank you for coming on to the passive income brothers and sharing your knowledge that has been, this has just been a great episode, including references with Liar Liar, the great Jim Carrey movie us singing Aladdin, six minute bathroom breaks, lots of public math. I mean, this is all been mind blowing stuff. But I think in the interest of time, we need to move on to our three questions. And we ask the same three questions each guess. And the first one is really a thought is when you hop on the phone with someone and like Tim said, yeah, sometimes you have to convert people. And that can be exhausting sometimes. But what do you say to people that come to you and say, you know, investing in real estate is just too risky?
Chris Miles 40:44
It probably is, if you don’t know what you’re doing. It’s probably true. If you know what you’re doing. It’s probably one of the safest places you can have your money in. And again, look at the evidence. Where do people usually make their money as a millionaire status, real estate, the stock market? So whenever somebody tells me that they’re like, real estate’s just so risky. I’m like, really? Or even if they call me risky, like, I’m not as risky as you, I’m more conservative. No, you’re not, you’re a comfortable saver. You’re comfortable doing what the masses have done, and the masses haven’t got results. So the truth is, you’re just comfortable being a saver. But if you have a 401k, you already take more risks. And maybe you are a gambler, you are more, you’re not conservative. I’m a more conservative investor than you are if you have any money in the stock market right now. So I just tried to flip it on its head and say, No, you’re actually a gambler. You put your money in the stock market. That’s been proven not to work. Why would I do something that’s 100%, proven not to work? I’ll
Tim Lyons 41:32
tell you what, Chris, five years ago, I would have heard this podcast said, This guy’s crazy. I’m doing all the right things, right. And then when I finally took the time to get educated, right, and then take that action, it’s a money mindset. It’s a complete change, a paradigm shift.
Greg Lyons 41:47
That’s what I want to say. Thank you. And a big word to Barry rice.
Tim Lyons 41:51
So the second question, Chris is from a de facto mentor of ours, you may have heard of him. His name is Robert Kiyosaki. He wrote Rich Dad Poor Dad the Cashflow Quadrant, right. Two of the books that Greg and I really started with that really changed our paradigm. And he can say something that turns people off if they don’t know what he’s really talking about. And he says that savers are losers and debtors are winners in this secular inflation environment that we find ourselves in. What does that mean to you?
Chris Miles 42:19
It’s true, I mean, leverage. Everybody talks about leverage, right? In business, every talks about having leverage, you know, like leverage is an amazing thing. Except when it comes to personal finances all sudden leverage no longer applies to people, for some reason, right? The reason that we’re taught debt is bad is because banks taught us that debt is bad. And why do they want to teach us that because they want us to pay as much back to them as possible. So they have more money to keep loaning out and making more off of us, right. But I kind of agree, kind of disagree with what he says context wise. Savers are losers, right? I mentioned a comfortable saver. If you just keep saving in the traditional places. It’s not going to work. You can create leverage. That’s why a lot of people I get the graduated like the Dave Ramsey poster children, they come to me and they say, Hey, Chris, I’ve paid off all my debt. But now I still have nothing. I don’t have enough to even retire. So what if I’m debt free? I’m not financially free like they promised me. Okay, great. Well, one things might consider is using equity for your house to go and make more money. Oh, boy, I don’t know. Okay. Well, you asked me what to do. It’s an asset. Well, yeah, but I don’t want to be in debt, that the who you don’t own anything. So and I don’t want to go into too long in this because I know these are rapid fire questions. But long story short, is that yes, with leverage. And if you’re a wise steward of your money, debt can be great. This is where I draw the line. If you’re an idiot with your money, don’t you dare listen to Kiyosaki. If you’re a spender, don’t listen to Kiyosaki. If you’re a horrible saver where you can’t even think about doing anything outside what your financial adviser sells to you, not tells you but sells you, then don’t do this. But if you actually want to do something that’s been proven to work, and you can be a wise steward of your money debt could be one of your best friends.
Greg Lyons 43:53
I think before you go down the real estate journey, sometimes you have to do a little self diagnosis. Am I a spender? Am I a saver? Am I responsible enough to do this because you have to be responsible in either an active or passive role with real estate. That’s great. Last question is or less thought is from Jim Rohn. And he said a formal education will make you a living and a self education will make you a fortune. Take it away, Chris. Amen.
Chris Miles 44:23
I mean, it’s true. If you feel that you’ve learned the majority your education came from college, shame on you. Right now, if you just got out of college. That’s not one thing, right? But if you’re someone who’s in a grown up adult in your at least 30s or 40s, you say that you learn more in school and college and you have as an adult, shame on you. Like the real power, the real power of your life is the wisdom and the education you gain after you’ve left the school environment. That’s why I dropped out of college, right? I wanted real life experience. I didn’t know where it’s going to take me but I’ll tell you, it has made me way more money so much more than anything other than grade school, high school or college. I’ve learned way more educating myself reading good books, listening to podcasts, just like your guys’s podcast, right, just really educated myself and training my brain to do things differently. Because if you want to extraordinary life, you got to do something extra. Dude,
Tim Lyons 45:14
I love this. And Chris’s podcast is called Money ripples. And he always talks about doing this for you, but also the effect that it can have on people around you, right? You want to live a full life and you really want to have that cash flow, right, just to kind of really kind of make a difference and create that ripple in your life. So Chris, besides your money ripples podcast, how can people reach out to you if they want to learn more about you your business and what you’re up to? You’re
Chris Miles 45:38
gonna money ripples.com We even have a passive income calculator. So if you’re wondering how much passive income you could actually create in your situation, we actually have a calculator on there that just a few short questions, and you can pretty much figure out what could be possible in the next 12 months. So definitely check that out.
Tim Lyons 45:53
I love it. And listen, guys, this has been awesome for me. I’ve been waiting to get Chris on the show for a little while. I’m so happy we had the opportunity to do so if you could do us a favor just like this podcast, write a review, leave a rating but also share this podcast episode with a friend that you may think could use something like this in their life, that’s that’d be the best payment for us. So that’s gonna do it for this week of the passive income brothers podcast and we look forward to serving you again next week. Thank you for listening to another episode of the passive income brothers podcast. We would be grateful for your support of our podcast by giving our show a five star rating and review and subscribing to our show on your favorite podcast platform. Don’t forget to take inspired action after listening to this show, so that you can start building out your passive income streams. Finally, head on over to cityside cap.com to connect with us and find out more information about how to get started passively investing in real estate