So basically you refinance an expensive property on a higher amount then what you bought it for and pocket the difference of what the original amount was. As a non taxable event because it is borrowed money.. when you sell you pay the largest lump some and pay the remaining balance on either you gain or lose from next sale. You have to stay afloat or lose everything
I can never watch the full video when someone post it in the comments. I can’t click on it to view it and not gonna right it all down then type it in letter by letter
Thats a great strategy but its not the full strategy.. You see when get to the last property you will sell and no longer use the 1031 strategy, you will owe all the capital gains taxes for any previous properties you sold and did a 1031 for. But what wasn't mentioned in the video, is there is a way to avoid this event which could potentially bankrupt an investor. You place all the properties you sold and plan to sell under a trust and when you come to sell your last property and no longer want to continue using this method, you write proceeds of the sale to that trust as a non-taxable inheritance. Virtually giving you a fully tax-free strategy. People like the guy in the video know these tax loop holes.
You can’t go bankrupt at the end because capital gains is 48% of profit. So unless your portfolio takes a 52%+ dip (to keep the math simple but this assumes you put no $ down which is impossible, it’s really more like 60%+), you will never be underwater.
What you’re not considering is that one major property sell can afford you to buy multiple properties. If you sell a business for $15 million you can buy a lot of different properties that’ll add up to way more than $15 million. Basically, Ben could realistically sell all of his hotels to pay off the IRS if he wanted to and then keep all of his apartments and strip malls. I wouldn’t be surprised if he’s gonna use his hotels as a bailout when he finally retires.
No need for a bailout when he can just take advantage of the tax code and put his properties in a non-taxable trust. Which I'm guessing he already has setup. Noone pays capital gains if there's a way not to.
@@AZZAMALI_OFFICIAL The issue with this is Ben has hotels and hotels require full time commitment to run them efficiently. Vinson is the general manager running his hotels from what I see and he had a lot of hick ups running them. Ben Jr. is the one taking care of the apartments and strip malls. Obviously he has more people behind the scenes we don’t see but it seems like Ben gave everyone their own lane vs Ben is good in all lanes. Look at Vinson’s personal real estate decisions when he decided to buy single family homes for $400K instead of an apartment complex. I think he’s gonna get rid of all of hotels before he retires because I don’t see his kids prioritizing them. Ben Jr. is building properties and Vinsons has an eye for finding opportunities.
The poors filling the bank's accounts The Rich's loans the banks money The bank's? They wait to the loan return the rich buys houses the poor/rich rent the houses and pay the rich loans ha?how that for story?
He uses home equity lines of credit instead of cash so he doesn’t have to sell properties, and uses a 1031 “exchange of equal or greater value property” instead of selling to avoid capital gains tax. This is all completely legal and in public tax codes. Pretty cool if you’re rich. Sucks if you’re poor.
Except you still have to repay the loans and the loan payments aren’t tax free… You can deduct the interest, depreciation, and operating expenses to lower your taxable income, but you can’t deduct the principal payments. It’s true that you don’t get taxed on the loan itself, but the money used to repay the loan is taxed. Anyone that says otherwise is leaving something out of the story or is completely uninformed about the US tax code.
@@jeepsarefun21’s rented out; so while it’s true that the money used to pay the loans is taxed, it’s not your money. It’s the tenants money; proper screening of good tenants is crucial.
As a banker who regularly sees this (albeit in another country) this is one of the few examples of actual good advice on UA-cam. People earning over 180k pay 45 cents to the dollar in tax and he is generating tons of wealth in an extremely tax effective way. The issue comes in maintaining sufficient collateral and cash flows to maintain this. Should either of those go down and the bank wants to call on it, you’re boned.
If worse comes to worst then he just files bankruptcy and restructues. Not a big deal. Pretty sure he has some asset protection strategy set up at his level. If the president could have millions in debt to an international bank then Ben will be alright
@@SergiyMichael hes not paying the loans or the interest you idiot he rents the buildings out. How don't you get it. People like hik only do deals where the rent they can get will cover all the bank loan costs. If you sell things for profit the government almost takes half in some countries but if you do this you give the government nothing
@@BroccoliBrigardist No, any person who needs to SELL A COURSE in how to make money is clearly still working on that themselves. 😂 Also "your" is possessive, "you're"(you are) is what you're looking for.
This is real. The only reason billionaires and other super wealthy people barely pay any taxes is because they borrow against their wealth and use that, never actually liquidating most of their assets. Unlimited money glitch
@@coasteyscoasteysDoesn’t matter if the value of the house goes up or not. They save millions in taxes. In otherwise it would’ve been gone. that’s the main reason
@AceSpade-je9qe but you can only claim tax up to your rate. It will still cost you to hold and why hold if the property goes down in value. You can't claim 100% tax back
I don't understand how he's not paying tax, If you rent out the property and earns for rental he has to pay and that doesn't matter if there's any debt on it or not?
People who are scared of debt using this model are not doing the math. Would you rather pay between 2-10% per year in interest, or 35-54% per year in tax. They arent looking at it logically like Ben is explaining here.
@@Chris-od1jp Yeah but that tax rate is only on whats left after all the write offs. Big business's pay zero tax. Which is how it should be anyways, consumers pay taxes. If the business pays tax, it just gets rolled to the consumer anyways....
@@BadBadgerTrollAccount172 I agree and don’t know why no one else says this.. raising corporate tax does nothing but raise the price of everything they sell so the consumer pays the tax regardless and that AND their income on top of all the other taxes it’s so bullshit
To obtain financial freedom, One most either be a business owner, an investor or both, generating passive income, particularly on a weekly and monthly basis. that's the key to living financial stable life. I pra upy that anyone who reads this will be successful in life,
It always works. 1031 Exchanges have been around for 100 years. It's not some Ponzi scheme or giving out loans to people who can't afford them, it's literally just a tax break that benefits both sides of the aisle, and despite the comments, you don't have to be "rich" to do it. You just have to be able to sell a single secondary house to start rolling the equity.
@@Cristian-ui1txwhen you invest, you don’t sell. You do the footwork and buy under value. That’s where you make your money. Selling it is realizing your money. When you lease your properties out they are providing you with cash flow. No matter if the market is up or down, you’re still making money. So why would you sell? The only true real estate investing is buying and holding. It’s a solid market because people always need to live somewhere, rents don’t decrease and if they do it’s not much and not long. Everything goes up over time. Including the value of your home through appreciation. If you do your due diligence you CANT fail investing in real estate.
@no rev limits you are either very dumb because he clearly over 50 and everyone hopes of making it to that age. Or you’re either trolling him for the cough in the short 😂 either way I get a good laugh from This.
I know a lot of people who watch your channel don’t like debt. But that is the advantage of real estate over other asset classes. You use other people’s money to make money. Similar to arbitrage, I get a loan at a low rate, and provide rentals at a higher rate of return and pocket the difference, mostly on paper, until i refinance at least. I am close to two million dollars in debt yet I am a millionaire. I got there by using the bank’s money. I still believe in being leveraged as much as is feasible, with the only concern being stable levels of cashflow and healthy cash reserves. This man knows what he is doing. A way that I like to look at debt is a force multiplier. If magnifies the return on investment, either gain or loss. It also magnifies risk, but risk can be managed.
@@z8dn 1.2 million net worth. No reason to keep that much in hand, that is my point exactly. That would be a waste of leverage. I do have some fairly sizeable cash reserves though for backup in case of emergency. Haven’t needed it though. I get that a lot of people aren’t comfortable with that debt but it doesn’t bother me. I care about the ROI, and i have averaged 40ish% roi (I haven’t looked lately, could be lower now) for 14 years. Started with $20k and never added money to it. Real estate really is the way to get rich. It’s just slow and not as sexy as GME calls.
@@MRkriegs It actually is... Google "The arbitrage between your interest rate and market return" or interest rate arbitrage. Arbitrage is when there is a price difference between an asset, and one way to look at real estate investing, specifically in my case, rentals, is the difference between my interest rate and the rate of return of the rental. I agree that it is a very creative use of the term arbitrage, but I didn't invent it nor am I the first to use it that way.
@@TheNativeTwo I understand it's not a term specifically used or created by u. Car dealers buying from manufacturers and up selling to consumers, credit card companies paying in full and charging interest on those consumer purchases, the vast majority of all debt fuelled investing would all fall under that term. That completely destroys the descriptive nature of the term and is way too loose to be a reasonable term to use in that instance. Just my thoughts. Cheers
Genius! I did this on my first 1031, but could have bought two properties instead of just selling one small and going to another bigger one. But I got to keep half the cash proceeds because I just got a bigger loan on the second bigger property! Today I wish that I had just bought one more property
@@sebjacome814 "1031 exchange" it allows you to find a replacement property with your proceeds after a sale instead of facing tax implications...but you need to have a deal in writing within 45 days and acquisition of a new property within 180 days
@@Bananapeel6969 So the main point is that he doesn’t make money buy selling a property and putting the money in his pocket. The money comes from buying a property, refurbing it (or just waiting for it to increase in value) then refinancing and the cash you get from the new loan will be more than you originally paid for the property because it has increased in value.
Most rich people do. The difference between you and them is the loan is 30-50% of their actual assets. Most Americans are 80-90% in debt and couldn't pay back all their loans at once. Car, credit, mortgage, time share, etc.
It's in the tax code, no loophole at all. The concept of 1031, or rolling your gains from a property into another property (or multiple) was actually derived from farmers, who were encouraged to buy bigger farms as they got more experience, so they could produce more food for the country
The risk is ruining your life and being in massive debt. Most "entrepreneurs" I know have really shitty personal lives and make no time for people because they are "on the grind".
I accidentally discovered this when buying a car from a family relative. They were selling it to me for $10k and the bank was willing to lend me up to $16k for it. So I took the $16k, paid the car and used the rest for other ventures. And yeah it works in general if you can get something for cheaper than the bank is willing to finance.
well done.... you borrowed an extra 6k that you didn't need or want and had to pay interest on it so that 10k car probably cost you north of 20k. your a genius!?!?!?!
@@samholmes599 You clearly don't know how money works. If you take the extra $6k and put it into something that pays more than the interest expense, then you've made money
@@StupidDummyIdiot No sh*t sherlock.....i 1000000% guarantee he wasted that 6k and did not invest it in anything that returned anywhere near the amount to cover the full interest(if he invested it at all I read his comment as he wasted it). I am happy to be proven wrong by OP though a doubt it will happen.
@@StupidDummyIdiot dude making more than interest expense ist that simple plus you also need regular cashflows to pay monthly installments on that loan
Correct however you cannot borrow money from a bank more then what the asset appraised for, so if he was borrowing 25-30m but only paying 18m that means all his equity he refinances out of the deal and uses that as another down payment on another property rinse and repeat, what he is saying is “he got deals on his properties”
@@geminisduerme5266 yeah man that’s why you have to be rich or have some money before getting into real estate .It could turn into a risky investment very quickly
@@Elseworth254 Problem is when your occupancy rate declines, or when insurance companies up your premium. I know in South FL they basically doubled insurances on apartment complexes ever since the collapse of that building in Miami Beach. Debt can go very left very quick.
I remember paying this guy something like 120.00 usd, for financial advice and all he could say the whole phone call was, "I don't know." I don't think this guy knows anything, other than he got lucky.
From what I understood, it allowed him to use the money as his own disposable income while being tax free, since you don’t pay income tax on bank loaned money.
The rate of return on using the bank's money is greater than the cost of using the bank's money (interest rate). Debt is not taxed, so you use "good debt" to raise your net worth faster
@@lolsk9136 Grow up, wanna see how you gonna buy 80k house just to spend on. Many of you kids don't realize this but like 80% of humanity can't afford this despite what few hundred scammers on YT tell you. Even if you do make 80k a year, you still have to pay rent, pay for gas, food appliances, that salary comes with a lifestyle, you can't say no to Bob when he invites you to go play golf of jet-ski because tomorrow someone else will be taking your salary home and will be happy to with Bob.
He started after the 2008 crash.. didn’t lock in his interest. He is selling stuff like crazy now trying to pay the rising interest. Yes.. still rich on paper but it's a house of cards. Who knows if he protected himself.
This is why real estate moguls always go belly up in the end. Yes borrowing from the bank is not a taxable event because the government doesn't tax debt. But if you borrow at a shitty rate, and you end up with an even mild recession and your tenants can't cover your loan payments and interest, then you will be losing assets and going bankrupt. And in the end, the bankers get wealthy and you lose everything, because compound interest always wins in the end. The bankers end up with all your assets and you end up penniless.
@@neafwhy6166 It's even worse because no one takes into account inflation which is created by the credit lines and fractional reserve banking. So people aren't even factoring these variables when calculating their investments. The banks will always win in the end, because the game is rigged in their favor.
Every bank loan has an interest. So what that means is you borrow money to buy a property. Rent that property so that you can pay the interest and your expenses. And one day when you pay the loan the money your property is making is fully yours to use + the property is yours.
@@edsida "my dad built a company and now I go around on the internet to troll people because I lack the foundation to build meaningful relationships with people in real life so I have no friends or people who genuinely care about me so this is my one and only release" there I fixed it for you 👍🏻
When you sell a property and you have to pay off the finance what are you left with. unless you can sell the property to cover the cost of the loan and keep the money that you financed very difficult to do
Full Video Here: ua-cam.com/video/Z2kM-zKRSsk/v-deo.html
Thank you for this informational content, this short has provided long-term gain.
So basically you refinance an expensive property on a higher amount then what you bought it for and pocket the difference of what the original amount was. As a non taxable event because it is borrowed money.. when you sell you pay the largest lump some and pay the remaining balance on either you gain or lose from next sale.
You have to stay afloat or lose everything
I watched this a while ago if this is the one you went to his house and he is like the big mob looking guy that took you around his house. Good video.
@GrahamStephan Can you ask Ben Mallah to explain this in more detail of how it actually works in real life?
I can never watch the full video when someone post it in the comments. I can’t click on it to view it and not gonna right it all down then type it in letter by letter
Was calling BS until I heard that cough.
@@simpleuploads7 I know haha I was the one who edited this video.
@@SocialMediaMoneyy And you kept the cough. Hey! I guess the editor knows best.
Comment of the year award goes to you.
Complete bullshit read my comment.
@@SocialMediaMoneyy LoL nice keep up the grind man.
That Kingpen cough is instant street cred😂😅
Joo boy with joo money
Pen?
@@yammie1536 he means KingpIn
Kingpin means the person whos the boss @yammie1536
@@joevela8757 is kingpen the kings pen?
That cough told me all I needed to know. This guys legit lmao
So original
the guy still smokes
I don’t get it ..
bro is so creative
Funny but I don't get it
i like how he made a hand gesture with the cough as if he was explaining something but he was just coughing
lmaooo
lol it spoke a thousand words.. rather efficient i'd say
😂😭
You know what I mean?
Wild that is 😂
Thats a great strategy but its not the full strategy.. You see when get to the last property you will sell and no longer use the 1031 strategy, you will owe all the capital gains taxes for any previous properties you sold and did a 1031 for. But what wasn't mentioned in the video, is there is a way to avoid this event which could potentially bankrupt an investor.
You place all the properties you sold and plan to sell under a trust and when you come to sell your last property and no longer want to continue using this method, you write proceeds of the sale to that trust as a non-taxable inheritance. Virtually giving you a fully tax-free strategy. People like the guy in the video know these tax loop holes.
You can’t go bankrupt at the end because capital gains is 48% of profit. So unless your portfolio takes a 52%+ dip (to keep the math simple but this assumes you put no $ down which is impossible, it’s really more like 60%+), you will never be underwater.
What you’re not considering is that one major property sell can afford you to buy multiple properties. If you sell a business for $15 million you can buy a lot of different properties that’ll add up to way more than $15 million. Basically, Ben could realistically sell all of his hotels to pay off the IRS if he wanted to and then keep all of his apartments and strip malls. I wouldn’t be surprised if he’s gonna use his hotels as a bailout when he finally retires.
No need for a bailout when he can just take advantage of the tax code and put his properties in a non-taxable trust. Which I'm guessing he already has setup. Noone pays capital gains if there's a way not to.
How can you place properties you already sold under a Trust?
@@AZZAMALI_OFFICIAL The issue with this is Ben has hotels and hotels require full time commitment to run them efficiently. Vinson is the general manager running his hotels from what I see and he had a lot of hick ups running them. Ben Jr. is the one taking care of the apartments and strip malls. Obviously he has more people behind the scenes we don’t see but it seems like Ben gave everyone their own lane vs Ben is good in all lanes.
Look at Vinson’s personal real estate decisions when he decided to buy single family homes for $400K instead of an apartment complex. I think he’s gonna get rid of all of hotels before he retires because I don’t see his kids prioritizing them. Ben Jr. is building properties and Vinsons has an eye for finding opportunities.
I like how he kept the cough in the short aswell 🤣
😂😂😂
It's how we know it's not a Ben impersonator
The poors filling the bank's accounts
The Rich's loans the banks money
The bank's? They wait to the loan return
the rich buys houses
the poor/rich rent the houses and pay the rich loans
ha?how that for story?
Haha thank you
That's the verification seal
This guy should be a character in the next GTA
Well it is
Yes
Diaz
I think he will be
Bro I tell everybody that 💯😂
That cough at the end from years of smoking cigars
You dont inhale cigars
@@bobbyphillipsiii4311you can tho and I do it by habit
Cigarettes. He’s smoking constantly.
Cigarettes. But yeah smoking us bad...always
Guy like that, are you surprised
Fun Fact: You can like comments by double tapping them, but by triple tapping them you can also reply
Wow thanks
“Deferring gains” doesn’t mean no taxes will be paid. Just kicking the bucket down the road.
...Until you"kick the bucket" having deferred gains to infinity..?
The gains can be ate up quickly though
No hes fine
When he dies the kids inherit everything tax free.
That cough said it all
Wdym? Please explain, I didn't understand
If YKYK😂
@Erratic Formula Just based on whatever someone's definition of success is.
@Erratic Formula I think he's become very wealthy.
Ya it sounded like $23,000 meals with $10,000 cigars. I'd rather live till 50 and be insanely rich then to live 100 years and be poor
This guy made more sense in one short than all of rich dad suzuki kawasaki’s videos combined
Bahahahahahah
💯
Hahahah
wut
You mean the angry little Asian burn victim who’s daughter should be r**ed due to how stupid his advice is
He uses home equity lines of credit instead of cash so he doesn’t have to sell properties, and uses a 1031 “exchange of equal or greater value property” instead of selling to avoid capital gains tax. This is all completely legal and in public tax codes. Pretty cool if you’re rich. Sucks if you’re poor.
It all sounds good but somebody has to make the payments or you won't be owning any of that property long.
Except you still have to repay the loans and the loan payments aren’t tax free… You can deduct the interest, depreciation, and operating expenses to lower your taxable income, but you can’t deduct the principal payments. It’s true that you don’t get taxed on the loan itself, but the money used to repay the loan is taxed. Anyone that says otherwise is leaving something out of the story or is completely uninformed about the US tax code.
@@jeepsarefun21’s rented out; so while it’s true that the money used to pay the loans is taxed, it’s not your money. It’s the tenants money; proper screening of good tenants is crucial.
You can do the same thing
what does that mean in simple words?
Dudu talking about 18-20m bucks like I talk about 18-20 bucks 😂
Props to the editor for keeping the cough. Respect
Hi
As a banker who regularly sees this (albeit in another country) this is one of the few examples of actual good advice on UA-cam. People earning over 180k pay 45 cents to the dollar in tax and he is generating tons of wealth in an extremely tax effective way. The issue comes in maintaining sufficient collateral and cash flows to maintain this. Should either of those go down and the bank wants to call on it, you’re boned.
He has strong enough assets to where he probably doesn’t worry about it
Nonsense. Living of a loan paying interest to banks while you having cash. Ye smart lol 😅
The Banks are calling now. He's been selling assets to create cash flow
If worse comes to worst then he just files bankruptcy and restructues. Not a big deal. Pretty sure he has some asset protection strategy set up at his level. If the president could have millions in debt to an international bank then Ben will be alright
@@SergiyMichael hes not paying the loans or the interest you idiot he rents the buildings out. How don't you get it. People like hik only do deals where the rent they can get will cover all the bank loan costs. If you sell things for profit the government almost takes half in some countries but if you do this you give the government nothing
Coughs in filthy rich
Can't take it to the grave with ya
@@wat2875but it sure does make your time outside of the grave real nice
😂😂😂
😂😂😂
He's not selling a course 👍 respect
Youre right, hes just a leech contributing nothing to society
he doesn't need to he's already made it in life
Unlike some other "billionaire," still trying to get paid for a fraction of what this man just taught so effortlessly.
If your rich you dont need to sell some courses right?
@@BroccoliBrigardist No, any person who needs to SELL A COURSE in how to make money is clearly still working on that themselves. 😂 Also "your" is possessive, "you're"(you are) is what you're looking for.
“I cut back on smoking cigarettes btw, ya I switched to cigars.”-John Candy, Uncle Buck
Simple, digestible, researchable. Thanks for the content.
When he said *CHKAUUUUUUUU* _i felt that_
😂😂😂😂😂
This is real. The only reason billionaires and other super wealthy people barely pay any taxes is because they borrow against their wealth and use that, never actually liquidating most of their assets. Unlimited money glitch
Derry
Based on assuming price rises for property. This will bankrupt you prices go backwards
@@coasteyscoasteysDoesn’t matter if the value of the house goes up or not.
They save millions in taxes. In otherwise it would’ve been gone. that’s the main reason
@AceSpade-je9qe but you can only claim tax up to your rate.
It will still cost you to hold and why hold if the property goes down in value. You can't claim 100% tax back
I don't understand how he's not paying tax, If you rent out the property and earns for rental he has to pay and that doesn't matter if there's any debt on it or not?
@@coasteyscoasteys idk if you noticed, but real estate is more consistent than the stock market also proven by scamdemic
Just knew the comments was gonna in with the cough bruh 🤣🤣🤣😭😭☠️☠️
So instead of paying taxes you’re paying interest? Which is higher?
His cough sounded like "That's it". 😂😂
Now this is actual real advice. Too bad you can’t 1031 your personal house, only investment properties
ok so if I buy a second property and make that my primary can I do this with my original townhome?
@@matt2m provided your town home appreciates in value and is in high market to be able to make a profit.
People who are scared of debt using this model are not doing the math. Would you rather pay between 2-10% per year in interest, or 35-54% per year in tax. They arent looking at it logically like Ben is explaining here.
Yea , the rich dont have to pay taxes its just the poor , who stay poor. Good system !
@@--LZ--- it’s not perfect but it’s working just fine
@@719Flowersoh yea man it’s working great just ask the hundreds of thousand homeless people
@@Chris-od1jp Yeah but that tax rate is only on whats left after all the write offs. Big business's pay zero tax. Which is how it should be anyways, consumers pay taxes. If the business pays tax, it just gets rolled to the consumer anyways....
@@BadBadgerTrollAccount172 I agree and don’t know why no one else says this.. raising corporate tax does nothing but raise the price of everything they sell so the consumer pays the tax regardless and that AND their income on top of all the other taxes it’s so bullshit
1031 form transaction borrowing money from the bank from your own buildings. Do you still have to pay interest from that loan ?????????❤
Good to see him still doing well. Was worried about his health a little while back.
That cough 💀
My guy put down the Romeo and Julieta cigar
Bro is irl tony soprano he doesn't have to
He doesn’t smoke cigars he smokes Newports. Cigars are not as bad.
i think he smokes a single cigar that cost as much as a dozen boxes of romeo y julieta
he need some cohiba
@xxmeanyheadxx Romeo Julieta cigars are $25-200/ each. I had one before and there's way more expensive cigars out there.
Money printing is why real estate has been so lucrative. Prices do not go up, only the money supply gets expanded.
@@tomoore1776 because people are stupid.
@@tomoore1776 because air Jordan’s is a shoe unfortunately
Horrible take
@@stephencolican2787thanks for the constructive input
Accurate, but the only way to participate (positively) in that expanding mlney supply is buying assets, like real estate.
the cough pretty much said “yep, it was that simple” 😂😂
That cough at the end is epic af😂
To obtain financial freedom, One most either
be a business owner, an investor or both,
generating passive income, particularly on a
weekly and monthly basis. that's the key to
living financial stable life. I pra upy that anyone
who reads this will be successful in life,
You are right Sir,
Most people don't invest due to
ignorance.
People are scared of investing because
of high rate of scammers in the market.
Thanks
You are wrong. Passive income is a lie told to your lazy generation.
The editor wins on this one. The emphasis on the cough was genius
It works till it doesn't. This reminds me of the beginning of the end during 2008. 2011 was the real crash.
mind explaining the 2011 part? do you mean 2011 or around that was the time the actual post-stage effects set in?
It always works. 1031 Exchanges have been around for 100 years. It's not some Ponzi scheme or giving out loans to people who can't afford them, it's literally just a tax break that benefits both sides of the aisle, and despite the comments, you don't have to be "rich" to do it. You just have to be able to sell a single secondary house to start rolling the equity.
Bought my house in 2008, had been waiting for a market downturn for years... Mortgage is $216.42 a month....
@@augustwest9727geeze how did you get such a low mortgage? Large down-payment?
@@Vamplord111 bought it for 50k put 15k down.
Love Ben!!! I remember when this episode came out I was so excited for the both of you!
Bro’s cough at the end had me rolling NoCap. “you can definitely tell I’m the boss cough”😂😂
He is the embodiment of cholesterol
the bodybilder will die also
Atleast he made it to his 50's as a millionaire
Cholesterol is necessary for life
@@flashpointprdx too much and it can obstruct the blood vessels
@@flashpointprdx especially for testosterone
Glad to learn how to contribute to the mega housing bubble
Everyting is great until you can't pay the loan and can't sell tge asset
Except most of his portfolio is on commercial short term stays (hotels e.t.c) and senior/low income housing so explain his contribution again?
@@sijosueIf this is the case. My bad
@@Cristian-ui1txwhen you invest, you don’t sell. You do the footwork and buy under value. That’s where you make your money. Selling it is realizing your money. When you lease your properties out they are providing you with cash flow. No matter if the market is up or down, you’re still making money. So why would you sell? The only true real estate investing is buying and holding. It’s a solid market because people always need to live somewhere, rents don’t decrease and if they do it’s not much and not long. Everything goes up over time. Including the value of your home through appreciation. If you do your due diligence you CANT fail investing in real estate.
@@Cristian-ui1txhousing bubble? Most of his properties are commercial no?
this dude knows about a loophole in the irs regulations that literally pays him non taxable profit with every business he purchases twice
So borrowing double of what you want? Your getting your value out at half the tax? Or with the newly aquired asset?
Ok got it! What’s a refinance?
The lesson: What’s wealth if you don’t have your health.
He has a mansion
@no rev limits you are either very dumb because he clearly over 50 and everyone hopes of making it to that age. Or you’re either trolling him for the cough in the short 😂 either way I get a good laugh from
This.
@@64devilwhat's the point tho?
Still wealth
Future generations will benefit
I know a lot of people who watch your channel don’t like debt. But that is the advantage of real estate over other asset classes. You use other people’s money to make money. Similar to arbitrage, I get a loan at a low rate, and provide rentals at a higher rate of return and pocket the difference, mostly on paper, until i refinance at least. I am close to two million dollars in debt yet I am a millionaire. I got there by using the bank’s money. I still believe in being leveraged as much as is feasible, with the only concern being stable levels of cashflow and healthy cash reserves. This man knows what he is doing.
A way that I like to look at debt is a force multiplier. If magnifies the return on investment, either gain or loss. It also magnifies risk, but risk can be managed.
So 2million in debt but 1million in hand?
@@z8dn 1.2 million net worth. No reason to keep that much in hand, that is my point exactly. That would be a waste of leverage. I do have some fairly sizeable cash reserves though for backup in case of emergency. Haven’t needed it though.
I get that a lot of people aren’t comfortable with that debt but it doesn’t bother me. I care about the ROI, and i have averaged 40ish% roi (I haven’t looked lately, could be lower now) for 14 years. Started with $20k and never added money to it.
Real estate really is the way to get rich. It’s just slow and not as sexy as GME calls.
That's literally not what arbitrage is. Just fyi
@@MRkriegs It actually is... Google "The arbitrage between your interest rate and market return" or interest rate arbitrage.
Arbitrage is when there is a price difference between an asset, and one way to look at real estate investing, specifically in my case, rentals, is the difference between my interest rate and the rate of return of the rental.
I agree that it is a very creative use of the term arbitrage, but I didn't invent it nor am I the first to use it that way.
@@TheNativeTwo I understand it's not a term specifically used or created by u. Car dealers buying from manufacturers and up selling to consumers, credit card companies paying in full and charging interest on those consumer purchases, the vast majority of all debt fuelled investing would all fall under that term. That completely destroys the descriptive nature of the term and is way too loose to be a reasonable term to use in that instance. Just my thoughts. Cheers
Ohh, he played a very dangerous game and won.
Genius! I did this on my first 1031, but could have bought two properties instead of just selling one small and going to another bigger one. But I got to keep half the cash proceeds because I just got a bigger loan on the second bigger property! Today I wish that I had just bought one more property
Didn’t make money selling but did so on the buying. Great negotiator
If you ever plan to sell a property and buy another property always always 1031 it. Never sell and buy seperately!
What does “1031” mean?
@@sebjacome814 "1031 exchange" it allows you to find a replacement property with your proceeds after a sale instead of facing tax implications...but you need to have a deal in writing within 45 days and acquisition of a new property within 180 days
@@willpowr416 explain what he’s saying in the video please idk what any of it means 🤣
@@Bananapeel6969 So the main point is that he doesn’t make money buy selling a property and putting the money in his pocket. The money comes from buying a property, refurbing it (or just waiting for it to increase in value) then refinancing and the cash you get from the new loan will be more than you originally paid for the property because it has increased in value.
Refinancing? How?
Ben is Literally the Fat Cat all the strippers be talking about 😂😂😂they like “idk he do real estate he own hotel he got a lot of money😂
“I borrow money from the bank to live off of”
Smart if you have assets growing and some cash out refinancing then maybe leverage the money from the HELOC into higher yielding investments
Most rich people do. The difference between you and them is the loan is 30-50% of their actual assets. Most Americans are 80-90% in debt and couldn't pay back all their loans at once. Car, credit, mortgage, time share, etc.
Can someone explain to me how this works? How exactly does he make money through financing?
I thought you had to own the property for some time before refinancing it? You can do it right away?
And that my friends is what a loophole is
It's not a loophole idiot. Debt still has to be repaid. It's not free. Ffs lol
1031 isn't a loophole, it's just a tool
It's in the tax code, no loophole at all. The concept of 1031, or rolling your gains from a property into another property (or multiple) was actually derived from farmers, who were encouraged to buy bigger farms as they got more experience, so they could produce more food for the country
It's not a loophole. It's the actual law.
Its not a loophole. He has to pay off those loans still. Its not free money
Statistically the most common way of becoming a millionaire is becoming an entrepreneur. I believe it’s 40 something percent. High risk, high reward.
Of course
The risk is ruining your life and being in massive debt. Most "entrepreneurs" I know have really shitty personal lives and make no time for people because they are "on the grind".
@@nothingnothings2264 yep. Certainly carries some serious risks and it’s often not a pleasant life at least before you make it.
41%
saw that stat as well. I think people that got rich from real estate are less than 10%
I accidentally discovered this when buying a car from a family relative. They were selling it to me for $10k and the bank was willing to lend me up to $16k for it. So I took the $16k, paid the car and used the rest for other ventures. And yeah it works in general if you can get something for cheaper than the bank is willing to finance.
well done.... you borrowed an extra 6k that you didn't need or want and had to pay interest on it so that 10k car probably cost you north of 20k. your a genius!?!?!?!
@@samholmes599 You clearly don't know how money works. If you take the extra $6k and put it into something that pays more than the interest expense, then you've made money
@@StupidDummyIdiot No sh*t sherlock.....i 1000000% guarantee he wasted that 6k and did not invest it in anything that returned anywhere near the amount to cover the full interest(if he invested it at all I read his comment as he wasted it). I am happy to be proven wrong by OP though a doubt it will happen.
@@StupidDummyIdiot dude making more than interest expense ist that simple plus you also need regular cashflows to pay monthly installments on that loan
@@StupidDummyIdiot but if you're making money that money will be taxed as capital gains so you're still paying tax.
Can someone explain? I understand borrowed money from the bank is non-taxable, but how he actually made money?
Doesn't this only work if interest rates are low and property prices keep going up?
The REAL wealth is health! 💯
Even the cough at the end is rich.
And that is how a bubble builds up to Pop just like in 2008.
Could someone explain what he explains
Correct however you cannot borrow money from a bank more then what the asset appraised for, so if he was borrowing 25-30m but only paying 18m that means all his equity he refinances out of the deal and uses that as another down payment on another property rinse and repeat, what he is saying is “he got deals on his properties”
U still have to pay the loan back. Right? That's a hell of a lot of debt
Yes but it pays itself by tenants paying rent .Basically the people who live in the building you own pay the debt .
@@Elseworth254 gotchya good debt vs bad debt. U just have to take the risk of managing the business
@@geminisduerme5266 yeah man that’s why you have to be rich or have some money before getting into real estate .It could turn into a risky investment very quickly
@@Elseworth254 absolutely
@@Elseworth254 Problem is when your occupancy rate declines, or when insurance companies up your premium. I know in South FL they basically doubled insurances on apartment complexes ever since the collapse of that building in Miami Beach. Debt can go very left very quick.
This dude is straight player !!!! He one of the realest one in game
Dude lives off debt tax free. What a dream
Most Americans do. It's call credit cards. Saying that he still pays millions in property, payroll, and income tax. Cashflow is still taxable income.
You get what you vote for!
Wgat is the exact model??? Refinance????
Half his lifespan went up in smog with that cough.
Heard that cough and knew it'd be mentioned in all comments, was not disappointed 😂😂😂😂
I remember paying this guy something like 120.00 usd, for financial advice and all he could say the whole phone call was, "I don't know."
I don't think this guy knows anything, other than he got lucky.
Hi
Can some explain to me how you can pocket a loan? Will you not have to pay back that exact amount plus interest in the future? What’s the point
Then use the cash flow to pay off the loan?
Can somebody explain the advantage of using bank loans even though they have to be paid back?
From what I understood, it allowed him to use the money as his own disposable income while being tax free, since you don’t pay income tax on bank loaned money.
Because the rental income pays off the loan instead of using your own money to buy the property outright
The rate of return on using the bank's money is greater than the cost of using the bank's money (interest rate). Debt is not taxed, so you use "good debt" to raise your net worth faster
You constantly borrow money till you die
Yes and then that is when the step step up basis kick in his children will get the assets without capital gains tax
That cough caught me off guard💀
it's low level compared to juggling act with companies basically you can do a form of this but instead of housing it's companies lol
i can’t believe i haven’t been buying 18-20 million dollar hotels yet im such an idiot
You could do this on a $80k house, no need for hotels
@@lolsk9136where you gonna find an 80K house? Not in Anerica or UK
@@rahulg5403 you can find them in a lot of places in the U.S.
@@rahulg5403It’s definitely hard to find an $80, 000 property in the UK.
@@lolsk9136 Grow up, wanna see how you gonna buy 80k house just to spend on.
Many of you kids don't realize this but like 80% of humanity can't afford this despite what few hundred scammers on YT tell you.
Even if you do make 80k a year, you still have to pay rent, pay for gas, food appliances, that salary comes with a lifestyle, you can't say no to Bob when he invites you to go play golf of jet-ski because tomorrow someone else will be taking your salary home and will be happy to with Bob.
You know my guy’s legit when he brings out the old solar powered calculator.
Hi
This is legit information. I'm in the process of buying more fixers and refinancing them. I want to use the 1031 to build more assets
Damn with all that money didn’t think to buy one salad
So basically max leverage and live off leverage. This guy will become a cautionary tale once commercial real estate and real estate TANKS
What if it doesn’t tank during the time he is alive? Also, I am sure he lived through the 2008 crises
He started after the 2008 crash.. didn’t lock in his interest. He is selling stuff like crazy now trying to pay the rising interest. Yes.. still rich on paper but it's a house of cards. Who knows if he protected himself.
That cough is throat cancer creeping up
Evergrande did the same. The only problem with this strategy is: what do you do when recession hits and you sell no more to pay your debts?
I have Q ( why he said loans don't have tax) but there's intrest on it right?
Its the same . Plz correct me if im wrong
So we aren’t going to talk about how this guys never plans on paying back in full anyone he borrowed from?
No because you’re a scrub.
Banks don’t really WANT to be “paid back in full”
U think banks will just let that slide😂😂
With interest
1031
This is why real estate moguls always go belly up in the end. Yes borrowing from the bank is not a taxable event because the government doesn't tax debt. But if you borrow at a shitty rate, and you end up with an even mild recession and your tenants can't cover your loan payments and interest, then you will be losing assets and going bankrupt. And in the end, the bankers get wealthy and you lose everything, because compound interest always wins in the end. The bankers end up with all your assets and you end up penniless.
Kelly criterion
@@neafwhy6166 It's even worse because no one takes into account inflation which is created by the credit lines and fractional reserve banking. So people aren't even factoring these variables when calculating their investments. The banks will always win in the end, because the game is rigged in their favor.
Pretty sure ben started before 2008 tho so if that was true he'd of been fucked wouldnt he
Yeah its all a massive ponzi scheme you 100% need to have an exit plan
Unless you're actually saving those piddly millions in 'excess'. Then you can go cry in your pile of money.
Doesn’t that just mean you owe for the loan? Like you gotta pay that back
Every bank loan has an interest. So what that means is you borrow money to buy a property. Rent that property so that you can pay the interest and your expenses. And one day when you pay the loan the money your property is making is fully yours to use + the property is yours.
@@themonarch620+1031 exchange
This could be very useful with the predictions for interest rates
How do you refinance then put it in your pocket?
So basically just stop being poor and buy a apartment complex. Got it, I'm writing all this down.
@Daniel-ie8siprices are extremely inflated from 20-30-40 years ago. Good luck
Hahahahahahahahah Brokies 😂
@@edsida "my dad built a company and now I go around on the internet to troll people because I lack the foundation to build meaningful relationships with people in real life so I have no friends or people who genuinely care about me so this is my one and only release" there I fixed it for you 👍🏻
@@youtubehatesfreespeech2436 ay that hurts
@@youtubehatesfreespeech2436Overdosing on copium, it’s not his fault you are broke 😂
Something tells me that someone is going to inherit an unpayable debt.
It's in a trust so it can be done in perpetuity
@@msing6741 what does that mean?
You only inherit debt when you sign for it, and nobody in their right mind would do that
@@lynch42o The debt dies with him.
Realestate is good debt
Massive Ponzi scheme we live in 😂
Yes. The key is to leverage as much as you need to live the life you want until you die because dead you don’t care about no dang debt.
@@sTayWVy as long as the leverage is working in your favour though
Problem is it’s going the wrong way now
And thats why the rich will never pay more taxes 🤣🤣
He still pays taxes because he is always whining about it in his videos
Thank god for that :)
He paid more in taxes in one year than your whole family tree in its lifetime. I hope he gets around taxes as much as he can taxation is theft.
So lake a loan, buy the property, then take another loan agaianst the value of the property ?
That OG cough at the end sold me.
He looks extremely unhealthy
he smokes a lot
Then, I bought McDonald’s
Ben stop smoking ya fuk! Love ya buddy ❤
When you sell a property and you have to pay off the finance what are you left with. unless you can sell the property to cover the cost of the loan and keep the money that you financed very difficult to do
That cough was weirdly a nice ending to the story 😂