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Transcript
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Welcome to the six figure business mastery podcast, where every week,

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Kirsten and Jeannie dive into the essential topics to fuel your business

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growth from copywriting to course creation, mindset to video marketing.

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They've got you covered tune in for expert guest interviews on all things,

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marketing and business, and learn how to work on your business, not just in it.

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So get ready to unlock your business potential and take it to the next level.

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I'm absolutely thrilled that you're all here today and you

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are going to be thrilled when you hear uh, from Glenn Barich.

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He's with America's Mortgage Lenders.

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He's lived in Sarasota, Florida since 1992, but is

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originally from Toronto, Canada.

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I'm sure he's quite happy to be in the warm weather.

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Glenn entered the commercial lending field right out of college and

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transitioned into mortgage lending in 93.

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So, our topic for today is talking about helping self employed people build

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a real estate investment portfolio.

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So much great information here today.

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So, welcome Glenn, we're thrilled to have you.

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Yeah, Glenn, we are so excited to have you today, especially considering my

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background is mortgage and real estate.

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So, I have been really looking forward to this conversation.

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So, welcome, welcome.

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Thank you.

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I'm glad to be here.

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So one of the conversations that we had a while back, which is what kind of sparked

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this interview for today is how so many business owners, so many entrepreneurs

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want to invest in real estate.

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They often consider real estate to be a part of their long term portfolio.

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And I think a lot of that is because you can borrow some of the money.

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It's not like you're just putting money away at a 401k or

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getting a match by your employer.

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You're often thinking about how you can strategically build a

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portfolio of real estate that could help you with your retirement.

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I also think because business owners are true entrepreneurs, they

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obviously investing in other types of businesses is often important to them.

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So what's your take on all of that?

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Well, you know, I found through the years I worked with a lot of investors

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and a lot of self employed customers.

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And the big thing was, is that they found their business was

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occupying so much of their time.

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That they're trying to look for some other ways of making income,

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what they call passive income.

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So set up an investment property and get that going for you.

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So they could look at a way of basically leveraging their time

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better, leveraging their money better and create something that's going to

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create income for a long time coming.

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Yeah, I think it's such a smart move and I think what happens is business

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owners are already risk takers, right?

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So I think your general population of people that have corporate jobs,

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they're more likely to follow that traditional path of investing because

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again, owning investment properties can seem, you know, high risk for

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a lot of people and, you know, for entrepreneurs, I think they love the risk.

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They love the challenge and the reward can often be, you know, fantastic.

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Oh, definitely.

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Definitely.

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And, and a big thing for them is they start creating some cash

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flow and they're wondering what do they do with that extra money now?

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Some companies have to put money back in, reinvest, but if they have extra

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cash flow, this is a great thing to do is to throw it into some properties that

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are going to generate income over time.

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And I teach them how to build on that as well, how they can take one property

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and make another and make another.

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I think it's so smart.

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And one of the things that's interesting is I predict we're going to start to see

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more people who are not self employed.

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But realize that we're living so much longer and that things have gone up.

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And so maybe if you're a single woman or a single man in your sixties or seventies

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or eighties, it may make more sense to own a duplex and just own a primary

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residence because then you can help cover your expenses and your living expenses.

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I think it's, I think it's not just going to be business owners

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and entrepreneurs in the future.

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I think you're going to have a lot more people realizing the value of

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having one or two or three units.

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I've chatted with a lot of financial advisors and it seems like the

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biggest issue they have is people worrying about outliving their money.

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And even that first big step is retiring, like really stepping away from the

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job and saying, okay, my income is going to go from way up here to down.

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How am I going to handle that?

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And that's a scary part.

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So as you're saying, as people are living longer.

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They're trying to figure out how to manage their money and having a sort

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of long term investment, you know, could be the perfect answer for them.

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Absolutely.

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I had my mortgage company through the fantastic crash of 2008 and

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I stayed in business till 2013.

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I always like to say we survived, but we weren't thriving.

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We're surviving, not thriving, but a lot has changed since then because I

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know everything really tightened up and a lot of loans went away, but there's

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really some great loans coming on the market now that can really help.

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Business owners, can you talk about some of those?

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Yeah, sure.

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I mean, I guess first I just want to talk about sort of like the entry,

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how to get into your first investment.

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So we kind of look at, there's sort of three steps.

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Do you have the down payment for it?

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So it can come from personal funds or business funds.

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So we can work with that.

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And then we look at credit.

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Do you have some credit available, right?

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And then besides that, income.

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So one thing, the nice thing is, let's say you go out and you start

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a business and you get a car loan.

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But you get it through the business.

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We can ignore that.

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So that's, in a lot of cases, if it doesn't show up on your personal

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credit, we're not gonna, we're not gonna look at that at all.

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So that will help out.

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So any sort of business loans you have in the company name, those

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will get ignored in many cases.

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So then we're going to look at their tax returns.

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You know, do they have the income that qualify?

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And the biggest thing is people think, wow, do I have to qualify

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to buy this 300, 000, 400, 000 property, whatever the price range is.

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And what we do is we look at the potential income.

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So if you're looking to buy the house across the street,

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it's going to become available.

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You want to buy it.

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It's not rented right now.

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How do we look at it from the banking side?

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So we'll have an appraiser go out and say, okay, it's worth, let's say 300, 000.

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And we ask him a rent projected rent on that property.

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So they look at the community, they look over here, they look

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around and come up with a rent.

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So you don't have to qualify the bottle 300.

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You have to qualify for what the rent is going to cover up the

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mortgage and the shortfall, or there might be a positive on there.

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So if the rent is going to be, let's say it's 2, 000 and your payment

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is 1, 500, well, then you're not qualifying to get a 300, 000 place.

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You've got positive income, so you're actually going to look better after you

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buy this property as opposed to worse.

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But let's say it's the other way around.

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Let's say you have a 2, 000 rent that the appraiser came up with.

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Your payment's going to be 2, 500.

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So there's a shortfall.

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So in our view, you have to qualify for a 500 a month payment

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difference, like a car loan.

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So can you afford a car loan on top of what you have right now?

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So that's what a lot of people don't see.

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It's like, so if you can just we can get you approved for that extra 500 a month.

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That's all we're looking for to get you in.

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That's fantastic.

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That's amazing.

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Now, do you see business owners often buying single family homes?

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Or do you see them buying duplexes or quads?

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Or, you know, are there any types of benefits of buying an investment

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property that you can also live in?

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That's a great point.

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So, in my view, typically, you're going to see as you buy a duplex

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or triplex fourplex type of thing.

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You'll get a better, you know, bang for your, so that's what you should look at

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is what's my return going to be sometimes in another view looking at, should you buy

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one 400, 000 property or two, two hundreds and the two, two hundreds probably gets

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you a better rent than the one for 400.

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So you need to look at those numbers and see what's going

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to be your best investment.

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I've had a client recently that sort of our first time home buyer, he was

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talking about investing and wanted to figure out, and the best Avenue was.

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You know, buy yourself a duplex for your first place, right?

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So you buy in there and we're going to actually take some of

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that projected rent on the other side to help offset the mortgage.

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You're like, well, I can't afford that much.

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We're going to use that rent on the other side to help.

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So, and then you live in there for a year, maybe, you know what, now

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we're ready for a bigger place.

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The business is now in its third year or fourth year and it's growing

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and I want to be in my own house.

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So this was a perfect way to start because you bought that

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as your principal residence.

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With an extra unit with a rental unit.

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All right, so we call that a principal residence on the banking

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side So then a year down the road two years down the road.

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I want my own place great rent out Where you were living in and buy a new

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place now Maybe you have the cash me you don't have the cash if you have

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the cash Let's buy you the place you buy the new place as your principal

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residence You don't have to put 20, 30, 40 percent down, you can get away

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with 5 percent down on your next place.

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So not bad.

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You put minimum down on the first place, minimum down on the next place.

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And we're starting, you know, we're starting this accumulation of property.

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Yeah.

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It's so smart.

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And then there's all sorts of ways with 1031 exchanges and ways

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to work around capital gains.

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And I think that's one of the things that business owners love is the

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figuring out how to make it all work.

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Right?

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Great.

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Thanks.

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Yeah.

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Yeah.

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And the big key is having the people in your, you know, that are working for

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you that you don't have to understand that a thousand percent, right?

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You need to have a good tax accountant to meet with.

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You need to have financial advisor, a loan officer, a realtor, all these

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people together that understand.

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And even, you know, shopping for a realtor that understands

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the return on your investment.

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You know, looking at what's going to be the best way.

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As I mentioned, like the two, 200, 000 properties are the one for someone

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that can look at that and knows about investing that understands where

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you're trying to end up in the future.

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Awesome.

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So if you were giving advice to a business owner who is just now thinking about

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investment properties, what would your number one piece of advice be for them?

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Uh, I guess part of it would be, you know, so get with a loan officer and make, make

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sure that you've got everything in place.

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So it's looking at your, we talked about income before is income in the right spot.

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You know, I've had clients where they're like, well, you know, this year.

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I'm going to have a better year.

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So maybe before they file their taxes, they review stuff with the loan officer

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and go, maybe you shouldn't write off as much, and then you're going to qualify

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better if you don't write off everything.

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And maybe they can put it into another bracket somewhere.

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And that's where sometimes it'll be myself, the tax advisor, and them

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getting together to try to figure out what's going to be the way to work.

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But if.

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If their income is coming in low, we have some other programs.

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Do you want me to talk about that now?

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About some of the other new programs?

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All right.

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So these are pretty cool things.

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So they're called the Debt Service Coverage Ratio, DSCR.

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The Debt Service Coverage Ratio, DSCR, measures a firm's available cash

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flow to pay current debt obligations.

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The DSCR shows investors and lenders whether a company has

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enough income to pay its debts.

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The ratio is calculated by dividing net operating income by debt service,

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including principal and interest.

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I worked in the commercial field years ago.

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So these look at debt service coverage.

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You know, you're going to buy a new building.

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Does the rent on the building cover the property?

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So now they're looking at that on the residential side.

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These are new sort, they're not Fannie Mae or FHA programs or new sort

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of proprietary programs out there, but they're saying, listen, I call

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it the don't even lie to me loan.

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So on the application, right, you're not going to put Where you work, you're not

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going to put how long you've had the job.

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You're not going to put an income from your business or a salary.

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We're going to say, let's look at this new property you're buying and does

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the rent cover the mortgage payment.

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And that's all we're looking for on it.

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And we actually have some programs that if it is a little bit

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short, we can still do the loan.

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That rate might be a little bit higher.

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So these are not your cheapest loans out there, but they're a way to get someone

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in that might not otherwise get in.

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Uh, they're going to need.

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Typically minimum 20 percent down on that but it's a way of get someone

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in that just says I always write off everything I've been writing off for the

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last 10 years Make i've got great money saved up, but I don't want to pay any

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taxes to uncle sam You're like great.

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We can get you in some places and then we can just keep Repeating that

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for the next one and the next one as you have more money to put down.

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Yeah, I'm assuming those takes, those would take a little bit of

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patience to find the right properties.

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Was that, would that be accurate?

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Yeah, so some will say, well, do I qualify?

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How much do I qualify for?

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Well, it depends on which property you look at.

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So it's kind of a chicken and the egg, you know, trying to figure

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out which one we're working with.

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Um, so we also have other programs.

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If you don't find exactly where property, we've got some, they're

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called a bank statement loan.

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And probably a lot of people heard of bank statement loans.

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Bank statement loans are a type of non qualified mortgage loan that

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allows you to qualify based on bank statements instead of tax returns.

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The lender will require prospective borrowers to provide a certain number of

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months worth of bank statements in order to prove their ability to repay the loan.

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And to summarize those, what we'll do is let's say the business

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is taking in 20, 000 a month.

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Um, we take that number and depending on the type of business, let's say it's

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tile installation or something like that.

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They might say, you know what, there's a lot of supply

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cost in there and labor cost.

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So we might say, we're going to take 50 percent of that as your cost of

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doing business and use, rather than 20, 000, we'll use 10, 000 as your income.

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And that's the number we're going to use to qualify you to buy the next place.

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So that's an interesting little program where we take, we'll take the last 12

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months of bank statements, we might go back 24 months, depending on,

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and then if we go back further, they might get a little bit lower rate.

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So that's where you're using your loan officer as a consultant.

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My job is to kind of go, where are they going to fit?

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Give me all your information and let me figure out what I can use and what I

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can't use and use that as our game plan.

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Yeah, I feel like as a loan officer, when you're working with self employed

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people, business owners, it's a whole different relationship, right?

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Because they're looking at it as an investment.

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They're looking at it and they kind of, they understand the game.

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So, do you end up working with people and having a lot of repeat

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business from business owners that start off with 1 property and then

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go on to the 2nd, 3rd and 4th?

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Yeah, because it's all about.

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Working together, not just being an order taker, but trying to figure

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out what's going to work best.

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So what we have is after they buy their first place, I always use

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the term with a lot of my clients is cash is king, cash is king.

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So I had someone recently that was buying a place, but it

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needed a lot of renovation work.

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And my suggestion was, And this was going to actually be their first property.

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So this was going to be their primary residence, going to live in it a year

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and then rent it and buy the next place.

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So, all right, you just have to put, you know, three or 5 percent

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down on it, but we can finance some of the improvements in it too.

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And they said, no, we're going to pay from out of pocketness.

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I think you're going to regret that in the future because you're going to

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use up a lot of money on the property where we can finance most of those

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improvements and then you have money to buy the next place sooner than later.

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So the cash is king.

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I've always had my investors and oh, if I just, if I had the cash, I'd buy this one.

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If I had the cash, buy that one.

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My job is also looking at what maybe looking back to their

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first or second property.

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Can we do maybe a cash out refinance?

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And pull out 30, 40, 50, 000 because maybe they bought it, fixed it up a

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little bit running out and there's money to be taken out of there.

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It's a team process.

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It is, and it's so fun because it's long term planning, and I feel like it's

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so much fun because I think business owners, they work so hard, right?

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And it's not always easy to save money as a business owner.

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You don't have all the perks that you have.

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You don't have someone matching your 401k, so to speak, that you

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would have in a corporate job.

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So I think having these alternative ways to really start building

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assets and building a secure retirement is really important.

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Oh, definitely, definitely.

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And there's even ways to work with their 401k.

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They can pull money from that.

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The self employed have a SEP IRA program where they can put in, I think, 25

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percent of their income out of it.

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So they can use that and start self directing where they're going to put

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some of that money for investing as well.

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Glenn, what areas do you cover as far as, you know, you are a

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mortgage loan officer, what areas do you cover as far as making loans?

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So, my primary area is the sort of west coast of Florida, but I

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can do loans all over Florida.

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And then our company can do in a couple of states.

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We've got New Jersey, Pennsylvania, South Carolina, and Georgia as well.

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So if one of my clients needs to do something in one of those other

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states where they have a family member that needs help, I'll work in

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conjunction with one of my other loan officers to put a deal together there.

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So I'm not.

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You know, not just hand them off.

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I'm going to be involved all the way I, you know, when you give a referral, it

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always kind of scares you a little bit.

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But how are they going to treat my customer?

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Right?

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So I do like the bill.

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We'll do sort of a team teamwork on work with someone in another state.

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That's fantastic.

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So if you are self employed and you have thought about real estate, even

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if you're not 100 percent ready to pull the trigger, I think it's really

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important to reach out to Glenn.

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If you're here in Florida, because again, there is some, like he

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said, some strategic planning.

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And I think about this, like reaching out to a business broker.

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You don't want to reach out to a business broker.

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The minute you decide you want to sell your business.

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You want to reach out to them 24, 36 months ahead of time so

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that you can get your business in the best position to sell it.

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And it's the same thing with someone like Glenn, reach out to him.

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You may be able to buy sooner than you think, or he may be able to give you

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some coaching and tips so that maybe you're ready 6 months from now or a year

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from now, but you'll be able to start building your investment portfolio.

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I think it's best to chat as early as possible because people will do things.

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Let's say they have an issue with their credit.

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You know, they start dealing with their credit on their own without

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having the right information.

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Like in some cases, let's say, you know, it seems like everyone's cable

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company, when you moved from one place to another and had to give back the box.

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Well, they never reported that you gave back the box.

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So now there's a hundred dollar collection with the local cable company and it's

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hard to avoid that and that happens.

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So in some cases, we'll just say, just ignore it for now.

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Because if someone takes a two year old collection and pays it

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today, that could lower the credit.

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So, it's best to chat up front, let's form a game plan.

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And maybe they do things like, well, I'm going to pay off all my credit

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cards first, and then I'll do that.

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It's like, no, because cash is king, we're getting back to cash is king, you know.

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A lot of cases like, no, let me tell you what to do with it.

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So, we'll pull credit and say, you know what, maybe you do have to pay off one

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credit card and everything will be fine.

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But let's You know, find a product, let's pull your credit, let's see where you're

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at, let's run the numbers, and have a game plan rather than just guessing.

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You know, guessing is going to get you in trouble.

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And, but do keep your tax accountant involved in it as well.

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And, and let's do a teamwork on putting this together, but they might think

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they have to qualify for a whole bunch.

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Give us a call, find out, we'll use some offsetting income for, to

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what you're going to qualify for.

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And let's start that ball rolling so you can convert all that sort of.

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Hard earned money into passive earned money and set up a

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good future for yourself.

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I love it.

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Glenn, thank you so much for being here with us today.

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We really appreciate it.

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Oh, thanks for your time.

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I, we, we always have great conversations and never seem to end, right?

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I love it.

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I love it.

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I miss the business and you keep me up to date, so I really appreciate that too.

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Oh, no problem.

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I'll tell you all my woes.

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Thanks for listening to the Six Figure Business Mastery Podcast.

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