[00:00:00] Intro: Welcome to Private Banking Strategies Podcast with Vance Low and Seth Hicks, your secret weapon to protect your assets and never have to start over financially again. Vance and Seth help high net worth individuals, families, business owners, and investors, structure and asset protect. Tax free fortress for their families.
[00:00:21] Intro: Learn how to keep what you earn and use the velocity of money to create your own private banking system. Join us on this journey as we explore the secret strategies of the rich and political elite and help you take total control of your financial security now onto the show.
[00:00:49] Eric (Host): Hello and welcome to Private Banking Strategies with Vance Lowens Ethics. Today, again, Seth has taken the reins. We are talking about something pretty important, real estate, right? And I, I’m pretty [00:01:00] excited because this has to do with how the banking strategy, the private banking strategies, can help you with real estate.
[00:01:06] Eric (Host): And Seth, I don’t know what all you’re gonna talk about today, but I’m excited.
[00:01:10] Seth Hicks Esq.: Yeah, I’m excited too. Thanks, Eric. We’re gonna focus in on the real estate investor out there. We’re gonna boil it down to simple mom and pop type acquisitions. You can get as complicated with real estate investment as you want.
[00:01:24] Seth Hicks Esq.: I mean, there’s apartment syndicators, commercial investment properties, but we’re gonna look at how private banking strategies can accelerate your real estate portfolio. Create tax free cash flow for you and just put your investment strategies when it comes to real estate on steroids. Fantastic. Love it.
[00:01:46] Eric (Host): I’m all ears. ’cause this is really interesting to me.
[00:01:47] Seth Hicks Esq.: Like I said, this is for people out there who already own real estate or want to get into real estate, we’re talking to real estate investors, also business owners, entrepreneurs. It really could be [00:02:00] applied to anyone who’s making an investment and how you use your own money through your own banking system to fund that investment.
[00:02:09] Seth Hicks Esq.: To acquire that asset for folks that aren’t in that position. But let’s say you own a home and you’ve got equity in your home, and you want to be able to accelerate your wealth curve through the equity in your home, same type of concept. You can use equity in your home, purchase a investment. Property or an investment asset.
[00:02:29] Seth Hicks Esq.: So long as the numbers make sense and are, you know, what I would call conservative returns, not over aggressive in things are too speculative. I think that’s some people can get out over your skis like that. But yeah, if you’ve got a, a home and you’ve got equity in your home, it’s another way to maximize an investment strategy.
[00:02:47] Seth Hicks Esq.: Um. Or also folks out there with a mortgage or other type of debt that they could effectively purchase through their own banking entity. Mm-hmm. And make those [00:03:00] payments back to their own banking entity. We’ll show you how that works as well. There’s a lot of different ways that it can apply. Real estate is a fundamental way that private banking fits hand in glove with real estate and private banking are hand in glove techniques.
[00:03:16] Seth Hicks Esq.: It, you know, covers a lot of people. Eric, I mean, a lot, there’s a lot of people out there that, that think they don’t qualify because they don’t have, you know, a hundred thousand dollars in cash sitting on the sideline. That’s really not the case. Alright. Private banking effectively enables you to become debt free to third parties, and the only remaining entity that you have debt to is your own private bank, which you own and control, and you’re.
[00:03:45] Seth Hicks Esq.: Own private bank operates in a tax free silo and a tax free, uh, umbrella, as we’ve talked about many times, and that comes pursuant to Internal Revenue code 77 0 2, which makes [00:04:00] all of the money inside your bank or the money that comes out of your bank, back to you in retirement or for investment purposes, a tax free event.
[00:04:09] Seth Hicks Esq.: And that enables you to really acquire. More assets and create passive income streams faster and exercise the velocity of money. So you’ve heard me talk about velocity of money before. Eric, what would you, in your simple definition define velocity of money at? The
[00:04:27] Eric (Host): way I envision it is when you take these assets and you are investing and you’re able to then gain that profit coming back into your own bank, you’re able to again invest in something else and the more you’re able to do that successfully.
[00:04:41] Eric (Host): The faster that goes and the faster your, your bank grows.
[00:04:45] Seth Hicks Esq.: That’s good. Yeah, that’s, that’s a good answer. And here’s another way that I’m, that I might describe it. Let’s say that you fund your private bank, uh, you capitalize your, your bank, like any new venture. Mm-hmm. Any new business with [00:05:00] a hundred thousand dollars, it could be a, we could say a dollar, $10, 10,000.
[00:05:04] Seth Hicks Esq.: We’re just gonna say a hundred thousand dollars. You take that a hundred thousand dollars back out of your private bank and you purchase a piece of real estate. And that piece of real estate spins off rental income, which then you pay back your own private bank mortgage. Mm-hmm. Which is totally controlled by you.
[00:05:23] Seth Hicks Esq.: You set up the terms. You set up all of the various rates. There’s never gonna be a foreclosure. There’s never gonna be a failure because you can always change the terms if you need to, but. That same rental cash flows coming back into your bank and your cash value and the ability for you to use that dollar comes back to you again.
[00:05:44] Seth Hicks Esq.: Mm-hmm. So you capitalized your bank with a dollar or a hundred thousand, you took the same dollar out and to purchase a piece of property, you purchased a piece of property with that same dollar. Then you’ve got the same dollar coming back to you in a rental cash flow. Then you’ve got [00:06:00] the mortgage payment back into your bank with the same dollar you’ve got.
[00:06:03] Seth Hicks Esq.: What that’s. Multiple touches on the same dollar. And that’s velocity of, of money in action. Being able to use the same dollar more than once and being able to do that in a tax free system is going to enable you to be, uh, financially independent and free in a much faster time basis. And we’re showing people how you can do this within 10 years and depending on how.
[00:06:28] Seth Hicks Esq.: Aggressive, your strategies are and what type of investments you make. You can do it faster, but 10 years I think is a conservative roadmap and we’ll show you why. There’s the seven pillars of private banking strategies we talk about quite a bit, and this is gonna be focusing on how to create the velocity of money within your own real estate transactions and your private banking entity, which we just touched on a little bit.
[00:06:54] Seth Hicks Esq.: Mm-hmm. Velocity of money.
[00:06:56] Eric (Host): Yeah. I remember when, when we first started this podcast, I really had issues with. [00:07:00] What that meant, right, that the using the same dollar over and over and over again, but the way you just described it, again, beautifully illustrates it’s the same money coming back into you differences.
[00:07:09] Eric (Host): If you only had that a hundred thousand dollars and that’s the only thing that you were using for all these different purchases and transactions as you’re going through it over time, if you still had that same a hundred thousand dollars, which you’ve gained, is property after property after property, which
[00:07:21] Seth Hicks Esq.: is huge.
[00:07:23] Seth Hicks Esq.: Absolutely. Yeah. Yeah. And, and people generally think, well, how do I use the same dollar more than once? I just spin it, how do I get it back? But the illustration we showed you is, is a perfect example. You have a a dollar that you start a new business. Your new business is banking. I’m going to be a banker.
[00:07:41] Seth Hicks Esq.: And so you fund your banking business with a dollar, and then with your bank, you’re able to loan out. The money that’s in your bank. Exactly. So you take the same dollar, you just capitalize the bank with and you loan it out to a, a borrowing entity, which purchases a piece of real estate. So that [00:08:00] piece of real estate spends off cash flow.
[00:08:02] Seth Hicks Esq.: That cash flow goes right back. To pay the bank debt down, plus other expenditures, plus profits, and you’ve got your bank being paid back with the same dollar that you put in from the very beginning. So that’s how you get multiple touches on the same dollar. But it illustrates an important part of this system.
[00:08:20] Seth Hicks Esq.: This is not a consumptive system. It’s not a, you’ve got money in the bank, let’s just, let’s burn money. You want to be utilizing the money for smart and conservative. Investment opportunities and business opportunities that actually provide a return on your investment so that your bank is getting the money back.
[00:08:42] Seth Hicks Esq.: And just like Wells Fargo or Bank of America makes loans, they want to get the money back. They make good loans. So you as a banker, need to make good loans too. Absolutely makes sense, right? Oh yeah. So in, in all of this system is people [00:09:00] go, well, how, how do I make more money that you’re not making more money, you’re actually just changing who gets the money that you already make?
[00:09:08] Seth Hicks Esq.: So whether you make a whole lot of money or you make the money that you make, it’s not a matter of having to make more money and work a lot harder. As long as you live within your means and you spend less than you make, this system will work for you and you’ll be able to change your monthly expenses, which is consumptive and cash, leaving your control, leaving your.
[00:09:33] Seth Hicks Esq.: Possession and not ever being able to use it again and turning it into income and cash that stays within your control and your bank’s control and creates the opportunity for velocity of money. So does that make sense to you, Eric? Oh, of course. Yeah, absolutely. So that’s what we, we wanna try to teach people is how to not work harder and be able to implement these strategies and [00:10:00] capture that tailwind and that cash flow that’s available.
[00:10:04] Seth Hicks Esq.: And that’s why we say, like the slide shows this happens without working harder. It only. Includes changing who you pay. You change who you pay.
[00:10:14] Eric (Host): Yeah. And for those longtime listeners that are listening to the podcast, Seth just referenced the slide. This is actually on YouTube as well. It’s on every podcast channel and then also on YouTube for those that like visuals.
[00:10:24] Eric (Host): This one happens to be on YouTube as well, so you can check it out there.
[00:10:28] Seth Hicks Esq.: Good point. Yeah, we should probably mention that.
[00:10:31] Eric (Host): Well, you know, I’m official learner and I, I can see everything right in front of me, so this is great.
[00:10:36] Seth Hicks Esq.: So l let’s take a look at a way a traditional, uh, mortgage works and why you wanna be your own bank.
[00:10:43] Seth Hicks Esq.: Let’s take a look at an example of a $200,000 house and you finance that house at 6% over a 30 year. Mortgage. So you’ve got about a $1,200 a month [00:11:00] payment to the bank, and effectively the first half of the loan, you’re gonna be paying mostly interest. Let’s call it a thousand dollars in interest, and you’re gonna be paying.
[00:11:11] Seth Hicks Esq.: $200 in principle, and that’s gonna go on for quite a while. And until you get to towards the back half of the loan, when that starts to change, I think these numbers will surprise most people. And when you really start analyzing what, what you’re paying in the first four years or 48 months of this mortgage, you’re gonna have made.
[00:11:32] Seth Hicks Esq.: About $58,000 in payments here, the curves are on the right. You’re gonna have paid almost $11,000 in principle. So for your $200,000 house, you’ve got about $11,000 in equity. You’ve paid $47,000 in interest. Hmm. And you still have $190,000, $189,000 left to pay off. And you’re going, huh? Yeah. [00:12:00] That, that doesn’t seem just quite right.
[00:12:02] Seth Hicks Esq.: It seems like I’m paying a lot. It gets worse. Yeah. So, hang
[00:12:05] Eric (Host): on, son. I gotta tell you the, the, the first time my son bought a house and he didn’t buy an expensive one at all, but he was looking at the paperwork and we had to talk through it, and he’s like, wait a second, why does it say I’m only, I’m like, only $180 is gonna go toward my principal.
[00:12:20] Eric (Host): What is all the interest? Why isn’t it like 50 50? I’m like. Because that’s not how it works, son. You know? And I had to break it to him. Boy, he was mad. I mean, he understood it. But yeah, it when you get a 30 year loan. And here’s the, the other thing that as you were, you were talking through that you said 6%.
[00:12:35] Eric (Host): I love this example, but it even gets worse because right now the average loan is 7% because of the Feds raising rates. So this is even a better scenario than what most people are facing right now.
[00:12:48] Seth Hicks Esq.: Yeah, and it’s probably gonna get worse with increased, uh, mortgage interest rates. Some speculate will be headed for double digits, whether we are or not.
[00:12:59] Seth Hicks Esq.: [00:13:00] 6% at the time when we created this particular slide was about. On the money. Mm-hmm. But I mean, we’ve seen interest rates as low as three or four and people thought that was great. One of the things I’m trying to get folks to do in, in this slide, and we will continue this thought process in the next few slides, is that that interest rate is illusory.
[00:13:21] Seth Hicks Esq.: It is deceptive. Mm-hmm. It’s not something that people should be focusing on. It’s actually something the banks want you to focus on. They want you to be. Interest rate focused. Interest rate driven. What can I afford in my payments? When really they’re making all of the wealth, they’re creating all the wealth off of you, and they don’t want you to, to look where you really need to look.
[00:13:43] Seth Hicks Esq.: Nothing over there to see. Just focus right here. Focus right here. It’s the shell game. Look at the interest rate. So. After 15 years, you’ve paid $216,000, you’ve paid enough to pay for that property. As far as value goes, you’ve only got [00:14:00] $58,000 in equity. Okay? Yeah. If Principal paid 58,000 in equity, you’ve paid 158 in interest and you still owe the bank 142.
[00:14:12] Seth Hicks Esq.: Okay, hold on a second. It’s a $200,000 house.
[00:14:14] Eric (Host): Yeah, yeah.
[00:14:16] Seth Hicks Esq.: Right? Yep. It was, you still, you owe, you owe 75% of the value, but you’ve already made. You’ve already earned enough. Enough has come into your hands and your possession to have totally owned that property. Free and clear. Yeah. But for the fact that you’ve got a great mortgage interest rate at 6% over 30 years in this friendly local banker.
[00:14:41] Seth Hicks Esq.: Gave you a great deal, right? Mm-hmm. No, for him, not at all. He gave him a great deal for him. Exactly. So 30 years, let’s look at this. Over 30 years, you’ve paid $432,000 in loan payments.
[00:14:59] Eric (Host): Yeah. [00:15:00]
[00:15:00] Seth Hicks Esq.: You’ve paid a total of 232,000 in interest, 231 in change, and you’ve focused on. This interest rate 6%, I got a good interest rate.
[00:15:13] Seth Hicks Esq.: Mm-hmm. Now you got, you got bamboozled, you got totally taken to the cleaners. It wasn’t a 6% interest rate. Look at the volume of interest over that entire 30 year term. How is 6% interest rate at on 200,000 turn out to making $231,000 of interest payments? That’s not 6%.
[00:15:39] Eric (Host): Yeah. Yeah.
[00:15:41] Seth Hicks Esq.: Can you see that? Yeah.
[00:15:42] Eric (Host): It’s crazy.
[00:15:43] Seth Hicks Esq.: Not only do you pay more in interest than the value of the property, but statistics show that most people refinance their mortgages within five years, or they move and sell. Most people don’t. Complete the cycle of a 30 year mortgage. And so [00:16:00] when you’re looking at the amortization graph, you don’t even really start getting into making a principle and reductions equity.
[00:16:09] Seth Hicks Esq.: You don’t really start getting equity in your property at a 50 50 ratio till you’re 15, and so if you’re refinancing or selling in the first five years, you effectively have acquired no equity. In your property. And people, sometimes they’ll say, well, I’ve got a 15 year mortgage. They got some slick mortgage product that’s supposedly helping them own their property faster.
[00:16:36] Seth Hicks Esq.: But you’re still paying those absurd interest amounts in total where the volume of interest that you’re paying over the term is astronomical compared to the value of the property. So. We wanna show people how to beat this system and how to not have all of the money that they earn, that comes into their control, get sucked out of their hands [00:17:00] and into the
[00:17:00] Eric (Host): banter’s
[00:17:01] Seth Hicks Esq.: hands.
[00:17:01] Eric (Host): Here’s the thing that I’ve, I’ve heard lightly, Seth, and this is what’s really bothering me. ’cause I didn’t know how theorization schedule worked when I was younger. Quite honestly, I had no idea. In my twenties I had no idea ’cause I wasn’t even close to buying a house at that point. But right now, and I think that a lot of people have heard this, and I’m not, I’m not.
[00:17:18] Eric (Host): Being rude to real estate agents. Please don’t take this personally, but I’ve heard a lot of this. Basically the same thing. Look, it’s still a great time to buy a house. Doesn’t matter that it’s at seven or 8% because you can refinance in a few years. I know that the payment’s gonna be high now, but just think about it.
[00:17:36] Eric (Host): You can refinance in a few years. When when rates come back down, maybe they go back down to four. Refinance. Man, when you do that, just like you said, your amortization schedule starts over again. And so after five years of barely creeping, barely creeping toward any type of progress, now you just reset yourself and you’re paying way more in interest again for the first [00:18:00] five years of your loan.
[00:18:01] Eric (Host): And it’s just they don’t tell ’em that part quite honestly.
[00:18:04] Seth Hicks Esq.: And I, you know, I don’t know that most people think through the amortization schedules like this, and like you and your son did, you looked at the truth and lending disclosures. It’s called the Tela Disclosures on any residential purchase. And it says, Hey, you’re gonna pay this much in interest.
[00:18:22] Seth Hicks Esq.: Mm-hmm. Over the term, this is what the property’s worth and walks you through that. Most people just, you know, initial sign. Initial sign, and take the keys. Gimme my
[00:18:31] Eric (Host): keys. That’s right.
[00:18:32] Seth Hicks Esq.: Gimme the keys. But if we want to educate folks into actually thinking through this and that refinance in five years, just like you pointed out, is not in your best interest.
[00:18:42] Seth Hicks Esq.: There are other things that if you’re in mortgages that you can do to accelerate equity. In some states it’s called a recast, not a refinance. And the recast is effectively taking money and straight to the, the. [00:19:00] Principle, bottom line, and they reformulate the loan, but don’t reset the amortization schedule.
[00:19:06] Seth Hicks Esq.: So you get to whack off a huge section of the principle with a chunk of money that you may have saved and, and recast the loan, but you don’t start at ground zero all over and start paying them the, uh, extravagant interest rates. Interesting.
[00:19:24] Eric (Host): Okay.
[00:19:25] Seth Hicks Esq.: Or the volume of interest rather than the rate. Yeah.
[00:19:27] Seth Hicks Esq.: Because they’ll, they’ll try to tell you that the rate’s still the same.
[00:19:31] Midroll: Yeah.
[00:19:32] Seth Hicks Esq.: So that’s an important thing for people to consider. This is a illustration now that we’re gonna dive into that is effectively purchasing real estate, which we, we said we were talking to homeowners, real estate investors. Folks that want to use equity in their home to purchase real estate and accelerate their wealth curve.
[00:19:53] Seth Hicks Esq.: Let’s say that you have, in our hypothetical, a hundred thousand dollars in your private bank that you can [00:20:00] put to use and you effectively could buy a duplex. Uh, it’s probably gonna be somewhere in the south, maybe Alabama, Tennessee. But there are places that you can still buy a duplex for a hundred thousand dollars.
[00:20:14] Seth Hicks Esq.: And it really, the illustration is more just for round numbers and to be able to understand the concepts. Really the, rather than getting the exact numbers on our property, dialed perfectly in, but, so let’s say that you can buy this duplex for a hundred thousand dollars. And so you take your bank proceeds that you’ve funded, you fund your borrowing entity to purchase that duplex.
[00:20:39] Seth Hicks Esq.: That duplex pays you a thousand dollars per side per month, or $2,000 a month total in gross income. And for our. Purposes, we’re not gonna analyze taxes and insurance vacancies, repairs. We’re just gonna look at a gross income. And with a gross income of [00:21:00] $2,000 a month, you’re gonna have $24,000 a year.
[00:21:05] Seth Hicks Esq.: And in about 4.234 years, you’re gonna have your a hundred thousand dollars totally back in your bank and you’re gonna own that duplex free and clear. You’re cycling that cash flow out of your bank. To purchase a piece of real estate. That piece of real estate spins off rental cash flow, which you then put back into your bank, and you do that within about a four year process.
[00:21:31] Seth Hicks Esq.: And that property has been totally paid for and you’ve got another a hundred thousand dollars to buy another duplex. Now, of course. We do have taxes, we do have insurance, we do have maintenance. We do have vacancies and repairs. So let’s say that that gross income of 2000 is cut in half, and that’s probably a pretty.
[00:21:54] Seth Hicks Esq.: Average and, and statistically probable type of, uh, ratio so that [00:22:00] you net a thousand and it takes you instead of four years, a little over eight years to own that outright. Still, the cycle takes longer, but same concept. Do you understand that Eric is, what have I missed there?
[00:22:14] Eric (Host): What I understand is it didn’t take you 30 years to pay the sucker off.
[00:22:17] Eric (Host): Exactly. That’s the big, not the only takeaway, but that’s one of the biggest takeaways is if you’re able to do this and pay that quick, you’re not doing this 30 year mortgage crap.
[00:22:27] Seth Hicks Esq.: That’s exactly right. You’re not stuck in a cycle where all the money that you’re earning in your job or in your business or in this investment is being sucked out and interest rates are being mm-hmm.
[00:22:40] Seth Hicks Esq.: Subject to other risk that you don’t control. You are the banker and the borrower. So you, as long as you’re making good loans and you’ve got good investments, this thing will hum along for you.
[00:22:57] Midroll: Do you see yourself in that story? [00:23:00] Do you feel like you are generating a lot of revenue but are not moving forward as fast as you would like? Are you ready for help? Please call private banking strategies at eight one seven two hundred. Four. Seven. Seven seven or visit us at www.privatebankingstrategies.com.
[00:23:33] Seth Hicks Esq.: Let’s look at the second scenario on the right, and let’s say that you take that same a hundred thousand dollars that you’ve got in your private bank that you’ve capitalized, but instead of purchasing just one duplex, you wanna purchase five duplexes. Well, if they’re all a hundred thousand dollars duplexes, you’ve gotta have a total of $500,000 to do that.
[00:23:56] Seth Hicks Esq.: So how do you use a hundred thousand dollars in your bank [00:24:00] and purchase five duplexes that you need 500,000 for? Eric, that’s a really good question. Tell me, so a lot of lenders out there, your Wells Fargo, your Bank of America, they’ll make you. What’s called 80% loan to valued loans. Mm-hmm. Whereas the borrower brings 20% of the value in the property, or $20,000 per property in this scenario that we’re describing.
[00:24:30] Seth Hicks Esq.: So in property one, uh, you put down 20,000 On property two, you put down 20,000. Property three, property four and property five. You put $20,000 down on each of those. And the bank. Finances the other $80,000 on properties 1, 2, 3, 4, and five. So you put a hundred thousand total in across five properties, the bank puts in $400,000 across those five properties.
[00:24:58] Seth Hicks Esq.: So, does that make sense?
[00:24:59] Eric (Host): Yeah. [00:25:00] And just wanna clarify, when you say the bank, you’re talking about a, uh, an institutional bank, not your private bank.
[00:25:05] Seth Hicks Esq.: Wells Fargo, let’s just say Wells Fargo. Yep.
[00:25:07] Eric (Host): Let’s call it Wells Fargo.
[00:25:09] Seth Hicks Esq.: So you put a hundred thousand dollars in, Wells Fargo puts 400,000 in, you’re on title to five properties subject to Wells Fargo’s, 80% mortgage on each of those properties.
[00:25:22] Seth Hicks Esq.: So far so good. Yep.
[00:25:24] Eric (Host): Absolutely.
[00:25:24] Seth Hicks Esq.: Now
[00:25:24] Eric (Host): let, lemme ask you this because I don’t know about investment real estate, but when you, when you get a mortgage, if you don’t put 20% down, a lot of times you have to get PMI, primary mortgage insurance. Is that correct?
[00:25:36] Seth Hicks Esq.: True. PMI, you’ve got, if you’ve got higher leverage than 20% in this scenario, you wouldn’t need it, which again, saves more money.
[00:25:45] Seth Hicks Esq.: Correct. That’s great. And yeah, and I mean, the, the leverage that you use on real estate investment is up to your own, uh. You, your own calculations, your own risk appetite. Yeah. [00:26:00] Your own, uh, scenarios. I mean, in the last two, 2000 year real estate runup, there were loans that banks were making for. I mean, you didn’t have to even come up with 10%.
[00:26:13] Seth Hicks Esq.: Yeah. On investment properties, and so the bank was financing 90, 95%, and investors were coming in with as little money down and buying as many properties as they could. If one thing goes wrong, the dominoes start to stack and they all come. Crumbling down where more conservative approach would be to use more money and a lesser leverage ratio.
[00:26:39] Seth Hicks Esq.: Yeah. Like 20% or maybe even come in with 25% and the bank comes in with 75% and you’ve got, you’ve got less risk of failure in those scenarios because the equity’s higher. Gotcha. Um, as long as the depreciation is, is moving up. And cash flows are moving up and you’re managing the [00:27:00] properties, right? Leverage can be a very powerful tool, as we’re gonna illustrate at the end of this slide.
[00:27:06] Seth Hicks Esq.: Okay, so let’s back to our scenario. Now we have five properties and we’re cash flowing at $2,000 per property per month. $10,000 total a month. So instead of $2,000 a month, we got $10,000 a month coming in. And you’ve got effectively no more money that you’ve. Put into real estate. You’ve just used the concept of leverage.
[00:27:31] Seth Hicks Esq.: But hold on, let’s circle back for a second, Eric. I thought we just had multiple slides and, and convinced folks that we don’t want to use Wells Fargo because of the volume of interest that we’re gonna pay over 30 year term.
[00:27:45] Eric (Host): Well, yeah, but then he already eliminated that 30 year term. And the last example is, that’s the whole goal, to do it quick.
[00:27:49] Eric (Host): Right.
[00:27:50] Seth Hicks Esq.: That’s exactly right. So if we’ve got $10,000 a month in cashflow gross, within a very quick timeframe, [00:28:00] we’re gonna see these Wells Fargo mortgages be paid off. Totally. So at the end of year one, if you had. $80,000 Mar Mortgage on property one to Wells Fargo and you had 120,000 in cash flow. You paid off Wells Fargo on property one in year one, right?
[00:28:18] Seth Hicks Esq.: Mm-hmm. Yep. And you had $40,000 to pay the principal down on property. Two and then so on, and, and year two you got another $120,000 gross. You pay the other half of the Wells Fargo mortgage on property two. Off the other 40,000 and you pay off the entire property on three wells Fargo’s mortgage on property, three 80 grand paid off.
[00:28:45] Seth Hicks Esq.: Year three, you pay off property four half of property five. And on year four you pay off the last half of, of the mortgage to Wells Fargo on, on Property five and Wells Fargo’s out of the picture. [00:29:00] Yeah. So in, in four plus years, you’ve used Wells Fargo’s money to acquire five times as much property, and then they’re out of the picture.
[00:29:12] Seth Hicks Esq.: You’re not paying them interest for 30 years. Mm-hmm. You’re not paying this massive volume of interest. You’ve actually. Just created a very astute leverage transaction where you’re able to ramp up your cash flows, increase your cash flows, and take that bank out in a much more rapid fashion. Now. We didn’t talk about taxes, insurance, vacancies, bad tenants, or any type of problems.
[00:29:39] Seth Hicks Esq.: So let’s say, you know that four and a half years that we double it. So instead of making 120,000, which was a gross number, let’s just say you’re only able to net 60. So that slows down the rate in which you’re able to pay off Wells Fargo by two. So instead of four and a half years, let’s call it nine years, [00:30:00] or let’s say that you’re.
[00:30:01] Seth Hicks Esq.: You’re really not good at the management and you had some extraordinarily bad tenants, and you’ve gotta add another four years on, and it’s 12 or 13 years at the still. At the end of that 12 or 13 years, you’ve got five duplexes, cash flowing, 120,000 a year with no third party mortgages, no Wells Fargo mortgage on it.
[00:30:22] Seth Hicks Esq.: So whether it’s eight years, 9, 10, 11, 12, or 13, those are all win, win, win.
[00:30:31] Eric (Host): Yeah. Well, I’m, I’m gonna bring it back to what you said. Let, let’s say that you’ve had issues, so on and so forth, and you’re only grossing the 60 right? After that 12 or 13 years, you’re still grossing 60 a year for nothing, right? I mean, I mean, you’ve got the properties, plus you would think in those 12 to 13 years that they would’ve gained in value as well.
[00:30:51] Eric (Host): You, you would hope so, at least. And that’s the pattern that we’ve seen.
[00:30:55] Seth Hicks Esq.: Yeah, absolutely. You’re looking to maintain the values of your properties. You [00:31:00] want to be making sure that you’ve got good tenants, you’ve got good management, and when those systems are are working for you, you’re gonna end. The equation with valuable assets that are cash flowing you in somewhat passive income.
[00:31:14] Seth Hicks Esq.: I mean, this is a lot more passive than actually having to build the houses or swing the hammers or things like that. I mean, it’s a, it’s a passive cash flow. That you’re creating that can’t really mimic in a lot of places. And so that’s why the private banking with real estate is actually a one-two punch that creates a lot larger bang for your buck.
[00:31:38] Seth Hicks Esq.: And now we didn’t even touch on this, Eric. Now. With that cash flow coming back into your bank, you’ve still got a private bank, a business, a banking business that’s increasing in cash flow. It’s increasing in cash value year after year, and that’s all happening tax free. With [00:32:00] compounding growth, that creates exponential growth as you continue to move forward in linear year, year 10, year, 20 year 30.
[00:32:09] Seth Hicks Esq.: Those numbers in your private bank, they’re not a hundred thousand anymore. They’re a million, 2 million, 4 million, and the cash value and the death benefits are all tax free. Yeah. So not only do you have real estate that’s pushing out cash flow to you, but you’ve got a private bank that has. Compounding growth each year with no tax implications whatsoever and creates a wealth waterfall, as we’ve talked about in prior episodes.
[00:32:36] Seth Hicks Esq.: Now, that’s the one two punch.
[00:32:39] Eric (Host): Yeah, that’s
[00:32:39] Seth Hicks Esq.: fantastic. I, I encourage the folks out there that perhaps you don’t think that you’ve got, you know, a hundred thousand dollars on the sideline to do this, but you own a home or you’ve got equity to, to reach out, uh, to us and talk with us through some strategies about how you might be able to implement private banking systems [00:33:00] and real estate investment, because I think that we can show you how there’s more ways than you might’ve thought.
[00:33:06] Seth Hicks Esq.: To accomplish that.
[00:33:07] Eric (Host): Yeah, absolutely. How do they get ahold of you?
[00:33:09] Seth Hicks Esq.: Private banking strategies.com. It’s www.privatebankingstrategies.com, and we’ve got a lot of resources on our website. You can, initially, you’ll have a, an invitation to, to receive a, a free book that we like to call a red pill book, but the banks don’t want you to know, and you can either read that or you can listen to it in audio or fashion.
[00:33:34] Seth Hicks Esq.: And then we’ve got a, a whole plethora of. Podcast on the website that you can listen to topics like this and others which focus on the seven pillars of private banking and which drill down into various topics. If those things resonate with you, schedule a call with my partner Vance and let him illustrate how this will work for you and and your family and walk you through an eight year roadmap.
[00:33:59] Seth Hicks Esq.: That’s our [00:34:00] process.
[00:34:00] Eric (Host): Yeah, absolutely, Seth. Great information. Love it. Thank you so much. Thanks, Eric. You bet. And our last thank you, of course, goes to your listening audience. Thank you so much for tuning in and listening to the Private Banking Strategies Podcast with Seth X. If you have not subscribed to the podcast yet, please click the subscribe now button below this way.
[00:34:17] Eric (Host): When Vance and Seth come out with a new podcast, it’ll show up directly on your listening device. And we humbly ask you to share this podcast, rate it and leave a review as this actually does help others find the show. Again, thank you so much for listening today. For everyone at Private Banking Strategies, this is Eric Johnson reminding you to live your best day.
[00:34:32] Eric (Host): Every day, and we’ll see you next time.
[00:34:42] Midroll: Did that story feel like it was about you? Do you feel you should be making more progress toward your financial goals? Do you feel stuck? Let us help you get unstuck. Are you ready to take action and get your own private bank? Please call private [00:35:00] banking strategies at eight one seven. 204 7. Seven seven or visit us at www.privatebankingstrategies.com.
[00:35:12] Intro: Thank you for listening to the Private Banking Strategies podcast. Click the subscribe button below to be notified when new episodes become available. The information covered in posted represents the views and opinions of the guest. And does not necessarily represent the views or opinions of private banking strategies.
[00:35:28] Intro: The content has been made available for informational and educational purposes only. The content is not intended to be a substitute for professional investing advice. Always seek the advice of your financial advisor or other qualified financial service provider with any questions you may have regarding your investment planning.
