The biggest wholesaling mistake that keeps wholesalers broke is simple—debt! Tom Krol, Founder of Wholesaling Inc, shares why you should avoid accumulating debt and discusses how you can succeed in this episode. There’s a simple but significant formula to build a successful real estate business, and Tom will reveal this for listeners today. He introduces the 4 Ts the wealthy use to stay on top of their game: Tax, Tithe, Table, and Take. Keep your ears peeled for insight that he’s gained after years and thousands of hours of coaching people in the real estate business.
Wholesaling Quicktip – The Biggest Mistake that Keeps Even Successful Wholesalers BROKE
One of the ways of simple methodology, when you get an assignment check, here’s the way it works. First of all, pay your taxes. You are not a W-2 employee anymore. You are an Owner. Every single person, you and I, and your audience know famous people that we would describe as uber-successful, who are dead broke because they didn’t pay their taxes. People that are household names that you and I know personally.
Number one, if you get an assignment check, I don’t care what any CPA or bookkeeper tells you, you pay the IRS what you owe them immediately. Don’t play games. “I could invest the money and save and then, later on, I would make a 2% extra.” Don’t do that. Your game is not tax evasion. Your game is real estate investing. That’s the first rule. The second rule is a tithe. It says so right in the Bible. Do you want to be a go-giver? Malachi 3:8, “You don’t give God his 10%, you are a thief.” It says, “How do I steal from God? It’s because I’m not tithing.” Check it out. Last chapter, Old Testament. First, tax. Second, tithe your 10%. It’s not your money. If you take it, you are stealing it.
Number three is table it. Table some money. All wealthy people only do a handful of habits. They are all over the map. I don’t care what skin color, gender, sexual orientation, age or industry. It doesn’t matter. Here’s what all wealthy people do. Number one, they all read. All of them, 100% of the time. They are all readers. Audibles are great. Reading is going to build the most important muscle in your body.
Number two is that they all save a portion of their income. When you talk to poor people, what do they say? “I’m in debt, so I’m putting all of it towards my debt.” No. You’ve got to pay yourself first. I don’t care how much debt you are in. You’ve got to save some of your money and invest it because compound interest works with time. When you pay your debt before you pay yourself, you are losing the most important factor, which is time. Tax, tithe, table, save 10% to 15% of your money as all wealthy people do, and then live on the rest. That’s it.
Tax, tithe, table, and take.
Tom, to open up this show, I talked about the first step is finding discounted properties, finding the opportunities as a real estate entrepreneur, replacing your current job. The third one is paying off consumer debts. Talk to me about that. Talk to me about the weight around your neck of consumer debts and what your thoughts are there.
If you are in this business, you are an Owner. If you are an Owner, you are playing and you want to punch the gas. You’ve got a lift, thrust, drag and weight. Any consumer debt, there is none an intelligent investor, a person or wealthy person who’s using the bonus points on a Marriott credit card. Don’t go into it. Avoid debt at all costs. Debt is dark. Debt makes the wrong things important. Debt makes money important. Money is a symptom. It is not a condition. Conditions produce money. What do wealthy people do? Wealthy people produce conditions that will produce the symptoms. They seek the conditions.
Poor people are constantly chasing the symptoms. They want to keep up with the Joneses. They are defining who they are by their financial life. They want to buy a new car to impress people. They care too much about what people think about that. They are constantly chasing cash but the secret is, what wealthy people know is, you’ve got to seek the conditions that produce the symptoms. Don’t chase the symptoms.
As far as your job, a lot of people are super conservative on this that you have to save a certain amount of months. No way. I’m going to tell you my advice. I would not be here now if I didn’t get fired. I’m going to say that again. I know that Brent Daniels can’t say this because you don’t want to go out there with that message. I’m going to go out there with this message, which is, “I hope you get fired now.” It will be the best thing that happened to you.
Quit prematurely because I’m going to tell you. Do you know who I want as a student? I want the people who are the most inspired and the most desperate because after coaching 5,000 people, I know who’s going to make the most money. It’s going to be the guys who are the most desperate and the people who were the most inspiring because when you are in love, you are going to make it happen.
You are going to realize you are strong, powerful. You are made in the image of God. All of your time, attention, focus, resources, money, networking, creativity. When it’s all focused on a single point, instead of being diluted through selling your time for money to somebody else’s dream, I know how powerful you are and that you can make anything happen. Secretly, I hope every student gets fired and loses their job immediately.
Avoid debt. Remember the simple formula. It’s tax, tithe, table and take. Live off of what is left. If it’s not there, increase your number. You cannot become rich as a pauper. You are living like a pauper. You cannot become rich only with frugality. Becoming wealthy means detaching yourself from money, not storing it up. That’s where money becomes the most important thing.
Store your treasure somewhere else. The whole idea about money is you’ve got to produce the conditions that allow those symptoms to produce automatically. I will say this too, after coaching all these students, Brent, I can tell you, the students who are the wealthiest are the ones who buy property. You’ve got to start buying property as a discipline. If you want to do an assignment agreement and your lawyer says it’s okay, great.
Location is the oldest and truest wisdom when it comes to real estate.
This is not philosophy or an idea. Take this with a grain of salt. This is from thousands of hours coaching people. I am telling you firsthand. This is straight from the horse’s mouth that the wholesalers who are no longer on a treadmill with a job, own a business, are wealthy and have a net worth over $1 million, those are the people who close. Start closing now.
If you have a limited belief that you don’t have enough cash to close or whatever it is, figure that out. Go to Brent. Ask him, “I want to start closing but I don’t know how.” Start closing on deals because that’s going to build the muscles in your belly to start seeing what your future could look like when you get beyond the treadmill of an assignment.
Wrapping this up because I think if I let you lose for too much longer, everybody’s minds are going to explode and nobody will be in the audience anymore. With your strategy for buying property, what does that look like? Somebody said, “What is your filter for knowing which properties to take off the table and keep?” Michael Jake, who you and I both know, said, “If it’s in the best school districts, buy them.” What do you look at when you are considering an investment property?
The first thing is, I know this is going to go against the grain but I don’t necessarily care about cashflow because what I have come to understand is that what I’m more interested in is equity. As long as the property will pay for itself, I’m okay with it. I don’t care about making an extra $200 a month because I understand that if I make $200 a month, all it takes is one tenant turnover or a bad roof and I’m opposite again.
I don’t care about $200 or $300 a month cashflow. However, I don’t want to go negative. By the way, Michael Jake, I love him. He has given us both some great advice in the past. Michael Jake said once, “Even if I would have paid retail and held for a long time, I would have made money on these deals.”
What I want is, whatever the property manager tells me that the property is going to rent for, I minus 40%. If they tell you that it’s going to be $1,000 minus 40%, count on $600. That’s what you are going to be able to count on. As long as you can cover that, it’s going to break even. It becomes market-specific. For me, in Florida, you want to buy a CBS home, a concrete home, as opposed to a frame home. There are little things like that. School district, I will tell you, location is the oldest, truest and most wisdom when it comes to real estate.
The other thing, too, is something that I learned from Robert Kiyosaki. Julie and I have implemented it. This is key, which is this, “Your real estate portfolio is a garden.” I’ve got off the phone with two agents. I don’t want to show too much information. We are doing two 1031 exchanges. Don’t worry about what a 1031 exchange means. I’ve got a 990 on my SAT. I don’t even know what it means but here’s the deal, if you buy a small little home and you rent it out for a year, you can then sell that home, keep all the money without paying taxes and reinvest it into a more expensive home.
We sold a home. We kept $316,000 for it. We are buying a home on the water. In this area, that’s about $700,000 but we are using the three $316,000 down so we don’t have to put down much more money. I want to encourage everybody that you can grow these portfolios by buying single homes. You don’t have to keep acquiring and adding to the number of doors but it has those options. Wholesaling is the art of consistently finding discounted properties. If you can get good at that and realize how to leverage those properties, you are financially free now. I don’t care what your strategy is but that’s the key.
Tom, you are the best. I love you.
You are the best. I love you, too.
See you, Tom. Thanks for popping on.
For everybody out there that is interested in joining the most proactive group in real estate investing, it is the TTP family, the TTP Program. Go to WholesalingInc.com/ttp. Scroll down, check out what it’s all about. Check out all the testimonials. If it feels good in your gut, sign up for a strategy call now. I look forward to working with you personally. Everybody out there, I encourage you, as always, to go out there and talk to people. Until next time. I love you. See you.
About Brent Daniels
Brent Daniels is a multi-million dollar wholesaler in Phoenix, Arizona… and the creator of “Talk To People” — a simple, low cost, and incredibly effective telephone marketing program…
Also known as “TTP”… it helps wholesalers do more, bigger, and more profitable deals by replacing traditional paid advertising (postcards, yellow letters, bandit signs, and PPC) with being proactive and taking action every single day!
Brent has personally coached over 1,000 wholesalers enrolled in his “Cold Calling Mastery” training, and helped 10,000’s of others who listen to him host the Wholesaling Inc. podcast, watch his YouTube channel, and attend his live events…
A natural leader, Brent combines his passion for helping others with his high energy, “don’t-wait-around-for-business” attitude to help you CRUSH your wholesaling goals as quickly and easily as possible!