"On one bluff and a money printer"
Shortly before I became interested in investing in real estate, I was intrigued by how the financial world actually works, how to make money by the book. Just to clarify I do not hold any academic degree in economics, but while moving and learning independently I discovered some things that amazed me, and surprisingly very few people know or care. That seems very strange to me in light of the fact that most of us have been involved in "how to make money" all our lives, but we have no idea where money comes from, or how the method works.
In retrospect, I realized that the establishment really wants me to know how to "work" rather than how to "earn", and it does it brilliantly !: You will learn 5 units of mathematics, specialize in statistics and probability, differential and integral calculus, functions, Euclidean geometry, analytical engineering, recruit paratroopers , Break free, start a business and ask someone if they know the difference between a tax invoice and a receipt because you have no idea. But give me a calculator in a second I'm doing you a function you're flying.
So what the hell have you been teaching me for so many years? I will submit a certificate, I will be hired, I will arrive at 8:00, I will leave at 17:00, and the firm's bookkeeping is already entrusting the money to you at the bank, remove worry. Oh yes taxes have to be paid, leaving it is complicated.
So here are some fun facts that will make you wonder
1. The Federal Reserve is a completely private company that is not subject to any federal body in the United States.
2. The phone number of the Federal Reserve appears in the American phone book line below the shipping company FedEx
3. The cost of producing a $ 100 bill or a single dollar bill is 3 cents.
Bottom line, money is out of print (digitally invented) by the Federal Reserve (central bank) for governments, as a debt for interest. The interest that the government owes to the Federal Reserve is collected from citizens through taxes. The interest rate is set by the Federal Reserve. Section .. Same as for commercial banks, any new loan is a new debt to the central bank when the borrower pays the interest to the commercial bank that charges him interest to earn and pay to the private company from which the money was made out of nothing, in the US this is the Federal Reserve. There are a number of central banks such as the European ECB.
So wait, you came to tell me that all the money in the world is invented out of nothing by a private company !? Privately owned ?? So who owns? And how do they determine how much interest will be on the money they print? Anyone visit them ?? Turns out not!
So the whole world economy relies on some insanely rich private individuals to be “okay” with the world, and take care of entire countries through governments that sell them debt ?? Every dollar bill has the word debt / note = debt because that is exactly what it is, a promissory note and not money at all, but a debt to a private company whose phone number appears in the phone book, and the interest rate on the loan = printing, it determines as it sees fit.
I do not know about you, but to me it's pretty amazing for some reason, and the main ones are that you will not be taught in school, and the mantra will always be, you will learn well, so that you have a day job through which you can pay taxes and what is left will support a family. And who determines the education program and what is taught in the school?
The big bluff for me here, is not the name of the game, because there are a lot of players who make a force in the economic swamp, but in my eyes the bluff here is that we as citizens think there is logic or justice in the economy we live in and we are protected by our government. The positive or negative current line can probably always be deleted from the computer by someone sometime without any dependence like inflation or bankruptcy of banks that gambled incorrectly in the capital market, but 4 walls with a roof called a house, very difficult to move with a keyboard and mouse assuming you purchased Him in full and he is not enslaved of course.
With this insight I began my journey in the real estate world. And when I was asked then why not in Israel? I replied that it is not because of the low yields or something similar, but because in Israel there is almost no private ownership of real estate, everything belongs to the state, in fact 97% of land in Israel is state owned leased to leased buyers even if they paid in cash. surprising? A very fascinating topic by the way for another post.
So what do most of us do whether knowingly or not .. beat them in their game ..
When buying real estate in the US if you are leveraged, you can "beat the method" in some way in part, one of the most common is the BRRRR strategy that I think has been explained in the forum several times, and is largely a first-rate cash-producing property to refinance. Or close to the initial investment amount and creating a positive cash flow from the surplus of the rent received minus all expenses. With the funding received, you purchase an additional rental and repeat the process as many times as you want. If done wisely, and succeed in obtaining funding it works.
Refinance is very difficult to apply for foreign investors but certainly applicable to companies like LLC that can take asset based loans from private financial entities (and not lacking), and of course buy assets with enough equity and renovate at a minimum to get maximum value before financing. The whole strategy works great in terms of taxation as it also does not supposedly generate a capital gain as in-direct sale of a property.
Another financing strategy (preferred in my opinion) is to play with existing financing combined with a creative partnership outline (JV) such as an outline we created for investors with us so that the investor puts in a minimum investment and comes out with a significantly higher ROI in a deal with enough equity. Which I will expand on later this week.
The optimal “knock the system” strategy is of course to purchase a cash asset without financing and liens but the reality of most investors will not allow it to grow on a large enough scale, so the outlines only partially win. And of course cash on cash is significantly lower, so for what.
Interim summary: do not want you to make money, want you to take part in debt. So…
If you can not beat them f * ck them up
In the next episode (teaser):
"Alpha Secret 82 and the New Mindset"
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