Behind The Shine 4/28/23

    The US Federal Housing Finance Agency (FHFA) is to change the structure of the Loan-Level Price Adjustment (LLPA) matrix to reduce borrowing fees for riskier borrowers and increase fees for those with higher credit scores.

    The change comes as part of the Biden administration’s plan to encourage homeownership among low-income and minority borrowers. However, the new rule has been criticized as unfair and potentially ineffective. It is set to take effect May 1, 2023.

    Read the full blog post here.

    I’ll often hear on social media, “If you have a loan on a property, you don’t own the property, the bank does.” 

    Everyone hears it and just takes it at face value like, “Unless you’re buying it free and clear, then it’s not paid off.”

    You have to understand inflation. You have to understand how gnarly it is and that when that is the case, if there is a lot of inflation, it’s better to own the asset that appreciates and it’s worse to own the note. So if I give you $500,000 to go buy an asset with it and you’re paying me back with money that gets cheaper every single year, I lost.

    That’s why the owner of the real estate makes more money than the lender, and that’s why they have to set things up where loans are amortized to where a majority of it is interest and not principle and they know that they’re going to get that money paid back.

    What is Spartan League?

    Build a financial fortress, protect your wealth, and join an army of others doing the same. The Spartan League is a community of elite individuals interested in real estate investing  and finance.

    Designed to create strategy, share knowledge, and build unbreakable camaraderie, it’s a call to arms for those ready to conquer their market, control their destructive impulses, and dominate the  industry.

    This is what a current member has to say about Spartan League…

    “It’s inspiring to see the passion and commitment that everyone in this mastermind has for achieving their goals and aspirations. Having the same passion and commitment to help each other all the time. I feel honored to be a part of this group and I am eager to do my part to contribute in any way I can. Thanks to David for this opportunity, thanks for all the crazy value you have offered to all of us inside the mastermind all these years.”

    Many of the tax benefits that come in the tax code come from non W-2 work, and there’s many reasons why, but here’s the way that I like to think about it.

    When you have a W-2 job like most of us do, you’re taking a lot of the risk out of the way you’re earning money, your employer is taking the risk.

    When you get into the entrepreneurial world, you get a lot of tax benefits, but you also take on a lot of risk.

    Starting a company is a great way to go from a full W-2 worker with no flexibility into the passive income ideal of owning real estate and living off of their rents.

    Very few people can make the jump from one all the way over to the other. So instead, what I recommend is that they make a little pit stop in between called owning a business. This is becoming a 1099 employee, an entrepreneur, and you get a lot of write-offs when you get into that world.

    Don’t forget to set a reminder in your phone that I’ll be on YouTube live tonight at 5 PM PST with Kyle. We’ll be talking about how to stop living paycheck to paycheck.

    Come join and ask us questions!

    When you refinance a property, you do not pay taxes on the refinance.

    Now you gain a bunch of money, but you’re also taking on a lot of debt. It is not a capital event. You’re not actually making money. You’re just exchanging money in the bank for a note that you have to repay with interest.

    So of course, you’re not going to be taxed on that, but people don’t realize it. You can buy a house, put it on a 15-year note, pay it off, refinance it, all that money comes tax-free to you, and then use the money from your tenants and the increased rents to pay off the new note.

    Again, this is why I love real estate because it’s something I buy with the majority of somebody else’s money, and then I get a third person, the tenant to give me the money that I borrowed to buy the property and very little of it is my money. It’s just the time that I have to spend operating it. Then you get all the other benefits of real estate and it is awesome.

    I want to let you in on a little secret. By signing up for our waitlist, you’ll be the first to know about upcoming events before anyone else! That means you’ll have the inside track on exclusive access to some of the most exciting happenings around. Trust me, you won’t want to miss out on these experiences. So what are you waiting for?

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