Choosing the Right Investments and Advisors – A Look Under the Hood

Audio Transcription

Broadcasting from the drivetime show studios in the business coach box that rocks it is tulsa’s number one cpa and every way he’s a gentleman it’s time to take a look under your financial hood with paulgreen country. In welcome back to look under the hood with paul hood tulsa’s number one cpa in every way. In fact, these bartlesville is number one cpa in every way and he’s claremore’s number one cpa in every way:paul you’re everywhere. How is it possible to drive everywhere and still here with us? This thing play:oh yeah I handle a wee wee wee wee, there’s a course. We take to be a cpa on cloning and we we mastered that. So, if it’s not the kind of confusing-and you know I’m-not crazy and neither am i, you know kind of arguing with myself, but it’s great yeah. Well I tell you what I’ll be half of me, myself and i. All three of us are. We welcome you to the show this morning and we’re talking about choosing the right investment vehicles and the right advisors too. Deep into the waters. Talk to me about the wrong advisorsadvisor. The challenge is clay is, is using you go to you want to. You want an independent person, because what happens is I can about 90% of time. Somebody comes into me and we’re done tax planning or whatever we look at the investment I can tell them about 90% of what they have in their portfolio or their holdings. If they just tell me who they’re working with the kelly, yes, the cookie cutter approach, you know whether you’re 8 or 80, you don’t.

They put you in the same mixture. That’s just kind of push. What’s what’s been put push down from above them, and so you really want an independent person. You want. Each individual’s plan should be tailored to them, know two people are alike and the right advisor is somebody who can take. It has a full spectrum of products. You know, if you go to an insurance person, you’re going to get insurance price, you go to start person, you’re a good stocks, and if you need somebody, that’s going to cross that threshold and and because insurance products are great for the right person, they’re terrible for the wrong person. Equity-based products are great for the right personthey’re terrible for the wrong person, so you have to have somebody that puts your interest first and that does a full analysis play we’re going to go into all the vehicles, all the savings vehicles one by one. We have the thrive time, show coder web developer guy. He thought he was going to be here to fix a business coach monitor how to make sure that the screens are working right and now we wrote them into a radio show so he’s here devin. How are you my friend you got me. You got me I’m here, the business coach, sir. How are you doing this morning is going to be here all right, so I’m going to go ahead and get into each one of these vehicles:vehicle number one you’re home i, just what you wrote in your book on page 57 of a look under the hood. It reads anything you have equity into investing. Your hard-earned funds is investment, including your homeunder. Current market conditions. Your home generally is an underperforming. Investment. It’s e-liquid and generally is not invested in for sale. For this reason, it really is not a very good investment to put your money into interest rates are very low. In bank, mortgages are generally better funds to use than your liquid investable assets. People like to have their home paid off for the warm-and-fuzzy feeling, but the reality is that the beneficiaries are the ones that will benefit from investing liquid assets into their home and so I’m going to be like their politics plane, which is kind of part by part. If you are investing in your home, it’s really not that great of an investment, so many people are saying why I thought itthe best ever so.

Please, please explain this to us. People make prudent decisions financially. Your home is really just something. It’s a consumable. It’s something you go to. If you live there, but the reality is it’s not going to produce for you to hear this kind of a funny? Little now, g i, usually clients you that everybody knows what a minion is. You know, dominion is right play it’s, a small minded person that just implements exactly what you want them to do. Is that what you’re more than the cartoon character? Many were there just working, but just worker bees, work, work, work, work, work and so the way I view investments? Is you to retire? Retirement takes money, not age, and you takes money because you have to be replacing your efforts and so what I said to talk to you about us think of your investment. True, as as minions in the more minions, you have the quicker you can retire because they’re more working for you, the route is your house is not business coach aminions. Your investments are real estate could be so that your house is not working for you now lot of people confused, investing success with with the cash flow and a lot of times that they’re contrite to each other. So you know people love the feeling. The safety feeling of paying off the house with the reality is. Is that house, when you die the equity in the benefit and the growth is going to go to your kids and i? Don’t do anything to you for you for your health, your retirement. You can’t use that for medical bills. You can’t use that to buy back your time is why I say it’s not that great of investment, okay, I’m, going to give you my mindset, my concept on this as an entrepreneur, and hopefully hopefully, this alliance with what policy is telling you? If you have a house and let’s say your house or build a house right now, are you not I’m about to him in the process and it is going to provide a wonderfulhome, john’s wife’s going to love it? My wife loves her home.

It’s a there’s, a lot of really great benefits. Raising your kids on a hall and a home, it’s great with the home, doesn’t really produce cash. So, if I think about a friend of mine, he has these. These cars, we’re talking about devin he’s got a model t and a chrysler 1938 whatever and he’s got these nice cars. If you, if you never checked it out, go to royal empire, seven royal empire limousines in these are kind of like older vintage cars that you could rent for your wedding. Now, if he paid cash for the cars, it’s a certain price or if you got a loan for the cars to certain price, so I’m just going to make up the example here and i, don’t know the numbers, but let’s say that his loan payment is $700 a month. What’s a his loan payment for those cars is 700 month ago. Well, I mean $70 a month. I mean if you have $100,000 of vehicle. Does that seem pretty reasonableit’s, pretty sure he’s paying 1500 a month to pay for servicing the debt on cars and again i, don’t know whether he’s paid cash for the cars resurfacing day, I’m just saying, let’s say he did have dead on his car, so is total monthly payment for those cars is $1,500. I know this because I meet with him every single  business coachweek. I know that royal empire limousines has turned down so far as of yesterday I think I said:devin 11, 11, 11, 11 limousine rentals in the first 3 weeks, I’m on because there’s more people that want to rent the vehicles and they can’t even keep up with so imagine that he wasn’t just right now on they on the buick of the cash flow. He’s brought him with his business. So far, I think he’s add parental he’s, bringing bringing in about $600and. So he’s are you still taking servicing a note or alone he’s paying $15 of a a month for the loan he’s ready, bring it in six thousand a month? That’s a positive cash flows using the word cash flow and how many people know what cash flow is, but it’s the did. He was servicing the debt on the vehicles and then he was bringing in the income. If you, if you look at that you’d say:there’s 6000 coming in 1500, going out! That’s the cash flow right with the house. It’s like your check, comes in. You pay $52 a month towards a mortgage and last time, I checked. I’ve. Never seen a house produce it, that’s it looks like a bed and breakfast or something cleaned in what you do to be successfully financially. He is. Is you have to leverage? You know if your time, if your money is based on you showing up for work or whatever you have to leverage your time and in financial prudence, also leverages money, and it’s like an example with the limousine. So let’s say he had $50,000 legossize, 1, limousine and and so it cost him $700, and you know the work that business coach debt and then he makes you know x dollars on that will what if instead of paying cash for that that car he took the 50,000 and he bought five cars and finance the rest.

So your cash flow per car is going to be less unit because you didn’t pay cash, but overall it’s going to be more I agree with what you’re saying I want to listen to i. Think a lot of people have never really thought about cash flow. So again, just think about this there. If you have a house and you’re paying $1,300 a month for your payment on your house, how much money are you making per month in excess of that payment there’s? Anybody out? There is making more you, probably the bed and breakfast or a hotel or a. But as far as your house goes, you probably don’t make money in excess of what you’re paying for the mortgage. Now the neat thing about a house is, it doesn’t really increase in value but usually keeps up with inflation every year. The american dollar is worth about and call me if you disagree with the inflation index will show about 3%, so the every year your dollar loses value. By about 3%, I agree and that’s the government is spending more money than what they have there for your dollars are worth less every year, cuz they’re putting more of them, and so your house, don’t you buy the house today for $300,000 in a nice neighborhood with the trees and he bought in there nice spot of the nicer part of town in 10 years. That house may be worth quote on quote $400,000, but didn’t really generate you. Cash, it just kept up with the inflation rate right, i, hope, I’m, not blowing some with mine. Are there chaptersmy talking in circles to somebody? Does this make sense to you make sense to me I feel, like a lot of folks are going cash flow. That’s weird. Are you also said here in your book? Your ball. You said that the cash flow you talked about cash flow. You talked about how it’s generally better to invest in something else. So it’s so you’re saying I should own a house if I’m getting the trash and I should maybe pay my mortgage, but I should take my liquid cash and invest in something else. Is that what you’re saying that’s, what I’m saying and why do you feel like i, should take my excess cash and put it into something else, and if I don’t own a business, what is maybe something that I should put it into well:warren buffett talks about dollar cost averaging. He talks about the business coach compound interest, things that actually works until elaborate limit like it cuz. You said the house was worth $300,000 bought it for 2010 years later.

The reality is:is it really isn’t worth anymore becausedollars by less? So it’s really like you said just kept up with inflation and two compound in to grow in to create wealth. You have to leverage, you have to use dollar cost averaging, and so you know those investments could be equities. It could be mutual funds. It could be an insurance based products that have a guaranteed side of it, but something that’s going to outpace inflation. That’s actually going to have appreciation or growth, so having a snow cone stand hypothetically could be a better investment than having a house. Absolutely i, know it. Gentlemen, very very well who pulls in over 6 figures a year with snow cone stands and i. Don’t know anybody who make six figures per year with your house, so I love, snow coneswar with you and some of the listeners out there. There are so many people that say:yeah, yeah, yeah, that’s great okay, great, but they focus on paying off their house and not investing shop. There’s no growth and here’s a problem is that it’s normal because that’s kind of what you’re told right you got to go out and buy a house. You got to follow the pendant soothes society latest societies in your ear man or telling you got to graduate high school man, go to college man, get a bunch of dead man by that house. Man have a baby soon, man, you don’t have to do that. You can actually plan to be business coach proactive and meet with somebody like paul hood and line up your financial future to make sure you’re going to actually make money not going to make money on a house. If you sell it, if you don’t sell it right, this is literally. This is what happened to me and my wife. We bought a house, we put a bunch of sweat equity into it. Thinking we’re going to sell this thing a couple years and now or anywhere like we don’t want to sell it. We actually like our new ride. Aroundexpected we come back in the break. I want to get paul’s take on that’s when you buy a house for your wife today. What I’m not leaving this house I mean cuz, we keep adding stuff and I love it. It’s not an investment, it’s any of it. It’s like our staycation, but I’m not going to add a bunch of things that never get.

The contractors will tell you if you do. This has resale value that screened in porch. We had in the new tile and we had we’re not selling it. Babyi want to go if you, if you don’t buy houses that you’re not emotional, about i, want to talk about buying rental properties, because I have bought properties in neighborhoods where that neighborhoods nice, the house I bought, was beat up, I fixed it up, but I have no emotional attachment to it at all, and you can make money with real estate, but your own home. It’s hard sometimes to do that, because once you finally get the house exactly how you want it to champs, point you’re, probably not going to want to sell it right at that that that moms come back. That I want to get your take on investment properties. I know you own a lot of it. A commercial buildings in residential property and I want to get your take on investing in ahouse versus investing in a rental home. Have you ever found yourself running out of money before the end of the month? Are you saving enough for retirement? Are you getting ahead financially tulsa? If you need to look at your financial hood, you come to the right place. It’s a look under the hood with tulsa epa and every way every way, we’re talking about investment vehicles and specifically talk about investing in real estate, but before we get back into it, paul hood, it’s kind of like that. The santa clause on a on a saturday and he’s a kind of the kind of the march santa claus he’s giving away a gift for all of the listeners and paul. What. Are you giving away to all the listeners and what do they have to do? To claim gift will quiet? You know what we’re trying to do is get people to think outside the box. Think, outside of what they’ve been taught about financial success and warren buffett is a great example of that in his book, snowball will will it’ll change the way you think about money about investing about. You know, following the crowd, and so are you going to do-is go to hood cpas, hood cpa, who tbh.Com that’s a tough name and what I tell you what the thing is when you’re on radio weird things happen because a lot of people you haven’t been on a microphone must, be, love it, on microphone, work, 30,000 people are listening, and so I can tell you this i. Typically, if I got tasered every time, I mispronounce something I would be just Like:i’ll be dead by now. Hood cps.Com fill out the form and I’m also giving an hour for your time. You know it’s. It’s we’re busy working 7 days a week right now, but we invest in our community and we won’t invest in you so an hour free time will give you the book. Hood cph.Com see here’s the business coach deal again. You go to hood cps.Com schedule, a one-on-one consultation with editor of the paul hood team, and you get a free copy of warren buffett’s book called snowball. All of all of that house it possible. He wants to be your account and he’d love to help you he’d love to help you get proactive with your accounting in your personal finances, and you can get that today. By going to hood cpa,, we were talking before the break about investing in real estate, so I want to I want to get your take on this devin I’d like to get your take a message to get your take on this as well.

We invest in your house and you finally get it, how you like it, your wife, maybe I’m married to somebody different, but most women once it get the house I like it. They want to make. You feel better. I went to the one in prove this to want to make the hallway wider. They want to make the bathroom a little better. They want a new tile, they want to add a new countertop. They want to put crown molding on a smooth walls with wood floor hand-scraped by the wake of the hand-scraped machine, with script by hand real. Would you want to decor and changes, and then there were making it the perfect atmosphere with the ones that they finally get the house how they want it? They don’t want to sell it, and so, even though it quote on quote, couldn’t prove resale value, usually your own home is not really the best way to generate income. Summer start with u chupp auctions. You guys have work to modify your home to make it how you want what are some of the things you’ve done to your home, to make it how you like it? Oh, my gosh. We knocked down a huge wall and put a beam in to make the dining room and living room wide open where the kitchen was to another spot. I built a new laundry room where the kitchen was we’ve done, all new wood floors, all new heat and air, all new electrical, all new plumbing and water like pretty much everything but the shell of the houses new. Did you like it? I love it now, it’s still not quite done, but we got the thing. I was going to say when you were talking about this clay. I kind of have I feel like a backwards idea from business coach society. On this, what I see happened with all of my friends and family. At my old house we had a previous house. It was me and my wife’s first house. We did a lot of work on that thing.

Well, whenever we decided to sell it, I did not price that thing. Crazy, I did not want a house sitting on the market for eight months, so I priced it at what I thought it would move in. We got two offers on the first day, I see so many people that put all this time african their house. Then they price it right out of the market and then there in that thing for a year, while it’s been listed in their price drop in and no realtor wants just like if you’re going to live in that thing, it might not be the best investment for you. So if you are going to make money in real estate I’m going to give you my tips there chapter, if you can just jump in the shower yet I have three quick tips. They work every time here we go stepping over when you go into a nice neighborhood. This is the tips you going to a nice neighborhood. You look. Here’s a nice neighbor trevor! You can’t move the house. Ok google go into a nice neighborhood we’re driving around in a nice neighborhood with a canoe brand ice house over there. There’s a nice house over there. There’s a nice house everywhere, except for that house, step to fight a fight, a nasty house and probably 6 months, find the lawn, which was the set of the movie jumanji on where there’s spider monkeys in the lawn. So you you see the house like that. Oh yes, in your neighborhood, the other neighbors that did the whole I haven’t mowed my lawn this year game. Your have you ever seen that move I have okay, man have like crazy cuz. My mom was a neighborhood with a guy on the corner, and it’s like this.

Dude is getting i, mean he’s keys, keys, I know what I I want my house to be the set of the next jumanji I am not going to cut my lawn until spider. Monkeys begin to show up on a lot of have you ever seen. This house is very near mine. Whenever’s between renters definitely had had grass. That was probably up to my knees, find out who owns the house with the high grass and attempt to buy it low? That’s it that’s it. I mean really upset because I’ll just give you one example:that’s that’s probably horrible and soul-sucking to certain listeners out there, but I think it’s pretty business coach awesome. There’s a church and there’s a church in tulsa in some scandal that happened. I, don’t know the whole thing, but I all I know is the parsonage for the church was available now. I know this because I was in a nice. Neighborhood I noticed that this this thing had, like epic grass cut parsnips, begin to call most of tree like I’m not kidding it was matt, was massive and so I go into that. Neighborhood and I see this massive outgrowth of of neglect, and so what I do is i. Do some research and I find out who owns a property and it’s a church and the pastor? Some weird things happen, so he resigned. The house is there. The average house in the neighborhood was worth about a hundred 50 hundred sixty there’s some houses that were two fifties and threes as you get deeper in the neighborhood they’re, bigger houses, midtown area kind of a sheridan area. You know what are you guys staying near the farm? Will? What do you think I had to offer for that house paul what you think I offered her house? That’s right, I came in at 4, i, don’t know about 75,000 $80,000 I came out in the offering $47,000 house for $52,000. That’s called setting the extreme anchor I just finished. Reading a business coach book about negotiating or not you 7 extreme anchor, just a shake them up and see what they do.

You buy the house, you make your profit when you buy it, so you just had to buy. What will you do to make your property to buy? It’s all. I did is I just offered crazy load, i, don’t get every single deal we offer, but we got it and then my partner and I went in there and we hired a guy to do the renovations and the guide of the renovation where you graduate and I thought I could trust the guy. He never really showed up on time and he he does a typical good contractors and then there’s bad ones, and he was a typical bad one and I called him one day and I said dude I just should have the job site and no real progress has been done. He said I got to be honest, I’m in san francisco right now. Lobster fishing hit up dying in a scuba accident on my god sounds like a joke and he died. I went to another contractor and it don’t end up spending about 20,000 more than I wanted to on renovations. So all in I think we spent about 80,000 total. We spent 50 something dollars on the house in, like thirty thousand renovations, we have 80 and do it and then we sold the property, 55001 30 or something or 120, and that’s how you do it if you’re going to miss the business coach real estate, let me tell you what I chose the flooring myself. I chose the countertops myself. I chose to open up the room to myself and it looks nice. It was very on trend jump, but it wasn’t an emotional family decision and that’s why I want to get devin to take on this. Damn it if you went in and you and your wife fully renovated, the house will be easy for you to sell. Are you going to pay me where you could play a house renovated, sell it move out by a house renovated cuz. Some people think that’s enough to make a deal. I can move the whole family into that house. Renovated nate, they put their whole family.

Could do this every couple years? Are you depending where you guys could buy a house renovated, sell it every year so make it your whole family? Do that? No no i! Think my wife would want to kill children by the look on his face. Devin would be, would be in heaven right now, so we’ll go anywhere renovate then we’ll sell. It will make me know. So your house is what it is. Your house is amaya, my humble opinion. It’s an expense and not an investment now I’m next week. So we’re going to talk about your savings vehicle number to which is a managed portfolio. What’s a managed portfolio or mutual fund portfolio is, is exactly that is somebody that our group, people’s actually proactively, evaluating investments everyday, is a by holding cell. It’s not you guessing! It’s not based on business coach fear is not based on greed is based on actual define steps and evaluating like warren buffett and is in his book snowball. Does he have a white businesses as a standalone investment and that’s inside a man’s portfolio? That’s what the manager does play if you have yet to check check out hood cpas.,, going to be up yet to check out hood cps.Com, go to the website today and claim your free copy of warren buffett’s book snowball is the only authorized biography out there about warren buffett. You can get it today for free by sketching a free consultation with paul hood at hood cpas. Tom will see you next week here on and look under the hood with paul hood