Locating Tax-advantaged, Passive Cash-Flow Investments with John Michailidis

Posted by Shannon Robnett Posted at March 22, 2023 Posted in Podcast

John Michailidis, MSIRE, JD, is an attorney and entrepreneur with degrees in economics, international real estate, and law. In this episode, we’re going over how to locate tax-advantaged, passive cash-flow investments. John talks about upcoming real estate predictions, assembling loans, and financial planning for your retirement.

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Locating Tax-advantaged, Passive Cash-Flow Investments with John Michailidis

Shannon Robnett  00:00

Hey everybody, welcome back to season three of the real estate rundown. You know, it’s, it’s the beginning of a new year, we’re looking at a very familiar landscape to a lot of us, and a very unfamiliar landscape to a lot of you. And, you know, nothing, nothing says, Welcome to the new year like experience. So I reached back in my archives here, and I’ve got a guy that I’m bringing on the show today that’s got that experience. And one of the things that I look at, as he’s got 30 years in, in, in real estate, as a broker, as a property manager as an author and educator, as a mentor, and guys, that’s the kind of stuff that’s forged in the halls a hell that’s forged when you can’t make a deal happen. And you’ve got to figure out another way to do it that’s forged in the not so distant past, but is our present future that everybody seems to have forgotten. And when I bring guests on like this, I really love it when you guys get to see what the experience says that’s been doing it for years and years and years. Because the one thing we know about real estate guys is it’s always changing. And it’s always just like it was last time. So with that I want to bring on my guest, John Michailidis. John, how are you?

John Michailidis  01:15

I’m fantastic, sir, thank you so much for having me on and giving me the opportunity to speak to your audience. And if we can provide anyone listening with one nugget that saves them or helps them or enriches their lives. That’s what it’s all about, man, just one person. Now we want everyone right. But you know what I’m saying?

Shannon Robnett  01:40

You know, John, it’s funny, because you and I could start out the year, start out the show, and we could talk about the 30 years that you’ve got the 27 years I got, and we could go down one of two paths. Oh, yeah, well, I’ve got a story for you. And it could be a good story or time we got knots on our head, right. But the one thing that I know is that as we head into this new season, that everybody’s seeing, you know, it’s not 3% interest rates and, and, and, you know, 640, credit score’s gets the deal done, we’re talking about real deals getting done based on real income DSCRs play a part in it, you know, you’ve got to have connections, there’s time to do due diligence, none, none of this, you know, none of the last 30 months, right? What is it that you’re looking at, when you look at what’s going to be in front of us for the next 18 to 24 months, that you’re reaching into the past and pull it out of your bag and going? This is what we did last time.

John Michailidis  02:43

So, you know, past is prologue, right? That means what has happened before will likely happen again. And we’ll we’ll get to past but I think we need to pay attention to the present also. There’s signals and flags and sirens and warning signs and, and, and prophets shouting from the mountaintops about what may… now nothing’s a certainty but their probabilities, what may will happen over the next 12, 18, 24 months. And so many people have the blinders on. They’re not listening, you know, Wall Street Journal few weeks ago, top economists, the experts right 15-20% decline in the housing market value over the next 18 months. First thing I see, when I hear the consensus at 15-20%. I say haha, so they really think it’s going to be 30-40% because they’re always going to shade it to the to the more positive side, I look at things like FedEx, parking airplanes, and cutting routes. I looked at Maersk, which is the world’s largest sea shipping company cutting back they call them sails like SAILS voyages, cutting back on voyages. And you think about Wow, what does Maersk do? What does FedEx do? If they’re coming out with projections for a depressed 2023? And they’re actually making changes to their business models based on that? What do these companies do? They ship the products of every other company in the world. So if they think the economy is going to tank over the next 12 months, 18 months, that means they think the global economy is going to tank over that time. So we’ve got all kinds of signals, we’ve got pundits…don’t listen to the MSNBC guys, they’re not your friend. They’re not trying to help you. They don’t care about you, man, they’re trying to please their advertisers. So I would ask you to first thing is, is put aside the hype that you’re hearing, put aside the rainbows and unicorns about how soft landing and transitory and all the other nonsenses that we hear, and just start paying attention to things like interest rates, the inversions on the long term and the short term rates, the the calls by companies that really know what’s going on in a global economy, and then say to yourself, wherever you sit, you may be a multimillionaire, you may have a $35,000 a year job, that isn’t the issue. The point is, if you’re aware of what may take place, the question is, how do I position myself so that I can be hurt as little as possible? And perhaps even prosper? In a time when other people are? Going through it?

Shannon Robnett  06:16

It’s It’s funny, you say that, because you know, so when we look at the past, you know, the last 30 months felt a lot like, ’05 and ’06 right? People were buying because real estate always goes up, right? People were buying, because that’s what you know, real estate had never heard so many people thought real estate was sexy again, right? I mean, that’s all I’ve done for 30 years. But now all of a sudden, everybody wants to do it. And I knew we were in deep crap when a guy hadn’t seen some high since high school, that was a chiropractor was developing subdivisions. Right? And I just went, Oh, we’re back to that again. So but then you also see guys like Elon Musk, to to your point sells massive amounts of his shares in in Tesla look like a madman at the time. Tesla has now gone down 75%. In the last 12 months, he now looks like a pseudo genius, because he converted half of his stuff to cash back when cash was worth something. But you know, I also saw that we had a we had a Christmas spending that was 7% higher than last year, with inflation at almost 9%. We lost ground, right?

John Michailidis  07:32

I’m very curious about…exactly, we lost ground. That’s dollar value. That’s not the number of things sold. That’s the dollar value of things sold. And if the dollar value of things sold, is rising, then clearly you’re going to have higher sales this year. But do you really have higher sales this year? Nother thing. I’m curious, I don’t know the answer. May be you’ve heard a statistic. I wonder how much of that was paid for. And I wonder how much of that was put on the credit card?

Shannon Robnett  08:10

I don’t know that. I didn’t see that number yet. But we know that household debt has been increasing over the last couple of months, right? And so all of these things paint to a picture that says if you like you mentioned earlier, if you have your $35,000 a year house in order, you’re gonna be okay. If you don’t have your $3.5 million a year house in order, you’re gonna die, right? It’s gonna be that same thing. So if you’re putting yourself in a position where you’ve got cash flowing real estate, right, I was talking to a friend of mine the other day, and I said, are you still doing deals and 23? He says, We’re doing all the deals that still make sense. And I said, Well, what’s different than 22? And he said absolutely nothing, right? Because debt is a function of what we do, right? It’s an it’s also a function of purchase price. It’s also a function of cap rate, all of these things blend together. And if the deal cash flows, it’s going to be doable, it’s going to be viable.

John Michailidis  09:10

If it pencils, its pencils, it doesn’t matter what the numbers themselves are, if it comes out that to do pencils to do pencils, now you’ve got to be careful not to over leverage yourself. We know this but…

Shannon Robnett  09:23

…and that’s where we look at it and we go, you know, so looking back in the bag of tricks that everybody seemed to kind of ignore for 30 months, right? I mean, I know of, of really excellent deals, guys that bought deals. Everything about the deal was perfect, except they maximize their leverage. And they went with a with a term of floating term, you know, so now now they’re they’ve gone from a two and a half percent they made I think maybe they got into they got below two, because it was a floater. Right. And so now they’re up at 6% their deals upside down. out there, they’re crying the blues, right? Because tomorrow was supposed to be just like yesterday. And it is it just didn’t tell you what year.

John Michailidis  10:08

But here’s the thing, Shannon, the signs…you mentioned Tesla and Elon, I saw posts that… I go on LinkedIn a lot. I saw a post, I think it was this morning, maybe it was yesterday, Guy listed a series of companies, Tesla, and and you saw these high fliers over the last year and how they’re down 91% and 72%. And this and this and this. And I’d made a comment I said, you know, the problem with the people that have lost 91% in these things, is greed and fear. You’ve got to know when to take your chips off the table, you’ve got to know when you’ve made a profit and get out of the game. I owned Tesla. I sold my Tesla when I was 100% up. Yes, it went higher after I sold it. But so what man, I was up, my investing model was met, and I pulled my chips off the Tesla table. Anyone could have pulled their chips off the Tesla table. But what if I miss that next dollar rise? $5. Right. It’s greed. And it’s fear of loss to themselves.

Shannon Robnett  11:28

Right, but then you take in you apply that same thought process and that same mentality to real estate, right? People are looking at it going, why would you buy now we know real estate is going to go down in the future. I know what’s going to go down in the next six months I do. I’m very confident that real estate prices will continue to fall. However, if the deal pencils today, if there’s meat on the bone, if you can make it cashflow, if you can turn it around, if there’s some value you can add and all of those things pencil in a way that makes sense for you to buy today. You’re right, you could you could get a better deal tomorrow, maybe, you know, your price may go down but your interest rate went up. So did you go anywhere, right, your purchase price may go down. But now you’ve got three bidders at the table. Because at that purchase price, there’s more people to deal. I mean, there’s all these different factors. So just like you said, when you analyze your deal, you have to balance that greed with fear. Right? You have to look at that and go Is this enough? I stepped up. I got a double and I’m stealing third, you know how many other analogies we can use. Right? But the reality is you when you’re looking at 23, 24, there’s going to be a lot of deals made. There’s going to be a lot of real estate sold raw, a lot of real estate bought, right? Is it going to be at the same fervent pace where it’s a million dollar non refundable on a multifamily project? And a 60 day close? No questions. Absolutely not. Right. But there was a lot of us that weren’t doing that even when it was frothy. Right. And I mean, I got I got looks, John, and I’m sure you had clients that did and didn’t do that. But I got looks from people like why aren’t you doing that? And I’m like, because that’s not good business. Right? I mean, you still have to conduct good business, I found deals, I could have done 10 more if I would have done it that way. But that’s not how I do business. Because I know that today, it was coming. I know that tomorrow is also coming. And that is change. That has changed. I remember, John, you’ve been doing this long enough. I remember what happened in the real estate market right after 911. It froze for like 45 days, nobody did anything, right? Because we didn’t know what to do. Right? And that was a change. So would you balance that John, you look back at your experience, you look at what’s coming and you look at it and and you’re advising your clients what in this in this space because of your experience. Right now and I’ll give you an example of what I’ve personally just done. I would … I’m an active investor and I’m also a passive investor. Right. So I had money in a limited partnership. I’m sure your crew knows about syndications and such. It’s what you’re involved in, so I was an LP investor in a land development deal. Very profitable land development deal, consistent. 20% returns no questions asked quarterly payments was a beautiful investment twp, maybe three weeks ago. I cashed that in why? And I’m reading signals, saying that. Let’s back up. What is the land development of syndication? Do they go to the proverbial farmer who’s got you know pick the number of acres and say look, we want to buy your land. Then they lock it up without closing, then they take it through the entitlement process. So now you’ve got the 150 platted lots, and you take that and you sell it to the developer, then you pay off the farmer, and you keep the spread. That’s what we were doing. When I say we, I was passive, right, I was…

John Michailidis  14:29

…you’re sitting there eating popcorn, right, watching from the sidelines. But the other thing that development deals do is they go long, right? They go long in the game, because there’s, there’s typically not a lot of cash flow during the development process. Right? There’s, there’s the activity that happens, there’s all this stuff that goes on, it’s similar to construction to development where you, you build it, you got 18, 24, 30 months before, you’re gonna have product online, that’s delivering returns. So you’re going long, rather than buying an existing cash flowing asset, right?  There’s, there’s two ways to play the land deal, right? You could be land banker, which is a different thing. We were actively developing land to flip off to the builders. Okay, for me personally, and, you know, this is John’s mind working, you meaning the audience, you need to decide what’s right for you what’s best for you. I can’t answer that. Neither can Shannon. Right. So I saw agree with it or not, that’s your prerogative. I saw big big housing developers, cutting back on land purchases, or canceling contracts, slowing pace of visitors to their properties, slowing sales, having to cut prices, rebates, etc. So I’m thinking, okay, maybe brand new homes. I’m not talking about apartments now different deal. I’m talking about new single family houses, and interest rates rising and all the things we know it’s happening. I’m thinking maybe, right, it’s all probabilities, not certainties may be in a year, the place to be isn’t in brand new homes, maybe that’s not where you want to have your money. Also, what happens if the prognosticated 15 to 20% decline in housing values turns into the 30 to 40% decline in housing values, then the US stock market differentiated from the new development might be an excellent place to put your money. So I personally decided to cash out of that nice, steady, safe 20% deal, land bank, excuse me, a cash bank, that cash that I took back, and I want to see what’s going to happen over the next 24 months. If something wonderful pops up? Fine. I’ll deploy that capital. But what I actually did is I bought a kilo bar gold with with half of it. I’m keeping the rest in cash kilo bar gold is very liquid very safe. Right? And I have access to it. I control it…

Shannon Robnett  18:24

…is definitely a heck of a defensive weapon.

John Michailidis  18:28

You know, let’s digress. Gold. Anyone who tells you gold is an investment is wrong, they don’t know what they’re talking about. Gold is insurance. Yep, gold is a hedge against calamity. Now, if you’re if you’re speculating in gold, you’re buying an ounce of gold because you think it’s gonna go up, then you’re speculating. But the real purpose of gold is to take the portion of your net worth, you pick it 10% 5% 50% I would say 100% silly, but have a portion that set aside in something you hold. Don’t buy paper gold, right? Don’t buy gold shares in an index, which isn’t gold at all. There’s no gold there. Call them up, say send me my gold, what gold? There’s no gold. We’re trading paper here. Right? So this is a hedge against calamity. People say Oh, well Bitcoin and all of this stuff is the new gold. And I say, maybe, but what what I know is bitcoins been around for whatever 10 years, let’s say, you know, people have been trading gold for 1000s. They’ve been worshipping for 1000s there may well be a day when someone says I do not want your Bitcoin. Matter of fact, there may be a day when someone says I do not want your US dollar. Right but I seriously doubt there’s ever going to be a day Shannon. When you hands try to hit someone to bar gold. And they say now we don’t take that here.

Shannon Robnett  20:00

Right. Exactly, exactly. So. So, you know, one of the things that you’re talking about here is is how to look at the market and look at probability, look at what people are doing, making your own decisions, and making sure that your investment strategy lines up with your investment knowledge lines up with what you’re perceiving in the market. And then even at that, it’s an educated guess.

John Michailidis  20:29

And you’ve got to have a full toolkit, Shannon, because what works in today’s market may not have worked in five years ago, market may not work in the 10 year market. So you’ve got to have a broad toolkit. So the whole point of the book, that that that we’re speaking about here today is create a base, protect yourself, and then understand that investing isn’t about putting money into your 401 K and hoping something good happens over time. It’s about protection. So you want insurance, you want tax planning, you want asset protection planning, you want to have a hedge against calamity, some gold and silver, you want to have entity structuring, you want to organize your affairs such that if the you know what hits the fan, you’ve got a portion of your assets outside of the splatter zone, if you know what I’m talking about. And so you need a base that almost has nothing to do with investing per se. But you have to have this underlying base, you have to know what your purpose is. Why am I an investor, as opposed to a speculator? Let’s go there. I know many people Shannon, they don’t own a single investment. They own nothing but speculations. Right, but they swear their investors lie on so much Bitcoin. Tell me how Bitcoin is an investment. I’m not saying good or bad. I’m just saying it’s just speculation. It’s a thing that has no use in and of itself.

Shannon Robnett  22:17

Well, and when you’re talking about an investment, you’re talking about a physical asset, right? You’re talking about something that that generates income, something that is saleable, something that is transferable. What else would you define as an investment, so that people can understand, you know, they’ve looking at I mean, there’s a lot of people, there’s a few people listening, that are going, Hey, I got stocks, that’s an investment. You own shares in a company, but you can’t you don’t have any control. You can’t make that company do anything. You can’t change the course of a Ford Motor Company, because you have shares. What is it that you, John considered to be an investment? And how are you defining that?

John Michailidis  23:04

John’s definition, not going to be the textbook definition, right? By the way, undergrad degree in economics, Master science, international real estate law degree from Northwestern. So I’ve got a broad understanding of the official definition is just there. I’ll give you my definition. It’s an economic machine, it’s an engine, I take capital, and I put it into the machine, and the machine starts operating. And it starts spitting out what we call cash flow, all the while preserving the initial capital investment. Now with so $100,000 in if you’re smart, going with good operators, choosing wisely, paying attention to the trend lines, and picking investments that you think match up with those trend lines, your investment theory, so to speak. So you want to preserve that initial capital input, you don’t want it to go away. You don’t want it to be diminished, and you want cash flow to come out. Now, what do you do with that cash flow? You can put it back into the same deal and then escalate, escalate. Or you can start other economic engines. I have a game that I like to play. I talked to people because everyone wants to hit a home run and make a million dollars. I said, What if you found some little tiny investment and economic machine as I describe it, a little cash flow engine that takes out your car payments for the rest of your life. I don’t have to worry about car payments for the rest of my life. 500 bucks a month. It’s not a lot of money, but My car payments are paid. And now what if I, what if I go find another little economic machine that takes out my house payment, and I find another economic machine that takes out this or that, in one day, you will wake up and say, I may not be a multimillionaire, or you may be. But my point is, it’s not about being a millionaire. It’s about lifestyle liberation. It’s about freedom. And that’s whatever you define it to be, if you’re going to be happy, and content, I mean, truly, if you can find yourself living in a little one bedroom cottage in the woods, and $50,000, a year is going to cover your full nut, and you’re going to be at peace and happy and at one with the world, then a $50,000 a year lifestyle liberation is very doable, right? Now, if you want to a $500 million lifestyle, you’re gonna have to work harder, and it’s gonna take longer, but the principles are exactly the same. So you have to define what lifestyle liberation means. And then start thinking about how can I create little economic engines that spit out cash flow, and preserve my initial nut?

Shannon Robnett  26:13

And that’s where, you know, John, you hear people like Tony Robbins, I love the exercise that Tony Robbins does, in his book money Master the Game, where he takes you through that and says, How much do you How much do you need to retire, right? And then he starts actually walking you through it. And people say, Okay, I want to do this, I want to do that. And he walks you through the exercise of not what that lump sum is, what that monthly outflow is. So that then he can help you understand how to create the cash flow. Right. And that’s where a lot of people and I especially go to separate I separate from, from Dave Ramsey, and Suze, in this regard, because of paid for asset, that’s all mine is a battery. Okay? It does not create the economic engine, it may be something that I can use to borrow from that starts my economic engine. But if I am the source of the payment for that, if I am the source of the payment for my car payment, then I am the engine and my my assets are my batteries, because I’m storing things there. When you take that and you say, Well, if I go buy a rental property, that rental property creates cash flow, now it’s paying my house payment, and everybody’s like, but your house isn’t paid for it. No, because that’s not an economic engine, right. And so then you take I mean, that’s why Robert Kiyosaki is so keen on what he says, with the fact that he comes in at that and says, Your house is not an asset, because it’s you that has to pay for. So I love the analogy that you do there where you say, if you start that economic engine that now takes care of your car payment, and I’ve never seen a way to lose money faster than to pay cash for a vehicle. Never seen it, right? You take it in, you know that you’re putting it into a depreciating asset that you get to write off you have the ability to use for tax purposes, and you paid for it. Instead of go create something that creates some tax relief in depreciation over here is something else that creates tax relief and make the payment over here with the economic engine. I’m going to use the snot out of that, John, I really am because you’re paying for something and you’ve created two tax savings out of one bucket that now one is paying for the other. This one is now going out and making more money because it’s your company vehicle. It’s work related. It’s those kinds of things. And you’re now creating additional economic engines. That’s that’s that’s a fantastic analogy. And I use those other authors there because I think what you’ve written about is very similar to what they’ve written about and how they put that together. Because it is economic liberation, that get that frees up your lifestyle, because the one thing that you and I can never get any more of his time, and we don’t actually know how much we have.

John Michailidis  28:53

Let me push back a little bit on the comparison with the other authors Dave Ramsey. You mentioned Suze Orman. I don’t buy into their philosophy.

Shannon Robnett  29:03

I meant the other two. Oh, the other two. Tony Robbins and…

John Michailidis  29:10

Yeah, yeah.

Shannon Robnett  29:13

And there’s a lot to that, you know, look, Dave Ramsey. And Suze. I mean, they get you dialed in and get you paid off. You know, you get out of debt with them. That’s great.

John Michailidis  29:20

There you go. They’re saving and getting out of the hole, but they’re not about, okay, I’m out in the hole. Now, what do I do? That’s not their steps. So, okay…

Shannon Robnett  29:31

…you can’t go out there and do investments that are to 22% return with 18% credit card debt. It just doesn’t make sense. Right? Oh, 4% spread we’re talking.

John Michailidis 29:40

But yeah, and the math we’re talking about here is real simple. You know, I had a property a year and a half ago that I happen on free and clear. And I thought, you know, this is stupid. So I went and got a 3% mortgage on that. Oh, as a matter of fact, I deploy that cash into the 20% return Landia that I’ve started. So think about that pulled out cash at 3% and put it into something at 20%. This kind of thought process is so simple. But how many people are attached to I gota own it free and clear, I gotta own it free and clear to me well, if if there’s a particular reason why you need to own that thing free and clear, then do so. But but the reality is you should always be strategizing paying attention to your surroundings as they exist now, and also as you project they might be. And you should always be adjusting your portfolio, nothing should be set in stone, the things the tools, the manner of operating we use today may be completely different back in, ’07, ’08, I wrote a book about lease option investing. Why? Because anyone in the world could go get a loan, you could buy a house, sell it to somebody else, get a nice nut upfront, pay off that more. Point is lease option investing is not the tool to be using today necessarily. But at one particular point in time it was. So educate yourself, as to the various tools, fill your toolkit, pay attention to the market as it exists. And as you think it might exist six months a year, 24 months out, and deploy your capital accordingly. And understand that things are going to change, don’t get tied into anything, build that solid base, your insurance, your estate planning your asset protection, planning your tax planning, and then be very flexible with respect to how you deploy your capital and accumulate assets.

Shannon Robnett  32:05

And I’ll take… let’s go back to that lease purchase stuff. Because I agree with you into to put this into place. You know, right now we’re back to assumable loans, right? Remember, remember when what was it? ’03, ’04 assumable? Loans were big deal? No is late, late 90s…

John Michailidis  32:24

Late 90s. Yeah, I was gonna say ’03, ’04? I don’t remember that.

Shannon Robnett  32:28

No, but everybody was doing even early zooming was, was assuming loans at that point, because somebody had a better interest rate, it made your property more valuable. You go back and listen to the early part of season two of the real estate right now I talked about that. I talked about locking in interest rates, and the twos and threes because it will add value to your property. We are looking at three deals right now that are based on assumable loans in the middle, right. And so we’re back to that I do agree with you that lease purchase had a point in a place in history, I think when you bought about let’s call it, you know, hypothetically, 24 months from now and you start heading back up when the market is trending upward. That’s a great time for lease purchases, right? When the market is trending downward. That’s a great time for assumable loans. But what you learned then it’s a different quarter of the game. But it still will be useful again, sometime in the future. It’s just knowing the landscape well enough to know what to play, right. And knowing where you’re at in in the game, because I truly do agree that we will find a time again, in the next four years that lease purchases will become a thing again. And I know that right now, assumable loans are very valuable thing, right. And so so those are the kinds of things and back to our history, you know, back to your 30 years in the business. You’ve seen all this done before. Right? What we’re going to see in the next 24 months, John, I would venture to say you’re not…is none of it is going to be new to you. It’s just how it exactly plays out in the circumstances. You got some different players, you got some different political surroundings, you got some different things like this, but the but the game plan is going to be very similar to something we’ve done in the past.

John Michailidis  34:17

Right? Yeah. This is how I’ve been thinking about that. So go back to ’06, 7, 8, 9, you know, that timeframe. Literally, breathing was the requirement to get a loan. I mean, literally, anyone that wasn’t there. That was it. The the mortgage industry was on such a tear to write loans. They would make up pay stubs, they would make up tax returns, they would do whatever fraudulent thing needed to be done to place that loan because they were selling it off into the secondary market and they didn’t care and…

Shannon Robnett  34:58

…or they would just create a loan product just said, Hey, we’re doing a statement loan. Right? Yeah, we’re doing you tell us what you made. And we’ll verify it. And we’ll call it good. You know,

John Michailidis  35:08

I’m going one step further, and we’ll write the statement for you. You don’t even need to give us a statement. Exactly. It doesn’t matter. Yeah. I got off track. Wait a minute. So what why were we going down this rabbit hole?

Shannon Robnett  35:23

Just because ’08, ’09, you know…

John Michailidis  35:28

So the reason why the market tanked that then was because of all of these unsustainable government couldn’t make payments. There was unsustainable mortgages out there. And it just all the house of cards came tumbling down this time is different. People actually have to qualify for loans now. So we’re not going to see that catalyst for collapse. If there is a collapse, right? It’ll be different. My thinking is, I’m thinking about employment. I’m seeing META, you know, Facebook and right, Amazon 100,000 layoffs here, you know, 50,000 layoffs there, you know, we have a big…

Shannon Robnett  36:15

…coming out saying he wants to cause 1.2 to 1.7 million layoffs. You’ve got him saying he wants to soften the economy that way. Right? He wants to push unemployment over 5%.

John Michailidis  36:26

So what happens is long as the employment picture stays strong, I don’t think we’ll have that collapse in the housing market. But if something changes to cause employment, to spike, and now even if you got a a 3% mortgage, if you don’t have a job and can’t pay for it, you’re gonna go into foreclosure, maybe because, you know, back in the day, you actually went into foreclosure. But now I’ve just lived through a Alice in Wonderland period, where the government said landlord, you cannot evict that person who is not paying the rent, right? So what happens if employment, does unemployment does spike people are out of work, but the government says you cannot foreclose on people. So I don’t know where this is going to play out. But I’m positioning my the first priority is to get your own house in order such that you’re, you’ve got a solid foundation. Now you have to be looking out on the horizon and seeing where you might be able to take advantage. Every time I say that, it sounds like you know, you’re gonna read the headline, greedy landlords greedy investments, taking advantage of people, but the way I look at it is this. Some people have made terrible decisions in their financial lives, right, which is papered over during the good times. But when the bad times come, all of those poor decisions become readily apparent. There’s also a small subset of people who, in spite of the euphoria and hype, continue to make prudent decisions. So now when the whole house of cards come tumbling down, there’s a few people in a very strong position. Now we could say, oh, they’re taking advantage of people. I say no, the people who made good decisions are now in a position to help out the people who made bad decisions by taking those bad decisions off of their hands and turning them into good decisions. That’s all that happens during the downturn, is the weak operators, the unintelligent decision makers wind up being bailed out by the strong operators and the good decision makers and it’s actually a win win. It’s actually a win win during that downturn period. Like I said, brokerage was my game. What do you shift into during Oh 910 You become a short sale guy, you become a foreclosure guy. Now what else were you going to do become a subject…

Shannon Robnett  39:36

…to specialists you know, I mean, there’s always there always sales happening. It’s just how are you positioning yourself to do that? Now John, let’s We’ve We’ve danced around it and in in the closing minutes here, I want to get to your book. First of all, guys, if you if you’ve listened this far, you want to keep listening. If you’ll send me an email at [email protected] I’m gonna send you a copy of John’s book. Okay, so I’m gonna get you connected with him on a send you a free copy. But John, tell us why the book is so relevant and so important right now.

John Michailidis  40:13

Okay, let’s I, I’ve got this blurry thing going on, I can’t figure out how to get the book to show up. But um, it’s called strategic planning, investing ended investing for individuals, asset protection, diversification, and passive investing for cash flow, and lifestyle liberation. I believe that this book is important because the first thing I do is I disabuse you of the false notion that the 401 K lady, if the HR department is your investment advisor, and that that’s how you invest that is not investing. I’m not saying don’t have a 401 K at work. But I explained to you how that should be a portion of your portfolio. I explained to you about economic engines, I explained to you what investing really is, I explained to you about life insurance and why for $500 a month, you can, for example, you can instantly have if you died the next day, after making that first premium, your family would instantly have a $300,000 Pay Day. So there’s little things you can do to secure your base. And then once your base is secured, I talked about real estate, I talked about commodities. I talked about syndications, I talked about offshore investing. Now the book is 160 pages, I cannot make you an expert in all of those things. But in the back, I have a bibliography of maybe I haven’t counted 30, 40 books, and websites and conferences that you should look into. So whenever I talk about tax planning, I’m not a tax planning expert who’s devoted my life to it. But I talked about it and give you a basic outline. And then I say, here’s the two books, you should read about tax planning, if you want a deep dive. So the book gives you, in my opinion, a very broad overview of all the things you need to know in order to secure your base, and then intelligently scan the environment for investment opportunities. And I point you to things that are real true investments, as opposed to the 401 K lady at the age

Shannon Robnett  42:34

John that I think is really important because when you start down those roads right there, like rabbit holes you get with a tax expert, and all he knows is tax expertise, he doesn’t really know how to stitch that in with life insurance, he rarely knows how to stitch that in with how to work with your 401 K, and how to maximize that and where to invest and how to put that, you know, he knows his world. So a book like this, and this is why guys, I’m willing to give you a free copy, just send me an email at [email protected]. And I’ll get you a free copy of John’s book. Because the reality is simply this, having that overview having that battle plan, having that clear understanding of what gets you to your goal. Everybody says I want to retire. What does that mean? It means being able to walk away from having somebody tell you what you have to do to live your life to receive the funds that you need to live your life. So the reality is, there we go. Strategic planning and investing for individuals, but giving that gameplan giving that overview and saying hey, here’s how you go. Here’s where the deep dives are, here’s good places to start. Those are the kinds of things that John does that I do any of you guys that have paid attention. Those are the kinds of people that are constantly on the show. And I love the fact that John has created an overview that gives you a complete picture of what the landscape in front of you looks like. So that then you can create that plan. We’ve got experts, John’s got experts, we’ve all got people that we can plug you in with but the understanding for yourself, because like John said, you can’t go rely on the 401k lady any more than you can rely on the HR lady to get you to promotion. Right. So understanding what they do and how they work is immensely important.

John Michailidis  44:12

Shannon, let me let me say this, this is this is this is extremely important. Successful investors are not lone wolf investors. It’s a team sport. If you’re going to be serious about protecting your base, and deploying assets wisely, you need to do that with a team. You need to have your your tax planning people estate planning people all of these CPAs all of that. And then I’m a big fan of syndication you’re a syndicator you know, you don’t look at every shiny deal that comes down the line because any deal can be made to look shiny and wonderful, right? Excel is wonderful, and you could make up anything You want for the projection, because it’s a pro forma, it’s made up, no one knows what the future is going to be. What you need to do is find that one or two or five syndicators not 50 that you know, are ethical people. Number one, ethics, some deals go good, some deals go bad, but you want if a deal is gonna go south, you want an ethical operator who’s going to stand by and take you through that storm. Hey, it happens. So, team sport, find guys like Shannon hitch your wagon, to that pony, so to speak, find a couple of other good, reliable ethical ponies, if you will, and do deals with them, get your get your your legal house in order your estate plan, you’re…

Shannon Robnett  45:46

Totally get it. And you know, John, the thing that makes that such an option for people is if you start it now, you’re going to know what your plan is. So now the shiny objects aren’t going to be as shiny because it’s not going to fit in your plan, it’s going to eliminate half of the FOMO. It’s going to eliminate most of the distractions, because you’re going to know exactly where you’re going and how you’re doing it. John, I really appreciate people like you that have taken the time to do the research, to put it together to put something together that allows people to understand things that they didn’t have the time to go research, because most of the people that are listening to this show, most of the people that are involved in syndications are people with limited time. That’s why they will love the limited part of the partnership. Right. So I really want to say thanks, John, for being on the show, guys. You know where to go. If you liked this, go to Apple, iTunes, wherever you get your podcast, give us a like, shoot me some comments, watch it on YouTube. And again, send me your email at [email protected]. And in writing there, John’s book and I’m going to send you a free copy of that. But John, thanks again for being on The Real Estate rundown.

John Michailidis  46:56

Thank you, sir. My pleasure. And for everyone out there. God bless 2023. No matter what happens with the economy can literally be your best year ever. You really gotta think.

Shannon Robnett  47:08

Absolutely. Thanks again, John.

John Michailidis  47:10

You’re welcome, sir.

Important Links:

About John Michailidis:

John Michailidis, MSIRE, JD, is an attorney and entrepreneur with degrees in economics, international real estate, and law.

As a young man he served with the U.S. Army as an 82nd Airborne paratrooper With a career spanning 30+ years as a broker, property manager, author, educator mentor, group investment sponsor, and coach he actively works with those interested in fortifying their futures, preserving their assets, and leaving a legacy that lasts.

Website: https://wealthloop.com/ 

LinkedIn: https://www.linkedin.com/in/johnmichailidis/ 

Facebook: https://www.facebook.com/johnnymich

Twitter: https://twitter.com/JohnnyMich

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