Leveraging Your Money


Want to know what IRR is?

 

IRR is a financial tool that helps investors measure how profitable an investment is. Understanding IRR can help improve your ROI.

Robert explains this concept with simple diagrams to make it easy for investors to understand how IRR helps measure their real returns.

financial iq

financial iq

Robert explains that passive income, like rent earnings, is taxed at a lower rate than regular income. In the U.S., passive income isn't taxed for Social Security or self-employment, which means it doesn't count as an expense. This is a big advantage because it helps increase your overall income.

He also breaks down how depreciation works when it comes to taxes. Simply put, depreciation lets investors lower their tax bills. The U.S. tax system lets investors treat things like the depreciation of property as income, even though it's not real cash. This is called 'phantom income' because it looks like income, but it isn't money you actually receive.

Let’s say your tax bill is $1,000, but you can claim $200 in depreciation. That means you only pay $800 in taxes. The $200 you save is called phantom income – it stays in your pocket instead of going to the government.

Now, let’s talk about 'amortization.' It’s a way of paying off debt through regular payments. If you have 'good debt,' like a property loan, and a tenant helps pay it off, the money they pay counts as income for you.

Even though the tenant is helping you reduce the loan, you still keep the money and get tax benefits from the investment. It’s all about using debt to your advantage – letting tenants help pay it off while you enjoy the financial rewards.

Finally, Robert explains how an asset’s value can grow over time, which is called 'appreciation.' Instead of relying on an appraiser to guess a higher price based on comparisons, he suggests looking at how much the income from the asset increases. For example, he talks about an extra $360,000 in income from a 300-unit apartment building.

Robert also says this method isn’t the exact way to calculate IRR, but it shows how investors can make much higher returns than what most people get from traditional investments like stocks or bonds. He points out that many investors don’t know about IRR, but understanding it can make you smarter and more informed than others.

 

Wondering what an exit strategy is?

This section explains a smart real estate strategy. Robert talks about how they increased the value of a 300-unit apartment building by making improvements and managing it better. Instead of selling the property and paying taxes on the profit, they refinanced it. This allowed them to borrow money based on the higher value of the property, which the bank accepted.

The refinanced money is tax-free, so they get back their original investment and even make extra money without losing ownership of the property. The extra income from the property covers the higher mortgage payments, meaning they still own the property while earning income with no money of their own tied up. This creates an 'infinite return' because they’re making money from the property without having any personal investment left in it.

For example, after five years, they refinanced and pulled out $4 million tax-free, paid back the investors, and kept the property, with the income still covering the new mortgage payments. This shows how leveraging assets can help build wealth.

This example shows how to use debt and leverage to build wealth in today’s world. Rather than avoiding debt like old-school methods, it’s about using smart debt to invest and grow richer.

financial iq

financial iq

Robert shares stories from their past and future projects and makes three key points about scaling up investments.

Want to know what they are?

The first point is that anyone can become rich, no matter where they start or how much financial knowledge they have. Many people let a lack of money or knowledge hold them back, and some give up after facing failure. The key is to take that first step and keep going, even when things get tough.

The second point is about starting small and taking gradual steps in investing. Robert shares personal stories of Kim, Ken McElroy, and himself—how they all began with small investments and grew to handle much bigger projects over time.

Robert points out that even with little money, learning through courses and seminars was key to their success. They encourage others to educate themselves before investing and believe that using your mind as leverage is crucial for financial growth.

He also talks about how their investment seminars help expand opportunities and change lives.

The third point is about dreaming big, both in life and in investments. Robert explains that big dreams keep relationships exciting, as they push each other to grow together. Instead of holding back, they aim to stretch beyond their limits through careful learning and investing. It’s about living a fulfilling life, not just focusing on money.

In conclusion, many people, even in wealthy countries like the U.S., are struggling financially despite working hard and getting an education. The 2007 market crash left many people confused about its impact, and many still don’t fully understand how past rule changes affect them.

The key message is that true financial success comes from understanding leverage and control, which you can achieve through financial intelligence. In today’s world, knowledge is the best tool for making money without needing much capital, and having a high financial IQ leads to better returns on investments.

Robert believes that with high financial intelligence, it’s possible to achieve an infinite return.

 

Stay tuned for the next valuable information on “improving your financial knowledge".

GHL INDIA is here to create a prosperous environment that serves the world at large

Let us join together to live an opulent life