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Enhanced Qualified Retirement Plan Strategy: Free From Financial Bondage With Damion Lupo

Episode 444: Enhanced Qualified Retirement Plan Strategy: Free From Financial Bondage With Damion Lupo

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REIS 444 | Enhanced Qualified Retirement Plan

 

In this fast-paced world, we all become so accustomed to wanting fast results. Because of that, we opt for doing things for the short-term instead of the long-term. Seeing this problem, Damion Lupo created a unique tool that can help free a million people from financial bondage, the Enhanced Qualified Retirement Plan strategy (eQRPs). In this episode, he joins Mitch Stephen to tell us all about it! He dives deep into IRAs and 401(k)s for real estate, how to avoid taxes, and how IRAs and eQRP differ from each other. Damion then takes us across his own success journey while sharing his books, Reinvented Life and Unicornomics, and the lessons he learned. Follow along to this great conversation to learn more about Damion’s unique tools.

I’m here with Damion Lupo. We’re going to be talking about eQRPs. Tell me again. I blacked out.

Enhanced Qualified Retirement Plan.

You think I should know this stuff, but I’ve never heard of that before. I always find it interesting. You can be in this business for a long time and still things pop up that you haven’t heard of, seen the angle, or you’re flat-footed about it. You don’t have anything come along. A lot of people deal in traditional companies that help you self-direct your IRAs and your 401(k)s. We’re going to talk about an alternative here. Damion, how are you doing?

I’m doing awesome. It’s good to see you. It’s been years. It’s been a while how time flies by.

We were talking for a few years and I’m like, “Has it been that long already? I’m getting old.”

It happens to everybody.

You’re sitting in Sedona, Arizona, right?

Here in the Red Rock. It’s the new California. About half of LA and San Francisco have decided to invade.

In terms of your success in investing, 5% is the system and 85% the psychology. Click To Tweet

We’ll say a prayer for all. First of all, give a little background on how you got here. We’ll talk about the financial underdog tribe, which is on your hat. We’ll talk about all that stuff, but give us a little background so we can figure out who you are, Damion.

It’s funny when I got started back many years ago investing in real estate, there was no podcasting. There was barely the internet. I remember going to live events out in Florida with a guy named Ron LeGrand who wrote the Fast Cash With Quick-Turn Real Estate. I ended up going fishing with this guy. I met Robert Kiyosaki out there. I said, “You guys are amazing.” They were much older than me. I said, “Whatever they’re doing must work.” I copied them and went out and bought 150 houses, developed apartments, and did all this stuff.

I made millions of dollars and then in 2008, I lost $20 million. I went through this whole cycle and then I wrote a book called Reinvented Life as part of the journey to help people not do that. It’s painful when you lose $20 million. You feel like a big dodo bird. I went through that process. After that, reinventing was more focused on doing something externally and helping people. That’s where the eQRP came into existence because I realized most people don’t have a very good long-term plan. They don’t have the long-term thinking and they have the wrong tools. This became a way to help solve the problem to free a million people from financial bondage.

No doubt, after you go up to the top and then fall down to the bottom again, you’re asking 1,000 questions. Where’s the strategy where that’s less likely to happen? It can happen to anybody anytime because whoever thought of COVID. It’s living proof. If you’re going to get smarter, you’re going to get smarter. There are plans that are much more durable than other plans for reasons that you figured out and saw it firsthand or might have come to the conclusion firsthand because of the downward spiral. By the way, nothing new, the most successful people in the world have been up and down. It seems like it’s more of a requirement than a fluke. It’s almost required that you go up and then down at least one time. It makes you appreciate what you’re doing and what to do.

You hit it on the head. When I was back, I remember that very first conference that I was out in Florida in Orlando in January of 2000. There were these hard money lenders. I said, “I’m interested in borrowing some money.” They said, “How many deals have you done?” I had purchased the previous week my first house in 1999. I broke into real estate in the ‘90s by one day. I had this one house. They go, “Come back to us when you’ve done about ten.” I’m like, “How am I supposed to do it if I don’t have the money?” They go, “And.” They said this and other guys said this, “I don’t know who you are until you’ve gone bankrupt at least twice.”

I thought that’s such an a-hole thing to say. I realized why because investing is 85% psychology. Van Tharp said this, so this wasn’t me. In terms of your success, 5% is the system. If your personal development in psychology isn’t square. Part of that is going through cycles and realizing that you’re not your money, that your self-worth and net worth aren’t the same thing. It’s incredibly valuable. People that are scared of losing their money, they’re playing not to lose. You know what happens if you watch a game or games you’re playing not to lose, they always lose. It’s incredibly valuable and it doesn’t kill you. That’s what people think is going to happen, which is why they don’t go out there into the unknown. They tend to play it safe and then they end up always poor.

You’ve got to be on offense. It’s the best defense. The longer you can stay on offense, the less you’re on defense. It’s hard to score when you never get the ball. It’s a topic near and dear to my heart. It’s everyone’s time in the woods because it’s important. It’s one of the most important things in the world. I love your title. Is it reinventing life or reinvented life?

It’s Reinvented Life.

REIS 444 | Enhanced Qualified Retirement Plan

Reinvented Life

It’s a good book for a lot of people to read. Everything we talk about here will be in 1000Houses.com/eqrp, Enhanced Qualified Retirement Plan. What was the cause of the demise in the recession?

If Ryan Holiday was here, he would hand you one of his books. It’s called the Ego is the Enemy. The demise was truly the ego. It’s interesting because when I looked back, I looked at the economy and I said, “This was Bush’s fault. It was Obama’s fault. It was the Fed’s fault. It was everybody’s fault, except for me.” Who made all the choices? It was me. After I got over that and decided to take ownership, this is where the shift came. The shift of wealth comes from self-responsibility.

I was being the world’s biggest victim. It was everybody, my bad partner. This is the common one in real estate, the bad person. It wasn’t me. I’m like, “What are you, shaggy? Yes, it was you.” It was me. The demise was me thinking that I was invincible 10 feet tall and bulletproof because I had success. Success is the worst teacher ever because you think it’s all you. I caught good timing. I took a lot of action but there was way more involved. When I thought it was all me that I could do no wrong, I wasn’t doing anything like risk positioning. I wasn’t making sure that I wasn’t going all in. I was 500% over-levered, meaning my net worth was about $5 million right then. I had exposure of about $25 million. You and I can’t control the Federal Reserve. We can’t control the weather. There are things we can’t control, but we have to be aware that they could impact us.

We can’t control the fact that these guys were dealing in a lot of dirty paper and all that stuff. I was wondering and waiting to hear if you were going to say over leveraging because it’s one of the things. I have one of the best plans in the planet, the seller finance strategy. It’s proven to do well in the good times and boom in the bad times. I asked the question to the audience, “When can you fail?” The audience always says resoundingly, “Never.” I go, “No, it’s not true.”

You can mess up anything. Number one, if you overleverage, you could get messed up. If people want to loan you money, even at good rates, it’s tenuous. I don’t borrow over 65% of whatever it is I can sell it for at the time that I’m buying it. If I want to pay over 65%, I’ve got to come out of cash out of my pocket above that. The other way to go under is if you don’t conform to some state and federal laws because I won’t mess you up.

If you don’t have integrity, lawsuits, whether you win them, you’re right or you’re wrong and you win, it still costs a fortune. It still buries you, bundles you up, and gets you in a whole bad thing. It’s a bunch of negativities instead of positive things. If you lose, all of this is going to hurt. Even winning a lawsuit, it’s not worth the drain damage, so stay out of that. How do you stay out of that? Have integrity. It doesn’t mean that you’re still not going to get in one because there are a lot of looms out there, but you have a lot less chance of getting in a lawsuit if you treat people how you wish you would be treated. If you know there’s a broken water main under the house, be honest. You can sell the house without telling someone, but you’re headed for a bad place in the road. You do that enough times, you’re going to get smashed.

One of the things that when I started, I didn’t have. I charged my first house in December of ‘99 on my Visa card. It was an owner finance deal. I took the down payment, made some back payments, and then took over the mortgage. That’s how I did the first 30 plus houses was your description. That thing is coming back because even though there’s a lot of money flying around, many people can’t get financing. That strategy is outstanding until your ego takes over. Some of the things I did, I took over houses where their mortgage was more than their house payment or more than the value of the house and that their mortgage payment was too high, so it was negative cashflow.

I thought, “I’ll grow myself out of this.” That’s like selling things at a loss and saying, “I’m going to do the Walmart thing.” I’ll do a loss-leader forever. It drains you. The other point you made doing the right thing is more likely to keep you out of lawsuits because inevitably, this is America. It used to be the land of the free. Now, it’s the land of the lawsuit. It’s coming because people think that if people have wealth, they would be a good place to take it. Unfortunately, you have to be cognizant of that.

You are not your money. Your self-worth and net worth aren't the same things. Click To Tweet

If you at least do the right thing, show people you care, and do the best you can, those are my three rules, by the way, that’s my entire playbook for my companies. You’re unlikely to end up in a lawsuit if you add in transparency. People are playing so fast and lose these days. They’re not upfront with whether it’s tenants or sellers. They tend to try to do things and make money quickly. If you’re fair to people, you’re going to do well long-term.

I’ve been over 2,000 transactions, neither here nor there, somewhere down the streets, the guy that did 2,000, that’s not the point. In 2,000 transactions, I’ve been sued three times. I won all three of them. All three of them cost me about $45,000 to win. Brain damage and anxiety. They’re all going for $1 million. They’re all going to crush you. Those people would never make it 2 feet inside my door. The situation will never happen again. I was trying to help destitute people by getting them Social Security, get them in a mobile home and a $300 payment. They don’t mail these checks to bridges.

You’ve got to get them out from under the bridge. You’ve got to get them an address. You can sign them up and get this stuff. All they had to do is pay me $300 out of the $2,400 that they’re now receiving that they never had. They didn’t pay. They were sitting on my property. I couldn’t pay with it forever. When I went to get them out, they signed up with legal aid, and you would’ve thought I was Hitler. Two of the three times, I had a jury of my peers. That jury, none of them owned a property. None of them owned a house. I say, “How is this a jury of my peers?” They don’t own their own business. They don’t own their own house. The bottom line of that is if you want to do charity, don’t do it with your houses. Go to the church, give some money, do whatever you want to but you don’t do charity giving people access to your property. That’s not how to do charity because they’ll get you over a barrel.

This is one of the things that’s happening in America right now that people think that this idea of giving back as if you took something, the idea that your business should be a nonprofit. If you’re a nonprofit, then somehow, you’re a Nazi fascist terrible person that came from hell. In reality, your point is spot on. You go out there, and businesses are the lifeblood of the economy. Small businesses are the lifeblood of society. Going out there and making a profit is how you build, grow your business, hire people, and create opportunities.

We’re tearing that apart because of some euphoria that people think is really where the government takes care of everything. There’s nothing wrong with building a business and getting exceptionally rich. One of the things that I would challenge everybody should do as you’re making wealth in real estate or whatever you’re doing is don’t become one of the poster child, children, or cheap, idiot, wealthy people. We need more wealthy people that are generous, kind, giving and compassionate. That would go long ways for shifting people in how they’re thinking. They think, “Everybody’s a Jeff Bezos, and they’re goons even though they click that buy button every day.”

We’re probably some of the most benevolent people in the world. History has proven that America has given more than anybody ever in the history of the world. Let’s talk about self-directed IRAs, eQRPs, Enhanced Qualified Retirement Plans. Where do we start on this topic?

Here’s the deal. The government has this inspiration. They go out and they say, “We want people to do a certain thing.” They create benefits in the Tax Code. All the Tax Code is a series of incentives. That’s why real estate is a great place to be looking because there are all these incentives to do it. One of the things that they’ve done is they built these retirement account things back in the early ’70s. They said, “We want you to start doing things for yourself, for your future because we know we can’t take care of everybody.”

The IRAs and the 401(k)s all came to life in the ’70s. In the beginning, it was to take the pressure off pensions because big companies were like, “We’re going to go bankrupt if we have to take care of people until their death.” What people started doing is they contributed to a 401(k), or they contributed to an IRA. People didn’t think a whole lot about why they were doing it other than they said, “It’s a tax deduction.” Where we’re at now is that a lot of people are either stuck in the stock market in 401(k)s or they’re using self-directed IRAs.

REIS 444 | Enhanced Qualified Retirement Plan

Enhanced Qualified Retirement Plan: The skills and tools to create wealth are sometimes the exact opposite skills and tools to keep and grow wealth as an investor versus being a business owner.

 

A lot of people are using those IRAs for real estate. They’re sitting on a ticking time bomb. Years ago, I developed something called the eQRP, which gives people the ability to use a different part of the code, the IRAs, and be able to invest in real estate, whether you’re by yourself or you have a business. Anybody could do this. You could have twenty employees or yourself, and you can invest in real estate. The reason this is important is because if you’re using an IRA, you’re likely going to get taxed up the wazoo because of something called UBIT tax. People are sitting on their IRAs, thinking that they’re doing great, the Roth IRAs, and regular IRAs. All of a sudden, they get a tax bill for $50,000, $100,000 and they had no idea it was coming. That’s avoidable. It’s a choice.

UBIT happens when your IRA borrows non-recourse money to purchase an acquisition. Am I right about that?

It’s when there’s any debt involved in a deal. The IRA doesn’t have to borrow money. This is where people are getting in trouble. They invest IRA money in maybe a syndication. Somebody else’s borrowed, but their IRA money is getting the benefit of the debt. Therefore, all that leveraged profit they make is subject to UBIT, which is 37% on most of that profit. People are getting caught. It’s not a direct borrowing. It’s any debt that benefits their IRA. That’s the problem.

I have a lot of properties on IRA, but my IRA bought those properties cash so they are not subject to UBIT, right?

Yes.

I have been tempted sometimes, but because of the bookkeeping and because of the UBIT, I haven’t done it. The IRA can borrow money to buy a property. He’s talking about something different. He’s talking about investing in REITs or whatever, I’m not exactly sure, but with companies who are leveraging. I’m talking about my IRA borrowing directly from a private lender. The only way though that the IRA can do that is if it’s a non-recourse collateral only loan because IRA cannot guarantee anything.

I’ve never done it because of the UBIT. The bookkeeping hazard that it causes, the flag and all that stuff, if my IRA can’t pay cash for it, then maybe my IRA is buying half of with someone else who’s got cash or something. I do want to clear up the other thing. There are Roth IRAs, which you invest after-tax money that are not taxed when you take the money out. Am I correct on that, or do you have some comments on that?

The Roth is great. What my contention is that the IRA is the wrong vehicle for most people. They don’t realize it because you can have a Roth 401(k). You can have a Roth eQRP. The Roth IRA or the regular IRA are still subject to UBIT. This is a dumb thing for people to use because right now, there’s going to be an unbelievable opportunity in taking over properties that have debt on them. If you could use a retirement vehicle for that, especially like a Roth eQRP, there’s no UBIT. If you could have $5,000 that you gave somebody and you took over $200,000 mortgage. If you used an IRA for that, even a Roth IRA, you’re paying 37% tax on that profit. Whereas with Roth eQRP, it’s zero, you get to keep all the money.

The shift of wealth comes from self-responsibility. Click To Tweet

It’s a huge opportunity if you use the right vehicle. A lot of people are doing what I was mentioning earlier was syndications, where somebody puts a deal together. It gets ten people together. When you do that, they typically have debt on these big projects. Using debt appropriately can be valuable, but I’m also with you. If you use it, there are two sides to that blade. It can cut you too. In this case, the debt cuts you because of the UBIT tax. It’s optional. That’s the point that I want everybody to know that you don’t have to pay it, but you will end up getting hammered with it with an IRA unless it’s all cash.

I don’t want to petrify anybody because there are some differences here. He is talking about maybe you take the cash from an IRA. You loan it to syndication, but the syndication is leveraging debt. It’s still going to come back to haunt you probably and most likely, or it should if you follow the letter to the tee. None of us are legal finance advisors or any of that. These are our opinions and whatever we’ve been doing, for better or for worse, that’s what we choose to do. This is how we think we understand them, but always, you need to seek your own professional counsel, attorneys, and financial advisors. We strongly suggest that you do. Tell us about the difference in eQRP and IRAs. You’ve got my attention. If there’s a better vehicle to use on anything, I want to know about it.

One of the things people ask when I’m at a live event or in general, they’ll say, “Why haven’t I heard of this? I’ve been doing real estate for 20, 30, 40 years. I’ve used an IRA?” I go, “The industry is all around IRAs. It’s a $10 trillion industry. That’s where you see the advertising. That’s what people have.” The other space, the qualified plans under the 401 section, where the eQRP live, is dominated by 401(k) companies like Fidelity.

What is not talked about is it’s almost like guerrilla warfare. It’s the eQRP. I invented it so that people would have an option to control their money and be able to do it. Whether they are by themselves, they have employees and be able to do things like real estate, not just stuck in mutual funds. The ability for anybody that has an IRA, you can move those things into an eQRP. If you have 5 or 10 employees, you can do it. The big differences are you have total control because you’re the trustee. You can put ten times more money into the thing, $57,000 to $63,000. There are tons of options.

My ears perked up. A lot of people can’t do a solo 401(k) because they have too many employee-paid hours. Right now, that’s got my attention because there are a lot of people. The solo 401(k), you’re much better off with them than self-directed IRAs, whether they be Roth or not because you can self-direct different veins in a 401(k) as Rothinized. The reason why 401(k)s are better is that the penalties are so much less. If you do a prohibitive transaction or you mess up, the solo 401(k) is much more forgiving than the IRAs. The IRAs are not very forgiving at all.

The penalties can be the entire amount of the account. They’re brutal.

What keeps a lot of people out of it is this problem of, “I have more than 1,000 hours a year in employees.”

Mitch, in January 2019, the rules changed. If you have part-time employees, 500 hours or less, you now can no longer have a solo 401(k). If you have people working for you ten hours a week, those people have to be included in a plan. A lot of people are taking their solos, and they’re moving them into eQRPs because Congress changed the rules and said, “You have to cover these part-time people.” The eQRP covers any part-time, full-time that you want to include. It is the solution. The other ones are like the #MeToo’s, but they’re not a good #MeToo.

REIS 444 | Enhanced Qualified Retirement Plan

Unicornomics: The Foundational First 15%

Tell us more about the eQRP.

One of the fun things is that you’re not stuck, hoping that everything is going to work. I would say that smoking opium is not a good strategy but that’s what people do in 401(k)s. They’re taking a big token. They say, “Maybe when I’m 60, I’ll have money.” My contention is, why not take control of it? A lot of people have said, “I’m too busy.” If you are taking responsibility, then you can take control. People are investing in real estate, crypto, Bitcoin, and physical gold and silver. You can’t own physical gold and silver and take possession of it in an IRA. In an eQRP, you can take physical possession of gold and silver. You can have Bitcoin. These are things that are valuable for people right now.

This is my opinion because you have control. You’re not subject to the whims and the will of Wall Street. It’s big differences, ten times as much money. You can convert money to Roth. Even if you make $500,000 or $1 million a year, you can have all that money go into Roth. Here’s the thing, Mitch. In my opinion, Roth eQRPs are the best tax vehicle out there because it’s permanently zero tax forever on that money. When you turn 60, you can pull it out tax-free. There’s nothing else that exists like that. Even real estate with depreciation and things, those rules are going to change. We don’t know what it will look like. Everybody should have different tools because when Congress changes to laws, you don’t want to be stuck in one thing going, “Dang it, all my eggs are in one basket.”

A question, there’s no income limit to Rothinize in an eQRP. Is there an amount that you’re limited to put in per year?

There is a limit. It’s ten times more than an IRA. IRA is $6,000 and an eQRP is $58,000. If you’re over age 50, it’s another $6,500. That’s per person. If you have a spouse, you can put another $50,000, $60,000. Here’s a cool strategy. You can talk to your accountant about this. You can pay your kids if they’re under eighteen, up to $12,000 a year, no tax whatsoever, no payroll taxes, no any taxes. They can take that whole $12,000, put it into their own Roth eQRP. You have a tax deduction for that $12,000 at your highest tax bracket. There are all these different options here. You can put hundreds of thousands of dollars. Unlike a defined benefit plan, which is like a pension, you get to choose how much you put in, when you put in, and then you get to do what you want with it. It’s the coolest thing out there.

I’m scribbling as fast as I can. $58,000 per person. If you’re married, it’s two times $58,000. At what age can you add another $6,500 to that $58,000?

If you’re 50 or over, it’s another $6,500. It’s like one of those commercials, “Wait, there’s more.” They changed the laws effective January 1st, 2021. You can set up a retroactive plan for the tax year 2020. What I’m saying is if you look at 2020 and go, “Dang it, I made too much money.” We can set up an eQRP for you for 2020 and contribute up until the time you file your taxes in 2021. It could be like October 2021 that you contribute to get a tax break for 2020. The laws are amazing right now.

A lot of the stuff you’re speaking right to me. That’s one of the reasons I love having a podcast and being an educator. I get to talk to a lot of smart people. We may never talk if it wasn’t for this podcast or for being in this space. A lot of people go, “If you’re so successful, why do you have to do all this?” I say, “I don’t have to do anything. This is how I keep smart, stay engaged, and choose to keep my game.”

Success is the worst teacher ever because you think it's all you. Click To Tweet

The wealthiest people are lifelong learners. There is no exception to that rule.

While we’re on that topic quickly, the rich get richer and the poor get poorer. It’s not about because they have money, they can stay on top. It’s because they stay educated. I don’t even like to call them loopholes. They are laws and those laws apply to everybody. The sooner you start understanding them, the sooner you’ll understand how to move from the bottom of the bucket to the upper echelon. The people that move up these echelons are experts in study, listen to stuff like this, and take advantage. Number one, you have to figure out how to make some money. Immediately after you figured that out, you have to take a whole other course on how do I keep this money. There’s always another level. You make a lot of money. Get a $1 million paycheck or commission and then see what you’re left over with. Go, “If I had done this a little different, I wouldn’t have to give up $400,000 of that $1 million.”

One of the things that you’re talking about is near and dear to my heart. One of the books that I wrote came out in 2020 called Unicornomics. It was the foundational 15% for any Unicorn, which is a $1 billion company. I’ve started 50 plus companies. I have little experience in doing companies, setting them up, and then screwing up a lot of companies. Success is not the best teacher. All those failures were. What I’ve learned over the years of doing all these businesses is that the skills and tools to create wealth are sometimes the exact opposite skills and tools to keep wealth and grow wealth as an investor, versus being a business owner. It’s risk tolerance. You don’t go as an investor and risk everything over and over because the house takes it.

In business, you can do that and it can be super smart. We have to start thinking. When you’re talking about handing those people $1 million is not going to solve their problem. It’s going to make it worse. Look at the lottery winners because they haven’t built themselves, their contexts, their psychology, their understanding of what to do has not been built to the place where they’re able to accept that. Somebody that says, “I want to get rich quick,” and they get broke quick because that’s exactly what’s going to happen.

I‘ve said many times that I’m thankful for the years it took me to get to where I’m at because I painfully grew up into this level. I know, appreciate, and can understand what it takes to keep it. There’s a lot to be said for that. If you had dumped $1 million on me when I was 28, or even when I was beginning my career in 34, I was a late bloomer. If you had dumped $1 million on me, I don’t know that I would still have it.

I don’t know anybody that does that. The problem is we tend to look at the people like the Mark Zuckerbergs of the world that make a bunch of money or Michael Dell or whoever. We think, “That’s the process.” That is not the process. Those guys are aliens. That is not how it’s done. You have to go through a process of becoming that wealthy person. The money is a reflection of who you already are. If the money comes in and you’re not already there, you’re going to repel it. That’s why people get rid of the money or they do stupid things because they’re not ready. You’re exactly right that everybody is so impatient these days. They want it yesterday because they see somebody’s highlight reel on Facebook and they think, “They’ve got it. I must have it tomorrow.” That’s a good formula for demise.

Here’s an interesting fact. If you make $55,000 a year, you’re in the 10% top of the world. It’s not what we see on TV. Those people are in the top 100, dividing this stuff by fractions, by 100s of a point because the wealth drops off so fast, but all we see is the pictures of the mega-rich. They may not have even planned how they got there. You think Mark Zuckerberg said, “I want to be one of the richest guys in the world,” then it happened like that. It didn’t. It laid in his lap. He was smart enough to hold on or to make some moves. I’m sure there were a million moves he could have made where we’ve never even known his name. He did some things right, but still, no one plans for that wealth. I don’t think.

Look at what Elon said when he became the richest person in the world. Somebody told him and he said, “Interesting. Now back to work.” The guy is thinking about changing the world. What people are doing is they’re looking to fall in love with the outcome versus the actual process. When you fall in love with the process, anybody who’s wealthy has extreme wealth and fell in love with the process. I don’t care if you’re talking about Justin Bieber or Oprah or anybody. They were in the process. The outcome was a reflection.

REIS 444 | Enhanced Qualified Retirement Plan

Enhanced Qualified Retirement Plan: Financial freedom is not $10 million in the bank. It is not $100,000 a month. Wealth and freedom are when you have the confidence to where the money can go.

 

It’s weird. They are more like oak trees than most people are. What I mean by that is in the world, in nature, human beings are the only species that stops halfway towards our potential. In nature, a tree doesn’t stop halfway and say, “I’m done,” but people do. What you see with these people that are changing the world, all they’re doing is growing to their potential. They keep growing and that’s what people stop doing. If you start doing that, everything changes, but people are like, “I don’t want to put in the work.” It’s not going to happen for you.

We’re going to go right back to eQRPs. I’ve had people a lot, “When are you going to stop? When is enough?” I say, “You don’t understand what it’s about. It’s about the purpose, helping other people, solidifying a legacy for my family, staying busy, invigorated, and being engaged. What do you want me to do? Go fishing every day of the week. How fun is that? I look forward to fishing because I don’t get to do it.”

It’s interesting because back in the early 2010s, after this meltdown and even before that, I had a conversation with my dad. At one point, this was when I had about 100 houses. He looked at me and he goes, “When are you going to retire?” I go, “Dad, I’m 24. What am I going to do?” He had a different mindset. He was a military guy. He was all about twenty years, a pension, and everything. I said, “What would I do?” He’s like, “You can relax.” I go, “The universe doesn’t like retirement because it looks at people and says, ‘If you’re not producing something, you’re taking up time, space and resources.'” That’s why most men die within three years in the United States of retiring.

Fast forward about a decade, my dad is getting ready. He’s on his way out. He’s got Stage 4 cancer. We’re having the last conversation I ever had with him. He wasn’t asking me why I was still working. I’m up there. The words that came out of his mouth were, “There were so many things that I wanted to do.” That’s why I don’t stop because there are many things that I want to do and I’m supposed to do. It’s my potential. The eQRP was dreamt up and built. I keep growing this thing because there are people out there in financial shackles.

There’s a mission to free a million people from those shackles and break bondage. It’s way beyond me. That’s why it’s there because I hated that conversation more than any other conversation in my whole life. When somebody told me that they ran out of time and they didn’t get to experience why they were here. It sucks to hear that. I’m doing everything I can to help other people never have to have that conversation or hear it from somebody they love.

The very wealthy people with nothing to do find very aggressive demons most of the time. Don’t be idle because you’re a target to yourself and what you’re capable of. That can go for almost everybody. It takes a unique individual to have all the money they need and have nothing but idle time. That’s a killer right there. That can be harmful.

It’s interesting that they get to a place where they’re 50, 60 years old, they have these retirement accounts. Because they’ve never engaged in it, they’re watching it in pair and fear. People ask me, they say, “Are you afraid?” I said, “I don’t have the time, energy, or space for fear because I’m engaged.” Your brain can’t do two things at once. We think, “We can multitask.” No, you can switch back and forth. If you’re focused on the thing, you’re taking action, you’re controlling your retirement money, you’re controlling your investments, and you’re engaging in relationships, you don’t have the ability to be in a place of the demons coming in. As you said, the idle is what kills us. It’s what makes us like crazy people. If you’re choosing to engage everything in your life, it changes your life.

Action conquers fear almost 100% of the time. You get busy doing, conquering, or slaying that you don’t have time to be afraid. You’ve got my interest up. What do I do to say, “I’ve got these IRAs. I’m ready to convert them. What do I do? Where do I go? What’s the first move?”

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The first move is education. That’s what we do is educate people to make sure that you can do it. You should do it because some people can do something. Robert Kiyosaki is a friend of mine. He said, “Stop saying you can’t afford it. Say, how can I afford it?” I did that, but there are some things I shouldn’t have afforded like a multiple Ferrari collection. Maybe not should. That is a bad idea. The first step is asking the question, can I do this? Should I do it? Am I self-responsible enough? If you already have IRAs and self-directed IRAs, it’s a good idea to be looking at it. The process is we build it, you get a checkbook with your stuff, and you get to start playing the real game. If you ever wanted to take a check for $50,000 out of your eQRP, you can do that with an IRA. Why would you ever go to a car dealership again and ask them to please give you a loan? Write yourself a check and be your own bank. This is not life insurance. This is how the rich play. They play with a different set of rules that you can play by if you even know what the rules are.

I might understand how similar is the eQRP to a 401(k) with checkbook control? Are they close? Are they the same and you’ve named them differently?

Solo 401(k) is narrowly set up to be something where one person had a 401(k). What a lot of these different providers are trying to say, “Everything is the same and they commoditize because that’s what people do and they don’t have an original idea.” The eQRP is different. One, you can have employees. There’s a huge difference, especially even part-time. The other one is liability protection. Everything is built under the 401 section of the code. The differences are how you’re building them. You can look at a Ferrari and a Ford and say, “They’re the same thing. They both have four tires and a steering wheel,” but that’s where it ends. They perform differently. They act differently. It’s what’s under the hood, what you can do with them, and how they go.

What you’re saying is you could borrow up to $50,000 and pay yourself back instead of paying the car dealership back, pick a rate. Is it the same rules in that? That’s blue sleep. The 401(k)s and the IRAs, you can borrow the money, but you have to pay a reasonable rate, which is deemed prime plus 2, but not more than 12% because someone might want to borrow the money and pay 1%, that’s not reasonable. They might say, “I want to get a lot of money back into mine and exceed the limit, so I’m going to pay myself 50% interest.” That’s not going to work either. What do you think when you’re borrowing a reasonable rate?

It’s what’s a reasonable rate. The default tends to be prime plus 1 or prime plus 2. As the trustee, you decide. You’re the trustee and the administrator. Where are we at right now in interest rates? We’re in a zero-interest rate environment. Does that mean you can pay zero? No, that’d be unreasonable, but could you pay 2% or 3% and justify it because there’s a lot of market data? Absolutely. You have to say, “Look at all the different things where I can get a mortgage for 2.5%.” Right now, if you wanted to do low, you could. If you go out there and look at hard money lending, what’s it at, 10%, 12%, 14%, 15%? You can easily justify almost anything. If you try to pay yourself 35%, good luck justifying in an audit.

I’ll give an example and it might help some people out there. They tried to value my IRAs at a certain thing. I went out and got a bunch of note buyers say, “If I sold these notes right now, here are nine people, and this is what they want to pay.” It’s nowhere close to what you’re telling me it’s worth. We’re going to have to readjust the numbers here. I take all those papers and throw them away because life is good.

One of the things that you’re talking about that people need to pay attention to because there’s been a ton that you’re saying and we’re discussing, this is a game. If you know the rules, it’s a lot of fun. If you don’t understand the rules or you’re on this board and you can’t even read it because it’s a different language. It’s very frustrating because you don’t know what you’re going forward or backwards. That’s why you and I spend so much time learning, studying, going into places where we’re not familiar, and challenging assumptions. A lot of people have assumptions that are keeping them in trouble. It’s not what you don’t know. It’s what you think. It isn’t so. I don’t know who said that, but it’s a good quote.

There is no neutral. You can say, “I’m going into neutral.” What are you going to do? Are you going to go to sleep? You’re still breathing and burning. Your supplies and everything are eroding around you. You’re going to have to get up and take care of this stuff or you’ll wake up in a rubble. You’re either moving forward or you’re moving back. When you talk about financial freedom and independence, tell me your experience or some case studies. Tell me their boss are good buyers. Who’s living the life? What are some examples?

REIS 444 | Enhanced Qualified Retirement Plan

The QRP Book: How to get Checkbook Control of your 401k money now

There are several different ways to look at that. I’ve had a number of people that have reached out. A ton of favorite clients. There’s no one client because these are all people and they’re families. This one guy sends me a message. I was reaching out to him on his birthday. He said, “I wanted to say thank you because of what I found out with you and eQRP. Now, my wife is home with our child, and we can spend time as a family. She’s no longer working because I tapped into that and it gave me the resources.” To me, that’s a piece of freedom. When somebody says, “I can control my money,” and then they start building a muscle around their activity, that’s the financial freedom.

Financial freedom is not $10 million in the bank. It is not $100,000 a month. The wealth and freedom is when you have confidence. It’s like Henry Ford told people, “You took all my money away. Five years later, I’d have it back because you’ve got the confidence of the experience.” That’s what the eQRP provides more than anything. It’s the playground to build the muscle. I see people going through that process. It’s like having Schwarzenegger training everybody with this tool because they’re building that muscle. The experience I’m watching is not that people are making money. It’s that they’re taking control of it. They’re almost scared because they’re thinking, “Is this illegal?” They’ve been so brainwashed by the system telling them that they’re too stupid, the system should keep their money, and the system is feeding on them. That’s exciting.

What happens if our legislators is in there to protect their own money and pass all these laws so that they know exactly how it works and what they’re going to do? They put it out there but they don’t send us the memo. They don’t send you and say, “Look what we did. Everyone should do this.” They’re doing it for themselves. It gets buried in a ton of legislation like miles high of paper. To become a student of this, you’ve got to tap podcaster, experts, or consultants that are in the business that know what they’re doing. I have people ask me all the time, “Do I use a corporation or LLC?” I said, “In real estate, it’s probably best LLC, but it doesn’t matter.” Learn the rules of the game and win. It doesn’t matter which one you choose if you win.

Here’s something that everybody should think about. Winning is personal. It is not comparing yourself to anybody else. It’s comparing yourself to what your potential is. That’s the winning. The winning isn’t a moment in time. It’s the process. It’s like martial arts. I’ve been doing aikido for many years. You don’t end up one day being a master. You go through a process of mastery that lasts forever. That’s part of this whole thing when you say, “I’m in.” You keep going. That’s where all the joy is anyway. Getting a big pile of money, I’ve had it happen. I’m like, “I have a big pile of money. Now what?” People should change their #Winning to #LivingThroughTheProcess. It would change their life.

I wrote this a long time ago, and part of what we’ve been alluding to was a quote by Michener called The master in the art of living. I was asking her to read this manuscript of my book, and she said, “I finally understand you.” I said, “Why is that?” She says, “I read this quote and I get it now.” This is from my book, My Life & 1,000 Houses: Failing Forward to Financial Freedom. This is a quote from James Michener, “The master in the art of living makes no distinction between his work and his play, his labor and his leisure, his mind and his body, his information and his recreation, his love and his religion. He hardly knows which is which. He simply pursues his vision of excellence at whatever it is he does. Leaving others to decide whether he is working or playing. To him, he is always doing both.”

My wife could never tell. I say, “I’m working.” She says, “You’re fishing.” I said, “I’m fishing with two millionaires that want to loan me money. I’m working.” “You’re at the bar.” “I’m at the bar with some people that bought 1,000 houses. They want to talk to me. I understand I’m at the bar, but you don’t understand I’m working.” It doesn’t feel like work. I’ve done a lot harder work. Did you ever dig a ditch with a shovel at 105 degrees? I’ve done that work. That’s not just the work. There are other kinds of work.

I grew up in Alaska. I was working in the Arctic Circle, cutting up dish or food, washing dishes, and dodging polar bears. Legitimately, most people will never have the experience of maybe being eaten on the job. I could have been eaten because when you take the trash out, the polar bears look for something that’s moving and that would be me. Leaving there and reflecting back, that was a job. That was never play. I was up there working my butt off. I was exchanging my time for money. It’s the opposite of what you described. This is a choice. Anybody that’s reading this, there is a choice you can make where living, working, and it’s a blur because you’re so in your life. You’re living. That’s one of the profound goals that we can all seek and a vision that we can have because it is a choice.

You are very fun to talk to and we could talk forever. I want to get some pertinent things out here. You have a digital book. If people get the digital book and give you the right information, you’ll also send out a physical book. Tell us a little bit about that book.

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The book is called the QRP Book and it goes over the retirement stuff. It’s a book meant for people to consume it and read it. It has all the IRS code. It was written years ago with a tax attorney and I. You mentioned your advisors and things. You have an advisor in the book with a human being called me that helps you see it and not into Tax Code confusion. The book is going to give you your reference manual. The summary book you’re going to get the report is going to give you enough to know whether you should pursue this. That’s my gift to you to help you start the journey of breaking those shackles. It’s the education. Keep in mind. You’ve said this I’m sure, information and knowledge are not power. It’s only when it’s applied. If you go, “This is interesting information,” and then you listen to another podcast without doing anything, you wasted the last hour.

I want you guys to take some action right now. Go to 1000Houses.com/eqrp, which stands for Enhanced Qualified Retirement Plan. Check out and get your free digital book, and then expect a physical book in the mail if you’ll give them the information they need to get it to you. It’s very generous because sending out books is not cheap. Most people at least want the shipping and handling or something. I know I do. Here you are. You’re like, “I don’t care. I’m going to get it out to you.” Hats off to you. Thanks for offering that to our audience. Do you do courses, education, or you have a bootcamp? Tell us something about that side.

I’ve got Financial Underdogs where I do my daily teaching and my podcast is mostly my thoughts and experiences, and then how people can apply those on a daily basis. The course that I have is called Black Belt Wealth. It’s taking all the martial arts principles. You’ll be able to learn about this at BlackBeltWealth.com. It’s effectively learning about taking martial arts principles and fusing those into investing and money. It’s how I approach. Whenever I’ve done mentoring with people, it’s the mentoring process in a core of sixteen modules that takes people through that.

If you don’t get your mind right, if you don’t go through the practice of building the muscle, I don’t care how many houses you can learn how to buy, you’re not going to be ready for it. This goes with the tools. You got to have the framework and it’s not woo-woo. It’s a practical application because I’ve done it. I’ve gone out there. I had my little pile, my 150 houses. I’ve built up tons of different companies. This is that journey that people can take. It is not a listen to it idly. It is a very interactive type of course. You’re going to be a different person on the other side of it.

If you want to know more about that podcast, if you want to know more about that course, I’m sure there would be a contact information to speak to Damion directly. If you’ve got some questions or want to get a consult or whatever, it will all be over there at 1000Houses.com/eqrp. Anything you want to say to those folks out there before we wrap up, Damion?

The one thing that I always like to remind people is that unless you are working in the Arctic Circle and dodging polar bears, or you happen to be on Safari in Africa and there are lions, nothing out there is going to eat you. There’s a lot of fear-mongering across the board right now. The truth is the only thing you should be afraid of is like we talked about, your idle mind and not doing anything. The truth is mistakes are what grow you. They’re not what eats you. The faster you make mistakes, the faster you’re going to grow into your potential. I hope that for everybody that’s reading this.

I would like to back that up because I didn’t know exactly what I was doing when I wrote this book, Failing Forward to Financial Freedom, but I was trying to figure out how I was going to fail without going under. I knew failure was part of the plan and it came out in the form of a couple of chapters called the Moat Theory. It was about getting your modest financial independence so that you didn’t have to have a job. Once you didn’t have a job, you had 2,600 hours to devote to yourself and education like this so that you can start being who you’re supposed to be in this planet, instead of trying to help someone else be what they’re supposed to be. I know there are all these phases and everything, but it would be nice if you were in more control of your own destiny.

We’re talking about taking control of your financial future so that it may lead to control over other things of your life. Where do you have to show up? What do you have to wear? How long can you go on vacation? How much can you spend on a vacation? When can you watch your kid’s soccer game? Are you allowed to watch three soccer games three times a week or one because someone is telling you what to do, dictating to you more or less? That’s what it’s all about, financial independence. I’d like to thank you so much for coming on, Damion. You’re always fun.

It’s always fun hanging out especially with fun people. That’s part of the reason to have financial freedom so that you can engage in a relationship. Money gives you tools and gives you time so you can focus on your health and relationships because everything is a pale comparison to those few things.

Since the last time we talked, I quit smoking, quit drinking, lost 55 pounds, and my bench press is going up. A lot of changes are going on in my life too. I’m trying to be better and also realize some of the vices that we carry. At some point, you can’t go any further and carry those vices. You’re going to have to shed some stuff if you’re going to keep going. I’m not done yet. I don’t know what to tell anyone else when they say, “When are you going to retire?” It’s the same thing you said, “I’m not done. I don’t know, but I’m not stopping.” I don’t have to kill myself anymore. I don’t have to do all that, but I’m still making a plan. As we get smarter, as we have more good assets behind us, you don’t have to work as hard to make progress. You need to parlay what you have or pay attention to what you have and tweak what you have to keep growing. It should get easier as you go.

Every step is a choice. You can challenge yourself to the extent that you want to. The nice thing about taking money out of the equation is that money is out of the equation where you can choose which step. It may be a step that only matters for you or maybe a step that matters for the rest of civilization. The beauty is that you get to choose every day when you take money out of the equation. That’s the ultimate in breaking the slavery that’s going on. Modern slavery is financial slavery. That’s the reason to do this so that you’re no longer saying, “I’ve got to go do this thing because otherwise, I’m going to die.” That’s what we’re here for.

One last time, 1000Houses.com/eqrp. Let’s do it. I’d like to thank Livecomm.com for sponsoring this episode. It’s a lead generation plus mass texting equal success. Check it out. There’s a lot to see on the homepage. We want to thank them for the sponsorship. Thank you for stopping by to get you some Damion Lupo. We’re out of here. Bye now.

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About Damion Lupo

REIS 444 | Enhanced Qualified Retirement Plan

American Sensei. Yokido Founder. 5th Degree Black Belt.

Financial Mentor and host of Financial Underdogs Podcast.

Creator of Black Belt Wealth.

Best selling author in personal finance. Rewriting the rules and plan for retirement.

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