Damion Lupo (03:35):
And so, I just went out and it was funny, I accidentally got involved in a deal that a buddy of mine found and he said, “Hey, I got this deal.” And I said, “Why are you telling me about it?” And he said, “Because I need money.” And I said, “I’m broke.” He goes, “Yeah, but you have a credit card.” So, I ended up taking a cash advance out on my visa to buy a credit card December 31st, 1999. And that was my first real estate investment. And then, I learned how to actually be a real estate investor by doing everything wrong, falling off the roof, doing roofing, electrocuting, myself, doing electrical work, flooding the house. And it was through that process that I started understanding what was involved, that it wasn’t just, hey, easy money. There’s work involved. It took me about four and a half months to play around and not pay attention to the metrics.

Damion Lupo (04:16):
And then I woke up one day and I was playing Robert Kiyosaki’s board game cashflow. And I said, “I’m going to do a financial statement on myself.” And so I did one and I realized that I was about 30 days away from bankruptcy. And it was because I was sabotaging myself because even though I had an idea around how to make money, I wasn’t contextually and spiritually ready for that type of wealth. And something switched in me and what I realized is I was sabotaging by not returning phone calls by people that wanted to rent my stuff. I wasn’t returning phone calls from people that wanted to sell their houses to me.

Damion Lupo (04:45):
And literally in 30 days I got rid of the three houses I had that were sitting, bleeding me to death and I bought eight more. And so, I went from borderline bankruptcy to close to being financially free in a month. And it was because of a psychological and spiritual shift. And then it just went from there. And there’s more story, but that was the baseline of when things went from interesting hobby to actual business that had the potential for freeing me.

Robert Leonard (05:09):
You went that visa credit card purchase into 150 rental houses in seven states. You did that in less than five years. Is this something that’s still possible for new investors listening to the show today and how did you do it?

Damion Lupo (05:23):
When I did it, I started off in one place. And it’s funny because I say one place, but it was the entire metropolis of Phoenix, which is a massive place. Maricopa County, which is basically where my playground was, is bigger than I think the seven smallest states. So imagine that my playground was seven of the smallest states. That’s the size of the territory I was working in. Huge mistake, not being focused, but I did, at least stayed in one place sort of for about two years. And I built up a portfolio. I had like 40, 50 houses. And then I went out and started expanding into other places because Phoenix wasn’t working. This is a fallacy I see with a lot of people. They start getting something that works and they say, “Oh, I’m going to go somewhere else where the grass is greener, much greener because my thing doesn’t work here anymore.”

Damion Lupo (06:03):
Problem is you have to start over and you lose the momentum. And 50 houses is not enough in my opinion, to go out and launch into another state. I went and bought another 50 houses in Birmingham and Alabama and kept growing this portfolio. I had a partner out there that turned out to be like kryptonite. A great opportunity to learn, but a terrible person. And I learned a lot about business and partnerships by going into a bad partnership with somebody that stole millions of dollars from me. And it was because I was a rookie and I was arrogant and I needed that experience. I went into other states because it wasn’t enough for me to be in one state. So basically what it came down to is my ego is driving everything. And ultimately in 2004 and five, I sold the houses, almost all of them, and then took that money and rolled it into other stuff, apartments that I was rehabbing, and building condos, and flipping four million dollar houses next to the bushes, state and Maine, not too far from you.

Damion Lupo (06:55):
And I was doing all these things because I was 10 feet tall and bulletproof. I was totally invincible because of success. And it goes back to the idea that success is a terrible teacher. Failure is an amazing teacher, if you can pay attention and humble yourself to the lessons. I just had all this money that I’d made, like a lot of people that have big gains right now, and they think that they’re super smart and I go, “What happened to timing?” And they’re like, “Oh yeah, but it was mostly because I’m super good.” And I look at those people and I go, “You’re about to be super humble.” And ultimately it’s a matter of time if your ego is not in check. Ego is important because it’s a good driver. It also can take you down. It’s like Ryan holiday’s book Ego is The Enemy. Really important to read that if you have big vision, because your ego can be your greatest asset and your worst enemy.

Damion Lupo (07:34):
And so I ended up in 2007, 2008, I took a 20 million dollar portfolio and turned it into a negative $5 million net worth. So 12 months I lost many, many, many millions and had to start over. That was the ride. And so when you mentioned ride in the beginning, it was one hell of a ride.

Robert Leonard (07:49):
What happened in 2007? How did you go from positive 20 million to negative 5 million? What happened?

Damion Lupo (07:55):
A couple of things. I thought that my stuff was worth more probably. In my mind and on my balance sheet, I said, this is what it’s worth. I think there are a lot of assumptions in there. Assumptions can be helpful and really dangerous if you’re basing them off of delusion. And so a lot of my things I said, okay, well, I’ve got equity built here and it’s based on these things that are going to happen without any execution intelligence.

Damion Lupo (08:16):
I hadn’t done any of this stuff. Like I hadn’t rehabbed in apartment. But I was going to do one and it was going to make me a couple million bucks. Because I didn’t have any experience, I didn’t understand. You should actually have somebody on site that has skin in the game or you should be on site. So I had a bunch of mice in the cheese shop, spending my money and the investors money and running a muck. And eventually we ran out of money and I gave the property back to a lender. And the lender sued me for a deficiency, which means nobody wanted to buy the property because it was a mess even after I’d put a couple of million dollars into it. So he sued and we have spent two years in court and he lost because he was playing games.

Damion Lupo (08:51):
The problem was, I was so inexperienced in that space and I wasn’t looking at people to help me because I thought I knew everything. And it was the same thing for a number of projects. My arrogance and ego were the driver of the demise. And I see that over and over again. It doesn’t matter what generation it is. It’s a function of inexperience, a lack of wisdom, and too much hair. I always say that because I’m bald now. I think I lost the hair because that’s the experience, that’s the scar tissue. You go through stuff. So I always like to look at people that are grayer or balder and you don’t have to just get wisdom from old people. It can be… Young people have a lot of wisdom from their niches, but they don’t have decades of actually going through cycles and things. And I think there’s value in that for people as well.

Robert Leonard (09:30):
A friend of mine likes to say, “Grass doesn’t grow on a busy street.” And in reference to your hair falling out. If your brain’s working or you’re stressed and it’s always a lot going on up there, the grass can’t grow.

Damion Lupo (09:43):
Yep. I mean, that’s a fact, I think there’s a lot of immediate gratification. People are looking for stuff these days and they think everything’s going to happen overnight. We see things like Tesla going up thousand percent in a year. We see Bitcoin doing what it’s doing, multi hundreds and hundreds of percent, greatest asset of all time, in terms of the last 12 years. We see these things and people are having major FOMO problems. They want to get involved. They’re chasing things. They’re seeing stuff that they can do on Robin hood. And they’re saying, Oh, there’s a delusion. It’s a collective delusion because more and more people are getting involved. Apps are getting smarter to gamify things. And the marketing is tapping into our primal brain and getting us thinking and feeling a certain way, driving us towards certain behaviors. And those behaviors are not long-term sustainable or valuable.

Damion Lupo (10:27):
They’re just really dangerous, except they’re valuable to somebody else that’s manipulating us. So I think it’s important for us to settle down and breathe and think. Thinking is a lost art. It’s because we’re in such an urgent, anxious state of feeling like we need to have things happen overnight and we don’t want to do the work. Most people don’t want to do the work. And if you think you want to do work, ask yourself, am I willing to pay the price for the next 10 years? And if you are, and you’re serious, then you’ve got a chance. If you say, “I’m going to give it 10 minutes or 10 months, then you’re already dead. You might as well stop.

Robert Leonard (10:56):
Warren buffet has a quote about going behind closed doors, just closing the door, sitting there and thinking. It’s one of the most valuable things he says he does. And I think it’s important for people listening to the show, to hear your story about ego and how it got the best of you and really humbled you because a lot of them listening probably don’t have too much of an ego problem yet because they’re newer investors. They probably haven’t done a ton of real estate deals. So they haven’t gotten to that point yet. But if they can learn about it now, if they do end up getting to a place where they might have a little bit of an ego from real estate success, maybe they can, in five years, think back on this episode, this conversation that we’re having and be like, “Damion warned me of this. Maybe I need to get myself in check.”

Damion Lupo (11:34):
It’s hard Robert, to really just self-checking and it’s blind spots. One of the best questions ever is, “What am I not seeing?” And “How do you know what you don’t know?” I mean, the biggest problem is what you think you know, that just ain’t so, and so in the situation here, what do you do? One of the most important things, valuable things that any of us can do is attach ourselves to people that been through the cycles, been through the stuff and people go, “Well, how do I do that?” Well, there’s a couple of options. One, you go find people that are mentors that have been through it and you pay them and you attach yourself to them and you learn, it’s a fair exchange. It’s a circulation. The other option is you go show up at somebody that’s successful that you want to mimic and model, you show up and you start creating value.

Damion Lupo (12:12):
And my friend Hayden Crabtree did this with his stuff he does in real estate with mini storage. And he basically found a guy that it was already doing this stuff. And he didn’t show up one day and say, “What can I do help you?” That is a terrible question. You ask somebody what you can do to help them. You put a burden on them to try to help you help them. And it’s like, ah, I’m too busy. But when you just show up for somebody and you start doing things to create value and you just be creative, figure out what they’re paid and the problems are. When you do that, you don’t have any risks except your time and people think, Oh, I can’t waste my time. That deal I told you about that my buddy brought, he brought that thing and we were both basically broke.

Damion Lupo (12:46):
We were both starting fresh. And the difference between he and I was after he brought me that deal. He said, I’m too valuable to help you and do anything with the deal. So I’m just going to go look for the next deal. And 10 years later, I went through this whole process, made millions and millions of dollars that lost it, then made millions again. And meanwhile, he’s still driving a cab and sleeping in a hammock, homeless. Because worked for him was a four-letter word and he was allergic to it. And if you’re willing to go out there and do the work with people and create value, then you’re going to become invaluable and all of a sudden you grow and you’re not at risk of blowing up or letting your ego take over because somebody way beyond you is going to keep you in check. So those are the two options I see for anybody listening or watching is really think about what doing one of those two things if you want to have a sustainable investing career.

Robert Leonard (13:31):
Back on episode 28, we had Jason DeBono on the show to talk about investing in real estate using a self-directed IRA. And I’ve spoken with a bunch of other guests and successful real estate investors who have talked about really liking this strategy. We discussed some of the flaws in that strategy during the call, but it was mostly about good things. Tell us the deadly mistakes that you see investors making when they’re using IRAs to invest in real estate.

Damion Lupo (13:58):
It’s interesting, because I know Jason, I like Jason. The IRA space is flawed. And the reason I say that is because if you’re using an IRA to invest in real estate, inevitably, one of the best things about real estate is debt. You can get very cheap debt from a lot of different sources. And if you use an IRA for any type of real estate, you’re sitting on a ticking time bomb called UBIT tax. And people don’t realize this. You invest your IRA, even a Roth IRA, which is supposed to be tax-free. You invest that in real estate that has any type of debt. And this could be a house you buy and you get some hard money or it’s a syndication and you go out and you join some other people and you buy an Aplex or an apartment. Any of the situations, almost always, you’re going to end up with a taxable event, which is going to be a 37% tax.

Damion Lupo (14:39):
That’s the first problem. Nobody tells you this. Custodians don’t tell you this. They say, “Well, it might happen.” And they sort of brush it under the. The difference is, if you say, okay, well, is there another option? And you say, okay, what are the options? Then you start having a rational conversation. I mean, I built a company called the eQRP company that has one thing we do, and it’s called the eQRP. And it’s a different part of the tax code that allows you to take retirement accounts and actually invest those in real estate without that tax, because it’s exempt. It’s a unique thing. There’s nothing like it. Even things that are like individual 401ks aren’t like it because the rules keep changing. And the rules a year ago changed to where some of the people that are out there like Jason are selling these solo type of plans and the problem is you can’t ever even hire a part-time person.

Damion Lupo (15:21):
So if you have aspirations of growing your business and your investments, the problem is either you use a self-directed IRA and you’re stuck with UBIT tax, which is going to hit you, or you say, okay, I’m going to do one of these solo 401Ks. And then you can never grow beyond just your own work or it’s just contractors. And the reality is, anybody that’s growing in business, you’ve got to have the ability to leverage other people, and you’re never able to do that.

Damion Lupo (15:44):
So the eQRP allows you to have employees. It allows you to have part-time, full-time employees and you have control. You don’t have a custodian. I don’t personally like to have a babysitter for my money. I want to be able to control my money and I think most people that are self responsible would like that option too. IRAs have custodians. eQPRs do not. You are your own prestige, which is in charge. So there’s big differences between these two. And quite frankly, you can create unbelievable wealth using tax shelters if you use them correctly. But if you use them wrong, why would you give up 37% of your money every time you sell a deal? That’s just ignorance.

Speaker 1 (16:17):
Tell us a bit more about this UBIT tax. We haven’t covered it here on the show. It sounds like if it’s 30%, that sounds like it could be quite a strain on your return. So break that down for us a little bit more.

Damion Lupo (16:28):
Great way to look at is, let’s say you have $50,000 in your IRA and you say, “Okay, I’m going to invest this in a deal.” And you go out and you invest it in a deal. There happens to be debt of 70%. So if you buy a property, buy a house, then you get 70% loan to value, $70,000 loan. Think of your IRA, investing the same way. Your few 50,000 goes in. And then there’s another chunk of debt. And so you’ve got 70% leverage. Let’s assume that, that deal grows and gets better. And now you cash out and it’s four or five years later. You’re 50 turns into a hundred thousand. In all likelihood, you’re going to write a check for somewhere between 15 and $20,000. If you get really lucky, it might be only 10 or 12,000. The problem with that is that it’s a choice you’re and it’s because this UBIT tax is the 37% tax on all of your leverage profits.

Damion Lupo (17:15):
So think of it this way, 70% of your purchase was debt. So 70% of your profits gets hit with this tax. So if you made $50,000, then 70% of that, which is 35,000 is subject to the tax. So when you do the math, first off, why didn’t anybody tell me? Well, nobody has to tell you. Custodians don’t have to tell you. There’s nobody that has to tell you. You have to be smarter and you have to go out there and have the right team. And unfortunately there’s no forgiveness. You can’t go to the IRS and say, “I didn’t know.” Your accountant’s going to say, here’s your bill. The worst retirement account providers that are out there are telling people don’t about it, the IRS isn’t really paying attention. Or if you just pay off your debt before you sell the property. Well, who’s going to do that?

Damion Lupo (17:55):
That doesn’t happen. I mean, this is just not rational. You see a lot of attorneys that are literally giving bad advice. And they’re saying, “Don’t worry about it. The IRS is not going to notice.” Or accountants say, “Well, we’ve never done anything with it. Don’t worry about it at this point.” This is bad advice. There’s a lot of bad advice because people don’t want to be wrong. And you know what I call that? Ego. They’re not willing to be humble and be honest. And so I think it’s important for people just to look at the reality and understand if you’re thinking about doing something, you can do it differently. And if you’ve already done something, you can fix it. And here’s how that looks.

Damion Lupo (18:26):
You got an IRA that went and invested in real estate? You can roll over that asset from a self-directed IRA into an eQRP and now you’re not subject to that tax. You have to do it before the property sells. So if you’re like, “Oh, my property is about to sell. I’ve got an apartment it’s about to sell.” Or you’re invested in something, you need to switch it over before you sell it and avoid the 37%, unless you hate your money. I mean, some people genuinely, I just don’t think that they care. But most people that are listening, I would venture to say, they probably care about keeping their money.

Robert Leonard (18:56):
What is the rationale behind the UBIT tax? Like what is U-B-I-T stand for? Typically the IRS, they tax you a higher rate for short-term gains. There’s a reason behind that. It’s because they want to incentivize you to hold it for the long-term. Why are they charging us this UBIT tax?

Damion Lupo (19:12):
So what they’re saying is they’re saying, “Okay, your retirement money is invested.” And let’s say, give you a great example, there’s a 500,000 dollar property, and you have a hundred thousand dollars that you’re investing. And 400,000 of debt and a hundred thousand of your money. The IRS says, “Well, you didn’t really invest in the whole thing. So this isn’t all your money. So all the gains aren’t really all yours. We’re not going to let you keep all the profits from the leverage, the debt. And so we want to equalize this. We want to make this fair. And so in their wisdom, they said, “We want to tax a chunk of that that’s due to not your money. What’s interesting is that there’s an exemption in the tax code for the eQRPs because years ago, developers, and pensions, and 401Ks, all their lobbyists got together and they had an exemption put in the code based on legislation from Congress.

Damion Lupo (19:59):
Basically it was exempting developers from getting hammered because what they were doing is they were going to pensions and 401Ks and raising hundreds of millions of billions of dollars. And they said, well, we need these people to invest in our developments. And so Congress passed an exemption and it said, “Okay, we’re not going to hammer them and charge them this UBIT, the unrelated business income tax. It’s based on UDFI. This is like alphabet soup. Unrelated debt financed income. So it’s income from debt financing. And there was an exemption put in place because the lobbyists with the 401Ks and pensions were quite frankly better than the IRA lobbyists.

Robert Leonard (20:31):
And so how are individuals able to leverage QRP to take advantage of that same thing?

Damion Lupo (20:38):
When you have anything that’s out of the 401 section of the code, you’re exempt. So if you moved money or property over into a 401k and the eQRP is built under the 401 section. So whether you’re by yourself or you’ve got a team and you’ve got employees or whatever, if you have assets in that, it’s just plain exempt. That’s how you get out of it. It’s not a loophole, it’s just a fricking code. It’s like saying, “Well, the whole code is a loophole.” The whole code is written by humans for humans. So you just have to be one of the humans that’s benefiting from it by putting yourself in front of that behavior that they want you to have anyway.

Robert Leonard (21:08):
One of the things listeners might be thinking is when they heard you talk about having employees, I know a little bit, I read your book. I know a little bit, I did a bunch of research into this. So I know a little bit more than probably the listener who’s just hearing this for the first time. But when they hear that you’re talking about hiring employees that might confuse them a little, because they’re probably thinking, “I’m taking my retirement money, putting it into an account. Where do employees come in? What does that have to do with anything?” So walk us through how investing retirement money then comes together with having employees or potentially having employees.

Damion Lupo (21:38):
Good question. So when you think about IRAs, IRAs are for an individual. They’re basically, if you think about the cashflow quadrant, if anybody’s read the cashflow quadrant, rich add, poor add, there’s a quadrant where you’re in either the employee, the self-employed business owner and investor. Most people take out an IRA because they happen to be an employee. And they say, okay, well, I just want to attack shelter. Has nothing to do with hiring employees, it’s just that’s what people do. They put their money there. Maybe they retire from something that had a 401K. Now their money’s there. When we look at the eQRPs and all the 401Ks, those are based on a company. So a company is a sponsor. So that their company has a retirement plan. And then the company has employees. So if I’m saying to you Robert, “Okay, your company, it’s Robert Leonard Ink, you’re going to have a company and that company is going to be the sponsor of a retirement plan.

Damion Lupo (22:26):
So if you’re just by yourself, it could look like one of these individual 401Ks. If you ever hire a part-time employee, and I’m talking to somebody working 10 hours a week. If you hire that person, you’ve got to make them eligible to participate. Just like if you worked at Amazon or someplace that had a 401K, they’re going to have a 401K for all their employees. So the same thing in an individual that hires part-time, full-time people, you have to include your employees. So, that’s why the eQRP is different. And when we talk about employees, if you want to use this tool, if you want to be exempt from the UBIT, you have to switch, you can’t use an IRA. It doesn’t work. They’re all subject to UBIT tax.

Robert Leonard (23:01):
What types of investments aren’t allowed with an eQRP?

Damion Lupo (23:05):
Yeah, pretty much across all the retirement accounts, whether you’re talking about IRAs, or SAPs, or so or simples, or 401Ks or anything, the code says you can’t do these five things or these eight things. It says, you can’t invest in things that you’re going to get a benefit from. You can’t go be a real estate agent and get a commission on a house that your retirement account buys. You can’t live in a property that your retirement account bought. You can’t buy collectibles like wine or rugs. I don’t know anybody that’s ever done that, but occasionally somebody will say, I’d like to invest in art, can’t do that. You can’t flip a car. Other than that, it’s pretty much anything you want, whether you want to invest in coffee farms in Panama, if you want to invest in Bitcoin, you want to invest in stocks, real estate, private notes, gold, silver, you’re unlimited. It’s really just a small number of things the IRS says, no go. And the rest of it is whatever your imagination can lead you to.

Robert Leonard (23:53):
I mentioned you wrote a book called QRP book. Admittedly, the title didn’t really speak much to me when I first saw it, because I didn’t know what QRP was. So I had no idea what this book was going to be about. And then I read the subtitle and the subtitle was How to Get Checkbook Control of Your 401K Rollover Money Now. And that spoke to me, that caught my attention. I know it’s a big topic, but explain to us what you mean by getting checkbook control of your 401K.

Damion Lupo (24:19):
Most of us have an experience of having a retirement account that an employer set up, whether it’s the federal government and it’s a TSP, or you work as a police officer, firefighter, teacher, employee, you have a 457, 401, you’ve got one of these things. You put money in, maybe the employer matches it. And so at some point, you end up leaving that job. Most people have these orphan accounts. They have old 401K or 457’s and they’re sitting at fidelity or different places. You have a choice. You can keep them there, or you can roll them into an IRA and you have sort of control, or you can convert it to an eQRP where you have total control. So it’s really a question of whether you want to take this money. I unfortunately hear a lot of people say, “Well, it’s only 50 or a hundred thousand.”

Damion Lupo (25:00):
My thought is, what do you mean it’s only 50,000. I took negative six. I borrowed 6,000 in 1999 and turned it into a $20 million portfolio in five years. So when people think, it’s because they’re thinking is their problem, 50 or a hundred thousand dollars from an old employer is awesome because you can take that and it gives you a chance to create momentum and get down that path. Especially when you’re new and you’re thinking, what do I do? What resources do I have? Well, this could be one sitting right under your nose and you didn’t even think about it. And there are different ways of using it.

Damion Lupo (25:30):
Another thing you can do is, when you convert it from an old 401K or an IRA into an eQRP, you can take out up to 50% or 50,000, just write yourself a check. For any reason, don’t have to qualify and you could use that for education, for mentors, for courses. That’s powerful that you can do that. You can’t do that with an IRA. And to say, “Well, I’m just going to go put my money into an investment, but I’m not going to educate myself.” is a fool’s run. It’s a terrible idea. You got to be educated. You got to do the work and put the time in. And this gives you a chance with the resources to do it.

Robert Leonard (26:01):
What if somebody has a 401K that they’re rolling over from an employer, but there’s still going to be an employee. They’re going to another company. They’re going to continue to work, but they have this money now sitting in an old 401K that they’re going to consider rolling over to an IRA or something like that. How does that eQRP work for them if they don’t have a business?

Damion Lupo (26:17):
You have to have a business. What’s fascinating is if you think about all the different businesses out there, what is a business? A business is something that has the ability to make revenue and potentially to make income. And so what could that be? It could be a lemonade stand. It could be an eBay store. It could be a consulting gig. You could have a construction company with 50 people. It could be anything. There’s this goofy mindset or this messaging that says, oh, I don’t have a business. Or people think, oh, I’m already working. I can’t have a business. I mean, how long does it take to set up an eBay store? Seven minutes. So if you have that, you’re in business. It doesn’t mean you can’t just start a business and say, okay, I got a business. There’s nothing happening there.

Damion Lupo (26:54):
It has to be bonafide. And so if the IRS takes a sniff and they say, “Do you have a business?” And you’re like, “Yeah. See, I started at seven years ago and haven’t done anything.” Okay. You need to make sure you can do something. Do you need to do a lot? No, there’s no requirement on how much you do. You can put up, like I said, an eBay store or digital information courses that are out there. There’s a million things. The question really is, does it make sense for you to have control of your money? And if that does make sense, it’s not really that big of a leap to have a business.

Robert Leonard (27:19):
Another bullet point in your book that really caught my attention was the one that said, “How to Get an Instant $50,000 Credit Line.” And that might’ve been what you were just talking about. But if it isn’t, tell us a bit more about this and how can we access a lot of credit like that?

Damion Lupo (27:33):
So as soon as you have an eQRP, you have the ability to… You have your checkbook and all your money is in there. And if you say, “Okay, I want to go do whatever. I want to go do a course, or I want to buy a car and I don’t want to go beg Bank of America for the money.” You can write yourself a check, walk into the car dealership. You’ve got 50,000 dollars or 50%, whichever is less. You do anything you want. And then once you borrow it, you’ve got five years to pay it back. And you get to set the terms, the rates. It’s up to you because you’re the trustee. If you’re using that money for a primary residence, you could pay it back over 30 years.

Damion Lupo (28:03):
So you have a lot of flexibility and then you can do this over and over again. It’s a perpetual way to tap into a line of credit, especially when you think about having an emergency fund. This is a great emergency fund. Instead of having all that cash sitting in your bank account, go do something with it, and then use your use this potentially as an emergency fund, because it’s just sitting there available anytime you want.

Robert Leonard (28:22):
Does it have to be actually sitting in cash or could it be invested in a deal? Because a lot of times people wouldn’t just have the cash in their retirement account. It would be invested in something.

Damion Lupo (28:31):
What happens is, your retirement account is invested or it’s in cash, and then it’s valued at a certain number. And so it’s $50,000 or 50% of that thing in that pile. If you’re borrowing money, you’re borrowing it from your plan. So you’d have to have cash that you wanted to borrow. If you want to borrow $20,000, you’d have to have $20,000 in cash or convert something to cash and then borrow it out.

Robert Leonard (28:51):
So it’s not using what’s in your account as collateral or anything like that. You’re actually taking the cash out of the account.

Damion Lupo (28:59):
You could. Your account, there can be leverage. It’s the same thing if you go and you use money in your retirement account to go buy property and there’s non-recourse, which means you don’t guarantee it, there’s debt, you can do the same thing. You’ve got assets, you’ve got a pile of gold. You’ve got whatever and you want to leverage against it. You’ve got the ability to have that account leverage if it’s not recourse. So you potentially could access other cash that wasn’t in there. If you had something that you could borrow against.

Robert Leonard (29:25):
What are some of the downsides of eQRPs?

Damion Lupo (29:28):
Egos, because you have control of your money. If you say, “This is great.” And I’m a crazy person, there’s nobody stopping you from going and buying a Ferrari or buying into the next bubble and saying, “I want to buy Nicola. I’m going to go buy that stock.” It’s really your money is in your hands. And for some people that’s a dangerous place for their money to be.

Robert Leonard (29:49):
Why haven’t we heard of eQRPs before? And how do we know for sure that it isn’t something like just an expensive life insurance product that salesmen are always trying to sell us?

Damion Lupo (30:01):
The one thing you’ll know about me is that I’m not a fan of life insurance. I had an insurance agency 20 years ago. Life insurance is amazing for people that are already wealthy, but it’s a terrible place to grow money. It’s a great place to save money because it’s very, very boring and flat. This has nothing to do with life insurance. And so there’s a lot of different names for life insurance, Bank on Yourself, Whole Life, Cash Value. There’s lots of tricky names and eQRP, it’s a product that the IRS has approved and you get a copy of that IRS letter when it’s set up. And why haven’t people heard about it? Because IRA companies are 10 trillion dollar companies and Wall Street doesn’t want to tell you how to take control of your stuff. Why would they do that? It’s not in their interest. Wall Street’s interest is in making more money for Wall Street.

Damion Lupo (30:40):
Wall Street is not there to make you money. IRA custodians are in the business of, having fees generate big piles of profit. Nothing against that. You just have to understand the alignment and how money is flowing. So why don’t you know about the things you don’t know about? Because you’re paying attention to marketing that’s funneling through algorithms in large part, or it’s people that are around you that have a certain bias towards the same stuff you do. And so they’re going to know what you know, in most cases. So you have to go outside of your norm. You have to hear somebody that is different. I mean, I’m different than Wall Street. I’m different than IRA companies. And it’s a huge value right now to have podcasts. I mean, it’s truly up to you and just going and searching it out. But that’s why you don’t know because the fees are so big. I mean, Wall Street always wins. IRA custodians always win. Why would they ever tell you how to take control of your money and reduce their fees? That makes no sense.

Robert Leonard (31:31):
Self-directed IRA companies typically make money from being your custodian and helping you handle that whole process. How do eQRP companies make money such as yours or any that there may be, I’m not familiar with any others, but if there are, how do they make money if there’s no custodian and you are really managing your own money? Is it helping you get set up?

Damion Lupo (31:50):
There’s a different philosophy. The typical philosophy is transaction and assets under management fees. So Wall Street wants one, or two, or three, or 4% of your money every year. And that’s just the blessing for being in your life. That’s what they think that they’re owed. And then there’s transaction fees. And there’s a lot of stuff behind the curtains. When you look at mutual funds, you’re talking about 12B1s, you’re talking about marketing, all this stuff. It’s always there.

Damion Lupo (32:10):
IRA companies are set up for transaction fees, and most of them have assets under management. If you have zero to a hundred thousand, it’s this percent or this dollar. And so it’s tiered. With the eQRP company. There is one, it’s ours, the eQRP company, there’s a flat fee to set everything up, whether you or you an employees and then there’s a flat annual fee. Those two fees are transparent and clean. There’s no transaction fees. There’s no wire fees. There’s literally no fees for you operating it. It’s just simply you operating it. And you know exactly how much your are going to be. So to me, it’s cleaner. I don’t like the idea that as I have more money, the company is not necessarily doing more, but they feel entitled to tens of thousands of dollars in fees. But that’s what our financial system is set up.

Robert Leonard (32:50):
When you think back on your life, whether it’s personally, business, everything you’ve gone through in real estate, what piece of advice have you received that has really had an impact on you and you continue to use it and think of it to this day?

Damion Lupo (33:04):
Some of the advice is warnings. So almost a decade ago, I had a conversation with my dad right before he died. And he made a comment to me. And it was strange advice because it was advice without being direct advice. He looked at me and he had a few weeks to live. And he said, “There were so many things that I wanted to do.” What do you say to that? He realized that he hadn’t gone deep enough on the things that he really wanted to be into that were part of his process. And he hadn’t gone out there and made decisions because he was playing chicken and he was playing not to lose. And we’ve all seen this with sports teams, the moment they’re up and they start playing not to lose, they lose. This is consistent. It’s a weird thing we do. That piece of advice, if you will, was don’t wait. If you’re thinking about something, do something. Don’t just ponder. In your head is not going to create anything of value. Sometimes it’s a scary place to be.

Damion Lupo (33:50):
The reality was taking steps in some direction, because you can pivot. There’s a thing called movement where we’ve got a frontal lobe. We’re not animals. I mean, we’re kind of animals, but we had the ability to choose and pivot. The advice was don’t wait, because you’ll wake up one day and you won’t have any more time. And that profoundly impacting what I do and helping people break their shackles because my mission is to free a million people from financial bondage.

Damion Lupo (34:13):
Financial illiteracy is the modern day slavery. When we see people rioting and they’re saying it’s not fair, and all these things are going on, and they’re smashing windows, and it’s all because of race, what we’re not talking about is the monetary system and how people are being ripped off and screwed over by these systems and they don’t even know what’s going on. That’s what it’s like to break those shackles, where you actually have control and you choose where you’re going. You’re not just hoping the government’s going to send you some 600 dollar check. That’s not going to change your life. It’s going to make you more of a slave.

Robert Leonard (34:41):
Damian, thanks so much for joining me on the show today. For everyone listening that’s interested in learning more and might want to connect with you, where’s the best place for them to go?

Damion Lupo (34:50):
Best place to go is actually really simple. You’re probably watching or listening on your phone, just text the word eQRP to 72000 and I’ll send you a report that sums up what we’ve been talking about. It’s a 15 page report that sums up that book that you mentioned, and it’s the first step. It’s you taking a step. It’s momentum. So I’m pretty sure everyone on earth can text somehow. So you just text the word eQRP to 72000 and that’ll start you on the right path and enable you to connect with me and my team and whatever we can do to help you break your shackles. We’re here with you.

Robert Leonard (35:20):
I’ll put a link to that information in the book and your website and everything else in the show notes below. So anybody interested can connect with you there. Damian, thanks so much.

Damion Lupo (35:29):
Thanks, Robert.

Robert Leonard (35:30):
All right guys, that’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (35:36):
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