Building Passive Wealth In Real Estate With Damion Lupo

March 4, 2021

Expert CRE Secrets Podcast

“It doesn't matter whether your bullets flying at you or people are suing you. You try not to be financially a slave doesn't make any difference. One of the greatest things that any of us can do is take action because you can't be in fear and take action, as your brain can only be moving or afraid.” Damion Lupo is the founder of EQRP and it's focusing on finding ways to create wealth with your 401k. He likes to say he likes to help you escape or your clients escape 401k jail and free up other investments such as investment real estate.

Watch the episode here:

Listen to the podcast here:

Building Passive Wealth In Real Estate With Damion Lupo

Brett:

I'm excited about our next guest. He is the founder of EQRP and it's focusing on finding ways to create wealth with your 401k. He likes to say he likes to help you escape or your clients escape 401k jail and free up other investments such as investment real estate. Please welcome the show with me, Damion Lupo. Damion, how are you doing?

Damion:

Hey, Brett. Good to see you, man.

Brett:

Excellent. Yeah, thanks for being on the show. And Damion was on our first show capital gains tax solutions podcast a few months back. And so now he's on the, on the second show here. So excited to have you. So David, would you give a little bit more our listeners a little bit more about your background and your current focus?

Damion:

Yeah, my background is pretty heavy in real estate. It's and I stumbled into that after I sold an insurance agency for $15,000. So if you want to talk about making a ton of money, it's not my first story. My first story was getting out of insurance to go do real estate. And at the time I was a real estate agent who had my license and also wanted to go in and do some investing. And so I started off buying a house like a lot of people do in the investment world, and transition that into 150 houses with doing commercial development with condo towers and apartments and, and end up doing some other development. And that was all well and good. I did that for about five years of real estate and the housing and then another couple years in the development. And then the problem of 2008 happened and it happened on my face. So that was an experience of watching a ton of wealth being created and vaporized. And then there was a recreation reinvention kind of coming from the Phoenix on the other side of that. And that's where the EQRP company came into play, where it took those lessons and understood that if it's just about making a whole bunch of money, but you don't have a long-term plan, you're never going to be free. And EQRP is the company that I run to help people develop some of those long-term plans, so that they truly are out of Wall Street jail, and they can have the skills and the tools and the ideas and alternative possibilities to be free forever.

Brett:

That's beautiful. That's speaking to our audience, right? Who are real estate professionals in real estate investors themselves, right. And so most of our commercial real estate brokers who listen to this podcast are helping people do that through investment, real estate, cash flow, mobile, home parks, multifamily, senior housing, you name it. And the idea is to generate enough cash flow to replace your expenses, right? And then enough cash flow to help and bless other people as well, right? And so lets before we dive into exactly what the EQRP strategy is, and breaking away from Wall Street. I want to take one step back, Damion, and I want you to give our listeners a little bit more about you in regards to maybe the strength that you believe you were given. And maybe some people call it a superpower. I believe we've all been given certain God-given gifts and these gifts are given to us to bless others. So I'm curious, was that one or two strengths that you believe you are given? And how does that help how you help the business professional today to succeed using EQRP?

Damion:

I think when we think about it, there's a question of whether we, we either believe or we trust and, and so my superpower is trusting in things that I see. Or I can envision. And it's interesting because a lot of times I see people saying, well show me, and then I'll believe it and I go you're gonna be stuck in your past the rest of your life. And that's simply a sad thing. But it's where this happens. It's kind of a weird tangent, but a lot of times in religion. I see a lot of people that say I believe and I go yeah, but you don't trust. It's the same thing with money to finance our futures. And so my superpower is to trust. It's like Walt Disney. He trusted in his vision and he started building before anybody else could see it, and now everybody can see it because you show up in Orlando. And so that's the superpower. And it's a power that any of us can develop. You have to practice, it's a muscle, it's like going to the gym. And being able to trust in your ability and trust in other people. And a lot of times we've been our legacy. Scar tissue prevents us from doing that we go, I hurt before, so I'm not going to trust it until I can see it right in front of me until somebody has done it. Or we don't trust other people because somebody hurt us. And the truth is, you're going to again, be stuck in your past for the rest of your life. It's like Groundhog Day on a merry-go-round. Unless you get over that. And you the only way to get over it is to practice in some way. So I just got I've gotten good at that, where I trust and I move forward. And it's really obvious when I'm around people that aren't in that space because it feels like they're going backward. It's like a really bad Michael J. Fox movie.

Brett:

Wow, so much right there. And you never know what questions are going to spark what kind of answers and that's incredible. So it believes in trust, right? It's not just the end, it's almost like faith without action is dead, right? So I'm a Christian, I'm a believer. And I read that and I'm like,

oh, that makes sense, right? We can have like a mental ascension to something or an idea or kind of excitement, but assigned to you to take that action is that thing come alive. And so what you're saying is the trust is the action part, even when perhaps the feelings may not be there or all the facts may not be there. But it's the ability to take that action to trust in whatever that new thing is, right? And then get results.

Damion:

It is. And one of the things that people have asked me over the years, they say, well, are you ever afraid and I got too busy in action. And when they say well, how do I get the courage I go, you get the courage after you do it. And it's you just you move despite the fear. It doesn't matter whether your bullets flying at you or people are suing you are you're trying to not be financially a slave doesn't make any difference. One of the greatest things that any of us can do is take action because you can't be in fear and take action, as your brain can only be moving or afraid. And the problem is most people are sitting idle, which is where all the fear sits. And then you start watching Facebook or you start watching the news, and your fears perpetuated by algorithms. So the alternative is you stay so busy with your vision, you trust in the action and you do it. There's no space for anybody to disrupt your thing because you've got momentum on your side.

Brett:

That's beautiful. David. So what do you write in your book?

Damion:

The next book comes out this summer, actually.

Brett:

Okay, well hope that's a couple of chapters because that is so much golden content there, also. So now let's dive into the action that you've taken and how business professionals can do the same and the real estate world unlocks more opportunities for commissions, right? Because that's, that's part of what our listener basis commercial real estate brokers or residential realtors or luxury realtors. So walk through what is EQRP? And maybe let's start with the big problem right now, how are people locked in Wall Street walking through that?

Damion:

The big picture problem is people are lied to. And they're lied to by a wall street system that tells them that you hear your options, you have a retirement, your option is to put money into a 401k or whatever retirement you have with your company or the government. And then ultimately, it's going to be managed by somebody else, you smoke a bunch of opium for 30 years, and maybe, maybe without hopium, you'll have some money at the end. Meanwhile, Wall Street gets rich, and you just get old. And so that's what we're being told. That's the myth. And the reality is there's a lot of options, including having the ability to control your own money. And it's not just your money. So as a real estate professional, the brokers that are listening right now, you're one of the greatest things you can do is empower and educate people with things they've never heard of and become a trusted adviser beyond just a sale. And what happens with trusted advisors when you're giving value for things that people aren't expecting. They're not looking anywhere else. They want to do more with you, and then they're going to tell everybody about you. So I always when people are saying I don't have enough business, I'm not making enough money, I go create 10 times more value. How do you do that you get people out of jail, that's a really valuable thing. People in jail don't want to be in jail. So if you're the one that says here's how you get your 500,000, or your million dollars out of Wall Street, put it into real estate, two things happen. One, they're free, and two, they now have a lot more resources than they can invest. And it's a fascinating way to leverage an idea into a whole hell of a lot more business.

Brett:

Yeah, amazing. Absolutely. So let's dive right into that. So the average 401k, let's say someone is in their 60s, right? And or even in their 50s. And they're looking like they're trying to retire by 60. And they have this 401k of 500,000. But there are certain restrictions they can't take out. They've now either left their company or semi-retired and another 401k still sitting at their old company. How does EQRP solve that?

Damion:

So there's a whole bunch of really interesting things that are out there. One of the coolest strategies and I'll give you a very easy tactical one, where somebody got to that hat, half a million bucks in their retirement account, and they say okay, I want to use this. Well, if you say I want to retire let's say you're 50 years old, you got a half-million bucks. But it doesn't matter what the number is, but use that as the example. And you say, okay, if I take this $500,000 and invested in real estate, some type of real estate, then I could generate enough cash flow off of that to be financially free, like that would do it for me. If that's the case, then you don't have to wait until you're 60 years old. And the way that you do that is you get access to that money, you roll it into an EQRP, it's a self-directed retirement account, once it's there, so there's no tax or anything when that happens. Once it's there, you can convert it to Roth, when you convert it to Roth. At that point, you have access to it, you can pull the whole thing out, no tax, no penalty, any age doesn't matter. And you can invest in real estate, well, then, you might be saying, well, if I convert it, I gotta pay taxes. Well, maybe not. Because the day that you go out there and you buy that real estate, if you are a spouse, are a real estate professional, you get to use all that cost segregation, as an offset as an expense against that additional income from the conversion. So the big picture, what I just gave you is a formula at any age to pull all of your money out of your retirement account and retire free, forever. And it's like, nobody else is ever going to give you that formula ever. Because it screws up their fee structure. So there's a way for people to, you can do this with 300,000 100,000 a million, it doesn't make any difference. There's just if you have to pack like you have your specialty, and people have their specialty, you've got to get people in teams together that are talking about all the different ideas, packing them together, and utilizing them as a conjoined effort versus one person and their one thing because that's probably not going to get the whole thing done.

Brett:

So well said I was trying to unpack that too, to make sure I grasped it, and our listeners are probably digesting as well. So this is the formula, right? Whatever the amount is 500,000 million bucks, whatever, in an IRA or 401k is that fair game and so far?

Damion:

Yeah, pretty much anything out there any type of retirement account.

Brett:

Pretty much any retirement, and then we can move it into the EQRP, which is like a self-directed vehicle, right? And then you can convert it to a Roth, which would be taxable, except for if you went and bought real estate with that, let's say that said money, right. And let's say I put down let's say, he's 500,000. And I pull all that out, I put all that Roth, I pull it all that out. And I use that to go by, let's say, a $1.5 million building, right, say 33%, down or so. And I can do what's called cost segregation. And if my spouse happens to be in real estate, and when you hear real estate professionals, you might be thinking, oh, I gotta be licensed. No, it could just mean, that is basically what you're doing for the majority of your income. And it can be you or your spouse, depending on how you structure it, you won't talk to your CPA and kind of go into that. But owning real estate and managing that and spending a certain amount of hours per year qualifies you as a real estate professional, a few other things, too. But that being said, Now I can wipe out that 500 that's a fair summary Damion, meaning a zero tax event?

Real Estate Business: "And the reality is there's a lot of options, including having the ability to control your own money. And it's not just your money."

- Damion Lupo

Damion:

Yeah. The conversion is where the agar you add income. And the cost segregation is where you deduct income, and they can effectively wipe each other out because of this trifecta of our tax code, and all the things that have happened the last three years. So you nailed it.

Brett:

Excellent. So let's dive into that next part, which is how long do those things last? Because let's say Biden's coming in, it looks like, right? And so where are we looking at for those changes? Do you think you think they might pull those away? And what's your thoughts on that?

Damion:

Well, we know that with cost segregation, there's so this is the place where normally we get depreciation and all cost segregation is if you don't know it's for anybody listening, it's an acceleration of the depreciation, you get to do a whole lot more depreciation right upfront. And basically, that rule that was put in place a few years ago, starts to expire in 2023. It's phased out over four years. So we're gonna lose 20% of it. So basically, if you could get a $500,000 deduction, that first year, if you did this in 2023, you're going to have the ability to do 400,000. So it's phasing out, what that means is that you've got 234 years to be able to implement this. So there's no brunch, you just understand it's going away unless the administration ends up changing the rules. And they say, okay, we're facing out right now. possible, not super likely, but it's always possible. I mean, it is the government who knows what they're gonna do.

Brett:

Excellent. Now, what if I have like a spouse, me and my spouse, and she has a 401k, and I have an IRA, can I form one of these and we combine it all, start piling it up?

Damion:

So you can do stuff if you can take spouses' money, and you can put them into projects. There are different rules about a controlling interest with spouses and just disqualified parties. It depends on who's running the deal. So if it's one of you, then you're generally gonna have a problem with a spouse investing with but if it's somebody else's deal or you have a third partner, that's the general partner, a lot of options to combine money, so you can do things like that.

Brett:

But if I did the Roth conversion, and I'm just pulling out the cash anyways, taking all that then it's freedom right?

Damion:

Then you don't have any straps or traps. The one thing I always encourage people to do is to make sure that you're not letting go of the Roth completely. And the reason I say that is because Roth is a zero-tax forever type of account, that is the only one of its kind where you can just grow it and take the money out and spend to do whatever you want. There's nothing else in our code that exists like that, where you have that total control. So my suggestion is, don't blow up the account completely. Just understand what you need to convert to real estate right now. And then make sure you get something that's at zero tax forever.

Brett:

Excellent. So now want to give our listeners T stats, right? So if you're a commercial real estate broker, realtor, luxury realtor, listen to this, realize that there's a huge amount of wealth with the baby boomers, and it is transferring over the next 20 years. It's about 17 to 20 trillion, according to American Bankers Association. And they're looking to get out of toilet trash liability, they're also looking to diversify outside of Wall Street, and be passive. So these don't necessarily have to be active stuff that they're owning, it can be into a passive syndication deal if they want it to which a lot of folks like to do. But realize that 50% of total wealth for America is tied into retirement accounts, right. equities, stocks, a lot of these things that are liquid and are tied up. And so how do we unlock that and move it to the side of owning investment real estate? what will you do with EQRP, right? You can also, by the way, do that with the deferred sales trust, too. If it's highly appreciated stock, or even cryptocurrency or business sale, you can move it into a DST and now the next step is to go be able to put that as a downpayment for the next deal. Guess what, you get a commission, right? You've added value, you've unlocked the capital, where if you don't know about these strategies, and as Damion said, if you're not adding value and thinking outside the box, and being more like a wealth advisor, then you're missing out on the opportunities to represent them and buy more deals and or sell more deals because you're gonna have other sellers too who might sell. So they have anything to add to that point.

Damion:

To your point about the DST's. And these different accounts, my suggestion is to have all of them. Why? Because rules change. And what you don't want to do is have one thing where you like, my life depends on it. And then a government changes because guess what, the government always changes everything. And if you're relying on one leg of a stool that, obviously that's the world's falling over anyway. And so I think it's really valuable to have things when we talk about diversification. It's not about five different stocks. It's five different tools. That's more of what I'm thinking when I think about diversification.

Brett:

That's well said. And the other thing, too, is, it's a good point that the news by the administration is talking about taking away the 1031 or limiting 1031, right? And so for the commercial real estate broker that's been the go-to way to do deals, and help transact and help incentivize people to not have to pay the tax right away. And they might take it away or limit it. So what is your next step, right? Well, you gotta start, think of the next creative tool. So I like how you put that up, diversify, and the value adds a tool that you're providing for your clients. And guess what, you'll do more deals, you'll help more people, which is what everyone's trying to do, ultimately. Any thoughts on that, Damion?

Damion:

No, I think one of one of the strategies that I love for the broker community is going over and finding abundance-minded people like you don't want scarcity, cheap clients. And just in general, I mean, if you're, I guess, if you're super cheap, maybe like that, but nobody that has a lot of wealth loves being around cheap people, it's just annoying. And one of the strategies that I've heard, I know some of my friends do this, here in Arizona, they're as brokers, they bring their best deals, their pocket listings and things to certain clients, because those clients cut them in on the deals. So hey, I'm gonna give you this deal. I'm getting my commission and I get 10% of the deal. So if you start thinking like that, you're gonna find that you have an abundance of people that want to do business with you. And it’s really easy way to expand your income and just your net worth and ultimately your freedom. Because you think about it, you bring certain people your deals and they cut you in, guess what, you just created an infinite return. That's who does that very few people because they're trying to figure out how much commission they're gonna get. And you're not thinking of the big picture. But when you start thinking big picture long term, you'll start attracting people differently. And it does break your shackles.

Brett:

Yeah, that's amazing. Multiple income streams, right part of commercial real estate, the goal is to get on the other side of the phone, meaning own real estate, try to get passive. The XP model, by the way, is also a way to do that through building a brokerage team, that also helps you become passive income as well. And so putting those all together, gives you more freedom, right? When you can replace your income and get cash flow coming from multiple streams. So love all of that. That being said, for those who want to take the next step, Damion, what would be the way for them to connect with you and find you and or start to use this strategy because it's one thing to hear about it, get excited about it. But it's nothing to implement this into your business plan into your listing presentations until you're onto your website as a business professional. So are there ways that folks can connect with you to make the real easy?

Damion:

The fastest easiest way is to text the word EQRP to 72,000. And what that's going to do is it's going to give you a 15-page report on what we've been talking about. So you can take this tool, not only use the tool for yourself, but it'll allow you to say, oh, cool, I can give this to my clients, I can shoot them a report. Because if you have 10, or 20, or 50 clients that you want to work with, maybe you can give them access to 10s of millions of dollars in literally the next 24 hours by sending them the report. So just text EQRP to 72,000, get the report, read it, learn a little bit about it, and then share it and you will watch your balance sheet explode over the next 12 months.

Brett:

Amazing. Absolutely loaded. Are you ready for the lightning round?

Damion:

Let's do it.

Brett:

All right, if you go back to your 25 year old self, Mr. Lupo, what's the one thing that you would make sure you would tell yourself?

Damion:

Make sure yeah, I have a bald mentor around that's pushing me to fail as fast as possible. And then I listened to him and took action on it.

Brett:

Best real estate decision you've ever made?

Damion:

Charging my first rental house so my credit card?

Brett:

How much did you put down for a down payment?

Damion:

Everything I had in my card, which was $6,000. The best part about that is nobody died. And I realized even though it was a stupid thing, I don't condone it. It also showed me that having some balls and going out there and taking action is the gateway into success and fulfillment. And just being afraid of it's never going to get you anywhere.

Brett:

Love it. Worst real estate decision ever made?

Damion:

Worst real estate thinking that my success was the best teacher and thinking that just because I've made a bunch of millions of dollars that I knew something and learned the hard way that in 2008 things cycle and I did not know as much as I thought.

Brett:

I love that chapter of your book. Best negotiation strategy?

Damion:

Asking questions, figuring out what the pain points are, and never assuming anything.

Brett:

A little bonus there. Chris Voss has read the book yet. Never split the difference. He talks to me about mirroring, right? Where you're asking questions and then they're responding and then you're mirroring what they just said to make sure that you're connecting and truly listening, right? So the question and the listening and the empathy or tactical empathy as you're connecting is just so much it's just so it blew my mind. I still have to reread it and digest it. Okay, number one book you've gifted or recommended the most in the past year?

Damion:

Unicornomics. It's the book I wrote last year. So of course, everybody gets a copy of Damion's new wisdom, because it's 50 companies worth of wisdom and scar tissue that I wanted to share with the world.

Brett:

Beautiful. And that's your book. I love that. I love it. What are you curious about right now?

Damion:

I'm curious to see when our monetary system shifts and we have the next Bretton wood, or the next 1971 I believe we're going to see it in 2021. I believe that we're going to see a major shift with the Chinese taking on the US dollar. And I'm curious to see how that rolls out because there's going to be a war between liberty and freedom between centralized cryptocurrency and decentralized and so I'm really really curious to watch this and be a part of it.

Brett:

Wow. And that being said for our cryptocurrency listeners out there right now one of our goals is to do our first deferred sales trust cryptocurrency deal, we've done highly appreciate its stock. So if you're listening and you have highly appreciated crypto, contact us if you're considering selling, you can diversify. You can go into real estate, you know, and it's a good way to take your games in case things are kind of a wild ride here. That being said, Damon and I'll let you go. How do you stay centered in your values and encouraged to reach for new massive goals especially given all your success? The books all the people who are helping, you know, conquering your fears and pushing through? How do you stay centered in your values and encouraged to reach new goals?

Damion:

The thing that I do regularly is own the problem. Doesn't matter whether I created it or not. If it's in my world, I own the problem. And it keeps me grounded and humbled. And it forces me to never become a victim and so I just keep if something happens it's my problem. And I think people follow that and they want to take that off because they don't want the team don't want to push everything on one person but if they see the leader taking on the problems and owning them, it creates a culture of ownership and self-responsibility that is impossible to compete with.

Brett:

Amazing and look for that would be Extreme Ownership and I think Damion's probably referring to that, right? So own the problem. Love it. Again, for those who want to get in touch with you Damion what's the best place for them to find you?

Damion:

Texting that texting EQRP to 72,000 is going to be a direct link to me. So if you want to start connecting with me, once you get that report, you can respond with another text and you're going to go right to me, I'm going to see it.

Brett:

Amazing. Well Damion, thank you for being on the show. Sharing a bit of your story. So much wisdom, and helping us as professionals help our clients break Out of Wall Street jail. For our listeners, I encourage you to keep doing what you're doing, keep inspiring more people, keep educating more people. And for our listeners, I want to encourage you to, take action on this and to connect with Damien, and find ways to add value outside of the box, because the marketplace is changing. And 2020 was an acceleration of rapid change, and how are you going to think outside the box? How are you going to add value? How are you going to find ways to do more deals? So check out EQRP as well as check out the eXp commercial model as well. We think that is also revolutionizing how you can do brokerage, and that you can build a team that can build massive passive. Well if you're interested that you go to exprealty.com is a great place to start. You can also go to expcommercial.com or go to expertcresecrets.com. And you can learn more about the team that we're building here. Our team is now about 712 1000 transactions, and we'd love to show you how the model is growing in commercial real estate with that, please rate review subscribe, we appreciate everybody. Bye, everybody.