The Secrets Your Financial Advisor Would NEVER Tell You w/Greg Herlean
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Most people don't know they can use their retirement money to invest in things they know, like, and understand. There's over 100 million IRAs in the United States that have over $17 trillion in them. If you were to show me a new business that you were going to start, I could put my IRA, partner with you, and all the profits and distributions would go back into my IRA and I'd pay nothing in taxes. And I never knew before I heard someone talk about this, this was even an option.

A bank wouldn't lend me money. My family had zero money. So for me, that's kind of where it started was understanding where money and capital is at. My name is Rudy Moore, host of Living the Red Life podcast. I'm here to change the way you see your life in your earpiece every single week. If you're ready to start living the red life, ditch the blue pill, take the red pill, join me in Wonderland and change your life. What's up, guys? Welcome back to another episode of Living the Red Life.

Joining me today is Greg. He's a real estate master, financial master, and investor, and done a whole bunch of stuff. But we're going to focus on a couple of things today. He's been in the real estate game for a very long time, done over $1.4 billion. Yes, billion with a B in transactions and real estate and investing. And he's fixed and flipped over 450 homes, 2,000 apartment units. And we're going to talk today about the financial secrets

that your financial advisor doesn't want you to know. So yes, I have your attention. And Greg, welcome to the show. Thanks for having me. I appreciate it. Good to be here. So Greg, let's just start. Before we dive into these juicy secrets that everyone wants to know, give me a minute summary just on yourself, who you are for those who don't know you.

A minute summary. Look, I have started from nothing. My dad was in the military. I was going that path that I think most parents want you to go. And I had a pivotal point in my life where I had to make a decision if I was going to go that direction. I decided not to. I dropped out of school.

And, and I got into real estate at 22 years old. Not only did I get into real estate, I also started a family and I have five kids. That's a big part of my why. But real estate has been a vehicle for me and I've been able to create massive wealth that way.

uh to afford the five kids and the in the in the memories but uh but really I mean I started with nothing and my dad was in the military and got into real estate but I think what we're going to talk about today is really what catapulted me to the next level learning how to avoid taxes and do things that I didn't really know was possible nor did my parents know was possible 23 years ago

Yeah, it's funny, you know, just to dive straight in on the taxing. Like, I think every entrepreneur that becomes successful, we'll go through this journey of like, we first learn how to make a lot of money and grow our business. And then we end up paying a lot of taxes. And then if we're pretty good, we get pretty advanced. We go, oh, crap, there's got to be a better way. And we partner with, you know, big financial experts and people like yourself. And I've got, you know, lots of advisors that,

work with billionaires and you start learning all these legal, but more advanced tax strategies on how, you know, you can obviously write off stuff and do it all properly. So I'm excited to dive into some of that today. And also, you know, one thing that I know we're going to talk about that's interesting is how to actually leverage capital too in less typical means, right, versus just going to the bank. So super excited.

to dive in, but let's start with the main secrets, right? So what are some of the main things most entrepreneurs don't know about money? Well, look, I think entrepreneurs...

one of the most difficult and important things is raising money. And so being able to get capital or partners or leverage and where to go. And the typical places people go would be a bank or a friend or a family member, right? And that's usually where it would end. And I learned at the age of 22, like, okay, someone taught me what we're gonna talk about today of a whole nother place where there's total

tons of money that people are just unhappy with that you can start talking to. And literally my first real estate deal, someone lent me money from their retirement plan, like just a little condo in Las Vegas, a $60,000 condo.

And I never knew before I heard someone talk about this, this was even an option. A bank wouldn't lend me money. My family had zero money. But someone taught me this and I was like, wow, someone with their IRA can give me the money and then I can pay them back profits and they pay nothing in taxes until they pull it out someday. So that was, so for me, that's kind of where it started was understanding, you know, as far as entrepreneurs, understanding where money and capital is at. And I think that's really important.

Yeah, well, I think it's funny, too, because I think when you start life, at least me, right? And I think most people, you assume when you look at these billionaires or people with a ton of real estate or whatever, you assume they somehow earned that money and just bought it all, right? And then you actually learn, like, I'm friends with some billionaires and stuff. They rarely ever use their own money. I hate, like, the smart billionaires never use their own money. They're always using their own money. And I actually got into real estate when I was about 20 years.

And I use my student loan. I took a student loan out and I worked full time, had a personal training business. So that paid all my bills and I'd save like 30 grand just from that business. And then I took the student loan out and put all of that towards my first real estate deal. And then every year I bought another one because the profits I put straight into a separate account to work on the down payment. So I just, you know, that's one example. And I'm sure

That's how you've got some of your 2000 doors and units isn't like you're not buying them all in cash, right? You're leveraging money.

Leveraging money, and in particular, my place is retirement funds. I mean, that's something you and I spoke about for a second, but I don't think people really grasp that they understand how much money is in retirement accounts. And this is one of the secrets. That is a lot, right? Yeah. There's over 100 million IRAs in the United States, just in the United States here, that have over $17 trillion in them. So if...

If you're listening to this and you're like, "Hey, I don't know where to find money." Most likely the person to your left or right has some of their money in a retirement account that frankly, besides this last week, right? This last week was good in the stock market. But besides that, it just goes up and down and people are frustrated and have no control of that. So what's, I think, exciting is learning about this concept

and realizing that there's opportunities all around you for you to leverage, for you to borrow, for you to use to scale your business. And that's why this subject is so near and dear to my heart. And it's how I've got where I am today. Yeah. And I mean, I think people like Trump are a good example, right? Like I'm not into politics and whether you love or hate him, it's like, you know, he built a lot of his wealth from loaning money and stuff. And then he also saved a lot on taxes by... On taxes, right? Yeah.

You know, so it's like a lot of the smartest people are doing that. And you always see, I think it's funny in the news, right? Like you see these articles where it's like Jeff Bezos pays zero in taxes or whatever, right? And it's like, you know, obviously they are paying a lot in taxes and many other ways because there's lots of different types of taxes. But yeah, I mean, you have to be smart about these things because if not, if you just kind of just pay everything at face value without doing any sort of advanced strategies,

It gets kind of ridiculous. So I think the access to capital is so key, too, because everyone, like you said, they just think about the bank, right? That's the go-to place. So how do they start, you know, using this method we're talking about? Where would someone start and how would they go about this?

Well, look, one of the big things and secrets I feel like that is really not a secret, the wealth are using these things. Like you just mentioned, the wealthy keep getting richer and bigger because they're using these techniques that are approved. There's no scam. This is approved by the rich, the IRS, or the government officials and lobbyists. So look,

advisors in general are good people. So I'm not here to hate on advisors. They're right for majority of America, frankly. But for entrepreneurs... Designed for the average guy saving 10 grand, right? Not entrepreneurs. That's right. And has the nine to five job who doesn't want to put a little more emphasis and energy into building or scaling their business or doing something new. Excuse me. But for those individuals that are looking to...

invest and use their monies in businesses, precious metals, real estate, Bitcoin, cryptocurrency,

All these other alternative assets that you can't use your IRA with, you can do that. And that's my message. I started a company 15 years ago to teach people how to unlock and teach them the secrets that their advisor might not share with them. Advisors aren't going to say, hey, you know what, Rudy, this is great that you want to invest in this new business. Why don't you move your money, part of it from me, from your IRA account and invest in that new business?

Why would he or she say that? They won't. In general, because they lose the fees when they do that. Now, some don't care, right? But most aren't going to advise that. Also, because they're not fiduciaries of that. They can't tell you what the risks are. Well, most of them think everything's high risk outside of the most basic investment strategy. That's right. Even the stock market, right? I mean-

I mean, what would have happened to Tesla if Trump lost last, you know, this last, right? I mean, for that week, it probably would have gone the other direction. So I don't like putting my hard-earned money that I put into retirement accounts, investing in particular in people I don't know or in deals I can't control. And so that's what's so powerful about this message is most people don't know they can use their retirement money to invest in things they know, like, and understand.

And that's what's not only exciting, but it's fun. Like if you were to show me a new business that you were going to start, I could put my IRA, partner with you, and all the profits and distributions would go back into my IRA and I'd pay nothing in taxes. And if it's in my Roth, I'll never pay taxes when I pull it out.

Yeah, and I think that's one of the ways, you know, I obviously have a team that manage all, but from my understanding, you know, every year you can put a certain amount in tax-free, right? And then that's what you can then use to reinvest. And most entrepreneurs, because I used to do this wrong, where I just take that money and invest it, where it's like there's a middle step that I was missing, right? I should put something there and then do it that way. Can you say something for a minute? Yeah, absolutely. I mean, you nailed it. So there's...

There's once you make X amount of dollars, you want to contribute. We talk about contributing to a self-directed retirement account and self-directed because now you can invest in what you want. So we if you if you contribute to that and then invest it in a deal or a business or in precious metals, those profits, then you'll all those gains. You don't pay taxes on those gains.

unless at some point when you pull it out, you pay taxes if it's a traditional IRA. But if it's a Roth IRA,

you don't pay taxes then either. And so that is one template. But I'm also not here to say put all your money, one, because you can't, into a retirement plan. When there's certain real estate transactions that you're doing where you get great depreciation, those go outside of your IRA. But there's other deals and opportunities that you make bigger hits, bigger interest or loans, you use your IRA, and those profits, compounding your profits, you and I can invest

in the same exact things for the next 20 years. You could do it inside your LLC or in your name. I could do it in my IRA, getting the exact same returns. 20 years from now, I'll have hundreds, if not millions more than you just because I'm not paying taxes on my gains every year. Yeah, and then that money that you're saving, the 30% compounds, right? It's the content of that sales frame. It's like you can put, what, 20, 30 grand a year or something, right, in tax-free? Yeah, in certain accounts, we can help...

entrepreneurs that have their own business set up a solo K, a 401k, where they can actually contribute up to $70,000 a year.

Yeah. Yeah. So I think that's like, to me, again, not finance advice, but to me, that's something that it became a bit of a no brainer to me. Cause then, yeah, you can use that to invest in some stuff. Um, so what, what, what else are people missing? We've talked a bit, a bit about that. Um, I, you know, the real estate means a big thing. Like I, you know, got married and

My wife took up real estate and, you know, full time real estate investor now. And I know that there's a, you know, important if you are doing it more than anything else and it becomes full time as you can get accelerated depreciation. So that's the important one if you're doing real estate too.

Yeah. I mean, that's good for that asset class. I'd say the thing that I think a lot of people forget about when we talk about self-directing is you and I just talked about contributions, people that want to save and put money away. The 100 million accounts I'm talking about that have 17 trillion, almost probably 50% of your listeners have an old 401k from a previous employer. In the last six to seven years, everyone's changed jobs.

When I say everyone, a large percentage. So therefore you have this old 401k and a lot of people are like, oh, it only has $25,000. I'm just going to, I don't know what it's really doing. I think a big miss is people are not paying attention to the $25,000 accounts that they own, these 401ks. Those accounts from previous employers qualified as self-direct to then invest in

in what we're talking about. And I see people wholesaling with their accounts. I see people buying and holding Airbnbs with their retirement accounts. Obviously, crypto this last week has been really good too for certain people. But I don't want to just pick on this last week because I can just look at throughout history that I've been doing this 20-something years.

Getting consistent returns, investing in asset classes you understand will outperform generally the market. Now, I'm not a financial advisor. I'm not going to give you advice on what to invest. It basically matches inflation, right? So it's not... Right. It doesn't move the needle. And so I just want to bring that up because I feel like when we talk about this message, people are like, okay, this sounds cool. Maybe I'll contribute to an account or start an account. If you have...

a current 401k or an old 401k, not current, those qualify. And if, or if you have an IRA account. And so don't, that's kind of like my mom would, what she would do, I think like most Americans, they'd open up every month. Now it's an email, right? But they open up the email or the letter. My mom's still old school, right? She would open up the letter and all she would look at is if the account did what, went up or down. And then she would just file it. She has no idea where the money's at. That's how much America is.

Well, and you don't get rich that way. You know, like if you want to really invest and get rich, it's like I'll give you an example. And I mean, you're right on the point here because I think people think that 25K is too small because, again, they don't understand what I said. They think, oh, if I want to buy a 200K property, I need 200 grand. But it's not the case like buying your own house, right? Like I...

bought one of my, I think it was my third deal back in the UK. It was like my best deal. I put 25K, a bit more, 30K in, mortgaged the rest on it. And that house was doubled in value in the last 10 years. And it makes about 15, 20 grand a year net profit. So it's like, you know, in 10 years, I make 200 grand profit and it's doubled in value when I sell it from a 25 grand investment. I made like a 10X on that money in cash.

worth another probably 150k in value add so it's like insane returns right isn't ever gonna get nothing close to that and that was with you know a small 25 30 grand i found a cheap house and a good deal and made it a value add so i could rent it for way more than the average and you just got to get creative right i mean you'll agree it's like the creative deal structure well and

And I'll add, I think that's a great example of what I see a lot of real estate professionals that want to be doing, let's say, more deals or bigger deals, but they might only have $25,000. And they're trying to do a deal in California, which we know would get you nothing, right? So this subject is near and dear to my heart because...

I gave you that stat. There's 100 million other Americans that have retirement accounts. So if I'm trying to close a deal and I have $50,000, but I've been...

I've had this roadblock of how to scale, but know this subject now. And I call Rudy, I'm like, hey, look, I got this deal. How about you and three or four of us put together 50 grand each from our IRAs? It's just sitting there anyways, you're not really watching it. Let's all partner in this next, this flip we're going to do or this deal we're going to buy and hold. So it should allow listeners to understand that there's a method for finding partners to do bigger deals and scale their business.

Yeah, I love that. And sometimes it's just stepping stone too, where it's like, if I had stayed in the UK, I'd probably have like hundreds of doors now and really gone into real estate. But I left that city after three years to move to America. So I kind of fell out of it. But like, I could have just like had that, done the value add, got the tenants in, showed the net yield, sold that house for 100 grand more to an investor because I did all the hard work renovating it and restructuring it.

And then I could have took that hundred grand profit I made plus my 25 grand cash back out. And now I could have got a half a million dollar house and then two years later done the same. So it can compound quickly too. If you, it's smart, right? You just got to, you know, like, I think your way is a better way, which I would advise too, which is also bringing in other money. But even if you don't want to do that, you're scared to maybe do that on the first couple of deals.

I have so many real estate friends. They started just how I explained it. And now they own, you know, $2,000 like you, you know. Yeah. Yeah. Yeah. Started with one, one beer. Yeah. And that's just, I mean, you just got to start doing it. And I think that's the, I think that's with anything, right? When we talk about any business or any venture or partner, it's,

working out. I mean, you just got to start doing it. Same thing with the self-directed IRA and start just little by little. You don't have to do all your money. You can put part, leave part of it in the market and then test out this concept and see how it goes.

Yeah, I put tens of millions back in my business. We grew it to 100 employees and 30 million. But I've so missed doing these real estate deals in America. So once I have a couple of exits, I'm going to do a bunch of stuff. Especially now, I'm married and my wife's a realtor. There's so many advantages to it.

So last couple of questions as we come to a close today. I would like to ask one more in 60 seconds. Any other secrets that most people don't know about when it comes to investing, financial management? For me, it's boring when it comes to secrets because I love boring and I want consistent. And so for me...

The message is you do not have to hit home runs. If you just start making double-digit returns, 10% or 12%, but not paying taxes on your gains...

That's the secret. We already talked about it, but I stick with like, sometime boring to me is very sexy. Is this up and down crazy? It's not for me. And I did up and down crazy for the first 10 years of my career, right? Because I did everything. But so that's, I feel like the secret is you don't need to diversify. Be really good at what you do. Don't invest in Bitcoin if you're not a Bitcoin person, even though your neighbors aren't. So that's my advice. Love to know,

Biggest win or proudest moment in business and then biggest failure? Proudest moment in business would be when in 2008, when I thought I, 2007, I thought I was the rock star. Anything I bought was gold, right? Just like everyone else in America. I went from being on paper worth, you know, as a young, in my 20s, being worth,

15 to $20 million to the following year being owing $25 million of banks. What I'm proud of is how I managed that and how the following year, 2009, I freaking put on my boots and,

went to work and I figured it out. And in that same year, I flipped over 300 homes and started from scratch and negotiate all that bad debt. And so that's my proudest moment because it was one of the hardest moments of my life when I had kids at home. It was, it was a very difficult time. That's a proud moment. Yeah. I like that. I mean, sometimes those combat moments are the best, right? I've had it a couple of times too, you know, and I mean, I,

I always say the higher you fly, right, the closer to the sun, the harder the burn. That's good. That's good. Yeah, yeah. That's great. And then last question. You know, if you could go back in time to your younger self, give yourself a tip, what would that be? Make decisions that make you sleep better at night, not what makes your bank account or your investment world bigger. And I just shared that with you. Similar to 2008,

that even though most people say,

Back then, leverage everything, take out your equity, double down on everything. I sleep better when there's money in my account, even though I know that money isn't working for me. So do what makes you sleep good at night. That's advice I give my young self. I've always done a bit of that too, you know, like some higher risk stuff and investing stuff, but having a bit of a cushion, it's always good. Because you also never know, you know, what's going to happen.

what's going to happen. I love that. So Greg, we had a great episode. If people want to learn more and read some of your social stuff and article website, learn more about you, where can they find you?

Yeah, just if you, my social is just Greg Herlene. My website's also gregherlene.com. My email is greg at Horizon Trust. Contact me. I'm very active. I care about our, my audience, my clients, my staff. We get to pick and choose our clients. So I, I,

I take a lot of value in that and take it seriously. So shoot me a message on social media. I'm the one that gets back to you. And so, or, you know, shoot me an email or visit me on the website. So we'll get back to everybody.

Love it. Love it. Great episode. Thanks so much for coming on, sharing some tips. Hopefully it got people hanging around investment, back strategy. And of course, you know, as we said, this isn't financial advice. This is all our own experiences and what we're doing. So always see, you know, an accountant or financial advisor before doing any of this stuff. And Greg, thanks so much for coming on today. And guys, keep working hard and live in the red line. I'll see you guys soon. Take care.