I am making a MILLION DOLLAR move

Now next 12 to 24 months, I'm kind of afraid. I think I squeaked in in October, but it's just gone nut Bar Factor 6 right now.

Hey everyone, my name is Mike Andes. I'm the founder of Augusta Lawn Care. We have over 85 locations around North America. Today I'm going to be talking to you about how throughout Covid until last September, October of 2021, I was able to get 20 units of rental property and how I sold out half of my stock port stock portfolio at the very top of the market. And how I'm making a re entrance into the market now that we have a big fear catalyst of war as well as high interest rate. If you go back To October of 2021, you can watch this video here where I talk about me selling out of the market. I was going to sell half of my stock portfolio, ended up selling about 60% of my stock portfolio and I was moving that into real estate. I'm going to talk about why I did that in just a second. But let me go back to April and May of 2020. That's right here on this graph. Now this graph here is kind of the general overall what the stock market over the past couple years, big dip here during COVID spring of 2020. Now, once I saw that the Fed was gonna step in here at the bottom of the dip and they promised to basically cut interest rates down dramatically and they were going to buy a whole bunch of bonds. Well, in that case, that's when I went ahead and entered the market and I put in about 300,000, a little less than $300,000 that was sitting in a bank account, was making like a quarter percent on interest. I put that money in. Now over the course of this time I grew this to about just over $1 million in the stock portfolio. But throughout this time, I leveraged that portfolio and I leveraged that asset to go buy real estate. Because when you can show that to a loan officer, Look, I got 5, 6, $700,000 in stocks in a portfolio and they're liquid. You can really use that to go get some real estate. So in this period of time, I got 20 units of real estate. Now if you go back and watch the videos that I made throughout this period of time, I said very specifically, the reason I am getting this real estate is because I feel like the equity is going to go up. I'm going to force appreciation by raising rents, improving the property, buying these properties when in our state no one wanted to buy because landlords were could not evict. People were trashing the units. It was a mess. So I was going to buy those up, improve the properties, raise rents, improve the value, gain equity, and then take the equity and use it as a way to create leverage that I could use to really grow my businesses. Because I knew, I already knew back here that we were going to need a couple million dollars for Augusta Lawn Care, either from an investor or someplace. Because when you start growing to a certain point, you need a lot of capital to keep investing in infrastructure and the software. And you're not profitable yet, and we still aren't. And so throughout this period of time, 20 units of rental property is what I got. Equities were all increasing. We raised rent substantially. But right here is when I got the second of these 10 units. So I got 10 units here, but right here I got 10 more units. This is kind of capped off another 10 units. What I surely should have done here is I should have said this was just 10 units. Okay, so I got up to 10 units right here and I bought another 10 units here. Now, at this point, what I said in October of 2021, and you can watch the video right here where I stated that I'm selling out half of my stock portfolio and I'm moving that into this 10 unit apartment complex of real estate. And I said so because I truly believe that 2020 was going to be a lousier year for the stock market. After two very, very hot years, massive gains in the stock market. I believe that it was going to be a hard year for 2022 for a couple reasons. One, inflation. Two, because it was very hard to compare the sales of 2022 against 2021 when everything was going so well. Back in 2021, when there's tons of stimulus money, people were spending like crazy. Yeah, it's really great growth in these companies. But I believe that once stimulus kind of wore off and rents had to be paid again and student debt had to be paid again, that people were going to spend less. And therefore the comps or the comparables of companies compared to last year was not going to be like, incredible. And so that's why I sold off more than half of my stock portfolio, moved it into real estate. But again, I'm not like a real estate person. I'm not a stock guy. I love business. I use these as vehicles to take my cash. Instead of sitting in a bank account losing 7% a year in inflation, I want it to work for me. So here I sold out over half of my stock Portfolio, moved it into real estate. This one real estate deal, I'm just gonna look at this one because these 10 units have done well. They've actually done substantially better than these ones because I've had them longer. However, let's just look at this 10 unit deal that I bought last October, alright? This one deal, I put $1.8 million in terms of the purchase price, I put over half, about half, I should say $800,000 of equity or you know, I put cash into this deal. So $800,000 I put down in the deal, got a million dollars worth of debt. I then have put since a little less than $100,000 in improvements. So fixing the building up, cleaning it up, you know, fixing the parking lot and all the rest of it. So I'm in on this deal. Let's just say 1.9, okay? Now in terms of cash, about $900,000 that I'm in on this deal because I invested in this property, fixed it up, improved it, raised the rents by 50, 60, 70%. By doing that, I believe that the property's value is probably at least $2.5 million, at least. I think if I put it on the market right now, we would sell it in a heartbeat. Problem is, if I did that, I would be taxed literally on like $600,000 in gains and it'd be short term capital gains because I literally just bought it several months ago. I don't want to do that. I'm not really interested in selling real estate. But the really cool thing is now that I have all of this equity, remember I put about $800,000 into this property of cash. What that means is I have about $1.7 million in equity on this property. And this is what we're using to leverage and take money out of the property. Because guess what, if I sold this, I would have to pay taxes. If I take out a line of credit or a loan backed by this property, I can take it out for 3, 4% interest. It's not a taxable event. I got all that money back. Not a taxable event. And furthermore, the interest that on that loan is now a deductible line on my taxes I get actually expense it as, you know, take it against the income that I make. So what we're doing right now is I am taking a loan. I stated this in the video. Most recently I said I'm making over a million dollars worth of debt. All of that is backed by my real estate equity. Okay, now that's just this one deal the 10 units here. I have more equity in these other units here. But, but what I'm doing is I'm taking lines of credit out on these properties against my home equity, against the equity of that real estate. And it's going to be at 3,4% interest over the course of 30 years. It's great debt. And what we're going to do is invest that in the business because I truly believe that that's where my next outsized returns are, right here. Big opportunity in stock market throughout this whole period of time. Lots of opportunity in the real estate market. I'm not buying real estate right now. I'm not buying it anytime soon. It's extremely expensive. Lots of like where you're paying ultra, ultra premium. I don't feel like you're going to be able to do what I did here in the next three months, turn a property into $600,000 worth of equity like I did here. I don't think that's going to happen right now. I think I squeaked in in October, but it's just gone nut Bar Factor 6 right now. And mortgage interest rates are going up, which means my returns on a monthly basis of cash flow is decreasing. This is what's really interesting though is right now I see this opportunity because we've had the one war and some massive fear of inflation and rates going back up from the Fed. And so the stock market's come back down. And so I have to ask myself, like, okay, I predicted that this would happen, like we'd have a bit of a crash or a bit of a downturn in the stock market. And I'm happy I sold out half my position. If I would not have sold out that, you know, $600,000 of this portfolio here, I would have lost about $250,000 just in the past few months. So now the question is, okay, I know in the long run I took out this loan for the business and that's where the going towards, but how can I raise cash right now? Because right now I feel like there's a lot of opportunity in the market to buy some of these companies that are 60, 70% down. And I think that could actually go a little bit further down. Could I potentially get some cash and then ride up a short term wave before we probably come back down? I think in the next 12 to 24 months we're going to have a reckoning with inflation. We're going to have a reckoning where we have to raise interest rates substantially. And that will eventually, in my mind potentially lead to like a potential recession or big, big downturn or a very long period of four or five years where we don't really have a lot of returns in the stock market. But I truly believe there's going to be an opportunity here in the next six months. You know, knock on wood. The Russia catalysts go away of fear as well as the fact that we aren't going to get rug pulled by the Fed and they're not going to jack up interest rates by 5%. You know, if that does not happen, there's a very good chance in the next six to 12 months we have a really nice kind of bounce back on the stock market. So what am I doing? I'm selling the gym. Now, this is not simply because of this. I was planning to do this anyways about a few months ago, already starting to plan this. But what this is going to do, it's going to allow me to have cash right here. I've paid the gym off, the gym was paid off and it's going to give me almost $600,000 worth of cash to go and put in the market. Now I'm not going to put all of my money in the market. I'm going to take about half of it though, and put it in the market. Because I feel like right now there's some really good opportunities in the market in terms of companies that have gone down 50, 60, 70% from their highs and are now actually good value plays. And like Facebook is at like 13, 14 times earnings. That's crazy. A year ago they were at 40, 50 times earnings in terms of their valuation. I think there's going to be a good opportunity here to take my, you know, three, $400,000 that I put into the market, turn that into six, $700,000 and you say, well, what are you going to do with that? Well, that is going to help pay off some bad debt. Now I don't think it's bad debt necessarily, but it's interest rates that are higher because this interest rate down here is about 3 to 4% against my real estate estate. It's over the course of like 30 years that I'm able to pay this thing off. Great debt. I love that. I like long term debt and I like low interest rate debt. That's fixed, fixed interest rate. I love it. You're not going to beat it at 3, 4%. It's fantastic. But what we are doing also is we're taking almost $3 million worth of debt for a building an SBA504 loan. Problem with that is I'm not gonna fix my interest rate until we're done the building project and the end of the this year. And I don't. I would not be surprised if my interest rate is over 6% and nearing 6 and a half percent. Right now it's like 5, 5 and a half. But the way interest rates are going by the time I lock in my rate it's gonna be short term, 10 years and probably gonna end up being like 6% interest. So I want to put, I want to pay that bad boy off over the course of the next 12 months as we're building this place, I'm going to be trying to look for arbitrages in the market to put my capital from paying off the gym and then selling it generally I make about $600,000 in cash. I'm to going, going to try my very best to actually pay off the 504 loan over the next few years instead of this great debt that I got against the equity in my real estate. Okay, so that's the plan. If it was way over your head. Don't worry about it. Watch my videos though about business. I'm just, I love business. This other stuff with real estate and equity and the stock market and kind of more of a trader's mentality of hey, I feel like we got a good opportunity next six months in the stock market market now next 12 to 24 months. I'm kind of afraid there's a really good chance in six to eight months I'm going to make another video saying alright, I'm selling all my stocks, I'm getting out, I'm taking that cash and I'm going to either wait on the sidelines or I'm going to go put that towards debt that is at 5, 6, 7% interest. By that time I'm not going to pay off my 3 to 4% interest. That's going to be the next 30 years and I'm very, very happy to have that long term low interest debt indeed General. Any debt that's under 5% interest I want as much as possible as long as I'm buying assets that cash flow with time and have a good return. And I believe my business is a great vehicle for investment and building my net worth and can kick off great returns in five or 10 years far beyond the stock market or real estate. That's what my main focus is, the business. But in the short term to raise capital and make sure I don't have to go out get Outside investors for the business. I'm playing the game of revenue, real estate and the stock market to raise capital and make sure that we have enough cash on hand. I hope that was helpful. This is maybe not so much for you as it is for me. We will look back in 10, 15 years and smile at these numbers and how we kind of thought things out. But trust me, knowing the market and the macroeconomics is good for your small business. I don't care if you're a landscaper, a roofer, a contractor, a cleaner. Stay abroad. Stay, stay abreast with what's going on in the economy. Stay abreast with what's going on. Inflation and interest rates. These things can affect your business. They affect the labor, they affect how much you have to pay for labor and where marketing is going. What is going to be the best opportunity to spend money on marketing? This is something I'm thinking about a lot with Augusta Lawn care. What is 2022 going to be when it comes to marketing and hiring? And these are the trends that move the needle. When Fortune 500 companies start moving their marketing budget and moving, how many people are laying off or hiring? That is going to affect your small business. And if you look at last month when I shared the number about small business in America, you could see how just mad I was and frustrated by the fact that, you know, the headline was 500,000 new jobs added in America in that time, when they broke it down by sector in that same time that we had a positive net of 500,000 jobs, small businesses lost almost 100,000 jobs in that same month. And the reason for that, in my opinion is because many small business owners are not looking at the economy and seeing what, where are the opportunities? Where can I move my money to get a better return? How can I look at macroeconomic trends that I cannot affect? I am just a player in this game. But if I want to win in this game, I'm going to understand inflation, I'm going to understand the stock market, I'm going to understand real estate. And so educate yourself, learn this stuff. It's not easy. It's a long term game. I'm not telling you to go invest in stocks right now. I'm not telling you to go invest in real estate. But start the process of educating yourself. So you, when you see an opportunity, when you see the chance to get out of the market or get back in, that is your time to pounce. But you've got to be educated. Before I invested here, I spent five, six, seven years educating myself about real estate and stocks and returns and macroeconomics. I went to business school. That was all part of my education to be able to make this happen. Never forget that. I don't care if you got a college degree. I don't care if you graduated high school. You can learn podcasts and books like I wrote this book about P4P pay for performance. Why hourly is a failing formula. Read it. It's a dollar on Amazon. This is the way to educate yourself. Create outsized returns and set yourself up for your family, your business, and for your future. I'm Mike Andes, and we'll see you tomorrow.