[00:00:00] Speaker A: Hello and welcome to Rental Property News. I'm Heather Anderson. Let's get started on our top story this evening.
This comes from Warren Buffett. You don't need 20 right decisions to get very rich. Four or five will probably do it. Let's take a listen.
[00:00:21] Speaker B: I've told students if when they got out of school they got a punch card with 20 punches on it and that's all the investment decisions they got to make in their entire life, they would get very rich because they would think very hard about each one. And you don't need 20 right decisions to get very rich.
Four or five will probably do it over time. So I don't worry too much about the things I don't understand. If you understand some of these businesses that are coming along and can spot things, if you can spot on Amazon, for example, I mean a tremendous accomplishment what Jeff Bezos has done. And I tip my hat to him, he's a wonderful businessman, he's a good guy too. But could I have anticipated that he would be the success and 10 others wouldn't be? I'm not good enough to do that. But I don't, fortunately I don't have to, you know, I don't have to form an opinion on Amazon and I do. I did form an opinion on the bank of America and I form an opinion on Coca Cola. I mean Coca Cola has been around since 1886. There's 1.8 billion, 1.8 billion 8 ounce servings of coca Cola products sold every day. Now if you take one penny and get one penny extra, that's $18 million a day. And 18 million times 365 is 7 billion, 3 less 730 billion or $6,570,000,000. So annually, $6,570,000,500,000 from one penny. Do you think Coca Cola is worth a penny more than, you know, Joe's Cola? I think so. So you know, and I've got about 127 years of history that would indicate it. So those are the kind of decisions I like to make. And you may have an entirely different field of expertise than I would have and probably much more up to date in terms of the kind of businesses that we're seeing evolve. And you can get very rich if you just understand a few of them and, and understand their future. But fortunately I don't have to.
[00:02:22] Speaker A: Four years now and I've told students.
So we got basically one of the richest self made men people in the world ever.
Michael Gomorrah seems to think he has no clue. So I don't know but Porsche Pooja agrees. For, for four to five to be right, you have to be choosy on the 20. Two will fail miserably. Ten will give an average return. Three above average, two exceptional. Top three will change your life. Now why are we talking about this? This is rental property news. But you know, this is applicable to any investment. This is how I think four or five will probably do it. Four or five rental property will get you to a millionaire status.
And Warren is famously known for this quote. Warren Buffett once said he'd buy a couple hundred thousand American homes and he'd take out 30 year mortgages to do it. Leveraging, using other people's money debt. We talked about this on our last episode. Here's how to load up on real estate in 2025. Thank you Money Wise for this article.
Back in 2012, Warren Buffett told CNBC that if there was a way to buy thousands of single family homes at once and manage them easily, he would load up. And a company that I worked for actually did that, called American Homes for Rent. He also emphasized he take out mortgages. And by the way, they didn't take up mortgages. Well, in a way they did. They leveraged a hedge fund to do it. But nonetheless, he said you could get mortgages at very, very low rates.
But for Buffett, those low mortgage rates were what made housing a great opportunity for them. He's a value investor after all, which means he seeks investments with low prices relative to what they're actually worth. The question is, with prices and interest rates now so much higher than they were, would Buffett's sentiments still hold for real estate as an investment now?
Well, Gemma, that's a decision our viewers and our listeners will have to make for themselves. Everybody's situation is different and there's no blanket advice for anyone.
For me personally, I decided years ago I was okay with not being a billionaire. I was good with just being a millionaire. And a few rental properties will do just that.
Let's take a look at Jake Leaked like, like the number one method to start flipping houses profitably. He says he's calling real estate investment investors and house flippers. And there's something in here for rental property folks. It's a different kind of strategy we haven't discussed yet on the episode of Rental Property News. But we're going to talk about it today and we're going to get to that. But before we do, there's a lot of information that's going to come at you on this Video. But I brought it in into our episode to show you some terms and what they mean and help you discern what is your pathway. So that's what we're going to do today. Let's take a look at what Jake has to say.
[00:05:33] Speaker C: Residential real estate investors. I got a problem. I need your help. So I'm talking to you house flippers, wholesalers, co sellers, wholesalers, b rrrrrr. People, gap funders, everybody making moves in 2025 in the residential real estate market. If you are looking to scale your portfolio, I'm talking directly to you. We well first off, I'm Jake Light, Founder CEO, Flip Secrets Real Estate Investor. For the last 13 years I've done over a thousand deals in that time frame.
We're the number one real estate education program in the United States. Got that designation by trustpilot not too long ago. And it brought an influx of resources, particularly lenders that want to fund our students deals. They've been doing that, that's been going very, very well. We're getting really good results.
But these lenders are putting pressure on me now saying that they want more people to fund. Wholesalers are placing their deals with our group. That's all fine and dandy. We got about 5,000 people in our network. But the lenders are saying they want even more. They have billions of dollars to place. They need my help. That's why I'm talking to you. We opened up 25 new scholarship opportunities within the program for our mentorship program where we help people scale the way that I did when I went from two properties a year to two properties a month and then up to two properties a week. It's a lever that we can pull up and down and it's a system of leverage. I'd like to show you how that worked for me and how we can work that system for you.
So that scholarship opportunity which is what we had retired is now back in full effect. We've got 25 more of them this month. So if you're interested in doing that, you have to have these four qualities. Number one, you got to understand that you do got to do a little bit of work.
Number two, you understand it's not free. This does require an investment. It's not super cheap, but it's not millions of dollars either. There's a very good return on investment for it. Number three, I don't want you if you're coming in and dipping a toe in the water. I want people that are diving in head first to this business now. It doesn't mean you got to quit your 9 to 5. If you're doing real estate on the side, doesn't mean that you know you have to replace your income, although many of our students do that. But what it means is I want you to be serious about assuming the identity of being a real estate investor in today's game, that's what I can work with. And then number four, I just want to make sure that you're teachable and coachable. Oftentimes when people are scaling their businesses, they have to unlearn certain things because when you go from, let's say, one to five flips or one to five deals per year, it's a different skill set going from 5 to 25 in a year. So I need your help in putting your ego to the side, just like I had to do in order to build upon the foundation that you have. If that's you, you may be my dream client. I'd love to work with you. But if it is you, book a call through the link below. You'll talk to one of my investors or one of my consultants, and we'll just see if there's a good fit and if we align with what we're both trying to do. I want people to partner with. I want good business partners. I want good business clients. I want people that are straightforward and transparent. So I'd love to talk to you if that's you. If not, no big deal. Keep scrolling.
But if it is you, looking forward to having my team talk with you. We'll see you on the other side. Talk soon. Have a great one.
[00:08:43] Speaker A: Okay, well, first of all, Jake, congratulations on your business, in your success, American dream pathway. Sounds like your pathway. And that is always admirable. Congratulations.
Now to our listeners, let's dissect this a little bit as to what Jake talking about. He threw a lot of terms at us. Flipper, wholesaler, co seller, whole teller, brr, Gap, funders. And then he used other words that are kind of code words or another word buzzwords. There we go. Teachable, coachable, scalable.
And then he looks like he wants volume or he's building volume to a year, to two a month, to two a week.
But the question is, friend, where are you?
Where are you? Are you?
Is some of these pathways right for you?
Is the timing right for you? Is it right for your skill set, your personality, your dreams, your goals?
And you don't need to know the answer to that right now. But if you're feeling anxious, because I'm feeling a little anxious, Listening to Jake's message, it's. It's an ambitious message, and it works for some people, but not all.
But if you're feeling a little anxious, just relax. We're gonna go through it, what all this means, and you can learn and take what you like and leave the rest. Let's go into it.
A flipper.
They call it flipper.
Is it that kind of flipper? Bigger?
I don't think so. I think Jake's talking about these kind of flippers. House flipping is a real estate strategy where someone buys a property, makes improvements, or sometimes holds it without significant changes, and then sells it for a profit. The goal is to buy low and sell high with a relatively short time frame. We kind of all know what flipping is because anybody that's watched HGTV in the last 15 years since the Great Recession knows exactly what it is.
Oh, I'm sorry for those nails. Rocky, sit down.
Sit.
Does your dog listen to you too, like mine does?
So you are aware of what flippers are?
See, they. They buy the house cheap, they do some work, and they sell it high. That's the idea. Remember Ty the builder? Okay, so maybe you're a flipper, maybe you're not.
Yeah. So you get to discern, is that your business model that you're in. You're going to need capital up front, you're going to need the time to do it, you're going to need the personality to achieve it, you're going to need the skill set, you're going to need all kinds of things. This very well might fit you.
It might not. Okay, the next term he mentioned is something called wholesaling. Well, wholesaling is an old term.
You know, we use it in the real estate world. But let's look at what a definition of it is. Wholesaling in general is buying goods in bulk, often directly from the manufacturer at a lower price than retail, and then reselling them to other businesses like retailers or other wholesalers. But retailers, you know, when you sell something retail that's like on market. So in real estate and rental property investing, when you buy a rental property, if it's on market, that means listed on the mls, which to you maybe as the consumer, that goes to Zillow and homes.com and Redfin and Trulia and all the other thousands of syndicated websites, that's called a syndicated website. It takes the data from the mls, the mothership, the multiple listing service, which is inputted by realtors in the market in which they work, and then that information is distributed to Those thousands of consumer faced websites that show you the properties that are available, but those are on market deals, those are listed. Sometimes there are still quote unquote below market pricing listed on the mls, but most of the time they're going to be resell. Okay, I'm sorry, retail priced most of the time.
And if we dissect that definition down further to what a real estate wholesaler is, to put it kind of easily, wholesalers actively seek distressed properties which are typically also off market. That means not listed on the mls. That might mean through means of door knocking, phone calling, foreclosure auctions, tax sales subject to deals, friend of a friend knows someone that needs to sell quick. Estate situations, hip pocket deals which are deals that also don't quite make it to market. And maybe the house has a peculiar situation as to why it might need to sell quickly.
Or other houses that are just distressed, maybe they have incredible foundation repairs or the roof is rotted out and the house is leaking and has mold and no one wants it.
Those are extreme situations. It doesn't have to be that aggressive. But those are examples. There's got to be a reason why the property would need to be discounted. Also. Also it could be just the market that we're in. Maybe there's too many sellers and not enough buyers, which typically is in alignment with a receding market. But it depends on how bad that receding market is. Also known as a recession.
Now the interesting thing about wholesaling is that a lot of times you assign the contract so the wholesaler doesn't actually close the property.
You can see that definition up here. A real estate wholesaler is someone who finds a property and puts it under contract, then assigns that contract to another investor, typically another flipper or a landlord for a fee. They don't actually purchase the property or make repairs. They profit from the difference between the purchase price and the resale price of the contract in which they sold it.
So they are playing basically real estate.
I don't want to say shell game, cuz that's not quite right, but I'm trying to think of a metaphor.
You know, it's kind of like you're buying something on credit.
Okay, this is a weak example, but you're buying something on credit and you put on your credit card. You know how you have, and maybe you don't have the money today. You, you can't actually afford this thing. Let's say you want to buy $1,000.
What's $1,000 in 2025?
What about a couch Probably a little bit of a cheap couch. But let's say you bought a thousand dollar couch, can't really afford it, you put on your credit card and you say, okay, I'm gonna find a way to pay for this within 30 days. But the time my first credit card bill is due and I'm gonna pay that off before the interest accrues on day 31. Okay, so you, you have the asset, the couch, this clock starts ticking and then you try to find a way to come up with the money for the amount of the catch, thousand dollars without interest before the 31st day.
It's kind of like that. Wholesaling is kind of like that. You're looking to have very specific time frame that you need to move this asset. You need to cover the cost of this, you need to get the seller paid for this asset and in return you're going to find, you're going to get a fee for doing that. Whereas in the credit card example you would, you would not pay the fee, but in essence you save money. Which in essence, you know, it's kind of like that, but in reverse. Okay, support. Poor job on my end, but hopefully that made a little bit of sense.
The next word he used was called a co seller. I have never heard of that.
So I, you know, started, you know, going down the Google rabbit trail.
And cooperative sell happens when a buyer is introduced to the property and represented in a buyer's agent who works for a different company than the listing agent who's representing the seller. I don't know if maybe he was talking about maybe cooperative. That's a word we use in the residential brokerage side or even in the commercial brokerage side too. It basically means it's a cooperative deal where the buyer has representation and the seller has representation. We're cooperative on the transaction. We are co oping the deal. There's two sides. Buy buyer, seller, agent, agent, and you're working together to get the deal done.
Two sides of the deal. Whereas if the seller sells direct or the buyer doesn't necessarily have an agent, that would not be a cooperative transaction.
But I also found where it talks about this co wholesaling. According to realestateskills.com they talk about co wholesaling, but in the URL it says, it says, yeah, co wholesaling. So I, you know, maybe that's what it is. But it says wholesaler A brings the property and wholesaler B brings the cash buyer.
So maybe it's kind of like two wholesalers are involved as opposed to one Wholesaler.
If anybody knows more about this, let me know.
I don't really understand. I mean, I guess, you know, traditionally in a regular wholesale deal, it's like wholesaler a goes directly to the cash buyer, which is typically the investor, the flipper. And then the flipper is going to do, you know, take ownership, close on the property, do the upgrades, and then flip it, sell it on the retail market for a profit. So maybe there's two wholesalers involved in this.
I don't know. Okay. Another term I'd never heard of before is called whole telling. Wholet telling is a hybrid real estate investing strategy that combines elements of both wholesaling and flipping. Okay. It involves purchasing a property, making minimal cosmetic updates or repairs, and then selling it to a retail buyer to make a profit. So that had to read that a few times. And then I found a video. Let's watch this and then we'll go through the analysis of what I boiled this down to.
[00:19:59] Speaker D: You have the seller, you agree on a price. Let's say it's $100,000, but it's worth $130,000.
You get the property under contract for $100,000, where you could buy it for $100,000, but you're not going to do that. You're then going to assign that, that contract, that right to buy it for $100,000 to a investor or somebody else. And you're going to tack on like just a nominal fee, maybe like three or five thousand dollars to the investor to pay for that. And then you make $5,000. The property doesn't even go into your name, it goes directly to the buyer. And you're just a middleman. Just like a realtor. I, as an Investor, I own 30 plus properties and I teach people how to invest in rental properties. And, and I absolutely love using wholesalers because wholesalers are amazing. They make me money hand over fist because while I'm sleeping, they're working, they're working their tails off. And they send me emails every single morning. I'll be sipping my cup of coffee and reading newspaper. But then, hey, I got an email. Hey, a wholesaler just sent me an email with a good property. Let me look at it, I'll analyze it and then I'll probably buy the properties. I get so many wholesalers sending me deals. But, but they make money and it's worthwhile for them to make money and it's worthwhile for me because they brought me a deal. I didn't do any work. Now wholetailing is where you Combine both of those together, flipping and wholesaling together.
So instead of wholesaling, you are going to actually do the work yourself, but you're not going to do it so crazy. Like, you're not going to actually rip out the kitchen. You're not going to rip out the bathrooms. You're not going to. You're not going to remodel or add a whole nother addition. You're not going to do that. But what you are going to do is you're going to make it nice, nice enough for a normal person that was just, you know, not really, really fancy, high expensive. Like, let's say you buy it for $100,000 and you put in $10,000 with painting and, you know, just changing out the electrical lights and the sockets and stuff like that. But you spend $10,000 instead of $50,000. Remember, $50,000 would be a whole flip. Instead of doing that, you spend $10,000 and you do things like paint the house inside and out. You make the yard look good. You just make it look really appealing. You know, maybe put new carpet in so you do a few things as opposed to big remodels. And then what you do, instead of selling it for, like, you know, $250,000 or $200,000, you sell it. So you bought it for $100,000, you put $10,000 into it. So you're $110,000, you into the property. Let's say you sell it for $130,000. Well, you just made $20,000. We need to make sure that we get the real estate fees and everything in there. So let's say we market the price the property at $140,000. Well, it shows much better because you have all the previous owners stuff out. You took out all their junk or whatever it was, you cleaned up the house, you make it look really, really nice, very presentable for everybody, so that then you are now able to resell that, that property at a better price. Not something like you actually added another room, you remodeled the kitchen. Not that type of price, but you're still making. Instead of wholesaling, you're making three to $5,000. Flipping, you're gonna make about $100,000, give or take. But if you're wholetailing, you might be making about $30,000, 20, 30, 40, $50,000, depending on the property, depending on how much you buy it for and how much you put into it. And so that's what wholetailing is all about. And, and so it's A combination. So this is just another tool in a real estate investors tool tool belt. Just like renting. Rental properties are fantastic. Flipping is fantastic. Wholesaling is fantastic. Now wholesaling is fantastic as well. So I want you to be completely successful in your real estate investing business. So add wholetailing into your business and there are so many steps. Go to the show notes page in the description. I'll walk you through the.
[00:23:53] Speaker A: Okay my friend, thank you. What a. What a wonderful explanation.
And this is master passiveincome.com sounds like this gentleman's done a wonderful job at giving a beautiful website with lots of courses and tools and free stuff and books and what a beautiful family. He has 30 properties he said he has and just excellent. So thanks for that explanation. To me my takeaway is basically it's a flip but it's a. It's a small flip and they're just. This is a new word for it. You will find that in investing in any facet that new words create new brands, which create new energy, which create new interest, which create new ways to sell things. So that's part of what we're doing in our RPN for you is helping you discern what is the right fit for you. So you can remove all the flashy lights and the new words and the lingo and the conversation with your friends and just boil it all down to what makes sense for you and what are you able to and willing to do to grow your one wild and precious life.
What investment pathway do you want to do? This gentleman sounds like a professional investor.
I bet it's another American dream story.
Maybe that's you, maybe it isn't. If it's not you, you might not ever have the time, treasure and talent to do all those facets of this business. Because that's part of our journey at RPN is to show you how many layers and layers within layers and layers within layers within layers within layers. There are just in this one episode we're going through several terms from one video in one sect of rental of real estate investing. Not even rental property investing. We haven't even got to that section yet. We'll get to that in a second here. But there's a company that did does this basically this whole telling. They don't call it that.
They came out around. Yeah almost 10 years ago was kind of my first memory. 2015, 2016 I believe I started working with them then. And they buy your house open door. I'm sure you've heard of them. They've Done a lot of marketing. They are national presence, but what they try to do is like go direct to consumer and say, hey look, we're going to buy your house.
Okay. We're gonna send you an offer on your house and then we're that offer, you know, we're gonna get you that offer. It's gonna have a fee in there, okay. So it's kind of like real estate fees to sell your house. They pretty much charge that. And then once they see the house, you know, they're gonna do a condition adjustment.
Okay. And then, and then if you, they're going to show you obviously your closing costs and then your net proceeds, okay. So it's very similar to what a realtor does, but they're doing it with technology, they're doing it as a big company, they're doing it as a massive, you know, macro level business model.
And what they do though, their business model, I was, I worked with them directly as an agent that would list these properties after they would do the rehabs. And they wouldn't do big rehabs, they would do these whole telling type things, these light rehabs. Okay. Now granted, they would own the property. So they would, when the seller wanted to sell. Open Door llc, Open Door ltd, Open Door Texas division, New York division, California division, Arizona division. Whatever buys the house, takes title. They own it and then they list it. They do the, or they do the cosmetic updates, okay. Which is what this gentleman was talking about. The whole telling model, not a heavy, huge rehab, moving walls, changing floor plans. They're doing paint, carpet, a punch list, landscaping, doing a deep cleaning and throwing it on the market. And that's what they're doing.
And, and so they, they've done this for a long time. Well, 10 years almost.
And so again, it's been around every. There's pretty much nothing new under the sun. It's just new terms usually.
So the next thing that he mentioned was called the B. R. R. The barber it stands for buy.
Buy a property that needs some work.
So you take ownership.
This one's more in the rental property category. Rehab it. So again, you're usually doing lighter rehabs like they talked about in that whole telling model like they talk about, like we, like they do an open door. It could be a big rehab, but usually not. And then you're going to rent it, okay? You're going to rent it and get the rental income in and then you're going to refinance it, okay.
And then you're going to repeat. That's what they're Saying, okay, that's how they get b rrrrr. And this was popular. This was. I remember learning about this in about 2012 and I think I even. That was the first burr that I did.
Yeah, sort of the last bur. First and last. No real reason other than I just wanted to try.
Worked out. Okay. I don't remember anything significant. My goal was to put less than 20 down. So I paid cash and then I did some paint, carpet and updates and then I refinanced or I did a loan and then I was able to at the end of the day put like 13 down instead of 20% down. So yeah, I would call that success.
Okay, now the guys that came up with that, again, they branded this. Okay, they branded this. Maybe this was around before that. But the bigger pockets guys, I remember them very clearly branding it back in the day. And they were the ones that they wrote a book about it. Okay.
It was all over their website. It was kind of like a big legion top of the funnel marketing pathway to get you to their website and teach you about their brand. And this was kind of a niche thing that they did to do that. Okay, so great article here. If you want to check this out on biggerpockets.com it's a free article a lot of times. Well, not a lot of times. Some of their stuff you pay for because it's a member based community and a great resource. But they do have some free, free stuff too in this articles. One of them, you know, so popular where you can even buy a T shirt if you want to. Okay, find your people.
So next he talked about gap financing. Gap financing has a Wikipedia page, so it must be something, right?
It says gap financing. Oh, this article has multiple issues. Well, hey, probably so does this video. But again, we're going to take what we like and leave the rest. We're just getting a general idea of these things. Gap financing is a term mostly associated with mortgage loans or property loans. It is an interim loan given by any bank to a person until they can get money from somewhere else, often so that they are able to buy another house before they sell their own. What does that mean? Here's a quick video explaining it is gap funding.
[00:31:19] Speaker E: Gap funding is a term used to describe a loan that real estate investors use to cover the down payment for a larger loan on a property. To give an example, let's say an investor buys this property right here for $100,000 and they go to a local bank who is willing to give them a loan of $75,000. This means the borrower will need to come up with a $25,000 down payment. But let's say that the investor doesn't want to put $25,000 down. They can reach out to their network and find an individual with $25,000 who will loan them the money for the down payment. In exchange for loaning the money, the private lender will collect a high rate of interest and and be secured against the property in second position to the bank that went the $75,000. This means that if the borrower defaults on either loan and goes to foreclosure, the bank will get paid back first. Then any of the leftover proceeds will go toward paying the individual that provided the gap funding. For that reason, we don't necessarily recommend this kind of lending. But there are individuals who are willing to provide this type of financing. You just need to find them. For more real estate knowledge like this, be sure to hit that follow button.
[00:32:16] Speaker A: Okay, so thank you, Sharper Capital Partners. Does that make a little more sense?
Basically, we can look at this image here from Blue Bay Capital.
Bbcfunding.com what is Gap funding? So you have a lender and you have a borrower.
The purchase is 300,000.
The max purchase loan to value PLTV is 80% of the 300,000. So that would mean the down payment is 20% of the purchase.
The future value is 375,000. That's also known as the ARV after repair value. The borrower needs 60,000 for the down payment, which is 20% of 320, 40, 60 and then 35,000 for repairs. That means they need 95,000 which would be this gap funding given by a second lender. Okay, which would take second position. Right. You're going to pay more for that and the term is going to be shorter for sure.
This gentleman over
[email protected] he says, you know, earlier in the Wikipedia, I believe it's talked about bridge loans, gap funding.
Those are terms that might be interchangeable in some cases. But Daniel Dominguez here, the loan officer says, hey, what is a bridge loan? A bridge loan is a short term loan that provides quick access to capital. Okay, difference between bridge gap funding and bridge loans. While similar gap funding usually refers to smaller interim financing to complete a project or deal that's like what we're talking about. Whereas bridge loans are often larger loans used to finance the purchase of a new property or assets while waiting for the sale of an existing property or long term funding. Sometimes we have this kind of Situation with construction loans, when people are building new construction and they don't have the money quite yet, but they have to sell their house, but they don't want to sell their house until the new house is ready. We might see those situations. And thank you, Daniel, for that explanation.
Investopedia kind of gives us what is short term debt. Daniel mentioned that. Well, according to Investopedia says short term debt is a firm's financial obligations that are expected to be paid off in one year. So remember that. Remember that, okay? When using gap financing, that is a risky move if you're ever going to do something like that on a long term asset like a rental property, not a good move unless you're extremely sophisticated and well, basically you got a lot of money, okay? To match a long term asset with a short term debt, very, very risky for us normal folks wanted to give you that definition so you can understand.
So remember, this might feel overwhelming like we talked about. Maybe it does, maybe it doesn't. I don't know. There's so many feelings, I'm sure, that are happening right now with our beautiful listeners out there. But remember, comparison is the thief of all joy. Theodore Roosevelt was quoted as saying this, but we know there's nothing new under the sun. So chances are this came from the Bible and it did. In Philippians 4, 12, 13, it says, I know what it is to be in need, and I know what it is to have plenty. I've learned the secret of being content in every situation, whether well fed or hungry, whether living in plenty or in want. I can do all this through him who gives me strength. And you might remember Tim Tebow and his famous under eye patches with Philippians 4:13 on them.
So even this guy Michael Jordan, you know, reminds us that really we're our biggest enemies. So don't feel like you have to do all of these.
Flip wholesale. Koso Hotel Burr. Okay? This is your one wild and precious life. Remember what Warren said, You only need a few victories.
Four or five will probably do it. He said, yeah, you could have 30, but you don't need 30.
You only need four or five.
[00:36:39] Speaker B: Hive.
[00:36:40] Speaker A: And at the end of the day, it's you versus you.
[00:36:46] Speaker F: Let's see what you can do now.
[00:36:47] Speaker D: Oh, man.
[00:36:48] Speaker F: Don't smile, kid.
[00:36:49] Speaker C: How much you want all day?
[00:36:53] Speaker F: Oh, got to stay down.
[00:36:55] Speaker A: I got that.
[00:36:55] Speaker F: You got what? That's youngster for you. Just when you thought it was safe to come outside.
I won't score again. How you like that rainbow? We're not done.
[00:37:05] Speaker C: Excuse me.
[00:37:08] Speaker F: Had enough look here, sucker.
[00:37:12] Speaker E: You reach.
[00:37:13] Speaker F: I teach.
Lesson just started.
That's ugly.
[00:37:21] Speaker A: Could have done.
[00:37:23] Speaker F: You should have done.
[00:37:26] Speaker A: So just like the goat teaches us to prepare for our future, we must first learn from our past.
And on this day, on April 15th, when did that become the tax filing deadline?
You know, effectively in 1955. And the IRS marks its 70th anniversary of April 15th tax filing deadline this year.
From Washington. On this tax day, the Internal Revenue Service marks a Major milestone the 70th anniversary of April 15 Federal income tax filing deadline Since April 1955, April 15 has served as a consistent annual deadline for millions of Americans to file their federal income tax returns, becoming a fixture in the nation's financial calendar.
Let's look at the history to understand that a little better. The Internal Revenue Service wasn't created in its current form all at once, but evolved over time. Here is the breakdown. Originally, in 1862, the Revenue act was passed by President Abraham Lincoln in Congress to fund the Civil War.
Initially, it was 3% on incomes between 610,000 and 5% on incomes over 10,000. Curious to know how much was 10,000 back in 1818 62? $10,000 in 1862 is equivalent in purchasing power today to about 316,000 today, an increase of 306,000 over 163 years. The dollar had an average inflation rate of 2.14% per year between 1862 and today, producing a cumulative price increase of 3,066%.
So how does 2.14% per year inflation equate to 3,000%? Well, that's the beauty of compound interest.
Warren Buffett alluded to that a little bit in the beginning when he talked about the history and the longevity of Coca Cola.
So the starting amount, $10,000 over 163 years at 2.14% annually, not making any additional contributions.
Results $315,445.
Not too bad.
And back over here, after the Civil War, the income tax was repealed in 1872. And then back in 1894, about 22 years later, the Wilson Gorman Tariff act re established the income tax, but the Supreme Court declared it unconstitutional in 1895.
They decided the Supreme Court decided it was a direct tax and needed to be divided among the states based on population.
The 16th Amendment, however, brought it back in to a permanent income tax.
The push for a permanent federal income tax continued, leading the ratification of the 16th Amendment to the US Constitution in 1913.
So let's look at our history here to see what this Wilson Gorman tariff was all about of 1894. They slightly reduced the United States rates from numbers set in 1890 from the McKinley tariff and imposed a 2% tax on income over 4,000.
It is named for William Wilson, representative from West Virginia, chair of the U.S. house Ways and Means Committee which we still have today and Senator Arthur P. Goman of Maryland, both Democrats supported by pro free trade members of the Democratic party. This attempt at tariff reform imposed a peacetime income tax 2% on income over 4,000 equivalent to 145,000 in 2024 which meant fewer than 1% of the households would pay any.
Does that sound familiar to you? The purpose of the income tax was to make up for revenue that would be lost by tariff reductions.
So let's take a look and see what the chain looked like here. They said,19 oh Night Grover Cleveland who was our President in 1893-1897 and then McKinley, Roosevelt and Taft. These were the years where they did not allow the income tax. And then let's see here, got signed in in 1913 by President Woodrow Wilson from the as a result of the ratification of the 16th Amendment. So President Woodrow Wilson down here.
So in order to prepare for the future we must first learn from the past. And the things we're still debating about today appear to be debated about all the way back in the late 1800s in the early 1900s and then in 1953 the agency was reorganized and officially renamed the IRS.
So that was during Eisenhower's term. If we go down here a little bit to 1953, Dwight D. Eisenhower right there.
1953 to 1960 he served two terms and he 1953 President Dwight Eisenhower crossed party lines and named Virginia Democrat to be the new Commissioner of Internal Revenue. T. Coleman Andrews brought several virtues to the job including a reputation for toughness and a set of strong convictions.
Amongst other things he was continued to bureaucratic reform, fiscal austerity and vigorous enforcement of revenue laws.
Interesting.
Does life imitate art or art or future? Does history imitate the future or the future representative of the past?
So Andrews was both pro taxpayer pro business.
But you know, as he learned about the IRS he decided he was not a fan. In the summer of 1953, Andrews dispatched hundreds of IRS employees to knock on doors across New England looking for tax delinquents. The result was impressive. As Andrews begged to a meeting of the Tax Executives Institute. New returns and payments were poor pouring in in regional offices. It all is up to the fact that they were causing a lot of folks to face up to their tax obligations for the first time.
Meanwhile, however, Andrews was struggling with his personal feelings about income tax. For the most part, he kept his doubts to himself. But in 1955, he resigned the post and set out to tell the world about the evils of progressive income tax.
Andrews gave a series of speeches outlining problems in the tax system.
In April of 1956, he endorsed a constitutional amendment to cap personal rates at 25%.
It failed, but only narrowly. He also insisted the federal government should stop taxing estates.
His biggest splash came in May of 1956, when he gave a lengthy interview to U.S. news & World Report.
Replacing the income tax was vital, he told the magazine. Less Americans were prepared to resign ourselves to slavery. The future was clear.
Absolutism in one form or another is the inevitable end of steeply graduated taxes on income and inheritances, he declared, an absolution in any form of slavery.
So, needless to say, he wasn't a fan.
But at the end, he said, Andrews made his mark during a crucial period. He gave an important credibility to a brewing conservative revolt. And he did with a genuine rhetorical flourish. Maybe, Andrews told U.S. news in one of his most famous comments, we ought to see that every person who gets a tax return receives a copy of the Communist Manifesto with it so we can see what's happening to him.
So as we sign off on this episode of Rental Property News, maybe we rest in the words of the Bible or the words of Theodore Roosevelt or the words of Warren Buffett. But above all, friend, remember to stay focused on your micro goals, because those are what you are here to do. The world will be the world, and history will always repeat itself. And all you need to do is have four or five, because that will probably do it. Thank you for listening. Please subscribe if you like what you're hearing.
