Zero To A Hundred – Episode 4: Unlocking Real Estate Wealth For Entrepreneurs With Mike Liguori!

Hey Accelerators! 🚀 This week on “Zero to a Hundred,” we’re diving deep into the world of real estate and financial strategies with Mike “The Money Man” Liguori. If you’re a business owner struggling to get that mortgage or looking to build a real estate portfolio, this episode is packed with golden insights.💡

🔹 What’s on the Menu:

• Unlocking real estate financing secrets for business owners
• How to qualify for that dream home even with heavy tax write-offs
• Cost segregation strategies that can save you big bucks

🔥 Why Tune In?

• Discover how to leverage your business revenue for real estate investments
• Learn the insider tricks to securing the best deals
• Mike breaks down complex financial concepts into easy-to-understand advice that can make a real difference in your financial journey.

💬 Gem from Mike: “Don’t buy for ego—buy for cash flow and appreciation.”

📞 Get in Touch with Mike:

• 🌐 ModernDayLending.com

Don’t miss out—hit that subscribe button and let’s take your business from zero to a hundred! 💥

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Watch the episode here

Listen to the podcast here

Unlocking Real Estate Wealth For Entrepreneurs With Mike Liguori!

I’m very excited to introduce Mike “The Money Man” Liguori. We are going to talk all about real estate and mortgages, how you, as a business owner, can get approved for a mortgage with no income, how you can use your 401(k) and IRA to your advantage. Also, creative ways such as applying cost segregation to offset your business revenue, investing in real estate, and keeping a heck of a lot more money in your pocket and are the secrets of the ultra-wealthy. Mike has worked for huge firms such as KKR, and he’s also the Founder and CEO of Modern Day Lending. Let’s accelerate together.

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Mike “The Money Man” Ligouri, welcome to the show. It’s great to have you.

Thanks for having me. I appreciate it.

I am very excited about this conversation because it’s going to add massive value to the audience. We are going to cover a ton of things based around real estate and how you as a business owner can capitalize on real estate. What I love about Mike “The Money Man” Liguori, you’ve always got incredible stories. You are always dealing with things that are unique situations with these business owners.

What do you see in this marketplace when somebody who is a business owner comes to you for a mortgage? How are you helping them get over the finish line? A lot of business owners have issues getting mortgages, getting SBA Loans, and getting any type of credit because of the way their taxes work, how they claim income, etc. Give us a little overview of what’s happening in the market.

Challenges For Business Owners Getting Mortgages

From somebody in my point of view, it’s rather simple. You are a business owner, you’re 1099, and you are self-employed. You are taking advantage of the tax code in this country, and because of that, you are able to write off your income. After 2008, a lot of these banks lost all their creativity. They lost all their common sense.

There are a lot of things that were put into place that make it extremely difficult for small business owners or people who are using those taxes close to their advantage to get financing, specifically in the mortgage-related world. By the time they get to me, they are so relieved that somebody understands their situation. “Yes, I make $1 million a year, but I’m writing off $850,000 of it. I’m only showing $100,000-plus income. I can’t get to $1 million to a $1 million property. Every bank is denying me. They don’t understand my situation.”

From there, it’s more or less understanding the dynamic of owning 1 or 10 laundromats. You are making $100,000 a month per laundromat, but you are writing off $90,000 of it. On paper, you are not qualified for a $2 million loan under the general sense of how this is a bit but together since the financial crisis. It’s frustrating.

What do you need to do? I love the example of the laundromat owner who has ten laundromats, you are doing $1 million a month, but $900,000 of that $1 million a month are expenses. How are you helping that business owner qualify for a loan?

Qualifying For A Mortgage Without Using Tax Returns

It’s extremely simple. Instead of looking at your returns that are showing no income and or credit losses from prior years, we won’t look at your returns. Returns are nothing to us whatsoever. What we’ll do is do an income analysis based on the gross revenue. That’s what it is in a nutshell. In layman’s terms, to make this thing as simple as possible, what we do is we take the cashflow coming into the business bank statements. We do income analysis based on that. For example, if you are making $100,000 a month, let’s say to make numbers easy, we’ll give you anywhere from $50,000 to $85,000, depending on what you do. It depends on a couple of different variables. That’s the difference.

Just for clarity and then I want you to keep going. Even if I’m the laundromat owner doing $100,000 a month, there’s $90,000 in expenses. You are going to look at what that gross revenue is, $100,000. For your underwriting purposes, you’ll give me, based on criteria, a qualification of 50% to 85% of that income to help qualify for a loan.

Some people are confused by the ending balance of the account and/or the delta between the gross income and the expenses. Get rid of all of that notions that people have told you before or explained to you. That’s not what it is. We are taking your gross revenue. It’s all of this. We are getting 50% to 85% of your growth. You can show zero as your ending balance every month. You can show a $1 million loss on your returns, but that doesn’t matter. There’s no relevance. You are getting financing for a home. This is for all. This is not an SBA loan to get a primary or secondary investment property. That’s exactly it.

This qualifies as a type of program if you are buying a primary home, a secondary home, or an investment property. That is very interesting. Can you use multiple income streams to qualify for a loan?

Using Multiple Income Streams To Qualify

At the end of the day, when you are going into the battle with underwriting. You want to make this as simple as possible with them. Let’s call it a spade, a spade. We don’t want to overcomplicate this thing. You don’t want to be jamming in documents that have no business getting this loan. Technically speaking. I can do ten businesses for any single transaction.

If you have ten restaurants, that’s more of the industry and you would want more accounts because restaurants have a lot of owners. They will probably only get a 50% expense ratio because it’s a lot of expenses, whatever the case may be. That’s a single example, but technically speaking, if you have ten different business accounts, we can use all ten. No problem. It becomes more of a pain in the ass for you for being honest with you.

If you are a business owner preparing to go out and buy that primary residence, that secondary home, or that investment property. What do they need to come prepared with when they are talking to you about opportunities for mortgages? Let’s talk primary and secondary, and then I want to come back to investment property because a lot of our audience own their own homes, but they would like to have some passive income and expand into a real estate portfolio. Let’s focus on those who are looking to qualify for primary and secondary mortgages first.

There are a lot of different examples that I could explain. The most common is somebody goes somewhere looking for a home and they get denied. Maybe they start trying to downsize what they can get because you have to fit in a box. If you don’t fit into their box, you are not getting a home unless you can meet their criteria. People start downsizing.

This is America. If you can afford it and you want it you are going to get it for your family. You want a bigger house, a better situation, or a view, whatever. Not only are prople getting frustrated by the time they get to me, but they are like, “I thought I could get this. I’m doing so well in life, but now I can only afford a $300,000 ranch in the middle of nowhere. What am I doing all this for? Why am I grinding this hard? What’s the point of having all this cash?”

Leverage And Mortgage Financing For Self-Employed

By the time they get to me, it’s like, “I can get you in a $350,000 house, but I could also get you a $15 million house,” and then they are like, “What do you mean?” There’s a lot of different things you have to understand. People with businesses, especially me. I know you for sure, like a lot of people I speak to, especially in this world. I’m talking about July 31st, 2024. There’s a lot going on in the election. The markets are dull. There’s not a lot going on. Cash is King. Cash has never been more important than it is.

This is the biggest thing that I get the biggest kick out of, especially for people who are self-employed. If you are like a W-2, you are somebody who has a guaranteed salary of $100,000, you know exactly what your budget needs to be. By all means, save up your money, down 20% lift to fight another day. If you are self-employed. Here’s somebody who’s scaling and you are hiring. You have an opportunity to buy another business, invest, make money on your money, and leverage financing.

That’s a big word in the mortgage and real estate world of leverage. There is no reason. People are shocked by what I’m going to say. There’s no reason that you put more money into the home. You need to get the whole and our parent’s generation certainly our grandparent generation, the banking world in general, everybody that goes to buy a home for the first time, they automatically assume, “I’m going to put down 20%.” I always say that’s fine, but why?

What would you say the benchmark is for somebody who is self-employed? They have a strong business in terms of Revenue. They are doing $250,000 a month in gross revenue. How much could they potentially get qualified and, again, zero guarantees? Everybody’s situation is unique. You have to check your credit scores, etc., but what could they potentially get qualified for, and in general, how much should they be setting aside to put down for that purchase? We are talking about primary and secondary homes.

Down Payments And Qualification For Self-Employed

The price is different from what you are allowed leverage-wise. For example, we have programs where you can do 10% down anywhere from $2 million to $3 million. That directly correlates to a riskier rate and a loan situation will be affected by that, but if you are not rate tolerant, you want to get the home and you are going to figure it out later or you want to keep the cash for business purposes. The capabilities of that are more advantageous.

I say this to people all the time. You are not going to be the government in two ways. You are not going to write off all your income and get the best rates. It’s not the way our system is. You have to make a conscious decision. Am I trying to keep the most money possible? Donald Trump was the biggest example of this. A guy that makes all this money but shows nothing on his returns is through like a real estate venture, but if we are going back to your actual business and writing stuff off, it depends on your specific situation.

Let’s say you are making $250,000 a month, and we are giving you half of that. You are getting $125,000 to qualify. There’s no situation in the world where you are not getting anywhere from $1 million to $3 million to $4 million easily. I don’t want to go crazy here, but I can get you a $20 million home because that’s not realistic for people from a cash flow perspective. If we are being realistic, there’s no reason you can’t get a $1 million to $2 million home for cash out-of-pocket purposes and overall living.

What does your down payment look like when you have $250,000 and gross revenue? They qualify with you for $125,000. You can get them a $2 million mortgage. How much do they need to put down to get that $1 million mortgage?

Let’s say it’s $2 million. Down 10% or $200,000. For these types of loans, generally speaking, it’s a 10% down minimum. Let’s say 3% max closing, depending on whether you are in LA, New York, or these places that are crazy expensive. Mansion taxes, whatever, and then you want to have six months of reserves. Those are the elite programs. If you have $12 million, even better.

Anything under $6 million, you are getting it to programs that I’d rather not do, but with no closing cost you are looking at somewhere around $54,000, so $200,000 for the down, so $254,000. Honestly, doing this stuff is important, though, because I feel like a lot of people don’t do this and then you get to the end line here in the 25th hour and it’s like, “You are short $100,000.” “How am I short $100,000? How was this not something that you said immediately?” It happens all the time.

It’s one of the things that they are not necessarily looking for. Business owners are in the business to provide great services to their customers. Keep as much money in their pocket as they possibly can in terms of their revenue but have as many write-offs as they possibly can, so they are not taxed out of the Wazoo. They like to be creative in terms of their financial structure.

To your point, it does hinder them when they go out and they traditionally want to get that loan for real estate and so many business owners don’t own as much real estate as they should. Knowing the numbers is key. We will shift into this because I also want to have a conversation about investing in investment properties. I want to talk a little bit about whether you’ve got a business owner who has a 401(k) or an IRA. Can they use any of that money out of that 401(k) or IRA? I’m assuming it would have to be self-directed to put that towards the acquisition of their primary home.

Let’s take a step back real quick as we were talking about the cash to close on the $2 million. On a $2 million prime, you want to put down 10%. To be clear, I would say a good number for you is $370,000. That includes down payment closing costs and $115,000 reserves, which have always been there with you. That’s a good transition to the 401(k) IRA.

One question for you, Money Man. How long do you need to keep that additional capital, an additional $125,000 in reserves?

Until the day is close. Let’s say that you have payroll you need to deploy on a Friday and we close on a Monday. You are good. You got to show it. If you are buying a primary, there are a lot of different variables of what I’m about to say, so don’t take it out of context, but as long as you come with 5% down, let’s say the whole thing costs you $370,000. At least 5% comes from Jared Randolph, so let’s call $20,000, the rest can be fully gifted. If it’s from a friend, family member, or somebody, because again, sometimes in the business world, you are playing a liquidity game. We all know it.

You can come into play. It has happened. Some people are like, “Wait a second. You get this whole thing gifted from my partner or my father or mother for the time being while I get my crap together.” Yes. Not ideal. We don’t want anybody getting into a home that doesn’t have any skin in the game. That is part of the homeownership, but you can do it. It’s another thing that people don’t know about.

Using 401(k) and IRA To Acquire Real Estate

Audience, you can be super creative in how you look at structuring the deal, and this is why I love how your brain works. You understand the nuances of the business because we are talking to CPAs, finance managers, and CFOs, but what you provide as a service and your background understanding of finance make it so much easier for these business owners who are making great revenue because most of the business owners were talking to have been in business for many years to go out and still get a loan and get their hands on the properties that they want to buy. Let’s move into talking about the 401(k)s and IRAs. How do we best use those when acquiring real estate?

That’s one of the first questions I will ask somebody how does your overall liquidity situation look? You have a business fund, a rainy day fund, and all that stuff. For people who have retirement, for me, it’s always like a home run because we can use 60% of the full retirement balance towards our reserves. If you have a retirement account, let’s say $300,000 in it, we are using, let’s say, $180,000 of that cordial reserve requirement.

For the $2 million home we were talking about where you need $114,000 or $115,000 of reserves, that entire reserve requirement is covered by your array of 401(k). You don’t have to take it out. That’s awesome. All we do is show 60 days of that account and make sure that the balance is where it needs to be by the time we close. Do a verification of the deposit. That’s why those are great.

Honestly, that’s what people should have in an IRA or 401(k) as a business owner with a financial advisor because, let’s be honest, none of us are saving money in that regard that we should be because we are trying to put it into the next idea or the next business, the next home, or whatever the case may be, but yes, those are extremely valuable. It is what it is.

The key point of being a business owner is that one of the most secure places where you can put your money is intangible assets, which is real estate. Whether it’s your primary home, your secondary home, or your investment property, with the cash flow that you have in the strength of your business, you should be if you don’t own real estate, looking at acquiring real estate and being creative around the financing and you have those types of options.

I want to shift more towards assuming that most of our audience will own their homes and how they acquire investment properties. It is not necessarily investment properties to become a landlord, but investment properties because they want somewhere to park their money, which is going to create some passive income and grow over time.

I help scale portfolios all over the country pretty much every 50 states. I have learned the strategy from a client. It’s something that I wasn’t aware of until I got in with this guy. He explained it all to me. For the most part, for most people who think I’m going to go buy and invest in property, I’m going to make a killing or I’m going to sell. If you break on an investment property, in my opinion, it’s a win.

It’s not a huge win, but it’s a win, like if somebody is paying off that loan for you, and you don’t have to come out of your pocket. In my mind, you are already winning because you are not buying real estate to make a killing every month regarding your balance sheet of PNL. If you are a business owner and you are buying real estate, it’s for one purpose and it’s cost segregation, and that’s it.

Anything other than that, you don’t know what you are talking about or you haven’t been well informed because, as a business owner, you are writing off all this stuff, but to maximize your write, whether you are buying a $500,000 Urus or a $2 million Airbnb Key West, the write-off potential is so big, that should cover such a significant amount of your income if you do it the right way. Granted, you turn that into an Airbnb but shorter-term rental, and it crushes, by all means, get the money, do what you have to do, and make the experience great for your consumers. That’s great, but don’t get it twisted. That’s a job.

Cost Segregation As A Secret Weapon For Business Owners

One of the things that the audience should recognize and something very important for business owners is to buy real estate because of the depreciation against the income in your business. There are key players in the marketplace who have been doing this for years. Andrew and Peggy Cherng, who own Panda Express, purchased their location, and they use cost segregation to offset their income.

If they have $1 billion in revenue within that year, they are keeping the majority of that income because they are offsetting it based on the real estate they own. Go deeper into how cost segregation works because we have an audience here who might not know exactly what that is and understand that call segregation truly is the secret weapon.

When it comes to this stuff, I’m a super nerd because I find it fascinating. Not that I didn’t believe it. I did it. That’s half the battle and I’m not alone. There’s a lot of people that don’t know. It’s one of those things that if you have the wherewithal, the means, or a good friend that explains it the right way and it makes sense, you are like, “I have a $500,000 tax. You are telling me that instead of paying $500,000 taxes, I can buy a $2 million investment property and write off the accelerated depreciation against my gross income in a year?” That’s exactly what I’m telling you. That’s what it is.

I studied this stuff and went back because I find it fascinating and there are people out there in the country, whose sole job is to do a cost-segment house. That’s what they do. They do the whole on it. If your accountant doesn’t know what they are doing or has never heard of it, which if your accountant has never heard of then you need to get a new accountant anyway. That’s beside the point.

These people will do the audit for you. What that audit does is it backs you with the papers so that if you were to ever get audited from an IRS perspective, you would have the general paperwork to make sure that the cost of the seg house was done appropriately. You are not writing off too much. You don’t want to take an extreme job of this thing. It is a great thing if you want to do it the right way.

There are businesses out there. This is all they did. They work with your accountant to get the paperwork done and get the taxes set up. It’s an extremely powerful thing. Let’s call a spade a spade. You are making $1 million a year under the pretext of the IRS code. You owe anywhere from $200,00 to $300,000 or $400,000. Somewhere in that realm, it depends on who you are and where you are. What I’m getting at is that “Yes, you can pay those taxes.” That’s what most people do or you could take that money and figure out how much money you would want to put towards a home at, let’s say, 20% down because that’s what most investment properties are in this world, and use that money to buy a property.

If you put that money that you owe to the IRS, instead of paying the IRS, you put it into an investment property. Now you’ve taken money that you were to pay the IRS anyway. Instead of doing that, you put a down payment on an asset that is called to be cashflowing and write off your mortgage for you. You are multiplying and leveraging your tax, which is what was owed on your income. Dead money. I call it. This is dead money. This isn’t income. It’s going to them or it’s going here.

It’s important for business owners to realize that they have cost segregation as an option. Correct me if I’m wrong, but the way in which cost segregation benefits the business owner is you buy a commercial building, every item except for the real estate, the ground. The physical ground doesn’t count within the calculation. The building itself, the lights, the carpet, the walls, the door handles, and the air conditioning system, all have a lifespan.

The way that cost segregation works is you can take the price off to replace each one of those items, accelerate that lifespan and take that write-off up front. If you don’t use all of that write-off, you can carry it forward. There’s still a little residual left that you can write off on your income even 10, 15, or 20 years down the road.

Utilizing Real Estate For Business Retreats And Specialized Facilities

To piggyback on what you are saying, it’s correct. It’s not just commercial. It’s residential, too. It’s single-family homes for you to multifamily. Maybe 6 to 12-unit multifamily and commercial. I know a ton of people who have bought these. Destin, Florida, is a place that’s gotten popular. I got a place called Rosemary Beach. The beach is fantastic. If you have never been there, I highly recommend anybody going there. It looks like you are in a Greek island. The beach is Turks and Caicos wide.

A lot of people have bought these massive homes on the water and use them as business retreats. I have clients that do that. They are making $20,000, $30,000, or $40,000 a week and they are using these massive homes on the beaches like a business retreat for whatever. It holds 30 to 40 people, whatever the case may be. People have turned this into a real business. There are a lot of people out there who have living facilities or rehab facilities where they can buy these homes. They turn them into drug rehab or addiction rehab facilities. Whatever type of facility, mental health or anything that you can think of where they turn these properties into income-producing businesses also.

It’s not just Airbnb and long-term rentals. That’s a massive part of it, but there’s also this entire other side to this business that if you have your ducks in a row, who’s taking charge of your real estate portfolio and the business inside of it, there are people that buy these homes and then rent it to somebody who has a rehab background. There are a lot of different revenues here. It’s not just the cost. There’s a lot that goes into this. Honestly, the opportunities and avenues you can explore are fascinating like the roads are endless.

Here’s my question for you. Cost segregation, yay or nay, is only used for investment properties, not your primary residence.

You cannot write off your primary. There is a small tax code called the Augusta rule. You’d have to look it up. I haven’t taken advantage of it myself. It has to do with something like the masters in Augusta where people are using their primary residences and they are renting their primary residences for two weeks during the masters and they call it the Augusta rule for this exact reason. You might be able to write off something with your primary because it’s like an income-producing property. I can’t speak on that to the full extent of what it is because I don’t know too much about it, but I do know it exists. To answer your question, 99% of it is all investment.

For those of us who have properties that they rent out for special events or special seasons, Hamptons, Augusta, Saratoga, or wherever it may be, you need to talk to your tax expert and ask them the rules around write-offs and the Augusta rule. I have written that one down. I’m always looking down here because I spend the entire time writing notes. I’m learning a ton that I want to implement as well.

It’s fascinating. This stuff isn’t advertised.

Investing In Real Estate For Wealth Building

Here’s the reality. It’s the secret of the wealthy and it’s one of the reasons why we have this conversation because you can take a business where you are doing $1 million to $10 million a year and that business can grow and it can incrementally grow. You don’t have to 5X that business, but if you use your income properly and invest in the right things, I’m not going to speak to the stock market or mutual funds. I don’t know the stock market or mutual funds, but what I do know, after 25 years in real estate, is that real estate is your best bet because you can offset your income as a business owner. That’s number one.

Number two, it’s tangible and it holds its value. It’s not subject to the ebbs and flows of the stock market. If a character in a movie dies on a Peloton at the beginning of the movie, the Peloton stock tanks the next day. That’s crazy. I don’t want to leave my potential for wealth up to someone’s emotional reaction to something so silly because they think the market will dip. Here’s my question for you, Money Man. If you were in the position, would you rent a property? Let’s say you have been newer in your business for a few years, you haven’t purchased something, would you rent your primary residence and go out and buy an investment property or would you buy a primary residence?

Advice For First-Time Homebuyers And Young Business Owners

It’s more of a loaded question than you probably attended and I will tell you why. It’s helping people all the time. Number one, if you have a small family, let’s say it’s you, your partner, and maybe a child or two and you are looking to buy your forever home, I always tell people, “Whatever you think your budget is, make it a lot more.” If you think it’s $800,000, make it $1.4 million and make it work because you will make more money. You’ll get there eventually. The last thing you want to do is buy a small home that you are only going to be in for five years or less.

Five years or less in a real estate property that you are selling is a kiss of death. There are exit fees with the brokers. There’s all these other fees. The roof this, that, and the other. If that hole doesn’t hit a bull run on a real estate market like we saw in 2021 and you say sideways, and then you have to pay the 6% or 5% exit fee, you have all been there for five years. With all the fees that you paid at closing, you are probably breaking even, if that.

I tell people that all the time. I hate it when people tell me, “I want to buy my starter home.” Then call somebody else because I don’t say, “I don’t have the time for it.” You are listening to things that aren’t making any sense, so you have to think about this differently.” Do not buy a home to live in for less than five years. It is dumb. You might as well write.

Get to know the neighborhood. Get to know what you what you and your partner like. Understand what’s more important to you. Maybe you’d rather have a different water system. HVACs. All these things come into play. If you are a young business owner, somebody who’s starting a newer business. I would always tell them, “A home is a very liquid asset. Once that money goes in, it’s hard to get it up. You have to either refinance it or get a line of credit. It’s a pain in the ass.”

ReFi takes 30 days, closing costs, big fees, or whatever, so you don’t want to do that. Put the least amount of money into the property you possibly can. If you are going to stay for more than five years, figure out the rate. The rates are always going up and down. I gave somebody at one point an 8%, 7%, or 5% rate. The lowest rate I have ever seen in my life. I gave somebody a 12% rate. This is what we have seen in several years. You have to understand that things will go up and down, but if you are a young business owner, write. Scale your real estate portfolio. A hundred percent. That’s what it comes down to.

That is some of the best advice. Don’t buy for ego. Buy for cashflow and appreciation, and the best way to do that is to buy investment properties as early on in your career as you possibly can. I want to go back to see if you are living on a property under five years. If we were talking pre-2020, I would have said, “You are out of your freaking mind. Don’t listen to this guy,” but it’s funny how markets change and markets change because a few things have happened.

The majority of markets are mature now from a real estate standpoint. There aren’t that many markets where there’s burgeoning opportunity. You take New York City, for instance. In New York City, you used to have Chelsea was an up-and-coming neighborhood. Hell’s Kitchen was an up-and-coming neighborhood. The Lower East Side is where you can get in and 12 or 24 months later sell your property for 50% more than what you purchased it for.

You are not seeing that in the market because not enough inventories are being built. You’ve got a ton of buyers out there who are putting upward pressure on the pricing of properties, whether it’s primary residence investment properties. You are not seeing that growth curve the way that you used to see the growth curve. That is a key point.

If you were going to buy a property that you are going to live in for less than five years. If it is your primary residence, you are better off renting, taking that money, and investing in an income-producing investment property that you can offset your income through cost segregation. Incredible advice. We will wrap up in a bit and before I get to our rapid-fire question section, I want you to give me one of your war stories of a very difficult deal that you had to get over the finish line for an investor who was buying an investment property.

I have the most ridiculous stories that you’ve ever heard. It’s a tough story. I’m not going to say her name because I love this woman, but they bought this beautiful home. It wasn’t an investment property, but it’s a crazy story. A property in this town called McLean, Virginia. Nice high-end. Higher Suburb outside of DC. This woman was buying her dream home for her and her family and then eight months into the construction, the husband suddenly passed away.

It was an instance for her. It was a shock I would assume. They were young. Long story short during all of this chaos, there’s probate. There’s all this stuff you’ve been taking care of. She was making big money, and then she got laid off after the whole COVID thing, when the company started laying off people left and right. She was a part of that. She ended up getting a new job, but what people don’t realize is even in the full documentation world as a borrower, if a lot of your income is commission or bonus base and you get a new job at a completely new company, most of the time these underwriters or banks will not count that bonus income.

You are making $1 million a year and half of it is a bonus and all of a sudden, during the new construction, you get laid off, or let go, or severance, or whatever the case may be. Now you have a completely new job in a completely new situation, and as a completely new position, it’s tough to use that bonus income, especially if you haven’t got one yet, so we don’t know if it’s guaranteed like anything can happen in the marketplace. That’s how these banks look at all this stuff as like, “What’s the worst-case scenario?” The worst-case scenario is you don’t get your bonus. I’m going to give you the $500,000 guaranteed.

Now she calls me. She can’t get her loan. She’s like, “I don’t know what to do. The home is going to be finished in 30 days. I have no idea what to do here.” You brought up the IRA thing before. What we did was we used the combination of her guaranteed salary and we used the combination of all of her assets that she received after her husband tragically passed that were transferred in her name.

We took all of those cash assets. The formula is to take the cash assets. This is not what it was. Let’s say it was $10 million. We divided that by $60,000, which is $60,000 for 5 years with the mortgage payments, and we gave her an extra $166,000 a month to qualify for this loan, and that’s how we got it. Honestly, I don’t know how else would have done it and it was like you are all sitting there thinking common sense being like, “You got $10 million of assets. Can we use this as income? It makes sense to me.” That’s how we came to it. That’s what I’m saying. I tell people this all the time. It’s going to be the most corny thing that we have said. “Give me your situation. I will figure out the loan. I need to know the full situation.”

Super Successful Real Estate Story

Share with me one of the key things or stories that you’ve learned from one of your business owners who you’ve seen it’s super successful in real estate that you want to share with the audience.

I have so many success stories. I’m trying to think. I have one guy I’m super fond of. I have done 400 homes for him. He’s a beast.

Give me a little background on what his business is and how he managed to accumulate 400 homes because our audience would love to know how to accumulate additional homes that are income-producing properties that are not even 400.

I say this to people all the time. Don’t get me wrong. Coming out of school. Everybody wants to work in real estate or Wall Street. That’s always a big thing, or tech is now a huge thing. This guy was a plumber. He was a plumber in a bunch of different plumbing and electrician businesses and he made a crap ton of money. He had the skills and those skills he kept, he’d buy up this one. The next thing you know he had 30 to 40 different plumbing and electric businesses. He sold them for a crap ton of money. It was $60 million or something like that.

He was sitting there, bored, a younger guy, and he had a whole family. He had a good time and he is the one that talked to me about cost seg because I knew how to get him the financing for these properties, but I’m like, “This is a lot of real estate. This is a job.” You have 2 or 3 properties you are doing Airbnb. Airbnb is a job. You got to turn your home over. You clean it. You have to make sure that it’s very squeaky clean for the people that come in or you are going to get that rating.

When this guy showed me what he was doing 10 to 15 homes a week, I’m like, “This is an operation. Why are you doing all this?” He’s like, “I have a massive tax bill after selling these businesses. This is the only thing that I know that I have learned,” so he started buying up all these properties. He lessens his tax bracket by millions of dollars.

On top of that, he has all these properties. He hired a management company and they ended up running the whole thing for him. Taking a fee. That’s a real business, too. We are talking about subsidiary and quasi businesses that have been built due to cost seg. Real estate management companies that’s a huge business. People do this all over the place. It’s not hard to find.

Thank you for the fact that you gave a clear example of how you can use cost segregation to build a real estate portfolio by using the revenue from your business. You gave me a great idea. I’m going to focus one of our shows on business roll-ups because if you are an expert who’s a plumber, paver, and nail salon, you can roll those up and own several of them, which is out of topic, but use the income that they are creating to borrow money to be able to acquire the business, and then go sell those to a private equity fund. Adam Coffey has a great book on that called The Private Equity Playbook, which is a must-read for anybody who’s looking to do that. We are going to wrap now and what I want to do is go into our rapidfire section. Here we go. Whiskey or red wine?

Depends on where I am, to be honest with you. I’m going to have to go red wine on that one, but I did that whiskey for a while. That’s tough for me. If I’m in France, I’m drinking red wine. If I’m in Kentucky, I take a whiskey. It comes out for that.

Real quick, rabbit or turtle.

Rabbit.

Little green plastic army men or Sega Genesis.

Sega Genesis.

If you were to grab one weapon during a zombie apocalypse, what would that weapon be?

Flame thrower.

That was my answer. That’s a good one. What is your favorite quote or phrase that you often use?

Some people watch it happen and some people make it happen.

What is the number one book that had the biggest influence on your life?

Lone Survivor.

By?

Lone Survivor by the NAVY Seal. He’s my hero. It’s Marcus Luttrell. It is one of the craziest books I have ever read, and it turned into a movie. Mark Wahlberg played him. Unbelievable story. A true story like do you think you are tired? You can’t get out of bed to go to your job. Work harder straight out.

That is some sage advice. A couple more questions. Dead or alive. If you had the option to pick anyone in the world to have dinner with, name that person.

Elon.

If you are a small business and you are doing $10 million in annual revenue, I hand you a $300,000 check. What would you advise that business owner to do with that to 10X their money?

I would say put it into a VC fund that specializes in AI tanks for seed realm investors. If you want low risk, high reward, that’s what I would do.

Biggest obstacle you’ve ever had to overcome in your business.

I have been in a nightmare. The worst mortgage market in the last many years, most people that you speak to in the mortgage business will tell you this has been far worse than 2008, which almost collapsed the entire economy. I would say that’s pretty tough.

How did you get creative and overcome the last several years?

We have a good team. I say this to people all the time. I never thought I would do this. The mortgage world has always been taboo since 2008. It’s not something where people come out of college where you are like, “I can’t wait to be a mortgage banker.” That’s not a thing. It’s not. The average age in this business is probably North of 50, if I had to guess. The average appraiser in the country is 65.

It’s a very old business. This business was built on Roman pillars. These guys are still doing the same thing. Some guys are still taking the application with pen and paper. It’s what this business is. Guys like me who maybe are a little bit younger have worked at companies like KKR. I have seen sophisticated systems that make your life like don’t work harder, work smarter mentality and it’s true.

To an extent you have to work, but to automate things and this world through AI, it’s never been easier. Honestly, it’s getting so rapidly better every single couple of months that if you don’t take advantage of what’s going on right now, you are going to be left. I think a lot of these people in this business now, they are dumb. They made a crap ton of money in 2020. They are like the last gold rush, and then it went from all-time highs. If you look around the mortgage business right now, big companies are laying off tons of people. This is it. Now we are at this whole different Renaissance or gentrification, if you will, in the mortgage business, and it’s going to be based on technology. It’s that simple.

You learned here that you need to invest in get involved in and bring AI into your business and we are going to do that one day and talk about AI and how it can help enhance your finances. Mike The Money Man Liguori, tell the audience where they can reach you if they have questions, comments, or complaints.

If you have complaints, then you can reach out to Jarrod, but if you ever want to talk about anything, I can do it all day. I work seven days a week. Feel free to give me a call, but you can go to our website, which is called Modern Day Lending. Check out and see some of the programs that we have. If you are self-employed, it’s probably the right spot for you. We can do everything else that everybody else can do, but where we separate ourselves is we cater to that market, and I think that if you are a business owner, you’ve been told no. We will figure it out for you and we will say yes.

Mike, thank you for joining us on the show.

Yes, sir. I appreciate you.

Important Links

• Modern Day Lending
• The Private Equity Playbook
• Lone Survivor

About Mike Liguori

Mike has worked for huge firms such as KKR, and he’s also the founder and CEO of Modern Day Lending.