You're listening to the Master Passive Income Podcast Network.

Welcome to the Master Passive Income Show.

My name is Dustin Heiner and I'm here to help you create wealth, afford anything you want in life by investing in real estate and achieve financial freedom.

And in today's show, we're going to be showing you how you can pay off your mortgage in as little as three years and, and how other people have done it and how you can do it as well.

All right, let's start the show.

Welcome to the Master Passive Income Podcast where we talk about investing in real.

Estate with a special focus on making.

Enough money so you can quit your job and live the dream life.

And now, here is your host, Dustin Heiner.

Hey.

Hey, what's up?

Super blessed as always to have you here with me on the show.

I mean, honestly, week in, a week out, I am super blessed that you are really changing your life, hopefully making and taking action, making plans to invest in real estate, buying your first property and moving forward.

And honestly, that's the reason why I have the podcast, is to see you succeed.

And as I was thinking about my investing, I am so excited.

I literally just told my wife this last night, like, I'm excited about Master Passive Income, the real estate wealth builders Conference.

I'm excited about that.

But now I'm getting so much more excited about investing in real estate.

Like me actually doing my own investing in real estate.

And I haven't, for the last, I don't know, two or three years, haven't been this excited.

And I'll tell you the reason why I'm excited.

Well, the first couple things, I just this year bought a single family home that is an Airbnb in Tennessee.

And this is the house we just moved into.

And now that we're here, we actually really like it.

So we're probably going to buy another house, move out into that one and turn this one back into an Airbnb.

But it was doing great as an Airbnb.

On top of that, we bought a 355 unit apartment complex which is just crushing.

And it's doing so well.

And here's.

I mean, not.

It's not just because I bought some properties that I'm really, really excited about it.

No, it's what is coming or what I see coming in the market, in the real estate investing market that is showing that we're going to be doing so well.

Now another thing that I started thinking about was my interest rate on my property.

And I kid you not, anybody I tell that I'm A real estate investor.

Because, you know, everybody asks, well, what do you do?

I'm a real estate investor and I ask them what they do and then we start, you know, usually always comes back to, hey, so tell me about like the real estate market.

What are interest rates going to do, all that sort of stuff.

And definitely I don't have a crystal ball, but you can kind of see where things are going by what the Fed has said, what the economy is saying, all that sort of stuff.

And a big thing that I try to relay, and I want to relay to you specifically, is interest rates will go up and down always.

Like they're going to constantly go up and down.

We've just been so blessed the last, what, seven years.

A very, very low interest rate.

Like crazy low 2% interest rates you get on mortgages.

Well, even though those are so low, that's not common.

In fact, common is like where we're at now, 8, 9, 10%.

That's common.

And so people are also worried or thinking, I don't know if it's worried is the right word, but they're thinking, hey, wouldn't prices come down with interest rates being high?

I'm like, yes.

And honestly, they are coming down a little by little.

Sellers are really nostalgic.

Oh man, I could have got this much last year and now it's just, you know, it's going lower.

So I'm just going keep my prices high.

Well, you put the combination of high price homes to high interest rates, then prices must come down.

Now what I look at is the house that I bought, that's an Airbnb.

And again, we moved into this property.

It's our Airbnb property.

We moved into.

It's beautiful place and we love it, but we're going to move out and turn it back into an Airbnb because the home we left in Arizona, that's making us money, it's owned free and clear.

So we're really blessed.

I have a HELOC on of $250,000, which don't use.

I have it as in case there's another property I want to buy, but I have that rented for $3,500 a month midterm rental that's paying for this mortgage of the house in Tennessee.

Well, why don't we now move out of this one and buy a new house where this house is now going to be paying off, this third house.

And that's literally what you need to be doing if you want to become a millionaire.

You need to buy and then Never sell and keep renting it out.

And on top of that, paying off your mortgage fast is amazing.

If you can do that.

When I didn't have a mortgage for the very first time, oh my goodness, I felt like a huge, almost like weight of a car on my back just taken off.

When you don't, that mortgage is such a drag on you.

Every single month is coming, you know it's due just like rent.

As soon as you get rid of that, my goodness, life feels like it's so much better.

And on my Instagram account, I have just put out a video recently where I share with you how you can reduce dramatically how long it's going to take to pay off your mortgage.

And then that dramatically reduces how much you pay in interest.

And you know what, I'm going to go ahead and put the link in the description for this video.

Walking through five different ways that you can dramatically reduce the amount of money and years that you to pay off your mortgage.

Hopefully pay off your mortgage in as little as, you know, 15 years, 10 years.

And today I'm actually going to be sharing with you, interviewing a guest who is an amazing investor, a business owner.

At the same time, he helps people to get out of their mortgage so much faster.

And I kid you not, when I say this, you might be thinking, oh, Dustin, really?

No, no, no.

I literally know somebody who used a certain, I guess, plan you could call it, or strategy to pay off their mortgage in three years.

Years.

I kid you not.

Absolutely not.

I like it sounds so crazy.

Whatever.

I'm telling you this right now.

I'm like, really?

Three years?

Yes.

Somebody looked me in there in my face at Rubecon and said, I used this method in order to pay off my mortgage in as little as three years.

And I did.

I paid it off in three years and now I don't have a mortgage.

So when I tell you this, this is literally somebody like, they're not paid to tell me this.

They were just, we were just chatting, we said, hey, how do you pay off your mortgage?

Said, oh, this is what I did.

Wow, so amazing.

And in the description, I'll put a link to that Instagram video that you can watch of me giving the five different ways to reduce your mortgage or pay it off much faster.

Now I am super pumped to get you more money in for your investing, in your pocket, for your investing.

Because the more money that's not going to bank, that is more money goes in your pocket that you can save to buy another property.

On top of that, when you're thinking of when you buy a house for $300,000.

Well, let me give you my own personal experience.

Right now I have an 8% loan on a $420,000 house.

I put 10% down payment.

So we're at, I don't know, 369,000 or something like that that we owe, but we're paying an 8% interest.

You might be thinking, wow, that is high.

Am I?

Yes, it is really high.

At least relatively from what we're used to.

But if you think about it, when interest rates go up, I will be very, very happy that I have an 8%.

I mean, absolutely.

Like, this is so great.

I have an 8%.

It's at 14 or 15 now.

But here's a great thing.

If it goes down, if interest rates go down, I'm going to refinance it.

And then actually, I might even pull money out if the value goes up.

But I'm a refinance it, make my payments even lower.

But the greatest thing on top of everything is because I bought it right the first time, and buying right doesn't matter what interest rate, because my tenants are going to be paying for that.

What I did was I made sure on day one when I bought the property, no matter what the interest rate was at that time, was I going to make money?

Check.

Yes, I was.

And so it doesn't matter.

But if the interest rate go up, I'm going to be happy.

If it goes down, I'm going to be so pumped because I can make even more money.

But that's the reason why I want to bring on my guest on the show.

He's actually a really good friend of mine.

He's been in my mastermind, personal mastermind, and I know that he has literally hundreds, if not thousands of people that he has helped to pay off their mortgage so much faster.

Some as little as three years, like I was saying.

But this is going to be helping you get a new perspective on how to use the bank to play against itself and how you can pay off your mortgage faster so you can invest more and be more financially well off.

I have my good friend Adam Carroll on, who's going to share with us how you can actually pay off your mortgage so much faster in as little as three years.

All right, here we go.

Adam, thank you so much for being here.

Dustin.

It's awesome to be here with you and to be with your audience, man.

I'm excited to share this today.

So we want to know how we can pay off a mortgage faster now we're going to get into that.

But at the same time, when we're thinking of having a mortgage, does this work for every type of mortgage out there?

Like, how does, how does the.

It's called the shred method.

This is the method that you have and you have a whole program, everything about it.

Now, how in the world does this actually help us to pay off a mortgage so much faster?

And does it work for every type of mortgage?

It does work for every type of mortgage.

Dustin.

I will tell you that if somebody's already in a 15 year or they've been in a 30 year for the last 10 or 12 years, it has less effectiveness because of the fact that you've already shortened the length of your amortization table.

Right.

So I encounter a lot of people who will either have been in a mortgage for a very long time and they've done a pretty effective job of making advanced payments, or I'll get people who have just refinanced and they're looking at this big mortgage balance and they finally realize when they look at their statement, how little of their payment is actually going towards interest.

And they go, wait a minute, I'm, you know, I'm spending $12,000 or $16,000 a year sending these payments in and all of it's going to interest.

So it does work for anyone.

But there are some things that make it work even better, which I'm sure we'll get into in the show.

That's great.

Now with paying off your mortgage early, the one thought that comes up, because we'll dive into how the shred method works because it's brilliant.

I mean, I am not a numbers person.

Like, if anybody's listened to me at all, I've said over and over again, I am not a numbers person.

And really what it comes down to is I understand numbers.

I love them.

Like two plus two always equals four.

I love that.

But what happens is when numbers go in my brain, they literally just kind of evaporate and disappear and they go off in the cloud.

Something like, I just don't remember numbers.

I am not an accountant.

I hire accountants.

So is this something that we can use if we are also just not numbers people, but we know we want to pay off our mortgage faster?

Indeed.

You know, there clearly there is some understanding that has to occur to understand why the numbers are doing what they're doing in the shred method.

But you mentioned that I have a course around it, and for anyone that's interested.

Theshredmethod.com is the site to go.

And I'm sure Dustin will link his link at the.

In the show notes.

When you go to the site, there is a free, what we call a Kickstarter course that's four days long.

And the videos sort of explain why, the why behind this.

And then once you get into the course, it's the what and the how.

And so the why behind it, very simply, Dustin, is, you know, most people don't realize just how much they're paying in interest over the length of their mortgage.

And to boil this down to the most ridiculous.

Do you know the average length of time that someone will stay in their home by any, by any chance?

Since I'm in the real estate business, I think I've heard something.

It's like five years or seven years at most or something like that, correct?

Yeah.

So 5.5 years is the metric that we have determined is kind of the most accurate just based on anecdotal evidence in our system.

But for most people, if they're in a home for five years, and let's say they put, I mean, in most cases today, they're putting three, three and a half percent down, right?

They're doing an FHA loan.

Someone told them, keep as much in the bank as humanly possible.

Borrow as much as you can, put as little down as possible.

You know, not terrible advice when you're buying a home if you're cash strapped or wanting to keep more money in your pocket.

However, what you don't realize is that five years in, you've made five years worth of payments.

And when you go to the closing table, unless your property is appreciated handsomely by the time you pay realtor fees, closing costs, other commissions and fees, you're lucky to get any check at all at closing, let alone a big fat sum like you think you're going to get.

Realistically speaking, in the first one to five years of a mortgage are the actual best years to implement the shred method so that when it does come time to move, you have either a paid off your mortgage because it's entirely possible to do it within three to five years.

And I want to pause for a quick second and share that.

Honestly, I really want you to invest in real estate.

Now, my new goal is to help 1 million people invest in real estate.

So two things I would ask from you.

Number one, if you get anything out of this episode, please share it with somebody else.

Just say, hey, you know, check out Dustin and Master Passive Income.

He really wants to help a million people to invest in Real estate.

That's number one.

Number two, I want to get you to invest in real estate.

Get my real estate investing course.

Absolutely for free.

Text the word rental R E N T A L 233777 rental to 33777.

I'll literally give you my course, show you how to find the area of the country to invest, how to build the business first.

You know, I always talk about that and how to find the right properties, how to make sure you're getting experts do the work for you and scale the business to where you're making $250 or more in passive income.

Scale it to quit your job.

I'll literally get to you.

Or go to masterpassiveincome.com freecourse.

Obviously it'll be in the description, but I really, really want you to invest in real estate.

Because the more that actual normal everyday people own real estate that are good landlords, the better everybody's life gets or you get done.

You sell your home, you know, five and a half years in and you get a big fat check at closing because you have all this equity sitting in your home.

So if you're not a numbers person, no sweat.

We're going to teach you at least how to understand what's going on in the process.

And I understand that when you get a mortgage, you are usually, or not usually every single time the bank makes their money at the beginning of the loan.

So if you think of your mortgage, you have a principal payment and an interest payment, they usually lump it all together and that's your mortgage payment.

Well, your interest payment is like I don't know, 10 times what your principal payment is.

So if you're paying $1,000 in a mortgage payment, usually about like $850, maybe even more like $900 of that just goes to interest.

Cause they front load all of the bank's money at the very, very beginning and you're maybe paying like 50 or at most 75 to $100 towards your principal because they want to get their money upfront and that's why they also always want you to refinance.

Hey, interest rates are lower.

Refinance, Interest rates are lower.

Refinance because it starts that debt clock all over again and you're really just paying debt over and over again.

Now when you talk, when you're talking about shred method, give us a bulk idea of how it actually works.

I know it uses maybe a HELOC or something like that.

Like give us a broad understanding of how it works.

Sure.

So the, there are a couple things that are assumptions that are made in the midst of using the SHRED method.

Assumption number one is that you have more money at the end of the month, not more month at the end of your money, right?

So there's got to be money left over at the end of every month.

And society, logic gurus everywhere tell us some percentage of that should go to savings, some percent of that should go to investing.

We got to have six to 12 months of, of living expenses in the bank at all given, you know, at any given time.

That's really hard to do for people who are in debt.

What the shred method does is it leverages a home equity line of credit.

So one of the things, another assumption we make is that you have the ability to go out and get somewhere between, call it 5 and $10,000 on a home equity line of credit.

And the HELOC is essentially you tapping into the equity that you have in your home.

That could be from down payment money, it could be from the fact that your home is appreciated.

But the bottom line is you have some equity that you can tap into.

The difference, Dustin, between the HELOC and the mortgage is a mortgage is a one way street.

Money goes in, money does not come back out again.

And in fact you sign a document that says you can't stay if you don't pay, right?

So it's called the mortgage for a reason, which is a document to death.

It was from the French word mortier, which is to death, an agreement to death.

So the mortgage itself is a one way street, the HELOC is a two way street.

Money comes in and money goes out.

So you can deposit money in your heloc, which would be your, your paychecks, and then you can take money out of your HELOC to pay your bills to, you know, pay off credit cards and whatnot.

But also then at the end of every month or every biweekly period, you'll have some room on that HELOC to put lump sum chunks down on your mortgage, which is going to do two things, increase your equity and decrease substantially the amount of interest that you pay over the life of your loan.

So if we're using the heloc, it seems like we would probably be using that somewhat similar to like a bank account and where the money goes in.

Normally we go into a checking account at whatever bank you have and then you would pay bills out of that.

Now is that the very, very similar type of idea?

It is the only difference, and this is where Most people have a hard time kind of flipping the script and rewiring their mindset is we are programmed to believe that if I have money in my checking account, I'm good, right?

Because then we just watch it over a two week period get lower and lower and lower and then we get paid and it goes up again.

Everyone breathes a sigh of relief.

But we all know that for most people payday is just transfer day.

Money gets paid in and we transfer it all out to the people we owe money to.

The mindset shift with the HELOC method is so long as you always have room on the HELOC and there is a balance on the heloc, so long as the balance on that HELOC is being applied to long term compound interest debt, it's good for you.

So the flip flop mentality is we have a credit mentality with a checking account.

We want to make sure there are credits in there, but we have a debit mentality on the heloc, meaning we always want to make sure that we're using that HELOC because when we use it we're actually saving massively on the back end of that mortgage or car loan or student loan or whatever else.

Now explain to me how we would.

Because obviously we have a mortgage which is long term debt, but we have simple interests and compound, like, how does all that work?

Because it seems like, why don't I just put in my bank account and just pay it?

Like it just kind of seems like it's, well, I'm getting more debt to pay off debt.

It just seems really interesting as a concept.

But you, I mean, quick question before we jump to that.

How long did it take you for you to pay off your house?

And then how much did, what did you buy for?

How much was the total balance?

So we bought our house, the house we're currently in.

We bought it for 315, we put 60 grand down on it and so we ended up owing, you know, 255.

I think if my math, my math is right, 255.

When we started this process, I think we owed 250 at the time when we really started using shred full time, which was in October of 2012.

And by December of 2015 it was down to $75,000 is what we owed on the mortgage at that point in time.

Now this is a little bit of a wrinkle, Dustin.

At that point in time I started wondering, well, if I owe 75, my house is worth now let's say 350, then I have $275,000 in equity.

I should be able to go get $150,000 line of credit and just pay off my mortgage entirely with that heloc.

So I did that.

And the reason I did it was I started looking at what is the simple interest holding cost of me having $75,000 at 4%.

Well, we can do the math really quickly right here.

So if I had $75,000 and I take that times 04 divided, sorry, $75,000 times 0.04 divided by 12, it meant that my house payment interest only to stay in this house that I live in was $250 a month.

So I went from having a $1,600 mortgage payment.

Now it was principal, interest, taxes and insurance.

I had escrows in there.

But when I flip flopped it and I paid off the mortgage, I no longer had escrows.

I just paid that twice a year.

And it cost me $250 a month to live in my house.

At that point in time, my wife's car's transmission was going out and she said, I really think I want a new van.

I said, okay, well let's go shopping.

So we went to the car lot and I started doing the math again and thought, I can either go get a 300, I'm sorry, I can go get a $30,000 car loan at 3%, 4%, whatever the rate was over the course of four or five years.

But my payment's probably going to be 450 or 500 bucks a month.

Or I could just write it on my HELOC for 30,000, taking my balance to 105 and it up my payment from 250 to 350.

So my wife was then driving a newish van.

We are living in our home and our all in expenses for both of those was $350 a month.

Now that's interest only.

But because we were using the shred method, all of our income was coming into heloc and the HELOC balance kept dropping lower and lower and lower month after month as our income came in.

Does that make sense?

Well, yes, yes it does.

And I'm not a numbers person, but it still makes sense because the easy numbers that really come to my brain, sixteen hundred dollars for a mortgage that you were paying all the way down to $250 a month.

Now obviously principal, taxes and insurance, you're paying that yourself, which it's only going to raise it up to maybe 500amonth, probably at most, you're saving 1100 dollars.

And you can then put that 1100 dollars towards the home equity line of credit if you wanted to, or get your wife a car like you said.

That is brilliant.

That's so awesome.

I'm just like, I wish I'd have done this sooner.

I was like, oh my God.

Let me, let me give you some more numbers.

I know you're not a numbers guy necessarily, Dustin, but I do know you love passive income and you know those numbers.

So I want you to consider.

Let's say you bought a $200,000 home and you put $40,000 down, 20% down to get a conventional finance loan.

That means you would owe about 160.

Right.

If you added, if you held it for three years time, and let's say on the very first payment that you made, you made the payment dutifully and it was just principal and interest, the payment ends up being $870.

Okay.

It's actually 869.65 to be exact.

But if 869.65 was your very first payment, the amount that goes to the principal is $194.65.

The amount that goes to interest is about 675.

So 675 bucks goes to interest.

195 call it goes to principal.

That's on payment one.

If right after you made payment one, you realized how much was going to interest and you said, you know what, I'm going to go get a home equity line of credit because I have the equity in the house, I put 40 grand down, you could very easily go get a $10,000 home equity line of credit before you ever made payment to.

If you took $5,000 and you dropped it from the HELOC onto your mortgage balance, let me illustrate what happens to this.

Okay, you're following me so far.

I sure am, yes.

If you made three years worth of payments at 869.65, the total amount over three years and those payments would be $31,307.

Okay.

That's the total amount of payments you made.

How much do you think goes to principal of that?

31,000.

In three years time, I would say maybe $3,000.

Okay.

It's a little bit more than that, but it's $7,500.

Out of 31,000?

Yeah.

Out of 31,000, that means that 23,764 goes to interest.

Okay.

So let's assume that's three years worth of payments.

But instead, before you made Payment too.

You sent a one time lump sum of $5,000.

Well, what that does is that accelerates the amortization table of your mortgage, basically bringing you closer to the end of the mortgage by about 25 payments.

That's two years.

So what happens is if you fast forwarded 25 payments and let's say you made 25 payments of 869, 65, what that would cost you altogether is.

Let me see what the.

I have the numbers here in front of me.

$20,871.

So you are saving by putting $5,000 down in one lump sum.

You're saving yourself over almost $21,000.

And that's the power of the shred method.

This is where people don't quite understand how it works, but understand that it does work.

What it's doing is accelerating the amortization table of your mortgage, which cuts off tens of thousands of dollars in the long run that you would normally pay in interest that you now have an equity that oh, by the way, is accessible to you through the heloc.

And one thing I love about the heloc, think of it like a credit card.

You know, it's, you have a balance as how much you borrowed, but you have a total amount of credit that you can borrow.

And as you borrow, if you have a balance, then you get interest on it.

If you pay it all off, if you go down to zero, you don't pay any interest.

Same thing with heloc.

So if you pay it all the way off, it's done, but you still have that credit for future financing.

Now, one quick thought.

If we're, that's amazing amount of savings we're still paying though, like a $5,000 HELOC, we're still paying a little bit of interest, but it's not nearly as much.

Do you know about how much interest we're paying towards a heloc?

Yep.

So here, and this is a really astute question, Dustin, you are a numbers guy deep down, I know you are.

So if you had a $5,000 HELOC and let's say that you had $1,000 extra at the end of, end of every month, it was just discretionary, it was going to savings, it was going to this, that and the other.

Or you cut out eating, eating out every night and you cut that out.

Beauty of that, my wife said, I'm like, are we in a scrimp and save?

Are we in the, you know, beans and rice, rice and beans, Dave Ramsey diet.

And I said, it's not really like that.

What you'll notice is your spending happens just as naturally as it would, but anything that was left over is far more efficient.

It's like one and a half times as efficient as it was before because you're blasting away your debt so quickly.

What happens when you blast away the debt against that mortgage is more and more and more of your payment that you've been making every single month is going to principal and not to interest.

So that's what I mean by your income gets more efficient is it's actually doing more for you.

You own more of your income on a monthly basis.

So $5,000.

And let's say right now you can get a heloc for about three and a half percent.

So that's $175 per year in interest.

But if we divide that by 12, it's $14.50 a month in interest.

Well, here's what happens if it took you four or five months to blast away the HELOC to bring it back down close to zero.

Five months at $15 is $75.

So let me ask you, would you pay $75 in interest to borrow $5,000 if it could save you $21,000 in the long run?

As often as I could, I would do that over and over again.

That's brilliant.

I love that.

Now, with having this shred method, is it just as easy or should we have something that would help us calculate or figure things out?

Because I'm thinking, okay, I heard Adam.

He said, you have a mortgage and then you get a heloc, put your money into the heloc, pay everything out of the heloc.

Is it that simple?

Or should we get something or have something that really is going to help us to understand the numbers, to really apply it?

Well, yeah.

For those that don't want to do the calculation game like I am, we do have a piece of software.

It's called shredmymortgage.com that does all the calculations for you.

And, Dustin, to be quite honest with you, this system is what I and my wife have used for the last eight years to completely revolutionize our financial lives.

And I always like to tell people it's a bit like that scene in the Matrix where Neo is given the choice, you can take the red pill or the blue pill.

Which do you want?

You know, but if you take the red pill, you'll never go back.

When I took the red pill, so to speak, with Shred My Mortgage, it occurred to me that we are living In a banker's business model.

Absolutely.

And the banker's business model says if you want money or need money, come to us, tell us how much you need, we will A, tell you if you're worthy of getting our money, and B, we will tell you how much you're going to pay us over what length of time.

And then we just dutifully do that.

Most people, they have debt and they say, well, my car payments 272 and I'm just going to pay my 272 month in, month out.

And yet we don't ever question the logic behind it or how we can play the bankers game against itself.

That's exactly what shred does.

And so the shred my mortgage system literally takes your income.

It takes your expenses into account, it takes your interest rates on your mortgage and student loans and credit cards, and then it will spit out, tell you exactly verbatim when to pay certain debts, at what amount, when to send lump sum amounts from your HELOC to your mortgage, to your cars.

And in effect what it does is it's continually shrinking your expense level month after month after month to the extent that, and I don't say this to brag or boast or be a big shot, but my family of five lives very, very comfortably on about $3,000 a month.

And it's, you know, granted, I'm in Des Moines, Iowa, but I live, I live in a 4,000 square foot home.

We drive, you know, cars that they're aging, but we could go write a check for new cars.

It's not a big deal.

We live a big, a really big life and we have a lifestyle that has commensurately risen over time but never outpaced our life.

Our life is always bigger than our lifestyle.

I love that, I love that idea.

And that's something that at Master Passive Income with investing in real estate, we free up our time by not working a job because we have passive income from our rental properties.

But then also how and when you think about if you're going to quit your job, you need to calculate all your expenses.

While your mortgage is a huge expense that you're absolutely going to have to have.

How much faster could you quit your job if you paid off your mortgage?

If I didn't have my mortgage, I probably would have quit my job like three or four years earlier.

It was like I think nine years of starting investing to the very end when I finally quit my job, if I didn't have a mortgage, I would have quit like a year, four or five, because I was paying like $1,900 a month in just a mortgage payment.

So if I were able to get to $250 like you did, I'm like, shoot, there goes all my expenses.

That's brilliant.

Well, and here's the other awesome thing about it.

You know, there, there has been a lot written about the fact that your home is not an asset.

And I believe that when I read Rich Dad, Poor dad and Cash Flow Quadrant for the very first time, and I was like, true, my home is a liability, no question.

I also began to challenge when I learned the shred method that if I could actually turn my home into an asset that I'm using, that I'm leveraging on a regular basis, I can, I can really see this as a wealth building tool.

Not just like, oh, this is where we live and we have this expense.

But how can you then turn the equity in your home into a vehicle that allows.

It will allow me and my wife, you know, I think next year we're going to see a rash of foreclosures.

I think the folks that were having a hard time paying mortgages when the, the safety precautionary measures from COVID go away in January, if, assuming they do, which I am assuming they will, people will be stuck, you know, with the tide out and they're not wearing any pants, not wearing a swimsuit.

And I think that there's going to be an opportunity.

You know, I don't want to sound cruel or vicious about this, but there will be opportunities out there in the marketplace.

You've, you've blogged about this a number of times that there will be a housing crash.

Imagine having 50 or $100,000 that you can stroke a check out of a HELOC, not get banker approval for, and go buy some of these properties that you could immediately turn into rental properties overnight.

Because the rental market is going to be so hot.

And it just, it opens up all sorts of doors.

It sure does.

And I know with this correction that's going to be coming, I am super excited.

Not for the bad things that's going to happen to some people, but I prepared myself for a very long time and everybody listening, you should be preparing yourself now because there will be, I'm not sure exactly when, but there will be a correction.

Just because it's been going the market and the economy's going to be going up for 12 years straight, which is unheard of.

It's usually seven or eight years of the correction.

So it's just bound to happen, it has to happen.

So if we're ready and we have something like this, especially having a HELOC basically ready cash that is inside of our property.

It's our cash we just have inside of a property.

It's ready to.

Where you can literally just write a check and buy a property, like $150,000 like Adam said, and actually put down and buy the property.

Or let's say you wanted to get 10 houses that have $150,000 each.

You put $15,000 down payments on each one.

You get loans for this.

That's just a big broad idea.

There's so many different ways.

As long as you either have cash or you have access to liquidity or to money to other people's funds.

Like a mortgage or.

Mortgages are hard to come by when the market crashes.

Because I Remember back in 2008, it was so hard to get a mortgage after for like four years.

It was so hard.

Now they've gotten so much more relaxed.

So right now, and this is what I'm literally doing.

I'll ask you this question too, Adam, about an investment property, but I'm literally getting home equity on credits on a few of my properties.

Because I'm like, well, why not?

It's just sitting there.

It's equity that I will be able to tap into.

But when there is a correction, all the banks are going to tighten up and they're not going to want to give that out because they're saying, I'm not sure what's going to happen.

I'm so uncertain about the future.

So if you have that HELOC already, you have that to where you can tap right into.

So let me ask you, if we had an investment property, does this also work for an investment property?

It seems like it would.

Because I'll give you an example.

Right now I have a property in Houston.

I'm literally.

I bought it five years ago.

I got it with a 30 year note.

I wish I would have done the shred method back then, but I have like 25, little over 25 years left and I'm refinancing it to a 20 year loan.

So I'm dropping off five years.

My payments are going to be the same.

My interest rate dropped by like a point 3.15, 1.25 or something like that.

But 3.1% on an investment property is unheard of.

I just crazy.

So long story short, I have a 20 year note on the property.

Should I look into using the shred method for this property?

Can I ask why you did a 20 year note, Dustin?

So I did it because it was the same amount of principal and interest payments.

It just be the same thing and I got a lower interest rate just because I was like, you know what, I have plenty of.

We're blessed.

We have plenty of properties, we have plenty of money coming in.

We do not need to do a 30 year loan just because I'm thinking I'd rather have it paid off soon.

My wife is much more conservative when it comes to mortgages, so she doesn't want any of them but.

So we dropped to a 20.

But I know that is better for me in the long run if I just stuck with it than a 30 year.

Because 30 year, you pay a lot more in interest.

But anyway, so I just signed the disclosures today so we should be closing right now.

Yep.

The, the, the simple answer is yes, you can absolutely do this on rental properties.

And in fact, you know, I could make an argument that having a heloc, if you can get them on rental properties, it's not always super easy to do.

You typically need to have either strong financials, a really good relationship with a banker or a credit union loan officer.

But if you can get one, by all means have one on your, on your rental properties.

Here's the reason why.

If you have a surplus of cash coming in from a rental property now, number one, if you're living on it, great, use it.

That's, you know, that's what it's for.

But if it's a surplus and it's just going into an account, anybody that just has money sitting in an account somewhere, whether it's 2 grand, 10 grand, 20 grand, 200 grand, and you have mortgages, I begin to question what is the point of having some of those out there.

Now granted, you're going to write off some of the mortgage interest and you've got business deductions.

So there are some tax implications of all of that.

But if you are cycling the extra income, the passive income from a property through the HELOC and massively paying off that house, you could, for most places you could be done with a mortgage in somewhere between four and seven years.

Done, done, like everything's paid off so it is possible to use it.

And in fact, in the shred method and shredmymortgage.com we can add multiple mortgages and then prioritize them based on when you want them paid off or paid down because maybe you just want a little bit of extra equity in all of them.

So we structure them where for one year or for six months one of them were really drilling hard and then we switched to a new priority and that one now we're going after.

And what you're doing ultimately is you're just adding more and more equity to your portfolio so that if and when you decide to sell any of them, you know you're going to cash out when you do and can do a 1031 or just take the cash, pay the taxes and you know, be ecstatic about it.

Man, I love it.

I'm, I'm super excited about this.

And in fact, when I do buy my next house, I'd more likely just do a 30 year note.

In fact, I'm an investor, so I'll probably do an FHA loan and buy the house that I'm going to live in, like an actual house to live and use an FHA loan three and a half percent down and absolutely going to use the shred method to destroy it.

Now quick question for you.

What about any downsides or any potential things that we should be not concerned but like watch out for?

Is there anything that we should know?

The caveat that I give people whenever I tell them about this system is that it is not for those who find themselves deep in credit card debt.

It is not for those who, they're prone to wild purchase swings.

Because the fact that you had, I mean, I have a significant amount of money available to me on a HELOC and I could go buy any car I want or any boat or any doodad.

Right.

And again, I'm not boasting or bragging about that.

It's the fact that when you get to a point where you can do that, if you don't have the commitment and the consistency to stick with the program, you could get out over your skis in debt relatively quickly.

For those that are disciplined, they have consistency in their spending.

They know they have income sources that they can trust.

This system is like a video game you can't lose.

Now for those that.

And I talked to a couple the other day who said, well, my husband's unsure about his job and you know, I've got another friend who was interested in it, but he and his wife tend to spend a fair amount.

It's like, I don't know that I would say, yeah, whole heart go into this because it does require a certain level of discipline.

On the downside, you know this, this is a very rare occurrence if you're a disciplined user of the system.

But on a very rare occurrence, the bank or the credit union could call your heloc.

You know, they could say, hey, we're freezing this.

You can no longer access the money and we expect that you pay it back.

But in reality, what's happening in the midst of me doing my mortgage payoff is to the credit union I'm borrowing with, they love me.

They think I'm a great credit risk because now they may not love the fact I'm not paying as much in interest on the mortgage, but I'm a really good credit risk.

And so it's guaranteed income for them on the money that I am borrowing.

I don't think they'll ever take away my heloc.

So should we go to like a big national bank or should we go to like a local credit union or something like that?

You know, this is, this is an editorial comment only, Dustin, because I don't know broadband, what everyone's out there doing, but I've heard that big banks, the US Banks, bank of America, Chase, Wells Fargo, they are beginning to clamp down a little bit on their HELOCs.

And I think, to be quite candid about it, I think that they're having flashbacks to 2007 and 2008.

Wow.

And what's happening is as the market gets hotter and hotter and people want to leverage some of that equity, they're protecting themselves from a downside, bottoming out of the housing market.

And so they're starting to scale back on what they're doing HELOC wise.

That being said, I think you could pretty much go to any credit union, particularly if you have an account there, you've got a relationship there, and just say, listen, I need $10,000 out of my equity.

Can I get that?

Because even ten grand is enough to begin cycling the shred system, where you're going to see massive, massive payoff in no time.

Man, that's exciting.

Well, great, Adam.

So that is so much great information and I know that I'm definitely going to be using it, the shred method.

So how can people find you?

I know we're going to have all the affiliate links and everything inside the show notes, but how can the people find you and get a hold of you?

So my site is AdamCarroll.info if you want information on me.

It's very simple.

AdamCarroll Carroll.info.

and you know, again, the show notes will hold the links to the shred method and then shredmymortgage.com, obviously will be, will be listed down there.

The other place that I'm doing quite a bit.

You and I are both in the YouTube game.

So if you check out YouTube.com AdamCarrollSpeaker there's a lot of great content out there on my YouTube channel and of course anywhere on social you can find me.

Awesome.

Adam, thank you so much for sharing all this great information.

I hope this is going to help loads and loads of people just really get out of that rat race and realize that they if they pay off their mortgage, they have so much more freedom because they have less expenses coming out and stop making the bankers rich.

So, Adam, thank you so much, buddy.

I really appreciate you being on the show.

Thank you, man.

Thanks for doing what you do.

You encourage a lot of people and I appreciate you.

Thanks, man.

And that is it for today.

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See ya.