09/23/2025
Collect assets. Borrow against them until you die. My 13 year old son and I had an in-depth conversation about this today. It's one of the most powerful strategies the rich use. Here's an example.
Let's say you buy a single family home for $300,000. If it's in the right location, in 15 years or less the price of that home will double. That doesn't include all of the equity you'll have in the house due to the tenant paying-down your original principal.
The great thing is, you don't have to pay Uncle Sam on the extra $300,000 of appreciation over that decade. It's not taxable until you sell the property.
Now, if you were working your butt off at a job and made 300K, you'd pay at least 32% in taxes on those wages, depending on if you're single or married.
Don't sell the real estate. If you want to get the money/value out of the home, you borrow against it. This is a loan and it's tax-free. Then, you take those funds and buy another house or cash-flowing asset. In a few years that second property appreciates and the cycle continues.
The value grows and you're not paying taxes on those gains. That’s why wealthy families live off debt and not income. Income is taxed. Debt is not. It’s one of the the ultimate cheat codes to building generational wealth.
Think of it like a snowball rolling down a hill.
At first it’s small, but as it keeps rolling it gets bigger and bigger, picking up more snow with each turn.
Real estate appreciation and borrowing are the momentum. Cash-flowing tenants and tax advantages are the gravity pulling it downhill. If you don’t stop the process you end up with a financial snowball so massive it’s virtually unstoppable.
Combine that with the hedge you get against inflation. Doesn't matter who's in power. Reps and Dems are going to keep spending us into oblivion. The more money The Fed has to print, the more the US dollar gets devalued.
This is great news if you own the assets! It's catastrophic if you're just saving money with no plan. The dollar becomes worth less and real estate goes up even faster.
That’s how dynasties are built so consider this before you even think of selling. Borrow and multiply.