Real Estate Nerds 45 | Asset Protection for Real Estate Investors : Royal Legal Solutions

Real Estate Nerds 45:

Bad Beats

"Recovering and Protecting Your Portfolio"

Antonio T. Smith, Jr.
Keynote Speaker and Business Advisor
Real Estate Nerds
Episode 45: "Bad Beats"

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On today’s episode of The Real Estate Nerds Podcast, we hear a Bad Beat from an investor and entrepreneur who rightly points out that success can sometimes reveal our problems. This was certainly the case for Antonio Smith, Jr., whose hustle and drive from growing up and experience of homelessness and his youth have undoubtedly helped mold him into the mentor, teacher, and multi-million dollar success he is today. But his first taste of success ended up unfolding into one of his all-time worst deals. Fortunately, Antonio isn’t one to get knocked out of the game easily. He’s bounced back and now has his sights set on leveraging real estate on the higher goal of philanthropy. Tune in to hear a truly remarkable story that does what our favorite episodes of The Real Estate Nerds do best: tells us as much about the person as the investment while giving us all some brain and soul food.

Antonio T. Smith, Jr.’s Incredible Personal Story and Incredibly Bad Set of Deals

Antonio went from rags to riches after rebounding from profound early life struggles–but his journey hasn’t been without bumps in the road. Little did he know, he’d lose big within his very first year in real estate–but that didn’t stop him from learning from his mistakes and winning in the long-run.

[1:00] Scott asks where Antonio’s head is at, as that informs all of our deals. Antonio tells us about his mindset: “My mindset is dominate. All day, every day…You want to become a monopoly as fast as possible.” He isn’t a monopoly in real estate, but he is in his type of coaching field. Antonio rose from homelessness as a youth aged out of foster care and is now a multi-millionaire.

[2:45] Antonio is from Galveston, TX. He had escaped poverty and immediately went into several deals when he got into real estate in 2008 after Hurricane Ike devastated the island. He purchased several homes in short order as his first rental properties.

[4:00] Hindsight is clear for Antonio: “Success will reveal your problems. My problem was overcompensation.” He had one renter walk out and that, and overcompensation, led to the loss of four of his houses. Scott asks how things went wrong so quickly. Antonio explains that he learned to invest before he learned to create systems that sustained a healthy business.

[5:45] Antonio trained under his mentor for two years, learning the real estate game before learning creative financing. He found a way to finance notes, picked his houses, then would get renters to fund the notes.

[7:50] Antonio bought his houses in 2009, when the housing market in Texas dramatically declined.  His renters were forced to downsize. The first time, he resolved the problem by moving into the house. But when another two renters left, he couldn’t account for that.

[10:17] Another problem Antonio had from the beginning was a lack of preparation: “I thought six months’ reserves was enough…I’m telling everyone: that is never enough.” He now aims for about ten times that.

Learning From This Bad Beat: Bulletproofing Your Assets and Building Your Legacy

Antonio and Scott reflect on some of the mistakes Antonio made in his story, as well as what has changed for him in the years since.

[11:50] In Antonio’s view, learning and having someone else pay for your debts are critical to investing. He also believes entrepreneurs should have a high tolerance for pain. His main issue was the individuals paying his bills stopped.

[13:00] Scott asks if his problem wasn’t a lack of knowledge so much as a lack of knowledge of what to do when things go poorly. Antonio agrees, pointing out there are a lot of other things he didn’t know about–taxes, what to do when he passed up his mentor, let alone what was the smart thing for him to do at the time.

[15:00] Scott wonders whether another mentor would have helped. Antonio thinks if he had gotten one, he would have known he had 180 days to prevent foreclosure and be less dependent on having tenants actively in the properties. He also would have advised himself that his investments weren’t protected as assets, and that he needed to diversify into small businesses of some kind to generate income. That way, if his investment income stream dried up, he’d have another form of income.

[17:45] Scott points out that many people spend their active income, and have trouble keeping their lifestyles down. He describes that critical piece of “bulletproofing your assets.” Today, Antonio has 16 income streams.

[20:30] Antonio didn’t have a technical deficit, he simply didn’t know what types of questions to ask. He believes a mentor would have been immensely helpful in keeping him in check in multiple ways. That would have included asking what he was going to do if all of his renters walked out on him.

[23:00] Antonio also admits he was chasing a lifestyle. Scott points out that’s what a lot of people sell, but that smart investors worry about what they want long-term.

[26:00] Antonio’s long-term goals have changed: “My goal is my legacy…to create more millionaires.” He has already done so with his core team of eight and has a new goal of 100 by a set date. He wants to create a lasting change in the world.

[28:00] The two investors discuss how initially, investing may be about having things. Those who succeed beyond a certain point will have wiser ambitions, usually involving giving back.

[31:30] Antonio shares another one of the goals that drives him:  “My passion in real estate now is to buy in low-income areas and fix them up, but not gentrification. I want to buy the hood then teach the people there to appreciate the hood.”

Take-Aways: Start Moving & Invest for Your Long-Term Goals

Scott and Antonio each share their favorite take-aways for listeners from Antonio’s story.

[32:45] Scott shares that his main takeaway is that slow growth isn’t necessarily “sexy,” but it’s sustainable and what gets investors to the higher levels of wisdom and contribution to the world. He also finds that Antonio’s story is a testament to the power mentors in maintaining this type of growth.

[31:30] Antonio knows what he wants to tell our listeners: “Move before you’re ready. I suffered from that, but I had a continuing education problem, not a moving problem.” He elaborates that “It is far easier to educate a doer than it is to activate a thinker.”

Connect with Antonio T. Smith, Jr.

Connect with Antonio T. Smith, Jr. on his Facebook page, www.facebook.com/theatsjr to get plugged into everything he is doing with his coaching and investing.

Listener Resources

Thank you for joining us on today’s episode of the Real Estate Nerds Podcast.

For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.

Don’t forget to subscribe to stay up to date and have the most current episodes of the Real Estate Nerds Podcast directly in your listening library. Every subscription helps us create new, custom content for you. What did you think of today’s episode? What would you like to hear more about in the future? Leave your thoughts and questions in the comments section below, or leave us a review in the iTunes store. We love hearing your feedback, so fire away. Join us again next time for another fascinating conversation and compelling story with experienced investor Trevor Robinson. Thanks for listening and joining us on our journey to become better investors!


Hosted by Scott Smith, Lead Attorney and Founder of Royal Legal Solutions. Schedule your personal consultation now. If you have questions about our content or suggestions for future episodes or guests, reach our podcast team at podcast@royallegalsolutions.com.

About Antonio T. Smith, Jr.

Antonio T. Smith, Jr. is a prolific public speaker and celebrity business advisor, with clients on his roster such as Les Brown. Antonio has delivered over 2000 keynotes at events held by the likes of the University of Houston, University of Wisconsin, The United States Army, Wiley College, and more, which you can listen to on his top-ranked business podcast. Antonio is an internationally recognized trainer and speaker, and best-selling author in self-help and religious categories. He specializes in Cognitive Behavioral Therapy, Business and Strength Training, Leadership, Teleconference Presentations, Personal Breakthroughs, Prosperity Consciousness, Mindset Training, and all levels of effective marketing, as well as scholarship in the Old Testament and Jewish Covenants, and he owns one of the most successful technology companies in Texas. He holds a Bachelor’s in Christianity and a Master’s in Theological Studies.

Antonio is a best-selling author and a popular podcast host, with a show that reaches 70 countries and 60 different languages. He has been coaching people around the world on personal transformation for the last 9 years and reaches over hundreds of thousands of listeners across the globe.

Before his current career, Antonio overcame abandonment, homelessness, and all-around brokenness. Antonio had to learn at age six how to use his mind to climb out of sleeping in a dumpster. He would spend his entire childhood homeless, was adopted when he was 14, and aged out of CPS custody at 18 years old. This Galveston, TX native has been through more in his 30+ years than most will ever experience. He has developed a “plant better” attitude, in which he teaches people to plant better seeds in order to have a better life, and has developed coaching tools, programs, courses and books designed to help the world succeed. Today he is a certified Les Brown Partner, a world-renowned public speaker, and leadership coach.

When making business decisions that affect your long-term goals, like what types of investments to make with your retirement dollars and which vehicles to use, it really is best to be aware of all of your options. We frequently talk about the Solo 401(k) and Self-Directed IRA as tools for funding your retirement. But what about life insurance? And what about the stock market? What if we told you there is a tool that allows to to reap some benefits of both? It’s called Indexed Universal Life Insurance–and some investors have found it a useful addition to their retirement plans.

What Is Indexed Universal Life Insurance?

Indexed Universal Life Insurance (IUL) plans are a variety of permanent life insurance plan that features a cash-building element. One primary benefit of these plans is that the policy holder gets some of the gains of being associated with the stock market without all of the risk Wall Street is famous for. This is in no small part because of how these policies are designed. IULs earn in part because they are directly linked to a market index, such as the Dow or the S&P 500.  Any gains remain within the policy, albeit a cap rate will limit how much you can make. However, you are protected during a particularly bad year for your index with an IUL. The worst case scenario with these plans is that you make nothing, but you never actually lose money no matter how poorly your index performs. The protection of your principal is actually derived in part from the same cap rate that limits your gains.

How much money do policyholders stand to make? Historically, returns run between 5-9%. The S&P Index has actually returned at 9-11%, but the upside limit on UILs stems from the account’s cap rate. For this reason, many advisors argue that the UIL can make a wise addition to a retirement or estate plan once more traditional and self-directed accounts are maxed out.

Tax Benefits of Indexed Universal Life Insurance (IUL) Plans

There are three key tax benefits of IULs. First, you may pay into the policy with pre-tax or after-tax funds. Withdrawals from the policy may be made tax-free if you are under 59 1/2. Such withdrawals are regarded as loans, with your death benefit serving as collateral. Any funds paid out to the beneficiary are also tax-free, including normal benefits upon your passing. This is true regardless of their value.

Ask the Experts at Royal Legal Solutions About Your Retirement Planning Options

Regardless of where you are in the retirement planning process, Royal Legal Solutions an assist you. We have extensive experience educating investors about self-directed investment options. Many of our investor-clients love our Solo 401k information, product, and compliance services. Our Self-Directed IRA services can also be helpful for retirement planning, as the SDIRA is yet another vehicle that allows you to diversify and take total control of your investments. To determine which of the available retirement planning strategies are best for you, consult with one of our experts at Royal Legal Solutions. You may also contact us with any questions you may have about your options.

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