Best Of: The Be Wealthy Podcast

0:01You asked, we delivered. Over the last several episodes of the Be Wealthy podcast, we've shared the principles, strategies, and mindset shifts that matter most when it comes to building real wealth. Today, we're bringing you a best of, greatest insights, and conversations so far. This is a fast-paced collection of ideas around ownership, long-term thinking, and keeping your capital working for you. No fluff, no theory, just what works. Let's get into it. And there's an incredible book out there by Bill Perkins, I believe, called Die with Zero. And I actually don't fundamentally believe with the principle of the book. I don't believe you should go create all this wealth and try to die with zero. But he makes a really interesting point in the book. And the point he's making is that life is really about experience points. It's not about whoever dies with the most amount of money doesn't actually win the game. And I've heard it said a lot lately, but if you think about it, three generations from now, very, very few people are even going to remember you or know who you were. And so, why are you so worried

1:04about what other people might think? Why are you not shooting for your dream life when it's totally possible listening to others where in three decade or three generations from now, they don't even know who you were? And so, I would just take a step back and go and ask yourself, what do I really crave? Right? Do I crave experiences? For me, it's all about creating experiences with those I love. That's both my immediate family, my friends, right? My friends have become a part of my family. And I believe your your family, you get to choose who it is, right? You're going to have your blood relatives, but you're also going to have people that come into your life that aren't blood family, but are more family than your real family. And we all know who those people are. Um, I've got my boy Maddie who probably one day Cole will totally My boy Maddie will be on this podcast and no question he'll be our first listener. Um, and so I want you to think about that. Go take your you take your future plan. I want you to crystallize that into a vision board. Get that on your wall and get really clear. Each picture you're on there should represent something of that future time and make sure it's something

2:06that you actually really want and really spend the time to think about it. I will also tell you going from you know co a very very young hip 24 to 43 the things that you want at 24 uh you may not actually want those same things at 43 and that's the reflection part of life and really figuring out what do I actually want so defining wealth is a big part of it getting your unique definition uh for me right when I really think about my mission statement I'm big and it's the mission statement for our training organization for be wealthy but it's the mission statement I used it for our companies but I built it for my life. And when I looked at my life, I wanted freedom. If you took all of the other stuff out of it, the things I really wanted was freedom. I wanted freedom of the work I did, freedom of how I did it, freedom of where I got to do it, and freedom of who I got to do it with. And that applies both to my life and in my work. But when I had that freedom, I felt fulfilled. It gave me the reason to go run really, really hard and sprint in business. And then I would

3:08go back and I would I would counteract that with massive travel and go spending time with my team. And so I I believe or my my family. So I go all the way in. I'm all in at work, right? It's a Saturday right now. I couldn't be more excited. My family's running around doing something awesome. I had a whole day of kind of errands and practices and stuff. And so I want to come in here and knock out uh a bunch of episodes. But I get to choose and pick how I'm counterbalancing that. And so that's what wealth really meant to me is freedom. You got to think about what kind of returns are you aiming for, right? As an investor, you only have one job. As an investor for the lifetime of you being investor, you have one job, which is you're pricing in the risk, right? Your only job as an investor is pricing in risk. building. It's all these other things, studying the market and knowing how things go up over time and and how different markets are related and how different facts and whether that's inflation and GDP, how these all these things intersect and all those things are important, but your job as an investor is to price in risk. So, if you're going to take an investment as

4:10massive risk, like I'll go on some Facebook group, Cole, and we'll see like I want to make 35% cash on cash returns on my money. The only way you can do that is to expose your money to extreme risk. Right? You got to price in that risk. Right? So, we're going to look at different models. I I'll share with you a basic model that I've lived by for a very, very long period of time. When I think about investing my money, I think about three primary buckets. So, when I'm looking to invest my money, I think about three buckets. 40, 40, 20. The first bucket of 40% I am looking to make safe consistent returns with very very low risk. I'm looking to 6 to 8% uh and that's 40% of my money I'm going to invest it with the goal of being getting 6 to 8%. What does this really look like? That's going to be single family rentals. When you boil it all out and you you figure that no matter what the gross rent is, if you paid all cash, typically about 35% of the gross rents will be the expenses. You will net about 65%.

5:13That's after vacancy, uh repairs throughout the year, taxes, insurance, HOA, management fees, all of that will equal about 35% provided you landlord really well. So, you're netting 65% which is going to land you at about 6 to8%. You're going to hear people say, "I get 12 or 13% returns on real estate. Maybe if you're buying in a war zone, or maybe if you just don't know how to do math." Uh, that was supposed to be an hilarious joke. Cole, you will find that people that can't do math have some of the greatest returns you've ever seen. Right? If you can't do it, why? And why stop, Cole? If you can't do math, why stop saying you got a 30% return? Why not say you got a 3,000% return so you really sound cool online? If most likely, right, the best investments come from the deals you're already doing. How can you go find those? Right? So, if I'm a real estate agent selling single family homes, likely I'm going to run into transactions where I could flip those properties. Unfortunately, a lot of the opportunities we have in life, they show up like work, right? You get that weird call that as a real estate agent, hey,

6:17I've got a listing. It's about an hour away, an hour and a half away. Imagine it's a Friday night. I've got date night planned with my wife. They only want to meet on Friday. It's 6 o'clock p.m. It's an hour hour and a half away in traffic from my home and it's a lower price list and they tell me, "Hey, I'm I'm in I haven't made my payments in two months and it's going to foreclo or it's in foreclosure or whatever the story is a distress situation. What are we likely to do?" Right? As human beings, we might overqualify that. We might actually ask so many questions that we talk ourselves out of going. And the reason I say that opportunities sometimes show up and sound like work. all of those deals. I was teaching a class once here locally and the guy says, "Hey, I've got a referral for this town in Whitman." And so Whitman for the don't know Phoenix, it's kind of far. It's like it'd be an hour and a half from where I'm sitting right now. And he says, "Hey, who knows a great real estate agent out in Whitman." And I raised my hand. I do. And and normally in real estate, if you give someone a referral, they'll pay you 25% as an agent to refer that business. I know someone I gave him my cell phone number, and he joked. He's like, "Dude, that's your cell phone." Said, "Yeah, it I you you can get me to drive across town for $15,000, right? I I'm totally

7:20good with driving across town for 15 grand. And so you got to ask yourself like where where does the deal flow come from? That opportunity sounded like work to him. To me, it sounded like money and opportunity. I could either have a commission out of it or is there some other way that I could, you know, if it was a distress situ. Can I go out there and buy that property? Like do they actually need cash? Is that the best thing for the seller? And so you your your access to deal flow might be something different. But so what is you know your unfair advantage? There are deals all around you all the time. I absolutely love the story The Acres of Diamond. It's great on Audible. We'll drop a link in the show notes, but the the principle, I won't ruin it here, but the thing is we're all sometimes we're so close to the diamonds, we just don't realize it, right? So many times in my life, I've been so close. I was at if I'd have done five more of them or I would have just kept going, I would have naturally reach reached success. But so many times we stop early. We stop right before the success is going to come. I always believe in my own life, it's the last 20% of my effort that creates all

8:22the results. When I'm out there, if I'm going to make a hundred calls today, all of my results are going to come from the last 20. It's always been the case that it comes, it's that one more, right? You take Ed Mylet's book, one more, right? If you keep doing the one more and you keep getting better, you put yourself in the path of success. There's lots of things you could do as an employee. The first thing you need to do as an employee, how do we drive your income up? We're going to cover that, but let's let's go through the four variables uh of your investing and what to think about, right? Number one, four variables that affect your wealth, your returns. First one being time. How much time do you have to invest? Is it 10 years, 20 years, 30 years, 40 years or longer? The longer you have, the more compounding can occur, the more wealth and money you can create. Number two, second variable is how much money did you start with? What do you have right now? Number three is how much money can you put away every single month? This is where, you know, we've got to lock into your burn rate. It's where stop acting rich, that book,

9:24uh, matters because the amount of money that you can invest every single month and the return you get and the time determine where you land, right? I was blessed. I didn't inherit a lot of money. I had to go build all of my wealth from ground zero. And so I started with very little money. Uh I had a long horizon. And so the returns I could get what what affected the returns was the knowledge I had, the people I knew. And how much money could I could I push down my expenses every single month and get into a number that was comfortable. I had a great life and that everything beyond that number I would invest it. Right? So as an employee, how can I figure that out? Second thing you should figure out, how do I increase your skills? How do you go out and increase your skills so you're more valuable to the business? First thing I would do, figure out what your company cares about. Go to your manager if you can reach the owner or someone in a high level decision-making capacity and ask them what they actually care about. What is the biggest thing you're focused on? What is the biggest challenge in your business? What is the biggest

10:26opportunity? Set another way, why don't you pretend you're the owner of the business and where do you see that opportunity? What items where would you take advantage if you were that owner? What would you do? Right? And the reason I asked that is if you can go and step away and step into this ownership mentality, right? Most owners, if you can go create a new profit center, create extra money in this, go save money on this other thing, in large part, you're well, first of all, you're way more valuable to the organization, right? We're not looking for the employee that shows up, clocks in, clocks out. That's a role player, right? That role is is valuable. There's something there. But if all you're doing is punching in, punching out. You're doing the core work, nothing more. You're essentially a commodity, right? And I know that sounds terrible and I'm going to get blown apart online. But if the role is just I come in, I punch in, punch out, I give nothing more than what's needed, I'm not available ever after hours, I don't want to gain my skills, I don't want to add more value to the organization, the organization

11:28isn't going to value you. So, it doesn't mean if you're the front desk person, you can take on a leadership or an ownership mentality from any position in any business. So, go out and figure out how do I get more skills and help help the company um help them with a specialty item. Go figure out something you could do that would help reduce costs or increase their income or create a new line of business. Right? You've got to start thinking radically different if you want to change your income as an employee. but increasing your income. So once you've looked at that, right? Is there another untapped area? Is there a business next to yours that would allow you to create more revenue? I'll give you an example. So I'm in the re residential retail business. And there's a number of businesses inside of that that you could choose to participate in. So the first one logically for me was, hey, every time I get a a closing between a buyer and seller, we've got to close that deal with a title company. So it made a lot of sense for me to go out and actually buy the title company. We disclose all that to our buyers and sellers. It

12:30allows me every time I get a closing, right, instead of I'm I I can work with my buyer or seller to use whatever title company makes the most sense for them. And provided all of the rates are the same, they're probably going to go with the one that offers the best service and it's the most efficient, which is going to be the one that that I have because I'm able to do different things because I own it. I'm able to make it have a mobile notary come to them and all the different things that you can do when you own your own business to cater the service to your clients. but it allows me to capture another piece of the revenue. Another example would be we're in the insurance business. So, when someone closes a transaction, I want to make sure that they're number one, do they have the right amount of insurance coverage on their home, and number two, are they paying the best possible price? That matters. Well, if I have an insurance company, I can actually make sure that that's happening and again, my customers are getting the best value. And in doing so, I'm still winning in that. And you can go all of the way down the line. I could step down to the next logical thing could be you could enter into the mortgage business or you could go into there's all kinds of there's a there's actually a business around setting up services where you put on turn on their utilities and internet and

13:35pest control and all of those things. There's a way to make an affiliate fee or own those businesses as far as you want to go. That's called vertical integration. So what other services could you offer your customer that would add value them and add additional revenue to your business? So becoming wealthy in your business, how can you think about it? And I used to think about lanes of revenue. What business can you stand alongside your current business that you already have the customers for? Anytime you can start a business where the customers, the likelihood of it succeeding and the likelihood of hitting additional profit is extremely high if you already have those customers in your core business. Now, we want we want to make sure that when we're buying something, a payment that we're going to have, we want to make sure we still got enough money left over to go do the investments for the things that really get us free. And and you've got to really think about your primary residence. I fundamentally do not believe that your primary residence is an investment. You know, I do come from the Robert Kiyosaki school of thought, which is like you got to look

14:37whose balance sheets that's on. Unless you're paying cash, um that home is a liability. And even if you are paying cash, I would still argue the home's a liability because you're going to number one, you're going to do things, Cole, to your home that don't make economic sense. Uh, I'll give you a great example in my life right now, Cole. I'm building a pickleball court in the back of my house, and I got to tell you, I couldn't be more excited about it. It's going to provide amazing experiences. I love it. My wife is turning into the most devout, crazy pickle ball person in the best way possible. However, Cole, I don't know that the next person uh that buys my home loves pickle ball, right? There's a there's just a chance that in the all the buyers out there, the family that wants to buy says, "Hey, I don't so all the money I spent in putting in that pickle ball court, that's not going to come back to me in terms of return on investment." And if you look at your home that way, it it's not going to make sense. Like think of when I go buy an investment property. I like I want to be in a certain zip code in a certain neighborhood and I will write an offer or I will mail every single

15:40three-bedroom, two bath house in that neighborhood. I'm looking for the best numbers and I'll buy it. Well, when I have a primary residence, I have things I want to pick. I want a certain backyard. I want a north facing. I want to have only two neighbors. Like my boy Maddie, my boy Maddie, he will only buy a home. His dream, he doesn't do it now, but his if all the things equal, he would have only two neighbors. Now, I prefer to have no neighbors, right? All things being equal. I'm a very private person at home. But the point is, you've got to keep your that 30% number allows you to have more freedom. The last part of his criteria, so save 30% down. Spend no more than 30% of your income. And this is probably the hardest part. Limit the purchase price. You've got to limit the purchase price to three times three times coal your annual income. So, another way to do that, right, if we divide the 500,000 divided by three, call. I got to go see what that actually is. I got to do that. I can't do that just totally in my head. So, I'll spit out a number and then in the comments, I'll just get lit on fire. This guy's teaching wealth and he can't even do

16:42basic math. Uh, all right. You need to be making about $166,000 a year to buy that $500,000 home. So all three of those, if you line that up combined, right, this would be the criteria to buy your home that gives you the best chance of having lots of money left over so you could go uh invest in other things. So uh live update. I had a a crazy business world. Uh I had a crazy business week. Just a lot going on in my office. We're making some changes and I needed to do something personally that would actually live our be wealthy mission. I want to do something epic. And so I on Thursday night, I was driving home and I thought, "What a cool way. Why don't we do an emergency fishing trip to my favorite place on the planet, which is Pamita to Mexico, I walk in the door, it was like 7:00 at night. I asked my 10-year-old, "Hey, dude, how do you feel about flying to Mexico tomorrow, fishing for two days, catching fish, coming and eating it, we're going to do some probably e- foiling, we're going to do something crazy, and how do you feel about that?" He goes, "Dad, I'm 100% in." So we load

17:46up and we rolled into Punamita. We found a room. All I wanted to make sure I text my fishing guide which will come up here in a minute uh the guy that owns the company I said dude you have two boats available for two days said we'll figure it out. So I don't have a room yet booked booked two booked flights there and back and figured out the room on the way confirmed as we were in the air and I had two of the best days ever fishing. Point of that story is money it's not all about the dollars and making it and growing your net worth. All those things are super super important. But I think there's a connectivity between what we really want in our lives, which is better experiences, right? We want to really live that wealthy lifestyle, which isn't about money. It's really about moments. The more moments you can create, right? And the more magical that moment when we all have the ability to create them, I think we just lose that um is it that inspiration coal? We lose that desire to create those moments and we can get stuck. And so I'm constantly thinking about what's the most what's the most momentum? What's the most epic thing I can do in this moment to make it really matter and be something I won't

18:48forget? At the end, it was an incredible trip. We caught a ton of fish and I'll share a little more about the story in one of the five investments that we're going to talk about today. So, um, as we jump in, right, we said we got we have more access than than ever to impossible investments. You know, most of us only know what we know. And if we really look back in the past, what you're going to see is we've all kind of been fed a certain group of investments like alternative investments. A lot of things we're talk about today aren't things that were being talked about. People have talked about, right, stocks, mutual funds. If you look at the whole 401k world until the last really 10 years, you were primarily limited to taking your 401k funds and going in this generic mix of either stocks or mutual funds or ETFs that are pretty, you are just kind of generic general plan. Put your money in the stock market, set it and forget it, work 30 years, put your head down, and we hope you can retire. And what's cool now is you realize, hey, I've got a retirement account. I could self-direct that account. So, it may if if you're a current employee, your plan may not allow it, but some people have had a prior 41k. A lot of people in the

19:50real estate industry came in this industry from another business. So, if you actually have an old 401k, you could self-direct it. Then you could put into any of the investments that we're going to talk about today. So, there's just a different way to be thinking about your investments. And again, the thing we talk about here is where do you have that unfair advantage? When you go to invest your capital, all of the money you can make, the return is largely based on where is your unfair advantage. You know, if you think about again, there's three resources in life. Money, talent, and time. So if you've got the capital, where is that talent that you have that you know more about this asset, this investment, could be real estate in your area, could be land in your area, could be some other business type investment in your area that you might have an unfair advantage. And that's where I think you should look about playing. Next thing is I became successful. I didn't stop the hours. I didn't stop working. I didn't stop putting in the effort to continue to grow. I see people is they have that first level of success and all of a sudden they get that first big check, that first big commission, uh the first

20:53time they get a $20,000 check and what happens? It gets just erased. It gets vanished right out of their hands into the ether. The universe extracts it because they didn't raise their financial thermostat. They had no model for what would I do if I had $20,000 in my account? What's the purpose of those funds? How do I use it to buy my time back? How do I use it to get ahead? They're not asking that question. And so they also, you see it, I see someone have their record setting month in sales. What do they do? They start letting off the gas, right? They were working three hours a day on the phone, just setting all the appointments, doing the appointments afternoon. In the afternoon, they have that record setting month and they let off the gas only to have their income right back go back right back where it was. I have always went home and told my wife, I'm a momentum player. I need momentum. Momentum is the key to business. And it's so weird because how you get it, you don't really know. But if you do a lot of hard work and you get a little luck, every now and then you need an ounce of momentum, that first step, that first right thing to go your way. I can leverage just a small amount of momentum into a huge, huge win in business. But

21:55it starts with getting that first win. The wins come from doing the activities. And so I never stopped working. I never stopped focusing on the outcome. The work was the work, right? If I've got to make 50 calls a day, it is what it is. And some days I didn't win every single day, but I started measuring my days in a different way. Most people are always focused on the outcome. And I only look at the effort. And I ask myself every single day to this day when I go home, did I put in the work today to win? Not did I win? Winning's irrelevant. I can't control always the outcomes on a given day. But did I actually put in the right amount of work so that I had the chance to win? Was I actually in the game? I think so many people don't even realize they're not even in the game. They're in the wrong parking lot driving to a stadium. It's not even for the same sport, Cole. they're totally not in the game. When I think about debt, overlever creates stress. When you are stressed out, you make bad decisions. I had a out of a private client, uh this is years ago, and I always tell my talk to my private clients, you need to have enough cash sitting in treasury bills or a

22:58savings account that your head hits the pillow and you have zero stress. And for all of us, there's that number. Like, so if you save 12 months of your burn rate, which is we talk a lot about if your expenses are $10,000 per month, I would recommend at a minimum you have $120,000 saved, you're not investing that money, you're not doing anything with it. That's just sitting in account sitting there. So you do not have stress because you would have 12 months without working before any financial pain would come to you. And so this guy had is much more than that saved. And at one point he and the idea of this money is though you never touch it. Greatest deal in the world comes along for you to invest in, you can't touch your burn rate. And so what did he do? He took a big portion of his burn rate. He grabbed that. He took out some debt and he went and did this big investment. And along the way, the investment started not performing. And there was there was stress in that and he went through a tremendous amount of financial stress. The thing he started admittedly doing, he started immediately making bad decisions in other areas. So now things that were super clear, he started, oh, I'm going to maybe sell this asset now or I don't want to buy that. I don't want to buy this other investment. So all the things that he was doing were right before now were

24:01wrong because he didn't have a clear head because he had financial stress. And so overlever creates stress and it doesn't allow you to make the best decision you possibly can. So last thing I want to say about stress is done correctly, it's actually a tool to help you become wealthy. So, after the all all the fun and COVID and it was really early January 2022, rates were low and this local bank of mine came out with a 30-year uh 30-year fixed mortgage for an investor. It was 4.25% with no points. And I looked at that, I thought, I'm thinking about refinancing. I wonder what I can get the rate down to uh if I refinance the bulk of my portfolio. This is in January of 20 2022. Uh I wonder if I get down if I pay the points. So, I paid a ton of points and I got it down to three and a half% fixed on a 30-year and I actually refinanced my entire portfolio. Now, I had no clue that rates would skyrocket and be where they are today. That wasn't the bet. I just knew that we were at near historic lows of all time. My properties had rapidly appreciated. I had a ton of equity and I was getting returns in hard money of 12, 13, and 14%. It made a lot of sense to

25:05refinance all those investments and take that money and put it into something else. Now today I look like a genius and and it's funny how time works. It either makes you an idiot or a genius. But at the time I was just placing a bet that was very very logical. And so debt has helped me become immensely wealthy. Now by the way when I say I refinanced them I didn't take it to to as high as I could have gone. I think I took my average uh loan to value around 60% of what it was worth at that time. So I've still got that cushion baked in. Debt allowed me to take advantage of a lot of other opportunities. But I wanted to share a handful of my takeaways from what Tony Robbins shared and his unleash the power within UPW for those that know it, walking on fire. Uh it is an incredible event that I think everyone should experience at some point in their life. But Tony really said in life we have three main decisions. Three main decisions that affect the quality of our lives. So number one, your first decision is what are you going to focus on? You wake up every day, what are you going to focus on? you can focus on things that are positive, things that are negative. Uh you get to decide what

26:08information you're putting into your head. And for a long time, uh I disconnected from the news. I find when you watch the news online, there's a couple things. Number one, largely it's inaccurate. I know it's crazy to think that CNN or Fox or whatever you listen to might be slanted in a given direction. Uh I don't believe what uh I don't believe they're all telling you the truth at any at any level, Cole. I think there's a version of the truth that they're saying that's sllanded through their opinions and views. And so you wouldn't need to have any issue to go very far than go to Fox, watch the issue, click right over to CNN, watch the issue, and how's the same issue presented totally different. And so where I went with my news consumption is I decided I mean negative. I could choose the information I was allowing in. So I have sites where the information is reputable and I'm choosing to read the information in the way I want it. And so I try to focus on the positive things and not let the negative get into me. So what are you going to focus on? life hits you, what do you focus on? Cool. The second decision, you got to decide what you're going to focus on. The second thing you're going to say, what does it mean? Right? Because the minute you focus on something, you focus on that moment. You have to decide what it means. So, it

27:10could be that you're waiting in line at Starbucks to pick up your order. Uh, which I'm not against as Dave Ramsey is, which will come up in the in in a moment. But, um, as I'm waiting at Starbucks, I could focus. So, I'm standing there. I'm focusing on waiting in line. And the meaning is it that hey, I've got this 15 minutes that I could uh I could check my email. I could meet the person behind me. I could start reading something. I could listen start listen to a podcast obviously be listening to the Be Wealthy podcast if you're in line. And so I can choose that this is an annoying experience. I'm waiting in line and it could be more efficient. Or I could focus on um hey, I've got a moment here that I can get better. Uh I can learn something or I can experience someone or I could have a quick call or whatever and connect with someone. And the last part you decide is what are you going to do about it? So once you decide what it means that hey I'm going to use this as an opportunity then you could take the action and go do something with it. And so uh there's just so many things I could share out of what Tony said, but I thought those three decisions uh were something I want to leave you with. Number one, every day your three choices. What are you going to focus on? What does it mean and what are you going to do? But I want to

28:12instead of go to houses, I want to go to commercial and I want to go to ideally retail businesses that I believe are durable and are a thing. And so I thought of the one that Cole, everyone does and no one more than a few people in this office, namely Sabrina loves Starbucks. And my fundamental belief is 20 years from now, Cole, I think people are going to want to meet at Starbucks and drink coffee. I know it's a bold idea. I don't do it personally. Uh I have a coffee machine in my house. I think it's just wonderful. Uh but people are going I believe that Starbucks is a real thing. Uh I think it's going to survive. I think it's going to make it. So, I'm going to I am in the process of likely exchanging 21 rental houses for 2.5 or $2.6 million I sold for for $2.6 million in a Starbucks. Cole, the numbers line up actually perfectly. And here's what's fascinating about the math. The math is actually going to be higher on the Starbucks than it was the 21 rentals. And by the way, the difference at Starbucks is what's known as a triple net lease, which is net of repairs, expenses, tax insurance. Every expense

29:14that you have as a landlord, all those are paid. It's called triple net. And all those expenses are paid depending on your lease, but in this case, all are paid. So my net rental income is my net rental income. I don't have to manage the building. I don't have to do anything. All I have to do is look at the lease. Did they pay? It's guaranteed by Starbucks corporate. It's got a 10-year lease built into it. It's and they can have options to extend up to 20. So I am at the start of a 10-year lease coal for the next 10 years. I'm not going to have the soft cost. And so the point of this episode is isolating the soft costs on your investments. I also want you to think about the soft costs in your life. And so what are the costs? So let's compare Alabama portfolio to Starbucks lease, Cole. So first thing, how many assets are we managing? How many different things are we thinking about? We got 21 verse one. Cole, what do you think is easy to manage? 21 or one?
I'm I'm going to go with one.
Boom. Cole, touch the sky. It's the right answer. Cole, next thing. How many LLC's did I have? Well, for 21 because you want asset protection. The way I

30:16think about it is how much equity do I want to expose in each LLC that I have? How much equity want to expose? So, I had, I believe, five different LLC's that owned those 21 those 21 assets. Cole, on the new building, I'm going to have one LLC that's only an old building. So, now what's easier, Cole? Five or one? Keep in mind of those five, Cole, each of those has a P&L. Each of those has a separate set of bookkeeping. Each of those has a tax return. You've got insurance policies. You got 21 different insurance policies as opposed to one. I mean, but all these things add up and we all look at it like, "Oh, it's totally doable." No, Brad. It's all the same. It absolutely is not the same. So, we'll get to the end. So, now accounting to account for 21 rental properties if when they go vacant throughout the year, right? You're going to have probably three utilities per rental properties times 21. So, you got 63 rental utilities you're paying. So, I would say it takes about eight hours a month to do the accounting on 21 rentals. Now, how much accounting does it take, Cole? When you have one deposit, like, hold on,

31:18wait a minute. Let me get my QuickBooks and I'm done. So, I think that's going to be five minutes or less. We'll call it 30. So, you got eight hours a month, 30 minutes. Let's go to tax returns. When you had five uh different LLC's, you're finding five tax returns. Just more complicated. How many And by the way, the amount of money to do those tax returns? Again, one asset, bam, one set of income, expenses, done. 21 different lines on your tax return if you seen how it's done. And so, what's it going to cost? It's not just five returns. I would argue that those five returns probably are cost $1,500 per versus the one return is probably going to be $2,000, maybe 1,500 bucks. How about renewals? I've got to manage 21 different renewal extensions that are all annual on single family rentals. When do the renewals come up? Every single year. We've got to get the tenant to sign on. They can move out every year as opposed to what do you think happen there? It's like a 10- year lease. Cole, we're not talking about renewals. By the way, the renewals are already predetermined and they can go out another 10 years beyond the initial term. By the way, every 5 years

32:22automatically 10% rental increase. Automatically built in. I got to go to my tenants every year and try to get that increase. Now, let's talk about vacancy. All of my single family rentals, what's the question you're asking, Cole? It is I budget that it'll be vacant one month per year. Is that true? No. Hope on my average single family rental property, my average tenant stays for 32 months. But I have to budget they're going to move out every year because that does happen. And if they do it, we'll be vacant for likely 30 days. As opposed to my vacancy call for the next 10 years, unless Starbucks goes out of business and they go bankrupt. Um, I'm not going to have any vacancy. I might not have vacancy for 20 or 30 years. That's possible. As opposed to one month per year. All right. Then we go down to rent collection. Again, is it easier to collect 21 properties or one? Pull out a sheet of notes, pull out a page, and write down three potential businesses you're thinking about starting or you have interest in or might start. Right? Just dream a little, write down three, and then I want you to circle and pick the one that that you could start the soonest. This is the one that if you were most likely to do something

33:24tomorrow, if something changed in your life, this is the business you would start. Uh or if you own a business right now, this is one you would think about starting in addition to the one you have. So, I want you to have that business. And I want you to think about your current criteria that you have to evaluate a business. What would you normally be thinking? And then I want you to ask yourself these questions. And so we'll we'll link all the questions in the show notes, but I'm going to ask you the questions and kind of give you my feedback on them. So number one, first question I ask, what is the upside of this business? When you think three years out in the future and things are meeting your expectations, you're not living your wildest fantasy, Cole. This isn't like you're going to the Ritz Carlton and having $225 breakfast every day type money, Cole. 3 years from now, this business is performing exactly like you want it to. Okay? It's doing everything you want it to. You're happy. You're pleased. What's that dollar figure? And boil it down to an annual dollar figure. When I first started playing this game, I would start a company if I could make an extra $100,000 per year. I was willing to start that business. It made a lot of sense. It would grow my income. You know, that was a very critical number to me at that time. Today, the way we think

34:27about it, right, if we're going to start a company within three years, if we cannot get it to a million dollars net, it is not a venture that we would start, it would make more sense to spend time on our current companies that we already have. And so, Cole, we kind of we missed that jumping in today. And I think one of the challenges of a content creator that actually really does the thing. So, Cole, I think what makes me a little different is it's actually hard for me to film. Like, you had ended up uh waiting for me, I think, four hours to film today's episode. And that's not me being a jerk, guys. So, I don't want to get lit up in the comments that Cole was locked in here. at other things he was doing. Um, but I'm actually like really running businesses. Like I'm I don't play an actor on TV that's like, gosh, if I had a business, this is how I think I would do it and how I would tell other people to run a business. If I had one, here's how I might think about it. And that's what most content creators are today, right? They are actually not business people. They are professional content creators. So Cole, we're not professional content creators. I mean, you are, but I'm not.
Which is why this is so hard. you're actually you're running a business and we can't create the content about it about running the business.
It it is a weird thing, right? It's it's uh being a teacher presenter. Uh I think

35:30it's more cool if you make it up, Cole, because it sounds really awesome, right? Like I could really make some of these business we have seem real cool if I made it up or like what if I talked about what I think it would be to have it like you know, think how cool of a business you could make up if you weren't going to do it.
I'd probably crush online.
What would be your what would be your business if you could make up something?
Probably something related to Mars or the moon.
Oh, astronaut cowboy. instantly. Astronaut Cowboy out of the gates.
Are we doing this?
Okay.
All right. Podcast next week. The astronaut cowboy. Uh, find us everywhere. So, all right. So, we're back. That was that was a tangent, but you actually got to think. It's not an astronaut cowboy business, Cole. But three years out, what could this business make? What's your number? It has to be worth your time. What are the dangers or challenges? Right? So, when you start this business and you think about it, what are the dangers or challenges in that business? What are you missing? This is where you want to think about all the blind spots, the things that could go wrong. And if you've read that book, The Six Thinking Hats, this is where you're thinking about the black hat, like where are the problems, the challenges, what have I overlooked, what are my obstacles, what can go wrong in this business as I go to

36:34hit my goal that I defined in number one, right? If I'm going to make $100,000 in three years from this business, what are the challenges or barriers or competitive things that are getting my way? All right. Number three, third question I ask. Do I have the right jockey for this business that is not me? Because businesses are going to require management, people, time, effort, and things in a you already likely have a job. All of us have a day job. So again, this was a business that you are starting that you are not in. We're assuming if you have a day job, you're keeping it for the time being for the sake of this exercise. If you have a business, you're staying running in your current role in that business. So, you need to find the jockey. Someone that's in that an industry that's either proven, someone you want to bet on that's got the energy and the ambition to go do this thing. Do you have the jockey for this business? I will not start a business without the jockey that can drive it. That is not me. All right, Cole. Number four, people. Never been a harder time to manage people. Never been a time where folks didn't want to work. Uh, in the last, it's a fascinating thing, Cole. last three weeks we're interviewing for some different positions in our companies and the

37:35amount of times someone said is this a like and this is a clearly like an ad for an inoff position like they're going to come into our office and work here and one of the first things like o is this going to be like you mean like a full 40 hours a week in your office I was like well yeah it's kind of like all in the ad like in office right you know 8 to 5 and people like is it how flexible is it like well it's a front desk position so like you're going to literally be at the front desk when people come the or it's a front desk. Well, can I work from home? Can you work the front desk from home? Like, Cole, so this is why number four is so important. How many people are we going to be in this business? Because you only can have some of those conversations and then your hair just goes straight white. I'm in the edge, Cole. I think I'm two clicks away from just straight white like the be wealthy sign. I want to start right here, which is I I think so often I hear the word failure, Katelyn. And when we're in weird times today as we're filming this, it's, you know, late 2025 towards the the middle of October. And you hear a lot of people are in pain out there. And I hear things like, "Hey, I'm failing. I'm not making it happen. I'm not doing the things that I thought I would be doing today." And I think

38:38it's important to really think about failure a little differently. And um it's the way I talk to my kids about it. It's the way I talk to all my one-on-one private clients. Uh there's no failure, right? There's there's opportunity to learn and there's winning and that's it and there's nothing in between. So just because you did something I could tell you that and you know this firsthand Katelyn in my life my greatest successes have come from my greatest quote failures but I don't think of them that way. They were just opportunities to learn right sometimes a business will have a ceiling of achievement or you have some revenue maybe it doesn't work out but the things that you learned inside of that are so infinitely valuable for the next thing that you're going to do. And uh that famous Steve Job quote, you can only connect the dots in your life by looking backward, right? You I don't think if we were to look your life as an example, you know, when you were selling bolts and nuts for a minute there, right? You might not look at that on a sheet of paper and go, "Oh my gosh, that's going to be one of the greatest stepping stones of all time." Or when you took that job at KW and

39:40expansion. However, those two jobs in your life, I believe, and I'm not saying they were failures, but I believe those the learning lessons there, you're using those today. So, they might not have been massive, the craziest successful things of all time, but there those experiences if you take trying lots of things that weaves into experience and that creates the fabric of success. And I think people are too hard on themselves to just go out and learn. And you you actually don't learn by I'm the biggest fan of reading, Katelyn. You know that I read lots of books. You cannot actually learn until you do something. Something has to occur. And you've seen this a lot in our companies where and we're at a big project right now, which we can weave in here in a second. Um and I tell you, you're like, what is this going to look like? Or what exactly are we going to do? And I'm like, I have no idea. We're going to do all of the things. Then we're going to measure and track all of them and determine what was successful. and then we'll eliminate the things that wouldn't work because I don't intend to know all the things that will occur in the next 37 steps that we're going to take on at a given project.

40:43
Brett, you you said this to me once when we first started working together and sometimes you have these sayings and I don't really know what they mean. So, I have the follow-up question. And your sentence was, "Katelyn, we're gonna have to ju just throw our wallet over the fence." which sounds crazy to me. What
what were you talking about there? I if I remember it was we were buying a large bundle of promisory notes.
Um
that was the the time I first you first heard it when I was buying a bunch of seller finance debt. So I was buying a tape of debt that was owned by other people
and we've not done that yet.
Research you had traveled and visited two gurus. You'd read probably a hundred books, maybe 50 books on seller financing. You'd watched tons of education on it and said to me, Katelyn, we only have one thing left to do and it's throw our wallet over the fence. What?
Well, so you can only like I was the greatest at that moment, right? If you think about how you learn anything, you

41:45you read all the existing publications, right? every single book that's out there, any data online that you can find that's relevant, like real, you know, articles, blogs, things that are relevant. And then I went and met with the two authorities in the space. So, at the end of that, I'm the most like knowledgeable armchair person that's never done anything in the space that probably existed at that moment. And so, I said, there's a country saying that there's a cowboy riding along a fence line and wind comes up and blows his hat over the wall. And they say, what's the first thing you should do if you're that cowboy? And the answer is you should take your actual wallet out and throw it over the fence uh by the hat. And the guy said, "Why would you do that?" It's because I'll actually go get the hat. Point is, sometimes in business, you've got to throw your wallet over the you got to do something to have the learning experience. So in that example that you gave, right? I bought a tunch of debt. Now, did it all work out brilliantly? No. There were some things that were crap and there were some things infinite amount of things that I've learned. However, I moved on from that like initial investment which was pretty

42:46significant uh to today you know we've done I don't know hundred million $200 million in debt as a result investments as a result of that experience that I could have never have got had I not put my wall fence or got in the game. And so Katelyn you you gave a great segue there which is if you think about failure like on one hand did all that debt perform like I thought it would and would it have hit a perform would it all worked out great? Well, no, but the things that I learned created that second section which you can see on the screen which is experience and that is the fabric that all weaves together to create success. So, wherever you are in your life out there and you're listening to this, just realize just because in things that aren't working, as long as you're learning along the way, you are gaining valuable skills that likely will be hugely impactful and you won't be able to connect the dots until you go backwards. was people come into your lives for one of three things, right? They come in for a reason,
they come in for a season,
or they come in for a lifetime. And you

43:49pose the question to me of do you have a model to determine who's in which of those categories and then how you develop them based upon that category or how you handle them. And of course, I didn't, Brett. You know, I was just rubbing and gutting. and I was just out there trying to make some scratch. Um, but as always, you help us to put together those models and what those look like. Um, and really it changed my life. It changed my relationships and it eased a lot of pressure and tension in areas of my life. So, I'm excited for us to share that today on this call on this uh on this podcast.
Well, thanks Katelyn. I I've taken that concept and really formalized the kind of the way I thought about it and and and did it. So, I I'll open with just a story here, the way I think about time. And it was about five years ago. Uh I met an acquaintance, which we'll talk about here in a minute. And he kind of like, "Hey, man, could we go to lunch? Can we go hang out?" And I was like, "Um, man, respectfully, no." And he goes, "What do you mean?" I go,

44:51"Oh, you don't fit into my circles." He's like, "What does that mean?" And I said, "Well, I wake up in the morning and I think about these three different circles as they relate to people. and I start in the center and I work my way out. Um, and I've never got to the end of it. So, thus you're in the outer ring. Um, and until I'm looking to audition for new members of the band on the inner circles, um, you've got to be there. And so, you don't have to be that aggressive. But, um, I do think a second, hold on a second. What did he to be a fly on the wall? You have this guy you're somewhat friends with. He's an acquaintance. And you have the nerve to say, "I'm sorry you don't fall into my circles." What did he say?
Uh, I mean, he looked at me like probably like I was crazy, but it's not like the looks I get often because when you're Katelyn, when you're a trutht teller in a fake world, um, often the things you say while true, um, people aren't willing to ready to accept them. Now, I could tell you he moved over time, you know, that that changed and

45:54and there wasn't that it did work out. And I'll walk you through how that how I think about it. But I want to drive with the listeners because you made such a great point. Quit playing for someone else's opinion that you may never see again.
It's your life. You only get one shot at this. So live your life. I just want to anchor the point you make because it's so freaking important in today's world that people are chasing something else that's not what they actually want. It's so true, uh, Brett, because what I learned too, the only people you impress with that kind of are other losers. Winners, winners, like I have a buddy on my team. He just went and bought a Tesla and a freaking Rolex and he's 18 years old. The only person he's going to impress with that is another loser.
Winners aren't impressed by that. When I first met my billionaire partner, he's and this is where I've learned a lot of my money lessons from is I I met him and we became partners and at that time I lived in a 900 foot condo and I had zero debt and he looks at me he's like you're one of us.
He was impressed that I didn't have anything.

46:56
How cool is that moment though when you get from someone at the top of the mountain to go Dustin I actually if you had the BMW if you had the new Tesla the Rolex I'd have probably gone
it's not a fit. I don't know if we're aligned, man. You're on a different journey. That's cool. That's a cool
cool moment.
It was. It really was. Yeah. Um and so I got about a mill I owed about So I get I I go and I hire a tax attorney, hire an accountant because I at some point this dark cloud starts to hover over me, right? Whatever you avoid, if you don't stay disciplined, life will discipline life will discipline you if you don't discipline yourself. And so, um, got with a tax attorney, got with an accountant, went back through all the years, all the years, ended up owning like a million bucks at like 28 years old,
you know.
28. You got to How many years was it of unfile of non-filed returns?
Four years.
So, you get to a million dollars. The weight,
how heavy is the weight on you at that moment,
Brett? It's all I thought about all the time. I didn't sleep at night. Like,

47:58it's all I thought about all the time, 24/7. It was never not on my mind. It was just this dark cloud over me. Um, it was awful. And it was like all It's It's so funny because like all of that euphoric feeling, it's like it was like I used this money as a drug and now boom, it hit and now I'm on the crash.
And it was like so all that good feeling now I'm feeling all the pain of it. And so
how old are you right now? How old are you with a million in tax debt not paid? How old?
I'm I'm about 28 years old.
Okay. This was 11 years ago.
Okay. Yeah. And so, um, I then start I then start my real estate team and start, um, I was co, oddly enough, it was like a I don't know if I should have been coaching people in real estate, but I was I was coaching people in real estate and I had started my real estate team and, um, with one mission, it was like serve as many people as I possibly can, make a a people first business, and pay this sucker off. And it took about I want to say it took about 16 months. I moved into a condo. It was 900 ft. Um, I paid off all my debt. I paid off every

49:02single thing. Every dollar I made extra went to that because the penalties and interest kill you. So, those of you that have IRS debt, and if you're a realtor right now, I think 80 something% of realtors have IRS debt of some sort. That's by the day. The interest is by the day. So, if there's one thing you're going to pay off first, it's that.
Well, because and to your point, it never goes away. I mean, it is the chase. It you're you're paying it. You might negotiate
some penalties and injury. You might get a little of that away, but it to your point, it's snowballing and and expanding.
Yep.
And so I think it's so important for the listeners to think about yes, your life will get better, but then you got to turn internal and go what do I really want? Like what's driving me and where do I get my validation for the world and where do I get my validation for my part? And how do I think about those things? And the more you could focus internally determining your own value rather than externally, right, the more the more peace you're going to have in your life. So I was curious. I wanted to pause you for a minute and ask like did anything

50:04radically change the formula because I I I I had kind of knew the answer was going to be no. So now you keep charging forward.
Yeah. I will I will say what happened what did change for me is that I became evidence and proof that this framework works and I became even more convicted to go out and help other people do what I did because yes I know I'm driven. Yes, I know I can work hard. Yes, I was given some god-given talents and you know whatever. I'm a chick. I'm blonde. I had this this time in the market. I have freckles. I don't know. like we all have our our thing but like I really I really kept saying okay I was in sales for 10 years and this was my result and then I started applying coaching which meant I was very diligent about my time where I was focusing my time energy and efforts um you know I got masterful on a few skills I learned how to be a leader and hire people when and where and what they did um I had a process around my money

51:07so I fill out a budget every month. I had rules around where the money went, you know, I it nothing was like MBA level stuff, but I started putting pieces together and the next 5 years I went from whatever 300 grand net worth to 4 million net worth. So I 10xed in 5 years. And so what I wanted to do more than ever was like shout off the rooftops like you guys you can do this. And um you know I've always believed in Zig Ziglar's line that if you help enough people get what they want, you will get everything that you want. And so I bu based my whole working life on that, which is if I help that real estate agent earn a commission, then I earn a commission. You know, if I help that family get out of the pickle they're in and get what they want, then I get what I want. And so pretty quickly as I started getting coached, I started figuring out like, whoa, I went from 20 million to 40 million to 80 million tound something million in my personal production. And again, I'm the same chick. I just applied some different

52:11focuses and tactics. I want to help other loan officers do the same thing. And so anyway, what got me to my next, you know, 10x over time was now just basically helping people do that. Saying, okay, what is the road map? what are your strengths? How can we intentionally focus you? How do you become a leader? And and and then that's what I've done. So I've now been in the business for 21 years. Um I have about 80 loan officers that span all over the country. Um I run about 12 branches directly where I am, you know, the branch manager. I I now have a solid leadership team. We follow the EOS model. I'm really stepping into being more of the visionary. But I found sustainability, Brett. And that wasn't always the case, you know, like once I hit four, I was like, "Ooh, okay. Well, maybe I got to move it move the target to six cuz now I see that life is a bit more expensive and I don't totally feel stable yet." And oh, by the way, um I'm 34 and um you know, we got a lot of life to live. And then once it was six, it was like, "Okay, maybe 10 feels better."

53:14And then you're right, after that, that's not what it it's ever been about. It's been it's been like, okay, we're safe. We're secure. We're stable. Um, how do I make this, you know, sustainable? How do I help other people climb to the top of their mountain? And then how do I just keep getting better at all the things? You know, I'm I'm obsessed with mastery just like you are. That winning is a mindset. And it's it's fun to keep improving every day.
One of And you could see my screen now, Katelyn, over here. Path of money. here. You'll see.
Brett, this is one of my favorite diagrams. I absolutely love this. If people are just listening to this on Apple Podcast, if you want to go onto YouTube or you want to go on to Spotify, you'll be able to actually see this video. We'll also include this diagram link in the show notes below.
Yeah, it is. Um I mean it takes a genius to do this, right? This is comes right from the genius of Gary Keller and he came with this idea of just path of money and I think he did it to explain to others how he thinks about money. And

54:17so you look at the very top right there's really two ways we generate capital. One is human capital. Katelyn you and I wake up in the morning we go to work. We do whatever we do. We try to proide value to the marketplace based on the amount of value we provide. That's how much money we make. Uh but essentially we're going to work for money. Whether that's as in a job, whether that's in our business, but we wake up and everyone has a day job. Pretty straightforward. That's called human capital. The other side, right, is doing things right, doing the things we just discussed. Your human capital, you earn more than you make. You've got some leftover money, and you're going to put that into what we call capital assets, right? That's where your money's got a job. Now, I would tell you everyone listening to this that and most people's mistake, Katelyn, is they go into it on the human capital side. spend all their energy there and everyone should drive up their income. You should get your income where you're you're past the point uh of surviving and you're into thriving and you've got your income over what you need to sustain and survive with that. The extra fund should go over into capital assets and you should really be

55:21methodical about thinking about your capital assets. It's where all the opportunity will go. And in the future, if you do it right, you your money can make more money than you can, right? Your passive income should exceed your human capital income if you do it right over time. So regardless, Katelyn, human capital, capital assets, those create cash flow.
That's the whole goal, right, Brett? So when I'm looking at this, we have human capital. All of us, I'm going to make a huge generalization. All of us are making human capital income. We go to work, we make money, we get that W2, we get that paycheck every two weeks or we have compensation that's coming from our real estate business. Everyone who's, you know, part of our group is all making human capital. And your mission, what you're teaching in be wealthy is that freedom component. We talk about that get free and that's really when you're able to transition from all of your world your needs your burn rate being covered by your human

56:26capital that now they're being covered by your capital assets cash flow your money that's working for you and so the challenge is they're both up here at the top of the diagram how do we do that and so I think this diagram walks you through a really methodical way of how to think about it. And as you mentioned, the human capital side ultimately in what you're about to go to, we must make more money than we're spending in order to be able to invest it to grow the capital asset side. So when you can't increase your human capital income, that's awesome because don't spend it. Invest it in the way that you're about to show us. That's what'll allow you to move even faster. style. I'm I'm excited to have you walk us through this
100%. I mean it and Katelyn, that's the key, right? Is understanding the world is designed to take your human capital away from you and not have you get it to working for you, right? The world's built that way. And it's built through FOMO. It's built through opportunity.

57:29It's built through these small rewards. And there's companies spending billions and billions of dollars in marketing and tools. They're trying to get you addicted to these devices to get you distracted from where you want to go and see what other people are doing. And and and the average human has zero plan for their future. That's why if you see overwhelmingly, Katelyn, I mean, the danger of today, right, consumer debt has never been higher. Consumer savings never been lower. And yet, here's a graph that could show people how to become millionaires. But you've got to do it right. And so I would encourage everyone that listen to this, go get this video, get this diagram, and figure out your path of money because it will massively, massively matter for you. By the way, Katelyn, don't forget if you're wa if you're watching, listen wherever. Subscribe so you get notified when we put out new podcasts every week. If you're on Apple, just go to the top, hit subscribe. You will love it. Magical things will happen in your life when you listen to this every single week. If the value of the dollar is going down as real estate investors, let's put it

58:32this way. If we're buying treasury bonds, we're an investor in that treasury bond. The if the value goes down, it's bad. So, as the lender, dollar value is going down is bad. Well, what's the inverse? Well, the inverse of a lender is a borrower. So if I'm borrowing dollars and the value of the dollars is going down, then I win. I I we as real estate investors essentially can take a short against the US dollar by borrowing against cash flow producing properties and letting inflation devalue that dollar. Again, I go back to, well, what's the real inflation rate? Well, I just look at gold. If you look at the the annual year-over-year appreciation of gold going back over the last 25 years, it's 8% compound, right? So 8% compound, right? You're doubling that every what is that nine years? Every nine years essentially that that the value has been cut in half. So So I want to hold as much dollar denominated debt,

59:35i.e. mortgage paid for by a cash flow producing real estate property, something I can pass inflation through, so something triple net, and I want to play the same game that the US government is. There's only one way to get out of $37 trillion in debt. The government's the US government's the largest debtor in the world. I mean, there's more than one ways, but the only realistic way is through inflation. We tried austerity. Elon lasted about 90 days. He's now said the government's basically broken. There's no other way out of this than inflation and I just want to play the same game that the US government is.
So is every That was the greatest explanation in like that 10 minutes. That was a master class in how inflation has such an impact because you're paying it back with different dollars, right? So you're I love your I want to go back to your unit of measurement and you when you talk in our room you're like do we agree that 12 in is 12 in? Right? 30 years from now we'll 12 inches. Do we agree that a yard is a yard? Do we agree that a gallon is a gallon? Do we agree

1:00:38that, you know, this is an 8 and 1 half x 11 sheet of paper? Do we agree that in 30 years this will be an 8? And then do we agree now then you held of a dollar? You like, is this a dollar? Okay, but what is it worth 20 years in the future? Well, we know one thing, it's not worth the dollar, right? So, while we talk about all these things as units of measurement, we talk about dollars as real dollars, but they're nominal dollars. And you and you were the one that first really the way you said it got me going. He's to I mean it's it's so crazy. We talk about it like it's a constant
and that the value of the dollar is doing this all the time. You saw that chart you showed a minute ago.
I just think it's something we've got to be aware of. And so based on that and we're going to get to your I want to go to your deal in a second then I ask you a couple questions before we wrap. So based on everything you believe, what are you capitalizing on right now? like what are the what should the audience do and what are you doing right now based on understanding that we believe you believe there's massive inflation in the future so do I what are the things you're doing right now so first just I think from an asset

1:01:40allocation standpoint I think that would be an important thing to point out so I picked for me that 85% of my net worth is in equity in real estate and cash flow producing real estate that I can pass as much of that inflationary cost as possible, meaning triple net real estate. So 85% of my value is there uh or my my net worth is there. 5% of my net worth is in Bitcoin. It exploded to 15%. I sold off 10% of it and I redeployed that in another asset class that I was short in. I have 5% in gold and silver and I have another 5% in treasury bills. And the reason why I have 5% in treasury bills is my outgoing mortgage expenses are like $375,000 a month. So you need to have some like dollars liquidity to cover expenses and those types of things if you've got a major vacancy or you've got to do a major renovation. So I'm a 8555 is how my asset allocation is. And when

1:02:46one thing gets blown out, I sell it out and I move back and try to try to rebalance those. So, that would be the first thing I would say. Um, and then the next thing I would say is like I want to control the biggest mortgage that I possibly can where the numbers make sense and I can debt service it. So, right now I'm selling four small apartment buildings um be roughly 17 million in these smaller smaller units and I have uh $6 million in debt in that. I want to trade that $6 million in debt for $26 million in debt. And that's going to sound so freaking crazy to people. They're going to be like, "Whoa, wait a minute. Isn't the idea to get out of debt?" Well, if if you believe, like I believe, that the value of that dollar is getting crushed. I want to own as much of that debt as humanly possible because the future increases in rents, the future increase of us being able to pass on those expenses is going to destroy the value of that debt. What

1:03:50does wealth mean to Dan right now? What does wealth mean to you?
It is it's tied to and related to anxiety and and you know lack thereof, right? Of course. So, it's about peace. It's about calm. So we could define it with, you know, do does your passive income pass, you know, does it cover your your expenses and this and that. Yeah, there's definitions that I'm not downplaying. They're they're super legit and in fact they give a good guide as to how to reduce that anxiety and how to bring peace. But ultimately whether my passive income is going to cover my expenses or not cover my expenses, etc. If I am peaceful, if I am if I have a low level of anxiety, if I have a high level of joy, that is wealth. That's wealth. I love that. I I I think that's a great By the way, you know, I've asked I asked this question every podcast and I've yet to get the answer that had anything to do with money. Like you said, it's a scorecard. We measure it. We track it.

1:04:52We're going to have investments and we hope our passive income is massive. But yet, the thing it provides, I couldn't agree more. It's peace. If your head hits the pill at the end of the day and you can sleep great and you wake up happy and you're not in a state of fight or flight and anxiety, that's a a beautiful definition of wealth.
You know, I think the reason that people get really caught up in like wealth is just being able to do whatever the heck you want, period. No matter what. Like that is awesome. Like that is very awesome. But the reason I would defi I would define it a little differently like the way I did is to me that has to do with how people view goals. It's like I think goal goals are wildly misunderstood and not appropriately set. And well they might be appropriately set but they're not appropriately treated once set. And so what I mean is let me make this tangible is that someone will say in this case okay the goal is my passive income must exceed my my um expenses and until that day I haven't hit my goal.

1:05:56And so they wake up every day. Are we there? No. Okay. Well we're not there. We're not happy yet. We're not joyful yet. Okay. Are we there? No. Okay. A year later are we there? Almost. Okay. Let's just keep grinding. And the reality is you could you could get to the same place you were going to get to anyway, but it can be an entirely different approach. I think goals should just simply be an orientation. So, for example, if we want to climb Mount Everest and Mount Everest is in this direction over here and we're facing the opposite direction, we're never going to do it.
We're not going to get there ever. No matter how hard we try. So if if we face the right direction, we get on route and we are now genuinely climbing Mount Ever, right? We're on route. What the way I believe goals should be treated is okay, I'm now oriented correctly. Now just release it. Just release it and go have an adventure every day. Go have a daily adventure on that route every single day that's just great for the

1:06:58sake of itself. And the reality is you're going to end up at the summit. Either way, you're going to end up halfway up and get blown out in a storm. Either way, you're gonna you're you're probably not going to end up in a different place. You're just going to have enjoyed it all very differently. You could have been wealthy the whole way through
the whole way through. You could have been wealthy.
If you're listening to some of this podcast and you're going, "Oh my gosh, I need to build my wealth plan. I need to do my balance sheet. I need to do these components." Um, and then my wealth plan is maybe to buy a property next year or to create a short-term investment opportunity next year. What I'd encourage you to do is just like Brett said, come up with the main goal at the top that's going to be passive cash flow. Your answer today may be zero, but it does not need meaning you have passive cash flow of $0 today, but in 12 months it can look very different. On the smallest scale of that, it could be that you took a certain amount of additional cash flow that your business

1:08:00produced or your job produced and you put it in T bills. Guess what, guys? T bills pay a return. You've got a number up there. So, there's no excuse not to have at least a number. Now, most of you have several rentals, have some passive cash flow. We're a few years into your wealth plan. So, that number is going to be really specific and you know what it is based on the wealth plan. But here's the challenge that I have for you. For some of you who may, no matter if you're worth $100,000 or you're worth $40 million, you may have some holes in your education and you may have some holes in your systems. For example, a lot of people when they first start private coaching with Brett and I'm taking them through their initial onboarding, they don't have something like the rental tracker we shared with you. So, a great place to put this rather than getting overwhelmed and not starting is in one of these columns to do education or systems. And you can put very specifically what that looks like. So, in education and systems, one of those could be I need to

1:09:04do get my entity and trust structures and my um retirement accounts, my tax advantage retirement accounts put together. Awesome. That's going to be on your wealth plan. You're going to create the diagram, set the appointments, and move that forward. That is an important part of your wealth plan. So, I do think supporting the actual investments with the right education and the right systems for it on this plan will help you to achieve them such that when you're listening to this podcast next year, you say, "Rat, Katelyn, don't even worry about it. All I have to do is update these two or three simple things." But you could be in a totally different position if you plan accordingly in just 12 months.
Uh 1,000%. If you don't have a plan, Katelyn, I know exactly where you're going to land. Probably about where you are.
Yeah. You're going to be I mean, it's one of the things of being successful, right? If you do exactly what you've always done, you'll get the results you've always got. And give the definition of success, right, is doing the thing that you don't want to do when you don't want to do it, right? So maybe

1:10:06the thing you don't want to do is come create your 30-year plan. It's going to take some work. Being wealthy is going to involve a plan and a little bit of work. But I got to tell you, on the other side of the slight bit of work up front, it's massively enjoyable, right? It creates all the things that you wanted. It's not complicated. You just got to start. And so, go fill this out and go back through this episode, watch it again and again, and complete all the items we're walking you through at the end of the year. It will make a massive difference. All right, so let's go through the checklist. Katelyn, next part. We're going to finalize our 12-month calendar. We filmed a whole podcast about your calendar, how to think about a year. Uh, make sure you go back, listen to that podcast. Right. So, you've
That'll actually air right after this one, Brett. So,
if you don't know what that is, for next week.
So, now what you got to do, Ke, stop. Go subscribe right now because next week you're going to actually have the checklist of how to go live 12 months in advance. Next, you go through. You should be reviewing all of your business financials year to date. I do this. I

1:11:09print the entire year, the detail where I've got every single expense for every business. I print paper, not cuz I'm looking to kill trees, but I need to highlight and write stuff in there. And it's like this thick. We go in there and I want to go line by line. I want to look at all expenses. Profit is made in your business by managing the expenses on the revenue you already have. So many people, Katelyn, are worried about running out and creating new revenue. Uh, in a business that's got a 4% margin. It doesn't matter how much revenue you have. You have an expense problem. And until you fix that, there's no need to go grow an incredible massive business. It doesn't make any money today. Right? The biggest lie in most real estate based businesses is as I get bigger, Katelyn, there's this magic thing that's going to happen and the economies of scale are going to kick in and I'm going to print cash. And what typically happens scale is the margin actually gets smaller as you grow in real estate because there's very few economies of scale. And the bigger the organization, the more layers of management it's going to require the further you step out of that business.

1:12:11It's a beautiful business. There's lots of ways to make tons of money in real estate. But Katelyn, if the margin doesn't work today, we got to fix that. The way to do it, going through and reviewing the business financials. Is it missionritical? Is it great and but not necessary? And is it something we need to cut? Find a better tool.