How Real Estate Pros Build $50M Net Worth (The 3-Lane Plan)

0:00and they would go on TV and show they sold $45 million house here and a 10 million here and 5 million there and all of it coal ready for this it's complete bull okay to get behind just be aware what changes are you making in that plan how do you make more money how do you invest that money and what are the cool experiences and things you can do with money to help you live wealthy because being wealthy is much more than money I realize that there's only a few variables to your wealth right there's not that many uh when you really dig in it became that really really cool thing Cole where it's just more than what you wanted all right welcome back to be wealthy with Brett Tanner episode 00 two Cole that is that is insane that would be four B uh cool but no for this that joke won't land yet but everyone will get that joke in the future welcome back I am so excited in our first episode episode 0 001 we talked about the importance of wealth what does it

1:03mean what does it mean to you uh we talked about your net worth tracker if you have not watched that episode go back and watch it first because we are going to build off that episode today and we're going to create a plan for you to be worth $50 million what what Cole did you just are you kidding me $50 million I want you to think about how many people do you know not the fake online Real Housewives is Atlanta that are dead absolutely dead broke flying first class and private planes they're totally broke Google it look at the net worth of the average reality TV star and it is laughable my as a real estate agent one of the most rewarding things is that the company I work for Keller Williams is transparent and by that I mean you can actually see other agents production and one of the coolest experiences that I got to have is one of the guys Cole who will remain nameless but everyone can look it up and know who it was um one of the guys on that show happened to be a Keller Williams agent this is early on in the

2:05uh one of those listing shows online uh I think it was a Million Dollar Listing and happened to be with Keller Williams which was so incredible and they would go on TV and show they sold $45 million house here and a 10 million here and 5 million there and all of it coal ready for this it's complete bull in large part it's total in other words you can actually see what they sell and my wife got to have a really interesting moment I got to have one of those cool moments as a dude you very rarely have which was we're watching this person who's selling and it looks like selling hundreds and hundreds of millions of dollars worth of real estate who isn't really selling hardly anything and my wife I pulled up his production and I pulled up my own as a point of reference not to say that I'm fantastic Cole but it was eye openening for my wife to say well you're doing way more than them and I said yes because it's all for TV it's all a show like oh let's go look at this $50 million home and they bought it and they just all came together no it doesn't really work like that uh anyway so the point of that is it's not real right so many of the net worth and what you believe in people

3:10uh it's not real right so you're you see a lot of fake things out there and I want to bring reality transparency and our show is all about how do you go take your life how do you make more money how do you invest that money and what are the cool experiences and things you can do with money to help you live wealthy because being wealthy is much more than money uh it's actually experiences it's what you know it's how you pass it on there are so many other things than money but today it's about anchoring in your $50 million plan so my goal in under 60 Minutes is for you to leave with the plan you've already got your net worth your balance sheet from episode 001 uh 00001 call when you're have when you're have thousands you got to do the third zero I forgot that so in episode 00002 we are going to cover how to get that $50 million plan so as you're doing your net worth every single month you've got a check-in point right you've got here's where I'm at today here's where I need to be in January of next year here's where I need to be in January of 2028 and you've got a plan so you know

4:13that you are on or off track so that when you are done working you land at the exact place that you chose you wanted to be and it allows you to live your absolute best life so today it's all about how to actually do that plan and so I want to go and I'm going to walk through as we do this so in the show notes there's a link to how you can get our 30-year plan both the where you can track your net worth and the 30-year plan as an example now you're not going to use the examples as your plan because your plan will be entirely unique to you I also it doesn't have to be limited to $50 million that is the minimum amount that I want you to do in this exercise you might say hey BR I don't need to be worth $50 million um I don't care do $50 million or more the there is a method there is a method to this madness which we'll cover later but just stick with it do not put in a lower number you can put in a hundred or $200 million you can make the number bigger you can't make it smaller because I want you to get the gift inside of this exercise I have done this for thousands probably over 10,000

5:18people have come to our Live Events where we teach this concept and they have to do it in advance so I want you to go play full out and do it and it's going to be hard Cole why is it going to be hard because Excel is hard if you're a young person watching this a young person like Cole um hip young guys got to stick together by the way what's the comedian's name cole it's like Nate I don't know you see his ass name Bazi Nate whatever his name Nate he did an amazing amazing Amazon it wasn't a Netflix special it was an Amazon special one of the biggest comedians out there and he's got this amazing joke in there and he says like when you're 43 years old which where I'm at and I hang out with a guy like Cole I'm always like hey us young guys we really got to stick together you know like we're young and hip you know we we're as young guys we got to really really really stick together and then I'll see someone who's 46 I'm like get away from me old man you got to get out of here it's his joke and it's it's kind of How I Feel So Co us young guys we got to learn even us young guys uh got to learn Excel uh I actually did not know how to use Excel if you do not know how to use Excel I will argue for it's going to be hard for you to be rich because most of the things you're looking at later in life whether it's a p&l you're trying to figure out a pivot

6:21table you're trying to look at different fields and figure out how the return on this particular asset or inventory you're going to be doing a lot of things in Excel and if you don't know how to use it you will have limitations in your earning potential so as you go through this excel's POS good news you need basic data and you're just going to key enlarge this is just data entry but there is a little bit of excel formulas you'll need to work through that uh that won't be an issue um for most so all right let's go through this and let's look at how do we build our $50 million plan so the first part should already be done right you started this person started in January they've got their basic Bank of America personal checkin account this for $88,000 you see here they have a Robin Hood account uh investing in some stocks they've got a business savings account with $88,000 they got a business checking account at Chase and so each checking account has its own line it needs to be separated this person like me he got a Tesla I have the model S biggest fan ever on Tesla I love the car it's the most efficient car ever uh this person's

7:23got a model 3 uh and they're putting in the fair value we recommend you putting the fair value uh from Kelly blue book or whatever Source you want to use but don't do the O the value that you're not going to get usually you'll every trade in will exceed fair value put in the address of your primary residence there here's what it's worth and you can see that it's I would figure in you get to figure in your appreciation and we'll talk about the assumptions that you're going to make in your plan moving forward again I put these amounts at about 85% of market value uh while we're we're changing this for an example here I typically only change the values on my properties about once per per year uh if even that right I get into market value and then usually um I'm I'm 85% but I'm pretty conservative on those numbers whatever you pick be conservative I wouldn't recommend you go over 90% of fair market value to track your net worth so that is an accurate representation of what you are really worth uh we got a rental property here you scroll down total assets just the sum of all of these items here total here to

8:2674659 all right really really basic we this person we've got a credit card if you're paying off your credit cards every month you would not put them in there so it would only be if we're carrying a balance $ 5,840 we would put that amount in there all right we've got some student loans here at 80,000 that we're deferring or they're not going down in value uh we got a Tesla you can see as we're making payments that's going down and our home our mortgage you can see that it is going down because we're paying it down the principal pay downs we pay it is occurring and you can see that here total liabilities are 683 th000 and we subtract that out and we've got our net worth and we've got this nice um this person's crushing it right they're going their net worth went from 62,000 to 66,000 to 71,000 again so we key this in if this was if we were in March doing this we would look here and the next thing we would want to do is we going to go to example and see are we on or off track now these won't tie out perfectly but I want you to look at I give you two different examples two different ways you could think about designing your $50 million plan do you are not locked into these there are no guard rails on this

9:30this is completely as they say in the business Cole this is wheels off okay this is go time you pick your own Journey Choose Your Own Adventure on how you want to become ridiculously wealthy so I'm going to scroll over here and so this person uh let's look at and so the years obviously 2023 we're not going to have a time machine and go backwards right but this person and the numbers again don't tie out to it's not the same person but we're going to for the example we're going to use here this person started with $384,000 okay and now they're going to build out their $30 million plan so the first thing I want you to do is scroll all the way over and this is not going to be a $50 million plan I said it's 50 million plus this is going to be this plan was 110 million 552 I guarantee it did not start there probably started 100 million and as they started adding up all the numbers it became that really really cool thing Cole where it's just more than what you wanted right more that's a one of those great problems he was going to give a loud woohoo uh we've got a guy in one of our business I'm sure he'll be on one of the episodes who has the best woohoo I've ever heard in the business all right so now we've just got a big number so you go over here to

10:33AF um what is this 49 you're going to pick 50 million a minute you can pick a different number and from there you're going to go back and we're going to start right so you've got if you whatever you already had will be your first column and so in 2024 if you're doing this right now you're going to fill in your actuals right so then now we're going to go look at what how are you going to make up your $50 million net worth how are you going to think about it so row two's got your assumptions and so the real estate overtime if we took a 50-year period of time is averaged about 5 to 6% I use 6% this example it's going to appreciate it roughly 6% per year now this assumption here this an example they're using loans paid off in 20 years if I take I always try if I'm taking long-term debt I always want a 30-year fixed mortgage as opposed to a 15 if you run the math you only save the interest rates a little bit lower on a 15-year mortgage than a 30-year however the payments ically higher because you're paying it off in half the time if you're ever thinking about getting a 15-year mortgage I would encourage you to not do it I would get a

11:3630-year mortgage and if you want to pay additional principle you can but you've got the flexibility what if you went into a time where cash LEL was lower you could actually pay the 30-year payment so you're not paying as much you're not paying it off as quick but you've got options you always the most options in wealth typically wins the game in the stock market they were going to put an additional $20,000 per year and it was going to earn 4% that's extremely low um and then we got a whole life policy that and that's going to and we're we're estimating that's going to earn a little high I would I would put in there at 4% was that's the guarantee in my whole life policy so now you go all right where are we at so they started with 20,000 the first year it's in there here's their current these are all current and here's what they're going to add right we're going to add four investment properties at $250,000 and those are going to appreciate at 6% so that $250,000 house here on row 15 becomes 265 next year right the next year it's 2 80 right those are the prices that I've got to buy them at right this one's going to appreciate right but in the future I'm going to likely be buying those at higher prices and I'm just using some

12:39we're managing to find the same $250,000 houses but that may change in the future so this person's buying four $250,000 homes per year if you're going to finance this is the part of the process where you start thinking okay how much money is that going to take so your plan maybe you're only going to buy one or two homes the first year but by year five you've grown your income to where you could start buying four or five homes per year so if you're going to finance with 20% down in this example so they need $50,000 down per home they're buying four homes this person's going to need an extra $200,000 to go be able to execute their plan in addition to the other needs right they need 20,000 up here so they're going to need 220 an extra $220,000 if you don't have that that's no problem we could grow into it we got to start making some assumptions right same thing down here now we're going to look at the debt now somehow here this would you know we're financing it at 100% so that wouldn't be real these these numbers would be 200,000 again it's an example you're going to go build this out and we can't build it out for you because we

13:41don't know what you're going to do some people might put 30% down some people might put 50% down right so depending on your strategy is going to determine what goes into this spreadsheet right you can see each year where they're where they're doing that and then we're going to go get the amortization schedule so when this pays down this is done as a 20-year mortgage you're going to go and do any type of let's see if I can do this here Cole it's always it's always sketchy when you do stuff in in real time but I would just go to you know a 30-year amortization calculator and you're just going to key in that data into here and and so there is some there are Excel formulas but it would be impossible for us to to get that out to everybody at the same time but if I've got a if I'm going to have a house here I've got a 250,000 loan amount on 30 years at this rate I'm going to be able to go grab that amortization schedule and then I'm actually going to be able to just plug in those numbers I'm going to take those numbers that would come from here and plop those in and see how I'm paying it down over time because that's going to

14:42drive right you can see my liabilities are going up because I'm buying more stuff but the actual loan amounts on the prior ones are going down right you can see I'm paying down roughly $10,000 per year this year N9 about 9,000 each year there so this person here right me go back up to the asset side on year four or five they decided to change assets they went bought a bigger building right I think this an apartment about a 200 unit apartment building for 7 million bucks right and so now you can see the value that's appreciating at 6% you can see the formulas we include for you there some of the formulas are included some aren't now this person changed right we got to year five or six now we're going to buy four $300,000 houses the price of the homes went up which you can see here we were continually buying $250,000 homes um for 5 years but then it changed and we had to go spend more money to get houses and there's those how those appreciate so you're going to start by just dropping in one or two houses and see what that looks like and then you're going to go and play the game as I drop in those houses I run the numbers did I get to $50 million plus and it's going to take you three or four rounds to get

15:45the assets right so you're plugging in the right assets to see did I get to my target number where do I need to be and again it's going to be unique to you as I think about this there's some things that I want you to think about as you go through it number one where is your unfair Advantage when I really look at wealth when I really look at it the people that do well typically have an unfair Advantage uh I'll I'll give you a very specific example to me I am in the business I'm in Phoenix Arizona I'm amopa County and we sell a tremendous amount of homes right we represent buyers and sellers and we've been selling over $100 million do with real estate for a really long period of time and so my unfair Advantage I have access to inventory and opportunities that come to me where there is a stress seller or someone just needs all cash or they want to someone wants to sell their home and they need the money in the next week they need it tomorrow they need it very very quickly and so there can be opportunities like that can come up so my unfair Advantage is number one I have deal flow coming to me from my core business the other thing I've got I've got this expertise I've got a knowledge

16:46base so I know what a home is worth in Maricopa County and because I've sold so much real estate I've got I really understand the mechanics of that I know what it it's what I can buy it for today I know what it's worth at some point in the future and I also also know the amount of construction needed to repair it so I know my actual profit I know how long it's going to take so I can kind of see the returns and how that would work out and I can also if I know if it rents I know exactly the rental rates and how that will perform based on the rest of the things I have so my unfair Advantage is that I've got access to this inventory where I've got a skill set that allows me to take advantage of it right I always say that like if I know that Tesla stock I get some tip or I'm on some I get some letter I find out somehow I get Insider information of act on that in Tesla stock I go to jail in real estate when I find a fantastic opportunity call and I go buy it I make $100,000 flipping it you know what happens Cole people clap right it's awesome it's actually what you should be doing so where is your unfair Advantage I'll give you another example if you're let's just say you're out there and

17:47you're a dentist and you're running your dental practice and you're like but I don't have access to real estate or these hard money loans you talk about so what should go on my plan well you may be paying a fortune to finance the equipment I believe they're called the the CAD/CAM machines Co now I don't don't worry about how why I know so much about the dental business but if I'm a dentist I'm going to look at am I paying financing costs for these machines if I was able to buy those machines or sometimes when you go get a crown done Cole I had a crown done the other day and some dentists are shipping that off to the lab other dentists Cole when you go get a crown built they're going to actually able to put that Crown in while you're still there because they've got the machine other words they're not shipping it off to the lab they've already got the machine actually at the location now that machine's extremely expensive but if you're a dentist and you can reduce your time because you don't have to bring them back in there at all those costs it actually the best investment you might make might be buying that machine or reducing your cost that actually might be on your wealth plan depending if you make money what if you now know other dentists that have the same problem so as you become more successful you

18:49actually get in the financing business uh of financing equipment or you could Finance your own receivables right some you have payment plans or some of these other creditors you might want to take take on some of your own financing there's different angles that you may have conversely you might have your best friend is in some sort of weird eclectic investment strategy like natural gas royalties is a is a very specific example Cole one of your friends in there so I again talking about me I've got a really good friend in that space and so I invest money in that space because I believe in the person and I have an unfair Advantage because I've got an expert in that space so think about what is your area of expertise what what are the networks that you have what are your relationships and how could you leverage those as you're building out this plan so the last example I would give you is if you're if you're a flipper right you're out there you're real estate investor who's flipping homes and the big aha light bulb moment in my life was when I was I was a I was I was

19:51literally like a hardcore dedicated flipper I believe there's no other ways to monetize a deal if you find an investment for single family rental and you did not want to keep a single family property and you did not want to keep it as a rental my method or my methodology the only way I could make money was to flip that home if I didn't want to keep it as a rental and it turns out you can you can actually sell that contract I could sell the property and I could carry the paper I could become the bank in that transaction there's so many different ways I could think about it and I didn't know that in the beginning right the more exits you can get out of an investment the greater chance you have achieving High returns if you have more exits meaning if I go buy a million doll house and I put 500 Grand and the only way I can make money is sell it for 2 million the market could change something could happen that may not happen but if I've got multiple multiple ways that I can think about that transaction or multiple ways I can get out of it or monetize it I can make more money and so the aha moment in my life went from uh I used to believe that wholesaling orning contracts was that grimy disgusting thing that terrible people do and it's just not true like any business or they Bad actors in any business of course but wholesaling

20:55agreeing to buy someone's house I might want to flip it but if I know that that's not perfect or our capital's tied up or all of our projects are full I might take that contract and assign it to someone else and so the light bulb moment my life came when I took a contract I sold it to someone else and I made about $25,000 is what they paid me for that contract to go do it and I said hey I I I'd love to lend you the money now when I was flipping the home I was putting the money into it anyway I was you know I was financing I wasn't using hard money and so I was like hey why don't I give you the money they were going to get hard money anyway and I'll lend you the money so on this particular deal I would have made about $50,000 to flip it and instead I sold that contract and I made $25,000 I loan them the money and an interest over six months I made about another $15,000 so I made 40,000 bucks now I would have made 50 if I did all the work but I didn't I just did the front end work to get the contract I didn't have to do you know all of the construction from the countertops to the floors and manage it utilities on utilities off and people and contractors and stuff I was able to take that contract sell they did all the work they

21:58end up making about 20 $25,000 a good deal for them but I made $40,000 because I found the deal and to become the bank right so I found a better way that allowed me to make more money so I would have you if you're out there what find your unfair Advantage there's ways there are additional ways that you can make money you can increase your income by increasing your skills and thinking differently which is what this podcast is all about next part is your thinking through it we 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 your pricing in the risk right your only job as an investor is pricing in Risk people think 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 all these all these things intersect and all those things are important but your job as an investor is to price price in Risk so if you're going to take an investment as

23:02massive 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 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 six 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

24:0465% that'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 68% you're going to hear people that say I get 12 or 133% 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 got a 30% return why not say you got a 3,000% return so you'll really sound cool online uh so next all right so I've got my first 40% That was supposed to be hilarious Cole when you're doing the podcast solo you just imagine 10,000 people people are laughing and so the next thing is 40% 40% of your funds I'm looking to get a little more return the next 40% bucket I'm looking to get 8 to

25:0812% right if you look over the long hul they all the the people that love the stock market mutual fund game tout 8% is being the return I have zero dollars uh of mine exposed the stock market because they don't have an unfair I don't have an unfair Advantage there um but you're going to look for that next 40% 8 to 12% for me this is where I go to Alternative Investments but really hard money loans is where I go I love the debt space I love finding people that need Capital with great collateral right I want to look I want my target goal is if someone's buying a home for $200,000 as an investor I hope that they're getting a deal and they're not getting a deal that scares me for a variety of reasons but if someone's buying a home for $200,000 I hope my hope is that that home is worth at least 220 to 240,000 ,000 that sets meaning they're buying it at a 10 to 20% discount to market value so when I've gotten that I'm looking to look at their purchase price and ideally lend them 80 to 70% of that amount so I'm going to lend $160 to

26:13$140,000 on a property they're buying for $200,000 today that's worth $220 to $240,000 I want to charge roughly one point and around 12% interest that's a hard money and that that's going to be very ACC across the country uh as you think about that number and so that return relative to the risk well what is my risk if it's worth $240,000 and I've loaned someone 160,000 on a six-month loan because they're going to flip it uh the market if you think about the percentage there right the Market's got to go down and we could run the exact math but roughly 20 to 30% in 6 months for me to lose money that is is never happened right and so at six months you've got the opportunity to balloon you got the opportunity to get out or you could extend it if you wanted I can tell you all the loans I've done I've always extended um because it makes sense right I did a great loan on the front end why wouldn't I want to extend that if they need more time and use that's done for another percent so that second bucket I'm looking to get 8 to 12% I'm looking to expose my money to greater risk because I want the higher

27:16return lastly the bucket is the 20% left and I call this the moonshot money it's the money that I'm going to put at risk where I expect a possibility would be that I lose it I want a huge return I want 20 30% plus returns usually this is going to be businesses this is Emerging Markets I'm going to take a risk with this Capital The Hope being that it perform creates an outsized return so I think about my money in those buckets is you're building your wealth plan what are your buckets right and you could change the percentages and you can change the game but if all 100% of your money is going to be in 30% plus return stuff I can tell you what's going to happen not much you're going to lose it all pretty quickly right Warren Buffett's got two two very simple rules as it comes to investing money Warren Buffett's rule number one don't lose money number two don't forget rule number one that has been the most Sage advice for all investors forever the second piece of advice would be from yours truly which is make sure you are correctly pricing in the risk you have objectively looked and are pricing in

28:19the risk all right so next if you're looking at your wealth plan again we're going out to be worth $50 million you've got to go you're going to go through your wealth Plan update it thinking about those buckets thinking about your unfair advantage and you're going to make up the balance of it with what investments do you have access to so you may if you're that dentist we talked about and there the equipment financing isn't an option you say I don't want to I don't want to invest anything I don't want to do the research I don't want to do that great you're going to need a long-term plan go invest in the Vanguard Total market index fund uh we can drop a link to that actual ticker put that in there and just invest over time so there's an amazing book called the simple path to wealth that basically walks you through investing in the total market index if you're just going to put money in for 30 years close your eyes wake up 30 years from now the total market index is a way to do it again you're going to average hopefully that around that 8% over a period of time which is great from a purely passive investment standpoint uh I also think when you go to your plan you really need to think about am I going to play more passively in this or more active again

29:22the D is putting the money in the total market index and just buying a mutual fund and buying the same amount every single month consistently over 30 years totally passive right but you're not going to have the opportunity to make some to utilize your unfair advantage or to get into some tax advantage or some larger moonshot type opportunities but if you don't want to do the work and you want to be totally passive put your head down put away money that might be your option so beyond when you're looking at your wealth plan there's some other areas I would have you think about right this is going to be a longer episode but we're really anchoring in the foundation of we've got got your plan now what are the other things you should be thinking about and there's some real Basics we should get involved because the best time to build your wealth plan is actually before you have wealth and I see so many people that are younger who don't have a will they don't have a trust and they're not doing those things because hey I'll do that when I get wealthy and that and you could absolutely do it then it's actually better to set it up and set up your legacy and figure these things out early is it guides a lot of your other

30:23decisions so everybody needs three documents when you leave here today the action item I would have you do number one go get a will even if you're young the things you care about organize it so that if someone's there uh and they're managing your estate there's a simple way to do it you should have a healthcare power of attorney you should have a medical power of attorney you should have a financial power of attorney the healthcare and the medical one are likely the same thing right so Healthcare medical you need a financial power of attorney and if you're planning on being ridiculously wealthy you likely need a trust right I've never seen I have never never seen a wealthy person a really really wealthy person that didn't have a trust so should you have one if you want to be wealthy I have yet to see a very very wealthy person that did not have a trust and the earlier you set it up the easier it is next thing you want to think about in your wealth plan as you're building it right what are the tax advantaged accounts taxes being one of the largest expenses you're going to have in your life what are the tax advantage accounts you can have and so you would think about your work for example if you're an employee contributing into I'm not a huge fan of

31:26401k however if your employer is offering you some sort of match go look at that and see if it makes sense in a lot of cases it's free money you're allowed that you I would put in the minimum amount that I could do to get the maximum match that I'm getting from my employer and I would use that as an additional tool that's a tax advantage account beyond that you can look at there's defined benefit plans there's cash balance plans I am a huge huge proponent which is Count counter to most of the wealth Community I love a Roth account I love a self-directed Roth and and the biggest reason for that is I can do math and when you eliminate taxes as one of your largest expenses it can create insane returns so if you are under the income limits where you can fund a Roth 100% get in a Roth get it self-directed and get that in where you are investing it again in your unfair Advantage uh if you make a lot of money or make too much money you've heard that myth oh you you know you can't fund a

32:28Roth because you make too much it's absolutely not true and that's what we're going to dispel a lot of myth you'll go out there and if you were to go out to dinner tonight and talk to a group of people hey can you fund a Roth if you make a lot of money you can't do that it's only for people that don't have any money it's absolutely not true you just have to go about a different way and the term a lot of people use called the back door Roth but there's a way to do it I love my friends at Horizon trust they do one of I think they're the best custodian out there for what they do they'll walk you through it to help you get it set up and they can take your situation a lot of us may have an old 401k some old company retirement plan we're able to convert that get it self-directed and all self-directing means is we're putting your money in your control I don't believe that anyone out there is going to care more about your money than you do and so getting your retirement account even if you had in the stock market or you had something Nothing Stops you from taking your 41k getting it self-directed and putting it right back into the same Investments that you had before Nothing Stops you from doing that I'm not anti-financial adviser I'm just Pro you and so as you

33:32go look at it make sure when you're your self directing that account give it a great custodian and put it again where you've got your unfair Advantage the biggest benefit uh you know you've got there's two types of tax advantage accounts you got the kind where you're going to get a deduction today your standard Ira your 401k your standard thing where you're getting a deduction today as you pull that money it's not going to pay taxes as it grows you'll pay taxes Once you pull that money out the beauty of the Roth you've already paid the tax today you're putting in after tax dollars so you already put in there but all of the gain all of the returns that you get right you're all of the gain you're getting you're you're not paying tax on it on the back end so it becomes a question right do you want to pay tax on the seed or do you want to pay tax on the Harvest Cole that's an old country thing right there but let's just use a 30-year period of time here and it doesn't really matter age 30 to age 60 but let's assume someone setting here and they funded a Roth retirement account and cuz and they put $6,500 in there they're going to put $500 a month they're going

34:33to make 12% over 30 years uh and you can go to be wealthy calculator.com you could play along this is the I use this app this is full disclosure it's ours it's free uh I built it I absolutely love looking at the different time frames and the financial returns that I can make over different periods of time so I'm always on here messing around but over 30 years if I put away $6,500 let's assume I put it in a regular retirement account Cole I got Just sh had 2 million bucks over 30 years but I'm putting away $500 a month it's not the most amount of money now the question would be so if I did an a regular Ira as I pull that money out I'm going to pay tax I'm going to pay tax on that it's going to be typically probably the way it's set up long-term capital gains 20% so let's just assume I pull the whole thing out uh depending on the year I'm going to ow roughly $400,000 get with your CPA make sure that's there's some many variables that would apply on that but make sure that number s right to your CPA but roughly 400,000 now if I'd put that money in a Roth account I've already paid the tax on the front end but all of

35:36the gain all of the gain call I pull out that 2 million I don't pay tax so it's it's one thing on two million now let's change the numbers and assume hey I started with $6,500 as this thing got going I got a back door r i did solo 401K that had a Roth component and I was able to put away more money and that example you can put away I think it's $69,000 per for person if you're an employee you could set up a solo 401K as a Roth Horizon trust could help you figure all this out if you wanted to use them or another great custodian I bring that so now I'm going to put in we started we'll say we did one year and then what coal is 69,000 I got to get my calculator out here so I'm just going to break this down monthly 69,000 divided by 12 5750 per month 5750 so now let's assume you crank things up over time same 30-year period we're starting with $69,000 and now every year we're going to put in $69,000 but we're going to contribute it monthly and so that's 5750 * 12 is 69,000 we're making

36:4012% what is that amount of money $22 million right it's a tremendous amount of money but if you can build it in your WTH You just went from paying you didn't pay $4 million in taxes right so what are the as I get money to my Roth where do you think the lowest risk highest return Investments go all of them all of them go in my Roth account right so you can play go to be wealthy calculator.com uh check it out and see the different ways you can play uh with your money to think differently about it and you want to see the different periods of time lastly one of the strategies I have my wealth plan I am the biggest proponent I believe in dividend paying whole life insurance uh there's so many myths out there I think life insurance really as you're thinking about your financial plan is one of the most misunderstood right is totally misunderstood largely promoted by Dave Ramsey Susie Orman and all these people that made all their money speaking telling people about money and not actually investing money and doing as an investor and so the things the people I bring on the show the things I talk

37:42about are things I'm actually doing in my life that have created results these aren't theories these are things that I wish someone would have grabbed me at 20 years old and walked me down some of these paths life insurance is one of those things that I wish I would have understood more younger I bought a uh a pretty significant policy uh 10 years ago dividend paying whole life and I bought a policy 10 years ago and I bought uh I could have afforded more but I I bought a pretty good siiz policy going back I don't have any many regrets in life if I could go back and about a much larger policy because as you it gets 10 years old this becomes an amazing tool right there's a death benefit function that takes care of my family but that's not why I got it I got it because I can use this as a financial tool to the money you put in after tax but it grows taxfree you can pull it out taxfree and you it earns 4% so right now where rates are high I'm able to go to my policy and buy borrow money between five and 6% is the interest rate I'm paying but I'm earning a minimum of 4%

38:45which gives me I'm actually only paying 2% interest so when I take that out and I'm able to do a great hard money loan if I needed to if I wanted to use this to fund a loan cuz all my cash was out I can go lend it 12% I'm making a 10% Arbitrage now you don't want to take undue risk because you get hurt if I go make that investment it goes bad I still owe the money to my life insurance policy but it's this concept of infinite banking meaning I'm making a return inside the policy and even though I'm borrowing I'm borrowing I'm using it as collateral so that's still earning and then I'm able to take the same dollars and go over here it's where that infinite concept I'm essentially using $1 in two places at the same time it's a it's a really big concept uh and if you if you look at it large banks are some of the biggest purchasers of life insurance in the world why does Wells Fargo on their balance sheet have $50 billion of life insurance because it's a fantastic investment why does the average retail investor not have it because his neighbor said it was bad and someone got taken advantage of and yes there is more Miss in terrible things in life insurance probably than most other

39:48fields it's highly commissioned and it can be very very confusing you need to understand what you're getting but used correctly it can be an absolute absolutely incredible tool I would recommend go read the book becoming your own bank by Nelson Nash we'll drop a link in the show notes this book is written like I understand it's written for a 10-year-old which is absolutely perfect the level I want to uh read at I got to tell you I love what Alex Heros said he came out he said all of your writing should be written at the third grade level because 50% of the population reads it below a fifth grade level and 50% reads above it and the people that you think are sophisticated will really appreciate you making it simple me not being that intelligent I absolutely love the Simplicity of that book becoming your own bank it's the infinite banking concept go read that book and see if you want that to be a part of your wealth plan but you've got to figure out your taxed advantaged accounts where do you want that in there right next you're going to go there's different investment there's different asset classes or

40:50investment so now you got to think through you think through the financing component think through the different asset classes you might have in your your 30-year plan is it all going to be single family residential is there commercial do you go 5 years into the future and then you you sell the single family homes and then you buy a larger building right your your plan again it's Unique to you so you're going to go through figure out this plan and really spend the time this exercise should take you a couple hours to work through at the end of it once you're done with this 30-year plan you may never tweak it you may wait 68 months and make some tweaks as you're updating every month realizing hey these were some things I hadn't thought about yet but get large part the the 2hour 2hour lift initially that is the work so you're again as you're reviewing it you're reviewing your on or off track and you're asking the question once you do your net worth every month you're looking to where you're supposed to be right so if this was my example and again these don't tie out perfectly here but again if I'm if I'm sitting here and I'm on my 30-year plan and let's say my net worth was

41:54$621,000 and again I'm on my regular balance sheet over here I'm King it every month and I get to let's just say June or July and I'm at about $850,000 and I need to be for 2025 here I need to be at 927 th000 how would I feel about that I started at 621 I'm about at 850 halfway through I am ahead of pace right I am more than on track to where I need to be now if it's June or July and I'm at about 685,000 I've got to make some changes right I've got to change some things I'm so it's okay to get behind just be aware what changes are you making in that plan on my way up I could tell you if you were to talk to my wife there were times we got off track and that's where things got super lean super super lean at home because I I realized that there's only a few variables to your wealth right there's not that many uh when you really dig in right the variables are time how long are you going to place that money out for right again four variables to wealth how long are we going to invest for what's that time Horizon again we're

42:56using 30 years in this example second variable is what did you start with how much money do you have right now in investable assets right what do you actually have that you can invest third variable what can you contribute monthly what are you actually going to put away monthly and lastly what is the return if you look at that three of the four variables you can change right time is on this example if we're sticking with 30 years that's fixed so we've whatever amount of money you have today is a variable that you cannot change you can if we're doing a 30-year plan in this exercise you can't change that so the only two things you can change are how much you put away monthly and what the return will be so why don't I go back my wife would tell there she's like bab what are we doing why are we making these decisions and I've always locked in my fixed costs at home and so I would have to even lower in lower those fixed costs because we're just going to go out to eat less or we're going to do things less because I am immovable on putting away the certain amount of money I need to get every month cuz I am committed to hitting my health Health Plan My Health Plan my wealth plan I am extremely committed to

44:00making sure that I hit that number next thing I want to talk about um when you're looking at this and you're looking at this wealth plan all of life has costs right I've been saying this forever that life has costs and you get to choose when you pay them right you either pay now right in some things or you pay later when you think about this when are you paying right I love watching these young 20 30 year olds right they're they're on Instagram they're gallivanting around I don't have a job I'm all freestyle I'm a free spirit going and hey I think that's awesome the question we're going to have is what is that lifestyle and what are the what are the cost in other words you're not paying the cost today right you're enjoying this amazing life which is beautiful however do you end up paying the cost at 70 right is it much harder to get fired up in work at 70 now I'm not saying and again I'm not saying when you should pay them I'm just letting everyone here know that life has C there's soft costs uh that wasn't my journey right my journey was went to college in 99 I spent one year partying at ASU and I had this eye wakening moment Cole I was at a party guy rolls

45:03in uh would seem like a young guy now seem like he's a thousand years old then he was 27 years old comes in this party and I'm like dude what what are you doing here I mean again 19 what's a 27y old doing here he's oh man just I think I'm going to graduate next year and I'm thinking holy did you get a doctorate you got multiple degrees no this guy's just close to getting his four-year degree and he's been there for you know whatever it's been eight years and it was in that moment I realized I got to make sure I'm not this guy and so I kind of distanced myself from some of my friends I didn't really love college I wanted to be an attorney once I figured out I didn't want to be an attorney I thought I want to be an attorney once I realized I didn't want to be one uh I wanted to get through college as quick quick as I possibly could so I started taking actual classes at the community college uh so I could load up on my 15 18 hours from ASU I would go to the Community College for the extra hours that would transfer in cuz I wanted to get it done in 3 years uh I punched it out in 3 years uh and I could graduate when I was still 6 to 12 credit short provided I would go back so I actually walked and I and never went back so Cole I have one of the coolest

46:08deep diploma holders you've ever seen it's incredible it's Majestic uh but I never went back and part of that was I I realized that I didn't want to be an attorney and I wanted to get to work I just wanted to get after it and so what's funny my wife would tell the story today is that in my early 20s um my girlfriend the time I met her at 19 she's my wife of three kids today we've been together married for was 18 years now and uh the interesting thing was I I partied and drank less back then not that I don't drink a ton now but I I drank zero back then I would work I would get up every day I'd work all day and I was paying the cost and so from the periods of 20 to 30 I was all in on working on my skills I was building my income I was getting my wealth plan in order and getting the compounding started right the earlier you start the better it can be and I remember a period of time when I look around at all my peers I think this will be instructural for all the young people if you're making decisions that are radically different than your peers that are

47:10positive decisions meaning hey I'm not going out because I'm saving money I'm not going out tonight because I'm reading the next book and I'm growing my skills they're all going to call you out for it right people that you love will call you out for things right they're they'll either call you out or sometimes they might love you but they're giving you terrible advice just be just because they love you and they're your family they may not be the best financial stewards and may not be the ones to give you that great advice but for me there was a period of time I'm working really hard we're doing all the right things in wealth it felt like I was going nowhere I could see it in my balance sheet that it's going up but it's going up very slow right it's like this you're pushing the story I always think is you're pushing this you start with a snowball and you keep pushing up the mountain that snowball gets bigger but it's not until you get the top of the mountain where you kind of get get to experience the coasting where it starts rolling down the mountain getting bigger and bigger you've got to do that frontend work and I think so many people aren are aren't willing to do the work and and I remember there's a moment where my wife was like Hey you you're reading these books you're doing all these things and every friend we have is doing radically

48:14better than we are look how they're living they're traveling these cars they got these houses and I said yeah in 10 years they're never going to have anything they spend 100% of what they make and they're never going to be anywhere and if you look at over a 10 year period what's going to happen in 10 years they'll be totally lost in 20 they won't even understand how we did it and so now I can tell you as someone who's lived it for 20 years um they don't understand it my friends came to me now they say Brett when did you when did the gap between us become so much like financially like where did that happen I like dude it happened 20 years ago I was making decisions 20 years ago and paying a price that you wouldn't pay so just realize that life has soft cost you can have the biggest world you possibly can you just have to realize what what those costs are and are you willing to pay them and you're going to pay them you're going to pay now or you going to pay later so as we're wrapping it up here on episode 002 I want everyone to leave with a few action items number one I want you to go through figure out where your unfair Advantage is I want you to go through your balance sheet and make sure you've got your your your monthly net worth statement nailed I want you to go to

49:18your calendar and schedule two hours to go build out your 30-year plan to be worth over $50 million I would love for you to reach out to to us and tell us how that went and tell us what your takeaway most importantly what we want to know what did you learn from that exercise as you went through it you completed it what um what you know what did you actually learn what was the AHA that you had as you went through that process so go out think about the tax advantaged accounts the other non the tax advantages ver advantaged accounts versus non we'll get way more into the into the future we mentioned a couple books go read the psychology of money read the Simple Path to Wealth and really focus on this plan I want you to go out this is the be wealthy podcast with Brett Tanner go out be wealthy