JF2242: Four Steps for Achieving Success in Anything | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be sharing the four steps you can take to achieve success in anything you’d like to pursue. 

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We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow. 

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JF2235:The 5 Types of Millionaires | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be going into the five different types of millionaires. This is based on a recent blog post that Travis shared on the www.joefairless.com site. Be sure to check it out when you have time.

Click here for more info on groundbreaker.co

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow. 

 

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JF2228: Are You A Passive or Active Investor | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be sharing the difference between active vs passive investors, the common personality traits found in both, and why you should get started right away.

Click here for more info on groundbreaker.co

 

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.


TRANSCRIPTION

Theo Hicks: Hello, best ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today we are back for another edition of The Actively Passive Investing Show with Travis Watts.

Travis, how are you doing today?

Travis Watts: I’m doing great, thrilled to be here as always.

Theo Hicks: Thanks for joining me. Looking forward to our conversation today. We are going to talk about what type of investor you are. This is going to be based off a blog post that Travis wrote. The three things we’re going to talk about is first, figuring out what the two types of passive investors are, what the characteristics are of each. And then based off of that, we’re going to talk about the second part, which is becoming self-aware of your personality, to see if you’re more conducive for one or the other. And then lastly, we’re gonna also talk about understanding your risk tolerance. All about self-awareness, all about understanding based off of who you are, if passive investing or active investing is ideal for you.

I’m going to let Travis take over for each of these sections. First, Travis, tell us about the differences between the passive and the active investor.

Travis Watts: Sure. Well, first of all, I’m very excited about this particular topic because the name of our show, The Actively Passive Show, so we are talking about the active side, the passive side… Trying to reel it in and bring it home. I know sometimes we get on these rants and tangents of celery juice and other topics, but this one’s spot on.

I think I titled this “What type of investor are you: A quick guide to self-awareness”, which I’m a big advocate for. I think the more self-aware you are, the better decisions you’ll make and the more in line with your goals you’re going to be. That was really the intent, is to help people uncover what may be right for them.

To your point with that, yeah, the first section that I point out is painting the picture. Of course, I go into much more detail on the blog, but I’m just kind of bullet pointing and recapping here… Active investor mindset versus passive investor mindset, and a few things you might pick up on that resonate with you.

As I go through this really quickly, just think to yourself which one resonates most with me and why that might be. I’ll start with the passive investor. I’ve just got a few bullet points, and of course, these are generalizations; everybody’s unique, different, you may be a combination of both… In fact, to be quite honest, most people are a combination of both active and passive. I’m the extremist, being I was full active, now full passive, but you don’t have to be that.

The passive investor often lacks the time to frequently monitor their investments. I say this all the time through podcasts; the doctor, the dentist, the lawyer, the attorney, and in my situation years ago, the oilfield worker – career-focused. Yes, I was doing the active stuff. But man, it became very difficult to find the time to do that when I was so career-focused.

Number two would be enjoys reading financial news. You do have a vested interest in investing. Being passive doesn’t mean you tune out and you look the other direction, and you just put money in a 401k, and you’re done. That would not fall under these categories the way I’ve laid them out.

The next thing would be likes to own a little bit of a lot. Hence the private placements, the syndications being a 1% or 2% owner perhaps in an apartment complex. Also, you can relate this to stocks, this may be more of the index fund investor that likes to own just a little bit of all the companies and not necessarily cherry-pick and handpick their favorites

At the end of the day, and to that point relating to stocks, seeks to match but not necessarily beat the market. You want to be in the game, you want to be participating, but your real goal isn’t to say, “I’m just going to annihilate the competition out there. I’m the best of the best.” It’s just to be in the game at the end of the day.

Now, let’s switch over to the active mindset relating to real estate and stocks, and any other asset class. The first thing would be “Likes to create their own unique strategy.”

My first property when I was active full-time was a unique strategy. I had found this undervalued two bed, one bath, I thought I’m going to move in as an owner/occupant. I’m going to rent out the spare bedroom. I’m going to make it fully furnished. I’m going to custom hand pick out all these things I can find frugally on Craigslist. I was kind of custom designing my own strategy that I felt was competitive among what I was seeing out there online, and among the competition.

Number two, doesn’t necessarily value diversification. What I mean by that is often the philosophy or the mentality of the active investor is put all your eggs in one basket and watch the basket closely. I don’t know who coined that term or that quote, but that kind of resonates here. You’re probably, in terms of real estate, doing active deals in your own local market, so to speak, not necessarily doing them across the US.

Number three, seeks control over his or her investments. You like to be in control, you like to call the shots, you like to make the decisions. That’s a huge component to being active. I enjoyed it for a while. You may have, as I pointed out, a unique skill or an upper hand in the marketplace, whatever that may be; you may be self-reflecting and thinking, “I can do this better than what I see other people doing it as.”

Last but not least, you essentially seek to beat the market, not just participate in it. You think, “If I do this myself, I’ll have higher returns, I’ll have more reward coming from it, because I have that unique ability to get out there and do it myself.”

I’ll pause there to not get too long-winded, but that’s kind of the active and the passive mindsets and the difference between the two.

Theo Hicks: Yeah, I couldn’t agree more. And I’m thinking back that the book I’m working on right now; I’m not sure exactly what the title will be, but it’ll be focused for passive investors. And that’s essentially exactly how we, in the book, define the differences between the two.

The categories for me were you mentioned control – so the control is going to be different… We’re gonna talk about it a little bit later, but the risk is going to be different. The time commitment and feasibility is going to be different. And then the returns, like how much money you’re going to make is going to be different between the two. I think those are the four main categories that will show you what the differences are between these two.

Okay, so now we know what each of these are. The next step is to look at the different personality types or to become aware of our own personalities, to see which one we are naturally a better fit for.

Travis Watts: Exactly. As I was writing this, it felt a little two bullet-pointed and analytical for me. This is kind of the portion of my article or blog that I go into a little bit of story mode. And this is the self-reflection piece more than anything. The whole blog is about self-reflection, but this is thinking back to, for example, your childhood. Where did you develop your beliefs around money and around finance? How do you respond to financial situations?

Let’s say that you own a bunch of stocks, and then you tune in to your phone tomorrow, and they’re down 30%? What does that mean for you? There’s folks on every side of the spectrum, people who could say, “Eh, markets go up and down whatever,” and people that freak out and say, “I’ve got to sell everything. I’ve got to get out of this market. I’m panicking.”

It’s great to be able to be self-aware of that, because you may be in the wrong asset class all together, you may be using the wrong strategy all together. It’s thinking through, and I point out a few examples, things to think through there, on the personality. For me, on a side note, I was raised by two very frugal parents. I’ve always found a lot of confidence and peace in the ability to save and to buy things below value. That sits really well with me.

As I was in the stock market at one time with a lot of my portfolio, I learned pretty quickly I can’t stomach the ups and downs. It was so unsettling. I couldn’t sleep at night. I wasn’t in panic mode, where I was about to sell everything, but I was uncomfortable. It was like this rain cloud over your head all the time. I got addicted to staring at my computer or phone, whatever it was, and I just couldn’t not do it. If it were down 30%, I had to know the next day, was it up or did it fall more? If it fell more, I’m really sweating bullets. If it went up, of course, it wasn’t enough, right? It needs to go up more. So I’ve got to tune in the next day now and see if it went up even more. It was a waste of my time number one, and it was taking a toll on me.

I found that private real estate, whether that means active in my own single-family homes that I used to own, or private placements, that you don’t know the value for a number of years unless you’re constantly getting appraisals done. That sat well with me. I loved the set and forget for a period of time; not set and forget for life, but for maybe three to five years. I will check in on it at that point, we’ll make a decision as needed. That’s kind of what that section is, is just self-reflecting on yourself and how you handle finances and investing.

Theo Hicks: Yeah, this is a very important section, I think; we could definitely talk about this for a full episode. But from my personal experiences, I can definitely relate with you when it comes to that cloud over your head. Because as a lot of best ever listeners know, when I bought all those fourplexes a few years ago, and I was self-managing them, and ever since I bought my first duplex, whenever I owned a rental property, it’s really—I wouldn’t say I was constantly thinking about it, but whenever I thought about it, it was never a positive feeling. I always had my phone, and when my phone rang, it was like, “Is this the tenant telling me the house burned down?”

At first, I thought that it was going to go away, I’d get used to it. I kind of did in a sense, but it never fully went away. So kind of, as you said, with the stocks versus some sort of passive investment, when you’re the active person who’s managing it, you have the ability to, as you mentioned, figure out where it’s at every single day. Whereas for passive investments, it’s you invest, and then you’re getting monthly updates, or you don’t even have access to getting the value and you don’t control the entire asset. The way you think about it, it’s definitely different.

And the getting used to it part because it is kind of two different ways to look at it. It’s either “Okay, so I’m self-aware that I react negatively to ups and downs in the market”, or for my case, I reacted negatively to my phone ringing, whenever I think it’s a tenant. So on the one hand, should I figure out why I feel that way and try to get over it or do I just try to take advantage of how I naturally am, in order to find the best investments. I think you can kind of go either way.

I’ve talked to people on the show who were a bundle of nerves when they first started investing. And then now they at least say that they’re not a bundle of nerves. Whereas other people say that “I started this one type of investments, and I didn’t like it, it made me too anxious, so I did something else that I was more comfortable with.” So kind of just being self-aware also of your ability to potentially change the way you react to these things.

I think Travis said it best, which is just see how you actually react to things in real life as they happen, as well as reflect on how you reacted to things a year ago, two years ago compared to how you react to them now to kind of see if there’s any evidence that you’re able to change your reaction to things.

Travis Watts: 100%. And I was exactly like you when self-managed real estate. I started very confidently, because when you first start, you don’t have problems hopefully. I didn’t for a while. It wasn’t until that rent was skipped, or a tenant bailed and fled town or these things started happening; a property was damaged… Then I started freaking out a little bit. Then to your point, every time I would get a tenant phone call, what problem is it now? Are they going to tell me they’re bankrupt, they’re moving out, the house burned down, whatever.

Here’s a key point to specifically being a general partner or doing your own active syndications. This is a critical self-reflection and conversation to have with yourself. Imagine, if you’re a bit paranoid about it, or always thinking the worst or it keeps you up at night, imagine that not just on an individual level, but imagine handling 100 or 200 people’s money, and now having to report to them and having investor emails come in all the time and having to do reports, and sometimes maybe that’s not always roses and rainbows. Because I get asked all the time on podcasts, are you, meaning me, am I going to be a general partner? Am I going to start doing my own syndications?

The answer is absolutely not. No, I won’t. It is for a lot of reasons, but liability and time commitment and whatnot. Now, I’m not bashing it, because obviously, there’s great GPs, we need them. That’s the Ying and the Yang, the LP the GP.

All I’m getting at with this – I’m not saying that active is right or wrong, or passive is right or wrong. It’s being able to identify your strengths, weaknesses, how you respond to things and just choosing the right strategy, the right asset classes… This is a great first step. That’s why I made this blog.

To that point, our last section or the last section I wrote about was risk tolerance. It’s a huge conversation that I don’t think it is happening often enough. I tried to categorize it in a different way than most people do, or what I’ve seen, and I took four different types of investors and how they respond to kind of piggyback on the last section. You have the cautious investor, you have the systematic investor, you have the spontaneous investor, and then you have the individualist. I’ll kind of go into again, much more detail in the blog, but I’m going to bullet point it out.

A cautious investor is very sensitive to losses. They may be better suited in things of CDs or bonds or annuities, things that aren’t going to fluctuate, go up and down; they’re looking for more of that certainty around their income or their retirement. Cautious, right? It makes sense.

Systematic is somebody who basically has built a system or adopted a system to go through the investing process. It’s most often based off facts, research, and a particular philosophy that you might subscribe to. It’s just simply a system. It’s just rinse and repeat every time, you filter it through your criteria, and there you go. That’s how you invest; very robotic, rightfully so.

And then you’ve got the spontaneous investor. There’s a lot of folks like this, that let’s say, to use the stock example. They log in to https://www.cnbc.com/. They see that Tesla is up or down, and then it’s buy, buy, buy and sell, sell, sell, and “Oh, I just heard that Bitcoin’s going up tomorrow, I might as well dump 10,000 there,” and they’re just always kind of on a whim, they’re trying to catch the wave. There isn’t really a philosophy or systemized approach, it’s just more on a whim. You’re walking through a neighborhood, you see a foreclosure, maybe I’ll buy that. Why? I don’t know, maybe it’s a good deal. There’s not a whole lot to back that stuff up, but it can be fun. They like to keep things fresh and new. Again, rightfully so.

And then you have the individualist, which you could relate that to an independent in political terms. As Robert Kiyosaki always talks about, there’s three sides to a coin; left, right and the edge. These are the folks that tend to step on the edge of the coin, and look over both sides, see the case for, “Yes, the stock market’s going to go up. And then this side no, the stock mark is going to go down.” And then they’re trying to be as unbiased as possible and make a decision based on what they believe. That’s kind of the approach there.

So yeah, those are four common types. Again, you may not be 100% in any category, but in general, that’s more or less how it goes. In the investors I speak with, that’s what I see coming up over and over again. Any thoughts?

Theo Hicks: Yeah. On the spectrum it’s like on the one hand you’ve got the spontaneous who’s the one who — I’m going to say suffers in a sense from shiny object syndrome. That’s kind of what the term people use. Then on the other hand, you’ve got maybe the cautious or systematic, who potentially falls into analysis by paralysis. Those are kind of two terms that I’ll always hear people talk about on the interviews that I do.

Again, I think the purpose of understanding and talking about these different categories of risks is to understand which one you are, and not necessarily no longer be spontaneous or no longer be systematic, because nothing, as mentioned, apparently wrong with being that way. It’s just if you take it overboard and you fall into analysis paralysis, or you are so spontaneous that you never get deep enough into a certain investment type that you don’t learn enough about it, and you kind of  bounce to the next one, and always are at the surface level. So just kind of understanding which one you are.

I was trying to think of which one I am. It’s really hard when you do these interviews, because everyone has a different investment strategy, like, “Oh, that is amazing. I’m doing that,” and then you talk to someone else and they’re like,” Oh, that’s also cool, I’m doing that one.” And you realize that you can be successful doing any type of active investment, any type of passive investment and people have been successful doing this forever. It just depends on personality type, because certain ones are better for other people. I think that’s kind of the entire point on this entire post, is to say, “Hey, here are the different types of personalities, here are the types of risk.” And then based off of that, you can figure out which of these you fit into best, or maybe a spectrum of one you fit into.

And then something else I want to quickly mention too, when it comes to things like risk. There’s going to be risk when you’re comparing across active and passive, but there’s also gonna be risk within the passive. So taking apartment syndications, for example; if you’re going to passively invest in apartments syndications, it’s not like the risk level is the exact same for every single type of apartment syndication. You’ve got developments, you’ve got ones that are completely distressed, you’ve got ones that are turnkey, you’ve got ones that are value add. Those also come with different levels of risk. That’s why it’s important to understand each of those, as well as your risk tolerance level, so you know which one of those apartment syndications or which type of stock is going to be more conducive with your personality.

Travis Watts: Yep, 100%, couldn’t agree more. In that example, LP-GP; LPs have an upper hand on one hand with risk, because they’re limited to what they’ve put into the deal. That would be their max loss, so to speak. But from the GP side, you have more liability, but you’re hopefully making more than an LP would, so you’re kind of limiting your risk there, too.

It takes some research and time. This blog wasn’t to get into the weeds, but I think it’s so important because I had to learn this lesson firsthand. I’ve shared this story before, maybe not here on this podcast, but I was in the middle of doing a fix and flip years ago, when I was fully active. It was this epiphany, this self-awareness moment, this light bulb moment as I’m standing in the middle of this vacant place, I had to pull in my mom to help me with something I was doing. And she yells downstairs, she says, “Hey, hand me the electric drill.’ And I thought, “I don’t own an electric drill.” And then it was just that moment, like, “Should I be doing this? Am I in over my head right now?” It was embarrassing. It was humiliating. That’s where kind of my self-reflection started. It wasn’t too long after that, maybe a couple of years, that I made the full transition out of doing that active stuff. And again, nothing wrong with it, it was just me personally, not very handy. I didn’t really have the competitive edge. I didn’t know what I didn’t know. I didn’t have mentors, coaches. I lacked so much that I wasn’t a key player in that space. And that’s something to recognize.

I wrap this whole blog article up, and I guess we can wrap up this show on the same topic, which is, at the end of the day, what’s the takeaway here that’s practical to get started? That doesn’t necessarily mean get started investing, although you could perceive it that way. But get started on your self-awareness. Write down your strengths and weaknesses. Write down some examples of how you would respond to extreme situations. I made a lot of money, I lost a lot of money, I invested in a deal that did nothing for five years. Just think through this stuff and it’ll help you identify a better alignment to how you should invest, basically. And only you at the end of the day knows you best and only you can make that decision.

Theo Hicks: Yes, 100%. All the people I talked to on the show about how to tactically understand and ultimately change your mindset is to just write and journal it. Some people tell me to literally just carry around a tiny little journal with you. And in this example, whenever you come across anything related to investments, write down your thought process, write down how you’re approaching it, write down how you’re reacting to it, write down how you feel about it. Do that for a week and you’ll have a much better understanding of the personality type, your risk tolerance level and maybe just for a month and you’ll have a lot more self-knowledge.

Travis, is there anything else to mention about what we talked about today before we wrap up?

Travis Watts: I think that’s a good wrap up. The blog is called What Type of Investor Are You; A quick guide to self-awareness or quick self-awareness guides, something like that. It’s on The Best Ever Community. It’s on my Bigger Pockets, so check it out.

Theo Hicks: Yes. What Type of Investor are You; A quick self Awareness guide. There you go.

Travis Watts: I don’t know these things, so check it out.

Theo Hicks: All right, Travis. A very enjoyable conversation. Thank you for joining us again. Best Ever listeners as always, thank you for listening. Again, make sure you check out the blog post and we will be back next week. Until then, have a best ever day and we’ll talk to you soon.

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JF2221: Cashflow Quadrant | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be sharing the “CashFlow Quadrant” based off of the book from Robert Kiyosaki. “The cashflow quadrant will reveal why some people work less, earn more, pay less in taxes and feel more financially secure than others” – Robert Kiyosaki. Today Travis will break down how he understands and utilizes the lessons he learned from the book to hopefully help you in your own journey 

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and we’re back with the Actively Passive Investing show with Travis Watts. Travis, how are you today?

Travis Watts: Theo, doing great man. Happy to be here.

Theo Hicks: Awesome. Thank you for joining me yet again. Today’s topic is going to be the Cash Flow Quadrant. I’d probably say that 25% of the people I interview, I’m going to ask them what their best ever book is, it’s some Kiyosaki book. And so I’m sure everyone listening is familiar with Robert Kiyosaki.

This concept, the cashflow quadrant, is based off of his book, Cashflow Quadrant. I’m pretty sure he, at the very least, introduces it in Rich Dad, Poor Dad. We’re going to go over what each of these quadrants mean, and the overall quadrant works, and how you can apply that to your actively passive investing business.

Travis wrote this very detailed blog post on it. He is the expert between two of us, so I’ll let him start, and then we’ll talk about his background and how he was introduced to this concept in the first place.

Travis Watts: Yeah, you bet, Theo. First of all, have you read this book, Theo?

Theo Hicks: No, I have not read the full book. I’ve read Rich Dad, Poor Dad, but not the Cashflow Quadrant.

Travis Watts: Sure. Alright. Well, for those familiar with my story, my mind started to open to this world of real estate and investing through one of Kiyosaki’s books. It was not this book, it was called Rich Dad Prophecy, written around the year 2000, give or take.

The Cashflow Quadrant that I have here up on the screen, that was the second book. So Rich Dad, Poor Dad came out, I think in 1997, this may have been ‘98/’99, and just before Prophecy, so it’s kind of the sequel if you will. That’s how Robert Kiyosaki describes it. It’s the sequel to Rich Dad Poor Dad.

What he’s talking about here, as you can see up on the screen, if you’re tuning in on YouTube, is you’ve got the ESBI. There are four quadrants, and what that symbolizes is, there are four ways to make money, essentially, in our society. You can be an employee, which is the ‘E’; you can be self-employed, small business owner, specialist, doctor, dentist, that kind of stuff. That’s an ‘S’. You can be a ‘B’, which is a big business owner; that’d be 500 or more employees. These are usually your corporations. And then an ‘I’ would be a professional investor. So not putting money into a 401k per se, but actually being a professional real estate investor, oil and gas, self-storage, whatever.  Those are the four ways.

And what was amazing about this is I started studying taxes at a certain point. I started to understand the tax implications, and that’s really what my blog post goes into. And with the disclaimer I’m not the CPA or tax advisor, or a tax professional, but I’m basically just taking the information out of the book and relaying it there in the blog post. As we talked about last time, Theo, about the speed reading, if you will, the point of this today is just to condense timeframes. Yes, you can go out there and you can buy this book, and you can go spend a month or two reading it, or you can just spend 10-15 minutes here and kind of get the gist of it, and the takeaways. That’s the value that I’m trying to create.

Let’s talk about the taxes here, and this is really what changed my whole trajectory, is how I earn income. This happened many years ago, but I’ve been on a pursuit in a whole different direction. I was at one point, again, those that listen to my podcasts and things, I was in the oilfield, so I was working a ton of hours as an employee. That was essentially the bulk of my income by a long shot.

Now, I was also self-employed to an extent, because I was fixing and flipping houses and doing that kind of stuff, running a vacation rental. So I certainly didn’t have 500 plus employees, but I was self-employed. You could also say in some regard, I was an investor, though at the time I wouldn’t have said I was a professional investor. I was dumping money into 401Ks and IRAs and things like that.

You can be in all these quadrants, you can be in one quadrant, whatever. But here’s kind of the tax side of it, I’ll run through really quick. An employee, if you really run the numbers, which I do in the blog, an employee is usually in on average, talking about the whole United States, paying roughly 40% of their earned income in taxes. Now, that’s a combination of your federal tax brackets, your state tax, if applicable, and then also the Social Security and Medicare. I’m not including other forms of taxes, like property tax, or sales tax in your state, stuff like that. So it could be higher, but roughly 40%. As a self-employed, believe it or not, actually the highest taxes paid come from self-employed individuals.

The reason is, when you’re an employee, you’re getting half of your social security and half of your Medicare paid by your employer, number one, and as you’re a self-employed individual, you’re paying 100% of all of those taxes, in addition to statistically speaking, self-employed individuals often earn more income, so you’re probably going to be in a higher tax bracket, in addition to both of those. Kiyosaki points out this could be roughly 60% of your total earned income and taxes, which is just crazy.

Theo Hicks: Yeah, I did not know that before reading this blog post.

Travis Watts: It gets crazier if you look at states like New York, or say California is the classic example. High-income earners in the ‘S’ quadrant could be paying 13.3% state income tax, almost 40% at the federal level, and then all of the social security and Medicare, it could be higher, so… Crazy to think about.

Now the ‘B’ quadrant; in 2017 – I don’t think this is in the book, because this was the JOBS and CARES act that got passed, they took C corporations and gave them a flat-rate tax. It’s 21%. That may be temporary, but even historically speaking, when Kiyosaki wrote this book back in 1999, he says, “’B’ quadrant is roughly 20% tax,” so significantly lower.

In a C Corp, for those that may not know, that’s usually your big corporations; your Apple and Google and Facebook, they usually structured as a C Corp. You see more the S corp structure as you get into the ‘S’ quadrant, and a lot of folks are operating just as a sole proprietor, also in the ‘S’ quadrant, just their individual names.

In the ‘I’ quadrant, this is what blew my mind. He claims that it’s possible to have a zero percent tax owed legally. Okay, and again, this is why a lot of the real estate gurus out there, and not to be political, but the Donald Trumps and whatnot, can legally pay zero percent in tax as real estate professionals. That was mind boggling to think that here I was, thinking I was going to be real smart one day money-wise and be in the ‘S’ quadrant, making [unintelligible  [00:10:54] and money or whatever, but I’d be paying so much in tax, it’d be insane. I could literally make half as much in the ‘I’ quadrant and come out ahead.

How that happens – we can take, since this is best ever community here Actively Passive Show, we’ll talk about real estate real quick.

The way that you pay zero percent in tax is because we have depreciation advantages to real estate. And not only just the straight line, 27.5 years in a lot of cases, but we have bonus depreciation that comes from doing these cost segregation studies. And, again, in 2017 the JOBS and CARES Act passed, and you can take these lifespans of certain items in your property, the ceiling fans and electrical and the trees, the landscaping, you can itemize this stuff out and you can do an accelerated depreciation, often all in year one.

It’s very possible when you invest in a piece of real estate, let’s say you’re earning some cash flow, you’ve got $10,000 in cash flow that you received – well, you might have losses on paper of $20,000 or $30,000, or something like that. That can be used to offset that, hence the zero percent tax and/or carried forward. In rare cases, if you’re a real estate professional, you can actually offset earned income as well with passive losses. I’m not going to get in the weeds with that, I’m not a CPA, I’m not a tax advisor. Please seek your own licensed professionals there. But I did want to point that out. That’s how that happens.

Additionally, let’s talk about stocks, because a lot of people invest in stocks. When you have long term capital gains, so you bought into an ETF or stock or something, and you’ve held it more than 12 months, and you go to sell it. That’s a long term capital gain. I think, don’t quote me on this, but I think for like a married couple right now, you could earn up to almost $80,000 doing investing that way and pay zero percent in tax, which is pretty incredible. A lot of different ways. There’s a good book called Tax-Free Wealth, it’s Tom Wheelwright’s book, check that out if you want to dig a little deeper, and of course, seek out your own CPA and advice there. But that is it in a nutshell.

What happened, back to my story real quick – I decided instead of going from ‘E’ to ‘S’, which was really my life plan at that time, I decided to go from ‘E’ to ‘I’. Today, I’m a professional investor, and the bulk of my income is coming from the ‘I’ quadrant. Now that being said, I do earn income a little bit in the ‘S’ quadrant, and in the ‘E’ quadrant, but the majority is from ‘I’.

So just learning the simple stuff, a book like this that’s 20 bucks can literally save you tens of thousands of dollars, not only sometimes in the first year, but for the rest of your working career. It’s really worthwhile to dig into certain topics like this, and then leverage the experts to help you out kind of on your own business plan. I know I’ve been rambling for a while, but that’s kind of the gist of it, and what the blog’s about, and the book.

Theo Hicks: Yeah, thanks for sharing that, Travis. You mentioned one thing I wanted to follow up on was the depreciation and the cost segregation, and there’s depreciation recapture, there’s a bonus depreciation… We actually wrote a blog post—again, we’re not tax experts. This is just general advice. But it’s called the Five-Tax Factors when passively investing in apartment syndications. It kind of goes into more detail on what Travis was talking about. We tossed in some examples with real numbers, so you can understand what the differences are between regular depreciation and accelerated or cost segregation, and when you’ll have to pay taxes on recaptured depreciation on the backend, and what Travis was talking about with the bonus depreciation for the tax cuts and JOBS Act.

Obviously, the tax aspects of the ‘I’ are the best, but at the same time, this is the actively passive show, so I wanted to briefly talk about the time investment associated with all of these. Surprisingly, reading through your blog post, not only is the ‘S’ quadrant the greatest tax cost, but it could potentially be the greatest time investment as well. Correct me if I’m wrong, but the greatest time investment is going to be between the ‘S’ and the ‘B’. But depending on what type of ‘B’, you are, as you mentioned in your blog post, it could be relatively passive, right? For example, I’ll talk to some people who obviously invest in real estate, but they’ll have some other businesses on the side, like consulting or something. And then they’ll hire a bunch of employees under them and they’ll hire a high-level CEO guy, and they’ve got people that are running the day to day aspects of the business; they’re not necessarily working that much, but when you’re kind of self-employed, you’re the person. When you’re employed, sure, you need to work hours, but when you’re self-employed, you’re the guy or your the girl, and you’re going to need to do everything. So not only is self-employed the greatest tax hit, but it’s also the greatest time investment. Whereas on the flip side, the ‘I’ has the greatest tax benefit, and also potentially, and again, it’s possible that you could be spending a lot of time here if you’re active, but as a passive investor, you could be spending the least amount of time by paying the least amount of taxes. I did want to mention that as well.

Travis Watts: Exactly. And that’s a famous quote, Warren Buffett talks about, if you don’t learn how to earn income in your sleep, then you’ll work till the day you die, which is a bit extreme. But to your point, so the ‘S’ and the ‘B’, big difference there is the ‘S’ is the operator, to your point; you’re a plumber, you’re an electrician, you’re a speaker. It’s you; you’re the business. But on the ‘B’ quadrant, you’re the owner of the business, to your point, so that you can walk away from the business, and it continues earning income for you.

So yes, absolutely. As you can see, if you’re not already familiar with this cashflow quadrant, you’ve got to get over to the right side of the quadrant, the ‘B’, and ‘I’. It’s tough to make a leap over to ‘B’ from ‘S’. I would say most people have probably the best chance at getting into the ‘I’ quadrant, because you literally can do that with $10. Just buy a share of a stock or something and you’re already there in the quadrant, and then just keep building on to it. It’s not to say you should only be an ‘I’ or you should only be a ‘B’. Like I said, I’m virtually in all quadrants except for ‘B’.

Extremely helpful to start thinking about tax implications, because again, it’s kind of a compounding effect. If you learn about taxes, say when you’re 20, and you start implementing this stuff, well, you’re going to be decades ahead of most people, and that savings can compound into more investing, and it’s going to have the biggest impact. If you’re listening to this today and you’re 85 years old, well, you can still make changes, it’s not too late, but it’s not going to have as big of an impact, obviously.

Theo Hicks: Yeah, it’s also important. We talked about how—I wouldn’t say it’s a drawback, but one of the prerequisites to being in the ‘I’ is you need to actually have money. And so sure, you can start with $10, but you’re not going to live off of $10. It’s not like you’re going to hear — every single person listening to this episode right now is going to quit their job and jump into the ‘I’ and make a million dollars. Obviously, that’s not the case.

As Travis mentioned, the goal is to be more on the right side, the ‘B’ and the ‘I’; and less on the ‘E’ and ‘S’, and maybe ultimately being completely on the ‘B’ and the ‘I’. But the first thing is becoming aware that this type of quadrant exists, and then as Travis mentioned, it’s a compounding effect.

Figure out how much money you can save each month or each year from your ‘E’ or ‘S’ job to put into ‘I’ and then do that for, depending how much money you have, a few years, or five years, 10 years, whatever, then you can start to pull back from the ‘E’ and the ‘S’. I think that’s a key here, is that you need to, in a sense, use the ‘E’ and the ‘S’ to get to the ‘I’. The ‘I’ is in regards to passive investing. Obviously, you don’t need to do this for active investing. This is not the active investing part of the show. But for passive investing, you need that capital to invest.

Travis Watts: That’s a good point. Something to point out too is this cashflow quadrant is just more or less a generalization. There are ways and strategies as a self-employed individual to save on taxes, with your home office deductions and your car expenses and your commutes and your mileage. There are definitely ways to offset. There are also choices to be made about like we talked about with state income tax; you could leave a state with 13% state tax to go to Florida, go to Wyoming, wherever, go to a no-tax state and save that, too.

It doesn’t mean that when you’re an ‘S’, you do pay 60% in tax. That’s not true. But it’s a generalization that a lot of folks do, for the reasons that we pointed out. Just know that.

And also, one more thing on the ‘S’ quadrant. You could learn to operate like a big business. You could do the same strategies; you could elect to be taxed as a C Corp if you want. There are things that you could do to pay that 21% tax, things like that. Again, not a CPA or a tax professional, but things that you can do there.

Now with the ‘I’, you mentioned passive investing. That’s true. I think a single-family buy and hold, specifically a buy and hold. Some would say that’s passive, others would say it’s not. But regardless, that’s what would qualify you for the ‘I’ quadrant, because it’s mostly hands-off.

Now, if you’re flipping houses, like I used to do, and you’re not an ‘I’. You may think that you’re investing, but that’s not true. You’re in the ‘S’. You’re actually self-employed. This is now a business that you’re putting a lot of time into, so you actually fall into the ‘S’. Because also you’re earning, by the way, short term capital gains, which go into the regular tax brackets of federal income, right? So you’re not going to fall into long term capital gains if you’re doing flips, for example, or wholesaling, or any active business in real estate. So, something else to think about.

Theo Hicks: People who are essentially holding on to their investments longer than a year, until you start experiencing capital gains tax – that would be considered an ‘I’? Or is it only people who do that and aren’t spending a lot of time doing it? Like, if I’m a buy and hold person who’s buying 20 deals a year, that’s going to be a large time investment. Would that considered an ‘I’, or would that be considered an ‘S’?

Travis Watts: Say it one more time? Sorry.

Theo Hicks: Is it just the tax benefits that determine which one you’re in or is it also the time investment?

Travis Watts: The way I look at it, you’d have to go into greater detail in the book to see exactly how he defines this. The way I look at it is a) a longer-term approach to investing because of the tax advantages that go with it. If you’re really striving to do the zero percent or up to, let’s say – I think it’s 15% after that, but it’s still capped when we’re talking long term gains. That’s the biggest thing, right? Anytime you’re actively doing a business, spending a lot of time on it, then you’re going to be an ‘S’ in that situation.

Theo Hicks: Got it.

Travis Watts: Now, the reason that Kiyosaki excludes 401Ks and IRAs is because that’s not a tax-advantaged strategy, that’s a tax deferral strategy. If you weren’t aware, anybody listening, a pre-tax 401k, a pre-tax IRA, when you finally do go to pull that money out, assuming you’re over the age of 59 and a half when the IRS says you can pull that money, you’re actually taxed as ordinary earned income, which is quite crazy to think about, because the investments you hold, if you were otherwise to hold those investments say in a brokerage account, not an IRA account, you would be paying zero to 15% tax in most cases on the gains. But instead, you may be paying up to 40% to 50% in taxes by kicking the can down the road and taking it later. We’re not even going to get into early withdrawals, which statistically most people will pull that money out early anyway, and pay a 10% penalty on top of that tax. It can get really ugly in those accounts, and that’s why he doesn’t consider that a professional investor, because it’s a very seamless thing; it comes out of your paycheck, it goes in there. You’re not usually being very active with a 401k.

Theo Hicks: Got it. I would say from the perspective of our listeners, it would be kind of broken into two categories. It’s the people who are an ‘E’ or an ‘S’, or they are in an ‘I’. If you’re an ‘E’ and an ‘S’, you’re working a full-time job at a corporation, or as you mentioned dentist, doctors, or own a company. Then you’ll want to kind of transition into the ‘I’. And then if you’re an ‘I’, and you’re a long term hold investor, from there you’re already experiencing the tax benefits. From there, the advantage would be reducing the time investment, and so that’d be transitioning from more of the active ‘I’ to the passive ‘I’.

Travis Watts: Yep. And so many folks, I guess, subliminally pick up on this concept without even knowing about this book, because coincidentally, there are a ton of S’s that are doctors, dentists, lawyers, attorneys that invest professionally in these apartments syndications, private placements, or just real estate in general. The reason that they’re really after that is for the tax advantages.

And again, not to go too deep into the tax stuff, but you can learn how to become a real estate professional. In some cases, or even as a married couple, maybe the spouse or stay at home husband or wife, whatever the situation may be, the non-worker could be managing the single-family portfolio, could be putting in more than 750 hours a year, it could be their primary focus. If you can qualify, working with your CPA as a real estate professional, it is possible to take these passive losses that we talk about from depreciation and bonus depreciation, cost segregation; take that stuff, and apply it against your self-employed income or your employee income.

So it gets deeper and deeper and deeper. We’re not the professionals here on the subject. But I just want to open everybody’s mind to this concept and idea if you weren’t familiar with the book already, or to reiterate, hey, maybe it’s time to reread that book. It’s been 10 years. Hopefully, that’s helpful just as a concept for people here on this episode.

Theo Hicks: It’s been very helpful to me too, because I’m pretty sure I’m getting the cashflow quadrant and then the assets and liability thing mixed up. I don’t think this was [unintelligible [00:24:59].14] but what I was thinking of was the liability versus assets.

Alright, Travis, it’s been a solid episode. Thanks for joining me and sharing your wisdom on the Cash Flow Quadrant on these Actively Passive Investing Show episode.

Best Ever listeners, as always, thank you for listening, Hope this was valuable. Have a best ever day and we’ll talk to you tomorrow.

Travis Watts: Thanks, Theo. Thanks, everybody.

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JF2214: The Truth About FIRE | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be sharing the truth about F.I.R.E, financial independence and retire early. The idea behind FIRE is to focus on producing as much money as you can possibly generate while living very frugal for a number of years so you can eventually have enough income to be financially independent and to have more of a flexible lifestyle.  

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.


TRANSCRIPTION

Theo Hicks: Hello Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks and we’re back for another edition of the actively passive investing show with me and Travis watts.

Travis, how are you doing today?

Travis Watts: Theo, I’m doing great. I’m super excited. This is one of my favorite topics and I’ve never had a chance to dive into it deeply. Hopefully, we can do that today.

Theo Hicks: Yes. This topic that Travis is talking about is the F.I.R.E Movement. F.I.R.E, which is an acronym that stands for Financial Independence and Retire Early.

I was talking to Travis a little bit before the show that I’ve heard of this movement before, I’ve seen a few trailers for documentaries, but I am by no means an expert on this topic. It’ll be mostly Travis talking and maybe I’ll ask him some follow-up questions to learn more.

Travis, kind of take it away. What is the F.I.R.E Movement? You said it’s one of your favorite topics, so maybe tell us why it’s your favorite topic, how you learned about it, things like that.

Travis Watts: I think I was just like you, Theo, a few years back and I had heard that acronym, really couldn’t tell you anything about it, didn’t understand it.

Here’s the long and short of it. I was raised by two very frugal parents. I think we’ve talked about that before. They taught me very well one side of the money equation, which is the saving and budgeting side; nothing about investing, nothing about real estate, but very thankful for that. I’ve always had a good discipline there.

I was raised that way, continued that throughout my life; just frugality, I guess we could coin the term as that. Then all of a sudden, I started feeling like I was the only one out there doing this. It was kind of a lonely existence. Then you start second-guessing it, thinking, “Is this kind of a stupid thing to do, or does anyone else feel this way about money?”

Then all sudden, I discovered the F.I.R.E Movement, which I wouldn’t say it’s a huge community, but it’s a growing community of mostly millennials. I would say people in their 20s, 30s, and 40s, for the most part.

The idea is this, a lot of people get this wrong when they first hear about the F.I.R.E Movement, and the whole retire early thing, a lot of heat gets driven there. The movement is really about designing a life and a lifestyle that fits you, that complements you. It’s searching for things that bring you happiness, joy, fulfillment, excitement, and then creating a life around that.

Now, I think a lot of people get caught up in the financial side of it, which we’ll talk about in just a minute. But it’s this idea that, hey, maybe I have a corporate job, and I make good money, I make six figures or whatever. I’m an IT guy, an engineer, what have you. Well, I may like that to an extent, but realistically, could I see myself doing that from today or in my early 20s, all the way through my late 60s, to get to so-called retirement?

Well, a lot of people are feeling like, “No, that’s just too long. That’s too much of a commitment.” It’s this idea that you work aggressively to earn income early on, as early as you can, make as much money as you can using your highest and best skills, talents, credentials, then you’re going to live very frugally. You’re going to live on just basically as little of that income as possible for a period of time; not forever, but maybe five or 10 years, something like that. It’s different for everyone.

Then here’s the most important element of that. You’re not just going to save that money and throw it under a mattress. You have to invest that money into assets. Now, F.I.R.E Movement is all about stocks and index funds, but what I want to talk about today is how the F.I.R.E Movement can relate to real estate and how I’ve done that. So earn as much as you can, live on as little of that as possible, invest the difference into assets.

Number four is just avoiding bad debt. A lot of people start out with bad debt, maybe it’s student loan debt, credit card debt. Get out of it, and then if you don’t have it, don’t get it. Just stay out. That’s one of the biggest things that detracts people from starting their investing journey.

By doing that, it’s incredible. But you see people all around; there are podcasts dedicated to this, as you mentioned, documentaries, books, there are conferences now around this topic, and you genuinely see people in their 30s retiring. What I mean by that is not going to the golf course and moving into a 55 plus community and these kinds of things, but it’s financial independence. Let’s just focus on the first half of that acronym. That’s what it’s about. It’s about financial independence, it’s about having enough income; as we talked about on our previous podcast, how much is enough? It’s just having enough to have lifestyle flexibility; if you want to travel more, if you want to be more charitable, if you want to spend more time with your family, if you want to go ride around in an RV for six months. You just have more options on lifestyle choices.

That’s a little bit about what the movement is. What I really want to dive into though, is how most people view the F.I.R.E Movement as it pertains to stocks and index funds, but how I think you could shift that over to the real estate. I think that can be very impactful, and that’s what I’ve done. That’s kind of what I want to pick up on there.

Theo Hicks: Yeah, sure. Let’s kind of lay the groundwork, maybe the first talk about what people usually do. You said that really what will remain the same is the saving of the money aspect. We talked about this before, but knowing what your number is, what’s enough based off of your lifestyle, but the major difference is going to be what you’re putting that money into, and then based off of that, when you’ll actually be able to achieve that enough number. Maybe kind of walk us through what people traditionally do in the F.I.R.E Movement, as you mentioned, with stocks and index funds, to maybe kind of give us like a high-level example, too.

Travis Watts: I was getting reeled into this movement. I was getting really excited. I was so happy to see other people are thinking like I think, until it came to this aspect, which is the one thing I really disagree on many levels.

This is how it works in the traditional sense; they use what’s called the 4% rule. The 4% rule is a withdrawal method off of your retirement accounts, whether that be a brokerage account, or actual retirement, IRAs, and Roths and 401K’s.

What I mean is this, they say, “Okay, let’s say you need 50,000 per year in income. The way the 4% rule would work is that you need $1.25 million put into index funds. That’s what 90% plus in this movement are doing, are index funds; something like VTSAX, Vanguard Total Stock Market Index Fund, for example. Why Vanguard? Low fees. Why that particular one? It’s a wide stock market index, so they claim you have some diversification that way.

If you have $1.25 million put into an index fund like that, what they say is, well, historically—I’m sure everyone listening has heard this before. But historically, over the last 50 or 100 years, whatever, the stock market has returned 8%, annualized. Obviously, some years being 20% or 30%. Some years being negative 40%. But we’re just trying to find the middle ground here and the averages, and it’s about 8%, give or take, depending on what you read, and how you interpret that.

The idea is, if you’re pulling 4% off your accounts per year to get $50,000 out, and it’s returning eight on average, that you’ve left yourself in their conservative buffer; that buffer can be used for inflation, or the ups and downs, or just a weird market, and we’ve never seen this kind of thing happen before, whatever. It’s just a safety margin.

In theory, you’re infinitely wealthy; if all you ever needed was 50,000 a year, you had 1.25 invested in something that historically does 8%. That’s how it works. It’s kind of a mindless thing to do. You have one strategy, you don’t really need to learn anything else, every dollar that you can invest, you just do and you just do that for five or 10 years aggressively, or whenever you can hit that number, and then there you go, you’re done. That’s how the F.I.R.E Movement works.

Theo Hicks: Just a follow-up real quick… Essentially, they’re just going to a bank or some broker, and then as they’re making their money, they’re giving it to them and saying, “Hey, invest this in this index fund.” They’re kind of doing that every quarter, every year or they’re just doing it once they’ve hit that number?

Travis Watts: Good question. Due to fees and financial advisors, and all this, they’re circumventing the whole system and they’re saying, “Hey, it’s free to open a brokerage account or a retirement account at Vanguard or Fidelity or Charles Schwab. They’re going to do that; no cost. Then they’re going to go into a low-cost index fund. So not like a mutual fund that usually has a higher asset under management type of fee. I think VTSAX are the lowest fee; you could probably look that up as I’m talking, but that’s why so many people in the F.I.R.E Movement choose it. You’re not using a financial advisor.

The theory is nobody, technically, statistically can outperform the stock market. Yes, people do, but it’s not a sustainable long-term approach. It’s not like someone outperforms it every single year for the rest of their life. So why pay somebody extra fees to basically match or underperform what the index funds do anyway? That’s the theory. That’s the philosophy. That’s the mindset. That’s the strategy.

Theo Hicks: Got it.

Travis Watts: I’m thinking about that. I’m thinking, “Wow, 1.25, 4%. Okay,” and I’m thinking about my real estate holdings. This happened several years ago. I’m thinking, “Well, when I buy a piece of real estate, what do I see as conservative cash flow?”, which is a completely different mindset; cash flow versus equity. I’m not banking on things to go up in value. I’m just saying, what gets collected out of rents, and other income-generating things on the property.

Well, I came up with 8%. 8%, to me, was kind of a conservative number, and let’s just forget about the appreciation side of the real estate, the fact that it could go up just because of inflation, and that’s what happens, or forced appreciation, you’re making it better… But just take that completely out. Let’s just look at cash flow.

If I put $100,000 into a single-family home or a private placement, or syndication or what have you, my principle is locked in there, that’s what allowed me to invest or buy the property, but the cash flow is what I could potentially live on. That’s what I do live on. I thought 8% to me is pretty conservative, as the F.I.R.E Movement sees 4% being conservative for the stock market. I thought, “Well, then if that’s true, you can actually get to where you want to go twice as fast. You could have $625,000 invested at 8% cash flow in real estate, instead of $1.25 million at 4% in the stocks.”

If you look at the yield on VTSAX or S&P index, it’s so low. It’s not a cash flow play. It’s 1.6% or something, depending on when you check it out. It’s really hard to live on that kind of yield for cash flow.

This is just a big mindset shift, and the deeper I got into this, the more I found out that just hardly anybody in this movement talking about real estate. I thought that was the craziest thing, because unfortunately for so many of these people, they could get there so much quicker, with half as much invested.

My wife and I, I don’t know if it’s earlier this year or last year, we went out to one of the biggest advocates for this movement, is Pete, they call him Mr. Money Mustache, and he’s a big blogger, things like that in the F.I.R.E Movement.

We went out to Longmont and we met with him. He has a co-working space, a bunch of F.I.R.E Movement like-minded people, they call him Mustachians, they do this goofy little mustache thing.

I was asking him, I said, “Pete, this index funds stuff,” I said, “everyone’s doing it.” And I said, “I’m kind of a real estate guy at heart.” I said, “Do you own any real estate or whatever?” He said, “You know, Travis, the index fund thing, it’s just worked historically. It just works for me. It works. Why change something that’s working?” This is, of course, before COVID, and as the great bull run has been happening and stuff, and I just thought, that’s interesting.

It led me to think that there’s probably a lot of people in this movement that just aren’t in investor mindsets, and rightfully so. Not everybody has the time, energy, effort, or interest to become an investor mindset or an entrepreneur or whatnot, and that’s fine. But I think that’s what gets so many people to buy into this concept, is “All I have to do is have a brokerage account and an index fund, and that’s all I ever have to do for the rest of my life,” and that’s pretty simple and that’s some peace of mind there.

But anyway, just wanted to point out that real estate’s a great asset for cash flow. If you’re looking at it through the eyes of cash flow, and not through equity, for those interested in this movement or pursuing this journey yourselves, that’s something to definitely consider. You may not go fully in like I am with real estate, but at least maybe having a few rental properties or something; it could really help that equation out.

Theo Hicks: Yeah, you have a really good point there, because one thing that I first thought about when we were talking about the index funds is – okay, so I follow the 4% rule, the example you gave us, 50 grand a year, so I need to invest $1.25 million. But at that point, really, I have my account with $1.25 million in it, and then I’m living off every single dollar generated by that account is me using it, and so that’s gone within the year, and I’m using the next 50. It’s kind of always 50. Whereas for real estate, as you mentioned, you’re kind of just focusing more on the cash flow and how you can get there twice as fast. But if you’re investing in a five year or 10 years syndication, then again, depending on what type of syndication it is – because sometimes you are just participating in the cash flow… Participating in the cash flow and the upside. Let’s say you invest 100 grand, you’re making 8%. And then you can obviously live off of that 8%, $8,000 a year, but at the end of five years, you’re going to get 60 grand. So now you’ve got 160 grand, and then you can pull that 60 grand out and do something fun with it, or you could take 160 grand invest it in something else five years later, and then make more cash flow, and then either live off of that still or reinvest that more and more, whereas I don’t think you can do that with these index funds. There’s no equity play here, it is just cash flow, right? Or is there an equity play?

Travis Watts: Yes. For an index fund, what you’re banking on is not cash flow at all. You’re just hoping that on average, that account balance goes up 8% and that you’re just taking four out of it, so you’ve got a little buffer in there, but inflation is a real thing, so that 4% isn’t just a gain, you’re kind of [unintelligible [00:18:28].03] there. That’s the good thing about real estate, it often keeps up just automatically with inflation.

We could make the case on and on, you and I, for real estate, with the tax benefits and the leverage that you can use and this, that and the other and we could go on and on. But I just want to paint the simple example of, if you’re trying to live off of something, it doesn’t sit well with me to sell off my nest egg, to have an account balance of a million bucks and just say, “I’m going to start selling it and then living on it.” I don’t like that concept.

With cash flow, it’s not that way. That 100k I put into the property is still there, and then hopefully the equity and appreciation come in too, but just again, forget about that altogether. I’m just talking about the cash flow. It’s a better asset, in my opinion, for retiring on, because we all have to come around to needing some income and I think real estate is one of the best asset classes to produce income.

Theo Hicks: Do people ever do life insurance with this F.I.R.E Movement?

Travis Watts: Like the whole life, you mean, and kind of doing that the infinite strategy and whatnot?

Theo Hicks: Yeah.

Travis Watts: Yeah, yeah. Some do, but I’m telling you, my theory—I need to do more research on this. I’m not an expert either. My theory though is that most people in this movement are not investor mindsets. It’s just, “Do this one thing, and then you’re good for life.” That’s kind of like insurance too, right? Open up this whole life policy and just dump everything you’ve got into it.

You have to play to your strengths, obviously. I’m not suggesting real estate is right for everybody, but there’s ways to do real estate passively; even if you were to do the stock thing. There’s REITs, there’s Real Estate Investment Trust, there’s high dividend yield stocks. There’s ways to create cash flow in that strategy, besides just doing an index fund with a 1.6% yield on it.

But that would be my suggestion, is focus on cash flow, versus the buy, hold and pray that the stock market just goes up forever.

Theo Hick: That’s actually a great opportunity to plug the book we’re working on, the Passive Investing Book, because we have a full section in the book where we go over every single passive investment you could think of – index funds, mutual funds, REITs, [unintelligible [00:20:33].14] regular stocks, private equity… And kind of just comparing all of those to one another in regards to risk, returns, feasibility, various other fees involved, just to say “Hey, there’s not one that’s better or objectively the best, it’s just “What do you want to get out of this?” And then based off of – again, if you want a low fee type of a situation, then you can do the Vanguard thing. If you want higher returns, you can do something else. You haven’t said any of the funds that we don’t have in there, so that’s good. I think we have everything covered.

Theo Hicks: One thing I did want to ask about this – so you mentioned that the traditional F.I.R.E participant would place their money and open up their own brokerage account, and they’d just kind of dump money in there, and then it’d be set it and forget it. With apartment syndications there is some more time that goes into it; and so for you, how much time are you spending on just your passive real estate investments, compared to your other investments you’re doing, or whatnot…

Travis Watts: Well, we call it the actively passive show… It is active to a point, but it’s fully intentional, a; and it’s, b, because I love it. It’s my interest. It’s my passion. This is what I like to research and learn. If it’s a Saturday or Sunday, and I’m sitting at home by myself, what am I doing? Probably a documentary on financial stuff or reading a book on that. I fully recognize that’s not most people, I totally get it. But for me, that’s why this topic is even coming up. That’s why not a lot of people are talking about the real estate side of the F.I.R.E Movement. Because everyone just wants the one thing, “Let me just do one thing, and then be done with it. Take the diet pill and lose 30 pounds. I don’t want to actually work out or know about diets.” That’s where it comes from.

I spend realistically, not a lot of time. I might seriously vet maybe one deal per week. That doesn’t mean I’m investing in that deal. I get sent, let’s say, four deals a week from different syndication groups, or whatever, and I pick one. I’ll dive deep, just mainly for the education side of it in, and invest maybe in one a month or one every other month or something like that.

What does that equate to? I don’t know, two hours a week or something like that, not a lot of time. It is mostly passive, which is what I preach and what I advocate. You’re already working 40, 50, or 60 hours a week, sometimes more. You don’t have the time to get out there and always fix and flip houses or do all this kind of research.

Theo Hicks: It sounds like most of your time is spent on not actually analyzing a specific deal or viewing financials, but kind of the other aspect that you mentioned, like watching a documentary or doing additional research.

Obviously, if you are one of those people that don’t have a lot of time, you don’t have to spend all this time on deals, right? I mean, you can just listen to a show like ours and take some takeaways and be able to quickly analyze deals. What we’re talking about in fact is just tradeoffs, right? I mean, you’re not going to have a magic investment where you don’t do anything at all; you just press a button, a spacebar on your computer, and then you make a 1,000% return. It’s just not how it works. There’s going to be tradeoffs. With higher returns, there might be a bit more risk, or there might be a little more time investment spent. With the lower returns, it might be a little bit easier, but then it can take a lot longer to get to that point. There’s going to be trade-offs all the time.

Travis Watts: Yeah, exactly. The last thing I want to circle back to is something that we talked about at the beginning of the show, is what this movement is really all about, and it’s more about lifestyle, it’s more about happiness and fulfillment and making wiser and smarter choices both for the planet, for yourself, for your family.

There was a well-done documentary that came out last year. It’s called Playing with FIRE. I can put a link somewhere. I bought it on Amazon. I don’t know all the outlets for it. It’s got a little orange shopping cart looking background to it. But it’s great. What it is, it’s a couple, they’re millennials, they’re in their early 30s and they live out in San Diego, California, and they’ve got the BMW and the Yacht Club membership and the beach house. More or less what they’ve been doing and they didn’t even realize is just kind of keeping up with the Joneses from their subconscious. It wasn’t intentional. It’s just, they thought they were doing what everybody does and should do.

They did an exercise—anybody listening right now, seriously, hit pause and do this if you can. If you’re driving or something, make a note to do this as soon as you can. It’s a simple exercise, but it means a lot. It can mean a lot. It’s life-changing. My wife and I did it. They did it in the documentary.

All it is, is you write down the 10 things that make you happiest. The 10 things that bring you the most fulfillment, either daily, weekly, monthly, annually; you choose your time frame. The point is, for this group, it was interesting. Husband and wife, right? And it’s like playing with their newborn child, eating dinner at home, enjoying a nice piece of chocolate, going on a walk outside, riding bikes together, and they’re thinking, “If that’s what brings us the most fulfillment, we can live anywhere. Why are we in the most expensive place in the US, paying $4,000 for housing, etc?” They end up moving.

This documentary is just about an average couple, that they’re not experts in the F.I.R.E Movement. They’re just trying to learn as they go. They end up leaving San Diego, they go to—I think it was Bend, Oregon and they just find cheaper housing and more outdoor activities and recreational things, they switch up their car and they reduce all their car payments. It was just a cool thing to see. It’s called Playing with FIRE.

There’s a lot of good books, a lot of good podcasts, so check out all that stuff if you want to learn more, but that’s a little bit what it’s about. Not to give it such a bad rep on, “What are you going to do if you retire in your 30s? You’re going to be bored out of your mind.” That’s not the point. It’s not that you are going to retire. It’s just that you’re going to have that flexibility to do what brings you the most fulfillment and happiness.

Theo Hicks: And I think we talked about this on one of the other shows that if you can think of a job to do if it didn’t really matter—if you could do any job and the salary didn’t matter, what would you decide to do?

My dad drives a bus. He loves it… Because he’s retired, he doesn’t have to worry about the money.

That documentary is by Travis Shakespeare. So if you search Playing with FIRE, Travis Shakespeare, you will find it.

Travis Watts: Cool.

Theo Hicks: All right, Travis, I appreciate you coming on. I enjoy talking about F.I.R.E. because I get to learn a little bit more about it. Make sure you check out that documentary, and then we’ve referenced a lot of blog posts. I’m going to try to remember to add some of those to the show notes for these shows moving forward, for some other secondary sources.

Again, Travis, thank you. Best Ever listeners, as always, thank you for tuning in. Have a Best Ever day and we’ll talk to you tomorrow.

Travis Watts: Thanks, everybody.

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JF2207: How To Get The Most Out Of Reading | Actively Passive Investing Show With Theo Hicks & Travis Watts

Reading is very important when it comes to growth, however, it is also sometimes very hard to fit reading in an already busy and stressful day. Today Theo and Travis will be sharing two methods they each use to get through multiple books in a short period of time. Each method is successful in its own right so be sure to try both to see which flows more with your personality.

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow. 

Click here for more info on PropStream


TRANSCRIPTION

Theo Hicks: Hello Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and we’re back for the Actively Passive Investing show. So Travis, how are you doing today?

Travis Watts: Doing great. Excited to be here. We’ve got a fun topic.

Theo Hicks: We do, we do. So we’re gonna talk about reading today, and how that can obviously help you in your investing business. We’re gonna go over a technique that Travis has for how to read more books every single year. So Travis, I did know that you wanted to mention something before we got started about the show and the reception the show has gotten, and you wanted to say some thank yous, so maybe you can say that first and then we can dive into today’s topic.

Travis Watts: Sure. Yeah, I forgot this completely last time; apologies. But so many people reaching out through social media and LinkedIn exclusively, it almost seems like… Watching our show, just thanking us for making it. So just thank you guys for tuning in, and hopefully, this adds some value. We call it the Actively Passive show because there is so much on the active side of being a passive investor, and we have folks on both sides of the coin, active investors and passive investors. So that’s, to the point of today’s topic, which is about reading, which is obviously something active that you would do to keep up with your education. Hopefully giving you some tips and tricks to make that an easier process, a quicker process, a more efficient process, and maybe point out a couple things you hadn’t heard before. I know Theo’s got some really cool thoughts and insights here on what methods he uses, and then I do as well. So between the two of us, you can find a couple things that’ll help cut the learning curve for you.

Theo Hicks: Yes, exactly. So let’s go over your strategy first, how you read, and then I’ll ask you some follow up questions or maybe give my thoughts on it as well. But I would say that overall before we dive into this, I think Travis’s strategy – he’ll explain it – but I think his strategy is really good for trying to very quickly pull out the top best things in order to immediately implement those in yours, whereas my strategy is more for if you want to read a textbook. If you are reading the Best Ever Apartment Syndication Book, and it’s more of a book that’s written by a step by step process. The reason I’m saying that is because our strategies are completely different. But the point is that both are helpful, based off of what you’re actually trying to accomplish and what types of books you are reading, and you mentioned that in the article.

Travis Watts: Oh, yeah, and that’s something to mention. This is all off of a blog that I wrote a couple months back called “How to Read 52 Books in a Year”, which is something I did in 2015. In full transparency, this isn’t the exact strategy that I used to read 52 books. I didn’t just skim 52 books, as we’re going to cover today; it’s  more or less how to get through a book in let’s say an hour, just to put a time frame to it. That’s actually not what I did then, but it’s what I do since, because it was just information overload that year. I had incredible amounts of information being poured at me like a firehose. But for anyone that’s familiar with the cone of learning – you’ve probably seen a diagram, it looks like the food pyramid. I think it was – gosh, what’s his name – Edgar Dale, I think was his name, that came up with this, and it’s basically how much information we can retain as humans based on what method we’re consuming the information. So for example, for reading, statistically, we’re only going to retain about 10% of what we read.

So this is just a method to make that percentage jump a little higher and to cut that time commitment. If it takes you a month or two or three to get through a book, as I said, this is a way to take one hour and get the majority of what the book is trying to tell you. But to your point, Theo, even my strategy here, this strategy is really non-fiction stuff, it’s self-help, it’s how-to books, it’s things like that. But anything that’s going to follow a chronological order or it’s going to be in story format, this is not going to be a good strategy for books like that. Just to lay that out there.

Theo Hicks: Is Edgar Dale’s cone of–

Travis Watts: There you go.

Theo Hicks: –experience, E-D-G-A-R? You said a pyramid, and I found really nice pictures. There’s a  green pyramid that has the different types of ways you can consume content, and then it has the percentage of information retained based off of whatever you’re doing. So I never heard this before. Interesting.

Travis Watts: Oh, really? Okay. The book I’m going to talk about as my example is Robert Kiyosaki’s book. I think that’s where I probably picked up on that for the first time, was through him. But just to give simple– I don’t have it in front of me; I forget what they are. But I know 10% is reading, and I think it’s like– I don’t know. 30%–

Theo Hicks: 20% of what you hear, 30% of what you say, 50% of what you see and hear, 70% of what you say and write, and then 90% of what you do.

Travis Watts: Exactly. And we’ll get to hopefully more than that 50% to 70% range, and I’ll show you how to do that. Again, this is just a form of speed reading. But instead of just flying through page by page like that and going through 400 of them and trying to retain what you can, it’s a little bit different strategies. So it’s five steps, and I guess I’ll just jump right into them.

The first three steps have nothing to do with even reading. So it’s pretty easy, there’s only two real steps. But setting some blocks of time aside to read. So I think, myself included, and I know a lot of people, when you make this vague commitment like, “Hey, this Saturday, I’m just going to read all day,” or “I’m going to read this afternoon,” and there’s no clear timeframes or timetables, we often get distracted. You might get 45 minutes in and then “Oh, I got a phone call. Oh, I forgot about that email. Oh, I got to go cook dinner” or whatever. So I think blocking out two or three intervals per day, 15, 20-minute range, something like that puts you in the ballpark of an hour per day, and it doesn’t have to be every day. Think about yourself, your schedule, your routine. Make it sustainable. Maybe it’s ten-minute intervals three times a day – I don’t know – morning, evening, night, whatever works. So that’s step one.

Step two is decide ahead of time on what you want your outcome to be for the book that you’re reading. That’s really important. I don’t think a lot of people do that. This book here that I’m going to use as my example is called Second Chance, Robert Kiyosaki, came out several years back, author of Rich Dad, Poor Dad. So Second Chance, what comes to mind, if I knew nothing about this book, is let’s say I lost a lot of money in the last recession or the downturn, or maybe I made some financial mistakes in my life previously, and what I get from this is, well here’s a second chance to think differently about it, or to come back stronger, or try something new or different. So that would be my outcome. I want to learn how I can have a second chance financially speaking. That’s step two.

Step three, we talked about this before the show – bookmarks, sticky notes; I’ve got all kinds of colors and types and sizes. It’s whatever works for you. But the point is, you want to highlight sections that are easy to find, like key concepts, topics, things that really stood out, things that were really helpful. And when you put this book away back to your shelf, you have these tabs so that, again, back to the cone of learning, we only retain 10%. Let’s say if I read this book, well, I want to be able to go back in five years and say, “What was that book about again?” or “I know there was something in that book. I can’t remember exactly what it was, but it really was helpful, or whatever”, and then you can just clearly go back in a matter of minutes and figure out what it was. A little overwhelming to go back to a 400 or 500-page book and forget what it was you’re even looking for and try to find it. You pretty much just have to reread it. So that would be step three, is simple organization.

So one, two, and three is just prep work. So to jump into it, this is what I do to get through a book in roughly an hour, depending on the book, obviously, and the size and the chapter length and all that. Step four is read the front cover, the subtext for your money, your life in our world. Kiyosaki, Second Chance, yadda yadda. The back’s actually got quite a bit on here. It says the past, the present, the future, you will learn how we got into this financial crisis and what we can learn from the past. The present is learning from the past. You’ll have the opportunity to make new decisions from the present for a better and brighter financial future. And in the future, you will learn how to guide yourself and your loved ones through this growing financial crisis.

So that’s just one small section, but this gives you clearly what this book is about, some things to think about. You may even need to use that to go back to step two, which is defining your outcome. Then, a lot of books have a jacket. There’ll be some text in here. This one doesn’t have it, but definitely read that after you read the front and back cover; the inside jacket there. This one has a dedication, that’d be fine to read that. I was really thinking about more the introduction. Definitely read the introduction. This book only has literally a one-page introduction. So that’s really short. So the foreword, the introduction and the jacket. And then we’re gonna jump right into chapter one. Okay, and this is all step four.

So the jacket covers, introduction, dedication, chapter one. So most books are gonna lay out the land for you in chapter one. It’s usually a pretty lengthy chapter, and it’s just the core concept. This is what this book is about, this is why I wrote it. They’re making the case for what it is. So it’s going to have the meat of what this book is all about. Now, so far, we haven’t done much different from reading any other book, like we’ve all learned in school and done our whole lives. Here’s where it changes though.

Step five, the last step, you’re going to skip all the way to the last chapter in the book, for the same purposes as I just pointed out for chapter one. Often in the last chapter, there’s going to be a really detailed recap. Okay, this is what we learned in the book, this is what we studied, these were some of the key takeaways, this is more or less what the conclusion is. So again, just painting the big picture. And then this book, I think, even has final thoughts. So definitely check that out.

But you can see in here, this is all part of the last chapter. It says right here, “Here’s a few ideas as you consider your second chance on what this could mean for your life, your spirit, your family, your future – one, two, three…” So it’s just recapping the book to give you the most out of this. A lot of people are phased out in the middle anyway, they’re not going to retain a lot of that. So this is just getting right to the point, highlighting, bookmarking, taking notes, all that good stuff.

Then, here’s the very last step that you do. Go all the way back to the table of contents in the book. And here’s the key – find one or two, maybe three at the most – depending on how much you love the book at this point – chapters that you actually want to read that are going to help you accomplish your outcome or your goal. So just skimming through here, I would probably read The Next Crash, chapter five, because I want to know thoughts on what is this crash? What are you talking about? What does that mean for me? What else would I read? Chapter 13, The Opposite of Get Out of Debt. That sounds interesting, because you would think you’d want to get out of debt, so what does he mean by the opposite of that? So those would be probably two chapters that I would focus on.

From there, literally, you’re going to be so much more organized than most people who read. You’re going to have things that you can reference and go back to. Of course, you can read the full book, if you’re really that into it, and you love it. But the concept here is, you put five books on your table and that’s overwhelming sometimes. You think, “God, that’s gonna take me a year to get through all that,” and here’s a way to do that in a week. You can just blow through them, and then maybe pick the favorite one of those five and say, “Man, that one seemed really interesting from what I read. I’d like to finish it.” And then double down on that one, and maybe one of them, you skim like this for an hour and you go, “Yeah, it’s kind of crap. I don’t think I’m gonna learn much from that book,” and that’s the point. Don’t waste your time. Value your time. So that’s the strategy to get through a book a lot quicker instead of the traditional speed read, which is reading super fast and trying to comprehend that. I’m not good at that. I’ve taken courses on it and I just struggle with it. So this is a way to retain more and to your point earlier, Theo, with that cone of learning. I think you said 70% is write, or at least that’s part of the 70% equation. No, write down notes.

Theo Hicks: Say and write, yeah.

Travis Watts: Yeah, say and write. So say it after you read the book. Recite your bullet points to someone. Now you’re all the way to 70% instead of 10%. So something to think about. But that’s my strategy in a nutshell.

Theo Hicks: Thanks for sharing that. And if you’ve ever written a book before, or you understand how the process of writing a book goes, this strategy makes more sense, because as Travis mentioned, typically what happens is you want to really summarize the book in the intro or the first chapter. So obviously, in that book Travis was talking about, it was summarizing– the intro was summarized in the first chapter. So you usually don’t write the intro until after you write the entire book. And then if the intro is 20 paragraphs, it’s one paragraph per chapter. So even you could even use the intro and say, “Okay, well in paragraph 15, it talks of something very, very interesting,” and then you go in the table of content and say, “Oh, Chapter 15 is talking about that particular paragraph in the intro.” So you can read that too. But obviously, you get that from reading the first chapter or reading the intro.

Something else too is a lot of the middle parts of the books is what authors do is they’ll have per chapter, maybe it’ll be one particular concept they’re trying to get across. So they’ll say that concept in the intro and in the beginning of the chapter, and then they’ll have 20 or 30 pages going into more detail and giving examples, which is obviously good to read sometimes. But really, if all you want is the concept, then you don’t even need to read that chapter in general. And then one other thing too I thought about as you were talking was I remember– I think his name is Tai Lopez. He talks about how he reads a book every day. So his strategy, from what I remember – I watched his video years ago – is he just downloads SparkNotes and he reads the SparkNotes of that book, and then that’s how he gets all the info. Now, the only issue I think with doing that is you’re going to be getting a summary out of maybe a real estate book or a self-help book that’s not written by someone who specializes in that, so you’re like “Didn’t I miss something?” So I think Travis’s strategy is a lot better, because you won’t miss the important things.

And then the one thing I wanted to mention before I talk about what I do really quickly, is taking a step back and asking yourself, how do I know what books to actually read, because there’s thousands, there’s millions of books out there, and if you don’t have a lot of time to read, obviously, this strategy would help. But if you even have less time, and you want to make sure that every book you read is completely worth it, then just make sure you’re getting your book recommendations from someone who’s at where you want to be.

So if you want to be a really successful apartments syndicator, then I would recommend reading books, listening to the podcasts, or reading the blogs of really good apartment syndicators or really good passive investors and see what they’re reading, and then just pick those books and just start there. That’s a lot better than going to a random top book list online or following the recommendations on Amazon, or something. So that’s how I pick books that I want to read, is that people who have information that I want or are at where I want to be, if they have a recommended book list, I’ll read that and only that. And once I go through that, I can move out somewhere else.

Travis Watts: That’s one of the most common questions I think I’m asked when I’m a guest on a podcasts, “What’s your favorite book or your top three books that have changed your life?”, things like that. That’s a great source to get that information. Again, if you want to be  a passive investor, go listen to a podcast with passive investors, see what they say about books. Great point. I love it.

Theo Hicks: So just really quickly, what I have is similar. So usually, whenever I read books, I go in a lot of detail, like a crazy person. So this strategy is more for if you– let’s say you follow Travis’s strategy and you find that one book that you want to read through fully. So again, I’ve never heard of this Edgar Dale’s cone of experience before, but he says that the best way to retain knowledge is to actually do it, act on that knowledge. And then before that is to say and to write it. So a little bit of what I’ll do is I’ll read the book, and while I’m reading it, I will underline, highlight maybe a statement or two, what concept is being talked about or whatever. So I’ll read the entire book that way, and then I’ll go back through and I’ll look at the words I had at the top of each page. And then it depends on how detailed the book is. But maybe for each chapter, you take a post-it note and you put it at the front of the chapter, and then you write your notes on that chapter. It could either be very detailed or it could just be bullet point form. And then you do that for each chapter, and then you can stop there. I don’t stop there. I go further than that. But if you stop there, then you go back to your book, and like Travis has these little notes at the top for you, you don’t even have to open that book again if you don’t want to. You can just say, “Okay…” You can just quickly read through that ten post-it notes in five minutes. So five years later, you want to go back to the book and remember what you learned, all you need to do is read these five bullet points, as opposed to reading the 300-page book again. So that’s the– you take care of the reading part and you take care of the writing part.

And then if you want to go even above and beyond that, you can write a page worth in Microsoft Word summarizing the chapter after you’ve read that chapter or later. Or even better, as Travis said, you can say it out loud. So usually, when I read a book, I’ll annoy my wife by [unintelligible [00:20:13].21], I’ll just start talking about the concepts that I learned in that book to her, and she’ll ask questions, and it makes you think about it more. Or you can turn it into a thought leadership platform where you can talk to listeners about what you learned. So not only are you obviously helping other people adding value to their lives, but you’re also helping retain that knowledge even more, because then he says in here, the best way is to perform a presentation on the information that you learned. So this is design and perform a presentation. So you read a book, you take your notes, and then you do a presentation on that book for, say, an hour, even if you don’t even record it. It’d be good to record it and post it, but you don’t have to. You can just say it out loud in your office to yourself, and that way, you’ll retain that knowledge, as he says here, 90%, as opposed to just reading it, and that’s it.

Travis Watts: Exactly. That’s something I just started doing too, just these relevant book reviews to the industry that we’re in, multifamily. I did one last week on The Hands Off Investor, and it really helped. I just finished up that book, and for reasons that we’re talking about, I wanted to really sink the point home of what that book was about and recap it. So I did make a video, I did record it, I did post it, but I don’t know how many of those I’ll do.

But one, it helps other people. Instead of what we’re talking about reading a book in an hour, maybe they can watch a ten-minute video and get the gist of it. But two, it helped me remember some key concepts. So whatever works for you, like I said earlier before we started this, whether– it’s not about my method versus your method versus anybody’s method; just do what works for you. But don’t waste your time reading a book that’s not giving you any value or a super long book that you’re already six hours in and you can only say one thing about it. This is just a point to almost like that book’s out too. The most time you’re going to risk is an hour, and if it’s junk, you just quit. And if it’s great, then you saved a month or whatever. So it’s a win-win.

Theo Hicks: Yeah, it’s definitely a really good vetting process. Again, going back to this pyramid and the experience of writing a book or writing blog posts or whatever. You’d be surprised by how much more you retain information when you write it. Someone could say something and you might remember a blog post you wrote five years ago about that topic, but you spent five, six hours writing. So I think that if you truly want to retain that information once you identify it using Travis’s strategy, you need to, in some form, do this, perform a presentation, whether it’s writing it or saying it out loud, if you truly want to retain it and be able to have it naturally come up whenever you see something that might be relevant. Is there anything else that you want to mention about this reading technique or any reading technique or how you read? I remember you mentioned that you don’t necessarily follow this strategy or you didn’t or I can’t remember exactly what you said in the beginning.

Travis Watts: Yeah, just remember that this is good for books like these nonfiction, how-to, self-health, all that good stuff. But again, if you’re going to go read Harry Potter, forget about this and things like that, fiction books. The other thing is I listen to a lot of audiobooks too, at least before COVID. I was traveling a ton. All the time I was on the go, sometimes hard to read a physical book. So mix and match. Maybe as you’re in your car, you’re doing an audiobook. But when you get home in the evenings, you’re doing a physical book. So it’s just one tool. I’m all about just sharing helpful knowledge hacks and tools and things like that. So try it out. That’s the best thing you can do for yourself – go grab a book, a nonfiction, how-to, self-help book and just try it. Try it for yourself and see what you think after an hour of that, and then take a book maybe that you’ve read previously, where you didn’t do this; you just read it front to back three years ago. How much do you remember about that book? What could you tell somebody? Could you teach a 20-minute presentation on it, and just see if it helps. That’s all I can really say.

Theo Hicks: Yeah. So I would summarize and say, when it comes to reading, I think it’s quality over quantity. So it’s much better to read one fantastic book that you get 52 takeaways than to read 52 books that you get one takeaway from.

Travis Watts: I can attest to that.

Theo Hicks: So if you want to read this blog post in full… It’s a really well-written blog post. It gives case studies of some very successful people and how many books they read and their thoughts on reading, and then it has the step by step process on how you benefit. It’s called, A Life Changing Technique – How to Read 52 Books A Year by Travis Watts. This one’s on BiggerPockets. I think it’s on the Joe Fairless website as well. So Travis, thanks again for joining us. I always enjoy these. And Best Ever listeners, thank you for listening as well. Go out there and read your book today in one hour, and have a best ever day. We’ll talk to you tomorrow.

Travis Watts: Likewise. Thanks, Theo, and thank you guys so much for listening and tuning in.

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JF2204: Investing While Overseas With Vincent Gethings

Vincent is the co-founder and COO of Tri-City Equity Group and is an active duty Air Force. Vincent shares the steps he took to begin his investing journey while still being active duty in the Air Force and not seeing the properties. He explains how he built a team through social media and through this team he has been able to grow his business to now a portfolio of 120 units.

 

Vincent A Gethings  Real Estate Background:

  • Co-founder and COO of Tri-City Equity Group and active duty in US Air Force
  • Has 6 years of real estate experience
  • Portfolio consists of 120 units (20 owned, 52 partnerships, 48 syndications)
  • Based in Oahu, HI
  • Say hi to him at: http://tricityequity.com/ 
  • Best Ever Book: Traction

 

 

 

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Best Ever Tweet:

“Set goals based off your potential and not your abilities” – Vincent Gethings


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, I’m speaking with Vincent Gethings. Vincent, how are you doing today?

Vincent Gethings: Good. Thanks for having me on, Theo.

Theo Hicks: Oh, yeah. Thanks for joining us. Looking forward to our conversation. Before we dive into that, a little bit about Vincent’s background. He’s the co-founder and COO of Tri-City Equity Group as well as active duty in the Air Force. He has six years of real estate experience and his portfolio consists of 120 units, broken down between 20 units owned, 52 from partnerships, and 48 from syndications. He is based in Honolulu, Hawaii, and you can say hi to him at his website, tricityequity.com. So Vincent, do you mind telling us a little bit more about your background and what you’re focused on today?

Vincent Gethings: Absolutely. So like you said, I’m active duty Air Force; I’ve been in about 14 years. So I do a lot of project management. I’ve done resource management before, so handling funds for big duty projects. Started getting into real estate investing, quickly wanted to scale up to multifamily. It didn’t take too long, about two years, to realize that small single-family, sub four-unit properties just were very hard to scale, especially because my entire strategy is out of state; being in the military, I’m always going to be out of state, essentially, from my market. So I wanted to scale up so I can afford the better systems, better quality project managers, property management systems… So I scaled up to multifamily. Now we’re looking at 50 to 100 unit property, B, C class. So we’re targeting El Paso right now. It’s our main market. We’re looking to take on a secondary market here, this Q3, Q4 this year.

Theo Hicks: Nice. So that will essentially double your units, right?

Vincent Gethings: Yes. So we’re eyeing up a couple properties right now. Nothing under the contract. We’re in June 2020, so market’s still uncertain. So we’re eyeing properties, but we haven’t pulled the trigger on anything yet. We’re still waiting to see if we can get some clarity on what the next year or two years is going to look like.

Theo Hicks: Perfect. So you’ve got 120 units. How many actual properties is that?

Vincent Gethings: Great question. So that’s seven properties.

Theo Hicks: And what’s the breakdown? So how many of those do you own? How many partnerships and how many are syndications?

Vincent Gethings: Well, I have 20 under my personal ownership. That was where I started, was I started with the zero down, VA house hack; that was my start. I made a bunch of capital off that. I was in Bay Area, California while it was crazy appreciating; took that capital, invested that. At the time, all I knew was small multifamily duplexes and fourplexes. So I went on a tear and bought six small multifamilies, had 20 units in about 18 months, and then that’s when I realized that I needed the partner to scale, and the next unit we closed was a 52 unit with a JV in Michigan. And then from there, we did our first syndication, which was actually closed two months ago in April now, during the height of Coronavirus. It was also our first syndication was that last 48 units.

Theo Hicks: Perfect. I want to walk through each of those. Let’s focus on the 20 units first. So six properties, all bought out of state. Obviously, the first one that you bought, you lived in it. So do you mind giving us some pointers, some tactics, some tips on how you were able to buy those properties, and then how you were able to manage those properties without being there in person?

Vincent Gethings: Absolutely. So the first properties I bought, I took that seed money from that live-in, VA, house hack, whatever the term we want to use. Took that seed money– it was about 150 grand I made off that first property from that VA loan, and then I started buying the out of state. So when I went into this, I went in with the mindset that I’m never going to work on these. I didn’t want to buy the properties down the street, become a landlord, and also the handyman and everything like that, because I know with being active duty military, I’m going to leave in three years, and I’m never going to come back to, say, Bay Area, California. So I didn’t want to have these properties sprinkled throughout the country at each base that I’ve lived in. I know that’s a very popular strategy for people in the military, and it works for them. That just wasn’t for me. So I picked the one location, said I’m going to build my team there, and I’m going to put my roots down there and scale up from that.

The way I did it is, I started with property management first, started building my out of state team, so property management first. Then I got a colleague. For this instance, I used BiggerPockets. Did their search feature of finding very active people in that market, set up some phone calls with them and developed a relationship, and said, “Hey, can you be my boots on the ground? If I have a property that I’m interested in, would you drive by it, maybe go do the– meet my agent out there, do the walkthroughs?” They were happy to do it, both for their personal experience, and then I would throw some money their way for their time, much appreciated. And then I had my agent.

So the way I pictured this in my head was a Venn diagram;my initial team was a Venn diagram. So one circle is my property manager, one circle was my agent, and one circle was my colleague, and they all overlap a little bit, and then that center in the middle was the synergy. So having all three of these people on my team, knowing my criteria of what I’m looking for, visiting said property – it’s the four-unit that we own – and reporting back to me their different perspectives on that deal… For the property manager, he would say, “Hey, these are the issues. We’re going to see a property manager. Here’s the upside I see.” That colleague might say he’s looking at that property from an investor [perspective]. He’s like, “This is what I see, value-add” or things that you might want to look at as an investor, maybe some cap ex item. And the agent, they’re going to report back and she’s going to tell me what she thinks about the price compared to the market and the neighborhood and everything like that. And then I can not be there at all. I can be 3,000 miles away, all three of these people report back to me. In my head, I’m putting together this picture of all of their stories and perspectives overlapping. And then when I’m done, I have this full thesis of this property and I have a very clear picture and understanding of the condition the property, how it’s going to perform, so I can do my due diligence and pull the trigger on that property without ever being there. So the first five properties I bought, all the duplexes and fourplexes, I don’t think I’ve seen any of them before I actually bought them. So I was 100% out of state.

Theo Hicks: So I think the property management company and the real estate agent, obviously they get paid after you buy a property, and I’m sure you did your due diligence on them to make sure they were experienced, but I’m curious about that boots on the ground person. So what types of qualification did you want out of that individual? Because obviously, you can’t just have a complete novice do it. Maybe you did; I don’t know. But I’m just curious to see what you did to screen that person initially.

Vincent Gethings: The first level of screening was at the time, I knew BiggerPockets, I read Brandon Turner’s books. So that was my base of my education at the time. That’s why I was investing in small multifamily. So I went to BiggerPockets, searched the zip code, and then I just filtered by pro members. So at the time, I was like, “Well, if they’re a pro member, they’re obviously invested enough into this industry to purchase the premium subscription at BiggerPockets.” So that was my first level. And then I looked at how active are they. Are they posting? What kind of portfolio do they have? And then I filtered it down more. And then I called a couple people, and I was like, “Okay, I need somebody that understands multifamily.” So I wasn’t going to send a wholesaler to go inspect a four-unit property. They might be pretty good at coming up with a valuation, but they’re probably not gonna be very good at understanding the value adds or the systems that need to be in place to run this property long-term as a landlord or an asset manager. So I looked for somebody that was actively investing in multifamily, and that’s where I found my good friend now, Manny, in Michigan, who’s just been a huge asset to my team.

Theo Hicks: Alright, perfect. Let’s transition to the JV deal. So do you wanna walk us through that? So you’ve got your six multifamily deal. Well, I guess, five, including the house hack, and then you decide to move up to this 52-unit deal. So do you wanna walk us through after you made the decision, what do you do, why did you decide to JV as opposed to doing it yourself, how’d you find the deal, what was your responsibilities, what was their responsibilities, things like that?

Vincent Gethings: Absolutely. So this was fall 2018, I hit the ceiling, so to speak, this plateau in my growth; in the current systems I had set up, we were seeing cracks in the systems and being able to grow further. So I knew that there was something wrong, but I wasn’t smart enough to know what I didn’t know. So I went out and I sought mentorship, did one of those paid mentorship programs. After vetting quite a few of them, it was an absolute godsend to me, and my team. I quickly found what I was doing wrong or how I could grow, and that was fall of 2018. By January or February 2019 I was in contract on the 52-unit. So that’s how fast I was able to figure out what I was missing in my education and my knowledge, break through that barrier and scale up.

I found this 52-unit through broker relationships that I was developing. Got them online, got the LOI, and then through meetups is how I found my partner. So I went to meetups, started talking about people that were interested in investing out of state. I’m in a capital market in Honolulu, Hawaii. There’s a lot of equity here, but the cap rates and the barrier to entry here is just outrageous. So there’s a lot of people that are like, “Look, I have a lot of equity, say, in my house, and I want to do a HELOC, or I have a lot of money in my IRA that I want to do self-directed, but there’s nothing around to buy. We’re looking at $200,000 a unit here.” So they’re looking for somebody to do out of state, but they just didn’t have that connection in the lower 48 to go and start that process.

The niche for me here was go to meetups and start finding people that are interested in multifamily, interested in out of state, in mainland. They just need the person to make that connection, that bridge. I found three investors very quickly that were able to come up with 25% of the deal. So it was very easy. Everybody just 25%, about  $98,000 each is what we had to come up with, closed that 52-unit. We closed it, and I actually did a very creative strategy, because at this time — and as you know, brokers are very skittish on your credibility and your ability to close. And at this time, I thought I had 20 units, I thought I had some credibility. That was not the case at all, because the 20 units are all residential-sized property. So I had to prove myself.

The way we did it was the 52-units is more of a portfolio. It was an 8-unit, a 12-unit, a 32-unit, all in the same town. I said, “Look, we can buy the 8-unit cash. We had enough money right then to buy the 8-unit cash, and that’ll show you brokers and sellers that we are serious. I’m serious about scaling my company and I have what it takes to close this deal.” So I bought the 8-unit cash, and that gave me the time to put together the loan with the bank because also had the credibility issue with the bank of, “Okay, we see you can do small units, but what makes you think you can do a 52-unit reposition?” So I had to court them also, and they took longer for them to underwrite.

So I bought the 8-unit cash to show them I was serious. That gave time for the bank to underwrite the entire portfolio. And then what we did when the bank gave us that commitment, I ended up using the 8-unit as the downpayment. So I crossed collateralized the 8-unit as the down payment for the rest of the property, and then wrapped all 52 units back together into one loan.

So that’s how we were able to creatively close that with not really having the credibility on the team, because two of them aren’t real estate agents, the other team member’s a military member like myself. So we lack the credibility on our team and that’s how I solved that problem in being able to close that for both the brokers, the seller, and the lender, was that creative structure.

Theo Hicks: Nice. So after that, you moved down to the syndication. So I guess my question on that is, why didn’t you do the same thing as the JV? You had three investors come in including yourself… What made you decide to do syndication instead?

Vincent Gethings: One, we wanted to scale our company up further in syndication. Some ways, it’s a progression. Other ways, to me, I think it’s just another tool in your tool belt, that you should, as an investor, you should be aware of and experienced in. So some deals, you might be able to do JV. Some deals you might be able to do syndications. So whatever that right for that job to take down that asset, and one, for personally, I just wanted experience in syndication.

Another side of it is, we wouldn’t have had the equity upfront as easily as we did the first one. So a lot of our capital was deployed in that first 52-unit, and we’ve only owned it for a year. So we haven’t refinanced yet, we haven’t sold it yet, so a lot of our equity’s still tied up in that one. So that was obviously, the biggest factor of going to syndication. The other side of it is the desire to scale the company even further and get that experience. And the second syndication was a 48-unit, so it wasn’t like we went from 52-unit to 150, 200-unit deal.

Theo Hicks: Who were the investors? How’d you meet those people?

Vincent Gethings: We did the common thing of getting an Excel sheet and picking our power base and write down all of our family, our friends, our uncles, our aunts, our co-workers, our acquaintances that we know that all had expressed interest in investing in real estate, or maybe that we’re partners with on smaller deals, and we wrote it all down and we started courting these relationships even further. So obviously with the SEC law, you had to have that pre-existing relationship, so we didn’t go out and meetups or shouting from the rooftops, “Hey, we got a deal. We’re syndicating.” We stuck to that power base or that circle of influence of people that we already had pre-existing relationships with. And we only had to pull on 10 or 13 investors on this one. So very small; $50,000 was the average investment.

Theo Hicks: Okay, Vincent, what is your best real estate investing advice ever?

Vincent Gethings: Best real estate investing ever is set goals based off of your potential and not your abilities.

Theo Hicks: Do you want to elaborate on that a little bit?

Vincent Gethings: Absolutely. So a lot of people have these limiting beliefs, and what I see a lot of people, they set goals of what they think they can accomplish right now based off of their current experience, their current education levels, their current partnerships or whatever they have. So they set their goals extremely low. They use that SMART acronym, which I absolutely hate, because the R in smart is realistic. I absolutely hate that, because you sell yourself so short.

Giving you an example… My original goal, when I did this, I thought I was like, “I’m gonna do a SMART goal, because that’s what we’re supposed to do.” It was 20 units in 10 years. So two units a year was my cash flow goal. I did 20 units in 18 months once I actually started opening my mind up and growing myself, actively trying to grow my experience, my team members. And then now, my team is at 120 units, and I’ve only been doing this for five, six years. I think that the sky’s the limit, now that our eyes are getting more open, we’re adding more tools to our tool belt.

So I think the biggest thing is people sell themselves short because they want to set realistic goals for themselves. They do it based off of their ability and not their potential. So a big example of that is the 10X rule. I read that and I was like, “Well, 20. Well, scratch that off and write 200,” and that’s what was my goal, and I quickly went from 0 to 120 in a very short amount of time once I did that. So absolutely set big, hairy, audacious goals, and then take massive action toward them. Don’t be realistic, because it doesn’t give you any room to grow.

Theo Hicks: Alright. Are you ready for the Best Ever lightning round?

Vincent Gethings: Let’s do it.

Break [00:18:11]:04] to [00:19:35]:06]

Theo Hicks: Alright, Vincent, what is the best ever book you’ve recently read?

Vincent Gethings: Best ever book I recently read is Traction.

Theo Hicks: If your business were to collapse today, what would you do next?

Vincent Gethings: Be a commercial pilot.

Theo Hicks: Nice. Is that what you do in the Air Force right now, piloting?

Vincent Gethings: No, I wish. No, I wish. I am not a pilot. I’m not Air Force pilot, but I do have my pilot’s license, and I have a small plane out here in Hawaii that I use for island hopping. So If everything went to hell, I would go finish my commercial rating and go be a commercial pilot.

Theo Hicks: Have you lost any money on your deals yet? If so, how much did you lose and what did you learn?

Vincent Gethings: Not actualized losses yet. So back to my original four-unit – I bought a four-unit for $170,000, put about $50,000 into it for renovations, making it really nice, best place on the block. So I thought you were supposed to do that to get the rent premium. Went and got it appraised, and it was worth $170,000, and I was like, “I don’t understand why.” And the appraiser said, “Well, it’s a residential property. I don’t care how much you raise rents. We go off comp value, and you have the only four-unit in this neighborhood. So it’s worth $170,000 because we don’t have anything to go off of as far as what it’s actually worth.” So on paper, I lost, say, anywhere from 30 to 50 grand on paper. But I haven’t sold the place yet, so it’s not actualized. But that was a huge lesson and that was the last straw for me of like, “Okay, I’m done with residential. I’m scaling. I’m going to partner up, and I’m going to scale and do commercial where the valuations make sense.”

Theo Hicks: What is the best ever way you like to give back?

Vincent Gethings: Mentoring people, especially in the military. Financial education, financial literacy is huge for me. I see a lot of people that just come from home with a good financial intelligence, and they just make very poor decisions very early on in their careers. So I spend a lot of time giving them a lot of books, Rich Dad, Poor Dad or Dave Ramsey’s Total Money Makeover. So stuff like that and just coaching them how to make budgets, how to think about investing, the different shades of money, so to speak… How currency works is very big for me.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Vincent Gethings: I’m on LinkedIn. So Vince Gethings on LinkedIn, and then connect@tricityequity.com.

Theo Hicks: Alright, Vincent, thanks for joining us today and very systematically — I can tell you’re a project manager, the way that you just knocked through everything, boom, boom, boom, step by step process for how you grew from your first zero percent down VA house hack to owning and controlling 120 units now, and hopefully, in the next few months, doubling that with your next syndication deal.

I think some of the biggest takeaways was I liked how you were able to find your boots on the ground in a state that you didn’t live in. So you mentioned how you went on BiggerPockets and you filtered by the pro member, and then you looked at those pro members to see how active they were, what portfolio they had, and then you spoke on the phone to make sure that they were actively investing and actually understood multifamily.

You also mentioned how you were able to do your 52-unit deal and build that credibility with the broker and the lender by instead of trying to buy all 52 units with 25% down or 20% down, you went in there and said, “Okay, I’ll buy this 8-unit all cash,” to show that you’re serious, and then you were able to actually not put any money in the deal and just use the 8-unit as a down payment and refinanced everything and cross-collateralized it into one loan.

And then you talked about how you were able to raise money for your first deal, which was that Excel spreadsheet exercise, which, Best Ever listeners, we talked about something similar on the show before, where you write down every single person that you know. Then you took it a step further and let everyone you know that you’d already talk to about investing in deals, and you were able to pull together 10 to 13 investors with an average of $50,000 each. And then lastly, your best ever advice which is instead of setting SMART goals, you set the SMAT goals. Or I guess, try to figure out SMAUT, so unrealistic goals.

Vincent Gethings: The Boston version, the SMAT goals.

Theo Hicks: The SMAT goals, yeah. So set goals based on your potential, not based off of what you can currently do, your current abilities or what you can currently do. So Vincent, really appreciate you coming on the show. Best Ever listeners, as always, thank you for listening. Have a best ever day, and we’ll talk to you tomorrow.

Vincent Gethings: Thanks, Theo, for having me on.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2200: The Truth About Financial Freedom & Retirement | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be sharing the truth behind what financial freedom and retirement is like, and how many successful individuals still “work”. Most of us need a purpose or mission to feel fulfilled and happy. The idea of sitting on a beach every day and sipping your best cocktail sounds great but will get old very fast. 

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow. 

Click here for more info on PropStream


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and I’m back with Travis for the Actively Passive Investing Show. Travis, how are you doing today?

Travis Watts: Yo! Doing great man.

Theo Hicks: Well, thanks for joining us again and looking forward to our conversation. So today, as usual, we’re going to be diving deeper into one of Travis’ blog posts that he wrote that are geared towards passive investors who are ultimately wanting to become full-time active passive investors, hence the name of the show. And the blog post today is entitled, Financial Freedom Doesn’t Mean Stop Working. So we’re going to talk about what financial freedom actually means, what it looks like on the other end, and then some of the things you can start doing right away before you get to that side to prepare yourself. But before we get into the details of the blog post, Travis, do you wanna, as usual, let us know why it is you decided to write this particular blog post?

Theo Hicks: Yeah. So this blog was actually inspired by one that we covered a couple weeks ago, which was called How Much is Enough? Essentially, how much is enough to retire, how to figure that out and that kind of stuff. So a lot of digging deep and soul searching, but it’s very individual. But this blog really piggybacks that one. So now we take it from a new angle, which is, okay, so you’ve gotten to the point of, let’s say, early retirement or retirement, in general. Does that have to mean that you don’t work anymore? What happens when you retire early and you’re in your 30s or 40s? Does that mean that it’s time to go move into that retirement community and start playing pickleball? In most cases, not. So that’s what inspired me to write this one. And yeah, looking forward to it. I think this one’s a fun topic.

Theo Hicks: Yeah. I loved reading this, and it reminded me of when I first became interested in real estate and you would read the blog post or listen to the podcasts, they would talk about the goal is to ultimately retire, and then you even have it in this blog posts, hang out on the beach and drink piña coladas or whatever. And at the time, this sounded amazing. This would be a great life – every morning, waking up and being drunk all day. I don’t know what the exact plan is. But you start to mature a little bit, and actually think about what is it that I enjoy doing right now and would I truly enjoy doing the exact same thing over and over again, every single day – going to the beach, pina colada, and not, as you mentioned, doing some of the things that you’re going to mention in this blog post. So I definitely fell into this early on, for sure. I think I’m slowly getting out of it, and your blog post definitely has solidified some of those things in my mind. So with that being said, let’s get to the blog post. I’ll let you lead the way.

Travis Watts: Sure. The idea here is that we all have a lot of preconceived ideas about what retirement is, what that means. And to your point, a lot of people in the very beginning of this whole search and journey and thinking about retiring early, that’s what comes to a lot of people’s mind is “I’ll just be on a beach, kicking back and really not doing anything”, but the fact is anyone that’s tried this… If you’ve gone up to an all-inclusive resort– I remember being in Cancun and by day four of piña coladas on the beach, I’m about ready to go home. I’m about ready to puke, quite frankly. So maybe you could hold out a little longer than I did, but inevitably, I think that we all want to be contributing in some form or fashion. So sometimes, I think that gets disguised as work.

Travis Watts: So I point out how many successful individuals that are far beyond what they need financially to retire, but why is it that they keep “working”? Well, it’s because they have a mission; they have a purpose. They have the ability to switch from trading their time for money like I used to do. I used to be in an oilfield gig that I really didn’t like, I wasn’t passionate about, I didn’t enjoy it. So really, all I was doing was trading my time for money, and that was a very sad existence. So as I built up the financial independence to be able to say, “Hey, I don’t need to be doing this anymore, but I still want to work. I’m still young,” I was able to pivot and go try out some new things. It’s been a soul searching journey. I worked for a brokerage firm right off the bat to learn stocks, bonds and mutual funds. I could care less what the salary was or if there even was a salary. That’s just what I wanted to learn at that very moment in my life, believe it or not; that’s what I was passionate about. And as that passion wore off and I realized how that industry works, I pivoted back to real estate and sharing my experiences and trying to help other people, which led to working with Joe and Ashcroft and the team there. So the point is, that, to me, is really what financial independence is all about. It’s having the option to work, but not the obligation to work. I think I put that in the blog. So that’s the whole basis behind what this is all about.

Theo Hicks: [unintelligible [00:07:59].04] intro spiel I mentioned that some of the things in this blog post are going to help you right away, and other ones will help you afterwards. But then you mentioned something that I really liked about this, which is the difference between the option to work and then being obligated to work. And then again, you talked about what work actually means, but I’m gonna keep using the word work. I don’t want to keep saying every single time exactly what you mean by work – but having the option to do something, as opposed to being forced to do something. You mentioned that you can start introducing this before you retire. You mentioned that you wanted to learn a certain skill that would help you to do what you’re doing now, and that was working for that brokerage and, of course, you got paid in return for your time, but you weren’t necessarily approaching it as “I’m just going to do it for eight hours or whatever per day and then get paid, and then do something completely different”. You picked a job that was part of your larger plan, which I think is something that people can do right away.

So if you want to ultimately become a full-time passive investor, then ask yourself, what are some of the skill sets that you’re going to need now that’s going to make you a better passive investor? So you talked about how you learned about other types of passive investments. It’s gonna make sense to know about whatever type of investment you plan on investing in, so apartments… So why don’t you find a job now that allows you to gain knowledge on that while you’re still obligated to work, get the information, and then while you’re working, while you’re spending the majority of your time at work, you’re able to move towards that goal faster than if you had to do some non-related job, and then do that all after work? Now obviously, I’m not saying that quit your job and get into real estate, but this is more for people who are earlier on in their careers and aren’t necessarily happy in what they’re doing, and as you mentioned in the beginning, they hate what they do for work. Well, then maybe rather than just quitting and going in real estate full time, try to figure out a way to transition into a job now that will help you reach your long-term goals.

Travis Watts: Yeah, and there’s usually two types of people. There’s those that love their career and they’re passionate about it, and then there’s those that really despise what they do. I was in the latter part of that initially, and then the passionate side later. But the point would be this – if nothing else, for either side of that, just get started. Again, to the whole theme of this blog about not having to quit work – it doesn’t have to be so extreme like I work a W2 job today and tomorrow, I quit and go full-time real estate. Just start. Just have a rental property. REITs on the stock market; you can get in with $10.

I helped my nephew… I don’t know if we talked about this on the podcast, but he’s 18 and obviously, he doesn’t have a ton of money. But I opened a brokerage account for him for graduation, put a few hundred bucks in there and we went through finding some high yield dividend paying REITs and stocks and things like that, and I was helping paint the picture of passive investing. So he’s already on the right road. He gets the concept, the philosophy, why this would be important, and he’s got a starting entry point at 18 years old. All he’s got to do is just pour more money towards that; not a ton, but just some, as you can, here and there, and while he’s in his 30s, he’ll have quite a portfolio built up. Hopefully, he sustains that and that becomes part of his whole thing.

But in either case, I was on the phone the other day, I do these free Q&A calls with folks to network, and there was a lady, 19 years old, California, and she tells me, “Six months ago, I just had this epiphany, just this mind blowing thing that real estate is my calling”, and she’s getting all enthusiastic on the phone – beautiful call; it was amazing – “but I just want to start building passive income streams as early and quickly as I can”, and she’s saving all of her salary, and she’s so dedicated to it, and I think that’s the solution.

So when we talk back to the preconceived ideas that I mentioned, let’s take retirement, for example. When the word retirement — and do this exercise, everybody listening. What comes to mind? Here’s a retiree. Well, what is that? Most people think of someone in their 60s, maybe 70s, did the corporate world thing. Now they’re living on their social security and their pension and whatnot. It’s our grandparents’ idea of retirement. Got my gold watch and my pension and I’m off to the races. But the fact is, you’re so fortunate in today’s world to even have a pension, and even if you have a pension, it doesn’t mean it’s going to be there in 10, 15 years. Most of them are going bankrupt or already bust today. It’s a horrible thing that’s happening.

In fact, I want to read this real quick. Before our call, I got on the Social Security Administration, ssa.gov. I was just reading this. This is right from the government. I won’t read this whole thing, because it’s long, but I’ll read this first sentence or two. It says, “The concepts of solvency, sustainability and budget impact are common in discussions of Social Security, but they’re not well understood. Currently, the Social Security Board of Trustees projects program costs to rise by 2035 so that taxes will be enough to pay for only 75% of scheduled benefits.” They’re telling you right there – your taxes are going up, and we’re gonna pay you less in the entitlement. So I guess my point being, you’ve gotta rely on yourself at the end of the day. When I started doing research like this and understanding 401Ks and retirement plans, Social Security, I just got so disgusted with the concept that I thought I’m going to put things in my control and I’m going to take action sooner than later, and I’m not going to hope that one day I wake up, I’m 65, and that all this stuff is just here to bail me out… Because clearly, all of these programs are failing and going bankrupt [unintelligible [00:14:07].01] what we’re talking about. So I switched my mentality. This is important; I don’t think this is in the blog.

Most people think of investing in terms of capital gains, in terms of equity, in terms of fix and flip a house, in terms of buying a stock at 10 and hope it goes to 15 and sell. That’s how most people associate investing. But I flipped that into passive income; cash flow, specifically. Living on cash flow and creating multiple income streams early in life to where you’re actually putting yourself in the situation that statistically 60 and 70-year-olds are in, in retirement a whole lot sooner than that, if you dedicate to this concept and philosophy.

So in that– hence, again, this blog and this topic… What happens when now you’ve done something like that and put in the work and now you’re in your late 30s or 40s or 50s and you have a sustainable income? You have more income passively than you have lifestyle expenses. What do you do? This is in the blog. I’m just pointing out how many people in my network are financially independent, financially free, whatever you want to call it, they have the time freedom, but they continue doing projects. They’re writing books, they’re launching companies, they’re launching charities, they’re still being productive. Use the celebrity examples, like Bill Gates and his charity foundation. That guy works his butt off. He’s not doing it for money. It’s a mission and a purpose, and I think that’s the whole concept that I’m passionate about helping people reach those levels, so that they can do essentially their highest and best work.

Theo Hicks: Yeah. So a few follow-ups on that. So we talked about your cousin and that reminded me of other preconceived notions that people might have about passive investing, is that it’s not extravagant. You gave him a brokerage account and he’s gonna be as a computer doing things for an hour, a month… I’m not exactly sure how that works. But it’s not this super extravagant, epic music playing in the background. I guess technically, you can do that, but… So that’s one thing too, it’s just a consistent grind. You could do things on your computer like buying properties and things like that, but if you’re doing that, extravagant parts are just once in a while, most of it is just the constant grind, which of course, most people listening to this know.

The other thing you said too that I wanted to also mention before we move on to the last part of this blog is, you said that you know a lot of people who are financially independent and that you want to surround yourself with these types of people, talk to them on a consistent basis, so that 1) you can absorb the knowledge that they have, how they were able to become financially independent, but also 2) to get the understanding of what we’re talking about today that what retirement actually means. Is it just doing nothing? It’s continuing to do something that you want to do, which is the last part of the blog post. You gave some examples of what people can do once they are retired. But again, you also gave some examples of things that you’re doing now that anyone can really do now to start to figure out the type of life that they should be living once they retire. So do you want to talk about that, too?

Travis Watts: Yeah. A lot of passive investors, I’ve come to learn, are just simply highly paid professionals doing whatever it is they do, and they’re looking for a place to park capital that’s not going to require their time. Think about being a dentist or a doctor, and then taking two days off a week, Saturday, Sunday, and going and trying to fix and flip houses. You can’t even day trade stocks; it’s the weekend.

So a lot of this act of stuff just doesn’t make sense for certain types of people. So what I outline in the blog and I’ll read it here, just three common examples that I talked to – these folks are in my network and I have these calls weekly – a doctor and or medical professional, an attorney and an engineer. “So when a doctor, an attorney or an engineer reaches financial independence, what they have is an option to”, and here’s the three things I point out – “An early retired doctor might set up a smaller practice, which operates without the pressure of optimizing profits and without dealing with the hassle of insurance companies; one of the biggest headaches in the industry.” So just more of a work-life balance and fulfillment from their work, not being tied to the structure of what that industry is all about. “An early retired attorney might refuse all cases that are based on questionable ethics.” You have just an option to say, ‘I’m not going to do this work. I’m not going to take on stuff like that.’ You can be a lot more picky and choosy with what you do. And then the engineer might continue working. For example, they might contract instead of being a W2. They might go to part-time instead of full time, or they might be compelled to create a new invention or a new software with their newly freed mind. So those are just some things to think about, of what we’re talking about. None of these folks in these examples stopped working, despite their age, but they were able to move on to something that was more fulfilling and brought more joy into their life.

Theo Hicks: Yeah. And then another example, more real estate related, too… If you are someone who wants to transition from active and retire from that and become a passive investor – I’ve talked to a few people recently who were full time active real estate investors, and then they hired someone to oversee that company, and then– well, I’m sure they took some time off, but then once they were ready to get started again – I think you either mentioned this in his blog post or you mentioned it when you were talking – they started some consulting program or mastermind group where they teach other people to replicate what they did.

So they’ll spend an hour to a month on the business they used to work in a 100 hours a week, and then they’ll spend the rest of their time doing their mastermind group, and then the remaining time doing whatever it is they wanted to do. So that’s just another example of someone who’s a real estate investor transitioning into what they can do when they’re not passively investing.

And then the other thing that I really liked about this blog post that you mentioned, the question you want to ask yourself to figure out what you should do once you retire is what you value. We talked about this in a past episode about stuff and that if you value stuff too much, then you’re gonna have a hard time reaching that number, because you’re going to have this luxurious lifestyle that’s going to cost you a lot of money to maintain, and you’re going to need a higher passive income to cover that. So you gave examples in here about things that were high costs but resulted in low happiness, and the things that were lower in cost that resulted in higher happiness. So we talked about how you could upgrade to a Ferrari or a Lamborghini, but would that ultimately make you happier? Maybe once you buy it, and then when you’re driving it once a month or once a week or whatever, or maybe when you’re looking at it when it’s stored in the winter. But it would bring you, as I mentioned, further away from your financial goals, and then your family goals and your travel goals, because of that reason that “Now I need to make that much more money. I need to invest in that many more deals to cover that Ferrari cost.” So you gave other examples of things that resulted in happiness. So I’ll let you talk about what those are.

Travis Watts: When I was a kid, Theo, I remember… Obviously, I think every, at least male child is into cars to an extent.

Theo Hicks: Oh, yeah.

Travis Watts: Well, cars are just cars, I don’t know. But I remember when I first was learning about money and how much things cost, and I would see a Lamborghini or a Ferrari and then ask or research how much those are and then think, “Oh my gosh, that car is $200,000. I can’t even– that’s not even in my world; that’s not in my reality. That’s insane.” And then as you progress through life and one day, you’ve got a couple hundred grand and now you’re thinking, “Well, I could really buy that car. I could really buy that car, cash.” And then you think, “How dumb would that be?” because it’s how much happiness would that give me versus what if I invested it and I got 1,200 bucks a month in cash flow? What could I do with 1,200 bucks for the rest of my life? That kind of stuff. For most people, that’s Social Security benefit right there – $1,200 a month or something crazy, and maybe less. We just read off the ssa.gov; maybe less.

Travis Watts: A couple things that I put in there that have added some tremendous value at a low cost where my wife and I, we went and we backpacked Europe for our honeymoon, and I bought the custom ordered shoes like a Forever Soles; breathable, washable. They collapse down, you can roll them up. You can almost put them in your pocket. They’re amazing shoes. They were like 100 bucks, and I can’t even begin to tell you how much value that added not only to that trip, but every vacation we take – I’m wearing them, and I love them, and they don’t wear down; they’re just phenomenal. Honestly, I think those shoes have given me more value than a Lamborghini would. All things considered. I truly believe that.

The other thing is my wife’s got scoliosis, so her spine’s jacked up a little bit like an S shape. So I bought her an inversion table. We’re always trying to experiment with things that make her life easier and eases the neck tension and the back pain. It’s just a little table. You strap your feet in and turn upside down and it decompresses your spine. I found that thing used for 40 bucks. I don’t know how much they retail for; probably a couple hundred. And I can’t tell you, man – very time she gets on it, she’s so happy and it’s so fulfilling and physically rewarding, and it’s 40 bucks.

So this whole thing is about finding things that bring value happiness into your life, and to our surprise… We used to be on the rat race thing. We used to want bigger, better homes, the fancy cars, “Oh, my clothes are three months old, I need some new ones”, just crazy stuff like that. But as we began to educate and learn and really think how much value is being created out of all that, with the luxuries, hardly any. And what we really value is travel and vacations and spending time with family and these little things – a nice pair of shoes that are comfortable. So just to wrap it up, that’s the whole point, I think, between this post and the last one that we discussed, too.

Theo Hicks: Alright, Travis. Well, I enjoyed this conversation. I think we gave a lot more information on this blog post. So the blog post is called Financial Freedom Doesn’t Mean Stop Working. So make sure you check that out on our blog. Travis, again, thank you for joining me. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Travis Watts: Thanks, Theo. Thanks, everyone.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2186: How Do You Know When It’s Enough | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be sharing their thoughts on the topic of “knowing when enough is enough”. There are some who are on the side of “always continuing to grow” and others who are in the group of “at some point, I want to retire”. 

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.

 

Click here for more info on PropStream


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks. We’re back for another episode of the Actively Passive Investing Show. With me today, as always, is Travis Watts. So Travis, how’s it going today?

Travis Watts: Hey, doing well. We finally got an official background for those tuning in on video; there it is.

Theo Hicks: That’s amazing. Maybe I’ll see if I can figure out how to edit my background, but I don’t have a green screen like you, so…

Travis Watts: That’s true.

Theo Hicks: It might look a little weird. I might morph in and out the video. But yeah, so today we’re gonna be talking about another one of Travis’s blog posts. It’s a deep topic today, so I’m really excited to dive into this with Travis and the blog post is entitled, How to Know When To Retire – How Much Is Enough?

Now before I let Travis describe it, I don’t see many people asking this question. I haven’t seen many blog posts covering this topic, and I think Travis did a really good job explaining what we need to do in order to number one, just be aware of this concept in general, and then number two, what we should do to figure out when, if ever, we have reached the point of maybe we don’t need to work as much, or continue that grind. So I’ll let Travis take it away and then we’ll have our back and forth. So go ahead, Travis.

Travis Watts: Sure, awesome. I think you hit the nail on the head there. This is an awareness blog, and it’s really not talked about a lot especially out in the real estate space, not that I’ve seen anyway. So what I wanted to do is paint a picture maybe from a different perspective that not a lot of folks have thought about before. So in this blog, I use this story of a CEO of a tech startup company, we’ll call it Silicon Valley startup. So it starts with the tail end of this guy’s career, saying he just took his company public, he’s got stocks that are going to vest over the next five years; once they do, it will be estimated this guy will have about a $5 million payout.

So that sounds like the ultimate American dream. The ultimate solution that we’re all after. But as we dig a little bit deeper, we get a little more into this story, and we figure out that number one, as I mentioned, this is the tail end of the story. So the way this journey started was this guy worked at a Fortune 500 company for the first decade of his working career, had a high salary, had some stock options there as well… So in those first ten years, walked away with approximately $2 million in total investments, had paid off home, things like this, and then launched his own company afterwards, went into business for himself. So he had actually previously sold a company; that was his second venture in the second decade of his life, and then here, we’re taking a look at the third.

So the question really is, is as much as that looks like an amazing success story to a lot of folks potentially, how much is enough? Was it possibly enough when he had a couple million dollars and a paid-off home? Could he have potentially retired in his 40s, maybe in his 50s? So now he’s 60 looking at– okay, 65 is the target, got a couple of kids in their 30s that he wishes he could have spent a lot more time with in his life. I know you and I, Theo, have talked about the previous blog I wrote about the top regrets of the dying, and Bronnie Ware’s story. Bronnie Ware, for those that may not know, was a nurse working in a terminally ill patient care unit, did a poll or survey on people’s top regrets before they passed, and the top two were, “I never pursued my dreams and aspirations and I never spent enough time with my friends and family.” So that’s a lot to think about.

To your point earlier, this is a deep topic if you take it that direction, but if nothing else, I just wanted to inspire the thought that a lot of people get caught up in these success cycles. It’s just one business to the next to the next to the next. I made $1 million now, I need to make $2 million; I made $2 million, I need $4 million, and I made $4 million, I need $8 million, but where do you stop? Do you one day just pass away like Steve Jobs, $10 billion in the bank, but a lost family by the wayside and possibly some regrets there? So that’s really what the topic’s about.

Theo Hicks: Yeah, I remember when I initially read the blog post about the top two regrets of the dying. So one of them is essentially career-focused and the other one is more family-focused. When I first looked at it, I was like, “Oh well, are these two mutually exclusive or can they both be used together?” Because in this story with George, we’ve got George, who I’m sure it was his dream to do a start-up, but at the same time, he in the story neglected the other regret. So I think what he’s saying here is that it’s not necessary that you’re gonna have both of these regrets when you die, it’s just you might have one or the other. It’s finding that balance. It’s finding that “Okay, well, I’m going to do this career thing.”

I’ve got a couple of things written down, because obviously, a lot of people expect if you’re the person who is able to grow that much success, it’s gonna be very difficult for you to attend to anything, so there’s obviously some options you can do in order to continue pursuing a career without having to work 120 hours per week. But when I  heard that at first, I thought, “Well, is it possible to have neither one of these regrets?” and then I think the reason why this blog post is important, especially for people who are just starting out who have no money at all and they’re like, “What are you talking about? It would be awesome to have $5 million in the bank” start realizing you need to be aware of this upfront, so that you can create your business plan on maybe not having these two regrets. So an example would be, I was talking to someone– I can’t remember what his name was; it was maybe two weeks ago on the podcast, and he literally had an exit plan right when he started; he knew exactly how much money he wanted to get in real estate before he fully stepped away. I think for his game, he was just gonna sell everything, right?

Travis Watts: Yeah.

Theo Hicks: So obviously, that’s one option, [unintelligible [00:08:38].11] okay, so let’s say I know what enough is, then what? What do I do after that?

Travis Watts: This is how I see it – identify first what is important to you, what are the most meaningful things in your life, what is the purpose of your life. If you had that ultimate life, reasonably speaking, what does that look like? What brings you the most fulfillment? This is something that — you’ve gotta write this stuff down. This can’t be just done in your head one time; just setting goals for a lifetime, 10, 20 year plus goals.

Number two is then you have to reverse engineer now. So how much is that going to take to afford that type of lifestyle. And I think what a lot of people find, myself included, is when you really nail this stuff down, you might find it’s a lot less expensive than you might think, when you really get down to it. I think the problem is in general, in society, is that we don’t stop to think about these things. We just think “I’m working now, I’m going to work forever, I’m going to work till my 60s”, whatever, and we don’t give it much thought, and we just go on the treadmill. And then one day, you’re waking up in your 60s thinking maybe either a) I have a few regrets about some of these things or b) like in George’s case in the blog, maybe I could have actually pulled the plug back in my 40s or my 50s, spent more time with my kids, maybe traveled a little more, had less neck and back pain, and those things; a lot less stress, if nothing else.

I think the purpose is not to say “Quit working” or retire in the traditional fashion, especially if we’re talking about someone in their 40s. I think it’s about finding what you’re truly passionate about. And maybe for George, this truly was his passion, but that’s why I point out in there that he’s got kids in his 30s he wishes he would have spent more time with, so obviously, there’s a level of possibly some regret in there. So just trying to find the balance and optimize your lifestyle. That’s really what this blog is all about.

Theo Hicks: Yeah, I totally agree. I think a good question would be again, where this is from – this is not from me, but ask yourself the question, essentially, what’s the job I’d be willing to do for free, is basically what it is. What I’d be willing to do, that I enjoy so much – work-wise, obviously; not like you sit there and watch movies all day or something, but maybe that’s what it is. [laughs] But what kind of job would I do? How many hours per week If I could do it for free, and then that would be what you do once you retire.

This also reminds me of what we talked about last week, is obviously how you get to this point. So there’s a million different ways to get to this point, and one of them would be making sure you’re focusing on not overspending in those main areas – the vehicle, the house and the food last week, and then doing some positive things as well. But I did have a few things besides that what I’d do for free, that you could possibly do once you’ve hit your goal. Obviously, the most important one is gonna be passively investing.

Some people’s goals in real estate is to actively invest, build up a large enough nest egg that they can passively invest with someone else, and then live off of that interest. So that would be probably the strategy that resolves it most times for you, because you’re just checking– Travis would know more about this than me, but you’re just checking the monthly reports and looking at deals, and it’s not gonna take more than a few hours a week.

There’s someone named Holly Williams, she’s been on the podcasts a lot. I interviewed her last week, and she is someone who is a professional passive investor. All she does is passively invest, that’s her job, and she’s been on the podcast a bunch of times. So if you want to figure out what that life is like, you can listen to her podcast. So that was one, and Travis, any thoughts on that?

Travis Watts: No, that’s exactly– yeah, that’s my big message to the world, too. Obviously, I’m a huge advocate for passive income and passive investing; that’s my story. The point is, you and I, Theo, are very fortunate. We’re very grateful, obviously, to have jobs and careers that we genuinely enjoy. We like to be creative and expressive, we both write blogs, we both do the podcasting stuff in various outlets, and that’s amazing, but you also have to remember most people can’t do that. Most people aren’t doing that. Most people are caught in the golden handcuffs, either a 9 to 5 situation or they’ve climbed this corporate ladder so high that they make a really nice salary and there’s really nothing else that they could do, so they’re trapped.

So until you start putting some of your income towards investments, whether it be passive investments or not, it’s hard to branch away and have this balance that we’re talking about, no matter what your approach is. But I think we all get there at one point or another. I think maybe we talked about that before. What’s the average American retirement like? 67 retirement age, or I don’t know; something like this. So you’ve got social security, you’ve got possibly a pension or your 401K. This is passive income at that point. You’re not having to exchange your hours and your labor in exchange for money. So we’re gonna get there somehow, at some point, hopefully. It’s just a matter of if you focus on this stuff earlier in life, you can get there potentially a whole lot faster than perhaps your 60s or your 70s.

Theo Hicks: Oh yeah, exactly, and there’s all those examples if you can invest $1 every day or whatever, for 20 years, you’re a gazillionaire, or something like that. So I 100% agree.

The other one, I’ve gotten this from– I do eight interviews every single week with people, and every single person obviously works — most of them, probably nine out of ten people were not born into a real estate family, and just were raised in it from birth. For example, I talked to someone last week, – he is a physical therapist, that was his full-time job, and he was doing some form of physical therapy that was very flexible. I think he go to people’s houses or something, and so it was very flexible, and then he got a promotion and he was a corporate physical therapist, and so he was traveling everywhere, he was working 60, 70, 80 hours a week, and during this job is when he had gotten in real estate, and he’s making six figures… And he asked himself, “Okay, well, I can continue to grind this 80 hour a week job, not be home with my wife, and make a lot of money, or I can go back to my old job, have more flexibility, so that in between the clients or at the beginning or at the end of the day I can work on my real estate business, so that I can get to the point where I can have my own physical therapy company” or whatever he wanted to do. But the point is, you don’t have to just once you catch the real estate bug, quit your job, and just be like “Well, I’m done”, without having an option. So one option would be to get a more flexible job, so that you can focus on pursuing your dreams and aspirations so that you can quickly get to this point where you’ve reached enough and then can transition into something else.

It’s funny, because I’ll talk to one person and then someone else who proves what the guy said to be true, and this guy had a job and he got into real estate, he completely neglected his job for real estate and got fired a few months later, and then it ended up working out for him. But if he would have gotten a more flexible job, he could have kept that job and then scale even faster, because he’s used that income to grow his active or passive investing business.

Travis Watts: Yep, exactly. Also, I was introduced to this video maybe a year ago. I came across it on YouTube, and unfortunately, this is on the fly right now, I can’t remember what the guy’s name is, but if you type in, I think, “retire at 36” or something like that, “retired at 36”, there’s this guy who had a passion for boats and sailing; that was really his life purpose. It was his hobby, it was his everything. Well, he was a consultant, if I remember right. An IT type consultant, made really good money, worked full time, grinded it out, up until 36. Ended up just buying this sailboat and just living out on the boat and in the Caribbean. He “retired” at 36 because– and he’s the one that introduced me to this concept of enough. He said that’s the hardest thing to do is pinpoint that number, “This number would be enough for me” and then take action when you hit it… Because that’s the scariest part, is taking the leap and saying, “God, I hope this is enough. I hope I’m right.” But it was for him, and this guy’s, who knows, in his 50s now or something, but it’s an amazing story just to hear about this guy’s adventures in life, and with his wife, and all the memories and moments that they’ve had, because he could identify that. His alternative was just more and more and more and more money, but then that would have kept longer and longer and longer away from sailing, and what if he had passed away or came with a debilitating disease or something? You never know, right? Life is short. So yeah, something to think about.

Theo Hicks: Yeah, that story just brought up another thought in my mind, which is why this topic is even more important the younger you are, because enough is gonna get bigger and bigger and bigger the older you get and the bigger your lifestyle gets. We also talked about this last week, about the three main areas of life, and the bigger your house is, the more expensive your car is, the more you’re used to these things, when you’re sitting there saying, “What’s enough? Well, I want to have a BMW and I want to have a million-dollar mansion and I want this,” which is obviously fine, but that enough number is gonna be way higher than if you just graduate from college and you’re in an apartment like, “I really just want a three-bedroom house and it’d be nice to have a car and to be able to go out to a restaurant once a week”, and then that could be your number and that’s what you can start working towards. Obviously, it might not be exactly that. It might grow a little bit, but you’d be in a lot better situation if you started thinking about these things earlier. It’s easier the earlier you do it, for that exact reason.

Travis Watts: Yeah, that’s a great point, and I know that we did talk about that previously. But again, for those that may not have heard the episode, as far as the things like talking about a BMW or a ten-bedroom house, or this, that and the other, you’ve really got to ask yourself, “Why are you doing that?” Is it because you genuinely, wholeheartedly love BMWs and you’re passionate and you’re a car fanatic, that’s your hobby and interest and everything in life to you, and it brings so much joy? Or is it because you’re keeping up with the Joneses? Or is it because you think, “Well, society expects this of me. I’m a dentist or a doctor or a realtor. I’ve gotta drive this really fancy car. What will people think of me if I don’t?” So you’ve got to really understand this takes a lot of soul searching and looking deep, but at the end of the day, it’s probably the latter in most cases for most people… And nothing wrong with those vehicles. I’ve owned nice vehicles, like we talked about before. I chose to buy them pre-owned and I don’t think I’ve ever spent more than 13 grand on a vehicle, but I have owned luxury vehicles. So there’s ways to go about it, but it’s to recognize that you’re doing it for yourself, and not trying to impress other people. So good point, though.

Theo Hicks: And then the last thing I had on here was — probably the most common transition that I see from people I’ve spoken with, what they’ll do is they’ll have this business, own this big business, maybe they’re fix and flippers or whatever, and they’ve gotten to the point where “I’ve got enough” or “I’m ready to have more time freedom”. So what they’ll do is rather than just sell portions of it and transition over to something else, they will completely automate the company, hire a COO… I was talking to one guy, he said he spends a few hours a month on his business that he used to work 100 hours a week on. And then he can take that money that he’s making and obviously grow that business, but also passively invest in other things. But then from there, he can just do really whatever it is he wants to do, and for this particular person, he started a mastermind group. So he’s still passionate about real estate, he just didn’t really want to do the day to day stuff anymore, and so he started a mastermind group and he was teaching other people how to do what he’s doing. So automating your business is another way to slowly get yourself out of it once you’ve hit that enough number.

And then I just wanted to mention one more thing, because we were talking earlier about pensions and how once you retire, it’s not like you’re just going to do nothing. My dad, for example, he retired, and he is a bus driver because he loves talking to people, and so every morning he will — not now, but before COVID, every morning at 6 am, he’d go to the bus shop where the buses are, and all the retired bus drivers are, and they just talk about whatever for two hours, and he really enjoys doing that. So it could be something as simple as “I like talking to people, so I’m gonna do a part-time job where I’m doing something as simple as driving a bus or being a cashier where I get to hang out with people all the time.” I thought that was really interesting.

Travis Watts: Absolutely. I know we’re getting towards the end, but I do want to share this one thought that you just made me think of it. I know we’re both Tim Ferriss fans. I forget which book, 4-Hour Workweek or one of them, but he’s sharing this story of the New Yorker business guy that goes down to Mexico on a fishing trip, and this guy takes him out on the boat for a few hours, comes back, and he says, “Alright, thanks. That was great. It was amazing. Do you have more customers today?” He said, “No, I only do the one trip a day and get some fish for my family and do this.” He says, “Well, why don’t you do more? Why don’t you do five trips a day? You’ve got plenty of time to do it,” and he’s talking about, “Well, I like to come home, take a nap, visit with my wife, play with my kids in the evenings, have some tequila or whatever, and then play music with my friends, and that’s my life.”

And he goes, the New Yorker, “Well, can you imagine though, what if you did more of these trips, made more money, you could buy two boats, then you could hire employees to run those boats, and then you could have a whole fleet of ships, and then when that gets successful, you bounce out of the business, then you could headquarter in the States, and then you could run this big operation, and then you could franchise it…” And then the guy keeps asking, “And then what? And then what? And then what would I do? And then what would be after that?”, and he goes, “And then, you can retire and come down here and have a quality life and spend time with your family and your friends and play money.” It’s like, the guy already had all that. He already had the quality of life. That’s one more example of having enough. This guy already had that. So something to think about, just an awareness article in general.

Theo Hicks: Oh yeah, that’s a perfect example of someone who’s just starting out and just getting a few rental properties or passively investing in a few deals, and then just using that income, and then essentially you don’t need to, as you mentioned, franchise. That’s a perfect story to definitely end with. So is there anything else you want to mention before we sign off?

Travis Watts: I guess, for anyone listening, just think about this question – are your goals and your aspirations more set around a quality of life, or having quantity, meaning money and numbers? I was guilty of this early on when I would set goals, it was always money goals. One of my first goals – I want to be a millionaire; I want to have $10,000 a month passive income. But when you dig a lot deeper, it’s what do you really want out of life? Who cares about the money aspect? What if that wasn’t the factor, how do you want to live your life? So that’s really what the question is and that’s how I end the blog, on that note.

Theo Hicks: Perfect. Let’s end the episode on that note as well. So thanks, Travis, again for joining me for the Actively Passive Investing Show. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Travis Watts: See ya.

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JF2179: Three Ways to Save Money Like The Wealthy | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be sharing three different ways the wealthy save money to maintain their wealth. Travis did research on the three main categories that most Americans spend their money on; housing, transportation, and food. He compares how the typical American spends vs the wealthy on these three main contacts 

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.

 

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JF2172: Why You Need To Be Healthy Before You Can Be Wealthy | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be diving deeper into one of Travis’s recent blog posts on celery juice. Being healthy is important to your wealth because while you’re building your wealth you will need to have high energy to be able to push forward through the hard times when you are growing and once you finally reach “wealth” status, you want to be able to enjoy it and live long afterward with your family and pass down the lessons you have learned.

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow. 

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TRANSCRIPTION

Theo Hicks: Hello Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, I’m back with Travis Watts for the Actively Passive Show. We got the show titled down, and it’s the Actively Passive Investing show. So Travis, how you doing?

Travis Watts:  I’m doing great. You messed up the title on the first episode.

Theo Hicks: What did I say?

Travis Watts: I don’t know. Actively Passive – that’s hard to say, but I think it’s a great title. So excited to finally have a name and a theme to this, even though going away from the theme today on our topic, I think.

Theo Hicks: A little bit, but we’ll connect it back.

Travis Watts: Yeah, alright.

Theo Hicks: We’re gonna start off by discussing the article that Travis wrote about celery juice. I really like how it starts out because he says, “What’s a celery juice have to do with real estate?” Well Travis, what’s the celery juice have to do with real estate? Let us know.

Travis Watts: And then the next line says, “Well, really nothing”. [laughter] So I guess we could take it from there. So let’s back up a second. So the reason that I wrote this particular blog is – for those who read my blogs and content, I’m a big advocate for going out there in the world, finding the experts, and finding a multitude of them, whatever we’re talking about, whether this is multifamily or active or passive investing or whatever, and what I’m trying to do is jump inside the brains of these folks, and then find the commonalities, and then extract those commonalities, and then form an opinion or a philosophy around something. So when it comes to health, I’m obviously no medical professional, no doctor here, but really, this is my wife’s research topic for the most part. I’m the finance guy and she’s the health advocate, but what we’ve done over the years is find all these health gurus, so to speak, and find the commonalities and what they say folks can do to health hack, if you will, find a shortcut into health, in a sense.

So over the years, we’ve done juicing, we’ve done water fasts, we’ve done smoothies, we’ve been on raw vegan diets, we’ve done all of this crazy stuff, and exercise routines is a whole other story… But one thing that’s really stood out lately is finding out, what I would call, the proper way to digest, if you will, celery juice straight. So I’ve found a lot of health benefits to that, not just on paper and by research studies in science, but just in my own body, in our own lives. So I just want to take the quickest, easiest, simplest thing that folks can do to find that health hack. So I put a quote in there to answer your question, Theo; I think is at the end. “If we don’t have our health, then what use is our wealth?” I mean, obviously, we can do some things with wealth, but as far as being self-centered, not a whole lot.

So that was my purpose of writing it, is at the end of the day, what’s really more important? We talk all the time about investing and passive income and active stuff, but really, if you don’t have your health, what use is any of that anyhow?

Theo Hicks: Yeah, that’s true. Thanks for sharing that. So do you think that it’s a step further in that? Because when I hear that quote, I say, “Well, first you need to be healthy, and then you can become wealthy,” they’re not necessarily — is it required to be healthy? It’s more like, “Hey if you’re unhealthy, what’s the point?” Do you think that being healthy is actually beneficial towards being wealthy, or you think it’s just the prerequisite just because of this quote – If you’re sick, then you’re not going to be able to enjoy the wealth. Does that make sense?

Travis Watts: Yeah, exactly. So you think about the process of building wealth or aka becoming wealthy… Let’s assume that the person we’re talking about is not just going to inherit their wealth; this is somebody starting from scratch and building up. It takes a lot of work, we all know that. You’re gonna have to network and find mentors, you’re gonna have to read books, you’re gonna have to study… Well, all of this stuff takes your time and energy, so what you’re looking to do is maximize those resources to give you the energy to push forward and make that happen. So yes, I would argue– well, not argue; I would agree that health comes first, and as you feel good and you’ve got the energy and the capacity, you can go out there and much more efficiently, build wealth and do fix and flips and do whatever you’re going to do out there to do your thing. So, absolutely.

Theo Hicks: One thing I was thinking about when I knew we were gonna do this topic is — I used to be in amazing shape. I became obsessive over working out, and I did this for about a year and a half; it was through CrossFit. And one thing I noticed is that it is possible to take your health too seriously. Let me give an example. A lot of people that I worked out with, working out was their centerpiece, their entire existence. So they’d work out and that’d be the highlight and the main thing that they did all the time, as opposed to using working out– using being healthy as a springboard to something else. So I have a note here of it. It does give you, as you mentioned, discipline, I can be very disciplined to work out, but it is possible to take it too far, like I did, where I was spending four hours every single day in the gym. I went to work, I worked out, and then that’s how I did it for a year and a half. So it is possible to overkill, which is why I really like this simple idea. It sure is possible to overkill a diet too, but this is just one really fast, simple way to right away improve your health.

Travis Watts: Absolutely, and for those who read these guru health hackers out there, Tim Ferrisses or even the Tony Robbins, they’re so into trying to take the four hour gym time down to a 30-minute segment, and maybe do that three times a week and get the same results. Sometimes that’s possible, sometimes it’s not; it depends on what we’re talking about. But the idea is who really wants to go spend the rest of their life in a gym just for the sake of staying healthy?

So we’ve got two sides of the coin and you brought it up beautifully there that you’ve got the physical side in the gym and the weightlifting and the exercise, and then there’s the diet. So we focused most of our attention on the diet piece, and I’ll tell you an example of going overboard. Please, nobody do this that’s listening. We started with just a simple smoothie, one that tasted great, which is called Sugar. So like fruit smoothies. And then we migrated our way into 100% vegetable smoothies, which tastes pretty awful in general. And from there, we thought, “Hey, if this already tastes like crap, let’s start researching the best possible things that we could put in a smoothie,” and we got carried away with this. We were putting four or five garlic cloves and papaya seeds and all these weird supplement things, and it’ll gag you; it’ll make you throw up.

Anyway, we were in the middle of that, and I went to pick my dad up from the airport, and I was about two weeks into doing these smoothies, and I get in the car and we’re driving, he’s like, “You smell garlic?” I said, “What?” He said, “I smell garlic,” and my body was just radiating garlic, but I was so immune to it, I didn’t even notice… Anyway, we took it too far. So yeah, do a smoothie or some juice, but come on.

Theo Hicks: That’s funny. So one secret for the garlic – because I used to garlic smoothies too, and surprisingly, the one fruit that I’ve came across that mask the taste of garlic when you’re eating it – because it is really gross – is pears. So if you want to make a smoothie with garlic and get the benefits of the garlic, if you do a pear and garlic smoothie, it’ll take– it just feels like nothing, which is surprising. They sort of cancel each other out; at least it did for me. But something else I think you talked about last week maybe — or I know I was interviewing someone else last week on the podcast who mentioned it, so maybe it was her. But I was asking her questions about morning routines and various different ways to improve your mindset, which you consider being part of your health as well… And she mentioned that when you’re first starting something or when you’re trying to figure out what’s the best morning routine, what’s the best workout routine, when you’re doing it, don’t tell yourself, “I’m going to do this for a year. I’m gonna do this forever,” but tell yourself, “I’m gonna test this out for a week, two weeks a month.”

So reading your blog post, all the various things you talked about, you mentioned that “I tried it for a little bit, I experimented it, and then I analyze the results, and sometimes it didn’t work. Sometimes, it did work, but it sucked. It was horrible, I didn’t like it, so I’m not doing it anymore.” I think that’s something important, too. You don’t want to start, for example, doing the celery juice – don’t tell yourself that you’re going to do it every single day for the rest of your life, because you’re probably not going to start if it’s too overwhelming of a task.

Travis Watts: Health is tricky, too. Everybody’s body is different. There’s some folks who could just, say, eat fruit all day and they would thrive, and there’s others who would feel sick and weak. So you should never just say, “I’m gonna do 12 months of eating fruit all day,” and then three days in, you’re on your deathbed. I mean, you gotta– we’re usually doing experiments, anything from three days probably being the minimum, to maybe, three months being the maximum, and depending on what we’re talking about… Because we can all persevere. We’ve got a little self-discipline, a little willpower, we can push through, but you want to be safe, too. Obviously, you wouldn’t want to do a three-month water fast. That might be catastrophic for you.

So to your point, it’s just any goal setting. Isn’t this just like goal setting 101, to go from scratch and say, “I’m gonna be a billionaire.” How about you shoot for a millionaire first, and then you can step up from there? But it’s a little overwhelming to try to go 0 to 100. So yeah, I love that; great point.

Theo Hicks: Yeah, especially when it comes to health, you’ve got the standard, traditional New Year’s resolution curse, where every single person on the planet is in the gym in January, and then they’re gone by February, because they set that goal of “I’m going to lose 200 pounds in 2020” or whatever.

Something else we got out here is that we’ve got all of your examples, all of your adventures, you say… And one of them, it says, “Lots of exercise routines in various programs, and this is still a work in progress.” So obviously, one side of health is the eating aspect of it. The other side is the physical moving aspect of it. So do want to let us know?

Travis Watts: Yeah. I mean, just through and through with the physical side, I’ve really got nothing to share that I feel like the masses would benefit from on that side. We’ve done way more experimenting with diets and food than we have with the exercise. So what I meant by that was, we’ve done all these little online programs or these 30-day things, the orange theories of the world, all those stuff. And some are great and some are terrible, and I don’t know, I haven’t mastered that side of it. So like I said, back to the philosophy here is just picking the brains of so many people, finding the commonalities and then making it simple and efficient and effective… So I’m trying to find almost the minimum viable product for the most bang for your buck, if you will, and to me, that’s what the celery juice has been. But I really don’t have an example on the physical side. You might possibly have something to share on that, but yeah, I don’t.

Theo Hicks: Yeah, I’ve got some notes here. So obviously, as Travis mentioned, there’s one thing people need to realize. I think it’s very personal, and what works for one person is not gonna work for someone else, especially where you’re starting at. If you haven’t even worked out in 20 years, it’s gonna be a lot different than someone who hasn’t worked out in a year or hasn’t worked out in a month.

One starting point thing, a little quick hack that– I’m not necessarily sure how much this will help you long-term health-wise, but a quick way to get a boost of energy that’s also, in some sort, beneficial to your health – and this is something I know Joe does and he got it from Tony Robbins, and it’s that mini trampoline. Have you ever seen that?

Theo Hicks: Yeah. We haven’t tried it. I know exactly what you’re talking about, but no haven’t yet.

Theo Hicks: I have one in my closet. I haven’t used it in a while, but essentially, if you buy this mini trampoline– I think Tony Robbins has one on his website, but it’s really expensive. You can go to Amazon and get one for $10 maybe, and literally whenever you’re feeling tired, around 1:0 or [2:00]… You guys get coffee, which I don’t see a problem with that, but a quick way to get a very fast, natural energy boost is to bounce on the trampoline for a minute. You’re not really going to be tired afterwards, but something about it, I’m not sure what the science is behind it, but it gives you a quick energy boost. That was one thing I wanted to mention.

Travis Watts: Yeah. And speaking of Tony Robbins, he’s a huge advocate of physiology. So just something you can do if you don’t have one of those trampolines too, that I do sometimes just to get my blood going again maybe after lunch, are just jumping jacks. You can do that anywhere. So simple. Do 60 seconds and all of a sudden, your heart rate’s up. It’s like the equivalent of going on a quick jog. Things like that can be effective. Obviously, that’s not the one thing you do to become healthy, but it gets your body back in check.

One more thing that just came to mind as you said that is I remember reading in — I think it was Men’s Health or something, years ago. Kenny Chesney, the country singer, when he goes on tour — he’s touring half the year in stadiums on a bus, and then half the year, he spends on his boat in the Virgin Islands. So he goes one extreme to the other. He goes from not drinking alcohol and exercising all the time and touring and just crazy amounts of energy, to sitting on a boat, eating whatever he wants to eat and just drinking all day, that kind of stuff. So pretty big swings. But something he does that was cool is this push up routine. So it’s real simple; I’ve been doing it since COVID because gyms were all closed, but it’s ten push-ups, and then ten seconds off as a break, nine push-ups, nine seconds off as a break, then 8, 7, 6, 5, 4, 3, 2, 1, and that’s 55 push-ups in a short amount of time, and that’s another thing that just gets your body going real quick. Again, you’re not going to become a bodybuilder, but it’s free, it’s cheap, and it’s easy. So stuff like that is what I’m all about are these little hacks here and there that you can implement, that are easy to do and effective.

Theo Hicks: Yeah, actually another one I had on my list was another really easy way to get a full-body workout in every single day, similar to what Travis just said, but you add in other movements as well. So using Travis’s example, what you would do– because again, the whole purpose of this is to do it quickly. So let’s say in the morning, right when you wake up, you do push-ups, you do 10, 9, 8, 7, down to 1, and then maybe before you eat lunch, you do the same thing, but for sit-ups, or some variation of an ab workout, and then before you have dinner, you do air squats. So you got abs, you got legs, upper body. It’ll take you, I don’t know, ten minutes total all day to do that, and do that every single day for a month and you’re going to see a difference in tone.

Now, one of the biggest things if your goal is to actually lose weight– so we’re talking about energy, and if you want to lose weight, the best way to lose weight I found is just running. I haven’t ran in a long time. I hit a 5k a month ago and I couldn’t walk for a week; so that’s depending on where you’re at right now. You don’t want to just go out and run 5k like I did, like a crazy man. You can start with walking. You can start with going on a 15-minute walk. It’s a lot easier to do that right now, especially since everyone’s working from home. So if you have a 15-minute call, just go and walk for your call. And then eventually, the next step from there would be to do some interval training. So let’s say you’ve got your 15-minute block of walking. Next time, you’re gonna walk for a minute, and you’re gonna jog for a minute; a very slow jog. So you alternate that. So 15 minutes at 7 to 8 times, and then eventually you can increase the speed of your jogging interval, until ultimately you’re sprinting. It might take a while, but ultimately, you’re sprinting, if you can.

There’s one investor, I think, his name is Jason Yarusi. I’m not sure if you follow him on Facebook, but he, at least a few months ago, was running hundreds of miles a week. So you can do that obviously and you will lose a ton of weight that way, but a faster way to do that is to do the intervals and just sprint, just like me. I don’t like running at all; I despise running, but sprinting, running for one minute, I know it’s only gonna be over in a minute, for a maximum of 15 minutes. So if you want to lose weight, that’s a really good way to start.

Travis Watts: Yeah exactly, and that’s setting up what we talked about earlier, setting small steps. I’m going to run for 60 seconds. I’m not going to run for 60 minutes, because it’s so much easier to give up on obviously, and not see the light at the end of the tunnel, so to speak. So yeah, absolutely. So you couple that stuff and all these topics with some diet hacks, and then all in all, I think most people will see some pretty rapid results surprisingly.

Theo Hicks: And then let’s see. I’ve got a couple of other things here as well I wanted to mention. So from there, something else you can do — because for me, after I got done doing my whole obsessive CrossFit thing and working out for three to four hours every single day, I was completely burnt out and I did not do a single workout for a long, long time like multiple years. And it was really, really hard to get back into it. So the people who are listening to this saying, “I’ve tried multiple times to get back into working out and I just can’t do it”, and this might not work for everyone, so I’m just gonna go to the top first and work my way down. So I have a personal trainer now, and the purpose of the personal trainer, besides them making the workout routine for me, is the accountability aspect of it. So every week, I have to send him my results. So if I send him half the results or I miss a few days, he definitely lets me know. So the whole purpose there is the accountability. So maybe you don’t have the money or don’t know a personal trainer or are not ready for a personal trainer, so the idea is to get someone to hold you accountable. This can be a friend, or a significant other, maybe you can start doing a workout together. Something we mentioned today – maybe you can just start doing the celery juice hack together and have them be your accountability partner. So you text them at the end of the day or end of the week and say, “Hey, here’s what I did this week. What did you do this week?” If they didn’t what they’re supposed to do, you can make fun of them. They can make fun of you. So use that as motivation to get started.

Honestly, there’s lesser personal trainers that you can do, some app on your phone or a P90X type of video thing, which definitely helps, but if you don’t have the accountability factors, you need to add in a level of accountability.

Travis Watts: Yeah, that’s true. And I can attest to that, that P90X; that was one of our experiences. This stuff dates back as far as Tae Bo, VHS tapes. We’ve tried it obviously, that was before we were married. It was a long time ago, I was a kid, but I’ve always been into those ideas. I was the kid who bought the ab belt. I was the kid that got the ab roller.

Theo Hicks: The one that electrocutes you? Is it that one?

Travis Watts: Yeah, it electrocutes you. Spoiler alert.

Theo Hicks: Was that in the ’80s that thing where it was like — it’d rub their backs, you seem to be talking about…?

Travis Watts:  Oh, yeah, yeah, yeah. Exactly. It’s a big conveyor belt making you shimmy. So goofy.

Theo Hicks: That pretty funny. We’ve trying to hack our health for a while. It seems like we’re making progress, right?

Travis Watts: Well, that’s the point of this episode, what I was trying to entail is that my wife and I’ve gone through a lot of these trial and error things, but there’s a few that have a lot more benefit to them than a lot of the others. So if you don’t want to go waste your next decade, getting ab belts, then we can share some tidbits that actually are effective and in a lot of cases they’re free to or cheap.

Theo Hicks: Yeah. And then the last tip that I had on here was actually diet, and this is– not only is it free, but it actually makes you money. You’ll make money by doing this and it’s really fast, and that’s not eating out. I’m talking to myself here as well. Not only does it cost money to continuously– especially now work from home, doing UberEats or DoorDash constantly, but I feel horrible afterwards. I feel absolutely horrible after eating out. So again, two benefits there, and it’s really fast. Just in the morning, instead of ordering Starbucks, just have coffee at home and make two eggs and put them on a piece of toast instead.

Travis Watts: Yeah, the way I look at that, too– this is the way I frame that, in my mind, which is true to me, is… You can have the short-term satisfaction of, say, the fast food or the alcohol or whatever it is, something bad for you, and it feels great in the moment, but then you’re suffering so much longer than that with the repercussions of that choice, and if you’re talking about doing something healthy, like “Yeah, I don’t want to do the push-ups. I don’t want to drink the celery juice” – okay, well, a short-term trade-off for an all day effect is a lot more worthwhile. So if you can just zoom out to a 24-hour period, you start to see that a lot of this health stuff is actually a lot easier and makes a lot of sense. So that’s how I try to look at that.

Theo Hicks: For me, mine’s a little bit different. So what I’ll do is I’ll try my best to do well all week, and then Friday night is when I get to do my gorging, my UberEats, whatever I got from UberEats… And then next morning I feel horrible, and then I start it over again. That helps me. I’m not saying to do that, but it helps me.

Travis Watts: You’ve got the dinner table laid out like the Talladega Nights with the Kentucky Fried Chicken and the Pizza Hut… [laughs]

Theo Hicks: Yeah, well, I think it’s The Rock who also does that, where he’s got that famous picture of him with a bunch of pancakes decked up, and a pizza, and a big pop, and he’ll do cheat meals every once in a while.  I don’t think he does it every week, but that’s the gist. I don’t think it’s 100% necessary to be perfect all the time. You just need to do it in moderation. I can’t be doing Uber Eats every single day and then not working out every single day, but at the same time, I don’t want to measure out all my food for every single meal and then go from there to the gym for five hours.

Travis Watts: Yeah, I love that philosophy too, and there’s different ratios, but I hear that 80-20. What matters is what you’re doing 80% of the time, but that 20% is flexible, and even Tony Robbins talks about it. He never deprives him permanently of anything like, “I’m never eating chocolate again. I’ll never have ice cream.” It’s like, he’ll have it, but in small limited portions here and there, not every single day after dinner, all that kind of stuff. So yeah, it certainly makes sense.

Theo Hicks: Alright Travis, is there anything else you want to say before we wrap up?

Travis Watts: Let me just explain this celery juice; we didn’t get too much into it. So we’re talking about juicing, number one. If you have only a blender, you can do it, but you’ll need one of those nut milk bags, like a strainer for the juice… And we’re talking about literally just straight celery juice. A stock of salary, ideally organic; if it’s not organic, make sure you wash it thoroughly… But just putting that through to have 16 ounces of great celery juice. No ice, no dilution, no water; don’t mix it with cucumber juice or any other fruits or veggies, and you drink that in the morning separated from food. So ideally, about an hour apart from other foods and breakfast. That gives it a chance to circulate through your body, cleanse your liver. It can reduce brain fog and acne, eczema, acid reflux, headaches, migraines, inflammation… I mean, the list goes on and on and on. In my blog, I put four links at the bottom to four completely unrelated sources where they go into the science behind it, the case studies, the true advocates behind all this stuff… And again, I’m no doctor or health expert, but check out those links, and it’s really that simple. Buy some celery stocks, 16 ounces, once per day minimum. We try to do two per day if possible, my wife and I, but it’s just crazy. And you’re talking about eating and weight loss for those looking to do that, a little bit of jogging, running cardio plus this equals a lot better results than what a lot of people try to do for weight loss… But that’s really it.

I wanted to share that because that one thing has had the biggest impact on energy and health and the things I just listed, and the list goes on and on and on. You’ll have to look it up yourself. But that’s just what I wanted to share with folks out of all these crazy adventures, as I call them. That’s one that I think everybody can do that everybody can benefit from, that’s cheap and easy and simple.

Theo Hicks: Great, Travis. Well thanks for telling us about this, thanks for joining me again today on our first ever – I’m gonna get it right – Actively Passive–

Travis Watts: Show. Podcast. I don’t know. Episode.

Theo Hicks: Actively Investing something. We’ll figure that last part out, but the Actively Passive is [unintelligible [00:27:17].09].

Travis Watts: Today was the actively portion. Next time, it’ll be the passively portion.

Theo Hicks: Exactly. So again, Travis, appreciate it. Best Ever listeners, as always, thank you for listening. Have a best ever day. Make sure you try out some of these tips and we will talk to you tomorrow.

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JF2165: Tips for Navigating 2020 | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be diving deeper into one of Travis’s blog posts called “Tips for Navigating 2020”. Theo will be asking Travis questions to dive deeper into this topic to help you become better investors.

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.

 

Click here for more info on PropStream


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and I’m back today with Travis Watts. Travis, how are you doing today?

Travis Watts: Theo, doing great man. Excited.

Theo Hicks: Yep, me too. So this is Travis and I, the second time together on this show. We’re going to talk about mostly passive investing, but also a little bit about Travis as well. So as a reminder, Travis is a full-time passive investor, he’s been investing in real estate since 2009 in multifamily, single-family and vacation rentals; he’s also the director of Investor Relations at Ashcroft Capital, and he dedicates his time to educating others who are looking to be more hands-off in real estate, which is again, the purpose of this.

So today we’re gonna talk about tips for navigating 2020. We’re going to expand upon a blog post that Travis wrote, called The Five Tips For Navigating 2020. So we’re gonna go over five particular tips; we’re gonna go one at a time, then we’re gonna probe Travis a little bit more to get some more information out of him.

Theo Hicks: So the first tip for better navigating 2020 is to educate, educate, educate. So since we are working from home, can’t really travel, we should be focusing on educating ourselves, and Travis gave us some examples; obviously, once we are able to work not at home again and travel, we should still be focusing on educating, but since this is focusing on 2020, the whole point is that we have a lot of extra time. Let’s say it takes you half an hour to get to work, ten minutes getting to work, so 40 minutes total commutes, you have an extra hour and 20 minutes of time every single day to spend doing something else. So if you add in, let’s say, 20 minutes extra per day of educating multiplied over every single day for all 2020, imagine how much further towards your goals you’re going to be.

So the question that I had for Travis here, to get more personal, is what is your go-to form education? On the blog, you gave a couple of examples – online events, webinars, books, podcasts, how-to videos, BiggerPockets, blogs; there’s really an unlimited amount of ways you can educate yourself, so what are some of the go-to things that you like to do to stay up to date on your industry, as well as progress towards your goals?

Travis Watts: Sure, Theo. I guess just to back up real quick, just for a minute, so the reason that I really wrote this particular blog – for those that don’t know, I spend my weeks on the phone with investors nationwide, just talking about COVID and passive investing, and through this process, having hundreds– well, I’m sure thousands at this point over time of these calls, what I’ve noticed as a trend since March is so much fear and uncertainty. So a lot of these questions are – are you investing right now? Or I think I might sit on the sidelines for the year, or whatever… So I’ve always been a huge advocate for self-education. I mean, my whole life, more so when I got into the real estate space post-2009, so I guess I’m an eternal optimist to an extent, but I was just thinking the other day, there’s got to be a handful of things that I could put together here for people to help them through a crazy year like this one, which of course, we’ve never seen before, but also reminds me a lot of when I got started in real estate in 2009. There was a ton of fear, a lot of people – I think we talked about on our last show – just saying, “Do I invest right now? Is it the bottom? Everything looks horrible. The news is putting fear in everybody.” So these are just some helpful tips for 2020 that anybody can do just to keep propelling yourself forward and to take advantage of what we can take advantage of. Obviously, we can’t do a lot of things that we were doing pre-March. So anyway, that’s a little backstory behind the blog. You asked me what my favorite source of staying educated is. Is that the question?

Theo Hicks: Yep.

Travis Watts: Cool. Boy, I don’t know if I have a favorite, but I really like just having conversations with people. So I do have some mentors in my network, and even if they’re not a mentor, if they’re just a peer or anybody, I like just conversing. So what I was doing before COVID was going around to conferences and just meeting people and just picking their brain and trying to add value to them as much as I’m getting in the conversation. So I would resort back to that. Now, if you don’t have a big network or you’re just getting started in the space, you mentioned BiggerPockets… Just online forums, not to drop a name brand, but just anywhere that you could go online and just have a conversation or post a topic like the ones that we just talked about, like “Who’s investing right now in July 2020? What are your thoughts?” and just to get 40 different answers to that is probably my favorite. I think I get the most benefit out of that, but I do them all, just to be clear. I’ve got four books on my audible right now, I listen to podcasts every week, I’m reading two books, so I just — whatever. There are different courses for different horses, or however that goes.

But anyhow, everybody’s different, but I just want to point out that there’s a lot of ways to self-educate. I know some people are visual learners, some people are audio, some people like to connect face to face. Take advantage of these Zoom calls; they’re incredible. Seriously, they’re incredible. I’d say about 20% of the calls I have, people ask if I’m willing to do a Zoom call with them. Sure, absolutely. It’s free, it’s convenient. Why not? So anyway, long-winded answer, but those are some ideas.

Theo Hicks: Yeah, I was just gonna say that you would go to these conferences and have one on one conversations with people to educate people. Another really good strategy that I implemented was to reach out to people on BiggerPockets, or in your local market, targeting them with your keywords in your local market they’re in, if you’re just getting started in real estate in general or if you’re further along, and you know what specific type of niche you should be involved in. You can reach out to them, see them in person for  coffee.

Now, since you necessarily might not be able to do that, depending on where you live, don’t use that as an excuse to just not do it. Travis gave you a perfect example, as opposed to saying, “Hey, do you mind grabbing coffee?” Say, “Hey, do you mind hopping on Skype or Zoom or FaceTime, whatever type of video conferencing software?” and if you don’t want to do that, you can even just do audio on the phone. So don’t attempt to use that as a reason to not educate yourself.

Obviously, this question is not going to make sense for going to conferences, but for the other types of education that you do – you mentioned podcasts, audiobooks, reading – do you have a block of time, set off a new calendar every day to spend on education? Do you do every single day or every other day? Is it something that you just do whenever you have time? What’s the best approach to make sure you’re actually doing this?

Travis Watts: That’s a great question. I’ve tried a lot of different things over the years. 2015 was my most disciplined year. Again, on the last episode, I think we touched on reading 52 books a year. So I had a very structured schedule day-to-day for that. Anymore, I really don’t, but I want to throw this out there just as a caveat – if you can be disciplined enough to just tell yourself “I will educate myself for 30 minutes today or 60 minutes today, I will do that”, and if you’re the type of person that can make that happen without a schedule – that’s me in a sense, but I know a lot of folks can’t. So I would recommend that you try to break it up into smaller chunks. Instead of just trying to say, “I’m going to do two hours of reading every single morning,” because there’s going to come a morning that you don’t, or you can’t… And here’s why I don’t keep a schedule. Especially before COVID, my wife and I, we travel a ton, so we’re always on the go. So I can’t say, “At [8:15], I’m going to read for 60 minutes.” Sometimes I can’t do that. I’m in transit or I’m driving, so I have to switch up to an audible or a podcast, and then that’s gonna depend on how much time I have; like you mentioned, the 30-minute commute to work; I used to when I worked a W-2 gig. I had about a 45-minute commute, so I would find podcasts that were between 30 minutes and 40 minutes, and I would structure it to that. So I had more of a routine and more of a schedule, but it’s chaos anymore, but I get it in. Even if it’s the last thing, if it’s 11 o’clock at night, I haven’t done it, I jump on YouTube and it’s like how to blah, blah, blah, or somebody’s thoughts on yadda, yadda. I don’t get on YouTube to waste time, I get on there as an education tool 90% of the time, I do watch some travel documentary stuff and whatnot. But anyhow, it’s different for everyone, but I think breaking it up could be easy. Just say, “I’m going to read for 15 minutes in the morning, 15 minutes after lunch, and maybe 15 minutes before bed.” That makes it for some folks. A lot more achievable than just saying, “I’m going to cut out 45 minutes right before bed every night.” You and I know there’s going to be nights where you’re just too tired and it just doesn’t happen. So at least you got two of three.

Theo Hicks: Exactly. I like how you mentioned that. It’s a lot easier to listen or to just watch that it’s to like actively read. So if you are able to get that reading aspect in earlier in the day and you are too tired, just put on a ten-minute YouTube video and just sit there, even if you’re not paying attention for most of it; at least you’ll get something.

Alright, so that’s number one – educate, educate, educate. The second tip for navigating 2020 is to redefine your goals and investing criteria, and you mentioned in this piece that the goal isn’t necessarily a dollar amount that you want to make or, “I want to make $100 in cash flow every single month” or “I want to increase my equity by whatever, 12% over five years.” Obviously, that’s important, but what’s more important you say is what’s the underlying reason why you want to make that money in the first place. So my question to you — and you mentioned, what is it that you really want to achieve in life? So you can either answer both of these questions or just one, but either for you or for all of the investors you speak with, what are these types of things that they really want to achieve through this passive income source?

Travis Watts: It’s funny… I made this mistake in 2009, I guess. If you and I were having this conversation and you asked me, “What are your goals?” it would have most definitely been a number; this much cash flow, this much equity this much — it’s all numbers. I was not going deep enough… And here’s the importance. Let me just paint this picture. I ask people all the time about their goals and their objectives, their five-year plan, ten-year plan, what’s the ultimate goal, and here’s what I hear all the time, “$10,000 a month cash flow.” But what I rarely hear is “be more charitable, spend this much time with my family, plan the specific trip that we’ve always wanted to do, but never had the chance to,” that’s your real why, that’s the actual goal that’s digging beneath the surface. Maybe the $10,000 a month cash flow makes that happen for you, but you’ve got to understand and have clarity around the actual goal itself. So I, to myself anyway, I discredit all my number goals; they mean nothing to me. It’s not about numbers at all.

Something I speak a lot about is time freedom – freeing up your actual time through passive income. The reason that’s so important is to discover the world, to discover yourself, to have the time and the flexibility to do what you want with your time. So that’s the ultimate objective. So that’s how I approach goal setting. So whether we’re talking about a small goal like “I want to work out for 30 minutes a day” or you’re talking a big goal like “I want to retire in five years, specifically for these reasons”, it’s important to not just write down a goal or think about it – that’s even worse – and then just forget about it and go, “Oh, well, that’s five years out”, and the next year “Well, it’s still four years out,” because you’re not really making progress towards those in most cases, you’re just letting them fly by the wayside. So I come back to them at minimum, quarterly, most often, monthly. That’s my frequency and that’s where I check in with myself.

And I do the vision boarding stuff and different things, and it changes, and it’s okay. There’s plenty of goals I set out to achieve in a particular timeframe and then realize halfway in either A, I don’t really want that goal after all, or B, what if I did this instead? You don’t have to stay locked into one black and white thinking and that’s the only way. So be adaptable, but the point is that you’re consistently pushing yourself to grow and to expand and to learn, and I think that’s the most important part, is you’re holding yourself accountable. That’s the monthly check-in, that’s the quarterly check-in on your longer-term goals.

Not to get all crazy and weird, but there’s so much, I believe, power to envisioning, like “This is what my life is potentially going to look like, these are the things I could do”, the vision board, whatever. I think if any of the listeners have read Think and Grow Rich and stuff like that – and that’s just one example, it’s a widely known book, but there’s a lot to the power of visualizing your future. So I’m a big believer in it. So I would recommend that people at least try that for a certain amount of time. Try it for six months and see what happens and check in at least monthly.

Theo Hicks: Perfect. Okay, so that was number two. Number three is to volunteer your time and seek mentors. So I really like this point, because you’ve written a blog post before about the knowledge hack, and I talked about this on Syndication School. Essentially, the knowledge hack is you’re able to save a year, two years, a decade, however much time by simply having a mentor. I went into specifics on exactly what you should want out of a mentor; because if you want to have that knowledge and you want to reduce that time, then you need to be doing what you want to do, and you need to be successful in it, because the entire purpose is that they are there to help you navigate any trouble areas, the common mistakes people make, so that you’re not spending ten years making mistakes that you could have easily avoided by having someone who has already made those mistakes or knows not to do something that is going to ultimately lead to a mistake.

So here you mentioned that you can consider either hiring a coach, spending money, but obviously mentorships can be pretty expensive, and if you’re just starting out, you might not have money. Again, don’t use that as an excuse not to have a mentor whatsoever, because you gave a second option, which was to consider volunteering your time to add values to other in exchange for mentorship. So this is essentially how I started working for Joe. So I wanted to ask where that idea come from. Is that something that you did, or did you see someone else do this that made you realize the power of getting a mentor through that particular strategy?

Travis Watts: I don’t know, to be honest with you where this initially came from. What I can tell you is I’ve done both. So I’ve paid for mentorship and coaches. I’ve also volunteered my time as well, and I think that’s the most widely missed aspect of it, is everybody’s out there looking for the knowledge, and what you run into when you Google is mentorship and coaching and these programs and these seminars, and you’re thinking, “Ah, this is thousands of dollars. I don’t have thousands of dollars. I guess I just can’t do it,” and that’s what a lot of people think… But it’s just false, because – I’ll give you an example. About two, maybe three months back, a guy reached out to me through– I don’t know if it’s BiggerPockets or somewhere online, and he says, “Hey, I noticed that you’ve launched this Instagram and that you’re gaining followers and whatever,” and he said, “That’s my specialty, that’s what I do,” and so I say, “Oh, here comes the sales pitch. How much do you want?” and he goes, “Listen,” he said, “I’m also a real estate investor out here in California,” and he said, “I’m doing this four-plex and I have an out of state property, and I just have some questions.” He said, “I like some of the blogs you’ve written and whatever.” He said, “So here’s the deal. I would run your Instagram and help you gain followers, since I know how to do that, if you’ll mentor me once per week for an hour.” So we did this for, I don’t know, two months or something; it didn’t last forever, but a classic example. So I could give him in a very focused, structured way, in enough, time instead of doing the 15-minute calls that I traditionally do with folks. I could really dedicate to what specifically he was trying to achieve.

I’d send him resources, I’d send them books, trying to go above and beyond, because I thought it was so cool. Just because that’s such a thing that I am an advocate for. I just wanted to go above and beyond with it, but that’s a classic example. Not that I’m anybody special or famous, but it’s like, I knew more than he knew in certain areas, and those certain areas is where he was trying to go. And he could have equally gone and paid whatever five grand or something to get some program, but he leveraged me instead. So he could have charged me five grand and then he could have turned around and then bought a mentor or something. But the point is two groups of people like you mentioned, – those that have the money to hire coaches and mentors, that’s perfectly fine and very efficient and effective in most cases, and then volunteering your time if you don’t; or maybe a combination of both.

Some of my mentors, by the way, or the way I add value is we’re just swapping experience in the investing space. I’m saying, “Hey, I’ve invested with these groups over here and this has been my experience,” and they’re saying, “Well, I’m invested with these groups, and here’s my experience.” So we’re both being a mentor to each other and it’s free, but it’s adding value on both sides.

One last thought on that, one of my nephews – I have four – is about to go into college. So this last 12 months, as he’s deciding what to go to college for, I’ve been telling him to add value to folks in the industry that he thinks he wants to work in… Because he’s changed his mind. He wants to be an optometrist, and then a this and then a dentist etc. I’m like, “Just go volunteer your time, even if it’s pushing paperwork or something. Just do something that you can do legally. Be a janitor, and just pick their brain, just be immersed in the environment. See if that’s really what you want to do,” and I think he did that to an extent, but not as much as I would have wanted him to do it. So anyway, that’s my thoughts on that.

Theo Hicks: So for that example, the approach that he used was he had a goal, and then he wanted to invest in this deal, and he, again, knew the power of mentorship and knew exactly what he needed, and so he sought out someone who could give that to him, who could be that mentor. And rather than just emailing Travis and saying, “Hey, I listened to you on a podcast. Here’s all my questions that I want answered.” He instead thought, “Okay, well, what can I do –rather than just pay Travis, what can I do in exchange for that help?” and in this case, he offered to help you with your Instagram account, because [unintelligible [00:21:44].16] you had started– maybe you didn’t specifically say, “Hey, if anyone wants to help me with the Instagram account, please email me.” So it’s not going to be that obvious, is the point. So if you have a mentor, the way you can add value might not be super obvious.

For me, Joe actually asked for help, but sometimes, they might not necessarily be asking for help. You can just listen to them and be creative and attempt to figure out what it is you could help them with. And then one thing if you really want to get someone’s attention is following Travis’ example, and you’re gonna let me know if this is true or false… But obviously, it’s good to offer to do something for them in exchange for something else. What would have been even better in my opinion is if he would have proactively had a plan for you ready.

So like, “Hey, Travis, I did this for Instagram. Here’s my five-step plan in order to get you to go from this many followers to 1000 followers”, and then not even asking for anything in return whatsoever, and so you see this guy like, “Oh my God, this guy just gave me this information for free,” and then once you’ve actually addressed the needs of that individual, then you can say, “Hey, by the way, do you mind helping me out with XYZ?” Again, not necessary, but maybe if you want to get some massive, big-time 20,000 unit apartment investor to be your mentor, that’s probably the approach you’re gonna have to use. You’re gonna have to put all your cards on the table first, and then ask for help afterward. So be more proactive in your value-adding, as opposed to it being an exchange type of deal.

Travis Watts: Excellent. Yeah, totally agree. For those listening that are thinking about this concept, think about this. It’s a super, super-competitive world out there. There are lots of people right now, especially on the online stuff, since we’re all at home and a lot of folks are out of work, a lot of people out there looking to work for free. So if you’re thinking, “Well, I’m worth this much money or this much per hour,” or you’re letting your ego get in the way, there’s a lot of missed opportunities with that. And you don’t always have to start working for free, but to your point, the more detailed, the more precise, the more you can stand out and add value, the better off you’re going to be; just food for thought to wrap that up.

Theo Hicks: Alright. Well, I think, what we’re gonna do is we’re gonna stop at those three and create a little bit of anticipation and maybe make people go to the blog to get the last two, number four and number five. So if you want tips number four and number five, go to the blog, joefairless.com, and then it’s “Five tips for navigating 2020.” The blog post goes live the 29th of July. So check that out for those last two tips. The first tip was to educate yourself. Number two was to redefine your goals, making sure you’re focusing on the underlying the why behind that dollar amount, and then number three is to seek out a mentor, either financially paying them or by adding value. And for all those, we gave countless examples of what Travis does, what people he talks to do, and then just overall advice on that. So anything else you want to say before we wrap up?

Travis Watts: We saved the best two for last. Go check it out.

Theo Hicks: There you go. Well, Best Ever listeners, thank you as always for listening. Have a best ever day and we’ll talk to you tomorrow.

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