retirement Archives - J Darrin Gross Podcasts

Wealth without Wall Street with Russ Morgan – CRE PN #393

Russ Morgan 0:00

We call our right next thing, helping them understand what is the right next thing we help them self assess where they are in relationship to all of these different categories. And you know, it’s overwhelming sometimes to see all the different options to realize there’s so much unknown and there’s so much uncertainty and what I’ve been doing. But then there’s safety and knowing, hey, there is a process to do this. I can get education on these core areas, I can then start to build my own investor DNA, my own investor, Buy Box, my own passive income operating system, and then I can start stacking cash because once I do it once, I can do it over and over again, right, like there’s people that don’t come in with a ton of capital, who immediately once they get in and they start doing it they realize okay, now I have the skill that produces passive income on a regular basis.

Announcer 0:51

Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant we are here to learn from the experts.

J Darrin Gross 1:10

Welcome to commercial real estate pro networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate and investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.

Today’s interview is sponsored by Building Insurance and Risk. When you invest in real estate, you need to protect yourself and your investment from catastrophic loss. The experts at building insurance and risk provide you with multiple insurance coverage offers and a side by side coverage comparison. To learn more, go to building insurance risk.com.

Today, my guest is Russ Morgan. Russ is the co founder and partner had Wealth without Wall Street, an online community that seeks to re educate business owners and families on how money truly works. And in just a minute, we’re going to speak with Ross about what is investor DNA and why you should only invest when following yours.

But first a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like share and subscribe. And as always, we encourage you to leave a comment. We’d love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you’re there, please subscribe. With that I want to welcome my guest, Russ Morgan, welcome to CRE PN Radio.

Russ Morgan 2:55

Thank you, Darrin, for having me excited to be on here with you today.

J Darrin Gross 2:59

I’m looking forward to our conversation. Before we get started, if you could take just a minute and share with the listeners a little bit about your background.

Russ Morgan 3:08

Okay, I’ll be brief. I don’t want to put anybody to sleep right. I had started out as a certified financial planner as an investment advisor a long ways away from our current company, which is wealth without Wall Street. When the market crashed in oh nine I was sitting there like everybody else palms up trying to figure out what happened. And sit me on a several year journey to determine how can I personally grow wealth without Wall Street and also help my clients along the way. And that led me to join forces with my current business partner, John Muir. A handful of years later, we started the company well, two out Wall Street 2017 We started a podcast called wealth without Wall Street that seeks to help people who want to become financially free, get there faster, and do it without having to invest in things that they don’t understand and don’t like without having to wait till they’re 65. And without having to work in a scenario where they’re out of cash, trying to pay off debt and living day to day. So that’s our objective and goal and we help people build passive income become better investors and create their own personal financing and cash flow systems.

J Darrin Gross 4:16

And I love that. So the name wealth without Wall Street’s kind of a funny one to think that you started as a certified financial planner. Definitely gets your attention. Tell me a little bit more. You mentioned kind of the the the podcasts and educating people. Are you are you helping people invest? Are you purely an education platform? Or how is it that you guys are what is it you do wealth without Wall Street?

Russ Morgan 4:47

Yeah, no, thank you for asking that. So I said it quickly a second ago, and often times it’s lost in all the other things I was talking about. So there’s three specific things that we do. The first thing we do is people build their own personal cashflow systems. And for for me, that was the exit out of Wall Street, I met a man named Nelson Nash and I was at a conference in Orlando, Florida, he wrote a book called becoming your own banker. It was the idea was that our cash needs to reside somewhere within our control and not in the form of 401, Ks and IRAs and equity in homes and so forth and so on. And he, he helped me see the light that the reason why people are not financially free is that they don’t have access to money, they put it in places they can’t touch. And so that was a big thing for us. So our team became known as one of the premier places to go and to set up these infinite banking systems, and help people build cash in a place that they can control. So we still do that to this day, we were mentored by that author, because he happened to live in our hometown, we didn’t know that at the time. And we’ve got to spend about 10 years with him for he pass. The second thing that we do is we built a community that is designed to help people become better investors. And we do that kind of by leading from the front. So my business partner and I publish our personal passive income report every single month. And we talk about our experiences, and we interview guest on our podcast as well, who are experts in many different areas, real estate’s one of many, right, but there’s so many different ways in real estate to create passive income. So we were trying to help people understand who they are, as an investor, we call that their investor DNA, we help them determine what their investor Buy Box is, so that they can make decisions based upon the criteria that fits their investor DNA. And then lastly, it’s ultimately connecting them to building passive income based upon that and doing that within safety being around other like minded people. So we also run two passive income. masterminds. One is called the passive income mastermind, one’s called the inner circle, ones for non accredited investors, one’s for accredited investors. And so our our organization helps people not only get set up in cash, connect them to like minded people, but also be there to give them a you know, a shoulder to lean on whenever they get in trouble, whether that’s from us or resources within our network.

J Darrin Gross 7:22

Now, I appreciate you breaking that out. And yeah, go a little deeper on that. So, you know, the historical notion has been that people they get a job or get an education, get a job, have a 401k and fund that. And that was kind of the way it was described me, as you know, hey, you know, you invest in the company all match. And, you know, in the start early, it’ll grow and before you know, you’ll be ready to retire and uncomfort kind of thing. What’s wrong with that that model?

Russ Morgan 8:00

Where do I start?

J Darrin Gross 8:01

I want to hear from you. You’ve been the guy selling that kind of program. Yeah,

Russ Morgan 8:07

I was early on. That was that was my career when I started in financial industry, and oh, four, that was my career, it was helping people set up retirement plans and manage those funds. Here’s the problem with that is when someone reaches out to us, Darren, they have reached a point in time where they are frustrated with the lack of time that they have, whether that’s lack of time to pursue other ventures or lack of time to spend with family. And it’s always because they’re constrained, typically, because of the job or business they’ve put themselves in. And we’ve we create prisons for ourselves, right? Like none of these bills and expenses we have, or were given to us. We acquired them, and did willingly on the front end, no matter what it was homes, cars, student loans, whatever. We we went in there, open arms and got it. Well, someone gets to a point where they’re frustrated, and they’re trying to figure out how do I get out of that they come to us and they say, I want to be financially free. So what does that mean? They say, Well, I want to be able to spend more time with my family I want I want my spouse to be able to be at home. So during the summertime when our kids are out of school, we’re not like playing daycare, you know, roulette here, whatever that may look like and I want to be able to travel more I want to be able to pursue this this other passion I have. Well, what does that require? It requires passive income greater than their monthly expenses, right? I mean, I’m sure a lot of people listen to your show because they’re trying to build their real estate portfolio to create cash flow. Cash flow then creates opportunities which allows them to either pursue what they’re doing at a higher level, you know, pursuing excellence because of it or it allows them to remove themselves from the country. strengths that they’ve put upon themselves with the jobs. So when I talk about the 401 K, I asked people, okay, Darren, when would you want to be financially free. And individual were talking to his 45 years old, they say yesterday, right? They don’t say 15 years from now, they definitely don’t say specifically 14 years and a half. Because until they reach 59 and a half, we all know, we can’t access the money within our 401, K’s or IRAs without penalties. So the the instrument that they’re most likely utilizing, regardless of the company, matching or not, is a tool that is in direct conflict with their goal. If my goal is to be financially free today, I need to build passive income, while my 401 K and Ira cannot build passive income. And so that’s why I say it’s a direct conflict, it may be one of the worst instruments for someone wanting to become financially free, that’s been built. But yet, there’s what $20 trillion, or something like that, in these plans?

J Darrin Gross 11:04

No, I, you know, it’s funny as you as you get older, and and kind of realize that you’re closer to the end, or, or there’s not as much runway ahead of us behind you or, you know, however you want to put that, that, you know, do you want to be working forever? Or do you want to have some some life? And it certainly becomes comes more into focus, you know, and your family and, and just how quickly time flies by? No, it’s certainly something I’ve become more and more aware of. So, when when you talk about financial freedom, and then how I mean, is it? Is it just do you break it down pretty much to just more more passive income than the expenses? Is that the simple is the

Russ Morgan 11:48

simplest answer that exist. Like we always talk about the the formula for financial freedom is easy, right? Passive income greater than monthly expenses going down the road right now, you don’t even have to stop it write this out, most likely, you can do the simple math to tell you how close to financial freedom are you, right? Like you can say, how much passive income do I have? Let’s just assume I have 10, at 10,000 hours a month and expenses, and I have $1,000 a month and passive income? Well, I take the 1000 divided into the 10,000. What percentage is that? 10%. Right. So I’m 10% of the way to being financially free. Now. Now I have a goal. Now I have a mark, I can actually start pursuing that. Before when I was a financial advisor when I was a financial planner, and I worked inside the belly of the beast. It was we need seven figures. Well, exactly what now? Well, I don’t know exactly amount. Because you know, what we’ve got to do is once we get there, then we’re gonna start we’re gonna use this 4% rule, right? That was the old safe withdrawal rate. Well, we interviewed Wade foul, the most recorded guy on this concept right now, two years ago, and he told us the 4% rule is gone is 3% rule, right? And so now if I have a million dollars, that means I can take out $30,000 A year and have 100% likelihood, I won’t run out of money at the end of 20 years. So if I took out more, I don’t have the safety of knowing that I may run out of money. Well, so if I’m I’m living off 120 $10,000 a month, right? Well, how much money do I need to take out based upon the 3% rule? Well, I need to have at least $4 million in the account taken out 3% to get me to 120. But that’s after tax if it’s coming out of 401k. So do I need to have 5 million, 6 million? Well, for the average person is looking at their 401 K balance right now they say well, I have 372,000 That’s forever, that’s just never gonna happen. And it’s deflating. But yet the same person comes into our world and says I need to build 10,000 hours a month and passive income, just like the lady that we had Dawn, who was raising two kids recently divorced, and said, I need to build $10,000 a month and we said okay, well, here’s a pathway to do it. Within 18 months, she had built a pathway with a lot less than $5 million, right? She built a pathway to actually create $10,000 a month and was able to leave her job and now spend more time with her kids and pursue things that was more of her passion project. So we say is that passive income can lead to passion income. I don’t believe in retirement, I think retirement is a new age word that shouldn’t exist, but what people were looking for is freedom.

J Darrin Gross 14:44

Right. Right. Right. And I think that’s kind of more the, the understanding I’ve come to is it’s not necessarily a quitting it’s a matter of just more or more time. Freedom. So I’m curious. So you mentioned 18 months it literally in 18 months, she was able to Due to achieve or what she is on a path to achieving the $10,000 month?

Russ Morgan 15:05

Yeah, well, Dawn and her situation within 18 months had created the $10,000 a month in passive income. I mean, I can tell you a story upon story of people in our community that has built, you know, 5000 a month, all the way up to $50,000 a month, right? The the key is, is that is it possible, right? Once you understand the formula becomes really easy? Why did people not achieve financial freedom earlier in the traditional environment? Because the target is constantly moving? And they have really little impact and how to do it, right? Like how much results can you have in the current 401k environment in the mutual fund that you’re investing in? And the stock that you’re invested in it? Can you? Can you impact the outcome of it? No, you can put more money in. But you can even even the more money you put in, does it lead necessarily to a better result, right? People can look, I mean, I’ve been putting more money in over the last 12 months, and my accounts lower than it was 12 months ago. How’s that possible? Well, so then that that leads to somebody putting the minimum amount into it and spending the maximum, right, as compared to when you say, hey, I need $10,000 A month to cover my monthly expenses. Okay, well, what is it that I can do to create that? And then they get really clear with that. And then every time that they make one step that create $100 A month or $500 a month? They go, Oh, wow, I’m, you know, I’m 1% there and 5%. There, I’m 10% there. And they, how fast can I do it? Well, we show people, here’s a process to do it. And then if you want to fast track it, here’s what this person did to fast track it. Here’s what this person did the fast tracking. And some people can some people can’t. It’s always up to you. There’s no good or bad investments. There’s only good and bad investors. Right. That’s what Robert Kiyosaki said, I totally believe that.

J Darrin Gross 16:54

So, so help me understand what are some of the vehicles that people are are using? You mentioned infinite banking is as one and I’m a little bit familiar with that. But I’d love for you to kind of get into that, but but just share with the listeners? What, what are some of the vehicles? Or how is it? I mean, you know, it’s one thing so can you $10,000 passive income? Are you cashing out a 401k? And investing? What is it? What are you doing? That’s, that’s getting somebody do that? Or how is it the one is generating 10,000? Passive income?

Russ Morgan 17:30

Yeah. Well, if it’s okay, I’d like to build that because what Yeah, that’s the most frequently asked question. You got my attention? That’s the most frequently asked question, what are you investing in, and you could easily go to our website, and scroll to the bottom and pull up our passive income report, and you would see mine and my business partners personal passive income report that we report on every single month. So in the month of September, we published 65,000. For the month, I think in the month of October, it was like 41,000. So that’s a monthly number, a little over half a million for the year in passive income. And it consists of lots of different things. And so people will look at our numbers and say, Oh, you guys are doing this land flipping thing. You’re doing the short term rental thing, oh, you’re doing these syndications over here, oh, you’re in an E commerce business, or you have long term rentals. That’s what I should do. And what we always say is pump the brakes on that. Because the the answer, and I said a second ago is no good or bad investments. There’s only good or bad investors. So the key for everyone is they have to understand one, what is their goal? Truly, why are you going to accomplish this? Like Darren, what is the thing that’s going to make sure that you never quit trying to get there? Because sometimes people are not even taking the time to say, what is my why? And is it greater than my why not. And that’s why they’ve pursued they’ve not pursued it to this point, because they don’t have clarity. So they need to have strategy and clarity around what they want to accomplish, then, then they gotta get their cash in a place that they can access it. So we’re talking about the infinite banking. We’re not in the business of giving people investment advice, so will not tell somebody, you need to cash out your 401 K you need to sell this stock, you need to do this. Never would you hear me or any of our coaches do that one because we’re not licensed to do that anymore. Thankfully, don’t want to be in that position. I have no interest in investing your money for you got my own to invest. But what we want to do is help them see is it getting you closer to or further away? If it’s further away, then why are you doing it? What are you going to do now? And so yes, do we have people who who can most people in a 401k can’t do anything with it right? As long as they’re employed at the job they don’t have access to that money now, when I was an investment advisor started now in 2004 2005 2000s. You could go and access 401k money’s there were abilities for early withdrawals that stuff left long time ago whenever the stock market crashed and oh eight that the Wall Street’s with with to read it all the contracts that existed out there and said, yeah, there, there are no more early withdrawal options within existing plans. No more in service withdrawals as with a head, they don’t do that anymore. Why? Because they don’t want to reduce their percentage of money they’re getting paid on. Now they tried to say, Oh, well, they’re in this for your good because if you take out the money before you get to fit nine and a half, you’re not gonna have it, yada, yada, yada. So they’ve done away with that. So most people can’t get access to that money anyway. But maybe they stopped contributing to the problem. But whenever they understand, hey, I gotta get my cash in a place that I can use. Well, then that allows for opportunities to happen. There’s million dollar opportunities, or 1000s of dollars a month of cash flow opportunities around you every single day. Well, why haven’t you participated in it? Well, you don’t know they exist. Darren, I don’t care what kind of car you drive. Let’s just assume you drive white for f150. Okay. Yeah, we everybody has bought and bought a car. And whatever kind of car it was, it was unique and new to you. And when you get on the road, probably even before you got home, what did you notice two or three other cars looking just like it on the road? Well, you never saw those cars before. Why didn’t you see him because your brain filtered it out was an unimportant information? Well, here’s the key is that when we get access to cash, and we tell ourselves that we want to buy assets are going to produce passive income. Now, our brain is, is focused in on what those opportunities might look like, and it starts looking for them everywhere. Now, I may not know what to do with them, right? I have to educate myself as an investor to be better at that. But I started looking at seeing opportunities everywhere. And that’s what what we found is once somebody has access to cash, now, it begs the question, what are you going to do with me? How do you get me at work? And so now we move into the third column, which is, how do I start building that five or 10,000 a month or 25,000? a month, right? I’ve got I got a dentist and our president come mastermind, this up to $60,000 a month, when he first got in our mastermind, his goal is to get to 30k. Well, now he’s at he’s moving towards 60k. He’s like, because I want to be able to take care of the next generation and the next generation. Like, why stop? This is more about building a process where my kids don’t have to reinvent the wheel. My grandkids don’t have to reinvent the wheel. Well, how do you do that you have to figure out who you are. As an investor, we’re all unique. Your gifts and my gifts are most likely completely different. The way that you’re going to see the world and be able to invest in things, I will not have that capability because I don’t have your experiences. I don’t have your resources. I don’t have your network. I don’t have maybe your finances. Same thing with me. So the first thing I did that cost me 11 years of my life as I made an investment in a single family property. i That $97 a month coming in was not exciting to me that the six months and when the rental property above me flooded my unit and cost me the next 18 months of that 96 bucks a month. It was gone right now, was it the single family rental property? That was the problem? Of course it wasn’t. I was not excited by that single family property because I couldn’t influence my investor DNA. I want to be involved. I want to have the ability to influence the outcome. I like to manage things. I like to provide ideas to it. My I tend to find investments and turn them into businesses. Well, so for me, that wasn’t an opportunity. I could do that with that. So I didn’t invest in another passive income asset for 11 years. But then when I figured out this whole thing about hey, invest from your own gifts, and invest from your own investor DNA, I realized that I was good at building businesses. Well, how can I go to business so I found a concept called the land flipping. I don’t know if you’ve ever interviewed Mark Podolski on your podcast. I’m lazy reading. Love that guy. And I was fascinated by his concept. It was a business. Now, I did not want to personally operate the business but I wanted to invest into it. So what did we do we figured out a way to create a business around it put in operators put in a team that’s running the whole thing. Now I put capital in I add management experience to it. Some level of influence in to the equation and now is producing $25,000 a month and passive note income to us. Same thing with a short term rental business. I interviewed plenty of people in the short term rental space they were all mostly individual operators running one to five units himself telling me about all the problems that they were having and how they weren’t able to scale because they were running in a spatula is in the middle of night over to the the next unit while they’re trying to change the pillowcases on the other one. Well, that didn’t make sense to me, but I did see the opportunity. I saw the unique you know, market share. It had the ability to Add instead of long term rental. So my business partner and I went and hired an operator that had run a similar type business just in a different field. And we knew he had the skills and we added capital to it. And we scale from zero units to over 30 units over the last two and a half years. And we did that in a non vacation market. So that that business produces between 5000 a month and 35,000 a month, depending on the season that we’re in. Well, those are things that fit my DNA, right? That’s not something that would tell you to go do unless you had the same exact resources, same exact skill sets that I possess. So people that come into our world sometimes want to be purely passive investors, we have an optometrist is an unprecedent mastermind. He’s invested in probably 18 Different syndications, he’s looking both for long term capital gains, but also for depreciation to offset have really high income, active income, he has another other things that he needs. So he’s looking for that. So there’s ways to invest, and there’s not a one size fits all, it just needs to be tailor made to your scenario.

J Darrin Gross 26:06

No, I appreciate you going through that, because I think that’s the restraint forgot the shortcut, the the answer, and I think where you started as you got to know you, and what really was important to you. And from there, then you can, you know, find the path and the vehicle that that makes sense for you. And, and also the different vehicles you you know, mentioned? Are there other businesses that you you know, that your you or your clients have sought out? I mean, it doesn’t sound like you’re, you’re limited by your model as to any particular thing as much as it fits you and your, your goal.

Russ Morgan 26:49

No, I’m agnostic, and most of the people in our group are right. We have a guy in our community that two years ago, during COVID, we did this financial freedom week. And we brought on I don’t know, 10 or 15 different people in different niches to share and do workshops for our client base. Everybody’s at home, right, you had all sorts of time. And so we were sharing this, and one of one of the groups was sharing how to build an E commerce business, not the arbitrage model where you’re buying cheap products and trying to sell them for a higher amount, but actually finding a product that’s being sold right now. And within a specific price range. And going out and redoing that product, like innovating on that specific product is already a winner, right? It’s already making money. And this company was really good at helping people discern what the process was figuring out if it actually could make money. Well, one of our friends did this. He lives down in Florida and he wanted to start a business with his two daughters. And he was a pastor by the way, he in worked part time as a pastor and he left the northwest to come to Florida because he was a full time pastor’s wife had a really successful networking marketing business that made enough money where he could become a part time pastor. And so he was started this business with his two teenage daughters. And he started this business out at the end of 2020, probably the worst time to create an E commerce business because most products are shipped out of either India or China. Well, he got his first set of products in sold out of them within like three weeks, and was 12 months before he could get the next shipment in. So he really figured it out and then was stuck sitting for almost the whole 2021. At the end of 2021. He had made four different orders because he knew he needed to stagger them. He shared with us the other day on our podcast, he’s up to 80,000 a month, passive out of the business. So he’s producing 350,000 a month in revenue, and paying himself over 80,000 a month. And it requires about an hour and a half a week of his time. Holy mackerel, it is. It’s fascinating to me to see people do things like that. There. There’s a there’s just a slew of opportunities out there. Somebody says, Wow, I want to go do that. Well, you have to have that same skill set. Right. You have to possess the same thing that he did and put in the time that he did to get to it. You know, we have, you know, people you talk to land flipping business. It’s fun to see somebody like Mark Podolski to see what he’s done. But yet, we have named Roberto this in our passive income mastermind, that was an attorney that was you know, three years into his field and realize that the only way he can make more money is if he put more hours in. He was sitting there looking at partners at 50 6070 years old. And he was like, I don’t want to be there. He was 30 years old. He’s like, I don’t want to be there. 30 years from now. So he heard Mark Podolski on a podcast started doing this. Within four years, he’s built 50,000 a month, and passive, working again, about three hours a week. So there’s so many opportunities to build streams of income. But sometimes people hear the word passive and they assume uninvolved, that’s not always the K. You sometimes you have to build a business and then set it up to where it runs on its own. So we move into that true B quadrant. And out of the S quadrant, which so many people live in,

J Darrin Gross 30:31

Yeah, I love the quadrant, or that was at the four quadrants is that the book? I can’t remember the was the name of the title of that book was a

Russ Morgan 30:41

Cashflow Quadrant by Robert Kiyosaki.

J Darrin Gross 30:43

Yeah, yeah, that was good. Good. I appreciate you sharing kind of the different models. And it sounds to me kind of the you know, one of the things that holds people back and I include myself is just convention, you know, there’s the way things have always been done the way you’re supposed to do things, as opposed to, you know, having the insight that Aha, that that something that burns with inside you that says, I can’t do this, I need something, something’s better, there’s gotta be some better, and having that, that, that want that really the desire that kind of drives you. But also, I think, you know, being open, open to different opportunities, and and being able to recognize those and to see them for more than, than what they present themselves at face value. How do you is that just innate? When I mean, when people know that, you know, what they want, that they’re they’re seeing this? Or is there any kind of, you know, coaching or conversations about looking beyond, you know, or to investigate things or to see more opportunities when, what, what’s just on the surface?

Russ Morgan 32:00

Yeah, when when people reach out to us, they’ve, they’ve got a problem, they don’t know how to solve it. Right? If they knew how to solve it, they wouldn’t be calling us. But they, they hear a story, maybe there was one we share on a podcast on your podcast or ours, they hear a client or hear a friend that has been in this. And they say, I want that I want to get out of this pain, I want to be in a position to where I could do that thing. And the to your point, when they have that desire. Now, they set up a 15 minute call with one of our coaches. And what we do is we want to know that their y is greater than their why not, they have to convince us to be honest, like we don’t want to take on anybody. Because if someone who is willing to learn, we can help get there, someone who has all the money in the world, but believe they’ve got it all figured out and have a rival syndrome, we to be honest, we just don’t want to work with them, and they’re not going to be a good fit. And so when somebody gets into our world, we take them to a process that we call our right next thing, helping them understand what is the right next thing, we help them self assess where they are in relationship to all of these different categories. And you know, it’s overwhelming sometimes to see all the different options to realize there’s so much unknown and there’s so much uncertainty and what I’ve been doing, but then their safety and knowing, hey, there is a process to do this, I can get education on these core areas, I can then start to build my own investor DNA, my own investor, Buy Box, my own passive income operating system, and then I can start stacking cash because once I do it once, I can do it over and over again. Right, like there’s people that don’t come in with a ton of capital, who immediately once they get in and they start doing it, they realize, okay, now I have the skill that produces passive income on a regular basis. Like we have a guy in our in our group called, his name is Jeff, his skill set was being able to operate the burr method. Well, the biggest problem he had early on was access to cash, he just ran out of money. But once he did it over and over again, then now he could go and borrow other people’s money. And now he’s got up to 58 doors personally, and he’s become financially free. He’s been able to leave his job in order to work part time in that business, and actually consults and coaches in our company with people that come in because he just has a passion to help people see what he saw. So when you you figure out that you don’t have to have all the answers but you you have to be around other people pursuing it and to oftentimes at the watercooler, you start talking about passive income. And people when they say rice, the crab in the barrel story, they try to pull you back into where they are. That’s just that’s impossible. That doesn’t exist, man that’s just a bunch of hooey. That’s just a bunch of workshops, you go spend 1000s of dollars you end up with nothing. But you know, a lighter wallet or whatever. And I’m not saying that some of those things don’t exist out there. But I’m just saying, I see people over and over again, who really want to do it accomplish it. And it’s not because we did anything great for them, we just unlocked the things that they had saw.

J Darrin Gross 35:16

Oh, no, very true. And just the fact that, you know, there’s so much opportunity out there and really kind of start with that core thing, knowing yourself and kind of figuring out what’s important to you, I think is, is kind of really the key to this. Because if you know that you want something different, and you’re willing to work for it. And, you know, put in the time and put in the effort and the education and the connections and all that. It’s just, I think a lot of just a mind shift or mind mindset. Shift to I mean, if you’re, if you’re if you’re not exposed to people that have achieved these things, it might be more difficult. But the more you’re exposed to people that have achieved financial freedom and, and kind of understand the way they think and the way they did it. It seems like it’s much more attainable, and something that you could possibly achieve.

Russ Morgan 36:12

So when you get into an environment, Darrin, that your goal behavior is the average of the group’s natural behavior, it allows you to level up very quickly.

J Darrin Gross 36:25

So tell me more about the community that that you’ve created there? Is this is an online you have in person events, is their selection process? I mean, are you admitted? With how’s it you know, what’s the what’s the process? And is there a cost involved? Etc?

Russ Morgan 36:45

Yeah, no, I appreciate you asking. So if it’s okay, I’ll share a link and they can get access to this they’ll talk about if you go to weltweit, wall street.com Ford slash commercial, commercial, real estate pro network, you’ll you’ll get access to this also have a quiz until you self assess where you are, you can jump on 15 minute call with our coaches if you want to. But also you can get free access into a community that we built, we built a community that has almost 7000 people in it right now. You can download our app on the App Store type in wealth without Wall Street download, it’s free. But within there, right, we do have groups, masterminds, you know, Napoleon Hill said, when you get two minds together, you create a third mind. And what for, for us, what we wanted to do is go deep with the people who really wanted to achieve 100% of their monthly expenses. That’s what we do in our inner circle group. And then for the people who’ve already achieved the money, and they’re really trying to focus on the time, that’s in our passive income mastermind group, we’re going at 200%. That’s our goal. So we we do have an interview process to get into both of those groups, there is a cost for each one of those groups, our members are in there for a minimum of 12 months, we have live events that we do, and then we meet on a virtual basis on a monthly basis. So we have depending on which group they they’re all doing different things, our hiring group, they tend to have less time that they want to focus on getting together on virtual, so we meet twice a month, virtually twice a year live, usually in resort type areas, our inner circle group, we we meet more frequently, virtually, and we meet once a year live, because again, travel sometimes is difficult for that group, because money is the issue that you’re solving for. And so we were working through with those groups, our coaches are helping them help them with their right next thing. And they’re ultimately getting connected to the resources and the people that they need to accomplish that right next thing so that they’re ultimately achieving either 100% or 200% of their monthly expenses.

J Darrin Gross 38:51

Awesome. I receive a could I like to shift gears here for a second. As I’ve mentioned, by day, I’m an insurance broker. And as such, I work with my clients to assess risk and determine what to do with the risk. And there’s three strategies we typically consider the first look to see if there’s a way we can avoid the risk. When that’s not an option, we look to see if there’s a way we can minimize the risk. And if we cannot avoid nor minimize the risk. And we look to see if we can transfer the risk. And that’s what an insurance policy is. It’s a risk transfer vehicle. And as such, I like to ask my guests, if they can look at their own situation, could be their clients, interest rates, political you know, how are you how are you want to frame the question, but if you can identify what you consider to be the biggest risk, and again for clarification, while I am an insurance broker, I’m not necessarily looking for an insurance related answer. And so if you’re willing, I’d like ask you, Russ Morgan, what is the biggest risk?

Russ Morgan 40:05

The biggest risk is lack of access to cash. The biggest risks, preventing people from being financially free as they have no access to cash is what keeps us going to work every day. Right? It’s, I have to be able to make the mortgage payment, I have to be able to make the student loan payment, I have to create the income in order to go on that once a year vacation, pay the cell phone bills, and they have no access to cash. So I have no ability to go buy assets, that would create a passive income to exceed or pay for those monthly expenses.

J Darrin Gross 40:49

Now, that’s pretty, pretty cut, cut to the chase. The issue most of us face the access to cash there. That’s, that’s pretty good.

Russ Morgan 41:00

Well, here’s the thing to do. And sometimes people say, Well, for us, I mean, I’ve heard some of the people on your podcast or on dierence podcasts, and they’re just sitting on six figures, seven figures, eight figures of money, I just don’t have the ability to do that where I am I my active income just doesn’t produce enough. And I’m gonna call garbage on that. Because I’ve seen people who have $50,000 a year and income achieved financial freedom. If you’ve ever played the game, cashflow, wonderful game, not a cheap game, but a great game, play it with my kids. The first time you play it, and you you draw the doctor card, you think you’ve won the lottery, right? Because you got the highest income of everybody. But everybody’s played it realize is the person who gets the janitor card is most likely they’re going to be the first one out of the rat race. It wasn’t because of the income, the income is never the problem. So when you understand that it all it’s all about where are you taking putting that income? Are you stuffing it to pay down debt? Are you using it to put in your 401 K to try to build up some nest egg for the future? You know, are you making mistakes with money because you’re you don’t know what to do with it, you’re you’re you’re betting on the company invest in assets only looking for capital appreciation. That’s probably where you don’t have access to cash, you just put it in the wrong place. Now some people have spinning problems. I would tell most of those people, they have income problems, fixed income. But most people that we see they’ve just taken their money and they’ve put it in places they can’t touch. And that’s the biggest risk that they have. Because the way you become financially free is having access to cash to do things with it.

J Darrin Gross 42:44

Hey, Russ, where can listeners go if they’d like to learn more or connect with you?

Russ Morgan 42:49

Yeah, go to Wealth Without Wall Street.com/commercial real estate pro network. And not only can you get in our community, you can connect with me or one of our coaches. And you guys can listen to our podcast, which is Wealth without Wall Street, as well. And we’d love to help you along your journey no matter where you are.

J Darrin Gross 43:10

Awesome. Russ, I can’t say thanks enough for taking the time to talk today. I’ve enjoyed it. I learned a lot. And I look forward to doing it again soon.

Russ Morgan 43:21

Yeah, thank you, Darrin, appreciate you having me on.

J Darrin Gross 43:24

All right. For our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow. That’s all we’ve got this week. Until next time, thanks for listening to commercial real estate pro networks. CRE PN Radio.

Announcer 43:43

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Don’t Save for Retirement with Daniel Ameduri – CREPN #210

Darrin: [00:00:00] Today my guest is a returning guest. Daniel Ameduri. He’s the author and founder of the newsletter and the YouTube channel Future Money Trends. And also he’s got a book most recently. It’s called, Don’t Save for Retirement. And we’re gonna talk to Daniel a little bit about strategies that worked for one generation and maybe wrong for the next. But first a quick reminder if you like the show, CREPN Radio, please let us know. You can like, share or subscribe and you can also leave a comment. And we love to hear from our listeners. Also if you want to see how handsome our guests are, be sure to check out our YouTube channel. That’s Commercial Real Estate Pro Network with that, I want to welcome my guest Daniel. Welcome back to CREPN Radio. [00:00:47][46.8]

Daniel: [00:00:48] Well thank you so much for coming on the show. [00:00:49][1.1]

Darrin: [00:00:50] Well I’m delighted to have you back and I’m looking forward to our conversation today. And before we get started if you could just take a minute and share with the audience a little bit about your background. [00:01:00][9.9]

Daniel: [00:01:02] Yeah I mean it’s the background is in the book. Don’t Save for Retirement. So, I’d highly recommend that everybody everybody check that out. And it starts off with me and my wife at a bankruptcy attorney’s office in 2008. And today we are financially free and traveling the world with our children. But like many people I went through all those other cycles I had I had a lot of credit card debt. I had housing mortgages. I had foreclosures. A lot of foreclosures in the ’08 crisis and I just kind of stumbled my way through it and eventually came across all the right people. It’s such a small world, building wealth and investing in real estate. And I’ve been doing this as a hobby for many many years. And then I started a Web site and that’s pretty much my labor of love that I do and it does it makes a great living as well now. But I did it for free for a year. So I’m very lucky to be able to do my hobby which is anything and everything personal finance. [00:01:56][54.5]

Darrin: [00:01:58] I love it. And as I recall your Future Money Trends you were one of the first YouTube would be the first to get paid doing YouTube. It was kind of like you were a pioneer if I remember right. [00:02:10][12.3]

Daniel: [00:02:11] You know, I was well I was one of probably only two people talking about the economy in 2008 on YouTube and made some very successful predictions. It’s funny I actually thought the predictions would happen earlier so I patted them well they end up having like dead on by patting them which was the collapse of Lehman Brothers and the Dow Jones. And the the Google had taken it over and eventually it contacted me and said hey we’re starting a new thing called YouTube partnership and I end up getting paid by YouTube. So that was really cool because I was literally doing these videos every week for free and then all said I’m doing the same exact thing I was doing but I was making about twenty five hundred a month from Google which which was which was awesome at the time. [00:02:53][41.6]

Darrin: [00:02:53] Now that’s great. That’s kind of love here. So let’s talk a little bit about your book. The title is definitely an attention getting one Don’t Save for Retirement. It’s a little different than you know look both ways before crossing the street. Can you expand a little bit. I mean on on just the concept don’t save for retirement. [00:03:15][21.8]

Daniel: [00:03:17] You know the book could have been called Don’t Save for Conventional Retirement. But I think the conventional would have been too much in the title. So we Don’t Save for Retirement and you know specifically to the younger generation I think that saving for conventional retirement is it’s an experiment that has pretty much failed for most of the baby boomers. Even the ones that were high income earners who live like peasants you know now they’ve conditioned themselves to save save save save save. And if you speak to many of them or if you read some of the data from Fidelity they’re living in this scarcity mentality they’re having trouble even spending the money because you can’t you can’t save for 30 or 40 years and then cut your active income out of your life and then all of sudden draw from this chunk of money. I mean it’ll make you sick to your stomach when you think about it. And for young people today who would who would do that to themselves after we’ve already seen that it’s not working. I don’t understand why they would do it. So there is another way there is a way that’s been proven for thousands and thousands of years and it’s what the rich do. And so instead of being speculative with your money and putting it in a 401k and hoping it goes up. And by the way the most speculative part of the 401K isn’t the stocks in it. It’s the you have no idea what rate you’re going to pay on withdraw. Nobody would take a loan from a bank and not know what your interest rate is. But that’s what we do every day when we take that deduction on the 401K. We have no idea what the tax rate is going to be when we withdraw that money. All we do know right now is we have to pay a 10 percent penalty that extra money which is kind of frustrating. So the middle classes are very focused on speculation and appreciation. And the rich are focused on preservation and income. And if we simply adopt that lifestyle combined with sustainability, a sustainable lifestyle. You can be financially free and independent within five to 10 years. [00:05:04][107.7]

Darrin: [00:05:06] I tell you it’s something that’s deffinately I guess kind of crystallized in my focus and and I know one of things I’ve recognized as both a you know, I’m getting older myself and aging parents and also clients as a as an insurance broker have clients that you know they get in the business they grow the business than they they get out of business. And I think that that the thought process for me has crystallized is that recognition of the people you know people work really hard to grow something but very rarely have a crystal clear idea how they’re going to get out. Or how they’re going to get their money you know out and whether or not that’s fully understood. And like you just said I think that’s for some member of her dad is that notion of not understanding the cost to get your money kind of thing as opposed to you know you’ve been working so hard to put this in put this in put this in put this in put this in. So that’s that’s awesome. [00:06:05][59.4]

Daniel: [00:06:08] By the way Darrin, the the tax rates if you look at the federal income tax it was this low in 1931 and for a brief lip in the 1980s. But if you if you kind of look at the chart we’re basically paying the lowest taxes right now since 1931 and then you gotta ask yourself a twenty two trillion dollars in debt and trillion our deficits do you think taxable going up or down. And I think it’s pretty obvious tax are going to go up eventually. And so you’re pretty much guaranteed to pay a higher tax than you are today. [00:06:40][32.1]

Darrin: [00:06:41] Well you’re saying that trickle down isn’t going to work? What are you saying? [00:06:43][2.0]

Daniel: [00:06:45] I’m saying, it doesn’t matter what you what happened but it’s been a long time coming. The United States is definitely on a trajectory of being in an unsustainable situation. [00:06:53][8.9]

Darrin: [00:06:55] Gotcha. So let’s talk about some of the aspects of the lifestyle or the different way of thinking. What do you see as some of the traditional ways of thinking that have gotten people to this point. [00:07:12][16.5]

Daniel: [00:07:13] I think the normalcy bias of of the acceptance of so much debt in one’s life. Financing a car for five to seven, eight years. If you if you make fifty thousand dollars a year buying a fifty thousand dollar car it makes no sense. But it’s actually quite normal in our world. It’s a perceived as normal but it shouldn’t be. Same thing for a house. I understand the appeal of getting a three decade loan. Well why does it have to be ten times your annual income. Why are people buying things seven times their annual income. That’s unsustainable it puts them in a situation where there is no room for error there’s no room for living. And like most things in life a lot of times people are buying things to impress other people. When the reality is after the first day of introducing your new car to your friends, no one cares and you’re stuck with a bill. I remember when I became financially dependent I was still driving a 2003 Nissan Altima and it was almost like a badge of honor. Now at the time I was in save and sacrifice mode and you know in the beginning and now I’m not going to lie to people Look the book will explain in the book you’re gonna do this if you really want to become financially independent fast you could do it slow. I’m saying if you do that you’re gonna have to have some upfront sacrifices for the first year to two years. But as you sacrifice and save and then have that mind shift say of living a sustainable life combined with instead of buying things for speculation you start buying things for income that those good decisions start to compound on themselves and all of a sudden your expenses are way down and you have multiple streams of income instead of just one source from yourself or two from yourself and a spouse. You might have six or seven sources of income coming in in the beginning it might be small it might be only fifty dollars a month but you’ll use that to pay a water bill off, or you’ll use that to buy more income. But I want people to understand that this is not income that you just save and save and save for you know 30 years and maybe it works out for you. This is income that is usable as spendable income and can also grow. But the main focus is having that sustainable lifestyle combined with multiple streams of income as much income as you can bring into your life. [00:09:28][134.8]

Darrin: [00:09:30] The streams of income. What have you found to be the. The I guess the I don’t the norm. But are there some go to points for you know buying a stream of income that you you find people go to? [00:09:43][12.9]

Daniel: [00:09:44] You know conventional thought is dividend paying stocks and bonds and fixed things from banks. But the reality is as you’re far better off being involved in the real estate market. And if you look at other countries who’ve gone through a crisis, the real estate investors always come out okay on the other side. It’s a physical property. People no matter what happens in the economy people need a place to live. So I tend to have a heavy bias towards either real estate note investing, physical real estate, rental properties, commercial real estate. There’s a lot of opportunities in commercial real estate because there’s more seller financed deals than there are in let’s say if you wanted to buy a single family home get credit or something. So I think there’s a lot of opportunities to create passive income in real estate. And if you’re like a I don’t want nothing to do with that kind of stuff that’s fine too. There is tons of crowdfunding type real estate vehicles like Fund Rise and Peer Street. And then there’s also old money private REITS that have been around for 70 years and I love those because they’ve been around through multiple crashes including the 2008 crash. And these companies regularly are paying out eight to ten even twelve percent yields and you know people are like well what do you own. What do you own your own slivers of J.W. Marriott properties and you own fractional shares of a brand new Walgreens and beautiful golf courses. So a lot of times instead of buying a physical individual single family home where you have a lot of risk you can own some of that you can actually upgrade your income by partnering with some of these groups who invest in very quality projects and assets. [00:11:19][94.9]

Darrin: [00:11:20] So may I ask you the comparison between the an income stream as opposed to the traditional 401K mentality of put your money in the stock market as a stock market you’re 401K. What do you think there’s more of a mentality shift is it taking control or is it just doing what’s comfortable and presented to you as an option what do you see as kind of the the hurdle for people to get from. The traditional way to of an income stream. [00:11:54][33.5]

Daniel: [00:11:54] The biggest hurdle is that they’ve all been conditioned that this is the way to go. And certainly the intentions were probably great for retirement and that’s a great incentive to bring the best employees and give them a great retirement plan. But this is relatively new you can trace the pension system back. Do the Romans. But then it skips you know eight hundred years and jumps to Germany in the late eighteen hundreds. And you know the 401k the IRA, all this stuff, most people don’t realize that this has been around. It was passed in the late 70s it’s been around essentially since the 80s. And a lot of these things have become great vehicles for a Wall Street to make money. The fees the commissions the vehicles the ETF the explosion of mutual funds there’s a lot more mutual funds and there are stocks. And so this has been a great time for Wall Street and there’s a book I can’t think of the guy’s name but the title is Where are All the Clients Yachts? And I think that’s what people should look at where all the clients yachts you know Wall Street. And if you look at hedge funds and Goldman Sachs what they’re buying or what some of the richest and wealthiest institutions are buying. It’s much different from what their clients are buying. And certainly anybody who’s going to run a portfolio you have to run it like a business and businesses need cash flow. So it’s just such a shame that most people just blindly throw the money at the 401K. 60 Minutes has done studies, all these hidden fees? Sometimes are taken up to a third of what you should have made. And they’ve got even worse ones now where you do these targeted things and they think you have even more fees. So everybody treats it like it’s been a perfect world like Adam came out with the 401k plan and the Dow Jones has been around for a thousand years and it’s not one of this is you can’t just tell everybody that it’s going to compound it’s 12 percent for the rest of your life. That’s ridiculous. And by the way one last thing was quick. No no nobody nobody compounds average returns. You know they’re commonly saying the average return is 10 percent or 12 percent. But let’s be real. No one’s compounding at an average return. The stock market goes up. You might buy high then it’s down. And you know look at if a stock stock doubles 100 percent one year and then goes down 50 percent they’ll tell you about the average return. But you know where are you right back to where you started. [00:14:15][140.3]

Darrin: [00:14:16] Right. Right. I’ve always wondered about that. How you can actually calculate the return and and it is. I mean conceptually saving for a future date for whether it be a purchase or some sort of a financially to be financially free. Concept makes sense. But I think that what I what I hear you saying is the where is the money going and how is the money work. Whereas on a like a real estate it seems like a little bit more clear or there’s a direct line of if you can understand exactly. Money goes in there is a vehicle whether it be the the note you have to pay the income that’s coming in from the rent. I mean it’s it’s a little more direct as a kind of what I’m hearing. [00:15:08][51.2]

Daniel: [00:15:08] Yes. And I’m not all in on real estate. I own a lot of stocks too. And I’m going to teach them to buy stocks they own Disney and Costco and Kimberly-Clark. These great companies great businesses that over deliver. And the reason, they pay a dividend. So it’s very important I train I train my children like hey if you’re going to invest in a business they need to share in the profits. That’s the entire purpose. If you remember there used to be a video back in World War 2 and it was on YouTube and it explains why people buy stocks and it explains about that. They companies are receiving capital to grow the business and then they share profits with investors. But somewhere along this journey companies stopped sharing the profits with investors and everyone just became a speculator. If the only way for you to make money is for the next guy to pay more than you you are speculating. So if you’re going to buy a stock buy a stock but make sure they’re sharing in the profits. That’s the entire purpose of owning a business. [00:16:02][54.6]

Darrin: [00:16:05] I love that. Because I think the you know a lot of what happened up up to the 2000s and that was more about stock split stock split stock split and it was more of like said just a speculative thing. And again I’m not the biggest in the stock market or anything. I don’t fully you know keep an eye on him like others do. And I’m sure you do. But just the whole notion of the price per earnings and stuff now that has blown way out of the round of what was traditionally thought to be a a model and maybe speak to that even just as it is that it my speaking in relative terms or is it. [00:16:47][42.0]

Daniel: [00:16:48] But you’re right they throw that out on market watchdog comments CNBC about P E ratios or the Dow to gold theory that all these different things look it’s all Fugazi. The game has changed there’s algorithms involved there’s more computer trading for half a penny than there are humans. So things have things have changed. And if we don’t change with it and consider that all these changes have been have happened, we we will end up losing money. And we won’t get any of it. We won’t be able to retire. And I say again you know in the book Don’t Save for Retirement which by the way I have for your listeners at future money trans dot com slash save. They can read the first chapter in the intro for free. And the book comes out on August 20th. But they can read that anytime right now. So you know if people just keep following these these metrics look it’s it’s we have no idea the last 20 years is going to look totally different than the next 20 years. Think about it some of the biggest companies on the planet; Netflix, Instagram, Facebook, Uber. Biggest company some of the biggest companies on the planet. They didn’t exist 11 years ago. Some of them did these meetings 10 years ago. So a lot of things are going to change. So I don’t like using any of those metrics in the end. How much am I going to invest and how much am I going to make every month or every year from the income. [00:18:11][83.0]

Darrin: [00:18:13] Another reminder just to have nothing last forever kind of thing. And you know kind of drive home that speculative speculation. You know if you’re if you’re waiting for you’re waiting for a way for it it may never come kind of thing based on you think about some of the companies that were you know that were so big and dominant my childhood that are no longer. But that’s great. So you mentioned a little bit about your kids and you know working with them and getting them taught you know invest in the market, but know that they’re going to get a return that the company is going to share in the profits. Are there any other kind of points that you recommend people talk in with their kids about. I mean I think that’s kind of what do you think should you talk about this generational thing and that like for you know the baby boomers it may have worked but the the Gen Xers or the Millennials it’s clearly not what they’re looking for. Is there is are there some points that you make for young people for especially for kids. I mean I would say elementary you know kids haven’t gotten started in the workforce yet. [00:19:24][71.1]

Daniel: [00:19:25] So with my family I have a 5 year old 7 year old and a 9 year old. We regularly talk about money if we have on a property we go to an investment we look at we look at it together. There is an escrow closing. They come in the office and sit down on the floor. They’re just around it just like you know if you want to teach your kid the construction trade you bring them on the job site. You to teach your kid to farm, you bring them on the job site. I want that. I want to know how to invest. It’s very important to have this mindset of having a buying income bringing them come into your life. So Cambridge did a study that financial habits are actually developed by age 7. So absolute you mentioned elementary school kids as early as you can. We played Monopoly with the kids that very simple one when they were young. Now they play the regular one they pay the Cash Flow Game by Robert Kiyosaki. Instead of playing Uno there’s a game you can buy called Net Worth very similar to Uno which kids love. However on Net Worth, you’re paying off debt, you’re paying off credit. So it’s good to get the mindset into focusing on on those type of things and understanding it. Keep in mind parents they’re not going to get any of this in school they’re gonna get nothing. In fact they might even get some bad habits talk to them but so it’s important for the parents to you know go over with them. I love when my kids have to buy something they pay for it at Target or something if they’re buying a toy they have to look at the receipt and explain to me what’s going on. You know I’ll help them. Course the five or seven year old but they have to understand the value of money. And it’s interesting I was at the store my son the other day and we bought just a handful of items and it came out to seventy nine dollars. He was he. He understood the values like. I’m surprised I thought that would be like 20 bucks and it’s kind of helping him understand hey when you make you know when you save one hundred dollars from birthday parties don’t go blowing 50 dollars on some toy. In fact we make our kids safe 50 percent of everything they make. Originally they were saving it in checking accounts and was like You know why aren’t they buying assets that buy income. So we opened up a brokerage account for them and now they buy you know some very friendly stocks that they actually engage with because it’s a twofold lesson there. If you let’s just do it easy example. But if you get your kids the buy Disney stock not only are they understanding a little bit more about the stock market and business and fractional shares because that stock does pay dividends but they also understand it might even make them more interested when they hear about Marvel making a billion dollars or something or the park because they realize hey I’m making more money and they’ll really start to connect but I even go like a step further when we interact with Disney on their cruise ships or their their parks. I always talk to the kids I’m like What do you notice about Disney versus another theme park or Costco’s another stock. They only like what do you guys. Like going to Costco they love going to Costco. Do you like going to any other grocery store on the planet. No. Who the hell cares about going to Vons or Safeway or any Kroger? You don’t feel anything when you go to those great stores. But the Costco has an experience and I and I always bring that up to them and I’m like What is this business doing? And it’s very important to teach the kids to over deliver because outside of the investments kids need to understand that you don’t make money from working super hard or being super smart or working for this guy that guy. You make money. The simple equation, you give value to other people and if you give more value than they paid for you’ll make more money. So I’m very very focused on teaching them that no matter what you do whether you’re a I have a job or a business you always over deliver for people and that will be your economic peace and security over delivering for whoever you’re working with. [00:23:01][216.0]

Darrin: [00:23:03] Now I love that I love the just the concept of money and getting them glued into it as soon as possible. I know my oldest just got his driver’s license and we’ve had the conversation about the gas pump you know. And they’re always surprised at what it cost to put gas in the car. You know kind of things like throw money. That’s great. Hey Daniel if we could I’d like to shift gears here for a little bit. As I mentioned before we started I’m an insurance broker by day. And work my clients to assess risk and determine what to do with the risk. And there’s a couple of strategies we typically consider and one is avoid the risk to is minimize risk and then three is transfer the risk which is what an insurance policy is. And recently I’ve started asking all my guests to identify what they consider to be the BIGGEST RISK. And just to clarify I’m not I’m not necessarily looking for an insurance related answer. [00:24:08][64.9]

Darrin: [00:24:10] But if you could if you Daniel Ameduri could say what you see is the BIGGEST RISK? [00:24:20][9.8]

Daniel: [00:24:20] I think my personal biggest risk at this point because of what I learned in the scars from 0 8. My biggest risk right now is simply myself. I have no debt. I am a big believer and having no debt I’ve surrounded myself with 21 sources of income. I have a great business. So I mean I’m well capitalized. I’m not leveraged. So all the missed all the big risks that I that blew me up the first time out are out of my life. So I would say the biggest risk is just me perhaps wanting to go on too many trips. Too many travelling trips. Not being focused. Losing my focus. Losing what got me here. And I’ll give you a perfect example. I mean I just spent thirty five days in a trip that we went to Kenya and then we came on a week and then went to Japan for three weeks. So my biggest risk is just having too much fun in life at this point because I’ve done the hard stuff. You know if you if if everybody is not happy with that answer I could say the biggest risk to all of us is probably the bond market. You know I mean that could throw the real estate market into a tailspin it could totally implode the stock market could even affect the U.S. currency so my absolute real biggest risks are things I can’t control. The biggest risk that I can’t control is me sleeping in. [00:25:41][80.6]

Darrin: [00:25:42] Yes. That’s great. You know I recently I’ve been reading Howard Marks some of his books on. I think one of it’s like the biggest or the biggest thing or the one biggest thing. [00:25:57][15.2]

Daniel: [00:25:58] It’s always the Most Important Thing. [00:25:58][0.0]

Darrin: [00:26:00] Yeah The Most Important Thing. yeah, yeah, yeah. And just his is just how it’s it’s everywhere. I mean the risk it’s not limited to one thing and what I think the theme that I keep hearing him come back to is people. You know it’s none of it’s you know the market is not mechanical. I mean you can set something on a on a path but it’s the interaction of people and how they react and whether you know the emotions of the people of the market and like said things that you can’t control that are really the things that that you know are out there. [00:26:36][35.8]

Daniel: [00:26:36] So so true because think about when you buy like a smaller company you know I’ve invested in a lot of these cannabis companies and I hope they do well and they should do well. But you know what. Sometimes I go to bed thing I’m like Man the whole thing holding that company together is one guy. The founder and CEO who’s working 16 hours a day. I’m like if that guy if something happens that guy across the street that company is going to zero. And it might not necessarily be as drastic for like your blue chip stocks, but there are some very very good CEOs who are the driving force of their businesses that have something happen to them. You can imagine a company might go into a tailspin or lose its focus like much like Apple did when they lost Jobs. Jobs literally when he came back the second time he pretty much pulled the company from saying they had like 1 percent of the market at that point I mean companies basically was going to die. And now it’s you know one of the most popular companies and probably the most popular brand on the planet. [00:27:30][54.1]

Darrin: [00:27:32] Right. Right now it is it is interesting and you don’t realize it. I think a lot of times on the is things are starting and going. But just how much of the identity and momentum that a company has is tied up with the founder or you know one or a couple of people kind of thing and that’s that’s interesting. Daniel where can the listeners go if they would like to learn more and connect with you. [00:27:58][26.7]

Daniel: [00:27:59] I would love for them to go to FutureMoneyTrends.com/save. They’ll be able to subscribe to the free weekly wealth digest. You’ll get letters about what the different experiences my wife and I went through as we were coming up as well as exactly what we’re investing in right now and I’d like to bounce a lot of different cash flow ideas up some experts. So we’re trying to introduce new cash ideas, because I’m selfish I want more I want to learn more and so I share it as soon as I get it with everybody. And you’ll also be able to read the intro to the book as well as the first chapter and there’ll be a link there if you want to continue reading the book. And you can buy it on Amazon. [00:28:34][35.4]

Darrin: [00:28:36] And I will put on the show notes and I highly encourage any of the listeners to go check that out. I’ve read the first chapter or so and it’s extremely well-written and it’s a compelling story. And for anybody that’s interested in you know how to take control of your money I highly encourage you checking out Daniel’s stuff. So it’s good stuff. Daniel I want to say thanks for taking the time I’ve enjoyed it. And as always learn a lot and I hope we can do it again soon. [00:29:04][27.6]

Daniel: [00:29:05] I really appreciate your time. Thank you. [00:29:06][1.2]

Darrin: [00:29:07] All right. For listeners if you like this episode don’t forget to Like, Share, and subscribe. Remember the more you know the more you grow. That’s all we’ve got this week. Until next time thanks for listening to Commercial Real Estate Pro Networks CREPN Radio. [00:29:07][0.0]

For more go to: https://www.futuremoneytrends.com/Book 1st chapter: https://www.futuremoneytrends.com/save

CREPN #182 What Wealthy CRE Professionals Do That Most of Us Do Not with Doug Marshall

What are wealthy CRE Professionals doing that most of do not?

Doug Marshall is the principal at Marshall Commercial Funding. Additionally, he is a CCIM, author and a returning guest to CREPN Radio. In this episode, he shares five points he learned from his commercial real estate clients that have changed his financial fortunes significantly for the better. And more importantly, how you too can leverage your relations with your commercial real estate clients.

For the first 24 years as a commercial real estate professional, I was on the never-ending hamster wheel of low paying jobs. I was living paycheck to paycheck. I was just barely getting by financially.

My financial situation went from bad to worse when I decided to make the transition from banker to mortgage broker at the age of forty-six. I was hired by a mortgage brokerage firm as an independent contractor which meant I received no salary and no health insurance. I didn’t even receive a draw. I was totally without a safety net and that first year I made a whopping $7,000. I quickly went through the little savings I had and started borrowing against the equity in my house. To say that time in my life was emotionally painful is a huge understatement.

The next four years I saw steady gains in my commission income but not enough to live comfortably, let alone put money aside for retirement. During my fifth year as a mortgage broker, I came across the Albert Einstein definition of insanity. “Insanity is doing the same thing over again, expecting different results.” I kept asking myself over and over again, “I’ve been working at this company now for five years and I’ve barely scraped by financially. What makes me think my sixth year will be any better than my first five years?” And the honest answer was, I couldn’t expect my 6th year to be any better than the previous five years.

Something had to change

I realized something had to change. After much consideration I decided I needed to take the great leap into the unknown and start my own business. So at the age of 51, I started Marshall Commercial Funding which turned out to be the best business decision I ever made. For the first time in my career I was making good money. Boy that felt really good. But even so I knew there was no way that I was going to retire well.

You see I could do the math and I understood I was too close to retirement to make up for the hard, lean years. I realized it was very likely I may never be able to retire at all.

But I also realized that my clients were doing quite well financially. Their liquidity and net worth were growing rapidly. That is no exaggeration. I have a number of repeat clients and I saw how their financial strength increased dramatically from one year to the next. It was an amazing thing to watch! And I knew at that point that the only way I was going to retire well was if I started investing in commercial real estate. That was the only way of getting off the hamster wheel.

My financial situation improved dramatically

So, twelve years ago I started investing in commercial real estate. And my financial situation has gone from very bleak to very good. Because of my real estate investments, my net worth and liquidity have grown dramatically.

Not only could I retire if I chose to, but I could do so comfortably. The passive income from my rental properties when added to my future Social Security checks significantly exceeds my personal expenses. Today I am one of a small group of investors that owns several rental properties valued at over $50 million. So that’s my story.

Most Americans aren’t going to retire well

Why am I telling you this? I believe that many of you listening to me right now, are either living paycheck to paycheck or you realize that you aren’t going to retire well.

Here are a few recent statistics:

40% of adults can’t cover a $400 emergency expense with cash
45% of adults have nothing saved for retirement
63% of Americans at age 65 are dependent on Social Security, relatives, friends, or charity
80% of Americans believe they will not have enough saved for retirement

I understand why most Americans would have a difficult time saving for retirement. But those of us who are commercial real estate professionals we have a distinct advantage over most people. Every one of us, reading this, in our own way, contributes to the success of our clients. But there is no reason why we can’t go along for the ride.

And that is what some of us have done. Do you want to know what wealthy CRE professionals do that most of us do not? They invest in commercial real estate. Now throughout this reading, I’m going to ask you to raise your hands or sometimes to nod your heads. I’m doing so because I need your feedback. As practice, by a show of hands, how many of you currently own a rental property?

Which brings me to my first point:

Point #1 – There is real wealth to be created in owning commercial real estate

Those who just raised their hands will tell you owning CRE creates wealth. It’s not a myth. It’s not a get rich quick scheme. It actually works. My book, Mastering the Art of Commercial Real Estate Investing, shows you how to do it. I’m going to give you a couple of tidbits from the book today to get you started on learning how to build wealth and grow passive income.

For those of you who didn’t raise your hand, this is my goal for you today: When you done reading, you’ll know what’s holding you back and you’ll know the steps you need to take in order to achieve financial freedom.

Today I am going to share with you 5 critically important points that have the potential of being life changing. Actually, I’ve already shared the first point: There is real wealth to be created in owning commercial real estate.

The second step to achieving financial freedom is this:

Point #2 – The savings generated from active income, i.e., your day job, will be invested in assets that generate passive income.

So we are all on the same page, let me define what I mean by financial freedom. Financial freedom is achieved when your monthly sources of passive income consistently and substantially exceed your monthly personal expenses. When that day happens you no longer need to work for a living. Congratulations! You’ve stepped off the hamster wheel.

Passive vs Active Income

But notice I said passive income. What is passive income? Passive income is cash flow received that requires little to no effort by the recipient to maintain it. Another name for passive income is mailbox money because it comes in the mail without lifting a finger. Here are some examples of mailbox money.

Annuities
Book royalties
Dividends from stocks
Owner distributions from rental properties
Pension
Social Security checks

The source of passive income I believe hands down has the best opportunity for creating wealth and growing passive income is commercial real estate investing.

Active income, on the other hand, comes from performing a service. Your day job is a perfect example of active income. In order to receive a paycheck, you must perform a service. So what you do for a living is a form of active, not passive income.

Two obstacles to investing in passive sources of income

But there’s a problem. We may agree intellectually that we should invest in assets that generate passive sources of income, but most of us will fail miserably to put our plan into action. Why? Because other purchases like a new car, an exotic vacation or a nicer home will tempt us to spend our money elsewhere. If that doesn’t cause you to stumble the next obstacle does: You’ve been brainwashed and incentivized to put your savings into an IRA or 401(k) plan. And what types of assets do you normally purchase for these types of accounts? Stocks and bonds that generate little or no passive income.

The benefit of investing in assets that generate passive income

Some of you are thinking, “Why is it important to generate passive income. I’m very happy with the return I’m getting on my 401(k) or IRA?” Right? Fast forward to the day you retire. If your assets are in stocks, bonds, precious metals, land, art, collectibles (anything that doesn’t generate passive income) how are you going to live off them? You will live off them by slowly liquidating them over time. Right? What happens if you live longer than your assets do? You’re toast. You end up being like the vast majority of Americans who will eventually end up dependent on Social Security, friends, family or charity.

Not so with commercial real estate. You do not live off liquidating your rental properties. You live off the passive income generated from your rental properties. And this passive income slowly builds over time. So when your passive income from your rental properties coupled with your future Social Security checks consistently and significantly exceeds your monthly personal expenses, you have attained financial freedom. In other words, you could live to be 120 and you’ll never run out of money.

So the second step to financial freedom is to invest your savings generated from your day job into rental properties that generate passive income.

The third step to financial freedom is this:

Point #3 – Everything we really want in life is on the other side of fear.

Think about that statement for a moment. Is it true? I believe it is. Remember that first kiss? How about the first time you did anything well? A solo, a speech, an athletic endeavor? Do you remember that fear you felt that gave way to relief? And then to joy? Those are examples of doing something that you really wanted to do well, and you overcame your fear and did it.

I believe the number one reason we don’t invest in CRE is fear. Fear of failure is all about looking foolish in the eyes of your family and friends if things go wrong. I get it. I really do. But it doesn’t have to be this way. Those of us who are reluctant to invest in CRE need to adopt a different mindset of, “You either win or you learn.” In everything we do, we either win (we make the right decision) or we learn an important lesson so next time we have a better outcome. Sometimes your investment is a home run, and sometimes you learn what not to do so next time has a higher probability of being a success.

An example of overcoming the fear of failure

In 2009, a group of like-minded investors banded together to purchase a 56 unit apartment that had been taken over by the bank. Do you remember what was going on in 2009? We were in the depths of the Great Recession. The real estate market was in a freefall. Everybody and their brother was running away from real estate in 2009 and here we were thinking about buying an apartment. What were we thinking!! Had we lost our minds?? Was I fearful? You bet I was! But I kept looking at the numbers and it made sense to me. Eventually I decided to proceed and looking back on it now, it was the best investment I’ve ever made. For every dollar invested we received $6 dollars back in owner distributions or in increased equity. But before I could invest, I had to get over the fear of failure.

Winston Churchill quote

Some of you are being held back from investing because you too are fearful. Winston Churchill said it best when he said, “Success is not final, failure is not fatal; it is the courage to continue that counts.” To succeed in life, we must realize that everything we really want in life is on the other side of fear. Does that make sense?

So the fourth point we are going to discuss is this:

Point #4 – The best way for most of us to invest in CRE is as a passive not an active investor.

How many of you are thinking some like this: “Fear is not holding me back from investing in commercial real estate. My problem is I don’t have the time, the experience or the financial resources to be investing in rental properties. I’ve got a day job that keeps me plenty busy without adding this additional stress to my life.” So who is thinking something like this?

But this is where you’re wrong. Dead wrong. That thinking assumes that the only way to own rental properties is as an active investor. An active investor is the person who makes all the important decisions, what to buy, how much to pay for it, how to finance it and manage it. To name just a few. True, this is one way to own CRE. But many times, the active investor, also known as the managing member of an LLC, or the promoter, or the syndicator or the sponsor, can’t do it without passive investors, also called equity partners, who provide the capital needed for the down payment.

Not everyone can or should be an active investor as it requires someone who has the time, experience and resources that many of us don’t have. But if we want to retire well all of us should strive to be passive investors of commercial real estate.

In the past 12 years I’ve invested in 10 rental properties as a passive investor. My only responsibility has been that I provide some of the equity to purchase the property. I leave all the decision making to my real estate sponsor. I’m more than happy to have someone else make all the decisions while I get my monthly owner distributions. It’s kind of like the best of both worlds, don’t you think?

So the best way for most of us to invest in CRE is as a passive, not an active investor. Does that make sense?

The fifth and final point I want to make is this:

Point #5 – To succeed as a passive investor requires finding the right active investor to invest with.

Be wary of real estate syndicators

Where do you find the “right” active investor? You have two choices. You can go to one of many online crowdfunding sites and choose one. But you must qualify as an accredited investor. But the real problem with using a syndicator from a crowdfunding site is that you have no idea the character of the person you’re trusting with your hard-earned money.

One time I was considering an investment opportunity with a syndicator. On the surface everything looked legit. But I was having problems determining how much money the real estate sponsor was going to invest in the property. They kept sending me pages of details about their proposed offering, but nothing explicitly stated how much they were personally investing in the property. So I point blank asked. The answer: none! Not a penny. So if the property went belly up, it would have no financial impact on them personally. Not only that, they were making handsome fees up front coupled with a very generous fee split with the equity partners when the property was sold. It was a win, win, win for them! This was an excellent deal for the syndicator but they were treating their prospective investors like chumps. They were structuring the deal so they made out like bandits while incurring no personal investment risk if things went badly.

I’m sure there are many fine real estate syndicators that you can do business with. But I have no sure-fire way of determining who is honest and who is a wolf in sheep’s clothing. Who is offering a fair fee split for their services and who is gouging their investors? It’s sometimes hard to tell. The point I’m trying to make is this: I’m wary of syndicators that I do not know personally and you should be too.

The best and easiest way to choose an active investor

But here’s the best and easiest way of choosing an active investor to partner with. And they are right under our noses. They are our clients. For me it was an easy choice to determine who I would trust with my investment money. I do all my investing with one real estate sponsor that I’ve known for about 25 years. He’s not only my client, he has become a friend and a 7 year member of my book club. I know his excellent commercial real estate investing track record. I know that he is a man of integrity and because of that I trust him. So in 2007 I asked if I could invest with him and he gladly said yes. He said yes because I had financed several of his properties over the years and he had come to know that I was good at my craft and someone he trusted and liked. And now when he invests in a new property I am one of the first people he asks to invest with him. Better yet, I’m given first shot at doing his financing.

As a passive investor you let someone else make all the investing decisions except for one: Who do I want to trust with my money? This decision is very important, maybe the most critical of all the decisions you have to make about investing in commercial real estate.

Ask your clients these questions

So how do you go about finding the right client to invest with? It’s really a no-brainer if you’ve been a CRE professional for a number of years. Ask yourself these questions. Of all my clients:

Who consistently brings me their business?
Do they think of me as a valuable team member?
Do they trust and like me?
Of these clients, which ones invest with equity partners?
Final question: Do I trust and like them?

Raise your hand if you have someone in mind? So the next time they contact you to use your services, ask them if you could invest with them. You won’t know if you don’t ask and if you ask I bet they’ll say yes. Why wouldn’t they say yes? They use your services because they consider you the best in the business or they would go somewhere else. Right? And investors who team up with equity partners are always looking for new sources of investment capital. The worst case scenario is they say no. If that happens, don’t take it personally. They have their reasons which probably has nothing to do with you. Instead, go back and review your list of clients and go through the process again. Rinse and repeat until one of your clients enthusiastically says yes.

So the fifth and final point I want to make today is: To succeed as a passive investor requires finding the right active investor to invest with. Does that make sense?

Summary of 5 points

We talked about:

There is real wealth in owning CRE. It’s not a myth. It’s not a get rich quick scheme. It actually works.
The importance of invest your savings in assets that generate passive income.
Don’t let fear stop you. Understand that everything we really want in life is on the other side of fear.
Most of us should invest in CRE as a passive, not as an active investor.
To find the “right” active investor, invest with a trusted client who values your service and would be eager to have you as an equity partner.

Final thought

I want to leave you with this final thought: If I can do it, so can you. I wasn’t able to start investing in CRE until I was 55 years old! That’s a very late start and yet I am now able to retire well. So if I can do it, so can you.

Imagine for a moment that you start investing a modest amount this year with one of your favorite clients. As the years progress that small equity investment will grow, slowly at first but before you know it, it will be a tidy sum. Now imagine if you invested a small amount every year between now and retirement so that when you retire you have 20 or more these investments. Where do you think you’ll be financially when it’s time to retire? Yep. You’ll be able to retire in style.

Call to action

This brings us to my original point: I began my talk by expressing my hope that when you walk out of here today that you would know what’s holding you back from achieving financial freedom. If what I’ve said today describes your financial situation, either you’re living paycheck to paycheck or you know that you’re not going to retire well, then I want you to do these 3 things:

Take a moment right now and identify what’s holding you back;
Right now, determine what one thing you need to do to move the ball forward; and
Consider buying my book. On your table is a book card which identifies the book’s name and author so you can go to Amazon to purchase the book. And if you’re skeptical that this book or any book for that matter can help your financial situation, then I encourage you to download for FREE the introduction and the first 2 chapters of the book. You can do that by going to the URL found on the back side of the book card. If after reading it, it resonates with you that this book might be helpful, then buy the book. It’s as simple as that.

This is my 3-step plan for you to become financially free.

Thank you so much for your time and attention.

Source: Fed survey shows 40 percent of adults still can’t cover a $400 emergency expense, Sarah O’Brien, https://www.cnbc.com/2018/05/22/fed-survey-40-percent-of-adults-cant-cover-400-emergency-expense.html, May 22, 2018; 20 Retirement Stats That Will Blow You Away, Matthew Frankel, CFP (TMFMathGuy), https://www.fool.com/retirement/general/2016/01/26/20-retirement-stats-that-will-blow-you-away.aspx, January 26, 2016.

For more go to: https://marshallcf.com/

CREPN #84 – The Value of Buy and Hold with Philip Joseph

Real estate investing strategies vary from investor to investor. Some prefer the fast cash of Flipping, while others prefer the long view of Buy and Hold. Active investors make it a full time occupation, while passive investors may remain employed beyond real estate. There is no one way to invest in real estate. The important thing is to do your homework, and get started.

Why do real estate?

Many people feel they need to get into real estate because it is in the news, low interest rates, big rent increases, and everyone is doing it. Because everyone is doing it is not a reason to get in.

How to get started?

No matter who you are, or when you start, the first deal is always the most difficult. It’s new to you, and there is a lot to learn. Regardless of how much you think you know, you will quickly learn lessons you did not think about before investing in real estate.

Know the numbers!

If you think you are making money because the rent you are collecting is more than what you need to cover the mortgage, you may be upside down. Don’t forget to account for things like, taxes, repairs and vacancies.

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What strategy is right for you?Continue Reading …

CREPN #47 – Reasons Why Real Estate Beats Stocks with Doug Marshall

There are many reasons investors choose real estate. However, they may not know Three Reasons why Real Estate Beats Stocks.

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Most investors can point to a handful of reasons they invest in real estate such as:

Cash Flow – The positive cash flow from commercial real estate is a major advantage over owning stocks.

Tax relief – The ability to defer capital gains through a 1031 exchange is not available in stocks.

More Tax relief – Depreciation on commercial real estate works to reduce taxable income.

Leverage; The ability to acquire an appreciating asset with borrowed funds is unmatched in stocks.

I spoke with Doug Marshall of Marshall Commercial Funding to discuss some “Not So Common” reasons why Real Estate investing is more advantageous than stocks.

Real Estate vs Stocks

Three Uncommon Reasons why Real Estate Beats Stocks:

1) The Commercial Real Estate Market is an inefficient market place. Unlike the stock exchange, where the purchase price is the listed price, Real Estate allows for the buyer to enter into a purchase agreement and a negotiated price. The buyer may have information that is not known to the seller, or that the seller has not yet acted on. This can favor the buyer with the ability to increase the property value quickly.

2) RE owners have direct ability to influence on the outcome of their investments performance.

Make capital improvements to tired properties.
Change management for those properties that are poorly managed.
Re-tenant properties with better quality and higher paying tenants.

3) No more need for retirement calculators. With Commercial Real Estate you can make a reasonable guess as to how much you’ll need to have accumulated in real estate in order to retire comfortably. All you need to know are the answers to these four questions:
a. How much annual income before tax do you need to retire comfortably?
b. How much annual income are you expecting to receive from Social Security?
c. What is the current return on the equity you have in your Commercial Real Estate Investments?
d. How much equity do you have in your CRE investments?

For more information, contact Doug Marshall at marshallcf.com.

To download the points discussed in greater detail, go to: http://marshallcfblog.com/3reasons