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Most of us, myself included, are never taught a thing about money.
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We re told go to school, get a degree, get a job, and now you figure it out.
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And then what happens for the majority of people is you end up broke, you end up struggling financially, and you can never figure out why.
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So the first thing is
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Welcome to the School of Greatness.
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My name is Lewis Howes, a former pro athlete turned lifestyle entrepreneur.
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And each week we bring you an inspiring person or message to help you discover how to unlock your inner greatness.
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Thanks for spending some time with me today.
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Now let the class begin.
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Welcome to this special masterclass.
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We ve brought some of the top experts in the world to help you unlock the power of your life through this specific theme today.
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It s going to be powerful.
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So let s go ahead and dive in.
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What is it that you want to achieve in your life financially?
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And then you have to go out and figure it out yourself because unfortunately school will never teach you this stuff.
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I saw my parents work their butt off every single day.
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If my dad got a Saturday and a Sunday off it was considered a long weekend.
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and so i didn t get to spend a lot of time with my parents growing up and they would always tell me that you know you have to go out and become successful and i completely agreed because i wanted to give back to my parents i wanted to help support them and i figured okay if i want to become successful i should follow the steps that were told to become successful what are those steps go to school
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get a good degree, get a good job.
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For me, in my case, it was become a doctor.
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And along that way, it was in college, I realized that something s wrong.
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Something s not adding up.
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And it actually happened.
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I was studying to get into medical school.
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and as I was studying I started reading other business books and financial books and I remember this I was in the library studying and I went on to Google and I searched the richest people in America and you see people like Steve Jobs, Warren Buffett, Bill Gates, Mark Zuckerberg and I was like huh none of these people are doctors
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None of these people went down that traditional route of getting a degree, doing a good job.
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Am I missing something?
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Because I thought that if you go to school, get a good degree, you can make a lot of money.
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And if you work harder in school, get better grades, you ll make even more money.
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So I thought it was just directly correlated.
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Your grades, your income.
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And that s when I started questioning things and I realized, oh, maybe this isn t right.
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And as you start to go down deeper and deeper down the rabbit hole, you start to realize, oh my God, everything that I ve been told is a lie.
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And so that kind of pushed me into this whole
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painful emotional journey of learning about money, learning about entrepreneurship, learning about what does it mean to become wealthy and how do you actually do it.
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So that was kind of the initial phase for me and then I had to go out and actually start learning it.
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And the first real experience of that for me was I had this event planning company that I started in college and the reason why I started it was because when I was in high school,
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I worked at Indian weddings so I got to know a lot of the DJs and when I was in high school these DJs were like hey man you know a lot of people in high school how about we host a teen party for your friends in high school I was like all right that s fine you know why not started this little teen party party business in high school and I go to college don t know what to expect because my parents didn t go to university here
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I think everybody goes to college to study hard and become this big thing in college.
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I get to college and everybody is partying.
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They re blowing their money that they don t have on alcohol.
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They re drinking.
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I don t drink.
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I don t smoke.
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I m not into that party scene, but I need something to do on Friday nights.
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So I was like, why don t I just take this teen party business that I had in high school, bring it to college?
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And that s what I did.
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My freshman year, I was 17 years old.
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I started knocking on the door of every club, venue, bar, restaurant, asking if I could host a party here.
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Some would say, yeah, it s going to cost you $10,000.
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Some would say, yeah, it s going to cost you 20 grand.
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I don t have that money.
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But then one or two said, you can do it here.
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We re not going to charge you a penny.
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Just give us half of the cover charge, half of the money that you bring in.
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I said, OK, now I m in business.
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So I started making a little bit of money doing this.
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and I had some cash saved up and I m starting to read these business books and every business book said wealthy people invest in real estate I don t know what that means I don t know any real estate investors my parents aren t investors and so I was like okay if wealthy people invest in real estate maybe I should invest in real estate and this was right after the 2008 crash in Michigan where real estate was hit extremely hard
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So I was like, all right, I would like to invest in real estate.
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I m studying for my medical college admission test.
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I start going to Google because I m bored while I m studying for this exam.
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I m reading about the Forbes richest people.
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None of them are doctors.
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None of them are people that work the traditional path.
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And I have this idea to start investing in real estate.
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So I started looking at real estate in between my study sessions.
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And on August 22nd, I took the medical college admission test, the MCAT.
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On August 23rd, I closed on my first real estate investment property.
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Wow, how old were you?
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I was 19.
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Holy cow.
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It was $8,000.
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What was the investment?
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It was the price of the condo.
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The condo was eight grand?
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Eight grand.
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How d you get a condo for eight grand?
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This is right after the 2008 crash.
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Wow, you got it on foreclosure or what?
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It was on foreclosure.
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that same condo was selling for about 150 grand just a few years prior come on yeah and so I came in it was actually listed on sale for $8,400 I made an offer for $4,000 they came down to $7,000 and I was still trying to push them lower but then they said they had another offer on the table I didn t want to lose it so I said I ll give you $8,000 right so I bought it for $8,000 put in a few thousand dollars worth of work and I leased it for $600 a month
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and now all of a sudden my mind was blown because I kind of had this idea of what entrepreneurship was I had never heard that term until I came to college but I was running this event planning company and I m starting to learn about this thing called entrepreneurship and now I had this condo that s generating me this like almost passive income I say almost because I was making a lot of mistakes in the beginning
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But now I m like, wow, this investing thing is very unique because I never learned this in school.
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My teachers never taught me this, but why am I working so hard in school?
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I mean, I want to become a doctor so I can ultimately make money.
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Now I start having this, you know, I talked about an emotional dilemma.
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Why am I becoming a doctor?
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Okay, I want to make my parents happy, check.
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I want to be successful, check.
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Do I really want to be a doctor?
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Maybe.
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And now I m starting to question my actual beliefs.
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Because if I become a doctor, how do you make money?
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You treat people.
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I kind of have this entrepreneurial mind.
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I want to become successful.
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How do you make more money?
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You treat more people.
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So it s like this kind of runs into a dilemma because if I m trying to maximize my income as a doctor, I got to maximize how many patients I see.
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Maybe that means I don t get to give the best value to each individual patient.
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But as a human, I want to provide the most value possible.
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So I started to kind of face this dilemma where maybe I m becoming a doctor for the wrong reasons.
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Interesting.
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And then I run this idea by my parents.
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I don t want to be a doctor.
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And they re like, absolutely not.
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My dad was angry, my mom was furious.
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It took my mom about a year and a half to believe that her son was not gonna be a doctor.
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And I had, I mean, when I say it was tough, like my parents would tell all their friends, Jasper s not gonna become a doctor.
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I m not gonna become one.
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Now I m getting calls from my family in India, I m getting calls from my family across the states.
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What are you doing?
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You re a disgrace to your family.
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Exactly, exactly.
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I heard that again and again and again.
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But I was like, this is not for me.
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And I started to realize that there s more to this thing.
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So now I started to go down this financial education journey.
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And the more I learned, the more I realized I was lied to.
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Like, we re taught to go to school, to get a degree, to get a job, so we can then get a job and climb the corporate ladder.
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Well, wealthy people don t do that.
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Wealthy people are not working to climb the corporate ladder.
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They re working to own the corporate ladder.
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I didn t even realize that you could do that.
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Now, you can climb the corporate ladder and work to own the corporate ladder at the same time, but it s a different mindset, right?
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Most of us are taught to get that degree so we can do one thing, climb the corporate ladder, earn a bigger salary.
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But if you only rely on your salary, you re just one step away from being broke.
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Because if you lose your job, something happens to you, you can t work or your company goes down, you lost your salary and now you have no income coming in, and now what?
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You re scrambling for a job, maybe you have some savings to help take care of you,
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Or if you haven t been saving and you just spend on things all the time and you have no savings, then you re really screwed.
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Yeah, you re going into credit card debt.
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Right.
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And now you re trying to figure out how do you make things work.
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And by then it s too late.
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This is where you got to be proactive.
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And now I m just like, this is crazy.
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Why was I never taught this?
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I was never taught about wealth.
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I was never taught about investing.
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I was never taught about this sort of financial education.
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But why aren t we taught this?
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And that s when I realized it s very profitable to keep people financially uneducated.
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It s profitable to keep people poor.
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Interesting.
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What would you say is the main system?
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that keeps people poor then?
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It goes down to so many different things.
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The banks profit when you re financially uneducated because they ll keep you saving money in the bank.
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They ll keep you in consumer debt.
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If the banks lived by their own advice, which is save money, the banks would be losing money.
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When you go and deposit $1,000 in the bank,
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that cash that you deposited is a liability for the bank an asset is something that puts money in your pocket a liability is something that takes money away from your pocket so when the bank has your cash it s a liability for them they want to get rid of it as fast as possible and the way they do that is by lending it out because it s an investment for the bank they don t want to hold on to cash but they want you to save your money
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you want you to give them cash right and just leave it there leave it there and what s happening to your cash while it s there it s losing value to inflation each and every day every day that you keep your cash in the bank you re becoming poorer each and every day now it s funny i made a video on this in 2016 it was my first video to go viral it was called you re guaranteed to go broke if you do this and i was talking about inflation at two to three percent
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if you keep your cash in the bank you re going broke every single day now here we are 8.5% and now people are starting to realize wow this inflation is a real problem and so now when you keep your cash in the bank the bank is paying you 0.01% maybe 0.5% if you re lucky and they re turning around lending it for 5% 6%
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And so the bank does not want to keep the cash and savings because it s a liability for them.
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They want to keep you spending money on their credit card because now they ll get to earn 18 to 25% in interest every time you spend a dollar.
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Governments want you to be financially uneducated because when you re financially uneducated, guess what?
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You are an employee and you re a consumer.
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Who pays the highest taxes?
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Employees and consumers.
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Everybody knows that rich people don t pay taxes.
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It makes people angry.
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but a lot of times we don t understand why.
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And we get angry at the wrong things, at the wrong reasons.
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Yeah, but the more you make as a business owner, until you re like uber rich, I feel like, you re spending a lot of taxes.
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You are, and you know what?
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And there s a lot of things that you can do legally to pay less money in taxes, and there s different ways that you can invest your money to pay less money in taxes.
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So, I ll give you a couple examples.
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Let me start with this.
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Tax avoidance and tax evading are two similar words with two very different outcomes.
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This is one of the first things that you learn in law school.
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Tax evading is illegal.
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You go to jail.
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Tax avoiding is legal
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and then you get hated for doing that.
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But this is the way it works.
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But you re playing within the rules of the system.
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And if you learn the IRS code, it s a rule book.
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And the people who understand the rule book are the people who have the money to hire the good accountants and the good attorneys.
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But you re not an accountant, but have you studied the law?
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I have studied a lot of tax law.
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Really?
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Yeah.
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And so what happens is wealthy people will understand how this works, play within that system,
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and pay little to no money in taxes.
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What are three things that people who are making half a million and above should be doing to avoid taxes better?
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So let s start with, I m gonna assume that you have either some sort of your own income, you re a side hustler, or you are a business owner.
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Yes.
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So if you make half a million dollars, let s assume that s profit.
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You are taxed on income.
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so if you take out a salary that s going to be taxed now the question is what is a tax deduction or the better question is how can you make something a tax deduction because anything can be a tax deduction if you know how to make it a deduction so that s the question that you have to ask yourself because if you don t have an income
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you don t have any tax.
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So this is what wealthy people are doing.
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So I ll give you an example of it being done, then I ll show you how people can do it on a potentially smaller scale.
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Elon Musk, he is probably the biggest example of this.
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He never got paid a salary running and owning Tesla.
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He got paid in stock options.
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So these stock options... Was this even before it was public?
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This is, I think it was around the time that it was public or maybe a little bit before.
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But he s been getting stock options for a long time.
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But the stock options that he gets or originally got were at $6 a share.
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So when the stock went up to $1,000 a share and he was given millions of these stock options.
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Now, he has on paper a lot of money, but that money isn t in his bank account.
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So what he does is instead of selling it and having an income,
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he goes to the bank and says hey i have these stock options which are worth billions of dollars how about you give me a loan at three four five percent interest no bank is going to say no to that because the value of this is so much the billions of dollars i mean you can make the number smaller but no bank is going to say no he takes that loan pays three to four to five percent interest on it and if his company grows his stock value grows by six percent
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He just made a profit on that.
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He didn t have to take any money out, never took an income, doesn t pay any taxes, and is able to now spend his money, live free, buy whatever he wants, live rich, and not pay a penny in tax.
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So he didn t have to sell any of the stock, because if he sold it, he d pay an income tax right when you sell it.
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Instead, you get a loan out from the bank, and you don t have to pay tax on that loan.
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When you go and get a mortgage to buy a home, it s debt.
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It s not taxable.
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It s not income.
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if you go and refinance your home it s not income it s cash that you have in your pocket but it s not income you re taxed on income so now your job now as a business owner is strategically how do you not have an income now you might say well i need money to spend sure of course you do
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But how can you now strategically use your income to pay for your lifestyle?
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Now, again, it s got to be within the rules.
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So talk to a tax advisor.
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But right now, after the pandemic, one of the things that the presidential administration wants to do is encourage people to eat out, eat at restaurants, because restaurants were hit so hard by the pandemic.
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So what did they do?
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They created a 100% deduction on food through 2022.
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So if you go out to eat with your team, it s a 100% deduction.
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It s a write-off.
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I m here in San Diego.
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Well, we re in LA right now, but I m here on a two-month business trip to San Diego with my business partner.
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I have to rent a car.
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I actually got a Ford Mustang because I always wanted a Ford Mustang when I was a kid.
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That was like my dream car.
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So I got one here with a convertible.
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Nice.
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And, you know, we have to go to business meetings.
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We have to go out and explore San Diego, do these things.
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My business partner is my wife.
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We re staying in an Airbnb in beautiful San Diego.
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Guess what?
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These things are tax deductions against my business.
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I m here working.
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When you re an entrepreneur, everything is work.
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Now the question is, how do you spend your money in a way that is going to give you a tax write-off?
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But you have to be smart here, because you don t wanna just blow $500,000 so you don t have to pay 150 grand in taxes, right?
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Like my accountant called me up last year and said, Jaspreet, you need to go out and buy a G-Wagon.
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I don t want to buy a G-Wagon.
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Why? 
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He said, you know, there s this tax deduction going on saying if you go out and buy a heavy car, it s still going on right now.
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If you go out and buy a heavy car, you can deduct up to 100% of that value of that vehicle right now.
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Really?
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And because you re an influencer, you can potentially claim that as an influencer, you need a G-Wagon to help you support your lifestyle.
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The tax code allows this.
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And I was like, well, I don t wanna go out and spend 150 grand for a car that I don t necessarily need just so I can save, let s just say 50 grand on those taxes.
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So you have to be smart here and know what s right for you and not just spend your money, just spend a dollar to save 25 cents.
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So you just need to know the right strategies that can work for you.
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And these things change over time, which is why the best thing that you can do is go out and hire a tax accountant, a tax advisor, somebody that isn t just gonna file your taxes, but someone that s gonna help guide you and say,
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All right, here are some things that you could potentially spend your money on.
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Here are where there are more benefits coming this year, next year, things that you want to do.
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And so there s going to be times where it s going to be more beneficial for you to spend money.
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There s going to be times where it s going to be more beneficial for you to take in money.
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And it s all a game.
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And this is what wealthy people understand.
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It s all a game.
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And a lot of people hate
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that, oh, this person s not paying taxes, that person s not paying taxes, but at the end of the day, what you have to remember is somebody else wrote the tax code.
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All the people are doing is they re trying to learn, okay, this is what the tax code is, what do I do?
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And then you kind of get into the other,
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philosophical questions.
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Who s going to do better with 100 grand?
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The government or me?
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If I have 100 grand in my pocket, I can go hire an employee or two.
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The government is going to, you know, spend that money wherever they spend it.
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And pennies will end up actually going to help people.
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I m all for helping people.
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I think that s very important.
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As soon as we hit a million subscribers on YouTube, what we did was took my team, we went out to a teacher store and essentially asked them, hey, can we buy everything in your store?
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Wow.
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Because, you know, the whole during the pandemic, people weren t going to class in person.
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And so a lot of these businesses were hurt.
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I cannot buy everything.
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And she said, well, we need some of this stuff for our teachers.
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I said, what can we buy?
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So then we went out and bought a big chunk of the store.
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Mr. B style.
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Mr. B style.
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It was a fun video.
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Took the team out kind of as a celebration.
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We bought a big chunk, took it out to a school in Detroit, gave it to them for free.
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And then I asked the principal there, he s a friend of mine, I said, how many teachers do you have?
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He said, okay.
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SPEAKER_00
And I gave every one of his teachers a $500 check to help them help support their students.
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SPEAKER_00
Giving is important.
2
SPEAKER_00
But it goes back to the tax question of who does a better job with their money, right?
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SPEAKER_00
Entrepreneurs who are working to create more jobs, who are working to produce more value, or the government, which may not be so good with their money.
2
SPEAKER_01
Absolutely, yeah.
2
SPEAKER_01
So you started doing the real estate thing early.
2
SPEAKER_01
Are you still a massive investor in real estate?
2
SPEAKER_01
Or what s your approach on it now?
2
SPEAKER_00
Yeah, yeah, so this is an interesting question that you asked, especially right after the tax question.
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SPEAKER_00
So real estate is one of the best tax
2
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games for investors.
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SPEAKER_00
That s one of the reasons why wealthy people love investing in real estate because not only can you get cash flow, but you also get tax benefits.
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SPEAKER_00
I started investing in real estate when I was 19 on accident.
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I went through a lot of pain.
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I remember when I told my dad first, hey dad, I want to go invest in real estate.
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He was like, you re stupid, go study, go become a doctor.
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SPEAKER_00
So I started investing in real estate then and I continued to buy homes.
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SPEAKER_00
And I remember, because remember this is right after the 2008 crash, I was buying homes for like 30 grand in good areas.
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I remember home prices went up to $50,000.
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SPEAKER_00
And I was like, that s a lot of money for a home.
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SPEAKER_00
I didn t know anything else, right?
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SPEAKER_00
That s all I saw.
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SPEAKER_00
And so to me, I was like, that s expensive.
2
SPEAKER_00
But I continued buying.
2
SPEAKER_00
And I still am buying, but not as much as I was before, because now I ve been working on a couple other businesses.
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SPEAKER_00
And so what I m realizing is, OK, when I invest my money in real estate, my goal is to get a 7%
2
SPEAKER_00
cash on cash return on my money.
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SPEAKER_00
Meaning for every dollar I invest, I want to get seven cents back in cash flow, positive cash flow every year.
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SPEAKER_00
If I invest 100 grand, I want $7,000 of profit every single year.
2
SPEAKER_00
Well, I m an entrepreneur, right?
2
SPEAKER_00
So I m working on a couple of different companies, one of which is market briefs.
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SPEAKER_00
And so now I m in this position where what do I do with this cash?
2
SPEAKER_00
I can take this money, put it in real estate, get a 7%, 8% return on my money, or I can put it in market briefs, which would be a bigger tax deduction, because now if I spend money in advertising, I spend money in marketing, I hire more employees, we have a smaller profit, but then I can grow the company significantly faster than 7% a year.
2
SPEAKER_00
So what I ve been doing now is investing more of my money into market briefs because it s something that I m super passionate about.
2
SPEAKER_00
Like I love real estate.
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SPEAKER_00
I love revitalizing homes and buildings and really helping to build neighborhoods through that.
2
SPEAKER_00
But market briefs had such a different value in the sense that we re making financial news accessible because I didn t grow up learning about money.
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SPEAKER_00
And CNBC looked cool, but I never understood anything that was happening there.
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SPEAKER_00
They have all these confusing terms that are going on.
2
SPEAKER_00
So
2
SPEAKER_00
it s a way to make financial education and what s going on with money more accessible to people because I m realizing how important that is to me because the more and more I talk to people the more that people listen to what I say the more I hear oh my god I wish I would have learned this when I was younger like yeah I know me too and so it s like it s important for me to help get that message out there because it s so needed
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SPEAKER_00
It s not very complex, but I created this wealth formula, which breaks it down into a very simple, almost mathematical thing, where it s, you take your income, you subtract your expenses, and that equals your investments plus your savings.
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Income.
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plus income minus expenses equals your investments plus your savings.
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SPEAKER_00
So if you want to become wealthy, it ultimately comes down to having more investments.
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SPEAKER_00
Your savings are not there to make you wealthy, they re there to protect you against an emergency.
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SPEAKER_00
Your investments are what make you wealthy.
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SPEAKER_00
So if you want to become wealthy sooner, or if you want to become a wealthier, you need more investments.
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SPEAKER_00
How do you do that?
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SPEAKER_00
Well, if it s your income minus your expenses, it s basic math.
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SPEAKER_00
Either increase your income, decrease your expenses, or do both.
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SPEAKER_00
So that s the ultimate formula.
2
SPEAKER_00
So now if we talk about, let s break it down step by step on how do you actually do it.
2
SPEAKER_00
Six steps, and this is no matter what age you are, these are the six steps that you want to follow.
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SPEAKER_00
Before you get into the six steps, what is the mindset that someone needs to think about?
2
SPEAKER_00
Step number one is build a mindset.
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SPEAKER_00
So step number one is you need to have the right mindset.
2
SPEAKER_00
And so this is why I call myself the minority mindset and the brand minority mindset because it s all about thinking differently than the majority of people because if you follow what the majority of people do, in 80 to 90% of situations, you re probably doing something wrong.
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SPEAKER_01
And you ll be in debt and you ll be paying off debts and loans for the rest of your life.
2
SPEAKER_00
The majority of people are broke.
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SPEAKER_00
The majority of people are living paycheck to paycheck.
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SPEAKER_00
The majority of people are drowning in debt.
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SPEAKER_00
The majority of people have zero to no investments.
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SPEAKER_00
The majority of people are unhappy.
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SPEAKER_00
The majority of people are miserable.
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SPEAKER_00
And the majority of people do not like their jobs.
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SPEAKER_00
This is not me exaggerating.
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SPEAKER_00
These are all statistical numbers where more than 50% of people feel this way.
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SPEAKER_00
And so if now you keep doing what everybody else does, you re going to end up like everybody else.
2
SPEAKER_00
And so this is where now you want to think a little bit different and try to find what s right for you and try to get educated yourself.
2
SPEAKER_00
Because when it comes to the mindset, the first thing you have to understand is that it is possible.
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SPEAKER_00
Because if you re sitting there saying it s not possible for someone like me, somebody who has my background, my parents, my whatever, I can t become successful.
2
SPEAKER_00
I 100% guarantee that you will not be able to become successful.
2
SPEAKER_00
You cannot
2
SPEAKER_00
change your outcome without changing your mindset.
2
SPEAKER_00
And in the previous interview we had, we talked about mindset versus toolset, where most of the times we assume that the reason why we can t become successful is because we lack the toolset.
2
SPEAKER_00
When in reality, for 90% of people, it s lacking the right mindset.
2
SPEAKER_00
Because when you have the right mindset, you ll discover that the toolset is right around you.
2
SPEAKER_00
So it s first believing that you can do it.
2
SPEAKER_00
Because once you know and believe that you can do it,
2
SPEAKER_00
that belief is going to then impact your decisions.
2
SPEAKER_00
Because now you can say, you know what?
2
SPEAKER_00
Yeah, maybe I can become successful.
2
SPEAKER_00
What are you going to do?
2
SPEAKER_00
You re going to go into YouTube, watch videos.
2
SPEAKER_00
How do I become successful?
2
SPEAKER_00
Maybe start watching videos.
2
SPEAKER_00
Maybe start binging videos.
2
SPEAKER_00
And now you start to realize, oh, OK, I can start to do this.
2
SPEAKER_00
I can change this about my life.
2
SPEAKER_00
I need to change the way I think.
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SPEAKER_00
I need to change my actions.
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SPEAKER_00
I need to do more things in my day.
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SPEAKER_00
I need to stop watching so much Netflix.
2
SPEAKER_00
I need to do this.
2
SPEAKER_00
Then maybe start reading books.
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SPEAKER_00
And then you start reading business books, because I have read a lot of business books, and there s so much wealth in a $20 business book.
2
SPEAKER_00
Just go onto Audible, look at some of the top business books, and just start reading them, and you will learn so much.
2
SPEAKER_00
Now you start reading.
2
SPEAKER_00
Now maybe you start doing a little bit.
2
SPEAKER_00
Maybe you don t succeed too much, but you start taking some action and you start to learn even more because your experiences are some of the best teachers in the world, even if you make mistakes.
2
SPEAKER_00
I have learned from my mistakes.
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SPEAKER_00
I didn t have a mentor.
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SPEAKER_00
I didn t have guidance.
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SPEAKER_00
I didn t have investment family members.
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SPEAKER_00
I didn t have people telling me how entrepreneurship works.
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SPEAKER_00
I screwed up a ton, just like you.
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SPEAKER_00
We made a ton of mistakes and that s how we learned.
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SPEAKER_00
And then maybe you go and take a class.
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SPEAKER_00
Now you re like, OK, I want to learn how to do this.
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SPEAKER_00
I m trying to build this business.
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SPEAKER_00
I m doing something wrong.
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SPEAKER_00
I m trying to get a better job, or I m trying to get a raise.
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SPEAKER_00
I keep doing something wrong.
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SPEAKER_00
You ve read books.
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SPEAKER_00
Now maybe you find a class.
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SPEAKER_00
You invest some money in this class, and now you have more education.
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SPEAKER_00
Now you try more.
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SPEAKER_00
And now you start to see over time, oh my god, 12 months ago, I had no idea.
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SPEAKER_00
I didn t even believe that I can do it.
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SPEAKER_00
Now that I believe that I can do it, I started watching YouTube videos.
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SPEAKER_00
I started reading books.
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SPEAKER_00
I started taking classes.
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SPEAKER_00
I started taking action.
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SPEAKER_00
And then you keep doing it.
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SPEAKER_00
Maybe you hire a coach, maybe you hire a consultant.
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SPEAKER_00
I mean, the list goes on and on and on of what you can do.
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SPEAKER_00
But it all first starts with the mindset, because if you tell yourself you can t, your mind shuts down and you re never going to find an opportunity.
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SPEAKER_00
You re never going to look for the opportunity.
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SPEAKER_00
So that s where the mindset is the most important thing.
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SPEAKER_00
And if you don t have the right mindset, this is where the first thing you want to do is start learning.
2
SPEAKER_00
How do I build self-esteem?
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SPEAKER_00
How do I build my confidence?
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SPEAKER_00
How do I believe in myself?
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SPEAKER_00
And there s, I don t have a ton of videos on this.
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SPEAKER_00
I know you have a ton of videos on this.
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SPEAKER_00
Watch Lewis s stuff, right?
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SPEAKER_00
So start there.
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SPEAKER_00
Then we go a little bit deeper now for focusing on finances.
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Mindset is number one.
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SPEAKER_00
The second thing now, once you build the right mindset, is you wanna create your financial base.
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SPEAKER_00
And the best way to understand this is just to think, if you wanted to build a house, what do you do first?
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SPEAKER_00
Well, you gotta build a foundation.
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SPEAKER_00
If you wanna build a bigger house, you wanna dig a deeper foundation.
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SPEAKER_00
You wanna build a tall building, you need an even deeper foundation.
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SPEAKER_00
So you have to start by building a financial base.
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SPEAKER_00
And what that means financially is first,
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SPEAKER_00
you want to save $2,000 at the very least, you want to put aside some cash for savings as fast as possible.
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SPEAKER_00
Because right now, it s something like 40 to 70% of Americans don t have, well, 40% of Americans don t have $1,000 to put aside.
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SPEAKER_00
And something close to 70% of Americans don t even have $400 put aside to protect them against an emergency.
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SPEAKER_00
So most Americans don t have $1,000 to put aside.
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SPEAKER_01
Get a $2,000 base.
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SPEAKER_00
Start with two grand as fast as possible.
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SPEAKER_00
And then you need to cut
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the financial bleeding.
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SPEAKER_00
That means your high interest debts, your credit card debts, your hard money loans, your 0% APR loans, which are now charged you 20 to 25%.
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SPEAKER_00
These need to be paid off as fast as possible because these are loans that are skinning you alive financially.
3
SPEAKER_01
So, I mean, it seems like credit cards are one of the biggest things that hold people back.
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SPEAKER_01
Look, credit cards are a tool.
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SPEAKER_00
They are a tool.
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SPEAKER_00
If you re not educated with them, you could get stuck.
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SPEAKER_00
If you have this tool without the education, it will burn you.
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SPEAKER_00
I only spend with a credit card.
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SPEAKER_00
I spend a lot of money with a credit card because I know how to use a tool.
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SPEAKER_00
And now because I know how to use my credit card, what happens?
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SPEAKER_00
Well, I don t spend more than I would otherwise because I use my credit card just as a medium of exchange.
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SPEAKER_00
I m going to spend this money anyways.
3
SPEAKER_00
Might as well use my credit card.
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SPEAKER_00
My credit card gives me perks.
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SPEAKER_00
It gives me cash back.
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SPEAKER_00
it gives me fraud protection, it gives me free insurance, it gives me hotel upgrades, it gives me all these things just because I use my credit card instead of paying with cash.
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SPEAKER_00
And so now again, it s the financial education because now some people will say, oh my God, these credit card companies are scams.
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SPEAKER_00
Well, the reason why they re looked at as scams is because we don t have the right education on how to use them, right?
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SPEAKER_00
It s a tool without the education on how to use it.
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SPEAKER_00
And this is where now you have to build that financial education and many times,
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SPEAKER_00
you re going to have to go out and do it yourself because your credit card company is not incentivized to give you the financial education because they re going to make less money, right?
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SPEAKER_00
It s profitable to keep people poor.
3
SPEAKER_00
It s profitable to keep people financially uneducated because now if you just keep spending money in your credit card because you have no idea what you re doing, now your credit card company is going to get rich.
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SPEAKER_00
The average household in America has $6,200 with the credit card debt.
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SPEAKER_00
So if you have credit card debt in America, you probably have an average of $6,200.
3
SPEAKER_00
Wow.
3
SPEAKER_00
Now let s talk about that because if and what s the interest on that?
3
SPEAKER_01
Well, that s at 15 to 25 28 and every month every month you re paying that you re paying it every month So it s not six thousand a month.
3
SPEAKER_01
It s really, you know over years if you never fully pay it off You re just paying more and more and more
3
SPEAKER_00
And the interest rate on your credit card isn t fixed rate, it s variable interest rate.
3
SPEAKER_00
So as the Federal Reserve Bank raises interest rates, the interest rate on your credit card also goes up.
3
SPEAKER_00
So if you are 21 years old right now, and you invested $6,200, which is the average household credit card debt right now, if you invest $6,200 right now, and you got a 20% return on your money, and you did that for the next 45, 46 years, you are going to retire with $20 million.
3
SPEAKER_00
$20 million, and you never invest another penny again.
3
SPEAKER_01
Say it one more time.
3
SPEAKER_00
If you invest $6,200 today, and you never invest another penny again.
3
SPEAKER_00
At 21.
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SPEAKER_00
At 21, and you get a 20% return on your money, you re going to retire with $20 million.
3
SPEAKER_00
Wow.
3
SPEAKER_00
And you re going to say, just breathe.
3
SPEAKER_00
Where in the world am I going to get a 20% return on my money year after year?
3
SPEAKER_00
You re right.
3
SPEAKER_00
But your credit card companies do it every single day.
3
SPEAKER_00
Wow.
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SPEAKER_00
They re charging you.
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SPEAKER_00
And so when you have that sort of credit card debt,
3
SPEAKER_00
that s you making your credit card company richer.
3
SPEAKER_00
Now, whether or not you think it s a scam, look, let s move past it, understand what s going on, that way now you can use it to your advantage.
3
SPEAKER_00
Because I get tens of thousands of dollars worth of cash back every year from my credit card company because I use it as a tool and I understand how to use it.
3
SPEAKER_00
And this is where, look, if you don t wanna use your credit card, it doesn t matter.
3
SPEAKER_00
But just don t, if you have credit card debt, you have to pay that off because that is skinning you alive right now.
3
SPEAKER_00
understand the financial education aspect.
3
SPEAKER_00
So that s the first thing you want to do is create your financial base.
3
SPEAKER_00
So you got to save some cash, then you got to pay that credit card debt off.
3
SPEAKER_00
Cut the financial bleeding.
3
SPEAKER_00
Cut the financial bleeding.
3
SPEAKER_01
What s the strategy if you got three credit cards?
3
SPEAKER_01
What s the strategy to getting rid of that debt?
3
SPEAKER_00
So Dave Ramsey is going to tell you to do something called the snowball method.
3
SPEAKER_00
The smallest first.
3
SPEAKER_00
The smallest first to the biggest.
3
SPEAKER_00
Because you re building momentum, right?
3
SPEAKER_00
A financial advisor may tell you the opposite.
3
SPEAKER_00
Do the debt avalanche, which is now pay the highest interest rate first and then go down because now you re going to pay off the most interest first, so it costs you the most money in the long term.
3
SPEAKER_00
The reason why Dave Ramsey recommends the snowball method is because psychologically, when you get those small wins of paying something off, you feel like you re winning and you can pay it off faster.
3
SPEAKER_00
An advisor is going to look at the math and say, hey, look, these numbers are telling me that pay off the higher interest rate first, because it s going to save you the most money over the long term.
3
SPEAKER_00
Which one s right?
3
SPEAKER_00
Again, I m not going to say which one.
3
SPEAKER_00
Do what s best for you.
3
SPEAKER_00
Because I know if I was in a situation, I m not.
3
SPEAKER_00
I like the idea of paying down the heavy interest rate first because that s how my brain works.
3
SPEAKER_00
I don t need the small wins like that.
3
SPEAKER_00
I can work for the long term.
3
SPEAKER_00
I think, you know, the entrepreneurial mindset where, you know, I know how my mind works, so I understand myself.
3
SPEAKER_00
And this is just honestly being open and honest with yourself.
3
SPEAKER_00
If you can t stay true with it,
3
SPEAKER_00
than do the snowball.
3
SPEAKER_00
It does not matter.
3
SPEAKER_00
Screw paying it off a few months early.
3
SPEAKER_00
Just get it away and pay it off as fast as possible.
3
SPEAKER_01
Cut the financial bleeding and have a $2,000 base.
3
SPEAKER_00
That s step two.
3
SPEAKER_00
Okay.
3
SPEAKER_00
That s step two.
3
SPEAKER_00
Now the next thing you want to do is what I call lead your money.
3
SPEAKER_00
So this is where you want to create a financial system and start investing your money because your savings will never make you wealthy.
3
SPEAKER_00
You cannot save your way to wealth.
3
SPEAKER_00
You have to invest your money.
3
SPEAKER_00
Your savings won t make you wealthy because of what we ve talked about in previous interviews, inflation.
3
SPEAKER_01
You re losing money in the savings.
3
SPEAKER_00
If inflation is higher than the interest rate you re getting at the bank, then your savings are effectively making you poorer each and every day because your savings are losing value to inflation.
3
SPEAKER_00
Now, does this mean you should not save any money?
3
SPEAKER_00
No.
3
SPEAKER_00
It means you need to save your money strategically.
3
SPEAKER_00
So you want to save your money for three reasons and three reasons only.
3
SPEAKER_00
Save your money for an emergency.
3
SPEAKER_00
Save your money for a big purchase.
3
SPEAKER_00
If you want to buy a car, you want to buy a house, you want to buy a nice watch, whatever you want to buy, you need cash in order to do that.
3
SPEAKER_00
And then three, save your money for an investment.
3
SPEAKER_00
If you re not saving your money for one of these three reasons, you re saving your money the wrong way, and it is making you poorer by saving that money.
3
SPEAKER_00
So now we focus on the first aspect of saving your money for an emergency.
3
SPEAKER_00
How much do you save?
3
SPEAKER_00
This is now again going to depend on your risk tolerance.
3
SPEAKER_00
You want to save somewhere between 3 to 12 months worth of your expenses and the amount of money you save is going to depend on where you are in life and how much risk you re willing to take on.
3
SPEAKER_00
If you re like, hey dude, I m 25 years old, I don t have any financial responsibilities, I don t need that much savings, fine, save a few months worth of savings and
3
SPEAKER_00
That s it.
3
SPEAKER_00
Invest more aggressively.
3
SPEAKER_00
If you re like, hey, I have a family, I have kids, I have a spouse, I don t want to take on all this risk, then save six months, nine months, a year s worth of savings because now it will give you that peace of mind that you have some extra cash put aside.
3
SPEAKER_00
So it s going to depend on your risk tolerance and what you want.
3
SPEAKER_00
But in this lead your money step, this is where you want to understand that there s more to putting your money aside than just saving your money.
3
SPEAKER_00
You also want to be putting your money to work.
3
SPEAKER_00
And the best way to do this is to create a system where no matter how much money you re making,
3
SPEAKER_00
you are going to proportionately continually invest and save based on your income.
3
SPEAKER_00
So what does that mean?
3
SPEAKER_00
Well, one of the simplest things you can do is follow something like my 75-15-10 plan, which means for every dollar that you earn, 75 cents is the maximum that you can spend, 15 cents is the minimum that you invest, and 10 cents is the minimum that you save.
3
SPEAKER_00
And this never changes with your income.
3
SPEAKER_00
The only thing that you would ever change
3
SPEAKER_00
is after you hit that savings goal for your emergency savings, you don t keep saving your money for the emergency because you built that whatever ones you want, you put that towards your investments.
3
SPEAKER_00
And now, whether you re making 40 grand, 400 grand, 4 million, 40 million, you just keep following the same thing, and you re living below your means, and now you re constantly putting monies aside for your investments.
3
SPEAKER_00
Now again, we talked about this before.
3
SPEAKER_00
This investment money can either be passively invested, all of it, or you can put this money aside to be invested.
3
SPEAKER_00
So you can put this money into a bank account, you re looking for a rental property, you re looking for a business to buy, you re looking for a cheap stock to buy.
3
SPEAKER_00
This now depends on your investment goals.
3
SPEAKER_00
right?
3
SPEAKER_00
Where do you want to be invested?
3
SPEAKER_00
How do you want to invest your money?
3
SPEAKER_00
And this is that financial education now of what do you want to do and your personal goals.
3
SPEAKER_00
If you don t want to be involved with your money, you don t want to be, hey, day-to-day investing or paying attention to the markets, you hate that idea, just passively invest it.
3
SPEAKER_00
You ve become wealthy with your investment money.
3
SPEAKER_00
Your savings are there to protect you against an emergency.
3
SPEAKER_00
Your spending money is what allows you to live your life and have the nice things.
3
SPEAKER_00
And so now, we ll get into now, how do you live more, live better today by earning more money in a bit.
3
SPEAKER_00
But this is where now the passive investing is the most accessible way for somebody to start investing.
3
SPEAKER_00
And then somebody is going to say, what do I invest in?
3
SPEAKER_00
Because we re talking about, well, you can invest in the stock market.
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There are funds, like there s index funds, ETFs, mutual funds, they all work similarly with some nuanced differences that allow you to invest into a basket of stocks, a group of companies.
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So for example, I like ETFs just because they re very convenient.
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So you invest in a ticker symbol.
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ETF stand for?
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Exchange traded funds.
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So for example, if you wanted to invest in the stock market, the general stock
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There s a fund, an ETF called VTI.
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Now I m not telling you what to invest in, just giving you some examples.
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VTI is a total stock market ETF.
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If you invest in that one ticker symbol, you re getting exposure to the United States stock market.
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You re getting diversified.
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Getting diversified in the stock market.
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Not across different asset classes, but within the stock market.
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You can then pick, oh, I want to invest in, let s say, the S&P 500, which is the 500 largest companies in the stock market.
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SPY is an ETF that gives you exposure to that.
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Let s say you want to invest in the Dow Jones.
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That is the most commonly discussed fund.
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It is a group of 30 companies in the stock market, big, large companies.
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DIA is an ETF that gives you exposure to that.
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You can invest in three stocks, which would be hundreds of stocks throughout those three investments.
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ETFs.
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Those three ETFs will give you exposure to hundreds, not thousands.
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And all you need to do is invest in those three things and set it and forget it.
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And now you can just set it automatic.
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So the key here now is you invest when the market s up and down.
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you don t change it.
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So when you see the market crash happen, you don t stop, you keep investing.
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The only thing that you would change is potentially buy more.
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Because when you see these types of market pullbacks, most people are selling and they re running away because they re panicking and getting scared that my investment is going down.
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That s when you want to become it and buying aggressively because now investments are going on sale.
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And so this is where it s, again, that mindset shift of understanding what is it that you want to be investing in and how long are you investing for?
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If you re investing for the long term, who cares what s happening in the next two months or next two years?
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You re investing for the next 20 years.
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I call it a decade of sacrifice if you want to become wealthy.
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and seriously wealthy not like oh i have a little bit of money no you want to become wealthy you got to put in what i call that decade of sacrifice where you re working to spend less and earn more that way you have more money to invest and most people are not willing to go through that sacrifice because that means i can t have that gucci belt today so i can have more investments today i can t show off my stock portfolio or my real estate portfolio the way that i can my gucci belt
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And most people would rather have the show, would rather have the look, than the actual thing that will make you wealthy.
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And that goes back to the mindset, the thing you talk so much about.
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Your mindset has to be focused on saying, you know what, I want to become wealthy.
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And that s hard because now, for one, you have to be convinced yourself.
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And now you might have a spouse, you might have kids, and that means you all have to be on the same page financially, right?
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Because money is a team game.
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It s in the house.
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If you think, you know what, I m gonna go and try to build my wealth myself, and then your husband or your wife is going out and spending all this money, they re gonna be pulling you back.
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So you gotta be on board where I m mentally on the same page, my spouse is on the same page, my kids are on the same page, we re gonna build wealth.
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And we re gonna build something that we ve never seen before.
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And that s that first mindset where now I believe I can do it, I m going to do it.
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Now you start putting in that sacrifice.
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So we started by the passive investing.
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Next is active investing.
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And I also should mention that you can do passive and active investing.
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I do both.
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I do- What s the example for you?
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So I invest my money in five places.
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I invest my money into businesses, which are my own businesses and startups that I invest in.
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Invest my money into physical real estate.
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Invest my money into stocks.
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Invest some of my money into cryptocurrency, a little bit more of a speculative play.
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And then I invest a small piece of my portfolio, about 2% of my overall investment portfolio into physical gold.
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So my gold, my cryptocurrency, and some of my stock market investments are passive, meaning this happens for my stock market every week, for crypto every day, for gold every month.
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It s the automatic, passive, and consistent.
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I don t touch it.
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It is automatically pulled out of my checking account and is invested.
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Interesting.
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And your bank, you can set up parameters in your bank to automatically do this.
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Yes.
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Two specific places you want to invest.
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Exactly.
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That s nice.
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Technology has made investing so much more accessible.
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Do all these banks do this?
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Or what are like the top few that you see that... Many banks will allow you to move money from one bank account to the other.
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These investment accounts, you re going to have to work with a particular brokerage.
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There s tons of brokerages out there that do this.
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You can find whatever you like for, let s just say you want to invest in the stock market.
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There s a bunch of brokerages out there that will allow you now to invest your money into the stock market through this passive type of system.
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You just have to find what s right for you.
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And this could depend on what country you re in, and just what interface you like the best.
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And it s become very accessible.
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It is so much simpler now than 10 years ago, let alone 50 years ago.
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So we are very blessed to be able to do this now.
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On the active side, this is where now I invest into my own businesses, I invest into real estate, and then I also invest in some stocks.
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SPEAKER_01
Do you do real estate funds, or do you do your own individual real estate buildings yourself?
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I have done some real estate funds, but that is the smallest piece.
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Most of it, probably 99 point some percent of it, is actual physical real estate that I m going out and buying myself.
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And so now it s, when we talk about active investing, what does this mean first?
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This means now that you are going out, finding investment opportunities to invest in, and then you re putting your money in.
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And now this is where the research is important.
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So like, for example, with business, I invest in my own businesses.
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I also invest in some startups.
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Startup investing is very risky.
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Nine out of 10 startups will statistically fail.
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So I know that when I invest my money in these startups, a big chunk of this money, well, I ll probably never see again.
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But my goal is now that a small piece of these startups that I invest in will go big, and then that will make up for the other losses.
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With real estate, my goal is completely different.
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With real estate, my goal is cash flow.
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I call it cash flow because cash flow funds the guac flow.
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And what that means is now when I own a cash flow producing asset, I m getting money coming into my account now every month with my real estate that I don t have to actively work to earn because I have a property management company in place.
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I have a system in place.
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So it s not like I have to go to work to earn this money.
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I buy the properties.
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I have the systems where we renovate the properties with the contractors.
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We do the right inspections.
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Then I give the keys to the property manager.
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my job is done.
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Now every month I m getting cash deposited into my bank account.
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Every month and every quarter I get financial reports going over what s going on with my properties.
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So it s hands-off.
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I still review the properties, like I review the financials, I review what the property manager is doing, but I m not going to work to earn this cash.
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Now I should also say it took me a ton of work and a ton of time and a ton of headache and a ton of mistakes to learn how to do it the right way because
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You know, I didn t grow up with real estate investors in my family.
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I had to go out and just kind of do it and figure it out.
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And it was very stressful.
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You know, a lot of people on the internet make real estate investing seem like this holy grail.
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Go buy some real estate and you re going to be swimming in the dough.
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But here s the thing, when you buy real estate on your own,
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it s almost like a full-time job managing the property, managing, if you re doing the Airbnb or short-term rentals, it s like you re gonna constantly clean and adjust and promote it and market it and deal with the Airbnb stuff.
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Or you need to find someone to pay to manage it.
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But ultimately, at the end of the day, you gotta deal with the taxes of it, you gotta deal with the expenses of it, you gotta deal with the fixing of it, you gotta deal with the regulations around it, whatever it might be.
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SPEAKER_01
So how do you invest where it doesn t become a time suck and an extra job?
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In the real estate, but it s actually cash flow that is more passive.
4
SPEAKER_01
Is that even possible with real estate?
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I can only speak from my experiences because for me, it was a huge time suck.
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It was like a full-time job.
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It was more than a full-time job.
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Stress.
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I couldn t sleep at night because of how many issues I dealt with.
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So why be in real estate today if it caused you so much pain previously?
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Well, see, you go in with a vision, right?
4
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Like entrepreneurs, you have to be a little bit crazy.
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You don t know how something s gonna work out, but you re putting in countless hours, you re not sleeping at night, you re sacrificing vacations, you re not talking to your family, you re doing a bunch of crazy things because you think this thing is gonna work.
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That s how it was for real estate.
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I m known for being like that stupid person and I ve always been that thing.
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And for me, it s like, I believe something so much that I m willing to make a lot of sacrifices and keep doing something.
4
SPEAKER_00
And for me, when I invested in real estate, I was 19 when I started, when I bought my first property.
4
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And I did it kind of all by myself because I told my dad I wanted to invest in real estate.
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And I grew up in a very traditional Indian house.
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My parents are immigrants.
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My state in India called Punjab.
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So my parents came to this country with very little.
4
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Yeah, exactly.
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You got the Bhangra moves down.
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That s our dance.
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We were just talking about Bhangra before this.
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It s a traditional dance.
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But my parents came here with very little.
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They wanted me to be a doctor and it was very strict that you have to become a doctor, nothing else is the option.
4
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So anything that wasn t medical related was a big no-no.
4
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So becoming a lawyer, you were a failure.
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That was a huge compromise for me to become an attorney with my parents.
4
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But this was before I even became an attorney where I said I want to invest in real estate.
4
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And I was actually studying.
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for the medical college admission test when I had the idea to start investing in real estate.
4
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And I had some cash saved up because I was working on an event planning company at the time when I was in college.
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My parents didn t know about that.
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So I was making a little bit of money and I was like, I want to invest in real estate.
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My dad s like, you re stupid.
4
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Go study.
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Go become a doctor and then worry about all this other stuff.
5
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that you re doing.
5
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So I was like, all right, I m just gonna do it without selling it.
5
SPEAKER_00
So how much was your first deal?
5
SPEAKER_00
It was a small condo that I bought.
5
SPEAKER_00
The condo, about three or four years prior to me purchasing it, sold for about 150 grand.
5
SPEAKER_00
It went through foreclosure.
5
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The banks had it listed for $8,400.
5
SPEAKER_00
How, man, you got the jackpot of that thing, it sounds like.
5
SPEAKER_00
I made an offer for four grand.
5
SPEAKER_00
Oh my gosh.
5
SPEAKER_00
I didn t know what I was doing, right?
5
SPEAKER_00
So I m like, well.
5
SPEAKER_00
Did you get it?
5
SPEAKER_00
Well, I put an offer for four grand.
5
SPEAKER_00
They said, we ll give it to you for 7,000.
5
SPEAKER_00
And I said, no.
5
SPEAKER_00
I don t know what I offered, something else.
5
SPEAKER_00
Maybe let s say five grand, yeah.
5
SPEAKER_00
And then another person came in to potentially buy the property.
5
SPEAKER_00
And so the bank says, we have another offer on the table.
5
SPEAKER_00
Give us your highest and best offer.
5
SPEAKER_00
Now, to put this in perspective, I didn t know this was a good deal because I m 19.
5
SPEAKER_00
I knew nothing about money.
5
SPEAKER_00
Five grand is a lot of money at 19.
5
SPEAKER_00
It s like all your money.
5
SPEAKER_00
Yeah.
5
SPEAKER_00
So I know nothing about investing.
5
SPEAKER_00
I didn t know what passive investing was.
5
SPEAKER_00
I had only read books about investing.
5
SPEAKER_00
So I m reading some books and now I m just going out doing it because I know nobody in real estate.
5
SPEAKER_00
I didn t even know you could invest in real estate.
5
SPEAKER_00
So I m like, okay, well, somebody s making an offer.
5
SPEAKER_00
I kind of like this deal because I d looked at a few other properties.
5
SPEAKER_00
So I was like, well, how about I make an offer for eight grand?
5
SPEAKER_00
We ll see where they go.
5
SPEAKER_00
And the bank took my offer.
5
SPEAKER_00
The other person offered less than what I did.
5
SPEAKER_00
Wow.
5
SPEAKER_00
So I bought it for eight grand, I put in a few thousand dollars worth of work, and then I listed it for $600 a month.
5
SPEAKER_00
And the profit on that was between $250 to $300 a month, depending on the month, which now sounds great, right?
5
SPEAKER_00
This is the beauty of real estate.
5
SPEAKER_00
The downfall is it was a big pain because I didn t know what I was doing.
5
SPEAKER_00
I hired a, I don t want to say scam property manager because I haven t been able to validate that, but I don t know if they were licensed.
5
SPEAKER_00
The tenant moved in, we didn t have a lease.
5
SPEAKER_00
The tenant was absolutely crazy.
5
SPEAKER_00
They had my phone number.
5
SPEAKER_00
So now I m going to class.
5
SPEAKER_00
Like I remember I was coming out of my chemistry classes or my physics classes and I had these voicemails, these multi-minute long voicemails of the tenants talking about how the world is ending.
5
SPEAKER_00
They were like, this property is gonna go up in flames.
5
SPEAKER_00
So I was like, what s going on?
5
SPEAKER_00
I get an electrician out there, we go to the property, and this is like after multiple issues that happened.
5
SPEAKER_00
I went with an envelope of cash.
5
SPEAKER_00
I probably had like $50 of cash in this envelope that I gave to them because I felt bad for the tenant.
5
SPEAKER_00
Electrician s looking at the property, they re like, yeah, your light bulb fused.
5
SPEAKER_00
We can just replace that.
5
SPEAKER_00
That was it.
5
SPEAKER_00
There was an instance where they were cutting cucumbers on the countertop.
5
SPEAKER_00
They missed the cucumber.
5
SPEAKER_00
They scratched the countertop.
5
SPEAKER_00
She calls me crying that she needs a brand new countertop.
5
SPEAKER_00
Oh my gosh.
5
SPEAKER_00
I gave it to them.
5
SPEAKER_00
Oh.
5
SPEAKER_00
Because I didn t, I don t know what s going on.
5
SPEAKER_00
So like I dealt with a lot of issues and that was just the first one.
5
SPEAKER_00
I mean like the first I would say three were my learning curve where I was like
5
SPEAKER_00
a full-time, like, I m on the phone talking to people trying to find contractors, I m trying to find the right attorneys, I got screwed over by attorneys.
5
SPEAKER_00
I mean, I made every mistake possible.
5
SPEAKER_01
Why did you keep doing real estate after the first three failed?
5
SPEAKER_00
Yeah, see, this is where the stupid comes in out of me.
5
SPEAKER_00
Well, I read books and people talk about how investors own thousands of real estate units.
5
SPEAKER_00
I was like,
5
SPEAKER_00
How can somebody deal with thousands of tenants like this?
5
SPEAKER_00
It s not possible.
5
SPEAKER_00
There has to be a system.
5
SPEAKER_00
I just had to figure out how to crack that code.
5
SPEAKER_00
How do I break this system?
5
SPEAKER_00
And that was my journey, was learning it.
5
SPEAKER_00
And it was very painful, very expensive, and very stressful because the third deal literally depleted my bank account.
5
SPEAKER_00
I was talking to my wife about this the other day where that third deal was so stressful because
5
SPEAKER_00
I made every mistake possible.
5
SPEAKER_00
I talk about this on YouTube.
5
SPEAKER_00
It s my worst real estate deal ever.
5
SPEAKER_00
I bought the deal because my contractor told me it was a good deal.
5
SPEAKER_00
He told me that, hey, we can fix it up for not a lot of money.
5
SPEAKER_00
And because it s such a good deal, you re going to be able to make a lot of money on it.
5
SPEAKER_00
So he s like, don t even worry about getting an inspection on the property.
5
SPEAKER_00
Just go out and buy it.
5
SPEAKER_00
So that s what I did.
5
SPEAKER_00
I trusted him.
5
SPEAKER_00
Bought the property, gave him the money.
5
SPEAKER_00
He ran away.
5
SPEAKER_00
i didn t know that he wanted the money because he was running into financial problems then this property it turns out had a lot of defects behind the scenes which i didn t know we had the city come out and look at the property and it was
5
SPEAKER_00
The repairs cost way more than what the actual property cost.
5
SPEAKER_00
And so now I was really in trouble because I wanted to get this property rented out.
5
SPEAKER_00
My bank account, that property account, literally went negative.
5
SPEAKER_00
And I had an overdraft fee on this account, which I had no money to pay at the time for that property because I was putting all my cash into this.
5
SPEAKER_00
And like I was saying before, I was in the event planning party business, which was a cash business.
5
SPEAKER_00
So I had like literally a bag of cash in my room.
5
SPEAKER_00
So I went to my last resort, which I pulled the cash out of my bag and I gave it to the contractor.
5
SPEAKER_00
I was like, dude, we got to get this done.
5
SPEAKER_00
I need to get some income out of this property because I couldn t sell it.
5
SPEAKER_00
I couldn t get a certificate of occupancy.
5
SPEAKER_00
I couldn t rent it out.
5
SPEAKER_00
And so it was like, I was so stuck.
5
SPEAKER_00
I was fortunate that I had that cash, but I mean, it was a tough situation.
5
SPEAKER_00
That was my real life tuition.
5
SPEAKER_00
Like that was where I learned, like I say that one deal taught me years worth of real estate in one property because I learned so many things that I should not do.
5
SPEAKER_00
But then from there, you know, I was able to stabilize.
5
SPEAKER_00
I made some more money with other ventures that I was doing because I was making money for one reason, to buy real estate.
5
SPEAKER_00
Like that s all I was doing.
5
SPEAKER_00
And losing it in the real estate.
5
SPEAKER_00
But I was learning, right?
5
SPEAKER_00
That was my learning process.
5
SPEAKER_00
So I guess I can t, you know, I wouldn t change it because I learned a lot from it.
5
SPEAKER_00
Very stressful.
5
SPEAKER_00
When I say I lost sleep, I lost a lot of sleep during that time.
5
SPEAKER_01
So when you re going to buy a property now, what is the approach that you take so that it maximizes your return, saves you time and energy, and minimizes stress?
5
SPEAKER_01
What is the approach if you re like, okay, am I buying single unit properties?
5
SPEAKER_01
Am I buying apartment buildings?
5
SPEAKER_01
Am I buying duplexes, fourplexes?
5
SPEAKER_01
Am I working with another investor in buying a bigger deal?
5
SPEAKER_01
What is that thought process into buying a deal first off?
5
SPEAKER_01
And then how do you set it up so it doesn t take you a lot of time to manage it?
5
SPEAKER_01
Sure.
5
SPEAKER_00
So I would say the first thing is I need to know what my return is going to be.
5
SPEAKER_00
And generally, my general rule of thumb is I need a 7% cash on cash return.
5
SPEAKER_00
And what that means is for every dollar that I invest, I want to see seven cents of cash flow.
5
SPEAKER_00
That s money that s hitting my bank account after expenses that has nothing to do with appreciation.
5
SPEAKER_00
So I want to look at those financials.
5
SPEAKER_00
I want the 7% cash on cash return.
5
SPEAKER_00
Then I got to look at where am I investing?
5
SPEAKER_00
So I like to invest in areas that are growing, that have more like up and coming-ness to it.
5
SPEAKER_00
So this is now, I want to see populations at least stable, if not rising.
5
SPEAKER_00
Do a quick Google search of any city and Google will tell you what s happening with the population.
5
SPEAKER_01
It s made it so easy.
5
SPEAKER_01
Wow.
5
SPEAKER_01
What are the top three cities that are rising
5
SPEAKER_01
that are also not over, I guess, overpriced right now.
5
SPEAKER_01
What are those top ten cities?
5
SPEAKER_00
Let s see in 24 months where that actually is, because we re going through this correction in real estate right now.
5
SPEAKER_00
So let s see where interest rates go, because that s going to influence housing prices and real estate prices in general.
5
SPEAKER_00
Interesting.
5
SPEAKER_00
But keep an eye on interest rates.
5
SPEAKER_00
The general thing is, as interest rates go up, property prices will go down.
5
SPEAKER_00
So let s rediscuss that.
5
SPEAKER_00
What do you think is going to happen over the next 12 months with interest rates?
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Well, the Federal Reserve Bank says that they re going to raise interest rates.
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And if they keep doing that, they re going to push this economy into a lot of pain.
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Because it came down a little bit, right?
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Recently?
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So mortgage rates and interest rates are two different things.
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Interest rates set by the Federal Reserve Bank are called the federal funds rates.
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This is the interest rate that one bank pays another when they lend each other money overnight.
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So that, think of it like the wholesale price, right?
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When you go to buy this mug from Amazon, Amazon s buying it from the manufacturer.
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They re buying it cheaper.
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Then they sell it to you at a marked up price called the retail price.
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So banks have this wholesale price called the federal funds rate, then they jack it up and sell it to you as the mortgage rate.
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So federal funds rates, the Fed rate, can influence where mortgage rates are going.
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So interest rates can be different than mortgage rates.
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Right, they are different than mortgage rates.
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What s the current kind of interest rate at the time of this interview?
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For mortgage rates?
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The interest rate versus mortgage rate.
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So the federal fund rate right now is right around 5%, just under 5% the federal funds rate.
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Mortgage rates are hovering around the mid 6% for a 30 year fixed rate mortgage.
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Now the question is, where are we gonna go from here?
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The Federal Reserve Bank has a mission to fight inflation.
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That is a big deal.
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It is a super serious problem, and we ve discussed this in other interviews, so I m not gonna go too deep into what is inflation, why that s happening.
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We have an inflation problem, and that is a serious problem, because if we don t solve the inflation problem,
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then we risk a serious currency crisis.
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We risk potential hyperinflation.
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We risk our dollar losing the reserve currency status.
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So it is a serious issue to bring inflation down because, yeah, a recession is bad.
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A currency crisis is even worse.
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That s why the Federal Reserve Bank is working to increase interest rates, because that brings down inflation.
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They re looking to increase them.
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Increase interest rates.
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And what about the mortgage rates?
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So that pushes mortgage rates higher.
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Higher.
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So now rising interest rates have
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a consequence.
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And that consequence is a slowing economy.
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Because when you raise interest rates, it makes borrowing money more expensive.
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Less people want to borrow money.
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Less people buy.
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And now if you remember what we said just a few minutes ago in our economic system, spending is good for the economy.
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Higher interest rates, less spending, bad for the economy.
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Our economic system wants people to spend money.
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In fact, they want you to be in debt and spend money.
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Because if you re in debt and you re spending money, they re making money.
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They re making more money.
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I hope you enjoyed today s episode and it inspired you on your journey towards greatness.
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Make sure to check out the show notes in the description for a full rundown of today s episode with all the important
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links.
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If you want weekly exclusive bonus episodes with me personally, as well as ad free listening, then make sure to subscribe to our greatness plus channel exclusively on Apple podcasts.
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Share this with a friend on social media and leave us a review on Apple podcasts as well.
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Let me know what you enjoyed about this episode in that review.
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I really love hearing feedback from you and it helps us figure out how we can support and serve you moving forward.
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And I want to remind you, if no one has told you lately, that you are loved, you are worthy, and you matter.
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And now it s time to go out there and do something great.