Our special guest, and my business partner, talks about the importance of turning losses into wins, and how we do it.
About Indestructible Wealth: I’m Jack Gibson. I’m your wealth strategist and I’m here to help you make some money. The Indestructible Wealth Podcast is for young entrepreneurs who want to make, keep and grow wealth to enjoy now, and for years to come.
Episode #10 – How Big Losses Turned into Helping Investors Win Big
Welcome to the Indestructible Wealth Podcast. This is the place where we help young entrepreneurs to make keep and grow wealth that you can enjoy now and for years to come. I’m your host Jack Gibson, serial entrepreneur and founder of multiple seven and eight figure of businesses and wealth building strategist. Each week I’m going to share you my tips, resources, and secrets to help you create a plan and build the life you’ve dreamed of.
Jack: All right. Welcome everybody to the indestructible wealth podcast. And I’m really excited today. I’ve got my business partner Mr. Jeff Schecter AKA Shecky here with me today. We’ve been real estate partners as I’ve mentioned before with our company High Return Real Estate for over five years and Wow it’s been quite a journey. So Shecky welcome to the show. Thanks for being on. Appreciate you sharing your wisdom and journey with us.
Shecky: Well thanks. I’m happy to be here.
Jack: So Shecky Before we dive into the good the bad and the ugly as far as real estate goes, let’s talk a little bit about your background, what did you do before we started the company and tell us a little bit about some of your background in real estate as well.
Shecky: Well I am probably the quintessential definition of the scrappy guy pretty much self-employed my whole life. In some of my earlier experiences with real estate were house hacking back in the days. And also had a flipping business for a while back before the big crash in 08. I always seem to have enjoyed working for myself and after that big real estate crash I was living in Texas in San Antonio and I moved up to Austin cause I got very curious about marketing on the internet. I studied a lot of that and worked in that environment in the digital marketing space for a long time. Cause I really just appreciated the leverage that you can get from the Internet and now using a lot of that expertise in our real estate business. So that’s kind of a short version.
Jack: So the way that a Shecky and I met is he was actually my digital marketing coach in my nutrition business and I I happened to be online one day and you know so one of those little short little cool videos explaining how to become better at social media marketing and Facebook ads. So I watch that and then I had a call with Shecky and I really just quite honestly I was impressed by not only his level of expertise and kind of overall strategic mindset but more so just I’m I felt like this supreme sense of trust and that’s the most important thing in business you really got to trust the people that you’re working with. So I knew that he was a standup guy so I put the big pitch on Shecky to become my real estate partner 50/50 equity partner. Shecky talk to us a little bit about that because you load up on your dry erase board you had before I put that big ask in front of you. You completely switched everything that you’re doing in life and join me in this new company you had some visions in place. I want to talk about how important that is for our listeners too.
Shecky: Yeah there’s definitely a spiritual component there so during the period that I was working in the digital marketing space I was experiencing some frustration at that time with the people that I was working with. Not that they were bad guys actually we were all friends but when you work in small business environments sometimes you can be on the on the butt end of the crappy piece and so I I just was finding that it wasn’t really playing out as well as I thought it was going to. After a pretty heavy recovery from a pretty big surgery I was sitting at home one day and I was doing a lot of working from home at the time and I just wrote a few little things on my white board with my left hand with my bad lefty chicken scratching. And I said what are the just sort of criteria that I’m looking for? I don’t want to work alone. I want to have a business partner. I wanted to be able to be involved in a high ticket item. Where indeed we weren’t selling like $20 eBooks and making 8 cents after marketing fees where we could actually make some real money. I wanted to be really the best in my space and there were a couple other criteria that were important to me. And I’m wanting to be able to leverage my digital marketing skills obviously.
Shecky: And I didn’t even write the words real estate up there but I just kinda threw it up there and it sat up there in this little “please don’t erase box” on the very top corner of my whiteboard in my home office. And it was sort of like I wouldn’t exactly call it a goal but I I would liken it to a message to the universe. It’s like I’m just going to put it up there and let it happen. It was maybe only like six or seven weeks later Jack that you and I had that very meaningful conversation when you reached out to me and I remember it was like this ridiculous three hour long conversation and so being all sweaty when I was finished from pacing around my apartment. But the energy was fantastic in that call and I as a courtesy I had typed up a lot of the notes that had come out of that and sent you the email and then the very next day you’re writing me back going like okay let’s do it. And of course I’m like WTF calling you up going let’s do what. And that’s when you sort of revealed to me like Hey this makes sense for us to form a partnership. And while I was caught off guard just a little bit I remember hanging up from that call with you and glancing up at the little spot on my white board and I’m looking at that thing. Huh? Check check check check check. So it’s like there is something to this whatever you call manifestation or just putting things out to the universe and I think the key there is to not being attached to exactly how it’s going to show up.
Shecky: Because obviously at the time I was living in Austin I had a great little apartment looking out over the lake, great life I mean there was nothing in me waking up in the morning going like oh my God I really want to move to Indianapolis.
Jack: All right from Austin to Indianapolis.
Shecky: It wasn’t really part of the plan or anything like that but I am a pretty spiritual guy. And I believe that at the time that if if all these checkmarks get hit and it shows up this way then to me that’s a very very strong sign from the universe so it wasn’t too much longer maybe a day or two that it’s like okay I’m happy to entertain this conversation and I flew up to Indiana and you met me down here and the rest as we say is history.
Jack: Yeah. So powerful to think that what you can just put onto a board and visualize and pray about and then you you’re right absolutely I think so many people get caught up too much in the how to. The how is this going to happen. Instead of just putting it out there and just be open to all possibilities of not being so totally constricted by why don’t I know how this is going to happen. So then I don’t believe that it actually can happen. So I think that was that’s pretty powerful. So I’m in this entrepreneurial group and I’m going to ask this question to you I’ve never asked this to you before. This just hit me so it’s brilliant. I was in this entrepreneurial group pre-Covid but we actually got to meet together it was fantastic. One person said well I heard we were talking about partnerships. Okay. In terms of business entity formations and this one guy said well this popular guru says the only partnerships are like sinking ships. That it’s just a matter of time before they’re going down. And I said I spoke up and I’m like well I don’t subscribe to that because I have a great partnership with my real estate partner. And you know we’ve been going for several years and it’s an amazing partnership. And I said I also don’t believe that because I have an amazing partnership with my wife. And we’ve been working together mostly harmoniously right but of course we have our challenges and things we’ve had to work through but we’ve always worked through them together and that’s the same for you and me. I mean it’s not like we always agree on everything but we’re always able to figure it out. So they said how are you able to have a good partnership in business like that? And I said well the most important thing is that we have shared values. We believe in in doing business a certain way and we have a certain set of code of morals and ethics. So that was my answer I’d like to hear what your thoughts are is how our partnership has been able to endure through some of the most challenging times possible for a new startup company.
Shecky: Yeah. So I obviously a 100% agree that I think we’re both guys that live by a code. And that just say like we’re always going to do what’s right now of course anytime you say that in a recording or in a video people are going to think to themselves oh well they’re just tooting their own horn whatever. And I would say look there has been times where we’ve made a lot of mistakes. A lot of mistakes let’s be clear on many mistakes but we’ve always corrected them. And we we’ve always gotten right with whoever we’ve wronged. And I think that that while it can be extremely costly as we found out in terms of dollars and resources and what it takes to make things right again maybe this is turning into a more spiritual conversation than what we both intended but it puts an energy out there to the universe that says – Hey we’re just going to always do what’s right and then we never have to worry about the old expression about karma being a bitch. So I think that’s number 1. Number 2 it is interesting that you liken to our relationship. And mentioned your wife in the same sentence and to an extent there is no question that what you and I have is like a marriage in some ways. So what are they? Yes there are many marriages that are sinking ships so when you look at that you go why are they sinking ships? There’s no question that in any partnership whether it’s romantic partnership, business partnership, whatever there is going to be some freaking Rocky times but that’s just the way life is life is bittersweet.
Jack: 100% right.
Shecky: It’s not sweet all the time and bitter all the time but it’s a combination of the two and again it speaks to how are you showing up? I think both you and I are very open people if we’re pissed we’re going to say we’re pissed we’re not necessarily going to try to overly judge each other. It’s like okay if you’re feeling pissed are you okay? I’m just going to let you be pissed and that’s legit and I think we’re both pretty strong communicators in terms of listening to each other coming to some mutual resolution. And I think that there are many business partnerships that are sinking ships that probably could start with shared ethics but they also don’t have that commitment to good communication and to always doing what’s best for both of us. So when you get marriage right? Has a me a you but there’s also an us. And in our case the us is that business right there.
Shecky: So we know that whatever’s good for that is going to be good for the both of us. And let’s just figure it out.
Jack: If you’re listening and not watching the video of Shecky he’s pointing to the high return real estate signs.
Shecky: Oh yeah. Thank you. Yeah. Anyway that’s my rant.
Jack: Amazing. So let’s talk to our listeners and start educating them about real estate and then we’ll transition that as we intended into the larger bigger picture view of investing for cash flow and tax strategies and all of that. So in terms of purchasing properties to get a cash flow yield and to take a chance on it’s also take a stab at some appreciation and all of that. What is some guidance and wisdom and things that you can tell our listeners that is going to help them because everybody listening to the show their goal is to create indestructible wealth. Right? And they I believe that they need to have some real estate exposure in their portfolio without any doubt. It’s where the most millionaires in the world have been made. So why not have some exposure to this? So let’s talk about single family rentals and what we’ve provided and what we’ve learned.
Shecky: Well there’s a lot in there right now. So let’s start early and go to some of the stuff we thought we knew and some of the stuff we didn’t know at the time that we got started.
Jack: That’s right.
Shecky: So just for for viewers and listeners purposes we got started in this model called turnkey investing meaning that there is a provider that provides a property that has turnkey ready to go. The property has been purchased the property has been rehabbed. There’s a tenant put in and it’s professionally managed its supposedly a cash flowing machine and while there are now quite a few different turnkey providers, obviously there is a lot of variety in terms of the quality and the kinds of properties that you could potentially purchase from said turnkey provider. We got started actually more as sales and marketing guys. Pedaling somebody else’s properties and long story short that turned out to be disastrous because we didn’t realize that these people were not let’s just say living on the same ethical plane that we are okay.
Shecky: Without name calling and all that stuff. I mean so there was a lot of stuff that was hidden from us that we just didn’t know what we didn’t know. And so not only did it affect us negatively in terms of our own investments because we bought a lot of properties from them but it also affected negatively that initial round of investors that also bought properties that we marketed to them and recommended that they use this company. So the first lesson that I would say that coming out of there as your some of your favorite words Jack is trust but verify.
Jack: Yeah. Bingo!
Shecky: So that’s what way beyond even looking at any numbers is and what are the things that you can do to basic things to verify? Well was the property inspected recently by a third party so that you’re not necessarily trusting the party that’s selling you the property. So anybody can read an inspection report. That’s pretty easy you can verify what the city tax rules look like. You know they’re telling you what the tax costs but you can get on pretty much any municipal site now and verify what the property taxes are for a property. You can also verify what your insurance costs might be. You can also look at previous rent rolls if the property has been tenanted for a while you can look at rental comps to see if you’re kind of in the right vicinity for market rent. You can look at sales comps because you also spoke a little bit about appreciation. So if somebody else is doing all the hard work for you like a turnkey company like ours and they’re going out and risking on the buy and they’re risking on the rehab and they’re tenanting the property and all that it would be foolish for you to expect that you’re going to buy that property significantly under market value. And of course to that I would say so what if your other numbers work and you’re walking into a property that you know is really good condition you know is cash flowing and you know your cost of maintenance over time because of the quality of the rehab and because of what the inspection report showed that your Capex, your future maintenance expenses aren’t going to be significant there’s always going to be something. Then a little bit of variance between slightly under slightly over whatever market value is okay.
Shecky: If you want to play the game of forced equity and being able to get a deal per se which is tough in this market because as we are recording this as most people know that inventories are pretty tight and prices are pretty high all over the United States not just in the Midwest.
Shecky: And that could be a whole another episode talking about why that happened and all that. But even with that you really it’s just a matter of knowing your numbers so that was a big lesson that we learned. If I were to if you could just let me continue and I’ll just talk then I would say the next rung of understanding goes beyond the property. And this is where investors I would say even seasoned investors fall off the mark.
Jack: When you were saying going beyond the property itself you’re talking about the area in which it’s in and the town like that?
Shecky: Well those are all factors that I would say fall into that previous conversation like if a property’s got potential for to appreciate all that that’s all numbers about the property right? So the next layer is then what’s going on with the individual right? When you look at every single guru that’s out there and they’re pedaling all this education all this kind of stuff they’re essentially teaching you how to buy a property or how to do something within the real estate world but where most of them fail and where most investors fail is they are not being selfish. And so what I mean by that is they’re looking at all that the property itself becomes that everything about that property becomes super important and I don’t want to minimize that but what’s going on with the whole rest of your life. What kind of wealth you’re trying to build. I mean this is why you have this other company and this coaching program now called Indestructible Wealth right? It’s like there is the big hole that’s out there.
Jack: Yeah. If I thought that just buying properties was the answer then I would still be doing that as far as how to help people create wealth because I do enjoy and love and get a passion for helping other people improve their financial life.
Jack: Like you’re saying it’s only one part and it’s a small part of that in terms of what’s the overarching goal.
Shecky: And so to put things to frame this in terms of me and you and the stuff that we’ve been through is over the years, we did our own podcast for a while and we had a lot of different experts on and then we had other working partners and there are a number of things that need to be considered beyond just purchasing properties. And I agree that there’s no question that a lot of wealth can be built within real estate as a major component of a systemized wealth plan I’m not arguing that at all. What I am saying is that there are other things to consider. Taxation is a huge one and that falls into whether you’re investing in and out of a retirement account. There’s other pieces within the real estate investing world where you’re maybe not just buying houses but you’re buying notes to have more stable mailbox money and not worrying about whether there are tenants in and out of that property. Then you have to look at what’s going on with you right? Like so over the years obviously we amassed this incredible Rolodex of experts people that we could reach out to tax experts and qualified plan experts and insurance experts and everything that’s kind of attached to real estate investing and other kinds of related investing. But it’s a more holistic approach so the point I was making earlier is that if buying a home is part of a holistic approach then what’s happening is most investors that come to real estate are only looking at this. And they’re not saying like okay I I need to have this holistic approach to everything because I’m trying to build wealth one guy’s building wealth the other guy’s buying a property.
Shecky: And so the best analogy that I could give you is and I’m kind of a natural health guy so I’ll use this analogy.
Jack: I was just about to relate it to nutrition too. I was just about to go there.
Shecky: A typical Western medicine doctor what does he or she do? What are they trained to do? They are trained to treat a symptom. That’s all they do.
Jack: Symptom. That’s right.
Shecky: That’s where you got a headache take a pill you got a backache take a pill you got a kidney problem take this medicine. Like it’s just very very cause and effect, what they don’t recognize that most people that are more into holistic health would say the pain the symptom is really just a signal. It’s not just a symptom. It’s a signal of a greater problem. And what how can we make the whole healthy? Because if the whole is healthy the pains are going to go away. If you just treat it with a drug or a chemical all you’re doing is masking something.
Shecky: And so we have seen over the years a lot of investors that come to us and great people and super nice and there’s no question we’re happy to sell them a property as long as what we have in inventory at the time matches some of the criteria that they’re looking for but it’s it became very interesting to me and ultimately very obvious to us that their only criteria was the symptom I have to buy a property. It’s like oh okay that’s great. But what are you doing holistically for the rest of your health? And so as a result we’ve come to a point where we and our company and you Jack with what you’re doing is we want to treat everybody with the holistic approach. What are you trying to build? What kind of life are you trying to build? I mean how is your business structure set up? Are they LLC’s? Is are they S Corps? What’s your taxation situation? Why are you paying this tax when you could be restructuring it that way? So what most people that are buying properties don’t recognize is that there are many other beautiful aspects to owning a property that may help them in other parts of their life. Depreciation, cost segregation just to name a couple but if you’re not doing all that stuff correctly and holistically you are not going to be able to take advantage of it.
Jack: I think that for us when we first started five or six years ago and a lot of the investors that we were initially serving is that we were so focused on cash on cash returns. What is the property renting for, how much am I buying this property for? And what’s the net yield I’m going to get out of it. So if I buy the property for $50000 and it produces $10000 net income after all expenses which six years ago was possible that’s not possible in today’s market. You make a 20% cash on cash return right? Well that’s what everybody was pretty much exclusively dialed in for. And now that you and I have had this five years of you know experience and wisdom right. Now we know and we can see through and past that and know that that’s just a small piece of that whole holistic approach to investing. And then oftentimes the best properties for a five or 10 year wealth building strategy are not those that produce the highest cash on cash returns.
Shecky: Yeah well said because they’re because of the way the numbers work out they may lend themselves pun intended to a better lending structure and that’s just another component of the holistic approach is how how healthy is your debt? How are you structuring your debt with everything including your primary residence. If you have good credit card and all that stuff and it is a really important component. And now even though what you’re saying is true about cash on cash returns there is also more creative lending products out there now than there was a few years ago. And so as a result of that that can skew those numbers. And like you said it’s you cannot judge a book by its cover. Okay great property, looks good, but how do you open up the book and get through all the chapters and go what could I do with it in terms of lending? What could I do with it in terms of my tax structure? What could I do with it in terms of my business structures? How can I depreciate this versus just buying it as a house? Like there’s so many things to consider. That once you start aligning with the experts that we have aligned with it’s a completely different ball game and it’s almost embarrassing Jack to say like what we know now and the information that we can share with investors. It’s fantastic. But it’s embarrassing compared to the kinds of stuff that we were sharing with investors even just three years.
Jack: Yeah. Everybody does the best that they can with the tools that they have at that time. Right.
Jack: And that’s one thing that you fundamentally have to believe about humans even the ones that they’re not doing things on the up and up, or with what you’d agree would be the right way to go. And that for us once we were doing the best that we could at that time and just like everybody listening to this you’re going to get better and you’re going to learn and five years from now you’re going to be a different you are going to be a different investor. You are going to be a different human in fact you’re going to grow and your perspective is going to be, it’s going to be so much different you’re going to look back and be like man I can’t believe that that we did that. Or we said that or we trained on that. So what is the so let’s talk about the transition and the product that high return real estate is now affiliated with in terms of being able to help with the holistic approach what does it look like? What are you speaking of?
Shecky: Yeah so we have another working partner in this venture who’s a really great guy that we’ve gotten very very close to. And interestingly he has equity in all of these companies that serve us. So it’s like we have a shared vision of being able to provide all of these services under one house. Advantage number 1 is the investor is not necessarily having to drive this boat in unchartered waters and go like oh let me reach out to a tax expert. Let me let me talk to my CPA, let me talk to the 401k qualified plans. And you recall Jack from the days that you and I were doing our podcast and I know we kind of joked about it is that we would have all these great guests on that would talk about these different things and different strategies. And essentially each one became a commercial for that guest and whereas there was nothing wrong with it. It was still a symptomatic splintered approach.
Shecky: And what we do now as a program called, at least today it’s called Cash Flow Plus and Cash Flow Plus is a program that we bring an investor in and we say look we’re going to do things simple. It’s four or five calls and we are first of all going to have a discovery call with you for free just to let you understand exactly what this is all about and see if this is meaningful for you. The cost to get in is very very low and there’s a very very small membership fee to be associated with it. So we’ve kept the price to entry extremely low and basically what we do is both will hold your hand, not necessarily doing your investing for you but in making the right introductions to you to the right professionals that can help you so on that first call discovery call you’re discovering what we can do. The next call is called a Go Call which just stands for get organized and in that get organized call we are going to help you and identify the opportunities that exist for you based on your individual personal situation. Like maybe you have W2 income, maybe you don’t maybe you have a gargantuan 401k, maybe you don’t, maybe you own seven or eight other investment properties that the debt is structured a certain way maybe you don’t but we have identified basically three common areas across all of these investors that they all tend to falter on these three areas. So number 1 is taxation.
Jack: Yeah .Right.
Shecky: There’s a bunch of different tax experts out there honestly.
Jack: The single largest expense of your lifetime by far will be in taxes in fact I would argue that you’re going to pay over 50%, well over 50% of your total income that you earn over your lifetime in taxes because there’s so many federal state FICA Unemployment right? You got property taxes, you got sales taxes, and then you have the hidden tax of the government printing money at billions and billions of dollars.
Shecky: Yeah it’s obscene and that could be four more episodes.
Jack: That’s a different podcast.
Shecky: Right. But yeah. And there’s also this this one thing you didn’t mention it was all these little insidious taxes that they don’t call them taxes but like why does it cost $80 for me to renew my driver’s license every year?
Jack: Oh yeah we had to spend a few grand when we bought our new car for my wife. Oh in Indianapolis you have the stadium tax there, which is like 2%.
Shecky: It’s insidious.
Jack: it’s crazy. Yeah.
Shecky: So we know that that exists so we can do everything that we can, I mean there are there are tax laws that are made to be very very intricate on purpose. So here in the United States obviously I mean we’re speaking mostly to Americans at this point but there is a tax code and I look at it as not only an obligation but now a sport to say, what can we do in terms of knowledge and expertise to reduce taxes as much as possible legally of course and those guys and gals that are what I would call tax strategists. I want to make a distinction, not a CPA because they are not tax friendly just they are a great tax filers but they are not tax strategists.
Jack: I was talking to one of our investors about Cash Flow Plus a couple of weeks ago and he said to me well I have an accountant why would I why the heck would I need Cash Flow Plus?
Shecky: Sure for that very reason. They’re great filers and they’re not strategists.
Shecky: I mean there’s some good CPAs that know a few tricks but you’re talking about somebody that spends their whole life and their whole focus is knowing every letter of the tax code and understanding when you take that tax code and you plug it into this particular individuals situation and you look at all their assets and all their liabilities and all their LLCs and all their debt structure and all that how can we then take that and go, we can take some of this stuff over here and restructure it in such a way that you’re in a much lower tax bracket or you’re getting this write off or you’re getting that write off.
Jack: My tax strategy team this year for 2020 taxes saved me over six figures.
Jack: That my accountant would have never done. Now I do have a great accountant no doubt.
Jack: I’m not taking anything away from my accountant by any stretch. He’s great. I refer people to him all the time. I think he is awesome.
Shecky: Yeah I know.
Jack: it’s not his job to be a tax strategist for me. He doesn’t have the bandwidth and the ability to do to do that and to scour the tax code they just don’t have time.
Shecky: I would contend and I don’t know what you paid for that but I would contend even if that tax strategist charged you and I’m seeing them out for their services let’s say $75000 and they saved you six figures. You’re still way on the winning side of that. Now I don’t think they necessarily charged you that much.
Jack: No. Not any of those.
Shecky: But what I’m saying is those people always always always earn their keep always.
Shecky: Whatever it is that it costs.
Shecky: Because you always come out on the winning side of that. So taxes number 1.
Shecky: That’s the place where there seems to be the most bleeding even from the seasoned investors because there’s a lot of complexity too when you start talking about all the things that are going on personally and how much money is in the right retirement account and how much isn’t and what are you doing with your LLC Set up all that. So that’s Number 1. Number 2 is what we call OPM other people’s money AKA debt. So obviously we live in a very debt ridden society and you and I both recognize that and just to speak on a higher level that there’s good debt and there’s bad debt if you’re just talking about consumer debt and racking up credit cards no typically that’s not good debt. But there is debt that is there to help you make money. I am always amazed as an example by investors that get all puffy and they start like well you know myprimary residence is worth $600,000, I only owe $150,000 on it and I’m sitting there thinking to myself Okay dang bro there’s $450,000 in equity that you’re not doing anything with that could be making you a gargantuan sum of returns.
Jack: That’s what is called a lazy asset.
Shecky: That’s what’s called a lazy asset but it speaks to that 2nd thing which is debt. Now it’s an example of how debt is oftentimes structured in correctly. And so that’s the 2nd thing that we attack is debt.
Jack: I love debt.
Shecky: Well it can be great.
Jack: I freaking love it. People are scared of it. It’s like debt is a four letter word because of some of the gurus that have so in like entrenched upon us that all like debt is so bad. There are some very bad forms of debt like you said credit cards consumer debt. And I think any consumer debt is generally speaking going to be bad. However there is great debt as particularly if you leverage real estate properly. Oh man. It’s made me a lot of money.
Shecky: Right. Yeah. Understood. And I think you got gurus out there and guys like Dave Ramsey that are touting getting debt paid down and all that kind of stuff. And I don’t necessarily think that’s bad strategy you said something earlier that I thought it was interesting about growth and all that kind of stuff. And yeah look I’m not picking on anybody here. Well maybe I am but when you go 5 years, 10 years down the road I mean there is plenty of people that really are just happy to hang out on the couch and watch Netflix. And they say that they want to get rich and they say that they want to build wealth but they’re not willing to learn some of the stuff or go through the processes or really do what it takes to put themselves into that right position. And I think that a lot of that comes from having a growth mindset and also having a good work ethic and being honest with yourself about who you are and where you’re going. And I think there’s a lot of the population that are just not of that mindset. And if you’re more in just like Hey I’m in a survival mode or scarcity mindset then a guy like Dave Ramsey is appealing. So to make a distinction if you’re listening or watching this podcast right now and you are of a growth mindset and really feel like yes, 5 years from now, 10 years from now I want to have a completely different life, I’m not afraid of change I want to look back and go like God yeah we’ve accomplished so much. I’ve learned so much! Then Jack and I right now are speaking specifically to you because the other thing that we’ve learned in the course of this growth that we’ve been through as we don’t really want to work with the people who Dave Ramsey is attracting as an example it’s just we’re just not of the same mindset. So again I’m not making any judgements I’m just saying that if you’re listening or watching this right now it is important for you to do some sort of self-analysis and go like where do I really fall? And to be honest with you there isn’t really any middle ground like you’re either saying I’m willing to grow and change and get uncomfortable or I’m not. And if you’re not its okay, nobody’s judging you it’s just recognize that be happy with where you’re at and that’s cool. So anyway sorry for that long rant but it does segway into the third thing that I’m talking about and that’s cash flow.
So one of the things that I hate and one of the biggest misnomers of what goes out there in terms of guru land in the investor world is this whole notion of socking everything away and saving everything for a rainy day. Give up all the stuff now so that you can live like a king later and whereas in theory there’s nothing inherently wrong with that. When you start talking to the right experts and get introduced to the right people the other thing that you start seeing and you start realizing is that there may be cash flow right now on a monthly basis that can be improved. S o why not? Again it just starts speaking to mindset and abundance and growth.
Shecky: Having money now and having a great nest egg for the future aren’t necessarily mutually exclusive. We’ve just been taught that from our parents right?
Jack: The prevailing theory that was taught to us that you bank everything. So you have this huge lump sum some point in the future age 65 or 70 or whenever that happens that then can live off and live the great life.
Jack: The problem, there’s 2 there’s big problems with that. Number 1 is that you’re putting off your happiness and your enjoyment of your money often to the future of which you may either not be around to enjoy it, orpotentially you might not have the right health. There’s a lot of things that can go wrong in a human existence. So this is a strategy that you’re talking about Shecky it’s is you can have your cake and eat it too and eat it later as well.
Shecky: Yeah. I mean I think that that’s one of the things that as we developed out this program and started opening up our economy again and we started having these conversations with investors that were going through and are still going through Cash Flow Plus is the underlying question is how can I have both? It’s a fantastic question. Again I want to put a disclaimer, big disclaimer here. Everybody that listens to this is they’re all different people. So some people have greater resources than others, some are better at saving, some have more assets put away, everybody’s different. So the point being is that we still want to ask that question and going back to what I said earlier there are still 3 things that we’re going to look at: taxes, deb,t and cash flow. Well if you really think about it the first 2 speaks to this 1 when you get your taxes straight and your debt straight not only can you affect the future but you can also affect the now. So that’s really what this is all about.
Jack: That’s good. So we’re about out of time but I did want to hit on property classes because when people go through this particular cash flow program they are going to have exclusive access to purchase properties, purchase mortgage back notes that have a fixed solid, predictable, very safe monthly interest rates. So what kind of property class are they going to be served up and why? A class B class C class D class what’s that going to look like? What were expectations like?
Shecky: Yeah. So just real quick I mean if you just took ABCD and I give you give you a very quick definition A would be like a super high-end luxury properties. B as what I would call basic suburban.
Jack: Middle-class America.
Shecky: C would be more like inner city beat up but sometimes can be in areas of gentrification.
Jack: And usually cash flows at a higher rate.
Shecky: Yeah. Cash flow is at a higher rate but it comes with a little bit more volatility.
Shecky: And then D is just sort of stay away from it. It’s like the war zones where everything is boarded up and high crime and all that stuff. So there’s a lot of people that would argue with me on that I’m just giving you a very general description.
Jack: Yeah. The classes are subjective for sure but I think you’re pretty spot on there.
Shecky: Yeah. And so just to go back a little bit about our history as we can I came from a history of working in kind of the C and C minus areas. And again what I used the word volatility it was we’ve had some pretty difficult struggles in terms of getting the right tenants and all that kind of stuff. So we have over the years upped our game in terms of the kinds of properties that we go after, the kinds of properties we hold for ourselves and the way that we manage properties and we typically straddle I would say in the C plus where there is opportunity in areas near gentrification all the way up to say a B a full B. And that seems to be a real sweet spot where you’re kind of balancing the return with the tenant experience.
Jack: Sure. Right.
Shecky: So that’s where we hover and FYI that’s what we built out in Indianapolis and the other really fantastic thing as a result of having this holistic approach and relationships is we also have relationships with sister companies in the Midwest that are buying and rehabbing and managing similar properties to what we’re doing in Indianapolis with nearly identical rehab processes and nearly identical management processes and it creates a consistent product across the board.
Jack: What are those other markets Shecky?
Shecky: Memphis, St. Louis, we may see some stuff in Dayton. We may see some stuff coming up in Birmingham. We may start to do some stuff in Nashville, we’re also looking at Chattanooga right now so they’re all kind of in that center part of the country that kind of straddles Eastern and central time zone.
Shecky: And It’s the beauty of that for the investor Twofold. One is the obvious is in terms of having just more inventory available because inventory is tight and when we got similar crews and all these other cities out looking for a similar criteria we’re just improved volume but the other thing as you and I also learned one of our other little side lessons is you do you want to put all your eggs in one metropolitan basket and look I’m totally hot on Indianapolis it’s a great market. I live here, I’ve learned the city and I think it’s a fantastic place to invest but so are all those other places and there are nuances to those local areas. There’s some things that they’re stronger than Indiana in some ways and sometimes they’re weaker but overall an investor buying multiple properties it does make sense for them to diversify across a few different markets. It’s just a way to spread the risk.
Jack: Okay. So in closing how do people get enrolled into Cash Flow Plus? What’s the cost as of this recording? And you’ve already stated the value I think everybody’s pretty clear. So imagine that at some point they’ll there’ll be wanting to join – what or where do they go?
Shecky: Yeah. So our website is highreturnrealestate.com and you can kind of see what we’re doing there but all you got to do is put a forward slash and write the word cash flow after that. So highreturnrealestate.com/cashflow will take you to the page with a descriptor and it gives you a quick overview as of this recording it’s $750 to get involved in the program. Now this is $1000 worth of value when you start realizing you’ve got 4 or 5 calls and you’re talking to experts and people that can help you restructure your retirement plans correctly and all that stuff. So it’s a drop in the bucket I think as of this right now its $35 or $40 a month something we’ve just tried to keep it really small as far as a membership fee. We as a company are so convinced that it makes sense for our investors to do this that once you go through that initial cash flow plus program and you’ve pulled the trigger on the roadmap that we’ve helped you build right. And you’ve followed all the steps. You’ll get a certificate of completion and you can take that certificate of completion and give it back to us and we’ll give you that initial $750 back against the purchase of your first property from us. So we’re essentially even paying for your entry fee. That’s how hot we are on it. So I’d encourage you to go check it out. And again there’s no charge to book a call with us just to learn about it and do a discovery call and if you find out it’s not for you. Okay great. It’s that no harm no foul. So highreturnrealestate.com/cashflow.
Jack: So Shecky thank you so much for joining and for all your wisdom and experience and expertise. I know that we will have you back certainly on several times on future episodes because there’s a lot to unpack here in terms of real estate investing and the whole holistic plan for an investor. So this is not the last time our listeners will be hearing from you. Thank you so much everybody and that’s a wrap.
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