How To Build Generational Wealth | REIal Talk | EP. 42

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies, and we'd like to welcome you to another episode of our podcast, which is Real talk.

And that's real talk for real estate investors.

1. Nicely done. This is episode number 42.

Remember you used to do that, by the way. 42. For those of you actually looking at the video and not driving in your car, we're making funny symbols quattro dos.

In this episode. Actually, this one is called Generational wealth and Real Estate Investing for Future Generations. And I want to show you something actually, real quick. So people that buy our turnkey, which is a turnkey property, which is our. What we call our rice bullet, that's our. That's our bread and butter, our turnkey properties. But, well, we. You buy one of our turnkey properties, you get this cool shirt that says, I'm planning for three generations instead of planning for Saturday night. Hashtag passive income. And no, the shirts are one size fits all. Just kidding. So that's our plan for 2022. Buy house, get a shirt. But anyway, I thought that was a great idea. This is a great thought, a great line. Great. I mean, I didn't think of this as. This is awesome.

Yes.

Because that's what it's about is planning for the future generations.

That's right. You know what I love about owning six companies and having all these incredible team members?

Is that happening without not knowing anything about it?

Yes, it's brilliant. I mean, we did know about it when it was being created, but, you know, just forget, okay? You were left out of the loop. But it's just amazing. Our team is so freaking amazing. I'm so proud of you, of everybody and everything. So that was totally off topic, but that's what these are about. These podcasts are just us and we don't drink coffee. But I should have my big soda here right now. We're just chatting.

Yeah, you know, I already had my coffee. I'm ready to go.

Okay. All right, so I'm gonna start this and then we'll really dive in. So this is an important topic for us. It's something that we talk about a lot in our Freedom Through Passive Income podcast series. It's a 365 day series and we have topics about tax free wealth, generational. Generational wealth. Gosh, I can't even remember. I just did a post about it just the other day. I was like, if you want to know, this, this, this, this, and it just exploded. And they're just like, yes, we Want to know about these things. High rates of returns, passive income, lots of stuff. But generational wealth is a very, very hot topic because so many times we're taught. We've talked about this before on the other podcast about the Social Security Administration, talking about the 100 people that they studied. This was done a long time ago, and of them, by the time they reach retirement, are broke, and they're. They're living with family or they're working because they have to, not because they want to. And so we are trying to change the game as much as we can by educating people. So I say all that because we had prepared this podcast and for the other series.

Yes.

And then Caitlin on our marketing team, she says, hey, will you guys do a topic about this? And I'm like, whoa, that's weird.

Well, we sure can.

So we had already, you know, we actually already recorded the other one because those are like eight minutes less. And we went, okay, that's one time.

We're actually on YouTube. You can click on the video and.

Slow it down because we're going so fast.

I mean, I said maybe seven words for those eight minutes, and I was exhausted when we got done. This is great. This gives us a chance to breathe.

Yes. Yeah. Probably our next one will probably point to this one and just say, hey, if you want to hear the relaxed version of Slippin Danny talking about this, go over here. The relaxed version. Okay. So in a very relaxing way, I'm going to talk about what is generational wealth. So building generational wealth is really your assets and your intangibles being passed down. So what are assets? Assets are your property, your investments, your money. That's just three examples. What are some of the intangibles? These are things that people do not think about when they think about generational wealth and what should be passed down. These are things like financial education. Ding, ding, ding, ding. We're gonna talk about that a lot in this podcast. Values. What are your values as a human being in general? You wanna be passing that down to your kids and habits, your daily habits literally make up who you are. And some of those habits are so incredibly impactful in the results that are created because of them. And if your kids can pick up on those things because they see how impactful those things are that you are doing, it passes down generation to generation, and it's so incredible. So generational wealth is very largely created by keeping more of your money. And you and I talk about this all the time. There's two skills I'm going To test you. What are they?

Three?

No, you want three skills.

Making it. Making it.

Yes.

Keeping it and spending it.

Spending is Flip's little twist on the two most important money skills.

It's 2.5.

Yeah. Yeah.

So it's making it and then keeping it. Those are the two.

That's right. And spending it really, quite frankly, is important. Right. We want to enjoy life. And you and I have always said that too. That, you know, if we're going to do something, we're going to do it upgrade. And that's why we started doing everything that we're doing here, because we wanted to do it upgrade. We wanted to do all these cool and fun things because we only live life once. But we didn't want to do it and be broke. We didn't. We wanted to use some wisdom in how we created it. So I'll give you that third one. As long as you're using wisdom in the making it and keeping it. Okay, so why is generational wealth important?

Well, number one, it gives you. You know, you win. Gosh. You know, you want to see what. You want to be there. And like, when you're 70 or 80 years old and just know that when you look at your family, you know, your kids and your kids. Kids. And you know that they're going to be taken care of.

Yeah.

They're not going to be, you know, begging for money. They're not going to be, you know, trying to make it at the end of the month. You know, what's the country song? Too much month. At the end of the money, you know, it's. They want to make sure that everyone's taken care of. And that just gives it's peace of mind. And it just gives. It gives you more freedom.

Yeah. And more options. Choices. Right. Especially for your kids. And I think that we talked about this a little bit on our other podcast was we hear stories all the time of. Let's just say we're parents. We've got three beautiful dogs that we're passing everything down to that are spoiled beyond belief. You and I work really, really, really hard, and we have for years. We are getting into what we're calling the anchor leg of our journey where we're trying to really kind of button things up and just.

That's my favorite line.

Just button things up and just have fun. But in that, had we not, if we had kids, had we not given them some education, those two skills we talked about not mentioning the third, the making it.

We did that, I would have taught.

Them the third the keeping it. We would have done that. But the second that you go to that second part of passing it down after we leave this earth, they have to know those two skills. Otherwise what happens? And we hear this story all the time. It's gone, you know, hundreds of thousands, hundreds of millions just gone.

I mean, look at how many millionaires or how many lotto winners, you know? Oh, yeah, or even.

That's a great example.

Even pro athletes. There's pro athletes that make millions of dollars. And you know, you find out like four years after they're done playing that they're homeless, you know, and it's just, it's. They learned how to make it. Yeah, they just didn't learn the second one.

Yes, exactly. Right. Yeah. So that's really why we're kind of. We're very, very passionate about passive income, number one. Because even when you pass down passive income, it's hard to really kind of screw that up unless you just sell all of your assets. Passive income is meant to be coming in every single month. Right. So it's one of the mitigating factors to help the future generations not screw up too badly. And that's why we love real estate.

Setting it up so that way no matter what they do, there's still something coming in next month.

Exact. Exactly. Because eventually they'll learn. And most importantly, when they spend all the money and they're like crap, you know, did they learn how to make it? Because they sure as heck didn't learn how to keep it. Okay, so how do you go about teaching or changing the game? For generational wealth, we came up with two key factors. The first one being invest in your kids financial education, which is what we've been talking about, this whole thing and all the mistakes. So that's number one. Number one is what we're going to talk about first. And it's going to have four key components. The first one is having open conversations about money. And I'll wait. There's so much I want to say. The second one is needs versus wants. The third one is earnings and savings. The fourth one is investing and giving back. So that's part one of what we feel is one of the most powerful things to think about when you're considering generational wealth and how to change the game for you and your future family.

I think actually before number one, we'll call it a. Well, a one is teaching everyone in your family that talking about money isn't taboo.

I was gonna say that. And I said I was gonna wait. That is part about investing in the kids, financial education because you need them to know it's okay to talk about money. Right. That's the. Like we created the. That's why when we created the free Facebook groups where we're talking about all this stuff, one of the said in the, in the post was, now I know most of you guys don't want to talk about money and it's a taboo topic. Don't talk about money. Maybe that's where I heard it. And we said, this is the place where you're going to talk about money because we're talking about it all the time. And the reason we're talking about it is because we all need to get educated. No way to pass down generational wealth if you're not educated first and you can't teach your kids. So thank you for bringing that up because I was so. I wanted to. And I was holding back.

I stole it.

I love it. Okay, part two of the hack, in our opinion.

Yes. Is preparing to pass it down.

Yes.

And so this is more than just, hey, we've got a bank account. Here we go.

Right, right.

And so we're talking about life insurance.

Yes.

Wills and trusts.

Yes. You can give them a sneak preview.

This is. So we did a will back in about 20 years ago. Yeah, about 20 years ago. And that was before we, you know, got into real estate. Before we formed six companies and have a 15,000 square foot office and 40 team members. So now we have a little bit more than a will. There's words in here that I don't even know what they are. In fact, and this is no joke, the very first thing I wrote, because I said to Danny, I said, what is this? And she says, I don't know. But if you have any questions, write it down. So on the very first page, on the very first line I wrote, what is this for question mark? Because I don't even know. Like there's stuff in here. There's. Oh, living will. I know what that one is. That one just says my name. So. Yeah, anyway, so there's a lot of paperwork here. There's a lot of legal. I read through these and I took a four hour nap. That was brutal.

Yeah. And we literally just read through these like just a couple weeks ago because we got these right before Christmas. We ended up getting sick, so we just didn't have time. So I thought while we were recovering, let's just print all these out, let's go through them, write any questions, correct anything that is incorrect, and then let's Book a call with our attorney afterwards. But I still wanted to go through all this with our CEO and everything.

Right. And clarification, this did not send me to the hospital. That was the day before.

That is true. But yeah, that's why I brought him in here. So for those of you who are listening instead of watching on video, what Flip picked up here was a ream of paper. Yeah, it really is. And it's all these documents that we went through that our attorney sent us because we asked him to update our will and to help us with estate planning because we do have a lot, so many more assets at this point in time, and we wanted to make sure that our team was protected. So. So part two is the how of passing it down, just like Flip said. So we're going to go back to part one, and now we're going to dig into the four pieces that we first told you about, and then we're going to hit part two and make.

Sure it's not taboo.

That's right. Okay. So part one was investing in your kids financial education. And that means you, too. So if you're listening to this, maybe you're educating yourself so that you can invest your kids that. Congratulations. That's step one.

Yes.

So money conversations. So if you're going to do this with your kids, you want to make it fun.

Yeah.

Right. Because anything that's work, you know, nobody wants to do it. Nobody wants. I don't want to talk about money, dad. Don't teach me about. No, I don't want to do it. So what I love is we gave this to the nephews and nieces on my side.

I don't.

I can't remember if we gave it to your nephews and nieces, but it's a rich dad, poor dad game. And I think it's called cash flow for kids.

Right.

And so we gave them that game because if it were us, we'd be like some making, you know, some fun ways for us to talk about money and learn about how to create wealth in the very first place. So we bought this for them. So that's just one of our ideas. Since we don't have kids, we don't have applicable conversations to be able to share with you here. We're just telling you.

They do.

But yeah, so. And then, you know, giving them rich dad, poor dad stuff. I mean, when I looked up financial education for kids, there's just so much out there. In fact, I remember sending my sister one YouTube video, and I can't remember this kid's name. It might have been like Caleb something, but type in, you know, financial education for kids or something like that. It's this like teenager who their parents taught him and he's incredibly, incredibly smart. And he's found a way to create a YouTube channel that's all about teaching other teenagers and kids about financial education. He's got a coaching program. It's like I was just blown away and I was like, more people need to see that. Sent it right away to my sister. So that's the way that you make it fun is you find ways where money conversations become normal. It becomes something that the kid is actually going, damn. I just saw Caleb on YouTube or whatever his name is, and he was talking about this and maybe suddenly your kid start teaching you, right? Because you and I don't know anything about money.

I don't know anything.

Sorry, not anything. We don't know everything is what I meant to say.

How to spend money. I am a master, grand master.

But I imagine if we had kids and we were doing all this stuff, the kids would get really motivated and excited about what they could do with money and they would start going, mom, dad, dad, don't buy that car. So anyways, and just start that process as early as you can. But we've got friends that have bought properties in their name. You want to talk about this?

So cool. Well, actually there was one couple. They've got thousands of doors and they've put some of those units in their kids names. So these kids are like, I don't know, five, you know, and they've got more units than I do.

Yeah.

You know, they, you know, obviously don't understand it and don't know about it, but it's for the future.

Yeah.

You know, then there was the gentleman just had a baby girl, right?

Yes.

And he said that I'm gonna buy.

60 doors this year for her.

Yeah. So I mean, she's gonna have 60 units before she's won. That's a little bit sooner than what I did. So, you know.

Yeah. I remember there was a video, I think you and I were with Steven. We were just, we were chatting with him and he had his girl with him and I think she was maybe three years old. And he said something like, yeah, she's. She invested in the storage units that we just bought. I was like, that is so cool.

Yeah. Yeah. And then why did I just. I just missed his name. From Utah rehab.

Tyler.

Tyler Jensen.

Yes.

He went to the closing table with his son. Yes, his son. Signing all the documents.

Yeah. How cool is that? I know. Yeah. And I think his son's, like, 12, 13 inch. I have no idea. Really. But that's what he looks like When I look at him. And I saw the picture.

Yeah. Because we're kid professionals.

Yes. Yeah. We are so not.

Yeah. Looks like he's 12.

I love that they do that. And tyler, Speaking of tyler, he actually takes his kids. He's done some videos. Kids at rehabs, dude. Yeah. And helping out. They're helping with trash outs. They actually brought their friends to rehabs and helped with trash outs and things like that. That's the type of education, Child labor. We're not going there. We said it was fun. Everybody's having fun and learning. But that's. That was the key, right, Is making it fun. Because I'm sure those kids are just super excited to be learning, you, know, all of that stuff. So that. That's the part one of the. The overarching number one of our. How is invest in your kids Financial education. The part one that we wanted to really hit home Was to make it fun.

Yep. And then Needs versus wants. Now, it's very funny that I get this one.

We did that on purpose.

Yeah.

Yeah. You've got a perfect example, don't you?

Yeah, I actually. I do. And it's funny because I always talk about how much I like to spend. It's like, even here in the office, we need to buy something. Tell flip. He'll buy it.

I believe that.

I don't even. How did that happen?

Because I'm calling to me, and I'm like, do we need it? Yeah, do we really need it?

Tell flip to buy it.

And luckily, Aaron's even better at it than me. Because I'll say yes sometimes when he'll be like, I don't know if we need that.

But needs versus want. So talk about the depreciation of things, you know? And when you talk about depreciation of things, especially guys, we talk about cars. You know, you go to a brand new car lot, you, buy a brand new car. The second you drive it off the lot, boom. That thing's depreciating, you know, and not a little amount.

Right.

You know, you know, we talked about this. On the other. The other one. Needs versus want. I didn't need a sports car, But I wanted one.

Yes, you did.

And, well, the. Just the day that we happened to go out and random day is. True story. Random day, we happen to find A whole bunch of them, Ended up picking one out. But this car was two years old. It had 7,000 miles on it. And I got it for almost 50% of the price that was bought two years prior. And then that's considerable when the person bought it two years ago for $96,000. I mean, that's a steal.

Yes. Thank you.

And it was still. It's still a brand new car today.

Right.

I mean, it's still. It looks gorgeous anyway. But that's. Buy the used cars. Well, actually, it's 20, 22, if you've done any research. Even used cars are actually more than new cars today. Let's get off the car. But talk about, you know, in saving money, what could they do with that money that they saved?

Yes.

You know, instead of buying the new car, they buy the used car. You know, now they saved a chunk of change, whether it's, you know, $500 or $10,000 or whatever. But now what do they do with that? You know, talk. Talk about that, because you know me, I'll spend it. Look what I saved. I'm gonna put it over here and in peer pressure, especially with kids, you know, I can't even imagine growing up with the social media.

Yeah, me neither.

Oh, my gosh. I'm just glad picture phones weren't around when I was growing up. But the peer pressure, you know, with, hey, no, let's go out and do this, and let's get out and go out and do this, and, you know, no, I'm gonna save my money or, you know, I'm not gonna. I don't want to do that, you know, or whatever.

Having some financial literacy.

Yeah.

When your friends don't.

Yeah.

That's just. And how that. That could impact, you know, both ways. Right.

Yep.

If you're not strong in your financial literacy, then you can be persuaded to be like, oh, I gotta have the new car. I gotta be the cool kid.

Oh, yeah. Keep up with the jones.

Yeah, exactly. Yeah. I gotta spend this money or I gotta go out and party or, you know, but if you've got that strong foundational component in the financial literacy behind you, then you're teaching them. Right. Because I. I'm gonna let you talk about it. We talk. I always think in the future. Right. I envision, you know, what. What's it like when I go to my reunion.

Yeah.

Yeah.

And actually, I actually, I actually went to my high school reunion.

I did not.

I don't even think you know where your high school is, but, you know, I did. And. And I went to a very small school.

Yeah.

In the middle of nowhere, you know, and so, you know, there was maybe 30 people there. Maybe 40 if that. And that's. That 30 people. I mean, that's people. Wow. That's not a lot. Well, that's a third of my class.

Right.

I mean, it wasn't a very class to begin with, but, you know, and I had a great time and. But you could see the people that knew what they were doing. You could see the people that didn't know what they were doing.

Yeah.

You know, and it was very. It was eye opening. You know, you had written this down. I'm like just there a couple years ago.

Right.

So it's, it's. And you can see it.

I mean, you see the Social Security administration stat coming true, right?

Yep. Yep.

That 92% are still struggling.

Right. And a couple years ago, that was my fifth year class reunion, you know, because I'm just a young chicken.

Yeah.

Okay.

Really?

Okay.

Fiber.

Yeah. I don't even know what year reunion it was. More than 10 north of 10. That's all I'll say.

Yeah. So to recap. So when we're talking about the. How we're talking about investing in the kids financial education, right? And the first thing that we talked about was make a fund, you know, play some games, enjoy it. Number two, Flip just touched on needs versus wants and really giving them that strong foundation. So they understand that. Number three is talking about earning. So one of the things that I think about when we talk about earning is like creating a business together. Like, I keep on hearing about kids doing this, that and whatever. And I think on the other episode we talked about Shark Tank and the fact. How many times have we seen kids that are like 8 years old or 12 years old when they end they Remember the kid with bow tie.

He was, man, he knocked it out of that. He did.

But we love that show. We love business in general, so we watch things like that. But that was an opportunity for the kid. And many times, and I don't know if that. I would just say 50, 50. The kid comes on and they're like, I'm the sole owner. Like, the parent is there to support them. They've allowed the kid to own everything 100%. And then some of them are, I'm the one that created the idea, but I've got to go to school and I've got to learn. So my mom or my dad is helping implement and they're running the business. So they create some type of partnership with their parents. I just think that's just one of the very cool ideas on how to pass entrepreneurship down to kids. Because I believe. Was it you on our last podcast that talked about a YouTube channel that some kid.

Oh, no, I talked about it last night. I was reading an article, and these two parents, they decided to create a video of their child that was three years old.

Oh, that's what it was.

Down a toy aisle. And. And I can't remember what the kid's name is, but now that was when he was 3. And the kid chose a toy or whatever, and so they created these videos and. And they were just having fun creating these videos, and then one of them went viral, and now they've got. They've got cartoons, they've got just. Just amazing amount of things. The kid's making $25 million a year. He's 10 years old.

That's unbelievable.

Their parents quit their jobs, though.

Yeah. Proud. Yeah.

Yeah.

I mean, they are the ones that started it.

Just saying. I had a lemonade. Sally, I've never told you this when, gosh, I was probably 10, and I think that was the very first time in my life that I learned the lesson. Location, location, location. I think I sold one cup, which I was probably a nickel back then.

Yeah.

You know, and that nickel was spent before I made it back in the house because I'm good at spending.

Yeah, that's right. So I was going to mention eliminated. Like, it doesn't have to be a big, huge business. It's teaching them what is a business and how do you create it and how do you make money out of thin air. Right. You know, mom and dad, will you guys go purchase some lemonade for me? I'd like to sell it. And then how much did it cost? How much are you going to sell it for? And what's, you know, the margin in between that you're going to make for net profit. And if you're going to hire your brother or sister to help you, how much are you going to pay them? Are you still going to make money? There's such simple concepts that can be taught at such a young age for them to just, you know, marinate on and grow and super, super exciting.

Yeah. I think I was like, this was lot of work, and so I went back inside and played video games.

Oh, my goodness.

Yeah, Pong.

Okay. So some of the other things that you want to be teaching your kids when it comes to earning is to pay yourself first. This is a concept that I would say I'm not going to give a stat. I have no idea what the stat is. But most adults don't even know how to do it right. They don't know that this is what you should be doing. But you should be taking 15 to 20% of what you earn to pay yourself. And that could be putting it in a bucket for taxes. It could be putting it in a bucket for your savings. It could be another bucket for giving back or investing. But the first money should come to you. Once that money has come to you, now you're going to pay any expenses that you have, right? Any bills. Once you've paid all the bills, you're going to look and see if there's any money left, because really, that's the money that you want to spend and to be living on, right? And if there's no money left, there's a lesson to be taught there. All right, son, you need to learn how to earn more money. So you've got more money down here. Because when you paid yourself first, that was for the savings that you wanted to go to Disney World, remember? That was for these investments that you wanted to use to, you know, grow your income. That was for taxes that you're going to eventually have to pay. That was for, you know, whatever those buckets were for. So that wasn't the money to really live on or have fun. I guess I should be saying. That's down here. That's a third piece. So pay yourself, then pay all of your bills, and then you should have some fun money left. And if you don't, you got to teach your kid how to make more money or how to decrease their expenses. And not just teach your kid, teach yourself. Because we should all be doing this. This is exactly how you grow something the right way. And if you love real estate investing, one of the ways things that you can do is read the book Profit first for Real Estate Investing. Yes, it's by David Richter. We just interviewed him for our Freedom360 podcast, which is launching soon. And he went through all of this, and it's such a great concept to learn as an adult. Even more important for your kids to learn at a young age so they don't screw it up. Because we talked about on that podcast that we screwed it up. We did not start the right way, but we eventually learned, you know, the concepts of profit first and how we should be doing it.

Right?

So I think that that's super, super powerful. So part four of this. How is investing. That's right.

Right. Yeah. Tell them what you're doing here. I mean.

Yeah, that's right.

You're. You're obviously you're listening to a real estate investing podcast.

Yes.

Otherwise you wouldn't be listening to us right now.

Yes. Because that's all we talk about.

Excuse me, but, you know, bring them in. This isn't. This isn't for adults only. This isn't rated R. That's right. Well, sometimes I can be.

I've accidentally cussed a couple. Yeah. Yeah.

But it's. It's, for the most part, it's PG sometimes. But bring them in, you know, bring them along, you know, teach them. You know, whatever groups you join, take them along, you know, even though it's real estate investing groups, you know, what, at the hotel. And once a month or whatever, we used to go to the one in Phoenix, Azria. You know, bring them along. There's no age, you know, criteria.

Yeah.

You know, no, there aren't a lot of kids there. That doesn't mean that you can't bring yours, you know, so do it with them. Read. Read more books about it, you know, get them involved with it. Listen to audiobooks together, you know, but. But just do do things together. And then giving back. This is something that's so huge. No one talks about this either. Ever.

Yeah.

You know, to give back. Well, I'm trying to save.

Right.

Why would I. I give back. This is mine.

Yeah.

You know, get rid of that mentality. You know, we always talk about the oxygen mask. You know, when you get on the flight, you know, they go through all the safety protocol and. And they say that the. If air pressure, whatever, blah, blah, blah, oxygen mask gonna drop. And that's what they always say. Make sure to put yours on first before helping others, because if you don't put yours on first, you can't help other people if you're not breathing oxygen.

Yeah.

So you need to breathe first. So put yours. And also the bag will have oxygen flowing, but it won't inflate. I'm just letting you know. Very key, but in. In one of the notes here. The more you make, the more you give.

Yeah.

You know, it's.

I think that's what people. They don't understand that concept. They're thinking, I want to help these people. I want to help these people. But they're not creating, you know, enough money themselves that they could be helping 10,000 people instead of one person, if they were, would put on their oxygen mask first. And the more that you make, the more you can give. We're creating a foundation now. Right. We couldn't have created a foundation back 10 years ago.

No.

Right.

That's Right.

But we concentrated and focused on putting our oxygen mask on, building it, helping the team grow. And then we're here and then how much bigger that we get and how. Where's Aaron gonna take this company? Oh, I know, you know, that's exciting. Yeah, it's, it's super, super exciting. So, okay, so that's the first of the hows investing in financial education. I was going to say something to. There was somebody in our mastermind and I remember him bringing his teenager to the event, so to the Mastermind event. And they were always saying, hey, we're listening to the modules, we're going through all this stuff. And I just, it was another just perfect example of bringing your kids along for the ride. And she was so excited to be learning and I swear she was smarter than probably half the room. Yeah, yeah, yeah. So when we talked about the how, we talked about number one, investing in your kids education. That was number one. Everything that we've talked about until now had to do with that. There was four parts that we dug into. The second one is now you have to pass it down and you have to pass it down and preserve the wealth that you've created to be able to pass down to them and as much of it as possible. So that is part two. This is where you're going to get with an attorney and start talking to them. But before we get to the attorney part, we're gonna talk about life insurance. What are you laughing at me?

You understand life insurance? I said, yeah, you make payments until somebody dies and then the other person gets the money.

Right?

Life insurance 101.

So the second part of passing it down is gonna be life insurance, wills, trusts, just estate planning in general. So we're gonna start with life insurance. I used to work at New York Life and so I know a lot about life insurance. And I said, hey, you can talk about this stuff if you want. We can go back and forth. And that's when he joked and was like, I don't know nothing. I make the payments and I know that when I die there's gonna be money going out to everybody. So there's two different types of life insurance. There's whole life insurance and term life insurance. Many people are familiar with term. It's the easiest to understand. It's you're gonna go in and look for a 5 year policy, 10 year policy, a 30 year policy, and you're gonna have a number of payments to make.

And I probably bet a majority of people think that that's the only.

Yeah, Absolutely. So you can have that term life insurance. I think these, this is a great like, for, for us, it's a great add on. It's nice to have time term life insurance for different reasons that are in additional to other policies because we have multiple policies and we're going to get into that. But the other type is whole life insurance and you can google this. I really recommend you talk to a professional that understands both because you are going to get educated in a way that your mind is going to be blown. And everybody who gets educated about what we call becoming your own bank, which is a cash value whole life insurance policy, everybody who gets educated about it gets it. Every single person. So don't read that stuff. I just googled it real quick before I got in here. I was just like, oh my gosh, crap, crap, crap. Because I know it and I do it. And the people in our masterminds, they do it. There's actually a guy, Tom, and he comes to all of our masterminds because he's like preaching from the rooftops like, guys, come on. Like, this is a serious wealth strategy. And if you don't have it already, it's because you don't understand it. That's all. So get with somebody that understands it. If you need a referral, we can give you a referral. Yes. And we don't sell it. We don't get paid for this. We're just telling you it's a really, really good thing to learn and get educated on. Yes. And it's especially awesome. What I did when I was at New York Life was I talked to people about doing it for their kids. Because if you can do it for your kids, it's going to guarantee their future insurability, which is a big deal. It's a big deal for you too, right? Because if anything changes in your life suddenly term life insurance, they'll probably turn you down. They might even cancel your policy if you already have a policy. But if you, if you insure yourselves at a young age and the younger the better and in good health, then as long as you keep paying on the policy, you've got it forever. So when you do it for kids like their, their insurability is guaranteed even if they have later problems that develop and their premiums are like, they're cheap. Cheap. And whole life insurance kind of the cons is cost.

Right.

So that's why. Yeah, the younger that you do it, the better it's going to be. And then the more it builds. Because what happens with whole life Insurance policy is the permanent life insurance policy. It's not something that says 10 years, 20 years, or 30 years, which is term life insurance. It is something that is permanent. As long as you keep paying.

That's key.

You have to keep paying on it. Yes. To be able to, you know, keep the insurance. But it's forever and it never changes. They can't cancel it on you as long as you keep paying. And you've got those, you know, early on premiums when you're healthy. So inside of it builds cash value. This cash value that builds inside of it, you can borrow against it. And the cash value is built tax free. And even if you borrow against it, let's just say we pull out $100,000 of our cash value life insurance. It keeps on compounding as if we didn't pull it out. It's just that. There, there, there, there. Now, if we didn't pay it back once the benefit went on to whoever was the beneficiary, that $100,000 would be deducted because we did have a loan on it. But this enables, you know, especially kids, if you set it up for them, they can use it for school, they can use it for their first car. You want them to pay it back. But this is just, you know, something that you've created that you started from a very, very young age. Lots of tax benefits. Some of the insurance companies, like New York Life, will also pay dividends. So if they're making a profit, they're spreading it amongst politics, policyholders. So that was something why I loved. And I chose New York Life. Again, not an affiliate. I don't work there anymore and I don't sell this stuff. But I'm saying what. I only do what I believe in. And I believed in whole life insurance. I believed in New York Life as a company. Now, some of the people that we work with, they don't like New York Life as much. And they explained to me why. I was like, oh, that's interesting. Okay, so talk to somebody who's educated and who's in the space right now so that you can learn, but become your own bank. You can Google that and you might see some stuff. But again, if you need referral, you can. Yeah, yeah, talk to us.

The company you keep.

Yeah, that's New York Life. Yeah. So the next thing is disability insurance.

Yes, disability insurance or disability plans. You know, this is just in case anything happens.

Yes.

You know, gosh, car accidents, random accidents, you know, walk into a door, you, gosh, gosh, who knows what you're gonna do.

Oh, my goodness.

Chairs and desks. So. But it's just protecting yourself and protecting others.

Yes.

Just making. In case anything happens.

Yeah. And that's something I didn't dive into in the life insurance, but it's perfect for disability too. And why we did it. It's not just for kids. It's not just for adults. It's for your business too. Right. If something happened to you and I, this is why. It was private money lender conversations that forced us to jump sooner on to all this type of stuff. Because I said, what happens if you flip, get hit by the bus, Dan? I was like, great dang question. I don't know.

I avoid buses.

So it got us thinking about stuff that we were pushing off, and suddenly we put in life insurance policies that covered all of the business debt, all of our private lenders. So if something did happen to us, everything got paid off, everybody was okay. And then somebody else popped in the question. Well, Danny, what if you get hit by the bus but you don't die. You're just disabled. You can't run your business anymore. I was like, eek.

Good question.

And so. But it was people asking me good, hard questions they should be asking me. And it prompted us to put in place disability measures of what happens if it's me? What happens if it's you? What happens if it's both of us? And we've got all this stuff laid out. Sorry, I had to jump in there because I forgot to talk about the business part of it.

No, that's great. That's great. And which led us all into the estate planning and led us into this.

Yes.

You know, and making sure that everything, like everything down to our pool table in the basement, you know, it's going to.

It to go to.

Yeah. And I can't remember either. Hopefully somebody close, but. But you know, and you know. Which is preserving the maximum amount of wealth possible, you know, and making sure everything's taken care of. Care of.

That's right.

Without this.

Yes. Yeah, yeah, yeah. What a nightmare for everybody left behind. So this is something. How much do you care about your family?

Yeah.

How much do you care about your business and your team? Because if you really, truly love them like you say they. That you do, you should be setting all of this stuff up in place so that. Because we're not promised tomorrow, it's one of the things I put at the very end of this, you know, talk about really bring it home. You know, we could. I don't know who it was they. Somebody just said they died in their sleep. It was young Bob. Bob Saget. He just died.

He was 65. Not really young.

Yeah, that's true.

Yeah. Younger than anyone expected.

But he'd just done a comedy show, I think, the night prior or something. He was in good health. They found no drugs, nothing like that. Didn't look like there was any foul play. But you are not promised tomorrow. It could be just as simple as dying in your sleep. And somebody else said they got their son came home sick from college, said they were going to take a nap, died in his sleep. I mean, it's just. You're just not promised. So how much do you love and care for those around you? Act right this freaking second, jump on the phone with an attorney or a life insurance person or whatever and put your ducks in a row is the point. And that's what we're talking about here. So succession plans. That's one of the things that we did. So as these questions and as we started building these six companies, these are the things that we were confronted with. And we're like, hey, if we really, really care about our team. I saw Tiffany. I love her. Every quarterly planning meeting, I would talk about the fact that we have life insurance.

She hates every.

She's like, stop talking about dying. You know, it's like, hey, I care about you guys, and I want to make sure that you're okay. So here's the things that we put in place. So, you know, even in our operating agreements, if we die, there is a succession plan that the people here are still taken care of. Not only is debt paid off and private lenders are paid off, but there's people put in place that they now own and run the company so that everybody keeps on going. Nobody has to worry. And that's because we love and care about the people around us. And then is this when we tell.

Them that our dogs actually will own the company?

Yeah, Spartacus, don't let Rosie have it. And Bailey will just give all the money away. So the other thing you want to think about is wills and trusts and have one or the other. We have both now. We only had a will. But right now, as we've talked about these papers here in front of us, we are working on estate planning at a further level, because our Last will was 20 years ago, and we had not built everything that we had today, so we wanted to update it all. Our operating agreements have our succession plan. We have our life insurance policies for each other personally and for our families personally. We have Life insurance policies for the business. We put all that stuff in place. But the last step was really taking our outdated will, making sure it was updated so everything, you know, on that side of things was handled. So a will is very inexpensive. It's just something for you to essentially tell people what you want to happen after you die.

Yeah.

This is what I. This is what, my stuff. Yes, exactly. But it's very likely you're going to have to go through probate if you just have a will. But it's at least a very first step. If you're going to do any step at all, take that very first step. It's not hard. You can even download stuff, I think, off on the Internet.

It's got to be something.

Yeah. And I think it's free. You can probably download it. You probably just fill it out and you just, you have it somewhere. You tell your family where it's at. So that's, that's one step then a trust. This is what we're working on right now. That's why we pulled all this stuff out. And a revocable living trust does avoid probate. And I do think that that's important. And so that was something that was important to us. That. That is. The trust has a trustee. They are the ones in charge of doing all this and ours. We are paying the trustee to do all of this. We're not saying, hey, friend, hey, family member, we're gonna put a lot of work on your plate and make you do all of this stuff.

Would want to kill me.

Exactly. We're actually putting it in place where, you know, a third party actually takes care of everything and distributes everything according to our wishes. And it's all laid out. Absolutely everything. We already had our COO Tina, take a look at everything before docs were created. We're going to have Aaron take a look at it next so that everybody's kind of on the same page. But it's just something that's important and it very much is a key piece to generational wealth. If you want to pass things down and you want to do it wisely and you want to preserve the most amount of wealth put possible and take care of everybody after you are gone, this is the way to do it. So there's two parts. Invest in financial education, two know how to pass it down, and pass it down. Well, now what we did not do is disclaimer.

So why is the disclaimer at the end, the disclaimer?

Can you just give that real quick.

That should have been at the beginning. We are not attorneys. Thank you, financial advisors. CPAs. We are not financial advisors. Is. We are not vegetarians. Please consult your own attorney and financial planner. You know, this is. This is all just flipping Danny talk. This is not anything to be taken. I know there's a disclaimer that plays at the end of this video, but again, make sure this is. This is just us just telling it how it is. Yeah, but make sure you consult your own attorney and your own cpa, your own financial planner, your own vegetarian if need be. But, you know, and. And don't just talk to one. I mean, when you started doing this, you had like four or five, you know, you had emails coming in left and right from attorneys, and I'm like, yikes, stripes, here we go. Because you're going to hear attorneys. You know, put 10 attorneys in a room, you're going to get 10 different answers.

Yes.

You know, so make sure you talk to more than one.

Yeah, yeah. So our real takeaways here is just act now, you know, don't wait.

You don't. Like you said, you're not promised tomorrow.

Yeah, that's right. And this might have been a fire hose of information if you're new to generational wealth and you know how to take the steps to be able to pass it down. But you can take one bite of the elephant and do one thing that you thought was the most important thing that we talked about today. Start there.

Hey, if you thought this was a lot, this is 45 minutes. Go listen to the eight minute podcast where we did the exact same content in eight minutes.

No, it was only part one because we literally said there's no way we could do both of these. But we did. We were much more relaxed and we were able to talk through different things. And so I think this one will provide a different type of value for a different type of person. So.

Well, we like to keep these short and sweet.

Stop.

That's the other one. Sorry. No, we don't like to keep these short and sweet. But we hope that you enjoyed today's podcast. Yeah, it was something. I mean, we did talk about it on the other one and obviously you can. You can tell we're very passionate about this, so we really enjoyed doing this one. So we hope you enjoyed it.

It.

But again, make sure you check out our YouTube channel to see all the other podcasts. Holy smok. We're in the 40s and 50s on these podcasts.

We have numerous podcasts, so, you know, jump around and find everything we've got Freedom360 is launching probably 2022. Second quarter Freedom through Passive income already started. And then this one is Real Talk, which is real talk for real estate real estate investors. So go around, subscribe to all the channels like like Love. If we're adding value to you, please share it because that's one of the cool things about social media is that the more that engagement you guys provide by subscribing comments reviews, the more that that media channel or platform says, ooh, people like them. And we're going to share this content because we're trying to help as many people as we can and this is just free chitter chatter.

And don't forget, buy a house, get a shirt. Yes, well, we like to end all these episodes with Invest Smart, Live happy. Bye everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss.