#28: Kathy Fettke, Founder of RealWealth - Creating freedom with passive income, the power of your network, and where to invest your money today

It was a shift in mentality. I remember it so clearly of like, oh, wow, this is how rich people think.

It's very different than normal people.

And it was, every single interview was shocking to me because it was just a different way of thinking.

On today's episode, we have the founder of Real wealth, Kathy Fethke. Steve Kathy's story is an amazing one. She's, you know, she's somebody that, whether or not you're in real estate or not, you've probably seen her, you probably have heard of her. She's regularly on Fox News or Fox, cnbc, cnn, she's got some pod, a couple podcasts. So she's a well known person. But I wasn't as familiar with her story and I won't give away it, give it away. But there's tragedy at the beginning of the story, but then there's this rebound that she has. And one of the things that stood out to me was the tragedy that you hear about early in the episode didn't hold her back, but it actually created the platform, so to speak, or a launch pad for her and her family to take off. And I love that she, she took what she knew, she took what she had and she made it work. And that was just such an encouraging story to hear about Kathy Jake.

When she was interviewing wealthy people and what it took for them to be wealthy, she was looking out in the future and trying to develop a plan of what it's going to take to get there. And with any business, with anybody, entrepreneur or whatever you're doing, it's critical that you can find that mentor, someone that's further down the road from you, that can help you, lead you through the maze to get to where you want to go with your strategy and vision.

Yeah, yeah. And so this episode is incredible because it's not only encouraging, but it also gives a great roadmap for somebody who wants to change what their life looks like if they don't like where they're at now or they just want to be in a different place in the future, whether it's financially or the work they do. Kathy really lays out a roadmap that everyone can follow that includes starting with the things that you know, the things that you do, surrounding yourself with the right people to bring you along and to learn from. But let's head west. Let's let people get to this one. Stay tuned as we discuss creating freedom with passive income, the power of your network, and where to invest your money. Today with our guest, Kathy Fettke, this episode is brought to you by Skyline Point Capital. If you're anything like me, you're always considering where to invest your money. Stocks, bonds, crypto, and rental home. The list is literally endless. As we've all seen over the past year, the stock market is unstable, the housing market is just weird, and inflation is on the rise. In times like these, the clear place to invest my money is in multifamily real estate, AKA apartment complexes. Here's why. Returns on real estate investments have little to no correlation with the stock market. There's lower volatility, stable income streams, and the tax benefits are insane. And let's not forget that the apartments will typically appreciate in value over time, which means you can walk away with a pretty nice return when the complex is sold in three to five years. Best of all, multifamily investing is passive, so you get all the benefits without the hassle and headache of your typical rental home investment. Getting started has never been easier. Head to skylinepointcapital.com to learn how you can start investing today. Kathy, we are super excited to have you on being a listener of BiggerPockets. And Steve and I are constantly watching the news and market updates. You're a name that we're very familiar with. Your face we're very familiar with. So we're so excited to have you here today. So thanks for joining us.

Thank you so much.

Yeah, absolutely. Well, typically what we do is we always start at the beginning of people's journey through life and through real estate and business. So I want to take us back to your beginning in real estate. And you're fairly well known for being a real estate investor and for having your finger on the pulse of the marketplace and for training and educating people. And you have a business that's centered around that as well. But I'd love to start with how you even got into not only real estate, but just the profession and the life that you find yourself in today. And I'd also like to know, what were you, what were you doing before real estate? And then how did you get to where you are today?

Sure, yeah. My background was in broadcasting. I worked in newsrooms in San Francisco at CNN's, where I started, and then went to Fox and then abc. So I loved that business. But when I got married and we had children, it was just the hours were insane. You know, sometimes I had to be at work at 3am and sometimes there till 2am not all in the same day, but just weird hours.

Yeah.

So I, you know, when we, when we had children, I just My dream was to be a stay at home mom, to be able to raise them. And at the time, Rich had become a motivational speaker and a business coach. So he allowed me that, you know, that opportunity. I kept a radio show on the weekends to be able to stay connected to the industry and because I just liked it. But right around 2003, when he was on a book tour for his book Extreme Success, on how to have a four day, not four hour, four day.

Work week, have a three day weekend, we didn't go as extreme as four hours.

But that's when he saw a freckle on his forehead that was unique. He's a redhead, so I have no.

Clue to this day how he knew.

That one was special. But he had it checked. It turned out to be melanoma. The doctor thought after further tests that it had spread to his liver. And in that case, the doctor looked at him and said, you may have six months to live.

Wow.

So that just obviously rocked our worlds. Here I was living my dream. We had just bought our first house. It was way too big. We were kind of doing the American dream of overspending, growing too fast. You know, he was making a great income. And we were doing all the things that our investment, or not our investment counselor, but our financial planner had told us, putting 10% of our savings, you know, away. 10% for emergencies, investing 10%, all the things. We would meet regularly with our financial planner. But when you have a glitch, you know, to the plan, something like this, where suddenly, you know, he didn't want.

To work, you know, he.

Yeah, he was on a treadmill. That if he got off of that, then our lifestyle stopped. And here we had a $4,000 a month mortgage, which today is maybe normal in California, but back then was probably closer to ten grand a month.

Yeah.

So like I said, we had too big a lifestyle.

We went for it for not having the backup plan. So that is when I had to just figure it out. You know, it was like it came from a place of love. Like, this guy needs to take six months off. You know, if the doctor's right, he.

Needs to spend that six months doing.

Whatever he wants, not working. And it just motivated me to figure out how to do that. And having been a stay at home mom, boy, it's hard for women who haven't been in the workplace to get back in it. But I did have this radio show, so I just thought, I'm going to use that. I do know how to do that. And I started interviewing people to find out how they built wealth and specifically passive income, because I wanted to be home with the family during this challenging time. And that's. That's when I started to learn about the incredible world of real estate. That's where it all started.

Kathy, you were talking about overcoming adversity. When the first company I bought, within three months after I moved my family from Kansas City to Omaha, it got hit by lightning. Oh, and 80% of the building burnt down. Down. This was my dream. This was my. My launch. My launch. I had one customer, one product, one building, and 80% of it burnt down. And I unders. You can understand that. That dilemma. What do we do? We got to pick. We got to eat that song. You get knocked down, you get up again, and you just have to figure it out, figure life out. Because life's not easy. Things happen.

And oftentimes we do need to get so uncomfortable that we change things, because it's easy to just do what you've always done. And that's just what, you know, oftentimes that moment of, oh, my gosh, I've got to figure out something different. It was so powerful and so transformational because all I could do was focus on that and nothing else. I refused to believe the doctor. It was this. This, like, 100% commitment to covering, not. Not just covering our expenses, but being wealthy. We had never had extra because we were in a lifestyle where if we had extra, we would.

We would upsize. You know, we just. That's just what. That's what we did.

And so this was like, what would it be like to actually have extra money and to have enough that, again, that he could be home and just get off that treadmill? So the 100% commitment is what makes a difference. It's hard to get there when you're too comfortable, really.

That's why tough times can be the.

Best time to create something new.

Yeah. And if you don't mind me asking, how's Rich today?

He's healthy. And I always forget to add that to the story that he's healthy. They fixed everything. They cut out the melanoma, and he, you know, he has it checked.

He kind of has a spot every time he goes, but 20 years later, he's fine.

So. So, thankfully, the doctor was wrong, but it is what prompted both of us to create this new world. And that's how real wealth was born. And 20 years later, we have 70,000 members.

We're still.

Oh, my gosh. Yeah, I imagine not. But I'll ask anyways. Did you ever imagine that? Like a traumatic event like that? And my mother had melanoma too. And, you know, it was early enough that it was like, hey, you should be able to recover from this, but you never know. And so I can empathize with that experience that you just don't know how this thing is going to pan out. But did you ever imagine that such an event like that could flourish into now this life that you have, or obviously rich is doing well? So amazing. But also your. You have realized that dream of building passive incomes and now educating people on that. Was that ever a thought in your head or was it just, I'm in survival mode now because of this.

We had met in a personal development workshop. We learned some really key things in that, which one was to be very clear about your vision and to create those dream boards that people sometimes laugh about, but, you know, put the images on a. On your wall that you can see every day of what you want and slowly have yourself, your subconscious, accept that idea. Because oftentimes what we don't have is something that we're not familiar with. Even if it's something we want, our subconscious doesn't know how to have that. So if we haven't had wealth or we haven't, you know, had the things we want, there, there's. There's often something blocking it where that. Again, that, like, blindness, subconscious that's stuffed in there somewhere, it just feels. It recognizes what's familiar and wants that. So we have to retrain it. And that's what we did. So in answer to your question, we did. It was on our vision board. I actually pulled out when I moved to Malibu. When we moved to Malibu, I was pulling out the boxes and going through them, and I found this diary. And it opened up from the year that we met, where in full detail, I described that we would live in Malibu overlooking the water. We would rock climb. We would surf.

Wow.

And we were friends with celebrities. It was like out of the blue. I'd never been to Malibu. We didn't rock climb. We didn't surf.

We didn't know celebrities.

It was so weird. And then 20 years, not 20, even like maybe 15 years later, that's what we were doing. So again, it's kind of like retraining this part of ourselves that absolutely creates what we. What our. What our subconscious sees. Not so much what we want in our minds, but what, you know, this part of us that has more power than us, but that we can't even.

See, we don't even know is There. So the more we can, you know.

Get to know that subconscious what runs it and what it's, what it actually is thinking it wants.

Yeah, I know this sounds really woo woo, but.

No, I, I mean, Steve and I will, will agree with that. I mean, we, we big proponents of obviously goal setting and building a roadmap for, okay, you see the future you want. We know, like, let's take Skyline Point Capital, which is the business we run. We have a vision for what it can be and what we want it to be. And so that's kind of like your vision board. Like, this is what it, this is what it's going to be. But then also what are the steps to get there? Because my one year plan or my 20 year plan, that's a, that's a ways off. I need to have something tangible to work on today. Whether that's, you know, like, okay, make three calls today to people you want to learn from or, you know, pitch to or so doesn't sound woo at all. It sounds very practical of how to, how to get the ball rolling to see the change that you want in your own personal life.

Yeah, it really, really literally comes to retraining your subconscious to wanting really to be in alignment with that vision because otherwise it will reject it every step of the way. And I remember when I would do kind of a visual, a deep visualization or write, you know, journal, because I can get kind of into a trance state when I journal the things that I wanted. I would suddenly hear like a voice in my head or like a feeling that was like, oh, you know, you can't have that or you shouldn't have that, or, you know, oh, if you have that, you know, you could fail or you could lose everything. Or you could, you know, all the things, all the reasons that the subconscious will shun it. And, and you know, you have to work, you have to listen like, oh, okay, wow, thanks for that thought. Well, here's my, here's how I'm going to handle that. Because I remember my big one was, oh my gosh, what if we lose everything? And that, that would be a conversation I'd have with Rich and he would say, well, what's the worst thing that would happen if we lost everything?

Yeah.

I don't know. He goes, well, maybe we could live in a van and just surf all the time. I'm like, oh, okay, that's all right.

Well then that's not so scary.

Yeah, that's a great perspective.

Kathy, what did you learn about yourself in those 15 years after we were putting the vision board, did you learn anything good or bad?

Well, you know, it was many years ago. I mean, we do it every year. We are constantly updating the vision and doing the dream boards. And, you know, every year it's a ritual we do with our family, actually, because we want the family to be involved in it too. But this all happened before. Like, this was, you know, the year we were getting married. So before all of this, when we. We had gone to this personal development course. And what I learned then was that the power of my thought, the power of my thoughts, that's the bottom line. That there's the famous saying, if you.

Think you can do it, you can.

If you think you can't do it.

If you think you can do it, you're right.

If you think you can't do it, you're right. And again, as simple as that sounds, really, we've got to pay attention to what we're thinking. If we're thinking, oh, in this market, we're never. I'm never going to find a deal, then you're right. But if you're like, oh, in this market I'm going to find amazing deals, you're also right.

You know, it's like your thoughts are super powerful.

And I realized back then my thoughts were not very pot. I don't know how to say it, but like I was. I had more of a scarcity mindset.

Sure.

Where I didn't think there was enough and I didn't think we'd be truly wealthy someday. There was this doubt or this belief that if I was well, then I wouldn't have real friends because they would want what I have. They wouldn't really like me. They just want my stuff or whatever.

You know, there are just these negative.

Thoughts and it's that we have to pay attention to those and kind of work together with those thoughts to overcome it.

Yeah, it's amazing how the mind determines what you do. And I relate that I used to do Ironman triathlons and Bendakona. And if you listen to what the Navy SEALs say, that when you think you're done, your body has 40% left in it. And I thought. And I found that with doing Ironman triathlons, when you think you can't get there, you just keep on going. But it's a mental game. It's an absolute mental game. It's usually your. The brain gives up before the body. And you are so right.

And it starts there. So that's the first place people should start because There are so many ways to make money in real estate or just to make money. There are so many ways, but without that mindset, you. You'll lose it.

I don't know if you guys saw the Beanie Baby movie, but it was really wild, like, what happened to him. So I recommend the movie.

Mindset is everything. So with that, I was. Back then, that was 2003, like I said. So I use my radio show platform just to interview people. I didn't really know what I was doing, but it was like, hey, they must know something I don't have. People who have created wealth especially weren't born into it or weren't trust fund kids. Like, how did they do it? And I just started interviewing one after the other. And it did change my mindset. It changed all those negative things I was hearing in my head too. Like, oh, wealthy people aren't generous. And then I'd interview these people and.

Find out, oh, my gosh, they're the most generous people in the world. They're donating more than they make an entire year.

Or, or I would, you know, just the more I spent time with people that I hadn't, you know, known before that I hadn't been around, the more those little voices in my head just disappear. And I'm like, okay, I want this. I want this. And so I also was lucky enough to interview Robert Kiyosaki because I was on a pretty major station in San Francisco on K and E W and then ksfo. So I was able to talk to people that would never talk to me normally. Sure. And it was Kiyosaki that really brought us the foundation of how we would invest. And I remember back then it was 2000, probably by then it was 2004, maybe 2005. And this is when, of course, the credit bubble was happening and anybody could get a loan. And, you know, he could see. What was so obvious but that so many people couldn't see was that when, you know, when anybody can get a loan but they haven't qualified, but then the payment adjusts, well, that's going to be problematic. And it was very clear when that date was going to happen. There was no mystery around it. Those loans were going to reset, you know, starting in 2006, then 2007. That was going to be massive after that. So he said, you know, these people.

Are not going to be able to make these payments.

They're. It's going to blow up. So get out of the storm. Like, you can see it coming. Just get out of it. Get out of all the bubble markets, get out of all the places where prices have gone up 40% every year because of this easy credit, and get into places where the lending was a little stricter and where the prices haven't gone up in value. But the three points that he left me with on that interview that I use to this day is follow the population, follow. So migration, you know, got to understand that. So follow population, follow jobs, and they go together generally, and then where it's still affordable, because if you've got people moving in and jobs moving in, but the problem prices are stable, that's where you're going to kind of see that all the tide raises, all ships sort of thing. If the whole area is growing, so is your investment. Yeah, we've used this since then. We went, you know, we went through the Great Recession and those properties. We followed him to Texas. Basically. He said, sell everything in Nevada, California, Arizona, Florida, and get into Texas where the fundamentals are there. Even in 2005 and 6, at the peak of the bubble, the fundamentals were still in place in Texas. So we followed them, we bought properties, we kind of learned how to do that. And those Texas properties fared well through the entire largest housing crash since the Great Depression. Those rents actually went up because we bought in, in, in the path of progress in, in the Dallas area. So that, you know, kind of put me on the map as being able to understand markets, how to invest out of state, what to look for, how to set it up with teams. And then our phones started ringing off the hook with people saying, well, I want to do what you did. And that's how Real Wealth Network was born, is helping other investors by sharing our contacts, our resources, the teams that we use, and that's still our business today.

I want to come back to two things that you said that you briefly touched on, but to point out how significant they are is the first one you touched on was you and your family sitting down and doing planning. You know, like whether it's, whether it's a vision board or goal setting, that that's a family affair and not a individual affair. Now, you know, you should have your own individual goals, but how they roll up into the family goal is incredibly important because, I mean, you know this better than anybody is that whatever profession you're in, but especially in the real estate investing world, your spouse and your family are closely tied to what you do in investing. And so having them be part of the overall goal setting is, is so important. But it's, it's. It's usually glossed over. People don't usually set a family goal and they don't incorporate it. But the other thing is, is the change of mindset in part came to the change of, of your, the people in your atmosphere, you know, as, as you, you know, part of that's your own work that you're doing yourself, whether it's self help and, and books and seminars. But part of it is the people that you surround yourself with eventually bring you to a higher level of either thinking or acting. And so you got people like Kiyosaki around you and these high net wealth people and successful people and generous people, you're naturally just going to become like the people you hang out with. And those are two things I think people discount to their own detriment.

Fairly regularly, 100%, you know.

Hang out with people you want to be more.

Like and write down in clarity the things that you want. Too often, you know, we'll do an exercise through that is like what, what are the top 10 most important things to you with the, you know, put, put what's most important at the top. And usually of course it's you know, health, it's family, it's, it's your spouse, it's, it's, it's the things that matter, it's our why.

Yeah.

And then the next column is, okay, how much time do you, you know, where does your time go? Starting with the top where most of.

Your time is usually inverted.

It's like all the stuff you care about gets this much time.

Yeah. Yeah.

You know, whether it's your health or your family or your, you know, travel or whatever. So like, like they say put the boulders in first, you know, put the rocks in first and then everything else will find its way around it.

It's really good. It's a great, great analogy. What. So I'd love to hear, you know, you've talked about, with your radio show you were able to get an inside track with people like Yasaki and other high performing individuals. And I know you were probably picking out best practices from each one of those and that probably helped train you and lead you into what you're doing now. And obviously Kiyosaki led you to Dallas and you know, the way of investing. But was there a commonality in, of trends or best practices that you saw with these individuals, these that you were interviewing on your show show that that kind of created the foundation for, for you and your practice going forward? Did any come to mind?

I mean, absolutely. Yeah, it was a, it was A shift in mentality. I remember it so clearly of like, oh, wow, this is how rich people think.

It's very different than normal people.

And it was, every single interview was shocking to me because it was just a different way of thinking. One was, you know, definitely investing in assets that produce cash for you. Whether it's a business, whether it's real estate, there's only one of you and you only have so much time and it's fairly limited, especially when you want to put those priorities in place, then you have even more limited time. So for you to truly build wealth, you have to have money working for you. When you're not working, which is what we were learning is like, oh my gosh, if you get sick, what are you going to do? If you're dependent on your hourly wage.

You know, what are you going to do?

You're not working, you're not making money. So that was kind of the common thread of whether you're investing in a, you know, in a, I don't know, wash a laundromat or, you know, just any kind of business, a self managed business that you've trained everybody how to do it. Now you don't have to show up. Or real estate, you know, real estate seemed to be where all the money would end up for these wealthy people that all the money they would get from their businesses or from their jobs would end up in an asset in real estate, which was the most passive because all you do generally is collect the payment.

You know, if you've got a good property management in place.

The hard work kind of comes in the beginning where you've got to know how to pick that asset and make sure it's, you know, with a. Well, with a company that will manage it well for you or all that comes at the beginning. And if you get that right, then it's pretty darn passive. So that, that was the big lesson of, oh, there's just no way that I can build wealth with my time. It has to be through other assets or other people or employees or whatever. You'll just never get there. You're never going to make enough money.

Unless maybe you're an actress or someone. You're making tons of money.

Tech CEO.

Yeah, exactly right.

So, but even a c, you know, CEOs learn to hire people so that they don't do all the work. And that, that was the big one, is you got to learn this thing called leverage. Otherwise it's just, it's going to be tough. It's going to be really tough. To get there with just your. Yourself working.

Yeah.

So that, you know, real estate made a lot of sense. And at the time, this is when I learned the passivity of real estate. And like, oh my gosh, I get it. Remember I said we bought that massive house.

Like, oh my gosh, we buy this massive house and now we're stuck with this payment. But because it was so big, it was kind of almost a blessing that.

We overbought because there was an in law unit downstairs and there was an office downstairs, and then there was another room in the back that had a separate entrance and the whole upstairs could be kind of separate from that.

So rich, you know, when he found out this bad news and he went rock climbing with his buddies to just.

Get, you know, feel better, he came.

Back to a rented out house. Like I came back to a fourplex. And I'm sorry, honey, but this is how we're going to get through this.

Yeah.

And I was able to get like.

Twelve hundred dollars for the in law unit, like eight hundred for the little office, and then another like six hundred for the back.

And that covered most brilliant.

It was like so awesome.

And you know, I got stuff on.

Craigslist and you know, like garage sales and stuff to furnish it.

And that was when I learned to be a landlord by accident.

I was literally getting the tenants on Craigslist that I didn't know how to do background checks.

It was crazy.

I could tell you some stories.

You lucked out there. Yeah.

Do you even remember Craigslist?

Oh, yeah. Yeah.

So, you know, we kind of learned like, as weird as this is, to have strangers not really sharing our space.

But sure, we had to kind of tiptoe around the house because we were on the upper floor. And as annoying as that was, it was like, oh, but this is amazing.

You know, they're, they're covering most of.

Our home expenses so that we can sort of relax and get through this together without having to worry about that mortgage payment.

Yeah.

Meanwhile, the house is going up in.

Value by about $100,000 a year. Because it was, it was like, wait, we're making 100,000 a year? Someone else is paying. This makes sense.

I get this. You know, it wasn't, it just was.

Like, oh, I get this. You know, provide housing for people who need it.

They pay you. Then the bank for some reason lends you the money, and then the government.

Gives you all these tax deductions. Like, okay, let's.

How do we repeat this?

Yeah, it was just mind blowing because.

Like buying Businesses that always. That sounded harder to me, like, how do I figure out how to do that? Even, you know, laundromats. Well, sure, that sounds like passive, but not as easy as just buying a place and renting it out and having a property manager.

Yeah, yeah. And you got to know, then know the industry and you've got to have some sort of, aside from cash, got to have some sort of value that you can bring to, to increase revenue and. Yeah, makes a whole lot of sense. Let's. I want to touch on real wealth. And, you know, you've talked about how real wealth started when you started taking action in your own life and then you had people who are, you know, passively viewing you and saying whatever you just did. I want to do that as well. Can you please teach me? I'm probably paraphrasing there, but. So you start real wealth. What does that process look like? Did you start with just education or did you start with, you know, investing and bringing people along with you? Or did you start with, you know, I know, mindset and habits and things like that Sounds like they're important to you. Did you start with that or was there kind of a roadmap?

There were a couple. The first was right in the very beginning. I needed cash right away. And you know, most of the time with real estate, it takes a little while for that. Like you, you're not going to get it right away. You oftentimes you need to have money to, to buy assets. If you don't have money, then you've got to find ways to, you know, to negotiate and get deals and seller financing and all that, which I didn't have a lot of free time. So I was like, well, gosh, how do I get money now? And I had a radio show, like I said, so I thought, well, sponsors. So I ended up getting a sponsor. Back then, remember mortgage brokers were, they.

Were making so much money hand over this because they could get anyone alone and make two or three points on it, you know.

Yeah.

And I'm in California, so a million dollar loan is going to be $10,000 for just handing someone an application. I mean, that's how easy it was back then.

Yep.

So I called, you know, every mortgage broker I could. I ended up getting one. It was really hard. I got turned down by everyone. I went down the phone list and, you know, nobody was interested. And I thought, well, gosh, I'm just kind of basically calling saying, you want to sponsor my show? They don't know anything about me. I need the Next president. You know, I need the next phone call to be something they can't refuse. So I call and I thought, just.

I'm swinging out, man. I'm like, okay, how would you like to be the co host? Or how would you like to be.

A regular on my show? And he's like, oh, my gosh. You know the guy who answers, Just some random person I found on the. In the phone book.

He's, I was just thinking, I would like to have a radio show. Like, great. He goes, when can you come to my office? I'm like, how about today? I show up with this whole presentation of how I was gonna have him be a guest, even a co host.

And the co host would be, wow.

This would be the biggest price tag.

But he could just come as a guest and, well, he chose the co.

Host position, wrote me a big check.

We had some money, but I came.

Home and looked at Rich.

I'm like, oh, my gosh, I just sold my soul. I am now doing a mortgage show.

And Rich just starts laughing. He's like, oh, yeah, you just lost your audience. He goes, but what if you don't talk about rates? Because no one cares.

What if you just interview his clients and find out what they're doing with those loans? Like, oh, that's really brilliant.

Yeah.

So I tell him that my new partner loves the idea. So that's really where kind of things changed, where I started interviewing his clients and learned the power of leverage. They were. They were getting loans to buy multifamily. They were to buy rentals or to buy a home and live in it, fix it up and sell it in two years and get all the upside tax free. They were. There were so many things they were doing that I was learning that I had never heard of. And even interviewing people who were retired by the age of 30. Like, okay, this is incredible. It was from those interviews that the phones rang off the hook from people from our audience who wanted loans. So my co host was like, man.

This show has been more successful than I could have ever imagined.

I can't keep up. Why don't you become a mortgage broker and help me?

And he pulls three checks out of his wallet. One for 10,000, one for 11,000, one for 12,000. He's like, I just made this today.

Okay.

So I ended up just sound more appealing now.

Yeah, they're not fun now to do.

But so, yeah, I got my real estate license. I became a mortgage broker. Now this show had a benefit to me where I could now have clients.

I became one of the busiest mortgage brokers in the San Francisco Bay area because of that.

But what was even more helpful, I mean, our financial problems were over like then, you know, so it, the whole thing was successful. But what happened is I was now kind of a celebrity in San Francisco in the real estate space where I was really new to it, and, and I started to get invited to speak at real estate investment groups. And I was just appalled. I would go to these events and I'd be like the keynote or, you know, I'd be there on stage and I would listen to these people just selling products for 10, 20, $30,000. I'd talk to them afterwards, and their integrity was just. It was just icky. And I thought, oh my gosh, there isn't a place, a safe place for people to learn. It's just always someone trying to sell something or push something. And I just, I look again, came home, looked at rich and said, we need to start our own group where that doesn't happen, where you're not allowed to sell anything. It's education only. And this was kind of before podcast. This was a long time ago when this didn't. It was 20 years ago when that didn't exist. The only reason you would have a real estate investment group was because you'd have some speaker and, and the person, the club owner would get half the sales. That's how they made their money. And I thought, well, I'm a mortgage broker. I'll make my money just helping people get loans and helping them build a portfolio. That's. That's what'll be the benefit. So that's when real wealth started. Was really out of spite in a way, just kind of disgust. Like I, I wanted to, to be the opposite of the guru, so to speak, and have a safe place for people to come and learn.

Yeah. And it's since grown to. You said 70,000.

70,000 members. Then I had Kiyosaki on. Then he, you know, again taught me to sell everything in California. And I could see it. I was giving people loans that shouldn't have them. You know, like they, they would, they would come in every year and they would refi. Just to pay off their credit cards. That was kind of what people did. It's like, oh, just, you know, run.

Up your credit cards and you're going to save a bunch of money if you just refi, cash out, pay those off.

Yeah.

I was like, this is a, this is something wrong with this business.

Yeah.

And I knew there was a problem and I Knew that people were lying because I didn't have to verify anything. I didn't have to ask. It was just. I'd give them an application, they would fill it out, no verification needed, and I turned it into the bank. And that's how it's done. Like something's wrong.

Yeah.

And. And that. So that's why I believed Kiyosaki. And. And that's why we went out, bought rich. And I bought like five properties in.

In one day in Dallas.

Like residential or multifamily.

They were. Those were single family because it was a great entry point of just. It was easy. They were new, they were in growing markets in Dallas, they were like $140,000 brand new and rented for 1500. And I could get loans, no money down. You could get an unlimited number of.

Investor loans back then with no money down.

Wow.

Crazy.

Those were the days.

Those were the days. Right.

But that also then I learned, wow, okay, these are new homes. They just got rented. Someone's paying off my mortgage.

It just can't be this easy.

Right?

Yeah. Yeah.

Sure enough, 2008 happened. And then we found out really, it wasn't that easy.

Sure.

Yeah. Well, to walk us through that. So 2008 hits. What. What happens? What do you learn in that moment, and how do you pivot from that?

Well, I was really, really proud of the thousands of people I helped avoid disaster, because I would have people come in and, you know, they'd want to buy a $400,000 duplex in Stockton, that maybe the total income was going to be 2,000amonth or something like that, or. Or less. And I would just go, why you, why are you doing that? You could buy in Texas, and if you're spending 400,000, you'll get, you know, 5,000 in income. Why would you settle for, like, a really C class, rough neighborhood, maybe D class $400,000 unit that doesn't.

Cash flow like this doesn't make sense.

So I helped so many people avoid disaster. And. And like one lady in particular had three old disgusting properties. I helped her sell those. And. And it was. She had about a million dollars. We could 1031 into really nice properties in Texas. When the crash happened, the properties she sold were worth about 20% of what she sold for, whereas the properties in Texas actually went up in value. So someone like that, she could have lost a million dollars in a month, you know, in 2008 when everything went down, and instead she preserved her wealth and grew it. Those were the kind of stories that I could Repeat over and over again. And what probably got me the Goldman Sachs award of top, I don't know, most intriguing entrepreneur because I had helped so many people just avoid that they felt nothing, no pain whatsoever during the Great Recession.

Yeah.

At least in their real estate. Whereas I did not listen to my own advice and kept two properties in California. Yeah, the one, the one that we bought that I turned into a fourplex, we kept because it was a four plex, quote unquote. It was really just one house that I turned into, you know, four units. And, and then we bought another house because I wanted my kids in a really nice distance school district. And by the way, remember, zero down loans.

It was really easy to get that. So I had 2 million dollar properties.

In California and you know, by the time the market crashed, they were worth half that. So it was a tough time, tough lesson, like, oh my gosh, I should.

Have just listened to myself. Yeah, I helped all these other people avoid disaster and here we were.

So, yeah, big lessons learned.

Like take your own advice.

Yeah, it takes that though sometimes to reset and to remember. Oh yeah, I need to get a little, to fall down a couple times to remember where I should be.

Absolutely.

So you talked about. So real wealth is 70,000 strong. And you've already touched on that. The truly successful people find a way to delegate into free up time, buyback time. What, How? So I'm curious, how do you spend your time today? I'm sure that you have freed up a fair amount of time to spend with family and I'm sure you're, you know, still doing radio show and podcasts and whatnot. So what is like a typical day for you now that you've started to implement these sorts of activities that free up time for you?

Yeah, I mean, I get to do what I want. And what's my, you know, my purpose, I guess you could say is I do love to teach and I love doing the podcasts. I love helping people who maybe felt as hopeless as I did back then, not knowing what to do. I've had, I've run into so many people at events who said that that information has changed their lives. So I get to do my unique ability and like you said, I get to really spend that time with family. I've got a grandbaby, I've got another grandbaby on the way and just be able to live life the way I want, which is a dream. So that's the best answer. I remember in 2008 I had built this business that was just booming I couldn't keep up, and I didn't really know how to run a business. And I was working probably 12 to 14 hours, you know, and I would still manage to get home, be home when my kids came home from school. But then I would work all into the night after they went to bed, always working. It was. It was crazy. But, you know, that's oftentimes how businesses get started. But then in 2008, I was at a breaking point, and that's when I.

Begged Rich, who was a business coach, to help me.

And that's when he came in and started to just kind of look. He's like, oh, okay, you need help. You're doing everything. The first thing he did was to create an org chart, which I didn't have. I was just doing everything. I had hired a bookkeeper. I'd hired a couple people, but I didn't really know how to train them and stuff. So he takes the org chart. Normally you've got the CEO, you got the CEO, then you've got the finance department and the marketing department and the product and so forth. And.

And on that org chart, it was.

My face everywhere, Kelly.

Everywhere.

Everywhere except for a couple. And that's when he's like, okay, this is the process. You just, one by one, replace yourself with whatever task it is, and ideally, the one you hate the most and that you're worst at, that's the first one.

You know, like, go after that. Which is why I got a bookkeeper.

It's like, I'm not doing that. So, you know, bring in someone who knows how to do that. Then the next one was, okay, well, I cannot. I'm. We have too many people who want to talk to me. I need to train someone on being an investment counselor. So then, you know, hired that and then an event planner. And it just now, today, all there.

I'm not on the chart.

Yeah, I'm on the board.

Yeah. You got fired from every position. That's the best way I got fired.

And I have to say, it's.

It's weird. It's hard for an entrepreneur. I remember there was a time where I'm like, well, what am I supposed to do now?

Everybody took my job.

There's a little feeling of loss because, you know, you built it, and it feels weird that you're not needed anymore. But then that's when you get to.

Go back to that vision board.

Like, what am I really here for now? Now my time's freed up.

Kathy, as an entrepreneur, start bringing in people in their organization. That's not an easy task either. And finding the right person. I remember back in my early days, I wanted to hire a controller, and I didn't want to spend $5,000 more a year to get the better controller. I wanted to save the 5,000. I won't tell you what that controller cost me, but it was a lot more than $5,000. If I would have bought. If not bought, but if I would have hired the right person. And ever since then, it's like, I want to hire a players. I've got to hire people. People that are better than me, that know what they're doing and they're an A player, not just somebody to fill a spot. Did you ever have that struggle when you were hiring people?

So, so many times I.

The stories I could tell you, it's.

Like a badge of honor.

Yeah.

Just terrible at hiring people.

I'm really bad. And then I learned that you could.

Actually hire someone who hires people. That's kind of the scale if you're.

Just not good at it, which I'm. I'm honestly not, because I do believe in people and I, you know, more positive. So you. You need someone who really knows what to look for in hiring. So I don't do it anymore. We did.

Let'S just say, like one lady we hired for events. So one of our clients had to. Had to go. I don't know if you noticed, but at the bottom of her email signature is a page where you can hire.

Her for certain other services. Nope.

That's terrible.

Yeah.

Anyway. Yeah, so I don't know if you could top that story.

Yeah, we all have stories like that. And, Kathy, when, you know, with our investors and when we're doing presentations and talking to people about real estate investing, we always talk about the plan C. What do you do if your income is based on the number of hours you work? And when we talk to them, there's like a light bulb that goes on. It's like, I never thought of that. What happens if I can't go to work? And I'm not. I'm the sole breadwinner, and for every hour I'm in the office, that's how I get paid. And it's so cool when you see their eyes light up and go, there's another way. Are you seeing the same thing when.

You talk to people all the time? Yeah, because we're really not trained to think any other way. You know, the idea is that if you put away 10% of your income, that by the time you're 65. And you've invested it properly or had a financial planner invested for you that you'll be set. But I just, I don't think you can make that. It doesn't work. It just doesn't work. Not with today's inflation.

It's helpful, but that's it.

Yeah, not so. I, I just. People aren't taught. And fortunately, today there is a lot more information out. But when I started, there wasn't. It was a secret. It was something that wealthy people knew how to do. But most people, you go to your job, set aside some money if you can. Otherwise you're living paycheck to paycheck, which is what most people are doing.

Yeah. And it's interesting, when Steve says plan C, we talk about cash flow. Cash flow is now, thankfully, especially passive income. Cash flow is such a buzzword that people are start. You can see their antennas start to move when they hear it. And I don't remember where I heard this. I can't reference it, but I had heard that or read that the average, truly wealthy person has seven streams of passive income. And because if one of those, like your primary one drops off okay, you're not. The boat doesn't sink. It might have taken on some water, but you're going to be okay. And when you have those conversations of cash flow, people start to say, you know what, I can think of a few different ways, whether it's real estate or freelance, this particular skill set I have, or like the person you hired who had that little thing at the bottom. But yeah, you start to see that light bulb go off. Of all the different ways that they can create cash flow, which creates opportunities, like Kiyosaki says, to buy back your time, to create freedom of time and in space and money as well in your life.

Yeah, I mean, you know, it's. It takes a while to get there. And I don't like to mislead people in thinking that you can create that overnight unless you get an inheritance or something. Like, we had one woman come to us with a. And she inherited this old, old building, just. She couldn't even rent it out in downtown San Francisco. And she's just sitting on this thing. She heard me on the radio and she's like, I've got this liability. It was really liability. She inherited this old building she didn't know what to do with and couldn't rent. And I'm like, honey, sell it.

Just because you inherited it doesn't mean.

You need to keep it. She thought she could sell it for A million dollars, which, hey, you know what, great. She ended up putting that on the market and getting 1.6 million. There was another problem she had suddenly, which is now what? You know, do I pay 50% of that to the government or do I 1031 exchange it? That's the power of our network at Real wealth is we've got teams across the country who've got products, so we can do ten 31s fairly easily. We were able to get her like $2 million worth of property and she was cash flowing $20,000 a month like overnight.

So there are ways to be able to cash flow.

But for the average person who's maybe just starting, it might not be right away. But you know, you have a plan. You know, you have a plan, okay, I'm going to buy a property this year, then I'm going to save money and buy a property next year. And then maybe that first property has increased in value enough that I could take some cash out and use that to buy the next and you know, to really have a plan. And what I would tell people is that if you, at least in single family, if you can buy one property a year and then take all the cash flow to pay off the first, you could be sitting on all those 10 properties paid off by year 15. Now you've got a plan. Now you've got an asset that's growing with inflation because property tends to inflate. So you're not getting drowned by inflation. You actually got an asset that grows with it and where the rents are growing with it so that you in 15 years can be comfortable. We had, now that I've been in business 20, 20 years, we have so many examples of people who followed that plan and it really worked for them. We have others who were able to accelerate it a little bit faster because maybe they took their, their IRA self directed it and invested it in real estate or they took out money from their home. You know, there's, if you can start with a chunk of money or if you have the time to do, you know, to find deals on your own and get seller financing or something, there's, there's ways to do it with less money. But if you're, if you have a little bit of money, it's going to take longer. I just want to be transparent about that. But then you have a plan and everything changes when you have a plan. When you don't have that plan, it's, it's scary. You have no idea how you're going to pay for college or Pay for your aging parents or yourself, you know?

Yeah.

But when you have that plan and you can see it on paper, and it's like, okay, I just have to save enough money this year to buy another property, and then I'm on track for my plan, you know, and then hope is. Hope makes all the difference. Without it, you're just floundering, you know, you're just living, like I said, paycheck to paycheck, like everybody does. If you know that there's a goal, then it's like, oh, maybe I won't take that vacation or I won't buy that new car. I won't. Because I've got to stick with this plan because I know this plan is going to work.

Yeah.

And without a plan, you blink an eye and 20 years has passed by.

Oh, my gosh, that is truth. And you're right where you started.

Okay, we're coming up at the end of our time together, but I want to spend the last few minutes however much you're willing to share. You're frequently on the major media outlets now, you know, fox, cnn, msc, msnbc. And you're frequently talking about what's going on in the marketplace today. Real estate. Just because you have your finger on the pulse, I'd love to hear your take on what you're seeing in the marketplace today. What are you seeing and hearing? And then what do you see in the next six to 18 months and how people should respond to that?

Yeah, I. I mean, a year ago, when I saw that, you know, the Fed was completely wrong about inflation, I don't know how they got that so wrong.

When you print $7 trillion and think there's going to be no.

No consequences for that, and at the.

Same time, shut down the economy.

So.

So, like, no goods are being produced, but money is circulating like crazy. So you have all this money chasing a limited number of items. It's just like, it was obvious.

But anyway, they got it wrong. And when we saw that they were going to dramatically raise rates, we knew what that meant. And for me, that meant, you know, you got to read the tea leaves, right? You've got to know what's coming. That is a key skill for real estate investors, for any investor. But to really understand what's coming, the way I interpreted the headlines. And remember, headlines are meant to scare you, and they're not always meant for you. So, you know, if. If all of a sudden the headlines are like, oh, mortgages are getting more expensive. Everybody's priced out. That's one way to look at that. The other way to look at it is, oh my gosh, we have a lot more renters. How do I fill that demand? So as soon as I knew that 25 million people were going to be priced out of owning their homes, I started a single family rental fund because it was like, now finally we're not going to have all this competition. We're not going to have 50 people.

Bidding on one house.

We're going to have nobody building bidding on that house. Now it's a buyer's market. Now is the time to buy. Not when it's a seller's market.

And people get that wrong all the time. They buy in a seller's market, they sell in a buyer's market. They pay too much or they sell it for too.

Like what? Just don't go with the masses. So to me, the minute I saw that, I thought, we're going to go against the grain. I'm going to start a rental fund when no one else is buying. The deals we've been getting are insane. And we're buying in this part, you know, another, another thing that's happening is reshoring. We have, the Biden administration passed a chip manufacturing law with I think it's like 72 million. I don't have the number in front of me, but to bring chip manufacturing back to the US and one of the areas that they're targeting is north Texas. I know the north Dallas area really well. I've got a property manager I've worked with for 10 years there. Together we started this fund where she, she's got wholesalers coming to her with deals at ridiculous prices because nobody else is taking them because I, other investors have loans they have to pay. Double digit loans. They're not. Numbers don't make sense. But as a fund, we have cash. We're getting these deals for almost nothing. We're fixing them up because now you.

Can get a contractor. You couldn't get one a year ago.

You know, so, and, and, and renovation costs are down and material costs are down. So anyway, go against the grain. That's all I could say. See what other people can't see. And when you've got millions of people priced out of the market, they still need a place to live. That's the piece people missed. Where are they going to live? They have to live somewhere. And it could be on the streets, but most people prefer a roof. So it's going to be apartments, it's going to be affordable homes. And that's the market we're in. We have been so active at a time when existing home sales are down 20%. We've been busy because I teach investors this, this is the time you're not competing. And then the fear of interest rates now that existing inventory is so limited because the lock in effect. Again, the Federal Reserve didn't see that one coming. They thought that if they raise rates, home prices will come down. No, no.

People still need a place to live.

And there is a bubble of first time home buyers. When you look at demographics, there's this bump right now of 30 to 40 year olds who are forming families. Huge household formation, people getting married, having kids. The largest generation ever from age 30 to 34, first time homebuyer age. There's nothing for them because you have homeowners who are locked into, I think 70% of homeowners are locked into rates under 4%. They're not leaving that. So the idea that there would be a housing crash is ridiculous. Nobody's selling, the market's locked and homeowners are in the best shape ever. This is not 2008 where they were on adjustable rates and when those rates adjusted, they couldn't afford it. No, no, no, no. Ten years later, you fast forward, these are people who qualified. They had to put money down. They had the best credit ever and they're locked into low payments. So the people living in homes today that own homes have the lowest cost of housing ever compared to income, they are in the best shape ever. They're not in trouble. The housing market is not in trouble. Yeah, what's, who's in trouble are people who don't own homes. Their rents are going up, their costs are going up. That's, that's the problem. And as business owners, we can solve that problem. We can provide housing for them, we can build it. We can, I'm starting a build to rent fund. We can find old buildings and fix them up and make them nice places for people to live. As long as you keep it in that affordable range. And I don't mean like low income housing. I'm not talking about that. I'm just talking about the average person in the area can afford to live. And when we can provide that much needed service, the demand is there. So you compare that to the commercial real estate world where many loans are on adjustable rates. Most commercial loans are. Commercial real estate may go through what residential real estate went through in 2008. And we're seeing that with a lot. Commercial real estate that's on fixed rates should be fine. But anything on adjustable, it's challenged just the way that residential was because those payments are changing and it's really difficult. So you know, if you can get into an asset with a fixed rate, if you can acquire a multifamily property that you know, acquire their fixed rate loan, you know, there's you're providing opportunity when you could provide housing. It is the most needed thing.

I love that. Well, I think that's a great place to end our conversation on a high note. Hey, Kathy, if people wanted to look you up to be in contact with you, where can they find you?

Realwealth.com it's free to join. We still offer free education. That is our thing. It always will be. We have over 500 webinars there where you can learn about asset protection and leverage and you can get connected to teams across the country who can help you acquire real estate. They have property management in place to make it simple for busy people. That's, that's our thing. And then to find out about my rental fund, it's grow developments dot com.

Love it. And as somebody who's, who's consumed Kathy's content, highly recommended. Check it out. And until next week, appreciate you guys listening to Heading West. And Kathy, thank you again for joining us.

Thank you so much for having me.

Thanks, Kathy.