S4 E18 - Wealth Buildings

Ladies and gentlemen, you are crushing it. Thank you so much for being here in this episode. We're talking wealth. How can you create true wealth with assets in real estate? Tune in to find out more.

Last episode, you're building the cash balance for people. You just walked us through the exact script of how anyone can do this, right? Get started in real estate with nothing. So now we're talking, what, three and a half, four years in. They probably have some cash. Maybe, let's just say, I don't know, whatever. Half a million dollars in cash. They've been crushing it. Real estate sales, flips, wholesales, bird dogs, all the things they've made their cash.

Yes.

Now how do they make their wealth? Because those are two different things.

If you've ever played the game Cash Flow, then this will be very real for you. And if you have not played the game, I highly recommend it. It is the board game off of the book Rich Dad, Poor dad, also made by Robert Kiyosaki and Jaron Lecter.

Is this the same game that I beat you at all the time?

You never beat me. You've never beat me. You never will. It's the same.

I think it's the same.

I want to keep whooping your butt in.

It's the same game.

We will forever talk crap about this game. 100% great game because he keeps losing and he's got to get better if he wants to beat me. But what is real quick side note, you don't even know the rules.

Well, here's the fun part. My dad taught me a whole different set of rules.

You have to read the rules.

Yeah. And I read it. Oh, my gosh, it was amazing.

Okay. Yeah, there we go. Now we know you keep losing kind.

Of the rules people.

So now that you've built cash, a lot of times you can have millions of dollars of cash but still have to go to work because you can't pay your bills unless you keep showing up and making money. And so how do we build up our asset portfolio to where the assets bring in income without us having to go work for money. And so the normal way to get started in that is to buy a single family home rental property. Now, one of your exit strategies from your rehabbing side is you could actually keep these houses and depending on your bankability, you. You can keep the house and get permanent financing for a rental property, pull out some of that cash that you just generated by renovating the property and putting in a tenant in there. So you can actually keep some of these properties which Is great. You really want to do that if you are creating a lot of appreciation. So the double prizes. You wanna hear the double prizes? Finding a good deal is finding a property that needs some love, needs some work, and is of good price. But the other way is to get into an area that is trending up. And so I love investing in the urban core and finding areas that more and more people are buying and renovating. You always want to go the places other people are doing it too.

Sure.

And. Or buying houses, tearing them down, and putting new construction houses up so they're getting revitalized. And in those revitalizing areas, as long as you're not the last one there, then you can probably count on that area continuing to upgrade. Appreciate in value. So if you're going to hang on to something, you want to create value, and you want the area to continue creating its own value, which is huge. I mean, I say that lightly, but I'm in neighborhoods now that have appreciated over $700,000 for the same house, same finishes. Yeah. In just a couple years.

Sure.

And so Shelby Hills. It's huge how much the Delta can be when you've got those double prizes in place. So anyway, building wealth. Single family home. Next, a multiplex. So either a duplex, quadplex, eight plex. And then from there, what you've learned is how to manage a small rental portfolio. What are the kinds of problems you're gonna deal with? What kind of staff do you need? How do you market to fill those? Now that you've got those skills, you are probably ready to get into apartments. You never, ever want to just jump into apartments. If you've never renovated anything, if you've never managed a property at all, you won't know how to run the numbers. It's a totally different game. And the way people promote them, list them, and try to sell them is very different than reality. And you've got to be able to see through the bull crap. We bought a project in Savannah. It was 148 units, 74 duplexes. Okay. And we ran the numbers. Everything was good. We went out there, checked them, all that stuff. The inspector just was lazy and missed it. That over 80% of their foundations were bad.

Dang.

80% seems like a larger number. It was in a flood zone, and they're basically just sinking into the earth. 20 acres.

Dang.

It's a big project.

Yeah.

Quite the mess. You pay a professional inspector who's done it for longer than you've been alive.

I've been doing this for 20 years.

Longer than you been alive, sweetie. Don't tell me what to do. If you do not have the experience to be able to double check things, even the professionals will get you tangent.

Is there any fallback on the. Is there any way legal recourse?

I looked into it for sure, yeah. First of all, you're in America. You can sue anybody for anything. But very unlikely you can win when they put a million and five disclaimers in there that say they basically don't have to do their job. So that one was frustrating, but yeah, that was a couple million dollar hit. Yeah, right there. So that's the other reason you don't want to just jump into huge big deals is a. You are probably still using investor money. And I have made sure none of my investors have ever lost money ever. And if you don't have a couple million dollars, chilling a couple million dollar mistake can cost you your reputation real early. So you want to be building up the cash flow, you want to be building up your reserves, you want to be building up your resume, all those things before you get into big deals. Because the consequences are never less than $50,000. Like every single little issue is 50, 50, 50, 50, 50. And so you got to be able to handle that, not just emotionally, but financially because I promise you, you're going to run your numbers wrong for the first several.

So those renovation experience is helpful. That multiplex experience is super helpful. And.

To go into multiplex or apartments, you could go the Airbnb route, which is huge. So you can still stay in the single family, you know, zone with an Airbnb. And a lot of people ask me like, why are you so into Airbnbs and or short term rental. You ready for this? Yeah. You get four times rent, four times rent per month. So if you normally could rent that house for $1,000, if you Airbnb it, you get $4,000.

Boom.

Heck yeah.

Sign me up.

Why would you not want to do that?

Cash flow's king.

Yeah. Best deal I've done. It was a single family home. Beautiful. Obviously. It was amazing. It was my house. I designed it. Awesome hot tub on the roof, baby, with all those cool things and the lights and the fire pit and the rooftop deck and the good parking and the view of downtown in a neighborhood that was appreciating. I net $257,000 on that house every year.

Thank you.

That was such a good deal. That was amazing. And I was only in at 500,000 was amazing.

That's so.

Yeah. I regret selling It. But it's okay. I've got other ones. So Airbnbs are great. The only issue is the legislation changes all the time. It's kind of stabilized a little bit more than it did now that the world has figured out this isn't going away. No matter how much people want to fuss about it, it's not going away. So it can be rocky. Especially if Airbnb is new in your area. They are very hard to finance for some reason. I don't know why. They're very hard to finance. Again, there's just a lot of people getting into it. The world, remember, the movement is people want freedom.

Yeah.

And what's the best way for freedom is to turn your home into a real asset. Asset is only qualified as an asset if it brings in income. Sure, people call their houses an asset, but it legally or like by definition is a liability if it does not produce income. So it's just you staying there. It's costing you money. It's a liability. So lots of people doing it. So you have to be really good. We can talk a lot more about Airbnbs and like all the things that you have to have that are special about it to make it stand out, especially if there's a lot. But what Airbnbs are really good for is they're great precursors for you to get into hotel.

Oh, shoot.

It can be a boutique hotel first and then a bigger hotel next. But it was really the perfect way to start learning, like, why is my property running? How do you run your numbers? How do you get people to pick there? How do I manage those tenants? How do I manage the experience? What are the different ways that I can start creating more value by creating, like, excursions and super important to learn all those little ways to really, truly monetize the heck out of your Airbnb before you get into a larger asset class. Because hotels that are empty suck. You do not want an empty hotel. Covid affected the heck out of hotels. But Airbnbs are the safer way to go because again, you can long term rent them until Airbnb is back. Yep. So I like backup plans on backup plans, on backup plans, on backup plans.

But especially the real estate.

Yeah. Hotels. There is a ton of money to be made in hotels if you know what you're doing.

I'm assuming. But hotel, motel. Do you have a specific difference or care difference?

No, it just matters on where the doors are.

What do you mean?

The doors are on the outside of the property versus you walk inside to.

Get to the Doors outside is motel.

Yeah.

Okay, well that's a fun learn.

Yeah.

But do you invest in motels also or own motels?

Okay, we've done both.

Got it.

Yeah, got it, got it. I like a class properties though, with you know, the aerial. BVI is the most incredible resort I've ever been to, which makes it really hard to vacation because I have, I don't say the word perfect, but I've really tried to perfect what we've got going on here with the immersive experience of truly. It's already almost full spectrum healing. We're just now adding all these new clinical opportunities when we build out heal. But everything from the food to the activities to the way the rooms were set up, Airbnb was such good test projects for me even before I got here because I want in, let's say the Peace Teepee, which is one of my favorite Airbnbs I have, have little mindful notes all over that house that tell you to be where your feet are. And you don't only notice these little cute quotes and sayings if you are present enough to actually see them because they're just little tiny things all around the house. And I have a little game. If you can count all the owls in the house, you get 10% off your next day and just cute stuff. And that was good practice because this island has little cute clues and stuff all over the whole place. That again allows people to learn how to be mindful, how to stop and to notice how to be, how to be present. And I've so loved this project because it has actually saved lives. Like, how do you create an asset? It doesn't just make money and build your wealth, but how do you create spaces that lead people to having different powerful experiences? I know you guys redesigned a section of your house for Svetlana to do healings in and you guys have seminars at your house, which are awesome. You can't just have a regular living room and get people to go into the zone of change. You know, it takes this transformational space. And so what I've done, and I just want to give you guys a couple pro tips when you're into doing this stuff, is I've bought apartment complexes that were owned by slumlords and not just renamed them. But I've designed the common areas just so to where the tenants are having different life experiences. If you understand the responsibility of a developer. Like, people live their lives in spaces. The way you design it and put it together affects their whole world. So to me, it's like a huge honor. And how do I want people. People to experience the world? I want them to connect to nature. I want them to have peace in their home. I want them to have winning relationships by separating the sinks far enough away. Or having his and hers toilets in the houses and his and her shower heads literally separate the closets so they don't fight. Like there's a way to design things to save marriages. I'm not even kidding you.

Hold on.

Yeah.

You thought through those things ahead of time.

Yeah. Far enough awake to where he can't mess with your stuff or get his toothpaste slobber on my side or stink up my toilet. Like, how do you keep them separate enough to where we still get along over the things that matter.

Yeah.

And that live in the same house.

But genius though.

Thank you.

Right? I really like that. And again, we have people from all around the world, especially Lithuania, listening to this podcast, Shout out. And just tips like that, Just those small ones. I think that's what makes Broke to Oak so enjoyable. Not only for me, obviously the number one fan, but other people that listen, the people that are there. That's one of those ones that you can just sprinkle in, but at the same time is so valuable because now you can do that in hotels. Right. As well, because that's when you have the whole family. So you're talking about creating these spaces, creating intentionality, Airbnb or your VRBO or whatever. Sitting down and thinking through, okay, if the family is here, what do they want? What do they want to experience? How do I arrange the furniture? Where do I put the pictures, the.

Paintings, the equipment kind of experiences are they going to have in this home?

Sure.

You've got the logic. What's the problem? Is a lot of the people who especially do larger assets, they're just numbers geeks. And they just analyze and maximize the roi. And they cut out the cabinet under the sink and they put those stupid pedestal sinks that every woman on the planet hates. We want to crush them all with a hammer. Where are you going to put your makeup? Where are you going to put your toothbrush? It all just falls into the toothpaste that's sticking to the side. It's the worst. So you save $50 by doing the pedestal versus an actual cabinet. My point is, don't skip out on the little dumb things that make life nice.

Yeah.

And enjoyable by trying to get a higher number. Now, do you have to make it a million dollar house when it's $150,000 house no, but how am I actually going to exist in this space? And you start with exactly what Newsom was just saying. Who's going to live here? Right. What kind of memories would I want to create if I was that family? What would I want to be looking at out the window versus just shove the bed in there? No, I need a window to look at the trees. How do we make sure people feel safe? How can they have Thanksgiving in this home? Where are they going to put their Christmas tree? Where are they going to store their crap?

Let's go.

How do they actually hang their clothes? Is that uncomfortable? Are they going to be annoyed every single day? Like, you have to think about these things, from a single family home to your rental property, to your apartments to your hotel, and understand you are creating experiences and you're not just trying to sell it and get out of there quick and hope nobody notices. Which should never be your attitude, because your reputation will catch up with you, I promise. Having the mindfulness to care about those things are going to allow you to build this reputation that people can't stop buying your stuff, people can't stop staying at your stuff. And then just to be able to say, it's an aerial house. I was able to command an extra 50 grand just because we had such a good reputation and great warranty service and all those things. So.

Well, plus, if people are spending money.

Come to Louis Vuitton.

Yeah, but plus, if people are staying, your house is longer because you thought about it, you designed it, you're having tenants or, you know, rental renters or whomever. This is how you're building that wealth game. Yeah, that's the point. Right. What Bernie just did is walked us through and walked you through how to build up your cash. Boom. Now how to build up your wealth.

Yeah, and I'll run back through those categories, just like I recapped in the last episode. So single family rental house will allow you to have the pre qualifications to be able to do a multi complex, which is duplex, quadplex, eight, plex, all those things. It's a smaller one, which allow you to get into apartments, which is really. You really don't want to do anything less than a hundred units. You really don't. Just for how hard it is to have the staffing to manage that. It's really more expensive to staff it. Then a lot of people end up running it themselves and then hating their lives. Um, but that multiplex qualifies you to do apartments. Or you can go another direction and have your rental house teach you how to do Airbnb which teaches you how to do boutique hotels which teaches you how to do large property hotels.

Money you go literally money.

There's so many other ways guys. There's office there's storage units there's all kind of commercial and retail. I'm just telling you the fastest way to start.

Yep.

In residential building cash and or building wealth.

Hope that was valuable to you as it was to me. Thank you so much for listening. And in the next episode we're going to continue the journey of a force for good wealth through broke to woke.

Aerial recovery. Our non profit has a program called heal the heroes initiative and it's where you can nominate and or sponsor a deserving veteran or first responder to go through a one year healing program and on the other side they are repurposed as humanitarian special operators that save lives and stop evil. Let's continue to build out this case study and show that veterans are not victims they are assets.