How to Create Wealth and Passive Income with Lifestyle Investor Justin Donald

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, bellmangeek.com and on this week's podcast, I'm going to put on my anchorman voice. He's a big deal. Justin Donald from lifestyleinvestor.com if you're not familiar with Justin, Entrepreneur magazine calls Justin Donald the Warren Buffett of lifestyle investing. He's the founder of the Lifestyle Investor and a master of low risk cash flow investing, which if you're listening to this podcast, that's right up your alley. Justin's ethos is to create wealth without creating a job. So just like mine, he's probably ambitiously lazy. He excels at simplifying complex financial strategies, structuring deals, and disciplined investment systems that consistently yield profitable results. He is one of the biggest in the country for owning mobile home park portfolios in the U.S. various additional rental property portfolios, Orange Theory Fitness and Kidstrong franchises, and multiple successful operating companies. He has one of the biggest and best masterminds in the world. Justin Donald, welcome.

Well, thanks Mark. Appreciate you having me on the show and excited to hang out. We've got a bunch of mutual friends and uh, it's always fun to, to connect with people and, and you know, by default I am a land guy because I got started in mobile home parks and that is a land play and a lot of people don't realize that.

Yeah, it is. And mobile home park investing is fascinating because so many people when they hear about mobile home parks, there's a lot of judgment and I'm sure you know this, but of all the real estate classes, do you know which real estate classes have the lowest default rates?

Oh, it's mobile home parks. It's mobile home parks 1 and 2 is always mobile home parks and self storage literally every single year.

Yeah. And why do you think that is?

I mean really, it's. You have less competition on mobile home parks. The price isn't being bid up as crazy. It is in other real estate asset classes. A lot of the time they're seller financed, so you know, the sellers or partially seller finance. So the sellers kind of help with that. And really it's just, it's the least consolidated real estate asset class. You're not. The prices that you can get it for are super reasonable. It's the only investment space where I've consistently made a 20% or greater cash on cash return. You know, to be able to do that consistently over, you know, 15, 16, 17 different deals to me is pretty incredible. So You've got this huge margin of safety. If you get a three point spread, 20 equals about 20 cash and cash return. It's, it's really hard to lose money. You buy right. You can have virtually everything go wrong. You're still going to be okay.

Yeah. And that really is the key, I think, in just everything in real estate. We're making our money on the buy, but let's just rewind the tape a little bit. And how did you become the lifestyle investor? What in your life influenced you to think, okay, I don't want to grind, I don't want to create a job. I want to have this passive income that supports my lifestyle and I'm only going to be looking at cash flowing type of assets.

Yeah, I mean, early on I, you know, I started as an entrepreneur and I worked, I worked really hard. I remember telling people that I'm a business owner, but that wasn't the truth. The truth really is that my business owned me. I was a slave to my business. I was a slave to the lifestyle that I had become accustomed to. And it, it was trading a lot of time for money. You know, I didn't have the systems built out and, and you know, over time that was something that I became better at. But I just remember having friends on the weekend reaching out, like, hey, you want to go out? Meet up at the bar, the club, whatever, let's go grab dinner. And I'm still at the office, still working on a Friday night, on a Saturday night. And I remember thinking to myself, hey, I'm trading time for money right now. I'm putting in the hours. I'm, you know, I'm, I'm demonstrating grit, I'm showing resiliency. I'm, I'm doing the things that are going to pay off down the road. But down the road I don't want to be in this position. I don't want to trade time for money. I don't want to work these hours. I want, when I have a family, I want to be able to spend the time with them and, and they get, you know, they trump everything. And so I, I knew at some point I either needed to really figure out how to build great systems and hire great people or, and I'd say and, but it's also an or start investing in assets that produce income. And for me, I, I, I just wanted cash flowing because if I could do that, then I don't have to work, right? If I can cover all my expenses, then I don't have to work. But I get to work. And if I get to work, it's going to be on different things. It's going to be on a timeline or a cadence that really feels good to me. It's going to be on topics and subjects that are really important or inspiring to me. It's going to be with people that I really want to be around. And so everything shifts when you don't have to work. And so I just wanted to get to that point where I don't have to work. And. And it happened in kind of three stages. The first stage was buying my wife's time back, which happened with the first property that we bought. And then the second stage is this, the survival income. Just what it costs to survive. Not current lifestyle, just like all the bills covered.

Right.

And then the third one's lifestyle. And. And that is, you know, everything that is happening today, how do we get that covered in passive income? And so achieving each of those benchmarks was really huge for us, really fun, really rewarding. And now I like to teach people how to do it. I like to coach them. I like to give them ideas. I like to, you know, we've built this incredible community where we get to do this together, and it's fun. You know, for me, I only achieve financial freedom once, or at least hopefully. You know, in theory, I should only have to do it once. Hopefully everything works out and continues working out, and I'm very confident it will. But I think it's fun to be able to celebrate with people constantly that, you know, are on that journey and want to figure that component out in life.

Yeah, I mean, we're, we're so aligned in this, it's scary. And I've been talking about this for years, where your passive income exceeds your fixed expenses. And you're working because you want to, not because you have to. And then I see people who go into real estate and they start flipping assets and they want the appreciation, they want the cash, and it's. To me, it's just financial insecurity. You've got to get that next deal. You're going to pay taxes, and then you got to take that money. You're not going to live on something you're going to get, keep doing again. You're. You're just on this, this roller coaster, if you will. And then if you're not in the real estate world, let's say you have a W2 job, you're on that 40, 40, 40 plan where you're going to work for 40 years, 40 hours a week to live on 40% of your current income. That sucks to me. And it's a huge gamble because, you know, we want to live our best lives. When you were your age, when we've got money, we've got time, we've got our energy. And so I feel like passive income gives us that trifecta to go and live our best lifestyle. And so the fact that you're helping people do that is super interesting to me in the sense that what are the common objections that you see people coming into your world throwing at you? For example, I've got a buddy, loves the stock market and he like loves that appreciation play. And he thinks he's crazy of me that I don't ever buy stocks or really any appreciating asset. If it doesn't cash flow, I'm not interested in it.

Yeah, you know, for me it was, I had to get the cash flow first. And once I had that, once I had, you know, once you, you live in a place of surplus Inc. The whole playbook opens up, right? So, you know, I think early in my life I worked really hard to save 10, 15, 20% of my income, right? My getting earned income. I gotta carve this off, I gotta save it. I gotta work really hard and I gotta build up, you know, capital to make, you know, investments. Well, once you get to surplus income and your lifestyle is covered now a hundred percent can go to building wealth and go to impact and philanthropic ventures and, and so it's, it's like a flip flop, right? You work so hard to like carve this little bit off, but now it's like, hey, I make now can help compound my wealth and, and the impact that I have with this capital. And I think that's really cool. But you know, it's, it's actually funny that you asked me the question that you asked me because I was literally reading this. So UBS just put out there, you know, one of the biggest banks in the world that just put out their family office report here that literally came out two days ago. And it basically outlines all these family offices, 200 plus family offices, the wealthiest people in the US and, and what they do, how they allocate their money and what that looks like. Because most people think, oh, you get rich by being in the stock market. That's what people taught me. That's, I mean, I think there's so much money being pushed into the education system that this is what colleges teach. This is, you know, that, that, that is the norm. And by the way, that's why it's called, you know, know, traditional investing versus, you know, alternative investing. But the funny thing is the wealthiest people in the world, alternative investing is not alternative. It is traditional. It is their normal, you know, way to go. So anyway, reading this report, you know, it's fun looking at this asset breakdown. And so you think about the wealthiest people, these family offices that manage the, the money of the wealthiest people in the world. And 59% is 20, 23 numbers. The report just came out. You know, so they've studied all the numbers of all these offices. So this is, you know, total end of year numbers. 59% of the asset allocation of these ultra high net worth individuals is in alternative investments. The vast majority, you know, and, and so I think it's important to recognize that only 41% is in traditional assets. And by the way, a large chunk of that's just sitting in cash waiting for opportunities to, to deploy. And you know, so this report has 6% cash, 7% fixed income. So it's only 28 equities. And if you study like all the other, you know, family office reporting systems, all the other, I mean, there's so many of these groups, these banks, these family office contingents that put out these numbers, but basically it's anywhere from 15 to 30%, usually 15 to 25% is what you see in, in public equity is the stock market. And, and most people don't realize that alternative investments house over half of the net worth of the wealthiest people in the world, and most specifically the U.S. i love it.

It's, it's such good information. All right, Justin, let's play a game. Let's play a game. All right. You're not, you're in Austin.

Yes.

And you've got your systems in place, you have your team in place. Everything's going great. You're, you're truly wealthy in the sense that your passive income is way above your s, your fixed expenses, and everything is going great. And then one day you wake up and you realize, holy cow, my, my firm, my CPA firm has embezzled everything from me. And not only that, they've, they've reallocated all the asset allocation into some, you know, crazy offshore trust I can't even get my hands on. It's going to be 10 years of litigation before I get all my assets back. What's the first thing you're going to do to rebuild your wealth?

Well, I'm probably going to go down the same path that I went down because I know that it works. I know I can get back to where I am way faster than I did the first time, you know. So for me, I kind of started a, you know, family bank via whole life policy that I do all my deals through. So that way I'm getting, you know, two returns with the same dollars. I'm going to start in cash flow real estate because that's the seat, the safer play. I don't want to.

You're going back into mobile homes.

I would, because it's still the, the least consolidated real estate asset class. I don't know if I would do it exclusively like I did the first time around because now I know a lot more about some of the other asset classes. But it most certainly would be one of, if not the first investment that I made and I would build. I would probably use real estate unless I could find a company that was very de risked to kind of help supplement. I'd probably use real estate to get to my lifestyle income before diversifying into other things.

Okay, all right, so now you've done it. Where are you? Where's your next diversification play?

Probably so I guess I'll give this, you know, disclaimer or this, you know, just throw this out there. I'm not necessarily real estate over business because I think both are good. And I think it's, you know, there are pros and cons each. Right. You know, you got a business way more risky, but if you do it right, way more upside, you got real estate way less risky. You buy. Right. It's hard to lose money, but you're probably capped on the upside. So someone that's a little bit more conservative might lean towards real estate. Someone that is a little bit more, you know, aggressive may go the business route. I have used both and I like both. I got started first in business and that's what yielded the, the capital to be able to buy the real estate. But I also wanted to buy my time back and get out of that business.

Right.

And then I learned I should only start a business I probably shouldn't start. But I, I, I've started several businesses. I probably wouldn't start another one today unless I had just the most killer team. But I would buy an existing business as long as there's an operator either there that is good that would stay on or that I would bring my own operator in and that there was margin already built in for a very good comp structure for that person. So I wouldn't say that one is necessarily better than the other. I think the real estate play is the safer play. It may Take longer as well. And I would probably do that and I'd probably diversify from there into, you know, a business with an operator. That's not me, you know, I don't want to buy a job. That's not the goal. But I also like private credit a lot. I mean, that, that pro. I actually take that back. I think I would move to private credit as my next diversification because you're getting, you know, twice the return of Treasuries right now and with, with very little risk if, if it's done properly, if it's leveraged properly, if it's collateralized properly, which there's a ton of them that, that we do and lifestyle investor community that are that way.

That's fantastic. Such a, such a great answer. Okay, so you, you've built everything back up and now you're going in and you're acquiring another asset or you're acquiring another business and you're going through the, the algorithm of this is a great operator. These are the attributes I want to see. What, what is that for you?

Oh, man.

I mean, who gets an interview with, with Justin Donald?

I've actually written down this exact thing, so I don't forget it.

Okay.

So I've got this document, qualities I look for in an operating partner. That's literally the title of this. All right. Because I don't, I don't ever want to miss this. So here it is. Number one is a credible work ethic. Number two is takes initiative on a high level. So I don't, I'm not a micromanager. I'm a macro manager. I'd rather hire someone that is really like, they're, they're tough on themselves. They have high achievement drive and they're going to like, you know, make things happen versus me trying to, you know, manage them. Number three, that they're very resourceful. They just find a way. Number four, growth oriented. I need abundantly minded people. Number five, solution focused and so not problem oriented. Figuring out solutions. Number six, loyal to me and really keeping me in the loop of everything. I think that's important. You know, I need to know everything that's going on with team members and culture and results and all that. So that's number six. Number seven is honesty and integrity. I mean, being trustworthy. These are in no specific order. I mean, if they were, maybe this one's first. Right. You know, trustworthy above all else. Number eight is care about the success of the team or the business as much as me, if not more than me. So they've got to have a high level of care. Number nine, leadership qualities that others want to follow. And then number 10 must be someone that I enjoy spending time with. Otherwise I'm going to dread working with them. So it has. I've hired people that on paper look great, but I just did not like they, they really zapped my energy. And I've just learned it's got to be more than how it looks on paper. You know, you have to want to work with that person because you're going to work with that person in some capacity.

Yeah, it's, it's, that's such a good list. And I love the fact that you, you have it written down so that you can cross reference it. How many times have you talked to people and they, it's, they have a fuzzy idea of what they want in their head. It's so much better to have concrete, a tangible list. That checklist, the checklist manifesto, it's so good. All right, so last question before we go to our tip of the week. And, and this has been fantastic. Justin, what is the worst advice you see or hear given in your area of expertise of lifestyle investing?

Oh, man. I mean, we could do a whole podcast episode just on this mark. I mean, should we do a part two? We, we definitely could and should. Yeah. I mean, here's what I'll say. Maybe right now, just because it's fresh, I'm just gonna say you, you, just because someone's a social media influencer does not make them an expert. So I am just seeing all these social media influencers that are giving all this advice. That is not good advice. They're sell. They're making more on the education than they make on the actual investing that they do. And for whatever reason, in, in today's day and age, you know, everyone's a life coach, everyone's an expert, but people actually look at expertise based on how many social media followers someone has. So it's like, oh, yeah, they, I, I want to listen to them. They've got a really big following, but they aren't even good at what they're doing. They're good at marketing. They're good at like putting content out. They actually have so little experience in the thing that they're teaching about. It's crazy. So, yeah, that's probably it. It's. I'm not giving you a specific one and I don't want to. I'm not trying to throw, I think.

I know the guy you're even, you're even talking about because I Just had another guy on the podcast, like, rip that model to shreds. But he's massive and he's a great marketer and. But I don't want to say his name.

Well, and there are tons of them.

I mean, there's tons of them.

Yeah, there's countless numbers of these people. And your average person, for whatever reason, is saying, oh, they must be really, they must be an expert, because a lot of people are following them and that's not the right way to go about it. That's. That's what I'll say. Most of the information you see online is not good, it's not accurate, and it's actually not even what they're doing. So that's what I'd say.

That's great. That's great advice. All right, well, Justin, your mentorship has been invaluable this podcast. And now I'm going to ask you for your tip of the week. A website, a resource, a book, something else actionable for the art of passive income listeners to go improve their businesses, improve their lives. But before you do that, I just have to give a shout out to our sponsor, which is flight school. Learn how the next 16 weeks can transform your life. Start building that passive income without renters, rehabs, renovations, or rodents, and do it safely, quickly and efficiently with us, that we've done it thousands of times. And I know you're thinking, oh, the tuition, tuition ain't gonna cost you nothing. Guaranteed you're gonna make it back 180 days or less. Just show us you did the work. Go to the landgeek.com training to learn more. All right, Justin, what is your tip of the week?

Gosh, I have so many from the standpoint of, like, resources, books. But I mean, the book that had the most profound impact on me, you know, early in my career, was Cash Flow Quadrant by Robert Kiyosaki. I mean, that book single handedly changed my life and shifted my perspective. I think, you know, today, a modern day, like, book of wisdom is Naval Ravikant's, you know, the almanac of Naval Ravicant. And I just think I've made so many pivots based on some of the stuff that he's talked about that I just think is so true and so real today. So I think that's powerful. I mean, for me, like books, podcasts, masterminds, coaching, relationships, mentors, I mean, this is, my goal, is to be around people who are playing the game of business and life and wealth creation at a higher level than me. And so you know, I'm happy to pay to, to be in groups, I'm happy to pay for coaching. You know, I'm happy to like be intentional about peer groups and finding those people. But I, I think that there's nothing better than that. And if you don't have that or can't find that, you can find it in books and podcasts and if you can do all of it, do all of it.

Fantastic. Well, my tip of the week is probably just as good as yours, if not better. And learn more. Go to the LIFE lifestyleinvestor.com However, Justin has a special offer for us. So if you go to lifestyleinvestor.com consultation, Justin, what are you offering?

Yeah, so on the lifestyleinvestor.com and we'll.

Have links to this by the way.

Yeah. So on my main website, we've got everything, we've got tons of free resources, we've got different courses, we've got different master classes, we've got our flagship products which are our masterminds, which are high ticket. You know, we're on a wait list right now. It's application, it's an interview process, it's a longer process for the right person. It's a great fit, but it's, it's not the right for most people. So we have products that are kind of like, you know, at every price point, every step of the way. And, and that goes from, you know, a podcast that's free to a book that technically you can, you can get for free on the website. You pay shipping. And, and by the way, the, the book now the Lifestyle Investor, not only is the number one Wall Street Journal bestseller, it's, it's now a top 1% of all books ever volume as of January last year. And just side note, all the profits from that book go to fight human trafficking. So wherever you buy it, however you do it, all that, we've literally put hundreds of thousands of dollars, you know, into several organizations that are, you know, are fighting this every single day. So really cool stuff there. But what I wanted to do for your audience, we typically charge $500 if someone wants to do a consultation with one of our team members to figure out, you know, what's the next step towards financial freedom and moving in the right direction. But, you know, Mark, for you, for your audience, we'll just do that for free. So, you know, go to lifestyleinvestor.com forward/consultation and someone on our team will have a live call with you and learn kind of where you're at. Where you want to go and kind of help you figure out the next best steps.

I love it. Justin Donald, are we good? We're good.

We're good. This is fun. This is awesome.

Yeah, we're going to do that part two for sure. I want to thank the listeners, remind you, look, the only way, the only way I'm going to get a Justin Donald to come back is if you do three little favors. Follow Rate Review the podcast. Send a screenshot of that review to support attheland geek.com I'm going to send you for free a signed copy of Dirt Rich, which is not on the number one Wall street bestseller list or top 1% of books sold. So Justin's going to help me with my second book to get there. I love it, but get it anyways. Anyways, just do it selfishly so we get better guests. All right. Let freedom ring. Thanks, everybody. Thanks for listening to the Art of Passive Income podcast. Are you ready to learn how you can start building a passive income without.

Renters, rehabs, renovations or rodents? Schedule a free consultation@thelandgeek.com forward slash training. Let freedom ring.