Wealth Formula by Buck Joffrey

Wealth Formula Nation, Happy New Year! I have a feeling that 2024 is going to be a good year for us. I think we are going to pick up quality assets at a discount like it’s 2012 and liquidity will come back to the real estate markets. I’m also eager to develop our own investor platform into a more diverse investment source. Real estate will always be our bread and butter but there will also be other opportunities in which to invest that will be vetted by our world-class due diligence team. You’re going to new opportunities in sectors like commercial aviation and even business mergers and acquisitions led by Zulfe Ali who used to do that for a sovereign wealth fund. With the New Year, you might also consider whether you might want to start a business of your own. As you know, I am a strong advocate for business ownership. And while doing a creative start-up is not everyone’s cup of tea, there are an increasing number of ways to get involved with business utilizing the skills you do have. One of those options is franchising. We’ve talked about franchising on this show before but I recently met a guy who wrote the most popular book on franchising ever published.  He didn’t try to sell me on franchising at all. Frankly, I left the conversation thinking he probably talked me out of it. But that’s also why the coaching clients he does have seem to do as well as they do. Is franchising right for you? I think this episode of the Wealth Formula Podcast will really help you figure it out using some very good self-assessment questions. If it is, this could be one of the most exciting years of your life as you embark on a new business venture. Show Notes: 00:05:50:22 What exactly is franchising?  00:10:36:15 Stats on franchising 00:14:48:02 The personality type that fits franchising 00:21:16:21 Does franchising have to be a full-time job? 00:26:47:09 The scalability of franchising 00:33:14:19 What are people franchising these days? 00:34:34:15 Green flags and red flags

Reflecting on the financial crisis of 2008, the speaker expresses their dissatisfaction with Wall Street and explores alternative paths to wealth. They discuss the risks and pitfalls of investing outside of Wall Street while emphasizing the importance of learning and growth. The speaker also reflects on their real estate portfolio, the importance of diversification, and their interest in starting additional businesses. They discuss the evolution of their podcast and how it became a crucial part of their business, targeting orthopedic surgeons and individuals interested in alternative investing. The chapter concludes with a discussion on investor profiles and preferences, introducing the concept of investor DNA and a show recommendation.

During college, I spent a summer working in a laboratory at the University of Chicago where my biochemistry mentor did his PhD. The lab studied prostate cancer and was the legacy of Charlie Huggins, a surgeon who won the Nobel prize for discovering the testosterone dependence of most prostate cancers. The guy who took over that lab was his protege Shutsung Liao who did some trailblazing work of his own. He was brilliant and for a young biochemistry geek like me was fascinating to be around. He thought differently than most. His thoughts were original. And that’s what he demanded of people in his lab. In fact, one of the particularly unusual philosophies he had for his postdocs was “do not read too much”. He felt that reading others work had a role in learning what was known but also could be detrimental in that it could unduly influence the direction of one’s own thoughts. In other words, he didn’t want his postdocs to simply follow and expand on the ideas that others were proposing. He wanted them to have their own ideas. That idea has always stuck with me and I was reminded of it the other day when a fellow podcaster asked me which podcasts I listen to. He, of course, assumed that I listened to a bunch of other personal finance shows. I listed my top shows for him which included Purple Daily (Minnesota Vikings Football) and The Drive with Peter Attia which is about health and longevity. The truth is, I don’t listen to any other investing shows. I used to, but I realized it was a little bit of an echo chamber in the alternative investing podcast ecosystem. And just like Dr. Liao warned about in that cancer lab, I started just saying and believing what other podcasters were saying. I’m fortunate enough to be interviewing economists and other smart people every week so I’d rather formulate my own ideas based on what I learn from them. One thing is clear, they don’t agree with each other! For those of you who listen to me, I highly encourage you to listen to others—especially those who do not agree with me. It’s important to hear the ideas of multiple sources when it comes to something that you want to know about. Economics is not a hard science. It is a social science based on theory. Similarly, personal finance is…personal. So it’s best to learn many different perspectives and philosophies out there and see what resonates with you. And sometimes, it’s good to get together with others and compare notes. And that is exactly what I’m going to do on this week’s episode of Wealth Formula Podcast. I am going to sit down with another well-known financial podcaster and see what he’s been hearing on his end. Exposure to different thoughts is critically important when you make important decisions in your life, like what to do with your money. So make sure to listen in to this week’s interview with MC Laubscher aka The Cashflow Ninja and see what he has to say. Show Notes: 00:09:34:09 Where are we in the economy? 00:19:56:18 What to look for as indicators of how the economy is doing? 00:24:51:06 Permanent life insurance in volatile times 00:32:16:16 Don’t let losing make you too scared to invest 00:37:05:09 Changes in tax code  00:47:02:06 Diligence in the cashflow world

In this bonus episode of Wealth Formula Podcast, Jorge Newberry shares with us some background on what’s been happening with AHP as well as his perspective on real estate and the debt market.

The podcast discusses the misconception surrounding rich Americans and their fair share of taxes. It also highlights the impact of estate taxes and an upcoming Supreme Court case that could affect investments. The case 'More versus the United States' and its implications are explained, along with speculations on the Supreme Court's decision. The podcast also explores investing in self-storage and provides updates on a tax case to watch.

The podcast discusses various strategies to mitigate tax liability, including the challenges posed by recent IRS crackdowns. Investment options explored include oil and gas, real estate, ATM machines, and life insurance policies. The benefits of wealth formula banking through life insurance are highlighted, including tax-free investments, loans for funding investments, and tax-efficient wealth transfer. Speakers emphasize the importance of education and trust in investment decisions, as well as the long-term benefits of investing in insurance policies for wealth building.

A lot has happened over the past year in real estate. It goes to show how quickly things can change. Unless you have been living in a cave, you know that interest rates went way up really quickly. When that happens, housing typically goes down in value significantly. Oddly enough, in much of the country, that wasn’t quite the case. Why? Well, there wasn’t much inventory. Record LOW rates created both a frothy market and a huge amount of liquidity in the housing market. People thinking of selling at that time sold. People thinking of buying were able to buy much more expensive homes than they normally could because of cheap money. And many of them locked those rates in. When there was a huge increase in interest rates, liquidity in the markets went way down keeping prices still elevated because of a supply and demand imbalance. A similar story was seen in investment real estate that is largely driven by cap rates. The difference being that much of investment real estate is purchased on floating rates. And, as many of us have seen, that has resulted in forced selling. Anyone who does not have to sell right now is not selling. Those who are forced to sell are losing money. This period in time for real estate investors will be emblazoned in our memories the way the financial crisis of 2008-2009 is. Hopefully some of us will also take advantage of what is occurring like people did in 2010. I anticipate 2024 will be a time with blood in the streets as many rate caps are expiring. This will be a great opportunity to pick up properties at significant discount. And those who do will very likely be rewarded for the ice in their veins. Why? Because predictions of lower interest rates in 2025 are overwhelming. If those predictions come true, it will create a situation where the investment real estate market becomes frothy again. People unable to hold on to properties is 2024 will be the biggest losers because they didn’t do what they had to do to stay in the game. I know that staying in the game is not easy. For many of you, this period in real estate time has been the first and only time we’ve ever experienced loss. We know rationally, that, investors are not supposed to win every single time but that’s what we witnessed for the past 14-15 years and we got used to it. But real estate is like every other asset in that it has cycles. This cycle ended abruptly and violently but another one is about to start. In this week’s episode of Wealth Formula Podcast, you’ll once again hear from an expert on the real estate market from the National Association of Realtors.  When you hear what he has to say, along with other economists, you will understand why the mantra in the real estate investor ecosystem continues to be, “stay alive until 25”.

When I moved to Montecito a few years ago, I was amazed at how many people didn’t seem to work. To be clear, we don’t have a homeless problem out here. We just have a lot of people who own businesses. And it’s not quite true that they don’t work. They just don’t have regular hours so there’s a disproportionate number of people hanging out during the day. Of course, I myself am a business owner and my businesses have experienced their fair share of pain over the last several months. In fact, my cosmetic surgery business in Chicago finally went out of business after almost 15 years. And I know it’s not just me. Everyone is slow and it seems like there are layoffs going on everywhere—lots of skilled people are losing their jobs. So I have been racking my brain trying to figure out why the economy is supposedly doing so well. I have come to the conclusion that we are not looking at the right indicators for the time that we live in. It’s like we bought an electric car but are still watching to make sure we have a full tank of gas when we should really be paying attention to the battery charge indicators. We’ve always judged the economy in terms of two major indicators: jobs and GDP. And those numbers haven’t looked that bad even after a year of oppressive rate hikes. But what does the jobs report really tell us? Is it telling us that many people left the workforce during COVID-19 and never came back? After all, you are only considered unemployed if you’re actively trying to work. And when you see all those new jobs added to the jobs report every month, is that taking into consideration the additional part-time jobs people are taking just to make ends meet? The numbers we get make no distinction. The bottom line is, I am convinced we are missing something that will become very clear within the next 12 months. My guest on this week’s episode of Wealth Formula Podcast believes this too. Believe it or not, he’s an Austrian economist I discovered on TikTok. And, because of him, I now have a TikTok account and you probably will too! Show Notes: 00:05:59:05 Who is Peter St Onge? 00:09:20:23 Is there such a thing as true conservative economics in the modern political system in the US?  00:13:44:01 Is the economy actually doing well? 00:16:38:18 Why is the job rate going up when people are getting laid off? 00:21:38:03 Why high GDP might not suggest a strong economy 00:25:57:21 Statistics on Bankruptcy 00:28:50:18 When is the next recession coming? 00:35:40:04 Why have we not seen more regional bank failures?

The podcast discusses tax mitigation strategies in real estate and uses professional athletes in the NFL as an example. It highlights the importance of decreasing expenses, particularly taxes, to increase profit. The chapters cover topics such as understanding tax benefits in real estate investing, maximizing tax benefits for high-income professionals, the benefits of being a real estate professional, reasonable compensation for children, proactive tax planning strategies for real estate investors, and tax mitigation strategies in real estate.

The world of real estate is kind of a cult. Members of this cult tend to think that pretty much anything outside of real estate is just a waste of money. I used to subscribe to this religion. And, for the most part, I still kind of do. My portfolio is largely real estate and I truly believe it is the most tax-efficient consistent way of building wealth out there. But it’s not the only way. I’ve made plenty of money as an entrepreneur and I know that you can make a lot of money in other kinds of business as well.  The key to making money in any of these endeavors is to know what you are doing. I know how to start businesses and I know how to make those businesses profitable, but I don’t really know how to buy them or know which business to invest in.  It’s good to know your weaknesses because they are often not insurmountable. If you don’t have the expertise, you just need to find someone who has it that you can trust. That is the primary reason that we have partnered with Zulfe Ali in Investor Club. These days Zulfe is a broker-dealer.  But prior to that, Zulfe spent decades in mergers and acquisitions at the largest banks in the world and was the chief investment officer of a sovereign wealth fund in the Middle East that acquired multibillion-dollar businesses on a regular basis. My goal in bringing him on board is to develop a broader platform of investments in the Wealth Formula ecosystem and, frankly, in my own portfolio. I want to create a platform where all of our investments are of institutional grade whether that be in real estate or any other asset class. A platform like this for individual retail investors like us does not currently exist. I know that there are plenty of offerings outside of real estate that you see on a regular basis through the podcast ecosystem but I must tell you that I am wary of most of them.  Too many people have been ripped off because the people raising money are either unwilling or unable to do the level of due diligence needed to make sure that an opportunity is real or economically viable. Hopefully, we can change that with what we are rolling out with the help of Zulfe. He introduced me to today’s podcast guests so I feel comfortable exposing you to them. These guys, in particular, are in the commercial transportation industry and this week’s podcast will focus on an asset class that you are probably unfamiliar with but is dominated by institutional money: the commercial airline industry. This is one of the areas in which we are currently doing due diligence and my guests today have been identified as a potential partner for our group. Make sure to tune in. This industry is fascinating and I believe worth consideration as a future addition to your portfolio. Start learning about it now. Buck