Wealth Formula by Buck Joffrey

Remember ARPANET? There’s a good chance you don’t. It was a precursor to the internet that essentially allowed researchers to access each other’s data. It was actually a revolutionary technology that, as you know, ultimately led to the creation of something that fundamentally changed the world. With the rise of the internet and all the companies built on top of it, a lot of people made a lot of money quickly. During the burst of the dotcom bubble, a lot of people also lost a lot of money. People like to bring that dotcom bubble up all the time to show the classic fall from grace of a new asset class—just like tulip mania in early 17th century Europe, right? Well, not really. Tulips never really recovered. On the other hand, two of the first trillion dollar companies in the history of the world, Amazon and Apple, arose from the ashes of that dotcom bubble. If you were lucky enough to ride the wave of those companies all the way up, you’d be a very wealthy person today. Easier said than done, right? So, why do I bring this up today? Well, I think distributed ledger technology is at a similar phase in its development to ARPANET in the 1980s and I am pretty darn sure that when the dust settles on this one, the winners will come out at least as wealthy as the early internet investors. The biggest problem blockchain projects have right now is that they are not user friendly for most people. Believe me, as someone who is relatively competent around computers, it’s still a challenge with multiple storage wallets, software and hardware. Wide scale technological adoption of distributed ledger technology cannot happen until it’s easy to use for EVERYONE. When that happens, all of the big money will have already been made by early adopters and investors.  So, if you are not technologically savvy but want exposure to this “Internet 2.0” while there is still meat on the bone, how do you do it? After all, like I said before, it’s not that technically easy to custody this stuff on your own. And even technologically savvy people really don’t know for sure what projects will take off and become the Apples and Amazons of the future. Well, let’s try to take a lesson from history. Let’s say it’s the early nineties and you can either try to pick a single stock from a myriad of dotcom companies ranging from Amazon to pets.com or invest in an index tracking the the top ten biggest tech companies by market capitalization for the next 10-20 years. Which option gives you a better chance of making money?  Unless you are REALLY GOOD at picking stocks, the index obviously would give you a better chance of success. An index of the top ten tech companies during the rise of the internet would have included Amazon and Apple in their relatively early days and you would have done quite well. So, let’s fast forward to the current tech inflection point—blockchain and distributed ledger technology. Do you know which projects to pick? Do you even know how to buy this stuff? Well, what if we could just use our regular old US dollars to invest in the top ten crypto projects by market capitalization and just ride up that index without ANY technical skill required? Well, that’s exactly what Bitwise Investments allows you to do. If you want to invest in digital assets but find it too daunting to move forward, you will NOT want to miss this interview with Bitwise Investments founder and CEO, Hunter Horsely. Hunter Horsley Previously Product Manager on monetization at Facebook and Instagram. Received his BS in Economics from the Wharton School of the University of Pennsylvania. Shownotes: Hunter Horsley’s background Big institutes getting into cryptocurrency in 2018 What’s holding back the investors What’s the cost if I DON’T invest Bitcoin vs everything else Bitwise Hunter’s typical investors Bitwiseinvestments.com

When I go back to some of my earliest interviews, I am always shocked at how my opinions have changed over just a couple of years. When I first started Wealth Formula Podcast, I was less sophisticated than I am now. I was being overly pessimistic about the economy just like other podcasts in the real estate and alternative investing space and I was interviewing people who were raising capital without much due diligence on the offerings themselves just because what I thought they were doing was interesting. Since then, I have gotten a lot smarter and more measured in my opinions. I have expanded my own network to people with very different perspectives from those who I started out following. Furthermore, I am A LOT more selective about who I will have on the show as a guest. You see, what I didn’t realize early on was that my listeners were seeing my interviews with individuals as a stamp of approval of their offerings. That, of course, was not necessarily the case. Certainly I have invested with a few of the people I had early on in the show, but highlighting a “good investment” was never my intent. Instead, I was trying to educate. When I figured this out, I mostly stopped interviewing people who were raising capital as I did not want the appearance of an endorsement—especially if I did not have one to offer!  Instead, most of the shows we do now tend to feature economists and financial strategy types, thought leaders, and miscellaneous topics that I think might be useful to you (ie. Behaviorceuticals!). The specific investment talk typically happens in my accredited investor club. Now, If I have someone on the show who is raising capital, it will typically be someone or something special. Again, that doesn’t mean I’m investing with them, but the interview will have more value then just why you should invest with someone as many podcast interviews seem to do these days. Believe me, I get bombarded with people wanting to be on my show every day. Jorge Newberry Newberry and American Homeowner Preservation raise capital. Jorge was one of the first guests ever on Wealth Formula Podcast. Back then, he had no idea that he was talking to about 20 people! He had this business that I thought was the coolest one in town called American Homeowner Preservation and I had to tell everyone about it. Well, fast forward a few years and about a half million downloads later, AHP became a sponsor of the show and Jorge’s business got so big that he had to hire a CEO. Many of you invested in his last multimillion dollar fund including myself and his next one is about to launch. To talk about that and to get some serious incite into the non-performing note industry, I have Jorge back on the show today alongside his newly hired CEO, Deann O’Donovan. I’m also going to tell you about a trip I took out to Chicago and my experience learning about the note investing business from Deann and her team. You’re not going to want to miss this episode! Jorge P. Newbery Is On A Mission To Help Americans Crushed By Unaffordable Debts. He is Founder and CEO of Debt Cleanse Group Legal Services, a nationwide legal plan to help consumers and small businesses get out of debt without filing bankruptcy. He is also Chairman of American Homeowner Preservation LLC and AHP Servicing LLC. AHP crowdfunds the purchase of nonperforming mortgages from banks at big discounts, then shares the discounts with struggling homeowners. AHP Servicing LLC brings social responsibility and a willingness to do the right thing to mortgage servicing, an industry often devoid of caring, compassion and basic human decency.  A 2004 natural disaster triggered the financial collapse of Newbery’s former business, leaving him with $26 million in debts he could not pay. Newbery rebuilt himself through AHP, sharing what he learned from his challenges to help families at risk of foreclosure stay in their homes. He authored Burn Zones: Playing Life’s Bad Hands, in which he chronicled his rise and fall; Debt Cleanse: How To Settle Your Unaffordable Debts For Pennies On The Dollar (And Not Pay Some At All) to help families resolve their unaffordable debt; and Stories of the Indebted sharing the struggles faced by everyday Americans burdened by debt. He speaks regularly on debt, housing, and finance. Shownotes: How did the fund from our last show turned out? DeAnn’s background What is “notes”? Approaches to buying notes First lien vs second lien Where can an investor buy notes? What to look for on a tape The due diligence process AHP servicing Cycle resistance AHP’s next offering Ahpservicing.com Debtcleanse.com

Most people aren’t trying to become ultra-wealthy. They just want to feel safe and to feel some level of freedom from the shackles of the daily grind. You see, the majority of us have one source of income and it’s usually being paid by someone else. That is not a recipe for stability. No matter what you were told while you were growing up, there is no such thing as a safe job.  The only reason employees feel job security is because they don’t typically have transparency to the company’s financials. Unfortunately, what you don’t know can hurt you. To be clear, I am not here to inspire you towards entrepreneurship. In fact, small business owners have their own landmines to avoid and they can actually be even deadlier in the financial sense. Let me give you an example. One of my best friends started an IT business about 9 years ago and it was going pretty well for him. He kept dumping money back in the business and the company kept growing. He was modest in what he paid himself and his only investment was his company which seemed like a good move at the time. A couple years ago, he was thinking about selling the company and retiring into public service (he is one of the nicest guys I know). Had he done that, he would have been all set. He didn’t need much to live on being the simple guy that he is and he isn’t greedy like me. A liquidation event would have set him up well for the rest of his life. But he didn’t do it. Instead, he kept pouring money into his business and, over the past year or so, his business performance started to decline quickly. Yet, like a faithful captain, he manned his ship even as he saw clear as day that it was heading toward an iceberg.  He did what many small business owners would do in that situation. He tried to save his business and dumped everything he had into in attempts to salvage it. But he failed and because he spent his last dollar trying to save a sinking ship, he went down with it. Now he’s 44, broke, and starting over. In this case, having access to the financials was not a blessing. It was a curse. His employees didn’t know what was going on and when he had to lay them off at least they had socked their money away. He had the curse of knowledge and simply made the wrong choice. So, as I said, I’m not here to sell you on entrepreneurship. It has its own dangers and is not for the faint of heart. For my friend, this situation was particularly harmful because of one simple concept: single point failure. You see, as an employee, you get your paycheck and hopefully you invest wisely. Hopefully you are trying to buy other streams of income to become increasingly independent on your day job (aka single point of failure).  My friend’s small business was his income and his only investment. When it went down, it was disastrous.  I had a similar experience back in 2012 when the only business I owned had some cash flow problems and my investments were not nearly robust enough to support my family and me. Luckily, I survived and got smarter. That’s why I started my second, third, and 4th business—because I never wanted to be in a position of single point failure again. Over the past 6-7 years, like clockwork, one of those businesses has had a bad year. But luckily the others kept me flourishing. Furthermore, the money I was making from these businesses was not being used just to expand the business. Most of it was not being used to acquire assets and other streams of income. I get paid from a lot of different sources today and it makes me feel a lot more comfortable. But to tell you the truth, I never feel safe. That’s part of what keeps me pushing. That’s what keeps me looking for the next opportunity. I joked earlier that I was greedy. But in reality, I’m just afraid. A lot of people would look at my financials and say I was being paranoid. Maybe I am. But I remember seeing a television clip on billionaire Jerry Jones, owner of the Dallas Cowboys, and he said the same thing. It is FEAR that keeps him motivated. I bring these stories up because I think it is critical to assess your own situation. Are you in a position where you could succumb to single point failure? What are you doing about it? The time to change that is now, notwhen things are bad. For me, it was that understanding that made it possible for me to step out of a seven figure per year income generating small business, hire someone else to do the work and take a huge pay cut until my next business started throwing off money. You can’t will your way into financial stability. It takes a deep reflection on your situation and massive action. When you set yourself up for massive action, it’s a lot easier. In my case, I wrote a resignation letter to my COO. She thought it was a joke until I literally told her to stop scheduling any more patients for me. I had to physically take myself out of that situation to get my desired outcome. It wasn’t going to happen if I kept doing what I was doing. My friend Benjamin Hardy said it best: Willpower Doesn’t Work. That is the title of his book and that is what we will be talking about on this week’s Wealth Formula Podcast. BENJAMIN HARDY is the foster parent of 3 epic kids. He is pursuing his PhD in Industrial and Organizational Psychology at Clemson University. His research focuses on the psychological differences of actual entrepreneurs vs. wannabe entrepreneurs.  His work has been featured at Psychology Today, Huffington Post, Business Insider, New York Observer, Thought Catalog, and others. Shownotes: Why did Ben Hardy write his book Environment beats Willpower Untrain yourself The ability to change More on Ben Hardy https://www.benjaminhardy.com/

It’s very hard to become an entrepreneur without any life experience. I know it seems like that’s the way it works. After all, look at Mark Zuckerberg and the other teenage tech superstars out there who did it shortly after puberty. But in reality, most of the entrepreneurs that I know spent some time working for others after school learning the ropes until, one day, they found an inefficiency in the system that became a business idea. Or, maybe they just realized that their boss wasn’t that smart and was making a lot more money than them just by being the boss. I’ve seen it over and over and it makes sense. We learn what we are exposed to and if we aren’t exposed to it, there is no way to learn about it. So, the best chance you have at success is to be exposed to a lot of things. One of my good buddies has a multimillion dollar tile company. Why? He didn’t dream of owning a tile company. He just worked for a guy with a tile company and thought he could make more money starting his own thing rather then working for someone else. He was right. Another friend worked for a Canadian company that bought energy in Canada wholesale and sold it retail to other countries. He learned the business and decided to do it on his own. He makes A LOT of money now. Then there is me. I worked for a cosmetic surgery company right after residency and realized that it wasn’t a very difficult business model to understand. Advertise big, lots of procedures, and profit. Think hair club but with facelifts. I figured I’d try something similar and it worked! In all of these examples, it was just a matter of experience. All three of us are entrepreneurs, we just happened to be exposed to different things. How much we all make from our businesses actually depends a lot more on the business model that we each copied than the execution. Makes me wish I worked in the energy business in Canada as a young man. Anyway, the moral of the story is that experiences matter. The more experiences you have, the greater exposure you have to all the different nooks and crannies that life has to offer…business or otherwise. So, putting this all in perspective, what is the take home message? Well, get out there and learn something new for one thing. Do some things you’ve never done. Also, let me tell you how this realization affects the way I see education and the way I guide my kids. They are little but this is what I’ll tell them someday. A broad academic education is important. You can never go wrong with an interdisciplinary perspective. Furthermore, after school, never look at your job as work. Look at it as paid education and quit when you have no more to gain intellectually. You don’t want to be one of those people who stays in the same job for 20 years and complains about it for 18. This advice is based on my own life experience and from the life experiences of others who I know. But it is also based in science. It is based on the way our brains learn and adapt and the more aware we are of these patterns, the more we can guide ourselves towards success. No one knows more on this topic then my guest on this week’s Wealth Formula Podcast, behavioral neurobiologist Dr. Kelly Lambert. Make sure to listen to this show. It will be well worth your time and your brain will thank you for it! Dr. Lambert received her undergraduate degree from Samford University in Birmingham AL (majoring in psychology and biology) in 1984 and her M.S. and Ph.D. in the field of Biopsychology from the University of Georgia in 1988.   After spending 28 years at Randolph-Macon College in Ashland VA where she served as the Macon and Joan Brock Professor and Chair of the Psychology Department, Co-Director of Undergraduate Research, and Director of the Behavioral Neuroscience Major, she recently joined the faculty at the University of Richmond as Professor of Behavioral Neuroscience.  She enjoys teaching courses such as Behavioral Neuroscience, Clinical Neuroscience, Comparative Animal Behavior, Neuroplasticity and Psychobiology of Stress.  Dr. Lambert has won several teaching awards including the 2008 Virginia Professor of the Year. Shownotes: Neuro Behavioral Science Which Quality means success? Behaviorial-cueticals Lifestyle is important Are Blue Collar workers more healthy? Kelly’s trustfund rats Well Grounded by Kelly Lambert Kellylambertlab.com

Beware of Chicken Little. The financial podcast space is small and we often tend to start believing each other and then spreading those same opinions to our listeners as facts. General sentiment in the alternative investing communities is bearish right now. The problem is, that has been the case for the last 3-4 years. And guess what? Contrary to the opinions of the Chicken Little crowd, people who invested in real estate and equities over the past few years have done very well and the United States has not turned into Venezuela. That’s not to say that I am personally a permabull. Like most people who follow the economy, I do now expect a downturn of some kind. Even Fannie Mae Economist, Doug Duncan, thinks that’s going to happen. He’s as mainstream as it gets. But what does that downturn look like? Is it blood in the streets or is it a recession in the industrial sector of the economy that we learn about two months after the fact? After all, most downturns look nothing like 2008. So what is an investor to do? Well, I’ve said it before and I’ll say it again. Keep investing but be smart about it. Now is not the time to invest with a friend who’s trying his hat at the real estate game for the first time. Stick with high quality assets and, if you are passive investor, stick with high quality operators with good track records. Consider hedging with non-correlated investments like life settlements. Don’t over leverage and keep some liquidity on the sidelines—preferably through a Wealth Formula Banking strategy that will keep your money working for you while you wait. Hedge your position but don’t act like the sky is falling…yet. As I said, it is extremely difficult to predict the financial future but one private economic firm has done it with extraordinary accuracy since the 1940s during which time they have been right almost 95 percent of the time. They predicted the 2008 meltdown 3 years before it happened and they predicted all of the upside we have seen over the past decade. Want to know what they are predicting next? I sure do and I’m taking it very seriously. If you want to know why, make sure to listen to this week’s episode of Wealth Formula Podcast as I interview Dr. Alan Beaulieu of ITR Economics. Alan Beaulieu One of the country’s most informed economists, Dr. Alan Beaulieu is President and a principal of ITR Economics. Since 1990, he has consulted across North America, Europe, and Asia, optimizing companies’ forecasts and planning to increase profits through his mastery of business-cycle trend analysis. Alan also serves as Senior Economic Advisor to numerous US and international trade associations. Alan has coauthored, with Brian Beaulieu, the books “Make Your Move,” “Prosperity in the Age of Decline,” and “But I Want It!” He has also penned numerous articles and makes up to 90 appearances a year. Alan’s keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends. Shownotes: [11:30] Alan Beaulieu and ITR Economics [17:00] 2008 in 2005 [18:30] Is the economy influenced by the insiders? [20:30] Are we slowing down? [27:00] 2030 [34:00] China [39:00] what shouldn’t you hold on to? [40:00] More of Alan But I Want it! https://www.itreconomics.com/store/books/but-i-want-it Prosperity in The Age of Decline: How to Lead Your Business and Preserve Wealth Through the Coming Business Cycles https://www.wealthformula.com/resources/ Itreconomics.com

Never try to convince a fool that he’s a fool. He won’t believe you anyway. I hate to say it, but that’s why I never talk money with people unless they bring it up with me first. That’s what’s great about being a podcaster. People CHOOSE to listen to you or to be on your email list. In fact, I recently invited people to attend a live webinar on some wealth strategies that I have studied extensively and am close to executing on. I thought it would be fun to have people see how I look at things in real time and add their feedback. After all, I don’t know it all. In fact, the reason I am as successful as I am is because I DON’T PRETEND to know it all. I try as much as possible to look at every opportunity with an open mind and poke holes in it. Curiously, last week, I got an email from someone in telling me that all of the things I was looking at were “garbage”. Of course I welcomed the dissent and invited him to join the webinar and explain why. He wrote back that he “espoused” the teaching of the White Coat Investor and Physician on Fire who did not like these products and, therefore, he would not attend. I wrote something snarky back which I should not have. Instead, I should have remembered, “never try to convince a fool that he’s a fool”. By the way, that product I was talking about is used by most of my nine figure net worth friends who might know a thing or two that doctors might not. It’s similar to Velocity Plus. And to be clear, I’m not saying that disagreeing with me is tantamount to being a fool. What I am saying is that “espousing” others in the world of finance is stupid. I don’t want any of you to follow all of my words blindly. I want you to challenge it. If I say I don’t like something, tell me why I should. If I say something is a great deal, tell me why it’s not. Listen to what others have to say and process for yourself. If you don’t agree with me, don’t just say you play for a different team and send me an article that doesn’t even pertain to the product I’m talking about! I don’t want lemmings like this in my community. Please unsubscribe from my list! Go die broke like the rest of them. I didn’t come to you, you came to me. The stupidity drives me crazy I have to tell you. Unfortunately, it’s usually the doctors who think they know it all. It’s from all that positive reinforcement we got in school for getting A’s. It makes us believe we are smarter than we are. The truth is, when it comes to money, most doctors could use a boost to the old financial IQ. I get fired up about stuff like this. You know what else I get fired up about? Taxes! Just like financial strategies, everyone loves to tell you that you “can’t do that” when it is clear as day in the tax code that you can. I remember my first CPA out of residency who was supposed to be conservative and who most of the doctors I knew used. I might as well have used turbotax. Then I learned of Tom Wheelwright and it completely changed the way I view not only taxes, but business and investing and it is a pleasure to have him back this week on Wealth Formula Podcast. Don’t miss it! Tom Wheelwright, CPA is the visionary and best selling author behind multiple companys that specializing in wealth and tax strategy. Tom is also a leading expert and published author on partnerships and corporation tax strategies, a well-known platform speaker and a wealth education innovator. In Tom’s best selling book Tax-Free Wealth, Tom shows entrepreneurs and investors how to build massive amounts of wealth through practical and strategic ways to permanently reduce taxes. Shownotes: [13:30] Buck introduces Tom Wheelwright [16:00] Employees got hammered [18:30] The 20% tax deduction for LLC [23:30] Tax your way to wealth [30:00] How it works for the bigger companies [34:00] Wealth Ability wealthability.com

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I’ve learned a lot of stuff in my life—from the principles of neurosurgery to the intricacies of cryptocurrency. Some of this stuff is pretty complicated…at first. But, I’m going to let you in on a little secret if you don’t know it already. Just about everything that appears complex at first can be broken down into simple components. If I have any God-given gift, it is the ability to simplify. And thank God for that because I’m not smart enough to understand anything that is truly complex. Any time I try to learn something new, I just try to break it down into simple little pieces. Eventually I get it. That is my framework for learning. I like frameworks. Creating frameworks helps me simplify everything. Otherwise, I would be overwhelmed with the decisions that come up in life all the time. Let me give you a couple of examples of frameworks that I use that help me from losing my sanity. The first one is make tomorrow’s decisions today. That’s why I moved to Santa Barbara. We had a gorgeous home in the Northern Suburbs of Chicago and great friends. Why move? Well, I noticed half the houses on my street were empty in the winter. All the retirees were in Florida. Would that be me in 25 years? With the kids out of the house in other states and subzero temperatures, would I want to live in Chicago anymore? The answer was no. Instead, I decided that if I just moved to where I might want to retire someday today with my young family, my wife and I wouldn’t have to move and make new friends in our 70s. And…even better, the kids might want to come home and visit us! Another framework that I use to guide my life is the deathbed framework. This one is particularly useful. Let me give you an example of how it works.  A couple weeks ago, I got an email from a college student who wanted to talk to me about whether or not he should go to medical school. I get this one a lot and I have a standard answer that seems to be pretty useful. I ask, “If you don’t go to medical school, will you regret it on your deathbed?” After all, that’s really the only reason to become a doctor these days. It sure ain’t the money! I have, in hindsight, asked myself the same question. That is, if I knew then what I know now, would I still have gone to medical school. For me the answer is yes. Even though I don’t practice anymore and I make a lot more money than just about any practicing physician that I know, I’m glad I did it. If I didn’t, someday on my deathbed, I would wonder what it would have been like to be a doctor. This framework might seem over-simplistic. After all, what about the mission in life thing and all those years you would have to put into it? Well, I would argue that all of those other variables just complicate the question.  Don’t try to justify what you want if you really want it because, whether it’s rationale or not, you will regret not going for it. Some decisions are just visceral. The deathbed framework is actually very practical and broadly applicable in many circumstances. For instance, I’m not one to spend a lot on myself. I like giving people things because I enjoy the experience of making them happy. And when I give things to people, my preference will always to provide and experience rather than a thing. For the last several years, I’ve given my nephew NBA tickets for his birthday because he loves basketball. If I gave him some mall junk, he’d enjoy it for a few minutes than never think about it again. But he will always have his memories of those games to cherish. For me personally, some of the most vivid memories of childhood are going to professional hockey, football, and baseball games. I remember going to see the Rolling Stones and the Red Hot Chili Peppers. I remember very little about the stuff people gave me over the years. The experiences are what I will take to my deathbed and those are the things, in my opinion, that are important to splurge on a little bit and start collecting as they will always be with you. Experiences, in the end, are the ultimate currency of a life well lived. My guest on Wealth Formula Podcast today has had enough interesting experiences for multiple lives and has given others even more. His name is Steve Sims and on this week’s Wealth Formula Podcast we talk about how his company might be able to enrich your experiential life. Steve Sims is the visionary founder of Bluefish: the world’s first luxury concierge that delivers the highest level of personalized travel, transportation, and cutting-edge entertainment services to corporate executives, celebrities, professional athletes, and other discerning individuals interested in living life to its fullest. Shownotes: [00:07] Introduction [20:31] Steve’s Story: His trigger of inspiration [26:05] Early Game [29:10] Experiences Over Stuff [34:25] Bluefish Get in touch with Steve: thebluefish.com stevedsims.com Text “uglysims” to 345345 [48:18] Outro

Leverage in the form of bank debt is a double edge sword. Obviously, consumer debt to buy things like televisions and mall junk can only be negative in the financial sense. However, using debt to buy cash flowing assets is perhaps the single most powerful weapon we can use to create wealth and the thing that makes real estate the asset of choice for the ultra-wealthy. The problem is that leverage is a tool that you must learn to use because, after all, a fool with a tool is still a fool. Leverage must be deployed carefully based on the asset and the market. In 2008, banks and buyers were both over-leveraged and that created a big mess. For borrowers, it was often the first time that they paid close attention to the fine print on the mortgages which they signed. That fine print often included loan covenants.  A lone covenant is a promise that you make with a bank to lend you money. For example, a bank may say that they will lend you 80% of the value of a property. That means you have to come up with 20 percent. That 80 percent is based on the appraisal value at the time of purchase. So, what if your property goes down in value just because the markets dipped and the property you bought goes down in value? Well, in that case, you are violating a loan covenant. If you are violating a loan covenant, does the bank care whether or not you are cash flowing? Not really. If they find out, they are going to ask you to cough up some more money so that you are no longer in violation of those covenants. If you don’t, you could lose the property. Now, for larger assets, periodic appraisals from the bank, maybe every 18 months, are standard. That means you can’t hide from them. If you think that this is an unlikely scenario, I would suggest you talk to any major real estate investor in 2008. Values plummeted and regardless of cash flow, there were capital calls and people lost properties. Few serious real estate investors argue that we are not late in the cycle. Does that mean that you should stop investing for fear of covenants? I don’t think so. I just think you have to be smart about it. It’s impossible to time out market cycles perfectly. If you sat out the last five years of investing, you’d feel pretty foolish right now. Part of being smart later in the cycle like we are now is not to over-leverage. That means two things really. Look at the loan covenants and give yourself some cushion. If the bank is willing to lend you up to 80%, maybe you only take 70%. The other strategy is to deleverage by creating equity in the property itself. For example, in larger assets the value of a property is determined solely by net operating income. So, if you increase net operating income by adding value, you are increasing the value of the property. When you increase the value of the property, you are effectively deleveraging. That is my strategy right now when it comes to acquiring real estate. Use moderate leverage and drive up net operating income. And if you can get a bank to give you favorable covenants, that helps too. But buying a property with no intention of creating additional value in this market is a little bit risky in my view. That’s my advice for the week when it comes to real estate investing. Now, if you don’t believe me that you can build some serious wealth from leveraging real estate, listen to the guy I interviewed on Wealth Formula Podcast this week: Grant Cardone. He has made a few hundred million doing exactly that. Don’t miss it! Grant urges his followers and clients to make success their duty, responsibility, obligation, and to rise above outdated, unworkable middle class myths and limitations in order to achieve true freedom for themselves and their families. His straight-shooting viewpoints on leadership, the economy, small business, retail sales, employment, and headlines have made him a valuable resource for media seeking commentary and insights on real topics that matter. Shownotes: [00:07] Introduction [09:45] Grant Cardone’s story [17:19] Breaking out of Scarcity Mentality [20:22] The Wealth Thermostat [24:41] How much is “enough”? [29:05] Getting into real estate [34:01] Grant’s assessment of the current market [38:30] Learn more about Grant Cardone grantcardone.com [45:13] Outro Join our accredited investor club: https://www.wealthformula.com/join-2/invest-with-me/

Man am I tired of hearing people with a lot less money than me giving financial advice. I have to actively suppress my temper when someone forwards me an article full of misinformation that someone, that is clearly clueless and NOT wealthy, wrote on a blog! There is a lot of know-it-alls in this financial podcasting space. My advice to you—don’t take advice from people who make less money than you. To be clear, I am not saying don’t listen to new ideas from some young gun, but take it with a grain of salt regardless of how adamant they may seem. Now before you think I’m acting like I am the ultimate authority on matters of wealth, let me tell you that this advice comes from a place of humility rather than conceit. If you go through my one hundred and twenty something podcasts, you will almost certainly hear me contradict myself. In most cases, I identify and readily admit that I have changed my mind or learned something I did not know about on the air. You see, every day I get smarter. And when someone tells me about a new concept or even asks me to revisit one that I have previously dismissed, I look at it with a fresh pair of eyes and an open mind. If you are not willing to do that, it will be hard for you to grow both intellectually and financially. For me, I’m always looking to see what the people with more zeros on their personal financial statement than me are doing. A good example of that is the family office industry. It is no coincidence that some of the operators I’ve introduced to my accredited investor club are groups with whom family offices invest frequently. When you see what the family offices are doing, you are watching the centamillionaires investing habits. That is going to be a lot more impactful to our wealth than reading a blog post from a podcaster who’s never even seen seven figures. In that spirit, I am delighted to have Richard C. Wilson back on Wealth Formula Podcast this week. He is the founder of the Family Office Club and the guy to know in the industry if you want to know what is top of mind for the ultra-high net worth. Richard C. Wilson helps $100M+ net worth families create and manage their single family offices and currently manages 14 clients including mandates with three billionaire families and as the CEO of a $500M+ single family office and Head of Direct Investments for another with $200M+ in assets. The Wilson Holding Company is also the exclusive wine importer and a wine brand representative for Hofkellerei des Fursten Von Liechtenstein, the 600 year old vineyard owned by the princely family of Liechtenstein. Richard is author of the #1 bestselling book in the family office industry, The Single Family Office: Creating, Operating, and Managing the Investments of a Single Family Office and a recently released book called How to Start a Family Office: Blueprints for Setting Up Your Single Family Office. Richard has his undergraduate degree from Oregon State University, his M.B.A. from University of Portland, and has studied master’s level psychology through Harvard’s ALM program while previously residing in Boston. Richard currently resides 10 minutes from downtown Miami on the island of Key Biscayne, Florida with his wife and three daughters. Shownotes: [00:07]: introduction [12:27] Buck introduces Richard Wilson [14:07] What does a home office mean? [21:37] Investing like the wealthy [30:22] The trust factor [36:45] Why do we not hear about the best strategies? [42:53] learn more about Richard Familyoffices.com [44:11] Outro