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Passive Investing for Executives and Professionals with Spencer Hilligoss
Episode 4079th October 2022 • Real Estate Investing with the REI Mastermind Network • REI Mastermind Network | Real Estate Investing
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Spencer Hilligoss is the CEO & Co-Founder of Madison Investing, a real estate investment firm specializing in real estate syndications. As a passive investor and active syndicator, he understands the unique challenges that busy professionals face when starting out on their REI journey. Spencer’s mission is to arm investors with the know-how they need to make confident investment decisions tailored to their individual life goals.

Prior to pivoting to real estate, Spencer held several executive roles in the financial technology industry, including positions at Intuit and Gusto—forging a 13-year track record of building high-performing teams across five companies (three of which were valued at over $1B). Throughout his career, one thing has remained consistent: his ability to keenly focus on professional development- helping teams and individuals reach their full potential.

Spencer is a member of the 2021 Forbes Real Estate Council and has been featured in publications such as Business Insider. When he’s not shifting the way people think about investing, you can find him listening to metal, adding to his tattoo collection, and jogging through the Bay Area with his wife and two sons. Ask him about the time he played onstage in San Francisco at the Vans Warped Tour!

We chat about:

  • Playing Financial Offense vs. Defense
  • Wealth Preservation & Planning Your Legacy
  • The Intersection of Personal and Professional Development
  • Declining Executive Roles to Build Your Own Financial Moat
  • Real Estate Syndication From A to Z

Connect with Spencer at his website https://www.madisoninvesting.com/

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"You can invest 10,000 hours and become an expert or learn from those who have already made that investment." - Jack

Transcripts

::

But when it comes to passive investing and like looking back at that journey and now being someone that is quote UN quote liberated from the W2 world in the corporate world.

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I would just say man oh man, if I could go back in time, like figuratively, grab my younger self by the shoulders and just say get started earlier.

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Man, look at these other ways of deploying your capital of.

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Like route some of that 401K my your maxing out young version of myself. I would absolutely go back in time and have a very direct conversation about that because it's changed our life.

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Welcome to the REI Mastermind network, where host Jack has gathers amazing stories from leaders in real estate investing.

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In each episode, our guests will tell you what they're doing that works, what they've tried, that failed, and best of all, you'll learn actionable steps to take your real estate investing.

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To the next level.

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Now here's Jack with another value packed episode.

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We have Spencer Hillegas with us here today.

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Spencer, I appreciate you joining us and providing some value to my network, but I'm going to direct everybody to your website because there is quite a bit of content there.

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Head over to Madison, investing.com, and Spencer and his team. They do issue a newsletter on a regular basis, so that's something you probably want to subscribe to.

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So again, it's Madison investing.com and make sure to have that link in the show notes. So, make sure again to head over to REI mastermind.net for that.

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But Spencer really appreciates your time today and we're going to tackle passive investing.

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We are very active when it comes to real estate investing, especially in this community.

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But I think sometimes there's a few of us that want to add a little passive investing to our portfolio, and I would really appreciate your insight on that because I understand that.

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Your team does both.

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We do, yeah.

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And thanks so much for having me on, Jack.

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This is a wonderful way to spend time, and I love not only nerding out on this stuff but getting to do it in a way that hopefully if it adds value to other people along the way, that's a beautiful thing.

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So, for a quick background of people, I currently run medicine investing as you mentioned.

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It's based out here in the Bay Area, California, although I grew up in a real estate.

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Household my dad was a residential real estate broker.

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For 30 years.

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I didn't think that was cool to tell my friends growing up fairly.

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So, I went into tech companies for 13 years.

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And somehow on the other end, the other side of that stumbled my way into becoming a full-time real estate investor and so.

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The learnings from that career, I would say of grinding out and building 5 different fintech companies along the way and chasing that big exit like an Uber or Google exit like we hear about those don't typically materialize, but when it comes to passive investing and like looking back at that journey and now being someone that is, quote UN quote, liberated from the W2.

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World in the corporate world, I would just say man oh man, if I could go back in time, like figuratively grab my younger self by the shoulders and just say get started earlier man, look at these other ways of deploying your capital of like.

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Route some of that 401K my.

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Your maxing out.

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Young version of myself, I would absolutely go back.

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In time and have a very direct conversation about that because it's changed our life and without exaggeration and I think that it's something that is, or it can be a big part of someone's life.

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It doesn't have.

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To be a life changing pivot thing, but it can be a key part of someone's strategy that if they haven't added in there, they actually aren't missing out on something meaningful that.

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Could be added in there.

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It's been a wonderful journey.

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I'm excited to talk to you about it.

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I'm interested.

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That you bring up the fact that if you started earlier, I think all of us say that our lives would probably be varied.

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Different, unfortunately.

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I gotta be pretty blunt.

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Do you find it?

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You think that when we come out of the school system, these types of options actually have never been taught to us?

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Oh, this is such an important and meaningful topic to me.

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I think we have two young kids, for example, right now, both boys four and seven, and they are around entrepreneurship every day now.

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I had the benefit of being around that with my dad growing up, however.

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We wouldn't necessarily get into dinner table conversations about this stuff, and we certainly didn't talk about investing.

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When I see the kind of things that are taught in coming home, whether it's the math curriculum, whether it's the school history, all that stuff, it's all important, clearly.

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But yeah, there there's a significant gap.

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A significant gap on financial personal finance, but absolutely on just the topic of something as simple as nerdy as this sounds is risk.

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Like how to understand if I take a dollar, if I take a dollar of my hard-earned money that I.

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Probably got from.

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A job pretty heavily taxed.

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What can I go do with that in the smartest?

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Way possible to.

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Impact my life now while still being ready for the future.

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That sounds so basic to you, and I know Jack, but for me, I was a dunce on this stuff, and I started.

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My W2 career fresh after college.

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Full time and I was going into fintech companies like including look into it, very fortunate to have gone through that company as an example.

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It spent five years.

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That was like leading teams, way too big for my age at that time.

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Mid 20s leading teams of 200 people, good learnings galore, but I was working for a company that processes 1/3 of the country's tax returns and I still didn't really get it in terms of.

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The importance of education and then bringing that stuff back to our kids.

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So, I look at it now and I'm like, oh my goodness, we'd give fun challenges to our boys.

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About topics of personal finance, it's not that advanced obviously 'cause they're just kids, but we try to figure out how we can bring that education to bear.

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And even just today, like literally before I jumped on the call with you today, we were giving wonderful news to a bunch of foreign investors because we are exiting these many different deals, many of these investments that we've done along.

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With them.

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And conveying good news, them also opens up.

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A chance for education and just to say now this is how this works, let's go revisit how this started over the course of a few years and how you're exiting this investment.

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So, I love every chance just to get in and help people if they have questions about.

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This type of.

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But yeah, big knowledge gap down the edge.

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Yeah, yeah, there's and frankly, there's been since your eyes are open.

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It's amazing what we do as a parent.

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I do things that my parents would have never thought to.

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You know what?

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When my daughter was just a few years ago?

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There's a nonprofit organization in town that it's called Inspire, and they used to have a entrepreneurship days.

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Out at the local mall.

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And my daughter would set up a slime shop, if you will.

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And then we would every week we would analyze like, OK, what's sold, what didn't sell.

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We went through that whole entrepreneurship cycle with her and tweaked her product and to do did a few other things and then she could see week after week how her sales would grow.

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It was such a huge.

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Opportunity for her.

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It was great.

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Oh, see, that's awesome.

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I'm looking forward to that.

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And how old are your kids, Jack?

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13 and 15.

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A change?

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OK, yeah.

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So, you could teach me a thing or two?

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Yeah, ours are still pretty young, but even something as simple as a lemonade stand or we walked down St bought Girl Scout cookies with our boys last weekend, which my love handles don't need, but they are really enjoying it.

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But it was a moment to say, oh, here's the money, yeah, do you want to go pay for it and.

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Those small formative moments are really important.

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For them and.

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They stick with you for years, the.

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Quick thing I wanted to mention.

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From my life and from my real experience growing up around my dad's business, he had me working open houses as a teenager. I had. We had a comfortable life at that time growing up, but there was a stretch.

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We now keep this brief would scare people off with TMI here, but this is important.

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This is formative as to how we see our business and our investing thesis.

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Now we look at this thing of financial offense, financial defense, and I can break those down later if we get there.

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But right now, I bring it up because my dad business ended up going through a particularly challenging decade.

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Our whole family did.

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It was a personal, professional thing.

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Yeah, let the resounding impact.

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On me, basically we had one stream of income, active income.

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He was a broker.

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And when that income went away after my brother died of cancer growing up, that was domino effect.

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A bunch of hardship happened, parents got divorced and all this stuff downsized.

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And so, I bring that up here because.

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That was the education, one of the points of education.

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I got the hard way just by being around that and seeing the hardship it brought for our family before it was built back up years later.

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And I look at that now and I think Lloyd is the education I can take away from that, and that was informative for me.

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It's informative for.

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How do I avoid that scenario as a?

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Parent, now that I'm.

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The dad, you know, and I got it.

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This you got a family to take care of.

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I had a career where I was making freight W2 income. Same with Jennifer, she's my wife and co-founder.

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We if we had.

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God forbid something happened to me; I got hit by a bus.

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Or since it sounds something happened to me, our engine would have gone away.

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Same kind of dynamic with my dad when the broker income sorted stopped flowing for our family growing up, we.

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Called that time the dark decade in our family and now I'm like 5 months.

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Oh, bid. This is in October:

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And that was five months before global pandemic, putting in hours my resignation for my 13-year career.

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And that was from a leadership track.

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That was a.

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Big scary call and folks in our network or reaching out to me saying are you guys, OK?

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You have to go over it.

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And I'm like, not.

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Only are we OK?

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We're doing great, and we're doing great because of all of this.

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Passive investing, income stream building stuff.

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We had multiple income streams coming in by that point, and so none of that education could have happened without the hardships along the way.

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And a few other really smart people and mentors that I look up to and just cherish for the stuff that they tried to teach me.

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And eventually, as a slower learner, I eventually picked up.

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But yeah, we covered a lot.

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Of ground there, hopefully.

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Didn't lose you on.

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That one, but no.

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And this is always something that I love to explore because you were essentially on an executive track in your in your career and the mindset to jump out of any kind of corporate job, let alone something in your situation where you're in executive type.

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Goals that had to have been a pretty big leap.

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Did you talk about going through that process and was your wife on board right away?

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How did that work?

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It was not easy, and it was actually quite scary.

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You know anyone out there that says it's not scary to go leave behind a career that is this you view as a ladder.

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It's how we are all brought up in the traditional.

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Sense of the corporate climb, right, and I turned down in that last year and a half to two years.

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I was building Madison, investing on nights and weekends, some Orban early bird.

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So, I was doing between the hours of four and 6:00 AM before I go into my day job and lead teams of people, which was a very interesting ******** period of time that I don't.

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Want to recreate?

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But we got.

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There so I.

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Was doing that.

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Making this push while also going in and.

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Leading these teams and.

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Then I would.

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Somehow figure out how to wrestle out enough.

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Alertness to go.

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Home and be a dad at the end of it.

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Day, but leading up to that, I think.

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People tend to ask what?

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Happened like out.

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Of the blue, you had this business and it's like, no, man, this is not some overnight success thing.

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This was me doing that for three years, really ********, working my **** off with something that started as a hobby very organically and we invested our own money and then suddenly people around us.

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Started to show interest in it and we realized there was a business to.

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Build around that and eventually had to turn down 3 promotions just in that last year from and.

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This isn't like a bragging point, it was just.

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It was.

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It was tough to say no to more money and more responsibility, but at the same time I didn't look at.

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That as a positive.

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I looked at that as a way to actually force me into social events, maybe for work obligations after the time that I would otherwise be putting our kids to bed, be otherwise, spending time with Jennifer the otherwise.

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Spending time with.

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Family and loved ones.

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And that's the kind of interesting translate.

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It's not all bad, I know.

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A lot of folks in kind of the real estate investing and entrepreneurship community who I respect.

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They might have a very negative opinion of the corporate world.

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I don't share that opinion necessarily think that it was very good to me.

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It was hard at times.

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You have a stressful, sure.

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But at the same time, there are skills and relationships that I look back at that never would have happened without that.

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So yeah, it took years of buildup and years of hard work and a lot of very.

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Open, direct conversations with your employer and your senior leaders to basically say I'm.

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Here I'm delivering, I'm showing up every day for our company, and I'm going to rally behind the vision of another company.

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For sure, I'll do my absolute best while still capping my hours toward that.

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Not opening the laptop at 9:00 PM at night to go dip back into work emails for someone else's company.

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That is the trade off and drawing those firm lines is.

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Not easy because I prefer to show for the.

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People who I.

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Work with and.

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I work for and particularly I'd had people reporting to me.

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I wanna take.

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Care of my team.

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I wanted to.

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Show up well.

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As their leader, and that's not easy to do when you're.

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Trying to do two companies at once.

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Yeah, I'm sure it gave you a very unique.

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Perspective, I mean, being.

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In an executive role or Corp.

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3rd The corporate world.

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A lot of people, they listen to shows like mine.

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We talk about real estate investing, how to get into real estate investing.

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And frankly, it's a lot of work.

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There's no hiding, there's no getting rich quick associated with this, but they are attracted to the real estate investing concept, yes.

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But with that background, I'm sure it allows you to talk to these individuals and help them get incorporated into your syndications, for example.

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Yeah, 100%. It's very relatable and I think in the end I was so traditional as most people are.

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In my views on finance, I was I was celebrating my maxed-out 401K. I was celebrating the fact that I was like, great.

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We hit the Max again this year and that's typically something that people.

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Would be very.

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Excited about and they.

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Should be proud of.

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That means that that's a heck of a lot better than doing no investing.

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It's a heck of a lot better than basically just spending it on consumer goods and.

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These are all habits I've had.

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So, I'm very comfortable speaking to it.

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I'm not higher than now.

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I've gone through all of that.

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Like Jennifer and I earlier, our relationships in our career, we got other debt together and I look at that as formatives.

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Yeah, I see. Particularly for.

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The couples that are out there, if you haven't fought through those stages of life together, so.

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So, all that to say, lots of folks out there and they have kids.

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Typically, the story goes with a lot of folks that work with us and invest alongside.

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Of us now.

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In real estate syndications and multifamily and storage, self-storage deals and some other niche real estate stuff that makes cash flow but also has a nice growth thing to it, these are things that people can do on a slower.

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Pace 2 and that's the part that I think is missed or even like underrepresented on a lot of the education that folks find out there.

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The whole notion of the fire movement is super cool.

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I don't subscribe to it.

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Directly, but that doesn't mean it's bad.

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I just think the financially independent retire early movement, the fire movement folks, I haven't heard that.

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It's all about frugality and.

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It's all about trimming down and making sure that you could live within these really tight means.

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For those of us that.

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Had worked over a decade to build a career in the corporate world, whether they worked for Facebook, Apple, Google, Salesforce.

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All these big tech companies, we have a lot.

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Of investors in those companies.

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They don't hate their job.

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They don't want to leave tomorrow.

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They have multiple kids often, and they.

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Have goals in life.

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And they enjoy their work, they enjoy solving meaningful problems and like what they were looking for doing.

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So, is complementing within another income stream or 10 overtime they want to take a 10-to-15-year exit plan out of their corporate career but still have an off ramp?

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And like, for example, I'm as ridiculous as this sounds, it is absolutely ridiculous. But I AM 38. I am not a spring chicken in tech anymore, right? I I'm one of the older guys, which is ridiculous.

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To say that by any normal common-sense standard.

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But in Silicon Valley, that's even the case for folks like me.

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So never had anyone say that to me.

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But Frank Vesco with that eventually works.

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So I was like all these folks that are out there trying to build an off ramp for themselves, very challenging, very demanding careers as whether it's a senior sales and senior software engineer, a product designer, a UI designer, like all the.

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Folks that work in tech.

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This is something that is applicable for them, and they don't necessarily want these.

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Give me the heck outta here.

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I want to pivot out of my job 'cause I hate it scenario.

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They just want to see a light at the end of the tunnel and not have it bank exclusively on a 401K plan.

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They can't tap until their mid 60s.

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These are all options, but I.

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That was probably more than you wanted.

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No, that was awesome.

::

And to go back to the situation, you called it your the dark decade with your family.

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I'm curious, like what from that situation, what did you learn that?

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You've applied to your current business.

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Oh man, so much.

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I look back at the single income stream dynamic that many households live in even two income streams that it's better than one.

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But I would.

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Say active income when it's coming on a page that's coming from a company.

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I remember getting out quote.

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It says this was not a mentor, but it was like a coworker, and he shared this quote with me.

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And I know he didn't come up with it.

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But it really.

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Stuck with me, rocked me.

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And it was just about how he's like Spencer.

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You realized that, like.

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Most Americans.

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Most people in.

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Industrialized worlds.

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They are addicted to a paycheck.

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And again, it's a platitude for those that have heard it before.

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For me, at that time when I heard that, it really rocked me because I was like, you're absolutely right.

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It means that literally you are at a high risk.

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I was at a high rate.

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Risk of household stability, taking care of our kids as a newer dad at the time I heard that quote, she said.

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Her first born. And I sat there and reflected on that. And in the course of devouring knowledge and trying to ramp up on education before I dove into this real estate stuff, I read 24 books. I devoured ate at 400, plus podcasts just like yours. Like great.

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Quality content and all that helped.

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But it starts with that catalyst of why and for me, going through that dark decade period, man, watching my dad was like a top five residential real estate broker in the country for a time in like the 90s and he built back up after we had.

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That dark decade.

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And that's just the guy that yeah.

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It was brutal, like having to downsize lifestyle.

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Had to basically watch what happens when one income stream goes away.

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And so, whether people know it or not, whether it's a real estate broker and that's one active income stream, whether it's a person working with a quote, UN quote stable job and they're getting at every two weeks' paycheck, and they think cool, low risk.

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I don't know.

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That person has to evaluate that for themselves.

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This isn't a scared, straight message.

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I don't want anyone to take offense to that.

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But if it is a sting and it's a sting that sticks with you, but then frankly, I'll take that because I hope it helps you anyway listening to that in here.

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After the first.

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Time that I look at that as a higher risk proposition now then simply just having no W2 job and overtime building up a series of investments.

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To pay you back cash flow on.

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Monthly basis that is what I.

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Consider the risk.

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Profile that I find lower personally for our own wealth now than having to rely on an employer sending me a paycheck every two weeks.

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But that's I.

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Say that and it's been a journey.

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It's been a journey from those early days up until.

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Now, but those are the lessons that I.

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Take and the.

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One last thing I want to mention on this topic too is that the value and of impermanence, right?

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Not to get too heavy and philosophical here, I'll just say when your family goes through hardship, you'll lose loved ones to cancer or otherwise you really start putting a premium on the people that you care about.

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In your life, right?

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And you?

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Prioritize them more, and so for me, we rebuilt.

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Our whole lives.

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Over the past five years.

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Was around being more present parents and being available and flexible to take our kids from or more like worldly experiences to travel with them to do things and show up with those soccer games, to be able to take kids where they gotta go and spend time with them meaningfully.

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So those are two figure buckets, I would just say from the early dark decade period for me which was?

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Don't take income streams coming from a day job or active for granted and the impermanence of life.

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Frankly, you know they get too corny and the headwind in our lives is not something to wait on.

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It really just means that I needed to.

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Act on that.

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And that's why I started working so darn hard for a period of two to three years waking up.

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Before anyone else wanted to society.

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Just start reading drive.

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Books about investing in real estate.

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That's what they say.

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You do what other people won't, so you can do what other people can't.

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And that's what that's the situation.

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You did there.

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So, this kind of leads to what you alluded to earlier though, the playing financial offense and defense, is that right?

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Very much, yeah.

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I think the without going too nerdy into it, 'cause I get so excited to talk about this topic, I will say that financial defense is the one that's very quick and simple to explain.

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Frugality matters, but I am a guy that we have driven in our household used cars for the most part.

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As an example, to give a very tangible real simple example for.

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People, could we?

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Go out and buy a new Tesla.

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Sure, but why?

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It's just not.

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It's not my style.

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More power to people if they want to get a brand new, awesome car.

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But that's just how we've approached things, as frugality does have a place, I do think, expanding your means.

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Is better than living within them as the primary.

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But financial defense means to me, thinking about how to go get income streams that are more tax efficient. And that's a really dry way of saying not tax so darn heavily as the W2 bonuses that I would receive when I was working in a corporate career giving away half. I'm a I'm a big believer in paying what is required legally.

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For taxation, right taxes or.

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A key part of society.

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That said, there are smarter ways if you want to diversify high you.

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Get income streams.

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To not have half of it go.

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Away in a single bonus.

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Check that you worked all year to get in.

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A corporate job?

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So that's what financial defense means to me now.

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I did not get it.

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I used to celebrate a.

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Big tax refund.

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I don't celebrate them anymore.

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But now I know what they mean so I will leave that as mysterious as can be so folks can go dig into that 'cause I'm not a CPA and I don't want to give any tax advice here, but.

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I'll just say that on the offense front, financial offense just.

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Means you're not going to get wealthy in your day job.

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You're just not.

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Most people are not going to ever become wealthier.

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They're not going to grow their net worth from their paycheck.

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And the moment that hit me, I started working harder than I've ever worked to go out find ways to develop capital to then go invest in deals.

::

Invest in other things that could pay back cash flow and grow over time.

::

And that's where the net worth trajectory for us drastically changed.

::

And it's scary at 1st, and it takes feels like a gut punch when you first realize that, wait, I am busting my **** at this corporate job.

::

Whether you're in marketing, whether you're in tech, whether you're if you're an engineer.

::

If you're in it.

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Whatever to know those 80 to 100.

::

Hours a week, which is like what I was working at, one of the rocket ship style unicorns.

::

Like early-stage startups that was.

::

That you think?

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You're doing all this, and it's going to have.

::

This massive outcome?

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I wouldn't bank on that.

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I don't bank on that, and I don't think other people should bank on that.

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It should be something that if they care about.

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Becoming wealthier and having more options 'cause that's what it's about is this.

::

None of this is to go get money.

::

The point is to have optionality.

::

The point is to be a better error.

::

If that's your jam, if you don't have kids, you don't have family, and you're single and you just want to go live life as big as you possibly can, that's awesome too.

::

Power to you to me, financial offense means all those things.

::

Means family presence.

::

Being able to give back and take care of our loved ones, which we've been able to do now in ways I never thought possible because of all this stuff.

::

So, this the.

::

Money is a tool. It's.

::

Not the end, yeah.

::

I frankly find that a lot of things that we were taught, I would call it almost brainwashing to a certain extent, because we've been told and taught, and we're convinced that the corporate world is the same.

::

If raught that that income is always going to come.

::

But you're absolutely right.

::

If we look at the statistics, most of us, most of the population will not retire with even six figures in our account.

::

It's shocking when you take that into account.

::

100%.

::

Find it to be not only concerning, it's the kind of thing where I had some folks asked me what do I think about?

::

Should schools close this gap?

::

Should parents close this gap?

::

And I don't know what the answer is.

::

I just know that.

::

I'm not going to wait for anyone else to do it in our household for our kids and I feel that there is so much on the positive side.

::

The Great news is like the amount of education and resources.

::

Available to people for free.

::

100% for free is literally.

::

It's endless.

::

And I know I really.

::

Look at it like big caveat.

::

That you've gone through this as well, Jack, like kudos to you and every other parent out there that's been through this whole darn pandemic thing in the last couple of years.

::

That's not been fun for anybody involved, but it is.

::

Still, something that we can impact positively when it comes to do our kids understand how to actually do, they?

::

Know what a dollar is?

::

Didn't really understand that something can have like value, like this phone that we carry around and look at too much is something that parents pay for.

::

And where does the money to pay for that come for it come from?

::

And all these questions or stuff that just pragmatically in simple daily ways, we can close the gap on early, really early in our lives.

::

Yeah, so.

::

Or no.

::

And I thought it was really important that you talked about understanding your why, because I'm sure a lot of people are tired of me bringing it up.

::

But for the most part people will react to.

::

Pain versus heading towards any kind of pleasure and more times than not the only driving force that I've ever I've been able to find, and I can be proven wrong outside of pain, is understanding and defining that why to drive you forward and to.

::

Hit those goals.

::

Some of those exercises I used to think were, and they've been so critically helpful for me on my own.

::

And you probably have your own distinct methods, right?

::

And ways of setting your wide Jack.

::

That you've established.

::

Over time I used to think things.

::

Such as shutting up a vision or writing down like for me like the most important goal setting.

::

Why exercise I've ever been a part of was sitting down with Jennifer at the beginning of our investing in this kind of private deal.

::

World syndication and funds were.

::

All basically passive investing and we sat down and literally.

::

What is a typical day?

::

For us, five years from now, 10 years from now, look like.

::

And then we.

::

Got really specific like what are the activities we want to be spending on spending our time on and it sounds so, so silly and far out and maybe that is, but frankly that works for us, and it works really well, and I haven't heard a better exercise.

::

To crystallize, OK, that's what we're going for.

::

We're going for spending the morning.

::

We actually both take our kids to school for a change, which we do now every day.

::

Walker goes to school, right?

::

And it sounds simple, but it's not.

::

It gets specific.

::

And then we worked all the way backwards from that to really crystallize or why.

::

And then you build your plan from there and the plan is going to change.

::

The plan is going to pivot the amount you invest in one.

::

Thing versus the other is going to change.

::

You're going to have some home runs, grand slams.

::

You're gonna have a couple that are fizzle out.

::

Hopefully you don't get you don't stay in your knees and have a really bad one too often.

::

But all these things are inevitable, and all these things are part of just.

::

Going outside of our comfort zone in ways that we thought were going really scary.

::

And they are at first.

::

But you realize, like the thing that's scarier to me now is a lack of control over our financial future.

::

Scares me way more than going in and potentially pulling the trigger on a deal with our investors.

::

Like with my own money going in and putting money into a deal and then maybe not getting it perfect, I'm taking it a good deal, picking a good location, beginning of market and all that stuff.

::

Anyways, no small window.

::

One of the exercises that I think I really want to point out.

::

Is that you spent?

::

Time with your significant other, your life partner, to define this, and you worked through this together.

::

I frankly, there's not a there's not a lot of guys that do that and I think that really needs to happen.

::

And you'd be surprised how much that pays off that that investment alone, and I wish everybody would see.

::

Those type of activities as just another form of investment.

::

No, the best one you can.

::

Make no.

::

So, I do want to spend a little time and I'm going to warn the Affiliates we're going to go over a little bit here today.

::

So, you're operating out of California, and I know that frankly that isn't probably the best place your backyard to invest in real.

::

Estate, but maybe.

::

You can prove me wrong.

::

But, but would that be part of the passive investing that you're talking about a lot of professionals, you're talking about Silicon Valley and a few other places?

::

It's hard to find income producing property in California.

::

Let's be Frank, you're probably finding some things outside of your backyard, right?

::

Yard right, 100% yeah, you nailed it. And we did just fire, literally. We're in escrow right now for our second home ever.

::

So, we're moving into a bigger house.

::

That's what we've purchased for new real estate in California in the past.

::

n terms of I think we're over:

::

Those are in Sunbelt.

::

Those are in everything from Texas, Georgia, North Carolina, South Carolina, Florida, all the way over to more close to our neck of the woods and California where, you know, Idaho, Colorado.

::

Arizona, these are markets that have really solid potential for good cash flow, where the income comes back in.

::

You've also got price points that are not so terrifying, but even.

::

This from buying a home here.

::

I was like, oh my gosh, this is wild.

::

But yeah, not for cash flow.

::

The very first real estate investment that we bought from a pure investment purpose perspective; we still own it's a duplex has based 45 minutes from my house here in California. We bought that before we understood cash flow that was a $430,000.

::

Purchase price for $200.00 a month in cash flow. That's not a win from a cash flow perspective.

::

We are doing a cash out refi on that now of course.

::

So, appreciation is a beautiful thing, but I'll just say that the cash flow understanding was limited and so our dollar does not go far here for that purpose exactly to your point Jack and I think that looking.

::

Inside better cash flow markets are out there, and we before we found all these big the apartment syndications and private funds and stuff, we did go through a stage where we were like OK, that $430,000 duplex, we're glad we got it.

::

It's not a much cash flow compared to how much we put into the property.

::

6 / 6 figures in cash.

::

We did get a lot.

::

That's similar even.

::

We then built a modest portfolio.

::

Of single-family rentals. We did that in Kansas City, MO. And so, $60,000, roughly a pop for the purchase price.

::

Yes, for the same amount of cash flow in a month or two bucks in cash flow, that felt like a better move.

::

We still ended up selling those years later just because we felt like no matter what anyone else out there says.

::

It's my personal opinion.

::

Rentals are great, they play a really good role, but they're in semi passive.

::

They are not passive even with a property manager.

::

And so, we had a couple of young kids.

::

We have a thriving business.

::

Growing business and so it just didn't make sense for this life stage.

::

So, we did sell those properties, but those two stages had to happen for us before we got to the bigger passive investing side of syndications.

::

Being an LP A.

::

Limited partner ourselves and these deals that was the final.

::

It's not really the final but it's the third phase after we got.

::

Through by local 'cause it's comfortable, and then by longest and sight unseen, we never saw those Kansas City properties.

::

And now here we are, and we were on the other side of selling those ones as well.

::

So, it's just an evolution.

::

So, I really do encourage and want to share those stories for other people because it's a journey.

::

And it's going to take time and rushing into stuff is not something you need to feel compelled to do.

::

I do think they should get started and try this.

::

If they haven't done anything like this today up until today, get started.

::

Just go research, but then start taking action and actually get into a deal or something.

::

Find a way.

::

To get interested.

::

Because it's going to be a multi.

::

Your journey for them as it has been.

::

For us too.

::

So, you mentioned if you knew then what you know now.

::

Would you start?

::

With the single-family homes or would you jump right into multi?

::

I would go straight in, yeah, ma'am.

::

Of course.

::

Only speaking for our own personal circumstances, I think the most challenging question for anyone who's like evaluating real estate investing for the first time.

::

Is what do you want.

::

It to do for you and.

::

And that sounds like a simple question, but I challenge someone to get a clear answer for it is it's not simple have growth any investment you can look at?

::

It like Grove cool cash flow.

::

Same thing as dividend paying stock.

::

Like you're evaluating all these things and for a call a new college grad, like if it was me and I was coming straight out of college, would not go back.

::

To myself and say yo, go spend your $50,000 that you have and the only money you have in a real estate syndication is a passive investor.

::

Because that was the mismatch for that stage of life for us then and now you know, 30 after a 13-year career.

::

We have financial footing.

::

Would I go straight into a syndication?

::

Absolutely, absolutely, full stop because it's just fully passive after you do the diligence, and it still comes along with the really wonderful tax aspects that make it favorable.

::

And further, so it's a no brainer on that front, but if they had you have no capital, you have limited capital which I was at 2 for years after I graduated college, well I got.

::

My footing, you have time.

::

And you have energy, you probably, maybe you don't have kids.

::

And so, I go back to myself, but that.

::

Stage and say go work harder.

::

On these types of things and it would involve getting involved in the deals more actively in ways that I have the time to go and do.

::

So, sort of add that comment, I think it's confusing, disorienting for folks when they hear go get passive, right?

::

Off the bat.

::

But yeah, but you gotta have enough funds to go do that to be fully passive too.

::

Otherwise, you gotta go be active until you go, build the bonds to go, then invest.

::

illion in total acquisitions,:

::

With all of that, with all of the syndication work that you've done, are there lessons that you when you first?

::

Started a syndication you wished you would have known at the beginning.

::

Endless, yeah.

::

I'll pick probably the one of the biggest ones, which is your vetting The Who, but there's three-part framework.

::

I didn't come up.

::

With this, I'm not that smart.

::

I would just say I like to.

::

Adopt smarter people, ideas and.

::

Then tailor them to our circumstances.

::

Frameworks were a huge part of learning for my tech career.

::

Frameworks allow us to make otherwise slow decisions 'cause big decisions are slowly.

::

Made when they're done, in my opinion, like big decisions. You gotta reflect, you gotta really think about it. If you're about to go drop A5 digit number at least into an investment, that's a big decision.

::

I don't care how wealthy someone is, that's a.

::

Big decision.

::

And so, I bring that up because we came up with a framework for our own.

::

Investing and I think that it just starts at the Who who's actually offering that deal like the where and then everything else like the business plan and the sub bullets beneath that we did come up with and I came up with for our business.

::

But I can come up with that three-part framework that's the team to market the deal. It's that's just.

::

Timeless, brilliant advice so.

::

We implemented that.

::

And I think that that's what's important to know, is that there's just going to always be more deals there.

::

Well, there's always going to be more deals beneath that.

::

You could probably line up 30 different other platitudes that are great advice.

::

And so, I'll spare everyone of that, but I'll just say when it comes to, there's always been more deals.

::

What I really mean by that is.

::

Like, I literally fly out, meet the teams that we invest with.

::

Like I will walk their properties with them first I will go and see stuff in person and then and only then do we put that money into a deal with them, which then helps them get eligible to work with mass investing, etc.

::

So, if I could go back in time and just impart on folks like.

::

It's OK to really ask more questions and are in a respectful, partnership-oriented way with the people that you're working with to really get to know of them.

::

And communication makes the world go round.

::

And so, someone can have an amazing track record.

::

Like before you go and hand them your money and say, OK, I'm passive.

::

I have no control over this.

::

That's why I'm able to sit on my button and enjoy the returns.

::

However, before I'm passive, I want to make sure that I can trust this person or people and they, even if they're competent.

::

Make sure that.

::

They communicate and speak with you in.

::

A way that you appreciate it because you're in that relationship with them for years.

::

It is not a customer support.

::

You were not a SAS company subscriber.

::

You are a limited partner and partners in the name.

::

Yeah, really take your time on that, would be the advice that should.

::

Go back in time?

::

And that's great advice and I really appreciate it.

::

Your time here today, this has been a fantastic conversation.

::

Spencer and I just wanted to remind everybody to head over to your website.

::

Bye, bye.

::

Madisoninvesting.com to learn some more details on what Spencer and his team are doing because there's a lot of activities and there's it's amazing to look through your portfolio of stuff on your website. There's you've got a lot of stuff going on.

::

So again, it's Madison investing.com. But before I let you go, Spencer, is there a question or concept you wish we would have covered here today?

::

I just think that when it comes to goal setting with your spouse, the thing we didn't touch on from this specific angle, Jack, is that and you hit on it, but we didn't have a chance to go into it.

::

So, I would recommend if you have a significant other and someone is out there and they're like.

::

Wondering like how do I even get this conversation started if you had asked the question of first talk about this stuff?

::

Did you guys?

::

And that was something I think really stops people just dead in their tracks from you ever going down.

::

This path you know.

::

And I was there too, frankly.

::

Like we were.

::

There, but there was a time where.

::

I listened to a wonderful podcast discussion.

::

And like one of your shows, for example, right.

::

And like you, I'd listen to that sounded Jennifer.

::

She's what the hell you.

::

And that is the starting point for everybody.

::

But when that would happen, I didn't stop there and say, oh, she's not with me.

::

I would sit there and say, OK, this is going to be a journey.

::

That's all.

::

That's the difference.

::

And that's why I wanted to mention at the tail end of our discussion Jack 'cause like people just need to, not.

::

Be disheartened by tiny.

::

That is a tiny.

::

One off obstacle?

::

Get ready.

::

If you're investing in this space, you better get ready for a lot.

::

It's worth the journey, absolutely.

::

But you gotta take the time to get to know and really understand what's in your partners head, no matter where you are in life.

::

And so, it might not resonate as.

::

Much with the.

::

Single folks, but I'll just say for.

::

The rest of us.

::

Oh, my, that.

::

Is a journey worth going down that goes with not only your personal partner?

::

But your business partners, I'm going to end with another cliche, but you either start.

::

With an awkward conversation or you end with an awkward conversation.

::

That's right.

::

So, you might as well get it out of the way.

::

So, I really appreciate it, Spencer.

::

This has been a great conversation.

::

You're welcome back anytime.

::

I hope you'll take me.

::

Up on that? Oh, I.

::

Would love to.

::

It's been a pleasure.

::

Thank you so much for.

::

Having, making.

::

This so much fun, Jack.

::

Have you learned at least one actionable step to incorporate into your real estate?

::

If so, please consider returning some of that value by leaving a positive review, subscribing to our YouTube channel, or joining our growing network on Facebook and Twitter.

::

You can find links to all of our social media accounts in the show notes.

::

See you next time.