The Truth About Building a Freedom Business - Ryan Lee

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1:01If, like it says, the opening man gets you from where you are to where you want to be. And today, if where you want to be is actually retired, living with some money instead of broke, living off the government, well, you might want to take a listen, because my guy today, in studio, live from Utah, he flew down just for this, is an expert at teaching you how to retire with wealth, not just a social security check, not getting by, but actually how to have wealth. And he has a pretty interesting system for how to do it. He is the host of the Passive Income Machine podcast, and he is now the author of the book Retire in 10 years or less, as he wants working, ladies and gentlemen, welcome to the program. This is Ryan Lee Ryan. Let's go. Let's go. John, man, it's a pleasure to be here. Man, studio is looking phenomenal. Thank you. This is such an honor to be here. Thank you, brother. I appreciate that. So give us a little bit of a little color on Ryan. You know what? I probably grew up a lot like most traditional people, right? I had a great family, good upbringing, phenomenal parents, but man, when I got into the space

2:07of earning money, I got stuck. I got stuck. And this is really what prompted me to write this book after several years. But really, you know, for me, I started climbing the corporate ladder, making little teeny trade-offs in my life where I would make more money and I kept thinking that the 401K was going to be my pathway out because I mean, who wants to work for the rest of their life, right? And I found myself stuck in the corporate rat race. And in 2008, right, in 2008, I realized I had no control over my money, I had no control over what it was happening with it. I couldn't stop it. And I realized if I ever wanted to retire, let alone retire in 10 years, like the book is talking about, I have to figure out a different way, I have to become a little bit more empowered with money. So that's been my journey post-college is learning about the game of money. And man, it is quite the game. So when you say, oh, wait, you realize, obviously the financial crisis hit in 2006, 2007, I'm assuming you were banking on your 401K, watching the value of it grow. And then it took a little bit of a beating when all the markets got hammered. And what was that like, that realization when you saw that number? Well, it was kind of crazy.

3:08I was only about five years out of college, right? And I remember when I got my first job, I had to move to Tucson, Arizona, right? And so I moved my new wife to Tucson, Arizona, I had my new boss, Rob. I did not like reporting to Rob. I did not necessarily love the job that I had. And I remember when I got that first paycheck, you know, this is, you know, I went to college for the sake of getting the degree, getting the piece of paper, not because I wanted to be that. I thought that's what a professional, responsible young man would do. And when I got that first paycheck with my college degree, I remember I took it to the Bank of America and I opened it as kind of like a symbol of success and I opened that thing. And after I opened it and looked at it, and I kind of flipped it over a couple of times to make sure there wasn't a mistake on it. And then there was not much money there after taxes and insurance and everything. And I thought to myself, man, there's got to be a better way. So I thought, look, if I can work hard, because I grew up in a hard working family, I'm not afraid of working hard, if I can work hard and start saving a bunch of my money and let the stock market, because that's all I knew, to grow my wealth, maybe I'll retire early. And back when I first started, that was my goal is to retire in my fifties.

4:08And so fast forward five years out of college, you know, my net worth had grown to about $100,000, 401K brokerage account, all that kind of stuff. Were you on that plan of 20% paying yourself first and investing? Were you? Man, I was up to 30%. Every single penny I could find, like I'm putting it in this account. And yeah, I'm watching the market grow. But man, the crazy part about it was in 2008, yeah, I lost a bunch of money. My 401K went, you know, 401K brokerage account, all that stuff. It went down to about $28,000. And at first, I thought I did something high of what? A little over 100,000, right, 105,000 at the peak of my net worth. Well, that's, I mean, dude, it's important because that's, you know, that's a lot of money for somebody that has. Well, it was crazy because I just traded five years of my life. And every single little trade-off I was making to make more so I could save more, it came with strings attached. And I only saw it in hindsight that I was trading my life away to earn more money. But the biggest thing in 2008 for me was it was a window into my future, right? I looked at all the people I was working with, modeling my life after. And these were people that were 20, 30 years ahead of me.

5:08And their entire dream, their entire vision of retirement was melting before their eyes and before my eyes. And for the first time, I realized that's me. Like, if I don't control the outcome, how can I ever predict retiring already? How can I ever impact it? I'm just along for a ride. And this is what set me off on the path of questioning the traditional model. And once your paradigm changes, once your perspective changes, the world that you see changes, and my gateway into this whole world was rich that poor dad, right? I mean, I remember I read that book and I'm like, oh my gosh, everything I thought I knew about money. Robert's on the back of your book, I see. Yeah, yeah. Yeah, there you go. So that was your first forays that book. Yeah, that was the first, that was the opening to the door that there is a whole different world of money. That if I was willing to step into it and learn it, it's governed based on financial intelligence, not dependency. If I was willing to raise my financial IQ, I could maybe take back control over my money and really learn how to invest, not just speculate. Okay, so let's talk about this because this is the step where I think most people get stuck, right? Is most people, and one of my favorite sayings is education without action is entertainment.

6:10And there's far more entertaining stuff in the world than rich dad poor dad, right? I mean, it's a good book, but it's not exactly entertaining. And what I would say is, so what was the first action you took after getting this new stuff where you're like, okay, I'm going to make a pivot. Do you remember what the first 100% was? Yeah, so first off, I almost cried, right? I mean, I'm like, what the heck, man? Everything is wrong. Yeah. But the great thing about Kiyosaki was, you know, it opened me up to a new idea, but I really honestly had no idea what to do with it. So I started searching. I started looking, and this is the second book I came across. And I came across this book. It's written by Robert Allen. He's the co-author of this book. The title of his book was called Creating Wealth, but that wasn't what caught my eye. Down below the title of his book, he said, retire in 10 years following Allen's seven principles. And I thought to myself, I can do anything for 10 years. What are the seven principles? And I'll never forget when I opened up his book, it was kind of like a playbook for what I read and reached that port at. And his model, I mean, it was so believable that I thought I could actually do it. It's that if you bought two single-family homes every single year for 10 years in year

7:1311, after 20 single-family homes, you'd have enough wealth to be financially free. So that was my first action. I bought three single-family homes in my first year of investing outside of Wall Street. And that was how I got into the game now. What year was this? This is 2009. Okay. So you're buying houses. Where were you buying them? Mass. I bought my first one in Utah, but then I bought my next two in Arizona. Okay. So you're buying Arizona by Utah. By paying $150,000 a door, $160,000 a door. Last man, man. You guys here in Arizona, you guys got it. Yeah. And it was lucky timing for me. I get it. I've since now bought many, many more single-family homes. But I bought houses for about $110, $120. Yeah. I can tell you one of the biggest, you know, it's not, I don't know, man, I go back and forth with this. So I always, I'm filled with regret on this one thing. I don't have a lot of regret. Yeah. In 2008 and 2009, I was the number one foreclosure real estate agent in the country. In the country. Well, that's the point. In the country for a lender processing services, which LPS was the biggest processor of foreclosures

8:18in the country. They're the ones who got in the RoboSign. Yes, I remember that. Right? I was their number one agent in the country. Like I would come into work wearing board shorts and flip-flops and turn on my computer and have 30 new listings every day. Yeah. It was wild. I had a buddy who will remain nameless, who was also in the same business, who was living in an apartment, like hand to mouth. And he just bought everything he could buy and LLCs and everything else. And it wasn't exactly scrupulous to do that. I mean, he was putting on the open market, but he was the ultimate buyer. Yeah. So it wasn't doing anything underhanded, I guess, necessarily to the banks. But we were not supposed to buy our own property. Got it. I bought one and I totally told the bank and I disclosed it to them and put on the open market and somebody actually bid me up and it was a thing. I bought one to live in. But he bought all of them. And like you look back now, here we are, 20 years later, he built an amaz- at a massive amount of money. It was my endorsement like 30 grand. Oh yeah, you were buying them like 30, 40 percent on a rebuild cost. Yeah, it was insane. I mean, literally my mother-in-law, you know, I did buy a few of them for like, for people

9:21that I knew, because of this is a good deal, you need to do this. And my mother-in-law at the time, well, she's still my mother-in-law, but at the time, all of her money was under the mattress, right? Not sophisticated woman, you know, cash just saved her money and not literally under the mattress, but just in a bank. And we took her money and bought a couple of these houses. And you know, now, here we are 20 years later, she's in the best memory care facility and it's in the parking lot at $8,000 a month being paid for because of those. Because that's the number one regret I hear from people I serve and work with. You know, we've done 5,000 transactions, single-family homes since I started doing this over the last decade now. And the number one regret is, I wish I would have bought more wind back in the day, right? The best time to plan a tree 30 years ago. 100%. Second best time right now. Yeah, right now, get going. So you started buying houses and you see, go back to your store. See, we're doing about three the first year and then I'm assuming it didn't take you that long to get to 20. Well, it didn't take me that long to get to 20, but I'll tell you what, after three, I almost fell apart, right? The first property on a scene, I'm still working corporate gig, right? I'm selling medical supply.

10:21That was my whole game back in the day. There's not a bad gig in OR, it's not a bad gig. I made good money. And I was funneling all that money back into the game of real estate. But after the first property, I'll be honest. I walked around the office with my chest puffed out. You know, I'm a real estate investor. I thought I was mini-grant cardone. Second property, I had a little bit of anxiety because I didn't know what the heck I was doing. I read two books, right? Yeah. Third property, legit, had a panic attack. And here's what I realized after three properties. I was doing this real estate and it was taking me time to find the listings, to find the property, to then rehab. I was flying down to Arizona, doing the rehab on my own. What are you doing? Because I didn't know, man. I didn't know. And so, you know, I thought that's how I'm going to make more money. I'm just going to work hard, right? Work harder. And after three properties, I got further away from financial freedom than when I started. Because now I have a part-time job and a full-time gig. And I realized I could not scale my portfolio any faster. And I'll be honest with you, John, where the lesson really punched me in the gut is property management. Right. I am the world's worst property manager. That is something you do not want to do as management. Oh my gosh, man. And after that third property, like, I was losing money and, you know, unless you want to

11:24go into it, like, I had a- Was it a late-night phone call that made, finally pushed you over the edge, what was it? Okay, all right. So, here it is. So, I was doing lease options back in the day when I first got in. I don't hate that. I don't hate that. Not bad, right? Not bad. That's the Cody Spurber method, man. I don't hate that. Dude, I'm telling you, it was actually great. So, I did this open house on the third property and the tenant gave me a $5,000 option payment at Downland on the property. Yeah. Now, his application was full of red flags, but it was $5,000. Okay. That was probably not some smart. Yeah, and I think of myself, man, I'm just going to take that right there. So, I took it in for the next six months. I basically gave him all of that money back and I'll never forget, I'm up in Rapid City, South Dakota, selling medical supply. I'm in hospital, fortunately, and my phone starts ringing. And by this time, I'd gained a healthy apprehension of my phone because every time I rang, I knew it was a problem with one of my properties. Sure. And so, it was ringing over and over. I got a boardroom through it full of medical, you know, hospital providers. I'm trying to sell them equipment and my phone just, just vibrating on the desk, you know. And I get out to the, the, the four year there, have a voicemail from the tenants wife trying, saying, please don't evict us, she'll make sure it never happens again, voicemails

12:26from several of the neighbors of the property I own, saying they're going to sue me. And a voicemail from the tenant himself saying that that's his, if you're a small business owner, you already know what it takes to keep everything moving. You're juggling customers, invoices, and about a hundred decisions every day. Thankfully, taxes don't have to be one more thing on that list with Intuit Turbo Tax. You can get your business taxes done for you with a full service expert. Turbo Tax matches you with your dedicated tax expert who knows your industry understands your business right off and gives you the personalized advice your business deserves. Upload your documents right in the app, hand everything off, and still feel like you're in the loop the whole way through. You can even get real time updates on your experts progress right in the app, which makes it so much easier to stay on track. And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit TurboTax.com to get matched with an expert today, only available with TurboTax full

13:31service experts. He's lawn and he would do it again if he had to. Then I had the final voicemail from a police officer saying, son, you better call me. I call him up and I find out that my tenant shot with a gun, a neighbor's cat who he perceived coming on his property blew up the cat right there on the on the property. And I realized to myself, I can't do like can I do it maybe I didn't want to do it like I was further away from financial freedom because I have a part time job and I'm not a good property manager. Yeah. And this open this open me up to like quitting number one, and I think this is where a lot of real estate investors get a bad rap is they they go in thinking real estate is going to be the path. But it's not financial freedom unless you build a system around. I call them the hd the HGTV investment was me. I was a GTV I read the purple book, but you know, I'm like, oh, cash was the game. Yeah. The thousand dollars of cash will be those three properties, but man, I'm working my butt off for it. And so what I realized is I had to actually build a system where I can be the CEO of a portfolio not do the work. And for the first time ever, man, like I said, I grew up in a very hard working blue collar

14:33family. For the first time ever, I had to shift from working harder to working smarter. And that changed the game over the next three years after that first year, I scaled it from three properties to 17 properties, and I'll never forget the day I quit. I walked away from my corporate job financially free. That's why it's called that working on the business. Not in the business. That was it right there. I had to work on the business. That was the whole game. Yeah. I consult for equity a lot with a lot of companies that are struggling to grow in scale. And that's almost always the problem. I literally have an appointment tomorrow at one o'clock with a plumbing business here in town that desperate not to scale. And I already know what the problem is. I already know. And so we'll take a piece of that plumbing business and get them going the right direction by just extrapolating the principles from the business. Yeah. And that's so powerful, man. That's the whole game. So when you got to 17, so when you were buying properties, obviously it's changed a lot since then, right? The yields, well, I mean, when you've gone up a lot too, what was your box as far as rent yielding? 50% cash on cash.

15:33That's all you want. That's all I want. I built a calculator and I could just run things through my system and say, okay, if it's 15% cash on cash, if it's in the right neighborhood, and there's no major foundational issues with the problem. I'll buy it, right? And that's obviously since changed a lot, especially if you're doing it passive. So I think really for me, the biggest game that I've learned now over owning real estate now since 2009, all the way to today, is it's not trying to time the market. Market's going to change. It's going to go up and down. Interest rates are going to be what they're going to be up down high low. But the real wealth in owning real estate is owning the real estate. Yeah. And so if you can build a portfolio and a system, and that's really what that book is all about. This book that you wrote here. 100%. Okay. Cool. I know how to get like anyone can become financial free and generate six figures of tax free income using the system talked about in that book with less than 20 single family homes, as long as you own it for 10 years. Well, we, you know, we, we buy property all over the place and a lot of people are scared to do that. So let's talk a little bit about building that system. I'm curious what you do if it's different from what I do when I go into a market. But let's say you want to go into a different market.

16:35Let's call it St. Louis. Cool. Let's say you want to go to St. Louis. What's the process you would go about by buying properties? Yeah. I mean, it really is what you would do. It's going to work backwards, right? It's got to be the right location. That's number one location makes all the difference. Number two, then it's got to be. What do you look for in a good location? Like, I like, I mean, I'm buying single family homes. I want to appeal to the broadest markets. So I'm looking for good neighborhoods, low crime, good schools, you know, good highway access, that kind of stuff. I'm trying to buy a place that has the highest demand to appeal to the most people. That's, that's my criteria. Well, for me, you know, I'm also looking at a place that have good sectors. Like, I like markets that I don't know that have like heavy or transportation hubs, heavy medical hubs, those sorts of things that are not going to get heavily disrupted by AI that's coming down the future. Yes. You know, if it's a, if it's like, oh, I'm going to buy here because there's an auto plant there. That's probably not a good idea for the long term future. Sure. But medical hubs, transportation hubs, those things I do like as well. 100% agree with the odds. Well, honestly, dude, for me, like the rust belt right down the middle of the country, is a wonderful man. And it's crazy.

17:36You can still buy properties out there for $15,200. Yeah. Dude, I got, I got a market right now that we're all over. We're looking at that we can buy for what in rehab 150 a door renting for two grand a month. And we have to share some secrets. Yeah. Yeah. But no, but so bad. So you identify the market that you like. And now, to me, like, you don't get it all, right? You can't find a market that's projected to have heavy appreciation versus a market that's going to cash flow heavy. Yeah. And the markets are not going to have heavy appreciation, which is fine with me. I'm not looking for boom appreciation because that also is going to tend to have some bust of depreciation. Totally. Totally. So what are you looking for there? So I'm looking for a place where I can hold the right property. That's the game. Like, if I think where most people get real estate wrong is they think they're going to get rich overnight, 18 months, 24 months, that's never going to happen. Yeah. I mean, if you're flipping, you have an active business in real estate. You might make money doing real estate, but I'm just in the game of buying hold. So I want to buy a property and be able to hold a property for at least 10 years. Now, I can use 1031 exchanges if it doesn't work out, but the goal is buying the right

18:39neighborhood, the right team behind me. So I need to make sure I've got a good team behind me of property managers, vacancy, make ready, all that kind of stuff has to be handled and taken care of within a range of expectations. And then after that, it's after that, it's the right right location, right team, then I'll look at the property. Well, let's talk more about the team because I won't buy in a place unless I have the trades wired in. Yeah. Unless I absolutely know that I have the trades done, so many people do this backwards. Like they go try to find a deal and then try to find the people to fix it. I've got the team first. Yeah, that's going to kill you. Like you need to understand all your trades and I, and this is going to be a shout out to them because I'll tell you who I'm using right now. This is amazing. I don't know if you know about this, but this is a pretty incredible. You're familiar with offer pad, yes, that's fun. Well, they do about $4,000 a year, but because the market has changed the way it has, now they have offer pad construction where you can buy a house in any market where they do. Come on, I didn't know that. And they will go out, they will bid it and because they're buying on mass, I mean, they buy millions of square feet of LVP, millions of square foot of tile and square foot of everything,

19:42you can go out, they'll bid you, they're pricing on everything. Wow. So you get institutional. Yeah, and institutional level and then they don't tell the crews if it's an offer pad house or it's your house. Oh, that's even better. And they're guaranteeing $1,000 worth of work a day. So if it's $27,000 project, it's done in 27 days. That's a phenomenal deal right there. I love that. Yeah, dude. So when I got hooked up with that, my buddy Jeremy that runs that, I was like, whoa, now I'll send them like, I'm much more comfortable going in a lot of the markets where I don't know people because it collapse my time. Yeah, 27 days, flip time. That's amazing. They're project managers, they're trades people, they're, they're materials. Yeah, I love that. I'm in. I love that. Because for rentals, especially you're not, you know, you're not doing the Taj Mahal, you're doing the best. I mean, it's just, it's box. I get every, every count. It looks the same, every pain. It's the same. LVP, all that kind of stuff. Yeah, it's the same stuff. So anyway, getting that team together is good. So now you start underwriting, and I think also I agree with you, one of the most important things there is effort in the property manager having down. What percentage are you looking to pay on a property manager?

20:42You know, here's the thing about property management. So I'm going to pay them a fair percentage, right? Which is what? Anywhere between eight to 10, right? Correct. So I'll pay 10 if that's the, if I only have one property. If I have multiple properties, then I'll want to negotiate it down. You've got some as low as six, but here's the reality. I want my property manager to think that I am the, the, I'm their best friend, right? I'll send them gift cards, I'll call them up, right? The objective for me is I want that property manager to care about my portfolio more than any other property that they manage. And when they go into a house that's Ryan's house, they know it's Ryan's house. Yeah. So, you know what? You know what? You know what? You don't mix the biggest difference for property managers. What's that? A $300 Golden Coral gift card. You do that once a year for your property managers, they will love you forever. Like that's been my biggest. That's it. You just take care of it. Oh my gosh. You just send them out of the, like sometimes it can be around their birthday. Like I was like, fine, just to thank you, but like going, because imagine what a property manager does. Like for me, a property manager, it's like being a garbage man. It sucks. It sucks. Like everyone hates you. Everyone's complaining. Just just, if you're listening to this, you know what I'm saying this, I want to explain

21:42something to you. So my company simply Vegas, right? We do 4,000 transactions plus real estate a year. We just got rid of all of our property managers because if you go on like Google and look at the negative reviews about my company, which are my company's amazing, but the negative reviews are always some tenant that the landlord decided to keep us deposit. Yeah. Like we have no control over that. So we're like, look, we're not the property manager business. Totally. We're in the house selling business. Oh my gosh. We got rid of all our property managers for that reason. It's a, it's a, it's a terrible job because it's never their fault. It's never their fault. The owners are like saying, keep the money. Oh my gosh. So if you do one thing, if you do one thing to acknowledge that property manager once every six months, you will be the only person in six months that have actually recognized that person for who they are, what they do, they are the key to your financial freedom. Like that is the linchpin in my, in my world, is your property management. Yeah. It's like, well, anything, it's like anything has to do with real estate or construction. I was talking about the three-legged stool. It's a good, faster cheap. You don't get all three. Yeah. You can pick two. Yep. So if you want to go cheap, that's fine, but you're not, they're not going to respond to you. That's not going to be fat.

22:42They might be good in the end, but they're not going to be fast. Totally. Like if you pay them, you can probably do pretty well. And that, that's where I learned my lesson. And I was trying to grind my property managers down in the beginning. So six percent, yeah, I'm getting a deal. But then you pay for that deal in the long run. Like your properties aren't maintained the way you need them to be maintained. And the real wealth from owning real estate is owning real estate. That I have to make it to year 10 to realize what the spreadsheet said I could possibly just, you know, have from that piece of property. Well, and some of the investors don't realize the importance of that time from acquisition to time to market. Yeah. And how that can murder you, you should get spun on interest. And so they try to grind the trades. They try to grind them, especially now, since, you know, with the climate of our country, with the, with the crackdowns and a lot of people getting deported, a lot of people that are banging hammers in those houses might not be here legally. And let's just be honest. I mean, they're just, that's who's out there. That game is getting, it is a tough game. Yeah. So the trades have gotten really, really tight. So if you've grind a guy down on lay in tile for $1.65 a foot, if somebody else calls him, it says, I'll, I'll pay it to $2.25 a foot.

23:43He's going to turn the truck. And you're like, stay your job. Like, where's my title? That's an expensive decision. You're trying to grind someone down and then you're paying for it in vacancy. Yeah, because you're sitting there with waiting to get to the end, which is crazy. Okay. So you got to your 17. You got to quit your job. Best day of your life. Dude, I'll never forget that day, man. So I think we've all had these moments. Well, no, this is everyone watching this. They need to have that moment. You need to build up a stream of cashflow that gives you more options. And that's what I really believe. Money's greatest intrinsic value is to give me more control over my time and more options with what I can do at that time. So after four years, four years, I'm still working in the corporate grind, right? And honestly, after I got in the game of real estate, my job meant something so much more to me. It was my fuel to earn money so I could then funnel it into my into my ownership, right? Of owning assets that paid me income independent of my time. So I worked as hard as I could. I got my bonuses, promotions, everything I could do to just funnel money over into my portfolio. Before years later, right? It's 2012 now. And companies are still kind of still tightening their belts after 2008, right? Yeah. I had two more geographies on my territory at that time.

24:45And I remember my boss Rob came in. Rob only came if there was a problem, right? So I'm either getting fired or something else is going on. And I remember Rob sat down with me and he offered me a promotion, but it was kind of like Charlie Brown, right? He had the audacity. He came into my office. He sat in my desk, right? I sat across from him and he's sitting in my chair, my desk, and he's telling me about this, you know, I can't remember $10,000 promotion I'm going to take, but I'm going to have to now go bump up my hours again, take over a bigger geography. And I remember in the back of my head, while he was talking, it sounded like Charlie Brown, so it's like, wow, wow, wow. And in the back of my head, I'm adding up my cash flow. Like I'm going, okay, those two properties, that pays for my food, those three properties, that pays for my mortgage, that property pays for my car, like I'm going over these numbers over and over and over again, because every single property I was buying, it was getting me one step closer to financial freedom. I just didn't realize it yet until I had the opportunity to make a decision. I remember when Rob said, are you ready to take the promotion? Like I looked up at him, I came out of my days and I said, I quit. And I'll be honest with you, John, like, man, when that word, like when that sentence came

25:45out of my mouth, I wanted to like grab it out of the air and put it back, I didn't mean to quit that day. But man, as soon as I did it, this weight came off my shoulders. For the first time in my entire adult life, I had finally taken control over my life. Now, the crazy part was, I didn't tell my wife that I was quitting that day. So I had to walk out in the parking lot and tell, you know, call up my wife, Beth, I'm like, hey, Beth, I'm just quit. There's this little silence on the end of the phone, right? And I thought, man, she's going to be pissed, right? She says, Ryan, it's about damn time. And I'll tell you what, man, my life, my second life started that day. Good for you, dude. Yeah. I always say it's not about having money. It's about what the money can buy, but the money can buy his time and options. Yeah. That's all it's about. It's just having that. It's like, you know, we build these companies and, you know, I'm blessed to have excellent people that work for us here. So I, you know, one of my mentors can't clearly say it once he goes, you know, leave your business for three months and see what happens. I love can't. Yeah. You come back and it's like all said and it's like, if it's nothing, then you don't have

26:46a business, get a job. Yeah. You are, you were never, you never owned a business. Yeah, you never owned a business, you own a job. So luckily, I can say that I own businesses here, which I love, which is good. Now you've got an interesting component that you add in to this, which is using high value whole life insurance. Yeah. So let's talk about that because that's the one piece of this that was kind of like, okay, you know, everybody's heard the story of how to, you know, buy an investor real estate, the burn method and sub two, whatever, blah, blah, blah. They've all heard that. Yeah. This is the piece that I was like, okay, let's talk about that because a lot of people may not have heard this. I'm going to blow your mind out. All right. You ready? So let's, let me, let me ask you this, okay? The number one thing that people have to understand when it comes to investing is how do assets produce income, right? And that's, that's the biggest challenge with people retiring or being financial free is they think that owning a 401k, owning a piece of real estate, owning Bitcoin, whatever, yummy, you choose the assets that it's going to make them financially free. But no one ever asks the question, how does this asset produce income? And the world that we live in today, man, that's more important than ever before, is it

27:47tax efficient? Is it going to rise with inflation? How long is the income going to last? And if we had to look out there, like when we look at real estate, I think, and this, this is my, this was my era in the beginning. I thought, okay, every house delivers rent to me. It gives me a little rent check, you know, but today, man, the margins are crazy. Like you might get a, a property today that's cash flowing 100, 200 bucks and be happy about that, right? Not you. Not you. Okay, not you. But the margins are, are they're super tight, they're super tight, so how, how can I buy a small base of assets and generate six figures every time an income? And, and let me ask you this, where is the biggest, like the biggest wealth gain in owning real estate? Where does it come from? It's the depreciation against taxes. It's owning the real estate, right? Sure. So, I own an asset that rises in value because of inflation, right? More money in the marketplace, causes the price of houses to go up. I'm renting that asset to a tenant that's paying off my mortgage for me. I get to depreciate all of my cash flow or all of my expenses, but I've got this like big pool of equity. So the game of insurance is really this.

28:48I want to go from making money, right? And that's requires my time, effort and energy in most cases. I'm not going to take that money that I've made. I'm going to put it in a place where I will never lose it. That's an overfunded whole life insurance policy contractually designed to protect my money and give me access to using leverage. I'm going to use that leverage to buy the right piece of real estate. I'm going to use the cash flow from that real estate to pay off that policy loan. I'm still going to use a bank loan to buy the real estate too. So 20, 20% down comes from the policy, 80% down comes from a bank, but my goal is I just want to own the real estate for 10 years, right? Now, I'm going to own it beyond 10 years, but after 10 years, here's what's going to happen. So I have hundreds of thousands of dollars of equity inside of that property. Yeah. If I have hundreds of thousands of dollars of equity inside of that property and have a whole life insurance policy, my objective is I'm going to take my income from the whole life insurance policy. I'm just going to take it out as policy loans private. I can do whatever I want with it. I don't have to report it. I'm going to take a policy-loan and use it as income. I'm going to take a policy-loan again in year two and I use it as income policy-loan again in year three.

29:49I'm just going to use my policy as income, but eventually, I'm going to draw that thing down, right? But if I still own the real estate, right? And I've just owned the real estate for another five years, let's say in this example, I'm going to go back to my real estate portfolio after five years. And I'm going to do the greatest thing in the entire world. I'm going to take a cash out refill. I'm going to reamertize my debts. I'm going to go to the bank and say, Hey, my portfolio was valued at two million. And now it's valued at three or my portfolio is valued at five. And now it's valued today, whatever it is, right? Just owning the real estate. Any bank in the world will lend me money. They'll reamertize my mortgage. I'm going to take all of that equity, also tax-free. I'm going to pay off all those policy loans. And I'm just going to repeat the process. I call it an equity mill. 80% of the real value of owning real estate over a long enough period of time doesn't come from cash flow. Exactly. It's the equity. And most people don't think about that. And that's a really challenging thing. I've have to borrow from my equity every single month to take my income, have to deal with banks constantly. But if I can take my income from a whole life insurance policy, I never deal with banks. I never have to ask permission. I can take the income from the policy, completely private, completely tax-free.

30:50And then I just harvest my equity once every five to six years to pay off the policy loans or repeat the process. Let's go again. Yeah, that's a really interesting way to do it, for sure. Let's talk about something different. Let's talk about this. That's fascinating. And that's in the book. I'm sure. But I want to talk about this because there's a lot of AI has is changing the world a lot. And I know that a couple of things, I want to talk about two different things. The first thing I want to talk about is AI. Because if you look at some of the mass layoffs that are already happening and companies are laying off in the middle towards the bottom of their employees as quickly as they can, I think there's going to be this curve. And this is just me literally just thinking as I'm talking, right? I think there's going to be this curve of mass unemployment that is going to happen before we get to some sort of universal income solution for all these people. The problem with that is the single-family home investor, I think, is a great peril by having all of these people that are living in these homes as renters that are very qualified

31:54today with good jobs that are fine that all of the sudden become unemployable. And now you are there, landlord. And so I think it's going to create, I think there's this arc somewhere that's coming. So my question is, A, have you thought about that? Yeah. B, what is your plan to ride that and see what do you think people should do? Man, that's a powerful question. That's a lot, dude. It's a lot. Honestly, AI's turning the world upside down. Whoever could have forecasted, I mean, we're living in the Terminator two days right now. That's why SkyNet is coming down and we got to go send Terminator to go get John Connor or something. I think we're safe because I still can't get my cloud bot to book me a dinner reservation. I can't get it. I can't get it to work right. Well, all right. So let's talk about this. And this kind of comes back to buying the ride asset in the right location. I think one of the other things that we actually deal with heavily and we got a little taste of this during COVID, I want to buy in states that are owner friendly. They're owner friendly versus tenant friendly. And there are red states and then our blue states,

32:57right? And so part of what I look for when I'm buying a property is I do want to be in a place that honors contract law, that honors ownership. Now, maybe some of that will change. And I don't know what the future is going to look like. But the one thing I do know is if we just, and this is why I like single family homes. But if we go to like the Maslow's hierarchy of needs, real estate, a place to live is at the base of everyone's needs. Everyone's going to need a place to live. Now, to your point, if there's like massive unemployment, who's going to pay for it? How are they going to pay for it? Right. And so for me, the only thing I can really do is only asset, try to buy it in the most ownership friendly state. And then try to foresee what's coming based on, you know, economic signals that I'm getting right now. Our occupancy is still super hot. Sure. I think it's fine right now. But you're right. I mean, if that could shift overnight. And that's the problem is it could, it could shift overnight. And then the challenge with real estate is it's not, it's one of the most illiquid assets that there is. I mean, it's hard day. It's easy to get in. It's harder to get in. Right. So I think some of the other things you could look at doing is you could flip it into Airbnb. I'm just brainstorming this with you at the top. Which Airbnb is dead, I think? Airbnb is probably dead.

34:00Probably a little better. A little bit better. Yeah. A little bit better. A little bit better. You know, for me, it's like I'm thinking about this and I'm like, do we need to start trying to focus now more even though it's a, it is a bigger, it's a lift. Yeah. More into section eight. More to that stuff because that's already being subsidized by the government. Yeah. So at least now you're somewhat already in that subsidized business. And I kind of go back and forth on that over the years, right? I've had section eight. I don't love, I don't love the like the, the meant, I mean, I love the, the consistent rent checks, right? Yeah. Yeah. But I don't like the subsidy from the government. That's always frustrates me. So but maybe that is the direction that we're going to have to go. And I think this is a real estate investor has to be able to figure out how to own assets. Anyone who's going to be in the ownership economy has to figure out how to own assets that can deal with all the volatility of own assets over time. Yeah. Because you're in a single family business and I know that, you know, everybody is most of your gurus over the last several years and said, you need to get out of the single family business and get a multi-family. And I know some syndicators that have gotten absolutely

35:00smoked in the last 12 months just because everything they did on their performance when they acquired these multi-family home, these multi-family properties was predicated on rates coming back some time. Yeah. And their performance just got smelt and they're getting obliterated right now. Totally. I think that's one of the biggest dangers right now in the marketplace right now is just the, the commercial space right now. Yeah. Commercials are, well, I think you're going to see, I think you're going to see, I think there's some opportunity for in places that need affordable housing to convert some of the commercial into some past but living stuff. But it's the lack of liquidity. You're absolutely right. I mean, people built their performance, they took on investor money, they took on bank capital and man, it's a scary. There's going to be some things that turn over over this. It's already happening. That's already happening. All right, next question, which goes this. So I had lunch the other day with a friend of mine who is a pretty high level international banker and soons. And he called me to go to lunch, which he never does. And when he calls me, I'm like, why are we going to lunch? And he, and his response to me was, he said,

36:03listen, everybody I'm talking to in banking is saying that the US government is going to aggressively devalue the dollar as a way to deal with the debt. Yeah. So he's like, I'm trying to, I need to get out of all of my cash positions. I don't want any cash at all. I need to get out of everything that's cash. So he wants to buy real estate. Yeah. So he's like, what are we buying? And when I hear somebody of that that has that kind of inside kind of knowledge, say that, it's like, okay, what asset class would you run to in that? You know, I think the core premise of everything that's in that book right there is exactly what you just said. I think the reason most people are stuck financially is they don't understand the rules of the game of money and the rules of the game of money. They've been in place for several years now and they're getting more visible now than they were ever before. But my, like my number one thing, if I could boil that book down into one statement as this, convert fake dollars, like dollars that are getting devalued, dollars that are worthless, dollars that are debt, dollars that are fiat, dollars that are enforced by the government into real

37:07assets. So now the question is what the heck is a real asset? Yeah. And for me, I'm looking at a real asset as something that has to always be in continuous demand. That's number one. It has to be able to allow me to use debt because debt is the new money. So for me, if I can't use bank money to buy an asset, then it's not a real asset in today's economy. So something that's always in continuous demand is something that can access the bank money. So more fake money to acquire the asset and something that because of its demand will adjust over time with inflation. So it's going to rise in price or value because of inflation. Because if the government keeps printing money, I want my assets to stay current with the rate of inflation. So for me, this is why I come back to single family homes. Now, hey, I could throw a whole loop in that. I totally get it. We don't know. We don't know. But the one thing I do know is for me, I'm not trying to really be a professional real estate investor. I'm trying to be someone who converts fake money into real assets, own assets for a long enough period of time and generate tax free income from them. And the best way I know how to do that is use the bank money to acquire a piece of real estate, harvest all

38:10of the equity in the cash loan, get it into a private life insurance contract. That way, the equity gets off the bank balance sheet or not to my balance sheets. And then my objective is to be as omnipresent with the market so I can see things coming and then course correct and adjust. Right. And that's really the game of real estate is you using that ability to foresee. And then maybe maybe single family homes are the thing. I'll just 1031 or something. Yeah, I mean, again, that's why when I first talked about this, I mean, Gary, and I kind of was a loaded question. Because you know, I was coming with the AI later, but that's why I said when I look at a market, I'm looking at I'm looking for hubs like transportation hubs. I'm looking for hubs like medical hubs. I'm looking for stuff that I think is going to be the last to be interrupted by heavy AI influence. I want to buy stuff around hospitals and buy stuff around those areas because I just think it's it's a good smart business plan. You know, Elon Musk came out recently and he made a comment. He said that saving for retirement is going to be moot because AI is going to make everything so cheap and

39:12and it's just money will have no like we're all going to be living in this age of abundance, right? I kind of had issue with that comment for a couple of reasons. I don't want to know what your thought is. Number one, I think that man without any need to strive for another level. Yeah, bad shit happens. I agree. When you when you have a bunch of people sitting around, like as much as we wish everybody would sit around and say, kumbaya, somebody's going to get bored. I agree. And that's bad. Yeah, that's bad. You've got to have like that to me. I'm a capitalist at heart. That to me is what makes capitalism work is it gives you the ability to strive for another level and it keeps people from doing the various things, I guess, in general society. How great if there's people who do bad things in the capitalism, but just in general society. I don't I don't foresee just as humans. I don't think we're wired to have a kumbaya society. I don't I don't think that's possible. I don't think it's like human and we've proven it all. Yeah, it's never worked. It's never ever. What those islands where like there was an island somewhere where we're like all these billionaires had houses and I guess I was reading an article on vice not telling I was like it just it just decayed into madness like Lord of the

40:16Flies where people were just like, no, this is just you just it just can't be done. So I had a problem with that. The second problem I have with is I think it sets this bad precedent for people that they're like, I don't need to do anything because Elon says a guy, you know, we're all going to be living this kumbaya thing. Yeah. So I'll tell you what, man, I have some very strong beliefs on that. You know, and I'll just I'll use another frame that I said in the book. I believe there's two parallel economies running in our world right now. Okay. And you can choose which economy you're playing in. There's the dependency economy. And the dependency economy is based on look, there's a path. The government has my best interest in mind. Wall Street has my best interest in mind. I'm just going to go to work. Keep my head down. I'm going to stay dumb with money. I'm going to binge on Netflix. I'm just going to have my job for 40 years. And you know, I'll be dependent on everything working out stock market taxes inflation. You name it. It's someone else's problem. Not mine, right? Pension plan. The pension plan, right? And in the in the dependency economy, you get what you earn. You get what you deserve because you never take the initiative to learn the rules of the game on money. You become dependent. And we can kind of see what's happening in our political system right now. I think our political system caters to

41:18people who are victims of the game that they've set up, right? And they just promise them free stuff. Take from those guys and give to you. And there's only so far that's going to go, right? And so that's the dependency economy. If you want financial freedom, it's not just doing the dependency economy better. It's actually doing the exact opposite. And you know this every, every wealthy person you've hung out with, they don't get wealthy by having a mutual fund that performs better than someone else's mutual fund. So it's the ownership economy. And the ownership economy is the base of what freedom really is. I own my money. I own my choices. And that's one side of the stick. I have to pick up the other side of the stick, which is I own the consequences of my choices. And the best thing about the ownership economy is I learn real lessons. Like I have lost so much money in real estate. I've made so many stupid mistakes. But if I'm smart, I never make the same mistake twice, right? And I just build a better system that gets better every time I get real world feedback. So the ownership economy is owning my money, owning my decisions and owning assets that I understand produce income for me. And that's, that's really the game that I look at. So

42:18in this future based world of everything's perfect, everything's wonderful. I think it comes back to the core premise of money. If I own assets, I own my time and I have more options with what to do at that time. And if things are falling apart, as the government sings this kumbaya song and says, Hey, we're putting everyone on universal basic income and that now everyone's just going to be poured together. That's basically what social is. Yeah. Yeah. The problem with socialism is always running out of other people's money. So it says market that year. But then what do the owners do? I mean, the owners, they find a way to circumvent the system. They go somewhere else. I mean, it's the whole book book of Atlas shrug, right? The owners leave and they go form their own society elsewhere. And so, you know, the more I look at the world that we live in today, the more I stand firm on ownership, ownership of free speech, ownership of money, ownership of choices. And that's a challenging place to be, but it's the only way to be free. Okay. All right, last question. Path A. Path B. Path A. Path A. By one property cash. All in cash where it cash flows heavy or option B by three properties with plus 6% interest leverage. Man, always option B.

43:23Always option B. Always option B. Why the leverage? Well, because it comes down to the core premise of money, right? So I mean, money is debt today. Debt is leverage. And so if I buy in cash, yeah, I own the assets. But when I buy in cash now, I, you know, I've got cash flow, but why not use the bank's money, right? If I can use the bank's money, look, and my wife always gets mad when I say this, so this is going to go to your broad network. But like, there's two ways I can go rob a bank. Okay. I can go into the gun. Or I can go in with a single family home or a piece of property. And either way, the bank's going to give me money. I want to, I just go to Joe with after and when I go home with a property. So if I can use the bank's money, if I can use the economic system to buy more assets. And then if you really consider anyone who owns real estate understands, this is the greatest power of real estate. It's using debt as income. So I want the ability to use debt to acquire assets, to build a portfolio. And then I want the ability to use debt as a way to generate tax-free income. That's really the game for me. And if we just look at it from a rate of return standpoints, right? If I buy a property and we'll just use simple math, buy a property at a

44:24hundred thousand dollars. And it appreciates by five percent. But if I bought it with all cash, my rate of returns five percent. That's where everyone's going to point to it and say, dumb, right? Markets better than that. But if I bought the same property and only had to put 20 percent down, and it's still appreciates by five percent, my rate of returns 25 percent. Same property, but leverages and multipliers. It's really what multiplies my rate of return. What allows my money to work harder. Yeah, but you also did you didn't include it for a total internal rate of return. You've got to include the cash one, that equation. Totally. But even if I include the cash one, it's not going to, like, it won't go to 25 percent. It won't go to 25 percent. Yeah. So the way I look at it is, and this seemed to let by love of his book, he says anti-fragile. If I'm going to use the game of leverage, if I'm going to play that game, I've got to counterbalance my barbell with liquidity. Liquidity and leverage have to go hand in hand. If I go all in on leverage, I'm not going to play the game or really stay for long, right? I'm going to get knocked out of the game. But if I go all in on leverage, I can build a much bigger, much more robust portfolio, and I can shift the risk to the bank, not to me. And I can just counterbalance that with having a lot of liquidity. And that's again, kind of where the life insurance component comes in.

45:26Got it. Cool. We'll do it. Super interesting. If they want to buy the book, where can they buy it? Well, it's retirein10years.com. That's the easiest place to buy. We get that. You know, I'm going to ask one more question, too, because I wanted to ask this, and I forgot to ask it, which is this. So many years ago, when you were struggling, here you were, you read Rich Dad Portad, and then you read Robert Allen's book. And now you've got him on the back of this book and Robert Allen co-wrote this book with you. We never even talked like, that's pretty amazing. So how do you go from finding your heroes to working with them? Man, I'll tell you what's, you know, when I first walked away from the corporate world, I walked away out of pain. Like I just, I didn't know what I was quitting to. I just know I didn't want that anymore. And it was kind of crazy. You know, a couple, most people thought I was crazy. I walked away from a six-figure salary, right? I was making good money in the medical cell division. But there were a few people that said, how did you do it? And can you show me, too? Right. And so I gave him enough information. I read these books. I did these things. Go try that. And they'd go do a couple things. Then they come back and talk to me and I'd say, okay, maybe try this. That's when I got stuck here. Here's how I did it. And I just started spiraling to

46:29where I saw people getting results. And they would send their friends. And I started working with people, which then turned into a company. I've been now doing this over for over 10 years. We've done over 5,000 single-family homes in this 10-year period of time. And the craziest part is, the real estate is a major component of it. The life insurance is a major component of it. But the most powerful part about what we've built as a community, a community of people that can help keep you in the game, can help all the questions that you're ever going to ask have already been answered instead of that community because people have lived it. Time machine. And so a couple of years back, we were doing one of our big live events. And I thought, you know what? I mean, I talk about these guys all the time. I'm going to hit these guys up. I don't know them. I'm going to hit them up and just see if they'll come to this events, right? And so I hit them both up and they came, Robert Allen came to the events and we stood them on stage in front of hundreds of people. And I gave him an award and said, it's a lifetime achievement award. Like, you inspired me. And because of that, I was able to inspire all these people. And he got so emotionally. It was, it was, I mean, his life. Sometimes he said, you know, when you sit down or write a book, you never know who's reading it.

47:30Yeah. You read it. And look what you did and look. And so he came in and he's like, you know what, man? I want to do anything I can to help you. He's BFFs with Robert Kiyosaki. So he introduced me to Robert Kiyosaki. And it was the same thing. All I wanted to do is say, look, I stand on your shoulders. Thank you. And so both of these people, when they saw what I had built using, because man, I referenced them constantly through what we do, they went all in and they've been helping me promoted, helping me drive it, introducing me to their connections. It's been, I mean, that was one of the greatest rewards, honestly, is to be able to go back to the mentors who inspired me and say, thank you. And I wrote this, I wrote this and I'd like you to be part of it. Unbelievable. Guys, the book is retired in 10 years or less. Where can they get it? Anyway, Amazon, Amazon, just go to retirein10years.com. We give out $500 with the bonuses that go with it. Awesome. Pick up the book, dude. And where can they find you look on the on the grand one? Yeah, the grand, I mean, the Ryan D. Lee is basically where I'm at. Don't we all be something on the, yeah, someone's got the John Gafford Brian D. Lee, but some though Ryan D. Lee. Yeah, me too. Yeah, I hate that because people think you're just being

48:32puppets. I know. No, somebody else had your name before he had it. You got to do something. And he's an actor. I tried to get him. He's like, he's super famous. I know. There's a run. There it is. All right, brother, I appreciate it. Have any of your time back in Vegas. You're always welcome back. Guys, if you listen to this today, man, listen, yes, I wish we could all go back in a time machine and buy houses for $130,000. But nobody's coming to help you. You got to get started in this. There are places in this country where you can buy doors that do cash flow and will appreciate start doing the work for your future today. See you next time. What's up, everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it, or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escapingthedrift.com. You can join our mailing list. But do me a favor. If you wouldn't mind, throw up that five-star review. Give us a share. Do something, man. We're here for you. Hopefully you'll be here for us. But anyway, in the meantime, we will see you at the next episode.