BiggerPockets Money Podcast - 396: The Investments That Will Give You COMPLETE Time Freedom

Episode Date: March 27, 2023

You want to retire early, but odds are, you think that you can’t. Whether it’s a high-stress job, a business that requires your full attention, or just the belief that you MUST be working, most Americans don’t think they can regain their time freedom. But most people don’t know about “lifestyle investing.” Instead of trying to be the wealthiest investor with the biggest house, fastest car, and most money in the bank, lifestyle investing asks, “what do you TRULY need to be financially free?” And there’s no one better to answer this question than Justin Donald, author of The Lifestyle Investor: The 10 Commandments of Cash Flow Investing for Passive Income and Financial Freedom. Justin redefined what it means to be rich by focusing on time, not money, as the most important metric. He went from working as a stressed-out business owner to having complete time and financial freedom simply by putting the lifestyle he wanted before everything else. And he has a lot to teach those of us that have yet to hit financial independence. Today, Justin will define some of his cash flow commandments, explain why passive income is the most essential investment you can make, and detail how to start living a proactive, not reactive, lifestyle. No matter where you’re at financially, this shift in understanding will help you build the life you love, WITHOUT creating more tasks for yourself to take care of! In This Episode We Cover Lifestyle investing explained, and why time freedom is far more important than money  How to find out whether you run your business or your business runs you The ten commandments of passive cash flow and where to find it Real estate investing and other income streams EVERYONE should know about  Diversification vs. concentration and which builds wealth faster De-risking your investments and how to get money out of any deal your enter And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Mindy's Twitter Jamil's Profile Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Subscribe to The “On The Market” YouTube Channel Listen to The “On The Market” Podcast: Spotify, Apple Podcasts, BiggerPockets Check Out Mindy’s 2022 Live Spending Tracker and Budget Money Moment 12 Ways To Make Passive Income From Real Estate Investing Click here to check the full show notes: https://www.biggerpockets.com/blog/money-396 Interested in learning more about today's sponsors or becoming a BiggerPockets partner yourself? Let us know! Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast where we interview Justin Donald and talk about his book, The Lifestyle Investor. When people buy their time back, it gives them permission to really pursue the things in life that they truly desire, the things that fulfill them and give them passion. And for me, I felt like I was working harder just to make more money, to maybe move up or expand or grow. And eventually, this business that I created to own owned me. It owned my time. Hello, hello, hello. My name is Mindy Jensen. And joining me today is my guest co-host from our sister podcast on the market, Jamil Damjee.

Hi, Mindy. I'm so happy to be here with you today. I'm so excited. You have joined me, taking, filling Scott's shoes as he is off gallivanting on the ski slopes, being a slacker. Who is not a slacker is Jamil. He fills Scott's shoes. choose admirably because he's wonderful. Jamil and I are here to make financial independence less scary, less just for somebody

else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting. Whether you want to retire early or travel the world, go on to make big time investments in assets like real estate or start your own business, will help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams. Jamil, thank you for joining me today. I'm so excited that you're here.

I am also super excited to talk to Justin Donald because he has what is possibly my favorite quote of all time. He said, live life by design, not by default. And that is, I've been looking for that phrase for my whole professional career. I had such a great time on this episode. I had an extraordinary time on the episode as well. I love being around people who are well, versed in all aspects of investing. You know, I've spent my entire life, I'm, you know, near 45 years old,

and everything I've done is real estate. Tonight, today, we get to talk to somebody who was so diversified and allows me to expand my mind into different aspects of ways that you can invest. It was very eye-opening. With actionable tips, realistic actionable tips. Sometimes you get these actionable tips, and you're like, hmm, I'm not going to do that. There are actual. tips that you can take and put into use right now. Well, I mean as soon as you're done listening. Before we bring in Justin, we have a new segment of the show called Money Moments, where we share a money hack, tip, or trick to help you on your financial journey. Today's Money Moment is, need some extra cash? We have a wacky way to make some extra money

on the side. Wrap your car. Many companies are actively looking for people who are willing to wrap their car in the company's advertisements for a mobile billboard. You can earn anywhere from $50 to $500 depending on the size of the wrap and the brand. All right. Before we bring in Justin, let's take a quick break. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact.

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You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves the needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code pockets at Monarch.com for half off your first year. That's 50% off at monarch.com code pockets. I love Matt, said no one ever. Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes.

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Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly re-listen to the highest impact titles. Lately, I've been listening to Bigger Leaner Stronger for Fitness, the Anxious Generation for Parenting Perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful is its breadth.

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Justin is the author of The Lifestyle Investor. the Ten Commandments of Cashflow Investing for passive income and financial freedom. Justin, welcome to the Bigger Pockets Money podcast. Hey, thanks for having me, Mindy. I'm glad to be here. Justin, can you tell us a little bit about yourself and how you got interested in investing? Yeah, you know, I have been always kind of fascinated by the world of money, the world of investing, just, you know, finance in general.

It is something that I, in college even dissected quite a bit and went in a few different paths of specialization and even like kind of niche topics, niche markets. One of the classes that I took in college was arbitrage strategy where I had a professor. So at the University of Illinois, they do a really good job of bringing in these adjunct professors that really have real world experience and then just teach classes based on what they do. And so one of my professors actually said, hey, here's how you make money on spin-offs and mergers. you find the arbitrage. So any that you find that I like,

I'll be the money and I'll split the profits 50-50 with you. And so I had that class. I had a real estate class. I had a class where we invested a million dollars of alumni, a specific alumni's money. And this class was 20 people that were selected out of the business college. And we had to go a full year and manage money for our investor client. this pretty successful alumni.

And we did very well. We ended up making them money. But it was kind of a nerve-wracking process since it was real dollars. And we were young at this point in time. So I've always really enjoyed it. But I think when it really became kind of evident and clear to me that I wanted to pivot my life more into this as a profession instead of a hobby or something I did on the side, it was after kind of just some late nights running, you know, kind of opening a business

that was taking all my time, all my energy. It was a weekend night. I was at the office. My friends were all out trying to drag me out. And it was kind of like, man, I'm missing out on so much fun that I think people my age do. And I think that what I'm doing is going to set me up better later. but I don't want this to be my life later. And just reading books of smart people that kind of came before me and it figured things out,

I read Cash Flow Quadrant really early on and just had this epiphany that I thought I was a business owner when, in fact, I was really a sole proprietor paying way too much in taxes. And I either needed to figure out first how to be a business owner where my business could operate without me or second, and even better for me, how to be an investor so that my time is not tied to the dollars that I make. And so those were a few of the moments and I guess discoveries that I had that helped me pivot into doing this as a profession. Awesome, Justin. So I love what you talk about here. And, you know, just the concept of being consumed by your business, being consumed in a way that you're being completely taken out of everything that's important to you in your life.

So I want to understand, you know, when did you finally realize the power that financial independence was going to give you in your life? Well, it's interesting because for me early on, I saw, so I didn't have a lot of role models early on. So that's why I kind of, you know, I didn't have role models, I should say, in the business world, in the investing world. I had plenty of great role models just for character, integrity, work ethic, you know, that sort of thing.

but my mentors all became authors that had kind of done whatever it was that I wanted to do until I finally started networking in these circles. And so I met some people, ended up bringing, you know, kind of my goal was to create a peer group of other like-minded people, people playing the game of business and life and investing at just a higher level than me, a way for me to upgrade my sophistication in my game. And then I just started bringing mentors in, hiring them. Because at first I couldn't find anyone to take me under their wings. So I just, I paid smart people to coach me.

And eventually I got pretty good at a few different things. But I noticed that they were living this pretty incredible life that I wanted. And at that point in time, my money was completely tied to my time, right? If I did not work, my business could only carry on so long without me. This isn't one where I could literally leave and it's fine a year later. that was not the case. You know, maybe I could get weeks or potentially even months away, but that was it. And so I noticed, though, with, you know, my mentor that first got me into real estate and one of my friends that really opened my eyes, that they were living this incredible

lifestyle, that they didn't have to work. They chose the projects that they worked on. They were really intentional with their time. They figured out who they wanted to spend time with, and they just did for extended periods. And I also, noticed that when people buy their time back, it gives them permission to really pursue the things in life that they truly desire, the things that fulfill them and give them passion. And for me, I felt like I was working harder just to make more money, to maybe move up or expand or grow. And eventually this business that I created to own, owned me. It owned my time. And I just wanted to escape that on many levels and live a life similar to my mentor at the time, my friend at the

time who really got me into real estate investing and truly choose where I spend my time. Because I knew if money was taken care of, if all my expenses, if lifestyle could continue without me having to work for it, that I would then be free. Not that I had to have that, but it was like a comfort that once. I had that, I could be free to kind of pick and choose where it was that I wanted to spend my time and with those whom I wanted to spend it. What was your business and why did it depend on you being there? Well, I've had a number of businesses over the years.

I mean, early on in my career, I worked with Cutco when I was in college. That's how I paid for my college. And I eventually got into management with Cutco. I ran my own office as a college student in between my junior and senior year and did well with it and had fun and learned a lot of skills and had great mentors. And so when I graduated, I interviewed around and nothing sounded like what it was that I wanted to do. It didn't sound more fun than like having my own business. So it was like having a business under the umbrella, you know, of a parent company where I kind of, you know, I was primarily a business owner,

but I didn't have to worry about fulfillment. I didn't have to worry about logistics, some of the tougher things, but the rest of it really, you know, was an entrepreneurial endeavor where I hired and trained and, you know, did all kinds of recruiting for different positions. And so I did that for years and years and did very well. And, you know, at a certain point, had, you know, about 4,000 people that were working for me in my peak with this organization over five different states, about 300 managers or so. And I just saw that with all the systems that I had in place, it just wouldn't completely remove the part of the business that really relied on me to run and grow and scale. And so, you know, I did it better the next time around when I started a company with a couple of friends and we scaled that company. That one was better because it was a system-driven business from the beginning. where we were able to bring in executive level talent over time and just, you know, top performing

people in other industries and bring them in. So that business, you know, was the benefactor of having gone through a business that wasn't very system oriented, at least in the beginning. And so there was a little more time. There was a little more ability to peel away and have the business function at a high level without me being tied to it. It's really interesting, Justin, because I know a lot of sharp people, pun intended, that have come from Cutco. I don't know what they feed you guys there, but it's incredible. We understand that you're pretty heavy into real estate. And I just want to understand, you know, how did you get into that journey of being in this asset class and how did it become a focal point for you? Well, it was one of those things. You know, I wanted to figure out what's the best way to transition into a life of passive income. And there are a lot of options out there. I mean, you could go the private equity route. A lot of people do that with their own company.

You have some people that do that by investing in other people's companies. You've got real estate. You've got, you know, debt or private credit. You know, you've got a lot of different avenues that you can take. Recently, a lot of people, you know, utilize cryptocurrency. And so there's various ways to do it. I just felt like real estate was like the safest way to do it. that it, like, I have an asset that likely isn't going to go to zero dollars. So like, let's say I

mess everything up and I'm just a total screw up and I am just not good at this real estate thing, that if I sell it, I'm probably not going to lose everything. I might lose something, but just not everything. And then the fact that you can use leverage to your advantage was also positive for me because I could buy property for 15 or 20 percent down and some of it with really nice, you know, seller finance notes or, you know, friendly, you know, let's call it local bank financing where it's a lot different than your regionals and your national banks and where it's really, you know, relational, not transactional, like it's a relationship business. And so I just saw this to be the way where I could get the best return on the dollars I put in, but it also

protected them in a way that was a lot safer to me. for what I knew at that point in my life than anything else. And so one of my friends bought a mobile home park. He actually owned a bunch of single family homes. And he's like, this is so much work. I think I want to get out of the game of these single family homes. So I'm going to sell them and I'm going to buy mobile home parks. He's like, I'm going to a seminar on it.

Do you want to come with me? And I was like, no, that sounds horrible. I have zero interest in doing that. Have fun. Let me know how it goes. Well, he ends up going, sells his single family homes, ends up buying a mobile home park. And this thing was a cash cow. At that time, he was one of my top sales guys.

And so, I mean, he did a great job. And I remember him being like, hey, I just want to let you know I'm going to be leaving. And I'm like, leaving. You're one of the top guys. What are you talking about? And he's like, well, I now make more just with the mobile home park. that I make actually with my active income. And that was mind-boggling to me.

And so that right there was this, this aha moment of, okay, all right, walk me through this. I need to understand this a little bit better. And so he walked me through it. At the beginning, I was lending him money. And then I was like, why am I lending you money? I could just go buy these outright and make like the full amount, right? And he's like, yeah. So it was a good friend.

you probably should own them. You shouldn't lend to me. I can find money, you know, other places. So I went and bought my first mobile home park, and that park replaced my wife's income. She was a teacher at the time, and she was able to stop teaching. We were able to prepare for having our daughter and for her to be able to kind of stay home and do that on her schedule. And so it was a real blessing to kind of get started that way. And one fail swoop to replace her whole income. So what does your real estate portfolio look like now? Do you still own that first mobile home park? I do. I do. So, Mindy, I have invested in every type of real estate you can probably think of unless it's super obscure at this point in my career. The largest holding that I have is still mobile home parks. I like them because there's a lot of scarcity built into that asset class because there's only 44,000 of them. They're being redeveloped every single year, probably about 100.

per year being redeveloped into something else. You can't build them or it's really hard to build them. It's just hard for cities to give you the zoning. So I like that it's a limited resource. So I'm a big fan there. My next largest allocation is it's in industrial real estate, specifically last mile. I think that e-commerce is here to stay.

I think it's going to keep growing. I think that having warehouses and distribution centers that can support the growth of e-commerce is going to be powerful. It's the best performing real estate asset class for the last five years in a row. So I'm a big fan of that. We've got self-storage and multifamily after that probably pretty neck-in-neck. And then I would say kind of everything else after that. But a lot of these I've sold positions in and I no longer own.

In real estate, or in mobile home parks, rather, I haven't sold very many of them because they've just been so easy to manage and they produce cash so well. And every single year that goes by, they're becoming kind of more desired by Wall Street. So the prices that you can get on an exit are just infinitely greater. I mean, just from a few years ago, the price that you can get now is like, ridiculously more. That's an incredible insight. And I think it goes in line with people's mindsets, right? You don't necessarily think a mobile home park is going to be easy to manage, easy to finance.

These are things that we normally would just think, no, that doesn't go well with each other, right? And so I appreciate the fact that you bring such an interesting mindset. And that's what allows you to invest the way that you do. But circling back to the way that you invest, the book that you've written is titled Lifestyle Investor. And I find that a very great title, but I want to learn more about it. What do you mean when you say lifestyle investor? Well, my goal is to really live a life that's on my terms. So I find that earlier in my career, I was living life on someone else's terms. I was maybe even chasing things that other people

thought that I should chase. In fact, you know, instead of getting, you know, clarity in what it was that I ultimately wanted. So the whole idea here is I want to help people really live an epic life. I have found that life for me is just so much more fulfilling and so much more fun as I pursue the things that really give me joy. And, you know, for me, I'm definitely kind of this eternal student. I love to learn, but I can tell you that my energy has gone through the roof when I've been able to direct that into the things that I actually want to learn the most about. Like, that is fun for me. And so I think most people, if they're like me, they were going through life on autopilot.

And it's almost like, you know, you put out fires as they come and there happen to be a lot of them. And so it's just a lot of time spent on reacting to what's going on around you, reacting to the business, reacting to employees, reacting to, you know, customers, reacting to people. reacting to situations and I just wanted to get out of that I didn't want to finish the day and feel like I didn't have time for myself or I didn't have time to focus my energy on the things that really filled me up and so once I started getting a lot more proactive and carving out time and having you know technology free time and time that I just can't be distracted that's when I really started pivoting into more of intentional living and you know gaining clarity on what

would a good life look like for me you know for everyone it's a little bit different but I was able to create some boundaries for me around what that looks like what you know where my uh no kind of lines in the sand are and that was just really beneficial for me so my goal is to help people buy their time back I really feel I really believe that when people own their time and they don't have to work they don't have to make more they don't have to keep up with a certain lifestyle I think that when you can become intentional and live a life that is more by design than default, it just creates this extra passion that I just don't want to live life without. That phrase, live life by design, not default, is a phrase that I have been struggling to

come up with. So thank you. Because what I have said is people just let life drag them along. And no, don't live life by default. Oh, my goodness, I love that so much. What are the principles of lifestyle investing? Well, let's jump into this. Yeah, so there are a number of them.

I mean, the way that I kind of built the lifestyle investor was that I wanted to create the framework or the criteria that I use in figuring out how to invest in things that produce cash flow, ultimately, first and foremost, buying and. assets that have some sort of income, some sort of cash flow where you get utility today. It's not tied up in the market. It's not, you know, in a company that may not have an exit. If ever at all, or, you know, maybe it does, but it's like 10, 15, 20, 30 years from now. My goal is to figure out how do I get utility out of my capital today so I can actually impact my living today? So my, you know, 10 criteria or what I call my 10 commandments,

of cash flow investing for passive income and financial freedom. They're really the rules that I have put in place. So that way I make better decisions. I have found that when decisions are emotionally based, it can lead to some disastrous situations. And by the way, I've learned that because I've done it. I have made these mistakes. And so I wanted to come up with guidelines for myself that would allow me to to achieve this goal, this dream life, and at the same time, protect me from poor decisions

so that way I could make decisions from a place of logic, criteria, a framework that's already set and a checklist that I can just run things by versus how do I feel that day? How do I feel about this person? How do I feel about this in this moment? Because it could be a great person and it could be a great, you know, asset class, and it could be the right time and then one day later it's the wrong time, right? So it's like the season of life, the season of the economy can dramatically impact something. And I think when we have this top-down view that's a lot more holistic, it makes it a lot easier to make smart investment decisions.

Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off

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as I was reading your book, you talk about the things that we come into investing or we come into our thoughts and beliefs about money in life with, right? Like, oh, rich people are bad or rich people are greedy or you have to screw people over in order to make it in life. And so I love that you address our mindsets and the baggage that we bring into day-to-day life and how we address money. How does that work for you? How does your mindset evolved? And how do you get that message to people in a way that doesn't make them feel alienated? Because they've been grown up with that, right? If you're 45 years old and you have a mindset that's scarce,

how do you adjust that? Jamil, this is a great question. And it's such a tricky situation because everyone enters into, you know, relationships, investment opportunities, you know, business, new job, whatever, with a certain mindset based on beliefs that oftentimes were borrowed from family, friends, people that have influence, but were never like cross-examined to see if those beliefs are actually real, if they hold up, if they should hold up. And so I think a lot of us over the years, or I should, you know, maybe speak for myself, I found that I was taking beliefs that my family had as doctrine and beliefs that my friends had about certain things as fact versus just digging in and realizing that, oh, that, there's a totally different angle to this. And,

the way I've been viewing this maybe isn't the best way. It might actually not even be factual. But even if it is, it might not actually be beneficial to me. It might be limiting my ability. And so I just think from a mindset standpoint that you adjust mindset. You solve for limiting thoughts. You solve for, you know, there's so many mindset pieces where just a small tweak, a small adjustment is a game changer. And I think pivoting from more of a scarce mindset around, you know, even what's out there, what's available, what is possible for you to something that is more abundant, is seeing things as more infinite than finite, I think is one of the greatest lessons, one of the greatest ways to serve you and your future and those around you.

And I just think unlocking that for me has been one of the greatest, not only joys, but reasons I've been able to have the success that I've had is because I just stopped living in a world where it wasn't possible. Here's all the reasons why it can't work and into a world of, well, if this person can, so can I, if I follow the playbook. and maybe I'm not as good. And maybe I follow this playbook and I follow most of it and I'm like 70% as good. That's still better than my current situation.

And that is a win for me. I don't want to spoil the book, but I want to talk about the 10 commandments of lifestyle investing. And then I want to deep dive into a couple of your favorites. Yeah, you know, it's interesting. Each one is important to me. me, although I do have them ordered in a way where I think that there's a bit of a hierarchy, right? Like the first one is lifestyle first, and that really gets back to what Jamil was talking about earlier, where, yeah, to me, it's important that lifestyle is the foundation. So for me,

when I invest, I want to invest in a way that supports lifestyle, that, like, gives me time and energy, not takes it away. I know a lot of people that invest in their business or in other businesses, and it's really in a way that's going to hook them in. It's like tied to their time. And I think most people really live in a space where they are a bit of, you know, a slave to the business that they've built, the job that they have, the security or safety of what they're accustomed to, the lifestyle that they're accustomed to.

And so there are these golden handcuffs where it's not that people don't make good money. like they might make great money, but they might be working so much harder to make a little more, so much harder to climb the corporate ladder just because they put in 20 years and feel like it'd be a waste to leave. And so my goal is, how can I invest in a way and teach others to invest in a way where it's not dependent on my time? I'll do some time to research it and it's a one-off time allocation that's been committed. And from there on, my capital is doing this. the work. My equity is doing the work. That investment is producing income. And so I do start the book off there first and foremost, at least in my criteria, in my Ten Commandments, with Lifestyle

First. And I followed up quickly with the second commandment, which is, you know, really focused around risk. I want to reduce the risk because most people, I think, invest in a pretty risky way. They invest in a way that's like... gambling. Yeah, yes. That's exactly it. And by the way, let's say, so first off, if you're a business owner, the odds of the business succeeding, and by the way, congrats to everyone who still has a business, even through the chaos of COVID, maybe you started a new business, but the odds of a business succeeding are really not good. It's a small percentage. So most people have all their eggs in that basket if they're an entrepreneur. And if they're not an entrepreneur, then they

have most of their eggs in the basket of the stock market or whatever qualified plans, the company offers, you know, IRAs, whatever. And so there's just all this exposure. You know, this is what banks, you know, and by the way, we got all kinds of banking issues right now, but this is what banks would consider concentration risk, right? And I think it's important that we look at the lens of like, anytime you have 90% of your net worth and any single asset, that's, that's, or asset class, or in many cases, like, ACE, or, or in many cases, like, specific asset, that's dangerous. So I just want to encourage people, you know, as they invest, there are ways to invest where you can protect your investment, where you cannot lose everything

or you can layer the risk to how much you can lose. But you can de-risk it along the way with being able to pull money out early, being able to have cash flow early, being able to utilize depreciation or amortization or different things that give you tax advantages. So there's just a lot out there. And so, yeah, those would be kind of my one-two punch. How do you live a great life and how do you reduce the risk so that way you can keep living that great life? My favorite one that right there is reduce the risk.

You said something interesting. You say that most people invest in a risky way and you watch these meme stocks and you watch these people doing. it's well documented that I am not the biggest fan of cryptocurrency. I don't have any cryptocurrency and this isn't a discussion about cryptocurrency. It's about how people invest in crypto or like whatever they're investing in. I think they invest from a position of not knowing anything about it. They hear something on the news.

They see that what was one of the meme sucks? The movie theater. Was the AMC theaters? AMC Theaters is up. Oh, it's a can't lose stock. Everything is a can lose stock. Absolutely everything. Tesla is a can lose stock.

Come look at my portfolio the last couple of days. It's awesome right now because Tesla is drinking again. But, you know, I at least I don't have any bank stocks right now. But right now, I am making an educated investment and I can afford for my investments to go down. Reducing the risk means a lot of different things. I want people to know that if you're putting $20 in crypto and all you have is $20, you're not investing intelligently. When you put every single thing you have into something that you don't understand, you're doing it wrong.

Yeah. I mean, there's so much brilliance in what you're saying there, Mindy. And I just have to say that your friends do diligence or your friends, opinions are not your own and their criteria is different and most of them probably aren't doing good due diligence and so you got to do your own. But also, let's say they are. They have a different criteria. They have different, they're in a different place in life. They have different risk profiles. You know, I had an early mentor tell me, he was telling me this story of this watermelon and how he got this scooper and he would scoop these watermelon balls,

kind of like, you know, ice cream, you know, like an ice cream scooper, scooping all these balls. And he's like, this is so great. I love watermelts, my favorite fruit. And he literally ate, literally ate the whole watermelon. And he said, and then, you know, my stomach hurt. I felt sick. I would, you know, I felt bloated. It was like the worst feeling.

And he said, in anything, too much of a good thing. It's not always a good thing. And that has just always stuck with me that like most people where they're like, this is so good. let me just put my whole net worth in it. It's crazy. So I like to follow what the smartest people in the world do and not just the smartest based on, you know, intellect and talent, because a lot of them are hiring people, but what are the wealthiest people doing to create the most wealth? And if you look at family offices, if you look at the, you know, the billionaire's portfolios and the allocation that they

have, if you look at, you know, any of the reports that the major banks that have exposure to the the highest net worth individuals, you will see that it is an allocation game. It's not about maximizing. So many people want to maximize every dollar that they have. That's risky. The goal is to have hedges. What the banks, you know, some of these banks failing right now don't have, right? They didn't have the hedge to interest rate, you know, to protect an, on a rising, a rising interest rate environment. Like, you've got to have a portfolio that when times are or bad or what, you know, rocky or turbulent that you've got part of your portfolio that can weather it. So the cumulative of it is good. And so like I look at cryptocurrency. For me personally,

I'd never put 100% of my net worth in there. I've got friends that have done it that did, that timing was right and it worked for them. And I've got friends that did it and timing didn't work. And it's a lot more of my friends that it didn't work for than it did work for. But when I look at family offices, they generally, like a lot of them have no exposure to cryptocurrency, but when I look at what most do, like from a holistic standpoint, it's generally about 1%. Some maybe go as high as 2%. And so to me, like, and you can look across the board at all the asset classes and see, you know, where private credit is and see where, you know, the stock market is. What, you know, what percentage is public equities, what percentage is real

estate. And the reality is it's spread out amongst a lot of different things. It's not concentrated in one area where if that thing goes under, if your business goes under, if the stock market gets absolutely rattled and all your money's there and you're about to retire, like there's some things that are just not like you can't recover from. Justin, I love this topic. And, you know, my opinion of cryptocurrency is they call it cryptocurrency because when you go to take it out, it's gone. It's hidden. It's crypto. It's not where you think it was, right? So I'm not a fan.

But, you know, we're a very heavy real estate audience. And I believe many of us may have all of our eggs in the real estate basket. So you're talking about diversifying your investments. Tell us some asset classes that are not real estate that you invest in that could be worthwhile for our listeners to educate themselves on. Sure. Yeah. I mean, this is a really fun question. And by the way, for those in real estate, I know there's the argument to be, you know, an expert in an area and just become the best at it.

There's a completely opposite philosophy, which is diversify. So don't have all your eggs in one basket, you know, be spread out even in real estate. And part of the reason for me, I became an expert in one. And I probably could have just kept doing that, but it was a little boring to me. So I wanted to learn other things. I wanted other exposure. And then I also wanted to diversify. I thought long term, that's probably safer.

And so even in real estate, I diversified. But beyond that, I mean, it did get me my start. And, you know, I bought my second mobile home park and that one covered our survival income. And I bought my third one and it covered our lifestyle income. So from that point on, everything was surplus. And so as the surplus dollars rolled in, I had this new problem. My problem originally was I've got no passive income. I need passive income to live this life that I want to live.

And then once I figured out how to get passive income, a new problem was I have too much passive income, which you would never think is a problem. But I needed to figure out what to do with it. Where can I put this where it is safe? I'm not just a consumer that is spending every dollar that's coming in. I also don't think that's healthy. So that's when I started looking at all these different asset classes that were out there that I figured I probably could use some exposure to. So for example, I started investing in companies.

So sometimes I would buy a company up completely myself or I'd invest into a portion of equity in a company. I'm at the point in my career where I don't make any decisions that are going to cause more work for me. So I'm not going to buy a company that I have to run. I'm only going to buy a company that I can put an operator in or already has an operator to be able to run. But that was a great use of capital, you know, finding some businesses that we could own outright, finding some other businesses that had operators and taking a percentage of those. So that has been big, especially in like the mom and pop, you know, industry. You got baby boomers with maybe a smaller business.

There's less competition. and they don't even know if they can sell it or that they can sell it. They think they might just shut it down when you could buy it for a really good price, which we've done. I like just having some exposure to technology. I think being in, you know, I would say e-commerce, technology, health care. I mean, those three niches, you can put some of those under venture capital. You can put some of those maybe further on. You know, beyond, I mean, like they have made it.

So they're not really early stage anymore. They're later stage. I love investing in later stage. I love investing in secondaries of privately held companies where I can get employee shares at a discount of price because they need to get out, but they still have a huge win based on what they got in at, right? So everyone wins in that scenario.

I like, you know, music royalties for the right ones. I like original content if the deals can be structured the right way. I like cannabis investing in lending for the right deals. And then just private credit in general. I'm a huge fan of figuring out a percentage of the portfolio that can be allocated to, and maybe it's 10%, maybe it's 15%, maybe it's less than that. but where you can be in like a senior secured position. So anything goes wrong, you take over the asset.

And that asset ideally is collateralized, but it's worth way more than the dollars in. So if I can put in, you know, $100,000 but have a $2 million asset that I would take possession of, I'll do that all day every day. Like that is a great deal. And I hope they don't lose. I want them to win. but I want the pressure that if you lose, you're giving up way more than you need to, so you're going to be resourceful to make sure that you don't default.

What is the number one piece of advice that you would give to someone who is just getting started on their journey to financial independence? Oh, that's a fun question. I mean, I think for me, I would say, find a peer group, find a mentor, get around people that are smarter than you in this specific area so that you can elevate your game. and just start thinking the way they think and asking the questions that you have and learning to ask even better quality questions. I do think the quality of your peer group, and I mean everyone has equal human life value, but if you know that you want to learn investing, then the quality of the expertise of a peer group in investing matters.

So like, seek those people out. This gets back to even what we talked about earlier, Mindy, which is living life on default. I think most people's peer group is based on default. It's based on proximity, right? Or intentionality. How can we design the peer group that we want that is the type of people that you want to become like and seek them out? I mean, I've spent a lot of my career seeking these people out. I'm now over 20 years in of finding someone that I want to either take to coffee, lunch,

dinner, once a week. So, you know, besides being on vacation, you know, it's, you know, two or three thousand hours of time that I've spent with people where I have proactively sought them out to learn from them and connect with them. And a lot of those people are now in my circle of influence, in my peer group. whereas before they didn't even know who the heck I was. I love it. I love it.

And, Justin, one last question. What do you look for in a good investment? Well, one of the things that I look for, so I mean, you really can look at my 10 commandments to see exactly what it is that I look for. So something that supports my lifestyle, something that I can de-risk. I like invisible deals, which is my third commandment. And that just to me means it's off market or it's not known by other people. Like I'm negotiating a deal that no one else knows I'm negotiating.

So there's no one else in there to bid up the price. Or it's a like I pay attention to trends, right? Like so something that I think not a lot of people recognize. And by the way, I feel like I've done very well for myself and made some smart moves. Just I'm paying attention to like what millennials are spending. Like, what are their shopping habits? What are their buying habits? Where do they spend time because the largest wealth transfer in the history of the world

is going to happen here from baby boomers to millennials, right? Like, we're talking $76 trillion, which is, you know, larger than, you know, the wealth of China. You know, like that is a big number. So what are they doing? So I like to look at, you know, trends. I like to, before something's mainstream, right? Like I got into cannabis a little bit early. I got into e-commerce early.

I got into technology early. I got into mobile home parks when people literally, I mean, my friends made fun of me about that. You know, I got into single family home rentals early before it was actually an asset class, right? So being able to spot the trend, I think, is really important. And then to follow that up, like, how do I get my principal investment back as quickly as possible? So a lot of people look at it like, well, when my money's in there, I've got all this equity and I should get some sort of IRA on that over time, right? My goal is how do I get my principal back as quickly as I can? Because if I get it back, it de-risks the deal.

And if I get it back, I can invest it somewhere else. So if I just invested in a deal, and since you guys are big real estate experts here, let's say that we can refinance out in a year and a half. Maybe even, you know, at some points I had deals we could refinance out in a year, which is so crazy to think about. But, you know, year, year and a half, two years, well, I can go take that money and put it somewhere else. I still got equity in the deal that I was in. Now this money's over here and we can get some velocity of money. And if I can set up maybe a six-month note with an equity kicker, which is just free equity, right, for lending this money.

And if I can do it on a six-month basis with some collateral, I can get those dollars back. And then I can put it in another deal, like a dog training company that I bought during COVID. Because I noticed the trend of everyone buying dogs during COVID. Even my friends that said they wouldn't buy dogs, bought dogs. And they're wreaking havoc in, you know, people's homes. And I'm like, there's something here. People are buying dogs. So I bought a dog training company.

I know nothing about dogs. Literally nothing. Don't own a dog. Never owned a dog. But I knew that people were going to do this and they were going to need it. And we just fixed some SEO on this company. The owner was paying himself $75,000. Found a friend that had worked with me in the past in corporate America now,

making $65,000 and said, you want a 10,000? pay raise and some equity, let's do this. And that ended up being an 11x in a year and a day. But again, that was a trend. And I put $100,000 in that one. And I got that money back in about four months based on the cash flow. And I was able to take that same money and reinvest it into a fourth deal. And as you can keep getting your principal back quickly in these deals, it creates this exponential growth because now you have multiple deals with multiple cash flows coming, with equity in each of them. You've got all your chips off the table in the previous companies. So there's no risk. If it goes under, you don't lose money. But if it doesn't, you make money

with no exposure. Justin, the way you think is incredibly powerful. And I heard you talk about people and who you've sought out, who you, people that you've wanted to actually be around and take out for dinner. And I'm sure there's going to be thousands of people that are going to seek you out. How do we find you, Justin? Yeah, probably the best place. You can go to lifestyle investor.com that has, you know, all the, all the stuff that we're up to, blog, online courses, masterclasses, mastermind. I've got a free book on there that you can sign up for. Or a strategy session.

Lifestyleinvestor.com forward slash strategy. Any of these can just be kind of great tools. And for anyone that just buys the book on Amazon or, you know, if you kind of get in the free plus shipping, you know, I guess funnel that we have on our website, all the proceeds of this. this book, I just want everyone to know, go to organizations that fight human trafficking. So the book itself has now become a top 1% of all books sold.

So we have had the privilege of being able to donate hundreds of thousands of dollars to these efforts to fight, you know, human trafficking all across the world, 30 different countries in the world. So that is something I'm very passionate about. And I just want to, you know, kind of create a little more awareness for people to know what's really going on. Justin, thank you for your time today. This was a lot of fun. And I now have some homework of my own to do looking at trends. I appreciate it. And we'll talk to you soon. All right, Jamil, that was Justin Donald. And that was fantastic. That trend tip at the very end, I am going to start writing down all of these ideas. Because I mean, how many times have you looked back on your, you're like, oh, that's a great idea. Hmm, I'm seeing a lot of this. I invented Uber. You invented Uber? Well, kind of. I thought of something like that before it ever happened.

And then it happened. You know, so like he's right. These trends, you know, paying attention. I feel like there's so many phenomenal ideas out there. And today we learn from a man who grabbed one of those ideas, watched what was going on in the world, grabbed an idea, put it into action, and 11 X's his investment. Get out of here.

In four months. Wow. I will have to tell you that I have never 11xed an investment in four. four months. Me neither. It usually takes a lot longer and it's usually a whole lot less than 11x. I love Justin and I'm also going to take the advice that he talked about seeking people out. I'm going to seek Justin out and learn more advice from him. He's somebody that I feel I got smarter from just talking to today. Absolutely. And that's really great advice. All right. I would like to say a special thank you to my co-host, Jamil, who stepped into Scott's shoes while he

played hooky and went skiing. So thank you, Jamil, for being a stand-up guy. And let's hope that Scott is still a stand-up Scott, not a fall-down-the-mounted Scott. Oh, no. It was a great hanging out with you, Mindy. Not only are you just beautiful and fun, but I learn a lot listening to you as well.

So thank you so much for the invitation. Jamil, where can people find out more about you and what's going on with you? You can find me on Instagram at J-D-A-M-J-I. That's at J-D-M-M-J-D-M-I. Also on my YouTube channel at YouTube.com slash Jamil Damjee. Awesome. Jamil, thank you so much for your time today. That wraps up this episode of the Bigger Pockets Money podcast.

He is Jamil Damjee, the Jamil Damjee. I am Indy Jensen saying, see you soon, Raccoon. If you enjoyed today's episode, please give us a five-star review on Spotify or Apple. And if you're looking for even more money content, feel free to visit our YouTube channel at YouTube.com slash Bigger Pockets Money. Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Kaelin Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the Bigger Pockets team for making this show possible.