Rich Habits Podcast - Q&A: Buying a Vending Machine, Wholesaling, and Selling an Invention

Episode Date: March 7, 2024

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz answer your questions!---Sign up for our next webinar, click here!---Public has finally released options trading on their platform! To learn more about all of the product features Public offers, ⁠⁠⁠⁠⁠⁠click here!⁠⁠⁠⁠⁠⁠---⭐ Download our FREE Budgeting Template – click here⭐ Earn 5.1% on your savings with a High-Yield Cash Account – click here⭐ Automatically buy stock where you shop with Grifin – click here⭐ Protect your family with term life insurance from Suriance – click here⭐ Use code “Spotify” for 15% off our 4-module video course – click here⭐ Optimize your portfolio with Seeking Alpha – click here---👤 Explore everything Austin does – click here👤 Explore everything Robert does – click here❓ Ask us questions for our Q&A episodes – @richhabitspodcast on Instagram📬 Inquire about working together – [e-mail]---Options are not suitable for all investors and carry significant risk.  Certain complex options strategies carry additional risk. Options can be risky and are not suitable for all investors. See the ⁠⁠⁠⁠⁠Characteristics and Risks of Standardized Options⁠⁠⁠⁠⁠ to learn more.For each options transaction, Public Investing shares 50% of their order flow revenue as a rebate to help reduce your trading costs. This rebate will be displayed as a negative number in the “Additional Fees” column of your Trade Confirmation Statement and will be immediately reflected in the total dollars paid or received for the transaction. Order flow rebates are only issued for options trades and not for transactions involving other assets, including equities. For more information, refer to the ⁠⁠⁠⁠⁠Fee Schedule⁠⁠⁠⁠⁠.All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, Inc., member FINRA & SIPC.See ⁠⁠⁠⁠⁠public.com/#disclosures-main⁠⁠⁠⁠⁠ for more information.Hankwitz Group LLC has an existing business relationship with NEOS Investment Management LLC. The opinions expressed are those of the author, and the author owns several NEOS ETFs.

Hey everyone and welcome back to the Rich Habits podcast question and answer addition. As a friendly reminder, if you have a question for the podcast, shoot us a DM on Instagram at Rich Habits Podcast. We only have one Instagram account. We know there's a couple scammer, Rich Habit podcast and personator accounts out there trying to scam you of your Bitcoin. Do not send anyone Bitcoin. Do not ever do that to anyone on the internet, especially an unofficial Rich Habits Podcasts Instagram account. Don't forget, you can also email us questions. Rich Habitspodcast at gmail.com. And we are always open to your questions and major shout out to the seven people who asked us these questions for today's episode. Now, before we jump into the episode, I just want to remind everyone that public.com, the all in one

investing platform, has now launched options trading. And with it, they're doing something that no other brokerage has done before. Public is sharing 50% of their options trading. revenue directly with you, the customer, and I tried this for myself. I did one option contract and it made like 20 cents, which I didn't know that's how much these companies made in revenue off me. So it's cool to see that transparency from public. So yes, whenever you trade options on public, you get something back. And of course, there are no commissions or per contract fees either. So by sharing 50% of their options revenue, you'll know exactly how much they make from your options trades because public is literally giving you back half.

of it. It's a more transparent approach to options with no fees and you get something back on every single trade. So go to public.com, activate your options trading account by March 31st to lock in your lifetime rebate. There's actually going to be a link in the description below to do that very simply and easily. And just as a quick disclosure, this was paid for by public investing. You must activate this options account by March 31st for that revenue share. We've got a shot clock now of about three and a half weeks. Get on that. Options, of course, are not. suitable for all investors and do carry significant risks. There is a full disclosure in the podcast description below, and of course, this is only for U.S. members only. Now, with that being said,

let's jump in to our very first question on today's episode of the Rich Habits podcast question and answer edition coming from Mari Pete. Marie says, I just found your podcast a couple months ago, and I'm trying to listen to all the episodes to catch up. I'm just about to turn 40 and my husband is 43. We've recently paid off $80,000 in student loans, but we're anxious to start saving for retirement. We've actually spent about 13 of the last 20 years of our marriage getting advanced degrees, hence the $80,000 in student loan debt. We just now fully funded a Roth IRA for my husband using the method you all suggested. But my question is, should we also be fully funding a Roth IRA for me or should I be investing that money some other way? Robert, what's your

perspective on this question? Yeah, this is a good one. And the answer is yes, yes, yes. You should fully fund an IRA for yourself because both of you can have these. And every single year you want to try and max those out, you know we love V.O. QQQ, maybe take a look at VTI, Mote. There's all kinds of funds that we like to have that basket of funds to have your base set there. So yes, definitely both of you should have that maxed out Roth IRA. And then also one thing to look at is between the ages of 43 and 65 with 22 years of investing, if you both max out your $585 per month over that time period, you would have $1.4 million combined. Again, the power of the Roth, the power of investing and compounding is so, so important. So don't worry about funding your child's college education. Please don't get roped in to a parent

plus loan. Remind them to study subject matter in college that could actually generate them a livable wage. STEM is a great place to start. You all just felt the burden of an 80, thousand dollar debt in student loans for yourself. So encourage your kids to go to community colleges or state schools because you all know what we think and that is unless you're getting a specified college degree, it really is too expensive and overrated. I'm okay if they want to be a lawyer, engineer, med school, but everything else I feel that the cost benefit is just not there to getting the degree and so many people today and for the past few decades have just been overly leveraged with this debt and it's really hard for them to make a dent in it because a lot of times it's high interest

debt on these college loans. So that's my takeaway. Austin, what do you have? You know, Robert, you mentioned something very important. You said between the years of 43 years old and 65, the two of you are going to have about 22, 23 years of investing, which is wonderful, right? You plan to retire at 65. If you both max out that 585 per month in your Roth IRAs and assuming the historical returns of the S&P 500, call it 11 or 12 percent, you would have one. $1.4 million across both of your accounts combined now in after tax Roth IRA retirement money. That's money that you literally have already paid taxes on. You can take the money out, put it in your checking account, and live off of that throughout retirement. So don't feel overwhelmed.

Don't feel like it's too late for me. Don't feel like, you know, life has passed me by. I'm already in my 40s. I can't invest. I might as well just give up now. Shout out to you all for paying off the debt. And shout out to you guys for getting excited about investing at your age because you you have so much ahead of you. You've got 20 plus years of compound growth ahead of you to grow your accounts into the millions of dollars. That's just what the Roth IRAs. Let's say you guys got really aggressive now since you don't have student loan payments anymore and you're really aggressive and you're maybe even investing toward the match at the 401K or maybe even beyond that, right? There's a lot of different ways you walk and generate velocity with your investments over the

next two decades. So get excited about it. We're both excited if you can't tell. Yeah, we talk about it every single day that every person on earth almost should be required to have a Roth IRA. So our next question comes from Demenzi. DeMenzi says, hi, Austin and Robert, I really love your podcast. I got a question. I'm 32. I'm married with a couple kids. And our household income is around $200,000 a year.

We live in the Bay Area. I'm an immigrant. And we just bought a house last year. We're house hacking it. We're excited about the whole process. And we really appreciate the advice on that that you all had shared us and encouraged us to do. Here's our question.

Do you think that we should be paying more principal every month in order to eliminate our PMI payment on this house? Or should that extra money go to something else? Robert, what's your perspective here? Yeah, assuming having the home, the primary home in the Bay Area, we're going to look at it that it's probably has a pretty decent rate of capital appreciation every year. So with that instance, but not knowing what your interest rate is, but again, with the assumption it's probably six or seven percent, I would say it's a good idea to pay the PMI down. get it paid down so it's removed from your loan. But then after that, I would not pay additional money on the mortgage at that time because you do want to make sure you're looking at some of these other investment opportunities that would come your way. But definitely if you can do it right now without putting yourself in harm's way to get rid of that PMI, I love that idea and the fact that you're actually thinking that through. But one thing to remember with PMI that is something no one ever seems to be talking about is with that capital appreciation being higher, let's say in the Bay Area. You can also rid the PMI earlier if you get an appraisal on the house's new value, not based on what the loan was. So keep that in mind because it might cost you a lot

less than you think by getting this new appraisal and having that capital appreciation included in it. That is exactly what I did, Robert, two years ago, right? I bought my first house here in Nashville for about $280,000 is about a 1,500 square foot townhome. Right now, that house is worth about $420, $430,000. And I hadn't put any additional principal down. I didn't do any additional payments. I just got it reappraised. And they said, yeah, your loan to value ratios now less than that 80%. We can get rid of PMI. It was really cool. A really nice woman came out. I had my loan, I think, through rocket mortgage. So I just called them. I was like, yo, how do I get rid of PMI? They told me they need to send out an appraiser. I had to pay for that. It was a couple hundred bucks. No big deal.

They sent them out. They took some photos. And they said, yeah, your house is now, you know, better than that sort of 80% loan to value ratio. So you're good to go. So Demensi, when you think about this, sure, focus on paying off that principle to get rid of PMI. I totally agree. Once that PMI is taken care of, I wouldn't add more payments to that, right? But maybe there's a world where you can kind of go to the Zillos, the red fins, maybe even higher an appraiser, to give you a better perspective on where you are with that loan to value ratio. Robert, do you want to actually take a moment here and explain to our listeners what the loan to value ratio is, what it needs to be to get rid of PMI and what even PMI is?

Yeah, so it's really important to understand that you're just trying to get yourself to a point of 20% equity in the property. It's really that simple. I know it sounds big and scary and all that, but it's getting to that 80% loan to value so you have that 20% of equity so you can get the PMI removed. That's really as simple as it is. And many people don't even follow up with this. They're paying out of house for years and years. And don't realize between the appraisal and making your payments, you might be able to get out of PMI much faster than you think. So it's just very, very important.

And for those of you that don't even know what it is, PMI is simply private mortgage insurance that you're required to have on the home until you build that equity. It's to let the lenders know that they're going to be okay regardless of where you're at in the loan as long as you're making those payments and you're keeping up the house and the house is appreciating and value. Really good question to Menzzi and let us know what you end up doing. Seems like you've got a really cool situation here with the house hacking. So keep us updated. Our next question comes from Ian. Ian says, hey everyone, how's it going? I'm 19 years old and I'm

looking for some financial wisdom. I live in a house that my dad rents to me and my siblings. I pay about $500 a month in rent. I have around $5,000 saved inside of an emergency fund and I have $50,000 saved for my college fund. I've been trying to figure out what would be the best opportunity to use this $50,000 because I simply don't want to go to college. I found a vending machine business not too far from me. It has 65 units and the man selling it is wanting $100,000. He mentioned, however, he's also open to owner financing.

I haven't got much more details other than that. I've been thinking about using some of this college fund to maybe pay upfront in split owner financing, but I'm really not too sure if this is a silly idea or not. What would you all do with this money if you were in my shoes? Robert, I'm sure you got a bunch of ideas. I have a ton of ideas, but I'm going to just let this rip really, really quickly. First, I would max out the Roth IRA, get that $7,000 in there. I would split that between V-O-O-O-V-G-T, V-I-I and probably QQQQ.

That's step number one. Step number two, so we spent seven grand. I would take $13,000. I would get it into public.com. I would build myself a cryptocurrency, port-year. portfolio there and I would use that 13,000 between Bitcoin, Ethereum, chain link and maybe a few other of the cryptos that we like. And then number three, I would park 10,000 of that into treasury bills. You can do that on public.com as well. I think that would be a great idea,

earn that 5%, have that money safe and liquid and ready to go. And then I would take that $20,000 and I would negotiate on that vending route. If he's saying he'll do 50-50, I'm sure he'd be interested in maybe doing 20 or 30,000 down rather than half. And it doesn't hurt to ask because it's better to be told to F off than it is to not even try. That's what I would do with the money. And then you have also another alternative. Bring the vending route to us, email us, and we'll buy it with you and help you run it and build it and grow it. So there's another opportunity as well. Yeah. I'm not sure if all the listeners know this, but I was a partner in a vending machine route here in Nashville. I think we paid $40,000 for it. And, you know, these vending machine routes are normally priced at about

one-time's annual revenue. And we paid about $40,000 for it. It cash flowed, like free cash flow after everything's said and done, like gas, like all the stuff, right? About $2,500, $2,800 a month. I think it was 14 units. And they were on college campuses. I mean, these were really, really prime spots. So yeah, I understand the vending machine business. I'm not an expert, but I have, you know, I've dabbled in the dark arts of vending machines. I do know, however, that those machines break all the freaking time, dude. Oh, my God. Those things are so unreliable. It's like you'll be spending half the amount of time just fixing these machines. So, Ian, I hope you're handy, my friend. Yeah, send us a little bit more details and we'd love to learn more about the opportunity.

But with that being said, I agree totally, right? You are 19 years old. You want to open up your Roth IRA. This is prime time. You have time on your side. You're literally 10 years younger than me. The stock market doubles every seven years, dude. Your $7,000 is more than likely to double in the next seven years before you're even my age, man. You really need to be thinking about opening up a Roth IRA at your age. I really like the idea that Robert mentioned cryptocurrency. Monday's episode was about our own crypto Bitcoin profit-taking strategies. So definitely go listen to that for our perspective on how that should be split. And then, you know, an additional $10,000 on top of your $5,000 to be parked into treasury bills, which are paying now 5% on public. That's perfect. And then again, yeah,

if you can do some owner financing, keep us posted. Our next question comes from Xavier. Xavier says, I'm 25 years old. I'm maxing out my Roth IRA, my HSA, and I could be maxing out my Roth 401k, but instead I'm put in the last few thousand dollars per month in a brokerage account. This is because I want to retire at 50 years old before the 59.5 age requirement to touch my traditional retirement accounts. I'm already saving about 30% of my gross income, which seems to be the most I can comfortably save right now. I have no debt other than my mortgage. Should I be maxing out the 401k instead or find another way to invest? inside of a brokerage. Xavier, I want to take a stab at this question first, and then I'll let

Robert kind of loop around us here. So I'm right there with you, man. I'm 27 years old, just a couple years older than you. And I, don't get me wrong, I am investing toward my retirement accounts. I have a solo 401k. I do have some, you know, SEP IRA money. I've got my Roth IRA. I do have retirement accounts. But a lot of the money I'm investing right now is not toward retirement accounts. It's instead toward normal online brokerage accounts that I don't get penalized for taking money out of before 59.5 years old, right? Because I also want to retire early. You mentioned trying to retire at 50. I would encourage you to even try at 45 because you're certainly smart enough to do so. A couple thousand a month is definitely going to get you there.

So here's what I would do. First and foremost, I would definitely keep maxing out that Roth IRA. We want to make sure even if you don't make this 50 age requirement that you do have money in a retirement account when you are older, so don't forget about that. Of course, we want to have that in VOO, VGT, and other awesome index funds that we talk. about. But beyond that, instead of, you know, putting money toward the 401k, sure, if you want to do the match, you can do a little bit of that. That's fine. But instead of that additional money, I would do at least experiment doing or learn more about the strategy I'm doing, which is building up passive income streams. So I can also retire early. Now, how I'm doing that are three ways.

One, covered call ETFs like SPY and QQQQQQI. QQQI just had their first distribution. It's over a 12% annual distribution yield, which is a lot of money of passive income. And SPYI is around that 12%. So 14 and 12% combined. You can think about a 13% blended there. The second way I'm doing that is dividend paying ETFs. Think S-C-H-D or S-P-H-D-V-Y-M, things of that nature. These are dividend-paying stocks that pay and grow their dividends over time. And the third way, which I'll let Robert even kind of talk about because he's an expert here, is real estate, right? Cash-flowing real estate. I have a rental property next door. If cash flows, I have this house here, I'll eventually pay off the mortgage because it's a high interest to me mortgage and I'll cash flow like abandoned after that. And then it like,

like, that's my strategy for retiring early, right? I want cash flow real estate. I want covered call ETFs. And I also want dividend paying ETFs on top of that. Yeah, really all speaks to diversity. And I agree with you 100% Austin. So many people think that, oh, I have a 401k. That's my retirement strategy and it just isn't. And that's why we always want to look at diversity. And in your instance, you have the gift like Austin of youth on your side because then you can let your money build and build and let compound interest work its magic and that is so so important but you still want to speak to that diversity that Austin was alluding to and that could be cash flowing small businesses cash flowing real estate it could be other alternative investments so just make sure you're realizing

that at 25 years old you have the ability and you should want to have your money kind of broken down but have that one bucket that is more aggressive because then that way you can speed up the money needed to retire early through having aggression across different platforms and types of investing. So very important to understand. What an awesome question by Xavier. Before we jump into our next question, I just want to remind everyone that public is officially the cheapest way to trade options. That's because they're doing what no other brokerage has done before.

They're sharing 50% of their options revenue directly with you. the customer. Whenever you trade options on public, you get something back, minimizing your transaction costs. So go to public.com and activate options trading before March 31st to lock in your lifetime rebate. Public.com, the cheapest way to trade options. Our next question comes from Christina. Christina says, if I contribute to a Roth 401k through my employer, should I also contribute to a Roth IRA as well? I feel like it's redundant. I'd rather contribute more to my Roth 401k than having to split that between two different accounts. Robert, can you explain to Christina why we think it's really important for people to always,

always contribute to the Roth IRAs? Yes, you want to do both because the Roth IRA is a retirement account you can actually control, whereas the 401K is controlled by your employer, which means you don't have the flexibility over the funds you're invested into. So their expense ratios are higher than index funds and ETFs, and they usually underperform because it, it's in a target date fund or some of these mutual funds, they just don't do as well as a lot of the things we speak about. That's why you want to do both. You want to get the free money, but you also

want to have more of your money into the funds that you control. That's why we always say, just go up to the match on the 401k and get that free money. And the rest, you want to have control of yourself and have the autonomy to make the moves that best suit you. Because many of these 401ks are going to simply dump you into a target date. fund. We've talked about this many times on the Rich Habits podcast episodes and in our lives, the target date funds can be okay, but they're just generally over time going to underperform the S&P 500 because they are meant to be a set it and forget it with a long out date of when you would get out of the fund and what you would make yearly and they just underperform and have

higher expenses. So that's why we want to do both, only do the match on the 401k and really rip it in your Roth IRA because you control it and you can make really great decisions on what to do with your money. Yeah, Christina. I was actually hanging out with a friend of mine who had a bunch of money over the weekend that he wanted me to take a look at in his Fidelity account. And, you know, some of the money was rolled over from his old employer's 401K. And he's like, yeah, so, you know, this was my old 401k when he used to work at this company. I rolled it over to this account and I didn't really do anything with it. Like, what do you think about it? And it had him in a target date fund, who was about a quarter million dollars in a target date fund. And this target date fund not only underperformed the S&P 500,

but only 40% of its holdings were invested into U.S. equities. And it wasn't even the S&P. It was the VTI, right, the total stock market there. And the worst part, Robert, about this, this fund, this target date fund had an 85 basis point, 0.85%, right, nearly 1% fee on it every single year. This guy is paying nearly $2,500 a year to underperform the market by having his money in this target date fund. It's like, dude, it's like highway robbery, man. It's crazy. Well, yes, I've seen this a hundred times where people just really don't understand what they're getting themselves into. And so they just don't pay attention. I know people right now that I've spoken to in the last few months, even, that have had their 401 case for years, don't know what it's invested in,

don't know what the return is. They're just leaving their funds in the hands of it. They're just leaving their funds in the hands of this 401k manager with their company and have no idea where it stands. Trust me, don't do this. You want to always, always have an eye on the prize, know what you're at, what the fees are, and what you're invested in so you can really optimize your money. You hear me say all the time that you want to have that positive arbitrage on your money. And that is just so important for everyone to understand in this situation. So great question, Christina.

and I hope everyone listening takes notes on this. Really good question, Christina. Definitely get that Roth IRA. Our next question comes from Jesse. Jesse says, what's up, y'all? I just started listening to the podcast and I'm loving it. With that being said, though, I was scrolling my for you page on TikTok and I found a guy talking about a real estate investment strategy that I just do not understand.

So I thought I'd ask you guys about it. The basics of it says that he finds these rundown properties, sets up a lowball offer with an agreement to purchase the property, gets a contract, and then sells the home to a developer before the contract closing date. He claims he makes like $10,000 a month on average doing this. Is it real or is it like a hot button online guru thing? Robert, you know a lot about real estate. Jesse's alluding to wholesaling. Why don't you explain what wholesaling is, how it's really done, and how hard it can be? This is a great question. So let's dig in first and talk about what is wholesaling. Wholesaling is when you go to a neighborhood, maybe it's an up-and-coming neighborhood,

you find a home that is run down, the grass is high, it hasn't been touched in a long time, you approach the owner and say, hey, I want to buy your house. They agree to it. You agree to the terms and you get this house under contract. So the key here is you're going to have a really nice contract that's spelled out. You can find them online. You can buy them. You can get courses on this. And you're going to get this house under contract, a wholesale contract. Then you're going to go out and find a buyer. Now, a lot of times these gurus out there that are going to tell you it's as simple as getting the contract, flipping it, making $10,000 or $20,000, that couldn't be any further from the truth. I've even seen these people selling a course say, oh, we don't even touch the property.

And that's even more ridiculous because wholesaling could be good if you found a rundown property and invested a little bit of time. Say you improve the curb appeal, you cut some trees back, You mow the lawn, you edge those sidewalks and make it look better so it's cleaned up and more desirable because then you're putting in this perceived value add to be able to get somebody else to pay more for it. So in this instance, wholesaling is simply getting a house under contract and then flipping that contract to somebody else for more money. So let's get into the pros and cons. The pros are takes no money. You can literally find a contract, make yourself a cute flyer, maybe make a couple T-shirts at the local

t-shirt shop that say, you know, Hankwitz wholesaling, here we go kind of thing. Hankwitz wholesaling. Hankwitz wholesaling. So the pros are low cost to entry, very, very easy to get into. You're going to learn a lot in the process. And it can be profitable. The cons are really, especially right now as we are in 2024, is super oversaturated because it's been a hot button item for all of these real estate fake gurus to sell you a

course on. So oversaturation. Number two, much harder to find buyers because at the end of the day, you're spending all this time to get this under contract, you're doing all of that, and you might struggle to find buyers because of the fact that it's a very tight market right now and getting funding for people that are cash buyers is very difficult. And number third is exactly all of it. And that is, it is very, very time consuming. So let's say you're trying to scale and do more than one deal at a time, you know, because they keep throwing out this number, you can wholesale a home and make $10,000, $30,000 each. Imagine the amount

of time and effort in this current market cycle, it would be to sell one, let alone try to scale and do two or three at a time, because what they don't tell you, let's say you make $10,000 on the contract. Is it really worth it, though, if you cleaned up the property? Let's say you spent a hundred hours on the deal. Let's say you had to hire help for photography or sales, or you had to go to events. All of that adds up to a lot of time and work to maybe make $10,000 or $20,000 on this house. So in my opinion, wholesaling was great three or four years ago. But like everything with oversaturation, I would be very careful getting into it now. Couldn't agree more, right? I mean, literally, I get calls all the time from people saying, hey, Austin, are you trying to sell your

house? And it's these wholesalers, you know, finding my information on the internet. And they call me up and say, hey, you know, you still live here. Can I buy your house from you? And yeah, I'll pay cash. Okay, great. Yeah, I sell it to you. Come by half a million dollars. It's not worth that. And they'd be like, oh, no, sorry, we can give you like maybe, you know, 200K. And I'm like, no, right? So, I mean, that's what you're doing, right? You're calling up these houses of just random places and run down areas, up and coming areas, whatever you want to kind of describe them as. And you're saying, hey, I'll pay you way under market for your house. Some people might jump at the opportunity because they might be unemployed. They might be behind on their, you know,

mortgage. It might be, you know, everyone's situation's different. And then you got to go, okay, get under contract. And you got to go find a buyer, right? Now you've got to say, hey, I'll sell you this contract for $10,000, that buyer's like, okay, well, you bought it for $200, pay your 10, so now it's $2.10 all in. I could restore it, flip it for $400 or whatever, right? So it's just, Robert, I keep telling these people, man, if you want a side hustle in 2024, the number one side hustle in 2024 right now is TikTok shop affiliates. I have so many friends that are making literally thousands and thousands. And I'm not just saying like one or two, like $9, $10,000, $15,000 a month, affiliating products on TikTok shop. It is the simplest way anyone can start making money

right now. You just buy a product. You even get a product from TikTok for free. Spend 20, 30, 40, 40 bucks. You make a couple of videos, have the affiliate link right there in your video. Congrats. If it goes viral, it does well, if people care about what you have to say, you just made 700,000, whatever amount of money. It is so, so underrated. I think it's going to get saturated here in 24 and 25. But jump on the trend soon because I think people are going to realize how profitable this is. Good explanation, Robert. All right. Our last question comes from John D. It looks like a Robert question. John D says in episode 16, Robert talks about his inventions and the success he's had with him. I have an invention which has made an existing product better and I even have the patent. What would be your next steps with the invention? Would you manufacture and distribute the product yourself? Would you look for a company to purchase the invention? Where do I start? John, great question. You're on the right track. And this is obviously right in my wheelhouse as a long, long time inventor, product development person. So here's what I would do. I would do all of the above. I would first start out with getting a small run of the product manufactured. And this is key point here.

When you're doing that, make sure you have a manufacturer's agreement spelled out before you even share the patent or what the idea is because we want to make sure you protect it. So get that small run. Maybe 100 units, 500 units. I don't know what the item is. So it's hard for me to tell you what to do from a unit perspective, but I would do that first. Secondarily, yes, I would launch it on your own and here's why. You want to have your social media set up. You want to have your website set up. You want to get through everything.

Did I make any mistakes in the packaging? What's different that I might want to change here in the branding or whatever? Get through all the bumps in the roads and the hurdles first as you're launching that product and build your story. If you build a story, let's say it goes viral on Instagram or TikTok, you're getting your online sales up and running. Maybe now you're ready to get on Amazon or one of the other big sites and get some more traffic out there. This is the really exciting part. Then after that, I would start looking to then go to retail or if you had an interest in licensing the product

to someone else, then you want to go from there. It's kind of like putting a valuation on a startup. If you have an idea that's not proven, your overall valuation is going to be much lower than if you are to prove the product and the concept, the brand and build a story, then go to raise money. Same thing applies here. You get that product out there. You get sales. You get people excited about the brand. And then you can go from there and figure out what is your best option moving forward. And for me, I would love John to see the product. So if you'd like, send me an NDA to the email address on the podcast. And I will take a look at the product myself and give you some further guidance or maybe invest in it myself. But those are the steps I would take and how I do everything. We just launched a

puzzle brand and it's doing very, very well. But we start out slow. We get it seated to different influencers that might be interested in pushing the product for us. We get it out there, get it tested, make sure there's no changes we want to make before we go for it all and try to hit a home run in retail or somewhere else. I think it's just very important to get your legs underneath you and really get through the process and then move forward with the bigger steps. So Robert, he asked, would you be looking for a company to purchase the invention? When would you start that process? Yeah, it depends.

If the invention was created just to sell, you could start at day one. But obviously, without any track record or any brand built, you're just really going to put yourself in a difficult spot, unless it's something absolutely incredible. You're going to put yourself in a tough spot to get anyone to pay real money. it'd be like me with silly bands. If I would have tried to sell it in the beginning, everyone would have thought I was nuts. They're like, why would I buy this company

that makes shaped rubber bands? It's the dumbest thing I've ever seen. But then once we were doing a million dollars a week in sales, it's much easier to get people to give you a real valuation. So that's kind of a stretched way to look at it, but it really just depends on what you're looking to do, John. In my opinion, I build the brand, get the company, get it up and running and dialed,

then look to sell it or find a licensor. Everyone, thank you so much for hanging out with us on this episode of the Rich Habits podcast. John, what an awesome question. Robert, what an awesome answer. And major shout out to not just John, but also Jesse, Christina, Xavier, Ian, Demenzzi, and of course, Mari P. Robert, it has now been, gosh, we're in March, dude.

This is so much fun. I mean, the podcast is so much fun, dude. We just keep rocking and rolling every week, Q&A. Don't forget, ask the questions. Come prepared. And we just, we love answering them. We love connecting with you all. We're working really hard on what might turn now into an email newsletter very soon.

We have a really cool webinar that's coming up in the final week of March, March 27. So mark your calendars. Stay tuned for that. And we'll have a formal announcement here pretty soon. But man, I'm just having so much fun with this podcast. Yeah, I'm very proud of rich habits and everything we've done and so excited for the future. You know, we're really getting it all figured out now. And with all of your.

support. We're just able to do more and more cool things around wealth building and business building and mindset and all the things we cover here at Rich Habits. So we're very, very thankful for each and every one of you every single week that follow along, give us those five-star reviews and share it with a friend. So thank you all from the bottom of my heart and Austin as well. And we'll see you soon. And with that being said, Robert, just to chime in real quick, you know, there is on Spotify a way to like ask a question. Why don't you guys, if it's you know, just share with us what you would love to see from us in 2024. If it's a newsletter, if it's a in real life event, like a conference alternative, if it's a physical product, like a

journal, if it's merchandise, if it's coffee mugs, if it's like more webinars. Like, what would you like to see from us in 2024? Because we'd love your feedback. We really do. So I'll have that kind of shared below here in Spotify. Definitely go check that out. If you're on a different platform, come to Spotify and share your notes. And as Robert said, we will see you next week.