Podcast: Cashflow Ninja
Episode: How To Passively Invest To Achieve Financial Freedom To Live The Life Of Your Dreams
Intro: [00:00:01] Welcome to the Cash Flow Ninja, the podcast Sharing how to create and grow income streams and manage, multiply and protect your wealth in the new economy. Are you tired of trading your time for money? You desire freedom today instead of retirement in ten, 20 or 30 years? I'm M.C. Laubscher and this is the Cashflow Ninja.
M.C Laubscher: [00:00:23] Hello Cashflow Ninjas M.C Laubscher here and welcome to another episode of the Cashflow Ninja. I have a great show for you today. In today's show, we're going to look at how to passively invest to achieve financial freedom, to live the life of your dreams. My guest in this episode is Spencer Hilligoss. Spencer is an active syndicator, real estate investor and executive leader for two real estate businesses. His own company, Madison Investing as co sponsor deals totaling more than 3000 units, which adds up to be over $328 million. Spencer is also a technology leader with a 13 year track record of building high performance teams across five companies, three of them software unicorns valued at more than $1 billion with a B, I've launched another podcast, Cashflow Investing Secrets. It's a shorter show, ten minutes or less, where I share one concept and or idea at a time that I've learned from interviewing over 500 cashflow ninjas.You could go to your favorite podcast platform or your favorite video platform or your favorite video live streaming platform, and simply type in cashflow investing secrets and you'll find the show. Other valuable resources I can offer is access to our private Facebook group. You could go to Facebook and search Cashflow Ninja Community to join us and our exclusive investor community. You can email me at info at Cash Ninja.com for more information. On October 25th, there's another Learn and Grow event at the historic Rhino Winery in southern New Jersey, just outside of Atlantic City. The event is hosted by Josh and Melanie McClellan, and it is a fantastic quarterly event to meet and network with fantastic people, learn from speakers and other attendees, and you get to enjoy amazing food and wine and wait for it. American Champagne. I'm super excited to be involved in this resort rehab project and I'm attending the event with people from my Meetup Investors group and other Cash Flow Ninja listeners, and it would be awesome if you could join us at this event. This is a resort, so if you're traveling there, there is a hotel to stay at on the property along with the other amenities such as the spa, restaurants, golf course, wedding venues and of course, the winery. You can email me at info at Cashflow ninja com for more information.
Intro: [00:02:44] Savvy investors know that in order for the miracle of compounding interest to work its magic, you have to be constantly invested in all stages of the economic cycle. So the question then becomes how do you find solid investments when the stock market is close to all time highs and everything else just seems so inflated? That's where our friends at ASM Capital come in. Since 2011, ASYM has helped more than 300 accredited investors allocate more than $25 million to mobile home parks, self-storage and workforce housing due to their ability to perform well during economic recessions. If you're interested in learning more, head on over to AsymCapital.com. That's ASYM Capital.com to get instant access to their investment offerings. M.C. Laubscher the creator of the Cashflow Ninja and Cashflow coach at Producers Wealth, where we help our clients integrate infinite banking with their business and investments. To learn how you can create your own banking system to turbocharge your investments and business in 30 days or less. Go to your own banking system.com. That's your own banking system. Dot com. Spencer welcome to the show.
Spencer: [00:04:05] Thank you so much MC It's a pleasure to be here.
M.C Laubscher: [00:04:07] Yeah very very excited to connect. I've been looking forward to our discussion today for folks not familiar with you and what you do and who you are, can you please share a little bit about your background and your journey?
Spencer: [00:04:20] Yeah, I'm happy to. You know, so here's just a little bit of a story about me. Um, you know, so I'm actually currently in Silicon Valley. I started them on the local business, if you will. So I'm a tech executive. I have a family, a couple of young boys, and a very hard working wife who's also my business partner. So these days we actually do a lot of passive investing. And I think that is a passion point for me because all of my tech brethren in this industry that I'm surrounded by on a regular basis, they don't know what this is. This is all very new to them. And so what I was hoping to do, at least, is one of the conversations that we have today is share with you M.C. like the story that kind of brought me to this realization that this is a real thing. And not only is it a real thing, it's become a core tenet of effectively how we're going to have our own exit strategy from the grind and eventually have ourselves and our family and even our extended family set up better for this life, to enjoy each other's company more, to have more time and all that wonderful stuff that we're actually here to put on this earth to do.
M.C Laubscher: [00:05:26] Yeah, absolutely. Freedom of time, money, relationships, purpose. So one of my favorite topics to talk about because again, like you said, there's so much that we're put on this planet for to do and to enjoy. You have an extremely interesting background in the technology space, have had a lot of success there with different companies and you know, building teams to absolutely just scale and grow those companies. What were some of the biggest lessons that you've learned in that space and through the success that you've had? Obviously, it's not all rainbows and unicorns, but what were some of the lessons that you learned and some of the the things that you can share about growing and scaling the business through successful and very, very effective teams?
Spencer: [00:06:19] Yeah. And you know, I'm not only happy to speak to that, I think talking about personal and professional development as it relates to being a better investor is a big thing to me. So before we go there, I would like to just kind of give you a quick story that that led me to where I am. And I think, you know, I found this whole notion of investing really through a journey of of kind of hardship and hard work and good timing. You know, I my own investing strategy these days in 2019 is focused very heavily on passively investing in multifamily and real estate syndications. And if you're if I'm sure many of your listeners are very savvy and I've been listening to you for a while, so I think people know generally what a syndication is. But if they don't quick refresher, that just basically means you go in and you buy something with other people as a group, you pull your funds together, you buy something big that you couldn't buy alone, and it takes a village to go buy, for example, like a $40 million apartment community. You know, you can't just go do that solo with your checking account, right? So you have to go and get a bunch of friends. They go out and buy it with you so we don't have to go into that more yet. But that's the stuff I focus on with my own funds now as an investor and my wife, and we're building our financial exit strategy that way.
Spencer: [00:07:33] And so like I if I had said that to myself 13 years ago when I first got into this tech business, I would have thought, like, what are you smoking like, like that? That makes no sense to me. Real estate is super risky. I think that you're talking about something that is not only weird, it's like so niche. It's considered to be almost like inappropriate or like taboo to talk about the things you're talking about. So really, I want to take it just really all the way back to make sure I'm not a total stranger for folks. And like I started just basically looking at life in two big buckets about how we can get to where where we are financially, which is I think people, including ourselves, can focus on financial offense and financial defense. And the way that I figured that out for me personally was started all the way back when I was first exposed to real estate, actually when I was about six. And my dad was a broker, you know, he he grinded for the 90s. He was one of the top real estate, residential real estate brokers in the United States. And as a teenager, he even made me go and do things like open houses and to glad-hand and say hello to prospective buyers for $10 million houses.
Spencer: [00:08:42] I had no idea why I was sitting there. Like I had no idea why I was being forced by my dad to go do this kind of stuff as a 15 year old, I didn't want to do that. I wanted to like hang out with my friends. And so, you know, life was generally happy. You know, our family was quite normal. And I was just asked by my dad to grind along with him in some ways. But the reason that this kind of motivated me and helped me find this this perspective on defense was life didn't always go swimmingly right after that, we we began this period of time right after that called in our family like the dark decade or the decade of pain. And you know, my my younger brother Justin actually was diagnosed with a rare form of cancer. Unfortunately, you know, he lived a very brief and beautiful life, but he did lose that battle. And I would say that shortly after that, you know, a couple really challenging things happened as a result, like my parents got divorced, which is a pretty common for those types of tragedies in the financial fallout for our family and for my dad was was devastating from all the compounding events. And so, you know, the resulting bankruptcy and the downsizing of our family financially, I mean, all of that and watching all of that was was not only, I would say motivating.
Spencer: [00:10:01] It just profoundly impacted the way I view the world. And I became obsessed with these questions that that kind of guide me to this day on the defense front, which is like, how could I have like, how can anyone, you know, protect their family from a bankruptcy like that? Like, how can what are the lessons I can take from watching that, that experience, you know, like and like, what are the steps now as a parent that I have two young kids and a family, like what are the financial moats that I can put around them to protect against life's hardships? You know, like like job loss and terminal illness. And, you know, if someone gets a really terrible injury and he can't work, like I just I feel the obligation to not only share that perspective with people because it comes from a place of pain, but I also take it as a motivational component because like, I have my own family and I want to take care of those around me. And this is something that often people just don't don't make the connection that my dad was a broker and it's a really good representation as an example of what it means to be active in the workforce.
Spencer: [00:11:01] Like we all work, we trade our time for money. A broker is very active. A broker has to stay active if they want to keep the income flowing. And so I would say that if you flash forward all the way to 2016 for for, you know, kind of when I found this real estate game in a modern sense, that's kind of when I connected the whole playing offense financially. And, you know, that's that's when I changed my my trajectory in the tech business away from for other startups this this grind everyone grinds in the tech business as they say for early startups. But I joined a real estate tech startup and that was the difference in 2016 for me. It opened my eyes and and just for a quick download for people here that aren't familiar with how this usually goes at tech startups, the wealth strategy, if you can call it that, typically goes like this. Join an early stage startup, hope that you get some equity that's meaningful. You grind hard, you work like 24/7 nonstop. You pray that you picked maybe a Facebook or a Google like one of those places that's going to end up having a huge liquidity event and exit, um, you know, and then you do what most people do when you're working is like you upgrade your lifestyle to the point where your income levels are matching your lifestyle costs.
Spencer: [00:12:22] And so maybe you're socking some money away in a 401k where you can't see it for a few decades. But admittedly, like I've been guilty of that same IPO, chasing equity, chasing behavior, which doesn't materialize for most people. And so I'm working at a real estate tech company. I still work there now, by the way. And I would say that we're building our own business and our doing our passive investments on the side. But that inspired me to go read some Robert Kiyosaki. And that's where all this started, is I read Rich Dad, Poor Dad, like a lot of people do. Many of the folks that have come on your show that I've listened to and I got the bug and I compared strategies about, you know, flipping and wholesaling and doing a BR project in small multifamily and big multifamily. And I looked at all those different asset types and I looked at all the strategies and I devoured 400 podcasts, read 24 books, all that good stuff. I went way down the rabbit hole M.C, and ultimately I even got licensed as a loan originator at my current job and built a team that originated $4 billion in real estate. So like, I pinch myself sometimes because if I had thought about sitting with my dad as like a 15 year old doing open houses and to where I am now, like investing passively in apartment buildings and then working at a lender, it's just kind of strangely full circle.
Spencer: [00:13:43] And obviously my dad is very proud now, but it's taken a lot of pain and a lot of motivation to get to where we are right now, because what I'm interested in now is basically I want to figure out predictability. I want to figure out things that are going to make sure I never have to worry and lose sleep at night about things like job loss, about devastating events and passive income has been the ticket to get there for me personally, and that's why we put our money there. That's why we invest our capital. And now we've at least gotten enough coming in passively to cover our mortgage. So we're not financially free yet. But in the wild world of tech companies, the last thing I'll say is, like my hope would be people hear the message that this isn't a weird niche strategy. This is something that not only works, it's proven historically. People are doing it now like people, successful people. And all you have to know is like what actions to take and how to go vet people and how to vet the deal. So anyways, I appreciate you listening to that. We got a little reel there for a second.
M.C Laubscher: [00:14:43] No, absolutely. Because I think that big aha moment that you had at the tech startup, I mean, sometimes you could get swallowed by the environment that you're in. You could get, you know, you're sucked in. Right. And. You're all in on tech and that's the only thing that you see and the only thing that you breathe and you don't have any of the other realizations. Was there a specific moment when you were like, I got to figure something? You know, I got to figure something else out. This is just not going to this is just not going to.
Spencer: [00:15:21] Yeah, man. I wasn't sure if there was, but in hindsight, there actually was. Um, it was before real estate, but it was not long before real estate for me. It was in a probably the hottest start up. And what I mean by that, it was like an A series funding round start up. So huge potential, lots of press around this company and they're still doing well, you know, and maybe there will be a liquidity event. I assume there won't be and if it comes, that'll be great. I had my first of two kids. He was an infant. I was coming home when the sun had gone down every night. My wife, who works full time, has a very successful career of her own. And we both, you know, we try to do full 50 over 50 carrying of, you know, the weight of a family, you know, being parents as well as being career professionals. And I, I just lost all steam. You know, you cap out burnout is such a real thing. And I think I hit a wall at one point when I was about a year into that company and I was looking at sure, I was looking at things like my cash income and the expenses to actually purchase a house in this crazy bay area. You know, when it comes to prices out here.
Spencer: [00:16:35] And it's yeah, I'm thankful that I still have my marriage, frankly, after that experience because my partner and wife and I are in a wonderful place these days. But it was a close call there because it was just so stressful and that that was the moment where I thought, what happens if I can't do this? You know, like what happens if I lose my ability to to show up? Well, and, you know, this sounds crazy for a guy who's sitting here at the age of 36 to say. So take this in context, everybody, that the tech world is weird, um, that I'm not a spring chicken in this tech world. So, you know, that starts to change pretty quickly when you get into your late 30s even and you start noticing that there's a difference in reaction for certain job types. And so you have to think about all those things. You have to think about the future. And that that was eye opening for me when I realized I could I could bottom out, I could bottom out. And then then where would would we be? Thankfully, my wife still provides an income that is significant on her own. But, you know, I was not in a good place and that was the moment.
M.C Laubscher: [00:17:37] So the the steps that you take was there. Did you look at like single family first? You said you dabbled in a couple of things. Did you try a couple of other things before you eventually settled on the passive investor strategy? Because I think a lot of folks that we talk to, my personal story, by the way, too, I started active. I jumped right in. And then eventually through my journey, got to the point to where, hey, I'm just going to go find the cash flow ninjas in their space and partner with those folks, right?
Spencer: [00:18:09] Yeah. Um, I was working alongside folks who were largely flippers. And what was fascinating was they were all trying to talk me into becoming a flipper. And I looked at the spectrum, you know, I know folks are on the podcast version, not the video version. Can't see my hand spectrum here. Not very sophisticated. But if you're thinking about active on one end and passive on the other, flipping is as active as you get. And I looked at that and I also asked the question, Do I like my job? Do I want another full time job? Because that's what flipping is. And the answer was, No, I'm not handy, by the way. I could barely swing a hammer and thank God for YouTube. But I would say I looked at that wasn't feeling it. I'm looking for a few things. I'm looking for predictability. I'm looking for, um, frankly, I'm looking for good returns, but something kind of boring that is that is proven and it's been done many times. And so we also hadn't gotten through that, that that comfort, comfort zone expansion of being comfortable buying something or investing in something sight unseen. So we had to buy locally. So we looked at buy and hold rentals. We drove around for like a year. We looked at all the Bay Area. We drove out like way inland, you know, North Bay.
Spencer: [00:19:25] We looked all over the place, scoured places. We specifically targeted finding a real estate agent who was an investor already who had her residential portfolio. And we closed on a duplex. And in a moment, if you want to, I can share the financials about that and compare it to other investments we've done since because it'll kind of it's not my proudest dollar amount that we spent on that property. But I would say it does cash flow, which is hard to find in the Bay Area and the tough learning from that journey. That part of the journey MC was like, it's a rental with property manager on it. We do have some turnkeys in the Midwest that we still own as well. Yep. Property managers clearly helping on that. But there's managing of the manager that no one tells you about. So when you say passive investing, we truly thought passive income was just magically going to come in from these rentals. We wouldn't be fielding things like that midnight phone call, you know, the notorious plumbing phone call. And we do get phone calls sometimes from the property manager about stuff that's relatively silly. And frankly, it's it's a headache. And so the key takeaway was cash flow was just okay. And it ain't passive, that's for sure. Even with a property manager? Yep.
M.C Laubscher: [00:20:41] You're at that stage. Just it's your leveraging still other the unique ability and skills and resources of other folks. But you're not passively. Well, yeah, you're not. You're not removed passively from from the process. So from a from a passive investor side. So you guys looked into syndicate syndications. We did. What what was the process and what have you learned in vetting syndicators and operators and sponsors of these deals? Because, you know, obviously that's the key thing for me looking at deals, too, is, you know, if you have the right people involved and the right partners with a track record, you have the right team and management in place, you know, then that's that's pretty much I mean, that's the majority up front right there. If you have that in place, the rest of the stuff is usually going to check out. I would say that, of course, with an asterisk, you know, buyer beware. Do your due diligence. But good people and good great teams and is usually good. How have you determined on your on your journey of how to find those folks?
Spencer: [00:21:53] Yeah, I appreciate you asking. You know, it's I've got the point now where it's like sitting in a spreadsheet nicely organized and there's like a 70 point criteria that I personally use to vet a deal. But it didn't start that way, clearly. I read voraciously. So first I got a baseline education because there's just so much great information out there. I mean, you can go on the Internet, you can you can buy books, you can buy stuff on Amazon, you can do podcasts. So baseline education is a good idea whether you're passive or active is my opinion. Assume you've got that the next step is just go on places like BiggerPockets start, start looking at some of the names on there that are actually very involved. Maybe you even go and you start. If you hear a podcast, you hear a person talking like I am today and you like their style, you like their delivery, you like what they have to say. I assure you, it's a very small community of folks out there that know each other and you can just go to anyone you can probably reach out to M.C. You could reach out to a number of people and connect with them. And that's what I did. And so I reached out to about eight different people, might have been nine, and I basically interviewed them. And these were like established sponsors or operators. You know, those are basically, you know, another term just to throw people who are relatively new at this is like the general partnership members.
Spencer: [00:23:14] So sponsors, operators, these are all people who basically manage these projects and manage the asset. They're the ones that find the deals a lot of times, etcetera. So I found them and I did my best to put together a hack job interview set of questions for them. And you know, in hindsight, I did I did have some experience coming in with that from the corporate world. Right. I've interviewed hundreds of people and I was like, I know what I'm doing right? Um, and so I got to know them. And and you have to understand, have they done this before? Have they done this before in the markets that they claim that they know? Have they actually deployed a strategy that has worked out? Like, are they two years into this, one year into this? Are they 10 to 15 years into this? Like, do they have pre 2008 or 9 experience that they can speak to somewhere in that general partnership team like? And so those were the kind of questions that would be I would be vetting with some of these folks. Um, there was a point as well where I thought about at that point going active, like I thought, I want to be the GP maybe, and I'm so glad I didn't at that point. You know, I think people don't necessarily realize their geography sometimes.
Spencer: [00:24:34] And I just wanted to call this out that I happen to live in a place if you want to make it really, really basic for folks in the real estate community, there's states that can cash flow easily, that can generate profitable deals. And California is not that when it comes to cash flow. So we live in a in a let's just say, a capital or money state. We don't live in a deal state. And I'm going to break some hearts probably in the flipping community or in some other places. But I would just say, yeah, comparatively, I'm happy to go toe to toe with people if they want to talk about some numbers on that conversation. But there's a reason why you have to find the right trusted partners outside of California and take the time to get to know a bunch of people and find someone. Frankly, you also just like talking to like if you if you like talking to them, you're going to want to go back and talk to them more, ask them more questions, and you're going to be interacting with them for quite a while. Like going into one of these projects passively, you're literally becoming a limited partner. And that means that I'm partnering and hearing from these people every month for the course of a five year span. Yeah, so it's an important thing just to feel like you're comfortable talking to that person.
Intro: [00:25:42] You're listening to the Cashflow Ninja, the show helping people all over the world create monthly cash flow and achieve freedom today, not in ten, 20, 30 and or 40 years. This is the show where cash is not king, but cash flow is king. We will be right back after a word from our sponsors. Kings, queens and royal families, along with the nobility and ultra rich, have warehoused and stored their wealth for centuries in gold and silver, art, land and real estate. These assets have stood the test of time through centuries and have been a great place to preserve and protect their wealth. Like gold, silver, land and real estate. Art has been around for centuries and will be around for many, many more centuries. That's why the ultra rich will continue to invest in art and preserve their wealth in art. While the S&P declined 5.1% in 2018, the art market returned 10.6% and was called the best investment of 2018 by The Wall Street Journal. Masterworks is the first company to allow investors to buy shares of great blue chip art masterpieces by artists like Picasso, Monet and Warhol. You can get set up on their platform at Cashflowninja.com/art. My friend Dave Zuck from the Real Asset Investor says you can be conventional or you can be wealthy. Pick one. The real asset investor team creates value for investors looking for higher yield returns from ATM machines and self-storage investments. Their syndications offer attractive investment opportunities that produce strong cash flow equity growth, huge tax incentives. They are truly passive and managed by a world class team. To learn more about the exciting investment opportunities the real asset investor offers, such as their ATM and self-storage syndications, please visit cashflowninja.com/realassetinvestor. You're listening to the Cashflow Ninja, the show helping people all over the world create monthly cash flow and achieve freedom. Today. Pay not in ten, 20, 30 and or 40 years. This is the show where cash is not king, but cash flow is king. Now let's return to our interview.
M.C Laubscher: [00:28:03] What are some of the other things that you would add to a checklist or a framework that you're using right now in deal analysis and figuring out what's fitting in with your overall strategy?
Spencer: [00:28:18] Yeah. You know, one thing I want to add probably before that M.C is also like I think I see a lot of folks who reach out to me now for advice on on how to get started in this stuff, which has been a cool dynamic and kind of surreal for me. Um, and the advice I would give them before they go into deal analysis and they just go into action and figuring out what deal they want to get into. Yep. They should start with goals and ask themselves like, what are they trying to do? Like in our case I mentioned earlier, okay, we're we're so excited. We can we can cover the cost of our mortgage now with passive income that requires nothing from us. We don't have to touch or lift a finger to cover our mortgage costs every month right now. And that I'm like pinching myself on that still. So we have a goal that we haven't reached yet, and I think that's important for people to actually set a goal, because if you say, I want to go get $8000 or $10,000 of monthly passive income, that's going to guide things like how many deals do I need to get in if you're deploying, you know, if you're placing 50 K per investment or 100 K per investment, you want to know that stuff because that gives you your time horizon, how many you have to do over what period of time, etcetera.
Spencer: [00:29:37] So do that first. Back to your question. Three parts of vetting that I look at and you'll hear this a lot. So I borrowed these. I borrowed this idea because it's a critical one. You vet the operator we just talked about. You bet the market. You bet the deal. And it's that framework that you'll see if you literally open up a Google sheet or a spreadsheet that I have and there's about a 70 point list of different things that I look through amongst those three. On the market, just to keep it super simple, you're looking at things like population growth. How many people are there? You're looking at job supply, job supply growth, because ultimately if we're talking about apartment buildings, which is kind of what we're focused on, um, those apartments are filled by tenants. Tenants are often paying their rent with their income. Their income is coming from their job. The job is coming from employers. So you're, you know, you get the idea. But those employers in that job growth is critical. You're also looking at things like household income. You're looking at things like home values, you're looking at crime, you're looking at all that stuff and critically important on the market.
Spencer: [00:30:46] You got to look at it not just in the big macro sense. You got to look at it. And I didn't get this at first, and I'm so thankful to have connected with multiple people who are way smarter than I am to have taught me this stuff. You got to look at it down in the neighborhood. And you can think that's kind of the crazy eye opener for people. This is publicly available data on all this stuff. Like you can go to city-data.com. Little hyphen in between city hyphen data.com. You can go and pull up down to the zip code down and you can pull up all these stats. It's beautiful. So market and you're looking at all those things at the macro level and at the neighborhood and submarket level. And last but not least, you're looking at the deal. It's kind of a duh, but like looking at that deal, a specific thing to keep it simple for folks is you ideally want to go in with a set of criteria already established. And it's kind of hard to do at first, right? Like if you're going in and you're thinking, well, I don't really know what equity multiple or IRR, I want to go for, just keep it simple and say, what is the return? You know, like what's the return, the annualized return that I'd be comfortable going for and take a crack at it, You know, like take a crack at setting one.
Spencer: [00:32:01] Because when you go in, it's so easy to get emotional and excited and make decisions too quickly. Compromise on your on your on your criteria. And I found myself doing that in the first couple before I realized, no, we're going to set some criteria. We're going to have that be pretty ironclad. And just to be specific for folks like, you know, I'm looking for things such as, you mean the market expectation on most of these now is going to be something like 8% cash on cash return if it's a five year hold, something like that. Right. I mean, I'm thankful that we've actually gotten that kind of stuff already on these projects where we put in, you know, 50 K, they have the capital for five years. You're getting back, you know what, like 333 bucks a month if it's getting paid out monthly during five year period. And that's that's pretty reasonable and expected these days. But all in at the end. They've they've done renovations on these properties. They've improved them. They sell them at the end. Sometimes they can do a refi and actually talk to a bank at a cash out refi early, get the capital back.
Spencer: [00:33:05] I'm looking forward to hopefully getting one of those pretty soon. But at the end, you hopefully you're looking at like maybe a 15%, 16% or up from there on the annualized returns. Some people's criteria are way higher than mine. But I would say I'm looking for the holistic picture of those things, which is it's got to be a multifamily project or a commercial project. And there's a couple of tax benefit things that we haven't gone into yet, which makes it even insanely better. You know, you don't pay any taxes on that 8% return, but like all of those things with a solid operator, I feel like I can trust and talk to and I've met in person and a market that it can be recession resilient because we're not exactly going to be going into smooth sailing for the next few years based on the direction that the market is headed and where we are in this cycle. Right. So we need the ability to have something that has conservative fundamentals in the project. The assumptions are reasonable. They're attainable and that we're not going in on something that's that's too risky into a downturn. So that's kind of all the all the stuff that I look for.
M.C Laubscher: [00:34:11] Yeah, absolutely. And the tech I mean, real estate right now is one one of the greatest tax vehicles or tax advantageous vehicles, especially with the new tax. Yeah. The tax law that was enacted. Um, one of the things that you and I discussed beforehand too, is a lot of folks when they get started, right? So tactical, tactical implementation of stuff. One of the things that that they think about I don't have what do I have? I don't have it. I don't have anything to get started in real estate. But they completely, completely forget about their retirement funds that they have or access to to capital through that because they just discount that, that they don't have any control or access over that. What's the mindset shift that has to change there for folks? And you've seen this firsthand because, you know, it's something that happens over over time. And what would you what would you share with listeners about that?
Spencer: [00:35:08] Yeah. I was so proud of my 401K after putting money into that thing for 13 years. And I just it's a passion point for me M.C. Because I'm sitting there checking my account, you know, probably more often than I should have while I was in a corporate fast track and I'm sitting there just dumping in the max. Like I'm thankful for that. I don't look back and say, Hey, dummy, I wish I hadn't done that. I'm thankful I did it. What? I have done it again. If I know what I know now. Absolutely not. Absolutely not. I would not have done that. But I still have those funds. So what have I just recently found out that I can do in the last couple of years? I can use that stuff. I can use that stuff and pull it out of a stock market and actually turn it into a retirement vehicle that I can use to also invest in real estate. And I mean a couple other cool things too, like I'm using some of that now, those same funds, like, you know, it's a six digit number that I very proudly put together and I'm going to invest in things like precious metals, like a little silver and some gold, a handful of other things. But I can take that retirement fund and instead of doing what the big traditional Wall Street banks will tell you, you have all this flexibility to go and invest.
Spencer: [00:36:23] I mean, what they're not telling you is you have all the flexibility in the world to invest in different types of stocks and bonds. That's what they that's the framing that they leave out. Yeah. And and it's interesting in that regard because you can go and get these things like the blanket term as I know you know these things. But maybe your audience would appreciate the refresher. There's a thing called an sdIRA, a self-directed IRA. It's a blanket term. It's also an account type kind of confuses people. At first it certainly confused me. But you can get a different type of a self-directed IRA. There's other types called eQRPs, and you can basically buy real estate, invest in real estate through that account, and it creates a retirement vehicle for you. And so now you've got this thing that's going to keep getting returns at a really impressive rate. And by the time you retire, you're going to be really happy with the outcome and you've got more of a diversification. You don't have to leave stocks behind altogether if you want. But going into a recession, that's certainly a better plan from my perspective than going in with stocks. I mean, just look at how stocks performed and through the 2008, 2009 time period. Right. So it's it's worth taking a look at. And I wish I had found it earlier.
M.C Laubscher: [00:37:37] Yeah, absolutely. And I mean, that's that's one of the things that, you know, if you don't speak about this, then most folks won't even notice that they have the capital to start already. It just has to be positioned more efficiently, as you said, and structured for you to put that towards your goals. How is your business evolved? What are some of the things that you're that you're sharing to get folks involved around syndications and more?
Spencer: [00:38:05] Yeah. Well, I appreciate you asking. So, you know, we've been talking this whole time kind of about passive investing and that is what we've been doing for the past few years. But mean more recently, we did realize there's so many of our friends and colleagues and just professional network acquaintances who've been reaching out and asking like, Wow, you guys seem like you're doing pretty well. How can I get involved? And so now we built a business around that. It's called Madison Investing. And what we do is we educate folks on how they can get involved. And, you know, that just means typically folks will start the journey of like getting some reading material, like understanding what the asset types are, what is multifamily. A lot of the stuff we've already been talking about. And, you know, I just grabbed coffees with them, hop on the phone with them, educate them, and if some of those folks want to get involved and join a project that I am now working on because I have joined up with a couple partners and I now am happy to say I bit the bullet. I am active, I am no longer passive. I still am investing alongside our investors. So I'm a passive investor, but I'm also active and it's been a blast. You know, I never thought I would be sitting there saying I'm an active real estate professional, but here I sit and I get the chance to educate folks on this stuff every day. And it's so much fun that I kind of forget that it's work sometimes until I hit the wall and I eventually have to get some sleep. So absolutely that that is what what we do these days on the active front.
M.C Laubscher: [00:39:36] Awesome. Any advice for folks starting their journey right now of what you would what you would share, what steps to take and get involved.
Spencer: [00:39:46] You know. I would write down this might sound corny to some people. It worked for me. I would write down what is the lifestyle you want and. It'll make sense in a moment. You know, for me. Here, here's here's the lifestyle that my wife and I agreed that we wanted as a starting point. We have two young kids. We want to be present parents. We want to be able to drop off our kids in the morning. We want to be able to pick them up from school afterwards. We want to be able to attend some of their extracurricular events. If it's like a soccer match or something like that, as they get older, we're going to want the flexibility to live, frankly, wherever we want. And we're not there yet, but we're going to get there. And so I bring that up because instead of going off on a diatribe about the pipe dream life, starting with that vision. Is what's going to drive.
Spencer: [00:40:40] You when you're at home at the end of your workday or you're on your lunch break and you say, Man, I heard this podcast or man, I read that book. I want to learn more about this real estate stuff. I don't know if I'm that motivated to do it. It's not motivating to sit there and think about an acronym like IRR. It's very motivating to think what is the lifestyle I can provide for our family? Therefore, being a present parent and more available to my children, that kind of stuff is extraordinarily motivating. So start there. Beyond that, one of the things that I tend to encourage folks, you know, I don't have my own coaching program, but I do mentor folks and kind of an informal sense when they ask about this, we actually go down, goal setting wise down to the week and we say, what is the one real estate related thing passively that we're going to get done this week? And that might be something simple, that might be go check out a new podcast. That might be go. Go, go buy that book and read one chapter. But the point is like, don't just assume you're going to wake up and suddenly be ready to invest. And certainly don't make the mistake that you actually hear people say every day right now, I swear I hear this every day. And so you probably hear this, too, is people say, you know, I think I'll just wait till the market corrects and then I'll and then I'll get started. And that one leaves me scratching my head because, I mean, you use any number of sports analogies if you want to, or even I'm a musician. So what would happen if you suddenly decide you are going to start working on your ability to perform a guitar solo, I'm a guitar player? And I show up to perform in front of 100,000 people that day. It's not going to go the way I want. I'm not prepared. I haven't even thought about it that much. And so to pull this off, I better be ready. And so, you know, those are the things I would encourage people to do is start early. You don't need to go spend money, but just do something and track yourself. And instead of vision.
M.C Laubscher: [00:42:38] Absolutely. All those little small steps add up. You know. You know, I'm by the way, I'm really good at butchering quotes. That's one of my powers. But Tony Robbins said something to the effect that you'd be surprised we over, you know, we think that we can accomplish more, you know, in one year. And we underestimate what we can accomplish in ten years, something to that effect. But all these little things add up. And by the way, I did butcher that quote, but you guys get the message. I know the one you mean. Yeah, exactly. Um, what? One of the habits that I've learned from successful and wealthy folks is that they're always studying new things and learning new things. What are you currently studying and learning?
Spencer: [00:43:23] The big challenge for me right now is scaling my time and scaling my impact. It's a great problem to have, you know? So we have so many people asking for our my time and reaching out to us from our website and hitting me up via LinkedIn that now it's a question of how do I figure out how to make my my biggest possible impact. And so what I'm working on right now is trying to put together things like video content, frankly, like for the basics. You know, like if I can do one best version of explaining what a syndication is for someone, because that's a question that they will have. And this is not something people typically get on their first go.
Spencer: [00:44:02] You know.
Spencer: [00:44:03] Like yesterday I did take an hour just to reply to one email and give someone a really, really long answer to to a brilliant question that he asked. But most questions are the same, you know. And so if I can do one recorded video of me doing my best, preparing thoroughly answering someone's basic questions about this stuff, then I can spend all the rest of that time that I just freed up, really focusing on the individual and getting to know them as a person. And that and that's what I'm interested in, is to like connect with a person on an individual level or them and their spouse get to know them, build that relationship and figure out what's the right game plan for them. And so scaling my time, maybe even I'm finally going to cave in potentially and hire a virtual assistant. So I'm not I'm not sure if that's going to happen right away. But, you know, I keep hearing that I'm supposed to do that around the stage. So. I'm trying to figure out how to do that correctly. But I'm new to that.
M.C Laubscher: [00:45:02] Awesome. Yeah, absolutely. Um, now you're obviously very, very successful and congratulations on all the success. What are some of the stuff that's working in your personal life and in business and why does it work?
Spencer: [00:45:19] Yeah, I'll think about that one. You know, I think this is kind of stylistic and a process all in one. I am. Right. You know, there's this. Concept. Out there. Some people will know this. There's a book by Kim Scott came out a number of years ago in the business world called Radical Candor. I think in some circles it's kind of like. It's it's taboo when misinterpreted. But in my opinion, when people have asked if I exercise this, this, this, this approach, I just tell them I've been living this, I've been living this truth for my whole life. I've always been a pretty authentic person. I like to think. But radical candor simply just means sometimes when you're connecting with. Someone. And you're getting to know each other, you know, you you might like I might tell someone, I don't think that I'm a good fit for what you're looking to go accomplish. Like, I don't think I'm a good partner for you because it sounds like you're looking for a level of handholding I can't provide you. Yeah. And and I think being able to say that or being able to say something like mean. Think of it like I want to build relationships with people who are. So that are so authentic and so trusting and so respected both ways. Where if I have something in my teeth, they're going to tell me because a friend does that. And that's the kind of stuff stylistically and in every process and approach I want to have wen I'm connecting with another partner. Maybe that partner is like a member of a GP team that before I joined their team, I'm getting to know them and I have to pass because it's not necessarily a fit. In how we communicate. And so I'd rather I'd. Rather roll that way, if you want to call it that and just tell people radical candor. Very authentic. Here's the truth. And I hope that I hope this lands well. And that has never, ever failed me. Every once in a while. Someone might take it. With a little bit more of a sting like, Oh man, I can't believe that he said no. But it's better than going into something half hearted. And it's better than going into a into a relationship where you feel like it's based on something that might be a little bit weaker than you thought or. That other person needs for the thing to thrive.
M.C Laubscher: [00:47:33] Yep, absolutely. Now, core message in our show is to leave our families, communities and the world better than we found it by passing down a mindset, values and principles to future generations, not just money. So if you cannot pass on any money to future generations and we're only allowed to pass on three principles to them to build wealth and achieve happiness and success, what would they be?
Spencer: [00:47:58] As a fan of your show. I was excited. So the first of three. I think that wealth is measured by the positive impact that we can have on other people. It's not measured by the size of your bank account. It's not measured by the size of your house. It's not measured by the price of your car. It's measured in the positive impact on your surroundings and on the relationships that you have. That's what wealth means. And I want to leave that to my children and other people. Number two, I think when we are born, we have everything that we need to be successful as we are right now. And I would love my kids to know that. I think that we have a tendency to think if I was smarter, stronger. Maybe. Maybe skinnier or maybe taller, that we would somehow be be more successful. And in reality, I think we all want the genetic lottery. We exist. We were born. Right. And the chances of that are rather low. And if you're listening to this podcast, I mean, you're doing so on a phone or on a computer. That means that some people in this world don't have access. To those things, right? And so you already have these amazing resources at your disposal and it's safe to say you are positioned to do something amazing. And so you have everything you need and you got it right now. So that's number two. I think. Number three, just get comfortable being uncomfortable. And I really do think that if life feels easy and you are young, like you're in your 20s, it's okay to have some fun. Of course, I certainly did in my 20 seconds. But if life feels easy. You're doing it wrong. So, you know, growth happens outside of our comfort zone, and as humans, we are very programmed. Just our brains are designed to avoid. Pain and seek pleasure. But you have to and you should train yourself to go and find. Pleasure in a sting that comes with failure when it's moving forward, if that makes sense. So just get comfortable being uncomfortable. I would really like to think that my, my, my kids will eventually hear those, hear that voice in their head saying these things someday. But, you know, maybe if they take away one of them, I'll be I'll be happy with that.
M.C Laubscher: [00:50:15] Fantastic work. And listeners learn more. Or about you, Where can they follow you and stay informed of all the projects that you're involved with?
Spencer: [00:50:22] Yeah, I would love to hear from anyone that wants to reach out. Madison Investing is our business. And you can reach me at Spencer at Madison Investing CO. Best to probably just go to our website. Madison Investing CO That's CO And if you want to just beef up your education, start the process of learning, you'll see a button on there that just says Join mailing list and you can join the mailing list. You know, just fill out some very quick information and we'll stay in touch with you, send you a newsletter and some resources to start the journey.
M.C Laubscher: [00:50:54] Fantastic. Well, thank you so much for coming on the show and connecting and sharing your journey and your knowledge and providing so much value for my listeners. Spencer.
Spencer: [00:51:03] Yeah, it's a pleasure, Missy. I'm such a fan. Thanks so much for having me. It's been a blast.
Intro: [00:51:08] Life settlement investments have allowed financial and banking institutions to not only buy their equity contractually, but also diversify their capital from any economic market and geopolitical risk. It's been part of the billion dollar blueprint, followed by institutional investors. And if you're an accredited investor, you can also now participate in this vehicle with enormous growth potential. You can watch an informational webinar presented by one of the premier organizations providing life settlement investments, a number of solutions at cashflow ninja. Com forward slash life settlements.
M.C Laubscher: [00:51:46] Thank you again for joining me on the Cashflow Ninja. If you like what you hear and appreciate what we're trying to build here, please subscribe right and write a review for our show on iTunes and share our show with family, friends and your network. If you're not a subscriber to our newsletter, you can sign up for our newsletter at Cashflow ninja.com. I want to thank you for spending your most precious resource with me today, your time. Until next time, my friend live a life of passion and purpose on your terms.
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