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The Multi-Family Legacy Podcast

Episode: 239 - Invest Your Dollars For Passive Profits and an Ideal Life with Spencer Hilligoss

Transcription below

If you want to live a life of happiness and achieve your long-term financial goals, you'll love this episode! So, hop into this interesting discussion with Spencer Hilligoss, where he delves into the realm of vetted real estate and explains why it's a viable avenue for earning passive income.

Topics on Today’s Episode

  • Exceptional advantages of passive investing in the real estate 

  • The power of mentorship and strategies to effectively leverage it 

  • Why due diligence and setting financial goals matter in real estate investing 

  • Ripple effects of sharing investing and entrepreneurial knowledge 

  • A rewarding method to manage wealth 

Resources/Links mentioned

Begin with the End in Mind

Intro: [00:00:00] Do you want a cash flowing portfolio that lets you live a life of freedom, sunsets and palm trees on your terms? Your host, Cory Peterson, is a rags to riches real estate millionaire who started with no money or credit and quickly grew a multi-million dollar portfolio of cash flowing apartments. Your only one deal away from creating the cash flow life and the Multifamily Legacy podcast will show you how.

Cory Peterson: [00:00:27] Hey everybody. Welcome to the Multifamily Legacy podcast. I'm your host, Cory Peterson. And today, man, we are going to take a journey that we don't normally take. And this is with someone that's going to come from the perspective of just passively investing. My good friend Spencer is going to come on to this podcast and he's going to share with you his journey of how he was working the W-2. And he found time early in the morning to put together a plan to escape the 9 to 5. And he did it a lot sooner than he initially planned for. And I'm telling you, it is a great story. We had great conversations about life, about family, about putting everything in perspective. It is one of these podcasts you're not going to want to miss. But before we do that, a word from our sponsors.

Sponsor: [00:01:18] Are you ready to take your multifamily game to the next level and learn the amazing results of living the cashflow life? Apartment investing can change your life. I know for a fact it's changed mine, and I would like to share my extraordinary journey with you and the clues I've learned along the way by giving you my eBook Copy Your Way to Success for free. So text the word book Bok to (480) 500-1127. Again, that's the word book b o o k to (480) 500-1127 and my team will ship it to you absolutely free as a way to say thank you for listening to this podcast and remember your Paradise is possible.

Cory Peterson: [00:01:59] Welcome to the show, Spencer.

Spencer: [00:02:01] Cory Honored to be here. Thank you so much for having me on.

Cory Peterson: [00:02:03] I am excited about this episode because it is one of those things. There's lots of people talk about hitting a milestone of passive income milestone and Spencer, you did it. You set one and you set it out. And I want to take all your thunder, but you set something out there and then as you started going towards that, you realized that you could achieve it much faster. Before we unpack that, though, tell everybody a little bit more about yourself and your history and just give us a little background of who we're talking about.

Spencer: [00:02:36] Yeah, thanks again for having me on. Corey I think passive investing is a abstract concept. It was for me and I was a technology company guy for 13 years before that. I was raised in a real estate household. My dad was a broker, residential broker for 30 years, had me cleaning out fridges and rentals, working in open houses as a teenager, which is what ultimately kind of scared me into going to tech companies and thought that was much cooler to tell my friends right? So growing up in the Bay Area, California, that's where I'm sitting right now. I live in Alameda, Cool Little Island across from San Francisco, next to Oakland. These days I identify as a totally different role. I'm a dad to young boys, happily married, co-founded an investing group along with my better half, Jennifer, who had her own career before we both pulled the ripcord to do this full time. I left my career in 2019 because business got too busy and Jennifer left hers in early 2021. It didn't start that way, though. Cory Like we started out as passive investors fully and now we still do it. That's the lens. I look at this through buying the local rental. Got up to five turnkey properties in the Midwest, realized rentals were not passive there Semi-passive and flashing forward. Geez, I think we've been in now over 60 different deals as LPs or co-GPs or both some assortment of that between multifamily primarily as well as some self-storage. And so with that word salad just walked you through, I'll just say it's a joy to wake up and be able to help other folks find the same path that we did. Wish I had found it earlier before I put in 13 hard years of work across five different financial tech companies in Silicon Valley. And it's quite the meat grinder. Not to be too crass for folks out there thinking it's glamorous. It's not. It's hard work on the other side of that now and very proud to say we hit our passive investing milestone just last year that we thought was going to take us originally 15 years. Then we chopped it to seven and we hit it in five.

Cory Peterson: [00:04:26] That's amazing, by the way. So this is a very unique episode. Truly, I must say, you're my first guest, Spencer, to say, like when you say the word passive, you're really saying that all true of the sense, right? Yep. And I'm assuming even the deals that your GP'ed on, you're still more of a passive co-sponsor role, right? Because you're supplying the cash. You're smart enough to say I want part of the GP too, right? Correct. But that's just an overall blend and making sure that you're getting the value add for what you bring. But I would love to talk about that perspective because the question is: why wouldn't you want to go do it yourself? Look how much money you're leaving off the table by not actively getting into apartments. And I would love for you to answer that because I think this is going to really be a real telltale sign because in real estate, Spencer, most of us that are in real estate think that everybody should be in real estate the way we are. And I think the answer is it couldn't be farther from the truth. They want to be in real estate, but they just don't want to do tenants and toilets and all that stuff. Not that cup of tea.

Spencer: [00:05:32] Right? Oh, my goodness. I did not know we were going to go there, Corey. I love that question so much and I really appreciate you going there. I'll start with a I'm not a huge fan of putting too many platitudes out there, but this is a mentor of mine I've known now for 15 years. He had nothing to do with real estate, still doesn't. Now this is a corporate mentor. This is one of the first most meaningful mentors in my career. When I was really green and he taught me my first lessons of management 101 when I was trying to learn how to do that. And he said, Spencer, everyone wants to be the matador, right? In a bull fight, in a figurative bull fight, a metaphorical bull fight, whatever. But no one wants to get in the ring. And I think that when it comes to real estate, that's just about the most tangible example I can give. If we're getting metaphorical here to compare. And I know you're smiling because you live this brother, the rewards are wonderful for real estate. It's why I've chosen to pivot and go so fully down this path. But also I had a couple really helpful folks in my corner like that mentor. And the beautiful part about mentors of any type is they can hopefully help you, grab you figuratively by the shoulders and just say, Hey man, here's what you're good at. And by the way, here's what you're really not. Yeah. And I cannot swing a hammer like I don't know how to be handy around the house. I'm not going to list all the things I'm not good at. But I will just say here, it was very tempting, a distinct moment back in about 2016, 2017. That was my last W-2 job. It was a great run. I had the benefit of working inside the guts of a fix and flip lender. I didn't plan to go work in a real estate lending company. We were doing 600 fixed and flip loans per month bridge loans. I was asked to come in and lead a team of mortgage loan originators. I'd never originated a loan in my life and I'm sitting there going, okay, so this is what these transactions look like on the inside, and I start getting the bug. I read 24 books in an 18 month period. Way too many books. Overdid it. Procrastination. I listened to 400 podcasts like yours, like great education. You got to do that foundational stuff. But then one quote hit me and it was said, I'll leave the name Anonymous. Very wise dude active in the business. And he said, Spencer, ask yourself before you go and sign up for a very pricey coaching program to become the next quarry, or the person who's going to become the bullfighter in the ring. The matador in the ring, right? Are you going to move? And I was like, Well, what do you mean? He's like, Do you live in a money state or a deal state? And I was like, Well, I live in California. And not to break the hearts and show my true opinion of this for a California real estate folks. But I'll just say we have only invested in one property in California personally. That's an investment. We still have it Now. Cash flow is $200.

Cory Peterson: [00:08:07] We're in the money state.

Spencer: [00:08:09] I'm in a money state. That's the bottom line. We look outside California for cash flow. One property we bought here, we still own $430,000 purchase price duplex for $200 a month in cash flow.

Cory Peterson: [00:08:20] Hey, I'm in one state over. I'm in Phoenix and I still think the same thing. Am I in a money state or a deal state? I'm like, I think I'm in a money state because it is so hard to find deals, even though it's half the price. Right. Of California real estate, right? That's right. I got us to go a couple more states over to find the right project.

Spencer: [00:08:40] Keep pushing these, keep pushing south. Maybe you can go north a little bit.

Cory Peterson: [00:08:43] Get in the Midwest and the South. That smells like money. Yeah. North Midwest, right. So, like, I get it. Yes. Invest where it makes sense.

Spencer: [00:08:52] Totally. That's my long winded metaphorical answer for you. I think ultimately it helps to have folks in your corner just to keep yourself aware. And I think that I know what what strengths I brought. I knew a great deal about people partnerships that hired hundreds of people, thrust into leadership roles and operations in big companies, leading teams of 200 people at the age of 27, way in over my skis, man. So I knew that world from hard work and messing things up and failing forward and all those things that we learn. But when folks want to get into active real estate work, that is a fully different career choice. And they think it's an investment, they don't realize. I think you could teach me endless lessons about this, Corey because you live and breathe it. People don't realize they want to go invest, but they're about to go become a business owner.

Cory Peterson: [00:09:35] Yeah, a business and systems and process and people. And then the stress that comes along with it to hit the returns, right? To make sure that you're making the cheese, right? Yes. That is very honest with yourself. When I first was like, I knew that I wanted to be the guy. Right. And get into it because I love it. Right. I truly, truly, truly love. Of it. But I also had to love all the bad things about it, too. Right. Right. And I had to accept that. That's just part of what it is. But I took time to self reflect to say, Is this what I'm meant to be? Right. And will I enjoy it? Ten years, 15 years? Like you just said, you spent a good amount of time doing something that you were not really devoted to, but it was something that paid the bills and made the income and made like it was a choice. Yes. Until you found the other option, which was like, I'm going to set myself free, but I'm going to do it a different way.

Spencer: [00:10:34] That's right. Really appreciate you saying that you love it. I think that loving every aspect of the work, I forget which person said this to give him credit, but like you have to fall in love with the process. Yeah. Of whatever you do, whatever your jam is.

Cory Peterson: [00:10:46] It really is. So it's funny, I'll bring this up because this was just happened to me yesterday, right? I got off a little bit early. I'm a workaholic. I'm programmed that way. I like to work. I got off at 430, so that was a early day for me, right? I think maybe we got off at four. So I sat around the house a little bit. Then I was like, I'm gonna go for a walk. So I chose to go for a walk on this beautiful sunset. Right? There was an Arizona sunset that was just amazing. I was by myself. My wife's out of town and I was thinking to myself, I love my life, right? And all the things like we had a good day at work. All that summation is like, man, everything we're doing, it makes sense. But I've been on the other side of that. What you've talked about really is like when you don't love what you're doing, those moments don't happen very often. Right? And so, hey, I want to commend you, Spencer, for finding the thing right? And then you also said another point that ringed my ears is you had a mentor or someone that you really looked up to guide you. How valuable was that?

Spencer: [00:11:47] It's everything. And thank you for sharing that story from yesterday. A full day. What did they say? The full day is one that has the whole range of emotion. Yeah, because you can't have the highs without the lows. But I got to say that the mentorship component oftentimes is a very narrow definition. And I look back at the folks that have helped me along the way, including in real estate, I've gone through at least three now, I think four, some version or altitude of paid coaching program. And I think that is essential because a mentor can be a coach, a mentor can be a boss at a company. A mentor can be a person that you happen to meet through networking in the corporate world. I think a lot of times that confused the heck out of me. When I first got into the space in real estate, it was like, Wow, what are these masterminds? What are these coaching programs? But in the end, I kind of took a DIY path, as it were. Once I made that very deliberate, intentional decision was scary to say, I don't want to go be a lead on an apartment deal. And for a few big reasons, it was like, well, not just because you have to love it. It's all in like to do it right. The rewards are incredible, but to go in and do that, there's so many wonderful mentorship options, but there's not really any mentorship options to go do some version of I want to be a passive investor, and that's my primary lens.

Cory Peterson: [00:12:59] Yeah, yeah. Who does that and even teaches how to do that, right? Or here's the right way to do that, right.

Spencer: [00:13:05] And do some kind of hybrid because we'll also do consulting and some of which is not even in any way real estate related. Right? Right. In order to invest passively more and learned underwriting for commercial real estate because that was one specific slice of a paid coaching program that I said identified the program. I liked it, paid for it, used it. It was great, moved on to the next thing, looked at like, well, how can I think about deal structures, subscription agreements, PPMs, and then eventually just pulled the trigger, invest in a deal and then take it on from there. So I think the role of mentorship is broad and pretty sweeping, frankly, like in a cool way, in a very intimidating way at first. But for folks that are sitting out there and going like, Well, I'm just want to be a passive investor, I'd be like, Cool. I would always recommend folks educate themselves.

Cory Peterson: [00:13:49] Well, there you go. For everybody listening right now, I will tell you this like, listen to what Spencer just said on the passive side for as well. But if you're in the active side like I am, listen to what he just said. He calculated a underwrite deals. He wants to make sure he can analyze them correctly. Right. The opportunities that he's getting as an LP, he still wants to be able to put it through a lens. He had probably had questions on how to vet a syndicator, right? These are the types of things you'd want to create and provide in any type of curriculum that you're putting out to help educate someone that's wanting to be like Spencer, Give them what they desire, right? They don't want a course on how to do all the other stuff. They just want something that give me what I need so I can passively invest.

Spencer: [00:14:31] Yes man underserved market and which I don't think is a negative comment at all. I love that comment.

Cory Peterson: [00:14:37] Corey I'm writing a book right now. Spencer I'm going to plug my book just because I have to go for it. Brother. It's not ready yet, but it's called Trust but Verify The Art of selecting the right general partnership or I can't remember what it was, but the art of selecting the right syndicator. Yeah, right. That's awesome. Because you really need to have something like for guys like you, I think about you guys all the time is like you've got to have a good roadmap. There's. Lots of people that are like you that want to passively invest for the right sponsor. That's right. That they know, like and trust. Right. So how did you find those types of people in your sphere? And then I really want to get back into your journey of how you I know we kind of a little sidetracked, but I want to go back.

Spencer: [00:15:15] No, this is fun. Yeah. Hey, man, this is real stuff. So I'm a big nerd. I like to think that's a good thing when it comes to process and structure. We really did sit down for two weekends in a row. Jennifer and I, we sat there. We had sticky notes on the walls. We were trying to approach this big goal setting thing about when we want to be financially free. What do we need our monthly income number to be in that weekend? Multiple cycles of laughter, tears, arguments, reconciliation, the full cycle. And that's an indication to me, not an unproductive discussion. That means we actually did it correctly in hindsight because you got to get down to the root. I say that because ultimately that informed what was next and how are we going to quit our jobs immediately burn the boats, where are we going to go and work more for a period of years? And that was actually the plan. So I had to figure out like, what do I do? How about time? Do I even have available? I was leading teams of people at a very demanding day job, and I found ten hours that I could squeeze in, most of which was 4 a.m. to 6 a.m., which I'm not an early bird, but I just figured that out and did that for two years. And I woke up, used those hours to research and network. I went to local meetups, got out there and started using the language that I picked up from the books that I had read, the 24 books that digested Overkill. No one go out there and read 24 books, please. That was procrastination, But ultimately going on and just devouring content and then realizing, Oh, these are real human beings.

Cory Peterson: [00:16:30] And then putting some action in place. Right? That's the key, dude. Yeah. Like you point out, anybody that's successful in any. Right, Right. Spencer, they will all have that same trait. I swear to God, I burned midnight oil for years when no one else was watching. Corey was doing the work just like you. I got my full time day job, but this is where I'm going to squeeze in for my legacy that I'm building. It's like a rocky movie. I swear to God, right?

Spencer: [00:16:57] In our heads it has to be.

Cory Peterson: [00:16:58] It really is. It's like I'm going to get knocked out, but I'm going to keep doing the workouts every day of that 4 to 6. That's mental game. Yeah, right. And most people are not willing to pay the price.

Spencer: [00:17:10] They see the end product.

Cory Peterson: [00:17:12] Or they get their first obstacle and they can't seem to ever get past it.

Spencer: [00:17:17] Yeah. And think in that moment, it's that choice of the obstacle. I mean, I sat there and did the reps on underwriting analysis. 100 deals. 200 deals. Et cetera. Did the reps felt good enough, by the way? Did have a couple of unique advantages. Like I had been working in financial tech companies that helped a little bit, companies like Intuit, that makes TurboTax and QuickBooks. So I saw some of the financial stuff and I understood that well enough. But frankly, being in the guts of a lender for single family helped me a lot. On the How does a bank think? How does a lending underwrite think really getting what LTV means, like all those basic like all that. But it's not the same. Like there's very big differences in commercial, right?

Cory Peterson: [00:17:54] Because you got to understand the opportunity of what is the play, what is the value add, How do you increase and drive rents, Right. Rent growth.

Spencer: [00:18:01] That's right. Like how are you going to push that and why?

Cory Peterson: [00:18:02] Where's the vision? Right. Right. Where's the business plan that's going to get me to larger returns? Because if it was easy, everybody would do it.

Spencer: [00:18:10] Absolutely. And so identifying the skills needed first to map to that goal and then seeking out the people who are really capable and delivering on that and just talking just speaking out loud. The stuff that you learn is the best proof point if you actually learned it.

Cory Peterson: [00:18:24] Yeah, I think that's why I got an education, right? That's right. I got an education because the more I talk about it, the better I actually get at it.

Spencer: [00:18:30] Yeah. And if I stumble over my words in the moment, I feel sure, I feel embarrassed. I'm a human. But at the same time also realizing, oh, this is a forward step, like it's a forward step. I have to hit that obstacle and move on from there. So ultimately, connecting with good people, networking like crazy, going on places like BiggerPockets forums and just talking to people in the real world, not just hiding behind the keyboard.

Cory Peterson: [00:18:51] Right? Yeah. No, I think that's it. You put in the work and every successful person has to pay a price. There's always a price to pay. Are you willing to pay it? But also there's a visionary piece of that too, is where do I want to go? Yes, because as entrepreneurs, once you get into that entrepreneur role and you understand the power of our minds, everything is available. Yes. Like Spencer, you can have an idea like I know if I focus on this idea and put what I know how to do into it, I can ultimately achieve it. But does it mean that it's the right thing?

Spencer: [00:19:23] That's the hard part, right?

Cory Peterson: [00:19:25] Like we're on a bunch of entrepreneurs and it is intoxicating because everybody was like, That's a great idea. You could do that because it's like the power of those collective minds will actually make you think bigger than you were probably thinking before. Yes, The challenge is it comes with no filters because they don't know what you want, right?

Spencer: [00:19:47] So they're going to teach you on like what they know or they're going to push you on what they know.

Cory Peterson: [00:19:50] Yeah. And so I got a couple of good mentors in my life and they usually say, Corey, what is your vision? What is your vision first, right? And they don't talk about my business is like your personal vision.

Spencer: [00:20:02] Yes.

Cory Peterson: [00:20:03] Right. Who do you want to be? How much time do you want with your kids? How many vacations are you going on? When do you get off work? Do you work Fridays? Do you not work Fridays? What's your day look like? When do you go into work? Like what is that really, truly look like.

Spencer: [00:20:17] Hour by hour? Can I say something to that one? Yeah. You hit on the topic that I think is very under-discussed and I try to bring this up with the members of our investing club as often as I can when they're talking about the most helpful question, which is like, what's the goal for the money? Like on any individual investment? That's the question I ultimately have to ask myself. And if I can't answer it quickly and decisively, whether cash flow or growth aligned for a reason, then it's like, well, I should go clarify my goals. But on the ideal day, that was key, man. And I think for us, we looked at the goal setting process at the beginning of this process for Jennifer and I before we set a concrete dollar amount per month that we wanted to come in in our household every month from passive investment. And we said the money's not the end, the money is just the tool. So like, what is the point of the money? Oh, it's to enable us to live a life that we couldn't live prior. Well, cool. What does that actually mean? And I sat there and said, This is what my day would look like, just to your point, like, exactly within my mind. Corey And so ultimately, just to make it tangible in about five days from recording and the release might not be aligned with this, but like just to say it for people to make it tangible, what does it actually mean? Take it out of theoretical, like we're going to go live in Portugal for six weeks, in five days. So we're taking our two young kids and we're not going on a vacation. We're going to live there. And we've never done that. We've never lived in another country for almost two months. And so, like, when people are like, well, what does that mean? Mean? That's what I'm talking about.

Cory Peterson: [00:21:39] That is living exactly what your goal when you said free, that's what you meant.

Spencer: [00:21:44] That's what I meant. I just wanted to make it tangible. And by the way, that's not like some kind of weird humble brag. It's just a manifestation of what we've been working on for years and we're still going to be working. But the work we do is aligned with the lifestyle that we've worked so hard to build.

Cory Peterson: [00:21:57] Amen, brother. So I've got one more year for my son is going to be out of high school, right?

Spencer: [00:22:01] Oh, home stretch.

Cory Peterson: [00:22:03] So I'm right there. And then that is exactly what my wife and I plan on doing, right? We're like, Listen, we can go live anywhere. I don't have to be at this office and I don't have to work as many hours as I do. I like to work, but I could like to work 3 or 4 hours a day. I've got the team behind me to do the work. Yeah. What does it matter? Right. But that's living by choice. You can fulfill your destiny and you can usually live that life sooner than later. If you would just put some planning behind it.

Spencer: [00:22:31] Right. One of the things that you made me think of there to back to your comment on being around other entrepreneurs, it's intoxicating and the best kind of high to be around that level of ideation. People coming up with brilliant ideas like something that you're like, Wow, that'd be so much fun to work on that. It'd be so cool to go build that. And would it be fun? Would it be cool? Would it be intoxicating? Probably. But the hardest part of making decisions is choosing what you're not going to do.

Cory Peterson: [00:22:59] Yes, right. Because it all comes with something. Right. So if that thing that you decided to do, but then it means that now I can't spend as much time with my wife. Right. And my kids and they're like, wait a second. Hold on. Those were my priorities. What did I just do? I went on this tangent because this sounded really good and I could do it. I know I could do it. But then you look at the price, you're like, Wait a second, those are my non-negotiables, right? That's not my personal vision 100%. I want to go to across the pond and stay for two months with my wife and kids. That's my vision. Yeah. Not done enough, by the way.

Spencer: [00:23:38] Oh, my gosh. I think the temptation because I also have been a hard worker my whole career, like to the point where it's hard for me to hit the brakes. And I know you relate to that. I think a lot of people relate to that. But really settling into the idea of like, what do I want and allowing that to simmer or marinate, not to get probably hungry. That's what I'm saying. Sitting there and thinking, what does it mean to wake up and spend more like half the day with your kids when they're young?

Cory Peterson: [00:24:03] How old are your kids?

Spencer: [00:24:03] Spencer Nine and five.

Cory Peterson: [00:24:05] Great age. Beautiful age, right? Yeah. This is when your time value is of the most importance.

Spencer: [00:24:12] It's peak, right?

Cory Peterson: [00:24:13] Because they don't even spend in dollars. You're only currency your kids trade in is time. Yeah, that is their currency.

Spencer: [00:24:20] And the older one, he's not pulling away quite yet. Getting those inklings. So I'm like, let's just go and live this life the best we can. But it takes a reset and it also takes like a downshift in the ability to just say productivity to me now means something very different than when I was in the working world. Right? Because anyone can sit out there and say, Oh, I had a very productive day, I worked ten hours and it's like, that actually has very little bearing on what I define now as a productive day, right?

Cory Peterson: [00:24:43] Yeah, I got four things I got to get done today. And once I get those done, I'm done. Right?

Spencer: [00:24:49] Right. I just want to mention briefly that when it comes to sitting down as a passive investor and like looking at deals or more importantly, like getting to know a person like a. Sponsor or an operator that want to park my capital with it's so much comes down to the same vetting criteria that I started this journey with back in like 2016, 2017. For our own money. It was like sitting there going, okay, have they done it before? Like, can they do it again based upon their track record? Where do they focus the team, the market, the deal? But like under that, who and who do I trust with at the backbone of everything that's gotten us here, whether it's a passive investment we're making or whether it's like us doing something actively in a deal. And in the end it's just asking the right questions, using the right frameworks, because that's all stuff that you can do remotely. But there was some hard work. I don't want to be disingenuous here. Like I got on planes. I still get on planes now.

Cory Peterson: [00:25:37] Yeah, I understand what you're getting into. See the vision, the play, right. All of it.

Spencer: [00:25:42] Exactly. I just want to make it clear for anyone that's hearing this going like, Oh, I want to be a passive investor. I've done it before, but like, are you saying it's okay not to do it? Like to do it full remote and be like, well, make sure that you do your diligence in whatever way satisfies your needs? For me, you better believe that before we go all in on a partnership I'm getting on a plane, I'm walking assets and wherever we happen to be doing deals, whether it's Texas, North Carolina, South Carolina, Florida, whatever, we're not in Portugal.

Cory Peterson: [00:26:05] And I love that you said do do deals, right? So I always say I don't have partnerships. I have deal partners, right? So I don't tend to go into business with people, but I like to do deals with people, right? Because I've always found that if I do a deal with someone and we may like that experience, we both be like, This is a good deal, let's do another deal. Right? But I could and I've done this and I'm sure you have these stories too, where you've done a deal with someone, you're like, probably won't ever do a deal with that one again. Not what I really wanted, not what I expected. Right. But I see too many people a lot of times trying to make long term commitments and like you've not even dated, you have no idea where this is going. And I see a lot of people fall victim of that.

Spencer: [00:26:44] Yeah, momentum is a dangerous thing. Yeah, it's helpful, but it's also something where, like, you really got to put the heavy lift work on the front end is what I've found, at least just to, to really like go.

Cory Peterson: [00:26:55] Back to the fundamentals, Right?

Spencer: [00:26:56] Exactly. Like literally, you cannot replace going out, visiting with a partner, walking assets, going to their corporate office, sitting down, talking about literally things as corny as this might sound like, some folks find this very squishy, particularly the quantitative heavy folks, to ask about a team's values. That matters to me. It matters to me that people think that tenants are real people, not numbers. I want soapbox here, but like I'm a capitalist like everybody else. But in the end, that stuff matters. And like, say, taking the time, there's no rush on the front end. There will always be more deals.

Cory Peterson: [00:27:28] Yeah. Culture, values. That's words to my ears. That's what we like. We practice and preach it. Right? Have to.

Spencer: [00:27:34] Yep. Got to do it.

Cory Peterson: [00:27:36] Because we are in the people business. I always try. Never forget this piece of it is that anybody that's dealing with tenants and whatever, you got to be in the people business, you got to understand people, right? We have investors that are people, we have tenants, we have staff, and they all of them matter, right?

Spencer: [00:27:53] The whole equation.

Cory Peterson: [00:27:54] Yeah. So the 15 year mark, how did you go from that to seven to then ultimately you just got there, right? So what happened in between there?

Spencer: [00:28:04] Yeah, the 15 mark started because it was a very simple reason we didn't want to take a timeline so aggressive it would give us an easy cop out.

Cory Peterson: [00:28:13] Yep.

Spencer: [00:28:14] And that's where historically I have always found and from mentors and other people, whether it's incredible sports professionals or inspiring folks that we take our lessons from in life, like they know that take off the time pressure and you've got no excuse. So that was why we picked 15 years. We then came back like a weekend later though, and we were like, okay, wait a sec. 15 years is way too long, right? Yeah. And it was primarily because of the age of our kids, frankly. Yeah.

Cory Peterson: [00:28:38] I don't want to be that old. I want to get there faster because I want to be able to enjoy more of this kids, right?

Spencer: [00:28:43] Yeah. And like, the whole notion of, like, shoot for the moon, you land on the stars. Like if we go for seven, we might not hit it. Let's do it. Maybe we'll hit 8 or 9 or somewhere sooner than 15. We had no way thought when we were starting that core that it was going to be a five year time horizon. But if I could go back in time when we had those two weekend sessions sitting there as a couple, as a married couple with careers behind us, separately saying, Hey, by the way, not only will you start passive investing in real estate, get up to six rental properties, then decide not to invest in rentals and not only go to invest as an LP and a bunch of different multifamily storage and other deal types, you're going to go do all that. You're then going to decide to do more work than you've ever done before in a compressed period of time while maintaining your job and parenting young children. Yeah, but you'll be okay with that.

Cory Peterson: [00:29:30] Sounds like a recipe that I know, right?

Spencer: [00:29:33] Yeah. We grow in our comfort zones, expand, and like, my brain would have called BS on that if I'd had heard that message.

Cory Peterson: [00:29:39] If you would have put it all in there right in the beginning. But that's not how we do it. We eat the thing bite by bite, right? We're just like, okay, what next? Right? Because adversity sets in. You set a goal, you chart a course, and coming out of the harbor, everything's great, right? Smooth. And then you get into the deep seas, right? Then you test your mettle. Is this the plan that I really wanted? Right. Is this the vision that I really see and the true sailors keep charting the course? Yes. Right. And you realize that you're getting there. You're getting closer to the goal, right? I think that's what as you started putting momentum, you and your wife into your vision, you started feeding it and you somehow start feeling some traction, some wind got in your sails. I'm using the metaphor of sailing because I think it's great. Oh, I love it. I'm tracking.

Spencer: [00:30:24] I'm right there.

Cory Peterson: [00:30:25] So when got in the sails and how did that feel when you started seeing some of the fruits? You're like, this is working, right?

Spencer: [00:30:32] Confusion and disbelief at first in the best way. Of course. I don't know about you, Cory, but at that point I had already been working so hard for so long. Like, I mean, again, I know those entrepreneurs who grind it out for years before they see a check years. Yeah. Ours was never intended to be more than a side hustle. I think that's probably the first thing that helped. I can share in full transparency and authenticity here that, like, I left my day job in 20 19th October, five months before Covid, when had replaced over 70% of my W-2 income. That's my side of our household. That was early. Yeah, that wasn't supposed to be the time where you burn the boats or whatever. You pull the rip cord. That was just because things got too busy. Yeah. And great reason to do it. So it was like, well, I didn't know Covid was coming five months later. Hey, but what can you do? At that point? We were actually in a better position because I had learned the lesson at that stage too. We had multiple streams of income coming into our household. Jennifer has a strong career at that point. Still, she didn't leave her job till 2021. Yeah, but not to go TMI and throw it way back to my upbringing, I'll just say I saw firsthand what happens in our household. Growing up, my dad's broker business, we had a bunch of tragedy over ten years. It's like the dark decade, as we call it in our family. Like lots of my younger brother to cancer lost grandparents in one weekend. Shortly after that in a car accident. Like it was rough. It was a rough time and dominoes fell. His business shrank significantly, bounced back years later. But like that, one broker income to that household at that time was all that household had and downsizing because of that it did imprint somewhere in my mind to be like, well, now I'm a dad. I got to do something differently here.

Cory Peterson: [00:32:04] Yeah, I don't want to have to go through that same pain.

Spencer: [00:32:07] Got to have a moat.

Cory Peterson: [00:32:08] Dude, I love the moat. Who talks about the moat? I can't remember.

Spencer: [00:32:12] I can't either. I use it all the time. Don't know who to give credit to.

Cory Peterson: [00:32:16] If you want to increase your castle, the first thing you got to do is increase the size of your moat.

Spencer: [00:32:20] Yeah, that's.

Cory Peterson: [00:32:21] Your protection.

Spencer: [00:32:22] And the income stream thing. It's very tangible. It's so real, I think, for you and it's very real for folks that are in the business. The passive income thing is a tangible thing. There's literally dozens of income streams coming into this household now. But at the time when I left my day job, there wasn't nearly as many. And ten years ago there was only two. Jennifer's in mine. Yeah.

Cory Peterson: [00:32:38] Now, Spencer, are you helping others now? Like, is that what you guys do as well? Are you teaching what you guys do?

Spencer: [00:32:43] Yeah. So we have Madison investing. It's an investing club we invest in in sponsors as LPs, put them through our vetting process, and then we'll look at their deals on a case by case basis. And then our club members can invest in the deals that we share. So yeah, so we'll bring capital to deals that way. But I'm also registered with a broker dealer. We don't have a fund at this point. Maybe we will at some point in the future. But yeah, I'm a passive investor first, doesn't like me sitting here grinding on deals saying, Oh, look at these amazing thousand deals, let's go do all of them. Like we say no to most things that come across the desk.

Cory Peterson: [00:33:16] Which is great, right? It's an investing club like. So listen, you've learned so much along the way. This is the way I think a lot of people are built. I know I'm built this way. Once I learned how to do real estate and I did it well, I felt like I had a responsibility to share because I'm like, There's so many people out there that don't know. Yes, right. That probably want to know. And I always felt like I started from nothing, called myself a scratch starter. I had a good family upbringing. My dad taught me the value of hard work. Right. But I wish I would have had better mentors if I had what I had. I didn't get to download from the mothership until I was like 32, right? So I never saw my dad be super successful. I just saw him work hard. My dad was a roofer. I was like, I don't want to be a roofer. Right? Right. I don't want to be a roofer. I want to go out different ways to make money. He didn't know, like he couldn't teach me something he didn't know. Right. And so I've always had to learn from others. And I thought to myself, when I get to this place, I want to help others, right? And effectively. Spencer That's what you're doing with your investor club.

Spencer: [00:34:15] That's been the priority. Thank you for sharing that about your dad too. In some ways, we also want to not do exactly what our parents did a lot of times, so we got to carve our own path too, right?

Cory Peterson: [00:34:24] Yeah, you do. There's something about it. Like because you want to hear the words, I'm proud of you.

Spencer: [00:34:28] Yeah. There's no one in the world that can say anything other than what you just said, man, Like every person out there wants to hear those words of validation from the parents.

Cory Peterson: [00:34:35] Absolutely right. And what I love about this business and I think what you're doing, too, right? Like when you have passive income, it gives you options and choices. Yes. I don't know what you guys do for your charity, but I find that successful people are the most charitable that I know.

Spencer: [00:34:49] Yeah, you better believe it, man. We were already donating to charity as an example, and like, we opened a little donor advisory fund. And so, like, we were able to do more of that.

Cory Peterson: [00:34:58] Which is the beautiful part of it, right? We're all in this spot where we want to hoard money. It's actually quite opposite. Most wealthy people that I know are the most giving, most generous because most people had to work very hard to get it. I see very few people that inherited wealth that keep it.

Spencer: [00:35:16] Right?

Cory Peterson: [00:35:17] If that's the right words for it.

Spencer: [00:35:19] Well, I think you're hitting on a oh, my gosh, there's so many directions you just brought up. And if me want to go down, but got to be prudent here and say got to close some doors here before I run down all of them with that stat man. That one statistic of over 70% of lottery winners have lost it all within a five year period. Yeah, the ability to manage the wealth once you get to the other side of this man, we're getting this is fun philosophical stuff. Of course you got to shut me up if I get too far on this. But I'll just say that keeping the wealth is harder than making the wealth. After you've developed a certain number of skills, build certain number of relationships, and you've built one business. At least I think so. I'll just say it like the biggest question that I've been surprised by on the other side of hitting our passive income milestone early is that the question of what is enough? Because it's going to sound lofty, delusional, probably even irritating to people that are sitting there in it. If I'd heard that from someone on a podcast like seven years ago, I'd be like, What is enough? What is this guy full of? And it's like, No, but I'm dead serious. I hope every person listening can like, get to that point where they have the ability and the position to ask themselves, like, what is enough? Because they don't need to work so damn hard constantly all day for just paying the basics. And they can sit there and say, Well, can I ease down a little bit and be present with my children? That's the biggest, hardest question that has yet to find a great answer to, but I'm going to be working on it every day.

Cory Peterson: [00:36:38] It buys you time.

Spencer: [00:36:39] Never expected that question coming, man.

Cory Peterson: [00:36:41] Yeah. So listen, I'll tell you this. My kids are a little older, so this is one of the things that I knew my dad was a good dad. Like he was there. He was present. He worked from early in the mornings, but he was always there when I needed him as a young kid. Right? So like, my goal was to make sure that I showed up and an entrepreneur, you can control your calendar if you give yourself that authority. I was the coach to my kids soccer and football early on when they were young, and it was the fun times of coaching. Yeah, When it got competitive, I was like, Dad's done, right?

Spencer: [00:37:12] There's a different level there for sure.

Cory Peterson: [00:37:13] But I will tell you, as I was walking the sunset the other day, right, and I was thinking I was good, it brought up this I coached my daughter's soccer from probably six, seven, eight, nine, four years in a row. Right. That's awesome. And I remember our practices were always right at sunset. Right? And it brought back my memory of and I was like, Corey, checkmark. I will always think of these sunsets and I think about my daughter on the field with all her little girlfriends doing soccer and watching some amazing sunsets, like amazing Arizona sunsets that you can only see in this state. I know California has some too, but I'm just telling you, it is different. Blow my mind. I remember the feeling of being present and I remember being on the field sometimes thinking, man, like I'm looking at. And there's no other parents at this practice.

Spencer: [00:38:10] Oh.

Cory Peterson: [00:38:11] I mean, there's some. There's always some, but I'm there every time, right? And I was like, I'm so thankful that I committed to this time swap, right? I'm getting lots of equity out of it. Right. And as my kids have gotten older, they remember that they have the same memories, Right? You cannot buy that, by the way. And what is enough? Right. So I'll answer it from my perspective. To me, once you get to a point where you can pay all your stuff without an issue. Money all of a sudden loses its intrinsic value. I could care less about money. Maybe you feel the same way. I don't know. But I could care less about it, right? It shows up. I'm not worried about my bank accounts. What I'm going to do. If I want something, I'll go buy it now. I also don't have a infatuation with. I got to buy, buy, buy, buy. Right? Like, I don't feel that need. I've got everything I need, right?

Spencer: [00:39:12] Yeah.

Cory Peterson: [00:39:13] I'm happy. But what I really care about and this is my thing, Spencer. I call it supplier of fun. That's what drives me. I want to be the supplier of fun. And that could be like you're doing a two month thing across the pond with your family because that's meaningful, right? I'd rather give experiences to my friends or the people that I care about. Let's go on a trip. Let's go do something together. Right. And I'm happy to kind of foot the bill a lot of times, right? I want to supply the fun. And so that's my value of like, I just want to make sure I have enough money to do that. Right?

Spencer: [00:39:50] That's awesome.

Cory Peterson: [00:39:51] My daily's fixed. I'm not too worried about that. But this is the thing that I really want to do. And so, like, our next goal is we want to buy a house in Hawaii. You can't be the big kahuna unless you have a house in Hawaii.

Spencer: [00:40:02] Of course.

Cory Peterson: [00:40:02] And the real thought behind that, it's a bad investment. Spencer It's a bad investment, I think, because last time I buy a stupid big. But what I really want to do is I want to be able to send my friends there.

Spencer: [00:40:15] That's cool.

Cory Peterson: [00:40:15] Right? And my family, like I'm going to buy a big enough house that me and my kids and my kids kids, when they start having them and my wife's sister and her family can all show up. We can do family together.

Spencer: [00:40:27] Yeah.

Spencer: [00:40:28] Which island?

Cory Peterson: [00:40:30] kauai. Okay. We actually rent this house every time we go there. I already know the exact house I want to buy.

Spencer: [00:40:35] Oh, you ready to have it identified?

Cory Peterson: [00:40:36] I swear to God, I'm going to do a Count of Monte Cristo. Right? I'm here to buy your house, and there's like, it's not for sale.

Spencer: [00:40:43] It's just show up at the.

Cory Peterson: [00:40:44] Door and have a chunk full of cash and be like, Are you sure?

Spencer: [00:40:48] That's awesome. Kauai is great.

Cory Peterson: [00:40:50] So it's our favorite island. That's actually how the Kahuna brand was started, is my wife and I don't know if you know this, but 22 years ago we went there for the first time and my first mentor, his name was Bruce. I call him Bruce Wayne. He owned a house in Hawaii with my mom. They were married. And I asked him what he did and he said he was in real estate because I'd never seen a guy that had time and money.

Spencer: [00:41:12] In Hawaii.

Cory Peterson: [00:41:14] And he got it through real estate. Yep. He was the big kahuna.

Spencer: [00:41:18] That is so cool. Yeah. Kawhi is beautiful. I've been to Hawaii a bunch of times. Only Hawaii twice. But I like to go more. That's beautiful. I like that title, though. The supplier of fun. There's got to be a supplier of fun.

Cory Peterson: [00:41:31] Always, right? And so as we finish brother, really great insight, great stories. This has been an amazing podcast. I've really enjoyed talking to you.

Spencer: [00:41:39] And likewise.

Cory Peterson: [00:41:40] Your philosophy on just how you look at things and your demeanor is just that of exactly, I think, who you are. It's very diligent, very thoughtful. There's a lot of thought behind everything that you've done, and it shows.

Spencer: [00:41:53] Thank you. That's very kind of you.

Cory Peterson: [00:41:55] Yeah, it's very powerful, by the way. Right. What is the future? Look for Spencer and his family.

Spencer: [00:42:00] In keeping with one of the topics we covered today. And thank you for those kind words. You're making me blush over here, Corey. The feelings are very mutual. I think closing the doors and saying no to the things that are not in line with the goal. And so this is going to sound somewhat boring, more of the same. And what I mean by that is I'll just be very specific with the example. Two things. As a father and as a husband, as a family person in general, supplier of fun, I'm going to start using that, probably pushing the boundary a little bit further. We're doing Portugal this year. We'd like to eventually go to a place that's a little bit less friendly on the English speaking side so we can challenge ourselves when the kids get older. It's simple stuff. 1 or 2 big annual trips. That's like the biggest gift I think you can give your kids right now in this world is like broader worldview and education and experience, right? And so that's number one. I think number two is purpose. Like I'm a better person when I'm still working on something that matters to me. I think a misnomer or a miscalculation. I've made this as well, by the way, early in passive investing was like, Oh, when I get there, I'm just going to sit on the beach. And although you and I both appreciate Hawaii, we both appreciate tropical places and I love having a mai Tai and Fruity drinks in particular. But I will tell you, it's boring if you only do that and all that diatribe to say like serving others with just extending the education I can in ways that is not just purely about the business. Like sure we have an investing club and educate folks and a lot of times there's zero monetary outcome of that. But taking that a step further and doing some more educational content for folks just to help them walk the same path and give them a better shot at getting there. That's really the two things that are on my mind and occasionally plucking a guitar. But beyond that, it's really family, father, supplier fun to borrow your term and then trying to provide some education back in purpose in the world so that people can do the same.

Cory Peterson: [00:43:39] I love it. So let's talk about the education. How do people find you and your company and your investing club?

Spencer: [00:43:44] Yeah. Our website, a and folks can go on there, basically put in a quick info on the form and then set up a call with me and we can get you qualified to join our club.

Cory Peterson: [00:43:54] Awesome guys. Make sure you take the time to do that. I think Spencer will definitely open up your horizon just in the short conversation that we've had. Just understanding who you are, your principles and what you stand for, I think is amazing. I think we need more people to stand up for those types of values and just trying to do good in the world. So, Spencer, again, thank you for that. Last couple things before we wrap it up. Any books you've been reading that's really helped turn the needle for you?

Spencer: [00:44:17] Yeah, right out the gates. Cory, I got to say, there's this book. Not a real estate book, not an investing book. Essentialism by Greg McKeown. My favorite business book helped me the most. And why? It's because it teaches you five specific ways to say no. And it's awkward to say no to friends and say no to coffee and say no to work after hours things and say no to things. But like, we all want to keep our social graces intact. But that book was very helpful when I needed to use that ten hours to build our company in 4 to 6 a.m. and every ounce of weekend time.

Cory Peterson: [00:44:50] Two letters.One word.

Spencer: [00:44:50] Powerful word, man.

Cory Peterson: [00:44:52] Hardest thing to say, right? But you have to master it.

Sponsor: [00:44:55] Got to do it. And it's okay to say not yet. There's other ways to do it. But that book, that is a killer book.

Cory Peterson: [00:45:00] Yeah. You don't have to say no. Yeah, not yet. I'm not ready. Right, Right. Love it. Great content. What advice would you give any of the listeners if they were in your shoes five years from now or seven years from now, when you really took that journey, what advice would you give them?

Spencer: [00:45:16] Begin with the end in mind. I'll take that a step further, though, and just say sit down and ask yourself like genuinely, what do you enjoy spending your time on and what do you want your day to look like? You and I really think captured it earlier in this discussion, not just to take the easy out here, Corey, but like, man, start with the ideal day you want to work toward and pick a time horizon and make it really far out, like pick ten years, 15 years, whatever, and then start making decisions that align with hitting that time horizon. And if you say, I don't have enough time, you're picking a time horizon, that's too soon. So push it out and then start doing the moves, whatever that happens to be.

Cory Peterson: [00:45:52] Hey man, Spencer, thanks a lot for coming on the podcast. Guys. If you're listening right now, this is the epitome of what success looks and feels like. We've went to the depths of it and understand that, like, Spencer started with an idea. He really wanted to get freedom and he found his path. He made the commitment to it 4 to 6:00 every morning for a couple of years, like he was committed to the outcome of the goal. He never lost sight of that vision. Guys, success doesn't happen by chance. It happens by choice. It starts in that little thing. Your mind, right? It's that little idea that you've got to incubate and nurture and you grow it and you feed it and you give it positive affirmations daily. Guys, when you do this belief is a hard thing to kill my friends. It will not die because if you believe it, you can achieve it and your Paradise is possible.

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