PMX Masterclass with Justin Donald, Bestselling Author of The Lifestyle Investor

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Air Date:
November 18, 2021

Episode Description:

Property managers want to create freedom and autonomy in their lives, but it can be hard because they are always on the clock and always on call.


In this PM XChange Masterclass recording, Andrew talks with the bestselling author Justin Donald to bring you his strategies and proven approach to lifestyle investing. 


Entrepreneur Magazine calls Justin Donald the “Warren Buffett of Lifestyle Investing.” He’s a master of low-risk cash flow investing, specializing in simplifying complex financial strategies, structuring deals, and disciplined investment systems that consistently produce profitable results. His ethos is to “create wealth without creating a job.” Listen as he shares how you can create passive wealth while you run your business and not a business that runs you!


To learn more about Justin Donald, visit his website.

To learn more about Love Justice International and how you can help, visit their website.

Follow the conversation PMs are having about this and more in our Facebook group.


Be sure to follow The Triple Win Podcast by Second Nature on your favorite platform and never miss an episode!

Episode Transcript:

Justin Donald  
I love when your core business supports real estate, you know, that's kind of like a no brainer to get into the business because you're, you're around it, you, you will see deals, you'll see things before it even hits the market. You have insider info, you've got core competencies that are better than your average investor. I mean, it's interesting, because when you go to buy real estate, the hardest part of real estate is managing the real estate. It's not buying the real estate. So most of you from the sounds of what you do for business, most of you already know the hardest thing. So all you got to do is find the deals.

Andrew Smallwood
Andrew Smallwood here, we just passed 2000 downloads on that. I mean, it's amazing that a year ago, this did not exist. This was an idea on a piece of paper, it took a few months to get to 1000. And then it took a few weeks to go from 1000 to 2000. It's really taken off. And we really appreciate all of you who are sharing these episodes, sharing it with other professional property managers. And our goal isn't to have the biggest or the largest audience. It's really just have as many professional property managers that are going to get value out of this as possible getting value out of this. But we appreciate you sharing that around. And it's just an exciting milestone. And now we'll get going. Justin, it's great to see are you in Austin, Texas today? Are you home?

Justin Donald   
I am. Yeah, Austin, Texas. In my little podcast studio, I got a bunch of sessions I'm doing today. And and yeah, I'm excited. I always look forward to spending time with people live, because a lot of what I do is is one on one, you know, podcast style. So this is really fun for me.

Andrew Smallwood   
Yeah, that's awesome. All right. Well, you just heard it home home is Austin, Texas. For Justin Donald. And I first met Justin, I want to say probably something like 13 years ago, somewhere in that neighborhood, we worked in a previous company together. Some of you know the Cutco organization, because there's some folks at Second Nature who have history and roots in the organization. And Justin Donald, I remember watching his sales training videos were basically the template for the entire company for years. And I would literally watch him do his 18 hours of sales training, like probably 10 or 11 times so that I could pretend I was Justin Donald for a minute and just try to get the results that Justin was getting. He was a top performing sales manager. And I think what a lot of people really respected about Justin was not just that he's an amazing guy, an amazing person. I know. That's what usually people always end with. I'll say that one first. You're not just his expertise in sales and in building a business. But in doing it in such a way where he was he was not just building a great business, he was building a great life. And that was something that people I think, really respect. I know, I respect a lot about Justin. And then I'm sure he'll talk today a little bit about his story of how he went from having a very high paying job by most people's standards, to getting into an investor mindset, and different ways of producing income. There's just a very different way of going about life, but he's really living life on his terms. And in the past couple years, he's helped so many people do the same thing. We think it's just such a cool thing and not something you can hear, you know, anywhere else. This is the best guy to talk about it. So we wanted to bring him in, just fill it in, man. What else should people know about your backstory? And how you got here before we dive in?

Justin Donald    
Well, thanks for the kind intro I should hang out here more often. Goodness sakes, you're doing a good job of building people up. You know, Andrew, it's always a pleasure to get together I still have such fond memories of the time that you came to visit me in St. Louis. And we got to talking bourbon at a high level and I learned of your collection and desire to try finer things. And you know, it's it's just been so great watching you grow as a leader and as an entrepreneur. So to everyone that's in this group. I just want to give a major shout out to Andrew and to the team here for everything that they're building and I'm so glad I caught the beginning because It's cool hearing how fast you're all growing and, and the success that you're having. And I just have to say, when when you experience that, you stick around and you do your part to, to influence and affect that change, and you ride the wave with it. So I just think this, this is incredible. So I want to say that first and foremost, you know, for me, I got started in, you know, in a sales position, and then that became more of a management position both under the banner of Cutco. And I was able to earn. So when I look at, you know, kind of the way that I wanted to earn income, I wanted to earn it based on results. And I wanted it at first, you know, the first job that I ever had was a commission job. This is way back in seventh grade, when my parents told me I had to get a job, because it's not the Bank of Donald, you know, I've got to go get my own money. And I wanted more money than, you know, my allowance would allow for. And so I got this job selling newspaper subscriptions. And I was horrible at it. I mean, I would go through days. I mean, this is like from the time school is done until, I mean, people probably wouldn't do this now. But back then, I mean, it was like four o'clock to nine o'clock, where we're out trying to sell newspaper subscriptions, and then on the weekends, and I would come back from like a whole week of sales where you only make commission, and I made no money. I made no sales, I was just really not good at the beginning. But I worked hard. And I became good at it with, you know, intention and with discipline and with just learning to, you know, work with people and not take things personally. And so, when I worked with Cutco, I had a little bit of that foundation where I didn't take as much personally when someone didn't want to do something, it wasn't like, oh, they don't like me, it was more, hey, they're saying no to this circumstance or to this set of facts. And that was very helpful for me. But I liked the fact that I could work harder, I could make more. And I like the fact that I could be super aggressive with my savings. So for me, as my income grew, my lifestyle did not, I kept my lifestyle to a good lifestyle, I wasn't wanting for anything. But every time my income grew, I just increased my savings goals and and then I was able to accumulate some cash to be able to invest in real estate. And I just knew at some point in time, I wanted to get to the point that I stopped trading time for money. And it's it's not a bad thing to trade time for money. If you love what it is that you do, and you're gaining an incredible skill set while you do it. But I just wanted it to be more more on my terms that I was working the schedule I wanted when I wanted, earning what I felt was reasonable for the time that I'm investing. But moreover, than anything, I just want to own my time. So I could really focus on the things I'm most passionate about the people and and whatever project it might be at that time. So I was I was on a mission to buy my time back. And that's why I started buying assets that produced income, so that I wasn't relying on my time to solve for life's needs. So that's kind of the the short story of it. Most everything I've done, I've been horrible at it until I gave myself the time and the space to figure it out, and actually become good at it. But very few things. I was good overnight.

Andrew Smallwood   
And that's great. Thanks for filling in a little bit of how you got to where you are. I want to go one step further. Before we get into a couple of questions that I know we prepped for today, Justin, which is I remember seeing entrepreneur, entrepreneur magazine, calling you the Warren Buffett of lifestyle investing. And you know, that's a big claim from a credible source in obviously I've got we've got a bunch of mutual friends who I think we both hold in very high regard that really trust you and have learned so much from you. We've had David Osborne actually on a few months ago and a lot of people were big fans of what he had to share. I know you just mentioned getting started real estate investing. We'll talk about that. But could you lay out for folks who aren't familiar with your book and your work that you've done in the recent years, hey, we went from a job investing but now there's this thing called Lifestyle investing. What is that and why are people kind of giving you the accolades As the person to really talk to you about that?

Justin Donald  
Well, first of all, it's a very flattering article. And it's a lot to live up to. So don't in any way, shape or form, compare me to Warren Buffett or I will let you down. But, you know, it's funny, I actually just shared a stage last week with David Osborne and we did a panel at Cody Sanchez, his contrarian thinking conference. And it was just a lot of fun. I love David, he's a dear friend of mine, we've been able to kind of get to where we are differently. And I, I love that there are different ways to do it. So it's not like you have to follow this one path. Because if you follow it perfectly, and you do everything you're supposed to do on this exact schedule and blueprint, you're gonna get there. It's not that there's so many different ways to get there. And David's way is very unique. And I think it's it's very replicable, I think my way is, as well. But the whole idea of lifestyle investing like this, this term that I coined was basically because I wanted to help people, I was trying to sum up what it is that I'm most passionate about. And what it is, is living life on my terms. And living life by design. I feel like most of the people that I knew growing up, most of the people that were in my world, for many of years of my life, live life on autopilot. And they just showed up, they showed up, they responded, they reacted. They're on someone else's terms, someone else's schedule. There's so many people didn't even like what they did for work, but they just kept doing it anyway, because it was safe, or it was easy, or it was comfortable. That it was a known thing versus the fear of the unknown. And so what I wanted to do is I wanted to help people have this idea of proactively creating the life that they desire. So instead of what this is probably another great way of explaining it when I asked someone so I've a handful of coaching clients, and I have a number of people in my mastermind. And I often will ask when I first meet someone, what is your ideal life? What what does that look like? And 99 out of 100 times, people tell me, well, here's what I don't want, I don't want this, I don't like that. It is so rare to have someone that actually knows what they want, as opposed to what they don't want. So that one is always a bit mind boggling to me. I think most people are used to or are conditioned to living life on other people's terms. And so my goal with being a lifestyle investor is if you don't have to earn money from your time, then you can be very intentional with how you spend your time. And you can live a life that really fits what it is that you desire. And what I want is different from Andrew is different from you know, everyone else on here. But I think when you have clarity around what it is that you'd like, how many hours what are the things that you do? What do you do for hobbies, you know, what type of travel? Do you have? What, you know, what are all the things that you enjoy the most? And do you have those in? Are you scheduling that I think that that creates this compelling vision of the future that helps people be excited. So the whole idea of the lifestyle investor is buying assets that produce income, so that way you can live an incredible life, on your terms with those that you love the most.

Andrew Smallwood   
You know, that's really great. And I'd love to dive into a couple of the lessons having read your book, you've got these 10 commandments of lifestyle investing, I'm not sure we'll have time to cover them all. Certainly not in the detail you covered there. But you know, making things specifically relevant to the audience that's listening to this either live or recorded. Many of the people here Justin, as you know, are entrepreneurs. They're business owners. And a lot of a lot of our friends, you know, fit that description as well even if they're in other industries. And you know, what, what's one of the biggest things that you see entrepreneurs get tripped up in, you know, the or the risks, you know, that they may be overlooking or not realizing their end by really dedicating and focusing on building their business.

Justin Donald   
I think most entrepreneurs got to where they are based on a certain skill set based on a certain mindset. And the skill set and mindset serves them very well. till it doesn't. And so I think that when an entrepreneur kind of goes in their own lane to do their own thing, and people are like, Oh, that's crazy, or, you know, I would never do that. It's almost like you're becoming, you know, the the minority of the workforce by going into entrepreneurship. So now it's like, you're on your own. And as you build your business, it can become lonelier and lonelier. Being at the top or being the person in charge, and I think that most people develop these success habits that need to be retired, in order to scale to the next level, but because they did everything on their own, originally, it's harder to ask for help. So and to like, kind of reinvent what that protocol might look like. So to me that that's it, you know, an entrepreneur going on their own, there's so much independence in that, but I think that there still needs to be some sort of dependence on better information, up to date information, other people doing the same thing, you know, the power of a peer group and having others that play the game of life and business at a higher level than you do hiring coaches or mentors that do. And I think that, you know, I want to honor every single person on this call, because you're doing that you're showing up to a mastermind, a group of like minded individuals that are playing the game of life, at a higher level than most with the desire to play it even higher than they are today. And I just think that's incredible. And I would say that the number one reason I see entrepreneurs failing is by not doing that not seeking help, not seeking knowledge, not seeking better understanding better relationships, connecting with more talented, you know, entrepreneurs and people that have done it done the thing, not are talking the talk, but have already walked the talk that they then talk.

Andrew Smallwood  
Man, that's really great. You know, if I could ask you a follow up question on this. Justin, can you tell us a little bit about like, what was your process for designing and developing? And, you know, ongoing managing your peer group and the kinds of resources you surround yourself with? Can you give us some insight into how you've done that approach? That was worked for you?

Justin Donald   
Sure. Yeah. Andrew, it's a great question. And I think it's, it's an always changing type of way to do it for me. So at the beginning, I didn't have a peer group. And the only way that I could find access to people doing the things that I wanted to do was to read the books of those people that were doing it. That was all that I had in my network. And, you know, it's really neat, because just recently, I had, I got some one on one time, I've got about 90 minutes with Robert Kiyosaki, who is, you know, I've read more of his books than anyone else. I've read every book that he's put out. And that was just a real cool experience for me to share the impact with him that he's had on me. And, and so that was it. Like he was my mastermind, and my mentor, even though he didn't know it until two weekends ago. So that was, you know, what? I could have had the limiting belief. And for a while I had the limiting belief. I don't know anyone. So how can I do this? But when you get past it, and you say, Well, what resources do I have? That was the first resource I had, and I took advantage of it. And as I started implementing things that I read, I would get better results, which would also open up the door for me to connect with other people that recognize that. And so the next tear of it is I started asking people, if I could take them out to coffee or lunch to pick their brain and just learn what they're doing. And, and luckily, I mean, I had plenty of people that didn't respond. Most people don't say, No, they just don't respond. So it's kind of like an easy letdown if they don't want to do it, or if they don't do it, but I had a whole bunch of people that said, Yes, it was pretty cool. So, you know, early on when I didn't have the money, and I felt like I really shouldn't be taking someone to lunch, I would take them to coffee. And then once I felt like I had a little more cash to be able to do it. I would take him to lunch. And only if I really was excited about him, I take him for dinner, because that was just you know, more expensive.

Andrew Smallwood   
That's funny. So, I want to have something jotted down here, Justin, I'd love for you to kind of speak to or expound on which is you're talking a little bit about this of building a business that owns you versus a business that You own like, how can someone tell when they're in one situation? Or the other? And how do they get from one to the other?

Justin Donald   
Oh, yeah, that's, that's easy. Most people fall into the trap of building a business. They're like, Hey, let me leave my job to start this business because I want freedom and I want autonomy, and I want agency in my life. And then soon enough, they're working more hours, but it's okay, because they're making more money. And, and really like the business scales, but they're the bottleneck to the business, it's so easy to identify it here. Here's the real simple test, can you stop working in your business right now tomorrow, for a month straight, do nothing, no communication whatsoever, for a month straight, and then come back and have it be in at least as good of shape as it is today. If you can, then your business doesn't own you. If you can't, then there are many elements that exist of ways that your business owns you. And by the way, this isn't necessarily good or bad. It depends what you want. Like some people, they're just they love their business, they love the season they're in, they're willing to work hard and put in whatever hours are needed. And I was there at one point to you know, as a single guy, when I wasn't dating anyone, I was willing to put in all the hours it took. But I also knew that that was a season that I didn't want to be like, when I was married, I didn't want to do that when I had kids, I didn't want to do that. So I just knew that, hey, for a season, I'll do it. But I don't want this to be my reality, you know, the inevitable, you know, the rest of my life. So I think for most people, they are slave to their business, whether they realize it or not. And they give up, you know, it's like you get out of the rat race and off the treadmill that you're on. It's a huge treadmill that you got from, you know, a secondhand store, and you got off that treadmill, it feels really good. And then you start a business, but you get back on another treadmill. But this treadmill is a peloton, and it looks really nice. And there's like some really nice features to it. And you've got some classes that you can take. And it's really cool. And there are other people taking these classes too. And you can compete, and it's really, really fun. But if you strip everything away, it's another treadmill, it's another, you know, you may have left one rat race, but you stepped into another granted, it may be a better rat race, it may have better quality problems that you're solving and better quality perks. But at the end of the day that the goal for most people is to truly own their time, and to be able to spend it how they want. And that doesn't mean that they wouldn't work. But it might be that they work 20 hours, not 60 hours.

Andrew Smallwood   
Yeah, that's really great. I'd love to see in the chat, actually, for those who are with us live. You know, just what's the answer to that question for you. If you maybe some people have done this recently, they've taken long vacations, etc, or sabbaticals? You know, I've seen people even just get involved in volunteer work, whether it's DARPA or somewhere else, and they comment on where their businesses a month later, versus when that's just like a great litmus test for what role you're playing, you know, in the business, still, as a true owner of the asset, or still employed to the business, the business is dependent on you. We'd love to see, see in the chat, you know, we're where people are, are feeling about that and where you want to go. Justin, I want to ask you another question, which is something we talked about that I thought was interesting was you mentioned how a lot of entrepreneurs as they build their business and so much they're in that season where they're pouring everything into their business. You know, at the end of it, they do you have an income producing asset, right, but the kind of focus that it took to get there and make that successful and a business that can survive and can potentially grow and thrive over time. You know, it's there in that mode of staying focused there, you know, in there can be some risk associated with that, versus a different approach. You're encouraging people to take or something to work towards. Can you talk a little bit about that and what's helping people, you know, really get into that place where they're in a stronger position?

Justin Donald    
Well, I think everyone here that's an entrepreneur is aware that most entrepreneurs fail.Most entrepreneurs don't get their business Business above a million dollars in revenue ever. Right? I think it's like 95% of businesses don't ever get beyond that point. And so I think it's important in the context of like risk to decide, does it make sense to put all of my eggs in one basket? In this one basket, that is my business, my single business? In most cases, most people have just one business. And if it fails, they lose everything. And if it succeeds, then they make a lot. That's it's a very risky proposition. But this is what I see all the time with the people that I, you know, would I work with and communicate with because I work with a lot entrepreneurs. And I think the goal is how do you take profit, and invested in other assets that produce additional income streams, so that all the risk isn't inside of one company. And it's interesting, because the experience that I get, that I've seen most commonly is that entrepreneurs put all their assets, all their profit for all back in their business after whatever lifestyle they want. And as income grows, or lifestyle grows, but everything for the most part gets poured back in. And then you've got a smaller subset of these entrepreneurs that, that don't put everything back into the business, and they put a percentage into the stock market. So now at least they're diversified, but they're diversified in what I would consider to potentially risky and volatile assets. And then you've got like a third subset that's like, well, I'm an entrepreneur, and I've been very successful. So now let me just put some money, you know, into this company in that company, because you know, I've got the Midas touch, except that you don't usually know if one of those investments pays off or not for about 15 years, maybe longer. So you don't really know how well you did. And that's the riskiest way to invest angel investing seed round investing, where you're the odds of a company not making it a really good. So that is generally what I see with the people that I come in contact with. And I think diversifying out of your main business is is great. But can you diversify out of it into really safe vehicles, can you diversify into something that can't lose all of its all of your money or all the, the capital that you put into it, you know, if you, if you put a certain amount of dollars in the stock, that stock can go to zero, if you put a certain amount of money. In real estate, for example, the odds are real estate goes to zero or pretty low, because you have an asset. And if it burns down, and it's properly insured, you still have an asset, or you still have the compensation of that asset. So I think having some sort of like, if you look at the most successful people from a financial standpoint, let's talk about the wealthiest people in the world 50% of their portfolio of their their allocation is in real estate and private equity. So, you know, your business would count as private equity. A lot of people invest in other businesses around the same thing that they do, because they have an expertise there. So I just think that getting to a point where all your eggs are not in your main basket or not in your main basket in the stock market is probably an incredible opportunity. And if you can put some more assets that produce income in there that are low risk, but provide cash flow. So there are additional income streams, the world's your oyster. And keep in mind that I mean, the goal here is how do you replace all your income with passive income? So that way, you can choose exactly how you'd work in your business. Right now, most people are probably operators, you're the CEO of your business, maybe you're doubling is the CEO and the CEO. How can you be the chairman of the board? And how can you kind of work on the business not in the business? And how can you create passive income that covers everything you need? So you can make strategic moves to bring people in that can run the organization even better than you can't they have experience that have done this before they've had an exit that have scaled a company. So those are just some preliminary thoughts I have around it, Andrew.

Andrew Smallwood  
Man, that's really great. And I'm seeing just great examples in the chat as we ask that question, some inspiring stuff here of people realizing hey, they were working themselves to the bone and you know, to the point of sickness and realize I can't do this anymore. Got to make a change and love what you're sharing here. about the kind of thinking, you know, it takes to start to start on that kind of path. I'd love to follow up with and get a little bit into, you know, some tactical and practical here, we, we don't have time for all 10 commandments, but maybe if you could pick a couple, that would be something really tactical and practical. I've heard you share some stuff about how to de risk deals and putting deals together that I thought was really interesting, but I'll open it up for what you think would be best to cover. But what what comes to mind there?

Justin Donald    
Sure. And one of the things I want to point out on some of the comments I made previously, I say everything from just the least judgmental place in the world, because I have been every position that I'm talking about, like I have been in the position where I am worn thin and have worked myself to the bone, I've been in the position where I'm making decisions based on how much I can earn versus what's best for the business, you know, and I could go on and on and on. But you know, I share from my life experiences here on this one. So it is truly judgment free. Because everyone shows up in the place they are and is doing the best with what they know. But the more you can be exposed to the different ways that other people think who are playing the game at a higher level than you, the more opportunities there are for change. So you know, specifically with some of the commandments. So you know, I can start with the second commandment, which you just talked about, which is reduced the risk. And this one to me is really important. You know, Warren Buffett always talks about, you know, that, that you don't want to lose money, that's the most important thing, don't lose money. Because it takes so much time so much energy to recoup a loss, it takes you know, two times at least two times as much to make that money back, when you lose it, if you lose your money, right, if you lose half your money, it takes twice as long to make it back. If you lose all your money. You know, in an investment, it's even longer than that. So just think about how much of a hole that really can set someone in. So when I invest, I like to set it up so that I don't, if things go bad, I don't lose all my money, maybe I lose some. But hopefully I lose none. And I just get my money back. And there are a lot of ways you can structure a deal to do that. One of the ways is with collateral. So if you invest or if you lend money, and you want to ensure that you get it back, you collateralize that loan, you take assets that they own, that you would gain possession of if that investment went bad. And you can collateralize assets that are worth twice as much, five times as much. And that is one way to kind of protect the downside. But still give yourself plenty of upside. If the deal goes well, there, there are plenty of other ways that you can do it too. I mean, that that's just one example. You know, I've done other structures where I've invested in a company, and I've set up an accelerated distribution schedule, meaning, let's say I put $100,000 into this company, part of the way I can de risk it is say, hey, you know, for this investment or for this loan, I want you know, above and beyond the return or the equity that I get, I want to get paid back at a higher percentage than what the equity, you know, would look like. So let's say I, you know, invested in and got 5% of a company. Well, I could have the distribution schedule be that I can make 80% of the proceeds until I'm paid back. And then it goes back to what the cap table says for equity. So that would be just another example of de risking the deal. personal guarantees is another way getting stock in the company assigned to you or pledge to you should they you know, default on the terms of your agreement. There are a lot of different ways but that is one commandment that I think is so important, and I put it at the beginning. It's only after commandment number one which is lifestyle first investing in ways that support your lifestyle and don't take too much time.

Andrew Smallwood  
That's great. Hey, Justin, you mentioned you got your start, kind of in real estate investing. I think that's very relevant to folks. I know people. It drummed up a lot of questions when David Osborne was sharing his approach to to investing and part of that is because people here many of them are investors themselves. or aspire to be and are uniquely positioned to be investors, they manage single family homes for the most part, some small multifamily properties. I know you've been involved in some different real estate asset classes as well, like I think mobile home parks was, was a big part of what you're working on at one point, what would you share about your approach to real estate investing from the perspective of people who are in that are interested in getting that, and then also who serve clients, right? That they help manage their, their assets in their properties over time, that's their core business?

Justin Donald  
Well, I love when your core business supports real estate, you know, that's kind of like, a no brainer to get into the business. Because you're, you're around it, you, you will see deals, you'll see things before it even hits the market, you have insider info, you've got core competencies that are better than your average investor. I mean, it's interesting, because when you go to buy real estate, the hardest part of real estate is managing the real estate, it's not buying the real estate. So most of you, from the sounds of what you do for business, most of you already know the hardest thing. So all you got to do is find the deals, right. But I love real estate because and I did get started, I got started in mobile home parks. And you know, as interesting back when I got started, and people thought I was crazy. They're like you're doing what you're buying a mobile home park. That sounds horrible. And the reality is, it's a great investment. And there's a reason why Wall Street's all over it today, it just took a little while. So I like a lot of real estate, there's a ton of real estate that I currently own, I've owned just about every type of real estate out there, you know, over the last 10 - 15 years, but you know, I'm probably holding on to four main real estate asset classes more so than anything else. mobile home parks is my greatest holding single family home rentals, industrial warehouses and distribution centers, and self storage are, you know, the four main ones. And so I like assets that A) aren't going to go to zero. B) you can get leverage on you only have to put, you know, 15%, 20%, 25% down to buy it. But you get the cash flows, if you own the whole thing, which is nice, right? And then C) that, specifically with mobile home parks, it's low maintenance. So for those of you that are managing single family homes, like that's the hardest of everything to manage, because of the way that they're spread out, I you know, I started a company with a couple friends and our business does very well in single family home maintenance. And we work for a lot of the largest institutional players that are out there. And, and so like, I know that business, I know it well. And I know how challenging it can be at scale. But I also know that when you can figure that out, you have the opportunity to scale like no other person, no other business because most of them can't do it. I mean, you generally win if you just respond to people in this line of work, which is incredible. I mean, talk about a low barrier to success, can you just respond to people keep them in the loop, and figure out how to get a team to manage multiple properties, you're going to be in business. So the opportunity to scale in the space is incredible. But with the inside info. I love real estate for anyone that, you know, that has any I mean, even if you had no experience, I love it the fact that most of you have experience in this space, it's a no brainer to me.

Andrew Smallwood  
And Justin, can you give us a sense of, you know, few of us are less familiar with you like, how many deals have you done over the last, you know, few years and give us a sense that you just mentioned Hey, you're in four main different asset classes just within real estate. You know, what does that look like as a part of your portfolio and how many deals are you doing as a lifestyle investor?

Justin Donald
Yeah, you know, I, my goal is to create a lot of diversification. So I really want to be in every asset class I can be an Andrew, I'm my goal is to just have exposure. So if the whole idea of being in indexes in the stock market is to have exposure to everything, so that in good times and bad, you're a little more protected, I want to do that on the private side, I want to do that with alternative investments. So, you know, in the last few years, you know, in the last what, four or five in the last five years, I've done at least 200 deals. And, you know, it's, it's all across the board. So we've talked a little bit about real estate, I do some senior secured debt, which I like, I've done debt, you know, both on the real estate side, on the operating company side, I've invested specifically in operating companies with with unique structures, maybe royalties, maybe rev shares, licensing agreements, I've done some IP, I've done e commerce, cannabis hemp CBD. I mean, I invested in a dog training company at the beginning of COVID. When I saw that everyone started buying dogs, even all my friends that said they'd never buy a dog bought a dog and all my friends said they'd never get another one got another one. So I was like, All right, well, something's going on here. I know nothing about dogs. I've never owned a dog, but I bought a dog training company. And that has been a very fruitful investment. So to me, I'm I'm really agnostic about like the industry. If it's sexy or unsexy, I don't care about that, can I get a good return? What are the trends look like? I like looking at, you know, the trends that exists. So I hope that is helpful in, you know, the way that I kind of analyze deals like, to me, I want to invest in a way that I'm less likely to lose money, but in a way that is identifying future trends so that I can have big upside.

Andrew Smallwood  
Hmm, that's great. And I think that just gives people an idea of your kind of experience and how many different and I know the diligence that you do on these deals, it's hearing the stories, it's, you know, it sounds intense to somebody like me, who's earlier on and getting into this stuff. Justin, can you share a story or two of a couple of your your more successful investments or some of your favorite deals that you've done in the past few years, what the outcomes were like for you how you were thinking about it, how it turned out?

Justin Donald  
Sure, you know, I'll start really quick with mobile home parks, just because that was how I got into investing in the first place. And the cash flow there was so strong, that once it replaced my income, I had surplus that I needed to figure out what to do is so it creates a problem. And you know, a lot of people would probably be like, oh, yeah, boohoo to you, you got a big problem. But it really is a problem to like, have cast that you need to do something with and it creates different, you know, stresses and, and, and so it was interesting, kind of transitioning from mobile home parks. And for a while I didn't transition because the returns are so good. So I would only invest if I could get a 20% cash on cash return. My first deal that I did was a first one I did was a 36% cash on cash return, which is basically I made 36% on the dollars I put into the deal that first year. The second deal that I did was a 54% cash on cash return. And then this one was crazy. This is a total outlier. I've not been able to replicate this. But the third deal I did, I made 105% cash on cash return. So what that means is I made my down payment on one of my mobile home parks back in profit that same year. So it only took me one year to have all my money out and be you know, risk free, which is a just crazy to think about but that is possible. It's possible in the world of real estate where you can get some seller financing and you can negotiate beneficial terms. And I went from there, too. You know, I had some really big returns in cannabis. So I invested in a credit fund that specialized in high performing cannabis hemp and CBD companies that just really took off and these are cash cows very profitable companies, but they just needed more cash and what they were making to be able to expand and these companies they're they don't want to give up equity because they know how because it's going to be they know, when it's federally legalized, they're going to be able to, you know, just have huge returns when the conglomerates come in and buy him out. So they're willing to pay really high debt, and even give some little pieces of free equity, which I would call an equity kicker, or a warrant kicker in their business. And so we've had some of these companies that have gone public, some of these companies have been bought by other companies. So there have been some very big returns in in those investments. And so I really like it, because it's, it's one of the only times that like, when you think about prohibition, and the opportunity there, you know, some of the most successful companies and people that were in it prohibition, like, it's been hard to penetrate that market, because of how well all these people and companies did. And so I see cannabis, hemp, and CBD, is that same thing, specifically cannabis, where we this might be the best opportunity in our lifetime, you know, you could make the same argument about cryptocurrencies as well, that either of these could be the largest swing and shift that will ever experience. And then, you know, a more recent transaction, I just sold my dog training company, it was called KC Dawgz, it was out of Kansas City, it was spelled DAWGZ, KC Dawgz. And we actually ended up having Patrick Mahomes train his dog in our studio, which is really cool. He's the quarterback of the Kansas City Chiefs. And that brand just really took off. So we made about, so I only put $100,000 down to buy it, it cost us $480,000. We made about that much. So I got my $100,000 back in about three months, we made close to $480,000 in profit over the course of that year. And then we sold it a year and a day, at a little over 2x. So you know, our total return was incredible. And that was a deal where there was a salary built in, I found one of my managers that worked for me at a different company. And I brought him over and he ran it. And he got, you know, basically, the salary was 10,000, more than he was making it as corporate job. And I never had to do anything, I never had to run it. I never had to do a thing. Because I was just the capital partner. And if he had questions, you know, he could reach out. But my goal, again, is first and foremost, lifestyle. First, I'm not trying to buy another job. I'm trying to buy assets that produce income. And I'm also trying to help support people in my life that are important in getting them out of the rat race. And so this provide an opportunity for him. And I could be super generous with salary with equity with all kinds of stuff, give them tons of upside, so we never have to go back to the corporate world again.

Andrew Smallwood
Hmm, really cool. Hopefully, people are appreciating some of these examples. And I'm seeing some great comments, some of them coming in privately. Hey, I want to go a little bit on real estate here for just a second. Justin then got an idea for how we finish this up. But I got a question here privately. I'll just read it up. Can you ask about you know, regarding real estate funds, you know, your thoughts on putting money into a fund versus, you know, stock or purchasing property outright? How do you think about those pros and cons through the lens that you look through?

Justin Donald  
That is an incredible question. And it's actually something that I think most people don't even know exists. I think most people are like, Oh yeah, if I am not putting my money back in my business that I'm putting in the stock market, or I'm taking a big risk and investing in a company that I hope does well. There are different ways to invest. So if you buy your own real estate, you buy deeded real estate, meaning you own the deed, it is your home or asset, whatever, you know, asset you buy. You can either run it all yourself and do all the maintenance and make the biggest return that way. You can hire it out to someone else. So you'll cut into your profit, but it won't take as much of your time you've got a property manager and a lot of you already know about that because you do that for other people. Or the third and fourth option is that you can go into a syndication which is like a pool of investor money to buy an asset. And then the next option is you invest into a fund that has multiple assets. So those are kind of like the four ways to do it. If you want, if you value your time, in our case, so like someone who wants to maybe get out of, you know, their corporate job, they don't like it, or you've got someone that they just need to make a huge return, they may value spending a little more time to make a bigger return. And in a season in my life, I did that, that was me, I bought it myself, I managed it myself, I felt like if I did that, I would be able to learn how to delegate it better. And then later, I was like, I'd never want to do that again. So I'm so happy and joyful to pay someone to do this, like this is a great, I take great joy in finding someone great at this, where this can provide for their family, and it doesn't have to involve my time. So that would be a property management company running your real estate. Or if you just want to take all the headache out of it. Then you go syndication or you go fund. But here's the big thing about those. It's all about the track record. How long have they been in business? How long? Have they been doing it? What's their reputation? How many times have they failed? How many times have they failed in most recent history? By the way, anyone in the last 13, 14 years has done well. So you need a longer runway than that, like you kind of I mean, in order to fail in real estate in the last 13 years, you would have really had to make some just big mistakes, like it is hard to fail in real estate in the last 13 years. Okay. And by the way, I apologize if anyone has, if it was your first go about then, you know, you learned some hard lessons, but it's been such a good market for real estate. But what did it look like the 10 years prior to that? What did it look like, you know, from 2000 to 2012, or you had two massive downturns in the economy. That is something that I would want to know if I were you. And then there are pros and cons to a fund versus a syndication, syndication, you know, you got all your money in one deal and, and your success rides on that one asset. If it goes well, great. If it doesn't, well, then you're gonna lose money or not get as good of a return. But you typically pay less fees. And then you, you know, you might have even a higher split, depending on what the deal looks like a fund, you may pay higher fees, but it's less risk. Because if one deal goes bad, you got 1015 20 others that help prop up the returns. So I think that if you care about time and truly want to be passive, I think both of those are great avenues for it. But I think all four that I mentioned, work in it's all about where you are in life today.

Andrew Smallwood
Hmm, that's great. Hopefully that answers your question. For those of you who are submitting that in, that's great. Um, here's how I want to start to bring this home, Justin, you know, you've got something called the Freedom formula, which you haven't covered explicitly. You know, and you have talked a lot about living a life by design versus default. And what's there? Could you could you talk a little bit about the freedom formula, and how people here can apply that?

Justin Donald  
Yeah, that's a great question, Andrew, I think with the freedom formula, it really starts first and foremost, what do you want your life to look like? How much do you want to work? What do you want to do? What are the hobbies that you want in your life? What are the things that you enjoy doing? Whether you're paid or not paid? You know, where do you want to go? And travel? How many days a week do you want to work? What is it that you have always wanted to do that you've never done, or you've been afraid to do or you tried once and didn't do well, but you have this, this desire to give it another shot. Like that's what the freedom formula is. It's, it's figuring out what it is that you want in life. And then it's taking a step further to say, hey, here's what it cost me to live my life as it is today. And then here's what it would cost me to live my life as I desire it to be tomorrow, broken down on a monthly basis. Because if you can create the cash flow to cover that, then you can you don't have to wait till retirement. So many people, they want to do this nest egg approach. And it's like, Hey, let me put all my money in the stock market and, you know, hope that it works out well. And at the time I retire, that you know, the economy's in a good place. And you know, that I can live off the interest. And unfortunately, most the time that doesn't work. And so people wait and they try this approach, but don't find out until much later in life that they're going to run out of money. And I just think it's better to figure out how to cover your, your life today. So you can have an amazing life today, not in 10,20, 30, 40, 50 years from now. When you decide to, quote unquote, retire? What if you just had a killer life today, and you worked a schedule that you loved that was sustainable in a way that you didn't ever want to retire, you just were able to keep doing the thing that you enjoy doing, because you never got burnout. Or maybe you're doing something that does burn you out, and you can transition to something that won't burn you out. I think for most people, I mean, for anyone on this call, you'll probably be bored to death in a month to two months, if you truly retire, you know, so this whole idea of retirement, I think, is pretty outdated. So how do you find the things that you're passionate about today? And how can they How can you get that to work in a way that is beneficial to you today and in the future?

Andrew Smallwood  
That's great. And if I could ask you, Justin, you know, the people here their core business, they're their core client, right? They serve a couple different folks here, right? There's a resident who's important, right? And it's their income that actually is the asset here, right in the rentals. But the the property investor, or the owner of the single family home, or the small apartment duplex would have you found home. You know, what we noticed is a lot of them don't think the way that you and David Osborne does, right? David's like I'm going to be holding, I've got a great day, I want to be holding it full cycles, a lot of them are still trying to time the market. You know, is there a way of teaching this freedom formula to folks like that, that people could pass along in a way? Or if you were having conversations with you like that? How do you encourage more of this long term and intentional thinking that guides decisions that are going to take people really where they want to go?

Justin Donald  
I just think that a relationship equals time spent. So if you are trying to share your thoughts when they're not welcome, they're just not going to be received. So how do you create like curiosity from you know, your, your, you know, your clients where they want to hear what you have to say, I think that happens through being likable. And through spending time and through asking, you know, instead of saying, Here's what I do, it's more like, hey, you know, would you be interested in hearing just another way of doing things are something that I learned from someone else. So it's, you know, kind of non invasive and very open to them being curious, I think the goal is to create curiosity with them. Because in that space, people are really open to learning and understanding something different, but you definitely can be the beacons of light to people that have never considered doing it a different way. There's no doubt about that. I mean, we've been able to do this with a lot of our clients in, you know, what I'm assuming is a very similar business model to what you are all doing.

Andrew Smallwood  
That's great. And then, you know, Justin, could you talk a little bit about what do you like, specifically about you got into SFR? You know, what do you like about that asset class? would appreciate? I know, you said, the management's really hard, which I think everyone here would, would agree with there's unique challenges to it that we're all working on together. You know, and it sounds like at one point, maybe you were managing some of this yourself. But now you have a team, there's people you've hired probably like people on this call, what do you look for in a professional manager of single family rentals? What's most important to you?

Justin Donald    
Wow, lots of lots of questions to unpack here. Let me let me see if I can do this justice Andrew. Um, so there are pros and cons, every asset class, there just are single family homes can be great. And they can also be a nightmare at the same time. But is it better than not having them? Probably not? I mean, I probably I think that you're always looking to upgrade your problem. So how do you find a higher quality problem? Well, I think a higher quality problem is owning an asset than not owning an asset. Even if you have, you know, issues, AC went out, whatever, right? You got some issues. At scale, it is hard to manage. But when you figure out how to management, that's, that's the secret sauce. So the whole reason that our company was able to scale and do some great things is because we went from like a service based company to a technology company, all by building a proprietary software that allowed us to say, hey, we're a tech company, since that's a nice buzzword. And this proprietary software, does things that other companies don't do. So we just got outside the box of what the norm is. And then we had some, some VC companies find interest in wanting to you know, invest in us. And it had nothing to do with anything except that we had a protocol that allowed us to scale out sight of the people. And so I think systems standard operating procedures like that, that's the key to scale. And that's what I look for. It's what I look for in my businesses. It's what I look for when I'm investing in another business. So to answer your question, I'm like, how do you scale you scale by processes. People can support that. But it's the process first and the people second, because you need the right people that are going to support the process, you got to figure out and kind of map out what that looks like. Now, in terms of ownership, single family homes on a long term rental are a lot I mean, if you own one, two or three homes, it's a whole different ballgame than if you own 40 to 50. So at scale in the ownership game, the profits to me really kick in at about 40 homes. And until you're at that number, you're probably going to have much higher costs and much less profit. But keep in mind, you still own an asset that is continuing to appreciate as the dollar depreciates, or diva is devalued every time that new money is printed. So it's still a good hedge, even if it's not cash flowing, I just like them to cash flow. On a short term rental basis, you have more opportunity for profit. But there's more management, and you likely would want to find a company that is exceptional at it. That takes you out of working it. So I know some people that only do the short, short term rental game, some people do the long term rental game, there's not a right or wrong here, it's what is right for you. I just think your your goal, or maybe I should say, instead of projecting my goal is to just make sure that I'm I'm in a better situation next year than I am today. So if I'm comparing me to me, I don't it doesn't matter what my friends are doing, my friends can motivate me to be a better me, but I don't want to compare myself to my friends. So how can I just the worst thing is to be stagnant and to be like at the same place as you were a year later. So how can I be a better version of myself today? Every way you look at it? How can my assets be better? How can I you know, investment opportunity to be better. That's the goal is just getting to be a little bit better than I am today.

Andrew Smallwood  
Cool, very cool. All right, Justin, here's how I want to wrap it, we are going to be told folks, hey, we're gonna have a survey at the reception this at the end, hang around if you're the live audience. And what we'd like to do is second nature's gonna buy 10 books that will give away to folks who, who want it and fill out the survey, give us some feedback, give us some feedback. Before we do that, I thought it would be important to mention that just I think your book, like 100% of the proceeds, or some percentage of the proceeds goes to an organization is Love Justice. Is that right?

Justin Donald
Yeah. Love Justice International. So my goal so I have two goals. Number one, I want to help educate people and teach financial freedom. And I think it's just it's, it's a mindset shift. That's it. It's what once once the mind shifts, everything changes. So it's not as like, you know, you know, hairy and audacious as you might think that it is it's it is a mind shift game. And if I can teach people to think differently, I can feel really good about it. But that's financial freedom. Some people don't even have true human life freedom. And so I wanted all the proceeds of the book to go to love justice International. And they fight human trafficking in 17 countries around the world right now. Their last month they rescued over 500 kids and so this is like exciting and depressing at the same time. But if you think about it, what you know, I'm, I even feel bad, like normalizing it and saying 'human trafficking', what I really should be saying is child sex slaving is happening in every state in every country in the world. You might not think it's happening in the US it's happening in every state inside the US right now as we speak. And and so I just want to bring awareness to this incredible organization that's rescuing kids all across the globe and doing wonderful work.

Andrew Smallwood  
Well, I'm with you. It's It's disturbing that 500 people and more needed saving right and great that there's an organization here doing it, we're proud to support it. Proud to support you and your support of it. And I'm sure people here appreciate this is a generous bunch of bunch of folks here and I'm sure they appreciate being aware of the cause and also that you're doing something about. So I saw somebody else. So it looks like Leanne also bought a bought your book on Audible just now Justin, but for everyone who hasn't bought it on Audible or once, once in additional hardcopy will be given those away in the survey right now, but Laura Mac is -

Justin Donald
Oh, go ahead, I was gonna say if you if you buy it on Audible, I didn't mention this. And I probably should have mentioned it, there is a glossary of terms. So if you buy the physical book, I have a glossary of every term I think you're ever going to hear that you can look up that is in total, like English layman's terms. Now in the audible, you may not realize it, so you can actually go to my website and you can download it. There'll be a link, you know, something in the book that it sends you there. But you could also go to Justin Donald calm. But it's it's a glossary that what I've heard from many people, it's kind of like their Bible for investing, and they look everything up, according to that. So you may not know that if you get the audible.

Andrew Smallwood  
That's great. Thanks for making us aware of the resource. Justin, I just want to personally say thank you so much, my friend, for being here for sharing generously, your wisdom, your gifts. It's really appreciated. Love what you share, too. I've got a whole page worth of notes myself over here. And Justin, lastly, I just want to say I saved this for the last part, which is that some folks here don't know that we actually asked Justin to be on the board of the Front Row Foundation, which is an organization that many, many here are fans of and are aware of. And Justin stepped up. He's been he's had a big impact every time we've asked him a question or asked for his expertise, he stepped up and answered that call. And we appreciate all the things you've accomplished in life. But what you have given and done for others is just so impressive what I love most about you, and appreciate about you, Justin. So just want to say that before we let you go today.

Justin Donald  
Well, thank you very much. And it's really a privilege to get to work alongside you. In that organization is an incredible organization. It's just an honor to be part of it. So yeah, thanks for you know, just organizing a group like this that is on the same page willing, eager, excited for just more knowledge and more opportunities. It's very inspiring, just seeing groups of people that carve time out of their busy schedules. And I know you all have busy schedules to focus on your learning, your growth, your education. So thanks for taking the time.

Andrew Smallwood
Everybody with that? I can't wait to see you next time. Justin. Thank you again, sir.

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