- Hey capitalist, I'm Ryan
Danny Moran and welcome to Capitalism TV. In this video we're gonna
talk about generating passive income and creating wealth in real estate. If you're watching this
video it means that you've already begun your journey
of looking for something more of creating something great. And you might have already
discovered that real estate has created more millionaires than any other vehicle in history. The challenge with real
estate is there's a bunch of different ways that you can go. And so we're gonna demystify
this and make this simple for you to move forward in this video. Grab a seat, we'll have some fun. (upbeat music) Before we jump in, just as an
anecdote I'm an entrepreneur. My full-time focus is creating businesses, building businesses, selling businesses. Dropping my mic. Just like most entrepreneurs,
I got into this game because I wanted enough passive income and wealth to live life on my own terms. And for most of my young
life, I though that vehicle was going to be real estate. And I still am a real estate investor. In fact, most of the very
successful people that I know, it doesn't matter if
they're worth $100 million or a million dollars,
most people have some sort of a holding in real estate,
because it's just a proven asset class. Because real estate holds
its value really well and it tends to spit off cash flow. So, as you are exploring
the path that you're on, it's important to say, do
I want this because I wanna be a passive investor
who gets passive income? Or do I want to make
real estate my business? They're two different
approaches, if you watch HGTV or if you've got a
friend who flips houses, real estate is their business. That's their full focus. They make money in real estate,
but it's not passive income. They've very active in that business and that's a great approach because if someone is
active in real estate, they're gonna find great deals. They're gonna have a head
start on everybody else. They're gonna know the bankers. They're gonna know all
of the subcontractors that they'll need. They'll have an expertise
that's gives them an advantage over everybody else. So, if you want to make
real estate your business, that's one approach. The other approach is to
say, what I'm really after here is passive income. And I don't want to be a
house flipper and I don't want to be sourcing deals all the time. If that's your goal, then
your set of strategies is going to be different. So it's important to
address that up front, because a lot of
investors or entrepreneurs get into the wrong vehicle
thinking that eventually they'll start to hit their goal without ever addressing what their goal is. If you know what it is
up front we can get there a lot faster. Now, you can, of course do both. One of my buddies, his
name is Jason Hartman. He's a goof and a half, I love the guy. And he also seems to
get younger every year. Whatever biohack he's doing,
he needs to hook a brother up. But, Jason, however old he is, does both of these approaches. He is active as a real estate investor and then he takes the profits of that and he is investing that in a
places that are more passive and this what he had to say about it. - You can do it a lot ways,
but I like being the direct investor, where I own and
control the property directly. Because when you're a direct
investor you don't leave yourself susceptible to
three major problems. Number one, you might be
investing with a crook. Okay, and there's no shortage
of crooks in every industry in every part of the world, right? That can simply rip you off. But number two, assuming
they're honest, you might be investing with an idiot. Okay, and just because
they're so stupid (laughs) you'll lose your money right? So, assuming they're honest and competent, you pass those two hurdles,
the third problem is they take a huge management fee off the
top for managing the deal. And so, when you're a direct
investor, you eliminate most of those problems. You do create a new problem though. The new problem is more work. You've gotta be more engaged. You've gotta be more involved. - Now if you're first starting out, it can feel a little
bit intimidating to say, I don't want to make this my full business right out of the gate. Well Jason's strategy
is incredibly simple, he very publicly on his podcast
and in his content says, that single family houses are
the most proven asset class in the world. His entire strategy is simply to invest in single family houses in good markets and get them rented. And hold them for a really
really long period of time. And have a little bit of
cashflow on each house and go do the next one. Recently on the 1% Podcast,
we did an interview with somebody names Todd Dexheimer. And his approach was exactly the same. He realized that when he
invested in single family houses he was making just as much money as his teaching job and
he went, wait a minute. I think maybe I should become
a full-time real estate investor, but that's the
formula that has created a lot of full-time real estate investors. Going all in on the
business which is acquiring small deals, single
family houses, duplexes, and then moving onto bigger
deals once you have enough cashflow to be able to
live life on your own terms and you're a full-time
real estate businessperson or real estate investor. There's other ways to do this too. I want you to meet my friend Tom. Tom is an orthopedic surgeon
here in Austin, Texas. Very very successful, very wealthy. But he was working 80-hour
weeks when he started investing in real estate. So he knew that he
couldn't go out and source deal after deal after deal after deal. He had to find one good one, one good one. And he was doing it nights and weekends and looking for the passive
income side of this. And I want you to watch
this story of Tom Sharing, how he found the first deal and how it then tipped the scales into allowing him to look
for more deals after that. Watch this. You're coming out of
school, today most doctors are covered in debt. I mean they're just
completely covered in it. And most people don't
know that, they just know how much doctors make. So everybody thinks doctors are rich. You come out probably have
student debt I'm assuming, you're working 80-100 hours a week, how did you have the
excess to start doing this? - I passion to think. (laughs) - Did you say passion? (laughs) - Yeah, had to be passion,
stupidity, one of the two. And so I really wanted this now. I was actually building my
practice and loving what I did. I'm a orthopedic surgeon,
I'm in sports medicine. I was a frustrated athlete. So I'm perfect, I run with my people. But, on the money side I
really enjoyed the real estate. I love buildings and
I love the development and construction process and
I love every part about it. So, my, the reason I started
small was it was in evenings and weekends, truly evenings and weekends. One time I was reading,
if you listeners remember this thing called a newspaper. Back in the day, on Sundays,
there was a classified section and it had real estate in the back. And there was a little
section, apartments and condos. It was down in the Texas, down
in the University of Texas area and I was zeroed
in on student housing. And I read an ad and I
told my wife, I said, "I'm buying this tomorrow." She said, "How do you know?" I said, "Look, I've been in this market, "I know it like the back of my hand." Somebody's either underpriced this thing or there's something badly wrong with it. So I was seeing patients in my office. Saw a patient. Said I'll be right back,
slipped out the back door, drove down eight blocks,
quick went through the place, made an offer, got it accepted and came back and kept seeing patients. (Ryan laughs) So that's how we did it. Mostly weekends, morning. Weekends, early mornings, in the evenings. And then as my real estate
income started getting more prolific, I was ale
to sort of cut back on days and that scale just
kinda changed like this. - And you're still
practicing today, correct? - I am, I did surgery this morning. (Ryan laughs) And spreadsheets this afternoon. - The beautiful thing to this
approach is Tom was looking nights and weekends for his first deal and then in between surgeries,
went in and acquired his first deal, which gave
him enough passive income to focus a little bit more
time on building real wealth. Because it doesn't matter how much money you're making from your job,
if you don't own something that can go up in value over time. If you don't own something
that you control, then you can't get rich. You don't get rich on salary. You get rich on ownership. You get rich on owning a business. You get rich on owning real estate. You get rich owning a piece of business, sometimes called stock investing. And so Tom did that. He went and looked at
where the deals were. Got really good at one market. He knew he didn't have a ton of time to go buy up a bunch of single family houses. So he bought one deal that set the path for the rest of his career. Now today, since I am not
looking at deal after deal after deal, what I do look
for is people like Tom and people like Jason and
people who do have the expertise where it is their business
to be in real estate. And then I serve as just
the investor in that deal and I take a piece of the action. So this is where I like to live. I now make my money in business. Or some people make
their money at their job. Or some people make their
money flipping houses, but then you get the
wealth and the cashflow from, in my case, investing in the people who make this their full-time thing. So that's people who are
buying up apartment buildings or who are building new projects and then taking money from investors and paying out a portion of the cashflow One of my best friends here in Austin, his name is J.P. I like to joke that he owns half of Texas. J.P., I call him the $800 Million Man. He controls about $800
million worth of real estate. And he sits in that chair
where he has all this deal flow and then he raises money
from investors like me and then he does the project
and he pays out his investors. Very interesting thing about J.P. though. He got started in his late 30s. He got started with no
background in real estate. It was his second career
and he was going in a whole new direction. So ignore the $800 million
that I slap on his name and look at the man,
who a couple decades ago was starting over from nothing. This clip is gonna give a
lot of hope to those of you who are just starting your journey are wondering, did I miss it? Are my best days behind me? Watch what happened with J.P." Do you talk about how much
of a portfolio you have? - My portfolio is about
$800 million in real estate under management. - Wow, when did the first deal come about? - So my first deal came about, I actually flipped a
house in Austin, Texas. And I worked my ass off and I made $12,000 and I was thrilled that
I had made #12,000. It was the confidence that I
had that maybe I can do this. And it wasn't, now a days
$12,000 doesn't sound like a lot but at the time it
was a very, very meaningful that I actually had gone from
beginning, middle to end. And that took a long time
to get to that place. - How long did it take you to flip that? - 8 months of hard work. - Oh, wow. - I was probably working for $8 an hour. But it didn't matter
because it was symbolic of my new life and some
completion and some success in this new direction. So here I am. Now I'm 32-33 making $6/$8
an hour flipping homes in Austin, Texas. - Were you still flipping
for a couple years for like pennies? Was it a couple of years of
grit and figuring it out? - I was so faking it. So faking it, like broking a deal here. Definitely, there was
a lot of that going on. And then I got my first apartment project and it as a small one. And it was really a rough building, but it got me started
into something bigger. And it was my first break. - How did you finance it? - [J.P.] How did I find the deal? - How did you finance it? - I almost embarrassed to tell you, but I'll tell you guys the truth. I put an add in the Wall Street Journal and it was kind of a clever ad. It was like earn above 10%,
at the time it was hard to earn great rates. I literally put this ad in. So I was raising money on the phone. I didn't know all that
much but I knew enough about the deal that I had raised, my first raise was $800,000. And I couldn't believe. Took me two and a half months to raise it. - Was that all from the
one ad that you put? - And then a couple of
friend who believed in me. Which was really special by the way, because when you're naked
and you've got nothing to fall back on and a couple
of those first friends, who put that first $25 or $50,000 in you because they believe in you. You're no longer that
executive, they believe in you. It's what we talked about earlier Ryan, they were buying to who I was. I had no track record going forward. I only had my track record backwards. - So if you're starting over
or you're in a new chapter of your life, there's still time, there's still opportunity And I don't care what
the economy is doing. Just like in business,
there's always opportunity. It's about where you're looking
and are you playing victim to your circumstances or
are you looking to create something new? You generate wealth by owning
something, by creating value for a specific group of people. Own, create, serve. That's our mantra here at Capitialism.com Now just recently inside of
our community, we had Jason, Tom and J.P. share their
insights on what is available right now in this economic climate. Where they see the market going? Where they see opportunity,
how they made the pivot from going from nothing to something. And that is inside of our members area, inside of Capitalism.com. It's called the 1%. And you can try it, so you can
get all of that for a dollar over at the link below this video. So if you want to come hang
out with other capitalist, this community is building businesses and investing the profits
and you'll hang out with people that you just
watched in this video. If you know somebody who
is starting their journey. Send them this video and
make sure you're subscribed to the channel because
we talk about all things business and investing
here at Capitalism.com. I want to salute you as a capitalist, because I think capitalist create change. So thanks for being one of them. Thanks for watching,
we'll see you next time.
