The Full Story Of Dave Ramsey | Inside the $700 Million Dollar Empire

so dave ramsey probably doesn't need an introduction but for anybody who's been living under a rock his show the ramsay show is the second biggest radio talk show in america with over one billion downloads he's written two new york times bestsellers has over two and a half million subscribers across two youtube channels and owns over 600 million dollars cash worth of real estate dave is actually somebody who i've personally looked up to now for 10 years and if you don't believe me i literally have a cat named after him because i found the cat for free and i have a life-sized cardboard cutout of him in my family room needless to say dave ramsey is the king of all financial entertainment well we got him for an exclusive one-hour long episode here on the iced coffee hour and couldn't be more excited to show you so if you're a fan of this content and you want to see more subscribe because we have some pretty incredible stuff coming out in the near future but first we want to thank our 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and build long-term wealth so why wait so earn two percent in your cash today by visiting wealthfront.com ich the link is down below in the description or again it's wealthfront.com ich this no-brainer good news has been a paid endorsement by wealthfront thank you so much wealthfront once again link down below and back to the podcast i'm george campbell and i'm not i'm dave ramsey and this is the iced coffee hour and so far this podcast wild guess has made 260 thousand dollars you're officially our closest guest congratulations actually good job usually we just say this you know if you're within you know a little bit but yeah two hundred and fifty eight thousand seven hundred dollars so you're thirteen hundred dollars this was price is right i would have won the dishwasher one dollar bomb well thank you guys so much for doing this and uh dave the hospitality of everyone that i've met on your team is insane just how passionate everyone is how much they really want to be here how excited they are how nice it's like i am blown away when we drove down here and saw we were asking uh your driver are your head of security actually i said is this all dave's he's got the whole thing and it's all paid for it's all owned out right and i'm like does he sublease any of it surely there must be like other like medical buildings or off no i am blown away insane now for those unfamiliar i bet most people are familiar with your story um could you give us a bit of a background on what you do your philosophies and how you were able to to go from being bankrupt in your 20s to owning everything it's incredible i'm at a loss for words here wow i like hanging out with graham ideas uh now we uh like you said we started with nothing mom and dad were in the real estate business and so i know your background of course uh your parents weren't but you got into it at 18. i got my license when i turned three weeks after i turned 18 and still got my license and a thousand years later and so uh i went and got my degree in real estate came out sharon and i got married at 22 years old 1982. and went through a couple jobs and then i quickly started buying real estate nothing down in those days it was a big deal before there was um before chip and joanna were born you know and so it's a long time ago and i got rich i had a million dollar net worth made about 200 i think i made 250 000 bucks at uh 24 years old and that's 1984. so that's that's like making 600 500 000 now you know so uh it was for a kid from antioch tennessee i mean where i came from that's called rich and so everything was going great but i did a lot of 90 day notes because i was doing flips a lot of short term notes and uh our bank got the the largest bank i had a million two out with them got sold to another bank and outside of the state of tennessee and some guy looks down in another city and said hey there's a 24 year old kid owes us a million bucks this is scary let's let's limit this relationship which is banker talk for ruin his life and they called her notes uh another banker got word we were in trouble called another eight hundred thousand so we had two million we had to come up with in 120 days and it's all in real estate you can't get out of it that fast so it started a crash that uh that i couldn't recover from and we spent the next two and a half years losing everything we owned being sued and foreclosed on and finally with a brand new baby and a toddler and our marriage hanging on by a thread we filed bankruptcy in september of 88 and um it was not a good ride but we uh uh we were new in our christian faith baby christians and i started studying what the bible says about money which was just common sense get out of debt stay out of debt live on less than you make live on a budget have a plan uh and i started doing this stuff and that evolved into people asking me okay how are you recovering from your bankruptcy it seems like you're doing okay and i'm like well we're doing okay it wasn't fast but um we finally sat down with some friends and helped them do a budget because they were in trouble and then pastor called from the church and said hey this guy's in foreclosure can you help him i went yeah i used to buy foreclosures and then i was one so yeah i could probably help him so we sat down did uh uh you know did a workout plan a forbearance plan with that mortgage company for him and um i started doing uh forbearance plans for people that were behind on their mortgage started helping people that were struggling so they didn't have to file bankruptcy they thought they would have to go into chapter 13 or to save their house and then that evolved and um started teaching a little sunday school class and there's about four people in there and looked up and there were 300 people in there and it just there was such a need people were they gravitated to my story of stupidity my phd in dumb and uh they were hurting too and it gave them an authentic place to get help by somebody who actually knew the pain and knew the stress and from there we i went on a broke radio station that was in chapter 11 bankruptcy a lot of bankruptcy in this story but the uh and uh they let us work for free uh which is exactly what we were worth and we were horrible daryl and his other brother daryl on doing talk radio it was nasty and um you know we were able to sell some a little bit of that first book i wrote out of the trunk of my car and uh started doing some events with overhead projector in a bad suit and you know fast forward all of that to this massive thing starting all that stuff was about 30 years ago starting the radio show was 30 years this year how were you able to turn that into a business though because it seems like at the beginning you were giving free advice just helping other people out from the church how did that evolve into making money from it or being able to grow that and hire so many people well we started i mean i started the first thing i did was i thought okay i can do counseling we now call it coaching but um uh counseling has got legal implications in the word but the uh coaching people in their finances and so i would charge 250 or 750 to help somebody and just meet in a conference room and sit down and help them do that uh outside of church i mean just word got out you know a guy at a red local restaurant heard i was helping people and he sent one of his employees over who had an irs lien and was getting the irs is getting ready to tag his house and so we were able to get that get an oic working on that and um so i just started coaching people helping them with their budgets and avoiding a foreclosure repo or whatever all stress stuff all hurting stuff and then i went on this little radio show and we weren't making any money on it we didn't make money the radio show wasn't profitable for 10 years but it was i mean we didn't make 258 000 i can promise you that um and uh but the uh there were a lot of people listening and it became a a megaphone a way to get to to acquire customers so they would come in and do coaching and we could sell books and then we started doing events that we charged for and then we opened up a thing called life after debt which was a 26-week course on money to get out of debt it evolved into what's now known as financial peace university which is now nine weeks mercifully you know that grew the events grew the publishing grew the speaking grew uh and finally the radio show became profitable we were able to actually sell some ads in our talk radio slots other than just trying to promote our own stuff which was kind of infomercial-ish really but in every case we just figured out a different medium or media to help people and then was there a way to monetize that too where we could help people make a little money and you know if you sell a ten dollar book and you make eight dollars on it or whatever that's good but if you're selling me and i miss better yeah and in that beginning phase when you were just getting started did you guys do any marketing to try to grow these different businesses that you were in or was it mostly just word of mouth and people telling their friends and their family hey you should listen to this guy he's got some great financial adv advice right entertainment yeah entertainment it was mainly word of mouth but we had this wonderful microphone of this radio station and the little radio station ended up getting bought out of bankruptcy and by then we had marshalled a following we didn't even know we had ratings because they never told us to say that call letters we were in bankruptcy it was like it was like a saturday night live skit i mean it was bad and so then this professional radio people come in and start teaching us you say the call letters you're kind of illegal if you don't say them once an hour you know and so and so we started using them in and out of every call and and so the radio show ended up building the the critical mass from a marketing perspective we didn't have any money to do marketing we were just surviving taking payroll on friday and so the first guy i hired was a another financial coach because i was maxed out logistically then i hired a lady to help us in the office and you know and then financial peace university started taking off we put it on video and quit teaching it live and boy that went to scale quick it's now been taught about 10 million people been through it in 50 000 churches but that you know when we put it on video that enabled on vhs okay later dvd now you know obviously digitally delivered yeah it was uh when we changed the mechanisms of the delivery we started seeing scale kick out on the different things and then we started getting more radio stations to add start syndicating the show meaning we would try to get other cities on to carry us and so forth and um you know we just i remember when we got to 10 radio stations i thought oh my god i'm in 10 cities wow am i a big deal what you know and now it's 670 or something like that it's crazy is there a reason you did radio over tv yeah i've got a face for radio no hey nobody nobody would let me on tv i mean i get them news media hits here or there or when we did a book tour i got i got on the today show the first time with that first book uh when i sold it to a publisher and then we went we re-issued relaunched it and they uh got on the today show i thought oh god this is it it's over man i just just checked that box man and uh nobody even knew i was on there it's great you know i sold some books though we got it on the new york times and um then people magazine picked it up and so we you know we ended up getting kind of in the pub business the publicity business we started figuring out oh that's like free marketing hello and so if we can provide content for them they'll have us on their shows and it doesn't cost a thing they benefit we benefit the viewer listener benefits but i wasn't good at tv i did uh when fox business first launched their their uh initial launch i was one of the first i was the show in the evening i was a prime time show we did a one-hour show on there uh that aired in the evening and i learned a lot tv's a lot harder than radio it's a lot and um people talking in your ear while you're supposed to be talking my brain's not that good i'm not smart enough to do that so but we got through it and we did that for two years and fox business shifted their aim at a different demographic our demographic's pretty young and fox business at that time was a very old demographic and so we we weren't a help to them nothing at that point so anyway but i did a little while but i really wasn't good at it i'm really good at like the three minute interview thing you know like on fox and friends i do that all the time from here we've got fiber into here they're friends we they the [ __ ] that's funny fox friends are friends but george and i do that you know all the ramsey personalities we'll jump on and do those i'm really good at those but the long-form tv thing is just what that is i don't i think there's just so many things going on and you have to concentrate and you have to look at the camera properly and yeah i just talk it's funny that's long but he does a three-hour radio show first i know i was just thinking that an hour of tv is just too long because like taking like a dr phil format for personal finance and finding really just extreme situations but helping them through that i feel like would be so interesting cbs had us do a pilot yeah when the nanny was hot you remember the oh yeah she would come in and fix the mean kids or whatever what was that the english it was the english ladies yeah yeah so about that time i did we ran around all over the country we had three families to do it shoot this pilot and their idea was that we would be like the nanny but in finance we'd come in and swoop in and help this couple and so forth then it was it was really bad it was awful you didn't like the way it turned out no it was they they didn't mean they didn't even air the pipeline oh wow it sucked that fire it's it really sucked and it was it was me was it just boring or what yeah it's just it's just i mean well i mean it's real the funny thing is reality tv has absolutely nothing to do with reality like i remember walking up to the doorbell at these people's house and ringing the doorbell i did it like 17 times before they got the take they wanted i'm like it's ringing a doorbell this is supposed to be real i just ring the dad blame things 17 takes to get the doorbell right yeah i'm like screw this i'm not i'm not any good at this but see at this point you would be able to produce your own show if you really wanted to and it would be a hit where you could ring the doorbell once yeah actually actually we're gonna do that with george oh my god are you actually way less intimidating if dave ramsey shows up at your house and hits that doorbell yes like oh crap yeah yeah they would be quivering here why why am i a fearful character like hey what's wrong with your money you show up and like oh gosh yeah like what did i do i'm i'm getting just yelled about more of a colleague more of a uh gordon ramsay i was about to say yeah the the kitchen was it kitchen nightmare where he goes in the restaurants and fixes the restaurants but he you got to be shouting half the time yeah yelling at them and berating them and you're going to be doing that i don't want to make you have that kind of energy no you don't think that yelling is a different vibe than dave got it okay don't yell listen to the radio show today he will be yelling that's interesting how many people now do you have working with you uh we got about 1200 in the building wow now i've heard and i've listened to other interviews you've done that the uh the interview process to work with you is pretty stringent how many people uh apply for a job versus how many people get one and what's the process like for you to hire somebody well i i don't hire yeah i mean they were hybrid inside our leadership team does the hiring the chances of me i'm not very good at interviewing people so i'm they don't let me do it um the idea just being that we want people that are on mission and on crusade and that align with our values and that's who we want the building we have had really bad experience with people who were here for what they could get rather than what they could add they're takers rather than givers they don't add value and people that add value generally are people that are aligned on our values they add value if they're excited about the crusade of helping people with their mental health or their career or their money or they want to help with that and even if you know it's a creative they want to do their creative work for something that matters you know but if you're just looking for a j.o.b we want to weed you out before you get in here or if you're crazy we'd like to find that out before you get in here um and so we don't just open a open a wreck for a hire and just whoever can fog up a mirror that looks like they have a good resume let's get it done and get them in here no it's pretty stringent because we've had bad experience with having the wrong people in the building you know people that aren't are here and unhappy it it distracts from all the work because you have to stop and deal with the drama queen instead of getting your work done you know so we don't we try not let drama in the building if we can help it i mean sometimes people have bad things happening we want to be there for them but somebody who's in here as a taker that's where we've had the worst experience so yeah you go through a whole series of interviews to weed that out and you can't figure that out in 30 minutes people can they can be psychotic and you know completely fool you for 30 minutes they can fool you anyway but all right but you know one 30-minute interview you're not you're gonna you're not gonna get a good team but how do you filter that is there a question is there a process that that breaks that down so you're able to see maybe what what an intention is or whether or not there's a good fit he just talked to them and uh you know listen to them if you just spend enough time and put them in different put people in different situations then you'll get a feel on it um uh you get a vibe on it we all i mean we all read people pretty well if we just would let ourselves yeah um and so just we're sitting here going do i really want to spend a lot of time with this individual so this is a small business even at 1200 people it's we spend a lot of time together we and we work hard we work really hard we go home at 5 30 but we work really hard while we're here and so and i do uh and so we just want somebody that's aligned with that and we ask a lot of questions and talk about who we are and watch their reaction to this is who we are you know and do you want to is that who you want to be around well no i think that's kind of crazy okay then we kind of figured that out you know or they give you some indication of that that feeling or that vibe sure now i'm really curious of your work schedule because you have grandkids now and how do you how has that shifted over time with spending time with family versus working versus helping people how do you divvy that up do you have the hardest times the hardest time was the early days um because we didn't have the help and we're trying to get the critical mass of the business moving trying to make payroll friday you know that kind of stuff so i would you know i would come in at seven and work all day and then go to a three-hour radio show come home from that or come back to the office from that and then go set up the screens and the overhead projector across the street at the local hotel to run financial peace university that night those were 16 hour days uh my wife will tell you those days she was a single mom for a while but that ran about i guess at that schedule it was only about two years we were able to get critical mass and then quickly you quickly i wanted to delegate some of that and so anything i could get off my plate that would allow me to be freed up and because i don't mind hard work but but i do do not want to set up a something that's not sustainable and working like that for 20 years means you don't have family yeah working like that means you you lose your health or working like that's silly but doing it for a period of time to get something moving well game on you know get ready you're getting ready for the super bowl you better get ready you know and so we did that but nowadays it's evolved and uh you know the my joke with the team has always been if i hate doing something it's going to be real bad because i'm just going to stop doing it and that means that something you were working on i might not be doing it anymore somebody else is going to do it or we're not doing it at all so like i mean live events we used to do uh you know 40 or 50 of those a year running around with me and then now we've got ramsey personalities that do a lot of those and i'll go do 10 you know or 15 or something a year which really isn't that hard to just run into a city do an event run back home you know it's not it's not like i'm gone continuously right or something like i've got friends in nashville in the music business they live on a bus i'm not doing that you know at what point did you bring on the personalities like uh you know i've been watching george and this is something for me where i've noticed maybe three years ago was it maybe two years ago you started bringing on other people and you changed the name of your channel from the dave ramsey show to the ramsay show while bringing on other people it's interesting to see that for the most part at least from what i saw you did everything yourself and you were the main face and as soon as you brought on personalities i read all the comments and some people were mixed about it but i think over time people really enjoyed uh having different perspectives how much of that was strategic and why did you choose to bring on other people with you i'm 62 today and back to my schedule when i turned 60 i quit working on fridays so uh and and we all pretty well work you know from you know seven to five or whatever around here we all the whole place i mean there's nobody in the parking lot at 5 30. with the personalities when i was 48 14 years ago i started getting around some business people who were talking you have to have a succession plan you have to have a plan to hand this thing off otherwise it just dies when you die and all the effort and everything you put into this uh dies and uh it seems kind of silly if you're going to teach financial responsibility you ought to be responsible with your assets you know so um i uh we started going okay we need to have some other we need to train the next generation of ramses to be wise owners we need to make sure we have leadership in place that can lead without me in the room and without me alive even then how are we going to hand off the brand and the brand those two you could find best practices on training up the next generation to be wise owners or build quality leaders you can find best practices but it's very difficult to find someone who had handed off a brand a singular name brand like that to someone and the one-to-one handoffs had the worst so you had like you know the father left it to the daughter or the son and it just didn't work there was too much weight on the next generation and it was um there was too much risk involved so we kind of felt like god showed us to diversify that and have a one-to-many handoff on the brand so literally 14 years ago we started hiring and training our first ones rachel cruz my is my daughter and she was doing some speaking and we had other people doing some speaking at the time we started we first we had horrible names for them we're like they're message bearers they carry the message but we knew we knew where we were going we just weren't talking about it intelligently and uh then later they became brand something's brand uh ambassadors or something like that it was and they know they were just called brands we just called your brand called them brands and they weren't a brand they're a person yeah there's brands like uh you know every dollar the app is a brand financial piece is a brand a person you know yes dave ramsey's become a brand but that's really that it was it was confusing everyone and so finally someone came up with the idea of personalities and we named them personalities so now i have multiple personalities yeah so we we you know we uh rachel and uh you know we've got eight now or nine um as of today and uh you know many of them have had uh number one best sellers uh carrying their they're getting tremendous speaking fees speaking all over america uh they are high quality communicators and thought leaders within their own right and but the last piece of that was the actual radio show so we had a long before three years ago we had a solid base of these things happening uh i think rachel had the first number one best seller and that was a flight and uh that's great land on my nose but the uh yeah she had the first number one and gosh that's probably 2014 or 2012 or something like that but yeah so we've had books going out and other things and including them in a smart conference and other events where we were doing multiple people but then the radio show we had the plan we we didn't know what to do with it because we weren't sure it could hand off we thought it might die with me but then covet and we went okay dr john deloney talks about mental health and loneliness and anxiety and boy have we got some right now and george and rachel cruz talk a lot about hope and they're fun and funny and god help us in the middle of quarantine everybody needed that so i just started i said let's just y'all get on the air with me and let's do this and the mistake we made at first was they were uh treated like a guest yes and that was that was more awkward chemistry and didn't work well and we've evolved that into a co-host and then the more comfortable they've gotten sitting in the co-host seat the more effective they've been and the less hate we're getting on it yeah but you know i told our guys guys are coming comments people don't like it they don't like it and i said well are they going to like static because that's what they're going to get when i'm dead yeah so they might we might as well try something you know i don't really give a crap if they like it because that's your other option very opinionated yeah i read all the comments so i watched lord i don't know no comments yeah no comments comments are watched i think a lot of it is that in the beginning people aren't used to it and they don't like what they're not used to yeah i remember when jack first came on the comments i don't like jacks something about all of them would read into this be like his body language suggests he's like you know yeah people were like diagnosing me with certain things they were like oh he's a sociopath i know jack i think he's a narcissist that's what i said yeah i don't know it was hilarious but then over time now people i i don't like graham on here i prefer jack on the podcast and it's interesting to see how it shifted over time it hasn't shifted you're doing great that's doing what you can do now like i prefer george over yeah yeah you get that yeah yeah we get that george is nice rachel they do like rachel's actually very nice yeah yeah they like rachel i've got a mean bone in me that comes out occasionally you have to you you're that guy i don't yell it's a calm mean okay it's passive snark yeah there we go how did you guys meet we met when i started working here as an intern back in 2013. i kind of snuck in the door i didn't have to go through 19 interviews because as an intern which i don't even think we do those anymore no we don't they're just like well he's an issue why he's a temp he's here for 10 months you know we'll get him he'll do the work while somebody could it be someone's on maternity leave this guy knows social media we'll have him do some things and then he'll be out of there and uh i went hey i want to stay here and they went well you have it you have any skills and i went i could do this role over here so i jumped into email marketing for about two and a half years went back to social media for the personalities that's what drew me here was our personalities with a message to share that was creative and gave people hope and so i wanted to help them spread that message through social media marketing and email and all those things and over time they had seen me on the stage at our battle of the bands event which is one of the ways we have a great time build culture here internal team members form bands a lot of failed musicians around here in nashville i play drums by the way yes so if you need a drummer just let me know guest appears he's not a failed drummer though he's actually successful you were like on tours and stuff yeah yeah two dollar royalty checks i heard about oh oh my gosh yes i haven't gotten a royalty we've been on our way the last one is probably like 60 cents i get like 30 bucks a month from my music career so i'm beating you in that regard there you go so i started doing that and they went well we should have him mc and host because ken coleman one of our personalities was stepping into that role and so i started hosting events and the video channel for the show and er curriculums you name it and last year back in 2021 i was knighted personality because of how much i cared about this message and wanting to teach it and create content around it especially for the younger generations i wasn't on where we knighted anyone i don't know i mean there wasn't an official nightingale it was more of just a meeting where they went hey you're gonna do this now and i went okay you know which i've had about six or seven jobs here at ramsey for george i like that it's got a ring to it stick with that you know actually jack and i are both lords technically technically yeah we did one of those uh certificates where we own a one by one plot of land you could be a lord for like 30 bucks online apparently yeah you can own a star too i have a star your award it's an yeah it's an nft this is this is pretty incredible yeah really accomplished what was it like by the way for your first show oh my goodness because are they film live yeah everything's i guess with the delay yeah with this it's like well we can edit it out i do a big flub and so i was live i think august 2nd of 2021 and i had just launched my very own podcast called the fine print helping people avoid the traps out there with money so i was on air with dave and there was it's a lot of pressure it's a lot of weight to be on you know the second largest talk radio show in america next to dave ramsey um but at that point i had done so many other things in front of cameras and mics and so i you know at first you're nervous and you get on air and dave does the intro and you're like holy crap i'm i'm in it i'm inside of the matrix right now and we just had a good time with it and over time you get more and more comfortable there's not as much nerves anymore but your body keeps the score your body knows you are live on air in front of millions of people don't screw up don't say the wrong thing and by the way this is then on youtube for the rest of time so my kids will go back you know 20 years from now and watch old clips of me saying stupid stuff but you know dave led the way he doing that so saying stupid stuff yeah exactly what qualities did you see in george that made you feel comfortable putting him next to you in all of our personalities we're looking for you know obviously a strong intellect because a lot of the stuff we do is quick react and you do not have time to think about the next day what you wish you had said it's over you're doing an interview on fox or you're on the air live or we're doing a q a in front of a live audience or whatever it is and you've got to be able to just draw and fire so we're looking for that but we're also looking for that uh it factor on the stage or in front of a microphone in front of a camera and different people have different places that are a strength i've already said my strength is not on camera i enjoy the stage and i enjoy the the uh intimacy that talk radio has because you're dealing with just one sense just just hearing and so you're not getting the benefit of body language or and you're listening for that pause that means they lied or you're listening for uh you know the the nuance of it and 30 years of doing it you begin to get it dialed in but the it factor in one of those places can they lift people so in our situation we have to be able to put out high quality information but doing it doing it in a way with story and with humor that is aspirational that's lifting you know there has to be a motivational piece to it if you just lift with no information that's just fluff but if you send out information with no lift that's called a boring 401k meeting and nobody wants to go to those and so we're not doing either one of those and so you know we sit and talk to you know dr john dolone we're interviewing him uh about coming on and doing this and he was the dean of students at a local university but you're just sitting in a room with him you get real quick you go how quick he is how smart he is and how funny he is self-deprecating and uh this guy can do he he can handle that and what george did was uh george has always had that i mean he loves to perform he's a musician he already you know already had that uh and we had had him in front of the camera with the video channel as the host so we got to see you know could the audience love george as a host and you know could they could he could he connect and you got to be able to do that through these things or from the stage or whatever it is and he obviously did that and he's got an incredible work ethic he's one of them of all the personalities he's probably the one that does the most work to prepare before he comes on the air to do something so he'll come in with like three articles when we're going on the air and go hey we could talk about this stuff i've been looking at this this morning and my level of preparation is i walked in there and hit on you know i mean it was like because i've been doing it a long time but i don't i don't track that stuff but he's bringing good fresh new ideas and chemistry from his work ethic and so that's the type of stuff we were looking for and that he definitely personifies it yeah i have to say the level of preparation even when we walked in here i looked at the desk and i'm like wow this is similar to our desk and i looked over i looked at the lights i'm like wow the very similar to our lights and you said that you've created this to somewhat replicate the iced coffee hour and just the level the attention to detail i've i've never seen like this before our team has very high standards and it stems from this guy right here his uh we call it the suck bar around here and sukbar is down here for most of america most companies and everything we do is to the highest standard you know when we say we do our work as unto the lord that means we are putting our 110 percent effort in and we have a core value of excellence in the ordinary which means the smallest things before we went live we are de-linting a shirt i know because we don't want anything to distract from women we're trying to do linting but our team i did none of this by the way it's our amazing video crew over here and their level of i mean excellence and over time you know 10 years ago we weren't at the level we were now and so we we grew over time we got better cameras we got better at lighting we hired even more talented people and so over time now the bar is just way up here and this is where we start and if you've been to our live event yes and so you know our production values the things that we put out there we want to be the best out there and especially in the faith space there's a lot of just like bad you know snl skit level stuff out there and we wanted to stand out from that crowd and do our work as unto the lord and so that's what we've been doing now for over many many years well i'm curious about this because your faith plays an important part in the business in your life where did that start because you mentioned uh in one of the interviews that you've done that it wasn't on the way down it was on the way up that you began to to practice and was there a catalyst or where did that start or what prompted that and how were you before that point um well yeah the phrase was used as i met god on the way up i got to know him on the way down meaning that first rise in wealth um and so i do everything backwards a lot of people want their faith journey begins at a point of crisis mine was at a point prosperity but it deepened with the going through that bankruptcy walk over two and a half years and so yeah i met god as an adult and uh but i didn't have a a framework for really anything you know how do i be a good husband okay i'm gonna learn that from biblical teaching i'm going to how do you raise good kids i'm going to learn that from a source of truth biblical teaching i'm going to learn how to handle money i'm going to learn leadership i'm going to because there you know the principles are there within biblical wisdom uh and it just gave me a framework to form my uh character and uh so then you know that's why i don't read comments because i'm not really taking a poll we're gonna do we're gonna do and if you don't like it it's okay i understand you get there's a lot of stuff you can watch and a lot of stuff you can buy and other places and it's okay but this is who we are and um we're not trying to rub it in someone's face in terms of the our faith but it is who we are we're not going to be apologetic about it and then of course you get a lot of we get a lot of hate and a lot of stuff from that um but you know people generally respect someone that's very authentic you know um you know i i've got friends that are uh deeply involved in a different faith uh you know muslim or jewish or whatever uh and i tremendously respect them for being who they are and uh it's people that change and blow with the wind and virtue signal just to be try to try to let everybody know that they're you know i'm into this thing or i'm into that thing so that you like them and i'm like no that's not we're not taking a poll yeah was there a moment for you though where you feel like your your faith had you know increased or was was there a pivotal point i guess in your 20s yeah you know it did increase it deepened in the pain the stress level of walking through losing everything and the strain it put on our marriage and deepened you know th that pain point deepened the quality of our faith and then you know i mean stuff around here we go through we all go through crap you know um whether it's just drama or whatever it is or a you know stress point and you go okay uh i gotta decide really what my center is on this where am i drawing my you know what's my source really where am i going with this and so you know it's it's a it's a walk it's not a singular decision it's not a singular inflection point got it now you've been married for how many years 40 40. 40 years congratulations thank you that's incredible what have you noticed that's led to such a long-standing relationship and a happy relationship i presume yeah sharon says we've had um 33 good years of marriage there we go all right that's a good ratio but yeah i mean thank god she's not married to the guy she married originally he's gotten better over time i've grown i've learned how to be a better man learn how to be a better husband learned how to be a better dad and uh now have the privilege of being a granddad and if i hadn't known how great grandkids were going to be out have been nicer to their parents but yeah but yeah uh yeah that's uh you know it's um it is a little bit like leading a team or raising kids or just dealing with the audience um are you are you there to add value and help or are you there to take and takers just don't you know the parasites of this life they don't do as well and they don't have as high quality experience um and the odd thing is if you choose to serve you end up you know in a position of uh of prosperity in every part of your life and so you know sometimes when i serve a team member i'm asking them to work somewhere else because they suck at their job and so they really need to go do something they're good at you know uh and you know we serve them by not letting them work here um we serve the rest of team if someone's misbehaving by not letting them stay in the building and uh so that people here are safe um and emotionally safe with you know that situation so it's an act of service sometimes to be strong and to take action but that and that's true in marriage it's true in leadership and it's true certainly with kids how do you feel that you've improved and evolved as both a husband and a father um well i i'm not arrived but i am better um and i think i'm a better leader i used to be more of a boss i'm a better um uh but it is it's a character issue and it really does come down to you know deciding that you're going to get the most joy out of adding value to other people you're going to get the most uh reward out of helping someone else do their thing without just saying okay what can i get out of this what can i get out of this what can i get out of this one thing i kind of wanted to harp back on is the amazing culture that you guys have established here we were told by your head of security that once every week you get all 1200 employees in one room and talk to them all about the different stuff going on with the business to for everyone to get updated on what's going on how effective have you found that to and you know make the culture better here because i know between graham and me and our other uh i guess partner alex we don't have meetings and it's only three people it's through text messages yeah and i guess we could do a lot better of a job with that but uh i just want to know how that contributes to the culture here and have you found that to be uh i don't know to contribute you know i roi we've learned so many things the hard way by doing it wrong and doing it stupid um but what we figured out is is that where there is no communication it's very difficult or limited communication or poor communication it's very difficult to build trust and when you don't trust the people you're working with you all you spend all your energy looking over your shoulder for the knife that's coming or all your energy spent on distract instead of doing the thing but when you when you when everybody has a level of trust a high level of trust it's never perfect because we're all humans but when you have a high level of trust things run really fast really efficiently productivity goes up and so even when there was like 10 of us we would just get around a conference table and go okay what are we working on what's everybody doing because if the right hand doesn't know what the left hand is doing they do not assume good they assume bad they assume it's going to be bad and there's something bad if they think they would rather hear bad news that's the truth then no news because they assume bad when it's no news and oftentimes there was no news or no good or no bad news uh but if you just don't talk about it when there is bad news you don't talk about it when uh and and just let people know what's going on and so the uh our once a week staff meeting i mean 1200 people 50 weeks a year or whatever it is for 48 weeks a year we end up in that room that's a heavy investment in payroll if you just add the dollars up for an hour of that every you know every week but it the roi on it is this level of trust goes up because you get to hear george up there we had a panel with all the personalities on there the other day this week and you know they get to see the personalities and it was behind the scenes kind of joking they're cutting up and they're you know they're telling stories on each other and what they're working on right now what they dream about in the future and you know some of the stuff that led them here and it was it was really the team gets to love the personalities and wants to work with them and for them and help them and that kind of thing and then you know we had a guy get up and you know talk about what's happening with the high school curriculum that we've got so we know what's going on with that and they you know we're able to get that we're changing this around and here's the thing we're offering here's a test we ran that bombed and didn't work and you know people get up and tell what's happening in the different areas of the business because there's a lot of different things going on in these buildings and you know i don't even know sometimes what's going on over there if i don't you know get reports in from the leadership team on it i would have zero clue uh but it's really refreshing and and you know we have to be real careful for it to not be boring because you can sit over there and go this doesn't have anything to do with me oh my god i'm so tired i don't want to be around anymore listen to this crap you don't do all that so it's be quick concise need to be uplifting and it needs to be truthful and we also recognize people we use it for recognition we use it to restate the core values and say this is hey here's the core value of this and i'll teach you on it a little bit i'll speak and that kind of thing and so it's just a real good solid uh and once we kind of said this is a lot of money we really need to because we kind of just used to walk in and just like ad hoc do it you know but now it's very programmed and has an agenda and how many minutes you've got is on a clock up there in that i mean it's because it's such a heavy investment we want it to be good and tight you know but uh yeah it that helps a lot because then when the right hand knows what the left hand is doing things move at the speed of trust and you know if i don't have to think about whether you got my back or whether you know what the flip you're doing or whatever then i can go do my thing and everybody everybody's that way in the whole building at what point did you start doing that uh when there was about 10 because we've i you know i'm like it's amazing with 10 people that somebody could be pissed off about something that doesn't exist you know it's just like just they just made up something in their head driving home they're like you know i i just think i think he looked at me funny today and yeah holy crap how do you do that but yeah the mind bro the mind does that it goes to dark places if it doesn't have information that's true there was a study that was done i found really interesting that a business let's just say has 10 employees and they asked each of the 10 employees what percentage do you contribute to the business's success and they added up all of the percentages of the 10 2000 and it was like yeah it was like 180 200 so it's like clearly the math doesn't work out but they over assume what they're doing and they under assume what their you know partners are doing yeah and you know well he didn't like me yeah because he walked by you and he maybe his wife yelled at him before he walked out this morning he's still trying to get to a cup of coffee and leave him alone you know how do the meetings help with that do they flush out some of these uh issues well when you hear what's really going on you go oh well that that team over there is going through crap right now they're stressed that whole product line they launched failed and you know they're dealing with all that and so maybe you know maybe i can cut them a little slack i roll or something you know and uh so uh you know just being in the same room you pick up on and dr deloney talks about this from a psychological standpoint you regulate off of other people that you're in the room with you know and you over time you're gonna get a vibe and you get stable and that's what's happened actually on the air with the personalities it took a little time for that chemistry to lock in and stabilize and where we can just sit there and have a conversation cut up and we can you know be messed with each other mess with the guys in the booth we can be talking to somebody on the air kind of know where the other one's going a little bit and you know you know george knows where i'm going to go and i'm hearing yeah he's going to take that i'm going to sit back and let him run that one you know and you get that but that comes from just time spent together yeah is there anything else that you've learned along the way in terms of managing a business and and being able to scale it efficiently it seems like you've done an incredible job of doing that and my fear is always over scaling taking on too much responsibility getting ahead of ourselves uh whereas i think you know jack is is prominent that you know we should be expanding more we should be taking on more how do you find a balance for that you know it's just it's uh it's worth it but it's hard uh it's not easy because you're dealing with people and um we teach when we're teaching entree leadership teaching small business people about the same types of questions um that you know people are gonna be your greatest blessing they're going to be the biggest line item payroll on your p l your largest investment in other words and they're also going to be the greatest source of pain if you love people and you care about people and you say okay i'm gonna take care of that person we're gonna do this and then you turn around six months later and they quit for a nickel an hour or more or something i'm like dad gum you forgot about that time i gave you a car you know it's like wow that hurt you know it leaves a mark and but you know that doesn't mean you can't still turn around and do something good for somebody and so um we continue to pour into continue to love people well continue to treat them like we'd want to be treated um and uh continue to fire them if they don't fit in and if they're not gonna you know align with who we are and so and the team you know it's like when we're bringing on new team members i i make them a promise i promise you're not gonna have to work with people a bad character and people who will not play to win you're not going to play you don't have to run with you you're a thoroughbred you don't have to be you don't have to work with donkeys we're going to regularly do donkey ectomies that's funny so we got about 20 minutes left i think it would be interesting if we shift and talk a little bit about the economy the stock market real estate um where do you see the economy heading over the next let's say one to two years because i think we have a lot of interesting catalysts going on with inflation that may have peaked student loan forgiveness that just came up which might have some implications down the line where is your stance about where we are today it's obviously today we're in a bad place but we're not in a devastating place but if you want to call where we are today prosperity you would be ignorant um and you would have to have some kind of a political agenda because any person that can look at life and look at numbers and look at the indicators in the economy the the metrics can tell we're not this is not a time of prosperity uh now the good news is there's always opportunities in up times and there's opportunity and down times and so that you know it may be a time that you take more space that you expand your uh your footprint that you expand your market share down times are a really good time to do that because a lot of people are sitting on the sidelines whining sucking your thumb when things are slow and so it's a good time to be a hard charger in the middle of that in terms of your personal reaction to it but no there's no question that we're you know running the gdp is running flat to down just a little to up just a little bit which is basically hovering around recession we did have officially a recession two consecutive quarters of a downturn i don't care how you want to define it that's what they teach an econ class so but it wasn't much of one it's like quarter of a percent it was a joke as recessions go it's a pitiful one you know but it but it's also not booming it's not a time of great prosperity and and the fields aren't full you know or that kind of thing so we definitely have that the inflation thing was aggravated by washington but certainly was caused by the uh economic suppression around covid i mean we shut down the economy when you shut down an economy the size of the united states remember the size of the world and you want to restart it you're gonna have shortages uh that's called supply chain maybe you can call it whatever you don't call it but you're gonna have shortages and when you have shortages you're always gonna price increases thus you're gonna have inflation and so uh you know [Music] it makes a real case for we destroy we economically destroyed some people's lives with the coveted policies sure uh was it worth it well we can argue about that it's kind of late but we could argue about it in the name of flattening the curve if you remember that that's what we were all doing everybody sits at home so the factories all shut down so they're not making cars so there's a car shortage so cars go up i mean for the first time and since they've been made used cars went up in value never in the history of the car has that occurred and never again will it unless you do something stupid in the economy like shut the whole freaking thing down um in the name of flattening the curve but the ripple effect is that of that that you get inflation uh and then you get people think you know the binding administration is tinkering with the energy policies in the name of green and so they're shutting down you know domestic oil production are greatly curtailing and making an unfriendly environment for them for sure intentionally in the name of a green policy and you can argue about whether that's the right thing to do or not but you can't argue about the fact that that caused gas prices to be five dollars i mean that's where it comes from it's a shortage shortage scarcity always it's a simple supply demand curve and shortage always creates that so we've got inflation as a result of those things i kind of think that's going to level on out i don't think it's going to continue if the fed will quit screwing around with it but they're they can't they're like a mad scientist so um but the uh the real estate market you know was crazy it was quite hot but a lot of that was scarcity people sitting around looking at their house going this this house sucks i don't spend enough time here to realize how bad it sucks and then you know but i'm quarantined i'm stuck here so now when i as soon as this is over i'm going to go change houses and boy by god they did or i'm getting out of this state we had a migration that occurred you know so there's all kinds of weird stuff that's um probably a once-in-a-lifetime events in the real estate world so my you know my guess is and really if you look back for the last 30 years i've been doing this it pretty well plays out that uh this too shall pass and um you know regardless of how smart or how dumb the people in washington are eventually these the wrinkles will be smoothed out of this and 36 months from now we should see a completely different economy than we do today yeah i don't think inflate these this is not long-term inflationary cycle this is caused by shortages yeah where do you see the opportunities today for most people i know you're talking about expanding but i would say for the average person who's maybe concerned that home prices are going to go down maybe they believe that or they believe that you know stock prices are still high things are going to crash uh you know my job is going well but where's the next opportunity i know short term where the next opportunity is but i do know long term i i'm buying mutual funds in real estate that's what i do and that's my personal wealth building plan it's not really complicated why because i'm pretty dead i'm sure that an 80-year history in the stock market of it you know of the economy getting stronger and stronger those companies continue to make profit and that profit results in value of those stocks going up and over time you know we're as a grouping the stock market the the what you're saying is is the american economy going to permanently go down and stay down if you say the stock market's going to go down and stay down that's what you're saying and that i just don't believe that and it's not it's not weird it's just there's a 80-year track record you can look at and go uh it didn't happen went down here came back up went down here came back up went down uh you know with quarantine dropped you know yeah through the floor and then was back 18 months later six months later whatever it was back up to where it was so uh you know i i'm just going to continue to invest this long term long time long time i i just you know i got in the real estate business as we said 1978 i mean come on and so and those houses that i was selling then yeah don't you wish you owned all of them yeah oh my gosh for what they're worth today oh of course now when you invest in real estate do you prefer residential or commercial uh these days it's commercial just because of the number of dollars involved and um real residential is a great place to get started i've still got i don't know 10 15 houses or something in our portfolio but just because i hardly ever sell anything sure just buy it and keep it forever buy quality properties add a deal keep them forever but um commercials give me better roi right now then uh of course our stuff's 100 paid for we don't borrow money but um it's giving me the best internal rates of return and cash on cash roi uh overall i've got one piece of commercials just sucks i can't get it rented but um but the rest of them are doing really really well and of course the residential is all jamming and the rents are the rents have gone up uh this year last two years pretty dramatically but still not making cash on cash or cash on value what the value if i took that million dollar house or that 700 000 house and i you know what's my return on it cash on cash isn't that great that's okay but uh even with high rents you know what do you think about the movement right now it seems that landlords are evil they're taking advantage of their tenants it seems like there's been a shift over the last two years with rents and house prices going up that buying a house right now is is is immoral what are your thoughts on that because that's a movement that i've seen it's been taking a stronger hold than i would have expected yeah that comes and goes too um i mean when people are hurting and they're scared socialism is it gets in vogue and being angry australians call it tall poppy syndrome uh or which is an aristotle thing actually isn't you know the poppy that gets higher has to be cut down and so anybody that makes money must be destroyed anybody that's successful must be destroyed so that we're all equal and uh which you know as we have figured out we are not all equal it doesn't work out that way i mean it turns out that brad paisley is better at playing a guitar than i am and we're not all equal and it turns out that other people you know my friend brad thor sells he does a fiction book on spies and sells 15 million per copy which pisses me off but you know we're not all equal but i don't think brad should be destroyed because he saw more books than i did i'm happy for him and it didn't cost me anything except when i bought a copy but i mean it was not you know so it's uh that kind of stuff but i i it's um at the core of that is the kind of the wealth inequality concepts the movement or the uh the socialism idea that you know if you're somehow a capitalist that you are evil and really the core of all of that is uh two of the deadly sins envy and jealousy jealousy is i want what you have envious i don't think you should have it and this is envy you should be you know you should be it should be taken away from you because you bought a house and charged rent um i mean one of the one of the things got really excited about something i said on the air and trashed me i can't remember who it was and one of the youtubers or somebody and uh because i said yeah i'm going to raise my rents i'm like well you're not a christian i'm like what's goddess christians don't raise rents what kind of dumb butt statement is that of course we raise rents you know we charge market rent it's not evil you're not evil you're providing a house and you don't have to live there where are your people going to live they can't afford it somewhere else you know i grew up in a neighborhood that was over the tracks from this neighborhood and when we were growing up we went hey rich people live over there i can't afford to live over there that's what we said you know and i can't afford to live there anymore they the rents went up and you know if you make 45 000 a year you cannot live in manhattan hello you can't pay the rent welcome to life uh you're gonna have to make more if you're gonna live in manhattan uh that's how it works well it's evil no it's not evil it's just math math is not evil it's not nobody's doing anything wrong nobody's out to hurt you it's just you you know you don't get a pass on math because you got your little butt hurt feelings yeah i will say i did make a mistake uh two years ago i made a comment to kevin o'leary who reviewed my portfolio and we got to a property and we explained the cash we looked at one property says well the rents on this is lower than every other place that you have and i said well i've never raised the rent on that tenant and it was 10 years i had not raised the rent she was a great tenant never a single issue always paid on time treated the place like her own and i figured you know what i wouldn't raise the rent makes my life easy don't have to think about it she's there uh she was a tenant ten years later had some issues and i i don't want to go into detail but i wish i i should have raised the run that was a huge mistake that i made looking back that i should have done that as part of a smart business exactly no and it's also psychological okay because she started to get confused at some point who owned the house yeah and so with our tenants and with our advertisers we go up every year 25 i don't know but we go up every year we don't any want anyone to go uh well i'm doing him a favor by being here and so no this is a transaction i mean you you're gonna pay the rent and you get to stay this is a transaction and i'm gonna take care of stuff that's broken and i'm going to be kind to you and nice to you but you are not entitled because you have been here a long time to cheaper rent now i i will you know maybe not raise it all the way to market to not push somebody out because of the cost of a turnover but that's an economic decision yeah that's not a i'm doing you a favor and you know and then if you run your business well then you can choose as a one-off in a situation to be kind to someone like we had a tenant that was going through cancer treatments and the family was just destroyed and so we not only didn't go up on rent we just gave them like three months with no rent just to help them but that was an act of kindness and generosity that was not a statement of previously we've been doing something evil and now we're going to do something good no instead and we're having a transaction here pay your rent you get to stay this is the value of the property and you can't it doesn't work anymore uh um and oh you've got a life thing and i've got some margins so i can just be kind i can just be generous and give you give you a little time off and we did do that um we took over we bought a building one time in a foreclosure that had a a church operation operating a daycare and the daycare was primarily serving uh the underserved area a lower income situation and they didn't have much margin in running that thing and they were running nonprofit we sat down with the guys and you know we ended up giving them the first six months after we bought the building free so they could get up get things running but it wasn't it wasn't because charging rent was evil it was because we were able to help these people get their business situated and that was a nice good thing to do generosity-wise but no it's ridiculous so we always go up on rents every year yeah i wanted to learn yeah there's a certain investing philosophy i know you feel very strongly about which is debt and i'm assuming you probably share that sentiment with dave so graham and i have had very unique experiences with that graham utilized debt extremely well to grow his real estate portfolio in the beginning he took on a decent amount of debt uh and was able to leverage because of that i have had a good and a bad experience with debt uh i bought a house i wouldn't have been able to afford without debt and since i bought it i've appreciated maybe i've gained probably 90 100 000 or so in equity on the flip side i had a stock portfolio that's kind of my fun portfolio and i brought it up from 20 or so thousand to like 75 000 and right around 75 000 i went in on margin yeah so i know where this is going yeah and uh unfortunately that was in december so the peak yeah and timing shots it was really bad too i thought inverse jack's trades you'll make a you really would yeah unfortunately yeah but uh i basically thought i was a genius because i was making money all last year and i'm like you know what i got this i'm just going to continue doing what i have been doing but this time i'm going to leverage now i had the money i had the cash but i decided leverage why not it's on robinhood so i did that and uh currently sitting at about seven thousand uh from 75 000 and uh you know so i've had both good and bad experiences with that and i wanted to know because maybe the average person isn't as responsible as maybe graham is with that maybe they're like me on my robin hood thing do you say debt is bad because for the average person that is a good principle to live by and with that i kind of agree with you however if people do utilize debt in an effective way such as graham he's very responsible very well researched on you know the markets and how he can leverage his money with debt do you think that that is a more effective way to to grow fast if you're calculated with it it is a more effective way to grow fast if that's your goal but what people leave out of the discussion is that you've increased your risk exponentially more debt equals more risk period and so uh you know after i went broke i had to analyze and go okay what went wrong here and because was it you see i had never lost money on a flip i was not behind on the notes they just called them they had the ability to do that because it was commercial paper it wasn't traditional mortgages it was 90 day paper and um so i you know what it amounted to was and i so i had proven track record of making money i mean i did i probably owned two thousand piece of real estate in my life and so i was doing a lot of flips and something i was doing in 24 hours you know i just buy and flip them to another investor and make 10 grand and keep walking you know that kind of stuff so i was doing 100 financed i didn't put any money in it not a time i didn't have any money so i talked a guy into giving me 100 deal on this house i flipped it i made 10 grand hey and i talked him into doing it again then i talked him into doing it again then i talked him into doing a million two and uh with that one bank and yeah so it set me up and so after i crashed i kind of had to go through a csi you know an autopsy and go okay why did the patient die you know so what i you know because everything i was taught i grew up in the real estate business and when you when you're in the real estate business as a profession one of the rules is they take your risk meter out and they sit on the table and they break it so you have no you have no ability to perceive risk because everything's good everything's going up and you know and you know it always works and uh the mythology that just because something worked once is always going to work every time so uh i i had to go through kind of a healing of my heart in that regard and going this is risk uh oh wait a minute opm other people's money yeah it's kind of got that get-rich-quick slimy vibe to it you know and all that but there are people that intelligently more intelligently than that use debt and so there's a spectrum there but even those are taking on risk and so when you have buffett says when the uh when the tide goes out you can tell who's skinny dipping so when you stress test with an economic problem of some kind uh outside variable or inside variable inside your organization or your life inside your portfolio or the economy like a quarantine type thing comes up or of inflation or recession and you stress test your theories um you know you can tell who is skinny dipping when the tide goes out and uh you if your theories don't last and so the only one i've ever found and this comes back to my faith journeys where it started the borrowers slaves the lender i can find nowhere in scripture that debt was used to bless people and so then i got to think okay do i believe that or do i believe my academic training i've got a degree in finance and i know how to run an irr you know and i know what the irr looks like without with with uh with debt and without debt and it's not nearly as good unless you're leveraged but you can run an irr through the roof with leverage guess what's left out of the irr calculation there's no math inserted for risk the irr is agnostic to risk it doesn't recognize it and so while you see this great rate of return there's zero risk shown up in there the chance that you lose the thing or the chance that the stress brings on your life or what it does to your marriage or what it does to your body to carry around the weight of that none of that is parlayed into there and real estate is unique in that way because other investment vehicles teach us to mathematically insert risk for instance two mutual funds you would never compare an aggressive growth stock mutual fund with a with a growth in income okay and if you look at the chart you know the growth and income is kind of like this and the aggressive growth like this right and that's the risk factor and the highs and lows on that y'all probably know this is called for our but for our audience at home the the change the rapid change is measured by a thing called a beta and a beta is a statistical measure of risk it's a math number and so a beta of 1.0 for those at home means that that particular mutual fund is exactly what the stock market is s p 500 doing what stock market's doing a beta of 2.0 it means it's twice as risky so this is an aggressive growth emerging market type stock fund portfolio and so it's twice as risky as the market so you would the way you would adjust for risk between a beta of a 0.8 which might be like a growth in income versus a beta of 2.0 is you insert the beta in an inverse in the math formula and you adjust for risk so you can compare these two apples to apples even though after risk a post-risk analysis we don't do that in real estate no one ever talks about that in real estate it doesn't even come up and so if but we have kind of a brain and our brain says oh wait a minute if i'm a 110 leveraged in real estate that's probably not good you know where would you say the risk is though let's say on a three percent mortgage or an interest rate that's below inflation because from my perspective it seems like there's less risk it is in having cash in the bank then tied up in a property that might not be as easily accessible that in the event of a job loss or something happens you'll have cash that you could easily access versus in a property where it might be difficult to take out like if you need the money like something comes up um and it exceeds your emergency fund that maybe it's harder to tap into if that's your last case resort well the the difference is are we talking about the shortest path to bankruptcy or the shortest path to wealth this what you're describing is not going to lead you to bankruptcy and so it's a nuanced argument at that point okay and so like you know uh because we're not talking about a get-rich-quick hundred percent you know portfolio and you're just trying to use an inflationary number to offset your interest rates and that that that doesn't play long term but you know where you've got a high cash position a high equity position lower debt well guess what your risk is so low that it's that the debt represents that your beta would not be a 2.0 it would be a 0.25 you know but there is still a risk that is there that is not there if the house is 100 paid for the property's 100 paid for because then if your tenant doesn't pay because of pandemic oh and by the way you can't evict them because of a moratorium on evictions uh and so you got zero cash coming in and nothing you can do about it or are they going to chapter 13 take six months to get them out um yeah you've got zero cash coming in and that's what you can do about it uh and legally you're gonna you're gonna get real criminal crap if you start messing with those things right so you cannot and so you're writing checks i'm not and i'm sitting here smiling and going okay we got a big pile of cash and we got all these buildings paid for and we had entire segments of our revenue just evaporate with the quarantine like live events didn't exist obviously right that kind of stuff and we're going this ain't good because we're gonna if this thing goes down into the red and we start burning that cash what's our burn rate and how long before we start leadership doesn't take pay and how long after that before we start having to furlough people or lay people off and we're running those calculations during that short period of time that we were off and uh but we did not have added to that the burn rate of the rent burning through the cash yeah uh or the hou or the payment on the buildings i mean can you imagine the payment on these buildings if i'd have been burning that cash during that holy crud yeah but you know so one less thing to worry about right but it's a risk analysis is what it is and if you 100 i run a 100 debt-free portfolio and so i have zero pressure to our virtually zero pressure to make that property inordinately perform in a stressful situation so i make different decisions about tenants i don't need a tenant and so i don't get as many bad ones because i'm willing to go yeah we'll sit here another month if it takes another month to fill it that's better than putting that bozo in there he's going to change his harley oil in the living room i can feel it you know you know what i'm talking about and so but but i remember when i had payments on properties in my other life and i'd be going honey i got to make this dead gun payment i need to get a tenant in here and you know all sudden your little irr thing you did when you bought the property and you ran your pro forma out on a you know you ran out the noi and you run the whole thing out through there all of a sudden you go oh that's out the window you're just like crap i got to make a payment and you forget thinking about that and so you kind of have that same look here and he's talking about seven thousand dollars a minute ago you know and it's um but hey dude i did it i did it with millions so you're not you're not nearly as dumb as i am but uh yeah that's where it comes from so i i you know the uh uh 100 debt free works in prosperity and it works in down times the more debt you use the more prosperity is required in the marketplace for you to succeed because to overcome the risk that's all it is and so i just decided i'm wounded i'm not borrowing money period and joe and susie consumer you know when i can get them 100 out of debt their probability of walking into a million million net worth increases dramatically because they're not trying you know of all the 10 000 millionaires we interviewed 10 167 millionaires in our largest study of millionaires ever done uh precisely zero said i became a millionaire because i borrowed all i could on my personal residence at three percent and i parlayed that in the stock market and it made me a millionaire none of them said that zero z that's bizarre i mean zero said that zero also said you know my airline miles that i got on my credit card you know you know that's him i'm the opposite i'm like yeah because i borrowed how many credit cards do you have probably 10. they're all paid off they're all paid off there's zero balance i couldn't remember which mission with him does that mean no i love it no that was that was you're going easier i look at the flights today just because i love your grounds because i love hotels we booked a whole trip to hawaii uh last year all paid for yeah because you couldn't afford it otherwise yeah but it was free it was a free trip yeah that's the way you spend 12 to 18 more when you use plastic on average and i don't think so i am so i don't know the behaviors i'm sure they do i had to buy him his iced coffee this morning dave you know i brought a coffee from the airbnb that i made there and i still have it in a plastic cup because i knew that i just habitually make my own coffee my default is to spend money you are frugal yeah the default is always i'm not going to spend i'm known for being cheap is it cheaper i'm getting better you are getting better i'm very proud of you well thank you guys so much i see we're running over a little bit on time but i don't want to hold this up thank you guys so much it's an honor to be with you guys love what you do love the podcast you guys are amazing thank you so much part of it thank you yeah thank you for for agreeing to do this thank you george for setting this up and we got another really exciting video planned right after this so make sure to check out the main channel right now it's worth it and uh i'll see you very shortly appreciate you guys thank you thank you see i could have done this for another few hours you

Channel: The Iced Coffee Hour

Views: 468,356

Keywords: graham stephan, graham stephan podcast, iced coffee podcast, iced coffee hour, investing podcast, investing for beginners, how to invest, how to invest in stocks, how to invest in real estate, personal finance, business podcast, investing in your 20s, how to be a millionaire, millionaire investing, best credit cards, credit score, credit score explained, how to build wealth, real estate investing, stock market investing, passive income, robinhood app, millionaire mindset

Id: YtapfdvXfyY

Length: 76min 36sec (4596 seconds)

Published: Sun Sep 04 2022