April 12, 2022

First off, I want to share a quick example on WHY understanding the Wheel of Wealth is so vitally important for anyone who wants to go PRO in the world of real estate investing.

I have worked with many students that were worth so much more than me when they come to me for help. They’ve simply done really well by following the basics: get good jobs, make high incomes, control expenses and buy properties. Properties that initially never cash flowed until market rents caught up. Even then, the cash flow amounts were pathetic (their word, not mine) because they were waiting for the big cash out once the mortgages are fully paid down…in 20, 25 or 30 years.

Very quickly, through one on one discussions and seeing how they handle opportunities that come their way, it’s ‘habitual’ for them to just ‘buy’. These also tend to be the people that have told me “somedays, I/we feel like slaves to our jobs, our properties AND our tenants. We pay them to be there because we don’t make any money until the very end.” They have this uncontrollable need to BUY and COLLECT. Before you know it, two, three and maybe even four decades have gone by. That’s great if that’s what you’d like and are able to put up with decades of stress like that. These are the people (I really don’t call them investors) that only feed into 2 buckets still: earned and portfolio. To me, those are the two income buckets that any average person has been taught to do growing up as discussed in Part 1. This is interesting to me because it’s like putting a driving coach in a car with someone who’s been driving for 20 years. Even with a good clean driving records, the driving coach can typically pick out “bad habits” that are blind spots to the long-time driver within seconds.

For many, it’s about rewiring our thought process and financial blueprint. Again, don’t get me wrong, there’s nothing bad about retiring with a buttload of portfolio income. It’s just that, one of my mentors in my early days asked me this question that really stopped me cold: do you want to be young and rich or old and rich? The key word here is not rich. It’s TIME.

The concept of time needs to be the first concept for all investors to learn and fully comprehend before anything else matters.

Onthat note, let’s come back and look at the hard and soft strategies again first:

1. Distressed Properties & Flip (physical buy and sell of a property)
2. Wholesale & Assignment (paper buy and sell of a property)
3. Lease Options (physical or paper buy and sell of a property)
4. Short-Term Rentals: vacation, executive, student and rooming houses
5. Private Lending & Creative Financing
6. Income Properties: single family
7. Income Properties: multi-unit residential
8. Income Properties: commercial, mixed use and industrial
9. Infills and Land Development
10. Asset & Income Protection
11. Business Fundamentals: business planning & goal setting, bookkeeping, systemization, networking, etc.
12. Portfolio Management: tenant management & management of the physical asset
13. Raising Capital
14. Creative Financing: small to large scale partnerships

Frankly, this list is not exhaustive, yet. In different countries/jurisdictions, there are many more available. However, for the sake of demonstrating the concept, we’ll keep this list for now.

From this point forward, typically we have 2 main steps on how to complete the Wheel of Wealth with the 14 listed strategies:

First — understand which income bucket each strategy goes into, and

Second — understand how to use it to our advantage to accomplish our financial goals.

Distressed Properties & Flip (physical buy and sell of a property)

This hard strategy falls under earned income for most especially when the clear ‘exit’ is to sell it once the value-add process is done. However, one thing to note is that distressed properties really is the foundational strategy of all property-first deals. As a result, many people have heard of the BRRRR process. BRRRR stands for Buy, Renovate, Rent, Refinance, and Repeat. It’s also important to know that BRRRR is NOT a strategy in itself as we BRRRR all property types (even businesses!). Amateurs who want to sound fancy will often times refer to this as a strategy. Please do not sound like one after reading this article — you’re better than that 🙂

I would personally put this strategy in all 3 income buckets if the exit strategy isn’t to sell immediately after the value-add (aka renovation) is done. Why? Because of one very crucial thing pointed out earlier — it is the foundational strategy of all property-first deals. Whether it’s a small single family, a 12-unit apartment building or 1,000-unit apartment building complex (or even commercial and industrial units), you will BRRRR them. And when you decide to keep them for cashflow, you now have passive and portfolio income for the long haul. While not directly in the passive and portfolio income buckets, it definitely is a main contributor for both.

Wholesale & Assignment (paper buy and sell of a property)

This hard strategy falls under the earned income bucket. Simple. Be the personal shopper in the real estate investing industry is what I call a wholesaler — doesn’t that sound fun?!

Lease Options (physical or paper buy and sell of a property)

Oh boy, this one is gonna be fun. Like distressed properties, this one contributes to all 3 — earned, passive and portfolio — income buckets. Unlike distressed properties, it can do it in a very direct ways. It’s worth noting that lease options can be used as both acquisition and exit strategies in real estate transactions. Frankly, for my readers who do day trading, you simply don’t need anymore explanation on this one.

Short-Term Rentals (STRs): vacation, executive, student and rooming houses

Definition matters in the world of investing. How we define short-term rentals is simply by the length of a typical tenancy which is 12 months. STRs can be either earned OR passive+portfolio income depending on one main factor: are you the active manager dealing with your tenants and bookings? If you are, then it’s likely an earned income bucket strategy for you. If you are hiring out the day-to-day management, then it’s simply passive+portfolio on properties that you have in your portfolio.

Private Lending & Creative Financing

First thing first, if you’re not licensed to trade in loans and mortgages, tread carefully on how you allocate this strategy into your income buckets. For example, mortgage brokers are legally licensed to trade in loans and mortgages. Most private investors aren’t. Amongst your close circles, you are able to leverage this strategy and feed all 3 — earned, passive and portfolio — income buckets. Certain creative financing methods will feed into your passive+portfolio income buckets only.

Income Properties — all kinds

Income Properties, by definition, is making you income every month so it definitely checks off the passive income bucket box. However, when done right and well, all income properties should feed into your portfolio income bucket as well. There are certain formula and key performance indicators as our north star to make sure both buckets are fed properly. Otherwise, we are no better than the example in the opening story.

Infills & Development

Perhaps the strategy that has the widest spectrum as you can build whatever you want here! Once again, to keep things simple, infills and development is what I would describe as distressed properties on mega steroids (except that maybe there isn’t an actual piece of dwelling sitting on the land sometimes and it’s just…land). As a result, if you sell it once it’s built, it’s definitely goes into your earned income bucket. If you hold on to it, it turns into an income property and thus feeding into your passive and portfolio income buckets.

Taking a turn here, ALL soft strategies go into all 3 income buckets. That makes it easy. Whew!

Now that we’ve gone through that, let’s make it a bit more relevant and start speaking everyday English, shall we?

Let’s say: if your why for investing is because you’d like to —

• Have better vacations with the fam every year
• Your job is “stable” — meaning your hours and stress levels and earning potential are predictable and capped
• You want to pick up a lucrative side hustle without the extra tax bills

You might be perfect for a mixture of distressed properties & flip, wholesale & assignment, and lease options.

Let’s say: if your why for investing is because you’d like to —

• Secure your retirement because, frankly, every time you look at your quarterly statements from whatever it is your money is in, you lose a few nights of sleep
• Make sure you don’t become 100% dependent on the government or, worse yet, become a burden to your children

You might be perfect for a mixture of lease options, income properties (types of property dependent upon your personal risk tolerance) and private lending & creative financing.

Let’s say: if your why for investing is because you’d like to —

• Have time and money freedom and enough to fire your boss one day (date TBD)
• Build and live a life by design and with purpose

You might be perfect for a mixture of lease options, income properties, STRs, private lending & creative financing.

Of course, there are many ‘it depends’ in every scenario. However, I hope that the essence of the thought process here is captured and understood.

Toconclude the whole concept of WHY it’s important to understand and complete your own Wheel of Wealth: you will never have to ask which market(s) to go into ever again. One of my mentors said this to me: build your own wheel so you never have to chase markets. Across the world right now, changes are happening everywhere — rising interest rates, governments capping rent increases, higher than ever before-seen property values, highest inflation rate and climbing every quarter, etc. Change is the only constant. When you round out your own Wheel, you never have to worry about what the market is doing. For instance, we started building (infill & development) in 2017 long before the amateurs are flocking into developing new properties because they just learned that there’s an overall shortage of housing in the country. I learned that when I was building my passive income, there were already people developing. And that precisely IS the point here: we are all at different stages of our wealth creation plan. When you have built yourself a safety net, it doesn’t matter what’s happening to the world. You’re financially independent and free first before you take on more (calculated) risk.

Inthe next article, I will share with our personal investing philosophy and, more importantly, process. It has been my guiding light for the last 7 years. Yes, 7 out of the 12 years since I started learning and applying because I finally figured out a formula that can be duplicated. A formula that will compliment the Wheel of Wealth and has the potential completely alter how you look at real estate as an investment tool.

For my dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

May 17, 2020

(WARNING: COLOURFUL LANGUAGE IN CONTENT)

This one is the hardest piece I have had to write to date. Like most experienced investors who have gone through the ups and downs building their portfolios, overtime our ‘what not to do’ list is actually much bigger than the ‘what to do’ one. This is done all in the hopes that the deal quality gets better and better. I joke with full truth a lot about this: if your first deal is your best deal, you’re doing it wrong! So…without going into too much of a tangent, here’s part 1.5/2 on the top 3 deal breakers for me when choosing a REI mentor these days.

For the record, I have a very deep appreciation for those brave enough to offer any kind of real estate investing training these days. Real estate, while being the most tried and tested asset class in human history, is also a moody animal. Training people on real estate investing can sometimes feel like training people on lion taming. Moreover, I also share the utmost respect for anyone courageous enough to offer financial education. It’s definitely the path less travelled. And, the mission of “creating financial independence one person at a time” is definitely one that requires more than just Trust Your Talent can accomplish. For that, I am grateful that there are others in the same industry.

On that note, it would be prudent to define what ‘industry’ that I am/we are in for doing what I get to do everyday. Like the titles of all of my published articles on this platform so far have suggested: financial education or financial education through real estate investing. Often times, people ask me about ‘competition’ in our industry and in the marketplace, my reaction has always been: there really aren’t that many — globally. Fortunately, I always say that “results always speak louder than words”. Usually, when people get to meet someone from and/or trained by Trust Your Talent, the question answers itself.

With that frame of mind, here’s my list of the top 3 deal breakers when choosing my next REI mentor:

To begin, borrowing from the previous article:

I stand for leveraging real estate investing strategies to achieve financial freedom because that was my goal and is my passion. I know some others may choose a mentor based on a single strategy, a market or a certain type of property. The importance is that you and your potential mentor align on your goal.

1. Misalignment in vision

For me, the purpose of putting my work and journey out there from day 1 is first and foremost to help others create financial independence or financial freedom through financial education. (Side note: it’s very uncomfortable to share a lot of the things I’ve been sharing. However, my mentor did tell me that I’d have to face my own fears and focus on the bigger picture. So here I am, stepping out of my comfort zone.).

What financial education has done for me is beyond what I could comprehend some days still. Yet, I feel it in my bones everyday that more people need to at least hear about it, if not allow themselves to start on it. Exemplified by one of my favourite quotes here, while traditional school (with a very pricey tag to my somewhat middle-class parents) bought me a poor mindset, a major clinical depression and my 3rd heart attack; financial education bought me time and money freedom, and later on, the ability to execute on my personal vision to help others achieve the same.

Ever since the first Wheel of Wealth article was shared, I’ve gotten very encouraging feedback from many of my readers. Perhaps it’s because it struck a chord — whether you’re a new grad from college/university, a highly trained professional (MD/PhD, engineer, accountant, nurse, marketer, programmer, etc.) or have simply fallen into the rat race.

As mentioned in the SMP Philosophy, it wasn’t always around when I first started learning and applying as an educated investor. It took time, more mentorship and further knowledge to distill the process. I firmly believe that if you don’t know where you are going, you’ll end up where you don’t want to be. Investing is very much like that. Over the years, I’ve seen people acquire properties and grow their portfolios only to end up with a 2nd job. It was shocking at first. However, when I dug deeper into these people’s stories, it was unsurprising to see how they end up where they are despite having numerous rental properties. Like one of those singing competition shows, it’s a constant balance between advancing one week at a time and still with a clear end goal in mind. I have hardly come across people admitting wearing the name badge of a Real Estate Investor that go into it with the goal to add more stress and to-do lists to their plate. Yet, so many do.

I, myself, and the creation of Trust Your Talent stand for the ideology of total wellness. This ideology is composed with wellnesses in 5 major areas in our daily lives: financial, physical, mental, emotional and spiritual. We are currently in Phase 1 of carrying out of the grander vision of “elevating human potential by living a strategically positive life” by offering tools to help with people improve their financial wellness. These are the same tools that have helped me greatly in my quest toward time and money freedom.

Further to that, mounting statistics and researches around the world have shown that “financial wellness” remains a front and centre determinant of one’s quality of life and state of mind. Forget statistics and research results, if we are to take an honest look at ourselves and the people around us, most (if not all) of us can relate to one of these statements or situations:

• The number one factor that breaks up any couple is money. I saw that happen to my parents and many other relationships in my lifetime so far.
• Stresses and worries about money have directly contributed to people’s mental health. I know I was there myself despite making a relatively healthy job income.
• The pressure to maintain and get ahead financially in life has directly caused physical symptoms and illnesses in the modern world.

The list goes on and on. Even a simple Google search on this topic alone was shocking and chilled me to the bone. The positive, though, is that it gave me a much needed dose of confidence and belief of what I stand for these days: increasing the level of financial education to help better people’s financial futures. Truthfully, this has never been about real estate or even real estate investing strategies (shocking, I know). This has always been about leveraging the right investment tool to take care of one very important aspect of our day-to-day lives: money. The most commonly used currency these days that allows us options in life.

I believe that people who are simply looking to buy more real estate aren’t simply the right audience for me or Trust Your Talent. Those who are seeking time and money freedom as a personal vision and a way of living are the ones that will resonate with these messages.

As a result, after bumping around for 4 decades with numerous mentors in my life, I look for those who understand that real estate investing is a means to and end. Those who create financial results through real estate investing to contribute to a bigger vision — in their own lives and into the world. Those who stand for anything less than that…well, they are simply not good enough anymore.

To be completely blunt, there are those who “teach” enough so that I either become their OPM (other people’s money) or have to solely rely on their ‘other paid services’ (ie. legal) in order to completely execute on any deal is a clear red flag. The purpose of offering financial education and elevating a person’s financial intelligence in my LOUD AND OBNOXIOUS opinion should aim at giving them the required tools for independent thinking and decision making when presented with an opportunity (for differentiation between opportunity vs deal, refer back to this article).

THIS quote above (or an ageless wisdom) is always the end goal. That’s why when I seek help these days, it’s to acquire resources, tools, new perspectives and new knowledge to become as good as my Mentor, if not better. I have no problem saying that because I know a few of my students definitely have gone on to doing bigger projects than I have. That is an amazing feeling when the shared vision is not on the size of the deal nor the amount of profit, but the ability to be autonomous and living life on our own terms.

Clearly asking them what their personal vision and mission for offering training and mentoring is a quick and easy way to determined whether you align. There should be ZERO hesitation for true go-giver to explain their purpose and intention being a mentor.

To be continued…

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

And if you’re looking for the quickest way to understand what “financial education through real estate investing” means, we run 1-Day Bootcamps as an introduction. And yes, full disclosure, you’ll have the opportunity to pursue advanced trainings during the Bootcamp if you wish.

(Written at home in Edmonton, AB.)