Investing in Tangible Assets

Note: I went a little long in my blog video today so I split it into two parts. You’ll see the first part today regarding what assets I used to buy back my time, and how I created financial independence. The second part on how understanding market cycles will help your business and investments thrive during a recession will be posted next week.

I have the distinct advantage of decades of experience in the world of business and investments. I also have the privilege of being involved behind the scenes with business owners, high-level influencers, thought leaders, and investment platforms.

This affords me an inside look at what’s going on in today’s market, how it relates to business market cycles, secular cycles, and where we can be most successful in today’s investment landscape. 

The lessons I share are a culmination of my network, lessons from mentors, and years of experience in the real estate, dental, and business arenas. It’s my perspective and therefore will still come with my bias as well.

And while the path that I have taken in my life has never been a straight line, it certainly has provided me with the benefits of knowing what to do in crises. Knowing what mistakes to avoid, and best practices for investing, creating passive income, and increasing time freedom.

And I love to share my knowledge with others. That’s how I choose to serve whether it's my Freedom Founders community or the next generation – who will have to do more heavy lifting than I did in the late seventies or early eighties when we had a different economy.

A New Economic Era

There is about a 40-year span (1980 to today) that can be grouped together, but we are now entering a new era. The dynamics of the last 40 years are changing dramatically.

This is separate from the fact that there are always market cycles that typically span about 6-8 years. The last one went about 14 years if you include the extra propulsion from the post-COVID helicopter stimulation money (the trillions of dollars that the Fed added to the balance sheet to maintain the economy).

It's what I call a faux economy. And there's going to be a day of reckoning. There's always a price to be paid when you steal from your future. That’s what debt is. You are stealing from future production and that falls on everybody's shoulders, but will fall to a greater extent on the next generations.

I care about this country. I care about the people I serve. I care about my family. But my family can only be as healthy as this country is. That’s why I share my knowledge. To help people put themselves in a better position to figuratively fight back.

My Wakeup Call

I built Freedom Founders out of a need I fulfilled in my own life. I escaped the chair. I left my dental practice back in the mid-2000s after my daughter had suffered and survived both high-risk leukemia as a very young child, and epileptic seizures thereafter.

At age 12, she was in end-stage liver failure and subsequently (by the grace of God and the kindness and generosity of a family who donated the organs of their child who passed away) survives to this day.

That was a time when I realized that having a Plan B – assets besides myself – to replace my active income was pertinent to gaining back time I could spend with my daughter and those I care about most.

You must understand that you are your first and primary asset. All investments into your education add to your efficiency, value proposition, and the problems that you can solve in this world for other people. That's where our value comes from.

Certainly getting the training and education that you need to provide value is where we all have to start, but if everything relies upon what we do – our expertise, our skill sets to solve problems, our time – then we are vulnerable. We all at some point run out of time, out of energy, and out of capabilities.

We all want to eventually be able to slow down. When we're young, we have time. We have energy to give and that's a good place to start.

But the faster we can learn to build or acquire assets – tangible assets – the faster we can acquire time freedom.

The Goal is More Time

You may like to have some of your investments in financial products, those found on Wall Street. That's fine. I, however, like the control that tangible assets provide. Particularly I like businesses and real estate.

If I didn't enjoy real estate so much, I’d probably be more of an active/passive investor in businesses. But I learned very early the tenets of real estate and how to utilize it as a vehicle to create wealth and, more importantly, to create more time freedom. That is what all this striving is all about, gaining time freedom.

Having financial freedom or financial independence means not having to work or trade time for dollars. It means you have assets to produce the income to sustain your lifestyle. This is what investing in the right assets like real estate can do.

But does that just mean you can buy more stuff? For some, it will be. But the more significant opportunity is to afford you more time freedom. Time to do whatever you want to do.

What does that look like? Lying on a beach somewhere or playing golf 7 days a week? Some may choose that, but that’s not for me.

I want to be relevant, useful, helpful, and knowledgeable to the people I serve. That’s what I want to do with my time.

Why I Left My Career Behind and Why It Might Be Time to Leave Yours

I was able to shift gears mid-career. Some people said, “How could you leave your profession in which you have sunk a lot of time and capital?”

My response: Why not? 

Most people in society would never think of leaving their career path early. Most plan on getting into a career or business, and running with it all the way to “the end”.

“The end “ is what we usually call retirement. Dentist’s retirement (as well as many other professionals) conventionally happens in your sixties, when you finally go live the life you always wanted during those 40 years that you were working. Personally, I think there’s something missing from that.

Many people had a wake-up call during COVID. They realized we are all mortal. Globally, every day, about a hundred thousand people pass away. Most did not know it was their last day.

My point is, we don't have forever. We think we have so much time with our kids while we have them at home until they become young adults. They become independent and we realize we don’t have as much time as we thought.

We don't lose them, but we realize that we could’ve done more together. In their earlier years when we said “We’ll get to that. We still have time.”

How I Created My Wealth with Real Estate

What are the assets that will give you the Plan B income that will give you time freedom to live the life you’ve always wanted? The assets that allow you to stop waiting for that mystical someday of “retirement” and become free much sooner?

The assets I used were real estate.

In 2008 during the Great Financial Recession, because of my network, because I invested in recessionary-proof assets and models, I was in a position to benefit from the great wealth transfer that occurred.

I had already left my dental practice. I had created a network in a certain real estate market in North Texas where I planted my roots over the last 40 years.

I had private capital lenders, so I didn't have to rely on banks. This is important when there is a recession and there is a credit crunch or liquidity crisis – what we're entering into right now.

The banks stop lending and people are caught off guard and get confused. They say, “I'll start buying assets when they go on sale.” But what's the typical way people purchase real estate?

Through leverage.

Now, I'm not against leverage. But there are different ways to use leverage and only some are pragmatic and profitable during certain economic climates. 

An example is when I was coming out of undergrad and starting my real estate portfolio. I was just entering dental school and I had to learn how to leverage without using banks.

I had no credit. Everything I acquired from real estate at that time, I acquired with creative financing. And I leveraged like crazy.

My average interest rate back in the 80s/90s when I built my portfolio primarily based on single-family rentals was eight and a half percent. I still had cash flow at every property. I had to make sure I had enough cash flow at every property for all expenses and debt service and then some left over as profit.

How did I build wealth from this?

I intentionally “snowballed” down the loans that I had. I acquired as many properties as I could, and made sure they all cash flowed. I did all of the management myself, because I had the time, and I took any extra money out of my dental practice to pay down the loans relatively quickly.

Instead of putting my money into a 401(k) for dentists, locking my money up until I was 59 and a half years old, I paid down those loans. Within 15 years, I had about 35 single-family rental properties, of which the vast majority were free and clear.

That's what allowed me to break the chains from my dental practice when I wanted to spend more time with my daughter.

I bought back my time.

I was in my mid-40s when that happened. That's usually not when people can break away from their active income production. But I had started early. I compounded the effect of time, investing in assets that, historically, have always produced a certain level of sustainable income even throughout recessionary downcycles.

That's what produced my freedom. 

Next week, you’ll hear the second part of today’s video regarding why it would be in your best interest to learn about market cycles. These are lessons that have made me a better investor and business owner.