Exiting Your 401k To Invest In Real Estate Syndications And Other Alternative Investments – Dave Wolcott

 

There is a huge difference between rich people and wealthy people. Do you want to be rich or wealthy? Our guest today has a strategy to help you build your wealth. In this episode, Dave Wolcott, the CEO of Pantheon Investments, discusses exiting your 401k to invest in real estate syndications and other alternative investments. Dave also shares his tax strategy and talks about the infinite banking as one of the wealth strategies wealthy people have been using. For more insights on wealth building with real estate, tune in to this episode now!

 

Get in touch with Dave Wolcott:

LinkedIn: https://www.linkedin.com/in/dave-wolcott-863306/

Pantheon: https://pantheoninvest.com/

You can also grab his book, The Holistic Wealth Strategy.

 

If you are interested in learning more about passively investing in multifamily & Build-to-Rent properties, click here to schedule a call with the CPI Capital Team or contact us at info@cpicapital.ca. If you like to Co-Syndicate and close on larger deal as a General Partner, click here. You can read more about CPI Capital at https://www.cpicapital.ca/.

—

Watch the episode here

Listen to the podcast here

 

Important Links

• Pantheon Investments
• The Holistic Wealth Strategy
• Wealth Strategy Secrets of the Ultra Wealthy Podcast
• Rich Dad Poor Dad
• Tom Burns – past episode
• Strategic Coach
• Who Not How
• Unique Ability®
• Cashflow Quadrant
• PantheonInvest.com/Wealth-Strategy

 

About Dave Wolcott

Dave Wolcott is a vetrin and a Captain in the Marine Corps. Dave spent the next 20 years building several businesses and investing in alternative assets.

Today, Dave is the Founder and CEO of Pantheon Investments and helps entrepreneurs build wealth by passively investing in superior real estate and alternative assets

Dave is the author of “The Holistic Wealth Strategy”, A Framework for Building Real Wealth and Living an Extraordinary Life and is also the host of the top rated “Wealth Strategy Secrets of the Ultra-Wealthy” podcast.

 

Exiting Your 401k To Invest In Real Estate Syndications And Other Alternative Investments – Dave Wolcott

We’re back at it, August. It’s the second show of the day.

It’s one of those high-recording days, but we’re fine with that. We’re pros now. We’re no rookies. We’re excited about this episode. We have our good friend, Dave Wolcott on the show. I’m excited about the show and learning more about him. He’s an author and we’ll get into his background. A quick thing to touch on here is that I grew up in a middle-class family. My parents were very pro-education getting a job. Entrepreneurial ideas were never provided even ideas about investing were never there. My mom was big in real estate.

 

 

My maternal grandfather was a real estate investor. He was a real estate agent as well. I always believed that real estate was in my blood but wealth-building strategies, budgeting, and all of these strategies that the top 1% used didn’t exist in my family. When I got involved in the real estate private equity space, I learned about so many secrets that the wealthy used to build wealth, and then I understood that there’s a difference between being wealthy and being rich. Rich people have money. Wealthy have generational wealth and passive income. These concepts didn’t make any sense to me. I had to be demystified like our show here.

A lot of people can say that they didn’t learn about that growing up. We’re here to put a bunch of amazing ideas.

The good thing about you is your parents were accountants, so they’re dealing with people’s money and what have you. They weren’t huge in investing.

 

 

We never spoke about it. My dad was like, “Let’s save money. Let’s get a big amount of money in the bank.” Now that I’m thinking about it, I’m like, “Dad, what are you doing?” Anyways, that’s a different story for another day.

Especially the inflation at whatever it is. CPI report came out.

You can’t teach an old dog new tricks but he’s getting there.

Inflation is coming down, but your cash is eroding to inflation. If you’re investing in a stock market down whatever percent has been in 2023, it’s 30%, I believe. Let’s get into the show.

I wanted to say I’m excited to have Dave on the show. We met him at Dan Hanford’s event, the MFIN Conference, and we’re probably going to see him in Florida because you and I are going to Florida. Let’s introduce our guest. I’m excited to have him on. A little bit about Dave. Dave Wilcott is a veteran, and he was a captain in the Marine Corps. Dave spent the next 20 years building several businesses and investing in alternative assets. Dave is now the Founder and CEO of Pantheon Investments and helps entrepreneurs build wealth by passively investing in superior real estate in alternative assets.

Dave is the author of The Holistic Wealth Strategy, which is a framework for building real wealth and living an extraordinary life. He is also the host of the top-rated Wealth Strategy Secrets of the Ultra Wealthy Podcast. We’re excited because we believe this interview with Dave will bring great value to real estate investors looking to learn how to exit their 401(k) and invest in alternative investments such as syndications. Dave, welcome to the show. It’s great to see you again.

Ava, August, it’s so grateful to be here and connect with you guys. It’s always such a pleasure. I look forward to the opportunity to speak to your audience as well.

You’re making us look bad right off the bat because you got that nice tan going on.

It’s all about lifestyle design. For me, I like to be outdoors. Moving to Florida, getting rid of state taxes on sunshine three over 300 days of the year makes a lot of sense.

Music to our ears, Dave. Let’s get started. Please tell us about your background and your start in real estate and financial advising.

It was interesting I followed the path that most people do of conventional wisdom that was out there at that time, which was, “Go to school, get good grades, and then you going to get a great job. “That was the recipe for success. Our generations were taught that was the only way to do that. I went to school and did the ROTC program and the Marine Corps. In the Marines, I had a fantastic experience. I got to travel the world, work with some phenomenal people, and you also learned some amazing skills that didn’t teach anywhere else, things such as integrity, teamwork and leadership. I took those skills and then transitioned into Corporate America shortly thereafter.

I was quickly dismayed because they didn’t have that same sense of mission, purpose, and corporate. Everything was very bureaucratic. On October 24th, 2000, my wife and I actually won the baby lottery and had triplets, plus we had a toddler as well. We literally quadrupled the size of our family. I can tell you that nothing will have you evaluating your finances more than quadrupling the size of your family. This put me on this obsessive journey to figure out how is the top 1% building their wealth. At that time, I had been through three different financial advisors. You pay more and more, but they kept giving you the same exact advice like, “The market is going to go up. The market is going to go down. Diversify and hold for the long-term.”

All of these assumptions that the entrepreneur in me was questioning and saying, “Does it make sense to defer taxes in a 401(k)? How can I do better than a 7% return on average?” On this journey, I then started investing in alternative assets at that time. I remember this is 2000. This is after Rich Dad Poor Dad was published. I read that, but it was like, “Where’s the playbook? How do I get into the deals?” These were the early days of private equity. I invested in oil and gas, retail, raw land, multifamily, and all kinds of different asset classes at that time. I then also transitioned into the Cashflow Quadrant and became a business owner as well so I could be positioned for taking advantage of taxes.

I built a technology consulting company that we took full scale and exited. Fast forward to 2023, I’ve essentially created Pantheon to help other people discover how to build their wealth alternatively. Exponentially build their wealth at the same time as reducing their risk, aligning to that vision in life that they want to live towards, and creating that target that they want to go after. That’s what our book is about, The Holistic Wealth Strategy. Our podcast talks about a lot of the strategies and different tactics that people take to be able to do that. That’s how it all started.

Thank you for sharing all that exciting stuff. A lot to break down there, so I appreciate that. I wanted to quickly touch on this. Could you quickly summarize for our viewers what 401(k) is, and then can you also maybe touch on what Roth 401(k) is and how it is different from an IRA? We want to make sure that everybody is on the same page before we dive into the next questions.

The way to look at it, Ava, is the fact that it is part of our wealth strategy. We’re not only talking about getting into great assets to invest in. Part of the strategy is you have to reduce your top three biggest expenses. Guess what those are? 1) Taxes. 2) Stock market losses over time. 3) Government-sponsored qualified plants. Those would be 401(k)s and IRAs. A Roth is something that is growing tax-free in it.

You have to reduce your top three biggest expenses, and those are: taxes, stock market losses over time, and government-sponsored qualified plants. Click To Tweet

For most people who are accredited investors, there’s a cap to it once you hit an income cap to being able to contribute to that. In the 401(k)s, a lot of people sign up for it because they say, “My employer is matching me 3%, and that’s free money,” but that’s only one side of the story. These are government-sponsored qualified plans, and what’s wrong about them is the government is telling you when you can use your money, how you can use your money, how much you can use it, and you can’t touch it until you’re 59 and a half.

Let’s talk about the power of how investors can use their 401(k)s or IRAs to invest in syndications. Maybe you can explain this to the audience.

This was enlightening for me. I went through this process and as I got into alternative assets and passive investments and kept growing, things were going well. You’re trying to find more capital to look at more deals, and you’ve got this little nest egg sitting over here. I literally went through the process myself. By the way, I’m not a CPA or a financial advisor, so this might be a little aggressive for some folks, but I sat down and modeled it out. If I exited my 401(k), I paid the 10% penalty, 35% in taxes or whatever that was at that time, and then I put it into multifamily syndications. We were talking about Tom Burns, one of your other guests.

I’ve been with his firm for many years. I invested that money into one of his syndications many years ago. The way I looked at it is after taxes and fees, I would be at a break-even maybe in year 4 or 5, and then things would go better. It turned out I broke even in about two and a half years, and I’ve since tripled the money by exiting the 401(k) and moving into multifamily syndications. We’ve built a calculator for investors that they can configure and make their own assumptions to see, “I do want to get a little more control back and redeploy those assets that are in my 401(k). I can put them into something that’s safer and has a better return, like a multifamily project.”

That was the process. The other process that people can do that still a lot of people don’t know about is doing a self-directed IRA, which is you’re able to invest in some of these real estate opportunities within the umbrella of your IRA. The only problem is you’re not getting the full tax benefits. You still have control limitations and things like that. It’s a matter of good, better, and best.

 

I have a follow-up question about this. You seem to be opposing the Orthodox financial thinking here by suggesting that people get out of their 401(k)s and invest in multifamily real estate holdings. Now, wouldn’t it be better to compound your principle under a tax shelter? Can the higher returns compensate for the added tax liability?

Real estate is a tax shelter so the returns can compound. Since you guys are big on YouTube, can I share my screen for a moment so we can talk through this?

I want to fully understand this, Dave. Please share your screen.

I’ll show something that was super enlightening to me and we can talk about that return. Essentially this is our calculator, and we’re going to talk through this for those of you who are reading. Let’s take the model here. If you have $100,000 in your 401(k), you pay the 10% penalty and have a tax rate of 35%. Now you have a net investible of $55,000. The interesting thing is we model a 20% return, which I know most of the deals you guys participate in.

We’re seeing a 20% average annual return and that is growing tax-free because we’re able to leverage bonus depreciation over a 20-year period that $55,000 becomes $2.1 million. Now let’s compare that to the 401(k). Let’s say I kept the $100,000 in my 401(k), we’re going to assume a 7% rate, and that would’ve grown to $386,000 before taxes. After taxes, It’s $251,000.

Isn’t that something? A lot of people are going to ask that question that I asked. A lot of investors also don’t understand that on top of everything else, there are tax benefits that literally flow through to the limited partners or the investors who invest alongside the syndications.

 

 

We appreciate that you shared that with us, but you also invest in other alternative investments and asset classes. What was the lure of multifamily particularly that excited you most for you to invest and advise others to invest in them as well?

A lot of it is about having an asymmetric nature of it. Our investment thesis is the trifecta of investing. You can think about it and say that there are three ways to make upside, but you can also think about it and say there are three ways to protect our downside. One is we’re only looking at investments that have tax efficiency, predictive passive income and forced appreciation so you have an opportunity to make money on the backend. Multifamily fit into that well. The other thing is if you look at that in respect to Maslow’s Hierarchy, shelter is not going away.

We have a shortage in this country of about 6 million units right now, even though we’re moving into this recessionary period and everything. I invest for the fundamentals and frankly, this is one of the keys that the ultra-wealthy invest on. This is very foundational. They’re investing over 25-year periods. You have to get crystal clear on the fundamentals and not change based on cycles. When you look at the fundamentals of multifamily, it’s very strong.

 

You also invest in other alternative asset classes. Maybe we can get to the next question.

Dave, what other alternative investments do you suggest for an all-weather asset allocation and why? Would you include Crypto, golds, NFTs, art, or collectibles?

There are so many fun things to invest in these days and new asset classes being created all the time like NFTs and such. I did come from a consulting background in my tech. I think about this a lot of times as basically solution driven. Depending on someone’s scenario, what their vision is, and where they’re trying to get to. Obviously, we have a lot of high-income entrepreneurs and things like that. They’re trying to not only increase their wealth but also want to reduce their taxes. They’re making $500,000 or more a year, and they’re trying to reduce their taxes.

We have an oil and gas fund that the investment is 100% tax deductible against active income. This is key. That is massive in terms of the tax deduction that you can get. It’s paying out passive income as well as an opportunity for upside on the backend. This is great for those high-income earners that are trying to offset their income. The bonus depreciation is great on the real estate side and most other passive investments, but the passive losses only offset passive income. This is good on the active side.

A quick question about that. Go over it mechanically. If someone makes $500,000 a year, they use $150,000 for their lifestyle so they have $350,000 left. If they invest that into an oil and gas fund, what happens then that $350,000?

100% of it is deductible. Instead of reporting their AGI on their tax return that they have $500,000, we estimate that year one is probably 80%. 80% of $350,000 would be off of their total AGI. Now they’re probably looking at an AGI of $200,000 and they’re in that tax bracket versus $500,000. That’s money right in your pocket, right out of the gate, and before you look at how is the investment performing or any of that.

That’s not necessarily for an ultra-high net worth, a family office or the top 1%. With $500,000 a year, a lot of physicians make that in the US. We have millions of physicians in the US.

My next question, Dave, is to learn a little bit more about this asset class. What are the forecasted returns?

This is strong. We are at 14% to 21% of annualized cashflow, and that’s consistent. Basically, we’re getting revenue from natural gas as well as oil production. We have a unique model. 95%  of the way oil and gas have traditionally been done. How it’s done is it’s an income play. People will come in, they’ll buy it, look for the income from the oil, and then the wells eventually run dry because it’s a depleting resource. As they run dry, the wells expire but in this case, what we’re doing is we’re proving up the assets. It’s very similar to multifamily. We’re doing the drilling, optimizing the flow and everything that’s coming out, and milk that for a period of time, 1 year, 2 years or so.

We’re packaging up those assets and we’ll sell it to either an income buyer, say a pension fund, or a bigger producer like ConocoPhillips or something who wants to expand their footprint. We’re able to do that on the sale, and then all the investors get to share in that upside. Oil and gas are not done that way, I can tell you. That’s what was attractive about this opportunity to me. Again, you have the trifecta of tax efficiency, passive income plus upside. This also mirrors the Maslow’s Hierarchy because regardless of whether we go to war, geopolitical risk, recession, or all of these things, energy drives everything around the world.

Whether we go to war, geopolitical risk, or recession, we need energy. It literally drives everything around the world. Click To Tweet

How long have you been investing in this asset class?

I started in 2000. It was my first investment and I got in and out of some. This latest one supports our thesis, and we’ve been in for a couple of years now.

This is what’s exciting about shows and stuff. You learn about new alternative investments. I wanted to touch on this, Dave. I believe you were in the tech consulting business. What are your thoughts on the tech sector meltdown that’s occurring right now?

There’s always so much innovation in the space. There are lots of new ideas and everything. We’re at the peak of the cycle for a lot of things. In VC funds, we’re betting on ideas because there was so much promise of the future. Moving into a tighter environment in 2023, we’re going to see a lot of those things that were ideas, and idealistic fall to the wayside. A lot of people are going to pick up market share who are well positioned and have strong fundamentals to their business.

A lot of those cushy jobs are being pulled out of their feet up to the people working there. I was watching a video of a workspace in Twitter. You should have seen the games room and the wine on tap. It was an adults fun play area.

Salesforce got 10,000 layoffs or something like that. That’s crazy stuff.

Big layoffs are coming, but that’s because of the potential recession as well.

We’re going to dive into the next topic here.

These questions have been comprised by us and our team.

Dave, there seems to be a common question that you ask your investors, and this was, “If you had $1 billion, what would you be doing, where would you be, and who would you be with? Out of curiosity, what’s most people’s response when you usually pose this question?

It’s such a great question, Ava, because people don’t spend enough time thinking about their life and their future. We live in this day and age where we’re so reactive to media, taking kids around, getting to the office, or whatever it is. We live in this reactive world. Think about this. How many times have you heard a great podcast, a TED Talk or someone speak that has such an impactful message, but they had to go through some extraordinary times like the loss of a loved one, a chronic illness, maybe a major health issue to get them to the other side?

It’s my belief that we want to inspire and encourage people to take control of their life now and get crystal clear on what that vision is because if you don’t have a target, you’re going to miss every time. Create that vision for yourself or your family, what that looks like in the future, and then start living to that. To me, it’s fascinating. Much of building wealth and money is the psychology of it. What it means to you guys is something different to me than someone else.

 

 

Once you start going through these exercises and you do some deep thinking about it, you can start to get there and live that life without $1 billion. A lot of it might be like, “I want to spend more time deepening my relationships with my top 10 friends, or my top 10 business people.” You can do that now or maybe you want to eat healthier. It doesn’t even necessarily cost money. It’s a strong exercise and one that I refresh with myself all the time. To answer your question, I don’t think there is one specific answer because it is unique to everyone out there.

A lot of people are clouded and their mind is clouded when thinking, “If I’m worth $10 million, I’m going to be super happy.” We know people that are worth billions. They’re billionaires but unfortunately, their health is not there and they’re miserable. it’s a good exercise to do it, Dave.

We’re having a discussion about a young CEO who’s worth well over $100 million, but their focus is more on their children and they’re not being the CEO they’re supposed to be. There’s not a difference between $100 million and $1 billion. That’s the drive that comes from inside you because the lifestyle doesn’t change much when you’re at those numbers. Let’s continue.

Dave, what’s the secret? We want to know how do the top 1% wealthiest individuals make and keep their money.

I’m not sure how much time we have here, but as I was explaining this to people, and I know you guys talk to new investors all the time, what’s a multifamily syndication. I never heard of this before. My financial advisor told me and it sounds too risky. Maybe that’s not for me so you have to cut off of all of that noise. The genesis for writing my book, The Holistic Wealth Strategy, was I created this visual diagram to help people wherever they are in their journey to be able to take action and put things in place for them to be able to achieve it. It’s not necessarily one particular investment or action but it’s about creating a framework and strategy that will last you a lifetime in multiple generations and creating that. That’s what the holistic wealth strategy is all about.

 

We can walk through it quickly. This is a five-phase approach that we start with a vision statement as we talked about creating your target of where you’re going. That’s key. Phase one is all about you and your mindset. Do you have a growth mindset? Are you open to learning new ideas, how to reduce your taxes, or some unique real estate opportunities or things? What limiting beliefs do you have? We all have them because they come from our upbringing, schools, or businesses we’ve been in the past.

Can you move aside those limiting beliefs and then start to expand and have that growth mindset to accomplish new things? Start to create goals and then habits to support those goals. That’s phase one. Frankly, if people can’t get past this phase, they’ll never invest in syndication. Maybe they do a one-off deal or something but you’re not going to move the needle at all. You have to internalize this. Once you’ve done that, we move into the second phase which is all about learning. We call it increasing your IQ, which consists of your mindset IQ, financial IQ, and health IQ.

In 2023, I have a goal to see how much money I can spend on my health. I want to see if I can spend $30,000 on my health doing a variety of different things for longevity and vitality. It’s because I’m my most important asset, so why wouldn’t I invest in my health? That’s paramount. A lot of times, sadly, people burn their health to acquire wealth. It’s sad.

I’ve had my doctor on my podcast talking about some of that. It’s a fascinating piece around health. Another one about IQ is relationship IQ. You’re definitely a product of the five people that you spend the most of your time with. Who are those people? Are they supporting your new ideas and your ambition, or they are detracting you? That’s key.

We then move into the third phase, which is all about creating infrastructure. If you want to be positioned to create real generational wealth, you have to have a good infrastructure in place. That involves some things like asset protection and making sure that you’re insulated regardless of what could happen in life. We talked about a tax strategy. I have so many battle wounds in running a business, I fired five CPA firms. I spent more money every year and kept paying more in taxes but I knew that there was an answer out there.

Finally, I got to the right CPA firm, and I got educated and smart on taxes. If you truly understand taxes, they’re a roadmap of incentives for you to partner with the government. The reason oil and gas is 100% deductible is because it’s very strategic for this country from GDP production to our National Defense and things. That’s why they’re giving these big incentives. You want to partner with the government versus the opposite way, which is if you’re a W-2 employee, you’re paying the highest amount of taxes. Get that tax strategy in place.

If you understand taxes, they're actually a roadmap of incentives for you to partner with the government. Click To Tweet

We also talk about infinite banking. This is one of those wealth strategies of the ultra-wealthy that people have been using for a long time, but there’s not enough education out there. That’s essentially leveraging a whole life insurance policy to create liquidity for yourself, tax efficiency. You can also pass this to your heirs completely tax-free. There’s asset protection. It’s a big multiplier in doing that.

We walked through phase one, which was covering your mindset. We talked through phase two, which was getting smarter around your IQ. In phase three, we talked about creating an infrastructure. Now you might say, “Dave, that sounds interesting. I’m on board. I’ve learned but I don’t have any capital. How do I deploy capital?” This is where we talk about asset repositioning. 90% of Americans have their capital tied up in two places which are their primary residents and government-sponsored qualified plans. The rate of return on equity in your primary residence is zero.

Even at nowadays’ rates, even if you go and take out a home equity line of credit for 6.5% and you can go invest in one of your guys’ deals and do a 20% annualized return, that’s a pretty solid 14% arbitrage in my book. In addition, you’re getting more tax benefits because you’ve got more interest that you’re able to deduct on your tax return. That’s how all of these things connect together. We talked about the 401(k)s before, the government-sponsored plans, and how you can optimize those to start to get them into some better assets.

That takes us to our fifth and final stage, which is building a massive passive income. Here, we look at a lot of these alternative assets. We’re cutting out Wall Street as the middleman taking all of their fees and everything, and we’re directly investing with Main Street into things like multifamily syndications, the oil and gas as we talked about, self-storage, and all kinds of different things.

Another great one for folks who are looking to create additional capital is about creating a side hustle business. Even if you’re a W-2, you can create a side hustle and start getting some income coming in from that. You get some tax efficiency where you can start taking some deductions there and start learning how to run a business creating alternative income streams for yourself. You can then not be so tied to your W-2 job for an income source. That’s a super-hyper speed version of The Holistic Wealth Strategy, the five phases.

That was amazing and unbelievable. Dave, how does someone subscribe to you or get a chance to leverage your brain power? How does someone connect with you on that level? Do you have a program? How does that work?

If folks do want to get a free copy of the eBook, they can go to PantheonInvest.com/Wealth-Strategy. That would be the first place. We’re constantly coming up with ways. I wake up every day trying to figure out how to serve our community, create value for our partners, employees, and investors, and what more education, insights, and things that we can do. We consider ourselves wealth architects. As a wealth architect, it’s understanding our clients where they’re headed and looking at some of these products and solutions to be able to fit what makes sense for them.

There are a lot of syndication coaching programs starting out at $20,000 all the way up to $100,000. For somebody to be part of your network and be able to utilize your brain power, do you have a coaching program that they pay to be able to be part of your network?

We have not launched that. That is on tap for 2023. We’re looking to do a coaching mastermind program, but at the moment, clients have access to us for free.

They can get on a one-on-one.

Maybe you can touch on this a bit. If they’re not paying a mentorship fee, how are you compensated? For example, right now, I learn lots being on this brief call with you, but for someone who is able to have you as a “mentor,” how can they repay that or how are you being compensated?

We provide deal flow. One of the things is creating deal flow for our investors. We try to pride ourselves in finding exclusive opportunities with great operators that have a good track record. We’re bringing those opportunities and then we can build wealth together with our investors. That’s one of the key ways. We also help people with the life insurance policies as we said. We have our license and we’re facilitating that as well. That third leg will be the mastermind coaching. Those are the two primary ways of our business now.

Let us know when that is live. We’d love to promote it, and we’d love to have you back on our show to talk about whole life, because that’s a long topic to discuss. Before we move to the next segment of our show, you’re very involved in the world of investing, not only in real estate but in alternative investments, such as different asset classes. We’re still in an increasing interest rate environment.

Inflation is still high. They’re having a difficult time bringing it down. It is on its way down. Interest rates are high to combat the high inflation, but when interest rates are high, it affects all types of businesses, very much so real estate. What are your predictions for 2023? Do you believe that there are opportunities that are going to be coming up? Do you believe that it’s time to sit on the sidelines to see what happens? Give us your quick prediction for 2023, please.

Again, there’s so much media and noise that’s out there. You have to control what’s coming into your head all the time. As we talked about before, one of the secrets of the ultra-wealthy is looking at things on a long-term view. When you’re investing on a 25-year horizon, you may go through three cycles completely. Investing in fundamentals is key.

 

I feel confident making those types of investments like we talked about. Things like housing where we have a huge shortage, and that’s not going away anytime soon. You have local situations, different markets have all their different things, and you’re going to have different cap rates and environments. What’s a good deal and a bad deal? You have all of those specifics.

August, it’s about having that big strategy that gives you a framework for the long term. You can operate in that, whether the market is going up, down, or sideways. Investing is a very emotionally driven thing. This is in fact why people lose in the stock market all the time. You’ll never win. It’s like going to Vegas. You’ll never win at the table. It’s because people will pull their money out when they get nervous and then they’re going to put their money in on the top end. In a way, private equity and investing in good assets like real estate are going to be here for a long time.

On the development side, they’re investing in something that is going to be around for 10 years plus. There’s going to be years of time of breaking ground before you even have tenants into a place and everything. There’s a lot of analysis and things that goes into that. I would say again, don’t get caught up in the noise, focus on fundamentals, be a long-term investor, and also focus on what you know. This is another thing of ultra high net worth. People are investing in either operating businesses, real estate or certain syndications that they understand or fit as a solution for them in terms of where they’re going on their journey.

Don't get caught up in the noise. Focus on fundamentals, be a long term investor, and focus on what you know. Click To Tweet

Is it fair to summarize that your response is basically market goes up and down and cycles come and go? Your investment thesis needs to be long-term, not to be motivated by what’s in the media or the ups and downs of the market because that continuously happens. We’re continuously going into different cycles.

Correct.

Thank you for that. Thank you for all your wisdom. I did take a screenshot while you were speaking, and I’m going to be posting it on LinkedIn, letting them know I got a crash course in wealth building. I’ll be tagging you shortly here. I appreciate it. Let’s get to the next segment of our show. Let’s get into Dave’s brain, see how things work up there and get his responses to these questions.

I’m looking forward to this. The 10 Championship Round To Financial Freedom. Dave, whatever comes top of mind.

Take your time. You don’t have to rush it.

Do I need another espresso here?

I talk fast but it does not mean you have to talk fast. Here we go. Who is the most influential person in your life?

I would say Dan Sullivan from Strategic Coach.

Who Not How, right?

Yes. He’s my coach.

He’s Canadian, right?

Yes.

We’re reading Who Not How.

I’ll tell you one thing about that book. I mean this. It’s probably one of the only books ever that from the title alone, it could help you change your life.

That’s one concept that they have. I’m going on my sixth year in the Strategic Coach program. It’s phenomenal. There are so many different powerful concepts to that. I would check it out if you’re an entrepreneur looking to scale.

This goes to the next question. What is the number one book you recommend. It can’t be Who Not How. There’s going to be something else.

There’s so many. I’m creating an inventory. We have a library on our website of top books that we’ve read. We’re further building out a whole other library because we believe so much in education. It’s such a tough question. I would have to go back to Kiyosaki and it was Cashflow Quadrant. It was less Rich Dad Poor Dad, but if you remember in Cashflow Quadrant, he shows the employee, the self-employed, the business owner, and the investor. That was my epiphany when I said, “If I’m going to play this game of capitalism, I need to be a business owner and an investor.” That put me on that track in 2000.

Dave, if you had the opportunity to travel back in time, what advice would you give your younger self?

I would’ve given myself this wealth strategy when I was sixteen, even younger, as I’m giving to my kids now.

You would’ve walked up to your younger self and handed him the book that he authored years later.

The real question is, how could we get your strategy into the school system? How amazing would that be?

This is the roadmap because this is only what the top 1% are doing. We’re in such a unique group of people who are privy to this type of stuff. We have an obligation to educate people out there that there’s other ways to bypass Wall Street. Live the life that you want to live.

Quickly touch on one thing. Dave talks about how he had to fire five different CPAs to finally find the right one. We went through tens of very established, cross-border accountants, and most of them were clueless. We experienced this on the cross-border side. We had to go through a lot to realize strategies to save our investors from having to do a lot of US tax filings and other stuff. Let’s keep going.

Dave, I’m excited to hear your answer to this. What’s the best investment you’ve ever made?

The oil and gas investment. Actually, I take that back. The best investment I’ve ever made is in myself.

What’s the worst investment you ever made, and what lessons did you learn from it?

The worst investment I’ve made would be along the same lines of not investing in myself or having a scarcity mindset during certain times in my life with my business or things like that. I learned a tremendous amount which is all about you. Your brain is a like muscle and you can reprogram it to live a life of abundance and intentionality.

Dave speaks my language.

He does. You’ve been hyperfocused on this episode.

Next question, Dave. How much would you need in the bank to retire now? What’s your number?

I don’t have a number because it’s not about the numbers to me. I could retire now if I wanted to. My goal is that my passive income always exceeds my expenses. However, I do not want to be what I call abundant complacency, which is you become stagnant and you don’t have growth in your life. Every 90 days every year, you have to be growing and expanding the things that you want to do. This year, 2023, I talked about my health goal.

 

I want to spend $30,000 on my health. I want to create amazing experiences with my family that topped 2022 so that they’re completely memorable. I’m always expanding what that number is. To highlight how important it is, many of these things don’t require a number. There are things like living healthy. We talked about Florida and changing your environment. That’s completely something within your control. You can change the course of your day and life every year by changing where you live.

I can’t wait to get on a call with Dave and talk about some of these health things.

Could I crack a couple of jokes on your expense?

Go ahead.

Could you spend $30,000 on your hair and makeup, Ava? Is that a possibility? Is that the budget-wise? Is that doable? Could you achieve that?

We’re talking about health.

LeBron James spends over $1 million a year on his body. How much are you worth?

Can I crack a joke on you?

Sure.

I’ve been diving into intermittent fasting and all this stuff. August is like, “Ava, you got to be studying real estate. You got to be doing this.” I’m like, “Excuse me, Mister. It all starts with right here.” Dave made good points. That’s why I was super excited about the show because I knew Dave was going to be awesome. Next question. If you could have dinner with someone dead or alive, who would it be?

I would have dinner with Elon Musk. He’s one of the most brilliant innovators of our time right now. As an entrepreneur, I have no idea how he runs multiple businesses at that scale. That’s pretty amazing. It’s such a deep mind in everything. That’d be my answer.

Maybe he does Who Not How to get it all done.

For sure.

Dave, if you weren’t doing what you’re doing today, what would you be doing now?

I’m doing exactly what I want to be doing. This business is completely aligned with what I want to do. There’s another powerful concept from a Strategic Coach called Unique Ability®. It’s figuring out your co-native wiring, which is the instinctual wiring of your brain. What comes naturally to you may not necessarily come naturally to someone else. I built this business around my unique ability. I love to spend time getting deep relationships with our clients.

I love creating value, solving hard problems, and being creative. This business is built around me. I practice every day with the things that are important to me, like my health, my family, and my relationships. I’m completely living the life that I want to live and then it keeps expanding every 90 days until I can think of that next idea to push me to the next level.

That’s what they talk about in Who Not How. They talk about focusing on your unique ability and everything else. You get your who’s. Is that correct?

Your audience will enjoy this. Here’s a little exercise from Dan Sullivan. You draw a circle and right inside the circle, everything that you think is fascinating and motivating to you during the course of your day or whatever you do, and then draw a bigger circle around that circle and put in all those other things. The idea is to get rid of all of those other things and be focusing on the things that are fascinating and motivating to you.

Get rid of all those other things and focus on the fascinating things motivating you. Click To Tweet

Can I get August to do all the other things?

I would be a spear fisherman. I would not be in real estate private equity. I’d be in water, spearing fish and then barbecuing it by the side of a beach.

You can do that at night when you come to Florida.

That’s his dream. You could go with him. That’s cool. Thank you for sharing that. Dave, book smarts or street smarts?

Street smarts.

Do you want to say anything else about that?

I am not a school guy. If you’re an entrepreneur, you’re naturally wired to be going against the grain and challenging the norm. I did not like going to school where everything was in a structured testing and everything. It doesn’t make sense because in the business world, it’s all about productivity hacks and working with a team. I’m building a team with people who fill in the things that I don’t want to do or I’m not good at doing. I get them to do that, but in school, you need to do everything. They teach you that. They teach you to work on your weaknesses. In the business world, it’s all about doubling down on your strengths.

In the business world, it's all about productivity hacks and working with a team. Click To Tweet

Last question, Dave. If you had $1 million in cash and you had to make one investment now, what would it be?

That’s easy because I would put it in my life insurance policy because it’s going to then grow completely tax-free. I can now be my own bank and borrow against it to pay for my kids’ college and invest in that next deal. By the way, it’s going to create a tax-free income stream for me in later years and I’m going to give it to my kids completely tax-free. That would be hands down.

Everybody is probably like, “What is he talking about?” We’re going to get him back on the show and we’re going to talk about that guys, because I personally think it’s exciting. I’m excited about that. Dave, what’s the best way people can reach you?

The best place is PantheonInvest.com/Wealth-Strategy. You can get a free copy of our eBook. Also, check out our podcast, Wealth Strategy Secrets. I know you guys are going to be an upcoming guest, so I’m looking forward to that as well. Hit me up on linkedin or anywhere. I love to chat and get to know people. If I can add value, then that’s awesome.

Thanks again, Dave, for sharing.

Thank you. I appreciate it.