Episode Transcript
[00:00:00] Speaker A: Welcome to create wealth through franchising. I'm your host, Kim Daley.
Whether you're a CEO, a military vet, a real estate investor, or simply in career transition and ready to take ownership of your future, with each episode you're going to learn valuable insights and hear inspiring stories from within the franchise industry.
On that note, my guest stories are their own. And as a franchise consultant, I do not make personal brand endorsements or earnings claims, but I do educate, motivate, and inspire dreams.
Now onto the show.
Welcome back to the mini series American wealth strategies on Kim Daily TV. I am your host, Kim Daley, and in my studio today, this is such a great honor. Doctor Joffrey is in the house today, so I'm going to have him start by telling us a little bit about who he is, what he's done, and then we're going to talk about advice for this alternative investing world. So, Buck, go ahead and please introduce yourself to my listeners.
[00:01:12] Speaker B: Yeah, well, Buck is fine. You don't have to call me doctor or whatever, but, um, so, yeah, so I am a former, well, I am a surgeon still, but I am a former a student and a guy who basically went through the system the way youre supposed to if youre an A student and went to Fante college and went to medical school and started out as a neurosurgical resident. And ultimately mostly because the hours ended up in cosmetic surgery, I switched to plastics later on. But the bigger issue for me was realizing that at some point that I was just going through the motions, that what youre supposed to do is a good student. Right. The whole industrial revolution sort of programmed us to go through these twelve grades and plop, give you information, plop, give you information. And then if youre a good product, you get sent out to the next factory. Otherwise you just get sent out on the road. So I was sent out to another factory. Another factory. And after 30 some years of training and education, I finished my surgical training and accidentally I got married. Now I'm divorced, by the way. So I got married like the week after training ended, found a Robert Kiyosaki book at a mexican airport during my honeymoon. And I had no idea who Robert was. I had no idea what cash flow or anything outside of w two stuff and higher education and academics was. But I read his book and something just like just went off in my head. And the next thing you know, I became an entrepreneur. And it really wasn't a real moment for me. I've never really had anything like that where all of a sudden I really shifted from one person to another. So then I had all this training, and in cosmetics I decided, well, what I'm going to do is, well, instead of trying to start a practice like everybody else, I'm going to start a business. And when I say that, what I mean is I still was doing cosmetic surgery, but I was going to run it like a business.
Basically took a lot of the principles of some of the major companies out there that are conglomerates, like some hair clubs and things like that, and use some of their marketing techniques and everything like that, and started something in the liposuction world and that built that to a pretty good machine there, and then started another business again. All the while, I keep calling this a business because I would never put myself out there front and center. It was always about brands. It was always about creating these businesses that could theoretically function without me. So the next thing you know, I started making a lot of money. Usually when people think about Kiyosaki, they think real estate right away. For me, it was all about entrepreneurship and freedom and all this stuff, right? I started buying real estate mostly cause I come from a real estate family. My dad is 85, he's still buying real estate. And I started doing that, and before you know it, the kiosk stuff really started getting in my head. I started a podcast because I wanted to learn more. And there wasn't podcasts that was offering me what I wanted as a high paid professional or whatever you want to call me, high paid business person. I wanted to know what to do next. And none of the podcasts seemed to be giving me the real secrets of the wealthy that I wanted. And so I was trying to figure those things out and pass them on. That podcast sort of took a life in its own wealth formula. Podcast started about a decade ago, right? So in podcast history, thats like ancient and started a major investor group almost by accident. And that investor group with about 3000 people in it as a group, have acquired probably about $2 billion of assets.
So thats what I do right now, essentially, I'm a fund manager, I'm a real estate guy, I'm a syndicator, and I podcast, and I have a new podcast about longevity because I gotta live longer if I'm gonna try to enjoy this stuff.
[00:05:10] Speaker A: So I love it. And I love how you started a podcast because you were looking for information, and what better way to learn it than to bring people onto your show and learn from them? I mean, that's basically what we're doing here on american wealth strategies. By the way, I love that story. And so do you practice as a medical doctor at all anymore? And if not, how many years has it been?
[00:05:32] Speaker B: No, I haven't practiced in eight years. I've thought about going back to do some stuff just for fun, not in surgery, but just because I'm in this whole longevity space. I've gotten super interested in it. So I've thought about maybe doing some coaching just for fun, but definitely not anything that I would consider, you know, like a real business where it's going to take a lot of my time and pull me away from other things.
[00:05:56] Speaker A: A lot of the people listening that story is like, it's their story. They did all the right things. I did all the right things. And then you wake up one day and you're like, I mean, I make a lot of money, but I'm trading my time for money. So how do I ever escape all of this? That's when people turn to me and start thinking about a franchise. But I want to take the conversation to the next place. So now they start building cash flow in their business. Now what do they do? The same question you started asking. So when you started asking the question and interviewing people on your show, what kind of answers were you finding? Like, I guess you found real estate, syndication, but there's so many options out there. How do you vet them?
[00:06:39] Speaker B: First and foremost, I think that, like, early on, listen, this is like, you know, it's been over a decade now, and so I know a lot more than I did a decade ago. And so it's not like I didn't make mistakes. You know, I go back and I look and I cringe at some of the things that I had on my podcast early on, because, again, my goal in those podcasts, Kim, was basically just to expose people to stuff. Yeah, I was getting exposed to myself. But I think the problem with that is, as you probably know, this whole podcast ecosystem is full of charlatans as well. So you have to be very careful. I accidentally interviewed people on there, went on to do some bad things, and so now I generally have a policy on my show, like, where I will not interview anybody raising capital unless I know them personally and that I have a personal relationship with them. Back then, it was like, oh, gosh, you can make money doing this. Oh, that sounds fun. Let's talk to them. You can get involved with that. And what I didn't realize as a podcaster was that once you have that platform as a podcast, people will look at you as somebody of an authority and so you have a tremendous responsibility to try your best to shield people from things that are not legitimate. And so I think the first couple years of this show, I didn't do that as much. But then as we get older and you have things that go south. And by the way, a lot of these things, they were not things that I was promoting. They were purely informational. So, for example, somebody got involved, like some oil and gas stuff that I had them on the show and stuff like that, and that thing went totally south. And I wasn't being a financial benefactor from any of that. But a lot of people kind of felt like, why'd you have them on the show? Well, I was telling you the benefits of oil and gas. On the other hand, you can't take that responsibility out of your own hands. If you're going to have Bibal on, you have to know that something could go south, and that's a big responsibility. So now, if you listen to my show, largely ends up being a macroeconomic show, then we talk a lot about strategy and tax mitigation, asset protection, state planning, all these things and so on, and less about sort of what the next thing you could potentially invest in.
[00:08:55] Speaker A: I completely understand that because people look at me as the franchise consultant with the same type of like, well, if you're bringing it to me, Kim, then it must be a great franchise. Well, yeah, at that moment that I'm bringing it to you, it's as vetted as I know it can be. Right. But you're not investing for where it is today. You're investing for where it's going. And so where it's going. I have zero control over that. Right. So everything is always sort of like at your own risk. We can only make our best assumptions, but I totally understand that sense of responsibility, and we try to do the right thing by people, but it doesn't always work out that way. And in my experience in the alternative investing world, I mean, look, I didn't know what I didn't know either in the beginning. And I took advice from some really wealthy people that I knew, and I thought, well, if they're putting their money in it, I'll put my money in it. Well, I have since learned that, you know, they have a lot more money to lose than Kim Daley does. I'm in a scenario right now. So I have two different real estate syndications, and I'm very curious what you're going to say about this. So I have one that in the climate we're in right now, has stopped paying dividends. And I have another that continues to pay very, very nice dividends. Like, okay, so how do you get more that just continue to pay dividends? I didn't know what I didn't know. I think I understand now, but how obvious is it to you what one did and what one didn't do?
[00:10:17] Speaker B: Well, I think part of it is like you have to look at the business models, right? Let me just give you an example, okay? If you invested in a big value add type project, which is very common, I mean, that's really where people make a lot of money. We talk about investors doubling their money in a couple of years and all that kind of thing. Its usually because of value add. Its usually because what youre doing is youre basically taking apartment complexes and flipping them. What youre doing is youre driving up net operating income and then you are getting a multiple of that just like you would in franchises because these things are heavily levered, you end up making a lot of money. Okay, so we just went through one of the most dramatic increases in interest rates in the history of the country. In fact, I think the slope of it is the most dramatic absolute numbers. Maybe you go back to the eighties, but the slope of that increase in interest rates, there's been nothing like it ever, right? You meant from almost 500 basis points up within a year. I mean, it's insane to those value add business models where you were just going to create value and then flip it, those were the ones that got in trouble with that. And the reason is that when you do that kind of model, you don't usually use a fixed rate. And people wonder why you don't use fixed rates. I mean, if you're at near zero interest rates, why in the world would you not do fixed rates? It's a very good question. But the reason is that when you have a 50, 60, $70 million loan and it's going through Fannie or Freddie, they're essentially sold off as bonds, right? And they have these huge prepayment penalties. And so what ends up happening is if you take a five or ten year loan and you want to sell in two or three years, the huge payment penalty effectively is going to knock out your return. So the long story short of it is if you were in a value add proposition, you probably are in a situation right now where there's no money to distribute right now because the interest rates went up so high, you're probably being protected by cap rate insurance, which is essentially limits how high that insurance can go. But there's no money to distribute. Hopefully I'm not getting too in the weeds here.
[00:12:40] Speaker A: No, no, it definitely makes sense. It's exactly the right. Well, you know, most SBA loans for franchises are also a variable rate loan. Right, right. And people always think, I want to get in when it's at the lowest. And I mean, I have a video on my YouTube channel. I'm like, I think you want when that's at the highest. Cause if you can build your business model with that high variable rate, right, and then it comes down, you're just going to be that much more in the money.
[00:13:03] Speaker B: You're 100% right about that. And then the other side of this is you're saying that there was other ones where you're still getting dividends. Well, if you were fixed in, you got a fixed rate at like 3% or something like that, and nothing has changed materially. And except for inflation making your rents go higher, guess what? You're in great shape. Right? So that's what's happening there. So you're basically picking different kinds of business models that are going to result in different types of outcomes. To your point, there is a very interesting phenomena right now where. And I'm sure that this is relevant to business, too. You know, Warren Buffett always talks about how you should be greedy when others are fearful and fearful when others are greedy. And right now, we are at a very high interest rate environment, and it almost certainly is going to come down. I could get into the weeds on that if you want to, but I could almost guarantee you that these rates are going to come down by the fourth quarter. And in that descending rate environment, is the absolute best time to own something that you've already fixed in at a higher rate. Because as those rates come down, those asset values go up, right? So if you think about it, you should be trying to buy things that can cash flow at these interest rates right now. Because if you believe interest rates are going to go down, the asset values themselves are going to explode.
[00:14:32] Speaker A: Hey, daily Coach fans, if you're loving this episode, please do me a quick favor and leave me a five star rating and a short review. Your feedback fuels my growth and rankings and shows others that this podcast is valuable. Now back to the show.
You heard it here, people on american wealth strategies.
[00:14:54] Speaker B: Just a little thing that might be of interest to some of your people is that you look at CPI.
Like the inflation index, right? Like 60 or 70% of CPI involves a lagging indicator of rent increases. So as of like, you know, a month ago, they were using rent increases of six or 7% in CPI.
You know what rent increases nationally are right now? They're flat or negative and they're about six months behind. So do the numbers on that. CPI is probably well below two in, in reality. And so when that happens, the election happens, it's overdeveloped. I think CPI is going to plummet and rates are going to go way down.
[00:15:41] Speaker A: It's not advice though, everybody.
[00:15:43] Speaker B: It's not advice.
[00:15:44] Speaker A: Not advice. It's just a conversation.
[00:15:47] Speaker B: But mark my word.
[00:15:51] Speaker A: Okay, so in your mastermind, you bring a lot of different ideas to the table, right? I have different ideas. For example, like mobile home parks, self storage, ATM franchises. Do you have a particular niche that you like, a beginner investor that you think is just easier to learn and you can make fewer mistakes or they all have pros and cons, Jeff.
[00:16:16] Speaker B: I mean, honestly, the more I get into different types of things, for me personally, I think real estate generally tends to be the one that I come back to.
The nice thing is a YDE limited partner, meaning like if you're participating in syndications, is that you can invest a minimum amount of money, right? I mean, you can get exposure to a 50, $60 million asset by just investing like 50 grand or something like that. So to me, those are some of the, especially in the environment that we're in, if you have opportunities that cash flow at a higher interest rates, then it's worthwhile to consider dipping your toes in at the beginning. And obviously, there are some, you know, tax implications and that kind of thing that are really useful in real estate that are probably way beyond the scope of what we have time for. But I think that's probably continues, in my opinion, to be the best thing to focus on as the core. And again, I'm biased. I'm probably, again, my personal portfolio is probably 80%, you know, real estate, and.
[00:17:21] Speaker A: I'm biased toward business. Right. I mentioned to you, Buck, I started a business with my kids. You knew that gentleman that I paid as a consultant to help us build this Amazon business. And even within the business investment, I've learned I don't really like this business. Right? Like, my kids love it because they don't have to talk to anybody. I hate it because it's all data. I'm like, I want to talk to people. I don't care about the data, right. But my teenage boys are like, oh, I don't have to talk to anybody. You know, we can email Alibaba and like do this, you know, like all online. So even within, you know, business, there are different categories that appeal to different personalities, and it's been a really eye opening experience because I always thought, like, I've run multiple businesses and I always thought, oh, I love every business. No, I don't. Not anymore. Right. So going to real estate, do you think that for somebody getting involved, does time decide, like, the time factor, whether you go in and you start buying properties and renting them or short term rentals for Airbnb or real estate syndication? How does somebody decide among the various options within real estate?
[00:18:26] Speaker B: So, okay, so first I should make a distinction that I think is important, right? Like, so I'm a business person like you as well, and so, you know, I have multiple businesses. And so I think of businesses as the fuel. And, you know, when you're creating the wealth, and then ultimately I think of real estate as where it's all incubating and growing. Right. So I. I don't necessarily think of them in the same category. I don't think of real estate for the most part as a, you know, it's not gonna light up your bank account with returns, you know, from day one. It's just not going to. It's a slow cooking type of thing where, no, you get dividends, but at some point, you know, hopefully you get a big pop. It's a very different thing from a business. Right. From a business standpoint, I still think of businesses as, like, it's the fuel that it's what's driving cash flow. It's like, allows you to invest in things and so on. I should make that distinction now in terms of, you know, what do you do?
[00:19:30] Speaker A: Thank you. Yeah, come to me first. Yeah, well, build the cash flowing returns. That's the heart of the alternative investing portfolio. Reduce the extra cash, and then we have a problem of where do we invest?
[00:19:43] Speaker B: You got to make money to invest it. I think real estate is fantastic if you're talking about growth. Right. But even if you're doubling, like, you know, in all practical matters, you know, a good return in real estate, we're looking with our investors, might be doubling our money in maybe four years or something like that. You know, that would be a great return. Right. But as a business, that would be terrible return. I'm not a franchise person, but I'm a startup guy, right. If I double my money in four years, that would be horrendous business for me. I'd be wondering why in the world I was doing it, right. So it's a totally different animal, and.
[00:20:23] Speaker A: I wish I could comment to that. But I can't.
[00:20:25] Speaker B: You can't comment.
I know, but I'm not a franchise guy. I've never done franchises is what I mean when I say I'm not a franchise guy. But I've started businesses and I would not consider that a success. But in real estate I would consider a success because I'm not doing whole lot there. I have teams, I have people who I'm relying on to grow my money there, right. Asset managers and so on and so forth.
[00:20:51] Speaker A: So if somebody's interested in getting into your, you know, community, where do they go and what should they expect? Do you have training? Tell us a little bit about what you do.
[00:21:02] Speaker B: Well, a couple of things actually. There is a course that I used to sell. I don't sell it anymore. I made my money back on creating it and I just make it for free. Now it's at wealthformularoadmap.com dot. And it's basically the nuts and bolts of personal finance for a high paid professional. So it's probably more than you possibly could want in terms of personal finance stuff. It's got guys like Tom Wheelwright on tax mitigation. Kenny McElroy talks about syndications, but then you also have hours and hours on asset protection and estate planning and various insurance topics. Things that are like just, you gotta know. I mean it's not even about investing. It's just about being competent in financial literacy. So anybody can go to wealthformula roadmap.com and just download that course. I have a group that right now is closed because we just got too many people in. That's a private group that used to feed into that which would buy weekly calls and stuff, but that's closed. But I mean obviously the podcast is probably the best resource and that's wealth formula podcast.
I mean it's really geared, again for the high paid professional, right. I mean it's for somebody who's making multiple six figures and trying to figure out what to do. One last thing I will mention though, you said where to start up. So it made me think. A friend of mine, I paid a physician who hes probably not even 40 yet, but hes making 6700 grand a year. And he asked me the same question like where do you start with investment if I want to do real estate? And its funny because hes not married or anything. Just as a little pro tip I might suggest is theres a tremendous loophole in the whole short term rental space right now that people should really consider looking at. And if they qualify for it. It basically allows for you to take advantage of some of the major tax advantages of real estate that you ordinarily cannot do if you were a w two investor. So you may want to look into.
[00:23:12] Speaker A: That interesting little tip.
[00:23:14] Speaker B: Yeah. Yeah. Actually a really big tip. Because I think at that phase in somebody's life where they're making hundreds of thousands of dollars and they don't have any investments, the best thing they can do is pay less taxes.
[00:23:25] Speaker A: Yes, sir.
Yes, you can.
And for those who don't know, Tom Wheelwright, he is the accountant CPA to Robert Kiyosaki, correct?
[00:23:36] Speaker B: Yep. Yep.
[00:23:37] Speaker A: I've heard him on your show multiple times, so I love it. So wealth formula roadmap.com and the podcast wealth formula podcast. I hope everybody listening will go check it out because this man gives lots of great information. I listen to your podcast every single week. Buck, thank you so much for honoring me and being my special guest here today on Kim Daily TV.
[00:24:02] Speaker B: Thanks, Kim.
[00:24:03] Speaker A: You're amazing. For those who are ready to begin your journey to find that perfect cash flowing asset called a franchise business, well, you know that I want to be your franchise consultant and your daily coach. Please contact me right now. And until next time, my name is Kim Daley and I want to be your daily coach.
You can find more content just like this on my YouTube channel at Kimdaily TV. And if you're inspired to take the next step to explore franchises matched to you, please email me right now at enquireimDaily TV. That's enquiremdaily TV.
