Nowadays, even though tech startups usually start locally, they succeed globally. Your small tech project likely has more in common with a multinational corporation than with a traditional geographically-bound business of the same size. In a way, your startup would have to think multi-culturally right from the start.

While this has strategic implications, in this article we’ll discuss the strengths of a couple of business cultures around the world that founders can draw inspiration from.

1. Silicon Valley’s Acceptance Of Failure

We have to start at the birthplace of modern Startup Culture. Silicon Valley, California, USA, has become synonymous with innovation and entrepreneurship.

If you have to nail down one major difference in the entrepreneurial culture in Silicon Valley compared to the rest of the world, it’s in the mindset that failing is OK. This unique social validation is what gives entrepreneurs the needed courage to try over and over again until they find a path forward without fear of being punished socially for failing.

As a founder of an innovative project, you are very likely to fail. And that’s totally fine. It is part of the process.

Internalize this mindset, and you’ll have the necessary persistence and resilience to find success eventually.

2. Japanese Kaizen: Continuous Improvement

“Kaizen” is a philosophy of continuous improvement. Japanese businesses prioritize incremental progress and iterative refinement, which can be immensely beneficial to startups. Remember that due to limited resources and time constraints, you’ll often have to launch imperfect products, which means that you’ll have to continuously improve on the go in order to grow.

Incorporating Kaizen into startup culture means emphasizing the importance of learning from mistakes, regularly assessing processes, and seeking small but impactful optimizations. Cultivating a mindset of gradual enhancement would help you find product-market fit faster while at the same time allowing you to reach with time the high product quality needed to move your business into its more mature stages.

3. German Engineering and Precision

Germany is renowned for its engineering prowess and meticulous attention to detail. The German business culture values precision, reliability, and quality.

In the context of startups, this often means restraining yourself from trying to do too much with the little resources you have in order to guarantee that you’ll have the needed resources to do what matters up to a very high standard.

Even if you can’t afford to offer a lot, it’s great if the little you are offering is of exceptional quality (and value).

4. Israeli Chutzpah: Boldness and Audacity

Israel’s startup ecosystem is renowned for its chutzpah—a Yiddish term referring to audacity and boldness.

If your project is innovative in any way, then by definition you need to be willing to challenge the status quo. Moreover, considering the risk of failure, innovation is only rational if the upside potential is large enough. This means that you need to dare to be ambitious.

In a way, failure is equally painful regardless of the level of your ambition.

5. Scandinavian Work-Life Balance

The Nordic countries, particularly Sweden and Denmark, are celebrated for their emphasis on work-life balance. While this is often not possible to achieve as an entrepreneur (and especially as a startup founder), it is crucial not to forget its importance.

If you fail to preserve your mental health while working on your project, then success would be very hard to find. Moreover, by building a community around your project, you need to be mindful of the well-being of all your important stakeholders, otherwise, you’ll face negative consequences in the long run.

At the end of July, the National Association of Realtors (NAR) had nearly 1.6 million members, which works out to about 2.4 Realtors for every home actively for sale. A report from the Consumer Federation of America (CFA) notes the surfeit of agents is costing the industry, harming consumers, and reinforcing high commission rates. 

Lenient licensing requirements and high real estate agent turnover mean many of these agents are inexperienced and underqualified. Of those who are competent, even fewer have the knowledge and experience to serve real estate investors. 

Demand for homes surged during the pandemic, which made real estate look like an attractive career opportunity. Layoffs in other industries left job seekers looking for new career options, and many of these people needed more flexible work arrangements. 

And the path to getting a real estate license is quick and easy in most states relative to other professions. According to the National Association of Realtors, more than 156,000 people became real estate agents in 2020 and 2021, a 60% increase from the prior two years. 

Of course, many of those real estate agents won’t last in the field. “Being successful in real estate is a hustle, and most people drop out after two years because of how difficult it can be to build a sustainable business,” says Kristina Morales, a Realtor with over 20 years of experience in multiple markets. “This alone naturally reduces the number of Realtors, but they are quickly replaced with new ones since the barrier to entry is so low.” 

The NAR views the turnover as a healthy consequence of competition. But while the industry may naturally spit out the real estate agents who aren’t cut out for the job, it doesn’t necessarily happen before these agents have provided homebuyers with guidance on what may be the most significant purchase of their lives. 

The Draw of the Real Estate Profession

Reality TV shows make the real estate industry look glamorous, says Martha Gaffney, a licensed real estate broker and strategic real estate advisor at Real Estate Bees. “Even before reality TV shows, many came into the business looking for a quick buck,” she adds.

After all, buyers and sellers agents each receive 2.5% to 3% commission in most areas, and the median sale price for a home in the U.S. is $416,100, according to the Federal Reserve. That said, many agents don’t realize how much effort they’ll need to put in to get clients or that they’ll pay about half their earnings to their brokerage firm. 

So, how do you become a real estate agent in the first place? In many states, you only need to complete a few weeks of coursework and pass a multiple-choice test. The cost for online training can be less than $100. 

For example, in Massachusetts, becoming a real estate agent only requires 40 hours of education and passing a licensure exam. In the same state, you need 1,000 hours of training to become a licensed barber. To be a certified general appraiser, you need at least 300 hours of education plus 3,000 hours of experience. You also need a bachelor’s degree. 

“I definitely think the requirements for becoming a real estate agent are too loose,” says Morales. “These loose requirements saturate the market with Realtors, and that saturation dilutes the Realtor’s value.”

A 2015 report from the NAR drew the same conclusion, saying: “The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry.”

Of course, there are benefits to the current path to licensure. “I’ve seen many instances where the low barrier of entry has allowed someone to enter and create a very successful career for themselves, where other opportunities would typically not be available,” says Andrew McGranaghan, chief development officer at Wallace Real Estate, the largest independent brokerage in East Tennessee. “It’s the American dream, where hard work and dedication can lead to a very successful business, where a college degree isn’t necessary.”

Tightening requirements could create unnecessary roadblocks for marginalized communities and further decrease their representation in the industry, Business Insider reports. But on the flip side, there are problems with keeping real estate licensure easily accessible. 

“The low barrier of entry attracts many who choose to dabble in real estate rather than make a career of it,” says McGranaghan. “They hold their license for personal use or as a part-time side job and never fully commit to learning and studying the craft.” There’s a delicate balance to be achieved when considering stricter licensing requirements, McGranaghan notes. 

High Turnover in the Industry

“Turnover is very high in real estate. It’s estimated that 87% of Realtors leave the business within their first five years,” says McGranaghan. That creates challenges for brokerages that want to invest time and money in training their agents. As a result, he says, “200-agent offices with one broker are becoming more of the norm.” 

Wallace Real Estate aims to beat the trend by focusing on training and supporting new agents. But it’s up to the consumer to seek out brokerages with that ethos. 

Morales says homebuyers and investors shouldn’t necessarily avoid working with new agents, but they should request that the agent partner with a more experienced team member. However, not all homebuyers have the knowledge or experience to recognize that working with a new agent could be a problem. 

“The risk of working with an inexperienced agent is that a consumer may leave money on the table—whether that is from paying too much for a home or not receiving the property value for the home you sell,” says Morales. “In addition, there is litigation risk if an agent does not know how to properly structure a deal or provide the required disclosures/documentation.”

For the NAR and for many brokerages, turnover and the continued overabundance of agents may mean more profit since agents who want to use the “Realtor” designation must pay membership dues to the NAR, and new agents often bring new clients, which leads to extra commission for the brokerage. However, Gaffney says, “The turnover just doesn’t help the consumer.” 

In other industries, competition might drive players to lower their prices to stay in business. But commissions for real estate are generally fixed, with the agent’s level of experience and effort having no bearing on what they are paid. 

High turnover only means a glut of inexperienced agents who may not provide the best guidance. And the lack of sufficient business per agent requires agents to charge high commission rates relative to some other countries, the CFA notes. 

Are Changes to the Industry Needed?

Potential solutions to the problem include stricter education requirements, a comprehensive supervisory period to give real estate agents real-world experience before licensure, and a change to the commission structure. But McGranaghan believes it’s up to the consumer to research brokerages and vet agents. 

Gaffney says that reduced commissions for inexperienced agents may help agents view real estate as a “long-haul career.” But Morales disagrees, saying, “They should be entitled to the same pay, as they are likely working just as hard to get a deal.” Additionally, some real estate agents who are new to the industry are just as successful and knowledgeable as those who have been doing the job for years. 

Still, each expert agrees that more robust education requirements could help the industry and consumers. Morales says she works to reverse customers’ perceptions about real estate agents because the level of education they require doesn’t garner respect. But, maintaining access to the career path for ambitious self-starters also should be considered. 

Additional requirements to maintain real estate licensure might also increase the number of qualified agents. “States should have in place a requirement that Realtors must do a certain number of transactions in order to maintain/renew their licenses,” Morales suggests. 

How to Find an Investor-Friendly Agent

The oversupply of inexperienced real estate agents creates challenges for investors trying to find an investor-friendly agent. Gaffney says relying on referrals from your network can be a great start. Investors can also use the BiggerPockets Agent Match tool to find what they need.

When interviewing agents, Morales says to ask about:

• Experience: Ask the agent if they currently work with investors and how many transactions they do per year. If that number is low, ask if they have a mentor or are willing to team up with a more experienced agent. Morales also says to ask, “How well do you know the area that I am looking to purchase in?”
• Availability: If you need the flexibility to see properties on nights and weekends, ensure the real estate agent is available.
• Relationships: Ask if the real estate agent has preferred contractors for renovations or repairs, and whether they work with an investor-friendly lender, title company, and home inspector.
• Willingness: Since you may write low offers unlikely to be accepted in the current environment, assess the real estate agent’s willingness to put time into finding the right property. Morales says to ask, “Are you willing to write 50 offers before one gets accepted?”

The Bottom Line

We don’t need 2.4 Realtors for every home on the market, and the glut of agents creates problems for everyone involved. New agents often don’t earn enough to make ends meet, while experienced agents lose commission, and the industry takes a reputational beating. 

Homebuyers and investors must work to vet real estate agents, and those who aren’t aware of the wide knowledge gap between new and seasoned agents may be led astray by bad advice, causing them to lose money or even face legal repercussions. Changes to licensing requirements may be in order, but in the meantime, individual investors need to work hard to screen for the best agents.

Find an Agent in Minutes

Match with an investor-friendly agent who can help you find, analyze, and close your next deal.

Mr. Cooper Group CEO Jay Bray joins ‘The Exchange’ to discuss hedging rising rates with investment in mortgage servicing, developing a competitive auction market for real estate, and the home supply imbalance keeping prices elevated.

Become an entrepreneur, they said. It’ll be fun. But when you’ve just worked another 100-hour week, you haven’t seen your friends for months, your skin is turning gray and your physique is going pear-shaped, you might be wondering what all the fuss is about. You dreamed of a life on your terms and time spent exploring. You pictured sunshine, beaches and cocktails with umbrellas in them, while your team diligently looked after operations on your behalf.

If you’re running a company that feels like it’s running you, make a change. Draw a line under where you are right now and begin a new chapter. Commit to finding a new way forward that involves you enjoying the results of your insanely hard work. Use ChatGPT to transform your entrepreneur lifestyle with these five simple yet powerful prompts.

How to use ChatGPT for lifestyle design

Establish your lifestyle goals

If you don’t know where you want to go, you won’t find the route that will take you there. All roads lead to nowhere without a clear plan. You’ve probably set goals for your business. You know where you want to be in terms of revenue, profit and headcount, you’re fairly sure which inputs create outputs and your three-year plan is solid. But what about your life?

Don’t let how you spend your non-work time be left to chance. Plan it with the intention you apply to your business. Create some extracurricular goals with the help of ChatGPT and this prompt. Paste it in and edit the square brackets with your information.

“My business goals are clear but my lifestyle goals are not. Adopt the role of a lifestyle consultant, tasked with making sure I live my best life as an entrepreneur. Use the following information to create a set of lifestyle goals that I should aim to achieve within the next [number] years. When I’m not working I like to [describe what you like to do] with [people you like to spend time with]. Ideally I spend [number] hours per week not working, but involved in activities that [describe the ideal outcome of these activities]. What should my goals be and therefore my plan of action for achieving them?”

Figure out what to subtract

The secret to success for more entrepreneurs? Do half as many things, twice as well. The problem is that hardly any follow this rule. Most business owners cram far too much into their already-busy week, and leave no time for thinking time, mastery, or anything other than work.

If you’re busy with so many things you don’t have space to breathe, use this prompt to work out what to cut. ChatGPT will be the ruthless editor you need in your life. It doesn’t care about hurting your feelings, but it may share some truths you probably should heed.

Here’s the prompt for the subtraction tips: “I can only achieve my lifestyle goals if I subtract nonessential items from my week right now. Otherwise I won’t have the time. You are tasked with ruthlessly cutting things out of my schedule that don’t need to be in there. Given that my business goals are to [describe your business goals in a simple way], look at my weekly schedule and suggest things I can cut out. For each suggestion, explain how much time it would save and the effect of cutting it out: [Include your weekly schedule split by hour].”

Identify what you can delegate

A weakness of many entrepreneurs is not delegating enough. Whether a symptom of ego, fear or scarcity, this problem prevents them from achieving more and limits the amount of downtime left at the end of the work, mainly because the work can never end.

Don’t fall into this trap. Ask for ChatGPT’s help in figuring out which tasks other people could do. Ignore that inner voice telling you not to trust anyone else. Move aside the feeling that it will never work. Get your plan from ChatGPT and run experiments to free up your time.

“Within my task list there are things that other people could potentially do. Given that my specific skills are in [describe your specific skills] but I want to free up [number] hours of time to focus on my lifestyle, which elements of my task list do you suggest I delegate? For each item, suggest who I could delegate it to, and the steps I should take to ensure it’s a success. Within my team I currently have, [describe your team structure and individuals] and my task list is [copy and paste your task list].”

Create better processes

Your processes should run by default and break occasionally, not the other way around. But if you find yourself putting out fires and dealing with everything case-by-case, your processes need work.

Get ChatGPT’s help in devising a blueprint for what happens in your company. Find the most optimal way to do every task and document the standard for everyone to follow. Ask for suggestions for improvements and implement them, for fewer headaches all round.

“If I had better processes within my business I could free up more time. Knowing my business of [describe your business] and the tasks I am responsible for [outline these tasks and processes], suggest where I should create or modify my existing processes to do more work more efficiently. For each change, suggest an action plan and include what difference it could make.”

Uncover your limiting beliefs

Holding a limiting belief means you have subconsciously assigned something a meaning, which may not be useful or true. By their very nature, limiting beliefs restrict progress. They stem from our childhood, current environment or other people’s ideas for who we are and what we should do.

If you’re not letting yourself enjoy your life, you might be holding limiting beliefs about what your role should entail and how you should spend your time. Break free of unhelpful definitions to reach new heights with your entrepreneur journey.

“I want to improve my lifestyle as an entrepreneur but something is holding me back. Can you play the role of a compassionate and intelligent psychologist and figure out what it is? I don’t know for sure, but I think I’m afraid of [describe your fears in spending more time on your lifestyle]. I’m worried that [elaborate on any worries] if I do [outline an action you could take that might have undesirable consequences]. Use this information to uncover any limiting beliefs I hold and suggest how I could reframe this situation.”

ChatGPT prompts for a better life as an entrepreneur

You weren’t put on this planet to work non stop until you die. You can achieve everything you want to achieve even if you enjoy yourself. Use these five ChatGPT prompts to call out unhelpful behaviour and see what changes you can make. Establish your lifestyle goals and subtract any nonessential work tasks, figure out what you can delegate, create better processes for you and your team, and work through unconscious belief patterns that are holding you back. Transform your entrepreneur life starting right now.

I believe that in order to actually quit your job and retire early, you will need to make some radical, suboptimal, and tax-inefficient decisions regarding your portfolio.

Please bear with me, as I am still working through this theory (and likely will continue to work through it for the next few decades). I’m only 60% sure of this point. But that’s far enough along for me to publish it and get your feedback.

Here’s my argument: In the course of my career, I’ve talked to dozens (Hundreds? Nearing a thousand?) of individuals who are at, near, or well past the point of financial freedom.

All these people—every one of them—have made choices that are different from what a typical financial planner would advise. All of them have some gaping tax inefficiency in their portfolios. And all of them have some “ace in the hole” on top of the traditional 4% rule portfolio that is the holy grail in the finance community. 

Finally, they all built portfolios that were way overkill for financial freedom. And nearly all of them made decisions that would make the typical financial planner cringe.

The ‘Typical’ Portfolio of Legitimately Financially Free Individuals

The exception that proves the rule I’m about to call out is Tim and Amy Rutherford. They are the closest, near-perfect example of a prototypical FIRE (financial independence, retire early) investment portfolio of a couple that actually earns no side income, is “retired,” and is living the travel/FIRE lifestyle that many seem to be chasing. 

The Rutherfords truly retired in their 40s on a stock/bond portfolio, a cash cushion, and little else in the way of financial assets. However, even they retired on a substantially larger portfolio than what would be called for by the 4% rule.  

If this is the closest to “perfect” in the context of a traditional FIRE portfolio, everyone else who is financially free either continues to work, or, if they truly earn no active income, is way wealthier and generates way more income than their lifestyle demands.

I encounter almost no one, with the notable exception of Amy and Tim, who harvest their equity, in any form, to sustain early retirement. 

 Despite the sound math and ample history supporting the 4% withdrawal rate on a portfolio, I can count on one hand the number of people I have personally met who are EARLY retirees who are actually selling off chunks of equity to sustain financial freedom. 

Nearly everyone else has an ace in the hole. Some of the possibilities:

• A pension plan for a military member 
• A paid-off house
• A couple of rental properties that generate enough cash flow to cover living expenses 
• Equity in a start-up or other business.
• A side hustle/blog/book or other intellectual property 
• A huge savings account and cash cushion 

Or it could be a combination of these things.

The ‘Optimal’ Portfolio Designed by Financial Professionals

For every FIRE individual I meet, there is an order of magnitude of potential peers who are equally rich but whose portfolios do not have one of those aces in the hole. Their portfolios do not actually produce spendable liquidity that the individual can wrap their head around or actually use to fund their lifestyle without feeling extremely uncomfortable.  

This article is written for the person who is wealthy—in the $1 million-plus range, or who believes they will get there in the next few years—but can’t see a path to actually generate passive income.

I believe there are a lot of you out there. Indeed, 30% of the people reading this are likely to be accredited investors, mostly through net worth. Nearly 100% of the people reading this believe they will become an accredited investor/millionaire within the next 10 years. Why else are you on BiggerPockets? 

If the problem I’m about to unpack doesn’t impact you today, it might in a few years. Read on.

A Case Study  

Recently, I had an individual reach out and ask me how they could generate $60,000 in passive income. This person is a wealthy executive in California with a great career, a mid-six-figure income, a real estate portfolio, a million-dollar 401(k) and stock portfolio, and a large life insurance policy. This person is about 45 years old.

Now, $60,000 in passive income is a lot of money. It’s almost the median household income in this country on its own. But generating $60,000 in passive income should not be a challenge for someone with $3.5 million in net worth. Literally, at today’s rates, one could stick $1.2 million in a nine-month CD at Ally Bank and generate $60,000 in simple interest. Boom. Done. 

Do this at four to five banks, and the entire balance is FDIC-insured. Game over. Sleep well.  

However, the fact that the answer to this individual’s question seems so remarkably easy is, I believe, a window into a larger problem that many investors face—a problem that prevents people who work hard for decades to grow their wealth responsibly from actually enjoying that wealth and the financial freedom it is intended to bring about. 

 So what gives? Why is it so hard for people who are, on paper, in the top 1% to 2% of American household wealth to actually free themselves from dependence on wage income?  

As mentioned, I believe that the answer to this puzzle lies in the pursuit of optimization. 

The Optimized Portfolio Problem

This $3.5 million portfolio of the individual who reached out to me is roughly divided as follows:  

• $1 million in stocks/public equities—mostly in a 401(k) and other tax-advantaged retirement accounts
•  $1 million in real estate equity, leveraged at a blended rate of 4.25% on a $3.5 million portfolio. 
•  A $750,000 life insurance policy
•  $250,000 in cash
•  $500,000 in home equity, with $500,000 remaining on the mortgage balance at 4.5%. Mortgage PI (not including taxes and insurance) is $2,500 per month. 

 This is a highly tax-efficient portfolio that was designed, as you’ve probably guessed by now, by a financial planner (who incidentally makes big money managing the $1 million in equities and likely bought their boat selling this life insurance policy five to 10 years ago). 

This person is highly likely to grow their net worth by high single digits/low double digits each year in the context of a professional, diversified portfolio. The real estate has done extremely well, appreciating in value and allowing the investor to repeatedly cash-out refinance and purchase additional properties without putting in a ton of cash.

However, their portfolio generates essentially no cash flow—certainly not enough to cover their lifestyle and likely not enough to even cover the costs associated with just their life insurance policy.

The real estate portfolio is highly leveraged—there’s about $4.5 million in real estate (including personal residence) against that $1.5 million in equity. The debt service wipes out essentially all the cash flow, after CapEx, on the investment portfolio. 

Sure, there’s a theoretical trickle of maybe $20,000 to $40,000 per year, but that is unpredictable and immaterial compared to the $250,000 in household income. 

The life insurance policy premiums suck $60,000 out of their household cash flow each year. The cash in savings generates minimal yield. The home mortgage requires $30,000 in principle and interest alone annually. The stock portfolio produces 2% dividends, and even those are held mostly inside tax-advantaged accounts and reinvested.

 Any financial advisor worth their salt would build a portfolio much like this for a client (maybe excluding the whole-life policy if they were a fee-only advisor). There’s honestly a lot to like here. This person is undeniably wealthy. They have a huge liquidity position, no consumer debt, and a big pile of assets. This person is also mitigating their tax bill to the maximum reasonable extent for someone in their position. 

In a lot of ways, this is what a “good” portfolio looks like. But this person feels trapped—so trapped that this multimillionaire executive is honestly questioning how to generate $60,000 in passive cash flow. While they don’t live paycheck to paycheck, this person would likely feel like they were running out of money after just 18 months of leaving their job.

The Big, Suboptimal Moves This Person Must Make to Achieve Financial Freedom

To remedy this situation and actually create a world where this person is “free,” we have to make some bold moves. These moves are highly tax-inefficient in the near term and have a high probability of reducing this person’s long-term net worth number. These moves will also result in a big tax bill in the near term and make their (newly hired, fee-only) tax professional stamp their fist on the table with frustration (hopefully, they’ve fired the financial advisor who sold them the life insurance policy yesterday).

Here’s what I’d do.

First, I’d kill the life insurance policy and harvest the equity. Reposition this $750,000 into two to three hard money notes generating 10% to 12% interest. This swing alone removes a $60,000 (!?) annual premium (cash outflow) with an $80,000 to $85,000 cash inflow in the form of simple interest. There will be a $140,000 swing in pre-tax cash flow with this move alone.

However, note that this interest is taxed at a high marginal rate. At a $250,000 base salary, the next dollar of income (simple interest) is likely to be taxed at 35% or more—federally, plus state taxes. This move isn’t likely to be CPA-approved.

Next, I’d sell all but the two highest-cap rate rental properties. This would transform the portfolio from a $3.5 million total asset value to a $1.2 million (using some of the cash and/or equities to pay off small remaining mortgage balances), to a $1 million to $1.2 million cash flow engine generating a cool $50,000 to $60,000 in dependable, (actual) spendable liquidity per year. 

Note that in selling, this person will have to pay transaction costs and capital gains taxes. There will be a tax bill coming due. And I’m not recommending a 1031 exchange, which requires the investor to take on new property with the same amount of debt—debt that will be higher interest than their current debt. I’m saying straight up: Pay the tax man, and buy your freedom.

Finally, I’d pay off the mortgage by using some of the stock portfolio (after-tax) or savings over the next year or two. This knocks off $2,500 per month or $30,000 per year.

I get it: Low-interest mortgage and an opportunity to arbitrage the rate. However, this person doesn’t have a net worth problem. They don’t need optimal. They need freedom. This last piece is it for many folks. With a paid-off home and cars and no consumer debt, the cash needed for one’s lifestyle drops drastically.

With these three steps alone, we can generate a net annual increase in cash flow from this portfolio of $30,000 in the form of eliminated mortgage payments, $60,000 from the rental properties, and another $80,000 from simple interest. In addition, we’ve removed the $60,000 annual expense of the whole life policy. That’s a swing of $230,000 of annual liquidity coming into this person’s life. That’s almost this person’s entire pre-tax salary.

All this means a paid-off house and $140,000 in truly spendable passive cash flow. And there’s still $1 million invested in highly tax-advantaged 401(k) investments. If they want more cash flow, they can sell the house, redeploy the equity, and bump up that cash flow number. Imagine what kind of life you can live in that context.

Of course, the tax professionals, financial planners, and optimizers of this community are reading this in disbelief. If this person follows this plan, they will incur capital gains on the real estate sales. They’ve already paid the price of the really bad returns of the whole-life policy. The simple interest they generate on the hard money loans is terribly tax-inefficient, especially for the next few years if they continue to work at their job. 

On paper, I’ve probably reduced this person’s wealth by a few hundred thousand dollars with this move on day one. And I’ve potentially reduced their long-term net worth by several million dollars. 

But, despite that, I will put my argument out there: I believe a set of moves like this is the price of financial freedom.

I truly believe that most of you reading this would, after my changes, live a life of optionality and freedom—a better life—than if you stuck with the portfolio prior to the changes.  

Conclusion  

As I stated at the beginning, I’m only 60% sure of this theory, let alone the practical example I used to illustrate this point. Maybe there’s a way to get a better blend of freedom now and long-term wealth later. Maybe there are ways for the “typical” millionaire household to break free earlier. Tell me in the comments. I’d like to hear it.

Until presented with an argument that I understand and that I believe a typical investor can rationalize, my analysis and experience so far tell me that this trade-off is real and does exist. It tells me I want to optimize for a portfolio that generates freedom, not the largest possible long-term wealth number, in the most tax-advantaged way.

It tells me that more investors should consider the cardinal capitalistic sin of knowingly paying more taxes on ordinary income and simple interest than a financial planner would advise. And they should do this for a year or two while still earning a high income to get used to the new source of income.

It tells me that they should consider building toward a portfolio that leads them away from an expensive home mortgage and heavy allocation to 401(k) or retirement accounts and reduce leverage on at least a portion of our core real estate portfolios.

It tells me that investors need to, at some point, determine what “enough” means for them in terms of net worth and stop, many years before reaching that number on paper, optimizing for long-term wealth creation. It tells me that if investors agree with my thesis here, they will need to begin making subtle but important changes to the composition of their portfolio that a tax professional might hate but are, in fact, exactly what is needed to get to a portfolio that reliably, predictably, and sustainably pays all of their lifestyle bills—and then some.

It also tells me that by submitting some of their portfolios to the clutches of Uncle Sam and the generation of cash flow at the expense of paying more in taxes today and forgoing some potential appreciation down the road, they might just actually let themselves free.

And, of course, it tells me that they should totally avoid that whole life insurance policy.

Now, what do you think? Am I crazy? Or am I on to something?

Get the Best Funding

Quickly find and compare investor-friendly lenders who specialize in your unique investing strategy. It’s fast, free, and easier than ever!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Carl Harris, first vice chairman of the National Association of Home Builders and a Kansas-based small volume spec and custom home builder, joins ‘The Exchange’ to discuss builders offering incentives to counter high-interest rates, the housing sector impact of rising mortgage rates, and more.

As a business owner, it’s easy to assume that you have to be a nonprofit in order to get involved in the world of philanthropy. However, your business doesn’t have to be centered around a particular cause in order to give back. By building a company culture that values generosity and doing good for the community, you can make a difference no matter what type of business you’re in.

But how can you as a leader incorporate these kinds of values into your company culture? Here, nine business leaders from Young Entrepreneur Council offer their suggestions for easy ways businesses of any size can make philanthropy part of their company culture and the impact this has on your employees and your company overall.

1. Implement A ‘Give Back Day’

One easy way businesses can make philanthropy part of their company culture is by implementing a “Give Back Day” or a designated time for employees to volunteer together for a cause. This allows employees to actively contribute to the community and make a positive impact outside their regular work responsibilities. It fosters a sense of purpose, unity and pride among employees, creating a stronger bond and shared values within the company. By integrating philanthropy into the company culture, businesses demonstrate their commitment to social responsibility, inspire employee engagement and contribute to a more fulfilling work environment. – Andrew Saladino, Kitchen Cabinet Kings

2. Provide Monetary Incentives For Participation

Businesses of any size can make philanthropy part of their company culture by providing monetary incentives to their staff for participating in local charity events or in any charitable opportunities. For example, for any number of hours or time an employee willingly spends in service, the company can match it with a donation. This builds goodwill and increases employee loyalty toward the company, and allows employees to band together for a higher purpose beyond corporate roles and hierarchies, helping to develop team cohesiveness. When employees can contribute to meaningful causes, it creates a sense of purpose and fulfillment, improving job satisfaction and employee motivation. – Brian David Crane, Spread Great Ideas

3. Allow Employees Time Off To Volunteer

One way for businesses of all sizes to incorporate philanthropy into their company culture is by providing employees with leave credits to engage in such activities. By allowing employees to take time off to volunteer or contribute to charitable causes, businesses demonstrate their commitment to social responsibility. This initiative fosters a sense of purpose and empathy within the company culture, encouraging employees to actively participate in philanthropic endeavors. The impact of this approach is twofold: Firstly, it creates a positive image for the business, showcasing its dedication to making a difference in the world. Secondly, it strengthens the company culture by instilling a shared value of giving back, promoting teamwork and enhancing employee satisfaction and engagement. – Pratik Chaskar, Spectra

4. Start An Employee-Led ‘Charity Of The Month’ Program

I believe an easy way to integrate philanthropy is by starting an employee-led “Charity of the Month” program. Allow teams to select a cause they’re passionate about. This not only fosters engagement, but it also promotes empathy and teamwork. The ripple effect is profound: It uplifts company culture, reinforces a sense of purpose and shows that the business cares about more than just profit. It’s about giving back and making a difference—together. – Michelle Aran, Velvet Caviar

5. Make It Part Of Your Mission Statement

A strong mission statement can help make philanthropy part of your company culture. This creates alignment with the organization’s values and actions. When philanthropy becomes an integral part of the company culture, employees are more likely to feel motivated and engaged. They can take pride in working for an organization that prioritizes social responsibility. Furthermore, having a mission statement that includes philanthropy can attract like-minded individuals who share similar values. Potential employees who are passionate about philanthropy may be more inclined to join a company that explicitly states its commitment to social initiatives. This can help in attracting top talent and building a team of individuals who are not only skilled but also driven by a sense of purpose. – Eddie Lou, CodaPet

6. Incorporate Philanthropy Into Your Product Sales Or Supply Chain

Some businesses donate a portion of all sales toward charitable causes. Others focus on revenue from specific product lines. Alternatively, you can source materials from suppliers who donate some of their profits to charities. This enables you to incorporate philanthropy into your supply chain. With any philanthropic initiative, make it a talking point in customer service, sales and marketing conversations. You’ll find that your staff are much prouder of the work they do when they know their work is helping to contribute to greater causes. – Firas Kittaneh, Amerisleep Mattress

7. Volunteer As A Unified Team

Organize companywide volunteer days! These events allow employees to come together and participate in community service activities. By engaging in meaningful volunteer work as a team, you foster a sense of purpose and solidarity among employees and promote a culture of compassion and social responsibility. – Jennifer A Barnes, Optima Office, Inc.

8. Generate Awareness For A Cause

Generating awareness for the cause and educating employees about it is the best way to make philanthropy a part of your company’s culture. Making an impact isn’t something you can do alone; it requires a collective effort. So, no matter how much you believe in something, you may end up accomplishing nothing if your team is not on board. So, educating them about the set philanthropic values will pave the way for you to acknowledge the desired culture. – Jared Atchison, WPForms

9. Lead By Example

First and foremost, lead by example. Show your team what it looks like to step up to the plate, regardless of a busy work schedule and personal life. Show them it’s possible to achieve a healthy work-life balance and help others. Get involved in your local community, and encourage your team to serve as well. This might look like hosting a company outing to volunteer at a charity, or even paying your employees for the time they spend helping. You can also lead by example by challenging other successful business people who have more financial resources to get involved. Through your example and encouragement, you can create a purpose-driven company culture focused on giving back. – Blair Thomas, eMerchantBroker

The real estate market has been all over the place lately. On the one hand, home prices have fallen year over year, while the number of homes for sale declined in July, according to Realtor.com’s latest housing data. Still, prices of homes remain near record highs, while mortgage rates have steadied slightly but are still hovering in the 6% to 7% range.

Some economists think that the housing market may be stuck in the in-between, with prices still rising despite an overall yearly decline coupled with a decline in inventory. 

So, what does that mean for real estate investors and the market overall? 

Why Are Real Estate Prices Still High? 

While the national median listing price declined slightly in July, mortgage rates have kept purchasing costs high, according to Realtor.com’s July housing report. The national median list price dropped to $440,000 in July from $445,000 the month prior. It’s also down 2% from a record high of $449,000 in June 2022.

But just because prices have dropped slightly, buyers haven’t felt much relief. That’s because mortgage rates have increased the monthly cost of financing a home by 17.5% compared to a year ago. This has outpaced both wage growth and inflation and has made it difficult for first-time homebuyers to afford to buy.

“High costs continue to be a stumbling block for some buyers, weighing overall demand,” Realtor.com chief economist Danielle Hale said in her analysis

And with the Federal Reserve raising rates in July, it’s likely it contributed to mortgage rates staying steady. However, the Fed has signaled it’s unlikely to increase rates again in 2023, so whether that will cause some relief for mortgage rates has yet to be seen.

Another factor driving home prices? The limited number of sellers on the market. With inventory falling, it’s led to “pricing power” for sellers, Hale said.

“With mortgage rates still high and buyers cost-sensitive, the limited number of sellers on the market may be sensing their advantage and pricing accordingly,” she said.

The Housing Stalemate

Housing inventory is also down, with new listings in the 50 largest metro areas in the U.S. falling 12% compared to last year and 46% below pre-pandemic levels. And while the supply of new homes has risen slightly, it’s still slumped year over year. 

With fewer homes, high real estate prices, and increasing mortgage rates, it means housing sales are stagnating. The typical home spent 45 days on the market in July, 11 days more than the same time last year. 

Still, homes are being sold faster than before the pandemic. Hale says it’s possible that this could change in the coming months, and homes start selling faster than they were a year ago.

“If so, that would mean that the market is settling into an in-between state, where homes sit on the market for fewer days than pre-pandemic but somewhat longer than was common during the height of the real estate frenzy,” she said. 

Where Is the Real Estate Market Heading? 

So where is the real estate market headed? It’s impossible to tell the future, but some real estate experts have made a few predictions. 

Dave Meyer, for example, thinks that the housing market will end the year mostly flat, or somewhere between 3% and -3%, due to a lack of economic incentive to sell. And with mortgage rates staying at their current rates, it’s likely that demand for housing will continue to stay flat as well. We’re seeing this flatness now with a decline in mortgage applications.

Of course, it’s possible prices decline steeply if there’s a massive shift in the economy, such as increased layoffs and unemployment, or if mortgage rates suddenly skyrocket due to rising bond yields. Another scenario is that housing prices continue to jump if the Federal Reserve pauses rate hikes and mortgage rates drop.

Overall, the housing market is expected to stay strong for the next few years, with Zillow forecasting prices will continue to rise due to a low housing inventory.

The Bottom Line 

Although housing prices have declined slightly in the last few months, rising mortgage rates have kept demand for real estate down. With inventory down as well, housing sales have stagnated and remain on the market longer than in 2022. 

While we have yet to see what the means for the future of the real estate market, it’s possible that prices will stagnate but remain strong in the coming years. 

Find an Agent in Minutes

Match with an investor-friendly agent who can help you find, analyze, and close your next deal.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Tim Ferriss’ book, The 4-Hour Workweek, was first published in 2007 and spent four weeks on the bestseller lists. Since then, it’s sold over 2 million copies, been translated into 40 languages and continues to change lives. The first foray into lifestyle design for busy professionals, Ferriss shared his experience and teachings in company automation and lifestyle development from working 14-hour days on his supplements company to being able to escape his workaholic lifestyle.

The 308 pages hold a plethora of concepts to apply to your life and work. Here’s how to use ChatGPT to implement the most powerful five.

How to apply The 4-Hour Workweek to your work

Apply Pareto’s Principle

The Pareto Principle is named after the scientist Vilfredo Pareto, who found that approximately 80 percent of outcomes result from 20 percent of causes. This pattern repeats throughout nature and human behaviour. Ferriss applies the concept to entrepreneurs, suggesting ways they could do less to achieve the same in their business. Here’s how you use ChatGPT to assess your work and make personalized recommendations.

Copy and paste in and edit the square brackets. The more detail you include, the better the response: “I’m an entrepreneur looking to optimize my business operations. I’d like to perform a Pareto analysis to identify the 20% of activities that yield 80% of my desired outcomes. Can you help me identify which tasks or areas I should focus on to achieve the most significant impact with less time investment? My business is [describe your business], my goals are [outline your business goals] and each week I [outline how you spend your time each week].”

Join the new rich

A significant part of the book’s introduction is the definition of the “new rich”. This group, compared to the “old rich”, is described as being “rich in life, which is not related to being rich in dollars.” Becoming part of the new rich means, in part, that rather than deferring retirement to some unspecified time in the future, you enjoy mini-retirements throughout your career. A mini retirement could take many forms, so use ChatGPT to suggest what yours might be.

“I’m an entrepreneur striving to achieve a ‘new rich’ lifestyle where wealth is measured in experiences and freedom, not just finances. Inspired by the concept of mini-retirements from The 4-Hour Workweek, I want to design a life where I have the flexibility to enjoy extended breaks throughout my career. My business is [outline your business] and my role is [describe your role.] The experiences I value are [describe what you do outside work] and I enjoy spending time [outline other activities you enjoy doing]. Can you (1) define my version of the ‘new rich’ and (2) identify potential opportunities for mini-retirements I could take?”

Delegate, automate, eliminate

The acronym DEAL is used in The 4-Hour Workweek to represent: delegate, automate, eliminate, liberate. If you assess, outsource, and reduce your tasks down, you will be free. But many business owners aren’t free. They are trapped in meetings, admin and processes. They are doing things that could be done by someone else, and they don’t experience the benefits that entrepreneurship can bring. Here’s how to use ChatGPT to find out what you could change.

“Within my business I believe there are tasks I could delegate, automate and eliminate. Given that our revenue goal is [describe your revenue goal] and the activities that contribute towards this are [outline what contributes towards making sales], of which I am personally responsible for [say which you do yourself], can you identify tasks that could be delegated, automated or eliminated? For each one, say why, outline the next steps and explain how much time it could save.”

Cultivate selective ignorance

Chapter six of The 4-Hour Workweek is about cultivating selective ignorance which includes going on a “low information diet.” As Ferriss explains, “most information is time-consuming, negative, irrelevant to your goals, and outside of your influence.” So ignore the news and get more done. Not only that, but remove yourself as a source of information for your team. “Problems, as a rule, solve themselves or disappear if you remove yourself as an information bottleneck and empower others,” added Ferriss. Help them figure things out and feel happy about doing so. Here’s the prompt:

“Within any given day there are a lot of things that try to get my attention. These include people such as [describe the people who ask you for things and what they ask for] and websites [include the websites you are notified or distracted by]. Cultivating selective ignorance means being happy to let things slide in order to free up time and headspace for what matters. Imagine you’re a productivity expert, can you suggest (a) what processes I should put in place so my team can progress without my involvement and (b) what I should intentionally ignore in order to protect my headspace?”

Create your email autoresponder

Interruptions are the enemy. If someone can tap you on the shoulder at any moment, you can’t get deep work done and you can’t escape. The biggest culprits are time wasters, time consumers and “empowerment failures.” Take control of interruptions starting with email. Ferriss recommends you, “Limit email consumption and production,” “Never check email first thing in the morning,” and “Create an email autoresponse so people respect your new rule.” For some brilliant examples of autoresponders, see Ferriss’ blog. Ask ChatGPT to create yours based on information you provide.

“I want to create a [tone, for example friendly and direct] email autoresponder that will be sent to everyone that emails me and serve the purpose of [purpose, for example them being directed elsewhere to have their problem solved and not expecting an immediate response from me]. People usually email me about the following items, and I respond with the following answers: [list common topics people email you about the corresponding answer]. Can you create an email autoresponder that politely directs people to visit the appropriate web page or how-to video to solve their problem, so they are not waiting on me for a response? Use the style of this one: [paste an example of which you like the style and tone, perhaps from Ferriss’ blog].”

Use ChatGPT to apply The 4-Hour Workweek to your work

Get help implementing the methods of everyone’s favourite lifestyle design book with these five simple prompts and ChatGPT. Apply Pareto’s Principle, join the new rich, delegate, automate and eliminate your way to freedom, go on a low media diet and create an autoresponder that releases your inbox’s hold. Escape the 9-5 and do more by doing less. Take control of your work and live by design.