\n<\/p>\n
Financial literacy<\/strong>\u00a0is the\u00a0first step to\u00a0<\/strong>becoming a millionaire<\/strong><\/a>. Unfortunately, the US is a (relatively) financially illiterate country, so to become financially independent and add more zeros to your net worth,\u00a0you have to self-educate<\/strong>. Fortunately, today\u2019s guest has published a book and workbook that lays out\u00a0exactly how to become a millionaire,\u00a0<\/strong>even at a young age.\u00a0<\/strong><\/p>\n Dan Sheeks<\/strong>\u00a0lives and breathes all things personal finance. He has been a\u00a0high school teacher for twenty years\u00a0<\/strong>and teaches young people everything he wishes he would have known about financial literacy. He teaches a variety of different business classes, ranging from\u00a0entrepreneurship to\u00a0<\/strong>personal finance<\/strong><\/a>\u00a0to marketing<\/strong>. His passion for working with young people is what inspired him to write his book,\u00a0First to a Million<\/em><\/strong><\/a>.<\/em>\u00a0In this book, Dan details nineteen \u201cfreakish\u201d phrases to get you to your first million. Throughout the book, Dan emphasizes\u00a0the need to be \u201cfreakish\u201d\u00a0<\/strong>and be willing to do the work everyone else won\u2019t.<\/p>\n Besides his role as a teacher and an author, Dan is also an investor. He house hacked his first property in 2004 but he didn\u2019t truly get into investing until he met his wife seven years ago. Together they have expanded their real estate operation and have\u00a0closed on seventeen units<\/strong>. Dan has dedicated his life to personal finance and financial literacy so if there\u2019s a man to learn from\u2014 it\u2019s him.<\/p>\n Ashley Kehr: Dan Sheeks: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Tony Robinson: Ashley Kehr: Tony Robinson: Dan Sheeks: Ashley Kehr: Dan Sheeks: Tony Robinson: Dan Sheeks: Ashley Kehr: Tony Robinson: Ashley Kehr: Dan Sheeks: Ashley Kehr: Dan Sheeks: Ashley Kehr: \u00a0<\/p>\n \u00a0<\/p>\n<\/div>\n
This is Real Estate Rookie Episode 179er.<\/p>\n
Credit card debt, student loan debt, car loans, things like that, those types of consumer debt, they are completely out of control in our country. And I think that\u2019s a direct result from the fact that we do not focus on financial literacy in our schools and in our households in our country. We are a financially illiterate country overall. And so those types of bad debt, the consumer debt, credit cards, student loans, car loans, they are just going to put you deeper and deeper into a hole that\u2019s going to be tougher to get yourself out of if you do want to reach financial independence earlier than age 65.<\/p>\n
My name is Ashley Kehr, and I am here with my cohost, Tony Robinson, and we are on everyone\u2019s favorite, a niner episode.<\/p>\n
And welcome to the Real Estate Rookie podcast, where every week, twice a week, we bring you the stories, the information, the education you need to kickstart your real estate investing journey. So my good friend, Ashley Kehr, what is going on? What\u2019s new in your neck of the woods?<\/p>\n
I actually, the speaking of niner, I had to start an entity for just a line of credit I was doing and I just needed a name. It\u2019s an LLC that nobody will ever see the name for. And I actually put niner in the name, just something random. But yeah, just keep collecting those LLCs and having a couple names. Each of my kids\u2019 names are already each in an LLC, so I was like, \u201cWhat else is there that I could do?\u201d<\/p>\n
What else? Tommy boy.<\/p>\n
Niner. Yeah.<\/p>\n
What\u2019s some other updates? What\u2019s going on in the business?<\/p>\n
So I submitted an offer last week on a campground, and I didn\u2019t hear-<\/p>\n
Congratulations.<\/p>\n
Thanks. And I didn\u2019t hear anything. I did two offers, a seller financing and just a commercial loan financing, 25% down. And I did my seller financing offer super juicy, way higher, showed all the interest they would be making and I didn\u2019t hear anything. And I actually froze, I could not work up the courage to call them. It was one of those things that we always preach, \u201cJust take action. Just do it. Just make the call. Just talk to the person. Ask the person.\u201d And I just could not do it, so I made my business partner do it. I literally sat on the couch hiding as he\u2019s calling and all it was, was they didn\u2019t see the email. She\u2019s like, \u201cOh my gosh, you did? Oh, I saw the email come through, but I thought it was something you already sent me.\u201d And literally two hours later, they called to discuss it.<\/p>\n
There you go.<\/p>\n
I just had this internal fear that was nothing. And I probably should have called them a couple days ago instead of yesterday. So that was really good. I talked over the offers with the guy, and he\u2019s asked me a couple things about\u2026 I did two letters of intent, asked me some questions it was like, \u201cWell, it doesn\u2019t matter anyways because I\u2019m not accepting either of these offers.\u201d So I was like, \u201cOh, okay.\u201d<\/p>\n
[Inaudible 00:03:16].<\/p>\n
Then we talked for about another half hour and I think we kind of have come to a deal.<\/p>\n
An agreement.<\/p>\n
So I just have to work my numbers a little harder. All this morning, I was in contact with the bank. They definitely don\u2019t want to do seller financing. I even had them talk to their CPA and they\u2019re going to bite the bullet and pay the taxes on it so hopefully it will work out.<\/p>\n
Fingers crossed.<\/p>\n
Well see, yeah.<\/p>\n
Yeah. How big is the campground or how many units is it? Or how many pads? Is that what they say?<\/p>\n
Yeah, so it\u2019s actually 200 acres but I think to make the deal work\u2026<\/p>\n
Holy crap.<\/p>\n
\u2026 we\u2019re going to parcel off 100 of the acres that isn\u2019t used and kind of on the back end of the property, and that will kind of make the deal work for me because there\u2019s still 100 acres and still plenty of room to add onto the property if I want to. But it has cabins, it has RV sites, it has tent sites, it has a little wedding venue pavilion, convenience store.<\/p>\n
That\u2019s awesome.<\/p>\n
So yeah, it\u2019s a cool little property.<\/p>\n
Well, fingers crossed, yeah.<\/p>\n
Yeah, thanks.<\/p>\n
Yeah, and then three years from now, when you finally close on it, because those New York policies, we\u2019ll get an update on that.<\/p>\n
I put a July 31st as the closing date so that it\u2019s like, because we\u2019re seasonal here, there\u2019s no camping the winter. So that would be like halfway through the season. So at least we can get some income before the winter months.<\/p>\n
Some revenue.<\/p>\n
And if that\u2019s pretty greedy of me to keep the [inaudible 00:04:41].<\/p>\n
Yeah, that\u2019s awesome.<\/p>\n
What about you?<\/p>\n
Well, yes, same on my side, Ash. We\u2019ve been busy working on the due diligence for this resort we have under contract. So again, it\u2019s a 23 unit cabin resort here in one of the lake towns in SoCal. I got a big packet of 200 pages from the seller yesterday that had all of their financials and reservation data. So I was up super late last night kind of coming through all that and kind of reworking our model based on those numbers. We have our property inspection is actually happening right now at this exact moment, the inspectors out there doing that, and they\u2019re going to be out there tomorrow as well.
And then we\u2019re meeting with our attorney tomorrow to start the syndication paperwork. So things are moving super fast. Our money goes hard in 22 days now so I just want to make sure that we do as much due diligence before that period. That way if we need to pull out, we have that option. So again, if you guys kind of want to follow along on that journey and see what it looks like, be sure to follow me on Instagram at TonyJRobinson and you can kind of see the ins and outs of how we try and pull this deal off.<\/p>\n
Are you going to be sharing it too on YouTube at the Real Estate Robinsons YouTube channel?<\/p>\n
Absolutely.<\/p>\n
Yeah, okay awesome.<\/p>\n
Our videographer is going to be with us when we go out there on Wednesday. So yeah, if you guys aren\u2019t following us there, check it out.<\/p>\n
I better make sure, are you going to have your videographer come to New York too for that property inspection?<\/p>\n
No. He\u2019s [inaudible 00:06:02].<\/p>\n
I better make sure I look good. Well, today we have a great guest on, someone part of the Bigger Pockets Community, Dan Sheeks, and he actually wrote a book for Bigger Pockets called First to a Million. A few of you may have picked it up, it was available this fall. But now he has created a complimentary workbook to actually go through the steps of creating financial independence and investing in real estate. So Dan shares with us some of the things that are in the workbook and how it can really apply to anyone. He kind of wrote it geared towards high school students and it kind of follows them through college as to what they should be doing to have that great personal finance foundation. But really it can apply to anyone. And it\u2019s a great gift. If you know somebody graduating high school or college, it\u2019s a great gift to give them too.<\/p>\n
Yeah. I mean, or if you\u2019re just an adult with a kid that you care about, right? Whether your children, nieces, nephews, whoever, I think even you just reading it and kind of having a good framework that you can give to them super, super important. And one of the things that I love most about Dan\u2019s framework is that he encourages people to be freaks. And as you listen through the episode, you kind of get an idea of what that means and exactly why he said that. So lots of really good information I think throughout this one that anyone can take and apply to build financial independence.<\/p>\n
And you guys already know Tony and I are freaky in the spreadsheets.<\/p>\n
Yeah, so there\u2019s a lot of that. But before we bring Dan on, I just want to read Ashley, one of the recent reviews that came from the rookie show. So again guys, we really appreciate if all of you could leave an honest rating and review on whatever platform it is that you\u2019re listening to. The more ratings and reviews we get, the more people we can reach and that does help us continue to kind of impact more lives.
So today\u2019s podcast review comes from Genalt. And Genalt says, \u201cFound the Bigger Pockets Rookie Podcast midway through 2020 and I truly believe it changed my life forever. Hearing stories of rookies making it happen in real estate really jumps out at my investing and reassured me that I can do it too. I\u2019d recommend the Bigger Pockets Podcast to everyone who has an interest in real estate investing. So Genalt, we appreciate you and we hope that you continue to have success in your journey as well.<\/p>\n
Dan, welcome to the show, thank you so much for joining us. Can you start off with telling us a little bit about yourself and how you got started in real estate?<\/p>\n
Yeah, kind of the down in dirty is I live in Denver, Colorado, or a suburb just south of Denver. I\u2019ve been in Colorado for over 20 years. I\u2019m a high school teacher, I teach business classes like entrepreneurship, personal finance and marketing, I\u2019ve been doing that for about 20 years. Love my job, love working with teenagers and young people in general, that\u2019s my passion. Also have kind of a side community that I run for young people interested in real estate and early financial independence. And then as far as real estate goes, I bought my first property way back in 2004 as a primary residence. I was house hacking it before I even knew what that was. That accidentally turned into a rental property because I moved out a couple years later and then sold it about 15 years after that. When I met my wife, honestly though, about seven years ago, that\u2019s when she was kind of just getting started in real estate investing and so that\u2019s when I became more serious and we became a team and have really leveled up our real estate investing in the last seven years.<\/p>\n
What was the first thing that kind of piqued your interest about real estate? Was there some moment or that someone said something to you? Or why did you choose real estate investing as your wealth vehicle?<\/p>\n
Well, honestly when I met my wife seven years ago, she introduced me to the Bigger Pockets Community and listening to the podcasts, that idea of passive income just blew my mind, no one had ever explained that to me. Even when I had a rental property previous to finding the community, the Bigger Pockets Community, it never really clicked for whatever reason, the passive income concept. And so when it started to add up like, \u201cHey, you could build a portfolio of more than one property, several properties, and you could be earning passive income of a significant amount every month to then maybe replace a W2 income,\u201d that just made a lot of sense, and that was kind of the impetus for us leveling up and going forward.<\/p>\n
Dan, I think I first just want to say how cool it is that the school that you work for offers entrepreneurship classes to high school students. I did not have that or anything close to that in my high school. So just from my own knowledge, was this something that you created for this school or was it already there and you just kind of stepped into the role?<\/p>\n
The entrepreneurship piece I\u2019ve been teaching that since I got here 20 years ago, 19 years ago. I embedded that into a marketing class honestly, a level two year long marketing class. I devoted a semester to entrepreneurship, it was kind of just what I was passionate about. But then lately, three years ago, my school, we actually have a class now called introduction to entrepreneurship that is a concurrent enrollment class, meaning that it\u2019s aligned with the community college here locally. So our students, our high school students, get college credit while taking that class. So it\u2019s now a little bit more specific and a little bit more driven as far as a focused curriculum, but yeah, I love teaching entrepreneurship.<\/p>\n
Dan, I think you just shared a really important lesson with a lot of our listeners and that\u2019s, if you have an interest, whether it\u2019s real estate investing or something else, try and find a way to integrate that interest into your day job. I think everyone is so, and understandably so, everyone wants to leave their day job, right? A lot of people listening have this dream of retiring from their day job and being a full time investor, but it\u2019s going to take time to get there, right? Most people can\u2019t flip that switch on day one.
So if you\u2019re unhappy in your day job, start asking questions if there\u2019s ways that you can integrate your passions and your interest about investing in entrepreneurship into your day job. But maybe it\u2019s not as straightforward as being able to teach a class on entrepreneurship, but maybe it\u2019s, I don\u2019t know, being the person that leads a new project, that\u2019s doing something new that feels like you\u2019re running a business. So I just thought that was a really cool kind of tidbit. I wanted to make sure we highlighted that for the listeners.<\/p>\n
Yeah. I agree 100%.<\/p>\n
Dan, you have this teaching background you\u2019ve invested in real estate now share with us what you have done to kind of tie all this together.<\/p>\n
Yeah. This is kind of where it got exciting for me, when the switch flipped, where I realized what I was learning about real estate investing, but more bigger picture, the early financial independence world. What I was learning there, for my wife and I and our family, I could then share that with the audience I have, which are students in my classroom, which aligns so well with the classes I teach anyway.
And then I also have created an online community to reach young people even outside of my school with these same ideas. It just made sense. Some of my passions are obviously working with young people. I would say 15 to 25 or Gen Z that\u2019s that\u2019s my niche. Personal finance education is a big passion of mine, real estate investing and that early financial independence community that those strategies that can get you to not having to work until you\u2019re 65. So if you add all that together, yeah, I created the Sheeks Freaks Community, I wrote a book and a workbook for Bigger Pockets, which I\u2019m super grateful to Bigger Pockets for getting on board with those and it\u2019s just taken off.<\/p>\n
So tell us more about this book because this is launching, is it today or this week?<\/p>\n
The book itself First to a Million launched last December and the subtitle of the book really says it all. It\u2019s a Teenager\u2019s Guide to achieving early financial independence. But the workbook that goes with it, the First to a Million workbook, which honestly I think is of the two slightly more valuable than the actual book, the workbook is launching right about now, spring 2022. It is a guide or a playbook for the young person or really anybody, anybody who\u2019s new to early financial independence, anybody who\u2019s new to real estate investing, index fund investing, all of those strategies, frugality, mindset, entrepreneurship, the book and the workbook are I think the starting point to really create that foundation to then move forward and create a better financial future for yourself.<\/p>\n
So Dan, I want to ask, how does this compare to Dave Ramsey? So he has his workbooks like The Total Money Makeover, and that\u2019s how a lot of people get onto that financial independence journey is first by paying off their debt and that\u2019s how I got rid of all my personal debt was following that journey. But then as an investor, his plan really doesn\u2019t align with being a real estate investor because he\u2019s like, no debt at all, where I have mortgages racking up left or right. So how does your plan and for financial freedom differ than his and can you tell me a little bit about that?<\/p>\n
I think the way that mine differs from Dave Ramsey or people in that community is very similar to everyone in the FI community that is pursuing early financial independence, especially with real estate. Yeah, I love debt, right? I love good debt, because it makes more money and more passive income. It\u2019s just a way to leverage. So yeah, the strategy I lay out in the book for the newcomer, the young person, are about using good debt and not accruing bad debt. There\u2019s a chapter actually called good debt versus bad debt and how you can leverage money, especially through real estate investing, to build passive income and to grow your net worth quicker than if you were to follow say the Dave Ramsey pathway.
I will say that my book and workbook, they are not for everybody, just like real estate investing isn\u2019t for everybody and even early financial independence isn\u2019t for everybody. There\u2019s a small percentage of teenagers who would actually read my book and then employ the strategies to reach early financial independence. I would never tell a young person what to do, and in my boo. I don\u2019t. I just say, \u201cHere are the options that you are probably not aware of because it\u2019s not adilly discussed in our society.: And then once you know all of the options, you can make the decision that\u2019s best for you. And so if real estate investing is something you have no interest in then don\u2019t do it or maybe do it later. You never know what might be down the road 10 or 20 years. So it\u2019s very different than Dave Ramsey but very much aligned with everything else we know about the early financial independence community.<\/p>\n
Dan, you brought up a good point about the difference between good debt and bad debt and I\u2019m hoping we can kind of go down that rabbit hole a little bit. I just actually, our friend of Bigger Pockets, AJ Osborne, he just posted something on his Instagram the other day and it was some news article clipping that said consumer debt had reached like almost $4 trillion. So I guess first, define the difference between good debt and bad debt and how does one go about staying away from that bad consumer type debt?<\/p>\n
Yeah, the statistics are pretty startling, although they\u2019re hard to digest because when someone just throws a big number out there like what you just mentioned, it doesn\u2019t really register. But yeah, credit card debt, student loan debt, car loans, things like that, those types of consumer debt, they are completely out of control in our country. And I think that\u2019s a direct result from the fact that we do not focus on financial literacy in our schools and in our households in our country. We are a financially illiterate country overall. And so those types of bad debt, the consumer debt, credit cards, student loans, car loans, they are just going to put you deeper and deeper into a hole that\u2019s going to be tougher to get yourself out of if you do want to reach financial independence earlier than age 65.
However, good debt is debt that I will take all day every day and you two know very well, it\u2019s debt that you take on but the net effect of having that debt allows you to increase your net worth. And a rental property is the best example by far, you have a mortgage on that rental property, but overall it\u2019s cash flowing positive because you have a tenant in there. And so you are growing your net worth, you are having positive cash flow every month, but if it weren\u2019t for the mortgage that you had for that property, you wouldn\u2019t be able to do that. So I would take that debt like I said, all day, every day.<\/p>\n
So in your workbook, I want to go through, Tony and I had a chance to look through it. And first of all, congratulations on creating this and it has turned out awesome. I want to go through one of the first parts of it. So phase one, can you kind of tell us what that is and the list that it goes into? These are some of the first things you should be doing.<\/p>\n
Yeah. And first I\u2019ll kind of introduce the way that workbook is set up. It is really helpful if someone reads the First to a Million book first and then goes and kind of graduates to the workbook. But in the workbook, it really tells the reader what to do, when to do it, how to do it, and why you\u2019re doing these things. And there are, I think, 19 phases or we call them freak phases, the book and the workbook all are kind of all around a theme of being freakish, which is basically being different with your money and your financial future. So if you\u2019re a FI freak, that\u2019s a good thing because you are doing things differently than the average Joe.<\/p>\n
Dan, I\u2019m sorry. Before you go on. I just want to comment on that because I absolutely love that concept, right? I think the vast majority of Americans today have a very warped sense of what it means to be successful financially. And if you\u2019re talking to people in your circle and no one\u2019s looking at you like you\u2019re crazy, then it probably means you\u2019re doing what everybody else is doing and that you\u2019re going to end up how everyone else is going to end up. So you want people to kind of look at you sideways when you talk about what it is that you\u2019re doing and what your goals are and how you\u2019re doing this with your money and how you\u2019re investing this way and doing those things. Because if people don\u2019t understand or if people are questioning you, it means you\u2019re doing something that the mass is aren\u2019t which is probably going to set you up for success. So I just had to pause there, man, because I love that concept so much.<\/p>\n
Tony, you nailed it. I mean, in our society, we\u2019re trained to spend everything we make because spending money is fun and work until you\u2019re 65. And if that\u2019s the path you want, then by all means, go for it, there\u2019s nothing wrong with that pathway. But if you do want early financial independence or you do want to grow your net worth quickly, then you have to do things differently. You need to stand out, you need to be freakish from your core circle and everyone else out there. And that\u2019s what First to a Million\u2019s all about.
So yeah, going back to the workbook, there\u2019s about 19 freak phases, each one is four months long, and it walks the young person through what exactly should you do in this four month increment of time to then graduate to the next freak phase four months later. The workbook is very flexible in that no matter how old you are or where you\u2019re at, high school, college or beyond, you can start the workbook from the beginning and work through the end. You can go a little faster than it\u2019s laid out or a little slower. But freak phase one is kind of geared towards someone who\u2019s in high school, right about the middle of their high school journey. But again, college and beyond it still works. And so freak phase one, which has I would say about 12 different tasks to complete in that four month period is all about again, setting the foundation, getting started on your early financial independence pathway. And if you want, we can dive into a few of those or\u2026<\/p>\n
Yeah, I actually have a question on one. So implement a new freak tweak. What is that? And can you give us an example?<\/p>\n
Yeah. A freak tweak is something around being frugal, right? So it is what is one way that I can help myself save a little money that I\u2019ve never done before that is not going to change my life drastically? So a freak tweak could be as simple as on average, I go out to eat five times a week, I\u2019m going to dial that back to three times a week. Or it could be, At my gym, I have the top tier membership, I\u2019m going to dial that back to the mid-tier membership and save 50 bucks a month. So tweaking something in your expenses so that you are saving a little bit more money.<\/p>\n
Can I share one freak tweak that I did when I was in my W-2 job, and it helped me a lot. So like most people, I was an early disciple of Dave Ramsey, right, when I was growing up and I tried to do the envelope system. But it was a pain, right, no one carries cash like that anymore, it didn\u2019t work, right? So what I did was I kind of created my own digital envelope system. So again, people thought I was crazy when I explained this to them, you guys might think I\u2019m crazy too. But I created a bank account with Ally bank, they\u2019re like an online first bank. But what I liked about Ally is that you could create multiple checking accounts and there were no fees for each checking account. So what I did was I had like, I don\u2019t know, like 25 checking accounts and I had one for gas, I had one for groceries, I had one for vacation saving, I had one for utilities, all the different spending categories that I had, I had a subsequent checking account for them.
And what I would do is that I would set up my direct deposit so that instead of all my money going into one account, it would automatically get dispersed across all these different checking accounts that I had. And then I had one checking account that was for spending. So I didn\u2019t have to carry all these debit cards, but if I wanted to go out and buy groceries, I would transfer money from my groceries account, into my spending account and then I\u2019d spend it from there. So it was a way to kind of automate my budgeting without me having to really think about it. Every time I got paid, the money just got dispersed. When an account got low, I knew I had to slow up on my spending. So I literally had like 24 checking accounts and people thought I was crazy for that. But for me and my wife, it was a really easy way to kind of keep our budget in check.<\/p>\n
I love that and that is freakish, Tony, that is absolutely freakish to have any more than two or three checking accounts unless they\u2019re for a rental property or something. I love that, it\u2019s a digital envelope Dave Ramsey system and I applaud that, yeah.<\/p>\n
So Dan, you want to tell us a little bit more about that phase and then maybe we can hop into one more phase and kind of explore it.<\/p>\n
Yeah. So in freak phase one, the the first item, and they don\u2019t have to be done in order. The first item is to read the book First to a Million. Again, that\u2019s kind of the foundation for the workbook. So if they haven\u2019t already read that they should. And every freak phase going forward, all, 19 will start with, here\u2019s a book that you should read in that four month period. I think a couple them even have two books. And so those books run the gamut of investing specific, real estate investing specific, entrepreneurship mindset, the House Hacking Book by Craig Curelop in there, Set for Life by Scott Trench is in there, couple other Bigger Pockets books and then some that aren\u2019t Bigger Pockets. But I think educating yourself is definitely one of the triggers or levers you need to pull to really find yourself success on this pathway.
There\u2019s another book that they should read in freak phase one, which is just a personal finance basics book written for teenagers. First to a Million, I talk about some basics of personal finance but not all so this book kind of closes the gap so that the young person now is knowledgeable about everything around personal finance, at least the basics.
Set three financial goals, implement the new freak tweak that you mentioned, Ashley. Sell a personal item you no longer want. Even teenagers I think have clutter that they\u2019ve accumulated and if it\u2019s something that they\u2019ve never touched or never used, even if you sell it for 10 bucks on Facebook marketplace or eBay or Craigslist, you just increased your revenue for that month. And you\u2019re not going to lose any sleep over getting rid of a guitar that you haven\u2019t touched in five years so why not sell it.
Finding a new fun, free activity. So just a way to increase your happiness without spending money. There\u2019s so many things that we can do and the book lists several that are free, that we can fill our time with without having to spend any money or very little money to do those. And the list goes on and on. Paying bills with your parents every month just to learn the expenses and income, the spreadsheets, the balance sheet of the small business that is a household.<\/p>\n
I want to pause on that one, paying the bills with the parents. I think that\u2019s a really interesting concept. So I just want to make sure that I\u2019m understanding that. So what you\u2019re saying is like, so I have a 14 year old son so I think this book really resonates with me and the workbook because he\u2019s getting to that age where it\u2019s important. Luckily, me being an entrepreneur, I have a lot of these conversations with him, but what you\u2019re recommending here is that when I go to pay the utilities bills and the mortgage payment and all these other things to kind of have him sitting there with me as I do that, so he can see, \u201cHey, this is how the funds of this household are being allocated.\u201d Or is there another way to do that?<\/p>\n
Yeah, you\u2019re exactly right. And don\u2019t just have him there have him run the show, have him sit at the table with your laptop, he\u2019s clicking the mouse, you\u2019re directing him. But at the same time, you\u2019re explaining here\u2019s where that money came from and here\u2019s where it\u2019s going and here\u2019s how often I pay that, and is it a variable expense, is it a fixed expense? Is it an expense that\u2019s going to expire like a loan or is that an expense that\u2019s going to be there forever? There\u2019s no better way to just teach someone, a young person about just the fundamentals of paying your bills and personal finance than actually having them involved. And again, make them the active partner and you\u2019re just kind of in the background giving them some direction, making sure they don\u2019t, spend an extra, the decimal point needs to be in the right place when you pay that credit card bill or whatever. So yeah, getting them involved is huge.<\/p>\n
Dan, what would you say, how can a parent approach their child about taking this on? If they have no interest in this at all, how can they kind of plant the seed that here\u2019s a great book? Because I think a lot of our listeners are going to kind of be in that boat, they\u2019re not going to be the young high school student listening to our podcast. And those of you that are, awesome for you guys, and we love having you here, but for those who have kids that are listening and want their kids to implement this, what can they say to them?<\/p>\n
I get that question a lot, but first, don\u2019t sell your yourself short. I know this podcast has a lot of young listeners because I talk to them all the time in my community. They love your show as do I.<\/p>\n
Oh, awesome. Good.<\/p>\n
But you probably do have a lot of parents as well of teenagers or even younger. And so I get asked all the time, \u201cIf I\u2019m a parent, how do I get my teenager to want to learn about these things? I give them the book, but are they going to actually read it? How do I get them to want to open that cover?\u201d And the short answer is you can\u2019t. As Tony knows, you cannot make a teenager do anything, they have their own mind, they have their own interests.
You can entice them or incentivize. But at the end of the day, if they have no interest in reading a book, then they\u2019re not going to. But the advice I give is incentivize them with maybe some money. If you read this book and you finish it and I ask you a few questions and you answer them so I know you read it, then I\u2019ll, I\u2019ll give you a hundred dollars or fill in the blank, whatever amount of money you think is going to do the trick. Or start having conversations about the idea of not working until you\u2019re 65. You could even throw out it as a parent, maybe a challenge, depending on what path you\u2019re on. I challenge you to retire before me because a lot of the people in the FI community are doing exactly that.
Their parents are on that nine to five until you\u2019re 65 grind, but they\u2019re retiring or reaching FI 30s, 40s or maybe even in their 20s. So it\u2019s not a contest, but I think it would be interesting to some teenagers to say, \u201cOh, you\u2019re telling me that I could reach FI before you and that I could beat you there? That sounds interesting to me. And then using words like financial freedom instead of retirement, phrasing things the right way so they\u2019re more interesting to a teenager. Retirement doesn\u2019t get a teenager interested at all, but financial freedom or millionaire at school it\u2019s much better to have a future millionaires club than a personal finance club. So just phrasing thing in a better way to get their interest.<\/p>\n
So Dan, you also, I know we\u2019re going to talk about some of the other freak phase you have in the book, but before we move on to that next phase, I also want to kind of drill down on your four mechanisms of early FI because I think that\u2019s a kind of a good baseline to give folks before we go on to the next phase. So can you break that down for us? What does that mean? What are those four mechanisms and why are they important?<\/p>\n
They\u2019re super important, right? If you do have a goal of reaching early FI, these four mechanisms are exactly how you will get there. And I go over them in detail in First to a Million. So just short list. Mechanism number one is to earn more. Mechanism number two is to spend less. Mechanism three, save the difference. And mechanism four, invest your savings wisely. And I mean, we could go into any of those mechanisms for half hour to an hour. There\u2019s so many different levers within each of those mechanisms that you can pull to maximize those. But yeah, if you do those four things and you do them well, then you are going to reach early FI.<\/p>\n
Dan, how important do you think earning more is because like a lot of Dave Ramsey folks, it\u2019s just like rice and beans, don\u2019t spend a dime. And I feel like a lot of the focus in that community is on expense reduction, but I feel like there isn\u2019t a big enough focus on income expansion. So I mean, how do you kind of balance those two things in your approach and why do you feel that income expansion is so important as well?<\/p>\n
I think they\u2019re both super important or maybe even equally important. Earning more, spending, less doing those two things is going to widen your savings gap or your increase your savings rate, which is only going to fuel your journey to early FI. And so earning more, we all have skills or time available to earn more money through a side hustle, a very easy entrepreneurial small business venture. For teenagers, there\u2019s so many things like just working in their neighborhood, raking leaves, mowing lawns, shoveling sidewalks, or there\u2019s so many ways to make a little bit of money online. I was just talking to my class yesterday about companies love to get teenagers input on their feelings and thoughts about different products and teenagers can go online and volunteer to be in different focus groups and they can earn money doing that in their free time. Not a lot, but anything for a teenager or someone young, especially when your income is pretty limited because you are a full-time student, anything that boosts your income in the present is just going to help you learn those skills and save more money to invest later. So yeah, I think it\u2019s super important to earn more,.<\/p>\n
Dan, let\u2019s jump into phase 12 of your workbook. Can you go ahead and kind of explain what this phase is and why it\u2019s important?<\/p>\n
Yeah. So yeah, just kind of picking a random phase. This is a little bit more than halfway through the workbook. Phase 12 would generally happen if a young person is going to college kind of mid to midway through their college, their four year college experience, or if they didn\u2019t go to college, they\u2019ve been out of high school for a couple years. So it\u2019s like every phase that I mentioned, it\u2019s going to have them read a book in this case. It\u2019s the Four Hour Workweek by Tim Ferris, awesome book, especially around mindset.<\/p>\n
Ah, such a good book.<\/p>\n
And so reading that when you\u2019re 20 years old, that can change everything, which by the way, I think one of the reasons I wrote the book is because I heard so often in the FI community people saying, \u201cI wish I would\u2019ve known this stuff earlier.\u201d And of course we all wish we could\u2019ve known this stuff earlier. And so teaching it to young people is one of the main reasons I took the time to write the book and the workbook. So also in freak phase 12, it\u2019s guiding them on a path to buy their first real estate property as they work themselves through the book. But they don\u2019t have to, right, because it\u2019s very flexible and if the young person has zero interest in owning real estate, then it guides them in other ways to build their wealth and passive income. But if they are interested in real estate, it\u2019s going to get them to buy that first property and house hack it right around this phase, phase 12 or 13.
So in this phase, it tells them to choose a real estate agent to help them buy that first investment property, which would be a house hack and the steps to go to make sure you have a great agent to work with. Determine your systems for managing that property is another task in that freak phase. Your systems for managing the property, utilities, expenses, collecting rent, that kind of stuff. Opening a couple bank accounts, a checking and savings account specifically for that property is a checklist item. Starts submitting offers, which is exciting working with that agent and finding properties that you\u2019ve analyzed and the numbers work and finding a right agent obviously is so key.
They\u2019ll help you in that process and then start submitting some offers close on your first real estate deal is a checklist item. And then there\u2019s some items that are repeating in most phases like setting some financial goals for that phase, a new freak tweak, selling a personal item, evaluating your income streams, that appears about every three or four phases, calculating your net worth is again something that comes up about every three or four phases. Networking, shadow someone for a day. These are all things that just build your likelihood to reach FI and some people, a workbook checking things off is just the way to make sure it gets done.<\/p>\n
Dan, I think this phase would actually compliment the Real Estate Rookie Bootcamp where you learn how to make offers and how to purchase a property. So when you\u2019re giving this book to someone or someone\u2019s going through and reading it, what would you say is overall the most important action item of the ones that are repeatable that they\u2019re doing? So the new freak tweak or selling a personal item or finding a new fun free activity. What are one of those things would be something they should be really diligent about consistency?<\/p>\n
Yeah, I think the answer to that question would be networking. It is so incredibly crucial for anyone, no matter what age and no matter what your goal, honestly, to surround yourself with like-minded people and the workbook guides them through what are different ways that you can network, what are different ways you can put yourself out there to find like-minded people, both your age, cohorts and peers, but also people who might serve as more of a mentor role, all of that is networking and the community I\u2019ve built is all about that aspect of bringing together young people who have similar goals but are freakish, right? Their good friends, their core circle at home may not have the same interest but bringing them together in a place where they can connect and network with each other and hold each other accountable and stuff like that. So I think networking is so incredibly important. You cannot put a number or a price on the value that\u2019s going to bring to your life.<\/p>\n
Yeah, like I said, obviously, I\u2019m kind of freakish myself, right, but I read the Four Hour Work Week when it first came out, I was in my early twenties and I immediately tried to start selling stuff on Amazon because I was so juiced up after reading it. The Millionaire Fastlane by MJ DeMarco was another really good book that\u2019s kind of in the same vein as Tim Ferris. But the reason I bring that up was because that was me Dan, I felt like the people around me at that age weren\u2019t thinking along the same lines that I was thinking. And I literally remember I had a blog and a podcast and I was like 21 years old about personal development. And I was in a mastermind with these other bloggers and podcasters and they were all like in their 30s and 40s right? Here I am this 21 year old kid and that was my circle, right? Because no one else who was 21 was trying to do the same thing. So I couldn\u2019t agree more that there\u2019s so much value in the network and the community that you build around yourself to kind of keep you juiced up and wanting to move forward.<\/p>\n
It changes everything, it really does. Absolutely.<\/p>\n
So Dan, I know we\u2019ve got several phases throughout this entire process. You start at phase one and it goes all the way down to phase 14. But depending on where someone picks this book up, do they always need to start at that phase one or maybe they move through it faster? Is there an element of customization to the phases you have here?<\/p>\n
It\u2019s very customizable. And so in the introduction to the workbook, I explain how to do that. So let\u2019s say someone\u2019s 24 and they pick up this book, but they are still in that beginning stage of learning about early financial dependence, learning about real estate investing and they haven\u2019t really taken any action yet but now they have the workbook. So you would still start in freak phase one. But I explain, instead of doing that freak phase in four months, maybe do it in two. Or maybe take freak phase one and freak phase two, combine those lists and try to get that done in four months. So you\u2019re accelerating the process. In this mindset, what young people sometimes forget, they\u2019re so driven, right? They\u2019re so motivated. They forget that it doesn\u2019t all have to be done today.
And even if takes them five, six, seven years to get to some major milestones, they are still decades ahead of most people out there who never earn a penny of passive income, who never own any real estate except for a primary residence, who never start a business of any kind, that\u2019s the vast majority of people in our country. And so sometimes I try to pull them back a little bit and said, \u201cYou don\u2019t have to do everything this year, just take some major steps in the right direction and still allow yourself to have some fun with your friends and do some fun things. You don\u2019t have to be 100% business all the time.<\/p>\n
So Dan, before I take us into our Rookie exam, since this is a real estate podcast, I just want to go into your portfolio a little bit more. What are two or three things that you could you have learned? Maybe it was an obstacle or a challenge you had building your real estate portfolio that you could share with our rookie listeners that you have overcome in a lesson you have learned.<\/p>\n
I think one of the major lessons is that you just got to do it. My wife and I have made a lot of mistakes. Some of them very costly, honestly, but obviously where we\u2019re at now, the net effect is hugely positive. And so, we\u2019ve signed leases with really bad tenants and regretted it, but the lesson we learned while going through the process of dealing with really bad tenants, we know that we\u2019ll never do that again and we have the right systems and processes in place to make sure it doesn\u2019t. Selecting the right properties, we\u2019ve made some bad decisions there. But you can learn everything you want from books and podcasts and blogs and talking to other people who are more knowledgeable than you. But until you actually take action and start doing these things, that\u2019s when you really start to learn.
And so I would say don\u2019t be afraid of making mistakes because you are going to make mistakes. And it\u2019s in those mistakes that you learn so much and you grow and your future, until you make those mistakes, you can\u2019t get to that next level. So know that it\u2019s going to happen.,It\u2019s not going to be a perfect pathway. I mean, every day in my side business of the Sheeks Freaks Community, I make mistakes and I learn so much. But it\u2019s only because of that it continues to grow and strengthen and become a better community.<\/p>\n
Dan, before we move on to the rookie exam, I don\u2019t think we touched on this at the top of the show, but just what does your and your wife\u2019s portfolio look like today? We know you started with a house hack, how big have you guys been able to scale?<\/p>\n
Yeah, we have 17 units mostly in Colorado. And that\u2019s a mixture of small multifamily and single family houses. We have three single families in Detroit or just outside Detroit, Michigan. They were all burrs, obviously all long distance. In Colorado, we have two short term rentals that we Airbnb full time and we have a house hack. So we have a three bedroom house and we rent our basement out to a young woman. I think she\u2019s our fourth tenant we\u2019ve had down there. That\u2019s amazing passive income. It\u2019s freakish, right? My wife and I have a one year old son, most couples who have small kids would never rent out a floor or a bedroom or to a stranger although our tenant right now is amazing, she\u2019s awesome.
But in order to get a different result, you have to do things differently. It is a little bit of an inconvenience at times, but overall not really. We would never use our basement. And so she pays us basically 1,000 bucks a month, that\u2019s $12,000 a year to expediate our investments and our net worth and reach our goals even faster. So I\u2019m a huge fan of house hacking, especially for the beginner and the young person, as you know, if they want to get into real estate.<\/p>\n
I couldn\u2019t agree more, such a great way to start into real estate investing. Dan, how long did it take you to build your portfolio? Once you met your wife and you guys started investing together?<\/p>\n
Seven years, we\u2019ve been at it seven years.<\/p>\n
That\u2019s awesome, congratulations.<\/p>\n
Thanks.<\/p>\n
Okay. It is time for the rookie exam now. So being a teacher, I\u2019m sure you should be able to ace this exam. So Dan, the first question is one actionable thing rookie should do after listening to this episode.<\/p>\n
Can I say go out and buy First to a Million, the book?<\/p>\n
Absolutely.<\/p>\n
Yes you can.<\/p>\n
I honestly, I mean, I wrote the book and the workbook for that young person or beginner who\u2019s just trying to consume all this different information and maybe it\u2019s not making sense. This is the place to go to start fresh and really kind of sequentially learn what you need to learn. So that would be my advice, it\u2019s a little self-serving I suppose, but it\u2019s the best advice I got.<\/p>\n
All right Dan, question number two, what is one tool, software, app or system that you use in your business?<\/p>\n
One of the ones that we found super useful for our, for our short term rentals is an app called Turnover BnB. And it\u2019s a way to find people to clean or even sometimes manage your property with very little effort. So I highly recommend that.<\/p>\n
Cool, thanks for sharing, I haven\u2019t heard that one before. Have you Tony?<\/p>\n
Yeah, I\u2019ve heard of it.<\/p>\n
Probably, yeah?<\/p>\n
We haven\u2019t used it before.<\/p>\n
Of course, he\u2019s heard of it, yes.<\/p>\n
Yeah. The last one Dan is where do you plan on being in five years?<\/p>\n
Five years. So my wife, she was a teacher as well for 19 years and she retired from teaching about two years ago.<\/p>\n
Wow. Congratulations, Dan, that\u2019s amazing.<\/p>\n
Thanks, yeah. So we\u2019re blessed that she is able to be home with our son full-time. She does some property management, she does manage our rentals, our portfolio. And she has a side hustle as a notary signing agent, but all of that is kind of on her own time. So she manages our household. And so in five years, I hope to be either halftime myself or out of teaching altogether, but it that\u2019s a struggle because I love my job and leaving altogether is not something I\u2019m ready to do yet. But we may have another kid in the future as well. And once you have a family things completely change and now I just want to spend every moment I can with my family. And so in five years, that\u2019s probably what I\u2019ll be doing.<\/p>\n
And I think there\u2019s definitely a way to fulfill your passion of teaching and educating people without having to work at a school either and being able to turn it into your own business and, yeah. Well, I\u2019m excited to see what you do and how you grow and congratulations on all your success so far. Everybody make sure you go check out Dan\u2019s workbook, it is currently available on amazon.com. So Tony, do you want to highlight today\u2019s Rookie Rockstar for us?<\/p>\n
Absolutely. So if you listeners want to get highlighted as the Rookie Rockstar, be sure to get active in the Bigger Pockets forums and the Real Estate Rookie Facebook Group, we got almost 50,000 people in that group, super active, super engaged. And then if you got a good story, we might share it on the show. But today\u2019s Rookie Rockstar is Patrick Ryan. And Patrick closed on a six unit apartment building which brings Patrick\u2019s total portfolio up to 23 units. And a few quick notes from this six unit acquisition, it was off market so they sent out some postcards, they were able to negotiate seller financing. So the sellers carrying 20% back of the loan and they use that as part of the down payments.
And then on the price, they paid about $72,000 per unit, which is really good because they said most other units are trading around 100K to 125 K per unit. And there\u2019s a lot of upside in the rent as well. But they were able to get $16,000 in cash at closing because of the way that some of the rents were set up. So I mean, it sounds like an amazing deal all together, Patrick, congratulations to you brother for knocking it out the park.<\/p>\n
Yeah. Great job, Patrick. Well, Dan, thank you so much for joining us. Can you tell everyone where they can reach out to you and find out some more information about you and of course learn more about First to a Million?<\/p>\n
Absolutely, yeah. People can find me on Bigger Pockets. I\u2019m there every day, LinkedIn, Instagram, they can also email me at [email\u00a0protected]<\/a> First to a Million and the First to a Million Workbook are available on Bigger Pockets and Amazon and everywhere else. Also, if there\u2019s some young people out there interested in the Sheeks Freaks Community, sheeksfreaks.com, you\u2019ll learn everything you need to know there.<\/p>\n
And I have to add, I really think this is a great book for anybody that\u2019s going to a graduation party this spring, this summer, I think for high school graduation, even college graduation. So if you guys are looking for gift ideas, I think this is a great one.<\/p>\n
Yes.<\/p>\n
Okay. Well Dan, thank you so much for joining us. I\u2019m Ashley at Wealth From Rentals and he\u2019s Tony at Tony J Robinson. If you guys love the podcast and you have a success story, a win, please share it with us. You can leave a review on your favorite podcast platform and we will be back on Saturday with a Rookie Reply.
(singing)<\/p>\n