E512 | The Benefits of Business + Real Estate

Today, my business partner, Jerred Moon, is joining me to discuss the combination of business and real estate. A great way to secure long-term financial security is to combine the two, but this also requires understanding how they can work together. Enjoy!

• Learning to make enough money before investing
• Making net-worth decisions
• The more leveraged you are, the more risk you have

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Podcast Transcript

Danny: [00:00:00] So there's all kinds of hidden fees within your business that are just part of doing business. One of those is credit. Processing and for us, we didn't even realize how much we were paying in credit card processing with the first management software we were using for our practice. And when we switched over to PT everywhere, we just realized we were saving literally hundreds of dollars a month with credit card processing with their partner with Card point versus who we were using with our prior.

Software. This has made a massive difference. It's more than paid for itself. It allows us to decrease our overhead. It allows us to have more cash flow to reinvest in our people, in our technology, in our facility, in marketing and everything that's gonna drive the business. So don't get abused by credit card processing companies.

Make sure you're paying what you should pay. And if you're looking for a management software, highly recommend PT everywhere directly integrates. Processor makes it very easy and their rates are super, super competitive. So it's saved us a ton of money and it probably will do the same for you if you don't know what you are getting charged.

So head over to PT everywhere. Take a look at what they've [00:01:00] got. I think you really like it. So here's the question. How do physical therapists like us who don't wanna see 30 patients a day, who don't wanna work home health and have real student loans create a career and life for ourselves that we've always dreamed about?

This is the question, and this podcast is the answer. My name's Danny Matte, and welcome to the PT Entrepreneur Podcast.

What's going on, guys? Dr. Annie here with the PT Entrepreneur Podcast, and today I get to bring. You're like the silent business partner. Yeah. The one, the guy you're like you're like Batman. You're like functioning the shadows in the background. Nobody knows about me, nobody knows about you, but you're Christian Bale in real life.

And Batman at night and j Jared Moon is who this person is. It's not Christian Bale. And. He's he's one of the three of us at PT Biz, Jared, myself, and Eve Gigi[00:02:00] are the partners at PT Biz. And I don't often get a chance to do a podcast with you cuz we're usually talking about, purely clinical stuff and business.

Relating to that. And for those of you that don't know, Jared owns a company called Gras Gym Athlete, which is a online fitness company. And the reason that, that he's just such a valuable partner with us is he's so good when it comes to understanding how to like effectively run the backend of businesses effectively, how to run online businesses in particular and has really been able to help us scale that.

But the other thing that Jared is really good at, Investing in real estate, which is something that, I haven't been doing quite as long as Jared has, but it's something that I have found myself moving more and more towards as a nice hedge in a way, to the business activities that we're doing.

And I, we wanna really talk about that. And the combination of. Business and real estate and the benefits of the two together. I think it's a really solid combination between the speed and the potential of businesses and [00:03:00] the lack of speed in a good way, and the stability of an asset like real estate when it comes to really securing.

Long-term financial security and and wealth for you and your family, over, over a very long-term, maybe generations even if that's your goal. Today we're gonna talk about those two. So Jared, let's start with this. Let me hear your sort of like origin story into your first real estate investment.

Like, how did that happen?

Jerred: Yeah, so I guess the first one I owned was co-owned with my dad. But the real origin story was we had a family friend. If you hear me in enough content or podcast, you'll probably hear me talk about a mentor of mine and this mentor. She. Just not a real estate agent.

She was for a while, but then it was just entrepreneur owned a ton of real estate and I ended up working for her when I had a, some gap time between college before going active duty. They, there was like a six month window before I [00:04:00] could actually go active duty after I graduated from college. And so I worked for her and just picked up so much stuff at that time.

They had they own. I think it was like 90 single family homes, a couple commercial real estate things. And today I think they're like, well over 200, 2 50, something crazy like that. And so they just had this like, well-oiled machine and they were only about single family homes, right? They, and they could, they had the money to do whatever else they wanted, but they just felt like that was their wheelhouse.

And so they stayed there. And so I learned a lot about doing it. I learned a lot about Like foreclosures, like I went on a lot of those trips with my mentor and her husband, like looking at properties. And so I gained a lot of skills. But the funny thing is e every time I would travel with them when they would do they would do talks at all these different events and stuff.

And I got to be on a fly, fly on a wall. And one thing that his name is Jim he'd always say when he was giving these presentations was people would be like, where do you find the money for these things? And like, all this stuff. And his response was always the same. But I [00:05:00] never really picked up on the importance of what he was saying.

He would say, you need to go get really good at your job first. And cuz he wasn't I know there are a lot of other things out there about. Ho home equity loans and other people's money, right? O p m and like all this crap. But he wasn't about any of that. He was about you buying the real estate.

And so that, that kind of came foundational to me. And so when people were like looking for these other ways to own real estate, his answer was always basically, how about you go learn how to make enough? To where you can do what I'm talking about. And so that, I, once I realized that, I realized that's what I had to focus on before I could start focusing on real estate investing.

And so that's kinda the origin story there. I saved up just enough through a side hustle at the time. To go in on buying a property with my dad. And so there was this other investor who was looking to get out of a really crappy property, and so we were just buying it straight from him. And that was my first property.

And it was about [00:06:00] as bad as you can imagine. Like everything everyone worries about with like real estate, like we had happen. So we're talking. Massive water damage, like plumbing leaking into the wall and underneath the property. We had a tree a giant tree limb fall off during a storm break through the roof.

We had to evict three different tenants from this property cuz they wouldn't pay their rent. So I'm talking about my first property was. Every nightmare that someone's concerned about when they're talking about real estate. And I own a bunch of other properties now and haven't had to do that on any of them.

And so you really need to know what you're getting into when you're buying things. But that was my first property and kind of the origin

Danny: story of where I started. Yeah, that's funny. I think for a lot of people they would've been. You know what? The real estate's not for me. That would've been it.

They

Jerred: were, they got very close to that multiple times.

Danny: Yeah. Yeah. I feel like I, yeah I've heard I've heard you a couple times where you're like, man, just, especially cuz you guys still self-manage and some of the things you have to do or just somewhat. [00:07:00] Redundant sometimes, but I know for you, your strategy and mine too, even with our first rental property was a house that we lived in and then we moved.

And that house that we, left, turned into our first our first rental property. In fact, for me it was by accident. I was trying to sell our house. This was in 2000. And what year was this? 2013. No, I take that. 2010 in San Antonio. So I had just graduated from PT school. We had this little house that we bought for $120,000, in Selma, Texas, which is a decent drive from where I was going to school, but it's where I could get like the most house for the money.

I was close, closer to the Air Force base actually than the army base there. But but when we left, we couldn't sell it. Like it wasn't a great time to sell a house by any means. And so we decided to, we decided to rent it. And luckily for us, if, it's funny, like the first guy that I met with we actually had two tenants before we, we ended up selling the property.

[00:08:00] The first guy I met with him at a a local Mexican restaurant and I'm like, I'm a good judge of character. I'm just gonna handshake a cream with this guy. We agreed on a lease to purchase of all things like, so a lease to purchase, which. Actually turned out to be pretty good for me.

Meaning like he was actually paying more money per month with the intent of buying it at the current price of the house. Like a year later. He ended up not, he ended up moving on and he kinda screwed up our yard, like his dogs messed it up. And we had some work we had to do, so all the money that we made was actually, we had actually put into like fixing the house back up.

The next people we get in is a pair of Army nurses and. We had a property manager at this point and they were like the world's greatest tenants. They paid on time, every time, and they even fixed our house up. They put like hardwood floors in, they put sod in the backyard. They just were like using our house as a test house for a house.

They were eventually gonna buy themself and just little projects or whatever around it. So it actually worked out great and as we looked. Back on, on that one property. The reason, the only reason we sold it is we sold it to start our [00:09:00] business. So we sold that property, took the equity from it, and we put that into starting our practice and having cash reserves in place, to be able to do it.

That thing, even though we wanted to sell it and we left, the five years later or wherever it was It was so awesome because it had appreciated in value. The loan had been paid down. We've been getting cash flow every single month. We're positive cash flow. And we sold it, at a gain five years later, which allowed us to start a business.

I think we're reluctant on real estate investors and now I look at it as just an asset that is, I want to, have as much of it as I possibly can for a few reasons, we both own businesses, multiple businesses, and business is awesome. Business is, I think, the best way for somebody to really increase their income increase their potential, as well as your net worth because you are getting equity in your business if you're building it the right way.

But it can also go up and down. Sometimes erratically. Oftentimes you can control it, but sometimes you can't. Last in 2020, our business got shut down [00:10:00] for quite a while because of a pandemic. Not that we saw anything humming, but we were just in-person business for other businesses that might have helped them quite a bit for us.

It did not. And you look at something like real estate and people still gotta live some. Now granted you maybe have a hard time getting somebody to pay rent in certain places, but but it's just a very steady, slow asset that I think the combination is really good.

When you look at it in particular with your approach, like how do you view real estate in the grand scheme of things with how your business and real estate function together?

Jerred: Yeah, so for me, business is all. It's my earned income, right? There is obviously a value to a business.

Most businesses, if you're doing it right, are sellable. But that I'm not banking on some sort of payout. Like I've just, I just have my earned income. And so I'm really looking at real estate. I take all the profits from my earned income and then I try and dump it into real estate when I can, and what that does for me is this cash flow kind.

It starts to eliminate my [00:11:00] need for earned income. And this is my long-term approach. My long-term goal is, and I've started, I started really small and I al also always recommend people do that with financial goals. So if you have a car payment like my wife and I did, we don't have car payments, but we, when we did it was like, If your car payment's 400 bucks a month okay, can I get to 400 bucks a month in cash flow from real estate to where my car payment is covered?

And I've just had like tiny incremental goals like that. So I'm taking my earned income, taking as much of that as I can that I don't need to live, and then I sink it into an investment that cash flows and then that cash flow eliminates need for in earned income slowly to where my one, one of my goals was.

I would, I. Want a mortgage, but not necessarily. I don't want, I don't want to sit here and dump all my money into my house. And then not have a mortgage. That's one approach. Yes. Instead of doing that, I said, I want my real estate investments to pay for my mortgage. [00:12:00] That way I don't have a mortgage payment.

So that was the next one. We achieved that, and then it just keeps going up. It just keeps going. Like at what point, how many houses do I need or whatever to where I just, I don't need earned income anymore. And then to me that's that's true financial freedom. You're, I love what I. I love earning the income.

Like I love the game, I love what we're doing. But that security of if this were to go away or shut down and my mortgage is still covered and my, I can still buy groceries from this passive semi passive real estate, that's what I'm g doing. That's been my long-term goal and what I've been working on for a long.

Danny: Yeah. And I think that's a great definition, right? I think for a lot of people, they they talk about the idea of like financial independence and there's all these, fire movements. The financial independence retire early, and then there's fat fire, which is like ball out with financial independence.

And it's just, it's interesting. You start going down the rabbit hole with these different things and The vast majority of them. Yeah, go ahead. Look on

Jerred: The problem I have with those those groups and those things, they [00:13:00] all, they're, they think so tiny. Yeah. Like their solution to everything is shrink shrink.

I only want a, I want the crappiest house I could possibly live in. Let's make it a tiny house. And and there's nothing wrong with that if that's your approach, but that's what I didn't like about it. Yeah. I want. Have a, an awesome, comfortable lifestyle that's still afforded by real estate, not this shrink down.

How do I live off of 1500 bucks a month for my family of five for the rest of my life? And those are the problems I've had with those kind of movements, but I've encountered a lot of them because I have a similar strategy, but I'm just trying to do it on a much bigger level.

Danny: Oh yeah you're a fat fire guy.

I didn't know this was a thing until recently. I heard somebody say something about fat fire and I was like, what is fat fire? And so fat fire is basically, financial independence, retire early, but like ball out at hundreds of thousands of dollars a year. So that's it. Yeah. So they're basically trying to replace an awesome lifestyle versus I totally hear you.

I think there's, if you look at this equation right, of like your. Your active income or your expenses, let's put it that [00:14:00] way, your monthly expenses that you need to live. Offset by non-active income, right? And that can come from a number of different places. That can come from a passively run business.

That can come from dividend paying stocks, that can come from yield on cryptocurrency, that can come from real estate passively. Of all the ones I just named, the one that is probably the least erratic and and most secure. Is real estate. It's been like that for a very long time. I was at this house in Savannah with Ashley, and it was this.

Big, like whatever mansion it's almost like a somewhat of a museum at this point. And we're walking around doing this little tour and the guy that owned it, it was a he had 60 houses that he owned that he rented out in the Savannah area. And I'm like, breadcrumbs. It's like that's, people leave those, like there's these paths, these trails that you see if you look enough.

They're all business. Real estate tend to be the areas that the vast majority of people that have. Significant wealth have [00:15:00] some element of that involved in what they're doing. And when we look at this idea of expenses offset by non-active income, you can decrease your expenses dramatically.

Like you're saying, live off $1,500 a month through the Dave Ramsey envelope system like I did back in the day. Hate your life and and not do anything fun, right? And yep, you can hit there, there pretty early. Maybe that's like a rental property or two and you're there. And maybe for some people, that's what they want or where they start, right?

But I think what you're talking about is a smarter idea of going about it. How do you start chipping away at certain elements of your expenses, like the idea of your mortgage, or in some cases, if people are listening to. Your student loans, right? What if you could get an extra thousand dollars a month off of, real estate, off of cashflow from real estate and that pays your student loans down?

How much does that help? I'm not even talking about completely replacing your income, like just that alone. Is a huge help, A huge burden is lifted off of people and that's the direction that we went as well because, we wanna slowly accumulate enough assets for that to [00:16:00] happen because it's very risk averse in comparison to, we wanna go fasten our businesses.

We know which are higher risk. So I think that the balance of the two, works really well. The other area that I feel like we talked about cash flow, but what people don't realize also is, Pretty significant tax benefit. So you keep more of what you make as far as real estate goes.

Maybe you can touch on that for a second and explain the basics of, how the real estate is actually a pretty tax advantaged investment. Yeah,

Jerred: so I don't Ben, I'm not, I'm definitely not the tax expert here, only because as and as I alluded to everything in my play is cash flow.

Yeah. Like to the point where I haven't paid attention to the mu as much on the tax side. But. There, and I don't know if this is, necessarily for everybody, but yeah, you can de deduct a certain amount of depreciation. Also depends on your income level. And then if your spouse is really involved, things that you and I have talked about and something Emily's doing right now is either being or becoming a real estate professional.

So you can have kind of an [00:17:00] unlimited deduction for. For these depreciation that do cap out at certain income levels. And so that's the main thing I think would be, yeah, there's so many things that you could do with tax that you could talk about cost ss cost segregation to like, take all the depreciation from a property instead of doing that over whatever, 30 years, like a property would typically require roundabout, you could do it in a much shorter timeframe.

Do, take all those tax deductions when you want them. So I think that's the biggest play. And like I said, we're doing some of those things, but it's not our biggest focus just because like we do we're trying to. Have more properties owned. Outright than leveraged. Yeah. That's, we've moved that more recently to that being the goal.

Mainly because the market has been so ridiculously crazy. Like you almost can't buy anything. But like buying stock, like it'd been great if I bought Bitcoin or Tesla like 10 years ago. That'd be amazing. And, but, and, but it's the same with a house. Like I have some houses that I bought, [00:18:00] almost like the stock market at these lit really low.

That are not only low on the mortgage rate, just like you're talking about like $120,000 house. Now those houses are worth $500,000 in this area. And you have that marked into time to where I'm stuck at one 20, but the market's saying 500. Yeah. So if I just sink cash into that one 20, paying off that debt, that's like my best investment.

I can't find a better cash on cash return because of how valuable the property is now. But going back to your tax situation, Yeah, Mo, most of that is I think that's gonna be the majority of what everyone would benefit from is the depreciation that you can claim on your taxes. I'm sure there's some other stuff, but those are the main

Danny: ones that we're doing.

No, even I noticed this, like even on a simple level, when we had our rental property and we tried it, the one we tried to sell to turn into our first rental property, I remember, my taxes were super simple back then. I remember doing it myself until I stopped doing it myself when we had this rental property.

Cuz then it got a little confusing for me. So I stopped and we had an accountant and I remember like we made. We were making about [00:19:00] 300 bucks a month off of the house that we had. And I remember thinking, okay, this is 36 thou, $3,600 I'm gonna have to pay taxes on. And I remember when I got my taxes back, I had zero income.

I had to pay zero income tax on that. That cash flow from the property. I remember talking to CPA and I was like, what the hell's up with this? This is weird. And she goes, oh, it's because you can depreciate. The building over a 27 year period or whatever it is. So the depreciation is more than your income is on this.

So it essentially like zeros it out and and I was like, what? And she goes, yeah, so you don't have to pay any taxes on this portion of your income. So even if somebody is just like looking at a single family home, right? It's a very simple example. In that example, you could add $300, let's call it like where I was at per month to what you're making.

But instead of you having to take 20, 30% of that or whatever your tax bracket is, and then now that it gets allocated towards taxes, it's actually zero. So I look at that basically that's like me multiplying that money by 20 or [00:20:00] 30% because of the actual Amount that I'm able to keep. And I always found that really interesting, but also understanding why is because there is a somewhat of a, a housing shortage in the US and the government doesn't necessarily want to create, massive housing programs that they have to manage because it's pretty inefficient in comparison to individuals doing it.

So they incentivize people through the tax code to actually be landlords because they want help on that problem. So that's why they do it, and that's why you're allowed. It's depreciation of the property, which is essentially like it's a paper loss. It's not that the property is depreciating terribly, like it's falling apart, hopefully it could be totally fine, but on paper it's worth less because of the usage of it, even though it's actually going up in most cases because of appreciation, which you talk about, right?

So you, when you bought the whatever house for $120,000, you. You just gave it enough time in a good location and now it's worth, three, four times whatever it was whenever you got it, I'd assume. Unless you guys did a bunch of renovations to it.

Jerred: Yeah. And [00:21:00] then, and that's what's so cool about it, is when you own these assets you could, I don't want to because I'm always trying to make net worth decisions and that's what, people ask me about real estate and a lot of the other strategies that there are out there, if you.

If you take on a loan that technically decreases your net worth cuz it's a liability. But what you're hoping for is the appreciation side of that would technically increase your net worth. Because if you have $300,000 of appreciation or what the market value of the house is and a hundred thousand dollars on the loan, then you.

Two, $200,000 net worth right there in that instance, or in addition to your net worth. And so trying to always make a net worth decision in real estate is what I push people to when they're asking me questions because they're like yeah, I could get a home equity loan, wrap that money into a deal and buy it and I'm I say that's fine.

If that's where you need to get the cash for your first deal or whatever, do that, but actually [00:22:00] map it out net worth wise, let's just say over a five year period. Because if you are going to take on a hundred or $200,000 additional in your current home mortgage, that's how much you're lowering your net worth.

And you're gonna take that money, you're gonna put it into an asset. And then how much value, what's the loan to value there? Like how much do you actually own in that property and what's it worth? And you can pretty much find out if that's a good deal or a bad deal right away from calculating it on your net worth side of things.

And people don't do that enough. I think I was only making cash flow decisions, which is not a bad decision to make in real estate. But now I make net worth decisions cuz I'm like, I could like leverage all the properties that I have. Increase the loan balances, right? Do home equity loans on all of them.

Pull out like a million plus dollars and go my buy more real estate. And that's what a lot of people in my situation would be doing. But I'm not because net worth wise, that makes my personal finances a little bit more unstable. And like you were saying, I'd rather be unstable, [00:23:00] moving fast, doing crazy stuff in business.

Not with this wealth building side of me that's really I don't need this money. I don't need to accelerate the speed, I don't need to do any of those things, so why would I take on more risk if it's not

Danny: necessary? Yeah, dude, I think of it like vehicles, right? Like I there's a myth here in Atlanta.

I dunno if this is true, but the 2 81 is the, Or 2 85. 2 85 is the, this, perimeter of of Atlanta. And there's a myth that like there's certain like biker, like motorcycle gangs where they have to make it around this in a certain amount of time. And it's big, I think it's 80 or.

80 miles, whatever but they have to make it in a certain amount of time. And you'll see like motorcycles on on this road sometimes. And they're going like 120 miles an hour. They're going so fast, right? And it's sketchy, but they can go really fast and be nimble. They can cut through cars and just they get where they're trying to go or they're making that like really quick.

And then, I look at we have a Volvo though. Okay. Volvo. It holds six people comfortably. We can go get pretty good gas models on it. It's a plug-in, [00:24:00] hybrid and safe. It's comfortable and it's very safe shit. Load of airbags. It's moose proof apparently. I think of business, I'm like I'm that guy on that motorcycle going fast, cutting through, different places trying to get where I'm going fast.

But I can also. I could also really get hurt pretty bad if I screw it up. Now, granted, we want to be, have like good risk adjusted decisions when it comes to business, but sometimes you have to take risk in business in order to be able to make, some of the progress that you might wanna make or, Decisions that might really improve the business, but I don't want to put all of my opportunity and my families like income potential all in one place. I don't wanna strap all my kids onto this motorcycle and go super fast. I wanna put them in the Volvo though, and I want it to be safe and a little slower. And I think that's the nice part about real estate is, granted people can.

They can go fast in real estate as well, and they can do really, dumb things if they don't know what they're doing. If you're trying to flip houses and you don't know what you're doing, you're taking on like 12% interest rate loans from people that also are like, take the [00:25:00] house from you if it doesn't work.

That's a really probably sketchy thing to do. And if you don't know what you're doing, you could mess up. That's not what we're doing by any means. We're actually. Doing like probably the most conservative things possible that you can do in real estate. And just give it enough time.

And one, one of my one of my buddies is a realtor and there does a ton of real estate investing up in Minnesota. And he always says real estate is like a bad, it's like a bad haircut. He's it's al it always works out if you give it enough time, it's always gonna be good.

And that's the thing that I feel like it forces people to be patient. If you could really look back right, 10 years ago when you bought that house, I bet if you could look back, you're like, man, I would've bought as many of these houses I possibly could. Knowing what you know now, right?

Jerred: Yeah. And that's the thing is and that's why you have to go back to my mentor's point, get really good at your job so you have the money to be able to do these things. And yeah, I would've bought plenty of those because that bad haircut example is so true. Like I have one property. I think I cash flowed like $180 maybe.

Maybe. And that's if [00:26:00] I take, if I were to honestly sit down and do the math, it would probably is worse. If I took in all the expenses, right? I'd ra I'd rather not do the math. So it's probably like a hundred bucks a month cash flow. And that's not, that's if you're struggling to make.

Monthly earned income to support your lifestyle. Having a property that cash flows a hundred bucks a month and the AC goes out that's gonna be a really scary situation to be in, but that was the bad haircut. Fast forward to today. It cash flows. This isn't the rent on it. It cash flows like 1200 bucks a month.

Yeah. And that's just such a drastic difference. I, how long did I have to wait for that? I, yeah, I'd wait eight or nine years. But the cash flow, and I'm not saying that's always gonna happen to you, like listeners out there, like the real estate market went freaking bananas over the last couple years, last two years.

Really. And that's the reason those things are happening. And it could even come back down. And that's why I'm not over-leveraging these properties and pinning the mortgages up higher and getting more equity out of them. But anyway, they do tend to work themselves out and you just have to hold onto it for a long [00:27:00] time.

And Emily always thinks it's funny because. I won't sell anything. Like period, die. Like we were talking about moving. And she's we have so much equity in this house, the house we live in. She's like, why? We just sell it and roll it into the next property. I'm like, no, I would rather be uncomfortable, spend all of our savings, do whatever I have to buy the other home.

And turn this one into a re a rental because once I buy something, I just, there's something about me that I just can't sell it. I just can't Yeah. Do it. I can't bring myself to do it. And so yeah, that's, those are the kind of the decisions and mindset you probably need to get into.

Danny: Dude, I've sold two houses and I wish I hadn't.

Like both of them by the one house, I'll give you a good example, I sold our house in San Antonio. When we when we started our business, we sold it for, we bought it for one 20. We sold it for one 70. And we had about we probably had, it was less than a hundred thousand dollars on that we had, left on the mortgage.

So we made a good chunk of, a good chunk of money, which allowed us to have a, to have. A [00:28:00] cash cushion to then be able to start a business and not feel, like I needed to go get a job somewhere else or anything like that at the same time and go all in on it. The other house, we sold it so that we could move into a bigger house in our neighborhood, purely because we couldn't afford it any other way.

None. And I looked at so many different ways of doing it, and I couldn't make it work. And the house in San Antonio, by the way now, Probably closer to a little over $300,000. And the house that I sold in our neighborhood it's worth a couple hundred thousand dollars more than when I sold it.

I'll just put it that way. And not only that, the guy that bought it, they lived in it for two years and then he turned it into, Awesome Airbnb. Yeah, you showed me that. It looks awesome. Yeah. Yeah. He's killing it. Like he's absolutely crushing it. It looks amazing. Like it looks better than when we lived there for sure.

And now I drive by this house and every time I drive by it, I'm resentful of the fact that I did not hold onto it, even though I know I, I knew I should have. But it's because, we wanted to move into a house where we could absorb family and host family gatherings and stuff, and we had a [00:29:00] lot of reasons.

We decided to do it, but on paper it was a bad idea. I agree with you completely with that. And I think that if people can have a more long-term perspective on some of these things, especially as they're looking at, if they're thinking to themselves, oh, 300 bucks a month, netting that is, it's really not like changing your life, all of a sudden.

But that house five years from then, just when, with the appreciation of. Your area. It could go down for sure, but rent also is something that like life just gets more expensive. Inflation is just part of, even not as much inflation is occurring right now, but just general inflation typically is two to 3% per year on average.

That's what the government wants it to be cuz that's actually For the way that our economy's set up, it's healthy. So you know, you take that and then put that with the house. And that's probably what it's gonna appreciate in just a general sense, because everything is moving that direction.

Everything becomes slightly more expensive. The difference is you get to do something with this that you don't get to do with anything else or very few other things. And that is to leverage other people's money to then allow [00:30:00] the time for those things to become less and less expensive. So your interest rate, especially if anybody got into these super low fixed rates, like in the twos.

Part of the most valuable part of your investment is the debt that you have on it. Now, if you went to refinance that now it would be 5%, and your monthly payment would go up significantly. But because of that, you can now cashflow more per month on, on the on the property. So hopefully this isn't like too high level as we're starting to talk about some of these things, but

Jerred: I think the.

Thing that people need to know is just kinda why you're getting into it. Because the reason I was talking about I stay away from all these other things that you could do is because I need something that's relatively hands off because this is not where my focus and attention needs to be. And to be honest, it's not there at all anymore.

Emily is fully taken over that business and she does basically everything, which is awesome. But I. Fully removed from it. We have a strategy that we stick to and it is slow. Making the net [00:31:00] worth decision and why you're getting into it. So again, everyone heard my why. It's slowly starting to pay for my life.

So my need for earned income goes down. I still want to increase my earned income as much as I possibly can, but my need for my earned income gets less and less other things that are happening every single month. When that mortgage is paid down, someone else is increasing your net worth by that.

Whatever the principal payment is they're making, they're increasing your net worth by that. Single month. And then when everything's all said and done, whether they're on 15 year notes, 30 year notes, whatever, when that's done, now it's just cash flow. Yes. Like you gotta pay the taxes on the house and any expenses or whatever, but it's all cash flow.

So it's just also a phenomenal retirement plan because if you were just cash flowing, let's say 300 bucks a month and it never changed for 30 years, and you're charging $2,000 a month for rent on this house it goes from 300 bucks a. On that last month payment to now you're getting $2,000 a month.

And that's great. It doesn't take long to beat out Social Security if you have [00:32:00] a few rental properties,

Danny: oh my gosh. Yeah. It reminds me of my buddy I gotta get him on the podcast who's getting out of the army. He's a physical therapist and he he got into real estate investing.

Right outta PT school, basically just as a hobby. I think he's found it very interesting. And he moved to Savannah after being assigned to a base in the not nice part of California. And he he bought a fourplex. So four units. He's li, he's living in one and then he made Airbnb units out of the other three.

And in this one building, he's been able to offset his income as a captain in the army as a physical therapist. And he is getting out to focus on real estate full-time now that he's been able to like, acquire and build up sell and have ownership in a number of different assets outside of that.

But just that one alone. Has now been able to offset his income as a full-time captain in the military. Which, I never would've really thought you know much about that as a primarily in the [00:33:00] Army because you have a retirement, right? And everybody's oh, okay or the Air Force like yourself, right?

They're like 20 years and you get 50% of your base pay for the rest of your life. And that's, that keeps a lot of people in, but. This, just this one property in Savannah has offset more of what than what his retirement would've been 13 years from now. He would've another 13 years.

Think about what that property's gonna be worth 13 years from now as he, is able to continue to, modify it or just let it go. Just the way that it is. So I think it's really interesting. We start looking at. What you're talking about from a cashflow standpoint, but also a net worth standpoint, and understanding the difference between the two, but how they affect each other.

And what I like to think about more than anything is, you know when you have enough cash flow, Like net. Net worth is somewhat arbitrary in a lot of ways because it's like it's on paper. Yes, you could do things with it, but maybe it doesn't really matter that much. Cash flow directly affects your life cash flow.

When you have enough cash flow. I call it no thank you money. Like when I have enough cash flow coming from other investments, I can just turn things down [00:34:00] because I don't need the additional money. It's probably not worth my time and effort. Or if it is, I can really go for it, which is the flip side of it where it's.

Now I have enough cashflow where I can really like swing for the fences and really go after something that I'm passionate about that maybe I couldn't have if I didn't have the resources or the cashflow to offset that. I feel like I was putting my family maybe in a bad position. I think what it does is just lets you relax a little bit more, focus more on the stuff that you'd like to do and build consistent sort of long-term wealth.

And it's definitely not gonna 10 x in a year, it's like that's not gonna happen. But if you're patient in 10 years, you'll, I think you'll look back and be like, wow, this is like the best thing that I did, besides maybe starting your business, which obviously we're a huge proponents of that as well.

Jerred: Yeah, I think the, like the net worth thing is really just a framework for you making the right decisions before you take on debt. And just forecasting that out. I think it just helps people understand whether or not it's a good deal or a bad deal, because the more leverage you are, the more risk you [00:35:00] have.

But then cash flow is everything, that's all I've ever cared about is just how much. How much cash flow is this gonna make? And my mentors always told me, I'd always ask 'em like how much cash flow is enough and that for like you, for me to move forward on a deal? And they'd be like, a dollar because they know what we're talking about smart.

Like things will work out eventually. And so they would actually be like, if it cash flows a dollar, you should probably do the deal because like it will work out better later. So they're just, it's such a secure thing. You're talking about the military thing. I remember if you sit too long in those.

Whether that's a W2 income or military, you get institutionalized over time. Like whether you wanna believe it's happening to you or not. You're slowly getting institutionalized. Yep. Because I remember talking to friends about this after having been out for several years who are like, they still have 10 more years until they can retire.

And I'm like yeah. I basically hit what my retirement would've been if I only made it to [00:36:00] this rank or whatever. Like it took me like five years. They're like, but they always, they would always find an excuse to be like, yeah, but what if that tenant doesn't pay? It's then I'll get a new tenant.

What? Nah, like what are you trying to poke holes in? My plan? Your plan is like 10 more years of your life doing something you don't wanna do. And so I do think that you have to really think about these things when you're planning out your future and how you're gonna use real estate, dude.

Danny: And not only that, but to be honest with you, It's a, I would say the military pension is probably one of the more secure pensions that you can imagine, but there's many examples of pensions that they've had to decrease because of lack of funding, and the management of the assets that are supposed to fund those things.

And, so I just, I don't know if anything is guaranteed. All I know is I would prefer to control the thing that, that I'm banking on, long term as well. If you get to the point. You can generate a few thousand dollars a month in real estate, cash flow.

You've now learned many skills that are gonna transfer to a lot of other [00:37:00] places that even if something really, catastrophic happened to you financially, it's not about your assets necessarily. It's about the skillsets that you've developed that have allowed you to get there, which is one of the reasons why we're so big on businesses because.

Like our businesses could tank, but we understand sales, marketing, how to right hire people, how to lead people, building infrastructure creation of content. I'm not worried at all about, if I had to start all over again how that would happen. It's, it, there's a number of ways that, that we could go about it because we have learned and gotten good at certain skills that are worth a lot, not just in the economy, but to other businesses like.

Worst case scenario. If, if I'm like, all right, Danny just lost everything, I'll go get a sales position for a software company and make $300,000 a year next year. I could do that because I could sell, I know how to follow up with people. I know how to do these skills that lead to that.

And. And, or I'll just go back to seeing patients, which I fucking like doing anyway. Oh, no big deal. I would totally do that. Like there, [00:38:00] there's these things that you can do because you learn these skills and I think with real estate, what's interesting is it's overwhelming. I was very paralysis by analysis for, with real estate for a long time because.

Dude, there's single family homes, there's multi-family homes, there's commercial, there's short-term rentals, there's passive investments where, you're pulling money together and investing with other people. You can buy debt, you can buy foreclosures. There's all kinds of stuff that you can do, and people see that and they're like, Ugh, this is hard.

Like what? What do I do? I'm gonna do nothing. And the easy, the best thing you can do is just start with something very simple and or find somebody that you trust that you can invest alongside, whether that's in like a a partnership deal or some sort of syndication where you're pulling money and working with somebody that's more experienced than you and still get the benefits of.

Owning real estate, but maybe not necessarily having to learn every single skill yourself. You still wanna be knowledgeable regardless. You wanna make sure you're getting the right type of real estate investment. But there's many different ways to do [00:39:00] it. Just a matter of getting started and being patient.

Super patient. Just let it go, yeah. You're gonna deal with, like Jared said, whatever, a roof problem here and there, or AC unit going out. But if you're okay with this is just part of it, in a decade, it's it's a life-changing sort of cash flow difference that people can have that allows 'em to say no thank you to a lot of other things.

Yeah. And if

Jerred: you take the same approach I did so like my our real estate can cover a lot of. Need for personal income. But we don't use it for that because we have the earned income to cover our lives. And so all that money does is to sit up and build an account. And so when an air conditioning happens, or a roof happens or what, like they've never been big deals for us because we have this real estate pool of money that just sits there and accumulates because I'm not actually.

It's a, it's like a threshold. Yeah, I need this much to cover my mortgage or this much to cover my life. And I know that I'm there, but I don't use that money for that because my earned income can still handle paying for my my life and my expenses. So it's [00:40:00] just what I'm doing. If you are conservative in nature, my approach is like the most conservative slow going thing that you could possibly do.

And not sexy at all. But if that sounds fun, then yeah, definitely look into like single family homes, buy one and then just. See what happens. Yeah. I will say, of all the properties I have, that first one was like Murphy's Law. The rest of 'em have not been near that bad. We've had things pop up, but they're like few and far between, not near as expensive, so just.

I don't wanna

Danny: scare anybody off. Yeah. But I think what you said is about getting really good at your job. It's probably the most important thing for people to take away from this a hundred percent initially, because, you know it, the reason that we br bring this up and that we want to talk about it is because I think it should be on your radar if you're just getting started, it should be on your radar as my business becomes, More profitable.

In fact the best investment that you possibly could make is in your business, if you've started a business, both in the space that you can work with people in these types of practices and the people that you're hiring to work with [00:41:00] them, those are assets in your business. You need those to scale past yourself.

But for minute, we work with, what happens is, they signed on to make about 80 to a hundred thousand dollars a year. All of a sudden, they're making. Twice that, if not more, in a fairly short period of time, even with reinvesting in people and space, and they're not, they don't know what to do with it, right?

So now all of a sudden they have a good problem, which is they have money and they don't know where to invest it, right? So they, they start looking at many traditional paths, and I think it's great to be diversified in a number of ways, but. Tried and true, opportunities for a lot of people when it comes to building cashflow and wealth outside of a business that compliments it, I think in a lot of ways is real estate.

We wanna have this conversation to, for you, number one, just to be aware of it, to know that this is, these are things that, this is in theory, like we're both actively investing in real estate. We're both actively own and run businesses and if we can. Help you realize, all right, what's the next best step?

What skills should you be learning? What are the things you should be thinking about? This is probably the [00:42:00] next place you should be looking. As a business owner that wants to be able to put the money that you work so damn hard to earn a dollar in your own business is so hard to earn. Put into something that.

You're not gonna lose it. You're gonna have something that's gonna be stable, that's gonna be, a very low risk asset that appreciates over time as well as creates cash flow, which can really change your life. Versus you get a whole bunch of money socked away in a 401k, you can't touch it.

How much does that help you? Doesn't help you at all that help you buy groceries if you needed to, or some emergency happen. So just having your radar, I think is what you think about. And if you're a little more advanced and let's say you're. Few hundred thousand dollars a year in your business and you're taking home more than you thought that you ever would.

Probably a good time to start thinking about learning this and where you can start to invest. Cause it's a really good compliment to to businesses. Anything else you wanna leave 'em with? Jared?

Jerred: No, I'll just say that the, just to give people some perspective on timeframe, like I worked with my mentor pre Active duty, air Force I went active duty.

We used all of our additional cash to pay off loans, and then we didn't buy our first property until after I had left active duty. So like we're [00:43:00] talking about, I knew I wanted to do real estate investing and then five years until I bought our first property. Yeah. So it's okay if it's taking you a long time.

Just if you know that's what you want to do, slowly move in that direction.

Danny: Yeah. Yeah. Said. I think it's never too late, and you definitely, you don't wanna put yourself in a place where you're. You're strapped for cash to, to be able to invest in a property. You definitely want to have that ground groundwork laid where you're stable and you have cash reserves and especially for you like, man, you paid off debt and then you went into debt again for an asset, which is better than most people, which is consumer debt.

That they have. Setting yourself up for success and you don't have to rush it, there's what are they called? The slow path to wealth is is a great path as well. So anyway, guys, hope this helps. I hope this spurs on some interest in an area that we think is just really important to understand as, especially as a business owner.

And if you wanna learn more about this and you're interested, let us know. Head to Instagram, take a picture of it, put it up on your stories tag PT biz. Let us know you're interested in learning more about real estate. This is something we can talk about in depth for, a lot more than we are now.

We're trying to keep this very simple. But if's [00:44:00] something you're interested in, we'd love to know. So head there, share us with a friend. You think you'd be interested in it. We'd love that. And as always, guys, we appreciate it. Thank you so much for listening to the podcast and we'll catch you next time.

Hey, peach entrepreneurs. We have big, exciting news, a new program that we just came out with That is our PT Biz part-time to full-time, five day challenge. Over the course of five days, we get you crystal clear on exactly how much money you need to replace by getting you a. Ultra clear on how much you're actually spending.

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So this is a one one-way channel. I'd love to hear back from you. I'd love to get you. Into the group that we have formed on Facebook. Our PT Entrepreneurs Facebook group has about 4,000 clinicians in there that are literally changing the face of our profession. I'd love for [00:46:00] you to join the conversation, get connected with other clinicians all over the country.

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