← Action Academy | Millionaire Mentorship For Your Life & Business
Action Academy | Millionaire Mentorship For Your Life & Business
The Way That You're Investing Today Won't Support Your Dream Life (Here's Why)
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What's up, Action Academy fam? Welcome back to another episode of the Action Academy podcast, Corporate America's least favorite podcast. I have one goal and one go only with this show, ladies and gentlemen, and that is to get you to replace corporate with cash flow, which is what I did. In March of 2022, I left a six figure corporate sales job to travel full time around the world and build up my own business. This podcast is a documentation of that journey from zero to $10 million a year in annual recurring revenue. I post all the wins, losses and lessons along the way so that you can benefit from it and you can learn from all the ways that I mess up, all the ways that I win. And so you can do it faster and way sexier than I did so that when we all go on yachts and private jets together, we could do it keyword together so you're not by yourself, which is super lame. We're all winning together. The topic of today's podcast episode is actually a rant that I did on my Instagram stories that got over 10,000 views and a lot of people were really engaged with it and commenting that it was helpful for them. So I wanted to make a quick podcast episode, expanding on my ideas, expanding on my theories, and really diving into the teeth of why I think about things the way that I do and why I think about investing the way that I do. And I want to preface this podcast episode with a quote that there is a million ways to make a million dollars. And that is very, very important to say because the way that we're going to talk about today is just my way. It has worked best for me and it is a strong belief, loosely held, that I have established over over like COD 500, 600 episodes now. I think we're in mid-600s of podcast episodes for Action Academy of multimillionaires and a few billionaires that we've interviewed, as well as now helping other people replace corporate with cash flow through our Action Academy community. So now not only am I building the business, but I've also gotten a lot of exposure and a lot of different ideas and frameworks from people that have built big businesses way bigger than mine, and now we're helping other people build businesses. So that is where my frame of reference comes from, from the following advice and the topic of today's show, which is I think most people pursue investing in the wrong order sequentially. I think if most people invested in the opposite order that they invest today and the opposite order that you guys see people Invest on Instagram and optimize for a different thing and a different path. You guys would all hit your financial freedom that you so desperately crave much faster, much easier, and much more elegantly and be able to enjoy a longer, more fulfilling journey down the road of your financial freedom and investing journeys. Because at the end of the day, I truly believe that every single person that listens to this podcast is two to three years away from complete and total financial freedom. Which means if you are in your 20s, your 30s, or even in your 40s listening to this, you have a lot of life to live after you hit it, if you are intentional, right, and you hit it in two to three years. So the way that I think about investing and building businesses and building investment portfolios and is a way that is going to maximize the enjoyment, maximize the cash flow, and then let you guys have as much fun along the way that you possibly can. So let's get into the way that people do it today and I'll offer my alternative theories about how to do it better. So first and foremost, I get a lot of DMs and a lot of people asking me about investing. I say, hey, you know, I am buying real estate. I learned about all this stuff, this financial freedom thing, and, and I want to get 10 doors by the time I'm 30, or 100 doors by the time I'm 30 or by the time I'm 40. And a lot of people optimize for door count, and that's not actually what we should optimize for at all. In real estate investing, we should optimize for only one or two different things, which is either A, cash flow or B, equity. Equity is going to be what shows up on your balance sheet for your net worth. So all the commas and zeros, you can say, I'm a millionaire, I'm worth 5 million, I'm worth 10 million. And that is what most people think that they should optimize for when they begin investing in real estate. So when you begin, a lot of people are buying a single family house once a year, which is what I started off doing as well. And then they maybe passively invest as LPs or they do these giant syndications where they're very, very diluted down in what their equity and ownership positions are, just to build up these massive unit counts and door accounts that you could put in your Instagram bio, right? You can say, oh, I own a thousand doors or I own 2,000 doors. And for the most part, what I found to be true after doing lots and lots and lots of interviews over 600 on the action Academy podcast, I found that the people that are doing that don't have that much cash flow. And that's why I wanted to make this podcast episode, because cash flow is life. Cash flow is offense. Cash flow is also defense. So today, what I want to share is what I'm doing personally and why. I think that in the next 10 to 20 years, looking back, I'll be glad that I did things the way that I did them. So leading off with my investment strategy, I will say that I am not worth millions and millions and millions of dollars. If you look at me on the balance sheet, it is not that impressive today. And that is perfectly okay with me. And I'm intentional with it because I optimize for cash flow first. Before equity. I only invest for cash flow in the very beginning. And I think anybody that's listening to this, you should not have a unit count number. You shouldn't have an equity number that you're optimizing for. You should have a cash flow number that you're optimizing for. And that's why we talked about the Survive, Arrive and Thrive numbers that I've talked about in other podcast episodes prior, which are your three cash flow numbers. Survive is how much do you need coming in per month to cover your fixed expenses. Arrive is how much do you need to cover your discretionary expenses. And Thrive is how much do you need to completely replace your W2.9 to 5 income so that you can quit that job? And you are fully 100% financially free. Right. So I wholeheartedly believe that every single investment decision that you make should be made in the frame of maximizing your cash flow first. We don't care about equity in the beginning. This is why I focus so heavily on Action Academy and Action Academy alone. I say no to everything. I say no to buying more businesses. I say no to buying more real estate. I say no to partnerships and opportunities left, right, and sideways. And only focus on Action Academy because for people that are OG listeners to the show, this became a cash flow vehicle for me, like, very, very fast out the gate. All right, so we first started, I had cash flow coming in for my co living properties, which was about $4,000 a month. And that was awesome. Like, that's great cash flow for single family real estate. But then I started up the podcast and I started talking about different masterminds, different coaches that I was using organically, and that turned into a freaking 10 to $15,000 a month cash flow vehicle for me of just affiliating and referring out people through the Action Academy podcast for things I was already paying for. And that was an accidental cash flow business that took me through 2022, and that's where I really pulled off that $20,000 a month. Then in 2023, I realized that there was a lot more opportunity to be had by me building my own thing and the Then we launched the Action Academy community in 2023. And I said when I launched it, I'm only going to do this for two full years, nothing else, because I realized the cash flow potential and that has been realized. Action Academy right now we're creeping up on like $1.6 million a year. And by the end of this year, we should be around $3 million a year in annual recurring revenue. And the online space has wonderful margins, ladies and gentlemen. So that is a wonderful cash flow vehicle. And so my personal strategy is to take the one to two years or one to three years and really focus on the cash flow first. Then once you have so much cash flow that you're not only financially free, but you have an abundance of it to where you're saving it and you're storing it away at that point is when you then pivot into the equity plays. So now that we've got this established, once we get Action Academy up to $3 million a year, top line, remember top line, not profit. For us to be at $3 million a year in profit, we probably need to do about 7 million. Top line for us to be 3 million in profit, which is still great margins. But that's why I'm waiting to invest in boutique hotels in 2025. So that gives us another six months to really solidify this business, solidify our team, and get this cash flow vehicle built to where it deserves to be, with a really great management team running the thing, so that I can then go and begin really swinging the hammer and swinging the bat at the plate for buying the larger assets. Because then what we can do is we can go buy these larger commercial assets that maybe necessarily don't have as creative cash flow, because I don't need the cash flow. And so what you can do is you could take those commercial assets and make the raise and make the syndication and the GPLP split very favorable to the investor, because now you don't personally need to take all the acquisition fees and all the management fees and all the fees that are associated with it, because you have the cash flow already from your cash flow business. So now you can be able to really make it investor first, investor friendly for doing your larger assets, and then those are your appreciation plays, those your equity plays afterwards. And that's where you build up your balance sheet. Also, the argument could be made for packaging your own business and then that becoming a large asset on your balance sheet later. I think I did maybe over a year and a half ago, I did a podcast episode where I valued action Academy at 5 to 1 multiple of net free cash flow profit. And that's absolute bullshit, which I know now, I didn't know back then. There is no valuation to Action Academy right now. My business does not have evaluation because it's dependent on me. It has significant key man risk and key employee risk and a lot of different risk that aren't a packageable, sellable asset. So over the next few years is when we're going to be starting to do one by one, making this thing into something that is a very tangible asset that could be on the balance sheet and have evaluation to it. But for right now, it doesn't have that. But once we get up to about $5 million in net free cash flow profit, that will put us at about $10 million top line, which would put the valuation, I think wholeheartedly at about 20 to 25 million dollars, plus that we could get bought out for cash. So that's in the next three to five to six years for Action Academy alone. And so businesses can become a balance sheet asset. But first it's all about the cash flow. Does that make sense? So how this looks like an application for you guys would be. If I were starting out from scratch and I was really gunning to replace $100,000 or $200,000 income, I wouldn't be investing for equity, I'd be investing for cash flow. So what I would do and what people have been crushing it in Action Academy doing in our community is buying small businesses. So you're literally buying net free cash flow from the small business itself at a multiple or land flipping. I found land flipping to be quite wonderful. And if you guys go through our episodes, there's more and more and more of these land flippers popping up on our show that are absolutely crushing it, doing $300,000 plus of net free profit take home after paying back their investors. And they're absolutely crushing. So what we're trying to do in Action Academy now is we just built out a lot of infrastructure for land investing. So we have an entire land investing course within the community. We have land investing coaches now and we're really building up that internal infrastructure to support that so that people are not only doing the land investing and flipping this dirt, slinging dirt, but now they're able to build businesses around it to where now they hire people to not only do the acquisition and dispo for them, but now it's actually a cash flow business that they've built. So the land flippers of, I think we have a few hundred now are absolutely crushing it. And then the next iteration of their journey is going to be investing with everyone else in the group for the larger commercial deals and more of the passive cash flow and then that's where they're going to get their equity. And after doing hundreds of these interviews, that is just the game that I've seen played out the best. Even the people that are in real estate that are at the $10 million mark, they have real estate businesses. So they get their cash flow from the property management fees or from managing the short term rentals or doing all this other stuff. Like they actually have businesses built to where they aren't reliant on all of these acquisition fees. And at the end of the day, equity doesn't pay your bills, it just doesn't pay your bills. You can't buy a cappuccino in France with equity. You can buy a cappuccino in France with net free cash flow to you as an owner distribution from your business. So hopefully this helped today. Guys, to summarize the tldr, too long didn't read. What I would do is I would first focus on cash flow. Whatever investing decisions that you're making. In the very, very beginning, invest for cash flow first. Then once you have so much cash flow that you can play defense and not only have your financial freedom position secured, but now you are financially secured and you have margin for when you're buying these larger deals so that you don't get wiped out. If you do a personal guarantee, you don't get wiped out because cash flow is a defensive metric for the larger deals. Then you go do those, you build up your balance sheet over a long period of time and now you have a cash flow vehicle and you have an equity vehicle or equity vehicles. So now everyone wins. And in the beginning, how we mitigate for this when we're trying to buy those large deals is through partnership. So even for me, once again, like I'm saying, to land the plan here, I'm going to partner with people with large balance sheets and that's how we're going to take down the large assets, because that's commercial real estate. You need people with track record and so you can borrow experience through partnership at the end of the day, once again, million ways to make a million dollars. This is just mine. And I've seen this work through how we teach an Action Academy community. And I've just analyzed so many people that have come on this podcast, and the ones that have done it right versus the ones where I'm like, dude, you have 2,000 doors, but your cash flow is like $5,000 a month to yourself personally, that doesn't really wet my whistle. That seems like a lot of work for not much return that you can actually spend and touch and feel. So if you guys are interested in learning more about this and executing this is literally the only thing that we do in Action Academy. Our community, we focus on cash flow. That is what we do 24 7. So we do it through multifamily self storage, mobile home park, small business acquisition, and land investing. So if that's interesting to you guys, you want to check it out, click the link in the show description. As always, book a call. And if this podcast episode brought you any value, please share this episode with somebody that you think needs to hear it, because this is how we grow. The show is only through you guys. So please and thank you and talk to you tomorrow.