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Problems to Profit
JP Newman: From Hollywood to $2 Billion Real Estate Syndication and Four-Dimensional Wealth
01:07:38
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- [00:04]
A
Welcome back, family. Welcome to the Problems to Profit podcast. Man, am I excited. We have an amazing guest today. I'm at this four Rooms Mastermind, which I became a part of, and I got to spend a lot of Last Night with J.P. newman. This is not a normal intro I would give, but the little kid that grew up broken me, the way this man spoke, I would have thought, wow, I would have been so triggered by what kind of rich guy he was and what kind of douchebag he must be. Even though I've become successful myself and I know none of that's true. Like, all of those feelings came up and then I got to spend time with him and I hung out with this guy and I watched the most wildly generous, wildly loving, wildly charismatic person who is the most beautiful storyteller, and he just wants to give back to the whole world. So I asked him to be on my podcast because I was like, holy shit. We need to take the world's view, the view that a lot of people that don't have things that don't have maybe starting out what they wanted, and reframe it. JP is a real estate investor, a syndicator. I mean, he's a money raiser, he's a capital guy, he's a tax strategist. I heard a rumor from somebody that you'd made a wildly famous movie and ran a company, like, I think Sony.
- [01:15]
B
I worked for Sony for five and a half years.
- [01:17]
A
I mean, like, but I didn't run it.
- [01:19]
B
I wasn't the head of the studio. I did family entertainment, produced animation.
- [01:23]
A
You are in for a treat. So without further ado, I want to turn the mic over to this man, because he's not just a man, he's like a king among men. And. And I got to just enjoy the heck out of time with him last night. So, JP with problems to profit, we always like to kind of get the story of the entrepreneur and what made you the man you are today. But. But before we go there, I kind of want to start with, like, some of the cool talk that we had last night. Yeah, I'd like to talk about just some of the awesome stuff you're doing. Like, what are you doing in Austin, Dallas, around Texas, with multifamily and funds?
- [01:53]
B
So I am CEO of a company called Thrive fp. The Thrive FP is for purpose, for profit, and we're a private equity syndication shop in Austin, Texas, and I've been there for about 20 years now, so. 20 years in the business, and we specialize in multifamily apartments around the south and Southwest. So basically, apartments that rent somewhere between, call it nine hundred and seventeen hundred dollars, that really serve our workforce in America, are the kind of apartments that I own and operate.
- [02:18]
A
In your time in, in the syndication business, how many units have you worked with?
- [02:23]
B
We've done over 20,000 units.
- [02:25]
A
Yeah, 20,000 apartment units that you've put together and either built, bought, kept, exited.
- [02:32]
B
Sold about $2 billion over real estate. So it's just like, I just joke and say it's just because I'm old and I've done it so long that the numbers get so big.
- [02:40]
A
I mean, and those are big numbers. I mean, people don't think about, like, numbers in a context. Like, I love numbers, like, just for everybody to understand. When people use the B word. If I count it in seconds, if I were to go like a million seconds ago, it's like 11 days ago. 10, 11 days ago. Right. If I go a billion seconds ago, it's like 33 years ago. So he's done $2 billion in acquisitions.
- [03:03]
B
And dispositions transactions, real estate transactions. I have a debt platform, so I also lend on commercial real estate, and then I own these multifamily apartments. So between the two businesses, something we're.
- [03:13]
A
Going to talk more about. You also do fundraising. You help investors take their cash and diversify their portfolios. Getting into the multi family space or retail space or whatever type.
- [03:23]
B
Multifamily? Yeah, all multifamily. It's either debt or multifamily, the two things I specialize in. So debt is like, you're a lender in a big fund, and then. Or you're an investor and you own a piece of the real estate. So.
- [03:35]
A
Okay, yeah. All right. So like I said, you never judge a story by the ending. You have to hear it from the beginning. But hanging out with JP Last night, I got to hang out with a guy, and I think I even told you. I was like, I think you're kind of where I want to be when I grow up. Because I'm still a business guy. I'm still, like, wildly operational, borrowing tons of money, producing products, and. And he's doing, like. He's doing the magic. He's doing opium. And I don't mean the drug, I mean opium, other people's money. And he's turning around, leveraging it, adding value to people and helping them generate wealth while benefiting himself as well. It's literally the goal of, I think, every entrepreneur that wants to exit. So how did you get your start? I'd like to go a little bit through your story.
- [04:15]
B
Sure.
- [04:16]
A
I know you didn't start with billions of transaction volume in the family and everything else. You started somewhere a little smaller, right?
- [04:22]
B
Well, actually, I started at 20 years old, listening to my Tony Robbins tape. So I was talking about Tony Robbins last night, and I was the guy with my little Walkman cassette, and I was memorizing every line of Tony Robbins. I was a total success freak from an early age. Read every book out there, and I noticed that the harder I tried, the more I failed, and I couldn't really figure out why. So I'd say in my 20s, I probably had 17 different jobs. I just was, like, going from job to job to job. I just couldn't kind of find, like, I had my vision board of what I wanted, but it seemed like I just couldn't quite get there yet. And it was a great experience. I think that in some ways, trying so hard and having failures, it creates a certain amount of tenacity. I mean, I just kept getting up. I don't know. People say, well, why'd you keep going? You failed so many times. And there was something in me, a tenacity in me. And I quite frankly, think it might have been partly my parents of saying, you're special and you can do it. And there was something. I think I believed it from a young age on. So I think that was definitely part of it. And, you know, I decided I actually wanted to be in the entertainment business. I was in Los Angeles, and the minute I started working for the biggest producers in Hollywood, I realized they were absolutely crazy. One of them who ran a studio, I was his assistant at 25 years old, and he was convinced he had a brain tumor and he was running a studio. So I had to drive his car and take him basically to the hospital and his psychiatrist. This is all I was doing back and forth. And then Julia Roberts would get on the phone. He'd yell at Julia Roberts. And my thing was to never speak. I was just like. I was supposed to drive him between a psychologist and his brain tumors that he was searching for. And finally one day I broke the rule and he got in the car again. I said, do you have a brain tumor? And he goes, no. I think he was shocked that I spoke to him. I said, well, why don't you just try meditation? And then I got fired. So then I realized at that point, and everyone was terrified of this guy. He was hysterical. It was like everything you would expect from Hollywood. Like, he was that guy. He would shock his dogs. He was crazy, absolutely crazy. But I realized I loved entertainment, but. But I didn't wanna be with all the crazy people. And I saw lots of crazy people in la. So I'm like, I think producing animation, like, how bad could it be producing films for kids? So I kind of like. I'll give you the short story. The short story basically was I applied for a job at Sony. And the truth was, at Sony, this was the home entertainment DVD division that was making all the money for the studio. And they kind of knew. They wanted to compete with Disney, but they also knew. The truth is, like, my boss at the time, he really wanted to make, like, the Miramax films. So they created a division called Screen Gems. It was just like Miramax, and no one really wanted to deal with kids films. So he interviews me, and I'm not your perfect candidate. I don't have, like, lots of film production experience. But he saw something. He saw that tenacity. I think he saw that. I don't think I'll have to babysit this guy. And I'd say, well, what do you want to create? He says, I'm not really sure. Can you just make it up for us? So literally, I was, like, left on my own for five and a half years. And from that, I built, like, $150 million portfolio for the studio. Everything from Jim Henson and all kinds of, like, Christmas specials for cbs, all kinds of crazy stuff. And it was a really, really great experience. But I realized it was not going to be a path to financial freedom.
- [07:31]
A
Weren't you, in many ways behind Veggie Tales as well?
- [07:34]
B
Yeah. Yeah, definitely I am. It's really funny how a studio works and how institutional finance people work. We were talking about this last night, and I see some similarities. So I knew that VeggieTales was going to be amazing. It's right when CGI started. Great messages. They were so wacky and funny, I couldn't stop listening to them. So I flew out to Chicago to meet them.
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A
And nobody else wanted it, right?
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B
Well, no one knew about them. And I just went out there and they had banners. When I came to their little office, there was banners welcoming. You could tell it was a really big deal that a studio executive was coming to check them out. And I knew right away. I knew they were onto something huge right after Toy Story came out. It felt right. And then we brought him to the studio, and I brought every major figurehead from motion pictures marketing to go, like, own the veggietales brand and turn it into Something.
- [08:20]
A
How old were you at this point?
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B
27, 28.
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A
And didn't you, like, bet your salary?
- [08:26]
B
I did something when it was all done. They're like, we just don't get it. Because they came in with golf checkered pants and plaid shirts. They look. I'm like, I'm in the movie studio, like, the highest dining room with all the celebrities, like George Clooney. And all these people are there. And I got people with a golf. A golf hat, wearing veggie tails, like, things on. And so it was like we were like a fish out of water. It's pretty hysterical. And they just didn't get it. So I just said them. Look, you're kind of missing how big this is going to be. What if I just bet my salary? I'll tell you what. Like, this is how convicted my conviction is. You can pay me minimum wage. I know you have to pay me something. So let's say in a year from now, if we buy it, I will bet my entire salary. I'll work for minimum wage. But if I'm right, you're going to double my salary. Like. And they would tell the story again and again and again in the studio. Because it was so shocking to them. Cause they were so used to, like, the president always being the yes. Everyone's a yes man. One day he came into the office, the president came into the office. He's like, I thought over the weekend, and I want to make an entire film on hummingbirds. Isn't that a great idea? Hummingbirds? And everyone's like, there's 22 people in the conference room. Oh, gosh, great idea. Let's go make something on hummingbirds. And then he looks at me, he knows, like, I would never, like, bullshit him. And so he looked at me, he's like, what's wrong, jp? Like, what's wrong? I'm like, I don't get it. Like, what's the story about hummingbirds? He's like, you'll figure that out. I'm like, why hummingbirds? And he goes, you don't like it? You're the only honest one in the room who will tell me. Because I knew when you bet your salary on veggie tails, that you'll only tell me the truth whether I like it or not. And that was kind of for better or worse. That's just kind of like how I do things sometimes in corporations. That's not great, because you can piss people off politically. Like, you gotta to get from A to B, you gotta, like, make sure C is happy. And the perception of D. And what about E? There's a lot of. But you know, that experience in corporate America, it was like my mba and I think I'm a much better leader today because I had five and a half years of really being trained by an institution how they think. And you know, you and I had a pretty intense conversation last night about some personal challenges I'm going through in my business with an institutional partner. And I really think those days at Sony really helped me understand what it's like.
- [10:35]
A
I wanted to bring that up because after hanging out with you last night and then, you know, just getting triggered and then getting shocked at how awesome you were because like I some childhood trigger that all rich people are evil. Right? And then I get shocked at how awesome you are. And so, you know, I came back to my room and I was exhausted because you're up late and I googled you, man. I was like, I got to look this guy up. This guy's freaking amazing. Did the Sony journey, working with the big corporate machine, the robots, the yes men, the people that are political. And I have a belief, I think poly means multiple and ticks or blood sucking arachnids. So it's a pretty fucking simple root word. And when I'm doing politics, like it's just dishonest. Like political correctness is another word for lying. I like honest people. And so was that the thing that prepped you for some of the struggles that you're going through, like even now?
- [11:20]
B
Yeah, I think understanding that people, entrepreneurs are a very unique breed versus like corporations. I mean, corporations. And you were talking about this last night. We had a great conversation on AI and basically these institutions. And I think you have to understand that everyone's playing a role on this planet. And entrepreneurs are coming a lot more from like, I feel like they come much more from instinct. It's like sometimes it's just that guttural instinct as an entrepreneur, you get some advice. But ultimately we tend to be stubborn, opinionated, I think a lot of us and very focused and passionate about what we do. And that isn't. It's easy to think that maybe everyone's like that, but not everyone's like that. So you really have to like, I think understanding where someone's coming from, the role they're playing and trying to meet them, like you're almost addressing their fears. Like even on this. I'm working on a negotiation today and I'm literally trying to get in the head of like not how I feel about it, but how I think they feel about it. And I think part of that training from Sony gave me a much better perspective because it really doesn't matter in business what my opinion is. At the end of the day, if you're trying to get a deal done with a partner, you're trying to move forward. Like, if your team doesn't understand you or you haven't really, like, if you're impatient, which I tend to be, you gotta slow down so that people feel connected and understand. They need to feel understood. And if they don't feel understood, they might go through the motions. But you're gonna have a lot of friction in getting your objective done.
- [12:43]
A
I wanna kind of swerve here, even though I wanna go back to the story.
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B
Sure.
- [12:46]
A
But you're hitting like a gold mine. And I think that we're unethical to the viewers if we don't, like, cover this gold mine. Because you're talking about something that I really care about called languaging, or at least I call it language. When I bought my homebuilding company, I had to learn to speak plumber, learn to speak electrician, learn to speak all these different languages. And even though they might have all been in English or which we were fluent in dealing with, there was different words, different phrases, different ideas, different ways of thinking in every single trade, that there was languages that I had to go learn to create the best efficiency. And you had to go learn these languages for this corporate machine in Sony?
- [13:19]
B
Absolutely.
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A
Can you talk a little bit about how? Because even though I don't want to keep this too tactical, but how do you dive in to understanding, underwriting a person and figuring their language?
- [13:31]
B
So I have a way of doing it, and it starts around a framework of curiosity, and it has to be genuine curiosity, because people can smell when you're not being authentic. So I think if you can come from a place of genuine curiosity and ask questions, I can tell you, when I do diligence on large real estate deals, the manager's been trained. Like, I've done this so many deals. They've been trained by the seller. Don't screw up my sale. Make sure you tell them that everything is going great. That's like, every time I walk a property that I think I'm buying, the man, the current manager, is being told by the person who wants to sell it to me, tell them that everything's great. Right. If you come from a place of genuine curiosity and you think of questions where you don't put someone on the spot, you don't give them an Easy way to. Like. That's kind of how you phrase the questions. For instance, if I say, you know, what are the problems with the building? Let's just say in this example, with a manager, well, oh, no, everything's great. So if I say to the manager, hey, what do you find? If you were to say, like, your two best victories in this building, the thing you're most proud of of this building, and what are the two hardest challenges that you're going through at the same time? How would you describe that to me? Now, you put the framework where you're giving them permission, even though their boss told not to, that you put in a way that it's like, a little more disarming. And you gotta come from curiosity. And it's amazing how much I can learn. And then also, I can tell when they're so scared that they're not gonna tell me the truth versus when someone, like, if I get. And I do a series of these questions, and you start with their family and you build some rapport. And usually by, I'd say, 70% of the time, I will learn so much about the building, even though they may have been told not to. Because if you frame the question the right way and you're authentic with anyone in any negotiation, you're keeping it safe. Yeah, you're keeping it safe. And then you actually know what they need. It's one thing if it's a manager. Now, if it's the owner and everyone thinks it's about price, you're negotiating a $50 million deal, a $70 million deal. Price is one thing. But if you can really read into a person, what are they really looking for? Are they looking for safety? Do they just want out? Like, maybe they just want to get out. Maybe they're under pressure, like, find their pain point or what they really want. Solve their problem first and then talk about the money.
- [15:35]
A
I love what you just said because one of my favorite things, as Teresa has told you about me, find the constraints. Solve the problem. Right. Like, find their pain points. Solve the problem. Like, we could hug right now. I wouldn't be sad. So I love that. Genuine curiosity and authenticity, which creates safety and.
- [15:51]
B
And then the right questions.
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A
Yeah. Even if they don't tell you what's really going on, you can almost get a feel for it, because you'll see what they're dodging, which is probably your clue.
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B
Correct.
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A
So, okay, we kind of went to your story, and you were telling us about Sony, about jumping around. You built all these companies. You got veggie Tales in.
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B
No, I lost the veggietales back. You did? I didn't get it. And they did not do it. And when it went super successful, that same guy, the president, the hummingbird guy, would tell the story again and again at the studio. How he rejected. He always tell the story that I was the only guy willing to put my salary on the line and that he made a mistake for years. I heard about that. It was a great way. You ever heard of Garfield the character? Garfield the cat? Yeah. Jim Davis was the guy. I'll never forget this. We would take great meetings with the creators of. You name it from the Simpsons. It was really everyone. Family Guy, all those guys Seth was in. We'd deal with all the people. And Ben would always. He would tell the story a lot about, like that. But the funniest thing with Garfield, I remember Jim Davis was the creator, and he was sitting next to me. You try to prep a president, you know, to be ready for a meeting. Cause you want to. I was trying to bring Garfield in for Sony. Like, I wanted to make a film and do all these things about it. And the first thing he says out of his mouth was, this guy, the creator, Jim Davis, is he dead or alive? And Jim Davis was right next to me in a meeting. So he's basically saying to the guy, are you dead? Like, he didn't even know that the guy next to him was the creator of Garfield. So I'm like, no, he's alive. He's right there. I guess you didn't. I guess you didn't read my prep notes. So that's the kind of chaos you're dealing with all the time. But you think about. They're under so much pressure. I mean, he's managing. In fairness, he's managing a $4 billion business. Tons of pressure, eyeballs looking at you. So really, my $150 million business, really, in the scheme of things, is really small and a $4 billion business. So I give him some grace with it. I'm just kind of sharing some humor of kind of the things that go on and how decisions get made.
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A
Well, and I think a lot of people also think, like, big businesses are highly sophisticated all the time and highly organized all the time. And the fact is, they're not like, things change all the time in big.
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B
And we're humans, and there's so much emotion. You know, someone has a good day, someone's having a bad day. You could work on something for two months and something you really want to bring into the studio and it would make a difference on the mood. I think I have a big negotiation this week. I think the mood of the people that they have their coffee, did they stretch? Could make a difference in a multi million dollar decision.
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A
Yeah, for sure. So what, what happened with like kind of the job world? How did you go from job so into working for yourself?
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B
Yeah, yeah, yeah. So coming to manual. Well, it was actually a really humiliating journey because actually what happened was the guy who was backing me, the guy was making the big films, was no longer in charge and they brought someone else in to run the whole family division. And I wasn't his guy because he had a guy, but I wasn't that guy. I was like a legacy guy. So I was invited to stay, but they were gonna relegate me. Like I was in a very highly creative position. I was a vice president. And they would have relegated me to another position, like more like marketing. And I just. It was. And that's not what I. That's not, you know me long enough to know like I would never. I just couldn't do that.
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A
Yeah.
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B
So I left the studio. I left and I really at that point was looking, you know, for financial freedom. I wanted to find a path towards financial freedom. I had done five and a half years at a corporation. I knew I needed something different. My dad was actually a small time syndicator who had just retired, so he was kind of out of the business. But ever since I was like 4 and 5 years old, I had investments in real estate. So it was brought up. I did have some literacy, but I didn't really focus on it all that much. It really wasn't something. But I just knew real estate was important. I kind of knew about it, but didn't know much about it. And I was pretty. Well, there's one more thing. After Sony, I actually did make a film for Disney called Where the Red Fern Grows with Dave Matthews and Alison Krauss. And Disney released it. So I did one independent film. And here's the irony of the story. You're gonna love this story.
- [19:40]
A
That's kind of a big hit.
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B
It was great. Yeah, it was amazing. So I was an independent producer. I started my own company and produced where the Red Fern Grows. And here's the funny thing about that. The money guy that I got to back the film was a real estate guy from Texas. I was an entertainment guy from Los Angeles. Right. I picked this guy, he's in his $10 million house and he says, I want to be in movies. Really, really nice. So he finances the film. And as soon as the contract sign and as soon as he meets Dave Matthews, as soon as we go to the south of France, he meets Dave Matthews. Now he's a lot less interested in me. He just wants to hang out with movie stars. So he's like a Texas real estate guy who just wants to meet movie stars. And so after getting the entire film made, and the film's a great film if you haven't seen it, it's really, really, it's a film I'm really proud of. He says to me at, you know, JP, I know we signed this 43 page, very detailed contract, but I am super rich. I'm like a Texas multimillionaire from real estate. And at the time I was, you know, I burned through my Sony salary, I was burning through my savings.
- [20:45]
A
It goes.
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B
I know I have leverage on you because I'm much wealthier than you are. And I'm going to destroy you unless you take 20 cents on the dollar. And my contract was rock solid. I'm not a dude. He's like, you can fight me, but I will exhaust you. I'll out lawyer you and I'll destroy you.
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A
Wow. You know, there's synchronicities here. And it's kind of funny because you saw Hollywood for all the bullshit, the fakeness and the robotics that it was, got funded by a Texas real estate guy that got distracted by the love of Wall street and became the Texas real estate guy.
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B
Isn't that.
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A
I fucking love that.
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B
Literally. It was this weird thing I. After that, I decided it broke my heart and I'm like, you know what? Forget about intellectual property where I have very little control. I'm gonna go towards real property, real estate, where I have a lot more control. And it's not some studio person that I have to talk about hummingbirds with. I'm just gonna be me. And that's actually what got me into real estate. But to be honest, first of all, I was very dejected that I was, you know, after three years of getting Disney to buy the film, getting like, getting the movie stars together, we produced a great film. I mean, to feel devalued for someone. And by the way, I did hire a lawyer. I sued him and quote, unquote, as soon as the lawyers realized what they were up against, they settled for like 40 cents on the dollar. Cause the lawyers just wanted to make their fee and they realized this guy was gonna spend millions and they just didn't wanna fight that hard. So even you're a tough Lawyer. So I was right. And it completely broke my spirit as far as, like, just my faith in humanity at that time. Cause I really poured everything into. I mean, you don't just get Disney. You don't just get these things to happen. It was magic that I put together. If you ever see the film too, it's a film I'm really proud of.
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A
I think I watched it years ago. I mean, I will rewatch it.
- [22:26]
B
Yeah, I know it's a phenomenal. You then it's a phenomenal film.
- [22:29]
A
Yeah.
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B
And I still have a production credit on it. I was the executive producer.
- [22:32]
A
I'm going to. I want to go watch it for the production credits. I mean, I'm going to rewatch the whole film.
- [22:35]
B
But they brought my credit down to like just producer from executive. He. He had to be the big, big, big person. So anyways, that was part of the contract breach. So anyways, it is ironic. So I got into real estate and it was a very, very hard transition. I mean, going from studio, going from going to the south of France, making films, meeting with movie stars. You know, it was an incredibly hyper creative process. So. And then here's the irony. I haven't told you this part, which was the worst part. My dad had retired, said he would coach me and mentor me, but he was kind of done. And he had sold his office. So he was officing out of his home office, which was my old childhood bedroom. So I went from a movie studio to my old childhood bedroom, back to the bedroom to start raising money.
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A
Wow.
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B
And talk about humility and depression and what happened. I'm now, you know, Now I'm like 30 years old, 31. And I'm like, I have friends who are starting to make some money. And I'm like, I listen to all the Tony Robbins tapes. I'm supposed to be a millionaire at 30. I'm supposed to have all these things, and I had nothing to show for it. I had none of the material trappings or even like the social things. I wasn't married. Like, I didn't check any of the boxes of what a good story looks like.
- [23:43]
A
Where was your mental state at this point in time?
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B
I was depressed because my biggest fear was I'm a pretty creative human being. I am a storyteller. That's why I. That's why I produce films for Sony. I'm a natural storyteller. I think visually I storytell. It's just who I am. And so I was very concerned. Like, how did I go from being a hyper creative studio Executive to a real estate finance pro. Like, and I always joke on my podcast when I say the words real estate finance or commercial real estate finance. I almost can fall asleep by the end of the four words because it conjures up such boring things. So my fear was, oh my God, I'm now a finance guy. What happened? It just, the story didn't feel good and I was worried that like, I had sold my soul and would never find redemption.
- [24:32]
A
So. And I don't know the full rest of the story here, but I'm curious because I'm looking at the previous journey, just up to like going back to your bedroom where you and your dad are officing, like, I mean, talk about like a new beginning where an old beginning was. And you're starting really. I mean, it's just a framework of back from nothing, back to nothing to come from there again. Right? Like you get to pull yourself up by your bootstraps twice.
- [24:56]
B
But remember, I blew my savings because producing redfern grows. That was three years that I burned through all my Sony savings.
- [25:02]
A
The text jillionaire was a cheat, right?
- [25:04]
B
So he owed me a ton of money, so it was a big deal.
- [25:08]
A
At this point in time, you have all these stories, all these relationships, what you've done, the problem solver you've become. And I don't know this, but I suspect that somehow you pulled yourself out of the woe's me bullshit. I'll bet you that was one of the leverage pieces. Maybe there were others and I'd love to hear about them. Started building you on the journey that made you the man you are today. How did you go from there? Hey, back to my childhood bedroom to hey, man. I run real estate syndications in Austin. I called a few friends and I was like, yeah, I met this cool guy. His name's JP Newman. You're so well known, it's easy to find you. I'm ashamed that I didn't know you before this. How did you do that? How did you make this jump?
- [25:51]
B
It wasn't easy, quite frankly, and it took some time. I think that the biggest thing was you start to make non negotiables for yourself because when you're feeling in scarcity around money, you can, you can feel like you. It's very easy to compromise everything. So in the early days, I was buying really small real estate projects to get started in areas I just didn't like, like dangerous areas, like just really rough properties because I didn't have the money to buy anything nicer than that. And I realized that even though I was making money, I was, it was sucking, like it was sucking energy out of me. So I made the first decision. I will never buy real estate in a market. To this day, I will not buy real estate in a market that I don't want to be in. If I'm not enjoying going to this market, if it doesn't bring me energy from the people, the energy, the story, I don't do real estate. I don't care on a spreadsheet if it has the biggest potential in the world. If it doesn't lift me, I don't buy it. That's part of my own investment things and it's really worked for me. Well, I think one of the greatest things strengths I have is actually picking markets early. I'm really good. But that took that early trust of saying what was not negotiable for me. And that became a non negotiable. And that was like the start of a self empowerment journey of having confidence step by step and then of course, then having successes along the way. So all of a sudden you're like, you have non negotiables of what you won't do. I won't do business with that person because I think they're unethical. You just go on and on and on and then over time you just kind of keep grinding it out. And next thing you know, like, and here's a big thing, by the way, for me, it was a big, big jump up. It's funny how life works. You never know the big step after kind of that was a guy comes up to me that I do not know well. And my partner, who wasn't my partner, he worked for me at the time, says, hey, I got a radio show and I got a television thing called a podcast. This was early on and said, hey, do you want to be on my show? And it took him a while. He got to know me and I said, yeah. And he said, just do me a favor, wear a clean shirt, like a clean white shirt when you show up because there's going to be about 40,000 people watching you. I'm like, oh, this is my first podcast, by the way. And like no one even know what a podcast was. So I didn't know I was going. So I'm sitting down and all of a sudden he's asking me to describe to his audience, empower your audience. Can you educate my audience that they can be safe around cash flow real estate? And it became the beginning of a journey with someone who's A dear friend to me to this day. But the gift of me educating his audience, bringing safety to his audience, it brought so much goodwill of investors who just like literally came to me. They trusted me, they felt me, they trusted me, they'd come in and to this day, some of those early, early people are still my investors today because they were treated right and they were treated well. Of course you got to produce the product. But having someone, and he did study me for a long time. He didn't just let me on. Like it took him a while to give me this invitation. I didn't know what the invitation was. But when someone believes in you that much on camera, someone that's got a big audience, that says this guy knows what he's doing and you can trust him, think about what that does for your spiritual trajectory of confidence. Like getting that early on in my career. Think about how important that is.
- [29:02]
A
So I love where we're going and I'd like to kind of like dive into this a little bit because I think it's probably one of the things that you might be maybe one of the best teachers to any audience at you exemplify. And as we were hanging out, walking, talking, whatever, like, you keep your spirituality like you wear it on your sleeve. Everybody can see it. I have a belief that business is a spiritual game. Like you won't do business in markets that you don't see fit. Like we talk about like some of the robotics of the, you know, Wall street companies that are really owned by the money changers. There's no culture, there's no soul anymore. And you're a spiritual guy. How does spirituality correlate to life and business and productivity for you? Because I think people just need to understand and feel. You hear on how you move in and out of deals.
- [29:44]
B
Yeah, it's a, I'm going to try to give you a short answer, but really the framework of what I'm passionate about now we've talked about, my four dimensional wealth is like my framework of four dimensional wealth, if you really think about it, is that in order to create money and understand what money is and what money isn't, and if you really, if you really dream of being wealthy, wealthy is a state of mind, it's a mindset. It's not just a dollar amount. Most people think it's a dollar amount. What I'm worth X million, I'll be wealthy. And that is so far from the truth, from my own experience. How many people do you know that are super wealthy and have no souls and Just no happiness and no satisfaction. So my whole thing is like wealth, true wealth. And true money is a currency. Currency just is an energy, just like a current. So if you're playing the game of money without understanding the river, the flow of your currency, because you're holding on too tight, because you're scared scarcity, or you're fearful that it's not enough, because either it's not enough or in your mind, it's not enough, because you don't even know what enough looks like. Like, no one's giving you a framework for how much is enough. So what do you do? You keep making money. You keep making money just in case. And then my financial planner's telling me, save the money, save the money one day that when you're 60 and you're out of money, you'll have money. That's all scarcity, that's all fear. That's ridiculous. It is all about living your best life, putting forward a servant, leadership. And from that money comes. Money comes. Of course, you have to have a good product and a good service. That's a given. But as a leader, the more you emulate who you really are authentically, and knowing who you are authentically, the why that makes you cry, I say, what is the why that makes you cry? What is your legacy? And the more you tap into that abundance will follow. It feels like it's just like a law of nature. It's definitely my experience. And then also, then you get to let go one day, if you're out of scarcity, of being transactional, in other words, like right now, we're sitting here, Preston, there's nothing I need from you, and there's nothing you need from me. There's no corner. There's not. And I've had this for a lot of my life where it's like when I was starting my business, like, oh, if I get to know Preston, he likes me, maybe he'll invest with me, maybe he'll do this. And it took up so much mind space for so many years. And having the freedom. And it does take money, it does take feeling safe. There's a lot of things that have to happen. But when you lose the need to force, guide, or get out of that transactional mindset, you really emancipate yourself and you earn freedom. And that is wealth, by the way. And that's one of my four pillars. It's presence wealth, it's time wealth, and presence wealth.
- [32:20]
A
Okay, so we have, okay, so the four pillars of dimensional wealth.
- [32:23]
B
We have time wealth, so I'll take you through them. So there's time wealth, which is being present. There is purpose wealth. It's living in your why, your purpose and knowing what your purpose is. It's your community and your relationships. It's your kids, it's your marriage, it's your best friends. It's this event we're at right now. We all know that humans are happiness or happiest when they connect. So that's it. And of course, having your money in order, having a real financial plan and connecting the dollars, the amount that you need with the life that you dream of.
- [32:56]
A
Time, wealth, purpose wealth, relationship wealth. What was the last one?
- [32:59]
B
Investment money, wealth, Actual wealth wealth. All right, yeah, money.
- [33:04]
A
I'm sorry, I'm taking a little pause. I have to write that down because I love anything that has just pillars and a formula and a framework because.
- [33:11]
B
And then there's seven steps to actually work out. I have seven steps to actually formulate your four dimensional wealth plan.
- [33:17]
A
You know what, can we go through that really quick?
- [33:19]
B
Sure, if you want to.
- [33:20]
A
Well, and I mean I love even just these four, but if there's more to this, we need to dive into it because this is gold.
- [33:25]
B
Like this is gold.
- [33:26]
A
If you think it these four without even diving into the seven steps which we need to do. I can sit and just cross pollinate these and say okay, well where am I weakest? And then I work there.
- [33:36]
B
Correct.
- [33:36]
A
Like if I didn't have your seven steps, I could begin there. But I mean if you're going to give me the seven steps, you're going to make my process more efficient.
- [33:42]
B
Also there's a QR code I can give a leave behind for your users of the seven steps because it doesn't get complicated, but it's money. And actually the seven steps actually will get you. It'll produce for you at the end of the seven steps a roadmap where literally we're going to look at. I'll just give you a basic overview of it. So the basic overview is I ask most people because I do a lot of financial therapy. When you have investors, usually they've come to you and they've had, I always joke, pretz. And I say that the things that hurt people the most are a broken heart or lost money. Where someone's taken money from them, that's like the worst thing. And how many people have either had a broken heart or a deal gone bad and they just didn't understand the. They didn't understand it. Right? All of us. Right.
- [34:19]
A
Yeah.
- [34:20]
B
So having Gone through a lot of relationship financial therapy. I joke and say, I'm a financial psychologist. You just hear people time and time again. And most people have a lot of fear around money. They have a very unhealthy relationship. When I ask people, like, what keeps you up at night? And it's like, well, I have this financial planner. I'm like, well, do you understand? Like, what's your goal? Like, what is your goal? Not sure. How much do you spend a year? What do you spend? Not exactly sure. I haven't really calculated that. How much do you make? And how much are you saving? I have an idea. It's maybe this. What's the money for? For you. And like, and on and on. And you quickly realize that most people quickly get to lack of a framework, lack of structure, and lack of a real plan. So how do you expect to feel safe if you've got no plan? And, Preston, that's what happened to me. I started making money fast, but I had no structure. And guess what happened? Started having panic attacks. I got my first BMW. I had a vision board from Tony Robbins days. When I actually got the damn car, I freaked out because I had no structure around it. I'm like, what does this mean? Will this mean to my friends? Will they look at me different? What will my wife think? Oh, my God, am I now gonna be a jerk? Or am I gonna. Is my personality like, I had nothing. I had no framework of why. So a lot of my story, of what I teach is what I went through in my own experience, and that's why I'm so passionate about it, as you can tell.
- [35:43]
A
Take us through the seven steps.
- [35:44]
B
I will. So let me take you through the overview, where we're going to go, and I can take it through steps, but basically, I always say, number one is, know your burn rate. How much do you spend a year? And we call that today. That's your life today. So that's your. That. We call that your secure life today or. Or your current life. And then step two, we talk about step one. Know your burn rate. And I have a very easy formula in my. In my. If you want to, I have a newsletter called Wealth Insider, and it's all in my.
- [36:10]
A
We'll attach the links to the podcast.
- [36:11]
B
Yeah, yeah.
- [36:12]
A
And we'll put the QR code to it as well. But I want people to hear it because it's always fun when it comes from the source and they can hear it and feel it.
- [36:19]
B
Of course. So, number one, you know your burn rate. Number two is you think about, what do you really want from your life? What is your why that makes you cry? And we only go 36 months out because it's hard for the brain to think. You get too dreamy. And so number number two is you start. I call it the Starbucks exercise. Go to Starbucks, take a pen, and become audacious, and start writing all the things. If it's three years out from today, what are you doing? Who are you with? Are you on the phone a lot? Are you in emails? Are you in a seminar? Are you educating people? Are you on a boat? Who are you with? What's your office like? Do you have an office? Who's around you? What's it like? What are you doing? And the more and more, because most people never can get that far. They're so in their head about, I need to make money. And they create these frameworks, but they're not really totally connected in their body or their heart as to why they're doing it. So the purpose of the Starbucks exercise is go into the deepest part of you to figure out what it is that you actually really want. Right. And you'll know it. By the way, Preston, here's how you know you've gotten there. And a lot of times it takes assistance, and I'm done. This for many people. People will go into a story with you. I really want this because I will be happy. And then I can feed children around the world. And then I'll say something like, so you want to feed children around the world? I'll say, well, why do you want to feed children around the world?
- [37:36]
A
You're looking for the. You're looking for the cause, not the effect.
- [37:39]
B
I'm looking for the emotion. Yeah. Everyone tells stories. We all have stories. We go to a party, we keep telling our same. We have a. We all at a party, we tell the same story about ourselves. We have stories. So if we broke our narrative and actually got to our core, why now you're getting closer to a real roadmap. So let's take your core, why you've gotten there. You've got this perfect life. Step three, what's it gonna cost to live this dream life of yours? For a lot of people, you may think it's a boat or a wine or a Lamborghini, but the truth is, for most people, if you get off social media, it's not that that's someone's pretend fantasy. Your fantasy may be completely. It's amazing with people. I have a guy who just wants to fly an airplane. He Wants to buy. That is his dream. It's flying an airplane with a dog and traveling the world. Everyone, if you actually get. And not all these dreams need to be expensive. Like, what really makes you wealthy and happy.
- [38:29]
A
Just to break this down, like, real simple. Because I mean, already it's beautiful. I see where it's going. And I think I don't have a framework for this. Not necessarily, but I think I do this. And I think a lot of winners have to. But just these parts. Like, know your spend. Like, I can tell you my spend right now. Like at least my family spend and my business spend and everything else. Know your 36 month. Why? Like, the thing that makes me happy is pursuing my goal. Like, you have to build where you're at and you have to build where you want to go. And that's the map, right? And then knowing what it'll cost is just understanding the journey. So, like, the first three steps kind of seem like a mapping process.
- [39:05]
B
It's a mapping process. And what I love right now and I tell people is, hey, with ChatGPT, if you're like, I want to, you know, I want to be able to travel six weeks out of the year. Well, and then part of the Starbucks is, how do you want to travel? Do you Want to travel 5 star? Do you want to be in a tent? Do you wanna look up at the stars? Or do you want someone serving you grapes? Like, describe it as much as possible and then if you don't know the answer, do research and use ChatGPT or use your GPT and get an estimate of. You don't have to nail it to the person. This is just an exercise. What is that gonna cost? And Preston, this is what I've learned from all my years of helping people. And this actually came from my pretty famous cpa. He's pretty well known, Tom Willwright, who.
- [39:44]
A
I read his book. I love him.
- [39:45]
B
So Tom's been my personal CPA for years and a good friend. Tom said to me earlier, I says, jp, he's like, this is a funny thing. I'm gonna go a quick aside. Cause it was so funny. Tom says, hey, jp. Hey, do you want a yacht? And I said, no, I don't need to own a yacht. He said, do you want three or four houses all spread around the world? I go, not really. He's like, do you want a really fancy wine collection? It's not important. I drink wine. Not important. He's like, do you want a second or a third wife? I'm like, no, I'm good with the one I got. He goes, well, guess what? If you answer no to those questions, you can't spend more than a million dollars a year. And in your perfect life, I challenge you to spend more than a million dollars a year. And I think for most people, the real answer is even your dream Life is probably 250,000 to $1 million a year for most people. Like, some people do want those things. And that's fine. There's no judgment. But like for most people, we are so out of like sync with actually what wealth really is and true happiness is. Wealth is when you wake up happy, you live your day in presence, and you go to sleep peacefully and your money's handled to handle your dreams. That is what wealth is.
- [40:58]
A
So purpose wealth, relationship wealth, and time wealth may have been assisted by the investment wealth that if you have two hands for the problems, you have, like money problems and life problems, you solve this one. You got two hands for life problems, right?
- [41:09]
B
If your money's not in order, you can't. You can't get. Your money creates the basis for safety. And then from that safety, if you don't have safety, you have nothing. Once you have the safety, from there you can go to these higher emotions. Like, I'm an experienced junkie. Like even just being with you right now, I'm having so much fun just being present with a new friend and learning something about you and having this conversation.
- [41:28]
A
So we're gonna hang out and have some fun in Austin.
- [41:30]
B
Well, we are.
- [41:31]
A
I'm coming to visit.
- [41:31]
B
We're surfing, baby.
- [41:32]
A
Okay, so I wanna. I wanna get to this. Cause this is freaking goal. Because I've got the first three. That gives me my map.
- [41:38]
B
You ready for step four?
- [41:39]
A
And four is like. It's tantalizing me. I'm taking notes.
- [41:41]
B
Okay, good. So four is really easy. Now your roadmap is where you're at now. Let's say where you are. Now. Here's how you define where you're at now. It's your active income. How much do you make and how much do you have coming in, which is your passive income? How much money do you have coming in that just comes in outside of your job? And that is your first number. That's your day, that's your today, right? Okay. Then there's your fantasy of where you want to be in 36 months from now? And then there's the differential. For a lot of people, they're already there. They just don't know it. They're so afraid. They're already at their dream rate, once they know what their dream. It's amazing to me how many people are already there and don't know it. But let's just say there's a $200,000 delta between where you're at today and where you need to go. Well, now you've identified a number of how much I need to make, which will completely define your investment goals as an investor. Because now you know, if you need to make $200,000 and you have these different numbers, what's my reinvestment rate? What do I need to make on this money in my cash flow in order to like, is my reinvestment rate have to be 20% returns, or can I just sail back at 8% and I'll easily get there? Now you've given a person a reinvestment.
- [42:48]
A
And the investment could be labor, too. Like, if you don't have the cash to go invest, you can turn around and flip three houses to get there.
- [42:54]
B
Right. And remember, reinvestment rate guys, just those who don't know. It's like saying out of everything I invest in, whether it's my interest at the bank, treasury, whatever it is, that all that hopefully at the end of the year, I want to earn an 8% on that money. So if it's $100,000 and I have a reinvestment rate of 8%, then I would think I would earn $8,000 a year as an 8% reinvestment rate. Right. And that number is completely your number. Here's what most people do that I've learned, Preston, through the years. Most people, they don't assess risk because they don't know the number. And they're chasing so hard. So they get into risky deals that don't have cash flow, which is the power of winning the game. And they miss the entire game because they're chasing things that are too risky because they don't have a map or a plan for it. It just doesn't make sense.
- [43:40]
A
I want to get into the cash flow.
- [43:44]
B
That's my piece.
- [43:45]
A
But I need to take you through four through seven right now, bro, because I can't let these listeners miss out on this.
- [43:50]
B
I know we were going to go there, but here we go. Okay, so now you have that step. You know what you need to do. Step five is the wealth pyramid.
- [44:00]
A
Okay. What is the wealth?
- [44:02]
B
The wealth pyramid is based. Your finances should be based on three fundamental things. @ the bottom of your pyramid is your liquidity. Liquidity is anything that you can redeem for cash within seven days Treasuries, bonds, stocks, cash, and that's your base. Then there's your cash flow in the middle, which is your game to winning the world. I'm sorry, Cash flow is basically the game to win wealth. It's not net worth, it's your cash flow. And then the top of the pyramid, speculation. And it's a relationship of these three things that make up your wealth pyramid. The bottom is liquidity. Liquidity is what makes you sleep at night. You got to have somewhere between six months and three years with a liquidity. When people ask me, I can give you formulas. You know, what's more important than the formula? What makes you sleep at night. If there's a disruption in your life, how much cash do you need to have?
- [45:00]
A
So you need to know your individual wealth pyramid, which goes back.
- [45:05]
B
You gotta know your burn rate.
- [45:06]
A
Sleep at night, right?
- [45:08]
B
So I would go six months to two or three years from your burn rate. So if you have a massive disruption, God forbid you have a health disruption or something, you've got money, you've got it covered. So don't. At minimum, you want it. And even crypto would be considered liquidity. Anything that you could redeem, it'd be risky. Liquidity, risk number two, cash flow. Here's what you do with your liquidity. Remember. Oh, and I think I said this, but I haven't remember that winning the game is when your cash flow from your active income and your passive income equals your dream life. Now you know, and eventually real wealth is you get rid of active income and now just your passive income is taking care of your best life. Now you have all options. If there's a health disruption, you don't want to work, everything becomes optional at that point. So real winning the game is when your passive income, not your active income, covers that dream lifestyle of yours. And that takes a long time.
- [46:03]
A
I hear this with almost every successful person I talk to in different various ways. I mean, everyone says the same things around. Like, it's always correlated. The first time I heard it, I think it was like poor people spend money, middle class people save money, and wealthy people invest money. And it always comes back to that theme to generate that cash flow that gives you the life that you're going for.
- [46:22]
B
Correct.
- [46:22]
A
I mean, and it's just so simple. But it's so simple, people miss the simple pieces that make them succeed. All right, what do we have on six?
- [46:30]
B
So on five is speculation.
- [46:32]
A
Oh, speculation.
- [46:33]
B
So that's the top. And speculation when you get wealthier or if you've Just got something you gotta do because it's a product you believe in or a friend. As you get wealthier, if you want to have, I'm sure you have speculative investments. Sometimes you totally believe in a friend or you're so passionate about the product. I always joke and say, when you read a business plan or if you read an investment deck and you don't fully understand it, whether you think or so or not, it's speculation. And how many times do you kind of speculate because you feel good energy or your best friend's doing it, or someone told you about this deal and you can't lose. That's all speculation at the end of the day. So next step is you now have this pyramid of your cash flow, your burn rate, everything. So the last piece of this step six is you create buckets allocations of risk. And mine are one through five. One is the lowest risk, which is cash treasuries, triple net real estate. And then bucket two is more low to moderate risk. That might be investing in apartments like hard money lending would be too. So it's low to moderate risk and you're going there. Number three is kind of like middle. It's not low risk, it's kind of like moderate. And that could be like you're developing a new shopping center or something like development or something like that. That could be great, but it's just not. It's not cash and it's not speculation. It's kind of in between. And as we know, if you're doing this right, you should be getting bigger returns along the way. Where triple net leases pay like 9% right now, as an investor where development I would expect 20%. So. And you gotta kind of like allocate those risk. Step four is riskier. And I look at riskier things like series A and series B. Businesses investing in like, you know, that would probably like series B, I'd say even series C. And then ultimately like five. That's speculation.
- [48:20]
A
I've not done that. I've always done like small business. We'll have to talk more on that maybe.
- [48:25]
B
I've done lots of it. My CFO says, look at all the blank spaces where you're missing cash flow on your spreadsheet. And those are the deals that you invested in JP seven years ago that you bet I was doing too much category 4 and 5. I made my own mistake. And he's like, all that cash that you've had for seven years, that hasn't earned you cash back is taken away from your cash flow. And it's been a great lesson. It's taken me years to realize. My point is, it all depends on where you're at in life and how much money you need to do. But at this point, there's no reason for anyone to take excessive risk. And that probably means something different to a 28 year old than it would mean to someone in their 50s.
- [49:03]
A
Well, and maybe another point to swerve here before we get to seven is everyone's got a great sales pitch. Not everyone's got a great product. I had an acquaintance that I didn't really trust reach out to me randomly. And I knew him three or four years ago. And of course he's like, hey, bro, just missed you, wanted to talk. And. And he's a good sales guy.
- [49:25]
B
Yeah.
- [49:25]
A
And I was like, this guy is, like, so transactional. Like, why is he reaching out? But. But, you know, I had a nice conversation with him, talked about his kids, whatever, and he's like, man, I really want to, like, introduce you to somebody. You and him were in another community at some point, and da, da, da, da. Like, you got to. You got to meet him. I think you're going to be so aligned. Oh, my gosh. And so, you know, sends a group text and I get this, like, video, and it's like, immediately, like, invest in this BS thing. I feel like everyone has a sales pitch.
- [49:53]
B
They do.
- [49:53]
A
Everyone has a sales pitch.
- [49:55]
B
And it's like a first date. Everything's hot on the first date. You have to get to know the investment. Every investment looks great. I mean, I get 20 investments a week on my desk, and it's always the best one. And you don't want to miss out. You have, like that fear of missing out.
- [50:08]
A
Yeah, everyone's got their sales pitch. When you're reviewing that investment, that high risk, that, like, four or five bucket, the ones that, like, gave you the lesson, there's a difference between emotion and gut. Fomo, I feel like fear of missing out is an emotion. They're leveraging fear to make you think that it's gut. And it feels almost like gut, at least to me. But it's not gut. Can you go into a little bit of the difference between emotion and gut on a deal? Cause it's so critical and it's a trap.
- [50:40]
B
Yeah, well, one of the things just like, for me, I'm at a place where I can do this now to separate emotion, you know, to separate the two, is I have someone vet my deals first. Like, if I don't like the deal, I don't even waste that person's time. But I pay someone to vet the deal first. Someone who's the exact opposite of me. Someone who comes from, you know, a finance background, comes from a very rational place to tell me why the deal sucks. And so I love starting off with tell me why the deal sucks or tell me what you like or don't like about the deal. And that really helps on a lot of things because a lot of times I have my blind spots too because I so like the person or I got so excited in the moment that I kind of like didn't really get the details. So this person goes to the details and it's amazing. So when we have. And then if, if there's so many questions at that stage for me and I know this isn't great for a lot of people don't have access, but actually your wealth planner should be doing this for you too. If you even have an institutional, like if you're, if you're hiring someone to watch out your finances, you could ask them. They might do a couple a year. They're not going to do a lot for you, but they might do a few a year. But sometimes there's just things that are just bombs. You're just like pass done. And it's really simple. It frees up my time, back to time wealth. And it's like if I'm like eh, I hear what that person's saying but I want to pursue this further. I have that person on the call with me and then I hear the person's response and I try to get calm and centered and realize where is this coming from? I'm hearing the responses. Do I feel that the person, Is that a rational answer? Is it coming from like an authentic gut place or is it coming from like a story? And when you're calm. Now I've neutralized my emotions. I might have been super excited. Now I see what the concerns are. I let it vet through a phone call and I just listen. And if I'm still excited, like I hear you, like I'm doing this deal I'm doing right now. I have two people who are very conservative. I told you that I showed you the deal last night that I'm doing this new apartment project. Well, I have two people that tell me why they didn't like it. And I listen to them the exact process until I listen to them and I felt it. I'm like, I just disagree. I just disagree. And I'm sure you have that all the time building homes where people are gonna tell you it's the wrong area. It's too many homes, it's never gonna sell. Don't make it so nice. Cause you're not gonna get paid back. Like all the things that people say. And that's where you have to trust your instincts as a great entrepreneur.
- [53:01]
A
We hear that in every neighborhood, every single neighborhood we go into, why it's.
- [53:04]
B
Not going to work.
- [53:05]
A
You have to consider the source of information.
- [53:07]
B
Of course.
- [53:07]
A
It's crazy.
- [53:08]
B
Yeah.
- [53:08]
A
Okay, so last but not least, seven.
- [53:10]
B
Super simple. Seven. Seven is so simple. Quarterly check in with an accountability. Your financial planner or someone that you respect in your community. Where you look at your map, you update your map, you see where you're progressing, you see some moves you need to make. Don't stress yourself out. If you're coming behind, be graceful. Three years, might take five years. Like, this is all about ease and grace, guys. Like, don't whip yourself. I did this. When you whip yourself, you get further away, not closer to your goals. You get so in your head and then you feel like a failure, then you're whipping yourself. And you know when you come into a mindset, whether it's investments with that, like, scarcity thing, you're just making it worse. So come into this whole process with excitement, curiosity, ease, grace, and just know it's fun. There's no finish line. You don't win in five years from now or three years from now. You win now for having a dream, and every day waking up and taking one little step closer to that dream. And if you keep that mindset, it's a game changer. But then having an accountability partner that you trust is super helpful.
- [54:16]
A
Okay, I want to go into two more things, because this is just absolute gold.
- [54:19]
B
But by the way, this is the first time that I've spoken about four dimensional wealth. This is the first podcast. You just got the scoop.
- [54:26]
A
Really?
- [54:26]
B
Yeah. Because my podcast, Investing on Purpose, I realized I had to put it. I've now interviewed 63 top CEOs, like, the top people in the world. And listening to them, I realized I had to put it into a framework. And so I can tell you, a framework person. I'm a framework person too. So Four Dimensional wealth is really me. It's my 25 years in the business and 63 podcasts where I finally came up with, like, your table analogy. This framework came to me.
- [54:53]
A
I'm honored.
- [54:54]
B
Yeah. So this is it.
- [54:56]
A
Thank you, bro. Yes, thank you very much. Like, okay, so if you're not loving problems to profit, you're Getting gold here. And you also have bad taste. But let me dive in because I want to do two things. I have a fundamental belief that love is the meaning of life and problems are gifts. And paradoxically, these are the two kind of intersections of the purpose of life. Right. And we all have our own individual purposes, but those two things generally hit us all. Like, people think problems are problems. I think problems are guides. What was your biggest problem that made you who you are today?
- [55:28]
B
We're talking about life, business. Where do you want to take it?
- [55:31]
A
Wherever you want to go. The thing that hits you the hardest emotionally, the thing that you had to learn and earn to turn yourself into the strength and character and I mean, just genuine guy that, you know, I had the privilege of spending time with yesterday and today.
- [55:45]
B
Yeah, I think for me, in some ways, I assumed I was going to be an overnight success. I figured that listening to all these tapes in my 20s, I would have been an overnight success. And the truth is, how many of us have pressure in our 20s and our early 30s to be somebody? And I really, to this day, just think it must be a God thing, because with how smart I am, I'm not being. Just being honest, like a self assessment here and how. And how tenacious I am. The fact that I had failure after failure until I hit Sony, it made no sense to me. But who you see, the guy you see today is a guy who comes from humility, grace, gratitude, love that. I don't know that I would have been all those things if I just was a success, if I was an Internet guy or a crypto guy who was just rich at 24 and just got it that easy. I don't know that I would have developed all these things that you see in me. I don't know that I would have had that if I didn't have to go through these trials of getting up again, being slapped down and like, you know, And I just think that humility, but the humility, I don't know if I would have had the humility. It's a big one, forged in fire. Yeah.
- [56:53]
A
You know, my wife has a thing about grace, and it's always a trigger word for me. Now, as soon as I started growing gray, going gray on my hair, she was like, oh, you're starting to get grace. And I was like, what do you mean? She was like, well, gray is the first part of grace. And I was like, damn it. Damn it. I'm not sure I'm okay with this, but apparently I'm getting grace, and I Know, most people are listening, not watching. But if you look at my head, I'm not losing hair, okay? I'm gaining face and getting grace. So I want to go into one other area because you're literally one of the smartest investors that I've had a chance to talk to, and I want to get your feedback. This is something that I'm excited about, and I know that we can probably close on this. This is something that I think you'll just bless people with because we'll go into a little bit of your thoughts and concepts. Back in the 70s, we removed the gold from the dollar. Since that point in time, you've seen a wealth gap starting to grow and grow and grow. I mean, there used to be kind of a standard, if you will, social contract that everybody knew. And the rich, they were here, and the poor in the middle class, they were here, right? Sometimes they went up, but they all went up together, and it tracked. And all of a sudden, once they removed gold from the dollar, they created this massive complexity around money that didn't previously exist. And complexity is seductive, not productive. Now you have found a way to take this complex money system and make it much more simple in your world, which I think a lot of people, like, lose themselves with. Before the 1970s, cash was definitely king. I believe cash flow is now king because they've removed gold from the dollar and created this new complexity. Can you explain to us some of how you look at money, cash flow, and how you underwrite things around generating that ongoing return, that ongoing wealth? I mean, so that people can understand that framework? Because I want people to hear that from somebody who not only just believes it, but has done it and looked at it.
- [58:56]
B
Well, I think you and I both see, like, it's funny, we just, as you know, finished an election, and they say the number. All the pundits are saying the number one reason of the election or the number one issue for most people was the cost of eggs and inflation. So, like, you know, hey, it used to cost $60 to go to breakfast. Now it costs $100. And I don't know that a lot of people fully understand that printing money. This is your point about removing the gold standard, that when you keep printing money, your dollars are worth less. So for most people, they think, I'm going to save money in the bank. But right now, at an inflation rate of 7 or 8%, every dollar I save in the bank loses 7 cents a year. So you're actually going backwards. You go back in cash. You take your cash that's necessary. But if you're saving money right now and you're earning 4% in your bank, you're losing 3% a year. Right, because it's 7% inflation. Your bank paid you 4, and I think you paid taxes on that, too. You're probably losing 5%.
- [59:52]
A
Let me chime into this too, because I want to. He's saying 7%, and that's not the number the Fed puts out, guys. So I want to explain this. The Fed removes food, fuel and construction materials from their inflation data. And construction materials is your house and your car. Food is your groceries and fuel and energy is what you put in your car and spend on your light bill. So when you remove those things, which are also the largest expenses of the American consumer, yeah, sure, that's how you can get down to your 2.5%, 2.7%. But what he's saying is you add those back in, you're at 7% inflation before you factor what they're taking in taxes. I'm sorry, continue.
- [60:27]
B
So basically, the more money you save, the more money you're losing, which seems counterintuitive. So you and I both know, like, as real estate guys, hard assets are key because hard assets will get through you. Like whether, you know, with inflation, real estate tends to inflate up, too. So you have an asset that, as you inflate, rather than just taking a loss, that building over time, with inflation will go up. Why will it go up? Because rents will go up. Unless rents don't go up for some reason. But in reality, if you just look at historically, there's a trend where real estate, basically, it's just a protection. There's other hard assets. There's oil. Some people do art. There's, there's, I mean, there's other hard assets you can do. Real estate's just the biggest. It's the easiest to get into. It's the biggest. And quite frankly, I just think it's the easiest to understand. Like, if you're into, like, you know, ancient coins or if you're like, if you're speculating gold or, hey, crypto, so sexy. But like, it's not a hard asset. It's a digital asset. It could actually theoretically go to zero in. My apartment building that I'm buying, that I showed you last night has 277 places for people to live in in Dallas, Texas. And that will always, as long as I keep that up, that will always have intrinsic real value. It's doing a real purpose that the Internet AI all These technologies are not going to disrupt the need for a human body to have a roof, a shelter, and a place to live. I mean, it might evolve over time.
- [61:55]
A
To break this down and make it just crazy simple because, I mean, everything you're saying is absolute truth. There are two types of businesses. There are two types of investments. There's need investments like Campbell's soup or coffins, toilet paper, real estate. Those are needs. People need to eat. People need to live. People need a box when they die, I guess maybe a plot of land. And so there's need businesses. But then there's the speculation crap, like the crypto. There's like, oh, Ray Ban sunglasses or luxury items, Rolex watches. Those are greed. Those are not a niche. And then when you say hard assets, I want to chime in here, too, because I look at three investments. I look at investments three ways. Is there cash flow? Is it an inflation hedge? And then what type of exit strategies do I have with it? If it's only one, I'm probably scared. If it's three or four or five exit strategies, I'm much less scared. And so. Oh, and I'm sorry, I should probably throw in there. There's a fourth. Tax advantages. Like, correct. You know, Correct. Real estate hits every single one of those buckets.
- [63:02]
B
Right. And we get leverage. Yeah.
- [63:04]
A
Can you explain? You know, and I don't want to go too deep, but I love your opinion on taxes. And taxes are a major part of cash flow. Like, there's cash flow and then there's net cash flow because the IRS is going to take some. Right. So how does leverage impact net cash flow with taxation?
- [63:20]
B
That's a big question. We could do our next show on that. But I'll try to give you a summary of a very complex question I always say, you know, how many people have heard you on the Internet, on Instagram, I pay zero taxes. I'll teach you this formula to pay zero taxes. Guys, I pay taxes. I pay my fair share of taxes. It's expensive. I'm an American. Whether I like the policies, don't like the policies, I get to be in safety, and I choose this country. So guess what? I'm paying for it. It's just part of what I need to do. If I really wanted to pay no taxes, you can legally do that. But what you're doing at that point is you're letting the tail wag the dog. So number one is I actually don't let taxation come into my investment thesis. It's a tax strategy upon exit. But I try not to overthink. Sometimes we get so obsessed with saving money on taxes that you forget what the investment was about sometimes. I'm selling a building now, it's gonna have a big tax thing. I don't know yet if I'm going to 1031 it, which is a deferred tax exchange, or if I'm going to cash out, because I think there's really great opportunities in today's current marketplace. I need to make the best business decision first, investment thesis, and then I can decide the taxation second.
- [64:32]
A
Okay, so you're telling me, and I love this because it's not something I do, and maybe I need to rethink this, but you actually remove taxes, you'll take it as an upside if it comes, but you remove taxation from the investment as a whole sometimes. Wow. Okay.
- [64:47]
B
I actually keep track of my. I keep track of kind of where I'm at as a percentage, and I plan. So I've got. This is complex. I've got a lot of poker chips, a lot of different strategies I can use. So it's almost like a composer. Like at the end of the year, when putting my tax picture together, I've got like nine different ways to do this, and it's like composing an orchestra. But I want the music to be beautiful. And what's beautiful is what serves JP's life and where I think I can make the most money. So right now, if I decide to cash out, it'll cost me like 20% or the capital gains, 23%. And that sounds really expensive. But if I believe that JP, the entrepreneur in the next cycle can start doing 30, 40, 50% in new deals, then I'm almost making a mistake. So part of it is just your own thesis on what you can do and also what do you need at that point in your life? You know, how many people do you know are real estate rich but are just like liquid poor? I. I've.
- [65:44]
A
A lot.
- [65:44]
B
You and I both lend money out to. To people, so we've seen lots of balance sheets. It's amazing to me how many wealthy, wealthy people have so little cash. I don't understand that.
- [65:53]
A
They're always growing. They never take a break to pause and allow themselves to catch up with themselves. Yeah, it's. It's. And then whenever that Black Swan event comes, which the Black Swan event's always gonna come, it doesn't have to be an economic thing. That can be a personal thing, or it can be a health issue or anything else. It comes from the area you're not looking when it comes, they're screwed because they never took the break to let themselves catch up with themselves. Wow, jp, this was gold. And for all the listeners, I know that you can just feel this man's brilliance and intelligence and especially our higher net worth listeners that want to invest, that want to learn more, that need, you know, a dose of you weekly or monthly. Like where, where can people find you?
- [66:36]
B
Yeah, so my my podcast is called Investing on Purpose. I'm on all the main channels if you want to check out more about my interviews and some ideas about wealth, what true wealth is. My company is Thrive FP, so it's www.thrivefp. frank Peter dot com. That's our investment site and then I'll give you a QR code and the website to Wealth Insider. I have a monthly newsletter that predicts the markets for investors and also keeping the mindsets from other experts on four dimensional wealth. We kind of look at every bucket that we talked about and I bring some experts to talk about one of those buckets between my podcast and my newsletter. So I'm happy to share. It's free. I am passionate about people really living their best lives with financial literacy from a place of safety, peace and joy. And if we're doing that, then you and I had a good day. So hopefully if one of you listeners out there got something from this, it was worth our time.
- [67:28]
A
If these mics weren't mounted, I would drop them. All right, brother, thank you and have an amazing day on purpose.