Welcome to the FlipNerd.com Expert Interview Show Top 10 series, where we share our top 10 shows from 2017. In this episode, I interview Dr. David Phelps, and we discuss how to get started in real estate investing. We go into detail on both investing passively, through rental properties and other cash flowing investments, as well as active investing, such as wholesaling and fix and flips. David is someone I have the greatest deal of respect for….let’s start this award winning show.

Highlights of this show

  • Meet Dr. David Phelps, professional real estate investor, mentor, mastermind leader.
  • Learn how to get started in real estate investing as either a passive or active investor.
  • Join the discussion on how to get access to capital for your real estate investing, no matter who you are or what your background.
  • Listen as David shares the importance of a real estate mentor.
  • Learn the importance of building a team for your investing business.

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Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike: This is the flipnerd.com Expert Real Estate Investing Show, the show for real estate investors, whether you’re a veteran or brand new. I’m your host, Mike Hambright and each week I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility, and taking control of your life and financial destiny, you’re in the right place.
This is episode number 342 and my guest today is Dr. David Phelps. I’ve met a lot of people, as you can imagine by creating 342 Expert Real Estate Investing shows. And David Phelps is at the top of the list of those that I respect the most and always learn from when he speaks. So I’m happy to share my friend with you today. Today, we talk about getting started in real estate investing or upping your game, if you are already an active investor.
So coincidentally, I’ve directly coached hundreds of others to build their real estate investing business and what we’ll call, and I’m going to use my air quotes here, “passive” way where you’re buying deep enough to wholesale. You’re buying directly from the seller. And I’ve helped those folks get their businesses set up and running operationally.
Now Dr. David Phelps spends most of his efforts helping doctors and other professionals get started and build wealth more passively, usually through rental properties or even lending, as they have other businesses that they have to operate. So they have probably less time on their hands to be an active investor. Between the two of us, we’re going to do our best to help you, no matter what your background, no matter how much time you have available to use towards investing, or no matter how much access to money you have when you’re trying to get your business started or ramped up.
So let’s go ahead and get this started. Please help me welcome Dr. David Phelps to the show. Dr. David Phelps, welcome to the show.
David: Thank you, Mike. It’s fun to be with you and great to be on today.
Mike: I always think it’s funny when I have people on the show that are in the DFW area here with me. You and I see each other when we go to our masterminds, whether we’re going to Tampa or we’re going to San Diego. We see each other far more in far-off lands than right here in our home town or on Skype, but happy to see you, neighbor.
David: Always good to see you, Mike. Absolutely.
Mike: Well, again, we’re going to talk about how to get started in real estate investing. And it’s something that’s kind of near and dear to my heart because I’ve helped a lot of people get started. And I know you do too. And what’s interesting is I’ve probably helped a lot of people get started in what we’ll call active real estate investing. And most of the people that you help get started are passive because they’re professionals. They’re doctors and things that they just don’t have the time. But I think that’s some of the things that are, a lot of people don’t think about is when you say, I’m going to use my air quotes here, “how to get started in real estate investing,” it’s not one-size-fits-all, right?
David: Right. Yeah. Exactly. I think, Mike, you’ve got to start with who you are. Real estate is a great platform. It’s a great asset, we know, for investing. And it’s also a great business to be in. So which do you want to be? If you’re younger and you have the time, you’ve got the energy capacity, then certainly, even as a sideline, you can create really a business/investing.
I think to make an initial income, it sort of can be done. You teach a lot of people how to do that through wholesaling, a great way to pick up some extra money. And then there are people that are already well-entrenched in business. So they have a career, but they’re trying to build a platform for retirement.
They also understand that real estate makes great sense. And they want to engage in how do I get started investing in real estate? So we’ve kind of got the active side and the passive side. And there can be an evolution between, a transition between the two, depending. So I think we can talk about both sides to that a little bit this morning. And I’ve been through all phases. So I started investing in real estate back when I was, let’s see, I think I was 23 years old. And I was in dental school.
Mike: Just a couple of years ago.
David: Just a couple of years ago. Right, just the other day, yeah. We’re talking about gray hair, that gray hair [inaudible 00:04:10].
Mike: You must be dying your hair gray.
David: No way.
Mike: You’re much too young to have gray hair.
David: Oh, man. It’s coming on. I hate to say it, but yeah. Just a few years ago when I was in dental school here in Dallas, I decided real estate was a good thing for me to get started, get involved in. And back then, we didn’t have real estate investor clubs, associations. We didn’t have internet back then, believe it or not, or smartphones. We had libraries. We actually went in and got libraries. We didn’t have Amazon. So you could go to a library or a bookstore, which I did. And I bought books on investing. And I looked at the stock market. And then I read some books on real estate.
Back then, the books back then were by William Nickerson. Actually, a classic book, how to turn a thousand dollars into a million, then three million, then five million. And then a guy named Dr. Al Lowry. He’s still around. Al Lowry’s like close to 90 years old now, but those were kind of classic guys back in the ’70s, you know, [inaudible 00:05:06] back then. And I read those books. And I thought, “This makes a lot of sense.”
So I got my dad to invest with me, to believe in me, to trust me. And my dad was not an entrepreneur. He didn’t invest in real estate. He was actually a surgeon, but I said, “Dad, I’m going to be here in Dallas for four years, at least,” not knowing where I was going to go after that. “Instead of paying rent, we, meaning you, need to put the funding together so we can buy this [inaudible 00:05:26]. I’ll manage it. And you put the money together, right?” And so we did. We did this short venture back then. And it worked out well.
I learned a lot about management. We did some light rehabbing. It wasn’t a structural situation we had to do, which was good because I didn’t have that capacity. But what I learned, Mike, was that the capital gain profit that I split with my dad after four years of owning this property, we sold it when I graduated, was more money than I had made working nights and weekends as a waiter on Greenville Avenue waiting tables.
The time spent, the return on investment, well, my investment was zero, except my time, return on effort, which was my time, was so much greater. And capital gain profit is taxed at a much slower rate than ordinary income. Even the waiter money in tips I made was getting taxed at a higher rate back then. So that’s what clued me in that this real estate, there was something there.
So yes, I got started as kind of a semi-active investor and did everything myself when I got started. I got out of school. I was in practice, but I still kept looking to buy properties, which meant I had to lead generate, meaning, again no internet. No one was using banner signs back then. So it was mainly I put ads in the paper. I said, “Private party. Will make offer, buy your property, as is,” that kind of thing. [inaudible 00:06:48] on Craigslist [inaudible 00:06:49], I was doing that stuff and driving around and looking for vacant properties, so lead generating.
And then figuring out, then how, with very little money at that time, very little money, I was squeaking by, paying on student loans. How could I acquire real estate when I didn’t have capital, so putting those deals together. And then having to do some rehab on properties, obviously, and then managing tenants. So all of those pieces . . .
Mike: You were doing it all.
David: I had to learn all those things, which was a good thing, but at some point, we all need to figure out where’s our sweet spot? What do we best bring to the equation and kind of specialize? At that point, you got to then work with other people. And you’ve got to do what you do, Mike, through FlipNerd and your other coaching. You’ve got to build a community around you. We’ll talk more about that, but I think that’s one of the keys there in getting started, figuring out who you are, and then how you’re going to scale this by having a community where you can insert yourself the best way you know how to.
Mike: Yeah. And, my background before I got into real estate investing, so almost 10 years ago and several years before that, was retail. I worked for Neiman Marcus. I worked for Radio Shack which, rest in peace there, but . . .
David: They lost you. They lost your leadership.
Mike: They were big retail organizations. And when I look back to that and you start to think about . . . I use retail just because it was my background as an analogy a lot for real estate investing. Well, let’s just use Walmart as an example. There are some products that they actually manufacture or they kind of have manufactured. So they kind of play that wholesaler role and they play the retail role, which is how if you’re an active investor, you can do that because you’re sitting on the couch or at the kitchen table buying houses. And truly until you’ve done that, most people don’t appreciate how hard of a job that is to just find the deals, right?
David: Yes.
Mike: You’re spending money on advertising. It’s a business in and of itself just sourcing deals, but if you don’t have the time to do that, then you need to be willing to, just like Walmart, pay Coca-Cola for a product at a wholesale price, but Coca-Cola made money. And Walmart gets that. And they’re okay with that because they know they’re going to make the retail margin. If it was a private label brand, they would make more money, but when you start to see kind of the supply chain, if you will of real estate investing, there’s a lot of ways to make money, right? You could be a realtor in there. You could be a lender in there. You could be the wholesaler. You could be the retailer. You could be all those things.
But you don’t have to be all those things. And I think a lot of people, when they hear “real estate investor,” sometimes people, probably a lot of people that you work with, that are doctors and professionals, that they know, “Hey, I understand I’m paying a premium, but I don’t have time to go source my own products. And my time is more valuable than that.” And then so you really have to know how much time you have and what your end goal is, right?
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You really have to know how much time you have and what your end goal is, right?
David: Yeah. It’s a big factor that I think many people get confused about. And, in fact I know it took me a while as I was evolving through, figuring out what’s my time really worth? Where should I put my time? And as you said, some people think they’re paying a premium because they’re paying someone else that’s already found a deal. Maybe they really can’t have it turn into a turnkey product. And they go, “Well, I’m paying a premium.”
Well, you are but you aren’t because, again, if your time is better doing something else and someone else has already figured out the scalability of what they do and they buy properties very, very well, they rehab them well, and they put the management there, then why would you want to go out and rebuild that whole system? I mean, it doesn’t make any sense. If you’re someone who already has capital and you just want to get involved in real estate, then find those right people and invest with them. That’s the key thing.
And if you’re one of the people that has that capability to find the deals, put them together, rehab them, and maybe you need fast access to cash, then you find those people that have that fast access to cash. And that’s where the marriage is made, the joint ventures are made, right there all the time. And that’s really what I see, what I love to see happen, that [inaudible 00:11:33] relationship.
Mike: Yeah. Another, I guess, quick analogy is kind of like a restaurant. Like if you don’t want to pay mark-ups and you always want to get the deepest price, then you would never go out to eat, right? Like you would just do everything at home. But sometimes you do that. And sometimes it’s to save money. And sometimes it’s just to eat better or whatever, but sometimes it’s like, “Man, I just want somebody to do it for me. And I’m happy to pay that premium because I don’t feel like doing that right now,” right?
David: Yep. Exactly.
Mike: I would even argue, and I’ll kind of put myself in this bucket, as an active real estate investor, that I aspire to be much more passive, but by being active, it creates passive opportunities for me, if that makes sense. So I kind of wholesale on rehab to ultimately, because I’m trying to build a rental portfolio, but those are the activities I do to help kind of fund that, help find deals and stuff. So I think you could wear a few different hats potentially.
David: Yeah. You wear different hats. Whether you’re passive or active, I think you’ve got to be in the mix, again, form that community. So who are the people that you’re around? What groups do you interface with, whether it’s online or in live, that could keep that network? The network really is the key. And that’s really what I do through my mastermind community is I’m still able to be . . . I actively orchestrate my deal flow because I’ve got other people. And I don’t have to go out anymore like I did in years past and find the deals.
That was fun back then, and I know how to do it, but that’s not where my time’s best served. There are other people, like people you coach, that are really, really good at doing that. And I’d rather interface with them, and you said, pay a little mark-up because what they put into it so much more valuable than me trying to go replicate that same model.
Mike: Yeah. So in terms of getting started, a lot of people get hung up on, “I don’t have money.” Now there’s really two kinds of money, right? There’s funding for deals. And then there’s kind of operational money, right? If you’re going to be active, you know, there’s a lot of stuff out there that’s like, “Buy houses with no money down. And you don’t need money to get started in real estate investing” And I’m not saying that you can’t hustle and get started, but generally if you’re going to run like a business, you need some advertising. You probably need some software subscriptions. You need a membership to FlipNerd or a lead membership, for sure.
David: That’s right. Exactly.
Mike: But there’s some expenses there, right? And so, but a lot of people get hung up on, “I don’t have the money to do that. I don’t have the capital.” And if we kind of break that down into I guess passive versus active investors, what are your thoughts on how to overcome those obstacles?
David: Yeah. I think you’re trying to be active and create a business around this that, yeah, either you’ve got to have some additional discretionary income that you can put into starting to create a real business, depending upon, again, how much time you’re gong to devote to it and what your goals are and how many properties you want to acquire, whatever you’re going to do with those, whether you rehab them or these can buy-and-hold rentals, whatever they are, there are going to be some operational costs. Or you pay someone a little bit of a premium for those properties.
What I’ve done, Mike, and I know you’ve done the same thing, you’re doing this right now, is I love to help other people. Now I have a vetting process and I’ve got to see that they’ve got what it takes. They’ve got to be mentored by somebody who I know that they know what they’re doing, but I’ve put capital with some young up-and-coming rising stars, is what I’ll call them, because I know they’re full-time. And there’s some ways to do some flips on that, so putting some funds together and help them with their marketing and their advertising budget as they get going. And that’s one way to get going.
So you’ve got to kind of find someone who would maybe either mentor you or provide funding for you. Again, that’s about the network. That’s about showing who you are and what you’re willing to do early on to get going. Once you do that, then the acquisition of properties . . . I always tell people, “Look. If you’ve found a good deal, really a good deal,” and the marketplace will tell you that, “the money’s always available for that.”
People think, “Well, I have to go to hard-money lending or I have to go to the bank.” That’s certainly one source, but, again, if you’ve built a network and you’ve let people know who you are and you’ve showed that you’re a trustworthy person who does what you say you’re going to do and you’re going to work hard at this, there are people that will fund your deals, on some kind of a split basis, short-term, long-term. That’s what we do in Freedom Founders. With the right people, we do that.
So there are ways to make this happen. I would say don’t limit yourself to the conventional ways. Well, I have to be able to get bank money. Bank money’s available, but still you’ve got to be able to have hard money down to buy deals. And that can be a little bit tough when someone’s getting started. So don’t limit yourself by the conventional methods is what I would say.
Mike: Yeah. And I see a lot of people that can get started, especially if they’re going to be active, right, is more in . . . Well, let’s just kind of say if you’re a passive investor, like a lot of folks that you work with, doctors and professionals, you probably have good credit. They probably have strong businesses. They have the ability to put 20% down, if they need to and buy a house. So that part is not a problem, right?
So for the active investor, I think anybody that uses that as an excuse, it’s like, “Well, you could start by wholesaling. There’s ways to kind of get things going.” And truthfully, after you get confidence and after you have some deal flow, like you said, there’s no problem getting money in this space. I mean, I started almost 10 years ago, 2008, nine years ago, when you called lenders then, it was like most of the hard money lenders were out of business.
David: That’s right.
Mike: Banks don’t lend to real estate because real estate’s evil, right?
David: Absolutely. Right.
Mike: There was no funding, not private funding and things like that, but it was so much harder than it is right now. I mean, I would argue that lenders have been beating themselves up for the last two or three years driving down rates. And it’s easier than ever to get money right now, right?
David: Yes.
Mike: So that’s not a big [inaudible 0:17:09].
David: No doubt about it. The money’s there. You just have to go find it and get out there and do it. I think another thing that really helped me, and I know it helped so many people that are getting started in real estate investing, Mike, is finding the right people that can coach, tutor, or mentor them. And, I mean, everything I’ve done in life, Mike, not just real estate investing, but other people have already figured out the pathway. And there’s no reason to go back and reinvent the wheel or make big mistakes, which can sometimes be somewhat devastating, if you take a wrong path.
There’s people that will help you, that will show you ways. So find coaches. Find mentors. Find groups of people. Go to real estate investment clubs, but find those right people so that you can get a pathway that you don’t have to go start it yourself and, you know, fall off the deep end because you make one bad mistake somewhere.
Mike: Yeah. I think that’s a mistake that a lot of people make is there’s a lot of bad training out there. There’s a lot of good information online, but I think once you find that person that can help you leap frog years of trying to figure it out . . . And it’s not just the lessons that they’ll teach you.
It’s just, as you know, having somebody there that when you get in a difficult situation or when you get close to doing a deal, and you don’t have that confidence yet, to be able to pick up the phone and say or get online in a private group or whatever and say, “Here’s where I’m at. Here’s what they said. I don’t know what to do,” it just gives you this massive confidence boost to kind of get you out of the gate.
And I think you and I both know after you’ve done five or ten deals, typically, it’s like your confidence goes like . . . My camera’s not high enough. Your confidence goes through the roof from where you started, right, because after you see it, you’re like, “Well, look. I don’t need to have the answers to everything, but I’m confident that I can find an answer, when I’m confronted with the situation,” right?
David: Yeah. Exactly right. You want someone that will coach in a way that they will ask you questions. So and hey, I’ve got this deal and this is what I plan to do with it. And have someone ask you questions to make sure, because there’s things that you won’t think about, when you’re first getting started. And you want someone to kind of ask you questions so they make you think through the process. That’s what makes you better, not just tell you what to do, but ask you the right questions. And then you come up with the answers or get help from them to get the right answers or you go find the answers. That’s how we all learn best. Someone that helps you that way, I think, is the best way to go.
Mike: Yeah. And I think that the other thing is we all . . . I know you run a mastermind, and we’re in a mastermind together. In fact, there’s another group that I’m going to join in the marketing space, just because I value surrounding myself with other people that are doing it, not necessarily just a mentor, but I think a lot of the best mentors bring you together with other people and not just them, right?
David: Yes.
Mike: And so maybe you could share some thoughts on how to surround yourself with other people that are doing that. And I don’t want to knock any of the free groups that are on Facebook because there’s a lot of big groups out there that challenges . . . A lot of times you get what you pay for when you’re in a free group, right? Everybody has an opinion, but they don’t necessarily have a vested interest in your success, but maybe talk a little bit about surrounding yourself and the importance of that early on when you’re getting started.
David: Yeah. Absolutely. Well, again, that’s what I did when I was young getting started. I found some really, really good mentors. And the way I found them was actually meeting them and seeing the people that they were surrounded by. You really get to see the character of people when you’re actually with them and you’re with them for two or three days at a time. And maybe you break bread together, breaks together, but really find what they’re like. And then seeing the other people that are around them gives you some real keys to who they are. So find those right people.
As you said, there’s tons of stuff out there today, but you need somebody that you can really trust to kind of guide you through that morass of information, what’s really true and who’s communicating the right stuff. So wherever you are, yeah, I mean, free’s not a bad place to start, but take that with a grain of salt. And always look for somebody who’s been down the road. There’s always older, gray-haired people in the field that aren’t out there to take advantage of the people that just will help you. So if you’re younger, find those gray-haired people that seem like they carry themselves well and [inaudible 00:21:21].
Mike: And they have a couple arrow wounds in their back.
David: Yeah, arrows in their back. And you can tell in a group who’s respected.
Mike: Yes.
David: You can watch and see people who are respected. You can also see the people that seem to have a lot of bravado and maybe shoot from the hip. And, again, not that they’re bad people, but you can kind of learn who’s the right person. From there, just like you do, Mike, is I’m always looking at . . . at this point in my life, I have the capacity and the desire and the need to invest myself. So I do a lot more of that today than I could when I was younger. But as you progress, yes, always staying involved in finding different groups just like you do, to be a part of because you can pull from the best of the best.
And that’s what we do in these mastermind groups that are a little bit smaller, a little more intimate, where we meet regularly on a regular basis, the knowledge base from different types of businesses. And they just have marketing and building the businesses and delegating who to put on the team, all these pieces that are part of anybody’s business, are keys to have. And I think you’ve got to keep yourself out there real time and vetting the people that you’re going to put in your space.
Mike: Yeah. Absolutely. And I would say, and you probably would agree with this, is that some of the most experienced people that I know or even like myself where I’ve done hundreds of deals . . . I’ve mentored people who buy thousands of deals, but people like you and others that I know, those are the most experienced, are those the ones that actually enjoy helping people the most. Like a lot of times people think, “They’re not accessible to me. I am not even going to ask.”
You and I both know that the days are kind of gone of somebody saying, “Hey, can I buy you a cup of coffee and pick your brain free for an hour?” It’s like, “Well, I can’t really do that anymore because I just have too many things going on,” but I think you would probably agree that some of the most experienced people we know are the ones that actually enjoy helping people the most, but oddly enough, they often don’t get asked because people are just like, “Ah, they’re not accessible to me,” right?
David: Yeah. Very, very true. One thing that I have a big heart for and my group does, my community, is helping younger people. And I don’t care if they’re going to professional school or they’re going to real estate, but we’ve had several younger people, I’d say they’re in their 20s, maybe they’ve graduated from college. And they’ve decided they want to be entrepreneurs. Their parents are part of our group. Well, we let these young adults come to our meetings because we want to kind of put the right stuff in their head, right?
Well, the ones that want to get involved in real estate, here’s what they’re doing, here’s what they’re finding is we’ve got enough mentors in our group that have active businesses, they are taking these young people under their wing, the ones who raise their hand say, “I want to do this.” And it’s really like an apprenticeship. They’re not working for free-free, but what they’re doing is they’re trading some time, some energy, serving in somebody else’s business who they know has a great business. And the education that these young people are getting right now, you couldn’t find it anywhere else.
You could pay thousands and thousands of dollars and go to get more education. And you wouldn’t get this boots on the ground education. So when they do it for six months or a year, these young people are going to have the ability to really have their sights on what’s next, what’s next. And these are good people. These are good people to spend time with. In fact, I’ll tell you a quick story.
One young person had met one of our advisors and talked to him in our meeting. And there was a little conversation. “Yeah, I’d like to work with you.” Well, here’s what this young guy did. He went back home. He was in LA, hopped on a plane, flew to this mentor’s hometown. When he got off the plane, called him up and said, “Well, this is so and so. And we talked at the meeting about working together.” And the advisor goes, “Yeah. That’s good. Let’s talk about that a little.” He goes, “Well, great. I’m right here at the airport. When would you like to get together?” Now, that’s taking action.
Mike: Yeah. Absolutely.
David: And this young guy has been working with this mentor now with his boots-on-the-ground operation now for three months and just soaking it up and doing a great job. He’s learning all aspects. He’s learning how to make offers, how to find the deals. I mean, it’s really a tremendous way to do it.
So that’s one thing I want to bring up is that if you have the capacity and you’re not locked own to a job or a family, if you can get up and go where somebody will let you apprentice with them, just go to [inaudible 00:25:24]. Yeah, they’ll pay you something, but don’t worry about the payment. The payment comes later. It comes back when you learn what you can learn. So that’s one of the things I would do today, if I was getting started, in anything in life, is [inaudible 00:25:32].
Mike: That’s awesome. Great stuff. Well, let’s talk about one last thing is building a team. I think a lot of real estate investors early on, especially the active investors that are trying to wholesale or get started in rehabbing or whatever, is they’re trying to be lean and mean because they probably . . . you may not be starting with a lot of money. So a lot of times you start to just do everything. And then, effectively, you’ve just created a job for yourself, ultimately, unless you can find a way out of that. So maybe share your thoughts on building a team and the importance of that.
David: Yeah. That’s a tough thing for all of us to do, Mike, when we are trying to run lean and mean deals. And I did the same thing. For too many years, I tried to do it all myself. And I finally learned that if I brought the right people in, and that’s the key. It’s not just anybody. It’s not just someone to fill my slot, but I think you really have to look for the right person. It’s really the who before the what, meaning who you bring in and then determine where they need to fit on your team.
But you might just start with a personal assistant. And that can be a virtual assistant, someone who just is there. And you pay them for X number of hours per week on a retainer. And they can pick up calls or they can run errands for you. They can handle voicemail returns. They can handle a plethora of administrative things that right now you’re trying to do. So start with someone like an assistant.
I think if you’re really doing a business of some kind, at some point you need a project manager, but that’s up the totem pole a little ways. You’re going to pay a little bit more for that person. But what I’ve really found over my lifetime, Mike, is the less I do, meaning trying to control everything, the less David Phelps is trying to do everything, the more free time I have, the more I get done, and really the more money I make because I’ve empowered or let other people become empowered to do things that they can do well and that maybe I don’t like to do or I don’t do as well or I shouldn’t be doing at all.
There’s a lot of great books, resources, on building teams, Jim Collins, “Good to Great,” Simon Sinek, “Leaders Eat Last,” just to name a couple of them. I would tell people to really start reading books that talk about leadership and team-building. There’s a bunch of them out there. I’ve learned so much from doing that. And I kind of didn’t pay attention to that early in life, Mike. I thought, I just needed to be better typically at what I do. If I just learn more and become more educated, that’s important, but I didn’t understand the power of building that team.
Today, it’s everything that I do. Today, it’s about that team and empowering them and looking after them and wanting to help them with their goals. When you really look after the people that you bring on your team and really care about them, then guess what? They’re going to care about you and care about the people you’re serving and helping to [inaudible 00:28:09]. It’s a big part of life.
Mike: And I know specifically your approach in your mastermind is because you work with doctors, a lot of dentists, that realize, wow. I have a friend here who is a surgeon. And he’s like, “If something happens to these hands or if something happens to me, I’m out of business,” right?
David: That’s it.
Mike: And so the challenge is, that it’s a noble profession to be a doctor. And there’s a lot of reasons why people want to do those things, but I think what you found personally, just because I know you, and we’ve talked about this before, and the way you teach others is you become your own bottleneck, right? If you’re doing everything, then what kind of life is that. You can’t grow. You’re always limited by your own capacity.
David: Yeah. I always say that if you have a business that’s primarily dependent upon you, the owner, then you really don’t have a business. You have a job. And maybe it’s a good-paying job, but you need to always be thinking about how can I transition from it being dependent upon me to where I have sustainability in my business, where I have duplicity, where if something happened to me, the wheels wouldn’t fall off? And if it’s all about you, that’s a tough place to be in. Don’t stay there all your life. You start there, but don’t stay there.
Mike: Yeah. Well, David, can you share, if people want to learn more about you, I know you do a lot of Facebook live videos to your group and stuff. Where can people go to learn more about you and what you’re doing?
David: Sure. You can go to our main webpage, which is freedomfounders.com. We also are on Facebook at Freedom Founders on Facebook. And that’s where we do, put a lot of our content out, which I think . . . I’d love anybody to connect with us on Facebook because we put a lot of good content out, I believe, about real estate, about team-building, a lot of those things that we’re talking about today. And I believe in taking what we’ve learned and what our team has learned and putting that out there. So connect with us there, if we can help you at all.
Mike: Awesome. Well, thanks for joining us on the show today. I definitely appreciate it. Great to see you. I guess I’ll probably see you in a couple weeks at CG, if you’re going to be there.
David: Exactly. And hey, it’s always great to connect with you, Mike. We’ll see if we can have lunch together somewhere. It’s a long drive across the Metroplex, like about 15 minutes. And we [inaudible 00:30:16], right?
Mike: Absolutely. We need to make it happen. So great to see you, my friend.
David: Thank you, Mike.
Mike: Have a good day.
David: You too.
Mike: Good. Hey, folks. So for any of those listening here, you were just kind of riding in the back seat while we were in the front seat talking about some stuff, but if you have any questions, and I have some questions of my own that I’d like to ask, I’d like you to go ahead and open it up. But I want to start by asking you, David, so tell us a little bit about when you first got started, I mean, I know you started while you were in school investing in real estate, but when did you kind of make that shift to say “Hey, most of my focus needs to be here” instead of on essentially, your practice, right?
David: Yeah. It really was a time in about 2004 when, I have a daughter who is 24 years old today. And she went through a lot of health issues. And her last major health issue was when she was 12 years old. She had to have a liver transplant. And that’s when I decided, stay kind of chained to a practice, it certainly was financially a platform that provided for lifestyle, but I didn’t have to stay there anymore because I had enough real estate that I could make a shift. So that’s what really gave me the permission to step away from practice and say, “It’s okay. You know, moving through life and involving, it’s okay.” You’ve done the same thing.
A lot of people have gone through phases in life where you say, “What I did here was okay.” And that’s when I made the decision that I’m not going to stay in practice. I didn’t know what I was going to do at that point other than I could still do real estate and do my own deals. And that’s when I had the freedom to think and be away from what was tying up my time, which is what I’m trained to do all my life. That’s when Freedom Founders organically started to happen.
I don’t think you can really change or transform your life until you free up some time to think. We’re so busy working all the time doing, doing, doing, that the ability to transition and say, “Well, where am I today? And where can I move to if I just made a few things happen,” it’s not an easy thing to do, but you’ve got to have a reason why, a purpose to do that. And that’s what I had.
Mike: Yeah. Is everybody in your mastermind, is everybody previously a doctor or do you work with other professionals, as well?
David: Being a former dentist . . . Well, I still am a dentist, but that’s who I speak to primarily, but we do have other professional practice owners. And really just recently, Mike, we’ve had some non-doctors, non-professional practice owners, become a part of our group. And you know what? I like that diversity because business is business is business. And so other entrepreneurs that are there, we’ve got a guy that has a marketing franchise, but he loves real estate. He’s got the right mindset.
So having other people that have the same goals, there is nothing wrong with that. I don’t go purposely out to try to find all people. I speak to kind of professional practice owners. But you know what? The message is really . . . it crosses a lot of platforms. And so it just makes sense.
Mike: Yeah. A lot of small businesses, they all have the same issues, right?
David: Yes.
Mike: There’s only so many hours in a day. They’re probably stuck doing more work than they should. They have hiring and firing issues. HR is always a big issue, finding the right people. You’ve got to generate leads. Like it’s all of the same issues all the time, right?
David: It’s all the same. And we learn so much from each other. From different business industries, I think it’s fun to see, to kind of cross-pollinate and see what other people are doing because you can use those things that others are doing that maybe no one in your industry has really looked at.
Mike: Yeah and help each other. Like that marketing person probably could help doctors, for example. So yeah. We talked a little bit about masterminding in groups and things like that. For those that don’t have a lot of money because a lot of the best masterminds are, in my opinion, not cheap. You’ve got to kind of pay to play. And a lot of times you do that to weed out people that are not serious, right? Like we’ve found that when you give away something for free, people just don’t value it as much as to whether they paid for it.
But for folks that are getting started and may not have those funds yet, and truthfully probably can’t get into those masterminds, because usually there is a restriction on your success where like you have to be at a certain level in your game, but any thoughts you want to share on how people, in your opinion, can kind of best start surrounding yourself, whether it’s like local, just like, “I’m going to find some people that are doing this and try to get together with them,” things like that? Any thoughts on how people can start kind of masterminding, if you will, without necessarily a high price mastermind group?
David: Yeah. You can start with, on a local basis. You need to get out and see what’s happening in meet-up groups and real estate investor groups. Go there. And in those types of groups, you’re going to find all kinds of people. You’re going to find people like yourself that are getting started. You’ll find people that are a little more active. You’ll find people that are a little bit more on the passive side.
You’ve got to do a stronger vetting there because it is a come one, come all. There’s going to be some really good people in those groups. There’s some people that probably you want to be careful with. So you’ve got to use some real discernment there. But find those few people. And maybe start your own mini-group, not necessarily one where it’s something special. Then you can go to a Denny’s, but somewhere where a small group of you that are trying to get going, you meet on a regular basis.
That’s just kind of where things get started or find someone who’s already doing that where it’s just like, “Let’s go in and have breakfast somewhere and just talk about what we’re doing in the marketplace.” When you learn to find, the cooperation is the best way to go in business, if there’s enough business, there’s enough deal pool out there that we’re not trampling on each other, that’s the way to make things happen. It’s more of an abundance mindset than that scarcity where, “Well, I’ve got to keep it all to myself.” That’s not going to get you anywhere.
And when you get over that and start thinking, “Cooperation is the way to go,” that makes more sense. So do it that way. Certainly, plug into a lot of online communities, again, just remembering that just watch and be discerning about who’s teaching and who’s selling stuff, not that buying investment products is not something to do, but just be careful. Find other people who have said that they’re good sources.
Mike: Yeah. I think what you said there is really powerful because when I started early on I had more of a scarcity mindset than I do today. I thought everybody was my competition. Why would I work with that guy? I don’t even want to talk to that guy like . . . And you still see that. We’re in the same market here.
So you see people that are doing really well, but they probably don’t talk to each other at all. And when you start to realize like, hey, [inaudible 00:36:41] when I go look at a house, I might be competing against 10 or 20 people. I’m not worried. If I’m worried about competition all the time, then I’m probably missing out on opportunities that there are to potentially work together. And without getting into a lot of details, that could have a lot of different flavors, but I think it’s an important mindset thing to get over, especially in your own market, if that’s where you’re operating, because it’s short-sighted if you do that.
David: It is. It definitely is. There’s always things that people can’t handle or deal pool at one time. And if you just talk and see what people have going on, sometimes you’ll find that someone else has a deal that you can help make happen for them or vice versa. Just be open to it. Be open to it. And don’t try to restrict commerce. So it’s just not a healthy way to grow a business.
Mike: Yeah. Well, David, thanks so much for joining us. It was great to see you again, my friend.
David: Thank you, Mike. It’s been awesome.
Mike: I appreciate everything you do. And for those of you that are still listening at this point, we’ll be publishing this show on iTunes and everywhere else in about two weeks from today. And again, this was episode number 342. I always have to look because I never remember exactly where we’re at, but we have lots of other great shows, although this I have to say was the best one we’ve ever done, I think, but 341 other shows . . .
David: You probably say that to everybody, but thanks anyway.
Mike: I say that to all the girls.
David: All the girls.
Mike: No, I always appreciate you, David, but we have a lot of shows. And, of course, we actually have another podcast. I don’t know if a lot of people even know that, even though we have more than 500 episodes on that one. It’s called REI Classroom. And we actually publish that seven days a week. It’s five-minute, little short lessons. So anyway, check out our shows. And everybody, thanks for joining us here today. And, again, David, thanks so much. I hope you have a great day.
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