Welcome back to the Discount Property Investor podcast. Our mission is to share what we have learned from our experience and the experience of others to help you make more money investing like a pro. We want to teach you how to create wealth by investing in real estate, the discount property investor way. To jumpstart your real estate investing career, visit freewholesalecourse.com, the most complete free course on wholesaling real estate ever. Thanks for tuning in.

David: Alright guys, welcome back to the discount property investor podcast. Your host, David Dodge. Today, I have a really special guest. Aaron West is in one of my masterminds that I attend and I've had the pleasure of meeting Aaron several times now, and Aaron's out of South- Southern California, right?

Aaron: No, Northern California [inaudible].

David: Northern California, I knew it was California. He's out in Northern California, this guy is a beast. Multiple Iron Man, 4-time finisher of the Iron Man, he's done 20 half marathons, father to two boys, and married. He's an agent in his local market, he does wholesaling, he does buy and hold, he does some fix and flip, and then of course, retail brokerage. I mean I'm sure I missed like 7 things there, right?

Aaron: Yeah yeah, no, it's a good life. It's a good life.

David: Aaron, you are crushing it. I appreciate your time and I am grateful to have you on the show. I know that you are going to just spit some gold nuggets here at our audience. So I was looking on your website, the west experience and then PMZ Real Estate. So you do a lot of retail brokerage it looks like as well too.

Aaron: That's primarily what I do actually is retail brokerage.

David: Okay.

Aaron: So I have a team of 6 agents and then myself and then multiple admin staff that we have. So we did about 165 retail transactions this year.

David: Holy cow.

Aaron: Our goal's 225 this year, we're about 2% behind that so we're just a couple of deals behind that, but it's early in the year so we're super optimistic with that and then I'll usually do anywhere between 10 and 25 flips a year.

David: That's a ton.

Aaron: Just depending on how that that comes through and then little bit of wholesaling, mostly I'm in the fix and flip world. If I find a deal and it's the right deal, then I'll take it and take advantage of it.

David: Do you have any rentals?

Aaron: Yeah, I got 27 doors now, rental wise.

David: Hell yeah man.

Aaron: All in California, so it's crazy you know because-

David: That's expensive real estate.

Aaron: It is but there's- you know, and I'm sure your people know that are on the show but there's two kinds of investing, right? There's investing for cash flow and then there's investing for appreciation. And so everything that I've done has basically been investing for appreciation because I want to build my net worth and then I can turn that to cash flow. So I know guys that have a hundred doors but they don't necessarily have the net worth that goes with saying you have a hundred doors because their cash flow plates, right?

David: Right.

Aaron: So there's not a lot of equity but they're getting that residual income from it. So I'm- I go at it from a little bit different perspective cuz I think that is easier to turn net worth into cash flow if you have the net worth.

David: Absolutely. I live and breathe that play, right? The building the net worth so I'm really happy that you mentioned that because you're not taxed on creating net worth guys, you're only taxed on your income, right? So if you can add 300 or 500 thousand dollars worth of wealth created via equity plays and appreciation and other things like that, you don't pay a dollar of tax on that but if you go and increase your annual income from you know, 80 to 100 grand to 300 grand or to 500 grand, that just means you're going to pay three to five times the amount of taxes by increasing, so I love that you mentioned that Aaron. I absolutely love that, the wealth play is my favorite play.

Aaron: Well then we'll probably end up talking about that a little bit because I think that depending on where you are in your life, it's a different play, right? So if you were a young guy building a portfolio that pays you $30,000 a year or $50,000 a year is awesome, but if that's all you're going to get from that for 20 years, it's not necessarily putting you in the place to be where the person that you want to be 20 years from now.

David: Right.

Aaron: So for me, a younger person should be focusing mostly on appreciation so that they can turn 2 or 3 or 5 million dollars into cash flow when they actually need it, cuz if you have a job or you are hustling and you got the money coming in, you don't necessarily need that cash flow so a lot of people have different perspectives, that's kind of my perspective on that.

David: Man, I absolutely love it. Tell me a little bit about the 27 doors. Is it mostly multis? Do you have some singles?

Aaron: No I've got- it's- I think I have 15 or 16 single family houses.

David: Nice.

Aaron: And then I've got 1, 2, 3, 4, 5, 6 duplexes. I've got a Triplex and I just went into escrow yesterday on an 8-plex here in Central Valley.

David: Hell yeah. Nice.

Aaron: So it'll be my first- first like commercial play other than some syndications and some other stuff that I've done so I'm super excited about that.

David: Man, that's super exciting. I love the multi, like the bigger multis. I've actually did a BRRRR method flip which sounds so strange but I bought a 10 unit and I slowly renovated every unit and raised the rents and cycled tenants in and out, and it was about a- almost a 2 year play, but we bought it using the BRRRR method and sometimes you can get really good relationships with your bank's and your lenders where you don't have to do the refi before the- I'm sorry, the rehab before the refi. You can actually refi first and then do your refi- your rehab later, right? But man, I really regretted selling that thing because the multis are just so easy to have 10 tenants in one building or 8 tenants in one building and I'm actually gonna be making an offer on like a 30 or 40 unit here in the next week or two so I'm really pumped about that. Man I love that, congrats. 8 units, that's awesome.

Aaron: Yeah, that'll be good so that'll be a nice little addition to the portfolio.

David: Hell yeah, I love it man. So let's pivot real quick before we jump back into the wealth building, you know, mindset and play that we both you know, love and are so passionate about and let's talk a little bit about the marketing. So when you- you do the majority of your business you know, on the retail side, but yet you're still doing the fix and flips and you're buying rentals and it's really, in my opinion, it's really rare that you have agents that are really crushing, crushing it being an agent but also are on the investor side so I think I have a couple questions. One, are you an investor first or an agent first?

Aaron: I- you know when I got into real estate, I was an agent first and then now I'm an investor first. So when someone asks what I do, I'm an investor and I have a real estate team.

David: Love it.

Aaron: Because I want to have that conversation and just see where that- if there is an opportunity and how that opportunity presents itself.

David: Well you are what you tell yourself too, right?

Aaron: So true.

David: So if you don't believe that you're not an investor, you're going to constantly get a lead and then be like, let me help you list this thing, when in reality you're better off being like, let me buy it from you, right? So love that.

Aaron: Well, and it's funny cuz there's a story behind that too because what you said is so true and so many real estate agents and myself included, you know, that have like a servant's heart, they want to make sure that they're taking care of their people and I was talking to this guy named Matt [inaudible] who is a guy in Northern California and he had a really strong real estate team but he was also doing fix and flips and so I was like dude how do you do it? And he goes, I don't let my preconceived notions about what's best for them be their reality, and so he gave me this dialogue that he uses when he's sitting down with someone that, you know, and the situation has to be right but I use it in a lot of situations where someone died, the house is run down, you know, all the things that would make it a good fix and flip or a good long-term buy-and-hold, and he said you know what? I'm an investor, I have some friends that are investors, would you be interested in an all-cash offer that closed in 2 weeks and just made this thing go away?

David: Go away.

Aaron: It would be under market but it would be fair, I mean it's an investor or an investor or myself so there would- we would need to make profit on it, but would you be interested in a fair cash offer that closes in 14 days? And he said and then you just shut up and you just let them tell you if they're interested and you'll get some people that are like, no, no dude, I want to put this thing on the market, and then- but if they say well how much? Then you go okay, and then you go through and I'm a big believer in being super fair with everybody so I'll go find properties that have been flipped and see what they were purchased for.

David: Oh nice.

Aaron: And then just bring them that information and say you know what?

David: That's a good approach, yeah.

Aaron: I pulled these last three houses that got sold retail, this is what they paid for them. I'd be more than happy to pay you that because that's where the market says that it is and you bring in that third-party validation of this is where the market is for a home like yours that's going to be sold and rehabbed. And I don't think I've ever had- maybe one or two people have pushed back, they usually go okay that's fair, and then you get it and really that's the way to get some amazing deals because what happens is, is that, especially in a market like [inaudible] where it's appreciating so fast, when you take them that number that was maybe three months or six months ago and they take that, you have three to six months worth of appreciation built in to your profit margin already, plus the rehab time and all that stuff.

David: Isn't that crazy how like only three to six months of appreciation like is something.

Aaron: It's ridiculous man.

David: It's not just something like in the last three to six months, it's been like 5%. I mean it's crazy.

Aaron: It is crazy. We have in my market right now and I'm in Modesto so I'm about an hour east of San Francisco and an hour south of Sacramento, we're right in Central Valley.

David: Oh wow, yeah you are a big North [inaudible]. Okay.

Aaron: So we- our market right now has 5% appreciation built into the pendings right now.

David: What?

Aaron: It's ridiculous. Well we're getting the Bay Area starting to move out because of work from home so we're an hour and 45 minutes from San Jose and as these- the work from home and all that stuff is starting to gain traction, we're getting the Bay Area to move out here so we've got not only the influx of our buyers, but we're starting to get the Bay Area buyers so it's stupid right now, it's crazy.

David: You got a- Modesto's- I'm looking online right now, it looks like you got a population of about 215 thousand out there.

Aaron: In Modesto, so we serve about-

David: In Modesto, that's a good size yeah.

Aaron: Oh it's a good market and there's a lot of little towns so we've got a fairly big footprint so we serve probably a million people in our market.

David: I love it. Guys, I want you to definitely take a second and take this in. So Aaron just spit out a massive gold nugget, right? So what he is doing is he is reframing the offer, right? So instead of sitting down at the table with the seller and saying, oh here's you know, what the market is paying and here's you know- or was willing to pay or what something's worth, and then here's what I'm paying, right? And by doing that, you're approaching it like it's me- it's me Mister investor versus you Mr. Seller, but he's not doing that. Instead, he's reframing this to say, hey it's me and you Mr. Seller versus the market. So the market is saying it's worth this but also, what people are buying these unrehabbed houses for is this. So you can kinda change the whole dynamic and basically take all the pressure off of you trying to sell somebody, instead you're really just educating them, right? And you're saying this is really me and you versus the market not me versus you. So Aaron I love that, I teach that to all my people as well. Such a great strategy to justify your offer as being fair. I think that's the best way for me to describe it is you know I tell the sellers my offers going to be low. If it wasn't, I wouldn't make money right? But my goal here today isn't to get you to accept a low offer, it's to justify my offer as being low but really more than that, being fair, right? Cuz an investor can't pay retail, I mean it's just you can't make money that way. So Aaron love that, thank you.

Aaron: Yup, yes. So anytime you can bring in any kind of third-party validation, I never say I'll offer you this because of X, Y and Z. I always try and find some kind of third-party, third baseman, market, whatever- whatever I can to be able to, when I make that offer, give some kind of justification cuz the reality is that everybody wants to help, everybody wants to make it happen, they just need a reason to. So if you're able to think creatively and come up with a way to present an offer to them to where there's a reason for them to accept it or even more importantly, a reason for them to justify accepting that offer then there's no battle. Then it's just all the matter of just ironing out, fine-tuning the details and it's not like oh I want 70 thousand more because you brought in that third party that validates everything that you're saying.

David: Love it, love it, I love it. Have you ever heard of the- so we have a little spreadsheet that we use, we print it out and bring it and we call it a seller's net sheet and I'm sure there's a lot of different names for it but basically we compare you know, them listing it as is, them doing a light rehab and listing it, doing a heavy rehab and listing it and then of course them selling it without an agent directly to me, right? Or to you or to whoever else, and it's a great way to justify because really that sheet not only includes added cost depending on which they choose, but it also includes added time and sometimes time is more important or more valuable to the seller than their- what they're going to walk with, right? The cost.

Aaron: It's all about finding their pain point, it's all about finding their pain point. Once you find their pain point, then everything can be directed around that and how to solve their pain and once you- if you're able to do that, then the odds of your success just go like [explosion noise].

David: Yes.

Aaron: Just go way up so it's- that's- that is- what you said is awesome as well. Just coming in with a bunch of different data points but really just trying to gather as much information to figure out where their pain point is.

David: Love it. Okay, question two: when you are doing your marketing, are you breaking it up into brokerage specific marketing as well as investor specific marketing? Are you doing one or the other or are you merging those together to do something along the lines of if we can't sell it, we'll buy it?

Aaron: So we're kind of- we're morphing right now because the market is so competitive, right?

David: It's so competitive right now.

Aaron: So we're trying to get creative on where we can find listing leads. So I actually just partnered with a local flipper that literally has a thousand leads of people that have reached out to him over the last 18 months and has asked about buying.

David: Yeah, that's such a great strategy.

Aaron: And so what he's doing and actually it's supposed to happen the next day or two, he's sending us every one of those leads via you know, Follow Up Boss which is where he keeps all of them. And so, my listing agent and myself were going to start off with a mass- a mass text that just says, hey if you were able to get your number for selling your home, would you still be interested in selling? And seeing where we get from that, and then we're just going to go deep diving into everything. So, the other place that we're doing is mailing. We went in and we found all of the areas that have higher than a 6% turnover rate and we're doing a letter to all of them that just- it's handwritten, the front is handwritten, it's actually signed with the person, we don't put a return address label on it or anything but everybody opens those and we just say, hey we've got a couple of buyers who are looking to buy in your area, would you be interested in selling? And then we're taking that feedback and depending on who it is that raises their hand, we'll go in as an investor first and then make those judgments as to do we go to a hybrid? We have a kind of a hybrid model where we- Eric Hatch does this as well, where we promise them x amount of dollars and then we say the buyers going to pay all the fees. So we put it on the market, we market it to investors, they're guaranteed x, we can charge whatever commission we want because the buyer's paying for it and then when the market responds to it, they get their number, we get our compensation, and then they get that spread or we go to the just the full traditional retail model where we do everything that we're supposed to do and put it on the market and try and get it sold.

David: I love it. So ever evolving though like that's really the takeaway, right? Like, you got to try new things and test new things so the fact that you guys are you know, kind of evolving and it's something that it is natural to do especially in an ever-changing market. I love that. So lots of different types of marketing. Who's writing the letters? Are you guys using like a third party company that has machines? Or is it actually a handwritten?

Aaron: It is actually handwritten.

David: Wow.

Aaron: I've seen all of the ones that are like handwritten and you can still tell.

David: Oh yeah.

Aaron: I mean I get them in the mail and you're like, oh that looks handwritten and then you look at it and you go that's not handwritten. So we're actually-

David: Like it looks really cool but-

Aaron: It looks really cool but it's not gonna dry the same as when someone actually handwrites it.

David: Right.

Aaron: So we've got my COO's mom is writing them, my listing agents' girlfriend is writing them. They're just- we're giving them 500 at a pop and they're just knocking them out and then we're trying to mail out 500 a week.

David: Man I love it, I love it. This is awesome. Guys, Aaron knows his stuff. He is in all aspects of real estate investing and it all starts with marketing guys, that is the name of the game. Learning how to get your phone ring or to find the people that are interested in selling that are motivated and get their number and ring their phone. I tell this to all my students, right? Aaron, the marketing efforts really, the end result is to get somebody on the phone, no matter what method, right? If you're doing direct mail, if you're doing AdWords, if you're doing social media marketing, if you're doing you know, cold-calling, cold SMS, bandit signs, billboards, radio, television, we could go on and on and on and on. The end result is to always get somebody on the phone, right?

Aaron: You know, without marketing, something horrible happens and that's nothing, right?

David: Nothing.

Aaron: Nothing.

David: Yes.

Aaron: So you have to be changing, you have to just like problem solve and say where is their opportunity? Because in every challenging market, there's huge opportunity. So in a market like this where the listings are really tight, it's like how do we find the opportunity? Most people look at it the exact opposite, they're like oh my God it's so hard, I'm struggling so hard, I can't get listings, I can't get my buyers into escrow and instead just go wait a minute, anytime there's a challenge, there's opportunity. Where is it and how do we take advantage of it? And if you just flip your mindset a little bit like that, then all of a sudden again it goes back to that thinking creatively. You start listening to other people and you start tweaking stuff and then someone says something, you're like dude that's genius. So one of the other things were doing that we just started doing is we have about 8 hundred people in our database for our clients, right? That's a big part of our business is just we've passes spear and referral and that kind of stuff, so we are printing up a Google map online with all of our clients on the Google Map and what's the biggest issue people have right now is listings, right? So when my guys are out showing houses- anytime they're showing a house within like a five-block radius of any of my clients, they're going to call that client and say hey we're in the area, we were just showing the house, my clients didn't like it but you know, I was talking to Aaron about it, he said to give you a call. Do you know anybody that's thinking about selling? Because my clients loved this area and they're just- we're looking to see if you know anybody who's looking to sell, right? And it gives you a reason to contact the people, gives you the reason to go to a professional-

David: It gives you a reason to contact, that's the most important part right there.

Aaron: And it's an easy contact and it puts in their mind: who do I know that might be willing to sell? And if you do that enough times, you're going to have someone go: oh my neighbor next door was just talking about it last week, but-

David: Or I'm ready, come over now.

Aaron: Or I'm ready, hopefully it's them cuz they're my clients, right?

David: It's like I got buyers with me actually. Wow.

Aaron: That's exactly right.

David: That's such a great tip. So you put all those like on a map essentially, you plot them on a map and then depending on where you're going to look for a listing or to show buyers or whatever, you're going to call the people around there as well. I love that.

Aaron: It's a live Google Maps so it's just like, if you're in this part of town, you just pop it up and it says these are the people that are around. So we've got their name and their phone number in the map and then they just call and then they log the call so we know when was the last time we contacted them and you know, things start to happen.

David: Aaron, I'm going to share my screen for 30 seconds with you real quick. So this is just a map of all the flips that we've done here locally in town. Can you see my screen?

Aaron: Yup.

David: And so it's similar to what we have here, but you're putting actual prospects on that map. I love that. Absolutely love that. I think that's really, really, really cool. We've done about 600 flips and that map only has about 400 of it on there so we have about 200 to add to it, but I've been wanting to make a case study for each of these and have a video for each of these. We'll get to that down the road but I love your strategy man. That's awesome.

Aaron: Yes. So yeah, that's kind of what we're doing for marketing and I mean there's a lot of other stuff we're doing too but that's kind of where our focus is right now. It's all about listings, it's all about trying to create market share and create opportunity because the more listings you have in this market, business begets business. Another thing that we're doing is with every listing or every buyer that we take, our guys are starting to post on- we just actually talked about this last week so this is a new thing but they're posting four or five times with each house that they're, you know, when they get the offer accepted or when we meet with them and sign the listing and then when it goes pending, so we're getting five or six posts out of each sale so that it looks like we're doing- I mean we are doing a lot of business-

David: No, no, every little thing helps man.

Aaron: -but we want to make it to 400 houses a year instead of 200 houses a year, right?

David: Yeah.

Aaron: So again, it's that marketing, the more- because anytime you post on social media, at most it's 30% of the people see it.

David: Yeah, so you gotta do multiple for sure.

Aaron: So if you're posting every single day, you're not- they're not seeing you every single day so you can be pretty proactive and not have it turn into white noise.

David: Yes, I absolutely love that. So I'm looking at the average home values, Modesto's 353, St. Louis where I live, 147. So having the higher value homes in the market leads to bigger profits, bigger commissions, so on so forth so I am a little jealous that you have a more expensive market.

Aaron: Well I've actually gotten to be buddies with this agent named Andy Hsu in Burlingame and TSE, and he'll do a billion dollars worth of business with like 200- I mean it's- with like 200 homes, he's average sales price is like 3 million dollars so it's all relative dude. I have home envy just like every other person.

David: Just like everybody, that's right.

Aaron: Exactly right.

David: I love it. Well Aaron, let's circle back to the you know, wealth-building. I think that that's probably you know- we share a lot of similar things like we're both landlords, we're both like you know, do fix and flips. You probably do double the amount of fix and flips that I do, but I do tons of wholesaling and so we share a lot of these things and I think the thing that we're probably the most aligned with is the wealth building aspect of real estate, right? So I guess what would be some of your favorite points on the wealth building and there's so many things that we could talk about, right? Like I think my favorite thing with real estate investing are of the two favorites is one, leverage and two, the depreciation. Love those two things.

Aaron: Yeah and I'm more of a mindset and principles kind of guy when it comes to building wealth so I'll give you my story just real quick.

David: Please.

Aaron: I was one of those guys that out earned his spending for his entire life, right? When my- in my previous career before I got in the real estate, I started out making 22 thousand dollars a year, when I quit making $125,000 a year being super successful, I was as broke as A as I was at B, right? I just- I got a raise every 6 months for 10 years and my lifestyle increased every 6 months by 10 years which I think is-

David: That's not abnormal, that's very normal.

Aaron: That's not- no, I think that's the majority of the world out there, right? So I started to wonder why I wasn't comfortable with money and it- I mean it was a year, a solid year of me trying to figure out what the problem was and I was talking to one of my mentors one time and this is one of those life moments that really just changes your trajectory and I was telling my problem, I'm like I don't understand why I can't keep money and he looked at me and he asked me one question. He said what was your dad's relationship with money? And it was like getting punched in the stomach because I had never thought about the fact that my financial disciplines were just repeating my dad's and my grandfather's for that matter. They were great people that everybody loved, made good money but were broke all of the time because they weren't comfortable with money. So what I had to do is I had to start putting some disciplines in place to be able to start building wealth and you know, I've been fortunate to where I have wealth now. There's a difference between being rich and being wealthy, right? I think rich is an a-hole thing, wealth is something that you're comfortable with and that you build to give you the lifestyle that you want to have.

David: It's hard to become wealthy without focus- without being focused on wealth, right?

Aaron: It's impossible to be wealthy without being focused.

David: You can get rich overnight but the thing about riches is it comes just as fast as it goes, right?

Aaron: If you haven't changed disciplines and your perspective-

David: Your mindset.

Aaron: -it's why like 98% of people who win the lottery are broke within three years, because they're comfortable at a certain way. So what I started to do is I had to put disciplines in place. So most people have a savings account, right? Which is really just an emergency fund for when the tires go bad. It's if- when the tires go bad, you're like oh I've got $2,000 in my savings account, you go grab it and your back to zero, so I knew that wasn't going to work for me because I've done that before and so what I did is I opened a new account and I named it 'not my money'.

David: Really? I like this approach.

Aaron: So that was the name of the account. In my bank account, it said 'not my money' and I would take every commission, every time I made money, I would put a piece of that into my 'not my money' account, and I made the commitment that I wouldn't pay my house payment before I touch that money because that's not my money, that's the money that Aaron West is going to need when he retires, right? So instead of taking ownership of the money which is the problem that most people have, as soon as they get a check or as soon as they flip a property and they're like, I have $30,000. They say I have $30,000, they've taken ownership of the money instead of taking stewardship of the money, and the difference is like, if you retire, oh am I gonna lose you or are you still there?

David: No, I'm here, I'm here.

Aaron: Okay. So let's say you pass away or not you pass away, one of you're buddies pass away and he's wealthy, he's worth a million dollars let's say, you know. And he gives 500 thousand to the two kids. They've taken ownership of that 500,000 and they're going to go spend it like it's their money, right? If he dies and he gives you that million dollars and he said, I want you to manage this million dollars for my kids, you now have stewardship of that money. You're going to make very different decisions than those kids are going to make.

David: Totally, totally different.

Aaron: One hundred percent, right? You're gonna look at that money very differently.

David: Like different opposite universes, yeah.

Aaron: But that's what we have to learn how to do to build wealth, is we have to separate our personal life and our personal spending from having that stewardship of the money that we're using to build wealth, right?

David: Right.

Aaron: And as soon as you are able to make that separation, now all of a sudden it becomes a game which is where the magic really starts to happen.

David: Then you can start building up your monopoly pieces.

Aaron: And you start building up your monopoly pieces, so you take- and then the other piece of advice that I think a lot of people just miss and I actually posted on my IG account the other day, Gary V said that most people want fast but life is long, right? So what that means is that most people want to take $10,000 and to be a millionaire but that's not how wealth is built. One of the other pieces of advice that I got that is just changed my whole perspective of everything was I was talking to a guy who was very wealthy and he was like Aaron, the way you get rich is base hits.

David: A hundred percent.

Aaron: He says everybody wants to step up to the plate and swing for a homerun, but the guy that makes the most money, that's in the big leagues forever.

David: Consistency.

Aaron: And just is- he's swinging for base hits, right? And the guys that go up and Mark McGwire's and you know, those guys-

David: They have a good run by all means.

Aaron: But there's such an anomaly as well. You just can't be that guy.

David: And not only is it an anomaly, but it's short-lived.

Aaron: It's very short lived. So I've always been of the mindset: if I have $10,000 and I can make $1,000 in six months, people are like what's the point? It's a $1,000- or even $100 in six months-

David: So what? It's free money that you didn't have to trade time for.

Aaron: Exactly right.

David: That's the whole thing right there is you know, whenever you go get a job or have a job, you're essentially trading time for money, like it or not. Even if you are- if your on commissions, average it out at the end of the year, how much money did you make for every minute, the time that you spent? That's the coolest part. So I don't want to get too deep into this Aaron but I'm sure you're very, very well aware of this but I really kinda like preaching this. Let me look this up. How many pages in the US tax code? I don't know if Google's going to give me that result or not.

Aaron: Like 3 thousand- how many?

David: 70 thousand.

Aaron: 70 thousand.

David: 70 thousand in the federal tax code, right? And only about 15 of those pages tell you, you know, how much you're going to pay, when you need to pay it and how. The other 69,995 pages are ways to prevent paying, avoid paying completely or to transfer that, you know, debt or that payment I should say into something you know, down the road or some other type of vehicle, right? It's just so crazy. So there's five different buckets of income according to the IRS and it just so happens that the one that you trade time for is the highest tax and I know why. Do you know why?

Aaron: Of course I know why, cuz that's where everybody is.

David: That's why, exactly. But really the real reason is because rich people are the ones that write the laws, right? It's very rare that you see somebody working at a fast-food restaurant this month and they're a senator next month, right? Rich people are the ones that are writing the laws and of course, they're going to want to put in these loopholes and these advantages to benefit themselves and their friends, right? So when you can get start- making- having your money make you money. Most people see that as wow, that's really cool like I'm making money without trading time. Well that is very, very cool but what's even cooler than that is you get to keep more of that, right? You're taxed at a lower rate on the passive income than you are on the earned income. It just blows my mind how this works and if you want to add in the compounding effect to that, you know, it's even crazier cuz you're keeping more of it, you know? So it just blows me away but the whole wealth side of real estate is really my passion. It's why I love doing real estate. Yeah, flipping a house, making 50 grand is great by all means. Love that as well, but the coolest thing is adding three, four hundred thousand dollars worth of wealth to your balance sheet, right?

And not having to go pay an extra $150,000 worth of tax. I love that.

Aaron: And you know, I mean I don't know the audience, I mean I don't know who you are audience but I guarantee that a lot of people are listening to us and going: dude, that just can't be me, I mean that's for someone else and that is total crap.

David: It is.

Aaron: Because the reality is-

David: Thank you for saying that.

Aaron: -you have the ability to be wealthy. You could be a millionaire in 2 years and I mean that with 100% sincerity.

David: Me too.

Aaron: Because I've seen it happen over and over and over again. It's all about putting the disciplines in place. It's all about changing your mindset and surrounding yourself with people who are comfortable having the money conversation. The only other thing that I think is really important on this whole wealth-building thing and I'll keep it kind of high-level but you have to know your net worth. It doesn't matter if it's negative 50 thousand or if its 5 thousand or if it's 100 thousand or if it's 5 million dollars. It's your scorecard. It's how you- it's not who you are, it's the result of the decisions you've made to get to this point, right? So once you know what your net worth is, you now can actually start quantifying your decisions. If your net worth is going up, that means you're living within your means and you're saving money or investing money.

David: You're making good decisions, right.

Aaron: You're making good decisions. If your net worth is staying the same, then that means that you're just living the same life you've always lived and that's the definition of insanity, right? Is that insanity? Is that the definition? Doing something over and over and expecting a different result.

David: Yeah basically, right. Expecting a different result, right.

Aaron: And then if you're going in the negative direction, then you need to figure out what it is inside of you and why those patterns are being recreated so that you can start breaking them cuz I mean it wasn't until someone said something to me that was like what is your dad's relationship with money? And it may not be your parents relationship with money, it could be something else.

David: Yeah, blindsided you like woah.

Aaron: But until you can start breaking those patterns or at least recognizing them, then that building wealth is just always going to elude you but I can tell you most people overestimate what they can do in a year and vastly underestimate what they can do in five, so know your net worth.

David: I totally agree with that, totally agree. You had said earlier that you know, going from zero to a million-dollar net worth is easily or not easily done, it's possible to do that in two years and you had said that you have seen people do it, I've seen people do it, multiple people do it, right? So yeah, you just got to put in the effort. You know, you are entitled to the work, right? But if you put in the work, you're going to get the result.

Aaron: And that's you know, religion, karma, universe, whatever it is, it is a law. If you put the effort in, you will reap the reward. I mean it's just [inaudible].

David: The harder you work, the luckier you get right? Absolutely.

Aaron: The harder you work, the luckier you get. And when you start tracking your net worth and you start telling your subconscious brain that it's important because up until this point, your brain doesn't know that it's important to you because you've never told it. So as soon as you start focusing on this and you start saying, I want to be worth a million dollars, your subconscious starts hearing opportunities that have always been there.

David: Always been there but you now start recognizing them.

Aaron: Always been there but you just never knew that it was important. I mean I can't tell you how many times I've written something down as a goal and within like 2 weeks, somebody says something and I'm like-

David: Like what? Weird.

Aaron: What? Where'd that come from?

David: But putting it out into the universe is the first step though, right.

Aaron: Exactly, exactly. So you know, I think that's something that a lot of people miss is you know, it's the habits, Atomic habits, the book Atomic habits, the best book ever written for finances.

David: I love that book. It's a great book.

Aaron: It is a great book. The best book ever written for finances is The Richest Man in Babylon.

David: Love that book, love that book.

Aaron: If you live by those principles, you will be wealthy. Principles don't change, tactics do.

David: Tactics do, right.

Aaron: So it's- I mean, being wealthy is achievable for everybody. You just have to change your mindset, surround yourself with people who are comfortable talking with it and then be willing to put in the work and it's easy.

David: Man, you nailed it. Aaron, thank you so much for coming on today. I am so incredibly grateful. Before we- ooh, I'm going to break my piggy bank. Before we wrap up today, I do want to talk a little bit about these Iron Mans, like I am truly impressed. I knew you were a badass man, but I didn't know you were like a ninja warrior man. Holy cow. So, have you done any of these recently?

Aaron: Not since covid hit. I did one in- I was supposed to do one beginning of last year in Oceanside and it got-

David: But that's still recent, I was thinking like last 10 years, right?

Aaron: Oh no no no, I've been doing them for a long time.

David: And 20 half Iron Man's? Holy cow man, you are an animal.

Aaron: That just means I'm not smart enough to stop.

David: I love it.

Aaron: That's all that means but you know, it's like the disciplines that you get from doing these kinds of things is it plays out in all the other areas of your life and you know, you get a mental discipline from training all the time and from doing these events and everybody's like oh my God, you did an Iron Man but the reality is you could- I mean, even you David Dodge could do an Ironman in 6 months if you just put your mind to it, okay?

David: You've got to put your mind to it.

Aaron: Because if you tell your body that's what you want to do, that's what you'll do. But yeah, I've had some amazing experiences, done events with amazing people and you know, it's- I wouldn't say it's fun but it's fun.

David: It is fun. I think it's so fun. Yeah, impressive is one thing, but it's super fun too man. That's really cool. I love it.

Aaron: It is, it is. So yeah, so that's been a big part of my life for a long, long time and you know, now I'm doing- since there aren't any races, I've been just trying to get fitter and put on some muscle cuz everything you do in Ironman is endurance and so I'm just lifting weights and waiting for everything to open up as far as races and all that kind of stuff then we'll see what happens.

David: Man, I love it. Aaron, thank you so much for coming on. Guys, go follow Aaron on Instagram, Aaron1656 is his handle. You have so much to learn from Aaron, he has constantly been teaching me things since I've known him and again, I'm just so grateful to have you on the show today Aaron. Any parting words for the audience?

Aaron: You know, I think that- yeah, I got one for you. It's about your friends, right? And this is something that I can't remember how it came up but you've got your 5-minute friends and those are the people that after five minutes you're like dude I love you but nothing good is going to happen if we stay together, right?

David: I got a lot of friends like that, not a lot but you know, yeah. You have a lot of people that are in your life like that, right?

Aaron: And then you've got your one hour friends, you've got your dinner friends, those are the people you go out to dinner with but after dinner you're like, that was really nice but I don't need to see them again for another six months. Then you've got your weekend friends which are the people you go spend the weekend with and they're- when you're done, you're like that was awesome and then you've got your vacation friends and those are the people that you go for a week on vacation, everybody has an amazing time and when you're done, everybody gets their phones out and say when are we going to do this again?

David: When are we doing it again?

Aaron: And that applies to your whole life, it applies to your finances: who are you surrounding yourself with financially and what kind of friends are they? It's in your relationships, it's in your family, it's in your business, it's in everywhere. How many 5-minute friends do you have? And if it's too many, you need to start being intentional about finding those dinner friends and those weekend friends and those vacation friends, because those are the people that will change your life and so it applies everywhere.

David: Man, I couldn't have said that better. You nailed that, right? Sometimes the circles you're in guys might be what's holding you back, so take a step back.

Aaron: No sometimes, it's always.

David: Always, always. No, that's absolutely right. Thank you for correcting me. It's always that, right? So take a look at you know, who you're spending time with and we're not here to say stop spending time with you know, with your friends by all means but there's certain people in your life that aren't helping advance you and they're holding you back and it's- and most of it's the mindset side of things. Aaron, you are the man.

Aaron: My pleasure.

David: Thank you so much for coming on today. Again, I am incredibly grateful to have you on the show. I know our viewers and our listeners are going to learn a ton, and we'll have to bring you back on the show soon.

Aaron: Anytime brother.

David: Love it. Alright guys, signing off. Don't forget to check out discountpropertyinvestor.com, we got tons of free courses over there for you guys to learn all things marketing and wholesaling. We also just added a free eBook and you can get that again on discountpropertyinvestor.com. The eBook is called The Three Pillars to Wholesaling Real Estate. We actually sell it on Amazon for about 10 bucks but head on over to that website and claim your free download right away. Until next time, signing off.

Thanks for listening to the discount property investor podcast. If you enjoyed this episode, please like, share, and subscribe to help us reach a wider audience to jump-start your real estate investing career, visit freewholesalecourse.com- the most complete free course on wholesaling real estate ever. We would also appreciate it if you left us a review on iTunes or Stitcher. Thank you in advance for your support and remember you make your money when you buy, you get paid when you sell. Now let's go build some wealth.