David: Alright Discount Property Investors. We are back with a brand new episode. This is your host David Dodge, my co-host Michael Slane is out in the field today, we are doing deals on top of just coaching, and teaching people how to do it as well. We are the real deal, so welcome Discount Property Investors. I have a special guest today, Paul Thomson out of Little Rock Arkansas. How are you, Paul? Hello!

Paul: I am doing great, thanks for having me.

David: Thanks for coming on the show. So Paul is a real estate investing and money expert. Paul also has his own podcast, what is that podcast called, Paul?

Paul: It's called Ready Investor One.

David: Ready Investor one. I love the name. So, Paul basically had a corporate office job, is that right, Paul?

Paul: I did yeah. I worked, I was a little drone in a corporate cog.

David: Probably like most of our listeners. So Paul was able to overcome this job basically, get out of the day to day rat race and the grind. He did so by buying rental houses. That's what we're going to talk about today. We are going to talk about some of the ways you can build passive incomes, how you can also break the chains of corporate America, and we are going to talk about Paul and how he secured 20 deals in his first 18 months of investing. That is a big number for a year and a half, Paul. That's awesome. So tell us a little bit about yourself. Tell us what type of investing you like to do, then also I want to really touch on what you mentioned earlier to me before we started the podcast; also about different ways to structure deals, that's awesome. So let's jump in, Paul. Tell us a little bit about yourself.

Paul: Sure thing, so I was in corporate America, middle management, have an engineering background. It's one of those-- it was a life and a job that was good enough, it was okay. My wife tells me, if you hadn't done anything differently we would have just done that for 40 or 50 years and retired and got the gold watch and the whole thing. But I just didn't find that to be rewarding or fulfilling. I always had these dreams, I wish one day I could. I want to be able to take an extended vacation. One time when I was coming back from a one week vacation that-- I was just kind of ticked off and I couldn't explain why. What's that?

David: You were probably depressed.

Paul: Yeah I was having to go back to work.

David: Oh I have to go back to work now, this sucks.

Paul: What I realized is that I didn't have the freedom to be able to stay another week, and that's what my kids were asking me to do. I just shut down, not a possibility. But what was frustrating was my wife didn't work, I had the money to stay another week, my kids were out of school, but I had to go back to work. That was kind of like the moment where I thought, you know what? This is just-- it took me a little while to put words to it, but on that ten hour drive back from the beach to Little Rock, I've got to do something different. I have to figure out a way to create additional income other than the day job I have. I knew I was vulnerable, if something happened to that job, which later in my story you will find out that two and a half years later I was laid off. It was the best of my life, because I was given the freedom to go do what I wanted to do.

David: You said it was the best day of your life?

Paul: It was, it was. Because I had spent the last two and a half years creating additional streams of income, and I was planning on quitting the subsequently January which was like three months.

David: But you were forced into early?

Paul: Right. The way I tell people, I was standing on the edge of a cliff thinking about jumping, somebody came by and pushed me. I had to figure out if my plan really flew as well as I thought it did.

David: Hell yeah, that's great.

Paul: And so it was a very freeing experience. The only thing I am irritated about is that I didn't get to walk in and hand that resignation later that I had written two years prior to my boss. It's not that big a deal, had I had that audacity to actually resign in January? I will never know.

David: Yeah that's a tough question, man. Would I have done it? Could I have done it? But I'm happy it worked out the way that it did. I am never happy that anyone gets fired obviously or laid off, but like you state it pushed you in the right direction. That's something to be grateful for.

Paul: Sure, and I've had more fun since then than I ever have. I won't sugar coat it and say it's all been smooth sailing, and I have never had a moment where I think, do I really have enough? But I get up every day thinking if it is to be, it is up to me. It is not my responsibility, or it's not somebody elses responsibility to take care of me. I have to do it for myself, I never want to be someone who lives off some sort of a system. I want to be able to take care of myself. I don't know of any better way to do that than using real estate. It is kind of like the last frontier where the average person like the people listening to this podcast, can actually create their own freedom, and create meaningful wealth over time.

David: I love that. You just said a really awesome quote that I am going to keep here. But if it is to be, then it's up to me. That's awesome, that's a great quote, I'm going to use that moving forward, I'm going to steal that from you.

Paul: That's Tweetable.

David: Tweetable, that's right. That's an awesome quote, cool! Well tell us about your escape from corporate America. Tell us about what you're doing in real estate nowadays.

Paul: Okay I decided to go down the single family route. The reason I chose that, the reason I chose real estate was because when I decided I needed to do something else besides just have a day job; I looked at the whole gambit of choices. Was it-- should I start my own company? I seriously considered doing that, buying a franchise. I didn't know what to do. I didn't want to buy a franchise, I just didn't want to be in another job. The people making money in franchises are the people with the franchise, the franchisee.

David: Not the franchisee, that's so truth. 3-6% of gross is really closer to 50% of net, it's really crazy.

Paul: Right, right.

David: It really is.

Paul: You're doing all the work, right? So that's very similar to be employed, you're building someone else’s dream. Okay so I thought, maybe I can build my own company. Well it turns out I was short on ideas. I didn't have a new widget or a new mouse trap to present to the world. I just thought, what else I can do. It hit me, I have been kind of thinking of real estate off and on for several years. But I kind of got married, had kids, life took over. I kind of looked back and thought-- I remember in 2008 when the collapse was happening I thought, this is an opportunity of a lifetime and I am not prepared. I was largely not effected, thankfully my job was not impacted, and all the investments I had I let them ride and never thought about it. Which was the smartest thing you could have done if you're into the stock market. But if you were in real estate that was a time to buy. But I didn't know how, so I spent some time doing some arm chair reading and learning about it. But then life took over and whatever. Do it for another five years, so five years later I thought, you know what? It's-- the market is only going to continue to heat up. Now is the time to get in. When is the best time to plant a tree if it was twenty years ago. If you haven't, do it now.

David: Right, that's another-- when is the best time to plant a tree? Twenty years ago. Absolutely, I love it.

Paul: The old saying in real estate, you don't wait to buy real estate--

David: You buy real estate and wait.

Paul: Right. Well I thought, well I have been waiting for too long, so after I learned more and did more study, this is a good idea. Single family is something I understand, that is not a big stretch for most people to understand what aspects of a house people want. So I don't know what that is for mobile homes, I don't know what that is for apartments. As a single family we understand. I like all the potential exit strategies that a single family gives you. You can go and sell it to another investor, or you can sell it to a retail buyer which gives you typically a premium.

David: Right.

Paul: A lot of different creative ways of monetizing single family. So what I did, I started first doing all single family, and buying with creative means. But my angle was buy and hold. I think the real wealth generation is buy and hold. But no one tells you about those really lumpy expenses that buy and hold properties tend to have. So when you're scaling up, before you get to about 20 or 30 properties; you don't have enough properties to help kind of isolate you from those big expenses. So you're income comes in little drips, then your expenses come in big spikes.

David: That's a great point, you nailed it, I couldn't agree more.

Paul: So you kind of need enough volume. I've heard the thing, you need to do 40 or 40. In-between is kind of the no man's land. So if you're just going to have [00:09:28.14 - inaudible] properties, just kind of a hobby on the side, do the work yourself, fine. But-- or if you're going to make it a business, you need to go and get enough scale, 20, 30, 40 properties where you get enough-- so one or two expenses don't crush your cash flow as it comes in. I've got enough income from the 25 properties I have, I have enough equity and cash flow into it, that I can quote, skim some of the income off of there for my free cash flow. That is kind of the basis of my income now.

David: I love it, so I would image you are financial free at this point in your life?

Paul: Yeah, I would describe it as lean financial independence. I could just sit back and do nothing, not ever take exotic vacations or buy anything fancy, and just live--

David: But you could live?

Paul: I could survive.

David: I'm in the same boat. I don't have enough passive income to be able to do all the cool things you just mentioned, but if I were to stop working today, I am 33 years old. That's pretty good compared to the rest of the world. If I were to stop working today, I would have enough passive income to cover the mortgage, cover the bills, cover the car payment, and have enough money left over to eat and take a little trips out-- take my wife to dinner, so on and so forth, I could live. And I wouldn't necessarily be scrambling for that next couple of bucks. I would have enough coming in. Now I am building the business to get to the point I can take the big vacations and do all the cool stuff--

Paul: Right.

David: -- on the passive income, but I am not quite there yet.

Paul: Same here.

David: And that's okay. You were able to escape your corporate job. Let's talk about that.

Paul: That's where all these other things come from, right? So you then-- once you have that freedom you don't have exchange your time for money any more in the traditional corporate sense. Then you can think, okay now what can I do in addition? I am already marketing for properties, I am already buying rental properties. Well I can decide to flip some, I can decide to wholesale or wholetale, whatever one you prefer, whatever one makes sense for your scenario. You're in the mid-west, I'm in the mid-south whatever you might call it; the numbers just tend to work where we live. Even with the hot markets that we are into now, you can still buy properties where the numbers work well below the 1% rule in the right neighborhoods, class B neighborhoods, B+, A- is where I want to keep my rentals forever. But that doesn't mean I don't play in class C properties where I can get it under contract, then I can either take time to it or wholesale it, or wholetale it. Or when it's the right deal flip it, because there is a lot of-- typically for me if it's-- if I can make 25-30 net of everything on a property, then I will flip it, I will actually do the rehab. But if I'm not going to make that much, take me 6-8 months to do it, why not just assign it to someone else? Or take title and sell it to someone else who is willing to take the--?

David: Take the risk, right?

Paul: Yeah.

David: That's exactly-- I bought one this morning for 330 grand, it needs 80. I think the ARV is somewhere between 450 and 480. That could mean we could male 20 grand on the deal or 50 grand on the deal best case scenario. But I don't know; it's a big risk. I would hate to do all that work to make 20 or less, so at this point we are kind of considering wholesaling it. It won't be a huge wholesale because the numbers are already kind of skinny, but if I can make $7500 and just walk away, that might be half of what the profit is after the six months. That could be much more, and that's where risk versus reward comes into play. But yeah, I'm with you, man, 100%. That makes sense.

Paul: It's the whole-- the quick nickel versus the long dime, which is why I like wholetaling so much. It's just the best way I know how to make a long time. Or a quick dime.

David: Are you doing wholetaling then over your buying, then either throwing a sign in the yard, doing a basic clean out? What does your wholetale consist of? Let me ask you that

Paul: That's a great question. I think I heard in one of your previous episodes you refer to it as knocking the ugly off of it?

David: That's right, we knock the ugly off of it.

Paul: I love that. That's pretty similar. What I do is-- me and my partner, we go in together. We will buy it and take title, then we effectively wholesale it to other investors. We don't go to the retail market, we just sell it to another investor who wants to do a rehab with it.

David: Why would you take the property down? We do that too occasionally. We only do that when we have to do that. I would imagine you have to do that too, right? If you can wholesale before you can close on it, why wouldn't you?

Paul: There is no sense in doing that, but sometimes when you slow down to sell a property, you can sell it for more.

David: That's a good point.

Paul: Right. It's one of the big lessons I learned, if you can make that quick dime, make it. But if you can wait three more weeks and have someone come in for $10-20,000 more, and you can make twice the [00:14:38.05 - inaudible] fee, then that makes sense. A lot of time the markets I'm working in-- we don't have-- we're a smaller market. So we don't have quite the investor base to sell too. So I don't have the hedge funds to sell too, not quite the way someone in Atlanta, or Dallas, or St Louis might have.

David: Sure, that makes perfect sense. That's a good point. So let's talk about these 18 properties you acquired-- sorry 20 properties in the first 18 months. That was basically when you still have the corporate job, right?

Paul: Yeah I was a newbie. I made a couple of mistakes, but what I did with the first ten I bought through a wholesaler. That was how I was learning, it averages out I think to one a month. But they came in sits and starts. I bought six real quickly, figured out how to make that work, and what is it really like being a landlord? What is it like to [00:15:37.19 - inaudible]? What is it like to be an investor? Once you get your head around that, get your systems in place, okay I will go buy some more. Then I started buying some-- after those ten using more creative methods, where I would buy either a subject-to the existing mortgage with owner financing, I have done several lease options.

David: Now are you buying lease option and selling on lease option? Or are you sandwiching them? Tell me a little bit about--?

Paul: I've done

David: There are so many strategies when it comes to lease options.

Paul: There is, it's complicated. I've done a little bit of all of it. I don't like not taking title to a property. If I’m going to be investor I want to take title. But I have definitely see and practiced this idea of wholesaling lease options, or I'm taking a sandwich lease, I don't like sandwich leases. The only time I think I would do a sandwich lease now is if I was going to do a specifically an Airbnb on the back end of it. So you take a lease telling the owner that you are going to lease it with the intent to sublet it as an Airbnb. That was a specific scenario that I would do to solve that seller's problems. Basically all you're doing is buying them time and taking on the headache or running a mini hotel.

David: That's a great point, so true. Awesome. Five or six of them it sounds like, then you picked up more? Over a course of 18 months you picked up 20 properties, that's impressive.

Paul: Yeah so I just kept rolling and I would-- as I would market-- what I learned is the best way to be an investor is to be able to control the deal. It's the same thing you guys do in your market. You market, you find the motivated sellers, and you figure out how to solve their problem. Sometimes it is owner financing, sometimes it's a cash deal, and sometimes it's a combination of any thereof. So you make-- you just start becoming a deal maker. When you're a deal maker, that's when you have the most control of where you can make your money

David: Ain't that funny, I was just telling-- so we have about 14 or 15 students right now in one of our programs we do, a weekly coaching call with them, give them some online course access and what not. I was telling them, literally before this podcast that the longer you are in this business, plus the amount you are out hustling everyday equals luck. You can actually create your own luck. It's funny because I have been doing this full time for about four years. I have been investing in real estate for close to 15. It's funny because, now deals will fall in my lap. It's just because I've worked hard and hustled hard. I get lucky now. In the beginning I didn't have this much luck. The harder you work the luckier you get. So sometimes I will fall into a deal where somebody calls me and says, hey I just bought this one, I am overwhelmed with other rehabs, and can you help me sell it? Those are my favourite. I go, great I've got five guys lined up ready to buy something right now, what have you got? What do you want for it? I will either make them an offer or JV on it. I will send it out and we can make $2-3-5-10,000 just by sending some text messages or making a couple of phone calls. It's kind of crazy.

Paul: Just the monkey in the middle.

David: You're a deal maker just like you stated. You become a deal maker, and you become a pro at it. It's really awesome, it really is, that's awesome.

Paul: You're monetizing your intellectual capital at that point. People come to you as a problem solver.

David: That's absolutely right, and that's all I do man. I just try to solve problems for motivated sellers, for cash buyers. At this point students as well, teach them how to do it. Yeah I love that, I love it. So you escaped corporate America in kind of a strange way, because you were getting ready to get out but they let you go, it was for the best like you said. Best day of your life, I love that. You are building wealth from passive income. Not just for the 1%, so what does that mean?

Paul: So we have this idea in America that we spend a lot of time talking about the 1%, or the 1% gets a lot of attention. In all reality, you and I and the people who are listening to this podcast are never going to be part of the 1%. We are not going be Mark Zucerberg, we are not going to be Warren Buffet. If we had the mental capacity or the luck so to speak to do that, then we would have already done it.

David: We would have already done it. I'm with you. It's kind of a depressing thought, but you're right. I am never going to be a 1%-er. But that's okay.

Paul: However, we can still be wealthy. In fact a lot of people would consider us wealthy already. So what we can do is-- living like Kings, anybody in America who is listening to this, is probably already living like a King or Queen compared to most of the world. But even compared to ourselves we can live a much better lifestyle if we just do what the other 3-4% are going. 95% of people are order takers. They are just out there living, enabling somebody else to live their dream. So we can have dreams for ourselves. We can lead a life of our own design by saying, what can I do to bring my value to the market place? How can I invest in myself so I can intellectual capital to be a deal maker? When you do so, start some sort of business, which you guys have done with your wholesaling and consulting business; you are not providing value to people way over and above what you could do for yourselves, because you are serving other people. That allows you to earn income far above what you could have done just as a real estate investor if all you ever did was buy in whole. So now what you're doing is, you are doing a mix of active and passive income. So I love passive income, because I want to have that residual income base, but I'm not going to sit around and sit on the beach. That's not-- most people would not find that rewarding. What you do then, is you go out into the market place and you provide value by exchanging that-- or sharing that knowledge base with the world, then you can build a very successful business with a very nice lifestyle design. You have the freedom to up and go wherever you want to go, when you want to go there. That's what the other 4-5% people out there can do if they wish.

David: That's a great point, that's a great point, I love that, Paul. That makes a lot of sense. I love that. So let's talk about what we were talking about before we started the podcast, the great thing about single families, and how-- there can be different strategies. Not only to buy those properties, but to sell those properties. How the average person really should be leveraging these different strategies, because not everybody has a ton of money in the bank, not everybody knows another individual who has a ton of money in the bank who they can essentially convert into becoming a private investor for them. So let's talk about some of these other strategies. Let's hear some of the strategies you are using to acquire properties, I would love to hear that.

Paul: Okay sure. So I kind of have a hierarchy, when I'm looking at a property, here is my order of preferences. I want to buy the property with owner financing first. If I can get owner financing that is my favourite way to buy properties. If for some reason that doesn't work out; which many times it doesn’t. Most people don't naturally want to sell owner financing, then I will see if I can to subject to existing mortgage. I don't make that-- I am not one of the typical guru types that has this silver bullet solution, but that's next in the hierarchy, because that is when I'm using someone else's financing. Second, if that doesn't work I might try-- then I will go down to can I do a cash offer? Then if the cash offer works, then I will figure out how to monetize that particular deal I have taken under contract, then I monetize it. Do I assign it? Do I take title and slow down and make more off of it because I can have a bigger buyer base? Or can I sell it retail? Or do I flip it by putting some work into it and assigning it, or selling it to the retail market in fixed up shape, fair market value ARV? Those are kind of like the hierarchy I go down. Then if I can't solve any of those problems, I will do the much more creative aspects of leasing options and whatnot. But that's usually-- I am actually stepping away from those more and more, because they often times more complicated, and they drag out longer--

David: They drag out, and it creates a lot of work. But I love how you had put that. So you start, your number one goal is to buy on owner financing.

Paul: Yep.

David: Then you stated that if that doesn't work, then you will try and buy it subject-to. Then last but not least, you make the cash offer. Which is kind of the opposite of what most people do. Most people come in with the cash offer. This is at least how I do it, I come in with the cash offer first. If that doesn't work, because that's usually very low, I got to buy buy great and sell good as a wholesaler, so I come off the cash offer first, an then I will offer-- I will see, okay maybe I can pay you a little bit more if you can finance it to me, or if maybe I can just pay you to kind of go away, but keep your existing financing in place. But you kind of flip that upside down which is interesting to me. You come in with-- hey I am going to buy this owner financing first, if that doesn’t work then I am going to do subject to. Then if that doesn't work, then I will make you the cash offer. So it is basically the exact opposite of what I'm doing. But it works and I love it! There is no right or wrong way to do it.

Paul: There isn't. But what's cool about it--

David: There is no right or wrong way to do it. Do what works for you and makes money, that's it. That's all there is to it.

Paul: Often times when I am doing it, I am making those offers all at the same time. So I actually use a three option letter of intent, unless they are just dripping with motivation and so clear that the only thing that is going to solve their problem is one of those techniques; what I will do-- so many people I talk to, they are kind of on the edge of motivation, they are not quite motivated enough yet. So what I will do then is send them a three letter option of intent. Everyone I talk to gets an offer. Even if they tell me to get off their line, wait, I will send them a letter that says, thank you for letting me come to view your house, I say something personal in the letter, then I give them a three option letter of intent.

David: Three letter option of intent. We use it too in our business. Not as much as we should, but we have it can use it occasionally. It's a great took; especially if you want to push somebody to one of those options. You can make the other options not nearly as--

Paul: You find that when you make-- the two year options financing or lease option.

David: Yeah so we have a cash offer. I kind of change it up too, depends on the property and the seller. Typically it's a cash offer which will be the lowest. Sometimes I will use lease option, but I'm not a big fan of lease option to be honest with you. Typically what I will do is do a principle only seller financing. That will be a little bit better of an offer. Then I will do a principle and interest. But those I typically stretch those out for like 15 or 20 years.

Paul: I do the same thing.

David: -- maybe 5 or 10 years, something along those lines. So obviously the cash offer is what I kind of push for, because I like to just wholesale. Typically we use the BURR strategy whenever we are buying our rentals. I don't really care if they are subject to or owner finance me the deal, because I am going to be re-financing it anyway after I fix it.

Paul: Right.

David: So we set up private money lenders that lend us to purchase, then we will rehab it, then our banks are pretty cool; we work with a bunch of them. As long as we can show that we have improved the property, then they give us what is called an entrepreneurial credit. Basically they will lend 70-75% of the appraised amount, which is awesome because we are not buying anywhere near that. We are basically buying at 50 cents on the dollar of the appraised amount, but then we have to go fix it up. We are buying at maybe a 15-20% discount to the market, then we are putting in some money to fixing it up. But we are increasing the value at the same time. It's just crazy how many ways there are to make money in real estate, I love it. You're doing very similar things, but you are kind of doing it different than me, that's okay, that's great, I love it, that's cool.

So you mentioned those are a couple of ways; owner financing, subject too, cash offer. Those are the ways you like to go into the properties. Let's talk about when you get control of it. Regardless of how you buy it. Also lots and lots of different ways to then make money on that deal if you don't want it added to your rental portfolio. You had mentioned assigning a contract, you can double close. Those are both ways of wholesaling, and you can also wholetale a property. You can also sell it on owner financing or on a lease option. There are so many ways. So what ways do you prefer to do if you are not adding to your rental portfolio? Because that's obviously the goal, to get passive income built up to create real wealth. But if you are wanting to get the quick dime over the slow nickel, what--

Paul: If I'm taking title to it, and I'm intending to... if I take title and I'm not wholesaling it, I will see if wholetaling it makes sense, or if doing a flip on it makes sense. A lot of that depends on the value of the property, the higher end of the property, the more like flipping makes more sense because that's where you get the bigger spreads. On the lower end wholetaling is so easy, you can sell it almost nearly fair market value, even when it just needs paint and carpet. So I will let somebody else go put lipstick on a pig, and I don't have to do anymore work. Sometimes I don't even put utilities on, sometimes I just wait. I just let the market bring me the highest offer. And so-- that might only be a month or two. Sometimes if it doesn't sell as fast as I think it should, then we will take the ugly off of it. Like you said, I really love that. I must start using that in my business.

David: Knock the ugly off of it! A lot of times that's just carpet or paint.

Paul: Just light weight, right?

David: Sometimes it is a roof and windows, sometimes it's fixing a driveway. It is exactly what it states, knock the ugly off of it. A lot of the times it might just be fixing the biggest problem. Sometimes you might have a property that year it might need paint and carpet, it might need a kitchen, it might need a bath. But it's got a really bad foundation issues. Sometimes we will buy a property and just fix that issue, then we will sell it to a rehabber because all the scary is gone at that point. He knows how to fix the walls and the floors, put a new kitchen in and a new bath. But he might not know the first thing about [00:30:40.20] a house, getting rid of a huge a crack or along those lines. Knock the ugly off it, make it look like a good deal for another investor, or a retail buyer. We both do that the same, that's cool. Wholetaling is a great strategy. We basically do about a third, a third a third. A third wholesale, a third rental, then a third rehab. But I think there is a little bit of overlap with both the wholesale and the rehab when it comes to wholetaling.

Paul: They blend together sometimes--

David: Blend together, absolutely. For those who don't know what a wholetale is, it's very simple; it's basically buying a property wholesale, so you are going directly to the seller. Then you are essentially trying to find a retail buyer. That could still be an investor, but you are basically taking to the market. You are listing it on the MLS, or you are listing it on some sort of a market place that has a lot of interested shoppers and buyers out there. You are basically trying to get close to retail. Mix the two words, wholesale and retail and it equals wholetale. I love it, man. Paul that's awesome that you are doing that as well. Again, there are so many different strategies.

So Paul, let me ask you this; you had sent over a little pamphlet before we did the podcast and the interview. I love reading some of these things. One of the things you had written on here was 'five things you can do today to create a new money mindset'. So what are those five things? Tell me.

Paul: Okay the five things for the new money mindset are, number one: Separate time from money. This idea that you go to work and you are exchanging your time for money is the 95%. If you want to live outside of the status quo, and you want to live a life completely of your own design, then you need to figure out how to take the knowledge that you have, or build a business or something that separates-- trying to exchange your time for money; time is no equal to money. We are told it is, but it's not true. How-- if time were money, how is [00:32:49.06 - inaudible] so wealthy?

David: Such a great point, some amount of time in a day that we do.

Paul: He learned how to make money while he sleeps. Once you learn how to make money when you sleep, then that's how you can create serious wealth. That is a money mindset you want to switch. Number two is, switch from looking for piles of money to looking for streams of money. That's why rentals, we all kind of end up coming back to the real wealth generator is rentals, because you get these streams of money. It could also be notes. I play with the note space as well. They tend to run out over time, but they are still ways to make streams of money over time that don't require any-- hardly any time of my own.

David: Okay.

Paul: Then the third one is, value is subjective. People ask me all the time, why would somebody sell a house to you for such a low discount? Because they don't want the same thing out of it that you do. Value is subjective. So the best way I have ever heard this explained is the ice cream analogy. So what's your favourite flavour of ice cream, David?

David: I like strawberry and vanilla.

Paul: So vanilla that's your favourite. What is a flavour of ice cream you would not eat no matter what?

David: Chocolate, I'm not a big fan of chocolate.

Paul: You don't like chocolate so you're a wierdo. You have two scoops of chocolate in front of you, but I have one scoop of vanilla--

David: I would trade you in a heartbeat.

Paul: Why is that? Because I have--

David: I just don't find value in those two scoops of chocolate, I don't like them. Even though I have 100% more ice cream than you--

Paul: Because you have bad taste it what it turns out to be.

David: Right

Paul: So the point being is value is subjective. Don't ever assume the other party wants what it is you want. You don't want to actually apply the golden rule, you want to apply what I have referred to as the platinum rule, is do unto others as they would have them do onto themselves.

David: I love that. Paul, that's great. Okay, cool.

Paul: Number four--

David: What have you got for number four?

Paul: Number four is, you don't actually want money, and you want what money can do for you.

David: I can't disagree with you on that one; that's a good one.

Paul: The best way I have ever found to make that point clear is-- we have talked about [00:35:06.02 - inaudible], I think he is 87-88 years old, really old, one of the richest men in the world. Would you trade places with him right now? If you could live in his body, have all of his wealth, do whatever you wanted to with your day and the money, whatever you want. Would you trade places with him?

David: That's a great question; I don't think I would. I don't know if I really want to be 87, I like being 33.

Paul: That's right, you don't want the money. What you want is what money can do for you.

David: Right.

Paul: If I just gave you money, that doesn't make you happy. You want what money can do for you.

David: You nailed it. That's a really good point, I love that.

Paul: So that last one is, you have plenty of money for all the things you truly want.

David: Explain that to me real quick.

Paul: That's the one people push back on me the most. I tell me coaching clients this a lot. I tell people all the time, go and find a deal, then go and find the money. This is the way I try and explain it to them. When you go to a bank, when you are buying your primary residence, you don't actually have the money to buy the primary residence most of the time. But it is completely normal for people to say, I intend to buy it, so I am going to go and get a bank loan. That's okay, that's acceptable, right? But people won't do that for an investment property; it scares them. I am not going to make an offer for a property I don't have yet. They say, when I'm working with a bank, they have that money reserved. No they don't. It's pre-approvable. That's really not worth that much.

David: That's so true.

Paul: Once the property is under contract, now you have something of value. Now you have something that is marketable and has equitable value in the market place. Then you take that, then they are willing to go through [00:36:53.11 - inaudible], then they are ready to take to committee and they will see then if they are willing to lend you the money.

David: That's true, they won't do that prior though. They will give you what's call the pre-approval. That is such a great point.

Paul: When we go and buy investment properties, we do the same thing. I am going to go to a private lender, or I am going to go to someplace else. Go talk to a private lender and say, would you lend me $100,000 on a rental property? But I don't know what it is yet, just go ahead and lend it to me.

David: Probably not.

Paul: They are going to say, they want to see the deal. So when I say that, if you really want money, or you really want something badly enough, you will go and do whatever it takes to go get it. But you have to go get that thing first to find the money.

David: Such a good point, Paul. That's awesome, I love the five things. And that's things you can do today to create a new money mindset. So let's review those. Separate time from money number one. Switch from piles of money to streams of money, that's probably one of my favourites. Value is subjective and that's a great one too. These are all good. You don't actually want money, you want what money can do for you, that's number four, that's great. Number five, you have plenty of money for all the things you truly want. I love that, all those are awesome, Paul. Very, very cool.

So also you mentioned why finding a tribe of likeminded people can set you up for greater success. Can you explain that a little bit to me? I don't understand that necessarily.

Paul: Okay yeah, so you have probably heard the quote from Jim Rohn, "You are the average of the five people you spend the most time around".

David: Absolutely, it's a great quote.

Paul: Most of us need to go upgrade our tribe, our group. I make it a point to try and be the dumbest person in the room wherever I go. If that's not consistently the case, then I'm not going to the right places. I am always trying to find people who are pushing themselves, taking a personal growth as a serious investment as much as I can. I am a member of-- I run masterminds that I'm like the mentor of, I am also a member of other masterminds for which I am being mentored. So I am always trying to meet and find people, because one of the greatest assets that we have is our network. Any business you're in, but especially real estate is not actually about real estate, it's about the people that we meet. You mentioned it before, how do deals kind of just land in your lap? Because you've met people, you have created value in the market place, and they know that when they have a problem they can come and talk to you, and you can help put something together. I want to do that in my life, and every aspect of life I am working in; I want to surround myself with other people who might bring something to the table that I don't have.

David: Sure.

Paul: Anytime I have a problem in my business that I want to grow, that I'm stuck; I take it to my mastermind and well I'm in the hot seat. Just this morning I was in the hot seat. I'm trying to grow my business, I am trying to get my message out to the market place more. What should I be doing? I'm limited I feel in my messaging, so they gave me several ideas on how to expand in my messaging. One of those was to do more podcasts. No mistake of what I'm doing, I'm trying to meet people and share value, try to figure out how I can help other people I talk to, and by some value in the universe, I'm not sure what it is, when I give value away, I get it back in spades. But I can't predict how or where.

David: That's a great point, I feel the same way. When I give value away I get it back in spades. That's a great way to put it, I totally agree. You might not get it back immediately, but--

Paul: You can't really measure it, right?

David: It comes back in some way, shape or form, or some point in time.

Paul: Right. There has actually been studies that have tried to measure; people who donate money actually get that money back. Some number, like 19% back, so you get a 19% return on your money or something.

David: It's kind of crazy. I'm with you. Find a tribe, that's a great point. I'm a part of some masterminds. You have your own, what's it called? Level up?

Paul: Yeah, I have one for people who are trying to take their real estate investing business to the next level, and I call it Level up your life mastermind.

David: Level up your life mastermind, I love it, that's awesome, that's really cool. We will put some information about that in our show notes today for you that sounds really cool. So Paul, a couple of other things before we wrap up here. Three investments you can make this month to set you up for future wealth, what would you recommend to any of the listeners and viewers we have today who are maybe new to the game, may not have 20, 30 or 50 rentals like we do. May not know a whole lot about real estate just quite yet. So what would be three investments you can make this month to set up for future wealth?

Paul: So it's ironic, none of these will be real estate specific, this can apply to anybody. So if you're listening to this and you're figuring out what is it that I can do to make investments, and make a different in my life this month? Number one is to invest in yourself. You have to be-- and this is from Warren [00:42:19.05 - inaudible] and others, you have to figure out how to make more value into the market place, and the way you do that is invest in yourself first. It's this whole idea that you put on the oxygen mask first so you can serve those around you. You have to figure out what skill sets you need to be more valuable in the market place.

David: Love it, okay.

Paul: Number two, is invest in your network. We have been talking about this a lot already. But you want to grow and improve your circle of influence by going out-- go to a REIA, go to chamber groups, go to conferences. I probably went to 30 plus conferences about real estate investing. I thought I was going there to learn something. But the biggest value I ended up getting out of that was the people I met there, and the relationships that were forged.

David: Man, I feel the same way about pod casting. I am meeting new people all the time. I feel like I am learning something new every day, probably every hour, because I embrace failing I really do, I don't care if I fail, it just brings me that much closer to success. Pod casting is a great way to meet new people all over the country that are doing the same thing as me. I love that one, invest in yourself is number one, and invest in your network number two. So what's the last one there? What's number three?

Paul: Number three is invest in assets that create streams of income. So this is the idea of whether it be a business-- wholesaling is not necessarily a business about real estate. Wholesaling is a business--

David: It's a marketing business. If you are going to be a wholesaler, you are getting into the marketing business. Yes you are also a real estate investor, folks. But at the end of the day, your business is marketing, love it.

Paul: I agree so much. What you're actually investing in there is the systems in the background to do your marketing, and to track your leads, and convert those leads into deals. You could turn around and sell that business to somebody else, because there are systems in place that do so. So the asset there is your business operations, not necessarily the real estate assets you sold per transaction.

David: No, I totally agree, I love that, man. I think that actually is three awesome investments. Probably the three best things you could do. This month as you stated to set up for future wealth. I am going to recap; invest in yourself, you have to create more value in your market place, and that's basically what investing in yourself is. Invest in your network, build your network. You mentioned the gym room, you are the sum of the five people you spend your time around or something along those lines. I think I screwed it up but I think you guys get the point. Then number three, invest in assets that create streams of income. Earlier you had mentioned, switch from piles of money to streams of money. That's a great mindset change. But that's a great point. I want to mention something real quick Paul that I always joke around with-- not only my friends but more importantly bank tellers. The bank tellers are the ones that write my cashiers checks for my line of credit whenever I am going to buy a property. They see me coming into the bank all the time, I am pulling out anywhere from 30 grand to $300,000 in large sums. It's borrowed money, it's not my money necessarily. But they see this as like, this guy is rich he is pulling off these big chunks of change to go buy some real estate. At the end of the day, I am either going to be wholesaling it, adding it to my rental portfolio or I'm going to be flipping it, right? That's basically what I do as an investor, those are the three main things. You could branch off from those three things and do a hundred little things, but at the end of the day, those are the three things that I do.

It's funny, because I'm all about passive income, and building a portfolio or rentals that I put out, as your state the streams of money versus the piles of money. But the funny thing is, and I'm going to wrap this up as I can talk for hours and hours. But the funny thing is, when I see people at the bank, and they see me pulling out a check to go buy some property, I always like to ask a simple question. I say, would you rather have this money right here that I'm pulling out? Or 500, 1000, 1500 a month for the rest of your life? 99% of the time they say I want that money right there, I would rather have that 60 grand than 900 bucks for the rest of my life. I ask them, okay I get it, and you are not abnormal for thinking that, most people think that way. But then I follow up with the really fun and even more important question and I tell people this, let's say you are able to build up a passive income portfolio of 20-25 thousand a month, okay? Seems like a ton of money, but in all reality it's not, okay?

Paul: Right.

David: What can you not do that the millionaire down the street can? Or basically what can he do that you can't? Everyone ponders about it, well I couldn't really have five houses and ten boats and two airplanes. I say, but do you really need all that for one? For two, couldn't you take a vacation to all five houses and rent them? Lease the boat? And or the airplane for the day or weekend that you want to use it? You don't necessarily have to own all these things to enjoy the benefits of them. You can still live like the ultra-rich by having this steady stream of income coming in every month. I think after I explained it to them I get people to change their mind set. Actually now you say it that way, I don't really want this $60,000 if I could have 900 a month for the rest of my life, and it's awesome. It actually gets people to really change the way they look at-- as you stated, large sums of money versus streams of money. That's really cool, it really is.

Paul: A good summary for that would be to buy value and rent in luxury. We think we want to own all these boats, and these big mansions or whatnot; but those things cost a lot of money to maintain. How often do you end up using all these toys that we want to go out and buy? Buy for value, buy something that is practical, that you can live in, enjoy you life and your family. When you have these streams of money you can use those streams of money to go and rent luxury.

David: Rent or lease, that's exactly right. It changes everything-- so my goal is 100,000 a month in passive income. I set my goal stupid high. I don't know if I will ever get there, I hope I do. But as this point in time I'm over 10,000 a month which is awesome, and I'm growing every month. But if I can get to 20-25,000, there is truly nothing I can't do that the guy down the street who has ten million bucks can. It's awesome it really is. I think when you explain to people a lot of times it changes the way they look at things.

Well Paul, it's been a pleasure. I have learned a lot on this episode, I know the viewers are going to love this episode as well. Check out Paul, guys, if you want to learn more about his podcast. It's called Ready Investor One. Paul also has a mastermind called Level up your life mastermind. Paul, you also have some online video courses and support group, is that right? Tell us a little bit about that if you don't mind.

Paul: Sure thing. I have my own course about how to become [00:49:51.17 - inaudible] the launch of real estate investing. I called it REI pathway or road map to freedom. It's the steps from A-Z on how to do exactly what I did, which is use real estate as a way to branch out and launch your life outside of corporate America. It goes into the details of actually how to do it, not just these conceptual ideas of I wish I could do it.

David: I love it. How would somebody could about finding that information, Paul?

Paul: Sure thing. What I did was, I created a website just for the listeners here. So PaulDavidThompson.com/dpipodcast. So that's short for your podcast. All your users can go there and get a free three optional letter of intent, and find out more information on how to engage with me if they wish.

David: That's awesome, man. You are giving away a free three optional level of intent as well, I love it. Providing value, that's what we are talking about, guys. Value is subjective. Provide value and invest in yourself. So PaulDavidThompson.com/dpipodcast. Is that right Paul?

Paul: That's right, you got it.

David: Awesome I nailed it, cool. Well again, Paul is an investor doing big things. He is out of Little Rock Arkansas. Paul, it was a pleasure having you on the show today. We got to talk about a lot of cool things. I loved hearing the five things you can do today to create a new money mindset, as well as the investments you can make this month to set up for future wealth. Those provided me with a ton of value, and I am sure they provided the listeners and viewers with a ton of value today too. Paul, it was a pleasure, thanks for coming on the show. Until next time-- is there anything else you want to add before we end?

Paul: I'm good to go David, thanks for having me on it's been a real pleasure.

David: Yeah it was a pleasure on my end too, Paul. Well thank you so much and until next time guys, check us out; DiscountPropertyInvestorPodcast.com. If you are new to real estate investing and want to learn how to wholesale real estate, we have a free course, freewholesalecourse.com. Check it out guys, until next time we will see you then.