Episode Transcript
Speaker 1 00:00:03 Hey everybody. You're kicking it with the homeboys and the Homeboys podcast, where we talk everything in the world of real estate investing, whether you're just getting started or a seasoned vet, we're gonna give you over 40 years of combined real estate experience to help you on your investing journey. Today we got a really exciting guest. We are talking with David Shaw of West Florida Invest. He shares a lot of the same thoughts on real estate that the homeboys do, and we're very excited to have him. He's a very seasoned real estate investor in the Tampa market, exceptionally smart, and has a passion for educating other investors. David, how we doing? It's good to have you on the show. Thanks for joining us.
Speaker 2 00:00:48 It's doing great, guys. It's a proper pleasure to be here today. I, um, I listen to you guys a lot, so this has gonna be cool. Well, I look forward to getting spoken
Speaker 3 00:00:56 When you talk. I listen, I, I just got to the pleasure of getting to watch you at, uh, you and I were both on a, a seminar recently and, and I literally sit back and break, break out. Broke out a notepad when you were talking. I'm not, not exaggerating, <laugh>. So I think for our guests, um, if you are a serious investor or if you're just getting started, there's nobody who explains the power of building wealth through real estate better than David Shaw. He doesn't even bother usually trying to sell you on what, how he makes a living. He's just that passionate about real estate that he shares some amazing insights that, that even seasoned investors like Clinton. And I love to sit back and listen to. So, strap in. You guys are gonna get a good show today.
Speaker 1 00:01:40 Yeah, we had to, we had to follow him in that, in that, uh, particular, um, seminar that we were, and I felt like I didn't really need to say anything cause it was already said, cuz he went before us, but, uh, <laugh>. But, uh, but anyhow, how, how is everything in the Tampa area? I'm sure the weather's awesome as always, and we're just stuck here in Drio, Indiana. But everything good? Definitely,
Speaker 2 00:02:03 Definitely the weather's fine today. Um, it's good every day down here, you know, the real estate market continuously pretty robust. So, uh, you know, the, the, the, the, the doom and gloomers on, on YouTube, um, they definitely, they're not getting the, what I see on the ground at the top of market right. Just yet. Maybe they'll be right. Sometimes a stop clock is, is right from time to time. But, um, no, it's pretty busy down here on the ground, uh, in the investment world. Uh, it's just as robust as it's kind of ever been.
Speaker 1 00:02:34 Yeah, me and Scotty were there. What, I mean, that's probably been about, gosh, has that been 10 years ago, eight years ago maybe? Yeah,
Speaker 3 00:02:42 Tampa.
Speaker 1 00:02:43 Yeah.
Speaker 3 00:02:43 And I've been with Jamie since, and then I go there all the time, as you
Speaker 1 00:02:46 Know. I was, yeah, whenever you and I were there. And I, you know, I remember looking at houses, we went around and looked,
Speaker 3 00:02:52 Oh, when we were looking to buy mm-hmm. <affirmative>. Yeah, yeah. Out at Treasure Island and, and, uh, Madeira Beach.
Speaker 1 00:02:57 Gosh. You know, and it's hard to live in the, the rear view mirror, but man, I look back at that, uh, that trip 10 years ago and now see where everything's at in Tampa. I'm like, gosh, what are
Speaker 3 00:03:07 We, what? Yeah, we were
Speaker 1 00:03:07 Thinking, we offered, we were low balling the crap
Speaker 3 00:03:10 Out of No, but we had one where we offered three 40 and they countered finally at three 50 and we said no. Yeah. And the house is a million. I mean, it's a million dollars today, but whatever rear view mirror, coulda would've, shoulda a
Speaker 1 00:03:21 Yeah.
Speaker 2 00:03:21 You know, it's funny you guys say that. It's, as I look back at my entire career, it's, it's, it's, it's not the deals I got that I regret. It's the deals I didn't get. I know it's the deals I stuck my heels in and I was right there 5,000 apart, and my ego and everything else got in the way. Yep. And I look back at those deals now, I'm like, damn, you know, we didn't get that done for five grand. I've had assumption
Speaker 3 00:03:47 We, we've had tons of deals where we lose, have lost money on tons. But I don't regret a single one of 'em. I don't regret a single one. Not a single one. I mean, that I regret the ones that we didn't do. So, you know, it's, it's, I
Speaker 1 00:04:00 I, there's a couple that still give me a stomach ache whenever I think about it, but yeah,
Speaker 3 00:04:04 <laugh>, yeah. I mean, they, they hurt, but I'm still glad I would much rather air on the side of, of, you know, buying than, than missing. Right. But, you know. All right. So, so tell us, you are so passionate about you. I know you're, you flip in order to help your clients and help them build their real estate portfolio, that's but your's, right? True passion is about the holding of real estate. If you could hold That's right. Every piece of real estate you ever touch, you would Right. You just,
Speaker 2 00:04:29 Right. That's, that's right.
Speaker 3 00:04:30 You just gobble 'em all up. But that's not realistic. You know, we all have our limits and you like helping other people build their wealth. So what is it about real estate that has you so, so impassioned about this topic?
Speaker 2 00:04:43 It's because real estate has completely and utterly changed my life. I, I, I started off my career. I was a construction project manager. Um, I'm Irish just to get that outta way. I'm a, I'm an immigrant. Um, I moved over here, uh, originally in 1994, and I did the w2, uh, income work on my tail off construction project management. Um, lived in San Francisco, lived in New York, and went back to Ireland then for a few years. And that whole period of my life, I was just working for other people, w2, um, getting paid well. Um, but, you know, really, really just disin disinterested in what I was working on. And I moved back here. I get into real estate over in Europe in 2000, 2004, 2005, as the EU was expanding. Um, I was looking at investing personally in, you know, in these inner city, um, apartments in Warsaw, um, you know, Riga and, and Berlin and places like that, that were really just joining the eu.
Speaker 2 00:05:47 And funding and financing were available in these markets. So Latvia, Lithuania, Estonia, and the Czech Republic, um, Germany, Montero. And I was buying some stuff in, in these kind of places. And then I, you know, I got real passion for it. So I gave up my job and I went to work for a real estate company in Dublin. And in that, you know, I, I saw a lot of how to do things and how not to do things. And this was just really just to figure it out. I took the, a massive pay cut to go work at a sales department for a, for a real estate company. But just to understand it, you know. So, uh, from there, you know, uh, I, I was, I was working in and projects in, um, in Argentina, Buen Ires in, in Costa Rica and, uh, Panama City. And then 2007, 2008 roll around.
Speaker 2 00:06:38 And I just saw the greatest opportunity because when I was living in, in, in the United States, I had bought some properties down in Florida, some vacation homes. And so 2005, 2006 rolls around, and I just get these spidey sensors. So a a, a lady in Florida one night sent me, uh, she said, David, you've gotta buy the steel. This is down in Orlando. She, you gotta buy the steel. It's amazing, blah, blah, blah, blah, blah. And I'm sitting at home, um, in Dublin going through the contract, doing some research. I'm like, man, this thing doesn't pencil out. There's no part of this pencils out. In fact, not only does the pencil out, but this is crazy. And she's like, yeah, yeah, yeah. This is selling out overnight. Like, get that back to me by the morning. I was like, no, no, I've gotta do the opposite.
Speaker 2 00:07:20 I'm gonna start selling everything. Cause if this is, so, this is how my brain worked at the time. So I went out, I sold my, I owned two houses in Ireland. I sold them. I sold everything. I owned all over the place. So I went into 2006, 2007, having, having sold everything, right? So this is just a, the reason I tell you this is because these are, this is, at the time I felt like a genius as is I look back as one of the greatest regrets of my life, because I thought I was doing the right thing. I thought I was jumping out. I was, I was trading right. You know. But then 2000, so 2007, 2008, roll around, and I'm sitting there, I've got cash in my pocket. I'm like, where is the best opportunity in the world right now? And it was, it was the United States. The US dollar was under serious pressure from a currency perspective. At that time. It was the US dollar was on sale, and then US real estate was down by 50 or 60% in Florida.
Speaker 3 00:08:13 We, we had every Canadian, every Canadian and every Australian on the planet. That's right. You know, showing up here, buying, gobbling up our real estate.
Speaker 2 00:08:21 That's exactly right. So I, I, I jumped over and I set up a company and we were specialized in taking down all these condo conversions that couldn't sell their stuff. So all these condo conversions, there was, there was hundreds of kind of conversions all over the state of Florida. But, you know, they became unfinanceable overnight. So Americans didn't want them. They institutional hedge funds weren't there yet. So, you know, I kind of specialize in taking down these deals that were too small for the big guys or too, you know, too big for the small guys and too small for the big guys. So these 30 to like 80 units, 30 to like maybe a hundred units, I'd grab them and put 'em on the contract over here, and we'd bring them out. We'd sell 'em over to Spaniards, Italians, Swedes, Danish, Norwegians, Irish, English. And so I did that between two th and we made great money between 2000.
Speaker 1 00:09:08 So you were complete selling condo wholesaling, condo conversion projects.
Speaker 3 00:09:13 Yeah. You wouldn't have to close on your purchase because you'd have 'em sold before. You would have to even close.
Speaker 2 00:09:18 That's exactly, yeah, that's exactly right. We'd just get option contracts. Yeah, how cool. And so we did that, did that a, did that like, you know, maybe 1500 times. So, and put that in perspective. And then I, but I just, you know, I went in two way. I went into a bank over here, I moved back over. And so I, I moved back over to the state senate 2008, 2009. And I went into a lender one day and a lender said, you know, I was trying to buy a couple of houses for myself. And the lender said, well, you know, you're doing great. You, you know, you're knocking it out and you can, you get some conventional loans. But I was trying to set up, I was trying to acquire a, a, a bigger portfolio. And the lender came back to me and said, you know what?
Speaker 2 00:09:53 Come back to me when you've done a few of these flips. Come back to me when you've, like, you've been principal on a couple of these, these deals where you actually buy them and they show me when you got a track record that took, that kind of hit me for six. So I just went, you know what? I'm gonna stop this kind of selling of other people's inventory. I'm gonna just, I'm only gonna exclusively work on my own inventory. That's when I started flipping houses. So, and 2012, 13, start flipping our first houses and 750 houses later. Here I am. Um, in terms of, you know, from a flipping perspective, now, I, I I, I, I just need to say this cuz we're, we're, we're gonna talk about this today. Flipping is just a job. It's a well paid job, but it's just a job. It's no different than any other job. You work your tail from morning to night, you get up, you're full of stress. Flipping is just a job. You guys know that. And then you flip
Speaker 3 00:10:41 One, two and it's not a very good job either. It's funny cause not a great job. Before the show started, you, we, we had some behind the scenes conversations. You're dealing with roosters, uh, you know, next door to one of your Airbnbs Clint over here having to run out and deal with our landscaper who had a gravel truck delivered. I'm having to deal with fire emergencies. It's not the greatest job in the world, but it's an awful job. It allows us to build wealth through real estate. So anyway, it's, it's an awful job.
Speaker 2 00:11:08 It it, it is an awful job. It's a well paid job and IRS love you for it. That's all I'll say. I'll, I'll, I'll leave it at that. But what the job does, what flipping does it, it, it, there is an advantage to it in that it gets you in front of sellers. So you get to see decent deals, you get to learn how to negotiate a little bit. But all the flipping really does is it gets you if, if, if, if wealth is, if you are separated by wealth and there's a river between you and wealth in the way, a good job, our flipping homes gets you to just the other side of the river and allows you put one rock in the river. But in order to get across to wealth, you've got, so money just gets you to the other side of wealth.
Speaker 2 00:11:54 All you have is money. Now you don't have wealth, you don't, you're not wealthy yet. You've just got money. You might have made a million dollars last year or 600,000 or 2 million, but all you've got is dollars. If you wanna be wealthy, you gotta get across that raging river. And on the other side of that river is, is wealth land. And so you need to put stepping stones in that river to get you across that river to use the wealth analogy. And so flipping, flipping, being a doctor, being a, you know, being a well played entrepreneur, any of these, any of these activities simply allow you play the game of, of creating wealth. So, you know, we can, we can branch out right here. We can say, okay, well let's talk about what creates, what, what is wealth and what, what creates wealth? Or how do you do flipping?
Speaker 2 00:12:44 So let's just really, really quickly on the flipping side. Cause you need a certain amount of capital to play the game. To play the game of wealth creation with real estate is a privilege. So in the flipping business, you know, we go to work every day for a lot of people, they, they're the first question your average flipper is gonna ask you or somebody who wants to get into the business is like, I don't have the money, right? So I think you guys deal with this every day in your podcast. So, you know, learn how to wholesale, learn how to direct market to a seller, learn how to underwrite a deal. I can, everything stems from there. Go get an underwriting sheet. Go get access to your local mls, identify what the, the price per square foot is of a home in this neighborhood and negotiate a different price per square foot in the same neighborhood. And from there, you know, just arbitrage that difference between what you can negotiate for and what you can sell the home for. So you're saying, and learn how to underwrite
Speaker 3 00:13:44 That. So just to summarize what you're saying there is, if, if you're not in the position to be able to start building that wealth yet, but you really want into real estate, you focus on the education part of yourself first. So you, you get access to the MLSs, you start learning the market, you gather that information while you're, you know, broke and learning. It's a great time that you can still take a bunch of steps that are gonna pay off huge dividends later even though you don't have money. And then he's talking about almost step two, which is you can get into real estate with no money through a lot of different means. There's wholesaling, there's um, hard money loans that you can go out and get. And I know that doesn't seem possible for a lot of people who are broke. Hard money is available. It just is. Yeah, you can get it. So there's a lot of meaning. It's never money. Just to summarize kind of what he was saying,
Speaker 2 00:14:33 That's right. Learn how to underwrite a deal. It's simple. Just Google it. Learn how to underwrite a deal, which is like, what do I buy it for? You know, what my renovation costs are, what my purchase costs are, you know, what my soft costs are, what my, my funding costs are, what my origination fee, what my selling costs are. You know, what are my costs costs while I own the property? Is there any realtor fees when I sell it? All of that. Learn how to put all of that into a spreadsheet so that all you're toggling is the amount that you pay for that property. Everything else is fixed. It what it's worth when it's done is fixed. Your renovation costs, it's fixed. You can't change any of these things. These are the things that need to get done. The only thing that you can change is what you pay for it.
Speaker 2 00:15:12 Once you understand how to underwrite a deal, then you can make an offer on a deal. Once you can make an offer on a deal, you get a contract on a deal. Once you have a contract on a deal and it makes sense, you can walk that into any r meeting anywhere in the country and get that deal funded if it makes sense to the local guys in that room. And from there you get your first deal done. And I've always, I've always said this about flipping the first one is the hardest one you'll ever do. And you'll give away the, you'll give away everything in order to get that first deal done. But eventually you'll do one deal three times you make 20 grand or 30 grand, and you'll do that one deal three times and then just like spinning plates on, on, on sticks, you get that one deal done three times, then boom, you'll learn how to get one deal going and then you'll learn how to get another one going simultaneously.
Speaker 2 00:15:59 And now you've got two going. So instead of making 20,000 every three months, you're making 40,000. Like you're making 40,000 every three months. And I'm just using round numbers here. But then eventually you can stick. That's so easy. Getting two deals going. It becomes so easy that you get three, then it gets exponential. You go from three to six, from six to nine, from nine to 18. Now when you are renovating and flipping 18, 19, 20 homes at a time, then you start generating proper money. You have to build a team around that. I'm not simplifying these things, but the first two or three, they're the hardest. But what we're gonna talk about, which is that the most important message that we can get across today is that takes up 100% of your time and we'll take up 100% of your life. And at the end of, you know, year two or year three or year four, you might make 500,000. You might make a million dollars in a year. The IRS are gonna come in and they're gonna trade. They're gonna take a huge amount of it in one go. And that happens enough times. You're like, okay, I I I need to figure out the wealth thing.
Speaker 3 00:17:04 Yeah. So you've become, you've become a high earner. So at this point, you, that's right. There's just like many Americans out there that are higher earners. You, it, it doesn't come with an automatic knowledge download into your brain that teaches you how to turn high income into wealth. Gotcha. It's, that is a skill that most people don't have that hasn't been taught. And it's the, the secrets of the wealthier pretty simple. It's, it's assets. And we're gonna now talk about once you've become that, uh, for high earners or you build it from scratch, starting with one house and then two. But how you turn that high income now into wealth that's right, is the most important thing. It's a very
Speaker 1 00:17:43 Important lesson. And I think that, you know, we, we've touched on it on here before, I forget if it's the millionaire mind or the millionaire next door, but shall they talk about, um, income statement, wealthy versus balance sheet wealthy? You know, and it talks about many people that are high earners that are income statement, we wealthy, but then look like crap, you know, on their balance sheet. So I think that's a, a great book. Do you remember which one it is? Both of those are great books.
Speaker 3 00:18:12 Yeah. I, I think that's the millionaire mindset because the Millionaire Next Door is more about stories of people who build wealth, um, with, with lower end.
Speaker 1 00:18:21 Anyhow, very important to distinguish between the two. And that's what we're gonna get into, uh, you know, right now.
Speaker 2 00:18:28 So that's it. I love this segue because you know how you make your money. We just, you know, hit on how you can make some money in, in real estate, but what you do with it is so, so important. Now, to give you some backdrop, I'm 51 years of age right now and I'm pretty passionate about this because time, you know, the time that you are live, the time that you're active, most people don't really start to really make serious money until they're in their mid thirties. It's just the truth, right? Um, if you were, if you were listening to this and you're under 35 and you're earning great money, listen carefully for the next, you know, 20 minutes. Cuz this is, this is essential. I have, I I just gotta say this first and then we'll, we'll go onto the algorithm from there. I have spent flipping homes, um, in the last, you know, 12, 13 years of my life.
Speaker 2 00:19:23 I've spent, let's say 98% of my time, of my working life flipping homes, which has enabled me to do a lot of things. But it's created about maybe 15% at most of my wealth. I have spent 2% of my time. But financial engineering, just buying a property, putting a loan on it, giving it to my property manager, I'm forgetting about it. And then once every, you know, a month later I'll do the same thing. I'll just put the deposit down. I, these aren't great deals. These aren't, you know, below market deals. These, these are just re I'll buy 'em off the mls. I'm simply just buying it. I don't want a hassle. I'm already flipping here to make money. So in turns my own portfolio, I'll just literally just go, I'll choose a house, I'll put a deposit on it, my wife will put a loan on it, put it in the portfolio and forget about it. I
Speaker 3 00:20:15 Think it's amazing that the three of us are, we're real estate experts. Let's just be real about it. You know, we're, we're, we're at the top of our industry, but all three of us care more about the 2% of our time that we spend building our own portfolios than the 98%. And we are, we are just like our clients, you know, high earners who invest in real estate. That's all we are. We are them.
Speaker 2 00:20:38 But you look back at what that 2% does, that 2% now represents that 2% of my time and my effort, my hustle level represents a minimum of 85 to 90% of my wealth. This is such that 2% of my time,
Speaker 1 00:20:54 Such good
Speaker 2 00:20:55 Information. It's true. It's just true. You can work hard your whole life and, and, and, and remain not wealthy. You can earn money so your
Speaker 1 00:21:03 Whole life and remain wealthy. That, that, uh, cuz like, I mean, me and Scotty can relate. I mean, we talked about a lot of the, the crap we had to put up with today, you know, as, as part of, you know, the sales that we're, we're going through. So are, do you think that we should balance that out like that, that instead of your 2% and you know, maybe that's what it is for us too. I don't know. I mean it's, it's, it's very interesting to think about that, that we should be looking like, if you were to write a book on it, David, should we be like putting 20% of our time right, you know, into this? Should this too be turning into 20?
Speaker 2 00:21:42 It's a great question. That's a really great trust. And, and, and it's something that we can't, all that we can do is talk to our kids and talk to people who are younger than us and give them that option. Cause I can't go back and, and, and, and change that stuff. I I can change it now. Right? And to your point, I do spend more of my time, um, working on my own portfolio now than I ever did before. Right? So like, let, let's get, let's get this to, let's make it very, very clear to anybody who, if, if you're listening to this and you're under 35 and you are, you know, you're, you're not, you're not 60 or above, wealth creation is created using a really, really simple algorithm. If you are a higher earner, listen carefully. Wealth creation is, is exactly this. Use leverage debt by time.
Speaker 2 00:22:36 So debt by time, by scale equals intergenerational wealth. Understand what debt is. Debt converts to equity over time. So you take out 2 million worth of debt, you'll be worth 2 million when it's paid off. But inflation, this is the time component. It takes about 20 years for that debt to convert to equity. Inflation is going to create from that debt that you took us. So you took 2 million worth debt, right? Time will pay it off. So over a 20 year period, the debt will get down to zero and inflation, the asset that's underwritten by this $2 million, let's say it's $2 million inflation over a 20 year period will give you about a $4 million asset value. So if you have 2 million worth of debt, that's probably gonna be worth a 4 million asset in about 20 years time. And that asset will be paid off by your tenants. So debt by time, and this is the most important part, and this is the part that I can't go back and change is scale.
Speaker 2 00:23:48 I know a lot of investors who own one house. I know a lot of investors who own two houses, three houses, but they don't own very much more than that. And so they don't fundamentally change their, their financial outlook. So understand how to use debt. Debt is the asset. Debt is what makes you wealthy, multiplied or understand the value of time you have one life, your usual investment horizon is probably from 35 to 50. It's when people wake up one day to about, wow, I've done everything right. I've got a degree and I went to work for such a sub corporation and I'm spending all my time and we're working here, we're doing this, we're doing that and paying it to my 401k. And I've got a wife and two kids and, and, and you know what I'm, and now I'm 43, 44, I'm getting a little bit of imposter syndrome at work.
Speaker 2 00:24:37 I'm feeling a little bit old, I'm feeling a little bit, I'm bored with it. I don't really wanna do it anymore. I'm at the top of my, my business and I'm getting, I'm getting worried. And then they look at their 401k and that they've been paying into for, you know, 15 years and it's 1.2 million. So 1.3 million, that's fine, but that's not wealthy. And you can't retire at 42 with kids <laugh> at 1.2 or 1.3 million in your bank account. It's not what you can do. So at that point, that's when people started wake up and they go, wow, I'm doing everything right, but I'm not doing, it's not enough. It's almost like that it's, I'm not gonna say that, that that whole mindset is wrong. I'm saying it's almost like people who wake up in their, in their mid forties and go, shoot. I realized now the value of time. I wish I'd started investing when I was 30 or when I was 25. Being 25 and having money in your pocket and deferring gratification at 25 is a superpower. The time is a superpower. If I knew what I knew at 51 when I was 25 and I'd access to capital, I definitely wouldn't be on this podcast. Right? You know,
Speaker 3 00:25:43 You'd be on the beach definitely drinking pina count your millions.
Speaker 2 00:25:48 I don't even know if I'd be there, but I, I just certainly wouldn't even be in the day-to-day real estate thing. I'd be managing something else. You wanna do something but understand the power of what I've just said. Understand debt, understand what's happening over time. Everything's being paid off over time. Everything's inflating. Now, inflation, you know, it's say it's the buzzword of the moment, but I've been talking about inflation for a long time. You've got two choices with inflation. You can bite inflation, you can walk, you can run into inflation head first with it blowing in your face, pushing you backwards. Or you can put out wings and use inflation to create wealth and just harness inflation to push you forward. It's your choice. We
Speaker 3 00:26:29 Talk about
Speaker 2 00:26:29 Assets are the
Speaker 3 00:26:30 Well said. Yeah. We talk about it all the time. The, the secret of the people that are not scared of inflation are the wealthy because they own assets that are going up in value. They are not, they are not consumers, they are owners. They have a large balance sheet and inflation does not hurt the wealthy. Join them. It's the place to be. And real estate is an amazing commodity because it's one of the few that you can actually use debt as David is ex explaining to build your wealth using other people's money to build your wealth. What an amazing concept. If you're a high earner and you are not, and you do not own real estate, you need to get up tomorrow morning and start looking at the first steps you need to do to get into it because you, before you know it, you're going to be a high earner without wealth. And, and time is the most important factor. And like David said, it's the one thing you can't change his time. So I mean, you
Speaker 2 00:27:28 Can't buy it. No. You can get more debt, you can get more scale, right? But you can't get more time. It's the one thing, you can't come backwards. And
Speaker 3 00:27:34 I don't want people to, I just wanna clarify one thing. I don't want people to think that David, and, and we are talking about leveraging, you know, 150% and just, you know, putting yourself right on the edge of bankruptcy if there's any bumps in the road. No, we're talking about using responsible leverage. Yeah. You know, it's, it's, you gotta be careful who you listen to out there because there's some people that are crazy about, you know, using too much debt, but at the same time you have to use debt. It is the, it, it is the 10 x factor that, that helps you build your wealth.
Speaker 2 00:28:05 That's right. And scale. You have to understand that you need to do it if you genuinely wanna use real estate as a vehicle for creating wealth. And remember a lot of people think about wealth in a, you know, in a one year, you know, timeframe. Like, oh, I think the market's gonna go down next year. I think the market's got, I I I don't care about the market next year. I really genuinely don't think about
Speaker 3 00:28:29 It. You've got three people, three people here who don't care about short term don't care. I do not care about, don't about it. Short term, nothing doesn't
Speaker 2 00:28:36 Matter. The LA every deal I buy now is for my kids. Yep. It's lit. Literally. It's for, it's for my kids. And why,
Speaker 3 00:28:42 Why would we care what it's worth? We're caring about the cash flow it's generating and it's paying off its own debt. That's all we care about. If the numbers work on paper for us, the value of it is just a, a line on a piece of paper that we don't care about. Right?
Speaker 2 00:28:56 It's funny you say that, you know, for the last couple of years, uh, anybody who's on a lot of assets, you might, you know, I I, I'd log in about once a year and I update, you know, the, the kind of net worth sheet right? Where I, you know, I increase the value of the assets. And now, and it's funny, you know, you, you say, wow, I, I didn't realize I had an extra X dollars, you know, and over the next year. And so it's cool, it makes me smile, but it doesn't change a thing. Your, your, your net worth in real estate will fluctuate. It'll go up sometimes astronomically and sometimes and it'll go down and that's okay. What what, what matters though is my cash flow is sticky. Rents tend to be sticky. And, and this is the next, this is the most, I think the most important thing about real estate.
Speaker 2 00:29:40 Building up a portfolio of real estate for me is true freedom. And what is true freedom is if, you know, if you're a high earner, you know, you, you're probably, you know, doing this, that and the other and you're putting some money away and you're putting this away. So earning money, a W2 income or a high, it allows you to do three things. It allows you to pay your expenses, it allows you to pay your taxes and allows you to save and invest. But real estate does exactly the same thing. It, it can cover all of your expenses, it can eliminate your taxes. And the fact that you own real estate is an investment already that's already compounding for you. So a real estate portfolio can act and look and feel and perform the exact same upside in your life as a W2 income. So real estate and a W2 income are almost identical.
Speaker 2 00:30:31 And for me, what are the most important, important things that we can say to you, uh, listeners today is understand. A lot of people say to me, they, you know, they earn $300,000. They, oh, you know, real estate, you know, these piddly $300 a month, they're not gonna replace my income. And I'm like, you don't understand these piddly $300 a month are not supposed to, you know, replace your income. What to do. What they're there to do is they're there to only cover your expenses. We, because it does the other two things for you. We're not trying to get, we're not trying to create $300,000 a year of income because you've gotta go and spend all your time working. What we're trying to do is we're trying to get to that, let's say your married wife, kids, schools. And you don't, you don't go to, you don't go to a job anymore.
Speaker 2 00:31:17 So you gotta pay your own health insurance and all that. Let's say that's $15,000 a month, let's say. That's what your monthly nu is. That's the goal. The goal is passively create $15,000 a month from real estate income. And once you get across that line, you start hitting 15 or 16 or 17,000 a month that comes in. If you get up in the morning, go to bed or whatever it is that you do, if that 15, 16, $70,000 a month is coming into your, from, into your bank account, from your investments and that's net you're freight. You don't have to worry about, you
Speaker 3 00:31:51 Don't have worry. Another way to look at, another way to look at that though is if you're a high earner and you have an expensive lifestyle, if you build a real estate portfolio that is out there building your wealth for you with, you can then live on your income. It's just a different lens to look through it for. That's right. Where you can then spend your $300,000 a year and live your life, but you're still building wealth. And it's not really you building wealth, it's your real estate building you wealth, it's, it you multiply the power of yourself. You know, a healthy portfolio can earn way more than you ever could at any job. At any job, okay? So, you know, high earners, they, they have this income and then they look at investments as a sacrifice of that income. They think, well I'm only making $300,000. Um, I've got my kids' tuition and all this. I don't wanna peel off even more to invest in real estate cuz it's just less money I'll have. But they haven't really been able to, a lot of people haven't seen the way that you analyze and a lot of experts analyze real estate and why the wealthy have so much of it is because it creates its own wealth. It doesn't take away from your, your, uh, income. It's the opposite. It can start building and building and you could start taking it and, uh, well we
Speaker 1 00:33:08 Could, it's so frustrating with hearing people talk about the piddly 300 right dollars that you talked about, David. We, we get it all the time. Like, why would I do this, you know, $300 a month? You know, I really encourage people stop being close-minded. You're talking to three people here that have seen the power of what it can do. And it's, it's amazing. And, you know, we really just, it's awesome to sit here and listen to you We're so like-minded. We can sit here and and and go on for hours, but we, we we're getting to the end of our time here. We always like to end, um, with three questions. Um, Scotty, you want to kick
Speaker 3 00:33:44 Us off? Sure, sure. So question one is, what's the best real estate decision you've ever made?
Speaker 2 00:33:51 Ooh, that's a great question. Best real estate decision ever made to quit my job full-time with a real estate.
Speaker 3 00:33:58 Nice. All
Speaker 1 00:33:59 Right. Just do it, man. We talk about it all
Speaker 2 00:34:01 The time. Yeah, just do it. Uh, yep. Just do it. Go for it. Quit my job and just go for
Speaker 1 00:34:04 It. I like a lot of people, you know, I, I forget where I heard this. I think it was Denzel Washington of all people. He's
Speaker 3 00:34:10 A really
Speaker 1 00:34:11 Neat man. People, you know, he, he was given a speech and said, oh, you know, always have something to fall back on. Always have something to fall back on. He's like, no, you know, if you're gonna do it, go in and make that the only thing you know, don't Yeah. Have anything to fall back on. So I think that, I think that's great.
Speaker 3 00:34:25 What, uh, real estate regret do you have, if any?
Speaker 2 00:34:29 Um, not buying, not holding more sooner. Yeah. Simple. That's, that was easy. Not holding more inventory. Uh, way earlier in my life when I was taking the, uh, I was taking the, the, the, the, the rip on the 20 grand and 30 grand and 40, whatever, each deal was that, that sugar high that you'd get from that and say, oh, you know, if we do four more, we get more sugar highs, we get more sugar high.
Speaker 3 00:34:53 That's a great way to put it. That's a great way to put it.
Speaker 2 00:34:55 You know? Yeah. Take the short term sugar high. And my biggest regret in my life is I've, I've done the math on this. Sure. Uh, it, it's, it's, it's, it's hundreds of millions of
Speaker 3 00:35:04 Dollars. We just had a bank, but I just bought, we just had a bank meeting on a, on a loan that's a, it's a 26 million, uh, commercial project. And we said to the guy at that, our banker right before lunch, we said, um, we don't wanna take any, uh, profit, we're gonna just hold the last quarter of it. We're gonna make $0 on the whole whole project, but we're gonna Yep. We're gonna, uh, deed the, you know, the last quarter of the project, phase four, uh, into our own names. And, and his mind was blown for a second. But I don't want the sugar high. I don't wanna make the money on the project. Yeah. I don't, we don't want the cash. We want to hold real estate and build wealth. It's so powerful. And if you can get over that sugar rush, then uh, that's when you get into the real wealth building. Well, the one last question and then we'll let you go, it's what advice do you have for the millennials? So for, uh, or even the, the younger generation, beyond even them, what advice do you have for those guys and girls?
Speaker 2 00:36:00 If you, if, if you are, um, in your twenties and early thirties, know that you're gonna be 50 real quick, right? Know that whatever it is that you're doing right now, probably get a little bit tiring, a little bit boring later on, but know that you are investing horizon the timeframe in front of you. The runway in front of you right now is an absolute superpower. Wealth is created by holding assets over time. Older people don't have time, younger people have time. Never underestimate the power of the timeframe that you have in front of you. Don't waste it saying you're gonna do something tomorrow. Don't think you'll get to it later. Don't say you're gonna do it when you're 40. The people I know, and I know 45 year old, 46 year old retired people down here in Florida, and I asked them, what do you do is say they are the people who deferred gratification in their twenties and thirties. You just talked about an expensive lifestyle. You know, I, I could, I see young guys all the time in my business, they pull up outside my office in, in, in Porsches and Parras mm-hmm. <affirmative>. And I just shake my head. I'm like, are you serious? I drive around in a, in 2014 Ford Edge, and I still do.
Speaker 3 00:37:16 I have a 2000, I I have a 1990 Jeep Wrangler that I drive. And Clint, you drive a
Speaker 1 00:37:22 1995, two-door Chevy Tahoe,
Speaker 2 00:37:24 Everybody. So I'm the one with the fauci car. That's
Speaker 3 00:37:27 Right, man. Yeah. We could all have, we could all have Ferrari and Lamborghini, but instead we're building wealth and living the dream.
Speaker 1 00:37:33 Well, I don't know, be ask me about my car. I say
Speaker 3 00:37:35 I drive it because it's awesome. I love Mic Jeep, as you know, I love Machi, so I don't care.
Speaker 2 00:37:40 Park your ego, guys. If you're a millennial, park your ego and understand the time is your superpower.
Speaker 1 00:37:46 Well, we thank you so much, David. Like I said, we could talk for hours and, you know, to all of our listeners, uh, you could find David Shaw, um, west Florida, invest. I mean, guys really, really smart and we, we encourage you, thank you, you know, to, to look him up. And, um, anyhow, if you've made it this far, we'd also really appreciate it. If you'd leave us a review on Spotify and Apple Podcasts, it really helps us to grow our podcasts and reach as many people as we can to help them understand the world of real estate investing. You can also find some short form content on TikTok. You can join that revolution at the homeboys podcast that's at the homeboys podcast on TikTok, where you can learn even more about the power of real estate. Tell next time, happy investing.
