Wealth Formula by Buck Joffrey

With rising interest rates, I keep getting questions about whether value-add real estate is dead.  The answer to that question is a firm no. Remember, people have made money and lost money in all kinds of interest rate and cap rate environments. The interest rates we have right now aren’t even close to the highest they have been in the United States. So why is there so much distress in the real estate market and all other correlated markets then? The biggest problem that the Fed has created for us is that they did not react to inflation fast enough and so it got out of hand. They ended up having to play catch up and raise rates at the highest slope in American history. All markets hate instability and extremely rapid rising rates wreak havoc on all of those markets that we typically rely on for investments including real estate and equities. This is particularly problematic for floating rate scenarios and for businesses that need liquidity. Banks don’t like to lend when rates are moving up quickly. The truth is that I don’t know anyone who hasn’t lost money during this period of time—whether that be in real estate or stocks. That doesn’t mean it feels good although misery does love company. The key, as I will continue to emphasize, is to be prepared to mentally cut against the grain of fear. Investing money while you are down is extremely counter-intuitive to the human psyche.  Fear is designed to protect us. If you were running from a lion, you wouldn’t be inclined at that moment to consider how you might avoid running into one in the future. You would be focused on the danger at hand. That reaction of focusing only on the danger might be useful in the wild. But when it comes to investing, it could prevent you from keeping your eyes out for great opportunities. While they might not be here yet, be prepared mentally. These are the times when investors with ice in their blood make a lot of money. Use this time to get the rest of your house in order. Get your asset protection and estate planning in place. Start learning about other sectors. The truth is that there is almost always something to invest in if you know how. How about tech? How much do you know about artificial intelligence? Probably not much. I don’t either. But it’s clear that this is going to be life-changing technology for better or worse so maybe we can make money off of it. Today, we are going to spend some time talking to an expert in artificial intelligence. I urge you to listen to this episode. I learned a great deal and it opened my eyes to its potential. Listen HERE After starting his business in possibly the worst year for financial markets i.e. 2008, Shashank Shekhar has led the company to be one of the fastest-growing mortgage companies in America by helping thousands of families secure better financing for their homes. In 2017 and 2021, InstaMortgage Inc. (formerly known as Arcus Lending Inc.) was named to the Inc. 500 list of the fastest-growing private companies in America (aka “Most Exclusive Club in Business”). The company was also named to the 2021 Deloitte Fast Tech 500, ranking higher than household names like Zoom, Pinterest, and Square. This dramatic growth has been built on the pillars of legendary customer service and an unrelenting focus on education. Shashank lives and breathes the mantra “We are in the customer service and education business, we just happen to do mortgages.” Amazon.com #1 best-selling author Shashank was named “2022 & 2023 Entrepreneur of the Year” by Stevie Awards. He was the expert guest of the TV and radio show – “Mortgage Matters” and the author of widely acclaimed books – “First Time Home Buying 101”, “Real Estate Unleashed” and the latest #1 best-seller “My First Home”. Besides writing one of the top mortgage blogs in the country, Shashank also gets invited to blog on several of the top websites and gets frequently quoted in national and international media. He was interviewed by Emmy Award-winning director Nick Nanton on his TV show. He is the host of “Shashank Redemption” podcast where he talks about entrepreneurship, startups, and FinTech, In September 2020, Shashank led his team to create, Rachel, the world’s first digital human in the mortgage industry. Shashank is also a regular on the speaking circuit with frequent keynote talks at Mortgage, Real Estate, and Small Business events. Shownotes: What is Artificial intelligence? ChatGPT’s accuracy What is going on with AI and real estate? InstaMortgage.com

This week’s Wealth Formula Podcast features me trying to answer your questions. Make sure to tune in as I try to answer questions about interest rates, the state of value add real estate and Central Bank Distributed Coins! Listen HERE

Joe Biden says the economy is “strong as hell” but he’s wrong. Interest rates increasing at the steepest slope in history over the last year have caused a serious problem for the economy and hell is about to break loose. I’m not the zombie apocalypse type but I have seen some shady-looking dead people walking around with silver dollars in my yard and I am a little concerned. Bankruptcies are up 216 percent on the year, higher than the 2008 crisis and double that during the Covid lockdowns. This is before a recession has even been declared. Banks aren’t lending. Much like they did in 2008, they are sitting on bailout money. Not only does this cause bankruptcies but it also keeps healthy companies from thriving. The Federal Reserve has really screwed us and it could take a while before we dig ourselves out of the impending mess. It doesn’t help that the current administration appears blind to the problems that we face. We as real estate investors are not immune from the carnage. We rely heavily on debt and those rates have made the markets illiquid and have significantly affected property values. So we need to come to grips that there is a good chance many of us are going to lose some money soon. I know I have already. But it is important to put things in context. The ride up has been fun. Anything people bought and sold between 2009-2021 invariably was a win. But that’s not how markets work. Everybody loses sometimes. The key is understanding that to get ahead you have to win more than you lose. That means learning lessons when you lose and also not giving up. In other words, just because you lose some money in this market doesn’t mean you don’t prepare yourself to take advantage of the same set of facts on the buy side. That would be a mistake. Nothing that happens in the next year is going to kill you. Don’t lose sleep over it. This too shall pass. My guest on Wealth Formula Podcast this week has thought and written a great deal about the psychology of investing and retirement. Listen to this interview as it may help you to navigate the headwinds before us. Emily Guy Birken is a finance writer who writes the “Live Like a Mensch” column for The Dollar Stretcher. She is also a contributor to Wise Bread, PT Money, Money Crashers, Yahoo! Finance, and Business Insider, and many other personal finance sites. She edits and writes for the FinCon blog, an annual conference for financial bloggers. She is the author of The 5 Years Before You Retire, Choose Your Retirement, Making Social Security Work for You, and End Financial Stress Now. You can visit her at SAHMnambulist.blogspot.com.

I was a surgical resident for years. I started out as a neurosurgeon, moved over to Otolaryngology Head and Neck Surgery then ended up in cosmetics. During my training, it didn’t matter how much I worked. I would always get the same paycheck. I wasn’t lazy but I certainly didn’t enjoy working for what amounted to minimum wage. And I was not about to volunteer for any more work than I was assigned. Eventually I did finish training and I was hired by a facelift company. I know it sounds kind of weird but they would recruit patients with questionable marketing tactics and hired an army of young surgeons to do the work. I got paid about 15 percent on revenue I generated for the company. They didn’t charge as much as your typical facelift surgeon, but because I was doing 3-4 facelifts a day, it turned out to be really good money. For reference, my most recent job was as a chief resident in San Francisco for which I was paid $50K per year (that’s poverty in SF). The day I became a capitalist was the day I got my first real paycheck.  In two weeks, I made more than I did in my entire surgical internship year. It blew my mind. Suddenly I realized that the harder I worked the more money I could make. And that made me work really hard! Suddenly, I was more than happy to put in long hours. I enjoyed doing the procedures and I was good at it. But I also liked the idea that my work was getting proportionally rewarded with dollars. There was a noticeable change in my spirit. Even though I didn’t own the place, I cared about the office and wanted to make sure we were doing a good job. I took ownership and that mattered. After all, in the history of the world, no one ever took a rental car to the car wash. Of course, like all entrepreneurs, I eventually realized that there was an even better way to make money than getting paid for the amount of work I did for the business—own your own business.  I went on to start multiple businesses and the rest is history. But the moral of the story is that opportunity for those who have talent and work hard is endless in our country and getting paid for the first time gave me my first taste of that. Anything that threatens that reward system threatens the very core spirit of who we are. Of course not everyone shares my views—especially these days. And it’s not always as simple as perhaps I make it sound. We still need to take care of people in need and we still need to provide opportunity for the underprivileged. This became even more evident during Covid when people simply couldn’t work. But I fear some of the remedies of a difficult time have permanently altered our culture. After all, it is difficult to take things away from people after you give it to them. My guest on Wealth Formula Podcast today was right in the middle of policy making during the Covid crisis and was making decisions like what to do about people who couldn’t pay their rent. What makes his perspective interesting is that he is a libertarian who works for a libertarian think tank. Find out how a small government guy navigated the biggest government intervention in American history on today’s economy on this week’s Wealth Formula Podcast! Mark A. Calabria is a senior advisor to the Cato Institute. He provides strategic input and direction on the federal economic policymaking process. He previously served as director of financial regulation at the Cato Institute, where he cofounded Cato’s Center for Monetary and Financial Alternatives. Calabria is the former director of the Federal Housing Finance Agency, which regulates and supervises Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. During his service at the agency, Calabria led the response to COVID-19, as well as laid the groundwork for a removal of Fannie Mae and Freddie Mac from government conservatorship. Prior to his heading of the Federal Housing Finance Agency, Calabria served as chief economist to Vice President Mike Pence. In that role, he led the vice president’s work on taxes, trade, labor, financial services, manufacturing, and general economic issues, including serving as a key member of the team that enacted the Tax Cuts and Jobs Act of 2017 and on the team that crafted the United States‐​Mexico‐​Canada trade agreement. Calabria served as the vice president’s primary representative for the U.S.-Japan Economic Dialogue. Calabria served as a senior aide to the U.S. Senate Committee on Banking, Housing, and Urban Affairs under chairs Richard Shelby and Phil Gramm. During his Senate service, he acted as the primary drafter of the Housing and Economic Recovery Act of 2008, which established a stronger regulatory framework for the government‐​sponsored housing enterprises. He also led the banking committee’s response to Hurricane Katrina, as well as its work on the Shelby‐​Dodd Flood Insurance Reform and Modernization Act of 2008, which served as the basis for the Biggert‐​Waters Flood Insurance Reform Act of 2012. Prior to his Senate service, Calabria served as the deputy assistant secretary for regulatory affairs in the Office of Housing at the U.S. Department of Housing and Urban Development. Calabria has also held positions with Harvard University’s Joint Center for Housing Studies, the National Association of Realtors, and the National Association of Home Builders. He holds a doctorate in economics from George Mason University. Shownotes: Risk-Based Pricing in Financial Services The Importance of Credit Scores Limitations of Landlord-Eviction Pause The Soundness of the Banking System Market Caution and Investment Opportunities Federal Reserve Actions and Inflation

When I was a kid, my dad deposited $1,000 for me and my two siblings at a local bank. I’m not exactly sure why he did that, but what I do recall is that my older siblings showed me that I could go into the bank every couple of months and ask for “interest.” I remember being about 7-8 years old and riding my BMX bike to the local bank with my bank passbook in hand. For those of you who remember, the passbook was kind of like a passport with your bank information. Every time you made a deposit or withdrawal, they would put the record in there. This was the early 1980s, and interest rates were exceeding 15 percent. Now I don’t know exactly what my rate was, but I do remember coming out of that bank with serious dough—like 20 bucks at a time. To celebrate, I’d cross the street and get myself a 99-cent McDonald’s cheeseburger. Times have changed. No more passbooks, and I doubt the bank would let my 8-year-old daughter walk in and ask for the interest on her account. In fact, they would probably laugh at her and tell her that banks don’t pay interest anymore. But wait…should they be? Back in those high-interest days, people were getting 10 percent interest on their money and living off of it. Of course, for the last several years, we have been accustomed to near-zero interest rates. It was great for taking out loans but not great for deposits. The thing is that now interest rates have risen back to levels more consistent with historical levels, and banks really ought to be paying us more interest. They know that. But as my buddy Peter Arts recently pointed out to me, they aren’t going to offer it to you unless you ask. Pete’s my old neighbor in Chicago and knows the banking system as much as anyone else. He’s getting over 5 percent on his money sitting in the bank, and he says we should be too. Simple tweaks to make you thousands of dollars per year sounded like a great reason to interview him for this week’s Wealth Formula Podcast. Not listening to this podcast could literally cost you tens of thousands of dollars, so make sure to tune in! Peter Arts served as the Bank of Montreal’s Global Asset Management’s global head of liquidity for the last ten years. In addition, he was also the head of U.S. private debt, taxable fixed income, and Canadian fixed income. He oversaw $50 billion in assets across Toronto, Chicago, and London, managed by a global team of portfolio managers and credit analysts. He has also served on global committees for counterparty investment and risk. Shownotes: Insights on Banking and Interest Rates What happened with SVB? What is the difference between SVB and larger banks? Banking for Profit and Economic Indicators

When new listeners of Wealth Formula Podcast tell me they started from the beginning to catch up, I cringe a little bit. It’s not that the original material was bad. For me, it’s just like looking at pictures of guys in the 80s with feathered hair (Think Dukes of Hazard). Or guys with perms.  At the time it seemed like a good idea but it isn’t anymore. But then again, maybe it will be back in vogue again in the future. (P.S. PLEASE MOM JEANS BE A THING OF THE PAST!) Like hairstyles through the decades, my views on personal finance have changed with time and some have gone full circle.  Was I wrong before and right now? Not really. My perspective is just different. And, I suspect 5 years from now I will, again, cringe at some of the things I am saying today. Like many guys approaching 50, I am becoming a little bit less dogmatic about my opinions than before— a little more open-minded.  For example, I no longer look down on people who invest in stocks and bonds. In fact, it might not be a bad idea to grab a Vanguard index or two while the markets are in the toilet.  That said, I’m still deeply dedicated to the alternative asset space. At my core, I’m a real estate guy but I’ve even opened up to other alternative assets lately.  My opinions on gold as an alternative asset have been the most dynamic throughout the years. I started out telling people to buy gold and to load up on silver dollars. I was telling people to buy monster boxes of American Eagles in preparation for the Zombie Apocalypse—because everyone knows Zombies only accept silver coins as tender. Then one day I became violently against buying precious metals. I didn’t see the point. What do precious metals do that real estate does not? Both are physical inflation hedges but real estate cash flows and has tremendous tax advantages. The IRS code for gold profits is downright punitive. And where would I bury it? Then some banks started failing and I started to see a glimpse of the doomsday perspective again and it started to make more sense to own some gold. To be clear, I still don’t own any gold now. I just have that monster box of silver coins sitting somewhere in a nuclear bunker. So now, I’m back in the camp of “maybe I should buy some gold”.  But… I’m still not sure. I’m listening and reading to a lot of people on this topic. One of the more respected gold bugs out there is Brien Lundin. Brien is a very rational guy on the topic and has a great newsletter to boot. This week on Wealth Formula Podcast, I pick Brien’s brain on the whole topic of gold again. It’s a conversation worth listening to. Listen NOW! With a career spanning four decades in the investment markets, Brien Lundin serves as president and CEO of Jefferson Financial, Inc., a highly regarded producer of investment-oriented events and publisher of investment newsletters and special reports. Under the Jefferson Financial umbrella, Mr. Lundin serves as publisher and editor of Gold Newsletter, the publication that has been the cornerstone of precious metals advisories since 1971, and as the host of the annual New Orleans Investment Conference, the oldest and most respected investment event of its kind. As editor of Gold Newsletter, Mr. Lundin covers not only resource stocks, but also the entire world of investing, from small-caps of every type to macroeconomics and geopolitical issues that ultimately affect every investor. As host of the New Orleans Investment Conference, Mr. Lundin has annually brought the giants of investing, economics and geopolitics together in intimate presentations with many of today’s most sophisticated private investors. In all of these endeavors, Mr. Lundin has striven to burnish the brilliant legacy of the late James U. Blanchard III, his great friend and the founder of both Gold Newsletter and the New Orleans Investment Conference. Shownotes: What gives gold its value? Physical gold versus gold stocks The New Orleans Investment Conference Why should you consider owning more inflationary-hedged assets like gold and real estate?

I used to be a guy who prided myself on being a minimalist. Despite doing pretty well for myself financially, I drove the same 2007 Prius I bought the day after residency until just a couple of years ago. My clothes often didn’t fit and I never shaved. Oh yeah—I was about 25 pounds heavier because I didn’t really care how I looked. I also didn’t really spend much on vacations or special events— I used to just blame that one on parenthood. It’s funny because I sort of took pride in my rejection of material possessions and my frumpy looks. I was sort of giving society the finger. Then all hell broke loose: namely the beginning of Covid lockdown and the end of my marriage. They kind of happened at the same time so it was a little rough. Confused and disoriented, I didn’t know what to do so I just began to hike the beautiful mountains in Montecito. It reminds me of the movie, Forrest Gump, where Forrest just decides to run one day and keeps going back and forth across the country until he seemed to figure something out. I hiked so much during those days that I pretty quickly shed most of my extra weight. Meditating on my life through those gorgeous trails every day made me see myself for what I had become: kind of repulsive. Ok, so maybe that sounds a little harsh but that’s the way I saw the old me. I needed to update my self-image for myself. It started out with the material things. I bought that Italian sports car I always wanted. I bought clothes that actually fit me and that were younger than my children and I started to take my health seriously. Oh… and I started shaving every day. They say the Chinese word for crisis is the same as the word for opportunity. Well, I took this crisis as an opportunity to overhaul my life and to start over. In starting over, I became acutely aware of the time I had wasted not living the life I want: material or otherwise. I just didn’t want to spend the money. But why wasn’t I spending any of this money that I was working so hard to make? After all, I can’t take the money with me after I’m gone. I’d already done a good job of setting my kids up with assets and insurance. Why not spend on me? Well, that’s what I started doing! And I have to tell you it’s a lot more fun than the alternative. And maybe I’m spending too much now, but I also have a lot of time to make up for. So now I’m buying the stuff I want and also living a life full of new experiences. The funny thing is that this was supposed to be about me, but I found that this change has also been great for my daughters as we now travel more and go to a lot of cool events. So why do I bring this up? Well, a couple of months ago, a friend and WF listener texted me and suggested I read a book by Bill Perkins called Die with Zero and it seemed to encapsulate so much of my new ethos that I wanted to share my thoughts on it with you. So I grabbed a couple of familiar faces to do a little book club on this week’s Wealth Formula Podcast. Make sure to tune in! Rod Zabriskie has been in financial services since 2009. Prior to going into business for himself, he worked in marketing and finance with several small businesses. He had the opportunity to purchase an existing furniture business in 2007, just prior to the Great Recession. The experience of struggling to stay afloat amid difficult economic conditions inspires Rod every day in his efforts to educate and assist his clients in implementing sound financial strategies. He strongly advocates for establishing a firm foundation, utilizing proven strategies and financial tools to create a strong base upon which we can each build our financial house. In addition to focusing on Wealth Formula Banking and Velocity Plus, he has expertise in retirement income planning. Rod has a bachelor’s degree in Marketing Communications, and an MBA with an emphasis in Entrepreneurship. He and his wife Jodi are the proud parents of 7 wonderful children. As a family they thrive on spending time exploring nature, playing games and doing projects together. He enjoys sports, music and reading. Christian Allen joined the financial services industry in 2004. Over the course of his career to date, he has developed a broad-based knowledge and experience set. He began as a traditional advisor, working with local clients in his home state. In that context, he began a movement of successfully partnering with other professionals, including accountants and attorneys, to assist clients in implementing sound financial strategies. He spent more than five years in management with 2 regional planning firms, during which time he assisted new and seasoned professionals in creating efficient systems and methods to build meaningful practices. Over the last several years, he has expanded to working across the country, teaching financial principles, and working with clients across a broad spectrum, including wealth accumulation, retirement distribution planning, as well as innovative, advanced planning strategies for both high-income and high-net-worth individuals and businesses. He’s a member of AALU, and holds the designations of Accredited Asset Management SpecialistSM and Accredited Wealth Management AdvisorSM Christian is married and has two children, and is an avid sports fan. Shownotes: Die with Zero by Bill Perkins Is there a benefit to getting convertible term insurance now? How can you enjoy your life right now without worrying too much about retirement? Rod and Christian’s event: https://mivirtualsummit.com/

Government is a funny thing. It is an organization that makes and enforces rules and regulations. The more rules and regulations it makes, the bigger it gets. It’s a monster. Government is also a significant employer that doesn’t seem to care much about being lean and profitable. Instead, it thrives on making itself even bigger and creating more things to control. But as the government starts to infringe on people’s perceived personal space, people start to push back and that is the only force that resists this monster’s thirst for power. Make no mistake, during these times when governments are held in check by their people, the monster’s appetite for power and growth does not go away. It lurks in the background waiting for its opportunity to pounce. That opportunity comes when people are at their most vulnerable—in times of crisis. When things go south, people are willing to give up more of their freedoms in exchange for stability. Governments are more than happy to oblige. Just think about some of the crises in recent history and the government response to those events: The Terrorist attack of 9/11, the 2008 financial crisis, Covid, and the Silicon Valley Bank failure. In each situation, the government found an opportunity to change the rules and obtain more control. This playbook isn’t just a conspiracy theory. It’s just how things work. Mainstream government figures will tell you the same as you’ll find out in this week’s episode of Wealth Formula Podcast. Listen Now! Alex J. Pollock is a Senior Fellow with the Mises Institute, providing thought and policy leadership on financial issues and the study of financial systems. His work includes cycles of booms and busts, financial crises with their political responses, housing finance, government-sponsored enterprises, risk and uncertainty, central banking, banking and financial regulation, corporate governance, retirement finance, student loans, and the politics of finance. He previously served as the Principal Deputy Director of the Office of Financial Research in the U.S. Treasury Department 2019-2021. He was a Distinguished Senior Fellow with the R Street Institute 2015-2019 and 2021, and a resident fellow at the American Enterprise Institute, 2004-2015. Among the many aspects of his AEI work, he developed the One Page Mortgage Form to give borrowers in clear form the key information they need in order to know what they are committing themselves to. He was President and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. There he invented the Mortgage Partnership Finance program, which successfully created front-end mortgage credit risk sharing beginning in 1997. His decades of banking experience include being a Visiting Scholar at the Federal Reserve Bank of St. Louis, 1991. Pollock was a director of the CME Group 2004-2019 and of Ascendium Education Group 1989-2019. He is a director and past-chairman of the Great Books Foundation and a past president of the International Union for Housing Finance. He is the author of Surprised Again! – The COVID Crisis and the New Market Bubble (2022), Finance and Philosophy—Why We’re Always Surprised (2018), and Boom and Bust: Financial Cycles and Human Prosperity (2011), as well as numerous articles and Congressional testimony. Pollock is a graduate of Williams College, the University of Chicago, and Princeton University. He and his wife, Anne, live in Lake Forest, Illinois; they have four grown children and ten grandchildren. His interests include political finance, policy, history, ideas, management, music, and the pursuit of clarity. Howard B. Adler is an attorney and former government official. He served as Deputy Assistant Secretary of the Treasury for the Financial Stability Oversight Council, where his job was to monitor and remediate threats to the financial stability of the United States. The Secretary of the Treasury awarded him the Treasury Distinguished Service Award for his work. For over 30 years, he was a partner at the law firm of Gibson Dunn & Crutcher, LLP, where he was cohead of the firm’s corporate transactional practice. He received numerous professional accolades as a lawyer, including recognition by Chambers USA: America’s Leading Business Lawyers as a Senior Statesman and Tier 1 mergers and acquisitions and private equity lawyer in Washington, D.C.; Best Lawyers in America for securities law and mergers and acquisitions; and Super Lawyers for mergers and acquisitions and securities/ capital markets law. Prior to Gibson Dunn, he was Executive Vice President and General Counsel of The Riggs National Bank of Washington, D.C. Mr. Adler received his B.A. from The Johns Hopkins University and his J.D. from New York University School of Law, where he was Note and Comment Editor of the Law Review. Mr. Adler has served as a member of the Board of Governing Trustees of American Ballet Theatre, Treasurer of the Washington D.C. Bar and Secretary of the Johns Hopkins Alumni Council. Shownotes: Government agencies tend to use moments of shock in the boom and bust cycles to gain power Is all finance political? Surprised Again! – The COVID Crisis and the New Market Bubble

You know the old saying coined by Ben Franklin, “Nothing is certain except death and taxes”. Longevity science might eventually prove that death is not inevitable but for the time being it is.  As for taxes? Well, I’ve spent a lot of episodes talking about tax mitigation while you live and I know for a fact that a number of you are legally not paying income tax. (HINT: REP) But there’s another kind of punitive tax called the estate tax (aka death tax) that kicks in when you die. The death tax is sometimes also referred to as the “stupid tax” because it has been creatively dealt with by savvy estate attorneys for years. They would tell you if you died with a ton of money without this kind of planning you might have been kind of stupid. All of this stuff might seem a bit too sophisticated for your situation if you are not in the ultra high net worth crowd. After all, doesn’t that estate tax thing kick in at $25 million if you’re a married couple? Well…for now, yes. But various tax laws are changing and that amount gets cut in half in just a couple of years.  Do you think you are likely to have an estate of greater than $12.5 million ($6 million if single) by the time you die? If you listen to my podcast then there is a good chance the answer is yes. In other words, don’t think that the world of irrevocable trusts and gifting does not apply to you because you aren’t worth that much today. It’s probably a pretty good idea for you to at least know your options. Even if you believe you will never get that wealthy, there are some things that pretty much everyone should do when it comes to estate planning. These things are inexpensive and only have to be done once. Whichever camp you fall in, this week’s episode of Wealth Formula Podcast will be of interest to you as I interview my own estate planning attorney, Joe Longo. This topic might not sound sexy but I’m quite sure you will find this interview to be extremely useful and pragmatic. Make sure to tune in! Joe began the LONGO LAW GROUP, LLP on the foundation of service of clients and results. He was influenced by his father, Dominic Longo, who founded Longo Toyota at a converted gas station with a 4 car inventory and eventually built it into a 22 acre facility housing the #1 selling car dealership in the world based on customer satisfaction. When most people are looking to hire a law firm its because they need something in the legal world accomplished. Its not to get overcharged and to have your attorney stop communicating with you. This firm’s philosophy is to provide the most vigorous representation, best service, ongoing communication, and at the most competitive rates. Joe has numerous Federal and State jury and bench trials under his belt, along with his sports practice that includes arbitrations, grievances, drug suspension hearings and appeals. Over the past two plus decades Joe’s practice has included Civil Litigation (business), Criminal (both State and Federal-Tax), Probate Litigation, Sports (MLB and NBA), Asset Protection, Trust and Estate planning. His clients have ranged from publicly traded, international, corporations, professional athletes, professional sports franchises, leagues, individuals, to volunteer pro bono work for indigent clients. Along the way he has taught law at Los Angeles City College, Mission College, and Pasadena City College, and is currently an Adjunct Professor at Loyola Law School. He has sat as a Judge Pro Temp in the Los Angeles Court System. He has been a Panelist on many law panels including “USC Gould School of Law— Institute on Entertainment Law and Business”, “Loyola Sports Law Institute on Collective Bargaining & Individual Contract Negotiation In Professional Sports”, and “Negotiation For Lawyers—Lessons from Baseball Salary Arbitration Cases” Joe is also the President of Paragon Sports International, LLC (www.ParagonSportsInternational.com). Joe has attained an “AV” peer rating from Martindale Hubbell, the national directory of attorneys, indicating preeminent legal ability and the highest ethical standards. He is a member of the California Bar, the Beverly Hills Bar Association, the Los Angeles Bar Association, the Sports Lawyers Association, and The Wealth Counsel. He received his B.A. from Brown University in Rhode Island, where he was a starting Defensive Back on the Brown University Football Team in the mid 1980’s. He obtained his Law Degree from Loyola Law School in Los Angeles, CA. His charitable endeavors include sitting on the Board of Ability First.

I have been at this alternate investment game since I finished surgical residency in 2009. Luckily, since then my wins have significantly outnumbered my losses and I have made a lot more money than I ever did as a physician. But It hasn’t always been smooth sailing. The first apartment building I bought for myself in 2010 was a big flop. Why? Well, I knew how to do real estate from reading lots of books and crunching numbers, but I didn’t really know how to not get bamboozled. Let’s just say the seller in that first deal was creative with his financials and I didn’t anticipate blatant fraud while I was doing my due diligence. I should have known better than to buy in a D-class South Side Chicago neighborhood anyways. I lost $300K when I sold that building but it was a tremendous relief to get it off my hands. Sound horrible, I know. But frankly, the amount I learned by experiencing my own personal real estate horror story was priceless. Since then, I’ve never lost money on any apartment building.  When I started investing in assets as a limited partner, the skill set for success was different. Early on, I was given some reasonable advice: Only invest with those who you know, like and trust. That’s not terrible advice but what I’ve realized over the years is that it is incomplete. There is a lot more to investing than to know, like and trust the operator. For example, you may know, like and trust your brother-in-law who is starting out in real estate syndication. But that doesn’t mean he knows how to operate a multimillion-dollar asset. He may give it his best shot but that doesn’t make him competent and certainly does not put your investment in good hands. Know, like and trust is only useful to the extent that it should give you some confidence that someone is not trying to rob you (on purpose). After that, you have to do your own research. Ronald Reagan used to say, “Trust…but verify”. You can trust the operator but you still need to verify their competence. Ask a lot of questions. Look at the qualifications of the team to carry out the business plan put forth and be cognizant of the operator’s track record. If you do all of these things, you will minimize your risk of disappointment. I say minimize because there are no guarantees in the world of investing. In competent hands, real estate will provide a profitable outcome most of the time. But not always. So what is an alternative investor to do? The task of vetting where you deploy your assets may seem both critically important and daunting. So, what are your options? Well, you could give up and invest in Vanguard ETFs. If you do that, you might be able to preserve your wealth but you aren’t going to get wealthy. Alternatives create wealth on a regular basis. So what else can you do to maximize your chances of success? I have said this before but will say it again—there is great power in collective intelligence—especially if people bring different skill sets to the table. At the very least, creating such a tribe of like-minded individuals will help to pool the right questions to ask about any opportunity. So how do you put together a tribe? After all, chances are that your friends and family are not into this stuff. If they are, you are all set. Otherwise, you may need to go to some in-person meetings like our Wealth Formula Events and network with others of like mind. The concept of tribe is really important in alternative investing. My guest on this week’s Wealth Formula Podcast created a business to help various tribes to deploy capital in an efficient way. Make sure to listen in for some ideas on how you and your tribe could use these tools! Tribevest CEO, Travis Smith, dreamed out loud about building generational wealth and forever altering our family’s financial trajectory. However, he’d never been introduced to ways of private investing, and wealth-building seemed out of reach. Travis and his brothers realized that they could overcome our lack of experience and know-how if we worked together. But they had to confront the more obvious and immediate barrier — we lacked the capital required to break into wealth-building, freedom investments. By forming and funding an Investor Tribe, they unlocked a new future and the secrets of the wealthy. Shownotes: TribeVest.com/wf and use the code “BUCK50”