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So the big question is this, what would you do if money didn’t matter? So you had millions in your bank account, what would you focus on? Would you spend more time with your family, with your wife, with your kids? Take family vacations.
Would you pursue your gifts and talents and dreams? Serve your local community, teach others, serve your church. You see if what you would do if money didn’t matter, it was pursuing your gifts and talents and dreams to serve others, and that is probably what you should be doing.
The problem is most people are in the rat race, living five inches in front of their face with no time to pursue what they were born to do. That is the problem, and the solution is to develop enough passive income to replace your working income so you can quit your job and be free to live your life the way you were created to.
That is a solution and this podcast will show you how…
What’s up guys? Welcome to another awesome episode of Cash Flow Dad Life. We are on episode 48 and today we’re going to talk about how a dream became a multimillion dollar real estate investment. It’s been a pretty bittersweet weekend for me because, you know, I’m an LSU fan…
So that’s bitter…
I’m also a Saints fan, so that’s sweet. For those of you are back listening to episodes…
This was the weekend that Lsu absolutely got spanked by Alabama. Took my rv up there with a couple of guys. It was a great time except for the game.
The game was the worst, but I’ve got to tell you guys, if you ever have a chance to tailgate and go to a game in an RV, it is like the best feeling in the world, especially if you lose because there’s nothing worse than driving back in traffic after you’ve lost.
But when you’ve got an Rv and you’re staying there, you’re like, “Eh, I can just take my time. I’m staying here on, on campus. I don’t have to sit in traffic and soak the whole way back. I can just go back and eat some Gumbo, and grill some food and just have a good time for the rest of the night.”
So at any rate, it has been bittersweet because of that…
But also because on Friday you guys have heard my story of how I started. I had a dream to open up an indoor sports arena, will Friday I sold the majority of it. And it’s, it’s a bittersweet memory.
It’s actually really awesome. You know, it’s, it is a little different feeling that, you know, I don’t, I don’t control it anymore. But I feel really good about selling it and feel really good about the guy taking over.
He’s got a lot of skin in the game and he’s going to do a great job managing it. And I haven’t been managing it in the past four years. I’ve been trying to passively manage it.
I wanted it to become a passive income investment, but realize there’s no way for me to do that with so many employees because employees, you just, you have to manage employees and you have to support them.
And I just wasn’t giving them the support that they needed and so it needs to have like an active manager with skin in the game.
So this is actually the perfect scenario because I can become a passive owner and, uh, let somebody else have a little more of a piece of the pie, but to where I don’t have to spend four hours a week or one hour a week or any hours a week on managing the day to day operations.
Now it’s truly a passive income investment, which is awesome…
But I figured since it was sold on Friday, sold to another company that I have a portion of equity in, I’d kind of tell the story and all the learning lessons that I got and basically how I took this dream and created a multimillion dollar real estate investment out of it.
So my hope is by going through this story and the learning lessons and being able to follow along with me on this journey, um, that you’ll be able to extract some things from this that you could use in your own life.
So as you know, when I first started it was driving across the causeway and just thinking what would I do if money didn’t matter?
And then I thought, you know, indoor sports arena would be awesome. So when I finally, uh, got down to creating an action plan, I was like, okay, I’ve got no money, I’ve got no experience other than I like soccer and I like football, I’ve got no experience running an actual facility.
Then I, you know, obviously there wasn’t a whole lot for me to offer anybody but I knew a very important lesson and this is if you are in the same place and you’re trying to go out and figure things out on your own, this is what I would recommend to you.
There was a quote that I heard, I think it was socrates and it was a, and I’m probably butchering it, but it’s something along the lines of this is socrates or aristotle. Maybe I’m combining quotes, but it’s, I’m wise because I know that I don’t know.
So if you’re approaching any opportunity out there, the first thing that you need to realize is that you don’t know everything.
I can tell you in my life when I get cocky and I start thinking that I know more than I do or that I can figure it out on my own, you know, that’s where I really get burnt.
There are. So the beauty of the world that we live in is that you don’t have to figure things out on your own. And, and there’s blueprints out there already about this. Actually, in my book, I talk about this. I’m trusting the blueprint.
If you want to be successful in the stock market, if you want to be successful in real estate, if you want to be successful with an indoor sports arena, whatever it is, there’s already blueprints out there. You don’t have to recreate the airplane, okay? There’s a blueprint to build an airplane. You don’t have to recreate it. So the first thing that I did, I was like, I know that I don’t know.
I need to hire a consultant. And again, I didn’t have any money, but I was like, whatever, you know, I’m, I’m just going to look into it and see what happens.
And that’s another lesson to a lot of people. They just stopped at that first barrier or whatever. I don’t know, you know, I don’t have any money, so why even bother? But if you just pursue something, things end up playing out, right? They end up, you find out ways to make it work.
So, uh, I just started pursuing it. I pulled up Google, I started searching indoor sports arena as I found this guy. I called him, he wasn’t interested in helping me. Then I found like this bigger group called USindoor.com. And then I clicked on that and they have a panel of consultants.
I called all of them. And um, and I just said, hey, look, I’m in the embryonic phase. This is just an idea right now. And I know that I need a consultant, you know, what do you do and how can you help me?
So I interviewed all these consultants and there was this guy that I really liked. The problem was that it costs $25,000, so I had a piecemeal, so I was like alright, I don’t have any money but what I do have is a little equity in my house.
So I went and I got a home equity line of credit and I didn’t pay them all at once though because he had it broken up into like, Hey, initial consultation costs this much business plan costs this much.
So I was like, well maybe I’ll pay him as I go, but the most important thing right now is for me to create a business plan and have that initial consultation so I know what I’m talking about.
So I ended up taking out a second mortgage and then I, I had $5,000 that I had to pay them up front to create the business plan and all that stuff.
So I paid them. That money started going out and started giving people the business plan and gave the banks the business plan, gave investors the business plan, got a Lotta knows about that.
And what I realized was that I don’t have any leverage, you know, because at that time I was a former high school teacher and a copier sales person and I was doing a little bit of real estate as a real estate agent and I had one or two investment properties, but that wasn’t something that like anybody would want to invest in because it was just, you know, small peanuts.
And when you’re talking about a multimillion dollar arena, you know, that doesn’t give anybody a level of comfort. So I was like, I’ve got to have something that I’m, I’ve got to have something to start with in order to get people to want to invest in me.
So actually part of the business plan was this program called soccer tots and it was a, um, it was like a tot sports development thing. And the beauty of it is that you didn’t need the indoor arena to run it. But you could go to alternate locations.
Like you could go to churches and parks and rec departments and gyms and you could get people to basically pay them a percentage of revenue.
I paid him like 20 slash 25 percentage of revenue, the parks were harder to work with and then you can have people register for these tots classes where you teach kids soccer. So my consultant actually owned the franchise at the time he owned this soccer tots franchise.
And so I was like, “Hey look, you know, what is it going to take, you know, can we work something out because I really need leverage.”
I need to be able to go to people and say I own the daytime business, have an indoor sports arena. And so we worked it out. He financed the purchase of the licensing agreement for the, uh, for the program for me.
And so I flew up to Spokane, Washington got trained and right away just went into it and started learning how to create this business.
And I created a cash flowing business. And at the same time, I’m still going around. I’m looking for different real estate locations. I’m looking to rent, um, I’m looking for investors to see if we can buy.
And what ended up happening is I was putting the soccer tots as a marketing thing, I was putting it into a, a parish fair because that’s one of the marketing things like you can go to like different parish fairs and um, and you know, like set up a game, like kick the soccer cones over for the kids and then you give people brochures.
So I called the chairman of this fair and I said, Hey, I’ve got this, you know, this thing called soccer tots. I want to set up a booth at the fair and he goes, tell me about this soccer tots. And I said, well, it’s the, um, it’s the indoor, it’s, it’s, uh, it’s the daytime business for an indoor sports arena.
And eventually I’m looking to build an indoor sports arena.
And so I’m trying to get this program launched at first. And so he’s like, well, that’s interesting because my partner and I, we just, um, we just hired a consultant to help us with building an indoor sports arena in this area. And so at the time I thought he might be competition.
And so I said, well, you know, good luck to you, I’ve got a consultant as well, you know, and I’ve got the daytime business already set up, I’ve got the local, you know, licensing agreement for it here in this area.
So, you know, it’s going to be a good, I guess it would be a race to the finish. And all I had was the daytime business. I didn’t have any money, I didn’t have any capital. And he was like, “Well, hold on a second, why don’t we meet and um, and, and let’s talk about it.”
So we ended up meeting and they ended up saying, “Well, look, you know, both of us have jobs, but none of us have the ability to run this arena. We don’t have the daytime business like you said, like you have. So why don’t we partner together?”
So the three of us partnered together and we ended up, you know, between the three of us now, I had a lot of leverage because it wasn’t just me, this 20 something year old kid with a, with a business plan.
It was me with a business plan with a, um, with an already cash flowing business, uh, with a couple older guys that were my business partners. And so between the three of us, we started raising capital, but we couldn’t raise it.
I think we needed to raise like $400,000 in order to actually build the arena, but we couldn’t raise that much or we just stopped racing once.
We had like $200,000. It’s something, I don’t remember the exact amount that we raised, but it was between like 100,000 and $200,000 and we ended up trying to build the real estate. But somebody came, another entity came in who was also a soccer enthusiasts and, and he happened to also be a builder and he was like, “Hey, why don’t I build this to suit for you guys?”
Now this was a huge mistake in retrospect to not continue to go after funding the real estate.
We were having some roadblocks…
So we actually just went after the first option that was going to get this accomplished. Now in my experience, raising $200,000 is no different than raising $400,000. You just have to keep on looking, keep on presenting the opportunity.
If you got $200,000 out of people, you can get an extra $400,000. So I continued instead of continuing to raise money for so that we could own the real estate and the business, we just got the business.
Now, this again was a huge mistake because we were paying something like $17,000 a month for rent and we had to pay the triple net, the taxes, the insurance, all that stuff.
You know, we had everything on the building, the utilities and so I was about a couple of years into it and you know, we’re running the business and it was, the cash flow wasn’t all that great for the business because we were paying most of it to the landlord.
I mean, it was, it was great for him, you know, and I don’t begrudge him at all. I mean, he made the project happen for us and that was going rent rates, you know, it was just, it was a reasonable return on his money, but we’re sitting here just getting smoked and we’re seeing the capital go down and go down or it’s flailing, it goes up.
And so while I’m struggling to get this business off the ground now most businesses, they, you know, they say you lose money the first year, you break it even the second year and then you make money the third year, I think that’s changed a little bit.
I think it’s more like you lose money the first two years you breakeven the next two years and by year five we’re making money. So you have to have cash flow prepared for any business that you start.
And it’s different by industry. Like restaurants is way harder than that as well. So I’m. So I’m like trying to increase the programming, increase the revenue of the business.
And something interesting happened because we built in this complex that wasn’t totally developed. There was land on both sides of our building after we built it.
So I got this sports performance group, this guy already had like 180 people, and I, we had talked and he was going to come over from an APP, like a gym to my athletic facility was more conducive to the training of the athletes to be on an actual athletic field.
The problem is he did, he needed more space so we need an outdoor space. So what I did was I called the guy next door and I said, hey listen, we need some outdoor space, you know, we’re just getting started.
Can you help us out, you know, that right now it’s just a lot and all we need is grass. Can we just sought it for you, ensure you on the lot, you know, give you insurance and uh, you know, just keep them for you. Worst case scenario, it just looks like an improved property and you can sell it.
And he was like, yeah, that’s fine. I mean all you’re going to do is cut the grass, make sure that I’m sure from it and put sod down. So that’s what we did. We put sod down.
Well then about a year later, this is great, you know, and we’re using this outdoor field for not only our sports performance, but we’re also using for our NFL youth flag football league for a place to practice because now the facility is filling up and we’re losing, you know, we need a place for them to practice.
We’re getting complaints from customers because it was like, hey, there’s no place for us to practice. Why would you have as join a league? And there’s, there’s no practice time and the facility is getting booked.
So we’re like, all right, obviously we need this outdoor space now because it’s a main part of our nfl youth football league and our sports performance program.
And so about a year later the guy strong arms us and he’s like, “You know, you’ve got to buy this or you got to get off.” And so at that point we went to our, um, our landlord and we’re like, “Look, you know, can we don’t have any money to buy this, can you buy this?”
And we’ll just pay rent on this.
So he ended up buying it, you know, and we started paying him a little more rent. So at this point is kind of like “We’re getting this business journey, this business is doing great, but it’s kind of just breaking even.”
And the only person who’s really benefiting is the landlord. He was just getting more rent, more rent, paying down his note, and we’re not really developing any equity in the business. In the meantime, I was listening to this book by Robert Kiyosaki, Rich Dad, poor dad.
He tells a story about Ray Kroc and Ray Kroc or is the, you know, the founder of Mcdonald’s and I guess he was giving a talk at some prestigious schools like Harvard or something. He was giving a talk at their, at their business graduation.
And afterwards they all went out to beers and he said to this group of recent graduates, he goes, hey, does anybody know what business I’m in?
And they all kind of laughed. And they’re like, well, of course, Ray, you’re in the burger business. And he said, wrong. I’m in the real estate business and they’re all surprised.
He’s like, Yeah, I basically have my business purchase my real estate for me and today to date, I think that Mcdonald’s is the second largest largest owner of property in the world, only second to the Catholic Church who’s been around for like 2000 years.
Right? So Mcdonald’s owns all of its real estate and that has been McDonald’s business. It’s a real estate business, not a burger business. And that concept blew my mind. So I was like, oh my gosh, I’ve been totally made a mistake.
No wonder we’re getting crushed. And so I started looking into. I started getting into creative financing and figuring out ways. I just put my brain to work and I was like, we have got to purchase this property some sort of way and so I’m looking at it, I’m looking at the numbers and we had a couple of barriers.
One is the guy built it, it was like one point 7 million when it started and after the appreciated value of it, three years later we convinced them to sell it to us for $2,000,000. So he made $300,000 in three years. Like $100,000 a year, plus he was cash flowing on that note.
Plus he was getting the amortization paid down on it. He made out like a bandit and good for him. I mean he was a real estate investor and he was smart and he did all the right things.
But we were breaking even every single year we could have been paying down that note and that was the second big realization that I had is because you have such a high loan.
Like for example, if you’ve got 100,000 dollar loan and your interest rate is five percent, you’re maybe you know you’re growing in net worth, maybe 100 200 bucks a month and what you’re paying down on the loan.
But if you’ve got a million dollar loan, your net worth is growing like four thousand five thousand dollars a month by paying down the loan. So the effort to purchase 100,000 dollar house is the same as purchasing a million dollar house or a piece of real estate.
And if the cash flow is there and it makes good business sense, you’re better off purchasing. The higher dollar one, because effort is the same, but the net worth grows bigger.
So that’s one of the things I realized in this deal and when I was looking at it and I started looking at loan financing, even purchasing it, uh, it at $2,000,000, our note was going to be like $9,000 a month instead of 18,017, $18,000 a month.
So right out of the gate we were saving like an extra $10,000 per month, 120 grand a year by owning the real estate. Not only that, but now the business is paying the real estate down.
So when we first started negotiating, the outdoor lot was separate and this is how it just became an amazing real estate investment when all of a sudden done by the time I sold it on Friday it, the guy said, look, after I say the building, I’ve got no use for this outdoor lot.
And we’re like, look, you know, it’s already, you know, $300,000 more than what you built it for one point seven. We can’t afford the lot.
So if we can work out a creative fun, and I learned about creative financing at this time, if we can work out a creative finance deal on this lot, then we’ll purchase you purchase it from you within two years.
So we ended up buying the building, but the lot next store, what I ended up doing was a lease option. So basically I didn’t put any money down on the lot by saying I will pay you this lease rate every single month, but a hundred percent of it needs to go towards the purchase price.
What ended up happening is after two years we had something like $300,000 that we had paid in equity on this lot. And then we went to the bank and instead of coming out of pocket with money, we said, “Hey, we’ve got this equity in this lot, next door, can we refinance it?”
So we ended up refinancing it all together and paying no more per month by doing so. So at the end of the day we ended up with this, uh, the building that prays for two point 7 million and we only owed less than $2,000,000 on it.
And so that was just a course of three years where we were able to generate, um, almost a million dollars in equity in and by just being smart and owning the real estate and letting the business pay it down so, you know, I’m not going to disclose the exact details, but the payout on a when we closed was actually really, really great.
So I feel so good about that situation…
That’s how a dream that started off with me taking a secondary mortgage to pay for a consultant, learning the concepts of leveraged, learning how to, you know, get private money. Lenders learning how to creatively finance purchases, learning just the, the metrics and putting the numbers together on what it would be like to own something instead of rent.
Something made this an incredible investment at the end of it. And it’s still not over. It’s still blown and going. So I’m excited to see what it does in the future.
But you know, I just want to share with you guys that journey because you know, a lot of you might be in a place where you’re starting out and maybe you’re looking to start a new business or you’re looking to start with real estate guys.
There is no more important thing right now than to know that you don’t know.
Start Educating Yourself, get books, get mentorship programs.
If you haven’t gotten my book yet, go to cashflowdadlife.com/7. And you can get the seven day real estate survival blueprint. How to create $10,000 out of nothing in less than a month.
Get Mentors, get consultants. Just figure it out.
Just continued to pursue it and make it happen. There’s a blueprint that’s already out there for it. Trust the blueprint and buy the real estate.
That’s my advice to you because you get so many exit strategies and you’ve got so many opportunities to grow a tremendous amount of wealth by buying the real estate. Thanks for listening guys. And until next time, I will see you later.
Thanks for listening. Please remember to rate and subscribe. You’re going to want to listen to every episode as soon as it comes out. It hasn’t been an idea or strategy that can literally change your life.
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