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PODCAST EDUCATION

3 Ways to Increase Your Return on Life

Episode 048

John Larson and the Real Estate Cowboys talk passive income real estate investing.

Hear new episodes every Sunday morning at 8 a.m. The Cowboys talk about the value of “Return on Life” over “Return on Investment.” What do you value more? Which should you value more?

Keep the #CowboyCoffee hot while listening to John, and the Cowboys talk about how to #BeACowboy and earn passive income in real estate.

Episode Transcript

Keith Weinhold: Hey, this is Keith Weinhold from the Get Rich Education podcast. You are listening to my friend John Larson and the Real Estate Cowboys. Don’t quit your daydream. 

Robert Helms: Hey everybody, it’s Robert Helms, host of the Real Estate Guys radio show, and you are listening to the Real Estate Cowboys. 

Announcer: Have you thought about becoming financially free through real estate investing, but don’t have the time or knowledge to get started? Welcome to the Real Estate Cowboys podcast. Each week we discuss passive income investment opportunities in the red hot Texas market. John Larson and the Real Estate Cowboys will show you how to leverage their team to build wealth in real estate through passive investment opportunities. And now here’s John. 

John Larson: Hello, hello and welcome back to another edition of the Real Estate Cowboys podcast. This is your host, John Larson. So this week, if you’ve been listening to the show for some time now, you know that we talk a lot about ROL, return on life is what I call it. And so with real estate investing, you know, you can either be a passive investor or active investor. When you’re an active investor, that means that you’re going out, you’re finding deals, finding homes, finding apartment complex, multifamily deals, commercial deals, whatever it may be. You’re actively looking for these deals, you’re managing the rehab, making sure the rehab gets done properly. And in some cases, maybe even managing the property yourself, that isn’t anything but passive, right? And with me, that, that just tells me that your return on life isn’t as great, right? Because now this has become a job. 

Although you can make money in real estate as a job. Uh, some people, you know, your doctors, lawyers, business owners, whatever it may be, and real estate is maybe a passion of yours, but it’s not your day to day job. And so if you’re trying to balance your normal job and a family and active real estate investing, it can get, you know, really cumbersome, which is why we talk a lot about ROL return on life. And that’s leveraging other groups out there in America who have access to deals and basically do everything for you. That’s where, you know, turnkey providers have popped up where they, uh, you know, find single family homes, good opportunities, do the renovation for you and sell you the home rent ready, place a tenant and manage that property for you. It makes it about as hands-off as you can. 

Um, but you know, we talk about with single-family homes are still some risk involved, right? Even though a management company’s looking after the property, you know, there’s a lot of things that can go wrong with single-family rentals, which can also make the experience not very passive for you and can also have an effect on your return on life. So that’s why here at Real Estate Cowboys and American Real Estate Investments, we’ve really been promoting direct lending, private money lending, debt syndications, whatever you want to call it. And if you’re doing research out there, you’re seeing that direct lending and private lending is becoming more and more popular and more and more mainstream. Russ Gray from The Real Estate Guys says it best. Taking your money out of Wall Street and putting it on main street and private lending is one of the best ways that you can do that. 

And it’s, it also provides you with a very good return on life because you’re collecting double-digit returns on your money in an extremely passive manner by just taking the role of the bank. So today I just want to talk about three ways to increase your return on life and talk about some options out there that can help you supplement income, replace income, grow your retirement plan. While, you know, still doing the things that you like to do in life; being with your family. If you still, you know, like being a doctor, you could still be a doctor. You still like being a lawyer, you can still be a lawyer, practice law and make money in that field while your money is then uh, over with groups like us making a solid return for you in real estate by being a lender, right? 

And getting your money to work for you. That’s, that should be everybody’s goal. Getting to a point where their money is working for you, right? So we’re going to talk about some ways that we can get your money working for you in a passive manner and keep, you know, your return on life very high. And so I think when investors think of value, they usually think about return on investment or ROI, right? ROI Is going to be calculated using a formula. But in a true sense, ROI is nothing but numbers on a spreadsheet. There’s no true value in ROI. All you can get out of the final result is another number. If you listen to the show, we talk a lot about avoiding C class, D class properties because although the ROI may look great on paper, your ROL is going to be very low, your return on life. Because it’s going to cause you a lot of headaches and the likelihood that that property really performs for you year in and year out is very low. And I only speak on this from experience because I produced c and d class properties in the city of Detroit and other areas around the country and I’ve managed them and I’ve managed A class properties and I can tell you what: there’s a lot less problems with A class properties and high B class properties than there are with the C, low C and D class properties. Now your ROI on paper for an A or B property isn’t going to look as high as C or D property because obviously, the purchase price is more when you get into the B and A range, high B and A range, but your return on life will be better. 

It’ll be less problems. Less calls with your property manager, right? I hate seeing emails about problems with properties or clients who are having a problem with their property. You know, tenant damage to the home and moved out, just up and left. That doesn’t really give you a very solid return on life when you’re worried about your investments all the time. Which is why when I talk to my investors and we talk about you know, how important is a passive experience for you and they say very important because I’m super busy. Well, then that was where I kind of guide them into private lending because it’s very hands off. It’s just reading a PPM and deciding if it’s a good deal for you or not; sending the money over and you start collecting a return. And then when the deal’s finished you’re paid back your initial principal balance and you’re given the option to roll it into another deal and just keep it working for you. 

So if you can find someone out there that has access to good deals and will let you take the role of a lender and pay you a double-digit return on your money, take it. It’s a great way to really build, like I said, your retirement plan, your savings, your retirement savings. If you have a retirement account, an IRA or a 401k, you could self-direct those accounts, do private lending through that account and these dividends are going to come back to you tax-free or tax-deferred in the form of double-digit returns. It’s a beautiful, beautiful thing. Return on life has to do with using money to add value to life to enhance the actual quality of life. And at the end of the day, the way you’re able to live is more indicative of success than how much money you’ve been able to squirrel away. 

And while money plays a key part, the abstract formula of return on life is not the final result. Money is not the goal with return on life. So let’s discuss what some of the goals are in terms of return on life and how you can increase your return on life. And the first thing would be closer to personal relationships. Many studies have shown links between close personal relationships and a better quality of life. The University of North Carolina at Chapel Hill reports that social networks ranked just as high in importance as diet and exercise. Loneliness has been shown to be a factor in an early demise. An OSU study found that improved relationships among teachers, students and parents did more to improve grades in school in Michigan, then an injection of money. It’s clear that close personal relationships add to life quality and longevity. And so when you invest with an eye towards ROL, you gain the time to develop close personal relationships with family and friends, right? 

If you’re investing in deals that are truly passive, that gives you more time to do other things. You gain the time to spend weekends cheering your kids from the sidelines of their favorite sport. You gain time to attend parent-teacher conferences to be more involved with your child’s academic process. You gain the ability to take a day off from work on a snow day and spend it in the back yard making snowmen, whatever it may be. The point I’m getting at is by investing in the right opportunities, you can then free up time to build closer relationships with your spouse, your children, your friends, your coworkers, okay? And that will result in making you money. It’s still the stress, the time. It should be that passive up at night. You shouldn’t be worried about it from day to day. You shouldn’t be on hour-long phones calls with your property manager, talking about how you’re going to get your property back on track after you went through an eviction and it was broken into and uh, your HVAC was stolen and copper piping was stolen and so on and so forth. 

That does not translate to a good quality of life for me, okay? Another thing. I mean going into it, what we just said, you know, hearing about bad things going on with your property, you getting the impression that your investment is going upside down can cause a lot of stress in your life. By factoring in ROL, when you do investment or get involved with an investment, you can really limit the stress in your life. Stress has been called the epidemic of the 21st century. Our forebearers surely experienced stress, but perhaps it wasn’t so widespread or as relentless as it is now. Stress leads to an array of negative consequences including chronic headaches, migraines, impaired memory function, reduced fertility, depression, and many more things. The less stress you have in your life, the higher the quality of life you have, which means the higher return on life, okay? 

So don’t get involved with an investment that you know is going to bring a lot of stress into your life. Not if you want a passive experience. If you’re looking for something like that and you know what you’re getting yourself into, go for it. But if you can’t deal with any more added stress in your life, don’t go buy a bunch of C and B class properties. Don’t go do a private money lending deal that’s promising you 15, 16 17% when a project that’s outside the United States that has a very low likelihood of being successful? You know, don’t go get involved in an investment in a market that you know, and that history has shown us that in down economic times that economy collapses in that market because you’re going to end up having a bad experience. Okay? You want to look to markets that are thriving, markets that are going to set you up for success, markets that are going to set your sponsor up, your turnkey provider, whoever it is, set them up for success to get you the return that was promised and get your initial principal sent back to you. Okay? So you can go do another deal with it. That would be my number one piece of advice for everybody out there listening to the show. It’s not all about the dollars, okay? The word passive is thrown around way too loosely in this space and you think you’re getting involved in a passive situation, but really all you’re doing is signing up for another job. So if you contact somebody in Memphis to buy turnkey properties and they’re C and D class and they start their sales pitch with, well sir, this isn’t going to be very passive for you and are you ready to sign up for a second job? You’re probably going to say no. Right? So just be careful with that and trust me, C and D class portfolios, even if they’re managed by someone else but not in the right market, are going to turn into a job for you as well. 

The third thing that I have found that really increases your ROL are more experiences. A study conducted at San Francisco State University, researchers demonstrated that experiences lead to more happiness and feelings of self-fulfillment. These findings support an extension of basic need theory. Where purchases that increase psychological needs satisfaction will produce the greatest well-being. Ryan Howell and assistant professor of psychology at San Francisco State University said this, “When you focus on creating positive experiences for you and your family through the return on life concept, everyone benefits.” You have the chance to bond with your partner and your children through shared experiences. You create lasting memories that can be more, that can be enjoyed again and again. You learn more about yourself and your loved ones as you encounter new environments, cultures, and challenges. This basically tells me, vacations, spending more time with your family, going to the zoo on the weekend instead of going and checking on your real estate flips, your single family flips, right? 

The fact that you know, if you’re in a really passive situation with a good team, the fact that you have that understanding that your money’s working for you and you’re not lifting a finger and your money’s with the right people. It’s such a gratifying feeling, it’s such a freeing feeling. So just be very, very aware when investing in certain deals. Think about your livelihood. Think about your life. Think about how this investment may change your life. Is it going to change it for the better? Is it going to kind of remain in the middle, or is there a potential that it could change it for the worse? You know, and you got to weigh those things out. And like I said, it’s not all about the money. I’ll take a 6% return with no headache, over a 15% return with headaches, all day long. So think about. Okay, we’re going to take a quick commercial break and when we get back, I’m going to discuss three ways to increase your return on life. 

Welcome back from the commercial break. This is your host, John Larson. This week we are discussing ROI versus ROL, return on life. And so now I want to discuss three ways to increase your return on life. And it’s all well and good to talk about leading a stress-free life filled with friends and loved ones, relaxation and entertainment. A few people can sit back and do absolutely nothing to earn money. The secret is to combine your investments with the goals of return on life. Here are three investment ideas that enable you to simultaneously make money and increase your return on life, and these are opportunities that we talk about weekly on the Real Estate Cowboys. 

I believe that the number one way to invest and really increase or enhance your return on life right now when it comes to real estate is to look at private money lending. It’s a passive investment opportunity to make your money work for you. With private lending, you can act as the bank, lending money to developers or companies that use investors’ cash to build, develop, buy needed equipment. At AREI, American Real Estate Investments, some private lending projects pay up to 12% returns. There’s actually an offering that we have right now that pays 12%. All you have to do is provide the funding and then sit back and collect your interest payments each month. At the end of the term, typically it’s going to be 12 to 18 months, maybe in some cases 24, you get your principal back, okay? This investment offers a very high return on life because the investor doesn’t play an active role in the project. You’re just taking the role of the bank, and you also have first lien position on the project ,too. So if something does go wrong, you hold title to that property. You can foreclose and take ownership of that property, right? And we all know with real estate it never goes to zero, okay? But with the stock market and other things out there, you never know what can happen. We’ve seen so many things in the past where people’s entire savings and retirement have been wiped out. It’s not going to happen with real estate, okay. If you hold first lien position, you know the value of that property will never go to zero, you’ll at least recoup some of your funds, okay. 

Another way would be through turnkey rentals. We kind of discussed that, right? Going the turnkey route takes a lot of the heavy lifting out of investing in real estate and single family homes and building rental portfolios and managing those rental portfolios. But we also discussed that, you know, it’s really tough to find a solid yield in today’s market when you’re trying to buy safer properties, nicer properties in better neighborhoods that you know are going to consistently attract good tenants. You know, which is forcing a lot of people to have to kind of go outside of their comfort zone and invest in these C to low C to D properties in inner city areas around the country that just have more volatile markets and you know, can possibly set you up for failure. 

Especially coming into another recession, which I do believe is coming up in the near future, okay? But I will say that turkey rentals are far better than fixing and flipping homes or fixing and holding yourself. When you invest in turnkey single-family rentals, you reap the benefits of the single-family home investment without the hassles of being a hands-on landlord. Turnkey rentals come to the investor ready to rent. In some cases, the tenant’s already in place. Property manager handles the day to day operations, leaving an investor free to enjoy an increased return on life. But as I said, it can come with more problems, more issues, whereas private lending is very, very hands off. 

The third thing I’d want to mention is vacation rentals. And as you know, we do stuff in Belize as well, Southern Belize, Placencia and we have vacation homes, private islands, um, which are now all sold out, but we’re looking for other opportunities. There’s a lot of opportunity down in Belize related to being able to invest in Hawaii in the 1950s. That’s what we believe. We have the opportunity in Belize, we believe we have the same type of opportunity. And so vacation rentals have the potential to offer a rare combination of a passive landlord experience with the bonus of a free vacation experience for you and your loved ones. So I have friends that have already been looking in the Carolinas and Florida for vacation rentals that they can use when they want, but when they don’t want to use them, they can rent them out on AirBnB and all the other sites that are out there, VRBO, uh, for vacation rentals. And you can make quite a bit of money off of them somewhat passively, but then also you get the opportunity to use the property when you would like to. So there’s really nothing better than that, right? And it’s obviously when you’re not using it, you don’t want to just have it sit there and collect dust and not make you any money. So vacation rentals is another great way to really increase your return on life because you get to also enjoy that vacation rental with your family and friends. And so when you invest in a fractional ownership turnkey rental, like we have in Belize, you get a high return on investment plus a high return on life. This kind of passive investment affords you the opportunity to maximize all three of the opportunities that we just mentioned earlier in the show that results in a higher ROL. You build closer personal relationships, de-stress on a vacation and you know, more experiences with your family and friends. So I think that that’s a great, great way to really increase your ROL while also bringing in some ROI. 

So I hope you liked the show this week. Like I said, we talk a lot about return on life. I think it’s very, very important for everyone to live the most fulfilled life that they can. And so I just wanted to provide a little guidance on that when it comes to your investment decisions as well. But, uh, if you’re interested in taking advantage of any of the three options that I just mentioned, you can always go to our websites, RealEstateCowboysDFW.com or AREIUSA.com. There’s more information about private lending, turnkey rentals and vacation rentals on these sites. Um, you can go to a RealEstateCowboysDFW.com to listen to past episodes or subscribe to us on iTunes, all the episodes are housed there as well. So yeah, if you’d like more information on these opportunities or to find out how you can get involved in these opportunities. 

We’ve got a great private lending opportunity going right now. That’s a year term that pays 12% fixed on your investment. So just contact us and a member of our team will reach out to discuss the opportunity that we currently have available. So very, very excited about our private lending program. And we still have some turnkey rentals available. I’m not doing as many as I used to. I’ve just kind of taking a wait and see approach right now with the market, especially out here in DFW. And then if you’d also like to explore more opportunities with Belize, we do tours down there every month. You could go on one of our Discover Belize tours and check out Placentia and see what we have available. Just opt into one of our websites and let us know that that’s what you’re interested in and we’ll put you in touch with the necessary party to get that trip set up for you. But, uh, that’s all the time that we have this week. Hope you enjoyed the episode and we’ll be back next week with another great episode and more great content on the Real Estate Cowboys. This is your host, John Larson signing off and always remember, what’s your return on life? Have a great weekend. 

Announcer: All opinions expressed by the host of the show are the opinions of American Real Estate Investments LLC and do not reflect the opinions of guests or sponsors. No personal or professional advice on this program should be considered an endorsement to follow a real estate financing or investment strategy. Before acting on any information, seek advice from your financial tax, mortgage or real estate advisor, as the information is not guaranteed and investment strategies have the potential for profit or loss.