The Journey From Dinner Table Deals to Financial Freedom – Shannon Robnett

Tim Lyons (00:00):

There’s so many people that don’t understand what’s available to them, how it works, and this is why we’re largely here, is to get the word out that there’s a lot going on besides Wall Street. Wall Street certainly has its place, I think, but there’s other things going on.

Greg Lyons (00:24):

Welcome to the Passive Income Brothers podcast.

Tim Lyons (00:27):

Here we take the fear out of real estate investing using real life stories of everyday successful investors. Let’s go. Welcome to another episode of the Passive Income Brothers podcast. My name is Tim Lyons, and today I’m joined by two rock stars, one of which being my brother Greg. How you doing today, buddy?

Greg Lyons (00:45):

Tim, the intro never gets old. I do appreciate that. And I’m really excited today because we’re going back to my old stomping grounds. We’re heading back to Boise, Idaho, where I was a resident for three years and it was a great stop and met a lot of great people up to and including our guests today, and just really excited to revisit the roots of Boise, Idaho.

Tim Lyons (01:11):

Greg, speaking of Boise, I’m going to throw in a quick story and I hope our guests can hang with us for just one second. I’m in Boise for Greg’s wedding. It is probably the hottest summer on record, but it’s a dry heat. Everybody kept on saying out in Boise, it’s not that bad. It’s a dry heat. I’m walking out of the hotel, I want to cross the street and being the New Yorker that I am, I want to cross midway in the block. But I said, you know what? I’m visiting Boise. Let me go to the stoplight and cross like a human being. The cars had the green light, Greg, and it was a pretty busy road, and all 17 cars jammed on their brakes because they saw me standing there waiting to cross, and they were basically waving me on and I was going, go, go, man. What are you doing? And I finally had to take a step back and say, Tim, you’re not in New York City. Take a deep breath. And I crossed the street. So a totally different animal.

Greg Lyons (02:04):

And you’re right, typically it’s a game of Frogger in New York where people are trying to mow you down for 500 points. But at Boise it was just such a great place and we’re just so lucky to have Shannon on today.

Tim Lyons (02:18):

Yeah. Without further ado, I want to take everybody back one second and say Shannon’s somebody that I have been following for, I dunno, a couple of years now on social media, on LinkedIn especially, and actually had the opportunity to meet in January. So without further ado, let’s bring in Shannon Robnett. How you doing, Shannon?

Shannon Robnett (02:36):

Hey, thanks guys. And Tim, in defense of Boise drivers, for those of you that just watched your podcast, you’re a guy of some size, so they may have just been protecting the front end of their car.

Tim Lyons (02:51):

Shannon, I hope you’re talking about the height and not the weight. Yeah, of course.

Shannon Robnett (02:54):

Course. You’re definitely somebody I look up to.

Tim Lyons (03:01):

Well, thank you. So Shannon and I had the opportunity to go to the Real Estate Guys goals conference, which if nobody knows about the real estate guys, I highly recommend you drop everything or just pick up a pencil and a piece of paper and write down the real estate radio guys. They have an incredible podcast. They have a website with incredible resources, and they’re really, they built a community of folks who are all rowing in the same direction. And so if you don’t know them, you need to know them. But we went to their goals retreat in January, which is held in Lake Las Vegas. And if anybody ever has any trouble with goals or figuring out what you want to do or how to write them down or how to really go through the process, Greg doesn’t know it yet, but I already bought his ticket for the upcoming 2024 session. So Greg, it’s going to be in Dallas, but you’re already bought and paid for, so you’re coming. So it was a great time. But anyway, Shannon, why don’t you bring people back to the real estate. How did you get involved in real estate number one, and what are you working on today?

Shannon Robnett (04:06):

Well, I didn’t really have a choice. I was born into a real estate family and my mother was a third generation real estate broker. My father was a builder and later on a developer. I just kind of grew up and I’ve told this story to Robert Kiyosaki. I grew up at Port Dad’s table. My mom and dad, mom would come home. She was showing Mr. And Mrs. Smith a house and they wanted to open up a business. So they’d start talking between past the mashed potatoes and is there more of that? They would start talking about putting a real estate deal together and maybe what they could sell to generate the capital. And so my weekends and my summers were spent as an indentured servant, cleaning up job sites and learning the business, forced to learn the business. And I thought I was wanting to go in a different direction after that kind of an upbringing.

(05:03):

And so I went to college, I Boise State, and I quickly saw my brother out building houses and making in 95 without a college education, making about $48,000 a year, which back then was a lot of money. And I’m working at a coffee shop trying to scrounge together enough money to pay my car insurance. And I quickly decided that college wasn’t really going to work out for me and began my journey back into the real estate world. I started building houses, quickly realized I didn’t like homeowners, and so I stepped into the commercial world. From there, I built police stations, fire stations, city halls. I’ve done medical facilities, we’ve done schools, gymnasiums, just kind of the gamut, but a lot of industrial. Throughout my career, I watched my father retire at 50 with cashflow, and I just kind of knew that that was going to be my real estate journey.

(06:05):

And I knew that being a four merchant builder wasn’t going to do it for me. I was watching the minute I finished a building for somebody, they got to continue to make money on that building as long as they owned it. But my job was done and I had to go find something else. And so in 2001, I built my first industrial project, sanitized it, and today I still have two of those tenants in that building. All this time later, they’ve paid for the building, they’re not going anywhere. We’ve raised rents to triple what they were paying in 2001. They haven’t complained, they haven’t said anything. They still continue to pay everything involved with it. And that’s when I really knew that this is where I needed to focus. And so I continued to build for other people because I wanted to have a stream of income that would offset my expensive real estate habit. But about three years ago, we discontinued working for other people and we’re just focused on building our own projects. And we’re actually going through one final iteration where because we’ve gone outside the Boise market, we’re working with general contractors where we’re just in the development role in what we’re acquiring and building on new construction and then working with value add guys on the other side. That’s kind of our journey, my journey in a nutshell, from forced labor to wow, I actually kind of enjoy this.

Greg Lyons (07:35):

And it’s funny, sometimes the forced labor is kind of the best teacher. You could go to school and you could pay for listening to other people, but that forced labor is kind of where you really learn a lot. And I think a lot of people like you, Shannon, have that pivot to equity where they realize they’re trading their time for money. And you had a front row seat, you were building these buildings for people that were going to keep cashflow on them for a really long time. But when you discovered that equity is how you really move the needle is kind of like that aha moment. It’s like when people read Rich Dad, poor Dad, you discover you have to be an owner, you have to have a table seat at the table. And I think from there you really own the Boise market in a variety of different ways and self-storage and industrial, a couple of different things. Can you tell us how you built out the business from there and how you’ve started the Boise market then expanded outward?

Shannon Robnett (08:39):

Yeah. When I did my very first deal, I used all my own money. And when I say I used all my own money, it was $500 for an earnest money. And literally at 21 years old, that was all I had. And then I began to find opportunities and I would partner with other people and I would work with one person and they would write all the checks and I would do all the work. And we had a pretty good thing going. And I had a couple of guys that were interested in that. And as my appetite grew, I’ll call it my appetite, but as the opportunities that came to me got larger and our ability to perform on those did the last deal we did was 180 unit apartment complex with a single check writer. And I just found that that was great. But then when we were done, I had two more and he was wanting to maybe look at some different things.

(09:32):

It was a family office and they had a bunch of things on their plate. And so that was about the middle of 18 that I really understood, began to understand and began the journey of syndication. And I quickly figured out, I learned from a guy that actually used to syndicate movies, and I don’t know if you guys knew this, but you can’t finance a movie, so you actually gather all the capital to make the movie upfront. There’s no financing for it. So you syndicate that capital, you create a capital stack that’s incredibly similar to what we’re doing. And even though syndication really kind of got a shot in the arm from the Jobs Act, movie syndication has been around for years and years and years. And so my journey took that road in 18 and we’ve continued to expand from there, and it’s really allowed me the flexibility to have not only multiple projects going at the same time, but also multiple streams of where that capital comes from and who we’re involving because not all deals provide the same results. There’s some deals that we do that are purely tax advantage. There’s other deals that we do that are purely appreciation, and then there’s ones that are cashflow and finding investors a one size fits all for investors isn’t always easy. And so having multiple deals going, having multiple opportunities for people to get in where they fit, what fits their investment thesis has really been a game changer for us because it’s allowed a much larger audience to participate in whatever deal we have based on what their need is.

Tim Lyons (11:22):

Shannon, I love that. Syndication, like you said, is something that’s new because we are now registered reps of a broker dealer. So this is our world capital raising capital stacks, getting money together. It’s been around forever. People have syndicated land deals back when they were expanding out west, right, in the 18 hundreds. I mean, it’s been around forever. It’s called What You Will. But it’s funny to me that people in our little ecosystem, right, shining at the conferences we go to or the podcast we listen to, we all get it. This is second nature to us, but there’s so many people that don’t understand what’s available to them, how it works, and this is why we’re largely here, is to get the word out that there’s a lot going on besides Wall Street. Wall Street certainly has its place, I think, but there’s other things going on.

(12:12):

I just wanted to comment while I was listening to your story, Shannon, you basically were telling your story, and what I was thinking the whole time was it’s like the opening chapters of any real estate book that you can go to barnes and Noble and go get, right? You have to grow up and you say, oh, what am I going to do in life? So there’s a mindset chapter, a goals chapter, then there’s an education chapter, right? College versus what you call forced labor, right? Doing the forced labor cleanups and the job site, whatever. But getting that experience and then it’s like, what’s your investing thesis? Is it trading time for dollars or is it creating cashflow? And what does cashflow even mean and how is cashflow taxed and what are the benefits of cashflow investing versus appreciation investing? Then finally, teamwork. I mean, you talked about being in Boise and having a team there.

(13:07):

You’re building structures, you’re putting tenants in, right? It’s property management, but now you’re growing out of Boise, you’re going to other places on the other side of the country. You have the experience, you have the goals, you have all that already under your belt, and now you’re building out teams and other places. So it’s like the one-on-one book of real estate. Those are the big, I’ll save everybody the entire time. Just whatever, one-on-one book you have, just put it down now and re-listen to this podcast. So with that being said, Shannon, I think it’s very valuable if you can kind of tell us from your perspective about cashflow. You said your dad was a developer and you grew up at the poor dad table, but now he has retirement cashflow, right? So to me, being a New York City firefighter, and I was an ER nurse for about 10 years. I was the quintessential trade time for money guy. I got rid of the nursing and I’m still doing the firefighting, but I had to understand what cashflow meant. I didn’t know what it meant. I heard the word, I see people wearing shirts that say cashflow on it. I see all that. I didn’t know what it meant. So can you kind of tell the listeners, if you had to educate somebody on what is cashflow, why is it so powerful, and why is cashflow investing where we are today? Yeah, take it away.

Shannon Robnett (14:30):

And the funny thing is this book that we would write, if you jump to the end and you look at your business or you look at my business, a lot of people go, man, I could never do that. But when you look at our journey and you look at how we started and you look at the lumps we took and the detours and all this kind of stuff, you wind up here going, oh, that makes so much sense to me. But you do. You start with that idea that my father did. If I work hard enough and I continue to put away and I build this building and I pay for that building and I do this, then I can retire and the rents come to me over the mortgage. So I’ve got my expenses, I’ve got my mortgage payments, I’ve got all those things, but what’s left is my cashflow.

(15:13):

And that shows up in the mailbox every single month based on the work that we did, 10, 15, even 20 years ago. And so that’s really kind of everybody’s goal. What a lot of people don’t realize is that the single biggest inhibitor to cashflow is taxes because they’re working like Tim, like you are, you’re working at a W two, you get paid. Uncle Sam steps in and says, excuse me, Tim, let me help you with some of that. And then you go buy a property, you do a rehab to it, you sell it. Then Uncle Sam steps in again and says, excuse me, Tim, I’m going to take some more of that. And there’s all these different stops along the way. And so one of the things that we like to make sure that people understand is how do you get the tax man out of your game so that your passive income is protected and it’s yours, right?

(16:02):

Because a lot of people do just that, Tim. They look at it and they go, okay, my goal is cashflow. And they get to cashflow and they still have a tax problem because of how they set that up. Real estate, as you guys know and your listeners do because of the education you guys provide, real estate is one of the most tax effective ways to get passive income. If you were to put your money in, I don’t know, a dividend paying stock, you’re going to be receiving passive income, but you’re not going to have any depreciation to go with that. You’re not going to have any, there’s no way to protect any of that. But when you do that and build that passive income out in real estate, you get the tax protection of depreciation. There’s bonus depreciation, there’s all the expenses involved, all the way down to your cell phone and your office and all those kinds of things that become part of the business that operates the real estate, that allows it to be a much more tax friendly situation.

(17:04):

And I think a lot of people, when they really truly understand cashflow, then the next question becomes, how do I get the best cashflow for the dollars invested? And that, again, here comes real estate because of the leverage that we can get with banking and things like that. Now you’re in a situation where you have tax protection, you have leverage, you have all the things that the stock market can’t provide and provided in a way that shows up every single month. And if that tenant decides to stop paying, great, that tenant gets replaced, here comes a cashflow. It’s not a WorldCom situation where all of a sudden a company continue or ceases to exist, and then the cashflow stops type of a thing. So that’s really real estate has different facets to it, but it is definitely some of the best on the planet for sure.

Greg Lyons (17:57):

And real estate has built a lot of wealth, I mean from cashflow, but through taxes and depreciation because you keep more of what you make. And that’s just so important. It is a huge part of the equation that a lot of people miss sometimes. And I think if you listen to the mainstream media right now, we’re in August of 2023, real estate is falling on hard times. It is very mixed right now what’s going on with real estate. And a lot of times when it’s not just everyone piling money into something that is actually the time to be investing. Maybe it wasn’t a few years ago, but now maybe the time to really be looking at deals and saying, Hey, is there something out there for me to really, really take part in? So in the current climate that we’re in right now, Shannon, where are you finding success? Is it multifamily, industrial, triple net leases? Where have you kind of shifted your business a little bit now in the summer of 2023?

Shannon Robnett (19:03):

Well, it’s funny, Greg, because you hear everybody, and I did a little bit of a deep dive last week into what the mainstream media is saying, and these numbers are point something, right? I mean, we’re seeing such minor adjustments, but we’re also stepping back into my world. I mean, I did my first deal in 2001 with a 9% mortgage and thought I was slaying it, right? There used to be a phrase the whole time I grew up that was, if it’s under eight, don’t hesitate. Now, OJ and his legal team kind of changed that if the glove doesn’t fit, you must acquit. But it was that same kind of a thing that if these kind of interest rates are always what we’ve underwritten to. So while we’ve had this fairytale season of 3% and 4% interest rates, we’re still finding success in good underwriting.

(19:53):

And from there we’ve got insurances going nuts, taxes are going nuts. As we’ve seen this astronomical rise in property values over the last couple of years, taxes have gone up. They’ve become a major contributor. So we’ve always focused a heavy part of our portfolio in triple net leases. And for those of you that may or may not know, industrial leases tend to be 95% of them are triple net leases, which mean the tenant pays for all the expenses related to the building. So they pay the property taxes, they pay the insurance, they pay the lawn care, they pay the property management company, they pay for the furnace and the roof and all those kinds of things so that your rent number is truly your rent number. And the reason they do that is because really, honestly, that’s the fairest way to lock in a long-term lease because most industrial leases tend to be five to 10 years.

(20:46):

And for a landlord to try and look out there and go, Hey, 10 years from now, what are my property taxes going to be? What are my insurance going to cost? That’s not really easy to do. So what they’ve said is, let’s take the expenses and set those aside so that the Tet pays the true cost of the expense and the landlord gets the rent money. And so right now, as we see insurance companies, because of the devastation of the storms in the Gulf a couple years ago, their adjusting, adjusting insurance rates. And so landlords in multifamily are finding themselves squeezed because you can only push the tenants rent so much based on market conditions and other things. And so they’re having to bear a lot of that 40 and 50% insurance increase where with triple net, I’m seeing the same insurance increase and still sleeping like a baby at night because I cut it up and I sent it back to my tenant and I go, I don’t know how to tell you this, but this is what has happened.

(21:42):

The other thing that we do with all of our triple net leases is we have for the last 20 years, put in an and or clause when it comes to rent escalations, and our clause is you’ll have a rent escalation of 3% and or C P I. Well, last year, C P I was 8.7%. Can you imagine the surprise in January when everybody got their notice of what their new rent was going to be? And then we reminded them of section 14 of their lease and showed them where that was. And now everybody is very concerned about C P I because we’re running at about five point a half percent so far this year, but we also protect ourselves that way. So we at least stay even with inflation. And so take that back to the analogy of my dad who retired 23 years ago, 24 years ago, every year his spendable cash has essentially stayed the same because as the price of fuel has gone up, the cost of housing, the cost of a new truck, the cost of eating out, all of that’s escalated. So is his rents. And so industrial is not the sexy animal that multifamily is, but it’s a very stable horse that runs and it’s really kind of a set it and forget it type asset because you put a Tet in there, they’re in there for 10 years, you’re going to check on ’em, you’re going to take care of the building, they’re going to pay you back. Your rents are stable, but your growth is stable too. It doesn’t have the opportunity to bounce like multifamily done lately.

Tim Lyons (23:14):

Dude, I love that. If you’re driving the car, you need to pull over, get the notebook out, get the pen out, and start taking some notes, right? Because this is what I’m talking about when it comes to education and listening to podcasts and getting in the right rooms and listening to folks like Shannon, because his dad, if his dad had say, I don’t know, just call it a hundred thousand dollars in the bank, and he peeled off that money every month to live on, well, guess what? After a while, dad would have $0 in the bank, but there is an asset. There’s a cash flowing cash producing asset. The golden goose is now printing money and is printing money every year on the and or cause, which is genius, right? Because yeah, you could have a 10 year lease even we do 20 year leases sometimes with our industrial triple net leases and say, all right, it’s going to go up 3%, 4% a year, whatever it might be or, and or might go up by C P I, right?

(24:06):

So you’re really protecting yourself because at the end of the day, when dad needs to get his paycheck of cashflow, if C P I has gone up over the last three years, say 18% plus or minus a couple percentage points, well guess what? His cashflow I’m thinking is probably going up by 18% over the last three years, plus or minus a few basis points. So that’s what we’re talking about with real estate. It’s understanding how money works, it’s understanding the velocity of money, it’s understanding lending, leverage, expenses, income statements, all this stuff. And what Greg and I love to talk about, and this is what we do for a living now, is we try to connect folks who have capital to be placed to talk with guys like Shannon. We have a stable full of Shannon’s at Cityside capitals because this is what we do for a living.

(24:56):

Because there’s other ways to have your cashflow grow and not kill the golden goose, right? Because I don’t know about you, Shannon, but the way that Greg and I grew up was the accumulation model, right? Go to work, get a good job, save, save, save, save live, frugally equipped the coupons, and then maybe one day when you’re 65 or 70, you’ll be able to retire, and then you take 4% out each year and you’ll stay. You’ll keep your taxes real low, and then it’ll be great and you can hopefully outlive your money. Well, that wasn’t good enough for me. I want to live today. I’m 41 years old, I got three little girls. They don’t want to wait until I’m 65 to start living, right? We need to start doing this today. And when you start getting educated about money, about real estate, about taxes, and I just wanted to throw out a couple of resources for folks, if you have not yet read Rich Dad, poor Dad, obviously by Robert Kiyosaki, followed that up very quickly with Cashflow Quadrant, right?

(25:49):

But also by Robert Kiyosaki, and then his accountant, Tom Wheelwright, has a book called A Tax-Free Wealth. You start with that little trilogy right there, and I guarantee you, you’re ahead of 90 to 95% of the people out there because this is what we’re talking about. Also, a good friend of mine, Holly Williams, has a book Keep More, and she’s a former New York City firecracker in the marketing world. Anyway, Greg, I wanted to throw it back to you because we always talk on the show about real estate is sunshine and butterflies. It’s the way to go. And Greg, Greg, in my opinion, and Shannon probably feels the same way, but there is an underbelly towards real estate. Sometimes you can get caught, and it’s not always sunshine and butterflies. Greg, I dunno if Greg, you want to talk about the Boise Idaho development that you guys did ended up not going so well, right? Greg didn’t take his ball and go home. He regrouped and still had his success. But Greg, you want to just touch on that real quick?

Greg Lyons (26:52):

Yeah. When I did live in Boise, we were in the condo business, and this was around 2006, 2007, and we were really smart in the condo business. We built our condos in phases, phase one and phase two. So we sold out a phase one, and right around oh seven, we said, yeah, well, let’s move ahead with 35 more units or so. And that’s just before the great financial crisis. And we sold out about half of them. We had to auction a couple of them off, and we ended up selling our note, got sold from the bank. And those were tough times back then. We ended up buying the note back from the person that purchased it. So we regained control of the condos, but that’s just no way to go through real estate. So it’s getting around the right people. It is aligning yourself with the people that really know what they’re doing. You have a cautious approach to real estate. And also getting in the right kind of sector, condos, you can make a lot of money in condos, but condos are a little bit tough sometimes. And it really, really depends on what the financial landscape is.

Tim Lyons (28:14):

And Greg, what I love that story is because at the end of the day, you could have very easily said, you know what? Real estate sucks. I’m out. I tried it. I moved my family to Boise. Now we moved back to the East Coast, and I’m not doing real estate ever again. But in true entrepreneurial spirit, those are what we call education and lessons. And I’m sure Shannon could probably write another book about lessons or education in doing what he does. So I dunno, I just wanted to give everybody a little feel for, listen, this is not always up to the right, right? There’s ups, there’s downs, but you got to get in the right rooms. You got to get in with people like Shannon. Shannon, in the interest of time, I wanted to transition to the last three questions. The first question comes from a de facto mentor of ours, Jim Rohn, and what he says is that formal education will

Shannon Robnett (29:03):

But I have a phrase that I use a lot, and it’s every dollar I’ve ever made came from a mistake. And the reality is just like Greg, there’s been a lot of deals that I’ve had my head caved in out of that. While I’m licking my wounds, I put together a battle plan that makes sure that I don’t get another shot to the head and figure out how to solve that part of the real estate problem. And it comes down to living the life and doing the deals and coming away from each one of those learning something so that you can go and do it again. And just like Greg, I remember when that project broke ground, that was a big deal. I mean, it’s right as you come into the connector. It’s a beautiful project. Even today. In fact, I looked at buying one of those a couple years ago. It’s a beautiful project, but it went through some tough times. But now it’s back to, I mean, it’s still what real estate is. It’s still an asset. It has appreciated, and people need to remember that real estate is a long game, and time will heal that real estate wound and persistence will be what buys you more time.

Tim Lyons (30:12):

So Shannon, thank you for that. I wanted to transition in the interest of time to our last three questions. And the first question is from a de facto mentor of ours, Jim Rohn, and he says that a formal education will make you a living and a self-education will make you a fortune. What does that mean to you?

Shannon Robnett (30:27):

Well, I completely agree with that. I spent one semester in college and they wanted me to show up every day and do the bookwork. And I learned more and exceeded where I would be if I’d have continued that education in about 24 months. So before I would even finish that formal education, I was making more than I would’ve. And I learned how to leverage people in building a business and hiring subcontractors and all of that. But it took me a long time in that education of myself and that Jim talks about so much to really understand that I could leverage myself, I could leverage people, and I could leverage bank financing and assets. And in that growth, I’ve truly put myself in a position to get to a place that provides financial freedom for myself and my family. And it’s through that process that I’ve really taken that self-education on because I’ve steered the ship and I’ve made sure that I’m taking myself that’s going to be the most beneficial to me, not that I’ve completed the curriculum.

Greg Lyons (31:29):

Now, Shannon, two things on that. Number one, you do a wonderful job of educating people yourself and telling people how you’ve done it and showing people different ways. And number two, you are an absolute podcast veteran by when the zoom freezes a little big, you jumped right in there, you save the day. That was really, really good. I mean, that’s perfect. That’s perfect.

Shannon Robnett (31:57):

Well, sometimes you got to dump in and save New York’s finest, right? I mean,

Greg Lyons (32:02):

Well, yeah, or the sinking ship that this podcast is. You would just brilliant right there, just absolutely brilliant. But no, we have one at time.

Shannon Robnett (32:13):

Maybe we got a shot at, maybe we get a shot at being some Olympic hosts, huh?

Greg Lyons (32:17):

Well, exactly. Exactly. But let’s go to our second thought here. And our second thought is we talk to a lot of investors, passive and active, and you talk to a lot of investors as well, and sometimes we come across people that say, this is not for me. Investing in real estate is too risky. What do you say to those people?

Shannon Robnett (32:38):

Well, I mean, look, betting on your employer is the ultimate gamble. If you want to really go there, I mean, how many people walk in on a Thursday, everything’s fine, and walk in on a Friday to a box sitting on their desk? So when you look at something that is going to be able to take care of you, maybe the idea of not having that money in the bank feels risky to you. But I would say that’s ignorance, and it’s not stupidity because stupidity is doing ignorance several times, but when you don’t understand, you can look at real estate is being risky. But when you really truly understand what that means and what it can do for you, just by example, real quick, I’m getting ready to turn 50. So we had a little party on Saturday and my dad asked the question, he said, Hey, what did a guy make in 1973, if you were in the top 9% of the nation in 1973, your salary was 25,000 to $28,000 a year.

(33:44):

That was in the top 9%. So then I ran down this road because this is what I do. I pulled out my calculator and I said, let’s say that every 10 years, that value of your wage doubles. So we figured it out. If you took every dollar you would’ve made since 1973 until you retired at 65 years old, you would’ve accumulated, if you did not spend one penny of it and it doubled every 10 years, you would’ve accumulated about $1.6 million cashflow on that if you were getting about an 8% return, puts you at about $120,000 a year and left you absolutely zero to live on. So this goes back to Greg, what you were talking about, equity and the value of that and what you could have bought along the way that would’ve grown. And so my argument would be if you just relied on your labor on what you could produce, and even if you’re 20 years old and you’re starting today, I don’t think the formula would change too much that your salary today would double in 10 years. That would double in another 10. So you do that for 40 years and look at what you could do and see if that would allow you to stop working and retire and what it would allow you for a lifestyle. So when you look at risk, I think you really need to get more of a picture. And if you say real estate is risky, I would tell you that you need to educate yourself more on the other factors that are at play in your life and what risks you really have with those.

Tim Lyons (35:09):

Love that. Boom. All right. The last question comes from Robert Kiyosaki. We’ve talked about him a number of times on this show, but I love Rhett. Robert and I subscribe to a lot of his teachings. He says it’s something that could turn people oftentimes because they don’t understand what he’s talking about. So he says that savers are losers and debtors are winners. What does that mean to you?

Shannon Robnett (35:32):

Well, the truth of the matter is, look, if I go out and I save my money, okay, right now a house is $400,000 in Boise, right? So if I go save $400,000, that takes me a long time to save that money. But if I’m talking about saving the down payment for that, that takes me one fifth of the time. Then I borrow the money from the bank, I become a debtor. But what I also do is I fix that cost for 30 years. So if I’m going into a single family home, I’m fixing that debt for 30 years. I’m going to pay that same interest rate for 30 years, assuming I do no refinance, I do no cash outs, I do nothing. I just fix that debt. If I look at what a house costs 30 years ago, and I got a mortgage on that house 30 years ago at $35,000, and I just made that payment this whole time, my cashflow would’ve gone through the roof.

(36:27):

I would be paying it off today, or I would’ve saved enough to buy that house. I mean, really, it’s that analogy that if you are saving to pay cash for something, instead of using the leverage that debt allows you to have, it is going to make an incredibly phenomenal difference in what you have at the end of life’s road, or when it comes time to start cashing the chips and spending the money. So if you are going to be a saver, you really need to plan for a life of lack. You need to plan for a life without things, because every penny needs to go into that savings account so that at some point in your life, you can acquire a thing. But if you’re willing to become a debtor and you’re willing to allow cash flowing assets, and an asset as defined by Kiyosaki is something that pays you a liability is something you pay. So if you’re willing to put that practice into place, you are going to be able to leverage yourself into a position of financial security years and years, even decades earlier than you would be able to do that if you were a saver.

Tim Lyons (37:36):

Dude, I love that. I think that’s one of my favorite questions to ask Greg, because we get so many different answers, and when you hear the Savers a losers, that is a winner, as people immediately think about, oh, he’s name calling, but no, maybe he’s name calling a little bit. But there’s so much behind that question, right? There’s so much information about good debt, bad debt, using leverage properly getting ahead in life versus living scarcity and abundance. I mean, there’s so much behind that question. It’s literally my favorite question to ask. So Shannon, thank you so much for knocking it out of the park. Well, guys, I wish this could go on forever, but it can’t until we bring Shannon on again at some other time, which I would’ve loved to do. But Shannon, in the meantime, if people want to connect with you or find out more about what you’re working on, what’s the best way for them to do that?

Shannon Robnett (38:23):

Easiest way is to go to shannonrobnett.com. There you can find my podcast. You can find my social media channels. You can find a couple of eBooks we’ve written. There’s a lot of information there, but just easy, it’s all in one spot at shannonrobnett.com.

Tim Lyons (38:38):

Love it. Well, that’s going to do it for this week’s edition of The Passive Income Brothers Podcast, and we look forward to serving you again next week. Thank you for listening to another episode of The Passive Income Brothers podcast. We would be grateful for your support of our podcast by giving our show a five star rating and review and subscribing to our show on your favorite podcast platform. Don’t forget to take inspired action after listening to the show so that you can start building out your passive income streams. Finally, head on over to cityside cap.com to connect with us and find out more information about how to get started passively investing in real estate.