Big Fat Real Estate Checks Ep 169: Proven “Investor DNA” Formula For Increasing Returns & Reducing Risk with Tom Bernthal (Wealth Factory)

“Risk in terms of the investment may have some inherent risks to it. But if you are an expert at it, if you know what’s going on, you’re going to be able to work your way through that just fine. The principle risk is in the investor, not the investment.”
-Tom Bernthal

Tom Bernthal is a founding partner at Wealth Factory, where they have a team of financial professionals educating and working alongside hard-working individuals to optimize their personal finances and ultimately achieve economic independence. He’s their “Chief Research Officer,” and author of Investor DNA: Capitalize On Your Unique Advantage In Investing, which reveals shows you that investing success comes from understanding yourself and leveraging your unique strengths and abilities.

As a thank you for being a Big Fat Real Estate Checks listener, you can get a free digital copy of Tom’s Investor DNA book right here.

Listen to the episode on Apple PodcastsSpotify,  Podcast Addict, Listen Notes, CastboxGoogle Podcasts,  Podchaser, or on your favorite podcast platform.


[0:01] Finding success by doing what you love and investing in what you know.
[6:08] Investing and risk management with a focus on personalized approach.
[13:17] Building wealth through investments and systems, with a focus on repeatable and scalable processes.
[16:45] Investing, risk management, and the importance of understanding market dynamics.
[21:41] Using options to hedge against stock price risk.
[28:59] Investing in stocks and options, with a focus on long-term growth and cash flow.
[32:33] Investing, risk management, and the importance of understanding one’s investor DNA.
[39:32] Investing, risk tolerance, and personal growth.
[44:37] Diversification and investing, with a focus on Warren Buffett’s approach.
[50:14] Investing and the economy, with a focus on opportunities and understanding market forces.
[54:38] Investing and creating value through real estate and stock market.
[58:48] Investing in real estate with a focus on personalized approach.

Please enjoy this transcript, but please note that it may contain a few typos. With many episodes lasting over 2 hours, it can be challenging to catch minor errors. Enjoy!

Marco Kozlowski: Hey, everyone, welcome to big fat real estate checks. I am your fearless leader that is full of fear many times when I don’t know what the heck I’m doing and something. And in order to remove the fear, I brought a very rare guest. As you know, I don’t think we’ve had any guests. Since we’ve started the big fat check real estate podcast. I am not going to have frank, sad face. I’m not going to have gave extra sad face. But I am going to have a very special guest. Tom Birdsall Tom Bernthal. any relation to Jon Bernthal.

Tom: We are related somewhere down that family tree.

Marco Kozlowski: Oh, very nice. You’re sharing with me you’re here that there is a relation that has something to do with bears. Are we all love bears? So as you know, our mission here at Big Fat real estate checks is to give you accurate and actionable and just great content for you to do something with. And of course, we welcome any comments, suggestions. And we hope that this podcast will be as always the better than the last. So, Tom, I actually have met a few. I think last year we originally met. We did something together he is the founding partner of wealth factory. And I think you sold a bowling game through Walmart. You don’t look like a bowler to me.

Tom: But that’s a funny story. No, I’m not I’m actually a golfer. But back in my day, do you want me to tell the story or not?

Marco Kozlowski: Please? Yeah, yeah, cuz I know, they ask you those six bigger, you know, six figures with, with with Google ads, and you use AI to trade options, and you do all sorts of really cool shit. And I would absolutely love to hear the Walmart.

Tom: Yeah, so bad. You know, back in the early days, in the 80s, I loved programming. I got into it. And I started programming computers. And I just was doing all different kinds of things. Loved it. I was a golfer, and our mutual friend Ryan, you probably know that he’s a big golfer two. That’s a that’s a big love of mine. I wanted to write a game, a computer game that simulated golf. That was my big goal. And I started doing it and it was just so frickin hard. I was like, there’s so many things going on with golf that it made it hard. So one of my friends said, you know, bowling would probably be a lot easier. And I thought I don’t even ball but I suppose so he took me out bowling a few times we did it i Okay, I could do this. And so I started doing some programming, created a little game kind of played a little bit like shuffleboard at first got really popular on the internet because no one was doing anything like that. And got featured on something called the Kim commando show. In a computer shop or magazine, I was just selling it saying hey, send in 10 bucks to my to my mail. I went up to the mailbox when they opened it up. And it was just packed and like going oh my gosh, that’s what happened. And it had got reviewed in a national magazine. And the next thing you know, someone said, Hey, we want to put this into saving ammo. We want to package this up and put it into a CD the remember those jewel cases like that?

Marco Kozlowski: I remember those from so

Tom: they they package it up, put it into Walmart. And it sold like two and a half million copies. And I was a bad I was a bad businessman. And they were selling them for like 10 bucks. And I got 30 cents each. So I didn’t I didn’t make as much as I probably should have. But it was still still fun. Still passive

Marco Kozlowski: income. Yeah. Right. So I’m sure you You did well on that for a while. So that’s, that’s cool. So from from from there. You obviously did some amazing things and which we’re going to unveil as we go along. The the objective today is to talk about really doing what you love, to exchange value doing what you know, to exchange value and not to try to get too fancy. My niche is at first was real estate investing because I learned as much as I could. I reinvested myself as much as I could in myself as much as I could. I took seminar after seminar made mistake after mistake learning and building on each mistake and to create after 25 years, what you now see and know me as and through that journey. You learn a lot of different skill sets that have a lot of different interests, but I’ve never really deviated from my one core understanding. And it branched out into different things. But generally, people have that shiny Penny syndrome where they’re trying a lot of different things, and it can really hurt you. So if you just pick one thing and really learn it to the best of your ability, you can have some really great success. And Tom is really an expert in this and also is, serves people probably as much or if more than I do a community of people that really want to invest wisely in the things that they understand and know well in and has really figured out how to empower someone to do really well. Doing a what they love, and doing it investing in what they know and understand. So I hope I’m distilling this and I’m not bastardizing your message, but I love it. I love it. And so Tom, you know, talk to me goose sweats, you know, you know, why are we here? You know, what’s what’s any advice that you can give someone that might have a couple of bucks in their pocket or no money in their pocket whatsoever? We have people that are, you know, have a seven figure balance, and, sadly, the number of zeros to their bank balance the commas definitely in the wrong direction. So there’s a period instead of commas, so yeah, help. Help us out.

Tom: Yeah, well, you know, it kind of goes back to what the company that I’m in does, you mentioned, well, factory founding partner there have been doing it for about 10 years now. And it came about because all of our as partners were entrepreneurs, we, we were making money, we’re really good at that. But what do you do with it, then, you know, and a lot of the advice out there is oh, you need to invest in you to put it away socked away for retirement and all this stuff, which we’re like going, that just doesn’t seem like it fits us very well at all. So we started looking for ways that we could, could actually use the money that we make, and help it have it make more, but also just grow it in a way that we could be serving others rather than just sticking aways, hoping that someday it would it would grow into this big mountain of cash that we could live off of that just didn’t fit our personality. So what we Yeah, go ahead. No,

Marco Kozlowski: it’s pretty sterile, just doing it that way. Right?

Tom: It’s really Yeah, it’s really sterile. And, you know, so we found out that most of the financial advice out there is really built on that, that thing it’s really meant for it’s made for the the non risk takers, the employees, the people who are just satisfied earning a paycheck and working for someone else. And that’s not us. And so if you’re an entrepreneur, you know that you want something more than that you want to be more involved, more active with your money. And so we said, what are the principles and things we could do to help people grow their money, who are just like us, and we found out there’s a lot of them, and they were just as frustrated as we were. And part of the thing is, we found they were, they were just doing silly things with their money, because someone said they should do it, and getting frustrated with that. And so one of the things we found out that, or, I guess, a principle that we we discovered and really hit on early on is that risk. Everyone said, oh, what you’re doing is too risky, you know, and we’re gone. Really doesn’t feel very risky to me. You know, people are always saying people who don’t understand something, think it’s really risky, right? So what we found out was risk is in the investor, not in the investment. And that’s totally different than most real estate investors get that intuitively. They maybe don’t articulate it that way. But they get it and most other people don’t. So accountants are going, Oh, that’s too risky, you know, on your advisors are going, Oh, that’s too risky. And we’re like, no, here’s the thing. Risk is the investment may have some inherent risks to it. But if you are an expert at it, if you know what’s going on, you’re going to be able to work your way through that just fine. So the way that you can prove that that principle risk isn’t the investor, not the investment. Take a look at anything. You can have the same exact investment one person can just make a killing on it, and another person loses their shirt. Why? It’s not that the investment itself was risky, it’s that the investor didn’t have the tools So the ones who lost didn’t have the tools, the knowledge, the skills, the connections, whatever else. So we developed this principle called investor DNA, which, which is kind of where, where we encapsulate all that into a little phrase that kind of helps people figure out how how they might invest in a way that fits them.

Marco Kozlowski: That’s a great way of looking at things because I meet a lot of people that are terrified of real estate investing, because they lost money in the past. Or they got lucky. And they bought at the right time, and made money and then bought again and made money. But suddenly, they lost a terrible amount of money, a tremendous amount. And they don’t understand the difference between one transaction, almost identical kinds of purchases, but the last one failed, because they didn’t know the market cycle shifted, or interest rates shifted, or something in the market that they didn’t know. Because it’s not what you know, that’s going to really take care of you. It’s what you don’t know that’s really going to hurt you. Right? And that’ll get you are always what you don’t know, and we don’t know, more than we do know, like, if you walk into a library, you know this much, right. And there’s a lot of information. So, or marriage, some marriages do very well, and some don’t. Right? And if when, like, I’ve been divorced twice, and my second wife, not a very good human being right, doesn’t mean I’m never going to women again, right? It’s not the women in general that are not, you know, have that personality. It’s just that one, right? So having a understanding of what you do know, and understanding your, your, your strengths, and have a desire, I think to learn, because if you actually Google, what does it really take to be wealthy? The answer is surprising. It’s invest in yourself, and investing in yourself as far as learning about something that you’re passionate in, which is what I think, Tom, that you empower people to do, is what are your skill sets? What’s, you know, as you said, crypto has risk. And some people do extremely well with crypto I, my son is big into crypto, but he he gets in and out in and out in different things that are and I don’t understand what he does, but he loves it. And he does very well at it makes tremendous amount of money at it. And if I tried, I would want actually did lost money on it, because I didn’t know what I was doing. So So here, you take my money and have fun with it. He’s enjoying it. And I’m enjoying that he enjoys it. But I’m not going to dip into something that I am not an expert in. And that’s what you hire the best of the best to do. So you can be aligned with that. And I think we were talking about this earlier, the investment can’t just be to make money grow. Because money by itself has no value it has it’s worthless if you’re in in the Himalayas, starving to death, and you’re freezing your butt off. And you know, the Yeti is coming to get you. And I come to you in a helicopter and say here’s $10 million, or a parka, and a cannon hot soup. What are you going to take?

Tom: No kidding, right? Any money, any

Marco Kozlowski: money, and the money by itself has no value, it’s worthless. And it’s an and also it decays every single day. So having money, you should be placing money in an investment that makes you grow. In fact, I tell people, you don’t use your money for real estate, use your money to make more money because the wealth is built on the on the transfer of assets with cash to asset that grows back to back to cash. So you cash in on that back to asset. And as you’re doing the transfer of asset to cash asset to cash back to asset backed cash, that journey will have your money grow in ways that are really exponential if you really understand what you’re doing. And as you said, you can two people can have the same investment lose their butts. And one thrives and and the answer is bang on. So I think I just said it worse than you said it but so nailed it. So other than that, Tom, what? What advice are your giving stories? Let’s talk about stories other than obviously, there’s plenty of real estate stories that people have lost their rear ends on that. But do you have any other stories of things that you’ve seen and people that you’ve interacted with where you’ve, you know, navigated a bad behavior, if you will, into a good behavior? Because I look at behavior, I look at things like consequences. There’s a consequence of every action, right? So there’s good consequences and bad consequences. If you do bad things or things that are not aligned. It sets you back. But if you behave, there’s good consequences to that and a good behavior where you have no choice but to be wealthy. Right. And I love the name name of your organization well factory because you’re actually creating your machine to build wealth. Right? So it makes a lot of sense. So I know if you want to go into that rabbit hole of some terrifying incident or something that, you know, that you’ve seen, or I’m sure you’ve seen it all. Yeah,

Tom: you know, we have we, we, and the factory part, like you mentioned, it’s all about putting systems and structures in place. And that’s what a factory does it systematizes The production of something. So that’s what, that’s all. That’s why we chose that name. It’s not like, you know, this is just necessarily automatic. But we do we, we have systems that we know, work, and can work system consistently, if you put them in place, so that it’s kind of like safety nets in a way. For a lot of stuff, you

Marco Kozlowski: have to have a process and everything right, even, we have process around and a factory has process an organization, by definition is organization of things, right? If things have to be organized. So if without a process and systems in place, there’s really no repeatable scalable thing that you can do, right? So any, any good organization that you want to link yourself up with, has to have the ability to help you scale and grow and give you some structures in order to accomplish whatever you want to accomplish. Whether it’s growing your money, growing your portfolio, growing your happiness growing your body, right, same thing, you follow certain rules that have been in place, you will get certain results, whether you like it or not, you just have to go through the process in order to get those results. belief has nothing to do with it. It’s a consequence of behavior. Go ahead. Sorry about that. No,

Tom: yeah, no, that’s perfect. And it’s exactly what what we try to what we try to capture here is where, where people are, what are their strengths, and not just their strengths and their knowledge and their past experiences, but also their values and things like that. So I guess you know, you asked for a horror story or some other kind of kind of thing like that. Obviously, a lot of them come out of come out of 2008 scenario, and I think you’ve got it that rubs pretty close to your

Marco Kozlowski: for you to a lot I lost, I lost over 600 assets, that time, but I also bought over 600 assets during that time up my mind, right.

Tom: And so what we found is, too, when when you’ve got times of turmoil like that, not only do people can people lose a lot of money, it’s also a great opportunity to really build wealth to and more people became millionaires during the great depression than any other time in history of the United States. Because there’s so many opportunities. And but but one of the big things that I find out is that a big problem and the thing is, you talked earlier about someone maybe has some success early on. To me, that’s one of the biggest traps. People jump into something. They don’t know what they’re doing. But they get early success. And they, they they mistake luck for that they’re, they’re smart, and savvy. I think that happened to some of my friends back in 2006. Seven, they they saw other people just killing it with buying rentals. And so they did it and they go oh my gosh, yeah, this is really easy. And they thought they were really smart. And they just over leveraged. And next thing you know, they’re sitting on, like 10 homes in Las Vegas in a abandoned neighborhood that had no no renters, and no one wanted to touch the touch the properties or buy it from them. So they didn’t understand liquidity. They didn’t understand the market. They didn’t understand anything. They just got lucky. And they were gambling.

Marco Kozlowski: Yeah, there’s and what happens even in gambling, speaking of gambling, you gamble before you put your your chips down the next thing you know, you’ve doubled it and like wow, I could do this for a living. Yeah. That’s more, you know, you’re looking at a really dark path.

Tom: And I in fact, I do I think you mentioned earlier I do some options trading. I’m the type who I I’m very analytical. I’m a researcher, that’s my one thing that I love to do. And it makes me good at the job that I do but it also kind of helped me figure out ways to to do the options trading in a way that’s that’s consistent and successful and I take what I do is I kind of play play it is and the value that creates a lot of people don’t like think that there’s much value in options trading and the way that I do it is I’m selling insurance to people so I The, it’s hard to explain it any other way. There are people out there with big portfolios. And when they’re scared that the market might go down, they buy protection, something in the options market called puts, and I sell those to them as insurance. If the price if that stock actually goes down, kaboom, I, I take over their asset at a discount price. If it stays above, I just keep the premium they paid me as their insurance payment. It’s just like being an insurance salesman. And I make little bits and pieces here and there, here and there, here and there. Every once in a while I get an asset given to me at a discount price. And but I have that all on my plan. Most people that I see doing options, they, they’re they’re doing it the other way around, they’re buying, buy, trying trying to make it, you know, make a bunch of money. And that’s the opposite way that you should be doing it. Fact, I had a friend who did not understand leverage at all, he had a margin account, if you know anything about trading, and he got that early success, just start doubling down, doubling down, doubling down and the next thing, you know, a big huge event and he’s going what is a margin call? I said, Well, that means you have to pay it, you have to pay money. And he’s going it says I have a $7 million margin call. I’m like well, that’s that’s pretty bad. And so a bankruptcy later he’s he’s learned the value of not over leveraging their life lesson right

Marco Kozlowski: there. So you unpacked a lot just there. And I’m going to make the assumption that none of my listeners know, speak any vernacular on what you just said. So I just want to rewind just that. Now an option in real estate is when I have the right to buy something, and I lock in that price, not make payments on it, that’s a lease option. An option by itself is just the right to buy something an asset with a specific price. And generally, there’s an exchange of value that happens where there’s now when I did it with luxury homes I used to flip mansions many years ago, and I controlled multimillion dollar mansions with 100 bucks, they use 100 bucks from a self directed Roth IRA. So it actually became tax free if I ever for if when I made money on that deal, because whether it sold or not, I had mechanisms to actually make money as you do. So is stock options the same where you have a certain if you can just walk through as if I’m the village idiot on how stock options work just for a second, if you don’t mind. Let’s want to go. But I just want to make sure I’m not glazing over people that are that might be interested in, sort of,

Tom: and what you’re Yeah, you’re right. So there is there’s a contract involved. And it most people are like the buy side, like you said they want to control, they want to have that right. And I play the other side of it, I like to sell the options. And so the way that I view it is it’s all a lot like like I said insurance, so think of it as you own a piece of property. You don’t want if a if you get a fire in that in your building, you want someone else to take on that risk, right? So you transfer your risk to someone else. And the way you do that is you pay a premium. So you might be paying out 500 bucks a month or 500 bucks a year, depending on the size of the building to an insurance company, you’re transferring the risk, if there’s a fire, they say, hey, guess what we’ll we’ll make you whole, they take your premiums, and they they have a float there going on. That’s what I do. So I I play the option side on that other side, where I’m taking, I’m getting money every time I execute a an option trade I’m selling it. So I’m getting a premium I’m making money on right away on the on, you know, right off the bat, that’s as much as I can make. I’m taking on the risk of if the stock that price goes down below that price that they’ve set, I will go ahead and buy that stock for them. So just as an example, let’s say that the stock is trading at 150 bucks, and I sell an option. If it goes down to 125 in this period of time, like maybe three months. I’ll buy it from him, they’d give me maybe 10 bucks to do that. Usually it’s going to always stay in that that range above 125 And I keep the 10 bucks and they then we move on And then maybe I can sell, sell them another insurance, then after that expires, maybe not. But if that price goes down below 125, let’s say goes all the way down to 100, I have to buy that option that stock from them at 125, even though it’s at $100. So my rules in in all that is I only do this on stocks that I want to own myself, I don’t do it on speculative stocks that are really crappy. So it’s like, I wouldn’t go out there and insure the property that I didn’t want to repossess. I want to, I want it to be a good stock. So I only do this on stocks that are really solid, really good stocks. And if I get them, I say, Oh, they got it at a discount from what I would have bought earlier. So

Marco Kozlowski: you’re basically guaranteeing assets at a discount? Exactly. You’re getting paid by assets at a discount. Exactly. Yeah, she’s actually genius. So you’re you’re you’re helping someone hedge basically lower their risk at a nominal fee. Right? And I’m assuming, is it $10 per stock? Or is it $10? Total?

Tom: Well, yeah, the contract is worth 100 shares. So it just depends upon the strike. So it’s always done in 100 shares at a time. Understood

Marco Kozlowski: again, village idiot here. All right. Um, yeah, no, that’s Judea. So that’s a pretty. So if you know that you again, I think the operative word here is the stock that you want to buy is within your DNA, right? Your your investor DNA, exactly. Standard, you understand the value of that. And then you totally okay with buying the stock at a discount, because even if it goes down to 100, or 110, or whatever the number is, you’re okay with buying it at a lower number, because you know, the value is significantly higher than what you’re buying it for. so easily. Right. So I reckon this too, like people get worried about, oh, I have, you know, if I buy multifamily what happens when the market crashes? But are the red still coming in? Well, yeah. So as long as the rents are still coming in, and the rents get higher and higher every year, the rents today are a lot more than they were 10 years ago, and they’re even more than 10 years before that, no matter what the value of the building is, is irrelevant. As long as the value here for us as as cashflow buyers, is, it doesn’t matter what the markets doing, because you’re constantly getting that revenue, right? So in his case, in your case, or whoever’s doing this, it’s cool, because you’re getting paid for something that might never happen. No, it’s like, if you’re not getting if you’re not getting a dinner, you’re getting a sandwich. Right, and enough sandwiches make a dinner. Right. And I’m sure if you count up the if you’re doing this correctly, with the knowledge that you should have, and whatever you’re doing, again, if you’re not educated, this is not something that I think either of us would recommend, specifically, Tom, you’re the expert in this, but I wouldn’t recommend getting into real estate at all, until you understand the value of what you’re buying. And as you know, we use acid based lenders, which do the same thing. They’re lending money, knowing that if you don’t make a payment, they’re gonna get paid anyway. Right there, they’re basically placing their money at a discount of 30% off on average, you don’t need to put any money down because they know that if you are a bonehead and don’t make the payment, they’re getting an asset that’s worth a million for 700,000 bucks, or 10 million for 7 million, no, they’re getting a 30% equity play, which is a 42% return cash on cash as far as if they were to liquidate that. So it’s better for them to take it back. In his case, if you count up all the little $10 that he’s made, he probably has paid for the stock that he has to pay for anyway, over time, on the little cash that’s coming in. So it’s like restock free assets. Genius.

Tom: Yeah. And there are actually the stock market, the options market has all kinds of data. And I’m a data freak. So there’s things called the Greeks, which are all these little numbers, which mean things and I don’t I can’t go into that, but but I can I can, I can go look at that and use that. And I only sell the options that I know are going to the probability of them expiring worthless, you know, where I don’t have to buy the stock, I just keep the premium. I have about an 80% rate on that. So I know about 80% of the time, I’m going to be keeping the money and not having to take the stock the other 20% of the time, it usually works out pretty well. As an example. I had sold some options. If you remember back in 2020. In March, the stock market took a huge dive that’s when the shutdown came because of COVID-19 and the stock market freaked out everything went down And then some things that summer as the uncertainty went on, some stocks went way down. So there’s a stock called Exxon Mobil, which I had owned in the past. And they’re, you know, a lot of people don’t like oil stocks, but they, they do a lot of other cool things besides just drilling oil, and they help our society a lot for things. So I was very bullish on the stock. And it it went from, like, 100 down to like, 30. And so I, I said, Wow, okay. I, I sold a bunch of options on that. And people thought it was gonna go lower. That company, like, that’s probably not gonna go to zero, right. And I had really good reason to believe it wasn’t gonna go to zero. So I was selling options like crazy. And within a year, the stock price had gone back up to 60s or doubled. The, so the ones that did get put to me a few of them did, I had those stocks, and they’d doubled the other ones, I’ve kept the premium. And now, that same stock that I got back there in 2020, for around $35 is trading at 115. So it’s just got this.

Marco Kozlowski: Yeah, you can’t lose. Yeah, doing just like, in

Tom: like what you said, that’s whole. That’s Warren Buffett’s whole whole philosophy too. He buys stock, and his timeframe is forever. He’s not ever can, because he buys dividend paying stocks. So he bought Coca Cola bought a huge block back in the 1980s, he bought another block sometime in the 90s. He doesn’t dollar cost average. He just he buys when he sees that there’s a buying opportunity. But in the meantime, sometimes that price has gone way down below what his purchase price was. Didn’t bother him because he was getting cash flow every quarter. And now because of that, it’s ridiculous. You look at it, he makes about every, every year, he gets about $425 million in in dividends from his coke stock.

Marco Kozlowski: It’s the same thing as rent. I’ve said this before, and I’ll say it again. And when we buy an asset, it’s a legacy purchase. It’s we look at property like herpes, and once you got it, it’s it’s yours for as long as necessary. And that pays you month in month out it rides appreciation, because things go up in value over time, and your assets go up in value over time that beats inflation. And if and the difference with real estate versus stock, other than margins, because you can use margins as an asset based lender, because you have stock that you’re lending money on, that you’re lending money on to buy other stock, that’s an asset based loan, right, except it’s to yourself or to others who can lend out that money to you can actually withdraw that based on the kind of margin that you have. So, yeah, it’s very, the more I dig into different niches of of investing, the more, it’s the same, I see that it’s very, very similar and the transition from one to the other as long as you understand the value of what you’re buying, because it’s not just it’s like real estate has a lot of different kinds of real estate, you have multi family, single family not value the same way. hotels that value the same way as storage unit facilities and mobile home parks is every single piece of real estate based on the number the size, the asset, class, location, so many variables. And if you, as an investor understand that risk, there is no risk are not playing in the risky environments that other people would go into. To be a risk would be to invest, take my money and give it to somebody else to that’s risky. Or to set it and forget it. That’s risky, right? Gotta keep your eye on the ball. So at the end of the day, Tom, why is it so important for investor, someone to have an understanding of their investor DNA? And really follow that principle and under and just live by that mantra, if you will? Yeah, I mean,

Tom: it goes to everything we’re talking about right now. It just keeps your money safer. It grows it faster, it gives you that that clear, clarity and clear path of where the value is being created, where it’s not. And so it just gives you that that that clarity, I guess is what I’m thinking of most people get really scared about investing if they don’t understand what’s going on. And so, when you are using investor DNA, and you understand all the moving pieces and all the things like you’re you’re just talking about now. It becomes actually kind of fun.

Marco Kozlowski: Yeah, and I think joy is an important part of life. I don’t remember. I meet so many people. And I asked him when’s the last time you actually had joy? And I’m like, Well, I’m happy. I may say scowl? Well, that doesn’t sound like joy to me. Right? Joy is things do remember when you were a kid, and you just loved everything you do. And then Aw, man, you played outside, you played hard, you skinned your knee, you cried, you laughed, you were free, right. And then as we go into the academic system that basically I believe, strips that away from us. Because now we’re taught to have responsibilities obey, and you’re not supposed to do that you’re supposed to do this. And common knowledge is this, and you’re not supposed to play with your own money, leave that to the experts, Hey, give it to an expert that’s gonna grow your money, but might actually lose your money. And there’s no consequence, the only person that’s going to take care of you and your family is yourself. No one’s going to take care of you and your, your family more than, more than than you. So I don’t want to be

Tom: more than one. One of the things we say is, no one cares about your money, as much as you do. You nailed

Marco Kozlowski: it, Nailed it. Nailed it. Do you mind sharing what your investor DNA is?

Tom: Yeah, you know, that’s a little dangerous. Because, you know, I don’t want people to think, Oh, that’s cool. I’m a researcher, I’m, you know, I’m a tinkerer. I try everything. So whereas normally, I would say, we tell people to really focus on one thing, for me, my investor DNA is to try a lot of little things. So I’m out there, dabbling in a lot of areas. And it brings me joy to do that, because I’d love to try different things. But it also helps me because when I do that, then I can, I can speak with knowledge to a lot of different people. So I have some real I’m not a big real estate guy, but I own a rental property. And so I know enough about it, that I know the, you know, some of the different things I have to, I have to get help from from guys like you, when I’m figuring out whether the cap rate is right or all I don’t even know all those terms. But I do know that money, I do know that money keeps coming in every month from from my rental. And I love that. And I do know that when I get my my taxes done that I get a really good write off from depreciation. So there’s all these cool things that I know about it. And that’s awesome. So like

Marco Kozlowski: I said, I know a guy, so you don’t have to worry about that. Yeah. I do want to say this, though. When you’re tinkering, you’re not winning 100% of the time, you’re okay with the losses to learn in order to get to the win. And that’s, that is a significant behavior trait that I want to sort of circle, right? A lot of a lot of us want to get into something, we have to have instant gratification, right, we have to, oh, we got to win. As soon as you see something going sideways, you panic, and you get out of there. But that’s a lesson you have to learn in order to get the big win, right, I’ve lost hundreds of millions of dollars getting to where I am. And had I not lost hundreds of millions, I wouldn’t have been able to generate hundreds of millions of dollars, right? So I think you have to look at the lessons when you have when you are in the process. I can’t speak to what you’re doing. But I’m assuming that if you’re a tinkerer, and you want to learn new things, you understand what the process looks like, in order to get to the you know, to the big payday, right? You have to have a level of understanding of the risk, I say in quotation marks because it’s it’s not risk. It’s an investment of what’s working, what’s not working, because most won’t take the time and put in the effort and the the the necessary discipline to do that, in order to have the system in place to say, Okay, this is absolutely going to work. Right. So I don’t want to speak to that. Because I don’t know if that’s something that you’ve spoken about in the past or now but when I heard that I’m like, Ah, you know, I think this is what separates you from, from many that are in wanting to grow their, their, their life in any way. As soon as you get a little problem, you quit. And that’s not when you quit, you quit. When you’re when you’ve done it, not when you started in the middle of learning it. That’s terrible. So I don’t want to speak to that.

Tom: Absolutely. I mean, no one likes to lose. You know, we no one loves to lose money, but you can’t be afraid of it either. And so I what I what I do when I go in and and do these investments and I’m a tinkerer. I accept the fact that I may lose some money, and I figure that’s the price of education. You can pay someone. You can pay a college to teach you stuff or you You can learn it from the school of hard knocks. And I think that’s always going to be the better educator right there.

Marco Kozlowski: Or having someone that’s done it and understands it right next to you, right? If you’re if I’m TRYING TO TINKER in something that you’ve already tinkered in, and it took you $100,000 of lessons to get there, writing you a check for 20 grand is way cheaper than the 100. And the months and years it took and heartache and not knowing if I’m gonna get to the finish line, right? Absolutely.

Tom: And, and that knowing your investor DNA and investing that doesn’t guarantee success, but it guarantees that you’re going to come out of it as a as a better person as a better investor. And you’re going to, eventually, you’re going to find that success that you’re looking for. At

Marco Kozlowski: is the when the lesson is the winner. Journey is the Destination. Like if you’re looking at just dollars and cents on the short term basis, if it’s a winner or not. It’s I don’t think that’s the right litmus test, when, when my my second wife decided to disappear with $11 million, I was left homeless, and I tried to kill myself twice, which happened. At that time, it was the worst time of my life. And I look back now, and it’s the best thing that ever happened to me, because it allowed me to get resourceful and create the systems, the processes I have now. So what I take that back, then absolutely was terrible. Now, I’m grateful, right? So and hindsight is always 2020. But if you have the capacity, I don’t think anyone’s ever done something brand new, right? I don’t, there’s not very brand new things available and aligning yourself with people that have done, the necessary sacrifice is, I think the word here is sacrifice, you have to sacrifice something in order to get something else. If you have a new best friend that you want to invest time with, then you are sacrificing your old best friend’s time for that time or your time or you’re not watching a movie that you want to see because they wanted to do something else. So there’s always a sacrifice in life. And the key the question is, are you sacrificing the right thing for the next thing, right? And money is infinite, we can always make more money, right? Can people like your stocks go up, they go down and explodes, you make a lot of money, it’s money can be literally generated at any point at any time and can always be made back time is something that has more value than anything else. So we’re trained to swap hours for dollars. And we are made to believe that time is much more valuable than money, which is insane. Wealthy people pay for your time in order to have all the time they need. And if you invest your time wisely, and align yourself with if you want to do real estate, then you know, I know a guy if you want to do that necessarily just I’m assuming you don’t just do you just do stocks or do you have other like other avenues? Or are you mostly in the in the in the in that in that lane because I know a lot of people make a lot of money with stocks by one of my best friends has never wanted to get a mentor, I’ve tried to send him to you guys, many times, he makes money in real in, in the stock market. And then he he actually makes money in real estate, puts it into the stock market loses it all takes all the money in real estate, puts it in the stock market loses it all. And he just says he loves it. But what he’s trying to mean that he just lost 100 grand, doesn’t seem like he’s enjoying it very much.

Tom: Ya know, for me, the stock market is more of a way. It’s just a little growth growth tool for me, I make most of my money through business. So through value creation and business and then I Where do I put that money? I’ve got a like I said, my investor DNA is that I I’m actually investing a lot of dabbling and a lot of things. I don’t call it diversification because that’s different. I actually research and know a lot of stuff I know everything about I don’t invest in something, let’s put it this way unless I have done thorough investigation when when crypto was really big a few years ago, I got involved in some of it. I read every single white paper that came out, I knew exactly how this coin worked. I knew who the people were, I didn’t invest in stuff where I go, man, this is just a big rug poll. This is just a bunch of kids who figured out some coin that they can make it go up and then they’re just going to they’ve got they’re going to cash in and the whole thing’s gonna crash. They go. I’m out. I’m not doing that. But I could find other ones that I said okay, this is solid. This is really cool. I’m going to I’m going to be in that.

Marco Kozlowski: So you said something there that you don’t diversify, because everyone says diversification diversification, diversification diversification. So let’s let’s put that myth to bed is I’m completely in alignment with that then well Most people think I’m crazy. So I’m glad we’re not the only ones.

Tom: Yeah, you know, diversification can be a protective tool that can help preserve wealth if you have, if you’ve, if you’ve made all the money in the world that you ever want, and you never want to think about money again, and you just want to live, you could give it to someone else diversify, and it’ll probably, that’ll probably help, you know, reduce some risk. But essentially, what you’re doing is you’re you’re choosing to be ignorant about how your money’s working. That’s how I put it. In fact, I think Warren Buffett himself said, diversification is protection against ignorance, it makes total sense of you know, what you’re doing. And that is so true. Because, you know, diversification, it’s basically scattering your attention across all these different things. Like I said, I do that because that is my investor DNA, I have the time as a researcher to be in to be researching all these things to be keeping my pulse on I had, I love spreadsheets, so I have a spreadsheet that’s like a little what you call those little dashboard, so I can keep track of all that stuff. And I enjoy it. Most people aren’t going to be that way. Most people don’t have that luxury. So it’s, it’s totally, for me, it’s not diversification, investing in a lot of things. It’s actually part of my investor DNA. But most people when they think of diversification, they’re, like you said, handing their money off to someone else scattering it out. I live in Phoenix, I know you’re, I think you’re in Florida. Here in Phoenix, this, the sun is really hot. So back in the backyard, I put up this shade cloth and it diffuses it scatters those rays, right. And so it’s like, it makes it so I can sit out there. But I can take I can take a magnifying glass and take those same rays and focus them I can start a fire here in about less than 30 seconds on a piece of paper. you’ve ever done that before. Yeah.

Marco Kozlowski: Was the guy dance as a Yeah,

Tom: okay, that too. And, but we’ve got it’s the same exact arrays, right? Same exact arrays. But when you focus on the power, wow. And that’s what we teach, we teach focus over diversification. Because when you focus on something, then that’s where you’re going to use all of your energy is going to be going to that one thing that you’re going to understand you’re going to have more control. And if you know you’re not pleading ignorance, you’re actually reducing your risk by doing are absolutely reducing your risk. 100%

Marco Kozlowski: Yeah, ignorance is expensive. Actually. That’s the saying around here, for sure. Now, you spoke about Warren Buffett a couple of times, and I’ve heard people say, you know, why don’t you just, you know, you can actually just copy what Warren Buffett’s doing right? You can have other investors and you can actually just why don’t we just mimic those things, and I’ll be rich.

Tom: I tried to hide that word. I tried it. When before I before I really understood all everything we’re talking about. Because you know, I wasn’t born this way. I was born actually, without hardly any financial knowledge at all. I came from a poor family, we did not know. I just wasn’t educated in money. And so I had to learn the hard way, like most of us did. But there was one point in my life when I go, Oh, man, Warren Buffett’s just killing it. And so I found out Oh, my gosh, you can you can actually see his portfolio. And so I’m like buying stocks and matching his portfolio. And a few years later, I don’t have any money. I’m going What the heck happened. But the thing it kind of goes back to what I talked about before copying Warren Buffett, you don’t have access to his research team, his knowledge, his connections, you don’t have access to you can’t buy at discounts like he does. He uses warrants a lot of times to buy shares at a discount. You don’t have the timeframe that he does. He does. He buys stock. And like I said before, he says forever. So price goes way down. What did I do? I’m spooked out and go, Oh my gosh, I’ve lost half of my money and I’m selling isn’t that selling? And so all kinds of crazy stuff like that. He you know, he can get on the phone to any CEO of any company owns and they will take his call. You know, I own a pretty big block of Verizon shares. I can’t get past their customer service if I try to call and talk to the CEO, but Warren Buffett can and so he you know he’s got Hey, what’s going on, man? It’s like And he can give them advice. He sits on their boards. It’s a totally different game. And so it just think copying what he is buying is going to equal that success you’re running, it’s a fool’s game,

Marco Kozlowski: you’re also not at the same level at the same time, right? If you’re starting out, like timing is everything and where he is at, are an advanced investor, or a very wealthy Connected Investor, the decisions they make are very different than the decisions you might have to make in order to achieve the goals that you want, right? You’re looking at someone in a narrow window of time, that’s very different than where you are now. And just because they have that now as they might have, he might have gotten those stocks, through options just like you have right and at, at prices that you would not necessarily know. So you’re seeing an end result, it’s like seeing me. We do seller calls on Tuesday, where I’m doing deals on Tuesdays, and you’re looking at me just rip through these opportunities and like making money out of thin air, after 25 years of experience, and you don’t see all the little things that are being done at the same time that you’re not noticing. So you’re you can’t look at a concert pianist and say, Wow, I want to play the piano. And in five minutes, I know, that’s what I’m gonna sound like, sounds like shit for a while. And you don’t know the pain, sweat and tears that has gone into that. And as you said, the connections, the ability to really also leverage a tremendous amount of wealth to strong arm a lot of things, you know. And if you guys, that’s not the right. You don’t want someone that’s, you know what Tiger Woods teach you how to play golf? You want Tiger Woods, his coach, to teach you how to play golf? Faculty? Right?

Tom: Exactly. I, I’m a I’m a golf coach myself. And what I say my sons are at this level, some of the other kids are at this level, like to my son, I could say, one little word, and boom, it fixes them. For the other ones. I’m like having to explain all kinds of stuff because they’re at a different level. And the other one it just one word, and boom, it it brings back all this all this level of training that they’ve done and grounds and back on that one thing and kaboom all of a sudden he’s fixed. And the other ones that are at a at a beginning level. I can’t do that.

Marco Kozlowski: Yeah, well, it’s again, as we get more advanced and understand things, we can pivot and do things a lot better. Yes. I want to talk about the economy for a minute. And oh, we’re probably running out of time here. But let’s talk about the economy. should we worry, I see this opportunity. When you say we’ve said this before, the worst things are, the better it is for us. We’re buying so much more now than we were this time last year, because of poor economic times, as you said, it creates a tremendous amount of opportunity. Now, I’d like you if you want to we spoken about it a little bit. And if we want to expand on that, or if we already nailed it, in your opinion, but I’m sure there’s some great opportunities now, for people to be able to do some amazing things that were not possible even a year ago or six months ago. Yeah.

Tom: And it’s hard to give him specific things, obviously, real estate you’re talking about, which is that there’s definitely opportunities but in anything, we’re not ignorant of what’s going on in the economy. You can’t be you don’t want to put your head in the sand, you got to know what’s out there. Everything’s a marketplace in the market. But what that means is there’s people on the other end, you know, that’s that’s what a marketplace is. And there are people who are feeling things based on what’s happening in the economy. So understanding that’s really important. But too many people just equate the economy as this unseen, unknown force. And it’s not it’s it’s what’s it’s what’s, how it affects the marketplace, which is other people. So when we understand that, then we can we can really find those opportunities. Sometimes it might mean, hey, the economy right now is bad. That means there’s a lot of people in in a lot a world of trouble with something, and maybe I can come in, because I’ve got a lot of capital, and I can help them out, I can help them get out of a bad situation. And in the meantime, I’m going to get some some pretty good reward out of that. So that’s one way to look at it. Just like

Marco Kozlowski: in real estate, if someone’s in trouble they gotta get rid of their property allows us to unlock asset based lending to get access to the capital to give them so they can move on. So you get the alternative win win. Right? Exactly. So with an as long as there’s people selling, or people creating companies that need money, and people buying stock and sell like stock, there’s always going to be an opportunity. And the stock that we have is is is property and the stock that you have a stock and it’s, we’re in the exact same business just in a different on a different platform. Really. That’s all it is. Right?

Tom: So value creation

Marco Kozlowski: is our God given right to be wealthy through the service and giving value to others. Absolutely, that’s, that’s the motto. Everyone’s

Tom: everyone’s out there, you know, that marketplace out there. They’re, they’re getting a little stingy with their purse strings right now, because they just don’t I think there’s just so much uncertainty. They don’t know, what, what, what’s going on. And so they just feel like I’ll wait and see, I’ll wait and see. Well,

Marco Kozlowski: that’s, that’s, that’s a wait and see. Wait and see, wait and see. What does that do?

Tom: I know it,

Marco Kozlowski: here’s the opportunities, you’re missing by weight. Lindsey, exactly

Tom: that. And that’s what we’re trying to, that’s what we’re trying to hammer home to our community to that, hey, there’s opportunity costs. And there’s, you know, lots of things that you could be doing right now, even if you’re not necessarily diving in and buying something or investing in something right now, there’s a bunch of things you can be doing and activity is doesn’t always have to be just jumping head in first, but you got to be you got to always got to be moving.

Marco Kozlowski: 20 racks now, while you’re waiting and seeing is better than waiting and seeing then sharpening your AX, because then you miss the opportunity that you should have jumped on, right? So you can never,

Tom: you can never get insurance when you actually need it. If you wait until after an accident to buy insurance, you’re not going to get it. So you might as well buy the insurance now.

Marco Kozlowski: Yep, that’s true. Well said, we have a very elegant way of saying things, man, I appreciate that. So I understand that you have our three part formula to all this.

Tom: Yeah, and by this guy, it’s pretty simple. Nothing spectacular. But when people are first starting out and not an exploring this is when it comes down to exploring their investor DNA we get a lot of people come in and say I don’t know what I should be investing in. And so your community is pretty sad. They know they want to be investing in, in real estate. But

Marco Kozlowski: actually, none of us for the most part, like real estate, okay, I’m not a real estate guy. I’m actually a service to others, cashflow that allows us to do whatever the hell we want. So I actually don’t give a rip, I don’t give a shit about real estate. Yeah, this is breaking sterile, there’s nothing there to it. But it’s, we’re giving value to tenants that want good value on it. Like we have a big enough community we offer free childcare. Okay, a couple units. So we can actually offer 24 hour childcare for those that need it that are in the community as part of the rent, right? So now we’re creating people that want to work in a safe environment and put their kids in safe environment. Now we’re creating such abundant value in the community, they don’t want to leave, which creates a legacy asset that now has even more value. So we’re creating value, value value value, how we take care of people. Yeah, it’s real estate. But at the end of the day, it’s people that pay the rents that take care of the mortgage that take care of us that take you know, but I mean, it’s a trickle down effect. It’s just people, same thing people are buying are working in the companies that are fueled by the money of the stock sale. The money is the blood, if you will, but the body is really people at the end of the day, money is just what flows in the currency within the bloodstream. Right? So, yeah,

Tom: yeah. So the three part formula, I grew up in Montana, I used to watch Eagles hunt. So I modeled it after that eagle goes way up in the air is scanning the whole area for something to eat, right. So we go broad first, and we look at all of the opportunities, explore what’s out there. And then once you lock into something that fits so in other words, they they see their prey down there, boom, they lock in, and then total focus, and they just they dive down on that one target. And they put everything they’ve got into that. And then that’s how you basically you go so you go wide. You focus on one thing and then you go in for the kill. That’s the three parts.

Marco Kozlowski: Fairly simple. I love threes. I do everything in threes. I have an ABC formula. I do. Like I have three big boulders in my in my negotiation process. Everything is done in threes. A our impasse is a three part process like everything 33333 So yeah, it’s Very line there. Man, we’ve covered a lot. Is there anything that I should be asking that I haven’t asked that. I’m going to make sure that everyone knows how to get in touch with your organization and can be really served by you and your fantastic communities. But before we do that, is there something that just, you know, a listener should just know?

Tom: Something? Yeah, just really, unlike, unlike human DNA, which you know, you, you have it and it’s who you are. Investor DNA is really, I think it’s kind of a something that’s dynamic, we can continue to develop that as, as our life goes on, as we develop more relationships, more skills, more knowledge, more experience, all those different things. So really keep keep working at your investor DNA. Yours is unique, but it’s also very much something that you’re you’re working on. And so that’s what I would do,

Marco Kozlowski: just like an eagle, in order for them to become an eagle, they’re kicked out of the nest. unless they do something about it before they hit the ground. Right? Yeah. And the beauty of this is, while you’re learning what your investor DNA is, you don’t have to plunge to your death, you can figure out in little ways and test. I’m a marketer at the end of the day, and I spent 10s of 1000s of dollars testing what doesn’t work. So I know exactly what does work and having someone oversee and help you have joy in the things that you want to invest in, I think is is vital. And that’s what I bring to the table with, with real estate. And again, it’s about investing in real estate, it’s really, we’re cashflow buyers that allow you to do what the heck you want. And that cash, you’re not supposed to put another deals you’re supposed to do something with. And this is why our, our relationship is so vital in that our tribe can then go to you with very same principles and values, figure out what they really love and enjoy doing how they can serve with the money that they have. And turn that money into more money and make it grow. And I think that’s really special. I think it is. So to get more information on on on Tom and his basically a mirror image of what I’ve been able to create for you guys, you go to my my NY like it’s my Alright, WF or wealth factory and DNA. So my W F And you can get a free DNA book, I think, where there’s a foreword from Rich Dad, which is pretty damn cool. And it’ll take you to a resource that you can start figuring out what your investor DNA is. And really start yourself on a path with whether you have just a few 100 bucks or a few million bucks going into a direction where you can have joy in making your money grow in, in something that will really give you satisfaction and really will serve others as well. At a very high level. And yeah, that’s that’s that. So I think that’s it. So Tom, I really appreciate you and your your insight and how you’ve put things together. Appreciate you very much you have a great group. listener, thank you as well. If it wasn’t for you, we just be talking to each other. And it’d be weird. And we don’t want to do that. And as always, we welcome your feedback. Please like us. Love us, share us. subscribe and tell your friends, friends, friends, friends, friends and tell everyone you know about big fat real estate checks. We appreciate you very much. And until the next episode, we just want you to action, any information that we give you. So you can serve others at the highest level because it’s your God given right to be wealthy through the service of others. Thanks, guys. Appreciate you. Thank you, Tom. Have a good one. Bye for now. Thanks.