135: How Justin Donald Makes 8 Figures Working Only 15 Hrs/Week

Today, we’re once again joined by none other than the “Warren Buffett” of lifestyle investing and my long-time friend, Justin Donald.

Justin, an 8-figure entrepreneur, has reached the peak of success while working only 5 hours a day, 3 days a week, all while maintaining a family-centered lifestyle. 

In this episode, he shares his inspiring journey–from being a top manager at Cutco to creating the successful Lifestyle Investor group.

We’ll dive into the structure of his investment group and his investment philosophy, zooming in on the importance of achieving financial freedom through strategic investments and avoiding lifestyle creep.

Whether you’re just starting out or looking to refine your investment approach, this episode will bring you tons of value bombs.

Let’s dive in!

Inspiring Quotes

• “A lot of people think I’m a great investor. I actually think I’m a great networker, and I have great relationships with people that give me access to great investments.” – Justin Donald
• “Peer group and mentorship matters more than the actual investments. ” – Justin Donald
• “Most wealth in the world is created through concentration, but most wealth is maintained through diversification.” – Justin Donald
• “If you’re doing something that you hate, you’re doing the wrong thing.” –  Brad Weimert
• “Lifestyle creep is a death sentence to many people.”  – Brad Weimert

• From division manager to lifestyle entrepreneur
• The Lifestyle Investor business model
• Key team members behind The Lifestyle Investor’s success
• Justin’s unique approach to compensation and incentives
• VA vs. AI and in-house VA vs. agency
• How Justin’s investment strategy changed over time
• What you need to know about whole life policy 
• The power of surplus income and impact investing
• How the wealthy people invest their money
• Rapid-fire questions with Justin
• “I don’t want to always achieve and produce.” 

00:00
Justin Donald
Getting to that level of passive income was quite a relief because that was the pivot from I have to work to I get to work. In the peak, when I got really aggressive with my investments, I was saving 50% of what were making.

00:15
Brad Weimert
How many hours do you think you put into this right now?

00:18
Justin Donald
Five to 6 hours, Tuesday, Wednesday, and Thursday.

00:20
Brad Weimert
So five, 6 hours, three days a week. Gross. Pushing eight figures, correct?

00:25
Justin Donald
Yeah. So a lot of people think that wealthiest people have most of their money in the stock market. They don’t. It’s generally about in stocks and bonds.

00:33
Brad Weimert
Damn. What advice would you give a 25 year old in terms of what to do with their money from an investment perspective?

00:40
Justin Donald
Before you invest any of your money.

00:43
Brad Weimert
Congrats on getting beyond a million. What got you here won’t always get you there. This is a podcast for entrepreneurs who want to reach beyond their seven figure business and scale to eight, nine, and even ten figures. I’m Brad Weimerta, and as the founder of Easy Pay Direct, I have had the privilege to work with more than 30,000 businesses, allowing me to see the data behind what some of the most successful companies on the planet are doing differently. Join me each week as I dig in with experts in sales, marketing, operations, technology, and wealth building, and you’ll learn some of the specific tools, tactics, and strategies that are working today in those multi million, eight, nine, and ten figure businesses. Life can get exciting beyond a million.

01:23
Brad Weimert
Justin, Donald, you’re in the new studio this time. Thanks for coming to hang out, man.

01:27
Justin Donald
Oh, I’m excited to be back. This is fun.

01:28
Brad Weimert
It was. Last time we recorded was years ago. I had started the podcast, I think, but, like, I don’t really know what the fuck I was doing. And it was in the old studio. We covered some basics, but I want to dive into lots and lots of other things. And for better or worse, this time we’re sober.

01:43
Justin Donald
Well, that’s important, I guess. I think last time we got into some really good wine. Yeah. Got into all kinds of stories. I don’t know. I mean, I guess you could go either way.

01:51
Brad Weimert
We can. And last time. Cause I reviewed it, we had champagne that we popped. But we do have, like, a hidden in the crates episode, which was definitely before. Beyond a million.

02:03
Justin Donald
That’s right.

02:04
Brad Weimert
And all sorts of inappropriate shit.

02:06
Justin Donald
Oh, yeah.

02:07
Brad Weimert
And that was full of bourbon for sure.

02:09
Justin Donald
Was that the one with Thomas?

02:10
Brad Weimert
That was the one with Thomas. Yep. Yep. That was hilarious.

02:13
Justin Donald
Good shout out to our bro, Thomas.

02:14
Brad Weimert
Yeah, for sure. For sure. We went through your history, your background, and kind of the cliff notes version of that are that basically I met you in Cutco forever ago.

02:24
Justin Donald
20 plus years.

02:25
Brad Weimert
Wild. Yeah, wild.

02:27
Justin Donald
Think about how many friends for anyone listening, how many friends have you had for what, 22, 23 years? That’s a long time.

02:34
Brad Weimert
Yeah. It also reminds me every time I’m able to say the next five year increment that I’m getting older. Like, it’s weird to say 20 years or 25 years.

02:45
Justin Donald
Does that mean that you’ve been friends a long time or is it just mean you’re old?

02:48
Brad Weimert
Yeah, both in this case.

02:50
Justin Donald
Yeah, I guess so.

02:51
Brad Weimert
Depending on who you’re talking to. 43 and proud. Thank you. Thank you. You too. You.

02:58
Justin Donald
I just turned right.

02:59
Brad Weimert
Right? Cutco. You were the most successful division manager in Cutco. You then bought a whole bunch of mobile home parks, are still crushing it in that space. You then started this company, ifm that you grew to eight figures plus in just over a year. Then you decided to take a year off and read books and listen to books. And during that time, I remember sitting down at Pateka, or Pateka, depending on who you talk to, coffee shop in Austin, and you saying, man, you really need some help managing and running easy pay direct. We should really figure out how I can help you manage it. And what a fucking mistake it was to not jump at that opportunity.

03:40
Justin Donald
Yeah, I had nothing going on at that time. I was trying to figure out what my next thing was going to be. I taken a year off, traveled the world, went to 1313 different countries with the fam, and I was just trying to figure out what would be inspiring and interesting for the next chapter.

03:56
Brad Weimert
And crazy missed opportunity for Brad. You then launched lifestyle investor and this whole huge brand around your lifestyle, really. But investing for the sake of lifestyle, I want to talk about the sort of the economics of that specific business and then also a bunch of other stuff around investing. The nutshell of this is that at this time, you have maybe 150 ish members. It’s 55 grand a year to be a part of the group. Anybody out there can do the quick math on that. And the premise of the group, as I explain it, is that you are both teaching investment strategy, but also curating deals for the group. You are not taking money on the back end of the deals. And initially, when I heard this business model, I was like, well, obviously you’re taking money on the deals. Why wouldn’t you?

04:53
Brad Weimert
And the fact that you’re not adds a tremendous amount of credibility to the picture and the investment group and lets people be comfortable knowing that they’re not biased. So I love the model in general. Can you tell me how you run a company that size and presumably still only work like 3 hours a week?

05:16
Justin Donald
Well, it’s definitely not 3 hours a week.

05:18
Brad Weimert
I mean, it’s definitely not 40.

05:20
Justin Donald
There may have been a season of that, and it’s definitely not 40. Yeah. You know, it’s interesting. I wanted to create this space. Well, it’s funny because lifestyle investor really was a passion brand. Right. It was something that I was passionate about, that I was doing for fun that was really interesting to me, and my friends found really interesting. So it kind of grew and I, and spawn from there. But this whole idea of being the one place people can go for truly unbiased opinions and information I thought was important. Because if you look at investments, financial services, wall street money managers, I mean, you look at the whole financial services industry, the money managers make money whether their clients do or don’t.

06:06
Brad Weimert
Right.

06:07
Justin Donald
I, and I don’t like that model. I think it’s fundamentally flawed.

06:10
Brad Weimert
Yeah, it’s super fucked up. And so it’s so far beyond fundamentally flawed. Like, it is really twisted.

06:16
Justin Donald
Yeah, well, and by the way, I have a lot of friends in that industry, so I want to be careful in a sense. Like, there are people out there doing good things and there are people that actually add value, and I would feel good about paying, but most people, that’s not the case.

06:31
Brad Weimert
Well, I still think that from a modeling perspective, there are misaligned incentives. And anytime you have misaligned incentives, you can have people in those situations that do good. But when you have misaligned incentives, it incents people to not do good, or at least to be complacent. In this case, later. I want to break apart people that create funds to do investment in where those misaligned incentives often are. I want to go into the lifestyle investor group specifically. I love that. So you wanted to create an environment where people had sort of an unbiased way to assess deals, which explains why you don’t take money on the back end.

07:10
Justin Donald
That’s right. And by the way, everyone offers. Right. So there’s this opportunity. I mean, it’s there. I mean, this is the industry norm, but instead of taking it’s, hey, how do you spread that across all of our members? Give everyone the preferred terms. And that really became our mantra as a group. It’s like, how do we get really incredible terms for every single member going into it? And I’ll participate the same terms.

07:33
Brad Weimert
It’s going to sound like I’m pitching the group, but I want people to think about this objectively. When you as an outside person that are trying to raise money for your fund, for your investment, and you’re trying to get people to invest in your investment, your group, the lifestyle investor group, is so attractive because not only did everybody in the group pay $55,000 to be there for the year, but necessarily the vast majority also have a bunch of money to invest. That’s right, because why would they spend 55 grand for the year to learn investing if they didn’t have money to invest?

08:08
Justin Donald
That’s right.

08:08
Brad Weimert
So it brings a ton of deals to you, and then, as you mentioned, your job is to curate them to some extent.

08:13
Justin Donald
I mean, at the beginning, it was just me bringing deals, and then what ended up happening is all these other groups recognized that were out there, and were one of the first groups of our kind. So there are other groups that are doing, I mean, no one’s doing exactly what we’re doing, but there other mastermind communities in this space. And so it has brought attention to the fact that there are these groups that are a great stop for people looking to raise money. You just have to be careful what groups you partner with. But then members are, I mean, these are smart people who are excellent at what they do, experts in their craft, experts in their industry, and many of them are bringing deals to the community.

08:50
Justin Donald
So now it’s a lot more community driven with deals and even reputationally driven deals from members or from me or from lifestyle investors as a whole. So we get access to stuff we have no business being in. We get terms we have no business getting. And it really is a win for the community.

09:09
Brad Weimert
I love it. So I want to talk about the investment stuff, but I want to talk about the architecture of creating a group like this. So it started as you. How many hours do you think you put into this right now?

09:18
Justin Donald
Oh, that was going back to the original question. Yeah, I’m probably putting in 15 ish hours, probably 5 hours, five to 6 hours Tuesday, Wednesday, and Thursday. That’s probably. And I would include my podcast in that, even though that’s not technically part of it, but it’s under the same umbrella, same brand, same umbrella.

09:39
Brad Weimert
So five, 6 hours, three days a week gross, pushing eight figures, correct?

09:44
Justin Donald
Yeah.

09:45
Brad Weimert
Lots of people love that idea and would love to run a group like that. Tell me about the other people that are involved in making that happen to allow you to work five, 6 hours, three days a week.

09:57
Justin Donald
At the beginning, I remember, it was just me, and then I brought on an executive assistant, and she’s awesome, t, you know, or she’s just amazing. And so it was just her and I. And so the big joke from the guy, Ryan Casey, who runs it, is, you know, it was duct taped together in the beginning, just the two of them with some duct tape. And so, you know, we kind of giggle about that. But now the team’s built out. You know, we’ve got someone that runs the day to day. That’s Ryan Casey, who, you know, has a very successful track record, and, I mean, is a lifestyle investor on his. On his own. Right. You know, he doesn’t need to be doing this for a career.

10:32
Justin Donald
He has two of the top orange theory fitness programs, a sales training, like all kinds of stuff, but he runs the day to day. We’ve got head of marketing, Phoebe, who you know really well, just awesome at what she does, and just a great person. You know, we’ve got our head of sales. We’ve got really, I mean, we only have one salesperson and a CTO. A Cio. I mean, you know, Hans. Hans is officeing right here, and Hans does a lot of our internal deal vetting.

11:03
Brad Weimert
Couple things. One right here is we are in studio in Austin, Texas, and Justin owns the building with me. Hans is in a different part of the building. And for those that don’t know, chief investment officer is CIO in this case. And most people do not have ACio. So I think it’s worth highlighting that. Part of what I’m curious about from a structural perspective is salaries and incentives and how you think about bringing these people on, because you have, like, the people that you’ve brought in. These are not nine to fivers. These are people that are participating because they want to be participating. And so I’m curious about how you incentivize them and get them to drive without you really managing them tightly.

11:52
Justin Donald
Yeah. So, really, I think incentives need to be aligned. I think having some reasonable base so people feel good and feel comfortable. I mean, actually, we could rewind here because one of the most important things is the personality assessment. So we talked about this a while back, but I want to make sure that anyone that’s going to be in some sort of, like, a senior position has an executive profile as a personality assessment or behavioral assessment. So I want to know that, a, you can play the game at the highest level, you’re really good at it, and b, even if you’re starting in a more entry level or middle type tier role, you could grow into an executive position. So for example, my EA that helped me start this, she had an executive level profile.

12:40
Justin Donald
So now she runs all operations for lifestyle investor, but she started as an executive assistant who I knew could grow with me. And this is what I’ve done in other businesses as well. So I think first, do they have the competency to be able to be there and play at a high level? Secondly, do they have the drive? And I think that can be observed pretty quickly on. And then if they have those things and you trust them and you like working with them and those are big things, like you have to like working with them. I’ve had the right people on paper where everything looks perfect and they check all the boxes, but then from an interaction standpoint, it just doesn’t feel good or I’m not excited about that person that just isn’t going to work long term.

13:24
Justin Donald
And so then you build the incentives around like, hey, as the company grows or as profitability grows, then their income can also grow. And so from the bottom to the top, people have incentives. And, you know, if our company grows a certain amount, if we grow revenue, if we grow profit, depending on the role, you know, each person is compensated in a way where they will be rewarded for great performance. And for people that want to go above and beyond and work more hours, they have the opportunity to do that and they’ll get paid, you know, handsomely.

13:57
Brad Weimert
How do you think about overall ote, total comp and incentives and the distribution between those as a ratio? Or do you think about it that way?

14:11
Justin Donald
I really don’t. I mean, to me, like, in some cases, you know, on the sales side of things, eat what you kill. I mean, if you can’t produce, then that probably isn’t the best role. I mean, either we’re failing by not providing the leads or you’re failing by not, you know, executing on the leads. But I want someone that can really survive in that role. A salesperson should, you know, want to be incentivized based on their performance because they will make more than just some, you know, base. If I look at what do we do last year, what do we want to do this year? And can you bridge that gap? If you can help us grow, I’d like you to have a percentage of it. I don’t need all of it. The company will, you know, we’ll do some reinvestment into the company.

14:55
Justin Donald
We’ll reinvest into activities and upgrade things for members and create cooler, bigger, more frequent experiences. But I want our, you know, all of our people have families and, you know, or livelihoods on the line, so I want them to be compensated well. So if you can help us grow, then you’re gonna get a piece of it. Usually for us, globally, we’re just looking at last year to this year. And really, in some cases, like, if the division didn’t exist before and there’s no benchmark, we just can create an arbitrary benchmark. Right, right. We have some incentive that. So one person on our team, I just want to be careful not to say who and, you know, with some of these, but one person on our team, you know, had a role, and this person really was kept.

15:43
Justin Donald
Like, didn’t have the opportunity to make a ton of money. And even as a top performer, this person literally hit the ceiling. And so with us, we knew for comp, we needed to make it so there was no ceiling. Like, you could just keep running it up. She can literally make two or three or four times what she made before.

16:04
Brad Weimert
One of the things that I find challenging about comp is, and you mentioned it, is create an arbitrary base. And one of the problems with that is validating that ahead of time or the lack of validation ahead of time. How long do you give it before you pass judgment and say, this was the wrong incentive and I need to change it? And I guess that’s another way of saying, how do you know if it’s your fault or the person’s fault?

16:31
Justin Donald
Yeah, sometimes it’s just trial and error. I mean, it’s really helpful if you can have multiple people in a role, because then you’ve got a larger sample size to select from. I also think if someone’s a good person, it’s worth fighting for them, maybe reworking the comp, like, if you like them, if they do well, you see strong potential. I would probably want to rework comp, especially if you’re just throwing numbers out there and you really don’t know. But I also think that even in that situation, you’ve got enough data for where they’re performing, and you can incentivize above and beyond that current level of performance.

17:06
Justin Donald
So maybe you reassess what it looks like, but also you can have some lower hanging fruit where it’s like, well, hey, 10% increase, and you’re gonna get this bonus in addition to what we’ve already laid out here, which probably feels a little too far away to hit.

17:19
Brad Weimert
I like that I’m sort of constantly thinking about it, playing with it, and at the end of the day, where my head goes is like, make sure that they are getting paid. Part of the fear for me with incentives is that I’ll make a mistake. And I know from being an aggressive salesperson that one of the things that sucks the most is when an incentive plan is put in place and then it’s changed and salespeople feel like managers and ownership is fucking them over. And I never want people to feel that way. So I’ve been very sensitive to misaligning those incentives, but I’ve leaned in the other direction, which is not putting them in place as a result. And that’s a problem, too. So your commentary was, get something there.

18:09
Justin Donald
And here’s the other thing. If they’re working in that direction and you accidentally overpay them, I would rather that than not having the incentives to drive what you are targeting for the business. You can reassess the next year. And you know what? Maybe they just make a killer income, and maybe that just helps you retain them that much longer. But I would rather pay too much than not enough for the right person. Not for the wrong person, but for the right person.

18:39
Brad Weimert
Still, how many people do you have on staff total for this mastermind, which is pushing eight figures that you work.

18:46
Justin Donald
15 hours a weekend, nine or ten officially on the payroll, not counting the vendors. That we have a good number of vendors that we use for different things that are outsourced but still regular.

19:00
Brad Weimert
Yeah, I love that. Right, so nine or ten people on staff. W two. How many people?

19:05
Justin Donald
Well, technically, we don’t have anyone w two.

19:08
Brad Weimert
Oh, shit.

19:09
Justin Donald
We’re 1099 for everyone.

19:10
Brad Weimert
Awesome. Crazy. Why did you choose that?

19:14
Justin Donald
I think it’s better for the business, and I think it’s better for them.

19:18
Brad Weimert
How is it better for the business? So, and let me add some rails to this. One of the critiques somebody could have about that is that when you don’t have people on w two, you legally cannot control hours of work. For example.

19:32
Justin Donald
I would agree with that. If you’re hiring the wrong people, I think if you hire people, there’s a cultural fit. People are bought in on the goals where everyone’s moving on some of the financial incentives. I think that doesn’t matter. If you’re hitting your numbers and you can do it in half the time, great. If you want to work twice as hard, put in more hours, great.

19:57
Brad Weimert
Echo that sentiment in some roles and right people. Right incentives are super important to be able to make that work. How do you think about that in what I’ll call the other roles, which would be customer service roles, for example, which may not really exist in your world, at least not the same way they do in mine.

20:17
Justin Donald
Yeah, our customer service is going to be a little different, but a lot of this, we feel like we’ve done a good job outsourcing some customer service to AIH. We have used a lot of virtual assistants in our customer service. We’ve figured out, I mean, we’ve asked AI. All the questions that can be asked, come up with great responses. I mean, we literally have what we think is written out. Most questions that could ever get asked have some sort of a response so that any VA could do it. And so my goal, so what I didn’t talk about is how I think every person that works for us should have at least one VA. And so everyone on our team has at least one. Some have two, some have three. So it’s lower cost.

21:01
Justin Donald
But, you know, people that have great skills, and that way everyone can delegate work that they should not be doing themselves, that needs to get done. So they have help, but they should not be doing themselves.

21:13
Brad Weimert
What kind of vas now you get into? Like, do you do a VA service? If you do a VA service, is it in the US, is it a overseas? Or are you doing solo vas that you’re getting from Odesk? Upwork. Which one is it? Upwork.

21:26
Justin Donald
Shit, we’ve done them all. I mean, I really just let people choose what they want to choose. We have some people that have worked with their eas, like Ryan. Casey and I both have eas that we’ve worked with for 20 plus years. So we’ve got a relationship, and I think they’re both Philippines based. For Ryan, mine is, but for Ryan’s, I think. And we’ve utilized other people from there. We’ve used services. Other people came on, you know, having had vas in the past, and maybe just rehired them. We’ve definitely done upwork for a number. You know, when you need, like, a specific task or a specific skill, I think that’s a fantastic way of doing it, too. You need video editing. Boom. Right? So it’s like you can find the people that are good and quick.

22:10
Brad Weimert
I think one of the. There’s lots of different things that are important about this to me. But for every entrepreneur listening, what to delegate, when to delegate it, what to have a tight grip on, what to not, and what to let go is always a challenging thing to assess. And having some sort of guiding principles or framework is very helpful. Absent those concrete frameworks, learning from people that have a business, that has run differently than yours. That’s successful, I think is really important. The same thing can be true of investing, which I want to shift to in a moment. But do you have any general thoughts or principles around when to hire somebody in house, when to hire an agency, or when to use a Va?

22:58
Justin Donald
I feel like we have had little success on the agency front. Doesn’t mean it can’t always. It doesn’t work. Sometimes we have overpaid for what I think is underperformance in a handful of different areas. There are some that have been great and some that we’ve really enjoyed. I mean, I think any minimum wage work, I think figure out what’s the dollar amount that is worth you working on it? Is it dollar 50 an hour? Is it $500 an hour? Is it $5,000 an hour? Like, what’s the number? That task generates enough revenue that it is worth your time, and then what’s under that dollar amount? And that should be hired out to someone. So vas being the first stop. Some of our people have their own executive assistants as well. Right?

23:49
Justin Donald
So that would be a tier up from most vas, maybe not all vas. And then agencies sometimes make sense because you just don’t have any other options. You just need high skill or big team or whatever the case is. You know, we’ve hired an events company that has been, you know, they’re expensive and could we do it cheaper in house? Yes. But is it going to be done as well with as many thoughtful touches? Probably not. And that was a good hire for us. So there are a number of those. You know, I think on the social media side of things, we’ve had nothing but disappointment in cost to actual product.

24:29
Brad Weimert
In terms of creative execution, video editing, social posts, etcetera.

24:35
Justin Donald
Yep.

24:36
Brad Weimert
Yeah, I have a general thought on that stuff, which is. And creative hires, which is you need to hire in alignment with your own vision, and somebody is not going to get more creative or snap to your creative vision through training like a customer service or a salesperson might. They are as creative as they might be, and they might be able to sort of loosely adjust to one style or another. But basically what you find in the creative is what you’re going to get. So you have to find the people that are fucking killer. And it’s not just that they’re killer, it’s that they’re in alignment with the type of thing you’re already doing. And what is true in a lot of cases is if you find those people, they’re either very expensive or they’re doing their own shit.

25:28
Justin Donald
I’d agree with that completely.

25:30
Brad Weimert
So I echo that sentiment, especially in the world of AI, where people are like, oh, yeah, just throw it in the engine. And then you get what you get many cases.

25:38
Justin Donald
Garbage.

25:38
Brad Weimert
Yes. Robot videos.

25:39
Justin Donald
Yes.

25:40
Brad Weimert
Lifestyle investor as a group is there to do a lot of things. One of them is to curate deals. That’s right. You started by having a bunch of mobile home parks that kicked off a whole bunch of cash flow which allowed you to functionally retire. And I hate that word. I don’t even know what it means. I mean, really, it’s interesting because the era that our parents grew up in, I grew up thinking about when I could retire, and in the last probably ten years, that word has been eradicated from not only my vocab, but, like, my entire life. I don’t think about it at all. No.

26:23
Justin Donald
Well, you live a good life, so, I mean, I get that you just want to keep living a good life. I think there are so many people out there in the world that they cannot wait till the day they’re done and all the cool stuff they’re going to do. You do all kinds of cool stuff and you like what you do for work. So I love that doesn’t exist for you. It doesn’t exist for me either. To know that I can. Feels good, but I think there’s a large percentage of the population that retirement is going to matter or be a thing for. Right.

26:54
Brad Weimert
Yeah, of course. I just. I generally believe that if you’re doing something that you hate, you’re doing the wrong thing.

27:02
Justin Donald
I agree with that.

27:03
Brad Weimert
And so it’s your first, even if.

27:04
Justin Donald
It’S your skill set, even if it’s what you’ve put hours and, you know, it’s. You’re pot committed, but you don’t have to be pot committed.

27:11
Brad Weimert
No, no. Right.

27:13
Justin Donald
I.

27:13
Brad Weimert
Is that a poker reference?

27:14
Justin Donald
Yeah.

27:17
Brad Weimert
Okay. So how has your investment strategy changed over time? So walk me through, like, the starting point where you’re focused on retirement, you’re focused on, how do I stop doing what I’m doing and have investments pay for my lifestyle and then fast forward to. Of amass some wealth and how you think about investing differently. So you’ve got sort of. And there are obviously more stages than this, but you’ve got two. You’ve got, during retirement, getting to, allowing investments to kick off enough cash flow to live, and then you’ve got how you deal with investments later at the stage that you’re in now.

27:57
Justin Donald
Yeah. For me, I think I really thought about it in a few different phases. So phase one is, what is my survival income? Just what it costs me to get by in life. Nothing fancy, not great vacations and eating out all the time. Like, what is just the bare minimum to cover mortgage, car payment, utilities, food, getting to that level of passive income in it, you know, just straight up, that was quite a relief. That just felt good because that was the pivot from I have to work to I get to work. The second tier then, is actually true lifestyle income. What does it cost me to live my current life the way that I’m doing it? This includes the vacations, the travel, eating out, however much that we want to eat out. And so that was a really fun accomplishment.

28:48
Justin Donald
I don’t know that it had the same, you know, I still think survival income was the biggest game changing, like mentally game changing, I guess, metric. But lifestyle income, that was really fun. You know, you hit that and life is good, you don’t have to do anything.

29:06
Brad Weimert
Well, you said something key that I want to highlight, which is your current lifestyle. And I think that’s really relevant because the in development we refer to scope creep, right? Hey, I want to create a product, and you lay out a plan to create a product, software product, and then inevitably there is scope creep. And so you’ve laid out the plan, you have a scope to do it, and then you realize, oh, I want this too, and maybe I want this feature. And how about this? And the same thing happens in lifestyle. And it’s actually a death sentence to many people who start to build wealth because they realize that they’re in a trap of keeping up with the Joneses. And it happens at every level.

29:45
Brad Weimert
So, you know, like, you get to a point and then people are flying private and you’re like, oh, maybe I should fly private. Well, there’s a huge difference between a first class ticket or a coach ticket and a private flight ticket.

29:57
Justin Donald
That’s right. We’ve been talking about this a lot recently.

30:00
Brad Weimert
Yes, we have. It’s top of mind, obviously. So first is basic survival. The next is lifestyle income. What are you investing in at those two phases for people to think about? Safe investments, risk, reward, et cetera.

30:20
Justin Donald
Well, for me, all I really knew early on is getting around people that were doing something successfully, that had a track record, that I could learn from, that I could copy the blueprint. So the only thing that I really had dug into with any level of time and energy was mobile home park investing, because I had a few people in my ecosystem that were really great at it. My buddy Tim is the one who really got me into it. And it’s funny because originally he was borrowing money for me to get him started in that space. Cause I had money that, you know, wasn’t being put to work. And so when I started seeing the returns he had, I was like, wait a minute, why don’t I just do this?

31:01
Justin Donald
And by the way, were gonna go into single family home rentals, and so he had accumulated some, and I was about ready to buy some. And he’s like, hey, let’s hit the pause on this, because it’s not as lucrative as you think you really need. You need scale, and scale’s big, and it costs a lot of money, and it’s hard to manage, and the profit margin isn’t what I thought it was going to be. So that’s where we kind of pivoted. And he went down this mobile home park path, and I was like, okay, I’m not ready for this yet, but I’m going to watch you. I’m going to see how you do it. And if you do it well, then I’ll do it. I don’t want to do another pivot. Cause this didn’t work.

31:38
Justin Donald
And so when I saw it working for him, I was like, all right, well, I’d like to learn from the best out there. And so, you know, that’s when I partnered with and learned from Frank Rolf and Dave Reynolds. And so Frank became a good friend. And, I mean, we talk all the time. He’s one of the smartest people I’ve ever met. Stanford economics degree, like, brilliant man. And he chose to be in mobile home park investing. And still today, he has a laundry list of all the reasons why it is the best performing real estate asset class. And if you look at the numbers, it is, you check out the numbers against any group, any sector. It’s the best performing, it’s the lowest default, it’s the least institutionalized. So the list goes on and on.

32:20
Justin Donald
I started down that path, and once I learned that, it became clear to me that if I’m going to be buying real estate, I might as well just keep consolidating in one area of the same asset class. That’s also the least amount of time to manage. So a mobile home park is way less time and energy than multifamily, than single family homes, right?

32:44
Brad Weimert
If you have a manager on site.

32:46
Justin Donald
If you have a manager on site, right?

32:48
Brad Weimert
That’s a big if, and that’s obviously the way that you run that model. For sure.

32:51
Justin Donald
Every park has a manager on site.

32:53
Brad Weimert
Yeah. So we could dig into the mobile home model. But two things. One, are billboards still a thing? I mean, they still exist. But is investing in billboards a thing right now? Because obviously, like, at one point in time, billboards were like the URL’s of the world, right? They were the websites of the world. You owned a specific billboard in a specific location and you got traffic, you got eyes on it. That’s still the case, but people are looking at their phones while they’re driving anyway.

33:21
Justin Donald
I think you can still make money in it. I think you can still do it in a strategic way. I was just hanging out with someone in this post exit founders group that I’m in. And I mean, literally just this week, on Monday, and were talking about a strategy that this company had as a startup, but they wanted to seem a lot more developed than they were. So they basically did advertising on like ten or 15 different billboards all around this one client that they wanted, and then they landed that one client. So then they just started doing that over and really scaled as a company.

33:52
Brad Weimert
Damn.

33:53
Justin Donald
So I know it still works. I don’t know, you know, the economics around, you know, the margin you make being the owners of them. But I do know people that have. Have done it and have done well with it.

34:04
Brad Weimert
I love that.

34:05
Justin Donald
Isn’t that cool?

34:06
Brad Weimert
That’s fucking dope. Yeah, that’s great. Buy all the billboards around, somebody to get them. Yep. Oh, that’s awesome. Okay. The other thing that you mentioned that I want to highlight is Tim was getting into the guy that you learned mobile home park investing from, or at least got introduced to it from, was buying a mobile home park, but he didn’t have the money and he had to borrow it from you. And he borrowed it from you. I think because you had built up, you had hyper funded a whole life policy or IUL or something. That’s right. Can you give me sort of the breakdown of why you did that? And so this is a really important vehicle for people and for some more than others. Like, I don’t have a whole life policy.

34:50
Brad Weimert
One of the reasons is that I don’t need a cash value for anybody. Right. I don’t have a family that I need insurance for right now. Tell me about the basics of whole life. When you think you should do it, why you did it, and when you shouldn’t do it.

35:04
Justin Donald
Yeah, you know, when I think about life insurance, you know, there’s a lot of life insurance, that gets a bad rap, or maybe even the whole category. Sometimes people feel like, oh, I don’t need it, or it’s not applicable to me. And I actually think in the world of life insurance, most term policies, I think it’s like 98 or 99% lapse or go the full term, and so there isn’t a payout. So maybe you can make the argument that it wasn’t worth it, but that’s on the term side, on the permanent side, you’ve got whole life insurance. And I do think, I mean, this is what the wealthiest people in the world use as their family bank. And so they build a lot of their business, their lifestyle, a lot of things from this bank, and over time, they grow it.

35:45
Justin Donald
There’s a situation that allows you to have this arbitrage when you’re investing, because you have a guaranteed minimum rate of return, but then you also have a dividend, and you’re going to get whatever’s higher of the two. But what that means is you’re guaranteed to at least make a return, but you can also borrow money against it. So you don’t take that money out of the policy. You borrow money against the policy, so the money stays in the policy, keeps earning your four to 7%. Right. Just solid, good, safe money. You take this money that you borrow against it, you can do different investments.

36:23
Justin Donald
Well, some of these investments are paying pretty good returns, and even in a safe way, you can cover the cost to borrow that money, and you can arbitrage and have, maybe you’re making three or four or 5% total margin, that deal. So you have two different returns with the same dollars. And so that’s really where my first loan came from. It was borrowing against my policy. I loaned that money out. I earned 10% of that money, and I think what I owed was 5%. I think that was five or five and a quarter something. It was right around there that I owed for borrowing it. But keep in mind, I’m borrowing my own money or borrowing against my own money. So technically, I have no exact timeline. I have to pay it back.

37:07
Justin Donald
If I don’t ever pay it back, it’ll just be taken out of my death benefit. So it’s very loose. It’s not a strict way of having to pay it back, but if you pay it back, it’s going to perform better. So I would, you know, I would pay it back. I would pay it back in many cases with more interest, because it all goes into tax free growth, tax free distribution, tax free growth.

37:28
Brad Weimert
Is a big deal. So help me with the mechanics on this. So let’s say you have $10 million. Let’s say you have a million dollars in a life insurance policy. You’ve put a million dollars in, you’re getting guaranteed three to 7%, 4% a year, and you want to lend 50%, you want to lend 500 grand to somebody else, they’re going to pay you a 10% return, but you are getting charged 5% to lend that half a million. Is it a third party that is giving 500 grand for is lending 500 grand and charging you 5% and then collateralizing your million dollars? Is that how that works?

38:06
Justin Donald
It can be. The actual life insurance company will have one rate. And then these third party, generally banks or lending institutions, specialty finance is probably more what it would do, what you were talking about. And then you just shop rates. So, for example, when interest rates were a lot lower, you could get interest only. You could get, I mean, as low as like two and a quarter, two and a half percent. So that was less than the insurance companies, and it was interest only. So it was very easy to make a big return on the same dollars. You have two returns on the same money. Now, today, interest rates are a lot higher. So if I had a rate with one of these third party specialty finance lenders, maybe I could do interest only.

38:54
Justin Donald
But maybe it’s a variable interest rate and it’s not as favorable as a life insurance company. So I’ve done both. Right now I’m back to the insurance company. Cause they’re paying me, you know, it cost me 5% over here. And I think the specialty finance companies are charging a little more, maybe five and a half, six. Six and a half percent.

39:11
Brad Weimert
But functionally, the mechanics are the same, is that some party is lending against. They’re collateralizing with your actual cash value in the insurance policy.

39:19
Justin Donald
That’s right. And it’s super safe to them because your policy has more money in it than what that is. I mean, there’s no way they’re not going to get paid.

39:26
Brad Weimert
Yeah, love that. Literally, cash. The mobile home parks you sort of fell into, you assessed, but it was close to you. And before you went into single family, you decided this was a better asset class for a variety of reasons. And so this was just the thing. And you realize that you would create some cash flow doing it, but you get a good return. Once you had covered the basics, how did your philosophy change to get to the lifestyle investment side?

39:55
Justin Donald
It’s a great question because one thing I will say is that you’re always going to, you got to be careful because the goal posts are always going to consistently move and change. So you got to be really careful based on what lifestyle looks like today versus five years from now. That same lifestyle that you want probably isn’t going to cut it, right? So there’s this ebb and flow there that exists. But what I will also say is once we got to 100%, I had worked really hard in my career to save 1520, 25% of every bit of money that I made. That was what I was saving, investing. And I remember in the peak when I got really aggressive with my investments, I was saving half. I was really disciplined to not allow lifestyle creep to, you know, to really invade our lives.

40:52
Justin Donald
And so we are saving about 50% of what were making. All right. Now, what’s interesting is once you get to surplus income, so lifestyle expenses totally covered. Now, every park that we add from here, every bit of income that comes in, that is surplus income, that’s 100% that can go towards either investing impact, growing network or impact, right. Whether it be a charitable vehicle or investing in impact type of companies or growing net worth through other vehicles. So you work hard to save 1015, 25%, whatever that number is. But once you get to surplus income, that’s 100%. That’s how you can compound net worth and compound cash flow and passive income. So my goal is just how quickly can I get to having that lifestyle covered? Because everything from there, the game’s going to change.

41:51
Justin Donald
You’re going to have exponential growth that is going to start playing a factor.

41:54
Brad Weimert
It is very easy to have lifestyle scope happen. Do you draw that line? How do you draw that line when you go into surplus? Because I know right now my general mentality these days is just make more. And that’s like, and that’s always sort of been the mantra, but I remember the forcing myself to put away 10% and being super diligent. I mean, I’ve been super tight with money until the last few years. In the last few years, it’s like now I think just create more. And a lot of the time, my mentality around even investing in surplus land is like, I’m not going to miss this number at all relative to the monthly cash flow that’s coming in.

42:40
Brad Weimert
So my criteria has changed and that’s part of the reason I want to talk about it, because most people do not have strict criteria in life. And I believe that inside of strict criteria and discipline, you find freedom. What are the rules that you have in place today in the land of surplus that allow you to really have freedom so you don’t feel like you’re pissing things away.

43:01
Justin Donald
Yeah, well, I mean, part of it is just recognizing that, you know, and my wife and I agree on this. We don’t want to get caught up in consumerism for the sake of just having more. I mean, for us, we’d rather spend money on experiences than on stuff, on material possession. So that’s one easy way that you just don’t buy more stuff. But I also think, you know, in surplus, like, I’ve been really strict in surplus to put 100% of that towards, you know, impact and wealth creation. And so we have a good life. We don’t feel like we need to eat like add anything to our life. We. We travel well, we eat great. We, you know, we do all the stuff. We have cool experiences, so we don’t feel like we need more.

43:45
Justin Donald
And it’s nice to have the luxury of having that. Given the opportunity to either spend it on ourselves or have an impact somewhere else. We take greater joy and satisfaction and having that impact somewhere else. So that, to us, is an important part. Like, our giving is a very important part to us. And so as we make more, we want to give more. And that not only feels good, but you can actually see the impact of that work. But I think it does take a strong discipline to not feel like you need more. You need the next car. You also need a boat because your friend got a boat and your buddy just got a jet, so you need the jethe. So there are ways it can happen. And lifestyle creep is, I mean, that’s a real thing.

44:27
Justin Donald
We talk about this every day in the lifestyle investor mastermind because it’s real. Like, people, this is a real thing that happens at every level. Yeah, we just. And by the way, I still. It’s not like I’m immune to it. I still fight hard, you know, to be disciplined against it where it’s unnecessary. Right. Sometimes it’s like, oh, it’d be cool to have that. But then it’s like, well, that’s going to be old in no time. I mean, do we really need that? And then in other instances, it doesn’t take a lot of money to move the needle on a few different things, right? Like, if you want a new wardrobe that is not that expensive, right? So you can upgrade your wardrobe and it’s not, you know, at a certain point income, when you’re in surplus income, it’s not a huge factor.

45:07
Justin Donald
One way or the other. But I mean, we just, we bought that ranch that you’ve been to and redid the whole house and we had one scope of work and then we had the next scope with some upgraded things and then the next one. So that one for us was a very obvious, like, scope creep happened at a very high level many times. And lifestyle creep is the same way. And I just think you have to be on guard. And until you are at a place where your income covers your lifestyle, your income, your passive income, not your earned income, your passive income covers your lifestyle. I think it’s better to be disciplined to get there and create that, unlock that next set of freedoms, because once you have that freedom, your mind is so free to create and collaborate.

45:59
Justin Donald
And I just think a whole new world opens up when you don’t have to work for money.

46:04
Brad Weimert
Yeah, I think that’s a great lesson. In general, you’ve got the people that are trying to cover basic income listening. Youve got people that are working on lifestyle income listening, and then youve got a bunch of people in the mastermind itself that are in surplus land, back to investment strategy. So youre in surplus land now. Youve got all this money to do something with. How does your approach, how has your approach changed in terms of asset allocation, what you invest in and what you dont? Risk tolerance, how has that changed since when you were in, lets call it lifestyle mode?

46:36
Justin Donald
Yeah, I think most wealth in the world is created through concentration, but most wealth is maintained through diversification. So, you know, you grow a portfolio much differently than you accumulate that first amount of wealth. For someone that has a big exit, you know, it’s because there’s concentration in their business or because they invested, you know, and for me, concentration was in mobile home parks. Right now it’s not in mobile home parks, but at one point in my career it was in mobile home parks. But I just started studying what all the wealthiest people do. And it’s funny, like, we’re talking about investing and I want to get into this. One of the big things that most people don’t think about, don’t talk about is tax strategy. We do some killer deals. It’s awesome.

47:19
Justin Donald
But what I think is like the underrated unsung hero is the crazy cool stuff that we do with tax strategy because this is saving people, in some cases hundreds of thousands, in other cases millions, and in some cases in our group, tens of millions of dollars in taxes every single year with strategies that you employ at once and it, you know, continues on. And sometimes when you’re in surplus income, you have all this money. So you got to get even more creative with the tax strategy, right, because you’re inviting another problem. Yeah, it’d be great to be in surplus income for those that aren’t. You’re like, oh, you know, poor you’re in surplus income, I get that.

47:55
Justin Donald
But when you’re surplus income and you have a lot of money coming in, it does create other problems and other, you know, things that you need to work on. You know, you need to mitigate that. I get these family office reports, and for those that are unfamiliar, family offices are the groups that really manage the investments and really even the whole estates for the wealthiest people. So think about it like single family offices generally make sense at about, you know, the billionaire club, maybe the demi billionaire club at 500 million, but beyond that, and you know, maybe at centimillionaire Club, you’re in a multifamily office. But these are organizations and I, you know, groups of people that are going to help you grow your wealth in every department.

48:36
Justin Donald
You know, you might have legal on your team, you might have tax on your team, you certainly have investment, you certainly have estate planning and all that. But if you study these. So this is what I look at JP Morgan’s annual family office report. UBS, let’s see, you’ve got Goldman, you’ve got KKR put out a good report this year. You’ve got even just the groups that aggregate data amongst the top 200 family offices. So basically you’re literally looking at the wealthiest people in the world and it actually breaks down world and USA and you can see what they invest in. And the wealthiest people have a nice asset allocation where the majority of their investments are in alternative investments. So a lot of people think that the wealthiest people have most of their money in the stock market. They don’t.

49:30
Justin Donald
It’s generally about 15% to 25% in stocks and bonds.

49:33
Brad Weimert
It’s crazy that most people think that, though. I thought that when I was younger.

49:38
Justin Donald
So did I. I think the Wall street conditioning and education, no question about it, in our country is incredible because the reality, the truth is far from that. But we grow up thinking that. We grow up even in school learning that. And you know, as a finance major at the University of Illinois and at that time a top 20 business school, I mean, that was very clear that, you know, this was the education they wanted us to have. But what you’ll see is that the majority is in, you know, if you look at a pie chart, you’re gonna have, you know, 25% to 35% in private equity. You’re gonna have another maybe 15% to 20% in real estate. So just those two categories is overdevelop half, and in most cases around 60%. In fact, what was the recent report?

50:26
Justin Donald
I think UBS has it at 59% of the asset allocation this year was in alternative investments. So it’s funny, they’re called alternative investments, but they’re actually the primary, not the alternative. The stock market’s actually the alternative.

50:40
Brad Weimert
It’s sneaky.

50:41
Justin Donald
It is very sneaky. Right. And so you look at private credit, usually five to 10% in private credit. You’ve got maybe 1% infrastructure and 1% in currency or commodities or agriculture, 1% in crypto, 1% in precious metals, 1% in uncorrelated assets. Think wine, collectibles, you know, bourbon, tequila. Be kind of the big spirits. Yeah. Yeah, me too. So that’s kind of like one way of looking at it. And by the way, were talking about whole life earlier and how you’re earning a guaranteed at least 4% in most cases, and with the dividend, it’s usually closer to 6.57%. And it’s going to creep up with interest rates going up.

51:38
Justin Donald
So, like, the one next year is going to be higher than the one, the dividend this year for all these companies, but that would be considered fixed income, maybe fall in line with like a bond, annuity.

51:50
Brad Weimert
Yeah, got it.

51:51
Justin Donald
And so a lot of wealthiest people have a good amount of their money there, because then it’s liquid. They could borrow against it. They can do other alternative investments.

52:00
Brad Weimert
That’s all super insightful. One, Washington. Look at what rich people are doing with their money and study it and learn from it.

52:10
Brad Weimert
Two is creating wealth tends to be a singular focus, single engine. And managing and growing wealth tends to be a distributed activity.

52:25
Brad Weimert
I want to ask you a couple kind of rapid fire questions here that I think are common for people to be curious about. What advice would you give a 25 year old in terms of what to do with their money from an investment perspective?

52:41
Justin Donald
It’s interesting. Part of me wants to give a technical answer, and part of me wants to give the answer. That is, before you invest any of your money, get around really smart people that are very successful at investing their money. For me, part of it’s like, actually peer group matters more and mentorship matters more than the actual investments, because those people know how to find the good investments. So a lot of people think I’m a great investor. I actually think I’m a great networker, and I have great relationships with people that give me access to great investments. And so that, to me, is number one.

53:19
Justin Donald
But, I mean, if you want an actual technical answer here, I would say, you know, for most people, real estate is an easy way to get started, that if it goes wrong, you don’t lose all your money, but if it goes right, you’re getting a consistent return. Real estate rentals, specifically, something that cash.

53:37
Brad Weimert
Flows, single family, multifamily, mobile homes.

53:40
Justin Donald
I still like mobile homes best. I mean, industrial has been the leader of the major asset classes the last. The real estate asset classes the last six years.

53:49
Brad Weimert
And rationally, that’s because there is more commerce and more drop shipping.

53:55
Justin Donald
I think so, yeah, I think that’s a good part of it. Last mile is the most expensive portion of getting a product to a consumer. So if you have a warehouse that is inside of the last mile of a major city, the cost savings of having that there versus the incremental rent increases is negligible. So it’s just there’s so much money to be made having right location for industrial.

54:28
Brad Weimert
How do you feel about weed, man?

54:31
Justin Donald
Well, I think there’s a lot of good that it can do, and I think at some point in time, it’s gonna be legalized federally. Obviously, a lot of states have legalized it. What I like best about it is there’s a huge arbitrage opportunity. I mean, it’s the wild west because there’s no federal regulation or there’s inconsistent state level regulation. And so you have these pockets in these areas that are going to be, you know, mispriced or, you know, have price differentials. And so because banks can’t get in it, and if you want to be in the lending space, which if you collateralize properly, there is very little risk lending to some of these companies that have great cash flow, great success, a track record, bank accounts, you name it. But because banks can’t lend to them, it creates this outsized opportunity for a return.

55:28
Justin Donald
So, yeah, I like it. From the standpoint of having an uncorrelated asset that people can earn well on. A lot of our community has done well financially on many of these investments we’ve done.

55:40
Brad Weimert
Are you then investing in funds that are lending to cannabis companies?

55:47
Justin Donald
Yes. I prefer to invest in funds because it mitigates some risk. A deal goes bad, then the whole, you’re not losing all your money. Right. And so I like this on both the equity and the debt side or the credit side, meaning that in a.

56:04
Brad Weimert
Fund that would actually buy a portion of a company and also just lend them money, that would be the equity versus the debt or credit side.

56:09
Justin Donald
That’s right. Yeah. But your outsized returns right now are going to be in that private credit side of cannabis lending, because you can, all day, every day, charge 20% on that money all day, every day, because no one else is money. Yeah. There’s very few players in the space that can do it, and no banks can do it.

56:30
Brad Weimert
Okay, well, I mentioned, I said were going to get back to this, so I want to funds having funds. Basically what you’re doing is saying, hey, everybody, give me a bunch of money and I’m going to go invest in things, and I’m going to pay you a return if I make one. And for the right to be in my fund, I’m going to charge you typically, like two and 20. I’m going to take 2% of all the money I raise and I’m just going to keep it. And then we’re going to get 20%. 1st often, I guess, depending on the return. How does that sit with you? What are good terms with funds? What are not good terms? What do you look out for when you’re first investing in a fund?

57:16
Justin Donald
Well, I think two and 20 is the going rate. So you will see that more commonly than any other number, you have some groups that will charge a 25% carry, a 30% carry, and that’s, you know, maybe it’s people that have a big head or a big ego. Maybe it’s people that have the track record and they can back it up and people are willing to pay it. You know, I mean, there’s a number of groups I’ve seen that. I’ve seen up to 3% on the fee. Actually, I take that back. I’ve seen up to 6%. Damn. Let me put numbers on the fee side.

57:49
Brad Weimert
Yeah, let me put numbers to this, because this is really relevant. Right. So somebody raised on the fee side, that means that somebody raises a $10 million fund just to manage the fund. They’re gonna take 600 grand.

58:05
Justin Donald
Yep.

58:05
Brad Weimert
Right. Okay. Just.

58:07
Justin Donald
Just for clarity, for people every year.

58:10
Brad Weimert
Right?

58:11
Justin Donald
Yeah. So let’s remember that. Yes, it’s significant. And so, by the way, this is also where you have to look at some of these monster funds. Do they actually have incentive to see deals all the way through the end? Like, if you have a billion dollar fund, maybe you. 500 million, a billion, and you’re charging 2%. That’s a lot of money, right?

58:33
Brad Weimert
Was that $20 million, tens of millions.

58:35
Justin Donald
Of dollars you’re making every single year. So are you, whether you get a.

58:39
Brad Weimert
Return or not for your investors.

58:41
Justin Donald
That’s right. So that’s where, you know, to a certain degree, you kind of have to. To say, hey, is this worth it? Do I want to be invested in something where they can make one heck of a living, whether they get a return on the fund or not?

58:56
Brad Weimert
So I kind of look at this for the initial phase of investing that we all got indoctrinated into was invest in the stock market. And so you’ve got mutual funds which operate similarly, but they’re different than what we’re talking about.

59:08
Justin Donald
That’s right. Still, high fee on those. A lot of those.

59:10
Brad Weimert
And you need to look out for the high fee on the mutual funds, for sure. And then as you get more money, you get exposed to, typically these private funds that are investing in. It could be a concentration in tons of different things or no concentration. Right. But a cannabis fund, for example, that’s investing only in cannabis companies or real estate investments or whatever. Whatever mutual funds. The next level of private funds, or there is being sort of your own fund, meaning that you are investing in your own things independently and running the whole project yourself. And so in the case of real estate, it could be you go buy mobile home parks and make them run, and you’re going to make more, hopefully, than if you invest in a fund. But there’s a totally different amount of energy that you put into it.

59:55
Justin Donald
That’s right.

59:56
Brad Weimert
So it’s do it yourself or be what’s called a limited partner in a fund and just make a return.

01:00:01
Justin Donald
That’s right. And if you. You know, we always say, we actually just did this course, vetting deals course where we’re teaching. You know, we taught all kinds of cool stuff. It was a live day, and we just launched this course.

01:00:12
Brad Weimert
I was there for seven minutes.

01:00:13
Justin Donald
Yes, yes. And it was.

01:00:15
Brad Weimert
I had a flight out. I would have stayed.

01:00:16
Justin Donald
It was amazing to just kind of put it all. I mean, it was a full day, you know, inside of a course. So I’m excited about the end product.

01:00:25
Brad Weimert
But I’m excited to listen to it, actually. I was actually bummed that I didn’t get to do it. I am excited. More excited to have it on, like two X, though.

01:00:31
Justin Donald
Yeah, for sure.

01:00:32
Brad Weimert
Yeah. It’s just easier to digest.

01:00:34
Justin Donald
It’s going to be great. I’m the same way. I love the two X stuff. But what we talk about that, I think is really important is how key the jockey is. So it’s not just about the deal, because a good jockey, a good sponsor, can take a bad deal and make it good, or it can take a bad one can take a good deal and make it bad. So there’s a lot there. But one of the other things I love to do for our community because.

01:00:58
Brad Weimert
Can I translate that for a second?

01:01:00
Justin Donald
Yes, please do.

01:01:01
Brad Weimert
Another way. That’s sad. Is the owner of the company, the entrepreneur, is equally or more important than the company itself?

01:01:07
Justin Donald
Yes.

01:01:08
Brad Weimert
Right. So the driver is more important than the vehicle.

01:01:10
Justin Donald
Yes.

01:01:11
Brad Weimert
Great. Use force analogy for, you know, force people. Got it.

01:01:16
Justin Donald
But one of the things I love to do with the mastermind, since we have purchasing power, we have a lot of people that could put capital in. Well, now, you take this two and 20 model that a lot of people are paid, and we can say, hey, we’d like to do it, but we’d like some sort of preferred terms. Maybe it’s 1.5% and, you know, 20% or 1% and 20%. Maybe it’s. Maybe you give us access to being in the fund at 1% and a 20% carry, but then all co investments after that, we don’t pay anything. It’s zero. Or maybe it’s a zero in ten, or maybe it’s a one in ten.

01:01:53
Justin Donald
So there’s a reduced fee that you would pay as you invest into a company that is part of the fund that maybe the fund can’t do to size requirements, can’t fully allocate to. So you do kind of like a side car investment.

01:02:10
Brad Weimert
So what are the few things that you look at when you are assessing whether or not a fund is going to be a good or a bad deal? I heard initial terms, what the carry is, what points are charged, and then I heard, and I think this applies probably to the companies, but also the fund. You said jockey. So the person that’s actually running the fund. Right. So what’s their background? So terms on the fund, the person running the fund, what are the other flags?

01:02:39
Justin Donald
Well, I’d also say, are there previous funds and how have they returned? So how many deals have gone full cycle, or how many funds have gone full cycle? I’d like to know a track record.

01:02:48
Brad Weimert
I think full cycle is super relevant. Right. Because a lot of people will look at that and say, oh, well, they’ve got five funds, and they raised this much, and they raised this much, and they will omit whether or not any of those closed out and what they actually paid back.

01:03:03
Justin Donald
Yeah. And a lot of those are still. They haven’t gone full cycle. So that would be the equivalent of saying, you know, oh, they’re good at raising money, therefore they must be good at what they do. I mean, this is the rise of the social media influencer that really are not good at investing, but they can raise tons of money because of how many followers they have. Right. I mean, it’s a fascinating thing.

01:03:28
Brad Weimert
What are you talking about?

01:03:29
Justin Donald
Yeah, I mean, so now it’s like.

01:03:31
Brad Weimert
Hey, we know some of those.

01:03:32
Justin Donald
I’m going to teach you how to invest in this thing, even though a lot of these people haven’t done much work investing in this thing, but they can raise a lot of money because someone’s like, oh, they’ve got millions of followers, they must be really good. No, they’re good at marketing themselves. That doesn’t mean they’re good at actually investing or operating an investment.

01:03:51
Brad Weimert
What is the worst investment you’ve ever made?

01:03:55
Justin Donald
The worst one is probably the Ponzi scheme. I invested in that I had all the documentation and info to really sync this, you know, this company, this guy that stood trial, and I had to, you know, I worked with federal agents and federal prosecutors and had to, you know, go to court. I had was federally, you know, had a subpoena to appear in court and testify last summer. So that was kind of a crazy ordeal. Emotionally charged, and it never feels good to lose money. And that is a weird situation where a company actually was not a Ponzi scheme for 28 years, and then all of a sudden, everything changed with algorithms online, Google, Facebook, a lot of things that they relied on. So they raised money and started paying.

01:04:51
Justin Donald
And what a Ponzi scheme is where you raise new money to pay old investors, and that’s what they did. So on that 29th year, that company became a Ponzi scheme.

01:04:59
Brad Weimert
So two things. One, I want to sort of diffuse the term Ponzi scheme, because the way that you just described it, I think, is totally accurate, and it’s really important at what point there is a blurry line of what is okay and what is not okay in terms of raising more funds. Right. How many companies, like, how is a series B in series C in Silicon Valley any different than a Ponzi scheme, really? And the delineation is the money going to pay investors, or is it fueling the company? But in both cases, it is an unperforming asset that needs more money to be successful. So I don’t like when I hear Ponzi scheme, I think it conjures up this notion of a malicious entrepreneur in the background that’s like, I’m going to get them. I’m going to steal their money.

01:05:51
Brad Weimert
And in the case like this, it probably isn’t that. It probably is somebody that got out over their skis, or in this case, everything worked fine, and then it stopped working, and they were scrambling to try to figure out how to fix it. What could you have done differently to not have found yourself in that position and that worst investment?

01:06:08
Justin Donald
Well, I should have listened to my attorney. My attorney said, hey, I don’t like this. It sounds too good to be true. They use language that I don’t feel is reasonable. They used guaranteed. The word guaranteed, and he’s like, nothing’s guaranteed. I don’t like that. He said, the legal paperwork that they used, even just the layout of it, he goes, this is not a good attorney that wrote this. I mean, these are little things that, like, I was like, kind of like, come on. Like, the way the contracts written. Give me a break now. I’m like, oh, man, I totally should have listened. I mean, I got a great education that day that I chose not to listen to, but now it just rings in my mind. So anytime now, we do a deal. I mean, he always knows.

01:06:55
Justin Donald
He’s like, you can tell a good law firm worked on this, or you can tell that this was a really cheap attorney that did this. I think that probably matters.

01:07:04
Brad Weimert
It does matter. It does matter. I’m involved in a real estate transaction right now that you’re familiar with, and it’s a piece of commercial real estate. And the sellers initially were positioned as. Positioned themselves and otherwise as pretty savvy, experienced people. And there are flags in how they’re behaving around inexperience, and they’re just things that wouldn’t get asked if they were experienced. And you just have to. It’s a tell, right? And you have to wonder what’s going on in the background. What advice would you give a 25 year old that’s starting a business right now?

01:07:43
Justin Donald
Very similarly, get around other entrepreneurs that are today where you want to be. I think that is first and foremost, like, live in a world with people that have experienced success, people that have failed at different things, people that can weigh in and pour into you. And then I think a lot of people pay attention to what they eat. Health and fitness is more trendy and cool and popular today than it’s ever been. But what I think a lot of people don’t pay attention to is what are you feeding your mind? What type of content do you consume? What are you doing to grow your intellect and grow your iq and grow your competencies and expertise? And I think that matters, too. So what are you consuming?

01:08:36
Brad Weimert
You might give the same answer to this, but what was the smartest thing that 25 year old Justin did to set himself up for life?

01:08:44
Justin Donald
I think first and foremost, being willing to take a risk, take the chance that I was doing something that everyone told me was crazy and foolish, and if I had listened to them, I would not be where I am today, but actually pursuing, you know, trusting my intuition and saying, hey, actually, I think it makes sense to get into mobile home parks, or actually it makes sense to start a business, or actually, you know, it makes sense to partner with this person. It makes sense to pay this coach an ungodly amount of money that everyone says is crazy. You know, not that you need to do that early on, but, you know, I’ve been paying for a coach well before I was 25, and I have some coach in my life, in some area of my life, almost every year, if not every year.

01:09:33
Brad Weimert
We talk a lot. So I can’t remember when this actually was said. I can’t remember if it was the last time you were on beyond a million or if it was just privately. But at one point, you told me years ago that your goal was to not have any goals. And you said you’ve been so goal driven in your life, your goal was to not have any goals. It’s been a few years since I heard that. What are your goals now for the next five years, or set another way? What do you want the next five years to look like?

01:10:05
Justin Donald
Well, I would say that even in my life today, I’m probably in less pursuit of goals than earlier portions of my life. But I don’t want to discount it because having goals is where it’s really what led to the life that I have today. So I do think that they’re important. I think the overarching idea was, I don’t want to be, like, on this train of achievement like that. I always have to achieve, I always have to produce, I always have to get something else because I felt like at my life at that point in time, it just wasn’t healthy that I needed to just be versus achievement. Now that I’ve spent some time not trying to go after that, I’ve been having fun again with some different goals.

01:10:55
Justin Donald
And, you know, one of them is to help bring more people, you know, create financial freedom in other people’s lives to help facilitate that, to do my part there, you know, another part that I’m excited about is the members in the lifestyle investor mastermind community are just incredible people. So I want to do more events. So actually, some of the goals, you know, inside of that community is how do we do more events? Like, how do we do more cool stuff together? How do we, you know, we just started adding white glove travel to the itinerary for the mastermind. And so I want to do more cool experiences, and I want, you know, I would really like to keep my focus on what I’m achieving, to not be materialistic as much as experiential and who it is.

01:11:46
Justin Donald
Like, I would rather collect deep, meaningful relationships and time spent with those people cool experiences than tangible items. Then more money, more net worth, you know, a boat, a new car, a third home or what. Does that make sense?

01:12:02
Brad Weimert
Totally. Let’s go do some cool shit.

01:12:04
Justin Donald
Yeah. That, to me, is my favorite way to spend money.

01:12:07
Brad Weimert
I love it, man. I love it. Well, I appreciate that. That’s all super insightful. You have a lot going on right now, some of it just doing exactly what you just said. Where do you want to point people? What do you want people to know at this point about you, about the group, whatever?

01:12:26
Justin Donald
Well, I’m really excited about just the people that are in the community. They’re the people I want to hang out with all day, every day. I think if anyone wants to learn more about it, go to lifestyleinvestor.com. Dot. If anyone has, you know, wants to figure out what are. What are next steps, what should I do? You know, here’s where I am in life, and here’s where I want to go. We generally have, you know, our team does these consultation strategy sessions, with people that, I think they’re like $500. But for your community, anyone that wants to do it’s just, it’d be free. So go to lifestyleinvestor.com consultation, and someone on our team will do a live one one call with you and.

01:13:05
Justin Donald
And kind of walk you through some of what we walked a lot of the people in our community through, as, you know, an onboarding first call, which is kind of fun. What’s the next step? What should people do? And then I’m really excited that our lifestyle investor foundations group is going to roll out in September, which is going to be our young adult program for people that are 18 to 29 years old. And we are thrilled about this. And actually, the people we’re running it with Molly and Nick. Pastor Mack are members of the lifestyle Buster mastermind. I so really cool. They’ve got a bunch of franchises. They’ve done very well.

01:13:39
Justin Donald
They’ve been lifestyle investors for years, and their kids are the age of young adults and they felt like this is something that we want to be doing for our kids anyway and why don’t we open it up to a lot of other people?

01:13:49
Brad Weimert
That’s awesome, man. That’s awesome. Well, our next visit will be all social, but I appreciate you carving out some time.

01:13:57
Justin Donald
This is fun. Always a blast to hang out. You know, we get some good time. It’s always fun to capture that time. Half the time we hang out, we talk about stuff. I’m like, man, I wish we had a mic on us. This is good.

01:14:08
Brad Weimert
Justin, thanks again, man. It’s always good to see you.

01:14:10
Justin Donald
Great to see you, Brad.

01:14:11
Brad Weimert
I hope you enjoyed the episode as much as I enjoyed doing it. I need your help. There are three places you can find beyond a million. The podcast itself beyond a million.com, which has some cool free resources, including a free course. And we finally launched the Beyond a million YouTube channel. I would love it if you would go there and subscribe. And if you don’t want to, you still will probably enjoy seeing the visual content. Check it out. YouTube.com forward slash at beyond a million.