Rich Fettke (02:42):

I learned after that that 86% of people don’t make it past the second chapter of a non-fiction book. I didn’t want to have that happen with my book. With this, I really wanted to convey this wisdom and this knowledge that I’ve gained over the last 20 years, running our company RealWealth, helping people invest in real estate, being an investor myself, and what I went through. The story is to convey this information in an emotional way, one, to be an engaging story that you want to keep reading it. You want to keep turning the pages.

Rich Fettke (03:13):

Basically, it tells a story of this husband, a father. He’s a real hard working family man, but he works so many hours that he doesn’t have time for his wife or his kids or even his life. Then he meets this new friend and mentor who walks him through this process, and mentors him, and shows him this new path to financial security for himself, for his family. Honestly, he becomes wealthy in more ways than one, more than just money.

Robert Leonard (03:41):

To most people not ingrained in the financial world or with a passion for personal finance and investing, wealthy means having a lot of money. But as many of us who study financial freedom know, that’s only part of the equation. Why do you think so many people think about wealth and financial freedom wrong? What is the right way to think about it?

Rich Fettke (04:00):

I mean, this hit home for me. I mean, going back, what happened to me after that book deal with Simon and Schuster, I was diagnosed with melanoma. They thought it had spread to my liver. The oncologist said, “It looks like you’ve got about six months to live.” It really rocked my world. That was the impetus for my wife, Kathy, to learn about real estate investing. She realized that… She was a stay-at-home mom at the time, and she had to find a way to make ends meet if I died. That’s where she learned about real estate investing.

Rich Fettke (04:30):

She sought mentors who taught her about how to do it. It really changed things for us. It showed us a new path to financial freedom. Thankfully, the doctor’s diagnosis was wrong. The melanoma had not spread to my liver, so I’m still here today, but that’s what got us going into real estate investing. We formed this group that we thought would be a small group of investors to help our friends and family. We thought it was going to be a couple hundred people maybe. Today, that group has grown to over 64,000 members at RealWealth, and that’s why we called it RealWealth is way back then, that was 2003 when we started this company.

Rich Fettke (05:08):

There was more of a focus just on drive and material possessions and making more money, and such a focus on that. There wasn’t that much talk about. There wasn’t even… There was no such thing as fire back then. There was no such thing or not much talk about financial freedom. Now, today, I think people have woken up really that there’s a lot more to life than just money. That’s why we called our company RealWealth. It was about not only just having a lot of money or money. It was also about having the freedom to live life on your own terms.

Rich Fettke (05:41):

That was our purpose. That was our drive ever since we started the company. That’s it. I live in Malibu, California. There’s a lot of money here. There’s a lot of rich people, but as we’ve heard, some people are so poor. All they have is money. It’s like you get these people who are so financially wealthy, but they’re relationship poor, or they’re life poor, or they’re health poor. It’s so important to us, to me. I feel it’s my purpose to really help people create real wealth. That is our purpose at our company is helping people create real wealth, and having the money and the freedom to live life on their own terms.

Rich Fettke (06:17):

I think that’s it. It’s like there’s something there around taking the focus on only money, and learning that as a coach. Before we started RealWealth, I was a business and personal coach for 15 years. I’d work with a client, and I’d pull out this life wheel, and there was 10 areas of their life. I’d sit down and say, “Let’s just complete this life wheel. I want us to take a snapshot of where you are in your life right now. I want you to rate these different areas of your life zero to 10. Zero, it sucks. 10, it couldn’t get any better.”

Rich Fettke (06:47):

It goes all the way around. It goes career and money, important, but then there’s health. There’s your significant other and romance. There’s personal development and growth and learning. There’s fun and recreation, spirituality. A lot of times, I’d be coaching a CEO or a business owner. They’d say, “No. No. No. I don’t… This is not what I want to coach on. I want to coach on profits. I want to coach on making more money.” I would just pause and just say, “We’re definitely going to coach on that. However, do you realize that if you don’t put attention over here in significant other and romance, that you could end up losing 50% of that money, 50% of those assets if you don’t take care of that relationship?”

Rich Fettke (07:27):

They’re like, “Ooh, it’s a good point.” I’d say, “How about over here, health and fitness? If you don’t take care of that, you could lose 100% of that, because you’re not going to be here to enjoy it.” Most of the times, people would just say, “Oh wow. That’s true. Let’s fill this thing out, and look at it.” Usually, we would have more goals working together than just their finances. All of a sudden, they would be getting in better shape. They’d be a better spouse. They’d be spending more time with their family.

Rich Fettke (07:52):

They’d start to structure their life in a way that was on purpose, that was fulfilling, that was real and authentic. That’s the way we see RealWealth. That’s why, I think, it’s important.

Robert Leonard (08:03):

Not only do you look at those things from a different perspective, but the mentor in your story also has an unconventional perspective on a little bit more traditional financial concept. That’s assets and liabilities. Tell us a bit more about that.

Rich Fettke (08:18):

It’s looking at the same type of thing. Again, these are the lessons that I’ve learned with running RealWealth now for 19 years. Kathy and I will interview people on our podcast. We’ll ask them, “What is real wealth to you, or where were you, and what did you do, and where are you now?” So seeing the stories of these different folks and what they’ve done, and what they’ve accomplished, you just got me thinking. I was actually on a hike once. I was just pondering this thing about assets.

Rich Fettke (08:44):

So often, we look at assets. It’s just like the money-making things. I think Robert Kiyosaki did a great job at really having us look at assets versus liabilities on the financial sense. But on this hike, I was thinking about, “It feels like there’s more than that.” I see assets, and the way the mentor describes assets to his mentoree, whose name is Ryan Brooks is the character in the Wise Investor book. He says that assets are anything that brings you income or better health or happiness or time. Really, those are assets.

Rich Fettke (09:14):

Then liabilities, you flip that around. It’s on the other side. A liability is anything that costs you money, or costs you health, or costs you relationships, or costs you time. It’s almost like you get to compartmentalize and just say, “Is this an asset, or is this a liability?” You can even look at the people in your life. Is this person an asset in my life? Do they add to my life? Is it more fulfilling? Is this a great relationship? Do they help me get ahead? Do I help them get ahead, or are they toxic? Are they a drain? Are they a liability?

Rich Fettke (09:42):

You can start to… That’s just one example. You can look at that like a filter, and just say, “You know what? I need to have a conversation with this relationship with this person,” or you might say, “I need to move on. I need to put more people around me that are assets.” That’s one example, but it could be anything. Looking at time, you can really look at that. It’s like, “Is this an asset? Is this going to save me time? Is it going to bring me more time?”

Rich Fettke (10:05):

We hear that when you talk about when in business, our people are our greatest assets, right? Businesses are made of people, and so they’re often our greatest assets, because they’re freeing up our time. They’re doing the things that they’re great at. I’m not the smartest guy in the world, and there’s people on our team. We have about 22 employees. There’s a lot of people on our team that are way smarter than I am, especially in their specific areas of expertise. I think that’s another one. They’re real assets.

Rich Fettke (10:31):

They really… They free up my time. They help me grow the business and expand the business like a team. We’re all in it together. The only thing more important than a great idea really is a team that can see it through, right? I think it’s so important.

Robert Leonard (10:45):

Your entire presentation at the conference that we were just at together was great. I really enjoyed the whole thing, but this-

Rich Fettke (10:51):

Thank you.

Robert Leonard (10:52):

… piece about assets and liabilities is what stuck with me the most. I have notes on my notebook specifically from that, because I had only heard people talk about assets and liabilities from a financial perspective. You always hear people argue, “Oh, that’s an asset. No, it’s a liability.” People can go back and forth. Some take the Robert Kiyosaki approach to it. A lot of people changed their perspective because of that little purple book, Rich Dad Poor Dad, but the first time I had heard it framed this way was from you. I really like this concept of not just financial, but time, health, wealth, happiness. I really like considering those as part of your asset-liability equation as well.

Rich Fettke (11:29):

Thank you. I give it credit to the power of walking, and the stoics said that so many thousands of years ago, a couple thousand years ago, let’s get out and hike and walk on your own. I do that often. We have a trail right off our property here. I take no electronics with me, and I just go and I hike for hour, hour and a half. It’s just amazing how many cool insights you get. That was one of those that I just downloaded, and it was just… It just hit home for me. I’m glad you dug it, because I really did when I was like, “Ooh, thank you.” Subconscious or whatever, I just tapped into. I really like that.

Robert Leonard (12:04):

I really like it as well. A friend of mine, he actually founded the podcast company that this show is a part of, Stig. He also says he gets some of his best thinking done when he is walking. Him and I will have strategy meetings about the business, talk about where we should go, what we should do, what we should change, et cetera. He almost always says, “All right, I need to go for a walk and think about this, and decide where to go from here.”

Robert Leonard (12:25):

A lot of people think climbing the corporate ladder is going to eventually get them to where they want to be financially. But why do you think climbing the corporate ladder actually doesn’t give the financial security that a lot of people think that it will or that they’re looking for?

Rich Fettke (12:41):

That’s why I wove that story into the Wise Investor. I really gave thought to what is it that I want to communicate? What is it that I really want to have people shift and move in a different direction, or almost have a new awareness? It was, again, coming from the members of our network who were trying to climb that corporate ladder. They were working so many hours and working so hard, and not really able to get ahead. I see there’s something in there about this… Number one, it doesn’t create freedom. So often, climbing the corporate ladder takes away freedom.

Rich Fettke (13:14):

You have to keep putting in more hours to get the next promotion, and then they give you more responsibility, and you feel just stuck. Sometimes, you get trapped in that corporate ladder. It’s like the old Stephen Covey. You got to make sure that ladder’s leaning in against the right wall. Sometimes people are climbing up. It’s like, “Oh man, this is not the wall I wanted to climb.” I think that it can be a trap. I’m not saying it’s a terrible thing. You can have a corporate job. What I’m trying to convey in the book is the importance of having your money make money, being that wise investor investing.

Rich Fettke (13:47):

There’s something about getting trapped in that, and getting comfortable, and being safe. I think that’s where getting caught on that corporate ladder so often is because people fear the change. They fear the change of stepping off that ladder. They’re like, “Well, then what? Then what would I do? What if I fail?” I think that’s a huge part around that corporate ladder trap. Just like the character in the book, the protagonist, he’s climbing that corporate ladder, but he learns to do things on the side through his mentor about investing and about growing a business.

Rich Fettke (14:20):

So, he really sees that, and then five years later, you get to see what happened and what he learned along the way, and how he’s created financial freedom.

Robert Leonard (14:29):

A big piece of going after and obtaining financial freedom is the right mindset, so how can people shift their limiting beliefs that are keeping them stuck and blind to what’s possible in their lives and finances?

Rich Fettke (14:42):

Isn’t it wild. It’s like we all have that. We all have those limiting beliefs, and they usually come from childhood. That’s what I learned so much through coaching is it didn’t matter who I was coaching, those CEOs that I mentioned, the entrepreneurs, the artists, the attorneys. It’s like every single person I ever coach has this inner voice, that negative inner voice I like to call the gremlin. I have it too. It definitely came up. I was diagnosed learning disabled when I was a kid, so I’ve got a really powerful gremlin that tells me I’m stupid.

Rich Fettke (15:11):

I’m never going to amount to anything. It’s recognizing that gremlin. The reason I like to call it a gremlin is you get to separate it from reality. You get to say, “Oh, this is little voice in my head. This is little guy or gal that’s berating me.” It’s those little whispers in our mind that we’re not aware of. It’s running these old programs, so it’s telling you, “You’re going to fail. You’re not going to make it. Look at this person failed. The same thing is going to happen to you.” The way to handle it, the how-to really is to recognize it, because the gremlin is so powerful in the dark.

Rich Fettke (15:44):

It runs the show, and it’ll pull the strings. It’s the puppeteer, but when you shine the light on that gremlin, it loses its power. It’s like, “Oh, it’s exposed.” Trying to do that, seeing it as the enemy doesn’t really work too well, because it’s in our subconscious and our subconscious, as we all know, is way more powerful than our conscious mind so as by recognizing it. I like to do… What I would do with my clients, what I do with myself is having the physical and the noticeable physical signs that is like, “Something’s going on.”

Rich Fettke (16:16):

It’s like, if you think about yourself, it’s like when you’re stressed out, when something’s getting you, when you’re feeling negative, when that gremlin might be whispering to you or even screaming at you, it’s like, “What shows up in your body physically to notice that.” For me, it’s I clench my jaw. If I’m clenching my jaw or I’m furrowing my brow, a lot of times though, that’s the gremlin. That’s a sign. It’s like, “Oh, something’s going on here? Something’s stressing me out.”

Rich Fettke (16:41):

Sometimes, it’s me jumping the project to project, and feeling like there’s not enough time, and something’s going on. I’m feeling irritated and stressed, or I get a little snappy. That’s another noticeable sign for me. It’s like a red flag that comes up and say, “Ooh, this might be the gremlin.” Then it’s just the process of the best thing to do is just stop and notice it. The best way to do that, as I went over in that night talk in the conference, is breathing. It’s just an incredible tool that we all have that deep breathing.

Rich Fettke (17:12):

Basically, what happens on a… I love the science behind the wisdom. It’s on a physiological level. What we’re doing when you take that deep, deep breath into your belly, and you hold it for a moment, and then you let it out, especially in through the nose and out through the nose, that deep breathing, it stimulates the vagus nerve, which runs all the way down to your gut, but it also goes past the diaphragm. That vagus nerve goes up to the prefrontal cortex of our brain. So, basically, it stimulates, and it controls our heart rate variability, which is one of the best things we can do to be calm, to be grounded, to be more confident.

Rich Fettke (17:48):

That deep breathing, it shifts us on a physiological level. It actually changes our neural makeup, neurotransmitters change. We start firing in a different way. That deep breathing, you slow down, and that’s the first step. Then you just say, “Huh, okay, gremlin, I think you’re here. I think you’re saying something to me. What do you need? What do you need right now?” It sounds a little woo-woo or hokey or something like that, but it’s amazing how it works, because what we’re really doing, again, is tapping into the subconscious.

Rich Fettke (18:19):

When you don’t try to battle the gremlin, if you’re like, “Nah, I’m just going to do it anyway. I’m just going to push through this,” it’s going to win. It’s going to still be running the show. But our subconscious is so powerful, tapping into it by breathing and just saying, “Okay, you’re afraid right now. You’re trying to protect me.” We were born with this little guy in our head that’s trying to… or this little gal, again, that’s trying to protect us from embarrassment or failure or loss. It’s actually our protector.

Rich Fettke (18:47):

It’s trying to do its best job, but it often over protects, and it often protects us based on what happened to us in the past, not the current reality. It often looks at who we used to be, but we keep getting better, right? We keep learning and getting better and becoming better versions of ourselves, tapping in and just saying, “Okay, gremlin, what do you need right now? I hear you. I know you’re trying to protect me. What do you need right now?” It’s really trippy.

Rich Fettke (19:11):

It’s really amazing how that little voice will say, “I need this. I need you to research this. I need you to do some due diligence here. I need you to learn a little bit more. I need you to reach out to this person and get support, get some help. I need you to connect with your mentor, and ask your mentor what’s going on, and all that, and bring this up. Be authentic. Be transparent.” A lot of times, you get that answer. Almost always, you’ll get an answer from that inner voice that’s going to say, “This is what I need.” Then it quiets down, and then you can even say, “I close my eyes, and I do that deep breathing.”

Rich Fettke (19:44):

I have that conversation with my gremlin. I say, “What do you need?” Then I’ll even say, “Is there anything else you need? Anything else you need from me to move forward?” Then sometimes, I’ll say, “I also need this from you.” Sometimes I’ll be like, “No, I’m good. You do that, and we’re good to go.” It’s amazing. That fear drops down, and you get more grounded, and you get to move forward toward what’s most important to you. A lot of this, I learned from adventure sports. I’d love to rock climb and surf. We used to bungee jump a lot, and sky dive, all these things.

Rich Fettke (20:14):

It’s the same type of thing. I really learned a lot of these tools with those adventure sports to be able to get grounded, to do the deep breathing, and really find out, say, bungee jumping. It’s like if it’s saying, “I think you’re going to die. I don’t want you to die.” You say, “What do you need?” I need you to make sure that you’re connected to the bungee cords. You do the double check. I need to know that the other end of the cords are hooked to the bridge. You double check that.

Rich Fettke (20:37):

Is there anything else? So, you go through this process. That’s an extreme way to look at it, but it shows up in anything. It shows up in our relationships. It shows up in our business relationships, shows up before we go in to make a sales call or a presentation, to speak in front of an audience. Super powerful.

Robert Leonard (20:55):

How can we tailor that to financial freedom? What if somebody is thinking to themselves they want financial freedom. They want to achieve that, but their little gremlin is telling them they don’t have what it takes. They don’t… They’re not smart enough. They can’t do it. Whatever the reason is, how can we fight that gremlin to achieve financial freedom?

Rich Fettke (21:14):

That’s great. I would just change that word a little bit, instead of fighting the gremlin, because it’s almost like what we’re told to do, feel the fear and do it anyway. There’s some truth to that, but it’s like, “Feel the fear. Listen to the fear. Find out what it needs. Then do it once you get some answers.” I think it’s the same thing with financial freedom. It’s, “I go through the same thing. I know I got a gremlin that says everything you’ve developed, and everything you’ve grown, all the money that you have, you’re going to lose it. You’re going to lose it.”

Rich Fettke (21:41):

I know there’s a lot of fear right now in the world with the economy and what’s happening with our deficit, with interest rates rising. A lot of people say, “Oh, I missed the boat for investing.” It’s all… That gremlin is just like, “I’ll take that. I’ll take that to try to protect.” It’s the same process. It’s slow it down, get grounded, breathe. Say, “This is what I want.” When you get clarity about what you want, and imagine that, and just like the process we went through in that talk that I just gave, it’s this process of looking forward into your future.

Rich Fettke (22:13):

I think it’s really powerful to just slow down and think about really, “Who is your future self? Where are you 10 years from today?” Really close your eyes. Imagine that person. Imagine meeting your future self 10 years from now. Imagine they have financial freedom, and go through the day with your future self, and look at how they’re living, what they’re doing, all that stuff. That taps into a different part of the brain, that reticular activating system that has you look for opportunities that can create that.

Rich Fettke (22:42):

But when you see that financial freedom, you see that future self. If you don’t see it, then that’s a good sign to be like, “Based on your subconscious, the way you’re living now is not going to get you to financial freedom.” But it’s when you tap in and you see your future self, and it’s a vision that you like, it’s like, “Oh, okay. I can get there. I just need to keep taking the steps. If I keep doing what I’m doing, I keep growing. I keep learning. Then I will get there.” Then so it’s coming back. Once you get clear on, “That’s what I want. That’s what my future self looks like. That’s what my life looks like in the future. That’s financial freedom,” then you can just say, “Okay, what are those potential obstacles?”

Rich Fettke (23:19):

“Gremlin, what are you afraid of? What do you need from me? What are those obstacles that might come up on this journey?” Then you start to get some answers. It’s really powerful. There’s been studies on this around looking at… It’s called a whoop, and she has this process called WOOP. It’s wish, outcome, obstacle, and plan. The wish is you think… They did a lot of studies on this, so they basically… They have people look at one group, but just say, “What’s your goal? What do you want to achieve?”

Rich Fettke (23:45):

Then I go, “Cool. Write it down. Now, go for it.” Then the other group, they said, “What’s your outcome? What do you want to achieve?” They said, “Okay, cool. Now, what obstacles might you encounter?” They would list all their obstacles, and they would be if then, then that. If this obstacle comes up, here’s what I’ll do. If this obstacle comes up, this is what I’ll do. Then they followed up with this group later. The group that thought about their obstacles had incredibly a higher percentage of accomplishing their goals than… I can’t remember the percentage, but it was way up there.

Rich Fettke (24:15):

It was like over 50%, I think more up in the 70% or 80% that people who looked at their obstacles ahead of time had this much higher rate of accomplishing their goals than the group that didn’t, because they were prepared when those obstacles came up. They didn’t just shut down and say, “Oh, that’s it. This isn’t working or anything like that.” It’s like… Even if it’s on a diet or something like that, the people who thought about, “Wow. My goal is to lose 10 pounds, and one obstacle might be going to a party, and there’s going to be all these foods that are not on the naughty list. If that happens, this is what I’m going to do. This is how I’m going to behave,” so any type of obstacle like that. It just increases your odds.

Robert Leonard (24:54):

What role does or can real estate play in this whole picture that we’ve been talking about and also someone’s journey towards financial freedom? Do they have to invest in real estate to become financially free?

Rich Fettke (25:08):

I don’t know. You don’t have to. I think you have to invest in assets, especially if it’s financial. We’re talking about financial assets. So if you have to invest in assets that are going to have your money grow, have your money work for itself, have your money make money, in the Wise Investor book, that is the main character. The protagonist, his wife has a business, and so she starts to learn through the mentor and the mentor’s wife. She starts to learn about how to really grow her business, and really turning into a cash flow machine, and to really grow that.

Rich Fettke (25:39):

The book sandwiches that. It’s like, “Well, whatever that asset is that you can invest in, you can put your time and your effort and your money into, that’s going to grow, and it’s going to be like that golden goose that’s going to keep laying the golden eggs.” It could be a business. It could be real estate. I mean, you can do it with the stock market. I think, it’s just a less effective way to do that, because it’s in stock investing, which I think so many Americans put their focus on there. We’re so trained by Wall Street that when people here invest, they think stocks, right?

Rich Fettke (26:11):

It’s investing in the stock market, and mutual funds, and whatever it is, EFTs. There’s this lack of awareness, I would say, and us as real estate investors, we’ve learned it over time that people who’ve read that purple book, Rich Dad Poor Dad, have learned it and really stepped back to say like, “There are so many benefits. I mean, those big five.” You got monthly cash flow. You got appreciation. Monthly cashflow coming in if you have whatever type of real estate, rental properties, apartments, whatever it might be, even self storage.

Rich Fettke (26:38):

It could be mobile home parks, but it’s that ongoing, consistent monthly cash flow that keeps growing over time. That can create financial freedom. You’ve got the appreciation of real estate over time, which can also create financial freedom. You got the tax benefits, which doesn’t really make you money, but it saves you money. We know that the huge benefits of the tax savings that you get from owning investment properties and the depreciation, it’s incredible. There’s so many benefits to that. Then now with crazy inflation too, there’s this hedge against inflation, getting locked in on a long-term loan at a low rate.

Rich Fettke (27:11):

As the dollar devalues over time, which we’re seeing that happen drastically now, having that hard asset is an amazing hedge against inflation. Do I think real estate’s the best way to create financial freedom? Absolutely, but there are other ways to do it.

Robert Leonard (27:26):

Give us a quick overview or rundown of your background and your experience with real estate. I know you’re a real estate investor yourself. Give us a timeline and a little bit of color around your experience there.

Rich Fettke (27:35):

I had some lessons learned. Some things have worked well. More things have worked well than they haven’t worked, but I’ve definitely learned some lessons over time, but it was way back then in 2003 when I got that diagnosis, and Kathy found this way to create a new way to bring income. It was through real estate investing. Soon after that, we were… Kathy had one of the earliest podcasts way back in 2005, and she had Robert Kiyosaki on it. He said, “Sell your high-priced California properties, and go to Texas. That’s where things are happening.”

Rich Fettke (28:12):

We took his advice, and that’s what we ended up helping other people do. We went out to north of Dallas, a little place called Rockwell, Texas and Wylie, Texas. We ended up buying five investment properties out there. That was the icebreaker for us. It was like, “Oh wow, this is really cool.” We locked in. We had our monthly cash flow coming in every month. It really just… That first investment property is such a mindset shift, isn’t it? It’s just like, you start to see things in a whole new way, and you’re like, “Oh wow. If I can do this with one, I can do it with five. I can do it with 20, and I can grow from there.”

Rich Fettke (28:46):

I love single family as a start for anyone, because it’s so easy to understand, especially if you’ve bought a property in your primary. Buying that second property is not too much gremlin in there. It’s like, “Oh, I can get this. I can…” Then over time, you learn it. You start to learn financial analysis and cash flows, and then you can grow and graduate from there until larger properties or different types of some vehicles. Anyway, that’s for me. That was our start. It was buying these five properties in Texas, and we didn’t take our advice. We’re telling our group investors, “Take our advice because we’re not using all of it.”

Rich Fettke (29:23):

What we didn’t do is we didn’t sell our high-priced California properties. We had a couple that we were holding, because they had been appreciating over $100,000 a year from several years. We’re like… We just were in that mindset of like, “It’s going to keep going up.” Then 2008 hit, we lost a lot. We had to do short sales on there, and it just… It was a punch in the gut, so it really told us a lot about every property has to make sense from the day you buy it. You have to at least have some cash flow in there and financial reserve. I think that’s huge.

Rich Fettke (29:54):

Then we went on from there, starting RealWealth and helping other investors grow. We started to invest with these other investors. At RealWealth, we have about a dozen property teams and brokers around the country that we’ve been in relationship with for many years over a decade. They’re like the boots on the ground. They’re separate companies, but they find these incredible properties. They fix them up to rent-ready condition, and or nowadays, they’ve been doing a lot of new builds, so brand new builds. They put property management in place, and that’s what we do at RealWealth.

Rich Fettke (30:24):

We educate investors, and then we refer them to these other property teams and brokers, so they can acquire these cash flowing properties. That’s what Kathy and I did. We started to put our own portfolio together, properties in Florida and Pittsburgh, Pennsylvania and Cleveland Ohio. A lot of in that Southeast area in the south, just because better cash flow. It doesn’t make sense to invest in. You’re not going to get cash flow in California, and it’s pretty hard to do that unless you’re doing short-term rentals.

Rich Fettke (30:55):

We were just on that path. Then in 2010, we had a developer come to us, and because we had grown our reputation, and we were out there just in the media, Kathy had been doing a new show. She’s been asked to be a guest expert on Fox News, and CBS, and CNBC, and MoneyWatch, all these things. This developer called one day, and he said, “I’ve got a project up in Portland, Oregon. This is after Lehman Brothers collapsed.” It was so hard to get financing, and this guy had an $8 million construction loan. He was almost done building these town homes right on the river in Portland, but he ran out of money.

Rich Fettke (31:34):

He was desperate, and this developer had located and found us. He said, “If you guys can raise $3 million, we can assume this construction loan. Bill this guy out, and take this project over.” That was our first syndication. We sent out some emails, and said, “Hey, we’re raising funds.” It broke some SEC rules back then back in 2010, but we learned about syndicating and bringing a group of investors together to take on a bigger project. That went incredibly well. Investors get over 20% return on their money, and so that was our start into syndication.

Rich Fettke (32:07):

Kathy and I are also LPs in syndications, and sometimes GPS in these syndications, mostly ground-up residential development. We’ve done developments in Reno, Nevada. We’ve done developments… We have a development right now in Park City, Utah. We’ve been in Florida. We have a development that’s almost done in Bozeman, Montana. Like I was saying before, we started with single family. We still do that. We still believe in it, and we’ve also grown, and we partner up with our investors to do bigger deals.

Robert Leonard (32:36):

It’s really interesting for me to hear, because I’m at that point where I’ve done single family homes as rentals for the last two to three years or so. Actually, I own my single family’s north of Dallas in a small town you’ve probably… Just because of where you lived, you’re probably familiar with it, but it’s called Wichita Falls

Rich Fettke (32:52):

Oh, okay.

Robert Leonard (32:53):

Two hours or so Northwest of Fort Worth, but… I’m actually starting to sell some of that portfolio of single-family properties to get more into the syndication model or at least the apartment buildings, but I do agree starting with single families can be a really a good way to go for a lot of people.

Rich Fettke (33:11):

It’s great, Leonard. It’s almost like training wheels. We have members in our network who have 20 or 30 single family properties, and they’ve got a total system. They got everything worked out. One family in particular, it’s the dad. He did his tenant investor loans, and his wife did the tenant investor loans, and then they started to bring their kids into it. Now, their whole family, they all own investment properties, and it’s really cool.

Rich Fettke (33:33):

It’s really cool to see what they’ve done, and what they’ve created, and how they’ve paid those off. They own a lot of them free and clear now, and they’re getting that consistent monthly cash flow.

Robert Leonard (33:42):

One-off single family houses are tough. Once we got to five or so, then, like you said, you could build a system. Now, it’s almost like we have a five unit rather than all these single individual houses. It’s not as bad. But during your speech or your talk at the conference that we were just at together, you mentioned Victor Frankl. I’ve heard him talked a bit about before his book, A Man’s Search for Meaning. I know you’re a big fan. For those listening today who haven’t heard of the book or Victor’s story, give us an overview of the book and his story.

Rich Fettke (34:13):

I heard about Victor Frankl because I love to study stoicism. I think it’s really powerful that the control that we have over things in our own mind, and to let go of the things that we can’t control. There are so many things, especially nowadays that we can’t control, and so it really turned me onto this. It’s like, “Ah.” Instead of getting stressed out about all this stuff, it’s like, “I’m just going to focus on what I can control, what’s in my control.” Studying stoicism turned me onto Victor Frankl, and I kept hearing this book, A Man’s Search for Meaning, A Man’s Search for Meaning.

Rich Fettke (34:44):

Finally, I read it and just completely captivated with his story. He’s a Holocaust survivor. He was a psychiatrist, and he studied stoic philosophy. He brought all that in when he was in these concentration camp, and they were abusing and beating him and also the other inmates, and his friends and family killed his family. It was incredibly sad. What he realized in this, no matter what they did to him on this external body, or they tormented him, or beat him, or starved him, and all this things they did to him, he realized that there’s nothing they could do to hear.

Rich Fettke (35:24):

They could do whatever they wanted to his outside, but he was in control of his own thoughts. That led him to creating what he called Logotherapy, which is his whole therapy for helping people move through obstacles like this and challenges. One of the huge things he realized that he writes about in the book is it was the inmates that he was with, that the ones who lost hope, the ones who lost a future vision and a purpose, those are the ones that would just close their eyes, and think about the past, and think about, “I wish I wasn’t here. I wish I was back there.”

Rich Fettke (35:58):

Those are the ones that lost their drive, lost their purpose. They started to decay physically faster than everyone else, and mentally. Those are the ones that died, the ones that didn’t have a future vision, the ones that didn’t have a compelling purpose. The ones that did have that like Victor Frankl. He’s like, “When I get out of here, I’m going to teach the world. I’m going to share this knowledge with the world.” He actually wrote all his thoughts down. He put it all down. He’d find little scraps of paper, and write these little notes.

Rich Fettke (36:25):

He put it all together, this incredibly thick book on all his findings and all his research and everything he’s learned. Then they found it one day, and they took it away. They destroyed it, and he had to rethink and rewrite all of that. He did. That’s what… When he was released, he was able to come out with that, and create Logotherapy, and make a huge difference in the world for so many people. It was the people that had a purpose, that had a drive, that had a future vision, those are the ones that survived. It just carries over.

Rich Fettke (36:55):

The way I loved that is one of my favorite quotes is the one I shared there is he said, “Between stimulus and response, there’s a space, and in that space is our power to choose our response, and in our choice lies our growth and our freedom.” I love that. It’s like, “Who really ponder that.” First time I read it, I’m like, “What? What’s he saying?” Then the more I read into it and really looked at it, it’s like, “So it doesn’t matter what it is in today’s world for him that response since stimulus was him being beaten, and he could choose his response to that stimulus.”

Rich Fettke (37:29):

I look at it for me today. It’s like someone does something that pisses me off. I can get all hooked and frustrated, and then fight back, and it really get me, or I can take that space to just be like, “How do I want to show up? How would my best self show up? How would me at my best show up?” Then I get to choose my response. It doesn’t matter if someone’s cutting me off in traffic, or it’s something that even something my wife does. It’s like, if Kathy does something that triggers me, and usually, it’s something that’s triggering me, it’s me. That’s not the problem, really taking it and taking ownership of it.

Rich Fettke (38:03):

I can think about, “Oh, okay, let’s pause for a second. Let’s do that deep breathing. How do I want to respond to this? What’s the most effective way to respond in a loving way and being my best self?” I love that. Thank you, Victor.

Robert Leonard (38:17):

Across all the books, all the stoicism, all the investments, all the people you’ve talked to, what have been some of the biggest financial lessons you’ve learned on your journey to financial freedom, and what mistakes have you made along the way?

Rich Fettke (38:31):

I was mentioning that we kept those expensive California properties that were negative in cash flow. We just thought, “Well, they’re appreciating so much. We’ll just hold those.” That hit us really hard. We lost a lot. That was… One is huge financial lesson is make sure that you have the reserves to be able to withstand at least six months of a downturn. It puts your mind at ease, and also not only puts your mind at ease, but if there is a downturn, and it was something like 2008, which I don’t see that happening again, this is a completely different time at different market, different circumstances, but I still got that gremlin.

Rich Fettke (39:11):

It’s like so many of us who went through 2008, and had losses, or those of us who their parents went through. We saw that, and we’re like, “I don’t want the same thing to happen to me.” It’s like we can calm that gremlin down by having the financial reserves. I think that’s huge, having six months of financial reserves. Like I said earlier, make sure that every property that you purchase, whatever that investment is, make sure it makes sense from day one. Don’t base it on projections of like, “Oh, if it’s apartment building, I can turn this around. I can raise rents. I can improve management, and then that’s going to increase the value by this much, so I’m just going to go for it.”

Rich Fettke (39:47):

It’s like, “Don’t make that assumption, especially based on short-term loans, short-term funding or bridge loans.” I think that’s a huge lesson too. Kathy and I did construction loans around 2007. We bought a couple cabins that were being built, and we did short-term construction loans. Then we’re like, “Oh, we’ll just refinance out of these construction loans, and get into a long-term loan.” We didn’t do… What we do today is we do a construction to perm loan, just that single close loan where we’re locked in.

Rich Fettke (40:18):

That’s another huge financial lesson is really just don’t make assumptions based on blind optimism. Make sure that you got the backup plan. Make sure that an investment makes sense from day one, and be careful of short-term financing, because you just never know when things are going to turn.

Robert Leonard (40:36):

It might have came from Victor. It might have come from somebody else, but what has been the most important piece of advice that you’ve been given? It could be about finances, investing, or it could even be about life in general?

Rich Fettke (40:49):

Well, beyond the we have control over our thoughts. That’s a big one. I would say the biggest thing for me is that realization that when I get better, everything around me gets better. So for any of us, if you look at yourself, when you get better, everything around you gets better. It’s about growth. It’s about getting better every day. It’s about basing, not looking at the gap of… Dan Sullivan says from Strategic Coach, not focusing on the gap of, “Oh, I want to be there, and I’m not there, and getting frustrated.”

Rich Fettke (41:19):

I think it’s better to look back a little bit, and be like, “Wow, I’m better than I was.” A couple weeks ago, I was riding my mountain bike up a long, long hill. It was a moderate hill, so I had a lot of time to think. I’m just like, “Okay, this is going to be a long hill, but I was just pondering things. I was thinking about this whole better version of yourself. It’s almost a meme now on social media. Become a better version of yourself. But sometimes, it’s like these cliches, they’re cliches for a reason, because they’re powerful, and because they’re important.

Rich Fettke (41:47):

As I thought about that, and I was almost relating it to… I have a Tesla. They’re always coming out with new versions that are better, the software. It’s like, “Your software has been updated.” Each version comes out, and so I started to think about that for myself. I was like, “What version am I?” I’m version 58.4 right now. Next month, I’m going to be version 58.5. Soon, I’m going to be version 60.0. So, how do I want to get better over the next 30 days? How do I want to grow, and how do I want to learn? 58.5 is even better than this version, 58.4.

Rich Fettke (42:22):

It was a good eye opener for me. Again, that was one of those things that outside, you download a cool thought. But for me, it hit home. I’m been stoked on this thing about this 30-day window of like, “I set annual goals. I set quarterly goals.” We do at our company, and we do for Kathy and I for our financial portfolio and all that. But those personal goals, I’m like, “Okay, I set annual, quarterly. I’m going to start doing 30-day goals about how do I want to be a better version of myself 30 days from now at the beginning of each month?”

Rich Fettke (42:53):

Hope that helps, but I think that’s what it comes down to. When we get better, everything gets better. That’s the big one for me.

Robert Leonard (42:59):

Rich, as we wrap up the show, I want to give you a chance to tell the audience where they can go to connect with you, pick up your book, check out any other content, your podcast, whatever you got going on.

Rich Fettke (43:10):

Social media, it’s just the only Rich Fettke in the world, so R-I-C-H-F-E-T-T-K-E. Rich Fettke on Instagram and all that. For our company, it’s just really simple, realwealth.com, realwealth.com, and then the Wise Investor, the modern parable about creating financial freedom, and living your best life… Well, I’m going to hold up my cover there, so we can see what it looks like when you’re searching on Amazon. If people are watching, that’s on Amazon. It’s all on major book sellers. It’s available as a Kindle version.

Rich Fettke (43:40):

Then the hard cover and the audio book are coming out next month. There’s a little supply chain issues on printing. It takes seven months to print a book now, so we’re waiting on the printing of the hard cover, but you can pre-order it now on Amazon.

Robert Leonard (43:53):

I actually discovered that myself. I finished… I signed a book deal as well with Simon and Schuster earlier or late last year. We finished February.

Rich Fettke (44:02):

Nice.

Robert Leonard (44:02):

We’re not releasing until September. I’m like, “Guys, what is the hold up here? September, that seems like a very long time. What’s going on?” But like you said, the supply chain issues with…

Rich Fettke (44:12):

Isn’t that crazy? The paper mills are shy, and then Amazon is secretly buying up a lot of paper mills, because they need so many boxes. It’s limiting the supply of paper mills now too. Just crazy times we’re living in, man.

Robert Leonard (44:26):

Their KDP publishing arms is taking over for sure. But anybody that’s interested, I will put all of Rich’s resources, book, podcast, website, everything, social media in the show notes for you guys to check out, make it easy for you to connect with Rich. Rich, thanks so much for joining me. I really appreciate your time.

Rich Fettke (44:43):

Thanks, Robert. Really enjoyed it. Thanks, man.

Robert Leonard (44:45):

All right, guys, that’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (44:51):

Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday, we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.