Joseph Warren has seen it all, the lottery winner who blows it, the engineer making emotional decisions with rocket-scientist precision, and the heir who won't touch a dollar because it was their parent's money. In this episode, he breaks down why sudden wealth events are more dangerous than most people think, why your CPA is probably not doing tax strategy, and how the smartest investors treat their finances like a Dream Team, with every player running the same playbook.
Episode 23: The Hidden Challenges of Sudden Wealth with Joseph D. Warren
Most people spend their lives trying to make more money, but what happens when a large amount arrives all at once? Whether it’s selling a business, receiving an inheritance, cashing out company stock, or another major financial windfall, a sudden wealth event can create opportunities and mistakes that impact the rest of your life.
In this episode, Zach and Mike sit down with Joseph D. Warren, a financial planner specializing in helping people navigate these life-changing moments. He explains why the biggest threat isn’t usually the money itself, but the emotional decisions people make after they receive it.
We discuss why creating rules before major financial events happen can help you avoid costly mistakes and why having a strategy in place before the money arrives is often more important than what you do afterward. You’ll also hear why successful investors build a team around them instead of trying to become experts in everything.
Our conversation also dives into business ownership, the importance of tracking how you spend your time, and why your business should support your life rather than consume it. You’ll also hear practical tips about naming savings accounts, preparing for future investment opportunities, maintaining proper asset allocation, and why diversification still matters.
“The biggest financial mistakes happen when emotions take over.”
“You want the plan in place before the money arrives, not after.”
“Your business should support your life, not become your life.”
“Ethics are the number one thing that you have.”
Joseph D. Warren is the co-founder of Financial Planning HQ, LLC, a boutique firm providing truly comprehensive financial strategies for a limited number of clients.
He serves fast-growing business owners with meaningful real estate holdings as their Financial CEO. Joseph coordinates tax, legal, lending, and cash flow so you can focus on your business and the things that matter more than money.
In his free time, when he's not helping clients, you can find Joseph at the gym lifting weights, reading Sci-Fi, or spending time with his wife and two kids (a toddler and newborn).
Find Joseph D. Warren on YouTube | LinkedIn | TikTok | Instagram
Call Joseph D. Warren on 210-444-2128
For Investors & the Fund – Learn how the Fund works and book a call
For Borrowers & Deals – Get funding and support for your next investment
[00:00.1] I love the contrarian approach. I think in finance you have to think that way because your emotions run contrary to how the markets run. So when everything's, you doom and gloom, it looks like the world is over. That's the time to buy. But it's emotionally you're paralyzed. A lot of people are paralyzed. They don't want to take action.
[00:16.0]
I have one similar, which is Dave and Buster's, but it was when everything looked like we were never going to get out of lockdown and it was it looked really bad and all the restaurants were shutting down. I bought some Dave and Buster's and it went crazy. Most people think saving money is the answer, but the truth is saving only gets you to zero.
[00:34.4]
Join Mike and Zach as they flip the script from saving to earning, from zero to unlimited potential. Welcome to Save to Zero. Hey everybody, thanks for, tuning in to episode number 23 of the Save to Zero podcast.
[00:54.0]
We are lucky enough to have Joseph Warren out of San Antonio, Texas with us today. Joseph is a, financial advisor. He has multiple areas that he focuses on. He's going to talk some about real estate and some of the other areas he focuses on.
[01:10.1]
And we're going to have a great talk. He's going to give lots of information. So, Joseph, welcome. Thanks for coming on, bud. I'm really excited to be here. Thank you very much for inviting me. So, from a 50,000 foot view, kind of give us an overview of the areas that your practice, focuses on.
[01:27.6]
Yeah, we call it truly comprehensive financial planning. And my main niche that I like working with is people who have sudden wealth events. So inheritances, they, win the lottery, they come into a lot of money. Sudden wealth event. I've never heard that. I like that.
[01:44.4]
And I you just said win the lottery. I'm liking this so far. No, well, the problem with that is a lot of times people keep the same patterns going. So you'll hear about it all the time. Like the classic example is Allen Iverson, the basketball player. And you keep the same patterns going and it can really be detrimental because you end up, you squandering a great opportunity that you have.
[02:05.3]
So really making the most of sudden wealth events. It can even be just like a stock going public. Right. But taking advantage of that and making sure you make the right decisions during that critical moment so you can build financial independence for your family for the rest of your life. A few of my clients, I would say about half have real estate investments.
[02:22.1]
I real estate investments are a lot of fun. I just started dabbling in it myself. But that's my, that's our bread and butter. That's the niche that we work with. And what we do is something we call truly comprehensive financial planning, where we look to coordinate all the aspects of our clients finances.
[02:38.4]
So minimizing taxes, making sure the investments are growing as quickly as possible within the risk that you're comfortable taking, making sure you're on track for your goals and you're taking steps to meet them. And you're, you have the savings account set up, the Roth whatever account is best for that savings goal.
[02:53.7]
And then of course, legal business, making sure that's set up correctly. Business entities with real estate, you might see LLCs, things like that. And finally, protecting everything. The insurance, sometimes considered boring, but making sure you're not taking on risks that you shouldn't be taking on. Sure. Okay.
[03:11.2]
That's a lot to unpack. So I love it. My first question is sudden wealth event. Yeah. I'm gonna ask, what type of education do you give your clients who have an event like that? And the reason I ask is when I sold my first company, I sold it to a public company and I had a sudden wealth event.
[03:32.5]
And what I did in order to not do something silly like going out and buying a, I don't know, a gold Rolls Royce or something dumb. And I don't know where that came from, but you get my point, Zach. Can't you see me in a gold roll?
[03:50.6]
Yeah, but what I did was I left my money sitting in an account and I didn't touch it for a year. Yeah. Just so that I could get past that excitement of doing something dumb. And that was just me. So what do you do to, educate your clients when they have one of these events?
[04:08.5]
The first meeting. So sometimes I've been asking clients questions, and I've noticed sometimes clients are intimidated before the first meeting. But we really look at the emotional why for our clients and what they want to achieve. And the reason it's more of a talk about emotions and background is we want to see what those patterns were before the sudden wealth event to see what we have to look out for.
[04:29.5]
Because we've seen different things. We've seen sometimes it's an inheritance of a lot of money and you don't want to touch it or do anything with it. You have these dreams of setting up a business. I've seen you want to start investing in real estate, but you're that's my Mom's money, that's my dad's money. I'm going to let it sit here, I'm not going to do anything with it.
[04:45.3]
We've seen inaction completely, and then the other side, you think of Allen Iverson and things like that where it's just never had money and you go hog wild. You just want to have all the things you haven't experienced. And it's just a lot of it is emotional.
[05:02.2]
A lot of even the most, I've learned, even the most, analytical engineer, works on rockets, is making emotional decisions with their money. They all do. But we have to understand that emotional why and then we can help to course correct in the right direction.
[05:17.5]
So we'll say these are common mistakes that you should look out for. And a thing that we like to do in the planning process is set rules, I call them. So if this happens, so say you're about to have a company IPO and depending on what happens, stock goes up, stock go down, this is what we're going to do.
[05:35.7]
While we're clear headed. If it goes down by 20%, this is what we're going to do. If it goes up by 20%, this is what we're going to do. If nothing happens, this is our plan and we hope for the best, but we have plans for every eventuality while everyone's clear headed, thinking logically and then we just pull the trigger when it happens.
[05:50.9]
So there's no emotions involved. That's fantastic. Do people try to. It seems like in that case if you're setting up rules, do people find you before they have a sudden wealth event? Sometimes. Usually when it's about to happen. And usually it's usually a few months out.
[06:08.0]
And a lot of times it's funny because people want to wait until afterwards and I say we got to do it before, you can pay us money hits the account. But you want to have the plan before everything happens. And I get that too because you're we can do it after. But it's we want to build that foundation first, right?
[06:24.9]
We don't want you reacting oh, I just got a bunch of money, now what do I do? Because that's opens the door for a lot of mistakes and missed opportunities. So we'll be flexible even with that. We'll say you can play, you a short part of the, a small part of the fee up front and Then the rest afterwards, once it happens.
[06:44.0]
Interesting. So how did you get into that niche? That's a very unique niche because, you not a lot of people go through those events. Just kind of been doing some, you searching on who I enjoyed working with. I was working with different coaches, you who had a background in marketing.
[07:00.3]
It's not really something that I'm very well versed in and was kind of seeing that you get commoditized when you work with everyone and you end up working with some people that you just don't like. They're not inspiring. It's not interesting. Joseph, I've always said, and I started my first business in 83 and I coined this phrase, feel free to use it and don't give me any credit.
[07:22.2]
All customers bring happiness. Some by coming, others by leaving. Yes. So I understand exactly what you're saying. Go ahead. Sorry, I didn't mean to cut you off. No, I really love that. And. Yeah. But it's just, I've been thinking, what's. What am I interested in who's fun to work with?
[07:39.5]
What are interesting? I don't want it, and there's, there's different types of planning, but some of it is very cut and dry, pretty simple, and then it gets more complicated. I like things that are a little bit more complicated. So I like when you can do some tax planning when there's a business there. Real estate investing, every.
[07:55.0]
Everything you do, it's. It's kind of crazy. The deeper you get into it, you see there's a lot of nuance. With real estate investing, you have the real estate professional status, short term rental loophole. You have so many different nuances in the tax code that most CPAs aren't looking into, are really bringing to the table sometimes.
[08:12.3]
I've noticed. And if you're building a portfolio, it's hard to be studying the tax code. It's boring. And I think it's boring for a reason. So you miss all these opportunities and you pay more taxes? That's funny. Oh, wait a minute. You're telling me the government does that intentionally so that you can pay more taxes so they can send more money to a foreign country?
[08:32.0]
I'm just asking. That's not a political question. I'm asking. I think, yeah, the incentives are to. That's the revenue that the government earns. Their incentive is to earn more. So it's complicated, and I think it's for a reason. Maybe from lobbyists saying let's make this complicated so only we can benefit from it or I don't know what it is, but.
[08:49.1]
So you also said that you focus on the legal side as well, Do you have somebody in house or is that someone that you work coordinate services with? That's a great question. So we have someone we coordinate with just to be very direct in the answer.
[09:04.8]
So we don't have an in house cpa. We don't have an impulse house estate planning attorney in the local area. And even outside, even in Florida and different places, we have really great CPAs that we vet. We make sure they do tax strategy. They're not just looking backwards.
[09:21.7]
It's not, oh, your taxes are done. It's like coming to the table with ideas like, let's rent out your house to your business, here's how to do it, and here's how to not get audited. And if you do, you'll have all the paperwork in minutes and everything. Like CPAs like that we vet them. Same with estate planning attorneys. We have some really good ones.
[09:37.4]
Can I name drop them? Because I like them and they're cool. Go for it. Absolutely. Yeah, we have some really good ones, like Todd, Marquardt we really love working with here in San Antonio. Rick Eskimi is another great one that we like working with in San Antonio. And you they do the estate planning to make sure that if you can't speak for yourself, your wishes are carried out. Gotcha.
[09:56.7]
Now, along with estate planning, do they do asset protection as well and setting up different entities in order to, protect against individuals who don't want to work very hard and want your money? Yep. And the reason we like those is they also do business, business law as well.
[10:14.2]
So they, yes, they do. They'll put the LLCs, setting up trust, they do asset protection as well. And something here we have here in Texas is a Texas series llc. Or sometimes you'll put separate rental properties into different series of llc so they're all separate from each other.
[10:31.7]
And if something happens in one property, it doesn't affect the whole portfolio. So yeah, they're versed in that. Yeah, I think estate planning is kind of more the generalist thing, but yeah, they look help to, to with the asset protection as well. I think that's really smart. I like that you don't pretend to be a CPA and an attorney and asset protection, all this, you you focus on and you lean on other people in your, in your market.
[10:53.6]
That you trust that you can work with, have, work with your clients. I, I really appreciate that. Just to clarify, because I know sometimes it can be confusing. It's like we want to quarterback everything. Because a lot of times people see PAs are not going to communicate with their estate planning attorney and their insurance agent and they're all going to have different ideas of what's important to you.
[11:14.0]
So we make sure they're all playing by the same playbook. So analogy you could use is like the NBA Dream Team. I remember that when I was a kid. You have like Michael Jordan, I think Kobe, like all these. Joseph just told us he's old. I have no idea what that is. I've read about that, but I don't know what it is. History book, Micah. Yeah, yeah.
[11:30.9]
In a history book. Ancient history. Yeah, yeah, I remember that. Those days, back in the horse and carriage days. But, I'm just kidding. But you had such a great team, right? It doesn't matter how great the team is. If they're not playing by the same playbook, they're going to run into each other, they're going to make mistakes, they're going to miss opportunities.
[11:47.9]
So it's making sure, telling the CPA we expect a tax strategy, we need a strategy for how they're going to minimize their taxes. This is what we think they should do. What do you think? What can you add to this? And really having the estate planning attorney say, and the, business attorney say, we need a strategy for this.
[12:04.9]
What entity should they use? Should they have a separate entity for maybe short term fix and flips versus long term rentals? Is it even worth doing right now? Should they wait until they're making a little bit more money? What do you think? And we don't. Because we don't know everything, but we learn a lot through that process.
[12:21.8]
I like that you keep using the word strategy because so many people see their accountant on April 14th when they drop off a box of paperwork and say, all right, do my taxes. And and they don't, they don't plan for things. And there's only so much your CPA can do with stuff that's already happened. Yeah.
[12:37.4]
And I don't want to blame the cpa. It's almost like that's what most people want and market kind of wants, just do my taxes. Right. But you want to get to a point, you know, if you're building wealth, if you're building a real estate portfolio where you, I it's fun where you have a tax strategy, where you have a strategy for paying less in tax.
[12:54.0]
You're using your business, you're using your real estate portfolio. Yeah. Blaming a CPA is like blaming a doctor if you get sick. You are some, the doctor, the information is out there as to what you should and shouldn't do. Now, nothing shoots 100% because the human body is what it is.
[13:09.5]
And there's so many nuances and variables. But the point is, you can't suddenly be in completely bad shape. And then you go to the doctor and you get mad at them because now you need your knee replaced. Well, you're carrying a little too much weight on your knee or, you know, I mean, you're not exercising properly or you didn't take.
[13:31.0]
I gave you these medications, you didn't take them. Well, why didn't you call and tell me to take them? No, you're an adult, so you got to be proactive. Yeah, I totally agree with that. Yeah. That personal responsibility, that's where it all starts, really. You got to, you got to have agency. You got to be. What's the word?
[13:46.6]
An internal locus of control. There you go. Yeah. Where you say you this is, this is my fault. I take responsibility for this. But, yeah, you we know that when you have a mastermind of these experts working together, you're going to have a much higher level strategy than I would come up with myself.
[14:02.9]
And we like to lean on them because that's their area of expertise. They know it very well. Some of them have their own, you tax AI set up that they have with really cool ideas. So we like to lean on that and we don't pretend to know it all, because I feel like that's a recipe for disaster.
[14:20.1]
Well, and I like the fact that you mentioned that the attorney, because the first attorney, the second attorney I ever had in my first business, he focused on entities, business law and tax preparation. He actually knew how to do that as well.
[14:36.3]
So he understood how if you were going to buy something, what the potential tax consequences were, even though he wasn't a cpa, and then he had a CPA that he brought in for stuff he couldn't answer. But he didn't do personal injury, he didn't do any of that stuff. He didn't do collections.
[14:52.2]
Those were the three areas. And that's what the whole firm focused on. And he had probably eight or nine attorneys. So the fact that you've got people that are focusing on these specific areas they're naturally going to get better at it. Yeah, yeah. And you it's their area of focus. Whereas if you get a generalist.
[15:09.6]
No, the generalist isn't going to work. And then it makes sense to niche down in anything because as they say, you get rich in a niche. Yeah, the attorney we use for our lending. That's all he does. He's an expert in it. You we don't have the, attorney you see on a billboard on the side of the highway that we use for our real estate stuff. We don't do that.
[15:29.3]
Yeah, yeah, absolutely. Really smart. Yeah, I agree with that. Okay, so it says here that you like to balance personal and business finances. Explain how that works and how you do that. Yeah, you probably had a term, and I know I've lived this before, where you don't own your business, your business owns you. Yep, sure.
[15:51.5]
And I've heard that it's a trap. It's very common. I know it's happened to me in my financial planning business and something I, I'm a big believer that real estate investors, any business owner should do is track your metrics. Right. There's lots of what's the return on investment here?
[16:07.1]
What's the cap rate? All these different things. But you want to track your time as well. How much are you making per an hour? Are you doing things like, one thing we talk about with our clients, I said, is everything that's important to them. Right. Emotionally important. So some people might say my family is important.
[16:24.0]
And I feel like I've been guilty of this in the past too. It's well, I'm working from sun up to sundown, so I'm not spending much time with my family. Does that make sense? So making sure the values are aligned and your time is being used in the most effective way possible, but also making sure that you understand why you have the business and what you want it to accomplish for you.
[16:44.7]
Because if you're putting everything back in the business, and I know we have outliers like Elon Musk, I know he puts everything back in and he's going to be the world's first trillionaire. He's not normal. We cannot compare ourselves to him. That's like comparing the guy on the local basketball court to one of the people on that, what did you call it?
[17:02.1]
The dream team from the time before my time. But yeah, comparing somebody to Michael, you just can't. Yeah, it's, But you want to make sure. That it lets you accomplish what you want to accomplish in life. So that's really getting clear on what your goals are.
[17:17.9]
And some of that is business related. I've had clients come to me. I want a real estate portfolio, five doors, netting $500 each. And then some of them, you it's just I want to, you buy a boat. I want to buy whatever it is. It's different for everybody. But you want to make sure that your business is moving you in that direction, which makes sure you're taking profits and you're using it for your lifestyle.
[17:39.6]
You're using it to pay off debt, buying regular, boring investments. And every time you make a deal, every time you do a fix and flip, you get rental income, it's moving the needle in the direction that you want to go. Instead of just being oh, I built this great business, but I have nothing to say personally.
[17:56.2]
Which is a trap. I don't know why, but it is a trap. Now, I'm just curious, do you integrate any of the concepts of the book Profit first, if you're familiar with that at all? I've read the book and some of it. Sometimes it's just for not getting caught in the trap. And I like the idea of having different bank accounts, like the operating account, taxes.
[18:13.9]
I think that's great for real estate investors, as well. If you get. I've done two flips, so I'm a beginner. I'm a believer, though, that you learn by doing big time soon, if I'm going to be giving people advice on it, like on Bitcoin or whatever, I'm going to buy some bitcoin and set up a wallet.
[18:29.1]
If I'm going to talk about real estate investing, I'm going to do some real estate investing. Just so I know you get the nuance. And fortunately, some of the mess, we had skunks living under one of our. One of our great lighthouses or whatever, we were there at the middle of the night, setting up a light and a radio so they would scare them out and kind of seal it up.
[18:48.5]
You want to, say you get money, you want to set some aside for taxes. That's a big mistake people make is they think, I'm not going to worry about taxes till April 15, April 14, but you want to set aside enough for taxes. And something we do with our clients is the tax projection. We'll have the CPA do. So they know exactly how much to set aside.
[19:04.8]
And then, yeah, Your savings money for the next deal. Make sure you set up some long term investments for your goals and then just enjoy it because I've only done fix and flip so far but it can be a stressful process. So go celebrate, have some extra money there for, for your lifestyle. What areas are you seeing that are the most popular for people to invest in and what areas do you focus on?
[19:27.0]
You obvious you can have a mix in the stock market. You can have large cap, small cap, et cetera. And then you can have people that are focused on alternative investments like crypto, private lending and other areas. What do you focus on?
[19:43.6]
What, what do you like to see your clients do? I like massive diversification. So first a boring portfolio just because you don't really have to work to have vo, vti. That's the vanguard, total stock market, bond market.
[19:59.8]
It's just really, it's hard working money but it allows you to be lazy, if that makes sense. So if you keep putting money in there long term it's going to compound and do well for you. So first that and then we add some alternatives. So our clients did really well. We've always said to keep, put some money in gold and of course that's done well recently.
[20:16.4]
Now people want to invest in it. Back then they were like, I don't want to put money in gold. It's so boring. Yeah, yeah, yeah. But it's funny, once it's really expensive, everyone's like, I want gold, I want this, I want bitcoin now. Always. But alternatives are a huge part because inflation protection is something that we believe is important now and is going to be more and more important as time goes.
[20:37.4]
As they keep printing money, that's not going to change anytime soon. No, we talk about incentives. It's going to be very hard to stop that without a lot machine is going to or doesn't matter who you are. So it's going to keep going. So buy something you we believe in inflation protection.
[20:54.9]
A small amount of bitcoin. I'm not going to say put 50% in Bitcoin. Real estate I think is great to have a lot of the richest people have real estate for a reason. And private, you private placement investments, we've seen that private preferred stock. So we like diversification to the level that you can first starting with kind of a simple boring portfolio and you get more money starting to protect against inflation and then getting alternative investments like real Estate, things like that.
[21:23.1]
Okay, so when they have say, for example, real estate in their portfolio, is this something that you're conscious of and you watch their asset allocation or is this something that you actively participate in with them? That's another thing that kind of separates us from just like an investment manager who just focuses on the slice of the pie that is the traditional investments is yes, we do include everything, including real estate in the strategy.
[21:50.9]
And worked with a few real estate investors. They, it's tend to be buy and hold type investors. Got rental, few rental properties, single family. But yes, we do keep in, we keep that in mind and we'll give advice on that as well. So they'll say we're thinking about selling this property. I think a slam dunk advice.
[22:07.2]
I'm using a lot of basketball analogies. But we gave was back in Covid, when the interest rates fell, they plummeted. We had our homeowners, our real estate investors refinance everything that was rock bottom and. But it sounds like, oh, it's, it sounds cool and like academic.
[22:22.7]
Oh, they refinance cool. But that helps their cash flow. That's more money that they're not. Right. Absolutely. Yeah, we, we look at everything. I hate these buzzwords because you hear them so much from financial planners, but holistically, we look at everything comprehensively altogether.
[22:38.5]
I'm trying to think of a way to say it. I think comprehensively that's a good one. I like that. Yeah, absolutely. I don't see money as, holistic. I think you have to be comprehensive. I think that's a better. Yeah, but you bring up, no, you bring up a very valid point that what happens is.
[22:54.3]
And I know this is something that Warren Buffett says, if the crowd is all going one way, you probably need to go the other way. Because what happens is they're all coming in after the smart money has already left. By the time most people have heard about it, the smart money has moved on already and they're on to the next thing.
[23:10.7]
So, if you're getting into gold when it's at the top, or you're getting into one of these other things and nobody can truly predict the top. But the point is, I like contrarian investing. And when everybody else is running away, I know that in.
[23:27.0]
And this was just because I like contrarian and I like to do the opposite. It's just when my brain works. When I was a kid, I used to drive down one way streets all the time. In the wrong direction. And I was caught by the cops multiple times. And I'd say, well, there's nobody else on the street. What does it matter? It said, one way.
[23:43.1]
I'm only going one way. And as you can imagine, that didn't go well with local. I'm sure they love that. But, yeah, I like the alternative. In March of 2020, I think it was, I was in Puerto Rico at a Mastermind, and they were talking about closing down the US and there was some serious talk during the Mastermind, because somebody knew somebody in the government and so on. And so for.
[24:09.7]
So I sat back and I remember sitting in the Mastermind, and they're talking about whatever they're talking about, and I went back in my seat. I'm thinking, okay, they're talking about shutting things down for two weeks. We know the government's wrong all the time, so it's probably going to be longer than that. The same as they're always over budget and so on.
[24:26.0]
So I think it's probably going to be a little longer than that. And I went and dropped 50,000 each in, Facebook, Apple, Amazon, Netflix, and Google. And my thought was, it's not gonna go to zero because of who they are. People are going to be on Facebook, People are going to be buying stuff from Amazon.
[24:46.0]
They're gonna be buying. They're gonna be watching Netflix. So let me just drop 250. And I called my advisor at the time, and he said, yeah, we don't know what's gonna happen. I said, yeah, but it's like Rubbermaid. Rubbermaid's always gonna be there. It might go down, but it's Rubbermaid.
[25:01.0]
So these things are part of the economy. They're an integral part of the structure of the economy. I'm going to drop in. And Home Depot did really well, too, because people are sitting at home and they're God, I got to redo this deck. I got to do this, I got to do that. I can't deal with this. You notice all the issues with that? Yeah, exactly.
[25:18.4]
Because you're sitting around. And now that honeydew list. You get it? Okay, now you got time. Let's go. So that's very funny. Okay, real quick. I just. I love the contrarian approach. I think in finance, you have to think that way because your emotions run contrary to how the markets run.
[25:38.3]
So when everything's, you doom and gloom, it looks like the world is over. That's the time to buy. But it's emotionally, you're Paralyzed. A lot of people are paralyzed. They don't want to do it. Easier said than done. I have one similar, which is Dave and Buster's, but it was when everything looked like we were never going to get out of lockdown, and it was it looked really bad and all the restaurants were shutting down.
[25:57.0]
I bought some Dave and Busters and it went, that's for that. That's cool. I'm reading here the liquidity stack for next deal readiness. Can you explain the system that you have in place for that for your clients? Yeah, yeah, that's a huge, you of course that's.
[26:14.3]
It goes without saying that's a huge thing for real estate is you need to have the money to fund your next deal having cash available. So of course you want to have maybe like 10%, just some rules of thumb and a high yield savings account. Right now they're touching around 4%. So you can find some good high yield savings account.
[26:30.5]
Huge believers in naming each account. So if it's a, you we're going on Japanese vacation in 2027, name it. Japan vacation 2027. Oh, I like that a lot. That's focused. They allow you to do it right. So name it. You can pretty much name at any bank account.
[26:46.8]
So name the savings account, next real estate deal, next rental, June 2026, whenever you're going to buy it. And you could put 10% down there, maybe do some money market or something for the rest of the down payment that you would need for the. Whatever the target size is for the next deal and then, starting to get leverage, I think is huge.
[27:05.5]
So sometimes we've seen people with large investment portfolios where they can just take loans out, collateralize debt on that tax free. But you a line of credit, building your business credit is a huge thing. So looking at your paydex and your business credit score and getting access to lines of credit so that when something happens and you have a deal, you can, you use that line of credit.
[27:27.3]
Strike while the iron's hot and, and then, you move forward and keep, keep, keep getting those deals and not missing out. Because you're oh, now I got to get the money, I got to get my proof of funds, which is something again. We lived during our first, first flip. We saw the process and we were oh, I wish we had kept some of that cash here instead of doing this.
[27:46.9]
No one says, I wish I had less cash. Especially when it comes to doing real estate. And, a flip. Yeah. Cash helps a lot, but it's just having the money available and, if you think steps ahead, you're going to think, this is my next deal.
[28:02.0]
This is how much I'm going to need in a down payment, closing costs, calculate all that stuff. Now, let me ask, when it comes to asset allocation, I'm making the reasonable assumption that you have an asset allocation strategy set up for your clients. And I'm wondering, do you handle the asset allocation or did they.
[28:21.8]
And the reason I say that is because if I had somebody who was making my food and telling me what to eat, I would be in better shape. And when I had, my financial advisor out of Boston area years ago, he said, I will let you have access to the accounts. But I suggest.
[28:43.2]
Well, he said, you have access to the accounts and I can't control that. But what I suggest is you not touch them. Because I'm going to look at this based on numbers and not emotion. I'm not going to think about you going away on vacation. I'm not going to think about.
[28:58.8]
The roof is leaking. That gets emotional. What I'm thinking about is you're supposed to have 20% in small caps, for example. So as soon as it is out of, order of the way it's supposed to be, then I'm going to move it.
[29:17.6]
Because that's the allocation we've talked about and I've committed to you, I'm going to do. And we signed an agreement and everything, so on and so forth. So how do you work that within your firm? I'm curious. Yeah. I've always. When you go to those restaurants and they're you got to cook the food. And I'm I'm always I'm a big fan of we like working with delegators, people who delegate their finances.
[29:38.0]
So we handle it. Or we'll have a separate money manager who handles it. Who. That's all. That's all they do is manage money. So they're a part of the puzzle. The investment manager and same thing there. I think it's good to not make emotional decisions. So we'll tell that you have to have faith in the future.
[29:54.9]
We don't want you you. You can have a. Some of our clients have a fun money, you trading account. Know, they trade options and things like that. We're not going to give advice to. To trade options. Because that would be yeah, yeah. What advice do you give besides maybe don't do advice? The only advice is don't do that.
[30:12.2]
So we have some clients who do that and they, but they'll have a fun money portfolio, like a speculation portfolio that they manage. Other than that, we handle everything else. So we look at the big picture asset allocation. So it's not just this is how your Roth IRA is allocated in a vacuum. It's this is how your Roth, your traditional ira, your non qualified brokerage, everything, even your cash accounts are allocated to get a big picture.
[30:34.7]
And we don't want our clients really saying, we want to get out of China, look at what's happening to oil, we need to buy more oil right now, things like that. No, they're usually financial delegators and that means they trust us to make the decisions.
[30:51.4]
Tell them this is what we did and make sure they're good with it. But then we take action on it. Make sure. Do you find a certain type of client that's easier to be a delegator? If somebody was a blue collar worker, for example, and came into a bunch of money through an inheritance or something, do you have to twist their arm a little bit to change their mindset?
[31:10.8]
How does that work? Yeah, we don't try to change people. It's, it's almost the philosophy of if it's not meant to be, we don't, we don't make the offer to work together, if that makes sense. And we're very polite about that. But you can kind of tell sometimes, I'm trying to think of red flags, but through our process we can see pretty clearly if someone wants to make all the decisions themselves.
[31:32.4]
If someone is a do it yourself or they want to do. And that's common with real estate because I think real estate is do it yourself for activity. They'll say, it's almost like they'll come to us for advice. Okay. And they want to see if their idea is good, but they never were planning to work with us in the first place, if that makes sense. Okay, I see.
[31:52.4]
You they want to be next to us on the plane and be the co pilot and we're going to be talking about you this is what's going on in China. But we really want people who want to free up their time, want to free up their energy for things that are more important and are comfortable with us coordinating the team and, and then answering to them and making sure everything gets done.
[32:10.4]
So we create the strategy. The clients know it. It's not like it's top secret to Them, they know what the strategy is, we present it to them, and then we start taking action on it. And with the investments, they may have one fun money investment account, options account, but the majority of it is going to be managed by us and us.
[32:27.7]
I'm sure that you have these in place, but can you explain to our audience what safeguards you have in place? Because, there have been people on occasion that had done inappropriate things with other people's money. So what safeguards do you have so that you could, you allay people's fears?
[32:44.7]
Yeah, you can check my broker check. So I've never done anything wrong in the past. You I don't have any. But everyone can check the broker, check for who they're working with, their financial advisor. And it'll say, any disclosures, anytime they've been sued, anytime they've been found to lie to people or did insider trading.
[33:01.2]
I think with that, think of Bernie Madoff and people like that. Yeah, they were promising things that were just ridiculous. It's almost like if it's too good to be true. It is. Yeah. And kind of the greed. I wish I was that. That charismatic of a person. I don't want to be a psychopath like he was, but I wish I was charismatic or I could just lie to people like that.
[33:19.4]
But I'm just, I'm not like that. I. I would never. I think ethics are the number one thing you have. I want to build this business on a good reputation. I want to be, I want my. My son and daughter, Luke and Vera, to be proud of me later on. But you can always check, the legal stuff, broker check.
[33:36.9]
You can see how your advisor is doing if they've done it, made any mistakes in the past. And I'm trying to think of safeguards, but really it's. It's radical. Transparency, I would say, in our business is just, exactly what you're paying to the dollar. What we're doing.
[33:52.4]
You can see all your accounts in one place. They're going to be at Fidelity and Schwab. It's not going to be trust me, I'm making these statements type of things. Usually we're using Fidelity, Schwab, sometimes, a 401k provider, things like that. But it's not like I'm, managing it and commingling it like.
[34:09.2]
Like Bernie was back in the day. Okay. And then. Am I correct in assuming that. That you can make the trades because you want to keep it within the asset allocation structure that you have set up, but you can't have the money sent to your company. Am I correct in that?
[34:26.2]
That's the rule. So our rules are set up that that would be considered commingling funds, and that's illegal. But then, sometimes things are illegal and people do them anyway, if that makes sense. No, but, yeah, that's. That's totally illegal, and we would never do that. Right. Awesome.
[34:42.0]
Well, I just want to clarify that for you. Because I know with my guy before he retired, he could make trades, but no money could ever go to him. It could only go to the specified accounts in advance. Okay. And it could never change. So I just want to make people aware of that, that you've got these safeguards in place to protect them.
[34:58.4]
Because you trust, but you verify. I think we should all do that. I think that's huge. But most of our investment accounts would actually be handled by a separate investment expert, and it's usually at Fidelity or Schwab. Can you give me. I know you said you work on, a case by case basis because everybody's situation is unique.
[35:20.2]
I get it. What are you looking for as far as an overall return for somebody's portfolio that you think, okay, that's good. That's going to make everybody happy. Without, obviously, somebody who expects a 30% return, which is not realistic. Yeah.
[35:37.1]
So basically, we look at the amount of risks they're comfortable taking. And y' all are probably familiar. You send, a risk tolerance questionnaire to really, you we send one of the more. More robust ones to get an idea of exactly how they feel about risk. We call it the risk number. And we want to get them, of course, the highest return possible at that level of risk.
[35:55.7]
But for each goal, we look at what the hurdle rate is. So that's the rate of return that they need to get to hit that goal. And really, we're happy if they have more than enough of a hurdle rate or, rate of return that they're getting on average, that they have a high chance of achieving the goal, which we consider 99, 100% chance at the level of saving they're doing.
[36:15.2]
So we kind of work backwards from the goal to determine what's the rate of return they need to get to hit this goal. And then we make sure that they're hitting that to have a high chance. Okay, so do you say if this is what you want as a rate of return, and this Is your goal. This is the type of risk you need to be comfortable with. Are you? No.
[36:31.9]
We would never tell someone to take on more risk than they're comfortable with. Right. But there might be one account where they average out to be their average level of risk. Okay. One's a 50. And say 50 is for simplicity, cases like 50 bonds, 50 stock. I know we would be more nuanced than that, but just say it is.
[36:48.7]
We might say, let's do a 70, 30 portfolio for this because it needs a higher hurdle rate for this account. And then over here, let's do a more 30, Okay. 30, 70 portfolio based on what they're trying to do. Yeah, if it averages out to that 50. 50. So we can do some.
[37:04.3]
Some there where there's some that are more risky than others and some kind of temper it down because we look at it comprehensively, not holistically. But yeah, it's basically based on the goals. We like to beat the market. We have some money managers who do beat. Have beat the market recently, or we have some that in 2008, they went down 3% instead of 40%, and they tend to match the market.
[37:26.6]
So we have some really good money managers, and we like to get a good return for the amount of risk that you're taking. But at the end of the day, we'll never tell someone. Take more risk than your company on the whole altogether. Okay. If people want to get a hold of you, what is the best way to do that? And everybody.
[37:43.4]
Just so his contact information will be in the show notes. I just want to talk about. Yeah, if you want someone to coordinate all aspects of your finances, so you can focus on the things that are more important. You're comfortable delegating your finances, you can give me a call and we'll schedule that first step, that financial roadmap that we were talking about.
[38:01.4]
And My number is 210-444-2128. That's 210-444-2128. Give me a call at that number. We'll get you scheduled and learn about your situation and see if, a comprehensive strategy is right for you.
[38:17.4]
Awesome. Okay. Now, you're based in Texas, but you work nationwide, am I correct? I will, but most of my clients are here in Texas. I have a few in Florida. That's why I know some, like, attorneys and. And stuff like that in Florida. But I will work nationwide. Yes. Yes. Okay.
[38:32.6]
Joseph, thank you very much for your time. It's very much appreciated. This was fun. And I know that for myself, even though I was an economics major and I read the New York Times for fun. I'm sorry, The Wall Street Journal for fun. It can get dry. You made this a great conversation.
[38:47.9]
I think you put it in terms that people are going to understand. So we really appreciate your time. Yeah, I appreciate you all as well. Thanks for the opportunity. Sam