If your money mindset is always focused on negativity, you cannot eliminate those blocks that hinder you from achieving financial freedom. Dave Mason chose to focus on the positive side of making money, which unlocked many thriving opportunities in his career. In this episode, he talks about running a thriving real estate business in the United States while living in Israel. Dave delves into his private equity deals, the levers he had to change in life to overcome debt, and what it takes to gain a positive net worth. He also shares tips on earning through real estate syndication, how cost segregation works, and what it means to be an accredited investor.

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Cultivating A Money Mindset Away From Negativity With Dave Mason

Our guest is Dave Mason. I found out about him when he sent me his book called The Cash Machine. If you read all the way to the end, he’s giving everyone a free download of books. I highly recommend it because it’s a great book. We talk a lot about taxes, how to save in taxes, investing, funds and syndications. There’s a lot of good information here for investors that are hoping to do some more hands-off investing, maybe they feel overwhelmed by real estate. I suggest sticking around. Let’s bring in Dave.

Dave Mason, welcome to the show. How are you?

Thank you so much. It’s great to be here.

I didn’t exactly know where I know you from, but you reached out to me when your book came out, The Cash Machine.

It was right before COVID. It came out in January 2020. I did something that l called Financial Independence School. You and Craig were two of the people that I spoke to during that.

It all comes together. I loved your book. If you guys haven’t heard about it, The Cash Machine is a cool way of teaching about financial independence because he teaches it in a novel setting. It feels like you’re reading a story. You get excited about the characters. It’s easy to understand the concepts in that way. I appreciated the way that you guys laid it out. Thanks for that book.

It’s a great read for even younger people, if you’re trying to get your kids into it or something like that. We want to hear about your financial independence journey. First, the way we lay out the show is we ask you how you first heard about financial independence, and then we’ll talk chronologically through your story. How did you first hear about it?

I first heard about it when I was picking up the pieces of the financial disaster that I had made of my life. It came to me, and I’m like, “That’s what I should have been aiming for.” Had I been aiming for that early on, everything would have played out entirely differently, which is a segue into the story I suppose.

Tell us about the disaster first. Where were you when you figured this all out?

First, I was a nonprofit attorney. Then I want to move to Israel and start a family here, and make the shift from that into the business world. We’re doing okay for a little while. As long as we’re making enough money to get by, we’re doing fine. The business started doing a little bit better. We’re making a little bit more than we needed to get by on. We’re still doing fine, and then we had a problem. We started making twice what we needed to get by on 3, 4, or 5 times. We were making a lot of money, and we didn’t know what to do with it.

We didn’t know what you do when you have more money coming in and what we need. Looking back now that I know about financial independence, I would have said, “I would have continued to live very basically. I would have taken as much money as possible and invested it.” I didn’t know how many years my business would be strong. It was riding a certain wave. I didn’t know how long that wave was going to last. I would have taken money out of the business and built up investments. I would have hit financial independence within five years of starting my business. I had that as a goal.

One thing that I noticed as a business owner, especially since I’ve become a real estate agent, is that it’s easy to blow money or reinvest back into your business and not know if it’s going to be paying off. I’m curious how that works for you guys. Maybe that wasn’t a business that you wanted to keep investing in, but in my personal life, my spending is minimal. In my business, it sometimes takes on this crazy thing, or somebody says, “It’s $5,000, but it only takes one client. If you get one client, it’s worth it.” All logically, that sounds good, but too many of those and you are underwater.

We rationalize the dumbest expenses in our business. In our personal lives, we’re spending not that much. We rationalized many stupid expenditures. We know a lot of bright people who are struggling to make money and get by. It’s a great thing to be given people jobs, and they’re smart. I’m sure we’ll figure out how to become valuable over time. Was that a total waste? We were getting ourselves into debt to be paying other people salaries who the business didn’t even need.

We thought we were doing all this great charitable by giving people jobs when the business went under, and I had to get rid of everyone. Everyone landed on their feet. It took me years to dig out of the debt I’d taken on for that. That was the big error on my side, then my wife had another big error. She wanted to own a house and fixing it up right away because she didn’t want to have to later move out, be living there, have to leave in order to fix it up. It needed some work. We wanted to invest money into this house when we didn’t necessarily have all that much. We sink ourselves into a huge house debt. We made ourselves house-poor.

It was only later that we read about Robert Kiyosaki. He is like, “A house can be a bad investment to be dumping all your money.” We were living in a large house with the expectation we might have a large family downline, which we never did have a large family. We had this big house, and we made it super fancy, then we got stuck with it. The dollar went down versus the shackles. We got ourselves into all this debt. What we paid for the house and what we were able to get back for the house was not at all levels. There are two things. We trashed ourselves in my business and in the house. We were staring at a ton of debt.

You mentioned the shackle. tell everybody where you are? It might be easy for people to think that financial independence stories are very Americanized ideas. You’re taking this information and you’re sharing it with the world. Where are you guys based?

We live in Jerusalem. I moved here when I was 29. I grew up in America. I grew up in Connecticut. I was an attorney in the US until I moved over here and decided to go into business. I have to say that from an American standpoint, I do tend to fall a bit that way. I find people will look at how successful Israeli businesses are these days and say, “It must be a good business culture.” No. Israelis are very good at coming up with businesses.

The business structures in Israel, I’ve had some experiences with that almost drove me under. To me, it is not the place where I want to be investing or building a business. I’ve started doing more things internationally. The US is my place of comfort. Despite the fact that I live in Israel, most of my investments are still going to be US-based. Israel is definitely where we live.

Let’s go back to your financial independence discovery. How old were you? What year was it? What did you do to make the switch?

We came up with The Cash Machine in 2020. It took two years to write it. 2017 or 2018 is when we discovered it. I had this whole insight that as a novelist, I learn best when I’m researching a topic for a novel. If I want to learn financial lessons to implement, then I’d learned a small amount. In order to teach it, I need to understand it much better and the nuances. It was when I realized I needed to become financially independent. That was the spark that got me to start writing The Cash Machine. I didn’t write The Cash Machine as a financial expert. I wrote The Cash Machine primarily for myself because I knew the process of writing would force me to get a vast financial education. During those two years from 2018 to 2020, when I was writing it, my understanding of money went through the roof.

You can learn so much about a topic by researching and writing about it. By the time you finished writing, you had already understood all of its nuances. Click To Tweet

I’m loving this because I did release a book on medium-term rentals. What I want to write about are my passion ideas and money psychology. Before we got on here, you talked about how you guys have a program where you’re helpings people get over their money hurdles, emotional, glass ceiling, and all kinds of beliefs that they’re holding that keep them from attracting or allowing money into their lives. It’s the same for me where I know I still have money hang-ups. I’m on my own journey of learning how to come them. This is exactly where there’s almost this imposter syndrome of, “Can I write about this when I’m not there yet?” In writing about it, you will be on the path of discovery to figure it all out. I think that’s exciting.

I would have some hesitancy about publishing a book if I wasn’t there, but starting the book is the exact opposite. Starting the book makes you take a hard look at where your own holes are and fill them. You can 100% start the book on that. By the time you publish it, hopefully, you will have gone through that. You need to take an honest look at yourself and say, “I want to talk about money mentality. Let’s look at my own money mentality, the places where I have holes. Let me fix them.” I can document that journey in the book. I can be talking about it. I sat down to write this section, I had to look at myself and say, “I wasn’t there. How do I get through this?” That brings us to Money Mindset Madness.

This is a course that my wife and I wound up creating a few years back. The first step of Money Mindset Madness is figuring out where those money blocks exist. We give a whole assessment. We give you 40 questions to go through. Each one is very simple. It’s literally a statement, and you say it to the degree that you agree or disagree with it. One of the statements says, “Money is the root of all evil.” If you put down 1, “That’s total garbage, I don’t believe that at all,” or is that a 7, “I completely relate to that statement.”

I encourage people to go through it fast because we want your first gut reaction. If you take time and think through them, all these statements are false. Emotionally, that’s what we want. We tend to attach ourselves to a lot of not healthy beliefs that hold us back. You go through and answer all these questions. You figure out which ones are holding you back. For example, one of the first times I realized the power of this, I was in my kitchen, doing dishes, and a neighbor comes over. He talks to you, “I’m struggling financially.”

This was a very bright guy, and he was highly skilled in an area where people pay a lot of money for skilled practitioners. He didn’t live on that much money and was having a hard time covering his expenses. He was talking about all these things he was doing while they weren’t working. I said, “Out of curiosity, complete the following sentence. Rich people are?” He said, “Greedy.” I said, “Money is?” He said, “The root of all evil.” I said, “Do you think you might have a hint here as to why you’re having a hard time going out and charging people?” He wouldn’t want to work with rich people because he hated them. He would find people to work for, but they couldn’t afford what he wanted to charge. Even if you wanted to charge a lot, and they weren’t up charging, wind up hating himself because now he’d be evil and greedy.

We want to look at ourselves as being good people. if we have beliefs that say, “Success financially is going to make me a bad person, greedy and evil, we’re going to stay far away from that.” We go through these 40 beliefs. We help identify what are those beliefs that are genuinely holding people back, and then we go through a whole process of getting rid of those beliefs. That’s step two. From there, in the third week is, “Now we need to fill those vacuums, let’s think about some powerful, healthy beliefs, and help you understand why those are as true or more true than things you had before that can help you move forward.”

I’m glad that you guys are out there doing this work. It’s like a rising tide lifts all boats. As we help other people, it improves the community. Those people can go out and help more people. I want to go back to your story because I feel like people will get a lot from your pivot point. When you first heard about financial independence, what were the levers that you changed in your life? What were the investments that you made that started to help you get out of your debt, and over to positive net worth?

Getting out of debt and positive net worth before financial independence was making the choice that we needed to sell that house. We’d put all that money into the house. We needed to get rid of it and sell it. That was tough. This was the house we thought we were going to live in for the rest of our lives. We put all this money into it. We had much stress and fixing it up. It is a beautiful place. It was tough going from being a homeowner to a place we wanted to live to being a renter and making that shift.

We first said, “We want to get rid of all of this debt because all the money we’re trying to save for investing is going into our debt payments. It’s not allowing us to move forward.” We took a major step backward and we sold the house, then we had money left over from the sale of the house. We’re like, “We should put that into the business.” Business can always be a place of putting things in. When you have extra money and you justify putting it into your business, that is some of the worst money you will ever spend.

When we started learning about financial independence and we looked at our own beliefs. As a point out of Money Mindset Madness, we go through 40 beliefs. The one that I scored the highest on consistently over and over again was, “Investments are hard to understand.” That was my real problem. I get more money. In the beginning, when my business was making enough for us to live on, we were doing fine. We’re making four times what we needed to live on. We got stressed out because our savings account was getting more and more money in it and is earning with no interest.

I was feeling guilty and bad for having all this money sitting, accumulating and not doing anything with it, but I didn’t feel comfortable investing it. I’m a religious guy. I also happened to be an orthodox rabbi in Jerusalem. We have this whole sense of God looks at you and very benevolent says, “Are you stressed by having all this money in your bank account? Don’t worry, I’ll make it all disappear.”

Be careful what you wish for.

“You’re getting stressed, no problem. That money is causing you stress. It’ll be gone. Don’t worry about it.” You can dig yourself into such a deep debt hole that now you can work hard you don’t have to worry about having any money to invest because it’ll all go into paying down that huge amount of debt. Once we sold the house, the debt was gone, we had the money and again we did bad things with it then, “Enough is enough. We need to learn what we’re doing. I need to write this book on money.” One of my biggest shifts in getting over my fears of investment. First of all, it was shocking how easy it was to get over the belief that investments are hard to understand.

It can be pretty simple.

I meet many people with this belief, the problem with that belief is that it’s true, there are investments that are hard to understand. It doesn’t mean that you have to be involved in those. There are also investments like taking money and putting it into index funds that are easy to understand. You can implement it in a few hours and automate it. It can be easy. I didn’t go in that direction. Recognizing that, “There are strategies that are easy. I can take ownership of my investments.” Because I was learning much and I was looking at index funds, I started getting excited about private equity.

This was a big shift for me. This came about while researching The Cash Machine, I was interviewing some people about real estate. These guys were helping me to understand things. Some of the local individuals who specialize in this reached out and helped me to get my head around certain principles of real estate. When I mentioned I was looking for investments, a couple of them said, “We’ve got some investment things. We can introduce you to people.” A lot of investing in things like nursing homes, college dorms and student housing. These were interesting because I wanted to get involved in real estate. I was learning a ton about real estate. I was living in Israel. The real estate numbers in Israel were very different from America wanting to invest in America.

That is a big problem for a lot of people in other countries, like in Europe, the numbers don’t make sense the same way because they don’t have the 30-year fix. Rents are not high enough so the cashflow is hard to get. I want to clarify for people reading, were you buying these through syndication or a fund, we’re not the active person, but you’re putting in money with a bunch of other investors, and then they’re utilizing their money to go buy value add college dorms, or nursing homes and develop those?

Exactly. That’s what I like. I was meeting people. I have no role in the management of any of these things at all. Sometimes the student housing, those guys give me a lot of information every month, I get an update on what’s going. Every single month there is 100% occupancy because there’s not enough student housing in the area where they are. They said, “Here are our costs for this month. Here’s what we’re where we made.” I get a monthly statement and nothing is expected of me at all.

In the nursing homes, I don’t even get those types of updates. The returns are higher, but partially because there’s not any money put towards investor relations at all for the people I want to invest through, but that’s a company like that wind up got investments in a lot of different nursing homes. Each nursing home has its own investment. These people have turned around a lot of nursing homes because they’ve got many of them, they’re able to negotiate good rates on all the pharmaceuticals they need and they’re able to use economies of scale.

They can go into a failing nursing home, make some changes, and then they have a whole payback structure that is very favorable to investors because they need the money to be buying the homes. We put in the money and the first 10% comes back to the investors before they wind up getting their cut from managing the homes. What was shocking to me the first time I invested in that was I was excited about the returns and the fact that I’d be taking my money and brain-making into monthly income. I wasn’t expecting the tax advantages.

I was shocked at how much it saved me on taxes. We did cost segregation and they’re able to get all this depreciation into that for the first year. Here I was making money. As far as the IRS was concerned, I was losing money. This is crazy. I’m getting checks. Yet very legitimately, they’re telling the IRS that I lost all this money in this depreciation, and suddenly my taxes are going way down. In the first year, I got a lot more tax savings and payouts.

I want to go into this concept a little bit for the readers because some of them are new investors. The way cost segregation works, I don’t know all of it. It works well on syndications. Some of them if they’re value add, maybe apartment complexes and some of the things it looks like maybe the nursing homes, they were doing value add. They’re able to use the idea of they’re going to do all these expenses upfront to get it up and running. Everyone gets to write that off in the first year.

You get to do like 90% to 100% depending on what the asset is. They’re going to be lowering that in the coming years. It is good, even in 2022, but after that, it’s going to be less. Some people, because of that, will invest in one of these every year because you get that bonus depreciation upfront. if you plan it, you can be getting it year after year for your different investments. That is exciting.

I’d explain it a little bit differently. It doesn’t even require you to be putting this upfront money in at all. What it says is you buy a property. for residential properties in America, they depreciate over a period of 27.5 years for commercial over 39 years. What’s interesting is that when you buy a property, let’s say, you buy a house or an apartment building, it’s not all building, there’s a bunch of other stuff in there as well.

For instance, there’s land that’s built on and never depreciates. The structure does it appreciates over 27.5 or 39 years. You could also break it down into its various segments because there are things that are not part of the building. You can say, for instance, that all of the money that had gone into landscaping, and didn’t have to be the money that you put in, it could be in the past, all the landscaping improvements was depreciate over fifteen years. There could be that the buildings had furniture, the nursing homes, they might have had beds in heart monitors and all kinds of different equipment. That stuff depreciates over five years.

The flooring and cabinets can be separated, all of these things can be broken out. It couldn’t be debts that you bought a place for $1 million. It could be that the land was worth $200,000. The house is worth $800,000 would depreciate over 27.5 years. If you do segregation, you might find that the land is $200,000. The house itself is $600,000. The furniture, lighting, cabinets and landscaping improvements might be $200,000 worth of stuff.

Even though supposed to depreciate over 5 years for the furniture and 15 years for the landscaping, they originally said, “For a short period that as you pointed out is going away that you could accelerate all of that into the first year.” You could want to bind that property for $1 million and you might only need to buy that $1 million property. Who knows if you’d financed it right, you might have got the $1 million property for $100,000. You might be able to depreciate $200,000. Knock out $200,000 of your income in the right circumstances for tax purposes in that first year. It could be powerful stuff.

The thing that’s going away is that in 2022 is still that you could go up to 100% of bonus depreciation. In 2023, 80% is the max. It doesn’t completely go away, but it’s less. if it’s something that you’re interested in looking into, reach out to me. I have a CPA that specializes in this. if you have any short-term rentals or syndications, there are different products that you can do a cost segregation study on. I’m super excited. Thanks for bringing that up. I think a lot of people don’t know that. That’s important stuff. You started investing in these private equities. What were the investments required I think people don’t realize that a lot of these have a minimum, what I usually see is at least $50,000, but what were you seeing?

The lowest I got into we’re at $25,000.

That’s pretty doable. If somebody has $25,000 maybe before, while you’re saving up to that you could be having it at index funds, and move it out afterward. At $25,000, unless you’re house hacking, you probably don’t have enough for a house. You could be putting it in these private equities. Oftentimes, they only hold them for a shorter period of time. Some of them are 3 to 5 years. Some are longer. Once you get the money out, then you could go invest in real estate if you wanted to, or roll it into a different fund. What was your path?

I tend to like the ones that never give you your money back.

They pay out dividends.

The problem with bonus depreciation when it’s a 3-to 5-year period, depreciation is a legal fiction. It’s saying, “We’re going to treat the property as if it’s going down in value, even though most of the time property has gone up in value.” They give you the tax savings up front for that. If 3 to 5 years later, they sell that place, and they show, “The place you bought for $1 million is now worth $1,000,002. All that money you took us depreciation, you owe that back because it was fiction.”

Depreciation is a legal fiction. You may be treating properties as if they are going down in value, even though most of the time, their value goes up instead. Click To Tweet

I like the ones that don’t sell but refinance. You have a nursing home, and it’s making a certain amount of money. The banks are willing to lend it to 80% of the cost of purchasing it based on what it’s making. Because you’ve got economies of scale with these people who want a bunch of them, they’re able to cost down the profitability up. They can go back to the banks a few years later and say, “we want to borrow more money.” They use that money to give me my money back.

If I put $50,000 into a nursing home, I’d be getting small amounts over the first three years, and then after three years, I might get $50,000 back in one. That’s a refinancing. At that point, I’ve gotten all my money back, and my shares go from preferred stock, preferred shares to regular shares. I no longer get that first 10%. The money gets divided from 1%, but it’s only after they paid it all back. If they’ve given me $15,000 in payouts in the first three years, they don’t reduce that from the money they give me back. They don’t give me $35,000 back if I put in a $50,000 investment. They still give me the entire $50,000 back. That $15,000 was mine.

Now they refinance me, they give me back all that $50,000. That money is not taxable at all because it’s not earnings. It’s borrowed money. You don’t pay tax on borrowed money. I saved all this money on taxes in the first year from the depreciation. I’m making money every single year on the payouts, I then get a chunk of money that’s non-taxable. I get all my money back. I can put in another investment. The first investment still gives me dividends at a lower level because I’ve gone from preferred shares to regular shares.

Let’s say you’re trying to do your financial independence math. You needed $3,000 or $5,000 a month to live off of. Do you feel like you can do that with syndications alone being able to depend on the dividends that are coming out?

Absolutely. Certainly, if you look at the amount of money you need doing these private equity deals, the amount of money you need to invest is far lower than you would need, let’s say, if you’re putting your money into index funds. In fact, I use you and Craig as examples when I talk to people about different paths. I tend to find the FY community falls into the index fund group and the real estate group.

If you look at the amount of money you need to do private equity deals, it's far lower than the cash required to be put into index funds. Click To Tweet

You’ll see that the real estate group usually becomes financially independent at a much younger age or faster period of time than the index fund group. The syndications we’re talking about were a way for me to do real estate that was less hands-on. I’m not going to be making the type of returns that you will make doing it directly. The period of time to become financially independent will be slower than if you’re doing all of your real estate yourself.

I’ve got other income sources, my business and books that I write. I don’t want to be dealing with real estate, especially because I live in Israel, and I’m investing in America, I don’t want the headache. I’m willing to have slightly lower returns if I was doing the real estate myself, but it’s still a much faster path to financial independence than you’d get from index funds generally.

If somebody was interested in this, how did you find them? It sounds like you got some recommendations from friends. In going forward, are you going off of those recommendations or new offerings from the same companies? what kind of research would you recommend someone does?

It’s a networking thing. Here’s part of the problem. You have to be an accredited investor in order to get involved in these. Not all of them, but most of the ones that I’m involved in, and some of them allowed me to self-certify as an accredited investor, which is an important distinction. Because a lot of these are accredited investments, they’re not allowed to advertise. You can’t go and Google these things. They can only reach out to people who already know about it.

The research for The Cash Machine and for the FY school that I interviewed you and years ago had got me interacting with a lot of people who had their hands in the whole private equity world and real estate world. I reached out to everybody I knew. I said, “Do you know of anything?” I’d reached out to people and they’d make a referral to somebody else. That person and say, “I don’t have a deal right now, but I know some people who do.” People in this world know each other. A lot of this is a word of mouth or networking. The first deals I got into were only because of networking they 100% would not even take money from people that they didn’t have some kind of a personal connection to a small group of investors.

They were happy because they were small enough. They were happy for me self-certifying that I was an accredited investor. I was borderline because most of my net worth was in my business and how much is a business worth? You don’t know. As long as I can make a case that I was accredited there, that’s good enough for us.

I have a meetup called Airbnb Investing. We have a group on Facebook, that can be international. People help each other. I go on and do lives every other week. We also meet in person here in Boulder, Colorado. That’s a great way to meet other people that might know about syndications and might have deals. Real estate is about who you know, and we all help each other out. It’s important to get out in the community and get familiar with people. I highly encourage go check out Airbnb Investing on Facebook, and I hope to see you there. Let’s go back to the accredited investor. Tell everybody what the limits are there because a lot of people probably are not familiar with that status.

Investor status drives me nuts. You can see in theory that good thing for people to say, “We don’t want inexperienced investors getting involved in deals. We don’t want people swindling those who are inexperienced.” We’re going to say that people have to have a certain level of knowledge in order to be investing in certain deals. The opposite of that is a public company. We say, “Stocks are publicly traded,” because anyone can invest in them.

The opposite of that is those that are not available to anyone. That’s what we say is available only to accredited investors these private investments. We have the main character in The Cash Machine, Amber. At a certain point, when she learns about this, she means, “What you have to do is take some tests in order to show that you’re like savvy enough to invest in these things.” The guy talking to you about like a driver’s license, that’s way too logical for the government because the presumption seems to be that if you have enough money, you must not be a sucker and it’s okay for you to go into these things.

If you don’t have enough money, then you must be immature with money. You can’t be trusted with it to make your own investment decisions. This is total garbage. This is why many professional athletes and lottery winners go bust often a few years after they win this money because having money doesn’t make you money smart. The accredited investor status assumes that it’s the amount of money that you have that determines whether you should be allowed to be investing in off-market investments or not. I don’t think that’s right. I’d much rather see people who are educated, savvy and getting themselves an education on this stuff, like your readers, are getting themselves in education.

They shouldn’t be able to get enough of an education that they could have any investment they want available to them. That’s not how it works. The government likes to say that there are 1 or 2 tests. There’s the income test and net worth test. The income test is if you’ve made $200,000, a year, several years in a row, or if you’re filing jointly with a spouse $300,000 a year. It looks like you’ll continue to make that in the future like you haven’t sold your business or your job, then you’re accredited

If you have $1 million of net worth excluding your primary residence, you are considered accredited, and then you can get involved in these different investments. For someone like me, it’s a difficult question, “Am I accredited or not accredited?” These days, it’s a bit easier because I’ve got many different investments now. A couple of years ago, when I was starting, I didn’t have that much money invested in the stock market. I sold my house. I didn’t have real estate or assets, except I had my business, which was making a decent amount, but not enough to be above the accredited investor thresholds.

What’s a business worth it? I’m writing another book now a sequel to The Cash Machine. It’s a totally different story but it’s more about The Cash Machine. It’s not a book about how to make money. The Cash Machine is a book about how to make smart choices with the money you’ve made. I always said, “I’ll write a book later about small business and how to be making money, dealing with some business acquisition issues and how to be turning around a failing business.”

As we put out in that book, there are over 100 different metrics for how to value a business. According to some of those metrics, my business was worth $1 million or a tiny fraction of $1 million. How did I decide what my net worth was? This helped guide some of my initial investments because a lot of the accredited investor deals used third-party aggradation services. They use the most conservative of the business valuation tools to figure out, “What my business was worth?” If I wanted to invest in a hedge fund or something, they would have said, “We’re only going to look at your business as how much money it has in the bank. Everything else we’re not even going to pay attention to.” By then, no way I would have been worth $1 million.

Because there were tools, there were perfectly valid ways of assessing a business that said, “My business was worth $1 million. Could I have sold my business at that rate?” Probably not, but there were legitimate tools that said that. There are accountants who will make you write a credit investor letter that will say how much you are worth. I approached the account. I said, “Are you comfortable using these tools?” They said, “If they are published well-known business valuation metrics, yes, I’m comfortable writing a letter based on those metrics. You can then use this letter and self-certify that you are accredited.”

I was able to get into smaller deals where everyone knew each other, and it was more of a word-of-mouth thing. It didn’t have to go through third parties. Who is accredited? It is not as Black and White as you might think. There were literally certain deals that I was able to get into that would consider me accredited and other deals that I would not be able to get into because they would not consider me accredited, even though they’re all using the same metric for accreditation. One other thing I need to point out is that there’s another loophole that could have gotten me into those nursing home deals because every accredited investor deal has a certain number of slots for non-accredited investors.

It doesn’t have to be that 100% of the investors are credited. I think there are 35 exemptions for people who are non-accredited. If it’s a big deal, if it’s a $1 billion real estate complex, forget about it. The odds of you getting one of those 35 slots are garbage. They’re all given to close friends and relatives of the people putting the deal together. Each nursing home was a small enough deal that there weren’t even 35 total investors. I could have got into those with one of the exempt slots, even if I wasn’t accredited.

It’s important for your readers to note that if they’re not accredited or have a hard time showing they are accredited but they want to get involved in these deals, that smaller deals will often give them the option to get in on one of these exempt slots rather than having to hit the threshold of showing you’re accredited.

How do people interview these companies? What are some things you look for? I imagine now you’re starting to see more and more deals. What have you bought in versus not?

First of all, I want to be making sure that these deals are legitimate. I want to look at their track record and talk to investors who have done past deals with them and know that they’re paying out and they seem to be legitimate. A lot of that then tends to be what are the deal terms? How much money am I likely to get out? Also, how much risk is there? I’m very into asymmetric risk-reward. How can I cover my downside to make sure that I don’t lose money but have as much potential for upside as possible? I entered a deal. It’s not an accredited investor deal. It’s not in this space at all. It’s for a small publicly traded company. One of the things I liked about it was that I’m putting money into the company, giving it to them directly.

I’m not getting stuck yet. I’m getting stuck a year from now. The deal is that I get the stock at the lower of two prices. Either nowadays’ price, the day I put the money in, or the price a year from now. If the stock goes up, it’s a penny stock. Let’s trade out in cents. If it goes up to $0.30, I make 2.5 times my money. I did great. If the stock goes down, if it’s worth $0.4, my money is converted to the stock at that $0.4 level. If it goes down, they take the loss. If it goes up, I get the gain. You always want to look at how you can protect your downside.

There are people look a lot about gain and about, “What’s my return going to be? It’s important to also know, “What am I risking? Is there a way I can get into a deal that is going to be protecting the downside?” Very often, there’s a bit of a give and take on that, especially in the nursing home deals for instance. Some of the deals that I looked at that were promising the highest upside also had the greatest risk of losing money.

Let’s take an example of two different nursing homes. One of them is making $1 million of profit per year, and they’re hoping to take it to $2 million. The other one is losing $1 million a year, and they’re hoping to take it from negative $1 million one to positive $1 million. The one that is already making me $1 million a year, your downside is pretty much protected. Things like COVID happened, and that’s through the industry for a loop that nobody saw coming.

When I’d look at an investment like that, I’d say, “There’s already good income. They already have enough money to be paying me out the minimum.” The 10% threshold, the first 10% comes to me, the odds of me not getting that is very low. It could be that that deal would have a lower cap and that maybe I get at most 20% back each year on my money. Whereas the one that was at like $1 million of losses per year, there’s no guarantee they’re going to turn that around. They’ve got their projections for how they’re going to do. There’s a higher risk that I’m going to get nothing back.

It could be that if they wound up being successful, I’d wind up getting 40% returns instead of the ceiling being 20%. You need to be looking carefully at how much is that risk versus how much of the reward, how much risk can you handle? One of the things I started doing after I had these investments is I brought in a bunch of family members in. My in-laws wound up investing in some of these deals with me. I told them they were in a different spot.

I said, “I have more ability to handle risk at my age than you do at yours. You’ve got a set amount of money. You’re retired. You need to make sure that you’re getting your return.” I would only have them in deals where the property was already making enough money to make the minimum payments. If they got less upside, they were okay with that. They needed to know that they’ve got a certain amount of monthly expenses, and they’re going to have that money coming in every month. If their bonus isn’t as high, they can live with that. I could handle more risk, and I can look at things that are a bit riskier. I could try to diversify around into a whole bunch of different properties that some would be winners and some would be losers, but I’d be willing to take the bigger risks to get the bigger upside in exchange.

Do you have any final words of wisdom for the readers before we transition?

Getting back to the Money Mindset Madness stuff, there are sides. We’ve been talking about tactics and strategies for making your money grow. That is important stuff, and I love those things. You also have to be willing to do that introspective work to look at those places where you’ve got holes in your money, beliefs, where you’ve got ideas about money that might not be the healthiest things out there that could be holding you back. I was in the right place at the right time. I was making great money, but I didn’t have a good financial blueprint.

I had all this garbage in my head about money, and that’s what caused me to get deeply into debt. Not that I was in the wrong business, but that I didn’t feel comfortable making money. As I’ve been able to go and find those places and tweak those things, that’s what opened up the possibility for me to be growing my money greatly. I want to always point out to people that it’s the external work of finding the deals and understanding the strategies, but also the internal work of making sure that you turn yourself into the type of person who can invest successfully.

The external work of finding real estate deals and understanding strategies is important. But the internal work of ensuring that you turn into a successful investor must not be set aside. Click To Tweet

I feel like people lose sight of the holistic view, and it’s very much a scorecard of, “How much money? What’s my net worth? How many properties do I have?” There’s much work inside that you can do along the way, and it’s important. Let’s transition into the final four. I’m going to ask you four questions that we ask everybody, and then we’ll be wrapping up the show. Question number one, what are you reading?

I’m reading Beartown.

What is that about?

It’s a Swedish novel about this small town within all a whole hockey. The first chapter is about to if someone’s going to go nuts and kill somebody else, but we haven’t gotten up to that point yet. That’s the novel that I’d picked up. I’d read one of his other novels and liked it, so I picked this one up. It’s sucking me in. It’s pretty good. They’ve turned into a show on HBO, I believe.

What is the best piece of advice you have ever received? As a rabbi, I imagine you’ve given and got a lot of juicy advice.

I’ll go back to The Size Of Your Dreams. It is the novel written before The Cash Machine. It was based on how to be focusing my attention on what my goals were, and then creating very clear steps for how to get myself there, that whole idea of coasting. We had somebody who was coming to us for advice because he said, “I see the years going by and life is passing me by. I’m not doing anything with my life.” You can’t decide on anything. You’re going in this or that direction. You need to have a very clear goal in mind, even if it’s not the one you ultimately stick with. You need to start moving forward and figuring out how you’re going to get yourself there.

What would you say is your why that keeps you on this path of investing and growing your finances?

Honestly, curiosity. It’s not even the path of investing and growing my finances much. What I started getting into this stuff was when I started being fascinated by it and wanting to learn more and grow. I’m get excited about learning new things and growing with them. The Cash Machine was a project of passion. I loved researching it, writing it, and learning new skills, techniques, and approaches to looking at the world. That’s my why. I don’t honestly need all that much more. I can’t say I’ve got all these things I’m looking forward to buying once I have more money. I love the journey of exploring and curiosity. The more I have a lot of that money, I turn towards learning. We travel around the world. We go to these different seminars and learn from the best people out there. We love being in these environments and growing ourselves.

Question number four is, what are you geeking out about? What is the latest thing on your mind that you’re learning a lot about?

Business acquisition. I did this course. I did something called the Harbor Club. These guys specialize in buying businesses, usually for $1. They’re based in England, usually for a single pound. This technique of finding businesses that some of them are distressed businesses, or it could be a good business with a distressed owner finding businesses that you’re able to go in, pick up and turn around. We talk about getting a 10% or 15% return on some of these putting your money into a real estate syndicate. If you’re able to go into a business and able to have those tools to turn that thing around, then the growth potential is many times greater than that. I’ve been geeking out on that.

Especially if you buy it for $1, you could 10X that pretty easily or way more. Where can people find out more about you, your books, and course?

You can go to DaveMasonAuthor.com, and you can see all of my different books there. I’m happy to give everyone a free download of The Cash Machine. You can get that again at DaveMasonAuthor.com or at BuildMyCashMachine.com. It’s a free download for you. If you want to check out Money Mindset Madness, you want to work on your own financial blueprint, get to the bottom of what’s making you tick, figuring that out, and get rid of all the garbage that you could be making money, go to MoneyMindsetMadness.com.

Thank you much. This was a great episode. There are lots of good information for our readers. I hope they go and check out your books.

Thank you much.

That was Dave Mason. What did I think about it? I like the conversation. I thought that Dave brought in a lot of debt. I love this concept of Money Mindset Madness. I almost feel like I want to take it. I’ve been wanting to write another book. I’ve been thinking a lot about how to formulate the book and work my own money hurdles so that I can give that information to other people.

If it is something you think that you would be interested in, reach out to me, and let me know because it is one of the few things that when you get an idea, you are like, “Does anybody want this, or is it just me being weird?” I love to hear from you. You can reach to me on Instagram, @ZeonaMcIntyre. I answer all my DMs. If you love the show, please share it with a friend, follow us, subscribe, like, share, and comment. All of that helps. We appreciate it. We’ll see you next episode.


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