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December 13, 2022

The Holistic Wealth Strategy With Private Equity Investor Dave Wolcott [EP131]

Are you looking for a more holistic wealth-building strategy? Dave Wolcott and his team at Pantheon Investments have been helping investors build their wealth for years. They focus on finding the best-in-class operators and partnering with them to offer a wide range of investment opportunities. This allows them to meet the needs of their investors no matter what their goals may be. Find out what The Holistic Wealth Strategy is all about. Listen and learn!

Table of Contents:

Discovering the Holistic Wealth Strategy

Discovering the Holistic Wealth Strategy
Photographer: iStrfry , Marcus | Source: Unsplash

Darin: Dave Wolcott served as a captain in the Marines. He and his wife were surprised with triplets and he needed to find a way to grow his wealth to provide for his family. This search led him into looking at the ways in which the wealthy invested their capital and he created a plan to mimic what the wealthy were doing. This developed into the Holistic Wealth Strategy that Dave is now focused on teaching others.

A little bit on how we know each other and then we'll jump into it. So Dave and I met at a conference, a multifamily conference that Dan Handford put on in Charlotte, North Carolina, earlier in the year. And some mutual friends of ours introduced the two of us. He's a good guy, loved hanging out with him and wanted to get a little bit more info on what he's up to and how he's helping others build wealth. So with that, how many properties and how many units are you currently invested in?

Dave: So we are not an operator. We're basically helping, we're an equity partner and we're helping do deal sourcing. Basically helping the clients with really becoming wealth architects to help them create an alternative strategy to Wall Street. So in terms of assets, we're an equity partner in over 2.6 billion worth of assets that consists of over 3,100 doors in multifamily. We have self-storage assets, we have Bitcoin mining assets, and we have over 160 oil-producing wells as well.

Discover How To Save Taxes and Build Wealth

Equity Partner: Helping Clients Create Holistic Wealth Strategy

Darin: Fantastic. So when you say equity partner, first of all, I think that you are the first person that we're having on the show that fits into that bill, the equity partner. But we have a lot of passive investors that are either first-timers or repeat passive investors and a lot of syndicators that are looking to scale. So when you said equity partner, I'm thinking, there's a lot of sponsors that may have interest in leveraging that. Explain that a little bit on how you work with other syndicators in, say, the multifamily space.

Dave: Well, the way I see it is, our mission is to really create value for our investors. And one of the key ways is to do basically deal sourcing and to find great deals that are inversely correlated to the markets. We invest in tangible assets and essentially our investment thesis is really three-dimensional in nature. So we're investing in asset classes that are tax efficient, they have predictable passive income, and then they also have some kind of forced appreciation component on the backside. So that's really our investment thesis and we're looking at partnering with operators who are best in class. Who have really strong competitive differentiation let's say when it comes to a particular asset class, it comes to a particular market that they just dominate.

Just to give you an example, one of our last multifamily deals, we partnered with our operator that did 39 different deals in the same MSA. So they've got very deep relationships, they're able to source deals off market, get good deals right out of the gate. And then we're able to provide those solid deals to our investors.

A Phenomenal Solution for Holistic Wealth Strategy

Dave: And then we're also looking for different solutions. Like we have an oil and gas fund right now that is really a phenomenal solution to investors. Because you can actually offset active income for a lot of the high-income earners that we have with the oil and gas, 100% of your investment is deductible and that goes against your active income. This is a phenomenal solution in addition to providing passive income as well as a multiple on top of that.

Darin: Absolutely. So, help me qualify. Say we have a bunch of syndicators who are listening right now, qualify, like when you said dominate, that knocks out a lot of people. So who should call you and who should not call you?

Dave: I mean it's a great question, Darin. I'll tell you, honestly, I want to be the best steward of our investors' capital as absolute possible. So if you're new to the space and you don't really have a track record, I'm happy to engage with people and get to know you and learn. Once you can establish that track record, then maybe we can look at things. But typically it's really 100 million in assets under management as a minimum threshold that we're looking at. We conduct very extensive due diligence on the partners. As you know in this space it's really all about the people. Whether they can actually execute on the plan or not.

Sometimes we get to know our partners a year or two years doing due diligence before we even get to know them. We're looking at deals, we're looking to see how their performance really tracked. We're looking at their communications to see, are they doing what they're saying? They're promising. So those are some key things.

The Need for a Strong Balance Sheet

Dave: And then again, when I talk about market domination, we have a partner, for instance, who's very strong in student housing. Very unique space, but they have a really good niche and they own a bunch of market share there. So if you have a really strong niche, that's also I think pretty compelling in terms of partnering. We just really want to have people who have a solid track record.

You've got to have been in the space for a while and looking at the partners on the team, have they succeeded in the past? And also the balance sheet. Because we've seen some deals in this business and some deals go sideways. If the partners don't have a strong enough balance sheet, they're not going to be able to protect their investors. And protecting our investors is everything to us in this. So we take that very seriously as we engage in those partnerships.

And then the other thing we're looking for is partners that we can grow a long-term relationship with. I mean, even one deal, we're in it for at least five years typically for the deal. But it's a lot easier to work with trusted partners that we can go back and source great deals from time and time again versus having too many spread out.

Darin: No, I think that's great. I mean, from what I heard, if you're a syndicator and you're listening and you're interested, 100 million in assets or up, that's one of the benchmarks. And are you in a strong niche or do you dominate a submarket? If you meet those criteria, then it may be worthwhile having a conversation.

An Entrepreneur at Heart

Darin: And just like attracting passive investors, it can take six months or a year or two years before you end up doing something together. But you have to just get the ball rolling at some point and start developing that relationship. So, let me understand, because you keep talking about your investors, how this works. Do you have passive investors on your end? Are they high-net-worth individuals that you're attracting into a fund and then you decide which projects you're going to allocate those funds to?

5 Step Process Ad

Dave: Partially correct. So, yes, we have an investor base, and typically we are talking to high-net-worth entrepreneurs. I was in the Marine Corps first, after school.

Darin: Thank you for your service.

Dave: Appreciate that, for sure. After the Marine Corps, I got into the tech field and built a few businesses. I had a tech consulting business that I exited from several years back. So I've been really an entrepreneur at heart for many years, so that's really our client avatar in terms of investors. Because we can relate to them the most. They really have open minds and are willing to challenge the norm and challenge conventional wisdom and what's out there.

Darin: Where do you live?

Dave: We're in Florida at the moment. So, kids are out of the house.

Darin: I don't know why, but I was thinking you were on the other coast in California, Silicon Valley. That's a lot of tech.

Dave: No. Well, we're in D.C. Virginia for the past 20 years and now the kids are out of the house and I'm now in a tax-free state, which is part of my plan. And I can tell you it's 79 degrees here on December 1st.

Knowing Clients Who Are Looking For Holistic Wealth Strategy

Darin: So mostly high-net-worth individuals, not as much of the institutional family office type funds?

Dave: No, we're working with accredited investors because our mission is to actually help our investors 10x their wealth.

Darin: Fantastic.

Dave: We believe we can have more impact working directly with the investors versus working with institutions.

Darin: When an investor invests in one of your funds, are your funds segregated, like multifamily assets? Or real estate assets versus oil and gas versus other avenues that you invest in? Or do they just invest in your fund and let you decide where to allocate that.

Dave: Yes, it's deal-by-deal. So we have not aggregated. I don't really believe in that model. We do a deal-by-deal. And again, a lot of things, the deals that we source are really solution-based. We try to pride ourselves in really knowing our clients really well, so we conduct investor surveys to really understand what's most important for investors. Are they looking for cash flow? Are they looking for tax plays? Whatever it is that's really most important, we're trying to source deals that align to that as much as we can.

Darin: All right. I keep asking you these questions partly because I'm interested in learning. So, a syndicator comes out with a deal and let's just say it's a 20 million raise. Do they contact you at that point and you already have the funds raised? Or are you going to present their deal and then start raising the capital at that stage of the game?

The Holistic Wealth Strategy Book

The Holistic Wealth Strategy Book
Photographer: Nate Watson | Source: Unsplash

Dave: Well, from a structural perspective, we're either doing special purpose vehicles like fund-to-funds where we can go invest. We can basically take our investor capital, pool that together, and then go invest. Let's say it's a 70 million asset and we can bring 5, 10 million to the table, then we're going to get better terms with the sponsor that we can share with our investors. That's one model.

Another model with some of our legacy-type partners or partners that were very strategic to us, would be the co-GP model where we have a relationship in place. We've been working with them for a while and when they have new deals we can be working side-by-side helping to do investor relations in addition to raising capital.

Darin: Fantastic. So I also believe you wrote a book called The Holistic Wealth Strategy . Can you talk about that a little bit?

Dave: I did the first version of that, Darin, and in fact, it was really spurred by trying to communicate with passive investors. I mean, what is a multifamily investment syndication? People had never heard of it. People had never heard of what is an accredited investor.

Darin: I never heard of it until four years ago. And I was at a coffee meeting this morning with somebody that I grew up with, and he was asking me, "Hey, Darin, tell me about it." So I get that. There's a lot of questions.

Dave: Yes. So I was really trying to articulate to people this strategy that completely goes against 95% of what financial planners and conventional wisdom is really teaching you to do. So I really conceptualized this in a, and maybe this kind of comes from my consulting background a little bit.

Money Is Oxygen to Your Holistic Wealth Strategy

Dave: But we created a very simple five-phase structure or strategy for people to achieve what we believe is holistic wealth.

Because if you do some deep thinking on money, it is actually just a means or oxygen for you to live your life or do the things that you want to do. And so what's important for you? So this whole thing is encapsulated with a vision statement. If you don't have a target you're going to miss every time.

So it's very important to get crystal clear on what your vision statement is, where you're headed long-term in your life. This is how family offices structure themselves and prepare. It's creating a real comprehensive vision. And then the first phase, it really all starts with mindset, Darin. And so like we talked about. Look, we just got back from Thanksgiving so it might be a family event and you're telling someone that, "Hey, I just achieved a 2x equity multiple on a real estate deal in only three years." And honestly, a lot of people don't even want to listen to it, nor do they want or care to listen to it.

Darin: It's crazy to me. It really is.

Dave: Isn't it crazy?

Darin: It is crazy to me that there's certain people. You want to help them, but they don't want to listen.

Dave: They don't want to listen. So that's why the first step of our strategy, it's all about mindset. You have to have a growth mindset. You have to let go of limiting beliefs. And you have to be able to be curious and ask questions and challenge the norm. I mean, everyone is telling you to put your money in a 401(k).

The Future of Taxes

Dave: It's the safest place you're going to put your capital, and they're telling you to defer taxes. Well, I don't know about you, but the only thing I'm certain about in the future is that taxes are likely going up, and you're going to be taxed at ordinary income rates when you take that capital out. And you have absolutely no control.

We're seeing the volatility of the market this year play out and who likes to wake up and see red every day? You've worked years and years and you're watching that just go down. So I think you have to be courageous. You really have to be courageous and have an open mindset to say, "Is what my financial planner telling me really correct?" Because, frankly, as I look at it objectively and I start to look at the data, it may not make sense.

Darin: I agree with everything you're saying, but I just got into real estate four years ago, but before that I fell into that camp. I had a small business, I was putting a lot of money into a SEP IRA. I thought I was doing the smart thing by deferring taxes. But explain to listeners why deferring taxes in a 401(k) could actually be the wrong way to go about it, versus some of these other investment strategies that you've talked about. Investing in real estate or oil and gas. Focus more on the real estate side just because this show is more real estate-related, but those are definitely alternatives.

Dave: So, Darin, I went through this exercise myself about eight years ago and I literally sold my 401(k). I exited it.

Darin: What do you mean you sold it?

Exit 401(K): The Path to Holistic Wealth Strategy

Dave: I completely exited. I paid a 10% penalty. I paid all of the taxes. And one of the things that we've done for our investors, and if anyone's interested in this, happy to send a copy along. But we've created a 401(k) withdrawal calculator.

Darin: Where can people find that? Is that on your website?

Dave: We'll give a link at the end if people want to reach out. But essentially you can model in that, "Hey, if I pay the 10%…" Let's say you have 100k, you pay the 10% penalty, you pay the taxes this year, and you put that money into a multifamily real estate deal, as a passive investor, by the way. We model out that you actually break even around year four, year five, depending on, are you getting a whatever, 16%, 20% average annual return.

So you break even let's say by year four, year five is really the window. And then what's really compelling, Darin, is when you model this out over 20 years and you see the compounding effect of what even a 15% average annual return. And again, that money, ideally, with bonus depreciation should be offset so you've got no tax consequence.

So at the end of 20 years you're compounding with no taxes if you have a good strategy in place, and then you compare that with where you would be had you not taken the money out of the 401(k), where you would be in 20 years. Plus you have the tax liability on taking out that nest egg. Plus you have the fees and inflation that have been eating into that for 20 years.

Asset Repositioning

Dave: And it's substantial. It's absolutely substantial. So when I went through that exercise myself and trying to convince myself, "Hey, this is the right thing to do to exit out of my 401(k)," besides everyone telling me I was crazy, the numbers proved it to myself and I went ahead and did that.

Now we have a lot of other investors who are doing the same thing. And part of this wealth strategy in phase four is all about asset repositioning. Because not everyone has 50 or 100k lying around that's just liquid. So what you want to do as part of your wealth strategy is look at your current portfolio of assets, where do they sit? And then can you drive more efficiency and create more velocity? So you move them into something like multifamily that's got that tax efficiency component. You've got the cash flow dynamic, and then you've got the equity multiple on the back-end.

Darin: That's huge. Let me ask you this. Doesn't sound like you did this, but what's your take on, when you pull money out of a 401(k), do you invest it in tax-efficient assets like multifamily or oil and gas? Or do you put it into a Roth IRA so that any of the gains appreciate with no tax consequences?

Dave: Good question, and that comes back to our three-dimensional investment thesis. So if an investment doesn't have tax efficiency, passive income, and appreciation, we don't look at it. A Roth IRA has tax efficiency, but it doesn't have the multiplier that multifamily does.

Solving the Problem on Velocity

Solving the Problem on Velocity
Photographer: Markus Winkler | Source: Unsplash

Dave: So everything we do, we're looking at as a multiplier where you can get much more from your money. I mean, frankly, I've been seeing for the past eight years, 20 to 60% returns when I put together our entire wealth strategy. When I factor in tax efficiency, all of these things.

Darin: Which people can't understand, I mean, but I've seen it, too. I'm like, "Oh, my gosh, this is really happening." And maybe define velocity, because that's a word that if people aren't already doing that strategy, they don't understand. What does that mean even velocity?

Dave: So velocity is a great question, and in a lot of cases we have cash flow leaks in our personal economy that we don't even notice, whatever that might be. Maybe some things on the expense side or you have lazy capital that's not necessarily being put to work. The whole goal of this is to have our money working for us, not us working for our money.

So one of those strategies that we have, and I've been practicing this for almost 10 years now, is the infinite banking concept. And so we as part of Pantheon offer that as a service. We're a licensed representative to be able to offer that because we believe it's such a great solution for investors, business owners, even syndicators as well, that solves that problem on the velocity.

And essentially what it is is a cash-value life insurance product where you can store capital inside of this life insurance contract and it grows tax-free. It has a rate of return to it so you're getting tax-free compounding. And the beautiful thing is you have complete liquidity and control.

Holistic Wealth Strategy Requires Inherent Credit Asset Protection

Dave: So I could fund this and say, I put in 100k into this policy and I can borrow out a certain percentage, usually about 80% of it or so. I could put it into the policy one day, borrow out 80k and now go invest that in my next deal. Or, when I put in earnest capital to do deals, this is where I keep it. So I'm earning almost 6% on it until I do that next deal and I got to put in my earnest money.

I put in the earnest money when the deal closes, I take it out and put it back in. I've run several businesses, as I've said, and I will never get caught out not being capitalized again. Where do you keep 12 months of operating capital for your business, for your personal economy?

This is the place to do it. It's safer than banks. And it's with a mutual insurance company. It's been around for 150 years. And then I'm also getting that multiplier, which is really powerful, Darin. So again, you got tax-free compounding, you have the liquidity, you can actually pass it to your heirs completely tax-free.

And all of us in the real estate business are trying to create legacy growth and legacy wealth. So passing it onto your heirs tax-free is great. There's inherent credit asset protection to it, which is really great. And you can also create an income stream in your later years. So when you're 65 or 70 or whenever, you can actually take a tax-free loan against that, that creates an income stream.

One Key Way to Add More Velocity

Dave: So that's my strategy when I'm 90 and I'm probably not doing deals anymore, my wife is just going to want to know, "Hey, there's a check coming in. I want some kind of income." Well, this is going to be the vehicle for it to do it.

Darin: Yeah, that's cool. So when I think of velocity, I think of, all right, you make money in a deal and you could just leave it there. But then maybe year three, four, five, six, it's not working as fast. If you take those gains and then roll that into another vehicle that all of a sudden has larger annualized gains in the first few years and you keep rolling that money into those types of assets, then your money is going to multiply much quicker than if you just park it. And then maybe it's quick off the gate for a year or two. But then it settles down and you're not getting the velocity, you're not getting the high of returns anymore in that investment.

Dave: Yes, I think there's probably two key areas where you're actually getting a velocity. So one is the fact, like I said, we all have a lot of lazy capital and you have passive income coming in off of different deals. I mean, if you've done a 50k deal, maybe you're making 8%, so you've got 333 bucks a month coming in. I mean, what are you going to do with that? You're just putting it in your checking account until the next deal. The next tranche for the next deal. Well, a more efficient use of that is to put it right into your policy, so now it's compounding tax-free. So that's one key way to add more velocity.

Phase Four of Holistic Wealth Strategy

Dave: Also, a lot of business owners and syndicators, like you say, where are you going to keep your liquidity? If you're keeping it sitting in your checking account in your business, you're earning nothing on it. Or it's a sweep account, you're making less than 1%. Well, put it in here and you can make almost 6% on it. So that's another place.

And then another really key thing for investors as well is you can amplify your returns and add more velocity by, remember the original example? We said if you put in 100k, you borrow out 80k, well, let's say I'm borrowing at a rate of three-and-a-half percent and I'm making almost 6%, so you've got a little spread. Your initial capital is still growing and now you've invested that 80k in your next multifamily deal. Now you just threw a little spread on top of that and you're making a few more points. So there's some additional velocity.

Darin: I think the same thing is an opportunity with home equity.

Dave: 100%.

Darin: People have their house. I mean, part of it is, how do people sleep at night and how much risk they're willing to take on. But if you have a million-dollar house and your goal is just to pay it down and pay it off so you don't have a payment. Versus other people that look at, "Hey, I've got unused equity, I'm going to borrow at… Even in today's rates, it's six or 7%, but I'm going to put it into another investment that's going to make 15%." You're getting a huge spread and you're leveraging your capital versus just having to be. And I guess that's where you talk about lazy income, lazy capital opportunities that are sitting there.

Your House Is Not an Asset

Dave: Asset repositioning. That's our phase four. And the reality is over 90% of Americans, where do they keep their capital? Their asset portfolio? It's sitting in government-sponsored qualified plans or it's in trapped equity in their primary residence. And the rate of return on equity in your house, it's zero.

Darin: Okay, let's just say that your house appreciates 3, 4, 5% a year, and we're using a million-dollar house. If it goes up by 5%, it's growing by 50,000. But if you were able to have two assets, your house is still appreciating by 50,000, but then you have another asset that could be potentially appreciating at the same time.

Dave: Yes, but that's Kiyosaki's big claim to fame, is your house is not an asset.

Darin: Right. It's not putting money in your pocket. I don't know that you're going to get everybody to agree with, especially with the run-up we just had in real estate.

Dave: With all of this type of investing, you have to manage your own risk. And I'm not necessarily saying that you should leverage your house up to 100%, but I mean 80% as an LTV is pretty comfortable. But there's a lot of people out there that have it in their mind because, look, this is the advice we all got for so many years. Pay down your house.

Darin: Absolutely. Pay down your house, put 10, 20% in the stock market. It's going to grow. You're going to have this huge nest egg.

The Ultra-Rich’s Holistic Wealth Strategy

The Ultra-Rich’s Holistic Wealth Strategy
Photographer: freestocks | Source: Unsplash

Dave: Yes. But I can assure you, when you model all of these things out and if you're paying extra principal on your house for instance, or you've got a 50% only debt on it, there's much more efficient ways to do this. And in studying really the top 1% in the ultra-wealthy, I mean they've been doing this for years. I mean this is the roadmap to how they've created massive wealth and how they sustain this wealth. This is the game they play.

Darin: That right there I think needs to be repeated. We have been taught all through our life that, get good grades, go to a good college, get a good job, climb the corporate ladder, put 10, 20% away in the stock market, let somebody else grow it. So when you talk about other wealth-building strategies, I think it's important to really highlight that you got this data because you are researching how do the 1% wealthy in the country do it? And they do it by these mechanisms, right?

Dave: Absolutely. I mean that was really my call to action, Darin. We had, back in 2000, my wife and I had a toddler and then we won the baby lottery and actually had triplets.

Darin: Triplets? Oh, my gosh. Were you prepared for that?

Dave: It was crazy. I'm still not prepared. And, yeah, it's a unique event.

Darin: How old are your kids now?

Dave: The triplets are 22.

Darin: Oh, my goodness.

Dave: My oldest is 24.

Darin: Fantastic. Good for you, man. But look, you're now ready for that, right?

Why Dave Became Obsessive to Holistic Wealth Strategy

Dave: Yes, exactly. So, I mean, what's the first thing you do when you realize that you've just quadrupled the size of your family? I mean the first thing that was going through my mind is like, "How am I going to afford this? How am I going to figure it out?" Someone just took the goalposts and moved them out like a mile from what I was planning.

Darin: Four colleges, four weddings.

Dave: Exactly. Four everything.

Darin: Four cars. You're in trouble, my friend.

Dave: Yes, four everything. It was like 100 diapers a week. I mean it was insane times.

Darin: So that's what prompted you to start looking for a holistic wealth strategy.

Dave: Yes, this really put me on this obsessive quest to really figure out, how are the top 1% really investing? And keep in mind, I mean, this is back in 2000. I mean, there was no podcast. The Rich Dad, Poor Dad came out, I think it was '99, right around that timeframe. So I had just read that, but it was new. There weren't all these awesome podcasts like this, or resources, or people with case studies talking about how they had really made their wealth.

So what I wanted to do, and I think, if anyone's ever taken the Kolbe Score, it's all about some of your instinctive inclinations, how your conative part of your mind works. And for me, I'm just very system-oriented, so everything is very process oriented for me. It's probably why I was in the process consulting business. And what I wanted to do is just create this process, a systematic way to build wealth like the 1% are really doing. So how can you do that?

Putting Concepts to Action

Dave: What is the playbook? Because there's all these great ideas from Kiyosaki and things, and very conceptually you might be able to get your head around it. But, "Hey, how do I put that into action?" Okay, if I own 20 single family rentals, okay, I can see how I can make money, but how do I really put that into action? What are all the different levers and everything? So I spent the past 20 years really on the cash flow quadrant, becoming a business owner, and that's where I learned a lot about taxes.

This year I paid 6% in taxes, legally, because I have a proactive tax strategy and I'm working on it. I also invested in lots of alternative assets and I got into real estate in 2000. I invested in everything from raw land to retail to office parks to multifamily. And I had been investing for quite some time. So that's why I was able to really refine our investment thesis and then get this experience to go through multiple cycles. Especially as we're coming into this cycle right now. A lot of people don't have enough experience to be able to say, "Okay, how can you ride it out? How can you position it?" Our thesis is only stronger in downtimes.

Darin: I think that's fantastic. Now, I think some people get caught up in terminology when they start venturing into a world that they're not used to. So you mentioned things like alternative assets and private equity, and I understand it now that I'm in the business. But sometimes when we use those types of words, it can scare off people that are just coming in.

You’re a Product of the Media You Consume

Darin: They're like, "Oh, man, that sounds complicated. That sounds like it's for the 1%." But alternative assets are just other assets that are not public companies then, they're not stocks. And how do you invest in those? What is the mechanism to do that? And now, like you said, there's more avenues to get more people involved. Private equity, again, is just getting involved with stuff outside of the public markets, outside of stocks. But it can sound complicated.

Syndication, just group of people coming together to buy an asset they couldn't buy on their own. So when you talk to your investors, do people get scared off by some of this new stuff that they're getting introduced to?

Dave: I mean, look, you're really a product of the media you consume and the people you spend your time with.

And the reason why everyone is fed this line and really thinking in these terms is because there's a $30 trillion financial services industry that wants you to think a certain way. That thinks investing in Wall Street is the only game in town.

And they're smarter, by the way, than you and I, because that's why they've got all these really sharp guys. You bet, they're intelligent, they're very sharp about certain things in the market. But what people don't realize is, they have an agenda. Their agenda is to sell you products from the company that they're representing, which consistently is around stocks, bonds, mutual funds.

When you start to look at these things like alternative assets, and the great thing about multifamily real estate is, look, all of us, I don't care how old you are, I mean even my daughter actually owns her own house.

Holistic Wealth Strategy Needs Mindset Shift

Dave: So I think people can understand the business model of real estate and how it works, how you make money on it. And by the way, I mean as an aside, I mean she's just turning 24, and so you can teach this to your kids. That's what we talk about in our household. She started her infinite banking policy when she was in high school.

And she took a loan against the policy for her down payment on a house in Knoxville, Tennessee. She went in on it with her boyfriend. They bought the place. They spent a year there, did all kinds of reno to it, and now they're cash flowing it for like 1,300 bucks a month. And they've got 100k of equity in that house and then they just went and bought their next house. So, all of these concepts and this strategy, it's amazing.

It comes back to what you were saying, this stuff sounds confusing or it's scary. But a lot of it is, do you have an open mind to listen to good podcasts like this? Or challenge what your financial planner might be telling you? Or what your parents taught you for so many years is, "Well, I'm getting a 6% match in my 401(k). That's free money. Or they're matching me 3%. This must be a great deal." Well, look at it on paper over the next 20 years and it's kind of interesting.

Darin: No, I mean, it's crazy. But I've been in both sides and there is a mindset shift that has to take place, I think.

Achieving Massive Passive Income

Achieving Massive Passive Income for Holistic Wealth Strategy
Photographer: Alexander Grey | Source: Unsplash

Darin: And we had to do it when we bought stocks, too. I mean, when I bought my first stocks, there's an inherent trust factor that it's just going to work. That same thing has to happen when you come over and you start doing private equity or alternative assets. Look, you've educated yourself to a point, but at some point you actually have to invest in something and see if it's going to pay off.

Dave: Exactly. And that's really our last phase of the wealth strategy, which is, it's achieving massive passive income and in order to do that, you have to take action. So you have to get off the sidelines. And that first deal, I mean, I can still even remember the first private equity deal I did, which I think it was like 20k. I scrimped and saved to try to find 20k back in my 20s to be able to figure out how to get in a deal. And then I wasn't even an accredited investor, so can I find a non-accredited slot, right? But whether it's the first 20k or first 50k or whatever, you've got to get into the game.

And once you get into the game and you start to see the result, you start to see these passive income checks coming in. You start to see properties exit in some cases even ahead of proforma and beat your expectations. Again, I look at it objectively and I'm waiting, by the way, Darin. I'd love to have someone prove me wrong. And I have financial planners who are actually some of our clients who are looking to diversify their portfolio. We've had financial planners on our show. I'm open to learning myself. Am I missing something?

Dave’s Passion for Helping Others Start Their Holistic Wealth Strategy

Dave: I will be at the family office super summit in a few weeks. Studying and sitting down with some of the wealthiest people in the country and the world talking about mandates and how they're positioning their money. But for the past 20 years, I haven't been able to find anyone to prove this theory incorrect. So I think we are all on the right track.

If you understand passive income theory, if you're investing in multifamily real estate, tangible assets and these different things, and then you start to add that to this comprehensive approach, it's really unbelievable what you can achieve.

Darin: It is, man. I'm so excited that you got your daughter involved at such an early age. Because you could still stay an employee, a W-2 employee, but you have the choice. There's so many people, at least in my life that I know, whether they admit it or not, that they're not happy in their job, but they don't feel like they have a choice. They have to put food on the table. And they have to pay the mortgage. They have to pay their car payments. But having your money work for you when you're sleeping is huge. And so thank you for teaching other people how to do it.

Dave: That's the reward for me, honestly. I mean, I'm really not in this to make money. This is a passion project for me, and this is creating impact. I'm really passionate about this because I feel that we were misled and I feel that it's a bit of a crime.

Achieving Four Freedoms

Dave: I didn't start to learn these things until my 30s and 40s also and start to put all of this together. So that's what really drives me, it’s trying to help people.

And I think ultimately what people are trying to achieve, it's all about achieving four freedoms. It's having freedom of money, to have enough money to do what it is you want to do. And it's about having freedom of time, to do it when you want to do it. It's about having freedom of purpose, to do what you want to do, this type of work or whatever that is. And it's also having a freedom of location to do that wherever you want to do.

So I think real estate and this approach with passive investing can really get you there. And as you do some deep thinking about your vision and really where you want to go as a person, as a family, where you see yourself. I mean a family office thinks in terms of 25 years. Where do you want to be in 25 years? And you start to really conceptualize that. And then it's just playing the chess board and moving the pieces around to achieve that.

Darin: That's awesome. And look, there's listeners, you can invest with Dave and his projects. You can invest with Darin, but you also can invest with so many different people. We're talking about getting out there and getting into these alternative asset classes that are returning so much more and giving you so much more freedom of time and money. So with that, where do you go from here? I mean, what's your next big stretch goal?

Dave’s Next Big Stretch Goal

Dave: Well, like I said, our mission is to try to create 10x wealth for our investors so they can protect and multiply their wealth. So we want to continue having more and more impact and getting deeper with our clients that we do have so that they can really instantiate this comprehensive approach to building their wealth. As well as trying to connect with new people who are ready. They're ready for a change and they have an open mind for investing in a real estate deal or whatever that is. But more importantly, learning more. Again, this all starts with you, and again, your mindset and your education. That's your biggest asset, really.

Darin: So you say 10x. I mean, that 10x is a Grant Cardone definitely, plays that up, right? 10x your wealth, 10x your lifestyle, 10x everything. Have you seen people 10x their wealth?

Dave: Yes.

Darin: And what do they say to you afterwards?

Dave: It is so rewarding, Darin.

Darin: Tell me what they say.

Dave: I just had a coffee with one of our investors last week who is in town, and he started working with us probably about two-and-a-half years ago or so now.

Darin: He 10x'd in two-and-a-half-years?

Dave: It didn't happen overnight. There's a lot of things that actually happened. But his assets were sitting in the stock market in different equities, different 401(k)s, and he had a lot of his primary residence paid off. And he was looking to go buy a second home. Very successful business owner.

A Complete Market Exposure

Dave: Ran an IT business, and we talked about real estate and he thought it was a good idea. He had thought about purchasing a property on his own, maybe with someone. And he didn't know what a syndication was. He didn't know what a credit investor was. All of those things.

Well, this guy literally took amazing action. Within 90 days, within the first year, he refinanced. He got a home line of equity credit on his existing house, so he repositioned all of that equity. He's put that into deals that are cash-flowing and some top deals that we've had. One of those deals, by the way, within 20 months, actually, achieved over a 2x equity multiple, one of our projects. So he was able to participate on over doubling his money in 20 months.

Darin: Which would've been just sitting as dead equity in his house.

Dave: Exactly. But more importantly, too, he had complete exposure in the market. Everything he had, most of his assets were really in the market. And he was just really struggling to say, "Okay, well, how can I do more than 7% a year, plus having all this volatility?" We were sitting down last week saying like, "Oh, my gosh, not only have my assets been performing over 20%. But the market's down, indices are down about 25% this year. And I would've been so completely down." So, if you add those together, that's like a 50% gain that he's achieved.

He's also set up infinite banking policy for himself and his wife. So now he feels very confident going into recessionary times. He's got enough liquidity for his business, for his family.

Live to 116

Dave: His family is totally excited about the future now. Their vision has definitely 10x'd. Because now he's modeling out where he's going to be in the next 15, 20 years, and it's more than 10x. So that's really empowering when you start to see that, you start to believe it, and it starts to come through. And then also, by the way, his taxes, he's cut his tax bill in half.

Darin: That's a lot of impact right there. And good for you. I think it's not for everybody, but for me, it sounds like for you, helping others, serving others, it doesn't have to be just showing up with a meal at someone's house. I mean, helping somebody build a holistic wealth strategy and helping somebody achieve financial freedom and time freedom to spend more time with how they want to spend it.

Some people still want to work, but some people want to have more time with family or travel or whatever. But they get to choose, versus feeling like they're in jail and they have to stay at a job that they don't like. So, thank you for doing that. What do you like to do outside of work for fun?

Dave: Well, I'm a big health nut, too, Darin. I have a goal to live to 116.

Darin: 116. Not 15, not 17. 116.

Dave: 116 is my number. So I've got a longevity and a vitality goal. So I'm on a Italian cycling team that I race with here and there. And then we have a team here in Florida that I ride with. And then we actually own real estate in Italy, which is a rental property for us. So we're able to go over, visit our asset tax-free.

A Complete Paradigm Shift

Dave: We have our family in the business as well. It's been a phenomenal journey, learning the culture and meeting other folks, learning the language. It's really been fantastic.

Darin: That's awesome. I read somewhere, and you probably believe this if you have that goal, and it makes sense to me. I mean, if you set an age number way out, then your mind is believing that you're going to get there, whether you do or not. But if you believe that it's 70, you're most likely going to pass away by 70.

Dave: It's 100% right. It's a complete paradigm shift. I think you and I are the same age, and so I haven't had my midlife crisis yet.

Darin: Well, I haven't had the midlife crisis like I have to go out and buy the Porsche. But I have had probably the midlife crisis, like I need to go out and travel and I need to do adventurous stuff because you just never know when your time is going to be. And so I did an off-road motorcycle four-day deal that I probably wouldn't have done.

So, in any event, I love your mentality, your mindset. I love that you're helping other people. If there's anything I could do to help, please let me know. How do people get to know you more? Get access to? You mentioned a calculator. I'd like you to please offer that to people because that's definitely an asset that people can use, and how do people find out more about you?

Dave: Appreciate that, Darin. So, basically, if you'd like a free e-book version of the Holistic Wealth Strategy, you can go on our website and it's pantheoninvest.com/wealth-strategy.

Darin: Fantastic. And all your contact info and everything is on there. Syndicators, look, I'm doing a call out to the large syndicators, the ones that have 100 million in assets and greater. If you are looking for an equity partner, look this guy up. Until next week, we're signing off.

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Darin Batchelder

Wealth creation through real estate provided me with a new passion to get the word out and let others know that they have an alternative to investing in the stock market.

If I can inspire and educate just one person to take action that results in life changing wealth creation then the work to launch and grow this podcast is well worth the effort.

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