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The Ground Game Podcast
Welcome to The Ground Game Podcast, where land investing meets real talk! Join your hosts, Justin and Clay, both 7-figure land investors and seasoned entrepreneurs, as they dive deep into the world of land investing, team building, and personal growth.
The Ground Game Podcast
Episode 37: Profit First, Freedom Second; A Wealth Plan for Land Investors
🎙️ Welcome Back to The Ground Game Podcast! 🎙️
In this episode, hosts Clay Hepler and Justin Piche dive into Profit First, Freedom Second: A Wealth Plan for Land Investors. They share personal experiences and insights on navigating the complexities of land investing, emphasizing the importance of strategic financial planning and enjoying the fruits of your labor.
Key Highlights
Personal Updates:
Clay and Justin kick off the episode with some light-hearted banter, discussing the chaos of summer with kids out of school and the excitement of nearing completion on Clay's home construction project. They reflect on the mental space that home renovations occupy and the challenges of managing finances during this time.
Understanding Profit Allocation:
The hosts delve into the importance of paying yourself first and how to effectively allocate profits from your business. They share their strategies for managing cash flow, discussing the stress of construction draws and the need for proper financial planning to avoid pitfalls.
Key Performance Indicators (KPIs):
Clay and Justin address the critical KPIs that every land investor should track to ensure profitability. They discuss how focusing on the right metrics can help maintain momentum and drive business success, especially in a competitive market.
The Importance of Strategic Thinking:
The episode emphasizes the need for strategic thinking in land investing. Clay and Justin discuss how to prioritize initiatives and allocate resources effectively to navigate challenges while still enjoying personal freedom.
Flexibility in Funding:
They explore the necessity of having diverse funding strategies, especially when capital is tight. The hosts share insights on raising capital and building trust with investors to ensure financial stability and growth.
Building a Consistent Business:
Clay and Justin stress the need to focus on consistency and volume rather than one-off deals. They highlight how perseverance and strategic decisions can create a sustainable operation in the land market.
Leadership and Team Empowerment:
The hosts discuss the importance of strong leadership skills and empowering team members to tackle core problems. They emphasize how effective leadership can
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Clayton Hepler (00:00)
Hello and welcome to another episode of the ground game podcast. This is your cohost, Clay Hepler.
Justin Piche (00:07)
And this is your other co-host, Justin Piche And we're here to show you how to win the ground
All right. Well, summer is here. My daughter is out of school and it's chaos. I'm a Life is chaos right now. I'm obviously running this business, starting funds. ⁓ My house, my big house construction project is almost completed, which is exciting. ⁓
Clayton Hepler (00:23)
What's going on man?
Justin Piche (00:48)
I don't know when we're going to move in, maybe a week, maybe two weeks and we can start moving in. We're like really close. So it's kind of like for the last, since last August, when we started construction, this has been this thing that takes up a bunch of mental space and thought of, you know, affording it, paying for all the things. I have a bank loan, but obviously if anybody has ever done the house construction where they're taking construction draws, they will know that things don't always work perfectly.
know, the bank will say, oh, we're only going to give you this much. And the contractor is like, yeah, but I paid about this much. They're not giving me this part. So I need this capital or we're to have to pause until we can get the bank. It's like there's so many moving pieces. So it's just been a lot of stress and thought of getting everything completed. But we're almost there. We're almost done. We have a beautiful home. And now we're it's like the last stages of just all of the decisions that have to be made, all like the final touches.
like your cabinet hardware and like what lights you're putting, where you're putting this decorative light and this sconce and this thing. And it's, my God, it's just a lot. My wife has taken on a whole bunch of like the, the thought we have a designer that's helping and guiding, but in the end, you know, we've, we've got to make sure everything's done right. Cause going back to fix things in the future that we didn't quite like, it's going be a whole lot more expensive than just knocking it out right now before we moved in.
Clayton Hepler (02:12)
Yeah, the punch list items at the end. That's when someone starts to look at their hourly rate wage and say what's my Aspirational hourly rate and I'll charge these guys that because they need some help here Dude, I yeah, that's you know, just remembering the flipping houses and that whole part of the I mean It's totally different home renovations or a personal thing But I can really resonate with that same thing here My wife was like six this entire week and so I onboarded four acquisition managers
Justin Piche (02:34)
Yeah, yeah.
Clayton Hepler (02:42)
And yeah, yeah, yeah, yeah, and they crushed it, man. We got four deals locked up on Friday, or maybe five, but. ⁓
Justin Piche (02:42)
four acquisition managers.
Wow.
Clayton Hepler (02:52)
you know, onboarding for acquisition managers while having to basically be a dad, a full-time dad for three out of the five days this week. ⁓ Man, I was being flexible, right? But yeah, mean, chaos is good, especially when you have these types of problems. It's really, they're really great problems to have. And I think it brings us to the topic today.
I've been thinking about this a lot. ⁓ And it first came to me, I would say probably last year, this topic, I was thinking about it, you know, pondering it in my private time. And, you know, I felt that a lot of people would benefit from it, which is how to diversify, to flow capital out of your land business in your life. A lot of times there's the hustle porn of, hey, I'm going to just keep scaling my business.
compounding my business and I'm never gonna enjoy the fruits of my labor and I talked to a lot of my private clients about like hey make sure that you're paying yourself a percentage of your profits every single month because if you're not you're scaling an unhealthy business. Even people like Mark Zuckerberg when he got his initial VC check took some money off the table ⁓ for Facebook. Don't quote me on that. That's what I've heard but ⁓
Justin Piche (04:20)
How about
this, I know the Coinbase CEO, I can't remember what his name, Brian Armstrong, he did that. When Coinbase IPO'd, he took a huge chunk of capital out of the business and obviously enough to live for the rest of his life comfortably.
Clayton Hepler (04:25)
Brian Armstrong.
Yeah. So, you know, in today's episode, Justin and I are going to go deep on how we allocate, protect and grow our, our profits. We really want this to be a tactical framework for how we take money out of our business, uh, to build our own personal wealth, to actually enjoy the, the money that we have, um, without really slowing down growth. Uh, so anything to add.
here to frame this podcast, Justin.
Justin Piche (05:11)
Yeah, this can be like a sensitive topic for people. I think you have to understand maybe our positions in our businesses to understand why we take money out or how we allocate money. And if it seems aspirational, that's okay. And if it seems ridiculous to you, that's okay. But we're gonna kind of be a little bit more vulnerable maybe on this episode and dive into what matters to us and where we.
where we see the fruits of our business producing in our lives.
Clayton Hepler (05:44)
That's amazing. Yeah, because the point of a business is not this like masochistic cycle of continuing to compound and playing the game more and more. It's really to build a life, right? Like a lot of people got into business to have time freedom. Like that's a huge one, right? I always hear that. Financial freedom, right? Being able to do what you want, when you want, how you want it. But if you don't strategically pull money off the table,
You literally cannot do that until you build yourself a prison. And so there's a psychological component, which I'm sure we'll cover in a future episode, but there's also a financial component of building yourself a literal prison that you can't get out of. can't scale out of, ⁓ because you're not properly allocating your profit. So, I first heard about profit first, which is a book, I believe by Mike McCallowitz, which is basically
how you distribute profits from your business. There's very purpose-driven accounts that's like, I think there's a concept like zero, it's called like, you need a budget or zero-based budgeting or every dollar has a job or something like that. And it's about allocating your profits in a percentage per month, no matter if you make 100K or 50K or whatever, to...
purposefully flow cash into your life, into different parts of your business for reinvestment so you're not making decisions that are just based on, we had a great month, let's increase marketing. It's like, hey, do we the cash flow and the bandwidth to do that? ⁓ Have you ever read that book or what are your thoughts around distributing profit?
Justin Piche (07:30)
Yeah.
Yeah, no, I have actually. I have it on my Kindle. I like pulled it up as you were as you were talking right now. The tagline for profit first right on the front is, man, it is transform your business from like a cash hungry monster to something else. It keeps going away every time I click on it, but it's a cashier monster to a money making machine. There you go. You know, I read this early on in my
Clayton Hepler (07:58)
Mm-hmm.
Justin Piche (08:02)
land investing journey, I'm sure I heard it on a podcast or something like this several years ago. And I thought there was a lot of wisdom to it. The principle behind it, which we're obviously gonna get into is you pay yourself first. So you allocate some amount of your, some amount of the capital that you're bringing in, the revenue you're bringing in to pay yourself. You allocate to taxes, you allocate to... ⁓
your OpEx account, in the kind of recommended way is to set up a series of bank accounts. So when revenue comes into your income account, you distribute it according to whatever percentages you should into the other accounts. And then while you're scaling, your limited or your constraint is the amount of money you've allocated towards that scaling function. That may be your OpEx or capital improvements or whatever it is that you allocate that capital to.
and I think there's a lot of wisdom in that because it gets really stressful if you're dumping every spare penny back into your business, into more and more deals. And it's kind of in a lure of starting a business like this, because you will scale faster, frankly, if you don't take any cream off the top or any money out of your business. But at what cost, right? At what cost will you scale faster? And I think that what.
Clay is maybe what you're getting at is things happen in business that are outside of your control. And if you don't create wealth for yourself outside of it and some catastrophe happens, you could lose it all.
you could lose it all. And if you don't pay yourself an appropriate amount for the work that you're doing, you may be running a really unhealthy business that actually isn't making money. And I've heard this from a coaching client recently. It's like, yeah, we made our net last year was about $200,000, but that's before I pay myself. I'm like, okay, well, yeah.
Clayton Hepler (10:13)
Right. Right. Yeah. Yeah.
Justin Piche (10:16)
⁓ but I will say, I will say
I've had, I had many challenges actually implementing profit first effectively while I was growing the business early on. and I've fallen away from actually doing, I mean, I, I do it in the sense that I pay myself a distribution from the business every month, but I have gone away from like separating the capital into bank accounts. At first I was like, money into this account, money into this account, money into this account, watch it grow, watch it grow, watch it grow. And then.
some properties get delayed on sales and we have a new acquisition coming up and I've got a hundred something grand chilling in my tax account just saved there for taxes. And I'm like, well, I don't have the money in my capital account to purchase this property. have it in my tax account though. So I'm just gonna take it out of the tax account and buy this property and I'll pay it back with the next capital to kind of, and it just got so crazy. you know, I think when you're hundreds of deals in a year, it can get a little bit.
crazy maybe to keep up with it. That's not to say that it can't be done. It's just to say that I wasn't particularly good at it. I'm interested to hear how your experience with Profit First has gone.
Clayton Hepler (11:27)
very similar. ⁓ you know, ⁓ it is dis it's like a discipline that must be recommitted to every single day. And the reason why we're, I feel equipped to talk about this is because I've attempted to implement and it has not been successful.
And so my, my thought was always, yeah, people talk about profit first, but that's not for me because I want to scale faster. Right. ⁓ but you're scaling something that's super unhealthy and you're not actually scaling a business. had a conversation with another very accomplished land investor and he was talking about his P and L versus a bunch of other investors, P and Ls. And he said he made less money, but more profit.
because he was focused more on the profit versus the revenue. so, revenue is, a profit is sanity, revenue is vanity. And this really puts that into perspective and it creates a system, a lock-in effect that you are accountable to this. And another thing that really helped me, man, is like, it created this perspective.
for me as the CEO of the business, that I am the highest paid person. And what that means is I should be allocating my time better. I always talk about, you know, our abilities as entrepreneurs is directly proportionate to our ability to allocate our time, our capital, and our people. And someone that might be less adept as an entrepreneur,
is not able to do that properly. But how you kind of get to that realization a lot of times is understanding that you are the business owner. You want to solve the biggest problems and you should be paid to do that. Right. But you need to have this forcing function that, know, like Justin said, you don't take out of the tax account as much as incredible as it is. It's forcing. It's like don't eat out of the cookie jar. Right. And a lot of times it's hard. You're like, oh man, I could do that. And I've done that a million times.
Justin Piche (13:44)
Yeah.
Clayton Hepler (13:44)
Well,
I'll just pull out of my tax account and delay my taxes this year. And yeah, done it. Right. But I think that it's just, it's kind of a really unhealthy way to it's like running on caffeine. You're like, I'm just going to like drink another cup of coffee this afternoon and keep going. versus just like resting my body properly. ⁓ so that's what I thought of when you, when you, when you, ⁓ brought that up. And so
Every dollar that hits the business in this way is really assigned a specific role, right? The one dollar is like, OpEx, keep the machine running. The one is to build the next machine, right? Your wealth wheel. And then the other is like, you know, you got to pay taxes, right? And an argument that I would, that was very top of mind for me when I was thinking about implementing this is I'm like, I'm different.
Right, I'm different because I can get a higher return in my business than I can get elsewhere. That's true, that's true. But that's also how entrepreneurs will work 20 years and have nothing to say for it. Because they think, they know that they can get a higher return in their business. But even though they get a higher return, they don't diversify. No, I'm not saying you should diversify if you have a $500,000 gross profit of your business.
But what I'm saying is as you kind of scale in order to diversify and protect yourself, protect your wealth and protect the hard work that you've given every single day for years, it's good to diversify outside of and allocate profits outside of it. So I'd like to talk about how I actually think about this. So my money from, from deals flow into, um, let's say I make $200,000 in a month, right?
Of the $200,000 about 50 to 60 percent ⁓ Is allocated to OPEX? ⁓ Depending on the month the owners pay the distribution to me is 15 percent This is all within a C Corp, right? I'm not a tax accountant. I'm not a LOC or a State planning attorney or corporate attorney. This is just how I structure
The owner pay distribution goes into an S corp, which is distributed to me for your marketing expenses. And I have 10 % retained for taxes. ⁓ And then I usually retain about 20 % for reinvestment capital or retained earnings. Right. And that's how I allocate my, my profits.
Justin Piche (16:30)
Mine is, I'm looking at my accounts because I have all these accounts set up inside of my chase account. And when I set it up, I put SLG OPEX as one account, 60%. SLG owner compensation, 10. ⁓ SLG profit, 15. SLG tax, 15. That's what I had allocated when I started. I haven't used the profit or the tax account in so long.
Clayton Hepler (16:42)
Okay.
Justin Piche (16:58)
A terrible example for actually implementing ⁓ profit first.
Clayton Hepler (17:04)
Yeah. And there are different levels. Like if you look at profit first, ⁓ there was a great article, I think it would spot it's, on relay banks website about like a different, gross profit levels, your owner's comp changes, your profit changes. Look, profit first is a framework. doesn't have to be a Bible. And so you want it, you want to use it as, as it fits your lifestyle.
Justin Piche (17:25)
Yeah.
I found it, I think one of the thing that I found the most challenging about implementing profit first was the way that I run the business, which is primarily purchasing property with my own capital.
When you're deploying a bunch of capital into properties, it becomes really challenging. And you have a limited capital. Let's say you have, let's say you have $500,000 of capital and deployed into inventory. Just use, or let's say it's a million because a million is a nice easy even number. Let's say you have a million dollars of capital deployed into properties and you're trying to scale. You're growing from five deals a month to six to seven to eight. As you do that, your capital base that you need to hold that inventory has to grow relatively quickly.
And the delay in time between that capital getting allocated into properties and that capital returning and the revenue coming on top of that into your business makes it has made it really hard for me to stick to sticking these, these, this amount of money in these accounts and being cool with it. Now that I have gone towards a fund where I've taken my capital outside of the business, put it into a fund and that fund is now funding the deals. It actually,
I think it makes sense to go back towards the profit first model for me because I'm no longer funding every deal out of my own capital, profits, revenue, tax, count, everything. I'm now funding deals from capital that I have elsewhere that is coming into the business to fund deals. And then when I receive revenue or profit from those deals, it's really just profit. it's not, the capital goes back to fund, back to my capital pool outside of the business.
and that revenue, that profit is in the business and it can actually be allocated appropriately.
Clayton Hepler (19:19)
Yeah, it really depends on what you start with. For a lot of people, you don't have the luxury of starting with a lot of cash. And so you use a lot of funders to get off the ground and running. And it's also a business philosophy. I've always felt that it's better to use lenders, whether it private JV funding, whatever, because of an opportunity cost calculation of my return on my ad spend is greater than 500%. Five X.
In all my channels and so if that's true, I'd rather allocate my capital towards that Again personal preference you can see Justin and I are differing here in this in this way There's no right way at all. It's just it's just preferences
how I think about the diversification kind of building wealth outside of your business is three phrases. There's builder mode, zero to 500K. There's optimizer 500K to 1.5 a year in profit, right? ⁓ And then there's allocator, right? So ⁓ I'll take a stab at the first phase, Justin, and you can tackle the second and we'll just keep going. So.
Builder mode is where 99 % of prior listeners are and land investors in general, right? The cash that you have, you wanna reinvest to get to that critical point of, hey, I'm really starting to have a business that can make money. It's funny, I was talking to my acquisition managers that are coming in this week and an average acquisition manager at my company could make anywhere between 150K to 200K in their first year.
Right. You're really crushing it. That's more than most land investors make.
without the, without the, without the risk. Right. And so when you're in the builder mode, ⁓ you want to take a modest owner's pay, right. and you know, modest is defined by you, but whatever you really need in order to live, but for a lot of people that are getting into land, ⁓ it's not their, their primary source of income. so taking a little bit more of a modest pay.
allows you to scale at that level, right? It allows you to say, maybe you're, you know, you make 500 K and you take, um, 15 % of that or 20 % of a hundred day rate that first year, like you were talking about with one of your clients. Um, and that allows you to, uh, when I say modest, I'm talking about the actual, the total amount, not the percentage. Um, but that allows you to start to build an emergency fund and start to pay yourself for the work that you put in and most likely.
At that level, you don't have a ton of employees. ⁓ so that's kind of builder mode, ⁓ phase one.
Justin Piche (22:07)
Yeah, for me in builder mode, I took out nothing. And but I had that luxury because my wife worked and so her salary could support our like basic living ⁓ without having to take any any cash out of out of the business. But it kind of is like an unrealistic start for most people, right? To be able to do something like that, like a lot of most people have to live off of the work that they're doing.
I probably my business probably could have supported a small, yeah, small interest compensation, but you'd have to live pretty freely. Like if your business is making sub 500 K profit, you're probably not pulling out a ton to live off of. Let's just say phase two call that optimizer mode. And this is where, this is where people start to feel like I have something that's working well. I have something that's working well.
talking about 500K, and a half to one and a half million dollars a year of profit in your business. And this is like, I feel like this phase is really the, this is where a lot of people decide I'm good here. I'm good here. This is a comfortable life. I can pull out 10, 15, maybe even depending on how optimized your cost structure is, 20 % of your profit as just straight owners comp.
Clayton Hepler (23:16)
Mm-hmm.
Justin Piche (23:29)
and then decide at the end of the year to give yourself a good dividend and maybe up that if you have additional capital leftover that you're not planning on reinvesting. ⁓ And you have capital to start diversifying outside of purely your business, if you so desire. And this is the place at which it makes a lot of sense for people to start adding other assets to build their net worth that are outside of their business. And I, for me,
The biggest challenge of this phase was I didn't really pull assets out to reinvest. I just poured it all right back into the business. And I think that's a big like Clay was talking about earlier. You know, if I'm if I'm seeing 500 % returns on my my spend or something like that, am I really going to find a different asset class that's better? And the answer is probably not. But but that's not the point of diversification. The point of diversification is to reduce your risk.
And when you have all of your eggs in one basket, whether you think so or not, you have a lot of risk.
⁓ What about you for this phase? Yeah, what are your thoughts?
Clayton Hepler (24:38)
Yes. Yeah. Yeah.
I think, you know, we all think we're special until we realize we're not right. Like I think we should assume that we're not as smart as we think we are. And we should assume that blacks want events happen and we should assume that the universe hurls towards chaos and difficulty and, we should plan accordingly. ⁓
I'm not, that's not a prescription for how you should live your life, but I believe that, ⁓ our confidence in ourselves as entrepreneurs is higher than most people. Right. And so taking, being a little humble about, ⁓ you know, maybe it is time to take some money out of the business, even though it pains me to do and start to really pull out and maybe diversify into something else, is smart. Now.
I'm, I'm at the top end of this, the $1.5 million a year profit. That's where I start to think about it. 1.25. That's when I start to think about it. If I'm at 800 K I'm not there yet. Right. I mean, I'm starting to pull cash out. I'm starting to think on, I should probably put some money into some savings accounts. Right. And, um, but when you get to the top, top of the, you know, make it more in a
1 % or $1 million. You're like 0.01 % of entrepreneurs and growth. We're talking profit. We're not talking revenue, which is, know, there's a difference there, but profit. Yeah.
Justin Piche (26:13)
We're talking net. We're talking
net. We're talking after your op ex after you pay your employees what's left.
Clayton Hepler (26:19)
Yeah, yeah, which that's a that's a that's a big business. That's a very big business. That's a, know, two, $2 million a year business, $3 million a year business, ⁓ something like that. So, you know, then at that point, then you get to allocator mode, which is over $1.5 million a year in profit, net profit. Transparently, I'm not here. I'm not here. Right. ⁓ That's that's pretty significant.
of net profit. You know, I think at that point, you got to be at three, three and a half, maybe four to hit that depending on your structure of your business. If we're talking a standard flip model. And you know, at that point, it's like it makes sense to start to think strategically about taxes, you know, you're in the point 001 % of entrepreneurs, and it starts to think about taxes, this is kind of where we're going, you know, my business is going.
⁓ And you know what how else do I protect my assets? ⁓ So that's the allocator mode and that's kind of the investor mode
Justin Piche (27:30)
Yeah, and that's yeah, I think I'm this year where we're knocking on the door right there. TBD by the end of the year if we actually get there or not, but we're on track and things I'm thinking of are different now, right? I'm thinking like insurance, like life insurance is something I just ended up finally getting.
protect my family in the event that something crazy happens. ⁓
Clayton Hepler (27:59)
Did you get term or whole life?
Justin Piche (28:01)
I decided to get term. I decided to get term. So I got a pretty good sized policy that will wipe out any real estate debt and give my wife plenty of capital, cash left to take her time selling the assets in the business and, you know, be able to keep things running for a bit to not have to stress.
Clayton Hepler (28:22)
Do you want to watch? Did you look at whole life?
Justin Piche (28:25)
I did. And frankly, I've actually read quite a few books on ⁓ that subject, on whole life, on banking on yourself and all that kind of stuff. And I see a lot of value in it in specific use cases. I still always struggle with the first year's premium not going to any of your cash value in your policy and really going directly to the insurance company. It's just like a
It's yeah, it's stuff. see the value. I see the use case. It's also takes a, it takes a commitment because it's something you need to do in perpetuity and the benefits can be incredible, but it's hard to change plans once you commit to it. You know what I mean? It's not the most flexible thing.
Clayton Hepler (29:15)
So I, before I got into land for a really brief stint, I was licensed and I was talking about whole life insurance and banking on yourself and I read all the books. I was literally licensed in it, in selling it and I ended up stopping because I think that for 99.99 % of people, it's,
It's not a worthwhile investment. It's there's so much cash drag. Your net IRR over 30 years is three to 4%. You don't, you know, you can have so much better, ⁓ compounding of capital using other, ⁓ your vehicles. Now there is something called, and I'm getting over my skis here, ⁓ private placement life insurance.
that's for incredibly high net worth individuals that you basically can create your own fund, not like an index universal life or a universal life, but you can basically put assets in like your own personal ⁓ real estate fund in the life insurance wrapper. And it's very high net worth individuals do it. And there is also,
what is called premium finance life insurance. And premium finance life insurance, depending on how wealthy you are and what your net worth is, is you can get a bank to finance a life insurance policy for you over a period of, you know, for the payout period, maybe five years or 10 years. And you just pay insurance on the, or you just pay the interest on the insurance.
⁓ And what it allows you to do is not have that opportunity cost of putting your money into the whole life policy You basically get a finance by a bank Again over my skis here ⁓ But it's very very interesting. It's called premium finance life insurance. This is the stuff that people don't talk to us about guys And what you know the podcast of kind of what what we're our goal is to really help you scale your business and this type of stuff is incredibly interesting
and it's another level of wealth. Now, should you be concerned about premium finance life insurance if you're making 500K a year? Absolutely not. But as you start to get to that next level, there are opportunities to get all the benefits of that. You're just given a different level of opportunities, cost of capital, things like that. I remember I knew a guy that sold his roofing company for 200,
in $90 million, right? ⁓ And he probably walked away with, you know, he still has equity ownership, maybe 150 million bucks in a cash.
Justin Piche (32:16)
Hey guys, this is Justin interrupting our podcast. As usual to say thank you for listening. Clay and I are getting a little vulnerable talking about kind of what our goals are and how we allocate capital from our business into our personal lives. How do we think about growing our wealth? How do we think about managing our capital? We're talking about profit first and a whole bunch of other things I think will be very valuable for you guys. And if you're getting value from this, leave us a comment below, rate, review, subscribe. We really appreciate it.
It helps us and a little shout out to Clay for putting this topic together. He put a lot of work into it and I think, I think it's a really good podcast. So now back to your regularly scheduled programming.
Clayton Hepler (32:54)
going to talk a little bit about wealth stack plan, what I plan on doing with the money that I make. Um, uh, and it's not betting it all on black. Um, right. Uh, so, you know, out of the percentage of owners paying distributions, I do take a percentage of that and I put it into a savings account.
⁓ for targeting smaller multifamily or commercial self storage deals. ⁓ know, so five to 10 unit apartment buildings and commercial self storage. A lot of that has to do with my background in real estate. I still own real estate ⁓ and I have a background in owning apartment buildings and also the depreciation benefits. So, you the goal is
buy a value add property, stabilize it, refinance it in 24 to 36 months and pull my cash out that I originally have in, get all the depreciation benefits. And that's kind of the path that I'm taking this year at least. I'm starting to stack cash for that this year. Last year, year one, two, I wasn't really in that position.
Uh, but I'm starting to be in a little bit more of that position. And, um, I like the real estate asset class. I'm kind of bullish on real estate, long-term specifically affordable housing and some commercial asset classes. And so, uh, you know, not an asset class that I'm really interested in and, um, you know, just don't have the time to get into it as, um, residential assisted living facilities.
Um, I think it's a really interesting asset class returns are very high, but it is a similar, I would say even more, uh, arduous to maintain as every and bees and I had a horrible experience with Airbnb as many of our listeners now. Um, and so really interested in getting into that. I'm looking for an operator eventually to partner with, um, someone that can help operate, uh, the business, but
That's probably sometime next year, looking to diversify a little bit into that. And then, you know, the next thing, of course, is staying in land. this kind of brings it to you and me, working together on some more ⁓ higher dollar value development, subdivide, rural subdivide development, entitlement deals. People bring us opportunities. 207 Acre in Alabama. ⁓
that you and I are looking at right now. ⁓ just, ⁓ from a long time ago, we've been under contract for a long time, closed on 150 acre subdivide and a 20 acre subdivide. Some really, really good opportunities. But these things were undercut, man, like six months type of deal. You know how that is. ⁓ So that part is kind of a, you know, co-GPing.
Justin Piche (36:04)
⁓ yeah.
Clayton Hepler (36:09)
⁓ not random loan placement, not random capital placement, people really bringing us opportunities and, coming alongside them. ⁓ and looking at, mean, you and I looked at that other deal in Tennessee. ⁓ and so we're, constantly looking, ⁓ you know, so what I don't do with my cash is buy crypto. What I don't do is put it in public equities. What I don't do is just kind of put it out there and, and, and not really consciously allocate it.
I have experience in real estate. ⁓ I like the tax benefits. Obviously my core business is land. And so you and I both have extensive experience in, developing smaller rural, ⁓ subdivides. And so, this is not me diversifying into something that I have no experience of. have a circle of competence. And so that's kind of how I approached it. So for listeners, ⁓ not, you can do whatever you want with your capital, but
I really felt that this was the best way to allocate some funds that were starting to pile up to create some, little bit of diversification. ⁓ because I want to extract the, the wealth that I've created through my business and then allocated to stuff that are not as high yielding. ⁓ but maybe I would even say safer, more consistent, reliable than a business, right?
then being a dealer, then being a land dealer, right? Flipping land. And so that's how I think about distributing my cash. ⁓ so yeah, how about you, man?
Justin Piche (37:46)
Yeah, so I guess I generally pay myself between call it 20 and $30,000 a month out of the business. And it's kind of like, I really only pull money when I'm like, I need some cash in my account type of thing. I need to be more disciplined. My wife is actually leaving her job here in a month or so. She's finally moving to the stay at home. We've got three kids. We want more. It's kind of something we've been
working towards as a family for the last four or five years since I started this business really, that's when that kind of dream really became more clear. I mean, it's tough for a mom to have to leave her child.
emotionally, mentally, you know. Anyway, so we're about to accomplish that here in less than a month, which is really, really exciting. And so I need to be more disciplined in actually pulling capital out and putting into our personal accounts that we're just spending to live our life, spending on our personal mortgage, spending on groceries, spending on things for the kids, like that type of stuff. It's something I haven't really had to be super disciplined in because we had cash coming in from her job. And I would pull things out to fund things in addition to like our
Daily Burn, like the house edition, and we're buying our neighbors' lot as well, and pulling cash out of the business for that, or paying myself a lot of money to be able to purchase those things personally.
I am, least net worth wise, heavily weighted towards land and real estate, obviously. I mean, I run a land development business. I have a lot of land, a lot of inventory right now. I also have obviously my house, Ryan a lot, the knot next to me. I have a 10 bedroom Airbnb in North Carolina that is a really nice home that I bought back in COVID times. And it's performed really well. I've got a decent mortgage on it. Obviously the larger the house,
bigger the rental checks and the less kind of riff raff you have, because not just anybody's going to rent a house that large. It's usually multi-generational family gatherings. And it's so expensive that usually it's higher quality tenants that rent that Airbnb. I do still have a stock portfolio that's mostly retirement accounts, ⁓ which makes up... ⁓
maybe a little more than 10 % of my net worth. And then I've got a big mortgage portfolio currently about the similar in size, at least in principle value to the stock portfolio. And then the rest is all land and cash. So right now, a lot of my excess cash is going directly towards paying for my home and the purchase of the neighboring lot, which is also going to essentially be my home, my yard, whenever I buy it.
⁓ but the things that I'm working towards and in my next several years, primarily large, larger scale developments, primarily infrastructure plays, infrastructure builds where I'm starting an SPV or a fund, you know, we're so far the, the, several that I'm working on or have done have been in the one to three, four ish million dollar raise range. ⁓ but my personal goal is just to get.
into larger and bigger deals like that. I'm starting a note fund, which is great because I'm looking for a place to sell my own personal notes into as well that provide liquidity. And then as I do some of these larger scale developments where like I'm bringing, we just closed on one me and a partner Ben closed on a property in Burnett, Texas. And we're bringing 40 lots to market.
And they're kind of higher end lots. They'll probably sell in the 250 to 350 range. So I doubt we're going to have a ton of owner financing for those specifically. ⁓ But when you're running a fund or an SPV for a deal and you have investors that are in that deal, the investors typically aren't going to want to just get payments for the next 10, 15 years as the fund entity takes these mortgages, these properties, or is the mortgage or mortgage or on these properties and takes in cashflow. You need a place to dispo those notes.
both to pay off the bank note if it's early on in the development and also to cash out your investors so they can get their capital back and invest in other investments. And so starting, I see starting a note fund as a companion to development funds as a great liquidity pool for the fund who's selling the assets, the dealer that's selling each of those lots and a place where you can give investors a really high quality 10 to 12 % return on their cash.
for investing in notes. So that's kind of the next thing that I'm working on right now. And then I just, I mean, I live in a, I would call, mean, I don't know if you would call like kind of downtown Houston, a high cost of living or a medium to high cost of living, but it's a, it's a relatively high cost of living area. And so a lot of my burn, at least on a month to month basis, just goes to the tax of living in a major city, like two miles from, from downtown. And then I do give, I give,
of my finances regularly and sacrificially to my church and to other causes. So that's a big place where capital goes as well. And we like to go on vacations. So, you know, I got to make sure I got the capital to go on vacations with the family. And one of the big, at least for my life, you know, one of the big blessings of my wife being able to leave her job and me being able to support our family with this business is
Clayton Hepler (43:20)
Thank
Justin Piche (43:35)
we're going to take my daughter and put her into a classical school, which is, it's called ⁓ Second Baptist University Model. It'll be two days a week of class for her. So Mondays and Wednesdays, Tuesdays and Thursdays are like kind of homeschool days. My wife, as a partner teacher, parent, teacher, whatever, we'll get through the course material for those days. But every weekend, we will essentially have four day weekends that we can utilize for.
weekend trips or travel or kind of whatever we want to do. And then it's a lot, you know, one of the things that when I put my daughter into kindergarten in public school in Houston this year, that we knew what happened, but was kind of challenging was it's very strict with how many days you can miss. Like there's a limit to it before you kind of get in trouble with the state of you're keeping your child out of.
out of school, I think from a school funding perspective, and obviously they don't want children to be left behind and miss too many days of school. But it felt really restrictive to our lifestyle and how we desire to be able to live, which is to be able to travel when we desire to travel. So I'm pretty excited about next year when my daughter's in this new schooling program with my wife and we're able to have a lot of flexibility. Now don't know if we're gonna travel a lot, because our community's here, our family's here, but having the opportunity to is very nice.
Clayton Hepler (44:57)
Right.
And that's how we started the podcast, man. Like I was talking to my wife next year, we are going to one of our good friends is, getting married in Sicily. And then another one of our good friends is getting married in London. And so we said, you know, why don't we just stay in Europe for, you know, the month between, right. And, or, you know, the, the five weeks between and be able to travel around Italy, be in Italy and then go to London. ⁓ and that type
Justin Piche (45:16)
Yeah.
Clayton Hepler (45:27)
of freedom, know man?
It's a long, it's a long and hard fought and conscious freedom. But, you know, I think really the purpose of the podcast was to show the listeners that it's important to pay yourself. It's important to value your time. It's important to diversify and build wealth. It's important to live life on your terms, because a lot of times I felt proud
pressure when I was just starting out and I felt pressure to just put money back into the business. And this was during a time, as you know, I mean, you know, we talked about my story a couple of podcasts ago, you know, we were talking about ramen. We were talking about like, you know, trying to pay for my wedding and really trying to get something off the ground. And, and I felt so much stress and pain to try to keep this thing going. And, and, know, after reflecting on all these, these moments,
The things that you and I are doing it's it's a product. It's productive expenses. It's life productive, expensive. It's, it's taking money out of the business so you can build wealth. So you can have that man, that freedom. ⁓ that's what we're here for. Right. It's fun to stack chips, right? It's fun to stack chips. That's what we love to play the game, man. But like, it's also important along the way.
to live life on your terms and your life on your terms could be stack and chips, right? It could be different than what we just talked about, right? And we're not here to tell you how to do that. We're here to say, hey, this is what's worked for us. This is how you actually build a profitable, scalable business and scale along the way while paying yourself. So you can live the freedom, the time freedom, the financial freedom, that the reason why we started this podcast, right? The reason why we do this.
Right? ⁓ So I just, really hope that the listeners got benefit from this because, know, it's, really up to them to, take this and apply it to their own circumstances.
Justin Piche (47:39)
What mistakes would you say people should avoid? What are the mistakes? Like, don't do this. This is not how you diversify.
Clayton Hepler (47:51)
That's a great question. I would say there's a real core component of investor DNA that I was talking about my circle of competency in real estate and I know real estate, I've invested in real estate, I've done a bunch of different asset classes in real estate. I know what I like, know what I don't like. And...
There is an investor DNA just because we say that we're doing real estate or you have this thing in Airbnb and I had a horror experience with Airbnb and you had this one doesn't mean you should do that. I think it's knowing maybe it's public equities for you. Maybe it's crypto. Maybe it's what know what your investor DNA is and follow that.
And so I think people want to diversify based on what other people say, not on self-direction, not on reflection, not on understanding who they are and what their investor DNA is. And that's a huge mistake, man, because all of a sudden, ⁓ year later, you look and you say, man, I made some huge mistakes and really hurt my progress in building wealth.
Justin Piche (48:58)
Yeah, I mean, I've been guilty of that for sure. I've made a lot. I mean, I lost quite a bit of money in some stock short term swing trading type stuff that I was doing and market crash didn't have stop losses or discipline to pull out and, you know, lost money there, lost money in crypto crashes. And I think through all of that and not just a little bit of money, we're talking like a lot of money. And through all that.
Clayton Hepler (49:22)
you
Justin Piche (49:27)
I think the biggest lesson I learned is about understanding myself is I like to be in control of the asset that I'm investing in. And if not in control, have a trusted operator that I know that's in control. Because obviously I fund deals and I'm not in control of some of the deals that I fund, but that's okay because I know the person who is and I know that they have good judgment. When I'm investing in a...
buying crypto and things like that. It's all speculative. was no basis behind the investment other than I want to invest in this because it's going up and it could go up more and there could be some significant utility in the future. And I'm not saying there isn't at all by any stretch. There probably is. It's just I have no control over it. And it's not backed by anything that I could potentially ever have any control over.
Whereas when I invest in a land development play that I'm running, I've done the due diligence. I understand that there are forces, black swan events outside of my control that could significantly impact it, but I can mitigate risk inside of that. And regardless of how, black swan event happens, the asset will not go to zero. It will not lose everything. If I buy a large development cost $3 million and I'm going to turn it into something that's worth six or $7 million.
Things go wrong, I don't know. What could possibly happen? That asset that I bought is still worth something. That's substantial. Maybe it's a 10, 20, 30 % loss to my initial investment, but it's definitely not zero. And I just feel a lot more comfortable when it's not zero nowadays.
Clayton Hepler (51:15)
Yeah, I get it. I get that. How about you, man? What's one thing that you think people make mistakes of?
Justin Piche (51:23)
You know, one thing that I thought I would do when I started making more money was buy a nice car because I just always have loved vehicles and fast cars. And it's just not something that I really think about much anymore. I mean, I see a beautiful Porsche or whatever it might be. And I think that they're beautiful. They're really, really nice. But I don't have this like strong desire to buy one right now anymore. keep what I really think about is like, man,
I could put this money to work in another deal that could help my family's future more. I think I weigh cost benefit a lot more against other opportunities to invest. And that's one of the things that I love about this business is that there's so many different opportunities to invest. There's so many different deals every day. And we look at a new deal that could potentially be something great. We look at a lot that are not, right? But we find one or two that are potentially great.
I just would much prefer to invest in those than buy something like a car. Maybe it'll change. Maybe if I'm like sitting chilling there with like multiple millions of excess cash, just chilling in the bank and it's all more rolling in, maybe I'll buy something that I really like.
Clayton Hepler (52:35)
I would, dude, I had a dream the other night about a 911.
Justin Piche (52:38)
I know I saw one I went to the I went to Jerry Seinfeld show last night his comedy show in Houston with my wife and my mother-in-law it was funny it was a good show but hi there was a like a early 2000s Porsche Carrera that was just clean clean clean clean clean clean Carrera s and it just looked beautiful and I was like ⁓ you know that's not even that expensive of a car I could totally buy that and have a fun little car to pop around in ⁓ but
Clayton Hepler (52:40)
You
Okay.
Justin Piche (53:08)
Yeah.
Clayton Hepler (53:09)
Yeah, man, you know, I've always wanted like a DB 11, DB 12, Aston Martin, you know? And I had a dream about a Porsche the other night. was like, oh man, like when does it make sense for me to buy like a Porsche? Like the DB 12 looks really good. But I'm just, I'm with you, man. It's like, what's the point right now?
Justin Piche (53:38)
Yeah, think of, think having kids has really changed my perspective on what I spend money on because there is nothing that I own in my entire life, any physical possession of any kind that makes me happier than my children, nothing. And there's nothing that could, I can't imagine any physical possession possibly making me any happier than being able to spend quality time with my kids.
Clayton Hepler (53:39)
I
Justin Piche (54:07)
And my daughter actually, we were having a discussion the other night and I don't know how we even got to this. okay. So she, yeah, she, she, we're scootering. She's screwing around the neighborhood and we live in a neighborhood called the Heights, which is really close to downtown Houston. and it's a beautiful neighborhood and, but there, the, lots are small. There's lots of houses and there's lots of cars that go through there because there's a lot of it's, it's high density for, for single family. It's like a high density kind of single family neighborhood. And, ⁓
We're scootering, she goes off the sidewalk into the street and we're about to cross this main street through our neighborhood. I was probably 30 yards behind her pushing the stroller, walking the dog and she's on her scooter 30 yards ahead at the intersection. And to me, it looked like she was going to go into the intersection and I see a truck barreling through there. The speed of them is 30, most people go like 25. This truck's moving. And I just screamed. was like, stop yelling.
And of course, you know, she's like, I wasn't going to go a little kind of attitude. She's sick. So she got a little bit of an attitude, you know, and I took her on the side. I'm talking to her like pretty sternly. I'm just like, I don't know that. Like you can't give me any inkling. And if I don't know that that driver doesn't know that. And like there's things that I see because I'm always looking out for your safety. Your safety is more important to me than almost anything else in this world that I am looking at constantly. And so when I give you an instruction, like
Clayton Hepler (55:11)
Yeah
That's right. That's right.
Justin Piche (55:31)
don't get off the sidewalk until I'm right there and I can inspect them, make sure it's safe to cross. You have to obey that. She kind of had a bit of an attitude. And so I was like, all right, we're done walking. My wife continued the walk with my son and my other daughter and the dog and whatnot. I walked my daughter back and we get to the house. She's going to get some discipline and we're talking. And I'm telling her, I'm like, you, your safety is the most important thing to me. Like there's the, are, you are my treasure. You are so important to me. I,
Clayton Hepler (55:37)
That's right.
Justin Piche (56:01)
I would be broken forever if something were to happen to you. And then she asked me, would you die instead of me or something like that? That's what she asked me. Like, would you die instead of me? I said, yes, 100%. I would step in front of anything for you. I would lay him down my life for you and for mom and for anybody in my family. And she's kind of like, her little brain is turning. She's like, you know.
Clayton Hepler (56:18)
Whoa.
Clicking, clicking,
Justin Piche (56:30)
clicking. It's like,
Clayton Hepler (56:31)
clicking.
Justin Piche (56:31)
okay, that's why dad cares so much. those moments when you know things are clicking and she tells me how much she loves me and yeah, she gets disciplined, but she understands the lesson and like those moments are way more important to me than any physical poss- yeah, God couldn't could- yeah, yeah. And so I think there'd have to be a point where anyway, I also think of the opportunity cost of what those dollars could do like for good in my church or in the world that aren't
Clayton Hepler (56:45)
to the $250,000 BD12.
Justin Piche (57:00)
Those things. That's not to say I won't ever get something fun or a cool car, but it's just not a priority in my life right now at all.
Clayton Hepler (57:08)
I completely agree. another thing that I'm very aware of now is like, you know, with my son is the cost of education and like very good education and the type of experiences that I want to have. One of my really good friends in college, ⁓ you he grew up in a very wealthy family, much wealthier than mine. His father, when he was a teenager, would take him to his father was a
Justin Piche (57:20)
Hmm.
Clayton Hepler (57:36)
Like a very well-known lobbyist, very wealthy lobbyist in a, and he would take them to different countries every year. ⁓ and so he could understand the different type of economies and politics and just kind of having that time, maybe two weeks every year to go to a different country. Sometimes it was, you know, more of a third world country. Sometimes it was a primary country and getting to understand the culture. And that like hit me like a ton of bricks.
And I said, I want to experience that with my children. I want my children to be able to have that sort of cultural experience. It creates depth in how you think and how you see the world. It gives you perspective.
And you have this lattice work of understanding of different cultures and people. it makes you empathize with people better and understand. you know, in the world that we live in now, having that skill to really understand people, right? Where they're coming from empathy ⁓ is huge. It's super important. And so when I think about that, man, I think about my, I resonate with you so much, right? With my son.
And, um, in my, our future children and that, that perspective. Um, and another thing is like security, like security for my family. Like, do I want a vanity piece or would I rather be that the protector and provider for my family? It's not even a thing. And it's weird after I had my kid, I don't like, used to think, Oh, my car is not whatever. Like kind of, I didn't get too, I didn't get like too wrapped up in that.
⁓ now I don't care at all. Like I do not care like at all. ⁓ and I don't like that's not lip service. Like I truly feel that. ⁓ so, but I understand how other people perceive people as well. Like I understand that you show up in a junker, people perceive you differently. It doesn't matter. Like that's a fact even nature. ⁓ you know, but I think that that is, that is a huge, I think that's a huge mistake buying the toys. Right. ⁓ so. ⁓
Justin Piche (59:36)
Yeah.
I mean, there's
a point and let's be clear, like there's a point at which your disposable income is such that like if that's your desire and that's what you want to do, do it. And like, don't want to, I don't want any listener to think like we're talking bad about that being your desire because that's, we're just saying that that's not our desire. And I, and the mistake to be made would be going too big too soon. I think that's the key. The key, the key mistake would be going too big too soon, spending money that on something that where it could be much better used in your business and you don't have enough.
Clayton Hepler (59:55)
Right, right.
That's right.
Justin Piche (1:00:15)
excess to justify that purchase going too early into that dream that you want to buy and causing a liability to yourself and to your lifestyle that you just have to crush it in your business even harder to just to afford that would be probably the mistake. But if you love cars and that's what you want to buy and you want a sick car and you have the excess cash for it your business is booming like go for it. More power to you whatever makes you happy.
Clayton Hepler (1:00:38)
You know what this reminds me of is ⁓ the inner versus outer scorecard and intrinsic versus extrinsic motivation. And particularly in the context of business, I think it's important if you're pulling money out of your business, there's a famous quote by Warren Buffett talking about inner and outer scorecards. He said, would you rather be the best lover in the world and be perceived as the worst or the worst?
lover in the world and be perceived as the best. And that is the inner and outer scorecard, right? And that's a whole, you know, ⁓ you know, a Warren Buffett, like pithy joke, right? But it's true. And so you do have an inner and outer scorecard in that, that can, that can help you avoid the mistakes of diversifying in that way.
Justin Piche (1:01:10)
Haha.
Clayton Hepler (1:01:28)
Yeah. I think that the, the, the one thing that Justin and I admitted to, it's kind of like you meant that your, that you, that you shot the person, right? I shot him. I, I, you know, to the judge, but not properly allocating your capital, your excess capital to the accounts that they need to be in paying yourself. Op ex. How many people do you know?
That they say, like I don't, I didn't, got blindsided. Like I just ran out of cash. It's like, well, if you know how much you're allocating to your accounts every month, your reinvestment account, your taxes, your, your owner draw your profit, your op ex. It doesn't happen. Right. You can project out. And if you, and if you're pulling money to go to you, robbing Peter to pay Paul.
in your business, because you're taking from your taxes account and you're buying a piece of land, right? No shit on you, buddy. I get it. ⁓ But that's, you know, that is a recipe for disaster according to profit first, right? According to how you create an operating system of properly funneling your cash. That's the recipe for disaster.
Justin Piche (1:02:35)
Haha.
Yeah, yeah, I agree. think one of the it is again, I'll comment on this again. I think one of the greatest things that I've done in the last 12 months has been set up the with a partner, the funding, the funding fund, if you will, that is now funding the deals going through my business. Because when I'm doing a deal with my own capital, let's say I use $100,000 of my own capital to purchase a deal.
and then I sell that deal for, I gross back 180 and I pay my capital back so now I have that 100K and then I have 80K of revenue that I then am gonna use for OPEX and for profit and for everything, all right. I might not be able to increase my capital stack enough to purchase the next batch of inventory based on however much I'm scaling. But with the fund, the way it's set up is it's a...
kind of a recycling fund. the capital that's inside of the fund, when the profit gets paid out, investors are not getting distributions quarterly. Their basis in the fund is growing. And they get a K-1 that shows them that, and yeah, they gotta pay taxes on that. And they can pull capital out if they desire, but it's not like the fund is automatically paying out dividends. Your basis in the fund keeps growing. And so all that capital, with the exception of a reserve in there,
obviously for conservatism, being able to distribute capital when people need it, goes back into funding. so the fund can actually grow, we said pretty quickly, in order to keep up with the capital demands of my business and then also starting to fund other investors as well. ⁓ And that's been great because now I don't have as much, yeah, it's efficient for the fund because they're not having to carry all of the operating costs and then the negotiation between my...
business in the fund is just what do we need to pay to make sure that the business is making enough money to keep up with OPEX and ⁓ getting more and more opportunities for the fund to fund.
Clayton Hepler (1:04:55)
Mm-hmm. Amen, man. I love it. ⁓ So.
What's next? Right? ⁓ For me, I have a goal of $50,000 and a month in in in passive income for my real estate assets. ⁓
Justin Piche (1:05:16)
Do you have any idea,
just to expand on it, do you have any idea how would it be split between notes and real estate or would just be real estate cash? Okay. Got it.
Clayton Hepler (1:05:23)
Pure brick and mortar. Yeah, I'm not counting my notes. I'm not counting my notes.
I'm talking just brick and mortar stuff. ⁓ Again, ⁓ setting up a fund for the opportunities that people bring us. ⁓ That's super exciting for me. ⁓ And also really building out a trust.
whole entity strategy for tax optimization in my life, asset protection in my life. So that, you know, all the wealth that we're starting to build in my, you know, my family is really protected for this generation and the next, right. And obviously for the big game that we play, taxes are a lot, taxes are important, right. And you're in Texas, right. You got a little bit of a save saving there. I think it.
Justin Piche (1:06:19)
On
the income side, certainly not on the property tax side.
Clayton Hepler (1:06:22)
Yeah, that's right. That's right. ⁓ but Pennsylvania, mean, the Pennsylvania income taxes, it's 3.7%. ⁓ so, you know, it's not, it's not crazy. ⁓ but it, you know, it adds up that type of stuff adds up. so that's, that's the, the next steps for me. ⁓ and keep, dude, keep having fun, man. You know what I mean? Like, I love this, you know,
Justin Piche (1:06:47)
Yeah.
Clayton Hepler (1:06:52)
I had this thought the other day. and it was when you, the struggle to get to, half a million dollar a year to a million dollar a year, grow your business is very different. After that, it's easier to make money. You have more opportunities. You have, you have a better people on your team, right? This is a people game. You have the ability.
to ascertain what is an opportunity, what's not an opportunity. Of course, there are more opportunities for shiny objects, right? Which we've talked about on the podcast, but there's also more opportunities to make money. And so the game gets more exciting. It gets more exciting because you start to have, you build relationships with people that you start to have trust with, deal trust ⁓ and build business relationships. And so that's super exciting. yeah, man, a thousand percent. That's what's next for me.
Justin Piche (1:07:50)
Yeah, man. For me, I can already touch on it, but note fund to have a place to give investors like a really solid return every quarter and a liquidity pool for notes originated from some of the larger developments that I'm working on real estate and land development fund. Got a few larger projects right now that, you know, we need capital for and SPVs are great. Special purpose vehicles, you spin up for one deal.
But you have to then go and raise for every single deal over and over again. And I'd like to be at a point where I have a pool of trusted investors that want to continue to work with me. Actually, I went with a partner of mine and a friend was invited to play golf at a crazy amazing golf course last week. And another gentleman who has done over 2 billion in transactions as a fund manager.
and a real estate fund manager and also an attorney who had like a huge team. just said really incredible person who I was just really grateful to meet and be able to talk to and get some wisdom from. He said to me, it's like, your 20s are for really for learning. You learn, you try things, you you start to get competent in whatever it is you're working. Your 30s are really when you get really good. Like that's when you hone your skills.
That's when you your skills and your 40s are where you start to make a lot of money. If you're good at that, that's your job. It was, you know, I'm 35 and you're saying, right now, these next years, your job, if you're, if you're wanting to get into these larger scale real estate development funds, you're to work on these larger deals. Your job is to find 10, 20, 30 core investors that you give great returns to that believe in you, that trust you.
that are going to be there for the next in the bigger deals. That's your job. You need to cultivate those relationships. You need to get people that are rooting for you that trust you trust your judgment and want to place money with the opportunities that you bring. And if you can do that, you will you will you will crush it. You will crush it. This assumes you have good judgment. It assumes you can manage risks appropriately. It assumes you can provide good returns. He's like anything. The other thing he told me, which I thought was really really interesting. He's like, look, nobody cares.
None of the investors that you're going to have investing in these deals. They don't really care that much if one of their investments loses money. They know that's going to happen. That's what happens. You do what you do 50 deals. You're going to have a loser. You're not going to win every single time you can't there. There are both events out of your control and there's misses and it just happens. It's part of part of the game. But what your investors need to know is that you have good judgment that you're going to make the right decision given the circumstances that everything is in.
Clayton Hepler (1:10:37)
Yep.
Justin Piche (1:10:47)
and that you're communicating very clearly so that they see that you care about their money. You care about their investment. You care about getting the most and making sure things work out as well as they can given the circumstances. You see the project through regardless of what happens. And if you do those things, you will have a stellar reputation and you will have people coming back for the next one. I thought it was great. Just really, really, really great advice. So I've taken it heart. I'm going to take it to heart as I continue to grow and scale things.
So yeah, guess that's kind of the next what's next for me too is just building up a loyal base of investors that I can give great returns to and that believe in me. So yeah.
Clayton Hepler (1:11:31)
Incredible.
All right, man. Well, um, the listeners notice that at this point, uh, the ask is, hope you guys got a lot of benefit from this podcast. Gentlemen's agreement is if you like it, rate review, subscribe, leave us a review, let us know what you specifically liked about it. Uh, I say this every week, less than 10 % of our listeners actually rate review and subscribe. And it helps us grow. want to be known in the space as providing the most amount of value for how to scale and develop in the land business. Those two things are who we are.
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