Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.

Josh: Hey, guys, welcome back. In this episode of the Accelerated Investor podcast, I am interviewing Dr. Jeffrey Anzalone. He is a full-time practicing periodontist, you know, which is a fancy term for a really high-end dentist. But his focus today is on helping doctors and high-income professionals create passive income from real estate. Jeff, in this interview, you’re going to hear the story about how he graduated from dental school with three hundred thousand dollars in student loan debt and was trading time for money, getting into the chair, working on people’s teeth, and how he realized after a while that this was just not the lifestyle that he wanted, the life of trading time for money, putting in 60, 70 hours a week in his dental practice to build that. Missing family functions, missing things, and how he was able to create a very popular blog called DebtFreeDr.com Debt Free Dr. Dotcom, which gets hundreds, thousands of visits every single day, every single month from high income professionals, doctors, dentists, attorneys, accountants, people like that who are trying to get free from the grind of trading time for money. 

Josh: So it doesn’t matter if you’re a new investor, an intermediate investor, an advanced investor or a passive investor. Everybody wants more passive income. And Jeff is going to talk about some of the challenges. So for those of you out there who are high income professionals, who maybe are one of those sort of positions or trades that I already discussed and mentioned, you’re really going to really going to love this interview with him. Also, check out his blog at DebtFreeDr.com and we’ll talk about some of the different structures for passive investing, whether it’s a fund, whether it’s a syndication, different types of syndications and also some mistakes that Jeff made when he invested in his first deal using one of the crowdfunding platforms that nearly wiped out a five-figure investment that Jeff made. So I hope you enjoy this episode of the Accelerated Investor podcast with Dr. Jeff Anzalone. 

Josh: So, Jeff, listen, I’m so excited to have you on Accelerated Investor, thanks so much for joining us. 

Jeff: Excited to be here, too. Thanks a lot for having me on the show. 

Josh: Listen, I’ve been looking forward. I’ve been looking forward to this. You know, any time that I can meet people who are investing both actively and passively in multifamily and apartment buildings like you, I get excited just to kind of talk shop, see what people are up to, see what their structures are. So tell us a little bit more about what you’re working on today, maybe a deal that you’re working on. I know you have your group of dentists and doctors and high net worth professionals that you work with. And coach, what are some of the deals or one of some of the things that you guys are working on today that you’re excited about? 

Jeff: Well, actually, last year, as you probably know, because of covid, it shut a lot of things down and one of those landing, so we weren’t able to have as many deal offerings as normal. Typically, we like to have anywhere from four to six multifamily deals a year that we offer investors. But last year a little bit different. But I’m excited this year that we’re on track to probably have four to six. Coming up, we actually have one that we are getting ready to offer at the end of this month, which is actually in February 2021 of our recording, but. 

Jeff: There’s been so much pent-up demand from people that were either pull their money out of the stock market because of covid or really what a lot of the social media, I think, did to people’s view of the stock market where, you know, somebody can send out a tweet and your portfolio could either go way up or it could go way down. So it’s like they’re kind of realizing, do I want to put my financial future in the hands of something that’s risky? So I’m real excited about being able to offer another deal to our investors. 

Josh: Got it. So tell me a little bit about the deal. If you’re under some sort of non-disclosure or you haven’t closed the deal yet, just give us as much information as you’re sort of comfortable with. 

Jeff: Yeah, we actually have not closed the deal yet, but it’s a typical multifamily value add deal that we that we look at. You know, I partner with people that have the same alarm at investor goal alignments. I’m forty-six. I’ve got two teenagers, so I’m a little bit more on the conservative side. So, you know, and we can talk later about how I lost a good bit of money early on when I started doing this. So we as a doctor, we work really hard, we train a lot, we get into a lot of debt. And when we come out and we pay a lot of taxes. So I want to to preserve as much as I can with having a family. So that’s why I’m a little bit more conservative. So I look for things that have a proven track record that are, you know, 90 plus percent occupied that are cash flowing. Well, so I know you can still lose money on them, but but it’s almost a no brainer. Kind of like if you were to put your money in Tesla’s stock or Amazon stock. Yeah. You could lose your money, but more than likely, you’re probably not going to lose all of it. So that’s sort of the things that I look for. 

Josh: Got it. Sounds good. So. So tell me a little bit more about you said you lost money at the beginning, right. So media bells go off. I’ve been there before. I’ve done deals that have lost money for sure. Thank God we’ve had a lot more winners and losers. Tell me what happened. 

Jeff: Well, it’s probably out of all the articles that I’ve written on my website, it’s gotten the one that has gotten the most traction and people are asking me questions about. But early on when I started learning about real estate and that you could invest in deals that are passive, that you don’t have to be actively involved, which a lot of busy professionals choose to do, that started to do what’s called crowdfunding, where you can go online. And at that time, realty shares and patch of land were the two big dogs you bought, I remember. So I started doing some small debt deals, you know, five thousand dollars and less on both of those platforms. They worked out pretty well. I mean, I was kind of getting the hang of it, didn’t have a clue what I was doing. So at that time, my criteria was going to go to their website. I’m going to look at the pictures. Yeah, that looks pretty good. I kind of know that area looked at all these different numbers, thesereturns. Oh, this has the highest numbers than this one. So I’m going to pick this one. 

Jeff: So I did that for a while and I finally decided to put on my big boy pants and do the first do it my first equity deal, which was fifty thousand dollars minimum in Oklahoma and. After about six months, which was kind of normal to before you start getting a distribution, didn’t really hear much from them. And after about nine months, the they started sending out updates to investors. And this was with realty shares that they were having problems with the area. And each month we kept getting updates and updates. Long story short, we weren’t told that the area was a high crime area, more people. So the sponsor put in a lot of money to rehab this place, but more people were moving out the moving in. So basically, he just folded and every investor lost their money. 

Josh: Oh, boy. And that’s the risk. Right. So when you typically do a larger syndication, the sponsors are going to get that first mortgage from Fannie Mae or Freddie Mac or a large bank could be could be permanent or could be bridge financing. And then typically the investors come in behind that as equity. And that’s the risk. Right. Instead of doing private lending where the first mortgage you get your interest income, the attraction to debt is on the first mortgage. I get interest income. A lot of guys like to do those deals in their self-directed IRAs and their retirement accounts because it’s interest income, it’s not really equity. The good thing about equity and being in second position is often you’re getting K1, so you’re getting some sort of loss or some sort of distribution, but also some depreciation against your income. So you pay very little tax. Downside is, is that you’re also right. You’re also in second position, essentially. And if the sponsor walks or something goes wrong, that’s why the returns are typically scheduled to be much higher because there’s also a little bit more risk. Right. But the crime is a great thing. So what did you learn from that experience, Jeff? What did you learn about underwriting or did you learn about deal flow? What did you learn about kind of some more boxes to check, maybe doing some more due diligence? 

Jeff: Yeah, like a stated before, looking back, it was totally my fault because I didn’t have a clue what I was doing. 

Josh: I mean, nothing. And it’s a lot like how a lot of people treat the stock market. You just throw money in and they don’t know what they’re doing. Oh, went up great. Went down great. They don’t know. Right. That’s the market special with all stuff with GameStop and AMC and Dogecoin and Tesla and Elon Musk tweeting about things. And prices going wild off of these. What like Elon Musk is not an expert at dogecoin. It’s wild what is happening. And a lot of investors are just well it sounds, get them to throw money at it. And I’ve been there, so I feel your pain. But what would you take away from it? What would you do differently or what have you been doing differently since then? 

Jeff: Well, I took a step back, I took about a year off from doing any type of real estate investing and just really dove into reading books and attending a lot of seminars, meeting people, figuring out what other people were investing in and then who they were investing with. Soso I was able to kind of come up with three or four names, really learned about the different metrics that went into it. You know, kind of like if you go to dental school or medical school, you know, you got to learn all the terminology and and everything what you’re doing before you start treating patients. Sure. And I didn’t do that. I just went for. So this was the most one of the most things that I guess a negative impact that that I saw was these websites were saying, hey, we get pitched deals all the time and we’re only putting the best of the best on our Web site. 

Jeff: So what happens is I was putting my trust in a website and you don’t get to know the sponsor personally. I think that’s very important. Who you get investing your money with, if it’s going to be tied up for five, six, seven years or longer. And who are they personally? Who would they work with? So you can talk with them where you’re not allowed to do that on these websites. So now you’ve got these new sites like Fundrise and Rootstock and all these other ones. Now, I’m not saying that they’re bad, but again, you’re putting your trust in an online platform. And if and if you’re investing a thousand bucks or something, that may not be that big of a deal. But if you’re putting in 50 hundred grand or more, that’s a lot and that hurts. Yeah, that’s what I encourage people the most to really know who you’re dealing with. 

Josh: Yeah, I mean, Fundrise and Rootstock and equity shares and patch of land, they’re using the 506C crowdfunding platform to make fees. It’s really no different than a broker that charges fees for selling stocks, bonds, mutual funds or managing a portfolio. Ultimately, that portfolio manager doesn’t really know the ins and outs of what’s happening with these CEOs, with these companies. They’re selling based on upside or they’re selling, even though they say Pat breakoff past performance is not an indication of future results. Everybody sells based on past performance. This is what the company’s done in the past. You should invest. And it’s really no different with these crowdfunding platforms. Some of them are really good at what they do. But again, do they really know the sponsor? Do they really know the deal? Have they walk the property? Have they seen the financials that they walk through the units? So what I find is that a lot of active and passive investors that have these personal relationships like you and I work in and you actually know who you’re investing with, you know who the sponsor is. Personally, there’s no intermediary. Those are the best deals to do. So is that the type of where you guys are investing now with your group? 

Jeff: Yeah, definitely. And, you know, you’ve got to realize the people that come to my website, they’re busy professionals may, but they don’t want to take the time, nor do they really want to take the time to learn all the stuff that I’ve learned. And I just enjoy doing it. I don’t need the money. I still work full time at practice. But, you know, I’ve been screwed a lot. I know a lot of people out there have been screwed a lot because we’re you know, as a doctor, we’re seeing salespeople as people that walk around with an S on our chests, not for Superman, but for sucker. 

Jeff: OK, he makes a lot of money. Hey, let’s go for the doctor. You know, we’ll just pitch you something. And I just got fed up with it. So that’s that was one of the reasons why I started my site that I wanted to be a. You know, somebody out there that people could trust and I tell people when I get on the phone with them and say, look, I’m just a redneck from Louisiana, if you want to come down here and, you know, meet me or whatever, I’m just a regular do like you. You know, I’m not some CEO at Fundrise sitting behind a desk or whatever. So I’m in the trenches like them and it’s just. It really makes me feel good, but sometimes people say, well, you know, Jeff, whatever you’re going to invest in, I’m going to invest in it, too, because I trust you, because as you know, as a Christian person, we’re told as too much is given, much is required. So if I’m going to put my name out there on something and recommend it, then a better a better do my due diligence to do that. You know, so that just say, by the way. 

Josh: Yeah, Jeff said, by the way, is DebtFreeDr.com for Debt Free Doctor. Jeff, tell me a little bit about your passion. Where does your passion for this passive investment come from your busy periodontist? You are a high-income earner. You have a busy practice. You’re still full time. But there had to be some point where you were constantly going to the office seeing patients and making a good income. But you felt this. You know, this desire to not be so dependent on active income and be really passionate for building this passive portfolio, when did that all start? 

Jeff: It was it was two things, but the first thing was about five years ago, we were snow skiing. Got off the lift, kid, cut in front of me, I fell and I landed on my wrist and it was nothing major, but it started me thinking, OK, well, what would happen if I couldn’t work? Because everything was dependent for my family on my income. 

Josh: How valuable are these things? When you’re a doctor or a dentist. How valuable are those? 

Jeff: Yeah. So I need my hands and my wife needs my hands to provide for the family and stuff. So that that started me thinking about, OK, well I need to figure out, I got to get some other income streams coming in, but I did not want to work more, didn’t want to get a second job. So it wasn’t like that, like, hey, I’m just going to go out and get more jobs. It’s got to be something looking out there. While I didn’t have to spend more time, I didn’t have a clue what it was. But the more research I started doing, the more that I realized that 90 plus percent of the millionaires out there had real estate in their portfolio. And I did not. I was all index funds and stock market at that time. Ninety nine percent and that is one of the things that led me to start looking at passive income. The other thing after I got into it a little bit more is, you know, there’s something that that’s getting worse and worse every year. And it’s called doctor burnout. Sure. People are at their wit’s end. Actually, covid really pushed it a lot because you would think that a lot of the doctors, we’re going to be really, really busy, but a lot of us were told we weren’t essential workers, but the guy down the street selling alcohol and lottery tickets were essential workers. 

Jeff: So that really ticked off a lot of people, especially a lot of emergency room people that were on the front lines seeing a lot of these covid patients. And then they’re told that, you know, we’re going to cut your hours back or you don’t have a job. So that really piqued a lot of people interest. And there may be something out there that I need to do or move to. And unfortunately, about two years ago, I had a friend here that’s a dentist colleague that committed suicide. And then that’s what a lot of these doctors are going to. And they’re unhappy. They’re financially strapped. So if I could just show people that there are different options out there, if you’re miserable in your work or if you want to do something else, you want to cut back part time or whatever, there are options out there because what what are we taught from financial advisers? The accumulation model. Right. Work 40 years. Put your money in for one and that’s it. Well, we’ve never heard of anything like, hey, you can invest for cash flow now to get out and seven to 10 years. That’s kind of the two reasons why I’m really wanting to get the word out. 

Josh: Yeah. Again, that website is DebtFreeDr.com. So, Jeff, when did you realize that you had an affinity for kind of I don’t know if you want to call it mentoring or coaching, but just sharing, sharing what you learned with other people and realizing that there were so many other high net worth or high income professionals that were in the same boat as you. You put up this website, you started blogging, you started telling your story, people started coming. And then now other high-income professionals are really looking at you and saying, well, you know, Jeff, we’d like your style. We think we can trust you. Like, tell us about the deals that you’re investing in. And you’re a little bit up on this. I don’t want to say up on a pedestal, but for lack of a better word, you have other people looking up at you and saying, well, Jeff, I want to be like you. I want to learn more about that. When did you realize that you had a platform where you could start having an impact on others? 

Jeff: Probably was after about two years of blogging. I mean, I was just blogging for a long time, just writing articles and, you know, getting a little bit of traction. But once there is there’s a big website out there called Doximity that I’d never heard of that has a platform of like two hundred thousand physicians. Well, for whatever reason, they picked up a few of my articles and they like and they’ve done this a few times, but they sent those out to their email list and actually, you know. Tripled or quadrupled or more, the number of people now that come to my site just from that kind of. So I really didn’t know how big of a problem, I guess this is because I wasn’t dealing with a lot of people, you know, but now that this larger influx of people have come in and I talk to people, you know, I’ve already spoken to three or four people this morning and I got four or five more this evening. And it’s, you know, is they’re saying the same thing over and over, no matter where they’re from, they’re just they’re either burned out or they’re tired of paying taxes. They’re looking for streams of income so they can have a family life and deal with their kids. See it a lot with the dual physician couple. They’re both busy. They’re both on call and their kids are suffering. So that really helps them out a lot. 

Josh: Yeah, you wonder sometimes you hear stories about kids that are teenagers or in their 20s and they’re, you know, do something stupid with drugs or they’re suicidal or whatever. And you’re like, oh, my God, your parent is a doctor. Your parent is a dentist, like they’re in the medical field. How is it possible that the child of someone in the medical field could, you know, have these issues? And a lot of it, from what I’ve heard and I don’t want to assume at all that I’m an expert here, but is a lot about just the time it goes back to normal human things like time, attention, love. And because their parents are so busy being doctors, the parents are on call. They’re working 60, 70 hours a week. And then you got two of them in some cases, and they’re busy. And the kids just, you know, just like any other kid that doesn’t get the time or the attention the kids get down the wrong path. 

Josh: And it’s sad to think that people start pointing fingers and say, you should have known your parent is a doctor or a dentist or a physician or a high-net-worth person. You should have the extra time. And what you’re saying is, this is really the opposite. These people are so busy, so tied up and so and a lot of cases. What you’re what I heard the story about covid is really being treated like they’re not valuable, like they’re just part of the big system. It’s a big machine and they’re just part of it. So there has got to be a little bit more in what you’re doing to think that you’re not only helping out the parents in paying less taxes and having better investments, but having a large impact on the entire household. Right. That’s got to be part of what you’re thinking here. 

Jeff: Yeah, because and I tell people when they when they call or reach out to me and they are asking about real estate and I always ask them for their why, you know what? What’s the reason? And most of the time or the actually the majority, the time is they want to spend more quality time with their kids, whether that be just at home or traveling or whatever. And a lot of them are not getting that anymore. So that that is one of the keys that I’m finding that they’re telling me. 

Josh: Got it. So, Jeff, let’s talk a little bit about deal specifics, so give me an example of one of the deals that you’ve done or deal that you’re looking at. And the structure is their preferred return is their equity. What’s the what’s the equity payouts look like? What’s the structure look like? And why did you like that deal and invest in it? 

Jeff: Yeah, we had one last year that was sort of the typical property that I invest in multifamily. Two hundred and seventy-two units, I believe was in Savannah, Georgia. Class B, I think it was built like in the 80s, early to mid-80s, had a really good upside potential. It was located in a high growth area that more people were moving in. So there weren’t enough rooms, weren’t enough apartments to do this. So it was in an area to where most of the surrounding apartments were similar in age, but they were charging more just because they were better technology. They were updated. So I had a really good upside potential to go in to to improve the property, to gradually raise the rents. I think it was a five- or six-year period and the quarterly paying quarterly distributions. It was a fifty-thousand-dollar minimum quarterly distributions, which were seven percent annual return over that five- or six-year whole period. And what I really liked about it is when they sell in five or six years, it’s an eighty-five, 15 profit split. 

Jeff: You know, 85 percent goes to the investors, 15 to the sponsors, where I’ve seen the majority of these types of investments. It’s either a 70, 30 or 80, 20 split. So this had a little bit more going. So, you know, there most of these sponsors are really shooting for a 2x equity multiple. So they’re really trying to get our money to double our money over the whole period, along with the tax benefits that comes with the accelerated depreciation. So that that was that deal. And that’s kind of a typical deal that I that personally invest with or again. 

Josh: Got it. Got it. That’s fantastic stuff. So as we kind of kind of work towards wrapping up the interview here, help me understand, like, what advice would you pass along to some of the people in your shoes? What are some of the conversations maybe you just had this morning or that you’re going to have later tonight with people? And in this case, the target audience is the high net worth the high-income earner that’s trying to get out? And it’s interesting, you know, you hear the same stories from people who have a lot of money, people that don’t you know, we all what we really want is time, freedom, isn’t it? It’s the time, freedom. It doesn’t matter what your budget is or how much you spend or how big your house is, how expensive your cars are. It’s about the time, freedom to do what you want with the people that you love. 

Josh: That’s what we’re all really fighting for in my group, with our members and our students. We call it forever passive income. Right. And we know how much forever passive income we want to build. And so, as you think about your group, what advice do you typically give them? What sort of coaching or advice do you pass along? What would you like to pass along to our group going forward? What do you see kind of happening with the market and what do you kind of suggesting that people do? 

Jeff: First and foremost, I would always tell people to start with their while and actually write it down because that’s going to keep them going, you know, sort of like if you say I want to I want to lose some weight. We’re going on the beach in a couple of months, you know, get very specific. You know, I want to lose twenty-five pounds in eight weeks because, you know, we’re going to this destination. So be because that’s what’s going to keep you motivated for sure. And then, you know, people don’t have time to become a real estate expert, but at least educate yourself enough to where you can ask, you know, kind of like if you were to go and try to find an accountant, you know, of course, you’re not going to learn the tax law, but you should educate yourself enough to ask good, smart questions when you’re interviewing these people, you know, know what to ask about. I think another thing is to figure out what your investment philosophy is. Are you more risky, would you go? Are you single? With no kids? You can be riskier. Maybe doing some new construction where the potential for higher returns would be better for you. 

Jeff: More conservative. You have kids, you you want to go something that has a proven track record? I would I would probably say the most asked question that I get from people would be, Jeff, how do you find the deals? And then last year was like, well, how do you how do you find deals that people are paying their rent or not affected by covid? And so they’re asking me all these specific questions. And like we discussed earlier, it all start. That’s the wrong question to ask. The right question to ask, as you know, is how do I find the right sponsor to work with right or right sponsor will get you the best deals. They’ll find the areas of growth where covid or whatever else is out there isn’t going to affect as much. And they know what they’re doing. And you’ve got to put your eventually you’re going to have to put your trust in somebody. There’s too many people, as you know, that have paralysis by analysis. Right. They’re just overanalyze everything. And, you know, once you get to the point where you think that you know what you’re doing and you’ve asked enough people and you’ve done your due diligence, then jump in, go for it, you know, and. You may fail, you may not, but you’re going to as you know, you’re going to learn more from your failures than from your successes. I surely have and I teach my kids that to so that that’s what I would recommend. 

Josh: Fantastic stuff. Jeff, listen up my audience. I want to encourage all of you, whether you’re a high-income earner, high net worth or not, you know, Jeff’s philosophy and his ideas today have been fantastic. Go to DebtFreeDr.com, check it out, follow Jeff on social media, follow him on his blog and his website for all of that kind of information. And if you want to join Jeff’s investment group, you can do it there. Take a look at the deals that Jeff is doing. Jeff, listen, thank you so much for joining me today on Accelerated Investor. 

Jeff: Absolutely. Thanks again. And hopefully some of what I share provide values to your listeners. 

Josh: You got it. Thanks so much, Jeff. So there you have it, guys. Hope you enjoyed that interview with Dr. Jeff. I really, really had a great time interviewing him. Matter of fact, since the recording of this podcast, Jeff and I have had multiple conversations about him and his group passively investing in our deals and our syndication. So very active investor. So if you enjoyed this episode, go right to your smartphone, find the Accelerated Investor podcasts, subscribe and leave us a five star rating in review. Appreciate you being here. And we’ll talk to you next time on the Accelerated Investor podcast.

You’ve been listening to Josh Cantwell and the Accelerated Investor Podcast. Leave a comment on our iTunes channel and let us know what you want to learn next, or who you’d like Josh to interview. While you’re there, give us some five-star rating and make sure to subscribe so you can be the first to hear newepisodes. Follow Josh Cantwell and his companies, the Strategic Real Estate Coach and Freeland Ventures on all social media platforms now and stay up todate on new training and investment opportunities to start your journey towardthe lifestyle you’ve always dreamed of. Apply for coaching at JoshCantwellCoaching.com.