Josh Cantwell:   Welcome to the Accelerated Investor Podcast with Josh Cantwell. If you’re looking to retire early with forever passive income, you’re in the right place. This podcast is the go to destination for real estate investors, both active and passive, and multifamily apartment investors, both new intermediate and advanced. Now sit back, listen, learn, and accelerate your business, your life, and your investing with the Accelerated Investor podcast. [INTERVIEW] Josh Cantwell: So hey, Tom, listen. Josh Cantwell: Welcome to Accelerated investor. Thanks for carving out some time. Now you’re financially independent, unlike a lot of people, so you might have a little bit more time than others. But thanks for joining me on the show today. Tom Burns: I appreciate it, Josh. It’s good to be inside when we’re recording this. I’m in Austin, Texas, and it’s 150,000 degrees out there, so rather being here doing this. Josh Cantwell: Yeah, I appreciate you covering up some time, sharing your message today, Tom. So look, you’ve got a lot more time available on your hands and a lot of people being financially independent. There’s a lot of things you could be doing with your time. So we’re going to talk a little bit about that. But as we kind of introduce you to the audience here, tell me what are some projects that you’re working on now? I know now you get to kind of do projects by choice instead of because you have to. Josh Cantwell: So what do you choose to spend. Josh Cantwell: Your time on today? Tom Burns: So, today, actually, I run an educational platform, so we’re kind of working on some things for that just to kind of help people understand how to do this. And then always there’s real estate projects. So we’ve working on various projects because there were things that we’ve got going on that have been going on since the Pandemic. So just kind of pulling on the reins here and there on various projects that are under construction. Josh Cantwell: Got you. Josh Cantwell: So new development. Tell me about that. Is there one project in particular that you’ve just worked on? Give me a little bit of idea of what that looks like. Tom Burns: Yeah, well, we’ve got several. One is actually an age restricted HUD project. So it’s a HUD loan. We’ve got some 40 year fixed debt on that one. Came through the Pandemic, moved a little slow. Big surprise, right? Just like everything that couldn’t be sold prior to the Pandemic. So truly starting to pick up velocity now. And so we’re kind of working on that, working on a recap of the capital. And so all is good there. We’ve got various multifamily projects in different stages of construction across Texas and actually kind of dove into the extended stay asset class this summer, actually, over the last two years. So we’re doing a portfolio of extended stay hotels. Josh Cantwell: You guys have done over $700 million of acquisitions development. You’re one of the few guys that I’ve interviewed that said extended stay. So just describe that asset class to our audience who would maybe not familiar with it and help us a little bit understand the structure, the capital stack around that type of investment opportunity. Tom Burns: Yeah, you bet. Asked me two years ago, you wouldn’t heard that coming out of my mouth either. So one of our partners came to us and said, hey, we really like the extended stay market. We’re like, hey, we’re multifamily guys, right? And the comment was, this is workforce housing. Okay? So we declined at the time and started doing our research. So two years down the line now, the extended stay, there is hospitality hotels. There’s the nice resort hotel you go to with the giant pool and all that stuff. That’s one type of hospitality asset. But the extended stay hotels are things that people use pretty much as workhousing. I was a physician. We used to have traveling techs, traveling nurses, traveling doctors. They’d come in for 30, 60, 90 days, maybe longer. They’d stay at these extended stay hotels. So 40% of the residents in these places stay over 30 days, and some stay up to a year. So we like that portion. It’s certainly less amenitized. It’s a lot less expensive to build. If you’ve seen them, they all have different names, but they pretty much got the same shape. They’re boxes, smaller workout room, smaller pool, things like that. So less amenities, less cost to build. It cost us 132,000 a key to build one of those. It cost us 250 to build a multifamily unit. Josh Cantwell: Oh yeah, 132,000 is cheap for a key, that’s for sure. Tom Burns: Yes. They’re in strategic areas around Texas and a couple in another state, and people stay there. And what’s interesting, which took a while to get my head around, was that you build these, takes about twelve months to build them, and then typically there’s your lease up period, right there’s your 1012 14 month lease up period for a multifamily. Well, these are the kind of properties that people Google online, look for the newest one and just book. So they will tend to stabilize anywhere, sometimes between two and four months. So they stabilize quickly. They do tend to cash flow, and so the plan is to create a relatively large portfolio and see what we want to do in five years. Whether it’s sell the whole portfolio, sell part of it, sell them one off to mom and pops, it just depends on what the market supports at the time. So it’s a new venture for us. I can’t tell you how it’s gone yet, other than it’s going along fine, but catch me in a year or two when everything’s built and we’ll see if the numbers panned out like we expected. Josh Cantwell: We’ll have you back on the show in a year and a half, two years, and you can tell us how things are going at that time. That would be great. You have had a lot of success with real estate development, but your career started as a doctor. You were orthopedic surgeon physician for the US ski team. A lot of people would say doctors are all rich, but yet you wrote a book called Why Doctors Don’t Get Rich. So that’s going to catch a lot of people off guard. So let me just ask you the question. Why don’t doctors and people like that, that are perceived to be wealthy, whether it be a lawyer, an accountant, a doctor, why don’t they get rich, in your opinion? Tom Burns: Yeah, and you picked up on that. Great. That’s actually sort of a shocker title, sort of a metaphor for the fact that no matter how much you get paid per service or per hour, if you get hit by a bus or get sick, the music stops. So sort of in my mind, my opinion, real wealth is having assets that produce cash flow. Whether you’re sleeping, vacationing, playing with your kids, or binging Game of Thrones on TV, whatever you’re doing, the money is coming in. So that was the premise for the title. Actually, a friend of mine gave it to me. I tested it for two years. It never got worse. So I love the title and that’s kind of the thing. I was a physician and loved it. We got paid well and really enjoyed it, but a long time ago decided maybe it was better to have something coming in outside of medicine to give me a little more freedom, a little more choice, a little more time in my life. Josh Cantwell: I guess the message that I heard you just say is it doesn’t matter how big the income might be if it’s a w two income, if it’s trading time for dollars, even if those dollars are a lot of dollars, the lifestyle typically keeps up with the paycheck. And so the lifestyle is expensive. Maybe it’s the larger house, the more expensive car, the second home. And so ultimately you’re still working and trading time for dollars and spending more dollars because you’re making more dollars. And so ultimately it doesn’t end up in wealth or richness or financial freedom. And that could be at a doctor, an accountant, an attorney, a highly paid sales executive, those types of things. So when did it dawn on you and your personal life that you were on that same path, that you were actually going to be that guy who had a big income but not a lot of free time and maybe never be financially independent? Tom Burns: So believe it or not, it was back before I was that guy that had the money. I was actually in training, so I was getting paid like an indentured servant and working hard, but watching the guys that were training me, right. Because we train with the apprenticeship model, so we’re watching these docs that are supposed to be us in 10, 20, 40 years, right? They weren’t happy. They were having to work. Maybe they were 65, 70, they were still working, things like that. And I saw enough examples of that, it hit me enough times and I thought, you know, maybe it might be nice to have something that’s not correlated with medicine. I see medicine kind of maybe having a little downward trend over the next 1020, 30 years. That turned out to be a lucky prediction for me, at least. Correct prediction. So it was back before I was making money. So that’s when it hit me. And it was just kind of a slow progression of always looking for something on the side. I landed on real estate because it fit that lifestyle. You don’t have to be first in or last out. And you can do it with partners, you can do it part time, full time, as you know. So it fit the lifestyle of a busy surgeon. And I just tried to put one block on top of the other over time and eventually those things compounded. Josh Cantwell: Yeah. Tell me about, or tell our audience about Tom for you. How important was it to have patience? And what I mean by that is so many people want the quick dollar. The big hit, the big flip. They flip a house, they flip a building, they make 50 grand, 500 grand, whatever it is, versus stacking bricks, stacking passive income checks one on top of the other. Many people think that takes a long time to create enough passive income to replace a big w two income. And if people will just get going, they realize it doesn’t take nearly as long as they thought. How did that work out for you? And tell me how important it was for you to have patience. Kind of be urgent in your acquisitions, urgent with your strategy, but be patient to know this is going to happen for me, I just got to stack. One chip on top of the other. Tom Burns: Yeah, I call it utilizing active patience. You’re always doing something to get better, but you got to be patient. My goal was sort of that how to eat an elephant thing, right? One bite at a time. I just wanted a little bit extra income. In fact, I would tell people if I could make a dollar passively that I didn’t have to do anything to make, I’d accept it because hopefully that dollar one day becomes ten 101,000 or whatever. And so that was that thought process. And so I literally actually would look at my financials for the year and I always tell people that I could tell what I paid for utilities, mortgage, food, groceries, whatever. And one year I looked and thought, well, I made enough passive income to cover my utilities. That’s one thing, that’s kind of a nice thing. Big win or a win. And I just tried to stack those wins. In my case, I didn’t want to get out of medicine. I just didn’t want anybody telling me what to do. So I was going to keep stacking these blocks until things happen. So it did take some time. And I tell folks, certainly financial independence has a definition, and that’s without the need to go to work to survive and live and live a lifestyle, but you can have partial independence. You can take care of part of your bills, and I suggest to folks that’ll make you smile a little bit more, you take a little bit of pressure off, take the mortgage off your back, or take your utilities or whatever, so kind of celebrate those wins. And that’s what I did. I just kind of celebrated those. It made my doctor life more enjoyable because as the scales began to tip, I worked a little less as a doctor, a little more on the real estate, and was able to kind of titrate that like a chemist to where I really liked it. So Peter Drucker does say that. Josh Cantwell: We. Tom Burns: Think we can do more in a year. We overestimate. We can do in a year, we underestimate what we can do in five years. It probably took me ten because I didn’t know what I was doing. I was bouncing into blind walls and making lots of mistakes. I think it can be done a lot faster than that, but I think if you just prepare and be patient and use that active patience, the power of compounding will work for you. Josh Cantwell:Yeah. Tom, I must ask you, how much more enjoyable was it to go to work when you knew you were doing it by choice versus by having to go? Like, how much more enjoyable was the day being around the nurses and your patients and your administrative staff, when you’re like, you know what? I don’t have to be here. I could walk out if I want. And that choice probably made things so much more enjoyable. Tom Burns:Gosh, it was fabulous. People talk about doctors spending 30 seconds with them in the office and things like that. And as my time became more my own, I continued playing doctor because I enjoyed it. I stayed as a physician for twelve and a half years after I became financially independent, and the last four years of my practice I did for free. So because I didn’t have anything else to do, I enjoyed what I was doing. My physician assistant and I would literally come to work saying, we like coming to work because we were able to curate the types of patients we wanted. I could fire the insurance companies that weren’t nice to me. I could not take call. And if a hospital told me, hey, you need to cover the emergency room in order to work at our hospital, I could just wave to them and say, I don’t need you. So it was a lot of fun. I don’t want to sound like a ton of hubris, but I was a better doctor because of it. I was able to put all my heart and soul into people and I didn’t have to care if they paid me and I could spend five minutes or I could spend an hour with them. I think I got the benefit, and I think they got a huge benefit. Josh Cantwell: Yeah. Wow. What a powerful statement. I was a better doctor because I was financially independent. That is a big takeaway. Tom, let me ask you, so if you were to look back at the way you did it, and I’m sure I haven’t read the book yet, but why? Doctors don’t get rich guys. Buy the book. Read it. I’m going to read it. I’m sure in there there’s probably a checklist of how to get started. So if you were to go back and I know you also teach this in your mastermind, the rich life mastermind, you teach this to your members in your group. So tell our audience, if they want to follow your path or a similar. Path, what are some of the first steps? Maybe the first two or three things that you would recommend they get started with? Should they invest as a limited partner and learn the business while investing with an active operator? Should they go buy a building? Should they JV partner with someone? Should they invest in a fund structure or invest with an active developer like you? What based on your experience, when you. See people get financially independent, what are. Some of the common themes of the way they begin and start? Tom Burns: I’m probably going to drive your listeners crazy because I’m going to sound like Robin Sharma, but you got to know why you’re doing it, because it’s not all fun and games. There’s ups and downs. Then you got to get a little bit of education. There’s tons of ways to get that. You and I are doing that right now. There’s books, there’s podcasts, there’s seminars, things like that. And then you got to kind of decide what you might like and try to focus a little bit. Get around people that are doing what you want to do. It’s really nice to hang around people that are at least heading in the same direction you’re going or even better, that have been to where you want to go and can help you avoid some of their mistakes. So that’s kind of the whole crux of the first part of the book, is just get your mind right, understand why you’re doing it, learn, be learning. But you can’t learn your way to financial independence. You got to get in the game. Josh Cantwell: And that’s right. Chapter, whatever, five or something, but get in the game, so do something. And I always suggest start small because you will make mistakes. I have made plenty and continue to make them. You’ll make mistakes. And so if you start small, your mistakes will be small, as will be the consequences, but the lessons will be the same size. You still get the big lessons if you make those mistakes. That was good. And you can do it in multiple ways. There’s no real cookbook. It’s basically you can be a passive investor and find people to invest with. I suggest you kind of carefully find people that have nice long track records and friends that have invested with them and get to know them. And there’s sort of a list of due diligence items for that kind of thing. And start like that. You’ll learn how people run funds or how they run syndications. You’ll understand the jargon and the nomenclature for real estate or whatever you’re investing in. Should you choose to go do your own, buy a single family home, buy a duplex, do something. But look hard. Look at a lot before you buy something and make sure it’s making you money on the day you sign the papers. Josh Cantwell: Yeah, but invest for cash flow. Let me ask you about that, Tom. That’s a great point. There was one thing you said that. I want to reiterate to our audience. I wrote this down and said, start small because the mistakes are small. But the lessons, the takeaways are the same size. Meaning if you invest $25,000 as a limited partner and you follow that operator and you follow what they’re doing and things that are going well, things that. They may be doing wrong, you start small. The mistake could be small, but if somebody else invested a million dollars in that same deal, you get to learn. The same lesson because you’re in the. Deal as a limited partner, you might have a much smaller investment, but you get to take away the same lessons from watching them operate. And what value add improvements did they make? What kind of development did they do? How did they structure the capital stack? You get to see everything the same as the million dollar investor. Even if you started out with 25 or 50 grand, that was big. So I wrote that down. I want to point that out to our audience. Again, like you said, start with a duplex, start with a small apartment building. Buy something. But you mentioned something, I think, again, that’s critical, is buy something that cash flows day one, right, versus something with lots of equity appreciation upside. So, Tom, when you were putting together your strategy, and again, when you talk to people in the book or in. Your Mastermind, how much more important is. It for you to get cash flow versus equity? Is it one more important than the other? And how much emphasis do you put into each one? Tom Burns: Certainly at the beginning I was painfully focused on cash flow. If it didn’t cash flow, I wouldn’t buy it. I didn’t buy land, I didn’t buy gold, and there’s lots of good reasons to buy those things. But I wanted cash flow. So if it cash flowed, I’d buy it. And I wanted it to cash flow day one. Then as you maybe go forward, as you have more passive income coming in, there’s times when you can sit back and take some time and wait for some years or months or whatever it’s going to take for your equity to build. And you can use sort of that a capital appreciation model. But I believe, at least in my opinion, that if you’ve got the cash flow, you can make mistakes. It will help you more immediately in your lifestyle. And it’s a lot easier to create $100 a month in cash flow than to make $5 million. Josh Cantwell: And it’s a lot easier. Josh Cantwell: Look at what’s happened in the last year, right? You can’t eat equity, right? So if you got a deal that’s. Josh Cantwell: Cash flowing, you got a deal that’s. Josh Cantwell: Cash flowing and it’s throwing off a 7% cash on cash return, let’s just say. And you thought you had a bunch of equity because interest rates were super low and everything was appreciating in value and maybe you waited too long to sell it. Now all of a sudden interest rates are up, the ten year treasury is up, bridge debt has almost disappeared, and all of a sudden that equity is not nearly what you thought it was. You still have the cash flow coming in. You can wait out the downturn versus somebody that just invested for equity and had little or no cash flow. Now, any equity that they maybe thought they had could be gone for the next two or three years until the market rebounds, right? So the cash flow is what you can eat, it’s what you can live, it’s what you can reinvest in. The next deal versus equity only really gets realized upon the sale. So that’s a critical thing, I think, that Tom mentioned. Go ahead, Tom. You’re going to say no? Tom Burns: Just great pickup, that’s for sure. Yeah, you care. But from a profit and loss standpoint, you don’t care what the equity is as long as your tenant is still paying you. So you got that cash flow and less of a tax problem. If you’re waiting for a sale, there’s issues with taxes. Either you 1031 or use some sort of accelerated depreciation, which is kind of getting a little less and less right now, but it’s still there. You got to retool and spin up the machine again every time you sell. When you have something that cash flows, if you’re holding for long term and you have long term debt, you’re in the cat bird seat. It’s a lot more comfortable. You sleep a lot easier. Josh Cantwell: Oh, yeah, I love it. So guys, start small. Invest for cash flow. You want something that’s going to appreciate that’s got to be part of the model that you’re looking for when you’re looking at investments. But the lesson is the same size, cash flow. Day one, you can eat cash flow, you can’t eat equity. Great stuff. Tom, a couple more questions. You said you became financially independent. You were a doctor for twelve more years. After that, the last four years, you basically worked for free for those people that don’t know what it’s like. And again, I’m not asking you to brag here, but tell us, what is. It like being financially independent? Most people don’t experience that. We know so many people are living paycheck to paycheck. Describe it for us. What is it like for you? What are your days like? What do you do with your free time? It’s liberating. Josh Cantwell: And one thing I noticed, I always sort of knew what day it was when I was, I was maybe financially free, but still doing the doctoring. So I would know it was Monday, Tuesday, Wednesday, whatever we did that morning. I only worked mornings for that twelve years, but now I’m not sure what day it is, which is interesting way to put it. Josh Cantwell: Today’s Friday, by the way, Tom, just so you know. I’ll remind you. Josh Cantwell: But it’s really fun and there’s some good and bad to it, I’ll tell you. Josh, when I finally stopped doctrine that things were scheduled for me, it took me a while. It was one of the things I was not experienced in. It was like, oh goodness, I’ve got to plan my time. So I wasn’t very good at structuring my time. So it’s a blast. And I probably got caught with too much opportunity, did too many things. Now we’re in the simplification stage and I basically schedule out time to make sure I’m going to go hit tennis balls or go hike somewhere. And I just came back from climbing a mountain in Africa, so I try to travel a lot. It is very nice when you know the money is going to come in, you can kind of sit back and you can kind of wonder what’s your purpose? I know that’s real deep sounding and everything, but we’re all here for a reason. And nobody wants to just sit around and eat Cheetos and binge Netflix, right? You want to do something useful. And so that’s what happened to me over the couple of years since I retired, was to really sit back and realize what gave me joy, what impacted other people. And it’s not like, it’s not work sometimes. It’s stuff that I’ve got to learn, but it is a blast. It’s very liberating to know that you’re in charge of what you do. Nobody’s going to tell you to see more patients or do more clients or whatever your job is. It’s awesome. Josh Cantwell: It’s awesome. That’s right. Tom, let me ask you this one final question, which is just really around know, one of the things, a couple of things that I wrote down that I took away was that you started. Really looking at, even though you knew you wanted to be a physician, you. Recognized early what they were doing wrong, right. Which was not really investing for cash flow, not really knowing their why and why they were doing it, and really understanding that you wanted to have multiple streams of income. Those are a lot of things that you got right. You also mentioned Peter Drucker, one of the great leader consultants. So first question I wanted to ask you was, as you were really paying attention to your journey and growing, besides Peter Drucker, who else did you follow? What other principles were you following? Were there leaders, thought leaders, books that you read that really helped you continue to modify your philosophy? Tom Burns: Absolutely, and I still read a billion of them. Back then, this was a long time. This was 25 years. Kiyosaki wrote Rich Dad, Poor dad, and basically the concepts of passive income. And then he also wrote Cash Flow Quadrant, which is really great for doctors, lawyers, engineers, architects. You look at that cash flow quadrant pretty much tells you where you are, and nothing’s really changed. You’re taxed a lot higher on that side of the quadrant, and you’re taxed a lot less on the business owner and investor quadrant. So I certainly followed those principles. I listened to Tony Robbins. Currently, I’m like a fanboy for Dan Sullivan and Ben Hardy, who not how gap in the game. Two X is better, easier than ten X is easier than two X. Those are all new, but there’s always something out there. Darren Hardy. Simple stuff. I love to listen to his little podcast every day. And The Compound Effect is just a pretty basic book about success. Josh Cantwell: Love that one. Tom Burns: There’s a lot of stuff in there, so you name it, I’ve probably read it. And if I haven’t, let me know what it is and I will. Josh Cantwell: Got it. Love it Last question is, tell us about Chrysario Ventures. You guys obviously work with a lot of investors. You’ve done $700 million of acquisition and development. What’s happening over the next couple of years for Prasario? How do you partner with investors and can people log in and check out your deal flow? Tell us a little bit more about your investment company. Tom Burns: Yeah, things were obviously nuts before the pandemic, and we were sort of half build and hold, half build merchant sale. Josh Cantwell: Right. Tom Burns: And then everybody wanted to buy what we had before things went bad. So we sold a bunch off and kind of finishing up projects now expecting kind of slow progress this year. Next trying to pick the best of the best and not doing deals just to do deals. Simple syndication models. We don’t do the fund. Model we raise deal by deal. SAS deal was that extended state portfolio. It’s pretty easy to get a hold of us. It’s at Prasarioventures.com and there’s all kinds of ways on the website to get a hold of us. Get on the list. You can get to me it’s Tom@richdoctor.com. And get both places at once. Josh Cantwell: That’s fantastic stuff. Listen, Tom. Fantastic advice today. I’ve wrote down tons of notes. Guys, make sure you check out Tom’s book again, Why Doctors Don’t Get Rich. That’s not just for doctors. It’s for anybody making a w two income and the ability and ways to replace that income with passive investments to ultimately get financially free. Tom, listen, thanks for carving out some time for us today, guys. Check out Prasarioventures.com and Tom, listen, fantastic job today. Josh Cantwell: Thanks for being on the show. Tom Burns: Thanks, Josh. Appreciate it. [CLOSING] Josh Cantwell: Well, guys, there you have it. I really enjoyed that episode with Caleb. Man, being responsible to others is such a motivator. Giving to others, I feel so good about myself, right? Such and such a good place when I give to others. Number three, making a new decision. I remember when I was diagnosed with cancer and came out of my hospital bed and had an opportunity to restart my life, I had to relearn how to eat, I was not going to go back and redo my life the way I had been doing it, so making that decision. And then finally, as Caleb and I mentioned, don’t quit. Guys, listen, everybody can do this business. Everybody can be successful. Everybody can be a multimillionaire with real estate. Keep getting your education, keep listening to podcasts like this. But most of all, go execute, raise capital, make offers. Don’t quit. We’ll see you next time on Accelerated Investor.