SPI 894: Becoming a Lifestyle Investor with Justin Donald

SPI 894: Becoming a Lifestyle Investor with Justin Donald

Justin Donald: Commandment number one in my book is lifestyle first. So how can I invest in a way that enhances my lifestyle and decreases my time spent, right? Truly a passive activity, not something that you can say is passive that requires time. And so that really was, kind of, the genesis of the lifestyle investor was how do we create an epic lifestyle? What does it cost to live? How do we create the passive income to get there? Because once you buy your time back, now you can, you know, live for impact, for fulfillment, for passion. the world opens up and life is just never the same again.

But we know that the largest wealth transfer in the history of the world is underway. Over the next 15, 20 years, baby boomers are gonna pass down anywhere from 80 trillion to 105 trillion, depending on what reports or who you’re talking to in dollars. It’s the largest wealth transfer ever. So what do millennials like to do? Baby boomers are passing this to millennials. So how do they shop? How do they live? How do they work? Like figure that out. And you’re gonna find a ton of different ways to be able to invest.

Pat Flynn: Remember back in 2008 I discovered the term lifestyle design that mainly came from Tim Ferriss and his book, The Four Hour Work Week. But it really shifted my mindset about how to use time and energy now to get some of that back later. Right? The investments of time and energy to build something that can continue to work for you over time.

This is where the passive income and smart passive income came from, and it was very much inspired by Tim Ferris in The Four Hour Work Week. And then for a while, the term lifestyle design kind of went away. But I’ve heard a recent new term. I mean, it’s not new, new, but it’s something that I really, really love.

And that’s the idea of a lifestyle investor because it really helps you understand the mechanism by which you can then design the lifestyle that you want. It’s not just about designing your lifestyle, it’s about how to do that. And that’s through investments. And there’s a lot of different kinds of investments that we talk about here on SPI, the investment of time and energy into building a business, into building something that can generate income for you over time online.

And that’s been my specialty, however. There are many other parts of the investment equation that don’t get spoken about very often here because I talk mainly about online business. But I wanted to bring somebody on, somebody who actually wrote the book on this called The Lifestyle Investor, and this is Justin Donald.

And Justin very similarly talks about stopping trading your time for money, so you have more of both by creating cash flow while reducing your investment risk. Replacing your job with something that provides a residual income that can multiply your wealth so that you can live on your own terms.

And Justin is coming on today to talk about some of these other parts of lifestyle investing. The one thing that I get intrigued about during this interview is his investments into mobile home parks and where that came from, and how do you find opportunities that are out there because there are many of them, and we talk about some of the commandments of cash flow investing for passive income, and we’re not gonna wait any longer.

Let’s dive right in. This is Justin Donald, the author of The Lifestyle Investor, and you can find him at LifestyleInvestor.com. Here he is.

Justin, welcome to the SPI Podcast. Thanks so much for being here. Finally.

Justin Donald: Yes. I’m so glad that we have been able to put this together after really years in the making, and I’ve loved your show.

I’ve loved all the things that you’ve done. I remember way back in the day at Traffic and Conversion, you had done some speaking sessions, and I think you and I actually spoke at a couple of events together, similar time, similar subjects, and so I’ve been a huge fan of like all the amazing content you’ve put out into the world, Pat.

Pat Flynn: Well, thank you so much and me of your stuff as well, and you’ve done some amazing things here. This book and everything that you’re, we, we have so many of the same friends and same circles. Many of our friends have come on the show before and it’s about time to have you, Justin, come on and talk about what it means to be a lifestyle investor.

I, that, that’s where I wanna start because we’ve heard of the term lifestyle before. Tim Ferris made it famous back in the four hour work week. What does lifestyle investor mean to you?

Justin Donald: Yeah, you know, it’s, it’s interesting because when Tim wrote that book, I feel like that was a revolutionary book for me.

At that time, I was building a business and trying to get smarter with the way that I was doing it. And it was, it was just perfect timing. And then, you know, at the same time I was reading, I mean, it was just devouring all of Robert Kiyosaki’s work, you know, and Cashflow Quadrant. That one just blew me away.

And so, you know, I, I was in my own little learning mode and experimenting, trial and error, trying to figure it out what’s best, all these different asset classes, you know, where do you begin type of thing. And, and I just had this realization that I need to be focused on like how I can show up in the world.

Like, you know, to me, lifestyle is I get to choose how I work and when I work and the, you know, timeframe that I work in. And really, I, I felt like I was trading time for money, you know, for, for a long time building a business. I was a slave to the business. The business owned me. I told people I owned the business, the business owned me.

In early days, I didn’t realize it. In later days, I did and I said, I’ve gotta do this different. I need to buy assets that produce income and they produce income regardless of whether I’m putting time in or not. And so that really was kind of the, the genesis of the lifestyle investor was. How do we create an epic lifestyle?

So not a lifestyle in default, like most people, but, but a life by design. And then what’s it gonna take to get there? What does it cost to live? How do we create the passive income to get there? Because once you buy your time back, now you can, you know, live for impact, for fulfillment, for passion. It, the, the world opens up and life is just never the same again.

Pat Flynn: Yeah, I mean, I started preaching passive income a long time ago as well in the sense of building businesses that serve audiences, but. By taking yourself out of them after they’re running. And I’ve continued to do that, but I know there’s a million different ways to build a lifestyle like that and have more of an automated or or recurring income.

What is your specialty, if you were to sort of sum up. Where people are putting their time and assets to eventually achieve that lifestyle design they want. What does that look like?

Justin Donald: Yeah, so for me, I’ve really utilized a lot of different asset classes for it. You know, the first, and you know, biggest one was mobile home park investing.

That’s really kind of where we got our first, our monthly recurring high enough that it exceeded what it cost us to live. And then we had surplus income. So for the first time in my life, I had worked so hard to get. Passive income. Well now surplus income, the script flips, right? Like instead of saving 20% of what I was making every year to invest, well now it’s a hundred percent of all the surplus coming in every month, and I actually need to figure out how to invest it better.

So, you know, I really started in that asset class. I’ve done well with industrial. I did well for a, a season in self storage and in multifamily, but, you know, really mobile home parks have been our bread and butter. And then at the same time, I had built and sold a company I had bought and sold some companies.

I started with some smaller kind of mom and pop type of businesses, and that really kind of was a unique strategy. You know, some worked really well. Some worked okay. I got into the franchise business and that in the beginning years did not work as well. We just didn’t have the right franchise in the right partnerships and, and it was a little tougher to get going and now we’re, we’re going and it’s great.

But. I, I’ve tried it in a lot of different things and, and for me, more than anything, I just, I want to diversify into a lot of different assets, so that way there are passive income streams everywhere, so as the economy, you know, shifts and shapes and, and things change, I’m not too over allocated to any single asset class.

Pat Flynn: Yeah. And, and that obviously super smart diversification can help shield against any movements in the market, or, or at least some of it. When a person is thinking about doing this, however, and they’re starting out, I mean, they gotta pick one thing to start and they might not have a ton of capital to invest with to begin with.

So what are your strategies or what are your thoughts for. Choosing the right assets and actually getting started with this?

Justin Donald: Yeah, I think it’s probably situational. I think it’s probably a little bit based on skillset, so you know if someone is actually transitioning from what they’re doing. So if you have someone that maybe is working a job and they want to do something different.

That’s a totally different situation than the person in corporate America or running their business that is okay where they’re at, but they really want to create optionality for the future. You know, I always ask the question, you know, what’s more important to you? Like getting the highest return you can or buying your time back? Is it about as little time as you can to get a return or the best returns you can, regardless of time? ’cause I think that kind of steers the question. You know, if someone doesn’t have a whole lot of time, it’s probably just some sort of LP investments. You know, finding sponsors that have been in the business for 15, 20, 30 years that have a proven track record through economic crises and have performed well.

You know, if someone has time, what may make sense that, you know, they get into real estate or they buy a business. You know, I’ve done it both ways. I would ask, is this an entrepreneur already? Because yeah, the business route might be the easier route. You just have to be careful you’re not buying a job.

Is this someone in corporate America? Maybe it’s easier to get into the real estate game. So I, I look at, you know, the, their background, their skillset, their desires, how much time they wanna spend, how much money they want to. You know what, what type of capital are you looking to allocate? And I think it could be many different strategies.

And by the way, we have a lot of people in our community that have had a big exit. And so for them, actually, we love the path of private credit as well, like that, that being a big component where they can get regular monthly and quarterly cash flow. That can buy their time back and, or maybe they have a business that they want to get away from.

They want to sell, but they’re unsure how to create the income to, to do that. So I think it’s, it’s different strategies for different people and a lot of different ways you can get there.

Pat Flynn: Yeah. Let’s say a person’s listening to this, they’re in the nine to five grind. They have tried some side hustles here and there starting businesses, and they’re kind of slow to go and, and oftentimes they are, but they’re of course, like we were talking about other asset opportunities and investment opportunities out there.

How much would a person need to get started with? How much of a safety net would they need, if anything? ’cause. I mean, there are some people who are like, you know what? I’m all in. I’m gonna cash out my 401k and just put it all in something. And you know, of course sometimes it works out, sometimes it doesn’t.

But we wanna be smart about this. What is a person looking at in terms of just dipping their toe at least, and, and starting to see some movement there. And then maybe making a decision to start to invest more or, or pull some time from one thing to put into another.

Justin Donald: You know, if someone’s had some experience, you know, it, it might be nice to ride the coattails of that experience if someone’s unsure what to do.

I mean, the way I did it is I started in real estate, so, you know, I have a, a soft side of me that really appreciates that as an entry point. It’s not too much work, it’s not too hard to pick up. There’s leverage, so you know, you’re coming up with 20% or maybe even less to be able to buy it. A lot of seller finance options.

And I will say like on the business acquisition side, I still think there are a lot of seller finance options there also. But I think it’s even more likely when you’re buying out some of these baby boomers on the real estate side, it’s just kind of become, with higher interest rates, it’s just kind of become a little bit more of the norm.

So, you know, just because that’s my path and I understand it well and it was easy, that’s probably what I would say. And, you know, in the beginning days it’s, it’s hard not to over allocate into something ’cause you, you know, you’re either in or you’re out. Right. But I also think like, once you have cash in, you are never more ready to be a student.

You know, it’s like once you have made the investment, you are, you’re gonna learn, but you just don’t learn that well until your money, you know, your skin’s in the game.

Pat Flynn: Right, right. I’m curious about, so you said mobile homes was sort of a first big entry for you. Were you. Passionate about mobile homes?

Were you like dreaming about mobile homes? And if not, I’m not gonna assume one way or another you could tell me if you were not. How do you continue to fight through the struggles and the challenges and the, I don’t know if this is right for me and like, you know, again, you’re probably not obsessed with mobile homes.

Maybe you are, I don’t know, but like thoughts on mindset related to passion and doing these kinds of investments and still pushing forward.

Justin Donald: Yeah, you know, I know there are schools of thoughts where, you know, it’s like, follow your passion and everything’s gonna be great. All I wanted was an outcome. So let me take a look at all the options to get the outcome that I want.

I wanna live a life that is low stress, that is high optionality, that is, you know, me owning my time. So I looked at a lot of different paths to get there. I would not say mobile homes and mobile home parks, you know, lit me up like the, I did not know about it. It was not sexy. That wasn’t the reason I did it.

But when I saw the cash flow and I saw what that could create in our family, and I saw that we are providing good in the world through that process because affordable housing is needed no matter what. A lot of people like the, they wouldn’t survive without it. So I felt like this is a good thing that we’re doing.

We have the ability to earn a great return, and we truly have the ability to buy our time back. And so that’s it. So for me, it’s not the thing, it’s not mobile home parks. It’s the compelling vision of the future and all the, you know, mile markers along the way that we’re achieving as we’re there, like, you know, first bit of cash flow, right?

And true passive income. You know, having our mortgage covered, having all of our bills covered, having like that survival or minimum amount that we need just to get by. And then eventually getting up to the lifestyle income and eventually getting into surplus income. For me, it was more celebrating the steps to get there along the journey than the asset class itself.

Pat Flynn: Yeah, I think that’s well said. You know, I’ve built businesses and people have seen me build businesses about things that I wasn’t passionate about, but I was passionate about the outcome, like you said, and what that could allow for myself and my family, and, you know, I’m not, you know, super jazzed about security guards, but I’m helping people and security guards are people too, you know, so there, there is a way to still, if you come from a place of service, no matter where it might be, there’s still people involved and you can step up to help them.

And I love that. For those examples, the, the mobile home parks, like what is. You know, in a very elementary way, cashflow look like there. How much are we, I mean, I guess it’s scalable, right? But what does that look like more specifically, tangibly, so we can get an understanding of that?

Justin Donald: So, the reason I got into mobile home parks, I looked at every asset class out there.

I looked specifically, I took a deep dive in every real estate asset class. I, I wanted to know everything. So mobile home parks. Were what I found there were a few things. Number one, it’s the least consolidated real estate asset class, so that means less institutional money in the game, meaning I have a better opportunity of actually being able to buy these from baby boomers looking to sell ’em.

Number two, it was the least amount of work on an ongoing basis. I found it pretty easy to be managing a park at five hours a week. All right. So to me, I didn’t have to give up this other thing that I was doing, the business I was building, I could just add this on top of it. And eventually the income allowed me to cover what my wife was earning as a teacher.

So then she retired, we started our family, and then we just worked on buying more parks to eventually cover what I was making. You know, we covered our lifestyle income, and then we actually waited until we covered our in earned income. So from the business that I had, we waited until we were earning that much just for my wife, you know, it it, she would rather play it safe. I could have just said, Hey, let’s go all in and do this. But I think she was way more comfortable with that approach. And then number three was the financials. So there were no other real estate asset classes where I saw consistent 20 plus percent cash on cash returns.

So in our first park we had a 36% cash on cash return. In our second park, we had either a 52 or a 54% cash on cash return On our. Third park, we had 106% cash on cash return. So we literally got all of our down payment money back in one year, and then we flipped it at a year and a day. So, literally everything that we put down is back.

There’s no risk now, right? Yeah. And, and then I sell it a year and a day, and we sold, so that was a $500,000 profit transaction, which was more than I was earning in my business at that time. And that’s when the light bulbs just went off. I was like. Five hours a week for a year, if even that by the way, for a year, just earn me more than me slaving away in this business that I built that really owns me.

I don’t own it.

Pat Flynn: You know, when you put it that way, it’s incredible. And you know, these opportunities, like you said, are out there. So what are some other just ideas, you know, people are probably looking up mobile home parks now, but what other things like this, obviously we mentioned real estate. Commercial real estate may be a thing.

You said franchising where you can put your money to see more of it come back without you having to do the work. You think of a franchise, right? You own it, well, you have somebody else and other employees working in it. You’re not the one working in it. You’re kind of just managing these things, which, which I think is really interesting.

So what other. Spectrums or worlds are there out there that we could start looking at for putting some of our money into?

Justin Donald: Yeah, so, you know, I can walk through the areas that I, I’ve really enjoyed, but I guess overarching, like, if we’re gonna take a big picture view of this, one of the things I talk about in my book, the Lifestyle Investor, I have, you know, the, the subtitles, the the 10 Commandments of, of Cashflow Investing for Passive Income and Financial Freedom.

And really it’s my 10 criteria. But number three says, find invisible deals. And what that means is, number one, off market deals. But number two, what are the trends that aren’t mainstream yet, but there’s enough data to support that this is going to be a big thing. So we’re early enough, early adoption, and let’s figure that out.

And so, you know, I’ve, I’ve looked at, so the reason I got into mobile home parks was exactly that, right? It was the least consolidated real estate asset class. But I knew private equity would wanna get into it. And they have. Right. Over the last 15 years, they have gobbled a ton of it up. Right. And then I got into single family home rentals early on.

So, you know, there was a time and a place, not even 15 years ago, where SFR Single Family Rentals weren’t even a real estate asset class that didn’t become an asset class until the global financial crisis, 2008 to 2012. And so watching how I had built mobile home parks, I was like. At least all the homes are there together.

And I built this management company and, and we ran it from, you know, we kind of built an in-house team and I was like, all these institutions buying up these homes, they are never gonna be able to run this internally. Like we have a hard enough time and they’re all one location. You know, so that’s when we started a company that did single family home rental maintenance for the large institutional owners.

And so, I mean, right out of the gates Blackstone’s invitation homes, their, their arm that was gobbling up. 10,000 homes at a time. I think they had 80,000 single family home rentals. We ended up doing work for them and, and really growing that business. So that was again, another trend, right? We, I noticed this wasn’t an institutional play before.

Now this is an institutional play. I wanna move into that arena. I’ve done that in a lot of different things as well. Those are just a couple of them. But I guess the overarching thing is we know, or at least there’s, you know, data to suggest that the largest wealth transfer in the history of the world is underway. Right from now over the next 15, 20 years, baby boomers are gonna pass down anywhere from 80 trillion to 105 trillion, depending on what reports or who you’re talking to in dollars.

Let’s just call it. A hundred trillion, or let’s just call it 79 trillion and say it’s less than what they think. It’s the largest wealth transfer ever. So what do millennials like to do? Baby boomers are passing this to millennials. So how do they shop? How do they live? How do they work? Like figure that out.

And you’re gonna find a ton of different ways to be able to invest. So if we’re talking big picture, that’s what I would do. I would study that data. If we’re talking small picture and you’re unsure, I mean you could literally just copy all the things we’ve talked about here today. ’cause I’m still investing in everything that we’ve discussed today.

Pat Flynn: That’s amazing. So thinking about the future where money is being passed through and how to get in front of that, how to not even quote unquote take advantage of it, but ride that wave and be a part of it, if you will. You mentioned in your book also something called the income amplifiers. What? What does that mean exactly in terms of the investments you’re making?

Is it tacking on other things that can sort of additionally include some income on top of those things? Or are these other side projects on kind of on the side?

Justin Donald: I’m always looking for ways to kind of sweeten the deal. When someone you know says, Hey, here’s what I’m willing to do, of course it works for them.

They’re the ones, you know, proposing it. So what I need to do is look at how does this work for me and how can I make this something that you know, is palpable for me? So I like finding ways to get some extra upside, whether it’s negotiating in kickers like equity kickers or warrant kickers, or. Whether it’s negotiating in, maybe it’s extra protection, maybe it’s collateral, maybe it’s more collateral than what they already offer.

So it, it depends on the deal. But my goal is to always create a position where I have the ability to have some sort of outsized return, even though what likely is to happen is that things just follow the agreement, and my goal is to get a single or a double, right? If I. Stick there and do well there, and I just don’t lose money, I’m gonna do pretty well, right? So I wanna protect against losing money, and I would love to set up to just get a single or a double, but if I can put a few sweeteners in there to enhance the deal, give me some, you know, extra shares for free. Give me whatever it is. Maybe it’s advisory, maybe it’s extra collateral to protect the downside.

Maybe it’s different hurdles that allow me to earn more at different levels. Depending on how the deal performs, right? Then it gives me a little bit of upside, and I love having some upside.

Pat Flynn: What are the characteristics of a person who’s good at this kind of stuff? Because it, it feels like there’s certain elements like. To be able to negotiate and those kinds of things that could lend itself to performing even better. What are the characteristics of a successful lifestyle investor?

Justin Donald: Yeah, I mean, I think, you know, having some sort of people skills is important.

You know, being able to have an intelligent conversation and, and be able to do so in a way that doesn’t create animosity. And if you can negotiate with someone. In a flow where you’re being totally respectful, but really confident at the same time, and really treating them well through the process. I think what happens is you have people that say, I really like this guy. I really like this gal.

And you know, I guess that makes sense. So for me it’s like if we’re on the fence of something happening, but I’ve always been transparent and I’ve always treated them well, I think that I’m gonna get that extra nod to make it happen, and that’s been my experience. Now, I think understanding the nature of deals and like long term, what is the outcome that you want? And then let’s work backwards to figure out how we get there or different options that can get us there. I think that that’s good. I mean, I think there’s a lot of great legal, advisors, attorneys out there that can help with the technical details of it.

But I think getting some reps on the negotiations that you’re doing, right, are you negotiating equity? Are you negotiating warrants? Are you negotiating like a royalty agreement or a licensing agreement? Are there splits involved? Are there hurdles? Is there collateral in this? Is there a personal guarantee?

You know, are we on the lending side or are we, you know, so debt side or equity side, I mean. Every deal’s a little different and there’s so many different paths that we can take, and I’ve done so many different deals over the years, but I think getting some reps to understand like what you’re trying to do, so you’ve gotta have some decent know-how.

If you don’t hire an attorney, hire a good attorney and get the reps in. And then, you know, really work on the communication skills and you know, just treating people well.

Pat Flynn: Yeah, the people skills part of it just so huge and it’s hard for a lot of people to hear that ’cause they like to be stuck behind their keyboard and kind of just have AI write everything for them.

So you gotta get out from under the keyboard and talk to people. Really, that’s, that’s a big part of it.

Justin Donald: And really just ask a lot of questions. You wanna do a good job, you’re unsure what to do. Just ask a lot of questions. Be interested. And curious about them. That to me has been the big key to it all.

And then you get to know ’em, take some notes, bring those things up in future conversations that shows that you’re present and that you are taking an interest in them, and I think it’s gonna serve you really well.

Pat Flynn: Yeah. Amen to that. Justin, I’m curious. You’ve done a lot of deals, like you said in the past, which, or can you share a deal that maybe didn’t go so well?

An investment that you thought was good, but maybe didn’t work out like you thought it was gonna end? Can you share why it didn’t do well?

Justin Donald: Yeah. Oh goodness. As an investor, I think people just need to be prepared for the fact that not every deal’s gonna work out, and I think if you can go into it with that recognition, you’re gonna fare a lot better.

But I also think if we can go into it with the idea that most deals are bad, so say no more often than you say yes. That’s probably gonna serve you really well too. So I, I like to talk about the difference between an entrepreneur and an investor when I give different keynotes and things because, you know, I start out investing as an entrepreneur.

And an entrepreneur is an eternal optimist, and they will always find a way to get it done. They’ll pivot, they’ll find a way to raise money, they’ll find a way to build the team. They’ll find a way to talk someone into taking less money than what they’re worth with, you know, some sort of upside, some, some equity.

I mean, the entrepreneurs just find a way to get it done right? But an investor, if they show up with that type of attitude, they’re gonna get taken. You know, they’re gonna get slaughtered. So investors show up, an entrepreneur is gonna be like, this is a good deal, unless I can see any reason why it isn’t.

Investors are gonna show up and say, this is a bad deal unless I can prove that it’s a good deal. Right. And so I think starting from a no is powerful. I mean, that, that’s a great lesson I learned. So my first big loss was about a million dollar loss. It was a really painful one. And, and I recognize, you know, it, it, so in my book I did a whole chapter ’cause I, I want people to know like, let me tell you all the mistakes I’ve ever made so you don’t make ’em, and all the lessons learned from this single deal, I call it Murphy’s Laws for the lifestyle investor, right? Anything that can go wrong will go wrong. And so I just geared it towards investing and, and went through, ’cause this deal rattled my cage.

But I should have known better. My attorney literally told me not to do it. He’s like, something doesn’t look right. Something doesn’t smell right. Their legal counsel isn’t good. They actually don’t write clean contracts. They actually don’t even indent, their indentations lead me to believe that this is not a top notch attorney.

So it’s like little things like that. But I got sold on the return. I got sold on 20%. No matter what. Guaranteed return and with a piece of even more depending on how it performs. This company, things worked out for like five or six or seven years, and I was kind of like, Hey, to my attorney, you were wrong on this one.

Everything’s going to plan. Well think it was close to year seven, this thing started falling apart. This company had been legit for, I don’t know, it was 28 to 30 years, and then all of a sudden it became a Ponzi scheme overnight when they took new investor dollars to pay back old investors, right? I had taken so many notes on this deal.

This was really painful for me. This was a lot of money at that time. And it, I mean, we’re just talking about a million dollars gone. And I had all the information because I’m, I take copious notes, I record everything. My goal is that I’m gonna have all the info that’s needed. And so I actually got brought on to work with the feds in this case.

‘Cause it did end up becoming a Ponzi scheme. I did have to go to trial. I had, I was a, a day one witness and it was crazy. It was a crazy experience, but we were able to put this guy away for, I think it was like 27 years or something like that.

Pat Flynn: How do you get through something like that?

Justin Donald: Oh man. Learning to forgive yourself.

Asking for new perspective, being willing to not beat yourself up over it. Finding ways to learn the lessons. I mean, here’s what it is. I got sold on this big juicy return that was too good to be true. I mean, if you ever hear the words guaranteed, all right, you should just run. And even when the signs were there.

Because I didn’t start at a million dollars. I started with 200,000. It went well. I put in another 200,000. It went well. I put in another two and eventually just built up. Right? So it was like over time. But if I went back, I could see some of the issues. I could see some things changing in the marketplace.

I mean, and to their credit, like. Yeah, if the economic season didn’t change, if some of these algorithms for these online businesses didn’t change, if if Facebook and Google didn’t change their algorithms, yeah, this thing would’ve probably just kept on crushing it. But they did change and I was privy to some of that info.

I was privy to the numbers, like I, I mean, I wanted it to work more than I knew it was gonna work, and that’s it. I was hopeful when I should have been calculated.

Pat Flynn: I appreciate you sharing all of that, Justin. Let’s flip to the other side of the story where you have now surplus income and you’ve been able to take care of your family.

You’re buying back your time, like you said. With this additional revenue that you have, where has been your best money been spent? When you say buying back your time, what does, what does that mean? What are you buying exactly, or how is that happening?

Justin Donald: So is your question on best money spent investment wise, or best money spent after investments?

Pat Flynn: Let’s talk about helping your investments become more passive and where you’re investing to do that. But then let’s talk about life and just kind of the fun things you do that you’ve now only been able to do since building your business this way.

Justin Donald: Yeah, so the way I look is I’m looking at systems and then I’m looking at assets that are truly passive.

So if, if you’re not careful and you buy a business and you don’t have a good operator, or you have an operator that fails, you become the operator now. It is no longer passive income, you know? So I think that there are systems that we need to build. If it’s a business, there’s systems we need to build, even to manage things.

So like early days when I had 5, 10, 15, 20 investments, I could do all that myself. We’re at, you know, I think I get around 450 K ones every year. So I have a CFO that, you know, handles all that like a family, CFO. Like I, there’s no way I can do it anymore. There’s no way I even want to do it anymore. We’ve got partners that help us vet a lot of these deals to, to know, should we be doing this? Is this a deal we should bring to our community? Is this a deal that, that I should do solo. Is a deal we should just walk away from. And so kind of upgrading the partners that we’ve had here and the partnerships has been huge. I think understanding the numbers and tracking everything, like I’ve used a lot of AI for this, but I’ve also used people, really smart people.

I hired a, a group that’s a, that basically runs investment reports for family offices, and that’s been really incredible. So now we’re seeing how things are tracking with the proforma. I’ve got another group that I invested with and they built an AI that actually helps you track the proforma. Are you ahead or behind the proforma on all these different deals?

So from the standpoint of like, how am I supporting this? Like what’s the infrastructure? Well, commandment number one in my book is lifestyle first. So how can I invest in a way that enhances my lifestyle and decreases my time spent? Right? That it is truly a passive activity, not something that you can say is passive that requires time. And so I’m very thoughtful about what I’m investing in and who I continue to invest with. So I’m not sure if I’m answering your question as you are asking it.

Pat Flynn: You are, and I think that first principle is, is key. That’s probably why it’s first. I like that frame of thinking. It’s very sort of profit first in approach.

What are we building for? Let’s make that the rule and then reverse engineer from there. How does one assess the lifestyle ability, I guess, of a new opportunity. Do you have filters in place or questions you ask yourself related to opportunities to make sure they’re still in alignment with that or not?

Justin Donald: Yeah, and, and by the way, we’re in a season right now where I just wanna simplify even more. So, you know, we had this lean, simple thing a long time ago, and it has grown in complexity over the years. You know, I’ve been investing for 25, 26 years, something like that. I’ve been very heavy in alternative investments for 15 or 16 years.

And so I’m kind of back to like, Hey, I just wanna simplify again. So we’ve actually been selling things. We’ve had, you know, some, I mean, the, the market’s been great. We’ve been getting some crazy offers on all kinds of different assets that we own. I feel like it’s kind of turning around and coming back because we have way more people reaching out than ever before or since 2021, I guess is probably a better way of saying it. And we’re getting attractive pricing, you know, with a rate cut that is almost inevitable next month. I think you know that that’s positive. So I’m on this mission now, and even though we have team and personnel and infrastructure that can help us manage this behemoth that we have built almost on accident, I still want to do everything to optimize my time with my family. Right? So it’s like when you look at a calendar, I used to be like, yeah, I’m a family man. You know, I’m, I put my family first. And I had a friend really challenge me. He is like, let’s look at your calendar. And I was like, okay. And I showed him and it’s like, it looks like you’re scheduling work and then family kind of fits in.

Was that how I was like, Ooh. It was same group, so it was another guy that was friends with, so Hal and I actually get together once a month with John Roman, Dane Espegard, and Tim Nikoli. All of us are in, you know, front row dad band. And so it was through that process that, you know, someone was like, Hey, I just wanna know if, you know, I, I would like to be your accountability.

And so I just had this realization of like, wow. Yeah, I’m doing better than I was doing, but I’m not doing as well as I thought. And so that’s when I kind of flipped the script and said, Hey, I’m just gonna stop working Mondays and Fridays. I’m gonna work Tuesday to Thursday. That’s gonna be my time. I’m always gonna be home for dinners unless, you know, I have some rare travel experience.

I’m gonna, you know, not do any work on the weekends or in the evenings. And, and I’ve really stuck to those boundaries and, you know, I like playing sports, so I play my sports in the morning. I try to, you know, get my work done in the afternoon and, and it’s a schedule for me that I really enjoy, but it is honoring my family first and planning around them first, and then, you know, my health, my wellness, and then, you know, I plug work in.

So it’s, it’s different, you know, I, I used to plug work first and then fit everything else, and now work is like third or fourth down the priority list.

Pat Flynn: That’s inspirational. I love that. Justin, to go back to an earlier question and to finish up here with regards to the surplus revenue, what kind of things are you investing in for your family and for your lifestyle that have been really life changing for you and your family?

Justin Donald: Yeah. You know, on a technical side of things, if we’re talking surplus income, I’m trying to, my goal here is I’m taking all the single family office information and I’m synthesizing it. And I’m democratizing what these billionaires are doing with their money. And how can I share that inside of our community, whether it be tax strategy, asset allocation, estate planning, all this, right?

And so I have learned this methodology. So when you said surplus income, I just wanted to say this real quick, is a lot of people are like high risk. They invest in these early stage companies. The odds are not good. They don’t realize they’re not good. I joke that it’s you know, if you’re investing in like seed or pre-seed or just early stage, you’re giving a 0% interest free loan for an undetermined period of time and a high risk asset class when you have no clue when you might see that money, right?

And so surplus income was a really cool thing for me because that meant I had enough cashflow to live my life. So everything above and beyond can go, I, I’d spent a life trying to save 20%. Well now I can actually use a hundred percent of the surplus for impact and wealth growth, right? And wealth creation.

And inside of that I’m gonna talk about some of the fun stuff that, you know, we do as a family. And, and for me, it’s all about experiences over stuff. But anytime I do risky stuff, so if I’m gonna do, billionaires generally only put 1% of their net worth in. In early stage angel investments, they put four to 10% in venture.

So it’s a little bit later stage, but still early stage right later than than angel investing. And so. If anytime I’m in that category, I’m using surplus income to make those investments right, and I’m keeping it inside that allocation. All right. Now back to family. We love to travel, we love like doing just impromptu things.

My daughter loves playing sports and she’s super artistic and so, you know, we’ll, we’ll go take trips that maybe fashion design trips and you know, she can learn some cool stuff from where we’re headed. She said that she wanted to do some really fun shopping. She wanted to see like, you know, what, what designer stuff looked like.

So, you know, the summer we went to Nantucket and Martha’s Vineyard and just had a killer time. We spent some time in Newport, Rhode Island, and that was huge. And it’s like we’re supporting like I’m, she has this brain. Like she’s been making clothes since she was six, right? Like she’s very gifted. She has a mannequin, you know, in her little play area that she actually like, makes dresses and stuff.

So it’s cool to be able to go show these things. She plays sports. I don’t miss a game. She plays volleyball. We do some pickleball. She plays soccer. So yeah, I mean, I just want to be a hundred percent there for everything and I want to create epic experiences that my family’s never gonna forget. And sometimes we bring friends with us and, and their families, and I love doing things when I know either, A, they wouldn’t spend the money, B, they couldn’t afford it, or C, they didn’t have access to be able to do that thing, even if they had the money like it, sometimes it’s hard and that’s really how I wanna spend my money. I want there to be impact. I want there to be experiences, and I want it to be relational.

Pat Flynn: Love that very much in alignment with our level of thinking as a family too.

My wife and I, we choose experiences over material for sure. And create those lifelong memories because the time, I don’t know how old your kids are, Justin, but I have a 15-year-old and a 12-year-old, and they’re just getting to that age soon where, you know, we only have.

Justin Donald: You can see it.

Pat Flynn: Just three summers left with my son, six with my daughter.

You know, we’re trying to spend as much time with them as possible. It’s crazy.

Justin Donald: So my daughter’s also 12, and so I’m, I hear you loud and clear on that. Yeah. You know, it’s like you soak it up. We’ve got just a handful of summers left and they get busier and busier and their friend group grows and grows. So it’s like you, you really see every year you’re getting less time.

Pat Flynn: Yeah. And then with the 12-year-old girl, I mean, it’s just. There’s a lot of things happening. Mm-hmm. You know, so trying to make the most of it, but man, this is such a fun conversation. We don’t usually talk about these alternative assets here on the show, so it’s great to be number one, just not just a reminder, but that there might be some opportunities out there that are there and there’s always new ones coming, especially with how fast things are changing. So I appreciate you. Where can we go get the book in case people are interested in diving more into this, Justin?

Justin Donald: Yeah, so I’m glad that we could dive into this and just, you know, extra data for anyone that, that is a data geek like me, the, the billionaires generally have 50% to 60% of their net worth in alternative investments. So I’ve been studying these reports over the last number of years and it just keeps ticking up and over the last 100 years, if you compare the S and P 500 index, which has performed at 9.5%, alternative investments over that same 100 years of performed at 14.5%, 14.5%.

So it’s, you know, what, 60% greater return. So you begin to see why the wealthy really like this asset class, so I’m glad that we could dive into it. I just think it’s fun for people to learn about it. ’cause I think most people don’t even know it exists or don’t even know how to get into it. Don’t even know where to start.

So thanks for, you know, having me on to share. Yeah, you can get my book on Amazon. You can get it at LifestyleInvestor.com. We have all kinds of stuff, you know, courses and I mean, we have free content to programs, masterclasses, masterminds, coursework. For anyone that’s interested, like, Hey, I wanna figure out how to make the next move.

I always say at the end of my podcast, like, what’s one step you can take today to move towards financial freedom and living the life you desire on your terms? Not by default, but by design. And so for anyone that wants to take that step, we generally offer these strategy sessions for, I think it’s like 500 bucks, but anyone in your ecosystem, we’ll just do it for free.

So if they go to LifestyleInvestor.com/consultation, someone on our team will do a, a live one-on-one call with you, or you know, with your spouse as well, if you’d like. And we can help you figure out point A to point B, what’s next for you? How do you get there?

Pat Flynn: That’s incredible. What’s that link? One more time, Justin?

Justin Donald: Yeah.  LifestyleInvestor.com/consultation.

Pat Flynn: Wonderful. Man, thank you so much. This was great. For those of you listening to this now, just know that I’ll also be on Justin’s podcast at some point in the future too. You can probably catch it there if you go there now or maybe in close to now. So go ahead and check out Justin’s podcast and we’ll just continue the conversation ’cause we’re going back to back today.

So this is, this is gonna be a lot of fun. But thank you again, Justin, for your time. Appreciate you and thanks for enlightening us.

Justin Donald: Hey, my pleasure. This is a blast. Thanks, Pat.

Pat Flynn: All right. I hope you enjoyed that interview with Justin Donald. We don’t have many or as many interviews as we did once before, but I wanted to bring on Justin because he’s just talking about a different side of investing and putting your time and energy and effort. And I think that still online business is a great way to get started. It’s very low barrier to entry. Of course, a lot of the stuff that Justin talked about does require some sort of capital upfront, and of course you could get lending and all that kind of stuff. I’m not a financial advisor or professional, so just keep that in mind. This is for entertainment purposes only.

But starting an online business does not require as much capital. It does take a little bit more time, but once you start to get that capital going, you can use a lot of the strategies and the commandments that Justin talked about to have that money work for you even more, right?

They say it takes money to make money. Well, you need to start somewhere. Start with something like an online business. But once you start to get that going and flowing, you can invest it in different places and that’s been working really well. So hope you enjoy this. Thank you so much. I appreciate you.

And make sure you hit subscribe for more SPI content coming your way very soon. Cheers.