How to Get “Unstuck” in Real Estate

David:
This is the BiggerPockets Podcast show, 8 29. These pillars are the three things that I recognize if I can succeed in each of these three, how well I keep the money I’ve made, how much money I can make, and then how well I invest it. Wealth just happens much like if you get your diet right and your workouts right. Physical fitness will just happen. What’s going on everyone? It’s David Greene, your host of the biggest, the baddest, and the best real estate podcast in the world, the BiggerPockets Podcast. Every week, we are bringing you the stories, how-to’s and answers that you need to make smart decisions in today’s ever-changing real estate market-

Rob:
You know what, David? Listen. Let me jump in here. Let me do the intro. You take a seat, you always do the intros. I just want to pop in here and say, listen, I’m really excited about today’s episode because I’m getting to dive into your mind. So we’re taking the interviewing pressures off of you turning them back to me, and I’m excited specifically because if you are at home listening to this and you’re struggling and you’re spinning your wheels and you’re not getting anywhere, you’re going to get a ton of value from today’s episode. One thing that I will let you do, David, before we get to the episode is today’s quick tip, what you got, pal?

David:
Thank you for that. Thank you for that, Rob. If people have ever struggled with shame for feeling like they’re not making the progress that they want in real estate and their wealth building journey, this show is going to hit you right in the feels. This is going to be aloe vera for your shame burn, but before we get into it, today’s quick tip is simple tracking gives you power.

Rob:
Speaking of power, quick tip number two, the long anticipated book by our friend David Greene here, Pillars of Wealth is coming out soon. So you’re going to want to pre-order that book because when you do, you’re going to get a ton of extra content and goodies that are going to set you up for some solid wealth building. So if you want to get your hands on a copy and pre-order everything, and if you want to find out everything there is to offer, head on over to biggerpockets.com/pillars. I’m not used to, this is such an honor to be interviewing my hero.

David:
No, you’re just stalling because you’re nervous to have to be the guy that reads to start.

Rob:
No, I’m excited. I’m excited. David Greene, welcome to the show.

David:
Thank you. Thank you. It’s an honor to be here, longtime listener. Not quite first time caller, but I’m a big BiggerPockets fan. I’m glad to be on.

Rob:
Well, listen, this is a full circle moment for you because I’ve learned so much about real estate from you and it’s really cool to be interviewing you right now. So I understand that you have a new book coming out, but before we get into that, I want to set the stage for folks at home. If you’re listening, it’s because we know that you’re a real estate investor and oftentimes with guests, we always focus on the investing part of their journey, the part that they’ve already become very successful at. But often I know it feels that we skip over all the things that they did before they started investing. So today we’re going to lay the foundation on everything that it takes to build wealth.

David:
Back in the day with baby Dave, when I still had hair, I weighed about 150 pounds. Things were a lot different. I started off working in a sandwich shop called Togo’s, and then I got a job at a restaurant and I was a busboy, and I eventually made my way up to waiter and I would track the money that I made working in that restaurant every single night. Now, I was doing that because to me it was insane how much money I was making busing tables. So I would look at the dollar per hour I was making, back then minimum wage was probably like 5.50 or something an hour, and I got this job at a restaurant and I left with 30 bucks, six servers all tip me $5, and I was like, this is doubling the money that I probably made for my six-hour shift. This is crazy. I got paid for twice as many hours just because I got tips and none of the other busboys even thought it was a big deal. Something clicked. I immediately started thinking, “How do I get more of these?”
“Well, I’d have to be a waiter. How do I get promoted? A waiter?” And I went to my boss and I asked some questions about what I would need to do to be promoted, and that was sort of the beginning of as I started to figure out you are in control of your destiny when it comes to work. But I also realized that the other people I worked with were spending the money just as fast as they need it. It’s easy come, easy go. Anyone that worked in restaurants, they understand how that is. So I would come home every day and I would write out a little piece of paper, $35, $40, $20 to track how much money that I made.

Rob:
Wow, okay. From the get-go, were you just stashing that away? Did you splurge ever? Did you ever treat yourself or was it sort of one of those instantaneous things where you realized you were the one that was writing your paycheck? And so did that just motivate you even more?

David:
Well, I was working a lot and I say working, let’s be honest here, working in a restaurant’s, not like climbing down into a coal mine-

Rob:
Unless the restaurant is in the coal mine.

David:
Yeah, I suppose that’s possible.

Rob:
And that’s a very niche group of people, but they might be listening,

David:
But I would say I was sacrificing my time to be there. It’s not climbing into a sulfurous mountain and carrying around rocks, like some of the people in China have to do, but it’s definitely somewhere you don’t want to be. You’d rather be somewhere else. And I looked at it like, if I have to give up my time to be in this place to make money, does it make any sense to go spend that $35 that I just made on a dinner that I’ve lost? Effectively, you’re sacrificing six hours of your life for a dinner that lasted for 45 minutes or maybe an hour, and you have nothing to show for it. Soon as the toilet is flushed, it’s gone. And my brain saw connection between if I’m making a sacrifice, I want to make it worth it. Saving became the vehicle to do that.

Rob:
That’s got to be so hard in that industry because it is such a social industry where waiters went out pretty much after every shift, maybe for a drink or two, whatever. Did you not really have a social life at the restaurant where you pretty much turned off from the social component of kind of waiting?

David:
No. I think my friends became the people I worked with. There was a group of us that were all kind of young guys and we had gone to different high schools in the same city. We’re all the same age. So I would go to work, you’d work a six, seven, maybe eight hour shift at a restaurant. I’d get off, I’d go to the gym, I’d work out. I had my gym buddies, I had guys I played ball with. You have ways that you can have a social life that don’t have to involve going to a bar, going to a lounge, going to a club.

Rob:
Well, awesome man. Well, I am super excited. I can’t wait to talk more about this book. The title of your book is Pillars of Wealth: How to Make Save and Invest Your Money To Achieve Financial Freedom. You’re probably like, “I know I wrote it,” but for those at home, if you’re listening, by the end of this episode, you’ll learn three very important things. You’re going to learn what to track to put yourself on track for financial freedom. You’re going to learn how to know when you’re ready for the next level of wealth building and what most people get wrong about investing. So first off, this book is called Pillars. What are pillars?

David:
Great question. So I’ve really simplified the process of building wealth and achieving financial freedom. What we talk about on this show is the third pillar that’s going to be investing. The pillars are defense, offense and investing. Everyone that’s been listening to you and I teach on the BiggerPockets Podcast, we focused on this third pillar. How do I buy assets that will appreciate, that will make me money, cashflow, equity, tax savings, all of these different things we talk about. But what doesn’t get discussed is the other two that really need to be brought into place for the third one to be possible. And that’s the ability to save the money that you make and the art, the skill of making money. I think a lot of people look at those who make money and say, “Oh, they were born into a rich family, or they got a better degree than I got. It’s just not in the cards for me.” They don’t realize that just like physical fitness, there is a science that can be applied that will lead to you earning more money.

Rob:
Basically, if I’m hearing you correctly, it’s like we tell people how to go and invest, but in order to invest conceptually speaking, you do need money to do so.

David:
And we always leave this part out or we tell them a way around the two pillars. So well, you can invest with other people’s money and we call it OPM, and then we make it a course that we teach people how to use OPM or we tell them, “Hey, here’s no and low money down strategies,” and we sort of create this entire world where it looks like this is just as viable as making and saving money and investing it, and they are possible. They are much more difficult to do. You and I have seen the people that have scaled portfolios, that have built big portfolios, the majority of them did it by earning money, saving money and investing that money at least until they got some momentum and they got good at real estate investing, and then they sort of got good with their mouthpiece. They could talk to people. They built a network, they built resources. They find these opportunities that don’t require their own money, but they don’t start off like that hardly ever.

Rob:
Sure, yeah. The old-fashioned way, they earn money, they save it, they invest it. So getting into this a little bit more, tell us why pillars are so important.

David:
If you don’t have a blueprint of knowing what to do, you’re not going to get a good result. And I’ll add on that and say most people get their content about how to build wealth or invest in real estate, that can become synonymous for most people from online content. It’s free. So you’re never going to get the full picture when you’re listening to a YouTube video, a TikTok video, an Instagram Reel, you’re going to get something that makes you watch it. The people creating the content are trying to get eyeballs. They’re trying to get subscribers, they’re trying to get clicks. They’re not trying to teach you how to build wealth in a way that is sustainable, and frankly, it’s not their job to, they’re not being rewarded for teaching that.
If I use a fitness analogy here, there’s a lot of people that want to be fit, but if you’re only shown a 30 second Reel on Instagram of a person saying, “This squat is better than that squat,” it’s entertaining. It catches your attention. You walk away feeling like you learned something, but is that actually going to be what gets you fit? And Rob, I could throw this back to you. You’ve been on a nice little fitness journey. You and Tony Robinson have sort of taken upon this challenge, and what I’ve noticed is that you eat very specific foods at specific times. You do very specific workouts, and then you have to wake up early in the morning to make this happen. Would you agree with this?

Rob:
Yeah. Right. Unfortunately, I do.

David:
So what you’re eating is something that you have to get right. If you want to be fit, you could do really good workouts and you might get stronger, but you’re not going to look healthy. You’re still going to be carrying around a lot of extra weight or you could get your diet. But if you’re not actually exercising in the gym and building muscle and burning calories, you are going to be healthier, but not your healthiest. You’re not going to be physically wealthy or physically fit. So these pillars are the three things that I recognize if I can succeed in each of these three, how well I keep the money I’ve made, how much money I can make, and then how well I invest it, wealth just happens. Much like if you get your diet right and your workouts right, physical fitness will just happen.

Rob:
And I know one of the things that you really get into in the book is tracking, right? The idea of tracking. It’s not just doing these things, but there is an actual component to having it on paper and having a system to actually measure success, results, routines, and everything like that. So getting into that topic a little bit, before you track anything, you’ve obviously got to figure out where you’re starting from. How can someone be honest with themselves about their starting point?

David:
Well, before you figure out how to become wealthy, you have to know what you’re measuring when you measure wealth. And in this book I detail three main things that I think we can simplify wealth into. The first is your net worth. This is how much all of your assets are worth minus your liabilities. It’s one way to track wealth. The next is cashflow. This is how much money you make every month compared to how much money you spend. And then the third is your quality of life because you can have a business that you hate that takes up all your time, and you work 18-hour days, you have a good net worth and you have cashflow, but you never get to enjoy it or you earn it in a way that you hate. You and I are lucky that we get to earn our living doing something we love. We love real estate, we love educating people. We love trying to figure out this puzzle of real estate. If I had to be making my living in something that I hated, I wouldn’t consider that to be wealthy.

Rob:
That wouldn’t be a very good quality of your life, right? You’re making money but you hate it.

David:
Exactly.

Rob:
Okay, so what I want to do is I want to run through what people should be tracking during each phase/pillar so that people can start doing this themselves today. And let’s get started with the first one. You talk about defense in savings. What were you tracking during your defense stage?

David:
So I have this philosophy that every dollar you make is yours to keep, and there’s a world of people that are trying to take it from you. This is just the way that I looked at the world. I recognize when I started trying to save money, how hard it was. I started to see commercials on TV that would make me want something that I didn’t want before I saw the commercial. I would have friends that would say, “Hey, we’re going to go somewhere,” and I’d feel that urge where I want to go to, but I would think, “Well, if I go on this trip, not only am I spending the money for the hotel, the plane, the food’s going to be more expensive when we’re there, but I also don’t make money for four or five days while we’re on this trip.”
They were thinking is, “Hey, it’s going to be $800 to take this trip,” but if we made a hundred dollars a night and you miss five nights, it would actually be $1,300 to take that trip. And if you compound that, if you invested $1,300 over 30 years, 40 years, that’s an insane amount of money that you’re actually giving up, especially when you’re young. So as I became disciplined and where my money was going, I recognized how many things were trying to take it from me. And The Richest Man in Babylon, great book, I referenced it a lot in pillars, sort of details this same thing that if you are not disciplined with having a plan for where your money’s going to go, you will spend it on other things. Most people that I come across, they don’t start saving money until they have a goal. It’s not so someone wants to buy a house. They’re like, “Oh, my gosh, takes money to buy a house. I now have to start saving.” But they don’t know where to start. They don’t have a blueprint like this of knowing what to do.
So what I would do is I would come home every night from the restaurant, like I mentioned, write down on a piece of paper how much money I made and then I made it a game. I have to save a minimum of $500 a week, which means if I want to go buy something, I can’t if I’m not going to put that money in the bank. And then that moves into the second pillar where I would have to pick up more shifts or work a better job or work more hours or whatever it was to make up the difference. But it was creating a challenge for myself that I have to save a certain amount of money that caused me to start tracking every dollar and really put these good defensive principles in place in my life.

Rob:
Now obviously people have to do this in a way that… I mean there has to be different ways to do this, right? Because the idea of writing it on a piece of paper seems can be a bit archaic. Are you an advocate of people sort of tracking however they see fit? Are you very rigid on someone’s tracking process? What are your thoughts there?

David:
I’m not rigid on what you spend your money on. I’m rigid on the fact that you spent it on something you planned to spend it on. I don’t like people making emotional decisions to spend money on a whim. So in Spartan League, we have our members actually come up with a budget. This is how much I will allocate towards these different things in life. There’s a spreadsheet and then they fill it out. Now, if you want to go spend your money eating out or getting extra guac on your Chipotle, like someone that I know might want to do, there’s nothing wrong with that. If you have made the conscious choice that I will spend this much money on food, I’ll spend this much money on entertainment, whatever it is.
And then we use apps like Mint or Rocket Money to measure where the money’s going, to make sure that it actually lines up with what we decided we were going to do on the spreadsheet. And this is important because if you’re not tracking something, you won’t be successful with it. That’s one of the things when you started on your fitness journey, Rob, I know you started tracking how much you’re eating, what you’re eating, when you’re eating, and what your workouts are. Very rarely is somebody really fit if they aren’t tracking what they do, at least until they can establish these habits that start with tracking and then tracking becomes less important.

Rob:
Very true. When I see a buff dude walk around, I just want to be like, “Hey, how many grams of protein do you eat every day?” Because I know that guy’s tracking it and I’m just curious.

David:
That’s exactly right. Yeah.

Rob:
I think it’s like when you see other people are tracking, it kind of keeps you accountable a little bit, if you know other people are tracking too. My wife and I, we very much track effectively every single meal and I measure my sleep and a lot of different things, but it’s a good routine. It is building that muscle. So however anyone is tracking at home for you, David, it’s an envelope with your tips and it was a notepad, but for other people at home, it might be something very simple like the Mint mobile app. There are so many budgeting apps out there. Is there anything that comes to mind from your coworkers at the restaurant in your early days that you saw them spending money on that you were like, “Man, this is crazy. I can’t believe someone would ever spend money on this.”

David:
That’s really funny. I was probably 19 years old. We were closing down the kitchen. I got promoted to waiter before they did, even though I started working after them because… And this will move into the second pillar of ways you can get promotions and raises, but I was asking my boss every day, “Hey, what do I need to do to be a waiter?” And they were just showing up every day waiting for the promotion that they thought they were entitled to. So there was a little bit of jealousy I would say, amongst that group of people that had worked there before me. A lot of them trained me in how to be a busboy. So they were giving me a hard time about how I would stay late and work all the time, or I never wanted to go out and spend money like they did.
And as they were razzing me a little bit, I remember saying, “Hey, how much do you guys spend every day between the going out to eat, the alcohol you drink every night and the weeds you’re smoking?” And one of them kind was like, “Well, I spent about this much on a weeded a week. I spend this much on alcohol because I go out this many times,” and food we had to kind of figure out together. It came out to be what I just thought was a wild number of how much money they were spending on just those things. Not their car payment, not their rent, not their big bills. It ended up being 15 grand a year.

Rob:
Wow.

David:
And I did this little… In my head I was like, “Okay, we’re all in college. We’re all freshmen in college. That’s going to be $60,000 when you graduate college that will be gone.” And remember, this is like 2003 money, that’s even more than it is today. And I just thought, it doesn’t seem like a lot of money when you’re just spending it in the week, especially when they would think, why could it make more? I’ll pick up another shift. I’ll make a hundred bucks and I’m good. But over a course of time, that becomes really big. And if you think about what $60,000 can do if you invested in real estate that’s 20% down on a $300,000 house, that $300,000 house becomes worth $400,000 after five years or six years. Now that’s $160,000 that you could have had over just four years. And something clicked where I realized what appeared to be small little decisions, they actually amplify into massive ones when you compound them over time.

Rob:
So give us an idea, what is mastery of this first pillar, the defense, the saving pillar? What does mastery of this look like?

David:
So the example I give in the book is most of us are in a river and we’re floating with the current that we don’t recognize because our eyes are closed and our eyes are closed because we are not tracking where our money goes. We don’t think about it. We use a credit card, we have a rough idea of how much we wake, but most people listening to this have zero idea where their money is actually going. When you’re in a river and your eyes are closed, you don’t feel the current, you don’t know where you’re going. It’s taking you backwards and you don’t realize it. When you open your eyes, that’s when you start tracking. You realize, “Oh, my gosh, all my money is disappearing. I’m getting nowhere. This is why I’m not making any progress on my goals. I’m listening to podcasts, I’m watching YouTube, but I haven’t bought any real estate,” because your money is disappearing.

Rob:
Yeah, yeah.

David:
When you put your foot down in the riverbed and you say, “I’m not going to move in this direction, I’m not going to spend the money.” That is when you feel the pressure of the current that’s been there all along. You don’t realize the temptation and the emotions and the feelings that cause you to spend until you make up your mind, you’re not going to spend and the tool that you need is discipline. You have to track where your money’s going and be disciplined to stick with it. Just like I’m sure there’s times that you want to get the burrito instead of the burrito bowl, and you got to tell yourself no, because it doesn’t match with your macros. The same happens when spending so mastery with defense is a combination of knowing where your money is going, where you made a conscious choice that you were good spending money with it, and then having the discipline to stick with it until it becomes a habit.

Rob:
Awesome. Okay. That is a very great encapsulation of what mastery for that pillar means. Let’s get into the second pillar here, which is the offense earning side of it. What are you tracking here?

David:
Yeah, this is all about how much money you can make and can you make more this month than you did last month? So when I started in my journey, I was a waiter and I would realize, “Hey, there’s things I can do that will make me more money.” Because I was tracking how much I actually actually made. I was looking at it every night. I made this much money. Patterns started to emerge. If I can get that section in the restaurant, it’s got the five tops, the four tops, the bigger tables. If I get this one, there’s only two people that sit down. Well, you notice when only two people come, they don’t eat an appetizer. They’re not going to order a full bottle of wine. The bills would be way smaller.
The minute I got to four people sitting down, well now they can split a couple appetizers and they’ll order a bottle of wine or two. The whole dynamic changes when you get a group of people, they’ll spend way more money. So the question became, how do I get to that position and I would just ask my boss, “I want that section. What do I need to do to get there?” “Well, you got to put your time in. You got to help.” “Okay, how can I speed that up?” “Well, if you could work on weekends, that would help a lot. I have a hard time getting people to work weekends.” “Great. I’ll work every Saturday and Sunday as long as you give me that section. Tell me what success looks like.” “Well, I want the customers to be happy.”
The restaurant, would track the average cost per person of the people that came in. So I realized I got to have the highest… One of my customers basically had to spend more per person than all the other waiters because that was a metric I could show my boss. I realized that in restaurants, you sort of get sat one table, then the next person, then the next person, there’s a rotation. Well, at the end of the night, they stopped seating all the servers except for one called the closer, and I realized if I’m the closer every night, I could take a normal night, which might be five tables, and I could get another four or five just from closing. I was way busier. I had to stay later. I had to make some sacrifices, but I could double my money just from closing.
Now if I’m doubling my number of tables and I’m getting the better section and I’m working more nights in the week while other people are taking them off, my income could more than double from the other waiters at the exact same job at what’s not considered to be a wealth building opportunity, waiting tables while you’re in college and applying that successfully eventually led to me graduating college with my school paid off, my car, completely paid for and a hundred thousand dollars in the bank.

Rob:
Wow. Dang. From college you had a hundred thousand dollars?

David:
And zero debt. Yeah, I walked out of college with that money and I didn’t have this crazy job. I wasn’t working at a day trading company or doing Bitcoin or anything. It was just the blue collar stuff. But I learned these principles, these patterns that led to success making money. And then when I got out of the restaurant industry, I became a police officer and the only way you make more money there is overtime. So I started to learn what do I need to do to get the sergeants to call me first whenever there’s an overtime shift? How do I get them to like me so that they want me the one to be the one that comes to work? I put speed dial on my phone so that when dispatch said, “Hey, we have an overtime shift coming up,” that phone was already ringing and I was going to be the one saying I’ll take it. You started to realize there were patterns that you could do to earn more money. That was the only way to earn more money when I was a police officer.
Then when I became a real estate agent, it was the same thing. How do you get more listings? How do you get higher priced homes? It wasn’t just how many homes can you sell? Which ones do you want to sell? Who are the buyers that are going to actually close on the deal and who are the ones that are going to talk to you all day long and get a free education and not close? There were patterns that I picked up in each of these industries, and what I learned was I would have to change David if I wanted to make more money. I couldn’t just look for the job that paid more, I had to become what that job demanded in order to get these opportunities.

Rob:
I understand that part of it, but help me understand what are you actually tracking in that side of it. We know the earning side, we got to put in more time. What are those tangible items that you were actually tracking? Because in the first pillar you were actually writing down pen to paper, these are my tips. I’m tracking those. I’m actually looking at how much money I’m making. We move into earning, how are you tracking the actual earning side of it?

David:
When I was a cop, I would have a key performance indicator. My KPI was hours worked. So I would say, “All right, I have to work a minimum of this many hours, and if I do that, this is how much money I can make above what my normal paycheck would be.” And I could literally double or even almost triple it by just working a lot of overtime because overtime gets paid at time and a half or sometimes more than that in addition to your regular shifts. So at one of the jobs I had, we would get paid double time if we work like seven days a week. So my Saturday and Sunday were normally days off. If I worked a 20-hour shift on each of those days, that was getting paid 40 hours a day, which was 80 hours over a weekend, that’s a full two weeks pay-

Rob:
Man, that’s wild.

David:
… that I could make in one weekend. So I would track that. And then the game becomes how do you find a way to safely do that? What do you have to give up in order to do it? How do you have to combine your shifts together? It was kind of a logistical headache, so you don’t want to do it forever, but for me, that was a sprint and I had the goal of investing that money in the third pillar, so that’s what I was tracking. When I became a real estate agent, I was tracking how many houses I closed and my total sales volume as well as making sure your expenses stay low. It’s very easy when money starts rolling into business to just start throwing it out the door.
This is what I see when I partner with someone who’s younger than me or someone becomes successful because we start a business together on enterprise and money starts rolling in. They spend it just as fast as they make it. That’s why I advise you need that defensive pillar to be locked down before you start making the money. But we train our students to track every month how much money they made and was it more than last month. And then the question becomes, what would I need to do differently? Do I need a new job? Do I need to be in a new industry? Do I need a side hustle? Is there overtime opportunities? Should I start a business while I’m working my job and start building up the success of that business so that the income of the business grows every month as well?

Rob:
Right. So you’re tracking things like hours, your KPI is the shifts that you work for the police force outside of your full-time job. And then obviously we’ve got the effort, how much effort you’re putting in relative to the quality of life that you’re getting. So DG, how do you actually keep tabs on those things and how often? Is it something that you were going in looking at whatever tracking system you had every single hour, every single day? Give us a snapshot of what that would entail for you.

David:
So when I was a cop, I would look at my paycheck and it would show how many hours I worked, how many normal hours of straight time, and then how many hours of overtime, and I could see time and a half versus double time and how it worked out. When I was a real estate agent, I would have a profit and loss statement that I would look at every month. This is how much money the company earned this month versus what it earned the last month, and it doesn’t really matter what you make, it matters what you keep. So the minute you start tracking it, Rob, here’s what’s crazy, your brain starts looking for ways to make it better. If I took this many listings versus this many buyers, I made this much more money. If I got a listing, I could usually get another listing out of it because the neighbors would see my sign and I would go talk to them and I could get another one. Or if I got a listing, I could hold an open house and I could get two to three buyers out of that.
So it became pretty clear tracking listings would lead to more money than just tracking the buyers. You started to see where everyone’s opportunity is individually, and that’s what I’m saying. Not everyone listening to this is doing the same thing. Some of them work in a 1099 position, some of them have a W2 job, some of them have a side hustle, some of them are house flippers. Everyone listening to this has a different way they make money, but mastery in the second pillar really comes down to adapting yourself to be what the market wants. The chapters in that are about leadership, it’s about taking more responsibility. It’s about looking for ways that you can pitch in and help the company and not just saying, “Well, that’s not my job. I don’t want to do it.” It’s about the pursuit of excellence.
Are you really trying to be good at what you do? You and I are in this podcast position, we talk frequently every week. How do we make this show better? How do we bring more value to people? How do we be better than the other podcasts that are out there? That is the pursuit of excellence. You’re looking at your YouTube videos, you’re looking at your social media and saying, “How do I make this better? How do I make this better?” And your stuff gets better and better as you go. I talk about the winning mindset. This is how winners think. I have a video that I’m going to be posting on my Instagram that talks about how losers tend to look and say, “Well, it could have been worse.” “Well, at least I showed up for work.” “Well, at least I have a job.” The winners say, “How could I be better?” “How could I have brought more value?” Those little things, when people start making adjustments, they will see that their income starts to improve.

Rob:
That’s a good snapshot of the mastery component of pillar number two. Now, I actually want to get into what… We’ve covered the foundations here. That’s the saving, the earning, but I do want to get into the stuff that I know everyone’s waiting for. It’s going to be this third pillar, which is investing. Again, let’s start with what to look at in the investing side of it. Can you talk about some of the ways that you track the actual real estate and the investing side of your operations?

David:
Yeah. I have a spreadsheet with all the properties I own and I track the things that I mentioned before, the net worth, the cash flow and the quality of life. So this spreadsheet shows what a property’s worth right now, how much I owe on it, what the interest rate is. And then another one will track how much that property made that month and how much that property cost me that month. It’s the same principles that I was describing with my personal budget that I apply to my portfolio. And then the third thing I look at is which of these properties are causing me a headache? Which of these are decreasing my quality of life and is the juice worth the squeeze?
What I find is that some of my nicer properties in better areas that are more expensive, they can cause a headache, but the juice is worth the squeeze. Their equity grows every single year. The cashflow goes up more than it did the year before versus some of the stuff I bought at the beginning of my career that was lower price, not as good of an area. It caps out. The equity’s not growing, the cash flow’s not growing, and the headache is still there, becomes very obvious those are properties I need to sell and 1031, that energy into something that’s going to grow more. Other people see the spreadsheet and they think it’s brilliant. They’re like, “I can’t believe you did this.” To me, it was obvious because I started tracking my tips on a piece of paper, and then I started tracking my profit and loss statements with the company. It becomes natural when you learn these fundamentals.

Rob:
Are there anything that stand out that you think that real estate investors should be tracking outside of the actual P and L?

David:
They should be tracking how much a property is improving in value. It doesn’t get talked about. We always focus on cashflow, and a profit and loss statement typically will only show the cashflow, and it’s important. I’m not saying it’s not important.

Rob:
We do like to make money in this industry.

David:
Yes, but we only look at making money through cashflow. If you look at how much money you make through equity growth over a 10-year period of time, it dwarfs whatever you made in cashflow. So that’s where my philosophy came, that cashflow is a defensive metric. It keeps you owning the property. You don’t go into foreclosure, but you don’t make a ton of money like you do from equity growth. And once you start tracking your real estate, these patterns will start to emerge. You really should be looking at which properties went up the most and which properties had the most rent increases because appreciation affects more than just the value. It does affect the revenue as well.

Rob:
Sure, sure. Well, you did mention that you track the quality of life right aspect of this. That’s not something obviously you put on a spreadsheet, but is there a tangible way that you track that. Not quality of life, but I guess sort of like the headache factor of it. You’ve got these properties that they’re not appreciating, they’re not making as much cashflow, they’re huge headaches. Is there a tangible way to say, “Man, the headaches that I’m getting from this property, I’m tracking it. I don’t like what I’m seeing, I’m going to get rid of it.”

David:
The thing with fitness is you only have so much energy and have so many calories you can burn in the gym. You can’t do it all day, but with business you can. If you stay focused on dollar productive activities all day long, you’ll make a lot more money. So when you’re tracking your quality of life as you’re looking at that spreadsheet that shows all your properties and you’re seeing it’s not making money or it’s barely making money, or it’s only making money because I’m self-managing.
There’s some people that bought a short-term rental, they paid too much, they didn’t buy in the right area, and they’re like, “Yeah, my ROI is 11%, which looks good,” but what they’re not telling you is that’s 40 hours a week of work to get that. And if they put that same 40 hours a week into a job, they would make way more than they make on the short-term rental. It doesn’t get discussed on the YouTube video or the Instagram Reel. When you’re looking at quality of life within your portfolio. If you’re asking yourself, how do I stay doing nothing but dollar productive activities? How do I stay in the gym metaphorically all day long? Certain properties start to become very clear that they’re not worth your time of having, and if they have equity, it’s a pretty easy answer that you should sell it and move that into something that will either take less of your time, be more enjoyable or have an upside that’s worth it.

Rob:
Yeah, we’re trying to track a lot more these days. We track year over year revenue. Now I’ve got some cleaners that are actually tracking the photographs of the home post clean, so it’s timestamped photos, and this has actually been pretty big for us because not only are we tracking that, but it’s like when a guest says they didn’t break something, we can send them a photo of the cleaners that just were in the day before and say, “Hey, here’s what the room looked like yesterday.” So tracking really has a lot of implications. It gives you a snapshot of your business, but it also I think provides a little bit of accountability when not only you’re tracking things, but you actually have your team tracking things as well and reporting those things back to you.
That’s sort of what we’re trying to incorporate now. It’s like we don’t want to just let things sort of accumulate like our reviews without reading them. We now read through them and we say, “All right, hey, we’ve seen this same thing happen three or four times. Where’s the accountability here? Whose job is it to address this one thing?” So I think that to really start excelling in this investing pillar, especially when you start building out the team, is actually having individual tracking, I guess, for different team members in their role, reporting it back to you. And that’s to me, we’re starting to see so many more efficiencies because when it’s all out in the ether and it’s not really written down on paper and you don’t have a system in place, how can you really track your business? You can’t, it feels like.

David:
You don’t, and accountability is the keyword that you said. I was just talking to one of my business partners last night and they were upset because they realized that we haven’t been closing the leads that we have been getting… Our agents haven’t been closing them. And I said, “Well, you’re supposed to be meeting with them every week. How did you not know until several months went by we weren’t closing leads?” And they said, “Yeah, I stopped meeting with them. I just trusted that they were doing their job.” I was like, “That’s the problem is we all want to…” The first thing we throw out is accountability, which is what tracking does. It’s like yeast. If you don’t have yeast in the bread, it’s not going to rise. It doesn’t matter how incredible your business is, how incredible your bread is. Without yeast, without accountability, it doesn’t turn into anything, and this shouldn’t surprise us because the principle applies to everything in life.
You can really only grow as fast as you can provide people in your business to hold others accountability. That is another success principle that you’re describing here. And imagine, Rob, how many people are listening to this that are reading the books? They’re making their calls, they’re going to the meetups, they are following the podcast, they’re doing everything they’re supposed to do, but they’re not tracking any of the metrics that you and I look at. They’re just spinning their wheels. They’re going to spend 10 years consuming content and not making any progress because they don’t know what they’re supposed to be focusing on developing mastery.

Rob:
Yeah, yeah. I mean, it happens all the time. Honestly, most of the stuff that I start tracking comes as a result of hearing what other people that are more successful than me are tracking and they say, “Oh, yeah, I track this and this and this.” I’m like, “You do?” It’s so simple. I’m like, “Oh, I guess I need to track that.” And when I start tracking that, I’m like, “Whoa, there’s a huge discrepancy here in the system as a result of having been so loosey goosey with it.” So it really is what legitimizes your business is the tracking component of it. So this is the last pillar. It seems like it’s always an evolving thing to track the investing side of your business. Can you even master this? Is it possible for someone to master this or is it just something that you always have to grow and evolve in?

David:
Well, you can measure the money that you’ve invested, how much has it grown? Not just from cashflow, which is typically we only measure the ROI. This is where I think we get it wrong, Rob. We look at a property and we analyze it and we say, “It’s going to earn me a 7% return on my investment.” And we say, “Okay, that’s good enough. I’ll buy it.” But then we don’t continue to track because the rents tend to go up and the mortgage usually stays the same if it’s a fixed rate mortgage, but the equity also goes up. It’s not a one dimensional investment like it looked like when you were analyzing it to buy, it becomes a three-dimensional investment you made or lost money based on equity going up or down.
A lot of the investments I buy, I add units to them. I call that forcing cash flow. So when I bought it made me this much money, but now that I’ve added units to it, I’ve added square footage to it, it’s making me more. Are we measuring how much the property is making me in relation to the equity it has return on equity, or are we only looking at the return on the investment? If your properties are performing well, they’re steadily going up in value, the rents are steadily increasing. You’ve added units to them to increase even more revenues. Now you have two or three units that have increasing rent instead of just one.
You can start to see how mastery in that third pillar is developed. You’re making sure that the energy that you’ve invested through the medium of money is growing, or if it’s not growing. Sometimes we’ll do retreats and people are bringing their portfolio and they’ll say, “Here’s my portfolio.” And they’ve got this beautiful spreadsheet that tracks everything well and their properties are not going up in value and they’re barely cash flowing if that, but they say, “I’ve got 12 doors, I’ve got 18 doors.” They’re measuring the wrong metric. They’re not looking at if the money is actually growing.

Rob:
That gives us a pretty good idea, I think, of the tracking of each of the pillars. But now that we know what to track, what do you think most people are actually failing to track? Is there something that you always see… And what are some of the pitfalls of each pillar when you’re really going all in on the idea of tracking?

David:
Well, first off, real estate education in general has become terrible at telling people to focus on acquiring cashflow. We will tell people, “Hey, if you get X amount of units, you’ll have X amount of cashflow and then you can quit your job. You can buy a Ferrari.” It’s like if you do a really good job being disciplined, you can make really stupid financial decisions as a result. Would you ever tell someone if you get to where you can work out for two hours a day for five days a week, you can go eat an entire cake? It’s foolish when we look at it outside the realm of real estate investing, but it’s normalized in our industry. I think that it’s much wiser to be teaching people, let’s figure out where your money is going.
Most people are failing to track where their money is going in the first place they treat money like a money tree. If I can just earn more of it, I can spend more of it, but you don’t get anywhere that way. Knowing where your dollars are going, how much of it is going into real estate and how well it’s performing. We are woefully bad at, like I just mentioned. We’re not even tracking how much your total net worth is growing, how much a properties value is growing. We’re just usually focusing simply on cashflow. I also think people are failing to track the effort that they put in every day in their job. Now, I know that this is a novel concept, but I talk about how everyone should go to work and they should have the attitude of, it’s the last day of tryouts and I don’t want to get cut.
We can all, every one of us can control the effort that we put into our job, and I think a lot of the time we clock in and we clock out and we say, “I did my job,” and we pat ourselves on the back, but we don’t ask ourself if we tried our hardest. I come from a sports background, I played basketball. You can be on the court for the whole game, but that doesn’t mean that you contributed the same way. The idea was to play a perfect game. How hard can I work? How many turnovers can I cause the offense to have? How many guys can I get open even when I don’t have the ball in my hand? There was a ton of things that I could do in basketball, setting screens, blocking off the defenders so other guys could get to the rim, making the pass, [inaudible 00:41:24] defenders to get other people open.
There was always something you could do. Even just running a fast break so that the defender has to pay attention to you and the guy with the ball can get to the rim easier because you’re distracting the defense. Do we take that attitude into our jobs? Can we all say that at the job we have, we are giving every single amount of effort we possibly have and looking for ways to be a better employee? Or do we take the attitude of, “Well, I’ll try harder when the coach gives me more playing time. Well, when you give me the ball, then I’ll try.”
I think that’s a disease that a lot of people have fallen into, and it’s this wealth entitlement idea that I’m supposed to be wealthy, and if it’s not coming to me, I’m not going to try hard. We hear a lot about this idea of imposter syndrome. I think what that really is your subconscious telling you if you got that promotion that you say you want, if you got that business opportunity that you say you’ve been waiting for, you know would fail because you’re not even crushing it with what you’re doing. We all want to be jacked. Okay, but Rob, if I went and put 500 pounds on the bench press bar, it said, “Here you go, this is what jacked people do.” Would that benefit you right now?

Rob:
No. It would crush my sternum.

David:
That’s exactly right. It’d break your rib cage. It would be the worst thing ever. If we gave a business to someone and said, “Hey, you now own 40 short-term rentals, you are going to flip a hundred houses a year.” It would crush them. They would lose all their money. They don’t have the skills required to do it. You only get to bench press 500 pounds by adding weight on and pushing yourself at every single workout. This is common sense at everything in life except for our industry.

Rob:
That’s interesting. So let me ask you this. As you level up, how do you make sure that you’re maintaining strength in the previous pillars?

David:
Well, for one, you have habits that develop after tracking. So let’s say that you stay on your diet for four years. At a certain point, you don’t need to track your macros because that’s all you eat. It’s not a lot of effort to meal prep. Once you’ve done it for years like it was in the beginning, you find efficiencies. You have the same food delivered. You know what you’re going to eat. Your body starts telling you it’s time to eat right now, and if you eat at the wrong time, it feels wrong. That’s not the case when you’re starting, that’s when tracking is so popular.
I don’t have to track every single dollar I’m making now because I have these habits in place where it feels wrong to spend money on dumb things. My habits are guiding me through this. The same with offense. I look to make more money, but when I get a new opportunity, it’s not this really anxiety riddled, how am I going to succeed here? I’ve done it so many times. It’s a predictable pattern. I know if I want to be better at jujitsu, if I want to lose weight, if I want to start another company, I’ve done it lots of times. I know how to do it again.

Rob:
So it’s almost like it becomes muscle memory at a certain point where you do work so hard to establish these habits and to track and everything, and then occasionally you might deviate a little bit and when you deviate, it does feel wrong. So honestly, it’s like more… It feels like it’s muscle memory. Is that sort of how you would describe this?

David:
Yeah, that’s a wonderful way of putting it. That’s a pattern of how life works out. The first time you work out, you’re super sore, but if we were that sore every time, nobody would do it. Your body adapts to it. It stops being sore, workout stops sucking when you’ve done them for a while, you actually start to crave the workout. It becomes something you want to do. Tracking, accountability, focusing on the pillars, it becomes easy and even fun once you’ve done it for a significant period of time.

Rob:
Well, that’s awesome. So before we wrap up, can you just give us one big mistake that people are making with regards to their wealth building? I know this is something you’ve come across. I know this is something you’ve consulted people on. What’s some of those common ones? If it’s not one in particular, but give us a quick one here and then we’ll close out the show.

David:
They’re not putting their best effort into the opportunity they have right now, and they’re telling themselves that I’ll try harder when it happens. You can’t have that attitude. You can’t think, “I’m going to work really hard to get someone to marry me and once I’m married, I’m going to stop and I’m going to chill and it’s going to be a passive relationship.” “I’m going to work really hard to get fit, and once I’m fit, I’m going to eat whatever I want and stop working out.” I’m going to have passive fitness. It’s a ridiculous thought, but it gets taught like that works in business. I’m going to build a big business, or I’m going to build a portfolio. I’m never going to look at it. It’s going to be passive income. It could be passiver, like we were just saying it’s less work. Once you’ve got good eating habits to stay fit, it’s less work.
Once you’re good at working out, you’ve done it for a while, but it’s never passive. You’re still going to have to maintain it. People have this ridiculous idea that they’re going to just buy some properties and it’s going to turn into money, and then they think there’s something wrong with them. They don’t understand that that’s not how the world works. If you stop paying attention to things, they fall apart. Or like I said earlier, they’re not giving their best effort. If you’re going to the gym every day and your goal is to leave without touching the weights, you’re a fool. I would say if you have a W2 job and you don’t like it, but you’re not working really, really hard to get better at it, you haven’t earned the right to get to the next position in life where you can make more money.
I remember this principle revealed itself to me very obviously. When I was on a hike with someone, it was like 105 degrees, very hot day. We’re hiking up a hill and this person’s complaining about how hot it is. “Oh, I’m so hot.” They just keep telling me how hot, and then they start moving at a snails pace. “It’s so hot, Rob. Oh, I just can’t do it.” And they’re crawling, and I was like, “Then let’s walk faster to get out of the sun so you could feel better.” You’re doing the most counterproductive thing you could when you’re in a situation you hate to say, “Well, I’m going to work less.” “I don’t like my job, so I’m going to try less.” “I’m really overweight and I am winded just getting out of bed, so I don’t want to go to the gym because it’s hard.”
If you don’t like where you’re at, the only way you get out of it is by working super hard, developing competence and eventually mastery, and then getting a job that you like more because you have the right skills. Everybody, if they take that approach… They may not all become multimillionaires, but they will definitely become financially secure. You could pay off a house and live without a mortgage. You could get all your credit card debt paid off, and you can have a really healthy amount of money saved up. You can house hack a house every year with 5% down. There are so many wealth building options that are available if we take that approach.

Rob:
Then let me ask you this. What would you recommend to someone listening at home right now who feels like they’re stuck or they’re waiting on the next thing?

David:
Stop watching the influencers like you and I that can lift 500 pounds of financial weight. Don’t worry about that. It would crush you. Ask yourself how many times a week you’re going to the gym and are you working out as hard as you possibly can? Are you maximizing the opportunities you have now? Are you looking for ways to build skills, to build talent, to improve your value at the position you have right now? Because if you’re not, you don’t want more weight, you don’t want more responsibility, you don’t want more wealth building opportunities, it’s going to crush you. Start building what you’ve got and you’ll build the skills and the opportunities will make themselves clear. Rob, you and I know this man. We have businesses and we’re looking for talented people all the time. Are you out there saying, “You know what? This person’s lazy. They don’t give a good effort. They’re not putting their most into life, but if I give them a job, I bet you they’ll step up and they’ll crush it for me.”

Rob:
Yeah, usually not.

David:
Usually it doesn’t work out. I spent five to six years making that mistake with hiring. What I’ve found is the people that are going to work good for me are already working good where they are, and they stand out. When I go to the restaurant, the waitress who’s kicking butt, who’s taking care of everyone else’s tables, who’s doing more than her job, if I hire her, she’s going to work like that for me. When you come across someone in the industry and they’re really good at what they do, you’re like, “I would hire that person for this new business opportunity.” There are financial opportunities everywhere because successful people need other hard workers and other talented people to help them grow. You got to make yourself look like one of those people to get those opportunities.

Rob:
Oh, man. That is awesome, man. That is good parting advice for everybody at home. So to recap our three pillars, we’ve got saving/defense. Not only how much money are you able to keep, but effectively how can you cut some of those expenses? How much of the money can you keep? Because the more you spend, the less you keep. We got pillar number two, which is the offense, the earning. Once you’ve got a really dialed approach to saving your money and stocking it, stocking it away, putting it in an envelope if it’s David Greene. How can I actually increase the amount of money that I’m making? What side hustles can I take on? How much more can I work? What double shifts can I pick up, and then how can I do that in a way that it doesn’t terribly affect the quality of my life? And then we’ve got number three, which is actually investing. Now that we’ve saved the money, we’re earning more, how can we deploy it in a way that will help us build wealth? Did I get that correct?

David:
Great job. It’s so simple.

Rob:
I’ve been listening adamantly for the past hour. I was like, I’m watching in masterclass. It’s hard to interject here because you’re bringing such good knowledge, but I think I got it, man. I’m ready to be wealthy.

David:
Yeah, stop looking for the way around the wealth building principles. Stop saying, “What’s the strategy when I have no credit, no savings, no skills, no work ethic, no girlfriend, no dog. I have nothing. How can I invest in real estate?” For a tiny percentage of people, that can be a good idea. My advice would be, “Well, let’s work on why your credit’s bad. Let’s work on why you don’t have any money. Let’s work on why your boss doesn’t like you.” Instead of saying, “Oh, my boss is a jerk. He wants me to be at work at nine o’clock every morning.” That’s just not me. Let’s fix those problems. Let’s build the foundation that you need to be able to handle the wealth when it comes and it will come your way.

Rob:
Awesome, man. So for people that want to find out more about you on the internet, they want to pre-order your book, can you give us a little bit of info, upcoming dates, all that good stuff?

David:
Yeah. I’m really trying to build a tidal wave, a huge community around this concept. I think it’s what American needs, and I think it’s what our listeners need. I think a lot of them have the skills, the brain, the knowledge to make it in the world of real estate investing that they don’t have the habits that are right. So you can get the book at biggerpockets.com/pillars, and please do. You can learn about me at davidgreene24.com or spartanleague.com, and you can find me online @DavidGreen24. If you like this content, if it resonates with you, but you feel like you just don’t know where to get started, or you need some accountability, you need some mentorship or some guidance, please do reach out. And please, as you’re listening to future episodes where you hear other people sharing their stories of how they built wealth, ask yourself, who would I need to become to do what that person did not? Not, how can I just find a way to get the results they have?

Rob:
Awesome. Well, you can find me over at Raw Built on YouTube and on Instagram, and of course, if you guys are looking for some really, really great content, we actually have an amazing episode that we’re about to release with David Lecko on off-market deals. So be on the lookout for that specific podcast, it’s coming out soon. David, close us out.

David:
This is David Greene for Rob, asking me the right questions like Barbara Walters Abba solo. Signing off.