Agents Building Cashflow

EP 165: How to Build Legacy Wealth with Dave Wolcott

• Dave Wolcott

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Wealth building visionary and author of The Holistic Wealth Strategy, Dave Wolcott, shares his personal journey from following the conventional financial path to discovering how the ultra-wealthy build legacy wealth. He outlines his five-phase wealth strategy, emphasizing the importance of mindset, financial IQ, asset repositioning, and building multiple passive income streams. 

Dave also provides practical insights into tax-efficient investing and leveraging tools like infinite banking. Tune in to discover actionable steps to achieve financial freedom and legacy wealth!

Key takeaways to listen to:

  • The importance of shifting focus from making money to preserving it.
  • Five phases of building wealth, starting with mindset and clarity of vision.
  • Utilizing advanced strategies like infinite banking to create certainty and tax-efficient wealth.
  • The role of asset repositioning to unlock hidden potential in trapped equity and qualified plans.
  • Exploring exponential thinking and strategy stacking to maximize wealth growth.

About Dave Wolcott

Dave Wolcott is a wealth building visionary who’s journey began with a passion for uncovering the financial strategies that propel the ultra wealthy. He spent most of his life accumulating insights, knowledge, and experience in alternative wealth building from the best investors in the world to provide a blueprint to become ultra wealthy like the top 1%. With over 20 years of deep immersion in alternative assets, seeking out, learning from, and partnering with the top minds in private markets, tax strategy, and multi generational wealth, and practical experience implementing and realizing results, Dave accumulated invaluable insider knowledge that led him to develop the proprietary Pantheon Holistic Wealth Strategy.

This approach combines Dave’s lifetime of ultra high level wealth building insight with a personal mission to empower clients, sharing the strategies and insider knowledge that have long been exclusive to the most affluent investors. Under Dave's leadership, Pantheon Investments has become a beacon for entrepreneurs looking to build wealth beyond the conventional stock market approach, offering a pathway to financial freedom and legacy wealth, all anchored by a mission on values, purpose, and fulfillment in life Dave is also the author of “The Holistic Wealth Strategy”, A Framework for Building Legacy Wealth and Living an Extraordinary Life, and is also the host of the top rated “Wealth Strategy Secrets of the Ultra Wealthy” podcast.

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[00:00:00] Dave Wolcott: What's interesting is everyone is always thinking about making money, but we're not focused on where are we losing money. And then also it's about preserving our wealth as well as creating an infrastructure around our wealth. 

[00:00:16] Intro: If you're a real estate agent earning 200, 000 a year and you want to grow your passive income, this show is for you.

[00:00:24] Intro: Learn secrets other agents use and hear from experts in our field who will guide you on your journey to investing in assets like apartment communities. So you can take your commissions and turn them into cash flow. Here's your host, Randall. Let's dive in. 

[00:00:39] Randal McLeaird: Hey, welcome back. Today's guest is Dave Wolcott.

[00:00:41] Randal McLeaird: He's the founder and CEO of Pantheon Investments. They are like a fund of funds where they will raise capital with their LPs and then they'll find great operators and partner with them and then invest their capital into those deals, whether it's oil and gas, multifamily, real estate. But right now they have like a debt fund or an income fund.

[00:00:59] Randal McLeaird: [00:01:00] And so very interesting strategy. We talk about his book, the holistic wealth strategy, and he has five principles on growing your wealth. And it's a great conversation. I learned a lot. He's definitely knowledgeable and knows what he's talking about. So I think you're going to get a lot out of the show.

[00:01:14] Randal McLeaird: If you would go on, rate and review, it helps us a ton, bring on awesome guests. Really appreciate it. And let's dive into the conversation. All right, Dave, welcome to the show. It's good to have you on. I'm excited for the conversation because. I was reading through your book, The Holistic Wealth Strategy, and I saw that you have a five phase approach to building wealth, and so I wondered if we could start there and kind of talk about that, and what those steps are, and if you could just high level those for the listeners.

[00:01:40] Dave Wolcott: Yeah, absolutely, Randall. First of all, appreciate the opportunity to be here, grateful to connect with you and your audience, and maybe just to provide a little context, right, before we kind of jump into that, you know, uh, just a little bit on my background. I was raised in a middle class family. I was told that the recipe for success was go to school, get good [00:02:00] grades, you know, you're going to get a job, and then that was it, right?

[00:02:03] Dave Wolcott: That was the plan. So I went to college, then had the opportunity to go into the Marine Corps, and served over there for four years. Did some amazing things, and got to learn things they don't teach you anywhere else, things such as teamwork, leadership, and integrity. And then after I transitioned into the tech industry, got into corporate America, started doing that.

[00:02:26] Dave Wolcott: And at the same time, my wife and I started raising a family. So we had an 18 month old running around. And then on October 24th, 2000, we literally had triplets. And quadrupled the size of our family. So I can tell you, Randall, like the first thing that was going through my mind, it was, you know, really crazy was just, you know, man, how am I going to provide for financial security for my family?

[00:02:50] Dave Wolcott: Because the goalposts just got moved way down the field, you know, and. I went to see my financial planner, right, was the first thing that I did, and he just told me the [00:03:00] same thing that everyone else says is, Oh, you can max out your 401k. They have 529 plans for your kids, you know, defer your taxes and all these things.

[00:03:10] Dave Wolcott: And it was right at that moment that I realized, you know what, the wealthy are not building wealth as retail investors in the stock market. There's got to be a better way. So I kind of launched this obsessive journey to figure out how the top 1 percent are really building their wealth. And so I spent 20 years after that investing in, on the real estate side, I invested in raw land, retail, single family, multi family, I even did flipping, land flipping, also invested in oil and gas, and so all kinds of alternative assets over the 20 years.

[00:03:46] Dave Wolcott: And then also figured out some other things along the way, some advanced, I would say, wealth strategies that really people just don't teach anywhere else. So, fast forward to 20 years later. And I wrote the book, The Holistic [00:04:00] Wealth Strategy, to really help other people really kind of have a blueprint or system, if you will, of how to actually build, you know, I would call legacy wealth and think like the ultra wealthy or like family offices do.

[00:04:14] Dave Wolcott: Even if your net worth isn't at a hundred million and it's at four million, you can still think and act this way and actually grow. Much quicker. 

[00:04:22] Randal McLeaird: All right. So can we touch on those then? 

[00:04:25] Dave Wolcott: Yeah. So it's all really underpinned by getting crystal clear clarity on your wealth vision. So what does that actually mean to you?

[00:04:35] Dave Wolcott: And I love to ask the question of people, you know, if you had a billion dollars today, what would you be doing? Where would you be? And who would you be with? And just really having that clarity of what that is, because if you don't have a target, you're You're going to miss every time, right? So getting that vision is really underpinning the entire framework.

[00:04:56] Dave Wolcott: And then phase one, we move into is mindset, [00:05:00] right? I'm sure you've gone to family events or outings and you start talking about real estate and I'm investing in this and what a lot of people say. That sounds risky to me, right? My financial advisor says it's a bad idea. Well, you have to start asking questions for yourself and see if it makes sense.

[00:05:19] Dave Wolcott: Like, does deferring taxes really make sense, right? And I think you need to have the right mindset. You need to be really a lifelong learner. You need to be asking questions. And then you need to start working on goals and habits that really support that vision. So it really all starts with mindset is number one.

[00:05:39] Dave Wolcott: And then the second one is really moving into, I would call really an equation around your wealth, right? That your net worth is actually equal to your relationship capital plus your physical capital. And those things can really help drive your net worth, not [00:06:00] just the amount of money you have in, right?

[00:06:02] Dave Wolcott: So as an example, I was just on another interview with a gentleman who I'd met actually in the early 2000s, who got me into, frankly, into my first, you know, multifamily deal. And this is back in 2000, right, when there weren't all that many. opportunities that were really available, right? So working on things such as relationship capital are super important.

[00:06:26] Dave Wolcott: Also working on physical capital. So I think about your health. Steve Jobs had all the money in the world, but he actually didn't have his health. Right? And so what would he have paid to actually solve his health problems? He would have paid anything, but he couldn't buy one more day. Right? So I think it's really important to have that.

[00:06:46] Dave Wolcott: And then we also talk about your financial IQ. As well. Right. So starting to learn that there are different asset classes, real estate, alternative assets, also different types of strategies. Right. [00:07:00] I think a lot of people think typically in a linear fashion, they're always thinking like, what's the return level on this?

[00:07:06] Dave Wolcott: How can I maybe outperform that? But we try to encourage investors to be thinking about exponential type thinking where you can do strategy stacking and really get real multipliers. Right. So I think improving your financial IQ is really key as well. 

[00:07:23] Randal McLeaird: Awesome. Okay. You mentioned that you have invested across a number of asset classes.

[00:07:28] Randal McLeaird: Before we dive much deeper than this, what's your favorite asset class from the last 20 years of investing? What are you most jazzed up about right now? 

[00:07:36] Dave Wolcott: I guess I would say I don't really have a favorite one, you know, and I think, you know, when it comes to portfolio allocation, so I've had Michael Sonnenfeld on my podcast, who's the founder of Tiger 21, we talked about asset allocation, and we kind of have this model inside of our mastermind that we talk about basically purpose driven asset allocation, right?

[00:07:59] Dave Wolcott: [00:08:00] So oftentimes investors can say, Hey, I went and I invested in this deal because my friend said it was a great deal. Or this one's got a certain IRR or certain cashflow to it. But in reality, people haven't really thought through what is their actual buy box? What is your strike zone based on your goals?

[00:08:19] Dave Wolcott: And again, that vision. So is it a cashflow vision where maybe you want your spouse to be able to stay home with the kids? You know, within the next five years. So it's a cashflow goal and it's a, you've got a date in mind and you're working really hard to that. Or, you know, you might be younger and you have a growth goal, right?

[00:08:39] Dave Wolcott: Like, I mean, we just did a really unique real estate project, which was a build to rent condo building in South Florida. And it's had over a three X multiple in four years, right? But total growth play, no cash flow on it, right? So it kind of depends on the goals and things that you're looking for. We [00:09:00] also love the energy sector because it's got great.

[00:09:03] Dave Wolcott: income to it, but you can also offset active income through the taxes. 100 percent of your investment can offset, um, your W 2 taxes, which is huge for a lot of our high income investors, right? Looking for those kinds of opportunities. So, so I think really understanding your vision and then creating your buy box.

[00:09:26] Dave Wolcott: Is the most important thing an investor can do and then start to look for those opportunities that are then going to fit into it. I'll give you another example as well. We have private credit is another big asset class that we're in. A lot of billionaires have been kind of going after this asset class right now because it's basically alternative lending.

[00:09:47] Dave Wolcott: So we're providing lending or factoring really to small businesses who need capital taking advantage of the banking industry that hasn't, you know, they've got tighter requirements that haven't been able to lend, but we [00:10:00] get really strong double digit returns. That are coming in on this, it's non correlated to the markets, it doesn't have interest rate, risk exposure, um, you're also diversified across 15 different industries, so it's got a really nice, uh, profile to it if you're looking for cash flow.

[00:10:19] Dave Wolcott: And 

[00:10:19] Randal McLeaird: that's like a straight debt fund, income fund that you guys set up? 

[00:10:22] Dave Wolcott: Yeah, it is an income and we do have some, uh, growth associated with it, depending on when you want to take your distributions either quarterly, annually, or at the end of the term, right? And then you have a coinciding return profile that increases the longer your hold 

[00:10:39] Randal McLeaird: is.

[00:10:39] Randal McLeaird: So, how much of your day to day is acting as almost like a financial planner for your clients? And then the other half is going out and actually finding the assets or finding the sponsors to work with. 

[00:10:52] Dave Wolcott: Yeah, it's probably split, Randall, you know, because we are, I really like to think about, I really like to break [00:11:00] down, you know, what wealth even means to people, right?

[00:11:04] Dave Wolcott: And think about the psychology of it. And then as you start to understand the psychology, you can understand what people's needs are, or what's really driving their motivations. Yeah. And again, try to help to create alignment and what their investment strategy might look like, understand their risk profile, you know, and get that alignment in place.

[00:11:24] Dave Wolcott: And then the other half of the time we spend actually creating relationships in the marketplace. We have, I believe, a nice sweet spot with our relationship base, you know, right under the institutional level, but also working with operators that are very seasoned, their institutional quality and nature, but they don't have all of the fees and, you know, The bureaucracy, right?

[00:11:50] Dave Wolcott: That the institutions do. So we're, we spend a lot of time deal sourcing, trying to find great deals and then also educating our investors. 

[00:11:58] Randal McLeaird: How do you find, [00:12:00] I guess, a balance on the inflow of potential limited partners or past partners that you're working with to the number of offerings you have at any given time?

[00:12:09] Randal McLeaird: Are you closing one out before you have another? I'm just always curious about that type of. 

[00:12:14] Dave Wolcott: Yeah, in some cases, in some cases, no, like our private credit fund, for instance, is open for the rest of the year. We just launched that. So we have, we have enough room on that, but it's a constant kind of supply and demand battle in terms of getting access to great opportunities.

[00:12:31] Dave Wolcott: Then having enough. Allocation to be able to support that opportunity. And then do you have the investor demand to actually fit that? And again, it all depends on what investors appetites are and what they're looking for, but we do regular surveys with our investors. So we really keep the pulse of what their needs are, what they're looking for.

[00:12:52] Dave Wolcott: Right now, at this point in time, most of our investors are looking for cashflow. That is the [00:13:00] primary dimension that they're looking for with investment opportunities. And probably some of the reason is, you know, a lot of the real estate has been challenged, as you know, with the interest rates. So a lot of operators have paused some distributions.

[00:13:14] Dave Wolcott: Cashflow might be light there. So finding some alternative options to fill that void, I think is paramount. 

[00:13:21] Randal McLeaird: So with that in mind, you're obviously providing a cashflow vehicle with your Debt fund with the income fund that you guys have. What is that investing in? What is the primary driver of the cashflow that is allowing that to return that type of.

[00:13:36] Dave Wolcott: Yeah. So they're actually merchant cash advances. So it's private credit. It's actually, you know, level up really from debt on the return stack. So, I mean, we're seeing returns from 12 to on the low side, if you're taking the quarterly distributions, you know, up to above in the twenties. On the growth side of it, and what the model is, is [00:14:00] that let's say you have a restaurant owner in your town and he's got two locations.

[00:14:05] Dave Wolcott: They're doing great. They've been in business for nine years, great track record, always full, doing well. Well, they want to expand to the third location. If they go to the bank to get capital, the bank might turn down in the underwriting because he doesn't have a college degree, or the credit rating isn't so great.

[00:14:25] Dave Wolcott: So therefore, we can provide the funding and do underwriting, like, inside of a week. There's a super rigorous process around doing that underwriting. Actually, give him the funding, and then do underwriting. He's able to put that new restaurant in place, and then we actually start taking on the receivables.

[00:14:47] Dave Wolcott: Like, literally, when there's credit card swipes, we're the first to get paid. Principal and interest payments on a daily and weekly basis. So this thing really, the cash flow comes in really quickly, [00:15:00] and the business owner is happy, it's all, you know, similar to real estate where you're looking for hard money lending, it's a little similar, right, to the business side of things, right?

[00:15:09] Dave Wolcott: You're paying a premium for that capital, but now he just put in a whole new revenue source. Which he pays off the loan and now he's got that new income stream. 

[00:15:19] Randal McLeaird: What's the recourse on that? He stands up a third location, location flops. 

[00:15:23] Dave Wolcott: Yeah. Well, this is what's great about this, Randall. I mean, there's higher, a higher risk profile than senior debt, but it's quite low.

[00:15:32] Dave Wolcott: So after the past six years, this platform that we're working with has had an average default rate of only 6%. Right. And we also collateralize the majority of the loans through personal guarantees by the business owners, or if they have equipment, things like that, that we'll always try to look to put collateral in place.

[00:15:56] Dave Wolcott: And then we actually further diversify in [00:16:00] two more layers, which is one, like I mentioned, that We never just say invest all in one sector, like in leisure, you know, we're in hospitality, we're in transportation, we're in retail, we're in restaurants, we're in real estate, right. And all of these different levels.

[00:16:17] Dave Wolcott: And then secondly, we only take just no more than a 5 percent position on any one of these given loans. So, therefore, it really reduces those defaults, right, that could come in or our exposure to that. Yeah. 

[00:16:32] Randal McLeaird: Are you saying UPantheon only takes a 5 percent position on the loans that the operator is, is loaning?

[00:16:38] Randal McLeaird: Okay. That's an interesting business model. When I was learning about funds in general, one of the guys was doing something very similar, just short term loans. Like, I don't know how, how long are those loans typically? Seven months is the average. That's solid. Yeah. Cause then you can turn your capital twice.

[00:16:52] Dave Wolcott: Exactly. You keep turning that capital. And the other thing I think that people don't realize is this industry over [00:17:00] the past 10 years. I mean, it started out of nothing started with zero and it's been growing at a 20 percent annualized rate. Yeah. Right. So. The need for this alternative lending, you know, just continues to accelerate.

[00:17:13] Dave Wolcott: Yeah. 

[00:17:13] Randal McLeaird: Yeah. I see that. Okay. I want to get back, kind of, kind of went down a rabbit hole, wanted to ask you about some fun stuff that you got working, but in general, on the blueprint side of things, the crux of the book is again, so mindset, finding out the mindset is this on the, again, your way of investing in your way of speaking to your potential limited partners and current limited partners.

[00:17:36] Randal McLeaird: It is mindset, let's figure out the equation of where you want to live in this risk reward, what kind of capital you have. Am I understanding that properly? Yeah. So why don't I 

[00:17:45] Dave Wolcott: kind of summarize and we had only gone through the first two phases. So, so phase one was the mindset. First of all, you need to be open minded.

[00:17:52] Dave Wolcott: This isn't for everyone, right? If you're happy with your W2 job and investing in your 401k and your financial [00:18:00] planner, then that's great. Right? But if you're looking to. Really figure out how the ultra wealthy are becoming deca millionaires and centa millionaires. This is a good framework for that. So you have to have the right mindset, right, and constantly be developing that.

[00:18:15] Dave Wolcott: You know, I spend over six figures a year on my mindset, investing in myself. Phase two was building out your financial IQ, your mindset IQ, and your health IQ. And the relationship IQ, right? So getting those all in place. And then in phase three, what's interesting is everyone is always thinking about making money, but we're not focused on where are we losing money.

[00:18:43] Dave Wolcott: And then also it's about preserving our wealth, as well as creating an infrastructure around our wealth. And so what I mean by that is taxes, for instance. Whether you're a business owner or an individual investor, taxes are your number one [00:19:00] biggest expense on your line item. So do you have a proactive tax strategy and a team that you're working on regularly to reduce your taxes?

[00:19:12] Dave Wolcott: You know, I was able to last year, my marginal effective rate was 4%, right? But that wasn't by accident, right? It's because of how I'm conducting things, how I operate my business, how I operate my personal life, right? So trying to reduce your taxes, I think is the biggest opportunity for investors out there, right?

[00:19:31] Dave Wolcott: Because it's your number one biggest expense. There's also something your listeners probably familiar with is the cash value, whole life insurance or infinite banking, which is just such a great way to create certainty in a world of uncertainty, right? By taking some of your capital, positioning it into life insurance.

[00:19:54] Dave Wolcott: And then, like I was talking about before, having this exponential multiplier. Right, [00:20:00] because you put this capital in this vehicle, it compounds tax free, you can give it to your heirs tax free, you can create basically a reverse income stream in retirement that's tax free, because you're taking loans against it.

[00:20:16] Dave Wolcott: It also has asset protection in it, so it's safer than your stocks or your house or things like that. And then the coolest thing is you can actually borrow money against it. So, this is where I keep my rainy day fund, right? Which is, you know, one to three years of operating capital for my family, so I can sleep at night.

[00:20:37] Dave Wolcott: Regardless of what cycle we're in or what can happen, this is the place I store it. And if I don't need it, that's great because it's growing at a 6 percent compounding tax free loan. And I know that even at age 110, my wife is going to be able to get tax free income every month, right? Very simply. It's just going to kind of come off.

[00:20:59] Dave Wolcott: So that's a, [00:21:00] a huge strategy we like to help our clients with. And it works so well with real estate and some of this other investing. Thank you. Because the idea is that, as you have all these multiple passive income streams, take that income, and you know, you might have a grand here, a grand there, we'll dump it all right back into the policy, so now you're adding the velocity to it, now it's growing at 6%, until you get your next tranche for sure.

[00:21:27] Dave Wolcott: 50 grand, 100 grand, whatever it is to go invest into that next opportunity. So, and you're taking over that banking function. And so again, it's a great strategy that a lot of family offices, uh, use. Yeah, 

[00:21:40] Randal McLeaird: I've definitely read about it. We haven't done that, but it's something that's like in the forefront. I want to ask, like who is it good for?

[00:21:47] Randal McLeaird: It can't be good for the new person who's just getting into real estate or doesn't have a good cash to put towards the first premium or where am I wrong? So look, 

[00:21:55] Dave Wolcott: Randall, yeah, I got to tell you, I mean, this is an amazing strategy and I [00:22:00] find that often a lot of times people are missing it at different stages in life.

[00:22:04] Dave Wolcott: But let me give you an example. My oldest daughter is 25. She started a small policy when she was in college, made some money over the summers and was like, where do I put it, you know, in the bank account? No, we're going to set up a policy for you. She put it in the policy. It was growing at just about a 6 percent rate like through college.

[00:22:24] Dave Wolcott: She graduated college. Her and her boyfriend bought a single family house in Knoxville, Tennessee, and they got the down payment for the house. From the policy. So they borrowed against the policy. There's the down payment. They spent about 18 months in the house, house hacking it, renovating it, building it up, built over 100k in equity, and then they actually borrowed from the policy again to go buy their second house, and now they're cash flowing the first house, and then all the cash [00:23:00] flow from that first house goes right back into the policy to recycle it so they can go do it again.

[00:23:05] Dave Wolcott: So 25 years old, I mean, just think about, you know, number one, being able to come up with the down payment, right. And then having that liquidity and flexibility to manage that. 

[00:23:19] Randal McLeaird: So again, break that down a little bit more. Okay. So how much did she start with? And when you're putting money into it. Yeah. On a consistent basis.

[00:23:27] Randal McLeaird: I'm putting a hundred. 

[00:23:28] Dave Wolcott: Hers was 10k. You know, I think you want to maybe the smallest amount, maybe 10k a year, but you can structure these different ways. You could have a liquidity event and fund something right with more of a lump sum up front with paid up additions, or you can do if you've got a longer time horizon, but like my kids, you know, we've set those up with about 10k.

[00:23:51] Dave Wolcott: And then every time you have a liquidity event, you just fund it and then borrow it out again and then go invest in your next deal. 

[00:23:59] Randal McLeaird: I guess what I'm [00:24:00] getting at is how much, how much it's going towards premiums and how much is actually going toward your cash value. 

[00:24:05] Dave Wolcott: Yeah. So typically in these, the premium structure is in the first two to three years is where your cost load is like, could be 25 to 30 percent to actually pay for the insurance.

[00:24:17] Dave Wolcott: And then, you know, hit this breakeven point and then it's all about the future growth. I mean, this is definitely a long term strategic play that you want to have, but the good thing is like, let's say you even did have say a down year in terms of cashflow. You can actually pay the premium with borrowing money from the policy, you know, so there is some flexibility there.

[00:24:41] Randal McLeaird: And then one more thing on this before we move on. You have a, let's say you have 100, 000 available that you can draw as a loan, and you're getting a typical 6 percent rate of return. When you borrow that money, how much is that costing you? Is the rate higher or lower than what you're It's always lower.

[00:24:58] Dave Wolcott: There's always some type of [00:25:00] spread anywhere from like a half point to a point, you know, depending on interest rate environments. But it'll always be lower. 

[00:25:06] Randal McLeaird: So your money, are you borrowing 100, 000 and you're still getting 6 percent on that money? As if it was still in there. Yeah, exactly, exactly. 

[00:25:14] Dave Wolcott: It's uninterrupted the total cash value of the policy.

[00:25:19] Dave Wolcott: Is always uninterrupted, regardless of what you're lending 

[00:25:23] Randal McLeaird: on. Okay, that's where it becomes really powerful. Okay, I got you. 

[00:25:26] Dave Wolcott: Yeah, when you look at the 20, 30 year compounding with tax free, you know, I mean that 6 percent is more like, say 9%, you know, over time. 

[00:25:36] Randal McLeaird: Is it like an IRA where if she sells that asset, then she has to dump all that 100, you said she had 100, 000 equity, does she have to dump that back into the policy for it to stay?

[00:25:45] Dave Wolcott: No. Yeah. No, I mean, that's, that's equity that she earned, right, so, you know, when they sell the house. 

[00:25:52] Randal McLeaird: Okay, really interesting. All right, so we've gone through, I think, three of the five. Preservation of wealth and creating that [00:26:00] infrastructure, are there two more? 

[00:26:02] Dave Wolcott: Yeah, two more. So number four, this is when it starts to get fun, right?

[00:26:06] Dave Wolcott: So number four is asset repositioning. Yeah. And over 90 percent of Americans really have their money in two places. It's in trapped equity in their primary residence, or it's in government sponsored qualified plans like IRAs, 401Ks, and things like that. So, I actually, on the IRA standpoint, 401k, I mean, 10 years ago, I was so bullish on the strategy and the investments and the track record that we were performing, I literally paid the penalty, I paid the taxes, and exited the 401k, and since then I've like tripled the money.

[00:26:45] Dave Wolcott: Right. So, but I think a lot of people like, who would ever even think about that? Yeah. You know, people are like, I'm not gonna pay the penalty. Well, here's what happens in reality, and we actually built this for investors, which is really cool. We built a [00:27:00] calculator. Okay, let's just look at it objectively.

[00:27:03] Dave Wolcott: So, if I take a hundred K from the 401k, I paid 10% penalty, and let's say I pay 35% taxes. So now you have a net investible 55 grand. Okay. And then you put that into, Multifamily assets, whatever you want, but we could assume, let's say a rate of return of 20 percent or you can even model it to what you like, but let's say 20 percent because that's what we've seen with depreciation and tax benefits.

[00:27:35] Dave Wolcott: You know, that amount grows to over two and a half million over 20 years. That same amount, had we left the 100K in the 401K, it would only be about 260 grand at the end of 20 years. And that's also before taxes, fees, and inflation. So, I encourage people to really take a look at the numbers there.[00:28:00] 

[00:28:00] Dave Wolcott: Obviously, it's not for everyone. There's some different risks, but, you know, think about some things like that. Yes, you could do a self directed IRA and get exposure to some of these assets, but taking back control, right, of money that is yours. You know, rather than having the government tell you how much you can take out when you can take it out is really powerful.

[00:28:20] Dave Wolcott: So that's one thing. And then again, if you have equity trapped in your primary residence, look, the rate of return is zero on equity in your house, man. I just talked to an investor the other day. He just purchased a new 2 million house. They paid cash. for the house and they feel great because they don't have a mortgage and they have a great new house.

[00:28:46] Dave Wolcott: But after you model out what we could do with borrowing money from the bank, even at today's rates of six, seven percent, And then investing that somewhere else at 20%, right? I mean, it can do a lot, [00:29:00] not to mention the tax deductions and all those other things. So I think asset repositioning is really key for people to look at their existing portfolio and say, how can I really optimize what I have?

[00:29:12] Dave Wolcott: Because most people have a lot of low hanging fruit. So that's phase number four. 

[00:29:16] Randal McLeaird: Yeah. Just on, on that point and on that strategy, when you talk about, I guess, mindset, again, this goes back to number one. And somebody that pays 2 million cash per house, there's no risk, right? They have zero risk now on that property other than taxes.

[00:29:30] Randal McLeaird: If they go and mortgage that property, now they have increased their risk slightly with that. And then they have a further risk if they don't put that money to work. If they are paying 7 percent on that million dollars, say they do a 50 percent mortgage. And they don't put that money to work. I mean, now they're kind of screwed the pooch, I guess, is that it's like you need to go put that money to work.

[00:29:48] Randal McLeaird: So, 

[00:29:49] Dave Wolcott: well, it's interesting, Randall, because, you know, you just talked about risk, right? And this is the blind spot that he didn't really see. Did he have no risk? [00:30:00] Actually, I would tell you that he completely increased his risk exposure because he's a business owner. And the first thing a creditor is going to do if you get into a lawsuit is they're going to go after your house or any marketable securities that you have.

[00:30:16] Dave Wolcott: Right? Since the house is a hundred, it's all equity in there. They're going to go after that. Now if I'm levered up, let's say 80 percent the bank actually had is taking on that risk, right? So you actually reduce your risk by having the bank hold the note on the house, right? And then the other layer in there, and again, this ties to the exponential thinking is think about all the extra interest mortgage interest deduction that we can get.

[00:30:45] Dave Wolcott: By having a mortgage on it, right, you know, so that's pretty powerful and you can convert that trapped equity into like, let's say we put it into that credit fund, you know, that's lower risk paying 15%, you [00:31:00] arbitrage that and now you're making seven, 8 percent return out of like nothing, right, just by being smarter.

[00:31:06] Randal McLeaird: Yeah, no, it makes sense. Again, you just have to have that money working and put it to work. Yeah. Otherwise it's, it's kind of a waste. Okay. So that's for asset repositioning and taking advantage of trapped equity. What's number five? 

[00:31:18] Dave Wolcott: Yeah. And the last one is all about building massive passive income. So what we want to do is be looking for these different assets.

[00:31:26] Dave Wolcott: We talked about building your own strike zone and what really looks good for you from an investment thesis standpoint. What type of assets do you want to be in that are creating multiple passive income streams so you don't have too much dependency. You know, in any given asset class, in any given asset, you know, you've got diversity between different operators, different markets, different return profiles, right?

[00:31:51] Dave Wolcott: And then again, all things that are supporting your vision statement. 

[00:31:55] Randal McLeaird: Okay, I'm going to do a quick, like, strategy session with you then. [00:32:00] So, you have somebody who comes to you and they say, Look, I'm looking for a balance between tax, cash flow, and wealth generation over the next 5 to 10 years. I've got half a million dollars to put towards something.

[00:32:13] Randal McLeaird: Like, what are your recommendations for someone in that, and maybe you have to get a little bit deeper, but just on a high level, like, what's your knee jerk? 

[00:32:21] Dave Wolcott: Just overall, yeah, just high level things I would think about. So one thing, I would set up the cash value whole life insurance policy, right, because that's, I could take some of that money, deploy that into that, build that asset, create that certainty, and again, then I can borrow against it, you know, at a future time.

[00:32:40] Dave Wolcott: The other thing that's really important with that is, I mean, how many times, let's say we have a liquidity event, or you, I just sold my business and now I have 500K. Well, like you had, you kind of have this money burning a hole in your pocket type of mentality. Right. But, you know, you need to be a prudent investor and strike when the timing is [00:33:00] right.

[00:33:00] Dave Wolcott: So if you immediately put it to work where you have control over it, then you can say, I could take 500 K and I can stretch it out for the next five years and say, Hey, I'm going to deploy a hundred K a year right into different assets as I find opportunities, right? So it gives you some flexibility. So that would be definitely one option.

[00:33:20] Dave Wolcott: One thing that I would put in place for sure. I would also look at again, depending on your income. We really like the energy sector. We have an oil and gas opportunity that's coming out here shortly. It's return of capital within the first three to five years, very strong institutional quality. Oil and gas is non correlated to the markets.

[00:33:44] Dave Wolcott: You're hedging inflation and you have exposure to a commodity that I don't care where you work in the world, what industry you're in, where you live, but the need and the demand for energy just keeps growing, right? So we'd like to have some exposure there. I [00:34:00] would look at definitely look at cashflow as well.

[00:34:02] Dave Wolcott: Any kind of cashflow opportunities like the private credit that we're in are great. Real estate, of course, is awesome, right? If you can get that three dimensional return profile, where you can reduce your taxes, you can get some cash flow, and you can get some upside growth, right? That's really the trifecta, but it's been harder, obviously, in this market, you know, to identify great deals, so.

[00:34:26] Dave Wolcott: Yeah. Yeah, I 

[00:34:26] Randal McLeaird: was going to ask you about the, um, just in general, I was looking at some of the opportunities you guys have and some of the assets together and have you guys shifted away from multifamily in general and more focused on maybe storage or any, um, specifically real estate, I would say, or are you guys out of real estate?

[00:34:42] Dave Wolcott: Yeah, we probably see a dozen. Multifamily deals like a week. I mean, we get a lot of deal flow coming across our desk and we've said no to everything because we still think assets are overvalued right now. You know, generally speaking, it's really all about the debt, but I think there's some unique [00:35:00] opportunities.

[00:35:00] Dave Wolcott: Like I had talked about earlier that one we did in South Florida, we partnered with a developer and a family office. To build this build to rent condominium building that's really unique product, really unique market dynamics where you have a lot of buyers coming from Central and South America that want to invest in the U.

[00:35:23] Dave Wolcott: S. and cash, you know, put their cash buyers and put their capital in the U. S. right? Because it's more stable. So, I mean, that makes a lot of sense, right? So we're always looking for a unique kind of opportunities there in the real estate space. So, yeah, I mean, I wouldn't say we're definitely real estate is a core focus, but it's all about finding the right operators and the right deals.

[00:35:47] Dave Wolcott: Yeah, for 

[00:35:47] Randal McLeaird: sure. For sure. You mentioned when we first started going about, you spend a decent chunk of money on your mindset, and I think it's important. And so, I'd be very curious to [00:36:00] know what you think is worth spending your money on. Programs or. What you do in order to make sure that your mindset is in the right place for you and your investment.

[00:36:09] Randal McLeaird: Yeah. 

[00:36:09] Dave Wolcott: So great question. And this is how I would really articulate this, Randall, is that your number one asset is you. And I've always gotten at least a 10 X or a hundred X return when I invest in myself. So when I invest in my health, when I invest in my relationships, when I let invest in my mindset, right, is all really critical.

[00:36:33] Dave Wolcott: So I'm a member of some very high level entrepreneurial groups, coaching groups, relationship capital kind of, you know, mastermind groups as well. But I also, you know, what's interesting as well is, you know, if you make the investment for one of these things, don't show up and expect, Hey, when am I going to get my ROI?

[00:36:55] Dave Wolcott: When am I going to make money back? I would pose that you actually show [00:37:00] up and say, how much can I give to this community? How much can I help other people? Because when you can make that shift and start helping other people, it's like the famous quote from Zig Ziglar, right? If you help enough people get what they want, you'll get what you want.

[00:37:18] Dave Wolcott: So show up and be an active member, participate in these communities. We have a mastermind community and I've just seen some explosive growth from people and how they think about things now, the relationships that they've created, the strategies that they've learned, the connections that they've made, you know, which are all really invaluable.

[00:37:41] Dave Wolcott: So 

[00:37:41] Randal McLeaird: for sure. Well, I think that's a great spot to leave it on because Very well said. And yeah, invest in yourself. I agree with you. You're going to get a lot more out of it than you put into as far as dollar value goes. So again, Dave, I appreciate you jumping on. I'm going to share all your contact information in the show notes.

[00:37:57] Randal McLeaird: If you're looking for an investment, I highly recommend you [00:38:00] jump on and take a look at some of the offerings that you guys have. And reach out to Dave and his team if you guys are looking for that. 

[00:38:06] Dave Wolcott: Yeah, I'd also be happy, Randall, if anyone's interested in learning more about the Holistic Wealth Strategy, you can get a free copy of the book if you go to holisticwealthstrategy.

[00:38:17] Dave Wolcott: com. 

[00:38:17] Randal McLeaird: Perfect. I appreciate that. All right, guys, we'll catch you on the next episode. Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could obtain financial freedom and become work optional? If you want to stay up to date, the best way is to make sure you're subscribed.

[00:38:33] Randal McLeaird: So if you haven't done that, go ahead and do it now. We'll catch you on the next episode

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Randal McLeaird

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Dave Wolcott

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