In this episode of the Invest Like A Billionaire podcast, join co-hosts Jim Maffuccio and Ben Fraser as they sit down with returning guest Justin Donald, author of The Lifestyle Investor. Justin has been named the “Investment World’s New Warren Buffett”. Explore Justin’s remarkable journey from business owner to lifestyle investor, gaining invaluable insights into low-risk investments, time management, and achieving financial freedom. Justin breaks down his own personal investment portfolio, how he creates “invisible deals”, and where he is currently allocating funds. Tune in to hear Justin Donald’s expert advice.

Connect with Justin Donald on LinkedIn ⁠https://www.linkedin.com/in/justinwdonald/⁠

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Connect with Ben Fraser on LinkedIn ⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.linkedin.com/in/benwfraser/⁠⁠⁠⁠

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Transcription

Ben Fraser: Hello, Future Billionaires! Welcome back to another episode of the Invest Like a Billionaire podcast. We’ve got a really fun episode for you today. We’ve got a returning guest, Justin Donald. You may know him as the lifestyle investor. We had him on the show a few months ago talking about his book, the Lifestyle Investor, and really the concepts that he’s created allows him to live this very financially free lifestyle while having a lot of success investing.

So he runs a lot of different communities and masterminds. Helping teach people how to invest better. One of the cool things about his story is that he’s really been able to grow his net worth primarily through investing really well, instead of having a big exit from a business where a lot of people come into wealth that way.

But he’s really grown it by compounding his wealth over time. And so we wanted to bring him back on the show and take a different approach and actually use our passive investors spotlight series kind of framework to talk through some of the ways that he looks at his own portfolio and his own risk reward.

Frameworks and how he finds deals and how he structures deals. He calls ’em invisible deals, and so it’s really cool what he shared on this episode. He even shared that some of the things he talked about, he’s not shared on other podcasts before, so he really goes into the nitty gritty.

Definitely don’t wanna miss this episode. A lot of great mags to pull from it. Hope you enjoy This is the Invest like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you’ll learn from this podcast will make you a better investor and help you build legacy wealth.

Join us as we dive into the world of alternative investments. Uncover strategies of the ultra wealthy, discuss economics and interview successful 

Justin Donald: investors

Ben Fraser: looking for passive investments done for you. With Aspen funds, we help accredited investors that are looking for higher yields and diversification from the stock market. As a passive investor, we do all the work for you, making sure your money is working hard for you and alternative investments. In fact, our team invests alongside you in every deal, so our interests are aligned.

We focus on macro driven alternative investments, so your portfolio is best positioned for this economic environment. Get started and download your free economic report today. Welcome back to another episode of the Invest Like a Billionaire podcast. Today we have a returning guest that we’re very excited about.

One of our favorite episodes that we’ve done before was an interview with Justin Donald, the lifestyle investor. We have him back for another conversation. Justin, how’s it going? 

Justin Donald: Good. Great to be on the show again. Good to hang, as always. We just got a chance to hang out, Ben, Jim good to see you again.

That’s right. That’s right. Always love chatting business with you. 

Ben Fraser: Yeah, it was fun. We got together just a few weeks ago and thought, Hey, it’d be fun to have you back on. It took a diff different angle. So we, in the last episode just talked about your story about your brand called The Lifestyle Investor.

You’ve been called the Warren Buffet, a lifestyle investing which is a great tagline to get and really describe what is lifestyle investing? How do you achieve it? What does that mean? Very cool episodes. So go back and listen to that if you have not yet. But we want to take a different angle today.

One of our favorite segments we do on the show is called Our Passive Investor Spotlight, where we dig into a little bit more of the nuance of, how do you view public versus private? What kind of alternatives do you invest in? What do you think about, from an allocation standpoint, how do you build your cash flow, stacking and income versus growth.

All these kinds of questions that get a little more practical and more specific. Who better to ask than the lifetime investor himself. So we thought it’d be fun to bring it back on and dig a little bit more into it. So are you up for this, 

Justin Donald: Justin? I’m up for it. This is like my favorite thing to talk about.

So we can go in any direction you want. I can geek out on you with very specific stuff. I can give a general overview, but I love talking about this, so yeah. I’m ready to rock. 

Ben Fraser: Okay, this, this’ll be fun. So let’s definitely air toward the kind of geek side of things. ’cause that’s where it’s most fun, I think.

But just again, for those that don’t aren’t familiar with you, I listen to another episode. Just give us the quick background and your story and your journey into this world of lifestyle investing and what that means to you. 

Justin Donald: I just wanted to get to a point where I owned my time again.

I felt at different seasons of life I’ve been more or less in control of my time and how my time’s being spent, how I’m earning income if I’m earning income based on time. And at a certain point I just wanted to buy my time back. I felt like I moved on, maybe.

A sole proprietor type of life to more of like the business owns me type of life. So it was more reactionary than proactive. And I felt like I was just putting out fires or moving from thing to thing, and I just wanted to get to the point where I was choosing how I spent my time. So that’s where this whole idea of lifestyle investor came into fruition, is that I wanted to buy my time back.

I wanted to, not that I wanted to sit around on a beach and drink, pina coladas. But I wanted to work on the things that I was passionate about on a schedule that I was passionate about, and maybe some weeks it’s a lot of hours and maybe some weeks it’s no hours or it’s a few hours, but I just wanted to have a lot more autonomy than I had.

And so I started buying assets that produced income. And that income eventually grew to exceed our lifestyle. First it was our bare minimum survival expenses, and then it was our lifestyle expense, and then it replaced my earned income. And then it got into this place of surplus where I had extra.

It can either go towards building an even cooler, more extravagant life, or it can go towards investing more into building wealth for the future. And I always opt to. I feel like I got a pretty fun life and so I just opted to reinvest all the surplus into other things.

So once I had my time, I got really clear on where I was passionate and. How I wanted to use that time and that’s where the lifestyle investor brand really blossomed. And I started teaching people how to buy assets and sharing deal flow that I’m doing and negotiating preferred terms and the mastermind and the book and the podcast all kind of blossomed from there.

Hey, let me ask 

Jim Maffuccio: you a question. So when you were just starting, acquiring this income producing assets, I’m assuming you had a regular quote, regular job, right? You had the okay for reading your bio and whatnot. So the person who’s out there that’s, maybe a professional, a high, a high salary professional, but they’re thinking in order to acquire enough assets to actually replace my income, that can seem like a long haul.

And so my question is, Did you fund that strictly from surplus of the income you were earning? Or did you start syndicating or using other people’s money in the process? Or was it a combination? How can a person that right now is feeling I’d love to do that, but man, that would take me 30 years and I’m already 45, 

Justin Donald: Address that.

Yeah, Jim, it is a super important question and I think that those are. Very high income earning individuals, whether they’re business owners or they’re in corporate America, like that is the toughest spot to be in because you’ve got the golden handcuffs, you’ve got a lifestyle that you’re accustomed to.

If you leave it without replacing it, then life does certainly change. So for me I was a high income earning professional. I worked my way up, but what I realized is that I didn’t have to replace it in one fail swoop. So I never raised money from other people. That is one way to do it, and I think it’s a great way to do it if you have the bandwidth for it, and if you want to develop the network for it.

I know a ton of people that have done it, and it’s probably a way that you can get to where you want to go a lot faster. I did not do that. I funded everything with my own dollars and I worked pretty hard to aggressively save and aggressively invest in the deals that I did. But the thing to keep in mind is that you don’t have to replace everything.

It starts off simple. Maybe it’s replacing some utilities, then car payments, then mortgage and eventually you’re building up. And again, let’s get to survival income. You can make a total pivot if you have your bare minimum survival expenses on a monthly basis, covered, right? Mortgage, utilities, car payments, groceries, whatever else comes along with it, so you don’t have to fully replace everything.

I. But if you can handle it, if you can swing it, you can keep your day job a bit longer and have that fund more of the investments. And again, you can raise money, you can do deals, you can do bigger deals. If you bring more people in depending on where you sit, maybe you saved a lot of money and you can do it all yourself.

So I think either direction works great. There’s pros and cons to either side of the fence there. I just think about getting a start at some point. Is really well worth it. And even if it takes a few years, I think it’s still going to be worth it when you get there. Yeah. I 

Ben Fraser: love both of those things You said, like so much of it, it feels like it’s this big far off goal, but you can take it into a little bite-sized chunk.

It’s to replace your first utility bill right on a monthly basis and just get that snowball rolling. The faster you do that, the faster the snowball goes and it compounds and builds up this. This momentum. The other thing I think is, correct me if I’m wrong, but I believe in reading your bio, talking before you, you’ve done all this without a big exit of a business, right?

A lot of people build a business and then they can sell it. They have a big liquidity event and they have all of a sudden $10 million that they can now deploy. But you’ve been able to do this kind of thing step by step over time. Build up this kind of snowball just from excess. And is that accurate?

Justin Donald: That’s accurate, yeah. I still to this day haven’t had a substantial, business exit. I just had my first seven figure exit, but I was a minority partner in that exit. So my exit was not seven figures. But the cumulative exit was up until the point that I had financial freedom, I had no exit.

So there was no significant windfall in cash. Everything was literally a step-by-step progression to cover my survival income and then my lifestyle income and then beyond. So what was the 

Ben Fraser: timeframe from that first passive income check, right? That you got from your investing in assets to achieving what you call the excess, the be able to fund the lifestyle.

Justin Donald: What was the kind of timeframe between that and if you don’t mind?

Jim Maffuccio: When you go through that, mention what kind of asset. I know that changes, but what assets initially did you, poke the fork 

Justin Donald: into? Yeah, I got into mobile home park investing at first. Really it, it at first wasn’t something I was interested in.

I had a friend that was gonna do it and started learning about it in single family homes and was like, Man, this is a lot of work. A lot more than I signed up for. The margins aren’t there. The overhead, the capital expenditures, the management, it is a nightmare. And so he ended up selling, I think eight or nine or 10 single family homes and then going into buying his first mobile home park.

And I got to watch him firsthand and it was a smooth transition. It did not seem hard to manage. And he’s, I was like a hard money lender. At the beginning and transitioned into being the, an owner myself just buying the deeded property. And so in one failed Swoop one park, I replaced my wife’s income.

She was a teacher at that time. And she didn’t have to work. We had our daughter shortly thereafter. And, she could be a stay at home mom. And it was a really good situation. So that one, I went to a bootcamp to learn how to do it. Within months of that bootcamp, I found an owner that was willing to sell or finance it with a 15% down payment.

Then I bought another park from him. In a matter of months from the time that I started learning about it, I had an acquisition and within months of that, I had another one. And really in one failed swoop, my wife’s income was replaced. And then with that second one, our survival income was replaced.

And really it was like a back-to-back transaction that all ended up happening inside of a single deal. So I almost closed on one, found out about another one, added that to the contract over the due diligence period. And so yeah, really we went to survival income immediately.

Ben Fraser: Do you have a decent nest egg built up at that point to be able to invest? Or are you just able to use creative financing and other structures to kinda maximize the dollars that you had? 

Justin Donald: Yeah, I’d been saving up for a while for that first purchase. I didn’t know where it was gonna come from as I was saving.

So this was a substantial amount of what I had saved. It may have been close to everything. The first one was 75,000 technically 65,000, and then 75,000. So I ended up doing that at the same time, and that was almost all of my money I had saved at that point in time.

I think that is accessible. 

Jim Maffuccio: What you just went through there, that, that is super key to our listeners and our watchers because a lot of people were thinking, and what I was feeling, and I, I’ve been there in the past, but the. Man, if I buy a house every year or two years, yeah, I could see down the road where tenants are paying off the mortgage.

But again, I’m, that’s great if you’re 20, there’s guys like me out there. I started over from scratch at 55. I was broke. Buying a house a year wouldn’t have done it for me. Yep. So you got smart. You saw the real estate was the play, but where’s a niche to stick the fork in And then you did, you used leverage, but smart leverage.

And that’s what enabled you to get there. And that’s why people actually need coaches and mentors like yourself that have programs and courses where you can help people get there, faster. Nothing wrong with the slow steady train, but again, the older you get the more you know, the closer we are to the, the end of the ride.

And we wanna, we wanna get there, we wanna get there to have that passive cash flow as, as quick as possible without taking undue risks. Appreciate that. Your secret sauce there, I think was the mobile home parks and with seller financing just turbocharges that old, that whole process.

Justin Donald: So that’s great. Yeah, and it’s multiple units, so it’s, instead of buying one single family home, I bought 60 lots in one transaction. So you have someone default it you don’t even feel it. And then that second one was 59. Now that one was not very, that was way less occupied.

So I think the first one was like 97 or 98% occupied, and the second one was like 37% occupied. So I had my work cut out for me. But all you add baby. Yes, sure. For sure. 

Ben Fraser: There you go. So from that point, give us kind of the high level, abbreviated journey from purchasing your first, mobile home park to kinda how you’ve built out your portfolio now.

And also, it is important to note like this, you were going more in an active approach to this first acquisition, right? Some people may not want to go and be as active as you were though that may be a good place to start, right? To kinda really learn the ins and outs of some of these things.

How do you kindly shift your approach to, from an active versus, passive role in investing as you’ve wanted to, creating more time. So give us that kind of journey from here. 

Justin Donald: I’ll give you the abbreviated version for anyone that wants to read the whole story.

It’s outlined in my book, the Lifestyle Investor, but I really look at investing in two different genres. You kinda have two different sides of the fence. You got, side number one is where you buy deeded property. You’re on the hook for everything. You’re managing that asset.

You can hire out a property management team to do it. You’re gonna make less profit when you do that. So you can either, really work hard to maximize the profits, or you can go the syndication route. You invest in other people’s deals. You invest in other people’s funds, you’re gonna get a reduced return because you don’t own, or you own a, a percentage, a small percentage of it.

It’s institutionally run. It’s managed by a third party or in-house. You’re paying people, you’re paying professionals, not people that are learning the job on the job. These are people that are actually good already with a proven track record. And so I think you’re really weighing and balancing. Are you maximizing the return or are you maximizing your time, like how much time you’re putting into it?

And I think. Either way is good. I think both ways are good. It’s just getting clear on what you value most today. So early in my life, I valued the return portion of it. So I was willing to do everything. I was willing to be the property manager and learn it. I also think that was smart for me because once I did hire others to do it, or at the beginning, I brought it in-house.

I learned everything, so I knew if people were doing a good job or not, or I knew if they were scamming me or not. And so there was an aspect to that where it was great. I did everything. My returns were much better. I eventually tried to outsource some of that. We had some good groups and some bad groups and I’ve since gotten a lot smarter on that front.

But today I didn’t make time. Earlier in my career it was a time swap because. The return I could make on my time was much greater than maybe what I was making, or for the hours I was putting in, it was a larger dollar per hour doing that than doing my day job, for example.

Or, I’m able to leverage systems or other people and so that return is greater. Today I’m not willing to make that transaction. My transaction today is I’ll take a lesser return. For no time spent. Maybe the only time is diligence on whatever the deal is. So again, I think either is great, but today my money works for me.

I don’t trade time for money. In the earlier years, I traded time for money, but I did it in a way that was calculated where I made a movie based on what I am earning today. My profession and what can I be earning with those dollars elsewhere? Can I do it as a side hustle? At what point can I transition and do it full-time or even part-time first, then full-time or do I even want to do it that way?

The other thing about real estate is some people get into it and it’s passive income in the beginning, but when you buy too many of them, it becomes an active job and then they’re trapped in their business out of them again. And you see this in the real estate world all the time. That’s another case for investing in syndications and doing deals with you guys.

And many of the others that are providing amazing deals out there that are professionally managed and run. So I would say that, 

Jim Maffuccio: You, so the continuum is you could go buy a machine that’s dialed in, that produces cash, or you can, or you could build the machine from scratch that will ultimately produce cash.

Or you could buy a machine that needs some work and you can add, but whatever bandwidth, whatever energy you have to apply to the machine is gonna pay you. So you wanna pick the kind of machine that’s gonna be still paying you 10, 20 years from now. So mobile ballpark, for instance. Now you’ve probably sold it and moved on but even if you hadn’t, it would still be sitting there minting money for you.

So that time and energy that you put into it, that wasn’t passive, that was active work to build a passive income machine. And I think that’s probably where most people are gonna have to start, let’s say just inherit a lot of money or or they have access to a huge 4 0 1 k or something.

So to make it, to kinda lower the bar to somebody that’s got a brain and is willing to work and has a decent income, it’s the best of both worlds. ’cause you can start applying some new skill sets. You can either buy the a hundred percent occupied mobile home park that’s all dialed in, or you can buy the one that, man, this is gonna be some work, but hey, once I do this work that think it’ll still be paying me in 10 years, it’ll obviously require some upkeep.

But that’s the model I’ve followed through my career. 

Justin Donald: But yeah, certainly. And to follow up on the path as you had asked me previously I side tangent here, but to even address what you had said, I still own those first two parks.

I’ve actually only sold one mobile home park to date. And I took that money and did a 10 31 into two other properties, so I doubled up on that and just grew it. And so those two properties are still minting, cash, they’re just, cash flow machines and really have afforded us a great lifestyle.

We get offers all the time for people that wanna buy ’em. And we just, we haven’t ever pulled the trigger, but. That led us to more surplus income. We bought our third park and then we rolled that into parks, the next two which covered our earned income.

So we got the lifestyle income, then we got to earned income then we got to surplus income. And then our problem flip flopped or the problem originally was we don’t have enough passive income. Or we don’t have any passive income really, is what it was to like. Now we have more passive income than we know what to do with, which doesn’t sound like a problem, but it actually is a problem.

It creates a situation where I wanna be a good steward of the money that I’m being entrusted with. I don’t wanna just sit on it. I don’t wanna make poor choices. And so that’s really what. Forced me to get into all the other alternative investments because I could either keep building the mobile home park portfolio, which we have done.

We do have an arm of our business, our real estate arm. And one segment of it continues to acquire mobile home parks, but the problem would just get bigger and bigger. We needed to figure out a way to take that surplus income. Allocate it in a way that wasn’t just producing more cashflow today.

And also in a way that was smart in a way that would de-risk the portfolio in a way that would balance it better from an asset allocation standpoint. And so that’s why I started studying who the wealthiest of the people that I could get access to their financials and to their portfolios and, what family offices are doing for, those that are.

In that decade a millionaire entered the millionaire category. What are the billionaires doing? What does their portfolio look like? And am I modeling it after that? Because, most entrepreneurs, they have huge risk ’cause the majority of their assets are in their business. And then everything else from there is likely in public equities.

For those that are professionals in the corporate side of things that don’t have a business generally most of their investments are in stock market public equities, which again, like a lot of people say, oh, it’s diversified. That’s actually still a huge concentration risk because you’re at the whims of how the markets react, which is irrational.

You never know what’s gonna happen. So it’s not to say that you don’t invest there, but to put a hundred percent or 90% or 75% of your money. Total net worth in that one sector that’s like high risk and scary to me. Like I would never do that. Yeah, in 

Ben Fraser: A lot of the research we’ve done on the ultra wealthy, in different groups like Tiger 21 and other reports you can find that are publishing the portfolio allocation of these ultra wealthy investors, generally it’s about 25% or less are actually in the public markets.

Right, which is severely flip flop for most retail investors. Where it’s at least 75% is in stocks and bonds. And to your point, over time, stock bonds, they’ve become more correlated than they ever had before. They used to be a helpful balance, but I think that 2022 was the worst year for the 60-40 portfolio in history.

And part of that is correlations are going to one. So they all move in tandem and you don’t have the diversification that you maybe once had. Shifting to that. So you’ve talked about your journey and your approach to investing has shifted over time from more of an active, approach where you can generate higher yield as you’re more involved in it to now where you’re really more focused on maximizing time, return on time, so you’re not wanting to be in the weeds and involved in every major decision on these things.

Investing more passively. What does your portfolio look like today? And maybe, break it down from your personal, which may not apply to everybody, but then also to how you would. Rules of thumb that you use for evaluating, different types of asset classes public versus private different levels of risk and reward that you’re benchmarking against.

Just give us a snapshot into Justin Donald’s brain and how you think about the allocation portfolio, because I think this is another area a lot of people don’t think about when they’re getting started. Do onesie, twosie have hazard investment into just things that come across their desk without any real consolidated approach to here’s what I’m trying to build and here’s where I want to end up.

Justin Donald: Yeah, great question. Ben and what I would say, like you’re spot on, on, on some of your stats. I’ve been in Tiger 21 for five or six years. And so I’m always looking at the allocations that the members submit and they’ve got some great data points that I think are definitely worth taking into account.

And the reality is very few people built their wealth in the stock market. A lot of people maintain their wealth with a hope to grow it with a percentage of it there. A lot of people, retail investors and those in corporate America are generally over allocated to it. Just based on the data.

But if you look at the wealthiest people in the US and in the world I just see more data from the us. It is surprising how small of a percentage. Is actually in the stock market. And by the way you mentioned, one of the worst performances ever, the last a hundred years, you can look at the data, the 60-40 stock to bond portfolio allocation that was touted as the safest way to invest your money was the riskiest worst performing in 2022.

Like that, that should set off, alarms and red flags galore. Not to mention that you have the statistic that, over the last 15 years, only 5% of money managers, financial advisors outperform the s and p 500 index. So they charge a premium. For you to invest your money with ’em.

But when they perform, 95% of them perform worse. And 15 years before that, only 4% of them beat it. And the 15 years before that same thing. And by the way, from 15 years to the next 15 years, it wasn’t even the same 4% that were the 5%. So it’s like all you need to know is in these statistics.

Most people pay a lot in fees to have worse performance than the cheapest way to get allocation to the public equities, which is just, some of the indexes. You can just use the s and p 500 index which is your lowest cost way of doing it. You can go in on your own. So I just wanted to share that most people build their wealth from a concentration strategy.

They maintain and grow their wealth from a diversification strategy. So if you look at the wealthiest people, they’re not trying to. Get wealthy in the stock market. They’re using the stock market as one component of their asset allocation, and oftentimes they’re not even using it for the return. They’re using it because they can borrow against it.

They can use margin too. Invest in other things without creating a capital gains transaction. If they sell a stock, they have to pay capital gains tax. If they borrow against it, they don’t pay any tax and they can acquire more assets. So the ultra wealthy aren’t using it straight up for the return. They don’t wanna lose money and long term, their banking on that segment outperforms, but they get real time out ways to outperform based on cumulative utilizing of those dollars plus the return. So I think that’s important to note. And if you look at it I’ve looked at literally hundreds of send a Millionaire billionaire family office tiger 21. The banks publish these reports on asset allocation.

You are generally seeing public equities at about anywhere from 15% to 30% right now. And by the way, some of the largest endowments in the world, the largest endowment of the world, are in the US at least. Based on credible information, less than 15% of their portfolio was invested in the stock market.

So think about the groups, the institutions, the Ivy League programs of the world and where they’re investing their money. Like I would like to copy them. More so than, follow the herd. And if you keep, I mean we could geek out on all the details, but you got another 25% that’s generally real estate.

You got another 25% that’s generally private equity, and then you got 25% everything else. And that can be, small crypto allocation. You’ve got fixed income, you’ve got cash and cash equivalents, you’ve got precious metals, you’ve got private credit. You’ve got agriculture, you’ve got commodities.

And so some of these are like 1% allocation, right? You’re just, or half a percent allocation. Others of these are, maybe a larger percentage, but there’s not actually a lot of variants across the board. You look at the wealthiest people in the world, and specifically in the US the numbers are pretty darn similar across the board, right?

It’s so 

Ben Fraser: interesting to me. It reminds me, I saw over the weekend this kind of bar chart of the actual causes of death by ear and what those things were, and then it was right next to it. What the media reported on by percentage of airtime compared to the actual, and it was like completely opposite, right?

Like all the terrorists, things and all the homicides, like they’re very small percentages of the overall desk, but it makes up 50% of the airwaves. It seems very similar, like we’re the kind of mainstream media that is always pushing this simple, cookie cutter approach to stock bonds, mutual funds.

The ultra wealthy aren’t actually doing that. If you break it down a look a little bit deeper it’s really not how they’re investing. And you mentioned endowment, like Yale Endowment was one of the first pioneers of this, many decades ago to allocate into the private alternative sectors to generate alpha, to generate you above market return.

And they were very successful in that being the most successful endowment, for a long period of time. So yeah, I would definitely recommend you. You said you’re part of Tiger 21. For anyone that’s out there that’s not familiar with this group, you can go and download this allocation report.

They publish it quarterly for free and you can see exactly what Justin’s talking about and it’s really great. Nice little graphic and you can see how this breakdown is, and it’s published quarterly. I’ve been following it for many years just ’cause it’s interesting data points. And most of the time, maybe there’s slight changes over time.

But largely it’s pretty well, baked in as far as what the allocations are. So you followed that similar approach to what would be represented there from your own portfolio, or how do you personally adopt some of these 

Justin Donald: concepts? Yeah. Another great question, and Ben, for me I want to model after the smartest people, the smartest groups, the smartest investors.

If you’re following mainstream media, you’re following programming from those that are the biggest investors, donors, contributors. So it is marketing to a retail investor and Wall Street knows what they’re doing. They are marketing to the masses that you should have your money with them.

If you look at the wealthiest people in the world and let’s talk about, I don’t, I would imagine a lot of your audience is US based, probably most of it, US based the wealthiest people in the United States. You go across any of the reports, you go across any of the groups you will see that over half of their portfolio is in real estate and private equity over half.

We could geek out on private equity. What is venture and what is, early stage and what is, I’m not a high risk investor, so for me, I would want just a small allocation of 1%, a half percent in the moonshot type of stuff. And for me personally I like that coming from assets that already have cash flow so that I’m not losing the principle.

I’m just, every month I’m getting cash flow. And if I were to put something in, it’s a piece of that cash flow that to me is de-risking. That high risk investment. ’cause on the angel side your smartest investors out there basically say that you need to have about a hundred angel investments to get one good return.

And you, if you’re a great angel investor, if you get two out of a hundred, if you follow a ball just think about him, he’s one of the most successful angel investors. But think about those stats. Those are horrible stats. But there are ways to game it there. There are things that we’ve done in our mastermind where we’ve been able to group it in different funds where maybe we have exposure to 600 to a thousand in one fail swoop, where not only can we capture the gains, but we can write off the losses.

And so it becomes very advantageous in one investment, one fails swoop. We’re able to play the odds of getting the exposure to get the winds right. So there, there are hacks, there are ways you can do it. There are ways like I. There hacks even to the VC investment, which is typically a 10 year plus one or two or three extension years at the end of that fund.

But we figured out ways to get in the middle or get in at the end, whether it be on a secondary or whether it be a group that does a series A extension in and out on a series b secondary and just ways to take the biggest gains of that 10 years. In the shortest period of time.

So instead of waiting 10 to 13 years, you can get in and out in a year, two years, three years. So there are ways that you can get an edge that we participate in. And so I model my portfolio after the groups, the people, the family offices, the billionaires, the people that I see having the best results.

People that year in and year out are performing really well. I am still heavier in mobile home parks, and so my allocations are gonna be a little different there. And from a real estate standpoint, I think that’s your safest investment class. And it’s just it’s recession proof and affordable housing’s always gonna be a thing.

And so if I’m gonna be heavy in something, I like that industry next for me as second heaviest. And I’m probably a little more concentrated there than what I would recommend. And by the way I’m just sharing my opinions and thoughts and what I do in no way is this financial advice, but I love teaching people the way I look at things and.

I’m an educator at heart and I love facilitating great conversations. Yeah, I think, having a percentage of your allocation in Bitcoin is probably a smart bet, or half a percent if you’re super skittish or maybe even up to 2%, having money in you guys are doing a new deal right on, on the commodity side, oil and gas, having 1%, 2%, in there.

This is in line with what the family offices do. We, yeah, we get gyms, raising it up, bullish on, and we’re in a good season where you could be bullish for it, right? But the reality is you want a little of everything. So whether the market’s good or bad, and that’s all relative, you have something performing well that is uncorrelated.

So to me, I like having that uncorrelated, all the uncorrelated assets. So let 

Ben Fraser: I ask you this. Getting into mobile home parks, a decade ago was a really good time to get into it, right? And now it’s a little bit harder and cap rates have massively compressed. And we’ve seen that kind of across all of real estate to where cash flow is very difficult to find number one.

So for you is kinda lifestyle investor a key kind of principle? And, part of this is current cash flow, so getting paid distributions right out the gate. It’s been more difficult to find those types of deals that are cash flow at a reasonable rate of return for the risk you’re taking, how has that impacted your approach and can you replicate what you did maybe a decade ago?

Is it by shifting to different asset classes? Is it, maybe just accepting a lower rate of return given, some of this cap rate compression? Are you expecting it? A reversion of cap rates over the next couple years. Throw about five questions in there, but give us your thoughts on that.

’cause I think that’s an important thing to discuss because timing matters in all of this and you got in at a really good time and obviously you’re a very smart person. You’ve done a very good job growing this. But it also helped being in an asset class that has massively appreciated over the past decade.

Justin Donald: All great questions. And, we could break down. We can go in several directions here. Let’s just start here with the mere fact that mobile home parks to me are still there’s still the opportunity to get great returns because it’s the least institutionally owned or the least concentrated or asset class out there.

So you, you’ve got really about I think the newest data is still under 10% of all mobile home parks are owned institutionally. Whereas you got the flip flop and multifamily where you got over 90% that are institutionally owned. So yeah, there is all kinds of compression there. The spread is, it’s hard to make sense of it and.

Yeah, I wanna stay away from deals that don’t paper. And I, and for the record, I have said no to a lot of deals over the last decade that we’re using, floating rates or, bridge, short-term bridge financing because I’m too risk averse to want to play that game. And even though I had a lot of friends, that made a lot of money.

’cause the timing was right at the moment, the timing’s wrong. You lose money. And Because of that, I’m in, no I have no risk of any deal going bad based on interest rates because I’m not in anything that is subject to the interest rate hikes. I’m all in long-term debt. Or long-term rates.

And so that, that to me is, first and foremost is I’m gonna make good decisions. And I might say no to some stuff that could have made money, but that’s okay. Maybe I lose some in a frothy environment, but then I win. In a tight environment. So that has served me and has served our community, the lifestyle investor community really well.

But again, when we go back to institutionally owned asset classes, find the ones that have more baby boomers looking to retire in the next 15 years. Basically the largest wealth transfer in the history of the world is about to happen in the next 15 years.

So baby boomers are gonna be passing down their wealth. And money that’s gonna be inherited by the millennials. And so if you wanna figure out how to make money, one of, one of my commandments is finding these invisible deals. That’s my third commandment of cashflow investing.

Right? And finding invisible deals is like paying attention to the trends. What’s coming? We know millennials are gonna control more wealth. Then, any other generation in the history of the world. I’ve seen some reports say that it’s 76 trillion. I’ve seen other reports say as high as 106 trillion.

You look at the net worth of the country of China, you’re talking about $75 trillion. So a and they’re second largest. So you’re talking about the greatest wealth transfer in the history of the world is about to happen in the next 15 years. If you know what millennials like, how they spend their time, how they spend their money, what buying criteria they have and what decisions you make, there’s so much opportunity.

But then also look at who’s gonna be transacting. So who owns what assets, what are baby boomers selling? A bunch of ’em businesses, a bunch of ’em own real estate. So paying attention to that trend is gonna make a lot of people very wealthy. I love it. 

Ben Fraser: You alluded to it but timing matters.

Trends matter. How is, or were you seeing, the next, obviously mul parks are still good deals out there, they’re harder to find than they were 10 years ago. But where else are you seeing, like more specifically, what are some other asset classes and other things you’re seeing that you feel like are, good long-term trends to kind of position for as 

Justin Donald: an investor?

Anytime you’re buying from, a baby boom or someone that wants to retire, someone that their kids don’t want their business. So they’re, in all reality, they don’t think they can sell it, and so they’re gonna just shut it down. It’s a profitable business that they’re just gonna close the doors on.

Anytime you can find that seller, you’re gonna get a great deal. So it doesn’t matter what the business is. And by the way, if you pick businesses that are performing well, that are trending well, that are, home service-based businesses, or, we could go in many directions, but these are all great businesses.

I’ve got a company in single Family home maintenance, and so we know. Margins on plumbing and HVAC are the two greatest by a landslide margins. So finding businesses in those spaces, there’re, we could go in many directions. Roofing, huge margins there. Those businesses are great.

The real estate that’s being handed down, I think there’s all kinds of opportunity in the secondary market for companies that are super profitable. Like I’ve bought a ton of second secondary shares. Companies that are profitable today, that employees just need, that there’s a life situation.

They need to sell their shares. They’re way ahead anyway from when they came in. 

Justin Donald: So they win and then you get in at a super low valuation compared to where they are, but they’re cash flow positive. So I’ve been doing that a ton. When you have these market corrections it creates so much opportunity.

The list goes on and on there. There’s endless places to be able to buy assets. At a good price in a safe way, in a risk adjusted way where if things go wrong, you’re not losing all your money. But if things go right, you’re making many multiples of your money.

Ben Fraser: I love that. It’s so true, right?

So many investors right now are terrified of what’s gonna happen in the economy and are gonna go into this deep recession. Are we ever gonna get out of this pickle we’re in? And it freezes a lot of people to not make decisions, not make any investments. And sure, you gotta be cautious. You’ve got to understand what you’re doing.

But at the same time, inflation is not your friend right now if you’re sitting on a ton of cash, and we have the same perspective, there’s opportunity everywhere. You just have to know where to look, and you have to know how to make investments in times like this. You’ve talked about some of the things you like, and obviously the mobile hub parks were this major catalyst for you personally.

Have there been any, on the other side of it, things that didn’t go the way you expected, whether it was, as an LP or as a an active investor that you invested in that kinda left you with a really good learning opportunity, a good experience, maybe you lost, maybe you didn’t lose money, but.

Something that really you live with now that has helped you, invest going forward on the negative side of 

Justin Donald: things? Yeah. There are tons of opportunities. We can call ’em opportunities today. They sting in the moment when they don’t go as planned. They hurt.

When you lose money or you had your money locked up for years and you just break even, although sometimes that’s a win, right? But it’s painful when it’s just completely opposite of what you anticipate. But I’ll also tell you the times that I’ve lost money, the times that I’ve broken even those have been some of the best learning experiences out there.

So yeah, there are definitely some deals that I’m in. In fact I think I’m legally allowed to talk about this. I just testified in federal court for a Ponzi scheme that I was an investor in. Critical info in and was requested by the federal government to share the info that I have for this case.

And so I just got back from that and you know that’s a great situation that I. I talked in depth in my book about where I lost money. This was not a good deal, but I learned so much from that experience that I have become a better investor. I’ve lost less money because of it. I’ve made better returns because of it.

And had I not lost that money, had I not gone through that experience it would have. Open me up for many other losses in the future. I have a new criteria that I use now. And so if you are in, these 

Ben Fraser: are outlined in your book, I’m assuming, right? So yeah, I think without giving the whole, giving it away, ’cause I’m gonna encourage people to read the book after this, but what are the kind of two or three things that it shifts your perspective on, or the non-negotiables that you have now when you’re looking at opportunities?

Justin Donald: It’s funny, I’ve got Murphy’s laws for the investor and for the lifestyle investor. It’s if it’s, if it seems too good to be true, it is. I got a whole bunch of these where it’s like you just have to do your due diligence. You can’t base it on emotion. You gotta base it on fact.

You have to you, you gotta, you can trust, but you, you’ve gotta diligence it, right? So you don’t have to go in. To every situation feeling like people are lying to you. But I think you will be better off if you go into every deal that you’re vetting coming from the standpoint of this is not a good investment.

I may know, prove to me why I should invest in this deal as opposed to this is a good investment. Let me see if I can talk myself out of it. And new investors think every deal’s a good deal ’cause they don’t have enough exposure, they don’t have enough reps. And so I think just the simple mindset of going into every deal saying, This is not a good deal.

I’m a hard no right now unless I can be convinced otherwise. That single thing has been a game changer for me. 

Ben Fraser: That’s so interesting. I think so too. Another thing I see a lot of early investors do is they just look at the returns, right? Are the returns X and they just based on their investment decision, based on that, without considering what’s the risk I’m taking for that return.

Is that return mostly cash flow or mostly back in profit when the deal exits and what’s the likelihood of that happening? And kind of risk adjusting. Everything is something that I feel is another helpful thing that you’re alluding to, but. 

Justin Donald: Can I pile onto that? Yeah, please. How successful is the third party group that is actually running it, or is it in-house?

How much experience have they had? Have they been through a recession? A proforma means absolutely nothing. I don’t care about you today. Proforma, show me your last deal that went full cycle proforma. And how did you actually perform it? And how many deals have you done and how many deals have gone full circle?

Like all those things. Did you only succeed in the last frothy? 10, 11 years? Or did you have success beyond that? Because I only want to invest in people who have been through a recession and have the experience in the knowhow. Like we could diligence that in so many directions, but a retail investor doesn’t get that.

New investors don’t get that. There’s ways to manipulate the preferred return with catch up clauses. That there’s a difference in the waterfall structure between an American waterfall and a European waterfall. There are ways that these groups can make money before the investors make money.

And then there are other ways to structure it where the GP or the sponsor can’t make any money until the investors get paid back and make their return. And so the more you learn, the more reps you get, the more you figure out like who are the good players that have good reputations, that have the experience that treat the investors the right way.

You’re gonna benefit from that, but you gotta get in the game and every investor’s gonna lose at some point. Every investor is gonna lose money at some point, and that’s just part of the hard knocks of learning how to become a better investor so that you lose less in the future. 

Ben Fraser: Yeah, that’s awesome.

I’ve said it, like I said, I was gonna say it, I’m gonna say it now, but you’ve gotta listen and check out Justin’s media. Platform that he’s put together on this lifestyle investor. Check out his book, the Lifestyle Investor, check out the podcast. It’s also the Lifestyle Investor, I believe, right?

Yeah. And go to lifestyle investor.com. He’s got a lot of resources. He’s got different online courses. He has masterminds, and a lot of really cool things in this community. He’s building on helping educate investors, which is something we’re obviously very passionate about here on the podcast.

And just love what you’re doing, Justin. I just really appreciate you getting out there and teaching people what you’re doing. So this has been so cool to have you back on. Thanks. Thanks for spending the time with us. 

Justin Donald: Thanks Justin. Yeah, thanks for having me. I’d love to just make a real quick plug for the book.

It was a passion project that I never thought was gonna take off the way that it took off. I never expected to be a number one Wall Street Journal, a today bestseller, or top 1% of all books sold. But I went into this book saying all the profits of this book. Would be a hundred percent donated to, to charities that I support, namely fighting human trafficking.

And so I’m really proud to say, This book has now been responsible single-handedly for donating hundreds of thousands of dollars to these humanitarian efforts. And I just wanna champion some of the groups like the Tim Tebow Foundation and Love Justice International and many of the other groups out in the space that are doing cool things.

So I talk a lot about financial education. I wanna help people become financially free. But a lot of people don’t realize that some people don’t even have their actual human life freedom and we wanna buy that back. Thanks. 

Ben Fraser: Thanks again, Justin, for coming out. It’s been really fun. 

Justin Donald: Thanks for having me.

Always a blast. I could talk about this stuff all day. Hey, we’ll see you in California in a couple weeks, right? I can’t wait. I’ll be there. Have some fun. Awesome. All right. Thanks so much. Thanks guys.