429: The Wealthy Gardener: Financial Independence Through Real Estate Investing

SHOW NOTES FOR EPISODE 429: THE WEALTHY GARDENER: FINANCIAL INDEPENDENCE THROUGH REAL ESTATE INVESTING

Saddled with substantial student loans, plus the challenges (and expenses) of a new growing family, a young Chiropractor struggled to keep afloat and still find hope for his future.  In today’s podcast, best selling author, real estate investor and entrepreneur Dr. John Soforic shares how he learned to overcome his financial challenges, write a best selling book and retire at age 49 with an annual passive income of $240,000 – all through real estate investing.

What You Will Learn

• The book that helped John to turn his financial life around
• How farming and time management can help you understand the key to growing wealth
• The importance of getting “family consensus” before pursuing your dreams
• Why real estate investing is the ideal “part-time enterprise” to grow wealth
• How to get the money you need to get started in real estate investing
• Converting leisure time into wealth-generating time
• Why you need only 5 years to jump start your real estate business
• The critical importance of sticking to your criteria

About Our Guest

John Soforic

Dr. John Soforic was a once chiropractor with a part-time real estate business. He retired at 49 with a passive income of $20,000 per month. He then wrote a book for his son in college: The Wealthy Gardener: Lessons on Prosperity between Father and Son. The book became an Amazon bestseller, sold 70,000 copies in a year, hit #46 worldwide on Audible, was translated into 3 foreign languages, and was relaunched by Penguin this year.

More About John

• Grew up in Mt Pleasant, PA – town of about 5,000 residents, outside of Pittsburgh
  • Small town, middle class, blue collar
• Called Dr. John most of his life
• When he was 19 years of age, he used to accompany his dad (a coal miner) to his Chiropractic appointments
• Saw this beautiful boat in the driveway of Chiropractor’s office
• Saw the part-time hours (only working 3 days a week) on the doctor’s door
• It looked like a great job with lots of freedom!
• 6 years later, he was a chiropractor
• Unfortunately, he graduated from school with $200,000 in student loan debt
• He felt anything but free
• At age 30, he had a wife and two children but was frustrated because of the great debt and growing expenses of a new family
• He read “Think and Grow Rich”
  • Gave him hope and clarity
  • Helped him to think bigger
• He set a retirement goal to retire with $240,000 in annual net passive income
  • He started with the end goal in mind
  • He wanted to live a life without money worries
  • He knew $150,000 would have been enough but wanted a surplus to build a business
• At age 49, he met his goal and retired

Finding Real Estate

• John had a patient who was an electrician who was also a part-time real estate investor
  • His patient shared how he could be an investor and yet never touch a paint brush or do any work on his rental properties by hiring outside workers
  • His patient, however, got into too much debt and over leveraged his properties – was doing things wrong!
  • But John watched the process, learned from it and saw how it might work better with him
• John then started educating himself, reading tons of books
• He learned how to use Quickbooks accounting software
• He used dead hours – driving or waiting time – to listen to podcasts, Audible books, and watch YouTube videos om real estate investing
• It took about a year and a half to get the education he needed and to attempt to master the business of real estate
• He realized that the best place for people in the middle class to generate passive income is with real estate
• He started looking locally (Western Pennsylvania) to see what kind of deals and numbers he could get
• He found that Western Pennsylvania had the type of real estate numbers that made sense and would work for him
• His challenge was: “How do I get the money to start and grow a real estate portfolio?”

Getting Help From A Gardener

• He looked at this challenge through the eyes of a gardener – a metaphor for this time of his life – seeing the garden, farm, sowing and reaping as way to map his way through this new opportunity
• He saw the opportunity as just a matter of using his available time wisely
• He also envisioned a farmer, for example, who had 112 acres of land but he only farmed 40 of those acres
  • The farmer is frustrated because he’s working hard but barely making it
  • To the outside observer, it’s obvious that the farmer should farm all the acres of his land but the farmer just doesn’t see it
• He looked at the farmer’s example as a correlation with his own situation and limited available time:
  • He saw that he had 112 hours of waking time to work
  • But he was only using 40 of those hours to generate income
• He saw how he could use more hours, in the same way the farmer can use more acres of his farm, to help get what we want
• Frustrated at age 30, John realized he had to use more hours if he was going to get what he wanted
• Like the farmer, he needed to till the ground (use more time) and fill it up with things that would get him were he wanted to go

Getting the Family Onboard

• John knew that in order to use more time (which would cut into family time), his family had to understand and agree to what John needed to do
• Communication was key
  • He spoke to his family (his kids were around 10 years old)
    • He shared his financial fears as well as his dreams
    • How he hoped to pay for their college
    • Why he was sacrificing
    • Why he was doing this
    • How he didn’t have a retirement income
    • What things would be like if he didn’t do this
• His example was an education for his family
  • They saw his struggle and sacrifice
  • His kids appreciated his openness
  • They also understood more about personal and family finances

His Real Estate Approach

• In the beginning, John did “forced appreciation” on single family homes:
  • He would find an undervalued, cheap property
  • Put in about $10,000 of repairs/upgrades
    • The repairs included a contractor’s labor so he didn’t have to do any of the work
  • Did a cash-out re-fi
  • And repeat
• With the flipping, he generated enough money to buy rentals
• It created a “snowball effect” as he generated more and more money
• He started with single family homes because he knew it would be easier to sell them if he had to
• He went into it very cautiously
• He was taking out mortgages and leaving about $10,000 in equity in each property
• He used debt, but very conservatively
• He implemented this for the first 20 rental homes
• He wasn’t really focused on specific goals as much as he was on using his time wisely to produce all he could in the tie he had available
• He currently has 110 doors and NO PROPERTY MANAGEMENT!
• He bought a 30 unit apartment a year ago to have more time – you can delegate more with more units under one roof

The Importance of Time

• We all have the same 24 hours available every day
• As he looks back over the last 25 years of his life, he sees how he and everyone uses time differently
• Other chiropractors he knew looked at their practices as their sole source of income
• He did too(at first) but then he looked “out side the box” and outside his practice
  • He expanded his “free time” hours
  • Instead of playing golf or pursuing other leisure activities, he used his free time to create wealth and to provide for and protect his family

His Five Year Crusade

• We always overestimate what we can do in one year and underestimate what we can do in 10 years
• John feels that 5 years is the “sweet spot” because
  • it’s a small enough time that you can manage
  • but it’s a big enough period of time to change everything
• For Old Dawgs, all you need is ambition
  • With ambition, you can use your free hours to make a difference
• His critical period was between 30 and 35 years of age
• Making a major change in our lives later on is look at a barge in the ocean
  • It takes 2 miles for it to change direction
  • But once on course you can plow ahead
• In 5 years, you can:
  • Educate yourself
  • Get into 2-3 rentals
  • Find out if you even like it
• John’s a morning person and does a lot of work very early in the morning

Biggest Mistake(s)

• Consider the worst case scenario before you take the risk
• John looks back at the many small mistakes he has made that he made over and over again
• It’s all about having a criteria in place by which you consider a property a good investment or not
• You’ve got to stick with that criteria
• John’s criteria was a cash-on-cash return of 12%
  • If he invests $100,000, he would have to generate $12,000 in net rental income per year
  • That means, he would generate $24,000 a year in gross rent
  • DON’T COMPROMISE YOUR CRITERIA – If he starts thinking, “I’m not getting the the 12%, maybe 10% would be OK” then you’ve made a big mistake
• The goal of investing is to be patient and stick to your criteria – you have to wait without tiring of waiting
• It always works out well when he sticks to his criteria

Biggest Success

• Achieving his $240,000 annual income goal
• He grew himself bigger to make himself worthy of a goal that was once impossible for him
• He learned his way up and he grew himself up for the task
• He grew himself stronger, better and bigger
• It’s all in the execution – getting yourself to accomplish what you know you need to do
• Be consistent and disciplined

 Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

• If you’re getting ready for retirement, you’re looking for things to do
• After the first 6 months of retirement, you’re likely to find yourself unfulfilled
• John looks to hire old dawgs to help him with his properties, for repairs, whatever, so they can generate income in retirement
• Courage is important but so is being cautious
• With real estate, start small and start conservatively
• Real estate is not for everyone, so you should test it each step of the way!

Current Business

• He wrote his book for his son
• Everything that has happened since then is unintended consequence
• He thinks a lot about what the future will hold
• He sees his book as a philosophy of financial achievement

Why he Wrote the Book for His Son

• He thought back to when he was 20 years old
• He walked out of his house and it was the first day of his life to be a man – to provide and take care of himself
• Every day was a battle – he had to walk over a mountain to go to battle
• Everyday, he’d get cut up and beat up but everyday he kept coming back over the mountain to do battle again and again
• That’s what it felt like for John at 20
• He wasn’t prepared for battle
• He didn’t know how to struggle
• He didn’t know how to fight
• In his 30s, he has a family but he’s still going out the door, climbing the mountain, and doing battle everyday
• As time goes on, he got stronger because he realized he’s winning as much as he’s losing
• In his 40s, he’s still walked out the door, walked over the mountain, but each night he’d come back stronger, he got muscles and calluses, he understood how to fight, he knew the strategies of fighting but he recognized the fortitude and mindset necessary to beat his opponents
• One day, he went to battle and ccame back victoriously and instead of feeling elated he was relieved
• He never wanted to be a fighter or warrior but that’s what he had to do to survive
• And one day, he saw his son walking toward the door and he asks him where he’s going
• His son says “I’m 20 years old.  Don’t you know, I’m a man now.  It’s my time to go out and battle.”
• And John just stopped and said, “Wait a minute son.  Come over here and sit with me.  I need to tell you what I know so that you’re not as unprepared as I was.”
• And that’s why he wrote The Wealthy Gardener

How he Got His Son to Read the Book

• He lied to him
• He said, “I’m thinking of writing a book and I’d like you to check out the first chapter to see of I’m making a total fool of myself.”
• His son was moved by what hid dad wrote
• Then John said, “I need someone to prevent me from making a fool of myself. How about if I send you chapters each week to read and we talk about them on Sundays.”
• He was writing 50 hours a week and the only thing keeping him going was to know he would be talking with his son about them every Sunday
• That’s why he called it “Lessons Between a Father and Son…” Not “Lessons from a Father to His Son.”
• The book transformed his life and his relationship with his son

Don’t Use Your Age as an Excuse

• Sometimes we use our age as an excuse to not do something – especially something big!
• Your best days may be yet to come – not behind you!
• Be careful to not use age as an excuse
• John’s father was a coal miner
• He grew up in half a trailer
• He found out that he can accomplish big things and lead by example
• Maybe it’s your time to write a book!

Rap-It-Up

• Favorite real estate book: The Millionaire Investor by Gary Keller
• Favorite business book: Think and Grow Rich by Napoleon Hill
• Most valuable web site for success (other than your own): Impact Theory and Old Dawg’s REI Network
• Favorite app: Audible
• Favorite quote: “Don’t judge each day by the harvest you reap but by seeds that you plant.” – Robert Louis Stevenson
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Start a new business (lawn cutting or cleaning) and scale it!

How to Reach John

• Website: www.wealthygardener.com
• Where to get John’s book: The Wealthy Gardener: Lessons on Prosperity between Father and Son

DISCLAIMER:  Many of the above strategies take knowledge and have a higher degree of risk.  You need to do your research and/or work with someone who is experienced to reduce your risk.

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Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com