LEVERAGING EXPERTISE | IF YOU’RE THE SMARTEST PERSON IN THE ROOM YOU NEED A BIGGER ROOM

Are you looking for freedom? Freedom from the daily grind and hustle, or just finding a way to live the life you always wanted. Then join us on the investing for freedom podcast. Our hosts, Mike Ayala will help you discover new ways to find freedom with tips, insights, and interviews. You’ll learn the exact systems he’s used to travel the world and live his best life. True success and happiness are all about freedom. And here’s your roadmap on how to find freedom on your own terms. Welcome to the investing for freedom podcast. Here’s your host, Mike Ayala.

Today on the investing for freedom podcast we’re going to talk about leveraging expertise. If you’ve been around me any amount of time or ever worked with me, or just listen to my podcast, you’ll probably realize that I’m a big fan of leveraging other people’s time, talents, etc. I believe at the core of everything we do. I mean, if you want to achieve something that you’re not currently achieving, you’ve got to leverage a new idea. You’ve got to leverage somebody else’s talents. You’ve got to leverage somebody else’s time. We talk a lot about, the people on your team and then that could be an external team. It could be an internal team. Maybe it’s your attorney, accountant people that you utilize on Upwork, contract employees, etc. But really, I think what separates people who are extremely successful from those who aren’t is the idea that, Oh, I can just get it done faster myself. If you want it done, right, you’ve got to do it yourself.

And while that might benefit you for a short period of time, if you really think about leveraging other people’s time and talents, you can get so much more accomplished. I had written on a blog on our website for www.peakspartners.com a while back about this subject. And we discussed there, the earliest NFL players were Jack of all trades, many players played multiple positions, both offense defense, sometimes playing the entire game, every single down. George Blanda was one of the best players of his era in the fifties and sixties. And he was one of those Jack of all trades. On one play, you’d see him throw a touchdown and then the very next play he’d kick the extra point. Economic obviously had something to do with this, teams keeping their rosters low to minimize payroll. But since those early days, the NFL has become one of the most lucrative sports on the planet. And it’s evolved into a league of highly specialized players that are skilled at one position and not multiple. NFL teams want to win and to give them the best chance of winning, they have to assemble the best group of specialists possible. And because the NFL teams make so much money from attendance, TV, nights, and merchandising, they can afford to attract some of the best players at their positions to achieve the goal of obviously winning a super bowl.

Physical attributes aside teams from the early NFL days, don’t stand a chance against the teams today because of the gap in the skill levels. A team with the best

quarterback and running back in the league is going to have an advantage over a team with the so-so quarterback who also happens to be a so-so running back. As the NFL so it was the case with where Jack of all trades and masters of none are at a disadvantage against competing businesses with highly experienced and skilled executives at every level throughout the organization. So a company where the CEO surrounds himself or herself with the best CFO, COO or controller, legal counsel, HR, obviously they’re going to be more efficient, more profitable than the company where one person spreads themselves, then try and do the job of several individuals. And this is, in times like this we’re in mid-May of 2020, and we’re obviously dealing with, COVID and all of us are looking about the profitability and efficiency of our companies. And, we have to be really careful. And I heard it said a while back that, there’s basically three different levels of surgery. One you’re cutting fat, which is not really challenging and it’s not harmful to the body or the organization in this case. But then when you start getting into muscle, we’ve got to be a little bit more refined because muscle can come back, but it takes more time. It’s more painful and it can ultimately affect other areas of our body.

But when you get into cutting bone, which is the support structure of your organization, you have to be really careful. So that’s kind of a little sidebar, but in times like this, when we’re looking about leveraging people’s expertise and talent, we’ve spent so much time and money and energy building out our teams leveraging other people’s time and talents. And now we’re in an environment where we’re having to cut some of that. We’ve got to be extremely careful and try to figure out how to keep our core structure, the bone, if you will, of the organization intact.

So anyway, back to the expertise and how does this apply to the investing. So an investing world, some of the most affluent in the successful investors recognize that the value of leveraging the expertise of others is the most important quickest way to success. And to that end ultra-wealthy investors prefer to avoid the volatility of the wall street sandbox. A lot of them prefer the alternative investment class. We discussed a while back where the, wealthy are moving their capital right now, and a lot of it’s into debt. They’re moving, a lot of stuff out of wall street and they’re coming into like first position debt on properties. It’s an interesting point that most of these sophisticated investors made their money in an industry other than the one that they’re heavily invested now. And I’ve said this for a while. I really think that the key to success is obviously multiple streams of income but getting a little bit more specific on that. It’s one thing to invest in real estate, but the majority of really, really successful people, their main business is not real estate investing. Now there’s a lot of companies out there that do a really good job at real estate investing, but the majority of really successful people, individuals made a lot

of their money in some other form of business, which is how we got started. We had a plumbing and heating company, and then we expanded into general contracting and bought a kitchen and bathroom modeling company, expanded into all these different businesses in forms of revenue. And then we started investing in real estate. Number one for the tax benefits, number two for long-term wealth. I’ve shared this story before, but Kara and I were really looking at what did retirement look like? I kind of thought at that point in time, I’m going to be 65 years old and I’m not going to have a 401k cause I’m really not interested in that. As I said, the sandbox of wall street.

So, we really started thinking, Hey, what are we going to do with this cash? Let’s start investing some of this cash that we’re spinning off in real estate, it’s long-term cash flowing asset. And that’s really how the majority of people really get into investing in real estate. But, a lot of the ultra-wealthy people, and here’s the important lesson that we can learn from them. They’re aware of what they don’t know. Dr. Jade Teta talks about this and I love it. It’s basically the three levels of awareness, which I won’t get into a lot of that right now. But the most important lesson we can learn from the ultra-wealthy they’re aware of what they don’t know. And so that owner, he might be in a niche shoe company, passionate about making high end hiking boots. And he knows that market inside and out, and he’s got the best team assembled. And they’re focused on what they make money on, but still he may not know anything about multifamily investments in the Midwest or affordable housing in secondary markets. Or in our case at four peaks capital partners, our primary investment, our strategy right now has been for the last couple of years, manufactured housing. And I actually think on the other side of, this pandemic economic challenge that we’re going through, I think the case in the need for affordable housing is going to be stronger than ever.

So what am I really saying? You don’t have to be an expert at everything. Just like whether you have a job and you work on a team and you look around you, you probably don’t need to know everything about everything in order to run that business. And even if you’ve got a concept around it, you’re probably not the best person to do that. You’re probably looking around and learning how to leverage other people’s time and talents. And one of my mentors always says, if you’re the smartest guy in the room, you need to find a bigger room. So if you are that person that you’re constantly letting your ego get in the way, because you want to be the smartest guy in the room, or you want to kind of, Hey, look at me now or tell everybody how smart you are, that might work for a little bit.

But ultimately at the end of the day the person who says the least and listens to the most is probably going to win. And so just like the ultra-wealthy do by relying on

others and leveraging the expertise of others in a certain asset class or investment arena, that might be your best investment strategy. The reason why I’m talking about all this right now is whether you’re running a business, whether you’re working on a team or whether you’re considering getting into real estate investing, or maybe you’re that person that said, Hey, I’ve done pretty well. I’ve got 10 rentals, but honestly like, I don’t have time for it. I’m thinking about turning it over to a property management company and how do I continue to invest in more real estate and get the benefits of it. I would just encourage you to reach out to us at www.fourpeakspartners.com or you can just join the Facebook community, the investing for freedom Facebook community. And we’ll be talking a lot about some of the assets that we invest in and how you can get involved in that.

So am I saying that you should it be a passive investor? I mean, that’s up to you. You’ve got to really decide, what you’re an expert at and what you’re going to leverage other people to be an expert at. And one of the main reasons why I’m really talking about this right now, I’ve had people come out of nowhere since all this started thinking, Hey, is it a good time to invest in real estate? Hey, I’ve been thinking about investing in real estate for a while. Hey, I’ve got $50,000 saved up. What should I buy? That’s the wrong question. If you’re not an experienced investor and you’re not investing in your education, then I’m not really sure that I can tell you what you should be investing in. I think you’d be better suited to invest passively with the right operator, somebody that you know, and maybe just to invest alongside of them and let your money make some returns and you get the benefit of investing in real estate and then learn along the way. I literally had somebody reach out to me and this girl was actually a very, very smart girl. She worked for me years ago in a cabinet shop that I owned, and she just asked me the other day. She said, Hey, they’re both successful. She’s now got a career in nursing. And her husband’s a very successful contractor, works for a contracting company and she said, I really want, can you point me in the right direction on how I can learn about budgeting and saving money and begin investing? Because my husband and I want to start buying investment properties, but I want to understand where to start. How do I learn? That’s the right question.

So if you’re not there yet, and you’ve got some cash, then maybe what you should do is really start considering investing passively. Like I said, reach out to us www.fourpeakspartners.com or send me an email at team@investingforfreedom.co. And we can talk more about that.

So anyway, pulling this back together, by leveraging the expertise of others, we accomplished two goals. We maximize efficiency in return, and we optimize diversification. By assembling a dream team of experts through funds spread

across multiple asset classes, geographic locations, sophisticated investors can maximize returns and they do it all while enjoying multiple levels of diversification that will shield them against downturns in broader markets. And they do this to ensure that cashflow appreciation and downside protection, even though recession exists in their portfolios. So am I saying you should invest passively, am I saying you should be an active investor? I’m not saying any of that. I’m just throwing out that there’s other things to think about. And whether you decide to be an active investor in a real estate portfolio, or you decide to be a passive investor in a real estate portfolio, either way, you’re going to have to learn how to leverage expertise. If you decide to become active, you need to learn from someone. You probably need to hire a coach. You probably need to go through a mentoring program. You probably need to find the right realtor. You probably need to find the right title company. You probably need to find the right appraiser. You need to have the right contractors to call that are actually going to take your call and show up and do what you need them to do. So that’s leveraging expertise.

If you’re going to become a passive investor, then you really need to leverage the expertise of somebody who’s already doing it. And I would just encourage you to do your homework and dig into that. Whether it’s us at four peaks capital partners. We’ve got references we could provide, or you decided to invest passively in a different asset class. Maybe you want to invest in cannabis. Maybe you want to invest in, crypto. I don’t know any of that stuff. I don’t know anything about any of those. And that’s why I don’t invest in it, because I want to invest in areas that I either number one, understand, or I know somebody in the industry who I really trust, and I can leverage their expertise. So I hope that was helpful. It’s always important whether you’re starting a business, whether you’re starting an investment company, leveraging other people’s time, talent and abilities is probably the most important thing that you can really get your mind around. If you can master that, you will be successful for a long time. A lot of times when we talk about leverage, we think about money and debt, but the reality is leveraging other people’s time and talents and abilities is just as valuable if not more valuable, than leveraging financial capital. So you guys have a great day. I hope that helps you with something.

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with your friends and until the next episode, cheers to moving further along in your journey of investing for freedom.