Over the course of their investment journey, Mike and his wife Kara found themselves coming back to the same process as they accomplished their goals. Today, Mike breaks down the key components of the Investing for Freedom Formula. He explains how his 5-step, revolving process led him and his family to the type of freedom they were seeking.
“If you have a business or a job that isn’t helping you achieve your personal goals, then you really just own a job. Even if you had a business, you really just own a job. ”
- [00:00] Intro
- [00:34] The Investing for Freedom Formula
- [01:00] Determining what you want
- [01:39] Creating an action plan to get it
- [02:00] Measuring results
- [02:50] Adjusting
- [04:21] How this idea took shape
- [05:30] What we wanted
- [08:58] How we were going to get it
- [11:44] The importance of the process and tools to measure
- [13:30] Episode summary
- [14:14] Outr0
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 host, 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.
Mike Ayala 00:34
Tonight I want to talk to you about the Investing for Freedom Formula. If you’ve listened to me for any amount of time, then then you’ll know this is something that’s near and dear to my heart. I talk about it a lot. It’s actually something that was crafted over, you know, probably the last 20 years of my life. But the initial thought process started in a story that I’ll tell you later, but here’s what it is. It’s what do you really want? Why do you want it? What are you going to do to get it, measure results and adjust.
Mike Ayala 01:00
Well, it might seem simple, but the reality is if you just apply this process, and you really start applying it through your life, you’re going to really start seeing how powerful this is. There’s the Lewis Carroll quote, If you don’t know where you want to go, then it doesn’t matter which path you take. That’s why it’s so important to determine what you really want. And then the reason why I say that the second part of this is why do you want it? Because a lot of times, if we don’t get real clarity on why we want what we think we want, then we may not actually be going after what we really want. And so that second question really begins to identify and clarify why you want what you want. And that’ll just give you some clarity. I’ll get into the depth of this one here in a few minutes.
Mike Ayala 01:38
And then what are you going to do to get it? So once you determine what you really want, why you want it, now we’ve got to begin creating action plans to take us down that road. And sometimes this is a short term process. It could be something that, you know, we’re going to work on for the next month or whatever, and sometimes it’s a longer range goal. What are you going to do to get it? So what’s the actual method? You know, we’ll take this into some different scenarios, but it could be exercise it could be, it could be investing in real estate, it could be starting a new business depending on what it is you really want.
Mike Ayala 02:09
So then measure results. So many times we go through life without a scorecard. We don’t actually know where we’re at. Because we don’t have a scorecard. We’re not actually measuring results. Can you imagine if you did not ever balance your checkbook? Which a lot of people don’t. But then you also never checked your bank account? How are you actually going to measure results as to what you’re spending and and what you can actually spend? How would you ever know if you could actually go to the store and buy a carton of eggs? You wouldn’t if you didn’t have some kind of measurement? Same thing with sales. I mean, any salesperson will tell you. I mean, if there’s not, if we’re not measuring the close ratio, the amount of leads coming in the time to close all of that we don’t know where we’re really at.
Mike Ayala 02:50
And then here’s the important part adjust. So many times we get so focused on our goals and the outcomes that we we look at adjusting as failure so Many times and I’m not giving you an excuse to change your goals or to detour from them or not to stick through with your goals. But sometimes outside forces cause you to change and you need to adjust. Here’s why. We’re in a good example right now. It’s April. I think it’s April 7 COVID-19, has just like wrecked our entire financial system. It came out of nowhere. So a lot of us knew that some kind of financial correction was coming. The writing’s on the wall, it has been for many years. Real estate prices are at the very top, the stock market’s, like just crazy high. We’ve been printing money since Oh, eight, this couldn’t have gone on forever. But the way that it came about and just shut the economy down overnight, we all set goals at the beginning of 2020 that we’re going to have to adjust and sometimes outside forces cause you to have to adjust and you have to be okay with that. But then sometimes your desires change too. So this is literally a circle. By the way, I have this mapped out in it. I’ll share some tools with you throughout the podcast and then tell you where you can get them but I Have this built in in a circle, that really makes a lot of sense. And honestly, like if you’re not constantly adjusting and then coming back to why, why you want what you want your it’s just a linear conversation, but it’s got to be circular. Because sometimes what you really want changes, sometimes what you’re going to do to get it changes, and so then you’ve got to be able to adjust.
Mike Ayala 04:21
So let me take you back to where I first started thinking about this. I think I was 26 years old, I had started a plumbing and heating company with along with Karen and a partner. And we, we had hired a consulting company. It was called Business Development Resource and they had an annual event called profit launch and a profit launch. It was basically a 3-day business planning event where you would go in you would spend three days in a room and by the time you were done, you would have your annual business plan for the next year. So this happened in October or November. And in order to get ready for this three day planning, they sent us out a workbook Well, the full first day was centered around this question: What do you really want out of life?
Mike Ayala 05:04
What they said, to get us prepared for this was, if money and time was not an issue, what would your life look like? What would you really want? And they also made the comment that has stuck with me since then. If you have a business or a job that isn’t helping you achieve your personal goals, then you really just own a job. Even if you had a business, you really just own a job. And that job is not going to get you to where you really want to go.
Mike Ayala 05:30
But in order to really understand where you want to go, you have to ask that question, what do you really want? So we started asking that, and a couple things came out of that, that kind of got me thinking around this investing for freedom formula. Karen, I sat down I think for the first time, we’d always been goal setters like we would just take at the beginning of the year, we just write this list and we’d say, Hey, we want a new couch this year. We want a new TV, we want to make another dollar per hour. So that was kind of like our goal setting process. But when we went through this we really started digging into Okay, what do we want and here’s the things that hit that list. So I said I wanted to Bonanza, g 58. That’s an airplane. We said we wanted a mountain house, a lake house and a condo in the city. And then we also said that we wanted to get to income producing properties a year for 10 years. The reason why we wanted to income producing properties a year for 10 years was we were just thinking about retirement. So it’s pretty early in our business career, I began I think I was 26 years old. And the way that I was thinking about it, then we didn’t have a 401k set up any of that kind of stuff. And I’ve never really been a big fan of 401K’s anyway. And so I was sitting here thinking that if we got two income producing properties a year for 10 years, by the end of year 10, we would have 20 rental properties that we owned. And my thinking was, we would probably have mortgages on those. And so when you travel out by then I’d be 35, 36, 37 years old. And so when you travel out 30 years because that’s how long it takes to pay off a mortgage. I’d be 67 years old when the last rental was paid off. And if I had twenty paid off rentals and they all brought me $1,000 a month, that would be $20,000 a month on top of, you know, what I still owned, that business or I had sold it at that point in time. My mind was literally in the point then, that I was thinking that I was probably gonna own that business for the rest of my life. And I needed some kind of retirement. So that was like our retirement plan.
Mike Ayala 07:17
So we came back. And we kind of put this into action. So what do you really want? We want to two income producing properties a year for retirement, cash flow. I wanted an airplane because I wanted to be able to get around and go wherever I wanted, whenever I wanted. So this is the why do you want it conversation, right? retirement, be able to go wherever I want whenever I want with the airplane, the Mountain House, the condo in the city and the beach house. The reason why we really wanted those was because we wanted to have that experience to be able to go, you know, to the lake in the Mountain House and be able to go to spend the time at the beach, but really kind of walking through that process. This is why it’s so important. When you really start asking, why do you want it those things don’t hit Our list anymore. I still want a house in the mountains now for but it’s for a different reason. But what we realized then was that we wanted the experience of being able to recreate that situation when we went on vacation for a week at the beach. That’s what we were really looking for. We’d love that vacation time. We loved that downtime. We loved being on the beach, did I really actually want to spend a million dollars on a house at the beach? No, I just wanted that experience. Well, you have to that’s why you have to really be into ask the question, why do you want it? Did I really want to say that I had a house at a beach? Or did I really just want that time in a vacation home. So those things ended up for the most part coming off of our list. But then now let’s talk about the rentals that never fell off of our list. Why do we really want or edit that? What do we really want? I wanted 20 income producing properties a year for 10 years. Why did I want it because I wanted cash flow I wanted to be able to retire.
Mike Ayala 08:58
So what was I going to do to get it this is where it gets critical once you get really clear on what you really want, and why you want it. Now we have to begin taking action steps into making that happen. So two things. Number one, I didn’t know this then but there’s a thing in our brain called the reticular activator. And one of my mentors says the eyes only see in the ears only hear what the brain is looking for. Once I decided what I really wanted to income producing properties a year for 10 years and why I wanted it now. I have to decide how I’m going to get it. And so I started changing my mindset. And we were coming back from Sacramento and we stopped at Barnes and Noble. I was living in Elko, Nevada at this point in time, we stopped at Barnes and Noble and there was a CD series there on the discount table. And I don’t I don’t know why it jumped out at me. But it was one of those experiences where, you know, again, the eyes only see and the ears only hear what the brain is looking for. My brain was looking for advice and wisdom on investing in real estate. So this thing jumps off the table at me and I grabbed this CD series. It’s by a guy named [Dalt Larouche] you can still buy it on the internet, there’s very few copies left I think it’s like 150 bucks. And so it was like 13 hours of teaching. And so we jumped in the car from Reno, Nevada to Elko is five hours, I literally got to Elko and I wanted to just keep going, I wanted to drop my family off and just keep going. Because this was kind of like the how-to manual of what I was going to do to get it. I won’t go into the details on that CD series. If you want that CD series, send me an email at email@example.com and I’ll get you a link to that CD series. But this kind of opened my eyes to what I was going to do to get it. And then within the first year, I had two rental properties that literally fell into my lap. I won’t go into the details on how we structured that and everything else. But if it hadn’t been for me, setting what I was going to do to get it and listening to those CD series, I would have never been able to figure out how to creatively structure deals that got me those two first rental properties.
Mike Ayala 10:52
Well then fast forward the next year, a 72 space mobile home park fell in my lap and again And I’ll go into the details on that at a different point in time really interesting story. We ended up buying this mobile home park through a series of events, like almost a deal I couldn’t pass up, I literally couldn’t pass it up. So by the end of the second year, we literally have 72 spaces in a mobile home park, plus two income producing properties a year. So if you count spaces if you count actual residents and tenants, by the end of the second year, I had 74 rental properties. 74 checks being written to me potentially checks being written to me a year and my goal was 20 income producing properties over 10 years. By the end of year two, we had like 10 X that right? I mean, that’s, it’s probably 1000 x.
Mike Ayala 11:44
So why am I saying all this? If you don’t ask the question or start going through the freedom formula, what do you really want and then you don’t determine why you really want it. And then you don’t start working through the process of what you’re going to do to get it. You’ll never know move toward that. And the important part of the measuring results if I hadn’t measured the results along the way, if we didn’t create ourselves some kind of scorecard, I wouldn’t even be thinking about this at this point in time, because so many times, we have wins and victories as well as losses. But we have wins and victories that we don’t even stop and celebrate, we don’t even know that we’re winning. And so it’s very, very important to measure the results. Because how do you know where you’re actually at and whether you’re winning and whether you’re getting closer to your goal if you’re not measuring it?
Mike Ayala 12:28
Now, I have some tools that Karen and I have created that can help you measure results in your financial world. In areas of health and wellness and financial, we’ve created this, the Investing for Freedom Wheel, and it’s basically got these eight areas, eight gardens that we kind of talked about. So I’ve got some tools that can help you measure if you can, if you wanted to send me an email at firstname.lastname@example.org and just put in the subject line tools and I’ll send you I’ll send you a link to some of our tools.
Mike Ayala 12:58
But here’s the important part. Adjust. And I already said this probably at the beginning. Sometimes our goals are going to change, sometimes our desires are going to change, sometimes outside forces change our goals and desires for us. I heard one of my mentors say one time that we tend to overestimate what we can do in one year, but we tend to underestimate what we can do in five to 10. And so this is why it’s really important for us to be able to adjust because you have to give yourself freedom to change the outcomes that you’re looking for.
Mike Ayala 13:30
So this is really a circular process. And I’m just going to close it up with this. What do you really want? Why do you want it? What are you going to do to get it, measure results, and adjust? If you start thinking through that process, you’re going to find so many times in life going forward, where when you actually write this down and you begin to apply it, just take one little thing like what do you really want in the next 90 days and take it through this process? And you’re going to find if you just start writing that down, you’re going to achieve so much more than you ever Could’ve without just sitting down and thinking about it. And another thing that’s going to happen too is even when you actually do achieve things, even if it’s not as a ton more than what you would have before, you’re going to acknowledge it, you’re going to see it, you’re going to celebrate it and it’s going to encourage you to accomplish even more.
Mike Ayala 14:14
So, go out there, invest for some freedom, make yourself some passive income. And I hope you all stay safe and healthy through this COVID-19 we’ll see you on the other side.
Mike Ayala 14:24
If you found value in this episode, and you know someone who’s wanting to start or move further along in their journey toward investing for freedom, I would be forever grateful if you would share this show with them and help me get this message out to more listeners. Also, if you enjoy what you’ve heard, I would appreciate it if you take 30 seconds and leave me a five star review and share this with your friends. And Until the next episode. Cheers to moving further along in yo