As various folks follow Robert Kiyosaki and the rich dad, poor dad books and seminars, many folks become interested in things outside of the norm.
So, we’re going to spend some time digging into that.
Our next guest is a lifelong entrepreneur. He started his first business at age 11! Now he is the owner of an 8 figure real estate empire, multiple black belter, and sought after financial consultant.
What is interesting about him is that he built a 5 million dollar Net Worth in his 20’s, lost it, and I am told has almost completely rebuilt his wealth in the last 12 months!
He particularly enjoys sharing the lessons he learned- and the things he wishes someone had told him before he got started.
Please help me welcome Damion Lupo of Total Control Financial.
In this podcast, you will…
- Discover how this business owner went from broke to rich to broke to rich again
- How his first business venture as a kid set him up for real estate (Hint: It has to do with video games)
- Learn about the difference between wholesale and retail and how it impacts the way you buy and sell real estate
- Discover how he used owner financing when he was broke to find his first real estate investment (This is really interesting, he helped bail out someone who was about to be foreclosed on)
- How his leverage and impatience and lifestyle killed his net worth
- Learn the lesson he discovered about the circle of people around him & how it effected his wealth
- Join us in an interesting conversation of when you should use leverage and when you should get rid of the leverage
- How his mission incorporates into his definition of financial freedom and how he is tracking it
Resources Mentioned In This Podcast
Get A Free Copy of Damion’s Book by Clicking here: www.totalcontrolfinancial.com/dave
Welcome to the Freedom Formula for Physicians Podcast, where it’s all about slashing your debt, slashing your taxes, and creating a liberated lifestyle. And now your host; who met his wife while training for the four hundred meters in Seattle and is eating gluten free, while lusting after Brit: Dave Denniston.
Dave: My name is Dave Denniston, and welcomes back my friends to the latest episode of the Freedom Formula for Physicians Podcast. various folks that I talk to, followed Robert kiyosaki and the Rich Dad, Poor Dad, and the seminars that I know many of you, many Physicians are interested in. So, we will spend some time digging into that a little bit today.
Our next guest, he is a lifelong entrepreneur, started his first business at age 11, so he’s been doing this for a little while. He is the owner of an eight-figure real estate empire, he is a multiple black belter, and he is a sought after, financial consultant. Now, what is interesting about this guy, he had originally built a five- million- dollar net worth in his 20’s, and then he lost it. So, I want to know more about that. We are going to dig into that here a little bit. And now I’m told he’s actually completely rebuilt that in the last 12 months. That is really interesting; we are going to dig into that. I am told he loves sharing lessons and things he learnt, some of them that he wished someone else had told him, which I think for many of our young physicians that going to be incredibly valuable. Please help me welcome Damion Lupo of Total Control Financial. Welcome Damion.
Damion: Hey Dave, thanks for having me man, it’s great to be here.
Dave: Glad to have you my friend. I would just love to know about your journey. I gave a little bit of nail sketcher in the intro; so, tell us about that, what do you do? How did you get started?
Damion: Yes. My journey started really back in Alaska when I was, you mentioned my first business when I was 11, started up a Nintendo buying and selling business, simply because I was solving a problem. I wanted to play video games, and I didn’t have any money, parents didn’t have any money, so, I found a way to support my habit and I think that’s how a lot of entrepreneurs go into the world. We find problems, we solve them. This happened to be my problem, but it was also other people’s problem, and It started there and then, after high school, I went out, and I went to college, did that normal route but I kept starting businesses in my dorm rooms, and eventually one of the Deans at one of the colleges said, you can’t do your business anymore, because you are putting our bookstore out of business. I said yeah, well am paying for school, and so he said well you can either do that or leave. So basically, I paid for school and in a few days, and then left and I realized my mind was that of an entrepreneur, I needed to go out and create things and be able to execute a vision. So, that led me into the real estate world where I spent about a decade building a real estate empire and it was based on a lot of Robert Kiyosaki ideology and the alternative methods, the alternate thinking , going out to a lot seminars, I spent about a million dollars on seminars and coaches and books and tapes and things while I was building this thing up which was, it’s important, and its what people are doing now, they are listening to us talking about these ideas and that’s what I was doing. I veered away from traditional academic stuff, because I wanted to create wealth, and academic stuff, doesn’t typically get you wealthy, it can create a lifestyle, and I wanted something bigger. That led to the 20- million-dollar portfolio of real estate and the journey where I built that and then blew it up.
Dave: Well, is that something, I got to ask, what was the video game that you really wanted when you were 11? That you had to start your own business to buy?
Damion: I am pretty sure it was the legend of Zelda, and apparently, there is this new one that is coming out and I am laughing because it’s retro now. It’s like the cool new-old thing, and I’m going wow, am I that old? Oh my goodness
Dave: Was it regular Nintendo, or the Super Nintendo, which one was it?
Damion: I am old school, it was the regular, the original Nintendo, it was just this clunky games, they apparently now are really very valuable, but it was the original one.
Dave: My wife and I had till a few years ago, had the Power Pad.
Damion: Oh my gosh, yeah
Dave: Those were the days. What was the business you did at 11, what was that you started out with?
Damion: I was basically buying and selling Nintendo games. I was buying them wholesale and selling them retail and hired my parents to drive me around. And it was really solving a problem, somebody had 50 games and I go buy all their games and then I’d played the games and sell them off one at a time so it was just the wholesale/retail model of squeezing the price difference between the two. It was fairly simple; I think E-bay is a great example of that. For me it was Nintendo and it worked well because I wanted to play with the product anyway.
Dave: I think this is a great point to bring up and I know we probably get into real estate, where you use those same terms. People aren’t familiar with this term wholesale, and this term retail. Can you just kind of fill them in, what does that mean?
Damion: Wholesale basically mean you’re going go and buy things in bulk, that’s the very common method where you buy, like I was buying 15 Nintendo games at one time and I buy them at the time say, 10 or 12 dollars each, and then people, the retail buyer, the person that goes into the store, instead of buying directly from the manufacturer, they are going directly into a store, they are walking into Walmart, and that’s what I was. I was like the Walmart where someone could buy one game at a time and I was satisfying their need to get that experience of the one thing, vs. me, I was just out there buying in mass like I was the middle man that was storing things up in the ware house.
Dave: It was kind of like E Bay before E bay was around, right, essentially the idea of selling to the public which is still in many cases below the prices they might pay at a Walmart or a Targeter, whatever, right?
Damion: Right, exactly the same thing
Dave: So, you built this 5, actually, 20 -million – dollar network I think you say. Then you lost it all. I would love to know; how did you build your wealth? What helped you do that initially? You mentioned going to seminars. What did you do to put yourself in a position to build that net worth to begin with?
Damion: I was really like a lot of, if I think about it, I was like a lot of medical professionals, where I started out in my early 20’s, and I had student debt, I didn’t really have any cash, and I just wanted to create wealth, so, I read some books, and went to a seminar, I went to one of these things where you go and it was basically a pitch fest, you have all these speakers and they are selling their products. So I maxed out my credit cards buying their ideas and their strategies and then I went out and I was creative, so my very first real estate deal, I used my Visa to buy the property, and that’s part of the way to create wealth instead of doing the traditional method, start thinking creatively; I just took over somebody’s property. Somebody had a house for sale, I put up $6000.00 that I took off my Visa card, and now I owned the house, I took over their mortgage and I was their landlord, more or less and I really did that over and over again to create the volume, the mass in my portfolio. And it wasn’t, it was really my brain that was doing it; because I didn’t have cash, I didn’t have a lot of borrowing ability; but I did have creative ability and I think that’s one of the keys for anyone creating wealth; because a lot of time we are so buried in our own financial lives we think, I can’t possible start. But the truth is we can start if we are willing to be a bit creative and think outside of the box; whatever it tells us is we are supposed to do and what we can do
Dave: So, give us dig into this a little bit more, so first how did you find the property? Do you remember that first one?
Damion: Yes, the first one is was sort of funny. I had a friend of mine that read Rich Dad, Poor Dad, and he said I found a deal, and I think he was just driving around neighbourhoods, looking for houses that were for sale by owner. It was really that simple, he found one, he talked to the lady, and said I want to buy your house and put it under contract, and then he told me about it, and I end up becoming what would be known as the money partner. I put up the cash from my visa and we were partners. He was what was called a bird dog more or less. He was out there, scoping things out, looking for deals and then he knew I was interested in getting involved in real estate so, he brought the deal to me and then he got to share the profits.
Dave: How did that work, so did both of you put up money then or was it just you? Because you said you were just the money guy how did you do it? Was the mortgage in your name, his name, partnership? What was that like?
Damion: Yes. The way the deal was, he brought the deal in he was the one who found it and he got to share half of the deal, so meaning he got half of the profits and I put up all the money, and that’s a very common thing for someone looking for a deal. They find the deal and they find someone who has money and they become partners. The person with the money didn’t go find the deal; they put up all the money. So, I put up the cash, the $6000.00 and then there was like $100,000.00 mortgage that was already on the property, and so I just took over payments, so I didn’t go a new loan anywhere I just took over payments from the original owner and then she signed the title over to me, so I owned the house and then I took the mortgage. It’s called buying a property subject to the mortgage in place, and that way I didn’t have to go to the bank to get financing, because quite frankly I couldn’t qualify.
Dave: So, it’s kind of a form of owner financing then?
Damion: Yes. It’s definitely financing
Dave: Did you have to write her a note then, you know for remainder equity in the place, or, what was that like?
Damion: Yes, when we did the deal, I took over, say the mortgage was say, $100,000.00 and there was $6000.00 in back payments, because she was behind, and she was happy to walk away, she wanted to be done with the property because she was going to lose it to foreclosure. So, my purchase price was literally $106,000.00. It was a combination of taking over the mortgage and putting up the back payments and so she didn’t want anything else. The note that I hand to her was really the exact amount that was owed to the bank. So, I wasn’t paying her, I was just paying the bank going forward directly.
Dave: Got it. Was her equity in the place immediately then, cause of doing that deal? Obviously, she got away from having a foreclosure on the place, she got a, I guess. She didn’t walk away with any cash then I guess out of the deal then?
Damion: I don’t think; she may have walked away with a thousand or two, it was fairly small, she just wanted to save her credit and be done, she was trying to move, she was behind, I don’t remember the circumstances 17 years ago, but the reality is, I solved her problem and that’s what we have to keep in mind when we are doing these creative deals or real estate, it’s, we are solving a problem, and so I solved that problem. That house was probably, if I was to put it on the market was worth a $115/$120 which doesn’t seem like a lot. But the way I was structuring things back then, and it definitely the same thing today. I was selling it on terms, which means I was the bank so somebody came to me I want to buy the property, I don’t want to go to the bank and so I financed it, I was the owner carrying bank. Basically, they gave me a down payment of a few thousand dollars and then, they made payments to me so, the idea was, the payments to me was the payment to me would be more than my payments to the bank and that’s one of the ways that you can create wealth out of thin air, because you can make up the value of the house. I think I sold it for $140,000.00 or a $150,000.00, and you get to make it up because you are creating value basically through the financing that you are putting in place for the new buyer that couldn’t otherwise own a home. So, that was one of the ways that I was printing money like the own federal reserves, my own money printing machine.
Dave: It was the form of arbitrage really the idea that you come in there and essentially you, same thing you were doing with the whole idea of retail vs. wholesale from the Nintendo games, right?
Damion: That’s right
Dave: You were selling something at a higher price by buying, in this case it was a book, but you were buying at a lower price. So, I would love to know Damion, and it sounds like – you stayed with this partner then? Time after time after time and doing these deals and stuffs?
Damion: You know it’s funny Dave, this guy came in and I went in and had to remodel the house because It was a mess, It was over 60years old. And I didn’t know anything about anything, and the closest thing I have done was rebuilt furniture as a kid in Alaska where I tore something apart cut it in half, re-screwed together, and that was my remodelling experience. So, when I got this house, I had to learn how to plumb and paint and do electrical work. So, I basically electrocuted myself, got super high on all the paint fumes, not opening the windows, and basically flooded myself out as pipes exploded underneath the sink. So, I learned all this stuff and when I started doing it, this partner, was too busy and couldn’t be bothered. And I remember saying, hey, I’ve got to go fix the roof and I don’t know how to do that and I’ve got to do these things and he said it wasn’t worth my time. And I went ok, so I found out how invaluable my partner was. He was basically worthless and we were done with our business. And a lot of times people get a bit full of themselves and I was getting dirty and that was one of the valuable things that you find success if you are willing to get dirty and or find a partner who is willing to get dirty. I was a great partner because I was out there doing what needed to get done and he was the type of partner you wanted to run from because he didn’t really have any value after he handed off the deal. And then it became my little baby and so I ran with it and started doing more of those.
Dave: So you bought more and more properties, you built up your net worth, you feeling pretty good about yourself. So, what happened that then cause you to lose all this money?
Damion: When I was doing this, one of the things that was happening, that was very fortunate, property values were going up and I had cash flow, so my payment to the bank on these properties, cause I was essentially building up a portfolio of rental properties. My outflow was whatever it was. It was a $1000.00 a month, and then somebody comes in, and they are paying me $1300.00 a month so am making a few hundred on each of these properties, and what I started doing was getting really impatient and a little bit too greedy, too fast and so I was starting to sell off the equity, and without getting into that, confusing the heck out of everybody. I was taking that $300.00 and essentially offering it to somebody selling off the cash flow, which means I was harvesting all my equity and I was doing that because I wanted a lifestyle very quickly. And I think this can happen very; it often happens, and I’ve seen it with a lot of my physician friends where they want, they fell like they’ve worked so hard and they want to have a lifestyle very quickly and it ends up hurting them in the long term and that’s what I did. I ended up selling off the equity very quickly to get cash and then I would be out there buying my Ferrari and having this great lifestyle, and I essentially killed off all of my trees that were growing in this garden instead of having all these fruit trees that I can harvest with a cash flow. I was just killing off the trees and selling the wood and it essentially made for a very soft foundation. I didn’t have a very solid foundation of equity and cash flow, so when the markets turned down, I was highly leveraged and I didn’t have any room to move and so I basically lost everything because, I was riding the edge too hard I wasn’t willing to be patient and allow these things to flourish and grow like a good gardener, I was hunting everything instead.
Dave: All, right let’s take a pause here for a second and go to our commercial break.
Dave: So here’s a great question. So, it sounds like to me that the lessons for you was you were not being conservative enough with your lifestyle which for many residents and fellows as they are making 50, 60, thousand dollars a year, the transition of practice all of a sudden, they are making $200 maybe if they are in surgery they are making $500,000.00 a year that not doing a lifestyle explosion has ever James Dolly say, but a lifestyle creep is probably better. Sounds like you had a lifestyle explosion which you weren’t banking the dough at some point.
Damion: No, I had an explosion of lifestyle all over me. I mean It was a big whole mess and it’s very easy to do that especially, this goes to one of the major lessons it really being conscious around who you choose to have close to you and I called it the ‘buckie five’ in my book, Re-invented Life where I talk about the influences of the people that are close to us. If we are a resident and or a fellow and we move into private practice or whatever it is, all of a sudden, our income is a couple hundred thousand; all of our friends have become a couple hundred thousand. We are hanging out with these people, we are going to start doing what they do and it they are out there buying the Bentley or the $100,000.00 Tesla or whatever it is, we are going to feel compelled to be like them. So, it’s really important to figure out who are those people that are acting as good stewards, and they are being smart with their money and spend as much time as possible with them instead of the ones that just are having the lifestyle. That’s what I did, I spent a lot of time with very wealthy people that have huge lifestyles, they didn’t necessarily have the best ethics and so I started to become them which is why I ended up with my Ferrari and the houses and all these other stuff. So just being conscious around who we are close to, and the influence they are going to have on us is super important. If people are saving money and investing it and that’s what gets them excited, you are more likely to do that than if you are around people that are constantly travelling and having the big cars and the big lives. Those things tend to be very depleting and very exhausting and they are not very great long term, they just look good and feel good in the moment, but the fulfilling part is kind of missing out of that whole piece, because you are in that rat race all the time.
Dave: This brings up a great question. Those are all wonderful, wonderful points, of you are who you are around. The question I have for you as you were building this. Lot times like in Kiyosaki books there’s good debt, there’s bad debt, and some folks feel that all debt is bad. Obviously, you went through bankruptcy or something like that. Now you are on the other side of it. How do you think about debt at this particular point? Do you ever see a point where being debt free is a good thing? You know maybe you have to take some risk to get to a point where you no longer need debt. What do you think about that Damion? I’d love to hear your thoughts on debt from the lessons that you’ve had.
Damion: It is funny, debt is truly a four-letter word for a lot of people and I am of the same mind-set that Grant Cardoon talks about, where he is going to go out and he wants to use debts to buy property, not to live in but to rent out because he wants to use debt to create asset and wealth. The misnomer is that we should go get the biggest house possible and get a bunch of debt and because we can write it off on our taxes that’s a smart move. That to me is a stupid idea because it locks you down, it doesn’t give you flexibility, and that house, like Robert Kiyosaki said, is truly not an asset because it is not feeding you, its eating you, and so if we think about debt that can be used to buy asset, in its most common form, that is real estate. Then we can start using it as a tool for us instead of being used against us. Debt is not in itself good or bad, it’s just how we use it and because money is being printed out of thin air, and that our entire monetary system is based on debt, it would make sense for us to use that system and not have it used against us. If we are saving money, and the Federal Reserve is printing money, we are basically losing a game that we cannot win. We’ve got to get smarter and start using debt to our advantage, because, if you are going out there and borrow money like right now at 3, 4, 5% and have an asset that’s going to pay you for the rest of your life, that makes a lot more sense than going to have a house you are going to sit in that is just going to consume you, that you have to work for every month.
Dave: I think those are all great points. I guess my counter to that is, I do believe that there is a point that we should be completely debt free; but, when you are younger, you can take some of these risks. Just to give you an idea, in my practice here which I have been very open and honest about this is back in 2008, August 2008, I closed on a million-dollar deal to make an acquisition of clients, and financial planning clients. And of course, August 1, 2008 was a really bad time unknown to me, I closed on that deal, so there was an extremely painful lesson of which I leveraged up to do and at that time I was only 27, going 28 and had the ability to do that. And so, one of my major lessons from that was- obviously, I had time to recover right, that I had my whole working career ahead of me to get it going, but as I looked up some physicians I have seen, where they leveraged up and now they have a lot of wealth, it’s like, if you built it up, now it’s just a game right where you don’t have to have that leverage any more. In my opinion. Some point as you get closer to retirement that leverage is a former risk, so you probably want to de-leverage so that every dollar that comes in is profit, rather than having to worry about whether the tenants going to stick around or whatever. What do you think about that?
Damion: I think it is a great point and I think that there is something that is lost on people. I certainly didn’t realize this when I was in my 20’s building things up, that there is value in the peace of mind with the things that aren’t leverage, extremely tight. So, the more you de-leverage, and what you are talking about, going debt free is de-leveraging and doing that you get to a point where you don’t really care what the market does. If you’ve got rental property, you’ve got, it doesn’t matter what happens to your house, if market collapses, your house it drops in half, or the rental property, the rental income crashes, you don’t care as much because the debt isn’t there that you have to support. So, I agree that as you get older, and I know a lot of wealthy people that I have been friends with over the years that are in their 50’s, 60’s, 70’s, they like the idea of having less and less debt because when they wake up, its less anxiety around what is going on and it is, it is a calmer way of investing. Debt is a powerful tool but I think that there is a gradual release of it as you get older that makes sense for a of people base on exactly what you are saying. It’s a sounder strategy, and as long as you can create your investments towards, they make sense doing it. I love the idea of eventually de-leveraging, and just having that real simple cash flow without the debts
Dave: What I’d love to know now, Damion, with your experience, how are you tracking kind a your financial freedom, having been through what you’ve been through, and now rebuilding your wealth, I am guessing doing much of the same. How are you tracking your progress towards that? What does that look like for you?
Damion: The way that I am tracking is a little different from how I was doing it in the past. In the past, it was more or so I was thinking, if I have 10 more houses 100 more houses, or more apartment complexes, that’s my wealth. And I used to think of billionaires and even millionaires, but I would look at the big numbers that the ionaires and I would look at that as a number of dollars in my bank account. The way I look at it now, I look at the idea of somebody that’s a billionaire which is my goal it’s impacting a billion people. So it’s a different focus, and before, the money was the focus, the mission, it was the outcome and now the focus is on the impact I’m having with people. So for me to guide people and inspire them to have control of their wealth, control of their financial freedom and their future, the more people that I do that for and with, the more wealth I create, and so the side effect is the money, it’s the dollars in the bank account. It’s a different focus, the more people I touch the happier I am, the more fulfilled I am. The ironic thing is, the wealth comes in a bigger more profound way as a side effect. So, that’s how I am tracking it. How many people are part of my world, my eco system. How many people are paying attention to what I am saying, how many people are becoming free and saying thank you for helping me getting me off that roller coaster that I was on. In my previous life where I just watched the stock market go up and down every day and it was chaos. So, that’s how I am looking at wealth now, it’s not just another unit. That’s just more of a side effect, the more people I impact.
Dave: Interesting. I love that. That’s great. Great mission to have. And I have mentioned from time to time to my listeners that, they like business education. I think you have done a wonderful job of bringing some mentorship to us here today and some of your own wisdom, your own knowledge; I’d just love to hear a parting, couple parting thoughts from you. What do you think the best business lesson is that you can pass on to doctors today?
Damion: The best business lesson is to make sure you have people that have been there in the trenches, that have scars, blood, tears and mud all over them that you are listening to, and even though there is a sense of intelligence, and physicians are no doubt, some of the smartest people in the world, make sure that you have people around you that have been out there, that are truly speaking from experience. So, that, you are not going out there and letting your ego get you in trouble. I know what that like and its dangerous and its expensive, and to really make sure that people are surrounding you, that are giving you legitimate, honest feedback and you are listening to them and, and then owning the results and not abdicating or punting, and getting in the game, I mean that’s really what this is all about. It’s about getting in the game and building confidence by doing things and becoming educated from people that have actually done it not just the academics that are teaching from theory, and so that’s really why I wrote the books I did around real estate, and the EURP it was to hand off that type of education and empower people so that they can make rational decisions. That’s my gift to people, it’s to take that wisdom and then make your own decision, because I think you are smart enough to make the best decision for you. You don’t need somebody else making it for you and I would start there.
Dave: That great. Thank you so much for that. Obviously, I could talk forever about all this stuff but, I want to respect people’s time, our listeners’ valuable time. Do you have any closing thoughts Damion that you want to pass on to the audience?
Damion: Yea. I would love people to visit and I would love to give people a copy of the book and give that to them so that they can, and the things we’ve been talking about and just hand it to them if that’s, if people want that I’d love to share that and put a link on our site, for people to be able to grab a copy of the book for free, if that’s ok with you.
Dave: Yea, that ok, where can they find that?
Damion: If people want to visit total control control.com/dave, I’ll have a link there where people can grab a copy of the book and I will send it out to you and it’s on me and see if it’s good fit for you. I think education is the biggest thing, and learning more about it is the valuable piece that I can offer the people, and just grab it and see if it resonates with you but; that’s it, go visit total control financial.com/dave and I’ll have a link there for everybody.
Dave: Perfect I will put it on the show notes as well so everyone can just click on it if they are on iTunes and just check that out. And Damion if they have more question and they want to get in contact with you personally where can they best find you?
Damion: I am everywhere, but the funny part is, the best place to go is. It’s funny because the social media, everything, we are all over the place. The best place to reach me is definitely LinkedIn, I love when people will send me an actual message not just a blast, but send me a message, you are likely to get a video response, I will definitely reach out back to you. I love when people say hey, I’m interested, I want to learn. Just makes me all happy so please, reach out to me on LinkedIn.
Dave: Awesome. Thank you so much for being with us Damion. if you are a physicians, or if you are someone servicing physicians, and you want to add value to the audience, you want to grapple with tough issues, and interesting ideas that Damion brought today, I’d love to share it in the next freedom formula four physician podcast, make sure to contact me at firstname.lastname@example.org, or on my website: www.doctorfreedompodcast.com. From the freedom formula for physician’s podcast, this is Dave Denniston, thank you so much for joining us. Remember my friends, make sure to cut your debt, cut your taxes and live a liberated lifestyle. Talk to you next time.