Posted on: March 30, 2020

In this time of economic uncertainty, you’re probably asking yourself some really tough questions. Was there something you could have done to prepare yourself and your business for times like these? Is there a way you can ensure your business stays afloat in the midst of a challenge of this proportion?

To help you put things in perspective, Tom talked to someone who knows what it’s like to go through a period like this—Jason Medley. Jason is the CEO and founder of The Collective Genius, the number 1 mastermind for high volume real estate investors.

If you need expert guidance on key things like building a strong financial foundation or keeping a rainy day fund, this episode is for you. Jason not only gave clear, thorough, and practical tips and instructions, he also provided some much needed inspiration so you’ll continue to thrive amidst these trying times!

 

MARCH CONTEST ANNOUNCEMENT!

For the entire month of March, Wholesaling Inc is running a Ratings and Review contest! We’re going to fly out 3 lucky winners to Florida, paying for airfare and hotel, to spend to full days with Tom Krol!

Whether you are trying to land your first deal or scale your existing Wholesaling business, Tom is going to help you crush your obstacles and achieve your goals!

And the lucky winners will all be featured as guests on the Wholesaling Inc Podcast!

To enter, you must Rate and Review the Wholesaling Inc Podcast on iTunes (5 stars please:) and send a screenshot of the Review to Darrin at darrin@wholesalinginc.com.

3 winners will be chosen at random and announced on the Podcast in April! Good luck!

 

Key Takeaways

  • How to take profit out of your business and when
  • Difference between having money and having liquidity
  • How to build a strong financial foundation
  • How he prioritizes his income and long-term goals in terms of cash flow
  • How to build a structurally sound financial ship for you and your family
  • What CPR means
  • What retained earning is
  • What you should do with your profit
  • The importance of having a rainy day fund
  • Why cash is king
  • What cash flow is
  • Where people can find out more about Collective Genius
  • His advice to those who would like to achieve financial freedom through real estate
  • Game-changing book he recommends

RESOURCES:

If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!

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Episode Transcription

Tom Krol:
Guys, don’t forget we are doing a major contest this month for our listeners and it’s this, rate and review the podcast on iTunes. Send that review over to darrin@wholesalinginc.com. It’s Darrin, D-A-R-R-I-N@wholesalinginc.com.
Send us a picture of that review and we are going to choose three people who send us those reviews to come down to sunny Florida and spend two full days with me going over wholesaling. We’re either going to get you your first deal, bam, my favorite thing in the whole world or we are going to grow and explode and automated or delegate your current wholesaling business.
Guys, I love wholesaling, it’s changed my life and I love talking about it and reviewing it with you. I can’t wait to get into the nooks and crannies of your wholesaling business and get you your next deal. Let’s do that in Florida. It’s going to be two full days. All you’ve got to do is rate and review the podcast on iTunes and send that review over to darrin@wholesalinginc.com. Can’t wait to meet you in person. See you soon.
You guys, I am so excited to be on the phone with the man the myth, the legend, the head of CG, Collective Genius, Jason Medley himself, guys. Jason has been a personal friend and a mentor of mine, and I wanted to get him on the phone because he and I have been going back and forth with conversations for actually over two years now. But more so than ever right now, because Jason knows what it’s like to go through a time period, like we’re going through right now with this economy, with the pandemic. He’s not only done it himself, but he runs an organization of some of the top real estate minds in the country, and he saw them go through this.
Right now, everyone’s talking about… There’s a lot of chatter online, everyone’s on social media all day, and they’re saying a lot of big ideas stuff like fortunes are going to be made and lost right now, or now is the time to act. But nobody’s really saying what to do or how to prepare, how to do it. Jason has gone through it personally. He has led many great men and women through it personally, in his organization of Collective Genius.
I was a part of Collective Genius for a long time, and I’m still friends with everybody there. It’s an amazing organization. I wanted to have the benefit of our conversations to be out on the airwaves here for you guys, for our listeners, so that you could pick his brain. You know me guys, I’m going to put him in the hot seat. We’re going to ask some tough questions. We’re going to hold his feet to the fire and see what he knows and peel this onion and get to the heart of it because this is Jason’s specialty. He is really good at this stuff and he has a lot of great ideas about stuff you can do right now and stuff you can prepare for and stuff that you maybe even should have done before this happened. You certainly won’t allow this to happen again without doing it next time.
Without further ado, Jason, can you hear me, okay?

Jason Medley:
I can hear you, sir, and I’m ready to rock.

Tom Krol:
Bam, what an awesome time. I’m so excited to have you on the podcast. I think this is your first time on the podcast. Is that right?

Jason Medley:
I think it is. It seems like that might be overdue.

Tom Krol:
I cannot believe it, you guys. I can’t believe Jason has not been on before. We will remedy that by having him on now multiple times. One of the reasons is because Jason right now is one of the guys out there punching the gas. He’s working hard, he recognizes the situation we’re in.
Guys, we are in a national pandemic. We’re in a national crisis with the economy and I wanted to pick his brain and I wanted you guys to have the benefit of it. Jason, before we deep dive, can you just tell the audience, some audience members might not be familiar with you or Collective Genius. Can you just give us a quick summary about who you are and the organization that you run?

Jason Medley:
Absolutely. Again, my name is Jason medley. I am father to Ava Medley, six year old little girl. We live here in beautiful Tampa, Florida, myself and my wife, Jennifer Medley. Love, love, love, love, love being outside, try to be as outside as much as possible while maintaining social distancing right now. Spending a lot of time in the backyard.
Love being on the water and I love helping people. I am a natural… My God given talent is connecting. That’s what’s enabled me to create an organization which is called the Collective Genius Real Estate Investing Mastermind. Effectively, what we do is we take the nation’s top flippers, wholesalers, rehabbers, turnkey providers, apartment syndicators, you name it, we take really the top shelf folks in the nation or I would anticipate our organization’s probably responsible for buying and flipping 20 plus thousand homes a year.

Tom Krol:
Awesome.

Jason Medley:
Big numbers too on the amount of doors that they own or control. But what we do is we take and bring all of those individuals together on a quarterly basis and we become their board of directors if you will. We’ve often coined CG the elite investors board of directors. What that really means is, is say that you are a gentleman, one of our members like a Mark Delatour, great guy. Close friends with Tom.

Tom Krol:
Yes.

Jason Medley:
The guy at times was doing 110, 120 plus deals a year buying them all at the auction. As he was a member in the Collective Genius, the auction began to dry up, margins begin to impress. He needs to look up and say, all right, the good times have been rolling, I’ve been smashing it, but the landscape is changing, it’s difficult to buy homes that they auction and create margin, now, what do I do?
What we do is Mark comes into our organization, we huddle up, we sit in a round table type of structure, and Mark says, “That’s my challenge right now, all right? I’m a turnkey provider. I buy all my inventory at auction, and that is getting more difficult to do, what do I do? I need to really create a seller direct sales organization.”
We, through… There are other people in our organization that are smashing it on that front. Maybe like a Jason Burn out of Denver, who generates thousands of leads a month and has four acquisition reps and wholesales 200 plus deals a year says, “Mark, I’ve got to covered, man. Here’s what we’ll do. We’ll jump on the phone after CG and I’ll bring into my back office, I’ll show you everything that we’re doing. I’ll tell you where to start. I’ll give you my systems. I’ll give you my processes, and I’ll help you get up and running on your seller direct platform.”
That is an example of what we do at CG. It’s also a massive deal machine. Our members are doing… A perfect example right now, everybody is trying to get their hands on what, cash. Greenbacks.

Tom Krol:
Right. We’re going to talk about that, guys. Because if you’re not in that head space you need to be. Jason’s going to fill us in, in a second on why that’s important. But, go ahead, brother.

Jason Medley:
We might have a member… He is actually on my leadership team, like a Frank Kava, guy’s got a gigantic portfolio, probably 300 plus units and he wants to have some liquidity right now. Those units, they have been bought, they have been fixed and they have been filled with tenants and they are performing assets with Section 8 tenants, which is very safe right now. You know the rent’s going to come in.
He’s going to sell a batch of his portfolio off and he will sell that to other CG members who are what are called aggregators, who that’s their specialty, they sell performing rental properties. In order to get some cash, Frank will sell some of his portfolio to other members in the Collective Genius to then liquidate that to people like doctors and dentists that want cash flowing assets.
That’s an example of what’s happening right now today, inside of CG. It’s a board of directors, we share systems, we share strategies, we help each other, we go to each other’s office, we do office visits. I want to say Mark Delatour, who I referenced earlier came to actually visit you in the process of building a seller direct machine.

Tom Krol:
He did. Others… Just off the top of my head without even thinking about it, you guys, everybody who is anybody who’s a real leader in this space is in CG. Mark [Delatour 00:09:16] is just one and he’s a total sweetheart, rockstar, a very good friend of mine. We actually get together once a month. But even my personal, my CPA, Marcus is in there, Nathan Brooks, Joe McCall, Corey Peterson, Phil Green, Corey Boatwright, Travis J. Connor, David [Lecco 00:09:33], Frank Kava, Corey, I said them. Christine Kraus, [inaudible 00:09:37] I’ve met so many rock stars, I don’t even know… Just off the top of my head, it’s crazy. Your organization is filled with every single leader of every single niche of real estate, and meeting with them once a quarter will change your life.
Mark Delatour, I don’t even know if you noticed, we were for a very long time, after my first CG meeting, we would meet every month over a conference call and go over each other’s numbers and help each other out on what our goals were for net worth and passive income and things like that. Amazing, amazing organization. Absolutely-

Jason Medley:
What’s funny is, what we’re talking about, this is a great segue to our story. I know we need to talk about what’s going on right now. But one of the things that we’re going to talk about is how to protect yourself from… Everyone, I don’t care who you are, I’m in fantastic shape, I know Tom is as well, but I don’t care who you are, there’s a lot of uncertainty, possibly some fear. One of the things that minimizes that fear is if you have liquid cash.
Tom and I had a conversation years ago. I’ve been preaching if not banging the drum inside of my organization. Not only like guys like Tom but also perfect example, Mark Delatour. Mark Delatour is in a great position right now because of the drum that we’ve been banging for the last several years. That you’ve got to expect the unexpected. You’ve got to have a deep foundation in your business and that just doesn’t mean simply doing more deals, that means taking profit off the table. Profit is not something that merely shows up in the bottom right hand corner of your profit and loss statement, it is something that you physically extract in the form of cash and retained earnings in your business and family rainy day fund.

Tom Krol:
Let’s talk about that for one second. Because I hear so many new wholesalers especially, and they’ll say something to me like on a support call, I’ll say, “How much did you do on your first deal?” They’ll say, “I made $11,000.” I’ll say, “Well, what did you do?” They’ll say, “I put it all back into marketing.” Can you just explain a little bit what it is when you say taking profit on the table? Because I agree with you, and we’re going to talk about, guys, what Jason I talked about two years ago, it really set me on the right path to where I am today on this exact thing, because there’s a lot of misconceptions out there about cash flow and putting that in first position. But can you just tell us a little bit more about logistically, how do you do that? How do you take profit out of your business and when?

Jason Medley:
Sure. Here’s the reality of it, that is a very different… I’m going to do my best to answer it, but that’s a very different discussion, depending upon what your existing financial picture looks like. I’m going to do my best to approach answering that, understanding that one of you is going to be listening and saying that’s not applicable to me and someone else is going to be listening saying, “That is applicable to me.” Let’s do this first. I need you to understand the opposite side of the equation before… If you understand the opposite or counter approach, it’ll make more sense when I explain the actual approach that Tom wants me to share with you, okay?

Tom Krol:
Let’s do it.

Jason Medley:
All right, one of the things that we talk about in the Collective Genius is you see alcohol commercials and they say drink responsibly. Well, we talked about scaling responsibly. There are a lot of business owners that if you’ve never experienced anything about what’s going on right now, and I have, this is my third time. I’ve experienced this, and I’ve experienced financial crash of 2008, and I’ve experienced 9/11. If you’ve never experienced anything like this before, you don’t have a baseline for what happens when these things happen.
When you’re growing your business, and you’re on an 11 or 12 year bull run, like we’ve had, you often are taking all your profits and putting them back into the business or you are, I made 60 grand this quarter, so I’m going into two new markets and hiring another person on board. Now, I’m making 80 grand next month, and I’m going into three new markets.
What happens is, is you can scale yourself out of your profitability, or you’re using all your profitability to scale. What happens is… You’ve got money, that’s what’s enabling you to scale. But if you don’t consciously take profit, you don’t effectively have any liquidity. There’s a difference… I want to draw a parallel here that there’s a difference between having money and having liquidity.
Granted, the person I’m describing to you right now, I’m making 80 grand, I’m flowing. Rocket, last month 60, 80 I’m rocking, I’m crushing it. You’re taking all your profit, all your liquid profit and putting it back in the business every month, you’re putting all your chips in, and sooner or later a black swan event like this happens, and the dealer turns over the Blackjack card and you are going home, because all of your money is in the business. You don’t have a stable financial picture.
What you’ve done is you’ve built the skyscraper another floor higher, another floor higher, another floor higher, another floor higher, but as you built it higher, you haven’t dug the foundation another level deeper and another level deeper. They’ve got to go almost hand in hand because the higher you build it, unless you develop, and methodically approach strengthening that foundation, the higher that building gets built without that strong foundation, the more wobbly and vulnerable and unstable it becomes.
Then when the wind starts blowing, and the hurricane cranks up, that building cannot stand. Now, here’s the counter to that, here’s what we want to drive home today. Right next door to that tall building, right next door to that tall building, that skyscraper, with a weak foundation is another building that say, is only 60% as tall, but its foundation is three times as deep.

Tom Krol:
Bam.

Jason Medley:
All right?

Tom Krol:
Got it.

Jason Medley:
Let me share with you the analogy of on the outside looking in, because this is what our senses tell us. You’re standing there looking at both of those buildings, and you’re like, “Man, this dude over here with the big skyscraper, he’s crushing it. He’s just demolishing it. Man, this other guy, he’s doing pretty good. But, he’s clearly not doing as good as this other guy with this big tall skyscraper.” Now, what you don’t see is what is below the ground. What you don’t see is the foundation. What you can see is the building next door, that’s only 60% as tall as a skyscraper that is wobbling right now has a foundation that is three times as deep.
I think what we want to talk about today is what does that mean, first of all? What does it mean that the foundation is three times as deep? What are the actions that you take to build that foundation and create stability so that when the storm comes, when the winds are blowing, you can look over at the guy who’s been running 1,000 miles an hour and growing this big monster and say, “Man, he’s about to tip over, and I’m going to be standing when the wind stops blowing.”
Here’s the thing, let’s put this in perspective. Now, the storm has come. Now, the storm is over. You’re building which on the outside, everybody’s like, “Man, you’re not doing as good as that other guy. You’re not doing…” Everybody’s looking at you now because you had a strong foundation, and the other skyscraper has fallen over. Now, the winds have calmed, the sun’s come out, and you are still standing. Your building, your structure that wasn’t quite as tall but had a strong foundation is still standing. Now, you have the ability to capitalize moving forward, because you are still standing.

Tom Krol:
Absolutely. I love it. It’s funny because it really speaks to a lot of things that we don’t normally talk about, but ego and pride and arrogance and bragging and boasting, I think are built into some of those additional stories that are here. Because that’s really what it comes down to, because the question is why? Why are you doing that? What are you aspiring to? Are you putting a cap on your financial aspirations and moving and growing the right way and scaling it and growing slowly and steady?
I love it. All right, let’s talk about… Just logistically, can you tell us how do you build a stronger foundation? For every story you build up, you build one down. Is that literally just taking a percentage of cash and storing it into a long term investment like a house or a bank account or the stock market? Do you have any kind of pointers on that?
Today, somebody can say, “Hey, I made $10,000 this month, this was my net profit, this is what I’m going to do with it.”

Jason Medley:
Sure. Again, this is a very difficult question because everyone on the call, everyone listening right now has a different financial position. If you made $10,000 on a deal or 12,000 bucks on a deal, and you got a couple hundred grand in the bank liquidity to take care of you and your family, and you’re just getting started, you want to plow it all back into the business, cool, go for it. You can afford the risk. You can afford the risk. If it goes wrong, you got a couple of hundred grand in the bank, you’re good, right?
If you are getting started in you do your first deal, and you are in a position where you maybe you don’t have that kind of liquidity, you’re really in a somewhat risk based environment, it might make sense to take a little bit of that off and say, “Hey, I’m going to take $1,000, I want to put it over here in my bank account in case things get dicey, I’ve got something to fall back on.”

Tom Krol:
Bam. Yeah, so important, so key and so often overlooked in the enthusiasm of trying to chase money and chase the symptoms of money and the cars and everything else. Also, so lost in the enthusiasm of trying to build cash flows. Jason, this was… Getting back to what you and I talked about two years ago, and this dream every new real estate investor has which is it’s always the same dream.
One of the things that we ask our new students is, describe your perfect day. It’s always, “Well, I have enough rentals that I’m on the beach and it’s just paying me while I sleep.” Can you talk about how you prioritize your income and long term goals as far as cash flow goes, because so many people put that right at the very top of the priority list. Can you tell us your interesting perspective on how all of that should work?

Jason Medley:
Yeah, I’m going to give everybody a formula, because everybody wants cash flow. I love cash flow. I’ve invested a ton over the last few years in apartment syndications. But at the end of the day, even that right now, unless you have Section 8 based tenants, even that right now is extremely susceptible. You’ve got to-

Tom Krol:
I don’t want to interrupt you, but I just want you to say that again, a little bit more slowly so everybody can understand it. Because there is a prevailing belief out there that I have heard from so many people, even those who are self-appointed experts, and they will say, “Well, that’s a great thing when the economy goes down, because all of my rents are going to go up. I can tell you personally from somebody, guys, who owns rentals, that I actually have never had any problems to speak of, anything that’s worth writing home about with rentals.
Yesterday, for the first time ever, a renters check to my property manager bounced. Can you just explain that because everybody seems to be under this impression that this whole passive income from rental properties, when things get bad in the economy, rents go up or stay the same, or stay stable because they have this idea that they can’t buy a house, so rents are going to go up. But what is your feeling about that?

Jason Medley:
Well, I think right now we’re in a unique position. In that, we got a double whammy here. We have financial issues that are being revealed to us that were probably there well before the virus came. The virus is one of the problems, but that problem is revealing other problems we already had in our economy. That’s a high level discussion really not worth getting into at this point. But my point is that even if you have… I fully anticipate, I have a pretty sizable amount of cash flow that comes in on a monthly basis from the apartment syndications that I invest in. I fully anticipate over the coming months until this thing stabilizes, that, I don’t know, 20%, 30%, 40% of that might get whacked because if you own rentals, more than likely, most business owners don’t have the ability without conducting commerce, without getting cash into their business to make it for more than two months. That people that they employ don’t have the ability to go without a paycheck for two weeks.
The reality of it is, is the majority of those people are who are renting properties. If millions of people are filing for unemployment… Again, it’s all relevant. Some areas will feel this, some won’t. But at the end of the day, if the people that are renting from you cannot get paid, they cannot pay your rent.

Tom Krol:
Common sense but lost in the enthusiasm and the hype of buying cash flowing properties. But just a good reminder. I didn’t want to interrupt you, but I just wanted yo… It’s so important to realize that guys. Prioritizing what you focus on and too many people putting cash flow in first position, what is your formula? Because, you guys, pay attention here.

Jason Medley:
Can I share our conversation from a couple of years ago, Tom?

Tom Krol:
Absolutely, yes. 100%

Jason Medley:
All right. What I want to do is share with you guys a conversation that Tom and I had a few years ago. I could literally remember when we had the conversation, I was pulling off the interstate, and Tom called me. We started talking and he was telling me what he was doing. He was like, “I’m taking all my cash and putting it on buying free and clear properties and buying rentals.
I started asking a few questions, which are fairly personal, but Tom knew my intentions and we started sharing with me. I was like, “How much money do you have in your business to withstand hiccups? How much money do you have from a personal perspective? Like a rainy day fund for your family? How many months, or do you know what your nut is, and how long will it last?” The answer, I think was primarily, no. Then from a family perspective, you’re like, you didn’t know what you… I remember you texting me back, though. You’re like, “Holy moly, me and Julie sat down and downed all our expenses. We realized that it was just way more than we thought.”
The reason that I was asking tom that is because let’s say that he was… I don’t remember that. I’m going to use some numbers here. If you want to clarify, you can, Tom. I just want to give you an example. Tom was doing very well. He had a cash cow. A core business that was performing well and spitting off profit. He was taking that profit and putting all of it into cash flowing rentals.
At the time, I want to think that… Forgive me, I’m just going to put some numbers in here so you can understand the math. At the time, I think you were buying $50,000 to $70,000 houses. I say, “How many have you bought so far, Tom?” Say the number was 10. I’m like, “Okay, let me ask you a question, you have got 10 houses. Let’s say that if they were 50 to 70 grand, let’s pick the middle ground say it was a $60,000 average. You bought 10 houses and you put 600 grand of liquid capital into those homes. Let’s say that each of them was cash flowing $250 a month.
Now, what you’ve got after all your expenses are paid on those sprinkler properties is effectively an income stream of $2,500 a month. I can remember asking you this question. I said, “Tom… ” Excuse my French here folks, I don’t do a lot of cussing, but every now and then, it helps to get a point across. I said, “If shit hits the fan, do you want to have $2,500 a month in an income stream from your tenants, or would you rather have a big chunk of that $600,000 in liquidity back that you spent on all those rentals?”
That was a moment where… I believe we were on the phone, but I could see the light bulb going off for Tom. There is an order… Here’s the thing, to be financially stable, you want to get to a point and it takes time. If you’re listening to this, know that what I’m getting ready to talk with you about, share with you about, it takes a long time of getting up, being excellent and making the right decisions day after day on a daily basis for years, quite honestly.
Don’t expect when I tell you what things should look like that this just happens overnight, because it doesn’t. To me, there is an order… Tom was doing the right thing. Who doesn’t want rentals, who doesn’t want free and clear rentals with cash flow coming off of them? But what I was trying to point out is maybe it wasn’t in the right order.

Tom Krol:
This is the key, guys, right here.

Jason Medley:
Maybe it wasn’t in the right order. Because, right now, if Tom had continued to do that, done that, take all of his profitability, paid for cash, all these houses, he’s got a decent income stream that more than likely is going to get impacted, because if people are losing their jobs, your income stream’s going to get cut, at least in the short term. You think, “No big deal. He owns those free and clear, things are choppy, I’m going to run out and get some credit lines, and then I can tap into those for cash.” Well, if you don’t have credit lines right now, it might be a little bit too late to get them on say, a single family rental portfolio.
If you had continued along the same path and not put any liquidity aside, which we’ll talk about in a moment, you can be in a position where that money, that income from those rentals was not enough to pay for your cost of living, if your income got hit from your core business. If you hadn’t been smart enough to go get lines of credit against those assets, that portfolio, you might be in a position where you get in a double whammy; you can’t tap into the liquidity, or you can’t tap into the equity and get liquidity and your income stream from the rentals is getting hit.
Now, you’re in a situation where you put all your liquidity into those properties and you’ve got money but no liquidity and you don’t have liquidity for your business and your family to survive during times like this where everything is uncertain and unknown.
The takeaway there is, there’s an order which, again, everybody’s different. I don’t have it all figured out. Humility is my best friend, especially right now, but I believe that there is an order in which you build a structurally sound financial ship for you and your family. The first thing is to create a cash cow. That means that you have a core business that is consistently, repeatedly and predictably spitting off profit. That’s CPR; Consistently, Predictably and Repeatedly.

Tom Krol:
CPR, guys; Consistently, Predictably and Repeatedly.

Jason Medley:
Repeatedly.

Tom Krol:
I’m sorry.

Jason Medley:
You get to the point where you look up for a year and go, my business is rolling. It’s consistently spitting off profit. I feel confident that next month is going to do the same thing. That’s where your ultimate focus should be is on creating a cash cow that is consistent, predictable, repeatable, okay? Once you have that, then you have to protect that cash cow, because things aren’t always consistent, repeatable, predictable. That’s why we’re on this call right now, because things are not consistent, repeatable and predictable.

Tom Krol:
Exactly.

Jason Medley:
When they are, you’ve got to take that opportunity to put protection around your business and protection around your family. The way that you do that is you have what’s called a balance sheet. If you just get going, you don’t have a business that we’ll scratch that, we don’t need to get into balance sheets. But my point is, is that you want to pull cash, liquid cash in the form of what we call retained earnings. Basically means you’re going to take your profit, some of your profit, and you’re going to stick it into a separate bank account that you don’t touch, and that you continue to feed from the profit in the business.
When times like these happen, you have the ability, oh my gosh, I can’t transact business for four months. What am I going to do? You cannot transact business for three months or four months or six months or however long this last, you’ve got to be able to tap into those retained earnings to help your company, number one, survive this time, and number two, when this thing stabilizes, you are positioned to thrive because you have money in which to do so.

Tom Krol:
Easy peasy, lemon squeezy. Number one focus, focus on what your business is, on getting it to produce as much cash as possible consistently, predictably and repeatedly. Then number two, take some of that profit.

Jason Medley:
Yes, I want to reiterate this again, we’ve said it once, it’s one of those things people should write down, profit is not something that merely shows up in the bottom right corner of your P&L statement. Profit is something that should be physically extracted from your business based upon where your business is at.

Tom Krol:
So, important, so, basic, so, important.

Jason Medley:
Now, the next phase is got to take care of your family too. You should have a rainy day… I know we’re just doing an audio podcast here, but I can show you a picture. I have five different accounts, one of them is that retained earnings account that we were talking about. One of them is a Liquid Cash, Hands Off. Literally on my Bank of America, you can nickname your accounts. That’s the name of my account, Liquid Cash Hands Off. That is my family’s rainy day fund.
Because at times like this, there’s one thing that everybody wants, it’s cash. One thing everybody wants-

Tom Krol:
I just want… Because some people on the podcast are just starting out. They’re like, “Well, we’ve heard cash is king.” Jason, why is cash king? Why do people want cash right now? Is it just as a life preserver, or is it for future investments? Can you just explain that a little bit?

Jason Medley:
All of the above. Here’s the thing, if you can’t transact business, or you get fired from your job, or… I could keep spitting out examples, but what do you want? Why do you transact business?

Tom Krol:
For money?

Jason Medley:
For cash, for money. What do you lose, when you lose your job? You lose cash, you lose money. A balanced financial structure includes having some cash on hand. Now, here’s what I will tell you, the guy with that big, gigantic skyscraper before the storm comes, he’s up on the top floor of his skyscraper looking over at yours laughing at you.

Tom Krol:
Right.

Jason Medley:
He’s laughing at you. You’re saving your money, you’re building your foundation deep, you’re missing opportunity. You’re saving your money, you’re building a rainy day fund, retained earnings for your business to take care of your family, you’re missing opportunity. Having that money sitting there is costing you opportunity.
Now, here’s the thing, though, he doesn’t have that foundation or she doesn’t have that foundation. Because all he did was focus on opportunity without paying any attention to potential risk, which it happens every 10 years. Take a look, I’m not that smart, I’m just good at reading history books.

Tom Krol:
Right, absolutely.

Jason Medley:
You got Coronavirus, you got 2008 financial crisis, you got 9/11 terrorism. My point in that is, is that in order to do this, you will have to forego some opportunity along the way.

Tom Krol:
Which is really in the tribe we call opportunity is just a code word for shiny objects or distractions. The opportunities go in what we call our someday maybe folder in the tribe. Listeners are familiar with this strategy. But, very cool.

Jason Medley:
He’s laughing at you the whole way. But when the storm comes and blows his skyscraper over and yours is now way taller than his, because it withstood the storm, because you had a balanced, you have a cash cow that’s profitable, You’re taking some of that money and put it into retained earnings. You’ve taken some of that money and put it into a rainy day fund for your family, and you forced your business to scale with what was left over from a profitability standpoint.

Tom Krol:
So Key.

Jason Medley:
So key. Now, at this point, when you look up and you say, “Wow, I’ve been doing this a couple of years and I’ve got a pretty good cash position in my business to protect me from risk, my family is good for a year or two years if something happens and the economy shuts down or the economy stops, or I get sick, I feel pretty good. At that point, you start saying, “I’m not going to put any more money into my family rainy day fund. I really think I’m good from a retained earnings perspective. Now, I’m going to start taking the monies. The monies that I would have been putting in both of those accounts. Now, I’m going to go out and get that other piece of the pie to create even more stability in my financial picture, which is at that point is when you are pursuing cash flow.”

Tom Krol:
Bam, you guys, this is the key, and I am just as guilty as anybody else because when I started out, it was a few years ago and I was focused on the cash flow, in first positions, like so many people do, but I’m glad I learned this lesson back then and not today. But if you’re listening today, it’s so key. I think everybody has a good understanding of cash flow, but can you just give just a quick one or two sentences about what is cash flow in your opinion?

Jason Medley:
Cash flow is when you invest… There’s a lot of different ways to get it. Whether it’s buying stocks that pay dividends or is buying single family rental properties or it’s investing in multifamily syndications or it’s basically putting money to work in an asset that pays you cash without you really doing a whole lot for it. That’s relevant too. If you got a couple hundred rental units in a portfolio, that’s not passive, you’ve got somebody on staff that’s handling that, you’ve got… But bottom line, is it’s an investment where you take money… I’ll give you an example, if I invest in an apartment syndication and I say, “Okay, I’m going to put a half a million dollars in this apartment syndication that’s going to pay just for round numbers a 10% pref.” Which basically means that it’s going to pay me 10% on the money on an annual basis, in addition to the appreciation in the asset, et cetera, et cetera.”
But bottom line is that’s going to spit off a $50,000 a year cash stream for me. Every month $4,000 plus is going to get sent to me.

Tom Krol:
Got it.

Jason Medley:
I’ve made that investment, I’m not managing the investment. I didn’t find the investment. I didn’t fix the investment, but I’m still putting my soldiers to work. Now, after I make that investment, I’m getting a check every month for $4,100, $4,200 bucks, whatever 50 grand is divided by 12. That’s cash flow.

Tom Krol:
After cash flow, when we focus on that, then is there anything next or is that the end of the road there?

Jason Medley:
Again, there’s so many variables; how old you are, what your risk tolerance is. I’m probably in a phase in my life where my next phase… Because you reach a certain point in your life where you have enough money where you want to have a certain factor of your financial security built around just simple… What would be the right word? Principal preservation. You’re just like, listen, this next portion over here is in bonds or whatever, where it’s almost like bulletproof. It’s [inaudible 00:37:08] it’s super safe, there’s very little risk. It’s guaranteed by the government. That might be the next phase for me, but that would probably also be later in my life if I decided to slow down from a business perspective.

Tom Krol:
But I think that is… I know, guys, we’ve kept Jason, he was supposed to be out of here by 11:00, and he’s got a lot of people who are pulling on him right now for advice and inspiration and motivation. They’re looking to him as a lighthouse in this heavy fog that we’re in right now. I don’t want to eat up his whole morning, but first of all, I want to say thank you, guys… Jason, I know first of all, before we… Let me just… I want to say this, guy’s, if you are already crushing it because his organization is only for people who are already doing amazing things in real estate and for people who want to not just go there and get but also give.
As a matter of fact, I remember there was a give and get on the presentation for each person. If you’re listening to this and you’re already crushing it, Jason, where can people go to find out more about Collective Genius and how to sign up for it or find out more about it?

Jason Medley:
Sure. Just go to Learn More about CG. Those initials are CG, learn more about CG. It comes from Tom please on the… It is an application invitation only type of structure. If you come from Tom, Mr. Tom Krol, just feel free on the application to let us know that you came from him. There’s a box in there that can tell us where you heard about us from. If you’re interested in checking us out, we are all hands on deck right now. If you’re running a high volume business, and you’ve got employees and you’re really aggressive, it’s considered a market leader. We’re doing some pretty amazing stuff. Right now. We’re meeting on a weekly basis, literally 140 plus of the nation’s top investors doing a virtual mastermind, figuring this out together, how do we bring cash in the door? How do we minimize expenses and manage expenses? How do we communicate with our teams? How do we communicate with the power players in our marketplace? How are we positioning? That’s preparation? How are we positioning ourselves to dominate once this thing settles up?

Tom Krol:
I think that is… Guys, if you want to talk about… We always say on the show, we’ve learned from Jim Rohn, and from all the great men and women who have come before us, that you’re the average of the five people you spend the most time with. Guys, I’m going to tell you right now, this is a fact that when we’re talking about what works right now, and what doesn’t in this great transfer of wealth, the people at CG are going to know first. They’re not only going to know, but they’re going to show you how to leverage.
This is the key of having a group of individuals like this, a true mind meld, or mastermind, a true group of people who are on the cutting edge, market leaders who they have their finger on the pulse of the economy, on the pulse of the markets. There are people in there not just in real estate, but hard money lenders. Mike’s [inaudible 00:40:14] is in there. Just people who are just rock stars in our industry, absolute rock stars.
When all these needles and indicators on the board start to move, these are the guys and girls who know what is coming and know how to position themselves to be able to just skyrocket in a good economy and an economy that’s failing. Definitely, 100%, find out more about CG. That website was-

Jason Medley:
Learn More About CG, Learn More About CG.

Tom Krol:
Learnmoreaboutcg.com, guys. Check it out, fill out the application and definitely a worthwhile. All the people that I’m going to be leaning on, are all from CG. All the people that I’m going to be taking advice from, including the reason why I’m going back and forth with Jason every day recently, they’re all in CG including the head of it, Jason.
Jason, I’m honored that you’ve been on the show to share so much knowledge that, it seems so basic, but it’s just a good reminder that these are the guys and girls, audience who are really crushing it and these basic reminders, they sound really easy. Some people might be listening and saying, “Jason, that’s so simple and basic.” Of course, you got to take money.

Jason Medley:
It’s not about the basics, it’s about the discipline to do it.

Tom Krol:
Yes. That’s the key, guys. It is easy, but it’s not simple because it’s going to come from your belly. I love it.

Jason Medley:
It’s brain dead simple, but it’s about discipline.

Tom Krol:
Jason, before I let you go, for anybody who’s just starting out because a lot of our audience members are commuting to work, they’re commuting to the gym, or they’re staying home right now because of this coronavirus, any resources, a book, a course, an inspiration, a leader… Who should new people look to, to really start to achieve financial freedom in real estate? Anything that helped you when you were first starting out?

Jason Medley:
I would encourage you to work your ass off, that’s number one. Nothing comes easy. Nobody that you look at, that you might have respect for has gotten there without working their butts off. I think that one of… I would suggest reading a book called The One Thing.

Tom Krol:
Bam, absolutely.

Jason Medley:
It’s a fantastic book, one of the biggest struggles that entrepreneurs face or struggle with is a lack of focus. It might be the single biggest detriment to entrepreneurs, the ability to stay focused long enough to create that core business that’s firing on all cylinders, that is consistent, predictable and repeatable-

Tom Krol:
Predictable and Repeatable. You guys, the one thing, Gary Keller, it’s on my shelf of my top 10 books, a book that I read at least once a year. I love it, Jason loves it. Guys, you’ve heard it before on the show, everybody recommends the one thing. If you haven’t read it, read it, it’s amazing and very, very cool. Jason, thank you for being with us today, man. I know we’re 11 minutes past, you had another appointment. I’m going to let you go right now. Thank you and, guys, if you want to find out more about networking with truly the best people in our market right now, today, and learn more about cg.com, correct?

Jason Medley:
Yes, thank you, sir. It was a pleasure.

Tom Krol:
It was a pleasure, Jason. Thanks again, brother. Talk to you soon.

Jason Medley:
You got it, talk to you soon.

Tom Krol:
Bye, bye.

Jason Medley:
Bye.

Tom Krol:
Bam.

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