Full Transcripts of the Show:

Tom: So I was seeing patients in my office. Saw a patient, said “I’ll be right back”, slipped out the back door, drove down eight blocks, quickly went through the place, made an offer, got it accepted and came back and kept seeing patients!

Ryan: [Laughs]

Tom: So that’s how we did it and mostly weekends. Weekends, early mornings, in the evenings. And then as my real estate income started getting more prolific, I was able to sort of cut back on days and that scale just kind of changed like this.

Ryan: And you’re still practicing today. Correct?

Tom: I am. I did a surgery this morning.

Ryan: [Laughs]

Tom: And spreadsheets this afternoon!

Ryan: [Laughs]

It takes one free person to create change. This is the show for them. We are the creators of the free world. This is capitalism.com and we are the 1%. 

Ryan: What’s up everybody? Welcome to capitalism.com! Hey. Oh, man. This is a really good one. This is so good! Is “epical” a word? C Money is shaking his head and he’s saying “No, it is not a word”. It is not a word! So it’s not “epical”. Well, this is really good.

You see, I think in today’s fast-paced entrepreneurial world we’re so demoralized when we have a punch in the mouth, meaning like someone doesn’t like us on the internet – that’s how thin-skinned we are! [Laughs]

And today is such an amazing re-frame. If success is your calling, if success is the thing you desire most, this might be one of the most valuable hour-ish of your life. And the reason for that is we’re spending an hour with a friend of mine in Austin. His name is Tom Burns. He’s sitting right here right now. [Laughs]

And what we talk about in this podcast is just such an important framing of success, of defining what it is that you want that you want upfront, playing for the long term, doing the right things for a very long time and not looking at the scoreboard – which is such a difference from what we are fed in the media, and by media I mean Facebook ads, YouTube… Anywhere where we are looking for short term results! Even I, the author of the book 12 Months to $1 Million, that’s an audacious short term goal! I might even be guilty of this a little bit. So I was challenged to think longer term, to think bigger. To do the right things, not the expedient things. And this hour with Tom had an impact on my life and I know it’s going to have an impact on yours as well.  So when you get a tremendous amount of value from this, please let me know. I am @ryandanielmoran on Instagram. All right enjoy.

Ryan: Hey, Capitalists. Before we jump into today’s episode, if you’ve crossed seven figures and now you’re stuck and you’re frustrated and you’re overworked and you’re not seeing the same growth and excitement that you had when you started this thing, but you know that you’re sitting on something special and it’s driving you crazy that you can’t get what is in your head out in the world… I know why you’re stuck and I can help! Go over to capitalism.com/7. I’ve put together a write-up about why you’re stuck, how to get unstuck and how I can help you in 2020 and beyond. I’m looking for exciting businesses with fun entrepreneurs who are frustrated because they know that they’re capable of more. So go to capitalism.com/7 and we’ll get your growing again.

Ryan: Hey, Tom!

Tom: Howdy!

Ryan: Welcome!

Tom: Thanks!

Ryan: I’ve been looking forward to chatting with you.

The thing that is kind of amazing to me about you is you still practice medicine —

Tom: Yes, I do.

Ryan: — but that is not where you’ve made your wealth.

Tom: That’s correct.

Ryan: Where did you make it? Actually, let me start this off by just saying – where did you make your money?

Tom: I made my money in real estate.

Ryan: And can you expound on that? How does a doctor who is practicing out-earn his salary —

Tom: Right.

Ryan: — in what is essentially your side hustle.

Tom: Yeah! Well, when I was in training — It was a long time ago. I was actually in training. I saw what the doctors were doing. They were making fairly staggering amounts of money, at least compared to what I was used to, but they were complaining. As much money as they were making, they were complaining about loss of time and loss of control and things like that.

These are the guys I was supposed to emulate once I got out of my training and went forward on my career and I didn’t want to be complaining like that and so I started looking for other things. I looked at a number of options and settled on real estate because it fit my lifestyle perfect.

Ryan: What other options did you consider?

Tom: I actually was back in the old, old days, a long time ago, the HMO craze. It was where everything’s going to come in and it was going to be run by Health Maintenance Organization. So I thought, “Well if you can’t beat ’em, join ’em!” and I spent a few months deciding on that and realized I would just be a corporate guy and there was no upside on that. I looked at the stock market and decided that was just way too much to have to learn and I didn’t like speculating and gambling. I like a more risk mitigated way to make money. So I got introduced to some money concepts because you know, I had no training. No training in school at all about money. So I got some concepts down and kind of started learning things and just explored through books, reading and seminars; I kind of found out about real estate. And you know, that’s something that moves a little slower and you can do it when you’re doing something else. You can do with partners, you can do it part-time or full-time and it moves a little slower. So that’s why I settled on real estate.

Ryan: So what I know about you is you own half of Texas —

Tom: [Laughs]

Ryan: — but obviously it didn’t start that way.

Tom: Right.

Ryan: So you’re in training, then you go — I mean, most doctors are running 80-100 hour work weeks.

Tom: Right.

Ryan: So what was the first deal that you did?

Tom: The first deal was actually not a part of the investment. Probably a couple of land deals. I bought some property, held it for a while and sold them. That’s not my usual routine now, but that’s kind of how I got into the game because I’m in Austin, Texas and Austin was coming out of foreclosure. So there were lots of great deals on the lake. So I bought some of those. I sold one to a famous bicyclist.

Ryan: [Laughs]

Tom: But when I started, what I wanted was I wanted money coming in that I didn’t have to go work for. You know, in order for us as physicians to make money you’ve got to do surgery, you’ve got to see a patient and you’ve got to have your time involved in doing something to get paid; and I found out that the better I got, the busier I’d get and the busier I got, the less time I would have. So I didn’t like that. So I wanted income. I wanted something coming in that wasn’t correlated to medicine. So I was in Austin, Texas. I kept it local and I started buying student property. That was before it became exciting to the larger folks. So I quickly bought up a bunch of student property. I cut my teeth a little bit. As things go, people start finding out you’re in the industry and they start calling you with good deals and they start calling the partner. So I had a few partners on some smaller deals, the deals got larger and then partway through my training – my real estate training – partway through my real estate training, I had a friend who was a real estate developer and I really liked what he did. I said, “I like what you do. Can I learn from you?” and he said, “Sure!” So I worked for him for two years for free doing land deals and builder suits and bank deals and that morphed into a rather large real estate complex that we built together that we still own today.

Ryan: And today you’re buying mostly apartment buildings?

Tom: Correct. We’re mostly developing. So we develop larger apartment complexes now.

Ryan: So what does a traditional deal or structure look like now?

Tom: It’s typically about a 40 million dollar deal and about 240 units on average. These are Class A apartments and it can be — We are in three states. We’re in New Mexico, Oklahoma and Texas and looking at some deals in Louisiana and Florida, but we pretty much are staying home because there’s a lot of opportunity here and a lot of jobs coming to Texas. So we’ll either be the developer or often we’ll joint venture and partner with another developer. We’ll bring the equity, the asset management and we’ll bring the debt. So my partner and I are kind of well-versed in a particular type of government-backed debt and that’s really nice; and so it makes us popular with some of the developers in the country.

Ryan: [Laughs] — So here is what I want to know right now. You’re coming out of school. Today most doctors are covered in debt.

Tom: Exactly.

Ryan: Right? I mean, they’re just completely covered in it and most people don’t know that. They just know how much doctors make.

Tom: Right.

Ryan: So everybody thinks doctors are rich.

Tom: Right.

Ryan: You come out, probably have student debt I’m assuming. You’re working 80-100 hours a week. How did you have the excess to start doing this?

Tom: Passion, I think.

Ryan: Did you say passion? [Laughs]

Tom: Yeah! [Laughs] — It had to be. Passion or stupidity – one of the two. And so I really wanted this now. I was actually building my practice and loving what I did. I’m an orthopedic surgeon, I’m in sports medicine and I was a frustrated athlete. So I’m perfect and I’m with my people, but on the money side I really enjoy the real estate! I love buildings and I love the development and construction process and I love every part about it. So the reason I started small was it was in the evenings and weekends. Truly, evenings and weekends! One time I was reading — If your listeners remember this thing called a newspaper —

Ryan: [Laughs]

Tom: — back in the day, on Sundays. There was a Classifieds section and it has real estate in the back, and there was a little section “Apartments and Condos” that was down in the University of Texas area and I was zeroed in on student housing. And I read an ad, I told my wife and I said “I’m buying this tomorrow”. She said, “Honey, no”. I said, “Look, I’ve been in this market and I know it like the back of my hand. Somebody’s either under-priced this thing or there’s something badly wrong with it”. So I was seeing patients in my office. I saw a patient, said “I’ll be right back”, slipped out the back door, drove down eight blocks, quickly went through the place, made an offer, got it accepted and came back and kept seeing patients.

Ryan: [Laughs]

Tom: So that’s how we did it and mostly weekends. Weekends, early mornings, in the evenings. And then as my real estate income started getting more prolific, I was able to sort of cut back on days and that scale just kind of changed like this.

Ryan: And you’re still practicing today. Correct?

Tom: I am. I did surgery this morning.

Ryan: [Laughs]

Tom: And spreadsheets this afternoon.

Ryan: [Laughs] — So where do spend more time now, on the real estate business or your practice?

Tom: Yeah. You know, I’m practicing 2-5  — I only work mornings and it’s 2-5 mornings a week just depending on where I’m traveling, because I travel to a lot of seminars and masterminds and places to keep learning. So it just depends on the week.

Ryan: OK. So here is what people who are watching or listening don’t know about you. You – at least when I have interacted with you – you’re present, your stress levels seem remarkably low and you have time. Like you have got a full calendar, but when we get together you’re like “Well I’m free at this time”. Like, you’ve got time to meet up for breakfast or have coffee or do a podcast interview. I mean, most people who are just one of the two things that you are do not have time and are usually worried about something.

Tom: Right.

Ryan: They’re thinking about the next surgery. They’re thinking about the next deal. They’re thinking about the next sale. They’re thinking about the next bill. So what the heck are you doing different?

Tom: [Laugh] — I think I’m just lucky, you know? I love what I do on both sides. I could have quit medicine ten years ago and that’s an honest statement. Literally right mid-recession, I probably could have checked out. But I love what I do! I see people. I like people, so I see 15-20 people every morning when I’m town and I love it, you know? I see people that I haven’t for weeks or months or years and we hug sometimes, we shake hands and I’m so happy to see them. Some of them have become really close friends and I literally met them walking through the door saying “Hi, I’m Tom Burns, your doctor” and asked them what their knee problem was. So I love that and it’s hard to get that experience to be able to meet new people all the time. In the real estate world, there’s the excitement of putting the deal together and I love it. So I think I enjoy what I do and it’s just focus, you know? You just have to focus and prioritize. So I have certain priorities that I like to follow and if they don’t fit in those, I will push them away until I’ve got extra time.

Ryan: What things do you prioritize?

Tom: It’s family. Family first! Easy – family first. Even as a physician, before I had much real estate money, I would take time off as a doctor to go and read to the kids when they were in first and second grade and I would play with them. I was home when they got off the bus, which is a big deal. I would leave early in the morning. So my strategy was to work early. I would do things in the morning and I was there when they got off the bus and I’d jump with them on the trampoline. So my thirty year old daughter’s friends still call me “the fun dad” to this day.

Ryan: [Laughs]

Tom: So I figure, that’s my success.

Ryan: So this is really interesting to me because you’ve out-earned most people in your profession, you’ve out-earned most people and you have time to jump on the trampoline with your kids – even twenty years ago!

Tom: Mm-hmm!

Ryan: Not just now, not just — You killed it.

Tom: Right.

Ryan: And now you can have time. You were having time while you were in the climb and while you were in the grind of it.

Tom: Right.

Ryan: So could you comment more on reserving that time for what you thought was most important?

Tom: Yeah.

Ryan: Most people don’t do that.

Tom: You know, I didn’t want time to fly by and miss something. I always wanted to be with my kids and with my wife and friends. That’s where my heart swells. I really enjoy being with people. So that was already a mind-set; and I’ll be honest with you, I sat in front of a doctor that was ten years older than me. And he sat down — He was one of the busiest guys in town. He had a huge practice. So business wise, you would be envious of him! He sat down with me and he said, “You know, I spent ten or fifteen years building my doctor practice” and he said “I didn’t have much time for my kids. Now they’re teenagers and I’m trying to establish a relationship and it’s not going well”.

Ryan: Mm-hmm.

Tom: You know, and he was half crying when he saying that. So that just sort of put the dagger in the heart and just made sure that I would never take a business opportunity and prioritize it over family. So there’s a lot of stuff I’d missed just because of that, but it worked. You know? Maybe the colonel was right, but that worked for me.

Ryan: How old were you when you started investing?

Tom: I was — I’ve got to think about this. You know, we’re doctors. So I got out of college at twenty two and then it was ten years of training. So I was thirty two. So I was probably thirty four or thirty five.

Ryan: OK.

Tom: So not too young.

Ryan: So I just turned thirty two —

Tom: Yeah?

Ryan: — and I would like for you to give me advice for where I am right now because the market has changed just a little —

Tom: Yup.

Ryan: — in thirty some odd years. How long have you been investing?

Tom: For twenty five years, close to twenty five years.

Ryan: Twenty five years.

Tom: Yeah.

Ryan: So obviously Austin is different, which is where we’re both based, but the whole industry has kind of come alive. So would you do anything differently? What advice would you give to a thirty two year old who is in a high paying profession —

Tom: Yup?

Ryan: — but also wants the wealth that you have generated?

Tom: Yeah. I would almost question back – Well, how do you define wealth? So if you define wealth as time and relationships and family and peace, along with money… I mean, money is an important part of all that. We need that – but you have to decide truly what you want. And so what I wanted was time, which meant time with my family and time to travel – a huge hot button for me. So that drove me. So I would say focus on what you want and why you want it, first. Figure out why. If you want money and you want to be successful, figure out why, because money is just paper or metal.

Ryan: Yeah.

Tom: It’s what it buys for us and what it does for us. So for me, it bought me time. It didn’t buy me trinkets. You know, I drive a truck. It’s sitting down in your driveway. I don’t drive fancy cars, but I’ll travel at the drop of a hat. I still get excited getting on Southwest Airlines.

Ryan: [Laughs]

Tom: So that drove me and so I would say figure out why you want to be wealthy and then I would focus more than I did as a person. I bounced through a lot of stuff. So a lot of rabbit holes and a lot of diversions.

Ryan: What do you mean? Did you do different strategies that you followed?

Tom: Oh you know, I did different things. I was marketing director for a lighter company and I was selling lighters.

Ryan: What? While you were practicing?

Tom: Yeah!

Ryan: [Laughs]

Tom: Well it’s because I had real estate income and I could leave my practice. I was at convenience store conventions hawking magnetic lighters to all of the convenience — You know, to the 7 Elevens of the world.

Ryan: So you were a serial entrepreneur for a few years while you were kind of ramping up?

Tom: I think so. I think so. It’s either unmedicated attention deficit or a serial entrepreneur. It’s one of the two.

Ryan: [Laughs] — Well, there’s plenty of research to say that they’re the same thing!

Tom: Yeah, true. True.

Ryan: So you wish that you hadn’t followed all those rabbit holes and gone into the thing that was producing results?

Tom: Well I don’t wish I had, but I would probably tell me to focus. I mean, I think each one of those has taken me down a path where I have learned another lesson or I have learned something that’s made me who I am today. That’s an honest truth. You know, I have run into a lot of detours and made a lot of mistakes and it’s molded whoever sits in front of you right now. But the people that I have seen who have been successful have focus on their time and their reason or their noble cause for why they’re trying to get out and do something in the world and try to create that income. So they’re focused on that, prioritized and from the monetary standpoint I just tell people “Focus on passive income”. You know? That’s different from my world as a doctor.

Ryan: Yeah – and do you equate passive income and real estate?

Tom: Absolutely! Absolutely.

Ryan: So would you call it the best vehicle for that?

Tom: It’s been the best vehicle for me. There’s lots of ways to make money. A lot of the wealthiest people in the world harbor or made their money in real estate. 10% of the world’s Fortune 500 made their money in real estate and of course, a much larger portion harbors their money.

It works for someone like me. You can set it up to where you are completely passive or you can go and be a doctor eight hours a day if you want, or be a podcaster or a serial entrepreneur. Your real estate will just click along without you. If you want to be more and more active like I am, you can do so.

Ryan: So would you help me unpack the actual putting together of the deals that you do?

Tom: Sure.

Ryan: I mean, it seems to me that — I mean, now you’re doing 240 units — Or is it 240 million dollars? I don’t even know.

Tom: 240 units, roughly.

Ryan: 240 unit apartment buildings. My guess is you have funding sources, which is probably a combination of private partners —

Tom: Yeah.

Ryan: — and also like more public sources or banking sources.

Tom: Right.

Ryan: And then you are putting together the developer —

Tom: Mm-hmm.

Ryan: — and you sit as the owner, who is basically overseeing that like a business.

Tom: Right.

Ryan: Do I have the nuts and bolts of it?

Tom: Yeah. I mean, it’s really a structured business. In our firm there are seven of us that are kind of running things. We got most bases covered but you know, if you’re going to build something you need somebody to build it and so you’ve got to hire that person. You need the developers to get the approvals and the plan. You know, they’ve got to sit in front of city hall and listen to that stuff for a while.

You need debt. So that’s the public that you were talking about – and you can get debt from multiple sources, all the way from private hard money lending to government-backed debt; and they have varying rates and benefits and risks to each one of them; but there’s always the equity portion, the equity or down payment.
If somebody has bought a house, they have to have a down payment of ten or twenty percent. Well we usually have to have anywhere from eighteen to thirty five percent equity, depending on the type of the project and the type of debt.

So that’s what we do as sort of the general of the project. We put all of that together, we put each of those pieces together. You know, going back twenty years, we have a rather long list of investors.

What happened to me was I started doing projects that were too big for me, so I just needed more money. So I went to other people and said “Will you invest in this?” Well now it’s called syndication. I didn’t know I was a syndicator back then.

Ryan: [Laughs]

Tom: So we syndicate. So basically everybody buys a pro rata portion and we gather the money from other people through Securities and Exchange Commission in a regulated manner. It’s called a 506B. So you’ve got to do things by the book and you can only advertise on certain things. So you follow a lot of rules, put the money together, put the debt together and then the project goes.

Ryan: So you are raising money for the down payment essentially —

Tom: Yeah, essentially.

Ryan: — and then you’re financing the remaining 80% of your sale.

Tom: Right.

Ryan: When you do a deal, does it cash-fill from day one?

Tom: It depends on the deal. If you acquire and at the beginning you said “Hey, you buy apartments”. Well we certainly have bought stuff in the past. We’re kind of in the ninth inning of a nine inning game here and so —

Ryan: Meaning the economy has been good for nine innings?

Tom: Yeah, maybe thirteen innings.

Ryan: [Laughs] — It does feel like we’re on extras.

Tom: Yeah.

Ryan: On extra innings – and we don’t know how the game is going to end.

Tom: Exactly. And so if you’re investing your personal money it’s easy to go and take a flyer, but when you’re investing other peoples’ money you have to be kind of careful.

Ryan: Yeah.

Tom: So there are plenty of people out there acquiring things and that is their niche. So we’re in a smaller niche. There’s less people that develop and there’s less people that use the loan product that we use. So we’re in a smaller sort of blue ocean as opposed to shark infested Red Ocean. So we’re in a smaller arena, most of the people in Texas know who we are and so we have ended up developing. So development still has — There’s still a nice gap between cost and value once it’s developed. So rather than buy something, improve it and improve the cash flow, we take a piece of dirt and completely improve it and create value.

Ryan: I see.

Tom: So sometimes there won’t be cash flows for two years. They’re getting accrued payments, they’re getting accrued interest and then in about two years we start.

Ryan: Yeah. So tell me if I’m getting this right? So you are — Because of where the economy is, you’ve put most of your emphasis into creating value —

Tom: Right.

Ryan: — on the build side of things —

Tom: Yes.

Ryan: — and they don’t always cash flow from day one. So your investors are getting a preferred rate of return —

Tom: Yup.

Ryan: — that is held until it cash flows.

Tom: Right.

Ryan: — so you aren’t bankrolling all of these payments —

Tom: Exactly.

Ryan: — but your investors are still getting their return —

Tom: Correct.

Ryan: — and then the business starts to grow and you’re in it for the long term, so if it doesn’t cash flow for two years that’s just fine.

Tom: Yeah.

Ryan: Tom is going to be OK.

Tom: Right.

Ryan: The business is going to make it! [Laughs]

Tom: Exactly! Our investors, they’re used to it. They’re educated and you soon laddering them up and soon things start cash flowing and then you start adding stuff to others and it’s just a laddering formation.

Ryan: Yeah. So at what point when you were diving into real estate did you start to out-earn your salary as a doctor?

Tom: Got you, yeah. You know, at first I was just doing it. You know? And my stuff did cash flow right away because I was buying existing student property and I bought some mobile home parks and some other stuff. So it was cash flowing. All I did — I’m a big compartmentalizer, so I didn’t use any of that money. So all I did was turn the money back in and either paid off debt, which maybe I wouldn’t do now depending on the economy, but I either paid off debt or saved up enough that I went and bought something else. And so eventually that little company that had its real estate started making enough money to buy other stuff and so it was good for a while. I just didn’t notice it. I was busy building a practice as a doctor and enjoying life doing both. I kind of had this dual life. It’s probably about ten years because I kept putting it back into the business and didn’t use it. I was putting it back in the business and after about ten years it took –

–You know, I had this nice smooth low curve and then it just took this logarithmic ramp —

Ryan: Mm-hmm!

Tom: — at about ten years and that was about ten years ago. It just did this and I’m not 100% sure why. I haven’t gone back to check it because I don’t really need to know.

Ryan: Yeah.

Tom: I was just happy with the result.

Ryan: Yeah. So one of my heroes, Gary Vaynerchuck, will say — He’s right there. He’ll say, “You have to be willing to punt the first ten years”. 

Tom: Mm-hmm.

Ryan: You have to be willing to just say “What am I happy doing for ten years because I’m probably not going to see that big spike” —

Tom: Right.

Ryan: — “for a decade”.

Tom: Right.

Ryan: Most people aren’t willing to do that and I know that I have made this mistake myself, trying to cash in the chips too early or trying to force something to happen and you slow down the long term process because you’re taking chips off the table rather than just letting it kind of bankroll over and over and over again. In our world, the kind of next entrepreneurial generation is very impatient. We want results right now. If something doesn’t take off right away, we think it’s a failure. What advice would you give to the next generation of entrepreneurs?

Tom: I would tell them it’s great and it’s nice to have a big hit. It’s great. It’s great to hit a home run on a first swing, but – using a baseball analogy – it’s great to slam a home run on the first swing, but a lot of singles will win the game. It’s that analogy of the rocket ship. The rocket ship burns up fifty percent or more of its fuel in the first mile or two. Then the rest of it is burning very little fuel to take it all the way to Mars or wherever it wants to go. So if you’re looking for excitement and a nice toy and quick hits it can be done, but then you’ve got to do it again. So building something that will create momentum and staying power… I’m telling you, it’s liberating and it’s blissful. The day I realized that I was making more money than I spent to live — I was just kind of in my house. I just realized “I don’t have to do this anymore” and it’s a liberating feeling! So just doing it fast and having to do it over and over again requires you to ramp up your energy, your intellect and your passion and your energy to get it done. So be patient. A little bit of deferred gratification, if you can do it, it really — It works. It works well.

Ryan: Yeah and you can only really do that if you’re enjoying the process.

Tom: Right.

Ryan: It’s so hard when you’re getting into an industry or a sector that you don’t genuinely like and the results don’t come right away – you quit!

Tom: Sure.

Ryan: Only 100% of the time.

Tom: Right.

Ryan: And you genuinely enjoy real estate.

Tom: Right.

Ryan: You don’t not only have to not practice anymore, you don’t have to do real estate anymore! [Laughs]

Tom: That’s right! [Laughs] — I’d wither up and die if I didn’t do something!

Ryan: [Laughs] — But you continue to do so because you enjoy doing it.

Tom: Yeah.

Ryan: What else would you say to the next generation of entrepreneurs? And I really want your opinion on this because you have the lifestyle that a lot of people really desire, even though what’s flashy is like “working yourself to death”. It’s popular to work yourself to death —

Tom: Right.

Ryan: — and you have been an extremely successful entrepreneur and a doctor and you still do both and you’ve got time —

Tom: Yeah.

Ryan: — and you live a great life!

Tom: It’s crazy.

Ryan: So I want to get as much out of what you would say to the next generation.

Tom: Sure. You know… I think lucky, blessed or however you want to put it, I have worked at it but I guess things have gone my way. You know, its persistence. The persistent guy wins. Stick with it. And you know, if you’re in something that you don’t like – as you mentioned – you might need to find something else because nothing’s more fun that doing something because you love it. You know what I mean?

I’ve got ten years of playing doctor because I enjoyed it. It’s been a great run and I plan on doing it for as long as I can. So try to find something you like. You know, passion doesn’t always translate to profit but passion, perseverance and energy oftentimes can. So you have to decide if you want the excitement of quick wins or you want the liberation and freedom of having choices in life and that’s when you —

— As you mentioned when you say they want “my life”… You know, the grass is not as green as it looks across every fence but I am certainly quite happy with what I’ve got and I’m probably not as cool as you make me out to be. You know, be patient. Be patient. Find something. Something will run across your path that you weren’t expecting. That might take you on for the next twenty five or thirty years.

 Be open, meet people and learn new things. That’s why I went down all those rabbit holes. I didn’t know if I wanted to be selling lighters or doing mobile homes. You know, I did some nutty stuff. So just be open, be willing to learn, be willing to make mistakes and be patient because it grows, you know? Especially if you’re a millennial now. If you’re thirty two years old, man you could be forty two and blow away anything I’ve done.

Ryan: OK. So that’s actually where I wanted to go next, because you started when you were really thirty three or thirty four.

Tom: Yeah.

Ryan: Ten years to really start to see that exponential curve.

Tom: Yeah.

Ryan: I’d just like to ask this question: Do you consider thirty two young?

Tom: Now I do, yeah. I tell guys my age that they were old when I started practicing medicine, but now they’re young because they’re my age.

Ryan: [Laughs]

Tom: So, I do! And it’s all perspective, of course. You know? Thirty two is just right, right now! To you. But yeah, in thirty years it’ll seem younger because there’s a lot of water that’s going to go under the bridge and you’re going to learn a lot over the next thirty years [Laughs]

Ryan: Can I ask how old you are now?

Tom: I’m sixty now.

Ryan: You’re sixty?

Tom: Yes.

Ryan: You’re in great health and you’re in great shape.

Tom: Yes.

Ryan: You’ve had two amazing careers. What is the secret to longevity?

Tom: Golly! You know, certainly cutting out — We can’t all eliminate stress, but have something that you really like. I like — As you know, I like to go out. I like to be in the wilderness. I like to be hiking, hunting and doing things like that. I look forward to those sorts of things. I exercise. I went to the gym today as well. So exercise – and a good family. I’m with the same wife for thirty five years and two great kids. So you may either get lucky like I did and have a great family — I don’t know. I guess a mission helped. A mission can sometimes either make you really calm and enjoying what you’re doing or it’ll keep you on the edge of your seat all the time thinking you’re not doing enough.

Ryan: Yes! So I would love to comment on that because most people who follow my work know my mission or my dream is to own the Cleveland Indians.

Tom: Yes.

Ryan: And when I was younger, that was very stressful for me because I didn’t know how.

Tom: Yeah.

Ryan: And now it is calming to me because it’s such a big dream that I almost relax into where I am right now —

Tom: Right.

Ryan: — and it’s totally OK for me to be where I am. So when I have one of these like, little dips… Like I had a business — One of my businesses lost me quite a bit of money, right? And it was a lot of stress and sleeplessness over that business not going well.

Tom: Yeah.

Ryan: But when I zoom out and I’m sitting in the owner’s chair, I think “Oh, that’s no big deal”.

Tom: That’s right.

Ryan: It’s no big deal to have that one major loss —

Tom: Right!

Ryan: — because there’s going to be all of these fun wins along the way.

Tom: Exactly, exactly.

Ryan: You said this. This is what I’m internalizing as you’re talking when you say “What is the thing you would do just because you enjoy it?” You talked about being in the wilderness and hiking. For me it’s writing.

Tom: Yeah.

Ryan: It’s very recharging for me to write and the thing that I’ll do – even if I never get paid for it – is record podcasts and content on the internet and what I am processing as you’re talking about it is you didn’t look at the result for ten years.

Tom: Right.

Ryan: You said, “I’m going to keep doing this” and then you kept practicing —

Tom: Right.

Ryan: — but you kept the real estate going for ten years; and I have been guilty of not doing that in my career. I’m looking at the scoreboard. I have wondered, you know… when does the payoff come?

Tom: Right.

Ryan: And one of the things I’m learning from you right now is to just stay in that zone of creating and giving and growing and enjoying the process —

Tom: Right.

Ryan: — and then look up in ten years —

Tom: Exactly!

Ryan: — and see where you are in ten years.

Tom: Yeah! And you could still look at little goals. I did little things like “Hey, my utility bill is X”, you know? Like “Hey, look at this. I’ve covered my utility bill for the year. So that’s paid for”, you know? Car payments. So you can do little things. And that was once a year. I’d kind of look at things and see where I am… “Yeah, it looks like I’m growing” and then just keep my head down and my knees high, you know? Just keep moving.

Ryan: You have two kids who are in their thirties, I believe. Right?

Tom: One is twenty seven and one is thirty, yes.

Ryan: OK.

Tom: That ages me.

Ryan: So what do you try to pass onto them based on what you’ve learned?

Tom: Ah! You know, just a couple of short rules that I just tell them both. I said, “Always give a hundred percent whether you’re taking out the trash or you’re taking the biggest test of your life or doing the biggest athletic event”. Always, if you give you best, whoever is around – they’re going to get your best. So perfection is a myth, but striving for excellence is always something that everybody can do. And just to be honest, it’s just a lot easier. It’s too hard to remember the lies and things like that, you know?

Ryan: [Laughs]

Tom: So give your best, tell the truth, shake hands, say thank you but keep growing and learning stuff. So hopefully that’s taken hold. Neither one of them is very entrepreneurial yet, but the student arrives eventually so the teacher will be there when they arrive.

Ryan: So I’m sorry to keep hitting this point, but you have a thirty year old and you’re like “Oh well, whenever it’s time” and most people — Like knowing my audience, most people who have not started by the time they’re thirty think that they’re too late to the game.

Tom: [Laughs] — Oh, man!

Ryan: And you, you’re just like “Ah, if they want to be entrepreneurs there’s plenty of time!” You started really at thirty four.

Tom: Yeah!

Ryan: You didn’t even count your chickens until you were forty four. I’ve got it. I just need you to say something about that.

Tom: [Laughs]

Ryan: It’s such a different mind-set than what we are constantly bombarded with.

Tom: Sure! And that probably causes a lot of angst. You know, “It’s got to be done now”.

Ryan: Right.

Tom: So now look at guys like me and Colonel Sanders – the sixty five year old story, right? He started Kentucky Fried Chicken at age sixty four or sixty five. I started at thirty four or thirty five. So you’re going to run across so many things in your path. So to think that between twenty two and thirty two that you have to make your mark in your life, you’re going to find out that a lot of people have done it afterwards. A lot of people started second careers, found their passion later or found their way to make their money or do whatever their version of success is. So it’s a long life, you know? Stay healthy, stay present and always look for it but don’t be nervous about the fact that you haven’t found it yet. It hasn’t found you yet. You just have to believe it.

Ryan: That makes a ton of sense to me —

Tom: Yeah.

Ryan: — and I have found, Tom — My next question was going to be: OK, what would you say to the person who hasn’t found that yet, but then you said “Stay present, stay healthy”. What I have discovered in my life is whenever I’m in transition if I focus on money it eludes me —

Tom: Right.

Ryan: — but if I focus on my health, my relationships, my mental health, my happiness… Then the next opportunity and the money shows up.

Tom: Right – and part of that focus is reading, being around other people, getting to different groups and things like that, you know?

Ryan: Right.

Tom: That can be part of your mental health, you know?

Ryan: Right.

Tom: Associating with other people and that sometimes triggers something.

Ryan: Yeah. Do deals and opportunities find you now?

Tom: They do now. I mean, we still look but they find us. You know, my partner, my current partner of ten years, this company that’s building all these apartments, he found me. I was speaking at a real estate conference in 2001 in Phoenix. You know? You never know what stars are going to cross. Literally, he said “This is Tom Burns. He’s from Austin, Texas”. I was speaking for Robert Kiyosaki. The guy came up at the break and said “We’re moving to Austin and can you be our contact?” Well, he’s my partner and we’re working together right now.

Ryan: Wow.

Tom: So you just never know who you’re going to run across. Life has a lot of ways of touching you in different ways.

Ryan: I can’t tell you how much liberation I felt in you describing that because I’m worthless without partners.

Tom: Yeah!

Ryan: Like, I am just horribly worthless without them and what I internalized when you were saying that was “If you stay in your zone of genius, the right people show up”.

Tom: Yeah.

Ryan: You don’t have to go figure it out. Just let it happen —

Tom: They will come.

Ryan: — and it will happen.

Tom: Absolutely, you know?

Ryan: Tell me about your relationship with Robert Kiyosaki?

Tom: Oh, gosh. Robert and I have known each other for twenty two years now, which is exactly the amount of time his book’s been published and the story is — So I am famously or infamously the guy who bought the very first book that Robert Kiyosaki published. SOLD – very first book sold of Rich Dad, Poor Dad. 

Ryan: Unknowingly, right? Like you didn’t know you were the first customer?

Tom: Unknowingly. Literally it was here in Austin at a car wash. I bought the book, loved it, I bought the other dozen that were there and we ended up calling the number on the publishing page just to find out about this author because we — Me and a few other friends; I had given it to some friends and we thought it was one of the best books that we’d ever read in our lives. It looks like we had good taste! So we called the publisher and when somebody picked up the phone on the other end it was Robert Kiyosaki, the author!

Ryan: [Laughs]

Tom: He had self-published the book. So went out to meet him, we formed a relationship and so we’ve been friends ever since.

Ryan: You know what we call that today, Tom?

Tom: What’s that?

Ryan: We call that “influencer marketing”.

Tom: Yeah [Laughs]

Ryan: [Laughs] — You are the influencer behind Robert Kiyosaki.

Tom: That’s right! That’s right, and he’s done pretty well with that.

Ryan: Yeah – and you continue to have a relationship?

Tom: Yes.

Ryan: What is that like now?

Tom: So I see him three or four times a year. We have a mastermind get together. There’s about thirty five people worldwide that come together with Robert and so it’s his advisers meeting. So I’m privileged to get to go to that, which is really great. So that’s three and a half days of really deep learning and often we don’t talk about money! It’s usually spirituality, teams…you know? It’s how to teach. Robert’s on a mission. Robert doesn’t need any more money. He’s on a mission to teach the world about financial education. He’s truly on a mission to elevate the financial well-being of mankind.

Ryan: In Robert’s last book, he made some interesting spirituality statements.

Tom: Mm-hmm?

Ryan: I’m curious what your conversations have been with him about spirituality in the last few years.

Tom: You know, he’s always wanted to keep learning. You know? He’s been a reader. He studies his books. If you look at his books – they are tabbed, multi color-coded and he truly studies them. So he has decided to study his own spirituality because he will just tell you – he wants to better himself. And so he works on it. He meditates. He’s been meditating for two or three years. He works out with a trainer that’s actually sort of a physical/spiritual trainer at the same time.

Ryan: Hmm!

Tom: Yeah. You know, everybody’s growing. So he continues to grow himself and he’ll tell you that.

 Ryan: Do you share in his spiritual beliefs?

Tom: I do. Well, I share in a spiritual belief. I’m not sure if it matches Robert’s.

Ryan: Would you be willing to share yours?

Tom: Yeah! I mean, truth and spirituality… I believe there is a force out there and something that’s governing all of us, just because I know and I’ll just say that if I pray I am praying to something. It’s usually not for me, but it’s for somebody else and so I don’t know. I believe in something. I know it’s out there.

I am not so sure man’s interpretation of what’s out there is always correct but I know there’s something out there. And so I think that if we’re going to be good stewards of being here on the Earth we need to try to embrace as much of that force as possible and either bring it to others or share it with others.

Ryan: Well we’ve talked money and religion. So I guess we’ve got to with sex and politics next?

Tom: [Laughs] — Sex and politics, for sure.

Ryan: [Laughs] — Robert is pretty public about his political beliefs. I actually want to take a little bit of a different shift. You mentioned that we’re in kind of a nine inning game, or the thirteen inning game?

Tom: Yeah.

Ryan: I’d be curious on what you think happens over the next five years, in terms of the economy? We’re at record highs. Things feel great. I studied economics. I can’t find any evidence of a reason for a slow down —

Tom: Right.

Ryan: — and I thought there was six or seven years ago and we just blasted right through it, it seems.

Tom: Right.

Ryan: So I have given up trying to make predictions because I’ve never seen a bull market like this before. So I would like to rent your prediction instead.

Tom: My crystal ball is pretty fuzzy, too!

Ryan: [Laughs]

Tom: You know that old story of Harry Truman saying we need a one-armed economist, because the guy says “On one hand it’s going to go up and the other hand, it’s going to down”?

Ryan: [Laughs]

Tom: And you hear the same thing now! It’s going to be Armageddon, you know? The mortgage-backed securities and derivatives are worse than they were ten years ago and so it’s going to be Armageddon. And others say it’s just going to be a blip. I can’t see any reason why it would crash badly. So I’m not smart enough to know. I’ve only been around sixty years. I think maybe I need to be around for five hundred to try to figure it out.

Nobody can predict the future, so I don’t know. So our philosophy is to prepare for something that’s going to be at least as significant or more than what we had ten years ago. So we will tell our investors that if we’re right at least we’re as protected as we could make it now. If we’re wrong, we’re all going to make more money than we thought we were going to make.

Ryan: Mm-hmm.

Tom: So that’s the way I go at it.

Ryan: How do you prepare when you’re putting a deal together in case the economy goes down?

Tom: Oh, there’s multiple ways to hedge. In our world, we use really long debt. We used fixed forty-year debt.

Ryan: I see.

Tom: Yeah. So long fixed debt. It’s low and we’re still at a historic low, so you know — Low cost to money, fixed for forty years. You know, you always do a pro forma and you make predictions on what rent rates are going to be and occupancy and things like that.

So we’ll typically try to stress test our properties, I mean our projects, at negative, at falling rent and falling occupancy; as long as we can make debt coverage and as long as we can cover our payments. Then we know where our break point is and where we’ll be safe. So we can’t armor-coat the thing, but it’s as much hedging as possible.

Ryan: So when you go forty years, is that to get the payment as low as possible so that in the event of a slowdown you’re not hurting for your short-term cash flow?

Tom: So two reasons. If you look back to 2008-2010, the problem was credit. Right? Credit and money.

Ryan: Yes.

Tom: And so there were people that had kind of typical thirty-year notes on a ten year balloon and their properties would come up for refinance right in the middle of the recession. So they could have a well-functioning property, cash flowing, doing well and they couldn’t get debt. Nobody was issuing debt back then unless it was a 50% loan to value.

So even ten years is sometimes not long. So that’s considered kind of a long fixed debt right now. The forty is, as you said, if you advertise it over forty years your payments are lowered and it increases cash flow. You know, we just basically take debt — Debt and property taxes are your two main variables and we just wipe out one of them so that we don’t have to worry about property taxes and keeping the place full.

Ryan: Yeah. It’s a very interesting spin on it, whereas kind of your traditional mind set would be to go for shorter term lending for the lower interest rate. So you pay less debt over time. And you’re saying go as long as possible?

Tom: For ours because you know, ours – they’re designed to hold in cash flow and re-finance and we get all our money back after a number of years and we own the property for free.

Ryan: Is that — You’re doing kind of a fix and re-finance and then taking your principle off —

Tom: Yeah.

Ryan: — and then riding that over the long term?

Tom: Yeah.

Ryan: I like that model.

Tom: Oh, it’s wonderful. It’s wonderful. So you’ve got — You’re playing with house money, for as long as you want to keep the property, and sometimes you can re-finance it again.

Ryan: So that model is basically that when you buy it you’re doing value-add work to raise the value of the property —

Tom: Mm-hmm!

Ryan: — and then when that matures after a few years you’re borrowing against the new value —

Tom: Right.

Ryan: — paying yourselves back.

Tom: Right.

Ryan: So all of your principle is now paid back and you’re in it kind of free and clear —

Tom: Exactly.

Ryan: From the personal side —

Tom: Correct.

Ryan: — you still have the debt on it —

Tom: Right.

Ryan: — and then you’re allowing the business to pay off the debt over time.

Tom: Right. Yeah. You know, as your note payment goes down and your equity goes up, that delta in-between is your equity. If it gets big enough you can strip it back out and safely – within reasonable metrics – and you get that money back and I’m not a tax expert but it is a loan. It’s not profit, so often its tax deferred money, if you don’t sell the property off and don’t pay on that. So it’s a nice way to get your money back and use it for something else —

Ryan: Yeah.

Tom: — and you still own 100% of the asset.

Ryan: Yeah. Well Tom, you’re a doctor and you’re a very successful entrepreneur. You have time, a perfect family… Would you please give me a flaw, like one flaw that we can all be like “OK, great… At least we’ve got something here”?

Tom: [Laughs] — I cannot sing!

Ryan: [Laughs]

Tom: And I wish I could! I play the guitar, but I can’t sing!

Ryan: [Laughs]

Tom: And I’ve tried.

Ryan: Do you have any regrets?

Tom: Oh, gosh! I probably do. None of them come to mind, you know? I always feel things happen for a reason but I know I’m not perfect and I’m not that Zen that I can put everything away. Just nothing really comes to mind. I’ve got a good family and a reasonable life. No.

Ryan: So you’re sixty now.

Tom: Yes.

Ryan: You show no signs of slowing down. You’re in great shape. You did surgery this morning. You’re still investing. What do you want out of the next thirty years or the next sixty?

Tom: There’s hundreds of countries I haven’t seen yet. So I would like to visit every country in the world. And I’ve got another mission. I’ve got some teaching I want to do for other guys like me, other doctors. And so I would like to travel the world and hike, hunt or tour every place I can in the world and if I really was successful I’d do it in my own plane.

Ryan: Hmm! [Laughs] — What worries you, if anything, about the world today?

Tom: I think the polarization of the world. Yeah… I mean, we see it in our country. Our country is really, really polarized, you know? Along political lines and idealistic lines. This is Texas, you know? You take care of your problems, you shake hands and you get up and dust yourself off again. Well now people are coming up with lots of ways just to chastise people for calling them the wrong pronoun or being in the wrong political group or whatever. So you know, I wish we’d kind of grow up a little bit and just try to make it better for the rest of us.

Ryan: What do you know for certain?

Tom: I know there’s a God. That’s the first thing that came to my mind.

Ryan: Hmm! What do you hope people will remember about you?

Tom: I hope they remember that I was always — That I was who I am privately the same as I am publicly, you know? I hope they know that I was honest and had enough integrity that I didn’t try to fool anybody.

Ryan: And who alive do you admire most?

Tom: Oh, my! I admire you for being able to do four podcasts a week!

Ryan: [Laughs]

Tom: You know, I can’t name them by name but I have been around some young people that just excite me; that I would invest with and that are just out there making things happen! So I wish I could come up with somebody else, but I admire them.

Ryan: C Money, I don’t think I’ve ever done a rapid fire like that before. It just came out of me. I feel honestly like I’m among greatness!

Tom: [Laughs]

Ryan: Like I mean, there is not a person on the planet who doesn’t want to be you when they grow up.

Tom: [Laughs]

Ryan: Like, zero people don’t want to be Tom. Like everyone wants to be healthy, wealthy and wise!

Tom: Ah, you’re kind.

Ryan: And you are in great shape, you’re happy as a clam, you’ve got lots of time and you’re incredibly successful. I feel like whatever you’re doing — I feel like I need to change my whole life to be on the Tom Burns path!

Tom: Ah! We’ve all got our own path, you know? I still want to make a difference. So that’s my mission.

Ryan: So I should say “tweak” my path. Like here is what I have learned today out of this. I have realized to not be in such a freaking rush, that if you prioritize the right things – the right things show up!

Tom: Right.

Ryan: And I am experiencing just times in my life where I’ve broken that rule and seen what it cost me.

Tom: Yeah.

Ryan: And that you started with the — It’s a really interest re-framing of “What is success? What is wealth?” and to you, it was time.

Tom: Right.

Ryan: And you then you never compromised that —

Tom: Right.

Ryan: — and if you don’t have that upfront — I know for me, if I don’t have that upfront, I compromise everything for what other people consider “success” or “wealth”.

Tom: Right.

Ryan: And so for me — You say time. For me, it’s creativity – and so I just made the decision in my mind when you said that. Never ever sacrifice creative energy —

Tom: Right.

Ryan: — because it’s where all the juice is. So thank you for that.

Tom: You bet! Use your yardstick. Your yardstick is not the same as the guy down the street. So you’re not being successful for them. You’re being successful for you and your version of success is a little different than mine, probably.

Ryan: Tom, is there anything that I didn’t ask you that I should have?

Tom: I don’t think so. The future? No. I think you got it all. You’re a great interviewer!

Ryan: Well thank you, sir.

Tom: Keep that talent going. Don’t be nervous. It’ll happen.

Ryan: You have a book coming out?

Tom: I do!

Ryan: It’s not out yet.

Tom: That’s correct.

Ryan And its called Why Doctor’s Don’t Get Rich?

Tom: So far! [Laughs]

Ryan: Book currently named… Maybe to be re-named —

Tom: Exactly.

Ryan: — coming out some time in the next year or so?

Tom: I’m thinking probably the second quarter of 2020.

Ryan: OK. Cool. Well, we’ll look forward to it.

Tom: Oh, thank you!

Ryan: Well I’m really excited about this new friendship we have and thank you for embarking your wisdom upon us.

Tom: Thanks for having me on your couch! [Laughs]

Ryan: [Laughs] — And that’s a wrap, my friend.

Tom: Thanks.

Ryan: That was fun.

Tom: Oh, good job!

Ryan: Thank you. You too!

Tom: You did a good job.

Ryan: It’s like you’ve done this before.

Tom: A few times.

Ryan: Hey, I hope you enjoyed that chat as much as I did and I know it can be daunting when we’re first starting out to think “Ten years!” or to even think “What am I going to do in those ten years where I’m figuring out what the heck I am doing?” That’s what we exist to do here at capitalism.com is to answer the question.
Look, there’s no fixed pie out there. We can all be ridiculously successful. We’re all making this pie. We’re all creating this reality. We are all making the world what it is and we can make it as great as we want. And if you do the right things well for long enough, you get yours.
So if you go over to capitalism.com/start, there’s some resources for you to decide what business you should go into, what product you should sell and what path you should pursue. So go over to capitalism.com/start and you’ll get access to our free resources to help clarify the path forward.  Hey, if you enjoyed this episode please let me know and share this with another fellow aspiring entrepreneur.

Ryan: Hello, my friends. I’m so excited to tell you that my first book, 12 Months to $1 Million, is available for pre-order on Amazon.com and it comes out on May 5th. This is the entrepreneur’s field guide to hitting seven figures in a year or less. I have proven it only a few hundred times. So if I have ever done anything that helped you move forward in an area of your life, it would mean the world to me if you went over to Amazon.com and pre-order a copy of 12 Months to $1 Million. It comes out May 5th. It’s the thing I’m most proud of maybe ever in my career and a lot of podcast guests and students are featured in it. I hope to feature you in the second edition a decade or so from now, but for now go over to Amazon.com and pre-order 12 Months to $1 Million. It would mean the world. Thank you.