Growing a $30k 401(k) Loan to $5m in 10 years

0:00You took out a small 401k loan from your your business early on back 2012 and you turned that into $5 million how was how was that possible like what did you do I'm sure it was through this concept of information Arbitrage but I guess what gave you the confidence to do something that a lot of people label very risky and then what did you do with it to know that you were making a smart decision yeah that's I don't think any financial adviser would would that that's a great idea right but and some of it so some of this is was forced too so I took a $30,000 401k loan to buy a $360,000 condo in Downtown Charleston this was like my first downtown property the one that I had owned before was in a suburb and

0:48You know so this was kind of my shot at like seeing which way the the city itself was growing and so I came across this 50-year study that the local College had done and I think we were like maybe 10 15 years into the study and and so you could kind of see you know some percentage of of things that had already happened for the plan that was laid out and so I'm like okay well you know it's an old historic City maybe this takes 20 years to work but I do have confidence that it'll work and I just was super lucky with timing I mean it wasn't even six months so everything like I would go hang out there you know go go run I was living downtown I would go run to right in front of the condo and just kind of hang out look you know at the streets right like you know how sketchy is this am I okay walking around so

1:37Is a transitioning area where you're yeah and it's like the hottest I mean there's a Starbucks across the street now so you know which is which is like the measure for where to invest in real estate right so yeah I mean it's it didn't even take six months and the development just like completely blew past that building and I was fortunate to actually reset the values in that building so post 2008 2009 I mean I bought this in 2012 but post 2008 2009 you know a lot of people just kind of hunkered down and stayed where they were and hoped things B bounce back and so yeah I wound up just buying a little one-bedroom condo and then from there I just the next PL I held that for two and a half years I made like 31% in 30 months and I I lived in that for more than two years so I I moved that Equity I actually listed that

2:25That place myself the market was so hot back then 2015 I listed it myself through a discount broker for like 500 bucks and did all the like copy and pictures myself sold sold it for the for 30 grand more than the exact same one-bedroom next door who who also paid a realtor a commission I might add U so I walked with like an extra 50 Grand from that guy right and just rolled it all into the next one and I think that's like the other thing is I would I would continually bet on myself rolling it all to the next one right so bought the next one in in 2017 and that was when I you know started to to kind of or I should say 2015 2015 to 17 I lived in it and and started renting u

3:14A room out of that house and had a new guest every two or three days end of that year that first year finally you know some point in the year I'm like I should make this a business and you know let me run this through a business account and I kind of started just setting up the processes back then and then at the end of that year I I made 2016 $28,000 in gross revenue and I netted 20 so mostly you know cleaning and taxes came out of it and I'm like oh I'm rich you know so finally sitting on a little bit of cash I'm like okay this is working how do I grow this and so ironically I was actually working on a mobile app at the time and my timing was off on that concept looking for funding for probably probably like 45 days and had a CTO on that who had

4:02A second business that was just really starting to catch fire so we felt like felt like a child dying U not that I have one but I mean it was like depressing for you know 12 18 months and in the meantime I just kind of kept this short-term rental thing going in the background at some point sold that house into a duplex and then started buying these Boutique properties so it's just been you know it's been like this slow build and then the last couple years you know postco it's just been it's been crazy so it's to your point if you keep growing 100% a year at some point that starts to be really really material and significant yeah yeah and and I mean to follow sort of the road map of what you did obviously if you take out 30 grand out of your 401k and you go you know try to bet it on something that's going to potentially

4:51Be a grand slam or or a bust you know maybe investing in a tech company or crypto or something like that you know then maybe you get lucky but what you did is is BET on things that had solid fundamentals and it wasn't like you're trying to get rich overnight it was like okay I'm GNA Ride This Out and luckily the fundamentals worked in your favor over time and and you just kept you know evolving or moving it to the next the next larger property and it it's it it pays off over time that's that's that's impressive that's amazing so I I last question before we get into I want to hear about your The Mastermind that you run but I'm curious from a personal standpoint because I think we talk a lot about the investing side of things

5:40But I think we can personally like personally we are our own barometer of how much success we have and the investment side of things doesn't really matter if if personally we we don't do certain practices or or have the right mindset so what do you do personally that helps you stay at the top of your game and continue to continue to to to evolve and and be better every year yeah I think the biggest thing is is who you surround yourself with right the old Jim R we're the sum of the five people who spent the most time around so I I think I felt like really intellectually stagnant for a while and a couple years ago I joined this Mastermind called gobundance there's I think there's like eight or nine00 guys in it now across the US and even in Canada but

6:28But yeah I mean that's been the single biggest thing and just changing the way that you think about things right and I don't think really until even last year right despite experiencing some of the success I don't think I realized how limiting I was being with myself until you know in the last like six to nine months right as you start to kind of remove you know you you mentioned blinders you start to remove those blinders and you really start to kind of see things for what they are and really see the potential it's a it's a beautiful thing right and then and you want to help other people with that right so yeah I mean I've got a great group of guys in that Mastermind they they split you into what they call pods so there's five people in my pod we meet on Mondays and Fridays but I mean it's it's just a great barometer right

7:17And it's also it's this mini accountability constantly right so I I do this I do this Daily Journal as well too super basic but it's kind of a kind of an offshoot of the miracle morning by how El Rod but it takes gratitude and then small goals and just little things you know what are the three things I'm grateful for what are the three things I need to accomplish to make today great and and then you do it in the morning and at night and then so at night you're looking at why was the day awesome is there anything I would have done differently and then doing little affirmations along with that so i' I've been doing that now I mean every day for like the last four month months or so and I think what I realized with that is even the the the giant goals right where they're

8:05They're just so big you you look at them every day you're like oh man I need to do that but it's just so big I don't even want to start tackling it but having this force you into these little bite-sized daily these daily goals it just really it takes it a long way a