Preston Brown, entrepreneur and expert in economics and business projections, empowers entrepreneurs by systematizing critical drivers, fostering fulfillment, time, and freedom. With a track record of 19 automated, successful businesses, he’s dedicated to guiding others towards sustainable success. Based in El Paso, TX he brings local expertise to a global audience.
Here’s some of the topics we covered:
- Preston’s Backstory
- Automating Companies instead of Scaling Compaines
- What Automation Means For a Company
- Automation Examples In Preston’s Companies
- Leveraging Data To Help You Automate
- How Automation Relates To Multifamily
- Efficiency In Business & Your Company
- The 3 Pillars of Efficiency
- Return On Debt & Why It’s Relevant
- The Qualities a Leader Must Possess
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below
00:00:00:00 – 00:00:26:24
Rod
Welcome to another edition of Life Time Cash Flow Through Real Estate Investing. I’m Rod Cliff and I’m thrilled you’re here. And I know you’re going to get tremendous value from the gentleman I’m interviewing today. His name’s Preston Brown. And not only is Preston in a lot of doors, about 3000 doors and multifamily, both as a general partner and a limited partner, But he’s got 18 businesses, many of them real estate related, if not all of them real estate related and significant revenue from those businesses.
00:00:26:24 – 00:00:31:17
Rod
He’s also an automation expert, so very excited to get into it with him. Welcome to the show, brother.
00:00:31:24 – 00:00:33:09
Preston
Thank you, brother. Yeah, excited to be here.
00:00:33:12 – 00:00:45:10
Rod
Good. So why don’t you do a much better job of introducing yourself than I just did and talk a little bit about your history and and maybe bring us current and then we’ll get into having some fun Q&A here.
00:00:45:13 – 00:01:02:12
Preston
Sure. Yeah. Business guy happened to also be a real estate guy doing tons of revenue and people always love the story when they hear the ending. And my my thought is people judge the story by the ending and you should never do that unless you hear it from the beginning. I was a seven or eight, you know, maybe nine year old kid.
00:01:02:12 – 00:01:18:23
Preston
I’m not great on past dates when when my dad from Little trailer park we lived in in Kenya till Texas decided I want the life we have on TV, not the one that we live in this little trailer. And and he opened a business. He became an entrepreneur guy was a member of Mensa genius. He was. wow.
00:01:18:23 – 00:01:40:28
Preston
Brilliant guy. And he didn’t understand some of the simple fundamentals frameworks that are a must in the business world. And of course, where he went out and did what he did and metallurgical engineer making things for people, designing things that he didn’t understand, billing, he didn’t understand collecting, he didn’t understand charging. My mom was still in school. We were broke.
00:01:40:28 – 00:02:01:22
Preston
He wasn’t college educated, so he wasn’t the expert, if you want. He was the operations guy and you know what happens when you open a business? You don’t how to bill is things run out of money real quick. And when I was young, tons of love, not a lot of money. The fight came. The cast iron frying pan flew across the room.
00:02:01:24 – 00:02:21:17
Preston
I remember all the words that were said, but I remember it being different from normal and the words I do remember was Go collect what you wrote or don’t come home. And I went with Dad and we went up to a house not far from where I live now. And I watched this guy that six foot four star football player from from his high school team, and here comes this guy, all of five foot nine.
00:02:21:17 – 00:02:41:19
Preston
My dad could kill him with a napkin and I knew how going to go was going to go with my dad demanding what he was owed. And we were going to go home and put food on the table. Everything was going to be fine, but it didn’t go that way. It went with asking, came from demanding and turned very quickly into almost begging.
00:02:41:21 – 00:03:05:18
Preston
And I watched Dad. I watched the shoulders go forward. I watched him compromise. He took a lot of cash from this guy’s wallet. We went to a Smith’s and Albertson’s now and and we drove back home. I got to ride there with ramen noodles on my lap with my dad not telling me what happened, but it shifted me and I shifted from love is the meaning of life, which I had at a young age to money is the meaning of life.
00:03:05:20 – 00:03:23:21
Preston
And I very quickly opened my first business painting driveways started making money. I was making shit few grand a month when I was nine, ten, 11 years old. That time frame, walking up and down, lying to everybody about like, the fire department wants you to do this, But I made money and they thought it was cute, so whatever, right?
00:03:23:23 – 00:03:45:15
Preston
And I got in the business and I became the corporate cutthroat character. I became the I mean, if you liked if if you thought Donald Trump was harsh, you would have thought I was a ten X asshole over that guy turned into the shit Father never had time for my kids. Turn into the shed. Husband never made time for my wife and made a lot of money.
00:03:45:22 – 00:04:02:27
Preston
Built some big companies. 2019. Worst day of my life and the best day of my life hit. On the same day I got a call from my brother in law on. I built some fairly large companies at this point and he said, Hey, dude, you need to come home. Your dad’s gone. It it’s been a weird day. I asked, where did he go?
00:04:02:27 – 00:04:29:29
Preston
But I already knew the answer to the question. And he said, Dude, you need to come. And I went over there and and I got to I got to see Dad laying there on the floor. What was left like? It was it wasn’t him. It was a body that looked like him. And. And my world collapsed. My entire world collapsed because I’d spent my entire life focused on growth, focused on scaling, focused on money.
00:04:29:29 – 00:04:52:29
Preston
And I’d never spent it with my hero, the man that made me who I was. So the most important day in my life was losing him, which brought back the love as the meaning of life part that I had before. But sitting in that room, I had to ask questions. I had to look at my mom, who a beautiful woman that was broken, looked more like some creature from Lord of the Rings than than the woman that she was.
00:04:53:02 – 00:05:12:27
Preston
I’d look at my sister, I’d look at all of my family sitting there and everybody’s broken. And the one thing I did have that was good is I had that entrepreneurial spirit. I had I had the ability to accept problems, take them on and challenge. And I remember doing stupid shit. I was remodeling my mom’s house, helping my sister buy a house, anything I could do to just get our minds off of that and and work through that.
00:05:12:27 – 00:05:45:20
Preston
And, you know, I over enough time and, you know, referenced this, I wound up two, three, maybe a month later, I wound up at a Tony Robbins event, and I wound up listening to Tony. I’d missed the entire event. It was Date with Destiny. I was it was like platinum or group or whatever. And sitting there at the front row and he’s talking to the caller a few rows behind me and he says, You’re not suffering in the fact you’re suffering and the perception of the fact and and I’ve been to a lot of his events, but not a date with destiny.
00:05:45:22 – 00:06:05:28
Preston
I wrote it down, but I didn’t know what it meant. And thank God she didn’t either. And he looked at her and he said, You’re not suffering because your loved one’s gone was the first thing I heard. I sat there in the entire event. I missed the whole frickin thing except this piece and what came after, which was perfect, said, you’re not suffering because your loved one’s gone.
00:06:05:28 – 00:06:28:14
Preston
You’re suffering because you expect them to still be here. And I wrote down expectations for the mother of all suffering. And I. I just. I started shifting things. I started shifting away from growth. I started shifting away from scaling. I started shifting towards I need I fell back in love. I was no longer mad at God for taking Dad, mad at me for not spending time or mad at him for leaving.
00:06:28:14 – 00:06:55:10
Preston
I was focused on how do I spend time with my loved ones, and it brought me to this beautiful process of automating companies instead of scaling companies. And I mean, that was 2019 and I was probably worth eight, ten, maybe 12, 15 million, depending on the banker you talk to at that point in time. And what’s funny is people value businesses in an interesting way, like they value them far more if they’re automated.
00:06:55:13 – 00:07:21:11
Preston
My wealth is compounded. My businesses have grown, some of them geometrically as a result of learning the automation steps, as a result of programing that in. And so now I’d like people I don’t want people to avoid the hard parts of their life, but I want people to maybe go through quicker, don’t waste so much time making money is really easy, but you don’t have to be the shit husband, the shit father, or lose someone to find the goal, if that makes sense.
00:07:21:13 – 00:07:38:23
Rod
This is exactly what I teach to my warriors, my coaching students. You know, I tell the story about coming home to my kids every day, but not being there mentally, being distracted, you know, focused on success have to prove to the world I’m good enough. I have to prove the world I matter. And I missed out on on a lot of their growth.
00:07:38:23 – 00:08:05:10
Rod
I mean, they’ll tell you I was a great dad, but I missed out on so many things for that same very reason that that need to be successful. You know, we talk, you know, in this country, we feel like to be happy. We have to be successful. And and we’re have to have achieved. And, you know, if you if you’re focused on what matters, the people that you love, the people you care about and and or you’re giving back, you’re happily achieving, that’s quite a story.
00:08:05:10 – 00:08:18:22
Rod
So. So you’re an automation expert. I’d love to drill down a little bit on you know I know you’ve you’ve said you’ve got companies that do real estate brokerage, real estate lending, real estate acquisitions. I forgot what else know.
00:08:18:24 – 00:08:26:06
Preston
My largest company is production homebuilding. Okay. Which the economy is very generous too, thankfully. Yeah. Right. Yeah. Yes.
00:08:26:07 – 00:08:34:05
Rod
So to talk about some of the things that you automate, if you would, just to just to give a little more color to this conversation around automation, maybe give us some examples of what you’re talking about.
00:08:34:07 – 00:08:54:16
Preston
Yeah, sure. Well, I, I create formulas, simple, easy, clean formulas so that people can use them to create a better vehicle. A business is nothing more than a vehicle. Right? If you can get a car to go to the grocery store or walk to the grocery store, one thing is always true. You got the grocery store. The thing that changes is the time to get there.
00:08:54:16 – 00:09:18:24
Preston
Businesses that the business. Any business. Your business. My business. All of our businesses have the same goal, right? Sell, sell a product. If you’re selling a product, well, what are people buying? They’re buying a solution to a problem, right? So what we have to do is create a model that creates that problem solution process and sets it into kind of that regenerative growth manner.
00:09:18:26 – 00:09:34:27
Preston
So it’s a vehicle for duplicating yourself, your time, your energy, your expertise, everything, including a communication machine. Like like I say, I’m a homebuilder, right? Like people ask, what do you do? Well, I’m a homebuilder, but look at these, Lilywhite hands. You think I’ve lifted a hammer? I mean, I’ve lifted one, but not in quite a while.
00:09:35:04 – 00:09:55:07
Preston
I’m not building the home. I’ve created a communication machine that knows how to work with the bank on getting the construction on it, knows how to work with the dirt, work contractor on doing the lot that knows how to work with the concrete guy, the framer and everybody else in between, all the way to the realtors and the loan officers and the sales agents that are title company to get the process finalized with the buyer taking over the ownership.
00:09:55:15 – 00:10:15:25
Preston
I mean, all it is is communication bridges in every single area. So when you’re automating the first step is you got to know where is your business today? Because most entrepreneurs, they’re not generally doing the wrong thing. They’re doing the right thing at the wrong stage. Like if somebody goes out and they’re saying, Hey, airplanes are a great tax write off.
00:10:15:27 – 00:10:46:12
Preston
Okay, well, that’s true. If done right and you should certainly not be doing that at some of the lower stages of entrepreneurship. If you’re a startup, you have plenty of expenses right there that can be used and leveraged as you’re growing the company. You don’t need a write off, right? If you’re in that operational entrepreneur, kind of that management by crisis, even that low operational mega-donor where you’re going through scaling, you don’t need the distraction, doesn’t mean you don’t need the write off, but you can probably find it somewhere else in your machine.
00:10:46:14 – 00:11:00:08
Preston
So you’re solving the right problem at the wrong stage of business development. If you’re looking to figure out who your target customer is and you’re doing that mega preneur, well, then you’re helping everybody and your margins are going to be garbage. You need to do that right in the startup.
00:11:00:10 – 00:11:03:11
Rod
Well, Mega preneur is one of your stages of a business.
00:11:03:11 – 00:11:25:15
Preston
Yeah. So I’ve categorized and I think everybody’s got this. I mean, you could probably go and find this with like Grant Cardone, Tony Robbins group, but I, I built this formula for efficiency, okay? And I realized people were screwing it up guy and they were screwing up formula for efficiency because the formula is just a problem solving formula and they would solve the right problems with the wrong stages.
00:11:25:17 – 00:11:29:00
Preston
And so you need to first figure out your stage regardless.
00:11:29:01 – 00:11:30:17
Rod
Business. Where are your business stages?
00:11:30:18 – 00:11:47:09
Preston
Where is your business at today? At step one, What are your single largest problems that you need to solve today? And step two, and then you can take the simplified formula and literally solve any problem that comes up. I have a belief that problems are.
00:11:47:12 – 00:11:49:27
Rod
If you’re going to share the formula or yeah, okay, let’s hear.
00:11:49:27 – 00:11:52:01
Preston
It. So every business has the same goal.
00:11:52:03 – 00:11:54:04
Rod
Right? The revenue efficiency.
00:11:54:04 – 00:12:14:01
Preston
Okay, efficiency. All right. Okay. You don’t have a problem with any market if you are efficient. There are more candles sold now than when they were used for lighting. There’s more revenue in candles than when they were used for lighting. There’s more revenue in horses than when people rode them to work. Different market. Now they’re race horses and all this.
00:12:14:04 – 00:12:35:12
Preston
But the players changed, the game changed, but the revenue is only grown and we can go into inflation and the other. But the goal is if you’re efficient then you’re always riding the market no matter where it’s going. Okay, you’re like the surfer on the wave. Efficiency has three core, let’s say, pillars that make it up alignment, simplicity and foresight.
00:12:35:14 – 00:12:55:18
Preston
Right? You’re not going improve simplicity without compromising alignment generally, and you’re not going to improve alignment without compromising simplicity. The thing is, the compromises are temporary, like when you’re improving alignment, like if you’re thinking, I need to improve my alignment with my customers, while your customers have different needs, like your your customers that buy your products or one financial transaction.
00:12:55:18 – 00:13:04:06
Preston
Right. But what about the like my bankers that I borrow money from? They’re my customers, right? Like, you know, my lenders, my vendors, my trades, my.
00:13:04:11 – 00:13:14:02
Rod
Guys, those you’re listening. Investors could fall into this category as well. You need alignment with them. You need alignment with brokers, you need alignment with lenders like you just described. So yeah, they’re all customers.
00:13:14:02 – 00:13:38:09
Preston
If you have a financial transaction, they’re a customer and you’re their customer. I mean, there’s there’s an exchange, there’s a transfer of action. That’s what transaction means, right? And so you can’t improve alignment with your bank without compromising it with one of your trades or maybe your end user customer or somebody. So you’re always going to compromise simplicity somewhere.
00:13:38:11 – 00:13:48:18
Preston
And so you have to kind of always be rebuilding the machine. You’re always looking at what’s the biggest problem? How do I solve that and then solve the problem that caused that guy and.
00:13:48:21 – 00:13:53:23
Rod
And use automation for this. You try to automate as much of this as you can. Have you gotten into A.I. with it yet?
00:13:53:25 – 00:14:17:16
Preston
yeah. We’re we’re building we have a program called Z Builder that we’re working with now. We’ll eventually take it to market and it’s it’s phenomenal. We were actually able because we developed there, we developed the original model on Excel and we had it machine learning, which is like eighties grandparent, right? Like people don’t realize A.I. is like 80 years old, right?
00:14:17:16 – 00:14:18:24
Rod
Guy Right.
00:14:18:26 – 00:14:36:13
Preston
The first computers that beat Bobby Fischer were machine learning computers, which is like the grandparent of ice. We had machine learning, watching things and we were able to predict that single family home pricing was going to go through the roof because of that interest. And so we started raising our prices to our capacity when we bought our homebuilding company like it was.
00:14:36:13 – 00:14:52:17
Preston
It was funny. All the builders either raise their earnings money or they said, no, Coke is going to do this. We had some machine learning which was way stupider than what we have now going and so we measured it to our capacity, what we could build, what we could frame. We brought everything to the the lowest constraint.
00:14:52:17 – 00:15:09:13
Preston
And at that point it was frame it. We could not build more than 20 homes at a time. And so as we were seeing sales do this, we couldn’t expand framing upright. We said, Well, shoot, what do we do? Well, let’s slow it down. Well, you can you can adjust what price, place people, product promotion or process, right?
00:15:09:13 – 00:15:29:04
Preston
These are the dials that you have in a business. And so we’re like, we’ll just raise the price. So we raised our price in El Paso, Texas, which is not a high priced market, right, by about 150 grand. By the time everybody was seeing the news on lumber going up and all this. Wow. So through that time, our margins are going through the roof and you will get the negative feedback.
00:15:29:04 – 00:15:50:09
Preston
You’ll hear everybody, yeah, you know, you’re you’re evil. You’re, you know, corporate greed. This at the other none of them said shit when their appraisals didn’t justify their sales and they all had to take their homes on the market or refinance them as rentals. And we went from one of many builders to the largest builder overnight. So if people anywhere to go to your eye comment.
00:15:50:11 – 00:16:08:09
Preston
Right my biggest benefits have not been they I but I think they might be in a year or two when we take this new product we’re using the market. My biggest benefits were actually machine learning which is still so frickin smart and any mid-grade software developer can probably make you a machine learning engine.
00:16:08:11 – 00:16:09:08
Rod
Really?
00:16:09:10 – 00:16:16:14
Preston
it’s if you have a good database engineer that has something for it to learn off of.
00:16:16:16 – 00:16:18:28
Rod
You got to have the data. Right? Right. Yeah. Okay.
00:16:19:01 – 00:16:21:12
Preston
And it has to be frame.
00:16:21:12 – 00:16:29:25
Rod
You buy the data, get the data. What? I’m just curious. I don’t wanna go too far down this rabbit hole because I might be losing people as this relates to multifamily investing.
00:16:29:25 – 00:16:47:07
Preston
But you can, you can buy data, you can create data. Most businesses have far more data than they realize already in. And if they can just use their data, cross-pollinate it against their data, they’ll improve efficiency like that. That machine learning. I mean if you’re.
00:16:47:09 – 00:16:56:17
Rod
You know so this whole improving efficiency, you’re looking at like is it is it eliminating humans as much as possible and automating the pieces.
00:16:56:17 – 00:17:26:03
Preston
Now? So I’ll I’ll tell you this problem A.I. has nothing on I am okay the the ability to think and change the way you think and question and the ability to cross-pollinate your mind and your emotions, which A.I. does not have right, makes you far smarter than any number crunching machine. So you’re never going to eliminate humans. Some humans will eliminate themselves if they stop thinking.
00:17:26:03 – 00:17:44:29
Preston
But no, efficiency is about creating the most output and throughput within a machine. And you keep mentioning apartments and multifamily and all this, which is kind of an industry that you know well. It is an industry that I think is done great a few years ago. It’s having some struggles right now where people.
00:17:44:29 – 00:17:47:15
Rod
Are a lot of bad debt, a lot of debt issues, right.
00:17:47:21 – 00:17:50:04
Preston
Which is going to lead to some huge opportunities.
00:17:50:09 – 00:17:53:09
Rod
That’s what I’ve been shouting from the rooftops. Yeah.
00:17:53:12 – 00:18:16:28
Preston
I want to just put this in because I know you have a lot of guys that that, you know, talk multifamily And I if they understand how to connect the dots on efficiency in their business to the investment to what multifamily represents, it is going to be one of the biggest asset classes like to right up on the planet.
00:18:17:00 – 00:18:43:08
Preston
People don’t think about the value. I mean, I’m still buying anything with bedrooms, anything. And I’ll tell you why. People look at the market and they’re like, you know, it’s rough, the rates are high. Well, we had 5 million to few units in America in 2018 with bedrooms for families. Okay? We have still not been able to keep up with new production of units right through COVID.
00:18:43:08 – 00:19:10:29
Preston
When there was demand, there was not enough trades. We told everybody to become a tech entrepreneur or a service preneur and nobody has become the plumber, the electrician. We need to make more units and replace, right? You factor that 5 million unit shortage that we then found we couldn’t keep up with to what’s happened with the migration and more the illegal immigration coming across the border which is not counted into the numbers.
00:19:11:06 – 00:19:15:12
Preston
But you can’t get rid of all these people. I know it’s big political campaign.
00:19:15:14 – 00:19:16:18
Rod
They’re they’re they’re they’re going to.
00:19:16:18 – 00:19:17:05
Preston
Deport them all.
00:19:17:05 – 00:19:20:25
Rod
No, they’re not like 11. 11 million is a number. I heard thrown around.
00:19:20:27 – 00:19:25:19
Preston
I heard that. And I’ve heard as high as 18 million.
00:19:25:19 – 00:19:30:26
Rod
No kidding. And and this is just the illegals. Not even. Yeah. And we already had a housing shortage.
00:19:30:26 – 00:19:41:22
Preston
We already had a housing shortage. So you can go and factor that there might be a 15 million unit disparity today. Yeah. This could be true. We don’t know because we don’t know how many.
00:19:41:25 – 00:19:50:12
Rod
Well, they’re putting them up. They’re putting them up in hotels probably till the election, then they’re on the street. But you know, they’re putting them up in hotels in New York and Chicago and everywhere else.
00:19:50:14 – 00:19:57:00
Preston
And they’re not going to deport them. Yeah, okay. I will tell you this. Yeah. And this will be controversy is control.
00:19:57:01 – 00:20:00:24
Rod
Now, Trump says he’s going to deport them, but how do you find them? I mean, you can’t write.
00:20:00:26 – 00:20:03:10
Preston
He would have deported the Jews, right? You would.
00:20:03:10 – 00:20:03:25
Rod
Have. Right.
00:20:03:28 – 00:20:19:01
Preston
Like, frankly, you don’t want to go through the negative press, right. For anything. So like, you’re not going to deport them. What’s going to happen is you’re going to have two choices. We’re not going to kill them. That’s choice one, right? Or you absorb them, which means we’re going to have to absorb them in some way, shape or form in our country, because we could not.
00:20:19:07 – 00:20:21:29
Rod
And they have to have a place to live. Bottom line.
00:20:22:01 – 00:20:47:24
Preston
At the end of the day, poly means multiple and tics means bloodsucking arachnids, right? So politics is a root word. I look at any politician and I think what they’re really after is votes. So if I’m a multifamily guy and I look at what’s real, not the politics, right? That third indicator in economics, right? If I want to study economics from supply and demand in the long term supply demand and government in the short term, there’s either two influences, two economics or three.
00:20:48:02 – 00:21:05:26
Preston
If you’re in the multifamily space and you figure out the efficiency formula now, you will be a billionaire. Yeah, like, like. And I don’t think that’s a bold statement. You will be a billionaire if you figure out not just multifamily as an asset class, but the business of multifamily.
00:21:05:27 – 00:21:18:28
Rod
Let’s talk about that for a minute. You know, you know, I was looking for more detail on the efficiency, but you gave me good, you know, a framework for it. And I know that.
00:21:19:00 – 00:21:39:27
Preston
Let me make the efficiency formula simple and thank you. You take a problem and you throw it in the top of that problem. No different than putting a ball in one of those things with pens is going to have to sort itself down through this filter to the bottom right. Business is really easy. There’s one goal efficiency that equals three things alignment, simplicity and foresight.
00:21:39:29 – 00:21:57:18
Preston
Foresight. It’s like when you’re driving a car, you want to able to look through the window and see where you’re going. Right In the long term, foresight can become forecasting, but you really don’t need to worry about that until your revenue is greater than $50 million. Once you have said, okay, my problem is alignment, simplicity or foresight, then you know where to go with it.
00:21:57:21 – 00:22:19:07
Preston
If it’s foresight, that’s what we’re dealing with. If it’s alignment, simplicity, the twin sisters of optimization that’s we’re dealing with normally, it’s both. It can be all three, but it’s rare. Then you need to look at the next stage of the formula. What do I need to address? What are the four pillars? Excuse me? Like legs on a table that hold up that surface on a table that has alignment, simplicity and foresight.
00:22:19:07 – 00:22:26:19
Preston
Those are like three glasses of water sitting on the table. There’s four legs to the table. Culture, clarity, capacity cache. These are the four areas of your business where your.
00:22:26:20 – 00:22:29:24
Rod
Culture of clarity, capacity and cache.
00:22:29:27 – 00:22:30:19
Preston
Yes.
00:22:30:21 – 00:22:31:07
Rod
Okay.
00:22:31:09 – 00:22:35:23
Preston
Culture. So that I can remove anybody from bad thinking.
00:22:35:26 – 00:22:36:06
Rod
Okay.
00:22:36:09 – 00:22:40:22
Preston
It’s behavioral moderation. Okay. Okay. It’s not, you know.
00:22:40:22 – 00:22:44:26
Rod
That’s right. That’s a great description of culture. Actually. I’ve never heard that before. Behavioral modification.
00:22:45:00 – 00:23:03:08
Preston
That’s great. So you you said you’ve done some Tony Robbins stuff, a lot of change. So identity, right? Your identity is who you are. So you get to be it’s all the prison of who you’re stuck being unless you learn how to learn. Correct Culture is nothing more than identity of a business. Your identity dictates your patterns, dictates your behaviors, your culture.
00:23:03:08 – 00:23:09:27
Preston
In a business, it’s sort of like psychology, individual sociology group, right? Your culture dictates your decisions as a group.
00:23:10:00 – 00:23:10:18
Rod
Yeah. Okay.
00:23:10:25 – 00:23:22:17
Preston
So it’s behavioral moderation for the group. Okay. Okay. Clarity. It’s understanding. It’s the willingness to learn and more importantly, communicate. It’s like, I’ll give you a paradox that I.
00:23:22:17 – 00:23:25:19
Rod
Love, not not understanding who your client, your customer.
00:23:25:19 – 00:23:26:11
Preston
Everything.
00:23:26:11 – 00:23:29:12
Rod
Everything. And so clarity around the whole business. Got it.
00:23:29:12 – 00:23:45:28
Preston
So I like to go on thought journeys. And when I say thought journey, I don’t mean plant medicine. I don’t mean drugs. I don’t you can’t say Journey anymore without somebody worried about what you’re doing. Thought journey for me is I like to think about paradoxes. Paradoxes. I can always generally find truth in a paradox. Can God create a rock so big that God cannot lift the rock?
00:23:46:03 – 00:24:00:21
Preston
And the answer is yes. And the answer is also no. Right? So is there a difference? This is my new thought Journey is there a difference between protecting someone from the truth and protecting the truth from someone?
00:24:00:24 – 00:24:06:21
Rod
Have to think through that for a second. Protecting someone from the truth or protecting the truth from someone.
00:24:06:22 – 00:24:10:13
Preston
Let me give you a horrible example that will be politically incorrect and old.
00:24:10:14 – 00:24:10:24
Rod
That’s all.
00:24:10:24 – 00:24:25:28
Preston
Right. Frustrate some of your listeners and others love. But that’s all right. So I had a buddy in high school and his girlfriend said, Do you think this dress makes me look fat? And I don’t recommend his answer to anyone. But the answer was interesting. He said, Girl, why are you blaming it on the dress? He’s no longer with that girl.
00:24:26:00 – 00:24:41:25
Preston
Now that had he been a gentleman, he could have protected her from the truth and said, No, baby always look great, right? He did not. He chose against it. Sometimes you should be dishonest. White lies are not necessarily always.
00:24:41:25 – 00:24:43:01
Rod
Bad, right?
00:24:43:03 – 00:25:03:05
Preston
White lies are to protect somebody from their emotions. But when you’re protecting the truth from somebody, you are preventing them from finding what they need. If she were to ask you, are there any fat people in old folks homes and you protect her from figuring out that maybe she should find a way to dial in her health? Maybe she should find a way to make herself better?
00:25:03:08 – 00:25:25:20
Preston
She’s going to die young because you’re an asshole. So in business, nine times out of ten, you have to understand that there’s no white lies in business. There’s just truth and lie truth in life. That’s it. There are no white lies in business. There is in your marriage. There is in your family. You know, Santa Claus is real for kids, right?
00:25:25:20 – 00:25:39:24
Preston
Sure. But in business, there’s no white lies. Do not protect me from the truth. Do not protect the truth from me. Let me find what’s real. When you find the truth, you become efficient. When you become efficient, everything gets easier. And so does I know.
00:25:39:24 – 00:25:58:25
Rod
That makes a lot of sense. Which is why we survey our students. We survey our warriors just to try to to get to that truth as best we can to try to speak in their language and find their pain points and clarity and desires and so on and so forth. And so that’s clarity.
00:25:58:27 – 00:26:26:02
Preston
The single greatest skill anyone can have is becoming an incredible learner. And so gravity is the process up. And I love the way you put it, speaking somebody else’s language. When I became a homebuilder, I didn’t became a homebuilder. I became a translator. I had to learn plumber, some better electrician. I had to learn all of these different languages that were nuanced in different ways with different things and had different terminology and different problems.
00:26:26:02 – 00:26:46:01
Preston
And when I spoke the language of their problems, then all of a sudden we had rapport. Then we could create lasting solutions and we could explain how we were. Yeah, I’m compromising your simplicity to grow your alignment. Once you understand the forces culture, clarity of passing cash, you go into decisions you can make. There’s only six in business.
00:26:46:01 – 00:27:04:04
Preston
There’s only six things you can do with any problem in, you know, my wife, if she wants to change her makeup and be a different girl on Friday night than she is on Sunday morning, she can she’s got 150 dials in her makeup. For my business at six I can just price product people place promotion and process. These are the only six things you can.
00:27:04:04 – 00:27:08:13
Rod
Do one more time. Price, product, product people, people.
00:27:08:13 – 00:27:09:02
Preston
Place.
00:27:09:07 – 00:27:09:26
Rod
Place.
00:27:09:26 – 00:27:12:23
Preston
Promotion. Okay. And process and.
00:27:12:23 – 00:27:13:04
Rod
Process.
00:27:13:04 – 00:27:33:08
Preston
And the last one, I say it last because you should highlight it and if you wear lipstick, kiss it. That is the way of solving the problem that caused the problem. Many people, most people, whether they’re in investments, whether they’re in business, they’re bouncing from crisis to crisis. That’s because they solved the problem at hand, not the problem that caused the problem.
00:27:33:09 – 00:27:34:20
Rod
To the symptom, not the cause.
00:27:34:25 – 00:27:50:14
Preston
Exactly. And it’s prevalent in almost every stage of entrepreneurship as you grow, you know, startups, right? They’re like little babies. Do you do schedule with a baby when they’re going to take a shit and you should change their diaper? No, you know.
00:27:50:21 – 00:27:51:07
Rod
You don’t know.
00:27:51:09 – 00:28:14:28
Preston
Yeah, exactly. You can schedule a lot better in all the other stages, but you can’t there. So every different stage has its problems and you need to address at each stage. So if you take your problem, once you’ve identified your stage, put it through the formula. It’s real simple. You know what to do. Excuse me. If you train your team on the formula, okay, then they’re going to be able to ask you about our questions.
00:28:15:01 – 00:28:32:04
Preston
They’re going to know what the outcomes are like. How are you going to get to the desired outcome? Like, like everybody in business wants the same thing and people don’t think about this. We all want the same thing. We all want certainty of success, right? Like if you want a company, you want certainty of success. What is your customer?
00:28:32:04 – 00:28:36:04
Preston
One certainty of success. What does your employee want? Certainty of success.
00:28:36:07 – 00:28:37:16
Rod
How do you make.
00:28:37:19 – 00:28:54:15
Preston
The employees certainty of success that, hey, I’ve got a compelling future, I’ve got friends at work, I make good money, I’ve got all these different things aligned to your certainty of success that, you know what, I want a great business. I’d love for it to be automated one day. I’d like to have great revenue. If I sold it, I could accident it.
00:28:54:18 – 00:29:13:19
Preston
You know, you can align those two. How do you align that to your employees? How do you align that to your your customer that’s actually buying the product? When you start finding the little nooks and crannies where those things link the cogs that make them gears in the same machine, you create automation and everything can be automated.
00:29:13:23 – 00:29:42:08
Rod
I mean, I’m thinking SWOT analysis. As you’re evaluating, you know, strengths, weaknesses, opportunities, threats. And I’ve used that for businesses. I’ve not used your Strat, your formula here, but it’s got a lot of merit. You know, I remember a previous large company I had and I’m sitting through these three these forces culture, capacity, clarity and cash and I can see how they all apply.
00:29:42:10 – 00:29:49:18
Rod
Certainly culture, capacity and clarity is the cash is just your your cash is the obvious answer there now.
00:29:49:18 – 00:30:12:19
Preston
So capacity ends at cash capacity. There’s four flows to what I call capacity. There’s lead flow sales flow deal flow and cash flow. Right? And when we’re looking at lead flow sales flow deal flow at cash flow, you’re talking marketing, which is not the same as sales. Then you have to deliver, which is not the same as marketing or sales, and then you have to receive your cash, right?
00:30:12:22 – 00:30:28:26
Preston
Well, there’s different ways to talk about cash. You can do cash count, you can do accrual accounting, you do this out of the other. But the languages of cash are also interesting. Like people don’t understand returns. I have had people with hundreds of millions in revenue sit and tell me about their ROI and ask them how much they invested in their business.
00:30:28:26 – 00:30:38:24
Preston
They’re like, about ten grand in a garage 20 years ago. And I’m like, Why are we talking about the return on your investment? Right? That sounds so maximized that your language is poor, right?
00:30:38:24 – 00:30:39:06
Rod
One of the.
00:30:39:06 – 00:30:47:16
Preston
Biggest problems we have in this country is we language everything, right? I mean, do we believe that fortune was science? If not, then let’s can language better, right? So you have a return on invested.
00:30:47:16 – 00:30:50:08
Rod
You went there all right. And that’s good. I feel the same way.
00:30:50:09 – 00:31:03:22
Preston
Multiple text means blood sucking arachnids, right? He was a politician, not a scientist. Right. So return on investment needs to shift to return on marketing. If you are looking at your return on investment after you’ve already gotten 100% back, just stroking yourself.
00:31:03:22 – 00:31:05:10
Rod
That’s just stupid. That’s just wrong.
00:31:05:10 – 00:31:15:21
Preston
Marketing is cost of customer acquisition, right? If I know that it cost me 13,000 to get a customer on a product that makes me 150,000.
00:31:15:23 – 00:31:16:23
Rod
It’s a no brainer.
00:31:16:26 – 00:31:18:04
Preston
Yes, I’m going to rinse, repeat.
00:31:18:04 – 00:31:35:11
Rod
You know, it’s the same thing. You know, we’re dealing with that right now and we’re marketing for investors. And one of the assets we have under contract and that’s exactly what I’m monitoring. You know, what’s it cost to get a phone call? You know, what’s it cost to have a phone call with someone we know and we know how many of those people actually take action and invest in the deal.
00:31:35:11 – 00:31:38:17
Rod
So this is just one of those metrics that you measure.
00:31:38:20 – 00:31:43:02
Preston
So let’s go let’s go into six returns. Let me give you two real quick that way, because you’ll probably get some questions.
00:31:43:09 – 00:31:43:17
Rod
Okay.
00:31:43:18 – 00:31:50:29
Preston
Return on investment. And your paradox is return on marketing because they do need to switch, right? You have to have return on balance sheet equity.
00:31:51:02 – 00:31:51:24
Rod
Okay.
00:31:51:27 – 00:32:09:20
Preston
And return on debt. those two, if you want the perfect scaling trajectory for your industry, your debt and your equity is the target. If you have 10 million of debt and 10 million in equity and we can go into all sorts of reasons running an arbitrage economy where gold doesn’t back the dollar, then you are scaling with the best and you’re going industry.
00:32:09:24 – 00:32:12:27
Rod
Okay, why? Why is return on debt relevant?
00:32:13:00 – 00:32:25:00
Preston
Because we live and this is going in further to economics, which is we could probably do an entire ten podcasts on this. We live in an arbitrage economy. When we shifted away from gold back in the dollar.
00:32:25:02 – 00:32:25:19
Rod
Okay, then.
00:32:25:19 – 00:32:27:05
Preston
The Federal Reserve was the hammer.
00:32:27:08 – 00:32:34:24
Rod
So you’re talking about the value of the of the debt and how it’s discounted and whatnot is that’s where we’re going with this. Okay.
00:32:34:27 – 00:32:52:27
Preston
We’re talking about markets and how they work and how they underwrite, how they work with this thing called money, which has changed. If the Fed was a hammer, the Fed never changed the nail that used to be the dollar became a screw. Right. And so we never change the hammer. We didn’t buy a drill. We now have a hammer hitting a screw.
00:32:53:03 – 00:33:07:24
Preston
And so what the business will do when the politicians and the bureaucrats running our government change one thing but not another. Without it, we became an arbitrage model. The reason you could raise interest rates back in the 1970s and eighties to like 18%.
00:33:07:27 – 00:33:09:22
Rod
When I started was 18%. Right? Right.
00:33:09:24 – 00:33:14:04
Preston
But you couldn’t do that now because back then the businesses did not have debt.
00:33:14:07 – 00:33:15:08
Rod
Right? Why?
00:33:15:11 – 00:33:34:21
Preston
Because it would have been stupid to have debt the way the money system worked. We changed the system. So that gave us a clue. And that clue is if you want to scale your company the perfect metric. I’m not saying the only metric, but the perfect metric is when you’re balance sheet equity in your company and your debt are the same, your trajectory for your industry.
00:33:34:21 – 00:33:35:01
Rod
Is up.
00:33:35:09 – 00:33:45:24
Preston
Is is is perfect. Now you can have much more debt and much lower equity, but that means that your risk to reward ratio is all skewed.
00:33:45:24 – 00:33:49:11
Rod
Sure, sure. If you’re overall it’s called overleverage and you can averaged right.
00:33:49:13 – 00:33:54:04
Preston
A lot more equity and not a lot of debt and you can actually try this your age. Like if you’re 60 or 70, you might want.
00:33:54:04 – 00:33:55:16
Rod
Less debt, more equity. Sure.
00:33:55:16 – 00:34:08:24
Preston
But if you’re 30, why not have a little more debt? You’re going to build more equity using more debt like. But if you want to balance and be safe regarding regardless of the economy in an efficient way, balance sheet, equity and debt interest.
00:34:08:25 – 00:34:09:23
Rod
Same. Very interesting.
00:34:09:23 – 00:34:12:13
Preston
Then what about return on emotion and return on time?
00:34:12:15 – 00:34:13:25
Rod
Return on emotion.
00:34:13:25 – 00:34:15:07
Preston
And return on time?
00:34:15:09 – 00:34:18:03
Rod
Okay. Help me understand. Return on emotion that one doesn’t.
00:34:18:05 – 00:34:38:00
Preston
So we we started kind of you Q&A with me before the podcast cause you wanted to ask good questions, which I loved because this is why you’re a great podcaster. You make sure that you know what you’re doing first. Why are you not coaching like you said, you owned a coaching company or you are you sell your coaching product?
00:34:38:02 – 00:35:00:20
Preston
No, I don’t like coaching, not because I haven’t done it. I’ve done a shitload of it. But I got out of it because I was coaching millionaires. I was coach. I had four billionaire clients. I don’t want to fucking coach them. I don’t want to go run their teams. Right? I wanted to help guys like me. I wanted to find people that couldn’t afford the high end coach and show them that you can do it too.
00:35:00:23 – 00:35:17:15
Preston
It didn’t feel right. Not not that I didn’t help them, Not that I didn’t make a lot of friends. I’ve got a lot of great friends from that and I’m glad I did it right. But I wouldn’t keep doing it emotionally. I was not cult. I think if you’re living your purpose, then you absolutely love what you’re doing.
00:35:17:15 – 00:35:17:27
Rod
I agree.
00:35:17:27 – 00:35:25:28
Preston
No, I don’t love building homes. So my return on emotion is terrible with that business. So I got it, made it, it got.
00:35:25:28 – 00:35:26:15
Rod
It, got it.
00:35:26:16 – 00:35:31:06
Preston
I automated the business my time was go where I my emotional returns are.
00:35:31:06 – 00:35:44:18
Rod
I got it now I get it. Okay. I was. I wasn’t tracking you. It’s. It’s really your lifestyle we’re talking about here. Yeah. Yeah. By the way, I’m a coach. I’ve got hundred one on one students around the country, so. But you love it. And I love the hell out of. And you’re good at it. I get love every single day.
00:35:44:18 – 00:35:48:01
Rod
My students on, I think pushing 200,000 units and your.
00:35:48:01 – 00:35:50:00
Preston
Reputation’s at ten out of ten for it.
00:35:50:00 – 00:36:01:01
Rod
Thank you. Thank you. Yeah, yeah. But, but yeah. So there’s 100% return on emotion there for sure. Okay. Because I absolutely love it. I’m passionate about it now. I understand. So what was the other piece Return on?
00:36:01:04 – 00:36:02:26
Preston
So return on emotion and return on time.
00:36:03:00 – 00:36:06:05
Rod
time. Yeah, yeah, yeah, yeah. Well, that’s efficiency for sure.
00:36:06:07 – 00:36:26:13
Preston
Sure. Right, sure. return on emotion and return on time are kind of the paradox. Return on income or return on investment. Return on marketing are the paradox kick return on balance sheet equity, return on debt. That’s the paradox. You always find a paradox. You find truth. Like, you know, religion’s probably a great way to avoid how spirituality is going there.
00:36:26:13 – 00:36:43:07
Preston
Conquering the mother return, coming back victorious, right? So like you have to get like spiritual in your business and go and study your problem. Find out where the paradox is you if, if there wasn’t something that was beyond our understanding, we wouldn’t need any faith anyway. And so we have to find that piece and get all the way up to there.
00:36:43:10 – 00:36:53:21
Preston
Sometimes you learn enough, you actually get a little more understanding, so that makes sense. So I’m always digging, Where’s the paradox? What’s the counter balance? How do I maximize to there? That’s automation.
00:36:53:23 – 00:37:03:13
Rod
Okay. Okay, interesting. So so are you are you the CEO and most of these businesses or what?
00:37:03:16 – 00:37:04:19
Preston
I have a co-CEO.
00:37:04:20 – 00:37:09:05
Rod
co-CEO. Okay, let’s talk about leadership for a minute. Yeah, okay.
00:37:09:07 – 00:37:10:16
Preston
We’re not getting to culture. Okay.
00:37:10:16 – 00:37:24:26
Rod
So fun. Yeah. And I love culture, and I had a lot of fun with it at a big company that I had, you know, a lifetime ago. But you know what? What qualities do you feel like a leader should possess? A good leader is an extraordinary leader.
00:37:24:28 – 00:37:43:23
Preston
So a leader must be a very. Well, let me go to the most important. I mean, communication is a huge one, and that’s where I was going to go first. But I think the most important quality of a leader is you’ve got to be dangerous guy. If if you are not dangerous, then you cannot lead.
00:37:43:26 – 00:37:48:29
Rod
And so tell me what you mean by that, because that that’s going to people are going to be scratching their heads.
00:37:48:29 – 00:38:13:17
Preston
Yeah, sure. So my job at my companies is to create safe it is an enormous human need. People don’t qualified as human need, but if it wasn’t a human need, Kolbert would not have sent us in the direction it did. Right. So the only way I can create safety is kind of the same. Going back through human history, 40,000 years of human history is by being the most dangerous guy in the room.
00:38:13:19 – 00:38:33:14
Preston
I need to make sure that my tribe is safer. My tribe has more opportunity. And you know what? If the threats coming from within the tribe, I need to cut that person out. I need to be willing to fire the bad actor. I need to be willing to recondition bad actors if they’re not doing it on purpose or I need to be willing to go and take market share from my competitors.
00:38:33:16 – 00:38:53:21
Preston
Like you you have 1500 coaching clients. Okay. How many of them would love to be the only apartment syndicator investor in the country? Probably all because they’d immediately be a billionaire right, Right. Well, there’s only so much market. The market’s only so big. Like you’re not going to go create a new market, which means all of your competitors are coming at you 24 hours a day.
00:38:53:21 – 00:39:05:21
Preston
360 days a year, wanting your market share. So you have to be dangerous enough to defend your territory like a pride of lions and dangerous enough to take some every now and then as you improve your model, you have to be dangerous.
00:39:05:23 – 00:39:08:19
Rod
nice. Great, great, great explanation. Love it.
00:39:08:21 – 00:39:20:11
Preston
What’s the most dangerous part of the spear? Spear tip. Right. Love it. You know. And what does the tip out in front of everybody that’s behind me. So I’m protecting everyone behind me by being dangerous out front.
00:39:20:14 – 00:39:38:25
Rod
Love it, love it, love it. So talk. I mean, you’re obviously very successful. You tell me you got two planes. Talk about you know, everybody thinks that it’s a straight line and easy to get to success. But talk about some early failures that may have, you know, can set you up for success later in life if anything comes to mind.
00:39:38:25 – 00:39:40:23
Rod
A big one, you know, doozy.
00:39:40:26 – 00:40:02:14
Preston
my, my, my biggest failure, which is what I don’t want people to like my story in the beginning. If love is the meaning of life, if you’re not spending time with your loved ones, or if you have something that’s consuming you, I mean, I did not spend the time I needed to with my dad. Now that has set me up for success with spending far more time with my wife and my kids and and all of my ones now.
00:40:02:14 – 00:40:29:23
Preston
So the biggest failure was eating that one up. But I wouldn’t be the man I am today, so I’m grateful for it. Number two, hiring based early failure. I hired my wife’s childhood best friend and he ran accounting for a property management company I owned. And I didn’t understand accounting and I did hiring. Now I know a lot about hiring and a lot about accounting because he walked out with a quarter million dollars.
00:40:29:23 – 00:40:41:23
Preston
And if you’re waiting for the police to arrest somebody, man, if you don’t understand accounting, the financial crimes detectives aren’t going to listen to you very much because he cooked my books so well that, you know, I just became a quarter million shy.
00:40:41:29 – 00:40:59:14
Rod
Well, you beat me. I had somebody take 100,000 out of a management company I owned in in Memphis. And I and she even she even signed a confession that they still didn’t go after. it’s amazing. yeah. No, it’s. That’s. That’s crazy. Well, let me ask you this. What do you think is the most you know, we have a lot of analytical people that listen.
00:40:59:14 – 00:41:04:26
Rod
And you’re obviously very analytical as well, but you’re very outgoing, even more so. But, you know.
00:41:04:29 – 00:41:05:11
Preston
And I hit.
00:41:05:11 – 00:41:06:07
Rod
That real quick. Yeah, sure.
00:41:06:07 – 00:41:08:13
Preston
I at that, because I’m an introvert.
00:41:08:16 – 00:41:09:02
Rod
You are?
00:41:09:03 – 00:41:27:18
Preston
I am an extreme introvert. People don’t understand introvert, introverted, extrovert interest. Okay. So the only difference between introvert and extrovert, we’re humans. We love people. All people love people like introverts, love people to if I’m around people, like when I’m done with this podcast, I’m going to be exhausted because people exhaust me. Okay? Doesn’t mean I can’t learn.
00:41:27:18 – 00:41:46:19
Preston
People like a skill, right? I get on stage, I can do all the dog and pony show like I was. The event’s only the same as you. We all learned amazing things from that man, right? But I’m exhausted afterwards. An extrovert gains energy from people, right? If you are an introvert, if you are analytical and you’re believing the word belief comes from the words, it’s roots.
00:41:46:19 – 00:41:52:13
Preston
Be love. If you actually think that means you can’t be charismatic and social, you’re.
00:41:52:16 – 00:41:52:21
Rod
You.
00:41:52:21 – 00:41:56:18
Preston
Will never succeed. So you can learn extrovert for an hour. Anyone can.
00:41:56:24 – 00:42:25:11
Rod
Sure, sure. And I will tell you that the introverted people are some of the most successful people in our business because they connect better, because they’re not looking over someone’s shoulder to try to get to the next conversation. They have deeper connections is what I’ve seen. And and so, you know, that’s yeah, no question now so where I was going with that is have a lot of analytical introverted people that that fear, you know they’re afraid of failure.
00:42:25:11 – 00:42:39:03
Rod
They fear, they fear failure. And, you know, I try to I try to push them to to embrace courage and action mitigates fear and so on and so forth. As it relates to you’re an introvert. What do you think is one of the most courageous things you’ve ever done?
00:42:39:08 – 00:42:55:01
Preston
So I’m going to just tell you my opinion on fear right now. Okay, fine. Better shit to be scared of. Okay. If you think you have a lot to lose, if everything keeps going the way it’s going now, you will have more to lose tomorrow. So at any point that you start later than today, you’re going to have more to lose.
00:42:55:04 – 00:43:13:28
Preston
Might as well start now. Okay, So at every point you will have more to lose. Everybody is going to have fear. I am maybe one of the most scared people I know, and I don’t think you can be a successful entrepreneur or without having taken risks of failure and at all points in time. I’m worried about something. If you’re not fearful, you’re an idiot.
00:43:14:04 – 00:43:33:01
Preston
But I I’m you know, and I don’t necessarily like to bring religion in or anything like that or faith or spirituality, but I’m going to say this. It says in Proverbs that fear of the Lord is the beginning of wisdom. Every morning I learned this from a mentor, and I’ve done it since. I know I can’t make God love me more or less, but I can make him more or less pleased with me.
00:43:33:05 – 00:43:50:05
Preston
So I fear not doing a good job there. And you know what? Now I don’t have time to fear anything else. So if you know you’re going to have it anyway, pick where you’re going to put it. What if you create an algorithm for. I’m going to put my fear here. I’m so scared and you don’t know if use what I said you don’t have.
00:43:50:05 – 00:44:01:28
Preston
You’ve got use whatever you want. Like I’m fear of judgment with my friends. I’m fear of my family. I’m fear of losing this whatever. But place it at a higher level. The higher level fears pay more.
00:44:02:01 – 00:44:21:11
Rod
that’s good. That’s good. You know, there any you know, you’re very motivated Again, you spend a lot of time with Tony Robbins like I did. Are there any favorite quotes that you have that you know? Very. You’re you’re very driven. Is there any any phrases or quotes that help drive you and push you and propel you to continue to do more things?
00:44:21:11 – 00:44:25:03
Rod
You’ve got all these different businesses or any any quotes come to mind?
00:44:25:06 – 00:44:44:13
Preston
There’s things I live by and I mean. I love quotes. I think all of us do. But there’s things I live by, one thing I live by, and it’s maybe it’s quote, maybe it’s just a saying or maybe I don’t know. We all think possession is about ownership and we are dead gone wrong.
00:44:44:19 – 00:44:45:26
Rod
Okay, explain.
00:44:45:26 – 00:45:01:14
Preston
Possession is about responsibility. Possession begets responsibility and responsibility begets ownership. We live in a world where we want possession, but not responsibility. We’re missing steps on a staircase.
00:45:01:14 – 00:45:02:02
Rod
Interesting.
00:45:02:02 – 00:45:26:25
Preston
And we fall right in the middle where we’re lost. And. And I love words because words have meaning. And meaning is so powerful. You know, we all think about possession. And when we go watch a good movie on Netflix about possession, there’s normally an exorcist. Well, what possesses most people? It’s a thought. Some thought or idea is what possesses or consumes most people and holds them back and causes fear.
00:45:26:26 – 00:45:42:09
Preston
Yeah, right. In fact, even if we go back and I you know, I’m a nerd, so. Pardon? You know, if I take off this jacket, I’m giant head, tiny shoulders. I look like Barbie’s world. Right. But I think too much. If we go back and we study ancient Aramaic. Do you know what the word Satan means? Crazy thought.
00:45:42:12 – 00:46:01:09
Preston
So when you go look at that and you’re like, Satan means crazy. So if we go read that biblical story, Christ, doing a fast 40 days, 40 nights, here comes Satan. Why not turn this stone into print? Get behind me. Crazy thought. Get behind me, Satan. What are you possessed by your possession? Which is what you’re chasing?
00:46:01:09 – 00:46:18:23
Preston
The goods, the things that you want to own beget responsibility. The moment nobody cares how much you know until they know how much you care. You know what? If I want to own a building, I should care about the building. That’s the baby that I decided to raise. Those the diapers I started to change. That will make my customers my investors.
00:46:18:23 – 00:46:21:19
Preston
That brought me money. Far more money than the guy that didn’t care.
00:46:21:23 – 00:46:22:02
Rod
Yeah.
00:46:22:07 – 00:46:31:12
Preston
Then the guy that was chasing the next deal. So possession begets responsibility. Ownership begets responsibility, and that begets possession. Does that make sense?
00:46:31:12 – 00:46:55:22
Rod
Yeah. No, I it’s. And that’s whatever. You know, people feel like they want the possessions, the the the cars, the houses, the the planes, the yachts and all that. But that’s a very interesting way to look at it. So you believe in mentors? There’s no question. for sure. Yeah. So so, you know, for a business for a wannabe entrepreneur and everybody that listens to the show is a wannabe entrepreneur.
00:46:55:22 – 00:47:18:14
Rod
I mean, you take off your employee hat, you put on your entrepreneur hat when you get into multifamily or any business for that matter, you know, what sort of training or education has helped you the most? And would you suggest for someone that knows they need to go change their life, knows they know they need to, you know, make something happen for themselves and their families to create freedom or whatever their definition of success is.
00:47:18:14 – 00:47:19:28
Rod
Any any suggestions?
00:47:20:00 – 00:47:25:26
Preston
So I want to make sure I understand your question fully. Like what sort of training helped me the most? Yeah, well.
00:47:25:26 – 00:47:38:27
Rod
Working in as a general global framework, are there any any areas of your life that you got training or mentorship on that you feel like helped you more than another?
00:47:39:03 – 00:47:55:01
Preston
Okay, you know what? Yes. And we can go into mentors and how to how I think you should find them. And I’m glad to be listening to you because if they’re looking at apartments, they should find you too, because you qualify for those. But let me let me give you a framework for investing, okay? Because this made me filthy rich and I recommend it to everyone.
00:47:55:04 – 00:48:02:22
Preston
So first thing you invest in and you fill them like buckets, right? Once the bucket starts overflowing, you move to the next bucket, but not move to the next bucket until you hit.
00:48:02:24 – 00:48:03:26
Rod
The fill the first one.
00:48:03:26 – 00:48:15:12
Preston
Right? Right. So each bucket should really pour into the next bucket. That one, your mindset, mindset, hearts that skillset. So you’ve got to invest in you. I don’t care It’s reading a book. I don’t care if it’s hiring a mentor. I don’t care what it is.
00:48:15:12 – 00:48:16:09
Rod
Mindset. You need to.
00:48:16:09 – 00:48:19:22
Preston
Put mindset, heart set, skill set. Kind of those three things where you are.
00:48:19:28 – 00:48:21:10
Rod
Is that one bucket that’s.
00:48:21:10 – 00:48:21:19
Preston
One.
00:48:21:19 – 00:48:26:19
Rod
Bucket mindset, heart set, skill set. Okay, bucket one.
00:48:26:21 – 00:48:28:06
Preston
To your business.
00:48:28:13 – 00:48:31:29
Rod
Okay. Why? Because it’s your automation vehicle. You got to pick your vehicle. Basically.
00:48:31:29 – 00:48:38:19
Preston
It’s your vehicle. Yeah. Not sure if you have one business or 100 businesses. Like I have a McLaren, I have a Corvette, I have a couple of airplanes. There’s lots of vehicles. Right.
00:48:38:19 – 00:48:41:03
Rod
Nothing wrong with owning multi. I’m just we’re talking a business vehicle here though.
00:48:41:03 – 00:48:53:01
Preston
Correct. Business vehicle Like whether it’s a homebuilding company, whether it’s an apartment syndication business doesn’t matter. Right. Your business. And if you need a new employee, but you’re like, man, I better go buy Bitcoin, stop right? Get the new employee, get the new software, get to.
00:48:53:01 – 00:48:56:17
Rod
Me, focus on the focus on the vehicle, the business to okay.
00:48:56:20 – 00:49:17:21
Preston
Three real estate. And the reason I say real estate, because I’m going to get a lot of people that disagree with me on that. And so I got to clarify, there’s only three types of investments. Okay. And I’m I’m a psychologist and an economist by trade. Okay. There are tax hedge investments. There are cash flow investments, and they’re an inflation hedge.
00:49:17:21 – 00:49:21:10
Preston
If it’s investments, real estate hits all three.
00:49:21:11 – 00:49:21:15
Rod
Yeah.
00:49:21:17 – 00:49:30:00
Preston
If you go to gold, you’re not going to hit cash flow, right? You know, that is the one that hits all three. That is just that perfect match is a.
00:49:30:00 – 00:49:35:15
Rod
Reason 90% of the world’s millionaires either did it in real estate or put in put their money in real estate. So I’m complete agreement.
00:49:35:19 – 00:49:45:07
Preston
And you’re not big enough to open a bank yet. Real estate. So for next one after real estate. Yeah. Tax hedges.
00:49:45:10 – 00:49:45:20
Rod
Okay.
00:49:45:22 – 00:49:53:03
Preston
Okay. And when I say tax hedges, normally if you’ve done the first three right, there’s tax hedges within.
00:49:53:06 – 00:49:54:17
Rod
Your real estate. I don’t pay.
00:49:54:17 – 00:50:00:19
Preston
Taxes doing accelerated depreciation in real estate, which might cost you a little extra money with your accountant. You are an.
00:50:00:19 – 00:50:02:09
Rod
Idiot, right? Cause segregation.
00:50:02:13 – 00:50:20:24
Preston
You know, if you’re not looking at like there’s, you know, I needed to get rid of a million and a half of income, and there’s a way you can go and spend it’s 100 grand buying land that you’re going to donate to an oil company. I can have my family office tell you about. It’s amazing. But each hundred grand turns into a half a million dollars of money right off.
00:50:20:26 – 00:50:40:16
Preston
Wow. And you still make a small return on it. Like, I mean, it’s it’s not like there are so many. You got to understand at a certain level that politicians don’t care about you. They care about votes. And the way that they’re going to get votes is by getting enough money to advertise for the votes. And the way that they get the money is by going to the millionaires, billionaires and corporate funds and trusts and everything else out there.
00:50:40:19 – 00:50:55:07
Preston
And they put under the table shit in there. So if you learn how to read that, then you can do it too. You don’t have to be a billionaire to do it. Anyone could do it. So that’s number four. And they’re normally associated in the first three. Number five, other shit.
00:50:55:09 – 00:50:58:14
Rod
Other shit, other shit that’s technical, that is technical.
00:50:58:16 – 00:51:13:09
Preston
Okay. Because like, everyone’s going to and you’re going to get people on here. Bitcoin. Etherium Okay, well, that’s like the dotcom boom of the nineties. We don’t know who the winners are. We don’t know who the losers are, right? Yes. Bitcoin’s a run today. While we’re talking next week, it might be down. Okay. You know, yes, this company is doing well.
00:51:13:09 – 00:51:21:26
Preston
You can read a balance sheet, but the public markets are more opinion than they are actual. I’ve seen companies with good fundamentals go down because of a Twitter comment.
00:51:21:29 – 00:51:23:04
Rod
That’s stupid, right?
00:51:23:10 – 00:51:28:05
Preston
Like, that’s not how you get value. You’re like, we got to understand, most investments and if we start.
00:51:28:07 – 00:51:33:24
Rod
You’re talking about investments. Basically when you say other shit, pick, pick, could pick other vehicles, other vehicles.
00:51:33:24 – 00:51:35:01
Preston
Other investment vehicles.
00:51:35:02 – 00:51:36:25
Rod
Got you. All right. What’s six.
00:51:36:27 – 00:51:37:21
Preston
That’s it. That’s only.
00:51:37:21 – 00:52:04:05
Rod
Five. Well, those five, those are great, man. I really like those a lot. Okay. That that really resonates with me. Start with mindset, heart set, skill set, you know, pick a business, pick your vehicle. Once that business is successful and overflowing, you’re going to get into real estate. Duh. That’s that’s just about anybody that’s super successful does that then you’re looking to save money on the income you’re making from your previous investments through tax edges, and then you’re looking for other stuff to do because you’re Because you’re.
00:52:04:05 – 00:52:25:12
Rod
Because it’s fun. Because it’s fun. I love it. Well, listen, brother, this has been a lot of fun. Preston, I. I know some of the listeners have had a hard time keeping up with you, because if I have a hard time keeping up with you, I promise you, as your brain moves very, very quickly. But, you know, I got some really good nuggets here and I really, really appreciate you coming down to be on the show, brother.
00:52:25:15 – 00:52:29:05
Preston
thanks for having me, man. You’re the only guy I’ve ever flown across the country to be on a podcast.
00:52:29:06 – 00:52:37:22
Rod
No kidding. Yeah. I didn’t know you flew here. Wow. Thank you for that, brother. Well, well, this has been enlightening, but I really appreciate you coming in.
