Robert Leonard (03:08):

So kind of just forgot about it. A few months went by, and then I heard the same sort of ad about a real estate show and that’s when my ears really perked up because I was like, “Well, I’m a real estate investor. I could probably do that.” So I ended up reaching out and at this time it was going to be the first show that they launched outside of We Study Billionaires, so they didn’t really have a defined process or role. So I got a little bit creative, reached out to Stig and ultimately Stig said no to me being the host of the real estate show, because I was too young. As you mentioned, I was just 23 years old. So he felt that I was too young to be a host and especially of the real estate show and so he said, no.

Robert Leonard (03:45):

And then he and I actually worked together on a couple different projects. I ended up writing a couple intrinsic value assessments and Stig and I just kept going back and forth and we really liked to work with each other. So Stig came up with the idea of a new show called Millennial Investing, that’s the show we’re on today. And at first I wasn’t sure I wanted to do it. I didn’t really necessarily believe in the idea of a millennial investing show, I really was just set on real estate. But I ultimately ended up saying yes, because I just wanted to get involved with TIP. And ultimately that has led to where I am today. I ended up hosting The Millennial Investing Show for a little while, Stig ended up offering me the real estate show a little bit later, and that’s where we were at today.

Clay Finck (04:26):

So I’m curious, what was it like starting out so young? Were you nervous getting started or did you feel like you had imposter syndrome as you were chatting with these extremely intelligent people like Preston, Jesse Itzler, Lewis Howes?

Robert Leonard (04:42):

Yeah, I was nervous and I did have imposter syndrome. So I was nervous for a couple reasons. One, because I was so young, but two similar to you, Clay, your background is in a very quantitative-based field and mine was as well, I was in finance and accounting. So I wasn’t a creative guy and podcasting, even though we’re talking about finance and investing, it’s a very creative kind of endeavor. And so for me, I was mostly nervous about that. It wasn’t even really so much talking to those people, although I was nervous about that at times, but it was really more just going into this creative field where I wasn’t sure if I was good at it. I knew I was good at investing, I knew I was good at being a financial professional. Going into a creative field was entirely new.

Robert Leonard (05:23):

And then when you layer in thousands and thousands, and as the show grew, hundreds of thousands and millions of people are going to listen to this, that made it even more a little nerve wracking. And then next thing I know I’m hopping on the mic with Kevin O’Leary, and like you said, Jesse Itzler who sold his company to Warren Buffet and part owner of the Atlanta Hawks. You’re talking to some really, really awesome people and I’m just this 23 year old kid in a small town in New Hampshire. So that was a little bit nerve wracking at first, too.

Robert Leonard (05:51):

And then of course, like you said, imposter syndrome, that comes in once people start to actually interact with the content. People start to reach out to you, they send you emails or they follow you on social media or whatever the case is and that’s when some of the imposter syndrome starts to come in. You’re like, “Not only am I this just normal person from New Hampshire, young 23 year old kid, who’s talking to these people, but also now you have people that are listening to you for advice and following your show,” and you start to wonder, am I really the right person to be doing this?

Robert Leonard (06:18):

And so yeah, I definitely suffered from imposter syndrome and being nervous. I think a lot of the nerves are gone today, thankfully, but the imposter syndrome is still there from time to time. Not nearly as bad as it was, but definitely is still existent.

Clay Finck (06:33):

Yeah, I’m not surprised that you did feel some sort of imposter syndrome with how young you were at the time. I mean, you were just a couple years out of college, right?

Robert Leonard (06:42):

I graduated college at 21, so I graduated in 2016. So yeah, I was just about a year and a half, two years out of college.

Clay Finck (06:49):

And I was a listener of both the Millennial Investing Show and We Study Billionaires and I’ve seen you develop quite a bit professionally just as a podcast host and just the way you carry yourself just over that short period that you’ve been with TIP. What are some of the biggest lessons you’ve learned as being a host?

Robert Leonard (07:09):

I really appreciate that. And I think it depends which avenue you’re talking about. There’s a couple different ways we could take that question and the first is just from a public speaking perspective as being the host of something like a podcast, I’ve learned a ton of different things. We could talk about what I’ve learned from the guests from a real estate perspective. We could talk about it from a stock investing perspective. We could talk about it as podcasting as a business. So I think there’s a lot of different things, different avenues we could take there. Is there anything in particular that you want to dive in on?

Clay Finck (07:39):

How about just the perspective of the host and not so much the perspective as an investor?

Robert Leonard (07:46):

From being a podcast host perspective, I think the biggest thing above all, and there’s been a lot of things that I’ve learned, but I think the biggest thing that I’ve learned is that for the most part, we’re pretty much all the same. No matter who I talk to, they’re just normal people like you and me. And that helped with the nerves, but it also gave me a lot of motivation because I’m not going to say any names, but there were times where I would host podcasts with very, very successful, well-known people that anybody listening to the show would know, and we’re recording and their dog will jump on their lap while we’re recording, or their kid will run in the room or whatever the case is. They’ll have some sort of situation that just reminded me that they’re a real person. They have their real life outside of their money and their fame. They have a real life, they have family, they have kids.

Robert Leonard (08:32):

And that was really sobering to me and really helped relieve a lot of my nerves because it taught me that when I sit down and talk to these people, they’re just normal people like you and me and we’re just having a conversation. And it also gave me a lot of motivation because a lot of times we get into this mindset that these other really successful people have something that we don’t have or can’t have. And so sometimes that makes us feel like we can’t do something that we want to do, because we think that people who are doing it, have something special that we don’t have.

Robert Leonard (09:00):

And so once I realized that, I realized they don’t have anything special that I don’t have, they don’t have anything that I couldn’t do. So that gave me a lot of motivation as I went into my entrepreneurial journeys, anything that I work on. It really just reinvigorated my drive and really taught me that I could do really anything that we want to do.

Clay Finck (09:21):

I really like that. And one thing I’ve realized in joining TIP is just how much the podcasting space has grown over the years as We Study Billionaires, it was just this tiny show in 2014, 2015, and today, it’s getting millions of listeners every single month. And it’s also made me realize how much more room for growth there is still to come. So I’m curious, where do you see podcasting going in the future? And do you think there are any possibilities of it being disrupted by other mediums?

Robert Leonard (09:53):

I’m sure there is the possibility of it being disrupted. I mean, when we think about before podcasting existed, I’m not sure necessarily what podcasting is disrupting. I guess you could say maybe it’s disrupting the radio industry, but if that is the case, when you were thinking about and listening to the radio, you probably didn’t think about what is going to come and disrupt this. And so I think we’re probably in the same type of phase where I think podcasting is obviously a lot newer than radio was when it got disrupted. So I’m not sure if there’s going to be any disruption in the near future. I think probably more likely in the near term is going to be these different avenues that build off of podcasting.

Robert Leonard (10:30):

We saw Clubhouse recently come out and try to, I’m not sure disrupt podcasting is the right word, but try to maybe build off podcasting or maybe disrupt and it didn’t quite work. I think podcasting is going to be around for a while. I think it’s going to continue to grow. I think there’s still a lot of room to grow, but I think it’s going to be one of the popular mediums that exist today. I mean, YouTube is massive for video content. There’s streaming like Twitch, things like that. So I think podcasting is going to grow and I think it’ll be a staple of one of the main ways that people consume content. Will it be disrupted in the future? I’m sure it will be, but I have no idea what that could be.

Clay Finck (11:10):

It’s interesting to think about how podcasting you’re really just recording with somebody and it’s something that could be just a one man shop that they do on the side. And after working with TIP, I’ve realized that you can take it so much further than that in preparing for a really good interview, bringing on really good guests and doing really good editing and providing just a really good listener experience. So I think that in itself is going to allow the industry to grow even more and bring in more listeners and again, just provide a really good listener experience that keeps people around.

Robert Leonard (11:46):

Yeah, there’s a lot more that goes into podcasting than people realize. I mean, you can hop on your phone and literally, Gary Vee talks about this, you can hit record on your phone and have a podcast out in the next couple of hours. So it doesn’t have a high barrier to entry, but the average quality of podcasts is significantly going up and you could do it as serious as a TIP does it. We’re a very real business here at TIP and our main product or service is podcasting. So there is a big range in terms of how serious you can take it, but the average of podcasts, the quality’s going up. People are getting a lot more serious about it. You’re starting to see the quality approach that of quality television or radio.

Clay Finck (12:24):

Now, like you already mentioned and like I mentioned before, I’ve listened to We Study Billionaires for years and Stig and Preston were two people that I just looked up to so much. And again, it’s really crazy to think about how big their show has gotten. And you’ve worked with them for a couple years now, so I’m interested in hearing some of the biggest lessons you’ve learned in working with those two over the past couple years. What are some big things that Stig or Preston have taught you? I actually had the great opportunity of visiting Stig and just hanging out and talking business with him for about a week and that was a really good experience for me. And I can just see that he just knows so much about business and about the culture and about life and I’m curious if you have any big takeaways that you have?

Robert Leonard (13:13):

Clay, as you know, Preston isn’t super involved on the business side of TIP like Stig is. Stig lives and breathes TIP. He’s involved in it day in and day out, whereas Preston is obviously involved, if you listen to the Bitcoin show. Preston is providing a lot of content in that way and he’s also an integral part of TIP Finance, our software tool to help you analyze individual stocks, but in terms of day to day, I speak with Stig significantly more than I do Preston. What I can say that I’ve taken away from Preston is from Bitcoin, just learning a bit about the cryptocurrency space. That’s pretty much been my biggest takeaway from Preston. And from Stig, I mean, the list is honestly endless. Stig has taught me so much over the last two, almost three years now.

Robert Leonard (13:57):

Some of the biggest things you mentioned are culture, but also opportunity cost. Stig is very big on opportunity cost. I knew what opportunity cost was. I have an MBA in finance, accounting. You can’t go through that type of academic program without knowing what opportunity cost is. So I knew what it was, but I never really internalized it or implemented it in my life. I never really said, “Okay, I’m going to make this decision. And if I make this decision, what am I passing up on and what is the cost of that opportunity?” I never really considered it in my real life. And so Stig has really, really drilled that home with me is to really, anytime you make a decision, but especially in business, what is your opportunity cost?

Robert Leonard (14:37):

And to couple it with that, he’s also taught me a lot about first things first, and this is from a book called Seven Habits of Highly Effective People. And he really has helped me hone in my skill of deciding what is the most important thing, what is the most impactful thing, what should I be working on. And it goes with opportunity cost, but it’s also just making sure that you are working on things in order that actually move the needle. And so those are some of the biggest things.

Robert Leonard (15:06):

He’s also taught me a lot about just general business. I mean, a lot of people today talk about at how you need to grow a billion dollar tech startup, and you need to scale, scale, scale, and take on venture capital and go that route, but Stig is on the complete opposite end of that spectrum for business. And I don’t think one is right or wrong and Stig will tell you that. He says that the other people are probably going to make a lot more money than him and considered to be, quote-unquote, “more successful than him.” But Stig is more interested in really building a business around the life that he wants to live and if it comes to making an extra couple dollars versus sacrificing his lifestyle and what he wants to do, he’s not going to do it.

Robert Leonard (15:42):

And so that is a different type of business that I’ve learned over the last few years, because you don’t see, it talked about a lot in the media or financial news. You really just hear about these venture capital backed tech startups that are going for these massive valuations. So I learned that from Stig, was also huge. So I’d say those are probably my three biggest takeaways from Stig.

Clay Finck (16:01):

That’s great. And like I mentioned already and many times before, we are both huge fans of the show. And what I’ve realized is many of the things that they implement into their life, they’ve already put out there in the form of podcasts. We Study Billionaires, years back, they would do book reviews and they would just review the book and just talk about the lessons they learned. And they would go over their biggest takeaways, what they liked, what they didn’t like. So Stig and Preston, they’re both very big readers. So you can see the books they read. They post the books they read on their website, their top 10 books for each of them and they do book reviews on the website too. So there’s just so much out there in just the form of podcasts and the website that you can learn from them. And I think that’s just a great opportunity for anyone out there that just wants to develop personally or just develop as an investor as well.

Robert Leonard (16:57):

Yeah, absolutely. And you and I, Clay, have talked about how Stig is probably one of the best people we’ve ever met at really implementing what he reads from books. He amazes me almost every day with how quickly and readily available he has information from the books that he’s read and how he actually implements it. I think there’s a lot of people who read the books, but don’t actually implement what they read and Stig is not one of those people. He implements almost everything that he reads that he likes.

Robert Leonard (17:24):

It’s different because coming from the corporate world, your boss, typically, at least in my experience, is not a reader and they don’t read like we do and they definitely don’t implement these business practices that … Your boss isn’t going to go read Seven Habits of Highly Effective People and teach you how to implement first things first, whereas with Stig, he’s going to go read these best selling business books, learn the principles and things that you need to implement in your life and he’s actually going to do it. So that’s a really big thing that Stig does. It’s different from not only most people, but also just the corporate world.

Clay Finck (17:52):

Yeah, Stig most definitely and Preston as well, they both take a very long term and thoughtful approach. And it’s not all about maximizing that dollar in the current year, they’re really thinking about things over the long term. And you’ve discussed this on the podcast before with me coming on, I’m going to be leading the regular millennial investing show and you’re going to be taking on the real estate investing show as you always have. You’re going to be working more on TIP Finance, so I’d like to talk about that a little bit. For those in our audience not familiar with the TIP Finance tool, could you give us an overview of what TIP Finance is and how you use it in your own portfolio?

Robert Leonard (18:32):

TIP Finance is a software tool that we’ve developed here at TIP that basically allows you to analyze companies easier, calculate the intrinsic value easier and we have a bunch of different tools that encompass that. So you can do all of your financial and portfolio management inside TIP Finance when it comes to individual stock investing. I track my whole portfolio in there, so I have all my holdings. I take them from Fidelity and I put them into TIP Finance. I have my whole portfolio in there.

Robert Leonard (19:03):

It calculates gains, losses. It does a lot of calculations for me in terms of the portfolio. It also allows me to calculate the intrinsic value of those holdings. So I know if the current price, where it is at in relation to the intrinsic value that I’ve calculated. There’s also a watch list, which allows you to have stock price notifications. So, if you set different prices that you want to know that a stock is, like if it falls to that price, you can get notified or if it goes up to a certain price, you can get notified.

Robert Leonard (19:32):

We also have momentum notifications. So if a company has been trending up for a period of time or trending down and it’s reversed and now it’s trending up, you can get notifications for changes in that. So where that might be helpful is if you’ve held a company for a while and it’s been green momentum, but then it becomes negative or red momentum. That might be an indication you might want to consider scaling back your position, selling off some shares, maybe exiting it all completely. Or on the reverse side, you can be watching a stock and it’s maybe had negative momentum for a bit, but if it’s turned the corner at the bottom and it’s starting to trend back upwards and it’s gone green, then you might want to enter a position. And so you can get notifications on the momentum of it. All the companies have their financial statements in there. So you can do all your analysis, all the company’s income statement, balance sheet, cash flow statement. We have a bunch of ratios in there, calculators for intrinsic value.

Robert Leonard (20:23):

And we’ve recently added what we call Legend Investor’s Portfolios. So you can go in there, you can see Warren Buffet’s portfolio, you can see Charlie Munger’s portfolio. And then what we also do is it allows you to see if you have any overlapping positions with Buffet. Let’s just say you own Apple like Warren Buffet does, then it would show you that you’re matched up with Warren Buffet on that position. Also, if you go to any specific company, it’ll tell you which legend investors own that company. So if you end up searching for just say a random company, say you end up finding Apple, you would see Warren Buffet listed on that Apple page with all the financials. You’d see which super investors or legend investors actually own that company as well.

Robert Leonard (20:59):

And then we have a lot of international data as well for our international listeners and users. We have a bunch of data on each country’s major ETFs, the most popular ETF in that country. So there’s a lot of really good information on that as well. And so that’s how I use it for myself.

Robert Leonard (21:18):

And probably the last thing that I’ll mention about TIP Finance is that we just recently implemented a freemium model. Should be out by the time this podcast airs. And so you used to have to pay $47 a month, or you could buy an annual subscription for $470 to get access to TIP Finance, but what we’ve implemented is you’re allowed to access the entire platform for free now, you just have to pay and upgrade to the full subscription if you want to access all of the features. So you can get a good portion of features for free and then if you’re ready to take advantage of everything the platform offers, you just have to upgrade to your subscription, but now you can access it for free. So we’re hoping to get that into the hands of a lot more people.

Clay Finck (21:59):

Awesome. For anyone in the audience that is interested in learning more about TIP Finance, I highly recommend checking out the intrinsic value assessments that Robert has done using the tool. He did one on AutoZone and one on Square. Those were really helpful for me personally in getting a better understanding on how he uses the tool himself in real time. I’ll be sure to link both of those in the show notes so those in the audience can easily get access to that.

Robert Leonard (22:27):

Yeah, I did. And I know a lot of people really, really liked the episode on Square, the podcast episode that I did a few months back, so if you want to see that in video form, you can check that as well. And it’ll show you exactly how I use TIP Finance to do that analysis. And also for anybody that is going to sign up for TIP Finance, like I said, you can do it for free now for the majority of the platform, but if you want to upgrade to the premium, get the full access, use coupon code Robert at checkout and you get 50% off.

Clay Finck (22:57):

Awesome. So as a podcast host for a couple of years, you’ve had the opportunity to speak to a wide variety of different investors and do your research on them and their strategies and methods of investing and that’s really allowed you just to think about your own approach as well. Could you walk us through your thought process as an investor and how that’s maybe changed?

Robert Leonard (23:21):

Yeah, my thought process as an investor has evolved significantly over the years, both just as I’ve gotten older, had more experiences, and also from what I’ve learned from guests on the podcast. So when I first started investing, I got into investing because of We Study Billionaires. And so I became a value investor. I was all about Warren Buffet, but I was so young. I was 14, 15, 16 at the time. And I thought that I was actually being a Warren Buffet style investor, but really what I was doing I thought was value investing, but it wasn’t at all.

Robert Leonard (23:53):

I was only looking at quantitative factors. So I’d look at a financial statement, run an analysis for an intrinsic value and then I’d buy a company based on whether I thought it was undervalued or not. I didn’t do any more analysis than that. I didn’t look at the business, I didn’t look at the subjective or qualitative factors of it, I only looked at the quantitative financial metrics. And I learned quickly that that was not really value investing and there’s a lot more to a business than just the financial statements. There’s a lot of value in things that you can’t see on a financial statement.

Robert Leonard (24:21):

And so that’s really where my investing evolved first was to start to look at things that provide value to a business that you can’t necessarily see from financial statements. I would still consider myself at that point, still a very strict value investor, but realizing that value comes in many different forms. Then fast forward, I learned a lot on the podcast from guests, probably one of the most impactful was a gentleman named Brian Feroldi and a big shout out to everybody at The Motley Fool. They really turned me on to this more growth style investing.

Robert Leonard (24:54):

And I think it is growth style investing, but I do also argue that all investing is value investing and we used to, or a lot of people still do, have this distinction that value investing is its own thing. But in reality, when you’re a value investor, what you’re trying to do is buy an asset for less than it’s worth. And in reality, that’s what every investor’s trying to do. If you’re a growth investor, you’re not going to try to pay more money than you think it’s worth, just because you’re a growth investor, you’re still going to want to try to buy something for less.

Robert Leonard (25:21):

And so now these days I have come to realize that all investing is value investing. And so even though I’m taking a more growth approach at times, such as with Square, my argument is often that Square at the time of when I purchased it was actually a value pick because I felt that I was buying it for under its intrinsic value. So just because it’s a high growth company and a lot of people classify it as a growth pick doesn’t mean that it couldn’t also have value. And so that was a big shift in my philosophy.

Robert Leonard (25:51):

And then probably most recently, I’ve just been doing a lot more indexing. For a long time, I only did individual stocks, I didn’t do any indexing or passive investing or ETFs or anything like that. But recently just with me not being able to spend as much time on analyzing businesses and picking individual stocks, I’ve actually started to allocate quite a bit more of my portfolio to index funds and ETFs. So that has how my portfolio and my investing has changed. And of course there’s real estate added in there and also some crypto here and there, but that has been the biggest developments of my investing approach.

Clay Finck (26:29):

Very interesting. You talked about investing more in those growth style companies, and I’m also a big fan of The Motley Fool’s work. I’ve recently listened to the We Study Billionaires episode with David Gardner, who is a co-founder of The Motley Fool, you’ve interviewed Brian Feroldi, who has been on the podcast, and we also recently released an episode with Jason Moser. And you’ll hear over and over again from these guys that they are looking for the highest quality companies they can find, and they’re holding them for the long run. It’ll be really interesting to see how that plays out as we’ve seen growth outperform value over the past decade. We’ll either see some sort of mean reversion like we’ve seen in the past, or we’ll see these very high qualities that tend to be technology companies continue to do very well.

Robert Leonard (27:17):

Historical data will say that we’ll probably have some reversion to the mean. But I think the difference is there are people who think they’re growth investors and they’re buying not necessarily the best companies or high quality companies and, or they are good companies, they’re just buying them at insane valuations. And so I think there’s a big difference there. I am buying growth companies, but I’m buying them at what I believe to be relatively reasonable valuations. I’m not going to buy a company that isn’t a super high quality business or is at an insane multiple or valuation. So there’s a little bit of a nuance there, a little bit of a difference in terms of how I approach it versus how some say millennials or new investors, or even just really, really growth style investors are approaching it.

Clay Finck (28:03):

And we’ve seen unprecedented levels of money printing and asset purchases by the federal reserve and one thing I’ve learned from Preston is how that affects markets. And that’s also where the TIP Finance Momentum tool comes into play. Some of these companies that are doing very well due to the momentum in the market environment tend to just keep on winning and using the momentum tool, you’d be able to get a better idea of the statistical volatility that’s going on behind the scenes. So the momentum tool can potentially help prevent you from selling a position to early while the momentum is green, or on the flip side, prevent you from catching a falling knife while the momentum is red.

Robert Leonard (28:45):

Yeah. There’s a law of physics that I think applies to both investing and life, but it’s just anything in motion’s going to continue to act in motion until acted upon it in a equal or greater force in the opposite direction, right? And so I think momentum is just, not in the sense of momentum investing, but the idea of momentum on its own, whether it be in life, business, investing when something has momentum, it’s hard to stop it and in both directions, momentum down or momentum up. And so I think that’s really important to consider these days when investing, working on a side hustle business, your own life. Think about how you can get momentum generated and watch out for companies that have a negative momentum.

Clay Finck (29:27):

Now you touched on Square and as I’ve gotten to know you and learn more about your investing strategy, you also really like PayPal, Visa and MasterCard. They’re all competing and fighting in that FinTech financial payment space. What makes you so optimistic on these industries? And do you expect these companies to outperform the market?

Robert Leonard (29:48):

I have to thank Jason Moser from The Motley Fool because he has what he calls the war on cash basket and years ago when he originally came up with that, that’s when I found out about these companies. And I think this idea of investing in a trend is this is a great example because in my opinion, at the time I was working in banking, I was working in financial services, I saw people moving away from cash. So I said, “Okay, there’s going to be this global trend that people are going to over time, move away from cash and move into more card or electronic-based payments.” And this is really before Bitcoin was huge and all of that, but I just said, “Who’s going to benefit from that?” And there’s these four companies that came up and there are some others as well, but these are the four major players.

Robert Leonard (30:32):

And so what you can do is you can sit down and you say, “Okay, I’m going to pick one of these and hope that they’re the best of everyone and I hope they’re going to either win, beat all the competition, or just at least have the most growth of everybody.” Or you could take a basket approach, almost like an ETF or an index, and you can buy them all and say, “I believe in this trend, but I don’t know who the winner’s going to be.” And so that’s exactly what I did. I said, “I really believe in this trend away from a cash-based society to a cashless society, and maybe we won’t get to 100% cashless, but regardless, we’ll see a lot more people using their cards.” And so I said, “I don’t know who’s going to win. I’m going to buy all of these companies.” And that’s exactly how I developed that position.

Robert Leonard (31:13):

And to this day, yeah, I do think that that is probably … I don’t know which of those companies, but I think as a basket, I think they probably will outperform the market. And not financial advice, not investing advice, but in my opinion, if I had to bet, I would say that these four companies as a whole on average, would outperform the S&P 500, say over the next five or 10 years.

Clay Finck (31:35):

Now, you’re someone who has a finance and accounting background in the traditional education system and on top of that, you’ve done a ton of self education yourself. Given that you’ve seen a lot of the education tools and options that are out there, what advice would you give to someone wanting to get a good understanding of the stock market, how to invest in stocks, how to analyze stocks?

Robert Leonard (32:01):

It depends if you want to get that education and that understanding because you want to do it as a career, or if you want to do it just as a passion project. If you want to do it as a career, the way the world is right now, unfortunately you’re going to have to go to college. You’re going to have to get your undergrad, probably get an MBA in finance or accounting. Math is actually a really good major as well for investing-based careers. But unfortunately that’s just the way the world is currently still. Is that going to change over the next five or 10 years? Maybe, but for now, that’s the way it is.

Robert Leonard (32:30):

Now when it comes to, if you have a great career as an engineer or some sort of other career and you’re just passionate about investing, you just want to do it on your own on the side, then I don’t think you need a college education at all and I think you’re better off reading as many books on investing as you can. And I think that starts with reading a couple different books on different topics, and then seeing which one speaks to you most. Maybe read a little bit on passive investing through index funds and ETFs, read a book on value investing, read a book on growth investing, read a book on technical analysis and day trading. Then decide which of those strategies fits your personality, your style, which one do you think is going to do best, what really aligns best for you and then really dive deep into that. All of those topics will have many, many more books that you can read. I’d recommend buying those books and going out and diving really, really deep into those topics.

Clay Finck (33:23):

All right. You are a stock investor, but as I’ve gotten to know you better, it’s obvious that you love real estate and you host the Real Estate 101 Podcast that is a part of the Millennial Investing Podcast feed that is released every Monday. I wanted to dive into the topic of real estate because I have a lot of questions.

Robert Leonard (33:43):

It’s interesting you said that, and I chuckle a little bit because I studied stock investing for probably 8 to 10 years before I even considered real estate at all. And I was really, really passionate about stock investing. And so to me, even just a few years later, it’s kind of crazy for you to say that real estate, and you’re right, is that I’m more of a real estate investor today than I am a stock investor. And so it’s been a big shift. I do love real estate, some cool stories, some cool strategies that I’m working on. And you did the great honor and did me a big favor of driving me to the airport the other day and we briefly started talking about some of this. So I’m excited to dive into all your questions.

Clay Finck (34:18):

The first thing with real estate is it can take a significant amount of capital to buy a property. How do you go about funding your real estate deals? Do you consider selling stocks or do you just save money out of your paycheck and fund it that way?

Robert Leonard (34:34):

Well, I think the first thing is that you’re operating under the assumption that it does take a lot of capital to get started in real estate. I’m not so sure that I believe in that assumption. Actually I don’t at all because I don’t think that’s true. And I am currently actually writing a book on house hacking and in that book, I’m de-mything, I’m breaking that myth of that you need a lot of money to invest in real estate.

Robert Leonard (34:59):

To answer your question in terms of selling other assets to purchase real estate, I think it really is going to depend. If you have a massive gain, is selling that stock and maybe losing 20% to 30%, 40%, depending on where you live, worth it, to put it into real estate? I’m not sure. I mean, that’s really something you have to talk to a tax professional about and decide what’s best for you. But there are other interesting strategies.

Robert Leonard (35:22):

Again, none of this is financial advice, these are just options. You could potentially take a 401k loan. I don’t love that option, but it is one. One that’s more interesting is you can withdraw from your Roth IRA any contributions that you made, tax free, penalty free. A lot of people go that route because it’s a great option. I actually did that for my first property partially. And so there’s a lot of different ways you could approach the asset side of actually purchasing real estate.

Robert Leonard (35:50):

But I think the biggest thing with this question is that I challenge the notion that you need a lot of money to get started in real estate. I bought my first real estate property with $8,000 or so. And we can talk about how you can get different strategies, different loan products, different types of ways you can go about it, to bring that down payment that you need to purchase a property down. But just I guess the biggest thing is I challenge that notion that you need a lot of money to get started in real estate.

Clay Finck (36:16):

Now, one of your investment properties took zero money down, which we will be getting into shortly. Before we dive into that deal, what does your real estate portfolio look like today?

Robert Leonard (36:27):

Today my real estate portfolio consists of about seven or eight units or so. I’ve done approximately 12 or 13 deals total in my real state career, but today I have about seven or eight units. And that is a mix between a house hack, long term, long distance, traditional rental properties, that’s an RV unit actually, partially an Airbnb unit. So there’s a little bit of a mix in there, but that’s what my portfolio looks like today.

Clay Finck (36:56):

It sounds like a lot on your plate. Does it take a significant amount of time to manage all those?

Robert Leonard (37:03):

Certain properties do and certain properties don’t, so it depends on which ones we’re talking about. When it comes to the long term rentals that are long distance, they don’t take much time at all. They’re on average, I’d say less than two hours a month, so it’s very little time. And that includes my house hack because I have a duplex that I house hacked. One of the units is long term rental, doesn’t take a lot of time or effort at all.

Robert Leonard (37:26):

Now when we get into some of the other stuff that I do, like the RV unit and the Airbnb unit, that stuff does take quite a bit more time, but it’s also a lot more profitable. So those different strategies do take a lot more time, but the more passive approach like rental properties doesn’t take much time at all.

Clay Finck (37:45):

What levels of returns are you able to get on your long distance rentals and how are you calculating those returns?

Robert Leonard (37:53):

So the first rental that I purchased out of state was a traditional investment property. I put 20%, 25% down on it. And we average, and I say we, it’s my business partner Ryan and I, we average between 30% and 40% of an annual return. So every year we get between 30% and 40% in profit and that’s based on how much money we had to put into the deal. So let’s just say for round numbers, we had to put $10,000 into the deal, we’re getting between $3,000 and $4,000 a year in profit.

Robert Leonard (38:27):

That’s my favorite calculation in real estate is your cash on cash return, how much cash are you receiving as a percentage of how much money you had to put into the deal. There are other return metrics. I also really like to look at how much cash flow per month, per door are you receiving. There are other returns like IRR and things like that. But for me, the biggest is just that cash on cash return. And so for that property, we’re looking at anywhere between 30% and 40%, sometimes more even, but over the last three years, that’s been our average.

Robert Leonard (38:57):

Now the other three or four properties that I own there, one of them, as you mentioned, I got for zero dollars down. So if you’re going to look at the mathematical equation of that, any profit you receive, you’re going to divide that by how much cash you put in the deal. If the denominator in that equation is zero, it’s not a solvable equation, your return is infinite. If you didn’t put any money in the deal, you have an infinite return, even if it was $1. So in that case, what is my return? I don’t know. Maybe you calculate it based on your time. But yeah, we’re earning multiple thousands of dollars per year and hundreds of dollars per month on that unit with zero dollars in the deal.

Robert Leonard (39:31):

And then the other couple deals, we put in such a small amount that the return numbers are almost astronomical. So it’s almost like an infinite return, right? So we have that denominator instead of being $0, maybe it’s $1,000 or $2,000. And so if you earn $3,000, $5,000, $7,000 a year, you’re looking at 100% to 200% annual returns, which is not necessarily sustainable, if you don’t understand that the basis of that is so small, which is what relates to such a high return. So I’d say, I think when you didn’t put a lot of money into a deal, I think it’s better to look at how much money you’re earning per month, like in a cashflow basis. So say $300, $400, $500 a month is probably a better metric to look at than necessarily just your percent return.

Clay Finck (40:13):

Now you mentioned again, one of your deals, you literally put zero dollars down into it, which means you literally own a property without putting a single dollar into the deal. Can you tell the audience how this deal worked out the way it did? And is this something you plan on doing in the future?

Robert Leonard (40:34):

So I’ll start with the more simple answer first. Yes, I absolutely do plan on doing this more in the future. You can’t always get zero dollars down deals. This I didn’t expect to be zero dollars down, I expected to leave just a little bit of money. I knew it wasn’t going to be like a 20% down deal. I thought we might leave 3% to 10% in the deal, which is still great, but it ended up being 0%. And those other couple deals that I mentioned, those were in that 3% to 10% down range. And so yeah, I mean, absolutely, I definitely do. It’s a strategy called BRRRR and I do plan on continuing to implement that.

Robert Leonard (41:05):

Now how it all happened was … This is going to get a little bit detailed in terms of numbers, so just try to follow along if you’re listening while you’re driving. And if you want the actual photo or breakdown of this, feel free to just send me a direct message on Twitter or Instagram and I’ll send you the actual breakdown. But the purchase price of the property was 72,500 and the lender would require a 15% down payment. And so my loan amount would’ve been $61,625 with a $10,875 down payment. And we planned on putting $4,500 into repairs, basically say $5,000 into repairs and then $2,000 in closing costs. So when you consider the down payment and the repairs and closing costs, we’re all in into this deal for $17,375.

Robert Leonard (41:56):

Now what happened was I was able to find a commercial bank that would do this interesting loan product and I didn’t have to actually put that $10,875 down. They just knew that based on the purchase price, that’s what my down payment would’ve been. And so what they did was they knew we were essentially doing almost a flip, and so they asked us for the list of repairs and everything that we were going to do to the property. And so we gave that to them and the appraisal was done based on the assumption that those things were completed to the property.

Robert Leonard (42:26):

And so even though we had just bought this property for $72,500, the appraisal came back at $93,000 because they knew … And we hadn’t done the repairs yet. They just knew that we were going to, and they said, “Once these things are done, it’s going to be worth $93,000.” So the bank was willing to lend to us $79,050, which is 15% of the appraisal amount. You can get an 85% loan value with this product that we had. And so we purchased it for 72,500. We put about 4,500 into repairs, 2000 into closing costs. And so we got that all paid off by that refinance amount of $79,050. And so we were into that deal for less than $0, we actually got paid $50 to buy that deal because the cash out from the refinance, what would’ve been a refinance is $17,425 and our total cash in the deal would’ve been $17,375. So the delta is $50. And so we ultimately ended up getting paid $50 to buy this property.

Clay Finck (43:29):

That’s incredible. It’s similar to finding something in the stock market that’s severely undervalued and buying that, and then essentially getting paid back what the real intrinsic value is. You just found something very cheap in the real estate market, you made your repairs and the bank recognized that yeah, this is going to be worth much more after those repairs are made.

Robert Leonard (43:51):

Yeah, it works the exact same way. You find a company, they have an undiscovered asset, maybe it’s a IP, maybe it’s a real estate property, whatever it is, maybe this company has something that makes them more valuable than other people think. And so you buy the company, it comes to light that they have this asset that’s worth more, the company valuation goes up and you’re instantly rewarded for having discovered that. It’s the same in real estate. We saw this property, we said, “Okay, if we put in these repairs, we’re going to get a lot more in value in the property than it costs to do those repairs,” and we were rewarded for that. And yeah, it’s the exact same thing, just different financial asset or different asset class.

Clay Finck (44:27):

So you’re getting very high returns on some of your real estate deals, returns that are much higher than at least some of your individual stocks. So I’m curious, how do you view risk in real estate? Do you see it as more or less risky as individual stocks or is it just different?

Robert Leonard (44:45):

I think it’s different. If I had to pick one, I think I would say an individual stock pick is more risky than an individual rental property and the reason for that is you have no control. Take this from this perspective of I’m a big stock investor. I love stock investing. I still have a lot of my money in stocks, but I’m not blind to the fact that real estate is also a great asset class. And the reason I mention that is because a lot of real estate investors say that stock market is basically a total gamble or a total hoax. I’m not one of those people. But when it comes to real estate, I have control over my rentals and with a individual stock, you put the money in and you can do your best, make your best effort to do your analysis, but you really have no control over what happens with the underlying asset, the business, et cetera.

Robert Leonard (45:33):

And so I think there’s the risk of fraud, right? I mean, a company could … management team that we see fraud from time to time, let’s just say Enron. There was fraud happening there and you would have no idea, whereas with a rental property, you are the one doing it, so there’s not really that risk of fraud there. And that’s just one example, but basically you have a lot more control over the asset when it comes to rental properties.

Robert Leonard (45:56):

And for me also everybody needs a place to live, and so I think real estate is just a very proven asset class. I don’t think it’s going away anytime soon. I don’t think the whole strategy of rental properties is going anywhere anytime soon, whereas with an individual stock pick, that company could become obsolete. And we see technology increasing at a rapid rate. Whatever that company’s business or service is, could be disrupted instantly. And so there’s just a lot more risk, I think when it comes to individual stocks than it does with a rental property.

Robert Leonard (46:27):

Now, if we’re talking about ETFs and a broad-based passive approach to the stock market, now that’s a different story. I’m not sure which one I would say is more risky. I think in that case, I’d probably say rentals are more risky. So I think it just depends on which strategy you’re implementing in the stock market.

Clay Finck (46:41):

And to a large degree, you’re getting compensated in those returns for taking on the responsibility of the property and not having it outsourced through investing in the stock market too. Would you agree with that?

Robert Leonard (46:55):

Yeah, I would.

Clay Finck (46:57):

Now just like the stock market, the real estate market is also very hot. It’s at all time highs, interest rates are very low. So I’m curious, what is your strategy over the next couple of years regarding real estate?

Robert Leonard (47:12):

My strategy over the next few years is to do more of the same, but also add a couple new avenues. So I’ve been really interested in Airbnbs lately. And these changes to my portfolio are not because of the market being necessarily hot. I think I could continue to do what I’ve been doing in today’s market. It’s more so I’m just looking to grow my portfolio and try and add different avenues to my business. And so I’m really interested in Airbnbs and so that’s going to be where I’m heading as well. Right now I’ve been buying mostly single family and individual unit properties, I’d like to start to buy some apartment buildings, some small apartment buildings. So those are the two areas that I see my portfolio going in terms of strategy.

Robert Leonard (47:55):

But in terms of actually buying things, I learned, and this goes back to my stock investing days, I thought I was value investing, but I was trying to time the market. I thought I could time the market, and if you use TIP Finance Momentum, you have a better chance of timing the market, but still you can’t necessarily time the market and I really realized that when I got into real estate. And so now basically my approach is that if the numbers make sense on a rental property, if I’m going to hit all my benchmarks, all my metrics that I need for returns, then I’m going to buy the property regardless of what the conditions are in the economy.

Robert Leonard (48:26):

And so right now, maybe it proves that now is not the best time and maybe six months from now, I could have got everything for half the price, but if my financial returns are being met, even at today’s prices, I think it’s always a good time to buy.

Clay Finck (48:38):

As I was prepping for this interview, I was just thinking about real estate and your strategy and what you’re doing and I realize that I don’t personally know a ton of people that are significantly invested in real estate. But then I listen to people like yourself that are using their own money, they’re essentially individual investors who are working with one partner and you’re very successful in real estate. And I ask you all these questions and you make it sound like it’s something anybody can do and it’s not as complicated as many people think. So I’m curious, why do you think more people aren’t invested in real estate?

Robert Leonard (49:17):

Absolutely, I don’t think it’s as complicated as people think. I would argue that investing in the stock market is more complicated than real estate. Now, if you want to go an index fund or passive investing route, that’s probably a little bit easier in the stock market than real estate. But if you’re going to go pick individual stocks, I think that’s significantly harder than real estate.

Robert Leonard (49:36):

I think there’s just this misconception around real estate that … And the reason I feel this way is because I felt this way for so long is that, like you said, you need a lot of money to get into real estate, right? I thought that that was the case. A lot of people think that’s the case. A lot of people only hear about the millionaire and billionaires that are getting involved in real estate. They don’t hear about people like me that’s an everyday guy, doesn’t have anything special about him that’s doing well in real estate, where in reality, there’s thousands and thousands and thousands of people that are doing that.

Robert Leonard (50:04):

And so there’s this funny saying from Brandon Turner about real estate, that if you do one deal, you pretty much are guaranteed to do another deal. He said, “There’s pretty much nobody that has ever done just one real estate deal, because when you get into real estate and you do that one deal, you break down all the limiting beliefs you had. You realize that everything that you thought you knew about real estate before is different. It’s not as hard as you thought, it’s actually better than you thought and you continue to go into it from there and that’s why you do two, three, four, five more deals.” And so I do think that there are way more opportunities to get involved in real estate than people think. And I think that the reason more people aren’t involved is just because they’re not educated on it and they don’t understand how it actually works.

Clay Finck (50:44):

I’ve listened to a lot of your show and a lot of BiggerPockets and I’ve realized that there are just so many good things about real estate. And if it’s something that you’re interested in, I highly recommend checking out Robert’s show that’s released every Monday. Another incredible thing about real estate is there are just so many different ways to invest in real estate. Robert’s done a house hack. He has an Airbnb. He does long term rentals. You can do smaller apartment buildings. There’s just so many different ways to invest in real estate and you can adjust your strategy in real estate to what works best for your situation and what goals you have.

Robert Leonard (51:25):

And also how much money you have. You can change as you scale your real estate portfolio. You get started with a house hack, because maybe you don’t have a ton of money. Even though I think if you have a lot of money, you should still house hack, but I digress. You start with a house hack because you don’t have a lot of money and then maybe you buy a couple rentals. And then you have more money and then maybe you buy an apartment building. So there is a lot of strategies and maybe it’s a stepping stone for you, maybe you start with one thing and then you scale to something else. You don’t have to be stuck on one strategy forever.

Clay Finck (51:51):

I wanted to touch on one more topic before we close out the interview. I’ve realized more and more as I’ve worked with you that it seems like you’re able just to get so much done. You’re a podcast host. You’re a real estate investor. You mentioned you’re writing your own book about real estate. You’re constantly networking with others in your industry. You have your own family. You work out every single day. I could probably go on and on, on things you’re working on. With all that said, how are you able to get all of these things done and manage your time effectively and efficiently?

Robert Leonard (52:25):

I think that this is probably one of the biggest compliments that I could get, and so first off, I appreciate that. And you’re right, all those things I do, for sure, you’ve seen it firsthand. I travel a lot too. We can talk a little bit about the tactical stuff because I think that can be important, but I think the most important thing is, and it’s not sexy, it’s not what most people are going to tell you, but it’s just hard work, just truly is. I mean, there’s just nothing to it, but to do it, and that’s all there is. You just do the work. We could talk about time management, we could talk about some of these other little things that I do. Those are important, but for me the biggest thing is I just put in the work. I just don’t waste a lot of time. I make sure all my time is scheduled and I just put in as much hard work as I can.

Robert Leonard (53:05):

And I also optimize my time. So the smaller things that I do on a daily basis is, I created this thing called a daily time log. I don’t share it really with anybody, I just keep it to myself. If somebody’s interested, I’ll send it to you, but it’s really just this home thing that I do and I just track a couple things. At the top, I track how much sleep I got for the day. I think sleep is extremely important. So I track what time I went to bed, I track how many hours of sleep I got, what time I woke up. I put down one thing I’m thankful for every single day. I write out my three biggest goals and then below that, I have a to-do list of everything that I want to get done for the day.

Robert Leonard (53:39):

And I rank them, again from this first thing’s first perspective is what is the most important thing that I need to do throughout the day and then I rank them from one to however many things I have to do and I just work through that throughout the day. And that has really helped me, but just generally speaking, there’s nothing more important than just doing the work. And people try to make excuses or all these different, no real, other better way to explain it than excuses as to why they can’t do it or they have too much going on. And the reality is you just have to just do it.

Clay Finck (54:09):

I love it. Thank you so much for sharing that. And thank you so much for coming on to the Millennial Investing Podcast. I’m sure it’s a very interesting experience to be the guest on the show for once as you’ve been the host for 100 plus episodes. I’m not sure what the exact count is, including the real estate show. I really enjoyed this conversation. I learned a lot and I’m sure the audience did as well, if they made it this far. Before we close things out, where can the audience go to connect with you?

Robert Leonard (54:37):

Yeah, it’s definitely been a little different being on this side of the mic. I’ve done a lot of podcast interviews on other shows, but to be the guest on Millennial Investing was definitely a little bit weird, but it was a great time. I hope everybody listening that has heard me as the host for a while enjoyed me on the other side as the guest. Really appreciate you guys checking it out. The best place to find me is on social, Twitter and Instagram. Username is therobertleonard. I have some cool content coming out over the next couple weeks, if you guys want to check that out. Best place to hear about it is on social. So give me a follow, shoot me a DM. Happy to connect with you guys.

Clay Finck (55:10):

Awesome. I look forward to checking that out myself. Thanks again for coming on, Robert. Really appreciate it.

Robert Leonard (55:16):

Thanks for having me.

Clay Finck (55:18):

All right, everybody. I hope you enjoyed today’s episode. Please go ahead and follow us on your favorite podcast app so you can get these episodes delivered automatically. And if you haven’t already done so, be sure to check out our website, theinvestorspodcast.com. There you’ll find all of our episodes, some educational resources we have, as well as some tools you can use as an investor. And with that, we’ll see you again next time.

Outro (55:41):

Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday, we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to the investorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.