Passive Income Strategies for 2024 with Justin Donald – EP 183

Cal Callahan: So, I was going to lead off with the quote, “Justin Donald is the investment world's new Warren Buffett.” And I still kind of want to lead with that. Like, technically, just did lead with that. But what I want to really drop into is you're leaving tomorrow for New York, Fox News, Fox Business News, Fox whatever it's called, and you just told me that you've got a new edition of your book coming out. And so, there's like a lot to unpack here but like, first of all, that's amazing. How did you land the gig on Fox? Because you said they didn't even know you were coming out with the book.

 

Justin Donald: Yeah. I mean, really, it's just the perfect situation of people knowing people wanted to help out. So, this was a friend of mine, his name's Jeremiah, who connected me with the person that really runs point on this, and Tom. And so, it was unexpected and really cool and timing just worked out perfect. It literally had nothing to do with the new book launch. So, yeah, I mean, everything was to launch this book at South by Southwest. Like, that's what we've been kind of gearing for and gunning for. Timeline-wise, we may end up having to push it a few days, but it's pretty close. We had this party booked and all these things and it always takes so much longer to get these done than what you want. Or you catch something, you're like, "Oh, I want to tweak that or shift that now that I see it in print.”

 

Cal Callahan: Yeah. So, the book, The Lifestyle Investor, is a number one bestseller, Wall Street Journal, USA Today. Bro, I mean, what do you attribute that to?

 

Justin Donald: I would say I attribute it to good timing and having people that care about me and care about helping because when this book launched, I didn't have a following. I didn't have an email list. I had nothing. I mean, I emailed like, I don't know, 100, 200 of my friends hoping that they'd buy. I'm like maybe I'll get a couple hundred copies. And within a few days, we had over 10,000 copies because it went viral on social media. We had people that read it and just huge impact. And they were on a mission then to help get the word out because it was a profound experience for them, which is super cool because, again, I had zero expectations or super low expectations. One of my buddies, I think Jon Vroman, he had said, "Hey, if you ever get to 10,000 copies sold at any point in time of having a book, that's a huge success.” So, in my head, I was thinking, "Okay. The life of the book, if I can get to 10,000 sales, that would be really cool.”

 

Cal Callahan: No way.

 

Justin Donald: So, I mean, I literally had no clue and I didn't have a social media following then.

 

Cal Callahan: Did you have enough books to sell at that point?

 

Justin Donald: So, we ran out of copies. We had to switch our printer. We actually had a period of time where Amazon literally was out of stock of our books, which I do think that kind of impacted and limited what it potentially could have done. But, all in all, it was cool.

 

Cal Callahan: How many copies sold to date?

 

Justin Donald: Hundreds of thousands. I mean, it's a top 1% of all books ever sold by volume. And again, all the proceeds go to fight human trafficking. So, I don't keep anything in this book. And part of the reason I think that the book has done so well, you've got this education, this message around buying your time back and creating freedom in your own life. But then the proceeds go to actually buying real human freedom back. And so, to me, it's been a really surreal experience and very powerful. And I don't know that the book would have the success that it has had if it were for other motives, if it were a for-profit book. I think that it just may not have, and not everyone even knows this, right, but I just think that because of that, it has kind of had this life of its own.

 

Cal Callahan: It's like the energetic of the book. Even if you don't know it, there is something that it holds that is greater than just what's in the pages.

 

Justin Donald: That's right. That's right.

 

Cal Callahan: Now, I'm going to just everybody listening, people who are thinking about putting on a book or about to put out a book, don't necessarily use your strategy, right?

 

Justin Donald: Yeah, I would say that…

 

Cal Callahan: I just want to be clear.

 

Justin Donald: I had a little bit of a strategy. I didn't have much of a strategy. I would say don't have the same expectations. I mean, this new book launch that happens, we'll see if anything's changed because now I have a list and a following. But, at the end of the day, I just want to get the word out that there's another way. Wall Street spends a lot of money for people to basically learn one path of how to invest, and it's to allow financial advisors to, I mean, people, they want you to outsource your financial well-being to someone else. Most people don't know how to qualify the person that is managing their money. Most people, I mean between 4% and 5%, can actually outperform the S&P 500 over a 15-year period of time.

 

Cal Callahan: That's one in 20 to one in 25 people.

 

Justin Donald: Right. And by the way…

 

Cal Callahan: Probably, you're not getting access to those people.

 

Justin Donald: And the 15 years prior to that, not a single repeat. So, like over the long haul, it's really hard outside of like a super small percentage that really the ultra-wealthy can afford can do it. So, I mean, you're better off just investing in index funds and saving the fees that you would be spending because you're basically spending fees to underperform what you could do on your own at the lowest cost basis to have play in the stock market. But at the same time, most people don't realize that the stock market is not where wealthy people have the majority of their assets. And even if you pay attention to the trends, right now, like 2024 trends, as of the new year, I mean, I just looked at data this morning, for what's going on this new year and you already see people, big family offices, which are the organizations that manage the assets of the wealthiest people in the world.

 

These family offices are trending somewhere between 7% and 12% down in public equities. So, down in the stock market favoring alternative investments, right? So, most people don't realize that the wealthiest people in the world have over half of their net worth in private equity and real estate. And so, it's interesting to look at it like…

 

Cal Callahan: Yeah. And I’m like 95% in those things, which is probably a little bit overweighted but for sure.

 

Justin Donald: And it's interesting because for most people, you build your wealth via concentration. You start a business. I mean, whatever it is like, in some instance, maybe you get into real estate and you concentrate in that but most people build their wealth via concentration.

 

Cal Callahan: I did it through trading.

 

Justin Donald: Yep. They maintain it through diversification, right? So, any large concentration, once you have a pretty big net worth, puts it at risk. You really want to spread that out. And so, I think it's funny when people think that the wealthiest have their money in the stock market. Well, not really but like 15% to 25%. Right now, we're seeing that starting to trend down more so than ever so closer to the 15% than the 25%. But why have dollars exposed to the stock market? Because you can borrow against those on margin to then buy more of private equity in real estate.

 

Cal Callahan: Oh, yeah.

 

Justin Donald: So, you don't have a taxable event. You're using debt. You're not selling stock and using the proceeds and paying the tax. You're borrowing against them to buy more of these alternative investments. And then the long haul of the public equities, in theory, should perform well.

 

Cal Callahan: I've also been hearing that today there are a lot more private companies that are staying private. And so, my buddy was talking about the Russell and he's like it's just not a good indication of actually what's happening in the United States. There's so much money being made in these private companies that the public just does not have access to, that the normal everyday person doesn't, which I don't know if that's true or not. It makes sense to me. But all the more reason why your book is so important for the people who don't have access.

 

Justin Donald: Yeah. And there is a lot of truth in that because when you think about making returns, you make the biggest returns from inefficient markets. So, the stock market is efficient. It's as efficient of a market as you're ever going to find, right? And by the way, are you ever going to win in the trading game? No way. 0% chance Read Michael Lewis’ Flash Boys. You don't stand a chance. The trades today…

 

Cal Callahan: That's why I kind of got out of trading because even as being on the right side of it, when they came in and just really tightened up all the margins, I was taking more risk to make less money. It’s like, "What am I doing?” So, anyway, not to cut you off but I get that.

 

Justin Donald: You get it firsthand, which is nice. Most people don't, and they don't realize that the stock market is an algorithm game. It's an AI game. Even before we were talking about AI, right? So, for a long time, it was quants who did the trading who are like geniuses on hedging and being able to make money in any type of market, right? So, you got the quants that handle all the trades. Well, then you had the quants formulas that build algorithms that the algorithms do it. And these algorithms are AIs doing this in milliseconds. So, like the time it takes you to click a button to buy, they’ve already bought-sold, bought-sold, bought-sold, bought-sold. I mean you're not going to win in day trading. You could win long-term by playing the market but if you're doing that, why not just invest in indexes, right?

 

So, if you want what people in the investment world call alpha or getting the outsized return, that's really going to come from the inefficient markets. The inefficient markets are the ones that are not as consolidated by institutional capital. So, you've got your institutional investment over here that's highly consolidated. You've got your institutional, or I guess your mom and pop that does not have much institutional. You see this in small business. You see this in real estate over time. So, I got started in mobile home parks. It's still the least concentrated real estate asset class.

 

Cal Callahan: Really?

 

Justin Donald: Yeah. Versus like self-storage or multifamily. They're highly concentrated by institutional investment. So, can you still get a good deal? Yeah, sure. Because there are still mom-and-pop, baby boomers that own them but way less than what basically the market over time that niche, that real estate sector over time will continue to become more consolidated by institutional capital. So, until it does, that's where your outsized returns are.

 

Cal Callahan: And we're seeing it in short-term rentals, right? There's a lot of these little homes in these tertiary markets, which would be like a really small market. And these big funds are coming in, buying them, fixing them, renting them out. And I've gotten into a little bit of that, and I can just see even in the course of like, there was so much edge in the beginning. And granted, interest rates have played a big part in that but it is incredible like how much more money is coming into that space. What is the new mobile home park play right now?

 

Justin Donald: You know, what I have kind of gotten into recently is, I mean, for the last number of years, for the last decade, I've been getting into industrial real estate. I really like industrial. By the way, I'll still say mobile home parks are still great. You still have 44,000 parks approximately in the US and less than 10% consolidation from institutional money. So, you got 90% owned by baby boomers still today.

 

Cal Callahan: Okay.

 

Justin Donald: So, I'd still say that's a great spot, but industrial, same thing. Not to the same degree. You got a lot more institutional capital in there than in mobile home parks. But what you're also starting to see is kind of like this new little sector of it that's the industrial outdoor storage, IOS, is I think going to be one of the best plays. It's again, limited. It's hard to get the zoning. There's just not a lot of them so it's kind of like a scarce resource. But, as we do more on-shoring here in the U.S. and as we start trading a lot more with Mexico than with China, we're going to start seeing that we need these spaces more than ever, especially on border towns with Mexico, especially at port cities on either the Pacific or the Atlantic. So, to me, that one is going to be huge because you need the space to store flatbed trailers and trucks and pods.

 

Cal Callahan: Massive storage. Like, what are you talking about for the, like, what would be a typical size of one of these spaces?

 

Justin Donald: I mean, these could be tens of thousands of square feet, right? I mean, they could be massive.

 

Cal Callahan: Wow.

 

Justin Donald: I mean, in some instances, it's just all raw land. So, it's not a sexy asset. In other instances, you have some buildings on the raw land. So, we just did one with another group that is a pretty high-profile group, and I'm thrilled to even have access to them because, basically, they do deals with, let's just say, household names, many of the top 50 wealthiest people in the world.

 

Cal Callahan: Yeah.

 

Justin Donald: And so, I've got to be careful what I do say and what I don't say.

 

Cal Callahan: Understood.

 

Justin Donald: But with this group, I mean, they're going to level a bunch of we just did this one deal where they're going to level a bunch of the buildings but we were able to buy this in an unincorporated major city, one of the top three major cities here in the US. So, the zoning is perfect. There's no zoning, right, because it's unincorporated. And so, you can really do whatever you want. So, we can build these new buildings, nice buildings, but have all this land, so we can really kind of mix use the space. It's pretty awesome. And again, that was a deal with a guy who I believe is in his 80s up there in age, tried to get it done. It fell through at the last minute. And so, we swooped in to do this deal, and we got an incredible discount because the guy was just deal fatigued. All he wanted to do was sell it. The last deal took so long and didn't go through.

 

And so, we basically got millions of dollars off this thing that was already under market because it was never put on the market. So, it's just an off-market deal, well under-market, then we were able to get a reduction because he just wanted to be done. So, it's like these are the deals that are out there, right?

 

Cal Callahan: Patience. This is what I'm hearing. Patience.

 

Justin Donald: So, it's a baby boomer looking to retire. He doesn't need to maximize the proceeds. He wants to just make sure that the thing closes. It's in an asset class that has limited number of potential assets because of zoning laws. And I think we're just going to see a lot more of it. I mean, I could go on and on and on but these are the types of deals we're going to see because we have more people that are going to retire in the next 5 to 10, 15 years. And I've said this with a lot of people in my Lifestyle Investor Mastermind community, but the largest wealth transfer in the history of the world is about to take place in the next decade, which is the baby boomers to the millennials.

 

And we're talking about I've seen reports anywhere from $70 trillion to $100 plus trillion. I mean, we're talking about real deal, like, that's more wealth than any nation in the world has. Like, that's a larger transfer than the second-largest country in terms of wealth, being China.

 

Cal Callahan: And so, how does that play out for opportunity? How do you kind of unpack that?

 

Justin Donald: Well, there's going to be a lot of people inheriting money. There's going to be a lot of assets trading. There's going to be just ample opportunity for off-market deals. There's people that are going to sell businesses.

 

Cal Callahan: So, I'm going to inherit something from my dad. And then I'm like, “I don't know this business or I don't want to own this industrial thing.” And so, I'm just going to put it on the market, get the cashout, and be on my way.

 

Justin Donald: Yeah, that's one scenario. Another scenario is the kids don't even want it so the parent, they don't want to be in the business. That's unattractive to them. So, the parents just sell it, right? And so, then those assets passed down to the millennials. You've got another situation where you've got a bunch of people that are running like sole proprietor businesses, and they don't even think they can sell their business. They think they are the business. So, if they want to stop or when the business is done, like how is it going to run without them? So, they don't even know that they can sell it. They're not even planning to sell it. Their kids don't want it, so they're just going to shut it down. So, there's good opportunities there too.

 

Cal Callahan: Good God.

 

Justin Donald: Yeah.

 

Cal Callahan: So, what I'm hearing is keep some dry-ass powder this next decade. I mean, always, but in particular, like, be patient as I'm sure I know you do. I get passed a lot of deals.

 

Justin Donald: Yes.

 

Cal Callahan: A lot of deals. And I've just finally started to take a much longer-term view on how these impact that longer piece. And it's been a lot easier to say no because the little deals that may have a 4X, 5X, whatever. Like, it's the same playbook, and what I'm excited about in the work that you're doing is playing differently. And so, it's such a small part of, I guess, my assets are cash flowing, and I know that you have just been crushing it there. And so, I'm excited to learn about that. And really, in particular, we'd love to ask you what do you see with people who they want to pop out of the grind? And you're inspiring them to do that. And so, what do you see as like the first step that a lot of these people have to take so that they can transition into a low-risk cash-flowing scenario?

 

Justin Donald: Great question, Cal. And by the way, talking about dry powder, just for a quick second, this is the first time in our lifetimes that you're actually rewarded by being in cash or rewarded by just having some treasuries, right? You can actually make 5%, 5.5%, 6% depending on where your money is right now today. So, you're actually rewarded for saving. And that has not been the case for our whole life. So, it creates a unique opportunity. For people, you know, so my big message is you don't have to. Most people are like focused on net worth over here. And I think that's the wrong game because most of that's paper money. You're worth X million dollars but what utility do you get out of it? For most people, it's not much. And most people, it's paper numbers, right? It's paper gains. It's paper net worth.

 

Meaning, that's not real net worth until it transacts like you can write it down, but that's not realized until a company exits or until, right? Like, you're in the middle of a round so the companies valued at that but, look, how many companies we've seen die that were at a huge valuation? So, to me, it's not as concrete as being over here on the cash flow side of things. So, I'd much rather cash flow and focus on the passive income piece than on this net worth piece. Net worth I think is a losing game because if you focus on cash flow, that creates utility today. You can literally use that today. And by default, if you're growing your passive income, you're growing your net worth. Right? So, to me, I want to focus over here. And I think the first step is let's get some passive income.

 

You're probably not in one fell swoop going to do what I did, where I literally replace my wife's income in one deal. That’s not normal. I just happened to be in the right place at the right time, find a real estate asset that I got for a price that in a cash flow that covered what my wife was making as a teacher, right? So, that was really cool. For most people, it's going to take more than that. And maybe the first deal, it's to cover your utilities, and maybe the next deal you get enough passive income to cover car payments. And then maybe the next one is to cover your mortgage or rent or whatever it is. So, I think you can just kind of piece up to it but I think for most people, this is one of my favorite stats of my professional career is that I was financially free and didn't have to work before I was ever a millionaire. And that to me is like one of the coolest ones.

 

Cal Callahan: Bananas. I would have never guessed that that's even possible.

 

Justin Donald: Because it's just the game of what does it cost you to live and what's your passive income compared to that cost, right? And so, even when I bought my first assets, I was only putting on the first two deals, I put 15% down. So, my equity in those is 15%. I had a bunch of debt on them that I had to subtract on the balance sheet to show what my net worth is. So, for a long time, I was not a millionaire but my passive income exceeded, I mean, at a minimum, my survival income and then over time, my lifestyle income. And so, eventually, the more properties I got, the more cash flow I built, the more passive income grew, the more my net worth grew. So, I was financially free first then I became a millionaire.

 

But I always focused over here on covering my lifestyle before I did the long-term deals that I didn't know how they were going to pan out. The money's locked up for a long period of time. I don't get a lot of utility. You know, in the stock market, again, there's still not a lot of utility. Even inside of qualified plans, there's even less utility because you can't use those dollars. You're not going to make an income stream off the money that's in a qualified plan even if it's self-directed. So, a lot of this, there's not today real-world utility. And that's where I wanted to live before I started allocating into other things, allocating more long term.

 

Cal Callahan: Dude, you're just speaking directly to me right now, and many others, I'm sure, but, I mean, it's like this is a huge part of my unlearning is I have 1,000% been playing that net worth game. In everything you described, that's been my experience. And there is excitement and there's a whole energy around it that is really enticing. And the cash flow game is blocking and tackling, but you need the Xs and Os to f*cking win the game.

 

Justin Donald: That's right.

 

Cal Callahan: You know, you can have a great quarterback and a great receiver, but if you don't have a great line, you don't have a great defensive offense, you're not going to win the Super Bowl. And I feel like I've had some star players and I haven't put together the team right now. And so, I'm super inspired to hear you speak about this. It makes perfect sense to me. You probably said it the last time we sat down and I wasn't ready to hear it.

 

Justin Donald: Sure.

 

Cal Callahan: Right? And I don't know if it's unnecessary. I think it's a humility that's come. I think I've always had a bit of humility to me but, I don't know, it just is hitting me so deeply. And it's like I have these 25-year goals that I know the current playbook is not going to get me there. I had to get really lucky. And I don't want to rely on luck.

 

Justin Donald: Totally. Yeah. And by the way, what a great realization that because I've been there too, the game I'm playing is the wrong game and, oh my goodness, what an epiphany I had where I was like, "Wait a minute, why am I playing this game?” Because this game actually doesn't give me the outcomes that I actually want. I'm thinking that what I want comes from this, but really it comes over here with a different strategy. And to compound it even further, I think cash-flowing deals, when diligence the right way with assets behind them, I think generally are a lot safer. So, it's a de-risked deal and you get utility today. If it's structured the right way, you've got an asset worth more than kind of what's going on here, the debt.

 

I mean, should anything go wrong, you can sell it, you can get your money back, or you can weather the storm because if you're getting the cash flow that you need to cover debt service, then it doesn't matter where interest rates are. Like, if you have a long enough runway on the term of debt that you're using, then who cares if it goes up and goes down and goes up and goes down? Because that's irrelevant to you. You have the cash flow to weather whatever storm there will be. So, you're not forced to sell ever.

 

Cal Callahan: It's so interesting. I just had it’s like an epiphany. There's probably been three times in the past ten years where I've felt this real financial stress where I had miscalculated what was coming in and what was going out. And the third one is very recent. Not 100% out of it yet, right? And I would get frustrated with myself. I was like, "Look, you have all this net worth, and yet you're getting into this situation again and again and again.” It's f*cking insanity. I'm using the same playbook and it's not serving me. It's the false promise that it's going to but it doesn't. You get into the environment we're in right now, interest rates where they are, companies raising money at down rounds. Companies are going out of business left and right.

 

Real estate, some funds that I'm in like that's been cap rates have been crushed in those. Like, there were several that were supposed to be already been sold and they're not. And it's like I'm waiting, waiting, waiting. And the way I'm set up right now, I'm not generating really any income. And so, I'm at the mercy of this. And so, it makes me feel a lot better about why I got… I understand now because I was like, "Why do you keep doing this, dude? Wake the f*ck up.” Well, it wasn't my fault. Not to say it is but like I just had the wrong playbook.

 

Justin Donald: That's it. That's it. And by the way, it generally takes moments of these to wake yourself up. Right? And by the way, I've been a slow learner at a lot of things where the first time I didn't wake up, and the second time I didn't wake up, and by goodness, I really hope the third time wakes me up officially, right? But the tough thing is there are always going to be deals that have sex appeal, right? It's a sexy deal. It's a sexy industry. It's a sexy product. But we got to be careful not to be lured into those and sometimes it's like friends are involved and we want to support them. And I've got a lot of rules around that but I think at the end of the day, coming up with your own investment criteria, what do you need in your life regardless of anyone else, and having like a one page of why you're going to say yes to a deal.

 

Well, this is something that we coach or anyone who joins Lifestyle Investor, we want them first and foremost before they do any deals to come up with their investment criteria. Do you need cash flow? Great. That should probably be on the investment criteria. Short term, long term, are you wanting to utilize an asset allocation that's similar to the wealthy people where you have about 25% in private equity and 25% in real estate or up to 30%, something like that? And it's figuring out, do you want sponsors that have gone through a recession before? A general partner doing a deal that they've weathered this storm before. And so, having all these questions ahead of time when you're in a grounded place to then go back to every time you make a deal, or decision on a deal, it's super helpful because then it's not emotional.

 

Then it's pure logic based on facts, based on your own sheet, your own criteria, and it makes it easy to say no. And I found, by the way, most deals are bad. They're inherently bad. They might look good. They might feel good. In fact, in one economic season, maybe they are good. But you take a step back and you look at it over a longer time horizon. Not good. Probably not going to weather certain economic downturns or interest rate seasons. And so, for me to become better, I need to become better at saying no. I need to have filtering like a system that filters more to a no than a yes. I need less deals coming through top of funnel. I need a little bit more criteria at the top. So, less deals are actually getting through. So, I'm saying no a heck of a lot more than I'm saying yes. That has served me really well.

 

And by the way, because of not having done that, I've learned lessons like you, I've lost money, I've done poor deals. I outlined in my book a Ponzi scheme that I invested in that went belly up and, actually, this last summer, I've been working with federal agents to basically give all the information. I had all kinds of data from my due diligence and copies of you name it. And so, I actually testified in court at a hearing. I was on the stand for close to two hours.

 

Cal Callahan: What was that like? I've never done that before.

 

Justin Donald: It was crazy. It was intense. I was grilled by the prosecutor or the defense. It was interesting seeing how they could take someone that had all kinds of data, all kinds of facts, all types of things to support the prosecution in assessing this Ponzi scheme. But for them to try and badger me and try to negatively impact my reputation…

 

Cal Callahan: Discredit you.

 

Justin Donald: Discredit me, yeah. It was fascinating, it was invigorating, it was scary, it was intimidating, it was exciting, kind of all wrapped up in one. But, I mean, I had a lot of nerves around it, before it, during it.

 

Cal Callahan: Wow. Did you feel like the prosecution prepared you well for what was going to happen?

 

Justin Donald: I do. Yeah. I do. We had done, I mean, we'd walk through it so many times. And it was easy for me because all I had to do is state the facts. Right? So, that was it. I created a timeline early on. And my due diligence, I'm pretty detailed. You know, I copy everything. I save everything. I mean, if something is communicated, I have captured it.

 

Cal Callahan: Yeah, yeah.

 

Justin Donald: And by the way, this is not the first time that this has come in handy. There are a few deals where this data collection, this…

 

Cal Callahan: And what does your data collection look like? Like, a phone call and like transcribing it? Or like what types of things versus just getting an email with docs?

 

Justin Donald: Well, for sure, that email docs, getting all the docs you can, getting answers, everything written. I get everything in writing these days. So, I capture all that. I do screenshots of slides. Yeah. I mean, you name it. I'm trying to capture everything, and it has come in handy in three or four occasions now, where some of that info is like the key info that proves that there was fraud or manipulation or whatever it might be.

 

Cal Callahan: Interesting.

 

Justin Donald: Because the last decade, I mean, everyone looked like a genius and everyone was doing deals that would only pencil inside of the frothiest decade that we've had. Right? They wouldn't pencil outside that. They wouldn't pencil today. They wouldn't pencil 15 years ago. But they did the last ten years. And also, people doing risky deals on short-term debt, thinking that it's going to be easy to sell it or refinance it. And so, it's interesting even there, like I said no to a bunch of deals that a ton of my friends did, a ton of people did, and they made money only after the group exited. And so, people kind of laugh and say, "Oh, you've been missing out in all these deals.” And technically, yeah, I had, but now I didn't do anything with short-term debt.

 

So, over the last decade, I said no to everything with short-term debt and I only went with people that locked up in the instance of real estate, for example, long-term debt. And so, because of that, today I have zero risk. Like, yeah, maybe I missed out on a few of these that did go full cycle, but I'm not in danger like a lot of people are now.

 

Cal Callahan: Yeah. They're not out of the woods.

 

Justin Donald: That's right. That's right. And more to come. More for sure to come.

 

Cal Callahan: And that's where I am. I'm f*cking deep in the woods right now. And that's why, again, and I've got some really kind of cool things that have come my way in the last two weeks. And, intuitively, I know I need to say no. And there's a part of me that rationalized that, "Well, this one might be good for a follow-on or to continue to get deal flow from this guy,” or da-da-da-da-da but, again, it's an old strategy. I'm just seeing that the no for me is simply no to all private equity right now until I can get the dry powder to a certain number and then I can even consider that. But even then, it's like it's playing the new game and it's like transferring over time. And as you know, this piece that I'm invested in is not liquid. And so, to be patient with that and to understand that even if I were to invest in any of these deals and if they were f*cking awesome deals, let's say they had an 8X, right, amazing, I'm not going to put much into it where it's going to be like, "That's a banger.”

 

If it were a 20X, it might move the needle but again I'm not in a position to like really do it. So, it's like I've got to reframe like what is the 25-year goal now? It's like really allowed me to like get much more granular with that in the strategy in as I keep saying playbook like how to make this happen. And so, number one, I know the first investment I'm going to make and that it's going to be your mastermind. So, do you have an onboarding? Is there certain cycles or is it like when can someone join?

 

Justin Donald: Yeah. So, for the mastermind, for a long time we had it closed. We had closed at 100 members. We've opened it up here recently, but it is waitlist still because the goal has never been for this to be a big group. We want it to be small. We want to be intimate. We want it to be right-fit people. But right-fit people can get in at any time. And so, there's an application process, there's an interview process, we’re highly selective obviously me knowing you. I'm sharing this for people that are listening in and the way that we do it but I know you. I can vouch for you. I think the world of you. But for people that want to get in the ecosystem, I mean, this is the stuff we talk about, and we cover all the time.

 

Like, I joke in my book that investing in these early-stage companies is like a 0% interest loan for a long period of time in the highest-risk asset class, right? So, it's like a high-risk interest-free loan that you don't know didn't work out for 15 to 20 years.

 

Cal Callahan: That's one way to look at it.

 

Justin Donald: We don't know what happened, right? So, it's like you give it that perspective.

 

Cal Callahan: They never told me that when I was looking at these deals.

 

Justin Donald: But it's beautiful that you already just named one of your investment criteria a second ago, right? So, one of these exercises is what we love walking people through. But you said, "Hey, I'm not doing any more private equity until I have the cash flow.” So, that right there is a great criteria to put down to make it easier. So, you come up with your 10, 20, 30 different line items. You look at a deal and you're like, "Oh, that's out.” You can just say no real easy, right? You've got that criteria. But for our community, for Lifestyle Investor Mastermind, we really just pick the best, the brightest minds, people that we want no egos. We want humility through and through. We want people that want to learn. We want people that want to share their unique gifts. We want people that, genuinely, want to get connected and help and learn and grow.

 

And we focus a lot on tax strategy. A lot of people don't look at this at all and it's an afterthought. Whereas for us, it's the first thing that we do in an onboarding session. We give over 50 unique tax strategies that it's like over 30 hours of content, I think closer to 40 hours of content just on tax strategy, just on deals, which we also just released in our tax strategy masterclass, which is pretty cool.

 

Cal Callahan: Yeah. So, you have three master classes now. You have tax strategy, mobile parks, and passive income.

 

Justin Donald: That's right. That's right. Yeah. It's been fun. So, one of the women in our mastermind, she’s awesome. Her name is Courtney. She's a very high-level executive at Fox Sports. So, she produces NFL World Cup, all this. So, she's actually gotten involved recently. She wants to give back with some of her gifts to be able to help produce some of these. So, we just utilize her to build our tax course, and it's great. I'm so happy and so proud. And for the price point, I mean, there is just no way someone is not saving thousands, tens of thousands, hundreds of thousands by implementing one or two or three things.

 

Cal Callahan: Million dollars. Okay. This is like there's a lot coming up here, but I do want to shift a little bit because I don't want this to get lost in who you are because I think it's, in many ways, the essence of who you are that you've been able to build and amass this, we'll just call it net worth over the years. But the most important thing to you has been your family. And so, how do you balance the two of those things?

 

Justin Donald: Well, the whole purpose of everything that I'm doing now really is I want to create a legacy via education and values for my daughter, for our family. You know, I've got nieces and nephews. So, I really just want to make sure that I'm doing right by the people and not just passing assets down, but passing wisdom down, passing lessons learned down. Here's where I messed up. Try to avoid these things. Here's where I got it right. Maybe it was after two or three or four tries, you know? But I finally got it right. So, you don't have to do trial and error like I did. So, some of it's that but really, this whole thing has been built around lifestyle in general. You know, this whole thing has been built to support family first, business second.

 

And so, I have very strict boundaries about in and around when I work and when I spend time with the family and we've got a great cadence that everyone really enjoys, my wife feels great about, my daughter feels great about. So, that to me is most important. And this really, I mean, the lifestyle investor is a total hobby turned business. It's my only hobby turned business. I mean, I was doing this stuff for free for years before we ever started charging for it, right? I mean, I had friends that were like, "Hey, man, you've made us a ton of money.”

 

Cal Callahan: Like enough. Like, I need to, yeah.

 

Justin Donald: Take some money. But I didn't want it to be like everyone else in financial services. Everyone else makes a carry or like I wanted to differentiate. Like, I don't want to make money on your money. I want to make money on my money because if I make money on your money, then I now have a bias.

 

Cal Callahan: Yes.

 

Justin Donald: So, how can I have an unbiased opinion if I make money off of what you put into a deal? I cannot. It's impossible. It's good of intentions as I want to have. There is too much influence, right? So, I just wanted to create this model that is not a carry model. There's a membership model. That to me is the easiest, the most fair. But I only make a return because my money is in. I have skin in the game.

 

Cal Callahan: Yeah, I love that. And I've recently, in the past six months, have played around with putting together some syndicates for some investments and getting better terms because of that. And then maybe there's a bit of upside. You know, I just kind of thought all these scenarios and it just never felt good to me for a couple of reasons. One, because, generally, if I'm putting together a syndicate, I'm going to put the most money in. And so, if this thing does take off, like the carry I make, and I wouldn't have made much of it, I wouldn't have been the 22 and 20 or any of that stuff. It's not going to matter relative to my returns. So, like why even bring that in and put a little hair on the deal?

 

And for me, I've since just realized that if I do put those together, I'm not going for a while because I'm not doing private equity. But if I were, it’s simply to come in and create better terms for the group and maybe allow some guys who can't write $1 million check to throw in $100,000 because they want exposure to it, right?

 

Justin Donald: 100%. Yeah. And by the way, when you say, “I don't want to do private equity,” because it's long-term or high risk or whatever, I do want to clarify that there are different stages. And so, what I would guess you're talking about and what I know based on the investments that I know you've made, is kind of that early-stage type of investment. We do a lot of investments in our mastermind and private equity, but it's like late stage or it's secondaries so it's getting into a company that is highly profitable later on. So, a concept totally proven profitability there or maybe they're about to be profitable, but in most cases are already profitable and they're raising a little bit more before they go public or before a further round. It's maybe a Series C, D, E, F.

 

And so, some of these deals we can get in in a secondary and get out in a year or two, three years. So, that's playing private equity but playing it differently, playing it on the more mature side of things. Or there's another group that we work with that we can get in on a Series A extension with very favorable terms, and we can get out on a Series B. And so, you take the largest value gain from A to B but also instead of it being 10 to 12 or 13 years, you condense it down to 2 or 3. So, now you're getting a great return on a short window in what typically is an illiquid long-term investment but we're cutting down that time frame. And maybe we're trimming some of the return off it but it's still a really good return.

 

And on the secondary side, sometimes we're getting employee shares that are like well below, like they will take, they have a life issue, they need to cash out. And you can get these shares like way below current market value for the company. And so, there's a lot of things you can do where you're just in the money. But I always tell people, in my opinion, and the way I did it and the way I share with people, those deals are great. I still want to get the cash flow solved first because when the cash flow is solved, you'll probably make different decisions anyway because then you're not making them for money. You're not making them for immediate money. You're not making them for like the playbook changes. When you don't have to worry about money, the playbook changes, how you spend your time, what you do, what you invest in, being more intentional with time and dollars. It's a total game-changer.

 

Cal Callahan: That's been the most frustrating thing for me. It's like, I have all this net worth and I don't have the freedom. And again, we've covered a few times that that's the f*cking goddamn playbook. But also, I just wanted to circle back on the private equity piece. I think that's a huge differentiation from how I've done it in the past. And I did learn enough in seed round that I will not invest in seed round. To me, it was like I could always get in Series A probably the same price, maybe a bit more, 20% more, whatever. But so much of the questions are answered. Not all of them, but a lot of them are. And so, I passed on the seed, I will still participate in some A and B, but really, as I iterated earlier, I'm getting out of private equity because I'm now no longer investing in it because I don't have my cash flow position created yet. It wasn’t a very articulate way to say it but you know what I was trying to say.

 

Justin Donald: I think it's beautiful because you have so much clarity around what's next. What moves do you need to make in your personal life? That is a powerful realization, and most people just don't realize it. They play the game not realizing they're in the game, but it's the wrong game and they don't realize it until way later in life. So, I'm excited to hear your take, your realization, the new playbook because once you have this new blueprint, everything changes. And each step of the way where you're buying back more time, you're covering expenses, you're getting your survival income, you're getting to your lifestyle income, everything changes.

 

Cal Callahan: Yeah, I feel that. Okay. I want to ask you because before we got on, I noticed that you look pretty buff right now. What's been going on?

 

Justin Donald: Well, I've got someone in you that keeps me motivated, but I got to make sure that I'm doing you justice in the workout that we did at your place. And the original days of I actually don't know what the group has evolved into or the name or whatever, but we used to do these workouts at your place, and it was so much fun. And I have such fond memories.

 

Cal Callahan: That's where we met. Yeah.

 

Justin Donald: Working through some injuries, and I really felt like limited for what I could do but I felt very inspired by the people that were there that I just felt like we're playing a whole another game in the world of health and strength conditioning. I feel like that really set me on a good path to take care of what I need to, get my body healthy. Don't push it. And get into a rhythm that works, a rhythm with the way that I eat, a rhythm with how I'm working out, who I'm working out with. I remember reading an article. This is a long time ago, that Brandon Marshall. I'm a Bears fan. I grew up in Chicago. And so, I read this article that he spends $1 million when he's in the NFL, $1 million on his body. And there are other athletes that I read the same thing, right?

 

I know Tom Brady spent a ton of money. I don't remember what the actual number was but I just remember thinking, "Wow. I need to treat my health a little different.” I actually need to say, like, I need to have a goal of, "Okay. Why don't I spend this much money? Why don't I give myself permission to hire an elite like world-class coach and to spend the money on nutrition and spend the money on a chef to spend the money on wherever I need to, chiropractic, but like high-level chiropractic, physical therapists, just the blood work, just all the different things?” And so, it's fun. It's like a paradigm shift.

 

Cal Callahan: Where I was going to say, what was it like just like what happened to me today, like this shift, and it's like, "Oh, wow, I can invest in this part of my life. I have all these resources.” What a return.

 

Justin Donald: That’s right. Well, it's like I battled so hard to get out of this scarcity mindset around wealth, money, all these different things. And it's like I won in some categories and other categories I realized, "Oh, I haven't won yet.” So, I was still playing a scarce game of, well, I can get by with just my own training. I can get by with… And not that I can't but if I have the means, why am I scrimping over here on the health side to save a little bit more money over here? I've worked hard to have the money to be able to afford the best of the best. So, it shifted from like, "How do I get the best deal, save the most money?” to, "How do I just invest in the best, whatever the price is?” Because I can cover that and my health is probably the first place I should pour it into. That and my family are equally one and two of where those dollars should be spent.

 

Cal Callahan: How long ago did you have this kind of shift? Do you remember?

 

Justin Donald: You know, that one was probably a year and a half, two years ago, something like that. And it's great because there's just a different level of intensity that you get when you're around certain people being pushed by certain people, having a different like, I've never not worked out. I'm going to work out. I mean, I guess I had one stint in life, like a one-year stint where I didn't and I was definitely not in very good shape. And it was like the realization of, "Oh, I can't just do nothing and be in shape like, whoa, what just happened?” And so, back in 2005, that was kind of a rough year for me. I got really out of shape. I didn't connect the dots of what I was eating to like body weight.

 

And so, I just had this realization, like, okay, everything has changed. My metabolism’s changed, my habits are changing. I can't just be working all the time and not taking care of my body. And it was funny. The more I started taking care of my body, the more clear I thought in business and in investing. And so, it's funny because it was like at first, it was like, "Oh, I don't have time to do it.” And then it was like, "Well, I don't have time not to do it because of the clarity that I get from it.” So, from there, it wasn't a matter of, "Am I working out? Am I not?” Now it's a matter of, I mean, I'm going to work out but if I'm going to do it, how can I get the best workout in that time frame, one that really goes above what I could do on my own? So, it kind of justified or gave me permission to just spend the dollars.

 

Cal Callahan: What do some of those workouts look like for you?

 

Justin Donald: Well, I've got a world-class trainer. I work out at the Kollective.

 

Cal Callahan: F*ck yeah. I mean, they’re amazing.

 

Justin Donald: The motivation you get.

 

Cal Callahan: Which location? Downtown or…?

 

Justin Donald: South.

 

Cal Callahan: Yeah.

 

Justin Donald: The motivation that you get seeing freak athletes and incredibly fit people is in itself wonderful but they've got the best coaches and they've got, I mean, everything that you can think of like massage therapist to chiropractor to physical therapists, to blood work, to you name it, they've got it. And it's not cheap.

 

Cal Callahan: Right.

 

Justin Donald: The membership is not cheap. You know, a company I invested in, Alive and Well, they're there as well, which I love that.

 

Cal Callahan: I love Michael Swail, I say. Yeah.

 

Justin Donald: Amazing guy. And so, I love their services. You know, it's the best of the best in every category, and that's what I want. That's what I want. I want to be looking, I mean, I used to never look at my blood. Now, I do blood at a minimum quarterly. For the last year, I did it almost monthly.

 

Cal Callahan: Yeah. And were you able to see some nice shifts in the markers?

 

Justin Donald: Certainly.

 

Cal Callahan: And that was through training, through food?

 

Justin Donald:  Yeah.

 

Cal Callahan: Probably. What other things?

 

Justin Donald: Supplementation.

 

Cal Callahan: Damn.

 

Justin Donald: So, it's been fun.

 

Cal Callahan: It shows, man. I mean, you've always got great energy but there's a different glow to you today.

 

Justin Donald: Appreciate it. Well, I do think that we don't compartmentalize well. So, the way you are in one area is going to bleed into the other areas. So, I feel like if you do take care of yourself in that health department, it's going to show up in a positive way in the other areas, in your marriage, with your kids, in business, right? It is going to permeate through those lines or boxes that you think it might not.

 

Cal Callahan: Yeah. Well, what do they say? The way you do anything is how you do everything.

 

Justin Donald: That’s right.

 

Cal Callahan: And it's easy to be like, "No, I'm great in this area and just happen to be sh*tty in this area.” But you're right, where we think we can compartmentalize those but it's a mindset. And I think when we're able to make a connection to, "Oh, this thing that I really don't like doing, I don't really like working out,” I certainly don't like going in the cold plunge, but I don't really like working out but I know how it makes me feel. And so, when you can connect that true value in how it spreads out across your entire life and how it impacts your relationship with your wife and your daughter and your kids and your friends, and it's like, how can I not work out?

 

Justin Donald: That's right. Yeah, it's a total shift, right? And it's the same thing even on the financial side where you say, "Well, I can't afford to go to this event or buy this course or join this mastermind.” But the more you think about it, it's like, "Well, no, you can't afford not to. You can't afford not to be around those people. You can't afford not to be learning those things.” Like, that's how I felt for me and that's what gave me the permission. So, on the health side, we talked about it on the wealth side as well. And we got to be okay spending the dollars if we're willing to put in the work.

 

Cal Callahan: Yeah. And with that said, like be discerning. It doesn't mean just sign up for every goddamn course that comes across you. There's a lot of bullsh*t ones out there.

 

Justin Donald: Tons. And by the way, the other thing that we run into in today's day and age is that everyone's an expert. We've got all these social media experts, and most of them make money based on the education they're selling, not based on actually having done the thing that they're selling education for. I mean, the vast majority, I mean, it's absolutely crazy. I mean, take a look and I'm not going to call anyone out here. That's not my style. But I would say you got to do your homework because most of the people that are promoting something online, that have a following, most of the people have not done the thing they're teaching to do.

 

I've always said, if you're going to hire a coach or if you're going to get involved with a mentor, they need to have done the thing that you want to do and done it well at a very high level. That's what you're paying for. You're paying to cut down the learning curve. You're paying for education and mentorship of how to do it, to avoid the trial and error of getting there, right? And so, most people, they figure out how they can make money selling a product, selling a service, but they were never an expert in that thing. They never made their wealth from that. In fact, they need the thing they're selling to cover their life. If you hit the pause button on the income that they make on that education, they would fall apart. They don't have assets producing it, right?

 

And I say this for those that are in real estate, that are teaching how to sell how do you invest in real estate, most of these people do not invest in that much or have a short track record, or only did well in the last ten years when everyone did well but those strategies only worked in that short time frame and they're not going to work outside of it. So, you got to just be careful.

 

Cal Callahan: Yeah. And you can tell who they, many of them are, by their relationship to money, which is they wear it on their sleeve, their pictures in front of their Porsches and their whatever. And it's always like, look at the people. Anybody I know who's generated real wealth wouldn't be cut dead in that photo. And they think they're inspiring others to sign up for their course. They are inspiring them, but they're getting exactly what they're calling forth. And those people are going to keep you at that lower level. And it's going to be this really interesting relationship that serves both because they're not ready to truly have the authentic relationship with money. But I see that stuff on Instagram. It's like, "Oh, bro. Like, enough. We've seen enough of you in front of your car. Okay. Do I have to unfollow you now? Because this is just, you know.”

 

But it's interesting. It's why it's been difficult for me at times to be out on social media because there's so much of that and I'm not selling anything. I mean, I guess I'm promoting my podcast but I’ve had an interesting relationship with it. I've kind of come full circle on it, I feel like. And I'm starting to just, like, say, “I don't give a f*ck.” Like, I just need to just share some sh*t in a way to help people navigate as people have helped me navigate, you know? So, it's been kind of fun to reengage with that. And it's just always like just being sure how that relationship looks.

 

Justin Donald: 100%. Yeah. Pick your mentors wisely. Pick your peer group wisely.

 

Cal Callahan: Yeah.

 

Justin Donald: Be intentional. Don't let it happen by default. Be intentional. Find the best of the best. My big thing is we want world-class, whatever we're going to do, right? We want world-class educators. We want world-class tax strategies. We want world-class whatever it is. That's what we want. And I want to build a community where every single person in there is just a world beater, and you are fired up to get time with everyone versus I've been in a lot of groups where it's like, well, I got to kind of wade through a lot of people to find the ones that I resonate with or the ones that I want to spend time with because I think that they're at my level or at a level above me where I can be mentored by them or I can… I mean, I can learn from anyone but there are certain topics where I'm guarded about who I learn from. Like, you have to have the track record for me to want to learn from you on wealth, investing, right, that sort of thing.

 

Cal Callahan: Yeah. Beautiful. That's important. I'm glad you shared that. Before we wrap, I'd love to hear kind of the new book, the new edition. Like, what do you feel like? How could you if you could distill it down like, what are people going to be able to look forward to here?

 

Justin Donald: Well, what's fun about this book is there's a lot of new content in the book. There's a bunch of new content that's so hot off the press, we couldn't even get it in the book. So, there's just additional resources that are going to come with the book that people are going to have access to. So, we're going to get into some tax strategy. We're going to get into due diligence. How do you actually vet people, teams, real estate, private equity? How do you vet deals? We were talking about a deal update. How did all the deals do? Where are they at? Full story. What ones and the ones that didn't go to plan? How did you solve for those? Right. And so, I've got a lot of that broken down.

 

You know, in addition to that, I bring in some new deals that I've done that have gone really successfully. And some of the strategies involved in those I outline a lot more of what this Ponzi scheme look like in the trial and all that. So, I do get into some of that. So, yeah, I mean, there's a ton of extra content. I don't know of the total. I think it's somewhere around 75 to 100 additional pages of content, which is pretty cool.

 

Cal Callahan: When do you hope to have it ready for sale?

 

Justin Donald: It will be ready, I believe, pre-sales probably will be ready by South by Southwest, but for sure by end of March, beginning of April.

 

Cal Callahan: Great. This will come out right around that time. So, pre-sales at least should be up and rolling. And I know we talked about it a little bit before but how can people work with you? We get the mastermind, the master classes, obviously the book, like, just kind of break it down for everyone.

 

Justin Donald: Yeah. So, if you go to LifestyleInvestor.com, it's got everything. So, free stuff, podcast, blog, free documents, free resources. There's tons of free stuff. You can get the book there. Although getting the book there, it's free. You just pay for the shipping. If you get it on Amazon, more money goes towards combating human trafficking, right? You can go either spot. Either way, proceeds are going to help out, but more proceeds go via Amazon. But at LifestyleInvestor.com, there's also an online course. There's different master classes as we talked about. So, there's passive income. There is mobile home park investing. There's tax strategy.

 

We've got the mastermind information there, which is pretty cool. Again, that's waitlist right now. And we're very selective with who gets in, but it is our flagship offering, most certainly. And for anyone in your community that wants to learn more and even get some sort of strategy or consultation around it, if you go to LifestyleInvestor.com/Consultation, someone on our team will actually meet with you to discuss what next steps you personally should have. Right? Let's talk through your portfolio. Let's talk through where you are in life, where do you want to go, and what programs, products, education would be right for you specifically.

 

Cal Callahan: Love that. Gosh, of course, there's a bunch of free stuff. I let anybody who is listening and is going to go to the website and engage with this, please hit me up on my DMs and Instagram. I want to hear about it because otherwise, I won't know but I know that this has been such an incredible conversation. And again, like, talk about the essence of what I'm trying to share with people, the Great Unlearn. I mean, you blew my mind today, brother.

 

Justin Donald: Well, I love it. I love your topic. I love the whole premise around unlearning because, unfortunately, we have been conditioned by education, by Big Tech, by Big Pharma, by Big Food, by Wall Street, whatever the groups are to think a certain way. And so, we need to get outside of, we need to seek truth and not just what someone else is saying based on their agenda. And so, I love the whole premise and theme of the Great Unlearn.

 

Cal Callahan: Thanks, brother. Yeah, thanks for being here.