011: Structuring Deals & Minimizing Risk with Hans Box

As investors, it’s our goal to find opportunities to turn a passive investment into a major return. But when things go wrong, what can we do to ensure that we aren’t positioned to take a major loss? 

In 2009, Hans Box took a leap of faith, quit his job at PriceWaterhouseCooper, and bought a handful of rental properties. Under a client’s mentorship, he invested a substantial amount of his net worth into a deal overseeing 800 units of multifamily housing. When things started to go wrong, Hans’s partners voted for him and his current business partner to take over the deal, and he was able to take the investment from the negatives to a 24% return. 

Today, Hans brings his CPA skills to the podcast to share the story of how salvaging a high-risk deal informed his unique outlook on investing. You’ll learn what a deal should look like and how to interpret it, what you can do to minimize and mitigate your risk as you structure it, and how creating reliable streams of passive income have allowed Hans to focus on the things he loves the most about investing.

Key Takeaways

  • How Hans’ first deal taught him the value of being able to remove an underperforming sponsor or manager. 
  • How partners, sponsors, managers, and operating teams should perform under ideal circumstances.
  • How to factor and evaluate what a return is actually going to look like, financial strength, and profitability.
  • Why lifestyle investing isn’t about sitting on a beach for the rest of your life. 
  • The unique value of being both a mentor and a mentee – and why tracking your progress is so essential to effective coaching.


“What gets measured gets improved. What doesn't get measured doesn't.” – Justin Donald Click To Tweet “Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” - Ayn Rand Click To Tweet


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Connect with Justin Donald


Justin Donald: All right. Well, I'm excited to have you here joining us, Hans. It's been a long time coming because you and I talk about investing all the time. I mean, in our spare time, this is what we love spending time doing. And I'm just so excited to have you on the show. So, welcome.


Hans Box: Thanks for having me, Justin. I'm honored to be on.


Justin Donald: So, what's new and exciting in your world today? I'd love to know kind of what's up with you. And then, after that, give a little history of you as I know you.


Hans Box: Sure. Well, I mean, new and exciting, I'm pretty excited for 2021, after getting through 2020. And I think there's going to be a lot of opportunities from some of the issues that have happened in 2020 and those are good investing opportunities. So, I'm excited about that. I'm excited about my loan business and that’s increasing as a lot of my clients are starting to buy multifamily units and apartments. So, I'm excited about that.


And in general, just excited to get started for 2021. And my history, I guess, if you ask what my general history is, is I am a CPA by trade, I'm a recovering CPA as they say. I stopped doing that work. In 2009 or so, I got a master's in accounting, but I just didn't really enjoy it. And I didn't like having a job. And so, what I did is I took a leap of faith in 2009, I’d bought two or three rent houses at this point, time to market pretty well, although it was hard to find money at the time, it was easy to find deals. And now as you know, it's kind of opposite. So, I quit my job at one of the big four PricewaterhouseCoopers accounting firms.


Justin Donald: Congratulations, by the way. That's a huge deal. It's tough to walk away from the prestigious name. And I know you are making good money and to just leave it all behind, kudos to you.


Hans Box: It was scary. And honestly, if I was probably at this age now, I don't think I could do it which is what made me do it 11 years ago or so, because I knew that I would get these handcuffs and I wouldn't be able to leave. So, I was like, I want to look back and not have any regret. So, I quit and went and worked with a guy that needed help on his accounting. He owned about 800 units of multifamily spread across like four or five properties, I guess, three or four properties.


And I fixed his accounting and the deal was he was going to mentor me in real estate, particular in multifamily. And he had a lot of experience, but long story short, I got in a couple deals with him and I put my entire net worth at the time in those deals. And one of them wasn't going very well at all. So, what happened long story short is that the partners voted for me and my now current business partner to take over the deal.


So, he was a passive investor in the deal, just like I was. And we were so worried about it that all the partners got together and said, “Hey, Hans, Doug, take over this deal and save our initial investment.” They weren't even that interested in getting a profit at that point. And so, we got voted in, we took over control of the deal. So, we basically were the sponsors at that point. We hired the management company that we've been asking him to hire for a year. And she helped us turn the deal around and we sold it for a nice profit, in fact, a record price at the time in the submarket.


So, it went well. We know it wasn't a home run because we were starting from negative, but it was a decent return, like 24% return.


Justin Donald: That’s awesome. And your first time ever doing anything like this.


Hans Box: Yeah. And that was just to save my investment, honestly. I had no intention of trying to do that full time. And so, that started a critical mass of investors that were in that deal, probably 20 or so, and they started asking myself and Doug, Are you guys going to do any more of these types of deals? Are you going to raise any more money? Are you going to go do your own stuff? And that got us to thinking and that's what got us started into raising funds and doing preferred equity and multifamily and self-storage and all the similar type deals we've done.


Justin Donald: I love it. And I want to get more into that, Hans, but what I want the listeners to understand is that this scenario, where you were able to be voted in to run things, that's pretty rare. I mean, you got to be really careful when you're investing with groups because often, the subscription docs don't allow this to happen. Can you expand on that a little?


Hans Box: Precisely. And in fact, that experience is what has shaped my entire investment philosophy, the experience of possibly losing my money, the experience of the difficulties of replacing the sponsor in that particular deal. And it turns out that we luckily did have that written into the operating agreement, where they could be voted out by I think, its required interest, but it turns out, it was unanimous, except for one person.


But going forward, on a lot of my deals where I've invested with smaller sponsors that, I'm not talking the big funds that are $100 million funds, but the smaller investors where they're raising $2 to $5 million and they have some track record, but not a lot, I really like to see the ability to take out the sponsor or the manager, if they are underperforming. And the rest of the partners agree that they want to do it. It shouldn't be for any reason, but it definitely should be there to protect your investment for smaller deals. You're not going to see that in the big deals at all.


Justin Donald: Now, let's take a few steps back because I want to make sure our listeners totally understand what is going on here because you've used some terms that you and I will exchange pretty easily and other investors will exchange, but if someone's just getting started, they may not know what a sponsor is or what a general partner is or what a limited partner is. So, I think it might be nice if you can color in for us from your perspective what that world looks like, just so that we have more of a nice canvas to see that the whole painting displayed.


Hans Box: Sure. So, sorry for that. A sponsor actually is the person that's leading the deal, that's putting the deal together, they're driving the ship, as you put it. They will be asset managing the deal, not necessarily daily managing an apartment complex say as our example, they will hire the management company that will manage the deal and then they'll steer the ship. And then, the LPs are the limited partners or passive investors or lifestyle investors that actually invest in the deal but are passive, meaning they don't really have much say in what goes on day to day. They may have votes on larger decisions that need to be made, like a refinance or a sale making the decision to sell, but in general, they're not dealing with the day to day, i.e., they’re passive, in which they actually fit to your mantra and kind of what you want to do.


Justin Donald: Yeah, I love deals like that because you're not doing the work. You do some work to make sure that the deal is right and you vet the deal itself, the market or submarket that it's in and that you vet the team that's running it, both the sponsor or the general partner and the operating team. And so, you want to know that there's a good track record. And part of the reason why I love having you on the show, Hans, is because this is what you do now. So, you had this crazy experience and luckily, the subscription docs allowed you to be voted in and take over when most of the time that that doesn't happen, like this is not a common occurrence, unfortunately.


And so, I know that you're really keen on making sure that this specific language and these words and terms are in these agreements, just in case a worst-case scenario happens and you can protect yourself, but for your deals, you act as the sponsor or the general partner and you put these together. And then, you have a team of limited partners which would be the example, starting with the limited partners of the first deal that you did that just followed you on to future deals. And many of these people I've met just are great guys and gals and smart investors and it's neat seeing kind of how our worlds have collided or coincided.


Hans Box: Yeah, definitely. It was fortuitous. At the time, I wasn't happy that it was happening and it was trial by fire for me, really, but it turned out really well and actually, it was a wonderful way to learn. I don't know that I would have picked that, but now I wouldn't trade it for anything because it really did shape the way I invest and I'm kind of all about hitting singles and doubles and getting cash flow. I'd love to hit a home run once in a while, but I want to do that almost by accident, I want to protect my original principle. And what happened in that deal, I guess, it was 2009 to 2012, it shaped the way I look at my investment principle and basically, I don't want to lose money. That's my first goal.


Justin Donald: Yeah, and you set it up really well. I look for singles and doubles because that's what I want to get. And if when I assess the risk versus reward, let's say that there's not a lot of risk in this deal, but you can get a single or you can get a double great and then, if accidentally ends up being a homerun, even better because you went into the deal, not thinking it was going to be a homerun, you went into the deal protecting the downside, making sure that the risk is reasonable or mitigated as much as humanly possible. And so, I love that you do it that way.


Hans Box: Yeah, thank you. And yeah, the risk of mitigation is, I think, a lot of people get caught up in IRRs and average ROI or cash flow and don't look at the risk-adjusted rate of return. There's a big difference between a 20 IRR that's highly risky and a 12 IRR that's very low risk. To me, the 12 is a higher risk-adjusted rate of return because you have a very low chance of losing your principal. So, it's something that you kind of get better at as you practice and look at deals and invest over time, but it's something that I've developed over the last 10 years, too.


Justin Donald: That's awesome. And what I really love for you to do is expand on that more, because what I find in a lot of people, and by the way, Hans is part of my Lifestyle Investor Mastermind and really just is a wealth of knowledge, a great resource, people look up to him in the group, and he has such expertise, especially in the realm of real estate and syndicating and terms, lending, I mean, you name it. And so, it's really awesome, but what we find of a lot of people in this group and other people that I've coached and other people I just talked to, is that they're lured into this really high, really exciting IRR or internal rate of return which is one of the main, let's call it components to factoring or evaluating what a return is going to look like. It's like a measurement of your financial strength, measurement of profitability.


So, let's dissect this because most people are like, Ooh, nice, I'm going to be cashing checks. This is a 20% IRR, or let's even use your first deal, 24% IRR. And most people won't promote that because they know better, but let's just say people, first-time investors are new, people that aren't as experienced in the game, they're like, cool, I'm going to be able to buy this and that and whatever and they show up as if they already made that money and you can't do that. So, how do you figure out this risk-adjusted return?


Hans Box: Well, you have to look at a thousand factors. Unfortunately, there's a lot to learn and there's a lot to do there, but I tell a lot of people that invest on the side, it's like, you almost have to treat it as your second job and be very serious about it because a lot of people will spend months trying to figure out what 55-inch TV to buy, but they don't hesitate to throw in 25,000, 50,000 into a deal, instead doing a very, very deep dive.


So, the way I do it is I dive pretty deep on, especially sponsors, they don't have a massive track record, who I don't know personally or things like that. I just want to understand what am I getting into. And of course, there's always going to be aspects of the deal that have some risks. And there's always many aspects of the deal that if you had your choice, you would change this and tweak that, but you can't do that, it's a little bit of a science and a little bit of an art at the same time. And you have to be able to accept extra return based on all these 10 data points that I know.


And so, that's kind of how I've developed it over the years. And we try to, as sponsors, structure our deals the way I would look for, if I was investing in somebody else's. That's kind of the way we thought through the process. So, me doing my own deals has actually improved my ability to passively invest with other people because it helps me understand what other people want.


Justin Donald: I love that. I think that's so great. And for our listeners, I want everyone to know, I mean, it's been really fun because Hans and I, we actually met at a GoBundance event here in Austin, Texas. And we were supposed to connect, for some reason, we never did. You guys probably know how that goes. You have good intentions and then, your real life sets in and doesn't get scheduled. I always tell people what gets scheduled happens and what doesn't, doesn't.


And so, we didn't end up hanging in and then, we were at this other investor event and we ran into each other. This was out in LA and we ran into each other and I'm like, gosh, you look familiar, and he's like, you look familiar. And it was just great because eventually, I can't even remember who placed it, I may have placed it, you may have placed it, but we figured out how we knew each other. And we're fast friends after that.


And then, when I started my original investor club series, you're one of the OGs of that. So, it started with me and kind of one other guy and we brought in a second guy, so there’s the three of us and we were kind of hanging out. And that was Brad Johnson and Shawn Sparks and then, brought in Ryan Levesque and then, brought in you, Hans. We brought into Nashville a feature in a future episode, and Ryan, Casey and really the group just grew and formed from there which is really neat.


Hans Box: Yeah, it was very organic which made it kind of special because we all kind of see things the same way. And it's a very easy conversation, whether it's the Mastermind or The Investor Lifestyle calls. And I really appreciate you bringing them in, it's been a great experience, so far.


Justin Donald: It’s so cool. Well, it's great because we both have respect and admiration for what the other has done. And when you live in that space, it's really easy to learn the things that you don't know as well. And I recognize, for you, you've got superpowers that I don't have. And so, I'm able to glean and learn off of you, especially having a background as a CPA, though you don't practice today, it doesn't mean that it's not a foundational part of what you do and how you look at the world, your worldview, your investment worldview is trained by that lens. And there's a lot of strength in that.


Hans Box: Yeah. Like I’ve said earlier, my world has been shaped by the first deal and then, also the fact that I am a CPA and by nature, I’m conservative. So, those two things together have kind of guided me through my investment journey, but I will say after meeting you and joining the Mastermind and joining the other calls, one of the things that opened my eyes was there's a bigger world out there than the singles and doubles in real estate, there's other things you can invest in, there's debt plays that you can invest in, it's not just about equity in real estate which is kind of where my focus was. And there's ways to reduce risk and increase upside, which is one of the things you introduced me to and I am grateful for that. And the velocity of money really, that's really what I learned a lot from you on is how to invest with a velocity of money.


I always went for the long term. In fact, we had like, signal conversations about, well, this is risk, well, no, I think this is higher risk or this is lower risk because I was all about, I want my money, I want to make my 8% for 10 years and then make an upside sale, but you were like, I want my money back, so I can reinvest it. So, is there a way to do it that way, too? And some deals, there is. It's been a great thing to learn.


Justin Donald: Yeah. And that's a great point. And there's so many different ways to do it. So, could you have kept doing it the way you were doing it and had plenty of success? You bet. And could I keep doing it the way that I'm doing it and have plenty of success? Sure, but really, where the strength really starts to grow and kind of become exponential is where you can kind of combine those and you can find deals where you get aspects of both or you're able to utilize and leverage one into another deal. And so, to me, it's about having as big of an investment war chest as you can with as many philosophies and strategies as you can because then, you're more well rounded as an investor.


Hans Box: 100%. I mean, I try to learn from every investor that I talk with, yourself, my business partner, he's gotten stuff from me, I've gotten stuff from him that I wouldn't have thought about when we look at deals. And so, every time I look at deals or work with new investors or we have co-sponsors, I learned something. And so, the key within this is, it's just like anything else on a job, you're always learning, you're always improving yourself on a job.


Well, it's the same way with investing, you have to continually learn and grow because deals change and circumstances change and macroeconomic climate changes. So, you should always, always learn.


Justin Donald: Yeah, that's awesome. So, for you, you're able to transition out of a job. Obviously, you've got some investments that are working, you've learned to get even better at investing. Part of the reason I wanted you on this podcast is because you're a lifestyle investor, you're not just part of the Mastermind trying to become a lifestyle investor, you are, you live the life, you don't have to work if you don't want to, but you like to, you get a joy out of doing it. And you're like me, you love finding a good deal and you love sharing it with other people and you love finding ways to kind of just tweak it a little bit more and make it just a little bit better or tweak it to make it a little bit safer.


And so, tell me about that. Tell me about this world of what it's like to have the cash flow to live your life, but then, still getting to work, because to me, it's different. So, I don't have to work, I get to work. And it's not like I'm not going to work, that would be really boring. I just want to work on the things that really inspire me and are enjoyable and bring me passion and work with people that I want to be around. I'm curious what it's like for you.


Hans Box: It's similar. Ten years ago, I had no idea that I would be where I am today. And it's the result of investing and doing those singles and doubles and that snowballing over and over. And you're right, I don't technically have to work, my passive income more than covers my expenses and we could still go on our vacations and whatever, but I enjoy it.


So, I enjoy working with my business partner and that allows me to do more of that. And I enjoy working with him and finding deals and us raising money. And actually, I enjoy helping our set of accredited investors fulfill their dreams. And we have multiple people that have lost their spouses in our investor group. And there's a couple ladies that totally depend on us to where we should put our money and invest. It's a lot of responsibility, but it's also rewarding and you're really adding value to them by helping them to invest.


So, that's why we continue doing that. I love doing it and honestly, I like freedom. And freedom means I can do what I want, when I want, how I want at any time. And once you are able to get to that point, it doesn't have to be a ton of passive income because I passed that point a long time ago because I live cheaply, but of course, as I've made more money, my expenses have gone up and I'm still well above it, but once you get free, then it's amazing, like with the doors that open because then, you just start doing what you want. And you don't feel this pressure to bring home a paycheck every two weeks because you have to, you want to do it because you want to, like you said.


So, it's been a great experience. And honestly, my wife still works and she does it for the same reason. She loves to work. She needs to find a different position within her company, in my opinion, but she loves it and she doesn't have to work, but she's doing it for the same reason. I think working, everyone needs it for self-esteem purposes, you can't just not work.


So, I wouldn't want your listeners to think, Oh, I'm going to do passive investing and then, I'm not going to need to have a job. So, I'm just going to sit on a beach because that's not how we've built, that's not how I built my net worth over time. And I'm sure that's not how you built yours. So, you have to continue to work. It's a second job, really.


Justin Donald: Yeah, and the other thing is once money is taken care of, once your expenses, your lifestyle is taken care of, it becomes more of a game, it really does. It becomes kind of fun and it's like you're playing Robert Kiyosaki’s Cashflow game or you're playing Monopoly or where really, it's like, there's fun in it and it's not about trying to just survive. And I know that that can be tough at that point in time in your life, but you can get beyond that if that's where you are right now.


And I have experienced when money is really, really tight before and barely getting by, either because not enough cash is flowing in or maybe, I didn't make as good choices that I could have made with the cash that was coming in either/or, and especially when starting a new business. I mean, goodness’ sake, I've made some huge mistakes with cash flow.


Hans Box: Yeah, I mean, and I'll second that. I would want your listeners to realize that people tend to overestimate what they can do in a year and underestimate what they can do in 5 to 10 years and that goes back to my earlier statement of, 10 years ago, I never would have guessed I could be sitting here in Austin and having this conversation with you about my current world.


Because when I quit PwC, my wife also decided to go to law school at that exact moment. So, technically, neither of us have income. I had sort of income from working with this guy, but it was a tiny amount. And we were literally turning off everything in our house before we left to save. Okay, I would unplug my TV when I left. I remember distinctly doing that to save money because we were living on basically nothing. And to me, at the time, when I was doing it, I didn't look at it like a sacrifice, it was like an investment. And here's what I wanted to do. I don't want to have regrets. Let me go try and do it. So, it's not just going to be like that. It's something that you build and you build and you build. The next thing you look back five years later, you're like, wow, I've done decently well.


Justin Donald: Yeah, and you and I were talking at one point because, and this is offline, this is not even today, this is just another time, and you're like yeah, I don't know that I ever thought I was going to be this successful, like where I am today. Like I don't know that I envisioned it that big which is really cool because you're very modest. And listeners may have no clue how successful you are. I can assure you are, assure you all that Hans is incredibly successful, but most people don't know how successful and it's neat because you have exceeded your expectations or thoughts, maybe growing up on where you would be today.


Hans Box: Yeah, and that's from reading books and meeting individuals like yourself that think a little bigger. And in fact, that's one of the things I think I told you a few months ago is that, one of the things I need to work on is to try to think bigger. And in spite of my, I guess, disability in that area, I've still managed to do decently well. And those singles and doubles have turned out very well. So, you can overcome that if you want to grow and learn. So, the key is to listen to podcasts like this, read books and just absorb knowledge, and your mindset will change.


Justin Donald: Totally. And who you surround yourself with makes all the difference, I mean, peer group and mentorship are like the two biggest things. And the peer group, by the way, can include authors, Hans talked about it, I've talked about it before, I mean, before I had mentors, my mentors were authors that I wanted to learn from. And then, I've just been very intentional about who I spend my time with in terms of my peer group. I really want to make sure that the people that I'm spending the most time with are bringing me up, are encouraging me, that they're helping me think about the game of life and the game of business and investing in a bigger way.


And by the way, you've done a great job because your wife, Jill, is amazing and your business partner, who I had the luxury of hanging with when our family took a trip out to, well, we went all over this past summer, but we spent a month in Colorado and I got a chance to hang out with Doug and it was just awesome. We went to this really cool smoothie shop and got some healthy things which is great because we both speak that same language.


Hans Box: Definitely.


Justin Donald: He’d just gotten done with like, a four-hour bike ride or something.


Hans Box: It's every day.


Justin Donald: So crazy. I'm like, Are you kidding me? He's just a freak athlete and mind over matter. It was just awesome. So, I mean, you've done a killer job because you've been intentional about who you're spending time with. I mean, we've gone to dinner with you and Jill and I mean, you have like, I always compliment people, when they have traded up, they found someone that brings them up in the world of being married and what their spouse brings to the table. And I feel like I have to, I'm lucky in that, but you have also been intentional outside of those key relationships. You've got your marriage, that's really important. You've got your business partnership, that's really important, but for you, you've joined investment groups, you're a part of GoBundance.


I had David Osborn on the show, let's say, probably a month back. And I know you and David are close and I mean, David's done a great job of that group, but you swear by it as well. And I'd love for you to talk for a little bit on your experience with your peer group and why you're so intentional about it.


Hans Box: Yeah, and you're right. It's for many of the reasons that you just cited, being a member of GoBundance, I joined them back in 2017 or so. And it's a group of men, it's for men focused on men, and it's basically…


Justin Donald: Well, now, there's the GoBundance Women’s chapter as well.


Hans Box: Exactly. There is a Women’s chapter now, but the GoBundance Men, obviously and it's been a really great experience because to get around peers and people that think like you do and will push you, there's guys in there that are doing 10 times what I've done and there's guys in there that are 10 times below me. And so, you're around a lot of different people, but all of them are hard driving and they're looking to improve their lives in all facets of their life.


So, it's not just about business. It's about business, it's about health, it's about generosity, it's about relationships and parenting and things like that. So, it's a well-rounded group. And being within a group like that and getting pushed on a daily basis, or we have events all the time and meeting these guys and seeing guys that are 10 years younger than me that are doing incredible things and then, I talk to some of the older individuals and they offer their wisdom, it's just been a great experience in that respect.


Justin Donald: That’s so cool.


Hans Box: Yeah, but then we also have done other stuff, like my wife and I went to Tony Robbins’ Date with Destiny and that was way out of my box. I'm famous, my last name is Box, but literally, that was not within my normal parameters, to go into something like that, it's a very intense six days and it forces you to look inwards and it also forces you to be very outgoing, which aren't either the things that I love to do, but it was fun, I loved it, loved that I went and I enjoyed the experience. And I hope things get back to normal so that the people can attend that in person again because you have to be in person, I think, to really experience that.


So, stuff like that, I go to meetups all the time and try to get around individuals that think like me. So, I've sampled a lot of it and then I've latched on to a few that I really liked, which are GoBundance and then joining your Mastermind group. So, it's been a great experience, but again, it's something you kind of got to go sample and learn about and then figure out what environment are you looking for that’s going to help drive you to the next level?


Justin Donald: That's awesome. Thanks for kind of breaking that down and for the kind words on our Mastermind because you had so much value there. And I couldn't agree with you more about Tony Robbins’ Date with Destiny, I mean, that may have been one of the most impactful and pivotal events and experiences of my life. I mean, I really believe that that event changed the trajectory of where I was going. I would say, UPW, Unleash the Power Within, was the first event that was just really eye opening and I had some big changes in my lifetime, but Date with Destiny was a game changer for relationships for a long term. I mean, my wife went to that at a separate event. So, when I first went to it, we weren't married yet, but like at that event, that's when I figured out like, Okay, this is the woman I'm going to marry.


Hans Box: Wow. Well, it was life changing.


Justin Donald: Yeah, whole reason I haven't because I think I've been scared. We're looking at it the wrong way, looking at like, well, what am I getting out at versus what am I giving to it?


Hans Box: Yeah, it was a great experience. And my wife and I went together, but they separate you if you're married and I literally only saw my wife at the end of the night, every night, like at 2am when the thing ended every night. And otherwise, she's with her own group, I'm with mine. And it kind of allowed us to experience it fully on our own because if you're together and your husband and wife, you tend to temper maybe some of the writing you do and some of the revelations, I guess, you may have during the event. So, it was really great. And it was great that she came because she got a ton out of it as well.


Justin Donald: Yeah, and my wife, too. And it was really outside of her box. I wouldn't say it was too far outside of mine, but it was for sure. She was like, “What's this? This sounds more crazy,” but she's so thankful she went. And I mean, it was really a game changer for each of us. And sometimes, it's just easier to talk openly and vulnerably around people who don't know you that you may never see again. So, you can say whatever, right?


Hans Box: I agree.


Justin Donald: You're not going to look bad because you're likely not going to see this person again.


Hans Box: Yeah, and that actually brings up a good point that I forgot to mention earlier when you asked me to talk about the groups that are members of, one of the big advantages of getting around people that are kind of your peers is that, at least in GoBundance and in these other groups, we talk about everything. We talk about things that I wouldn't talk to friends that I've known for 25 years about income net worth or even relationship problems.


We have guys in there that'll basically just, and it's not like we're best friends and we know everybody, there's like 150 to 200 guys in the group, so you can't know everybody perfectly well, but the beauty of the group is it's so open and you can just talk and learn from people that are on your peer level. And that's probably been the best thing about it to me, is being able to talk to people and not hide something because you've known each other for 25 years. It's just completely open and accountable, it's great.


Justin Donald: Yeah. And I think that there's some things that the groups that were part of do really well. So, I know GoBundance does this, I know that Tiger 21 which I'm part of, they do this, where you have like a scorecard or you have, it's kind of like your net worth statement. And it's like a one page. It's like, here's what I have accomplished. So, one of the things at first, when I heard this, I was like, ooh, I don't know if I like that because then you're jockeying and it's like how good am I compared to someone else. And I don't think that someone's human life value should ever be based on their net worth, what they earn, what they do for a living.


To me, like if there was any one barometer, if there's like one thing that you're making those judgments on, to me, it's like how good of a person are you? Like, how much do you help other people out? How selfless are you? How are your relationships with people? That to me, matters more than anything in the realm of money.


Now, that being said, that disclaimer out of the way, I think that there's a lot of value in knowing what your real net worth is, knowing what your assets minus your liabilities are, what does that equal? Do you have a negative net worth? That's good to know. And it's okay. It is what it is and then, you work out of that. Or have you gotten it to be positive? And how positive? And then, what's the next step that you can take there and not to be better or higher than someone else, but more of like the self-challenge? It's like, can you improve your financial situation for you and your family? Can you create something better? And then, can you help other people?


So, I'm a big fan of having mentorship on two different levels. You are a mentee to some and you're a mentor to others, you're taking and giving all at the same time, but I think it's powerful to know where you are financially, just like it's powerful to know where you are from a health standpoint, if you get regular checkups with a doctor once a year, get your blood drawn and read and know where you are. I mean, it's kind of like you need your pulse, your financial pulse, your physical pulse, you need it all.


Hans Box: You have to track. You track other aspects of your life. So, why wouldn't you track your finances and track where you are? And when you set goals, then you can envision that, but if you're not tracking it, there's no way to get there. I track my net worth, obviously, because we go over it all the time in GoBundance and then, we also have measurements of like happiness index, there's happiness. So, net worth isn't just about you, sometimes, it isn't just about your money, it's about your overall life, how you are overall doing. So, that's the way we look at that.


And then, I track my passive income streams. So, when one goes away or a deal sells and it goes away, I track it so that way, I know kind of what I have coming in a month are available, so I can make decisions about investing and living my life.


Justin Donald: Yeah, and something I've coached people on for many years is what gets measured, gets improved and what doesn't get measured, doesn't. So, I just think it's so important to figure out what it is that's most important in your world. And hey, we're at the beginning of the year. So, I mean, one of the things that my wife and I love to do that we do every year, we've been doing this, so we're celebrating here our 10th anniversary in literally days, just a few days.


Hans Box: Congratulations.


Justin Donald: Yeah, thanks.


Hans Box: We just passed that, actually.


Justin Donald: All right. I love it. Yeah, it's so cool. And so, even while we were dating, we created this dream’s list together and then we had goals and we had this whole planning day. And now, I call it my family planning day and I've got a document to it and it's a little more formal. And I believe you've seen it. I think we went through that in the MasterClass.


Hans Box: I think so. Yes.


Justin Donald: And so, I love this thing because it's so good to figure out where you are. And I look at wealth, so wealth, one component of it is money, financial, that could be net worth where I think is what I will tell you is even more important than net worth, in my opinion, it’s just cash flow, your cash flow statement. You think about business and you think about how important it is. Anyone who's a business owner, it's important that you have your profit and loss statement, but especially in the early stages and even further on, I mean, your cash flow statement is more important than that because that's what keeps you afloat. I mean, it’s like what your profit and loss statement says isn't an actual representation of how much money you have in the bank right now.


Hans Box: Exactly.


Justin Donald: And how much is coming in and what's going out. So, that to me is so important. So, to me, your profit and loss is kind of like your net worth statement, but your cash flow, which to me is like your most important component or metric of measuring a business. Most people don't even look at it in their own life and to me, that's what you want to look at in your own life. Where's your passive income? Some people call it horizontal income as opposed to vertical income. Your vertical income is kind of like your earned income and your horizontal income is being able to earn on multiple income streams based on passive income.


And however, you describe it, I just think that that's an important component to know. So, when I think about planning, we talk about net worth, we talk about cash flow, but we also talk about health. Where are we with our health? Are we where we want to be? Are we not where we want to be? We talk about that from an emotional standpoint, an intellectual standpoint, and a physical standpoint. We talk about our passions and our purpose. We talk about dreams that we'd be excited to accomplish together and then, even separately. And then, we help hold each other accountable to getting those and we have good celebrations for it. So, to me, this is such an important way to kick off and start the new year.


Hans Box: I 100% agree, I mean, and the beauty of the groups I'm in, it's like it almost naturally happens in these groups is to go over your one sheet and look at your goals for the year, your goals for each quarter and within each pillar of what GoBundance represents or whatever group you're a member of. So, I think we're kind of moving into goal setting here, but it's very important to have stuff written down.


I mean, I'm not like David Osborn, I don't have a book that has everything tracked perfectly on my goals, but I have seen and just by pure practice, that just writing them down and having a general idea of what you want to accomplish during the year, it's much more likely to happen. And it's something that I need to work on, it's probably one of the things I need to get more, I'm very dialed in to being very specific and detailed on deal review, but I probably need to do a little bit more of that on the goal setting review.


And so, there's always room for improvement for everyone. So, that's why I love that group like that and meeting individuals such as yourself that are already doing it and doing things that I do differently or don't do as well, I learned from that.


Justin Donald: That's awesome. Well, I'm excited because this is a great time of year to do it. So, for anyone that hasn't done it, you can do it now. In my book, I talk a lot about this. The book just came out, The Lifestyle Investor: The 10 commandments of Cash Flow Investing for Passive Income and Financial Freedom. And I'm just so excited about, not only the commandments, but the philosophies, the strategies.


And then, I get into a lot of the personal stuff because a lot of this is lifestyle driven, it's not investment driven, it's how to have a great life. And so, a lot of what we're talking about, to me, is so important. And you said, “Hey, we're kind of transitioning into like, goal setting and all that.” And I think that's awesome because to me, that's more important than investing, that you are on track with the life that you want and then, you just figure out how to build investments around it that support the lifestyle that you want.


Hans Box: Yeah, the investments are what gets you there or create the freedom for you to go doing the things that you're passionate about or whatever that may be. And it’s a great point on the cash flow. In the accounting world, P&l is everything and cash flow is kind of secondary, but day-to-day living cash flow is king. And if you're able to, at least meet your expenses, your world opens up and those goals that we're talking about are much easier to accomplish and much easier to envision, if you're not tied down to having to do something. It's a really amazing feeling and I'm just thankful that I've had the opportunity to do it.


Justin Donald: That's so cool. I'm curious, are you reading anything right now or listening to anything that is interesting, inspiring, thought provoking? I'm curious what's going on in your world in terms of personal growth.


Hans Box: Sure. I do a lot of podcasts listening, I do a ton of that. Obviously, I listen to yours. And then, I listen to quite a few others that are some are real estate focused and some aren't at all. For instance, to throw one out there that I really like is Ed Mylett Show. He has a lot of variety of guests that are anywhere from entrepreneurs to sports athletes and sometimes, he is just him talking and I think he's an amazing speaker. And I love that podcast and it kind of opens my world up.


Like I said, some are real estate, very real estate specific. And then, actually, one area that I've kind of gotten into within the last three or four years is reading more of Ayn Rand. I really respect her work and the philosophy of objectivism and I read Atlas Shrugged and I loved it.


Justin Donald: Brilliant book.


Hans Box: Yeah, it was a great book, but then I started learning a little bit more about it and the way she defines for you to live your life, to follow these, to figure out what your virtues are, and then live your life so that you're meeting those virtues and are happy, is kind of like what we've been talking about this whole time, you figure out what's important to you and go do that and make rational, self-interested decisions to go meet to have long-term growth and long-term happiness. That's really what it's about, is having long-term happiness as an individual. And so, it was a good synergy with what I was kind of already doing anyway, but it was the philosophy behind it that really has stuck with me. So, I've enjoyed reading some of her stuff, too.


Justin Donald: Well, I'll tell you what, it's great that you mentioned that. I had no clue you're going to mention that. I'm a huge Ayn Rand fan and the quote that I open my book up with, is this, it’s her quote, “Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”


Hans Box: That's great.


Justin Donald: I just think it is so powerful and that's how I wanted to open up my book because that's the truth, it's about you, it's about working on and growing and improving yourself, your skill set, your mindset, your peer group, your mentors, I mean, just being intentional. So, you couldn't have thrown out in my world, like a better offer. That's awesome.


Hans Box: Yeah, man, that was not planned at all.


Justin Donald: That’s great. So, Hans, thanks so much for joining today. I have had just a blast talking, as we always do, it's great. Before we started, I said, hey, you're like, well, what's it going to be like? And it's like, well, we're just going to talk and hang out as if no one else is around. Like this is a conversation the last time we went and met up at, what was that cool place over on South Congress?


Hans Box: Yeah, I don't even remember the name of it, it’s like a…


Justin Donald: Comet or something like that.


Hans Box: Yeah.


Justin Donald: And so, it's just like we're having a conversation there, grabbing some food, grabbing a drink, and I love that. So, thanks for showing up and offering so much value. Where can our listeners find out more about you, because you do syndicate deals and your deals are fantastic? You have an incredible track record. I'm a huge fan. When people ask me about you in the Mastermind, I'm like, Yeah, I mean, he's great. I endorse Hans Box and Doug Wilson and their team. So, where can people find out more?


Hans Box: Sure. And thanks for the kind words, Justin. My email is hbox@boxwilson.com and you can also just go to boxwilson.com and check us out. And we do syndications, but we're pretty conservative. We don't do a ton a year. We may do one or two a year depending on what we find, but if you're interested, just feel free to reach out and happy to chat about anything. And I love talking about passive investing. As you know, I've given talks on passive investing. So, it's kind of a fun area for me to talk about.


Justin Donald: Yeah, and you've given a talk, you actually gave a talk at our MasterClass. So, if you have any interest in learning more about that, we've got that at justindonald.com/masterclass and Hans did an unbelievable job and taught a ton and it was just fantastic content, so we appreciate it. Let's see, well, here's what I'd like to do. Do you have any last thoughts for our listeners?


Hans Box: Well, I think we covered most of everything. I think the biggest thing that people need to think about as they get involved in passive investing is to be patient. I meet a lot of new passive investors that are like, I can't find a deal. I can't find a sponsor, I want to put 50 grand here or 25 grand here and I can't find anybody to invest with or they just jump in the first deal that they see because they heard it was a good deal and had a good return. Be patient, it'll snowball, because if you lose, I don't know if your listeners have heard this example, but if you lose 50% of your principal on a deal, you have to make 100% return to get that money back. So, it's better not to lose money first and then find return after, so just be patient. Be patient and learn.


Justin Donald: That's great advice. Well, I want to end as I always end which is to take some form of action today towards your financial freedom and living the life that you truly desire on your terms. So, thank you so much for listening and we'll see you on the next episode.


Hans Box: Thanks Justin.


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