Entrepreneur | Part 1 – Real Estate Terms With Michael Burer

Audio Transcription

Get ready to enter the Thrivetime Show! We started from the bottom, now we’re here. We started from the bottom and we’ll show you how to get here. We started from the bottom, now we’re here. We started from the bottom, now we’re here. We started from the bottom, now we’re on the top. Teaching you the systems to hear what we got. Cullen Dixon’s on the hooks, I’ve written the books. He’s bringing some wisdom and the good looks. As a father of five, that’s where I’mma dive. So if you see my wife and kids, please tell them hi. It’s C and Z up on your radio. And now, 3, 2, 1, here we go. We started from the bottom, now we’re here. Started from the bottom, and that’s what we’re about to do. Hello, Thrive Nation. This is your humble host, Clay Clark. I’m here off the coast of San Diego at the Hotel Del. With Michael, there is no real estate topic to obscure a bureau talking about this little thing called the 1031 exchange. Now before you go freaking out, before you go, what is this? You want to make sure you understand. I’m going to read the definition and then he’s going to explain to us what it means in layman’s terms that I can get it. And if I can get it at a third grade level, I know you can get it. So here we go. The 1031 exchange. This is sort of a lengthy description. So I’m going to read it to you. Definition. Under the Section 1031 of the Internal Revenue Code, like-kind property used in a trade or business or held as an investment can be exchange tax deferred. Under a fully qualified Section 1031 exchange, real estate is traded for other like-kind property. All capital gains taxes are deferred until the newly acquired real estate is disposed of in a taxable transaction. The underlying philosophy behind the deferral of capital gains taxes is the taxation should not occur as long as the original investment remains in tax intact in the form of like kind real estate like kind refers to the real property as such, rather from the quality or quantity of property, blah, blah, blah, blah. What does this mean? It is a great thing, mainly found in real estate investment, that allows you to defer, not avoid, but defer the payment of taxes. So for example, you buy a building for $100,000. You want to, you sell it for $150,000, so you made $50,000. You could pay tax on that $50,000. Right now. Right now. Or, if you meet the requirements, and they’re very specific technical requirements, you could defer that tax and buy another building for $150,000 and avoid paying that tax at that time. Three odd questions I have about this. One, this allows you to get some financial momentum. You buy a property for $100,000, you sell it for $150,000. For somebody who’s watching this, you’re flipping houses. You buy one for a hundred, you sell it for a hundred and fifty. You keep the capital, you take money now, you buy another house for a hundred and fifty, you sell it for two hundred. You just keep doing that. Right? I mean, that’s the main reason why you’d want to do it, is to gain financial momentum. Yep. Now you don’t avoid the tax. Yeah, you still pay it. Now, the second thing is you never want to even attempt to do this sort of hoo-ha without the help of, what, like a CPA? A CPA or an attorney. Okay, an attorney or a CPA would help you through this. You don’t want to be just saying, well, I think I’ll 1031 exchange that. You really want to have a professional that helps you here? That’s right. Third is, how common is this? That depends on the real estate cycle and where you are in the real estate cycle, but it’s fairly common. With what you guys do and the acquisition of properties, is this common in your world? It is, I mean, you almost, you probably want to never, you’d almost want to do a 1031 exchange whenever possible, right? Not always. There’s a lot of factors that go into whether you would choose to do a 1031, the source of your equity, you know, but… What’s an example where you wouldn’t do a 1031? Well, if you think tax rates are at a favorable time, because you’re not avoiding the taxes, you’re just deferring them, so… So, the tax rate was really low at one given time. If you perceive the taxes, like a lot of people right now believe that taxes in America might go up. Right. So if you’re like, they’re going to go up in the future, if you go ahead and pay it now then we’re good later. Right. Or if you’re trying to create liquidity, maybe you’re pulling some money out of the real estate and you wanted the cash, then you’d have to pay the tax. Liquidity meaning? Liquidity meaning liquid investment of cash. So real estate’s not liquid, it’s tied up in a building. You know, I want to share my appreciation for you and I don’t want to get emotional. So I fight it back, I fight back the tears and I just read this. Don’t cry, I don’t want to cry, but you could end wars with how much appreciation I have for you being here today. Beautiful. All right, we’re here in sunny San Diego with Michael There Is No Real Estate topic, to obscure Burer, to talk about this beautiful topic called accumulated cost recovery. Michael, I’m going to kind of read you the definition, and I’d love to get some clarity and get some examples as to what this means. So here we go. The definition is the total cost recovery deductions are taken throughout the holding period of a property. What does that mean my friend? So basically if you own an asset you depreciate it over a set time usually the tax basis the tax period of time so total accumulated cost recovery would be the amount of deductions you’ve taken through that ownership period. Let me ask you this, just for people who are watching or maybe like that third grade mind like my own here, the word asset, when you say it’s an asset, that’s like a building you own? Yep. A property or something in real estate. Now talk about depreciation. What is this idea of depreciation all about? So depreciation is theoretically the asset would be worth less over time because it’s older, because it’s not up to the standards of current building standards. So over time, you would cost or expense that building rather than all at once. You buy it, it’s not worth zero, but over time, you would expense a portion of it. When does this term, accumulated cost recovery, typically come up? Like, when is it discussed? Or is it ever discussed in real estate? I don’t think it’s the most frequent term. Probably when you’re talking to your tax accountant. Okay, so really, and you want to limit the amount of time you talk to your tax accountant. So, Michael, I appreciate you being here. Can I get a boom? Woo-hoo. Boom. Boom. Boom. We are here in sunny San Diego with Michael. There is no real estate topic to obscure, Bure. I haven’t been outside for several years, and so my eyes cannot open out here. And I’m excited to be talking to you about active income. Active income. I’m going to read the definition, and I want to get an ample example that my mind can handle. So here we go. Active income. This includes income from salary, wages, tips, commissions, and activities in which the taxpayer materially participates. Michael, what are we talking about? What does that mean? So active income is when you’re working hard. This is if you’re getting a W-2, maybe you own a small business and you go there every day and you’re running it, that’s all active income. This is typically a tax term. Best maybe to understand it in contrast, which would be passive income. So if you invest money in the stock market, you get dividends, that would be passive income. You’re not working every day for that. So let’s say that I right now am a waiter and I’m thinking about buying a business or starting a business of some kind that can make money when I’m not working. Once it starts making money when I’m not physically… If I own a restaurant and other people are waiting the tables for me, in theory that can be passive. If I’m on the beach here in San Diego, and the business is making money without me, that can be considered passive? If you are the general manager, you’re responsible for overall for the whole thing, you’re still probably considered active from a tax standpoint. But the goal is to work hard, have a lot of active income, that you eventually put into passive income so you can sit on the beach. Okay, so the active income is kind of where we all start out, but you ultimately want to be, as a real estate guy, you want to make a lot of passive income. Yeah, so passive income in real estate terms, if somebody buys an apartment building and he comes to you and says, hey, we want to invest a hundred grand in this project, and you may go down once in a while and help him maintain the building, but for the most part, you’re not involved in the day-to-day managing leasing of the project, you would be considered a passive investor. And I want you to know, I sincerely am looking at you, although my eyes are not open. Hey, I appreciate you being here. Can I get a boom? Yeah. Boom. We are here in sunny San Diego with Michael. There is no real estate topic to obscure Bure. And we are talking about one topic that’s really just neat, kind of close and dear to my heart. It’s amortization. And amortization, I’m going to go ahead and read the definition, and I’d like you to provide us with an ample example that my mind can handle about what this means. So here we go. Amortization, the repayment of a loan principal through equal payments over a designated period of time consisting of both principal and interest and good times. Can you go ahead and describe what this means? So when you borrow money, amortization simply is the term that’s used to refer to paying that money back. So typically every payment that you make to your lender is going to include two components. Interest, which is their profit on the loan, and then the principal repayment on that is called amortization. So typically you’d have a loan maybe that amortizes over, it could be 10 years, it could be 30 years. Basically it’s that loan amount divided up over that period of time paid back monthly. And I think it’s important that the thrivers know what this is because if you buy a building, let’s say, for a million dollars for your business you’re gonna probably, after 15 years, pay for the thing twice. That would be due to the interest. Due to the interest. The principle is just paying that loan down. So it starts at a million, after a couple years now you owe maybe only $900,000 on it. The difference is due to the amortization, the principal you pay back. But if you’re not careful and you’re not aware of what this term means and how this all works, you might think, well I’d have that thing paid off in five years or six years, but really it might take 15 because you pay all that interest. Because you paid all the interest, right. To improve your cash flow, you may want to get an interest only loan that doesn’t have any amortization. So meaning, you borrowed a million dollars and that million dollars is not getting paid down, you’re just paying interest. There’s no amortization on that. You see this a lot Yeah amortization is an important factor in negotiating the loan terms What period of time is the loan going to be amortized over if at all? You negotiate the buying of selling of buildings all the time, don’t you I do What’s the biggest building that you’ve like this is sold like what’s the what’s the biggest you know? You know a hundred million couple hundred million really and when you’re in these discussions, you guys are negotiating about this kind of stuff? When you’re working on the financing of those properties, when you’re putting debt on them, amortization is an important term that you would consider. Okay. And these are terms, like if you’re watching this and you’re not familiar with these terms, the reason why you have to have these terms in your mind is because it’s really hard to have an intelligent conversation with somebody if you don’t know what these things mean. So this is great stuff to know here. And Michael, before we go, I just want to say, I couldn’t appreciate you anymore if I hired one of those really crafty, there’s a guy out there who’s doing the sandcastle, I don’t know if you can zoom in and see the guy, but he’s a sandcastle guy out there doing some sandcastle artwork. If I had just written your name, Michael Bure, B-U-R-E, with a sandcastle, that wouldn’t adequately show how much I appreciate you being here. I’m looking forward to seeing it. Hey, thank you. Boom. We are here with Michael, no topic, no real estate topic, it’s too obscure, Burer, talking about the annual percentage rate, otherwise known as APR. The people in the know, they’ll just call it APR. APR. If you’re really in the know, you might just call it like APR. If you’re really, I don’t know. All right, so now we’re going to go ahead and read the definition. I say we, I’m going to read the definition, and then I’d like for you to go and provide us with an ample example of what this means. So here we go. This is the true annual interest rate payable for a loan in one year taking account of all charges made to the borrower. This includes compound interest, discount points, commitment fees, and mortgage insurance premiums. This also takes into account the amount, the time at which the principal is repaid, especially when payments of principal are made in installments throughout the year. What? Can you give me an ample example? What does it mean? So this is a APR used to compare two different loans. You may have one lender say I’m gonna give you a great loan And it’s at 10% interest. Okay, and you may have another lender say I’m gonna give you a loan That’s 5% But you got to pay all these fees up front maybe an origination fee and then maybe you got to pay fees on the back End exit fees and so it’s difficult to compare the two loans what you’re really paying Yeah, basically an APR is a way of adding all those costs all together, the origination fee, exit fee, any other kind of fees, dividing it all by the term of the loan so you can annualize that interest rate and effectively compare two different loans that may have different costs. So if you’re talking to somebody, let’s say I’m a thriver and I’m trying to buy a building. And I’m trying to find financing and all this. And one guy is just giving me all these little fees, little like nickel and dime. Here’s a fee, there’s a fee. Can I just ask, then, hey, I want to see the APR? Is that a reasonable request? It is, especially for a consumer loan. I mean, definitely in residential loans. In commercial loans, APR isn’t as used or quoted as often. But you have to figure that out, don’t you? Yes, when you want to compare the effective cost between two different loans to evaluate which one’s better. As a CFO guy, do you do this often, where you have to add up all this stuff and figure out what it is? Yeah, we definitely, when we’re comparing two different loans, we would do this. We compare the costs. You don’t just kind of go, well, we’ll see. Sometimes we flip a coin. That’s all I thought in a good way. Awesome. Now, Michael, I was trying to think of a witty way to tell you how much I appreciate you. All I could say is this. I couldn’t appreciate. Actually, I appreciate the same level right now, that the desert appreciates the rain. That’s pretty good. Hey, thank you. Boom. Bop, bop, bop, bop, bop, bop, bop, bop, bop, bop, bop. We are here with Michael. There is really no real estate topic to obscure beer. And we are talking about appreciation potential. And really we could be longboarding, we could be swimming, we could be… We’re here. There’s a lot of things we could do. But we have chosen to be here. I appreciate you for being here, my friend. So here we go. I’m going to read the definition. And I’m excited to hear your ample examples. So here we go. Appreciation potential. The beautiful possibility or probability that a real estate investment will increase in value during the holding period. Can you just explain to us what that means, my friend? Well, appreciation is hopefully why you’re buying real estate. Appreciation refers to the increase in value in a building. So if you buy it for $100,000 and it increases to $150,000, you have $50,000 of appreciation. Appreciation potential refers to, maybe on the front end of the investments, what you think that that increase could be. Okay, so let me ask you. So if I’m a thriver and I have a business and I’ve been leasing for a while and I’m contemplating about whether, you know, should I buy it or should I continue leasing it? How does appreciation factor into that decision-making process? So when you do your cost-benefit or comparison between renting versus owning, one of the factors that would come into the own scenario would be your expectation of the increase in value that that piece of real estate would have over time. You could reasonably expect them to buy it for a million dollars and over time, due to the market and inflation, it’s going to be worth a million and a half. Do people ever buy properties, you were seeing commercial real estate where they buy a property and it actually depreciates over time? It certainly happens quite a bit, but no one buys real estate where they expect that to happen. Example, there are shopping centers I see that are always perpetually unleased or there is a shopping center that is in an area that is getting bad. Maybe it is an area that is kind of bad but it is getting worse. That kind of stuff would be depreciation, right? It would affect the value and make it worthless. And decline. Yep. Okay. Well, I don’t know if this is actually the definition of appreciation, but I feel like the definition of appreciation is just how I feel for you. That works. Thank you so much. All right. Boom. All right, we are here with Michael. There is no real estate topic to obscure beer in sunny San Diego. Look around, people. This is a beautiful place. No, no. We’ve chosen not to be out there, but right here talking about real estate for you to answer the questions that you need to know. And we’re going to be talking about assessed value. I shall read the definition. I want to get your ample example that my mind can handle about what this means. Here we go. I’m ready. Assessed value. The value of real property established by the tax assessor for the purpose of levying real estate taxes and supporting our incredible government who never spends more than they have. I like it. I don’t know who wrote that part, but talking about assessed value, what does that mean? Assessed value refers to, depending on the tax jurisdiction, how they determine the value of the property that they’re going to apply the tax rate to. So, in some tax jurisdictions, it could be the market value, it could be replacement cost value, but however in that jurisdiction, they determine the value of the building that they’re going to tax. Now, you guys have properties in like Hawaii and Phoenix, and let’s just say I’m in Hawaii. Do they ever, in Hawaii, try to assess the value of your property at more than what you think is reasonable to make you pay more taxes? And then you come back and you say, no, no, no. I want to pay less taxes so my building’s worth less. But then the next year, when you try to sell it, you realize you got it assessed too low. You’re trying to save taxes, so you try to push it to be assessed too low, and now you have to sell it at a lower price. Does this sort of stuff happen all the time? Well, it doesn’t affect how you’re going to sell it, but certainly, often as an owner of real estate, you would appeal the assessed value to try to bring the value down, and that can be independent maybe from your marketing efforts to sell it later for a higher price. As the chief financial officer of this real estate group here. How often do you challenge the assessed value of a property? I mean, does this happen on an annual basis? It all depends on the market and how it all depends on the specific tax jurisdiction and how they handle property taxes. But for example, in Texas, he would be appealing the properties every year based on how they do it. Just because it’s their method over there. They assess it at market each year. Versus California, it’s by statute more of a set through Prop 13. The increases are limited. And when you say Prop 13, what does that mean? Prop 13 is a California law that was passed in the 70s, a limited property tax increases, and so it’s taken a lot of the need out for tax appeals in California, unless you’re in a declining market. Okay. Okay. Now, Michael, I just want to share this, and I really want to tell you how much I appreciate you, but I don’t want to do it in a way where it seems like it’s contrived, or like I’ve sat down ahead of time and written something down. I just want you to know that I could not appreciate you anymore if I worked really hard. I appreciate it. Boom. All right. We are here with Michael, there is no real estate topic to obscure, Bure, the CFO of a very large real estate business. You have chosen to really just say, I don’t want to go to the beach, I don’t want to go on my longboard, I don’t want to go swimming, I don’t want to see a… Is there dolphins here? In the ocean. I don’t want to see a whale, I don’t want to do all the things I could be doing in San Diego. I’ve chosen to be here to talk about this topic. The average annual effective rate. I’m going to read the definition. I’d love if you could provide an ample example that my third grade mind could handle. Here we go. The average annual effective rent divided by the square footage. What does that mean? So that is used to compare your rent at a couple different locations. So one guy may say my rent here is a thousand dollars a month, over here it’s twelve hundred dollars a month. But how do you compare that? If you take your total cost of occupancy in that building, divide it by the square footage, you can get a rate per square foot, and then you can compare the cost in two different locations based on the relative size of each. So the equation is our program observer is taking notes feverishly. He’s got arthritis due to this fast typing. You’re saying the cost divided by the square footage? Yep. So you may have rent, you may, there may be a cost for operating expenses, you add all that up, you divide it by the square footage, that’s your total annual effective rate. You know, I wanted to show my appreciation for you and I was thinking about it, I’m like, I couldn’t possibly do it with, while still fitting it in within the viewable area of these cameras. Appreciate you being here. That’s useless. Boom. All right, we are here with Michael. There is no real estate topic. Too obscure, Burer, in sunny San Diego. I haven’t been outside in a decade or so, and so I can’t really open my eyes, so bear with me. I can see you. It looks like I can’t see you. But Michael, we were talking about balloon payment. I’m going to go ahead and read the definition, and then I would like to go ahead and have you provide an ample example so that the average thriver can know what you’re talking about. So balloon payment, this is the final payment of the balance due on a partially amortized loan. The word amortized snuck up on us there. What does this mean? What’s an ample example? So if you get a loan, it may have a repayment term over 30 years. So you’re going to pay back the principal or amount you borrowed over that 30-year period. But the loan term may be shorter, maybe it’s only 10 years. So at the end of that 10 years, you started with a million dollar loan, maybe you paid back principal a couple hundred thousand, now you owe 800,000. When that loan comes due at the end of the 10 years, you have a balloon payment or a payment of all the outstanding principal. That $800,000 is referred to the balloon payments. Do you see a lot of times where people don’t expect there to be a balloon payment, and they go, uh-oh, and they didn’t plan, and they go, uh-oh. You ever see a deal where you’re trying to like, you know, you’re working with somebody, they’re trying to close a deal, and they say, uh-oh, and they didn’t plan for it? You know, hopefully real estate investors know when they’re signing a loan, the term of the loan, and what’s outstanding. So it shouldn’t come up as a surprise, but drivers if you’re watching this you cannot be surprised with a million There’s I only mention this because I do know people who’ve been freaked out by this before so this is yeah This is a deal you got to be aware of this yep now Michael I don’t want the thrivers or you to feel like I have I have to write down on a piece of paper Witty ways to explain how much I appreciate you so this one is totally just off the top of my head I appreciate you in the same way that red hats appreciate the sun blocking ability of banana boat SPF 75. Awesome. I am joined today with Michael. There is no real estate topic to obscure beer. Talking about something that’s not funny, something that’s really not so much to be laughing about, but something that’s called bass. Not like bass, not like a base wars, but base in real estate terminology. So I’m going to go ahead and read the definition and I’d like for you to go ahead and explain an ample example of what this means in a way that my mind can handle. Got it. Here we go. Base. A base quoted dollar amount representing the rent or the rate or rent in dollars per square foot per year and typically referred to as the base rent. What does that mean? So base means the main rent. You may have one landlord that’s quoting you a $2 base rent. But on top of that there may be additional charges for operating expenses, for electricity, for janitorial. Those are additional expenses. Base rent just refers to the rent before any of those additional costs. How do people get this wrong? How do they get this confused? How do they look at it and they go, I thought it was this, but it was actually this. How does that happen? Well it’s important when you’re talking about rent to know what you’re comparing or what you’re talking about. Is it all inclusive rate or is this just the base rent and then there’s additional charges? So that’s the key factors when you’re comparing it to two different locations and how those additional costs are included or not. Now I don’t know a lot about real estate but I’m gonna tell you what I do know about. As a former DJ I know a lot about bass. I’ll tell you, the guy who played the bass line, and I’d like you, the program observer, to add this, it’s very important that Thrivers know this, this is going to be a task here, you need to know this. The guy who played the bass line for Rapper’s Delight, which was the first hip-hop R&B song to make it on the Top 40, 1978, Rapper’s Delight, I love that song. Doop doop doop doop doop doop doop doop doop, that guy’s name is Chip Sheeran, and Chip Sheeran is in the Rock and Roll Hall of Fame for his bass skill. So that’s bass. That’s bass. I like yours definition better. Boom. There you go. I’m dating myself. There you go. All right. We are here. We are joined with Michael. There is no real estate topic too obscure. And we’re talking about a topic that I know is close to your heart, basis. And I’m excited about it. So I’m going to go ahead and read the definition. And I’d like to get kind of an ample example as far as what you think that my mind can handle about what this means. So here we go. basis the total amount paid for a property including equity capital and the amount of debt incurred. What are you talking about? So basis is pretty simple. It’s simply a total amount you pay for the asset. So not how much money you put into the property. So say you buy something for a hundred thousand dollars. You put twenty thousand in, you get an eighty thousand dollar loan. It’s not the twenty thousand and it’s not the eighty thousand. It’s all of that combined. All hundred thousand is your total basis. Then maybe once you own the property, you do tenant improvements, you put another $10,000 into it, now your basis is $110,000. So the total cost of all the money that went into the property from whatever source is your basis. If you’re a small business owner, you’re trying to get a loan for, you know, to buy a building, is somebody gonna ask you, is somebody gonna ask you what basis is? Well, it’ll probably come up when you are gonna sell the asset and say, what is your basis? My basis is $110,000. You can sell it for $130,000. OK, I can generate a profit. I can get all my money out, repay my loan, and make a profit. So you’ll usually ask what your basis is. That’s kind of the time where you would typically hear this term introduced. Yes. OK. And Michael, I want you to know this. And last night, I was trying to go to sleep. And I’m like, should I go to sleep or should I come up with a great way to show you my appreciation? I decided to come up with a great way to show you my appreciation. So I wrote this little ditty for you. I appreciate you in the same way that the moon appreciates the Earth’s gravitational pull. Well said. Boom. We are joined here today with Michael. There is no real estate topic to obscure Bure. We are joined with the ambiance of Eddie’s Landscape. We’ve got mowers, we’ve got all sorts of stuff going on in the background. We have the ocean view. It’s hard to concentrate, but we’re choosing to do it to talk about break-even point. I’m gonna read the definition. I’d love for you to provide an ample example. Here we go. Got it. The stage at which an investment produces an income is just sufficient to cover recurring expenditure. For an investment in real property, the point at which gross income is equal to the normal operating expenses, including debt service. What are we talking about? Where your revenue equals your expenses. So where you don’t have to put any money in to keep it going, and there’s not enough excess revenue that you can’t take anything out. So it’s your default point. Do you feel like a lot of business owners who buy real estate don’t factor this in adequately? They make errors when figuring this out? Yeah, so when you’re buying a building, you may want to say, hey, this is my kind of fixed cost, so this is the minimum occupancy I need to cover my operating expenses and my debt service. That would be your break point or your break-even point. You are the CFO for a very large fund. You have a lot of different properties in Hawaii and Phoenix and where else? LA? Texas, California. And when you guys can get a good deal, when you can buy a property at a good deal, correct me if I’m wrong, but isn’t it usually when somebody maybe undershot what their break-even point is by a lot and they’re not really making any money with the property and now they want to need to sell it? Is that? Yeah, it’s important to know your break-even point if you’re determining your cash flow. How much am I going to have to invest over the long period until I get this asset stabilized. So I need to lease it up to a certain point. How hard is that going to be to get to the point where I’m not going to have to put additional capital in? Now, one thing that thrives is all you’re wondering, why do we have birds? Why do we have landscapers? Why do we have the ocean? We have tried to create an orchestra of ambience. This is San Diego in its rawest form. We want to bring that direct to you. Michael, I always want to tell you before we go, I appreciate you in the same way that that original instant oatmeal Appreciates a healthy not too much, but a healthy dose of brown sugar We are here today joined in sunny, San Diego with my beautiful friend Michael, there is no real estate topic to obscure here. And we are talking about break point. A topic I know that you’re excited about because you obviously come to this part of the website. So we’re going to get into it. I’m going to read the definition. He’s going to explain to me what it means. So here we go. The sales threshold over which percentage rent is due is calculated by dividing the annual basis of base rent by the negotiated percentage applied to tenant gross sales. Michael, what does this mean? So, typically found in a retail lease, so for a restaurant or a shopping, some kind of a shopping center type of lease, and for a tenant who, say they have $100,000 worth of revenue, over that certain point, over that break point, whatever the cutoff is, they would pay percentage rent or a percentage of their sales to the landlord. So in negotiating that, where that kicks in, is called the break point. I want to give you an example. I have a business I know about that it’s like a pub. They didn’t have a lot of money and they leased out the space and they said, hey, once we do more than a million a year of sales, we’re going to split some of the revenue with you, landlord, who’s given us a good deal. Is that a good example of a breakpoint? Exactly. So that pub would have a base rent amount where they pay no matter what, and then once their sales get to a certain point beyond that breakpoint, they would pay a portion of their revenue to the landlord. So if I’m a thriver watching this, and I’m thinking about leasing space, and I don’t have enough money to pay the monthly rent, can I go to the landlord and say, hey, I want to set up a breakpoint here. I want to say, once I bring in this much revenue, I’ll pay you a percentage of it? That’s right. Awesome. For any of the thrivers who are wondering, what’s that sound, that rumbling, that thing? That’s a landscaper. That’s somebody moving. That’s a seagull. That’s a boat. That’s waves. It’s the ambiance of San Diego. And really, I want to let you know this here, because this is something I’ve been cherishing and waiting to tell you. I appreciate you in the same way that a surfer appreciates a fresh coat of wax on that sweet, sweet board. Now that’s not funny to me, I just laugh because I’m shocked at how little you appreciate the words I just said. As long as it’s on the board. Boom. JT, do you know what time it is? 4.10. It’s TiVo time in Tulsa, Roseland, baby. Tim TiVo is coming to Tulsa, Oklahoma, June 27th and 28th. We’ve been doing business conferences here since 2005. I’ve been hosting business conferences since 2005. What year were you born? 1995. Dude, I’ve been hosting business conferences since you were 10 years old, but I’ve never had the two-time Heisman Award winning Tim Tebow come present. And a lot of people have followed Tim Tebow’s football career on the field and off the field. And off the field, the guy’s been just as successful as he has been on the field. Now the big question is, JT, how does he do it? Well, they’re going to have to come and find out, because I don’t know. Well, I’m just saying, Tim Tebow is going to teach us how he organizes his day, how he organizes his life, how he’s proactive with his faith, his family, his finances. He’s going to walk us through his mindset that he brings into the gym, into business. It is going to be a blasty blast in Tulsa, Russia. Also, this is the first Thrive Time Show event that we’ve had where we’re gonna have a man who has built a hundred million dollar net worth Wow. Who’ll be presenting. Now we’ve had a couple of presenters that have had a billion dollar net worth in some like a real estate sort of things. Yeah. But this is the first time we’ve had a guy who’s built a service business and he’s built over a hundred million dollar net worth in the service business. It’s the yacht driving, multi-state living guru of franchising. Peter Taunton will be in the house. This is the founder of Snap Fitness, the guy behind Nine Round Boxing. He’s going to be here in Tulsa, Russel, Oklahoma, June 27th and 28th. JT, why should everybody want to hear what Peter Taunton has to say? Oh, because he’s incredible. He’s just a fountain of knowledge. He is awesome. He has inspired me listening to him talk. Not only that, he also practices what he teaches. So he’s a real teacher. He’s not a fake teacher like business school teachers. So you’ve got to come learn from him. Also, let me tell you this, folks. I don’t want to get this wrong because if I get it wrong, someone’s going to say, you screwed that up, buddy. So Michael Levine, this is Michael Levine. He’s going to be coming. You say, who is Michael Levine? I don’t want to get this wrong. This is the PR consultant of choice for Michael Jackson, for Prince, for Nike, for Charlton Heston, for Nancy Kerrigan. Thirty-four Grammy Award winners, 43 New York Times bestselling authors he’s represented, including pretty much everybody you know who’s been a super celebrity. This is Michael Levine, a good friend of mine. He’s going to come and talk to you about personal branding and the mindset needed to be super successful. The lineup will continue to grow. We have hit Christian reporting artist Colton Dixon in the house. Now people say, Colton Dixon’s in the house? Yes! Colton Dixon’s in the house. So if you like Top 40 Christian music, Colton Dixon’s going to be in the house performing. The lineup will continue to grow each and every day. We’re going to add more and more speakers to this all-star lineup, but I encourage everybody out there today, get those tickets today. Go to Thrivetimeshow.com. Again, that’s Thrivetimeshow.com. And some people might be saying, well, how do I do it? What do I do? How does it work? You just go to Thrivetimeshow.com. Let’s go there now. We’re feeling the flow. We’re going to Thrivetimeshow.com. Thrivetimeshow.com. Again, you just go to Thrivetimeshow.com. You click on the Business Conferences button, and you click on the Request Tickets button right there. The way I do our conferences is we tell people it’s $250 to get a ticket or whatever price that you could afford. And the reason why I do that is I grew up without money. JT, you’re in the process of building a super successful company. Did you start out with a million dollars in the bank account? No, I did not. Nope, did not get any loans, nothing like that. Did not get an inheritance from parents or anything like that. I had to work for it and I am super grateful I came to a business conference. That’s actually how I met you, met Peter Taunton, I met all these people. So if you’re out there today and you want to come to our workshop, again, you just got to go to thrivetimeshow.com. You might say, well, when’s it going to be? June 27 and 28. You might say, well, who’s speaking? We already covered that. You might say, where is it going to be? It’s going to be in Tulsa, Russia, Oklahoma. I suppose it’s Tulsa, Russia. I’m really trying to rebrand Tulsa as Tulsa, Russia, sort of like the Jerusalem of America. But if you type in Thrivetimeshow in Jinx, you can get a sneak peek or a look at our office facility. This is what it looks like. This is where you’re headed. It’s going to be a blasty blast. You can look inside see the facility We’re going to have hundreds of entrepreneurs here. It is going to be packed now for this particular event folks The seating is always limited because my facility isn’t a limitless Convention Center you’re coming to my actual home office, and so it’s going to be packed So when June 27th and 28th who you you’re going to come who you I’m talking to you You can get your tickets right now at ThriveTimeShow.com. And again, you can name your price. We tell people it’s $250 or whatever price you can afford. And we do have some select VIP tickets, which gives you an access to meet some of the speakers and those sorts of things. And those tickets are $500. It’s a two-day interactive business workshop, over 20 hours of business training. We’re going to give you a copy of my newest book, The Millionaire’s Guide to Becoming Sustainably Rich. You’re going to leave with a workbook. You’re going to leave with everything you need to know to start and grow a super successful company. It’s practical, it’s actionable, and it’s TiVo time right here in Tulsa, Russia. Get those tickets today at Thrivetimeshow.com. Again, that’s Thrivetimeshow.com. Hello, I’m Michael Levine, and I’m talking to you right now from the center of Hollywood, California, over the last 35 years, 58 Academy Award winners, 34 Grammy Award winners, 43 New York Times bestsellers. I’ve represented a lot of major stars and I’ve worked with a lot of major companies and I think I’ve learned a few things about what makes them work and what makes them not work. Now, why would a man living in Hollywood, California, in the beautiful, sunny weather of LA, come to Tulsa? Because last year I did it, and it was damn exciting. Clay Clark has put together an exceptional presentation. Really life-changing. And I’m looking forward to seeing you then. I’m Michael Levine. I’ll see you in Tulsa. James, did I tell you my good friend John Lee Dumas is also joining us at the in-person, two-day interactive Thrive Time Show Business Workshop. That Tim Tebow and that Michael Levine will be at the… Have I told you this? You have not told me that. He’s coming all the way from Puerto Rico. This is John Lee Dumas, the host of the chart-topping EOFire.com podcast. He’s absolutely a living legend. This guy started a podcast after wrapping up his service in the United States military and he started recording this podcast daily in his home to the point where he started interviewing big time folks like Gary Vaynerchuk, like Tony Robbins, and he just kept interviewing bigger and bigger names, putting out shows day after day, and now he is the legendary host of the EO Fire podcast and he’s traveled all the way from Puerto Rico to Tulsa, Oklahoma to attend the in-person June 27th and 28th primetime show two-day interactive business workshop. If you’re out there today folks you’ve ever wanted to grow a podcast, a broadcast, you want to get in you want to improve your marketing, if you’ve ever wanted to improve your marketing, your branding, if you’ve ever wanted to increase your sales, you want to come to the two-day interactive June 27th and 28th primetime show business Thrive Time Show Business Workshop featuring Tim Tebow, Michael Levine, John Lee Dumas, and countless big time super successful entrepreneurs. It’s going to be life changing. Get your tickets right now at thrivetimeshow.com. James, what website is that? ThriveTimeshow.com. James, one more time before he leaves you. ThriveTimeshow.com. Even if I got three strikes, I’ma go for it. This moment, we own it. I’m not to be played with because it could get dangerous. See, these people I ride with, this moment, we own it. Thrive Time Show two-day interactive business workshops are the world’s highest rated and most reviewed business workshops because we teach you what you need to know to grow. You can learn the proven 13 point business system that Dr. Zellner and I have used over and over to start and grow successful companies. When we get into the specifics, the specific steps on what you need to do to optimize your website. We’re going to teach you how to fix your conversion rate. We’re going to teach you how to do a social media marketing campaign that works. How do you raise capital? How do you get a small business loan? We teach you everything you need to know here during a two-day, 15-hour workshop. It’s all here for you. You work every day in your business, but for two days you can escape and work on your business and build these proven systems so now you can have a successful company that will produce both the time freedom and the financial freedom that you deserve. You’re going to leave energized, motivated, but you’re also going to leave empowered. The reason why I built these workshops is because as an entrepreneur, I always wish that I had this. And because there wasn’t anything like this, I would go to these motivational seminars with no money down, real estate, Ponzi scheme, get motivated seminars, and they would never teach me anything. It was like you went there and you paid for the big chocolate Easter bunny, but inside of it, it was a hollow nothingness. And I wanted the knowledge, and they’re like, oh, but we’ll teach you the knowledge after our next workshop. And the great thing is we have nothing to upsell. At every workshop, we teach you what you need to know. There’s no one in the back of the room trying to sell you some next big get-rich-quick, walk-on-hot-coals product. It’s literally we teach you the brass tacks, the specific stuff that you need to know to learn how to start and grow a business. I encourage you to not believe what I’m saying, and I want you to Google the Z66 auto auction. I want you to Google elephant in the room. Look at Robert Zellner and Associates. Look them up and say, are they successful because they’re geniuses, or are they successful because they have a proven system? When you do that research, you will discover that the same systems that we use in our own business can be used in your business. Come to Tulsa, book a ticket, and I guarantee you it’s going to be the best business workshop ever and we’re going to give you your money back if you don’t love it. We’ve built this facility for you and we’re excited to see it. And now you may be thinking, what does it actually cost to attend an in-person two-day interactive Thrive Time Show business workshop? Well, good news, the tickets are $250 or whatever price that you can afford. What? Yes, they’re $250 or whatever price you can afford. I grew up without money and I know what it’s like to live without money. So if you’re out there today and you want to attend our in-person, two-day interactive business workshop, all you’ve got to do is go to Thrivetimeshow.com to request those tickets and if you can’t afford $250, we have scholarship pricing available to make it affordable for you. I learned at the Academy at Kings Point in New York, acta non verba. Watch what a person does, not what they say. Good morning, good morning, good morning. Harvard Keosak University Radio Show. Today I’m broadcasting from Phoenix, Arizona, not Scottsdale, Arizona. They’re close, but they’re completely different worlds. and of a special guest today. Definition of intelligence is if you agree with me, you’re intelligent. And so this gentleman is very intelligent. I’ve done this show before also, but very seldom do you find somebody who lines up on all counts. And so Mr. Clay Clark is a friend of a good friend, Eric, Eric Trump, but we’re also talking about money, bricks, and how screwed up the world can get in a few and a half hour. So Clay Clark is a very intelligent man, and there’s so many ways we could take this thing. But I thought since you and Eric are close, Trump, what were you saying about what Trump can’t – what Donald, who is my age, and I can say or cannot say – Well, first of all, I have to honor you, sir. I want to show you what I did to one of your books here. There’s a guy named Jeremy Thorn, who was my boss at the time. I was 19 years old, working at Faith Highway. I had a job at Applebee’s, Target, and DirecTV. And he said, have you read this book, Rich Dad, Poor Dad? And I said, no. And my father, may he rest in peace, he didn’t know these financial principles. So I started reading all of your books and really devouring your books. And I went from being an employee to self-employed to the business owner, to the investor. And I owe a lot of that to you. And I just wanted to take a moment to tell you, thank you so much for allowing me to achieve success. And I’ll tell you all about Eric Trump. I just wanna tell you, thank you, sir, for changing my life. Well, not only that, Clay, you know, thank you, but you’ve become an influencer. You know, more than anything else, you’ve evolved into an influencer where your word has more and more power. So that’s why I congratulate you on becoming. Because as you know, there’s a lot of fake influencers out there, or bad influencers. Anyway, I’m glad you and I agree so much, and thanks for reading my books. That’s the greatest thrill for me today. Not a thrill, but recognition is when people, young men especially, come up and say, I read your book, changing a life, I’m doing this, I’m doing this, I’m doing this I Learned at the Academy in Kings Point in New York Octa nonverba Watch what a person does not what they say Hey, I’m Ryan limpy. I’m originally from Tulsa born and raised here. I Went to a small private liberal arts college and got a degree in business, and I didn’t learn anything like they’re teaching here. I didn’t learn linear workflows. I learned stuff that I’m not using, and I haven’t been using for the last nine years. So what they’re teaching here is actually way better than what I got at business school. And I went what was actually ranked as a very good business school. The linear workflow, the linear workflow for us in getting everything out on paper and documented is really important. We have workflows that are kind of all over the place, so having linear workflow and seeing that mapped out on multiple different boards is pretty awesome. That’s really helpful for me. The atmosphere here is awesome. I definitely just stared at the walls figuring out how to make my facility look like this place. This place rocks. It’s invigorating. The walls are super, it’s just very cool. The atmosphere is cool. The people are nice. It’s a pretty cool place to be. Very good learning atmosphere. I literally want to model it and steal everything that’s here at this facility and basically create it just on our business side. Once I saw what they were doing, I knew I had to get here at the conference. This is probably the best conference or seminar I’ve ever been to in over 30 years of business. You’re not bored. You’re waiting to arrive the whole time. It’s not pushy. They don’t try to sell you a bunch of things. I was looking to learn how to just get control of my life, my schedule, and just get control of business. Planning your time, breaking it all down, making time for the F6 in your life, and just really implementing it and sticking with the program. It’s really lively. He’s pretty friendly, helpful, and very welcoming. I attended a conference a couple months back and it was really the best business conference I’ve ever attended. At the workshop I learned a lot about time management, really prioritizing what’s the most important. The biggest takeaways are you want to take a step-by-step approach to your business, whether it’s marketing, what are those three marketing tools that you want to use, to human resources. Some of the most successful people and successful businesses in this town, their owners were here today because they wanted to know more from Clay and I found that to be kind of fascinating. The most valuable thing that I’ve learned is diligence. That businesses don’t change overnight. It takes time and effort and you gotta go through the ups and downs of getting it to where you want to go. He actually gives you the roadmap out I was stuck didn’t know what to do and he gave me the roadmap out step by step. We’ve set up Systems in the business that make my life much easier Allow me some time freedom here. You can ask any question you want that guarantee. It’ll be answered This conference like motivate me and also give me a lot of knowledge Everybody It’s up to you to do it. Everybody can do these things. There’s stuff that everybody knows, but if you don’t do it, nobody else is going to do it for you. I can see the marketing working. It’s just an approach that makes sense. Probably the most notable thing is just the income increase that we’ve had. Everyone’s super fun and super motivating. I’ve been here before, but I’m back again because it motivated me. Your competition’s going to come eventually or try to pick up these tactics. So you better, if you don’t, somebody else will. I’m Rachel with Tip Top K9 and we just want to give a huge thank you to Clay and Vanessa Clark. Hey guys, I’m Ryan with Tip Top K9. Just want to say a big thank you to Thrive 15. Thank you to Make Your Life Epic. We love you guys, we appreciate you and really just appreciate how far you’ve taken us. This is our old house. Right, this is where we used to live a few years ago. This is our old neighborhood. See? It’s nice, right? So this is my old van and our old school marketing. And this is our old team. And by team, I mean it’s me and another guy. This is our new van with our new marketing and this is our new team. We went from four to 14 and I took this beautiful photo. We worked with several different business coaches in the past and they were all about helping Ryan sell better and just teaching sales, which is awesome, but Ryan is a really great salesman. So we didn’t need that. We needed somebody to help us get everything that was in his head out into systems, into manuals and scripts and actually build a team. So now that we have systems in place, we’ve gone from one to 10 locations in only a year. In October 2016, we grossed 13 grand for the whole month. Right now it’s 2018, the month of October. It’s only the 22nd. We’ve already grossed a little over 50 grand for the whole month and we still have time to go. We’re just thankful for you, thankful for Thrive and your mentorship and we’re really thankful that you guys have helped us to grow a business that we run now instead of the business running us. Just thank you, thank you, thank you, times a thousand. So we really just wanna thank you, Clay, and thank you, Vanessa, for everything you’ve done, everything you’ve helped us with. We love you guys. If you decide to not attend the Thrive Time Workshop, you’re missing out on a great opportunity. The atmosphere of today’s office is very lively. You can feel the energy as soon as you walk through the door, and it really got me and my team very excited. If you decide not to come, you’re missing out on an opportunity to grow your business, bottom line. Love the environment. I love the way that Clay presents and teaches. It’s a way that not only allows me to comprehend what’s going on, but he explains it in a way to where it just makes sense. The SEO optimization, branding, marketing. I’ve learned more in the last two days than I have the entire four years of college. The most valuable thing that I’ve learned, marketing is key, marketing is everything. Making sure that you’re branded accurately and clearly. How to grow a business using Google reviews and then just how to optimize our name through our website also. Helpful with a lot of marketing, search engine optimization, helping us really rank high in Google. The biggest thing I needed to learn was how to build my foundation, how to systemize everything and optimize everything, build my SEO. How to become more organized, more efficient. How to make sure the business is really there to serve me as opposed to me constantly being there for the business. New ways of advertising my business, as well as recruiting new employees. Group interviews, number one. Before we felt like we were held hostage by our employees. Group interviews has completely eliminated that because you’re able to really find the people that would really be the best fit. Hands-on how to hire people, how to deal with human resources, a lot about marketing, and overall just how to structure the business, how it works for me and also then how that can translate into working better for my clients. The most valuable thing I’ve learned here is time management. I like the one hour of doing your business. It’s real critical if I’m going to grow and change. Play really teaches you how to navigate through those things and not only find freedom, but find your purpose in your business and find the purposes for all those other people that directly affect your business as well. Everybody. Everybody. Everybody. Everyone. Everyone. Everyone needs to attend the conference because you get an opportunity to see that it’s real.