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Part 1: Using The OTHER Four Currencies in Real Estate Investing

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If you’ve ever felt like your lack of cash is holding you back in your investing efforts, this two-part episode series is for you. In this series, Jeff explains the concept of the five currencies we have at our disposal in real estate investing. While we are usually totally focused on the one currency we are most familiar with—the currency of money—there are actually four more non-cash currencies we can harness to buy rental properties. In Part 1, Jeff introduces the five currencies and helps you assess how much of each one you have to work with.

Episode Transcript

Have you ever felt like you wish you had more cash to work with in your real estate investing endeavors? And maybe even that you feel like your lack of cash is limiting the progress or the speed of the progress that you’d like to make? I’m going to go out on a limb and say probably the answer is yes, for you. I think the answer is yes, for most of us. It has definitely been the answer of yes, for me at points. But I want to talk with you today at the beginning here of a two part series that talks about all five currencies that we actually have to work with one is money, and the other four are not money. So we’re going to talk about how we can strategically think about in use the other four currencies, to make up for the fact that we might not have as much of the financial one as we want. So let’s cue the theme song we’ll jump right into part one of two of this important conversation about these five total currencies.

Welcome to racking up rentals, a show about how regular people, those of us without huge war chest of capital, or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting “We Buy Houses” signs are just looking for quote, motivated sellers to make lowball offers to. You see, we are people-oriented dealmakers, we sit down directly with sellers to work out Win-Win deals without agents or any other obstacles and buy properties nobody else even knows are for sale. I’m Jeff from a Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media. This show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.

Thanks for joining me for another episode of Racking up Rentals. Show Notes for this episode can be found at www.thoughtfulre.com/e130. Please do us a big favor by hitting the subscribe button on your podcast app, it really helps you make sure you don’t miss any shows and it helps other fellow Thoughtful Real Estate Entrepreneurs to find us onward with today’s episode.

So like I mentioned in the intro, I’m guessing if you were anything like me, and probably just about everybody else who’s listening to this podcast right now, you’ve probably felt at times like your available cash or your access to cash feels kind of limited, feels finite. You might even feel like a bottleneck that is keeping you from growing your portfolio in the pace, the rate, the style, that you want to. But I want to talk with you today about something that I’m going to put under the category of a brand new expression that I have invented here that you’re gonna hear a lot more about for me here in the near future. I call it the direct relationship capital method. What the direct relationship capital method is; it’s an approach to buying real estate that emphasizes forming and nurturing genuine relationships directly with the sellers of the properties you want to buy, not nurturing the relationship with the people who give you access to those sellers, but with the sellers themselves. This approach treats relationship itself as a valued and valuable currency. That helps you get deals done. And so that’s what we’re going to talk about today. So this is going to be the first part of a two part series. Overall, we’re going to talk about the five different types of currencies that you can use when you’re buying investment, real estate. And we’re going to focus on the currency of relationship. I’ll explain why as we get there. Because once you understand and appreciate these five currencies, then you can move beyond feeling like you just don’t have enough cash to buy rentals. Instead, you will see that there are other powerful resources that you do have available, and that you can use those to build a rental portfolio that will set you financially free. All right. So let’s jump right into this.

The first thing I feel like we have to do is simply identify the other four currencies, right? When we think about the resources, we need to buy rental properties. The first one we think about is money. It’s cash. So I don’t need to explain that one. Do you’re probably keenly aware of that one, but the truth is, throughout life, real estate and other parts of life as well. There are actually multiple types of currencies that we use and what is a currency means simply a medium of exchange, right? It’s something that two people agree that they both value. And every day we we use these currencies we we earn them, we spend them we save them in their various forms. So there’s five different currencies that we just need to first identify. So the first one, obviously, is financial currency, right? This can be cash, it could be the access to cash, it could be the ability to qualify for credit, I would call that a financial currency as well, right? So if you’ve got an 800 credit score, and you can enter, you know, $200,000, a year w two job, you can just waltz into a bank and get a loan. Those are forms of financial currency, as well as a big checking account itself, right. So in real estate terms, it’s the money that we’re going to use for a down payment, it’s, it’s our ability to get loans, it’s the money we’re going to use for repairs, reserves, or whatever. So money is our most recognized currency, right.

Here’s another one that we think about certainly a lot, that maybe in a slightly different way. And that’s time currency. Number two is time. Time is a funny currency. Because we all have exactly the same amount of it right? Not over the course of our lifetimes, we all live different lengths. But on a day to day, week to week, month to month basis, we all have exactly the same amount of this currency, there’s 24 hours in a day for you and for me, and for anybody else, there’s 365 days in a normal year. And that’s the same for all of us. So what matters, what changes is how much of that currency you’ve already allocated to other stuff, right. But depending on how much you’ve already allocated, you can trade your available time for the other stuff that you want in life, right. And we’ll come back and give a couple examples of that. But time is a currency that you think about a lot, probably think about your lack of time as well, in that case, but time is a currency that also has value. In real estate investing, we’ll take a look at that more in a few minutes.

The third currency is energy, you know, when you actually kind of, quote, do the work, you’re spending your energy currency, you could be physically building a home swinging a hammer, picking up two, two by fours, and doing physical work. Or you could be stuffing envelopes and doing the legwork to go find a deal perhaps that’s energy currency as well. And energy currency is needed. In all forms of real estate, right? Energy is a valuable currency. And it’s also a limited currency. Like time, it’s kind of similar to time, in the sense that it’s very finite, right? We can’t, we can’t pretend it’s 25 hours in a day. And we also can’t pretend that we can do more work than we can actually do. But it’s a valuable currency that is needed to do real estate deals.

The fourth currency is the currency of relationship. Maybe you’ve heard somebody say, or maybe you’ve even said something along the lines of, you know, I can totally get my car repaired a little cheaper elsewhere, but I really liked this mechanic, I trust him or her, and that is worth a lot to me. Or they might say something like, you know, whenever I need to have something fixed at home, the only person I call is Bob, you know, we’ve got a great long standing trusting relationship. And I’m loyal to, to Bob. So we’ve all said stuff like that. And that’s those are good examples of what we call relationship, currency. Because relationships, trust, rapport, or loyalty, those are valuable elements of currency that we convert into business all the time, it happens every day in in all of our lives, we convert relationship into business, one way or the other, directly or indirectly, on a big scale, or on a small scale. And the last of the five currencies, is the currency of expertise. You could call this knowledge or maybe even wisdom to kind of go a little bit further with it. But the fact is, of course, we all don’t know how to do everything, right. There are things that I can do. And there are things that I don’t know how to do. Whether it’s you know, like photography, it’s cardiac medicine, it’s baking pies. Everybody’s an expert in something, and most people are not an expert in most things, right. So when we need help, we need to turn to those who have expertise in that area. Right. So expertise is a highly, highly specialized and highly valued currency in our world, right. So what is the first takeaway I want you to have from this, I simply want you to kind of recognize that every day, all day long, whether we’re consciously thinking about it or not, every single one of us is constantly trading in all five currencies. Right?

Let me just give you a couple super basic relatable examples. You woke up one day and you went to work. What were you doing when you’re at work or you were trading your time currency, your expertise, currency and your effort currencies for financial currency, right? You’re like, well, I guess I’d rather have that paycheck, then I’d have the time and energy and I have this expertise I can give. So I’m going to trade those things for financial currency. And then I’ll take that financial currency, and I’m gonna go to the grocery store. I’m going to trade my financial currency for the time and effort currencies that I’d have to otherwise spend, if I were going to grow and cultivate my own food, right? Like, do I have to have money to eat? No, I don’t have to have money to eat. But I either have to have money to go buy the stuff that other people know how to grow. Or I better figure out how to grow my own vegetables or my own animals, or whatever it’s going to be right. So I’m trading financial currency for time and effort currency, or to give a totally different type of example, what if you go do somebody a favor, right? You’re gonna mow your neighbor’s lawn? And maybe it’s an elderly neighbor, who are going to go mow their lawn for them? What are you doing, you’re spending time and effort currency, or you’re trading time and effort, currency for relationship, currency, right, you’re giving time and you’re giving effort to get back a sense of relationship or a sense of bond or rapport, or trust, or maybe there’s some sort of a favor that person will do for you in the future, but you’re making deposits into that relationship bank account.

That’s how I want you to think about it, you know, I want you to picture you’ve got five little piggy banks sitting in front of you. And each one is labeled. Each of those five things, you’ve got a piggy bank labeled financial, one labeled relationship, one, they will time, one labeled energy and one labeled expertise. And you have all of these piggy banks to work with as you’re doing your real estate investing. But we don’t think about that, right? As a real estate investors, we think about one piggy bank, and pretty much one piggy bank only. And that’s the one labeled financial. But there are actually four other piggy banks, just sitting there with deposits you’ve made and have made over time, just waiting to be used. So I feel like the next step is now that we’ve acknowledged that there are these five currencies in these five piggy banks, we have to really kind of just step back and take inventory of how full is each of those piggy banks, right. So for each of us individually, those piggy banks are not going to all be exactly the same full, right? My expertise, piggy bank is not going to be exactly the same have the same balance, so to speak. As my effort piggy bank is not gonna have the same balance as my enter my financial piggy bank. So those are going to vary. For each of us, we’re each going to have different account balances. So we have to really kind of each individually take stock and figure out what is my account balance in each of these little piggy banks of currency? So you might ask yourself questions like this, let me go through currency by currency and just ask you a couple questions that speak to helping you understand how full that piggy bank is or how empty that piggy bank is, right? In terms of the financial piggy bank, you might ask yourself question like, do I have cash that I can put into a deal? Do I have the ability to qualify for and get a loan? Great. So you take a look at those questions, you start asking yourself other questions like that. And you can kind of look at your piggy bank and say, ‘all right, well, that piggy bank is, you know, maybe it’s 20% full, or maybe it’s 85% full.’ But you get to decide, like based on the answers to these kind of questions as you assess your level of currency, like about how full is that bank account for that particular currency? Let’s look at the next one time, you might ask yourself questions like this. Am I available, you know, like during the day, or in the evenings or weekends to do some of the legwork, that’s going to be required for real estate investing. You know, hunting down a deal, or meeting with sellers or repairing a property that you have bought or spending time on Project man or property management activities, things like that. You might ask yourself, Do I have a flexible schedule that allows me to do some investing activities when they come up? Right? Maybe I have a job that is very flexible. And in the middle of the day, if there’s a tenant issue or a seller meeting that pops up, I have the flexibility to go do that. So you ask yourself questions about time. And you say you know how awful is my time? Currency account? Is all my time allocated? Is it very rigid? Do I have flexibility? Do I have time and flexibility? How full do you feel your piggy bank account balance is for time?

Energy is the next piggy bank will kind of look at what’s your account balance like for energy, you know, you might ask yourself, Do I have the motivation and the drive to go do some of the legwork needed for real estate investing, am I up for learning the new things I need to learn? Do I have the physical energy and the strength to do things like, you know, swinging a hammer, building a new garage for this property, or something different like managing a marketing system for how we market to our sellers? So when you think about your energy that’s available, do you feel like Gosh, that’s yeah, I’ve got a big account balance and energy? Or do you feel like you have a lower account balance in energy? And what type of energy do you have the most of maybe you have intellectual energy. Maybe you have physical energy as well, two different types.

Let’s talk about relationships, currency. You might ask yourself questions like, do I have good people skills? Do people tell me that I’m easy to get along with when I walk into someone’s living room? Do they tend to feel comfortable with me and at ease with me? Or do they tend to feel you know, less? Am I a good listener? Am I a good conversationalist? When I have a conversation with people? Do I retain what they say? And do I understand them? Do I make them feel? Understood? Right? So these are the types of questions you might ask yourself, and then you say, well, here’s how full my relationship, currency piggy bank account balance really is. And then of course, the last one we do is expertise. And you might ask yourself here, do I have knowledge or experience in any of these areas of real estate investing, you know, whether it’s construction or property management or whatever, that would be helpful, getting deals done? Do I have any unique knowledge, maybe specific property types or locations, you know, maybe you have 10 years of experience managing self storage? Maybe you’ve lived in Boca Raton your whole life, and you know, the whole place like the back of your hand, and you could navigate it blindfolded? Do you have unique knowledge of specific areas, locations, types of properties, etc. So this is the type of activity you do, right, you get to make up your own questions.

As you go through each of these five currencies, you can kind of look at each one and say, All right, well, that piggy bank for, you know, effort. And energy, it’s pretty full, I’ve got a lot of that, maybe I feel a little bit, like I have less on the currency side, but I have a lot on the relationship side, a medium amount of the time side, or whatever the answer is for you, now is your chance to take stock of your own resources. And here’s what I want you to take away from this, I want you to remember that nobody has a full bank account of all five currency, all five currencies, nobody looks at this and says, Yep, I’ve got tons of money, tons of relationship, tons of time, tons of effort, tons of expertise, everybody’s gonna have a unique balance some things where they are stronger in certain areas and weaker in other areas. And that’s okay, because there’s two sides to this coin, no pun intended, maybe a little bit slightly intended with coin joke. First of all, if you are feeling like you have a low account balance in one area, there is absolutely 100% guaranteed, somebody who has a high bank account balance in that area. So just because you feel like you’re lacking in that area, doesn’t mean that it’s not possible to get those resources, because there’s somebody else who’s got a full account of those. And exactly the inverse is true, the opposite side of the coin. There’s always somebody whose piggy bank account balance in a certain area is low, and they need what you have, but yours is high, right? You look at this, and you say, well, that person’s got a lot of money, but they’ve got no relationship skills, I have got relationship skills, and I don’t have as much money. So they need me just as badly as I need them, right. So there’s always somebody who has what you wish you had. And there’s always somebody who wishes that they have what you actually have.

So that is the first part of our conversation about these five currencies that I wanted you to understand and just acknowledge, recognize what each of them is, and then start to take stock in what you feel like your account balances are with each of those. The second part, we’re going to pick up here and we’re gonna talk about understanding how those five currencies are actually needed in successful real estate investing. Then we’re going to talk about which of them I feel like you should double down on and spoiler alert because this is not a spoiler at all. You will not be even remotely surprised to hear that I think the one you should focus on is relationships. So we’ll talk about why that is the case. I’ll give you a hint. It’s the infinite resource. And then lastly, we’re going to talk about how you can then focus on Spending some of the relationship currency that you have used and we’ll put a nice bow on this, to kind of just recap why if you don’t have infinite financial currency, you’re still okay because you’ve got other currencies that you can tap into and harness if you have just the right approach. So that is it for today’s episode of Racking up Rentals. Hopefully this feels like an epic cliffhanger and you can’t wait for the next one to come out. That might be a little bit of an exaggeration, but I hope you’re enjoying this and I hope you’re excited to pick up the conversation next time. Like I am.

Again, show notes for today’s episode our thoughtfulre.com/e130. Please do us a big favor by hitting the subscribe button in the podcast app and rate and review the show. Did you know we have a Facebook group for thoughtful real estate entrepreneurs too? It’s called Rental Portfolio Wealth Builders. We’d love to have you join us over there. Just go to group.thoughtfulre.com and the magic of the internet will take you right to that page and you can hit the Join button. If you liked this episode, please take a screenshot and post that to Instagram and tag us we are @thoughtfulrealestate.

I will see you in the next episode. Until then. This is Jeff from the thoughtful real estate entrepreneur signing off.

Thanks for listening to Racking Up Rentals where we build long term wealth by being a win-win deal makers. Remember solve the person to unlock the deal and solve the financing to unlock the profits.

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