Chris Naugle (3:06)
That’s a tall feat because we don’t have mountains. We have hills, but I was determined and during that I needed money to travel out to New Hampshire to Vermont and the whole eastern seaboard is where all the snowboard action was happening back in those early 90s. So, the clothing line which was called PHAT Clothing Company, PHAT, started in 1992 in mom’s basement. Well, a year later, after starting that I was traveling around selling the clothes to all these snowboard skateboard shops. And I actually started building a brand I started getting it distributed out there and I was doing pretty well. By 17, I had three seamstresses working, I had clothes and all these different shops and my next big dream came said, You know what, if I’ve got this clothing line, I need my own shop. All these snowboarders that own the shops, they seemed to me they had the life. They’d work in their shop, they’d go ride in the afternoon, it was just kind of the lifestyle business.

Chris Naugle (3:54)
So I started started out on the journey to take Phat Clothing Company and turn it into Phat Man Board Shops. But the only thing that stopped me there is I needed 70 grand. 70,000 bucks was what I needed to open this store. And I remember I’m 17 years old. So I started going around and asking everybody for money. And I was asking, Hey, can I borrow money? Hey, can I borrow money? I go to banks asking him if I could borrow money and I heard, No. absolutely not. Heck no, to the point where I almost gave up. And my mom watched this whole thing. Now, bear in mind, my mother never followed her dreams. She always focused on you know, making me live mine helping me dream big. And she said, You know what? I can’t let you not follow this dream.

Chris Naugle (4:31)
So she did what I think looking back was a really stupid thing. Mom, the only thing she had was the house she got in the divorce. And she put her house up on the line as collateral so that I could get a loan from the bank to open the skateboard shop which is what Mom puts the house the only thing they have upon the line so the punk snowboard skateboard kid and chase their dreams. So mom did that. And at that moment, something switched with me. I had to all of a sudden learn that if I fail in business, I lose mom’s house. So that’s where Phat Man Board Shops started. 1994, my first retail shop, that’s kind of what happened, it was a massive dream.

Chris Naugle (5:07)
So fast forward all the way up to the early 2000s. I become a pro snowboarder, I had four shops going. I mean, it would seem that I had a perfect life going and I’d never seen a recession but in the early 2000s the.com crash, I saw my first recession when the planes hit the towers. And at that point, I realized, oh, my gosh, this isn’t working. I can’t afford all this because I was highly leveraged. And I had to get a job that landed me in the financial services world. So in the early 2000s, I became a financial advisor, which was then supposed to just be a temporary thing just to get me through these hard times, but ended up loving it.

Chris Naugle (5:39)
And in that journey of kind of transitioning from being the guy, the snowboarder, the, you know, everything in the shop. Now listen, I’m wearing suits. And I wasn’t working in my shops anymore. But I learned how to work on the business, not in it. And I went on to be one of the top financial advisors at the firms I was at things were going so good that all the way up to 2008. I was one of the top advisors, it’s crushing it was making a ton of money. I’d watched a TV show on one of the national networks about flipping houses.

Chris Naugle (6:05)
So in 2006, I said, What the heck, hell’s money let’s flip a house because in 23 minutes, you can flip a house, right? So I flipped my first house. It was a complete disaster. And then I did another one. And then by 2008, I was absolutely crushing it, I decided, now’s my chance, I’m going to do something big. My lease was coming due on my main store and I, I bought this dilapidated Paint Shop two buildings down. And my dream was to take this dilapidated paint shop and turned it into a three unit strip mall, where my tenants would pay all the rent and all the mortgage, and I would pretty much have my shop there for free. It’s a grand idea, actually brilliant idea. Why pay somebody else when you can pay yourself. And what ended up happening is you know what happened?

Chris Naugle (6:46)
This is 2008. Right? I borrowed money from a hard money lender had never borrowed hard money before. I had no experience with it. I got into it. And all of a sudden, the 2008 great recession. And it brought me to my knees. It literally hit me like a Mack truck hit me at full steam had. And I got to the point where I was one payment away from being completely bankrupt. And I remember at that point, I went home to my girlfriend who had just moved into my house, that beautiful girl that moved in and I said you know sweetie, I need your help. I need your help paying the mortgage, I need your help paying them utilities. And my friend Keith is going to move into that bedroom and my friend Jessica is going to move into that bedroom because I can’t make it.

Chris Naugle (7:20)
Now I knew I had a 50/50 shot. She’s either gonna walk out the door, or she was going to stand up and help me and well, I guess she kind of liked me because she’s ended up marrying me and now we have our first child who’s now 10 weeks old, I believe. But anyway, got through that period barely and from 2009 to 2014, I went back on this journey of buying more real estate and I bought properties pennies on the dollar. And I got a 36 units by 2014, which would seem like I’m back where I was because I was pro snowboarder, I had sold the retail shops up to this point. And that was a financial advisor doing really well. And in 14, I learned probably one of the most pivotal things in my life. I learned what failure really was.

Chris Naugle (7:58)
Now I’d failed a couple times. But now I really learned it because the bank, who was borrowing money from all the sudden decided to freeze all my lines of credit. At the end of the year, you got to report to the banks, you got to show them here’s what I have, and everything else and all the reporting. And when they got my reports, they basically saw that I didn’t fit the little square box, the debt to income ratio, they froze my lines. And then they ended up calling a couple of my mortgages. So here I was, you know, I lost it all in 2008 made it all back by 14. And now I had to sell all the properties, all 36 units had to be sold. The dream house that Lorrisa and I, Lorissa is my wife, that had to be sold. And things got so bad. I literally had to take a month long backpack trip to Thailand just to get things straight in my head in my heart.

Chris Naugle (8:41)
And at that point, I came back and I was so devastated by what had happened. I was living paycheck to paycheck, I was over leveraged under knowledge. And I remember I got a postcard in the mail, you probably got these postcard to come to a three day seminar to learn how to flip houses. Now I didn’t go to this seminar to learn how to flip houses. I went because I had nothing to lose. And by going I had an iPod Shuffle to game because that’s what they’re giving you for going. So I went there and I was you know nothing I want to really learn. So I was just so negative at that point, blaming everything.

Chris Naugle (9:10)
But two guys got up on the stage, Greg and Mike, I’ll never forget these two people. And they started talking about how they use money in real estate, and the different things they were doing, how they were getting money for their deals. And Greg was the bank and Mike he had a show on A&E. And all the sudden in my mind, I’m like wait a second, every single thing they’re doing in real estate in with money is the complete opposite of everything I’ve been taught to do. And remember I’m a high level financial adviser. Everything I’m taught to do with money is the opposite of what these guys are doing.

Chris Naugle (9:38)
So at that point, I changed everything I was doing. I started following them around I rack up all my credit cards, get mentored by them to learn from them. Greg is now one of my business partners and he taught me one of the most pivotal things. He always said this, he says the ultimate in real estate is being the bank. Now, Greg had flipped 1000s of properties, apartments and hotels and everything and all the sudden he says to me, the ultimate in this business is being the bank, in other words, lending to people like me, and you lent me a lot of money.

Chris Naugle (10:06)
At that point, my entire life changed because what I started doing in 2014 is following around multimillionaires and billionaires to learn the secrets of the wealthy to learn what is it, the wealthy do with money, that we, are not taught about money. And that brings me to where we’re at now. So yeah, that’s the story. So it was a little long.

Robert Leonard (10:24)
It’s a great story. And there’s so many different things in there that I want to dive into, we’ll talk about all the different things that you learned from following those guys around what some of the misconceptions are in real estate that you had, and that you learned. So we’ll talk about that. And I want to talk about how you saw 2000 and 2008, different how are those two time periods different? Cause a lot of times people think they’re similar, but it sounds like they might have been a little bit different for you. So what was that experience like? And how are they different.

Chris Naugle (10:48)
So 2003 was more of a delayed recession, it hit but it just was like a prolonged multi year recession was like that slow burn that slow pain by 2008 was just boom, and it happened. And it crashed. And then it kind of rebounded a V shaped recession. But 2008 was devastating compared to 2000, the early 2000’s dot com crash because 2008 hit real estate, it was a real estate crash, a bank crash. So it pretty much hit everything that real estate investors are doing. Early 2000s was a tech boom, it was a tech bust. So it really hit technology, but then it trickled through the entire economy. They’re totally different. And if you look at where we’re at now in 2020, and you try to go back in time and figure out what is 2020 going to mimic 2008.

Chris Naugle (11:29)
Is it gonna mimic the early 2000s? I’d have to say, it’s probably going to be more of that long, slow burn like what we had in the early 2000s. Because what just happened now, the damage that’s done, we haven’t even seen. Stimulus just like in 2008 brought everything back. And now everybody thinks things aren’t going bad things are getting better, when they’re really not the underlying problems are still there. Well, that’s exactly what happened in 2003. You know what happened. And the underlying problems were still there, which prolonged it. 2008 was, it hit, it hit really hard, people felt the pain, the suffering and lost a lot. But then it rebounded relatively quick. And when we kind of had a straight line up from 2009, straight through today. Well, so March, I should say.

Robert Leonard (12:10)
You also mentioned that some of your loans are recalled by the bank, walk us through the details of that a little bit. Some people listening to the show might not be familiar with what that means. So tell us a bit about that. And maybe why they did that. And you talked about not fitting in the box? What were the specific things that made it so the bank wanted to freeze those lines of credit or even recall the loans?

Chris Naugle (12:29)
That’s a great question. And that’s a really important thing that people can learn from. What I didn’t know is when I was doing this in 2009, when I was taking mortgages out, I was borrowing mortgages, I was taking mortgages in my personal name. Now why would I do that? Well, number one, the interest rate was lower than the commercial lines. And number two, that’s what my bank mortgage broker was telling me to do is like, well, it’s a lower interest rate. And we can get a longer duration on these properties as well, that makes all the sense in the world, they never tell you that you are going to hit what I call the financial wall. If you do that.

Chris Naugle (12:58)
You see banks have metrics that they use called debt to income ratios, and I teach this, but essentially, your income and your expenses are going to play into how much the bank will lend you if you’re borrowing personally like I was. So in doing that I just kept buying and buying and buying and everything seemed great. They just kept giving me mortgages, but then all of a sudden, my percentage fell out. And even though all these properties were rentals that I own, they didn’t factor in 100% of the rent like I did, I would say, Alright, I got this rental, this eight unit and it’s cash producing this. So I figured they just use the rent roll.

Chris Naugle (13:28)
Well, they didn’t they use 70 to 75% of the rents. So while I kept doing this, even though my income was good, remember, my expenses go up with every property I buy. And because they’re taken all the expenses, but not all the income. No matter how you do this. Personal, you can borrow essentially 10 loans, that’s about what you’re going to get to, but you’ll never hit it, the math won’t work unless you’re extremely wealthy, you’ll never get to 10 because you’ll hit that debt to income ratio limit, and then the bank will cut you off. So what I should have been doing what I learned after the fact after I lost all 36 units, which I wish I had today.

Chris Naugle (14:03)
I learned that I should have been borrowing commercial, I should have been using my LLC, borrowing in the LLC name and then you know, even if I had to personally guarantee it if I get it right, number one, none of those mortgages like today we have almost 70 mortgages in our LLCs names, 70. How can you get 70? Before I couldn’t even get up to like seven? Well the answer is commercial mortgages don’t report on my personal credit score personal mortgages do, therefore the metrics of how it’s all calculated is completely different.

Chris Naugle (14:30)
So if you want to scale, always do commercial loans in your business name. Try to do non recourse but most people are going to have to personally guarantee those loans it was it was something I wish I just wish I had learned back then but you know what, they don’t teach this stuff. They don’t teach it until it’s too late.

Robert Leonard (14:45)
And that’s why we’re here talking about it on the podcast so everybody can learn it because like you said, you’re not gonna be taught this in school. You’re not gonna be taught this in a lot of other places. So you’re gonna tune into resources like this podcast to learn it. So, what is non recourse and recourse loans what are the difference there?

Chris Naugle (15:00)
So non recourse basically, you’re not personally backing that loan, the strength of the company and the strength of the project is what supporting the loan. Now a recourse loan, you’re in as much in the deal as the property is. So they’ll go after you personally and they’ll crush your credit. They’ll take whatever resources and assets that you have that you allow them to take. Now you can control this, if you learn how to protect your assets, if you learn how to do that, you won’t have that much at risk. But most people, when they get into real estate, they missed the most valuable step. And that is that education step.

Chris Naugle (15:28)
That’s what I did in 14, I got educated, I learned from some of the best in the business. But prior to that, I just I said, Well, why would I pay somebody to teach me how to do this when I can just read a book or read Rich Dad, Poor Dad, and all of a sudden, I know what I need to know, I just dove in what so many people do that. And you know what the mistakes you will make will cost you double, triple, 10x, what it would cost you to just get a coach a mentor and learn the right way, learn from other people’s failures. So that’s what I didn’t know, recourse versus non recourse. And even today, you know, it’s very difficult to get banks to want to give you non recourse loans, if you’re not really big, and you don’t have a lot of commercial credit.

Chris Naugle (16:04)
But it’s not impossible, you just have to start asking the right questions, interviewing banks, instead of just going to your regular bank, go to community banks, small local community banks that actually care about you, because it’s a relationship business. And we’re going to talk I think a lot about the relationship side of this business. But many people, they just go to the bank, because they’re just used to going to it. Well, if it’s a big commercial bank, you’re just a number, you’re not a relationship with that bank, you’re just a number. So take that and build relationships with smaller community banks that care about you care about your business, and care about your projects.

Robert Leonard (16:37)
How has your experience, all of these experiences that we just talked about with debt and recourse and non recourse loans, How has that changed your philosophy around debt? Has it not necessarily tactically, you know, whether you’re using commercial or personal deb., But as it changed how you approach how much debt you’re going to have, how leveraged you’re going to be things like that? there’s been a lot of talk about whether somebody should be starting to pay back a lot of their debt given where we might be in the market, or maybe just continue to be leveraged. So has it changed how you approach having debt on your properties?

Chris Naugle (17:05)
Yeah, 100%. But I mean, let’s go back to the beginning of your mindset on how you think about debt, we always were brought up to think that and liabilities was a bad thing. And you know, I know most people that get into real estate, they’ve read the book, Rich Dad, Poor Dad, and in that book, it teaches you there’s good debt, and there’s bad debt and good debt is debt that pays you. So now if we would just focus on debts, that is good debt rental properties that pay you passive income on a monthly basis, in excess of what your expenses are, that is the good debt, but you’re getting into leverage.

Chris Naugle (17:33)
So leverage is a huge part of scaling a real estate business, I wouldn’t be where I’m at today, if I didn’t understand leverage, but you also leverage is a double edged sword, to be very careful with it, you can over leverage very easily. And I can tell you right now, and I’m not going to say much about this, I know a lot of real estate investors that are in a lot of trouble. They’re way over leveraged, they weren’t careful, they just thought the gravy train was never going to end. How I’ve always run my practice is I’ve always, I used to leverage up to 80%. Now I’m only going 70%. So I always want to keep buffer 20-30%, which you can usually pick up like, if I had 80% leverage back then the appreciation is probably brought me closer to that 70% mark now.

Chris Naugle (18:11)
So I only want to leverage up to 70%. So if there is a follow up, which indeed there will be that 70%, you know, that I that I’m leveraged up to, I’ve got a 30% buffer, this is going to carry me and protect me. The other thing too, that’s important is a lot of people don’t learn from the past. So let’s kind of talk again about leverage. A lot of people in 2008-9 learned a hard lesson when they were living in working off of their lines of credit, California, let’s just pick on that they had tons of equity in their houses, you’d hear people were multimillionaires because of the equity in their house. And then they had these home equity lines of credit and like, well, I’ve got all this money in my home equity line 2008-9, real estate values plummet the bank, just like they did with me, one letter, one phone call one decision, shut your line of credit off, shut or reduce your line of credit.

Chris Naugle (18:57)
Now that line of credit, which is what you needed to survive what you needed to scale your business, what you needed to run your business is now not in your control anymore. The biggest thing is people don’t realize this, you are not in control of your money, you have not been taught to be in control of your money in those lines of credit. And believe me, I learned this because I was there and I had to learn from wealthy people what to do. So right now here we are 2020, What is one of the first things I did when the country shut down? The first thing I did, I went to all my lines of credit, every single one of them and most people are gonna think I’m crazy.

Chris Naugle (19:28)
When I say this, I maxed them all out, I took every penny from every one of those lines of credit. Why? Because that’s what the wealthy people were doing. That’s what all my wealthy multi millionaire and billionaire friends were doing. They were taking all their lines of credit. Now these people didn’t need money, but you know what they understand. They understand how to be in control of their money, not out of control of their money. So by taking all that money out of your lines of credit, and then once you get that money, don’t just put it in your bank account and leave it sit there because your bank accounts not in your control. It’s really not.

Chris Naugle (19:56)
So what we did is we took all those lines and we shuffled them, you know The old Cup game you put something you’ve seen the magic tricks with a cup game? Well, not that one, not that one. Well, that’s what we did. We took all these lines, and we move them around to different banks, we also deposit a ton of money. So we don’t use banks, like most people do. That’s not where we hold our wealth. We hold most of our wealth in mutually owned giant insurance companies. Why? Well, because that’s what I learned. I learned that the wealthy don’t keep their money in banks, because they don’t trust them. So when we diversified all this money from these lines, we shuffled it.

Chris Naugle (20:26)
We put it in community banks and credit unions we have right now, you’re gonna think I’m crazy. 29 different bank accounts, not including the accounts that haven’t mutually owned insurance companies. Why would I want that many? Well, because if anything ever falls out, if 2021 Turns out, like I think it’s going to, and I need money, and I need liquidity, because cash will be king. When everything falls apart, people get scared. Well, that’s when you got to get creative. Warren Buffett says, Be Greedy, when others are fearful and be fearful, when others are greedy. I’m really fearful right now. I’m hoarding cash, and I’m shuffling this money around, when it all happens, and I need capital, I just go and I just do a day trip to all these banks, and I just take all my money out.

Chris Naugle (21:05)
And I’m never gonna really have a problem or I walk into a bank and I go to take my money out. And the bank says you can’t take all your money, we need a couple days, or we can only give you a three or five grand because I’ve got it shuffled around, and mutual insurance companies, I just click a button and the money’s in my account. So these are just some of the lessons that I’ve learned. Don’t ever think you’re in control of those lines of credit, because the bank at any time can shut them off. So if you want to be in control, well take the control and do something with that. But then comes the second part. When I take these lines, the bank starts charging interest.

Chris Naugle (21:34)
And a lot of people would say yeah, but now you’re paying all this interest on this money. Well, first off, I understand how to move money. And that’s the most important thing. So first, I put it in these accounts. But from those accounts, I move it, see money is nothing more than a raging river, you have to keep your money moving like a raging river. And when you have more, your river gets wider when you have last year river contracts. But one thing that happens from time to time is your money finds its way off one of those little creeks off that river, and it ends in a stagnant pond. And that stagnant pond, if you think about a fish in a stagnant pond, would you want to eat it? I wouldn’t. I’d rather eat the fish in the raging river.

Chris Naugle (22:08)
But the stagnant pond is full death. And it’s just there’s nothing good in there. But what we’ve really been taught our whole lives with money is to do nothing, but leave our money set. We don’t know how to move our money because we’re not taught to we’ve been taught to give up control to everybody else. We give money to financial institutions, we give money to advisors like I used to be I was an advisor for over 16 years, believe me, I know this from the inside, we would tell people that money was complicated.

Chris Naugle (22:32)
And money can be complicated, but we’d make it extra complicated. So people needed us, and people would then give us control of their money. And that’s how we made money. But they could have just kept control their money and learned a few things to keep their money moving. And that’s kind of what I do today, I really just teach people how to, how to move their money, how to be in control of their money. And these are just a couple of the little things that I picked up along the way.

Robert Leonard (22:54)
It’s really interesting that you talk about how you maxed out those lines of credit, because that’s what a lot of major corporations did. We’ll just take Boeing, for example. And we’re talking about real estate here. But on my other show Millennial Investing, we talk a lot about investing in stocks. And that’s what you saw Boeing do, as soon as this happened, they knew that they were probably going to have trouble, you know, given everything that’s going on with their, their airplanes and aircraft right now, in new, they’re probably gonna have issues with their lines of credit anyway, so they went out and they max their entire line of credit.

Robert Leonard (23:19)
And everybody started panicking, like what’s going on with Boeing, and they’re probably just doing the same thing you did is just trying to maintain that liquidity. And there’s a lot of other companies that did the exact same thing, because of the exact same strategy that you said. And he mentioned Robert Kiyosaki saying that debt is evil unless it pays for itself. And that’s exactly I had the opportunity to meet with him.

Robert Leonard (23:35)
And that’s exactly what he told me to his he said, If you just say debt is evil, then I would have a lot of a lot of evil because I have a lot of debt. But the good thing is that all my apartment buildings and all my rentals actually pay for that debt. So I don’t consider it that way. He said, the bad evil debt is your student loans, your credit cards, your auto loans, just things like that, that aren’t actually providing any income to you. So that piece was really important as well.

Chris Naugle (23:56)
And it’s in it’s important to Boeing like there’s an important lesson there. Boeing didn’t need the money, like you’re saying they went out and they took all their lines, they also did a huge a massive bond offering, why would a company that doesn’t need cash, go out and raise more cash through a bond offering, which means they now have to pay the bondholders interest. Well, the answer is, is they knew something was coming, they knew it was going to be bad, and they needed cash to be ready. Now Boeing actually is a very strong company, they’re even stronger today give it by making that decision.

Chris Naugle (24:25)
When I tell people what I did. With all my lines of credit, the first thing they say is, oh, how much interest are you paying? And you know what I say to him? I see. See, that’s the biggest problem. You think that cost is the number one thing but cost is only an issue in the absence of value. So let me ask somebody a question. If cost is what you’re so concerned with, and you just leave your money in your line, lines of credit and then the bank freezes your line, What value did you just give up? What is those those opportunities that you now have to pass on when your neighbor comes to you and says, I’m going to lose my house, Do you want to buy it? I just need to walk away I figured I’d ask you and you’re like, Darn it, if I would only take it that money out of the line before they froze it, I’m sorry.

Chris Naugle (25:02)
Now you have to pass on that opportunity. See, when I took the money? Yes, there’s a cost to that. But that cost is only an issue. If there isn’t value. Well, the value is the opportunities that are going to start presenting themselves, even though they haven’t really yet. You know, there’s no opportunities in the stock market. I bought Tesla at 415. When the market tanked, that was an opportunity, but I sold it. And people are like, Oh, my God, you sold Tesla. Look, I made 105% In a very short period of time, of course, I sold it. Because Warren Buffett, if you can follow anyone I know this is real estate. But listen, real estate money, it starts with money, and it ends with money.

Chris Naugle (25:35)
Real estate is in the middle. In real estate is the component of what you can do when you understand money. Without money. Real Estate isn’t gonna exist for you. So we have to understand money to actually understand real estate and how to scale a real estate business. And Warren Buffett says buy low, sell high and don’t lose money. But that don’t lose money thing is kind of like that Family Guy episode, you know, where he’s in Bed, Bath and Beyond? You understand bed and bath. But what is this beyond thing? Well, it’s kind of like Warren Buffett’s buy low sell high, we understand that. But how do you not lose money?

Chris Naugle (26:04)
Simple, follow one and two, I bought Tesla at 415 when in March when the market tanked. Tesla’s a great company and I knew it was and I sold Tesla before it hit 1000. Because I hit my number. I had an exit, and that was high. Now, is it gone higher? Absolutely. Do I ever sit back and say, Boy, I should have held on to Tesla? Absolutely not. You have to have rules.

Chris Naugle (26:25)
Just like real estate, money, real estate. The same thing. If you operate a real estate business without a set of defined rules, you might as well just put a blindfold on, get in your car and just drive and just put the pedal straight to the metal and just see what happens. It’s the same thing. If you don’t have rules in your business and your investment philosophy, and what you do, then you are literally flying completely blind or driving completely blind.

Robert Leonard (26:49)
Although this is a real estate show, like we’ve both said, one of my favorite parts about this podcast is that we talk about personal finance, we even talk a little bit about stocks. And the reason I like that is because a lot of real estate podcasts act as if real estate is the end all be all as the only asset class you should be in. And I don’t personally think that’s the case. I think real estate is very important. I think a lot of people should be involved in it.

Chris Naugle (27:09)
But I think it’s just a component of your portfolio. I think it’s real estate, and stocks, not real estate or stocks. And so that’s one of the things that I liked that we’re having this conversation about. Now I want to transition a bit and talk a little bit about your experience on your TV show on HGTV.

Chris Naugle (27:24)
You notice I didn’t even bring that up.

Robert Leonard (27:27)
Well, I’m curious to hear your experience, because we’ve actually had another guest on the show in the past that hadn’t experience with HGTV. So I’d love to hear more about your experience.

Chris Naugle (27:36)
It’s an interesting one. So remember, I said back in 2014 when I met those two guys, Mike and Greg, well, I ended up going into this education program. And me and my wife were in Las Vegas at a summit. And I remember watching and I’m not going to name them. But two TV show stars flipping show stars get on the stage. And I remember loving what they were talking about, loving that they were had the attention of this entire audience of 600 plus people. And I looked at my wife and I said, Lorris said if we’re ever going to get on that stage, we have to have our own show.

Chris Naugle (28:04)
Now remember, I was a pro snowboarder for a long time and being a pro snowboarder. You’re always filming videos, there’s always video parts. So I knew producers. I knew guys who could film. So when we got home, I took one of my friends out for drinks. And I said, and he was a videographer. And I said listen, I want to film my own TV show. I want to create a pilot and sizzles. So I can send it off to HGTV and it’s gonna be awesome and blah, blah, blah. I spent 40 grand paying my friend and audio people and everything else to produce seven sizzle reels.

Chris Naugle (28:31)
Now most people wouldn’t have done that. Now I didn’t have the extra 40 grand but you know, again, cost was the the only an issue if I didn’t get the show. So that was 14 when that began. And I was one of our flips. It was a mess. But we got through it. We got the sizzles put together and I sent them out to all the networks thinking oh my god, we’re gonna love this. It was basically skateboarding and flipping houses all brought into one video. And they hated it. And they said, No. He said No, HGTV said no, they all said no.

Chris Naugle (28:58)
Now most people would have just quit and I said no, I’m not going to quit. So we were in contract with a producer and that producer basically we ran out our contract they said sorry, we couldn’t get this thing you know to go it was a great show is awesome idea. But I immediately when that ended, I went in I found a different producer who understood what the network’s actually wanted. You see before when I first did the show, it was all about what I wanted, right? I thought this is gonna be so awesome. Never been done. It’s what I want.

Chris Naugle (29:24)
And I just assumed that they would want it. But what I learned there is it’s always about them and what they want, we had to solve the network’s problem and the network had a problem where they wanted a couple show. They wanted a couple show with a unique individual who was Blair an ex pro snowboarder of mine who was a contractor who brought this crazy dynamic and we filmed with this new producer and got a sizzle and that sizzle got picked up and they’ll be all we ended up airing on HGTV. It was two years ago, it was an amazing dream and amazing experience. But one that literally was built on was a house of cards.

Chris Naugle (29:58)
When you look at a show You think oh my god, we’re gonna make all this money on the show, when you actually get the contract from the network’s. You’re like, whoa, whoa, whoa, guys, we’re missing a couple of zeros here man, I really, I can’t do this for that. Well take it or leave it. Oh, alrighty. So that’s what it was it was, you don’t make the money on the show, the show was literally the lost leader you make money on everything else. And there’s so much more I could talk about what to show but let’s just put it this way was just another dream, I don’t want to be defined by the show I don’t want to be known as the guy, you know who had the TV show, which was called risky builders, you can look it up.

Chris Naugle (31:01)
But I also want to say, if you dream it, and you believe it, you can achieve it. That was the likeliness of getting struck by lightning. And it happened to just us little Buffalonians here. And we actually had a national show on HGTV that aired six times. And then after that, we never went on to the next season, which was, again, like a big blow for us. But the best thing that ever happened, because if I did have that show, I would have been trapped and locked into it. Where now I was free to go out and chase the dream that I always should have been doing.

Robert Leonard (31:01)
And the reason I asked about that is not only because it’s entertaining to learn about the ins and the outs of the shows that a lot of us see on TV. But I also like to learn and I want the audience to learn that not everything you see on TV is necessarily completely accurate. Things don’t go always as planned, not just on the show. But what have been some of the biggest unexpected issues that you’ve run into when flipping all the houses that you’ve done. And for those who may not be familiar with the flipping strategy, tell us a bit about what that is.

Chris Naugle (31:29)
Flipping is just the art of buying a property undervalued buying an off price or an undervalued property, and then doing renovations to make it you appreciate you’re forcing appreciation into the property through renovations and making it beautiful. And then you’ve got this beautiful finished product that you put on the market and you sell for a profit. It’s it’s a fairly simple concept. But when you actually boil it down and you say what are the problems with flipping? Everything.

Chris Naugle (31:52)
First and foremost, problem is it doesn’t take 23 minutes to flip a house, I watched my first show and I went and flip the house, it was way harder than what I saw on TV. See all the hard stuff except for like the things that are entertaining. They don’t show you all those things. They don’t show you that when you get into a property, and then all of a sudden you’re working on it for six months, and then all sudden water starts to appear in the basement. You can’t figure out why. When you figure it out. It’s a six to $10,000 problem.

Chris Naugle (32:17)
We live in Buffalo, there’s a lot of water issues here. Or you get into a deal. And all of a sudden you take down the finish walls in the basement, you realize all your foundation is crumbling or crack. These are the things they don’t tell you about. They don’t tell you that contractors if you don’t understand how to work with them, some of them the bad ones, if you give them a deposit to ask for sometimes they just don’t show back up. And then you think oh, well, I’ll just I’ll just take them to court. Yeah, right. Take them to court, and then they have no money to pay you. And they’re done that man, I could talk for an hour on all the pitfalls of flipping.

Chris Naugle (32:45)
But the one thing I will tell people is, if you’re looking to get into flipping, it’s a great business model. But it should absolutely positively not be your own strategy. Real Estate isn’t built on just one strategy. Real estate is a multifaceted strategy business. And you have to have multiple strategies. If you’re going to succeed long term. You watch the shows and you say, oh my god, they make all this money. And they’re they’re driving Ferraris. And Lamborghinis folks don’t believe you see on TV.

Chris Naugle (33:08)
We know those people. Now, are they driving fancy cars? Yeah. But are they making money the way you think they’re? Absolutely not. And what happens behind the camera is not what happens in reality. And I don’t want to go too much further into that. But I just want everybody to realize as, as shown on TV, I guess is the only thing I’m going to say. It’s not what it seems. I think flipping is a great strategy. But I think people that are getting into this business as real estate investors need to be very careful right now.

Chris Naugle (33:34)
Holy crap, if you’re getting in thinking that flipping is going to be the way you’re going to become wealthy, good luck. Because right now you’ll be buying at the highest point the market has ever been. And that is a dangerous position to be in. So you absolutely have to focus on creating multiple strategies and understand based on the economy, understand based on the timing and understand based on where you live, what is the right strategy, not only for you, for your family, but also for the market.

Robert Leonard (34:00)
Outside of just some of the mistakes that you’ve seen, or issues that you’ve run into? What are the major red flags that you’ve learned to look for when you’re walking a property as a potential flip?

Chris Naugle (34:11)
Some of the biggest red flags is I used to go in and you know, I’d look at a property no matter how bad it was. And I always had this big dream that I could fix it, I can fix it. But what you end up doing is you end up getting so deep into the project that you don’t make money. Now I look at properties and I look at ones that need the least amount of work. The red flags are the biggest things foundations.

Chris Naugle (34:29)
If there’s a foundation issue, even if you think you know how to fix it just walk away. It always is going to cost double what you think it is. Water. If you live in an area where there’s a lot of water issues like here, be very cautious if there’s water or dampness in the basement. Just double the amount you think it’s going to cost because there’s a lot of unknowns get into the attic a lot of people just walk through and look at what you can see face value. Get behind the scenes try to see behind the walls try to see what’s in the attic is there sags in the roof that was a big thing.

Chris Naugle (34:56)
I never thought anything when the roof had a sag and I learned the hard way when a building inspector showed up on one of our projects that we were putting a roof on, he’s like, You guys can’t put a roof on this. Well, what do you mean? He needs a roof? Yeah, well, you see that sag? that means there’s a problem, you need an architect, you need plans. And this, that $10,000 roof turned into a $30,000 roof, how much profit you have on a flip? I can tell you that that much, that property we lost money on.

Chris Naugle (35:21)
And you know, the one thing I’ll tell you about that, we’ve done almost 270 flips today. And I don’t remember all of them. But I certainly remember each and every single one I lost money on. And I remember what mistakes we made. And every single one of them. They were simple mistakes that we ignored in the beginning, because we thought all it’s not a big deal, everyone.

Chris Naugle (35:40)
How are you able to find these properties as potential flips? For someone who’s listening to the show that’s new to investing and decides they want to give flipping a try? How are you finding those properties?

Chris Naugle (35:50)
Well, you know, that’s the secret sauce, you know, you can’t make money in real estate, if you don’t understand what you just said, finding lucrative off market deals. Now there’s a lot of ways, and everybody wants to just go out and do the easiest way, the Push Button way. But you know what, those ways don’t always work. I will tell you this, the number one way we find deals is through relationships. I’m old school call me okay, I’m not the guy that sits behind a desk and sends out 10,000 mailers every single month, and then just has ringless, voicemail hidden and just so all of you know, these are just added technologies that you can do just by a click of a button, you can send out 10,000 mailings saying, I want to buy your house, I’ll pay cash, no contingencies.

Chris Naugle (36:26)
And then those people will call you and then you just keep hitting them. Now that strategy works, but that can’t be and shouldn’t be your own strategy. I know a lot of wholesalers, which I think will talk about wholesaling, a lot of wholesalers, that’s what they do, and they make great money doing that. The best of the best of them, I will tell you, it comes down to the relationship, their skills of building in a relationship with the seller, and that relationship is built by solving their problem.

Chris Naugle (36:51)
You see, that’s the number one thing you want to be good at real estate, solve people’s problems. You are a professional problem solver. So a couple ways that I find deals. Number one, I sourced out, I said, You know what, if the banks have all the deals that I want, how do I get the bank deals, I used to think I could just call the bank when we know that can’t happen. And then think I could call the attorney. All that doesn’t happen either. But then I figured out that there’s these brokers that work specifically with bank foreclosures.

Chris Naugle (37:16)
So we developed relationships with these brokers. And that wasn’t easy, because they have more people that want to buy their inventory than they have inventory. So there’s selective, just like everything else that I learned, you know, in my experiences with everything I’ve done is I learned that I have to find out what that person likes what they want. And I have to solve that problem. This bank broker happened to like, fine whiskey.

Chris Naugle (37:38)
Hey, it is what it is. I sent him a bottle of the finest whiskey I could find back at me at dinner with him. at that dinner we paid and we just talked about him. How have you done it? How’s your business been? How have you got all these properties, not about what we wanted. We focused on him what he needs what he wants. And we figured it out what he wants. And what he hates is when he gets brokers that come in and they want their 3%.

Chris Naugle (37:59)
He’d much rather just work with somebody like an investor that just gives him both sides of the commission. We said all that said, We’ll give you both sides of the commission. Just bring me the deals first. I have done. I don’t even know how many deals with just that broker, because he sends a deal to me before anyone else ever knows about it. So I’ve already seen it. I’ve done my analysis, the second that deal hits the market, because most of these brokers have to list it. I’ve already got the inside scoop my offers in and you think my offer kind of gets to the top of the pile? Yes.

Chris Naugle (38:25)
How about relationships with estate brokers. Okay. Estate Brokers are when you drive around, you see an estate sale sign, right? A professional one will go to that, ask who the estate broker is build a relationship and then learn what they need. Our Estate Broker we found out, they just wanted a little extra money to pay for their vacation. So you know what we do? Okay? It’s funny, we basically said to him, we said, how about this, when you go to a property, and people you know, you want that they want to sell, tell them, you know, somebody that pays cash, they’ll close fast, no contingencies, they can leave all the stuff.

Chris Naugle (38:55)
And you know what, when we close, we’ll give you 500 or 1000 bucks. And we ratchet than that. That has been a huge source. And then just driving around your neighborhood, look for long grass, look for signs in the window, then go down to your tax assessor and ask them who owns this house, reach out to them solve their problem. There’s a reason their grass is long, maybe they can’t afford it. Maybe they’ve got a divorce situation going on, find the problem and solve the problem. That’s how you get deals.

Robert Leonard (39:20)
When I first got into real estate, I didn’t realize how much of a problem solving business it was going to be. But nearly everyone that I’ve talked to in real estate has said the exact same thing. It is a problem solving business, learn how to solve problems, and you’ll be successful in real estate.

Chris Naugle (39:33)
Absolutely. And it’s same thing what you know, like money is a huge thing in this business. You know, a lot of people that I talk to because I’ve coached 1000s of people. They’re always like, why don’t have any money? Well, it’s not about your actual resources. It’s about how resourceful you can be. But if you want to think it’s about your money will then carry on and you’ll never make it.

Chris Naugle (39:50)
So to raise money for real estate. Most people think well, I’m gonna I got a deal. I’m gonna start asking people that I know for money. The second you ask for money is you’re in a position weakness. You can’t go out and raise money by asking for money, you have to go out and raise money by solving people’s problems. And the biggest thing I teach people, because this is a huge thing with real estate, especially new investors, they always need money. I wrote the book, private money guide. It’s all about how to raise money. But the number one thing that I always tell people is stop worrying about asking for money, stop worrying about whether or not you’re going to find money, there’s tons of money around you, you just need to know what the sources of money are. And you need to know what the problem is.

Chris Naugle (40:26)
Listen, this is 2020. COVID-19, the epidemic pandemic, whatever you call this, this is the easiest time I’ve ever seen to raise capital. Because all you need to do is go to your neighbor, your co workers, your friends, your family and solve simple problems. What problems do people have? Well, if your neighbor lost his job or got furloughed, a problem that they might have is they don’t want to pay for their car payments. They’re having a hard time making their car payments.

Chris Naugle (40:48)
So you know what you can do? pay their car payment, teach them how their house can pay for their car, through the equity that’s just sitting lazy on their couch doing nothing. See people always have equity in their houses, and they think, Oh, I got all this equity in your house. Great. What is that changing your life is that equity paying for your car? Is that equity sending you on vacation to Disney World with your family? No, it’s just sitting there lazy on your couch doing nothing while you go out and hustle in work for money.

Chris Naugle (41:13)
That’s what we’ve been taught to do right? Go and work for money. We’ve never been taught to make our money work for us. You want to raise money, go teach people how to make their money, work harder for them, and then show them how to have their house pay for their car show how to have their 401k pay for their car, show them how the money they think that isn’t usable, can be usable. And all of a sudden, money will just be attracted to you and you’ll raise money. Lots of it.

Robert Leonard (41:36)
What are some of the things that you learned about upgrades that people should or shouldn’t make when you were doing up to 270 flips what are some of the upgrade options that provide the biggest bang for their buck when you’re flipping a property?

Chris Naugle (41:49)
That’s easy kitchens and baths hands down, you know, you remodel a kitchen you get so much more but a lot of people will remodel the kitchen and skip the granite countertops, granite so inexpensive or quartz. That’s a huge upgrade. If you have existing cabinets are in good shape, paint the cabinets, replace the poles replace the hinges and put nice granite countertops with nice fixtures.

Chris Naugle (42:10)
And that right there will change your entire dynamic of your property. Bathrooms don’t ever skip a bathroom, renovate the bathroom, you can skip a lot of other things like heck, if you were thinking I’m going to put all new floors and money just carpet it all. But don’t skip the bathroom in that. Another big mistake people make is they they focus so much time and I used to do this and all the cosmetics, right the the beautiful little intricacies the things that you would want in your house that someone else might like but it’s not going to make the difference.

Chris Naugle (42:35)
Focus on the big things. Don’t ever leave an old roof on a house because you might know the Roof Cost 10-15 grand but that person that’s buying that house, they might not have 10-15 grand and they might think the roof costs 30 grand they’ve never put a roof on. A furnace, For you, you’re like oh furnaces easy, it doesn’t cost a lot. So then replace the furnace because to them, that furnace might just as well be a $10,000 bill.

Chris Naugle (42:55)
All those little things the big mechanicals that you don’t think think is a big deal. Your buyers will Windows roofs, furnaces, air conditioning units, electrical panels, those are the big things, skip the real fancy stuff that you see on HGTV because that stuff, although it looks great on TV, it doesn’t sell your house for more, it just makes you make less, I think doing less is more now. I think right now, the less you do, the more imagination you give to the people buying the house. If you take care of all the big things and you give them a nice clear palette, you’re gonna make way more money in this business.

Robert Leonard (43:27)
Looking back, what do you know now that you wish you knew about flipping when you were just getting started?

Chris Naugle (43:34)
100% I understand money in a way that I had no clue. And I thought I knew all about money because I was an advisor. But the biggest thing I know now is exactly that I know how money works, how to make money work in real estate. When I got into this it was all flip, flip, flip, flip, flip your way to wealth, right? Well, flipping my way to wealth ended in huge cash flow problems. So now one thing I wish I knew back then is I wish I knew that I needed rentals with passive income to provide cash flow.

Chris Naugle (44:01)
And then if I how I do it. Now as I got all my rentals, whatever the net cash flow is, that’s how much I can basically go out and do in flips. The cash flow of the rentals supports my flip habit, because that’s all flipping is it’s just a bad habit. So if you want to flip, build the rental portfolio, build a wholesale business that’s going to provide income that then supports what you’re doing in flips. And the flips just become an added revenue source, you need three strategies, I always every deal we get.

Chris Naugle (44:24)
First thing we’ll do is we’ll try to assign the property always it’s the quickest money and assigning is just if you got a contract on the property, you put some special language and or signs or other languages you can put in that gives you the ability to assign the rights of that contract to somebody else. Now that contract has value because you got it at a great price. So you can sell that value to somebody else that’s assigning and you can make quick, easy money.

Chris Naugle (44:45)
If you know how to find deals, flipping, I have a rule if I can’t make 20% on a flip, I will not flip it. So if I can’t make 20% It’s moved to what we would call the bur strategy which is a rental strategy and we will renovate it not as much as we would with flipping it, rent it out. Take it to that beautiful community bank, get a commercial mortgage on it.

Chris Naugle (45:03)
Pull all of our equity out or pay our private investors back all their money, have no money, in theory, have no money into the property at all, and have a cash-flowing asset that now that income comes in, we don’t just spend that income, we use that income, and then go out and get the next flip. So you need multiple strategies to be successful. But you also need to understand how the money piece works in order to make all this work.

Robert Leonard (45:24)
Let’s talk about that money piece a little bit more, whether it’s real estate or stocks, I, like I talked about on my other show Millennial Investing, I believe that at the core of being a good investor is having a good personal financial base. So I want to shift gears and talk about that a bit. And how personal finances can help the listeners become better real estate investors and just investors in general. So what is the money multiplier method? And how does it differ from other wealth-building strategies?

Chris Naugle (45:51)
Oh, it’s totally different. And this is the biggest thing that I learned on my journey with wealthy people. And here’s, here’s the gist of it. The money multiplier is a 200 year old strategy created back by the Rockefellers, when they didn’t believe in banks that didn’t want their money at banks, because they weren’t comfortable, they had to find a way to bank using something other than banks. And what they did is they landed at insurance companies, mutually owned insurance companies were the strongest financial institutions back then.

Chris Naugle (46:17)
And they are now but you can’t just go to an insurance company and say, Hey, I got all this money I want to deposit with you. It doesn’t work that way. So they had to figure a way to create this banking system and how they did it is a very old financial vehicle that most people have a completely wrong misconception of what it is, but it is called Whole Life Insurance. Now when I say that the first thing you think is all that’s a terrible investment, because that’s what the Guru’s out there have taught you. And you know what? Poor life is a terrible investment, let’s just call it what it is. It’s a terrible place to invest your money, which is why you don’t use it for investing. You use it for banking.

Chris Naugle (46:49)
So what do you what do you do when we use these whole life, we don’t use a regular whole life. First off, we use them the same way the banks do. And just so everybody knows these insurance policies, these specially designed and engineered whole lives that we do through these mutually owned giant insurance companies. We figured this out because of the Rockefellers and also banks, banks are the number one purchasers of whole life insurance. Big banks, like Bank of America own more whole life than they do all the land and buildings combined. So why would that be? Is it because they’re stupid? Or do you think maybe they know something we don’t know.

Chris Naugle (47:18)
But you know what they understand. They understand one thing and this is what Rockefellers understood, this is what all the billionaires and the multimillionaires that I’ve meet and talk to understand, they understand a simple principle that Albert Einstein called the eighth wonder of the world. And what is the eighth wonder of the world, it is called uninterrupted keyword uninterrupted compound interest, it is the ability for your money to earn compound interest never be interrupted, but you have to have control of it.

Chris Naugle (47:42)
So these specially designed whole life gives you the ability to take money to deposit money with these insurance companies, you earn a guaranteed 4% Plus every year they pay you a dividend. But then immediately within the first 30 days, you can go and you can take your money back out, and you then can use that money to go buy real estate, use that money to go buy Tesla or different stocks, you can use that money for anything you want. But the beauty is, and this is what they understood is that money that you took out, you didn’t take your own money, your money still in your account, earning 4% plus the dividends and money you took out.

Chris Naugle (48:12)
That was the insurance company’s money. See, insurance companies understand what I said earlier, money needs to be moving, you don’t deposit money in the bank, and bank doesn’t take your money and put it in a little box in the back of their name on it. They move your money, they lend it out to your neighbor to your co workers to your friends. They’re constantly in the business of moving money, your deposit then gets moved, how many times can it move, your money needs to be moved.

Chris Naugle (48:32)
So you deposit in these mutually owned, specially designed and Whole Life policies. And just so everyone knows, it’s called privatized banking, in the street name, today’s infinite banking. So what I do is I deposit money into these policies, I immediately then take that money out. And I use that money to either lend to other investors, real estate investors, I use that money to buy these burrs, these flips. I use that money to do wholesale deals, but my money, every penny of it is earning uninterrupted compound interest, because that’s what Albert Einstein said was the most powerful thing in the world. Those who understand it, earn it. That’s what I’m doing. Those who don’t pay it, the people and lending money to.

Chris Naugle (49:08)
You see, this is what I learned from Mike, Mike and Greg, those two people, one of the biggest things I learned is this one concept. When they started talking about this, the first thing I said is no way. No way sounds too good to be true. I’m an advisor. Whole Life insurance doesn’t work that way, guys, I’m in the business. But you know what, that was exactly what most people think. They think they know what they don’t know. Because no one’s ever shown you the other side because there’s no money in it for anyone to show you.

Chris Naugle (49:34)
The reason people don’t understand this concept is simply because no one’s ever shown it to him because they couldn’t make money on it. So I know I’m going down a rabbit hole. But that one thing that I just said the ability for me to deposit money, take that money back out still earn interest on that money because the insurance company makes a loan to me out of their general account. But then when this is where people get confused to what this concept, they think that loan has to be repaid. But see what these insurance companies they don’t care if you ever pay the loan back.

Chris Naugle (50:00)
Because they also made a promise contractually that someday when you graduate. And folks, I don’t mean from high school or college, I mean, the big graduation day, the day you die, when you graduate, that insurance company has to pay a death benefit to your your beneficiaries. But when they get all those loans, every deposit I make, I’m taking it back out and alone, and I’m earning uninterrupted compound interest, those loans are just advances of my death benefit.

Chris Naugle (50:21)
So essentially, the insurance company doesn’t care if I ever pay it back, they’re just gonna pay less out the day I graduate. So it gives me the ultimate foundation, if you will, of where my money starts. And all I had to do is learn to change one thing in my life. And that one thing was where my money went first. So it goes over there. And then it goes to whatever else I’m doing real estate, stocks, private lending, anything paying loans.

Chris Naugle (50:44)
You see, once you understand this concept, like I do, you will never borrow money from banks the same way you do. Now, you’ll use bank money in mortgages, because it’s just still going to be a way to leverage but you’re going to use money a completely different way. Because now you understand how to make your money work for you, every day, all day, and never ever, ever stopped earning interest.

Robert Leonard (51:04)
Why do you think there are so many misconceptions around this idea? And why do you think more people aren’t doing it or aren’t familiar with it?

Chris Naugle (51:10)
There’s people like the Dave Ramsey, Suzy Orman’s out there that you know, just to brainwash people to think that whole life is a terrible thing. And because they’re they’re talking about regular whole life, life insurance whole life, they’re not peeling the onion two times and understanding how banks are using it, how GE the company GE uses how Apple, Samsung how all those companies use it.

Chris Naugle (51:28)
How Walt Disney started Walt Disney World, Ray Kroc launched the advertising campaign for McDonald’s, JC Penney, Sears, Pampered Chef, they all started using this system, I just told you, but nobody knows about it, Biden, McCain, they both use it. I mean, it’s just all over. But you have never been shown this because we get our advice from the sources that we do from bankers, we get our advice from advisors like me, and advisors are not taught this. Because if an advisor was taught this, they’d be really excited. I teach advisors this all the time. But then all a sudden, when we get to, okay, well, what does it pay, I tell them how much it pays, they instantly don’t want to talk about it anymore.

Chris Naugle (52:03)
Because to do the banking system with the whole life, the way I just described means that the adviser has to take a 60 to 90% cut in their pay. Now all the sudden, what you have is what you’ve always had, is one of the biggest secrets of the wealthy is this privatized banking, it’s been around you your whole life. You’ve heard about it, you’ve seen it working in banks, that’s what Vice Presidents get when they become a vice president, the bank uses them as a vice president.

Chris Naugle (52:26)
That’s why there’s so many VPS the VP is nothing more than an insurable interest for the bank to go buy another whole life. So they buy a specially designed and engineered whole life. And I want everybody to understand these whole lives are nothing like the whole life that you know, they operate differently, they look different, you put money in, and you have the ability to take that money right back out.

Chris Naugle (52:43 )
So it looks nothing like the ones that Suzy and Dave are talking about. That’s the misconception. The misconception is, we just have never been shown how this works, because nobody could ever really capitalize and make the money on this. That’s what we do. We found a way to do it. We just had to do volume.

Robert Leonard (52:58)
You mentioned a couple individuals that use it, but mostly companies, are there any other specific well known ultra wealthy investors like maybe Bezos, Warren Buffett, Elon Musk, you know, that type of person that use these types of strategies? And if so, why isn’t that more mainstream?

Chris Naugle (53:15)
So, you know, that’s a great question. And they probably are using it, I would almost guarantee you because I know a bunch of family offices. So wealthy families basically have what’s called a family office and family offices often will use this privatized banking as the foundation for where the money starts, because then it never stops earning interest. And then they do other investments outside of that.

Chris Naugle (53:35)
I can’t verify on this show. Whether or not Bezos uses this do I do what I assume he does? Yeah. I mean, every time I see a wealthy individual, like a Buffet, or Bezos, or anyone, Steve Jobs, you almost just have to assume that they are using this or they’re their executive financial team is using this, but they’re not calling it they’re not saying Oh, yeah, we put Warren Buffett’s money in whole life insurance. No. They’re calling it privatized banking.

Chris Naugle (53:58)
You’ve heard this before. So what do you do we do privatized banking? And would you ever think to ask one additional question? Well, what is privatized banking? No, you’re just like, oh, well privatized banking. I probably don’t have enough money to do that. That’s what most people think they don’t want to take that extra step. You see, I’ve always been really bold, being an ex-pro snowboard, I just say it. So when I meet people, like people on my podcast, I just say, hey, what do you do with money? Where does your money go?

Chris Naugle (54:21)
And you would never ever believe me If I told you how many of these incredibly successful wealthy individuals, you know what they say? I say, hey, are using privatized banking, you know, you put in money into specially designed whole life? Of course, we are. That’s always what they say. It’s not even like Well, no, but tell me about it. No, it’s always Oh, of course. It’s just why don’t we know about it? Well, they’re not going around talking about it. What’s in it for them to tell you about this? Nothing. What’s in it for your financial advisor to tell you about this great strategy. You know, all these unbelievable people from Walt Disney to Ray Kroc to I hate to get political, but Biden in McCain just because they publicly have said it. That’s why I’m using I hate politics.

Chris Naugle (54:47)
But all these people use it. They just don’t Talk about it, because they have nothing to gain. You see, we live in a self serving world like work. If we if somebody’s got something, they’re not going to tell you about it if they can’t gain from it. But there are some people, some people that I’ve met that love telling people because it’s all about giving. And Zig Ziglar said, If you help enough people get what they want, you get what you want. And that’s what I based my entire business my life around that statement.

Robert Leonard (55:22)
I think it really all boils down to incentives, right? I mean, I think incentives lead almost everything in this world. And it sounds like there’s no incentive for really anybody to teach this because you’re not just going to make any money. And that’s a lot of times the incentive that people are looking for, unless there’s the occasional individuals, such as yourself, who’s looking for incentives in a different way, you know, just helping people as is that incentive. So?

Chris Naugle (55:42)
Well, your audience would hear that and be like, Oh, he’s not doing that just to help people. And you’re absolutely correct, folks, I’m not doing that, you know, I do help people. That’s the sole thing. But what we figured out, we have to help so many people in order to make a good living doing this privatized banking, infinite banking concept. That’s what we figured out. We said, Okay, well, how do we help more and more people? Well, what we did is we basically designed the system to make a lot less, but we help a lot more people.

Chris Naugle (56:06)
And we helped over 3000 people doing this banking concept. But see, it’s not a lot of people where they stop as they think it’s about the whole life, the whole life is nothing more than the dumb machine that we use to move your money. And if I could find a better machine than this specially designed whole life to use, by all means I’d be using it tomorrow. But there hasn’t been for hundreds of years, it’s been the most efficient vehicle to do what we need it to do for banking.

Chris Naugle (56:28)
Our company focuses on the banking, we focus on what do you do with the money after you put it there, because you don’t want to just put it there and leave it then your money sitting in that stagnant pond that I talked about. We want our money in that river, we want our money flowing, and we want it flowing fast. So what we focused our business around, is that part of it? How do you move your money? How do you make money the second time?

Chris Naugle (56:49)
If you’re already making money over there? How do we make money a second time? How do we make money in stocks, in real estate, in banking, in private lending? How do we make money through our own debts and expenses that we already have? Imagine this folks. Imagine if you could just build wealth by just doing one thing and that one thing is just taking back the money that you’re giving away to everybody else. Wouldn’t that be a grand idea? Imagine that.

Chris Naugle (57:10)
Think of all the money you write checks to all the people you write checks to all the companies you write checks to every month, Visa, Amex, discover Home Depot, Lowe’s, add all that up, How much are you giving away every month and how much interest are they charging you? Is it 5, 10, 15, 29%? What if we had a method where we could just take back the money that we’re giving away to everybody else? You’d build tremendous amounts of wealth, and then I can then show people how to get all the money back for every single car they will ever buy driving home.

Chris Naugle (57:36)
I don’t care if it’s a Ford Focus, or Ferrari, which is at a zero. See, once you understand how to move money, and take back the money that you’re giving away. You absolutely and I can show someone in five minutes, how to get all the money back for every single car they will ever buy driving on. No ifs, ands or buts is guaranteed to work. You just got to change one thing in what you’re doing now. But most people, they always say, oh, that sounds too good to be true. Well, you know, what Will Rogers said something profound, too. He said the biggest problem in America is not what people don’t know.

Chris Naugle (58:06)
He said the problem in America is what people think they know that just ain’t so why is it that we take advice from people that don’t live the day we want to live that don’t live the perfect life we want to live? You know, I find that hilarious. And a mentor of mine said to me says, What are you working for? And I ramble off a bunch of things. He said, nonsense. What are you working for? And he kept asking us, I kept telling him, You kept saying that’s not what you’re working for. That’s a lie. That’s not it. And then he finally said, Aren’t you working for the perfect day? Don’t you want to live your perfect day, every single day?

Chris Naugle (58:35)
And then that changed everything because then I realized I had to understand what this my perfect day look like? And how do I make that perfect day happen every day. And once I figured that out, I just had to figure out how to make it happen. Well, you’re never gonna have my perfect day if I’m always trapped and out of control and money and giving all my money to everybody else. So now I’m the bank. When I buy a car, I just bought my wife, a Porsche, that Porsche, we use our banking policy to pay for it.

Chris Naugle (58:58)
And then what we do is, we still make a monthly payment, but we make that payment back ourselves, you do this for everything in your life, you could get all the money back for all the taxes, you’re gonna pay, you could get all the money back for the real estate deals you do, you can get all the money back for the boats, and anything, it works for everything. And I don’t mean to go down a tangent with this. But it is that powerful, that the people that understand it will change their lives.

Robert Leonard (59:19)
It does sound too good to be true. And I’ve actually had this conversation with someone before, we never talked about it here on the show. It wasn’t a guest it was someone that I know, in my personal life that I had this conversation with. And I remember I felt the same way was that when I was talking to them, I was like, There’s no way this is true, because I was in a similar position to you as I thought I knew, you know, a thing or two about money and personal finance and investing and then he was explaining it to me and my first thought was that it’s too good to be true.

Chris Naugle (59:43)
I haven’t done anything with it yet. I have a couple books on my shelf that I want to read that are about this concept, but I haven’t dove into it yet. And maybe this conversation that we’re having will be the catalyst that I need to really start studying it more but a lot of people in the audience are really big readers and just like myself, and so I want to get some books recommendations from you not only about this infinite banking or privatized banking concept, but just personal finance in general, what are some of the best books that people should read that can cover these types of topics?

Chris Naugle (1:00:09)
Well, can we do one thing a little different, too? Can I give your entire audience a free book? So this book mapping out the Millionaire Mystery, this is my newest book, it’s all about that concept. That sounds too good to be true. I’ll give this book away for free to everybody if they want it. I mean, they can get the ebook or they can have the hardcover if they just do the shipping and I get this one the private money guy solutions to finding money where to go how to ask, I don’t mean to be self serving and say that these are the only books because they’re certainly not.

Chris Naugle (1:00:34)
But outside of those books, some very important books you should all read is number one, Napoleon Hills’ Think and Grow Rich, that book, or none is the first read. If you haven’t read Rich Dad, Poor Dad. That’s the next one. Nelson Nash’s book, Becoming Your Own Banker is phenomenal. And then there’s another book that I absolutely love. And it’s it’s perfect for money, because it doesn’t just cover one aspect of money, but it’s called the 501 K.

Chris Naugle (1:00:56)
The 501 K was written by the grandfather, the grandfather, I think he’s what he calls himself of the 401k, the guy that invented and came up with the 401k. He basically does an entire book talking about all the different financial vehicles that he’s learned about in his entire professional career. This banking system I talked about bar none. He says that it is the Swiss Army knife of the financial world, the biggest secret in the financial world. And you can understand why more people don’t know about it, just like you did.

Chris Naugle (1:01:21)
Just too many people think it sounds too good to be true. And they stop right there when the secret lies one step further. So those are some great books. And I highly recommend reading them all. But absolutely start with Think and Grow Rich from Napoleon Hill, that is a must read.

Robert Leonard (1:01:35)
As always, for everyone listening to the show, I’ll be sure to put links to all those different books in the show notes. If you’re interested in reading them. Feel free to click the link below in your favorite podcast player to go pick those up. And Chris, that’s very generous of you to give the book to the audience. Where can everybody listening today go or connect with you to get the book and then just learn more about everything else that you have going on?

Chris Naugle (1:01:55)
It’s very simple, If they just go to my website, Chris Naugle, N-A-U-G-L-E.com, and then slash resources, all the videos, training and teaching you how to do all these things that I talked about today are there everything’s free, the book links if you just go in there, all the book links to get the free books, whether you want the e-book, the audiobook, or the hardcover, the hardcover, you just got to pay shipping. They’re all on there. So ChrisNaugle.com, everything’s on that one place.

Robert Leonard (1:02:19)
There will be a link to that in the show notes as well, so you guys can go check that out. Chris, thanks so much for joining me on the show today. I really enjoyed it.

Chris Naugle (1:02:27)
It was my pleasure. I enjoyed it as well.

Robert Leonard (1:02:29)
Alright guys, that’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (1:02:36)
Thank you for listening to TIP. To access our show notes, courses or forums, go to the investors podcast.com. This show is for entertainment purposes only. Before making any decisions consult a professional. This show is copyrighted by the investors Podcast Network, written permission must be granted before syndication or rebroadcasting