Aileen: [00:00:00] Thank you for joining today’s  episode of the, How Did They Do It? Real Estate podcast. We are your hosts Seyla and Aileen. And today we have Dr. Jeff Anzalone. He is a periodontist in Louisiana and the founder of debt-freedr.com. He started his blog after paying off close to $300,000 in student loan debt in order to share his investing strategies to other doctors and high income professionals to achieve that financial freedom by building multiple streams of passive income through real estate.  We’re really excited to have you on today, Jeff.

Jeff: [00:00:27] Yeah. Thanks. Thank you guys for having me on the show, looking forward to connecting with you and your listeners.

Aileen: [00:00:33] We have a lot to talk about today and I’m sure everybody wants to know how you got out of your debt and all the strategies that you’ve implemented to get you to where you are today.

So can we please start off by telling our listeners a little bit more about your background and how did you get started in real estate?

Jeff: [00:00:48] I’m a full time practicing periodontist in Louisiana. And born and raised here, went to LSU. And when I got out of training, I was supposed to come back here to my hometown and join a group.

But unfortunately, a couple of weeks before graduation, the deal fell through. And if people that are listening to this know anything about dental school or medical school, or probably any professional law school, they just teach you your trade. They teach you how to do the work. They don’t teach you anything about the business, how to run a business, how to run a practice.

And unfortunately, when that deal fell through, I didn’t have a clue of what to do. So with $300,000 student loan debt, a two month old, no business knowledge, no patience. It was a little stressful. If  you can imagine that, but I think all things work out for the good. I’m from a small town, so people heard about  my situation. One particular gentleman reached out to me, took me under his wing, taught me how to run a business. I was able to rent space from him. He helped me network in my area with the other dentist, and that’s kind of how I got started with the practicing. During that time period, now, I always thought that I never really thought much or really had any issue with the debt that I was acquiring, because I guess maybe it’s kind of like, we don’t get paid near what professional athletes do, but I can understand that maybe if they’re in college and they know that they’re probably going to go play pro somewhere, they’re always thinking it’s not that big of a deal. If I get debt or accumulate debt because I’m going to be able to pay it off, I’m going to have a good income.

And that’s, I think that was always in the back of my mind. So I really wasn’t that big of an issue, but when it was all taken away, that opportunity, plus we had already purchased a home, interest only, based on the guy gave us the loan, you know, this was before the 2008 crash, but it was based on, Hey, he knew the group I was going in with.

So he said, Oh yeah, no issue. And we’ll get you the house. So yeah, I really went in, went from that abundance mentality. I’m going to have plenty to scarcity survival mode. And it took me a while and it’s still to this day, it still takes a while to shift from that scarcity survival mode to an abundance mindset.

And I think that really helped me in a way, because it really helped me to concentrate on paying off all the debt, consumer debt that I had mainly acquired. It was mainly student loan debt, no credit card debt, but unfortunately, most doctors, you know, other high income professionals, they put that off and just pay it out over the lifetime of the career.

And I just didn’t want that.

Seyla: [00:03:40] Thank you for sharing your background. One of the things that Aileen mentioned was that you were able to pay off your debt pretty quickly. Will you be able to share some of the strategies that you use?

Jeff: [00:03:53] I worked while, as I was building my practice, I worked at other practices.

So I basically work multiple jobs. I actually resorted back to what I used to do and mow yards and lawn service in high school and college. So I did that on the side and as you can imagine, it was very humbling experience. I really didn’t care. I just wanted to build my practice, clean up the debt and I’d just move on. For me, it was just a lot of sacrifice for those first few years, but you know, it really, it really wasn’t that bad because you’re young and hungry. You have all this excitement and being out of training. So it really looking back on it, it really wasn’t as bad as most people think, but you just have to really focus on that’s your one goal that you want to focus on your one thing then go for it.

Seyla: [00:04:42] So focus is the key and while you’re working as full time, what are some of the strategies that you utilize to build up other streams of income, and at what point did you realize I need additional streams of incomes instead of just my full time income?

Jeff: [00:05:00] Yeah, that’s a great question. And I think the incident that got the ball rolling was several years ago, we were on a snow skiing trip and a kid darted out in front of me. And I had to avoid killing him and killing myself. So when I did that, I fell on my side and I caught myself and it hurt my wrist and hurt my hand. And my wife asked me, was I okay?

And I said, yeah, it lingered for awhile. And I think playing sports my whole life growing up, you never think about becoming injured until you get injured. And I remember I dislocated my kneecap playing church basketball a few years after I got out of practice. And before that I’d really never been injured before.

And then now it’s always in the back of your mind. About that, which bits you see these guys, it was blow out their ACL playing football, and it’s mind boggling that they can come back and compete in six or eight weeks. It’s just, it’s a mental thing. So I really never thought about something happening to me.

That would affect my active income. And I think most people, yeah, kind of like most people would ever think they’re going to have a heart attack or something like that until they do. So that, I think that was the incident that started me thinking and asking questions. Those, what if questions? What if I wasn’t able to work anymore?

What if I was either temporarily or permanently disabled. How would my family, how would I provide for my family? And that led me to start searching for other streams of income.

Aileen: [00:06:33] So during your search for other streams, what did you find to be the most effective?

Jeff: [00:06:38] It was definitely trial and error, had some successes, but had several failures.  Had a really big failure early on.

But when I started looking around and researching about passive income, It a lot of times, or most of the time, it pointed to people who are using real estate, but I didn’t have, I didn’t the only thing that I’d ever done was just purchased my home. So that was the only real estate experience that I had.

So that was back about the time that they started the crowdfunding sites. And I started with patch of land and Realty shares. And there’s some little small debt deal thousand dollars here, $2,500, and you’d put your money up. You could invest in and they would pay you X amount of percentage, maybe like 10% over a year or something like that.

So that those worked out pretty well, but I decided to step up my game and did my first equity deal, which was an apartment complex in Tulsa, Oklahoma. And back then, the way that I would invest would be, I would look naturally look which deal on the website are paying the highest amount of returns, which I didn’t even know how to calculate a return.

I just saw it, this IRR, whatever that means. It’s like 20% that looks good. And then which one looked the best? So the picture. So looking back on it, it was totally my fault while I lost that investment, which actually was $50,000. The deal fell through. It was just a bad deal that the guy, the sponsor was putting in too much money couldn’t keep up.

People were moving out. It was a lot of crime in the area, so more people were moving out and moving in again. If I would have done my due diligence and checked on the area and the sponsor and all of that, I could have avoided that. So that was a big setback, but I could have, you know, I’ve had many failures in my life, which I’m sure you have, and most people listening to this has.

So you just have to make a decision. Do you want to quit or do you really want to continue to pursue this? And I did. And thankfully I was able to do that. So I found a real local, real estate mentor. I started going to events, meet ups, meetings, started networking with people, learning more about it, educating myself about it because it was important to me and started writing down, really. That’s kind of how I started my blog. Debt-freedr.Com because I was just sharing what I was learning along the way. And I still do that to this day. What I think that I’m learning this week that’s important, I’ll write an article on it. And that started the process with the passive income like that,

Aileen: [00:09:21] the first deal that you did in the multifamily syndication space that you lost your $50,000 investment in was the deal in Tulsa, Oklahoma.

Jeff: [00:09:30] Correct.

Aileen: [00:09:31] And so you didn’t vet the sponsors you based it off of just the pictures and the high returns that they were projecting,

Jeff: [00:09:38] what I was doing, I was assuming you’ve probably heard the phrase when you assume, you know what happens, but I was assuming that the Realty shares website, which actually went under, was doing it for me.

But actually I’ve spoken to several sponsors that have capital companies and such, and they told me that a lot of those companies like Realty shares they’ll take anybody. A lot of them just, Oh, you give them a deal. It was just like, they don’t do that. They’ll just put it on their website, but when you read the website, it’s almost, Hey, we’re scouring through all these deals and we’re putting only the best ones out there on our website that I was putting my trust into the website, which now I don’t do that anymore.

If I’m going to invest $50,000 or more with somebody, I want to know who I’m dealing with.  So now I have a process where I’ll meet them and personally, and get to know them, talk to other investors. And, but anyway, if that wouldn’t have happened and how it probably still to this day be investing like that, cause it wouldn’t have made me change.

Seyla: [00:10:43] That makes sense. After losing $50,000 on your first deal, a lot of people would possibly give up, like you mentioned. And what was it in real estate investing that actually kept you motivated and kept you going forward and investing in real estate even more?

Jeff: [00:11:00] That’s another good question. I think because there were just so many people that were doing it and were successful with it that were working full time, like myself, that you can still focus on what you do best and what we were trained to do whatever that is for me, it’s treating patients, but still have this passive streams of income on the side. So I knew that it could be done.

I just needed to figure out a way to do it. And I’ve read the Millionaire Next Door. And Chris Hogan’s everyday millionaires and, you know, researched that a lot on my website and these common characteristics keep coming out, keep coming up when I’m researching it. And like almost 90 plus percent of the majority of the millionaires do have real estate in their portfolio.

And the majority of them have anywhere from three to nine. Income streams. They don’t rely on just one. So I think those two things really help keep me motivated as well.

Aileen: [00:11:58] So how are you finding the people that you’re investing with today?

Jeff: [00:12:01] It’s changed a little bit. So before, like I said, I was meeting people and, and I still do that now.

But now what I’ve done, I’ve actually let me back up. So about eight months ago, one of my nurses during one of our surgeries, we were talking about my blog and that sort of thing. And we’re always talking about a good bit. And she said, well, do you make any money off your blog? And I said, no, she said, why would you do it?

And I said, I just enjoy doing it. I have a passion for it. So I’m literally just a few weeks later I had somebody that used to be an ER doctor reach out to me who actually has a company and was interested in the message that I was putting out on my blog. And he was wanting to expand his business and educate more people.

So we we’ve been kinda in conversation and talks and that’s led to me now focusing more with their group because I know them so well, very ethical people. They’re great, great operators. So I, just by chance, just, you know, if you go fishing and you keep going to the area where there’s a lot of fish, eventually one’s going to bite, but I really wasn’t fishing. They just found me. But the more that you’re networking with people, the more events that you go to or Facebook groups or whatever, you’ll start hearing the same groups or sponsors names come up. If you’re in your area and you go, you start asking your friends, Hey, we want to build a house. Who should we use? And you’ll start hearing the same contractors used. Oh yeah, he’s great. Or this group is great. That’s what I used to do. And then from there I would personally interview them. And because I think whenever I talk to people, I talk to doctors on a daily basis that have questions. And one of the first questions I ask, which is actually the wrong question is how do you find good deals?

And. That’s not as, that’s not the question you should be asking yourself, you should be asking, how do you find a good sponsor? Because you found a good sponsor. They’re going to find you the good deals.

Seyla: [00:14:02] So after you found a good sponsor, what is a good deal or a good investment in your opinion?

Jeff: [00:14:09] I believe that it’s different for everyone. So for instance, if I’m talking to somebody that’s a little bit older in their practice that is getting maybe ready to try to retire, well having money to use now is more important than somebody that’s maybe just out of practice or just starting to work. So it depends on the situation.

So I always encourage people that I talked to. Uh, you got it. Cause they’ll, you know, I’ll say, well, you know, why do you want to get real estate? And they’ll just say, I just want passive income. And they haven’t really thought about their why do they want to do it? What’s going to get them, if they have a failure, what’s going to get them to, like, I did keep moving forward, trying to get to their goals.

So you have to set some sort of goal. And I think once you set your goal, then you work backwards and then that will allow you to. Focus on what the best deal or what a good type of deal is for me. I have, you know, typically invested in multifamily in areas that are growing in affordable areas on the South Southeast Midwest.

Region typically, um, B maybe upper C class investments where we can get a good deal on it. And we can add value by making good renovations for people, giving them good, safe, clean, affordable housing, but at the same time as gradually raising the rent, not only are you getting those distributions either quarterly or monthly.

So for us, I’m still working. So having that cashflow right now to use isn’t that important to me, but later on, it will be, but for me, I really liked the tax benefits. That I’m able being in such a high tax bracket that then a lot of these investments provide. So again, it just boils down to the person, what their goals are, what they’re looking for now.

Aileen: [00:16:05] So as a passive investor, you’re able to take the benefits of the taxes and apply that to yourself, even as a passive investor. So you don’t need to be an active investor to be able to do

Jeff: [00:16:16] that.

I’m not an accountant, so I would speak with your accountant, but typically the tax benefits that at least I have gotten, they’re not going to affect your work or your practice, unless you have file as a real estate professional status, which that can be done.

But for most people that are working full time, what this is going to do, this is going to offset the money that you’re going to get either quarterly or monthly or distributions. So basically you should be getting those tax free and that’s what we have acquired. So when you think about how much money you would have to save, and then when you pull that money out, then your tax you’d have to save a lot of money up.

So in order to get something that’s going to be comparable to this, that’s basically tax free. So for instance, if you’re investing in a deal and it’s a 7%, it’s going to be paying you 7%, like an annual rate. If you invest a hundred thousand dollars, it’s going to pay you $7,000. It’s a year tax free, and you can divide that by four and get your quarterly amount.

So you would probably have to invest in something that’s paying 10 or 11% because it gains, which is hard to do is stop market all over the place. Then you pay taxes on that to get that percentage. So for me, I do best in the stock market with our practice. Retirement accounts for my wife and I, but before I started investing in real estate, we were 99% in the market, but I wanted to get more 50 50, which I’m actually now doing more real estate now than 50 50, but that was another reason that the diversification that looked at real estate as well to add to our portfolio

Seyla: [00:17:55] A lot of us would think that as a high earning professional, you’re possibly achieving the financial freedom already.

What does financial freedom mean to you?

Jeff: [00:18:05] For me, it would be having options. And it would be, if you get, basically you get to the point where if you want to go to work, you go to work. If you don’t have to basically your passive income streams that are coming in have given you the freedom to do that.

They’re paying for your expenses. So if you have a hundred thousand, if your expenses are a hundred thousand dollars a year and you have real estate or other passive income streams that are paying that, then guess what. You don’t have to work unless you want to. So to me, that’s freedom. And unfortunately the financial model that we’re taught is ingrained in us so much that when you finally tell somebody, Hey, you can have financial freedom in your thirties or forties.

They’re like what snake oil are you selling? But it just. Working 40 years and at a job that you may or may not like and putting money in a 401k and in hoping that number one, you’re going to have enough and hoping number two, that you’re not going to run out. That’s not the only option. And that’s what I did for the first 10 to 12 years of practice.

But now I know there’s a difference and, but some people may want to do that. And that’s fine. So again, it just comes down to what do you own if you want to work your whole life and. And do it that way then that’s fine. But if you want to not, and give yourself off options and freedom early on, or you can maybe do something else, or maybe you want to start a mission somewhere or give or donate or work or.

I had one guy that wanted to be like a coach, a high school coach, and he could do that. And you just never know. So what’s going to come up later on in life, maybe what your interests are or people that your mate. So to me, I like having options whether or not I change that’s I never would have thought when I was in dental school that I would be right here. So you just you’d never know what you don’t know, but if, you know, I encourage people that are listening to this. If you really like something, if you have a passion or a dream or goal, don’t think that you can achieve it based on the situation you’re in now, if you really want to do it or achieve it, it’s not impossible.

What did Walt Disney say, if you can dream it, you can do it. It’s true. I’m living proof. I’m just a regular guy down in Louisiana. And when I started my blog, the only thing that I knew how to do was turn on and turn off a computer. That’s about it. I’m not kidding you. I can get on Google. Sorry. But other than that, that’s it.

Seyla: [00:20:37] Will you be able to share a little bit more of how real estate investing impacted your life so far?

Jeff: [00:20:43] One thing that we haven’t touched on is the being able to impart this education to my kids and the mindset. I think for parents really given them that mindset because when I grew up hardworking blue collar family, which probably a lot of people listening to this were as well, but unfortunately a lot of times for me and other people, we hear a lot of scarcity type statements.

Like we can’t afford that. We can’t go on that trip, cost too much to go there. What do you think were made out of you think we have a money tree in the background and in our backyard, do you think I’m made out of money? So it was, everything was, it was too expensive. It was too much. Money doesn’t grow on trees.

It was almost like there’s only a certain amount of money to go around. And that’s what I thought growing up. So. If there’s only a certain amount and I better what keep what I have and hold on to it. It just, it cracks me up these websites. And this is, I don’t want to offend you, but it’s just funny to me that you have all these groups or websites that yeah, that they want to retire early and they just want to be so frugal when they do it. Hey, I’m going to live in an 800 square foot cardboard box and eat spam. But Hey, I retired at 32. What kind of life is that? I don’t want to work my whole life to eat spam in my parents’ basement. Yeah, they do it, but I don’t want that.

So. To be able to impart that type of mindset and my kids and let them know, you know, my 13 year old and I’ll play Robert Kiyosaki’s cashflow game for kids and just getting that game and just having a conversation while you’re playing it. The goal is to get out of the rat race, which we’re all in. And after my son, of course beat me, he said, dad, are you still in the rat race? And I said, you know, unfortunately I still am, but I’m working on getting out. And he looked at me and he said, that must suck. Doesn’t it? I said, yeah. And he’s 13 and he already gets it. And a lot of times it takes people until they’re 50 or 60 or older to get it.

So to answer your question, I think that’s probably one of the biggest ways it’s impacted my life is how we’ve raised our kids.

Aileen: [00:22:56] That’s definitely very valuable, because a lot of times we look back and we’re like, Oh, I wish I got into this sooner. I wish I knew about this sooner. So to be able to get that information and to get at such a young age, they’re already light years ahead of us.

Jeff: [00:23:09] Oh, absolutely. Yeah, for sure.

Seyla: [00:23:11] What is one thing that sets those successful people up in real estate investing?

Jeff: [00:23:16] I would say that we touched on a little bit earlier that then instead of looking for the best deal, they find the sponsor to work with. If they want to do passive investing, I’m not talking about being a active investor because I don’t do that, but I’m talking about being a passive investor.

And once you do that and find somebody that you, that you trust and other people trust as well, then I think that’s probably the one thing that sets the successful real estate investors.

Seyla: [00:23:48] What tools or techniques have you used to improve the efficiency of your business or personal life?

Jeff: [00:23:55] I would say probably the number one thing is I probably couldn’t last without I’m looking for it right now.  My Google calendar. I can’t tell you how many times I’ve been somewhere, but we were in Dallas last weekend and I was on the treadmill and I got a notification that I had an investor call, somebody that was interested in investing. I would have totally forgotten about it if it hadn’t been for my Google calendar.

That’s one thing thing. Let’s see. I think another thing that when you asked about technique, improve your personal life, if you’re married, then always carve out time just to spend with my wife because we can get so involved with this and so wrapped up in it. A lot of times you start neglecting your, if you have a spouse, or partner or whatever, or kids.

So you want to make sure that you’ve got that balance. I’ve always made it a priority to carve out time for my kids or for my wife of that sort of thing. Just to keep me balanced. That makes me realize that, Hey, this is why I’m doing all this to have that time to spend. Yeah.

Aileen: [00:24:56] And one of the great tips that you gave was you incorporated your son into your real estate career and your life and learning about that.

So you guys are able to share that in common. So that’s really great.

Jeff: [00:25:05] When we were in Dallas last weekend, there was certain areas in South Lake, which is northwest Dallas and just the growth there is just booming. There’s just building stuff all over the place. So before we would just ride by and you would look at a set of apartments or a hotel being built and don’t think about anything, but so now we can ride by and I can point that out.

Hey, look at the growth guys. Look there, whoever owns that, look at all the tenants they’re going to have that are they going to be paying them whether or not they do anything with it or not, but at least I’m pointing that out to them. That’s just not a set of apartments that’s being built, there’s people that are investing in that and making money off of that.

So just to make them aware of the situation, just to get their attention off their phone for a little bit, as we’re driving,

Aileen: [00:25:51] Can you tell our listeners a little bit more of where they can find you if they wanted to get a little bit more about your background and learn some more strategies that you’ve implemented?

Jeff: [00:26:01] Yeah, you can go to my website. It’s a debtfreedr.com. And if they put in debtfreedr.com forward slash free guide, they can download a passive income investing guide I’ve put together that breaks it down a little bit more. If they’re wanting to learn the basics and how to get started. So that’s some of the basic information that I learned.

I put it more in layman’s terms and then if they want to go farther than that, then I have a free passive investors circle on my website. It’s just a group where you just learn more about passive investing and you can connect with other people in the community.

Aileen: [00:26:43] Awesome. Thank you so much for sharing Jeff. We really learned a lot from you today.

Jeff: [00:26:47] Yeah, absolutely. And enjoyed being on the podcast and best of luck continued success on your podcast.

Seyla: [00:26:53] Thank you.