A Realistic Look at Gary Johnston Real Estate Investing
All of us in search of a better life, go out looking for something that we can do… that we like… Something that will create a passive income for us.
I was no different.
If you search hard for it, financial freedom is available.
There really is no shortage of money out there.
One of the things I had to work on personally (if I can be real for a sec) was getting to the point where I saw life in abundance instead of scarcity.
-As long as I was stuck on the scarcity train, I created an imaginary world where I could only win if others lost. It’s a world of survival. It’s a “you or me world.” Now that I have gotten some extensive coaching, I realize it isn’t about survival it’s about something bigger than ourselves.
It’s about creating a “you and me world” where others win first. I know it sounds hokey, but I’m serious. This simple mind shift allowed me to invite more relationships into my life. Relationships that have taken me to new levels. As others around me have won, I have won too.
The other day I was sitting with my financial adviser…truth is we were having breakfast in the Florida keys ’cause we were about to go out for kiteboarding session.
I was explaining to him what I did for a living. He told me that he had not seen many businesses in his lifetime that he liked. He said most of them are either too time or location intensive, but he loved mine….just need a laptop. Good to go.
This is James. He was the guy that showed me how…
So you are most likely trying to figure out if you should attend a Gary Johnston event.
I say DO IT. You can never get enough of an education.
I am not your typical NEGATIVE Nelly.
I am gonna give you some more info on his offering but first I want to talk to you about being careful when it comes to real estate investing.
I know I know… You have heard it all before.
Just like me you’re probably thinking to yourself right now, all you don’t understand, I am super careful. I have a neat plan. It is all laid out.
Well what would I say to you? Pride comes…before the fall.
I thought I had it all figured out as well. The problem with the real estate is one thing.
Once I tell you what it is you understand. Matter’0 fact’0…. if you can control this one thing then you’re golden. If you can’t control it you’re setting yourself up for financial Armageddon.
What is it?
>>Leverage<<
Yes, I said leverage. If you leverage too much in order to acquire the real estate that you believe this going to turn a profit for you then you could be setting yourself up for a 7 year ride on a set of cheap carnival tea-cups.
I believed real estate was the best potential investment one could have. You can read about it here.
Here were my reasons:
- It was a tangible asset.
- They aren’t making any more of it.
- Overtime Real estate always wins.
- Most financially set people made money or hold money in real estate
The problem only comes in when you underestimate the cash flow you need the nest egg that you have or the rents that you’ll be able to charge and collect.
That is when you get in to a heap of trouble.
I LOST IT ALL.
You don’t have to. I still believe real estate is a great way to accumulate wealth.
-But, you need to be mindful of your cash flow, Flo. You got to know whether you have enough available cash on hand to make it.
A lot of seminars are out there coaching you that you don’t need to put any money down or you don’t have to bring your own money to the table to invest in real estate successfully.
That’s one of those things I’m just not buying. Typically in order to negotiate those types of deals, you have to have some experience. If you are a newbie you simply are just not going to have that level of experience.
Once you get bit by the real estate bug, you’ll be happy to flop down your fortune in exchange for heavy breathing hopes to become the next real estate mogul. Sorry…odds are stacked against you.
Just ask me. I know what foreclosure is like. I know what bankruptcy is for like. Just trying to give you an alternative here.
Gary Johnston Offering Overview
The initial two pieces that I read about Gary Johnston made me like the guy.
Not that it matters, in a review, whether I like the subject or not, but it’s kind of a bonus.
First, I read a review on BiggerPockets.com, by “Jeff,” an asset-based private lender, who said that you could fit the egos of Gary Johnston and his co-presenter, Clyde Wilson, into a thimble. A thimble!
Then I went to Johnston’s website, read his “About” page, and came to the same conclusion all by myself.
I’m not into arrogant. I like people who are humble. I especially like it when successful, financially-secure people—who teach other people how to become financially secure—are humble.
Of course, if they’re humble and don’t know squat about what they’re teaching, that’s not good, but such is not the case with Gary Johnston.
This guy did not come from money.
He grew up in rural Oregon in a logging/ranching community, where the population was a couple hundred, if you factored in cats and dogs. The nearest McDonald’s was 90 miles away; the grocery store was 40 miles away. Not a “hotbed of wealth,” says Johnston.
He grew up being reminded (by his father) that “there’s a big difference between being broke and being poor.” The one, said his dad, is a temporary money state, and the other is a debilitating mental process.
So despite not having a lot of wealth growing up, Johnston did not internalize that as his predestined lot in life.
A neighboring rancher named Norbert Volney had a huge impact on Johnston, and to this day Johnston credits Volney (and his parents) for launching him on the path that has led to his success. In a podcast on Flipnerd.com, Johnston describes his early mentoring by Volney.
“He always called me ‘kid,’ even up until he died. When we were working, he’d say, ‘Now kid, listen up now, kid.’ Then he’d say something like, ‘You’ll never get rich on a W-2.’ Now, I was 13 years old and I had no clue was a W-2 was. But then he’d explain it to me, and he was right.
“He’d say, ‘Now kid, do you know what two things will make you money while you sleep?’ I’m a teenager. Making money while I sleep sounds pretty good to me! Volney’s answer was rent and interest.”
These early conversations molded and shaped Johnston’s thinking about his relationship to money in ways that impacted him deeply, although he was unaware of it at the time.
His neighbor also stressed the importance of getting a college education. Johnston did this, attending the Oregon Institute of Technology, and later, Purdue. He earned a BS in software engineering and an MS in management.
After earning his BS degree, he was hired at Hewlett Packard, where he worked for 17 years. In those years he followed Volney’s advice, buying real estate and building assets to generate cash flow.
At age 38, Johnston left Hewlett Packard to focus on his investment pursuits.
The idea of teaching other people about investing was never forefront in his brain; he kind of slid into it through the back door.
His initial motivation was to set down and record all the lessons he had learned over the years—from Volney, his parents, and others—in order to pass on the information to his kids and, eventually, his grandkids.
He pulled together his materials and, with his friend and long-time investor Clyde Wilson, taught one seminar.
To his surprise, attendees came up afterward and asked when the next class would be, and that’s how it all started.
Gary Johnston Seminars
Financial Freedom Principles Seminar Overview
Johnston and Wilson now regularly conduct two seminars. Their core class is called “Financial Freedom Principles.” Jeff, on BiggerPockets, summed up the class as a “relatively broad overview of personal investing, with a focus on real estate.”
For $547, over three days, participants learn how to create a financial freedom roadmap, about three income types and which one is best, how to use knowledge of taxes to make investments decisions, ways to structure debt to make more money, and about the time value of money. (Price includes an HP 10bII financial calculator, valued at $40.)
Money Not Math Seminar Overview
The other seminar that Johnston and Wilson teach is called, “Money Not Math,” described on Johnston’s website as “how to make money in real estate and notes with the magic of the financial calculator.”
In this three-day seminar, participants learn how to use a financial calculator to make daily decisions, about the power of the time value of money, how to calculate yields on investments, how to calculate the time left on a note, and how to calculate uneven cash flows.
Reviewer Jeff wrote, “The course builds from simple time value of money calculations to some mind-numbing, though brilliant, investment strategies. These range from simple payment and interest calculations for the uninitiated, to combining owner financing, options, assignments, leveraging, and walking mortgages.”
Johnston can’t express strongly enough the importance of knowing how to use a financial calculator if you’re going to invest in real estate. “If you go into a situation with an investor that knows how to run a financial calculator and you don’t,” he says, “it’s not going to be a fair fight. If you’re going to be in this business, you really need to learn how to run a financial calculator.”
Holy Pocket Protectors Batman…but I get it, wink.
These two live seminars are Gary Johnston’s main offerings. He’s pretty streamlined compared to other real-estate investment gurus. You can purchase the “Money Not Math” seminar as a DVD course ($397), a two-hour DVD called “Financial Calculator 101” ($97), and two calculator workbooks ($40 each). Other than that, he has no real-estate investment books for sale, no bundled packages, and no newsletters.
He has a grand total of five YouTube videos.
His website does have one unique feature: the blog posts, which are a series of calculator problems. A fresh problem posts every two weeks, with the answer to the prior post’s problem. I guess to keep you sharp and challenged with that financial calculator.
What I like about Johnston is his big-picture approach to real estate investing.
That is, what the ultimate goal is and the basics that need to be in place to achieve it.
“People sometimes forget what the real goal is,” Johnston says in the Flipnerd podcast. “The goal is not to own 100 houses. The goal is to become financially free . . . to be able to generate enough cash flow from assets to cover your monthly note. Sometimes when we’re focused on real estate investment we think the goal is just to buy a bunch of property.”
He describes being at a real-estate investors’ club where all the talk was about how many units people owned—how many “doors” they had.
Then he points out that if you have 750 doors but you’re losing money on all of them, that’s a problem. You’ve got lots of properties but you’re not generating a positive cash flow, and that does not contribute to financial freedom.
When asked what’s the most important first step anyone should take in moving toward financial freedom, Johnston says, unequivocally, that it begins with having the right thought processes.
“It’s our thoughts that control where we go and how far we go,” he says. “People say, ‘I’d love to buy-and-hold, but I don’t have any money.’ That’s just the thought. You’re assuming because you don’t have any money that there’s no way that you could put together a deal that can generate cash flow. . . . You’ve got to work through that thought process first and be focused on what you are really trying to achieve.”
The first hurdle to real-estate investing, he says, is figuring out what you’re trying to achieve (flipping? wholesaling? retailing? buying and holding?) and the thought processes you entertain that limit that.
Although Johnston is a big-picture guy, he’s also an experienced real-estate investment educator.
Mindset Management
James and some others were really good at helping me with this.
People like that.
And then, he says, you’ve got to start small. You don’t have the system in place or the experience to handle multiple houses, so start with one house. “Learn how to screen tenants, learn how to do rent ups, learn how to manage, and then add to that, but don’t go out and buy a bundle of 40 properties.”
Along with starting small, he urges new investors to acquire properties in their own backyard, so to speak—in their own state. It’s hard to manage a project and a property that’s far away; the back-and-forth travel also cuts into profits.
How to acquire a property? “Well, ride your bicycle to the neighborhood you’re interested in and start knocking on doors,” Johnston says. “Say, ‘Hey, I’m looking at buying a house in this neighborhood. Reminds me a little of Robert Kiyosaki.
Do you know anybody that has a house for sale?’
If you get out and talk to people and let them know what you’re looking for, you’ll be amazed.”
I find it interesting that despite all of his knowledge about real-estate investing, Johnston has not written books specifically on the subject. There are resources on his website, but they are produced by other people (mostly Jimmy Napier).
Maybe he’s just focused on the bigger picture. Maybe he doesn’t want to write books. Maybe he’s already doing everything he wants to do. But he seems like the kind of guy that would have some fresh things to say. I mean, if you couldn’t go to his seminar, wouldn’t you buy his one book? Me too
