Apr 9, 2022
Can you still achieve financial freedom without large amounts of money?
With the right money management skills, you can. Florian Fritz is here to talk about money management, which can be applied to both personal and business finances. He also shares a simple but practical strategy to grow your money without having to track every centavo you earn!
Florian believes that there is an investment vehicle for everyone. He talks about the platforms that people can invest in that do not need large amounts of money unlike in real estate.
[00:01 - 02:38] Opening Segment
- Florian Fritz shares his journey to being a financial management mentor
- He was a former financial advisor, but now working so that people won’t need one in the future
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- Here’s his reason
[02:39 - 12:40] Money Management
- Florian reveals his lead generation strategy to find clients
- You will never be rich if you have this mindset
- Florian talks about two simple strategies for money management
[12:41 - 18:34] Cheap Investment Alternatives
- Where to invest if you don’t have large amounts of money
- How much liquid cash or assets should you have right now
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- Florian shares his thoughts
[18:35 - 19:35] Closing Segment
- Reach out to Florian
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- Links below
- Final words
Tweetable Quotes
“As long as you believe that money is bad, you can't become rich, you'll never be financially free...” - Florian Fritz
“...you don't want to have too much cash, but you want to have liquid cash or assets so you can buy cheap stuff after the stocks have crashed.” - Florian Fritz
“You can already tokenize your real estate…if you find a way to do that, you can have it without any administrative work. You can have people invest with 100 or $1,000.” - Florian Fritz
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Want to read the full show notes of the episode? Check it out below:
Florian Fritz 00:00
You need to work on your money mindset because what we learn is you have to work hard for your money. Money is the root of all evil. Money doesn't grow on trees, we learn all these things. Right? Right. And as long as you believe that money is bad, you can't become rich, you'll never be financially free because your subconscious will protect you from becoming rich because you don't want to be a bad person. So that's what I work with people on and then the second thing is money management because that's like the biggest difference between financial success and failure is how well you manage your money.
Intro 00:29
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.
Sam Wilson 00:41
Florian Fritz started as a financial advisor, He then worked nine years with a real estate company finding investors and now he teaches people how to take care of their finances, so they don't need financial advisors. Florian, welcome to the show.
Florian Fritz 00:53
Thanks for inviting me.
Sam Wilson 00:54
Pleasure is mine. Same three questions I asked every guest who comes on the show. In 90 seconds or less, can you tell me where did you start? Where are you now? How did you get there?
Florian Fritz 01:01
Where I started was not knowing what to do. Becoming a financial advisor with the largest company in the German-speaking area, I found that I didn't like how financial industries treating their clients, clients take all the risk industry takes all the money. That's how I left them, started working with a real estate company who, in the beginning, had a very fair offer. So we made a lot of money, helped hundreds of people grow their investment returns. And after the real estate company was happy with the results I had given them for nine years. That's when I started my teaching business helping people so they don't meet financial advisors and can take their money in their own hands.
Sam Wilson 01:38
Oh, man, that was great. That was perfect. That makes a heck of a lot of sense. So let's just rewind a little bit. For the nine years, you were basically in the United States, we'd call it, I think it's an RIA, a registered investment advisor, where basically you take a commission for presenting the opportunity to your investors, if your investors invested a million bucks, you'd take whatever that commission is, is that right? Okay, which is a great way, you know, if you can enter that space, I don't care where you are in the world, if you can enter that space and have those investment advisors bringing capital to your deal, that's a great way to raise money. But it sounds like you raise too much money for them. And eventually, they just didn't need you anymore.
Florian Fritz 02:16
Yeah, looks like it. Because the plans they had in the beginning was if we have to pay you 10,000 a month, great. If we have to pay you more than that perfect, the more money you can bring the batter, we want to grow until we own the whole world. That was where we started. As soon as they had to pay 10,000 more every month, they were not so happy anymore. I don't know why, because I did bring all the money.
Sam Wilson 02:39
Right. Tell me about that. What was the strategy that you employed, you know, for finding investors for those specific opportunities? Because, you know, that takes a niche skillset. What was that?
Florian Fritz 02:50
Yeah, actually, two things that we did one, we started with Google ads. So very simple. And you just need to know who's your target group, old people? Is it poor people? Is it educated people? Is it workers, whatever? I don't know. It's all of them. We had students, we had doctors, we have blue-collar workers, everything. But it's people who have safety, right? People who come from the savings account or invest in bonds, or maybe mixed mutual funds with bonds and a few shares. But those people that love safety, that's your target group. So what's your keywords, it's bonds, invest, real estate, bonds, things like that. That's what people are looking for that, that's your target group. And then you want to grab them with the greed, offer a little more than they're used to, we did that. And like 12 years ago, now, we did that with a offering 8%. If you come from a bank account, 8% is amazing. Amazing, right? And you catch them with greed. So they send you a message at least and say I'm interested. And then you got to work on their fear. Because of course, they're afraid to take their money from their bank account or out of their bonds to go into your project. And then you have to show them that you're safe, that you have some experience that your project is safe and sound that you know what you're doing. And if you get them with greed, and then you can work on their fear and show you're safe, then you've got a client, an investor. And the second thing we did was I was working with other financial advisors, telling them, see we've got this amazing new product. We do property all the time, and we'll pay 8% to your clients and you get a commission. And then they brought half of the investors for me and I didn't have to do anything except for talking to them once or twice a year and having a dinner.
Sam Wilson 04:31
That's brilliant. I love that. Yeah, it's scaling via using obviously leveraging other people's talents, skill set, investor pools, things like that. I love that, and I love the kind of method you broke down there, which you get to hook them in the beginning. Because yeah, somebody said this. I remember from something a few years ago, I'd posted and they came back with 8% Where do you get 8%? And I'm like, all day, I get 8% all day long. That's low.
Florian Fritz 04:54
I want more but you have to know who you're talking to.
Sam Wilson 04:58
Right, yeah. If somebody used to get One to 2% in a CD, and you throw on 8%. They're gonna say, oh my gosh, this is a scam, where you show me 8%? And I'll say, No, I can invest my money elsewhere and make 12 to 15 without really trying. So why would I go for 8%? It really is framing it. And then I love the idea that then you hook them with that greed idea and then address the fear because you do develop that curiosity. And I think developing that you call it greed slash curiosity and the opportunity. So that's really interesting. Cool. Well, let's talk then. So you stepped out of that, though, because it finally got to a point where you said, hey, you know, you kind of worked yourself out of a job. It sounds like you raised too much money. You worked out of a job. And then you said, hey, I want to tweak what I'm doing. What was the impetus for you to change your business model?
Florian Fritz 05:46
That was actually an old thing already when it, coming, when I stopped working as a financial advisor, but I found I wasn't happy with the industry was doing, I thought, Okay, now I've sold so many products that are not really good for the client. They were good for me as a salesperson, they were good for the industry. For the banks, investment companies, they were not good for the clients, I wanted to do something good for the clients. So I had already started learning from some of the world's best trainers, people like Robert Kiyosaki, I met him in South Africa. I've been training from Singapore to Phoenix, Arizona, I've been all over the world, learn from some of the greatest trainers in investments, but also in personal development and teach you how to teach. So that okay, now I've got an idea how to make people rich. I know how to teach it. So why not do the thing, two things together? Before people invest in real estate or invest in anything, you need to work on your money mindset, because what we learn is you have to work hard for your money. Money is the root of all evil, money doesn't grow on trees, we learn all these things. Right? And as long as you believe that money is bad, you can't become rich, you'll never be financially free because your subconscious will protect you from becoming rich, because you don't want to be a bad person. So that's what I work with people on. And then the second thing is money management. Because that's like, the biggest difference between financial success and failure is how well you manage your money. You probably heard of the book, The Millionaire Next Door, right? Oh, the book says is rich people are good with money. Don't need to read the book anymore. Thank you. You're welcome. So that's what it says. Because there's this thing called Parkinson's Law, that says the demand for something will always mention supply. If you have more money, you're gonna spend more, there's a middle class, upper middle-class people for every $100, they make more, they actually increase your spending by 137. So we need a system to fight that. So you have some money left at the end of the month, and not a month and left at the end of the money. And then after we worked on that, now you think money is easy to get money's laying on the street, I just have to pick it up. And you know how to manage the money you make. So you keep something and then you can start investing and actually grow your wealth and become rich and have an amazing property portfolio. And in my opinion, you've got to start at the beginning. Otherwise, you will do one deal after the other and you'll wonder why they fail.
Sam Wilson 08:06
Interesting. So talk to me about, you know, what are some management tools that you put in place that help people? I mean, because really, in my mind, this is kind of a construction project. It's like, you've got to start with the foundation. And that's what you build for people. What tools do you use to build that foundation?
Florian Fritz 08:23
Well, in money management, I have two very simple strategies. One is for business, one is for you personally. And both actually have the simple rule in the beginning is pay yourself first. In business, I'm sure you learned profit minus expense, income minus expenses equals profit, right? And then you wonder why there never is a profit, because the expenses always grow until they met your income. So what you want to do is income minus profit equals expenses. So you want to take a profit first, and put it aside. And then you know how much money you can spend? And same thing is, if you're don't have a business yet, you're just thinking of starting it and start to invest in your personal also have different jars, buckets, bank accounts, sometimes people ask, Why should I have a second bank account? Yes, because you want to manage your money. One is that you take away for your financial freedom. You put at least 10% of your income every month, you put in your financial freedom account, and you never touch it, unless for investing it. And then you grow it. This is your golden goose and you only take the X as soon as you've got enough investment income. Okay, this will only work if you also manage the rest of your money. You want to have some money for play, for fun, have 10% that you spend on just having fun in your life. Because if you only manage it only safe, you won't be very happy. And you will say damn all this. I want fun and then you blow your whole savings accounts. So I plan to have fun as well. And then you can buy whatever your video game or your 100 pair of shoes or whatever it is without any regrets because you actually planned it. Then you want some money for half another 10% for long-term savings, savings for spending, meaning your new TV set maybe is something you can't buy every month. So you want to save a couple of months for that have an account for these things, a new TV set a new car, refurbishment of your home these things. So 10% for financial freedom, 10% for long-term saving for spending, 10% for fun, 10% for education, because you want to go on learning, so you increase your ability to make more money, 55% for your necessities. Well, of course, we need that food, shelter, and insurance and all these things, utilities, and 5% for giving, so you give something back to people who were not in your situation and can't do that and meet more help. So that's this very simple system. This is described by T. Harv Eker in the book Secrets of the Millionaire Mind, very simple system for your personal finances, which I highly recommend people implement. It's very easy, extremely easy, and makes a huge difference. Just a couple of months, you'll notice how much more money you have.
Sam Wilson 11:01
Right. That's interesting. So tell me, you say that's easy. But then I think about that. And we're very good on tracking, obviously the business expenses. I mean, ours are dialed in. But when it comes to personal expenses, I'm not real good about that. It's like, well, I keep more than I make and or keep more than I spend. And otherwise, I'd rather just go out and make more money in business and just keep that faucet turned up higher and not monkey with it. What do you say to that?
Florian Fritz 11:26
I love that make more, yeah, absolutely make more. But I'm not talking about you need to track your expenses and write down every penny or every cent you're spending. As soon as you're using the system, you have an account for play, just, play money, and you have an account for investment money, and account for education money, you don't need to track it anymore. You just look at account is money there is not there right now you don't need to write down, I spent $5 on whatever, you just know, okay, I've got $500 in my education account, okay, I can spend $500, when they're gone, they're gone next month I will refill it.
Sam Wilson 12:00
Right?I like that. And that's one of the things I think that keeps a lot of people from, you know, taking the time to do those things. Even with the tools that are out there. I'm thinking of tools like Expensify and other products like that. It's an administrative burden.
Florian Fritz 12:14
You start that you do it for three days, and then you drop it.
Sam Wilson 12:17
Then you got another $20 A month subscription on your credit card that you're not using.
Florian Fritz 12:22
Cancel that subscription, just get your six bank accounts were like I told you right now. Yeah. And then you need every month, when you get your money, you distribute the money, and the job is done. That's all the money management, it takes no more tracking, no more extra apps that you don't use. Just do this. And it takes you I don't know, a couple of minutes a month.
Sam Wilson 12:41
Great. I like that idea. Talk to me, you know, we're seeing hyperinflation, I don't know what the rest of the world's currencies are doing. You know, cash is trash, essentially, from somebody well known here. And maybe a year and a half ago, they said cash is trash. So when you're talking to your clients about investing, and about setting aside money for the golden goose, or the golden eggs, whichever one I guess you need the goose to lay the eggs, but, no, feeding the golden goose. Like, what are you doing with people when they have cash to invest, but maybe not enough cash to invest in, say a large commercial real estate deal? I mean, for us, if you're gonna come invest with me, the minimum is 50 grand, and it's probably going to move to 100 in the near future. So that takes some cash reserves to get in on an opportunity. What do you do for people that don't have you know, that large of a check to write?
Florian Fritz 13:28
Start with something cheaper. An ounce of silver, one silver coin is less than $30. Everyone can buy that and silver is, will save you from hyperinflation. An ounce of gold, one coin is 2000. That's, it was 69 euros, $2,000. Now, that's a lot cheaper than 50 grand. And you don't have to buy an ounce, you can buy something in between. So you can start with silver and gold, you can find other real estate opportunities. Well, if you buy REITs, you can invest with very little and it's a stock, it's a paper asset, right? But still you have an income comes from property. So that's a possibility to do something. You can use crypto in some part, have some money in crypto, not all of it. As always, not all of it. Yeah, there's a couple of different opportunities to build up your money until you can go into larger properties, real estate and then come to Sam and invest in the commercial real estate. 50, 100 grand is, built them up somewhere else. I have very interesting thing in the cannabis business now, international company that pays amazing returns, and you can start with $60.
Sam Wilson 14:42
Wow. That's fantastic. Yeah, those are niche opportunities. I think that you know, the smaller investor can get into we've seen that with crowdfunding. I think we're going to see more of it with Blockchain as those technologies come online because for us, one of the reasons that the numbers are so high is because it's an administrative burden, you know, if you come in on a deal with me, I'd rather deal with you, for one check for 100 grand than 100 investors for a grand, right? That's an administrative nightmare. That means everybody's signing 150 or 200-page document and everybody's getting communicated with. So it becomes, we just can't do it. But I think one of the interesting things we're seeing is in blockchain, and in those technologies that are slowly building, it'll remove a lot of that overhead and admin.
Florian Fritz 15:24
You can already tokenize your real estate, right? So if you find a way to do that you can have without any administrative work, you can have people invest with 100 or $1,000.
Sam Wilson 15:37
Right, yeah. And we saw those securities with the crowdfunding regulations that came on, gosh, I don't even know now, six, seven years ago, at least here in the States, you know, it's something where you can, bring on those $100 investors with a Reg A fund, you can do that, and even speaking out of my funding to get our securities attorney on this call, but you can do it here. It's just again, it goes back to the administrative side of things. Is that what you want to do? So I think that'll be interesting to watch. Watch how that unfolds. Let's go back to the cash conversation. What do you recommend that your clients keep as a percentage in cash.
Florian Fritz 16:09
In cash of your investment money? I'm not a great cash person. Although today, it's advisable to have more than I used to recommend, right? Because of the uncertainty we have right now, with a war going on not only 500 kilometers from my border, my wife is from Ukraine, and we have a friend from Ukraine staying with us now with her son. So it's very close to us. And it does. But it's not only local here, it's for the world economy. It's huge uncertainty, we don't know what's going to happen, how it's gonna affect us, stock markets might crash to I don't know where, if it weren't something I saw today, the nickel prices went up from 30,000 to 100,000, in three days per ton of nickel. If people, company, industries that use nickel suddenly have to pay three times as much than before the products might go up in price, just guessing. So I think we'll have more inflation coming up. That's why you don't want to have too much cash, but you want to have liquid cash or assets that so you can buy cheap stuff after the stocks have crashed. So that's why it's difficult. Now you don't want cash because inflation is going up. But you do want to be able to buy in, I don't know, a couple of months or a year, there will be lots of cheap opportunities, definitely in the stock market and maybe in the property as well.
Sam Wilson 17:31
That's an interesting conundrum. Because as you have a wasting asset, you know, it just isn't this case would be cash. I mean, it's losing value every day, the theoretical purchasing power of that is decreasing. And yet at the same time, if things like stocks or bonds, or whatever it is, treasuries, if those fall, then then they may fall at a rate faster than the devaluation of your currency.
Florian Fritz 17:55
Yeah, if your currency falls by 15%, if the stocks, by 50%...
Sam Wilson 18:00
You got to 30% arbitrage right?
Florian Fritz 18:02
You still make a profit on that. So 10 to a maximum 20% in cash is what I would advise.
Sam Wilson 18:08
Got it. I love it. Florian, this has been fun. Thank you for taking the time today. We kind of wandered all over the place on this, but I enjoyed the discussion. Because I mean, we covered everything from, you know, the war in Ukraine to you know, what you're recommending to your clients, you gave us some tools for interesting ways to find investors working with Ras, and even just the basic money management tools that your clients need, or that anybody needs in order to be financially successful. So I appreciate this. Thank you for coming on today. If our listeners want to get in touch with you and learn more about you, what is the best way to do that?
Florian Fritz 18:40
The best way is to actually join my free Facebook group, the Money Hero Community, where I share tools like the money management system every day, and it's free. And I have a couple of events going on that I advertise in there. So you'll always find out what's new, what's going on away. You can join and learn something.
Sam Wilson 18:58
Fantastic, Florian, thank you for your time today.
Florian Fritz 19:01
Basically, Facebookgroups.com/moneyhero.
Sam Wilson 19:03
Facebookgroups.com/moneyhero. We’ll make sure we get that in the show notes. Thank you again. Appreciate it. Have a great rest of your day.
Florian Fritz 19:09
Thanks a lot, Sam.
Sam Wilson 19:10
Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories so appreciate you listening. Thanks so much and hope to catch you on the next episode.