Make Money Work for You with Scott Jarred

January 6, 2022

Expert CRE Secrets Podcast

“That leadership ability to pull it in and look macroeconomically to give someone the keys to make and be able to write their own story that they want.”

As the CEO of INVST, he built his company around a core vision: Crafting the ultimate uncommon experience. Specializing in providing a comprehensive wealth management solution, they have overcome the pitfalls of the micro-specialist. Their goal is to be an industry transformer, continually innovating our anything but traditional approach.

Scott Jarred is on a mission to help make all things investing simple for people through education, guidance, and counsel, and really focused on helping each individual reach their full financial potential. He has unique specialties lying with high net worth individuals that utilize their private client platform to protect and preserve their wealth. This has helped him position himself to help his clients become more financially independent and secure.

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Make Money Work for You with Scott Jarred

Brett:

I'm excited about our next guest. He's on a mission to help to make all things investing simple for people through education, guidance, and counsel, and really focused on helping each individual reach their full financial potential. He has unique specialties lying with high net worth individuals that utilize their private client platform to protect and preserve their wealth. This has helped him position himself to help his clients become more financially independent and secure. Please welcome to the show with me, Scott Jarred. Scott, how are you doing?

Scott:

I'm great. I'm great. Thanks for having me today.

Brett:

It's for our listeners who are just getting in for the first time. Would you give us a little bit more about your story and your current focus?

Scott:

Back in 2003, we started a company called Jarred Bunch Consulting recently, we rebranded to INVST, and our whole mission was to educate guide, and counsel people toward reaching their full financial potential, and we've created Financial Engines almost like a family office structure for our clients, we help them organize all their financial information, help them weigh and measure financial decisions, and over that journey over all those years, we found that there's actually a proven process for getting people to really live the life they want. We put this into a book called a FutureHack, and from working with high net worth people that have either exited their businesses have developed real estate, however, they've built their wealth, there's been seen a pattern of success, that is actually replicable, and so we're putting it together and, and sharing it with people like you.

Brett:

We're gonna dive into how to make money work for you, and how to dive into some of these secrets that Scott has learned around his time in the industry. But Scott, before we go there, I believe we've all been given certain gifts. I want you to go back to maybe your high school or college days. Some people call these gifts superpower, some people call them strengths. I believe their God-given gifts that are given to us to be a blessing and help to others. I'm curious, what are those one or two gifts that you believe you were given? How does that help how you help and bless people today?

Scott:

I'd say that's a unique ability. What's your unique talent that you're gifted at that you never tire of? Just really love it. I guess when I was a kid growing up, I grew up in a very poor environment, at a younger brother and sister that we just never had anything, we always struggled my way out, was playing football, got a college scholarship, and was able to, throughout that time, become a team captain and all these things, and that leadership stuff that I developed at a very young age was one of those things that I thought that really works for me and deciding to, I could always see things I could see abstractly, I could see connections between multi different things. I actually got a degree in urban development to understand cities, how they layout, and ended up getting a master's degree in technology and how to integrate decisions for tech companies and how they work and how they integrate, and it wasn't till we started our company INVST, were that I really realized that those same macroeconomic viewpoints I was really gifted at seeing and be able to connect people and things together to create a better solution are really were the core makeup of our entire company today. That macroeconomic the tech side to be able to create something that was macroeconomic versus micro to make financial decisions. Then you can go back in and build the real estate and develop the city and how the things we’re gonna go by focusing on my unique gifts, taking all this complexity and taking all these, what I would call like your who's these, these board of directors that you have that make decisions for you and put them together so they make decisions on your behalf based off of what you said, it's that leadership ability to pull it in and look macroeconomically to give someone the keys to make and be able to write their own story that they want, and that was the gift man. We built the whole company around and it's been a lot of fun.

Brett:

The leadership, connecting multiple things together, seeing things from a macro perspective and finding out how they all integrate, and then centering that around the client and what they want. Is that a fair summary?

Scott:

Just like Capital Gains.

Brett:

Let's dive right in now. What is the number one secret for helping people to make money work for them?

Scott:

The number one secret be like, you got to decide that you really want to have money work for you. There's a lot of people out there who just don't.I think I always go back to like, there are people that live in, there are two kinds of people, and if you read our book. People live in abundance, and there are people living in scarcity, and a lot of times we like, I'm afraid to take and understand how paper assets work, how to create certain things. What happens is, they end up having to work their whole life trying to create something, but they never get to the position where they can actually have trust and faith that they can actually manage their paper money, the right way to be able to make something work so that way that can create an engine to really give them what they really want, which is basically we talk about these four freedoms like they want freedom, their time, they want for freedom for their money, they want freedom for the relationships, and they want freedom for their purpose, like, what's their bigger purpose? When I really carve it back, I find out really, why is it you want this money? What is it for, and it's usually for these freedoms that they're searching for? If I can create a world where they can get to the point where they can do that, where they can focus on their unique ability to spend their time doing, what their purpose is, that will give them the freedom to do what they really want in this life. The hard thing is for most people, as they never can slow down are so busy, to actually be able to sit down and write that out for themselves. Get really clear, intentional on what their core focus would be based on what their unique talents and gifts are for them.

Brett:

Abundance, mindset versus scarcity, mindset, and then working to the four freedoms, time, money, relationships, and purpose, and once you define that, have a plan, have some coaching, training, consulting, right adviser on your team? You can help bring that together. Is that a fair summary so far?

Scott:

Yeah.

Brett:

Then, what's the next step? So like, I'm sitting down with you for the first time, Scott? I'm saying, Scott, I read your book like, this sounds awesome. Like, I'm ready to go. What is give me kind of that, step one, step two, step three?

Scott:

If you can't decide if you can't discover your why, for money, it's more important than money itself. If you don't know why you work, why you do what you do. We've created a program to really help you clearly identify what you're going for.The first step is to really get clear and intentional about what you want. The second step is you have to get organized, just what you have. Back when I was urban planning, we would literally map out like an entire city, here are all the locations, here are the roads, here's how all the infrastructure works. When I got into technology, it was like, here's the full data network for an entire organization, how it works well, our financial lives are no different, and we run our businesses in a certain way. But rarely do we run our personal life in the same way. The second thing you have to do is get organized, and a lot of times people don't even have we call it like a financial junk drawer. It's like, over time you start accumulating more and more stuff and just gets piled in the drawer, and it's like, well, where is it all, and like when you go to your state plan, for instance, the state planners send you this big questionnaire, fill this out the bank or send you another one like here, give me your net worth statement. A lot of times people don't have their organized money into a financial way where has an actual financial model that you can weigh and measure financial decisions on so until you get organized, you can get the data to organize on a daily basis, you can't even make financial decisions, because you don't have a financial model, or what I would call like a financial game board to really play this game that's driven toward this bigger future that you've set for yourself.

Brett:

That sounds amazing. I want to talk about this financial game board. Walk us through how you help folks to set up a financial game board.

Scott:

You, me my deal, we aggregate financial data. Back to the tech days, we're in the information under management business more than anything. We're pulling out financial information, and we look at things four dimensionally, just like you would look at like a, like when you meet with like for instance, a business would have a balance sheet, they would have like a net worth statement, they would have cash flow, and they would have a risk management plan. Personally, we do the same thing. We look at those four ways we have a net worth.it's assets minus liabilities, then we look at cash flow. What's your cash flow money in money out, and then we've got protection. We literally have four domains, and you look at things four dimensionally. Every decision you make will impact all four domains. For instance, you have a highly appreciated piece of property that has a liability associated with it. You have a loan, that's net worth. It produces cash flow, and then you got insurance.

There are four things that a piece of property does if you sell it, and if this is capital gains we're talking about now your asset goes away, we have a deferred liability that's due and then we might have an impact on our cash flow is now out of our pocket and then the protection goes away. That decision if we keep it or sell it, we make the decision. Now I can weigh in measure what happens, and then if I have a Capital Gains Tax, what's the lost opportunity cost on that money, and what my future balance sheet would look like 30 years from now had I paid a tax or not. Now I can start making financial decisions four dimensionally versus just saying, oh, that would be good that we bad based off of one opinion of an attorney or a friend or business partner, whatever. Alright, let's put this on paper. Let's actually weigh in, measure that decision. I can take my emotion out of it. My job is not to decide for the client, my job is to help them discover what's their best way to do it.

Brett:

I think that's so powerful Scott, and obviously, this way you wrote the book, and you've been able to articulate this. With so much clarity and I want to just step back and summarize this for a second but by the way, you can learn more about Scott Jared at invst.com, and that's spelled INVST.com, and it's all coming together now. Urban landmines, land background, looking at everything from the top-down, discovering what parts of the city, would be good for a park, what parts of the city good for the business district park for the downtown for the, for communities, for family, all these things kind of fitting together on our macro view to building, a city that's well functioning and has chances to grow? Well, right. Let's just put it that way, and it's the same thing with our net worth with our cash flow with our asset protection with the values of our assets if we're selling and making these decisions, not in these little mini silos, but on these four foundational ways of building wealth. Is that a fair summary so far?

Make Money Work for You: “Real estate is the best investment in the world because it is the only thing they are not making anymore.” - Will Rogers

Scott:

You have taken the four critical domains, building the financial game board, allow you a way to measure financial decisions based on your true why.

Brett:

I want to make sure I got those because I have net worth cash flow, protection, and then what was the fourth one?

Scott:

Liabilities?

Brett:

Liabilities. Now we're looking macro, and I like the way you put that with the Capital Gains Tax, because there are times like, for example, in California for really where I'm at, you got folks that are looking at big, big challenges with rent control now. Well, California-Wide with eviction control and challenges with, COVID, with their loans coming due, right with their age, and their health and their time and their energy, right, there's a huge, massive amount of wealth that's going to be transferring, and a lot of my clients before they need us, feel like they're trapped with this capital gains tax. they're trapped with hiring property management or having a 1031 Exchange, I had one client his name is Peter, and he's driving from Irvine, California to Sacramento about three days a week, and he's fighting traffic two to three hours each way, kind of a bear, and he's like, 18 problems, and I want you to do a 1031 Exchange or Delaware Statutory Trust, he's like, Brett, I have 18 problems. He goes, I don't need 36 problems, and he goes on top of that, I need some flexibility with my cash, I need some liquidity, some diversification, the ability to purchase insurance if I want to go back into real estate, should I want to, or to maybe never go back into real estate if I don't want to, and he goes. That's why I'm choosing the Deferred Sales Trust, and it's interesting, as you're breaking these things down, these are all the things he was looking at.

He asked about cash flow, can I get cash flow? Do you get cash flow from the trust how much? Well, we can you can turn that on or turn that off, based upon your needs, protection. I no longer own the asset itself. So, therefore, I can't get sued by a tenant or somebody else, because he's lending it to the trust. He gets some asset protection, he'd also be able to pay off debt, he had about $550,000 of debt, he goes, probably went through the 8 crash, and I had to claw my way out of that I was able to hold on for a lot of my stuff. But guess what, I don't want any more debt at my age, and then the last one was, I guess, protection would be just, he's not having to get asset protection because he's not owning the asset. But all that being said, I love the way you break that down. Would you give us maybe a clear example of a client that you've helped recently and what was the biggest kind of aha moment for them? And how does that help them build their wealth?

Scott:

I just I mean, if I was talking to your friend here that when you're talking about what does make these hard decisions, you could hear the scarcity coming into their mind, man, 08 09 happened and I don't want to have dead it's bad. I just want all the stuff so that's a lot of emotional stuff that I hear. Because right now you can borrow like next to nothing. capital gains are the lowest they've ever been. The market in California has gone absolutely astronomically high. You've got huge so it sounds like a cash flow issue. In the four domains, right, so how do I manage my liabilities? I gotta get acid that's generating and not get cash flow. The right answer would be looking at what is it deep down that you're afraid of? Because I mean, I'm sure you can rent these places out and do that. But if it's a regulation change things out of our control, the market is at a high point where it's got to change the way we do have to look at the investment specifically on those four critical domains that may be a good time to exit the strategy. I would start to really get dig into, there's something at the root of that fear that he has, right that we got to pull that thing out of right? So we got to figure out what it is. But to me, it's a cash flow problem. These ideally, I would structure that debt, push that out longer to keep the cash flow lower. If you do have someone come in and out, how do we maintain that and then maybe we actually go buy more real estate use these the equity is built-in and create more opportunity for you to buy life insurance to pay the tax if we continue to step up and basis, this could be a really good asset for you for a long period of time?

But we got to figure out really what the root is of it before we start looking at what that is. Any client that comes in so we had this exact same question that I had, as a client, I have a business that generates a couple of million dollars in revenue to me and my pocket, it's in the home healthcare space, and I've got a private equity fund, I think I want to sell it. Private equity fund comes in offers $150 million for this built this for this business, and it's generating only this much cash flow because the multiples are so high of what they can get for this thing. Now the question is, do I want to pay this Capital Gains Tax? And worry about it? Or do I just want the cash? And then and then how do we do it? So those are decisions, but then a day at that multiple and what we're seeing like, especially in real estate, especially in California, it's out of control, but you do have regulation issues.it's like, how do we weigh in measure those things as tangible assets, intangible assets, and make that decision? So it's not me and you have given them the decision, then they're scattering but if that's the decision they do, it's time to exit the market. I'm gonna sell to California and go buy cheap real estate in Arizona or wherever more cash flow stuff, what's that look like? Or I'm done? And I want none of that headache or risk again, then what's that look like?

Brett:

I like the way you said that and, and I think for him, it was the time and energy and verse that he was spending because he has other properties to write that are local that aren't headaches, that isn’t stressful that isn’t, this was like a C property and C minus neighborhood, and it was, it was causing a lot of stress, and he could never find really good property management. He was she was like, What am I trading really what am I trading for? versus what I could have on a personal side of things, and then the second part is the business sales, so the deferred sales trust works for business sales, so we just have another business owner in Alabama. He was having challenges with his partners one and out wanted to start a whole nother thing. He sold the business for 2.6 million deferred 600,000 of tax and he's building his next dream was to build multifamily projects. He's building 70 units in Tennessee, and so for him, it was multi-layered, the next chapter of his life versus paying tax, but it was also a timing-related right he didn't have to do for forcing himself into 1031, overpay for a property he could diversify his wealth into multiple syndications and stock market stuff and insurance, and, and so that's part of why we love the Deferred Sales Trust for all of those reasons. I'm just curious, what's the biggest frustration you found? When it comes to capital gains tax deferral? Either the 1031 Exchange or just Capital Gains Tax Deferral for business owners cryptocurrency owners, public stock real estate, what's the biggest one you found in your career?

Scott:

I'll tell you the trust thing you're talking about hasn't very intrigued about how you guys structure that because it makes a lot of sense to take a highly appreciated business if you can move in that environment, defer it because we use a lot of lines of credit. I mean, we look at there's two kinds of debt, right? Yeah, that’s, that's good that and you're good at that. That's bad debt. Good debt has low-interest rates, it's attached to appreciating assets and it provides you good tax benefits. If you got a business sale, and you can transition it over, and then in the book, we talk about ways to manage paper money, and a lot of the real estate people don't really like paper assets because they are so good at hard assets. But if you look at the most wealthy billionaires and people in the world, they're really good at managing both. What we've identified is how well do I manage the paper assets? And then how do I use Velocity of Money how to get $1 do two things that this pot of money can now go out and get me the real estate to provide the cash flow that if the capital gains deferral ends one day, I've got enough cash set aside ready for it. Like how do we do it so the some of the best things I've ever done is like, is just thinking through those processes of how that goes because we're the same situation and we've got, we buy a lot of real estates we have like a $200 million real estate portfolio with our clients and investors that have grown exponentially.

My friends that I went to school with and are planning have become very successful real estate developers I've got a friend of mine who owns a billion dollars in multifamily. I got another one owns an office park, I know it as hotels, I've got retail strip mall. We've got a lot of expertise, these different restaurants, food chains, I mean different businesses and stuff that we've really worked with and I've expanded it, but what you find is if I keep that capital at work, and then go get it again and again and again, that's Velocity of Money, how many times you get that $1 to roll over? So it's how do you manage the tax that's there like in your case is deferring it? But if but today, capital gains rates are so low, what is the potential of being ballooned in the future. That's how I get rid of stepped up and basis. Like so used to be just let it defer, defer die one day, get a step up, put in your dynasty trust, have life insurance, double your state and you're like off to the races, like you just spent all your money, enjoyed it and then left is the next generation all's good.

It's that political structure that we don't know is uncertain. It's like, how do we manage these things now, but as you can create more income and profitability, so when the market does correct, and it will, and when the bank says, that's my money, I want it back. Well, it's their problem, not mine, because I've set myself up in a way where I am in control of my money to make those decisions. But I'm not making a decision for a tax that I don't know if it's going to be higher or lower in the future, what it's going to look like, I'm just being as effective and as best as I can right now and present positioning, knowing that the worlds gonna look very different in the future. What's the most economic decision I can make now? And then I start looking at do I do so we open up opportunity zones. We've done numerous opportunity zone transfers we've done like, we've set up self-insurance companies to take ordinary income to capital gains, in a roundabout way, if you did it, right. We set up a lot of those different things, we've done their 1030 ones, and then we just said. We're gonna pay the tax, and we're gonna finance it over 10 to 20 years, we're just going to use these low-interest rates, they are locked in credit swaps on the money and then defer it out for long periods of time.

Brett:

I think we should chat even more offline and explored what the Deferred Sales Tax could do because a lot of stuff that you're saying, we can solve or like we can we eliminate the need for the stepped-up basis, we can eliminate the need for estate taxes, remove funds outside of the taxable estate, and it's unlimited, and it's, it's really remarkable what it can do, and just, it's To me, it's the best-kept secret, people don't know about it, you can also brand new depreciation schedules by partnering with the trust. Many things here. That being said, we are running out of time, are you ready for the lightning round?

Scott:

I am ready, let's do this.

Brett:

Knowing what you know now if you go back to your 25-year-old self with one Golden Nugget. Make sure to tell yourself what to do.

Scott:

You got to be so you have to think future focus like you have to think in the future. Here's the deal, you get you only have so many hours. You what you just said I'm 25, and you're gonna have so much time left, you're gonna identify what that looks like. You only have so many hours to do it. If you're going to wake up every freaking morning, what are you going to do first? So you need to write down every single action item that you got? And what's the level of importance? That's what most people do. Write down all the things you got to do, and what's your importance? Well, you got to do is, the third column? What's it gonna be significant today? What are you gonna do is absolutely significant, it's going to change? So you got to think about what your multiplier yourself what your self looks like, in 20 years from now, what is different, that I didn't learn that until I was like, five years ago, I really started to embrace that because it was always about these action items, and this now it's like, how do I take what I can do?

And then 10x? What's the significance of it for my time? And how do you build that and everything else has processed, you build process and procedure for everything else? So like your friend who's been there twice, so maybe his significance isn't doing that kind of real estate anymore, we have to eliminate that real estate, let's focus like on my friend, you know, very specifically what type of multifamily they're doing what the framers look like, what private equity funds they're working with, what type of capital they want to take on. It's very clear because they have leveled significance, and that's the way those people get to the multi-billion dollar realm. If I can, went back until my 25-year-old self, say, yo, quit doing the same stuff over and over again and getting stuck in your own head, start thinking about it this way, and you're going to exponentially grow yourself. Now you're not taxing every five or six years. You're doing it every year.

Brett:

I've got it back on we've run out of time here, but there's so much more we can dive into so I can tell you if you're up for it, Scott Jarred, we'll have you back on for another time just to just dive in even deeper to some of these things. But for listeners who want to get in touch with you would you remind them one last time where they can find you?

Scott:

We're at invst.com I N V S T.You can also reach me on email scott@invst and pretty much everywhere so future hack my life. We got all that stuff, got a book download it, read it. It's got all the secrets there man little hacks.

Brett:

We love hacks here Capital Gains Tax, which is also streaming expertcresecrets.com. For our listeners, Scott, on behalf of us and myself, and then I want to thank you for being on the show sharing so much wisdom in a short period of time. I want to encourage you to keep using the leadership you've been given looking at things on the macro-level the gift of looking at viewpoints and connecting the dots. We've connected some today and I hope to do some more in the future. I wish you well on my new friend and I also want to thank our listeners for listening to another episode of the Capital Gains Tax Solutions Podcast. Also streaming expertcresecrets.com where we believe most high net worth individuals and those who helped in the struggle with clarifying their Capital Gains Tax Deferral. options, and also sometimes their wealth options on how to view these things and connect everything on a macro scale, and using strategies that Scott's talking about and the Deferred Sales Trust are the best way for you to grow your wealth, and I'm your host, Brett, and I want to encourage you to please invite somebody to share this with somebody who can get some more knowledge here and go to capitalgainstaxsolutions.com. By the way, if you want to learn more about the Deferred Sales Trust, that's capitalgainstaxsolutions.com and we appreciate everyone out there. Have a great rest of your day.