117 | How High-Net-Worth Investors Build Passive Income at Scale with Bronson Hill

Patrick: [00:00:00] What if the safe financial advice you’ve been following is actually the very thing keeping you stuck? Welcome back to another episode of the Vital Wealth Strategies Podcast. I’m your host, Patrick Lonergan, and today I’m joined by Bronson Hill. Someone who didn’t build his success by playing the typical game or repeating the same worn out money scripts most people are told to follow.
Bronson is the kind of guy who looked at conventional wisdom, asked, does this work, and then made a one bold decision, put cashflow at the center of every move. What makes his story so powerful is it didn’t start with a massive paycheck or some perfect setup. Bronson was once working as a youth pass. On a shoestring budget, and through a combination of discipline risk and the right investing strategies, he’s able to replace his entire income in under four years.
But what I love about this conversation with Bronson doesn’t just share the wins he shares the hard lessons, too, the losses, the moments that forced him to rethink everything, and the [00:01:00] mindset shifts that made the difference. In this episode, we get into what it really takes to break away from the nine to five grind, how to think differently about building wealth.
And why creating options for your life matters more than just stacking dollars. We talk investing, yes, but we also talk personal growth, family priorities, taking smart risks and the kind of discipline that actually creates freedom. So if you’ve been working hard, doing what you’re supposed to do. And still feel like you’re not getting ahead, you’re going to want to listen all the way to the end.
’cause Bronson’s approach might be the missing piece that helps you unlock your next level in business and in life. And as you’re listening, if you want to go deeper and start applying real strategies like the ones we talk about on this show, I wanna invite you to visit vital wealth.com/resources to access our free guides and wealth building tools.
Again, that’s vital wealth.com/resources. It’s packed with resources that help you build smarter, keep more of what you earn, and create real momentum. Also, quick favor, before we jump. If [00:02:00] you’ve been enjoying the podcast, would you take a second to leave a review? It helps more entrepreneurs and business owners find the show.
It means a lot to our team. Alright, let’s get into it. Here’s my conversation with Bronson Hill. I’m excited about our conversation today. We’ve got, uh, Bronson Hill on the podcast and we’re gonna get into real estate and how to invest in that in a way that we get to avoid. All the hassles that, that generally come with, uh, investing in real estate.
Uh, the average landlord lasts about three years before they decide to hang it up and go do something else. And so, uh, we’re gonna get into to how to avoid some of those things. Uh, and so Bronson, thank you so much for, for joining us here today,
Bronson: Patrick. I’m excited to be here, man. Excited. Uh, you also have the same barber, so we have, we say we got, uh, we got a great hairdo there.
Patrick: Yeah, absolutely. Bald is, uh, the new black. It’s good. So. Um, very good. So I, I think about the entrepreneur that is looking at, you know, their, their wealth and they’re thinking about, man, okay, uh, I’m, I’ve got a tax problem, I’ve got capital stuck in [00:03:00] volatile or inefficient markets. Uh, you know, and, and there’s just complexity in my life and I don’t, I don’t need to add to that.
And so I’m looking forward to digging into that. And then also just thinking about man, internally, I, I’ve got. This anxiety. You know, I, I think about the stock market in general, and it’s like, we’ve been on a really nice run, you know, 2008 was the last, I’ll say, real recession. And we’re, uh, we look at market cycles, you know, we’re, we’re 17 years into this, uh, uh, 18 years into this market cycle, and it’s like, wow, okay, that’s a, that’s a pretty long time.
Usually they’re, they’re 10 to 12 years. And so, uh, I don’t know when the next recession’s coming. My, my crystal ball isn’t there, but, uh. It’s, it’s something that the entrepreneur, I think is, is concerned about. And there’s also just a general distrust of, of Wall Street. And, uh, so I, I think there’s, you know, a few things that we think about.
And then philosophically it’s, it’s really hard to produce, uh, freedom, uh, when I’m just grinding it out. And, um, and, and wealth should serve our [00:04:00] life, not, not necessarily make us a slave to it. So, uh, I’m, I’m looking forward to, to digging into a lot of these, these, these issues. Can you give us a little bit of your.
Your background and how you got, uh, uh, started doing what you’re doing.
Bronson: Yeah. A lot of things you shared I can relate with. I was a, uh, I was a well paid medical sales professional, so I was working in medical device sales and surgery for 10 years in, in different forms. And, uh, basically I worked with doctors that made millions of dollars, but they worked 60 to 80 hours a week every week.
And I thought, that doesn’t feel like freedom, right? So I was grinding it out. I was, I was working hard and a lot of people can relate with this. And, and it was like every quarter if I met my number or I did, you know, met my sales goal. It was like slap on the back, great job and not do it again next quarter, but do bigger.
So you feel like that. So a lot of co, especially a lot of corporate sales or just even, even just general like working a job, um, it can feel kind of soul killing. About 70% of Americans feel they would say that they’re not engaged at work, they don’t like what they do. So I started to kind of like, well, what can I do to start generating passive income?
Because if I can just, you know, as Warren Buffet say, [00:05:00] figure out how to make money while I sleep. Otherwise, I’m gonna be working until I die, right? So, can I do something that I enjoy and that, that I kind of gives me life? And so learned about real estate. I had been doing a little bit of single family. I had a mentor come around saying, Hey, why don’t you do multifamily?
And I said, what do you mean? Like, I don’t have the money for buying apartments. And he said, well, you can raise the money. So he, you know, kind of gave me some tips and said, here’s how you get started. So I started raising capital, uh, started to meet up in Los Angeles. Raised a little bit of money for one investor, and then I found a partnership of a guy who was helping people, other people raise money.
And I approached him and said, Hey, what if I help you raise money? And so we basically worked together, we raised about $15 million together over the next 18 months, and that allowed me to be able to fire myself, which is the name of my book behind me here of like, uh, the subtitle is Replace Your Working Income with Passive Income in three years or less, right?
So what, why is what I’m doing now not working as a corporate employee or if I have a business? And really the issue for a lot of people. Um, you know, if I, if I got disabled or something happened to a family member, or I just didn’t wanna work or wasn’t able to work, uh, would I have money? Would I have, would I have funds coming in to be able to [00:06:00] support?
And that’s what passive income really does for people.
Patrick: Yeah, I love that. And I, I think there’s a, there’s typically a misnomer around real estate and passive income because, uh, we both have real estate backgrounds. My, my wife and I, we’ve been investing in real estate for, uh, almost 25 years now. The thing that most people, they, they think about, oh, I’m gonna go buy a, a single family home.
I’m gonna go buy a 10 unit apartment building and I’m, I’m gonna create passive income.
Bronson: Yeah.
Patrick: And, um, that’s generally not the case. Uh, it’s actually not passive at all. It, it’s like owning a small business. I have to show up and, uh, start doing the work and finding the, the tenants and making sure the, the property’s clean and neat and, you know, all of those other things.
Um, it’s. It goes back to that one of the initial comments I made about, you know, the average landlord lasts three years before they get out because they’re like, I don’t have time for this. Uh, this is a, uh, a pain in the neck. It’s, it’s a hassle. And so I’m, I’m looking forward to getting into [00:07:00] talking more about.
How you’re putting together like truly passive income
Bronson: for people. Yeah. Yeah. Just to kinda highlight what you shared. So a lot of people will say, oh yeah, I should start, you know, getting passive income. And what they say is they’ll buy a rental house or, uh, start an online business or do trade options or stocks online.
And none of those are passive strategies because if you buy a rental house, like, you know, it’s not passive. Even if you, even if you have a property manager, they’re gonna be asking you, Hey, the, the tenant didn’t, you know, are they, you know, the toilet’s broken. What do we do here? What do we do? In this case you need an upgrade.
So you’re getting constantly having to make decisions. Decision fatigue is real. So once you get to, I think at one point I had four single families, but I felt like it was a lot of work. ’cause I was buying in areas that weren’t great and anybody, you probably had, you’re smiling, you have multi, you have single family.
People think it is a way to freedom, but it’s, it becomes another job. So I realize if I fast forward to like, okay, I’ve got 30 of these houses, I was like, okay, I quit my corporate job and now I have a job and I’m just managing the manager all the day. And like, I don’t wanna do that. I know people that do it.
I know people that are over $10 million that do it. I’m like, why do you do that? Because your time is more valuable. Right? So, so yeah. Of. [00:08:00] Passive income really is, does this, I do a little bit and nothing’s fully passive ’cause nobody cares about your money like you do. But uh mm-hmm. Once you kind of do a little work to vet a group or a project or something, you kind of do some work.
And I talk in my book a framework of how you vet, uh, different assets and we do all different types of things from oil and gas to real estate and debt funds to development, these kind of things. So how do you vet it? How do you know? And then you invest. Once you choose, you say, I’m gonna invest in this.
You send your funds and then you’re hands off. Right? You’re not actually doing the work, somebody else is doing the work. They’re providing reporting, they’re giving you the cash flow and they’re giving, you know, the tax reporting so it becomes much more passive. So there’s, this is how people get to put millions and millions of dollars into projects they’re not running, and that’s where, uh, it becomes very scalable.
Patrick: Yeah. Yeah. And you’re, you’re hitting on a really, really important point that I think we should, we should dig into a little further. So we encourage our clients to, instead of going out and being involved in, you know, their own 10 unit apartment building, me personally, I would. I like 300 units in [00:09:00] up. I can put full management, you know, maintenance, all of that sort of in place, in that, uh, that, that environment.
Uh, I’ve had a 10 unit apartment building and I hated it. I always had a vacant unit. I, you know, there was, there was not enough like, uh, infrastructure there to have like an onsite manager. It was, it was just a pain in the neck. Uh, I’d rather have like a single family home, which. We generally would lean into like selling it on our financing or 300 units and up, like nothing in between.
So, um, I think that’s good. And so what we have like encouraged our clients to do is like, go, go work with an operator. Somebody that’s really, really good at this type of thing that just needs more capital, you know, that they, they need some dollars to, uh, go do the next deal. ’cause they’re, they’re in the game and they’re, they’re finding opportunities all over the place.
So can you talk a little bit about how you. Find and vet operators that, um, you know, can be somebody that can execute well on a deal.
Bronson: Yeah, so it’s a good question. We have a, uh, math paid mastermind group that [00:10:00] we have called the Wealth Forum. We have, uh, uh, man, we have an amazing meeting coming up in Scottsdale with Ken McElroy is a friend of mine at the Ford of my book and a few others.
And just getting a, getting in the room with amazing people. ’cause a lot of times great deals come from a great network, right? So it’s not just like you go online and this stuff’s all here. Or people talk about if, if people are talking about stuff. Like on social media or it’s an ad or something else, just there’s, it’s much less likely.
That you’re gonna find a great deal. ’cause a lot of times people that advertise and do this stuff, it’s people that can’t raise money on their own. So how, how these deals come from typically our private networks. So we have people that reach out to us, Hey, come do our deals. There’s a lot of other groups we find out there, and a lot of times it kind of comes in reverse order.
So Right. People will send us a deal and then we’ll have to take a step back and be like, well, hold on. Before, uh, a lot of investors are really unclear on what their goals are, right? So they’ll say, I’ll ask this question. I’ve had over 2,500, uh, one-on-one phone calls with high net worth investors. And individual calls and, and they’ll say, I’ll say, what is your goal?
Is it cash flow? Is it appreciation? Is it tax benefits? They’ll kind of be like, well, kind of like, I need some cash flow and I need some. Some tax [00:11:00] benefits I need. Like, there’s kinda like a little bit of everything. I’m like, well, you really don’t what your goals are. And so I think for a lot of people, cash flow is really, really important.
So it’s important to figure out what, what it is you want and then run that through a filter, the deal that you see or you find. And of course you can be, you know, podcast people reach out to us from shows and our website, whatever. Hey, let’s, let’s have a call and figure out we, we will share about what we do and we’ll get them on our deal list.
There are groups giving all types of different deals. Like I know you said you’re in senior care. Mm-hmm. So like that’s a great place to be at somewhere we’re very interested in. Right. So we’ll have calls with people that kind of vet those deals and as an investor and also for our investor. So I think, you know, really asking great questions.
I think some great questions to ask are, um, well, tell me, you know, what, what’s the biggest risk of this deal? What’s a way that, you know, you could lose money? And I always, I always have something in mind of what I think it is. And a lot of times they’ll share something totally different I didn’t even think of.
Right. And they’re the ones operating, right. So what you ask them without telling ’em, and then they’ll give you something, oh, well, tell me how’s that gonna work here? And then also, I love to, if I can speak with other investors or get a referral from another investor of like, what’s it like with them?
How’s the communication? How’s the performance? Because you can have great performance, but if they are [00:12:00] terrible at communicating, it’s not a good experience. It’s not a good experience. So, so I think there’s a lot of that, like it’s. It’s kind of this whole pri world of private deals that is kind of private, that we don’t really have a lot of information about it.
So the best way to get information is to talk to other people that have invested with this group and say, Hey, I’ve worked with these guys for 10 years. They’re awesome.
Patrick: Mm-hmm. Yeah, I, I love that. And some, some key points there. We agree a hundred percent. If the deal’s on the market, we’re probably not terribly excited about it, uh, unless there’s some sort of value add or some opportunity for us to, to take a look at.
Our network has been so valuable to us in finding new opportunities. Uh, people, people figure out you’re, you’re in the game and then it’s bankers, it’s, uh, developers, it’s owners that are, you know, maybe getting ready to get outta the game and they’d just rather, uh, work with somebody that’s, that’s got a track record versus like, bring it to the marketplace.
And, uh, so yeah, that’s uh. I, I, I love the highlight there on the, the value of the [00:13:00] network. It’s, um, it’s incredible. Can you talk to us a little bit more about your mastermind and what that all entails? ’cause that, that sounds, uh, very interesting.
Bronson: Yeah. One of the challenges I found, uh, Patrick, is that anybody who’s a high net worth person, and I mean typically somebody who’s worth over 2 million, we’ve got people that are up to 40 million or more.
If I have one friend that’s over 500 million. The challenge is when you start talking about money, you open up your mouth and you start what you’re doing with your money. It’s awkward when you talk with family and you start talking to friends. Most people say, why don’t you talk to your investment advisor?
And I, I used to be, there’s something called an RIA, which is a registered investment advisor. I used to be, well, now I’m an RA, I’m a recovering investment advisor. I’m not registered, but I’m an advisor, but like I’m recovering from that. So, but everybody in finance is trying to sell you something, you know, myself included, if you do deals.
So no one is biased in finance. And so that’s what I’ve realized that for a lot of people, and I think of a guy that I knew who lived in Spokane, Washington, who was very high net worth, probably worth north of 30 million. He was really isolated. He didn’t know anybody. [00:14:00] And who’s he gonna talk to in Spokane, Washington, high net worth, whatever.
So, so he was, he joined the Wealth forum because, or was a part of a group that we did because he was looking for peers, he was looking for people that. Could say what I said before, have worked with these guys for 10 years, they’re awesome. Uh, don’t watch out for these guys. And so there’s a lot of that, that information sharing.
The second thing I think that really happens that’s really powerful in a group like this is I really thought it’s gonna be all about deal flow, tax strategy, and, you know, investing kind of stuff. But what it becomes, it becomes this peer group of like, Hey, how do I get my kids to like learn about investing?
How do I teach, how do I raise kids so they’re not spoiled? How do I, okay, I’m, I’m 55 years old, I’ve accomplished everything I want, want in life, what’s next for me? Right? So, and a lot of mindset. So a lot of pieces around that. That just people, the only people that will really get, that are people that are in that place or that can kind of speak to that.
So we have a lot of dialogue around those things, and it’s been just an awesome group. And, and the room is very, we select who’s there, so we don’t get people pitching anything and we don’t get people that are, um, you know, [00:15:00] lower net worth just because it’s just not a good fit. So we really curate the room and it’s been really fun.
Patrick: Yeah. No, that’s fantastic. And again, uh, this almost fits back into that, that dialogue around value of your network. Uh, a it can help with deal flow, but I, I think about the people that you surround yourself with. Uh, so, so valuable. I, uh, I’m a, I’m a part of three different, I’ll call it pure groups, one C 12.
It’s a Christian business owner. The second is eo. Yeah. Many know as well
Bronson: being entrepr. Yeah.
Patrick: Entrepreneurs doing cool, exciting things going, wow. That’s pretty neat. And then we’re also involved with Strategic Coach. Yeah. Which is like really, like, let’s get our mindset right to 10 x what we’re doing. And so, uh, I think about that and, you know, there’s a, there’s an old saying that we’re all familiar with, but, uh, you know, if you, if you look at your five closest friends Yeah.
Like, that’s you. That’s, that’s the direction you’re headed. And it’s like, great, let’s get plugged in with, with like-minded individuals that are doing really cool things. And, you know, heading up into the right and let’s be a part of that. So
Bronson: yeah,
Patrick: that’s, that’s, that’s great.
Bronson: Yeah, I was a [00:16:00] part of Strategic Coach for a couple years, learned a lot there.
I’m eo I just joined YPO recently and then mm-hmm. Um, yeah, I, I, I love, you know, being in rooms with amazing people, it’s so important.
Patrick: Yeah. This is great. So, let’s talk a little bit more about the types of deals you’re looking at, because I, I think there’s, there’s lots of different ways to, to make money in real estate.
You talked about, you know, knowing what my goals are. Am I looking for cash flow? Am I looking for appreciation? Am I looking for tax opportunities? And, uh, you know, my bias personally is, and we’ve made money in and I think in all of those things, but, uh, my bias is towards cash flow. ’cause you know, it doesn’t really matter what the market price does, if it cash flows, uh, I can, I can sort of sustain that.
And if it doesn’t cash flow, I have a limited number of those opportunities I can pursue. Of course, I’m very interested in the types of deals you’re doing and, uh. How you, you look for those. And one final comment, I I like my favorite deals are the deals that I can force the appreciation, you know, by driving the cash flow number up.
Yeah, right. Uh, when you’re a good [00:17:00] operator, you can come in, you can see those inefficiencies, uh, or opportunities to increase the, the bottom line. And when you’re multiplying the value times the number on the bottom line, it’s like, well. Cool. I can go impact that, uh, in intermittent
Bronson: Yeah. Value add. Yeah, value adds great.
I think, uh, we, we did a lot of multifamily previously where, you know, you come in value add multifamily, and then when rates, uh, started rising a lot, there was some real pain for a lot of people, us included, where it just, mm-hmm. You know, I think it was like early 2022, it just, some of these, you know, properties decreased in value up to 40%, you know, in two years in the same condition.
So we shifted and you know, we realized a, there’s a lot of deals there, a lot in real estate. Now it’s hard to find cash flow and I think cash flow, just to your point. Is the most important thing because if you have deals that cash flow, you can hold it forever. It doesn’t mean if I get paid tons of money in five or 10 years, that doesn’t help me pay for the bills.
Now that doesn’t help me do like, like, I mean, it’s good to take some of the shots, like, okay, I’ve got this thing that if it goes right, you know, these deals that will go really well. But, uh, if you cash flow and you can grow the cash flow, it’s a way people can live. Um, [00:18:00] and that’s what I talk about in my book is if you have, uh, so for me, I was making over 250,000 per year.
I realized I didn’t need 250,000. I needed about. 6,000 a month, so about 72,000 a year. So I realized if I can just get to 6,000 a month, and that was a much more manageable number and I got to that than I got to the other number. And so it’s like, but that’s the number where you’re free, right? So a lot of times we think we need this huge number, but it’s just growing that and scaling it up and it becomes like this snowball that kind of ramps up over time.
So, so deals I like today, um, that are doing, that we love, um, uh, in real estate, we, we love real estate debt funds. We have a debt fund that we’re involved with that. It’s paying, you know, around 10 to 15% it’s first position. That’s really important. In debt funds, there are people doing mezzanine and second position.
Other things, if you have something that’s primarily first position, that just means if anything happens, like you are the first role on that and nobody else has anything. So we’re low loan to value, so it’s 50, 60%, so that doesn’t pay. We just take over half the half the cost and that’s kind of neat. So, so those type of funds, and you know right now those are paying.
The timer recording is know about 10 to [00:19:00] 15%. Um, and it’s typically fixed or some sort of fixed with a, a little bit of a lender fee that we share with this lender we’re working with. It’s a 25 year lender. Um, so we like those. We love oil and gas, the right types of oil and gas deals. There’s two ways we invest in oil and gas typically.
Uh, one is land ownership called royalties where you just own the land. And so there’s a lot of deals now that are, that are coming to the market that are over 20% cash on cash just simply from owning the land where existing oil and gas is being drilled. Right. And then some of these funds that we do, there’s an opportunity in the fund that they withhold some of those.
The cash flows and then put them into new projects, new drilling there. And then the second one is, is the actual drilling itself, where there’s, there’s an unreal tax advantage. So we can buy, you know, the cash flow and the tax advantage where, uh, a hundred K invested typically reduces, uh, you know, somebody’s income for that year, no matter what kind of income by, uh, 80 to 90%.
So if I invested, the last one we did, it was a hundred K invested. It reduces to somebody’s income by $90,000. That could save somebody. If they’re 30% tax rate, they could save ’em 27,000, [00:20:00] $28,000. In year one, even before they get any money back from the cash flows. So we like those kind of deals. Those are a few, a couple things, but there, there are others.
But those are a couple things we like and we also love, like cash flowing businesses, small cash flowing businesses. Look at buying those as well.
Patrick: Yeah, no, I, I love all those things. We, we’ve, uh, I’ve got an affinity for oil and gas as well. It’s like when you look at the cash flow kicks off plus the tax benefits, it’s like, this is, uh, this is good stuff.
So. Um, another thing that I I think matters in when you’re starting to look at all these opportunities is who’s doing the diligence on these? Who’s, who’s underwriting the, the deals? And, um, how are they looking at it? Are they taking a conservative approach? Are they being aggressive? So I’m, I’m curious your perspective on, on how to figure out, like, is this a good deal versus not?
Bronson: Yeah. That it’s a challenging one because there’s lots of ways to underwrite deals. There’s things that people do, I think. For me, I typically we’re very slow to start with new operators. [00:21:00] Typically, uh, we have a new operator we’re gonna start with in the mobile home space that I think I mentioned that I have a friend that I’ve known for many years.
And he’s invested with ’em for the last five to 10 years. I see their record, I mean, their phenomenal returns. Um, I have another friend who’s worked with them more recently. Um, we’ll probably speak with an investor or two of their, so it’s like, uh, and actually I know one of the guys actually was working with another group previously that moved over to help them.
So, so there’s, there’s a few, few connections there, which is really great. But we had an operator that we started working with in the self storage space. We’ll probably do more deals with them. I’ve known this guy for seven years and we just did our first deal together, right? Mm-hmm. It’s like, but that’s what really is really helpful.
Even as a passive investor, if you go to events, if you shake hands with operas, you get to know people. And then it’s, it’s kind of a small world, so people kind of are get to know folks. So if someone’s like, oh, I’m doing multifamily, say, well, okay, did they, how long have they been doing this? Who do they get trained by?
If they, or were they in Michael Blanc’s group, or Rod Kale’s Group, or Tyler Devereux, or you know, I know people in those groups I can kind of start asking around, well, how’s this person? Who are they? Whatever. And you kinda get to know just from your network. So that’s all really valuable. So I think that’s one of [00:22:00] the big things, because investors, again, a passive investor that.
Has worked with them, they’re not biased to like lead you astray or to say it’s what great one, it’s not. Mm-hmm. They’re not a general, they’re just, Hey, I’m in here. Or if they’re upset, they’re gonna tell you. And so that’s where you get an unbiased person, which is really rare in finance. Right. So those are a couple things.
Um, you know, we do kinda the typical stuff. We’ll look at, you know, what’s, what are their projections? What if they done, what’s their track record? We do a background check if we’re partnering with people, and I am surprised how few people do a background check. There’s a site called Checker, which is CHE.
CKR without the last e checker.com, and it’s like 50 bucks to run a background check. And it’s like super simple criminal background check to see what’s there. And it, it’s just, it’s just something you can do, right? And then another really great thing that I recommend everybody does, it’s the easiest thing in the world.
Take ppms, take like marketing material and put ’em in chat. GBT. And just say, Hey, I’m an investor here. What should I do? And it’ll like give you, it’ll, oh, on page 1 96, there’s this thing, blah, blah, blah. And like this stuff used to take hours to read. And now you just say like, [00:23:00] Hey, I’m coming at it from this.
What? What are the concerns? What should I ask? Whatever. And it will just give you all kinds of information. So when you have that call or follow up call, you ask questions, you’re asking really intelligent questions, and it’s very efficient for your time. So I think Chad GT is a great way to use AI in your investing, and I think very few people use it, but I think it’s incredibly valuable.
Patrick: Yeah, I, I would agree with that. It, um, when, when you, I like giving chat, um, a role, like, I want you to play this role and, and so, uh, let’s, let’s say it’s mobile home park. Uh, I want you to be the, the United States greatest Mobile Home Park investor. Here’s the PPM. Tell me what you like about this deal.
Tell me what concerns you have, what risks are out there that I should be asking questions about? Like, you know, and it’s like, it’s amazing what kind of output you get. Uh, yeah. And now I don’t have to be a, not that you shouldn’t have good legal counsel, but I don’t have to be an attorney to understand this complex document that’s in front of me that, uh.
And [00:24:00] another thing about a PPM, uh, that we should all recognize is A PPM is going to give you all of the reasons why you shouldn’t do the deal. Like you’re basically gonna lose all your money. Uh, if you’re not careful and you know, this is the real risk, which is, which is true of any investment. You know, they, they could go to zero.
But, uh, uh, those are all things to be, to be mindful.
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I think [00:25:00] another thing that we, we’ve touched on and danced around a little bit, but, but investing alongside, uh, operators who also have skin in the game, I think that’s a, an important piece of this discussion as well, because. If, if somebody’s organizing an investment and they don’t have any real economic risk, um, that, that’s something that makes me, uh, a little concerned.
Uh, we, we were involved in lots of real estate deals in the, uh, early two thousands and any idiot could make money. Uh, and we saw lots of these funds starting to pop up. And then pretty soon we, we saw, oh, that guy doesn’t actually have any money invested. He’s taking a very healthy. Um, management fee off of said fund, and then the thing blew up catastrophically and investors lost all their cash and they, they were like, huh, you know, I got paid for a few years to, to sort of mismanage this thing.
So I’m, I’m curious your perspective on, on sort of co-investment.
Bronson: Yeah, I think, I think it’s important. I think, um, you know, it’s, it’s, we try to invest in every deal we can. That is available sometimes too. This, there’s an [00:26:00] issue. For a lot of real estate people I know is that you’re high net worth, multimillion dollar net worth, but no liquidity.
Right. So it’s all tied up in deals. Mm-hmm. And that’s a challenge sometimes that, um, so it’s great. You know, actually it’s really great having partners that are well capitalized because if a deal struggles then um, they can come in and, and have some resources to help it. Um, so, you know, we do a lot of cog ping.
We do a lot of, uh, even fund to fund sometimes other things. We do look at the, what is the co-invest from the sponsor and sometimes say, well, how much are you guys investing? And I think, you know, just to be real frank, uh, sometimes we invest substantially. Sometimes we invest very little or we don’t invest just ’cause it depends on the situation where we’re at.
I don’t look at it as like it’s a deal breaker. I do think it, it, alignment of interest is incredibly important. Mm-hmm. And so, uh, what I’ve seen sometimes is, you know, we’ve had deals, so we made, you know, absolute harm runs to tons of money. We’ve had deals we’ve had. Lots of challenges then, right? So I think that, mm-hmm.
Uh, reputation is a big deal. I think, you know, how things go and how people go through that is really important, I think ideally, yeah. You know, an operator should be invested in every deal. They should have, you know, funds in there. Uh, for me, um, I think whether it’s a, [00:27:00] again, ’cause then I’ll, I’ll look at the partnership and I’ll say, well, okay, you know, like one deal is okay, over a million dollars is invested from the gps.
Okay, that’s great. You know, that’s a way we can say, Hey, there’s a lot of shared risk here. And, um, you know, obviously yeah, if, if you get the sense that someone is. From a short term looking at a deal like, Hey, well how’s this gonna go just for, for my sake? But, you know, the challenge some sometimes is, um, you know, how much liquidity as an operator do you keep and how.
How important is diversification to you as well? ’cause as we saw with multifamily, if you were just heavily, heavily invested in multifamily, you could just absolutely lost your shorts, which some people did, you know? And so I think sometimes, and one of the, one of the best I, this is a little side note, one of the best things I did about six, seven years ago is I bought a ton of precious metals, right?
Physical, precious metals. And we’re watching now, I don’t if you’re a gold and silver guy, but like it bolds up, you know, three and a half, three times what I, three and a half times what I find it, I think silver’s up like nine times. Or it’s, I mean, it’s just insane what’s happening. So like. Having some different things going can be good too.
So I think in general, yes, as a general rule, yes. Uh, there are situations sometimes where it’s like, [00:28:00] sometimes liquidity wise it’s like, okay, you know, someone needs to keep liquidity for something else, and, you know, that’s understandable too.
Patrick: Yeah, yeah. No, I, I love the, the concept of just diversifying our assets.
You know, it, um, I wish my crystal ball was very clear on what, you know, asset class and investment was going to be, just up and to the right. Um, but it’s, it’s a little fuzzy. No. Um, we, we’ve touched base a little bit on, uh, business acquisitions. Uh, I feel like that’s a, that’s an interesting space. I’d like to spend a minute just exploring that with you.
What does it look like if somebody comes to, to bro and equity and they are interested in. You know, uh, being invested in a business. Can you, can you walk us through that?
Bronson: Yeah. So, uh, the amazing part of this is we think when we think of like real estate deals, especially commercial real estate or multifamily, think of something in terms of cap rates, right?
So a cap rate is if, uh, someone owns something in cash, what percentage do you get per year? So if I bought a, you know, $10 million place and it returns, you know, is it 500 KA year? Is that 5%? Or, you know, whatever that percentage [00:29:00] is. So, um, you know, if you were to convert cap rate to buying some of these small businesses or mid-size businesses, a lot of these would be like a 30 or 35 cap rate, which means, you know, you pay a certain amount and you’re getting a third of your money back in the first year, which is crazy, right?
That’s if you brought the business to cash. And a lot of you can finance them through SBA through other types of mechanisms. And of course, SBA has some risks there too. But a lot of these businesses are, they are, they call ’em like the less sexy a businesses, like if it’s a cleaning business or it’s a laundromat, it’s a senior business.
They sell for three, four times profit, right? So it, it’s very considerably cheap. Now, there’s a challenge with that I found is that you don’t wanna buy too small of a business because you’re not buying a business then you’re buying a job, right? You’re like buying, you’re putting yourself into business.
But it, I feel like if it’s above 500 K to a million in profit, it really gives a lot of space there where you can. Learn, maybe be in the business for a little, learn the business or have maybe the old operator kind of stay in there, teach you whatever, and then you hire someone and you kind of manage that.
But we like that a lot because, [00:30:00] um, it, it’s just high cash flow. And then what happens is if you have, let’s say that business that’s selling, let’s say it is a, a plumbing business or something, and it sells it, it generates a million per year in cash flow. Well, if you can do that, maybe you buy a couple other businesses, you scale it up, you’re able to kind of get it up to five or 10 million, you know, of all revenue there instead of trading and selling for three times profit.
You can sell it then maybe for five to 10 times profit. Right. So it’s, it’s just amazing that when the larger you get with something, the more value is given to that. And so that’s a great strategy. Some people go buy different things and run, roll them up, put ’em together. But as an investor, it’s, it’s very interesting because.
Like we talked about, most people need cash flow. That’s one of the highest cash flow strategies that I know. There are risks there. It’s different risks, but again, for boring businesses that have been there sometimes for 10, 20 years or maybe somebody’s retiring or something, it can be really attractive.
And there’s a lot of times you can come into a situation where somebody is like, Hey, I’m done with this. And they can kind of just give you the business and say, Hey, just pay me over the next couple years or take out a little bit of a loan and whatever. And we had a situation worked out, uh, in end of 2024, we went under, under LOI, which is letter of [00:31:00] intent to buy this e-commerce business.
That was 27 million pre in sales. It was no, uh, Amazon business. It was a niche. Women’s cosmetic and apparel business. And my partner and I were working on it. We had raised $2 million. We were gonna earn out of three or 4 million from the the to the owners. And we had a loan for 10 million and this thing produced 5 million per year in cash flow, right?
So we’re putting $2 million of our own basically of money. We’re getting 5 million now. It did not end up closing ’cause tariffs and it was e-commerce and just that you kind of at the, so it was, we learned some things there. But those kind of things are life changing. They’re life changing type things as an operator and also as an investor.
Um, the money is really good.
Patrick: I, I think that’s great. And I, I remember, uh, reading, I think Cody Sanchez’s book, main Street Millionaire on, on sort of this exact topic, and it’s like, Hey, these, what we call unsexy businesses are fantastic opportunities. And so, uh, I, I I love what you’ve got, um, going on there.
I think that’s, um, that’s great. Um. [00:32:00] Let’s see. We, we’ve also talked about, you know, I, I love real estate from the point of view of the, the tax benefits. Uh, we qualify as real estate professional. My wife runs that business. And so, uh, when we buy a new asset with the big beautiful build, the cool thing about that is we’ve got, uh, a hundred percent bonus depreciation.
So we can do a cost segregation study and, and use that to offset our active income. Now, cost segregation study can also be done to offset passive income if you’re not a real estate professional. So that. That’s pretty cool. Um, we talked about the tax benefits of oil and gas. Can you talk us through like some of the tax benefits that are, that are out there through just, uh, being involved with, with bro and equity?
Bronson: Yeah, so I think, uh, you know, in general it comes back to your goals, what you’re doing. A lot of people we work with now, if you’re in the great state of California, like me, if you’re a physician and you’re making a lot of money, it’s gonna be pretty painful because, uh, we just do the math. It’s like for every.
Dollar over a million. I mean, you’re paying 39% [00:33:00] in federal, you’re paying 13.3 in, in states, you’re at 52, over 52%, they’re in taxes. Then you have self-employment tax if you have, if you’re self-employed, which a lot of physicians are 67%, right? That’s most, that’s two thirds of your money, over two thirds of your money, so.
I think that, you know, really considering, hey, you know, what can I do to mitigate this? And you know, of course we offer, you know, business, you know, investments that do this, whether it’s oil and gas, whether there’s other things we look at. Okay, if someone like that is in that situation, is their spouse working?
Are they not? Can they become a real estate professional? My last couple years of me doing medical device sales, I actually was putting in more hours into my real estate. So I became a real estate professional and I was actually still. Technically full-time in my job, but I counted my hours and I was, I was substantially more hours over here.
So I was, was a little bit of a hustle, but it was really allowed me to be able to, to make a shift. So I think that in that case there are, there are tax strategists that basically do a free call. You’ve got a couple that we work with that we just refer people to, and they do a free call and then, um, if you wanna work with ’em, they’ll charge a fee, but they’ll look at everything.
And there’s, there are situations I’ve seen where, for [00:34:00] example, somebody, uh, a guy was a medical, uh, device sales manager and his wife was a CEO of a Fortune 1000 company. They’re making a lot of money. They realized because he was doing real estate stuff, if he, if he basically quit his job and just did kind of manage their portfolio stuff, like they would actually take home way more money.
His wife was just shocked. Like, how is this even possible? How is this legal? But you know, the tax code is not, it doesn’t tell you like, here’s how you pay taxes or here’s what you, it shows you how to like, reduce your how to, like what’s the guide in the map to, to align with the government to do what they have incentives for.
Right? Because the government, when they do housing, what, what happens? The project’s in the hood. Right. It does not turn out well. Yeah. So, so they’ve realized there’s a lot of great things if they incentivize you to do certain things to provide, you know, energy or housing or things like this. So I think that, you know, really figuring out what your goals are is really important.
And then, um, you know, for people to say, okay, if I wanna reduce taxes, I, I am a big fan of, you know, a big fan of paid tax strategists. Most CPAs, 98% of them are not tax strategists. Um, but there are some, and some are not even CPAs, but there’s a lot of [00:35:00] CPAs, or it’s a handful, maybe 2% that are paid for, you know, they’re fee based.
Tax planners and, and strategists that will come through and say, Hey, here’s what we should do here. We should set up this entity here, this person, or, you know, your wife should do this, you should do this. And, and they’ll kind of structure things in such a way and it can save hundreds of thousands or millions of dollars.
So I watched one, I’m going on here for a bit. There was a a a, mm-hmm. A couple brothers I know that sold a medical practice in California, their tax bill, or it was a $5 million sale, so they were gonna pay over 2 million in taxes and they got it down to 120 5K. It would’ve actually been zero. Yeah. But they found a way through strategy to get it down lower, which is really incredible.
Patrick: Yeah. No, I, I love tax strategy. It’s, it’s something that is underserved in the marketplace, and you’re absolutely right. The CPAs are great at the compliance, but their, their job is to, to look back in the rear view mirror and capture all the things that happened. And their business model just doesn’t support, uh, tax strategy very well.
So, uh, yeah, we, we’ve got a number of clients this year that, that exited their. Their businesses, uh, for pretty healthy figures. One had a $9 [00:36:00] million tax liability after his sale. And, you know, that number was zero when we were all said and done with the, the tax strategy. So it’s, uh, it’s a lot of fun putting those, those pieces together and, and utilizing the tax code in a way that allows us to, uh, uh, minimize the, the tax bill.
’cause when you start thinking about the, the impact of, of tax on your wealth creation and it’s tremendous. It, it just erodes it like crazy. There’s a, there’s an interesting, um, example out there where if I take a penny and I double it every day for 30 days, when I, when I get to the end, it’s like $15 million.
It’s, it’s some ridiculous number. When I apply 37% tax rate to that, that penny. Doubling every day. It’s like $15,000 or something. So it’s just incredible the, the drag that tax brings into your wealth building. So the less tax we can pay, the the better. So
Bronson: I agree.
Patrick: Great deal. Thank you. Um, good. So what things haven’t we talked about that we, we [00:37:00] should be talking about?
’cause there’s, there’s lots of opportunities out there. We, we’ve discussed, you know, sort of getting ourselves out of, uh, traditional markets. Uh, the benefits of, of. Everything from real estate investing to small business to oil and gas, the tax efficiency there. What, what else should we cover?
Bronson: Well, I think, uh, I think a big trend right now that people, uh, it really should be paying attention to.
And I think that people under 30 are really paying a lot of attention, but I think over 30, over 40, they’re not as much as just what’s happening in ai. I mean, it’s been said that in the next five years that, you know, by 2031, we’re gonna have more change to the way humans live because of AI and robotics than in the prior thousands of years, which is kind of crazy.
You think about it. So this stuff is happening. It doesn’t always seem very quickly, but all of a sudden this big change happens. But I mean there’s, there could be just almost overnight, seemingly, or in a very short period of time, you know, people driving cars. There’s 8 million people in the US that drive cars for a living, right?
Or drive trucks. And it’s like, that could be automated. You can kind of see how that can happen or we’re kinda like, oh, I could see how that can happen. Or what happens to accountants, you know, what happens to, uh, people [00:38:00] that do bookkeeping? What happens? And a lot of us could just kind of be so, so I think for a lot of us, it can be a little scary.
But I think it’s important to see, okay, if this happens, well, how can I get retrained? What are, what are they new opportunities there? And people compare it to when people went from horses, you know, to to cars, right? It, it happened pretty quickly, but it was like people that were like horseshoeing guys, or they would, you know, put horseshoes on horses.
It was like, oh, it was there, but, but it created way more prosperity, way more opportunities. And so, you know, it, it’s not that, you know, there, there’s been this theory that, oh, you know, from the 1970s radio, oh, computers are, you know, we’re gonna have this thing, we’re just gonna be working 15 hours a week and not really doing, have nothing to do.
And of course that’s never been the case, right? So there’s always gonna be things to do. There’re gonna be things that are gonna happen. Utilizing AI in your life, in your business? I mean, I think it’s great to use chat, uh, chat, GPT, any, anytime. I mean, it’s like, you know, it’s been described. If I had a person who had a one in 10,000 person IQ sitting right next to me solving the biggest problems of my life, my health, my family legacy, my friends health, you know, other issues, spirituality, like what, what are the things that I.
Can do to help me with that. And [00:39:00] so I think it’s great. So I think that, you know, we can embrace it and look at it and say, okay, there’s challenges and opportunities and how do I be someone that’s not, you know, afraid of AI or afraid of, you know, some of this, but I’m actually using it to help me in my business, in my life and, and to make things easier.
Patrick: Yeah, I, I love that we’ve, uh, absolutely embraced AI and the opportunities with it. And we’re, we’re just looking for new ways to create. More efficiency and, uh, I, I a hundred percent agree with you. I think if you think AI is a, a threat and you sort of stick your head in the sand, it’s a, it’s a dangerous place to be because, uh, uh, before long, if you’re, you’re not careful.
You are, you are the guy that’s, uh, you know, used to horseshoeing and there’s no, there’s no horses to horseshoe anymore. Yeah. So, um, that’s great. So Bronson, when we think about all of these things, uh, that we, we’ve talked about, can you, can you talk. Through what, what success looks like for an entrepreneur that starts building a, I’ll say a diversified portfolio correctly.
Bronson: Um, yeah, I think that’s a good question to a [00:40:00] diversified portfolio. I think again, it comes back to your goals and what you’re trying to build for yourself and for your family. And, um, I think that. I, I just think it’s so important to be willing to try things. A lot of people, I think for most people, their biggest thing is it’s, it’s a kind of a form of analysis paralysis.
Like, oh yeah, I know I should be doing real estate. I know I should be learning, I should be investing, I should be doing something, but it’s just easier to trust my money guy. Or to do like box or index funds and that’s fine. There’s nothing, there’s nothing wrong with that. But for, uh, for some of us it’s like, well.
I actually want to create something different. I wanna create a brighter future. I want to create something in my family that would allow me this type of freedom or allow me to give in this type of way or allow me to live this life that I wanna live. And I think it’s just really like that statistic I shared earlier, about 70% of people, uh, don’t like their jobs or what, they’re not engaged at work.
They don’t like it. And the reason a lot of times is that we have this other thing that we’d love to be able to do. There’s this other passion that’s there. And man, if everybody was just able to or found a way to like. Become financially free and then be like, Hey man, I’m just gonna go after the passion.
Whether it, it, it [00:41:00] pays a lot or it, it’s mm-hmm. Some hobby that I love, right? Because I think that it really allows people to come alive. And so I think that’s kind of the benefit of all of it. But I think that for mm-hmm. Each person, um, you know, they’ve, they’ve gotta kind of figure out what their goal is and then move towards it.
And, because, you know, a lot of, thank God we’re, we’re healthy. We’ve got the things in our lives that we have, but situations change. And so it’s important to be prepared and just keep kind of moving forward in your finances.
Patrick: I I love that. You know, I just a few highlights there, right? Like, we’ve got, we’ve got freedom, we’ve got freedom with our time, we’ve got freedom with our opportunities.
We’re going to pursue, we’ve got peace of mind through all of that. And then ultimately we we’re able to do that because we’ve got this predictable income that’s, uh, that’s, that’s showing up. And I think about the flip side of that, right? Like, you know, if, if I don’t take action on these things, if I’m not creating wealth.
I’ll say, even outside of my business, it puts me in a position where I’m, I’m stuck. I don’t have the freedom, I don’t have the optionality. Uh, if a Market Black Swan [00:42:00] event comes and sort of takes my business out, which is, you know, there’s, there’s real risk in being a business owner. Um, you know, I’m there, there’s, there’s real stakes there.
And so we, we, we take a look at all of these things and we’re like, uh, we love building enterprise value inside of our businesses, but we also like. Building, you know, our balance sheet outside of the business to, to just protect our, our financial situation, our optionality, our family, all of those things.
So, uh, I think this is, um, this is great and we’re also big believers in, uh, I’m gonna call it who, not how, yeah. Like not this is a strategic coach idea, but it’s like you don’t need to go figure out how to go be a great real estate investor. Get together with somebody that understands how to be a great real estate investor.
Leverage your capital and let that that deal and that opportunity, uh, just kind of execute while you get to stay focused on the main thing. Yeah. So I think that’s a, a, a key thing to huge, uh, consider as well. [00:43:00] So I, I’d like to, we’ve talked about your book, fire Yourself. Um, we’ll have a link to that in the show notes.
Um, how about your mastermind group? If somebody’s interested in that? Um, I know. If that’s available on your website, but, uh,
Bronson: yeah.
Patrick: Uh, can you just talk about like what are the best ways for people to get plugged into what’s happening
Bronson: Yeah.
Patrick: Uh, at Bronson?
Bronson: Well, yeah, that’s a great question. So, um, yeah, we have, uh, it’s kind of an invite only Mastermind.
If somebody’s interested, they can reach out. Um, one of the best ways I think, to connect with us, uh, we have a, a free gift. It’s basically my favorite three favorite investments of, of 2026. Talked about a couple of ’em, but there’s one that I didn’t share, but it’s basically. What, uh, and really what provides cashflow, just some of the stuff we talked about.
So if you text the word cashflow, just all one word to 3 3, 7, 7, 7. So you just text the number 3, 3, 7, 7, 7, the word cashflow, all one word. We’ll send that to you and then it’ll kind of keep you in touch with what we’re working on. Uh, you know, next event is coming up in Scottsdale, uh, March 5th and sixth.
It’s all two days all day. We have Ken McElroy and Christian Kathy Fed Key and Russ Gray, and just some amazing people coming in [00:44:00] to share. And so it’s, it’s gonna be collaborative. People bring concerns, things they wanna work through, and we’re able to kind of mastermind it and work through with them and then just get around amazing people that are also trying to figure things out for themselves and just have a lot of fun together.
So it’s, uh, it’s fun to do this. We do actually do that four times a year, so we’re doing it now to two day event four times a year. Um, and it’s just been a blast. I can’t wait to, you know, do more of it and really, you know, continue to, we, we typically limit to about 30 people and so we usually have a full room and it’s been a lot of fun.
Patrick: I love it. Yeah, I’m, uh, I’m excited about checking out your, your free resource there, ’cause you’ve got my interest on that, uh, that investment opportunity in 2026 that, uh, uh, is out there. So, uh, this has been wonderful. Thank you so much. I appreciate, uh, all the good work you’re doing. Just, um, helping, helping people.
Investing new opportunities that create cash flow. Uh, I think this is, uh, this is important stuff. Thank you.
Bronson: Thanks man. Thanks so much. This has been a blast. Thanks brother.
Patrick: Alright, my friend. That’s a wrap for today’s episode. Thank you so much for tuning into the Vital Wealth Strategies Podcast. I hope you got a ton of value from this conversation with [00:45:00] Bronson Hill.
And that it challenged you to think differently, especially when it comes to cash flow, taking smart risks, and building real freedom for yourself and your family. And if this episode helped you, here’s my ask. Share it with someone, a person who could use this information right now. A business owner, an entrepreneur, a friend who’s grinding hard, but wants a better path.
Send it their way and help them take that next step. Also, if you want to go deeper and start putting these strategies into action, make sure you visit vital wealth.com/resources to access our free guides and wealth building tools. Again, that’s vital wealth.com/resources. Go grab what you need and start building momentum.
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You’re vital to your family, creating abundance in every aspect of life, and you’re vital to me because you’re [00:46:00] committed to growing your wealth, leading with purpose, and creating something truly great. Thank you for being a part of this incredible community of vital entrepreneurs. I appreciate you and I look forward to having you back here next time.
On the Vital Wealth Strategies Podcast where we help entrepreneurs minimize their taxes, master wealth, and optimize their lives.