Turn Your Real Estate Closings Into Lifetime Dividend Income (Warren Buffett Style)

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Show Summary

In this conversation, John DeSmedt shares insights on navigating the real estate market, emphasizing the importance of persistence and strategic decision-making. He discusses the significance of investing wisely, particularly in education and financial planning, and highlights the need for goal setting in business growth. John also addresses the challenges faced by agents in a competitive market and the potential rewards for those who adapt and thrive.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • John DeSmedt’s Phone no: (704) 999-0896

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  John DeSmedt (00:00)
  year by year by the future dividends I get on the stock holdings I have right now and I won’t have to touch one dollar on my own principal. So if you think about that, that’s really how you make time be in your favor rather than as most of us go through life trying to catch up, catch up, catch up for lost time.

  So by the time he’s 18 and walks out of high school, he’ll be able to go to any college in the country he wants to because the power of the compounded dividends and as I continually add to that over 18 years.

  Michelle Kesil (02:06)
  Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. And today I’m joined by someone that I’m looking forward to connecting with, John DeSmedt who has been a real estate professional in three states and has about 70 agents under his team. So excited to have you on the show today, John.

  John DeSmedt (02:29)
  Thank you very much, Michelle. Delighted to be here.

  Michelle Kesil (02:32)
  I think our listeners are going to take something away from how you’re approaching helping people manage their money better, mentoring and teaching agents how to list their homes and yeah generate more leads. So excited to have you on the show today.

  John DeSmedt (02:49)
  Thank you, Michelle. So ⁓ I guess to just start at the beginning, ⁓ if you’d like me to. So I’ve been in real estate for 21 years in three different states, like you mentioned. And I’m currently with EXP Realty. I reside down here in Charlotte, North Carolina. And I’ve got about 70 agents in about 14 states that I continuously mentor, coach, and train.

  Michelle Kesil (02:51)
  Yeah.

  John DeSmedt (03:17)
  some big producers within our group. And our business model is such that we’re 92,000 agents globally now in six different continents and there’s really nothing else like it. So my whole forte is I start with how do you effectively lead generate? So you’ve got a pretty steady full pipeline year round. How do you approach as much as just scaling it down to the bare minimum? How do you use this?

  This guy right here is your best friend if you’re taught properly and learn how to do it properly versus people that shy away from it or fear of making calls, fear of rejection, all that stuff. It’s actually your best friend because they’re never really taught how to do it. It’s a lost art. It’s a science and that’s sad. So I’ve got a private coaching business on the side

  and do a lot of that and help a lot of agents for many different firms as well.

  And ⁓ what happens is when the market shifts, that really separates because when the market’s red hot and there’s all kinds of inventory and multiple offers, that’s really fun. But when it doesn’t last forever.

  So moving forward, whatever your market’s doing, if you have a lot of inventory, minimal inventory, if you’re more listings driven or buyer driven, you get to the finish line and you have some closings now.

  So what are you going to do with that hard earned dollar? What are you going to do with that? So I see so many agents make, to be blunt, know,

  not real wise decisions with their money and then when the market shifts again, they get in a little bit of trouble. So I’ve spent 30 years following this guy named Warren Buffett and he’s done pretty well and he keeps it so simple. ⁓ It’s amazing. So what I do is, and this can be shared with any line of work you’re in, it doesn’t even have to be real estate or real estate investing. If you just take 10 % of your income.

  and invest that in blue chip stocks. So what’s a blue chip stock? It’s one of these behemoth companies that have been around for decades and decades and they pay strong dividends every year and usually pay quarterly. You can build a gigantic financial future by yourself with no other assistance at zero cost. At zero cost.

  For the newbies, as I say, just get into a habit of taking 10 % of every closing you have or for other lines of work if you’re on a salary, take 10 % of your income every week or whenever you get paid and put that into an account where you can buy direct stocks, not mutual funds because the fees will eat you alive, direct stocks.

  like a Coca-Cola, like a Johnson & Johnson, like a Procter & Gamble, no more complicated than that. And they pay dividends. So take for example, Coca-Cola. That’s one of my favorite stocks. I’ve had it for many, many years and it’s done phenomenal for me. They’ve raised their dividend, which they pay out to shareholders every year for 63 years in a row.

  There’s only about five companies in the world that have ever done that. So case in point, as Warren Buffett tells his own story, he bought his first share of Coca-Cola when he was 12 years old for $40. One share for $40. Now he’s over 90 years old. That one share, they figure it’s worth $2.5 million now. So with all of this periphery discussion we’re doing here, Michelle,

  The fortune is in what’s called compounding. Compounded dividends. Not compounded interest, that’s good too. But compounded stock dividends is where fortunes are made. And if you read any of these books from the real savviest of long-term investors, you’re not going to make all your money in a year, two years. If you’re willing to wait it out a few years,

  then it turns into a phenomenal money making machine and if you add to it then it gets crazy fun. So can I share a story with you? This might help. I became a grandfather a little over a year and a half ago and two weeks before he was born I opened up a stock account for for little Jack and what’s going to happen is I’m going to fund his entire college education

  Michelle Kesil (08:31)
  Go ahead.

  John DeSmedt (08:49)
  year by year by the future dividends I get on the stock holdings I have right now and I won’t have to touch one dollar on my own principal. So if you think about that, that’s really how you make time be in your favor rather than as most of us go through life trying to catch up, catch up, catch up for lost time.

  So by the time he’s 18 and walks out of high school, he’ll be able to go to any college in the country he wants to because the power of the compounded dividends and as I continually add to that over 18 years.

  And most people don’t even recognize that. So you can do it in any increment you want. 5%, 10%, 20 % if you get a little breathing room. And you won’t believe what you can make. You know, I keep referring to Warren Buffett. He’s one of the wealthiest man in the world. And he’ll tell you, I’m only 50-50 on my stock picking choices. All my fortune was made after age 65 on compounded dividends.

  because it gets so big, it starts off slow and steady like this and then after a number of years it just goes straight north.

  So if you have a little bit of patience, whatever line of work you’re in, particularly these real estate investors, put that hard earned money and all those closings towards, just take a percentage of it each time and put it in a separate account.

  like I have mine with Fidelity. You can open an account at no charge, you can make a purchase at no charge, you can make a sale at no charge, anytime you have a rainy day. So if you have to make a big purchase or you have a family emergency, within 24 hours the money is liquid at no penalty. So I don’t know… Here’s a way to… I guess I tell like my new real estate agents…

  If you just try this, here’s all you have to know. You get paid for owning the shares of stock. Take simple Coca-Cola. You get paid for owning the shares of stock in the form of dividends. You get a raise every year, Michelle, for doing absolutely nothing. I like the sounds of that. And then if you add to it…

  Then instead of going slow and steady, it’s going to do one of these. gets crazy fun within a few short years. You start edge and adding digits as we say. So the power of compounded dividends or just compounding in itself over time is staggering, but most people don’t give it enough of a chance to really see what it can do. So, you know, it’s the old story. I, I kind of got that part figured out now.

  from reading and studying it for years and I wish as we say I wish I knew way back when what I know now but there’s no reason anybody can’t start at any point along the way and it’s it’s recessionary proof and it doesn’t matter what the share prices of these stocks are they can’t take your dividends away the fortune is in the dividends so does that make sense?

  Michelle Kesil (12:30)
  Yeah, absolutely. It makes a lot of sense.

  John DeSmedt (12:33)
  In the old days, you had to pay to open an account. You had to pay to purchase some stock. You had to pay another fee to sell some stock. You can do it free now with any of these brokerages. So, they don’t like me because I make all my own trades and I set up all my own investments. You don’t need 50 different stock investments. That’s another big misnomer. You need one or two. You can get really, really, really wealthy on just one or two great stocks. And keep adding to them.

  Why would you want to put any money in your 38th favorite stock? Why would you want to put one nickel in it? Find one or two great stocks to invest in and there’s many of them out there and just go as deep as you can and you won’t even believe how that’ll set you up.

  ⁓ that’s, that’s the gist of what I do. I can teach them how to list homes and lead generate and prospect and get listing appointments and find clients after you’ve been doing it long enough. mean, that’s, that’s what we do. So to me, the bigger point is, okay, you work so hard to get all this. Now, what are you going to do with it? Or like in my case, everything I receive, I try to double it again.

  then I try to double it again rather than just let it sit you know as they say cash is trash I want to do something with the cash I want to double it and double it again if that makes sense so any questions so far?

  Michelle Kesil (14:07)
  No, that makes sense. I would say most of the listeners are investing in real estate. Do you have any advice or strategies for that type of investing?

  John DeSmedt (14:20)
  ⁓ Yeah, that’s a terrific question I might add because so if you’re investing in real estate, you probably have tenants. If you’re investing in real estate, you have return on your investment, meaning when you flip it and go to resell it. Well, why not take a portion of those returns, your rental income or the returns you get when you go to sell and flip a property and invest it like that.

  and you can put it in accounts where it’s 100 % tax free. ⁓ like I said, you can actually relay this to any line of work you’re in. I mean, whatever line of work, whatever profession, but very few do. And I don’t like putting money in mutual funds because the hidden fees will eat you alive over time and many people don’t see those.

  So it’s so simple now and there’s so many books written on this. It’s amazing. ⁓ They make it so user friendly now, but yeah, great question. I would say if you’re a real estate investor and you have, you know, a dozen rental properties out there, why can’t you take a portion each month of that rental income and put it somewhere where you can double it again and then double it again. Then it’s four times where you started. So.

  Michelle Kesil (16:23)
  Yeah.

  John DeSmedt (16:23)
  and the same when you flip, know, when you flip a property, you get a big paycheck at that closing, right? So why not take those and, and, and invested in blue chip stocks? And I mean, yeah, technically there’s a little bit of a downside, but I haven’t found it yet. The, the internet stocks and the up and down stuff. I don’t go anywhere near those. want slow and steady and the compounding just goes straight North after a few years. You can’t go wrong.

  So look at in my case, I’m going to fund my grandson’s entire college education and I won’t have to touch $1 in my own principal. It’s all going to be done with compounded dividends. So here,

  the earlier you start, you put time to your advantage versus constantly trying to play catch up. Cause I have people coming to me all the time and they hear this kind of story and say, gosh, John,

  I’m 50 years old or I’m 58 years old or I’m 60 years old and I really haven’t even started anything yet. Well, it’s never too late to start. Sure, the earlier you can start the better you’ll do, but it’s make it’s making ⁓ a better decision with your money than any of this high risk stuff.

  So what if you get bad tenants? You know, we know all the pitfalls of the downside of investing. What if you get bad tenants? What if you get a property that’s loaded with problems you didn’t know you were going to immediately inherit? So what I do, I don’t have any of that. I don’t have any of that. I just keep building it bigger and bigger and bigger every time I make a commission. And it’ll set you up beautifully. ⁓

  I followed one guy who’s done pretty well with it and he started with one single share of Coca-Cola and he’s done pretty well. So if that makes sense.

  Michelle Kesil (18:15)
  Yeah, it makes sense. Yeah, wanting to stay in the realms of real estate. When you’re selling your houses and you’re doing your listings, do you work with investors often?

  John DeSmedt (18:17)
  Yeah.

  Right.

  Depending on the ⁓ type of property, like I said, I just activated one this morning. It’s an investment property over here in Union County, right outside of Charlotte. It’s probably going to sell really quick and we’ll probably get multiple offers from investors. So, yeah. ⁓

  I’m on the listing side of many of those, Michelle, because I list a lot of homes and some of them are ideal ⁓ rental ⁓ or investment properties, whether they want to buy it to flip it or buy it to spruce it up and then flip it or buy it and strictly hold it as an income producing rental property. So my whole thing is you generate all that income either from the rental income itself or when you turn around and flip it. All right. So what are you going to do with that money next?

  That’s my question. So I’m trying to think two steps ahead. Because you work so hard, like around here, there’s nothing for sale. And the hardest thing to find here in Charlotte is an opportunity for, you know, they call me every week, John, you have anything coming up? I want to be the first one to the front door. There’s nothing for sale. And the prices have gotten so high that even closes the window even tighter. So when does something pop up? You got to be ready.

  So you work so hard to find that ideal property, you get it at a good price, so it’s time to sell it, whether you held it for a while to rent it or not and sell it. Now here’s a nice big fat check that you earned all by yourself at the closing. Now what are you going to do with that, with that profit? That’s my question. So, because if you make a bad decision with that,

  You know, you just kind of defeated all your efforts. So, it works for me.

  Michelle Kesil (20:19)
  Yeah, amazing. So what are your goals for where your business is heading?

  John DeSmedt (20:26)
  That’s a great question. ⁓ I’ve got numbers in mind that I’d like

  hit with units sold. ⁓ Our numbers are a little bit down in this area right now strictly because we’re so strapped with lack of inventory. But one of these days this is going to turn back around. ⁓

  I’ve got some numbers that I want to grow my team to. I’ve got some numbers that I want to get my own units sold to, but my bigger goal is I want to hit a certain number on those investments I keep referring back to because that’s the goal.

  Whether you sell five houses a year or 500 houses a year, if you don’t make any wise decisions with your closings, with your earned commissions or your profits as an investor, what does it even matter? So I’m thinking about that before it even closes. It’s like you just flip a switch and then, so how much can I take out of this investment property? Or how much can I take out of this?

  rental income and do the best I could with it for my family. And it’s, mean, I think you have to be, if you’re any kind of a business person, you have to think that way first or what’s the point? You know what I mean? So I think the groundwork of that has to be laid immediately. Once you go into business world. Yeah. ⁓ I mean, I drive a nice car, but when I started, I was

  I mean, drove a Ford Pinto when I was a kid, you know what I mean? It had wood paneling on it. So I’m at a point now where I can drive a little bit nicer car, but I really could care less. Where the young people nowadays, they got to have that fancy car first. They got to have that dress first. That’s wrong. You know what I mean? You got to get your feet underneath you first, and then you can spread your wings a little bit. But it’s a different world.

  So yeah, I’m big on goal setting. I’m big on goal setting and I like to set high goals because if you meet your goals fairly easily, they’re not high enough. And it’s not the goal, it’s what it does to you to reach the goal. That’s the big takeaway. It’s what it does and turns you into to get to the goal. Then you’re finding out what your abilities really are. Okay?

  Michelle Kesil (22:42)
  Definitely, I agree with you. Amazing. So, before we wrap up here, if somebody wants to reach out, connect, learn more about what you’re doing, where can people find you and connect with you?

  John DeSmedt (22:54)
  Yeah?

  Sure. I’ll just go ahead and leave my cell number. It’s area code 704-999-0896. That’s 704-999-0896. I’m available anytime to help.

  Michelle Kesil (23:13)
  Awesome, John. Thank you so much. I appreciate your time, your story, and your perspective.

  John DeSmedt (23:19)
  Okay, Michelle, and thank you for being so generous with your time as well. Okay.

  Michelle Kesil (23:23)
  Of course. And for those

  that are tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like John who are building real businesses, and we’ll see you on our next episode.