Episode 11 Transcript

You're listening to the Business in Morocco Podcast the
podcast that discusses all things
business and all things Morocco. My name
is Ryan Maimone, I'm here with my co-host
Ryan Kirk and our goal is to share our
knowledge and experiences you in order
to help you gain wisdom skills and
habits that can help you succeed in
business and in life you can learn more
about us by going to our website moroccopodcast.com
alright let's get started with today's episode it's going to be a lovely day
welcome to episode 11 of the Business in
Morocco Podcast this week we're going to
talk about accumulating wealth income
producing assets but first let's get an
update for the week Ryan what's going on?
hey Ryan
good to see you again yeah I've had a
great week it's been exciting I was
invited to speak at an event up in
Tangier at an engineering school there
and so I took the high-speed train for
the first time took it from Casa
Voyageurs all the way up and it was an
amazing experience the train runs
perfectly it was on time to the minute
it was very exciting a great place to
work and being able to travel from Casa
to Tangier in 2 hours and 10 minutes
definitely can't argue with that it's
pretty exciting development for Morocco
it's gonna open up a lot of
opportunities for business awesome
I also took high-speed transit but now I
am in the United States I'm doing some
business development and we're also
taking some vacation time and as we
speak we mentioned this last week we are
doing this podcast remotely experiencing
some new challenges in terms of
communicating and recording audio and if
you hear some differences in the quality
of the sound it's because we are doing
some deep work and we're learning how to
record this podcast from two different
continents that's right
overall since we've arrived it's been a
busy time a lot of meetings I've been
working a lot but overall it's it's been
it's been nice it's been good to
reconnect with some friends and family
members and and meet some new business
partners so we'll be continuing that
we'll be spending a few weeks here in in
Washington DC area and then we'll be
travelling around other parts of the
country like California and the Midwest
so it's exciting any time yeah a busy
time but a good time and how long has it
been since
you were in the States it's been more
than two years, it's good to be back,
not a lot has changed it's been a bit of
a culture shock I the the number of very
large vehicles is certainly shocking
compared to Casablanca and Morocco where
cars are smaller and they get good fuel
efficiency here in the United States
everyone seems to have a gigantic truck
or SUV and it's a different experience
on the road for sure Wow and is that
your son's first time in the States it
is he was born in France so his first
steps on American soil were the day we
landed at Dulles International Airport
Wow crazy what a life
yeah it's been good I'm I've been
working on my SMB Online Guide doing
some promotional materials thinking
about ways to reach out to small
business owners to help them improve
their online presence
I've got a few marketing ideas I'm going
to test and see which ones are working
some of the methods involve handing out
promotional materials directly to small
business owners and then I'm going to
try another marketing effort of using
postcards mailing postcards directly to
small business owners who from all
appearances don't have a good online
presence so there that is my target
customer base so that's what I'm working
on this week that's cool I like the idea
of using postcards because you know your
potential customers may not be very tech
savvy and so reaching out to them via
email could just get lost yeah and you
know I've sort of validated this idea
here in the States I've seen Google is
now actually advertising on television
wow really
for what yep for essentially to compete
with me to help small businesses grow
their business online
so there I've seen all they're doing a
lot of advertising during live sporting
events so this is a separate business
that they have because I thought they're
basically the platform they just rolled
out this entire training platform and
networking platform for small businesses
it's basically an expansion of Google
Maps Google my business yeah if you type
in www.Google/startup or www.Google/grow
you'll see they've got a lot of
resources on there for small businesses
Wow interesting yeah
all right let's let's get into the topic
of the week which is how the wealthy
become wealthy and the difference
between income producing assets and
other kinds of assets Ryan you've got
some experience in this area you own
some income producing assets why don't
you talk to us a little bit about your
journey to understanding what an
income-producing asset is and and what
your financial goals are all right well
I got married in 2003 and I figured I
better start thinking about finances and
making some wise choices to put my wife
and I on a good path financially and so
I started reading some finance books
this is 2003 so this is before YouTube
existed you couldn't just Google things
and watch videos there were limited
resources available online and so back
then you just go to a bookstore and go
to the business section or the personal
finance section and select a couple
books eventually I read Rich Dad Poor
Dad which radically affected my thinking
and the basic premise of the book is
that he outlines the difference between
assets and liabilities and his main
point is in order to become wealthy you
need to own assets the author Robert Kiyosaki
he gives this simple definition that
assets are something you own that put
money into your pocket while liabilities
take money out of your pocket and the
story is he compares you know his his
actual biological father who was very
much middle-class and someone who was
the dad of his best friend who mentored
him and showed him what it meant to be
truly wealthy Robert Kiyosaki points out
that the rich owned assets whereas the
middle-class they acquire liabilities
that they think are assets so things
like a car things like your furniture
your electronics you know toys like a
boat or a motorcycle or even something
like your personal residence Robert
Kiyosaki would argue that that's a
liability because it doesn't put money
into your pocket in any way so I decided
at a young age okay I need to try to
figure out how to buy assets and when I
looked at the options that were
available starting a business or
purchasing a business financial products
like stocks and bonds and mutual funds
and investment real estate I got really
interested in investment real estate and
so I've got a small business in Canada
that that owns a few properties and
basically the premise is there's tenants
there's people who live in these
properties and they pay rent and the
rent that they pay covers all the
expenses of the property and each month
I'm paying down the mortgage so slowly
shwea shwea, I'm owning more and more
of the home buying it back from the bank
and over time in the long run the value
of that property is appreciating so by
holding onto this property it takes care
of itself financially and my wealth is
growing without me needing to put in a
ton of work that's a great explanation
I think some concrete examples of income
producing assets are houses that you
don't live in apartments you don't live
in land that you lease to someone else
it's anything that you own that you can
charge someone else to use meaning
there's positive cash flow exactly what
you described you have tenants you have
renters in your houses and apartments
they pay you rent and you cover all the
expenses and you pay down the mortgage
meaning your tenants are essentially
purchasing assets for you mm-hmm yeah
and you're taking on the liability
you're taking on the risk in terms of
your relationship with the bank you're
taking on the risk of owning the
property maintenance damage depreciation
and because you're taking on the risk
you are reaping the reward of owning
assets once the mortgage is paid off
some other examples of income producing
assets are intellectual property so if
you have an artist a musician and they
create a piece of music they own the
rights to that music and they can
essentially rent out that music to radio
stations to movie producers to
commercials to advertising firms to use
that music for their purposes and then
the artist gets money in return so it's
an asset that is producing positive
cash flow other such examples of
intellectual property are patents or
trademarks or or secret recipes for
example coca-cola their recipe is an
asset and they could sell that recipe
for a lot of money but they're using it
to produce coca-cola and sell their
products so it is producing revenue for
them as an asset another example of
income-producing asset is a business and
of all the income producing assets that
are out there this is the
one that I'm focusing on I'm trying to
do that develop a business that will
eventually be able to operate on its own
I will hire a team a group of managers
and employees I will set up processes
and then they will be able to execute
them my goal is to not have to be
involved in the daily activity but
provide more of a oversight role a board
of directors role a strategic role and
have people operating the business and
so in that sense it will be
income-producing asset for me that I
don't have to be grinding away 10 - 12
hours a day in order to earn a living
that would be another example of an
income-producing asset on the other hand
if you own a business but you have to
work every day and every week in every
month in order for that business to
produce income that would be closer to
the definition of a job than it would be
to the definition of an income-producing
asset mm-hmm yeah yeah actually the the
author of Rich Dad Poor Dad Robert
Kiyosaki has another book called
Cashflow Quadrant and it's it's almost
like Rich Dad Poor Dad part two so if
you've read Rich Dad Poor Dad and you
enjoyed it you learned a lot you loved
it I definitely recommend Cashflow
Quadrant and he kind of lays out this
progression where you're an employee you
work for somebody and then maybe you're
a self-employed but you kind of need to
exchange your time for money so it's
basically like you own a job but still
you have to be there it's it's very much
active income and not passive but then
you can graduate to where you build a
system which is what you're working on
Ryan where you're putting in all this
extra work to to be able to explain to
someone else how to do what you do so
that in essence you can hire someone to
replace yourself and then remove
yourself from the business so in that
case you have produced an asset that
doesn't require
your time for it to continue generating
revenue for you and then the fourth
quadrant in the cash flow progression is
where your money works for you so where
you're an investor so you just simply
buy something and your money grows from
owning that
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now back to the show
yeah this idea of interest the very
wealthy they come to the point where
they fund other people and charge them
interest and often times when they make
those loans those loans are backed by
other assets so the risk is very low the
main idea is putting yourself in a
situation where your money and what you
own is actually working for you as
opposed to causing you to spend more
money to support it and this idea plays
into a couple of the topics we've
already talked about on the podcast
long-term thinking delayed gratification
if you spend all of your money every
month on yourself what you want what you
want to do the newest phone, vacations,
cars, if you spend all that money on
stuff you're satisfying your immediate
desires but you're not thinking
long-term if you're thinking long-term
then you are depriving yourself of
certain things in the moment in order to
invest for the future and buy some of
these assets that in the long run will
pay for themselves and more in order to
get to a situation where you own an
income-producing asset you have to make
choices and you have to make sacrifices
yeah yeah there's some great quotes like
unless your money works for you you will
always be working for money and
unfortunately there's many people who
have the perspective or the mindset that
they should get an education in order to
get a job that has a very high salary
but most of these jobs even if you're a
lawyer or you're a doctor or you're some
kind of professional that earns a very
high income it still requires your time
you still have to get up on Monday
morning and go to the office or go to
court or go to the hospital and give of
your time and your expertise in order to
be paid but if you can take some of your
high salary and buy assets that will
continue to generate income this is a
way to really become wealthy where money
is coming into your pocket even apart
from your skills and apart from your
attention and your effort and your time
and that's the opportunity so whenever
you put a Dirham into an asset that
Dirham becomes your employee and that
Dirham works for you and it'll work for
you 24 hours a day 365 days a year but
as long as you spend a Dirham then you
have to go to work to get another one
coming in. one of the books that I highly recommend
is the E-Myth by Michael Gerber and the
reason that I love this book so much is
he talks about the fallacy of many small
business owners they think they have a
business because they're the owner but
they spend all day working in the
business and in fact if they didn't work
in the business every day it would fall
apart and in many ways like I said
earlier it's not a business it's not an
income-producing asset it's a job that
you happen to own and I actually have a
client here in the States
and we've had this conversation quite a
few times where I'm telling him you need
to find someone to train to do your job
and especially to train to do the things
that you don't like to do because right
now if you were to get sick or you were
to get injured we both know that it
would be only a matter of weeks before
the quality of your products and your
service and your brand would utterly
fall apart because you were not there
making sure everything was was going
according to plan
and I said you are getting to the age
where you need to hire a manager who can
carry out the daily activities of the
business and who can allow you to focus
on other things like franchising your
business like growing your business
strategically as opposed to making sure
that the minute details of the business
are being executed properly on a daily
basis and unfortunately he just doesn't
feel like he can trust anyone to do that
right now and I keep pushing on him to
at least try to find someone and train
them up to do that so that his business
which is really a job turns into an
income-producing asset that he doesn't
have to be personally involved in every
day yeah that is an excellent book I
think I read it probably 10 years ago
but that phrase
working on the business rather than in
the business is a quote that I've never
forgotten because it's really really
profound and super important for a young
business owner what about in Morocco?
what are the options for buying assets?
or creating assets here? yeah I think
that there is actually a good
opportunity to make money in Morocco but
it takes a mindset change when I walk
around Casablanca I see so much
commercial real estate that is vacant
that it boggles my mind and you go and
you ask some of these folks who own the
commercial real estate and they want
exorbitant rents they want very high
rents for a location that is in disarray
meaning it is full of trash it's
completely unimproved the walls are not
painted there's no plumbing there's no
electrical and they want very high rents
to come in and improve the space and
then have your business there not only
do they want very high rents they want a
very high rent when on the same block
there's ten other properties that are
available and they're also vacant I
think if you apply basic economic
principles and basic cash flow and cash
management principles to these
properties people could be making money
on these vacant properties if they came
down to market prices so if someone was
out there who really wanted to help the
owners of these properties manage their
properties and do some kind of revenue
share or or maybe do a reseller
agreement there would be opportunities
to have businesses in these vacant
properties if the owners were able to
understand the value of having the
tenants in there producing positive cash
flow every month sometimes I think that
that these owners would rather have a
property vacant and hold out for a high
rent than have the property being used
and improved and at least get a little
bit of rent oh yeah that was something
absolutely shocking to me when I
came to Morocco not so much about the
commercial but the residential real
estate because my family we were looking
for places to rent we looked at property
after property that had been vacant for
clearly a long time because it was in
disarray as you said and the owners were
not cleaning it up or investing any
money into it and so no one was
interested in renting it and I'm not
lying there are some properties that we
looked at five years ago that remain
vacant residential properties they're
still empty to this day in the real
estate books that I've read they teach
you to view your property view the home
or the apartment as a business and
obviously a business needs to make money
it needs to be profitable so I think
there's a lot of property owners who
view their property not as a business
that should generate income but as
simply a place to store their wealth so
instead of putting a cardboard box full
of stacks of Dirhams under their bed
they've purchased an apartment or
purchased a villa and they're just
letting the building run down and what
they're banking on is that in the long
run it'll be something they can pass on
to the next generation or it will
appreciate in value because of the value
of the land itself but they're losing
out on the opportunity to even if they
hired a property manager to and didn't
have to do the work they're losing out
on the opportunity to put their money to
work for them and generate cashflow in
the present rather than just counting on
a payout in the long run from the
appreciation of real estate yeah and I
want to make clear this is not just a
Moroccan problem this is a problem in the
United States in fact vacancy in New
York City is so bad it's to the point
where the the city is going to fine
property owners if their properties
remain vacant for too long even here in
in Washington DC where we are we just
drove through our old neighborhood
and there is a a large commercial space
in our old neighborhood that is vacant
today and it was vacant in 2012 when we
moved into that neighborhood and to me
that is just incomprehensible this is a
nice neighborhood there are a lot of
opportunities whoever owns that property
is making bad choices and losing out on
a lot of income
you've been listening to
the Business in Morocco Podcast my name
is Ryan Kirk here with my co-host Ryan
Maimone, if you enjoyed this episode be
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