WS1415: Quitting Business For Time and Financial Freedom | Keith Blackborg

EPISODE 1415 

[INTRODUCTION]

Keith Blackborg (KB): I needed to escape. I could never get out of the business. I realized I was going to be trading time for money forever. As much as I enjoyed it, there were some moments of frustration, there’s long hours as CPA. You can end up doing long hours all year round if you do it right, meaning you’ve got unlimited work. But that’s not what I wanted to do. I had to get out at some point if I wanted to make a meaningful change, and be able to prioritize other things like my marriage. That’s when I was able to step away. And that was helpful for me.

Whitney Sewell (WS): This is your daily Real Estate Syndication Show. I’m your host, Whitney Sewell. I am so thankful you have chosen to listen again today and I hope that you will continue to listen. Hope you have liked and subscribed to the show. I’ll be forever grateful for that and just your support. I hope you are learning a lot and your business is growing because of it. Well, today I have an exciting guest for you. And we’re actually doing a series of shows with this guest. He is going to share many details with you that I know you’re going to learn a lot from. 

WS: His name is Keith Blackborg. He worked as a CPA and reached financial freedom within 10 years due to success as an investor and tax strategist. Keith and his wife Jessica have experience with domestic and international investments including residential and commercial real estate, lending startups and paper assets. Keith served as a director of acquisitions for a hedge fund that transacted the largest private sale of homes in US history. Keith has so much experience and he has educated himself in so many ways. He has a CPA background, tax strategist background. You’re gonna hear a lot today about how he built that business, but also selling that business and the things that come along with that. But over the next few days, you’re going to hear some details from him about creating investment opportunities, managing those, to deal pipelines to tax strategies that I bet you have not heard of before. So you’re gonna learn a lot from Keith. 

He has an amazing group, they mastermind together, learn about investing. I encourage you to look that up because we’ll give the details of that after each segment. Also, please look him up. I know you’re gonna learn a lot. Thank you for tuning in. Again, I’ll appreciate a like; hope you’ve subscribed to the show on YouTube, and you are learning a lot. Reach out if we can assist you. Or if you have ideas for ways that we can improve the show. Have a blessed day. 

[INTERVIEW]

WS: Keith, welcome to the show. I’ve heard so many great things about you and the community that you’ve built as well of investors. You’ve become somebody that’s extremely knowledgeable in this space, and I’m wanting to learn from you. I know the guests are wanting to learn from you today and just your level of experience. So, give us a little more about who Keith is, your background. I mean, you retired at age 32. So I mean, we’re wanting to dive into that. I know the listeners, they want to do the same if they’re not older than that already. So let’s learn who Keith is.

KB:  Sure, thanks for that invite. Jumping forward jumping right in. I grew up in California. My wife is originally from Honduras. We met in a Belgium salsa club of all places in Belgium. And so we just kind of traveled through Europe as part of studying abroad and that’s where we first connected.  So after college, I went to work for Deloitte and got the big fancy job. As a CPA working at a company like that means you’re working 70 to 100 hour weeks consistently, and that will burn you out quickly. So, I went to Dallas in 2010, heard of a guy, you may have heard of him, Robert Kiyosaki, spoke at a convention. So, I learned “Rich Dad Poor Dad” real estate investing. And so I got really interested in real estate. We didn’t quite sign up for his program but found another way to get involved with the local program. And we started buying rentals and flips in 2010. And along the way, I started a CPA firm focused on high-net-worth real estate investors. 2013 rolls around, we did active and passive investments in hotels and apartments. And that allowed us to scale quickly, we first started investing at age 25. So starting in 2010, age 25 just diving both feet, no kids, we went headlong into work. My CPA business grew 100% plus every single year I was in business, except the last year only 50% because we were maxing out. And so along the way, I was able to apply some tax strategies that I had learned from previous places I’ve worked that were really advanced. As a result, I built up a niche around apartment syndicators. So a lot of people who teach or gurus out of the Dallas area are former clients of mine.

KB: 2015 rolls around, if we weren’t working, we were traveling. We got to that number when we first started in real estate, I want $10,000 a month in passive income. And by 2014, we were definitely there. And my wife was like, okay, we’re good. And I said I want to keep going because I think part of my pride and everything else was tied up into the business. So we kept building and along the way, I realized I could never escape the business. If we weren’t working, we were traveling. We had some fun with that. But when you have a client that’s trying to close an eight or nine figure transaction despite having staff and systems and processes, I felt like I had to be available. And so that led to some hardships. 

KB: In 2016, we were on the brink of a divorce and I really had a choice. I could either continue to grow a business and have all these successful signs of wealth and everything that goes along with that or I can make some major life changes. I ultimately chose to prioritize marriage and family. I also thought, as part of that decision, that Hillary Clinton was going to get elected and the real estate market was going to crash. I was wrong, but we ended up selling out a lot of our stuff that year. And we went from there we sold out, I put money with some of my best clients. I knew who the best performing syndicators were and we just spent the next few years traveling the world.

WS:  Incredible. Well, hats off to you for making that choice, prioritizing your family. Grateful for that. The listeners know me well enough now to know that I’m going to tell you how great that is. And so I want to ask you obviously a number of questions about what you said there you did you had the fancy job you went down the path that probably means the listeners did as well or have right you it’s what we were all kind of taught that’s what successful people do, right? We were we get this secure, quote, j-o-b and man, you know, we’re making some money, you got those benefits. But you know, you heard Robert Kiyosaki like many of us as well or read that book. And it’s like, boom, you know, just changed the way we thought about our income, and our j-o-b’s to say the least. Okay, I want to dive in a little bit there on achieving 10K a month, that was your goal. And maybe you can break down a little bit how you owe more about what provided that 10K? What were the types of investing or maybe would you suggest that now for the listener, that’s saying, hey, Keith, I would love to have 10K a month in passive income, or maybe that’s changed now? Or has it? What you would say, hey, to achieve 10K a month, this is what I would do now.

KB:  Yeah, there’s a lot there. So for us, it was initially rentals. I looked at the market and I saw where opportunities were. Part of my decision, part of it was I stumbled into it and then part of it was also seeing some opportunity when I had people telling me that you could not build a house at the price you could buy them for; that seemed like a good opportunity to get in. I was also young, I could lose everything multiple times and still be okay by retirement. So felt like it was worth the risk. And in the beginning, the way we ran some of our finances is we were tight using lines of credit, things like that, that allowed us to do more. And thankfully, it worked out. There were some riskier things that we did. What allowed us to truly grow fast was concentrating on one thing and we’ve since diversified. 

KB: I’m happy to talk more about that later. But concentrating, putting all our time and effort into something really made a big difference in the real estate market today. I think with rising interest, it’s a bit, there’s some risk. I think anytime you’re actively involved in something, you can mitigate those risks. And I still think real estate is a good investment; this is probably a little not as good of a time to buy as it was in 2010-2012. So, there may be other places that are more favorable with economic winds, happy to dive into that as a separate part. But there’s knowing where the economic winds are, knowing where you’ve got experience kind of lining all that up, helps me decide where I want to invest and see the opportunities.

WS:  That’s awesome. Yeah, and we will. I just want the listeners to know, we’re gonna do a series, a number of shows here with Keith. We’re gonna dive into a few of these topics that he is an expert in and how he’s accomplished this. While we’re still on this topic right now I’m so passionate about and I feel like it’s so important, you know, the decision you made to prioritize family versus business. And I’ll just let you share as much or as little as you’re willing, don’t feel as if I put you on the spot, but sure, you know, because I feel like it’s such a common path for entrepreneurs, and you’re so driven. Actually, I just spoke in an investor conference on Friday about this exact thing and so it’s something that I’m passionate about. I can be so driven, and be just like, go, go, go, go go. And before you know it, we’re sacrificing the ones who we claim, we’re doing all this for, right? And so, speak to that decision. Maybe there’s somebody that’s listening right now that is struggling with this as well. And they’re like, well, wait a minute, Keith, you know, I gotta keep the business going. I’ve got to work. I’ve got, you know, all these, how did you work through that? And maybe you can help the listener a little bit as well.

KB: So for me, it was about being really intentional. I went through a period of time where I was less intentional, and I let the business carry me. I got caught up in all the work and all the success. But one thing I learned is just because you have more money, I was around enough ultra-high net worth people, people with eight-, nine-figure net worth; they’re not necessarily happier. They’ve got new and different problems that come along with it. And money does solve a number of other problems. But there are also some new challenges that come with it. But the main takeaway was they weren’t happier, they still had issues with their marriage, they still had issues with their kids. And if I didn’t fix my foundation, if I wasn’t really rooted in the values that more money wasn’t going to help. And so I felt like I had to slow down, back up and really decide what was important to me. And that, for me, was my marriage at that point. And I would love to say that we have it all together. But there are still challenges that come with that.

KB: Post-travel, we got the best souvenir we could have had out of all of that, and that was our firstborn son, who is now three years old. And we now have a six-year-old. There’s been a tremendous amount of reconciliation that has gone through that. But I had to work through some of my own selfishness. Having kids will also force you to work through some of your own stuff. Wife, we both still have our stuff. But we went through a period of counseling, and getting plugged into our church was hugely helpful. And I would say ultimately, Jesus is the reason why we’re still together. It would have been very easy for us to become a statistic. 

KB: But I’ve learned that it’s really worth fighting for. I believe it’s worth fighting for. And I respect those, the longer I’ve been married, the more I respect those who have been married longer than me because I realized how hard it is. But at the same time, similar to the kids, it’s a ton of work. But it’s so worthwhile,it’s so fulfilling. It’s through the hard stuff that there’s a certain sweetness that comes with it. You asked about some of the stuff that we worked through. For me, it was some about getting our priorities straight. And for me, I love the business. It’s what I feel like I’m gifted at. I like doing it but I don’t want to do it at the expense of life.  I want to enjoy the journey. That was my wife’s mantra, “enjoy the journey, because the only destination is the grave.” 

KB: So you can spend this whole time building, but ultimately, you’re gonna give it to somebody else who may do well with it or may squander it. But eventually, whether it’s 50 years, or two or three centuries, that fortune is going to pass away. There’s going to be somebody that comes along who doesn’t manage it well. So that can’t be my legacy. The best legacy I can have is pouring into my kids and sharing those vision with not only my kids but others around me. And that’s a little bit why I’m doing financial journey today as a way to give to others.  There was also some other things I had to work through that I worked through with the church as part of it, but there was a lot of housecleaning that had to happen in my heart to get to where we are. And I have to do regular maintenance on that as well. 

WS:  Love that. I just appreciate your transparency. You said, “we still don’t have it all together.” I think if any of us are honest, none of us have it all together, right? No matter what it looks like on the outside, no matter what your website looks like or your Facebook page. And you know, we’re still all a work in progress. I, as well, man, if it hadn’t been for the Lord, my wife and I would not be where we’re at and would probably not be together. It’s just we look back and think, Lord, it just wasn’t possible without you to sustain us in so many times. And so just appreciate your transparency and just being real about that. Because it’s a continual thing I hear about from many entrepreneurs, right. And the more entrepreneurs I meet, the more people who quote are successful, the world would say are successful, it takes a lot of time right commitment, and unfortunately, it’s often at the sacrifice of our family. So it’s a real thing. And I’m just grateful for your speaking to that and being real about it. I also want to talk a little bit about you, CEO of wealth business, you know, or even selling your business. Let’s think through that a little bit. What did that look like to sell your business? I’m sure that there may be others that are listening right now who have a business and maybe it’s not even in real estate as well, and they’re wanting to get in real estate. Talk about that plan or probably the emotional process of selling this thing that you built and just the exit strategy.

KB:  Yeah, I’m happy to talk tactical legal strategy. That’s often something I work with and people ask how to package your business, sell for the highest sales price possible, minimize the taxes. But you can talk to business brokers, there’s multiple people that would talk you through that part. Very few will actually help you package it up and help with the tax consequences. But I really want to focus more on the emotional side. For me, I went from a business where I was overwhelmed, owned it, had employees, want to make sure that employees were taken care of. Really, it was my baby that I built with all sorts of things that I was very proud of. Ultimately, a buyer looks at it a little differently. They’re usually primarily concerned with the financials and how much money it’s going to make them and less concerned about all the work or creativity you put into it. 

KB: Usually a business is a representation of many hours of effort. And so it’s something you built. And so letting go with that also meant I had to part ways with some client relationships and vendors and other business partners, the people that I worked with in various ways. And that was hard for me. For me, I realized, especially after the fact, a lot of my ego was tied up in the business. I would say before that I didn’t think I had much of an ego. But going from business sale, there was a transition period where I still had to help or stay on to make sure that the business transition well. But after that six-ish month period expired, it was quiet. It was crickets, I had a very full bank account. I had to, I needed to invest it someplace. 

KB: But I went from a ton of people needing me that I felt really respected by to nobody, and I didn’t really know what to do with myself. Some might suggest you go in and jump into the next thing. I suggest it is actually healthier to be okay with that stillness. Go do something. For us, we did some travel as part of that; just get out and kind of it was the first time in my life where I didn’t have to work. I didn’t have to do anything for an extended period of time. I was set for life. I was good. And so, what do I do next? And so before I just jumped into building the next thing, we went on and really had to do some self-assessment, work with the Lord, what does God want us to do? What could we do? Do we even want to do something? And it was a couple of years before we even worked on anything significant and there was a growing process that went through that that we would never would have gotten had we not done that. 

WS: How did you know it was time to do so?

KB: The main reason for me was I needed to escape. I could never get out of the business. I realized I was going to be trading time for money forever. As much as I enjoyed it, there were some moments of frustration, there’s long hours as CPA. You can end up doing long hours all year round if you do it right, meaning you’ve got unlimited work. But that’s not what I wanted to do. I had to get out at some point if I wanted to make a meaningful change, and be able to prioritize other things like my marriage. That’s when I was able to step away. And that was helpful for me.

WS:  That’s awesome. I appreciate you mentioning the emotional side of selling the business. You talked about employees that respected you and that you spent so much time with and probably helped groom and train and worked so much one on one with these folks. Speak to that a little bit how you kind of made that separation with the employees as well.

KB:  Yeah. So first, with the buyer, I had to show contracts that people weren’t going to just walk away from the business where they couldn’t steal all the clients, there was that whole piece. And then separately I wanted, I had multiple interested buyers. I wanted somebody who was going to take care of the employees. It would be a good cultural fit when dating potential buyers, I wanted to know that it would fit, that the clients would fit, that they had experience with these kinds of clients. It was with the employees really trying to show them a future and a path forward with the new company. But I didn’t want to tell them about the sale until after it was done. The reason is, if you tell people about a sale before it’s done, the employee start looking elsewhere, because they’re fearful of who the new buyer is. And it’s frankly, it’s hard to do. But I think it’s best to keep it a secret up until after the sale. And then I took a few key employees privately out to breakfast one on one, this is what we’re going, this is what it means for you, this is how I see opportunity for you, this is a potential raise you’re going to get by staying on if you stay on through this period. Finding incentives for them to stay on for a longer period of time is key for that transition. Because often when you’re selling a business, part of the sales price is based on revenue staying at or above a certain level.

WS:  Awesome. Yeah, I appreciate just you taking it one on one with them right and seeing ways to incentivize them, but also the ways that they’re gonna benefit by saying and just caring for them, just in that relationship. But one of the things I wanted to go back to, before we close out the segment is, uh, you know, you mentioned something that seemed important to you, it’s very important to me as well, and I appreciate you being real about, hey, you know, we’re gonna build this wealth, and eventually, you know, it’s not gonna last forever, right? You know, there’s probably going to be somebody down the line that just squanders that or whatever happens. 

WS: However, you talked about the best legacy you can leave, pouring into your kids. It’s something I’m very passionate about, and trying to strive to learn the best practices around that. The guy I recently interviewed, or I’ve gotten to know,  Jim Sheils – I don’t know if you know him – but he wrote the book called “The Family Board Meeting”. And, it’s about having a quarterly meeting with each individual child and he goes through a process of doing that. So, it’s fun. And, you know, it’s just building that relationship. But I wonder, are there any techniques around how you are doing that with your kids now? Or anything you’ve instilled that says, you know, hey, this is how I’m leaving that legacy or training them?

KB:  So, right now, my kids are still young right now, it is just about learning manners, or “please and thank you”. Even this morning, it was, I need this, I need that. And I understand where they get it from. And because we often tell them, you need to go to bed you need to eat. And so they learn that language from us. So one, trying to demonstrate that language for them as both to them, speaking to them in a way that’s respectful, but it’s really about values at this point in time. There’s some more financial stuff that I will do, and I want to lead them and I want to show them have an opportunity to go into sort of business to walk through that at age appropriate levels.

WS: Awesome, Keith, appreciate your desire and focus right on the family and your kids and the legacy. And it’s not just about wealth, or just about that creation of wealth long term. But there are the things that are our priority. Keith, why don’t you tell the listeners how they can get in touch with you. We’re going to close this segment out today. And I hope the listeners stick around because they’re going to hear us talk about numerous things. Keith has become an expert in just understanding investment opportunities and strategies and deal flow and tax strategies as well that we’re going to get into over the next couple of days. So Keith, how can the listeners get in touch with you? Please share that with them and we’re going to continue again tomorrow.

KB:  Sure. So we’ve got something called the Wealth Builder Experience, and you can go to my website. I’m sure we can include the link in the show notes. And it’s really about how do you make wealth the business? Often I find so many businesses get caught up in making money that they miss the opportunity to become wealthy. So, if the primary reason you’re in business is for financial purpose, then there’s a key transition most business owners miss and that is making wealth the business. So, along your way, some way through probably in your 40s, late 30s, somewhere along there after you’ve had that business, likely five to ten years, you’ve got to start putting money into other assets and learning how to manage almost like your own family office, if people are familiar with that. I show people who have, in that $3 to $70 million range, how to build their own family office. As part of that, how do you manage alternative investments into a cohesive portfolio, where do you find those great deals, and it’s really about making wealth of business. There’s a quick visual, if you’re okay with it, I’d love to share it.

WS: Yeah, please. 

KB: So, in making wealth the business, your work, your career, your business, all feed up into initially growing that income, and then in time, how do we convert tax efficiently and intentionally those funds into assets that can be your real estate, your stocks, your housing, whatever it is. And then lastly, you’ve got three different divisions. Your last division is your personal finances, your lifestyle, your fun, your giving, not to say that wealth business is the most important thing but this orientation merely recognizes the impact all the divisions have on it. So when you start to realize wealth is the business then your work, getting caught up with your business isn’t necessarily the most important thing ever. It continues to grow. But you start to look at things holistically, and it changes your perspective and priorities as part of that.

WS:  Awesome. Keith, that’s incredible. I hope the listeners, if you’re looking on YouTube, you can see the image that he just showed on screen and also we’ll try to put that image on the show notes as well. And so that way you can you can see it right there on the website. There’ll be links to everything he was talking about also.

[END OF INTERVIEW]

[OUTRO]

WS: Thank you for being a loyal listener of The Real Estate Syndication Show. Please subscribe and like the show, share with your friends so we can help them as well. Don’t forget, go to LifeBridgeCapital.com where you can sign up and start investing in real estate today. Have a blessed day.

[END]