Jason Hartman’s guest in this Flashback Friday episode is real estate “artist”, philanthropist, risk-taker, visionary, and 5-time international best-selling author Frank McKinney. He shares his real estate journey, from the $50,000 fixer-upper property to being an upscale real estate developer. Then, Jason and Frank talk about real estate bubbles, timing cycles in the market, the spiritual and mental mindset that can lead to success and failure in business and real estate.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Jason Hartman 0:08
Hey, this is Jason Hartman, thank you so much for joining me. Do you know what day it is? Yes, it is flashback Friday, where you hear the best of the creating wealth show and you hear some good prior episodes, some good review. Remember, we’ve got almost 500 episodes out. And you know what? iTunes doesn’t even hold them all if you’re an iTunes listener, if you are listening on Stitcher, thank you for joining us. So we want to bring you some good review stuff. Now. What’s interesting about flashback Friday, it’s a little scary for me. I got to be very, very candid with you on that. Because you the listener, you get the chance to hold my feet to the fire. Did I make any predictions? Was I right? Was I wrong? I’ve been right about a lot of things, but I’ve been wrong about a few. So you can give me a hard time about that if you wish. But it’s flashback Friday, and we will give you the uncensored Best of the creating wealth show with a prior episode. So let’s dive in. Here we go. Remember, this is not current. It’s flashback Friday.
Announcer 1:22
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur whose own properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 2:12
Today, we’ve got an exciting show with well, gosh, it’s hard to title this guy because he’s got quite a few titles. But it’s Frank McKinney, he is a very interesting guy and upscale real estate developer building incredible mansions and creating all kinds of value where really there was none before kind of out of thin air. You’ll like this show from many perspectives. It’s really not necessarily a real estate show, although we’re going to touch on that. But it’s about marketing, spiritual growth, and philanthropy. All kinds of great things, motivation, just some neat stuff. We’re going to cover quite a wide range of topics with Frank today. And before we do that, our next show has Dr. Denis waitley, one of my all time favorite mentors, where we’ll talk about the psychology of winning and the seeds of greatness. And I discovered Dr. Whaley at age 17. And he really did change my life. So I think you’ll like that show. That’s one of our every 10th shows that’s on a totally non financial topic. But as I always say, it always relates to finances. In some ways, we are moving into our new office tomorrow. So I’m very, very excited. They finished putting down the carpeting today and just getting the final touches on it. It’s real exciting. And you know what, I’ll post a picture of that probably on our website, and it has a huge conference or sort of seminar training room. Maybe we’ll have some events there coming up soon. And speaking of events are next creating wealth in today’s economy boot camp is on February 20. That’s a Saturday February 20 registered Jason hartman.com. And the Masters weekend of course, March 6, and seventh, we’re going to do one day on real estate and finance where we’ll have asset protection and all kinds of gurus on that subject area managers, property managers, etc. And then we will do a second day the Sunday which will be more focused on internet marketing, growing a home based business or a small to medium sized business. And I think you’ll really like this Master’s weekend. It’s the first one we’ve done this way. So it’s real special. In one weekend, you’re going to learn all about creating wealth through real estate and creating income through a side business that may well grow into be a big business for you. So that’s it.
Let’s go to the interview with real estate artists marketing guru and philanthropist and motivational guy Frank McKinney. Here’s the interview.
Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday.
It’s my pleasure to welcome Frank McKinney to the show. He is a real high end marketing genius. He has got a tremendous rags to riches story. He’s going to talk today about bubbles and timing cycles in the market and also about that very important spiritual and mental mindset that can lead to success or failure in business and In real estate, and he’s just a really, really interesting guy. I’ve heard him interviewed before on other shows, and really want to welcome Frank McKenney to our show today, Frank, thanks for joining us.
Frank McKinney 5:09
Fantastic opportunity to be here, Jason. I know some of the guests that you’ve had. And I know you’re you’re heard around the world. So I’m honored to be sitting on the same stage.
Jason Hartman 5:18
Well, we’re honored to have you
Frank McKinney 5:20
The stage we’re sitting on, by the way, for those who are tuning in, I am talking to Jason from my oceanfront treehouse office. This is where I’ve written all my books from five books and where I design all of our oceanfront homes from and so it’s a beautiful setting is 23 feet above sea level for so for those of you who are listening in a place, it’s cold and dreary, just think of me sitting up here looking out over the Atlantic Ocean.
Jason Hartman 5:41
You’re making our listeners very envious, there, Frank. But you’ve got a tremendous story and congratulations on your success. You have taken and built such a phenomenal reputation for really creating a whole sort of image and an a, just a persona that that markets these really, really high, high-end properties. And right now you are close to selling I believe the most expensive green or environmentally friendly home in the world, right?
Frank McKinney 6:15
Yeah, let’s, let’s delineate a little bit for your listeners. I am I’m the creator of these magnificent, one of a kind, oceanfront homes. Really artistry that can be found on that sundrenched Canvas known as the Atlantic Ocean. And I do, Jason, all on speculation. So that’s my, my risk my dollars at risk there. I have no partners, it’s me, the bank, and the IRS have been at it now since 1986. Starting back then, with a $50,000 fixer-upper, in a pretty bad part of town down here in West Palm Beach, Florida. And and now you know, almost 25 years, 23 years later, we just finished, again on speculation, in a market like this, the largest at over 15,000 square feet. And the most opulent at over $29 million home that’s been certified, triple-certified green by the United States Green Building Council, the Florida green building coalition, and also ENERGY STAR for homes. And so I think what’s what’s great for your your listeners to tune into is, okay, so wow, you know, Frank, you’re taking this huge risk. Again, I’m building on speculation for those of you who don’t know. I am building, I’ve been creating these houses for all these years without knowing when I’m going to get paid. There is no buyer in mind, no, no buyer waiting, I should say when we’re finished with these homes. So, kind of like the Field of Dreams, you know, build it, and they will come. And that’s what that’s what I’m hoping here. That’s what I’m believing I have believed it for nearly 25 years. And so the most important thing that I’ve become familiar with that I have embraced, I can’t say that I’ve mastered it, Jason, but that is, that is, this exercising of one’s risk tolerance, one’s risk threshold, exercising that risk threshold, like a muscle. You know, eventually, it does become stronger and able to withstand greater pressure. So for the common man that says, Well, how is how in the world can you take a you know, this risk in this economy? Building a 15,000 square foot $29 million home on speculation without a buyer? And the answer is quite simple. You know, I didn’t start with a $29 million house. I started with a $50,000 fixer-upper. And I, and there’s the I see you’ve interviewed some great people and one of my favorite authors is the author of Blink.
Jason Hartman 8:28
Oh. Malcolm Gladwell. Sure.
Frank McKinney
Malcolm Gladwell. I’m sorry. Good point. There, Malcolm Gladwell. And in Blink, and the tipping point and his new book,
Jason Hartman 8:35
Outliers. I think. That’s the
Frank McKinney 8:38
I’m sorry and outliers. He says you have to do to become an expert at anything. The Gladwell says, You must apply it yourself for 10,000 hours, right? And if you do the math, that’s the first five years of a career and really for the first five years of my career. That’s, I didn’t do a house worth more than $100,000, Jason.
Jason Hartman 8:55
So you were just doing fixer-uppers. That’s, that’s an amazing start.
Frank McKinney 8:58
Taking it to the bank day in and day out. Taking my lunch pail to work day in and day out. Nothing flashy, you know, not overindulging in debt, not overindulging in lifestyle, not charging it today and pay for it, you know, paying for it never. I live a very disciplined life. I kind of sacrifice today for a better tomorrow. And now, you know, turning to page 23 years later, we’re able to take what is perceived as being enormous risk because we took so many smaller risks many, many years ago.
Jason Hartman 9:24
That’s fantastic, Frank. So tell the listeners if you would, when you went from that first five years, or as Gladwell puts it, the 10,000 hours that you put in and for most entrepreneurs, they probably do the 10,000 hours in about two and a half or three years, I would say, because they love what they do and they’re working all the time. But work is really play for for someone who has passionate about it. But in the first five years, what was the jump? How did you suddenly go from the hundred thousand dollar fixer-upper houses that you were buying and selling on into the next what was the next move up and how did that occur?
Frank McKinney 9:58
You know, here’s how it evolved. I want to I want the listeners to pay very close attention to the fact that when I was doing those smaller homes, Jason, I wasn’t longing for something more. I was very content with creating and building these little first-time homebuyer homes. So I basically was taking people who were renting the American dream. And I was teaching them how to own it for the first time. And what a wonderful way to be in business. To teach people how to own the American dream, and then to provide them with a piece of the American dream. And after five years of getting really good at it, and we were doing 20 or 30 houses a year and doing quite well, you know. Nice margins on our little sales. I turned on my wife, I said, Honey, you know, we’re pretty good at this, I get this, I am now seeking a greater challenge. I don’t want to I don’t want to deviate outside of my niche as far as the real estate market. But let’s add, let’s simply add a zero, let’s simply add one, zero to the acquisition. So if I was buying houses for 75,000, and selling them for selling for 100, let’s buy one for 750. 750,000. Let’s fix it up. And let’s sell it instead of for a million, let’s sell it for 2 million. Let’s create a you know, a million-dollar margin. And and I felt, after a hundreds of smaller transactions, that this was a natural progression. And when you step back and look at it, it was the same application, Jason. It just was on the ocean, instead of in a, in a, in a burgeoning or struggling neighborhood. And it was just one zero. And that’s all I did is I built up a decent savings and I again I didn’t over-leveraged so it was it was easy for me to go to the bank and borrow the money I needed to to complete the project because I put a lot of my own money more more my mouth was. I don’t I didn’t believe in other people’s money. But in fact, there’s a long chapter in my new book, Burst This, it talks about, it’s titled, as a matter of fact, the most obscene four letter word. And it’s not the F word or the S word. It’s the it’s the D word. It’s the debt word. And because I manage my debt very well, I was able to take on that first project as this. It was kind of both evolutionary and revolutionary. As far as need making that big jump, I didn’t jump from $100,000 house to a 200 or 300. I jumped from $100,000 house to a $2 million house, because I felt, I cut my teeth, I’ve walked the walk and I felt that I was ready.
Jason Hartman 12:20
That’s great. So Frank, where did you go after 2 million? Did you do several of those and get kind of comfortable playing in that pond and then go up to 5 million, 10 million? I mean, was it just sort of that progression like that?
Frank McKinney 12:32
The first house we did, the $2.2 million house that we did, Jason was in 1991. And since 91, we have done 36 homes, on the direct oceanfront. 36 projects, 36 properties. So that’s, that’s more or less two a year. And we very slowly went from two to four, and then six and a half or a member than an eight and then we we we cut through, broke through that $10 million barrier back in 1996. And then we continue to slowly but surely escalate up to where the most expensive one we’ve done was a $15 million house back in 2004. And so we’ve we’ve kind of bounced back and forth between, I haven’t actually we haven’t gone below $7 million since that very first project, with the average price of a home that we’ve done being around $15 million. That the interesting thing and the longest chapter in my new book, Burst This, and we’re talking about the, the thesis behind this book, right?
Jason Hartman 13:27
I’m gonna ask you about that in just a moment. But go ahead.
Frank McKinney 13:30
The longest the longest chapter is the marketing chapter. And so how, you know, how is it Frank, now I’m selling to an infinitesimally small percentage of people that can afford my artistry. And we’re talking about, you know, 25 to 30,000 people out of a worldwide population. Six and a half billion that can’t afford what we do for a living. And so, we have become very keen on our ability to as you referenced, in the, in the introduction to brand, our homes. I will tell you that I’m not a builder. I’m not a developer. I’m not a flipper, I’m not a rehabber, I’m not a contractor, not a wholesaler, I’m an artist, plain and simple. And the artistry that I create is the type that people can live in. I mean, Van Gogh, Renoir, Monet, you can hang them on your wall. But a frank McKinney home is unlike anything you’ve ever seen before. You can, you get an emotional return from living in the art and most often, Jason, our buyers are owners that end up selling their house after whatever, five, six years, they get a financial return, and end up making more money selling the house and I did selling it to them. So it’s important for the proprietor, the entrepreneur, almost regardless of field to consider themselves like an artist approaches his craft. It’s kept it fresh for me for all these years and it really has created a brand that people long for.
Jason Hartman 14:51
Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday.
That’s fantastic. Well, Frank, you’ve got two great books. They’re both out this year. First I want to ask you about burst this, which is about bubbles, Frank McKinney’s bubble proof real estate strategies. And then I want to ask you about your more spiritual book entitled The Tap. So tell us a bit more about burst this I mean, you say that people, they create their own bubbles? First, maybe that the market cycle thing that you’ve studied? And then how people do it psychologically right?
Frank McKinney 15:26
Yeah, here’s what I here’s why I decided to write this book. I had written two other books before, Make It Big: 49 secrets for building a life of extreme success, which was a philosophical book with real estate anecdote sprinkled throughout. The second book was, Franklin Covey Maverick approach to real estate success. And that was a kind of a 20-year ride in the very first property through the first 20 years of my career. First, this was born from my, my just disdain and growing tired of hearing about the bubble and the negativity surrounding the real estate market. And so what I did is I went back and I studied six distinct real estate cycles that took place over the last 35 years where I, my mission was to sift out this, this kind of critical, recurring trends, you know, that that highlight when significant opportunities are going to present themselves? Well, more importantly, signalling where history is going to repeat itself. And these cycles, how long do they last? What brings them on, and ultimately what to look for when we’re about to come out of one, which we are right now. That was one of the most and I just began to think, you know what, as I as I studied, listen, I went through four of those six cycles. The other two, I didn’t go through because I wasn’t in the business. I was too young. And I did very well in some of these cycles. Because I didn’t buy into the bubble mentality. I didn’t over leverage, I created my own market, I created my own brand. I wasn’t a lemming with, you know, I took a contrarian approach. As a matter of fact, the whole first section talks about the importance of being a competent contrarian, and really the book now I think it’s refreshing because there are a lot of there are a lot of books out there. And you’ve interviewed some authors that have kind of predicted the crash and talked about how bad it’s going to be. And I believe that’s fine. We’ve seen that happened. But how do you bubble proof? Your real estate portfolio? How do you take advantage of these cycles? And how truly are our most bubbles self created, just like most opportunities are self created?
Jason Hartman 17:19
So how is that?
Frank McKinney 17:20
Well, first of all, when I look to make money in real estate, I go, I go in the opposite direction of the old, tried and true locations, location, location. And I know that sounds crazy, but hey, if you want to buy a home and be comfortable and live in a nice neighborhood, in a nice schools and all that, that’s great, follow it. If you want to have a nice vacation home, follow the location, location. But when I look back over hundreds of transactions a time I made the most money times I made the most money well, when I went in that opposite direction, and I went into neighborhoods that people wouldn’t go into or on the ocean front. You know, I have never done a project in the town of Palm Beach. I’ve done plenty and Delray Beach, done them in Manalapan. I’ve done Gulf Stream, I’ve done an Ocean Ridge. You’ve probably never heard of those towns, you’ve heard of Palm Beach, you’ve heard of Boca Raton, those towns that I just referenced are right in between. So I’m a firm believer in going and making a market where it hadn’t been made before.
Jason Hartman 18:13
Now. So the question that that kind of begs in my thinking, though, is that you have the power to do that. Because you are such a big force. I mean, you were either doing a large number of transactions, or you were doing a few really high end transactions. And that is of course risky. What you did, I would say, but is that possible for the small investor who just wants to buy one or two houses?
Frank McKinney 18:38
Listen, I, I bought one or two houses for the first three or four years, Jason. I mean, that’s all I I never looked to the next deal. I’m so hyper-consumed with the one I’m working on. That’s why Hey, listen over what is that? 18 years, I’ve only done 36 transactions. That’s only two a year.
Jason Hartman 18:55
Wow. That’s not a lot. Yeah.
Frank McKinney 18:56
You know, the dollars were big. But I am a firm believer in carving your niche a little wider and a little deeper than most. But staying within that niche and don’t be distracted or deviated outside. Everybody’s tempted to deviate outside. And so in times, like we’re in now, these are the millionaire maker days. These are low hanging fruit days. And as Buffett says, you know, when everybody’s afraid, it’s time to be greedy. And everybody’s greedy. It’s not to be afraid. Well, look, you know, he’s putting his money where his mouth is, just last week, he bought Burton, Burlington Northern Railway for $34 billion. And if you if you look, you know, you look at people that this is the time to embrace the opportunities, ie the risks that are out there because you’ll be handsomely rewarded. That’s what first this talks about.
Jason Hartman 19:40
I couldn’t agree more, Frank. I think that of course, you need to be careful always and you need to be prudent. But these are the times in in these quote unquote bad economies where the opportunities are just so so present, whereas in good times, it’s just really hard to find an opportunity when when the market is booming, and Everyone has picked the first 10 levels of low hanging fruit. And now there’s a lot of low hanging fruit out there, as long as someone does the plan and does it correctly a lot of opportunities. And a corollary to that Warren Buffett saying is Jay Paul gettys buy when everybody’s selling, sell when everybody’s buying? So would you consider yourself a bit of a contrarian then?
Frank McKinney 20:21
That’s the first part of a four-part book, part number one, if any of your book right there, you open it. The confident contrarian. And that takes some intestinal fortitude, but once you practice it, and you sensitize yourself to the, to the trend that is upon us, and when you see it for what it is, and you have, you have the belief, the hope, and the faith that you are your decision to say yes, more than no to opportunities that are out there are going to pay dividends, not immediately. That’s why I, I really, I there’s a there’s a chapter in the book we’re going to talk about. It talks about overspread, shooting your life and the one of the negatives of the information society that we live in Jason is this, this over researching this, over googling this. Just, you know, just don’t spreadsheet your life to death. Because what people do, and especially in scary times, and mind you the media has created times that are scarier now than they actually appear, or they appear scary, scarier than they actually are. Believe me, that is something why I advocate you creating your own reality and not following you know, following that, that that immediate created frenzy, the fear that’s out there. But here’s, here’s what you’re doing. Here’s what you’re doing. When you do that, you are psychologically subliminally looking for a way or a reason to say no, that’s what you’re doing. You and believe. Here’s the problem with this with the information that’s out there, Jason, you’ll find the reason you will find the reason and you’ll see I you know, there it is, I found it. So no, we’re not gonna do that project. Let’s just go ahead and sit in the cubicle the rest of our lives, right, the nine to five game.
Jason Hartman 21:57
Yeah, that’s really sad. And you know what that reminds me of Frank, and I can’t remember the title of the movie. Well, maybe it was called Yes, man. I’m not sure if you saw it with Jim Carrey, wasn’t it? You know, what really blew my mind about that little comedic movie is is that it just amazes me as so many of my friends and so many clients that I interact with, they’re so consumed with saying no to things, where if they would just say yes, yeah, things might go wrong, but just get out of your comfort zone. And when he had to just say yes to everything, look at the sort of opportunities that opened up in his life. I mean, the road was windy, a little bit. And at first, it may have seemed like, oh, saying yes, was the dumb thing. But ultimately, a lot of things really work out by just saying yes to them.
Frank McKinney 22:43
I have a couple of shorter chapters in the burst this book that talks about celebrating each humble victory as a triumphant achievement. What does that mean? Small, humble victories? Not not, you know, asking your wife to marry you. And she says, Yes, or having your first child or doing your first mega real estate, the small little humble victories and considering them triumphant achievement, because what that does, Jason, is it builds confidence. And when we have confidence, we will say yes, more than No. When we say yes, more than No, what are we doing? We’re exercising our risk tolerance, like that muscle eventually becomes stronger, and is able to withstand greater pressure.
Jason Hartman 23:20
And we’re getting out of our comfort zone. Very good advice, Frank. Anything else in Burst This before we talk about the tap?
Frank McKinney 23:25
Well, I think that it’s a very, very timely book, it was supposed to be a book that was 250 pages long, it’s over 376 pages because I really went deep into these, these cycles. So that you can use this anecdotally, as a as a guide and a compass when it comes to either buying your first investment property, stepping up your your margins, if you will, or even buying your first home.
Jason Hartman 23:45
Tell us about the tap here, you get more into the spiritual and the psychological side of success in life and success in real estate too. What’s it all about?
Frank McKinney 23:55
Well, you know, you can apply all the platforms in the in the suggestions in the burst this book, or some of the other guests that you’ve interviewed that have all these wonderful nuggets of wisdom, nuggets of success, and and then at the end of the day, you know, what’s it all for? And I listen, I went to four high schools and for years, and it wasn’t because my father was in the military, I was asked to leave every single one of them I came out with a 1.8 GPA and didn’t have the benefit of pursuing a formal education, came down the floor with a $50 bill and started digging sand traps on a golf course by hand. And here, so many years later, we’re doing we’re this real estate artist and build these beautiful homes. Why? And I began I went back and studied and I studied my mentors, you know, people I look up to, and and I came away with it with a very, very interesting conclusion. If you look at the cover of the book, the tap and it’s it is it is the hand of God coming down from the Sistine Chapel and instead of touching Adam’s finger like it does in the painting, Michelangelo’s painting, it’s touching you on the shoulder, and in a tap. Jason, I expand upon a wonderful life mantra regardless Have your religious preference or even if you have one, there’s there’s a great passage from the Gospel of Luke 1248 that says, and paraphrasing, to whom much is interested, much will be expected. And so why is it that certain people’s prayers for more, and let’s face it, if you pray, you do pray some form of prayer, for more, more wealth, health, happiness, love, peace, relationships for somebody you love, or yourself and why and I was curious what why did why are my mentors like people I look up to that have seem to have it all? Why? Why were they having their prayers for more answer when mine were going unanswered, or taking forever to be answered. And the reason became very clear to me, God rewards responsible stewards, those who are responsible for the blessings that they’ve been given time, whatever time talent, treasure blessings that they have, and are responsible to share those with those less fortunate, who hadn’t succeeded at their level. Those are the ones who had the prayer for more answers. So, you know, I contend, and I, you know, prove it in the book. And it’s the book is for those who want to succeed in the business of life, okay. And that’s the most important business that we’re in, you can’t succeed in the in business, and fail in your personal life. You can’t live that double life, it doesn’t last, that’s a flash in the pan variety of success. And so in the tab, I teach the reader how to sensitize themselves to what I refer to as life’s great tap moments when God does come down, lay his finger on your shoulder and say, Jason, I’m calling you to more.
Jason Hartman 26:30
Thank you for listening to the creating wealth show. This is Jason Hartman, your host, and we appreciate you following the show. We have many, many episodes, hundreds of episodes, and some of the older episodes have been archived and placed in our members section. And that applies to this one. So we include a sample that’s about 25 minutes long. And then for the rest of the show, you can go to our members section at Jason hartman.com. Many of the other shows are still in their full length complete version. However, some of the shows like this one are in our members section where you can hear the show in its entirety. And again, you just need to go to Jason hartman.com. And you can get the full show there in the members section plus a whole bunch of other great members benefits and resources, whether it be documents, forms, contracts, articles, other video and audio content, just a great resource, so be sure to join as a member at Jason hartman.com and thanks again for listening to the creating wealth show.
Announcer 27:42
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