How Money Really Works with Chris Naugle

Episode 325: How Money Really Works with Chris Naugle

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REIS 325 | How Money Really Works


The problem in America is what people think they know is just isn’t so. We have professors and financial advisors teaching us about how money works; but now and then, we hear people being hit every time the economy takes a downturn. In this episode, Money Mentor Chris Naugle shares his initial financial failures because of following money advice from people who are not doing them. Being at the bottom moved him to learn how money really works. He then exposes these so-called “expert tips” about credit and investment. See if you are making the same mistakes, too. He touches on getting out of the market, finding good advice, and what it takes to be truly happy and successful.

I’m with Chris Naugle. This guy is all over the place. He travels like the wind. He has speaking engagements all throughout the year. He has courses and classes. He’s teaching people how money works, which is probably the biggest obstacle in everyone’s mind when they first get started is, “I don’t have any money so I can’t do this,” which is a bunch of crap. If we needed money to do it, probably Chris wouldn’t be here. I know I wouldn’t be here if you needed money to start. Once you learned that concept that you don’t need your own money to do this, the whole world opens up. With no further ado, how are you doing, Chris?

I’m doing great. Thanks for having me on the show.

Where are you sitting right now, what city?

I’m in Buffalo, New York.

The guy has this 8,000-square foot facility with two podcast studios, one for training and one for an event center and everything else. He’s a very successful person. He’s got it going on. His wife runs the real estate side. He’s running the educational side. We’re going to get to some real content here because this is one of the most important issues of the day when it comes to real estate investing. It’s “What about the money?” I want you to give us a little background of who you are, where you’re from, how you got here.

I was born and raised in Buffalo, New York as a young child. I grew up in a humble and low-income family. I was a big dreamer and my first dream was I wanted to be a pro snowboarder. Everybody says, “You can’t do that. You live in Buffalo. You’ll never make it.” I became a pro snowboarder and that set the pace for the whole thing. I was self-employed at sixteen years old. I had a terrible job working for a restaurant. I was degraded terribly. That led me to being self-employed. I started in the clothing business creating clothes. I then moved on to opening retail stores in the skateboard/snowboard industry. I ran those successfully for sixteen years. It was all going great. I landed in the financial services industry. I became an advisor in 2003. I did that for sixteen and a half years until I retired.

Everybody’s story sounds great if you look at all the good things, but you don’t learn from the wins. You learn from the failures. I have failed more times than most people I’ve ever met. Many of my big failures started in the early 2000s and the first recession. I fell flat on my face in 2008. I was one payment away from being bankrupt. I got back on my feet. I started buying lots of real estate in 2009 because Warren Buffett says buy low so that’s what I did. I almost fell on my face again in 2014. What I didn’t understand is how money worked. I kept doing what I was trained and taught my entire life about money as an advisor. Where we’re at now, we own and operate eight different companies worth about $11 million. I flipped about 247 houses, rental portfolios or wholesale operations. I travel nationally. I speak on stages with Grant Cardone and Ed Mylett and teach people how money works. That’s my passion.

That’s one thing people can connect with is the struggle or your time in the forest. I have a book, My Life & 1,000 Houses: Failing Forward to Financial Freedom. I’m about to come up with my fourth book. People call me all the time and say, “I related to your book.” They start telling me their story and I’m thinking, “We don’t sound like we’re alike at all,” except what they’re latching onto is the struggle or the time in the woods. It’s universal. I don’t think anybody gets anywhere without going through at least one patch of darkness, probably multiple. Here you are. You’ve had these failures. You’ve had these successes probably floating along medium to medium well. Where’s the turning point? What opens up? What changes everything?

In 2014, l was buying real estate, got up to 36 units from ’09 to ’14 and fell on my face again. I almost lost everything, including my fiancée, who’s now my wife. In ’14, we had to sell off every single property we had. We had to sell our dream house that we had bought. I was doing well. I was making high six digits as an advisor. It wasn’t so much that. I was using the money in the wrong way. In ’14, this is where it goes. I got a postcard in the mail. We’ve all got one of these to go learn how to flip houses at this three-day seminar. At that point, I was so humbled by my failures. I had nothing to lose and to go to this seminar, they were giving away a free iPod Shuffle.

Nobody gets anywhere without going through at least one patch of darkness. Click To Tweet

I had no money so an iPod Shuffle got me there. That’s when it all changed because I learned one thing. I learned that what the wealthy, the elite and the successful investors were doing was the complete opposite of what I was doing. That is where it all changed. I dove in. I started learning the secrets of the wealthy. I started learning how private money worked and how hedge funds operated. That’s the turning point because my whole life, and you mentioned it, everybody either doesn’t get into the business or gets into the business and money is an issue. You always think you need more. You don’t know where to get it. You think you’ve got to have money to make money. I lived my whole life that way until I learned that the banks don’t use their own money. Why am I using my own money? That was the turning point, 2014 at that three-day summit. I’ll never forget that day. It was rainy April, my wife was watching Tarek and Christina on Flip or Flop. She wouldn’t go because she was so caught up into it. I’m like, “I’m going to get this iPod Shuffle. I’ll be home in an hour.”

Who did you go see?

That was the Tarek and Christina one. That’s what the postcard was. I came home and I was so fired up, “I figured it out. I found out what we’re going to do and how we’re going to change our lives and how we’re going to get out of this mess. Sweetie, I charged $2,000 in the credit card. Don’t be mad.” You could imagine how that went. First, I had to get over the hurdle of the $2,000 I spent that we didn’t have. I told my wife, “You have to take a day off from work to come to this seminar out in Rochester with me.” That didn’t go over well, but that was the defining moment that changed everything for us.

What a nice moment because half of the struggle is hope or vision. Someone lit a fire on you and showed you something that you felt like you could do. Those are scary times, but they’re also some of the best times when you look back because everything’s new. It’s coming at you and you’re growing a million miles an hour. You got with the right people and they told you some common sense stuff and didn’t try to sell you a bag of crap.

It was the people, 100%. They took us under their wings and showed us the path. They didn’t hold our hand and say, “Do this, don’t do that.” What they did is they solidified our hope and our dreams. They gave us a plan and they held us accountable for our actions. That was the biggest things that allowed us to get there. We learned from what they were doing. We mimicked what they were doing. That’s all we did.

You sound like you took off right from the get-go, but I hear a lot of stories all the time. People try something or an educational group one time. It didn’t work out the first time or the second time. I was a third-time guy. I wouldn’t give up on it. I knew I had the right idea, but I didn’t think that I got the right people. It wasn’t necessarily their fault. We didn’t mesh in the way I needed to learn and the way they were teaching it until I got to a point and I landed in the right place with the right person. I couldn’t believe my life. It was all good and I wasn’t rich by any means. You have the same stories. Have you been to some that didn’t work out?

I only told you about the one that did work out. I didn’t talk about all the ones that we went to before that were a waste where it’s just a pitch fest. They’re trying to sell you something. After you buy something then it’s like, “See you, guys.” There were plenty of those. This one was very different because we resonated. My wife resonated with the show. We end up landing a show on HGTV partly because of that defining moment right there. We had a ton of them that didn’t work out. One of the biggest things with success or failure with education is the application of knowledge. It’s not the knowledge. We can get the knowledge for free on podcasts like this or books, but it’s when you take the knowledge and someone gives you a kick in the butt to get you to apply that knowledge and take action. That was this one. They held their hand accountable to take action. We did take action to the point where there was a rough road where we went in heavy. You know how flipping works, sometimes they don’t work out quite well. We had a little string of flips in 2011 where we had a couple of losses and it almost sank us. We kept going at it and that was it.

That’s one of the most important things when you get into this business or any business. If you have some bad things happen to you right upfront, you can be out of a career that could have been stellar for you. I was almost that guy. I got in. I was having major troubles. If I hadn’t had stayed a little bit past what I thought I could hold on, I was almost out of this career. This career has made me millions and millions of dollars. To think that I almost quit and I didn’t know what I didn’t know. I was trying to do things the way I thought I knew how to do them and they weren’t even remotely close to how I was supposed to do it. Someone pat me on the shoulder and told me, “Look over here, not over there, stopped doing this and do that. Why is this happening?”

REIS 325 | How Money Really Works

How Money Really Works: You can acquire knowledge from anywhere, but the difference between success and failure is the ability to apply that knowledge.


Mitch, you said something that resonated right there. I want to reiterate that because it’s important for everybody to understand is the path to success is not all wins. To succeed you have to fail because you learn more from the failures. Failures are maybe you didn’t make money on a flip or maybe this didn’t work. Every failure is where we learned and those learnings or teachings are what got us to where we’re at now. You have to almost fail to succeed and everybody’s going to fail. The difference is some people quit and once you quit, it’s all over. That is when it all ends because the biggest thing is you’re going to fail. It’s just don’t give up and keep going.

If I can share one other thing that you mentioned that is so important is the big takeaway that we learned during those periods when we were failing is we were so focused on one aspect of real estate, flipping. You know how flips work. You put a ton of money in. You’re sitting and waiting. All of a sudden, you’re waiting for it to sell and maybe a sale falls through. There’s no cashflow. We were told by our mentors that you can’t focus on one thing. You have to have multiple lines of business. What we did is we developed three strategies. First, every property we get, we will wholesale if we can. If we can’t wholesale it, we move it down the line to try to flip it. If we can’t make 20% flipping it, it moves over to the rental pool. We way space, we take the deal and we do a BRRR. We rehab it, rent it out and refinance it with the bank. We portfolio that. Once we learned that and we started building that, the rental supported the flips, the wholesale supported the flips. Our business was more level and easier to operate.

It’s the same thing. I have eight companies. They all start and feed off of a flipping. It’s like you have this exhaust coming out of your tailpipe. What do I do with it? If you’re in the business of selling trees and the boards, you’ve got a big pile of sawdust. You can either pay to take it to the dump or you can sell it to someone or figure out a product to make out of the sawdust. We’re going to be giving away a free 90-minute webinar. Tell us about the giveaway.

One of the things that I do from the stage and it’s one of the most valuable things is I teach people a 200-year-old banking strategy that’s used by the wealthiest individuals including banks. The best takeaway of what this webinar gives everybody is it’s going to teach you two basic things. Number one, it’s going to teach you how to get all the money back for every car you will ever buy driving on. There is no fluff to that. When you watch this webinar, you will know exactly how to buy every single car for the rest of your life and how to get all the money back for every one of those cars. You’ve never known how to do that. The second thing we show people how to do is we give an example of how we showed somebody how to pay off debt, but not to pay off debt. This person paid up debt in six years, which would have taken him nineteen, but he recycled and recaptured all of the money he was paying to everybody else. We’ll show you a method to recycle and recapture all the money you’re giving away to all the credit cards and all the banks out there. You can keep it all in your own household. That’s what the webinar teaches.

We’re going to go to 1000houses.com/OPM, that’s Other People’s Money. I’m sure it’s going to apply throughout this conversation. To your point, I bought a little ranch in Texas. It’s 40 minutes south. It’s 160 acres and it’s a nice place with house, pool and barns. I leased 440 around me from the neighboring rancher. I’m hunting 600 and it costs about $10,000 a year to lease that 440. I got four of my best friends that like to hunt. I charged them $2,500 apiece. I’m hunting 600, I’m paying for 160. We’re all having a good time. It works out perfect. There are 100 ways to skin a cat. You don’t have to pay for all of it. If you get smart, you won’t pay for any of it. How does money work? Kick us off here.

The thing is that in 2014, the biggest takeaway I got from that is we go through life and we’re taught that money works a certain way. We’re taught that when we need money, we go to the bank and we get a loan, we use a credit card or we get a line of credit. Those are the things we’re taught, but what that is doing our whole life is we’re taught to give up control. When we’re borrowing money and using everybody else’s money from the bank standpoint, we’re not in control. I’m not saying don’t use other people’s money, but the other thing we are all taught is to give up our good dollars and get paid back with weaker dollars. Let me give you an example.

Most people, their largest savings vehicle is employer-sponsored retirement plans. Essentially, you’ve been taught your whole life to put money in retirement so someday at 59-and-a-half or beyond, you can retire happily and ride off into the sunset. Tell me how many people you know that ride off into the sunset. Statistically, only 5 out of 100 people nationwide or countrywide retire successfully. It’s only 5% and that’s sad. It’s because the whole system is working against you. You’re giving up your good dollars by putting money into these vehicles. You’re getting a tax deduction. That money is compounding over time, building to a larger sum and someday later you’re going to take that money back, be taxed at a higher rate and you’ve lost control for that whole time. The funniest thing I’ve found in learning what I know now is we do things with money that we would never do with things that money buys.

Let me give you an example. Would you ever go to the store and buy a loaf of bread, come home, put it in your freezer, come back five, ten, fifteen years later, open that freezer, take out that loaf of bread and be like, “Yum?” It would be a freezer-burned lump of bread that you would never eat. You’d never buy a car and wait five, ten, fifteen years to drive that car and you would never certainly buy a house and wait five, ten, fifteen years to live in the house. Your spouse would divorce you. Yet we do that with money. We give up our money now. We’re okay with being paid back later. During that whole time, we borrow money from the institutions because they’ve made it easy enough for us to get money and we’re a slave to the very thing that we’ve created.

The advice that financial advisers give you is always derived back to what pays them the most. Click To Tweet

The one thing people don’t realize is they think this is normal. This is not normal. This is what you’ve been taught. There’s a whole other side of what the wealthy do with money. If you peel the onion once, you will see a whole different light. In 2014, I saw what the wealthy were doing with the money. It was the complete opposite of what I was doing. I was a financial advisor at Wall Street level. What they taught me as an advisor was the complete opposite of what these guys were doing. I had this mind thing going on where I didn’t even know what to do. Is this right or is this right? As I continue down the path, I learned that what the wealthy do is mimicking what the banks do, and copying that is the path to freedom. That’s what gets you off the financial hamster wheel.

Everybody makes it seem so much like it’s about money, but it’s not about the money. It’s not even about the economy. Everybody’s like, “The economy went down. I couldn’t make money.” It’s not about that. There’s more opportunity in a down-market than there is in an upmarket. Right now, we’re at the top of the market. There’s an opportunity but it’s scarce. You wait another year when this market turns and mark my word, the market will turn. It always has and it always does. I know things that most people don’t. When it goes down, that’s when your opportunity strikes, but if you’re not ready for that opportunity if you don’t have your bank ready. I don’t mean your bank is your money. You might be like, “Chris, but I don’t have any money, so how can I have my bank ready?”

You have to mimic what the banks do. Banks make 400% to 1300% off of every $1 you leave there at the bank. Why are you not using other people’s money? If you want to get into real estate, learn how money works, mimic the banks and use other people’s money to get your deal, but do it smartly. Make sure that when you’re using other people’s money, you’re doing it in a manner and in a fashion where you understand the steps and the process of how that works to protect yourself and also protect the investor. I could go on for days about this stuff, but that gives a quick summary of these things.

It gets some education and take control of your financial future. If you drive down through town, the biggest buildings in town have a lending institutions name at the top of it. Why can’t you lend the money? There’s no law against you lending money in certain things and certain ways, but there are also very many ways to lend your money. You have to look at your risk-reward formula. What’s the reward and how much risk am I putting for that reward. You find some sweet spot in the middle where there’s not so much risk if any at all. There’s always risk from lightning, meteors, nuclear bombs and terrorists, something can happen. There’s no 100% thing. In fact, SEC tells you it’s against the law to guarantee a rate of return or guarantee because you can’t.

What I find funny is every time you go to the bank, there are times to sign the personal guarantee and there are times that you don’t have to and you shouldn’t. Why should you if you don’t have to? You need to recognize those times. When you signed that guarantee of the bank, you are guaranteeing everything that could possibly happen in the world from hurricane, flood, lightning, armies, wars, the whole thing. It seems ridiculous that you would put your savings on there and have the audacity to think that you could guarantee something. Try to learn, especially in the beginning, they used to find the money that’s not recourse or collateral only because at the end of the day, if you loan $50,000 on $100,000 house or $200,000 on a $400,000 house, the chances of you going under are pretty nil if you know how to do your due diligence and size up that collateral. Just because someone told you it’s worth $400,000 doesn’t mean it is and there’s something that’s not in. I went the long way. Probably if I’d have known how to loan money at a fair rate twenty years before I did, I may have never even gotten in this business because I may have never needed to.

The ultimate is that being the bank and learning how that works. If you could be the bank, that’s the ultimate in the real estate world.

At least if you get your education and you take your own financial control, you can look in the mirror and you won’t have an Enron to blame or you won’t have whatever corporation who went out of business who cut your retirement in half in the last two years of your stay. You will have no one to blame but yourself and you won’t put yourself in those positions. These people knew they were going broke years before they told you or before it showed up on the news. If you were taking control of your own future, you would have seen the signs of what you were doing wrong years in advance and you could have corrected it.

The funny thing is sometimes you’ve got to look at yourself in the mirror and ask yourself, “The people that are giving me advice on money, why are they telling me the things that they are?” I came from the advisory world. You learn from your failures. As an advisor, I drank the Kool-Aid and I wore the pretty rose-colored glasses. Advisors are in the business of selling a product or charging a fee. The advice that they’re giving you is always derived back to what pays them the most. You’ve got to think about that. The advice you’re being given for stocks, bonds, mutual funds is how they’re getting paid. That’s how they’re making the most money.

REIS 325 | How Money Really Works

How Money Really Works: There is more opportunity in a downmarket than there is in an upmarket.


There’s no reason why people in the financial business make a ton of money is because you’re paying it. You’ve got to realize that. The biggest advice I can give people in understanding the market cycles is we are in the eleventh year of a proverbial seven-year mark. We are out of fuel. The only reason we’re still going is every once in a while, someone puts a little drop of fuel in the tank to keep it going. You’re seeing these things happen, but yet your advisors are telling you to buy more stock, buy more mutual funds and put more money into the market.

You are literally buying high and you are going to lose when the market goes down. People like myself and so many other people that have learned the wealth without Wall Street and learned how to use money, they’re going to be ready to take advantage of everybody else’s losses. I hate to say that, but you need to be smart about it. Get out of the market. The smartest thing you could do is get your money out of all stocks, bonds, mutual funds. Sit on the sideline and wait for the opportunity. Whatever your opportunity is, real estate or buying stocks back when they go down 30% to 40%.

Find something you’re passionate about. It’s better to have a higher ticket item because you can buy a steeper discount and make bigger margins. My show is sponsored by TaxFreeFuture.com. People that help you set up self-directed checkbook, control IRAs or solo 401(k)s so that you can decide where your money goes. There are some rules and you’ve got to learn the rules like you’ve got to learn the rules to Monopoly or Parcheesi or anything else if you’ve got to win. It’s not overly sophisticated. Some people go to their job and put more effort into that than you would ever put into figuring out some of these strategies. They’re not that big a deal. You do have to get immersed in them and level up to a certain point. It shouldn’t be hard to level up. It’s your money. It’s your life. Everything you do well is going to reflect on your lifestyle. When you do bad it will. My pitch is TaxFreeFuture.com. If you don’t have a self-directed, tax-deferred or tax-free retirement plan, you don’t have any idea what you’re missing. You have no idea the tool that you don’t have in your tool belt. There’s a reason why the financial institutions don’t tell you what they should tell you. We’re going to tell you what they’re not telling you and why they’re not telling you.

What if they walk in the bank with a bunch of money to put it in there and they pitch you, “We’ve got a 1% CD?” I love these billboards bragging on 1%. I’m like, “You should be ashamed of yourself. You spent $2,000 a month on a billboard and exclamation points tell me I can make 1% that doesn’t even keep up with inflation, is two points behind at least.” The audacity of these people, give me a break. What if you walked into the bank and one guy looked at you and says, “Why don’t you loan it out yourself? Why would you give it to us and get 1%? No one in that business is ever going to do it. To your point, the financial advisors aren’t going to tell you what to do either because they’re not going to get a commission. You hear people, “I made 14%, 16%, 18%, 20%.” On average, if you could make 8%, 10% to 12% steady for the rest of your life, you would have outperformed all of these jerks.

You don’t even need to make that much. The fact of the matter is if you make just 4% consistently over the entire time frame and it never changed, you’d beat Wall Street every time.

You set your goal for 4% or 5%. What’s going to happen is as you get good in your strategy, there will be opportunities that walk in that you’ll make 25%. You’ll make 50% times. You’ll make 100% and it will skew the 4%. You set your goal to make it steady and you make your bread and butter deals like that. Before it’s over, whether you’re flipping houses, flipping cars, making loans, at some point something happens that skew the 4% upward.

That happens all the time. You were talking about self-directed IRAs. I would say that I am somewhat an expert in self-directed IRAs. I use them heavily in my own practice. I teach people how to use them because they are single-handedly one of the greatest financial vehicles and they’re available to everybody. They’ve always been available. It’s no different than the IRA you own now. You are allowed to direct where the money goes. If you understand how to use that, even if you don’t want to swing hammers. You don’t want to be in real estate because you say it’s too much work. There are ways to use self-directed IRAs, use your retirement funds without having to do money. You were talking about that. There are so many other people that will pay you way more than Wall Street would. I’m going to throw some numbers out, but I know of two places where you can get 9% or 16% on your money and it’s a note. It doesn’t go up and down, it’s flat.

I borrow money at 8%. I got $20 million with 8% money. I have a seller reputation, a long reputation and verifiable reputation that you can talk to anyone I ever borrowed money from them. I got their phone numbers and their email addresses, call them. Here’s the thing, I never borrow over 65% of the piece of collateral that I’m pledging. I average borrowing 58%. If I want to buy a house that I can owner finance for $100,000, I average borrowing $58,000 from some private individual like you out there reading. I give you a first lien on it. If I don’t pay, which has never happened, you would get $100,000 house for your $58,000 cash. You’re probably going to do way better when that happens then me paying you 8%. The way it’s worded is the worst thing that will happen to you is you’re going to make 8% if everything goes right. The best thing that will happen to you is if I don’t pay you, you’re going to get my house. You’re going to be a big winner at that point especially if you understand anything about seller financing in the state of Texas.

Asking somebody for money is putting yourself in a position of weakness. Click To Tweet

Chris takes people like you, run something in the mill house and get some education. He does it to probably protect the other side of the equation. He’s going to introduce you to people that have money. He’s not going to introduce somebody who doesn’t know what they’re doing to as many people because then there’s going to be a train wreck and Chris Naugle has got his name all over it. He doesn’t want his name on a train wreck. What he’s doing is pretty smart. He’s saying, “I’m going to put people together that need to buy, but I’m not going to put you all together without me vetting both of you. What are your expectations for the people over here? They’ve got to be reasonable and fair. The people that are borrowing the money need to know what you’re doing because I’m not going to introduce you to these people over here if you’re going to blow it.”

When I started doing this, what you described is exactly what we’ve created. I did it almost self-serving. I looked at it. There are only two types of people out there in the world. We’re going to picture a quarter. On one side you have the heads, that is all the people that have money that want to make money. On the tails, you’ve got people like real estate investors that need money to make money. The only thing missing of bringing the heads and the tails together is the thing that we always ignore, which is the edge of the coin because it’s so small. It’s so hard to look at it.

The edge of the coin is financial education. We brought the heads and the tails together in a community and we put together a regimented four-week education program that teaches people how money works. Everything from traditional funding to private funding to the strategies that you have to use and the steps of putting the rubber to the road. We don’t allow either one of these two, the heads or the tails, to come together until they’ve learned the same exact education. The lenders know what the borrowers know and the borrowers know what the lenders know. Everybody is on the same page. We created a standard operating procedure and check the box off, “You’ve got this.” This is what banks do. That’s all it is. I’m not that smart. I did not create something that’s never been done.

Banks do this every day, but we’re not taught to do that. I created this standard operating procedure, which allows the lenders and the borrowers to come together and then all of a sudden you have harmony because everybody is educated and everybody knows exactly what each other is supposed to do. There’s never any hanky-panky or faulty dealings or deals that go on and all of a sudden there was no security on the backend. It’s a standard operating procedure. That’s all we’ve done. It’s very simple.

Lending is probably the second-oldest profession in the world.

It’s been done since the beginning. A barter system is the same exact thing.

The problem is there are people that have money. They’re dying to find people like you and me. They wish they knew. There are elderly people, over 65, 70, they’re done working for a living. They want capital preservation. Some of them will tell you, “If you’ll give me my money back, I’d be happy, but I’d like to make a little bit, but don’t lose my money. I hear it all the time. There are people out there that desperately need other people like Chris and I or you out there. They’re not looking to make 25% loan shark rates return. They want a decent return on the money with a minimal amount of risk. They’re out there. The goal is for us to find each other because they’re perfect fits. What you’re doing with the educating both sides and at the graduation ceremony, letting them all sit down in the same room, that’s great. Everybody knows and they know the same thing. No one’s going to go in and try to pull some crap.

It’s such a simple concept, but the most brilliant minds, the most brilliant things ever created are created at a fifth-grade level. They’re so simple that nobody ever thought of it because it’s too simple to wrap your head around it. The institutions try to make things complicated so that we think we need them. This whole thing being a lender or being a borrower, it is so simple. It’s probably the second oldest thing being done. There’s nothing hard about what we do.

REIS 325 | How Money Really Works

How Money Really Works: Your real estate deals hold the key to solving everybody’s problem, that is, to make more money.


You go to a bank and try to get a mortgage loan, it takes 60 days, 90 days, 120 days. I get up at 8:00, someone calls me at 9:00. I go look at a property. I run some comps and by 2:00, I’m cutting a check. It’s not that hard. They have made it into like it’s going to be monumental. It’s not. I went there. I pulled some comps. The house is worth $150,000. The guy wants $60,000 in the first lien position. I call the title company and make sure he’s the owner. I’ll do some due diligence, maybe even call an appraiser and do a desktop or drive out there. I got a third party to back my busy butt up a little bit. I’m done half a day, a day and a half, no 60 or 90 days.

I did a deal that took two days. The borrower gave me everything I needed, the appraisal, the BPO. They gave me all the information because they knew what I was needing. They knew because they had their education.

They went to your class. This is what a lender wants. Let me save him the breath of asking for it or giving it to him piece by piece. Let’s get it all in a nice little box and send it over to his office. I’ll get an answer like that. I have a raising private money course myself. Private money changes everything. It’s quite different from Jay Conner. Jay is my friend. Everyone has their own way of doing things and I had my own strategy that I was trying to get the money for. My pitch was uniquely different because it was a little more niche down. One of the biggest things though in raising private money is people think it’s about them. It’s not about you. It’s about the deal. I use this analogy and it’s probably the worst analogy ever in the history of the world, but Charles Manson should be able to get this loan from Wharton. It doesn’t matter how many murders the man committed. It’s how much collateral am I going to get if he doesn’t pay me? That’s all that matters.

Let me add to that because you’re onto something important that everybody needs to hear. The other thing so many people make the mistake is when we need money, we want to go out and ask people for money. The second you ask somebody for money is the second you are in a position of weakness. If you’re going out asking for money, it will be very hard for us to find the money. Here’s what you need to do and it’s so simple. Go out and solve people’s problems. Everybody that you will ever meet has one common problem. That problem is they all want to make more money so you with your real estate deals hold that key.

You hold the answer to that problem. You can help them make more money. Teach them how to solve their problem, your opportunity, your deal, which is exactly what it is. It’s not your real estate deal. It’s an opportunity to solve someone’s problem. Go out and solve their problems. Show them how to make more money, safer with a lot less loss of control and a much more consistent way to do it. By doing that, you will find that money will find its way to you so quickly the second you start solving people’s problems. If you continue on the path that you’ve been taught of asking for money, you’re never going to make it because you’re after the wrong thing. You’re self-serving. You’ve got to solve people’s problems to get money.

I was in a restaurant and I was meeting someone who wanted to be mentored. I was sitting there at the bar talking to him. We were waiting for a table at the restaurant and they were pretty busy. We had to sit at the bar for a while. A lady pulls up next to me dripping in diamonds. Wherever she came from, she wasn’t broke. I started telling this young man where I’d been, what I’d done, how I found the money to do this, all my track record. I was going through the whole thing. When we finally got a table and we sat down, I said, “All that stuff I was telling you about the money and all that, I wasn’t talking to you. I was talking to the lady next to me.” I left two cards where I left my drinks at the bar. I went and sat down. That was my pitch for the day. I’ve gotten in a habit a long time ago. I’ve got to do my pitch one time a day. It can be face-to-face. It can be an appointment where people know they’re getting pitched or people that don’t even know they’re getting pitched.

I’ve had that happen too where people don’t think they’re listening, but you know they are. They want to know. They want the answers, but they don’t have access to it because the knowledge that people need to get off the hamster wheel, it’s not knowledge that anyone’s going to give you. It’s the knowledge you need to seek out. If you’re not out there seeking that knowledge out, which takes time and money. If you’re not doing those two things, you’re never going to find it. No one’s going to come and teach this stuff to you, nobody because nobody can make money off of it. If an advisor can’t get paid, they’re not going to tell you about self-directed IRAs. For the record, they can’t get paid on self-directed IRAs. If you haven’t heard of what self-directed IRAs are, that’s why nobody can get paid off of it. They can’t figure out how to get paid. They don’t tell you about the greatest things out there. The biggest secrets of the wealthy had been there for hundreds of years, right under your nose. They’re there. They’ve always been there. Nobody’s told you how to use them because they can’t get paid.

They pass those laws on 401s and the IRAs, but those legislators pass them in the middle of the night among stacks and stacks of bills. They never send you the memo and they do it for themselves or do it for their community of politicians or wealthy. They pass those things for themselves. There is a path not to pay taxes. They don’t send you the memo.

What makes you happy is when you serve other people, when you give back. Click To Tweet

Learn about 1041s. You want to see how not to pay taxes, it’s right there. It’s always been there. You didn’t know about it. 1041 would be like charitable, giving and foundations.

1031 is a property exchange. There’s even a property exchange where you can defer the tax. It’s like a 1031 but the property hasn’t been built yet because you’re going to build it. There are all kinds of ways, but they don’t send you the memo and the course on it. They pass it because they understood it because they wrote it. They know how to get through it. They tell their other colleagues, “Look at what we got through. We don’t have to pay taxes on this, that and the other anymore.” It goes into a vault that year with a stack of bills in legislation as high as a ten-storey building. They don’t tell you where it is in the stack. They don’t even mention it.

It’s funny that that webinar that I’m giving away, the 90-minute webinar, what that teaches you is a 200-year-old system that’s been around forever. It’s the easiest thing in the world. It was created for the wealthy by the wealthy. The Rockefellers, the wealthiest people in history, created this system so all their buddies had a way to do banking without paying taxes and a bunch of other stuff. The Tax Code wasn’t written until 1913. They made it around that. There’s so much. Watch the webinar and you’ll learn so much about one of the biggest secrets of the wealthy. It will blow your mind when you see how to get all the money back for all the cars you are ever going to buy driving on. When you see how it’s done, you’re going to slap yourself in the head. You’re going to be like, “This has been available to me all the time.”

I’m going to get that one. I can’t even resist that one. Go to 1000houses.com/OPM, which stands for Other People’s Money. Go there and get this free 90-minute video. It’s two-fold. Making money is only half the equation and that’s the first step. Keeping that money is the other half of the equation and how to defer, postpone or otherwise not have to pay tax is the next school you’ll go to. You go to the school of how to make money and the very next enrollment, you’re going to need to do or no one even has to tell you, you’ll figure it out pretty fast. You’ve got to figure out how not to give the money back. Why does the educational system suck at this? From the time we go to school starting in kindergarten until the time we get out of college. Unless we’ve picked a certain and smart enough to pick a certain path through a college venue or university venue, they’re not going to tell you about how to do any of this. It’s the most basic functions in the whole planet.

Mitch, that’s a fantastic question, one that I’ve read books upon books on. The only thing I can offer to you on that is my personal opinion because the answer is so many things. The reason why traditional education doesn’t teach us how money works is that it’s designed not to. If you think of where education comes from and the people giving it, they’re taught to teach us to be slaves. It’s to punch a clock to trade hours for dollars. That’s what we are taught. I don’t care what you went to school for, they trained you how to be a good employee. They did. They didn’t teach you unless you found your way to the right courses on how to be an entrepreneur. The reason they don’t teach how money works are first and foremost, they don’t know.

Nobody ever taught them how money works because the traditional system never taught them so how can they pass that knowledge on. The second reason is to think of where education comes from and chart it down. You can do some very minor research and see exactly who created education. It was created by the same people that don’t want you to learn how money works. The reason they don’t want you to learn is the same reason you mentioned. There was a study done that if all the wealth in the world was distributed equally amongst everybody, within a ten-year time frame or it might have been less. All that money would have ended back in the pockets of the people that had it in the beginning because it’s designed to work that way.

They understand the principles of the wealthy. If they taught everybody that in high school, in college, banks would go out of business. Financial institutions would not be needed or they would be needed in a completely different world and way. It’s not designed to teach us that and it never will. If you think that’s going to change, they won’t. To get an accredited course that’s going to be offered in a college is next to impossible. There have been so many people that have tried getting financial education into schools and they’ve all failed. It’s not because they don’t have good material. It’s not because they’re not teaching the truth. It’s because somebody doesn’t want it there. That’s my personal opinion. You can take that for what it’s worth.

I’m going to make a bold statement and this is not a blanket statement. College is not what it used to be. It’s not necessary for everybody. I’m talking to you out there. If you don’t have a college degree or you didn’t have a chance to get one or you don’t feel like your college material, you’re probably not. It may be the best thing that ever happened to you. The greatest thing that ever happened to me was I didn’t go to college. I tried a couple of semesters when my business professor started explaining to me how he was filing bankruptcy. I had to seriously walk outside and beat up a locker. I was like, “Why am I here listening to a guy who’s filing bankruptcy?” He’s my professor in business.

REIS 325 | How Money Really Works

How Money Really Works: Most financial advisors out there giving you advice are broker than you are.


If I might say another thing and I can certainly get hate mail for this but I don’t care. The more haters I have, the more I know I’m speaking the truth. I come from this world. I’ve earned the right to do this. Not all, but most advisors that are out there giving you advice are broker than you are when they’re giving you the advice. Do you want to take advice from somebody that is not in the same financial position or has not done things that they’re telling you to do? That’s backward. That leads right into everything in our life. We are taking advice from people that don’t and had never done it. Will Rogers says it best. The problem in America is not what people don’t know. The problem in America is what people think they know that isn’t so. That’s exactly the world we live in.

We are swayed from doing the right thing by people that tell us, “You shouldn’t do that. You couldn’t do that. Why would you do that? That’s a scam.” They’ve never done it themselves. How can you give advice on something if you’ve never experienced it and done it? Wisdom, in its general sense, is the most powerful thing on earth. It’s from doing. It is from applying knowledge and doing something, then you can give wisdom. Knowledge or the so-called wizards or experts in the world, if they’re so good at it, why aren’t they doing it or why haven’t they done it? If they haven’t done it, they shouldn’t be advising or telling you to do something. Most advisors haven’t just so you know.

I always tell people, do your research. Make sure the person that you’re paying for mentorship or if you’re lucky enough to have a mentor that’s taken you under their arm, do your research. Make sure that they are financially successful. Make sure that they are or have done exactly what it is they’re trying to tell you to do, that they didn’t read it in a book. Make sure that they’re the person that you want to be on and off the field. Don’t go hang around a rich guy if he’s not got the same moral compass that you want to have. You’ll get tainted with their smell and it will make it harder for you, plus you’ll be tempted in other ways. Get with someone who’s done it right who is the person that you want to be on and off the field and you’ll do well.

Back when I started, I didn’t want to listen to anybody unless they were making about $1 million a year. Now, I might move that bar to three or four. Don’t be deceived by tax returns or whatever. People sometimes are good at what they do. They’ll zero out on tax returns. That doesn’t mean they’re not making $1 million. If you got privy to someone’s tax returns to try to make this decision, do not be fooled. Some of the wealthiest people in the world don’t pay any taxes. That’s what you want to learn from them. That’s why you’re there. Look at their lifestyle, look at how they run and make sure that they’re not living on borrowed money or smoke in mirrors. The other thing is money has a place and it’s not everything. Tell me if you had this happen in your life. Was there a time in your life when you made more money than you ever made and realized that it was not going to fulfill all the things you thought it was?

Absolutely. There was a while back where you get so fixated on having things. You make all this money. You’re like, “I got all this money. I can have all these nice things.” You get all the nice things and you feel so empty. I’ve been there. I’ve had every nice car. I’ve had huge houses. I’ve had so many things, vacation houses in Mexico. You get all these things, but they don’t make you happy. What makes you happy is when you serve other people. When you give back. That’s what makes me happy. It might be different for you, but I have been there. I’ve made a lot of money in my career with different things. I’ve had all the fancy things and now I don’t even care about the things anymore. I care about what I’m out there doing. I care about what I can do to change people’s lives because that in turn changes me. Giver’s gain, if you give, you get. That is the golden rule. If you live your life with that one thing in mind, you will always be ultimately successful.

A man told me something I never forgot. First of all, there is a natural step. When you don’t have any money, that’s the priority. You’ve got to change that. You’ve got to get the money. The other thing, and he’s talking higher level now, we all have what I call a pent-up demand. When you don’t have any money, there are a lot of things that you like or that you see everyone else is having and you want to get them. What this man told me was, “Look at that truck, those jet skis, that boat, that vacation home, all that stuff. I own all that stuff, right?” I said, “Yeah.” He says, “No, that stuff owns me.” I get my boat out and the battery is dead. I’m going and I’m calling. I get on my jet skis. The kids run it into whatever. I got a lawsuit with so-and-so now because someone got hurt. I don’t own this stuff. This stuff owns me.” I learned that a long time ago. If it flies, floats or faces the ocean, rent it.

You bought that vacation house in Mexico and all of a sudden, you’re worried about, “Is the hurricane going to hit my house? Do I have to send the people to board it up? What happens with that? I don’t want to go to Mexico this time. I want to go to Greece, but I feel like I need to go to Mexico because I own this house in Mexico. I know, I’ll let my friends use the house and that will make me feel better.” You go to use it and all your stuff is missing. It’s broken and it’s got a hole in the wall. Go to 1000houses.com/OPM. Get your free video. Learn how to drive cars and get all the money back you paid for them. It isn’t about cars. It’s the concept. Read the concept around whatever you want to and whatever you can. It’s been a nice talk. I appreciate you very much.

Thank you for having me on the show.

Is there anything else you want to add? Maybe tell the new hopefuls any last words of advice.

There are so many people that worry about money. They don’t get into this. They don’t chase their dream because they think that they need money. Money is the biggest mountain that they have to climb. Remember that it’s never about your resources. It’s about how resourceful you can be. If you focus on being resourceful, focus on providing a service to others and giving to others. What I mean by giving is not giving things or money. Give knowledge or give something that will solve their problems. Solve people’s problems and they will solve your problem. If you keep those two things in mind, you’re going to have a great career and tremendous success.

I appreciate you so much, Chris. It’s been wonderful. I’d like to thank everybody for stopping by to get you some Chris Naugle. I hope that you are achieving your goals and dreams. If you’re not, get a little more educated and get a little bit closer to the people that are. We’re out of here.


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About Chris Naugle

REIS 325 | How Money Really WorksChris is a nationally recognized entrepreneur with high-level experience as a financial advisor managing over 30 million dollars in assets. Using his expert knowledge in finance he has successfully bought, renovated and sold hundreds of properties, which have been featured on HGTV. He is a motivational Real Estate speaker.

Along with teaching the how-to’s of Real Estate Investing in the Western New York Market via FLIPOUT Academy, he also tells his story to encourage others that they, too, can take action and turn their passion into passive income. He talks about FEAR and how to help you overcome the negative mindset that brings you to not taking action when you dream so big. He teaches others how to run successful businesses and how to monetize on ideas, utilizing multiple streams of income.


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