Real Estate

The Rich Doctor: Creating Financial Freedom To Design The Life That You Want With Tom Burns, MD

TWS 73 | Rich Doctor


Why don’t doctors get rich? It’s a baffling question considering how much hard work and service these individuals are putting in every day. And it’s not all about the money, even. Doctors do have a comfortable salary, but most fail to develop and design the life that they want simply because they have no time. Tired of being trapped by his own profession, sports doctor and orthopedic surgeon, Dr. Tom Burns started to look somewhere else to find a way to create that financial freedom he was looking for. After reading Robert Kiyosaki’s iconic, “Rich Dad, Poor Dad” (the very first copy, no less), he knew that the answer to his question is in real estate. Through a combination of hard work, luck and the right people to support him, Tom developed his own real estate portfolio that now provides him the financial means to do what he wants with his life. In his book, “Why Doctors Don’t Get Rich,” Tom shares his story and message with other doctors, creating the beginnings of a community of physicians who are passionate about creating wealth and freedom for themselves. Listen in as he joins Patrick Donohoe in this eye-opening discussion.

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The Rich Doctor: Creating Financial Freedom To Design The Life That You Want With Tom Burns, MD

I have a guest that I’ve been looking forward to interviewing for quite some time. He wrote a book, which is called Why Doctors Don’t Get Rich: How YOU Can Create Freedom with Passive Income Investing. His name is Tom Burns. The first time I met Tom Burns, he was telling the story of how he purchased the very first copy of Rich Dad Poor Dad from a carwash owned by Keith Cunningham in Austin, Texas. He looked at the number on the back of the book when he was finished reading it. He called the number and lo and behold, Robert Kiyosaki himself picked up the phone. From there, they developed a relationship and it was awesome hearing that experience.

The next story I heard from Tom was when he was down in Southern Chile on a cruise. It was an icebreaker ship going toward Antarctica. This guy is an amazing guy and has incredible stories. You are going to love him. Tom is a physician. He started his adult life as a doctor. He’s trained in sports medicine as an orthopedic surgeon. He began his career in Austin, Texas and he continues to practice to this day. Along the way, Tom decided that he wanted an exceptional life and didn’t believe that a career as a doctor would check all of the boxes.

He wanted choice, freedom and time with his family. Through a series of events that included hard work, luck, loyal friends, great partners, patient educators and giving mentors, he developed a real estate portfolio that gave him the financial means to determine his ultimate future. Tom gets to live a pretty extraordinary life and he wanted to give back. He wrote this book. He is specifically focusing his attention on doctors, those in the medical career, which in 2020, they have had some challenging times.

It speaks to his experiences and what he did in order to achieve even more freedom. I hope you guys love the interview. Go pick up his book. You can go to in order to learn more about Tom. He has a newsletter and a blog. You can also go to Amazon and purchase his book. The audiobook will be coming out soon. It’s a great interview. I love talking to Tom. He’s such a good guy. I hope you enjoy it. We’ll see you in the next episode, until then.

It’s great to have an honored guest, a revered guest. His name is Tom Burns. As I mentioned, Tom, correct me if I’m wrong, but you purchased the first Rich Dad Poor Dad book ever.

I got lucky and picked up a good book. It happened to be the first one.

That fact alone says a lot about you. First off, how long ago that was, but also what you’ve done with your career and outside of your career. You have these dual careers in a sense as an entrepreneur investor and medical professional. It’s going to be awesome to interview you. When we first met, I don’t know but there’s something special about you. It’s something that I believe others could have benefited from. You took the plunge into the writing a book world. What was the experience like writing that book?

It was something. A friend of mine, the author of that book you mentioned, suggested that I write a book. I never wanted to shy away from a challenge. I said, “Okay.” I didn’t know what was going to happen. I started the process. People would ask me, “Who’s going to be your ghostwriter?” I didn’t have one. I’m a physician and sometimes a doctor’s disease is to do it yourself, but I had a specific reason I wanted to write every word in the book. I was writing to everybody, but directing the book at physicians, using them as an avatar for anybody that makes any kind of a paycheck.

I knew that my words would get through in one of the processes. What happened was I ended up growing because I wrote every word. I found out how to do it. I got editors to help. I learned a lot of terms and things that I hope to never have to remember now. It was a real blessing. It was because I learned a lot about myself and I was at first started writing a book. Somebody suggested to write a book. I’d never done it before. It sounded like a cool challenge.

Life is not all about money, but it’s a great tool to use to get the life that you want. Click To Tweet

What happened was I grew, changed and found out that the problem. I discovered a mission because in my world, in the physician world, there are a lot of unhappy, sad and trapped feeling physicians. Although the books written for anybody to learn about freedom, it was written to the doctors to try to help them because over 50% of them are unhappy. You and I, Patrick, when we get older, we would prefer to have a happy doctor taking care of us. It was a selfish reason I wrote the book.

As I did the research, I developed a website and developed some tools to help them. It has been a process. I’m still a tadpole in the evolutionary world trying to learn how to do this, but it was, it was great. I learned a lot about myself. I learned a lot about the world and learned a little bit about book writing. It was fun. It was a growth process and it was a blast.

I know that it has been months and months in the making, but what an iconic or serendipitous year to release a book like that. The medical world has been stretched in 2020, more so than probably any other year in memorable history. In 2020, I would say this statistic most likely has worsened as far as the medical world asking that internal question, is this worth all the decades of school and hundreds, millions of dollars in opportunity costs, but also tuition, school fees? You coming out with a book, Why Doctors Don’t Get Rich, it is somewhat of a wake-up call to them. You started down this path, but how would you characterize the theme of the book? What you want the medical world specifically to walk away from reading it? What do you want them to understand based on reading it?

I’ve had quotes from people. I felt trapped being a doctor. I didn’t know anything else was possible. I want it to be an instrument of guidance and hope to people that bring them a paycheck and feel like they’re trapped, particularly doctors. We know life’s not all money, but it’s a great tool to use to get what we want. There are certain ways to buy back your time, which is our most precious resource. A lot of physicians, a lot of people in the world don’t have time.

With some extra time, you can start to develop and design your own life. I want people to know that there is an option. It’s not for a special group of people. It’s not that difficult. Once you know the steps to buy back your time, create a little bit of even partial freedom. You take a little pressure off, life gets good and you start to smile a little bit more. The book is designed to give people guidance, hope and a bigger smile.

I know you speak to this in the book. The idea of freedom is it’s in your mind. It’s feeling, a sense of freedom because I know a lot out of people that have a financial amount of money that I would say anybody could consider being free if they had that sum of money, but they don’t feel like they’re free. When you felt that sense of freedom knowing that you didn’t have to perform surgeries, you didn’t have to work in the field that you were trained in, what was that like and how did it impact your work?

On the one hand, it was exhilarating and happened slowly. I wasn’t looking for it. I was doing my thing. All of a sudden, I realized one day, the money coming in from my passive vehicles has eclipsed my doctor’s income so that was exciting at first then it got confusing because what do you do? I wanted to make sure that I had a purpose. Freedom, money, it’s not everything you do. You do somewhat need to have a purpose. We all want to have some worth and a mission in life. It gave me the chance to sit back and see what I wanted to do with it. Selfishly, I traveled some, but then I started realizing that a little contribution to the world might be nice as well. I started looking for a mission and a purpose. It came like that. You can have the money to be free, but if you’ve got a bad home life or you’re unhealthy or your spirituality is compromised, it’s not freedom. It’s somebody with a lot of money.

Robert is the one that inspired this several years ago. He did a private education for a bunch of investors and talked about Maslow’s Hierarchy of Needs. There are these levels of Hierarchy of Needs, and most people get stuck in the self-esteem level where they achieve a lot. They go travel, they buy nice cars, they wear nice clothes. They eat at nice restaurants. It’s a Law of Diminishing Returns. The more that you pursue that, the less fulfilled you are. That’s where Maslow has his self-actualization level where it switches from satisfaction based on pleasing oneself to satisfaction coming from serving a purpose or a mission. Looking at this book, I imagine that was part of being able to offer and create value for those that you have empathy with. What has been your experience along the way, being able to give this gift to those that are in a similar situation as yourself?

It’s been a blast and that was part of that growth. I wanted to write the book to get the information out, then the mission developed. What you give, you get back ten folds. Now, I’m getting the opportunity to talk to people from all over the world and it’s been a blast. That mission has gotten deeper, broader and more focused in my life. It’s given me a great purpose. I’ve got a twenty-year plan to keep going. I hope to be doing something until I fall over and go to the next level. It’s been a pleasant surprise and it gives me a lot of fulfillment. I get to do things like this. I get to talk to good friends like this on Zoom. I’d rather do it live though.

Let me ask you a question around, I would say the information that medical professionals are exposed to with regards to finances because it’s a profession where there’s very little time. There are strenuous hours, plus there’s a lifestyle on top of that. The medical world in my experience at least has been the target of a lot of financial advertising. They’re pulled in all these different directions. When you look at the message you’re wanting to send, knowing that, how did you want to separate what you were trying to get across to this world that’s different than the typical advice that the medical world has given financially?

TWS 73 | Rich Doctor

Why Doctors Don’t Get Rich: How YOU Can Create Freedom with Passive Income Investing

One, you mentioned the education. We rarely get any financial education although a lot of younger physicians now are taking some business courses. They’re doing combined MBA and medical programs. People are becoming more aware or medical professionals are becoming more aware. In my instance, I was a biology major and I took zero financial classes. That’s the one thing. They will get targeted for lack of a better word. Nobody feels sorry for physicians and you shouldn’t. We make a great income and it’s a great profession. It’s a fulfilling, wonderful profession. Everything’s perspective, but they get targeted by people. I’ve been in the meetings when nobody knew I was a physician and I’ve heard the person in the front of the room say, “If you don’t have a client list yet, go for the doctors. They’ve got money and they don’t understand what you’re talking about.” That’s a true story.

There’s a section in the book that talks about all the traditional ways to create investments or create money or passive income outside your profession. They’re not bad. There’s nothing wrong with them. Sometimes they are proposed or advertised as the only way. I want them to know there’s a lot of ways for them to create a lifestyle, to create the money and the funds to create their lifestyle. It’s not so much about money, but it’s about buying back that time. If you’re a physician, you have to go provide a service in order to get paid. That’s the way it works. When you have some funds come in that you slept to make or that you were on vacation, or you didn’t do anything to do, and that check shows up, it becomes a little bit addicting.

I want them to experience that feeling and have the time to do what they want to do in life. It can be research to cure cancer or it can be to quit medicine. It can be either end of the spectrum or spend a little extra time with your kids or get off a couple of hours early so that maybe you can pick your kids up from the bus when they come home from school. It’s things like that and the list is endless. That’s what I want them to know is that there are other options and that there is a life out there that is not the one that has been prescribed and advertised to you. We’re only here once and I want the journey to be magnificent.

I had seen this study where this year 2020 specifically has inspired a number of youths that are in school right now to want to pursue a medical career as a physician. I look at where most of that drive and motivation is coming from. It seems to be coming from wanting to make a difference, having a purpose wanting. In the medical world, a physician is so revered because they work on one of the most precious things that exist, which is that human life. They are remunerated highly because of that. There’s a lot of dedication, work and investment of time, energy, money that goes into developing that skillset. What have you seen as time goes on in the medical career where in the beginning, there’s that passion and drive? Does it stay the same? Does it diminish over the course of time? What is your experience collectively? Following up on that question, when you sensed that feeling of independence, how did that change the way in which you serve your clients or patients?

The answer to part one is like everything, it depends. I have partners. I’m still practicing medicine. I have seven partners and they all love what they do. They’re great at it. They’ve been in it a long time. It’s not that everybody’s unhappy. There are people that enjoy the service. If somebody gets in to serve, that may be mission and purpose enough, and they may or may not need anything extra. On the other hand, a Medscape survey shows that roughly 50% of the physicians in the United States have at one time or another been burned out. Burnout means at one time or another, they didn’t want to be a doctor. We don’t want that. That means to you and I, that at one point, every other doctor you see, wanted to not be in medicine at one point. It’s a balance like anything in life. Everybody has different opinions, different things that motivate them. What is exciting to me is there are still a lot of physicians out that are happy with what they do.

Question number two, I continue to enjoy it because it’s been a decade since I haven’t required the income for medicine. Your question is that I was able to enjoy it more on a base level. I could eliminate the things I didn’t like. We, doctors, sometimes we take call calls when you stay up all night and the operator answered the phone. I decided that was infringing on my family time. I stopped doing that. If the hospital has too many rules or whatever, I won’t go into details, but you can stop going there. You’re not there for the money.

I was able to lower the volumes I was seeing. I can spend five minutes with somebody or 45 minutes with somebody. It doesn’t affect my income. It doesn’t affect my life. I’ve developed friends by walking and saying, “I’m Tom Burns. I hear you have a sore knee.” Years later, we’re going on trips together or we’re friends. That’s a blessing. I get to meet twenty new people several times a week. It’s been a blast. It’s been fun. That’s what I wanted every physician to have that, to wake up and realize I get to go in and see patients, not I have to go in and see patients. It doesn’t happen for everybody, but it was life-changing. If it hadn’t been like that, I would have been out of medicine several years ago.

It’s the professional world that has a very similar challenge. At the same time the medical world, the amount of time, effort, energy and money that it takes to develop those skills and be in practice is extensive. It magnifies that principle of being able to educate yourself financially and then develop a strategy to get to the point where you are free. You are independent and you don’t have to do these things. You have a choice now. You didn’t have the choice before, but now the choice is, do I practice because I want to or do I practice because I have to? It’s a very interesting question that most people don’t get to ask themselves. At the same time, those in the medical field, because of the amount of money they’re able to make have that option more so than other professions.

When you have a choice in life, you’ve got freedom. It gives you the choice to decide what’s most important to you. What’s most important might be serving your clients or your patients or whatever your profession or your job is. Your most important thing in life might be to travel and see the world or to be the best parent in the world or the best spouse or the best sibling. Choice does give you the potential to have and design the life that fits you best and that gives you the most meaning and self-actualization, as Maslow would say.

Let’s do this as we conclude. You have an extension to your book, which is a website and some tools that you’ve mentioned. Would you take a moment to speak about the website that you’ve developed and the tools that are there and how those that are listening could take advantage of those?

Choice gives you the potential to design the life that fits you best. Click To Tweet

For everybody out there, I’m transparent. I’m still learning how to do this stuff. I put a knee together but running a website’s been interesting. I wanted something to be useful. I wanted the book to be combined with a website that was a living, breathing organism. I have a blog that I put out and I find myself better on video. As time goes on, I’ll be having videos that have little lessons. They might be mindset lessons. They might be real estate lessons or money lessons. If you look at the book, the first half of the book is all about mindset.

Some of the how to do things is in the second half of the book. The website’s going to be the same type of thing. I’ll put out a blog that either deals with mindset or something concrete with action steps. I’ll put out some videos. I have a little section that will grow, that has some tools, things that I’ve used over time, that I developed to underwrite projects or to do some things like that. There are some spreadsheets and some resources. I encourage people to sign up and get the newsletter. It’s non-spammy. It comes about once or twice a month now. It’s usually got some helpful information. You can look at it or hit the delete button and it’s all there for help. It’s all there for you to grow and develop your own freedom.

Is the URL, the website just

Yes. I’m the world’s worst marketer. You can go there and there’s a little sign-up sheet. It’s for everybody. I come from the doctor world and have maybe some credibility with them. You replace the word doctor in the book with your job, whatever it is, the principles are all the same. They’re all wealth and freedom-building principles.

Tom, thank you for sharing your wisdom. Thank you for writing the book. I saw how much it took and the number of revisions that you had to do. Did you end up doing the audiobook?

I haven’t yet. I’ve had a lot of requests for that so that’s step number next once I get the other mechanics of the website going and that’s about done. That’s probably the next project.

You had eyes on this book of some of the most reputable authors that are out there. It reads well. The information is compelling. It’s clear. I’d encourage anyone, regardless of whether you’re in the medical field to pick it up. Tom, any final words of wisdom or anything you’d like to leave the readers with?

I tell everybody, if you’re not growing, you’re stagnating and you’re going to wither away and die. I tell people that the $15 book is not going to change my life. I didn’t write this book to make money, but it might change your life. Whether it’s my book or your book, which is fabulous, anything. There’s always a little bit of information. You could learn something and then try to combine your education with a little bit of action. You’ll be surprised where it takes you. Life’s got a whole lot to offer and there’s a big world out there that is a lot of fun. I encourage everybody to use a little perspective and realize how much fun you can have and try not to be trapped. I don’t want people to be trapped and unhappy.

That’s one of the secrets of life is constant growth and improvement. I can’t remember what you called it. I call it the infinite horizon. What did you call it again?

It’s the second mountain.

TWS 73 | Rich Doctor

Rich Doctor: Doctors need to educate themselves financially and develop a strategy to get to the point where they are free and they don’t have to do the things they don’t want to do.


It’s the infinite second mountain because the second mountain will lead to the third mountain, the fourth mountain. Once you have something that you’ve achieved, in order to have that fulfillment and that enjoyment of life, you have to continue to achieve these milestones.

That first mountain might be about acquisition. There’s a book called The Second Mountain by David Brooks. The first mountain is about acquisition, which we all get into when we start, but the second mountain is more about contribution. The third mountain, the fourth mountain, we always find more mountains to climb, more to contribute and more growth to achieve. That’s what keeps you young. It gives you purpose and makes life fun. It gives you a chance to do things like this.

I’m going to ask one more question. There’s a quote that I think about quite often. It’s, “The quality of life is in proportion to the quality of relationships.” I know that you have valued relationships more than anything else. You mentioned it with regards to some of your patients. You in the book, it’s very evident of all the different seminars, all the different meetup groups and associations that you’ve attended over the years. Speak maybe to the importance and value of relationships and how they’ve helped you develop over the course of time.

We’re pack animals. We love people. I love doing this with you right now. I’d rather be face-to-face. I’d rather we be in a group of 300 people as well. You and I go on a cruise together frequently. That’s fun for me. Often, I’ll go to seminars where maybe I could be teaching some of what’s going on, but I’m going there to see the people. Relationships, when you meet other people, everybody’s so diverse. Everybody has a talent and you can learn from other people or you can live through their experiences. That’s what life all about. It’s a giant world. It is a giant passion for mine. I have my core values and they are adventure, growth and connection. We talked about all that.

The connection is so important to me that I put it as my top three of my core values. I want to be with people. This is fun what we’re doing now. It’s fun to go connect with people. You will learn and grow, and your life will be better for it. Your life will be enriched by the experiences of others. I can’t encourage people more to keep up with connections and start with your family. Family connection is most important. Those are the people that count. Broaden your circle, it will make your life a beautiful thing.

I’ll end with this comment where our society is evolving to this place where relationships are the true value of life. We have been blessed with technology such as this video conference software whether it’s energy or transportation. This is a year of disruption, but it’s going to pass. The way in which society is evolving, it’s going to, in my opinion, decrease the efforts and what we’re going to have to do in order to maintain our lifestyle expenses. That’s where, again, going to the value that people seek sometimes is right in front of us, which is our relationships starting with our intimate relationships, going to kids and going to friends. It’s no longer going to be a choice where we’re going to have a lot more time on our hands as a society. The principle of satisfaction and fulfillment is right in front of us. It’s meeting new people. It’s enjoying time with the ones we love. You don’t have to wait until someday. That day could be now.

The best time to start is always yesterday and now is the next best time. Don’t let technology run your life. It’s great that we have this, but there are 7.5 billion of us. Let’s go out and meet some of them.

I can’t wait until we meet up face-to-face again. It’s been a few years. It was in Austin. It was summer of 2018. This is a year that has made us value those personal interactions even more so. I’m sure the next time will even be sweeter. Tom, thanks again.

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“The beauty of the soul shines out when a man bears with composure one heavy mischance after another, not because he does not feel them, but because he is a man of high and heroic temper.” Aristotle

What a week!

In this special episode, Patrick takes a moment to share his thoughts on the week and what he is doing. Then, he sits down with his good friend Jason Hartman to share their perspectives on COVID-19, the markets, the economy, and the massive opportunities available.

Listeners who have been learning over the last few seasons must see this as a perfect environment for you. Moments like these magnify the value of the right mindset, anticipation, and preparedness. Although there are temporary physical concerns which I encourage you to be vigilant of, I hope you are poised to take some action.

Stay safe, stay healthy, stay positive.


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About Jason Hartman

Jason Hartman is the Founder of the Platinum Properties Investor Network and host of the Creating Wealth podcast, which is heard in more than 180 countries. Jason is a genuine self-made multi-millionaire and serial entrepreneur who owns 21 businesses in investing, financing, real estate development, and SaaS software. He has owned properties in 11 states, had hundreds of tenants, and been involved in several thousand real estate transactions. He has visited 83 countries, enjoys adventure, fitness, and lifelong learning.
Jason Hartman is the host of 23 podcasts with listeners in 189 countries, over 15,000,000 downloads and over 5,000 episodes where he shares powerful strategies for business, investing and living the good life. Check out his podcasts and resources at or  Available on iTunes and your favorite podcast platforms.


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Mortgage Note Investing with Bob Fraser of Aspen Funds

TWS FF 4 | Mortgage Note Investing


Sometimes people get into trouble with their mortgage payments, but then they get back on track and have their loans modified. These become good performing notes that sell at a discount. Bob Fraser of Aspen Funds says this is where they specialize in. They buy discounted notes that are performing, aggregate the notes, and manage the cashflow. Bob goes into detail about mortgage note investing and the unique opportunity in it, and shares why he’s chosen this niche from the get-go amidst great challenges.

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Mortgage Note Investing with Bob Fraser of Aspen Funds

Financial Friday

My guest is Bob Fraser of Aspen Funds. He’s the Cofounder. We’re going to talk about mortgage note investing. Bob, welcome to the show.

Thanks, Patrick. It’s great to be here with you. Kudos to you for what you’re doing, all this great education you’re giving to these people.

I appreciate that and thank you as well. You and your company were one of the sponsors of the Cash Flow Wealth Summit and we appreciate that. We appreciate the support and I’m excited to get into some of the details of your presentation and your business. The presentation I gave at the Summit talked about that investment isn’t just the investment idea and that it’s also the underlying business that orchestrates the investments. The first part is talking about your niche, why it exists, what the demand is, what the opportunity is, what the investment opportunity is and what the idea is. We’re going to segue toward the end and talk about your team and how you operate and look who’s behind the curtains. That says a lot about the success of a company that’s been in business as long as you have. Let’s start with the investment first. Tell us about note investing, whether it’s private notes or non-private notes.

What we specialize in is performing notes on consumer homes. We buy discounted notes that are performing. A lot of times, it’s newly originated seller finance paper. Sometimes it is people that have had their loans modified. They got in trouble, but then they got back on track and now it’s good performing paper but it sells at a significant discount. We love those discounts. We buy that paper, we aggregate that paper, and then we manage it. We manage the cashflow. It’s a cashflow-based investing using retail residential mortgages.

The greatest non-cyclical thing out there in the real estate world is owner-occupied real estate. Click To Tweet

One aspect of real estate, in general, is that it’s not necessarily liquid collateral but in a sense, everyone needs a place to live. It’s a very in-demand collateral. Talk to us about why this market exists. Why wouldn’t someone go and refinance in a conforming or a conventional type of loan?

Loans are often modified. FHA for instance, during these big auctions they’re selling billions of dollars of non-performing loans while they buy it by hedge funds. These hedge funds buy these non-performing assets and a certain percentage of them end up re-performing. About a third if you look at the auction results. A lot of times they take possession of the property, but a lot of times they do not take possession of the property. They talk to the borrower if the borrower wants to stay in the home and they do a loan modification. If they can afford, they put that in place and the borrower starts paying again. It’s a huge market. There are $30 billion in what’s called troubled debt restructure held by US banks that’s in compliance. It means it’s in compliance with its modified terms. It’s performing paper. It just went bad at one point in its life. That’s one option.

Another is the low balance area, which we love. These are loans on homes that are under $100,000. It’s a place that the big boys don’t want to play. It’s very complicated if you have to take back the property. If you put in $20 and have to fix it up, that’s a significant amount. Borrowers have less wherewithal so it’s a much more problematic space and the easiest thing to do is to avoid it. Most of the big service providers, big funds and financial institutions avoid the low balance market. We love the low balance market. The low balance market is in the Midwest. Here I am in Kansas City in the Midwest and it’s a fantastic market. In fact, I argue that it’s a non-cyclical market.

If you look at the price of a home that’s $100,000, the replacement cost for that home is close to $200,000 because of the price of lumber and labor at everything. Doesn’t that argue that it has to go up in value at some point? You’re not seeing a lot of new construction. I’ve done a lot of financial analysis and economic analysis of the housing market. You’ve seen single-family homes have been significantly underbuilt in the last decade since the crisis. There’s a shortage of single-family homes. In my view, the affordable low balance homes are the ones that have the greatest upside and the least downside. It’s a market that not only do we love for its discounts but also for its safety and its non-cyclical behavior.

TWS FF 4 | Mortgage Note Investing

Mortgage Note Investing: The affordable, low balance homes are the ones that have the greatest upside and the least downside.


How did you arrive that this was your bread and butter, that this was where you learned to play and that it was your niche? It makes sense because some of the questions I had was, “Banks have a ton of capital and they’re still able to access it relatively cheap to the Fed window. Why aren’t they participating in this market?” My point was getting into why you’re in this specific niche. Was there a story behind that or was that the opportunity from the get-go?

We got into space from the non-performing loan side. We buy the non-performing loans. There’s a great space because we get to help people. We’re about people and we get to wipe out a massive amount of debt and help people stay in their homes and we created a lot of this re-performing paper. We help people stay in their homes and that means they get a new loan and they start paying on the loan. We discovered there were IRS issues. It’s a huge phantom income problem if you do a loan modification. I won’t get into the technical details, but we had to sell it. At the same time, I had a good friend come to me and say, “Bob, I have a settlement, I have an inheritance, I have a nice chunk of change, how do I earn income?” Where do you go to get a good safe income? In the public markets, it just doesn’t exist, Patrick. Not that safe and not that’s nonvolatile. I said, “I could create that for you by buying these assets that are secured.” They’re at a discount there. They have a lot of safety on them. I said, “Let’s put together a fund.” We put together an income fund based on loan modifications and learn to manage that very effectively. I’ve done well for our investors.

We got in for wanting to help people and wanting to solve an income need that’s a tough need. The rally has been fantastic. A lot of people have made money in the rally, but it’s getting a little long in the tooth. How much further is it going to go? I’m a computer scientist by background, so I’m a super math nerd. I can show that the future earnings and future growth in the stock market are highly correlated to PE ratios. They’re inversely correlated. The higher the PR ratio, the lower the expected earnings ten years out. We’re roughly around 30 right now. You can expect it to earn about 1% in the stock market over the next ten years annualized. That’s not that attractive. When you look at the bond market, that’s not very attractive. Even alternatives, which most alternatives are facing real estate. Is that getting long in the tooth? I’ve been in the investing world for 30 plus years and I’ve seen several real estate crashes. What’s to say this isn’t going to happen again? You’re looking for countercyclical or non-cyclical investments in my opinion. That’s another thing. When we designed this and when we went after space and after the strategy, we are looking for something that is non-cyclical. The bread and butter homes are non-cyclical, but I’ll give you a tip. The greatest non-cyclical thing in the real estate world is owner-occupied real estate.

A lot of the guys that have lost money were in hard money loans. This is fix and flip loans, developer loans or construction loans. What’s the value in the housing crash of a piece of partially developed land? It disappears. What’s the value of a home that you’re currently living in? Patrick, if you experienced negative equity in your home. The Zillow says the paper value of your home goes down, are you going to hand the keys back to your lender? No, you’re not and people don’t do that. In investment real estate, the first thing that people do when they have troubles is they just give the keys to the lender. It’s your problem now. Not with owner-occupied real estate. They do not. That’s what we buy. It’s the owner-occupied real estate. It’s uber sticky and. In my world, home equity is less important than the job market. I can show you correlate the false. It correlates not to the price of equity but to the job market.

You probably let your home go before you let your dog go. Click To Tweet

I have a background in economics where financial models are very straightforward in a sense, absolute assumptions. Something that surprised me is based on the conversation I had with the chief economist of Fannie Mae. I had a long dinner with him and it was amazing. One of the things he told me was that they weren’t communicating well with their borrowers. They experienced that people left their homes and they were in default. What they did is they correlated the demise of Fannie Mae that the fact that Fannie Mae went into bankruptcy or receivership to them no longer having a mortgage, therefore they couldn’t stay in their home. It doesn’t make sense to us because we understand certain elements of finance.

Sometimes human behavior is outside of that rational line of thinking. Nonetheless, they communicated with their borrowers and they communicated what was going on. They started to do surveys and they continue to do it. They use artificial intelligence as well now and they’re able to understand how to price risk in a way that they wouldn’t have been able to experience before the financial crisis. I look at where you find safety in anything. I would say more lends to the expertise that you have any experience and it sounds like you found that because you’re in a market that isn’t that volatile. You also have people that will stay in homes for a long period of time, which is the Midwest sector.

Oftentimes it’s easy because you know what your assumptions are, and you know what you need to get to a rate of return. You know you need to buy at and you know how to communicate with people. I’m assuming that you initially worked in the non-performing space. In the non-performing space, people weren’t paying their mortgages. You figured out ways and you have a system where you spoke to them and you modify the terms of their loan so that it was affordable. They recommitted and now it’s performing because they’re making payments on it. That is an insanely valuable piece of this. It’s a 5% mortgage at $50,000 and you buy it at discount for $40,000. You have a system in place in which you’re communicating to the people. They’re going to be paying you. That’s one of the most valuable pieces of this puzzle.

I was talking with a New York investor and he said that one of his top investments was loans on pets. I was like, “Are you kidding me? Who’s going to default on their dog and get their dog to repossess?” You let your car be repossessed before you let your dog be repossessed. You want a little bit of the emotions attached to something as well. We’ve all seen the financial models. A lot of the models out there that traditional bankers use is dumb. The reason I’m making money is because their models are incorrect. I found a better way to do what they’re doing. I found different ways to solve the problems that they couldn’t figure out. There’s a lot of opportunity by building better models. We love having owner-occupied homes and helping people stay in their homes. It just creates something that’s very sticky and not correlated to the home price entirely. It’s a great place to be.

TWS FF 4 | Mortgage Note Investing

Mortgage Note Investing: A lot of the models traditional bankers use are dumb; there’s a lot of opportunity by building better models.


Bob, this is an investment niche and alternative type of investment where there are tons of opportunity and you’ve clearly articulated that. We both are on the same page in regard to what success is in any business. This investment has an underlying business that operates it. Would you speak about your experience in the business world and the team that you’ve put together to orchestrate this great opportunity?

My background is I was a computer scientist, but I ended up starting a company in 1995 that became one of the largest ventured capitalized companies in the Midwest. It was a tech company and it started in my attic with my sister-in-law and $100,000 from mom. We grew to 300 employees and hired some of the best people in the city and learned a ton by doing that. I learned a ton from the guy I hired to run my business. My president learned about what it takes to run a business by the guy who worked for me and ended up winning in 2000 the Ernst & Young Entrepreneur of the Year Award, which is a big honor. I’ve rubbed shoulders with them of the top entrepreneurs in the world as a result of that. I even have a quote from Richard Branson. He said, “I’ve never been that interested in money. I’ve been more interested in ideas.” The best entrepreneurs are not bottom-line focused. You’d be surprised. They’re solution-focused. They want to make the biggest impact. It’s just different than TV people think.

That greatest strength of entrepreneurs is often their greatest weakness.

It can be. A lot of people who are the best entrepreneurs and having watched a number of venture capitalist companies rarely end up running the company. That’s just an absolute it seems. Through all that, I’ve learned that people are the most important asset. Getting great people matters. It’s the key driver of success.

The best entrepreneurs are not bottom line-focused. They're solution-focused; they want to make the biggest impact. Click To Tweet

It’s the right people in the right places doing the right things. Always on the same page. I look at your team and maybe you can comment on some of them and how you guys operate. It sounds that they have extensive experience in banking and also in this niche. There was some project management and systems expertise as well. Can you talk to us about the different positions that exist in your business and how you guys operate?

One of the first guys we hired in the non-performing shop that we did was a guy named Stephen Gryglewski. He’s a banker. He is a 29-year bank veteran at the time we hired him with fifteen years of experience running the workout shop in the bank. When a bank loan went bad, he was the guy they heated hot potato to. He’s super compliance oriented. He’s super knowledgeable and he was a conference speaker. He was the guy that went to the lost mitigation conferences. I’m sure you’ve spent a lot of those conferences. He loved them as much as I am. He was the speaker. We hired him. He has since built a team in Maryland of have all bankers. We have seven full-time staff and part-time staff out there who handle all loss mitigation efforts and do a fantastic job. They know more about the statute and limitations issues about bankruptcies, about foreclosures, which are different in every single state than most lawyers do. We make money primarily because we know how to buy and we know how to avoid the pitfalls. We know how to get deals done for people and at the same time helping people. Here we are, we’re buying bad debt but only 3% of the time. We ended up closing three.

Are you in credit in a specific way? You say scalable, but what do you credit the sub-skill level?

It’s exactly what you said. It’s communication. We reach out to the borrower. We educate them. We put them in touch with home counselors supplied by the government who tells them, “Talk to these people.” The biggest issue we have is getting them to talk to us. I wish some of these borrowers would call us sometimes because we’ll do miracles for them if they will talk to us. They’re afraid and they think that they don’t have any answers, so they’re not going to talk. The truth is if they will work with us, we’ll do miracles for them. That’s the key. We’ve hired a fantastic team and continue to hire a fantastic team. We were in this for the long haul and we want to grow to a very large company. I love scaling a business. It’s the most fun thing on the planet, in my opinion. I do that with people.

TWS FF 4 | Mortgage Note Investing

Mortgage Note Investing: You make money primarily when you know how to buy and how to avoid the pitfalls.


It’s easy to get a return with one deal or two deals when you get to 10,000, 2,000 or 5,000. This is where I felt so strongly about the presentation I gave at the same summit you sponsored and presented at. The BI Triangle that Robert Kiyosaki came up with or helped it to improve, which talked about the successful operation of a business. The smallest piece is the actual product or the investment itself. The underlying mission, values, systems, financials and so forth is vital. There’s one element there which is profound that I’m picking up on with you is the team. Your title originally was the CEO and President, but it sounds that you have essentially delegated a lot of those responsibilities to others. It’s paramount to any business that wants to scale to find those that are best at doing what they do. Putting them in that position and then putting you whatever other role is in a position where you are going to be the most valuable. Can you talk to that briefly?

Having scaled a business from two people to 300 people, I learned that you only do that when you have to give up control. You are limited to what you can control and you’ll never get bigger than what you can control. The truth is when I own a thousand notes, I can’t control. I can’t get my head around a thousand notes. I’ve got to have it subdivided. I’ve got a capital department, I’ve got a loss mitigation department, I got an acquisitions department. I’m not in control of any of those things. I hired people who run those divisions and are doing a fantastic job doing that. It’s not just people. The other key to scaling is systems. I read a book called Total Quality Management back in the ‘80s, back when Japan was ruling the world. The book is all about TQM and it was all about systems creating quality. The key to being one of the other keys besides getting the right people in the right spot is getting systems for everything. Everything is systematized and that means a super high level of quality. That’s why McDonald’s can make the hamburger that tastes the same regardless of whether you’re in Singapore or in San Antonio. It tastes the same because it’s completely systematized. There’s not a creative element in there. It’s all done the way it’s supposed to be done through training and systems.

That’s why most entrepreneurs are not systems guys. They understand systems and the importance of them, but they don’t follow them. There’s an underlying foundation of a business that has to be systematized. There’s another layer of it they can’t be and that’s more of the creative ideas adapting to markets and so forth. If you don’t have those systems and you’re trying to scale, it’s a disaster waiting to happen.

I was a computer programmer for twenty years so what I do is I built a system and I built them to scale so I understand about building systems. The creative element is also super important. Even that, there’s a way to be creative. I’ve run shops of computer programmers and creatives and there’s a way to get them to do well. You have to put boundaries around it, around the creative side even.

The keys to scaling is getting the right people in the right spot and getting systems for everything. Click To Tweet

One of the coaches I’ve had was in charge of all the developers. She’s the vice president of development and it was fascinating to talk to her about how they operated. The tech world has it done. You’ll see a lot of the business operation guys that are essentially modeling what the tech world is come up with, whether it’s scrum or agile systems. There are so many different ways to do it. It is a uniform quick efficient way to get things done, which is just business in general. Because of tech, there are so many different moving parts and elements that was a requirement to make any type of tech project viable and successful.

How do you get a bunch of uber creative independent-minded people all work together and like each other? It’s magic for sure. Technology is our big helper too. It’s just so easy. We are a thousand miles apart and we’re communicating. My team does the same thing. We communicate through technology. We use software platforms to manage all of our activity. Everything is systematized. I do analytics all pulling data from the accounting reports to the servicer reports to everything. From my home, I have knobs and dials on every aspect of the business.

I have the same thing. There are so many different moving parts, but technology has made it so that you can pull up a dashboard and you can have all of the different primary measurements that tell you whether things are going the way they should or not. Bob, this has been a fascinating interview and I appreciate your time. Let’s talk briefly about how people can get involved and learn more about Aspen Funds and some of your opportunities. Can you talk about that a little bit?

Our website is That’s the best starting point there. There are webinars. People can learn about what we do and why it’s cool and how we do what we do and see our team. That’s the best place to jump in and get started.

TWS FF 4 | Mortgage Note Investing

Mortgage Note Investing: Technology is our helper. It makes everything easy.


Is this restricted to accredited investors or are there opportunities for non-accredited investors?

This is all accredited investors. You understand the regulations as I do. It’s the way we were able to offer these kinds of things. We have to enforce those rules.

Bob, it’s been a pleasure. Thank you so much for joining us and we’ll make sure that we get the word out and people can learn more about your business and how to make investments.

It’s been great to be here with you.

Important Links:

About Bob Fraser

TWS FF 4 | Mortgage Note Investing

Bob Fraser has 20+ years’ experience as a finance and technology executive and is a Magna Cum Laude U.C. Berkeley computer scientist and a former Ernst & Young Entrepreneur of the Year Award winner. In 2012 Fraser co-founded Aspen Funds, a fund management company focused on real estate note investments. In 1995, Mr. Fraser founded NetSales, Inc., a back-office e-commerce provider. As a CEO, Mr. Fraser raised $44 million in investment capital, and guided the company to an average of 20% month-to-month revenue growth, becoming the metro area’s fastest growing company between 1997 and 1999.

Since 2002 Fraser has founded and served several non-profit organizations as a board member and CFO. Fraser has also been involved in a number of entrepreneurial initiatives, including book publishing, financial consulting, and an investment fund managing member.


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Patrick Talks “Multi-Family” Real Estate With Michael Blank / Property, Episode -4

Patrick Donohoe welcomes Micheal Blank as his special guest for Property, Episode-4!

Michael is an entrepreneur, investor and personal development coach.  Originally, Michael made a large amount of money developing software during the dot com boom, and after diversifying is career, he found a passion for investing in multi-family properties.  His company Nighthawk Equity currently controls over $65 million in performing multi-family assets all over the United States and he dedicates tons of his time helping others become financially free in 3 to 5 years by investing in apartments buildings with a special focus on raising money.


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