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An Alternative Take on Investments with Chris Odegard

Updated: Apr 7, 2022

By: Thoughts of a Random Citizen Podcast





Thank you everyone for tuning into another episode of Thoughts of a Random Citizen. Today, I have an amazing interview with Chris Odegard. If you're tired or exhausted, or emotionally damaged from the stock market ups and downs, maybe you're looking for passive income and not sure where to start. I'll just say now this conversation with Chris is the place to start. I pound Chris with a bunch of little questions and he knocks them out of the park with amazing insight in how to invest in low-risk assets that yield solid returns.


He's living proof that these strategies work and for any who want to continue to invest, but again, can't stomach that current market volatility, this episode should be a breath of fresh air for you. Chris has said he allocates maybe 1% of his portfolio into the stock market. Even though I'm about the exact opposite of that, it just goes to show that when you hear investments, it doesn't only mean traditional ETF stocks and bonds.


Chris has a great take on owning and purchasing real assets which is why I played that clip. How he preserves wealth, all the same, if not better than traditional investments and by far and away, better than cash sitting by itself in a bank account. I hope you guys enjoy the conversation.


Chris, thank you so much for coming on and being a part of the podcast. I believe you're actually one of the first guests I've had on the podcast to talk specifically about investing with, so I'm really excited about that considering I love investing so much. I know you've recently wrote a book called Get off Your A$$ and Manage Your Money: Why You Need Alternative Investments, which before we get into that book and your alternative investments and financial knowledge, can you walk us through a bit of your background before the book leading up to now?


Yes. Thanks to you, first of all, thanks for having me on, happy to be here. Hope that I can provide some value and maybe some little entertainment to your audience.


That's right.


I used to be like most people, a conventional investor, and that means investing in stocks, bonds, and mutual funds through your employer's 401k. What I finally referring to is the 401k highway to mediocrity with retirement. It's so far away that you need a telescope just to see it. I was that guy. That's what I grew up with. Around 2009 in my mid-40s, I had this huge illiquidity event where I lost 55% of my assets and thousands of dollars per month in cash flow. In my case, it was divorce and lots of people can relate to that, whether it's divorce or whatever thing happens, and so all of a sudden, that highway to mediocrity was looking even worse than it was before.


Coincidentally, around that time, a friend of mine said, "Hey, Chris, you got to read this book. You got to read this book," so I bought the book and I just set it aside for way too long. Then one day I was flying somewhere, I said, "Okay, I'm finally going to read the book." The book of course was Robert Kiyosaki's Rich Dad, Poor Dad. Like millions of others, my mind was open to a new way of thinking about money and investing and so I did that pretty aggressively, and lo and behold, nine years later, I had made up that 55%, multiplied it many times over, and I fired the man. I never have to work if I don't want to.


I wrote the book and started the blog at theprolificinvestor.net to share just there's this completely other way of thinking about money investing that is so much better, so much more profitable, and it'll get you to retirement, financial freedom, whatever much faster. It is harder but the benefits are so worth it. That's my story.


What was the career that you had to enable the alternative investments?


If you've read Robert Kiyosaki's book, the Cash Flow Quadrant, I was an E, I was an employee. I grew up with a family of Es, none of us were entrepreneurs. It was just plain Jane vanilla stuff and so that's what I knew. I went to Embry–Riddle Aeronautical University in Daytona Beach, Florida to become an airplane mechanic, which I did. Then I worked at the Kennedy Space Center about the time the first shuttles were going off and then I moved out to Seattle and worked for Boeing. At the height of my career, I was the director of contracts out there and I wrote and negotiated the contracts for the sale of commercial airplanes all over the world to airlines and one royal family. It was a lot of fun.


It's easy to look back at a job on the last few years or whatever and it sucked or whatever but when I look at the whole time, it was really fantastic. Especially the contracts job was like an MBA on steroids. You couldn't learn what I learned in a classroom and I've traveled over 30 countries and just met people from everywhere and done big business, big-dollar business, and tough negotiations. It was just a blast.


I talk a lot about travel in this podcast. Before we dive into the financial stuff, what were some of the highlights of your travels? Maybe like your most favorite? Can you just walk through that?


Oh, sure. Yes. Walking on the great pyramids, on safari in Africa, walking on the Great Wall.


Wow.


Being in Majorca or the Maldives. I've been on just the most beautiful beaches all over the world, it's just incredible. Hong Kong is my favorite city. I lived in China for three years and I loved-- I've probably been to Hong Kong like 50 times. I love going, there's just such an energy about that place. I'm ready to-- if we get back to some more normalcy in terms of international travel, I'm ready to get on the road again.


Just veering off of it here, has it been more difficult with Hong Kong in light of recent events?


I haven't been there since COVID. I went back-- my daughter was living in Seoul and so my girlfriend and I flew up from Seattle up to Vancouver, got on a brand new 787. Flew into Seoul, spent Christmas there, and then flew over to Hong Kong on the 747-8 and had New Year's Eve in Hong Kong. That was probably, oh, 2017, maybe. I haven't done any international travel since then. It's all been domestic on motorcycles and Corvette's across the US.


Well, there you go. That's not too bad, though, and there's worse places to be stuck.


No, it's not a bad substitute.


Getting to your book, Get off Your A$$ and Manage Your Money: Why You Need Alternative Investments, you designed a pyramid of how you recommend investment allocations. In the shadow of the pyramid is traditional investment stocks, bond, mutual funds, et cetera. Can you elaborate on why you've thrown those specifically into the shadow of that model pyramid?


Manage your Money book cover - Chris Odegard

Yes, it's a little bit of humor and making fun of conventional investments because the pyramid you're talking, call it a pyramid or ladder, it's something you get on and you climb. Well, the conventional investors aren't even on the ladder, they're in the shadow where it's dark and damp, and there's just no fun down there. There's nothing good happening down there. There's mold growing, you know what I'm saying when you're in the dark, in the shadow, all the good stuff happens on the pyramid. You got to get on it and start climbing, and the sun comes out, and the air is cleaner, and their ROIs are better. I think it's true but just a little bit of making fun of the whole situation.


Oh yes, and when you've walked on the pyramids yourself, why not?


I want to correct one thing you said there. All those different investments that are on the pyramid, that's not an asset allocation. Those are just examples of alternatives and they're not in any particular order or anything. You could start on that pyramid at the middle or the top or anything.

Okay. Cool. One thing in your book that I really wanted to question you about was the concept of a family bank, or I don't know if that was actually in your book, it might have been on your website.


It's on the website, yes.


Can you walk us through the formation process of this bank, who qualifies, and the concept in general?


Yes. Well, it's way easier than that. There's a good statistic that I have that about 34.5% of the average American's income goes to interest to other people. Think about that. If you make $100,000 a year, $34,000 is going out to credit card interest, student loans, home mortgage interest. That's a huge amount. What if you could bring that? What easier way would there be than to just keep that interest inside? A family bank is nothing more than opening up a checking account or a savings account or taking an account that you already have that you don't really use. Some people might have a couple of savings account, and they don't really have activity so you designate one of these accounts as your family bank.

Then you start to fund that bank, and you can fund it with, oh, I've got an extra $1,000, or an extra $5000, or $10,000. Or you can just start by setting up a recurring automatic deposit into that bank and then pretty soon, let's say, you've got $5000, all of a sudden, you've accumulated $5,000 in that bank, and maybe I'm dating myself here. Then your first child, turns 15, or 16 and they need a car to drive; today, you probably can't get much of a car for $5,000 but back when I was younger-


Used car.


Yes, a used car. You go, okay, instead of going to the bank to get a loan, you withdraw that $5,000 to pay for that car and you set up an amortization schedule just like you would. What's the going rate for used cars? You go to your credit union bank and say, oh, it's about whatever. It's 4% and you can do it for 60 months. You start paying yourself back at that rate, or whatever the monthly payment is, but you set it up. Now you're keeping that interest that would have gone to somebody else to yourself, and it's no more complicated than that.

Some people would say, the question will be, "Well, if I could pay cash for it, why wouldn't I just pay cash?" If you have a loan to a bank, you will find a way to make those payments but if you pay cash, the money that you save in interest, you'll never end up saving that anywhere, it'll just get spent. By paying yourself back, you put that principal and interest in pretty soon now you've got your $5,000 back, and with interest, all of a sudden, you've got $8000 and the next big expense comes along, you need a roof on the car, you need a new washer and dryer, whatever, and all the money that comes out of that account comes out in the form of a loan that gets paid back on some schedule.


Okay, so it's like a financial discipline strategy, essentially?


Yes.


Because you are, I guess in one way paying that cash but you're just structuring the loan yourself, correct?


Right, yes. There is no third-party separate bank, it's just an account and you borrow money from yourself. Think about this, if you were a young family starting off with kids and you started doing this from the very beginning, you start off financing little things, and you're doing cars, and you get a boat or whatever. My daughter is a therapist out in Las Vegas and she's self-employed so she's not a good candidate for a loan because she's got some flexible income. Well, what if I'm to the point where she could come to me and say, "Dad, I'd like to buy this $250,000 condo, can you be the bank?"

I could arrange that, given enough time, I could put that money aside but really, it's not loaning her money at the typical 30-year fixed rate. It really isn't a good investment for me because I can get some more but I'd say, "Okay, here's the deal. It's on a five-year balloon so in the next five years, you need to get your credit and everything in order so that you can refinance and take me out of this loan, right?" Think what that would do over generations if you just kept all that money in the family?


Yes, absolutely and financial discipline and just that strategy itself, that's so important in regards to money because that's really all it is, it's discipline. One of the things you also talk about in your book that I really want to talk about is passive income, and I love passive income strategies. One thing, though, I've never considered that you actually talk a lot about was ATMs. It's something that you reference it quite a bit. For those who might not be aware of this idea, can you elaborate on it a bit for us?


Yes. Let's talk about something called a syndication. A syndication is just where I would like to buy that $40 million apartment building but I don't have $40 million, or I don't have the $10 million down-payment that I need to get the loan. I go out and get 100 guys or girls, whatever, investors and we each put in some amount of money, and we form a company and we go buy that thing together. Now we all get the benefits of the ownership, we get the pass-through tax benefits and you can do a syndication for anything. You could buy a shopping mall, you could buy up an apartment building, or you could buy ATM machines.

I own ATM machines all over the country, I've never seen them, never touched them, never will. They are all managed by a third party and there are three players in the ATM space. You've got the person that owns the real estate that you're going to put the ATM. You got to have an arrangement with that person, and then you have the person that owns the ATM, in this case, me. Then you have the companies that do all the maintenance, insurance and putting the cash in the machines, and if they're not performing well at one location, they move them to another.

Those are the three parties and every time you go to an ATM machine, and you pay that surcharge of, it's probably averaging around $3 depending on your location, those three parties get some percentage of that fee. Now, if I owned these things directly, and I was to put them in my pickup truck and move them here and move them there, I would get a different amount of money every month from each machine because there would be a different number of transactions.

The way that I do this, or the way that I participate in this is, I'm just wiring money to a company that's going to go out and buy these things. I have ownership of these things by serial number and hundreds of ATM machines that are all managed together and I get what's called a blended return. They look at all the stuff and they say, "Look, if we meet this average amount of transactions across the whole thing, I can pay Chris this X amount of fixed dollars a month for the next seven years."

It's a really great investment and it started before COVID and it just gives me a predictable monthly cash flow for seven years. At the end of seven years, it's like a used car; it's outdated, you sell it for whatever it's worth and then you move on. Unlike an apartment building that produces cash flow, you don't still have this appreciating asset at the end that you could sell. This is a depreciating asset. If you spend all the money that comes off these ATMs for seven years, you just have to know that there's nothing left, that money's all gone. [chuckles]


Yes, absolutely. Well, for some of those seeking passive income, that's obviously a great route, and for the innovators out there, something that just popped into my head would be doing this with some Bitcoin or crypto implementation where you essentially have the ATM but instead of fiat currency- it would print out fiat currency, but you obviously would withdraw via crypto, a unique, innovative implementation. I know that they actually have those in Australia, I've seen a few. I was looking at some of the returns and obviously, you have to give a lot to the people managing it. Do you think that there is if people are interested in a side hustle, any potential in managing them yourselves, or is just too much?


Yes, there are certainly people that do that. That's not really passive income. If you own a piece of rental real estate, or if you own a portfolio of ATMs however that many be, you've got a job. You've got a small business in running the rental or managing those ATM machines. There's nothing wrong with that, it just depends on whether you want to have a job, or do you want to have what we used to call mailbox money or passive income.


I've never actually heard that term. That's great. Shifting gears a bit, you released something else on your website that I really liked and you said that, Trump paid $750 in taxes and you paid zero. Ignoring politics, obviously, because the mention of him is rough sometimes but you said that 95% of the tax code is written to tell you how to pay less taxes by adding benefit to the economy. Can you elaborate on this?


Yes. There's a book that everybody should read. Let me back up. If you're an investor, unless, you know, the average stock investor, the S&P 500 over its history has delivered about 9.8% average annual returns. It's routine for me to get returns in excess of 20%, and it's really weird when you think about it, but if you're getting 10% on an investment, you say, "Well, I'd rather get 20%." How do you go from double the return on investment? Well, the easiest way is to keep more money in your pocket in the form of taxes. It's the low-hanging fruit if you will.

There's a guy named Tom Wheelwright, who a lot of people refer to as the smartest tax guy in the country. He wrote a book called Tax Free Wealth. If anybody wants to know how to- that is one book they should read. Tom would say what I said, or I got it from him I should say, that 90 plus percent of the tax code is telling people how to pay less taxes. The government uses the tax code to modify behavior.


For example, the government thinks that having married people having babies is important for the country. Guess what, if you're married and you have children, you get tax breaks, you pay less taxes. They also feel that people to have a roof over their head, whether it be an apartment or a single-family residence is important too. If you build or rent property, you get huge tax benefits in the form of depreciation, and now for one more year, 2022, something called bonus depreciation. If I were to put $100,000 into an apartment syndication, I would actually get $100,000 negative on my tax return for that year, so the next $100,000 that comes to me of the same type of income it's tax-free.


Wow. Geez.


In energy too, and it's switching from fossil fuels to more greener fuels but the reason that I paid no taxes in that year is because I strategically made an investment in some coal processing units. We need energy to run the country, like it or not. We need energy in some form and so those people that go out and drill or refine petroleum products, they get some of the best tax benefits.


Is that still today? I know you said you did that a few years ago or whenever that was. Has that inverted into some form of green tax benefit?


It's interesting that with all the talk that there is about green energy and solar and all that stuff, the tax benefits, to my knowledge, have never kept up because investors will go where those tax benefits are. I think it's shifting but I don't think it's quite moved all the way over in that direction. Although I was just listening to a podcast this morning and it talked about how President Biden shut down the Keystone Pipeline and shut down some nuclear plants. He's really putting a damper on the traditional energy sources, which is driving up energy prices.


Oh, yes. I thought nuclear was zero emissions. Why would he be shutting--? Obviously, this is going, it's just shocking to me.


I think France gets about 50% of their electricity from nuclear power. In the United States, it's very small. We had an accident here called Three Mile Island like 40 years ago and from that point forward, there was just no more building of nuclear plants, so it's really tragic.


Obviously there are some dangers to 'em, but when there are zero emissions and they're super powerful, but anyways, that's often to another topic in and of itself. I'm curious to see what you think talking about the economy in regards to inflation in the next 10 years. Do you see hyperinflation, and obviously this is speculation, but I just wanted to pick your brain about it a bit.


I'll make the disclaimer that my crystal ball is as good as everybody else's. I listen to lots of different sources of information and try to figure out how I'm going to do my investing based on what I think from all the things that I hear and I don't think it's going to be universal. I don't think everything's going to go up in price or everything's going to go down in price.