The IDEAL Investor Show: The Path to Early Retirement

Ep 86 Unstable markets with Eric Francom

• Axel Meierhoefer • Season 2 • Episode 9

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Who is the Guest?

Dr. Eric Francom attended dental school in the inaugural class of Midwestern University. After dental school, Eric owned and operated four dental practices- three he started from scratch- and sold them to a private equity group.

 After increasing his net worth four times since the sale of his practice, and increasing his passive income from $7k to over six figures per month, Eric wanted to share his knowledge and teach others how to do the same. He now manages his wealth and investments in commercial real estate, private equity, and VC funds. Eric also coaches and guides his clients to achieve complete financial freedom through passive investments with “Infinite Freedom”, his private coaching and Mastermind platform at www.EricFrancom.com. He connects members to high-performing investments and coaches them on passive income to facilitate a dream lifestyle.

 Eric served in the US Army National Guard for 10 years and proudly serves as a mentor to the Harvard Business School. Mr. Francom attended dental school in the inaugural class of Midwestern University and has owned and operated four dental practices after dental school. His success allowed him to roll the practices up for a sale to private equity. Mr. Francom also Proudly served in the US Army National Guard for 10 years during the creation of these practices. He now manages wealth and investments in commercial real estate, private equity, and VC funds. At BPC, Mr. Francom coaches and teaches private clients to achieve complete financial freedom through passive investments.


Visit Him at:

Website:https://ericfrancom.com/ 

Linkedin:https://www.linkedin.com/in/jericfrancom/ 

DOWNLOAD YOUR 2 FREE INFINITE FREEDOM GUIDES & FREE MASTERCLASS : https://ericfrancom.com/about/


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Hey, have you ever heard about the saying that real estate is all about location, location, location? Well, we've always thought that would apply for where in a particular location or a town, you would want to look if you're looking for a house. But if you elevate it a little bit to the next level up, you also know that there have been many, many articles written about people moving from California, and from New York and other states, mainly to Texas and Florida. So if you happen to have a real estate investing business in Texas, and you have all this inflow of people who want to not just work, but if they want to work, they need business to hire them, or they want to form their own business. And here we have Eric Frank calm, who is actually helping us to understand how when you're in the right location, you can make great cash flow with commercial real estate investing. So let's listen in and learn how they can work in a state that is growing in leaps and bounds. Hello, and welcome to another episode of The IDEAL Investor Show season two as started, we are interested and we have a great guest for the episodes in season two, his name is Eric Francom. Eric, welcome to the show. Glad to be here. Thank you, Alex. Excellent. I'm sorry. Absolutely. Ya no, either way, I just I'm really glad that we were able to get you to come on the show, because you do some real estate investing, but also some other things. But before we get into that, I would like to ask you a little bit about how does somebody who was a dentist before get into all these kind of money, financial services related things? Well, I guess it just means I get bored easy. So I tell people, I'm a recovering dentist, okay. I enjoy being able to help people with those skills, and whatnot. But at the end of the day, I'm able to help people in a different way. And you know, I was looking for a little bit more of a well balanced life, aren't we all. And, you know, I was able to create passive income and different things to facilitate a better life with my family, and I'm helping other people to do the same thing. So I sold my practices, I have a Covenant Not to compete for, you know, some time and, you know, I will be able to do humanitarian trips and whatnot to be able to get my dentistry type service, and you can help people to get that same freedom and balance in their lives, in the meantime. Right understood. Now, just a quick for me to understand when you say you have a non compete, does that mean you couldn't be a dentist in another location? I certainly couldn't another location, I did have four practices that were spaced out from where I'm at a little way. So I'd be driving aways or moving and that would be fine. But ya know, I certainly could go for a drive and still work as a dentist. Now, I'm choosing to do this instead. Yeah, that's smart. I'm pretty sure now one thing I'm sure that some people that listen to us in the audience would wonder, okay, obviously, having four practices and being able to sell it would probably pay off your student loans. But I think one of the things that people that have spent a lot to learn something right, and I don't know exactly, I just know that medical school typically takes something like, you know, from start to finish designing, I want to become a doctor something like eight years besides the money. So I don't know exactly how that is for dental school. But was that relatively easy for you, when you actually got the payout from the sale to say, okay, I can give that up, or at least I can pause it or was that ability to say, Okay, how much I spent to get there and to actually be successful with four practices? Well it was certainly nothing that's irreversible. And it does, it doesn't fit my lifestyle, like I, at a certain point, would love to have other dental practices. But I'm not going to be there five, six days a week, like it was before. And I'll probably use my experience to train some of the other dentists and to help the people that I want to on a less regular basis. But the big shift is going from having to work to being able to get to work. And for some people, they get that freedom, and they want to do even more of what they're doing. And they're glad that they get to do it. And it's more of an art than a necessity. And for some people, you know, maybe there's something else that they're doing for at least a little bit of a time. It's been a privilege to be able to write my book and write my story and get the story out there and help other people to do the same. And a lot of people do pivot. Yeah, absolutely. And thank you for sharing that. We call that by the way, the time freedom point when we have the freedom to determine what we want to do with our time and no longer be necessarily required to exchange time for money. So I think there's a great alignment there. The other part I think that's probably important you mentioned you know, that people can change when they find something and I always try to weave in a few things about me personally, when we are having podcasts and engaging our audience, one of my uncle's is actually a dentist, too. And he is retired from dentistry by now. But what he taught me at one point when he was wondering, should I continue or should I not continue was that the frequency of treatments that he determined he would need to do to make the practice successful based on how much reimbursement for certain things he got was more like, at least in his words, kind of like on a production line, rather than really engaging the patients, which he was where he wanted to do this kinda like fancy, complicated stuff that takes time, and you really need to explain it and stuff. But the health insurance or I don't know if it's dental insurance, or whatever it's called, he said, that just didn't allow for that. They basically wanted me to have a new patient every 10-15 minutes on a chair. And so that was his reason to say, I don't want to do it anymore. And maybe there was a little bit of that. But you said, Okay, you found somebody who wanted to do it worse than you. So yes, that's right. So I guess you know, when you say four practices, that it's a nice amount of money coming out of that, what did you decide to do with the money if you don't mind me asking. Just redistributed it into just diversify the assets, real estate and private equity. And as much as possible cash flowing assets, there's such a big difference there, rather than having a big lump sum that you're not really connected to, rather than having a stream of income coming in is really something that you can be more connected to, to living on, rather than just having a big nest egg in retirement. Yeah, absolutely and that's super, super aligned with what we do at idea with grower, especially, because and I would really like to hear what your thoughts are on that, at least on the real estate side. And I know you're more on the commercial real estate side. So it's maybe more providing an opportunity for businesses to conduct their business for us on the residential real estate side, it's really providing shelter for families to have good quality living for a fair price. So what's your thought about, you know, besides the fact that it's an investment in that it's cash flowing? Are there any other associations that you would make with that? Well, yeah, I tell people that investors get paid to make the world a better place. Right. So I mean, we can pay, you know, even partnering with the government in paying our taxes in the form of creating houses and jobs and different things that the government incentivizes people to do. That's why 95% of the tax code geared towards, you know, how to provide the government and the people of the country the things that they need. So it's just a different choice, you know, so I've always been an investor. That's partly why, you know, I chose dentistry versus some of the other branches in medicine is there's a little bit more freedom there. But yeah, and I also think that diversification of variety is important, as well. I mean, we continue to get better and better at what we do. But I do like to learn new things as well. Yeah, absolutely. Now, we're in the spring of 2023. Right now. And I'm sure that people in our audience who are probably at least I'm always imagining, or hoping that they are interested in investing in real estate and passive income and all that good stuff. They read in the media, that there might be some kind of wave in a kind of cautious tier type of sense coming with commercial real estate. Can you tell us a little bit what your thoughts are on that? Is that true? Is the refinancing of commercial real estate really a tricky thing due to the increased interest rates? Or as somebody who works in this invest in this helps others to invest in it? What's your take? Is that overblown? Is there some truth to it? How would you describe it? Well, I think it's always important to be cautious and to prepare for more of the worst, rather than to just take a gamble. They say, when it comes to professional coaching, if you listen to the fans, that you're going to be sitting with the fans. So at a certain point, you have to make the decision for what you think is going to work for your money. I think real estate is a very good investment over a 10 year period of time, you can usually do pretty well with it, especially when you factor in tax advantages and cash flow and different things. You know, the number one thing that affects the price of a piece of real estate typically is the interest rate. And, yeah, I do feel like we haven't felt the crack of the whip on that yet. That being said, with inflation, you know, there's a good chance we're going to be in stagflation, where even when things are worth, you know, more, we also just the inflation is outpacing the amount while we're in a recession, as well. So, you know, I just think that it's time to be cautious. There's always niches where you can find a good deal. I've always said that there has never been a time where there wasn't a deer that would work. I mean, obviously, I think whether it's commercial real estate or residential real estate, you always have to run the numbers. And if like, we, for example, have certain criteria on what the performance of the property needs to be and either it is they are just not there, right? It's not, you know, emotional connection or be like this one because the color scheme is greater. So it's literally running the numbers and see doesn't meet the criteria or not. Now, one thing I heard recently, but as I said, you know, we're focusing on Wednesday. a denture. And that's why it's such a treat to have you with your experience. How is that in comparison for the financing? I heard that and I don't know if it's really true because I know experience that the financing for commercial real estate is way shorter because our properties, the ones are pretty much all the ones that we owe our clients by on a 30 year mortgage. And obviously, everything we bought up until what a year ago, we're sitting nice and pretty watching, watching the rest of the market my way it doesn't mean we don't do any deals anymore. It's just harder to make them work. Right. So is that really true that there's a different term in all that stuff in commercial? Yes, it's rare to go. I mean, I've never really seen a 30 year term, sometimes you can stretch 25 out of somebody, but a lot of times it's 15 to 20, if you're lucky on the longer end of things. So yeah, that does certainly affect it a lot. And it's hard to say what the new normal is with all the changes of the new banks. And the government taking over for a lot of that that might change, you know, some of the litigation started the regulation, I should say. But yeah, so the fact that it is shorter that you're feeling a bigger change, as well as oftentimes, there's a five year ARM a lot more than you would do in a residential situation, I used to have several residential properties and whatnot, as well. And I like to have them fixed as long as I can. But we've also been at a record low rates. So you know, there are properties that people have that have five year arms or bridge loans and whatnot, and they're gonna go up and their payment could double because of how low their rate was before to what it is now. Right, that's great. Thank you for the explanation. Now, real quick. I mean, since you said you also have residential, can you expand a little bit on what the cash flow situation would be if you compare a residential property versus a commercial? And what happens? And maybe also weaving in a little bit? I heard because of all this remote work that, you know, it's depending on what kind of commercial I mean, if you have a mall with Macy's and Walmart in it, it's probably not going to change much. But if it's like an office building or something that is more service oriented, it might make a difference? Can you give us a little bit of an idea? What can be the casual expectation? How might it be hit, if it has to reset to the new higher rates in what happens with those who own properties or invest in properties? If the tenants are either no longer there or don't need as much space anymore? Well, that's gonna be the trickiest part of all right is if people started defaulting or whatnot, if there's just less of a demand, then people can be in real trouble. But right now, at least in my area, what I'm experiencing is that there, we're still very building poor, I mean, Texas can still be booming, and it didn't feel the last recession, the same way that a lot of the rest of the country did in 2008, and whatnot. So again, there are always pockets, you have to look at what's going on, was in 2008, with the closing down of the motor areas in Detroit, that would be a very difficult, you know, market, obviously. So the nice thing about commercial is you can scale a strip mall, you can have a property manager, that might do it for three or 4%. Because they can, there's higher rents, they can do more things kind of at once that are closer together. Whereas some people might be paying seven to 10%, or sometimes even more, if you have a manager managing the property, and there's just less margins. So, you know, I've kind of ascended and I haven't missed it going back. And that was for single property, real estate. And I've, like I said, I do believe that the future's bright, they just can't make enough properties for what we need with some of the supply chain issues and whatnot. But yeah, I think it'd be a good time to be a builder as well, as long as you can get supplies. Yeah, absolutely. And I think we all agree anybody who's in the real estate space in general, whether it's, you know, storage units, or commercial real estate or residential real estate, if I'm just because you know, people rightfully call me a Tesla fanboy. And I accept that by now, initially, I was fighting it, but it's kind of true. But we you know, if you look at it that way, with Giga Texas, in the Austin area, and Austin being such a draw for so many companies, and then, you know, I don't know how many billions upon billions of investment is going in the ground so that people need to live somewhere that people need to go shopping somewhere, that people are not all just gonna work at Tesla, they work and all this other stuff that supports and supplies Tesla, these guys are probably going to construct on those 2500 acres for I don't know, the next time, something like that. Right. So from that perspective, to me, that will be a location I would say, okay, that makes sense. If I compare that right now to what I hear about certain places in New York, that used to be great, they had all these high rises, they looked really, really amazing. But when people also go remote work, well, what do you do if I mean, you know, I don't know if you own any high rises in New York, but I would be scared, if that were my investment, you know, how am I going to keep that occupied or is it going to be converted to residential and then even if, who would want to actually live there if there is no work? So I So I think location is an important component. Now you also do a little bit of venture capitalist investment opportunities. How is that in this kind of economic environment? Can you tell? Because I really know even less about that than about commercial. So it's a new area, but I'm sure from a cash flow perspective is an even more leveraged opportunity. Sure, well, I'm pretty cautious. In my opinion, I think that real estate is pretty high right now. And I think that opposite of that, I think that venture capital and private equity are relatively low, some of these shifts over the last year or so have really brought those prices into check. And the people that are buying right now are buying at a major discount. And it doesn't really matter what something's worth, you know, when you sell it, that's what the price really matters, if you're gonna sell in 3,4,5,10 years, I mean, there's a chance that we're going to be working with the tide instead of against it. So private equity and venture capital, where a lot of the smart money is really pivoting to, you know, the Yale endowment fund is kind of seen as the pinnacle of, you know, just year over year gains, you can track over time how much they've shifted from, you know, the public markets to the private ones, and a lot of the wealthy families are doing the same thing. And even, you know, smaller investors, there's a little bit more red tape with it. If you're using your regular registered investment advisor, it's harder to have things vetted to the point where the companies are comfortable, and people that aren't accredited investors can't invest in a lot of those meaning they either have a million dollars of investable income, or make two to $300,000 a year depending on how they file their taxes. And so just even there, there's a supply demand shift. And right now, when less people are investing, that's when you can really find some good deals. So I'm loving it, you know, people that are heavily invested in the stock market, it's not been a fun, you know, several months or a year, and I don't know anybody that says, hey, I love the stock market, I feel really good about it, it's going to do really well. Whereas for me, I'm like, wow, these are great values that we're buying into right now. And I know that we're going to be not only growing the companies, but the valuation is going to be likely stronger in three to five years. Okay, so can you tell us? Are you allowing people to invest alongside you? Or how about something like, if you find a company that you think is promising? How would that look like for anybody in our audience who might think, Oh, my, maybe I can join Eric on one of those deals? Yeah, absolutely. So we have a mastermind group where we get together. And we basically talk about different investments, we talk about what we like about the investment, what we don't like about the investment or bring in the CEO, or the fund managers or the people that we're considering investing in, we'll ask them the difficult questions, we'll put them on the hot seat and with respect, ask them all the tough questions. And again, after they go off, we go through what we like and what we don't like I've already done, you know, a good deal of homework by the time we get to that point. But again, I'm really wanting people to learn how to fish so to speak, you know, this isn't just something where I feel like we are too dependent on people sometimes when it comes to the one of the most important parts of our resources. And I had a friend and a mentor that he managed money for entrepreneurs, and as well as big heirs and heiresses, and you know, like in the downturn of the market, some of these errors and nurses have these big fortunes, they were just panicked because they had no power to know how to flip something around. Whereas an entrepreneur or investor that is doing more of themselves, they would think, even though they're annoyed that they're losing some money, this is what I need to do to kind of turn this around, and I can get working on it. And so I want people to have more power to be able to do that. And we tee it up really easily. The things that I invest in, people have the option to go into if they would like to or, you know, they there's certainly no pressure or obligation to go into things that they don't want to. Yeah absolutely, that totally makes sense. And I think we're very aligned with that because it IWG, when somebody joins us, my goal is always to help them learn through the first one, two, sometimes three investments, how the process works, and what to look for. And yes, there are steps after the investments themselves, you know, state building and creating a trust and all that kind of stuff, then more legal things. But that enables after the third year, most people have seen enough different things and the whole process returns over so that they may not necessarily want to go completely on their own. But at least we are relatively confident. And I think this is true in many ways when you want something but you're not necessarily familiar with it that much to get an opportunity to have somebody hold you by the hand and show you where the right and wrong path are and then just do it a few times. Now. Is there a particular industry because of your background that you're focusing in? Or is it just whatever the opportunity is that comes in on your radar? You don't really is the opportunity? I do like being you know, agnostic, as they say, and with good reason. I'd like having non correlated assets. So I don't like having all of the things in the same industry. You mentioned store sheds within real estate, I like those a lot, because they're, they're not correlated or even inversely correlated a little bit to the greater market. So things that I can find that are not correlated to the stock market, the real estate market or inversely correlated, I like having those hedges. So I end up my criteria is set more on the risk reward profile. I mean, I look for things that can cash flow for cash flowing investments, and, you know, I just have selected 36%. And pretty aggressive and I've been pretty fortunate there has been enough deal flow, that if I don't project at least 36% year over your return, then I'll pass on it. And you've never seen a projection you don't like, of course, I mean, it doesn't, some are going to perform much better. And some might, you know, like, be duds and go to zero even but the statistics are on your side, when you have projections that have such high possibilities that we're measuring in private equity, and VC we mentioned in MOYOCK, which is your multiple on invested capital, and percentage of internal rate of return. So I like the multiples. No, absolutely. And I mean, I've never really been able to participate in any, but I have a few friends who work in a similar space. And they, for example, said You know, if I can project a 5x In five years, then I probably wouldn't do it or something like that. Right. So that totally makes sense. I would applaud you for being brave, because I would probably feel pretty uncomfortable in any industry that I've no clue about. I know that people can do pretty business plans and stuff like that. But you know, to be able to say, is this really gonna work out? I'm glad that you are there to help people to come along your side. Because I mean, as long as it's something that you do and know about, or when it's something totally different. I think having somebody who can help vetting It is super, super important. Well, businesses is relatively simple. I think we overcomplicate you know, things like coding or whatnot. That is complicated, you know, to me, or dentistry, that's very specific yet, but as far as answering what problem is this solving, what is somebody hiring this product to do, and if you can see that there's a need for that there's a pathway to profitability. Oftentimes, yes, you will want a specialist to be able to give their technical opinion for the things that you just can't see, it also feels good when you do have institutional money with you. It's not a failsafe, but they just have a lot of resources to be able to do their own betting, as well. But it is very important. I mean, that's kind of the biggest times I've gotten in trouble is when I've relied on some other people that should have known what they're doing. And I've let my guard down a little bit. So I would just say, you know, you have your criteria of investments, but you have your criteria on on vetting as well. And too, if you stick to those criteria, then I think the odds are really in your favor. Yeah absolutely. And I don't want to really call it a niche, but it's a small area where private people can join institutional investors and have the guidance lead you provide and actually do something that used to be only for really rich people in the past, right. And that's kind of what I also always feel about residential real estate, you know, you can find a property where with 30, or $40,000, you can actually own the property, get the rest of financing and provide shelter to people. Yes, it's not easy. And there's a certain complexity to it. But that is more and more available to regular people than you know, some of the other stuff. So I'm really glad that we got you to come in and explain a little bit about it. Now, when we as we come to the end of the show, we always ask two questions at the end. So the first one for you, Eric, would be if you could meet anybody alive or not? Who would it be? And why? Oh, I don't know. The one that keeps coming to mind is Richard Branson, which I did get a chance to meet him and spend some time with him on his island. I really liked learning from him. And he just was, it was just a really neat down to earth person. If there was somebody else. I mean, I would really love to meet Warren Buffett, he just has so many years of experience. He is a very down to earth person. I know some people that do know him. And I think there's so much wealth of knowledge. I mean, he learned from Benjamin Graham and just I mean, he was kind of you know, that pre depression area. Yeah, I would definitely have to say of ones that I haven't met already would be definitely Warren Buffett. Yeah, that's very cool. And I mean, Richard Branson, I think, you know, he is a great example of that. If you want to really be successful, you also need to be willing to take some risks, right? I mean, I'm sure he was convinced that version of it would be the next big thing and, you know, you fail a few times, and it just doesn't work out. But if you look at the whole history of all the stuff he's done, I think he is a great example. Okay, so the last question I always ask is, if you had a time machine, you're not allowed to change the time space continuum. You know what, you know what you have to come back in or don't change anything. But where would you go in why? That's a that is a really good one. I think, you know, people lived in much simpler times before and sometimes that is a relief. So if I could go anywhere in any place at any time. I don't know. The thing is, I really am a sucker for technology though. You know, I just said how how peaceful it can be like turning off the phones and getting into the mountains. But I really am grateful for the technology we have to live in today's day and age for both the medical technology as well as communication, transportation, convenience. You know, I talked to my grandma who passed away just a few years ago, and as we knew she was about to die. So you know, what, what are the greatest inventions you saw? And she said, you know, the radio was fun. But I'm gonna have to say when we started getting water inside the house, I was like, wow, I mean, it really puts it in perspective. That's not that long ago. So I guess I would I would if going to the future was a possibility. I'd sure love to check that out and come back, but.. Yeah, exactly. You can come with me. I said, oftentimes, when people answer the question, solely, everybody's choice, right? I said, when they asked me, Where would you go? I wouldn't really want to know if this city on Mars, it's actually happening on if the what was that? The city on Mars? Okay. Right. Like, supposedly in 2030 or 2040. Maybe 2050. there supposed to be 1 million people living on Mars, I would like to see if that's really coming true. That's where That's where Elon says he wants to die. Right? So Just not on his back. He said Yeah, just not on impact. And he's been a little over ambitious on his timeframes. But, you know, at least he's, he's delivered on most things. Yeah, well, I mean, he's like, What, early 50s now, so I, the oldest person that went to space, I think was like, almost 90, so yes, kinda like 35 years. Okay, cool. Now, you told us a lot about, you know, investing in commercial real estate and in venture capital opportunities and stuff like that. So if people listen to us, or watch us on YouTube and say, Hey, this is really an interesting aspect that I hadn't really on my radar, how can they get in touch with you? You know, the website would be the best way, just ericfrancom.com, or the infinitefreedom.com. The book I'm just completing now that infinite freedom is the name of the book as well as the mastermind. And I'm looking forward to being able to share a lot of my secrets and things out there. There's a lot of free materials. If people want to check those out, I'd be happy to give them away. And if they want to get in contact and be the apply to be a member of the group. They can do that on the website as well. Okay, awesome. Yeah, I might actually do that. And I've been used to a lot. So Eric, thank you so much for coming on the show sharing a little bit what you do and recovering dentists, I think you said at the beginning, so I wish you the best and maybe we see each other in the mastermind. I look forward to it. Thank Okay, awesome. Thank you. Take care. Thanks for listening. And I hope you enjoyed today's episode of the The IDEAL Investor Show more info and the links we mentioned during the show in the show notes or you can go to our website at Idea wealth grow a.com and sign up for the Apple podcast link. And if you'd like to talk to me sign up for a strategy call. Hopefully you want to share what you learned with your network and bring more people in we are really eager to hear your comments and until next time, be well stay safe and ciao.