Diane's Story

Grab a cool drink, put your feet up on your desk … and sit back for a long story. If you don’t want to read the long version, just fast forward to the bottom. I’ll do a summary.

My first lessons in business and real estate came from my Dad. He has a born entrepreneur. He bought small businesses that were failing, moved our whole family there and worked 7 days a week until he could turn it around. He invested some of the profit in real estate, found another business to buy and we all moved to a new town in Oregon.

The problem was that he believed that he had to do all the work himself. He didn’t really trust other people to make good decisions or to care about his business as much as he did. He had his first heart attack before he was 40 and had to completely retire by age 47. Luckily, he had real estate that let him retire early.

A side note: There is a lot of buzz lately about investing in precious metals – my husband and I do invest in some stocks associated with gold, but don’t own gold. My Dad, on the other hand, invested in gold and silver. I remember one Oregon winter in 1972 or 1973 when I borrowed my parent’s big car. Road were icy so my Dad loaded the trunk up with some weight so I’d have traction when I drove. He told me not to open the trunk, but I forgot and after I was done running around to see my friends, I opened the trunk to put something in it. The trunk was linked with gold ingots. That doesn’t mean anything really, although it was my strongest memory of what it means to invest in precious metals.

Some of the lessons I learned during that time that shaped my life:

• Working in a business is hard. You have to work harder than any of your employees. (Later replaced by a less-limiting belief)
• Save your money in real estate
• Gold makes good ballast for traction in snow (Every time someone says they are stocking up on gold now my first thought is, “Oh, is it going to snow?”)

So, I went to college, got an accounting degree from UNR and went into public accounting. I didn’t count on the long hours working for someone else, so after about 3 years I left public accounting to go to work for my biggest client as CFO. It was the first multi-planned community in Northern Nevada. I learned a lot about real estate speculation and development. I became an expert at finding financing no matter what and how to create presentations that got funded every time.

Then the real estate crash of late 1980’s occurred and by 1991, banks were closing and there was simply nothing other than hard money available for projects. I started looking for other opportunities. About that time I got divorced and guess what! I was one of the first women in N Nevada ordered to pay alimony. Sometimes equality is such a pain.

Plus, my husband and I had spent a lot of money foolishly. Although we had a home with equity, our credit card debt spent building up all types of depreciating assets (i.e., not assets at all) wiped that equity out. We had a negative net worth. We owed more than we owned.

So … I had a job in a failing industry, I had to pay alimony and I had a negative net worth. What should I do? I had to do something drastic. Bankruptcy was not an option for me. I pulled a page from my Dad’s play book and quit my job and started a business. I got a personal loan from one of the backers at my old job (who told me I’d made a great business owner because I was such a lousy employee) and bought a small firm. It was 100% seller carry, but I needed the personal loan to float me until money started coming in.

I worked hard in my new CPA firm. I spent a lot of my energy and time, but not so much money, in marketing. This was 1991, so it was pre-Internet boom. The marketing was completely different from what I’d do today.

In the 2nd year, I doubled what I had done the year before. In the 3rd year, I doubled the 2nd year. In the 4th year, I doubled the 3rd year. I was awarded Entrepreneur of the Year for the state of Nevada. In the 5th year, I doubled the 4th year. And, I was completely burned out. I sold my first CPA firm for a little under $500,000.

Meanwhile, I had been investing in real estate, so I was almost completely out of the rat race. I had millionaire status and the knowledge that I could always support myself as a self-employed CPA with a few employees and that I knew how to invest in real estate in a downturn market and in a flat market so that I created massive cash flow. At this time, my net worth mix was approximately 30% liquid, 60% real estate and 10% other.

But, something really bugged me. At the time I graduated from college and took the “high road” of being a CPA, a fellow student decided to opt out and not become a CPA. Instead he started a payroll service company. We superior CPAs looked down our noses at him. What was he thinking? He went to college for 4 years to become a gasp bookkeeper?

About a year after I sold my CPA firm for a half million, he went to Intuit with an idea. He asked to get into the source code for their big seller QuickBooks. His thought was to give an option for QuickBook users to use his payroll service. Intuit asked a lot of questions first and then they told him no. They would not give him the source code for QuickBooks. But, they would pay him $200 million for his company. Whew! Big lesson there.

I figured I was too young to really retire at that point. I did enjoy what I did so I kept a handful of my clients from my past firm, just to keep my head in the game. One of those clients was someone you all know – who went on to co-author the international bestselling book “Rich Dad Poor Dad.” Robert asked me to speak with him at his seminars and at first, it was exciting because it was so new.

Lessons from that time in my life:

• You can’t count on someone else to protect your financial future (I still believe that)
• Working in a business is hard (Limiting belief that got replaced)
• Real estate can save you in the long run, but you have to take a long range view of it (I still believe that)

I was flooded with requests for CPA services. It looked like I needed to build another practice, and in a hurry. This time, though, I wanted to build it so I did only what I cared about: writing, speaking and doing big picture tax strategies.

I drove business by going on the road with Robert. I had amazing experiences talking to huge crowds that I could never have drawn on my own and learned everything I know about presentations from people who were fantastic at it: Blair Singer, Dolf deRoos and of course, Robert Kiyosaki. I focused my practice on business owners and real estate investors, but not the prima-donnas that I’d previously worked with. I discovered that the more I could specialize in a few things (businesses and active real estate investors), the better I got and the more efficient the firm ran.

I was gone so much of the time on the road that I was forced to re-examine how I ran my business. I pulled away more and more from the CPA firm, building my online tax education company - TaxLoopholes.

Lessons from that time:

• Passive income gives you the freedom to discover your passions. (Amen)
• Being an “S” sucks – the only way to succeed is with a business.
• Sell to the masses, live with the classes. Sell to the classes, live with the masses.

Eventually, I sold my 2nd CPA firm for about $1.2 million and, most importantly it turned out, a referral agreement. I knew I would refer a lot of clients, but I didn’t realize how many until the requests for CPAs started flooding in. I completely stepped away from doing personal tax strategies to concentrate on automating the referral process. I made some mistakes in the initial agreement, such as not requiring that the referral company follow the same principles I had in my business. Things got out of whack for awhile as I struggled to reconcile the values I personally hold important with a business with someone else’s version of what those values should be. Plus as tax law changed, it was necessary to change the strategies. Tough lessons as I felt out of step with my values and I was on the road way too much.

July 2003. Denver, Colorado. I will never forget that month because it changed the course of the rest of my life. I met with a newly founded mastermind group for an all day mastermind session. I was griping that I was sick and tired of seminars where I inevitably got cornered by someone who rapid-fired me with questions when it was obvious to everyone that they would never do anything with the information. It was like they were looking for a slip-up so that they could prove, “See, Diane Kennedy, doesn’t think it’s possible either.”

Occasionally, there were bright spots such as the time I spoke to a group of real estate brokers in Phoenix who swore that there was no such thing as a cash flowing deal in Phoenix. I got so mad that I said from stage that I would find it and post it on my website. The one thing I asked was that when I did, I wanted to hear from them about what difference that would make in their belief about Phoenix. So, I went home and coerced my husband Richard into helping with the project. He was a real estate agent as well, so we could access the MLS and pulled properties. We looked for anything that had been on the market a long time. It was just the beginning of the upswing real estate market. We knew we didn’t want a property that everyone was bidding on. We needed a dog that we could find an innovative (and cheap) way to turn it into a deal.

We went out that night at about 10 pm and drove around looking for the dog properties he’d identified. One was a condo in a so-so neighborhood. It was clearly all rental, but the price on the property was simply too good to be believed. It was an REO and was listed at $33,000. The next day we met the agent who handled that bank’s REOs. The bank had turned off the power as a way to save expenses. Unfortunately it was summer in Phoenix and the condo had only a few windows to let in light. You couldn’t really see the place, the refrigerator smelled to high heaven and it was hot, hot, hot. We bought it for $31,000. Our payment with $1,500 down is $269 per month. We rent it quickly and easily for $695 per month. It doesn’t stay vacant very long because the townhouse is 3 bed, 2 bath and about 1500 SF. There is covered parking, laundry facilities, and a pool for the tenants. I posted the deal on my website and waited to hear how it would transform the beliefs of the 1,000 real estate brokers in the room. No one ever wrote or called.

So, I was tired of beating my head against a wall with these seminars that seemed pointless to me and seemed to do nothing with what I wanted to accomplish in the world. I just wanted someone in my mastermind group to say, “Oh you poor thing.” But, that’s the point of a good mastermind group. They don’t let you off easy. In my case, I was barraged with questions, “Why don’t you want to do seminars?” and even better “What kind of seminar would you want to do?”

I listed out what the ideal seminar would be for me: more than one day (so you had time to really create an impact for attendees), in a beautiful location, with people who were proven “do’ers” (not just talkers), and with a big chunk going to charity. I will never forget that moment. David Finkel said “I want that too!” We agreed to do it together and he said, “If you’re going to be a bear, be a grizzly bear” and grabbed his scheduler. We booked a time on the spot. We worked out the basic points of the seminar, including price that we set high enough to be a barrier in itself. Plus, we set up the interview process with the questions we’d ask to verify that the people who attended were ready for this seminar. The last thing we wanted to do was get someone attending who used their credit cards and couldn’t really afford the seminar. Rather we wanted to create a camp for over achievers…where people could rediscover their dreams and take already successful businesses and investments up a bunch of levels.

On the way to the airport, I called Amy (event coordinator for my company) and there was silence. She asked, “Are you sure about this?” The price, the type of seminar, the short notice – all were concerns for her. A week later we sent out our first email and she called me excitedly. The email hadn’t even finished going to our database and we already had 7 people who were anxious to be interviewed.

Right about that time Robert re-examined Rich Dad and what he and Sharon had created. He wanted to tighten the company up and bring the advisors more into the fold. Basically that meant more travel and creating products and information under the Rich Dad umbrella. I just wasn’t ready for that commitment and felt I would do a big disservice to them if I continued. We parted friends and with respect.

There are two things I remember from that time. One was a joke Robert told me: “A guy hires his best friend and it just isn’t working out. So, one day he calls his best friend in and says, “I have to handle this in a business-like manner. Right now, you’re not my best friend. You’re fired.” Then the guy says, “Now I’m your friend. Hey, I heard you just got fired. Are you okay?”

Although it wasn’t a firing or a quitting per se, the joke was exactly what was going on between us. There was business and there was personal.

A few days later, he called me and said he had another story for me. He said that there comes a time when two trees planted near each other can’t both survive. One of the trees need to be moved or they’ll choke each other out.

I like that.

Lessons:

• Building a “B” can take a lot of time/money/energy
• You are only one mastermind group away from everything you’ve ever dreamed of
• You can teach skills, not values
• Partnerships come and go. End with grace, no matter what

And that still wasn’t even the biggest thing that happened in 2003. We gave 20% of the gross proceeds form Maui Mastermind to charity and we let people in the room decide what charity to select. Fall 2004 Amy called the charities to get stories on what had happened. I’ll never forget that day. She called me, in tears, and said I had to listen to this one call. She had started taping it when she realized the call was so moving.

One table had decided to donate $10,000 of the ear-marked money to an orphanage in Juarez Mexico. The orphanage had lost their property in a land dispute and had to move out by the end of the year (12/31/03). The thing is, in Mexico, there is no safety net. There was nowhere for the 15 children, age 2–16, to go. They were probably going to end up on the street. The director wanted to let the children have Christmas first and was then going to tell them they had to find somewhere else to go. The check from Maui Mastermind showed up on 12/26/03. It was enough to start the first building on a piece of land on the outskirts of Juarez. He said that we were the answer to their prayers.

I had asked for many things in my life – in times of stress, fear and just out and out greed. But, it struck me hard that sometimes the things we do might actually be the answer to someone else’s prayer – a good job, a chance to learn, the opportunity to create a business or live in a safe house. I felt like I just suddenly learned something that everyone else already probably knew.

Amy and I cancelled a shopping trip we had to London the next week and took a film crew to Juarez. The group had grown by the time we got there and my husband even went along. That’s when we met David, a bright, personable 13 year old boy that we knew would be on the street if something dramatic didn’t happen. Something in our hearts just told us that this boy was meant to be with us. We started adoption proceedings and were able to bring David home 6 months later. If you’ve come to any of my seminars, you’ve undoubtedly met David. He’s started his own charity now, Thunder Mission, and raised over $30,000 last year for it. I could go on and on… but the biggest thing is that I was a mom for the first time in my life and it’s been the greatest time ever.

On the business/real estate front: The real estate market totally exploded during this time. Richard put a crew together and started doing fix and flips. He timed the market perfectly. When it came down (not a real crash, just a gentle downturn), we were out – but a few million richer.

Lessons:

• Make hay while the sun shines
• Watch your liquidity as your business cycle expands
• You may hold the answer to someone’s prayer
• Just being rich can be lonely and sad – having money plus™ is my answer

More Lessons:

• Point Loma Seafood has the best grilled sea scallops in the world. (Grilled sea scallops and a glass of perfectly chilled Russian River Chardonnay next to the San Diego Bay may be one of life’s best little pleasures)
• If you have financial fluency, you will never be poor
• Money doesn’t solve money problems. Understanding money does
• There are more people that will tell you that you can’t than will tell you how you can
• If you are a successful innovator, someone will try to rip you off. For me, it’s “I’m just like Diane Kennedy, only cheaper.” When that happens, I just smile. I’m used to it by now and I know they never provide exactly the same service, innovation and integrity that we do

And…gasp…..

• Tax law is constantly changing. Last year’s plans, or worse yet, the plan from a few years ago can cost you big time

For example: Four years ago, I said:

If you are paying too much in tax, you are doing one of two things wrong:

(1) You don’t own enough real estate, and/or

(2) Your CPA doesn’t know how to take advantage of real estate loopholes.

Some so-called advisors are still saying that even though it’s completely wrong in today’s tax world. And if you’re posting in this forum, chances are not only does it NOT work anymore for you, you risk getting slammed with an IRS audit, penalties and interest if you follow this out-dated advice.

Final Stage (Right Up Until Today)

I could have ended my story right there and been happy and satisfied for the rest of my life. Then, out of left field, my business partnership in the Maui companies ended. I went into a horrible depression and think I might have stayed there if not for the loyalty of my family and some close friends.

I lost people who had been friends for years as they betrayed our friendship to make a quick buck. My copyrighted material was blatantly ripped-off and I had to hire a lawyer again and again to protect my interests.

On the positive side, people I barely knew came forward and helped guide me toward the creation of this forum and finding a way to connect with people in a brand new way (for us, anyway).

I no longer am part of the Maui Mastermind seminar.

I still hold true to my dream of creating something completely unique in the world – a place of connection between like-minded individuals with different talents and abilities who realize that together we create something bigger, a place where dreams are rekindled, passions stirred, and the practical art of business and networking occurs in an intensive and fun way.

And most importantly to me, a place where the act of giving and contributing, the actual creation of a legacy that defines not only who you are, but who you aspire to be, is a real part of the growth of us as true human beings. I still believe that good exists in people.

And, on the business front, I’m back taking personal CPA clients. My husband Richard is working side by side with me and our marriage has never been stronger. I have more time with my family and frankly, am making more money and more connections as our clientbase is exploding with new community members. The new opportunities are just flowing in. I think I had to let go of the old, to be ready for the new.

Lessons:

• Things change. Be adaptable
• Be true to yourself, your ethics and integrity. It will always come back a hundredfold
• I really love the tax game!
• The secret in business is combining three things: What’s Most Important to you, Your Unique Knowledge, Talents and Abilities, and What Customers Want and/or Need
• Figure out what you do best and turn it into something you love. You’ll jump out of bed every morning, excited by what the day holds

And that’s my story … for now.