teamjoe, Author at Simple Passive Cashflow

Coaching Call – Remote Investor Incubator Student Round Up

https://youtu.be/WTOCBP-GU_Q

What’s up everybody? This is episode 300. We’re going to be doing a little giveaway if you guys stay to the end of this, but where we’ve been in the past, what we started this podcast in 2016, and back then I was still buying little single family homes. Obviously, you know, I came in as an accredited investor and kind of left that world behind.

I think, investing in large multi-family apartments or other syndications where you’re a passive investor is the way to go because you’re turning your ordinary income to passive income, you’re getting a lot of passive activity losses with cost segregations bonus depreciation.

Pushing forward the cans down the road, leaving a world behind of 1031 exchanges, which I think are obsolete unless of course you’re having a gate of more than a few million dollars of capital gain depreciation, recapture. If it’s all garbled gibberish to you, go to simple passive cashflow.com/tax.

My little tax notes there, some of my old tax returns, a lot of good stuff there. We started the HUI pipeline club thus far and brought in over $140 million from folks like yourself, a billion dollars of assets under ownership. A lot of people getting started today are still under a hundred, $250 million.

We’re well over a billion dollars at this point, 7,800 units or so, and I just realized these large crowdfunding websites, which spend a lot of money or venture capital back so they can pay for customer acquisition. And we’ve raised like half of the amount that these large groups have been.

Lowly old me from 300 podcasts to go. It goes to show if you start something and you chip away at it I can grow this something big, especially when the mission is to get you, the high paid working professional out of the day job. And it’s finally taken me 300 episodes to really get this formula down, but it’s a simple 1, 2, 3 step program.

First invest in deals where you’re going into value add. So you can get the passive activity losses. So then you can play these tax games that the wealthy do. And thirdly, infinite banking. And I always say, thirdly, because some of you guys have lower net worth out there. Geek out on infinite banking or even if you’re above one to $2 million net worth, a lot of you guys will geek out on that and spend too much time and we have the free infinite banking e-course if you guys want to check that out at simplepassivecashflow.com/banking.

You guys can get free access that takes a couple, two or three hours from are all about infinite banking. As opposed to just listing a bunch of podcasts and hearing it, the marketing pitch from the life insurance guy, learn about the pros and cons. That’s been my thought process from the beginning. There’s so much noise out there. IRA, self-directed IRAs, solo 401k, all these things, when you keep things simple and it’s geared towards the high paid working professional things are very simple.

Now, along the road, right? We teach you guys that, paying on your house, paying down your debt. The best part about this stuff may not be the right decision to buy your primary residence. To me, in my opinion, some people will call me crazy for this. I don’t think you should buy your primary residence until your net worth is two to three times that of the house.

Therefore, if you’re in your thirties or forties buying a $600,000 house, I don’t think you should be buying a house until your net worth is like a million half, $2 million net worth, which I know it ain’t, if you’re buying a $600,000 house, now, maybe I’m just getting old 36 today going on 37 and I feel part of this was to give back.

So on today’s podcast, you’re going to be hearing a coaching call for a program that I used to do that we don’t do anymore, which is called the incubator. The incubator was meant for lower net worth folks under quarter million, half a million dollars to buy their first single family of all remote turnkey rental.

That is how I got started, back in 2009, I bought a bunch of rentals in Seattle, and then I went out of state for cashflow. I bought 11 of those rental properties and realized there was a total pain in the butt to manage. And all your returns go away. It looks great on paper, but all the returns go away and the headaches magnify themselves, but tenants move out.

You got a big cap ex tidal wave. If you’re out there having a couple of rental properties or even eight plus rental properties, at some point that cap ex is going to get you and you’re going to have, an eviction here, there and, a small fraction of those evictions is going to end up into a five $20,000 repair billing, or you’re wondering why, like, why are we doing this again?

Don’t take those pro formas for those turnkey guys, they’re just trying to sell this stuff guys. But anyway, how do you educate yourself? We did this incubator. We have the remote investor e-course and we have the incubator. So for the people listening to this you’re going to get a sample of this at the end, but if you want to email us at team@implepassivecashflow.com subject line 300, we’ll hook you up with it.

But you gotta be part of the investor club to do that. Go to simplepassivecasual.com/club and join our database right there. That’s how you get all the pool insiders. And part of the bonus for this episode 300, put that in the subject line. We’ll hook you up with that because we’re moving off of buying little rental properties and moving more to the accredited investor stuff, which our curriculum and ecourse

syndication course for passive LP partners, how do you do your best due diligence? Whereas the incubator and investor force is more like what’s in the black box, right? How do you go buy a remote rental source or property manager or get a lender or do all this pain in the bud stuff? Which I feel is the foundation.

So not to alienate the accredited investors who are like, yeah, screw that stuff. And I would probably agree. That’s no way to build less lasting legacy wealth when your net worth goes over a billion dollars or you’re making more than a hundred, hundred $50,000 a year. Buying little rental properties is a waste of time, but it’s a great place to start.

So for some of you accredited investors, I think it’s a great idea. To go buy your kids a little rental property, let them mess it up, let them learn. That’s the way you learn. I think if we have some investors that will bring their kids into some syndication deals. I feel syndication deals make you dumb really fast.

It’s a great way to live a nice passive investor, simple passive cashflow lifestyle. But if you’re trying to pass off the wealth, which is really the focus of a lot of us, who’ve found financial freedom and are funded in such a way where, you know, in five to 10 years, if you’re doing it the right way, stop doing all the 401k nonsense.

Stop paying down your debt in your house. You can get financial freedom in under a decade. Some even less than five years, if your net worth is already 1.5, $2 million net worth. So you focus on what’s the next generation so section planning. To me, my kids aren’t this old, but the best way to have them is to own a little rental property.

Now at the last mastermind retreat, I joked around with a lot of people who were two or $3 million net worth. Even buying a little rental property for them is a complete waste of time. Yes. You want the kids to learn about this type of stuff, but maybe you just lie to them and you buy them a fake rental property and you ask them, Hey, Jr. The refrigerator broke. What do you want to do? Do you want to fix it? Or, your tenant might move out? And people joked and laughed that yeah. It’ll be easy to make this stuff. I’ll just look up the stuff from my property manager, all the emails, all the garbage BS that came from there, all the drama that happened.

And then the funny joke at the end, when the kid gets 16 or 21, you reveal that, Hey man, I just made it all up. But you learned something about this. But this is what the incubator is. So if you’re already in the club and especially if you’re an investor with us currently, we definitely want to hook you up with the incubator concept, which really doesn’t help you and doesn’t pertain anything to a passive investor.

Even though there is a little bit of a carryover, we want your kids to go through it, right? We’re big on education for the next generation because who cares? If you have $5- $6 million net worth, you put it all into infinite banking and the kids take it over.

We all know it’s going to happen. They’re just gonna do cocaine. I forget the verbiage, somebody, I think it’s a warm buffet thing, but you want to give them enough money to be comfortable, but not enough to do nothing. I might be butchering that for a little bit, but.

You’ll get a sense of what this incubator content is. Again, for the lower net worth guys getting started in today’s podcasts with Marianne is going to help me ask the questions. This is probably like 5% of the whole incubator course. It’s like about 20 hours, but that’s the free gift.

And that’s the mission behind simple passive cashflow, right? I am working as an engineer. There’s not a day that goes by that I’m super grateful for starting this podcast, which allowed me to start the family office ohana mastermind, which kind of replaced my W2 engineering salary for me to do something that I enjoyed.

And, I want to continue to grow that group in the future. If you guys are, a million, $2 million plus, and you get it. You want to invest in deals, but you need that network around you. You can’t go to the local real estate club. You can’t go to all this online free garbage stuff, because they’re just a bunch of freeloaders there and marketers and sharks out there.

I created the family office ohana mastermind now with almost a hundred members. Learn more simple passive cashflow.com/journey, or send a team@simplepassivecashflow.com an email. We’ll get somebody on our staff to tell you what it’s all about, but that’s where we’re heading off into the future, deals and I like this consulting route, right? To me, there’s no better way of impacting people. And for me, I don’t really like to help the masses. I like to help people that I know. That’s just the way that I’ve felt to give back. I like to know the people who I’m helping and it’s a smaller community there.

Again, go to simple passive cashflow.com/journey. The incubator is up for grabs for a very limited time email, subject line 300. That’s the secret code for the team to hook you up with it, but you gotta be part of the club, simplepassivecashflow.com/club. And thank you for listening to 300 of the episodes.

If there’s any feedback or anything you guys want to see in the future, please let us know. Thank you for allowing me to quit my day job. If not, I’d probably be out there waking up at 6:00 AM for some boring job briefing and that I don’t want to go and regurgitating the company jargon of, safety first or safety second, whatever it is.

But again, thank you everybody. Here’s to another a hundred episodes and looking forward to meeting as many as your person as we open up in 2022 beyond.

Hello, incubator students. So we have an old student Marianne here who went through the incubator course. So please go through all the past videos before you watch this video, because it’s meant to round out all the remaining questions and fill the gaps. But thanks for jumping on Marianne.

And hopefully this discussion helps give me more insight and hopefully I answered all these questions. Sure. Maybe I didn’t like, understand or needed just some clarification. Yeah. And that’s why we do this right in this format, as opposed to writing down answers and a horrible typer.

And I was never good at English. So it’s always better to talk through the answers because a lot of these are more, answers in the gray and stuff like. So the first one here is one of our associations, these are rental properties. Is this charged back to the tenant or can it be tax deductible if it’s a short term rental?

So let’s just take out the fact that we’re talking about short term or long term. I don’t think it matters either way, but it’s two things here. So they’ll almost all owner association fees for the most part. You can do it either way. It’s just some people decide that they want to charge the tenants.

I think some of us who’ve lived in apartments or houses or in college, it was all over the place so very similar. But most times the tenant is just in charge of one thing, especially in B & C class stuff because dude, you don’t want to give these guys responsibility to do another thing.

And ultimately you’re the one holding the bag or interest fees racking up. So if you gotta make it easier for them so they just paid one thing, which means they’re typically reimbursed for utilities or these homeowners association fees. And then the other question is is it tax deductible? Yeah, sure it is necessary and ordinary for your business.

I guess I’ll let you ask the questions here. So actually that was for number one. So number two, in this section, within the turnkey, a course on what markets do I invest in? Like in the course material, how often are the top markets updated? Is it annually? Because it’s due to the MSA data. They’re not really updated.

I just cut and pasted this thing right here. And it’s supposed to be just guidelines that these are the types of markets. You’ll probably never see California, New York, Boston, Hawaii, Seattle here. All right. These are all secondary and tertiary markets, if you’re looking for the top 10, this is the clickbait type of stuff that maybe I would be the one thing I would be on the lookout for what markets to invest in.

The one thing I would caution people about is to stay away from those very small markets like Boise, right? He’s making a lot of headlights now, but it’s only a quarter of a million people. It’s under that. I wouldn’t invest in anything less than half a million or certainly 300- 400,000 thousand population or less.

Okay. When you’re talking those bigger medium, large size cities MSA now, like there’s not really much. For the most part. That’s exactly why you pick investing in Phoenix or Houston as their major markets. They don’t really around too much. I would group B&C questions together.

Can we correlate a short-term or vacation rental kind of market with Regular turnkey market? So for instance, like Jacksonville, Tampa, Florida, and Arizona, would you say those are, I guess safer markets? Cause you could either go on vacation or turnkey.

To me, like the short term rentals is an entirely different business. It’s a very, and I say that, it’s a seal, like people are living in your box, right? So from that respect, I think that’s where you can say it’s the same, but the way I look at it, it’s very different because the clientele that you serve is very different.

Term rentals are more discretionary it’s people on vacation. Just something like, just to prove my point, like very similarly, like a mobile home park. Is for like class D class C type of tenants, but then you have RV parks, same structure, but two very different clientele RV parks are more for the families that like to travel.

And they like to go to the parks and on vacation, like two very different clienteles. I just don’t even like to intermingle . Like that. I think you got a good idea there, right? And you’re like, oh wow. If Jacksonville is a place where it’s traditionally been a great secondary market, with a lot of long-term rental short with long term rental market, and people happen to travel up the panhandle up to Florida, to go on vacation because they can’t afford to go to Disneyland or go to international travel. And that’s where. Those types of short term rentals come in. But I guess I was just thinking more of an exit strategy if I need any in future.

Would it be an easier exit, but that was my thought. Oh, okay. Yeah. But the problem is like if you’re buying a class B house it is a piece of crap. In terms of short-term rental vacationer standards. You say you’re looking to get a long-term rental and then sell it retail to some sophisticated Airbnb owner.

Is that kinda the idea? If we have to exit, for instance, like the pandemic light turns different or at least at the beginning of the pandemic, we are unsure. And this was the other way around like short term people are looking at long-term or maybe, I don’t know, with, meaning futures.

Long-term going to short term. I don’t know, but just if I had to exit a turnkey, I was thinking if, having it somewhere that may be short term interest too, if that’s safer. Yeah, it’s just your run. Long-term rental, your class B rental. It ain’t going to be in a place where people are going to be vacationing.

And I think a lot of you guys in the incubator, it’s great ideas, but this is where you got to get some on the ground and actually go travel and want to go visit these properties because once you visit the stuff. Shit, that ain’t good. A good idea, right? It’s not dangerous, but nobody in their right mind would come and vacation there for a day or a week.

No way. It’s just not gonna happen. Yeah I don’t know if Seattle, right? It’s kinda like you traveled to Seattle. There’s no way in hell. You’re gonna go and get a short-term rental in Auburn, Kent or Renton, no way that’s not going to happen. Or where you’re out in the world.

You’re not going to go get an Airbnb in Baltimore, hell no. It’s the same thing. Or maybe those are bad examples or kind of extreme, but it’s what I’m saying, at the same time to your point, we never knew what was going to happen in the pandemic. Traditionally or especially in Florida, a lot of the people, they’re Airbnb shutdown, but around the summer times, those people were making a killing firefly with their short-term rentals because people couldn’t go to Disney world. They wanted to get the heck out of their houses. And you know how Florida people are right.

They’re anti-vax. They want to get out there. The only place they could go was to a little Airbnb in Jacksonville or on the coast. Who knows? But I think, separating the short-term long-term, it’s just two different clienteles, two different asset classes. Got it.

Thank you so much, Lane. Okay. I know you’re thinking. I like how you’re thinking too. You never know. Yeah. I was thinking more like airports and stuff too. But then again, how do we correlate the best real estate markets with the rise by sector? I guess as things expand off California and Seattle.

What cities are startups, starting to lay down their roots and are any of these new cities in the appreciation market or in those markets where we are, we should look at for short-term rental or long-term? So you’re thinking like the tech markets or any other things that are moving out of California or Seattle, right? Like where are these people going? Boise, I dunno where else they’re going. Analogy that people use is that the Bay Area was like a pressure cooker and it just spilled over, in probably the 2010s, it was spilling over into Seattle, Bellevue, Kirkland . And then in the last decade, also it spilled over to Salt Lake City, Phoenix.

And then with the pandemic, with the remote working where a lot of these tech companies said, you can go where the heck you guys want. Now it’s spilled over to these other or tertiary markets like Boise, people are coming to Hawaii here. Because they don’t, they have no need to go to an office anymore.

So they’re going all over the place. I’m not in tech, so I don’t know, but the traditionalist inside of me still feels like these people need to be physically located in a city hub. But every city is telling themselves that it has a little tech sector, Atlanta, even places like Birmingham, right?

Like it’s everywhere, right? Like the Delta variant it’s everywhere, it’s your fault. Okay, thank you, Lane. I asked specifically about Texas because in question E because my husband just moved to Texas this year, where would you recommend to invest in Texas? And does it depend on the year, like in your copy and paste above, you mentioned that’s pretty general, a year does not matter.

Yeah. Texas is on fire. You see all the stats every single month, the people will be from everywhere, especially California, pro economy, more of a red state, except for Austin, Texas. Everything is new out there and from a traffic engineer standpoint, like you can build roads how you want it.

Everything’s bigger in Texas. Traditionally this is as far back as like the early 2000s, they call it the Texas triangle. So that is Dallas, Houston, San Antonio. Anywhere in the Texas triangle, it’s just blowing up. That said, that has been the sentence for the last decade.

And now in the year 2021, it’s getting older, especially in Dallas. You have a lot of unsophisticated people just coming in. Oh, it’s really hard to buy even class C assets. It used to be, you could buy it for 40- 50 grand a unit. Now you’re over a hundred grand for some of that class C.

Texas is overplayed and you’re probably like five years, to be the first settler. But that said, all the fundamentals are still strong and people are, keep moving in. Rents are still going up. I guess if I’m reading your question, maybe it’s not as hot in Dallas, but maybe people are starting to look in Fort Worth more, which is the sister city of Dallas. They’re running off to Houston. Now, San Antonio was a little weak in the last handful of years, but now these things go up and down. But I don’t think you can go wrong anywhere on like the or other main interstates, even going out to the panhandle.

Okay. Thank you Lane for helping. Moving on to the next section on deal analysis is really just a comment on the deal analysis like excel on the analyzer, I was wondering if we should include some of the assumptions, 5% in some of the fields and then also like color code, like conditional format.

So see if I put in certain numbers that all were red. If it’s low, the trash will be looked at. So maybe I could work on that for you, Lane, if you want. Or I could just see for myself. Yeah. I think a lot of people out there want to go based on whether I want the spreadsheet to light up blue or different shades of green.

But things change all the time, right? Like when five years ago you’d be looking for properties at the 1.1%, rent the value threshold in a certain sub-market. Now, today that same market, you might be lucky to find rent to value ratios at 0.9%. So it’s a constantly moving target. And if you’ve seen that chart that I show sometimes of like general cap rates coming down, It ain’t getting better.

It’s just you did the infinite banking thing and they always change those things. The best time to do it was yesterday guys, and this is why in the incubator group, like we always have people. I always tell people I don’t know what lights up, the spreadsheet, red or green.

I say that facetiously because I’m like go out and go analyze 20, 50, a hundred properties. And you go tell me where the scatter chart tells you where the water line is on this type of stuff. Let’s see. Cool. The next one is more just on organizing the Google drive.

I think I put it here, should we put it as the suffix rather than the prefix? Because of some of the files, I was like where do I see? Where do I, how do I see the actual file? But that’s fine. It was just my comments on the origin or anything. Okay. Okay. What, like what fall are you trying to get access to Google drive files?

Yeah, but which one? Maybe I should email you the record. Cause I put these questions a while back and I forget what the deal analysis is. Sorry. Okay. I think so. I think all the, like the resources and files are just clumped in the share file, but if you go through the incubator course or the remote investor equal yeah.

The links are there in the order of progression. So let’s see, I caught it here. You didn’t go through the e-course. I know, like that’s how I would do it. I’m just like you, right? I’m like, all right let me just read stuff as I need it, not go through the freaking order and then let me download this big resource and just go do the research. Like you worked backwards. That’s how I would do it too. But that’s why you have enough problems. Okay. Thank you.

Yeah. It’s pretty typical of folks in our group, right? That’s why you’re doing what you’re doing.

So doesn’t that eel hold the same weight as cash on cash or ROI, is NOI, does it hold the same weight and why. Cash on cash. I’ve never heard of net yield, talked about two months, but cash on cash is a very common one. It’s a cash and cost is based on how much money you have if your down payment and then how much ROI getting on it.

NOI is how much money you’re making. You’re profiting. So income minus expenses, not including any of your debt service. Because some people won’t use any debt, which is silly to me. Some people will use 70%. Some people use 80%. So in terms of people comparing their investments, they throw all that stuff out the window and just compare the net operating income on a deal.

But as an investor, when you’re looking at your portfolio you have three or four properties. Something I suggest investors do every year is prune off the property, one out of the bunch. So the way you’re doing this is you’re just comparing yourself. You just, you’re just in competition with yourself or your properties or competition that gets each other.

So you want to figure out what your return on equity is. So part of that analysis is your cash and cash return. Okay? Yes. I think that makes sense. ‘ cause I sometimes am emotional about stuff. I buy mine, looking at it through this analysis. This helps me prune, yeah. The resource for that is simplepassivecashflow.com/roe.

There’s a spreadsheet in there where you put all your properties and then you put in like how much equity the schools or deployable equity you have in there. So basically. You have how much property you’re profiting. You are divided by how much deployable equity and that’s your return on equity.

And then it compares all your properties. And for most people that they do this especially the ones that have done it the traditional way, where they try and fail debt, which doesn’t take advantage of all the inflation that’s happening. Now, you get killed by hanging off.

Now that you’re like, oh shoot, I have this one a hundred percent paid off, even though I’m cash a lot. And it is, it might be a great rental in my portfolio. This is my dead weight right here. This is what I should probably sell refinanced. We keep on first. And that’s what it helps. Helps you make that decision.

Okay. Thank you then. I think they are kind of related too, so cat rave, so let’s talk about cat rate. Any, should we only show, talk about cat rate when it’s all cash, since it’s the ratio of net operating income to property value. So if I bought a house at 70 and like the NOI seven, that brings me to a clean cap of 10, right? Or no? So cap rate is typically used in commercial real estate. When you’re buying little rental properties, it really doesn’t. People like to use it to sound cool, but it’s really, to me, not the place or that type of usage of the word, in a single-family home, we mainly discuss in terms of cash on cash return or return on equity, which is more just in competition with your old self.

But when you’re trying to compare all the investors, like comparing each other’s stuff, Ooh, I’m getting cash on cash return. That’s how you typically talk in terms of things. When you find an investor and they stay alive, operating on us for cat five cat, they usually there it’s like one of those people that they want to sound cool, but they really only look like a douche because.

Terms correctly. Cap rates are mostly for the commercial world because as I cut and paste this in here, cap rates are severely overestimated. In most cases, especially by brokers, sellers, and syndicators. And your guy who likes to brag about his one rental property, being a seven or 15 cap, I don’t really pay much attention to.

The reason why is because typically what’s going on or expenses are always left out or income is slated and that’s what dictates your cap. So when you have bad data, you might as well just throw the dang thing out. So it’s like a top of line calculation. They’re always manipulated, and this can throw your cap plus or minus 2%, right?

So an example is a broker will be like, oh, we got it. We got a fifth, 12 cap. First of all, when I see that stuff, I know I’m working with just a douchebag broker, right? Another one of these yo-yos. And I want to work with a broker that shows me numbers and actually is not going to just try and trick me.

But ridiculous stuff with, oh, we’re working on a seven chapter eight cap, right? The reason why is because they’re just manipulating, they’re just manipulating, but either income or expenses. And one common way is maybe they don’t show the property manager, the owner is doing the property management themselves.

So they’re saving several thousand dollars with property management. But when I take over the property, you take over the property, we’re going to need it. So that nine chap property goes down to a six, five cat property overnight. That’s why I threw the dang thing up, because it all depends on how the seller has manipulated it. Their profit and loss statement. That makes sense.

So it’s what do you want, what cap rate do you want to see? That’s why all brokers know that they have a sucker, a buyer like, oh, Marianne, what a cap rate are you looking for? Eight and a half. All right. Let me just change this number here. Like it’s, if you don’t know the difference.

All right. Here’s the eight cap. Oh, you like it? That’s good. That’s exactly what you want. Okay. When you’re working with institutional brokers, larger deals where they don’t jerk around. They sell things as they are. Yeah. You still have to be, do your due diligence. And you’re playing a detective to get the cap rate.

You have less of this nonsense. But with single-family homes, anything under 60 minutes, this is going to be very positive and it was just why I don’t even look at the cat. Mind blowing. Thanks Lane. Appreciate it. Case study, I have not submitted what he said yet because my husband and I are looking at an investment in Houston or attempting Houston, but the TKI.

I think in Houston,Texas, they mentioned that they’re out of inventory. So they’re supposed to send the inventory list this month. Yeah. Which may or may not be good. Because they have so many clients, sucker investors. There’s so many people now that after the start of the pandemic have rushed into buying turnkey rentals.

That’s one of the reasons why we paused on the whole incubator program because. I’ve moved off to syndications and private placements. And like the turnkey world is always just always changing people come in, they come out the good ones. If they’re smart, they go to more retail products and they don’t mess with cheapskate investors.

Which is hard, right? Like the people that people always talk about on the forums, those are the people just gouging people on prices because they built up a track record. And the sponsored group has happened. But I dunno, I figure out what the property is worth, that you’re actually paying for, not the price that you’re paying, gonna use your deal analyzer for that.

So thank you. You have to figure out the comparable sales, right? You get to do that yourself. And unfortunately that’s why I don’t like residential real estate because the price is dictated and comparable sales have nothing to do with the number. So when you’re buying a duplex triplex spot, it shouldn’t go based on the numbers.

It should get the price dictated on comparable sales. Oh, he understood. I was wondering in terms of the financing, do you know if you like for duplex turnkeys, if we should even look at FPG loans, yeah. Because if he’s based in one of the units, can I try to receive, we could qualify for FPG.

Yeah. You have to be owner occupied and you have to be owner occupied to get that stuff. I’m not super familiar with the FHA. And this is where you talk with your lender because the rules kind of change. But my understanding is that for the FHA stuff you have to live there for sure. On the Fannie and Freddie loans, you don’t have to be living there to be not more occupied, but you gotta come with a full 20% down payment and you’re going to have to pay maybe half a point higher than what you would have otherwise, if it was occupied.

But I don’t know. If you guys are accredited investors, to me, it’s a freaking waste of time. What do you do? You do all this work, you do the inspection you buy, especially when you buy it over market price, because you’re surrounded by a bunch of unsophisticated turnkey buyers that just listen to a bunch of podcasts and you’re overpaying by 10 20 grand plus, it all you’re going to have at the end of the day is going to be underwater and you’re going to be making what, $200 a cashflow a month.

For younger people, That’s cool. What if your net worth is half a million or your credit investor then? In Hawaii, we call that full whole. It’s not worth it. It’s PETA. Okay. Thanks. Even what the E I D and I think they’ll lower is the FHA we can get in with. And what’s the look at the ROI, the cash on cash, because my down payment is so low.

I’m making, I’m just making this up 30% of my money, 40% of my money just in cash, because I only have $10,000 down. But how much are you really making at the end of the day for that level of effort? I don’t know. And then I, especially for accredited investors, You’re going to be living amongst your tenants.

This is not cool for married people, in my opinion, but I’m not, this is a lifestyle that doesn’t listen to me. And if I wasn’t a credit investor, I’d want to live somewhere. Cool. Instead of just a turnkey rental, with LVT flooring and indestructible countertops, I’d rather.

Living in a nice, luxurious apartment. I think seeing me as my husband, he likes apartment living too, so yeah, but we’ll look and see. Yeah, but I get it right. Like the FHA is, that’s the law, right? You think you’re coming in with 5% down and the wheels in your head or? Ooh, that’s a great ROI, but is it really?

Move the needle. And at what point, especially as a credit investor, you start to realize I’m going to get financial freedom very quickly in the next five years. If you’re already a credit investor, why am I doing silly things like moving in next to my tenants? For some of you guys deserve to start living it up already.

Nobody ever tells you that, everybody wants you to like, don’t find latte living under your means. Save. Because of that, I don’t know. I think it’s one of those things where if you had parents like mine or you probably are the same, you were rewarded by being very frugal.

Yeah. And I guess. At work, if you do well, you get rewarded with more work. So yeah. All messed up. Is that, huh? Yeah. Anyways. Yeah. I guess I was along the same lines as while we already went through. It’s 10% down, not five but 10, but no PMI and sturdy. So we were looking at that too.

That, yeah, we’ll go through that. Yeah. I don’t know all these companies there’s or there’s a bunch of these guys there for the most part, I would, they make it really easy to apply, which is nice, but I think you have to be careful that bait and switch, especially if it’s not owner occupied and you have to massage your debt to income ratios in your power profile.

They, these guys spend a bunch on ads and they get you guys to apply via their app. They’re typically I don’t think they have as good pricing for the most part. A lot of times this thing. Okay. I guess you’re 2021, for all the listeners. What is the average rate for the third year?

For now, I don’t know. I have no idea. Maybe for non-owner occupied, maybe 4% to 6%. Okay. Yeah. What I would do is if you walk into any bank and you look at the really low rights for owner occupied offices, and I think that what does that three and a half percent right now? Yeah. That’s never nobody ever gets that.

It’s what it seems like. So it’s that, it’s more like for, so what I’ll do is go plus a half a point because it’s not occupied the beat four and a half.

Do you recommend using HELOC or non-recourse asset based loans to like funds to? why not? Do you need to figure out your level of risks that you want to take part in? You want to ask me five, 10 years ago. If I felt comfortable with people getting lots of leverage on top of their leverage, using the HELOC for down payments and more properties, I would have felt uncomfortable with that personally.

But today I guess I’ve been desensitized to it and I’m like if you’re buying cash flowing assets, I’ll bad Kennedy. Go ahead and do it, right? Yeah. But most more, most people have just lazy equity, nothing Jack. So I’d like to get that working first, before you start to get key locks and stuff like that, going to the non-recourse asset based loan. They sound foolish and the lenders make great fees on this, which is why they always push the stuff, especially like the all-in-one loans and the portfolio loans.

But the Thies suck on boats and their leisurely higher rates. Do you want it? You want to exhaust your Fannie Mae, Freddie Mac volts first all the time. And this is like where the lenders are, they’re not your friend. Make no mistake. They’re not your friend. They’re always going to like it. As soon as they start to see your borrower profile become a little bit squirrely.

They’re going to look for the easy way out, just like we talked about like tax professionals, right? They always want to do things the easy way. So once you, once they start to say, oh, your debt to income ratio is anywhere from 60 to 45. I don’t know. I’m just making this up, but oh, Hey Maryanne, maybe you should do a non-recourse asset-based loan, a portfolio loan, think for yourself.

Understand the pros and cons of going down that to me, if you have a clean borrower profile and you have good debt to income ratio, Do you use the Fannie Mae Freddie Mac loans, but for some of you guys out there who have California rentals and a lot of equity that mess up your debt to income ratio, because it’s not a good purchase and a, not a good loan, then you pop, you might not fall find, you may have to go down this non-recourse asset based loan, but then again, if you have several hundred thousand dollars of equity in your California rental, you shouldn’t be investing in little rental properties.It’s probably a accredited.

Great. That makes sense. I don’t know. I, yeah, it depends where you are and like your profile. So yeah, some options out there but yeah. Do your own analysis. Got it. Hard money. So it says for instance, if you did use hard money, would you recommend paying off, paying it off quickly instead of refinancing because of all of these?

Why are you using hard money on these types of properties? Paint the scenario that you do make this with. I dunno, for. I don’t know for someone who may not qualify for a traditional, I don’t know if anyone would use hard money, but I’m not sure. Yeah. Let me give one example and then if you can think of another let me know.

So I would think the only reason why you’re trying to use hard money to go after a deal, if you’re buying that deal, is because you’re stressed and you need to close on it quickly, or. Maybe it is a turnkey and it’s a highly competitive environment. You’ve got to go in with a stronger offer, which I would say totally buy the damn property in the first place.

Everybody is heavy going off of it. You’re buying it over price period. Don’t do it. It’s not it’s not like an LP feels like, oh we’re having a $50,000 position, but because everybody. I Want it now, it’s $60,000. It doesn’t happen in the world. But that would be the only reason why you’d want to use hard money.

And this is we get into the realm of the people doing that BRRR strategy that buy, rent, rehab, refinance, you’re an accredited investor to me. This is just Childsplay. Just don’t waste your time doing this stuff, unless you’d like to feel like you’re making a lot of money and feel like you’re forced.

That’d be the only reason why you do the hard money. But that’s up to you, right? Like how do you want to run your finances? Do you want to use Ash or would you rather use a hilar or use a hard money loan and keep the cash on the side? It’s always having dry powder. It’s up to you. Is there any circumstance where you can think where you’d have to use hard money to go after a deal?

Oh, indeed. You want to go heavy, right? Because all the books tell you, if you go on hard money, you can get a 5% discount, which doesn’t happen. That was like 1998 or something like that. It was not really real, especially when you’re buying retail type of products like turnkeys, and I can get no discount with that.You’re already buying it overpriced. Okay. Good to know.

Cash reserves. So like in case of vacancies, I don’t know, like what, how would you recommend whether present teacher number, like in order to handle the loan payments? I, what kind of cash reserves we should have, like a total portfolio in case of emergencies, if we’re doing that.

Okay. This is totally up to your personality, too. Some people believe the Corona virus is real. Some people aren’t right. Like it, people, it’s all based on where your personal head space is at. If you want, the bank, where they’re called, smart money or just conservative to criminal we’re conservative.

They typically want anywhere from three to six months of principal, interest taxes and insurance. So on a little rental property where your mortgage is 500 bucks, they’re wanting what? 1500, three grand. So we can use that as a starting point. How does that sound to you? Is that, are you, would you like more, which you can, what is your personal comfort level?

I guess I would say that class time is six. Okay. And this is where it’s up to your personal comfort level. Like I would say in my experience what’s the worst that can happen. A tenant messes up your property and now you have to pay $20,000 to get the thing back online. There should be other places you should be able to take cash from, to pay for some very low chance of something. But high-impact things like that. What’s going to happen? 80% of the time is maybe a tenant moves out and maybe your property goes vacant for a handful of months and you might have to fix something.

So that might be, you gotta pay your debt service for a few months. So 1500, maybe you gotta pay to put in a thousand dollars of repairs. So two to $3,000 is you’re going to be your key in most cases. So I would tell people like, we’ll have at least. It is dry powder, but then it also has to do with your personal cash flow levels.

Like we just had in our mastermind group, a guy who makes eight or nets $8,000 he puts that away every month. Old Henry. And he, and I’m like dude, you’re fine. Like you can have a vacancy, every single month, several every month you’d be fine. So he needs less dry powder around.

And for a lot of people in our group, a lot of you guys are able to save two to three, $4,000 per month. So that should, you’re good. You can also keep some dry powder and like some IRAs, Roth IRAs or.

I’m not saying you should have $3,000 times six. I think that’s a little ridiculous. And then as you get more properties, right? I think your level of dollar per property goes down, because you’re reaching a more steady state. You’re more diversified, right? So it’s harder in the beginning.

And when your net worth is lower, which sucks. That’s what’s hard. I bought this whole wealth building thing. And at the beginning, it’s the hardest, but as your net worth grows, as you have more income, more cash flow from just your day job and you have more properties, your level of insurance goes down. And just to use an extreme example. If you had larger companies, they self-insure to a point.

Yeah, it’s called the trickle for me, because I use mint to track my net with. So when it drops, the cash side drops. I’m like, oh, I wish he was over here. But yeah, and this is like every situation is different. And what I would say for you, you’re more on the conservative side, but for every rental property.

Yeah. This is just me shooting from the hip. Don’t do exactly what I’m saying, because I just thought of it. I’m in it. But maybe knowing your personality, maybe I would get a few thousand dollars per property of cash reserves, but be able to pull a little bit from elsewhere. If you’re able to net three, $4,000 per month, you’re good right there.

And then the more properties you have. I would say maybe $1,500 per property. You start to work your way down that way. Yep. I agree. Probably on lending. What kind of lenders should we use to reuse those that are recommended by the provider? Or the turnkey provider or like on your preferred list, I don’t know if we need to like, try to scale to other states, if we should think about that and then yeah.

So the way the lending works is the lender, the lenders are a lot of the guys that we work with are licensed in multiple states, like life insurance, right? So those, the banking stuff that we do. The same guy gets licensed in multiple states. That’s all it is. That’s it. And the loans that were getting Fannie Mae Freddie Mac for the most part are federal programs.

It doesn’t really matter what state you’re in. So what I would say in terms of the lender, right? There’s two parts of the lender, the broker, right? The sales guy, the guys who tell you all this stuff that they can do. You’re trying to, that’s why you work with referrals, right?

Because these guys are not just the stupid salesman that tell you one thing, but then the underwriter in the back room tells them they can’t do it. And now you’re stuck. And then the general rule of thumb is you don’t go to a large bank because typically those people are, might be great at working with owner occupied stuff in the state that you live in.

But this non-owner occupied stuff is a little different to them. And I would just not interest those types of people to do it. I would look for people who do own or non owner occupied and rowboat rental property. As their primary business. Okay. Reps, I guess if someone is like 35 to become an inspector with that country threat status doodle property inspector.

Yeah. If you’re a real estate agent, you can inspect properties for gazillion hours a year. Play a real estate agent for a gazillion hours a year. But if you’re not actively participating in your personal portfolio, it doesn’t count. I see. And this is where I’m a little fuzzy and of course, none of this is financial advice or tax advice.

Go find a CPA. That’s going to sign off on this stuff first. But of course, I always tell you guys to get educated on this stuff and know the nuances. So if you can go and play a little intellectual jiu-jitsu with your CPA. So they just don’t do it the easy way until you know what. To me, if you need to have some active participation in your portfolio.

Now, if you’re an inspector, really how much you can’t hit 750 hours inspecting your property is not going to happen man. Okay. So no, but you need to say but how can I? Interesting. Good question. So that’s a difference between yes, you’re doing real estate activities, but has nothing to do with your portfolio or passive portfolio that you’re operating.

All right. Insurance question on umbrella insurance. Currently, we plan not to have a car anymore. I was wondering, if we should still get an umbrella, neither of us are in high liability kind of professions. To me umbrellas, the first thing you get well before, you get property insurance on your properties.

But yeah, you get the umbrella before you get any LLCs, start spending money on that type of stuff. Okay. The umbrella is the one that everybody thinks is you’re driving in your car or you hit grandma, right? Yeah. Even if you don’t have a car, I would still get it. It’s so cheap, like probably a few hundred bucks. Just get it.

Yeah. Because it’s supposed to cover let’s just say the insurance doesn’t cut, jump in. Supposedly the umbrella is supposed to be your next layer before you rely on all these entities. But too often entities and all these others. Exotic trusts are sold before this. Hey, it’s you’ve got this armor on, put this stuff on. It’s like just the order where you put it in. Thank you. That helps a lot. And it’s cheap just to get it right. Yeah. Operating the property. So do you think for the turnkeys we would need to put in things like remote control thermostats or security systems and security cameras, or that depends whether it’s A, B or C type of finishing?

Yeah. You’re not going to put a Siri or Alexa thing in that property, class C they’ll probably just steal it or something like that. It sounds cool, but it’s just not the clientele. My style is like, you hire good people and you rely on their expertise as consultants.

And these are your property managers. You know, asked what they think about it. They’re going to give you the best opinion, because they’re set in the ground. They know the clientele, they know the area. But typically not the type of long-term rentals that we’re doing. Short-term rentals probably, but that’s a totally different business.

I’m just saying this, but I don’t want security cameras in there. I’m probably going to get sued or something like that for invasion of privacy or some nonsense like that. Okay. Exit strategy. If we can sell it back to the turnkey provider or should we? You could, they’ll buy it. That’s an option most times is they know that you’re an unsophisticated buyer who’s distressed. So they’re going to buy it for pennies on the dollars, just like the used car dealer.

And this is the thing, right? That the business model for a lot of these name brand turnkey companies is they’re buying a hundred thousand dollar property for 120. Now, if you come to them and you say, and enough, I don’t want this thing anymore. They’re probably going to fire for 75 and then sell it again to some sucker at 110 to 120 again. Okay. If we have a bad experience with a tenant and want to exit, do we change property managers instead of selling it?

That can possibly be a solution. I guess you got to figure out what the problem is, right? Is it your PM or is it just a tenant or maybe that property isn’t very good? And this is where you have to figure things out because everybody’s going to be blaming each other. So for example, the properties manager is going to say the turnkey company sucked because they didn’t fix all this stuff.

Or they’re going to blame the tenant, we have a horrible tenant. The tenant’s going to be blaming the property manager and that the property sucks and it’s all brokers, it’s just a constant finger-pointing game. So it’s your job. And it’s three employees that are dysfunctional. No, they couldn’t complain to you as the boss for all you guys aren’t there that are like managers of people, it’s just like the childish stuff you have to deal with.

Totally. You think that it’s going to be like a grownup adult and once the kid graduates and goes off to college, no one follows. But maybe there are still some problems. Like when we sell it on MLS, should we target retail or like investors bigger pockets, investors, or would you recommend for sale by owner?

I would sell it. If the tenant moves out then, what I would do is fix it up retail. You might spend 10 to $20,000 and then sell that thing to a local broker to sell to some retail owner, occupied buyer, hopefully thrilled with the motion to buy it and will overpay for what it really is. If you want to get rid of it.

What I would do is I would list it with a lot of discount brokers that will sell it with a tenant in place to a turnkey buyer. If you guys need a recommendation, you guys can shoot me an email. I can connect you with my guy who does that.

It’s kinda like a boat. You’re happy when you get in here, you can have here, when you hold a turnkey rental property, if you’re an accredited investor, like for those of you guys out there who are under half a million dollars net worth keep buying rentals, I always have to put it in because people cannot make that difference.

Understood. And would you ever recommend owner financing? Never. It’s like a unicorn. It never happens to these guys and don’t even fall for this stuff. The tenants, like when I left the property, I want to live there. Can we work out some deal, lease option, owner finance. Those are the reasons why these guys are living in class B&C rentals.

Their credit report is probably shot. They don’t follow through with things. This is not going to happen, guys. Just stop wasting your time and just sell it to retail or to a discount broker. It’s just like borrowing money. Lending money to you, like your brother-in-law or your sister-in-law is not going to get it back.

It’s just not going to happen. I think that’s right. Would you recommend selling to a family? Oh no. Heavens no. And the problem is like you might be in good faith that I’m selling the property. Like I wouldn’t, I’ve done it in the past where I sell properties to people I know.

And I always do. Hey, man. I’m just being honest here. Like I fix things up as they need to, but if something should break, I’m sorry. That’s just the risks you take on and so you need to have that discussion. To me. It’s not worth it. And then with the year of the house, be built into key decisions to exit strategy, not really houses.

It’s not like commercial assets, where there’s a definitive class A,B & C type of thing with ages when apartments in the 1970s are more like the class B minus type level or class A is getting into the 1980s, 1990s, houses there’s no age on the date for the most part.

The bad side of that is you can sink an infinite amount of money into a house too, in terms of repairs and upgrades, etcetera. But any other questions? Good question. Those were all I had as I went through the course, because it was so detailed and I guess answered most of my questions already. So thanks Lane. We’ll throw this into the remote investor eCourse for folks. Thanks, Marianne.

1.5M Accredited FOOM Member Coaching Call | 1031 Exchange/ Infinite banking / Goals

https://youtu.be/PLRjVNjSM4E

Hey simple passive cashflow listeners for another week in a row because you guys requested it so much. We are going to be doing another coaching call with yet another accredited investor. You guys seem to really like these and you guys also keep signing up to do more of ’em. If you guys wanna sign up then make yourself anonymous, make a fake name, change the story a little bit so that your coworker doesn’t know it’s you. When they’re also listening to the simple passive cashflow podcast, feel free to do so. Gotta do two things: you gotta be part of our free clubs, simple passive cashflow.com/club joined there.

So we know you’re a real person to get to know you a little bit better. And everybody in that club, make sure you guys sign up for the onboarding call, get a call with myself or somebody else on our team. And if you want to sign up for that free coaching call to be put on the podcast, send an email at the team@simplepassivecashflow.com and we’ll get you set up.

But before we get going again, I wanted to give you that opportunity to check out the free audiobook of my book, go to simplepassivecashflow.com/book. And also thanks for buying the book because we got an Amazon bestseller. And if there’s something else that you guys want me to cover on this podcast, or talk about, maybe we can do a feature, just ask anything or talk about any topics.

Let me know, send the email over team@simplepassivecashflow.com and we’ll try and get a handle for your guys. But yeah thanks for listening to the show and here we go.

Hey simple passive cashflow listeners. Today, we are doing a coaching call with Eric who has a net worth of a million and a half. He’s an accredited investor, and he has a bunch of rentals, but he’s looking to sell them off, go into syndications and private placements. So we’re gonna be talking a lot about how he built up that original portfolio.

He worked with a bunch of friends, a bunch of guys drinking beers, pulled the cash together and that’s how we got to accredited status. And then we’re going to talk a lot about options, 1031, that type of stuff. And a lot of good stuff here. So I think, a lot of you guys starting out, you guys are creeping over that million dollar stage.

This is going to be very perfect to a lot of you guys. All right, let’s welcome Eric who’s also a FOOM member . If you guys want to check out that group go to simplepassivecashflow.com/journey. A lot of high quality people in that group, but, yeah, go there to learn more. But yeah, Eric, thanks for jumping on.

Thanks for having me. Yeah. Once you give people a little context on how you got started a little bit like, how old you are, family structure, then how long ago did you get started to get to the point million and a half now? Yeah, sure. So I’m 33. I’m married. I have two kids under three, and we started out about five or six years ago getting into real estate.

Following college. I worked in oil and gas. My undergrad is related to oil and gas and kind of the business finance side. So I did that for a few years traveling a lot and jumped into renewable energy about five or six years ago. And have been doing that ever since as a project manager for utility wind and solar projects, but along the way we got away from the traditional personal finance stuff, IRA, SEP IRAs, Roth things like that.

I didn’t have any travel expenses like you in part of your career or any living expenses. I’m sorry. Cause I was living in hotels for the first four years out of school. So I was able to stockpile a decent amount of cash. Just didn’t know what to do with it, honestly on the road a lot started listening to podcasts, like a lot of people in their mid twenties, right?

Yeah. I’m 25. I bought my first little house just outside of Austin that we’re actually getting ready to sell. And when listening to podcasts, alternate investing kind of stuff, real estate really starts going down the rabbit hole of rental properties and I think that’s the way many do when you get on bigger pockets.

And that led to other podcasts over the next few years, but probably between. I dunno, 26 and 20. And now we have about 35 units in central Texas of rental properties, all small residential, one to four units. Some of those are probably A class that we’ve lived in around Austin. And some of those are your C class, Eight are B or eight are D, kind of fourplexes and duplexes.

That cashflow pretty well in an area near Fort Hood Killeen, which if you’re looking at it recently, it’s been growing a lot, over the past year or two, but, that’s where we thought we were going to go is rental properties and cashflow. That was going to be our way out to quit working if we wanted to, or as my wife and I, at that point in that late twenties got engaged and then married, that was our pathway that we thought we were going to go down.

I guess as I got older and a little smarter. Started talking with high net worth parents of my friends that I, we were hanging out with, maybe having a drink or whatever. And I realized that none of them own little dumpy houses in Killeen, Texas. They were investing in commercial funds and Large multifamily deals, new development subdivisions, things like that.

So started picking their brain a little bit on it. Like we’ve built up like a nice little portfolio. You think you’re hot stuff and then you find other people that do it very differently. And after a while you start to follow the breadcrumbs.

Yeah. Like you mentioned hot stuff, right? Like in my peer group, I was the guy buying rental properties, thinking I was doing well or whatever, but then you stretch your network a little bit and you realize there’s people your age that have already amassed quite a bit of wealth.

They get there in different ways and I just got my eyes open to the long-term game, not the running back and forth, checking on rehabs and dealing with tenant headaches and all that stuff and it wasn’t what I wanted. So over the past couple of years, we started looking for different ways and luckily a family friend got us in with a group out of Fort worth that does medical office spaces.

And that’s kinda how we got our start in a limited partner investing. And so in 2020, we started putting a little bit of money in probably I think 150,000. Some of that was with the group that I started with just buddies who were interested in the same thing, all, early thirties, good paying jobs, things like that.

We wanted to find a way to get our money to work for us. And then in 2021, we got fortunate with some good appreciation around Austin and sold one of our old primary houses that we had lived in for two out of the five. So no taxes to worry about and started refinancing a lot of our rental properties, just pulling out a decent amount of cash.

And I met Lane. I met you. I think we started talking about a deal in Houston at one point. And that’s where you met the mastermind group and enjoyed that. And since then, we’ve been diving all in. The unfortunate thing is that there are a lot of people who haven’t met any wealthy people.

You don’t know what you’re missing. And I think correct me if I’m wrong, but like you’re lucky enough to be in proximity to some wealthy people that you can see the other side. Is that correct? Yeah. I grew up in a working class kind of middle class, going to work. They advise me to go to school and get a job, get a high paying job that way, whether it’s a project manager, oil and gas.

That’s part of the reason I pursued oil and gas is because it’s typically high paying, but yeah, no one in my family was buying rental properties or looking to invest in apartment deals or whatever. A family friend that I think was a buddy I grew up with and his dad had been doing it in that kind of opened my eyes to it.

And then we got to go rub shoulders with some of his friends at weddings, this and that. And you really saw a different lifestyle from yeah. You know what my trajectory was with rentals and just, a couple hundred dollars here, a unit couple hundred dollars here, a unit first, putting in a hundred thousand and then doubling that in three or five years.

And then we’re just rolling the money over. So just to set the table for you guys on the podcast, we also put this up on the YouTube channel too. I think we have a playlist of all the past coaching calls because we have the personal financial sheet up here. So we’re going to talk through some of these numbers and this and these other charts.

And I think this is also available. And if you guys sign up for the clubs that will pass a cashflow.com/club, all of these get categorized in net worth. Cause we’ve done a bodily, it’s a couple of dozen of these so far, so you can see where you are, but Eric’s got a net worth of 1.5 million. So we’ll fit that in where it needs to go in the pecking order. So you guys can fit yourselves in, but again, network million, $1.5 million. So that’s what I call it, like where he is at this point in time. But the other point, anybody who’s like a physics major took physics. You guys know one in time and then velocity, the velocity ice I call it is which, what do you net at the end of every month?

So his assets or his monthly assets or income coming in here, I think your real estate stuff is about half or a little bit more than half than your day job stuff looks like. That’s moving in the right direction. That’s where you want to go. We had some people in the group where they make most of their money through the ordinary income route.

And that’s why you don’t want to have an app, right? Yeah. It’s been a long time coming. It always hasn’t been that way, but the last two or three years, it has, but granted, we also self manage these, so there’s no management fee. So I do have to devote some time to that. But luckily, To put systems in place and, dealing with good and bad contractors throughout the years.

Yeah. It’s starting to make it worthwhile, dammit. It’s working. All, all those threads that you had in your twenties, they didn’t believe you, but it’s working now. Your expenses are in control. I think this is what we talk about a lot, like in, in our kind of circle.

A lot of us got to this point and worked class. A lot of us are very frugal, but I tell guys like, Eric, Hey, lighten up a little bit, have some fun, things are gonna be okay. Very, so the control we’re pretty frugal. Our mortgage is $1,800 a month in Texas. We have relatively pretty cheap housing. For my job, I get paid mileage and I drive around 50,000 miles a year. So essentially I don’t have a car payment and my wife’s car, she uses it in her business. So it’s written off. So we don’t have a ton of expenses but we do like to travel. So we do have a little bit of fun, but once the kiddos are a little older, we’ll get back to that.

We’re going to get you into the exotic car hacking subgroup. I’m sure my wife would love that. I know which by the way guys, as I’m going through this course, now there’s ways you can hack cars. It’s based on the whole depreciation schedule, it hits the bottom and it pops up.

So the idea is you buy it at the right point. You hold on to it, as it pops up, you can actually own the car for free or make money possibly. But anyway, fun stuff but any net cash flow, you’re putting away quite a bit of money. It’s definitely six figures a year to put two investments in. I could do like three or four syndication deals a year, beautiful stuff.

Talk to us, you started to invest with your buddies, right? Like shortly after you got started, how did that all come about? How did you guys work that? After a few years of me talking about real estate and buying properties and probably headaches that came with that, I convinced three of my buddies that I went to school with in college with, to form an LLC, you start buying some rental properties.

In that Fort Hood area. And we bought a fourplex. A couple of duplexes realized I was the one doing all the grunt work, even though I was taking a small little fee to do it, but I got it. Do you structure that to compensate yourself for your time? Yeah, we just set it up as a member LLC.

And then I had a separate property management LLC, and we did a lease agreement to my LLC for 6% of the revenue of the rent. Oh, you were doing the property management, right? Yeah. So we’ve always self managed. We’ve never used a third party. Yeah. I’ve seen some people. If you have property management, you paid for property management, your role will be asset managers, maybe take a point. That’s fair.

Yes. That’s come up in the last or conversations cause even, that same group, some of the deals in 2020, we all went in. So we, a hundred thousand minimum each show is through and 25. And the idea was whether it’s the fourplex, a duplex, whatever we buy or a syndication, should there be some kind of fee because, I spend a decent amount of time reaching out to people or a decent lot of time dealing with property management stuff to find those opportunities for us.

So we’ve brought that up, but, honestly with the syndication part, it’s been, it hasn’t been too hard, you find a few good people and we’re trying to dip our toes in with the few of them and see which ones we like. And, in a few years, hopefully some deals go full cycle.

We’ll have those three to five syndicators that we can just keep rolling over the money with, with that group. So what percent of your current week, like where you’re actually on real rental properties directly, are through your buddies, LLC or personally alone? Yeah. So on the tab that you’re on, those are all just my wife and I.

There’s another tab that shows the partnership kind of market value, loan balance SENCF. What would you say just dollar wise equity do you have between just personally with buddies? So this one is, its market value is 580,000. So I own a quarter of that. Mostly personally, on your own vast majority.

Yeah. We bought a few and I really liked the model of having all of it, if I’m going to have to deal with it. And we talked about it and I think the better plan for that partnership was to just do syndications and try to get a little bit more money and spread it out that way.

Yeah. But that was cool. You got them involved, right? You got them the taste of blood and I think they’re hooked right. Two of the other guys they’re just kinda like I’ll send them stuff all the time and either they have the money or they don’t but one of the guys who ironically his dad was the one that kinda got us into syndications and helped us get our foot in the door where otherwise we probably would not have, he’s really taken it and run with it and made some connections of his own.

And he lives in the DFW area. So we get together a lot and he has some good connections. Yeah he’s actually brought some stuff to us to look at it. Not just me reaching out to people through podcasts or different networks. Yeah, that’s cool. Like helping those guys, your buddies out.

Good thing. So now we’re getting into the reasoning between why you’re transitioning. As most things like real estate go up in price, you’re paying down your mortgage and your return on equity goes down because your loan to value goes down. Maybe you talk to me about the epiphany of you kinda realizing this, what were the options to talk to that part of the story?

Yeah. As you can see there, my loan devalues, let’s just say 50- 60% on those things and a lot of that’s just trapped equity that it’s hard to get a line of credit on a rental properties, at least with a few that I’ve had, it’s have to really dig deep and look for it. So I haven’t had a ton of luck with that.

So I’ve just had to do a full refinance on ones that make sense. But aside from having the trapped equity in there that I think I could better utilize in a syndication, get a better return with, no headache, no liability, which is another thing that we’ve really thought about. It’s nice to be able to REFI these and pull out 50 or 60,000 every few years, but who knows when that may, maybe it goes the other way or maybe I ended up having a tenant slip and fall. Who knows?

So the idea is just that we’re getting away from this. Yeah, the joke in the group is, can you tell me any good freaking reason why you want to own rental properties directly? In the past, like inefficiency of equity, return equity here. Another thing that a lot of people will come to is they’re trying to get the equity out right.

Then they may still want to own the properties. So they look into these refinances, you’re still talking about recourse debt and another option that comes up is all in one loan. I would say stay away from those generally. That’s just what, that’s just what the lenders want you to do.

Cause that’s cha-ching in their pocket. But they know their options you can solve other than just getting out of the rental property owner. Yeah, no, I looked at those, I looked at a portfolio loan and a couple of the options didn’t seem too bad, but you and I talked in the group about the issue of what if I wanted to offload one property or, within that bundle, it would be a pain.

And then also on some of the leaders. Yeah. So what Eric’s talking about there is like, when these lenders make a loan with multiple properties, There’ll be a caveat where like you can’t, if you take one out the cell and you can’t do that, you have to unravel the entire loan, which is incredibly impractical.

This is why you need to actually meet people because you see a lot of these like crappy Facebook groups that are free. And then you just see like these vendors just poaching people and just writing comments here or there. And there’s no counter argument, that I’m seeing right now, or you don’t get the real, the cons of any.

See people, unsophisticated investors, just going through all these in one mode. So portfolio loans, they don’t realize this impracticality at this type of stuff. Yeah. That’s exactly right. The portfolio thing seemed good on paper from a high level initial conversation, several of the people I talked to said the points were high, so the fees to do it, the fees to unravel it.

So basically the reason for this is I’m going to have forever manage these properties. And over time it may make sense, but I just think the liability part is something I don’t want. I don’t want the headache, the lifestyle isn’t that great because I go out of town to work for work, and I constantly find myself running by a property to look at something or do something.

And just not a lifestyle, whereas if I sell them and let’s say I can pull out a million and a half by selling them over the next year to two. I think that’s a better use of the money for sure. You’re not a bigger pocket bro anymore. You have kids and responsibilities now.

Yeah. No more. I’m not cool doing burgers or anything right now. So let’s talk about the 1031 thing. Cause I think you can’t have recently come to this. You must be saying, went through this kind of talk to us the whole like option of 10 31. So that’s all about it. Talk to me. Yeah. So we have a property just south of Austin that we used to live in.

It’s a nice town home. The market’s going a little crazy here. And so we would be able to sell and probably pull up 200- 250,000 or take it out of that walk away from it. And I started freaking out about the capital gains. So 1031 immediately came to my head and I started thinking about it.

But then I started thinking about what property am I going to buy? What am I going to do? Raw land is a small apartment complex. That’s overpriced right now and another headache and its own. I talked to some people in the group and yeah. They pointed out something. I ha I didn’t even know, because up until last year or even this year, we didn’t have any suspended losses that you can deal with.

Once I actually learned how that works and what would really happen based on their experience doing the same thing, it opened my eyes to not having to do a 1031 and be under the gun to find a property in forty-five days, which good luck. And then. Yeah, if you think you can find a deal in 45 days, you’re the sucker that I want to sell to me.

And every, going back to different podcasts or different stories, the seller knows when you’re doing a 10 31, so they have all the leverage right away. Yeah, just after learning a little bit more about that, and maybe I know you have some articles on why not to do a 10 31, and I look those over, it just makes sense.

That if I’m going to go into syndication and I’m going to, and I have pals built up, why would I roll it into another dumpy property and then be in the same boat? Yeah, that’s really the game changer. So what Eric’s talking about is, as you guys know, one of the reasons why we can buy real estate, as we can deduct the price of the lack of the building improvement over 27 years with all these rentals.

So that’s cool. But it just takes freaking forever. But with syndications, if they do a cost segregation, you can deduct a third of the property improvement in the first year. This creates a boatload of cows, passive activity, losses that you don’t need to use. It just goes suspended. But those suspended, passive losses can we use when you finally sell these properties?

This is what I did back in 2017, when I still thought about seven rentals that year. I had a capital gain and you also get to include the depreciation recapture too. So you add those up. I had $200,000 of that, that I had to pay taxes on, but I had some, a hundred thousand dollars of passive losses that were suspended built up that are used to offset that which indicated Texas.

And which negated any reason for a 1031? Yeah. Did you know how much the 80 to 85 farm or something like? Did you see how many calls you have? We haven’t completed our 2020 return yet. So in 2020, probably won’t be I take that back. We did quite a few. We bought a lot of properties in 2020, cause some crazy deals are coming up, but a lot of them are remodeled.

So we did have some losses and our income phases this out over the 25,000 amount, you can take each. Yeah, a hundred hundred to $150,000, which is most people in our world. Yeah. Yeah. So the last, however many years I’ve been phased out of that. So just carrying those forward, but I don’t know off the top of my head.

But I do know in 2021, just based on the type of deals that we’re going in and the amount that we should be able to offset all of it. Yeah. So when you guys are looking to sell properties, you guys want to see how much passive activity losses you have suspended. This should be an 80 to 85 farm.

Don’t quote me on that, something like that. Your CPA should have that. And unfortunately that sometimes the CP doesn’t give that to you because when they don’t like to give it to you so that they know when you start asking for it, they know you’re shopping around for a new CPA, because there’s a lot of back and calculations that come on that form.

It’s a complicated sheet, but basically the right question to ask is how much suspended, passive activity loss. You have built up so you can offset your capital gains patient ratio with captures of what we sell. So what was your plan like? Like you kinda know that you’re not gonna do a 10 31, but like you still did you decide, like I’m going to sell two off this year or three off this year?

What was the rhythm or cadence to, yeah. Yeah. It’s just the way the market is. And I was doing the math just back at map and kind of that and realizing what the cashflow is on a couple of these properties that are, in that higher market value number, how many years it would take me to get to where I could if I just sold it on the return.

And then if I can just put that money back to work. In various things like that, it’s just, it was just dumb, to hang on to it and take, say 200 bucks a month or whatever. Yeah. It made sense in the beginning. But as your loan devalue went down as a property appreciating you got more equity.

Doesn’t make sense after a while. Yeah. And every time I refinance one, there’s five or 10,000 in fees. Which still lenders, they sweep it under the rug with a higher interest rate to make it a no fee, but they’re still paying for those friction costs. Yeah. So something like that, like you understand this pretty well and you’re able to make an educated guess on this, but like you right now, the game plan is to do the passive activity losses through bonus depreciation costs.

At some point in the next 2022 will be the last year that you get a hundred percent bonus depreciation and then it starts to step down a little bit for the next four years. I don’t think that this is going to be open for a while. They could extend it. They, I don’t think that they will is my guess, or I don’t know.

I just don’t think that sweet deals like this are going to stay open for me. That’s just the way I look at it. So something for you to think about, right? Like you gotta get it while the kids are good. So are you saying maybe liquidate now while the market is also red hot in this area and people are overpaying for everything and try to roll it into deals.

I’m not looking for him, like in terms of yeah, it’s a great time to sell right now. Seller’s market. I don’t, I try and personally, I don’t really try and have that sway what I would do. I look at it in terms of like tax offsetting the tax. Right now, when you go into a syndication and do a cost SEG, you’re getting a lot of bonus depreciation right now in 2022 and beyond, that’s going to be going down a little bit.

So you’re going to get less passive activity losses from these things in the beginning. So you need to keep that in the back of your head. What I would be doing if I wanted to sell these 1, 2, 3, 4, 5, like 12 properties, what I would be doing and be trying to do half this year and then the next year, and then maybe spill over.

I wouldn’t be assuming it was new to every year. No, because in two to three years, you’re not going to get as much passive losses from new deals. Like I would try to front load it. And this is where it makes it hard, right? Cause we don’t know what’s going to happen. We don’t know what Congress is going to extend the bonus appreciation thing.

We don’t know if they might, I don’t know. Who knows they might get better. And maybe you’ll be rewarded, but I don’t know, like this is where it’s just good to talk with people and understand how things it’s a fluid situation. The thing is it’s stagnant and you have to make the best call today.

Based on what is unknown known as in the future in terms of taxes. Yeah. And that’s what makes it so hard. It’s just not knowing. And I don’t want to kick myself in the foot for selling too early, too late, whatever. But yeah, but I think after a while you know what Congress will do, what things, what levers they do pull.

Like another great example. You don’t care about this. I don’t care about this now, but like the state tax, I think it’s low right now. I don’t really know exactly what it is because I don’t care. But like sometimes it floats to 20 plus million. Sometimes it’s infinite. Like it the boy goes up a doubt for that.

Just one thing, same thing with this stuff. I’m assuming bonus depreciation is the same phenomenon. Yeah. I think you’re right. It changes like what you’re talking about and you get different administrations and they’re trying to appeal to different groups. And do different things.

Like the whole land conservation easement thing. It’s a little bit difficult nowadays. There’ll be something else. And as empty people waiting to get full confidence in it, the window’s closing on you already or something like that. Yeah, yeah, I haven’t looked at those, but I know some of the people have, some of the other people and worked out pretty well for them.

But personally, I haven’t really dived into that. Yeah. Yeah. But what else? What else can we talk about here? Space, other sheets. The other sheets are pretty standard. This is just my personal tracker. And I added your summary because I liked it on the first page, this is just a tracker of things that we’ve gone in on that is also yours.

I actually don’t do this, I don’t know. I’m just, I don’t know. It’s kind of a conflict. Yeah. Honestly, it’s like a K-1 tracker and just seeing quickly, how much are we in this year? I may want to change it up a little bit and maybe add some information about the K-12 totals and different things.

Yeah. This one looks like you have like your passive losses and your returns all in the same thing. I keep mine separate, but however you want to do it. Yeah. I need to clean it up a little bit. Yeah. Hell of a lot better than working with a schedule a year, running out the properties. Yeah. Believe me. Cause I have to do this and tax season comes up and have to manage all that and fight taxes every year to pain. But yeah, on the properties, I think it’s just how to strategically offload those. That’s the, if it were me like me playing you’re just I would have mowed half of them this year and you’re going into deals right.

You’re picking it, the passive losses where you don’t help me. Your sales are getting passive losses. Of course, I think that goes without saying, but I would really try and get rid of the other half in the next couple of years, because at that point, the bonus you’re getting is going up, your windows going to close and getting the passive losses and then just to clean things up too.

Because it’s a pain. I still have two rentals. It’s not occupied, but it’s just out there such a pain. We were just on a vacation and I was dealing with things that were either distracting me or causing me to have to send some emails or make a few phone calls every day because of this not even work.

Yeah. What else do you want? One of the things I had written down, right now I work as a project manager, mostly real estate development is what I do just for a different product. We build wind and solar projects, and I have some friends that work in real estate development and they, I enjoy real estate quite a bit.

It’s fun for me, it’s engaging and challenging and all that stuff. So my question is, If you had a desire down the road to be a GP in some of these deals, aside from just being a key principle or, just bringing more money to the table, would it be advantageous to maybe switch careers, try to work for some of these developers?

Yes. I may take a pay hit initially, I’ve seen some of the bonuses that these guys get every now and then it’s pretty crazy on, maybe a new multi-family that sells. So do you. Do you think it would be wise to have all my investments in real estate that I’m hopefully relying on in five to seven years to really start being able, just to recycle and turn over, but also have my W2 in that world.

My goal is to move into that GP role in five to 10 years. Yeah. So it comes down to your goals. If an operator has a good track record, Like really, what the hell did they need you for? What do you do, and it comes down to the essence of what you do for the general partnership where you can either do several things.

You can find the deal, which ain’t going to happen. Talking to brokers, you’re not going to break people with yellow letters and find deals that just don’t work. What the grooves say, they want to sell you on $30,000 programs. It ain’t going to happen. Could it happen perhaps? That’s why these guys make the programs the way they are. So they go find a thousand suckers to run through brick walls and one or two of those guys make it like, it’s you who gave me it’s possible, but here’s where it’s I don’t know if that’d be a good use of your time. Because you make a pretty damn good salary as it is.

Yeah. And it’s a good industry to be in right now in general, signing on debt, being a key principle or putting money down on hard money. That’s another option, right? But you’d really need a net worth of over 3 million to make more sense to do that. And you’ll get there. They want to do that in the future.

Signing your name, on some loans could pick you up substantial money. You know what I mean? It’s essentially money, 30 to a hundred grand possibly. Just for doing that. But it’s all equity. The other things that generally. Get used in a general partnership if you are doing work right?

So are you putting in sweat equity and this possibly you might be able to do, but then you ask the question. If you’re investing with a reputable operator, they should have all these systems and teams in place. What the heck do they need you for? Like the only people that want sweat equity from people are people.

I haven’t got a track record together. And you’re not coming on the ground floor. And that kind of, maybe I put the question back at you. Are you coming? Are you okay? Working with somebody who was in startup mode that could very well flounder. If that’s the case, then you have a shot, but if you’re working with somebody reputable you don’t need cooks.

And the kid cooks more in the kitchen. Yeah. And that makes the concern that you would have to start at the bottom and either work your way up and then start over, or you have to go to a risky startup that you’re putting a lot of trust in. And, but let’s just go with that one, you’re like, all right. I like doing this stuff. It is fun to me. I like this cowboy type of attitude. I want to see what I can do. Then it comes down to. All right. Make sure you don’t sign on debt for number one. Hey, don’t put your whole family’s estate on the line, but is it, then you look at your salary, right?

Like what you’re doing right now, is it that hard? Is it worth you making three, four times this 10 years down the road? I don’t know. And then that, and then I, as your family office guy is going to ask you, amen. Which we’re going to get you the four and a half million dollars that kind of, that upended me off the finish line, I guess we’re going to get you there.

And, by the time you’re 45-50. Do you want more? Yeah. I dunno. Go into my current job and if I like it, I probably work 35- 40 hours a week. And then I have some weeks where honestly, there’s just not much going on. And I work from home, freedom to travel, work from vacation kind of thing.

Cush job, to be honest. So it is hard to leave. Maybe the better play there is just to roll with it and find ways to either increase my income in other ways. Maybe different businesses that my wife and I, since she’s really into that, starting those up and just keep rolling this money in offload these assets, that’ll free uptake.

Just the same, I don’t know, a million dollars. And just keep going and on good deals with good operators and then look up in five or 10 years and beat it at that mark. Yeah. And get to that mark. And you don’t need to go find operators. You can just do like an IUL type of product and put it into an incredibly brain dead mode and cash flow.

And I don’t know those, the reason why you got here is not because you have that attitude that you want to coast, but like you can coast. And I know it goes against everything. Everybody’s told you, everybody’s telling you, you need to work harder to get to the next person.

But like I’m telling you, you’re going to get to a point where it doesn’t matter if you have four and a half million dollars or $10 million net worth, it doesn’t matter. But I think that’s where the fulfillment piece comes in. Like maybe you can carve to start to think about this and what do you guys really want to do for the last 30 years, 40 years?

Yeah. And whenever we go out to dinner, my wife and I, and we were talking non-business even though we somehow circumvent back to that circle back to it, but yeah, exactly. Of course. And we find ourselves thinking about what we are doing all this for? Why are we dealing with rentals?

And, Starting a business to try and make a little money kind of thing. And it comes back to, we don’t need that 10 or $20 million net worth at the end. We just don’t want to have to worry about things, if we want to go to Europe for a couple of months and hang out, we can do that. And eventually our kids are gonna get older and move out and they’ll be fine.

So what are we going to do with our net worth in 10 or 15 years? I think the answer is yes. Whatever we want right or fulfills us at that time. Some guys have a 503C kind of thing they want to do or whatever, and maybe that’s down the road. But I think right now it’s just having options on the table and not being forced to like golden handcuffs and work for a W2.

And this is all uncharted territory. Most people spend their whole life to get to one and a half million dollars that they get there. And there, it’s game over already. They’re already old. It seems really morbid, but there really isn’t a life after you achieved that number that you’re looking for, which you’re already there for.

So you better start thinking about it. Yeah. You hit on it earlier. Relax, go enjoy yourself. Go by that Ford Raptor you want? Yeah, I did order something. Yeah. Very cool. Thanks. Enjoy it a little bit or otherwise, what’s it all worth and or why do it, why are we putting ourselves through second?

Heartache and stress sometimes if we’re not going to cut out, enjoy the fruits of your labor. Yeah. And you’ve got a couple of kids and from what I notice not notice, but statistically 90% of wealth needs the families right. In two to three generations. And maybe it’s because most of the time people are putting their pedals to bed, 50-60 years old, then they get to one and a half million dollars and they don’t have time to teach the next generation. The next generation has already gotten through the college educated system and they haven’t taught, how do they build wealth? You have an opportunity to actually teach the next generation because you have the bandwidth to do it.

Yeah. And that’s important to us, my wife, I mentioned she was a teacher and she realized after a few years in that system, after spending four years of school to go be a teacher, she was going to be working. Forever for $50,000 a year. It was crazy and no matter how good she was or not, she just worked, there was a lot of negativity with all the other teachers that she worked with about not liking their job.

And the older ones were burned out, just trying to get to that 20 year retirement mark. And it was kinda sad, honestly. I don’t want our kids to think, go to school to be a teacher because my grandma was a teacher who went to school to do something right. Yeah, you enjoy it, but also you can utilize it to build your own wealth, right?

Yeah. Maybe it’s maybe it’s like a thing of, like they say, you’re never in balance. You’re always out of balance. You’re just focusing on different time things at different periods. You already buckled down in your twenties and thirties. I’m getting this net worth thing.

Maybe take us a step back to a season in life where you focus on teaching the next generation, which you can always come back to. If you ever wanted to do that GP thing in the future, or make some kind of more lifestyle business or something that’s fun. And I think that’s what I’m getting at.

There’s everybody, there’s something that resonates with somebody like that you want to do, maybe you’d make a dog farm or something like that. I don’t know. Or like a farm. No honey company, I don’t know. There’s something that you’d like to do or like the wine tours or, yeah, no, that’s a pretty fun business.

We get to go right off drinking wine all over the place, so it’s not too bad. But yeah, there’s definitely things out there that I would just enjoy. They just don’t bring in the salary, down the road or not even down the road, but shortly I’ve, we’ve talked about just selling some of these properties.

A little bit of money and just leaving my job. Because I can always go back and work in renewable energy and do what I do. I don’t think I’ll have a problem with that. You can run hers from anywhere. Cause she has employees that kind of run it. She only works five or 10 hours a week and just takes the kids five, six years old and go spend six months overseas or whatever, and just hang out with them and enjoy that time.

I think we’ll be able to do it. Like you said, offloading some of these assets that we’ve worked hard to acquire to low cost spaces that we’ve gotten fortunate on appreciation and investing it wisely. Don’t just put it in your bank account. Do you have any models that have a net worth of four to 10 million that you feel have gotten it?

Because I don’t. And I think the people who are very visible are the people that are like those serial entrepreneurs that just keep going more and more. It’s the quiet people that kind of got off the freeway. Yeah, no. Like you said, the ones that you see are the loud ones that are making all the headlines or whatever, every now and then I’ll run across somebody, whether it’s a landowner that I deal with on a project who 56 years old made a few smart moves when they were younger.

And I’m trying to catch them in between fishing trips or vacations, and they’re just joined life. But the people we know. The people we buy these apartments from they’re typically in the 10, $20 million plus range. And they’re the one dying with the property on their deathbed. As they sign up for the paper.

What I’ve learned is I don’t want to be in that position. Yeah. It seems like a few of them, whenever we’re talking about who the sellers are, it’s a widow or widower and they’re just offloading it and, they, and they’ve worked to manage it on their own, painting walls or whatever they’re doing for the last week.

It’s always the widow, like the wife right back then. And that’s why my list is like, at some point. Stop investing at deals that just go completely passive, like an IUL product. Cause I empathize like they’re panicking, right? Their husband who ran the whole business, the real estate apartment is gone.

They’re just confused. You don’t know what to do. Because they’re rich, but they can’t get it out. They don’t know what to do. Yeah. That’s a scary thing. Yeah, no. Yeah. Yeah. Aside from really getting in the weeds on financials and everything. We like podcasts that talk more about philosophical things and banking and books over kind of stoicism and things like that.

Cause it kinda opens your eyes to there’s more than just trying to just continually make money for whatever reason. You don’t know why, but you’re just trying to increase your bank account. So yeah, you don’t want to be at the end of your life and thinking about it. I wish I had gotten to 50 million instead of my 40 million, But that’s where it’s hard because since I’ve been 18 working all the time the goal is to get there.

And then when you start getting on this cruise control, like we were talking about it the other day is things are easy right now, honestly, we’re rolling into apartment deals and yes, none of them have gone full cycle yet, but I have faith in the people that we’ve given the money to, that they will.

And jobs are going well. We go on vacations when we want to. So things are going pretty smooth. It’s nice. Yeah. Cool. Any other last pondering questions you want to talk about? Or a good, no, I wrote some stuff down, but I think we covered it, yeah. Just thinking about how to offload these properties and hopefully, it might be a little bit of a headache for a couple years, but.

Planning ahead, like we talked about, and then hopefully I don’t get in a situation where I have, I don’t think there will be a lack of deals coming around. That’s one of the things that made me a little nervous is deal flow, but I think. I think there will be plenty of opportunities.

They seem to come up once you start networking, and that’s how I met you. I think I heard you on a podcast or, and then a couple others. And I just finally got to the point where I would email you guys and say, Hey, what’s up? I’m interested in learning about what you do and going towards that passive side.

And then honestly, everyone, I reached out to the three or four people that we’ve invested with who have all been really cool and No, it wasn’t just there’s some imaginary person on a podcast kind of thing. Have you guys done the IBC stuff infinite banking? Yeah. So I set mine up with a guardian and I did it. It’s a 50,000 policy and I already use it. I took a loan out against it shortly after and when I’m on a deal and then I repaid it whenever we had some money coming in from something else.

So yeah, I had it set up and rolling, and then I’m doing a HELOC on my primary. Cool. So what I would, how long have you been doing that? Thus far? Yeah. Four or five months. Okay. Okay. Okay. Yeah, maybe in the next year or two especially before you leave your day job, right? Because that’s what they’re insuring and enshrining or salary.

We’ll Maxwell, max up things out, try and get up to 200, 250,000 a year. So just open new policies, you mean? Yeah. Layer them on top of each other. You’re still in the beginning, so you’re getting used to what the heck 50,000 is, feels like for a year. Same thing I did when I first started, but I would just go big with that.

It’ll be so nice to have a million dollars in equity. Yeah, no, it’s it took me a little bit to wrap my head around, I’ve heard it on people talk about it and I was dumb and not doing it earlier, but yeah, now that I wrap my head around the simple interest part in the loan. Yeah.

It’s super easy and it’s pretty sweet. Yeah. I’m looking at doing one for my wife, but one question since she does not have a duty to how do they qualify income? Just federal tax. My wife’s a teacher too. So that’s the thing you get to maybe talk about offline, but technically it’s supposed to like, it’s supposed to be on like your salary, right?

So no more salary cannot do it. This is One of the common questions we get from like these hackers, they’re always trying to optimize a situation. Oh, I’m gonna get all my kids because they’re younger. Or the cost of insurance. I’m like, yeah, it’s going to be cheaper, but you can’t get Jack from it.

Because they don’t make any salary. And it’s kinda like that whole it’s like a clickbait YouTube videos oh, you can pay your kids. They don’t have to pay taxes. You can only pay them like four grand. Who cares? Who cares? If you save 20% of four grand, it’s nothing.

Yeah. Yeah. But you gotta look at the limits on there’s different auditing, but yeah. Talk to you, talk to the IBC guy that we got and then, but it gets yours first, right? And up yours to two 50 per year, then worry about your wife. But I don’t know. I argue that maybe once you fill up yours, you don’t even eat one.

Yeah. Yeah. So tell me the logic behind that. Cause I’ve expressed that to her that we didn’t really need it for her. Cause if something were to happen to her we’d be fine. You’ll be fine. You’ll be okay. Other than the pure fact that if she passed away, you would need some, have some money to, John, your sorrow and tears.

You’ll be fine. So I wouldn’t, you don’t really eat that in my opinion, unless you want that. That’d be the only reason why you’d want to put it on. Yeah. And that’s what that was. My thing only happens to me, and if people listening right now think that’s not right.

You’re missing the whole point in his infinite banking thing. It’s not for death payout or doing it for the liquidity part of this. Yeah, no, that’s true. Just to, yeah, not for that benefit. It’s just a perk. I used to sell it on it. Yeah. Whatever you gotta do, but if that’s, if you want that death payout, if something happened to her.

Get term-life on her, in my opinion, just to keep things. So I keep it simple, right? I have two policies for myself and I’m like just two log-ins and then sick to have a third one. It’s kind of a pain, and if you did two 50 for five, six years, you already have a million dollars of liquidity in there.

Shoot. Do you think you are more right? I think, and I talk about this bucket system, right? Like you’ve already filled up a few bucks. Now the next bucket is this infinite banking. Once you get like a million dollars in that thing, that’s when we start to talk about the IUL type product. And I’m sure we’ll talk in person about this and other, we have other people going down this path too, but I haven’t really figured out the feel for it. It depends on again, what your goals are, right. If all you want is two and a half million dollars. And then you want to put it in cruise control.

Cool with you. But we may have somebody in the group that wants $7 million net worth. Then they go to priest’s control. So two differences, it depends what your goals are and when you want to get off the freeway, yeah. Yeah. Yeah. I realize this very early on that, like my spouse does not care one bit about anything I do one bit.

It’s just. I like wondering what the little baby should wear. I honestly don’t care. So like amplifiers, right? What things should we get? I don’t care. I don’t mean I care, but I don’t, I’m not the person who asks, we delegate things. We’re not like one of those families.

Yeah. We’re the same way. Yeah. She handles a lot of the stuff like that. And then I handle all the bills, finances, all that fun stuff. So I thought hard about this. And I was like if I died, maybe I would have her talk to certain people like yourself. And Even if she did talk to you for an hour and talk to 20 other people that I trust, you’re not going to get it, she’s not going to get it.

That’s not her thing. She’s not like that. So how do we set her up? So she doesn’t fail. And to me, there’s no way that they’re going to be able to decide, oh, should I go a hundred grand into this deal with this person? It seems simple because we live and breathe it. But for somebody coming in and coal, it’s very difficult and we have some people in the group.

They have no background in real estate investing and they don’t need to, but they need to have at least the interests, which is what makes them start to learn. But if you have no interests, then that’s what the IUL products are for. Yeah. And that goes back to rental properties. What am I going to do with those?

When I’m 70 years old and have to say, I never went down this passive role path and I have a hundred Reynolds and then something happens to me. You have two older ones. If my kids have no interest in it, they’re just wasting away. And then, yeah, that’s the worst. Whereas what you’re talking about, she doesn’t have to deal with that stress.

It’s a login to life policy, whatever, everything’s taken care of. I think she has an interest in real estate. She likes seeing, but she has no idea. And whenever I tell her, Hey, we’re going to go in on this deal. And Alabama, she’s oh, cool. That’s it. Yeah. That’s all.

So she probably doesn’t have an interest in it. She just, I want to make it easier for her and not set up something that’s complicated to unravel and do down the road whenever either something happens or we just don’t want to do it. Yeah. Yeah. But to get it to that point, you make less yield when you get it to that IUL point.

So you have to squeeze it to get to that number. You get there. But, going back to the IBC is one cool thing. I realized I never realized whenever I hear people talk about this two 50, $250,000 policy, a hundred thousand that, you can pay that in a rears on your rider, you can catch up, which is what really sold me on it.

After talking to the person who sent mine. It yeah. Cause you, you freak out, right? Because you’re like, oh shit. What if I can’t make my two 15’s? Yeah. But yeah, some of them are, yeah. Some of them are more flexible than others. That’s why I like this guardian one because it’s one year off, you can skip a year in a way.

Yeah. Yeah. That’s what I like. That’s why at first I was like, I’m going to do 15,000, 20,000, that’s safe. But then I was talking to some others in the group. Yeah. It wasn’t like they were selling me on it. They just told me what they’re doing and why it made a lot of sense.

And it depends who you are if you’re just a salary guy, then it’s one thing. But if you’re a salary guy plus performance bonus or your business entrepreneur then it’s a different thing. For those people, I would say go with the bigger one because you’re going to right size it up into it.

You set a goal and you’re going to hit it. Yeah other than that, man, things are going good. IBCs, they’re getting out of the mentality that I need to retire by accumulating 50 rental properties and dealing with C class tenants all over the place. Changing the mindset of going more towards lifestyle than just hustle. Yeah, we wrapped it up here. If you guys liked this and you guys want to do a free call.

You gotta put you on YouTube land and the podcast. I don’t know, maybe you guys like that, but let me know where I was looking for some folks. Cause it seems like you guys like these types of things, cause there’s always, you see the path based on net worth where people are in a journey and you know this is a step ahead of you. But yeah thanks for listening guys. Check out the website. We have all these guides. I think the one that would pertain to this would be simplepassivecashflow.com/banking for the IBC stuff, and then simplepassivecashflow.com/syndication for the syndication stuff. Okay guys, we’ll see you guys next time. Thanks Lane.

Coaching Call – Accredited Investor/Pilot | Military Retirement | Infinite Banking

https://youtu.be/MZ1DgLlqugE

Now, today’s podcast. We’re going to be doing a coaching call with an accredited investor. These guys seem to always, really like these because everybody we’re all the same at the table. All good savers work hard. Pay too much taxes and I want to get financial freedom safer and easier. If you guys want to sign up for the next one and kind of put yourself out there, we can make a fake name for you.

We don’t have to use your profile picture video. Go ahead and join our club@simplepassivecashflow.com/club complete the quick one minute form. So we know you’re a real person out there because we’d like to know who’s out there on the other end. And reach out, send the team an email at team@simplepassivecashflow.com and volunteer yourself.

And at least we’ll send you the personal financial sheet worksheet so you can outline your entire personal financial world on that sheet. Before we get going, I just want to thank everybody for buying the book, leaving a review, my book, The Journey to Simple Passive Cashflow on Amazon, or becoming an Amazon bestseller.

First week it came out, thank you all for going there and grabbing it. If you haven’t yet, please check it out. Please leave a nice review and I’ll finally make my parents proud that they know that they raised the author since they don’t know what the heck I do these days, that I’m not engineering things anymore.

But anyway, if you just for you podcast listeners, if you guys want to get a free electronic copy. Or better yet I sat down and I read the entire freaking book and I did it in every chapter and I interjected some extra things in there for you guys to serve a special edition. If you want to get that, it’s free at simplepassivecashflow.com/book. If you have any friends, feel free to share the link to it’s a podcast exclusive. Thanks again, join the club and here’s the show.

Hey, simple passive cashflow listeners. Today. We have another coaching call with an accredited investor, Nick, who is going to be talking a lot about a lot of things. Maybe taking money out of his retirement account. We’ll start digging into it. If you guys haven’t checked out, the website has a lot of resources on there for free.

Turnkey buyers syndication investors and I think one thing that’s going to be pertinent today is, are probably gonna be talking about retirement funds and what to do with that. Maybe it’s not even an option for you. Check out the info page at simplepassivecashflow.com/QRP for all my thoughts and ideas regarding that subject.

Hey Nick, Thanks for jumping on. Why don’t you give people a little bit of context for yourself as a kind of scroll down your personal financial sheet. If those are listening to the podcast, you can check this out on the YouTube channel too. Hey Lane. Thanks for having me on. A little bit about myself.

I’m a straight W2 worker. I’m an airline pilot. But also part-time, I’m in the military and international guard. So I’m making most of my money, just the hard way trading time for money. So a little bit about myself, my family married, I’ve got three young kids. So that’s taken a lot of my time and trying to figure out how I can realize my investing goals and plans for retirement while not completely ignoring her nor my kids.

It’s a pretty big factor for me. And when I’m trying to figure out what to do next for my investments. Tell us a little bit about the military. Like what’s your path out of that? I think there’s a lot of military investing podcasts out there at platforms, a lot of those are for the enlisted dudes.

The guys whose network is under a hundred, $200,000, but you move the officer route in your definitely years outside of the military. Maybe talk about the path and where you came today because you also have a civilian job too. Yeah. So I’m a little bit different so my dad was enlisted.

I actually did a direct commission to become an air force pilot. And so I spent 12 years in the active duty air force. Just flying around the world and traveling, living all over the mainland and in Hawaii spent a lot of time overseas and in Germany, in Afghanistan.

So I was able to build up a little bit of my net worth just because I was on the road a lot of my pay was Tax-free which is nice. And that’s one of the big advantages that our military has. It’s a way for the government to limit the retirement pay that we receive.

So they classify some of our benefits, and that we get paid as a housing allowance or. A cost of living allowance or allowance for sustenance. Essentially what that does, is it classifies a good chunk? Sometimes when we live in high cost of living areas, sometimes that costs our pay is maybe 40% tax-free, which is huge.

It really lowers our AGI. But the reason why they do that is because when they pay us our retirement they pay us a percentage based on our base pay. And they don’t want to pay certain people or hire certain service members higher amounts just because they live in a high cost of living area such as California or Hawaii and so on.

So I built and I just visited. Just as an officer through 12 years of active duty. And then I realized that I was just working way too much. And the air national guard was a way for me to continue my service to not, I’m gonna say throw away, but to lose all my years of active duty service but keep them and keep building on them to build toward 20 years and qualify for a military retirement.

So I made that change at the 12 year point. Joined the airlines because it offered a much better quality of life. It’s a pretty common path for military pilots. When they see the light, they see this job that offers half the month off or more for a lot more pay and a lot less headache because you don’t have to deal with the bureaucracy and management in the airlines.

So a lot of guys in my shoes make that jump. But they still stay in like reserve status, or international guard. I hate to sound like a commercial, but it’s nice for guardsmen. We can jump back in, do our service once a month and two weeks a year and still keep accumulating points towards retirement.

And then in my situation, it’s nice that when there’s an economic downturn in my civilian job, Might not be doing well. It might be threatening for a Lowe’s or, and other industries might be layoffs. Having the military as a fallback is nice because I can work full time.

And in certain situations when there’s opportunities available and can replace my income, if I get, if I take a hit on the civilian side, I’ve heard that the big perk of doing that is like, The military will pay for your kid’s college or something like that too? Or is that, is there something like that for sure?

Yeah. It’s called the post 9/11 GI bill. And you have to do, I want to say six years of service or something like that in the military. And they’ll give four years of college for you or when you can give it to your spouse, you can give it to your kids. You can spread it.

Between multiple kids. That’s what I’ve done. And it’s, if you’re doing in-state, it’s really nice in-state school. If you’re doing a private institution, it’s huge because they’re, they cover the entire amount if you’re going to NYU or something like that, but they can offer, they can cover a big chunk, but they also cover a housing allowance basically a classified and the, you get the same rate as a.

Staff Sergeant a mid man enlisted Amber would get a housing allowance while you’re going to school. So in high cost of living areas like the West coast, you can really squeeze out a lot of benefit from the GI bill. So it’s definitely something that a lot of guys sign up for, at least on the endless side to get that free college.

Is that kind of what makes up, like why you still stay in it? Cause it’s kinda mind numbing work, right? Yeah. I mean it’s so the carrot at the end is probably the easy answer. Yeah, I want that 20 year retirement because it’s a pension guaranteed by the US government.

And if I am certain, if you do 20 years of active service all at once you can start collecting immediately. So some of my active duty friends can start collecting maybe at 38 and then they can start a whole new career while they’re receiving a multi thousand dollar pension every month. But there’s a lot of yeah.

In satisfaction in inservice and doing something for the country and doing something for the community. And in my case, being in the air national guard, if there’s a disaster and natural disaster or something like that, the international guard is, who gets called first. And then, a lot of times, when something bad happens in your community, you want to help out and you want to do something.

If you’re a cop, if you’re a policeman or a fireman, you’re going to be on the front lines and helping out. But a lot of people, they don’t have a way to contribute rather than donate to the red cross. If you’re an air national guard, the national guard, army national guard, you’re gonna be called up, almost guaranteed.

And you’re going to be doing something to help the community, to alleviate the pain and suffering that’s going on. So I think that has a lot to do with it. I get an opportunity to leave to help out my unit and help out fellow airmen and there’s a lot of gratification that comes with that that I don’t get in the civilian job where if I’m flying my airline, I just show up. And it’s like driving the bus where I just go and enjoy my time off and go work out, eat good food at informed places, there’s not much. So it was just the balance, trying to, not, have a lot of gratification from your employment, but not get burned out and, want to pull your hair out cause you’re coming out crazy from the pace of the work demands.

I think you got to get that you got two jobs and if one goes down, you’re diversified both ways. So let’s dig into the numbers here, your net worth brought a million bucks, essentially an accredited investor salary and wages about 15,000 a month. W what does your spouse do? Which is that, or is that primarily you. Yeah, that’s all for me. My wife used to work a little bit when she could but due to COVID, she’s not really, she’s not doing anything.

I would like her to work at some point, but my kids are, my youngest is three. They’re just a handful trying to chase them all around with all their activities. There’s not a lot of free time. For her and my job’s pretty demanding, so it’s nice that my wife can just stay home and take care of the household and make sure that the ship is running right.

And everyone’s on time to where they need to be considered. Go ahead. Which is actually like an ideal strategy for if you ever wanted to do real estate professional status too. But what is her capacity for earning? What if she were to go back to a full-time day job? Where was she? She’s been out of the workforce for a long time.

So it would be hard for her to jump in and make a large salary. And then that’s why we just focused on it. Me as the breadwinner, they, and she’ll just not just, but it’s a huge job at home to take care of the kids, but who had a division of labor, as you would say it for now while the kids are young when the kids are in school, when they’re all in school, we’ve talked about looking at.

Maybe doing real estate professional status, trying to figure out if we can pick up some rental property to manage and to realize the unlock, all those passive losses. But I think we’re still a couple of years down that route. And I just don’t, I don’t think I could make quite enough money to make it work worth the squeeze.

As far as annual income, I think I will, in a couple years. So the timing might just work out where I’ll be in a couple of years, I’ll be in a high enough tax bracket where I can use real estate professional status. And then my wife might have the time and bandwidth to take on some of that work outside the home.

Yeah. So let’s unpack that for folks. Nick’s kinda got a good handle on the as, as soon as he says that, his spouse doesn’t stay at home, doesn’t make as much money as him, which is, I dunno, I see path half. I see. Sometimes it’s two doctors and it’s Oh goodness, like neither you’d need to just go to work.

Or you make so much that you guys just have to go to work. But in these situations it’s a little lopsided. You start thinking, Hey, maybe one of you guys can be a real estate professional. Of course they’re going to need a, you can’t have a full-time job. You’ve got to have 750 hours of active participation and there’s some fine print in there. Obviously, what that allows you to do is take your passive activity losses that you get via bonus depreciation from some of these larger deals and offset that ordinary income category.

But as Nick is keen to acknowledge they make about a hundred and, under 200 grand a year AGI wise, it really is. As we say in Hawaii, it’s Poho. It doesn’t make too much sense unless their AGI was maybe a little higher over 300, $350,000. Cause that’s when you really get that savings tax savings by bringing that lower.

Bringing your AGI lower, but right now, they don’t pay too much taxes. They’re not in the danger zone or the red zone for taxes. So it is an art form, and these tax brackets changed throughout the years. And I guess, Nick, how would your income go up? You would increase the civilian islet.

Yeah, it’s essentially another point on my taxes with the military. We have the FCRA service Service members, civil relief act or something like that. I can’t remember what it stands for a CRA, but it allows military members to retain their state of residence that they had before or their permanent, what they plan to have as a state of residence.

Independent of whatever, wherever they’re working on, full-time active duty with porters, which I’m on right now. There’s a couple of States out there that don’t charge state income tax. So it’s a nice advantage for military members to obtain Residency in one of those States and not have to pay state income tax.

So I got that benefit there, but talking about the pers perspective increase in pay, but do with the S the airline industry. For pilots, we just get paid on a negotiated scale or whatever the union MDC can get from the company. And so we know what we’re going to get paid based on what plane that we fly and what the position, whether we’re in the captain or first officer seat.

And if we just assume normal growth of the industry and. Those pilots have to retire at age 65. It’s mandated by the FAA, the government. There’s going to be movement ahead of me. And we’re also, I didn’t bring it up. Sorry that we are. Seat position and airplane that we fly in is determined by our seniority, which is strictly by date of hire.

And we move up in seniority as people at the top retire or get medically disqualified or leave for whatever reason. And so I can project, in a couple years I should be able to be. Move up to a captain seat, captain position and where my pay PayScale will increase dramatically.

Because it’s like that, essentially that first officer makes like half of what the captain makes. Not exactly, but just, for round numbers, it’s like that or lives at stake, essentially, right? Yeah. Bigger claims more lives. So let me, before I forget you mentioned the, I think the thing where you can go so on military orders, I think it also applies to civilians working for the government overseas.

We actually have another guy in the family office, a Honda mastermind that you’re also a part of sh remind me to connect you guys, but. I think that’s what they do. And they’ve made their residents to be in Washington or something like that is what they conveniently selected. Washington has no state tax.

Yeah, you guys should probably put your guys’ heads together on that. I don’t know where you would want to live either Florida or Washington, those are the one of the ideal States I would think. But yeah, I know a lot of people that are Washington residents for sure. Yeah, I don’t work for the government, but yeah.

Yeah. Something, yeah. Remind me again. I’ll make that connection for you. A lot of cool stuff in the film that people are doing, or you might have to buy a house up there, just buy a crappy house. I think that’s what they did, but it’s worth it right to shelter. The state taxes. Yeah, whatever we can do and not pay taxes the legal way.

I’m all for it. Yeah. So if your income does double, that’ll put you in over $330,000 AGI. So then that would definitely bring the real estate professional status into play potentially. Living in Hawaii, maybe do a short term rental, something that’s fun. Start to get, I just planted the seeds now because a lot of this takes years to really implement.

Especially, if you’re doing like a short-term rental, you guys aren’t going to do it right away and you’re not going to do it. It’s gotta be your spouse’s project. So maybe start thinking of the fun idea, having a rental property now that you guys actively manage could be fun. They would like it.

And I think maybe it shows the kids like, look, people are paying us to live here. It’s like the feedback loop is a lot better than. Boring rentals or syndication deals where you get paid on a quarterly roll up. They don’t really, kids don’t understand that type of stuff but they understand when that Ching sound comes on the app, that’s money in the bank in a week.

So just some thoughts there and then living expenses. Is this what people and kids spend a month? It was, yeah. It adds up on all the kids’ activities and they need stuff. And he, new shoes are really growing. I feel like you buy it, you buy something and next month it doesn’t fit them anymore.

Yeah. What do you guys pay for rent? Like our housing for it 4,000 which is kinda high, but here we get a lot of benefits. Yeah. And you guys, I want to highlight you guys’ rent, right? These are the guys doing it the right way. Tell us a little bit like how you did that before we met. I think, yeah.

I, and I had this discussion a lot with my friends who they know I live in a nice area close to. Close to the ocean. I’m paying for having that quality of life the way I see it. And they questioned Oh, why don’t you buy Y like you’re throwing so much money away and rent, and then I just respond, Hey, do the numbers like, look at what.

You know how much you’re paying in your mortgage and, including maintenance, CapEx includes all the utilities. I’ll include all the little things they have to pay for if you’re paying for yard, service, bug service, that just everything. And the time you have to also count for the time that you have to spend, if something breaks that you gotta deal with finding a contractor or fixing it yourself.

And I do the math all the time and try to compare it like, okay, I can buy a place and spend all this money, or I can rent. And because where I live, everybody wants to own, and we’re willing to pay for and pay the astronomical prices. The rents are cheap because there’s a lot of people that have these houses and sometimes they just buy them to lock up capital I’m guessing and, they’re fine with just making the appreciation in the long run.

They don’t care if they’re losing money on it. The rents are pretty low. To live in the same house, same area and own, I think I would have to pay, comparing all expenses, I would have to pay thousands of dollars more per month.

And so I just, it’s just not to mention the quarter million dollar down payment. That you got to lock down. Yeah. Just last year I had a fridge that went out and an oven, a range that went out and there in Kobe, you couldn’t find them. I went to the appliance store, one of the appliance stores to see what they had because our landlord let us pick out the replacement and they had two in stock and they were like that.

The high end, 4,000 or not 4,000 early things, but $2,500 model ones. And you’re just like, man, this is nuts. But I didn’t have to deal with it. I was like, Hey, this is all I see. And, let me know what you find. And they’re probably like, don’t Sue me, Nick, you don’t have a refrigerator. That’s exactly what it is, right? People. For, from them, from the lay person, what kind of idiot? Rents? People like you and me, right? That’s why we get such a good deal on it. And then the quarter quantifies the quarter million dollars sitting there as debt equity.

But it’s not a, but it’s not hard, it’s not, I’m not saying I’m going to rent forever. If it flips and it’s Cheaper to own then I’m going to go buy a house, tomorrow I don’t, I’m not tied to, I’m not married to a certain strategy, rent or own I’ll do whatever makes more sense.

What will save me money in the long run, and then maybe at some point I’ll decide, I want some stability. I don’t want to, I don’t want to move in, because my landlords. Decide to sell or whatever I made, maybe I’ll buy, but hopefully I’ll be in a much better position where I won’t care about making as much money anymore.

Yeah. I think you get to that. You just get used to it. And you enjoy the freedom. If your landlord makes you move well, you just pay a couple thousand dollars to get Island movers to move your stuff for you. And you go on a little vacation, come back and here you’re in a brand new place that you don’t have to upkeep again.

But I’ve thought about that. When do you, when the heck do you buy, right? I don’t know, maybe in Hawaii, how the quality of houses, don’t really, there’s a big gap between $1.5 million and below and something a lot bigger and nicer. I’m more of that delayed gratification type of guy.

And just, if I’m gonna buy a house, I’m gonna buy something like 400. Formula and above do something like that. And as a means to just lock up the equity, once I max out my infinite banking thing, but that’s a while from now, I think, definitely. I’m not a good, hard and fast rule guy, but I think people shouldn’t buy their house until their net worth is really into a few million dollars.

Which is crazy, right? Because most of your neighbors, their net worth is barely a quarter million, but they own 1.1, $1.5 million houses within what they’re doing out there. Yeah. I also think people’s needs change too. What you want might be different 10 years from now, right? More people live in your house right here.

Exactly. And maybe you want to send them to school somewhere else or get them into another school district. You have the ability to move around, maybe have to, something I’ve thought about. I was like, why not have houses that you rent one near their school? One? I don’t know. Just, these are the ideas that you have when you think outside the box, you’re going to have to spend all your time commuting.

It’s especially with a short-term rental option where you can make the house, do something for you and while you’re not in it. There you go. Buy that house in Honolulu that you live in and then work it out on the weekend. They don’t guarantee a middle run out guarantee. Yeah. And then you can justify having somebody clean the house for you two times a week with you with that, your house cleaner.

That’s actually not a bad idea. Looks crazy. A lot of crazy families, but all right, so let’s dig in so I’m going to go into your liquidity and kind of the goal of this exercise is like, all right, what, where are we going to invest first? Or what you’ve already been investing in syndication deals, but where’s the next money coming from?

This is the deployment plan. Maybe take, you’ve probably got a good idea. What was your plan of attack here? You got about 180 in liquidity. Some, a lot of checking most in the cryptos stable coin accounts. You’ve got some. Retirement plans, Roth IRAs 401ks five 29 is about 370 in there. But yeah, so if one or two deals come up, where are you going to take the money from?

What’s your plan? So the easy way is just take it out of the, some of the checking. Some I haven’t checked in. Obviously I have to keep some of it just for living expenses. What is your what’s your how much do you want to keep in the checking just as your emergency fund?

Probably about 25,000, just to cover, cause I’m not worried about not having money. It’s more, I just don’t want to, I got everything automated, so I don’t want to check the balance because they just. Cool too much money. Yeah. Yeah. Yeah, it’s very common, right?

We all got this stuff automated. So when it messes up, it’s a huge freaking train wreck. And not now you’ve got five, like NSF fees piling up and you don’t know who to call first to ask for forgiveness. Yeah, I get you. Yeah. Most, I don’t know what your guys’ credit card bills are, but. I have a lot of business expenses.

So mine sometimes can be like 20 grand or more a month, but I’m all I play the points game. Ops and I haven’t done it in a little while, but I’ll sign up for credit cards and get the bonus offer and rack up 50 to a hundred thousand points for airline miles or whatever, and then turn the next card.

I just don’t have any time to do it right now, but I’ve done that before, but not now, but I’ve gotten to the point now where if I buy anything, I want to use a credit card because I want to get the points because it’s free money. I know I’m going to pay down all the balances every month.

And I get so much protection from the credit card issuer as far as extended warranties and the charged record section in case I get ripped off. So I try not to use cash for anything. The 2%, at least the double cash cards or I use the American express one’s for 2% and then the 5% swans for gas groceries, those categories.

Yeah, you’re like a lot of us in our group. We kinda, it’s fun in a way. It is a little bit of a waste of time. I’m sure you probably draw the line at the manufacturer spend level, right? You’re not buying $10,000 of mint quarters, sending it to your account, walking it over to the bank of Hawaii and depositing it.

Or I used to do that. Okay. That makes sense. We used to buy, I used to buy like the special edition dollar coins from the US mint and then I’d have $10,000. $1 coins in my house. I’m like, okay, I got to use this. So I’ll go to Home Depot and I’ll buy you know how every time you go to Home Depot, I used to be a homeowner, but so every time I’d go, it’d be a hundred dollars.

And I use the self-checkout cause I don’t want to wait in line for the cashier. So I scan my things and then I get to pay and I’m literally putting one coin in at a time. Into the machine. I’ve got like this sack of coins and the people behind me think I’m crazy. And then, what are you buying?

I’m really quarters. Yeah. And the receipt counts every coin as a separate line item. So I get this long, like Walgreens, a CVS kind of receipt at the end. I don’t play those games anymore. Yeah. But no, it’s very common. I think a lot of us in the foam, we did. Craft like that in our twenties, maybe early thirties for the late bloomers.

Sometimes I still do that stuff, but yeah, definitely draw the line at, like a lot of the kids these days, they do the manufacturer spin or are they the last one? I heard that they’ll buy a really expensive laptop, like a five, $6,000 laptop from Apple. They’ll pay a hundred bucks with a debit card and then they’ll use the same, like they’re using a.

Visa debit card. They’re using visa credit cards to pay the manufacturer. So the, so it’s like a split tenor purchase. And then the next day and the return, the laptop would put it on that a hundred dollars debit card. I think that’s a little unethical in my opinion. I don’t know.

But that’s just what people do, that’s I don’t know. Yeah, you got all the time in the world. If only if you’re single and you have no kids, you could just do that all day long. You’d be at the mall, buying yourself all of the free Java juices and. That type of doing that type of stuff all day long, all day.

But yeah, I would agree, maybe drain the stout to 20, if you can. And then you’re planning. How long have you been doing like the stable coin and then the crypto investing? So you’ve got 30 grand and the stable coin and a hundred grand and more like Bitcoin Ethereum, the mainstays. Yeah. And I, it was at an accident because my plan was put it on to a stable point and maybe dabble just like 10, 20 grand in Bitcoin, just, just is more as play money, not as a serious investment, but then I saw that the, some of the exchanges I was trying to use were charging a lot of fees for the stable coin because obviously they want to get, they want to get paid. And then I realized, Oh, I can buy Bitcoin. Instead it and not have to pay the fees and then I can just exchange it to trade it for a stable coin.

I did that. I started doing that last month, bought Bitcoin and Ethereum and then it took off and I’m like, Oh man. Now how much did you put in there originally? Oh, I want to say I want to say Maybe like Haiti or something like that. So it’s gone up 10, 20 grand.

Like I can’t, I don’t remember exactly. When I started, I stopped trying to watch it. Yeah.It’s just kinda crazy. It’s fun but it’s not a good long-term strategy. I don’t think I’ll just keep some and just cause it’s fun just to speculate, but.

I’m not going to buy any more. I want to try it. I think I want to try to move some of it out into a real estate syndication, or maybe move it into a stable coin. I don’t know. It’s just hard, right? Because there’s so much hype and on those cryptocurrencies, everybody’s excited, I think.

And it’s going to go to the moon and I think it’s a nice time now. Not that it’s like that. It’s definitely past the early stages, but the nice thing I think is that the institutions have signed off on it and they’re involved. So that brings another layer of stability to this whole thing. But my thing is keep it between one and 10%, 1% of your lower net worth 10%, if you’re higher net worth or above.

I think that’s my goal post personally. Maybe I’d play around with 1% at this point. But it takes bandwidth to learn it and. That’s what we’re talking about in our group, right? It’s, you don’t need to know anything, a father, which is dangerous too.

I do. Th the speculative coins they’re no, they’re the rational part of my brain tells me it’s just dumb, right? There’s nothing back in it. It’s not like real estate where real estate actually can be cash flow and asset but the stable coin, I a little bit, because the Eagles are so good.

At one point I was getting 12% on my stable point, which is a dollar peg cryptocurrency and that’s, and it’s super liquid. I can just sell it whenever I want. So it’s just a man. It’s hard. There’s a little bit of risk there in that. I don’t know if the exchange could get hacked or whatever.

And they still have insurance too. It’s all new and uncharted territory I think. Yeah. During the block five one, I think they give me like 8.6% on the stable coin, but you’re doing the other one then. Was it? Yeah. Celsius is at one point it was paying 12 for the stable point.

Now it’s around 10 and a half. Nexo pays pretty well also for their stable coin interest. I don’t know how they do it, but I probably should understand a little bit. Yeah. My understanding of Blockfi is probably the most secure of ’em right there. More the most. Financially like solvent when they’re there, they have insurance more than the others.

To me, I was like I don’t know about this stuff. I’m just going to go with the biggest one. I don’t care about making 10, 12% as opposed to 8.6 is good enough. As long as they don’t lose the whole damn thing. Yeah. That’s why I stayed with that one. So Let’s say a deal comes up 50 grand.

Are you taking it from here? Or where are you taking it from? Or this retirement fund? So I would meet, I kinda think that the Mark, I don’t know, the market scares me. Yeah. More than the crypto. Okay. Yeah. So I’ve got a 401k That I want to pull money from. It’s the government ‘s called TSP thrift savings plan.

And I don’t like how I don’t. Their performance is not, has not been as good as my civilian 401k and my IRA, which has just been in a target retirement fidelity fund. And so I would like to pull money out of my TSP 401k account. But, some things considering it’s a Roth account.

So a majority of the balance should already have its taxes paid. So I’ll just have to pay the taxes on the gains. But I’m going to have to pay a 10% penalty over the entire amount. Did you do the care act thing last year? I maximized that and I did that for my wife too. And so I was a huge benefit.

I’m glad you mentioned that there was. It was like a get out of jail free card. I hope they do something like that again, this year. I think they will. I hear more stimulus plans coming and I’m sure they’ll stuff that in there somewhere, then it’s getting confusing for the average person to understand it at this point.

There’s multiple of those. Get out of free jail cards. I think that’s the government never, it never makes things simple. So this TSP is Roth, then you’ve already paid the taxes on it. So this is where there’s really no path. There’s an art form. What I’ll normally say to people is like investor liquidity, except you’re investing in freaking crypto, which defies gravity.

But then I, at that point, I usually listen to what you said. I feel I get a sense of fear for this stuff. I agree with you, take this stuff out, right? Just if nothing, for quality of life and peace of mind, because I would agree with you. I think all these stocks and I mean their all time highs, just basically because of four or $5 trillion pumped into the system this last year.

The thing is, if I’m going to pay the taxes on it, I’m probably going to be in a higher tax bracket, in a couple of years. So take my medicine. Now. It won’t be as bad as later. Just something I’m thinking about. And I think because as we said earlier, your income is going to go up aggressively in the next three to five years, I would.

The plan I would recommend for you is to take as much out to get right up to that higher tax bracket. I think it’s about $330,000. AGI is the magic number. I think you want to shoot for it every single year. So that means leaking out. Maybe you’re at one 50 now, so that’s 180 every year.

Yeah. I don’t know if that’s the meth, that’s the perfect number, but that’s the idea of post tax money or if your tax, bill stacks, the one, the non Roth stuff, right? Yeah. Yeah. So I think that’s, so this is your 401k stuff, like 170 grand. So you should knock that out next year, Ben, right?

Yeah. Understanding it right. Yeah. I’d like to and a lot of my pay right now is not taxed on my W2 job. There’s a little bit more space there. And also, yeah, you got a lot of investible funds, so maybe the real plan I would suggest is like a plan on leaking this one 70 out in two years.

Okay. So go or maybe 50 in three years. There’s really? No. Cause you can take, if you get in trouble and, or not really in trouble, but if there’s like the after, do you have to deal three deals coming on in a row, just take it out of the Roth or you already paid the taxes on it, but have this, you’re on the three, four year plan to take this out.

And then this is being your get out of jail card or not bill bail you out in case there’s a lot of deal flow. But what are you doing? You’re doing that like an infinite banking thing. I think you should do that, man. Yeah, I’ve got some quotes and I’m trying to figure out how much I want to put as far as for the writer to do the additions.

But the way it was explained to me is that I should try to get a big policy now, and then I don’t want to put in the max that’s okay. As long as I’m putting in the minimum for the, of course the insurance salesman is going to say that. Yeah. I would like to, I’m learning a lot. Yeah. More about it.

And I’m still trying to figure out the strategy. I get it, like you have this cash value in there and then you want to buy a car and you just pull it out and you have a lot of benefits. Like you can not have you can self-insure and I have, comprehensive inclusion insurance and, get your insurance rates down.

And then for deals, I can just. But 50 grand into my cash policy and then take the 50 grand now as a loan and invest in a deal and then just have that money out and we recapitalize it. But yeah, I don’t know. I definitely am. Think it’s something I want to do. I just, I’m just trying to figure out a day-to-day strategy on using it.

I would disagree with this insurance salesman and I would say the first one you want to do is a little smaller. So you can understand the field for this thing and then size up to the one that you want to do maybe a year or a few years later. And just layered on top of the current one there, the reason why the salesman wants to do it is because most Americans are lazy and once they do something, they’re likely not going to do something again, as they continue to binge on Netflix and whatnot. So that’s why the insurance sells my hair. They want to get paid. So they want to load you up with the biggest thing right off the bat.

I think for you personally you have a lot of liquidity lying around, I don’t know how you, how quickly you want to deploy this into deals where you’re at, you’ve already had some deals. Maybe plan on deploying, one a quarter at most, maybe. I dunno, but. Nothing crazy. So like you’re at a good, good, a good steady state you’ve been investing for about a year now and to alternative assets. So what I mean. I’m kind, kinda like the fortune teller here Hey, tell me a little bit about yourself before I read your Palm or I like real estate.

I like being in real estate. I want to be as good as I can. How much were you thinking about putting into your life? The infinite banking every year for the five or six years. I was thinking something like 40 grand a year. I’m just throwing it out there, but it’s not really paced on anything other than I can just, I know I can hit that.

I can hit that number without it. I like that number. So here’s one, one general rule. What I’ll do is I’ll take this net cash flow, which you’re making, you’re able to put away 80 grand a year and I get one third of that. Or I come up with that real just trust me. But one third of that is like 30 grand, right?

Yeah. That’s I would say that’s the low end for you, but because you have a lot of liquidity lying around here and you already telling me, you want to take this out and you have 180 here, I would push that a little higher. So I like how your initial. Guests were 40 grand higher than that. 30 grand.

But maybe if you want to go that cool. Like I said, you can always size up and put another one on top of that. I think at the bare minimum through 30 or 40 a year. Okay. But I think I don’t know. Maybe we just do 50, just do a round number. If you want to do it, you could do a hundred, I think, but I would rather you guys size into this stuff and get us.

Get a feel for this thing. Because there are downsides of it. The downside is it’s heavy fees at the beginning, right? So for the lower net worth guys with no liquidity who are listening, don’t do this. You’re not like Nick, but I don’t know. Maybe munch on that. Yeah. The other thing I was considering is the guaranteed return of 4%, that was going to go away at some point.

Because rates have been so low for a long time motivating me to get a policy now, but I guess it would take a while to make that change. Yeah, I don’t understand. I don’t. I hear you guys talking about that to me. That’s just kind of noise because you’re not doing it for the rate of return anyway, where there goes down to two from four, I don’t care.

You don’t care, like all this other money, other places, right? This is just a place to start. Yeah. If that rate goes down, wouldn’t the rates of borrowing it. Go down to. One would assume. Yeah, you’re right. You’re right. It doesn’t matter. It’s the way I’m looking at it, but I dunno, don’t let it, I think you should do this thing, but don’t let that’s just more sales tactics to create urgency is what I see.

Yeah. Yeah. Everybody’s got to get theirs. Yeah. Yeah. No nobody does anything unless there’s some sense of urgency, even smart people, you got to trick them to do the right thing, but yeah, I would do it. I don’t know. Yeah, like the 40 grand, I think you’re good with that. I really think if you wanted to wholeheartedly trust me, I would say, just do a hundred and you’re gonna take the money right back out and invest in any way.

But if you just wanted to set it and forget it, we’ll go with 30, 40 a year. Yeah, cause what you’ll do is you’ll drain out your liquidity and you’ll place it right back to where it was essentially, because there’s going to be a couple years, at least where you’re going to be really fat with money and you’re.

And another reason why I’m saying that higher number, like a hundred grand a year your income is going to be greatly increasing too, which is why I think you can be more aggressive with it. But yeah, get that done man, in the next six months. I’m pretty close. Like I did the medical exam and just knocked that out. And so I think I’m just to wait for the underwriter to do their thing and then they’ll come back to me with paperwork.

But yeah, the only other thing, if you’ve got any other topics, the only other thing like me personally, and not saying that you should do this. But I think that’s why you have people around you that understand the stuff that you can have, these types of conversations, whether you and ICI or agree I will, if it were me, I would feel uncomfortable with it.

And a theory. Bitcoin or non-stable coin. That’s a lot of money there. What I would be doing is I would be sliding half of this and to a stable coin. And then I don’t know, that’s a big number. That’s 10% of your net worth into something new where you could like the news. If you lost half of it, that’d be 50 grand. You would feel like crap. That’s just how I quantify it in my head. I want to know what’s the magic number where like you lost 25 grand in this maybe.

And you’re like I’m going to go to the beach and not worry about it. So if that’s the case, then head your number down and your position down. I don’t know. I wouldn’t feel comfortable with this amount, but you can do what you want. You’re also going this, what? This will probably double and you’ll just rub it in my face and buy me dinner one day and say, don’t worry.

There’s a. 10,000 more dinners that I could buy you because I didn’t listen to what you said, crypto devil in the next six months. But that’s just how I would do it. I don’t know. Yeah. And your religion at this point, the way people believe in leaving cryptocurrency replacing the dollar or replacing not the dollar.

The dollar too, but I guess a more logical one would be gold as a store of wealth. I’m coming around a little bit. I don’t fully believe in it, but I definitely use it. It was a haphazard way to invest that money. It wasn’t, I didn’t intentionally go into that big on it. Yeah. Yeah. What would you do if these are your currents and vacation holdings, if this was like triple right.

What would you do at that point? And would you just throw more into that or, I think that’s what you need to think where this is going. This is all, everything. Is an interim solution. So we get to the end game, but the end game never gets there because then ideally these deals should cash out and give you more money at that point.

But this it’s just, but then I think that at that point you get more and more ballsy with the stuff like once your net worth goes to $3 million, I think then this amount of money is appropriate right there. Like I said, For the guys who are in the lower net, net worth spectrum, I think a smaller position in crypto is appropriate, but as your net worth increases, yeah.

If you want to go to 5%, 10%, I think that I’m just thinking of him from a theoretical perspective, right? Like you want something very volatile, high risk, high reward. It greatly increases as your net worth increases. I think. As a percentage, it’s just, I would look at it, but then again, you don’t get broke if you don’t take some chances

It’s hard. I fully believe both sides of the coin. Half of me thinks man, that is stupid to be having all that money in Bitcoin. It’s not real. It’s real, but it’s not based. It’s not, it. It’s not cash flowing. No assets. It’s just soft, pure speculation. I just look at the game. Look at how people believe in it.

Like they think it’s like the second coming of Christ. Yeah. This is a conversation I had multiple times last year when we’re doing that Chase Creek development deal, where I was like you guys who don’t have a good job, like if back then people were worried about their day jobs, right?

Especially the oil and gas guys. And I was like, if you have to worry about where your money is coming from, maybe this isn’t the deal to go into, maybe you’re looking for more of a cash flow deal, but then if they’re, they’re. But then I was like, how else are you going to get above, accredited status and beyond.

And if you don’t take some chances now, so I don’t know if those are two ends of the spectrum, make your own decision. Good luck. I definitely think you got to, you have to make some calculations. Risks and figure out where we’re willing to accept it. Cause if you go set no risks, it’s I dunno, you think about the guys who are scared to put money into anything and they have it all in their savings account, getting 0.5% high interest savings.

It’s wow that’s the worst thing that you could do. That’s just so you get nowhere with that. But then before you buy crypto and it’s completely opposite of the spectrum no. What I think is wrong, there’s only one rule that’s certain here is to use the analogy of say we were like gambling in Vegas.

We need to have a certain set point on where to take the overflow of profits to at some point, because if we keep playing the game in the Las Vegas casino, we’re going to lose. That’s how the odds are paid. Now, maybe crypto isn’t the same type of game, but I think it’s prudent to like, maybe if this doubled.

The next six months, you have a pre plan to take some of that overflow into real hard assets. I think that’s the prudent thing to do. Like at least you set the terms, so you don’t get money drunk with all these returns. Cause in a way that might be what is happening here. You had a little nice 20% return, but that’s nothing like a lot of these kids have 10, 20, 30 X on their money.

Right now. But this stuff. Yeah, I, and I liked the strategy of having a diversification plan where certain assets, investment categories, you’re only going to have X amount of percent. And so crypto for me was 5% and I went way over that accidentally. And I, yeah I definitely see a lot of value in trying to.

Push that back down closer to 5% that might net worth and not go over more than over that. Because then I won’t cry at night if I use it. All right, you’re now you’re the, you’re up. You’re up on the house, but make sure you don’t lose, yeah. Cool. Yeah. We’ll wrap this up here.

If you guys like these, we have all these YouTube channels. And if you guys sign up for the club there’s also a page with all these in order of networks. So you guys can see, find where you are in terms of net worth and start listing from there on and see what else is ahead of you guys.

Thanks Nick for putting yourself out there. I think a lot of people got some value out of this. If not, they’re just going to invest in crypto because they saw one guy do it. No, don’t do that. Don’t do that on my account, please. Financial advice. We’re here to get your own profession.

All right. Thanks guys. Okay. Thank you.

Non-qualifying Home Mortgages and HELOCS With Benson Pang

https://youtu.be/PVKHW4R35lY

Hey simple passive cashflow listeners. Today’s going to be a little bit more of an advanced topic or for some of you guys save for the later, it’s going to be talking about what do you do to qualify for a really big mortgages when you buy these really big houses that, you shouldn’t be affording it, but Hey, you got all this cash flow because you’ve been investing the right way.

Now again, might be a more advanced topic for later. But if you’re getting started and you’ve got a lot of home equity, if you’ve got more than 20% of your property, your home paid off, dude, you guys gotta do something with that, right? You guys should not be living by the mindset of paying off your house.

Right? There’s these two kinds of sets of paradigms out there, 99, 95, whatever. I’m just making this stuff up. I’m going to argue that 99% of people out there are really bad with their money. They’re not like folks like you who listen to financial podcasts, max out your 401k, good little boys and girls work your jobs.

High contributors to society pay most of the taxes. It’s not the wealthy people paying the taxes, that’s for sure. If you want to check out our tax guides, go to simplepassivecashflow.com/tax. If you’re interested in learning more about that type of stuff, and it’s not the poor people. Obviously, we’re not going to go down that road.

Now again, a lot of these people were people that look like grownups, that kind of act like kids financially, nothing wrong with this. Again, most people are like this, and this is why the mainstream financial advice out there on the street is buy your house to live in because y’all, can’t seem to keep your grubby hands off your money. So we need you to put your money into this house and pay it down over time. Before you spend all your money on all these things that you can manage your money in, create a budget for. But again, a lot of you guys aren’t like that, there’s a paradigm shift here, the type of advice you’re moving away from this Dave Ramsey world, where you’re told to pay off your debt and you use debt now responsibly.

And this is why you listen to this channel and you are supposed to use debt to your advantage. What I would suggest is to go to simplepassivecashflow.com/heloc if this whole concept is new to you, I am going to suggest checking out some of the articles I wrote in Forbes at simplepassivecashflow.com/debt.

It is a mindset shift. And I think that, you know that you understand it, but you may not embody it. And you’ve got to get around other people, right? You have to join our mastermind group, getting around other people who are taking a huge HELOCS and then taking it. The next level of getting things like secure backline of credits, secure Line of credits on the infinite banking policies is the next step.

And for somebody who’s just thinking about refinancing their home, that might make their head explode. And because it goes against everything we’ve been taught, like I always say, take advice from financially independent people moving on this path. Not from your parents, your friends, or family.

How are you going to spend 30, 40, 50 years paying down their house and that’s it. They’re going to be cash poor house rich. That’s not what you want to be. So again, all you guys, you’re going to get me to get a heloc first, because a lot of your equity is going to be trapped in your home equity right there.

HELOCS are a great way. You don’t pay fees on it. The only downside is you’re not gonna be able to tap all their equity because the banks are gonna want to sandbag you on the evaluations to cover their old buds. But that’s fine, right? For a lot of you folks who have your properties paid off more than 30, 40% plus, that’s not a good thing.

Any time you’ve paid off your house more than 50% and you come into one of our events before are looking around oh my goodness, you need to stop doing that for your own good. And then put it into good investments where you’re going to create positive cash flow and grow your money.

And then that kind of creates gets you on the bandwagon for all these tax advantage investments. But, before I go into the whole simple passive cashflow, the trifecta, which is good investment, tax systems and infinite banking, I’m just going to send you to the websites simplepassivecashflow.com/heloc to get started with that and enjoy the show because if you keep following this, it take most people like four to seven years to get on the bandwagon, get your passive income up by getting your lazy debt equity, which is typically in your home doing something. And if we get them doing something, at some point, it’s going to grow over time.

If you have a million and a half in the bank right now, it may not be in the bank. It may be in your home equity, retirement accounts, if you get into something lame, that’s making 10%, which is very achievable in the alternative investment world. You’re making 150,000 probably tax free. You probably don’t need to be going to work tomorrow.

You have enough potential energy. You just have to really shift things and part of that is getting a heloc and putting that money in the right place. So it’s a knowledge game. It’s a mindset shift to get there. Fortunately, you’re gonna need a peer group to do that, but enjoy the show.

Hey folks, I got my buddy Benson Pang, a lender out of California, to help me out with a personal issue that I’m having. As a business owner, I am pretty good with my taxes and deductions, but in terms of dropping down my taxes, I drive it way down. If you guys want to see my taxes, I think last year, My AGI was 25 grand in 2019 or 2020. And then this year it’s probably gonna be something very similar. I haven’t gotten it back, definitely like nothing of course, but which excuse me for going into loans now. I co-sign on all my general partnership syndication deals, but it’s totally asset backed.

And the funny thing is they don’t care about credit score on my tax returns, they just based it off of the asset and my personal net worth. But unfortunately I can’t go buy a house here in Hawaii cause I don’t fit in their stupid box. For those of you guys who are business owners, this podcast has really pertained to you guys and it also may pertain to you guys. For those success stories out there, you guys want to buy those 1, 2, 3, $4 million.

Dream homes. I think today’s podcast is going to pertain to you guys. But this is the second time we have Benson on the podcast. Hey Benson, why don’t you tell us your engineer to lend a story real quick. Hey Lane. Good to see you again. I went to school for engineering and graduated civil engineering. I worked at a local utility company, new nuclear power plant for four years.

And God, my engineering, masters, professional engineering license, and gave it all up to be a loan officer. As an engineer, I need someone to explain to me how a loan works in the engineering way. So the whole reason I did that is so I can benefit the engineer crowd. So we got Benson to explain it in engineering, speak to me today.

So maybe it should explain to us like, okay, what options are available for weird folks like us in this situation. For weirdos, like you. I filed my taxes. I got with letter taxes. It’s just, you have a lot of legitimate deductions. And I think in 2020 a lot of self-employed borrowers will suffer for the most of the year. Really for the first eight months of the year is really uncertain. You don’t know where your next dollar is going to come in. You have to pivot very quickly. And hopefully by now of last year, you have already pivoted and started making some reasonable income. And a lot of times when we look at business bank statements, it shows that around August or September is when people started getting their regular deposits back. If you were to look at your 2020 tax returns, you’re going to be like, boy, how am I going to qualify for a loan?

Because the first nine months or eight months, it’s just crap. Recently there’s a lot of bank statement programs that pop back up as they allow us to use your business bank statements from your last 12 months to qualify you for a loan. So even in a conventional loan and a home equity line of credit, those are all requiring tax returns, business main statement loans.

We call it non QM loans. They don’t look at your tax returns, and really only look at your business bank statements. So I’m right to think like the Fannie Mae Freddie Mac route is no blood. All of us don’t even waste my time. Yeah, I’ll take a look at it just to see if you qualify, there are things that I can add back but for the most part, yeah, you’re right.

It’s going, we typically glance at it and go straight to the business bank statements and a lot of people ask oh, I also have a lot of expenses on the business bank statement. My answer typically is I don’t worry about the expenses. We look at the deposits, legitimate business deposits, and then 50% is the most we’ll take from it.

We deduct 50% as your expense ratio in cases like real estate agents, where they don’t have a lot of expense. So we just need a CPA letter saying that, oh, their expense ratio is 10% or 15% and we can use most of that business deposit.

Even in a higher expense ratio type of business, I don’t know, manufacturing planner. That will use 50% yeah. You mentioned the 12 month rule. Would it behoove me to take all my income in a certain period of time and then lock it in? Is that part of the game? Yeah, basically. So the lenders we use have an AI technology where we send in bank statements, it spits out an income.

And obviously I know how that works. They add up all the business deposits and average in the last 12 months. What about some business owners who do this S-corp salary, dividend split, where, I can show how much I make right. Are they going more on the business level or that S-corp level where I can connect to and show my business level?

Since we’re already looking at the business deposits. They’re not going to care about how much of the business paid you as a business owner. Let’s just go off like a million dollar home this is what exponentially, the price of the home that you’re getting into. You still have to maintain a debt to income ratio, right?

If you’re buying a $1 million home, 20% down, your monthly payment is probably like $4,000 or $5,000. Ideally we want to see $10,000 after your expense ratio. So if it’s 50% and we wanted to see $20,000 gross being deposited into your business bank statements, average for the last 12 months or a million dollar purchase price.

Correct. Prices here in Hawaii and California are expensive. Yeah. And we go up to a one and a half or even $2 million in those business bank statement loans. What about there are some ballers in our group? What do you do when you’re trying to buy a $5 million home?

I asked the question because, like I rent where I live and I should probably buy, but I just do it to motivate the young guys, give them somebody to aspire to, a good role model. So I don’t buy my house to live in. And I’ve been using this whole thing as an excuse.

Oh, I can’t qualify for a loan. But that’s why I’m asking you the question, what do you do when you’re at the end game and you actually want to have a place that you just sink money into, as a money pit. And you want to buy a $5 million, $10 million house. What are the options for that?

At that $5- $10 million range, now we’re talking to a whole different loan. A lot of the loans go up to $3 million. And then when you get past that 3 million, you actually have to have some sort of banking relationship at that point. We also work with lenders that can go up to that level.

But now we were talking about okay, are you a private banker with XYZ bank? And now they can hook you up because you have $20 million sitting in that bank. Got it. Like a lot of people get a collateralized loan on their cash value, life insurance. Morgan Stanley has that.

A lot of those wealth management companies have collateral. Like they use their cash as collateral. So that $3 million purchase price. Again, you just have to strategically find that full month period where you have 20 grand for every million dollars so 60,000 or a little under a million dollars of income per year. But when you get above that mark, this sort of Johnny Walker blue label comes in and walking into some banks is like, just giving you the Johnny Walker blue label and you go divvy that up to your friends and lending partners. Like, how does that work? Asking for a friend, of course. It’s still all by the guidelines, right? But I think in that realm, guidelines are meant to be pushed a little bit. So let’s say someone who has less than required income, but they have other compensating factors, like they have a really high credit score or they have a lot of cash reserves.

Then that can be looked past. So it really depends on the price range. I think those borrowers all look very different. It’s not just an 80,000 to $190,000 engineering job. The one thing I’m concerned about doing is that I don’t want them to lock up dead equity, right?

You hear these IUL, premium financing, these types of products that a lot of us talk about in end games scenarios. Like they don’t lock up a lot of your liquidity. You can’t touch it. It’s dead to you. It’s effective, like you put a down payment on something cause you can’t touch it.

That’s something I’m a little weary about. So what about this strategy? Let’s just say you went out and you bought the $5 million home cash. Can you get a heloc and effectively strip out 80000 of that. That’s a lot of money for a heloc. When I think about a $5 million house, I might just invest enough with you and have the cash flow to rent a $5 million house, but that’s the problem, right?

At some point, that’s why I do what I do. I kinda currently rent a million dollar house. That’s an average house here in Hawaii, but when you start to get to that higher echelon three, four, $5 million to rent your option goes severely down. That’s true. Yeah. And the people who rent out to those people, they’re a little cookie, right?

They’re typically like international Asian investors that own that south. And they, for some reason, somebody tricked it into renting them and they just slipped this on a whim and they kicked you out. Like I don’t want to be kicked out of the place I live. That’s why, unfortunately to me, I have to buy at that point.

When you’re at that one, one and a half or even 2 million, I think it would be wise to buy. But if you were to take that money back out of your down payment money back out, you might have to wait a couple of years for that appreciation to happen before you can take the money out. I agree with you.

If you put that down payment on any half decent investment, you’re going to have a lot more fun. This is like, when you have such an amount of money you don’t care anymore. It’s more about enjoyment and quality of life, that’s what people tell me. I think at the $5 million, $10 million house, I don’t think it’s about money anymore at that point. Your taxes are like 40- 50 grand right there anyway.

Your property tax alone it’s a lot. So you’re saying the banks would max out the amount of the heloc thing. Like it’s not as simple as getting 80% of the value. Yeah. Is that the four or $5 million property? Yeah. But when we’re talking about let’s say let’s bring it back from Mars back to earth for a second.

For people like you and I, we have a $1 million house in LA or Hawaii, and perhaps your loan is up to six, five, 600,000 and you need a couple of hundred thousand. Usually the helocs are not a problem, which kind of brings me to a lot of people asking me, like I asked, should I cash out?

Or should I take a heloc? How do you typically do? On earth, not mars, right? Like the heloc you’re going to get away with less fees doing it that way it’s more flexible. To me, the downside is that HELOCS can be pulled at any point, whenever the world gets a little crazy. And I think the bank is always going to screw you with the appraisal.

They’re always going to shortchange you on that perspective. Effectively, you’re only getting if the advertised LTV was 80% email and he gets 75 or 70, but at least you don’t have to pay a lending broker and go through all the blood draws of DNA samples and pay fees too. I don’t know what you would do?

I’ve gotten a couple of helocs myself and a couple of times I, they actually asked for more documents and when I was refinancing myself. They actually asked for more because when you get a heloc now you’re at the bank level, you’re at their mercy of their guidelines, their heloc guidelines.

And each bank might have a different guideline. The US bank or bank of the west, they one might ask for two years of tax returns. One may ask for one year. But if you’re doing a conventional loan, you already know what the guideline is. So to me it’s a similar difficulty and even on a cash out, you can do a no point and maybe even no fees kind of cash out refinance. The pros and cons are number one. I need a HELOC, or why do you need a HELOC? I need access to money from the equity, right from my house. Why do you need it? Is it for the short term or is it for the long-term? To me HELOC is more like the short term.

Like you said, less secure because they can pull it anytime when there’s an economic downturn. They can pull it to today. Tomorrow. Wells Fargo froze everyone’s personal line of credit, even though they unfreeze. I think a couple days ago but it shows that they can do what they want to do with their line of credit.

What about the jumbles is conventional financing, right? So for me, there’s no chance that even looking at that, when it comes to jumbo, you’re looking at an even lower debt to income ratio, right? 43, a debt to income ratio instead of 45-50. And they asked for more documents. So a lot of times in LA our clients who are looking at 1.1, 1.2, we in 20% down, we sometimes help them do what we call a piggyback loan, where they get the first loan as a conventional loan, Fannie Mae, Freddie Mac loan, and then a second as a piggyback HELOC.

So it was a smaller amount where they can manage to pay off in the next 10 years. Again, heloc has a ten-year drought term adjustable rate. It can turn into a fixed loan after 10 years at market rate. And that like whenever that fateful day comes, when I give you that call, you may choose to piece it in that fashion or go to somebody in your black book to get the whole thing as a business loan or the non QM. See, that’s a thing too. Bank statements are just one of them. There’s 1099 loans where, you get a 1099, you’re a truck driver. You could be a real estate broker and you get a 1099. I can go off of that 1099 instead of bank statements. And or if you have a couple million dollars sitting in a bank and you just don’t have active income, we can actually use something called asset depletion loan.

You, you have $2 million, we divide by 84. And that’s your monthly income? That sounds like a lot of people in the mastermind are getting like they’re stuffing their cash value and over time, maybe it goes to over a million dollars. They can take the loan from Penn mutual or whoever they’re working with at 5% or they can take it to one of these little small banks and get 3.5%.

That seems to be that option for that. Is that the same term for what that is? Yeah, you can actually get a bank statement, loan or asset depletion loan for three and a half depending on your down payment amount and credit score range between three and a half to four, that’s another option.

What about another person who mentioned to me that just getting a straight up business loan is not on your house. But you get a business loan on your business, but then you just use that to pay cash for the property and you collateralize a loan with the property. I would say, if you can get it collateralized using the home instead of a business loan, that would be the wisest, just because it’s going to be stupid, expensive to get a business loan.

And they always trick you. I got a letter from American express the other day. Oh, working capital loan, only 0.75%. I’m like, oh my God, 0.75% per year. And then I looked into the fine print it’s per month. And if you multiply that by 12 that’s a 9% interest rate. Yeah. That’s how all of these online banks make money, right?

Like they’re all free and they have good services, but they send out these teaser rates for working capital or essentially like payday loans for business owners or online people. That’s how they’re making money. That’s all online banks are. And sometimes I just like to look at those letters and try to call in and see what they really are.

And I got offered a 13% interest rate loan by some lendme.com or something. And I’m like, dang, that’s predatory. I mean it’s white collar payday loans essentially on the internet, essentially what it is. That’s why we do infinite banking, right? You stuff, money in there and you don’t have to deal with one of these guys.

You can just bank from yourself. You bankrupt yourself and you have to start young too. It’s not something you want to start. You start whenever you can. You can be 25 year old. You can be 55 year old. You just gotta start somewhere. Never too late to start infinite banking.

Going back to this first world problem. Big home purchase, which by the way, I’m not doing guys relax. Oh my goodness, that’s an expensive home. It’s kinda just curious like what the interest rates are, what are the options? Planning ahead, but if you exhaust all options, all I’m hearing is just, we’ll go talk to you.

There’s a way to do it at the end of the day. I think if you’re Lane or you comfortable living in it for the next five, 10 years, I think it might be a good time to consider the options.

Folks, if you guys are in similar positions as this going to Mars scenario reach out to Benson Pang, nestmade.com. He’ll help you out. You guys can guinea pig it for me and then that way Benson knows what to do when I finally come knocking. When you get that $10 million property. We’re going to party in it. One of these days. Thanks for jumping on Benson. Appreciate it. Hey, thanks Lane.

Never Invest in Real Estate Based on an Internet List

https://youtu.be/NPHXCfRR7lE

And this is an extreme example that 10 90 premium split. In some cases, some of the people in the family office group have found that the 70, 30 premium split is actually better. That’s an, I actually. And this is just more of the extreme about that example, where you’re still complying with those mech limits.

So you’re getting the tax free treatment, but you’re stuffing as much money into the cash value and you’re minimizing your fees. One unique way that someone explained. To me, as far as understanding the premium keyway relationship was relating it to your house, the base premium is like your mortgage. So that’s an expense or a cost that you have to for your house by slowly paying down the principal.

So base premiums does add a small amount of cash value. Just like how paying down your mortgage slowly pays down the principle. You can think of your paid up additions as if you were to do that. Renovation where you spend $50,000 to renovate the kitchen at $50,000 spent on the kitchen, basically increase the value of your house.

Hopefully, almost exactly the same or even more so that’s the home relationship. As far as the base premium, paid up additions to mortgage and our renovation, again, different ways to understand this and it to me personally. And it really took me about a year and a half to. The school and the differences between typical whole life insurance, configuring it in a way and using it in a way that the wealthy do have for some of you guys use that strategy where you’re taking a hilar out on your mortgage and paying down your mortgage with simple interests versus amateurs interests.

It operates in a very similar way. And in fact, when you’re using a whole life overfunded or infinite banking or whatever you want to call it, simple, passive cashing, it is superior to using a heat. In my opinion. And I actually think that this is a lot better than using a 5 29 plan for your kids’ college savings too. .

Coaching Call With Henry – 2016 Hui Investor | Searching for Purpose Then but NOW FINANCIALLY FREE

https://youtu.be/8n7Hm-Ru070

Hey simple passive cashflow listeners. Now on today’s podcast, we’re going to be doing a coaching call with a long time ago, investor. And we’re just going to call him Henry in this case, if you guys haven’t heard of this acronym, Henry stands for high income, not wealthy yet, but he’s certainly accredited nowadays.

That’s for sure. But I think he is a great role model and this particular gentleman has been a great blue guy for us in our hui investor group. Most of our investors are in their forties and fifties, but they have younger kids finally going to college and that’s really the benefit of our mastermind group.

And if he were to come up to our retreats, they get access to these kinds of Henrys, these high income, not wealthy yet, guys that work for Amazon, Microsoft making a button book 50 under $150,000 out of college. And the world is at their fingertips. If they can find a way not to get caught up in the rat race, just like all the other friends.

But before we got to that, Just had a taxi and sat down with my guy and just wanted to go over some takeaways I had. Now if you guys want to get the full tax simple passive cashflow guy, you can go to simplepassivecashflow.com/tax. But I just want to list down a few of these takeaways that I had. So first, cash donations, $300 per person.

A hundred dollars per couple. Now this is important above the line. You can take up to a hundred percent of your AGI, but this goes away in the year 2022, where it goes down to 60%. So you might want to think about doing it every other year, perhaps number two here, 50% of your Beale and beverage deductions is typical.

But remember. In the year 2021 and 2022, it is a hundred percent. So that is going away after this year, 58 at 58 and a half cents per mile. For your mileage, number four here, equipment purchases in the year 2022. This goes away in the year 2024. Just keep that in the back of your head. So it’s been a couple of years since the fifth point here.

Everybody was talking about the 1031s getting killed. And I think this is the same thing that happened several years ago when we’re doing the same fire dance, but it’s just an example where there’s a bunch of games being played. And I think a lot of that kind of marketing by CPAs to get that using fear tactics free will.

Clear minds typically prevail. Although I do think. In the future, it’s going to get harder to pay less tax. And that’s why you need to get on this now and understand how the games are being played. Number six here on January 1st, 2026, the tax rates will go back up as of right now.

They’re a little low. The 12% tax rate goes back up to 15%. The 22% tax rate goes back up to 25%. 24% tax rate goes up to 28% and I’m a person always asks why reasonable behind this is, I think this came about, Trump put this in, or this was a stimulus plan package where the tax rate would temporarily again, til 2026, all the tax brackets are brought down, maybe a few percent points across the board to give people generally some tax relief, which means well, and this is where you have to take ownership over your old plan. If the taxes are going to be going back up the next several years now is the time to be potentially jailbreaking your retirement funds or what I call leaking that out slowly.

Now, if you want to go over this in a quick onboarding call with me, go and sign up for the hui pipeline club at simplepassivecashflow.com/club and you get one free, quick coaching session. We can talk about this very thing. How will your taxes get impacted and how to best strategize to take your retirement funds out or check out we’ve done a couple of coaching calls on it when you do sign up for that list.

You do get access to all the past coaching calls too, along with the one where we’re going out today. Second to the last point here, 1099s will be reported from Zelie cash app, Venmo, PayPal go fund me. So if some of you guys were keen on the fact that all these pay apps weren’t going to be telling you to the government, what you were making, or you could get some payments in that way without paying taxes on them.

Shame on you. You shouldn’t do that. This might be kind of smart. But now starting this year, those apps will be sharing that information to the government for whatever it’s worth. And this probably had to do with, several years ago, they started to ask for social security numbers on LLCs. This is all part of the government getting more and more information whether it’s right or wrong, who cares it is what it is folks. So get used to it. And the last point here, the 1040s are due on October 15th, 2022 not in April. I don’t know why everybody thinks they’re doing April.

You need to file and extend in April but be like all the cool kids that just extended out to October your tax preparer will thank you in the long run. And they will be less in a rush and they might not want to just do it the easy and quick way when you do it like that, you can also see the latest tax changes in the tax code unfold through the summer months.

And some of these points that I made earlier today, you’ll be able to make better plans. And some people think that giving the IRS six less months to audit your file is prudent too. I don’t know if that’s fact, but look, just with being able to see what unfolds ahead of you in terms of which way the tax code goes.

I think that’s reason enough to, Hey man, just file it in October. Again, I think most of you guys listening out there are good little boys and girls like, oh, I first thing was, Pay our taxes and fire taxes when you’re supposed to, which you, they brainwash, you think it’s April, really that’s when you need to file.

But doesn’t mean when the 1041s are actually due, which isn’t again in October. So be like the cool kids. If you need a new CPA, now’s not the time to be looking for one. Probably we want to be looking for one after the tax season. Amy, April, they’ve got most of the lay people doing their taxes at that point.

And then March, they’ve got to do all the LLCs and corporations at that point. So that’s a very busy time. In fact, it’s already busy for them right now and might want to start hunting, interfering in May or June. If you need a referral shoot us an email team@simplepassivecashflow.com. If you haven’t joined the club and checked out all the great information that we have behind the members portal, which you can only get when you sign up at simplepassivecashflow.com/club, you can join us there.

And, thus far we’ve raised over $130 million from investors, just like you from our group, which is crazy to think that, I’m not gonna mention the name, one of the big crowdfunding websites out there. They’ve raised about a quarter million dollars of capital, a little bit more than a half of that, which is not bad for a little website, a simple passive cashflow created several years ago in 2016, actually we started this, and if you guys are new to the whole private equity, crowdfunding syndication, 506B and 506C world, and go on Google on espn.com. The WMB amounts, a $75 million capital rate to eight growth strategy. And this is nothing new, right? This is how things are getting done in the world. I’m not advocating for this investment. I personally wouldn’t invest in this.

They’re going to raise $75 million to pay for a bunch of staffing costs to push the WNBA forward again But this is just a great example of something that is right underneath our noses that happens all the time where private, wealthy individuals. will fund a project and become part investors within this little country club deal they have going on. Again, we’re not giving any legal or financial advice or investment advice.

You’ve gotta be crazy to take some word or some guy from the internet and that’s what we tell you guys to think for yourselves, right? Again, I’m not investing in the WNBA personally, but just wanted to point that out there. And if you guys like the show, please rate and review, it’s been awhile since we asked for that and enjoy the coaching call

Hey, simple passive cashflow listeners today we have our friend Will Rogers. We don’t know if that’s the exact name, but that’s the name that we’ve chosen for him today. He is a simple passive cashflow Hui OG here. So here’s this guy when we started the podcast we would do organic events, pop-ups and we stopped doing this because we realized whenever you put real estate on any kind of local REIA , this is when I was back in Seattle. Bunch of RIFRA comes in, you know, people who don’t have any money. And, but this one dude came in and he made, what were you getting paid originally?

Like 150, 200,000 at your tech job. Did you have a beard at the time? No. I grew into that. Yeah. You grew up, but yeah, you, you are like what? Just out of college, high paid salary. They call you guys HENRYs. I don’t know what the acronym is called, but high income but not high net worth yet back then. Higher earners are not rich yet.

Yeah Henry we’ll just call you to change my name from Will to Henry. Got it. But net worths slightly over a million, but once you continue the story for us. So I went to school on the east coast. I graduated in 2016 and then I moved out west for a job to become a Henry. So it was working for Amazon. It was a very low starting position entry level. And I was a software engineer or programmer, those of you who are not in the tech industry. And I’ve read rich dad, poor dad because I was probably like three weeks into my job. And I was like, man, like I spent four years prepping for this thing.

I don’t feel like I’m making an impact that didn’t like what I was doing. I guess I just have a low pain tolerance cause I was the only three weeks in, but yeah, I just, I read rich dad, poor dad. And then I started scouring meetup, like meetup.com, like the app. And I saw like a hundred different ways to meet up with people and talk about real estate because that’s the way I thought was a good way out.

Tried to do my own developments, but I wasn’t rich enough yet at all. And my income wasn’t there, the Seattle market was too high priced. So I just kept looking and failing. And finally I stumbled upon simple passive cashflow and specifically Lane. He was still here in Seattle. I think at that time he was trying to get rid of like 10 single family homes or something.

Henry likes the single family home. Steve. No, just kidding. It was kind of true. I mean, you, you said, Hey, you should start with a couple of single family homes. I got a few. And then you know, things make sense. We’ll move on to syndications. And I basically begged Lane to just let me jump ahead and just say, okay.

I get the single family home thing. I don’t want to be called at night. I don’t want to manage managers of, or properties. Can I just be in a syndication? Frankly, my net worth really wasn’t there yet. Because I had just started working. It’s just fresh out of college. The income, I think, was the only thing that really made sense, but it did take me some time to kind of nudge Lane into letting me into a deal. We formed a relationship, got to know each other, things like that. And that was, yeah, that was 2016. So now we are here.

Back in that day, like their first couple years out of college. What was your top line salary? I asked this of everybody, what did you able to save like, and that’s kind of your velocity , how quickly you’re moving. How much of a cheapskate were you? You’re still kind of a cheapskate.

I am, I think this year is the first year that I decided to ease up a bit. But yeah, when I first started, especially in Seattle, like these rent prices out here were completely foreign to me. I’d been in Virginia my whole life and, you know, 700 bucks a month in rent was pretty solid.

You get out here and rent is three grand and you’re like, what’s going on? So I got as many roommates as I could. I actually had three roommates with me. We were living in a three bedroom and so one. Pair of roommates where it’s actually a couple and they shared a room and we divided up the rent and I paid as little as I possibly could. So I think my entry level was between, I think it was like one between 120- 150 and I think the first year I saved 78,000.

I beat you with my time. I was over a hundred but, yeah, I think it makes sense. Save any money, but that’s all that really matters. Like if you’re a younger person or even if you’re older, if you can save 50 Gs a year, I mean, you’re going to get to where you want to be under a decade. I think I agree. Yeah.

Talk to us about, you’re hanging out with like a lot of people with a traditional mindset where. You know, a lot of computer programmer types, a lot of ego is involved in those kinds of jobs or the way they invest. Maybe talk us through the struggles and the differences between the simple passive cashflow folks and those that peer group you’re stuck in.

The biggest challenge was upfront about converting. But then, you know, as any reasonable person does, they’ll look to their left and right. Maybe talk to their parents and say, Hey, is this doesn’t make sense? Things like that, but you’re right in the engineering sector, at least especially software engineering, people love optimizations, and they love thinking that they can dive in and do it themselves.

So it’s not uncommon for friends of mine to think of stock traders and lose an entire year’s salary just because they thought they could be, you know, a stock trader or it’s not uncommon to have friends of mine who really, just want to optimize their 401k as much as they can. And there they do a mega backdoor Roth and all these things.

And in my opinion, you know, they’re kind of like optimizing percentage points. So, you know, there’s not many people around me who would do something like this just because they’re busy, either micro optimizing, or they believe that they can do way better. And that stuff can get addicting and it can really feed the ego when there’s like that instant feedback.

Right. You make a trade and you get confirmed confirmation bias, I think. Yeah. A little dopamine hit and then he doubled down. Yeah. One of your first deals. Like we had fires and then we didn’t pay cash for like a couple of years to just kind of gummed up cash flow. But I think a lot of people, they don’t realize, like it’s kind of like a train or there’s a lot of slack, like the train might stop.

But things might be going well, but you don’t see that slack come out until the very end. For me, it was about visibility. Right. So if I understand that it’s recoverable and that the long-term business plan is still valid. Like who cares if, you know, as long as people don’t get hurt who cares if a couple of units burned down, if a tree falls on it things like.

Oh, the tree you’re in that one too. Yeah. I saw a lot of it. I mean, it’s been what, like, I don’t know, five years, six years. So it’s yeah, I’ve seen a lot of stuff. Yeah. Did I tell you on that tree one, we also had a homicide. You sent up a news article. I wasn’t going to mention that here because that really scares people and thinks that we’re, you know, I don’t want people to think that we’re in a slump.

W we’re really not, but these things at scale will just happen. So, yeah, I mean, that’s why I bring it up cause we kind of stay away from the class C hairy stuff, you know, a little bit better clientele today. Personally, I think it’s a lot harder for you Lane to like manage those deals and make them happen.

But those are the ones with, in my opinion, like a lot of meat on them. But they’re riskier. Yeah. Are you doing any direct real estate personally these days? Because some people will buy a few rental properties locally. That to me doesn’t make any sense, but it is what it is.

Right. They do it in better areas, but then they’ll go to us to outsource the hairy pain in the butt stuff with difficult tenants. And that’s the way they diversify amongst them. But the pay scale, I guess. Yeah. You need that. So Henry talks to the young Henry here. Let’s kind of build a timeline.

So you started this in 2016. That’s when we first met, tell us what you did and then maybe, you know, take us through the years of what you did. And maybe some of the lessons learned here. I think this is the best stage for you to kind of talk through it. And if you guys are listening to the podcast form, we have this in a YouTube channel.

We have the personal financial sheet up with the, the investment that you’re acquired, the cost of hoop at market value, etcetera. If you guys want to follow along in video format. I’ll probably be out of your friendly to cause you understand you’re very you have a very high EQ.

That is what I noticed most computer programmers, engineering types do not have that. Right. And I think from what I see of a lot of the engineers that invest with us, they’re typically not true. You’re capable. Weller’s the technical, they’re the people who have some people’s skills, stepped in engineering sales roles, and kind of gotten out of the trenches with that stuff.

But it’s just a takeaway that I’ve kind of seen from you and other engineers amongst the group. That makes sense. That’s a lucrative angle software and then software sales it was 2016. I begged Lane to get into the first deal in terms of a syndication. So basically I would be part of the limited partnership, the LP, and then Lane was part of the GP so he was responsible for bringing people into these deals. And then he was also responsible for vetting them prior to me. I mean, obviously I still have water. I’m responsible for my own money. Right. So I need to validate everything that Lane is saying and make sure things make sense, make sure the business plan is feasible.

I had to pick that up and learn it pretty quickly to get into that first deal. I don’t even think that first deal is displayed here, but I can’t remember what it basically is, any deals that are closed. I don’t think I put it here because the market value is now zero. The personal financial sheet is just supposed to show currently what you all said today, but I think you jumped in to a Georgia deal.

Maybe I think that’s it. Okay. It might’ve been, it might’ve been Joseph or I don’t know. Well, we’ll see. But anyway, regardless that was the first deal. Basically. I just saved up all the money that I could keep my expenses low. I liked the deal. I liked the performer. I was happy with the business plan.

It wasn’t what I liked about it. I don’t promise any stellar returns, right? I was, my, my general plan was to build up several of them. Kind of base hits, get a foundational layer down to, to replace my living expenses and then start swinging for the fences. So, you know, we can talk about that more later if we, if we need to, but that was the rinse and repeat attitude I had for at least I think the first four deals were just going to be base hits apartments.

Stable communities, population growth. I think I got into maybe one or two C-level deals, which I, I actually didn’t mind that our word problems, you know what I mean? Things happen, but that’s where I wanted to go. So yeah. And I see here, maybe we shouldn’t show this to folks, but like you got in at the right time, we were kind of getting started and you got in at the lower middle.

Done this cause we had built a relationship and I didn’t feel super comfortable with you flopping in 50, a hundred grand. But gone are those kinds of days because I’ll tell you what, it’s a crap shoot. Like, you know what I mean? This is a game of social investing both ways, right? Like I’ve met, I built a relationship with you.

You’ve come to Hawaii and hung out at the retreat. It’s been quite lucrative. I think both ways. Right? Investing. But sometimes when you bring in investors that under $50,000 are kind of interesting characters and you I’ve pointed this to you, right? Like, cause you’re on the fast track and you kind of get zipped by all these investors, people in their thirties, forties, and fifties.

I mean the way they wrap their mind in terms of investor mindset or just money scarcity, you know, ideal. Yeah. And it can, yeah, I think, I think what was important to me was understanding it from a root level, trusting you. And then understanding that all of my work was upfront, right. That’s really the key to investing in syndications.

Do all of your homework and then once the, once you send your money over that, that’s it, you’re an LP, right? You’re, you’re a silent partner in this. And if, if it goes bad, you didn’t do it. And so you can see here that I think I did at least a reasonable amount of homework for the Huntsville apartment. There’s one apartment listed on this sheet here where it says my acquisition or the cost to, to, to get into the deal.

It’s 50,000 and it says the market value today is 8,200. That’s just because we were waiting on that last little bit to trickle in. Cause that deal did finally close. So that w we, we still made a lot of money on that deal or, or more than 50,000 that I put in. But yeah, that’s, don’t, don’t think of that as like we lost 80 or 90% of the investment.

Yeah. And just to summarize for folks when he means, like going in on a base hit, stabilize, you know, light value add first, and then I don’t know if we kind of came up with that strategy for you to aggressively kind of move into more home runs. But then you kind of went and did some developments. Yes. So here’s the thing.

Lane was kind of my foot in the door to the entire industry. And then I don’t know if he ever met any other real estate people, but people talk about it. Like people really love it. The community is pretty big and there’s not a scarcity mindset in the real estate community that I’ve seen.

So, you know, talking about it, networking things I basically met other people who do what Lane does but in different areas of the world and in different asset classes and in different stages of those asset classes. I think most of you have the ability, cause you’re not married, no kids in theory, you should be able to take more risks AF but I think it’s prudent exactly what you did.

So I think this is a great blueprint. But then you kind of went into more of these developments where now personally, I’m kind of looking at New York development myself because New York, you got beat up, right? Like, heck this is the time to do it. Yeah. Yeah. And I, you know, I was really scared because again, like I did all my homework, I’d put the money into the development and then COVID.

Yeah. So we thought it was going to go bad, but then lumber skyrocketed and we had most of our places already built up. So now all of a sudden we’re looking at extremely valuable assets and yeah, I mean, I just got lucky there, I think. But it didn’t look good at the start. W what is your kind of general advice to these minds is like, well, what Ryan’s doing, or what I’m saying is like, if you’re listening to the podcasts and you really shouldn’t be using the podcast, Financial advice.

That’s just silly, but get in a few ducks, get in a dozen stabilized deal first then depending if you don’t have a wife or kids or spouse or whatever to worry about, and you’re, you’ve got a good stable job, then roll the dice depending where you are in terms of your mindset. Yeah. And it depends on, you know, make sure you have your emergency fund.

I don’t think I have that shown on this sheet. You know, make sure you have a year or two of expenses saved up. And then, you know, make sure that you’re not going to miss the money. And just, just keep like, keep working hard and keep putting money into it and, and guide the Henry’s. They can make hay now before they get married and they have to go and go to council with somebody else.

Who’s likely going to say no, like I got lucky, right? Like a lot of the stuff I did first was before. I got married and I got proof of concept from most of the people in our group. They’re married and they’re kind of getting started with it. So I totally sympathize, I may not have the best strategies or been through it myself or have experiences, but other people’s problems on Henry.

Well, no, I mean, I would say it is, but it’s also mine too. Right. I, I want to expand my network and I want to help my friends out and I want to show them the way, you know, in terms of real estate is, is a, is a really good thing. But the thing is, they only see what they want to see. So if you come to them with a pitch and you haven’t proven success, like you don’t have a proven success of, or track record, they’re going to be skeptical.

Right. But now if I tell some friends about this, they’re like, oh, well you gotta get me in, you know, I have like friends lining up saying, Hey, like, how can I get in? Can you connect any, this is how much I have, you know, but five years ago I was laughed at. So I see that it could be similar. For spouses or family members.

So let’s, you came to the retreat in 2019 and drank the Kool-Aid with everybody else. And I remember you were kind of just searching, right? Cause at that point, what was your network? Maybe half a million. It wasn’t that much. No, but you had proof of concept with this stuff at that point and you knew to take us back to that mindset where you thought you were going to be in the plans at the time.

And then we’ll kind of go through. The junk. So specifically you want to know specifically what you want to know, like take us through like the transition. Cause everybody hears about people who are starting off or kind of people who have already left their job, but take us back to just wasn’t too long ago that you were, I mean, you had a cushy six-figure multiple six-figure job.

Give it up. What takes us to. Oh, yeah. So basically how did I, yeah. Transition, transition into

that stage two, because basically the way that I thought of it was to get that base layer down. Right. And then once I have that base layer start taking more risks and that there are more risks in terms of real estate, but also in terms of life. So what, what, like, is it a number baseline? And it’s different for everybody.

It was, it was, it was a mill for me. I needed a middle one once I, once I had a mill, I left my $300,000 job and I am now, you know, I went to go make an educational product that teaches people how to get into the tech industry that took about four months. And then after that, I’m now at a small healthcare startup.

So you know, that salary cuts, you know, that’s everything. But it’s. It’s far more enjoyable to me. So you left, like, I don’t know. I don’t know what they call it. The big five tech companies. Exactly. Fang is typical. Yeah. Facebook, Amazon, Apple, Netflix. Google. Yeah. We don’t want to say who they are. They’ll come and find you on one of the big floors.

And you went from what salary? To what? After the transition. Yeah. That’s a big thing. Yeah. So this is so. Like I said, like why my safety net was so large of a million, I think it was because I knew the cut would be substantial. So my last year at my job, I made 300,000 and then I left into a, basically four or five person company to make this educational product.

I was actually just going to partner with them and bring my content to their educational platform. And, I had no idea what I had no idea what they were going to pay me. But we worked out a monthly kind of stipend that they would give me. And that was it. It was roughly 50,000 a month, but you know, it was only gonna take me three or four months.

So it wasn’t, it wasn’t close to three, 300,000 there. And then we also worked out a royalty deal that would kick in after we launched the product. And then obviously those, those monthly stipend payments with. Would go away. But yeah, I mean, that was risky to me because I mean, you know, I’ve, I, I met this guy online.

I literally just messaged him on LinkedIn was like, Hey, can I make a course on your platform? So it was, it was, it was a huge risk. And I didn’t know if they were solvent enough or anything like that, but just trusted them and went with it. It was a bit of a success, but now you’ve kind of, I mean, projects like that, it wasn’t going to come around.

But now you’ve kind of found that more long term. That’s really good. So this is a little bit more play. Yeah. So right now I’m at like the 180 mark for your salary. And then I get a half a percent of the company, so, but that’s all funny money, right? Like it’s, it’s, you know, until we get bought out or go public or.

Something like that. I mean, the, or leveraged buyout, you know, I mean, it, it, I’m not going to see any of that. So, basically now it’s like 15,000 a month from that place. And then I, the reason why I took this, I was actually like retired just cause like I had good monthly income from the royalty, and I had a good safety net and I don’t have many financial commitments.

But the opportunity, like I said, it’s just, you’re at the stage now where. You can say, why not? And you can risk something for a few months and if it doesn’t work out, just leave and then go hang out, chill and wait for the next great opportunity. So I took on this and, and now you know, I used to be like a software engineer.

Now I’m more of a leader across different organizations in the company, which it was that would have taken me years to do at my old job. Is it a resume builder? So I thought it would be but I, I it’s, it’s the only start-up I could find that actually has like enterprise clients that like they’re extremely early stage, but they’re already cash flowing.

They have enterprise clients, you know, six-figure contracts, seven figure contracts and. Crap, an existing P and L of profits or revenue. My goodness, which is, you know what I mean? Like that’s, that’s like a one in a million chance. So yeah, I’m actually extremely bullish. Yeah. So, I mean, from my point of view, it’s like your salary is a lot lower than what you should be.

Well, you’re kind of trading that sweat equity for a bit of asymmetric risk. This is the beauty of your situation if you take those kinds of risks. At this time. You don’t have a five $10,000 mortgage, although I don’t think you’ll ever get that in the next 10 years anyway. I hope not unless I, you know, get crazy and then lay in, you got to shout at me, it is a substantial pay cut for that asymmetrical upside.

In fact, my old employer did call me since I left and they asked me to come back and they wrote me an offer and. Stupid to say no, but, you know, I said, no, you know that was, that was between four and 500. So, most people listening are in the group. Would Bobby take that and just go rock on their butt and just do that for maybe five to 15 years.

But I think you’re a little bit of a minority in terms of your, I mean, your, your age too. I mean, much of your time too. Spear out with this type of stuff, but explain to us, like we’ve had this conversation before you have a bit of an itch, right. To kind of do something more meaningful. And I think this is because you’re a lot more experienced beyond your years.

And part of that is like, it’s not how old you are in my opinion, it’s how much time you have to think about random stuff like this. And I think that’s what financial freedom does. It gets you out of the day-to-day kind of get more philosophical. But, I mean, so you, you, I, if I recall you kind of looked at one time, Hey, why don’t I do something entrepreneurial right.

In the realm of real estate and then take us through that journey. Yeah. Can you refresh my memory there? I had like a hundred ideas and I got really distracted. Yeah. And I know we’ve checked in a few times in the last several years. I remember at one time, you’re like, you’re trying to buy some rental property.

You’re trying to do the turnkey thing or the burst. Okay. And I told you, man, you’re giving up your competitive advantage. You know, you’re pretty good at this computer thing, you know, don’t do anything other than computers. W what I didn’t understand is that you have to look at barriers to entry, right?

And you have to look at market knowledge and you have to look at track records. So I had a. None of those went for me when I said I wanted to go flip houses or I want to do a burn model in Seattle you know, there’s, there’s a trillion YouTube videos of that online. And, and really all you have to do is, you know, maybe you can wholesale your way there, or maybe, you know, you get an FHA loan, you put down nothing and you, you try to make it work.

But it still takes three to four years, I think, to actually build up what would be my equivalent current income. And so that’s an opportunity cost of at least, you know, 900, maybe. So. Yeah. I just, I think at the time I just didn’t, I disliked where I was so much that like anything sounded better. But yeah, I think that was just like where I was.

That was my mindset at the time was just like, okay. No matter the cost, I eventually realized that I just needed to suck it up. So, yeah. So I was thinking about this. I’ve been thinking about this for the last couple of weeks, as I always kind of ponder random things. So this concept is like being in the top 10%, 5%, 1%.

So like I’ve been kind of screwing around with my trust, right. Trying to find strange ways to pay off my kids when I die. One of those things is like, you know, the trust will continue to give you X amount of money to sustain a pretty decent life. But if you want the load, you have to demonstrate that you’re in the top one, five, 10% of the people that you’re doing.

So for example, I don’t know. What would you say in the computer programming world? I mean, you’re basically saying. We’ll give you, you know, in terms of trust, we’ll give you this monthly stipend or whatever, but, but if you want all of it, you have to prove yourself. Yeah. Okay. Or like, if you, like, for example, say you’re my kid and this is just hypothetical.

There’s no way I’m going to really write this into any kind of document. I’ll just break my trust. Right? If you came to the trust trustee and said like, Hey, I want to get at daddy’s trust fund and I want to do it. We would probably say, Hey, hell no, man. Like you’re like 50 percentile at best or maybe top 20.

Cause you’re kind of smart. Right. But then we would look at you as somehow needing to demonstrate that you’re really good at something. And the computer programmer. I don’t know. Maybe your top 10%. I don’t know. Right. But something, cause I think. When you raise kids, what? I hear a lot of people, as you’re trying to find, what is their penetration into one thing that has God given talent that they enjoy?

Yeah, my favorite mechanism for that is time. So, you know, you can try to plan for all these things, but like who knows what’s going to exist by that, you know, by the time they want it. So my, my favorite one and it’s not, not really a friend, but someone that I do know of. They have a trust fund ready for them at 35 and their parents cut them off at 18.

They made them pay for their own college. They made them, you know, pay their own way. So, basically the option is starved from 18 to 35, right. Or. Do something. And what actually happened is this person pursued what they liked. Because most of the time, people don’t want to be an artist or a musician, or they don’t want to take a risk or be entrepreneurial early, early on because they don’t want to start at 60.

Right. They want to focus on retirement, getting that bank roll up. So if you tell someone, Hey, you got to figure something out. I don’t care what it is, but at 35, you’ll be okay. Typically by that time they’ve settled into something that they. They’ve been, you know, 10, 12 years at it. And they’re typically pretty good.

They’ve done 10,000 hour. Exactly. Exactly. But what if in that case, what about if you have a situation where somebody is really smart, they’re just a little lazy and all they want to do now is wait until the 35 and we’ll smoke ganja and play the guitar. And they suck at playing guitar. How did they do that for free?

You know, how do they do that for free? They have to create money. So, okay. So you’re saying like totally starve them on everything until they’re 30. Yeah, then they get the mother load, you know, how they go off into the mountains somewhere and just it’s, it’s great. You know, you basically say your kid’s college, you’re taking care of your retirement’s taken care of.

But you better do something. So the college is not paid for. Wouldn’t be paid for, so they got to work through it. They got to know how much it sucks. Yeah, I’m sure you, you, you can, you can, you know, fiddle with it in the way that you want. Yeah. Well they have, but that, if they want to go to college, you got to pay for the damn thing and make the minimum payments.

Therefore they have to go and trade time for money in society. Exactly. Exactly. Yeah. It’s kind of a form of child abuse, potentially some good. See it like that, but I think it’s a forcing function. I think 18 is too young. I think 25 is too young. I think 40 fives are too old because now they potentially have spent because here’s the thing at 352, no one really knows what they want to do at 18.

Most people don’t know what they want to do at 25. So by the time they’re 35, if they do have this escape hatch, and they’ve really just been miserable for the last 10 years chances are they’ll go switch. And start to do some, okay. I should have done this now. I have that opportunity. If you wait till 45 they’re 20 years into doing something they don’t like potentially.

Yeah, yeah. Yeah. I like it. W w w I’ll think about that a little bit more. I like the idea. I like the idea that but going back to like, so in your twenties, you got to this point where you were, I think a lot of high, high net worth entrepreneurs get, they have a little. S network, they have means, and they have a network to be able to solve problems.

And I remember that was one thing that stuck with me that you’ve kind of repeated again, is I have the skillset now, what problems can I solve with associate? Because money comes to people who create value and essentially solve problems. Yes. And that’s exactly right. And so I started off at websites, right?

Like I would optimize my company’s website. Make them the most money possible. But now I switched over to healthcare. So basically, we’re optimizing the revenue cycle of hospitals. It adds value. I’m good at it. And people know. Yeah. Do you like the fact that it, maybe you are making something a little bit easier, faster, say somebody’s life or to, ah, so we don’t, we don’t save anyone’s life and I’m kinda glad we don’t like it.

It gives me the opportunity to kind of breathe a little bit. We’re not making medical devices. We’re not in the operating room where we’re not telling doctors what to do. We’re not making any recommendations like that. We are using machines. But it’s, it’s really just after everything is said and done after the patient has either checked out, right.

Like, or died. How do you get paid by the insurance company or the government? If, if that was the program that is under. And so we make sure that that happens quickly. Got it, got it. So investing wise, switching back to there, what is the, what is the game. Are you good? Are you taking more risks or, I mean, between the job versus investing, which one are you getting more risk tolerant towards or what’s your game plan investing minds?

This is, you know, this is part of partly why I wanted to take the call with you. I don’t know, you know, I have my base. I am doing something that I like. I think it could be lucrative enough for me to get to the next level net worth wise. But yeah, I don’t know. My most recent investment was like a fund.

Right. And it was a 20 pref and they just made subdivisions. Why? Because I wanted to make sure of my royalty income. That, you know, at least this would pad it a little bit. But beyond that, like, I don’t know. I don’t know, like I’m, I’m probably, you know, if I quit tomorrow, I’d probably still be able to fall back on like a hundred grand a year.

So, that’s enough for me. So I don’t, I don’t know what’s next. There are a lot of people in the group that are between five to $10 million networks. They are maybe a couple of decades older than. There were, you know, like the, not, not a kind of employee part of the business, but actually the entrepreneur that started it and they’re exiting or they’re at the point of exiting.

What I would recommend is again, come over to the retreat and then, you know, you’re good at drinking beers, interacting with people. I’m a fly on the wall. Right. I think that’s a good way to do it. You know, being the younger guy, it’s good to kind of just be in the flat in the wall, find valuable ways you can add value to these more guys with a little bit more experience with stuff.

I mean I’m part of more entrepreneurial groups where you gotta pay to get in. I mean, I would recommend finding those groups locally and then just getting around like high performers, successful people that make not 50 grand a year, but $500,000. Okay. You’re a leader of leaders, I would say, I mean, what’s five, 10 grand to kind of join a group like that, you know, more entrepreneurs.

Yeah. And that was, yeah, that, that, that makes sense. I think here, here’s kind of my point with that is like, let’s say I do go to the retreat. And I meet these people. They’re exiting, you know, most of these people. Or Don may, maybe they do want to go for round two, but most, most entrepreneurs that I’ve met that have an exit, you know, they’re, they’re at least recovering for a couple of years.

So do you think they’d be ready for some young gun like me to come up and say, Hey, you know, how can I add value to your current situation? Maybe we could do this or that. Do you think that what we received adds value right away, but like, I mean, just to start the relationship, but then maybe check in once in a while, but like, Maybe it’s different.

Maybe there’s a paradigm here between the people that, you know, that are kind of exited. Like a lot of those guys are in very asymmetric types of businesses, right. Tech stuff. Right. You know, like I think that’s where you come from. Where I come from, the people who are successful entrepreneurs, they built up really boring non tech businesses.

Right. They grinded it away and they just built it. And for them, they know that they can do it again. We’re subconsciously, I think the tech entrepreneurs, like you gotta love it. Lucky people just hit the lottery, basically. Yeah. So it’s different, right? And the smart people who are in tech that hit the lottery with that stuff, go buy a $5 million house in Bellevue Washington, and just hide out for the rest of their life and just hope that they don’t spend all their money.

But the entrepreneurs that I see a lot, the guys who have the boring businesses, they have so much like business building. That it’d be a shame for them not to use it and they enjoy the rush. So they would be a lot more inclined to jump back right into the pool. That’s who I’m looking for. And you’re right.

I don’t have that network, like I know people who got rich on Bitcoin or invested in GameStop or, you know what I mean? And, and now they’re, they’re fine. But you’re right. They retreat. So. Yeah. I don’t know. I don’t know people who already, I don’t know a lot of people, I know one person that comes to mind, but beyond that, like the network is pretty.

Yeah. So like, I mean, of course you’re kind of feeling people out feeling, figuring out where they are and the pecking order, but then you also need to identify, is this somebody who kind of built this slowly? You know, it’s just like a blue collar investment. You buy a stabilized asset and you force appreciation slowly over time, you know, rent, average rents go up $5 every month.

You know, sometimes it goes backwards $3, but it kind of powers forward. As opposed to that, that one, that the lucky lottery winner, which is going to know. I think the key that you said is the boring business. I love being bored. Like if I, if I broke down what our business actually does, like where I’m, where I’m currently working, you know, probably half the people listening would fall asleep.

But that’s where I want to be. I don’t want to be in an ultra exciting area because it’s probably saturated. Probably has people in it who will get really rich and then probably didn’t learn very much. You probably know people like this. Gamblers, right. Or, you know, I can go to Vegas with your friends.

You always have that one friend who doesn’t know what the hell is doing and he’ll, he’ll win really big. And then he might say like, I have this system, you know, it’s all about the system. I’ve heard the system, I’ve heard the system with stocks. You know, I’ve heard of the system of gambling with Yeah. Land flipping, right. You know, there’s, they, they feel like they have a system and they’re gamblers, but the people who you’re looking for, the people who like, not here’s my system, I just think every day I make my business a little bit better to either increase income minus expenses.

Yeah. So two different mindsets and the fallacy, I think for the gamblers that they start to associate the wind. With themselves, right? The self confirming bias versus the I, at the end of the day, you want to do something just like any worker, right? Any low-level salary worker, they want to do a good job is what I believe and no different than yourself.

You want to do a good job and be rewarded with the results. It’s the, it’s the cycle. You are a high performer in life and that’s what you want. And therefore that’s, I think that’s why you like to grow a business. It’s very similar. I don’t know if you’d like to grow gardens, like plant vegetables. My grandfather, he was a botanist, but that’s the closest, if I’ve ever come, I think you might really enjoy that.

Right. You plant it and you’d go walk away. You come back in a couple of weeks, month, and you have some vegetables. If, if that’s the case like that will confirm my. My analysis, if you like, I’ll get a vegetable garden on the roof there. Yeah. That’s Washington. I can’t grow very much here. Oh yeah. Yeah. You have to hit it when the time is right in the summertime.

Right. But I mean, that’s, to me, like, what’s your China, like you’re a young guy, right? Like you gotta find something that feeds this dopamine. Like you’re addicted to this, this thing. And I seem like the people that do. They’re just looking around for problems, the way to kind of go about solving problems.

I mean, a lot of them like, we’ll look into like, oh, let me go start a realtor thing. Because they like real estate. Probably not the best thing. Right. Because you’re giving up your advantage. But I guess identity, some people, their advantages building, hiring people, building systems. I don’t know if that’s your thing and you’re more technical.

Well, that is my thing, actually, like I think I used to be software. I wasn’t actually a great software engineer. But I think I am good at hiring the right people and getting a system down to, to operate a business. Yeah. You can know, that’s, that’s your, maybe your 10%, your top 10% in that category for your competition feel okay.

Gotcha. But if that’s the case, then I guess you could do anything, you know, at that point, right. It’s the people portion of building, building organizations.But yeah, I mean, I think that’s, I mean, is that what you’re kind of pondering these days, trying to find that next vegetable garden or that next thing to make it? I like the vegetable garden I’m in now with, with my work, at least I would like advice and expertise on where to grow. I think because my mindset for the past five years has been like, get the base layer income.

You know, get, get, get passive income, get all that going. I don’t think more passive income is going to move the needle for me, honestly. I don’t know. I mean, like, even if I double or triple my net worth that probably won’t move the needle for me, you know, I probably need to attend to X and, and I, I know how to do that with a business sense, right.

Because I can go work at startups, peek behind the curtains and, and help them out. But I don’t know how to do that. As an investor, here’s an idea. So this is, you know, what a lot of music musicians will do, or like YouTube stars will do if they realize that their fire burns out pretty quick. Right?

For a lot of this stuff, it’s the, not for long league, like the NFL. So what they do is they empower others, they become like a producer for some other young pers startup. And maybe for you, it’s like, maybe you could create your own incubator. If you enjoy empowering others, then. If you’d like the people’s stuff you get off on that type of stuff, that might be a good way to kind of keep things going.

That’s a good idea. It’s funny. You mentioned that I wanted to, like, I did not want to, but I explored that a little bit. I even bought some office space. But I just haven’t had time to set it up. Yeah. At the end of the day, I think most people will agree with passive cash flow, not a big motivator. It’s not going to change your life very much.

And with the G six plane, just out of grasp of even the best of us, if you can find something that helps people. I mean, that’s what I, I mean, civil, passive cash flow, essentially that right. I’ve kind of luckily stepped into this thing where we help people. And then they’re like, you know, they, it’s kind of a game changer for most people and then what they do after that, you know, that’s up to them, what they do with it.

You know, there’s, if there’s some way you can use your skillset to help people, that’s bridged the gap, doing a little quicker than what used to do, then you might enjoy and get enrichment off that just helping other people, empowering other people. That’s very common.

And that, that may be why I enjoy my current role. So well, cause I, I do, I just, I report to the CEO and I just help them as much as I can, like get where he wants to go. But I do think you have a good point there about scaling that out even, and perhaps making an incubator. But I do think I still need to kind of have a track record before that.

Sure. You have a lot of time to do that, but I mean, if you can’t think of anything else, then we’ll then just give your money to some charity. Right. But I think when you do that, you don’t get, as you don’t get leverage and we love it. We’re real sandbars. We’d love each other. Leverage and it doesn’t compound, you know, it doesn’t, it doesn’t like to bring people together to work toward like, you know it.

It’s not compatible. Yeah. It’s a night. That’s like a nice firework show. One time I checked and it’s cool. But I think a rotary does this, right? The rotary has a lot of affluent people in it. They’re in that mode to get back. They could just give money, but they’ve, they use the leverage. They leverage the relationships of the group and then their problem solving skills to bolt and make a bigger impact into the community.

I mean, I’m not going to go. I mean, I’m not going to go do habitat for humanity. I don’t know how to build anything either. The only reason I would go for like a workout, but I just see that as your community, right. I don’t know, you’ve grown something basically from the ground. I wouldn’t even say basically from the ground up, right?

Like this is yours. It was just you and me and six other guys who came a long time ago. So you have that. And I want that it could be through a business. It could be through an investment. It could be through an incubator, but I think you’re right. I think that’s where I need to focus.

Henry. That’s such a trying to build. I hadn’t recalled. But anything else you’re pondering these days? No, we covered it. Thank you.

Well, I’m sure you’ll have more questions in the future. And thanks for being a part of the group. You’re always a lot of fun. So folks joined the group as kind of eclectic folks. We got Brian L Henry here who is kind of the younger guy in the group. I think the one thing that’s common, even for the 50, 60, some 70 year olds, Very eclectic group.

Like alternatives to thinkers, people who’ve gotten it off the beaten path. So if you guys like these types of calls you guys are already kind of in the community reach out, let me know, and that we can make up a fake name for you. Henry is already taken and Mike’s been probably used two or three times at this point, but thanks for listening guys. See you guys next time.

What to Tell Your Lender When Applying for Mortgage Loan

https://youtu.be/RvQ3t9TrZro

I always tell my clients to give me the full story. I don’t want to have any surprises while we’re in escrow it’s oh, so you own a house with your parents and you forgot to tell us. And we always ask for the full story up front, then we can know how to what’s going to come our way and how we can prepare you when we submit your file to the underwriter.

And try to rent them out

For you guys, this is how the industry is made, right? Like you have lending brokers, you have the people on the sales side interacting with you, but there’s a person in the back office. Maybe it’s an agent at a different company. Whereas the. Now, this is where you need to have a good broker or front office person to take your story to that, that if you have just some bureaucratic idiot on both ends, you’re going to run into all these types of problems, but you need to have somebody to Excel your story the right way.

See, even if you do have a bureaucratic idiot as the. You can pass all these barriers. I always tell my clients to give me the full story. I don’t want to have any surprises while we’re in escrow. Oh, so you own a house with your parents and you forgot to tell us. And we always ask for the full story up front, then we can know how to what’s going to come our way and how we can prepare you when we submit your file to the underwriter.

Benson’s a licensed loan officer. So he has no comment on this. I’ve had clients where they change jobs the last second and let it slip on they’re on email and their lending broker kind of kibosh as the loan I had. So my guys will, if anything like that happens, use the full. We’ve had lungs where we call.

So a lot of people, then you’re a couple of times where they submitted their stubs. We’ve got into ESCO, got loan approval and they quit. I quit my job and my wife can cook my job for jobs so we can get real professional status or some other random tax schemes. Yeah. We actually do a final verbal verification of employment three days before you close.

Meaning you sign documents a lot of lenders. They wait until that last minute. When you think about it, Hawaii or California, we close escrow in 21 days, 30 days. It’s very typical. But when we’re in the Midwest, other states, they might take 60 or 90 days to close an escrow. Heck their appraisal process.

Probably two months right now. There’s appraisals shortage right now. So like in two months, who knows if you’re still going to be employed. So they always do a verbal verification of employment right before you close. Sometimes Fannie Mae picked about 10% of loans. So sometimes they will call after the loan is closed to see if you still work there.

It’s okay. If you don’t work there, you just don’t want to make sure they want to make sure there’s no loan from, I think they’re just in the back office there, the Johnny Walker, red DayQuil and checks with people over at the very last second. And we’re talking a lot about like primary owner occupied houses.

How does this change for you? If you’re buying a rental property, non owner occupied, first of all, If you’re talking about conventional owner, non-owner occupied, no gift is allowed. No gift is allowed at least in the last two months, we look at your bank statements and there shouldn’t be any gifts in the past two minutes.

And if you’re looking to do some DSCR loan and for those who don’t know, DSCR, it’s a debt service coverage ratio. It’s a terminology that’s often used in the part mid and loan world. They have it for one to four unit for people who don’t want to show their tax returns. And we base it off of the income of the property that you’re buying to qualify you.

And a lot of those programs will allow a gift letter or will allow gift. But what is that debt service coverage ratio, that magic number that they’re looking for. One that managing numbers one can do less than one. You just need to take. That’s actually not hard that it like for the larger apartments, it’s usually like we’ll fight to fight.

Yeah. So commercial loans, Fannie Mae, Freddie Mac, the multifamily home loans, they asked for 1.2, five. And the one to four is private investors so they really only ask for one or even less than one, depending on the LTV.

This website offers very general information concerning real estate for investment purposes, every investor situation. Always seek the services of licensed third party appraisers inspectors, to verify the value and condition of any property you intend to purchase. Use the services of professional title and escrow companies and licensed tax investment and or legal advisor before relying on any information contained here in information is not guarantee as in every investment there is.

The content found here is just my opinion and things change. And I reserve the right to change my mind above all else. Do your own analysis and think for yourself because in the end, you’re the only person who is going to look out for your best,

How to Invest in the USA as a Canadian With Quentin D’Souza

https://youtu.be/wzgh0fPwlyg

What’s up investors! On today’s podcast, we’re going to be talking to a Canadian investor that it’s going to answer the question on, how can Canadians or folks outside the United States invest in the United States. Now we’re going to be going into just some investing and entity structuring ideas, and we’re not advocating for any of this type of stuff, but it gives a good insight into what it takes for some other folks that, we have to have some international investors in the group, but they have to go through and, it might also expand your mind to thinking, to get an outside of the United States.

And this is a typical topic for a lot of high net worth investors when their net worth goes over three or four or $5 million. A lot of people might have a lot of distrust in the United States government, or just want to diversify over the United States. Now I personally believe that the United States is the best nation out there because we have the best military. But it might be prudent to get outside of the United States for other reasons like taxes, or maybe just having another passport to be able to get out of town. If you’re in the United States and you love the United States, today’s podcast probably isn’t going to be too much value for today.

But before you go, I just wanted to go over a couple of thoughts or lessons I like to share with you guys before you guys take off to the podcast. Now somebody introduced to me this idea of an incubator group out there, and this is really not in the world of real estate, but in the world of venture capital.

And I’ve spent a couple of years, I spent a lot of my time looking into venture capital because here we have all these investors looking for ways to grow their money, which ultimately just ended up coming back to real estate, mainly for the taxes and the stability.

Especially when you go into stabilized apartments or stabilize properties that it’s already occupied and it’s more of a cash flow model, really. You’re very conservative in your investment and you can really sleep at night or venture capital projects, very, asymmetric type of returns where you might hit it big the 5% of the time. Sure, maybe the overall return when you average all the losers might be a little bit higher than real estate, but personally, that’s just not the way I like to invest. I’d rather hit a high percentage of singles doubles and also get the tax benefits from it, which you don’t get from all these other asset classes.

But somebody brought me to one of these incubator groups and what I’ve learned. And I could be wrong because this is outside of the realm of real estate as there’s a lot of these incubator groups put forth by these influencers, or you can call them mini gurus if you want. But a lot of these guys, they just couldn’t hack it as venture capitalists, actually doing the thing.

And as the same goes, those who can’t teach. So in this world, those who can’t make freaking companies. What they do is they’ll create these incubator programs, where they get a bunch of other mini startups and they give them the resources. They give them some general education, coaching, mentoring, and they create this kind of greatly branded and marketing incubator where they will go out and possibly raise capital from them.

And it gives some legitimacy to the venture capitalists, but really this is all just a fabricated business model for the group creator to extract money from these diamond doesn’t venture capitalists to join their incubator group and also to make possibly big money. All the fact that they have this group and some unsuspecting high net worth ultra high net worth person coming along.

Just thinking that group is legit when it’s just not, it’s just put on by somebody who could do their thing. And they’re pretty good at internet marketing. So just be in the world, that’s out there. I ran into a lot of folks like that. And then the second teaching today is, I think we’re in a very unusual time or in a bull market folks, if you have it realize, and if you think that the market is going to be cooling off anytime, I would disagree. A lot of the stuff I’m reading is, we’re really not going to hit any Rocky times until the year 2026. Now you may disagree with that. You are probably going to miss out on the best bull market run that you ever did see even more than the time, 2012 to 2016, which was known as the age of the apartment.

Now is the good market’s, it’s a bull market. The tide is coming in. And it’s potentially not a good time to be doing more of a duck and cover strategy or what I’ve called a strategy part of the end game strategy. When you have a lot of money, you just want to get a little yield.

One of those strategies in particular is the triple nets, right? When you go into a commercial real estate property and your tenant pays off all the expenses for you, it’s lower risk, lower return. But it may not be the best thing in this type of environment right now with inflation running rampant, a lot of your tenants, which on the marketing cereal box, they tell you triple net deals, you have corporate back, very strong tenants, but that can also have a double-dip because very sophisticated tenants they know what’s happening in inflation and they can just tell you to go screw off when it’s time to they can drop their lease, or they’re a lot more aggressive and a lot more sophisticated in terms of negotiating with you, the landlord in the triple net deal or the triple net arrangement each you have with them.

Think of it like a lot of mom and pop investors got kinda rocked with the pandemic because they weren’t able to fully capitalize on the rent’s going up and they bent over just giving away rent concessions to the tenants, thinking that yeah. It made sense in a pandemic, but the professional landlords, the kind of the way we do, we’re not hugely impacted by rent moratoriums, eviction moratorium, and we know how to play.

Our vendors know how to play the game to extract the whole amount of rent that is due, and that rents are going up over time. And that’s just something that the mom and pop investor that the amateurs just don’t have the ability to do. And that’s just making the comparison, which triple net it’s two.

And you combine that with the fact that like Walgreens, these types of stores are closing. Possibly because of Amazon coming and taking over the pharmacy sector too. And again, I’m just bringing up this concept. You may agree or disagree, but it might be a time to be more aggressive in times of vocal bull market.

And when you should be aggressive and huddle and ducking cover into these more conservative triple net type arrangements that are traditionally lower return, lower risks, and just be cognizant of what other large families are doing. Large families, what they do is they go into those asymmetric risk plays with a certain amount of their net worth while also playing it safe.

Not saying that you have to have the same strategy with your entire portfolio, or another idea would be to be bipolar, which a portfolio potentially being very risk tolerant with a smaller portion going after more asymmetric risk returns and maybe being more conservative with a majority or portion, or maybe even a minority or portfolio if you’re in the beginning, wealth building stages under $5 million net worth. And to go into deals that are more conservative with that portion of your portfolio. Now everybody’s different and this is where I talk to a lot of new investors. We have our onboarding call, which you guys can still do. If you sign up at simplepassivecashflow.com/club, we only do one per person these days for people.

After that, you’ve got to join the family office ohana mastermind, get around other folks, just like yourself doing this and start to build relationships with other high net worth families. If you’ve been around the circuit, dumpster diving in the free Facebook groups, the free online forms, and even worse, the free meetup groups out there with a bunch of house flippers and lower net worth guys. Just join the family office ohana mastermind, right?

You got to get to a point where you pay to play. And that’s what I personally did in 2015, when I had 11 rentals and I saw the light and I got around other high net worth folks. And I realized that was what you do to get your net worth up, to be about a quarter million, half a million dollars.

But when you become an accredited investor, it’s about investing in good deals where you get the tax benefits. You start to learn how to play the game of passive activity losses. You pay less taxes, a little bit infinite banking, and that’s the way that the passive accredited investor invests.

And unless you get it around a community like our family office ohana mastermind, you do not get that. So apply, go to simplepassivecashflow.com/journey and hope to see you out. At a future event, we were doing a meetup in San Francisco and we’re also going to be doing a tour in Houston but you guys can check out all future events at simplepassivecashflow.com/events. All right, here’s the show.

Hey, simple passive cashflow listeners. Today, we are going to be talking about investing from a different country and in this case, Canada. So we’ve got one of our experienced investors here. I’ll do the disclaimer right now. We’re not lawyers, not CPA accountants. We’re just a couple of guys who are real investors and use professional advice from our professional advisors. And this is how we do it. Not saying it’s right or wrong, but hopefully it’ll just give you some ideas as this podcast is just for your entertainment out there.

But thanks for coming, Quentin appreciated it. Oh, no problem Lane. Give people a quick overview of some of your wide range of experience. I think people need to understand that you’re quite a big dog there in Canada.

Thanks man. I hang out with big dogs, so I feel like this small dog with them, but I’ve been investing since 2004. By the end of August, I’ll have $80 million of assets under management. The smallest amount of equity I own in any project is 25% and that’s about 30% of my real estate portfolio is 25% like personally owned by me not shared and the other 75%, I own 50 to a hundred percent of.

So I’ve got a large stake in my portfolio. I have single family homes with up to 40 unit apartment buildings. We’ll have 15 apartment buildings across Southern Ontario. I do invest in the US. And I’ve got some reasons for that. I’m sure we’ll talk more about it. I’ve written five books. I run a real estate investment club in Ontario which is a Durham REI. I was a teacher for a long time and I left teaching to be a full-time investor in 2014. And I haven’t looked back since I flipped like a dozen houses. I’ve done a whole bunch of other strategies and you know what, I really love investing in real estate, not for the fact that it’s investing.

I just like being a transaction engineer. Like I like putting things together. Making deals happen refinancing projects, I love all that sort of stuff. And I understand the asset class. And that’s why when I looked at what I considered diversification, as, moving money outside of the area of where I mostly control, which is Southern Ontario and looking at the U S as a way to expand it.

On this show, I have a loose policy where it’s a no gurus, Quintin fits in that category. We’re going to try and bring some real value, which is, how do we invest from Canada and I was really interested in investing outside of the country at one time. And we’re going to talk a little bit about that, but just, so your main business, you’re an operator in Canada morons more importantly, more than Eastern side of Ontario, maybe describe your portfolio, like just percentage, like what percent in Canada then versus a United States and anywhere else, just give people like a real quick macro view.

I would say that I’ve got to all of my, like I’ve got a, like an $80 million portfolio just in Southern Ontario. And I would say that 75% is in multi-family the other 25% would be in one to four unit properties. In the U S I don’t have very much, I got probably about a million invested in the year.

About maybe 550 K worth in like I’ve got four single families in Tampa or five single families, one one’s a duplex. I actually gotta go back and look, I can’t remember, but then I’ve got to have visited it. I’ve been there. I’ve been to like when I went down, I went, I’ve been down to Tampa a couple of times.

I actually like to visit the places that I invest in. So I was there and I looked at the properties that I purchased at least the first two. And then No, I’ve been doing syndications in the U S. I have invested in an ATM fund down there. I do other things too.

I’m like on the board of directors for a company called rental , which is they basically do bank account checks for tenancies and stuff like that. I’ve got private placements. I’ve invested in different companies too. So I’ve got my, I’ve got funds in different places, but on the real estate side, I would say like about a million down in the US as a hedge.

Like I understand real estate and that’s why I want to continue to invest. And I like the fact that I get to invest in an asset class I understand with other operators down there and what I like is that I’m not depending on the Canadian economy now I’m looking at the US economy and different demographics in different areas as well.

I’m getting paid in US dollars, so I get some currency hedge there, which is useful for me. I think that’s really great for myself and also like everywhere we go, when we go on vacation, we spend US dollars. That’s what we like. I’m going to Costa Rica and spending US dollars.

I go wherever. And so it’s handy to be able to have those US dollars already converted for me. And having the proper structure is really important. Cause you can get slammed. Especially Canadian investing in the U S with double taxation. That’s the worst.

It’s two hands coming into your pocket at the same time, taking your money and pulling it out. And I don’t want to do that. Having the structure is important and taking the time to get it right to avoid doing that. But I’ve, I’ve enjoyed everything I’ve done up to this point and my experiences I’ve had.

Some experiences with property management in the U S like it’s like with the rental properties that I’ve had. And having to deal with that. But I think overall my experience has been really good and I’ve really benefited from real estate over the last, I dunno, two decades.

I’m really happy with doing it and I’m continuing to do it, right?

So I’d like to point out for the folks, like in this lens of diversification, I like Quentin and cut on myself. We’re considered operators, which you guys are not, you guys listing are mostly passive investors. And, I. I think of operating, where we eat our own cooking. We’re going to be heavily into our product through Quentin and it’s going to be up in Ontario for me, that’s going to be apartments that I run. I personally feel like I’m in like 80% of my own stuff. And it seems like the same thing for Quentin, very heavily that side, the analogy I, or the similarity.

I see it like people used to live back in the day where they buy their own company stock that they work for. We all know that’s dumb, but people used to do that pretty religiously until things like Andra started to happen and woke people up. But that’s what we do. So people always ask me like what should I do?

How should I diversify my portfolio? That’s the first question? Are you an operator or are you just a passive investor of your passive investor You’re more likely to diversify a lot. But I personally came to this epiphany where I was like going into a lot of deals by myself, I got a lot of my own equity in there.

I probably want to have this new site idea of having 20% of deals where I’m not the operator and a totally different asset class, not apartments as just being prudent. And I don’t know, maybe for Woody, how did you come with the same thought process too? Is that what kind of led you to come into America?

One of the things that I’ve looked at over the time is Robert Kiyosaki’s, where you have employees, self-employed business owners, and investors. And so for me, I’m trying to focus on that right side in Canada, I’m the business owner in the U S I’m the investor. That’s the way that I see myself and by doing that, I’m able to use my experience in the asset class as a way to get involved in different projects down there.

I’m also learning how to do this stuff, right? Like it’s also part, I enjoy learning all the time, but I’m able to see what the projects are like. And then I can look at different projects and invest in different projects that I want to and yes, I can diversify across different projects, but at the same time, like my concern is that I’m not a big enough player in a particular project in order to affect change in that project. Whereas here I’m an operator. If something needs to change, I’m going to make it happen. That’s my role. I make things happen. I make nos into, yes, right. In a project where I’m a small player, I don’t have the ability to do that.

So when you have an operator, that’s also an investor in a project, it makes it a little bit more comfortable for that person, because then, you have quite a few people that are brought together and then they have a little bit more control, a little bit more control than most.

Like you were explaining before your analogy there, but that, that gives some comfort and it gives you some diversity because then you can be in different like different projects in areas that you like, maybe it’s Arizona, maybe it’s Texas, maybe it’s Alabama wherever it is that gives you still that geographic diversity.

But for me, like I’m getting into being more on the investor side of things, rather than the business owner side of things. Yeah, it’s because you’re used to driving your car and your family around all the time. It’s nice to get into an Uber once in a while. Just relax and play with your phone, enjoy the scenery outside.

But for some people it’s very difficult to turn that off. Yeah. Oh, yeah, my son just started driving. So now I’m in the passenger seat and I’m not, it’s not like being in an Uber. I’m like, you’re conscious of what the heck is happening. The nuances that are going on behind the scenes when a certain message comes out.

But then I don’t know, I do this. I kinda enjoy it. Like a little. Then we’ll talk about this at the end. I’ve been in deals with the passive that haven’t gone as smoothly and things I’ve blown up and I just find it entertaining and being on the other side to just be a passive investor on that. Before we move on, let’s talk about this. Some similarities or differences. With Canada rather than the US, you see both sides of any quick things that come off to the top of your head, just, just for investors out there, just for a general, broad understanding of differences between the two.

The structures, the way that we buy stuff, like the syndication model is very similar. Sometimes it’s structured differently. So like when I’m putting a bunch of people together to buy a building in Ontario if I have less than 10 people, I’m probably just going to use a corporate structure.

We’ll have a corporation and we’ll have shares and Instructure. If. No more than 10 people. I’ll probably do an LP-GP structure, which is pretty much the same as the syndication model than the U S you have. You have the second just a different way that it’s set up, but big picture wise, they’re very similar.

So from the multi-family side it’s quite the same, just some nuances that are different on the residential side, you get, you have this beautiful product in the US it’s called the 30 year mortgage, 30 year term. We don’t have that. Like it’s not there’s no.

The longest that you can get is a 10 year term. And I don’t even think you’d want to have that. So you know, you have this 30 year term, like a super low. It is really awesome. And you’ve got some more, I would say, innovative products on the financing side, particularly in the one to four unit space.

We don’t have those sorts of things, but what we do. Is on the financing side for the multifamily units, we do have the ability to get higher loan to value, which I don’t think I’ve really seen in the U S but we have like CMHC financing that can get us up to 85% to 90% loan to value with the

sub 2% rates. Which is a pretty different outcome you’d have to, you’d probably. You’d know around the multi-family side, whether you have what you have for financing in multi-family buildings. Yeah. So that’s the big piece there. And so that probably means you guys don’t cashflow a lot on a lot of the deals just because the amateurization is wasted.

No one, the amortization can be like, you can get it up to 30, per 30 year AMS for the multi-family side. Typically their 25 year AMS on the multifamily. But if you’re going to CMHC financing, amp Amery will go up too. So it actually works out really well. On the resi side. So one to four units, you’re like, it’s typical to get 30 year amortizations.

And right now Rezi rates are probably around, I would say 2% to, probably, depending on your qualification rate and all of those things. But it’s, I would say it’s around that, cashflow wise, like I would compare Toronto to like Like a New York or somewhere in California and the landlord laws are like in California too.

So it’s pretty nuts when it comes to that. It’s tough. Like you get a lot of appreciation. So my, the way that I’ve been able to do really is I don’t buy anything that doesn’t have cash flow in my market and I make it work. And I, we work to do value add, we do turnover units. We do a lot of different things to make it work and make it cash flow and then refinance and do it again. And pay back the investors funds and continue to own it. And that’s why I liked the syndication model in the U S. Where we were doing exactly the same thing, except I didn’t have to worry about financing.

If I try to get financing as a Canadian in the US it sucks like it, like I’ve I spent almost a year and a half getting financing for those rental properties in Tampa a year and a half. It was brutal. And just at the point where I was about to get financing, it was like, Martin. 2020, and then, COVID but they got rid of all the foreign national lending.

So it was a real pain. So what’s nice for me as a Canadian investing in the US is I get to take advantage of leverage, which I wouldn’t necessarily be able to do if I were to invest directly in the projects myself. Now you would have asset-based lending for multifamily buildings in the US but you still don’t as a foreign national, unless I partnered with somebody else who is a national in the U S I wouldn’t be able to take advantage of it in the same way.

So it’s interesting that I’m able to take advantage of that. Through investing in syndications in the US yeah. And just to a side note, the key principles, the loan guarantors in American syndication, before we go get that Fannie Mae Freddie Mac, I don’t think you can be a foreign national.

I’ve seen it done sometimes if you have a green card, but then I’ve seen it happen sometimes, but it just takes an act of God. And people are like, lenders are just really confused when it does happen. But yeah, that’s up for Americans, but I guess going back to your investing in Ontario, it’s a primary market.

So you focus on things like the more outskirts, the more rural areas of Ontario or. I focus on the 401 corridor, which is from Toronto to Kingston. It’s a major highway corridor there and it’s where a lot of the population in Canada is along that 4 0 1 corridor. I stick to the bigger cities and the bigger locations within there, but on the outskirts. So the suburbs are low. So I’m not in Toronto, but I’m in the outskirts of Toronto, but not in, not rural. So suburban, I would say. So Pickering, Ajax would be Oshawa Kingston and I work hard to buy properties directly from owners. When I buy it.

All the buildings that I bought have never been listed on the MLS system. It’s always, I always worked directly. I have a good reputation. I like people who know me. I do what I say I’m going to do. If I say, I’m going to close, I’m going to close. And my reputation is really important. So that’s how I do a lot of the work that I do in Ontario and I, and I’m what I’m hoping for. Those same relationships through the people that I’m investing in the U S with. So they’re like me in the U S and that’s what I want one to be able to do.

To be able to invest in an asset class that I understand. And be a little bit more hands-off but still, I can read the numbers, I can see what’s going on. I like it, and I have no problem putting people’s feet to the fire if I think something’s a problem. Yeah. And I think what I like about our relationship is, you understand what’s going on and it’s, for some people you need to tell them something like we just had a fire at one property.

And detailed unsophisticated investors, they freak out right where you’re going to ask the right question. All right, what’s the deductible, the cover or the kind of anomalies fine, got it. I’ve had it. I had a total loss on a building. I’ve had to start from scratch.

Took me two years to rebuild. Like I went through the whole process. Actually, what I did was a little bit different from that. I hired an independent adjuster, so that they fought on my behalf. For me against the adjuster of the insurance company in order to get me a little bit more, we do that every time too.

And one time we did it, we got I think three times as much as the first offer. If you’re on a little residential property may not be worth it. Cause I had rental property that I owned outright myself and I just got steamed real. It was just the biggest, it wasn’t big enough.

Nobody would work. And I just got screwed over by the insurance company, but that’s why the bigger stuff it’s better, but let’s get into the question at the top, so a Canadian wants to invest in America in a syndication. How do you structure it? Again, you’re not a lawyer, but how do you do this yourself?

There are a bunch of different ways to do it. And you have to be careful because some of the advice that you see on the internet is old and it doesn’t work anymore. Like some of the things that you hear are like buying it as a Canadian, you hear buying an LLC. If you buy in an LLC as a Canadian, you’re going to be double taxed.

The Canadian government doesn’t see that as an independent entity and you’ll be double taxed on that. And if you earn a dollar and you get taxed 20 cents there and 30 cents here what do you have left? Yeah. Why did you do it in the first place? It’s important that you get a structure that avoids double taxation.

So the way that I do it in the U S is I use a limited partnership where the general partner is an LLC and the general partner owns 0.5% ownership of the LP and 99.5%. Is owned by the limited partner and that can be a corporation and that can be owned by a Canadian corporation, or it could be owned personally.

The idea is that when you are doing your taxes in the US you’re going to try to take as many. Deductions as possible so that you get to a zero tax rate and you’re not bringing anything back. And what’s nice is that they have so many differences, the other difference is depreciation.

Like your depreciation is super awesome. The US I can take the sum of that depreciation upfront because you can segregate it. You can. There’s just so many more benefits. I can get zero every year and I’ve got, and I’ve got like a backup from previous years because I’m able to do that.

But with having that limited partnership And doing my taxes in the U S when I take the, whatever I’ve finally made and bring it back to Canada, it’s usually zero. And then that way I’m not double taxed on that, on the income that I’ve made in the U S there are other ways to do it.

There’s, S-corp, let’s recap the first way. So I think some people, they get confused cause we throw around the terminologies that LP and LP, which is a different thing. It’s a position within a larger deal partner. But there’s no soul, the entity LP lP or the entity and LLC.

So you’re creating a Canadian LP US. So I’m creating a US LP that has so in every US LP, this is the legal structure. There is a GP and an LP within that, right? The limited general partner and eliminated partner within the limited partnership. So the general partner in this case owns another structure that I own.

Which is 0.5%. It’s an LLC, right? So I’ve got my LLC that owns 0.5% of the LP. And then 99.5% of the LP can be owned by me. It’s a limited partnership, or it could be owned by. A corporation can be a U S corporation like an S Corp or whatever you do, whatever you want to do as, I, I can just, for me, it’s just personal.

Then, that’s one option for structuring. So it’s like you have control, you’re the thing that you can. Through is your LP within this energy and you have control over it. I think a lot of people do this in America, where they have a family management company, a holding company where they own a piece of it LP.

They have control over that. So that way it’s like a, it’s like all this kind of like an LP works in a syndication, but you’re doing this all on your side. And so this entity goes into all these other deals. So I just want to. Break that out for folks, because now they’re thinking like, do you make an LP for every deal?

Now this is all of your institution. That’s right. It could be your base structure. And then that’s what goes into investing in like these other projects or owns the property in the U S right in Canada. What you’re talking about would be like a family trust, right? Like it would be like that type of arrangement.

But within a bunch of other structures, but for, in the U S the way that I have it is that I know other people that have done it differently, right there. There’s the right thing. Like I stay out of the gray area. Okay. I’m not into it for, to, to hide my money somewhere or to avoid taxes. I’m okay with paying my fair share of taxes, whatever, but there are other ways to do it that I’ve heard that people do that are Canadians, who are investing in the U S yeah. Yeah. So this is like me personally. I’m not a lawyer. But I’m not a huge fan of series

People use them, but these are like the similar things that other people do. And just, we’re just talking about it here, just to give you guys different ideas, because I think this helps people learn too when you start to get creative with this stuff, but yeah. So how are some of the ways that people get around?

Yeah. So there are, what’s interesting about the U S is that every state has different types of if you form a corporation and in some states there, it gives you additional privacy that you may not get in other states. So that’s one of the things that. It is like the Nevada Corp, right?

So people may want to invest in, or create a corporation in a place where it’s hard to get details on who owns the actual structure. And so if you were to use a Nevada Corp as a Canadian, you move money into there, then you buy whatever assets you want with the Nevada Corp. That’s somebody who’s probably trying to avoid it.

Taxes now we’re not giving anybody advice. I feel like I’m doing something right? No. This helps us understand this. Like what are some of the pros and cons between different states? So correct me if I’m wrong. But I think Wyoming similar, whether you have that anonymity where like you put it in the LLC and you have this anonymity, but to me that enemy’s kind of stupid because any halfway decent lawyer can figure out what it is and subpoena what’s in it.

But in this case, we’re going off the thread that countries are clunking and dumb and they can’t really do that unless they have a reason to uncloak the the entities. So we’re saying, we’re not saying this, but what people do is like they throw into the Nevada thing that kind of cloaks it and then if you can’t see it, you can’t tax it.

But I don’t here in America. You’re supposed to self, self Self do your taxes right in your, in the best way that you can. And what’s right based on your understanding of the taxes. To me. Yeah. This is a little shady, right? This is an up and down to you. Yeah. And that’s why I stay out of that sort of stuff.

I’ve got an ITIN number. I follow the US tax return, as part of what I need to do. And I filed my, take my US taxes, take it to my accountant and make sure that it’s filed in Canada too. So that’s just to be clear, that is not me. I’m not doing that at all. No magician tricks here.

This Pelosi of this. Yeah. I bought that. I think that’s, I’m aggressive, but to hide it behind something, knowing it’s there that’s to me, that’s not. No, and you’re just inviting to, to get into more trouble for something else. Like I, it’s just, you don’t want people to just keep looking at everything that you do just, for something like a, a small portfolio or wherever else you are, you just.

I think that you have to weigh the risks when you do something like that. It just doesn’t make sense to me. And I think there are lots of different ways to structure yourself properly and you just need to find an accountant and a lawyer. Who are familiar with both the US side and the Canadian side at the same time and get their advice.

Cause there are like I’ve heard of structures where there’s a Canadian corporation that owns an S-corp in the US and then the S-corp is what purchases properties. There’s lots of different ways to do it. What year? Trying to avoid double taxation. That’s as a Canadian. That’s what I’m trying to avoid.

I don’t mind paying taxes, but I only want to pay it once. I don’t want to pay taxes, like two countries’ taxes on the same dollar. It doesn’t make sense. Then what’s the point? And that’s all that I’m really trying to do. And then the other piece for me, Hedging against what I’m doing in Canada and the US and then, having that diversity of currency, as something that I find appealing to me. So when I’m diversifying in an asset class, I understand, but not necessarily in a whole bunch of others. Yeah. Yeah. Going back to the whole. The other nefarious type of entity structure, but you see it, the hard thing is like passive investors out there.

You don’t know who to believe, right? Everybody’s shape-shifters out there. And a lot of lawyers who haven’t built up their firms yet, or are young and hungry. What they’ll do is they’ll put their whole business on this kind of aggressive strategy. And they’ll run around and say, Hey, I got this magic trick where we hide all your assets in Nevada and there you don’t pay taxes. If you do, we’ll tell all your friends and yeah. Their professional license and everything, but they’re hanging their hat on something. That’s a trick. And in my opinion not really the right way to do things. So it’s hard for people, right? And this is where I keep coming through.

You can’t just trust licensed professionals. This is where you have to build your network with other capacity investors here, all the different pros and cons of different options, understand it yourself and B become the architect. But then of course go to the right professional, the referral that you deemed the right strategy, and then go and implement it.

Just like taxes, right? There’s guys who like the same thing. There’s all these different strategies out there. Some in my opinion are very nefarious and aren’t right. I think you as investors need to take ownership over that. Yeah, absolutely. Like I, what I do is I’m always looking for peers who are either at the same level of being, but, or just above where I am at and, talk to them about how they do their structures and what they’re doing.

Not necessarily the. Like I’ll ask different professionals about how they would structure it, but, and then I’d go, I’m going to go that extra step and talk to other people that I know who are already doing what I want to do and talk to them about how they’ve got it structured. And not just one person, two or three people that are doing the same sort of thing, to be able to figure this out and then make a decision.

Based on that and what you get from the professional, because in the end, like you’re paying somebody, and when you pay somebody, there’s going to be some bias there, no matter what you do. And they’re going to want your business. So you have to make an educated opinion. And I like mine.

I’m always trying to hang out in a room where I’m not really the smartest person in the room and, I don’t want to sound egotistical or anything, but I think I’m pretty bright and I’ve got some experience, so I need to find like rooms that have those types of people and, I’ve joined different, like coaching, like I’ve I was part of strategic coach and I’m part of the entrepreneurial organization which I really enjoy.

In that group, there are real estate investors from across Canada and I’m able to be in a room with them and like they are, they make me, he looks small and that makes me feel good. Cause I feel like I’m learning all the time. So find that room and they don’t have to be like 20 years in front of you, even if it’s just a year or two in front of you.

That’s probably the best thing, especially if you’re just getting started because. It’s easier for them to want to share with you. If you’re going to ask me questions, I don’t mind talking to you Lane, but if I get a new person who’s starting investing, asking a bunch of questions, I’m going to go say, go talk to your lawyer or go talk to you.

Like, why are you talking to me? Read it, read the basic primer book on this stuff, guys. Like why are you bothering me? So at the same time, though, if you had somebody who just went through the process, they’re going to want to share that knowledge with you. Because they’re like, they’re proud about going through it.

I did great last year, great. Then that’s the person that cheated that you need to find. Groups like yours, like your tribe, right? Like that’s the type of thing that will help people. Get from where they are to the next step, because they’re interacting with other people who have already done it. And that’s what we want to do. And I think this is where you get in the right groups that people pay for. They help out here’s exactly what I’m doing to print it right now. I’m picking his brain on this Canadian thing and we’ll get to my.

Selfless question here at the end. But he helps me out because he knows that the person that he’s helping, if they’re the right person will reciprocate, and not only is it the right thing to do and he enjoys it, this is when you get into these types of worlds, these masterminds, like these are the magical things that happened.

But so here’s my myself, as the question went in it, because you’re a little bit further along the road as I am. And I just kinda liked that I respect your opinion. Not saying I would follow it. But getting these different opinions from people on the same level is important. So it’s a question about diversification.

If I understand it right. You and I are in different situations. You’re in Canada coming to the US. I’m using Canada, maybe one of them for diversification from a real estate standpoint, or maybe a currency standpoint. I don’t know what side of the fence I’m on at this point, but so if I understand what you’re doing, most of your stuff is in Canada.

You take a little small chunk and in us, is this just some place to fund for you? Or is this like a true hedge? Cause you have no intention of really assigning this money back to Canada and you don’t need it. You don’t need the money to survive, put food on the table. So what is like the, is there, it’s just a, something a hobby, give me some insight.

That’s hard. That’s a hard question for me. I would say that for me there’s a couple of different things. It’s again, moving to that investor side rather than the business owner side. You’re right. It’s not a lot of funds for me to be able to. To put it in and invest in different projects.

It’s also, I think I don’t intend to bring the funds back, but I do like the idea of being in the unit. For quite a few months of the year. Particularly as I get older. So I’m thinking that it probably would be good to have all of these things set up. I’m a planner.

So I tend to think 10 years down the road and getting all of these things set up we’ll set up. And my family up in the future, for the things that I intend to do in the U S in the future. There is a, there’s a little bit of that. There’s a lot of just being able to have us dollars for different things that I’d like to do.

And it you’re right. It’s not a lot of my net worth that’s going in there, but it’s it’s it’s enough that I think will be useful for me, for my future goals and plans. So it’s not like you’re not like a prepper kind of mentality then by no means. And you’re not thinking about the Canadian dollars.

No. And I’ve had many people ask about investing with me in Canada and from the US and I’m like, why would you do that? It doesn’t make any sense for me because the state of California is the population of Canada, right? Come on. Instead of coming to Canada, just go to a different state.

You’ve got so many different opportunities in the US instead of going to Florida, going to Arizona or going to Texas, you’ve got a lot more of that. We have some of that in Canada with provinces, but the population is so small. If you were to, if I were to say if someone were to ask me that I would say hedge against it, Asset classes in the U S do like storage or do something else, mobile homes, or do do something else that if you’re comfortable in the real estate space, there are other ways that you can do that in there, but you don’t necessarily have to go out.

And Like there, there’s so many different types of investments out there that you can do that are, I feel like better than putting money in the stock market. If you can do private placements in companies, that’s another way to do it, especially if you understand who they are and what they do. That’s something you could do. But come to Canada. I’m not going to say, I’m not going to tell you to do it. W it would serve me well, but I like to have investors invest in my projects, but I’m. Okay. I think for what I would suggest for Canadians to definitely do, to consider it and to do it and to do it properly and structure it correctly and stay outside of do it.

Don’t do the legal stuff, like just do it right. But don’t worry about what I say, an American co investing in Canada. I don’t think that’s necessary, you can do what you need to do from a diversity perspective in different states. Two, two common mistakes that come to mind that new investors do all the time is, they think that the grass is greener on the other side. They’re in the US, but they think Canada is the untouched proverb, the opportunity. And then the second lead, like shiny object syndrome, a lot of investors get this there, they start to open up into this world of alternative investing and then it becomes like a Las Vegas buffet.

They’re going after the Asian food, the seafood that deserved the Italian food. Which is a multi-family self storage, mobile home park. And then they want to go off to Canada too. I was still able to just focus on one thing. Residential multi-family, I think it’s the start or the basis of it all, but, I think people spread themselves too thin and they don’t earn anything, spend at least a couple of years into one asset class first or that before you branch off to something else.

Because the biggest thing is investing with the right people that aren’t going to steal your money. It doesn’t matter what asset class. For sure. And you have to figure out what your goals are too. So some people, like when I first started, I needed to replace my income. That’s what I needed to do to leave my teaching job.

By 2012, I had enough funds to be able to do that. I didn’t leave my job until 2014. And then I just kept building and building that one type of residential. Real estate where I was getting cash flow from it until I did really well with that. I had really solid cash flow coming from that.

And then I moved away from that into multi-family because multi-family is not as great on the cashflow at the beginning, but it’s great for your net worth. So it was more of a net worth plate. Stabilize the asset, get the property refinance and into longer term financing. Then we started to get cash flow from those assets, but it takes three to five years, at least you can get a home run maybe once in a while, then you can do it in one or two years, but mostly it’s three to five years.

And once you do that, then you start to get the cash flow that comes to that. But people have to first figure out what their goal is, right? Is it cashflow or net worth? Because some people don’t want to quit their jobs. They don’t want to do that. And they don’t, then they need to just focus on, okay.

Let’s not go to the buffet. Let’s find out where the ribs are. Okay. Let’s find the ribs. I’m a meatatarian so I don’t know. Yeah. My cell phone went through it. When I go to a buffet, I love crab legs and bone marrow, that’s all. I’m big on ribs. So that’s where I would go. But you gotta find what that is, and then get enough of that, so that it’s substantial. And then you can worry about the desert and the salad and the, whatever. Yeah. Go have your pizza then, and then your noodles. Just gotta build that up first and then, and you’re right.

The shiny object syndrome is a problem. Like I see so many different people that have been really successful in real estate only to sell it too early. And then get into something else. The analogy that I use as a hockey stick while I’m Canadian, I gotta use a hockey stick. Great. So you got the base of the shaft, you got the base of the stick where you hit the puck and then it goes up the shaft of the stick. What ends up happening is most people. Actually sell their property, probably just a little bit up on the shaft of the stick and they missed the full shaft, right?

Because of whatever reason they got distracted, oh, this is going to be the next big thing. I have to solve this. I got to get into this and they miss all of that. And I think that you got to watch out for that shiny object syndrome. So you can get that big lift that happens, with properties over time.

And that comes with mortgage paydown. It comes with appreciation and it comes with cash flow and value add repositioning those assets. Even if you can take a single family home, And give it to its highest and best use. Maybe get it to the place where that could be like a triplex or fourplex by rezoning, doing whatever you can do.

You can make that thing make you money. There’s no tomorrow, if that’s what you want it to do. So like you got to figure out what your goals are, but don’t. Don’t get distracted and then sell that asset, especially if it’s just some tenant that’s causing you, whatever problem it is, you get too emotionally attached and that’s why you sell it.

You can’t do that. Don’t let somebody else affect the way. The reason why you sell an asset. That’s not a good thing. That means you just got to hire the right people. You’ve got to find out who the, who is. That’s going to help you to manage that asset better and take yourself out of the thinking process, because then you’ll get too, you’re too emotionally involved and then you’ll sell it, right there at the bottom of the shaft rather than at the top. So once I close up here, All right. So you’re a Canadian citizen. You don’t have the protections of the SEC. What if something bad happened in a deal? And then, your general partners you decided to invest with across the country line border, goes haywire. What would you do as a GP?

So I would make sure I have the address of the GPs home. I’d find it in my truck and get my baseball bat and say hello. No, you know what? I think that The thing is that you can do as much due diligence as you can, but it depends on a lot of the things that you can foresee coming, especially if you’re not getting numbers from somebody.

Having experience in this business is really helpful, but there are some things that happen that we have no control over. We’d get A hurricane or, there’s a flood or whatever it is, but the thing is, did that person have the right insurance in place that the people have? And as a LP, you can ask a GP, that sort of stuff, right? That’s what you should be doing. You’ve got to advocate for yourself. And hopefully if you’re with a group of people together who are in an LP, you get the ability to be able to move that GP forward a little bit just by asking the right questions and staying on top of it.

But as a Canadian investing, I have less protection than somebody else, but you got to remember too. It’s just, it’s not just me and not as an LP. I got all these other guys who are SEC protected and you know what they’re going to do. They’re going to complain more than me. Yeah. Like a class action lawsuit, where you’re usually going to have, you’re going to have that one guy out of the LP of 20 guys or even 150 guys, there’s always going to be a leader that emerges. I call it like the lord of the fly. There’s always one guy that’s going to take command of the mutiny and charge things ahead.

Hire the lawyer, just the nature of these people in these deals. They may or may not know what the heck is happening, but there’ll be a leader that usually arises. This is why I enjoy being an LP sometimes. Cause I’ve seen this happen a couple of times where a deal has gone sidewards and. I’m a GP, so I know what’s happening. I’m not, I’m a GP, so I know I’m not a GP, this kind of deal, but I know what the GPs are going through, but I see it from what the LPs are doing. And sometimes it could be overboard and too much and really annoying. And that would really upset me if I was a GP. This is, I think, what happens.

And I think this is why it’s nice to invest in a group like that, that maybe you are the person that I don’t care about. There’s somebody else that probably cares more than you. That’s going to carry the metaphoric baseball bat. That’s great. It’s all metaphorical and that’s what I’ve said.

But yeah, but the other piece there too, is that this really isn’t a significant amount and might not be worth as well. For some people that it may be, but like it’s not really a significant amount. Saying that I wouldn’t be upset if I lost it, but I’m not going to eat tomorrow because of it.

Like it’s not, and that’s traditionally the type of investors I like to work with anyways. Like I’m an ideal investor for myself because I know that I I don’t like to invest with people who are bringing 50 K or 75 K like I’m usually looking for people to bring 200 K or 250 K to any project that I do because I’m dealing with a different person.

I don’t like to see people take money from lines of credit, and invest with me. I’m looking for other types of people. Like my last, the last couple of buildings I had my last building I had 700 K one person. Brought two. And then I’ve got a 16 unit where I have 900 K that one person brought. I would rather deal with those people and be in a partnership with them, a 50-50 partnership and get the deal done rather than have 10 or 20 people with 50K each.

I just find that the people who have 50 K are usually the biggest pains. Take the guy’s 25 grand, cause he needs it more than the other guy. No blast though. The worst is the last 20, 20 grand the person with the last 20 grand I’ve. I turn many people away from investing in my projects because I just, I met a point in my investing career where I would rather not deal with pain in the right.

And this is why I tell people like, if somebody is willing to take 50 grand or less, they’re desperate for cash for their project, because if not, they will just pull it out of their own pocket because most general partners, their net worth is well over $5- $10 million. And they’ll just feel it personally, if I take a guy’s 30 grand. Yeah. It’s a little sketchy. You want to be careful with those types of deals for sure.

Great insights. I. I read between the lines with your little us. You’re not going to be domiciled. I see it. I don’t know if you’ve thought about it this way in your head, but I see it.

I think I see you doing it as an envelope system, people’s budget, and they have like their little play money fund. I feel like you’re using your US money as you’re playing money. So when you go on vacation outside of Canada, you just feel like you can just blow it off. Maybe just don’t tell your wife, I’m neither confirming nor denying what you’re saying. It seems whimsical, but this is what people at the end game do. And I think this is what kind of keeps it fun, just bigger envelopes. And I love learning, right? For me, this is new learning.

The US for me is new learning. It was almost like starting from scratch again, like investing directly in going through the process and, and I enjoy it. So I like to continue to learn. I’m going to keep doing this until I can’t anymore. This has been a fun conversation and I really appreciate it.

Folks, once you guys get Quentin’s book the title is The Action Taker’s Real Estate Investing Planner. Yeah. The Action Taker’s Real Estate Investing Planner, it’s on Amazon. Yeah. And last name D S O U Z A. It’ll probably pop up to the top of Amazon and pick it up. Yeah, thanks for coming on Quentin. No problem and one thing too, is they can reach out to me on Instagram at QMANREI. That’s my Instagram handle and trying to get my followers up on there. So yeah. Cool. There you go. Consolidate your channels, right? I can only focus on one. I’m not really that good at multitasking on multiple social media things.

Thanks everybody for joining us today. We’ll see you guys next time.

Want to Get a Loan? Do It the RIGHT Way

https://youtu.be/zoaZOzv4-m4

I typically suggest there are two ways of sending money into escrow. You can have the donor write a check and deposit in the borrower’s account, but you would need a lot of documentation showing how the money is deposited. We’ll ask for a canceled check or check image and the transaction history.

Sometimes it takes three, four days for it to clear. So depends on where you are in the contract. You might not have that luxury. The cleanest way. I always tell people is just have the donor and wired directly into the escrow’s account.

try to rent them out and

Let’s get to some of the problems you’re seeing through transaction. Maybe we’ll break it down. Order occupied it, non owner occupied too. But the first one is when I was buying a lot of these rental properties, of course I was using my own money. My parents never give me anything. Nobody gives me.

But some people when to buying their primary residence, shoot, what kind of 20 something year old kid can afford to $300,000 down payment. A lot of these guys are getting it from their parents. What’s the best back to sit there, like work that in a lot of people, when they come to me, obviously there’s some gifts.

But for gift letters, for the most part, conventional loans are pretty easy. They make it really easy for us lenders and also the borrowers. I typically suggest there are two ways of sending money into escrow. You can have the donor write a check and deposit in the borrowers. But you would need a lot of documentation showing how the money is deposited.

We’ll ask for a canceled check or check image and the transaction history. Sometimes it takes three, four days for it to clear. So depends on where you are in the contract. You might not have that luxury. The cleanest way. I always tell people is to have the donor and wired directly into the escrow’s account.

So this way there is a receipt and there’s no way the money is going wrong anywhere. But for FHA loans do know that we will ask for the sourcing of the donors funds. So meaning I will ask for two months of bank statements from the donor, I’m trying to sharp shape this. If I get a random check for my friend, Two and a half months prior to when I throw this money into escrow.

Nobody checks or there’s nothing I need to write that this is when the real estate industry, I hear a lot of real estate agents would say, oh, you need to have two months of bank statements, clean bank statements, or seasoned funds really that’s a myth, but it really depends on what the deposit is for. We call them large deposits.

So large deposits definition is basically any positive. That’s more than 50% of the total gross income used on the loan application. So let’s say if you and your wife combined $10,000 gross ran knowing gross income on the loan application. So anything higher than $5,000 deposit into your account, we just have to know what it is then.

Why is it deposited? We just want to make sure. You’re not loaning a $5,000 to go buy this house and now you have to pay back and we need an attitude that we can come or get, or it can’t, it gets, it’s a gift. And we just need a documented source and explain, I just got it from my block five or crypto deposited from Coinbase.

We can use a crypto as down payment. I’ve got this other, wasn’t he wasn’t annoyed, but the bank was being really at the way. They’re like, oh, we see her in these private placements. And we amount to make sure, like LPs don’t both sign on debt. They’re the best investors, but they’re asking all these questions.

Any thoughts on that? Other than finding a VA letter, you can explain all you want. If you met with an underwriter that won’t let go. Sometimes it’s just easier for you to change lenders to someone who can get that scenario ran by their underwriter. And if you get the, okay, then resubmit that application over there, that’s what we do as brokers.

Sometimes we run into cases like that. Yeah. Lender aid doesn’t work out. So we quickly, we have your application. We it’s so easy for us to go to the second lender, go to the next lender that can get this done ASAP.

Syndication eCourse Freebie

https://youtu.be/3hOywQBjUB0

Finally, we’re able to edit the latest Sunday cram school. I think we did on Saturday, actually. We got a bunch of investors who want to learn about syndication topics, did a bunch of FAQ’s in a presentation form, and we edited it up for you guys to listen in today’s podcasts.

Now, there are a lot of things that I had to actually edit out due to SEC reasons. If you want the full cut of it, you guys can go to simple passive cashflow.com/club. Join the database there, and we will get you a copy or you can send an email, the team@simplepassivecashflow.com with the subject line Secret Hui Message either way that works.

We’ll get this unedited version out to you guys, but just some takeaways that I’ve been seeing this week, actually this month, a lot of this came from the Hui retreat that we had recently in Hawaii, really excited about doing it next year. Not only talking about investing money, where did you get your money from?

Where do you put it? How do you protect it? Taxes, et cetera., but more about the relationships because to be seen, if you’re doing the 1, 2, 3 simple passive cashflow plan, investing in good assets where you’re cash flowing, just in case of a recession with good honest people. Secondly, you’re investing tax wise, smartly.

You’re using the passive losses effectively to possibly pay less taxes on the ordinary income side. And you’re doing a little bit infinite banking. But mostly you folks out there will make six figures. You’ll be out of the rat race in four to seven years for the most part. Some of these takeaways that I wanted just summarize for some of you folks is we talk a lot about end game getting the four or $5 million net worth because that’s a threshold where you can get to and get back into the marketable securities, the wall street crap, and just make that four or 5% return or put it into infinite banking, which is even more secure and life insurance and make that return tax free there.

If you’ve never heard about it and go to simple passive cashflow.com/banking, get the free ecourse to learn more about it. The ideas you have to get penetration and grow your equity into, more semi aggressive deal to get yourself to this sort of higher level $3, $4, $5 million net worth and at that point you can go into cruise control. Now, one of the ideas that, we talk a lot about in our family office group and in-person meeting is this concept of what do you invest in when you get to end game?

Not necessarily for equity growth or better returns, but more for stability and some people they titrate to that point slowly, right? Where in the beginning, they are going to be in rental properties, syndications to get up to a point, maybe two to 3 million, but maybe take, I don’t know, a quarter of their portfolio and slowly put it into these more end game type of investments.

Just to name a few. Just to get the wheels turning case. You’re not aware of some of these types of things still in the alternative investing space, they might be like life settlement investing, where you’re going to be buying out the life insurance product of somebody who is unfortunately going to be passing away or in a terminal illness seems very morbid, but it is one of those things that is guaranteed to happen, it’s just a matter of when.

Another investment that a lot of people talk about are triple net deals or commercial leases and this is where they say just go buy a Walgreen’s once you have a boatload of money, something I want to point out and a discussion topic that came up that I wanted to share is, maybe triple net deals aren’t the best thing to be doing at this point in time this market cycle. Right now rent increases are skyrocketing. The economy is doing pretty good. If you’re not going forward, you’re going backwards and we’ve heard this in many types of personal development, and also I’m going to extend it out to real estate.

Now, hear me out here now, triple net deals like investing in a Walgreen, any kind of type of corporate based, big corporate tenant is very, and especially when they take care of all the expenses, which is the term triple net comes from you, the landlord investor, you pass all those expenses off to the tenant.

You don’t make as much money, but it’s still pretty decent return for a very low risk. But now what you’re starting to happen, this market cycle is a lot of these very sophisticated corporate tenants they know their value and they know that inflation is going up. For a lot of them, they’re making the good business decision to just dump their leases so the landlord to go screw off.

Which may not seem like the right thing to do, but in terms of their leases, it’s totally within their contractual basis for them to do this. Combine this with the fact that you’re seeing a lot of these Walgreens and these pharmacy stores that were traditionally, one of the people who would take up these single lot kind of type of triple net ideal type of investments for high net worth families to go after.

Partly because Amazon’s coming down to town with the pharmacy stuff and just less need for brick and mortar. I’m not saying it’s going away completely, maybe not be the time for this. And this is where it’s a concept of, there’s a time to get aggressive and there’s a time to huddle. I’m trying to emulate and so I don’t see it that often, but large families, family offices, the guys that are 50, a hundred million dollars net worth.

Now these guys, sometimes you can make the argument that they have enough money where they could just live off the remains and they’re 20 something plus off swing can live off of it and they’re fine. But the ones that are being done correctly, they are still semi aggressive in the market. And what are they doing now? Are they getting more aggressive buying rental properties while the rents are going up and interest rates are still pretty low and continue down that track, or are they going into triple net deals, which is the duck and cover where there are these from a risk standpoint, there are these kind of headwinds that are fitter the commercial leases are heading into.

Now, I don’t know. But I just want the pulls it out there as a question to ask. Now, maybe you can take the standpoint that I’m just going to be very stoic, whether they’re good times or bad times, I’m going to be doing the same thing regardless.

Fine I don’t know. I’m there’s different investment philosophies out there, but I’m starting to catch on to the fact that maybe you might be very stoic and, or maybe a family offset might be very stoic in their philosophy, but still they recognize when the timing is good. There’s a time to get in. And then when there’s a time, when things are overheated, you go to a hedge strategy where you protect your tail.

Just thought I put that out there. Now that said, there’s a lot of people that listen to podcasts and just don’t have very much money and they have very little investment knowledge and are very unsophisticated, even though they listened to a gazillion podcasts. Now, if you’re out there and your net worth is less than a million dollars, I have to say that you can’t play the strategy where you can just duck and cover.

You need to get out there and you need to grow your money. Let’s just say at that, because I talked to a lot of people and they’re like, yeah, the other world’s going to end the, everything’s going up, interest rates are going to skyrocket, which by the way, that’s why you invest in real estate. When you are basically hedging that the interest rates will be going up because you’re hedged against it and protected because you will have the rents in play.

If the rents go up, the rent is essentially a way to hedge that interest rates go up because when interest rates go up, that’s indicative of a good economy and that just pretty much gets passed on unfortunately to the tenants. So there’s a lot of people that kind of say the economy is just too hot and they just use that as an excuse not to get started.

And, one way to figure out what’s real, who’s not, say, what’s your net worth. If you’re less than a million dollars I’m just going to discount your type of opinion, to be honest. But that’s just me. You guys might be different, but I just want to pose a different ideas of some things I’ve been listening to.

But with that, here is the replay of the sensored version of the syndication cram school we did. We’ll try and do another one of these in the future, but what I would really suggest for everyone of you interested in being a passive investor is get educated. Do our syndication e-course it’s a few hundred bucks, but if you definitely join up at some point, we do refund that for it.

We have a refund policy. So it’s kind of no risk type of thing. The worst thing you can do is learn something and this is where you learn all the little tricks that syndicators do, what to invest in and mort importantly what to stay away from. You can’t just go off pro forma, a pro forma mean nothing.

If the numbers that were used to assume that pro forma are all vague and overly exaggerated, and that’s what the syndication course does to get more information, go to simplepassivecashflow.com/club. And we will be sending out the uncensored version or the one with all the extra goodies, basically here for the end of the next month. Be sure to go to simple passive cashflow.com/club it’s up there and enjoy the show.