Author: Lane

#1 – 2018.09 – The SPC GreenSheet

Investor Letter #1 & My Journey to SPC

2018 Q3 @$5,400/Mo

Get the uncut version by signing up for the Hui Deal Pipeline Club

Side topics:

Getting frustrated at W2

What are we talking about “Metric?”

What I don’t like about engineers

New Podcasts & Articles:

Not ‘Faux’ News [Lane’s Real Talk]:

  • May Yardi Report – Link – U.S. multifamily rents rose $4 to $1,381 in May. This represents a 2% year-over-year increase but a 50-basis-point decline from April, as new deliveries took a toll on occupancy rates and growth.

I don’t care about politics but lets understand what’s happening…

Everyone saw Trump shaking hands with KJO from North Korea

For nearly 20 years, U.S. foreign policy has been dominated by military campaigns in Iraq and Afghanistan.

Fighting two wars made it necessary to make deals with other nations to secure key strategic military placement (ie bases in Turkey).

Everything is connected and when you become aware of this the world’s events make sense.

Turkey attacked the Kurds because they knew the U.S. would value the air bases in Turkey over supporting the Kurds.

Russia annexed Crimea because they knew we wouldn’t intervene militarily (Obama would not send more troops).

China built island naval bases in order to expand their military presence.

When the cat’s away the mice play…

Seeing the end game, Russia seized Crimea because they correctly calculated that Obama would not put U.S. troops into yet another battlefield.

Trump’s policy is more independent and less reliant on other countries.

When Saudi Arabia recently petitioned the U.S. for military support, Trump told them to pay for it.

When the UN voted against U.S. agendas, Trump told them that the U.S. would review the support and money it gives to countries that consistently work against the U.S.

One could describe this as hardball. It works in a lot of real estate deals when the winner is the party that is willing to walk away first. Who knows if it will work in world politics???

Right now the US economics look good and rents continue to raise at a steady pace (although not expected to mimic the growth in 2014-2016).

Although we all shake our heads at stories like this…

Call it a flashback but Subprime mortgages are bank except with a new name, “non-prime.”

“allow … borrowers to have FICO credit scores as low as 500 … can take out loans of up to $1.5 million … can also do cash-out refinances … up to $500,000. Recent credit events, like a foreclosure, bankruptcy or a history of late payments are acceptable.”

Other stories remind us of the big picture…

Trump signs bipartisan bill rolling back some Dodd-Frank bank regulations – Los Angeles Times, 5/24/18

“Community banks, which enjoy broad support among Republicans and Democrats, will be freed from Dodd-Frank’s mortgage rules if they make fewer than 500 mortgages a year.”

This unraveling of Dodd-Frank with make lending easier, which is awesome for real estate investors.

Interest rates:

 

Link to Hui’ Google Drive – Treasure Trove of Real Estate Investing Goodies!

 

Hacking my 6 needs…

  1. Growth: Revamped my messaging to you. I will start doing these monthly tailored messages.

 

New initiative: Per the advice of my new health advisor (who said “my VO2 max sucks”) I an starting the day with 5-10 rounds of high intensity calisthenics to get my heart rate over 140 bpm. This should be done in 5 minutes and continue in the fasted state after. Recently I paid for a health MD. It’s cool because he took my blood biomarkers, did a DNA sample, and gave me a supplement plan. We get together and chat about how things are going with Dex scans and VO2 max readings (think Gatorade commercials with Lance Armstrong with the mask on while biking). It cost a couple thousand dollars but I figure it can’t hurt. Your health is wealth. He sold me when he said “MD’s are normally idiots” (He is an MD himself).

 

Morning time supplements:

Simplepassivecashflow/latte

Vitamin D3 – 5000iu

Omega 3 – 2g

Vitamin K2 – 1g

Alpha Liponic Acid – 1

Multivitamin – 3

DHEA – 1

CoQ10 – 1

Zanthosyn (Astaxanthin) – 12mg

Anastrozole – 0.5mg

 

Evening time supplements:

Melatonin – 3mg – PM

Zinc Magnesium – 2g

Zanthosyn (Astaxanthin) – 12mg

2. Contribution: I interviewed four candidates for a job. I don’t know if I will work with any of them but I feel like I definitely helped them get where they need to go. Apply here.

3. Significance: Mailing out 160 books (email me for final twenty) and spoke at two events and gave out books there. I also wrote my first Forbes article.

4. Uncertainty: Doing a syndication in a new area in a new partnership. Finishing up two flips (38k & 21k) in Atlanta and will put on market $oon.

5. Certainty: I got bonus depreciation on my K1 and got first distribution checks from Syndications per plan. Also got paid back on a 2nd lien private money loan I did on a flip. And replenished money back into investinahp.com right before the 12% fund closed. A lot of my deals are starting to get cashflow now.

6. Love/Connection: Helped out a few people locally at my meetup get out of a tough legal situation with a lawyer referral. Hosted a mastermind meeting with like-minded people. We had whiskey it was good fun and I think I will continue. I realized part of the reason I don’t like my W2 job is that I am surrounded by W2 mindsets and I too am a product of my peer group.

 

Distractions/Barriers/Noise/Resistance:

What I need help on: More time – need to add staff or I will just continue to be a super employee of one. Join my team!

Lessons learned:

#LaneHack – I use a lot of Gmail inbox labels. Here are some great suggestions in this article.

https://hustletostartup.com/organize-gmail/

I especially like the one about filtering all emails that have the keyword “unsubscribe” which are likely to be things trying to sell me things.

It’s not all about Money:

Flowstate – Song of the month – Avicii Bromance – Avicii died this past month 🙁 – Sign up for the Club to download 😉

Be ready for the best sunset and sunrise captures: https://sunsetwx.com/

Join the club and find out what the easter egg is…

Richard Duncan’s Economic Predictions (2 parts)

Richard Duncan is back here in Simple Passive Cashflow (2022)!

Part 1: U.S. Economy: Foundation of Today’s Crisis | Podcast With Richard Duncan

It’s a 2-part podcast and in this podcast with Richard Duncan, he discussed the foundation, how the economy and the Fed work, the relationship between gold and the dollar, and understanding our economy.

https://youtu.be/Jqn3vNK9eIc

Part2: U.S. Dollar STRONGER Than the Euro | Podcast With Richard Duncan

In the second part of the podcast,  Richard emphasized multiple points that will make you grateful to live here in America. First, the U.S. dollar is at its 20-year record high. Second, don’t be doubtful because the government and the Fed are doing their best to care for the economy. Thirdly, be in the position of opportunity and do not sit your money in dead equity.

https://youtu.be/EXwGK46DVLk

Note – we regularly discuss and co-watch Mr. Duncan’s talks in our Passive Investor Accelerator & Mastermind

Discussion of China Trade Wars, where we are in the cycle, and new marco economic concepts.

Use code “LANE” for 50% off the Macro Watch! https://richardduncaneconomics.com/product/macro-watch/

Subscribers to Macro Watch will receive:

  • Approximately 25 Macro Watch videos per year. A new video will be uploaded roughly every two weeks.
  • Richard Duncan’s two video courses:
  1. Capitalism In Crisis:  The Global Economic Crisis Explained
  2. How The Economy Really Works
  • Access to all past issues of Macro Watch*

Richard Duncan is the author of three books on the global economic crisis,

including the international bestseller, The Dollar Crisis: Causes,

Consequences, Cures, which forecast the global economic crisis of 2008.

Since beginning his career as an equities analyst in Hong Kong in 1986,

Richard has served as global head of investment strategy at ABN AMRO

Asset Management in London, worked as a financial sector specialist for the

World Bank in Washington D.C., and headed equity research departments

for James Capel Securities and Salomon Brothers in Bangkok. He also

worked as a consultant for the IMF in Thailand during the Asia Crisis.

He is now the publisher of the video-newsletter Macro Watch, which can be

found on his website:

Home

Live Coaching Call w/ Non-Accredited Investor (Engineer)

  • I’m currently in the middle of setting up my overfunded whole life policy with the guys over at Wealth Formula Banking that you connected me with.
  • Properties:
    • First purchase in August 2018 (duplex in PA)
    • Currently in closing on another SFH that I’m 100% financing… currently waiting on a tenant situation to get them out before locking it in… see my underwriting here:
    • The cash flow is low on this one, but you can see the comps here are quite higher than what I’ve conservatively set (and what my financing is based on), so I expect to get even more equity right out of the gate on this one should we resolve the tenant situation. I’ll also be completely funding it through financing, which provides an effective infinite return there on this after refinancing it.
    • My other property can be seen here (it cash flows around 1k per month, and when I finish financing it at the end of this month, it’ll still cash flow around 500/month):
    • Going forward, will be focusing only on properties that I can recoup most of my investment during the refi
  • Currently starting up some branding around my RE ventures (Engineered Cash Flow):

I am a little different than most of your clients/followers in that although I do have a high income day job, I do enjoy the entrepreneurial side of the RE business and am looking to be a bit more active in the business side of my venture (honestly very similar to what you have created).  I am looking to grow an investor list and scale this year. In addition to my income, I also have very good credit which has made it fairly easy to get lending and to get creative with leverage.

Currently have a solid team in Philadelphia that allows me to purchase discounted properties, rehab them, rent them out, and finance out my investment while still able to cash flow.  They effectively wholesale me the deal, which I am the purchaser and funder. They then use their contractor team to do the rehab, and I use their property management group to manage the properties (could use other groups, but after doing due diligence and interviewing a couple of companies, went with them anyway).

I do realize there is a lot of eggs in the basket there, but this allows me to get into value add properties that allow me to get out a majority of my investment back out in order to scale faster. I also realize that they take nice margins for their selves during the wholesale and construction (which they guarantee and have a fixed construction cost so low risk for me there), but I’m willing to pay a little extra to do better than your normal turn key and be able to take advantage of a cash out refinance right after the construction. My plan is to do a few more with them, but I’ve also been building up my own team (i.e. wholesalers, contractors, bird dogs) out there in the area so that I can cut out a middle man factor and recoup another 10-15% equity per deal.

Live Coaching Call w/ Non-Accredited Investor (Engineer) Ep159

 

 

Fine with video

 

  • I’m currently in the middle of setting up my overfunded whole life policy with the guys over at Wealth Formula Banking that you connected me with. I’m planning on putting in 50k/year into as my “war chest”.
  • Properties:
    • First purchase in August 2018 (duplex in Philadelphia, PA)
    • Currently in closing on another SFH in Philadelphia again that I’m 100% financing… currently waiting on a tenant situation to get them out before locking it in… see my underwriting here:
    • The cash flow is low on this one, but you can see the comps here are quite higher than what I’ve conservatively set (and what my financing is based on), so I expect to get even more equity right out of the gate on this one should we resolve the tenant situation. I’ll also be completely funding it through financing, which provides an effective infinite return there on this after refinancing it.
    • My other property can be seen here (it cash flows around 1k per month, and when I finish financing it at the end of this month, it’ll still cash flow around 500/month):
    • https://docs.google.com/spreadsheets/d/12iO1JqBt8AmudMreWFLOK03wjkbbnL09VvUr69avPnU/edit?usp=sharing
    • Going forward, will be focusing only on properties that I can recoup most of my investment during the refi
  • Currently starting up some branding around my RE ventures (Engineered Cash Flow):

I am a little different than most of your clients/followers in that although I do have a high income day job, I do enjoy the entrepreneurial side of the RE business and am looking to be a bit more active in the business side of my venture (honestly very similar to what you have created).  I am looking to grow an investor list and scale this year. In addition to my income, I also have very good credit which has made it fairly easy to get lending and to get creative with leverage.

 

We’ve chatted before, but I’ve attached a quick bio blurb that I’ve used for private lenders before that gives a bit more background on myself.  Currently have a solid team in Philadelphia that allows me to purchase discounted properties, rehab them, rent them out, and finance out my investment while still able to cash flow.  They effectively wholesale me the deal, which I am the purchaser and funder. They then use their contractor team to do the rehab, and I use their property management group to manage the properties (could use other groups, but after doing due diligence and interviewing a couple of companies, went with them anyway).

 

I do realize there is a lot of eggs in the basket there, but this allows me to get into value add properties that allow me to get out a majority of my investment back out in order to scale faster. I also realize that they take nice margins for their selves during the wholesale and construction (which they guarantee and have a fixed construction cost so low risk for me there), but I’m willing to pay a little extra to do better than your normal turn key and be able to take advantage of a cash out refinance right after the construction. My plan is to do a few more with them, but I’ve also been building up my own team (i.e. wholesalers, contractors, bird dogs) out there in the area so that I can cut out a middle man factor and recoup another 10-15% equity per deal.

 

With the financing and capital I have available, I am looking to do 6-8 more properties like this in the next year.

 

  • That PFS is a few weeks old. Added another ~5k-8k to general savings during that time.
  • The refi on the original duplex should be done in early February.
  • Forgot to note that I’ll be dropping some cash on an engagement ring after I get my refinance complete and my life ins policy set up (watched your diamond purchasing for bros podcast too ), so that’ll be ~10-15k out of the stash.

 

 

I worked at two startups (currently at one).

 

Where can I find off market properties?

Affiliate relationships with local realtors
Reach out to top insurance agents if they know large apartment owners looking to sell
Utilize relationships with regional banks for deals that fell out of contract
Affiliate relationships with local PM companies
Team up with other syndicators/investors
Contact organizers of local REIAs
Search BP for multifamily investors in specific area. Leverage their warm industry contacts.
Reach out to operators in groups like Michael Blank’s Slack group
Database of brokers or deals
Find investors locally
Find investors on the internet
Turnkey providers – to network with deal people
vendors
Find deals
Network with wholesalers
Talk to brokers
Talk to apartment owners
Brainstorm fundraiser sources
Church
Sports club
Professional organizations
Non-profit
neighborhood association
Military
Healthcare
Government agency
Family
Fraternal org
Culture org
Main Street/small business
Trade organization
Insurance companies
Faith-based companies
Support groups
Social service agency
Schools colleges
Large companies
BiggerPockets
Property management
Rehabbers
General broker blast
Apartment owners

Assisted Living Facilities w/ Gene Guarino Ep158

Gene Guarino, CFP and Founder of the Residential Assisted Living Academy is regarded as “the” expert in the residential senior housing space.

Learn more about the asset class – SimplePassiveCashflow.com/alf

Free 101 Assisted Living Course – Click Here

Not only is Gene a CFP, Certified Financial Planner, in the US for over 20 years and licensed in Australia for the past 7 years, he has also spoken to over 300,000 people in 5 countries live from the stage.  In addition, Gene has written 4 books and hosted 3 radio shows of his own.  Gene understands what you are looking for from a guest and how to make the topic interesting and valuable for your listeners as well.  Gene is a life long entrepreneur with 17 businesses over the past 39 years.

 

Why would your listeners be interested in the topic of Senior Housing?

The reality is that every one of us will have to face the fact that we will have to deal with aging and the need for care and housing as we age at some point.

Gene shares with listeners how they can participate in this opportunity as a real estate investor, business owner or simply investing in this fast growing niche.

 

 

1- Gene, with the baby boomers aging, how big of a crisis or opportunity is assisted living today?

 

2- How did you first get involved with assisted living?

 

3- Do Good and Do Well is your motto. What does that really mean and how do you help people?

 

4- At your Academy, you train people how to start and operate these homes as a business, is that correct?

 

5- How can people learn more about the Academy?

 

Additional Questions;

 

1- How many people need assisted living services today? How many seniors really need this help?

 

2- What does it cost to stay in an assisted living home? Is it different based on the location

 

3- How does the residential model that you teach compare to the “big box” facilities?

 

4- Can this be done anywhere in the country?

 

5- Can people just invest and be “Hands off”

 

6- Do you have a home study course?

 

 

Live Coaching Call w/ Non-Accredited Investor (BRRR & Turnkey) Ep. 157

I met Bo (online) in early 2018. When I first chatted with him he was another propeller hat.

What makes him different but more importantly what tangible steps did he take.

Bio:

Bo is a buy and hold real estate investor from Southern California and has picked up 6 rental properties in 6 months since closing on his first property. He invests in working class neighborhoods across the markets of Indianapolis, Kansas City, and Little Rock. During the day, Bo works as a senior consultant for a regional CPA firm and hopes to create passive income to become financially free and also educate others to do the same.

Story

  1. Learned about REI at a young age (landlord from 10-18 yrs old) was a chinese lady who taught her son how to be a landlord
  2. Started to rent out room in 3 bed primary room for cash flow
  3. Parents had “renter’s mentality/scarcity mindset”

“I cant afford that right now” – Rich Dad “How can i afford that”

“This is good enough. I don’t really want that bigger house, better car or fancy vacation anyway.”

Let go of fear!!

Why I chose REI -passive income: “David Bach – automatic millionaire, latte factor, pay yourself first”

RD → Pay yourself first, but with a purpose, savers are losers (inflation, money not making a return, etc.)

  1. Started consuming all podcasts, books, audiobooks, and attending real estate conferences and meetups
  2. Met mentors (lane, who showed him how to invest out of state (instead of REITs, other passive stuff)
    1. Good mentors/Bad mentors
      1. People who try to sell you things
      2. Good mentors – are doing deals, negotiation tactics (saved 3K on first deal). Dont have to re-create wheel, introduce them to their circle of friends/investors. Looks at deals – responds 24-48 hrs
        1. Ongoing relationship – i sent them leads if i find any, send them vendor listing compiled, heloc listing,
      3. Bad mentors – arent doing the things they are “promoting”/exp from 10 years ago
  3. Goal is to continue to BRRR in KC, Indy, Little Rock (atleast 10 in each location)
  4. Build brand = blog, podcasting, networking like a madman
    1. Tips
    2. Bad things
  5. “Motivation gets you started, but habits keep you going.” Finding my why – which is building income for my aging parents, and building a legacy for my family got me started. But I know that Ive started things in the past that have fizzled out – Like what?

Trying the latest workout, studying for licensure

To finish strong, I knew I needed to create lifelong habits that will help me take a step (no matter how small) in the direction where I want to go and the person that I want to be. To take a page out of Grant Cardone’s book – 10x rule. Uncle G says by increasing your target goals, and taking massive action (10x) your mindset will shift and so will your results.

  1. Another key thing ive learned was create systems and processes that you can leverage in the future, whether it be

 

routine checkups w/ your PMs – What exactly?

  1. Utilizing custom spreadsheet to keep track of all P&L items across 6 properties
  2. “Gauge” expense % and if over time its trending towards higher than expected (i.e. 50%) then have a check in call w/ PM to understand why
  3. Depending on area, (now learning KC basements are prone to flooding), consult them to see if we need to take preventive measures, drylocking, sump pumps, ventilation, etc.
    1. Actually took this from your spreadsheet (bi-annual checkin)

underwriting deals – What exactly?

  1. Using a checklist to make sure it fits your criteria
    1. If it deviates, explain why (“deal is at 50cents a dollar, than the typical 70cents, diff strategy/airbnb, venturing into new area)
  2. Run it by 2-3 locals
  3. Stress test it – lower rents by 10-15%, increase maintenance and vac from usual 8%/8% to 10%/12%
    1. What could go wrong? If a rehab, add in 10-15% contingency
    2. How long can i sustain vacancy

 

whatever that helps you streamline your business and reduce unwanted risk. Luckily for me, my background as an accountant and consultant that specializes in compliance and internal controls helped me view this new business venture in terms of how I approach a new client – I look at the business environment, risks that the company faces, and find solutions to mitigate the risk if it cannot be completely eliminated.

  1. Words of wisdom for scared newbies newbies that are out there looking for buy and hold properties, especially as an out of state investor? Another favorite quote of mine is one that says “its not what you dont know that gets you in trouble, but what you think you know that just aint so”. Im not sure if i interpreted it the way the speaker intended it, but I like to refer to this whenever people come to me and relay information that they heard from a friend, or read in an article somewhere that the next crash is here or that out of state investing is super risky. If i have done my due dilligence (talked to 5-10 different investors from indy and get multiple viewpoints, fly out to the market, underwrite dozens of properties) I am okay with taking calculated risks.

 

My piece of advice is if you want to get into real estate investing, treat it like a business, take the time to educate yourself, and take massive action – DONT get into analysis paralysis. Also – team up with the right people. No one became successful by themselves, real estate investing is a team sport you need the right acquisitions manager, the right lender, the right property manager, etc. Tips to find other passive investors? Bigger pockets, facebook groups (joined like 50), google: real estate investing blog/website and contact all of them, ask other influencers (lanes introduced me to a couple ppl)

  1. What’s next?: my passion – helping other people. I see alot of my friends and family members struggle financially, and often give them a copy of rich dad poor dad to read and educate themselves about finances. I see real estate as a vehicle to really achieve that financial freedom to make choices in life that really motivate you, get you excited, as we weren’t created to go to school for 15 years, work a 9-5 for 40 years and then hope you have saved enough to retire at 65.

I ask alot of my friends what they would be doing if money was not an issue, and alot of the times I get blank stares, as they really haven’t thought about that question. I give them a couple of minutes then they start talking about their passion projects such as making music, DJing, being a travel blogger, building homes for the homeless. But we are stuck in a rat race that doesnt allow us to look around us and truly live life since we are busy looking forward with our blinders on trying to get ahead. For me personally, I truly feel joy when I am able to help others and see changes being made in their lives. I hope that I can leverage my experience working at a financial services company, as an accountant, and now real estate investor to help others who feel stuck and trapped, so they can create passive income and follow their passion project.

bo@biggercashflow.com

www.biggercashflow.com

Commercial Shopping Center Investing w/ Michael Flight (EP156)

Isn’t Amazon going to kill Shopping Centers?

Michael Flight has an extensive background in commercial real estate investing and is principal of Concordia Realty.

Concordia Realty specializes in shopping plazas and retail properties. They prefer to purchase operational commercial projects with existing income. They concentrate on strip shopping centers and they occasionally renovate or restructure existing commercial properties.

They have over a million square feet of retail space located in the Illinois, Indiana, and Michigan markets. Increasingly they are interested in Ohio and Wisconsin. They continually look for good opportunities and are working to expand into new areas.

Michael became involved in real estate shortly after college where he worked as a broker and then began working with a syndicator that owned shopping malls. In 1990, he started out on his own by founding Concordia.

 

Take us back to Pre-1990, how did you get into Real Estate Investing?

 

What does Value add mean in shopping centers?

 

Finding better tenants, upgrading and renovating buildings, and increasing rents.

 

Isn’t Amazon going to kill Shopping Centers?

He says, “A lot of negative press about retail real estate has been generated by companies like Amazon competing online. This has driven down prices and opened up opportunities for Concordia. It’s hard to get goods delivered that last mile to parts of rural America. Even Amazon has invested in companies like Whole Foods as they recognize the need for retail outlets.” They are examining different merchandising strategies and like to see that their tenants have an online component to their businesses.

 

What types of Shopping Centers do bad?

 

He discusses the types of retail stores that will likely do well in the current environment and those that may fail.

 

How are Cap Rates in Shopping centers compare with other asset classes?

 

Institutional investors?

What are you personally investing in as a LP?

 

What is something that I (apartment refugee) should do? Go to a boot camp?

Live Coaching Call w/ Non-Accredited Investor Ep. 155

Jason Ricks discusses his options as being and investor after having some experience as an investor of small residential units and now transitioning to syndications.

His day job is in commercial shopping centers which brings a unique perspective to the conversation.

From all in 401(k)index investor starting out to single family purchase while simultaneously receiving AMLI equity share position.

Failed attempt of Single/Duplex investing.

Lane shares his rule: After over 1000 strategy calls with investors and coaching clients over the past couple years here is what I tell W2 employees… For those who are able to save more than $30k a year or have substantial liquidity (over 200k), being a landlord and especially flipping is a lot of work. If you like it cool/good for you… but just remember why we got into this… To be free from a JOB. A lot of us (80%) who stumble upon simplepassivecashflow.com and start drinking Kool-Aide will be financially free in 4-7 years pending taking action. So I always urge people to start with the end in mind and take a more passive approach.

Do the math here… you with 300 dollars per property (2 months of work to buy a turnkey rental) you are going to need 20-40 of these to replace your income. I have 10 of these and have systems in place but have 1-2 evictions a year and 3-4 big things that happen. Image if I had 30, just 3 x those numbers.

Directly investing in a turnkey rental or small MFH is a good way to start to learn and build up the war chest to go into my scaleable investments such as private placement syndications. Whatever you do, try to be as close to the investment as possible. This is the fundamental problem I have with Wall Street who takes too much fees off the hard-working efforts of the middle class.

Due Diligence process, PPM, and why I decided to invest in the deal.

Focus on buying retail properties, and using my retail CRE knowledge moving forward.