Author: Lane

https://youtu.be/vIfZa_besRc

This is more for the accredited folks who make over two to $300,000 adjusted gross income per year but for everybody’s entertainment what our land conservation easements so then conservation easements are a tricky way of getting a tax write off by designating a land conservation easement, no development can go there in the future by doing this, it becomes sort of a taxable donation. So just like how you take a bag of old clothes out to the Salvation Army and you arbitrarily call that $500 like shovel do this around his golf courses, but the tricky thing is that they have the value of land but then they’ll mark up some kind of like fictitious development plan to basically get an appraised value of anywhere five to 10 times higher than what the land is actually worth. So what guys will do is though and invest or basically donate 50 grand and he goes on a taxable donation, but they get like a five to one pop on this stuff. So for me 50 grand, they donate they get 20 $50,000 of deductions before God, you know making more than 20 $50,000 a year that’s a lot of money at 50 cents of every dollar of tax savings.

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If you don’t know what you should get in terms of interest rate, or you don’t know how to evaluate the risk, get a mentor or hire third party professional who give you their opinion of the deal, they’ll go into a sucker deal even if they’re offering you 12 to 15%. So this is very common, you know, most newer investors will just be shopping based on rate. Let’s just say for example, you’re taking a first lien on a property anywhere from eight to 12% is the normal range. But if you’re working with a newbie, I mean, I wouldn’t even invest in that type of deal. But if you had to have maybe 15, or 20% might be fair. A lot of people in my collective genius mastermind these are the pros flipping over 100 houses per year, they have investors that are lend money to them at low single digits, which is crazy. I sure like to get some of those guys to invest with me, but that’s what reliability does. And in the grand scheme of things is something is very reliable, it’s a lower risk, and they’ve earned it they earned the right to pay 5% for money.

never buy a note or something you wouldn’t want to own because you always have to understand that if things don’t go well, you might have to take over the property. And that’s the nice thing about private money lending is that you own title, it’s a collateralized loan. And some of them were situations or when you’re in a deal with non collateralized debt. And what that means in layman’s terms is if the guy screws up, you’re not protected. So the worst case scenario here where if the borrower defaults, you take it over, you really want to take that thing over, don’t maybe you should reconsider your loan to value calculation. The long term value calculation is a great way to start out assessing the risk. So if you’re taking over property that’s $80,000, and you’re giving them $100,000 loan, you’ve got 80% loan to value typically you want to stay anywhere from the 60 to 80% range, something does happen and the borrower does default. Maybe you can cut losses at 20%. And at least that way, your original investment is covered there.

What’s one thing that you’ve seen that people are doing that that you can point out and say that guy’s not going to be successful, but something that’s a trait or something these guys do that will lead them to success. So

of course, photos, I think everyone really knows that but that’s the number one. That’s the big elephant. If you have lousy photos, forget it. You’re going to be beat out all the time are you gonna have to keep lowering your prices to get someone interested in you. The next thing I see is people over decorate and they’re just being a great host. And they’re collecting great reviews and they’re not making any profit. At the end of the day. There’s no net income because they spend it all in decorations and gadgets and things like that. So that’s it you operate as a business owners is completely different than operating as a great Airbnb host as two separate things altogether.

Transcribed by https://otter.ai

So we don’t leave anybody behind talking about VR Bo Airbnb, whatever platform kind of working on Airbnb in VR Bo, let’s call it just one planet in a vast solar system the gravitational pull on this whole world of Airbnb is so strong that people never leave it and competition is getting increasingly a stiff especially within the Bay Area. More people are jumping on trying to make ends meet. So I use that as a safety net to fall back on it’s not where I stay. I tell people I coach that Airbnb is the minimum wage job into the corporate housing world. So I continue up the ladder all the way to build relationships directly with companies and cut Airbnb and brb Oh, completely out. My main source of traffic is Facebook Messenger and also lots of word of mouth, things like that. So there’s a very, very big world and Airbnb is new, their artificial intelligence all their internet SEO Marketing is great, and it’s so great that you should use it as a backup and keep trying different things.

Transcribed by https://otter.ai

So what are your thoughts on a lot of the law changes? I know in Hawaii, it’s very against this because pushing up a lot of the prices of just the normal local homeowners, what do you think on your fund in the Bay Area, and other places, you know, for example, Hawaii, you have to be a residence right to have a short term rental, that some of the ordinance that they came out with, you have to live there on the island. And in the Bay Area, they have laws for tourists, which is less than 30 days, they call those guys transia. And essentially go over 30 days to just doing regular month to month rentals. That’s another reason I position myself out there in the 30 days in longer because you’re really following landlord tenant laws, and those hardly ever change. And you can do a little bit of both, right? Absolutely. You ever seen an example of you drop these large rocks into a jar first and they fill it with sand? So that’s exactly what we do. You try to get these longer term stays in there and then you can use short stays to fill in the gaps.

Transcribed by https://otter.ai

Another mistake I see is a lot of the lower net worth guys seem to be doing the private money lending. And it’s completely opposite the people with the lower net worth need to be going after equity deals, let the guys at two $3 million net worth in their Roth IRAs or their self directed IRAs, do the private money lending at high single digits, those guys don’t really need to grow their money. And hopefully they’re working with people they know like or trust. But the people who go to the local Ria or these newbie groups or the people investing in or what I say kind of suckered into these deals as private money lending, when really they should just be going into private placements and actually good deals out there. But again, you know, that requires a good network and to be a little bit more experience.

rent control is sort of making a comeback. There was real laws passed in late 2019. Limiting rent increases. If you read into it, it doesn’t seem as bad, I guess, depending which side of the table you’re standing on right politically, but sometimes they’ll put in restriction where it needs to be based on some higher number that the really never get, I think is sort of fair. But regardless, I mean, if you’re investing in California, I don’t know why you are doing that, or even any other blue state for that matter, probably not getting the rental value of the 1% rental value ratios for anything that’s not a war zone property or C class property or worse. So I don’t know why you would be doing that.