Category: Blog

How Do the Wealthy Pay Off Debt?

https://youtu.be/I1eVpkOPWMI

The wealthy, think about how do I have capital that I control because I like to think of it as an emergency opportunity fund, right? You’re going to have life come at you where you have a bigger expense in some months that you weren’t expecting that would be considered an emergency. You’re also going to have opportunities, which is the thing that’s really exciting.

It’s the reason that I want to have cash that I can get to, and that cash that I’m storing. Is way more valuable than paying off the loan as quickly as possible. Here’s the thing. If I have the cash to be able to pay off my mortgage, I’m not in debt. Now. This is something that we talk about on a regular basis.

And people say just because I have a loan, that means I’m in debt, but I know you and your audience are super smart and you’ve probably thought this completely through already, but you’re only in debt when you have negative equity. And negative equity is a position where your assets are less than your liabilities.

Now, if you had your cash sitting somewhere that you could access and say you had $700,000 and you want to pay off your $700,000 mortgage. You could, if that was the best use of that capital for you, but what if there was something that would produce a higher return than paying off that loan? And you wanted to go ahead and put that into a commercial property or multi-family deal, or you wanted to go into mobile home parks.

And invest in that you have so many options when you have cash, but you limit your options when you just focus on paying off the loan and interesting, like that word opportunity fund doesn’t exist with the layman. They have an emergency fund. And as you can see what I do at my opportunity fund for when deals come along, my video, there is simple passive cashflow.com/bull fund, but I use a little bit of infinite banking and some other more liquid investments in there is that all the time.

How to Increase Tax Deductions on Single Family Homes

https://youtu.be/-TQIx5njkz4

So DIY cost sag is a platform we developed after being in the industry since 2002 and doing well over 15,000 studies. And we saw a need in the market for smaller properties under a million dollars. And whether it’s a single family, residential, duplex, quad, or triplex. We cover those, or it might also be a dentist office or any other kind of commercial property under a million.

We actually go up to $3 million, but it’s a lower cost quicker alternative. So how that works is we’ve built a modeling system and we’ll model the property. So it’s a non inspection product. It takes essentially. Five or 10 minutes to input the data you put in your credit card and you get your results instantly.

So what happens with that is you’re done and you get your results. So it is going to air conservative. And because we’re not inspecting it, there’s been a lot of talk like on bigger pockets of your folks. That’s in the bigger pockets about these solutions. We have tremendous supporters and people that question it mostly competitors, but we provide audit protection.

So in the event you’re auditing, which is very rare. But if you are audited, we are going to send an engineer out there and do a full engineering study, which we do again, we’ve done well over 15,000 a year since 2002. So we will defend you fully so you’re protected, but it’s a quick and easy solution, whether it’s a one to four family with a discount code that you’ve got through here with lane, it is, uh, $640.

That’s a wonderful word and matter. What’s a single family or quad anything in between. And if it’s under a million dollars in five plus units, it’s 1200, $1,390. That includes the audit protection is one 95 it’s insurance policy. So basically. It works great. It’s a good solution for the right situation.

Certain, there are plenty of properties that are under a million or right in that borderline that justified the full asset detail that you’d get from a cost segregation study for a future abandonment and disposition and things that depending on your purpose with the property and what your plans are with it.

I talked to folks and say, this is your best option, or this is your best option. Are you looking to maximize your depreciation and do a lot more value add? Or are you just looking for quick deductions? And an answer here, but if you’re a real estate professional or not, sometimes that makes a difference.

How valuable are these tax deductions to you for an officer? And it also takes into account, like how long are you going to put onto the property? It’s just like a turnkey rental that you’re going to dump in three years to go to syndication deals. Maybe it doesn’t make sense, but if you’re costing out maybe a little bit.

Larger property, especially in California, maybe that might be just enough to get some tax savings, to save up more money and eventually go into deals and get cost segregations there, and then sell the properties and not have to do a 10 31 exchange as I don’t like at all. But you guys can go to again, civil pass, a castle.com/cost state.

And then there’s the link there with the discount code SPC.

Offsetting Active Income w/ Passive Losses as an Accredited Investor

https://youtu.be/WFcivagBeN0

So people ask I’m a high paid professional making over 200, $300,000 a year. How come I can’t get these passive losses or pals for short and offset my active W2 salary and pretty bad, but supposed to be calmed down. What’s the deal, man. Yeah. Yeah. Well, the, the most simple way to explain it is that you’ve W2 business, income, capital gains, stock sales, interest, dividend income, all of that income is considered non-passive.

 

So I go out and create a passive loss. I can’t let my passive losses against my non-passive losses. So my goal then should be to recharacterize my passive losses as non-passive.

Tax Deductions | Single Family Home vs Apartment

https://youtu.be/z_gYhWYhf1Q

It sounds great. Right? You’re getting 10 to 15 times more deductions of first year, but there’s a cost to this. And when I do it for my large apartment buildings, I’m usually paying five grand or so on that thing to do this, to extract it out. But that requires sending out a guy on expenses to travel out there, but that’s obviously not cost effective to spend $5,000 to get $20,000 of deductions.

At 25% tax bracket, that’s a break even. So that’s where this do it. Yourself. Cost segregation product comes in, but bill, let me put you on the spot here. Why would Lane’s spend $5,000? What else am I getting it by cost? Say that somebody’s spending 600 bucks and one of these things. Isn’t getting just sitting no eyes wide open what they’re going into.

Well, there’s a huge difference. And I think on your bigger deals, if you’re spending 5,000, you’re not getting a very good study. You need to spend more than 5,000. Are there usually between five and 10? So on an apartment complex, it might be 7,506, six to eight, depending again, on the engineering that’s done.

So on a full study, we look at it and I think anybody else would look at. What are the engineering hours it’s going to take to do the work? Cause we send somebody on site. We count everything. We qualify everything and we do all the asset detail. So in a full study, you get complete asset detail, meaning all your roof deal tale, all your HVAC detail, all your straight line detail.

As well as all your short life detail, carpeting, flooring, cabinets, everything, you’ve got some, and we give a hundred page report or back to you showing out all that detail. And we go into everything, electrical breakers, no one else gets the breakers. We need things that people don’t do. So we are deeper, but everybody goes in an engineer’s pretty deep and gets all the outlets and things.

So that’s what a full study is. It’s a lot of pages. It’s a lot of research. And a lot of documentation with the guy on site here. Oh, you always see the guy inside. Yeah. You always send a guy inside an engineer. We send our own engineers. Some people would send picture takers and interviewers and stuff, but somebody all wasn’t goes on site.

That’s pretty much what happens now with DIY it’s a non inspection product. So DIY means we’re modeling. So we’re going to air conservative. So if we would’ve gotten a 25% results by going on site, we might get. 19% by the DIY because you’re not sending somebody on site. If in fact, you’re audited, though, again, as I mentioned, we will go send somebody on site and we will do that a hundred page report for you.

But what you’re going to get with DIY is a model solution, which is what a lot of the people out there do models and residuals and sampling, and they add pictures and some engineering. But what you get is a one-page report that gives you your five, seven, 15 and 27 and a half year. And then some categories of generally what it would be, and then a receipt, and then your data inputs, because some people put the date wrong, we fix it for them.

We don’t charge afraid of that. You get a very streamlined report, but that’s all the CDA cares about CPR. 100 pages they want. Five seven, 15 and 27 and a half to put on your tax return and they’re done. So that’s what DIY does. So it gives you a lower number. It’s a lot less expensive. And so that’s why it’s good for the lower value properties where maybe you can’t justify a five or $10,000 study.

New Baby Shopping Lists & New Parent Tips


Downloadable Shopping Spreadsheet


Shopping Links

Going from a life without kids to your first is going to change your life. 

I was going to start a new website call Simple Passive Parenting but did not seem to be my passion project and something I couple spend listening hours of podcasts too (although some said I should). So I went out and asked people I knew and trusted. Here is the new parent advice I got:

  1. Do everything you can think of as a couple (dinner or roadtrip). Once baby is born doing anything simple like that becomes a mission. Simply a grocery shopping involves taking half the house “just in case” and is planned around nap times and could very easily take you 1/2 day or may not happen until the next day.
  2. Enjoy every minute with your baby. It’s an amazing journey. You will miss your old life but your new life will be filled with joy you never new existed. Parenting is the hardest thing I’ve done in life but I wouldn’t change anything.
  3. Pray
  4. Community – connect with those around you, connect with history, connect with the physical world. Take your child with you.
  5. Study machine learning. The medical approach to the brain/mind is too much. The computer science approach will easily bring joy, understanding, and amazement to you as you watch your child’s mind develop. You’ll watch the invisible. Your child will see importance in things your mind treats like white noise right now. You’ll be ready, wiser, and more patient. You’ll learn how to employ things that seem meaningless.
  6. Jeremy Howard of fast.ai uses a hairdryer for warmth and wooshing noise when changing diapers. Genius.
  7. Dr. Emily Puente of Bridge Family Chiropractic has a video on Facebook and Goodhousekeeping.com that shows a not intuitive but genius way to turn that cumbersome, painful, car seat burdened walk from the car to the building (and shopping) into a normal & agile walk. This one easily makes you the hero when you show other parents who aren’t in the know.”
  8. When they are about 6 months old, invest in a high quality Pikler Triangle. A climbing triangle to help with motor skill development. My son started using his right around 7 months and he is such a confident climber and has awesome control of his arms/legs and balance overall. Google it to learn more, and the brand I would recommend is Rad’s Children Furniture. Literally started by a handy grandpa who first built one for his grandkid.
  9. Love your new family member with healthy boundaries. The first one you want to cuddle and sleep with all the time. It’s amazing! However, having them sleep in their crib at night and eventually in their own rooms. Start early. If not sometimes it’s harder later to shift this.
  10. Track the feeding, diapers, and sleep cycles using this app https://apps.apple.com/us/app/baby-connect-baby-tracker/id326574411
  11. Read and study this book: https://sleeplittlelamb.com/sleep-solutions/sleepguide
  12. Don’t try to get everything right, it’s all trial and error
  13. I just had a 6 week old and for that reason haven’t reached out to get involved in some deals.
  14. Always be looking and excited for the new things and experiences. Many call them bothersome and interruptions. But these are the BEST things about Parenthood.
  15. My advice for you, soak up as much time as you can with the baby. They grow up so fast. But also just help your wife as much as you possibly can because it is tough on the Mom for sure.
  16. The Snoo was a game changer for us. Got ours sleeping much longer stretches.
  17. This sound machine has been amazing. It’s a real fan and you can adjust the way it sounds: Marpac Yogasleep Dohm (White/Gray) The Original Noise Machine Soothing Natural Sound from a Real Fan Noise Cancelling Sleep Therapy, Dohm Gray, 1 Count (Pack of 1) https://www.amazon.com/dp/B07NJSDBQ3/
  18. You can get sleep. This worked for us: “Precious Little Sleep” book https://www.preciouslittlesleep.com
  19. The sleeper onesies with zippers (even better if the zipper zips from the foot/bottom) is better than the button up ones. Especially for those late night diaper changes. Using a hakaa to catch milk on the opposite side while breastfeeding helps to collect and save milk to build up your milk stash.
  20. Take care of your body, your home, mom. Do all those things on the front end before the baby comes. Stay close to family if you can. #
  21. You can buy all the gizmos and expensive strollers but in the end you will start giving it all away or throwing it away as the child ruins it beyond repair (think nice clothing for baby). There are plenty of baby strollers over $1k! Buy what you need as you need it and return it if you find it wasn’t worth it. Baby doesn’t know if the stroller was $100 or the free clothes were given to you by Auntie because her kid outgrew them.
  22. Best books we found on sleep. Our kiddo was sleeping 7-8 hrs by 3 months: https://babywise.life/products/on-becoming-babywise
  23. Babies (& kids) don’t require 90% of the crap the Baby Industrial Complex has brainwashed too many parents into buying. Believe it or not, humanity got this far without parents needing an 8-pax SUV for their kid.
  24. Sleep when the baby sleeps
  25. Work hard to be extra patient with your wife and the other way around (it will be harder because you both will be sleep-deprived)
  26. Get a diaper genie because that stuff STINKS! (amazon’s monthly diaper service really helped us, if they still have that) from DanGar”
  27. Most baby wipes suck. Get the Costco Kirkland brand.
  28. Don’t get a baby wipe warmer. Just use cold wipes.
  29. Baby doesn’t sleep in your bed, and when they get older they get their own room as soon as possible
  30. Sleep train them early, it never gets easier just worse
  31. Sing to the baby
  32. Nosefrida works with stuffy noses
  33. Have a second one soon so they can be around the same age groups
  34. Something that JD did for me was make snack bags (granola, seeds, nuts, trail mix, etc) and had it stashed everywhere I’d sit down to feed the baby. It gave me energy when I needed it because taking care of ourselves is hard when you put all your energy into baby. Also, he did most of the diaper changes.
  35. A good comfortable rocking chair is a good investment for multiple purposes. For soothing when the baby cries, putting to sleep, and feeding time. Also, helpful for your wife in the later stages of pregnancy.
  36. Try to keep a strict sleep schedule. The earlier they sleep, the more time you and your wife have to get caught up. Also, if you want them to eat veggies, don’t introduce anything with salt or sugar other than natural like carrots and fruit purées. Hard to get them to eat bland blended peas when they get the taste of a French fry. Also, start stockpiling on diapers now. And instead of using wipes, we washed the kid’s butt every time in the sink with just water and mild soap and she never got a rash.
  37. Take lots of pictures and stay in the moment the best you can, because time flies and they grow so fast. Other than that, seems like everybody and ever baby’s journey is different so best I can say is find a good pediatrician to answer questions you’ll have. You guys will figure out the details of what works best for your family together.
  38. Make your family Christ-centered and parent-centered. If you make it kid-centered/focused, kids think they are the center of the universe. Take time to follow God, and continue to date each other. Spend quality time with your kids. Dad’s are a daughter’s first love and a son’s first hero.
  39. Teach the baby some basic sign language. Our kids learned how to tell us they were hungry or thirsty way before they could talk for example. It is crazy how young they can learn it. (“Both my kids were signing their wants to me by 7 months.  Neither went through the terrible twos because they could communicate really well.  My son had a speech delay (got early intervention speech services) but  that just stepped up our signing that we’d luckily started way earlier.  It’s a great tool to bridge the communication gap before they talk.  It does not hamper their ability to talk.”)
  40. You do all the “correct” things the books tell you to do with the first one and then realize they’re fine and throw all the “book knowledge” out with the second and do whatever works and they’re still fine.
  41. Do the sleep training around 6 months don’t worry, you’ll still have tons of time with baby, but you get your nights back.
  42. The first 6 weeks is usually the toughest. The bottles are only 2 ounces and you never get any sleep maybe 1.5 hours if that.
  43. Have the grandparents etc. watch the baby occasionally so you can both sleep and rest. 7 hours of sleep will feel like 1,000 hours. If you can get that 1 to 2 times a week should be really helpful. The first 2 years is a lot. Lot’s of times baby sleeps on back in the crib.
  44. Watch out for the back of the head as it can flatten some as they say not to sleep on stomach because of SIDS when they are really young. If head is flattening you might need a baby helmet to round out the head before the skull starts fusing together. We had to get that for our son and now his head shape is beautiful. Some people do not know about that and then when baby is 2 to 3 years old they can’t get the helmet and ear level symmetry is off and skull pushed too far forward which can cause issues later on. https://www.cranialtech.com/
  45. Sneak in and peek at the baby after they are sleeping, no matter how crazy the day was. Something about seeing them so peaceful resets everything and gets you ready for the next day.
  46. My best advice is get a SNOO, it’s a crib that will rock your kid to sleep during the night, help you get about 1-2 hour of extra sleep per night and while it is expensive it’s totally worth the money!
  47. One small little item that we really loved was a warmer to wrap around the baby wipes. It was great not to clean my daughter up with with cold wipes.
  48. You will sleep if you read this book and follow it like a manual. “Cherish the first six weeks.” We are 2 for 2 on our kids sleeping through the night after 6 weeks. That book works wonders! It’ll teach you that your kid can be trained to sleep. Babies are nocturnal at birth about flipping their body clock.
  49. Love and care for your children and be the best Father you can be, but always put your wife and her needs first.
  50. Try to be present in the moment as much as possible. For baby shower register with BabyList, super easy to use. Diaper pail is a must.
  51. Spend all your time with them cause you made a commitment. You will never regret it. Carry your babies as much as you can cause when they start walking they won’t like that as much. (used a Gerry pack snugli.  There are many other types out there but I carried my kids while vacuuming, cooking, shopping ( I never put them in the shopping carts, nor ever carried their car seats around…too heavy and doesn’t free up my arms.)
  52. Take 1st aid course. I had to do the Heimlich maneuver both of my kids.
  53. Kids are great. Take lots of pictures. I created a Gmail account for each of our kids when they were born. My wife and I each send occasional emails to our daughters with stories, advice, and pictures. We’ll let them have the account when they are old enough. It’ll be like a time capsule.
  54. A “Shhh” machine for the car seat. There is also a cool app that lets you take 1 second videos.
  55. Get sleep now and make a plan on covering overnight shift. Good planning and shared coverage helps both sleep deprived parents. Get some protected time to sleep
  56. Healthy baby is all you need! Only buy diapers, wipes, butt paste, bath stuff, just a little bit of clothes, car seat. That’s really all you need. The rest of the stuff you think you might need, will be collecting dust cause you’ll be too tired to remember that you bought it.
  57. Just follow through with your promises even if he/she forgets, be swift with your punishment that has to fit the bad behavior, and of course, afterwards, remind him/her you love him/her.
  58. The only thought I have is that having the first child is the last decision you make on your own as a couple. After that, every decision is based on that first child, but that’s a good thing.
  59. Get Babywise. Listen to advice but then just love that baby and do what works best for your family and your baby! The reality is that babies are resilient and just need love and care! Do that and baby will be just fine!
  60. The sleeper onesies with zippers (even better if the zipper zips from the foot/bottom) is better than the button up ones. Especially for those late night diaper changes. Using a hakaa to catch milk on the opposite side while breastfeeding helps to collect and save milk to build up your milk stash.
  61. Slather  petroleum jelly generously over their butt area (and front) every time you diaper.  It prevents diaper rash, is cheap, and not adding chemicals to their skin.  Neither of my kids ever had diaper rash.
  62. Check into Adlerian style of parenting.  We mostly parent how we were parented by our parents.  But that didn’t work for my daughter (being in a divorced situation) and my parents physically beat us (different generation) so I had to find a different way to parent.  Adlerian style seems counterintuitive but it teaches kids to grow up Responsible, Respectful, and Resourceful.  Worked for my kids who are both out on their own at 19 and 23  years old.
  63. With my first kid, we bought everything possible, from toys, gadget and clothes. Let’s just say we went overboard with everything, end up giving them away and not even using some of the stuff even once. So word of advice only buy when you need it, as first time parent we are all very excited about everything. We buy buy buy and without a care in the world. Want everything new and the best, second hand stuff work very well also. Plus they grow up so fast you won’t enjoy the new stuff for too long
  64. Just know the baby is pretty tough, they fall, they get bump but most of the time they are ok.
  65. My wife would freak out over everything, but reality is nothing really happen.
  66. We got one of these systems for our youngest with the car seat and it worked well…however he was big so he grew out of the car seat pretty fast…the stroller is great.  Our friend’s 3 yr old still sleeps in his..https://www.bobgear.com/travel-systems
  67. Portable fan for when the baby is sleeping in the stroller. https://www.amazon.com/dp/B086JMZRBN/ref=cm_sw_r_cp_apa_glt_fabc_P5RMGX3YWH73ZXWQ3KZB?_encoding=UTF8&psc=1
  68. Learn first aid and CPR…saw this on the list and I would definitely recommend it.
  69. Try your best to enjoy the struggles.  Create memories if you can.  My first 2 boys are 2 years apart and those 5 years were just a blur.  I think it was a combination of being new parents and having full time W2s.  It was just trying to survive day to day and we failed to take a step back and enjoy what was happening.  One of the reasons we decided to have another keiki was to be intentional and enjoy the crying, changing diapers, and all the other baby stuff.  We are grateful for it all!
  70. Take pictures and back em up with multiple devices…we didn’t do this with our middle child.  Wife’s phone got stolen along with the majority of pictures of him.  So now we don’t really have pictures of him.
  71. Know how to install a car seat correctly and securing baby correctly.  Depending on the hospital you go to, the nurses will actually secure the baby in the car seat before you can leave…make sure to double check it because the nurse did it wrong the last time.
  72. Having car seats installed in both cars is super convenient!
  73. Get this rolling cart for all the stuff you gonna have to carry to the beach, park, etc…this has the wider wheels so you can take it on the sand…cheaper from Costco https://macsports.com/products/extra-deep-xl-wagon-with-cargo-net?variant=32470056173622
  74. This thing is good for the beach and park as well. light and compact https://lightspeedoutdoors.com/collections/shelters/products/quick-cabana-blue-tide
  75. A bottle warmer was key for late night bottles…i forgot which one we used.  Also an electric kettle or hot water maker of some sort to make formula bottles…you could probably just use this to warm the bottles as well.  Having warm water available quickly will make night time bottles way easier.
  76. Everyone is different but if you’re thinking of having more than one child, it helped us to keep them staggered closely in age so things are more convenient school and activity wise.  That can change though – recently when one of them start attending an arts focused school miles farther away.
  77. We also felt a side benefit of having a dog would help them get used to interacting around animals.
  78. Your letting go of things to others is the right way to go.  Time flies fast so enjoy your time with your children.
  79. Have pacifiers around. There is some advice out there to not use them but we found there are times when it is the only thing that will calm her down.
  80. I tried several baby tracking apps but the best for us is called “BabyTime”. It is easy to use, syncs across phones, works on iphone and android, and it’s free.
  81. Get a deep freezer and fill it up with lots of food before the baby comes.
  82. Diaper genie
  83. Baby Briefcase to keep all the kiddies’ doctor papers, insurance papers, etc, etc
  84. All of the Emily Oster books – you will like these books as they are data driven instead of random made-up stories
  85. Pacifier clip to the kid’s shirt (saved us from losing so many of our daughter’s pacifiers)
  86. Baby cries 99.9% of the time because he/she is hungry, gassy, or just wants to be held. If you try all three of those actions when you baby cries, 99.9% the baby will immediately stop crying. I kept getting frustrated at our baby crying until I started applying that approach and I was never frustrated again.
  87. Great dads can put babies to sleep. Be that guy.- Principle: For at least 3-months, babies wish they were in the womb to sleep/ get comfortable. So recreate the womb with 5 S’s and you’ll be a hero– Shhhhhh – the “shushing” sound– Side-laying – fetal position against a belly– Swaddled – nice and tight– Sucking – whatever organic pacy-thing you got– Swinging – consistent, repeated movement tells them they’re being taken care of.

Anything else email me to add to the list. Let’s make the world a little better (for that next poor sap – new father/mother)

How Much Should My Rental Property Cash Flow?

https://youtu.be/AETUTpDj1eQ

What cash on cash return would you recommend for a single family home rental property where the goal is cashflow not appreciation? So normally, I think least 8% return is what you’re trying to shoot for. So if you’re using an analyzer, what I would put in there and make sure you’re also including all the.

Repairs maintenance. Most people forget about the cap ex and the vacancy that you’re going to have, and also include the property management. So for a property that is friends for a thousand dollars, so you guys can buy a hundred thousand dollar houses out there that will rent for a thousand dollars. So out of a thousand dollars rent, each of my fingers is a hundred bucks.

You’re going to put aside a hundred bucks for repairs. $100 for big cap ex items. And that is you’re going to eventually need to repair the roof, maybe paint the house, big items. That’s cap ex. You’re going to need to spend another a hundred or so dollars stuff. That’s going to go wrong, right? Things are going to go the way you want it.

So you want to have that money sitting aside and you’re going to have vacancy. Another a hundred bucks is going to be paying your professional property manager because we teach you guys to be investors, not landlords. And then the remaining money, the rest six fingers here, maybe $400 is going to your mortgage, insurance and taxes.

And that leaves you. 200 bucks, right there, $200 is pretty good buffer in my own opinion that you should shoot for assuming that you’re accounting for all the expenses in your underwriting. But again, download the analyzer and run the numbers yourself. And after it’s all said and done on that hundred thousand dollar property, you’ve probably put down 20 or $25,000 and you’re making into your cashflow is that $200 a month.

That is $2,400 a year. So I think the math is $2,400 divided by $25,000, right around 10%. And that’s how we backed into that. At least the 8% cashflow number assume, and again, you’re underwriting your deal the right way. .

When Should You Not Invest in Syndications?

https://youtu.be/sMGxgbMmsYs

If your net worth, income minus expenses is under $300,000, or you’re barely able to save $30,000, look, syndications are not for you stick with these turnkey rentals or even do these BRRRS that we’re kind of against in this whole video. And you’re going to have a little more gains that way. What you’re doing is you’re essentially trading your sweat equity for that extra equity at the end.

How Do Sophisticated Investors Make Money?

https://youtu.be/d4y_Mj9PIVU

Just grab this out of a new Mark or recently in this models, the interest rates, which, you know, all-time lows. Once again, maybe it’s been creeping up this first quarter, but still pretty much as low as it’s ever been. And the cap rates on multi-family and that’s, this is just a general cap rate for all markets, all asset classes.

So the important thing, what I want to show here is everybody asks, when does it attempt to buy? It’s always a good time to buy when you’re trashed, but as investors, what we do is we’re basically making money on the spread between the cap rate and the interest rate. So right now, cap rates are 5.8% on average, and that the ten-year treasury as is at a 0.93 investors make money on it spread.

And then of course we apply leverage good, healthy leverage. On top of that to magnify those returns, you look what’s been happening is last few months, that’s spread between the cap rate and the interest rates is a lot bigger than normal. Some of the squeeze points of times where it wasn’t a great place to be investing was mid 2018.

As you can see by the charter that there was a bit of a squeeze there, or maybe in between 2006 and 2007, there was this, there was also squeezed there, but the times were the spread of widens. Now that’s the time to invest like mid 2012 year and right now, but that’s a year academic look of how investing works essentially.

And this is what a bank does. They go in and invest in arbitrage of money somewhere else. And they take on debt, but good debt to be able to afford onto the asset that cash flows.

What the Unemployment Rate Does Not Tell You About the Economy

https://youtu.be/4vPkhgIuZaA

The way they keep those statistics on who unemployment has been changing to make it look rosier than it really is. Yes. But I would say there’s another statistic, which is more important, which is labor force, the labor force participation rate, which is down around the 61% now. But as recently as the 1990s, early two thousands, it was around 67%.

So that’s a six and a half point. Decline or 10% decline if you think of it as a percentage of the whole, that’s a big deal. That number is the lowest. It has been since the 1970s, when women first started coming into the workforce in large numbers. Now, if you don’t have a job. But you’re not looking for a job.

You’re actually not counted as unemployed. The unemployment number we saw and yeah, declined from it was hit about 13%. Last spring came down to 10. Now it’s around a seven or so maybe slightly higher. That’s still high, but it’s a significant improvement over where it was last April, let’s say, but that’s not the number that matters.

The number that matters is labor force participation. So what’s happened is. Tens of millions of Americans have, have left the workforce there. And I’m talking to ages 25 to 54. I’m not talking about a 68 year old who wants to keep working or a teenager, or we’re not talking about disabled. There are perfectly good reasons for people not to be in the workforce.

There are always some, but we’re talking about able-bodied individuals between the ages of 25 and 54 prime working ages who have left the workforce. If you’re not. Banging on the door of the unemployment office is looking for a job. They don’t count, it was unemployed, but you’re not working and you’re not producing.

And so I look at that number because to me it’s a better gauge of economics displayed right here. So that’s just simply Google and the labor force participation. Right. Kept up by the U S Bureau of labor statistics. And is this pretty much it, this is what makes it hard, right? Because everybody hears the news headlines and we know they’re always just trying to sell use headlines, just like other talking about how collections are horrible, but I don’t see any of that issue happening.

In other words, saying that. Unemployment’s down, but is this really the way to cut through that noise? Yeah. This is a more manual chart than the unemployment rate. Again, this is the labor force participation rate. Now you notice you heard a lot of talk in the last March, April, may about the V-shaped recovery and pent up demand and all that.

And you look at that chart and look at labor force participation while you see the steep decline at the time of the pandemic. Okay. Got it. It came back. But that’s not a, the that’s like a half a B, in other words, the bounce now it’s flat and going down again. So yeah, you had a little bit of a bounce back.

That was to be expected after the, we got through the original round of lockdowns in may, in June, she had that bounce back, but then a flat line, and now it’s going down again. That’s consistent with what I said earlier, which is we’re heading back into another recession right now. Because there’s a new round of lockdowns.

You don’t need a Ph.D. to figure this out. You locked down half the economy. You’re going to get a reception. It’s as simple as that.

How Big Tech is Hiding the Health of the Economy

https://youtu.be/CqCCOQjx21w

And the other thing lane is that people go, Oh, the stock market’s at all time highs. My 401k is back where it was even better, et cetera. There is a major disjoint, if you will, between the stock market indices and the health of the economy, you have stock markets who are back to all time highs. But I look at the S and P 500, I call it the S and P six, or maybe S and P seven.

If you want to count Tesla, now, then it was the S and P 500 is a cap weighted index. That means if you have a larger market capitalization, you count for more in the index itself. 40% of the index. Is now seven stocks and you know what they are. It’s Amazon, Microsoft, Google, Facebook, Netflix, Apple. And now you can throw in Tesla and maybe one or two others, and they’re the ones going up.

They’re the ones that least affected by the pandemic. They’re overwhelmingly digital. Okay. Amazon owns whole foods and Apple has some showroom type stores. But not much, mostly they’re online and they’re selling digital products and advertising and data mining, et cetera. So they were not only unaffected by the pandemic, but did better because that was the only place people could shop or communicate.

But what about the S and P 490? What about the other stocks in the S and P 500? Have a look they’re all the kind of flat to down there. Yeah. There’s some individual cases that have gone up, but on average they are flat to down. So we bet our whole economy. So there’s six or seven stocks. So there’s no.

Relationship between how the stock market and the seas are doing and how the economy is doing. When we get back to the economy who suffered the most and who continues to suffer the most small and medium size enterprises. So restaurants, bars, nail salons, dry cleaners, boutique shopping on and on. There’s a long list and people look down their nose at that and they go, wow, you’re a small business who cares, or you’re not Apple, computer, whatever.

Sorry. Those small businesses are 45% of GDP and 50% of all jobs. That’s half the economy right there.