Podcast Archives - Page 10 of 27 - Simple Passive Cashflow

Tips for Getting Your First Remote Rental

If you haven’t checked out the strategy where people are using their key logs to use simple interests, as opposed to average horizon interests, go and check this strategy out@simplepassivecashflow.com/heloc to learn more now, fair warning. It works and it pays down your mortgage in a fraction of the time.

But paying down debt is not aligned with financial freedom. And I think when you guys check out the webinar that we have in there, make sure you listen to the very end, because it’ll be my disclaimer. I think , instead of paying down your mortgage debt, take that money and go invest it. And he can probably go up three or four times the pain dire debt.

But, Hey, look, it’s a start for some people, but we’ll check that out. Simple, passive cashflow.com/keylock. A little personal here. I just have a little bad dream. The other day found myself in the office of the place that I started working as my first employer. Let’s just say, call it a fortune 200 company and.

I think I talk a lot about a lot. It wasn’t a fun place to work. It was very conservative company and things were very high stress there. I had a dream where I did not have a desk and there are a lot of younger people working around there. Maybe I feel like I’m getting old, but I woke up in a cold sweat.

And thankfully I didn’t have to go to that job when I woke up for real.

But anyway, on this podcast, we’re going to be talking with a newer investor who is looking to pick up their first turnkey rental property. Now this person has been in our group for quite a while and took a look@theturnkeyrentalguideatsimplepassivecashflow.com slash turnkey. Wasn’t able to get over the hump.

So joined up with our incubator group and is on the path to getting that first rental property. And you’re going to hear her story right now, but before we do, we are relaunching that incubator program. We started the incubator last year, we ran for five months. It’s a five month program where we have biweekly calls, you’ve got the peer group around you, and we help you out with the role of ethics, who to work with.

We pretty much walk you by the hand to get your first remote rental property. If you want to go through a turnkey provider who will be got, do you want to go do it on your own and get a broker and property manager? We can help you find that person. Learn more by going to simple passive cashflow.com/turnkey and make sure you get on that list so that when we started here this next month, you aren’t left out.

The last announcement here. If you’re a high net worth passive investor and using a 401k or self directed IRA, what the heck are you doing? Check out simple, passive castle.com/qrp, which is just another good tool out there, right? It may not be good in your situation, but we’ll check it out. It avoids UDFI and UBIT tax,

which hits you whenever there’s leverage involved in ADL.

Now on this page, once again, it’s simple passive cashflow.com/prp. We’re also going to have webinars on there on self-directed IRAs. You want to turn it Roth. That’s cool too. And the QRP for you to make your own decision. Of course, if you’re not in the foam, you don’t get that personal touch and that coaching environment.

So take whatever you watch on that page with a grain of salt and good luck, but I really suggest you guys join up with our family office Silvana mastermind and get the insider perspective on how to implement all these strategies. But anyway, join your show.

Hey, simple passive cashflow listeners. Today, we are going to be talking to a non-accredited investor, trying to get started. I’ve known this person for a couple of years now. She’s actually helped me out with the syndication. E-course. A couple of years ago. If you guys haven’t seen that, I checked that out, but she was helping me put this together and she’s been trying to get her portfolio for some turkeys herself.

But yeah, Jennifer, why don’t you introduce yourself and tell us how you fell into this world as simple passive cashflow. Hey, Wayne. Thanks for having me. So yeah, I’m a management consultant and early on in my first year of working full time I had discovered pretty early that I wanted to invest in real estate.

And I started to just listen to some podcasts, which is where I came across. Simple, passive cashflow, and I really fell in love with the thought of having just a passive income, to just substitute for eventually my current income. Having gone through a lot of different like trial and errors between.

Going for a turnkey property. And then also, just trying to invest locally. I’m currently in the New York area. And I thought that I could get an investment property around the New York or New Jersey area and just going through that and realizing that the cashflow and all of that just wasn’t there.

I went back to, turnkeys and just going through a lot of different types of providers. And now I’m just at the state where. I think the market is just so competitive that you’ll eventually have to complete and assign on a property within just a couple of hours.

And you’re really only able to, back out of the deal. If something comes up during the. Review process. So this is where I’m staying between, like trying to look for a turnkey property going into maybe a different market. And yeah, I’d love to just hear your thoughts lane.

Yeah. So a lot of people that are listening, they’re either just getting started in your shoes. Or they’re older and they maybe have kids our age and they want to maybe give them a little bit insight of what it’s like working as a six-figure person in New York. Is it all sex in the city and dinner parties and, where John legend shows up in places at all?

What’s it really like? How are the hours like yeah. Yeah, that’s a good question because I think that had a lot to do with the reason why I wanted to do this passively because the hours are rough. Like I would say. And my first year I was working a solid, like 80, 90 hours a week.

It’s gotten better over the past few years, but not substantially I’ll what time do you show up? Like you work banker’s hours, like 10:00 AM to 10:00 PM or and so I’ll show up between eight or nine, and then I’ll usually be there to 10 or 11, like what do you y’all do?

Like at five, six o’clock do you guys get dinner or yeah, we order food. Yeah it’s nice when there’s like an expense budget and all that stuff, but I think you ended up seeing like your teammates much more than in your family. Yeah. Yeah, crazy. Crazy. So for all that, you get paid about a little over a hundred grand a year.

And talk to us a little bit about the bigger personal finance situation, like you were living on Manhattan for a while, and then you moved back in with parents. Talk to us about that decision process. Yeah. Yeah. So I think with those hours it’s really hard not to live nearby the office, unless of course you’re like traveling.

And my first year I thought I would just travel like Monday through Thursday and then just be around, on the weekends. But I think I quickly realized that a lot of my projects were actually local, so I needed to get a place in the city. So I. Previously I was paying, a good amount of money in rent.

And I think ever since the pandemic started, , I felt like I should just go home and save that since now we’re all working remotely. Okay. And then what were you paying for rent originally? So I had a deal where it was like 1400 a month. So it’s considered like pretty good for New York standards?

Yes, it was definitely like a closet, but yeah, so overall net worth under $200,000 Jennifer here was not born with money, like a lot of us. I think most of us listening, if you even listened to a podcast, I think we could probably safely say that you are not born with money.

You’re here to learn and grow your net worth. And I call all us first-generation wealth. Yeah. So that’s kinda cool. So you decided to move back in with your parents to pocket that money and put it to investments. Which is cool. Those are the hard decisions, right?

I think some other people are like, they do that house hacking thing, but I just think that’s a little ghetto, right? Who wants to live with their tenants? It’s with crap. My style.

Yeah. Yeah. I considered it going to New Jersey, but even then it just wasn’t really working out the numbers. Oh, I’ve never been to New Jersey, but it just hear it all in all the sitcoms and I want to be in New Jersey. Okay. We connected maybe a couple years ago and you started, okay. I got this video here.

I’m going to tease you a little bit. This is the Dave Castro best ever. This reminds me of when you were trying to do your first turnkey rental. So if you guys can see on the podcast farm, you have Dave cash or the CrossFit games guy he’s doing this, deadlift and he’s struggling with it for like over 30 seconds.

This totally reminds me of your struggle with the turnkeys and I will give it to him, but anyway, take us back to when you first started where did you go down and then maybe some people don’t make the same mistakes that you did. Yes. Yeah. So I would say like the mistakes that I’ve made where I would say the first two years I was just fearful. And I definitely went into analysis paralysis mode. I analyze so many different markets. Just talk to a lot of different providers. And at the end of it, I just didn’t feel like I could even make a real decision. And I was just like fearful of this like long distance investing.

And then I decided to switch up strategies, which ended up stalling more time of Oh, let me just look nearby New York and New Jersey to try to. I dunno, like by fixer-upper and then renting it. I remember that, I think that was like 18 months ago. And I was like, all right.

I won’t probably won’t hear about you again. But that’s just how I am as like a mentor. You guys have to make the mistakes and take the time. Yeah. Yeah. So I think quickly after that I realized I know nothing about fixing anything up, so I would have to contract everything out and it was just like a project management nightmare.

If I really got into it and the numbers aren’t even like attractive, you’re still negative every month. Yeah. But didn’t you see all the bigger pocket bros doing this, that burst strategy. Like it’s easy. Anybody can do it. But that’s what I thought until I realized it wasn’t yeah.

I think you can, I’m surely I think you can, but is it worth your time? You’re not some dude making 30, 40 grand a year. You’re working 80 hours a week. Yeah. Yeah. Even just commuting to New Jersey, I realized just was a little bit too much for me to go and see the properties.

I think it’s just like indecision. I think it’s important to come up with a good strategy upfront. And yeah, I think I know lane, like you recently came up with the remote investor incubator and I think having a group of people. To bounce ideas off of and talk to, and all that.

I thought that was really helpful too, to kind of cement, the idea is that your thinking and beliefs and just like limiting beliefs and all of that kind of just clarifying and helping Streamlined just it’s just peer group, right? And using peer pressure to your advantage.

How many of us smoke cigarettes when you’re in a circle of other people when you’re a teenager? I didn’t do that, but actually for the young people, they don’t understand that. Cause everybody knows cigarettes are bad for you and they don’t want to do that. But we’ll keep with the analogy, but in the incubator group, everybody’s taking a dive into the Lake and going remote and just doing it, doing a little bit of due diligence on the neighborhood, and then just diving in with the right people that we’ve worked with in the past.

But let’s go to this this other spreadsheet that you’ve put together here. So you also, or another one of these people, and I usually teach the computer programmers who do this, but. You have amazed me that you’ve put one of these things together yourself. So this is the infamous thing that a lot of people will do when they first get it started, create this big spreadsheet.

She have some bunch of formulas and data that they grabbed from God knows where and to figure out which city to invest in. So yeah. Why don’t you walk us through this? How do you use this? Where did you, okay, where did you get the data from for all this stuff? Yeah, I got it from a mix between Google and like the labor statistic, like a government market, sites.

And then another city data. Okay. Citi data.com. Yup. Good resource little old data, especially if you’re looking right now, since we’re doing a census right now, but. It’s for those of you guys listening on the podcast, swarm. This is pretty crazy spreadsheet with some conditional formatting that lights up green, certain areas.

I don’t know why, but on the left side we had the cities here. Just, this is just probably if I’m hearsay, right? You’re just hearing from other investors. You just put them on. You have 41 markets while these population 2000, 2018. You just manually grab this from the same data source. Okay. And then you figure it out, which is the increasing population areas.

Okay. Yup. Yup. Okay. Yeah. It’s like kind of craziest Frederick I guess the green is the first to be like, Oh, you know what? The numbers are looking good. Like you can consider this a good market. Yeah. Super logical. I think it’s great. You want to be looking for places where the population is going up and the ear of the median income is going up in medium house.

This is actually. Pretty good data right here. This, if I were to make a new column for you, if you take the average or the medium household income, and then go like 80% of it is usually the general rule of thumb. That’s usually what you want to be looking for as your rental property.

One thing that I take exception to this whole spreadsheet is like the markets on the left side, some of them are big. MSA is like Baltimore. And then some are very small, like center point is a sub-market of Birmingham, right? Like Atlanta’s humongous and Houston is huge, humongous, 3 million population right there.

It’s you can’t really compare it with a port Charlotte, Florida or little rock Arkansas. Like these are more, you have some tertiary and secondary markets combined on here, but I understand what you’re trying to do, but like Houston, for example, it’s gone up 39% medium household income, but there’s within Houston.

There’s probably dozens of. Harrisburg, Pennsylvania, which is a tertiary market that makes up, in Eastern Pennsylvania. So just keep that in mind, maybe if you were to separate the secondary and tertiary markets and it’d be a little bit better, but, Yeah. I think in the incubator, I noticed a lot of people will do something like this.

And I usually have you guys go off on your own and waste your time doing something like this for a couple months. And then somewhere around a week, our fourth call. Cause we do bi-weekly calls. I’m like, all right, perfect. You guys have done your research. No, that was just all a waste of time, but it’s cool.

You guys know where to find the data so that when you do get the real data points of actually going and buying properties and you see how it operates, you can refer back to your original hypothesis and kind of correct yourself. So that’s great. You put on crime here. I don’t know. Crime is really subjective.

Prime is like block the block, some market to some market and then job growth is good. I like that. Okay. No, I think once you exactly what you want to do. And then tell me how many hours were you spending on like the first year of the struggle and the second year of the struggle?

Like how many hours were you going into this? Oh, man, I’m stuck between talking to. Property managers, turnkey providers, and just trying to do doing analysis and stuff, I would say yeah, definitely like maybe three, four, three to four hours a week, take, give and take a little bit per week.

When did you do this? Like on the weekends or on the weekends? Yeah. When the days were particularly tough, I was just like, I need to do something passive income. Okay. Yeah. I’m not going to lie. Like you are properly. The person who struggled with this, the longest of everyone I’ve seen.

Right.

I am amazed that you’ve stuck through this more than six months, but hopefully you make people feel good at home because there’s sure there’s somebody listening that is just lurking and probably done the same thing. But as you saw, when you were in the incubator, we pulled you out of this in a couple of months, right?

So you don’t waste the time. And that kind of goes to the bigger point, like bigger picture. Like you got to figure out what your highest and best use. In this two-year period, you got promoted. We talked to us a little bit about that and I think that really tipped the scales for you where you what became your highest and best use.

Yeah. Yeah, definitely. So I think getting promoted there’s that pay bump. And I think that once you know a little bit. More of what you’re doing. The hours aren’t as terrible. You have some people helping you out and supporting you so you can disperse the work a little bit.

So I think over time, the job itself became a little bit more variable, but yeah, and I think that it was nice because after getting promoted, like. After some time I was able to come back home and save. Just like that additional income that I’m able to save down.

So hopefully I can use that to put that to some good use. Yeah. Because right after college you’re making what, like 70, 80 a year or something like that, which is not much in New York, but you were like minion status, which. I think that’s a sad thing. Like parents don’t remember that time of their career right.

Their first five years. So they just have to suck it up. I saw like a YouTube video of this. They call it the ground, find where you’re working along hours and then you have to go to the grocery store to pick up your shitty, lunch or dinner to eat by yourself and it’s raining and it’s cold.

And you only get to go home each or make your sandwich and You got to go to sleep. Cause you got to wake up early and go to work again. Nobody teaches that part of life to you, that grind in the beginning. Hopefully you feel like you’re coming up for air now. They got you off that rookie contract.

Oh yeah. Yeah, definitely. It’s a lot nicer and I completely agree. I thought getting a job was the end all be all. And that was. It knew of happily ever after, but yeah. Would you say that maybe this you’re not the right person to ask, but do you feel like you’re going to be promoted multiple times?

I call this being red circled, like in certain companies, they kind of circle you as. The chosen one, or someone that’ll push a couple of wrongs. I was never red circled, obviously. That was never special enough. But do you feel like that’s in the cards for you or? I think that it’s interesting because like my company.

They have like promotion tracks for everyone. So typically you’re promoted every three years. And if you Excel super quickly then you can do it in two years. And yeah. So it’s almost like preset path. Okay. Okay. Which is great for training monkeys. Cause you assume it a little bit.

Yeah. Yeah. Yeah, because so most of my cohorts that buy apartments and Duke, this kind of stuff, we develop a mindset. If they’re still working their day job, they’ve developed a mindset of they hide from promotions in a way, because it takes away from their highest and best use, which is buying these investments.

But are you getting that type of feeling? Maybe because you haven’t started really investing in this stuff scene to scene that track launch, but where’s your head at now? If you can only choose one path, right? Either you go for the promotion, you stay on that fast pass, or do you think you’re going to just lay low and do the sort of bare minimum?

And just invest passively, right? Like how, when I was thinking, why would I want to work 50% harder to get 10% more pay when I could just buy a rental or two and create that passive income for the rest of my life? Yeah. Yeah. I think I’m definitely with you, eventually just thinking way into the future of potentially starting a family, like later on all that stuff, that was my initial thought I don’t think I want to be doing this forever. So I totally agree, like passively is what I’m hoping to do. Yeah. But in the meantime, I’m sure that there’s some optimal set point or maybe you have to, kick butt at a few more years or six years to get to that optimal point where you have the ideal management role.

Or the highest pay, but at least amount of work for them yeah. Pay or then you can kick it into cruise control. And then while investing passively, I think that’s the mix. Everyone’s a little bit different, but I think you’ll find that. But for now I would still keep working hard at your day job, but we got to fix this three, four hour a week.

Passive investing, like to me, if you’re spending more than five or six hours a month, Being a passive investor doing it wrong. Yeah. But, okay. So we went through a bunch of, dead ends with the turnkey stuff. Where are you at now? Where is the incubator pointing to you? What’s your next three month action plan.

Yeah. So I think three month action plan is to come up with, the market that I want. I guess in terms of finding a property, I think I’d like to find a property where I’m able to evaluate the property, given my shot at analyzing whether it’s a good investment. And then hopefully making the actual purchase.

Okay. So that was the Pennsylvania or the York folks we connected you with, right? That’s right. Yeah. I think right now, which is so competitive out there that you really don’t have time to analyze and yeah, you kinda just have to, go with it. And then if there’s anything during the inspection and.

You would you’d be able to back out. Yeah. Yeah. I think that’s, it’s always been like den. I think it will always be like that. If you’re going with turnkey providers that are legit, and this is what makes turnkey providers so hard, because if somebody is a good house, slipper, turnkey provider, they eventually stopped.

Doing rental properties for landlords, the rental grade, because landlord grade stuff is lower scope douchey only 50 to a hundred thousand dollars scope. It’s easy for them. So that’s where a lot of rookie start as they get better, they graduate to more higher end properties because that’s where the profit margins are.

It’s not like a cheapskate investor like us. Who’s only going to pay 1% rent to value ratio. They can sell it to some emotional buyer and get that nice pop. So the fact that they’re turnkey providers, it’s either they’re newbies or they have the really good marketing and now they upcharge the price of the homes to on sophisticated turnkey buyers.

So that’s just how it is. And it’s a little unfortunate because. I try and keep one foot in that world. And it’s hard for me to keep up because the people who are good, they graduate out of it. It’s like college basketball. I don’t know anybody in college basketball because they all the good ones leave.

So York, Pennsylvania has Pennsylvania where they’re close to you, but are you going to go with that one or are you going to just pick a different market? Yeah, I think I’m at the point now where I think I just need to pick a different market. Okay. Cause we had people in the incubator.

I know they’re in Cincinnati, Cleveland. I got folks in Jacksonville, Dallas, Texas. You’re not going to cash out there, Huntsville. I don’t think there’s turnkey out there. I got you covered in Birmingham center point. Memphis. I think Memphis is overplayed already, like Memphis personally, but Hey, it’s up to you, right?

But I would listen to me cause it’s all relationships, right? Atlanta, Georgia, you can’t cashflow there anymore. I’m not too connected in the Carolinas, so I can’t help you out there, but maybe an incubator, somebody else can Houston, you’re not going to be able to cash flow for single family there in Chicago, I would not go anywhere near Illinois.

Detroit. I would actually recommend Detroit and Gary Indiana, if you like Chicago, go to Gary Indiana. Kansas city, Missouri is getting low, expensive, Indianapolis, I think a lot of unsophisticated turnkey buyers have been going there for the last several years. So if you like Chicago or Indy, go to Gary Indiana, it’s like the place that people aren’t flocking to.

And that’s, what’s making this hard, right? Like every few months cycle by there’s another wave of unsophisticated. Oh, working stiffs, trying to get out of wall street into their first alternative asset, which is typically a turnkey rental. So it ain’t going to get any easier. Competition’s not going to be going down.

Yeah. And yeah I totally agree. I think my next step. Going back to your original question lane of the next three months, I feel like it’s just to reconnect with some people in the incubator just to see what specifically why they chose their market.

And maybe if you had to be able to get a property out there too. Yeah. Why recreate the wheel, just use the property manager. She used a broker, just people are nice. So she wants you join up. People help out their own. It’s like a sorority fraternity in a way. It’s like a cult.

Actually everybody wears the same bath slippers, but you’ve got these really neat rules, right? Thumb on median, household income and stuff right here, but, okay. So going back to your personal financial sheet, I want, I meant to just point out a few things. So student loans, you don’t have student loans.

Okay, good. What are you doing for your Roth? 401k, your retirement stuff that everybody says you should be doing. What’s going on there. So I put some into it, for my first two years, but I’m only putting what, I guess my company’s matching. Okay. Like 6% or something like that. Okay. And then, yeah, my Roth IRA I am maxing that out at 6.5 per year.

But I think I was really struggling with this whole real estate thing, because I know you talk about it all the time later about don’t put it in your IRA. Like you could just put it in like a real asset. So yeah, I’m hoping that once. I get this whole ball rolling with them real estate.

I’m able to, over the next few years, just start moving things over to hard assets. It’s not like you don’t have liquidity, right? You don’t have to pull the goalie to buy your first rental. You don’t have to pull your retirement, your Roth to buy that first rental you making good money.

You making the hard right decisions to live with your parents. I wouldn’t wish that upon anybody, but I think that’s the stuff that’s going to set you up. If you can do that for a few years, pick up a couple of rentals, you’ll be off your way. And then you quote, unquote, pull the goalie stepped in that retirement stuff.

Or to me it doesn’t make sense. Where’s your AGI right now? Or it was this year, last year, just under a hundred or. Yeah around them. Okay. And so the cool thing when you’re under a hundred grand is they allow you to take up the $25,000 of passive losses to lower this down to from a hundred down to 75.

So I did this for a couple years, a few years back, When you can use the passive losses to lower it. Once you go over 150,000, it’s gone from a hundred, 250,000. You’re phased out completely, but this would be like you can’t. When you go into a rental property on that, like a hundred thousand dollar rental property, the depreciation is not going to be that great.

One 27 of the building value is probably only equate to like a thousand or a few thousand dollars a year. But this is where like a syndication deal comes in, right? If you invested 40, 50 grand to pick up $25,000 of passive losses, you could use that in that same year to lower your AGI from a hundred to 75.

So that would be low-hanging fruit for you. If you wanted to do like a syndication, but yeah for those of you guys who are above 200, $300,000, AGI ropable and 50, that doesn’t apply to you guys. You guys have first world problems, but for those folks who are just starting out under a hundred thousand dollar AGI, that is low-hanging fruit to do for sure.

But yeah. Any other questions or any other? No. I guess last tips of like how to get this ball rolling. I think for you, it’s just mindset and I’m not really good at this stuff. I think you gotta find ways to get yourself moving forward. And I think for you, it’s just like, all right, I need to make a goal to buying a property and next month, and being like, all right you already know how to analyze it, right?

If people want to get my analyzer, it’s that simple pass the castro.com/analyzer. It’s free for everybody. You guys can underwrite your own properties. Your incubator students. So once you put it in there, Just put it in the group, send it to me for that final approval and yeah. Put in the offer and moved through to due diligence process, get inspector and let’s get going.

Don’t let it hang you up. Like I think we want to push you forward and give you the confidence that you’re not making a stupid mistake, but I think you just can’t do what you’ve been doing for the last six months. You gotta keep buying. And then also be mindful of how much time you’re spending on this thing.

Right? I guess it is goal-setting season this time of year, but there’s one thing I picked up where you have a goal, right? I don’t know, lose 10 pounds or buy five properties or whatever. Now think just simulate in your head, like, all right, I have to do this thing in the next 30 days.

You’re like, Oh, what do I do? And maybe it’s not realistic, but it helps you be like, all right, I got to do this. What would I do? What would I have to give up? What would I have to stop doing to make this goal come true to really make it happen? Maybe not 30 days, but seven days or three days.

If I had to lose 10 pounds in five days, what would I do? Maybe that’s not healthy or safe, but what would you do right now? It starts to makes things very clear and focus and all this other extraneous stuff just disappears. And I think that might be a good exercise for you to try out, right?

I tell you, so I have to buy property the next two weeks. First thing that should happen is you get a little twinge up your spine, if you’re like, Oh crap. And that’s good. And then you notice just observe what are the things that you were doing and that you think you would be doing that just go away?

Because I don’t have time. I have to buy property and next to it, I have to put an offer next two weeks. And just take note of that, because those are the things that you should stop doing. Got it. And then yeah. Use the peer pressure on your side. Find a couple of people that you can stay accountable to.

But maybe you’ve done that, maybe it’s not working for you. Yeah. There were a few people who volunteered to be my peer pressure person from the incubator group. Yeah. And how did you follow through or how did that go? Yeah. Yeah, no, I think the bi-weekly calls. It really help out, but like we just chat, like messenger and all of that stuff.

Just having to give updates is helpful. Okay. Yeah, but maybe at the end of the day, maybe buying a rental property, isn’t your thing, right? Maybe it’s just being a straight LP. Passive, right? Yeah. I used to think a long time ago that everybody could buy a turnkey rental.

And I was like, yeah, it’s a turnkey rental. Here’s one page document, figure it out. Turnkey. It’s called turnkey for a reason. A monkey can do this and then. A couple of years went by and I started to realize yeah, this isn’t something, not everybody can do.

Not everybody can call a property manager to be able to relationship with. Not everybody can work with a broker, not anybody can. I think that the first layer is like, who do you talk to? Cause it’s just a random people. You can’t go on Yelp or some random internet site to figure out who you’re working with.

You have to build relationships with other people. Who’ve done it before to get their referrals. And that requires a little bit of like relationship Jim Jitsu. And then I started to realize, yeah, most people cannot do this. Financial independence is not for everybody. And buying turnkeys is a lot harder than doing syndication deals as a passive.

And I started to I was like, I was trying to get my wife to do this. And I was like, she’s not an idiot, but I was just like observing. And I was like, yeah, there’s no way she’s going to do this. She just doesn’t have that the want or the aptitude or she doesn’t care to. And I realized, yeah, this buying a turnkey is not as simple as it sounds nor is it that great in my opinion, too.

But that’s where kind of the roads lead to eventually being a passive investor in many deals for diversification and scalability. So why not just go there automatically, but I like to see most investors get their feet wet with single-family homes to learn the business a little bit and get used to the ups and downs.

But maybe it’s just not for you and me. And that’s why I’m like, it’s exciting to see you progression your career because that maybe that’s your thing, right? Yeah. It ultimately comes down to what’s your highest and best use. Yeah. Yeah. But yeah, it’s nice having you in the incubator and I don’t know when the next time we’ll be launching it, probably maybe do a one or two classes per year.

But yeah, go to simple, passive cashflow.com/incubator. To learn more about that or check out the free turnkey guide@simplepassivecashflow.com slash turnkey and yeah. Thanks or listening guys. And we’ll see you guys next time.

Never Enoughitis w/ Robert Althuis

https://youtu.be/l8-bwpOvvSE

Lane here. If you haven’t yet go and download the buy-and-hold analyzer for single-family homes, you can get an Excel or Google sheet format and just go download it from our Google drive with the full explanation of all expenses on there to spot check for performance given to you.

If you want to get ahold of that, go to simple passive cashflow.com/analyzer. Or go check out simple, passive cashflow.com/turnkey to learn all about turnkey rentals. And you can also find it on that page too. The common person that we’re going to be talking about throughout today’s podcast is this type A theme a lot of us are very hard workers and we’ve been.

Taught to save our money relentlessly. Now, when people usually find me, their net worth is typically over a million dollars and they’ve just gotten accustomed to just saving their whole life. And just like myself. My first 10 years out of college, I was saving at least 50 to a hundred thousand dollars of my salary every single year, putting it to investments.

I grew up very frugal. You guys can learn all about my sheeple tactics by going through the website and looking at that list, simple pasta castro.com/cheapo, but I was working with a client and we realized that it just made sense for them to just rent in a foreign country and they had way more money than they needed.

And I was kinda thinking about this for myself. I went and bought these really expensive abroad James’ shoes is my favorite player and they’re expensive for some basketball shoes, but, within the pandemic, that’s really the only thing I do and I spend money on. So in the past, what I’ve normally done is just buy a cheaper pair of Nike’s that I get on eBay for 60 bucks.

But then I start to realize, you know what, I’m just going to use those expensive shoes, because for all I know I could die tomorrow and it would be sure a waste. You can take any of this stuff with you. That’s just one way I’ve been loosen up, trying to spend my money on more experiences or things.

If you call it like that. It’s not like it’s a Ferrari or anything like that, And lift more of that fat FY lifestyle, right? And people talk about this fire move in F I already financial independence, retire, extreme. Most people think of the penny pinchers, the node latte people, and they think of, living well below your means. And I think that’s great to get yourself up to that first hundred thousand dollars net worth and get into your first few investments.

But after a point, it can be very debilitating. Some of the most successful people out there are very generous with their money. And not like giving money to other people, but they have this propensity towards money to let it flow. Because they know they have the confidence that they can recreate it with either investments or creating in their job or business.

The last finding I found was, another person in our family office will a mastermind. That’s it’s a classic case, same thing, big saver, able to save 40 to $60,000 a year. And I say loosen up a little bit. I tell them, it’s I have the same problem, right?

There are things that I probably should buy that I don’t, because I still live with the same mentality. Yeah, you don’t do the math. I think a lot of us will be financially free in five to 10 years. And it would be ashamed if something happens with us and, we had less than two years to live.

I think when you start to invest alternatively, with all these great wealth building strategies, you could press that timeline to get to that bold so much quicker that it may not make sense to white knuckle your way there. Safe to the extreme, but loosen up because you’re going to get there quicker than most people.

If you haven’t yet, make sure you sign up for the Hutto pipeline club that we dumped pipeline Columbus or free investor club, where I filtered vestments and underwrite the numbers and partners myself. I like other investor lists and groups out there. You guys get to know me.

We do that onboarding fall. To learn more, go to simple passive cashflow.com/club. And enjoy the show. This one’s going to be good for you. Take 8% is out there.

Hey, simple passive cashflow listeners. , we are going to have Robert ultras, the founder of whisper, a mindfulness organization that provides coaching strategies and tools and techniques to help private clients in their businesses. A great book coming out here soon, never enough itis.

And we’re going to be talking about this because a lot of the listeners are very type a personality. I consider myself a type a, but I can be lazy sometimes too, thought it would be break from the normal topic material of real estate Roberts also in real estate development too.

But I think there’ll be a lot to glean from this interview, but yeah. Welcome Margaret. Thank you. I appreciate it. Thank you for making the time to having me on. explain this term of never enough itis. Yeah. So the the book came about actually as cell therapy I sold a big part of my business in 2015.

And, I found myself having everything accomplished, which I thought was going to make me happy. And yet I felt. Something was missing. I had a restlessness and emptiness about me and that kind of prompted me on a, more like a spiritual search, what else is there to life than just making money.

And and that’s ultimately culminated in writing this book, which when I was going through some personal trauma and I also had some financial setbacks, I had a hurricane that wiped out a business and Yeah, nothing like a good crisis or catastrophe to do, meet yourself and look yourself in the mirror and take stock.

And the book kinda came from that. I was kinda looking at, what had been driving me in my life and how I could turn that around because I really had become to be honest and a narcissistic asshole. And I felt that the man I saw in the mirror, wasn’t really the man I wanted to be.

And so I started making some changes and. I think never enough as the title comes from this notion that we’re just always chasing more and it comes from this sense that we’re not enough. And we forget to look at all the beautiful things that we have in life already. We don’t live in the present moment, we’re always debating the past, then we’re peering into the future and we’re just on this carousel and forget to live life. And I think if you’re able to stop and ponder and think if you’re a narcissist, you probably aren’t and probably has a little bit of self-awareness there.

But I think that’s something, a lot of people that are listening, as their net worth grows, half a million million, 2 million, 4 million and above, they start to get to this idea. They’re just constantly going after the next thing I know personally, there was a number that I had in my head that.

I surpass that. I thought that I’d be super happy when I would get there, but it just came and went, but what was your moment where you hit this epiphany? That moment. When I sold like a large chunk of my business, I had a big payday, remember I was flying back from Bogota where that business was, and I was back on my way to Miami, driving, going to live in an ocean front community, a beautiful wife and kids and all the toys and all, everything.

And I was like, There’s something missing. I’m just not happy with this. This stuff is not filling me up. And my marriage, I’ve been so dedicated to my work and my career. I mentioned marriage suffered. I wasn’t the father that I wanted to be. And so I started analyzing that, what else is there and why am I doing this?

And I’m a capitalist at heart and I believe in the capitalist system and I believe that it motivates us. I just think that money is an amplifier. And when we have narcissistic behavior you just become a bigger narcissist with more money. When we are a good solid person, we have our integrity in place.

We have our values and our principles in place, money is just going to amplify that goodness at us. And I had lost myself in the game. And that was really the conclusion for me. I needed to get back to having integrity and showing up and living my truth.

And, there was my book details, a lot of different things where I got lost and I was doing high-level business and, in Latin America predominantly but I did it for GE as well. And it’s not always pretty what happened, and so you have to own that stuff and to look at it.

And is that the way I want to show up is that what I want to contribute to this world? And I’m a big believer that everybody’s true satisfaction is really making a contribution. Of some sort to this world, which could be, creating a business could be being a mother. It could be being a volunteer somewhere.

It could be being a doctor and, finding out some medicine that we don’t have today. But, I’m a big believer that, when we really want to fill ourselves up with what we do, we want to make sure that what we do has a purpose bigger than ourselves, and that can be translated into anything really.

It’s not limited what that looks like. And our listeners listening right now and they’re like, all right, I want to make a change. I don’t want to be forced to make a change. It seems like most people, they need to have some kind of thing to happen to them. But what are some things that they can ponder or changes made so that they can proactively make a change for a little bit of a better.

Yeah, I you’re absolutely right. We tend to learn humanity, right? Learns through crisis and catastrophe. That’s where we wake up and Holy crap, I need to do something about it. And that could be, a major illness. It could be a divorce, it could be, financial losses or whatever that tends to wake us up and do something where we don’t have to learn it that way we can obviously take a look under the hood.

And I think what I always tell people. Is the first thing you need to do is get a North star and your North star is the spiritual vision for your life. And that’s not necessarily a whole roadmap of airing you’re going to do, but I think you got to have something that gives you direction. And what you want to create in your life.

What’s important to you and, what’s that vision that you have for your life. I call it a spiritual vision because I think your soul once express itself in this life, for whatever you’re doing, everybody’s got unique gifts and talents and superpowers. And those we got to tap into because that’s going to be our most aligned work, our most successful flow state type of endeavors.

And we’re going to be most financially abundant there because. That’s going to come easy to us. So find your spiritual vision, get really clear about what you want to create, how you want to show up in life and then start taking congruent actions. Now, as a second offshoot of that is we can see what am I life is toxic right now.

That’s going to be people. It could be environments that could be situations that we look up or. That we’re part of, and, I think a big step is lose the toxic news in your life. And clean that up. So you surround yourself with the people that are going to support you in this vision that you have.

And then the third part is we all have limiting beliefs because we’re just mushy little humans. And we grow up and we have all these beliefs that start selling in when they’re in our childhood and, we’re in feta state. So we were very impressionable and, we have wounds and scars because we go through life, we get hurt, we get disappointed.

We have stuff that happens to us. And so it’s a good exercise to look at us and say, okay what are some of the things, the patterns that I can see in my life that I’m recreating all the time, that aren’t necessarily serving me. And once you got a drill down there, that’s the effect, right?

So what’s the cause of that. And the cause is always some kind of belief that you have, which could be like, I’m never lucky. There’s no good men in this world. I never make more than this much money, it could be anything I could never be this way. I could. Any limiting belief is basically a ceiling on where you’re going to go in life.

And once we can start addressing that, we can remove these artificial ceilings, cause it’s just fog and your beliefs, triggers, thoughts, flaws triggers your emotional body, your feelings and your emotions. That’s going to drive your actions and that’s going to get you results. So you have to address it at the belief level.

Yeah. There was a guy that we had on the podcast. My buddy Chris rush. Actually I haven’t seen the guy in a couple of years when Robbie’s doing it, but I remember. Great example of surrounding yourself with the right people. Like he had this thing where he would write down living beliefs. He had like about six or 12 of them.

I saw the list. I didn’t read it out to him, privacy, but he was there. He showed it to me and then say, he said, yeah, every like few months I go in there and I look at it and I try and add another one. Don’t I’m trying to get that next layer. And then I’m trying to work on one of those limiting beliefs, but that was a pretty good tactic.

Yeah. And working on limiting beliefs are actually decisions we once made and we then automated in our subconscious mind. So really the way you address a limiting belief is you make a different decision. And then you find the evidence in your life or anybody else’s life that supports that new decision.

And that’s how you actually change the neuroplasticity in your brain. Because just thinking or affirmations is not enough. It doesn’t change. Believes have really deep grooves, right? Like a record player. And so they get out of those grooves. You gotta make a new decision.

Can you tell me one here with an intro verdad mindset, it’s harder to open up for those folks. How can they rely on outside source for support, support? First of all, everybody’s supportive because this university is abundant and I only get depends on being introvert or extrovert.

I’m a big believer that the biggest challenge for us is to show up in a really authentic way, because we have so much societal programming, so much cultural beliefs, so much of our upbringing, potentially religious dogma, and all these things influence us and they make us believe we have to be something somehow.

And, part of, I think really getting to our core essence is stripping away the societal programming, I call it bullshit rules and really get to our core and what are you’re introverted or extroverted? That’s just a personality trait. I don’t think it’s going to stop you from attaining the success that you want to have in life.

There’s many introverts that are extremely successful, even successful salespeople. Yeah. So the most of the listeners here are higher paid working professionals. A lot of times to get to that point in your career, it is a bit of a toxic environment that people who are more stoic, more closed off, rise to those positions.

At our recent mastermind, we had almost a hundred participants. Average net worth was $1.9 million. So it was a high level group that came out virtually. And it was hard for me to get people loosened up because everybody has this corporate America kind of mentality, yeah. I don’t, I don’t know any tick. Maybe you can give some insights in how to loosen up. Yeah. I talk a lot about this in my book. I was a stoic when I was in my, the front of my career. And I was merciless. I was heartless. I would go over dead bodies to go what I needed if you go.

And that became worse as there was more money at stake and I’m so much, Oh, I shot my wife out. I was very unexpressed in that sentence and there’s there’s a lot of work around the masculine, the feminine energies that we each have. And the heart is the Citadel, the feminine energy.

And it’s really where we feel. It’s also where we’re vulnerable. And, when we open up the vulnerability, we want to be heart-centered, we have to open up our heart, we have to share. And that’s not something that men especially in our culture are encouraged to do because from a very young age were little boys like boys don’t cry, you’re tough.

You gotta be fearless. You swallow all these emotions and feelings. So it doesn’t surprise me in this corporate environment and the type of audience that you have that. People feel like you can’t really share that side of you. The irony is, or the paradox is I’ve come to find out that when you’re vulnerable and you share your heart you’re actually become indestructible and invincible because, you can only be hurt when someone is trying to protect something.

But you can’t kick it in an open door. And so when you share your heart and your heartfelt and you share maybe some of the things that, your fears, your worries, or some of the things that aren’t going well in your life, you’ll be hard pressed to find anybody that’s gonna in any way take advantage of it.

What are they going to do? Because you just shared the truth. You owned it. It’s actually, when we hide it and we try to, paint this picture on the outside, this kind of, we live by our social media accounts and by our LinkedIn profiles. And we want to look at this perfect, smart and successful.

There’s a lot of vulnerability actually in that, because now we’re very vulnerable because, we’re not like that. We, none of us are perfect. We screw up all the time. We make mistakes, things don’t go we have fights with our spouse or our friends or family members.

Anyway, life is messy. It’s messy for all of us. Yes. And just being human about that and discussing that in an open way, in my personal opinion makes you only stronger that makes you more trustworthy because it’s more real. It’s what people can connect with is yeah, I have that in my life.

That makes sense. Nobody’s perfect. Whenever I see anybody like painting this perfect picture of their life, I just shrugged my shoulders and it’s I know it’s not like that. Yeah. That’s still a mentality is a little bit needed, right? Because you need to go after your goals, especially in the beginning and not listen to what anybody has to say and just move forward.

Despite all obstacles, but once you get to a certain inflection point, I think opening up, this is the way to go. But why do you need to be stoic early on? I think it’s a gray area, right? I think people. When they’re starting on their career or doing some new venture, there’s a lot of naysayers out there that the peer group might not be at that evolved.

So you’re going to have to shut people out and you may be a little bit closed off, but in the process. So you see I think you anchor it in your spiritual vision. Because if you’re very clear on where you’re going with your life, and you’re very clear on what you like, what you’re passionate about, what your gifts, your talents, your super powers are, what makes you go in the morning?

What gives you mojo? What gives you energy and vitality when you’re very clear about that. You’re not relying on this motivating muscle, right? Now you’re just sheer power. You’re clear, you’re intentional, you’re determined and it comes from a different place. It comes from a completely different place than, you feeling your way out there and like someone might upset your Apple cart by being a naysayer.

I think you just take these opinions in you filter it because it’s their lens that they look life experience life Ru. But if you’re very clear in your spiritual vision and you you’re really committed to that. I think really that’s where you anchor and ground yourself and you don’t have to be a stoic.

I think you can share it as, and I think, I’m very public about my spiritual vision. It’s inspire and create a world of love and truth. That’s in alignment with everything I want to do. No, that’s part of the message of the whisper and what I’m trying to create. And I want to empower people.

But it’s all based around love and truth, which really opened up your heart and living in truth. So right now the guys are listening, they are mowing the lawn and some dishes driving home. They were like, I’m on board. I’m on board with this. What are some like quick wins that what are you things that matter to you most now?

And how does that kind of show up and kind of small habit changes or quick wins and, your audience is probably pretty disciplined, I would assume because they don’t get where they are by not being, but, one of the first things I tell everybody is the way you do anything is the way you do everything in life.

And look at those areas in life where. You’re not counting the reps. And you might find a couple of areas where you’re not. And there’s something that’s pervasive throughout your life, because if you do it in one area of your life, I can guarantee you it’s showing up somewhere else in your life, too.

It shows just the way it works. It’s the way you train to condition yourself. So I always tell people be very honest with yourself, the way you do anything, usually you do everything. I think in terms of my in business, what I’ve found is this notion that you have to be very cunning and and very astute and all those things.

Yes, you have to be smart about things, but I actually think people do business with people. And I even noticed this when I was at GE I was a very successful salesperson at GE. I was a Rainmaker. They called it, but I related to people, even when it was company to company, business, to business, it’s still human relationships that are going to drive all these things.

Even when you’re in real estate, if you’re going to go find a deal and you want to, sit down with the owner and there’s multiple buyers there. Guess what? It’s going to have a sway the way you show up, the way you hold yourself, the way you respect people, the way you treat people.

This follows you for out your life. I’ve never missed a bill in my life. And, you get a lot favors from a lot of people when you show up like that consistently. And we tend to abuse power sometimes a little bit and, leverage our power. But I think, be really cautious in the more means and resources you have.

Be more salad and really protect the integrity and the way you show up, be human be cause we’re ultimately we’re interacting with people, right? Every business transaction at the end, unless you’re buying Bitcoin online or something like that. For the most part, there’s some human interest there.

Being a nice guy, be an honest guy, be a guy or woman that you would want to do business with. Yeah, something I can share from my first few years or five, six years working was very different. Holly was my last few years working when I didn’t give a crap. And I was definitely on the way out.

My last few years I ran meetings differently. I stuck up for the subordinates and the consultants. They didn’t care. And I think that came across as more of an authentic leader and much more efficient leader too. You got stuff done a lot quicker. And I think that’s what financial freedom allows people to do is.

Kind of treat people how they’re supposed to be treated, but without that other constraint of making our boss happy, or these other external factors, when you don’t have to worry about, I got to still stay employed by these guys or get the next job. But yeah let me put up the book, Robert ultras, a L T H U I S never enough illness.

yes. Just released January 1st, 2021. So pick it up guys and yeah, appreciate it. Robert, for joining us. I really appreciate the time and I wish everybody a well, it’s just such an interesting time, there’s so much flex in the market. It’s so dynamic.

This is when the greatest opportunities of marriage to, when there’s chaos, when there’s a lot of fog, amazing opportunities come about. So I think for everybody just stay alert, play within your strengths. And lots of really good stuff can come from these things as unfortunate as it is for other people that have lost their jobs or their financial hardship and all those things, I feel terrible for them, but, I think it’s a great time to be out there and scouting for opportunities.

Yeah. Just like hard work pays off. Passive cashflow pays off, got that t-shirt made already, but you guys can buy the book and thanks for joining. We’ll see you guys next week. Bye. All right. Thanks so much, Lynn. I appreciate it.

Coaching Call w/ Accredited Engineer & Hui OG

https://www.youtube.com/watch?v=RvMIlR6ADa0&ab_channel=LaneKawaoka

Hey guys Lane here. Normally I don’t like to brag at all. But yeah, I just want to highlight a few of these recent closings that we had. We sold off a lot of these class C properties that were a little bit of a headache to deal with some of the properties didn’t cash flow initially, which is pretty common with class C collections up and down.

But. Yes, total 114 unit in Atlanta. We a hundred percent return investors’ capital two and a half years. Crazy on another one in Huntsville, we still have 70 unit there, again, another class C for 108% return. And to be years, cut back early on another class C where we 26% returning two years.

And then in addition to a Chattanooga property class C almost a hundred percent there three years now, to say that it was a lot of hard work and dedication, but, quite frankly, we didn’t rehab all the units. We didn’t take it the full business plan yet. We felt like it was prudent to cut bait and with these great returns already.

And investors pumped to the next deal. And keep the good times. Rolling. But yeah, a lot of good things are happening, I think, especially in Huntsville. It’s one of its deepest tertiary market out there, emerging markets. If you watch my monthly reports, and just did a report of top of which in markets and it’s on there.

So a lot of the first investors we have one today, we have a coaching call. This client has been with me for quite a while. We’re going to call him the wi OJI investor, Mike. But yeah, starting to see the successes come through and people’s lives are changing through this stuff. It’s not only the deals, but it’s the holistic tax and legal asset protection.

And how do you move money around, and also lifestyle changes such as not buying your house to live in, renting for a lot of us. Makes sense. Granted though, those people aren’t listening to this podcast don’t really have interests in personal finances and financial freedom. They should go probably go by their house because it’s a forced savings account, but you guys are different, right?

So hopefully you guys enjoy this podcast with a current investor of ours and yeah, you guys want to build a relationship with us. Go to simple passive cashflow.com/club.

Hey, simple passive castle listeners. Today. We have a, another exciting coaching call with an OJI of the who pipeline club. Mike here we’ll call him like, cause that’s how people know him as, but yeah, accredited investor in several deals. We’ll talk about that, but I think today’s call is not.

Really on the basics. But where do we go from here now that we have proof of concept? But Mike wants you to give people a quick overview on yourself. What do you do for work? Just so people can get a little context. Sure. Currently I’m a construction manager with the city of Seattle. I have a civil engineering background.

Did the consulting thing for a little while but have been working as a government project manager for about six years now. It’s been doing real estate investing since 2017, started with two turn key rentals in the Birmingham area. And then along the way they come up to six or seven syndications with lane.

And yeah, just trying to see what the next steps are here for me. Yeah. So I think when you came in at 2017, your original goal was to buy some rental properties. What was your net worth? Like 600 or something or 500? I don’t know around there, I’d say, yeah. Yeah. In what, under four years you almost two X that, yeah.

Okay. Okay. So I’m just looking million-dollar net worth in terms of salary and income, you’re another frugal guy, so you’re able to put away 40 grand or so to investments every year. So just giving some people some context here. Again, if you guys are listening to this and podcasts for me, you guys can go to the YouTube channel where we have this displayed.

Also club members get access to all of these investor calls or investor coaching calls. Sign up for the club@simplepassivecashflow.com slash club. And you can watch all these. And I arrange all these coaching calls based on net worth. So you guys can quickly fall in to where you’re at super watchable.

It’s perfect. But help us out Mike, for the new guys because you’ve went through the whole entire Genesis where you started with turnkeys. Take us back to that point, some of the takeaways, but a few years after that, Yeah. To be honest, that it really mirrored your journey, I definitely piggybacked on all the training that you took, all those networking opportunities that you did, jumping on with the turnkey providers that you found in the Birmingham area made it really easy cause he hadn’t been there before.

And just decided. I couldn’t keep doing the same thing and expecting the same result and also had my son in 2016. So that was kinda my Han solo moment, as you say find a way to increase my income, to get more time to spend with him. So along the way just with the two turnkeys, and then seeing these syndications starting to pan out.

My wife’s been able to leave her job and spend her time with our son because he’s about to start kindergarten. Yeah. It worked. Huh? Good.

So you jumped on a few of these deals where a couple of these yeah. Two of them cashed out for you. Money. So that probably makes indices very happy. Yeah. It was nice to see that 40 15, I’m trying to capital come back and looking forward to what to do with the distribution. Oh, how did you guys manage your guys’ finances prior?

Like she gave you some sort of like allowance or allocation to do this crazy stuff with in the beginning. And she said changed her. I do most of the finances in my family. I think it was a real as you said, we’re very frugal. It’s very tough for us to spend a dollar. It’s not essential.

But I guess along the way just showing the math of, what we’re putting in and what we’re getting out on a month by month basis has been helpful. Using a lot of the graphics that you show in that Sankey diagram that kind of unlocked everything that really broke the dam and getting us able to be comfortable with doing the syndications slowly, building them up and just increasing that, that extra cash buffer and savings.

And then as has it progressed throughout the years, you got more and more. Investible capital that you can touch. Yeah. Yeah. It, a lot of it is from my day job that is where I get the bulk of my savings from. I’m a little conservative with the rental properties. I don’t really pull much in terms of profit.

I just keep building up that stash in case something goes wrong with them. But yeah, at least with the multi-families I feel like that’s been able to start compounding here. So one thing I know you guys did, if you guys, you can help out people, is the whole, do you rent or do you buy I’m a big proponent for renting.

I rent you had to talk to your spouse since we’re doing this crazy idea of not buying, but maybe. Help out the poor souls that need to do that thing too. I think for you, it was harder because it’s not like you didn’t have investible funds, but when we sat down and outlined it, it makes so much sense.

Site’s there. Yeah. I was lucky enough to ride the appreciation wave from 2011 to my wife and I owned a condo. In North Seattle and we sold it for more than double than what we paid for it. So that was pretty much our equity that we used to invest in first, the turn keys, and then the first batch of syndications.

So we’re most small spouses would probably chop your head off if you took that money and buy a house, a bigger house to live in, that’s the status quo. Yeah. That’s exactly what the traditional plan was. So it, really was a long road to get to, renting and then using money from the sale of a property that equity to start investing.

And it’s starting to really. Come home to roost right now. Yeah. Yeah. Cause you sold that and you got what, 300 grand that stuff after all the closing costs and whatnot we cleared about two 50. And did you invest all that two 50 or what was the deal within the household that you could invest?

I think along the way we have been. Wanting to get a primary residence again. But I asked her, let’s rent for a little while. We’re, we’re not tied to anything. And just give me a little bit of time and let’s see how this goes. And at any point, if it doesn’t seem like it works, we’ll sell these turnkeys, I’ll stop investing in these multi-families.

We’ve been able to see proof of concept. And this’ll be our fourth year renting now. And so there still is the itch to buy a primary residence. But at the same time, we haven’t completely shut the door on renting. Yeah. But I’m looking here I’m, you’re still able to put away 40 plus grand a year to investments.

The syndications are starting to cash out. You’re going to have more investible funds. Now the, again comes into play, right? You’re you’ve got to make a new deal. Or are you thinking about getting a new home to live in? Because I’m a little bit more yeah, if you, maybe if you want to, you could at this stage, cause you, you put in the three, four years of delayed gratification and. At what point? I know personally, I probably will never I don’t want to say never, but I liked renting and it’s a lot cheaper than buying a yeah. Yeah. I dunno if we’re just trading one thing for another, but there’s always the thought in the back of our head, whatever it landlord’s plans change year to year.

Now that we have our son, we’ve got a lot of stuff in the closet that I’m not really looking forward to moving. And I really want to get him into a good school district. So that’s the main thing. It’s just the stability is what we’re looking for now. And I know I don’t have to be a homeowner forever, but for me, it’s the stability for the family and the the school district.

And I know I talked to people, I know the people who’ve moved multiple times in their life and their parents have come back late and said, Oh my God, I’m so sorry. I moved from this town to that town, moved me from this school to that school and know the other kids are grown up. They’re like, I didn’t even know that was just used to that.

But just for me, my own wanting to be what I feel like is a good parent. That’s I guess my number one. Yeah. If you could keep moving at this space in 15 years, you can buy your kid up Dodge Viper. Doesn’t all will be forgiven before. It’s 21. That was my, that was what my mom was trying to get me to do this day at UHC.

And since you can buy whatever car you want, and then, so I actually just move myself too recently. And the mover is costing me a thousand bucks, but I boxed up everything and I was like, my God, that’s the last time I’m ever going to do that. But our other buddy is a mover and he said, yeah, you just tell them to come to your house and pack up all your stuff for you.

Yeah. You probably want to take your wife’s underwear with you separately, but they’ll do it for two or three points. So No, it’s just money. And you’re saving so much money every month anyway, growing your money so much before. And hopefully that helps. It’s just think of it as a few grant that you just to Chuck up to move it costs.

Yeah. I think honestly, we understand the math. I think it’s more of a feeling now than it is. Whether it makes sense, monetarily. Yeah. But we had talked about some other options, maybe outline it for folks like a bigger house or location-wise. So what are you currently thinking about now for the housing?

We’re still pretty narrow. And where we’re looking we floated the idea of moving out of the general area, but I know we seem to really like where we live. And so we’re going to. Try that at first, who knows, I don’t know, or at least as good for another few months, but we’ll see if the time comes that we have to move.

If we really have to do something. Yeah. The key is like finding a landlord that is also an unsophisticated landlord that loves a very stable tenant. And if you can bamboozle them into a longer lease, that’d be ideal for both of you and down. Yeah. I did contact the property manager recently and in the area that I wanted to live and I was like maybe we’ll just try out when you’re at first, but I really am looking for a place I want to stay long-term and she was like, Oh yeah this investor, she had a house for 25 years sold that, bought this one.

And that’s what she’s planning on doing for the next one. I’m like, Oh, that’d be, yeah, that would be perfect. But it’s. We’ll see what comes up to buy and what comes up to sell. And, trying to look for the right place to be at least for the next six years. Yeah. Yeah, because currently you pay how much per month for 2,700, which is a great deal.

Cause we got one of those landlords, this is a house they bought for their son to move into. Once he moves back to the area and we’ve been waiting for the son to move back for two years now. So who knows, maybe we even stay here another year. I don’t know. It’s probably one of those or for bearing that more, it’s probably why the son doesn’t want to go anywhere near them.

They live like five minutes away, so yeah, maybe it’s a little too close for the other guy to come back. But so when you’re looking for that next rental, what is your budget? 30 to 50. I think I’m keeping that budget the same for a house payment versus the rental. Do Jack it up to four grand.

Trust me at the end of the day, you pay four grand for a rental and you invest and it just keeps you on this path of renting that much longer. It’s going to be better. And, but just for kicks. See what you’re getting when you pressed up the Ford brand. Yeah. It’s, you’re already getting so much of a better deal when you compare what.

Rent is for that by costs. So yeah, it’d be like heads and shoulders above. Fine. Yeah. And now that you’ve been doing this for a few years, now, you can take some of these profits, the investible funds and start living with it. And that’s the way you start to do it because I know people like in your shoes, what you’re probably to keep doing is keep continuing to live in a.

Kind of like a dingier house rental for 2,700 a month for the rest of eternity, right? Yeah. But yeah. Try and consciously increase your means, which goes against everything in the personal finance world. That’s the whole point of doing this investing stuff, that’s why we’re doing it.

Is that what we’re doing at.

Yeah, I think that’s why some people do it. But I thought it was just a rack up money in your bank account. So I look at it when you’re not doing anything, but yeah, it’d be take it off the foreground. Yeah. And I’m curious what the missus says at that point. Once you start to tour those places or show pictures of it.

I mean it honestly they don’t care the, just the fact that she’ll have to tell her friends that she’s living in a place that costs four grand a month. She should, she won’t do it based on that principle.

Yeah. I know what you’re saying. The friends will probably think that she’s crazy and your likes and ADL, but. I tell my wife. Yeah, look, don’t think about what other people think about you. Life’s too short. Yeah, I know. It’s hard. Yeah.

I know. But that is a big thing. Cause people don’t understand it and they’re like, what are you doing? You’re just throwing money down the two crazy.

Okay, so let’s talk about this stuff. What do you got going on here? Why do you have so much? So that’s the thing it’s that was also part of the agreement. Oh, it’s like the COVID reserves right? Where the bank makes it, this is the life reserve that’s my escrow account.

Okay. So the deal was, if I recall you had to keep liquidity in the bank to be able to put down on a primary residence. Yeah. And so that money right there is our emergency fund, plus our future down payment. And that’s a lot of money to just be sitting at escrow. You got to ask the bank, they’re like a little bit, it’s been it’s been working really well with this arrangement.

And so I don’t know if I’m trying to. Break that arrangement at this point would be a wise decisions. Okay. So here’s some options, right? What about other than obviously investing at all? Surely you’ve seen some positive effects of this stuff starting to work and it’s real, but maybe put a portion of it as equity, right on the top of the capital stack, getting dirt.

10, 12% every month. Yeah, like an HP. Gotcha. I know a lot, what a lot of guys did was , they got to refinance their loan on their house. So he lock and they took a portion of that too. And then put it in for the equity to pay their key lock on their entire thing as arbitrage.

That’s the first option. The second option is what do you think of block five? Yeah, it’s putting money into, I can’t understand any of those terms. I’ve been, I’ve been working, trying to understand it with some of those folks in that Facebook group, maybe I just need to dedicate more time to it, but Yeah. So our mastermind is going to be doing a deep dive into this next month, but. What I’m advocating for is not really investing in block five or any cryptos in terms of Bitcoin or Ethereum. Have you heard of stable coins? Yes. After reading about it. Yeah.

Yeah. So for you guys don’t know what this is, that’s my understanding. And I don’t understand this entirely. So go do your own research, but stable coins are, as the term suggests it’s stable. But to me, like from what I hear from people who do this for what it’s worth, like most of the crypto, especially at theory and Bitcoin, now institutions are involved in this stuff and it won’t go 10 X and a couple of years anymore, but.

At least to me, I think that’s the point where I’m getting more interested in the stuff. Now, big institutions are backing it and they believe in it too, which just makes it more stable., but like the stable coins is another level beyond that of stableness. So what you’re doing, you’re loading money into this website.

You don’t have to deal with all that annoying. USB things. Some people will think that’s more security because you own it, but it’s no different than you going to, each trade or whatever stock investing thing where they app digital. But you mean like block five and I’ve done my research.

They’re, US-based, they’re insure supposedly they’re property capitalized. There are a bunch of others, but if I were to recommend one over the other, that one, just as a starting point to court research. But for if you put your money in, I think it’s G USD and block fi you’re able to make 8.6% on it.

Now, if block five goes on, there don’t come complainant. Maybe, I don’t know if, what, I don’t know, see what, like throwing 50 grand into something. That see us, like God lean more towards doing private equity versus the books, I think. Yeah. Yeah. Or maybe, go a hundred grand in pref equity and the salon and the next salon.

But in the meantime, when you wedding for the next one, just have 50 grand that block fire or something like that, or diversify over different coin basis. Coinbase Gemini. Yeah, yeah, you got to get that move in then it’s a big drag. Yeah, I know it’s a big drag or, okay, so here’s the other one.

Are you doing internet banking at this point? No, I’m not. I just didn’t feel like I had the right kind of net worth to be doing. Your net worth is higher than half a million. So it is a thing for you. Again, if we’re talking to the guy who is, has no money, don’t do and banking, right?

Put your ear my son, go focus on making more money or investing in a rental property for now. If you guys get shiny object syndrome so much, you gotta be like Mike and do this for few years. And then you can think about these things, but this is even if you’re a lower net worth, I would still recommend the jury because you have so much debt equity, you might as well just stick it into insurance product, which is probably the most stable things out there. And just let it grow at 5%, at least. So that’s the third option I have for you. Okay, it’s just load this into there. And then next question is how much do you do? What I’m looking at here is you’re able to put away maybe 40 grand a year, but you have so much built up in this escrow crowd and you have, you got to get it deployed.

So you have to build a plan that’s six years or five years, and you have to stick to a Mount. Obviously I wouldn’t go more than 40, 50 grand per year because that’s all your liquidity. Sometimes I have a general rule of thumb of one third of your net, which is in your case one third of 40 grand, so 10 to 15 a year.

Okay. But maybe I might bump that up because you have so much luck in the beginning. So maybe, we can connect you with the life insurance guys, but. Maybe I would go in with how does 20 a year for six years now? That’s the cashflow that includes the fees too. That is what you’d loaded in. The fees is probably gonna, you’re going to take the haircut that first year for sure.

But your money is not doing anything anyway. So it might as well loaded in there for now. Like you should be able to intellectually talk about this decision to your spouse who is controlling this escrow account for you, because I would make the argument that the life insurance is more secure than any of these things.

Okay.

Shouldn’t have more than a hundred grand in here anyway. FDI FEIC. Yeah. You load it in there. And another thing that we’re tinkering on in the mastermind is instead of taking loans from Penn mutual, the insurance company or whoever insurance company you’re using, we’re using a third-party bank to get an even lower interest rate.

So if we borrow from Penn mutual at 5%, There’s another third party bank that will do give us a collaterized loan on the life insurance. You sign the, like the bank and they’re giving us like 3.5% for prime, minus half a point or something like that. So it’s I think that’s better than a hilar.

Yeah. Yeah, crazy stuff right up there. So I would try and do 20. You know what if this is not going to go down, I would load it up with 40, 50 grand in the first year and try and backdate the first payment. So you can load a hundred grand in the first year. Okay. Does that makes sense?

Yeah, it does.

And then. Year two year three, you’re going to have to fund it know for 40, but if you only funded up to five or 10 grand, it’s not the end of the world. It’s going to take a lot for it to not cave in. If you understand that kind of, that concept. Kevin, what do you mean? Yeah. So caving in is just like non-technical term that I’ve created where it’s no, you have to commit to a certain amount, right?

Every year, where, if not the dividends I think the fees start to pay and cannibalize itself, the policy. Okay. And I’m not an expert, right? This is why we work with experts to originate these things. But I know from a high level to, amounts to put in.

But how it’s designed, just like in taxes, I know how taxes work and you should know how taxes work. But you don’t know what forms to do, right? That’s their job. In fact, that’s their only job. Their job is not strategy. That’s yours. It’s like how we’re doing here. Your job is to figure out how much you’re going to put anywhere.

And before I have the conversation with the salesman, because the salesman is obviously not really aligned with what you want, they’re going to probably try and load you up in the longest policy for the biggest amount, because that’s what lines their pockets with commissions. Okay. But. Yeah. I would just throw in a hundred grand right off the bat, and then you have a 150 grand.

So it gets you that in the next few years, and you’ll probably be making more money and hopefully the investments keep going well. But at the end of the day, or if the worst case scenario, you bring back how much you put in. Yeah. It’s not the end of the world. Initially when I did my infinite banking policy, I did 50 grand and I did, I actually the same thing.

I backdated the first payment to put in a hundred grand in the first month, one after it. Boom, boom. So then I was supposed to do a 50, 50, 50, 50, and then when I was first starting the syndication journey, , I. Spend all my money and invest it all. So I didn’t have much money. And I was like, Oh crap. So I had to go down to the minimum where it wouldn’t keep in.

And I think it was somewhere between on $50,000 commitment. I could put at least like five or 10 or something like that. You can do that. Or if not take a loan from yourself and paid the premium. So the backdating is like a year, zero. Contribution. Yeah. I talked to your agent on how to do that.

Okay. But that’s for your case, right? Because you have so much dead liquidity right now. I’m not doing anything. Whereas most people, they don’t have that much. Most people have a hundred grand or less, but they might have a higher net where you’re able to put away 40 grand per year.

A lot of other people, they might be higher. 50 to a hundred. But that’s how I would play this. And as you see, it’s a art form. But should you lower this amount that you have to keep in here as cash reserves? Because the boss says, do you know that strategy obviously changes a little bit too, but.

Those are the three in that order that I would allocate that stuff. Okay. But as far as investments, you’re just on the one or two a year plan, is that yeah, that’s what I’ve been able to do. Once I get enough to put into something, it goes right in. Yeah. This is not too important, but I know you got kids.

The term life insurance. Is this through your work or is this additional? The standard insurance is through my work and the mutual is my own policy. Okay. If you start doing an infinite banking policy with the whole life, you probably should just, this has been done, then I would get, just get rid of that.

That’ll save you 500 bucks a year. Yeah. But yeah, I mean it’s, so if you died a million, $2 million is good thing. Yeah.

But you still have, is this company like TSP or four Oh three B 401k stuff. So I did the 401k. I closed that out last year. And I have about. $20,000 in my Roth that I can take out as straight contributions without paying any penalty. And the other, the lower amounts are my spouse’s plans and that’s her money.

So I haven’t pressed her on pulling that. Yeah. But so this is not 133, it’s 20 now. And then. It’s like I could take out 20 of that without the pain. Oh, okay. Okay. Yeah. So it’s like what? Vanguard? 500 or something like that. Yeah, exactly. Yeah. That’s cool. You want some stocks and is that, I don’t need it.

It’s more like it’s there and I prefer not to touch it cause I don’t want to pay the fees, but I’m open to eventually taking that all out. did it with my 401k last year. I’ll pay the taxes on that. Yeah. And luckily, because the wife doesn’t work, you’re not in a high tax bracket, so you can make maneuvers like that.

I personally don’t have any paper assets, but I always just ask you guys and where your head is. That’s fine. I’ve already taken out a good. Chunk of my Groth contributions along the way over the past four years too. Is this all Roth or? Yeah, it’s all wrong. Okay. But only 20 grand has contributions, I think.

Yeah. That’s all that’s left that other contributions, but it’s not a self-directed. No it’s a wrong, yeah.

I might have up. Something for you later,

but yeah. Any other questions or, what level of tax professional should I be seeing? Cause my buddy who used to do it he took a real job, so he’s done taking clients and then I’ve always been wanting to sing that I needed an estate plan and a will like, cause the Anderson folks. Who should be talking to, is that, too much for me?

I think they’re, I think they’re cheap for what they do. We definitely don’t need, like one of the white glove services that are gonna charge you 10 30 grand to do your taxes, but the trust, the state stuff, I think that’s separate. But yeah, I can connect you with a couple people on that side.

But, yeah. That’s so that’s next on your list of deep to do items. Yeah. So if you guys are listening, if you guys have a you guys don’t want that sucks. It’s going to go through probate, start do that. You guys need to trust, especially if you have kids.

Yeah. Yeah. We’ll play around with more that strategies like irrevocable trusts. Once the network gets a little higher, but. Can get the trust set up because the trust is just essentially instructions to avoid probate. So the state city, I don’t know who gets their hands over the place, but it’s just a way of taxing and running away.

But yeah, that’s a good goal. A lot of people in the bubble that was something that they need to get done. It’s something that people that lay. But yeah, as far as the taxes, you don’t have moving off the rental property, so things are getting easier just to have a bunch of Caitlin’s.

Yeah. I still don’t think you should do it in triple tax, but it didn’t take a genius to do it. And you’re educating yourself and you should be able to spot check what they want. Anybody does. Yeah. The situation is not super complicated, but. And you should be able to supervise them too.

It shouldn’t be that different from the last three years. Yeah. I’m curious how much passive losses you have on your 80 to 85 forum? Have we asked your buddy for that? Oh, I was looking at that the other day. Yes. So you guys, this is super important. If you guys don’t have over 85, 82 form, you need to get it.

And we’ll CPA. Typically they withhold that because they don’t want you to run off to another CPA. So the way they keep them keeping you under their collect checks. But but yeah, that, this is what is on your suspended, passive loss. Buckets these investments, rental properties, especially passive private placements in syndication gives you a lot of passive losses the first year that you may not use soft passive income.

So it goes on this 80 to 85 form taxes

of you guys are writing that number down, going to go home control F over taxes. But it is pretty neat to see those passive losses, that, those big numbers, how much do you have? Is it I think I’m like at 130 and that was at the end of 2019. Oh yeah. So who knows? Maybe two 50, 300 now. Yeah.

Yeah. You’re seeing, that is at this point, it’s don’t really need the pay taxes if you don’t choose to. But before we go, let’s talk quickly about real estate professional status. Cause your spouse doesn’t work. She’s working her ass off should help too much with your kids. Not that I’m working from home.

I really see how much work it is. Yeah. What about, so we had talked about this, you’re trying to get real estate professional status to use the passive losses to potentially offset your ordinary income. Income and capital gains on the sales of the rental properties. Yeah. One thing, your guys’ tax bracket is in that pie, right?

Because you took, you opted for their quality of life instead of you kicking more, but at work, getting paid more and for working. So you’re not in a huge tax bracket and I, and if you guys are under. No $330,000 AGI. I wouldn’t really freak out too much about getting that roasted professional status, Texas, but you still have you kinda given up on that, is it not make sense to you now?

Yeah, it doesn’t really make sense. Just trying to get the sheer number of hours to I don’t know. I wouldn’t, I would’ve had her like cold calling people that stuff that we hate to get. Yeah. If you are a doctor, and if only you are a doctor, then it makes sense, but you probably wouldn’t care.

You probably, and I probably wouldn’t be friends, probably wouldn’t care about this stuff, but cool. Anything else or any other stuff for the folks? No, I think it’s just interesting to see, cause we ran through this. Back when I was starting, I put together my little manifesto of what I was going to do, and we had a plan then, things change along the way, but it’s generally going along with what we thought it would be back in 2017.

Yeah. And another person who gets over the one, the two comma club. Yay. I’ll drink a beer tonight. Yeah. Yeah. You like expensive beers. That’s what the movers aren’t taking. I’m taking my boxes of beer in my own car. But but yeah, congratulations moving into the world of a credit status and I think you can agree that it doesn’t feel much different.

It really doesn’t, but happy to make it. Yeah. Now we’ve got to get you to four and a half million. Yeah. Yeah. That’s like graduating high school. So you go to your nephew’s high school graduation and you’re like, yeah, man, that’s nothing like, maybe I might come to your college graduation or when they actually do something in life.

But yeah. That’s getting to accredited. Status is all about that’s true. That is true. But yeah. Thanks for listening guys. If you guys liked this sign up for the investor clubs, we’ll pass the cashflow.com/club. Stuff really works. Real and yeah. Thanks for listening. Like.

March 2021 Monthly Market Update

https://youtu.be/Tg_DiV-67QE

All right. Welcome everybody. This is going to be the March, 2021, a monthly market update. But before we get going through the content here, I have a lot of questions on some of the current events that are taking place, especially in Texas, out there where the temperatures got into the single digits there for a little bit.

Yeah, we’ve got a lot of assets own, maybe half a dozen apartments out there. And we just finally got chucked through most of the aftermath. And yet there are a lot of burst pipes and a lot of leaks but Everyone was freaking out. Yeah, we had some issues called the plumber and they got fixed and damages on, most of our apartments are a hundred to 250 units, but the damages came back or maybe five grand to 20 grand per property, which seems like a heck of a lot of money, hurt the monthly profits, but really not touching cash reserves and yeah, it’s a bummer.

It happened, but it just got to think here, for, five to $20,000 on a lot of these properties where the monthly revenue is a hundred to $200,000. If you just take a thousand bucks times a hundred, 200 units, 250 units, that’s how we get a hundred, 200 grand brought in. Five to 20 grand is not that much money.

It’s probably about 10 to maybe 20% of that. And, normally the net operating income, the profit that we bring in is usually in the 50 to a hundred thousand dollar range. We still made money. But I think those of you guys who are into the turnkey rentals, you guys probably understand, with your turnkey rental, you maybe you’re bringing in a hundred dollars a month.

That’s a hundred dollars to $200 repair bill on the same bank. That two that we have. And I think that’s why we like the bigger assets, because on a lot of these, we did have one where the chiller Got a little damage, no big deal. They are. But for the most part, it’s just a bunch of plumbing issues, which a lot of it got taken care of with in-house staff.

And that’s the nice thing about what these bigger properties, where we have a lot of the staff on call. I’ve been pay on salary as opposed to paying those huge third party, the pair bills. And that’s what I never really liked about being an out-of-state remote landlord. I’ve paid like 900 bucks to the carer stinking toilet.

I don’t know. At a hundred to $200 hourly billable rate. That’s a lot of hours to fix a toilet. I don’t think, but that’s how it is as an out of state landlord. But yeah, you guys who are lower net worth, I’d say still got to start there. That’s where I started. But make sure you guys run your numbers, right?

If you guys haven’t yet grabbed a hold of my buy and hold analyzer, it’s in an Excel or Google sheet format, full explanation of all the expenses on. To make your own performance. So in case the Texas freeze happens again, you’ll be able to observe it on your monthly cashflow and it, and like for us, it didn’t really dip into cash reserves.

And this is what allows you to perform your sensitivity analysis on your own. So to grab that and go to simple passive cashflow.com/analyzer, or we also put it on the simple passive cashflow.com/turn key page for folks to grab for free. But we’ll get right into this month’s report. If you haven’t yet, please join our Facebook group and check us out.

This is also recorded in podcast form on the podcast. And I also put the slides up on YouTube. So if you guys are listening on podcasts and you want to, you’re feeling some FOMO for missing out on some of the slides, you can check it out there. For those who are joining live feel free to put in a question into the box.

If there’s a question that comes out, but we’ll start off with a few teaching points here. Just grab this out of a new Mark or recently in this models, the interest rates, which 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 at 5.8% on average, and that the ten-year treasury as is that a 0.93 investors make money on that 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 these last few months that 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, there was a bit of a squeeze there.

Or maybe in the, 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 here and right now, but that’s the, your academic look of, how investing works essentially. And this is what a bank does, they go in and invest in arbitrage, the money somewhere else. And they take on debt, but good debt to be able to afford onto the asset that cash flows. A lot of good news that have been happening and saw the last market update gen records. John Burns, a lot of these guys are putting, given the green light, but I want it to report on, as I mentioned in the previous slide long-term interest rates had been creeping up just a tad this first quarter of the year.

A 10 and 30 year treasury yields have been running up the start of 2021. That’s where we were conservative using like a 3.5% as a placeholder for our commercial deals these days. I don’t really know what people are getting for residential, maybe around 3%, but it’s been creeping up lately. Now just a little bit of the guys have been following the news on January 4th.

The yield on ten-year treasury note was a 0.93 and the 30 year treasury yield was one. Point six, six a month later, the 10 year treasury came up to 1.19 and the 30 year treasury came up to 1.96. Now that’s a big move for just a five week, one month period. Bonds have been getting killed in that interim what’s driving these changes.

The Democrats novel, the house of representatives, the state and the white house. And if you look back and how the stuff was moving, when the Georgia Senate runoff was happening and tip the scale to the Senate going to the Democrats, the markets reacted by expecting massive dismissiveness because typically the Democrats do spend more money.

And the us treasury expected to bring massive amount of bonds to the market for a fairly short period of time. Now, what does this mean? I look at it, this is all good for investors like us because ultimately more government spending means that it trickles to us landlords and investors. This is what is essentially driving up yields or the cap rates on the short term.

Because as I said in the previous side upgrades typically go up when interest rates go up, they float together to investors make money on the difference between the cap rate and interest rate. Plus the leverage has magnifies difference. So in other words, sophisticated investors know that cap rates typically go up and down with interest rates.

They don’t really freak out when type these types of movements happen. Now the economy is continuing to reopen more and more, and I think Biden just released another stimulus plan to hopefully get a lot more people vaccinated by the end of April. So all good news pointing to. A big recovery.

And I’ve been seeing a lot of Fannie Mae Freddie Mac before it, so we’ll get into this later on in the report. But a lot of these guys are saying that, Q3, Q4 GDP growth should be over four to 5%. Here’s one of those reports right here from Fannie Mae. You look at 2021, they’re predicting a 4.8% GDP growth in Q2.

Two three 7.5 and Q4 6.1. So that’s big stuff. Probably what that’s accounting for is personal consumption. Expenditure is big in Q3 of 20, 20. A lot of people think inflation is coming. I don’t necessarily read that even though logically. That makes sense. I think they can just keep printing money.

But even if inflation does then, right? Like by buying fixed commodities, hard assets, like real estate you’re hedging. That way.

Facebook plans expansion to the console data center, project price, the top $1 billion of development. Ongoing construction. This is their construction in February, 2021. And they announced this back country in 2018. So you can see how long these projects take to get in there. But Facebook is definitely committed.

It seems to be by this picture that they’re going to put that big data center in Huntsville, Alabama. Here’s another chart that I’ve found from via the global research and it shows the different models of. COVID cases coming down and basically the nuisance they’re getting better and better.

The fan line report has been released. And this is very similar to the UAR report. You have report models. There’s a great indicator for the blue collar workers, the budget folks who have to move themselves. Where the van lines is more they’re white collar workers, where if you’re a corporate worker, you have to get moved, relocated that the van line is typically who’s going to move you.

So the top 10 on the moving out list in this order was New Jersey, New York and Noyes, Connecticut, California, Kansas, North Dakota, Massachusetts, Ohio, and Maryland. Obviously in New Jersey, New York, California, people are everybody, everything. Everybody knows that at this point, that everyone’s getting the heck out of town, Illinois, if you haven’t heard that everybody’s getting the heck out of the noise that States go down really fast.

What are the States moving in? It is Idaho, South Carolina, Oregon, South Dakota, Arizona, North Carolina, Tennessee, Alabama, Florida, Arkansas. And again, this is the more white collar worker folks, Freddie Mac flags, robust growth in the South and West. So they cited three Texas cities grew by a total of 2.8 million people from 2010 to 2019.

And I think we all know what they are. The Dallas, Houston and Austin grew by 2.8 billion people. Why lower cost of living attractive, whether influx of domestic and international migrants, I would have Hughes. One of the biggest masterplan community developers is adding 2 million square feet of new development across the four master plan communities in Las Vegas, Cypress Texas, Columbia, Maryland, and Honolulu, Hawaii.

It’s always interesting to see what the big institutional money and these guys put a lot of money into research. And because they’re making big bets on whether they’re building.

Of course, we as more mom and pop investors, be a little bit more nimble, but it’s good to whale watch what these guys are up to. Another guy you want to definitely will watch on a more macro sense is Sam Zell. If you don’t know who that is, you better know who it is because right below Warren buffet, this guy is the guy who kind of kicks certain sectors not necessarily good management companies or, like how Warren buffet does, but Sam Zell definitely picked is a better picker of sectors in my opinion.

So in his commentaries, he’s expects a rebound for office hospitality, and big city multifamily. Chicago, he, he’s a native of Chicago, I guess he’s not moving on. He doesn’t, he has a lot of money. He doesn’t care, but he, doesn’t not so much like predominant shifts stemming from COVID 19 pandemic office use hospitality and central city apartments will all rebound while the industry icon sees potential for over supply in couple of search and currently hot sectors.

Says, I think we’re going to go back to conventions back to people creating relationships. I don’t see that changing. Although we’ll restart slowly. There’s also a huge, build-up a tourism demand. People have been locked up for almost a year, which I would agree personally. And I think you don’t see it very much, but a lot of folks in this pandemic were hurt by the things being shut down.

But a lot of white collar folks. Or just totally unimpacted and, there’s, it got a few stimulus checks too. On top of that.

So Arbor put up a few of these great charts that I put up on the screen. Just model, how did the COVID 19 recession relate to the great recession? So if you look here the green line. Basically, if I’m going to describe this for the folks listening on the podcast, aren’t able to take a look at these charts, which by the way, you guys can all look@thesereplaysonatsimplepassivecashflow.com slash investor letter is where all of these past monthly updates are held.

Casey ever want to go back and spot check than something you saw. But, the way that it’s illustrate. And I think this makes a lot of logical sense is the beginning of the pandemic was a big spike, big impact where the other recessions, it took a lot, a long time, 12 months to develop where this COVID-19 recession.

In one month, unemployment just shut up. But then very quickly, I would say it’s reading by this chart six months later. Things came down and has been steady on the decline. On this chart right here, we’re already under 5% unemployment where all the.com the great recession, the 1990 recession, it took them five years to get to this five years plus to get to this point where we’re at now in terms of unemployment.

So some would say the recession is over I personally don’t even call this a recession. It was just a health crisis.

Consulting releases, apartment rent forecast four big trends that they’re seeing first, the Bloomberg’s suburban apartments where the biggest beneficiaries of 2020 condemning with renters. Like for more space, examples would be Austin, Tampa, Phoenix. Next is brain towns. These are the demanded college towns to improve in

fall as students return to campus more Trisha and markets like Ann Arbor, border, Colorado Madison other beneficiaries are downtowns, which should come back to the play. He’s saying by 2022 we’ll work from home may have suffered demand in urban markets for now the watch for a back bounce back in COVID.

So they’re citing Boston, DC, New York, Miami. And the Dependables, the dependable markets are historically stable and steady. They be forecast some bumps in the near term, but big opportunities. Long-term such as places like Minneapolis, Kansas city and Reno.

And, from a real high level where we look at a lot is just strictly population change from a high level. And here’s a chart from new Mark. Illustrating where the population growth is. You’ve look at the 10 areas. Those are the areas where people are moving out. The blue, the darker blue areas are people moving in.

Now this I stole from a 2021 rocker for family office report. Okay. A lot of things are going on in this chart, but I just put this in here to show folks that, how the wealthy invest, right? They’re not just in retail mutual funds and that type of stuff. But a lot of these guys are in that private equity space, which we really focus on in our pool.

That’s what we thought to call ourselves private equity.

They are the Rockefeller guys. They’re probably going to decrease their longterm, us treasuries, and also decrease their eye corporate. They’re also going to go to more, a bunch of markets and also decrease their us large cap equities. Okay,

but a big chunk of it is private equity. I think that’s my other takeaway from that. And what do they mean by private, real estate? Mobile home parks, apartments, office space things like that.

And. Just to take a little break there in case you guys haven’t noticed we do have a mastermind group. If you are accredited investor, please check this out. Simple, passive cashflow.com/journey. And for those of you guys, I would say under a quarter million, half a million dollars net worth and looking to buy your first remote investor incubator, you guys know that you guys have to get off the active train.

If you’re flipping houses, wholesaling, and you got to get started, but how. If you may not have enough money to do syndications quite yet, you may not be a sophisticated investor. So check out simple, passive castle.com/turnkey. Great way to get started. That’s the free guide, but we are starting to incubate a group, which is a five month boot camp where we walk you through buying your first rental property.

Now we’re going to transfer We’re going to go and to my personal report I always like to split this off into different categories based on the 20 ramen six human needs. More information about that. Go to simple, passive cashflow.com/happy, because if not, what’s it all for. If you’ve got all the money Overwatch, you’re not happy.

So the first one here is growth. No, I here’s, my I’m working on my last Burr. I don’t like burrs at all. I think it’s too much risk. I think it is a real pain to do. I don’t think it’s a great return on time, but I think if you’re lower net worth, I think that’s where it come in. It comes into play. Or in my case, I want to just on a reload, these last two rental properties that I have.

So I am actually. I think I put in maybe like 20 or 30 grand into this property and yeah, we hope to sell it quick, unload it to some retail and buyers and wipe my hands with this direct ownership stuff on loading the rentals, boom contribution for all the founding office Ohana massive. And it has been having a lot more on new recruits into our group.

I really enjoy helping out the people there. I don’t have the time to individually help out folks just in the general we pipeline club anymore. Now that we’re over 400 on getting old, maybe 500 investors. Now who’ve invested at least 50 grand into a past deal. If you guys want family office consulting you probably can’t afford that.

And unless you’re your a hundred million dollar net worth and above. So that’s where our family office Ohana mastermind, it’s a group coaching experience significance how to get significance. I couldn’t think of anything. So I was just told myself the old stoic line, no one cares work harder.

But number four here, uncertainty the Texas freeze was a bit of. Uncertainty and to my life this week, who woulda thought, right? Thank goodness. Some of these places had natural gas, but yeah, I don’t know. I, maybe I wasn’t reading the headlines too much, but some people seem to be really freaked out.

And I thought there was some kinds of like with the whole energy crisis in Texas. A lot of our properties is business as usual. A couple of days later, But yeah, there’s always gonna be something that makes people scared and stick to the status quo, if you stay with the status quo, we all know what we’re going to get.

How did I establish some certainty in my life? That was the report from Hawaii at the same time, like forecasts of light wins some more showers as the cold front new year’s we all got and actually got into the high seventies at the grab a jacket. But, and all Sarah NES, Charlie Munger, he was Warren Buffett’s buddy at Berkshire Hathaway.

He always has this famous rule and he wasn’t recently on the news the other day. People, they asked them well what’s the rule for a happy life. And he says low expectations. And as I look at my investor group, a lot of you guys are very value driven folks. First, a lot of first-generation or actually most first-generation people that value things and experiences.

And what the value of the dollar is and you guys keep it simple sometimes too simple. I think a lot of you guys can be a little bit too frugal at some times. Some loving connection will were expecting. I am no longer going to be working 12 hours every single day.

Hopefully, if everything pans out, I’ll be a dad in January. But thank you for all the words of encouragement on my Facebook and LinkedIn, I’m actually going to compile can I have my assistant get all the best practices that you guys put on there? A lot of you guys put good tips on my feed.

So I’m going to compile that, put all on the spreadsheet, categorize it. And those of you guys who. Commented. I’m going to give you guys access to that spreadsheet so that you guys can share with any friends or family that you guys have. I think that’s something I’ve learned from this investing thing, everything is out there and we just have to tap it all.

And there has to be at least somebody. And I guess that’s the role I like to play that facilitates the conversations or captures everything in a digestible form. If not, there’s just a lot of noise out there. There’s just a lot of like big pockets and stuff like that of just endless data and knowledge out there.

Some fun things. I bought some, these are do dads. I bought this fried garlic chips from Amazon. It’s like pretty cheap. It’s 15 bucks for a pack. And what’s cool about this is I set this up on subscription. So every like four to six months, it sends me a new one, but I was trying to find a way I liked those garlic chips to fry, but.

Unless you fry it perfectly. It doesn’t get burned or it gets moldy after a while. So if you guys like, thinking the same way and you guys like the cook, try that out. And I thought I’d splurged from the old Heinz ketchup and get me some Portland catch up here. Reminds me of my days in the Northwest, where we would spend way too much money for GMO free and gluten free vegan free and organic.

By the way, but yeah, nothing in this presentation was considered legal or think for yourself, guys, just think for yourselves. Thank you everybody. And if you guys haven’t. Make sure you sign up for the Udo pipeline club to get sent the same deals I come across that we have, the pipeline club is a free investor club where I filter investments and underwrite, the deals and partners.

And a lot of times operate it myself. Unlike an other investor looks in groups, my investors know I kind of personal skin in the game. If you would like to join go to simple passive cashflow.com/club. And we’ll see you guys next time.

Fun Cheapo Ideas w/ Marilyn Anderson

https://youtu.be/JndGlTr6hwI

Hey, simple, passive cashflow listeners. As you guys know, I am a recovering cheapo. I call this cafe style, which stands for cheap-ass free and easy. C a F E. You guys can read all about my cheapo adventures@simplepassivecashflow.com slash cheapo. If you’ve got any good ideas, let me know there, but today’s podcast.

I have Marilyn Anderson who wrote the book, how to live life like a millionaire when you’re a million short and we’re going to be going over seven pretty cool ideas just to get the wheels turning on. These are going to be more towards staying at home since the the pandemic everyone’s not going out to large gathering still.

What I realized is a lot of our audience out there, you guys are pretty affluent make a lot of pretty good money. But you guys are still let’s just call it. You guys like to go after value. When we have our Hawaii mastermind retreat the other year, I don’t think anybody stayed at the Hilton or the Sheraton, the five star resorts.

Everybody stayed in little boutiques or with relatives. So I think today’s content will be right up the alley for most of the listeners. But yeah. Thanks for jumping on and let me put up your book so everybody can go get it at amazon.com. We’ll put it up at the end, but yeah, let’s first thing first.

Seven free things to enrich your life. When you’re staying at home. The first one here is unclaimed property can tell us a little bit about that. There is so much money just sitting and waiting for people to claim that, and it’s like, Money that people never knew that they had, and there’s billions of dollars just sitting.

And if people vote to missing money, thought, Tom, and just fill in their name and the state in which they live their name may pop up and tell them they have money. The other thing it doesn’t have most of the States are there, but some are not. So if not you can go to the state website for wherever you live and putting unclaimed property.

And you should do it not just for yourself, but for your parents, for your siblings. And you may find that you have a lot of money. I told a friend of mine to do this, and he fought me all the way. He said, Oh no, this can’t be real. It must be a spam. And. Texas steady at somebody. So he filled out the forms and he got a letter from them in a couple months saying we’re sending you a check and they still thought it wasn’t real.

He ended up getting a check for $12,000. Now some people make that $10 and make it a hundred dollars. They make the 150. Alison powers, but the point is if people have money, they don’t know they have. So that’s an assignment. I give everyone that I talk to is to go to missing money.com for the state or any state in which you’ve lived with a lot of people these days move around.

So if you’ve moved from one state to another, do it for every single state you’ve lived in, put in your city in your name and also do it for your parents, do it for your siblings. And I bet you’ll find some money there. Nine out of 10 of your listeners will probably find some money. I know I did this at one time for the state website and I did find a little cash there, so yeah.

And just in the time you’re talking, I checked my stuff and I didn’t have anything but likely, cause I cleared my name out a little while ago, but yeah, next one. I’m going to Harvard or yell for free. How do we do that? Especially, a lot of these things, some things were available even before, but a lot of people didn’t know about it.

But there are actually about 5,000 different courses from Harvard, from Dale, from Princeton, from universities, all over the country where you can take classes for free and it can be from anything from computers to religion, to science, to technology. And there’s three places that I will tell you about now.

One is edX. Dot org. And one is coursera.org, and one is class central.com. And as I said, the classes and everything, and they’re free, or if you want a certification, you can pay a small fee, but it’s an opportunity either to just enrich your life, you enjoy or advanced your career, or even change your career.

So those are a couple of places I recommend for that. Yeah. And then now there’s a lot of paid ones, right? Like masterclass or teachable. Yeah, but people should also take advantage of these free courses too. Yeah. And if you guys haven’t checked out, we have a lot of e-courses at simple passive castle.com/ e-course the treeline cars, the new syndication LP course, and the Romo investor course are all on there.

If anybody or their kids wants to take courses in screenwriting, I teach those as well because I’m a TV and film writer. So I teach classes in screenwriting all over the world. Actually, I’m teaching a class next week in South Africa, glide to a broad rate show for free. I know

we had a past episode where my buddy, Matt, he would invest in like Moulin Rouge and Hamilton, but now it’s like one of the biggest, yeah, it’s definitely the biggest Hamilton is definitely the biggest.

Yeah. He invested in that and made a killing, but now the stuff isn’t going too well, everything in show business has been pretty much on hold. And the thing is I talk about in my book actually, how, when theaters are going full force and you could pay. $200 a ticket or in the case of Hamilton, what you said hundreds to $2,000 a ticket.

And I would tell people how to get tickets for twenty-five dollars, where in the case of Hamilton tens hours. But now that there’s a pandemic, actually people can see. All these Broadway shows for free. And that is first of all, if you go to YouTube we’ve just put in Broadway shows. There’s about a hundred different Broadway shows from rent to Moulin Rouge, which you mentioned to Aladdin to frozen the musical.

If they have kids or Mathil the legally blonde, I actually watched it the other day. And not only is it the full Broadway production. I think if you have the lyrics, so you can sing along with it and families love to do this. So one thing is, as I said, YouTube, they have all these great Broadway shows.

And if you’re watching musicals, you can’t feel bad. The other place you can go to Broadway HD and they have newer shows. And of course, Now, if you want to see Hamilton, you can see it with your whole family, just for signing up for Disney plus for one month, which costs eight $99 and 99 cents. Instead of paying, two to $800 to see it.

And it’s you have a front row seat because everything is right there in front of you on your TV screen. Green and it is a play it’s not redone as a movie. It’s actually the play Hamilton. So I definitely recommend that. So once things open up again how do you get $25 seats at one of these life?

When things open up again, there’s all kinds of ways to get discounted tickets. Of course, one way is if you’re in New York to go to the tickets booth, but. A lot of the shows. Now the Broadway shows have what I call lottery tickets. And for instance, Hamilton has lottery tickets for $10. And if you’re lucky enough, it used to be that you had to go to the theater two hours before and they would take the numbers out of a hat, but then they were getting too many people blocking the streets for Hamilton.

So instead they started doing digital lotteries. So for shows like Hamilton and practically every other Broadway show. And this is not just in New York, but we chose travel to your. City. If it had a lot of Rio, New York, there will be a lot of reef in your city. And if you’re lucky enough to win the digital lottery, you can see Hamilton for $10 and sit in the front row.

So that’s one way is as lottery, then there’s rush seats. Then there’s a thing called pay. What you can, a lot of theaters will have a night during the week where they have a pay, what you pad and you can pay. If tickets are normally $60, you can pay. $10. You can pay $5. You could pay $1 and it’s a pay what you can night.

So I have all of those different kinds of things listed. Also of course, people, sometimes people like to usher. If you have kids for instance, and they’re in college or something, not only ushering get them into all the shows for free, but they’ll get to meet the people who are in the shows and you’re doing them.

And if they’re interested in a show, but his career, that’s another way. By the way you mentioned that the guy who invested in Hamilton made a lot of money. If you remember the movie Blair witch project, if you had invested a thousand dollars in Blair witch project, you would have made back $7 million.

Of course that’s not the norm, but that is an example of how people made it with a horror movie, horror movies and thrillers are very big for that. Yeah. A lot of very high risk like just like startups. It’s a very small chance of it blowing up, but when it does, it goes crazy. But I like the idea of magazines. You can get a lot of free magazines because that’s how magazines make revenues. So they can, they send out a lot of free magazines to people, so they can go to their advertisers and say, look at all the subscribers we have, even though they’re fake subscribers. Like buying an apartment in St.

It’s 95% occupied, yet half of the people are paying rent, like it’s just it’s you got to make sure who’s actually paying of course, but yeah, good good stuff to think about. That’s like how Vegas is, right? When you’re walking around the strip, they have all this like wholesalers and outlets.

Is that kinda what they’re doing? Or you got to go direct to that. Vegas, you have all kinds of touristy things going on and whatever, but Hey, so actually, if you’re going to bake this and you want to see a show. For discounts. They’ve got all kinds of discounts available for Vegas shows too. When I do mention that and how to live like a millionaire when you’re a million short, so never pay full price for Vegas shows.

Obviously if you’re a, if you’re a high roller, if you do well at the casino, they’ll give you free passes, but there’s ticket booths. All around Las Vegas to get you into shows for discounts or go online before you go there. And there’s all kinds of discounted tickets for Vegas.

And another thing is people like make this. There are bangs now on your phone. Not only do you get the games for free, but you can win money. And I just put on my phone, which is listening to music, you can make money and they say, you can make $600 a year. Just keeping your phone on this app.

And I keep it low because I don’t listen to the music the whole time, but listening to music, you can make money and there’s all kinds of games. But what they do is. When you’re watching the games, they give you surveys or they give you other things to join if you want, but people are winning money on them.

But again, it’s a question of, do you want this stuff on your phone and, or are you lucky? And a lot of this stuff, it takes a little time, but. For me personally, I enjoy getting a good deal, even though it takes a little time. But yeah. Another thing is, if you like to buy things online, which I am buying a lot of things online now they have these places like rocket dim.

Or capital one shopping or piggy. And all you do is you put it on like your Chrome, where you buy things. And I get a check every single month from Rakuten, from things I’ve already bought. I get rebates. So I’ll get a 20, 30, $40 check every month. And it’s from stuff that I just normally wanted to buy.

Yeah. I’m goofy where I’ll go to Nordstrom and then buy expensive like lunch. Cause it’s they got pretty good food there and drink and I’ll go in there, walk around and see what I want to buy. Look it up on the internet or go to Facebook marketplace and buy it there. So I don’t waste my money on, yeah, you don’t have to buy it there as Nordstrom actually matches price.

So if you find it somewhere else, but you start at Nordstrom. If you ask them they’ll match the price for you. We’re not going to match Facebook marketplace for half of what they match Amazon. And we also the same thing with best buy and staples whenever I go to best buy and staples, which is a lot because I buy all my supplies there.

I will never just go to the checkout and pay the price. I’ll always price match. And even if they say something is on sale, as it mean that it’s not cheaper somewhere else. So whether I’m buying a 30. Dollar toner or a $3,000 computer. I will price match it while I’m there. Or you could ask the clerk to price, match it.

And almost 90% of the time you can find it somewhere else cheaper and they will give you that price. Yeah, such an items for sure. Other things. You’ve got to be careful of probably maybe better to buy a new, but. I don’t know. I just liked the socket dude, Nordstrom. I don’t like those kinds of companies.

I think it’s a waste of money. I had a thousand dollar jacket and I saw it at Nordstrom and I loved it so much, but it was way too expensive. So two of my rules are the first one is make an ask of yourself. In my first role asked, so I asked the sales girl, is this going to go on sale?

And she said probably necessary. I said can you call me when it goes on sale? And the other one is make a friend. So I made friends with her and she would call me every couple of weeks and say, Oh, your jackets on sale, your packets on sale. And so I would say, Oh I have a hundred is still too much in 300, still too much.

So she called me when it went out to 200 and I went in there and I was trying it on and I said could you do any better? She went in the back. She said, I’m giving you the family and friends price, $149. And it was a thousand dollars back then at Nordstrom’s. So she used to call me every time they were like good sales and I want to go in.

And then about a couple months later I went and she was no longer working in the Aaron wondered. Did she get fired because she has good prices. That’s the next one here? Take a virtual tour of foreign countries. Yes. Of course. Because of the pandemic. A lot of us are not able to travel now.

And if you like to travel there’s all kinds of places that you can go actually from the comfort of your own living room. And you could take virtual tourists all around the world. You can see the seven wonders of the world. You can see museums, there’s all different rooms in the loop you can visit virtually out of can city.

Other museums in Mexico city in New Zealand and Australia. What I like to suggest, because we are all stuck at home is if you want to go to a particular place and it could be a place you’re going to go to later, or maybe a place you’d never ever get to, make a plan. Maybe if you take Italy, go to Italy for the day.

Not only do a virtual tour, but make food from Italy and make it a whole day for the family where you have, lasagna for lunch and maybe, and Italian stuff, fish for dinner and boat, all the cities and the. Museums and make it a day and you can learn a lot. The thing is there are also lots of those tours, so you learn a lot and also you don’t have to take the plane.

You don’t have to schlep all that time or spend the money and you can see all these wonderful places around the world that you might not even be able to get to. Once things open up again. Yeah, something along those lines is if you go to wine.com and you search for this, but there’s, they have virtual wine tastings at home.

It’s cool. You got to buy their pack, you just watch the video. There’s a famous one where you get the Bonanza, the conundrum, and then the moneymaker right there. It’s fun. If you’re into that, you don’t need to leave your house splurge a little bit on good wine and your house, not the spend 50 cents on every dollar you drive or travel costs.

So that’s another idea there. my thing is it’s not just about saving money, but it’s about enjoying your life. And just because we are in this situation, we still need to take time. And those moments too, and max, what that’s what I believe. And that’s what had a live like a millionaire when you a million short, does it tells you not only how to save money, but also how to Enjoy every moment of your life to the fullest.

Exactly. I’m going to, into your closet, come out with some cash. No, this is good for people stuck at home, right? Yeah. Or even if you’re not stuck at home, it’s good because, like a lot of it has happened. NGS that we haven’t worn in years. We’re talking about clothes and I’ll start with clothes.

I had like jewelry that people had given me, like when I was 12 years old and it was literally sitting in my closet for decades. So I took it out and there’s a place called real, real.com. And it’s a high level consignment shop. If you put something in an assignment shop or a jewelry shop in your neighborhood, you have to.

Depend on people in the neighborhoods to buy it, but on the real, real.com, they. Publicize it to everyone around the world. So if you have find jewelry or you have designer clothes, the real, and they will either come to your place to get it, or you can do it all through the mail. Other places for things that might not be quite as upscale would be Poshmark or Etsy, you can sell things.

And even Facebook has a lot of marketplace groups where you can buy and sell things. Also, if you have. Of household items that you don’t Need you can go to offer up or next door com and sell them I go to the Emmy gifting suites every year, and I always get these fabulous gifts, a lot of which I don’t use.

So I had this beautiful gift box of. I have different types of honey and yesterday I sold it to somebody on nextdoor.com. I just put it up, Aaron. No, I’m not going to use it. I actually got three different packages. So I give some of them as gifts and some of them myself. So if you have good furniture and you want to try swap it out, this is called cherish.com, but there’s all kinds of ways for you to not only make money, but also

to buy things. If you’re looking to get things for less. And the other thing there’s a group called I nothing and buying nothing is in your local area. And there’s people who were just giving things away and. Sometimes it’s like brand new things that they’re giving away and you don’t have to trade.

You don’t have to do anything. If things you have, or you can take things that other people are gifting. I got a brand new shirt for my boyfriend and it still had the price tag of $150 on it. Somebody was just giving it away. There’s also a lot of furniture. If people give away. I see during the pandemic, a lot of people are getting like big desks because they don’t have their offices anymore.

Or they’re giving dressers or all kinds of furniture, lamps. And I have a girlfriend, actually, you can, of course, paint furniture, fabric. I have a girlfriend who actually painted her sofa. Now. I never knew you could paint, but, and one way of course, to learn how to do all this. Stuff is to go to YouTube.

They have all these, do it, yourself, videos of how to do all kinds of things. At some furniture and make it look brand new and make it look special because you can do it so that you have this only one piece that you’ve created. Yeah. Here in Hawaii, we have like bulky pickup days. It’s when everybody puts their crap out on the street.

I’m excited. When I get my new cyber truck, I can go drive around in the middle of the day and pick up some cool stuff. But yeah, that’s maybe that’s too much information, but Hey, just wipe it down. Make sure it’s it’s virus free. Yeah, and then redo it. I once did a, I had an old chest of drawers and my roommate at the time, she was very creative and she took this fabric of different colors and sheet.

We put the fabric on the chest and it was so beautiful. People wanted to buy it from us for tons of money because it was so incredibly special. So there’s all kinds of things you can do. And I liked those other more co-signer websites. That way it’s a little bit more secure. I do have a story where we sell a lot of stuff on Facebook marketplace and I don’t know what I was selling, but it was like a Bose speaker when I was like a hundred or $200 ones.

And I just never used it. I bought it because I had a gift card and then somebody was like trolling me or something. They’re like, Oh, how’d you get it? I was like I don’t need it. And there, somebody was like, Oh, what are you selling it for? And what the heck do you think I’m selling this thing for?

And then there’s this big troll thread of other people. And I’m like, man, like just people have too much time wasting on social media. Yeah. Yeah. You can’t worry about the patrols. It’s somebody, I have books out. I have used these out and there’s always pros. There’s always.

Even who were jealous, who are going to knock you down. But I have also sold a lot of things on eBay. I’m not like a regular eBay seller, but if I’ve gotten things again from Emmy gifting suites that I don’t want and they’re worth a lot of money, so I’ll put them on eBay. And I’m embarrassed to say I got something from buy nothing, a beautiful pair of Marc Jacobs shoes.

And they were too big for me. So I put them back on my thing because I was going to get them, but nobody wanted them while I put them up on eBay. And the next day they were bought for money. Yeah. That’s how I started with this entrepreneur stuff. I would buy and sell a lot of things on eBay.

I would sell my video games. And I don’t know. Maybe if you guys got kids up there, make a deal with them. If they sell it, do all the work, take all the fees, take it to the post office. Give them like half of the cut. Oh yeah. There are people who did that, I used to have a girl who just sold stuff on.

He ban, I would take our, all my. Because that was much easier and I didn’t have to spend the time doing it. Then there are shops that do it too, but they tend to take bigger commissions, but yeah, you can find a friend or someone that, that does it. That’s the easiest way.

Yeah. My wife likes to do that. She likes to waste her time doing this stuff. So sell stuff for her friends. And I think the deal that she has is she takes a 10% cut, but she sends up wasting so much time. Yeah. 10%. I’ll send my stuff to her. I know. Yeah. It drives me crazy. Absolutely crazy.

But cool. Last one here. Get furniture, household items for free. I think we talked about this, but any other. Sites to go to try. Oh yeah. I can tell you for medical procedures or for prescriptions I’ve found sometimes that has lower prices and in copay, and if you go to good rx.com, that’s a good place for checking how much prescriptions would cost at different.

Pharmacies in your neighborhood and sometimes it’s even lower than the pasta with your copays. The other thing is like I went to a periodontist, my dentist had been telling me for years, I needed to have a periodontist appointment and he wanted to do gum flap surgery, which would mean cutting the gums and then grafting from the top of my mouth.

And he said, Oh, it only cost $10,000. And I said, it’s $10,000 and cutting my time. And should I make an appointment? So I said give me some time. And I went home and I thought, what would the author of this book too? And so I went online and I looked for alternative procedures to go to flap surgery.

And I found that there was an alternative called LANAP and there was no cutting, no pain, no recovery. And it was about half the cost of the other. But I went further. I found the place that was about 30 miles away from LA, where I live and they was called millennium dental, and they actually trained dentist and periodontist all over the country to switch to this procedure.

So it wasn’t. Students, but it was actual dentists and periodontists. Who’d been in practice for 10 or 20 years. And this company, they were looking for volunteers. So I went there and I got the LANAP. I had no pain, no cutting, no grafting and no $10,000. I got it free. And I got a girlfriend of mine and for free plus, we got our cleanings free for the next year.

So sometimes if somebody gives you a high price, even if it’s a medical or dental procedure, or if you don’t want to do, you can actually negotiate with some doctors and say I don’t want to pay that to you have to be cheaper. Or sometimes you can offer to if they’re putting a video when their website, you can make a deal.

I’ll let you video me for whenever I’ve looked for alternatives because for instance, rhinoplasty is another one nose job can cost like from 15 to $20,000, but you can get a. 15 minute nose, job that has no pain, no recovery and no surgery. You come out looking better and it’s like a thousand instead of 20,000.

So there’s different ways you can find whether it’s an elective procedure or something like at my periodontist where they said, you must get this and they don’t tell you about the other thing, because they personally don’t do it. And take the difference and go blow it on something else. A Vegas, right? Another thing I was thinking of I, yeah, I had a rock stuck in my tire for the longest time. So I took it to Mercedes and they said I needed a new like wheel or something or new tire. And if they’re going to charge me like several hundred bucks and I was like, are you kidding me?

So I just went to Les Schwab. Down in the shady part of town and they fixed it for I called them and they’re like, Oh, it’s going to be like 29, 99. But of course, when I get down there, they see it’s a freaking Mercedes and they charged me like 60 bucks. But Hey, lot cheaper than buying a brand new tire.

That’s just ridiculous. But of course everything we’re saying here is a little, you don’t be a bonehead. Some of these things like meeting random people on Facebook marketplace be safe about it. Absolutely. Another thing that when things open back up again, I another thing I talk about in my book, one of my favorite tips used to be how you can get a vacation at a four star resort in Spain for six nights for free.

And people would say, how can you do that? And there’s actually a in town that if you’re a native English speaking person, they have four different resorts outside of Madrid and they will host you for six nights with all accommodations, all meals, activities, and why they want you. There is they have Spanish business, people who want to practice their conversational English.

And so the resort hosts. People, whether it’s from England or the United States or South Africa or Australia, but any English speaking people, and all you have to do is enjoy breakfast, lunch, and dinner and activities and pop. And people say, like I say I don’t speak Spanish. And the thing is you’re not allowed to speak Spanish.

She could only speak English. And I have a couple of friends who went and they said it was the best vacation it ever had in their lives. And some people loved it so much that we go back 15 times. So that’s another thing when things open up that I highly recommend. Yes, that’s on that one actually sounds pretty fun.

I do have an experience of my own going and do the Groupon China tour. Which I thought was a complete waste of time. I’ll never do again, but yeah, on Groupon, which also by the way, also does they fill seats at concerts. I’ve done that a bunch of times, but so Groupon has these like international tours and I don’t know if different countries are like this, but I know China’s like this, you go on there and it’s they even pay your airfare.

And it’s like a couple of thousand dollars, but it’s like a five or 10 day trip. It’s all meals, it’s five star hotels, but there’s always the catch. And the catch is that you’re pretty much captive to these like tour buses and then take you to a couple of these boring factory tours where you’re forced to buy stuff and you’re not forced to, but you’re just a time suck.

Thank you to the glass Floyd museum. They take you to the needlework museum. They take you to this clay museum to all, to like by seven years and you’re captive. So it was funny. There was like 20 people in the tour and there’s always four people or 20% of the group there.

they realize what’s happening. And they’re like, screw this. We’re out of here. This Texas, the hotel. We’ll figure it out, but yeah. Be aware of the the Groupon China tour. I use Groupon a lot for restaurants and also for my hair and stuff, but yeah. I still use it.

Now, when all the restaurants in LA are closed, even for outdoor dining, they were open for a while, but okay. Group bonds and use them for takeout now, but group bonds, I tell people don’t even buy the group regularly. Wait, so cause they always have sales for 20% off or 10% discount. So I wait.

So the sales and then I at discounts on my discounts and there’s also restaurants.com. That’s in, every year. City practically well, in the States, I don’t know whether it’s across the world, but there’s 18,000 restaurants where you can get restaurant Factom coupons. And so I use those too, but great restaurants I’ve used that before.

Like you said, you got to wait until the Groupon or the restaurant.com goes on sale, which happens. Most of the time, there’s always like a, I don’t know what it is. 35 or 50%. That’s the magic number, but yeah. Yeah. I wait for the restaurant coupons. Usually they’re like $10 for $25 certificate and they often go down to $5 or $4, but I’ll wait until they go down to $2 or $1 for $25 certificate.

And then I’ll on them at the restaurants that I like. So I’m getting a $25 certificate for a dollar. And then when you go, you have to spend 50. So you’re getting a, $50 meal for say 25, $26. So then it’s worth it. So I’ll one up you right there. You also run it through like Mr.

rebates.com or the Raku con. And they even will usually give you a 20% cash back on those. Coupons. So I’ve gotten it down to a dollar 40 cents for a $25 gift card. They pay you to go. I like it. I don’t do this anymore. Cause I think it starts to be a little waste of time and. Not all the restaurants are that great.

That’s why they’re on the damn thing in the first place. But yeah, like you would, I would buy them in like in 10 packs. You can buy them in five or 10 pounds. Here’s another thing too. There’s a couple of services. One is perfectly Frank and another one is I’m trying to remember the name of it, but they’ll actually pay you to go out to dinner or.

A restaurant club and what it is, you should have a mystery shopper. And I don’t do the mystery shopping thing where you have to go to a gas station or you have to go to target. But on the food ones, if you sign up for upscale restaurants, I have a girlfriend who’s been doing this for seven years and they’ll pay her to go to dinner at the peninsula hotel.

So they’ll pay for her dinner. And then she comes home and she goes out a questionnaire and then they’ll pay her like $60 or $200. Oh, she’s gotten to go to dinner with a friend at a big hotel or a fancy nightspot. So those are fun too. When things open up again, I got a question on that rush rushed on.com thing.

Like my big beef with that is you actually had to go sit down and dine in which now you’re cutting into my T I M E D. Now with the whole pandemic, they allow you to take out now. Yes. Oh, I’m on this. Yeah. I guess it depends where you live in LA everything is closed for any kind of indoor or outdoor dining.

And they want you to take out because the restaurants are failing now. So yeah. I’m using them for for take out. Yeah. And it helps them get their churn, to get people in and out buying stuff. Yeah. I use them all the time. The other thing I do is I go to happy hours.

Cause this is like Ruth, Chris. A lot of expensive restaurants in your neighborhood. If you go to there for dinner, you have two people. It’ll cost you a hundred bucks, but if you go for happy hour, you still get the ambience and the food. And some of them have really nice. Appetizers are like Ruth, Chris has steak sandwiches, burgers and fries, lobster tacos things that are substantial and you can get out of there for $25 instead of, a hundred dollars a person.

Cool. Cool. Yeah, once you drop you out so people can find you and also make sure folks did check out marlon’s book on Amazon, how to live with a millionaire when you’re a million short,

a millionaire.com. Oh, appreciate for coming on the podcast and like again, everybody be safe with this stuff. Don’t be a bonehead, but Yeah, hopefully you save some money and, take the money and put it right back into the economy somewhere else and have some fun. We’ll see you guys next time, but thanks so much

Coaching Call w/ W2 & Business Franchise Owner

https://youtu.be/WAbXXPmgumY

Hello, simple passive cashflow listeners. Today, we are going to be doing a coaching call with Ahmed. Who’s going to show us all about him building his portfolio, how you’ve been buying some rentals with some buddies of his and where he is going financially as he is right on the verge of financial independence.

But, thanks for joining us. Amen. Once you, give us a quick context on yourself. Thank you Elaine for having me. it’s a dream come true. I’ve been watching your podcast for a number of years now. my story is, I think it’s just a typical American story. I came here to go to school, an immigrant, now taking the next step of financial independence.

the funny thing is that, I, Came here in 89, graduated in 94, with accounting and moved away from accounting, from working in that industry for a year and a half. And ever since, I’m an it professional. met my wife, in Mankato, where I went to school, we just celebrated our 28 years of a partnership.

Being a father of a twin daughters. I spent my entire time, in Minnesota, I think as the saying goes, wherever the immigrant lens being, they tend to stick around. so the story that I like to tell is this to first and foremost, how I have embraced frugality, personal responsibilities in finance, as well as how I see real estate as an important vehicle to get to the next level.

Yeah, I definitely got a lot of first-generation wealth people listening to the podcast. what, first generation is, secondary industry generation. You’re born with it. but yeah, first-generation doesn’t necessarily mean immigrant, but it’s just the first generation where your net worth is over a million.

Yeah. I’m thinking, a lot of people, they get college degrees, but they’d never hit that threshold but, Yeah, a lot, very, financially minded frugal folks they pay for value. So you’re fitting right that moment. Like when did we first connect when a couple of years ago or something like that, I’ve done that, so I first bought my first rental property with a partner in 2015.

and I started listening to simple passive cashflow, About 2017 or so. And the reason you hit a chord with me is that because, I had some ideas, did not know what the concepts of fires and all of these things behind me, but at the same time though, just being a numbers guy, it never attached to me till you started, speaking about, passive income, what does that mean?

it’s not necessarily, that, I call self retirement too, that, you know what, just remove the dependency on paycheck. But at the same time though, it just does not happen. You have to work for it. And that’s something that I took up from your podcast and from your teaching.

Oh. So just to give people a quick rundown of the stats, you make a route 120 grand a year to day job, which is pretty typical for our listener base. Mostly six figures and above. let’s say accounting things. That’s a side hustle that I’m doing right now, late, and, not to digress, but, Graduating the County moved away.

my day job is it I’m a software quality assurance manager for a consultant company. I have had many different types of roles in it I’ve implemented large scale systems, mostly CRM set financials. And now I quote unquote, find bugs for a living.

But accounting is, when I started investing in real estate, one thing that I bring to my partnership is that, I say, for example, the bookkeeping, the accounting, skipping the numbers, dealing with the CPAs, stay ahead of that, the tax laws, and then, I started doing it a little bit commercially too, because, I was asked even know, so my business partner, who’s, one of my business partner, he’s a broker and he desperately needed some help with his books.

So now I do side hustles of some real estate bookkeeping, not to, limit myself, but not to stress myself also. Yeah, of course. You’d do a side hustle. That’s. I mean it’s either that or a what? Six grand a year buy a couple more rentals, At 3000 a piece, I’m sure you set to the nice thing about the side hustle is you can stuff different, deductions or expenses through there.

what kind of things do you buy and shelter under that thing? Mostly office expenses right now, so remember the chair that I’m sitting on needs to be replaced, mostly, the office expenses, I actually started out with, say for example, some of those, software programs that, I thought that, it’s going to help me grow.

and that’s what I started. And then I thought that, you know what, and then, the time that I spent for my partnerships to, because we pay for two of my partners, should we self-managed and we pay our partners to manage our properties. And that the same thing goes for me, I’m spending an inordinate amount of time, keeping the books, making sure that, our financials are up-to-date and our partners have at the true 360 degree view of it.

So I charged back to the partnership. But, the question that you’re asking me is that, what are the, some of the benefits right now? Mostly I will call it like, the, the soft expenses, which is in office supplies, softwares, conferences, by the way, just attended a real estate conferences or charging that on my side hustle.

We’ve got to get that to $6,000 a year down to zero. That’s the goal.

So the savings rate of 15%, I know this is coming from cause you’re coming. You’re like a refugee from the personal finance blogs, fear. They fixate on this 15%, which to me means nothing because I got guys making 600 grand a year, a million dollars a year fit a percentage. Isn’t that big. Tell me, how much money are you able to save either in stocks, mutual funds, real estate, anything every year, like what’s your net get is question.

You make a buck, 30 grand, you spend some money on vacation, some I-phones and some fun stuff. And then your daily expenses, how much do you have on a monthly basis or annual basis? Would you figure. if I look at the watermark, whether it changes or not. So say for example, that cash number that I’m showing you about 38,000, whether it’s staying static, because you have quote unquote, then that’s saving experience.

What you’re talking about is that, maybe, our savings doesn’t have to go into the cash. It’s always, should go back into investments. So yeah, include that. Include that. I got guys , still putting money in the 401k. I say, keep that, even though I say don’t do that. But just want to know what this is the question, what’s your velocity currently, right?

If are you able to save 30 grand a year or you have to save a hundred grand a year? I definitely can say that I’m saving between 25 to $30,000 a year. Okay. Okay. So where your income level is. I would have expected it to be a little bit higher. and I know you’re cheap.

I just know that about you.

Yeah. most of the guys is in my group or like at least 30 grand a year. And that includes some guys make it under, 80, 90,000 a year. Granted, there are single dudes, but you got a family, but. I would say people in your kind of, you’re more established. You’re not making big purchases.

They’re around 50 grand a year. you don’t have to answer it now, but maybe think there’s something that you’re spending your money on every year maybe private school education, or I dunno, there’s something going on, man. There’s a hole in your pocket. We’re at 10, 10 or 20 grand is going.

maybe your spouse is. Run it off to Nordstrom. You gonna send them the Macy’s but think, jot that one down as anything does the mine. And lane it’s a happy medium. if you remember, coming from the David and sees a piece of the world, which I’m going to cover a little bit later on too, I think that’s a phenomenal, kind of dementia , that I had embraced, but, being a free spirit and a nerd, obviously you can see, everybody can see that, being the nerd of the family and then the free spirit of, an artist wife, I think that’s a happy medium you’re right though.

my wife is. it’s weird, she is, financial frugal, what you call that wild spirit, so you’re right. Just being the families. We could do a lot better with the savings rate, but , it’s one of the inspiration that came from her is that, you know what, we can draw a happy medium.

We don’t go overboard on anything, but, quote unquote, let’s not go super cheap either, but it’s easy to say that, but. Yeah. My philosophy on the whole quality of life and spending is, get a few years, four to six years of years where you’re saving 30 to 50 grand in there.

But once you peak or that 50 grand, you have the ability to free spirit at that point and buy some nice stuff. And that’s what I’m cool with it at the end, but only if. The investments, the castles and investments is paying for crap like that. Got it. I feel like where you’re at maybe.

we’ll get going into that, but maybe it might happen. Tighten the belt for a couple years, get bumped that up, but then reap the rewards later. But, while you’re mentioning your spouse, what did they think of the whole? you’ve got a portfolio of over a dozen units.

What did they think of that stuff? What’s their overall. One of the conscious thing that I have tried to do, because this is real estate being, the saving grace for many families, but at the same time, the most litigation, industries. So I consciously, created a firewall for my families, not to be exposed to the real estate that much.

In fact, so remember I’m talking about, creating state, trust States and what have you trying to create those firewalls as much and not to have those decision-makings, the spouses might hear this complaint that, yeah, you guys are doing all of these things, but anytime, things go South.

we have to hear that, and that’s one of the complaint that my wife had to that, when things started going sour, then you start coming in and, the venting, they, my wife did not like the venting part, so I consciously, kept her away from this, we are all aligned on the end goals, but how we get there, she left it on me.

Does that make sense? I get it. just do it. I do. I never say any of the bad stuff that happens. Bring it upon yourself. If that, say that jokingly, maybe the problem is if they don’t see you putting in, you’re currently putting in 30 grand a year buying one unit a year, but what if they see.

You buying one and a half units or two units every year that saving an extra $30,000. So it gets you up to 50, 60,000 a year. What does that do to your bottom line that bumps your cashflow up 5,000, $6,000 a year, right? Do you think that they’re making that equation or that cost. Yeah, they’re not you’re right.

So keeping them encapsulated, of the problem. And the biggest thing that I started doing the financial piece of diversity a while back, and then I can move away from it is because, the conversation that should happen within a week, at least. with your spouse, especially having, stay at home, spouse that I have, because we have to, because of our daughters twins, we didn’t have any support structures around us.

So my wife actually had to stay at home, to raise our daughters, so that, but having that conversation, I think that tremendously helped once we got into a philosophy that, you know what, yeah, this is what we going to do and try to do a data verse, try to stay within our means, follow the envelope system and what have you.

Yeah. you’re driving the ship, but she got her in the bottom, like shoving coal into the furnace, just doing stuff. He doesn’t know. What does she care if you save an extra 15, 20 grand a year to buy a rental, I don’t see it, but that doesn’t mean that they need to be involved.

I just see it different. I see so many different arrangements of how people do things, but I don’t know if you want a different effect, right? You want to save a little bit more money to buy more rentals. You definitely have to do a different action. If not, you’re insane. It says Einstein.

One thing that I want to bring your attention to is that, based on, the circle that you, you associate with, that distribution number that I’m showing 8,400, that’s the first time I’ve taken a distribution this year, and my goal is, and I’ll cover that, that’s my financial goal is that, I want to see in a consistent distribution, out of all of my partnership on all of my assets.

What’s your thoughts on that? Yeah. I think that’s your problem. you segregate all this stuff and this distribution is where did you pull this? 8,400 bucks. It’s just what you felt comfortable with. No, it should be whatever that thing makes or doesn’t make.

That’s what comes into your personal life count every month, if you’re having this type of problem, right? You supposed to, I didn’t care do it however you want. But another framework I would recommend for you, and we’re not going to get too much into this, but. I would pick up the book profit first by Mike

He has this framework, about he has got these charts on here. Let me copy this over and I’ll put it into your thing right here. Do you have your mom on your podcast? Yeah, I think I did. But I just put it into the chart here. So it says okay, based on a certain revenue range, let’s just stick you in this column.

A this is how much you should be spending on profit owners, pay taxes, operations. what is your top line income about, let’s just say let’s backwards engineer it. So let’s say you’re making a hundred grand, right? You just save 15% for taxes, but the real estate is different.

You don’t pay taxes, but I always say do that first, but the whole premise is like the profit and owner’s pay. You need to be paying yourself these amounts and not just some random, Oh, I felt like paying myself 8,400 look, honey, we made 8,400. This is a way of forcing you. To take some profits off the table, because that’s the saddest thing in life.

These entrepreneurs, they build these businesses and put it, always put it back into research and development and operating expenses or marketing stuff. never take it out and their family just gets disenchanted by this whole thing, because this is black pit. So just take the look at these percentages and it’s not gospel, but

try and understand why the percentages are working that way. So owners pay that might be you putting into a bank account and eventually taking it out as 8,400 or whatever at the end of the year. But profit is something that’s consistent. Profit is something that they can see in their bank account and get on the team.

Who cares if you get another rental is what they say, who cares? What’s in it for me? you get 5%, right? Or imagine if you gave your kids one 10th of this right now, everybody’s on the team. Now. I’m not a big fan of this. Everybody, screaming up and seeing kumbaya, but this might work for you guys.

So just something I think about. but it might be another thing too, right? Like I know you went to Dave Ramsey, he brainwashed you guys with the whole debt stuff. How’s that going? you’ve got a lot of debt on these properties, as you can see, I documented that I actually moved away from his teaching.

Is that because, buying cash for property simply does not work, and so without that, and, say for example, leverage works. and I think he’s teaching, where I differed is that, quote unquote. let’s set aside, they ran this out. As soon as the origins of the world at the end of the day, don’t do stupid things.

I think that’s what they teach. But at the same time , in terms of, growing well, though, I feel like that, first teachers of how to be responsible and then, take on, leverage debt that makes sense, don’t buy, things that doesn’t, generate any income or they appreciate,

and I moved away from his teaching, but I still follow some of the principles, we still do, all the involved systems, trying to stay within. And the budgets, I try to make my disposable income as low as possible, and that’s something though. I know you have our strong feelings about it, and I’m seeing, the other way around too lane, just to digress, how moving money away from financial markets to, other avenues real estate is definitely one. So I have seen my network, switching from financial markets to real estate.

I think I have for the first time, but I think this year I went below 50% of my net worth. That’s more into real estate than, financial market. Yeah. And that was something else I caught on here. you’ve got a lot of money in the 401k and on these paper assets, that’s the trend, right?

Like you’re moving the needle more to real assets, which just happens over time. It took me a long time too, but that’s natural. but like your spouse, , it seems like they’re not entirely on board, but how did that whole discussion about that come around?

debt. Oh, concept. She was absolutely on board with me. In fact, my spouse was , wasn’t very happy when I, put that primary house for a mortgage, so I have a line of credit, hilar that I use it as a, to find that some of my investments, and then I thought that he didn’t want, why not, just lock the rate, because the rates are so low now, lock the rate, take a lower rates and let you know, but still, aggressively pay that off.

so she wasn’t, at all happy about that. the dad Evers lifestyle, she enjoys it. She doesn’t mind that at all because it does provide that financial peace. Okay. Cool. And then, as I said, I have consciously encapsulated her because if you see the numbers that you’re showing, lane for the real estate, over $4 million off, a real estate under ownership, the number that I’m not showing is the debt.

It’s about three plus millions, that we have, I think 2.8 is probably what the debt that we have. So as I am as a, as an investor, I’m personally guaranteeing that loan by the way, but we know that it’s coming, against the real estate.

So that’s one of the other reasons too, that, I am not preaching, that, In order for that, you should not, take on debts. if you don’t have to, I still say that, but I do see that, that could be utilized, judiciously, as long as you build that skill.

I agree. I agree. I get frustrated sometimes like that Dave Ramsey they affiliate really closely with the whole Jesus Christ and Bible stuff. Yeah. So they don’t follow it themselves. I have to tell you that, lane, at the end of the day, you have you own properties in the Southern part of the, the state.

it’s a lot better than I do. But, I live in the twin cities of Minnesota, you cannot buy a property cash. That’s just simply does not happen. It does not happen. And you don’t have to be real sick about it. I think one of the biggest, newer points is did these days is inflation is going to be coming.

not like in the next few years, but it’s coming without a doubt. The pale for Ella stimulus. this is the way to. So to lock in this great debt and just wait this out, because in the end, savers are going to be the people who get killed. People who put money under their bed or not doing anything with it right now and playing the waiting game.

They’re the ones who are going to be losing. but yeah, you got this nice little portfolio peer. I have the spreadsheet. and if you guys check these out on the YouTube channel, it’s, you kids can actually see the numbers, but. Talk us through how you started acquiring these properties up in Minnesota and North Carolina.

Because I think when we first chatted your artists set on buying properties near your local area, but how did this all come about, help the new guy getting started. Take us back to 2015, 16 when you picked up these first few. That’s perfect. I am the perfect story for why people should invest into real estate because I am that person in 2011 at the heart of the downturn, we have sold our property for a loss because I did not want to be a landlord, from that person, to in 2015 buying my first rental, property.

And the reason, I made that switch is because first and foremost, Lane. I think, I believe in , not believe people blindly, build a relationship. relationship has its ups and downs, so my business partner, then from that point onwards, my realtor, who had helped us, the property that we live in right now, It’s a rainbow that we rehabbed.

and we moved here because of the school district, and that, from that point onwards, he has almost become like a family members, but at the same time, he helped me acquire a property. We own it together for, that was the first property I bought.

And that’s the message that I wanted to get across that, what. all of us, we think that, if you don’t think that you have a shortcoming, you’re misjudging yourself, but at the same time, I also feel like that, we always undersell ourselves in terms of our skills, but I know what I’m capable of, what my strengths are.

So I have started equating relationship to partnership. So this entire, portfolio that you’re seeing, it’s built out of three partnerships. the first one is a real estate broker that, I had known for many years, he acquires the properties, she’s helped manage the properties, and the partnership pays for that.

and then I bring in different sets of skills. I keep the numbers and then, with this partnership, we are doing something very interesting, lane, being a realtor, as most of the time, the realtor’s mindset is that, keep that property and exit tree.

so we have spent a lot of money, as you said, put the money back into the business , to keep access, all of our properties, have , all of those things, are done. So it’s almost like owner’s exit ready. so the trend line for me is that, 2015 one property is 2016 two, but on average I’ve been acquiring two properties, every single year, even during the COVID I think we have, three acquisitions this year.

So on this first partnership, maybe walk us through each partnership. Do you guys put up the money separately? Who does the sweat equity? And then how did, how do you guys split the payouts is a the cap half, or how does, how do you work these deals? So what had happened is that, for the partnership based in Minnesota, and then I will also answer the question that, why did I end up, spread out, but for the partnership in Minnesota, what happens is that, yeah, it’s 50 50 partnership, but, I would say higher percentage of investment came from myself and my partner,

yeah, he does the sweat equity. and what happens is that, we can pull in a loan payback to me, we decide what’s a fair, loan paid back to me and we are carrying that. And then, we are working towards that, so essentially what happens is that even if we end up selling a property, which we have done, and we are converting from, single families to, we can moving into a town home, for us, less maintainers, but that’s a different story.

And we also can running our commercial loans to 30 or, papers to, that’s how the story. But, with this partnership, the way we build this up is that, majority of the, investment is coming from myself, my partner also put up cash, wherever it needed to, in fact, he floats all of our invoices for Tampax.

So what we ended up doing is that, we look at the cash contributions of each property, and then if you’re selling it first, what we do we take out is that, let’s pay back that capital off each partners. And then we split the appreciation. Okay. And so who’s putting in the debts. So like on the second property, actually, let me first mention this.

I like what you did than the first one. Like you just bought it yourself, Because you don’t know what you don’t know. So before you start jumping into bed with people you don’t know, or you sorta know it’s good to just do it at yourself. So you know that, Oh, the cap ex floating, that’s a pain in the butt or not a big deal.

And you know how much it’s worth. So I think that was a good move on your part. but yeah, so the first school around in the partnership, with the realtor who supposedly, I think he does more of the sweat equity, operation, and especially on the deal finding side on the large syndication deals, the way we break it down is like, One third is who brought the money.

One third is who found the deal. One third is operation, there’s all these small intangibles like on this deal whose debt this is a Fannie Mae, Freddie Mac loan. And who’s that name is it’s actually, all of these are LC back loans, so both the partners are liable for the loans.

Okay. why did you not go with putting all the loans in your name and getting a little bit better interest rate as a Fannie Mae Freddie Mac? What was the, you had to do that late when we first started, because, we did not have that, this, the story of, LCC and not having an income.

We had to do that. I think out of this portfolio, there are two loans that are our personal names. We actually have now started doing that. What you just said, which is that you’re putting the properties, taking out of the commercial loans for the 20 year amortization. Getting out of that and putting it into the cheaper money we started doing that.

That’s what I would do. And, just compensate yourself a little bit, admit that might be like worth five or 10% of the general partnership here. You’re saying that you are a hundred percent, So out of this entire portfolio. especially the ones in Minnesota, I think there are two properties still under the commercial loan, interest rate is decent, but as you said, with the 20 year MBA is just killing yourself.

Yeah, but you don’t really sucks about that commercial loan. what’s the term length, what’s the term on the loan? five years. Five years. Yeah. Yeah, dude, that sucks. get out of that. that’s a dangerous loan go. No less than seven years. Yeah, we are. You are right though. We are right on the cusp of, twos.

That’s going to probably readjust, but, we will, as I said, this year we are doing two things, at least on the properties in Minnesota, we are getting away from single families. We are looking at a little bit higher value, added, townhomes where the rents are actually higher, lane.

So we are converting our single families to townhomes and a second part, even with the HOA. By the way, with the HOA. And the second part is that we are taking the 20 year notes to a 30 year notes. Okay. I would say get those commercial notes down to get the term lengths up, just do Fannie Mae, Freddie Mac, and put it in one of your guys’ names and work it out.

Maybe you get one, maybe he gets one, you split it that way. So you’re not splitting hairs and 55% here, 45% to that guy, right? yeah, I get all those commercial loans. and whatever you don’t talk to Lenny brokers. Those guys are. Stupid. they’re gonna want you to do it all in one loan or like cross-collateralized and put multiple of these in one.

Don’t do that. that’s what they love that because it’s a large loan and they can pick up their origination fees. But the problem with that is , if you wanted to get rid of one of the properties, you can’t, you block the whole loan. So you’re right. Chris driving crazy. You’re trolling all over the place and Facebook groups and whatnot.

Don’t mind. I want to take this chance to answer one of your questions that you had asked me earlier, which is that, Y move away from the local market to outside markets, lane. So for me, the biggest, driving force was entry points. What I was noticing is that, how much more can my money buy?

And that’s what I was seeing, especially with small multiplexes. I remember I went through the life cycles of, I think you probably have talked about at knowledge, see about, the real estate investors starting out visiting your family’s portfolios and get into small multiplexes and then, midsize multiplexes and then, obviously larger multi-plex.

So I’m on that small multiplexes right now. Multi-families. And what I saw is that, my money was not buying enough in the twin cities market. So that’s why he started branching now. Yeah. So I would probably not recommend doing what you’re doing. I think you’re okay.

Cause you know how to do this, but most people do not have the ability to do what you’re doing. Correct. I would not recommend if you’re listening, doing this, because now when you’re going over five units, you’re getting crappy commercial loans. You’re not getting Fannie Mae Freddie Mac it’d be course debt.

would you have to go to million dollar loan sizes or more? You’re not getting the economies of scales that you are with a hundred unit where you get a property manager who sits at your building and a guy driving around in a golf cart, fixing out work orders. All this stuff is still third party.

Really super expensive repairs. and then the biggest issue is now you’re going to different places, you got different partners and you just a Russian roulette in a way which of those guys are going to screw you over. this stuff works when it works. I would say whatever you do either got to stay safe, small with the four units and under, or just go LP syndication and go big.

But you’re obviously picking this road, you’re the bunker, right? Which I think it’s fine. you’re an outlier again. If you guys want to read more into this, go to simple passive castle.com/syndication, which is this indication guide and , it’s a huge article, go command F or whatever, and search for mom and pop investor.

And there’s a myriad of reasons why you don’t want to do it. Almond is doing right here. But, but yeah, what’s next? where are you going? Are you going to keep doing this or is this worth it like the reason I need to, See this thing through a little bit longer is, this model, because, by the way, I’m also investing into syndication, I was just going to amplify what they, you said, the learning curve to get this thing to manage and then, develop this partnerships across state lines, it’s not for everyone. In fact, 90% of the investors probably should not be doing that. It’s only because I think, either you or somebody else said that. It’s all about, even if it’s indication, it’s all about relationship, you should know the syndicator that you’re trusting with.

And then, most of the time I think there are, people, repeatedly invest with the same set of indicators because they believe they build that relationship. one thing that I wanted to point out is that, lane, just to answer your questions is I’m just using a very simple formula that, each of my units needs to provide me at least a hundred dollars a month.

so if my, goal is to reach that $5,500, how do I get there fast? So now I’m super concentrating on that North Carolina partnership because we are buying, smaller multi-families, but you are right though. You pointed out a few things, which is that, just by doing this, Kind of a small scale.

We are never getting the economics of scale. I think that’s so important. And that’s one of the areas that I’m looking into that, what are the things that we can do at that small volume? We probably would never be able to do that, but it’s one of five points that you brought up that, as a mom and pop investors, if we think small like this, we would never get the small, economic social scale.

And then also. let me dig a little bit and get people confused a little bit. So how did you find that North Carolina operator, the person that worked what was your due diligence process and why did you work with them? family members, , so this is a partnership that I built in each of the trial areas.

So it’s been a family member, who’s a partner and then, he brought in two other people that I did not know a single thing about them. You’re right. Yeah. it’s, again, it’s a crapshoot, right? It’s almost like a throwing a dirt, obviously worked out because now, second years of existence, we went from one to 10 units and it’s working out and in terms of, everything, we match, but it was pure luck though.

You’re a hundred percent. I think the way he did it was good. that’s better than going on bigger pockets or working with a fortune builder partner education and another, an expert. Next question here. How did you guys structure it? Did you guys have some kind of partnership document written out, outline few things that could go wrong and how you would remediate that?

And is it within an LLC or something it’s with an LLC is an operating document. But I think what you pointed out it’s something that our sec lawyer has been asking for as well, what is the succession plan? we don’t have that and we need to work on that.

no, it’s fine. I think it’s fine. Here’s my thought process. Like you don’t really need, even if you have really good documents, it doesn’t matter if people aren’t on the up and up. Yeah. You could. As long as the people they act in good faith and they’re good business people, if you don’t really need any documents, technically in my opinion.

But, another reason why, I don’t like doing this stuff is, I don’t know, like working with people who have a net worth of under 2 million, because, what’s, these properties worth 40, 50, a hundred grand. if a $10,000 repair goes around and somebody has a tough time, they can just steal 10 grand.

Cause that’s a lot of money to them. But if a guy is worth $2 million net worth. They’re not gonna screw people over 10 grand, not even a question. Yeah. It wouldn’t have been on my register. but I don’t know that may not be a good, ask your partner how much your net worth is because you never know, but that’s just a thought process I have.

That’s why I’ll never do a private money lending to a house flipper who drives around a truck. I’m not saying that’s bad, but Hey, not with my money. Look, I’m going to be very discriminatory with my money and kind of create rules around certain things like that. It’s my money. I’m the investor. I call the shots.

But, okay. I think you have fun with us, and that’s why I think. Keep doing it personally for you. So you weren’t able to scale up I’m hoping to pick your brain on a few of the topics, lane. I never did what you did, right? Like I never went to the five to 50 unit.

I saw the issues and complications at. But I never went to the depth you did. I never really did it. It was all intellectual and thought process for me. Oh, I don’t want to do that. I’m just going to go to the bigger stuff. No, but you are right though, because you constantly have talked about your turnkeys, in, in Birmingham.

And you said that, one camp X will wipe off all of the games I’ve seen that, and one of the things that I put down on my observations that most of the real estate investors do not understand that they are not making money. Yeah. I’m with you on that one, that, lane, the biggest challenge for most of the real estate investors is that, they are so much into the weeds because, they have to be in the weeds because, they are trying to sell of the properties, the market is not there.

They did not buy the property smart. So I taught you, people should take a big long at heart. real estate is a fantastic, vehicle to get you to a promise land, if you do not pay attention, if you’re not aware, it’s very easy to get derailed.

And this is where I open arms, welcome you to syndications because now, the ups and downs and real estate. And. And you’re totally encapsulated. Yeah. Yeah. can’t tell you how many accredited investors who don’t have a freaking clue. I never owned a rectal ask. why did distributions get delayed?

it’s we had a pandemic grow, people weren’t moving out people because this claimant as much as you want to, but still people will have that certain expectations. Yeah. I dunno part of it is education part of it. people’s true colors. When it come out.

And we’re a relationship business, and that’s how use 50 get yourself removed from the investor list, but you get it right. I think that’s why it’s nice working with folks like yourself because you want a reasonable excuse or justification for things and everything is reasonable.

we’re not making this stuff up. And you understand it. You understand how it feels. And what was the bottom line every month? That’s what I look at. What was the bottom line? Oh, we only made $15,000 this month. Normally we should be around 30 to 40, okay, bad month.

Let’s try the next month. And you as a rental property owner know that shoot HVAC might not five grand. Now I’m down for that. Is this.

I deal with numbers late. What you’re saying is the music into my ears is exactly right. That majority of the times I looked at the curve at the end of the five-year Mark in my partnerships in Minneapolis, I looked at, how much money we have made. Versus how much money we actually had to put back, it’s not easy.

so the question that I have for you was that, laying, you are probably, you made that journey, remember now, you have moved away from your full-time job, but do you have an accountability partner? I have used them in the past, but it’s far to find people who is willing to.

Kind of jump on a call with you on a routine basis. the mere fact that you’re asking this question is probably telling me that you’re the, probably the one who, gets ghosted by us accountability partner. That’s the hardest thing. And I think the, also we used to do this in the investor club where I would connect people with accountability partners.

I don’t know if you remember this, but these guys, we do it in January and we’ll probably do it again at this next mastermind coming up the bubble one. we’ll sign accountability partners for those who are willing. But then one mistake I saw was like, people are like, Oh, we’re gonna, we’re in.

Do a call every two weeks. dude, man, that’s just going to blow up in your face and that’s not sustainable. Maybe make it on like once every quarter, every three months, like that’s just my recommendation from best practices. but I pay for. A coach. they not really, not too much about business.

They’re just an accountability partner. that’s something I’ve heard from a lot of people in my sphere. It’s yeah, man, I just pay a few thousand dollars to have somebody call me up. It might be us. Right when I’m just sitting here in my chair, not really making any progress. I’m just talking about doing the things and then the accountability partner or not the partner, they’re not partners.

They’re our accountability coach that you paid money to. They’re the ones being like, Hey Ahmed, you’ve been doing the same thing, but less six times we’ve talked. I try to talk to them two to three weeks. Try not make it too. I got one for my wife too. But I think her coaches taking for a ride there, they’re like doing a call every week.

I’m like, I guess got to pay for it, but the way I see it, it might be a waste of money, but I don’t know. It’s well worth it. I think, a few thousand dollars for a year for that type of stuff. I think that’s nothing. I looked at your investment sense. You always talk about that, the investment that has, before, that allows you actually to get to the next level, that how much you have spent on your education and mentorship.

I think that’s an eye-opener for me, especially. Yeah, the money, I think, if you just want accountability, just go get a coach. That’s cheap. That’s like under five grand for the year. Okay. But you pay the money for the connections that you would not have otherwise.

one of the common questions that you always ask on your podcast is that, you know what, of any guesses that, where are the ad in terms of how much passive income they’re generating. So this BNC is together lane. I just wanted your thoughts how do I make sure that, I can retire.

I have a soft goal of doing this at age 55, which is three and a half years from now. How can I make sure that, I’m on a solid path, my friendship, final salary that I am, but I just don’t feel it. And the second part is that, you are living that life now that, you do not have a W2 jobs.

what are some of the thoughts that you had? how to handle that? Yeah. that’s you got this nice spreadsheets, but the one thing that doesn’t tell me is the bottom line. The goal is cashflow. How much are these things freaking making, man, like you get all this other stuff for now numbers.

I haven’t, right now it’s at 3,500 3,500. Yeah. And you’ve got about when I calculated your equity based on your partnership share you have six, a little 610,000. So if you’re telling me you make 3,500 a month. So let’s just call it 40 grand a year 40 grand divided by 605 equity is 6.6%, bro.

Yeah, it’s not that great. I’m looking@thisblockfi.com thing, and you can put your money in stable coin and get 8%. that’s just kicking it. But yeah. Granted, you don’t get the tax benefits, but you’re spending a lot of time and energy on this stuff and that’s correct.

That’s exactly correct. You’re not putting , an amount of time and energy and then, the depression lets you go. Yeah. So here’s I think where you have to think, you have to like, do the mat, add that other extra line on your spreadsheet with return on equity percentage and your equity and how much you’re making.

And then also, going back to your original, your side gig, right? Like at the end of the day, you have to ask yourself, what is your highest and best use, Maybe it’s, I don’t know. I get the feeling that you’re at a dead end job already. And you’re like, whatever, but maybe you can expand this thing, right?

Maybe you can five X that in the next couple of years, do your accounting side gig and that’s likely where your highest and best use instead of screwing around with these little North Carolina properties and just go passive. I think that’s, I don’t know your situation entirely, but I’m guessing that’s probably the highest and best use for your time.

Just like a dentist or doctors, just going back to work. Sorry, buddy. You may not like it, but that’s just, it’s Tom Brady to skull spin the football. That’s all. You’re good at man. Just keep doing that while you still can. You’re echoing my, one of my business partners to comments, the same conversation that I had with him.

Yeah. He actually said the same thing that, when you have to look at, what’s the highest ROI in terms of your time. Yeah. And I know what, which way this direction is going. I would start to put these. Properties on Roofstock if you want to my guy, I can connect, give you a warm connection, but I would play some on Roofstock while they have of tenants in place.

So you don’t ruin the income stream. And I would say start the conversation with your partners on being like, all right. Let’s force straight a little bit. Maybe you would like to own these properties outright. Perfect. You get to hone down and this is where you can be strategic and be like, all right, maybe you can dump the capital gain on them where they own it.

And they just give you cash. Now. I don’t know if that’s kosher tax-wise but. we’ve been doing a part a little bit of that already, because you know that, the partnership in twin cities, we have, we used to have 10 units. We are down to eight. We are going to get down to seven.

The way we did it we each took one property, remember it comes with all the other things, the County gizmos, the property distributions and what have you. But yeah, we are doing a little bit part of that, lane. and you said that, that conversation was only forced because, my partner, he was overstretched.

And he said that, he wanted his, kind of portfolio to be a lot more. So it’s almost, the same conversation gets held by multiple people. Yeah, most people want these properties paid off and most people want properties that are, they can feel it, touch it in a local area. So I’m sure you can find another sucker to take these off your hands or maybe bring them in as a partner first and then giving them the taxable gain.

But at the same time though, what you’re saying is that you want, Le B blot lens, the OSHA B, is that a lot more, less hands-on and that look at more, through the passive, syndication opportunities, right? Yeah. And this is going to take a long time, right? Like I had 11 rental properties and I sold.

it’s seven of them in 2018, two of them in 2019. And it got still two of these things that I’ve been trying to sell for over a year. that’s, it just takes a while, your destiny is shaped in your decisions, but I think you’ve made the decision. I don’t know if you made the decision. I know you definitely made the decision that to sell some of these, but overall, I think you need to make that decision.

Are you going to go all in on this accounting thing? are you, maybe we’ll get to this last question. Are you there? Are you at escape velocity? How can I tell that? I asked you your net worth, right? Yeah. I think you we figured it was somewhere around 1.4, 1.5.

Correct. which shouldn’t be the case. She should know that’s the score and we should know what the score is at all times. I think the problem is you got all this like money. That’s like not doing anything right now. It’s in stocks, checkbook, IRA, all this type of stuff. self-managed texts.

this is all I don’t like these checkbook IRA or self-directed Roth IRA is at all. you want the tax benefits today? Get it out of that stuff. Invested cash. Especially if you’re younger, which you are, I think that’s classic limiting belief, right? Oh, I’m too old. That’s playing that’s for old people.

what are you like? 41. Kidding me, man. not old. Yeah. I think what is retirement age? 65 or something? It is. I think only if you’re ordering 65, then the self-managed tax event accounts makes sense Roth and all that stuff. Or you make a whole boat load of money. You don’t know where to put it, but every situation is different, but, yeah, you gotta pull the Goldie man.

You gotta get the stuff working, either buy more rentals or syndications, or this is the problem. You’re fighting with one arm tied behind your back. You got 500 K of equity working, but you got another 500 K just sitting here doing nothing.

So now let’s see, I like to use is you’re trying to fight a war here. You get half of your soldiers back at the barracks, smoking weed and taking naps.

you got half on the million dollars fighting on the front lines and freaking Minnesota, North Carolina, Nebraska. Doing kamikaze runs for you. You got Bobby A. Little bit more than a half? Not doing Jack, not doing anything. So I’m not saying that these guys need to go on the front lines, buying some properties and winsome Salem’s James toddler, but get ’em get on making something.

Not saying you have to put it in a syndication, but like maybe, I dunno, throw him an HB or throw them in like infinite banking, get them going, get five or 10% of this stuff. That’s, what’s hurting you, but once you get, let’s say you only have half a million dollars in the game right now.

And even at best half a million dollars at 10% cash flow. That’s. 50 grand a year. That’s nothing. You got to get these guys in the game. So at 10% you can be at a hundred grand a year. And at that point you’re at zero gravity, you’ve got that escape philosophy and you’re at critical mass. So you’re there.

I think you just have to move things around , but then it comes down to your goals. At your current spend level, is this what you want that you, I think you narrowed my problems. They’ve been very well because that’s what it is that my current spend level can I achieve? what I’m saying that I should be achieving in 55.

Yeah. And this is where your means might expand to you have to go at this harder or at their current. Are you going to be able to send your kids to college or is that a thing with you guys or. Do you have a thing with us? we have, which account is applied 29 plans, but, I stopped investing into it.

our goal is, to make sure that, they have enough money for the first two weeks. Yeah. Okay. Are you on track to hit those goals? Yeah. Okay. cool. yeah, if you’re at your current spend level, you’ve got that passive passively. But you don’t, you got to get the other stuff working a little bit, but you’re there essentially.

the reason I asked that question is have you have the, for some people listening, they may like, Oh shoot, I don’t have that money as fat save. okay buddy, you’re going to have to go with some North Carolina, whatever, like I have to do more stuff. But it seems like you’re there.

If that’s truly the case, of course you should probably sit and ponder or how you’re going to piece this together, but for you at a million dollars in passive stuff, making 10%, and maybe it grows a little bit better than that. Yeah. You’re there. You just have to, I think your problem is you got to pull the GoLean and get these guys work in a little bit harder.

Not harder. Yeah. Yeah. You said you had a five 29. how much you got in that part of that testing advantage? So I have about right now, 58 between two daughters. Yeah. Get rid of that stuff, man. That’s five 20 nines are like college savings pants for the clueless investor cash. You’re better. You can run it a hundred percent and the person, because there’s no guarantee that my daughters, even though we want them to go to colleges, that they would do that.

Yeah. put it into if in a banking and invested for them.

yeah, that’s, I think a longer topics, I have to follow up on what you’re teaching about infinite banking. I have looked at the numbers, so I need to look at that a little bit more closely. Yeah, but it’s eat, you pay a lot in fees in the beginning, but you got money, not doing anything right here.

This is not doing anything. And that’s the thing. They take you to a breakeven and the infinite banking, because what, when I calculated it, I saw them that the breakeven is about five years. Yeah, we’re on there right now. But like it’s for people in your shoes for the better kind of hemming and hawing.

And for a few years, with over half a million dollars, not doing anything.

the inefficient liquidity people that you are. Inefficient you’re right. but, I did some of the stuff that you have been, preaching on, lane and thank you for opening my eyes, because this is the first year I’ve taken that Kobe distribution, so started pulling money out of, that I thought that was never, untouchable or not, but you’re right.

You just have to. be intentional about it, So did COVID distributions, moving, money from, 401k loans, they remember that they, Ramsey principles, you never do that, but I’ve done that and it’s working out fairly well for me, So those things, have opened up, you were able to help me open my eyes up. I’m just giving, entertainment here. you get it. Take these ideas, but I guess my goal is to dispel all the dogma and what people normally do because when people normally do get you what they get, but to put you in a group of other people that are doing the same thing, that are taking their 401ks out, at least makes you make a logical decision, Without prejudices in there. Okay, let me ask him this. And he’s been inspecting your time. I wanted to ask this question that I did not document here, but, I know the answer, but I’m hoping that, just by use, answering it, other people would learn, which is that, what do you recommend for, how do you choose, which vindication group you want to invest with?

What are the things that you decide before you invest with the syndication group? I’m a little bit, I can underwrite the deals so I can decode the code. So I just pull the rack rolls and P and L’s, and I run it through my analyzer and I see what it would pencil out as a, what I’m trying to look for is what kind of assumptions are these guys use?

Are they using like a zero? what is the reversion cap rate it, is it the same as their insurance? Cause that’s, I think that’s irresponsible. what is their rent increase per years at 3%? Like you said, that’s way too high. most newbie investors are looking at silly things like what is the GPLP split or where the acquisition fees.

That’s not the way to look at it guys. but assuming that most people don’t know how to do that. That’s again, where you look at, it’s good to invest in good areas path to progress in case the syndicator falls down that at least the, it was in a good area. but then again, it’s mostly just investing with, via proxy that you have people that you trust that are pure passive investors, that they can vouch that they invest with somebody and you might as well try it out yourself.

It’s like the whole, like you’re at an intersection, this car is making a left turn. I don’t look, I just make my right turn if they’re going right. If they get T-boned well, at least I won’t get the brunt of it, but I’m assuming that they’re checking. So if I have a built a relationship with another pure passive investor, not just, I had one beer with him, or I talked to him on the phone for 10, 20 minutes, but you build rapport over time.

You have a reciprocal relationship. And now you share what deals you’re going into, they’re going into what deals aren’t working, what deal is, and you can build that type of relationship where if they’re going to make that left turn, you’re going to follow them in a way that takes a long time to develop.

I never had that when I first started, but that’s really the gold standard. Just like how I asked you. Going back to, Oh, how did you find that guy in, Minnesota, right? The agent? I was listening for that, so I was like you said, I knew this guy for a couple of years, right? Like you had built up that relationship and rapport and you guys, you knew this wasn’t just a one guy dropped into the local Rio or put a few posts in bigger pockets or something random like that.

this guy was there. maybe you probably check for social proof on other people who’ve worked with him in the past. you did your due diligence, not like a bone head and most people. Do you do this, that really wrong way. And I think that’s shown why you’re able to navigate the successes really.

and the other part is being accountable to have accountability plan, accountability partners, but most people are not able to do that. Most people are unable to build relationships with people. the next generation, the gen Z or whatever, they’re going to be horrible right at this stuff.

Absolutely horrible. I tell you I’m losing the battle. , I do not see any interest on my daughters. I keep on trying to put them to just menial tasks or attack these, they’ll understand that it’s not, I don’t want them to grow up to be a trust fund babies, but they are pretty much growing up to be like that.

Yeah. that’s something I’ve tried to build on the curriculum. I don’t have kids, but I know on the upcoming mastermind, I asked people. Do they have older kids, younger kids, they don’t have kids. And then we’re going to split up people in different breakout rooms based on that topic and give them speaking sheets.

So you can speak to people that have younger kids like yourself. But my only take on that from my perspective is if you’re getting them menial tasks, that sucks. Why would I want to do menial tasks? give me. Show me the rewards, right? Just like the profit first thing, show me the, give me the, my 5%, even if it’s super small, I want some, give me some skin in the game.

Just like your spouse, middle skin in the game, you take some arbitrary, random $8,400 distribution. That means nothing to them. So you gotta figure out a way to get skin in the game or, but I don’t know how it works. some people swear by the game cashflow for kids. That might be a good one and then bribe them to play, whoever wins gets 10 bucks.

I don’t know.

Yeah. any last things or you think you’re good for now? I’m going for an hour. the other things that I’m going to follow up on the website I think you have talked about this a little bit, that, as you have moved into syndications and how you have learn how to operationalize, designate, how does the asset management work, but those are a lot deeper conversations that I just need to really read up on the materials that you have on your website.

Yeah. So by the time this goes out, I’m sure we’ll have the syndication eCourse done. Okay. let me check that out. Simple Pasa castle.com/courses. it’s done and it’s pretty good. Good. but yeah. thanks for doing this. And people will want to, you guys want to volunteer and put yourself out there.

Ahmed was like, yeah. Transparency. Put yourself up there. let me know, and we can do one of these for you, but hopefully, it was helpful for everybody. And thanks it for volunteering. You’re more than welcome. Thank you for having me on.

February 2021 Monthly Market Update

https://youtu.be/T-la1Hyc5Gk

This is the February, 2021 monthly market update where I go over the news and what’s been impacting the economy and our real estate investing Easter egg just to start out. So I put together all the recordings for the turnkey rentals. In a little turnkey download tab for we guys that’s all past the cashflow.com/turn key slash download.

The reason why I did this because a lot of the stuff I’ve forgotten yeah, we have the incubator group and we have the remote investor eCourse for new investors, but now I’m moving off to syndication deals and more accredited investing type stuff. So I thought I would try and archive this all in one place before I forget it all.

So if you guys are starting out low on the net worth side, check this out, but let’s get into it. If you guys don’t know who I am. My name is lane I still have my PT license. I don’t find it. Go back to the day job. So habit, because it took so long to get , if you guys want to check out my podcast, find it on iTunes, Google play, and also the YouTube channel.

All right. First thing here, we’ll start with a few teaching points for folks. First thing first, Biden’s in charge now and some of these tax changes might be coming down the pipeline. Currently corporate rates are at 21%. Biden’s looking to push set up with about 28%. They always talk about removing the 10 31 exchanges.

Frankly, I don’t really care, 10 31 exchanges. Doesn’t really impact us sophisticated investors who invest as private places in syndications and diversify. It only hurts the sucker buyers who are distressed buyers. I love 10 31 buyers because they’re distressed and they pay a hundred, five, 110% of asking price because they’re distressed.

They have to move. So you don’t want to be that person don’t say no to 10 31. And so two might be taken away. Which is fine. So other things that’s going on is, the other than the corporate tax rate possibly going up is he’s he looks looking like he’s going to whack those people over $400,000 AGI.

But for a lot of us, we’re able to use these passive losses and manipulate her AGI to fly under the radar with that type of stuff. You don’t know how to do that. Check on my tax guide. It’s simple. Pastor cashflow.com/tax. Okay. But yeah, a lot of cool charts here. I got this Ernst and young report that they put out.

You guys want to see some of the visuals here, check this out on the YouTube channel or I have all the investor letter, all the monthly reports on my website@simplepassivecashflow.com slash investor letter. And you guys, can I catch up on plus individual form? So other things he’s going to be looking to do is it’s going to create like a maiden America credit, 10% towards revitalizing and between manufacturing facilities and bringing production back to the U S I’ve definitely looking at some industrial vestments.

Dean stays, did diversify myself. I still like what they found. They still like mobile parks. And office space, but yeah, I’m always looking to diversify my personal portfolio. Nope,

of course. Biden is a big greeny guys. So you’re going to possibly see a lot of the solar credits maybe restore the full electronic vehicle tax credits for, in terms of housing, looking like that they might bring back the $50,000. First time home buyer credits. Everybody freaks out every time, something like that comes out saying that it’s actually going to impact a lot of things to me.

Like I stopped caring about all of that stuff. Cause it’s a drop in the bucket really. Yeah, some people might be buying a house and it might make things go up for a month or two, but even big $15,000 tax credits for first time home buyers. I just seen it, not really move the needle, the longterm.

But if you are like me and you rent, Hey, it might be a cool way to pick up $50,000. But if you’re buying a one to $3 million house, what’s 15 grand. That’s not much as far as childcare 8,000 tax credit for childcare, 5,000 tax credit for informal care givers aimed at elder care. Most of the stuff is still in the works and I’m sure it will change, but when we figure out what’s going on, I won’t let you guys know.

Of course we strategize best practices behind closed doors in the family office for Honda mastermind. If you don’t know what you’re missing, like you guys don’t want you to miss them, but it’s good stuff in there. All accredited investors and it is what exactly what it is. Mastermind of multiple family offices coming together that are under our umbrella.

So learn more, go@simplepasscashflow.com slash journey, but enough for the commercial. So more teaching points here. I was working through the development deal that we have going on in Huntsville, and we just signed our guaranteed maximum price contract on that. And for those of you guys still doing the birth strategy and flipping houses.

The way we did it. This is a $20 million project we’re working on. We’re trying to build 200 multi-family class a units. So workforce housing, class A’s kind of synonymous with new builds. We are put in place a guaranteed maximum price contract to shelter. The movement on the price where.

We’re also incentivizing the contractor to find us cost savings. So I pulled this out of the wash dot standards when I used to be an engineer up in the Washington state. So back then, or if you followed the wash dot standards, there’s a former like year. Saying that if the contractor finds a cheaper way to do it you could split the cost savings with them.

So it’s a way of incentivizing them to be a good steward of your money and find cheaper ways to do it in the private sector. We use a 25% profits split, but yeah, just a few ideas for you guys doing the birds. Take some tips from us. We want to be aligned with our contractors as much as possible, even though it’s very hard, if I’m going to do a construction project, it’s going to be on the bigger scale with these bigger, more professional construction firms.

If you guys hadn’t heard, the whole game stop thing, I’m not gonna beat this to death and show you’ve read about it in every single publication out there, but. If you haven’t, basically a bunch of folks on Reddit banded together and manipulate the price of gain stuff. And look, this is what I personally don’t have any paper assets.

This is what happens when a bunch of kids have access to an asset. And this is why I’m out of something that everybody has access to. There’s a reason why we’re like real estate. Not everybody can save up 20 grand to go buy a hundred thousand dollar house. Certainly not many people can go and buy a 10, $20 million apart.

There is limited access. There is a barrier to entry. That is why I like it. And I try not to do anything where I don’t have that unfair advantage. But if you guys are on the rollercoaster of stocks, mutual funds, that type of stuff. It took me a long time to get off of that bandwagon, but I’m so glad I did getting into real assets, especially that cash flow,

On this chart is 30 or 40 things that can go wrong. Ranging from weapons of mass destruction, price, instability, digital inequality. Some of these, I don’t even know what they are likely of a crisis, infectious diseases, climate action, failure, human, environmental damage, extreme weather in it.

Ranks everything on a chart, which if you guys go to the YouTube channel, you guys can take a look at what I’m looking at, but. Frank it on the chart between how much impactful it is to the global outlook and how likely it is. I’m sure we have about half of these on the private placement memorandum of in capital letters, but in this life, there’s risks, right?

You’re always going to have risks. But I think if you figure out ways to mitigate that risk is the important thing. And I think diversification is that will personally the way I do it. And going into things that perform well in recessions. Not hospitality, not restaurants, not those things like travel and leisure.

We touched upon this earlier, potentially impact the Biden’s 15,000 home buyer tax credit out of the list. This is the, probably the one that’s likely to go through is what I’m reading. It’d be cool. The residential real estate market is very hot right now because of the whole supply.

Not necessarily, I think there’s super high demand, but it’s more because of low supply, but maybe when this gets put into the money supplier or out there, people start to get, see this. Maybe it might take the real estate market even further.

John Burns we just had him on the podcast a month and a half ago, but he points out some cool things, developments that are happening migration from urban to suburban locations, people are seeking less density, larger floor plans or outdoor space. The low mortgage rates, relative affordability and shifting from working and schooling from home supports the suburban migration.

So examples of that are Bay area. Worker’s going to Stockton or Sacramento Seattle folks moving out to Tacoma or, like to the East sides. If you’re familiar with that site, Bellevue. Migration from gateway cities to secondary markets continues to be on the rise, such as Boise Spokane, Charleston, I don’t necessarily like those specific markets, but this is just what John Burns is saying as a general training.

And they advise to a lot of institutional investors. Another development is luxury and second home sales sword. In locations drivable from nature, coastal markets. So those people run away from those high price areas, such as Seattle and San Francisco, Los Angeles. You’re seeing new home sales peaking in places where people are trying to pick up that second home or that nice luxury home

just outside where the populated areas. So places like Naples Lake Nolan, I in Orlando salt Lake city and Las Vegas, or people in salt Lake city and Las Vegas are benefiting in daybreak. In Summerland. For example, you have home sales in the top 50 master plan communities. Now these are like the big suburban development.

So track homes. Largest year of your growth. You’ve seen in nearly a decade, we expect lower mortgage rates and buyers since urgency improved living situations. And John Burns will advise for a lot of those types of clients, the big home builders out there. They’ll use their data to make the right picks of where to go.

I’d be telling you this guys, because these are the smartest minds of the business and we are lucky we get insight in what their information is, so we can make decisions as a mama thought investor or a syndication, private placement investor, and follow where the smart money is going.

Not where the dumb money, which is typically in these primary markets, just the flipping houses locally, because they need to feel it, touch it and see it. New home prices Rose 8% year of year, according to the proprietor builder survey, I will bust the man in limited supply at driving prices up and up.

And they say that they do not see this forecast really changing any taxing, but are some of the barriers to be on the lookout for. Should they come to fruition? Finished inventory per community remains low are restricting sales at 28% other communities, nationally three align with production capacity and lots of supplies.

So they’re still moving forward, but it’s going a little bit slower. Finished lot supply runs, low builders are scrambling to find new land deals and develop additional lots after selling far ahead of expectations. Some of the new lots of pipe, won’t be ready until the second half of 2021, especially in markets with difficult approving processes, building product delays, and shortages, continue to play the builders such as appliances, or, we’ve been facing a little higher than normal lumber.

So we’ve been forced to buy lumber as we need it. Resale home supply remains though in most metros. So this is encouraging even more consumers to consider the homes.

Yeah. Joint center for housing studies of Harvard university. Real next findings. That’s definitely not an article that you would scroll through on social media feed here. So I didn’t put it on the Instagram channel. There’s no one who would read this, but I started reading this article and I was actually.

It’s actually pretty good. So they’re saying, during the downturns, the expectation is that the housing prices with the client not increase and certainly not increase as such extraordinary high rates as it has. Some of the causes is the tight labor markets. The unemployment rate after peaking at 4.7% in April, we came down to a still weak level and 6.7% in November.

So some room to improve, but. You got to remember before this whole thing was not an economic issue was a health crisis before the health crisis that threw everything out of whack. We were at a super low level, 3.5% unemployment high inflation that consumer price index has been running for years, but only up 1.1% in 12 months ending November, 2020.

Therefore strong housing prices increases are not simply reflection of inflation. They’re extraordinary high on real inflation adjusted basis. So what is it like four to $6 trillion when I dunno if that’s true, but it’s somewhere on that magnitude. At least two to $3 trillion got pumped into the money supply, which is likely causing the stocks to stay at these all time highs despite.

Going to 14.7% and not 6.7% unemployment. People will say likely what’s happening next is inflation. But if some of the readings that I’ve been doing through Richard Duncan and other economists out there, what they’re saying is a lot of the inflation is not tied to the money supply these days.

Essentially America can print whatever money they wanted and nip delay the interest rates and. Can do this all by not precinct inflation. Not yet. That is there was still a loose lending mortgage bubble. The average national lending of a single family of whole mortgage debt divided by the market value of the whole is still an extremely low at 34%.

There’s no mobile skies. People are paying down debt, especially in this 12 months. If you have a job consumer debt is on the decline. So it’s not a repeat of 2008, that’s for sure. It’s a couple with ultra low interest rates. The fed pushed down interest rates to very low levels in early 20, 20, and promises to keep it they’re ultra low for years to come.

As a result, Walter’s rates have dropped to a record low level of 2.7% 400 points bait lower than it was a year ago. Housing production shortfall prior to 2008, housing production was cyclical with volumes that went significantly above long-term growth, but that’s not happening today. And bill we’re building as we need it. It’s what’s going on. Fewer houses for sale. The pandemic has been noted for the bowl level of houses for sale. Like I said, Low supply potential sellers do not want to risk inflection with buyers, wandering through their houses for showing and open houses.

That’s what these guys say. I don’t know if I wiped by it. If, to me, , if you need a house, so you don’t care, if you were walking through it, you need it soul. But in recent years, as an evidence that the baby boomer generation supporting onto their homes longer than their predecessors, it’s creating that log jam.

There is no more fundamental economic rationale for prices to go up. Shift and family spending moving towards housing, everyone’s stuck in their house. And this is all the, see why people are rehabbing their houses, de Paul renovations. People are nesting. They’re less traveling.

They’re stuck in their house, putting more money and more percentage of their net worth into their house.

Maybe because people can’t have house guests now, maybe the whole keeping up with the Joneses isn’t around anymore, but there’s certainly data is showing that they’re certainly putting more money into their houses. A pandemic induce acceleration in the purchase of second homes. So this is a lot of the wealthier guys, they’re trying to. Buy other properties in other areas like we mentioned from the John Burns study this is a list of the top 50 master plan communities of John Burns. The takeaway here guys is you look at the list, , what are the States that keep coming off Florida? There’s one big one.

The Howard Hughes in Summerland, Las Vegas, Utah, South Carolina, Florida, Texas, Florida, Texas, Florida, Texas. I mean it’s and then Phoenix. There’s a couple in California. There’s one Houston, Texas, but it’s always the big three, right? Florida, Texas, South Carolina, that these are the places where people are moving.

Do you have notes? Top 10 emerging markets. If you are a multi-family general partner apartment buyer, please cover your ears because the top three are Huntsville, Alabama, Pensacola, Colorado Springs. These are the top emerging markets and these are the smaller markets. So these are not secondary markets like a Dallas or a Phoenix, Arizona.

Those are that. I thought the mid tier in terms of population we’re talking about is emerging markets. So a lot of these are considered tertiary markets. So again, in order it’s funds for Alabama, Pensacola, Florida, Colorado Springs, Omaha, Rena, Savannah, the points you Orleans, Birmingham and Knoxville, Tennessee.

Maybe that whole Huntsville, Alabama growth is spurred on, or actually this got released pretty recently in the last month that the secretary of the air force has selected Huntsville, Alabama as the preferred location to post the us based con. No, I don’t know what the heck this is. Back in the day, these guys would launch the V2 rockets.

I don’t know what they’re doing all in space, but whatever they’re doing, it probably costs a heck of a lot of money and it was all the smart people and everybody else and a lot of tech stuff. So that’s going on in Redstone arsenal in Huntsville, Alabama. Why I liked Huntsville a lot. Patty may release a press release economic growth, expected to accelerate as vaccine deployment quickens, and one brother approaches like a dog here, but they’re saying the U S economy is expected to grow 5.3% in 2021 is substantial improvement from the currently projected 2.7% contradiction in 2020.

So they’re saying it’s a green light. Commercial property executive also echoes that to their headline on January 11th was vaccine to trigger order three CRE recovery with an economic turnaround expected to begin around mid 20, 21. I gotta say, guys is what were you doing when that Bicheno was about to burst here’s fatty maids right out of the report.

That’s their GDP estimation. So exactly what they’re saying to hit 4.8% in Q2, 2021, 7.5% in Q3 and 6.1 in Q4, and then the kind of re level off in 2022. Yeah, a lot of action. Prices are still low for large commercial assets. And , I don’t think that . The prices are better RV.

No, that long a Freddie Mac C’s improving multi-family sector for 20 and 21. So this is Fannie Mae’s brother or sister or whatever you want to call it. The other pseudo government agency predicts rents to increase in most markets and originations to rebound after a very slow year, 2020 for obvious reasons.

So the U-Haul report has come out guys so that you have all report is something I really liked to follow, which you guys haven’t used. The U-Haul in awhile. You’re probably too rich to use it, right? The you haul is what all the blue collar folks or the broke college kids use to move themselves.

So this is a great indicator where the blue collar workforce are moving and the top. 12 migration growth is in this order, Tennessee, Texas, Florida, Ohio, Arizona, Colorado, Missouri, Nevada, North Carolina, Georgia, like in saws in Indiana. That border Texas is always on the top here. It’s always a dog.

Like a Texas has been like the top, like the last half a decade at least, but a surprise or one is Tennessee. And I think a lot, a few slides ago we had Knoxville. If you’ve been up there, so there’s something going on, but yeah, Tennessee used to be 12th on the list. Now it is shown to be number one of Florida was number one, but it’s down to number three in Texas is number two.

Like I said, I, Joe Biden just passed his $1.9 trillion relief bill. It’s like stimulus three or stimulus four. I don’t know which one we’re on now. But this one went into effect in right as he took office January 15. What is it? How does it impact multifamily investors will of that big bill? What it did was it extended the eviction and foreclosure memorandum student end of September 30 billion in emergency rental and utility assistance, $1,400 similar checks for qualifying adults.

Increasing federal weekly unemployment balance. And it’s two, $400 through the end of September at 5 billion in emergency assistance for people experiencing homelessness. And it’s, people are like, before this happened, they’re like, Oh my God what’s going to happen.

We’re going to fall off the cliff. People’s welfare checks are going to be running out. And this happens all the time. Guys. Like the government has shown us time and time again that they are just going to print money. that’s just what they do.

Some of the biggest surprises of 2020, where the rapid innovation safe in the housing industry via virtual tours, exploded private appointments, drove conversion rates to levels of federal stimulus. They’re saying that’s a big surprise to me. It was no surprise. People were repairing and remodeling their houses.

Single family home rental operators competing for land. A lot of these guys are building with the build to rent model which included amazing 8% in the South East surprise of rocks. And.

The midway point here, guys, just take a little break here. If you guys haven’t checked out our offerings of what we have in our ecosystem and simple passive castle.com. Check out the website and our two groups of masterminds are the family office. Ohana mastermind the phone for short, simple, passive casel.com/journey.

If you want to learn more. Probably in the next couple of months, we’ll kick off another key beta group. Now this is the group for newer investors under Porter, mainline under half a million dollar net worth. You’re trying to pick up that first single family home rental. And that’s what I did back was 10 years ago, myself.

And that’s what started this whole journey. If you want to learn more about the equity simple passive cashflow.com/incubator, check out the revolt investor. E-course. If you want to buy that, and when you sign up for the incubator, we can be funding for their purchase there. That way you can get a headstart on the e-course, the academic learning.

And then when the group starts up, you can jump right in everybody, but a little bit of a personal updates on my side, as I always try and break things up in the six eats. But Tony Robbins first growth. Like we had our virtual bubble. I thought it was awesome event. I was pooped after two full days of this.

We had about a hundred attendees virtually. It was a paid event, so it was awesome. People who were there were serious about connecting with others. It was not a death by group PowerPoint. It was, I would say 60 to 70% was breakout room times. Building organic relationships with other passive investors.

So I’m saying it was great for me because I’d never done one or I never hosted one. So it took me a few hours, but I really got the hang of the virtual breakout rooms. And I think a lot of people were able to navigate on their own. So that was cool contribution, new members that came to the bubble.

I didn’t realize how many people I guess they don’t listen to every single podcast or they read every single article I have@simpleclassiccastle.com, people say, Oh yeah, I’ve seen that infinite banking thing. I didn’t realize it was such a thing everybody’s doing it here. Or, yeah, let me see it was really cool to see people seeing the light on some of these wealth building strategies of the wealthy and how supple they are, but how counterintuitive they are to what you normally see out there.

Again, it seems like we’re heading off in life is to create a contribution to the world to create more of a cheek. I was watching a YouTube video today of what’s the difference between McDonald’s in and out burger. And McDonald’s when they conquered the world to do this big business.

Whereas in and out burger, they’ve kept things small and a boutique, and that’s my vision for simple passive cashflow. Hopefully you guys will stay a part of it. I do I get a little significance in my knife? We close this sucker. The Jacksonville’s tallest building in the bank of America tower.

I was built in 1990 and we just bought it as a group. It was a $75 million deal on an appraise the next week for like low eights. So we just made a few million, at least right there. And it’s a biggest and skylight, who doesn’t like to be the biggest. How do I get a little uncertainty in my life?

This has been the theme for the last six months, right? What is the world going to open up again? Then we just showed you like three articles of how everybody’s saying what are two quarter three, 20, 21 is going to go like gangbusters, but it hasn’t happened yet. We’re still waiting.

I’m seeing a lot of listings go up by brokers. A lot of these brokers are finally getting the sellers to say, yep, now’s the time let’s put it on the market. Let’s move it. We held back in 2020, but let’s get it moving. We know that the world’s not okay,

but we don’t know if we have another six months at prices at this level. Which is why we’re pretty active and which is why it was great that we were still active last year, because all these other guys who just sat with their bare hands under the butts, they don’t have the broker relationships at this point.

How do I get a little bit certainty into my life? We sold three deals in the past month. One in Atlanta that one we a hundred percent return investors’ money in two and a half years. Sorry guys. The first checks in that are going on, I think in a week two on that. And then we’ve got to wait for some, the final bills that come in, but we should get that out shortly.

Another class C in Huntsville. So 60% return for investors in three years, that’s like a 33% time. And then another one, a hundred percent return in three years on another Huntsville property. But yeah. It’s done certain how do we build a little loving connection in my life? In the bubble, it was a cool thing.

On Saturday night . Some people were invited their spouses and we have those spouses panel. My wife was there. A few other of the investor wives were there and we demo dive into, how do we work as a couple to make financial decisions. So I want the testaments to go.

And how do you run your family household? And the finding was everybody’s lives a little bit differently, you’re not going to have the ideal, we make decisions and tent and maybe that’s how it happens, but that doesn’t happen in my family. So it was great to get people together and it was really appreciate the spouses for coming out to that.

The spouses and somehow, or listing. Such good sports, listening to this book, passive cashflow podcasts, as they are driving around, or maybe reluctant Nicholas thing. Cause their spouse is making you listen to it. But let me know. I don’t like that’s shortage.

If you guys came to the Saturday night thing, I got shirts for you guys as a prize and thank you for coming. Cause not many spouses come most don’t so if you guys truthfully came, let me know. We’ll get you a shirt. Some fun things I bought because what’s money for it and to buy some cool stuff.

So I bought a workout bench and I bought this cool punching Bay, but not like the punching bag you fill with towels or sand that like ribs for hands up. This one’s like you put water in and, punching water is still can break your hand. But so there’s a column of air. And so it’s like just soft enough, you get that snap, but it’s just soft enough.

But, that can be found on Amazon. A couple of cool things I bought this month. Yeah, the, again, the Easter egg guys, if you guys want to download all the audio trainings for surrounding single-family home, remote rentals, turnkey rentals, hopefully you can use this to get ready for the incubator.

If you want to join us on that and get Rolodex access to the people that we work with, go to simple passive cashflow.com/turnkey dash. Download. Or share this with your friend, right? I think that’s the common theme I hear all the time is that my friend does it. I tell him about this all the time and I just waste my time.

In fact, that’s how I created this podcast. So my friends would ask me how I buy all these rental properties and they never do anything. Some of these guys still never done it. But, you can lead a horse to water, but you can’t force them to drink something like that.

But for those of you who jumped on live, thank you. If you guys have any questions on typing in the question, answer box, we’ll try and get to it, but I here’s the legal disclaimer and not, we will see you guys next month.

Do it Yourself Cost Segregations w/ Bill Smith

https://youtu.be/3gF1se6dpXk

Hey Simplepassivecashflow listeners. Today, we have Bill Smith here who is going to tell us all about the, do it yourself, cost segregation. For those of you guys who own single family homes or rental properties on your own, this can be a great cost effective means for doing a cost segregation, but hey Bill help me.

Let’s start at the top. No investor left behind. What is a cost segregation before we start drilling into this, do it yourself one. Okay. Okay. Essentially a cost segregation study, a real estate asset, mostly residential. What you’re dealing with is 27 and a half years or 39 years.

And so that’s your straight line depreciation. You can take that deduction every year to reduce your. Tax liability. What cost segregation does is we break down a building, essentially dissect it into its component parts, like when you were in eighth grade and you’re in biology and it does dissect a frog and take everything out.

all those parts, we put a different life to them. So those parts have a different life. And by short life, in those certain components that the IRS allows you get greater deductions upfront, realizing time, value of money. And then you can invest in more properties. So essentially that’s what we do is.

Dissect the building assign a new life. They call reclassify that property. And then you have higher deductions in earlier years. Very elegantly said. and if you guys want to learn more about cost segregation, go and check out podcasts. One 37. We did a little bit more deeper dive into the topic.

And I have a master cost degradation guide. If you are more of a reading and on your free time type of person, go to simple, passive casel.com/cost SEG. And while you’re on the page, you can also put it in your email and sign up for the newsletter to get the free Gootee there at, which is the K one tracker form or those syndication investors who have all these K ones all over the place and keeping track of your deductions, which.

You get those deductions by doing these cost segregations and on some of the larger deals, I can see like almost 50. It is 80% come back or what they invest as first year depreciation, but that’s all fine and dandy on the big deals, the syndication deals. But what we’re talking today is this cost effective.

Do it yourself. One that really makes it worthwhile to do on a smaller property. When I do it on my apartments, bill and I were looking at, This last deal and going to cost say get out. We don’t know the exact price yet, but it’s in the range of what, four to $6,000 typically on a large building and on a smaller building, it can be, you’ve got to send a guy out there and there’s a lot of modeling.

but there’s another way of doing it. And maybe bill, if you could go through that, what we’re talking about today, the paired down version. Yeah. 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, 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.

Maybe you’re focusing on to BiggerPockets about these solutions. We have tremendous supporters and people that have questioned it, mostly competitors. But we provide audit protection. So in the event, you’re audited, 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 the discount code that you’ve got through here, with lane, it is a $640. That’s a one to four. It doesn’t 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 and $1,390. That includes the auto 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 justify the full asset detail that you’d get from a cost segregation study for.

A future of 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 of value add? Or are you just looking for quick deductions?

And an answer here, if you’re a real estate professional or not, sometimes that makes a difference. how valuable are these, tax deductions to you for an option? 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 against civil pass, a castle.com/costs say, and then there’s the link there with the discount code SPC, but I really wanted to dive into. there’s some controversy with this stuff when they go that’s so let’s speak to it. That’s how that mature conversation about the risks of what they are and some of the cons.

Okay. So you’re asking him what the cons are. The cons are, you have to have a habitats liability and you have to be able to use the benefits. I talk to people to say, okay, I want to get this. I heard about this depreciation. I want a bonus. I want everything.

It’s like Laurie real estate professional will know you got a deputy job. Yes, you’re good. They don’t have that much income where potentially straight line can almost neutralize their needs. they have to actually need it and have the doctors because there are passive, of course, if it’s a business property, and not residential, or it’s Airbnb, I talked to a guy the other day, he was calling about this and he’s doing Airbnb.

He was like, put this on my schedule C and I’m like, yeah, you could, because it’s a 39 year commercial property based on your tax situation. that’s a discussion with your CPA. So he was looking at getting these deductions on a schedule C, which actually did make some sense, but again, we’re not CPAs.

We don’t give that advice. So I talked to folks what makes sense for you? What’s your tax need and is this the right thing to do? And anything from, $58,000 single family, we did the other day with a guy in upstate New York. Too, we just did a $120 million, building in Atlanta, which obviously is a full cost.

Yeah. I’ll, I’m not a CPA, but I’ll walk people through the quick math in their heads. So basically we all know that on the residential rental property. You’re able to deduct one 27, the building value every year. So on a hundred thousand dollars property, let’s just assume that half of that property value is the building value, but in a lot of places that we like to invest in the Midwest and South with lower land values, that probably two thirds of it, but let’s just go at $50,000 and a hundred thousand dollars purchase price.

Now you divide that by 27. so 50,000 divided by 27. You’re roughly talking about a couple of grand a year of deductions, which is great. But. When you do a cost segregation, the general rule, as you’re looking to bottom third of the building value in the first year via cost segregation using utilizing bonus depreciation.

So one third of that building value 50,000. So you’re looking at 18 something like that. Yeah. So 18 grand compared to about two grand. So maybe a little bit less than 10 times, the amount of deductions you withdraw out in that first year.

That is right. But I think in the market, you’re talking about, you’re giving a lot of value to land because you live in Hawaii and usually in a CPA like Brandon Hall, he always wants to use the assessed value. And if the assessed value is below 20%, you go with the assess value. If it’s not, you look at the 20% is the rule.

A lot of people use. I’ve got people to use 10%. On pretty aggressive properties. We have to be able to support that. So we’re going to, it’s a problem. We’re going to say, wait, we can’t justify that land value for you, but usually 20%. So that a hundred thousand deal you’re looking at 80,000, let’s say it was 20% just at a conservative number for a house that’s a $20,000 deduction in year one with bonus depreciation.

And that goes to the end of 2022, unless the new administration happens to change that. we don’t know if they would or can and. And how quick that would actually happen, but it won’t happen on January 23rd. We know that, I’ve got a couple more years thinking and employ this strategy, but it’s ultimately, 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, unexpensive 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 spend $5,000? What else am I getting in my costs say that somebody’s spending 600 bucks and one of these things is getting. Just sitting no eyes wide open what they’re going into.

what does 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. They’re usually between five and 10. So on an apartment complex, it might be 7,500, six, 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 pass at 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. and we give a, a hundred page report 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 wind in our 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, too. Oh, yeah. You always see a guy inside.

Yeah. You always seen 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 are going to air conservative.

So if we would have 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 input the date wrong. We fix it for them. We don’t charge. You’re afraid of that. you get a very streamlined report, but that’s all the CDA cares about CPR.

And 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 or for that, and then we also have a hybrid.

So one of the things to think about which I did, we did a million to house and sound like Hawaii, but that’d be a small house and wine LA this year we did a desktop. So a desktop takes our fully engineered study methodology. We use an engineer, but we don’t inspect. We ask the homeowner for answer a few questions.

Maybe get a few more pictures because the appraisals usually don’t have good property pictures. If they have a listing, like this was an Airbnb listing, then we had a lot of great pictures, had a swimming pool and tree. amazing grant, great landscape, good view. We got 52% of the property value for her.

She was blown away. She was like, wow, no, that’s not, doesn’t happen all the time. But that one, she’d been just a little bit under it, it might’ve got a DIY would not get near that because we just don’t know these specialty Palm trees and some nimble hot tub and the things that it says pool. So we’ll do the valuations, but it was, and that’s going to be a lower cost product about halfway between the DIY.

And the, full study, but so on a big house like that, they’re usually in the three to $4,000 range, but you’re going to get a full study, fully defendable, and you get a lot of detail. And that’s the thing, when you do one of these studies, if you were due to one, I would really suggest you guys get the audit protection.

So how does that kick in. I think there’s a pretty low chance of getting audited if you were. I dunno if like the percent chance, but I think it’s pretty dang low. It’s very low. of all the tax returns they get out at 4% of all returns get pulled for audit, which is a low number four or five.

and Cost segregation. Depreciation does not trigger on it. We’ve done over 15,000 studies. We’ve done plenty of audits, but relatively speaking, very few, but cost segregation has never been the trigger for the audit. People have got an audit for something else and when they get an audit. Of course, they look at everything.

They come in, they’re looking at everything. So now they’re going and depreciation schedules on the trip. So they say, okay, we need to check out why you did this or whatever. We send a report. If they asked a specific question, we answered their question. We showed the documentation to the report and the auditors happy.

Cause there’s somebody out of college, working for PWC or something and they go check and they’re off to the next thing. They got a list of 30 or 40 days or so. They’re happy. Our report is Bulletproof. And we’ve helped defend people that have been audited themselves. They got in trouble.

We’ve gone defended them. When guy was an honor, for two years, we did a quick study. We did a 27 page engineering letter, like a study summary. They send to the IRS in two days, the closest case. He had three more plants and was building a fifth plant. And so we, we got a client for life out of that.

Yeah, audits, but they’re rare. you want to anticipate the worst and expect the best. so walk me through this. Like I get the cost SEG, right? If I’m two bucks or so, you use my code to get a little off of that and maybe that helps pay for half of the audit protection and another a hundred bucks.

like a couple of years go by and the audit, maybe something else that gets flagged in my tax return. And he started digging into this. What do I do? so like, all right. I email bill and say, all right, man. the audit protection thing I bought, what’s the steps at that point?

You guys like, all right, man, we got it. We’re going to send the guy out and what’s the timeline and what are the steps? So what’s going to happen in the event. There’s an audit, your CPO, get involved, they’ll call us and say, Hey, we’ve got an audit and they’re looking at your depreciation schedule and say, yes, this one will not support an audit.

So we will then send somebody out onsite. Do the study, get it back and defend it. Usually have a specific question. So we might be able to defend it and just answer those specific questions. But if we need to go out and do a full study of it, and if we go to a full study, we’re going to find five, 10% plus more.

So you’re going to make sense. Oh, thanks for auditing because we actually have another $25,000 in appreciation. We didn’t claim. So we’re going to do a 31 15 change of accounting method. And where do you get this? And actually you owe us a refund. It may not go like that. that’d be a really happy ending, but we will find a lot more detail and we will get more benefit for you.

So there’s no chance there’s going to be any problems. Yeah. I think the do it yourself model is pretty dang close. Anyway. It might be so negligible. That it may not even matter, but I don’t know if that’s true if you do get audited and they do blow things up and you do find that your costs sake comes back even stronger, that you should go back and refile it seems like you should write, maybe just wait till the dust settles and refile next year.

So you don’t piss off that particular auditor. they forget that they’re not that’s that, but if you’ve done it in the year you purchased it. So you’ve already done component level depreciation. So actually you can’t go and do another 31 15 change of accounting method on the same thing you’ve already done.

I had someone ask me if they could reverse it because now they’re real estate professional. Two years later, go back to straight line for two years and then do it 31. I said, no, you can’t that’s well, there’s a lot of tax. I had to go to CPA on that one. And what if they didn’t pay for that insurance a hundred bucks.

Sharon’s how much legal fees or CPA fees does that take to defend something like that, just going out and doing a study or getting a study, you just have to go out and pay that $5,000 for a study, So you do have to defend that. So it’ll be certainly defendable. there’s no issue.

It’s not gonna be wrong. You just have to give them the detail. And that’s what the one big audit we did for that client. He did it. He was basically right. the CEO when they were doing, rubber for Nike and a whole bunch of stuff, he was basically right, but he didn’t have the backup details.

IRS wants you to detail out what you did. And that’s where our study with, our traditional study has straight-line components completely broken out. No one else does that. Unless you pay for an asset detail report. And they’ll charge again, another five or six grand on top of that original five or six brand they charged.

And so okay, now you’re looking at, 12 grand when we get an ELB for maybe seven for a thousand more that you’re looking at because we do the detail on everything. And what happens when you have that is you get dispositioned abandonment, which creates expense. So expense is great. So what you’re not going to get from, let’s say you’re doing roofs and things.

So you get a roof. We’ve put a value on it for if it’s about to be changed and we’re not going to high value with visit, it looks like it needs to be, it’s not a 30 year roof. We might have 20, $30,000 right on the roof, sat in an apartment complex. Like I’m one of the, one of your bigger projects or even a, on a house, houses that , we do with.

So what happens guys are during the shingles that rip off the shingles on the dumpster, they haul them away to landfill and then boom, throw them away and you put on a new $200,000 roof. On residential, you can’t expense it on commercial. You can expense it. Expenses are always better depreciation, but what happens?

You had $20,000 for the value on that roof. You just throw it away. And so at a, a 33% tax bracket that is $6,600, you just throw away. If you don’t have the asset detail and don’t know how to dispose of it or retire that asset that you’re replacing on a straight line. which is actually requirement from the IRS and their TPRS tangible property rates from 2014.

So that’s why asset detail’s important when you’re going to be doing a lot of repairs and maintenance, especially the straight line. It’s also important for the short life property. But now since a hundred percent bonus is in place, anything is five-year property carpeting things you’re replacing. Once you’ve done hardship bonus, it’s already written off.

You’ve disposed of it. It’s off your books. And so you just basically put in five years, so you spent 10,000 on flooring, you put 10,000 five-year life flooring, So when we help our clients identify, life components when they get replacements. Yeah. And the farm is pretty dummy-proof, it’s pretty easy.

Then you can do it in five minutes when I was looking at it. but yeah. So when people, they. Oh, you guys, this insurance, are you guys? Self-insuring it. It’s not through a third party. We’re self-insuring okay. Okay. So you guys, yeah. I’m sure you guys stand behind that percent chance of audit.

Cause your guys, the one, owning up if it’s the higher than that, right? that’s, that’s IO people always ask Oh, what do you think? The steel’s good look, man, I’m putting in my money. That’s what I think. And in this way, you guys are like, self-insuring these audits and not, you guys are going to do the work.

If we had charged with this kind of insurance policy that you guys have in place. so the odds are very low and we’re going to be Aaron conservative. So you’re not going to get maximum benefit. But you’re going to get good benefits and you’re going to get actually very similar to what some of our competitors do because they’re using modeling solution.

They’ve done a little bit engineering. We’ve actually done some tests and comparisons. We actually go up to 3 million now, on that net goes up, it’s not 640, that’s just for a house, but it goes up to close to 3000, I think for, a higher property. And we also, then we just, we do them on mobile home parks.

Those, we almost manually do our guide behind the curtain. He works on those, DIY is a great solution. It’s been really well adopted. A lot of folks in bigger pockets are big fans. A lot of folks are a lot of CPAs that use it for the smaller clients that have investors. I get a lot of calls and I get calls all the time.

They’ll go onto our website. Hey, I’ve got this house, let me know. And so we’ve got it. a number of big CPAs that also refer us when they have a smaller client. I talked to them and I set it up and they got 10 houses, or I get one, got a guy that had 10 houses. We’d get on Thursday. We connected and did 10 houses last Thursday.

All right. So yeah, to close things out, this, the why is this important guys, while you get the passive losses from these things, and you can offset your. Passive income. But if you’re super smart, like how we work our taxes, we played a real estate professional status. There’s a lot of nuances to that which we talk about every other week in the mastermind group, you guys can learn more about that.

It’s full passive cashflow.com/journey, but you can do tricks like this and. Now, I’m sure people who’ve listened to podcasts awhile. No, quite really don’t like 10 31 exchanges. I don’t know why anybody does them, who is a syndication investor, because, here’s my tax form that I have to display.

This is on the cost SEG website, simple passive cashflow.com/costs. So this year was I think, 2017 or 18 when I sold seven of my single valuable rentals. That previously done a 10 31 exchange. So I know all what they’re all about. I would never do one again and I don’t recommend it for most people, but I had a $200,000 capital gain see here on line 13, but because I was doing all these syndication deals doing cost segregations, like bill does, I was getting all these losses and they’re just piling up.

So when I had this big capital gain, I just brought it over here on line 17 to knock it right out and no gain. Without a 10 31 exchange. if you guys are thinking a 10 31 exchange, please don’t do it. Read this article, please don’t waste your money and don’t be a sucker or distressed. We call them the suckers, but they’re distressed buyers.

Whenever we want to sell an apartment, we jumped for joy when there’s a 10 31 buyer, because they are distressed buyers. But yeah. So coming to this page, that’s the main thing we’re talking about today is do it yourself cost SEG bill also does regular cost eggs. He’s looking at some of my apartments right now, to do it the, heavy duty way.

But this is the pair down for the show, slowly on 10 30 ones, because 10 30 ones. for some people generational wealth handing to the kids and what it was really designed for back in like the thirties or something like that. But people not using, Oh, I just want to get rid of taxes.

They use it for the wrong reason. And there’s so many, as you showed a great example, you don’t need a 10 31 necessarily to reduce your taxes. So I’m not a fan of 10 30 ones either. There’s a guy in those internet form that always gets into like an argument on the internet forums.

So to me and buck had 30 ones, he’s a 10 30 ones. He sells 10 31. So they always this is outrageous. You’re like 10 30 ones are like the best, no, man, like just looking at your small world, like this is the bigger picture. yeah, maybe in that world it is the best strategy that you know of, but I know something that’s a little bit better.

That’s right. And Joe Biden had said, he’s going to, the first thing he did was to go after his 10 30 ones is a low hanging fruit. And I don’t know if he’s at that’s just political talk or why, politicians say anything to get elected, but he said 10 30 ones showed more risks than bonus depreciation this point.

I will see what happens. I appreciate it. I don’t think people understand like that. You can depreciate an asset like with bonus depreciation. So therefore it’s out of the vernacular of the common American, like ABC can make an article on it basically. So yeah. let them have the tender one is what I say.

yeah. Yeah. Should we actually say, what bonus depreciation is done? And we define that. Did we. Yeah. Yeah, I think so. And, we also did mention a little bit that it is going to be going away in 2022, I think like stepping down 20% every year. So it’s not going away entirely, but.

Let’s cross our finger and it gets, renewed, right? Yeah, it will. What’s going to happen in 2022 and now it’s a hundred percent. And in 2023, it goes to 80% and then it goes to 60% and it goes to 40%. It’s been a hundred percent once before, and it’s been 50%, several times to infuse the economy, And so let’s say you bought a property in 2020. You didn’t realize cost you do it in 2021 and 2022. You will still, if we knew cross sag in the future and do what we call it, look back study. You still get bonus depreciation in the year that you paid for it. Bonus depreciation was in fact, or if you bought some in 2016, Wayne you’ve introduced me to a whole new world.

Oh my gosh. I bought this $5 million book apartment complex. And in 2016, we can do a site study on that. Now get that lost opportunity in 2016. 50% bonus depreciation. Of course the key thing is all a five-year we’re doing a catch-up you’re going to get it all in year one anyway. So what bonus appreciation is besides the word?

Everybody knows. Okay. We’ve heard about it. We’ve talked about 27 and a half year, 15 year, seven year. And five-year seven years. It’s your phone lines, but your short life, anything that has a shorter life than 20 years. You can depreciate in your one, it’s an election on your software, your CPA software, you still put in your five, seven and 15, but that bulk number, which might be 20 to 25 or 35 or 45%, I’ve seen some multi-families go to, you can take it all in year one doesn’t mean you get extra.

It just means you get it to take in year one. So you get that big deduction like you got in your properties. So you all set that big capital gain. So now you’re going to have to buy more properties next year to offset your other capital gains. So it just keeps going and you’re going to keep building your portfolio and your wealth.

So that’s how it keeps working. I call the, I call that the simple passive cashflow gravy train. Once you keep rolling and rolling. And people always ask don’t you sell your properties and you’ve got to pay back the depreciation and recapture and the capital gains, yeah.

But hopefully in the meantime, you went into dozens of deals and then you accumulated all these passive loss and then you take that money that you did make and put it into two or three new deals. Get the good towns rolling. That’s right. that’s the other thing that people that I don’t like as well as recapture all recapture and like 10 30 ones are also great recapture so bad.

Not necessarily because, one, we know tax rates are going up. And especially capital gains rates. So if capital gains rates go up to ordinary income, right then recapture, you can recapture anyway on your straight-line property. So do you want to, you’re going to pay taxes on that money either in the future or today just saw your tax rates are lower today.

So recapture is not such a bad thing. if you’re using the money, if you’re buying one house and you’re sitting on it for years and you might sell them, buy another house. Yeah. It’s probably makes sense. But if you’re investing. And turning your money. We have big clients. I won’t say the names, but they do it on everything.

They bought hotels in Hawaii, their bicep, all over the country building and buying they’re opportunistic. They might sell it, but they’re using that money. And the return they get on that money is greater than the tax rate they’re paying capita. So again, it could be bad. Again, it depends on your situation, but recapture and especially if.

Ordinary income tax rates or cap gains go to ordinary income tax rates. It makes it a moot point. You’re going to pay me now, pay me later. but the money in your pocket today, but yeah, there are, people are looking at this myopic thing. they’re looking at in one off deal one property and yeah, you do have to pay the depreciation recapture back, but I tell them like, Hey dude, look at the big picture.

You better be in like, 10 20 deals, right? Like in the next five, 10 years. Like they’re not only having one. you’re in multiple deals that are all kicking off these passive losses. So they all help, like in the big picture of things, right? Yeah. you’re going to pay tax on the recapture money anyway, so you can either pay him later in the future or pay them now.

And are not paying now and that’s what cost segregation as it differs, if it’s a tax deferral strategy. so anyway, what, what else? I love all your pictures there. All the parties you’ve had are all the groups, masterminds and networking groups. It’s fun out there in Hawaii.

Yeah. that’s where you get all these strategies, right? It’s not just like the neck when I read about this stuff in a book, because this stuff changes so quickly, right? Like bonus depreciation is a rather new thing, but that’s, I’m always preaching on develop your network.

Right? Most people, myself included when I started out, the best thing was like listening to the senior worker and to keep it going. That’s absolutely not the guy to listen to for financial advice. Yeah. Finding your peer group of pure passive upgraded investors doing this stuff. And that’s when you’re going to find these still chicks tips like this, just like the, do it yourself, cost sake, which, yeah, again, check it out.

As simple as a casper.com/cost say great for smaller property and mango airport folded on it. Cool bill. appreciate it. We’ll talk a little bit later about some loose. They, the larger ones, largest cost variations, but, yeah. Of you even want to get a hold of you? I’m gonna duct you’re contacting for, if not, they can reach out to me and I can do I’d have to you guys later on.

It’s pretty simple. It’s bill. At ELB cost seg.com. So ELB cost SEG is our firm cost segregation. It’s CLB consulting, but the website ELB costs. So just build an ELB cost side. And my phone number is four zero seven four seven five five four seven. It is my cell (480) 747-5547. Perfect. And, if you guys want to learn how to get these costs, surrogation bonus appreciation stuff.

That’s where the syndication deals come in, get yourself educated, pick up the new, go to simple paths to casel.com/syndication to check out the free guide there and see if the e-courses for you. But we’ll see everybody next time. Thanks very much.

The New Great Depression w/ James Rickards

https://youtu.be/4eVAskRng9Q

Today. We have James Rickards here, author of the new great depression. Check it out on Amazon. It should be out now, but let’s dig right into it because a lot of you guys know who James is and he writes a lot about, bat girl economies. And I thought bringing him on would be a great way to get a little bit of different contexts or different viewpoint on things too.

When you’re reading headlines, how do you take it in? But I guess James, let’s start off with you’re saying that we are in the new great depression. If you can explain that to us. Sure. It’s important to understand the distinction land between a recession and a depression.

A recession has a kind of a technical quantitative definition. It’s two consecutive quarters of declining GDP. There are a few other bells and whistles involving employment, so forth, but two consecutive quarters of declining GDP is a good rule of thumb. There’s actually a body that determines that it’s a national Bureau of economic research in Cambridge.

So the, they call the Boston strikes on recessions. They tell you when to start it when it ended, they said, pardon me? That this recession began in February, , 2020 . I think that’s correct. They haven’t said it’s over, but we can look at the data and. Pretty much see that it was over by probably July a third quarter growth was very strong, not strong enough to get us out of the hole we had fallen into, but but strong enough to end a recession.

Depression is different. Depressions are much more long lasting and people incorrectly assume that well, Jay, if a recession is two quarters of declining GDP depression is versus depression must be 10 quarters of declining GDP, like a really long recession. And that’s not the definition of depression.

Is you can have growth in a depression, but the point is it’s depressed growth. In other words, it’s growth below trend. For example, take the expansion from ten-year expansion from 2009 to 2019. The economy grew for 10 years. It was the longest expansion in us history, but it was also the weakest expansion in us history.

Average annual growth was about 2.2%. And all recessions are all recovery since 1980 average growth was 3.2%. So in other words, you were growing at a full percentage point less. Than the trend. And so it’s that below trend growth, depressed growth relative to trend. That’s what makes the depression.

That’s what we’re in now. So we had growth in the third quarter. That’s fine. We’ll probably have growth in the fourth quarter, although the data is that they keep revising the data downwards. So that target gets smaller for the full year to 2020. It’s going to be one of the Weakest year as largest negative growth, largest drop in GDP ever recorded.

The question is where are we now? My view is when a second technical recession in. The depression, by the way, this happened in the original great depression from 1929 to 1940, there were two technical recessions. There was a recession from 1929 to very severe. And then there was growth in 1933. It was one of the best years in the stock market.

34, 35, 36. We had growth. But the problem was we had dug such a deep hole. That even with growth, you weren’t back to where you were. So in 1934 or 35, unemployment fell from 25% to 14%. That’s sounds good. Except it’s still 14%. In other words, it’s still so extraordinarily high. And then 1937 38, we had a second recession and that’s what prolonged it and turned it into the great depression.

We’re going through something similar right now. I would we’re going to have a recession. In the first quarter of 2021, the quarter we’re in right now this will be what they call back-to-back recession. We had a recession and pretty much the first half of 2020 and a newest session beginning in the first quarter, at least of 2021.

All in the context of a great depression. So I focus on the depression aspect of it. You can have growth, you can have declining unemployment. There are certainly investment opportunities, but you’re looking at the press growth. You’re looking at prolonged period change behavior. We’re not going to get back to normal or there’s forget about normal.

We’ll live through it. We’ll cut out the other side, but things will be permanently different and that. Affects all kinds of expectations about growth asset allocation. And that’s really what I focus on in the book hit some of these COVID questions here at the end, cause that’s a little bit more of the micro cycle, right?

What we’re talking about today is more of a longer time horizon. So just to understand it correctly, from my perspective, you’re saying depression is you can still have growth. In a depression, but it’s just not at the pace of 3%, 4%, 5%. Correct is depressed growth in other words, right? One, 1%, 2% a year over five, 10 years, that can still be in the technical term, but depression is what I’m understanding.

That’s right. But again got to go back to the 2009, 2019 recovery ten-year recovery. And I said growth was 2.2% trend growth. Prior to that, going back to 1980, it was 3.2%. If you want to go back to the end of world war two, it was more like 4.2%. So that’s the kind of goes, so you say Jay, 2.2, 3.2 it’s only one percentage point.

What’s the big deal. No one percentage point apply to a $20 trillion economy. Compounded over 10 years, that has up to four to $5 trillion in lost wealth. In other words, yeah, we had an expansion, but it would have been $4 trillion greater. There would have been $4 trillion more wealth created. If we had been able to get back to 3.2% at which we did not The same thing is true today.

So yeah, you had growth. The numbers are in the first quarter, going back to 20, 21st, first quarter, GDP was down about 5%, second quarter down about 31%. And the third quarter, it was up about 33% and people go well, okay. We went down 31%. We went up 33%. Aren’t we back where we started? The answer is no, because the 33% was applied.

To a much lower base. In other words, if you start the year at a hundred, say 2019, is your baseline. Just call it a hundred percent of 2019. You go down 5%. And then you get down 32%. Now you’re around 67% of the old baseline. So even if you go up, let’s say 30% or a little higher at 32% that only gets you back to 87.

It gets you to 20 points. You get us back to 87. You’re still. 13 points below 13 percentage points below the old trend. And even if we have say 10% growth in the fourth quarter, which is some estimates show, okay, that gets you another eight points, but you’re still back to 95. In other words, you’re still.

Below 2019 baseline growth. We’re not going to get back to 2019 levels of growth until 2023 at the earliest. We’re not going to get back to 2019 employment levels in terms of total jobs until 2025 at the earliest that’s if nothing goes wrong in the meantime but I expect a number of things would go wrong, including a new recession right now.

Lot of people don’t know lane Yeah. They know that the stock market peaked in a night, October, 1929, and it crashed 89.2% by 1932. So almost 90%. That’s what a real market crash looks like. And then you ask people when did they get back to the 1929 level? When did it get back to the old high and people go, Oh, it must’ve been late thirties, early forties.

No, it was 1954 and it took 25 years. To get back to the old high, the Nikkei index in Japan hit 40,000 in 1989. It’s still not there. That’s, be able to talk about the last decade. We’ll try three last decades. Here we are 30, over 30 years later and it’s still nowhere near the old high.

And so that’s, I would say Japan has been in a depression the whole time. So that’s what depression is look like. They’re multi-year, they’re actually intergenerational You can have growth, but it’s not try and growth and it’s not enough to overcome the damage that was done. So we’re still way below, even with growth in the third and fourth quarters, we’re still well below the 2019 base.

And we’re not going to get to that level for several years, at least. So I think a lot of people understand this as, if you have your stocks drop a bunch where it’s going to almost have to come up twice as much to get to where you were, that phenomenon with numbers. And then you also mentioned something there too.

I think a lot of us, we understand what’s going on in Japan the last decades. Do they have negative GDP growth or is that kind of what you’re alluding towards that you. The U S is going towards, they have both I think the U S is going to resemble Japan. I think it has resembled Japan since 2007.

Going back before the global financial crisis, but I think that will continue. So just use Japan as example, I said during the 30 year depression, which they are, they’ve had a series of technical recessions. Now the recession might last. Six months, nine months a year, sometimes longer.

And then they have growth, but they never get back to trend growth. They never get back to the old level. That’s my point, not Japan’s nitrous in place. And I had a conversation with. He was known in 19 years and said, Mr. Yan, he was the assistant finance minister of Japan. But I was talking to him about this.

So we’re in Korea, about exactly what we’re discussing now, which is that Japan is growth has been very weak within and out of recession with a prolonged depression, but some growth along the way. And he said, yes, but you have to understand that the population is declining. So , if you calculate Japan on a per capita basis, They were actually doing better than on an absolute basis.

Absolute growth has been very weak, but if you spread that growth with a much smaller population, the per capita numbers, they’re actually significantly higher and which is true, just, fifth grade math

so where are you? Ended up as one person knows the whole country and he’s the richest guy in the world? That’s the deal ad absurdum of what he was describing. He was technically correct, but is that doesn’t work in the market? May our population is increasing we’re a country that likes growth.

We like both at the individual level and at the national level. So the idea that we could be satisfied with we growth in a declining population is just, it’s just not going to happen. Could be inappropriate long bout of weed growth. And then the policy question as well.

How do you change that? How do you get out of that? How do you deal with it? Yeah. So if you guys haven’t heard of this term of, changing worlds, demographics, aging, and birth I think that was in. Mr. Rickards last book. She just want to check that out, but definitely a big impact too.

So America’s population is growing. Barely, it’s funny looking at it as a great question. You look around the world. Japan’s population is declining. Russia is declining. Europe is declining. China is flat, but they’re approaching a level where they’re they’re not going to be at replacement levels.

Chris, this is the legacy of the one child policy, which is, we don’t have to do a deep dive on that, but that was one of the great plungers of history and aging rapidly. So Japan is flatline now until recently. United States population had been growing not at a high rate, but faster than all those other countries.

I mentioned mainly because of immigration , the natural birth rate of people in the country was not much better than Europe is at, or slightly below replacement level, but we had enough immigration to increase the population, but pardon me, partly because of policies during the Trump administration that immigration has been truncated.

So we may now be closer to a flat shall we say a population growth. And of course that, that affects output. There are lots of ways to think about GDP, the four part definition consumption investment government spending and net exports. But there’s an even simpler way to think about it.

It get to the same place, which is how many people were working and how productive are they? It’s working population times productivity. Productivity has been flattish, not very strong for reasons that are not entirely well understood, but it’s just the case. And population growth. Here, we’re talking about the labor force not the total number of people, from coast to coast, but how many people are in the labor force that labor force participation has been declining and fell very sharply during the technical recession that we had , in 2020.

If your population’s declining and your productivity is declining, your GDP is not growing very much at all. That is the situation we’re facing in the United States. And also like 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 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.

It 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, I’ve 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 economic growth

displayed right here. So that’s just simply Google and the labor force participation rate. Kept up by the U S Bureau of labor statistics. And is this pretty much it, this is what makes it hard, right? Cause everybody hears the news headlines and we know they’re always just trying to sell news headline, 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 they 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’re heard a lot of talk and 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 B 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 in may, in June, she had that bounce back. But then it flat lines and now it’s going down again. And 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 PhD to figure this out. You locked down half the economy, you’re going to get a reception. It’s as simple as that. 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 or 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 and I call it the S and P six, or maybe S and P seven, if you want to count Tesla now.

And that was the S and P 500 is the 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 a Dell 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’re flat to down. So we’ve bet our whole economy on 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, Oh, you’re a small business who cares? 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. If you crush it, you’re going to crush the economy.

I don’t care where Apple stock goes. It’ll, I’m not going to short it’ll probably go up more, but you’ve crushed and destroyed half the economy. And we’re doing it again with the new outbreak in COVID cases and fatalities, which are actually higher. Then they were less March and April when everyone thought the world was coming to an end, it’s worse right now with this second wave and it may get even worse because some of the new variants or strange, or whatever you want to call it, it’s not clear that they will be controlled by the vaccine, even if they are.

It’s not clear that the virus won’t mutate further. To escape the vaccine, they call it mutation as escape or the immunity escape. In other words, the idea is that the virus first of all, the scientists and I’m a sheriff is alive or not. I talked about that in the book.

It’s a it’s something, it’s got some RNA in it. It’s got a shell and it exists. We can see it under electron microscope. It’s not clear that it’s alive, but it’s really good. At replicating a cell by taking over cells and cell infection spread. Now, if you create antibodies to the virus, so you can get antibodies through a vaccine and you get hit with a virus, your body can fight back.

That’s what vaccines do. But so the virus think of the virus is trying to survive, right? It, all of a sudden more and more people have the vaccine more and more people have immunity get close to her, to immunity. The virus has nowhere to go. Every time it jumps from one body to the next, it runs into the antibodies.

Or as I say, the vaccine or whatever what does it do? It mutates in ways that do an Enron around those particular antibodies, you need new vaccines, new antibodies to stop it. This is just how viruses behave. It’s been true throughout history. It’s why you get these second waves or in our case remain.

B heading for third wave. So this pandemic is far from over, right? The vaccines. Great. That nice job. The pharmaceutical companies, the Trump administration did a great job of funding it and getting bureaucratic roadblocks out of the way. And it was in redundant record time for something of this magnitude.

That’s all to the good, but it doesn’t mean it’s over because we actually already, with this new UK, South African. Strain or variant could be saying the virus like Houdini escaping from the existing antibodies and finding new ways to infect people. So I want to go back to wrapping up the depression discussion.

So you, you mentioned productivity and the percent of. Labor force participation rate. What is the cause of that? I don’t know if you can speculate. Maybe it doesn’t matter, but what do you think is the general cause of that? Is this people lazier these days or, no, there are a couple of causes.

One is demographics, as I said, the populations aging and not expanding as fast as it used to so that some of it’s demographic people get to retirement as, no reason you can’t work it. 68 years old. Bernie Sanders has gone strong and he’s just getting close to 80. But the point being that is a time when people retire and check out, then the workforce has to decline and you don’t have as many younger people entering the workforce.

You have millennials now gen Z is coming along, but I’m not quite at that replacement level, but that’s not the only factor. The other factor is Because so many jobs have been moved to China and elsewhere, it’s not just China, but China’s probably the biggest culprit. Where are the the mining jobs, the steel jobs, the assembly line jobs, the skilled craftspeople, et cetera.

You don’t need a nothing wrong with college, but you don’t need a college degree to. To work on assembly line. You need some training and some smarts but yeah, jobs are largely gone. And what have we done replacing them with? We’re replacing them with, the gig economy, barista, Sarah, and by the way, there’s dignity in all work.

There’s not nothing, wrong with being a barista, good for you or an Uber driver, but those jobs don’t have the benefits and the pay scales and the security that we’re talking about. So a lot of people just drop out of the workforce. Drug use is going up. Obesity is a problem.

Diabetes is a problem. A lot of areas are just totally depressed. There aren’t any jobs around people don’t have the resources to necessarily pick up and move. I remember the 1980s, there was a migration from Detroit to Dallas. People just got to you all and moved to Texas and got another job. That’s harder to do now.

Not just the question, having the resources, there are plenty of jobs in Austin, but they’re the high-tech jobs. You do need an engineering degree or something like that to jump on board there. The quality of the jobs the lost opportunities, the depressed area, drug addiction, demographics, all these things come together and people just say, you know what?

I’ll sit on the couch in front of my wide screen TV and watch a football game and maybe. A relative as a job or someone else is paying the rent or you got some a government check or something, but it sounded long-term solution. And that’s part of what we’re going through.

I’ve heard that there is immigration still coming into America and that’s a lot of the blue collar workforce coming in. And a lot of markets there are new. Assembly, plants opening up, Mazda and Huntsville, stuff like that. But , you think it’s more of a paradigm between the coastal markets and more Southern Southeastern States, Florida?

Is there a different between, people moving out of California or no jobs in California. I know homelessness is really bad out there in Washington and a lot of other cities. Yeah. When you talk about immigration, that mean there are two completely different kinds of immigration going on.

There’s legal immigration with, an H1B visa or some other visas. And yeah, if you’re an engineer from India, come on and you’ll get hired, before you’re off the plane. But that’s okay. A limited number. And those aren’t really creating jobs for Americans or creating jobs for Indians who got an engineering degree, but that’s relatively small compared to the whole, most of the immigration is the opposite.

They’re, coming through the Mexican border. They’re pretty much impoverished. And then they’re not all Mexicans, by the way, they’re from Guatemala and El Salvador and Nicaragua, and actually all over the world. If you can get to Mexico, you can probably get into the United States.

Those people are not getting jobs in Huntsville. They’re they’re either dependent on the state or, yeah. Okay. Landscaping jobs waitress jobs maybe babysitters, et cetera. And again, let me be clear. There’s dignity in all work. So I’m not sure. Disparaging prefer illegal immigration.

I’m not disparaging people who do what they have to do for themselves or their families. And I’m not disparaging that type of work. What I’m saying is that those jobs do not have high salaries. They do not have benefits. They’re not going to lead to a particularly a high growth or higher consumption. Maybe in the next generation, that’s fine but not now.

So moving on to the COVID 19, which we know we’re moving into 2021. Where were we? About half time, first quarter. How do you see this playing out this year? The pandemic is getting worse and it may get worse than that depending on how the mutations go, which are unpredictable while lot mutations mean nothing.

They’re like right. A couple sequences change, but it didn’t really change the behavior of the virus and the vaccines still works, et cetera. Some mutations are favorable in the sense that the virus gets less contagious and eventually it can fail entirely. Those are possibilities. The history of pandemics is that in most cases, not all, but the most that the mutations actually get worse.

And then the classic example of that was the Spanish grow which by the way, lasted for three years and especially in 1918. Okay. But it was very bad, 19, 19 and continued into 1920. So that was really spread over three years. And the first way it was kind of March April 1918, which was horrific, but then it seemed to go away in the summer.

July, August, September were much better. It came back with a vengeance in October, 1918, and most of the fatalities were in that October, November, December. 1918 period, and then it faded again. They came back for third way of 19, 19, not as bad. So the, and that’s true of the Hong Kong flu in 1958. And the several other flu epidemics we’ve had recently.

And I COVID is not the flu. It’s a coronavirus, but some of the mutation dynamics are the same. So the point is the place you don’t know, nobody can sit here today and predict. What will happen exactly, but history and biology and virology suggest that, mutations that, as I say, do this immunity, escape that I talked about earlier can make it a lot worse and we seem to be seeing something like that right now.

But even if we don’t, even if. The vaccines where the mutations don’t get worse in this phase, over the course of 2021, it’s going to take a year by the way at best. It doesn’t mean the economy comes roaring back this whole notion. You’re Larry Kudlow and everyone else talking to me. And last April may is I guess, bad right now we’re locked down.

But we’re at least there’s pent up demand. Where the economy is going to come roaring back. As soon as we get through this and a lot of the policy decisions in March and April were based on the fact that we’d be able to remove the lockdowns by July and August. And they were expecting as they say, pent up demand, but that’s not true.

For example My wife and I, we were locked down kinda quarantined like everybody else in March, April and may. And usually we go out to dinner on a Friday night, but we didn’t because we were locked down. Eventually in June, the restaurants opened up and my wife and I went out to dinner.

We didn’t order 10 dinners. We ordered one. And as if we had skipped nine weeks of dinners and then went out, we ordered one dinner. Those other nine were permanently lost. That was not a temporary loss. That was not a timing difference. That was a permanently lost income permanently lost revenue, besides which when a restaurant let’s say had 20, the waiters and cooks and maitre D whatever, and you shut down.

And then you reopened in the summer. You didn’t hire back 20 hard back 10 maybe because capacity was reduced. People still weren’t going out, et cetera. That’s if you even reopened at all, a lot of small businesses did not reopen those. Those losses are permanent. Again, I’m not talking about Apple computer, I’m talking about.

The other half of the economy, which is small and medium size enterprises. And there’s data on all this. I’m not just speculating, and this is all in my book. By the way, in the book it’s got 200 end notes. So you might want to buy it just for the endnotes alone, because I I researched everything.

I read over a hundred peer reviewed papers, and I should more than that. And and all the citations are there. So if I’m saying something, I tell the reader, don’t argue with me, argue with scientists. Cause they’re all footnoted and you can look at the source papers, but we have data on all this.

Now we didn’t have as much data. In may and June when I was writing a lot of the book, but then the publication date got pushed back a little bit because of supply chain problems actually in the printing industry. But that gave me an opportunity to freshen it up in September, even as late as October.

So we have the most recent data and it shows what I’m describing. This is a mess migration. Out of New York, Los Angeles, San Francisco, Seattle, Chicago, Philadelphia, and Baltimore, and a few other cities. And the people are going to, Phoenix, Scottsdale, Miami, Nashville, Portsmouth, New Hampshire Boulder, Colorado, Denver, and a few other places.

And part of the reason is climate’s nice, but there are jobs there, but the taxes and the crime, you didn’t have the kind of rioting and destruction that you saw in New York and Seattle and Portland you don’t see that in Phoenix and some of the other cities I mentioned or Miami for that matter.

So whether it’s high crime, high taxes, density, functions, lost jobs or whatever, there is this massive migration, which is interesting because. In certain sectors, residential real estate is doing extremely well. Usually residential and commercial kind of move together based on interest rates and economic cycles.

They can go up together or down together in a recession. But right now there’s is a bifurcation residential real estate in the destination, cities and suburbs is going up very strongly. Commercial real estate is nowhere near the bottom. It’s just going to get worse. At least through 2021, probably even longer.

veteran, you mentioned in your past book the move towards the urban Exodus. I like that idea. That’s why we try and stay out of the city core out to the more suburbs investing in those multi-families out there. And I think, with the pandemic, I don’t know if you want to expand anymore, the big cities are mostly blue.

Mostly bird moving up to the red States any other kind of newer developments on that? That’s, I don’t really I don’t really get into politics. I say in the book, the virus is not a Republican or a Democrat. The virus just wants to kill you. So the virus, you need to understand epidemiology and virology and what’s going on, but yeah.

It by itself. It’s not political. Now you can politicize it if you want to. And a lot of people have but I would simply make the point that the reason commercial real estate is down. Across the board, even in stronger cities like Miami and Phoenix, that’s suffering. And clearly the exit of cities as I call them New York and Seattle and others is suffering even more.

A lot of that has to do some of it has to do with crime in the streets and the mayors and all that. Yes. But a lot of it has to do with the work from home environment, which very few large companies would have said. No two years ago, Hey, I think everybody can work from home. We’ll figure it out. We’ll get some software or whatever nobody was saying that but in the pandemic and the shutdown last March, they had no choice.

You had to work from home, because of the lockdown, it turns out it worked pretty well. There are pros and cons. We all get a little tired of living on zoom, a little bit. Personal contact is socializing is a good thing for your mental health, but that aside from a purely business point of view, the work from home model still works.

So if you had 10 floors of a, Midtown office building prime location in New York, And they’re vacant because everyone’s working from home. You’re not going to go back to 10 floors. You might go back to two floors. You might have a locker room. Not like we had in high school, but yeah, a nice facility with a lot of attractive office space where people can basically reserve the office.

So you’re working for him. You call up say, Hey, I need an office and a conference room two days next week. And you book it as yours. You come in, you open your locker, there’s a laptop and a sport coat and a tie or whatever you need. Nice scarf. And you go sit in the office and you do your business, and then you go back and work from home.

If that’s the environment where everyone, it’s not quite like a, it’s a kind of office Sharon, but it’s not, we works in the sense that everyone’s crammed in together. You could have a nice facility, but if it’s always temporary and always rolling over. You only need two floors instead of 10 floors.

So first of all, that’s slams the landlord, but the ripple effects are huge because it’s not just that it’s okay, what about commutation? What about public transportation, food trucks, restaurants, cleaning staff, maintenance, staff shopping is so all the things that surround people coming to cities and working in fairly dense environments, that’s down 80%.

And it’s not coming back because the model’s not coming back. We’re a long way from the bottom. I understand what the stock market’s doing. I would say again, B seven, not the S and P 500 and query whether that’s a bubble, I don’t want to go short Tesla right now. You probably get the getting run over by an 18 Wheeler, but I don’t want to buy it either because I do see it as a bubble, something that’s going to reverse fairly.

Severely wants this new stage, two of the recession sinks in, but again, commercial real estate and small and medium sized enterprises, including a lot of retail, which has half the economy have been slammed and are not coming back quickly. So our listener base is pretty smart.

They don’t just read general headlines on, people are moving out of the cities. They understand somewhere in the pilot, there is an emerging market out there that is doing better than the rest. Any particular emerging markets in America that you like or. Yeah. As I said, we already talked about residential real estate and the target cities, I would say again, Nashville, Miami, Phoenix, and others as attractive 10-year treasury notes are set to rally and we’re probably going to get to a negative yield to maturity and yield matured in a 10 year note is set by secondary market trading.

So that has nothing to do directly with the fed funds policy rate, which is Yeah, with basically an overnight rate. The fed can stay at zero, not go negative in terms of the policy rate, but there’s nothing stopping 10-year treasury notes from having a negative yield of maturity. All it takes is, secondary market trading.

I’m a seller, you’re a buyer. There’s this triple coupons associated with. The tenure note, the minute you pay me a price, that’s greater than the present value of the coupons and the principal. You’re going to have a negative yield to maturity. Now that’s okay. There might be a lot of reasons to do it. One might be that you think rates are going to go even lower so you can sell to somebody else at the higher price.

The other thing is, if you’re a foreign investor, you can lose on the dollar denominated, yield maturity, but make money on the currency. If the dollar gets stronger against the Euro. Based investor can make profits in Euro, even though the cashflow in dollars was negative because you have higher exchange rate.

So there’ll plenty of reasons for it. And we see this all over the world. Buns are a negative buns, Japanese government bonds, awesome. Bond markets have negative deals to mature. There’s no reason to doubt the treasury, no market can’t do the same thing. If it does, you’ll be looking at huge capital gains because right now the.

Yield to maturity is about 95 basis points. So if you go up from 95 basis points to, let’s say negative 50 basis points, that’s a huge capital gain because the interest rates go down prices go up. And so that’s how you You capture your profits. So that can be large. I like gold. For about 10% of your portfolio, there are opportunities and alternatives.

Again, we talked about residential real estate funds, but I think natural resources, water, agriculture, some other sectors will define this also room for a big allocation to cash. And people go, wait a second though. Why would I want cash? It has no yield a couple of things. Number one if you had deflation.

And I think right now, deflation is a greater danger than inflation. If you have deflation, even with zero return, your real return could be. 2%. It could be your best performing asset because in deflation prices are dropping. So you’re not getting returned a nominal return on your cash, that the cash is worth more because the price has dropped.

So there’s a real gain there. But number two and probably more importantly, cash has huge optionality. If you have cash. That’s the functional equivalent of not the money call option on every asset class in the world. And we’re going to need greater visibility and you need to be nimble to decide what to do.

So you can have some investments today, but if you go all in. You say why? No. I want to be all in residential real estate or all in some alternative funding, whatever it may be. And you find out six or eight months from now that OJ to places worse than I thought, maybe inflation’s worse. And I thought maybe this particular sector is not so hot.

It can be very expensive. If not impossible to get out of. Those asset classes. Try getting your money back from Henry Kravis ahead of schedule. It’s you know, good luck. So the point is the person with cash can be more nimble because as we get greater visibility, you have no impediments to the pivot.

You can pivot here or there, depending on where the opportunity lies. And that’s valuable. The most people, a lot of experts will say, you know what? The fed printing all this money. It’ll be leading towards inflation, right? $3 trillion, $4 trillion in the last few months. Pop the stock market. And that’s one of the ways it’s shown its ugly head, but you’re saying the complete opposite it’s deflation that’s coming.

Maybe why is the whole inflation story? Not true, first of all, it hasn’t been true for 13 years. Go back to 2009, between late 2008 and 2009, the federal reserve expanded its balance sheet from about $800 billion. Two something just under $4 trillion. So they increased it by the 300% and it was like, Oh my goodness, they’re printing all this money.

We’re going to get inflation. We never got inflation. We didn’t have inflation for 10 years. We still don’t. The money supply has nothing to do with inflation. Milton Friedman was wrong about that. The Austrian school was wrong about that. The Neo Keynesians are wrong about that. Inflation is not caused by money printing.

Inflation is caused by velocity of money and it was this, the turnover of money. So you can take the fed balance sheet to 7 trillion. My friend, Stephanie Kelton, she’s the big brand of modern monetary theory. They say, why can’t it be 10 trillion? The answer is, it could be 10 trillion, but it’s not necessarily inflationary unless you get the turnover.

So I’ll give you a simple example. Let’s say I go out to dinner and I tip the waiter and the waiter takes the tip money and takes a taxi or an Uber home, tips the driver. And then the driver takes the tip money and puts gas in his car. My $1 had velocity of three. It supported $3 of goods and services that, the restaurant tip the taxi tip and the guests.

But what if I stayed home? And watch TV. Then my money has philosophy of zero. I didn’t spend my money. There was no turnover and I remind people $7 trillion times zero. Is zero in others. If you don’t have velocity, I don’t care how much money you print. If you don’t have velocity, you don’t have an economy.

Velocity has been dropping for 22 years. It started to drop in 1998. It’s been coming down ever since our head larger spikes down and the 2008 global financial crisis and the 2020 pandemic collapse. the clear line has been going steeply down and it’s still going down.

So my point is, And we need inflation. Inflation is not good in some ways, but you can’t print your way out of a liquidity chap. You can’t borrow your way out of a debt trap. The only way to get out of it is with inflation.

And the only way to get inflation is to change the psychology because it’s not controlled by my supplies control by how people feel. And right now they’re. They’re savings. Savings rates are sky high is precautionary savings. People feel it, prices are going to get lower, so they defer consumption.

Now I’m talking about consumer price inflation, which is what the fed looks at and what’s policymakers. I got a few, if you think the stock market is a place, I can call it an asset bubble. Yeah. Stock prices are going up. That’s not inflation as. Economists and policymakers understand it.

Those are just asset bubbles and they are happening. So the money has to go somewhere. I’ve heard of people got these $1,200 checks last. Think around last June, may and June, they’re probably going to get another $600, in the next month or so. What are they doing with the money?

Some people were paying the bills, but a lot of people are investing in stocks. You’ve got all these newbies, they’re on Robin hood, their first time investors. They don’t really know what they’re doing, but they know that stocks only go up. They’re not spending the money they’re investing in the stock market.

They’re just in plating the bubble, not doing anything for the real economy, which would come from spending. And there’s something to be said for savings. But that’s what people are doing, the saving the money and investing the money. They’re not spending it. So the money printing doesn’t work.

Yeah, no, that makes total sense. The money’s out there, it’s just, the government needs have to try and find a way to incentivize throwing it into the real economy. Getting abundance mindset for consumers. That’s right. And there is a way to do it, which I talked about in the conclusion of the book.

Not to tease it, but yeah, it’s out there. What I tell people is that policymakers don’t. I understand that. So I explain it clearly. I give two historical examples, two different presidents, one Democrat, one Republican of the 20th century who pulled this off successfully. So it does work.

There is historical precedent for it. Central bankers have forgotten it if they ever knew, so they should read my book. If they want to know how to get in place and get out of the debt trap. But the point I make for the reader is even if the central banks don’t do it, even if the government doesn’t do it, you can’t, you can personally go on a gold standard one, a hard assets standard and and benefit personally, preserve wealth and make money.

Even if the government doesn’t find a right. So I guess the, I was going to ask you about the Biden camp or anything coming down the pipeline, but it may not matter, if they have another couple of rounds of stimulus checks, this money is just being diverted to the stock market. It’s just not getting to where it needs to go.

That’s exactly why I’m proud to say, I barely talk about politics at all in the book, but partly for the reason you mentioned, which is it doesn’t matter. Monetary policy doesn’t work because of declining velocity, fiscal policy deficit spending doesn’t work it because the debt to GDP ratio is so high that we’re through the looking glass that what people are doing now is they’re saying, look, I don’t know how it ends.

It could be inflation. It could be higher taxes. It could be a debt default. There could be a number of different scenarios, but they’re all bad. And so I’m just going to save more, spend less on a precautionary basis to get ready for that day. When other, inflation kicks in or I have to pay higher taxes or whatever.

, and that pressure by the way, is 90% debt to GDP. Right now, the debt to GDP has gone up from a hundred, 6% pre COVID to around a hundred. 30% today. So this is for the United States. The U S is now in the same league as a, Lebanon Greece, Italy there’s your club. So my point being we will have large deficits.

We will have more deficit spending. We will have more debit. It doesn’t work because we’re through the looking glass. We’re through that 9% critical threshold where now behavior changes and people don’t spend the money. So monetary policy doesn’t work because of philosophy and psychology fiscal policy doesn’t work.

Because debt to GDP ratio is too high and people are getting ready for bed ending. So it, Trump Biden administration, they’re going to pursue the same policies. You can print money, but that’s not stimulus. You can run deficits, but that’s not stainless. I always tell people stop calling it stimulus.

You can call it deficit spending. If you want, you can call it money printing if you want, but it’s not stimulus. It doesn’t stimulate anything. Yeah, no. Very interesting. For the guy under a few million dollars net worth, what would you be suggesting at this point for their portfolio?

Yeah I think I have about 30% cash, but sounds high to most people, but we already explained that I’d have 10% gold or gold mining shares. There’s room for a residential real estate. We talked about that you need the right fund manager but there’s a way to do that. Some for alternative investments, I’ve some money in some venture capital and startup type companies they’re risky, but they can be.

Very attractive, depending on the management again, and the business plan this one for listed equities, but pardon me, and have more than about, Oh, 20% or so in the stock market, people say to me, Jim, yeah, you’ve got 10% in gold. How can you sleep at night? And I go, you’re 90% in equities.

How can you use sleep at night? Because that’s really the risky asset class. Yeah. That’s something, I don’t have any paper assets personally, we’re always trying to move people to alternative assets. It’s either, do they take the money in their home equity or they take their money in their stock holdings or mutual funds?

And I’m like, I don’t know if it were me, I’d take it out of the stocks, but look, that’s just, who knows. but thanks James. For coming on. Folks get his book, the new great depression, winners and losers in a post pandemic world found on Amazon and yeah. Thanks for coming on.

Appreciate it. Thank you.

What is an Institutional Asset and Operator?

What is an Institutional Asset?

What is an Institutional Operator?

I am going to be doing a shorter podcast this week because I’ll be honest. I’m a little poop from this weekend. About eight hours a day of pure passive investor networking at the bubble. Thank you all for coming. We almost had a hundred folks join us in the plethora of breakout rooms. I think a lot of people made lifelong connections., this week cast, we’re going to be briefly going over. What is it? Institutional grade, they did investment and operator. Before we do that, I want just wanted to catch up people where we are in the economy.

And what are some of my opinions of things four. the fed almost $4 trillion Into the economy in the past six or seven months, you can bet that this is likely the reason why stocks are now at an all time high. Yeah. I don’t know if this is going to continue, but I do know that true wealth comes to those who create value.

And for those of you guys jumping into opportunities that do value, add. AKA rehab the property to create better living conditions for people who in turn pay more money for that product are the ones who are going to have sustainable longterm wealth. Those people who trade money, like you’ve got our Amazon business or eBay business where you just buy things low, sell high.

It’s just easy come easy go. And the same. About, buying crypto Bitcoin or just trading stocks. What value are you adding there? What value are you adding to society? But anyway, all this money is going into the system prop and stocks up. But what about inflation? Shouldn’t inflation come well, I was just watching some of Richard Duncan’s videos , who is an economist that I follow.

And if you guys want to get more information about Richard Dunkin and see the. Past podcasts. He was on go to simple, passive cashflow.com/dunkin. Check out his newsletter there too. I subscribed to it and while you’re there checking on all the other things on civil pass, a castle.com, but you can never checked it out and join our investor club@simplepassivecashflow.com slash investor.

Now what’s going on here? Why is the money supply growing by leaps and bounds yet? Inflation. It’s not happening. Part of this has to do with, we are not backed by gold anymore, and it is decoupled the correlation with modern money that’s out there and inflation.

It’s just another form of credit. And that is being created by the federal

and that’s why money’s still apply, but it doesn’t really matter. Although a lot of people say when is this going to end? This is all going to come down. People say that all the time, but a lot of these people are, what are they selling to you guys? What’s their product of the week.

There’s trying to sell to you gold, which is why they’re trying to claim the doom and gloom thing. Whereas I don’t know if the doom and gloom is going to happen, but I do know people need a place to live at the end of the day, especially. Good value rents between 700 and $1,200 a month.

What we call workforce housing? Richard Dunkin says that the credit supply is not what counts and he outlines four scenarios here. First snares were inflation. Interest rates remain low. This would probably be the best possible scenario for asset prices. And I think we know one thing. In all these scenarios that the government is going to be spending more money.

I mean Biden’s in there and he’s going to be putting more money into the system, which I ultimately think helps investors. Yeah.

Now the fed is likely to be putting more money into the system. This is going to keep things going, Richard Dunkin actually. He made a comment where he thinks that we are nowhere near the end of seeing the last, the stimulus. He says that you might even go two times. So what we see now from about 4 trillion to atrial and dollars.

So there are two that you talked about as higher inflation with higher interest rates. This would be the worst snare for asset prices. The economy would obviously get a boost from the increased government spending. But significantly higher interest rates would probably come. So those of you guys are watching interest rates on your primary residence should probably be wary of this possible scenario.

Gold is seen as a hedge against inflation, but significantly higher interest rates could actually cause the price of gold to fall. Scenario three. Is higher inflation without higher interest rates. I actually think this is where we are heading normally when inflation increases in interest rates move higher to however, as we sit before the fed is adopting a new thing called yield curve control, which is like quantitative easing where holds the interest rates at this unnatural level.

But it is the new natural. It’s whatever the fed desires, for instance, if they want it at 3%, they keep it at 3%, even though the inflation was at five or 6%.

So this new government spending would boost the economy and it would be combined with lots of quantitative easing or your curve control. And this would likely push asset prices up in this case. Sabers are the losers. If you got money in your cash, bonds, savings accounts, or maybe an equity that lazy equity in your homes or your rentals, you won’t be the loser.

And the last scenario is a short-term rise in inflation and interest rates followed by a subsequent client and vote.

either way. I think we’ve had several guests on even Jim Rickard, who you’re going to hear coming up in the coming weeks, but Richard Duncan, John Burns, they’re all pointing towards this bullish sign and we’ll see what happens if it comes great. Cap rates will fall. And our properties will increase in value, but if it doesn’t, Hey, we still cash all heads.

I’m going to be explaining what an institutional asset is. Now. Institutional asset is a little bit different than what we normally go after. When we’re looking for a 50 to 300 unit apartment complex and institutional asset is the higher grade than that. And certainly it’s bigger than your your single family, home, duplex, triplex, or quad.

The institutional asset normally is around, higher than five to $20 million in purchase price. And in these properties,

usually the largest buildings in the skyline, lower cap rates, somewhere in the two to under five cap rate land. And these are usually what the assets that large family offices, hedge funds. Insurance companies or any other institutional operator that is just trying to invest large sums of money. They’re not quite in it to make the best return, but they more want the reliability.

This is usually what is invested in large clumpy REITs. They’ll go after these markets, situational assets, because it’s a lot easier for them to manage them. Also. Outside of that, these things spike, you get the reliability. It is lower returns.

What is an institutional operator and institutional operator is an operator that manages apartments, mobile home parks, or office space or commercial veto ins is the operator. We’re talking about. , I consider myself more of a middle-market operator. Where we’ve been around, we’ve done deals. We went full cycle on some properties, but we haven’t been around for decades.

a lot of investors always ask I want to work with the operator that has been around since 2008, And I’ll be honest. especially in the apartment investing world, You’re not going to find them. I’ve tried to look for them. They’re not out there. Because they have been around since 2008, what they’ve been doing slowly is swimming upstream.

So they don’t work with small private equity guys. guys that are million dollars, a few million dollars net worth putting in 50 to $200,000 chunks there we’re swimming upstream. So they can eventually grow into large REITs so that they can extract more fees and better profits split for themselves.

So going back to ourselves. I’m the principal of the company, typically the one making management decisions, interacting with third party property managers, or maybe we have them in house. I don’t have, maybe, luckily one day we’ll have an investor relations staff, but we don’t have all these operational staff.

like a manager of operations, Texas director operations, Alabama, for example, I’m the guy. And I think that’s why a lot of people like investing, cause we’re not small, we’re not new, but we’re not also large. And, big and comfy, the reason why people like to work with middle-market operators and why I as LP, like to invest with middle-market operators, because when you start to go to the institutional operators, they charge very heavy fees, acquisition fees, and typically over.

Three to 4%, which is crazy to me. Remember, you have to add up all loan fees, guarantor fees, all these other fees, they’re all acquisition fees. They’re all just tricky ways to make you think that the acquisition fee is lower than it is. so in addition to the fees you also have where splits for passive investors and not necessarily saying that an 80 20 split is good or bad.

the operator’s going to take more as they become more online institutional and as their cost of capital gets cheaper from their perspective. So as an investor, you want to get a good blend of both, and especially when your network is lower than a few million dollars, you’ve got to grow your money.

You can’t just invest with institutional operators in my again, but. Institutional operators have been around the block, possibly five, 10, 15, 20 years in some cases. And they have large bloated staff, a lot of times, a lot of operators. And you’ll see a lot of these companies where they have to continually do deals just to get acquisition fees, just to get that three, 4% of big money to come into the office so they can pay their office staff and keep the lights on.

I don’t want to run a business like that, where I need to do deals just to do deals, just to pay my staff. But a lot of these companies have created this type of infrastructure where that’s, how they need to do it.

So some of my higher end clients, the guys that are over a few million dollars net worths, I may suggest to go into and work with self institutional operators in certain asset classes. But for, a lot of us that are under that, it may not make sense from a rewards perspective, which you definitely don’t want to be doing is working with a newbie operator.

And you guys know who I’m talking about. We talk about a lot of times, these are the guys who just created a podcast out of the blue cause everybody can name podcasts. He speaks, he just read a little script and in front of the microphone right here, And you got yourself a podcast and not, everybody’s like a syndication expert these days.

I’ll tell you creating a podcast. If you don’t do it efficiently, there’s no way in heck you can be the primary operator. It’s typically the guy on the blank is really the marketing side of the company. But what you’re trying to do is you’re trying to cut through the noise where the people who are actually doing the work and is this operator or that interacting with.

Are they truly more of an institutional operator or have they been around the block or are they complete newbie? tell, tells are guys still working their it job and they do this apartment investing on the side, but they have a great understanding of Upwork and Fiverr.

And how do you get a VA to do a nice little PDF pitch paycheck? And they have great presentation skills and they can put together a very, concise webinar. So don’t be fooled by all this. they could very well be very new just because they can put together a shiny presentation it doesn’t mean that they can operate or they have a track record.

I’m all for people going after their genes, but I don’t want to be putting in my 50 grand to be powering that I want to see people have to be at least in a few deals. Getting their track record going. And that’s why I prefer to work with more middle of the range operators. I’ve said that a lot of times before, the same reason why I don’t work with certain CPAs that charge our clients 10, 20, $30,000, even though they might be fine and they do a really good job.

I just don’t think it’s worth it at the same time. I won’t go to the low end and I won’t work with like H and R block or do triple tax. It’s just not good quality and you’re not getting all the deductions. I work with value operators and value vendors, and that’s just my brand. Is it a little bit more risky?

Yeah, but I think the risks outweigh the reward and you get the better returns in the middle, it’s very hard for passive investors to distinguish between complete newbies who are pretty nifty with making PDFs and presentations. From those operators who have been around the block a little bit.

that’s why I stopped going to real estate meetups and different conferences these days, because I’m in this business, honestly, Gator, I know all the little tricks and games they play. I know when they say something and it’s complete nonsense when they say it during a presentation, I make a list of these things and still I have a really hard time too.