Category: Podcast

January 2021 Monthly Market Update

https://youtu.be/adRXM-HItHE

All right. Hello everybody. This is January, 2021. We made it yay. 35 monthly market update. We’ll be talking about the 2020 statistics, how it was for 2020 real estate versus the stock market and that rehab trends. Introducing Dean here. There’s this contact information you went to buy or sell your house.

Great time to sell. Does that sound happy? New year, buddy? Glad everyone made it through. Pretty exciting new years. I don’t know how the festivities were for you lean, but we saw quite a few areas as usual. Thankfully you weren’t in a beach or Waipahu, right? I think they, Oh yeah. So was like, It’s always a great shortage.

If you see those videos of people driving through, like on the freeway passing, when is the next Paki off like, Oh, I don’t keep up. Take your kids? Go on there for the next firework workshop. Why the ones here blew it away. Eight away starting off 2021. , as we always do talking about, August statistics for December, 2020, it was the same trend as we’ve had for the last, maybe nine months since the April, March of 2020, where we’ve seen Prices go up.

We’ve seen volume go up and we’ve seen days on market go down or signs of a strong, healthy market favorable for the sellers for the most part. So on the single family on the left, median single family prices at 870,000 increase of 6.1% from prior year. Or Same time in December, 2019 closed sales at 420.

It’s like almost a 36% increase from same time last year. And these are market in staying at 10 days for single family, which is as discussed before very low. And that’s from the point that the property is listed from the point it gets into contract. So on the condo townhouse side, we have 455,000 as a meeting conduct price increase of 7%, close sales 20% increase at 514 closed sales.

And these are markets still really low 19 days. That number is a little bit deceiving though, because I think overall yes, it is still a strong seller’s market, but it seems to be a way stronger on the single-family side. And part of it due to COVID. So now we look at closed sales, we see.

, I want to talk about just taking a look at the trends, right? So we talked about the five 14 and the four 24 single family. But if you see that trend going upwards, so we’re seeing, volume tending to go up and on the next slide side, we’ll see that the new listings are going down.

What’s that a S R E S next year name. What does that stand? Oh, yeah, that sounds for senior real estate specialist. Thank you for noticing that lane. Wow. You’re pretty. I so that’s why I don’t like that. Instead on the next slide The numbers we’ve talked about before is again, when you’re looking at the median sales price for single family, we’re looking at, it’s 70 years, the end of this year versus eight 20, was it in the last year? So that’s a 6% increase.

And for, condos, we see about a 7% increase, which is, really healthy considering all this current situation. So , when we look at that lane, What made me think, we talked about all the year and things and comparison. So , we talk about. Real estate versus other investment opportunities.

So I wanted to see how the stock markets did and how stocks did. So I pulled this off of a site and if you can see for the year 2020, SMP was up 16% and that’s pretty darn awesome. And it makes me think, Then, we’ve been proponents for real estate for a while.

And, we have our opinions about investing in real estate versus the stock. So I made me. Look into things a little more and just do a quick, not a really a case study, but I just wanted to put something up. So last night I pulled this stock market information and then the next slide you can see, I did it really quick just for SNG.

Just to take a look at, try to compare that to you. So I went onto the MLS and I looked at single family homes that closed on December 30, first, 2020. Just for fun. Again, just bear with me. So that’s 38 homes. I found right. So then what I did was I scrolled through the transactions and I tried to find one that was few years ago, not a flip.

So I came on as I was going through the details. I came up with this home. So on the next slide, and you’ll see this home hopefully none of our viewers homes, but this is public information. So anyway, at number 15 of 38, I stopped. So this is a single family home, a little more than 1500 square feet, three bedroom, two and a half bath sold for $800,000.

And was it days on market. Okay. Then I looked at its history. So if you’re going to next slide, we see. So yeah, again sold for 808 days on market listed for $50,000 less. So it was closed at $50,000 over asking price. That same property sold in about four years prior on February, 2017 for $690,000 even almost two months on market.

And it was listed, at a higher per click. It closed at a less than the listed price. Yeah. Slightly. So definitely a different market if three, four years ago. And simple math, you say, okay, that’s a 16% appreciation over four years. I’m like, Holy that’s. Still sound too good. We’re trying to pitch this and again, not as a replacement, as a way to, compliment your portfolio and then, but we’re saying, okay, on the slide few slides ago, I said, okay, but this P had a 16%, return right in 2020.

So they ha but then, I was thinking, Hey, , we forgot to consider leverage. So I then looked further to get more information on this property and as okay, let’s see if it was a leverage. So come to find out, this property was bought in 2017, it was purchased a hundred percent finance VA loan so that the buyer didn’t even pay any closing costs, anything, and all got rolled up, as you can see in that amount.

And that $110,000 of appreciation. , in theory that. Owner purchased with no money down $110,000 in appreciation, but no initial investments or nothing down. And he made a hundred, $10,000 in theory. So that to me, then validates. In my mind, why I’m also investing in real estate.

As well as in the stock market, because, when you take into the con the other benefits of real estate investing it does have its positives that you can’t just look at the 16% for S and P for one year versus the 16% in this appreciation for this home for four years.

So there’s a lot of things to take into account and also keep in mind that on the other end is, whenever you take into account, leverage it. Could be the dangerous you need to be leveraging. Smart. Yeah, because I think literally the first, I think this property might’ve actually went through a foreclosure process, but anyway, that’s beside the point, but, yeah, it’s a classic case of people just comparing rates or return.

But you got to leverage, so yeah. We didn’t even lever that appreciation of three, four X. We didn’t take into account the tax potential tax benefits. All that kind of stuff. Because when they sold that 110 K was P could potentially have been tax free for them as well difference.

Like the stocks is ordinary income and for people making over three, $400,000, you don’t want any of that. You want passive income. So again, yeah, I just did that for us in G last night as I was going to this. And yeah, one thing I wanted to talk through to end my section was my other day, I put the house bathroom trend studies for 2020.

And so how was, is a resource for homeowners to, that they provide information to . Help us know what the current trends are in terms of the home improvement activities going on throughout the States. So I pulled that and in doing so put some interesting data, if you want the report, just shoot me an email and I can send it to you.

But some interesting information we found for 2020, so average remodels Then on the next slide, you’ll see that the average remodels are in the realm of 8,000. So for the major remodels and upwards of, close to 20,000 and for the minor remodels where, below 5,000, but some interesting information, again, this is just trends.

So everyone has their. See, this is a way to see how you add up. But one thing was , 23% of renovations included bathtub removals. So I thought that was kinda interesting. And another, yeah that’s what we noticed on the apartments. People are optic for the really nice showers.

Getting rid of the Tufts or the other thing I was thinking of is , aging populations needing to age in place, or so they’re getting walk-in showers with, less chance of slipping as they step over the threshold. Yeah. Yeah. Yeah. Both. All right. And then, yeah, so I thought that was interesting.

And then another statistic per this study was that of everyone doing their innovations. They said that 41% use the bathroom to relax and rests or, ticket what it is. I don’t know if you count, like sitting on the throne and going number two or Sandy crutch. But I was thinking more along the lines of they’re having their tubs with their.

Either a jacuzzi tub or a soaking tub, which what’s the best time for that anymore. You got to get your shower, get the heck out this morning. Yeah. So the funny thing that you mentioned that too is because I’m working with buyers and sellers. And so , when I’m talking to every different buyer has their opinion.

So the I’m working with the , families , with young children and I’m like, Oh yeah, we need a tub because the child is going to love to play in it. Or the way they beat them. So the younger families need them. And then as we mentioned earlier the order.

Generations tend to not want one as much. Yeah. And it’s not as much of a necessary cause what else are you going to do besides that? Because it’s hard to soak in for, adults. Yeah. And then the other thing that came up was. This is on another deal in Texas. Like my partners are now in our Indian, so I was asking it’s a cultural thing.

Cause a lot of tenants are Indian. Okay. And they’re like, what do you guys do with your kids? Do you guys, do you bathe their kids and the sink or I don’t want me, yeah. What do you guys use? When my kids are young, Yeah. Yeah. When you’re a super small we bought like a little plastic support thing.

I was actually the designated beta. So we bought this plastic tub that they would sit in nicely with a nice padding and it would sit within the tub and it would hold them up. But I’ve seen people beat them in the sink too. Yeah. Yeah. My partner said, yeah, we just bathed them at the sink.

We don’t care. I guess no need for a tub, that’s true. Once they can stand up and say, okay, just take the shower head that comes off and you just. Should we shut them down time efficiencies. So a few other statistics guests I thought were very interesting vinyl flooring, although not very big had an increase.

So as you can see, on the left side, ceramic and porcelain still. Took the cake with 59% for, the flooring outside the showers, but the vinyl jumped up apparently 4% to 11, which is still relatively low for the flooring. With the luxury playing vinyl coming out with, so it’s waterproof.

It has, they have so much new styles coming out and so strong and reasonable. I thought that would have been up higher over the ceramic important, especially for the floor, and then little self selecting, people that are getting bathroom remodels or your affluent people. So that they’re getting that stuff.

LVT is more for like rental grade. That’s true. That’s a very good point. That’s a very good point. And then on the right side, we see four sinks. Whenever they’re upgrading sinks. Of course, the undermount sinks took the cake at 65% and then, the drop-in sinks were second and I was surprised vessel sinks.

We even made third place. Cause I thought those are a dated, but I think again, I’m not keeping up with the trends. So I know, what do you think about those vessels sinks that you see in the fancy bathrooms? So like the one where it’s like a bonsai pick a ball, it looks like a giant salad bowl.

Yeah. I’ll be honest, man. I don’t know what the weather undermount Drophead vessel. I don’t know until you said vessel and that I didn’t have call it. Who wants to get there for that one? Yeah. I just don’t care about that stuff. No you’re the pragmatic guy though.

So if we asked your wife, it might be different, right? Yeah. Yeah. She doesn’t know. But the last, just a slide I was going to talk to is I’m talking about premium features for toilets, showers and tub. So one thing I agreed with in this was the one-piece toilets. You can see, , 20%. Of renovations had one piece Torres.

I really liked those one piece toilets. It’s the one that the tank on top is, it’s one piece with the base so that it’s not screwed in. You don’t have to worry about any leaks in between. Sometimes if you lean back on the tank or you push it, that’s it creates a crack or the seal breaks and it starts leaking so simple easier to clean.

There’s no. Crevices and let at times the base of the one-piece toilets drop straight down. So there’s less dust to collect around the the edges. Something I didn’t care for so much that I not to say I disagreed, but the premium features for the shower, they talked about those rainfall shower heads, where it feels like it’s, it’s a big square and it’s like raining on you.

That was a 58%. Of installs had those as well as the dual showers, which are, I believe where the jets are right in front of you. And they’re shooting horizontally for me. I’ve used those at the hotels and I don’t really care for it. I’m old school. I like the high pressure to shoot the soap off of my hair and kind of feels weird when.

Something’s coming at me horizontally, but that’s just me. So give me one of those high efficiency things that you need to stay in the shower for 20 minutes you do something like, Oh yeah, those are super bad. Yeah. Then those, yeah. It’s like really mini sprees. We install them and all the apartments.

Oh yeah. Talk about money savers. That’s a great money saver from that standpoint. Yeah. It’d be being green, then that’s a different story though. Yeah. So , if you want a copy of the 20, 20 years how’s bathroom trends study, just shoot me an email and I can send it your way. So about 33 pages and I just tried to pull out what I thought was interesting.

So yeah, if you guys haven’t checked out my podcasts, we’ll pass the cashflow all about investing on the mainland for cashflow. But the free giveaway this month is a free buy and hold analyzer. And this thing called the bird calculator. I’m not a big fan of this burst stuff, which stands for buy rent, rehab, you finance.

But if you want to do it, I used to go in knowing your numbers. You can go download it simple past the castle.com/returns and download it there. But yeah, little teaching point. Paying off debt. I pulled up this check from 2011. We didn’t know each other back then. Did we? I don’t think so. Yeah, that was before BiggerPockets was around, right?

Yeah. So this is one of the checks where I would pay down my mortgage and then I realized what a mistake that was, and she saw. And I knew it didn’t make sense, but everything gets you taught right. Pay down debt, pay down that. But I will be one to tell you, that’s a tool use tools for the right job.

This might be the reason why I’ll ever be stocks is of 16% this year. If you look on the right side, that’s the amount of money that got pumped into the system the last five months. And. This is what’s surprising. Like you look at 2008, 2009, there was a lot of stimulus, but nothing compared to what it is in the last five months.

Yeah. That’s true. It’s being supported. Yep. So John Burns puts together these reports, different markets that he likes. And I think the real story is, yeah, I heard about it is the max Exodus out of San Francisco, New York. Expensive parts of California and going to more than the Midwest, South, Texas, and uncle bill Gates had a little predictor.

Some people don’t like them, but he had a phase, one health crisis. He got that one, we had 10 weeks of lockdown. He thought it was going to take 18 months to get a vaccine, took us what nine, nine or 10. Rented as it is it’s a fake vaccine, right? It’s an NRA or whatever they call it.

Wasn’t like the normal vaccines that we get. That’s cool. That’s pretty quick, right? It’s like super fast. Yeah. And then he also, I don’t know why the heck they’re asking bill Gates this stuff, but he also predicted that home buying. The market would take a very long time to recovery.

So he was completely wrong on that. We had just a nice bull run with prices going up and pretty much every single market due to low supply, billionaires got rich through COVID because they pivoted their business. Yeah, there’s always opportunity out there, people to capitalize on it. Jim Rickards.

Have you heard of that guy, but he’s a per repair. So I interviewed him last week or it might’ve been Monday. They just go by, but he’s right. He’s got this new book out, the new great depression. And I was expecting him again to let off a scuffle with him. Cause he’s like economists, I’m not to each big fan of economists because.

They’re like the weather man. They just make a bunch of predictions and change it when it doesn’t happen. And they’re never in the game, they never have money. They never have any investments. So they’re out of touch with reality, in my opinion, their academics. Yeah. Other academics that Howard Drake gets guys, right?

Like he’s the Hawaii guy, right? I’m like, I want to know what’s in his portfolio. I don’t want to hear his predictions. I want to know what he’s doing. Maybe he’s not doing it. I want to know his network. I want to know what’s under the hood, but yeah, Mr. Rickards said here that basically do not expect two, three, 5% GDP growth every year.

Like how we’ve been saying the last generations instead to expect maybe a zero to 2% increase every year. And I was like I’m cool with that. That’s fine with me. My expectations aren’t that high, and that he says, that’s the new great depression like a Japan in a way

pulled this one out. And if you heard about this project, a cool renovation of an older apartment, hi at the address and it’s somewhere downtown. But yeah, it’s cool to see these types of properties get rehabilitated,

but going back to the mainland stuff, if you are checking this out on the YouTube channel, we have a map of the United States. You see where a lot of the red is getting out of Seattle port plan Bay area, Los Angeles. And moving forward to places that are a lot less budget friendly and less crowded.

And one of the big headlines is of course, everybody is getting the heck out of California. If you watch any bit of YouTube, every single influencers, making a YouTube video on getting out of California, it’s such a big trend that just by having that in your video, it pulls a lot of things. Readers and viewers, because it is so popular.

Good to know. So if HP, they were the startups in the Bay area, and now they’re fleeing to Texas just like Tesla, just like many other companies out there because of put taxes out there. Effective rate for growth for multi-family. It was flat line this year, but that’s to be expected, right?

It’s a pandemic, have new single-family rental tenants coming from urban areas. And so 59% removing from urban locations, 41% moving from suburban locations. So this is a general trend of people getting out of the business court district. Going to a little bit more suburb type areas. Yeah. This is why ever beach in maca.

Kilo is single families are off the hook when you know that wasn’t the case before. Yeah. I don’t know. Th I think Hawaii is weird though. Like it’s, Hawaii is like the Island on that night. It’s just a long piece on the cause he gobbled up mountains, but like in a normal. It States ever say it grows outward like a web.

But I guess, yeah. People want to get away from the Seattle or maybe it’s just, they can’t afford it too. Yeah it’s the way they develop too. Because like you said, typically they talk about the urban sprawl where if it starts in Honolulu and starts to go out. But I think when they tried to do, a couple, a, the second city and Colina was that 20 years ago, it, they just said, okay, we’ll go all the way out there and just build, so that kind of.

Threw everything off and not in hindsight being 2020 the urban planners look at it and say, that may not have been the way to go, it is what it is, right? Yeah. People want to work, not really in the city unless they have to for connection, or, but I think people would rather just take a little shorter drive to the, the middle market.

Five story, high rise, like Milani has some of those, I think a small office building. I think so. Hopefully it has that. Yeah. So three big trends for multi-family and you could probably make the case for single families in 2021, a banner year for the transactions, because things are going to somewhat normalcy by mid to late 20, 21.

And just a lot of heads up transactional demand. People were frozen with the whole COVID-19 and also the election too, which came and went. The second thing was the crowding of the South East capital markets. So the, like it’s at the general trend to get out of those high price areas to more places that make more sense financially, economically.

And. A temporary boost for the suburbs that you just talking about on the last page with the remote worker cultural sort of sticking around and coupled with the desire to live in less than populated areas. Yeah. Should be interesting. And like you said, temporary, it should be interesting when people are starting to have to go back to work and now have to start fighting that traffic again.

And I call how We used to see, then that side we might, out in the suburbs might not be as appealing as it was earlier this year. Yeah. Yeah. But COVID accelerated a lot of trends, right? A lot of employers got confident. That’s true. Yeah. That is a very good point. My ordering from California pizza kitchen and some other restaurants.

It’s pretty sleek using those apps or stuff now. Oh yeah. Yeah. So $900 billion relief package. Got signed very recently. This is the latest round of stimulus. Everybody should have got their checks. You didn’t make too much, you got your checks. And a lot of this is somehow probably flows down to investors and the general public.

But I think that generally a lot of people are boarding this cash. They’re just paying down debt, keeping into savings accounts, very logical, but that’s not what the government wants. The government kind of needs it to get into the system spent yeah. Need to spend it. Yeah. Yeah. So we talked about stocks.

This is something I’m interested in investing in, like investing in websites and stuff like that because no. So like Blackstone, the big hedge fund, they’re buying ancestry.com, buying a website that has existing cashflow that they could do value add, or can improve the business. It’s like a digital asset that you can buy.

But I think , what I don’t like about stocks is like, you can appreciate the value that you can’t increase value just in Bibles. So high. I don’t think that builds like a C well, you can get lucky here and there and you can buy an option, but , real wealth comes to those who create value.

And you can do a plug for the mastermind this year. We’re not going to be able to do it in Hawaii. But we’re going to do it for Chile. We’re going to have almost a hundred people come into this. Wow. It might, you might help out. Yeah. Yeah. I had fun last year. That was the one we did last year.

They have to do it. Hi, I’m super bummed that we’re not having additional. Nope, no pick-up ball, no pickle. No. Knockout room. What does that room? Yeah. Yeah. They escape from escape rooms. They’re out of business now. I think that was a bummer, but that’s okay. How many days are this one for two days.

And I think it’s cool because look at then like already a, how many people registered, like so many other people are going to see the kind of people that we have in this school. So people want to register. You got another week simple, passive cashflow.com/bubble. And but yeah, if nobody has anything else to get any parting words, 13, what are you up to this month? This month? I am doing some refinances. I. Didn’t realize call me foolish, but I’m only doing my refinances now and that, in terms of some of my investment properties on the mainland, so China hit up a bunch of them all at one time.

And hopefully, bring down my debt servicing by a lot. I got a letter from my lender. It was a portfolio loan and they were calling my note due here in the next few months. And I was like, what did I do? But then it was a five-year note and they get you to five years already is a commercial.

And then, yeah. So you just got to refund it. It’s a little single family home, but Oh, that thing. So I don’t have to go through the trouble of refinancing then one of the last few ones you have. Yeah. Yeah. I should just fire. So bad thing. If somebody wants to buy up turnkey rental in Birmingham, No, but yeah, it’s been five years since I got that.

That one there. Oh yeah. I’ll hit you on. Maybe I’ll throw it into my solo 401k or something. I dunno. Cheap.

Yeah. I have something here, but all right guys, we’ll turn the recording off here and we’ll see you guys next week. Bye. See ya, Mike.

Essential Virtual Networking Etiquette w/ Deborah King

https://youtu.be/zmBt2VCsF5E

 Hey, simple, passive cashflow listeners. As you guys know, we are not doing the retreat this year in Hawaii. Unfortunately, a lot of you guys had a lot of fun office, back in the beginning of the year, but we’re taking it virtual this year and NBA style. We’re calling it the bubble.

We, if you guys want to learn more about this, go to simplepassive cashflow.com/bubble, but I wanted to, have a guest today, Deborah, who is basically, runs a charm school for professionals and she was going to help me out, and give everybody some tips on in this world of digital networking.

 

And we’ll also get into some professional networking etiquette, too. how do we extract the most value of, people are going to be coming into this bubble and it’s not cheap. And the people coming here and we’ll see, going to be accredited investors that A-list, that I’m going to curate and not everybody’s going to be allowed to attend this meeting.

 

A lot of you guys have said, I don’t have anybody in my network that invest in real estate or invest the people on the internet. I need to build a network. this is the time to do it. So how do you make the best use of the time? this event is going to be a lot of networking and in small intimate groups or even one-to-one with a guided topics.

 

So we’re not just staring out into the camera, , , , you got Debra on, she runs a charm school for professionals. I got connected with her. She’s not some just random guests. It’s someone I’ve actually worked with. I think a few years now when I was up in Seattle, she does these cool, in-person trainings that, yeah, it seems so long ago and you’d be able to do things in person, but she runs some in Texas and Seattle.

 

And, we’ll get into that a little bit, , but yeah. Thanks for jumping on. Appreciate having you. Oh, my pleasure. It’s so good to be with you and excited to learn more about your group and, what you’re doing it. you’re doing some incredible work and building a network of people, which is the whole key.

 

Isn’t it building networks of people that we can collaborate with and, do business with. I think I told you this earlier, like most of the people in my group are introverts myself included. that’s why I tried, I’m always like cognizant of connecting other people.    Cause I don’t like talking, I’d rather just connect to people.

 

So I can just into that vanish and go away and have them talk. So I don’t have to talk. I’ll do it. I’ll get it in front of the stage if I have to. But that’s what I prefer. And I think that’s what the bubble mastermind is going to be all about. But, yeah,  let’s start off with some general things.

 

the world is changing. What are some key things that you’ve been teaching your students, this past year that can help out the listening. we can dive into specific scenarios. 2020 has been a year. Hasn’t it? I think we’ve all been stretched to do things outside of our bubble and whatever we had done previously.

 

Maybe some of those things weren’t working quite the same way, or we needed to adapt some new skills in order to successfully move into the world we’re living in right now. as you noted all of my classes, everything I had done pre COVID. Was all in person we met together. It was face-to-face, I’m pretty strong believer that the best way we learn social skills is in a social environment.

 

And so we had to move that physical environment here into a virtual platform. And we’ve done that this year. but I am looking forward to the day where. We will resume, to face-to-face because I do think that’s most important. I think one of the things I saw this year unfold was, not only the heightened.

 

Realization for the need of social skills. Reality is that,  the talent professionals today are saying that it takes, soft skills are really the reason why most people fail in their job, whether it’s their own business or they work in a business. And there was a LinkedIn survey just recently conducted that said, okay, That 92% of businesses and companies believe that it’s more important to hire for soft skills than it is for hard technical skills.

 

And I find that’s really interesting because in the 32 years I’ve been doing the work I do. I have worked with every type of individual and. We tend to think soft skills, social skills, or are common sense and people should just know this. It should just be intuitive and it truly isn’t. And so where do we invest our time and our money and our effort.

 

it’s in developing those technical skills and we do need them. I’m not minimizing those at all, but what really sets us apart and allows us to reach those highest levels of success. Are going to be social skills and the ability to create human connection. this year lane, we’ve heard a lot about what’s essential.

 

I’m sure you probably have there in Hawaii as well. this is an essential business. This is an essential fill in the blank. I firmly believe that the most important and most essential tool that any of us have is human connection. And it’s really backed up by science because human connection allows us to, be healthier physically, emotionally.

 

mentally and look at some of what, at least I know some people in this past year and clients that have contacted us that have really struggled with dealing with mental challenges and physical health issues. Because they are isolated. And we’ve seen an increase in alcohol abuse and drug abuse, and people either are really exercising a lot, or they have set exercising apart and you might’ve heard of the COVID 15 or 20 for some people, not the 15 and 20 we want, and sleep quality is impacted.

 

So not connecting socially. Really has, an impact on us and interestingly pre COVID. Do you know what the cost to us companies was for disconnection in the business world? Talk to tell, right? Yeah, it was over $500 billion pre COVID. I would love to see new research on that number. Now where we’re at today, because the more we have isolated and pulled apart from one another, it’s impacted  how productive we are in business and in what you’re doing.

 

and that is critical. Human connection is absolutely critical and it’s key to networking. Isn’t it? Yeah. and that’s what we want, but a little bit off the wires, like I tell a lot of investors, right? When you’re investing in private placements and syndication deals, or you’re trying to find that lawyer or tax accountant, different service provider, it’s all referrals.

 

This is a referral based business. And how do you find those referrals? But you have to find a pure passive investors. And build relationships with them or jump into my master bag. But that’s a paid thing, right? It’s a, it’s a bat cave for that. So there’s two ways about doing it.  The cheap ways just put on a smile and get along with people which doesn’t come naturally to most of my folks, right?

 

Most of us are technical type of sighted people. I think when we step back, one of the taglines for final touches, how do you want to be remembered? And that’s not just thinking about some people take it to the morbid side of when I’m dead. certainly there will all be remembered at that point in some manner, but how do you want to be remembered when you walk out of the room?

 

When you click in the meeting on your zoom call, when you got off the telephone or you just finished that email, how do you want to be remembered? That’s really quite powerful. That takes, a big picture approach to every single interaction that I have with one. Whether it’s going to be brief in passing, maybe at a networking event or on a zoom call where I just see a little face on a tile or it’s long and lasting, maybe it’s somebody that I really do work at setting up engagements and having other points of contact.

 

how do I want to be remembered? And it doesn’t matter if you’re an introvert or not. Actually, I used to be much more of an introvert than I am today. I would stand back and observe and watch people and, it took practice. All I had to do was learn some skills, practice those skills. And it became much easier.

 

And once I understood the why does it really matter? Why does it really matter? What’s hate to all of us say what’s in it for me, but what’s in it for us in creating those connections. And, for me, when I go into a networking event, I’m always looking lane for, do I really see others?

 

Because I think it’s easy for our brain to get focused on everything else that’s going on around us. all the distractions, is my phone beeping at me or vibrating or is it not? And I’m concerned about that. who’s in the room. Do I have the skill? I’m a little bit nervous stepping up and speaking up, but do I come fully prepared, fully present, fully ready to engage with the people that are there.

 

That’s important. And if I really do see others. And then I look for ways to connect with them virtually or in person. Then I’m beginning to create those relationships that are going to enable me to find the clients that I’m looking for and find the people that I need to connect with because in business, everything is about those relationships.

 

And some of the basics there is, show up, . Turn on the camera, turn off all of these. I have the four screens here. Turn them off. Stop typing stuff. Face the damn camera and playful out and interact. This is not, at least my meetings. Is this not like the workplace where if you say something stupid will not be considered for a promotion for five or 10 years, I guess people don’t even stay at a company for more than a couple of years, these days anyway.

 

But yeah,  this setting is at least my bubble mastermind and all my other events that I do. It’s a place where it’s time to be vulnerable, which gets very out of your social norms for your professional work setting. Because. People come in and they have to protect their reputation.

 

Yeah. Yeah. And I think. I, we all do business with those that we know we like, and we trust that’s just the bottom line. , if you’re a fan of Starbucks and you buy your coffee at Starbucks or your local coffee place, and you are loyal to that location, you’ll drive further, you’ll spend more and you will be more consistent, then to accompany that you don’t really know where you don’t have that commitment to.

 

So to your point,  do I know you. So you have to show up and went in this format, you have to show up on video. so often I see people turn off their videos and there are some companies that do require that just because of the technical load in that. So I get that, but when you can’t see a person.

 

It’s very difficult. You’ve hindered the amount of connection you’re going to be able to make. we make fast impressions about people in a blink of an eye, and it’s primarily based on how they dress, how they show up. what am I reading when I look at you and research shows that we gather over a dozen.

 

Really core values about an individual within a blink of an eye. So if  my visual picture is missing or I haven’t put effort into showing up with some thought in how I wanted to show up, I’m missing a really important moment and I’m going to be invisible to that group, even though I might add value vocally or in the chat box or  in another manner.

 

I’m sure it is. People make snap judgements. They do. And so I do I show up and then, so do you know me? And then I do I have likability. Is there something about that individual that is likable and, that comes across in some pretty easy ways? we are always looking to have those, have the hormone oxytocin fire off in our brain, and oxytocin is known as the connection hormone.

 

So when I see you, I immediately have some type of a response. And the response I want to have with another individual is a positive response, because I want to be able to create that oxytocin, which is a bonding hormone. It’s going to make us feel more connected. It’s going to create, like ability between the two of you and easy ways to do that is, smile.

 

A smile is so powerful, make eye contact and you can’t be looking down. And then this kind of a platform, a lot of times you’ll see people looking down or looking all around in, they’re not focused on what’s taking place. And it does take a little more effort. I do think in this format than it does face to face, frankly, but, do I really, show up?

 

so do I smile? Do I make eye contact? Am I fully present? Do I do something as simple as say hello? amazing. How many people don’t say hello or goodbye. Those are the two things I’m really always amazed by. Some of the research says that just as simple greeting of hello, how are you is really powerful and memorable.

 

Oh, and wear a decent shirt, right? Like you wear whatever you want underneath. Cause they don’t see it, but it’s fun. A decent shirt. That’s all I ask guys. But on a decent shirt, comb your hair, make sure that you look at least somewhat presentable given your audience, given your brand and how you want to be remembered.

 

Because you only have this little moment to do that.  . So do you, do you know me, do you, is there like ability there, something that makes you want a trigger that says, I want to get to know you a bit more or I want to be able to connect with you again and then last, do I trust you?

 

And again, oxytocin is that hormone that feel good hormone that does start to establish trust between two people really powerful and it helps to deepen our relationships and the connection and that bond so that you do think of that individual moving forward and a little bit of a tech tip here.

 

There’s a setting and Zune where , it can scrub your faces gives you makeup. Wow. So you guys are tech people, you guys can figure it out or Google letter. I’m sure there’s a YouTube video out there, but that can help, like you’ve got boogers under your eyes in the morning. I need to go find that it’s in there.

 

It’s in there.  So let’s move on to some more tactical tips once they get in the set, They’ve shown up, they’ve got their stuffs set. They’re smiling. And they got their cameras on. so one thing I got for a lot of people is the nice thing about this online settings, is like you get forced into the interaction.

 

It’s not like you’re him and hauling. I’m going to we’ll talk to him or her over there after walk over. It’s this is the beauty of virtual networking is I can force people into breakout rooms. And you’re stuck. You’ve got to do it, So there’s not that awkward feeling  the fear of approaching and starting that conversation.

 

But once you’re in the set, one tip I always have is yeah, you introduced yourselves, but it’s always about the other person help them out. Like one tip I’ve always followed for myself personally, is help out the other person first, which is why I do all these free onboarding calls to new investors is I’m just trying to add value to them.

 

In 15, 20 minutes. It’s a test, whoever reciprocates or stays around. That’s what food typically stays at my network for my circle. And so I would push that out there is like, when you get into a set with somebody or a few people learn what the other people are doing and see how you can add value means, add encouragement.

 

If you don’t know anything. give them a referral and articles, something you’ve heard, or maybe there’s somebody else in the group that you met five minutes ago, the day before that you can connect them with a way to add value. So you’re not just standing there spying, right? Yeah. you’re not a model or a statue.

 

and that’s,  part of connection because if I’m going to connect with you that it can’t just be this. Stoic stable face staring back at me. I have to give something to receive something. and we do, it’s the old  analogy of the farmer. You’ve got to go out and plant something before you can go out into the field and look for anything to harvest.

 

And so showing up smiling, engaging, asking about the other person. Get to know something about the other person. I have a friend a few years back and she used to say, if I ask somebody three questions about themselves or what they do, or the type of work they’re involved with, , and they never asked anything of me about me.

 

I write them off. Now that’s pretty harsh. I’m not personally going to take that stand, but it does make sense because it’s really a one-way street. And sometimes we do that because we’re nervous.  We know all the answers to our own story. I don’t necessarily know your story, but get good at having at least three good questions in your back pocket that you’ve thought about ahead of time.

 

So when you go into these types of settings, that you can start the dialogue and not feel uncomfortable. Now I can think of conversation. Lane is like playing tennis. if I hit a ball to you and you let it drop, I’m thinking you missed it. So I’ll serve you another ball. If you let it drop again, I might serve you another ball, but then I’m going to start saying you’re not a lot of fun to play tennis with.

 

 And that’s frustrating, right? All right, you’re listening to LAN and Deborah talk about these tips or asking questions, but it’s hard to do anything unless the other person is playing tennis, but you and being vulnerable, right?

 

Show your insecurities, tell people what you’re working on, what you don’t know. Maybe you haven’t heard about real estate professional assessment asks the freaking question because that’s how you hit the ball back over the net. And this is how it works. but it can be frustrating, right?

 

Debra, if you’re not in a place where people know how to swing the racket and get the ball over the net, right? and this is why I say it’s a waste of time to go to most. Local real estate club events or free online forums because you’re in a room with people who are all about themselves are selfish mindset and it’s all about what’s in it for them.

 

I’ve curated my group and people who come to my events. It’s a different type of crowd. mostly because I’ve gotten to help that people out of here. The people that don’t fit that aren’t this abundance mindset or not just in it for them, they’re gone. So I’ve set the culture in a way and curated the list to be decent tennis players here to spar with.

 

but that’s hard, right? It’s hard to practice with people who don’t know how to swing. It is. And then there’s the other side of playing tennis. So then you, I say to you Lang let’s go to the court again tomorrow. Let’s try again and you’re ready. So you’re there with your racket. And I stand on the other side of the net and just bounce the ball on my own racket.

 

And you’re saying, Debra, I thought we were going to play tennis and it’s we are. And you’re thinking if you were just going to bounce the ball in your own racket, you could have done that at home. And I didn’t need to even get dressed to show up. And that’s what I call a monologue. Not a dialogue.

 

When you ask somebody, how are you today? And they never stopped talking.  It’s all about them, as you just mentioned. And, Oh goodness. I’ve been to so many networking events where I’ve had people come up and shove their business cards on me and their books on me and their things and talk about what they’re doing.

 

And I walked away going, that’d be the last person in that field I’d ever hired. And those people typically never get anywhere. So there really isn’t much. Motivation to follow up there, being there. this is why my wife is like, why do you spend $25,000 to go to this? Like mastermind four times a year?

 

yeah, you don’t deal with people like that. There’s a reason why they’re in the wrong and they can afford that to it. The stuff, Yeah. Going to a dinner party to lane, you go to a dinner party. And if you sit down with a whole table of people that have nothing to share, it’s a really quiet, boring meal.

 

And you hope the food is really good. but if you come to the table and the food could be okay, maybe the environment’s okay. But. You’re sitting next to people on your right and your left, maybe across the table, depending on the size of it that are engaging and interesting and, sharing that’s a meal you leave not just fed physically, but you’re inspired mentally.

 

You’re encouraged and you walk away from that going. Wow. That was really an amazing night.  And you said it before, you said the word practice before, and it’s not like people , if they don’t do this, it’s not like they’re jerks or they’re horrible people. It may just be, they just don’t know how to do it.

 

Know all the time. I hear that all the time lane, that it’s all a matter of, gosh, I should know how to do this. I’m, 30 years old, 40 years, 50, 60 years old, I’m at this place in my career. Financially and I’m successful. And I can’t show up to this kind of a class because it’s been, make me look like I’m an idiot.

 

I should know this. Why would you know this over? I don’t know the real estate information, it’s not what I’ve studied. It’s not my area of expertise. So I don’t have any expectations on myself to know that same. Thing’s true about social skills. We only know what we know and we’ve only made it to the point we’ve made it because we have the skill level.

 

We have to go to that next level. You join mastermind groups, you go into other environments and you learn new skills so that you can boost every area of your life. And the exciting thing to me with social skills, it influences absolutely every part of our life. Yeah. . So let’s, kind of transition here to  some mistakes you’ve seen people make.

 

I’ll start off with one, give you time to think politics just don’t go there. I think I can agree with this, but here’s the funny thing. I think the majority. Of people who are normally not the talkers, they’re the listeners to the minority of people who go talk about left stuff, talk about rights stuff.

 

And the majority of people get this. So we’re talking to the minority of people who talk about this stuff and you guys know who they are. I’m so glad when,  I saw this at another very high level mastermind I’m in. we were finishing up the main talk and it was just Oh, this is a break time.

 

So a few people at the nominee chit-chat and I’m just sitting here doing my own thing, working on the computer and just listening and waiting for this next session to start. And there were like three very high level entrepreneurs. these are guys making over a million dollars a year and they got into this thing about some political discussion and I saw.

 

Three, very intelligent high-performing people and it just got derailed and they were never going to do business with each other ever, never, it wasn’t going to be a shot. And my takeaway from that was what is the purpose of having that conversation? Is it worth the risk for never working with each other in the future ever again?

 

And and that’s how do you want to be remembered? Correct. They will remember each other forever based on that political conversation they had, and it will frame up or destroy or undermine any potential business in the future. And we do that in so many ways. So politics definitely. And certainly in the last, I would say probably 10, 15 years.

 

Getting into politics is just bad news. It used to be in when I was younger, that we could have political conversations and we could agree disagree. We’d walk away and still be friends. And sadly, that’s just not what’s happening in this day and age,  it seems like so many of these social issues right now are just.

 

Highly charged. and I often encourage people to stay away from conversations that are emotionally charged or could potentially be emotionally charged because it does trigger. It’s not going to trigger oxytocin. I promise you, it’s going to create that divide. So you’re not going to create like ability you’re going to do exactly the office that I’ll know you, but I won’t like you.

 

And I certainly won’t do business with you. those emotionally charged, even talking about COVID right now for a lot of people. you bring up something about that and aspect of that, and that creates an emotional charge for people. Politics does it. so many issues that we’ve seen in the last couple of years have created really emotionally charged moments.

 

And so I always say, stay out of that. Territory find other conversations, starters that are going to be more engaging. one thing that I hear people say a lot when they first meet somebody is, where are you from? Have you ever heard that? And I used to say that all the time, Oh, where are you from?

 

And then I interacted with somebody that was, Not from, here they were from another country. And I sense that because they had an accent and so forth. but  they said, Deborah, that makes me feel really uncomfortable. And I said, tell me about that. And they said, when you asked me where I am, from what you’re saying without realizing it is, you’re saying I’m not from here.

 

So I’m not one of you. that wasn’t at all. What I was meaning, what I meant was I’m really interested in your, place of origin, your birthplace, or where your family grew up or where you may have grown up. And that was what was intriguing to me. Never entered my mind that maybe there was a seven message being sent to that individual that they’re not from here.

 

When I moved to Texas from Seattle, I would be in a store and people would say, where are you from? And I went, Oh, that’s what they mean because it was a very strong message. I wasn’t one of them, which is fine for me. I didn’t mind it, but that’s something to be mindful. So I’ve switched that language.

 

And now what I’ll say is where is home for you or have you always lived in Dallas? Is Dallas always been your home? Because everybody has a home. And everybody generally likes to talk about home. what kind of food did you grow up eating or that, and that has always, I found that it’s been received far more positively than where are you from?

 

Yeah. Yeah. it’s just part of this, it’s just the self-awareness right. And empathy. How does it come across? I know some people , it wouldn’t matter. But  just spell it out, right? If you ask somebody like that,  

 

what do you think I’m from? Like some jungles of Asia or something like that? Where are you from? Like it’s some people that’s just how they are and you just never know. So Y chip yourself off the starting line, but I say, I like, wow, I’ll look for those points of connection, Lane. I want to find, how can I connect with you?

 

Not how can I create a, something abrasive and it’s going to happen. This human connection is not about perfection. I’ve never met anybody. That’s perfect. I’ve just met some people that are really good, but I’ve never met anybody. That’s perfect. And so I always encourage people, take the press off of yourself to be perfect.

 

This isn’t about perfection. It’s about purpose. And so my purpose is I want to connect and I have to be able to read those non-verbals and say, you know what, maybe I missed it there. Maybe I missed it. And then step back and ask a question or find out a different approach. And that’s why having more than just one or two questions to dive into, but you’ve got to be using empathy.

 

it’s you can’t go overboard. You can’t be too subtle. if you’re trying to build connection, you’re going to have to take a little bit of risks with that kind of opener. you don’t want to be just, I’ve been vanilla, right? Unless you love vanilla ice cream, but you want something with some complexity and somebody that has a backbone and has an opinion.

 

But stay away from those emotionally charged topics. I know something that I’ll personally do. I don’t get along with most people. I’ll be honest. , I don’t really like my job. I never really liked it. so I can’t really get into rapport with somebody who just loves their w two job.

 

So that’s always been a hard thing for me, but what I used to do or.   What I do now is I just put it out there. Yeah. I stopped in my engineering dinner and they liked that. And then I just see how they respond. that’s a good icebreaker though lane, because that opens up where somebody else might say, you know what?

 

I don’t really either. And if somebody is like, they  think the complete opposite they’re totally company person. that’s cool. find some, move on, right? What’s the next like point of connection we can make and  the goal is to get into connection and to get into rapport and then figure out how we can help each other, what are the needs of the other person, And learn about them. You brought this up earlier is. I want to learn about what they’re doing, who they are, maybe a little bit about their family. why is that important? Because later on, when I connect with them again, then I’m gonna have a little bit of insight into who they are, what they do, and you start building, it’s a process.

 

It’s not  one and done. That’s not our goal. Our goal is for ongoing long-term relationships that we can go to at different points and we may not see somebody for five years and then you see them again and you’re able to pick up and move right on. Yeah. and this segment will probably be like required viewing prior to entering the bubble.

 

And for those of you guys in the bubble, if you guys get stuck, To say, Hey, I was listening to Lane’s podcasts on networking in the bubble, and I’m just trying my best. I’m very awkward. Tell me about yourself and what is it that you’re struggling with? So maybe I could help, just use that light.

 

if you get stuck, just use that like ice, but, any other  mistakes, people making it’s very common. Yeah, I think just being distracted, I think distraction. one is emotionally charged questions, conversations or topics, but the other is just distraction. Looking over  your shoulder for somebody better to come down 

 

the hallway or, into the room. Of course, virtually we don’t have that, but we do it virtually in other ways, by looking at our computer, by picking up our phone by looking at something else. And what’s interesting in this format because we only have this little tile that we see this small amount of space.

 

We can very easily misread those. Micro-expressions. When I’m with you face to face and a live networking event lane, I get to see your entire being and place you in context of what’s going on, not the case in this setting. So we have to be careful that we’re not just picking up certain, non-verbals and reading more into it than what it is.

 

But that also means I have to be responsible when I show up to really show up and be there be a hundred percent present. And, They’re simple things, eye contact focused, ask clarifying questions, make sure you come in with some good questions. be honest, be humble. You don’t know everything.

 

You might know a lot of things and you’d probably know way more than I’ll ever know. But you all, there’s always room to be gracious and people remember that. And when you’re remembered like that, you’re remembered for the right reasons and people are more likely to reach out to you when your services one that they might need in the future.

 

Yeah. And it’s also, I can think of one particular, he’s a pretty high , profile person in our real estate world. I remember having interaction with him and he was doing the show over the shoulder, looking at who else is coming down. I will never forget that. And you guys come in the above, I’ll tell you who it is.

 

I’m not too big fan of them. for sure, but I will always remember that. And same thing when you’re in this virtual setting, people remember that type of stuff, and you’re not going to be able to pick up on those social cues that you go down the wrong path on something to pull yourself back.

 

If you don’t have your camera’s on coming back to that again. And, I realized that there are times that if you’re called into a last minute meeting, maybe you’re not ready to be on camera, but. you just need to hustle, you need to make it a priority and then schedule those meetings so that you can be fully present.

 

it’s critical right now because we don’t have the opportunity to connect face to face like we were doing. hopefully we’ll be doing that again soon. When this is our primary format for connecting, we have to utilize every little inch micro inch of this screen space we have and make sure that we’re really showing up and putting the effort in.

 

and I recognize zoom fatigue is a real issue. It’s a real issue this year. I hear it a lot from people. I don’t know if you’re hearing people talk about zoom, fatigue. Yeah. Yeah, another thing, this is more of a technical thing, and I’d like to get your opinion on it. It might just be me being nitpicky, as more of a person born with this technology.

 

people jumping on these in calls on the call-in number, which is like the worst, because you’d never see who they are. Everyone’s a little wary of who that magical person is. and then even just using an iPad or their phone, right? , especially in the bubble format, I want everybody to be on their computers because you’re not able to navigate and jump into your breakout rooms unless you have the desktop software.

 

 Correct me if I’m wrong, but I see it as like a subtle thing of no, this is that important. I’m just going to do my own thing.  Maybe be at the at the mall waiting for my spouse while I’m jumping on this thing and just hop it on. As opposed to I’m in my dedicated place of work, I’m going to dedicate all my attention to this person on the other end, but that might just be me nitpicky, but I think there’s a subtle message there line. ,  it’d be like going into a live meeting across the desk from you. And I didn’t bring what I was supposed to bring to my meeting and I was half dressed. for that meeting and was totally distracted.

 

You would say, why did you even bother showing up? , I think what’s happened this year. What I’ve observed is this feels so casual to people. And because  we’ve dressed down more this year, people aren’t getting dressed up, people aren’t putting in a hundred percent and some people are working many more hours.

 

But are they being effective in those hours? and I think the whole experience has just taken steps down and then every once in a while we show up, we really need to shift that and think about, no, this is a time. I have an opportunity. This is the format right now. And how I show up now is going to be how others are going to see me when we are back out face to face.

 

Interesting about first impression, some studies say it can take up to five years to change a first impression. That’s quite. Staggering. And I think a lot of it has to do with so much of how we interact with one another, even pre COVID. and the lockdowns is because we had to, we spoke on the phone or we sent emails or we, occasionally may have jumped on these platforms.

 

And then that was my memory of that person. And then when I saw them in person, it took several of those interactions over maybe years before I finally started to see them slightly differently. Just like the man that you just talked about, what you remember is him looking over your shoulder. It would take a long time, a lot of interactions before that would shift and a willingness on both of you, to shift that, first impression and how you would interact with each other.

 

Cool.   Of people want to , work with Debra.  She’s taking her classes soon. I actually might jump on this. It’s every, in starting in January on the Saturdays, she  giving a live presentation and, tell us more about that event. And, you guys are doing some networking, so that’s what I’m particularly  , excited about kind of meeting some other people have that growth mindset too.

 

And you never know who you’re going to meet on the other end. And we never know who signs up for our programs because unlike you, we just, whoever signs up, as long as they have a room, they enter into the room with us. but it’s called confident connections and we hit over those five weeks. the key areas that we’ve been brought into companies to do training for, I did the training for Boeing for about eight years prior to COVID, worked with many fortune 500 companies, as well as.

 

Small startup companies, everything across the board, as well as individuals and some public programs. And we’ve taken many of those key elements and brought that into this five week. confident connections masterclass that we conduct. We will have some breakout rooms and interesting. we’ve had some people that have turned off their cameras and we use that as a teaching opportunity.

 

Everything’s a teaching opportunity. And so I say, all right, how did you feel connected to this person? When their camera is not on. And of course, everybody says, no, not the purpose to embarrass anyone ever, but it is important that we step back and vocalize and really think about how we show up really does matter because I think it’s easy to get fall into the pit of it’s just my technical expertise.

 

As long as I’m good at that, the rest doesn’t matter.  And that’s the cool thing about these online settings and being connected with this random people is , you likely will never meet these people again. And if you’re trying to work on these skills, what better place to work on the stuff that messed it up royally, then people not at your workplace, right?

 

Like just random strangers on the internet. I think it’s a great opportunity to nudge at your self-aware and just practice. and it’s a safe place. these are live training programs. These are not recorded that you’re going to watch later. These are live interactive. We tried to make it as close to being in a real class.

 

Face-to-face as we possibly could. the interactions, the conversations, it’s right now in present. And it’s always interesting that people that show up around the table and the questions that they have, and it takes on a lot of the life of the participants. it’s always fun for me to see who’s going to be around the table.

 

And what will this particular program look like? as we walk through content, but people don’t leave jobs usually because of the technical issues, they typically leave jobs because there was something in that work environment that. was abrasive for them. most of us get a job and we’re excited about it.

 

And we tell everybody, and then we start hitting the snooze button saying, is it Friday yet? Or whatever your work week looks like. And it’s usually that sandpaper individual or that person I have to work with that is just very difficult. Because it’s relationships. and so the better I become at communication, creating connections at delivering a better service.

 

The more effective I am professionally. And so these classes are really fun. We have that one coming up and we do have some live programs that we’ll be re-engaging with this next year as well. But our is final touch school.com. And if anybody has any questions that you’ve been just totally off of topic of that, and they want to shoot me an email, I was open to reply to them.

 

Yeah, and you’re based out of Dallas. So we do have a lot of Dallas and Texas folks that are listeners. nothing earlier places, the in-person stuff. but, yeah, we’ll put that in the show notes for everybody and, yeah, appreciate you jumping on. thank you lane. If I were in your world, I would be at your masterclasses 

 

it sounds fantastic. And what a great, great, opportunity for those individuals that can participate and grow individually, grow professionally and grow collaboratively. , it’s what business is about. Yeah. And so if you guys want to jump in the bubble of go to simple passive cashflow.com/bubble, that’s going to be January 16th, the 17th Martin Luther King weekend.

 

or if not, she may email lane and simple passive cashflow.com. If you’ve got any questions, but, thanks for listening guys. And we’ll see you guys next week. 

Pursuing Purpose Through Masterminds and Nonprofits w/ Tim Rhode

https://youtu.be/pH70LEehEQw

Hey, simplepassivecashflow listeners. Just want to wish everybody a Merry Christmas. I don’t know if you celebrate Christmas, but Hey, we got the day off, right? That’s all that really matters. Want to alert you guys that I dropped the new syndication. E-course. Now this is not going to teach you how to be.

No syndicator is going to teach you how to be , the best damn LP. Investor that you can be through a self-guided e-course. So I’ve been working a real long time on this. It’s got, eight modules taking you through every piece of the syndication due diligence process from just understanding what’s the syndication then also, where do you look for?

Like, how do you vet the people? How do you vet the numbers? I have a big section in there on what’s all the little dirty tricks That the syndicators pull to make a deal look better than it really is. And then once you get up to speed on syndications, I have a bonus series in there at least six hours where I’ve got in my mastermind students and some other volunteers together.

To ask me specific questions in an interview format where we really get into the nitty gritty and all of these nuances of great conversations, great insights that you’re not going to get anywhere else. If you don’t like it. we’ve got like a money back guarantee. But I’m pretty confident in this thing that you’re not gonna find anything better than this. So check this out by going to our freeze in a vacation guide@simplepassacastle.com slash syndication. And there you’ll find the link to the e-course, which has way more information than that free guide.

So I would say, yeah, check out the free guide And go from there.

Hey, simplepassivecashflow listeners today. We are going to be talking a little bit about  five Oh one C nonprofit  with Tim road   who’s built up his massive nonprofit and has definitely created his vision and serving that purpose. But if you haven’t yet, please join our mastermind group.

 

Check that out@simplepassivecashflow.com/journey and One two walk around Tim road. How’s it going to. Hey lane. Thanks for having me on look forward to hopefully helping you, where guests get what I call the gift of giving back, on our climbing the first mountain to success. A lot of times we forget about.

 

Throwing down the rope and helping lift others to come with us. And I want to put this bug in your ear of how much society needs that today and how you can be a hero in your community and help lift others while making millions for yourself. Hopefully. Yeah. And for those of you guys, we’re coming out of the election season.

 

 , you’re getting frustrated like me.  They see a lot of problems out there.  This is the way to go fix it yourself. Look at the Melinda Gates and bill Gates foundation, they went and did it themselves. And that doesn’t mean that, you can create your own little nonprofit, do it yourself also.

 

And great way to empower yourself after you’ve created your wealth. Tim maybe gets a little bit background. You started in real estate. Tell us how you found this. You got your head above water. Sure.  I’d like to say I’ve gone from one of the more selfish people you’ll ever meet in your life to one of the more selfless  you’ll ever meet in your life.

 

And this transition happened from 15 I’m now 61. Okay.  Barely graduated high school. I never went to college and I was what you’d call a late bloomer. And luckily I found my niche selling real estate and  I put the key in the lock and it finally fit. And I found my niche and I want to touch on one life fully lived on what we teach there later, because that’s what it’s about is figuring out where do you think.

 

Fifth and how can you thrive? And that’s the charity I created down the road. So here I am a lost soul at 25, with two small kids, barely getting by as a person, part time, grocery clerk, I get my real estate license. I sell three houses the first weekend. And I knew it was on, I knew I had found my niche.

 

So consequently. Doing what I love to do worked really well. And so I got better and better at listing and selling homes. And what I did differently that most don’t do is I still lived like a grocery clerk as my income went from 60 to 150 to 300 to 500. My expenses went from 30 to 35 to 40. That 50 to 60.

 

And so if you look at what’s coming in, what’s going out, what’s left to invest that number kept growing. And I was very aggressive by and single family duplex land in the path of growth, different,  just singles and doubles. To where I looked up at around 40 years old. And this was in 2007 in California and I was ready to retire and I sold  most of my properties right into the California craze and basically retired around 40 years old.

 

And since then I’ve been doing what I call getting the goods in the woods skiing, hiking, biking, all the NS that are so fun. And I helped start our for-profit company called GoBundance, which is really Blossomed, hugely and I at a nonprofit called one life fully lid. So I could throw down the rope and help those, emerging from hardship, those that never learn this stuff that most of us do how to find their best life also.

 

And I found that really rewarding. So a lot of folks listening are still working the day job. They have high salaries, but now there’s this concept. We hear a lot about putting your oxygen mask out before helping out others. , how did you in your thirties and forties, how did you personify that whole.

 

Thought I want to challenge that thought. Why do you have to wait?   So here I am like at 25, I’m a part-time last grocery clerk. And at 28, I started to have some success. I was probably making in real estate. I was probably making a couple hundred grand a year and I just. But stuck my toe in the water.

 

I went and spoke at a junior high to 13 year olds. And you talk about a tough crowd. And they were like, Hey, does he have a bugger? They were just rude. And it was a really not a fun experience, but it felt good to give back. And I also volunteered at my local boys and girls club and got on their board of directors and help them raise money.

 

While I was making my way. So I don’t think you need to wait till your ships come in or you’re on top of that first mountain and quote successful. Why not do some great things to help humanity along the way? So when you were making lessons 400, 500,000 a year, were you giving your time or was it more money?

 

Back then, because some people think when you’re in that early stage of your entrepreneurship journey are still building your net worth up, that you need to put that money into real estate agents, that brokerage businesses, a money intensive business too. Yeah. Yeah. Honestly, I wasn’t that generous financially.

 

Until after I was financially free, I gave more of my time and some of my money to the boys and girls club, probably a couple of grand a year. Whereas now I literally give, 50,000 to 75,000 of my own cash, as well as put in,  thousands of hours a year on my charity.

 

 Yeah. And I think  that’s the hard thing, right? I call it the sandwich generation is, the folks between the age 30 to 50, when you’re supposed to be building that wealth, the financial wealth,  there’s a huge demand on your time, so you pulled in two different edges.

 

Absolutely. Especially people with busy families and I’m talking to the moms, those are the ones,  doing the business or working and running a family. Boy are you squeezed for time? And this is something you can do. Just the volunteer and take your kids with you perhaps and get them understanding how important it is for us to all give back as we go.

 

But I understand those challenges between 30 and 50 of your just you’re on the hamster wheel, trying to make sure you make it up that first mountain yourself. And I say good for you for working harder than most trying to do. Everything you can do to make sure you make it up that first mountain. And believe me, I remember that timeframe and it was, I didn’t know, this was all going to work out the way it did until I looked up at 40 and said, Holy crimeny, I could retire.

 

And did what most don’t. I did retire. I did quit listing and selling and just put all my efforts into the things I spoke of getting the goods in the woods, taking care of my health, being close to my family and give them back through our charity. And when you started to come over that apex and you went to more of a retirement lifestyle.

 

, , you just start your nonprofit at that point, or  were you still searching for what really resonated with you? No, that’s a great question lane.  I tapped out around 2007, 2008, and it was you said a lot of people are upset of how the election went.

 

Around that time. I wasn’t too happy with the way the election went and I was upset and I was upset what humanity, it felt like it was going in the wrong direction. And so it took a couple years to figure out how can I make a difference? And it also took my mastermind partners. Calling me out. Cause I was bitching about how pissed off I was, how things were going.

 

They said, why don’t you do something about why don’t you quit wine? And we’re sick of hearing you whine about it. And I was out getting the goods in the woods, which you have more time to think when get quiet and meditator, pray. And really get quiet. The answers come to you and it hit me out in the country.

 

Dude, you know how to be successful in life. You have all these friends who are really successful. What have you got all those friends together and had them help you? Teach others, these basic concepts of how to create your best life. And if you don’t mind laying really quickly, I’d love to talk about what one life teaches.

 

Is that okay? Yeah, sure. Sure. So I talked about putting my key in the lock and it fit. That’s what we want for everybody. Where will I fit in and thrive? So we created this thing called the fulfillment triangle. And if you look at a triangle you look at where do my passions meet my talents, where there’s opportunity, where can I figure out what to do, where I’m good at it.

 

I love to do it , and I can make a lot of money doing it. That for me, was selling real estate. So that’s the first concept is where will I fit in and thrive? And then there’s the second  concept. And that’s our one live roadmap, which is available on Amazon. And that’s figuring out vision, where am I going with all this?

 

Finances, how will I fund it relationships? Who’s my posse. Who’s my mentors and wellness. How can I be healthy in my mind, body and spirit to pull off this amazing life I’ve been blessed to live. So that’s our one life fully lived teachings, and we want everybody to be empowered, to find their best life.

 

And can you see how. I’m alive when I’m speaking about that I am so passionate about helping everybody find their best life. And I challenge you to find something you’re so passionate about. Maybe it’s climate change, maybe it’s, something maybe it’s battered women or becoming clean and sober, whatever it is, put your heart and soul into it and find a way to to lift others.

 

It feels great. Or another question I’ll ask is what upsets you in the world? Or what gets you really fired up? For me, it’s  people there’s so much bad financial advice out there, right? Like by a big young family buying a big house to live in they give up their cashflow, they can’t buy rentals or all this, investing in retail investments, like the 401k, Bad financial advice in my opinion.

 

And it just robs a lot of people of retirement, but looking back, what was the thing that you’re bitching about? And maybe it seems like I’d love to tell you I’ve changed the whole thing or one life has, but it seems like it’s harder today for the average person just getting out in the world to find their best life.

 

And it seems like they’re being told you can’t do it. Your screwed. There’s nothing you can do and be pissed at them,  instead of them being them Howard, to go inside and find the tools for their best life. So I think that would be just like you said, wrong information with. Financing. I would say it’s wrong information as to how to find your best life.

 

And one of them is the one size fits all. All you need to go to college here, sign here. Don’t worry about the debt. Just sign. Everything will work out fine. And no one’s telling them about trades. The country is screaming for plumbers and electricians and welders. You can make a hundred grand out the gate with no debt.

 

 So  we’re really into empowering people to find their best life and go after it with that. Is there a such an age range that you dial in on or is it a wide range, right? Yeah, we most concentrate on those, just getting out in the world either in the, let’s say 10th grade and we have the one life.

 

One life is the number one, one life. Roadmap on Amazon for students, those still in school. And then we have the one life roadmap for adults. And mainly it’s for those, just got out of school up until gosh, some of them are 40 and having to  reboot, if you will. So it’s mainly for those just getting out of school and those kind of struggling with what they’re going to do.

 

I sure wish I had this at 17 years old. My life would have been way different. I would have gotten it together earlier. If I  only had a roadmap to follow.  Now, one of the nice things about having a nonprofit is, some of the tax advantages, if you can give us some insights on, when you initially started  your foundation,  how did you use that five Oh one C3 and maybe just,  a lot of people, I don’t know too much about it, but I know that there’s some benefits in there.

 

Sure. There’s a lot of benefits. If you want I’m kinda weird. I don’t take any salary from one life. So I don’t benefit financially at all. I’ve put hundreds of thousands of dollars of my own money and hit up all my GoBundance friends. David Osborne, Pat. Hi Ben, Mike McCarthy. And our tribe has literally given millions to go by minutes to help others.

 

There are tax advantages.  To, there is no tax on the nonprofit, but all of our funds go into, serving the community and helping lift the others. It gives you like that basket to go and pull other people who haven’t don’t have the time. But maybe have the money.

 

Is that right? Yeah. And everybody’s different. Some have time and no money, some money and no time. And everybody’s looking for a way to serve. And one thing that one life’s done really is made it. We call it easy to serve in your neighborhood by teaching our teachings to those you want to live.

 

And because of that,  there’s a group of clean and sober people. One guy was a heroin addict for seven years. Got clean. Came to our teachings in the last year, he’s bought his own home and two rental properties, including a fourplex. And he said he learned more from our community in six months than he had in seven years.

 

 One thing I say a lot of times is the relationships is the currency of the wealthy  I get it when you’re starting out. And this is the way I was in my twenties. When I was really frugal still am, but I wouldn’t spend money on anything. And  I’ve heard the wisdom where, money augments, what you are.

 

Inside,  it’s a multiplier. So if you’re cheap and  you’re wanting things all by yourself. Even when you have money, you’ll be that way. But for me, when I got more money, it kinda opened my eyes to seeing how. Other people were doing it  better models.  We have our free Facebook group, the who we that you guys are welcome to join you guys listing.

 

But if you notice in that free group, there’ll be some folks who just dive in, dive out, ask for some free advice, peace  in and out. And I’ve mentioned on the show that I’m in, I’ve been in several masterminds. Some of them are over $25,000 a year.  And I’ll just say it’s a different species of people in those groups that fly around 25 grand.

 

And, not that they have  25 grand to burn on something like that, but  it’s their opinion on like money flowing. I don’t know if you can talk about the contrast because a lot of people listening, they’ve never been in a mastermind before. It’s just that W2 working lifestyle where it’s just, it’s competitive.

 

There’s , not much  collaboration. There’s none of this pay it forward type of attitude amongst the cubicle dwellers.  Maybe you can talk a little bit about that, Tim. Sure.  That’s touching more on the tribe. I also help create called GoBundance and GoBundance is helping wealthy, generous people who choose to lead Epic lives.

 

I don’t know when this podcast is gonna come out. But as of now, it costs 7,000 to be in our tribe is going up January 1st to 10,000 and we feel about some bargain and in our tribe or many  W2, people who want to be 10 99 people, we actually have a micro tribe within our tribe of people. Who are current W2 and are working on their investing to take over to where they can just go off into that world.

 

And we’ve had some amazing people speak at our events and beyond something within the tribe. That we call seven to eight and seven to eight is how do you go from seven figures for a million dollars to eight figures worth $10 million. And there’s a gentleman who was on there just recently.

 

That was a W2 person three years ago, I believe. And he’s now, or some crazy number. 28 million or something like that because he’s been flipping triple net lease properties for the last three years and making millions doing that. And when you surround yourself with people who are doing the things that you want to do, but at a much higher level, you seem to come up to that level.

 

And that’s what we’ve noticed within GoBundance. And that’s. From my standpoint is one of the founders of go Bennetts and one with a big heart to lift others. Here, we’ve created this one life community. And in there we have something called three to five, but take off on the seven to eight. How do you make your first hundred bucks?

 

And how do you turn that into 10,000 and become entrepreneurial in nature? 

 

Hey guys looks like a Tim’s internet went out, but just to cap things off, we’re not telling you to go and join GoBundance, which I think is a pretty moderately price mastermind I’m in another mastermind called collective genius that one’s 25,000 a year. But  I’ve been in a lot of masterminds and it really changed my life.

 

I think if you’re listening right now, you’ve never been in one. Yeah, don’t go join in a $10,000 one in a year, right off the bat, but maybe just start off with a small one of even your, just your friends and family,  get a few people together. Get some drinks, go out for dinner and make the discussion a little more focused around what are your goals?

 

Not only money-wise or business-wise, but also career family relationships, et cetera. And I think at that point you start to see the value and the power of these types of masterminds. And when  you’re able to. Become more vulnerable, share what you’re working on, what are the good things?

 

What are the bad things? And one of the very famous very popular formats we’ll use is that the thorn and the Rose, so that the Rose is that you talk about something shiny that you’re working on or a win, but the thorn is designed that you get vulnerable and you share, what’s not going well.

 

And that’s really where the power of these masterminds come because it’s the aid of the other people listening. That they come in and either have a connection for you, or they went through the same circumstance and they can guide you through it. And this is what separates, the average folks from a lot of, like just the people who are killing it out there that they’re able to graduate to higher level masterminds and.

 

It’s really where the connections, the same, your net worth is. Your network is so true because when you go higher and higher, which is why pay so much money to be in the masterminds that I’m in, you get access to people who have the connections and have the social capital to call upon to give it to you.

 

And the thought is you need pay it forward and you help out each other. And. , if you would have found me five, 10 years ago, I would have thought you’re crazy. My wife thinks I’m crazy for spending $25,000 a year, when somebody from one of my masterminds that I am in visits Hawaii,  it’s just night and day different than connecting with some person who’s never been in a mastermind.

 

And I think even she gets it at that point, why it’s so valuable or  how it keeps me. Sane when I have to talk about my 401k or why I don’t have one to my mom around Thanksgiving time or whatnot, or, get into those types of arguments or go and congratulate somebody for buying a house that they live in that just messed up their financial future for a really long time.

 

 Yeah, it keeps me sane. If I have a  peer group that I know is out there that I’m a part of, but yeah  I’m not saying that you guys should be joining one, but try and create your own one. And if you guys are looking for the right peer group of the right people, cause that’s the hard thing, and this is probably one of the reasons why pay so much money.

 

Too. So I just don’t screw around with the wrong people. We have our,  own passive investor accelerator that I’m rebranding as the family office Ohana mastermind. You guys can get more details@simplepassivecashflow.com slash journey, but high paid professionals pretty much all accredited investors at this point.

 

Who are busy professionals still gonna spend most of their time at the day job, but looking to build connections with other pure passive investors and to find more deals, figure out what are the best practice for tax legal, infinite banking. And more importantly, which I don’t think they realize until they get into it for about a year is it’s the relationships, right?

 

As your journey to financial freedom, Moves on. Most people get financially free in five to 10 years and have a good paying job that, what do you do for the other 10, 20, 30 years? What’s the relationships that you forge in your first five years are the relationships that at least I cherish, but yeah, if you guys haven’t connected me I still do those free calls for new Club members for your onboarding call check that out.

 

Simplepassivecashflow.com/club. And we’ll see you guys next time. Bye. 

2021 Housing Market Preview w/ John Burns

https://youtu.be/2Fs7CYzzGrM

We are going to be having a presentation done by Mr. John Burns from John Burns real estate consulting.com. John gave a great presentation to a mastermind that I’m personally in collective genius, and I thought it really, great for a lot of us viewers to go to the same presentation, but tailor it a little bit for our group.

individual investors, vacation investors, and some of us with still some single family calls and portfolio. We’re trying to get into that, but, thanks for joining us, John, and, appreciate taking us through. There’s going to be a lot of insights to do this deck. Yeah. We collect a lot of data that’s for sure.

You guys like my, monthly reports, you guys can get access to that. It’s full passive cashflow.com/investor letter. But from time to time, I’ll take a thing from John Burns like there you haul report that always comes from them. a little bit on my business then to start, we’ve got 70 people all over the country, nobody in Hawaii. but we do a little bit of work there and we focus on big companies, who believe it or not. Even the biggest companies in the industry, don’t have big research departments to figure out what’s going on in the housing market.

A lot of them. So they outsource that to us. So we’ve got 70 people trying to figure out what’s going on in the housing market. I subscription research product, and then also individual consulting. And one of the things I’m trying to get closer to and you guys can help me with the fair trade here is I’ll share all this information with you, but, I want to really understand what’s going on at the individual investor level.

And since they’re not clients of ours and you’re not, we do a survey of investors. And a couple of questions once a quarter, just got to email me or, Devin Bachman. And I will, we’ll send you the content plus some of your local market, research that you’ll find interesting. And her email is D Bachman, B a C H M a n@realestateconsulting.com.

So we’ll put this all in the YouTube channel, show notes, and then the webpage for this. but yeah, this, and this is what makes this data so great is John actually goes and gets this from folks like ourselves instead of, and they bring it to the institutions out there. So this is great data, but he needs some help here, from the foot soldiers like us that see what’s actually happening out there.

Yeah. data includes just comments. like John, you’re totally wrong. I’m seeing this, I’m seeing that. I learned more from my clients’ stuff. They’re seeing in the field than actual from data. so I’m gonna bring back a couple slides from a presentation I did in April, just to compare and contrast with where we are today.

And then, I think this has been totally underplayed, even though everybody knows it. the government stimulus was just massive and it, if it was $500 billion, it would’ve helped. It was a couple of trillion dollars at more than helped. And it really was a government induced housing boom that we’re in the middle of.

And, then we do one of the surveys we do is we survey people that own single family rental home. So you can participate in that. We serve at the landlords that own 175,000 homes. I’ll share you with you. What’s going on. There. It is one of the reasons that so much capital is pivoting into single family rental homes right now is our thesis was, it was a pretty stable recession-proof is too strong, but, Doesn’t cycle as hard as real estate normally does in a recession.

And man, is that definitely playing out right now? So we call it the safe and stable investment. If you will, single-family rentals. I know it’s getting a little more challenging because prices are going up faster than rents though. Then, I’ll talk, I’ll share with you some of the public data on how the new public companies are doing.

Just, I’ll give you some metrics with that. Do a quick regional overview and then a little wrap up of some risks and rewards. So back in April, we actually started this in March. We started weekly webinars for our clients. We do them monthly. Now that there’s day in fact tomorrow, we started calling it a global reset in March and here are the slides that, it was more than a reset.

It was a complete rocket taking off. So one of our clients is Oak tree capital. They manage 130 billion assets under management. Howard marks is one of the most brilliant people out there. If you could pick up some of his investing books, I would highly recommend it, but here’s what he was saying in April.

just back up, this is one of the greatest pandemics in history, the greatest economic contraction in 90 years, the greatest oil price declined practically ever. But this was the key that the greatest central bank and government intervention of all times. So if you study the economics and demand and supply, what the government does is not in response to demand and supply, it’s just massive stimulus.

And he called this one, And he was on the sidelines for a while. and this has been the big boost to housing. So as far as the vaccine was concerned, We turned to bill Gates. Who’d been studying this heavily. He said 10 weeks of extreme lockdown. And then we’ll open up in may or June. You got that, You said probably 18 months to vaccine, which seemed optimistic at the time. But actually there, it looks like we’re beating his forecast, so that’s pretty good. And he got this one wrong and he really just mentioned quickly. He didn’t think it’d be a while until housing recovered, but he wasn’t focused on what Howard marks was focused on, which is what the government was going to do to intervene.

And the intervention, even though it’s been much more significant than the early two thousands, if you study housing cycles, it reminds me of the early two thousands. When housing was 10 to 12 years after the great SNL crisis that had wiped out all the capital to housing, this felt very much the same.

And then we have a recession and Greenspan at the time drop the fed funds rate 550 basis points, 5.5%. And housing was in great shape and housing led the recovery and in a bit of a different way, I think the exact same thing is going on right now. So the other slide that we showed was that. There were really three arms of the federal government coming to the rescue.

All of our elected officials, all of the appointed officials overseeing the mortgage industry, which you remember at the time was in a complete upheaval and the fed. So let’s talk about what they did, the government induced housing built. So this is a timeline, and I’m going to show you about where we are right now that we’re getting a little bit toward the end of Q4 here, but.

670 billion dollars in PPP loans. they throw around these billions of dollars of numbers. And if it was a hundred billion or 670 billion, most people don’t know the difference, but this was all of the payroll and all of the rent for two months for all small businesses in America.

Now that wasn’t enough for retail or a restaurant in New York. But it was a hell of a lot for a lot of other businesses that were struggling a bit, but they were covering almost all of their expenses. And I’m in a CEO group where more than two thirds of the CEOs, we just pulled them. Their balance sheets are stronger today than they were back in February, JP Morgan, chase and others have released some data that consumer’s checking account balances.

Now, not everybody, but on average are higher than they were in February. This is just a lot of cash. This is the $290 billion stimulus check. They’re talking about doing another one. you got 26 weeks of unemployment that got extended the 39. Hey, we’re going to put $600 more per week. Into everybody’s unemployment check that is more than enough to pay the rent.

And then when that expired, through executive order, there was another $300, and that’s getting ready to expire. So the government has been paying for people’s expenses here, Stu loans, Hey, don’t worry about them. You don’t have to pay it mortgage. you don’t even have to prove that you’re in distress.

Just, you can stop paying if you want to 15%, 16% of FHA mortgages, which are the mortgage is to the people that are putting the least amount down and have the lowest credit scores, are delinquent right now. some of those people have their job. They’re just not paying it. And the government has said, we’re not going to foreclose on you.

We’re going to restructure your loan. So if you miss those payments and you’ve got a job and you can start paying again, where it’s going to tack all the missed payments onto the end. I’m sure there will be foreclosures that come out of this. but it won’t be anything like the last time.

And then I don’t know where the center for disease control thinks that they’ve got the power to tell people to stop paying rent, but they did interestingly though, at least among my clientele and some of whom have pulled their clients who are definitely out of work, they’re still making their rent payments.

because they know what it’s like to have to rent a new place. When you got kicked out of the last place for not paying rent, it’s pretty hard to rent a new place. So people are still paying their rent. So this has been like the U S government, took a helicopter and flew all over all of America and just spread cash all over it.

That could the consumer financial obligation ratio, which is people’s debt in relation to income is down. The actual, balances of consumer debt. Now mortgages are trending up because mortgages are doing great, but everything else is 10. People are paying down their debt. the rent collections, as I mentioned, have been pretty darn high in December.

They were pretty bad, but this is through the sixth of the month and the fifth and sixth for the weekends, I’m expecting it to get a little bit better. But if I told you that, Hey, we were going to. Have 30% of America lose their job in March and everybody would still pay their mat. you’d said that was crazy, but that is what’s going on because they were given the money to do And this has been what people call a K shaped recovery, which I like to distinguish it, sadly between the haves who are at the top of the K and the have nots who are at the bottom of the K. and if you’re at the top of the K, if you had some assets going into this, your stock is up, your home prices are up, your retirement savings are up.

If you’re employed in an industry that’s doing okay, you’re fine. they have nots where people that were really, in an industry that was paying people, minimum wage or close to minimum wage that, also involved group gathering so that all the headlines have been there. There has been a lot of distress there, but.

What we’ve seen for housing is that’s not the majority of America. It’s part of America and it hurts, but a good chunk of America is doing fine. Yes, John, like you said, it in the last presentation that I jotted down as a note here. not to be tone deaf or anything like that. If you go back to your last slide, but I think a lot of the people that are listening to this podcast and investing, they have very stable, white collar jobs.

And it’s the people that are more in the travel entertainment industry, food service industries, which were typically the ones struggling out of work, but there’s a lot of people, I don’t know what percentage of people out there that are doing just fine. And , they’re paying down debt.

They have quite a bit of money on the sidelines. And if you noticed that the things that we can’t do, like we can’t go to sporting events. We can’t travel. there’s a lot of white collar professionals out there. Just itching to spend the buck. yeah. when people are wildly vaccinated here, I think in fact, I was just telling my wife , we’re going to book a hotel in New York for the month of October now.

Cause it’s really cheap. I think things are going to get really busy. People are dying to get out. And the other part of this I didn’t really talk about is that, the government took away your ability to spend a lot of your money. You can’t go on vacation, you can’t go out to restaurants.

So people have been saving. So on top of the here’s some cash, you forced people to save more. I think there’s a lot of potential at the end of this year for the economy to be on rocket fuel. If all these vaccines happen, like it, it seems. I think so myself, I think it’s going to be a big party coming late next year, especially for those who have money.

just for scale, like the 2008, a lot of money got dumped into the system. Is it more or less, or what kind of order of magnitude are we talking? yeah, it’s I think I have a slide coming in the neck coming up and it’s a, it’s $3 trillion and 2008 through 2014, it took per Nikki. Six years to spend that three term dollars.

Jay Powell did at this time at five months, same amount in five months. I mean we borrowed the playbook. I said, why let it play out over time? And we may get some more here too. I think I have a slide on that, but the other thing he’s doing this time, which Bernanki did start doing last time, that the fed controls the short end of the curve, how much the bank borrowing rate is overnight.

But he said, I’m going to control the long end of the curve, but I’m going to actually be the purchaser of 10 year treasuries and be the purchaser of mortgage backed securities. And that extra demand from me is going to drive mortgage rates down. So that mortgage rates are below 3%. It’s not because of the free market.

Although the part of that is that the fed is interviewing. and it said we’re going to be intervening for the foreseeable future. Even if we see some above normal inflation here we want to see that. So here’s the chart you were alluding to where the fed back in 2008 had an $800 billion balance sheet.

Then it started buying mortgages and tenure treasuries grew to $4 trillion. And then in just this year has grown to $7 trillion. it’s just. Treasury is printing money and the fed is buying it. And, I’m not smart enough to predict interest rates. but you can go into the bond market and see what the bond market is forecasting and they’re forecasting that the 10 year treasury rate stays relatively flat over the next four years.

Mortgage rates usually trade as a premium over that cause a typical pool of a thousand mortgages. Pays off over 10 years. Cause somebody replies after two, but somebody else takes 30. So they trade off the 10 year and the bond market is saying, rates should be flat. So I’m saying I’m not smarter than the bond market.

And assuming rates are going to be flat. if the bond market is wrong, then I can change the game here dramatically. So just wrapping this section up, the government lifelines have just been unbelievable. They’ve helped businesses. Keep people employed. they’ve helped consumers pay down debt, pay their rent, pay their mortgage, avoid paying student debt.

A lot of my builder clients are saying to their clients have got the down payment now because it only requires 5% through FHA due to somebody’s savings. And then the artificially low rates of boosted home prices and sales volume. So housing is just booming, if you turn to housing investment, being a landlord.

So here’s our survey where we got 192 people to fill this out who oversee 175,000 properties. We got it at the local level two and 55 Metro areas. I didn’t just go to the big boys and say, give me your numbers. On the average, we have this by market. and we do share I’m only sharing part of it here, but we do share all the detail with people that participate.

it’s a 50 page report for a couple of questions. I am putting here on the slide, the email again, D Bachman, B a C H M a N, every real estate consulting.com. So here’s what they said. So 32% of new tenants are coming from apartments. it’s a different demographic as your clients know.

I find that the wall street types who all own their home, Or a young smart kid in New York who grew up in an owned home, doesn’t understand single family rentals. And I’m trying to educate. And it’s those of you that are raising capital, probably understand those two people. why aren’t people buying homes?

There’s just, there’s a lot of people who are just, I live in a single family rental home, cause that’s what I want to garage laundry. I want yard. It’s those folks. and then 59% of their tenants are coming from an urban location. Now we weren’t able to say, okay, was that downtown Los Angeles or the San Fernando Valley?

So I think, urban areas is the right way to look at it. Median rent is , $1,753 per month. That’s within a dollar of what the big professional landlords are saying. and rent growth, which was still growing, but at a lower rate during the first and second quarter is climbing back up. And what we’re learning, I think I show this later is that landlords by and large, not raising the rents very much on tenants that are renewing, but the demand is so strong that when your unit goes vacant, you’re able to release it at a lot higher rates.

So there’s a tale of two stories in here. There’s also people wanting to avoid headline risks, particularly the institutional companies of being known for Jack rents during a pandemic. They don’t want that. And 60% of them are now telling us that leasing activity is strong or very strong. So here we are at the end of the fourth quarter saying leasing activity is great and going forward, I expect it to be great too.

So that gives me a good eye on what the demand is like out there. only 11% say they’ve got lower occupancy than a year ago. They’re 97% occupied. So if you own a hundred units and 97% of them are full you’re in pretty damn good shape. And, that’s the recipe for a business that needs some more supply.

And we are seeing more supply come on the market, actually with newly built rental homes. Really in a mass way for the first time ever. So let’s look at the cycle of, okay. I could make a few comments. I think you hit it right on the head there, John, like I’m coming from the apartment world. And, you had that slide there where you had people moving out of apartments into homes.

definitely saw that in one of our apartments, that’s more on the B plus a minus fringe where it’s a clientele that is very good with their money. Let’s call it that. And they, when they saw race drop under 3%, we had a lot of people move out because they were buying houses to live in that has come and gone over a few months.

We had to get through that struggle where, went from 90 something percent down into like the eighties, which that was an interesting phenomenon and you hit it right on the head. and then, demand is definitely coming back overall. but we are still doing concessions cause it’s weird.

we don’t know. What’s a really thing with this. The CDC. But I do think that data is definitely skewed, right? if it clumps in there, all the Bay area, blue markets difficult non Lord laws areas. And then there are some areas that are undesirable that suffer because of this.

Yeah. and, if you’re a tenant basis, people who can work from home, , we’ve actually seen people move further out to get cheaper rent. and then there also is, they happen to have a neighbor who’s a bit noisy and interrupting their zoom calls. They’re gone. I think that’ll all come back if you will, but we have some pretty good data and a lot of confidence because I’m allowing my employees to do it.

More of them to continue working from home in perpetuity, some privacy and some quiet is more important in an apartment situation than ever before. So it can come down to the building and even who’s in the building. so here’s some data from our big single family rental report that we publish regularly.

So we do have a dashboard or where we can slice and dice all the data on rents and job growth and home prices. And one thing I wanted to point out here is actually during this pandemic, we’ve seen the gross yield and in places like Atlanta actually tick up, where rents have been. Growing. So 8.1% gross yield versus 7.9 a few months ago.

but that’s hair today to a year ago and just call a massive shift here. So a year ago, incomes are growing, say two and a half, 3% on prices. We’re growing four. So they’re growing a little bit faster, but rates were falling. payments weren’t growing faster than incomes. Single family rants were growing a little bit better, than incomes and apartment rents were going a little better than incomes, but basically you had a stable environment where three to 4%, payment or rent growth.

That’s a re that’s a market where demand is exceeding supply, but just a little bit. And there’s a lot of people running around saying, we need millions of more homes built or under supplied to the extent I think they’re overstating that, but to the extent it’s true, rents and prices have already adjusted.

And I think it’s important to remember that the look of what we’ve got going on right now. Home prices are up 10% year over year. We think they’re going to end the year up 11% single family rats, pretty much the same, about 4% single-family rent growth. And on average, apartment rents down because of some of the concessions you’re talking about.

But you want to pick the San Francisco Bay area? It’s down 30% plus in San Francisco, it’s up in Sacramento. So that’s a good example of people moving somewhere else to pay a heck of a lot less in rent. And here’s a good example of what you were illustrating. There’s a publicly traded company out of Toronto that owns a lot of rentals in the United States.

They own 22,000 single-family rental homes in 8,000 apartments. They’re called Tricon. they just reported their quarter. It was a phenomenal quarter where net income was up 74%. But since it was the exact same company, I thought I could compare and contrast their single family rental portfolio with their apartment portfolio.

So their apartment portfolio, the occupancy was down 2.4% to 92.8. the bad debt was up, to two and a half percent and rents were down to their single family. Rental portfolio. Occupancy was up to 97 and a half bad debt. And in a pandemic, a bad debt was down and a rent growth was a very strong 5.2%.

And when you drill down to that 5.2%. It was 2.4% of renewals and 12 of 0.6% on new leases, they were able to increase the rent. and this is the reason why, this is some census Bureau data. It’s the best data out there. It’s not perfect, but, they’re showing 95% occupancy, which is the highest occupancy in 25 years.

And so that’s where we sit right now is very high occupancy on single-family rental. One of the other big differences between apartments though, is we’ve been we’re at a 40 year high of apartment construction. So when demand slows and you dump in all these brand new, beautiful, vacant homes, that creates a lot of incentive where we have not been building rental houses like that.

So rental housing is not having to deal with all these brand new, beautiful rental. It was coming onto the market. There’s no competition. And that’s historically why this has been a more stable investment. And to compare in the apartment tenant versus the single family rental tenant. They’re the real amenities they want.

I get this question with our developer clients a lot. What amenities do they want? single family ranch just wants things I can’t have in an apartment complex, like laundry in my unit, more privacy, I garage, more square footage place for my pet, a tiny yard for a barbecue and the pet. those are the amenities.

Skip over this. And we have this in 63 markets around the country and probably the easiest way to say it is that the rent growth is the least along the California coast and in the Northeast. And it’s the most in the South. and the Southwest were these. Population growth we were seeing to those areas has just accelerated even more right now.

there’s been a lot of headlines of, big companies leaving California just in the last month. So the big guys, here’s how they’re doing. So there’s 80,000 homes, invitation homes. They’ve got the most expensive rents too, because they focused on what they call supply constraints.

Sub-markets places where you’d never see a lot of construction because there’s homes everywhere. So that they’re in it. From there in the eight locations, if you will, American homes for rent right behind him at 50,000 homes with slightly lower rents around 1750, both of them are clients of mine. And both of them say the average income on their tenant is as a dual income household.

That makes more than a hundred thousand dollars a year. And there’s a privately held company called progress that just bought a public company called front yard. And they’re going to be the same size as American homes for rent, but with an older, Less of a great location. Property, if you will, and these guys all need to grow.

So this is one of the reasons why I want to pull you and your, clients is, I think, an under reported factor. I think your listeners probably get it, but most people don’t is all the investment activity that we’re seeing in the housing market and investors competing from home. It’s not, we’re talking about mortgage rates and consumers, but.

That’s not helping invitation homes who needs to grow. That’s not helping American homes or needs to grow. American homes is building, I think about 1500 homes a year for their own account, brand new homes, plus buying off the MLS and same with Tricon. So I think there’s an investor frenzy. If you will.

everybody’s got what they call quote unquote, their buy box, their locations and price ranges. And as soon as one of those homes hits the market, there’s three or four beds on it. That could disappear. It did in 2007. so that’s why I want to pay attention to this. Then let’s talk about the rentals in America.

So there’s almost 46 million people who rent something 14.79 of them, or any large garden, a pump apartment complex, or a high rise. So that’s less than a third. Another 10 million or in a small rental building, like three to nine units, another 3 million in duplexes, another 13 million in old homes and another 3 million in condo.

So you probably hear people quote 13, nine or 16, nine or 19 nine. It depends whether they’re including condos or duplexes in their definition, if you will, but why are we building 400,000 new homes a year? Just for this segment up here that is garden apartment complexes. And we’ve been building nothing for the rest forever.

So this is the real opportunity where we’re seeing a lot of money come in and say, okay, if these guys can manage thousands of units all over Atlanta, if I put 200 units right next to each other, I’m confident they can manage that and do a great job. And there’s so much real estate capital out there right now.

th that’s the only safe place to go. You’re not going into apartments. They’re not going into hotels. You’re not going into office. You’re not going into retail until those things really become distressed. Then maybe we’ll see some capital pivots. They’re not. So I don’t skip over that. whereas, Oh, the greatest names of the apartment world than all of this.

So these are the biggest apartment companies out there, and they have not been participating in this at all. But I think this is going to change. We’re talking to quite a few of them. They’re not going to be building another garden, apartment complex when they’re giving away two months of free rent and the one they just opened, they’re pivoting over to what I think is going to be a brand new asset class, where we have more than a hundred thousand, brand new single family rental homes built every year.

the data right now says that we’re at about 55,000. And the big home builders know how to build these homes more efficiently than apartment developers and get the cost down. So you’re seeing Dr. Horton, Lennart told Taylor Morrison LGI the new Hong company. All play in this space in one way or another.

Some are building subdivisions and selling them. Others are, most of them actually are selling three homes here, four homes there, to people. Some of them are now in partnership with some of these companies to just basically feed, build the home for them since they know how to build. so here’s what we’re seeing nationally.

So in four years, the rent, has gone from 1400 bucks to 1,753. That’s a pretty substantial spike. The net operating margins have gone from the high fifties all the way up to 64%. These companies are becoming very efficient and, a percent now is a lot to add, but they’re adding a 10th of a 0.2 to 20 basis points, all the time getting more efficient on expenses and growing revenue.

And then, rent growth on new leases as a six and a half. And on renewals is three. So again, that’s the disparity I w I was talking about. I think one of the more interesting opportunities on acquisitions here, if you’re looking at acquiring a property, that’s leased, whether or not the current tenant is fully a market and whether or not you can take them to fully a market once you purchase them.

And the turnover has, people are locked down in their house in COVID right now it’s down to 29% turnover rate, which is just extremely low 97% occupancy. So getting to what’s going on around the country. this has not been an equal recession as we talked about earlier with the K recovery, but this has also hit various markets very differently.

So some of the markets that we’re already growing, like gangbusters are the ones that have had less job losses this cycle too, because people are moving to these places. Boston salt Lake Dallas, Phoenix. They’ve got 2% fewer jobs than they did a year ago, but the country has seven in places like New York and Las Vegas have 12% less.

So you got to pick your geography very wisely. And then if you’re targeted to do something new or class a or B plus you’re focused on high-income tenants. Austin actually has 4% more high-income jobs than it did a year ago. Dallas is higher. And that was before Tesla and Oracle and all these other companies announced that they’re leaving California officially and move into Austin.

So Austin is just absolutely on fire with people that make big bucks. what we’re seeing on the, if I transitioned over to the home price side of things, the number of homes in escrow pending sales is up 41% year over year. It’s up in every major market in the country, even Houston, where wild prices, I thought Houston was going to get killed.

We’ve got three people in Houston. they’ve been busy all year long. And one of the things you mentioned that you haul analysis, we price out, renting a U haul truck from one city to the other. And, if it’s the exact same price to take it to one city as to take it back, there’s an equal number of people leaving and coming and going.

But even during all of this where you think Houston would be in a big oil related recession, people are still moving to Houston because it’s cheap. And I can work from home. I can work from anywhere. It’s a better way of saying it. this is some data we got from a company that, analyzes mortgage data.

And you think of investors is paying all cash, but we’re now. So I talked about a hot Austin is with real people moving in. 15% of all the houses sold in Austin with a mortgage are going to investors right now, including some second homes. So this is a big part of the market and its cycle is pretty good.

Darn hard. Very interestingly to me that the investor percentages have been similar over the years, but who the investors are changes, dramatically. And that’s why I want to stay close to your listeners. Supply with that high demand supply is extremely low. We’re down to 285,000, homes for sale in the entire country.

That’s next to nothing. and, it’s down in every market except the two where the media is located and they’re pounding on San Francisco in New York. So yeah, San Francisco, New York housing markets are not the same as the rest of the country. They’ve seen more flight there and it’s more expensive and all the fun things to do have been shut down.

That’s why they’re struggling. lots of suppliers got really low. And so what happens when that happens is prices go through the roof. So we’re seeing even some of the markets that weren’t doing very well. Like the Chicagos of the world, our prices are up 7% per year. I do think that is driven by the fed with the low mortgage rates.

Then you go to some of the boom markets like Nashville and Portland up nine to 10%. A Phoenix home prices are up 15%. And that’s very interesting. I think for investors. Phoenix is one of the hottest rental investment markets in the country. but home prices are up 15% and rents are not up 15%. And so the yields have gotta be falling there.

And now we’ve got some markets where, homes are 20% of the homes, almost one in five and Seattle and Portland are selling within two weeks. And this has been such a big change from the old days when you had to go get a broker and you wouldn’t even get your open house, done it in two weeks. Technology has really accelerating the industry here.

this is probably too much detail, but I want, I wanted to point out there’s been a big shift in price in activity in the high-end lately. The a lot of the homes under $200,000 have now appreciated. And that used to be 50% of the market. It’s only 25% of the market, but this year really starting around.

June a little bit in may, but more in June, you started to see, people sell their home and buy a bigger, nicer home. We’re seeing a significant increase in activity about $550,000. And this is, that goes in with the K shape, recovery. It’s either the haves and have nots. I know here in Hawaii, The condo sales are staying where they’re at. those are you could say they’re the have nots, at the bottom half. And then the million dollar homes. Multi-million dollar homes here in Hawaii. It’s a lot of people coming in, moving in, trying to get away from the big cities or they just have money to spend on this stuff.

It’s the great chef, right? Not the great chef. No, I think, you’re talking about the high rise condo, so I assume, there’s that’s not something people are seeking during COVID, but I think that’s going to change. yeah. And then just wrapping it up today. So we did, I showed them a graphic here of a video we did 12 years ago.

but it smells a lot to me like, We had a little mini recession here, just like we did in when NASDAQ crashed in 2000. And then there was nine 11 in 2001, but we’ve got all this fed stimulus, just like we did back then, in, on the housing industry, which was in phenomenal shape. going into this recession and I just, I think we’re in the midst of a boom, how long it goes.

I don’t know, but I do advise all of my clients keep your eyes wide open as we go through this, because you can make a lot of money, but the last thing you want to do is give it all back. so managing your balance sheet and being careful and diversifying and all those things, I, and I’m sure that’s what you advise people to do.

It is the right way to play this and watch your debt levels as well. So there’s two charts here. They’re really compare and contrast what I’m talking about. Some of those, the home price to income ratio, we call it the home value to income ratio, which is actually creep it’s up at 2004 levels already.

It’s if you just looked at prices in relation to income, which is what investors are paying you say, this is absolutely insane. and we think it’s going to get more insane that’s how the. Tea leaves or how we’re reading them right now. but with payments so damn low, I’m not getting a lot of color from our clients that sell homes that they’re having a tough time getting people to qualify.

In fact, they’re getting three, we have offers on every house. so you’d say, Hey, this is sustainable. But the important thing to point out here is it’s sustainable because rates are so damn well. And, We think rates are going to be low for a long time. That someday if they’re not, or when they’re not, that will be a challenge.

they’ve been low in Japan now for 20 plus years. So it’s impossible to say this is going to change anytime soon. So just wrapping this up, that the payment matters more to the consumer, but the price matters more to the investor. So just pay close attention to that. Okay. I hit all these other things in here.

so let me just get to why we’re so bullish on the short-term resale homes are now sitting on the market for 21 days. That’s it? 71% of homes are selling less than a month compared to 49% a year ago. And we were talking about how ridiculously quick that was a year ago. Builders are selling far more homes than faster than they can build.

D R Horton, which builds 50,000 homes per year. So 81% more our homes last quarter than they did a year ago and a year ago was a good quarter. so they’re just struggling trying to get these things built, which by the way is great for the economy that all that construction is going on. And there’s a shortage of lots.

For the home builders to build on because all of the demand and job growth is in the urban areas, this cycle, and all the land is really far away and people hate to commute. And so there wasn’t a lot of demand far away, but I do think this work from home shift has change that permanently. and we have some survey data on that if you want to get into it.

I mentioned the bidding Wars, Bob Shiller want to know about prize and I’ll just. No wonder for a lot of things. But one of the main things he did was looking at investor sentiment and how that can drive prices too high. So that’s why I want to get an appetite on sentiment. And one of our signs of a housing bubble is a, when my cab driver, I guess now it’s an Uber driver or the lady who was cutting my hair is flipping homes are we’re back at an all time high number of realtors, which by the way, we are that’s, that can be a sign that things are getting too frothy.

So just keep. Keep those factors in mind. So I’m assuming continued economic growth continued though mortgage rates and increase in closures, but pretty modest, thanks to government controlling the process this time. And this may not happen, but a reduction in home price euphoria. it actually could go the other way.

So I’m being a little bit conservative here. But if that happens, we think rents are going to grow three to 4% a year, but home prices could grow 8% next year and then six and then five, if I don’t see that reduction in home price euphoria, I think we could see a couple of years in a row of an eight or higher.

We just are. We’re coming off in 11. that would create a housing bubble, that you. Want to be prepared for, with your debt structures. And if anybody wants to see the slides, just send me an email to Jay burns it real estate consulting.com. Or if you sent that email to Devin Bachman to, she, she can share the slides with you as well.

Yeah. And if you guys want to help us out and, do the survey for us, you don’t have this, shoot me an email plain and simple passive cashflow.com. I can connect you with the folks and get you set up with that. I think. If you guys do the survey, you guys give them the survey results right after the data’s all compiled.

So that’s you guys want to see this for yourself. That’s the way of getting that data logging at all. But if you go back to the last site, John, the way I’m reading this, you’re calling there’s a big STEM of less what, five to 10 trillion who knows there might even be another stimulus early next year, but you’re seeing this push through in the next year.

Two or three years like the, the benefits or I’m seeing a push through now. And, there’s this year, there’s probably been an overemphasis on where you live because you’re, there’s more people in the house all day long. I do think some of that will cool next year, people are going to take vacations instead of remodeled their house.

But, I see a sea change now to people who wanted to become homeowners someday becoming homeowners, settling down, being far less worried about mobility issues, because, Hey, I’m a great computer programmer. And, even if I switched jobs, I don’t have to move. there’s a really good chance here that we’re going to see home ownership skyrocket because of technology.

And I have, always been a big fan of these presentations you guys put together. And I think the reason why as you guys get right down to the weeds level, where we are simple, passive cashflow nation is not mainstream by any stretch of the imagination. And I think it’s, that’s a great place to get some data from.

like you said, when the text, when the Uber car driver is flipping houses or buying turnkey rentals, that’s the way I really have to all worry that ain’t happening yet. Oh, one thing that I did want to mention, when I was at CG, one trend that is coming up and I think you had it in a few of your slides, but you didn’t really mention it, a lot of.

there’s turnkey buyers that buy, rehab properties that are a few decades old, but you’re starting to see a lot more of the build to sell to landlords, new builds because people want newer properties, more workforce housing types, but they want new stuff. So you’re having a lot of these home builders are smaller guys like in CG built these brand new rental properties, turnkey rental properties.

But with which at a local level can create an oversupply issue. So there are parts of Phoenix where we’re starting to get concerned about that. So it is something to look at for the first time. yeah. Let me ask you a question. I’m sure your listeners would be interested in this too. What is your sense of, the number of people that are interested in passive investing like this?

how much is it up versus a year ago? like in March and April, we were doing, we were actually buying the Rockefeller, building in Cleveland, Ohio. And it was like, Oh crap. Like the Dallas, when the world was going upside down. And investor segment kinda got cut in half. Normally we can bring in like $10 million and that just got cut in half, just from a pure numbers perspective.

People were afraid. I didn’t know what to expect. It’s a multi-family residential, it was just, I don’t know if it really matters what it was. It’s just, I think it was just general, uncertainty, but it’s been slowly on the rise. Coming back. I feel like the L I thought it was the election was going to be a big part of this, getting back to normal.

But I don’t think it was, I think it was just a distraction, if anything, but I think people are, that’s presentations like yours, that really shines the light that, yeah, this is big government stimulus. The wave is coming these next few years better get on it, or you’re going to be missing out on one of the best bull runs ever.

I didn’t know how much stimulus money was coming through the pipeline. Now that I thought it was less than the 2008, 2009 stimulus times. no, it was more it’s R what’s already out there. and actually, I should mention too, a lot of the stimulus last time was on bank balance sheets and just sat there.

Now it’s on business owner, balance sheets and consumer balance sheets. And so it could be spent pretty quickly. And that’s the fear of some people is that if there’s some big resurgence in spending here and everybody’s competing for stuff, we could see a lot of inflation and we’re seeing a lot of inflation and home price, just not in everything else.

I’m more of a moderate, I don’t really get too excited. this is very exciting. Data that you’re showing. I try not to get too excited about these types of things and just stay in my range of the welfare cash flows. We have the good debt service coverage ratio. We’ll have God, can it be?

but I think what confuses a lot of investors, there’s a lot of, PERMA bears, right? If you’re Peter shifts, your guys are always saying that the world is going to collapse every other month and it doesn’t. Yeah. And I don’t think anybody listens to them. I’m far more interested in how many permeables out there, particularly under the age of 32 that can’t afford to buy a home where they’re currently live, but are buying homes, sight unseen in Memphis.

So that’s what makes me nervous. and so you’re telling me you’re not seeing a huge boom in that I’ve been speaking to the number of events I’m smelling one. it’s, it seems to me like, Hey, I’m not going to the stock market. I’m not going in the bond market. That all feels really frothy the housing market.

That’s what to do. Yeah. I think I, my, I’m speaking on behalf of my investor club, which I feel like are still, we’re not huge family office. We’re not institutional money. I like to think we’re sophisticated mom and Paul money, we’re not buying some random, crappy turnkey rental.

That’s overpriced. Like we’re a little bit better than that. Oh, you’re way better than that. But I would be very interested in learning if you’re starting to lose out to some of those non-professionals who are overpaying for things, because definitely like the guys that have joined in my group maybe a few years ago.

They’re starting to realize, yeah, I can’t be buying turnkey rentals anymore. I can’t be using all the same techniques, the, these lease option, things that used to, because yeah. Now the new guy is eating my shorts on that. I’m like, yeah. wake up. You’re 30 years old. There’s another 22 year old kid doing the same thing or somebody who started up a few years ago was doing this.

You know what you’re doing Fabi better or are willing to take more risk. I think I see a lot of kids that they’re doing that burst strategy where they’re. Right throwing over 30, 50 grand wiring cash at him and see the property. it works in theory, but I’m not a big fan of that stuff.

Especially for high net worth investors. It’s not worth the risk. That’s what happened last time when they started borrowing a lot of mine to do those things. And so I do not think that’s going on right now, but that’s why we want to do this survey because if it does start going on, I want to identify.

there’s a couple of companies Roofstock and another one, I just talked to you where you can now buy part of a home online. And in fact, the one I talked to yesterday, you can start at a hundred bucks. So they’ve, they just got started. They’ve sold six homes this way. I don’t know how many people have been involved, but I bought pieces of these houses.

And as does it’s designed for people to build an ETF in housing, I’ll take, 5% of that home in Vegas and 10% of that home in Houston, wait until somebody starts loaning them the money to do that. And I don’t think it’s a huge issue right now, but I’m starting to see it coming. and I think they’re lowering that barrier to entry, to investors, which I think is a great thing.

I’m all for people getting out of the stock market and that retail investments. But when you look, when you lower the barrier to entry too much to, that’d be bastardized the, get anybody can get in and anybody can run up and buy a hundred bucks here. It’s like the Robin hood thing.

No it’s Robinhood for housing. And what happens to home prices when that happens? They go right through the roof. Same thing happened to the stock market. So you don’t get in now or get a little more sophisticated and do something else that the normal guys don’t do mean. One premise I always do is do things that the average guy can’t do that can’t compete and always try to stay a half step of the game.

But well, John, yeah, again, help me out guys. want to have John back on here, so let’s try and help them up on those surveys. It doesn’t take too much time. jayBurns@realestateconsulting.com or just shoot me an email. I’ll connect you guys with the right folks. And I appreciate it, John.

Announcing the 2021 Virtual Bubble Mastermind – January 16-17

https://youtu.be/0RIq0WOmOfs

We’re talking to Ryan, he’s one of my, accredited investors, been in a bunch of deals with me. he came down to the hui mastermind retreat in Honolulu, Hawaii last year. once you give us a little quick take on, what did you like about it? and then, , I’ll give you the big news man.

. So I loved it last year. I can’t wait to do it this year. So basically these people, I could relate to them a lot more. They were all hard workers. They understood the long-term play. , they had the capital to up, what they wanted to do. everyone in their group had their own little experiences and experiments going on.

So some people that are looking into tiny homes, some people are, looking maybe into, office space. Some people are doing, still single family homes and others are doing syndications. So you get a very broad range of what everyone’s doing. and it rarely intersects with, exactly what I’m doing.

I would be doing like for instance, of what I brought to the table, last year was I had just gotten into an Island syndication. so I wanted to bring details to everyone there and you can share your experiences and people can ask you questions that you may have not have thought of. And, because they have that experience as well.

Yeah. And that’s the thing, folks like our group is I think the only group out there that’s pure passive investor groups, most real estate. I actually, I stopped going to real estate conferences because I started to realize they’re all fake either. They’re trying to sell some gurus $30,000 course, or they’re just a bunch of newbie syndicators trying to get into game.

And, yeah, just. On some podcast or something like that. I noticed that this was an experienced group. a lot of them had already been in, some syndications. some were good, just getting started off, which is fine too. but. got help on both ends, so I could see what others were doing from the get-go.

And I realized that they had capital, they had, the desire to just be passive. and then I saw, obviously people ahead of me who had been doing it longer, who had been in more deals and I could peek around the corner and see what I should be looking out for what’s next. and that’s mainly what I like.

I like to get that notion of what’s next. and how to look ahead. I’ll be doing the same thing. We’ll be filtering investors. And only those who meet the certain criteria of your passive investors will be getting into this year’s event. But I got some bad news, man. What’s that? you’re not going to be able to, come to Hawaii this year because the, all that’s been going on, the whole pandemic thing.

So you just want me to come. no, not you and everybody else are going to need to stay at home and attend this thing virtually, but yeah. How is that going to work? , I’m in a bunch of other masterminds and we are all, things I paid 25 grand I’m in a few of these and I’m taking the best practices from those events.

the reason why I spend that much money to go to those types of events. And I’m sure why you came to Hawaii was so that you could build a relationship with other people. so I seen ways to do this virtually right, using a lot of zoom breakout rooms, but I have a lot of work that I have to do to bring the bright people in, ask people the right questions to curate the right speaking slots as we go around this event.

Okay. It will be virtual this year, Martha Luther King, January, , there’ll be probably a couple of days, no more than six hours a day, in the first half of the day, since I know how things are hard. And this is what’s nice about our in-person meeting, that we won’t be able to do.

As you get to detach and it’s, it’s, it was the time at the bar. It was the time hanging out. That was the cool time. But we’re going to try and mimic this as much as possible. And I would say like most online events search it like death by speakers, A bunch of power points, but the majority of the interaction is going to be, you guys are going to be talking to other members, either on a one-to-one basis like this, or in a small groups.

no more than 12 people in a group. So you’re going to really get to know each other personally. I like that, I think. Yeah. Okay. So you’re going to have breakout rooms with smaller groups of people. I think that’s going to increase the focus as well. I think it’s easy to get caught up in trying to talk to everyone when there is like a larger group at a big table.

I noticed that. So I think it is, that is going to be helpful. Yeah. And that’s the hard thing about even in-person events, right? Like when you. And most of us in our group are introverts. You’re at your ranch for right to, I want to be, yeah. Yeah. you’re an evolvement shiver. So what I noticed being an introvert too, is like, when you find somebody cool to talk with you just spend a lot of time with it.

And you don’t talk to everybody else. So these breakout rooms, common to , facilitate them is going to be cool because. going to give you enough time. You don’t have 10 minutes to interact with somebody, get a good vibe, see if you want to interact with them again in the future.

Take that content, but it’s also going to maximize your time so you can interact with as a lot of people in this that’s okay. That’s true. I think it’s gonna, it’s obviously I think it will be, so how will it be organic? Like I think, in person you It would just be like randomly, you would meet some people and see if you would connect with them.

how is it going to work here? Are there going to be like groups that you choose to be in or they’re going to be focus groups or, yeah. So I’m going to do a little bit of random, matchmaking for sure. But for the most part, I want to give people somewhat of a guideline of what to talk about instead of just pop you guys into a group, because that’s a little awkward, right?

here is the start of the, family office, Ohana virtual mastermind, the bubble of 2021. This is what I’m going to call it. I’ve got, I’m starting to build a list of different topics here. This list will obviously grow as the weeks go by as we get closer to the event. But there’s very common topics that I see coming up, right?

the guy who has a high net worth doesn’t have very much liquidity, but has a lot of money in their home equity or their 401k. Are they taking money out of their 401k slowly. So that unique it out. So their AGI doesn’t come up over $300,000. That was something we talked about this past year that I would say half of the people in the Roman, I’m sure half of the people in the virtual mastermind are having the same issues.

So getting those people together and for those people who don’t have those issues, we’ll put them in another group for general networking, Or infinite banking. I don’t know if you’ve set yours up yet, that was a big thing for a lot of people, hardly setting that up and everybody has a different situation in terms of net worth, how many kids they have, where they are with a career, what is their liquidity look like?

How much money do they net at the end of the year. And what do they want to deployment strategy for investments are going to be, so what I, when people sign up and they apply, one of the biggest thing is I’m going to have a long, pretty long intake form. So that I know where everybody’s net worth their liquidity, what problems they’re having.

So that when we go to the itinerary, I can match people up specifically in the right groups or with the right people. That makes sense to, yeah. That’s going to be really helpful. It’s going to take a lot of planning. Yeah. That’s a lot of work on your end. there’s a common amount of problems and issues people have.

And for example, infinite banking, there’s some experts in the crowd. There’s some people that have never heard of it. The experts I’m going to hook up with, I’m going to have some people at my current mastermind to play elders and bring up some people with that are in the middle.

But I’m going to jump to the breakout room with the complete newbies and teach it from the start. So this will this format will continued throughout the weekend. Okay. Yep. That we might even do a little bit of a Texas hold on. This is a fun game or something like that.

That’d be awesome. I think games are, I was going to say like the activities and the games, especially in person last year, that was, those were great. that really helped start talking to people and just. Feel people out at least, in terms of not just real estate, but just in what type of person they are.

Yeah. it’s going to be a super sleek use of Google documents. And because one thing I can do is you have your, you’re just totally random networking and you have these more specific itinerary based, topic discussions, but in the middle, you have this form of. maybe there’s different breakout rooms that people wanted learn about or talk to other peoples in the peers.

So I can build a Google document with the breakout room, breakout one and rename it to, 401ks breakout to rename it, to taking money out your retirement account, breakout three to, legacy planning. What are you doing in your ear? Revokable trust or trust? What kind of caveats that you’re putting in there?

Who wants to talk about oil and gas or land conservation Eastman’s right. And just a general hallway. Yeah. I think like that, to your previous point, that was important for me is like tax strategies. since, I’m single, I don’t, there’s no kids, so it’s, I don’t get a whole lot of tax help.

those were great strategies for me last year. And I’d really like to see and check in, what have people been doing or out about them? Did anyone go for it? I know that we were still researching oil and gas last year. and then obviously, yeah, the hallway too. I think it might be good to force people to rotate into the hallway every so often to just relax and take a break from learning and, absorbing information at least.

Yeah. and in the new version of zoom right now, you have the ability to navigate yourself through the breakout room. So if you’re not, if something’s not working for you, you can move around wherever you want or leave that option open for people. But, going back to the taxes, right? Like the using real estate professional status, 750 hours with active participation and using all these passive losses, you’re getting via costly innovations and bonus depreciation for this deals.

you understood it, right? you’re there in person, you got the concepts. So what we would probably do for you now is puts you in a group of the experts, That get it. And you guys have passive losses to use. and then, puts you in the people that are on the same level.

So you can guys can talk shop. I might stick with the new people and teach them this concept of this simple passive cashflow gravy train as I’ve trademarked it. Yeah, because that was me. that was me last year, actually. I had no idea about it. I’d never heard of these things. and so I was new and now that I know about it and I’ve actually been looking around, it’d be great to even get more information about people who’ve already done. we’ve got people in the group have gotten short-term rentals to let this, enact their real estate professional status.

They can offset their passive losses . to the ordinary income, you, my friend are single, so it’s going to be hard for you to do it, but we’ll connect you and maybe the other single people too. Even if they’re not single, it’s still, I think it’s still useful. I think, yeah, I can still find relatable people.

And again, the big part for me is probably, I guess the hallway, it might be helpful to have a room to just talk about. Like a general room. there’s no forced topic, but it’s also not like a hallway where you just kinda hang out and talk about like the weather. I don’t know, but really a big part, a big draw for me is, like hearing, like for instance, I think, one person was doing like Airbnb’s, with tiny homes and I was like, that’s awesome.

And he was just wrapping it up. So I’d love to connect with him again and say, Oh, how’d that go? how’s it looking now with COVID, things like that. Yeah, and I’m going to be going out to certain members on specific topics that they’re doing like that. And they can need a breakout room also.

that way they can work their membership or their admission rate, a little bit lower, on a scholarship. So that’s a big thing I’m doing in the family office. Ohana is I’m having people join up for another year or more senior kind of helping the event go. So it’s just not me doing it all.

we’re going to have definitely had helpers here, but like more facilitators too. I’m hoping to that also, we’re trying to build this community here of high net worth the credit investors to on the road to financial freedom. One thing I’d also like this year is, I’m not married, but I, I do have a girlfriend and she wants to get into real estate.

she likes the idea of like mailbox money, passive income. that’s why she has you, man. plenty right there. You just go to work every day.

yeah, maybe it is, but, she, that’s an ordinary, I am, it’s more passive on her part. but yeah, I, I think it’s beneficial here. do you think there would be. for people who do have spouses or significant others, are there going to be rooms for them or can they join?

that’s a great idea and what I know I’m going to do is we’re going to have a topic called reluctant spouse syndrome. where I’m going to give the high level very quick presentation. But again, the format of this thing is to break out into a room to talk story.

Get best practices from the other members. I’m going to pull people in and find those people in the group that have gotten their spouse over the hall. And from that means they maybe talk to them for 2000 hours and they finally get it. Or they found some kind of quick, medium, right?

Like me, I don’t have my spouse co-sign any of my documents because I don’t want to waste my time. Every single time I do this. So I found the happy medium, but it’s different for everybody. And I think in that situation, you’re going to be able to talk to people who have gotten over the situation, or you got in, going through that heart struggle with, your significant other going through it.

we’ll probably allow maybe that might be a good evening time event for. We have the spouses join us and they can interact with the other spouses too. when we did the in-person thing. There were a few couples that came, that brought their, a reluctant spouse along because it just happened to be in a boy and they got shipped people to Hawaii.

when they met a lot of the other investors such as yourself and they got it right, they saw how are very, High level group, did this, and it wasn’t just about making money. It was about from creating a legacy and wealth building audit.

And I think that to have the spouses come in and interact, mix it up with the other spouses and folks like yourself, I think that’s bold. And we’ll definitely try and do stuff like that. Great. Yeah. that’ll help because right now, she only hears me talk and so I think it’s.

It’s refreshing to maybe get her some more exposure in terms of more experienced people. Other people are also getting there. yeah. that’d probably be the good cocktail event for sure. Cool. . Any other questions, man? I think this can be a super fun event. Martin Luther King weekend. So you’ve got that Monday off. Okay. But we’ll probably do it on the Saturday and Sunday and the first half of the day. Awesome. Awesome. And then how are you going to, cause typically like when everyone was in Hawaii, you had, everyone was in the same time zone.

So how are you going to coordinate everyone to be together when they live. in different areas. I’m going to suck it up and try and wake up extra early and I’ll be started at like really early, just so that we can stay on that first half of the day for you, for yourself. I think most of us are in the mountain or Pacific time zone, centrally located.

So that kind of started in the morning and then go to a little bit after lunchtime. But so you have the time to do whatever you need to do for the rest of the day, but I think it is important to Break away from your normal day to day in immerse yourself. That’s the big thing is immersion.

yeah, I think it’s cool this time with that, you don’t have to get on a plane, and go, and what I’ll probably do also is build an itinerary of these different topics that we are talking about. so if something doesn’t pertain to you or you want to cherry pick, you got to go do the laundry or something.

You gotta run Aaron. Right? Mr. Ordinary income, man, you gotta do something. I gotta go look at work stuff. Yeah. You gotta go do work stuff. You can cherry pick when you want to do that. So you don’t miss out something that you really want to learn about. And that’s huge. That is. Yeah. But I think when people realize that quality of people in this group.

if they haven’t already, they’re going to see they’re going to, their eyes are going to really open. Just like how yours when you came down? Yeah, that was huge for me. I think that’s when it became really evident that you’ve put a lot of work in, into creating a group and it’s yeah.

it’s, everyone wants you to win and everyone’s on a team together and everyone’s going to help you out. yeah, it’s a great group. , I’m going to do my best, trying to filter the right people into the group. There’s always a chance. Not many people make it, get past my filters, but I think this is where I’m going to go past you.

You’re going to make it in. You’ve been around a while. I know you personally, I think this is where I rely on like immediate, right? We all need to be watchdogs, potentially a bad actor or a shady character who could come in. Could infiltrate the group. But for the most part, everybody are pure passive investors.

They’re all working to build their own personal family office and it’s more of an abundance mindset. That’s what I found in competitive. Yeah. we’ll, send this out to folks and, hopefully they learned from your good questions. You gave me a good one. That was good.

But any last words, my friend, that’s all I got. Thanks a lot, Lane.

Dec 2020 Monthly Market Update

https://youtu.be/a1jxul2pPZw

All right. let’s get going here. so starting off with a few teaching points and I diving into the news to wrap out 2020.

So the teaching bike here is now, this is the time to invest is what this chart is showing because as investors we invest off of the spread between the interest rates. And the cap rates. So the cap rates is the light blue. The interest rates are the dark blue right now. The interest rates are so low. The cap rates have come down a little bit, but the interest rates have come way down as of the last couple orders and you know what everybody’s afraid and everything I’m like, this is the time to invest right now.

The spread between the interest rates and the cap rates is larger than what it normally is. see this kind of moving up and down, when it’s like this, when the spread is smaller, that’s when ideally you don’t want to be investing as investors. We make money off of the Delta between cap rates and interest rates.

And of course we apply a, usually a four to one, five to one leverage, and that’s how you make money as investors.

who are our renters? John Barnes broke it down and we’ll charge here. Most of which are 25 to 34 years old, broke down their house. So income over 50 and under 50 K I rent, I think it’s a good idea, especially if you live in a high priced area like California, Hawaii, Washington, New York.

Maybe, I don’t think it makes sense to buy. Of course the caveat is most, I guess most people fall into this caveat, like mostly bar irresponsible with their money. They can’t seem to save it effectively. So houses have forced savings account. but if you’re listening to this podcast, YouTube channel, you’re probably a little bit better than the average cat would saving their money.

These conscious of it. That’s why it’s a, just take the money and invest.

No, this is just a little diagram of which States are the most restrictive on the COVID

constraints. Not making any political statements here. But, Hawaii is down there. One of the most restrictive and on the other side is how much, is it working, right? , currently hospitalized per a hundred thousand? So if you want to see your state, you see where they fall.

so starting off with the news here, this is something that’s going to be slowly developing in 2021, but the library , which is what a lot of interest rates are governed offered. you might get a commercial loan based on, quarter point higher than lie bore, but they’re going to be changing it to Sofer, I think is what they’re called.

S O F R. And that transition is going to be happening throughout the year. The reason why they’re changing it is because , I think it has something to do with the library being so low or things are already so low. They need to fix it to something else. That’s a little lower. and supposedly the library is a little bit more erratic, but I don’t think it makes that much of a difference.

It is what it is. And it’s changing guys. That’s the takeaway, John Malone, reported by CNBC is, buying hard assets like housing to bet on currency, devaluation, or inflation, which is coming. yeah, this is why buy real estate. It’s fixed art assets like housing, and it’s a commodity.

We need more of it. And he sees substantial interest in multifamily housing. We’ll get into that a little bit here in this Alna article, where through the first 10 months of 2020, the only price class to lose ground in average occupancy among stabilized properties were class a. So those are the luxury type of properties that we stay away from.

these are like the build 19 or. Probably built after 2005, 2010, in my opinion, it’s hard to save by date, but that’s probably the best numerical differentiator of class. A, with a 1.3% decline to 92%, average occupancy. This is not an alarming little figure, but it is a few percentage points below the other three pricing classes, B, C and D, which all finished between 94% and 95%.

Class C actually went, improve. So a lot of the culprit was negative demand or, new properties coming online that Warren white absorbed, which makes sense. people are staying put through the first half of the year and even plead a second. So takeaways stick the class VC.

Out. This is, development that’s, the state of California, which you may or may not care, but I think it’s, sets precedence to what’s coming down the pipeline to California had these two big statutes, prop five and prop 19. The presidential race. Wasn’t the only thing here. It was like B that they had to, the state was split on

so California proposition 15 , which would raise taxes for commercial real estate failed. So top 15 would put further downward pressure in real estate during an already difficult time for real estate in that state. Contrary though prop 19 would allow former 55 and older, disabled or victims of natural disasters to transfer a portion of their property tax base when they sell their home and buy a new one.

And that looks like that will probably be passing at 51%. So very close, proposition would offset. By closing other people’s specifically, it eliminates unfair tax beholds used by East coast, investors, celebrities, wealthy non-California residents and trust fund hairs. yeah, I think it’s, it shows like what’s coming down the pipeline in there.

You just can’t inherit the lower tax spaces. a lot of people in California that have inherited houses in their family, the one to sell and yeah, they’re getting killed on taxes, but they might be sitting on a one to $5 million estate and a real estate, and they just don’t want to give up that good tax.

So prop 19. kind of gives up that incentive in a way. if anything’s, it takes a while for the California’s to go through it and then, think of like marijuana, right? So the rest of the country gets impacted by this, or we see it in our backyard, but it’s, coming down the pipeline.

Star Wars would read by $645 million of affordable housing. They are getting into the affordable housing workforce space and I think to get into alarm, but, I watch what the big guys are doing. Like the Blackstone’s. And I follow them closely. So 950 units in Jacksonville, Florida, and 28 communities with a total of 3,600 units, primarily in Virginia and North Carolina.

And they’re buying this stuff because it’s stable, occupancy and rents didn’t change too much of all things to a pandemic. John Burns came up with the chart, a us single family rent index. So they modeled and you can see the recession periods where it went through in 2007, eight, nine in the trough.

It’s peaked. but demand is still very strong for single family home rents based on this chart. Again, if you guys are checking this out on the YouTube or on the podcast channel, you can take it on the YouTube and all the nice graphs and graphics. Read this stuff for yourself that I put on the screen.

commercial property, executive reports that the pandemic accelerates rather than starts commercial real estate trends.

so one of the big trends is this live work play concept one question that came in, is there going to be a recession in 2021? I don’t think so. Madly, chillax, they’ve been S people say that every single six months doesn’t mean crazy

I think that you got to be careful people saying that because likely they’re trying to sell you both collect their commissions on that and you offer the gold salesman. It’s easier to sell doom and gloom than to prudently, be buying cashflow that’s for sure. so what are the trends live?

Work, play concept were, people want to be able to live in less central areas, more of the suburban areas. there’s a urban suburban divide , mostly gateway cities, high costs. Areas like New York, San Francisco, Chicago, any of these people have lost occupants during the pandemic, the evolution of cities.

So the inner ring suburbs have also grown a bit by the desire for people to work and live in places with city like features, but not in the urban core district. maybe like 20, 40 minutes outside of the downtown area. So the pandemic didn’t really start in trends, but just accelerated all of these trends, commercial property, executive reports that, construction has launched on a Houston Hyatt hotel that is associated with the Houston’s Texas medical center.

So it’s their first hospitality brand. Very interesting that a hospital that was getting involved with this type of housing, but I guess they’re seeing it as a lot of the people that come for their care, like cancer, Shimon, or whatnot, need to stay in a place. So why not, double dip.

Some trends that are coming, that I think are cool or a Chipotle like plans, their first digital restaurant, their online sales tripled in the third quarter. So they’re some of the are winners as reported by shopping center business. some of the losers are just the general shopping balls.

So while owners see VL and associates falls for chapter 11, bankruptcy, does it mean that those. Shopping malls are going anywhere. Although I do think shopping malls are not as popular, especially like the not high-end ones or the middle range ones as popular multi-housing news reports at senior housing, occupancy drops, inventory increases.

So a lot of people, they all get excited and new investors get excited by like trends like the silver Wade, people are going. Need places to live when they’re gold. I want to invest in the city living developments. All right, buddy. I’ll tell you, I haven’t found a one really good reliable operator quite yet.

even though all the trends point that way, I wouldn’t be messing as a passive and I sure as heck, wouldn’t be investing as an operator in assisted living. That’s where you get these doctors or nurses. They think that they know medical stuff. Assisted living. It’s not really medical stuff. You just hire a doctor to do that stuff for you.

It’s more of a facility management and a marketing and sales thing than a technical medical thing.

so we take a break here. The Easter egg this month is. Check out the newly branded family office, Ohana mastermind. So this is the group with the, a credit investors in, or if you would like to be a credit investor, this is the way to get around. A lot of you guys are asking, how do I find syndication deals?

How do I find like good people to work with? you got to build your network with the right people. If you’re tired of screwing around at the local Rhea. Or going to the free Facebook groups or the other free forums out there with just a bunch of folks under a quarter million dollars net worth all day long.

now’s the time to step up, see what we have to offer simple passive castro.com/journey. And we are about ending our first incubator group, which is the little mini group coaching group, where we help people get their first remote investment. that one should be wrapping up this next couple of months.

And, we’ll be looking to do another one early in 2021. So if you guys are interested in that, please let me know. But, yeah, transitioning to some of my personal stuff that I’ve been working on. if you guys have any ideas, some things you’re working on. Let me know. My email isLane@civilpassivecashflow.com, but, first is growth.

So we changed the mastermind to a more of a virtual mastermind. last year we did it in Hawaii for a few days, but with everything that’s going on, I’m moving this virtually. So we’re calling this the bubble. If you going to get more details of this, go to simple, pass a castle.com/bubble, and it’s gonna be awesome.

it’s going to be primarily networking with other participants instead of just death by PowerPoint or death buys, random sweepers pitching their product. Yeah, trust me. If you’re not happy, I’ll refund your money. I’m super confident with this. Like I got some tricks up my sleeves. You guys will see those.

You guys do attend over the weekend. It’s going to be a half day on a Saturday and Sunday. Martin Luther King weekend in January of 2021, contribution, yeah, rebranding the family office , mastermind to be more of a collaborative thing. We’ve got some new initiatives there to keep older investors around.

they might’ve learned everything, but they just want to meet new people, grow their network with new high quality working professionals. and then this I added just a little while ago about. having some success for the shade line hackers. If you guys haven’t tried this, I’ve got a simple pass, a castle.com/ straight-line.

But yeah, we had an investor that tried it out since, began in may 15, 20, 20 great thing to do when you’re stuck at home, you get your credit cards together and start renting out authorized user slots. He made. $1,800 and just over a few months, and he’s got $750 left in pending commissions.

So it’s coming back to him. Awesome. significance, it makes me more proud of, what we’re doing as a group is that we are not letting fear get in a way, and we’re seeing the data for what it is. And this is what it is. I started at the talk with the teaching point. Of the same slide investors make their money on the Delta between the interest rates and the Tapper.

It’s simple as that. Of course there’s outliers, right? You want to pick up properties that are already under market that exceed the cap rate here and have multiple opportunities for value add. But yeah, if you’re picking up existing cashflow and even in tough times, you still cashflow. a lot of the deals, the stabilized assets, you can stay above 50, 60% occupancy are still in the black, a lot of the assets that we had through the pandemic for 200 units.

we’re still making money on all of those. none of them came down to the red level, out of probably like 25 projects, maybe one or two of them kinda got close, but. I think that’s pretty good. All things considered being a pandemic. some things I’m dealing with in terms of uncertainty because in search needs not necessarily a bad thing, but, yeah, just investing when everyone is waiting for COVID or the election to be over.

I get it from one perspective, but you got to keep moving forward at the tenants are cash flows, the cash flows, and you can do your sensitivity analysis, still cash flows through tough times then just to keep buying cashflow dollar cost average. and then a lot of the uncertainty is what’s going to happen next year.

I’m seeing it as I want to get traveling. I want to have some fun. when’s Pfizer going to come up with their vaccine, is it they’re saying it’s here, it’s 90% effective. Of course this is from the fires or websites that you can’t really believe, but they, it says, but, yeah, , hopefully this thing works right.

So we can get back out there. Let’s get stuck in our homes all day long. how did I, my creating certainty in my life while I’m creating another infinite banking policy for myself. I probably had four or five deals, went full circle and cashing out, and I’m going to take some of those profits, put it into an internet banking policy and pull it right on and start investing next year.

I like this because it adds life insurance, but that’s not the reason why I’m getting it, but it makes a nice little yield four or 5% tax-free because it’s life insurance and. Because it’s life insurance, it’s often table creditors or litigators. So that makes me feel a little bit better from an asset protection perspective.

if you guys, haven’t learned about this, go to simple, passive castle.com/banking and, on the last 10 years, love and connection, you know what things slowing down here in December and, things will definitely pick up in January. I, got an invitation out to your folks.

If we haven’t connected, let’s get on the phone. let’s do your onboarding call to the week club, put it simple past castro.com/gift. And for those of you guys who I have connected with and our current investors or of, in our deals, if you haven’t connected in the last year, let’s get on the phone.

let’s talk star, let’s see what’s going on and see how I can help, see what’s coming on the horizon. some of the resistance and verus distraction noise that I’ve been working with is pushing out larger projects in time. I got the syndication eCourse coming out soon. Hopefully it’ll be out during Christmas time.

I was trying to get you guys some kind of cool like promotion for black Friday instead. I didn’t get it done. So I think the, probably the next couple of weeks we’ll see the eCourse for the syndication and it’s going to be amazing. I’m still confident in this one, again, that. I got that money back guarantee on it.

the fun stuff here. So do dads, I bought two dishwashers cause I want to take all this stuff out of one. And when I make dirty dishes, I’ve put in the other, so they never have to put my dishes away. these things are big and they’re a little annoying, but that’s just an idea.

You guys to create your lifestyle. That’s it simple, passive cashflow is all about. Now. Let’s go to these questions. interest rates for the next two years at interest rates have popped up a little bit. I would say maybe a 10th of a point, but. I’ll ask the question to you.

Like, why do you care? what does it really matter if the cap rates are going to come back up and interest rates will go back up and again, as an investor, you’re just making money on the Delta work difference doesn’t matter. but, and I don’t know what interest rates are going to go, but if you were asking me everything I’m reading and everything I’m hearing, I think interest rates are going to be probably both for the next couple years.

It might come up. No slightly border point half a point during that time. But I don’t think they’re going to see interest rates on commercial debt in the five, 6% range for quite a while. But I do think inflation is coming. how else I’m going to pay for all this trillions of dollars stimulus and then the last stimulus plan is definitely coming.

Okay. It’s for sure. It’s coming. We need it. And I think for sure. It’s coming. Just like how you joke about the government shut down. I guess it’s not a joke that the government did shut down, but we all know it’s a joke because they’ll just create some kind of bill that extends the obligation.

Isn’t often rolling again. It’s just like the stimulus plan. it’ll come. and then when it is. Also as investors are going to be the ones who benefit the most on it. I guess what I’m seeing, I was reading an article yesterday about Fannie Mae and Freddie Mac on the commercial side for the large non-recourse the agency loans that we get.

They’re creating their quotas for next year and it looks good, man. they didn’t hit their quarters this year, obviously because volumes of sales transactions were down, which is why they did a lot of refinances. The refinances were awesome. They’re being very lenient on refinances. because they needed to have that quote, but yeah, next year is when things start to open up.

it’s probably going to, because a lot of that ending is it’s very free and flowing. when is a good time to buy REITs, never, it’s a good time to buy, reach beats, or retail investments you didn’t killed. And something I learned recently. we did a , three hour webinars and there was like the one tidbit in it that I learned was like REITs.

, they have a timeline where they have to crystallize, so return and exit and everybody else. So they don’t make good decisions. They don’t make long-term decisions and they have to pay 90% of their revenue or their income to investors, which sounds good. Wait, what if it wasn’t, it made more sense to put the money back into the assets so that the acid is more secure and so you can bump rents and do that type of stuff.

And that’s just the one way, like the reeds are confined there and read such as retail investments. You’ve got good stealing because the only and middlemen they’re not touching her, she feeds I’m not a retail investor. that’s for the average Joe out there by investments. All about share market performance.

I don’t understand that. Or shouldn’t be tied to that. any promising markets if 2021 when compared to 2020 and not really. there’s some places in Tennessee, like Chad and Duka the Carolinas always keep coming up. Florida, Jacksonville, but, I’m a little scared that I think Huntsville is finally coming on the map.

A lot of people are finding out about Alabama. but yeah, mostly it’s the stain big storylines, Texas. Everybody’s getting the heck out of California, Chicago, New York, all these high price, postal markets going to places that make more sense. this was always happening and again, had the pendant.

I did not create new trends that accelerated trends such as people getting the heck out of those overprice areas and into more like the secondary tertiary markets. but that’s, doesn’t mean that you can’t find a deal in Jackson, Mississippi. I don’t want to, not Jackson knows if he’s not a good bike and I don’t think it is, but that doesn’t mean that I wouldn’t invest there and deal with that undervalued breakfast is what I’m saying.

If you invest at Jackson, Mississippi, I’m sorry. , last question here. Can we expect a foreclosure due to vendor random thinks of anything silly? I’m sure. I just personally don’t buy. Unstabilized assets. So if a property is going through foreclosure apartment, then I wouldn’t be buying it in the first place.

So I don’t care. I’m sure it is, but it’s at one point it’s just Biden’s going to kill people. That’s making over $400,000 taxes, but I don’t care because I don’t, I’m not going to make my HCI that high. I’m going to put away lower. so it’s a moot point to me. I don’t care. that makes sense.

I don’t care if there’s foreclosures coming. I don’t really, I wouldn’t buy those properties. I don’t buy problem properties. I buy properties with sellers, we have problems. and maybe a foreclosure does expedite that, but yeah, the occupancy would probably did and I wouldn’t buy it, but if you’re a single family home investor, Number one.

And what the heck? Why are you doing that? yeah, if your net worth is under half a million, that’s fine. But you got to build your net worth and putting your sweat equity to doing that. But if you’re a credit investor, like most of us in our group, that’s just not a good use of your time, in my opinion.

but for some of the younger kids that are listening, yeah, I’m sure there’s going to be a lot of single family home foreclosures coming out. I’m sure. just. As there always is nothing new. I don’t think they’re sending any new, and like some kind of housing crisis. I think that’s just like people like celebrities trying to sell you two views and stuff like that.

I just don’t really see it happening. again, there’s always people trying to sell, like on fear, like the world is coming to the ad, these human forms, or, what’s worse is the people on Facebook. They always just relayed this. Long, like texts about the world is coming to an end. then you look back at that was from like 2012 or 2016, or whenever it had never happens.

I just buy for cash though, and just . Don’t get ahead of your skis and they’ll be all right. That makes sense. but yeah, if you’re house flipping, I don’t do that, but I would be afraid potentially. I don’t know. But hope that helps. thanks for, questions and, we will see you guys next time and check out the mastermind bubble@simplepassivecashflow.com slash bubble.

And thanks everybody. Bye.

Soft Skills and Spouse Advice for the Socially Awkward with Brady Helkenn

https://youtu.be/OBCC_EwR1bo

On today’s show, we’re going to be helping the socially awkward folks like myself, who are self-proclaimed introverts, try and be a little bit smoother and a little bit more effective in terms of networking. And just getting along with people at work. I am bringing on an it guy turned of social coach on today’s podcast to give us some pointers and some things to be aware of.

So if you guys, Hear me talking about a lot of being an accredited investor and finding deal flow is mostly about networking and getting to know other passive investors so that you can become a better past investor yourself. But to do that, you have to make relationships organic, real relationships with other high net worth of credit investors.

A lot of this, again, like I say, all the time, it’s not going to be at their local REIA or at the free, internet, Facebook groups or other forums out there because those groups are typically filled with, guys who are trying to make their first hundred, $200,000 network. but how do you, when you finally get in the right room, like maybe we do a simple passive cashflow outing.

Maybe I come to San Francisco or Seattle. When you finally get in a group with our tribe, how do you make the most of it? So we’re going to be a lot of the soft skills are going to talk about the survey and I hope you guys enjoy.

All right. Hey, simple passive cashflow listeners. Today. We are going to be talking to Brady Helton, who is a X I T professional, but he is focusing on teaching other it professionals and other smart guys, the soft skills, like clear communication, responsiveness empathy. And we’re going to be doing a deep dive with this.

So this is going to be a good one. For those of you guys who have day jobs, which is most of you. A lot of folks in the simple passive cash on nation are high-paid professionals. You guys realize that your time is better spent at your day job going after that next promotion. It ain’t going to be forever.

most of you guys I noticed can get financially free in five to 10 years, but it’s definitely a time better spent there than screwing around with some Burr property or, your fourth or fifth turn key rental that’s for sure. But, Brady, thanks for jumping on it. Of course. Yeah. So a lot of our groups, a lot of engineers in our investor club for some strange reason, maybe because I am, but, I guess w why don’t you take us through, what is like the biggest mistakes that you see other it professionals, or let’s just put in general, like smart people, right?

Dentists doctors, they need to have bedside manner. W what are the biggest mistakes that you see just as start us off and we can maybe isolate a few of these or within this next podcast? Yeah, I would say the biggest thing that tends to be the root problem here is when you get really good in any particular field, you start to learn the jargon and use the jargon, but you don’t necessarily keep a sense.

Of what the other person in a conversation knows and doesn’t know, and too often, particularly for, engineers and other, process oriented individuals, we tend to think in terms of the tasks that we have to do, we tend to think a little bit more in acronyms and other terminology and it’s comfortable for us.

And we don’t. Go through the effort to make ourselves uncomfortable enough to translate our jargon into something the other person can understand. And when we don’t do that, it tends to break rapport and make for rather stilted conversation, short conversations, not a lot of popularity within the workplace, et cetera.

Yeah. it just goes to show that you, the person you’re talking to on the other end, they are not an expert as you may be. And it comes across as number one, you don’t have empathy over the other person, their shoes. And number two, you could just be like you breaking, It’s the idea of almost like a lack of sensitivity. you could make an argument, in fact, that it is almost inconsiderate to spout jargon at another person who you didn’t check to see whether or not they would even understand the jargon. You’ve made an assumption about it. And then you launch in and you get a lot of hurt feelings that way you get a lot of ruffled feathers.

You get a lot of conflict in a workplace where you might come across as condescending or as an asshole or whatever. There’s any number of extra elements that come into play because. All the person on the receiving end has to go on is the words that you’re saying and the tone you’re using, and if you’re really short and succinct about it and almost impatient about it, because it seems obvious to you and you’re making all of these assumptions.

You can have a completely different reaction from them than what you would be expecting.

It’s just, what is the acronym? Picnic problem? Not you good Peter found in seed or something? Yeah, probably. Yeah, probably between a monitor and chair or something like that. Yeah. But yeah. what are things that have people to be on the lookout that they do? Cause there’s a lot of smart people that listen to this podcast.

And sometimes it can Def, a lot of introverts too, but I think sometimes the smarter you get the less self-aware you are at least some incense. Yeah. And I think about it as a lot of people will make the assumption that the go to the effort of translating for somebody else is something that somebody who’s more extroverted would go through.

the reason why, one of the reasons why I suspect the proportion of individuals that have trouble with clear communication with avoiding jargon tends to come from like engineers and it people and other really technical industries, or because there’s probably a somewhat higher proportion of introverts there than extroverts.

And a common misconception is that you’ve got to be extroverted in order to get along with other people and establish rapport. But interestingly, somebody who is an introvert actually has a lot more empathy for somebody else. They just don’t necessarily know how to tap into it. So the effort that you go through to translate for somebody else is actually easier on an introvert than for an extrovert in a way, because you can internalize the emotion of what the other person’s feeling.

You just don’t know how to do that. They’re just not an introvert. Just. Also just tends to be listing or not talking all the time. And then when you want to say something, oftentimes again, in technical fields, you want to be precise about what you’re saying, but there’s so much effort on being precise that you don’t necessarily keep in mind what they’re going to understand or not understand about your precision.

Oftentimes translating it in a way that loses a tiny bit of the meaning, but becomes much easier to understand is a lot better than giving the precise terminology or acronym to what is happening or what this thing is. And it goes over somebody’s head instead. So it’s the main thing that stops introverts, I think is the initial effort.

It takes to think not only about the other person, but then to go out of your way. To accommodate them because that in a way is what you’re doing. You’re accommodating somebody else explicitly to translate something that you take for granted into words or ideas that the other person will understand easily.

It’s well received when you do this, but it takes a lot of effort. There’s a hump to get past. And sometimes it’s just an ego thing. A good example of this is, I guess in art, our industry, we make a lot of fun about doctors because doctors in our realm are horrible investors. They’re really smart people, but they’re absolutely the worst investors.

They invest in some of the worst stuff. And. It’s funny when I get a doctor that is clued in on this true that you see some doctors who are very intelligent people and I’m just, I don’t really want to isolate the doctors completely. It’s, it’s every smart profession, You get a smart person and they come into a realm such as investing and they’re complete knew about it.

Newbie. And yet they believe that they can learn it like that, or they already know have a pretty good understanding. But part of it is Eagle and being able to start at the infancy stage, realize that you don’t know what you don’t know, just stage one, and then realize that there a whole bunch of other stuff you need to learn to even start to build an understanding.

it’d be talk to us. I’m sure you run a lot of bootcamps with folks. What can you say about people with that type of products that one’s a little bit harder to work around, right? It is more fundamental. I wouldn’t necessarily say that it’s harder because it sounds deceptively simple to avoid jargon, but in practice it’s so much harder because there is the value system that somebody holds internally that really ultimately dictates whether or not they go through the effort to avoid Charcot.

So it is deceptively simple, but quite difficult. To actually change in practice because they have to change themselves their values. And when we talk about something like ego, it’s much the same idea. There’s a fundamental way that we view ourselves that you can’t be on autopilot with you. Can’t just let that be and carry on with the day-to-day stuff and expect that not to influence everything you do.

And all of your results in your life. It all comes down to your value system, your viewpoint, and how willing you are to change that. And I cover a topic that I consider a difference. I did not create these concepts. These actually came from a book Carol Dweck mindset, that I would recommend would be good reading for people, but there’s this concept of growth versus fixed mindset that is.

The technical terminology, which is to basically say, when we talk about smart people, when we talk about educated people, when we talk about people that are really good at this, we are labeling them. We are labeling them though with fixed attributes. If you are not smart, then you must be dumb. So there’s a lot of those backhanded compliments that tend to start coming in, where you go, somebody gets a hundred percent score on a test and you go, congratulations.

You’re so you’re a genius. And then they don’t really feel great about that. They actually feel pressured now and nervous because if they don’t get a hundred on the next test, then what does that say about them? So that’s that idea of the fixed mindset. A growth is about the effort about the journey that we’re taking, about where we are trying to reach with our effort and our energy and our focus.

And that’s what I helped to craft. And it correlates with ego because. I put that on a spectrum between solution focused and ego focused as two ends of a spectrum. And the bootcamp that you mentioned briefly teaches throughout those six weeks of recurring theme of being solution-focused because you can enjoy praise.

You can enjoy the nice things that come from. No, it feels good to know that I have this PhD. It feels good to know that I hold this kind of salary, this kind of prestige. You can enjoy those pleasures, but don’t let them affect your decisions. The decision should be influenced by a solution approach. What is the solution that I want to do if you’re unhappy with something in your life right now, if you’re unhappy with something in your career, in the workplace that you want to change.

It is infinitely better to treat that as a problem that has a solution than to react from your ego, to react from your emotions, to react from how other people should treat you, because you have accomplished X, Y, Z. So you talked a lot about like handling rejection and confrontation. And that kind of reminds me about when you go into a confrontation or some kind of conflict that again, Like he mentioned, it’s all about the, what is the solution that you want them to be off the cuff?

Maybe you can go more into detail about that. When you focusing on a solution with a conflict, it tends to dampen down your emotional reactions from a place of ego. So if you’re giving, we can call it investment advice. If you’re giving investment advice to somebody and they’re not listening to you.

They’re not taking your advice. you’d alluded to, like doctors might be, proportionally higher, at being terrible investors kind of thing. And if there’s ego involved and they’re rejecting your advice and they don’t want to do the investments that are a good recommendation or coming up in group conversations, because they think this is going to work better, you’re in a conflict.

And as an expert in investment, or if we talked about the engineer, Or if we even talk about the doctor, imagine a doctor with a patient and the patient is going, yeah, I know I need to exercise or haha. And they’re brushing off the doctor’s advice. There’s that prick to our pride as an expert, that’s somebody is not taking our advice, but if we’ve maintained our focus on the solution, we will react and respond differently to that person in the room differently than if we reacted out of her pride, wounded pride.

Offense, et cetera. So that’s where that kind of ties in the main thing that we want to focus on from the solution is mastery over our own emotion, not letting our emotions rule us.

Yeah. I think the example that I see, I personally go through is I tell people, and if you do the math, Investing via a retirement fund, doesn’t make too much sense because you gotta wait till you’re seven years old to get the money you’re going to you’re in a lower tax bracket today, tax brackets are go down in the future.

And when you invest via retirement funds, you don’t get any of the passive losses to potentially offset your W2 income. when people, I guess they go the other way, I could probably be like, whatever, man, you’re the expert. You can do it. Do it. Do whatever you want.

That’s the prick, right? That you’re mentioning. So maybe walk me through it, how I should work through that solution or get to the solution because I guess the solution I want them to do, what’s what makes sense. I guess I think the, what this boils down to is that there’s a different concept that I can intermingle in here.

And that’s the idea of separating the two kinds of power, because when we think of power, we just think of one kind of power. Which is social power influence over another person. And if you look at your goal or your objective as trying to get somebody else to do something, then you’re already setting yourself up potentially for failure, because all you can do is influence them.

You can’t control them. But the thing that you can control is personal power. And that is your reactions to something that is your decisions on how you’re going to respond. How are you going to move forward? So you feel that prick of wounded pride, you exert personal power by choosing to adopt a solution approach rather than reacting from her pride.

That’s the first thing you can control your reaction. You can’t control what they decide to do though. So now we’re talking about social influence. What I would actually say to you in this situation and what I usually would say to somebody else in a similar situation of what do I do? I want them to do this reevaluate your true goal, your true objective, because your true goal and objective should be something you have control over.

Not something you can only influence your goal should be something you can actually reach and guarantee that you can reach. That’s where confidence comes from. That’s where that. Certainty in your path and what you’re going to do comes from, so your goal could be to exhaust all options. You can take to influence this person to take sound advice, and take a sound approach.

That could be the objective, because if they listen to you at some point, and then they follow your advice, that’s fantastic. That’s a great outcome, but you still win. Even if they don’t. Because you’ve taken all logical steps to try and coach them the right way to follow the right advice and the right steps.

So you will still win because you could control that. You can control all of the suggestions and pathways that you could eliminate for them. It’s up to them to use their personal power, to decide, to take your advice or not. So whether it’s. A doctor teaching about diet and exercise, getting them to make that path.

having somebody get their retirement funds out of the clutches of the government, it’s not about the other person. It’s about me, exhausting, all my options to get there. And if not be okay with it, is that kind of the answer? Yeah. Because if you think about it through to a logical conclusion, you can end up with doctors that become suicidal.

If you really think about it in a life and death struggle kind of situation, you’ve got somebody having diagnosed with cancer and they have to take certain medications or go through certain treatments, and then you have the patient refuse to take those treatments. And the doctor in that room is going to go, you are most likely going to die then.

And if you keep your focus on saving that life would, you can only influence you can’t control that you get somebody that now has a lot of baggage to take around and try and process. But if their goal actually is to make sure that they educate as much as they can to say, Hey, look, these are your risks though.

you’re an adult. You have to decide for yourself what you’re going to do, but I need you to know at least. What’s at stake. And if they keep their focus on that, they can control that they don’t have unresolved baggage to fight through. They knew they did everything they could to try and save this person.

Now it’s a life or death struggle situation that really exemplifies the emotion that we go through. But it really also illustrates the grounding we should pursue because you can’t borrow other people’s troubles. And here’s another example that comes up a lot. actually have a big article that I update from time to time about the reluctant spouse syndrome, where an investor has a spouse that is a partner in life that isn’t quite on board with getting off the beaten path of traditional investing and not buying a house to live in.

you guys can check this out@simplepassivecashflow.com slash spouse. But so let’s walk through this. somebody wants to go into an investment or maybe not buy a house to live in, Maybe rent for awhile and it clashes with the other person. And. To me, the worst case scenario is when I throw my hands up in the air.

And I say, sorry, man, that’s your problem? It’s the other, the spouses is on, is disinterested in a way, but holding to their truth, how would you navigate that specific scenario? In that case, I would say, hold to your truth. There’s a fine line. And here’s where a lot of people who are technical, but not necessarily empathetic or externally empathetic, I should say visibly empathetic will struggle because it is a fine line.

You can have the same content, but the message and the wording and the tone changes everything. We’re talking about establishing rapport. We’re talking about already. if the timing isn’t right, or if there’s a personal conflict, that’s preventing this person from moving forward with something you think is a good idea.

We’ve already covered what that looks like. It’s not a good fit. If you can’t prioritize this, then it’s. It’s not going to work out. You’re going to make a different decision. All I can do is give you an educated sense of what your options are. And if you don’t pick that up and run with it, I can only give you your options.

I can only educate you. I can’t force you to do something against your wishes, right? You can’t control them, but there’s a distinction between throwing up your hands and going, whatever, I can’t tell you what to do. There’s a dismissal to it. There is a reaction to the emotion that is coming into the tone and to the wording, because your emotions at that exact moment have the better of you rather than the other way around.

There’s no solution there because the solution is whether or not you’ve exhausted all options. And if you throw your hands up in the air before you’ve exhausted all options, then you have failed something that you actually have direct control over. You can exhaust those options. And what that ends up looking is just illuminating to them.

What would be a process that they can, should you change your mind or here’s an article you should read, or here’s a podcast episode you should listen to that really talks about this kind of concept and this kind of concern that you’re running into right now. And how do you reconcile it?

Like you can provide them options for them to come back later. It takes little effort on your part, but it’s a solution approach. It’s something that you can offer them that whether they take it or not, doesn’t matter, but the delivery is establishing that rapport. The delivery is making that ally on the other side of the communication, rather than using a rejection from emotion.

If you have mastery over your emotions, you can address that situation. A myriad number of ways. That gives them a good feeling at the end of the day. Even if it doesn’t financially work out for them to want to do the investment advice for them to purchase this, to do that, whatever. And this is true for doctors with advice.

It’s true for engineers with, unreasonable deadlines and I’ve managed her breathing down their neck. Like no matter what conflict you’re looking at, you can react emotionally, or you can feel the emotion. Recognize it for what it is, ask yourself, but what am I going to do about it? Because reacting just from the emotion you go, I can’t do anything about it.

And you just throw your hands up in the air, but you ask yourself after you recognize the emotion, what can I do about this? And you’ll have a couple of things usually that spring to mind and you can still do, and you can close the book too. You’re going to be like, Hey, if it doesn’t feel like it’s a good fit, I can’t change your mind on that.

Here’s some resources for you to check out. Or find me if continuing down this road is going to ruin the relationship even further. Maybe that’s a smart choice, that circumstance. and to that point, if you’re giving investment advice, you’re not a family therapist, You’re not a relationship therapist, a marriage counselor, or anything like that.

So also recognizing where our strengths are and where they’re not. I will say this is a common story is something like innate, like infinite banking using whole life insurance to bang from yourself. It’s a little complicated topic and some spouses would dig their feet in and say no.

And the, the kind of the more financially minded spouses. No sit I’m frustrated and I’m trying to China teach them about this. They want to listen. They don’t want to watch the damn webinar to learn about it. And they say no, and then they just let it cool down for a few days. And they said, yeah, they said just do it sometimes.

Sometimes that can be the path forward, but this is just me being an observer for other people to see how it works. and when we see situations like this, that we want to influence, there is a strategy we can still employ. If you see that as a recurring theme, And you can recognize you don’t have the control to change them or change their situation, but you do have networking partners, referral partners, individuals that specialize in, maybe.

persuasion and conversational therapy or whatever, right? Some kind of sense of you’re having a financial conflict. How do you resolve these kinds of financial conflicts with your spouse? Because if you’ve got somebody that really wants to do it, and then the spouse is in the way, then that person that really wants to do it is not going to go against their spouse, but they would love to figure out a way that they can communicate differently with their spouse to maybe persuade them.

That is certainly something they would be interested in that isn’t necessarily your strengths, but there are people that do that. And that’s where the, the idea of an understanding of what you can and cannot work. What’s your expertise in ledger and what isn’t, your expertise plays a crucial role.

And by offering, even if the connection doesn’t work out, just the offer of connecting them with that kind of resource to help them find a solution for themselves. When’s you that kind of rapport? I think the goal is the rapport, right? in going back into the example of an it solution where it’s very binary, you as the expert, know what the problem is, and it can be very frustrating, especially in that case.

switching gears here a little bit, I’m big on, building networks of other high net worth investors, getting in the room of the right people, which is usually not the vocal Rhea, the free, groups online. We’re just more about wholesaling and flipping in getting their first hundred, $500,000 net worth.

But. And that’s a big part of it. I think, getting into the right network. And that’s why I’ve created the simple passive cashflow nation and the mastermind. But I guess Brady, once you are in the right room, I will some tips on someone who is a little socially awkward from a technical background to get all their comfort zone and intermingle and put their best face forward, My main advice is to play to your strengths, which might sound a little confusing perhaps to somebody who is very heavily introverted. But I had mentioned this earlier in the episode where we were talking about introverts, having particular empathy that even extroverts do not possess. Because an extrovert can be a social butterfly and foot around the room and chitchat with everybody.

And they look like the life of the party and somebody who’s heavily introverted, not only will feel envious, looking at that example, but feel lacking. Like they can’t do that. And that is doing an apples and oranges comparison. You look at somebody that’s social butterflying around the room and you go, I can’t do that.

And you start to shut yourself down and you don’t go up and talk to anybody. That is what we end up seeing in those kinds of situations, but that’s not your strength. Their strength is as an introvert, for example, is not your ability to flip between 20 different conversations. In 10 minutes, your strength is really deeply understanding one conversation, being able to really tap into another person.

And that is something the extrovert can’t pull off. The extrovert usually gets bored too easily and flips to the next conversation. You have a much. Stronger opportunity for connection rapport and building a strong ally in that room than even the extrovert can do. The extrovert could collect 15, 20 different business cards and not necessarily have any real follow through with any of them, but the introvert could get one card, maybe two, that actually goes somewhere because there was a deeper, meaningful connection that was happening.

It takes a courage to do that. You have to get up the nerve to come up and talk to somebody, but. Devote yourself to that realize that your strength is to be able to understand this other person and make an ally. And I think in our group, I would say 80% of the people are introverts. If let’s say at least you got a pretty good shot of talking to somebody who is glad that if you’re talking to them, you think the first move and then something else that of came to mind was in a.

I, when I go to, conferences, industry events, and I make a point to go more deep into one or a few people than to run around the room and wastes my business cards. and it’s funny cause everybody sees those people’s fluttering around the room and you also see this in the virtual setting today, or when there’s not as many in-person events.

I see it. I see it on my Facebook feed. I know you guys are out there. You guys are in every single Facebook group out there. I know cause I am too. And Facebook alerts me and I see those type of people that would skin that’s the cheap, easy, free folks who they flutter around to every single group. Ask the question.

You’re asked a question to ask a question in there. there are transitory to all these groups, but they’re not a resident of any one or two, and I think it’s different. I know the truth is those people. They never really get anywhere. Let’s say never reinvest their money into one group of people, time and money wise.

that’s, I think that’s how it recreates itself in the virtual world that we also unfortunately are living into. and there’s also a corollary, it’s a little bit of a cliche, but it’s an interesting mental trick that I would recommend to somebody, because. Whether it’s in a virtual, zoom call where there’s open breakout rooms and you have to pick a breakout room to go into or something like that.

Or, you get assigned to a breakout room. Or even if we think about an in-person thing and you’ve got 15 people lined up against the wall and nobody’s talking, cause everybody’s nervous. Just remember. And this is true. If you’re the one that has the courage to go up and actually initiate the conversation, you’re scared as all hell of how that’s going to go.

But in that instant that you’re doing the approaching to somebody else in that moment, they’re more afraid of you than you are of them. That’s the cliche. And by having that leap of faith, that courage to actually be the one to go up and initiate, you have now proven that you’re just ever so slightly less afraid of this conversation than the person who didn’t get that courage up to do it.

And as a result, You’re almost guaranteed to actually have a really good conversation because they’re just happy that you started it. Yeah. And I think a great opening pickup line is like, Hey, I’m new here. I’m still trying to learn. yeah. Tell me about yourself. And I’m interested in learning too.

it’s rare that you find people that. Don’t have that ego or the I’m all-knowing, I’m the best doctor on the best dentist and the best it guy. I know.

but yeah, let’s so Brady runs a pretty good boot camp specifically surrounding, progressing your career and all these little social tweaks. great. I really liked the group coaching setting that you do too. We can do this and they can keep beta group ourselves, but it’s probably the most, best way you’re going to be able to get some people around you and that as close to one-on-one coaching, without the price of that, you can get like insult virtual, right?

Say, no, you start it with pentatonic, but you guys, what’s the URL, right? If people want to get ahold of you or. Yeah, my website is infinitech.ninja. So I N F I N I T E C h.ninja. and , the name was created around the idea that we are helping texts, particularly whether we’re talking it or programmers and developers.

If you’re in the tech industry, And that we have infinite potential, but we just need to untap it. So Infinitech, and then I call our graduates from the bootcamp tech ninjas, because there’s a resiliency and a versatility and agility to the mindset that I coach on these concepts that really prepares people to face down just about anything, because really tapping into our personal power and not getting bogged down by what we can’t control.

And I’ve spoken about this before this concept of binary skillsets that are contrasting it’s like the seven foot or in basketball that can also dribble and shoot or the super strong guy. Who’s also fast. If there are an introvert out there and you shut up and actually listen to people, is there a normal tendency, but you’re also able to navigate social norms.

You become what you become one of these rock stars and guns Lakers in the world, and you just rise above everybody else in career and networking. And it’s because it’s rare that binary skill sets is rare. and it’s something that I’ve worked on myself. Cause I was, you ask anybody who knows me.

I’m one of the most socially awkward people in the world. but I kind of work on it. That’s really how I’ve been able to work on all these business development relationships and partnerships and find, and build the group. And, Brady will call me so that I’m confident. yeah, cause I put in the FM work.

And that’s what I encourage. Everybody else should be doing a jumped, do the bootcamp. I would definitely recommend it. And I liked something else that you mentioned in there, like the introvert who can start a conversation and actually communicate effectively with another person does so much more powerfully and meaningfully than the extrovert.

And part of that is because of what you had mentioned about listening. We tend to as introverts, I count myself among them shut up and listen more than we want to talk necessarily. But the extrovert by the opposite end of the spectrum, can’t wait to get in their piece. So they’re not necessarily actively listening.

So you get that game of telephone that happens almost in that social butterfly where they’re not even necessarily understanding what the other person just said because they were brushing up for their next statement. The introvert is actually paying attention and listening to the content and gets closer to the spirit of what was trying to be communicated.

So that’s how you establish those allies. I think it feels better than being listened to, and it makes you want to know this person somewhere. And if you’re doing that for business, you’re more likely to do business together.

All right. again, the URL infinitech.ninja and a bird and use these skills when you guys are in our mastermind groups and. we’re going to be doing the retreat this year. Virtually it’ll be the bubble, the virtual bubble this year, but, yeah. easily skills, bring your ego down, be open, be the first person to show weakness and you don’t know anything.

It’s what I’d say, but, thanks, Brady. Really appreciate that.

2020 Advanced Tax Saving Tips w/ Toby Mathis [Part 2 of 2]

https://youtu.be/FTj-nJEGi-4

So what if I have an asset, I did a cost segregation. I shipped that all the passive losses and I slide that asset into profit. Do I have to give up those passive losses personally or no? Passive loss is in the year that it’s earned. So the same way you can be a real estate professional in one year and a non real estate professional, just a regular passive investor.

 

Is the same way those losses get locked on your return. There is something called disposition of the asset where you can unlock those losses and they become ordinary losses. So the one thing we would look at is whether that disposition would qualify. If we transferred into a nonprofit, the other reason that deal might be slightly different.

 

Is that while there’s no issues with putting in straight line depreciation property into a nonprofit, as far as the value, when you put in property where you’ve accelerated the depreciation that accelerated depreciation, just the five, seven and 15 year property gets subtracted from the fair market value.

 

So if I bought a property for 500,000 and I wrote off a hundred thousand in year one, And then the property goes up to a million bucks and I transfer it into the nonprofit. I would take the a hundred thousand dollars of accelerated depreciation and I would subtract it from the million. So I’d get a $900,000 deduction.

 

And you’ve mentioned it earlier, but is it essentially you can load assets into the nonprofit just as long as it’s not luxury or what about like class, a office space that don’t work as long as it’s passive? What the nonprofit, the only thing the nonprofit worries about is when I have an asset, whether it’s used for my charitable purpose, for example, I don’t like private foundations where they’re not doing anything.

 

All they do is give money to other nonprofits. We’ve done them, but I much prefer things that are actually doing stuff. And people don’t realize how wide open that is. The example I give people that usually makes them go. Hunt is Ikea and Ikea is a nonprofit. Always has been. The majority owner, the majority control is actually two different charities.

 

And then the kids of Inbar the guides set it up for still control about a third of the board. So they, nobody can get rid of that company in it. He is very, almost no tax. I think it was about 4%. When you operate an ordinary business than a nonprofit, there’s something called UBIT that you have to be worried about unrelated business income tax.

 

And if you’re leveraging the asset, there’s always the possibility of unrelated debt financing, but it’s a misnomer. We don’t really worry about it because there’s still depreciation that we get to use against it. So even if it did make that. You’re probably going to be paying to somebody anyway, like you’re gonna be paying it out as a salary or another expense.

 

Like you’re not more than likely you’re not going to get hit by anything. If you did you pay a little tax on it, but the charity pays it. I must admit, like from an asset protection standpoint, you’re pretty solid there. Nobody could ever take it away. That’s the thing, things, nobody owns it. It’s for the public benefit, you control it.

 

So if you run over a bus load of nuns, you get sued, but lightening suit out of you, they can’t touch it. They could take your, if you start paying yourself out of salary, they can garnish some of those wages. But even that’s 25% of a wage. So it’s not like they could just. Go in there and they can’t touch the asset.

 

And then you control. Usually what people would do under that scenario is they’d pay somebody else, a spouse or a child, and they would take care of that individual, but it just takes the bowl, the bullseye off your forehead. When you have a lot of assets in your walk around with them in your name, I just say you’re attempting fate.

 

There somebody is good inside. They’re going to make their bones on trying to take your stuff. So you, do you like the strategy in new of, or it conjunction with something like a Nevada dynasty trust or like a domestic asset trust or irrevocable trusts? Like even though there’s, everybody’s got their different little, what they think is best, what is your kind of thoughts on how this all works and you use what’s appropriate at the time?

 

And you try not to overthink it. The, uh, Nevada asset protection trust. Yeah. All that is a trust that could last 365 years. Good to cans into another one and keep going on. It just means we’re getting it out of our estate. I don’t own any anymore when, while I’m alive, technically somebody can’t take it from me.

 

So they’re an asset protection tool and in all living trusts end up becoming. If you draft them right. Dynasty trust anyway, you know, unless you want to give all your stuff to your kids right away. So I would say don’t do that. My experience is that you’re better off having instead sit in trust for their benefit during their lifetime, and then going to another generation and you can have them go for a long period of time and you can pick whatever state you want.

 

So Nevada is the number one state for asset protection for us. The reason being is a, they last a long period of time, 365 years. You can make that go longer. But also if you have a creditor of a beneficiary, all creditors are protected. Whether it’s child support, alimony, personal injury, there’s no exceptions and most States have exceptions.

 

So Nevada does not. So we tend to. Put the Situs of our trust in Nevada for that reason. So that’s why you see you here in Nevada asset protection trusts. It’s a fancy way of saying credit shelter trust set up in Nevada. You know, it stuff, but stuff. I think we’ll talk about, bring you to the mastermind and cut Bobby, talk more specifics with the folks there at a future date, but let’s get back to the crystal ball here.

 

So the big thing is the $400,000 threshold. To me, if you’re able to lower your AGI below 400 grand or even less, does it not even matter still on 32% tax bracket, if you’re over 400,000, that 39.6 plus your state. So it’s going to be painful. If you’re below the 400,000, you’re going to get a deduction.

 

That’s going to come back. So that may help some people out. You’re a state and local taxes. You’d be at a write off right now. It’s capped at 10,000. So for some people it might actually be better. We always look at what’s bad about it, but what’s good about it is you make less than 400 grand. You’re going to protect protected class.

 

If you make over a million bucks, you’re completely you’re on the endangered species list. You got to do something, you got survive. Some, there are some ridiculous ways, by the way, to lower your income, you’re doing one late in your real estate professional. That’s not available to everybody. There are things called defined benefit plans that have become more and more powerful over the years with savvy.

 

Advisers where you’re able to put in some cases, upwards of a million dollars a year tax deferred, there’s other vehicles, if you want to get there. And it’s just recognizing that, which category you’re in, if you’re making 200 grand or in below you’re okay. There’s some things you can still do to lower your taxes.

 

Absolutely. There’s still some things you can do to make sure that you’re. Taking advantage of, of opportunities that are available to you to minimize your tax about you’re not, you don’t have the bullseye on your forehead. You’re making 1.5, 1.6 million a year. Got a goals eye on both were asset projection by the government.

 

They want to take a big chunk out of that. And there’s some things we can do to lower that so that you’re not sitting there feeling like you’re just opinion getting hit and all the canvas. So let’s talk about that a little bit. Maybe not for example, like land conservation, easements, not, let’s not really get into whether that’s.

 

It’s going away or right now it’s being fought around a little bit, but what’s what do you think with the new administration new things might be coming? I think that would actually be kind of a greater incentive lane. And I would, the only thing that I would say is the administration right now is looking at it saying that there’s been abuse in the conservation area where they’re overvaluing the conservation easement itself.

 

So it’s something called a listed transaction. If you go over 250% of your investment in an English, it means I give a doll. And I get a deduction of more than $5. They’re going to look at the transaction. That’s all. They’re going to make sure that it’s legitimate because there’s people out there pitching 15 and 20 times.

 

Yeah. Those are the boneheads, right. Taking advantage of it. There’s no way that the value holding up. So I got, we have one right now that we’ve been looking at and these are legitimate. So it’s a developer. Developer is developing a big chunk of Vail, Colorado. So they have an area that they’re willing to conserve.

 

What it does to their other developments is makes that land more valuable. So they’re willing to put restrictions on an area that’s already been approved for the development. All the plans are up like you literally, they built sections of it. And they said, this land is worth $40 million with the developments 42.9 or whatever, but we bought it for 9 million.

 

So we’ll give away all the development rights. And they get a deduction for it. And what is what it is. They say here’s an area that would be perfect if it was never altered. And it’s where two rivers come together. It’s about, that’s going to make everything else. The whole area is going to be better off.

 

So there’s about $30 million of deduction. So if you put in a dollar, let’s say you were one of the 9 million. Then you’re getting a deduction worth. In this particular case, it ends up being more as about $4.70 for every dollar. So you’re going to get to write off, you’re going to have a charitable deduction of $4.70 for every dollar you put in what’s that board at all at 4.7 words, it depends on your tax bracket.

 

If you’re in the 20% tax bracket, it’s going to be 20% of 4.7 is what it’s worth. And it’s what is that like a dollar for whatever it is. See if I can actually do math in my head, a dollar 40 or something around there, a buck it’s you paid a dollar to get just over a dollar. You’re probably not doing that for tax purposes.

 

You’re in the highest tax bracket probably worth it. It’s probably going to be, Hey, you know what? I get a buck 60, a buck, 70. For every dollar I put in, I’m saving a dollar 70. Okay. That’s worth it. Saving an extra 60 cents and that’s conservation stuff. And Biden is showing that he wants more solar and he wants more conservation.

 

So I would say that the opposite is going to hold true on that area, that you could actually see more incentives and there’s a crazier one land. You and I have never spoken of, which is the solar credits that are still floating around out there for business use, for example. What’s going to become a big incentive.

 

And I can almost tell you that this is going to be a reality. So I’m going to get my crystal ball out and say, you’re going to watch this. And then we’re going to listen to this in three or four years and say we were predicting it right now. If I put a solar array on a building and let’s say it costs me a million dollars.

 

I get a tax credit of $260,000, 26%. Even if I finance the whole thing, that’s a credit. I get a credit. That’s not a deduction. That’s a dollar for dollar credit. So if I owe a hundred thousand dollars in taxes and I have a $270,000 tax credit, I don’t pay any tax that year. I use 100,000 of it and I carry it forward into future years.

 

But I also get to depreciate the solar and I depreciate 87% of it. So a million bucks, I’m going to get an $870,000 deduction in year one, plus a $260,000 tax credit. That’s not bad. So there’s, and I think they’re going to increase those incentives. It used to be 30, 30%. And then this year went down next year.

 

It goes to 22%. So that solar panel, you can deduct it all in that first year. You can deduct 87% of it and you get a tax credit for 26% of it. So maybe I actually go around Hawaii and find a contractor. It makes deals with some people, put some solar panels have to sell off the credits to invest in them a year.

 

Is that you’re already there. Yep. That’s exactly what they’re doing. So I have a client. That’s what he does. He, he installed solar, but it gets interesting. What he does. He goes to a utilities, public exempt organizations, five Oh one C3 churches. And he’ll go find a wealthy parishioner and say, Hey, would you, would you put the solar array on?

 

And then do it five-year contract on the energy because there’s going to be energy independent. And so they’ll sell it to the charity and say, Hey, after five years, the array is yours. And so he’s taken the big tax credit. They have a little tiny bit of income on the, on the revenue that’s coming in because they’re technically, they’re selling them the electricity.

 

Although, usually they just give it right to the charity. So that washes itself. There’s a deduction. And then, so you have a little bit of income with a deduction that equals it, but you get that first year. It’s a ridiculous deduction, but where that’s really going to be important later is next year, if the taxes do increase, guess who’s going to be really incentivized to do stuff like that.

 

Yeah, that’d be cool. Like investors bring in the capital, they get the tax incentives and the plan owner gets get some cheaper energy. Yeah, what they do is they lock it in and they’ll say your energy, won’t go up for five years and then you have the right to buy it at some peppercorn price. So you’ve already depreciated it.

 

So you don’t really care and you just don’t want to have a E you would recognize all the income as ordinary income. If you sold it for more, more than your basis. You have a really tiny basis. So that’s what you sell it to them for you like, Hey, 13% basis, whatever that is. So it’s, I just want to not pay anything.

 

Yeah. So during the, during those five years, I have a little bit of energy money coming in and I haven’t payments on the loan on the solar, but it’s basically washing itself. So I, again, I’m getting a huge tax credit. I get a huge deduction. I have very little income that’s coming in off of it. So I’m getting a big first-year benefit and yes, there’s a lot of people starting to do those now.

 

And I think that creative syndicators are going to get into that arena. I think going back to the land conservation easement, I think Democrats are typically more than farm mental sides. So I think that’ll continue to be a little bit, but I, what I’m looking for is then to create some kind of safe Harbor instead of us speculating backroom floor.

 

That they just make it more black and white. So mr. I need to file an April. Doesn’t get all for doubt, but they did, they did make a safe Harbor. It’s 250% and they made everybody list it so that, so the it’s the syndicator that gets audited in those situations, not the individual. So usually what they’re doing is they’re trying to figure out who these promoters are and whether they actually gave away the interest.

 

And so what oftentimes will happen is somebody thinking. I’ll pretend to give away something and we’ll revert back to me in 20 years. So I’ll get a deduction, but it has to be a complete gift and perpetuity. Somebody who, who doesn’t, obviously that’s a syndicator who’s running fast and loose and it’s not.

 

Doesn’t hire competent professionals to look at the situation and say, Hey, you actually have to get your way. And I’ll use the example of our president right now. Trump. Mar-a-Lago is a good example. I think it’s six parcels. Mar-a-Lago the golf course. And he gave away the development rights. I think it was on two or three of them, but also the clubhouse.

 

And so there’s a bunch of cultural antiques in the clubhouse. They have to have a non-profit gala every year, so people can see it. But on the parcels that had the golf course, you gave away the development rights to an outside the conservation RT. And the reason that you do that is so that nobody’s tempted to sell the golf course and build a bunch of houses.

 

It does a couple things, Hey, that will always be open space. It’ll never be developed. They’re not going to build buildings on it. They’re not going to put houses on it. Number two is if there are houses on a golf course, you want to know that they’re not going to sell the golf course. And all of a sudden your house it’s on the fairway on the ninth hole is.

 

All of a sudden in a very dense pack of houses that are on postage stamps, that just happened in a community. That’s literally about a mile away from me here called Queensbridge, where they saw the golf course and they’re going to develop it. And it’s a lawsuit in the making that’s where Snoop Dogg that, by the way, it was in Queens Queensbury, I think it was one of the condos that’s in there, but it was like a super high end area of Summerlin.

 

And yeah, the golf course wasn’t profitable. So the guy just let it go Brown and selling it to a developer. And so all these people that lived on the golf course, all of a sudden, they’re on a Brown golf course. That’s gonna, you know, they’re gonna have neighbors in their backyard. And they thought they were going to be living on a golf course.

 

So there is some benefit to it of saying, Hey, I have a golf course, worst case scenario. It’s going to be open area and you guys can decide, maybe it won’t be a golf course someday, but it’ll be open green area. Maybe it’ll be. Maybe we’ll plant a bunch of trees. And if you give it to like ducks unlimited, maybe there’ll be a wildlife habitat that’s in your backyard.

 

So that’s actually one that people give a lot of land to, but it’s, that’s that world, the people that live in that world land they’re true believers. Like these are the folks that are like, Hey, we need, we need these open spaces, please. Don’t. Put asphalt over everything, especially on why I’d imagine you guys would have an appetite for that.

 

So wrapping things up. The last thing I wanted to go over was the corporate tax rate going from 21 to more of a 28. Do you guys finally got me on a C Corp system after takes me a long time to figure these things out? I don’t have a home office. I have an administrative office because I have a SQL or now I’m getting it.

 

I’m practicing. I’m practicing for that audit, but I’ll probably have you guys talk, but the audit rate is they just came out with the audit rates from 2019, your little, uh, little companies, little S a little seeds, little partnerships were below 0.0, zero five. They didn’t even register. It’s first year, I’ve seen an asterix as the audit rate, as escorts were 0.01, a C Corp syrup when you’re small you’re minuscule, but the people that get audited or the individuals in big companies, companies, the, yeah, the LLC sole proprietors, they still there about it’s still, what would it be about a hundred 1500% more likely to get audited right now?

 

Yeah. It’s not even close. And so I always chocolate because we just don’t see audits here. We actually had seven years that we had zero audits of any of the companies that we set up and we do more than 6,000 returns a year. So like we should be seeing lots of audits because the audit rates traditionally around a percent it’s been dropping, the IRS is understaffed overworked, and they’re focusing on the people that are actually bad doers when you’re a small company.

 

Truly not much that they can get. If you have a lot of different options, you can’t take it one way. You could probably deduct it. And three other different ways as an individual, you have really no options. And so they, when they audit sole proprietors, they win 94 to 95% of the time. It’s a slam dunk. They went about 64% of the audits against companies, corporations.

 

It’s not even close, like when you actually start doing math on it. And you’re like, Oh man, who should I audit is audit sole proprietors all day long out of the modern pause. People are playing games when they’re sole proprietors, you know, they’re more apt to do stupid things. Like you’re not allowed to sell phone.

 

I can’t write off myself on it. And sole proprietorship. I can just go down the email lists and say, who has all the Yahoo or Gmail accounts that have skull audit those guys? They don’t know what they’re doing. If I was the IRS, I would just audit them all. They actually, they do have algorithms and they were auditing all the earned income tax credit.

 

So they were auditing all the poor people that were taking the earned income tax credit because none of them would respond and they’d win. Every audit was the most disgusting thing I ever met. I talked to the programmer who said, I felt dirty after writing the algorithm and it’s stupid stuff like that.

 

You’re just looking at it. And government going guys, I can tell you who the screwballs are. Like we already know who they are. They’re the ones doing everything cheap and fast. So that’s why I do the C Corp guys. But with the taxes going up, Toby is that we’re going to keep it C Corp or we’re going to change it.

 

S-corps what do we do? What’s the plan here calculation to see. So I can tell you the numbers. If you make over a million bucks and you have a C Corp and the C Corp makes its money, pays tax pays it out to you. You’re looking at an aggregate tax bracket of about 59%. That’s going to be painful. So if you’re a high income owner, it’s going to hurt for you lane.

 

If we paid out the profits of the seed Corp, you’re in the 0% tax bracket, your long-term capital gains is the dividend rate. Well, what about like a lot of my clients, like, Hey, The C Corp to them, or S are a little complicated to them. And th they just think of themselves as lowly little passive investor got a few deals that still makes sense.

 

You just do the math. And so I’ll use a stock trader. As an example, we don’t have a miscellaneous itemized deductions, stock traders. It’s really hard for them to qualify as a business or something called trader status, which is not even in the code. It’s just made up. It gets audited almost every time, or you just use a corporation and you haven’t managed a partnership that has the brokerage account and it sounds complicated, but what it does is it allows you to write off all your expenses that you otherwise wouldn’t get.

 

So you just get a pencil out and you say, all right, how much are those expenses? In my experience, the average expense of an individual who’s doing any sort of investing is between 20 and $25,000 a year. If I can write that off, I just look at your tax bracket and say, is it worth it? So if it’s somebody who’s in the 12% tax bracket and they don’t really care, I look at it and say, it’s going to put an extra, let’s say $2,500 in your pocket.

 

Is it worth it to do an extra tax return and deal with a little complexity? And their answer may be no for somebody else. They may be looking at it and they go, Whoa. Yeah, that’s going to save me about $10,000 a year. I need that extra money because it takes me from making 7% to making 13% a year. That’s a huge, like they’re in the 20 to 24% tax bracket.

 

Exactly. And they start all of a sudden it starts those deductions start to mean something. I don’t want to ever put my, my wallet in somebody else’s back pocket. So I just do the calculation and say, Here’s what it means to you. Is it worth it? Technically it’s the same bookkeeping, no matter what you do, you’re required to keep books and records.

 

So I always say that’s a misnomer. What it really comes down to is the little complexity of running a court. And yeah, maybe it’s an extra hour or two a year that you have to deal with it. It’s not, you do syndications. It’s not like it’s earth shattering. It’s not like it’s a ton of stuff. You just, you have to keep track of your books no matter what, that’s the hardest part for anything is keeping track of the books.

 

So all you’re doing is you’re still doing the bookkeeping. It’s just, I have one other mouse over here that has its own tax bracket. And I like to feed that mouse because unlike me it doesn’t have to pay tax on some of those things. Yeah. Okay. So yeah, wrapping up here will be any other thoughts and feelings or anything else in that crystal ball you don’t want to predict.

 

Yeah. Relax. I would say go slow. Don’t make wild moves. Don’t freak out. If we can’t do things one way, we’ll find some other way. It’s rare that you have catastrophic tax changes. Usually they give us things. And so even in the biggest tax changes that we’ve had, whether it be the 86, whether it be 2003, a tax cut and jobs act individually at axes, actually we’re not.

 

Business taxes went down no matter what those are, which by the way, one 99, eight is also on the chopping block. The 20% deduction, I would just look at it and say, talk to somebody who actually understands how these things work. What are the silver linings they’re giving us tax laws always have silver linings, and it’s just, let’s go find what they are and see if actually your situation benefit.

 

It’s weird, but like usually with a little bit of complexity, those that are willing to embrace it, do better almost all the time, because it’s not like Biden wants to hammer people. What he wants to do is he wants to hand hammer the people that are just doing thing mindlessly or don’t have advisers. And so he sets up traps and if he it’s like you’re catching, I don’t know.

 

Let’s say they’re putting a bunch of hooks in the water and they’re waiting to see who will come up and bite it. So don’t buy it. Yeah. It’s like the heads I win tails. I win complexity helps because in the complexity you can find a path forward and stop complaining, try and find those ways to get her up off.

 

I just wish that Trump hadn’t used the carryback and hadn’t used the accelerated depreciation and use the costs or the conservation easements. Because they used it. They hit him over the head. When really realistically they should have been saying here’s huge tax incentives that we want everybody to participate in.

 

We’d love to see more development. We’d love to see more conservation instead. They said, Oh, look at him. He’s not paying any taxes. Yeah. Like here’s the guy that. He saved billions of dollars on his taxes because there’s incentives to do X, Y, and Z. And he took advantage of those incentives kind of like shut up.

 

You emphasize it. Just why bring all this attention to this stuff, right? They didn’t do it say, Hey, and you saved tens of thousands of dollars a year running your business as an escort. You never heard him say there was one or two articles where they actually pointed out. Hey, you set up a structure where you’re able to reduce your own age disability and survivor’s benefits and Medicare payments.

 

You save yourself. I think it was like 150,000. It was a pretty large amount and yeah, they didn’t beat him over the head for it. Thank God, because we want these things. There’s incentives to do things the appropriate way. We want people to, we want charitable donations. We want conservations and it’s we want development.

 

We want people to. Want to build more housing cause God knows we’re going to need it. And the poor being left behind everywhere on your Island. I know that there’s people that could really use low income housing. Why are they making it so hard? Give us incentives to do it and we’ll take care of it. I actually think maybe with Biden and everything, maybe my taxes might go up 5% overall, but with all the money that they put into the economy and they spend money, like drunken sailors, especially on the low income housing stuff.

 

I think if you’re like before they would put a bunch of housing in projects, right? Like they, they would densify all the low income stuff. Now the push is to spread it out to more suburban apartments here and there amongst nice houses in these neighborhoods. I see that as opportunity for investors to go like apartments, or I know you guys see that stuff too.

 

It’s huge. It’s huge. I work with the United way Catholic charities and nonprofits that work with terminally ill, autistic adults. There’s no housing for these folks. And like, I don’t want to go down that path right now, but it’s. Serious as a millions of folks are going to be in a really bad situation.

 

There’s almost a million autistic adults that are living with their parents. What happens when the parents pass away, these folks can not live on their own. They’re going to need some sort of assistance. So there’s going to be that the elder population is, but we’re living longer in our older population is growing about 25% faster than every, than any other demographic.

 

We’re going to need to house people, but they’re not going to be able to live on their own where we’re going to just put them in nursing homes. That would be horrible. So we’re going to have living arrangements that work there. And then there’s the last 10 years of all the housing that’s been built about 75% has gone to people making more than $75,000 a year.

 

So you have a section of society, especially the millennials that are being underserved. So, uh, what they ought to do is create incentives for folks like you. Folks like me, who love real estate, like to develop and give incentives to solve that problem. And the accelerated depreciation is one fixing the voucher system right now.

 

Not everybody wants to do HUD housing. But there’s other systems for people, whether it be veterans, whether it be somebody who’s got a short-term need or has a certain type of disease, or again, autistic or whatnot, where there’s groups that, that give incentives to people like you and I to help solve that issue.

 

By giving us tax incentives to do it. And that’s the best thing they could do because the government sucks. That feels strange. It really bad. Anything else going on in Anderson, you want to give a shout out to, you know, what we’ve been going gangbusters. We love working in the tax and asset protection and the estate planning.

 

What I would say if you’ve been part of our infinity group for anybody, we’re going to make that free now. The basic infinity that used to be a hundred dollars a month is going down to free. We lowered it $10 last year. And now down to, to free. If you want people to learn how to invest, I love getting young people into it and they actually learned the principles of money.

 

That’s actually really fun. I’m always doing, am I doing one tomorrow? All day long, but we teach a workshop and then there’s, they can come in and trade in the stock market with, with a fiduciary, like a professional every Wednesday. We just train people on how to be good investors and there’s not a dollar to be had.

 

And if they can just go do it, I spoke to some of your mastermind folks in an infinity group, and it’s kind of cool guys. Like it’s, it’s, I’m not a big fan of the stock market. Sure. But the way they teach it as like more, it’s like cashflow investing, but like investing in dividend type of stocks. So they teach you how to do that.

 

It’s great for like younger guys who. Need to save up some money to go buy a rental property and get started. Or some of you older guys, just looking for that hobby to do it too. It’s casual. We call it being a stock market landlord. Everybody forgot that the stock market used to be a place where you got paid to invest.

 

Then it became, Oh, the is going to go up. No. If I gave lane money and said, Hey, open up a restaurant, I’d expect him to pay me something for it. I wouldn’t wait 10 years and say, Hey, if you ever sell that restaurant, I hope we make some money. That’s stupid. So we cashed, or there’s only about 60 companies that give you good cashflow.

 

And then we show you how to rent the stock. So you could make a good 10, 12% a year, pretty consistently out of the stock market. Just picking those companies and renting them out is a fancy way of saying covered calls. It’s actually fun. And, uh, we do it because if younger people start doing that, they won’t be afraid of it and they won’t get taken advantage of by all these knuckleheads out there in their suits, trying to take your money and put it in an account mutual fund and rip you off.

 

I shouldn’t say rip you off. I always get in trouble. Somebody yells at me for saying that mutual funds have really high fees. ETFs are really cheap. Just take 30% of all your gains, right? 70%, 70% is the average what their fee will end up taking away. 70% of all the growth. You’re a hundred percent at risk.

 

You get less than a third of the benefit. Once people realize that’s how wall street makes its money. If you guys want, because I go to the Anderson advisors.com or Mickey mouse and your lane. Good stuff going over. Toby. Appreciate your time. Hey, it’s always fun. Thanks. Thanks for having me.

New Tax Implications from the 2020 Election w/ Toby Mathis [Part 1 of 2]

https://youtu.be/aqPWoki-MP8

Hey, simple passive cashflow listeners. Today. We have Toby Mathis here, a partner at Anderson advisors, the guys who got me to pay no taxes. Thanks again, Toby for that. although I was the one putting in a whole bunch of money into deals, par in economy through the pandemic. So I can say I earned it.

We didn’t do anything. We just point you to where they incentivize you to invest in real estate. Exactly. So today we are coming to you post election and things are pretty early still, but we’re going to be looking into the crystal ball here and make some speculations on where some of the tax laws are going.

And maybe what strategies you guys can be looking towards to maybe even we’ve got to pull the trigger before the end of the year, right? Possibly. the presidential election is looking like it’s going to be Biden. but tell us what really matters here. Is it the president or is it the Senate or the house? Yeah, Congress writes the laws, but the Senate, but the president can always, veto. So you have to be able to get over you basically, you have to have a certain alignment. Otherwise it’s going to keep you from being able to pass certain laws.

The house right now is going to stay Democrat. The Senate is a little bit up, we’re going to be at a deadlock. I think you’re putting it up right now. There’s two more runoffs. I believe in Georgia that might impact things, but it’s either going to be a standstill. if you end up with 50 50, then the vice-president decide.

So if the Biden inheritance are in the white house, then, Harris could pass a deciding vote and you could have changes if there’s not that scenario, it’s really difficult to pass anything without you’re gonna have to get the Senate on board, which means it’s gonna be hard to. Move really dramatically in any one direction.

What we know is what Biden has said he’d like to accomplish. So PRI prior to 2020, this a little bit of a history lesson for folks. so bill gets passed or tax law gets changed. it is. Birthed here in the house, primarily Democrats. So this is where, like the stimulus bill comes out, what is it like 10 million?

And then it goes to the Senate, they chop it down. prior to this, the Republicans had the edge, but it looks like it’s going to be more of a gridlock more than yeah. They both put out their own bills and then they decide that kind of goes through a committee and they decide which pieces they’re going to.

Are going to get an app. That’s where they all negotiated. So that’s why you never really know what’s going to be done until they actually pass it. Holy moly. What did you guys do? What’s the old famous one, you’ll know what’s in it when, after we pass it. So it’s kinda, or sometimes like they’ll write a bill, a Republican bill, and then all the Democrats will veto it, but then they write the same exact bill.

And then they’ll pass it. But it’d be originated from the Democrat side. Yeah. Always they call it the pork, this is what I want in order to allow you to get what you want, man. It’s usually not so good for the taxpayer. Yeah. so let’s just kinda, from what we know of the Biden, what Byron was saying prior to the election and campaigning, where are things heading in terms of taxes?

What do people need to be aware of? So the first thing to know is that the tax cut and jobs act, which they called the Trump tax cuts. A lot of it phases out in 2025 and there’s portions of it that start to phase out even now. there’s a little bits and pieces of things that are set to slowly go away like accelerated depreciation.

After next year will start to drip down. You have other things like your solar credits that are already going down, you have things like. the estate tax exclusion, that’s sitting over $11 million right now. And that’ll revert back to the pre tax cut and jobs act, level, which should somewhere in the five, five to $6 million range, depending on inflation.

So there’s things that no matter what, they’re still going to move, then you have the, Hey, these are the things I want to change. comments from the Biden team and the big one was anybody making over $400,000. They want you to be in the highest tax bracket and they want to move that highest tax bracket to 39.6.

Then they also say, Hey, if you make over a million dollars in capital gains or dividends or the combination of those two, then we want you to pay 39.6 on your capital gains, which would be almost a doubling of the capital gains rates. They also say, Hey, we don’t like this 21% tax rate on C corporations.

We want to make it a flat 28%. And if you remember prior to the tax cut and jobs act, it was graduated. it would be as low as 15. And then it would go up to 39 and back down to 35. It was this bizarre, and they’d just put flat 21%. So for a really small C Corp, it was a little bit worse, but for big companies, it was better.

That was the sort of pre page tries the big guys, right to come back. that was the push for it. There was that what they want to be is more competitive on the international, attracting companies, but their headquarters in the United States, as opposed to incentivizing them to go elsewhere.

We were not competitive as a taxi. They also had the, Hey, we’re going to cut the repatriation of your profits down significantly. I think it was 15%. I don’t know the number off the top of my head, but I know that. They reduced it, so that companies like Apple or Amazon, or some of these companies that have a lot of earnings off shore would bring them back in the United States and perhaps do local investment.

So let’s go back through these and I’m going to ask it from my own selfish perspective, which I hope that listeners are in that same situation too. But like the 2018. Jobs tax and jobs ag, I don’t know what that’s called, but it allowed for a bonus depreciation and whole bunch of passive losses that you could extract from deals that do cost segregations.

Right? That’s the one, whatever that one is. actually you don’t have to worry about the, real estate professional that was actually changed back in. I think it was 90. it’s four 69 seats. Seven, if I’m not mistaken, but that’s carved into the code already. That’s you don’t have to worry about that.

The bonus depreciation was, Hey, if you have five, seven, 15 year property, anything less than 20 years, you could choose to accelerate the depreciation. assume that you have, let’s say you have a carpeting and you put a hundred thousand dollars of carpeting into an apartment building. Normally you’d get to write off $20,000 a year as a deduction because the whole carpet will last five years.

So you’d take $20,000 each year. What accelerated depreciation allows you to do is just boom, taking them one year in order to know what portion of your property is carpet versus cabinets versus fencing versus driveway, all these different, Lifetime, of those particular assets you have to do.

What’s called a cost segregation. There’s always been cost segregation. You’ve always been able to do that, but now all of a sudden we have this huge incentive because about 30% of most buildings are five, seven, 15 year property. So all of a sudden you can accelerate your depreciation at any particular time.

You can just, you can choose five years after owning a building. Boom, I’m going to take it. And you have this acceleration, where you can really accelerate what you’re able to do. Sometimes it’s 50. Sometimes it’s a hundred percent. It depends on when you put the building into service, but you can do the acceleration and all you’re doing.

there’s nothing crazy about it. You’re just writing it off early. You’re still going to write it off over time, but it’s almost like getting a loan from uncle Sam for no interest saying, Hey, I know I’m going to get the tax benefit. Over the next 20 years. How about you? Just give it to me now, early Christmas present.

So if you guys miss it, the rule of thumb is about a third of the building gets written off in the first year, but to simplify it even more, a lot of these deals, you’re trying to max out the leverage 70, 80% loan to value. So what I’ve seen is, passive investors that put in a hundred grand, they’re getting anywhere from 60 cents to almost a dollar.

Back in that first year bonus appreciation, 60 grand or 80 grand back. depending on the deal and yeah, and it offsets not to interrupt you, but it offsets passive income. Unless you qualify as a real estate professional, there is one other one active real estate, but most people make too much. that’s the one that I’m really worried about, right? Like these, the passive loss gravy chain. Getting these super just mean that ain’t going away, that ain’t going away, what you might see as the accelerated depreciation. I think in 2023. So in three years, two years really, will start to go down to 80% and I’ll drop to 60% and then, go down from there.

I’m not certain, but I may, I haven’t looked at it so long lane. It’s probably. If it goes away completely, I’d be shocked. But sometimes it goes down to 50%, which is still pretty good. not w we do a lot of cost segregations where clients, where we will direct them to have them done. Not always do we accelerate the depreciation, especially not on the five-year property.

Sometimes you just let it spread because unlike you like, w you’re a real estate professional, you had massive amounts of deduction. But it doesn’t help you to get really dizzy zero because the lower tax rates are pretty low. Like I’m okay. Paying 12%. I’m okay. Paying 22%. What? I’m not. Okay.

Is paying 39.6% on rents. I’m not okay. Paying 37%. I’m not okay. Paying 32%. Like it’s getting too high plus by state. So sometimes it’s just about making sure that you’re hitting that number. So I tend to look at 200,000, And say, if I can keep people around $200,000 a year, that tax, it’s not going to be so extreme, you get up into the half, a million, 600,000 range, every dollar.

So much of it is being taken away from you. for every dollar you make, let’s say we had the Biden one. For every dollar you made after a million bucks, if somebody was taking 60% of it and that’s really what it gets up to, if somebody is taking that much away from you, you’re probably don’t have much incentive to make money and it’s hurting.

Cause it’s not always cash that you’re receiving. Sometimes it’s profit, that’s blowing down via K one or your investment. You don’t have the cash. Now you have to liquidate assets to pay the tax bill. And that’s what we want to make sure that you’re never in that situation. Yeah. so sometimes I think just to summarize what Toby saying, you have to be strategic on how you use those passive losses.

You don’t want to burry burn your AGI down to zero. Sometimes it’s good to pay a little bit taxes. you can’t help it because you’re the sponsor and you have, you’re leveraging up. So you’re going to get these massive. Deductions, not everybody gets that. A lot of folks that are just, they’re not going to pay any tax on rents the next 10 years, because they got a huge deduction and they may be making, $50,000 a year with rental that they’re putting in their pocket, but they don’t have to pay any tax on it.

Yeah. so like I talked to my tax guy and he burned up all my passive losses and I asked, he told me, he said, I should pay some taxes. But the conversation that we had that I got on board on was like, he was like, you’re probably better off paying no taxes and investing the money and just kick it forward.

But it depends on your situation, right? if you have a W2 job, you’re going to be okay. and if you need loans on a home or something, you need to have some income. If you don’t need that, like you’re leveraging on the asset, you don’t need the income. So you may as well not pay it, use that money to continue to invest.

Yeah. so the tax cut jobs act tax that’s phasing out the pass of losses, the accelerated bonus depreciation in the year 20, 22 and beyond. So yeah, look at that, I think 20, 22 years safe, I think it’s after 2020, I think you’re right. It, we’ve probably got a couple more years of where the getting’s good.

And that’s plenty of time for me, but what is, what are you thinking it’s coming up in the future is like the Biden clan going to be putting, getting rid of that, or I’m thinking that hopefully they can just focus on that 10 31 exchange and leave me alone and they want to get rid of the 10 31 exchange.

They want to get rid of step up in basis and that’s going to affect all of us. that’s huge. That’s huge for anybody who has substantial amount of real estate, that could be really painful. It’s going to force you to have to get rid of your real estate during your lifetime, because it’s not going to step up, which means if you’ve depreciated it accelerated the depreciation, then, you’re going to have some substantial recapture when somebody, if somebody sells it after you’ve passed.

so I’m not too pleased about that. that one, that all, isn’t the game plan. They’re like, all right, the Democrats have it. Now, if you’re a 40 years old, surely in the next 30 years, some more tax friendly leadership will get in there and swing the state taxes the other way. And that’s what you do.

Yeah. that’s the ideas right now. The law is what it is and I tell people don’t make dramatic switches until the law actually looks inevitably going to be changed. Cause even when you think, somebody gets in as president and they said, this is what I’m going to do. good luck.

Getting that through. Especially if you don’t have the, the, the house and Senate. Good luck. if you have the house and Senate fantastic. They might be able to get some things through, but even then, it’s not used to be, you can filibuster in towns, but the, It’s still not a, it’s not a guaranteed and people oftentimes campaign on things and then do something else as well.

So I tend not to make dramatic switches until I actually see laws being drafted or changed and they have support. and even if we, Biden’s Binance has won now, he’s even in the first hundred days, it’s going to take what another year, 18 months for that law to go into effect for the previous tax year, too.

So there’s. Probably about a couple of years of, turnover time I’m thinking. Yeah, good. If they could get something through in the first year. And again, the way that, the way it works is they can’t go back and change something, but they can say going forward. So if you pass away or if you remember this, but I think it was, the owner of the gang.

He was passed away during a year where there was no estate tax at all. We didn’t even have the $11 million cap Steinbrenner. This is not that long ago. Yeah. So he avoided billions of dollars. Like he, he, the joke we all had was people are going to snuff out their parents, like on December 31st, if they’re on their death, there’ll be like, let me help you along here because the, the taxes can be so extreme the following day.

it’s we’re going to have a new year’s Eve party with a bunch of pillows. It’s horrible. But that we were there was actually concerned about that and Oh boy, if somebody is on life support, they’re going to have a real incentive to pull the plug. It’s morbid, but it actually was discussed in the tax world.

There were many discussions on it. what would you do? And, So it’s not always, we think like these things have been debated for years. I remember when I first became an attorney, the estate tax exclusion was 600,000 wasn’t, was not very high in a lot of people got hit by it. And then it went up to a million and then it would defy a million.

Now it’s over 11 million and then they said, portability, most spouses can use it. It used to be way to have a, we had to use a trust to double it up. But that’s still on the table and Biden is shown all indications that he wants that to go back to the way it was before the tax cut and jobs act.

But he also wants to eliminate that step up in basis. And the step up in basis in English just means if I have a building that I’ve depreciated or a piece of real estate or stock say I’ve owned stock for 20 years. And it’s gone up in value. The day I pass my, the value steps up, or the basis steps up to the fair market value on the date that I pass.

So if I have a building that I’ve depreciated in my basis might be a little bit of land, maybe it’s a hundred thousand it’s million dollar building. Right now, if I pass the base, that steps up to a million dollars, I live in a community property state. So even my spouse could sell it the day after I die and pay zero tax, no recapture.

If that goes away, then assuming that, somebody had to sell an asset after somebody passes or wants to cause they don’t want to manage it and they sell it. no they’re going to pay recapture in capital gains. On that. So they’re going to pay up to 25% on the recapture and up to a underbite and it could be 39.6% on the capital gains.

So it’s a pretty big hit. Now the other side to that is if it’s real estate, not only does the patient have stepped up, but you can read deep, read deep, appreciate it. You know you, so you can go back and write it off again, and you lose that. So that’s flying under the radar. And that’s the one that I focus on saying that’s the one that’s going to have the biggest impact on our clients is people who aren’t investors are going to get punished.

And under that plan, and I don’t like it because before the strategy was just die and pass it off. And then your kids get the step up basis and you go wash the asset strategy was accumulate real estate and stock in capital assets. 10 31 exchange you’re real estate into more real estate leverage. Use those, use the proceeds, if you need to, for other things, and then pass away and you don’t have to worry about any tax that you could either.

depreciate it. So they’re not going to pay any tax on it in the wrench for a long time. so you’re going to have to appreciate it again after they’ve passed at that higher amount. And all of a sudden they’re getting huge tax benefits. or they sell it and they pay no tax. And so there was always that kind of, the silver lining, especially in community property States where the first spouse, everything steps up.

dad passes and mom can sell the stock and not have to worry about getting hit with capital gains. Now mom could be getting hit with as much as 39.6% federal plus the net investment income tax, which is 3.8. Plus their state taxes, which can be as high as 13%. So you could be in a scenario where you’re paying, 50, some odd percent it get, it gets a little ridiculous.

So is the solution either to wait until a different party is in there and changes the login or some kind of dynasty trust or a trust irrevocable trust that owns the assets. So it never. Ever does a step up. Yeah, it’s, that’s a tough one because yeah, because no matter what if I put it into trust, the basis is the basis I’m done.

So when they there’s really not much of a strategy on the step-up you can do, what’s called a deferred sales trust on substantial assets, or you’re spread it out over time and you allow a installment sale essentially. and then step up the basis and you sell it and avoid the tax immediately, but you spread it out over, let’s say 20 or 30 years.

So there’s still some strategies that you can do to lessen it. realistically, under those circumstances, it’s just, you’re sitting down going option a, B, C at the time. I’ve seen people make changes where they were scared to death. So I’ll give you a good example. I had a client, it was siblings.

So there was five siblings and the dad had a office building and this particular office building was in Ohio, but it has substantial value. So they were worried about the estate tax. So he started giving away interest and that building wasn’t eliminated partnership. So this is back in the day when limited partnerships ruled the world and not LLCs.

And he would give his kids these interest. So he transferred the entire building to his children before he passed. he’d own that building for going on 40 years, the basis was tiny. And then when he passed, it was in the year that they had unlimited, the unlimited, the state tax exclusion. So there wouldn’t have been an estate tax at all.

And he would’ve still been underneath the threshold. it was multimillion dollar building, but he’d given it all onto his kids. So his kids said, Hey, we’re going to sell it now. their basis was his basis, which was almost zero. So they got hit with this huge tax bill that would have been avoided, completely had he just done nothing.

And so I tend to look at attorneys that are, pushing people to do huge gifts. make big changes and I’d say, don’t do that. You don’t know what the future is going to be. You could make, you could really hurt yourself. And those kids that hurt them. They were like, there was a little bit of a dispute over whether they wanted to keep it and operate it, but it was like they didn’t have the depreciation.

So they actually had income coming in off this thing. And they were like, Oh my gosh, they had to do some fix up on it. There was some capital call issues. And so they decided they wanted to sell it. And instead of getting a dollar, they were getting, 60 cents. And, because it’s not cheap to sell a building, you’re paying the commission, you’re paying the real estate tax, the closing costs and all these things that eats away.

Plus you’re paying long-term capital gains on that thing. and you have a lot of recapture on the original building and in the improvements that they had done thereafter. it ended up really hurting and it was shocking to look at it. And, and I’m talking to the accountant who advised him the whole time.

And I could tell, he was like, Oh, that was what the dad wanted to do. And they overreacted to. Yes. Long changes, similar. you never know, right? Like a lot of this is the art form. You never know what’s going to happen. You got to play you to stand there and play goalie and you don’t know which way they’re going to kick it.

in this situation, it’s makes sense to procrastinate. And it reminds me of one of my biggest pet peeves is like my clients. They always want to file their taxes in April. what are you doing? Just wait until October. That’s when it’s really due. Sit back and wait, as long as you can.

I had a guy yell at me. He wanted one of us to file the S-corp in March and he goes, I’ve never been late. And I said, you’re not late. You’re entitled to an automatic extension. That’ll take us out to September. And he goes, I’ve never used that. I’ve never been late. And I kept saying, look, your tax payment is due on April 15th.

You had probably some quarterly taxes due, like as long as you pay in that. We’re not worried about penalties or interest, right? Their tax return itself has an initial due date of March 15th that you can automatically extend. You don’t have to ask for permission. You just say, I’m going to use my extension.

he forced us to do it. And then it goes close to September and he had made more than he realized. And he had a 401k and he had taken a really substantial salary. And I said, The sad part is we could make a pretty sizable contribution to your 401k for last year, but we can’t do that. Now. He goes, why can’t we do that now?

Because you’ve forced me, this idiot came in and told us to do this, from that point forward, we didn’t have to have that conversation anymore. Yeah. Fishy the eighth students that then thank you on it. Do that. There’s a few that sometimes you beat your head against the wall. The other one was, they’ll change K ones.

So you know, your syndicator, sometimes things change during the summer. You start finding out are their expenses and you’re going through your books and you’re sitting there and you’re like, you have a couple of choices. Like I can either fix the K one and give everybody a new K one. The problem is if they filed their taxes off the first K one that came out now they’re going to have to amend.

And so I always tell people like, wait till the last minute, so that your investments have a chance to make any changes. th the fun one was, the year that the, option reporting or the basis reporting, in brokerage houses came out and then they all use the same software and it was all incorrect.

So they sent out all these tax forms to their clients who ran out and filed their taxes. And then they corrected them about a month later after the tax deadline. And it’s you can either get audited or you can fix it. And now you’re gonna have to amend your return and you’re gonna pay to basically do your return again.

I always, I, we always try and get it out and March before the April the deadline, but I always feel like at least half the little. Probably less than half, still file it in April anyway, but there’s no reason. There’s no reason to file just, even if your return is done, just don’t file it.

Just file the extension, pay the taxes and you don’t have to worry about anything. And it gives them the opportunity to go back and revisit issues because you do have until the tax deadline. To make contribution, company contributions to retirement plans. So you never want to take that off the table.

You also have, you could be doing a cost segregation election all the way up until October 15th. So you don’t want to, that one, we could actually go back and amend, but why, like, why would you put yourself in a situation where you’re paying twice for something when you could just wait and do it once?

So going back to the whole, simple basis might be going away. And this is a bigger strategy that I’ve always said, it’s like, why would you want to own your own properties? That issue, especially if you’re not a professional operator, be a passive investor, split your net stake up into 50, a hundred thousand dollars increments and just bankroll a big Bon of passive losses and gains, never have to worry about any of these types of things one way or the other.

Yeah. th there’s something that you can do no matter what they do, because you still have exempt entities and exempt entities are like your 401k, your IRA, your Roth, IRA, Roth, 401k, but also five Oh one C3. And, Len you’ve known me enough that this comes up quite often with anybody who has substantial wealth.

That five Oh one C3 is your best friend because it gets it out of your estate when you get a tax deduction. Now. So worst case scenario, let’s just say that by, in the Senate and the house conspired to take away 10 30, one exchanges and the step-up in basis, they, increased capital gains rates.

They, they create a 39.6% top tax bracket that your dividends and capital gains can be taxed at. If you make over a million bucks, itemized deductions already gone, but w they were talking about bringing it in, but having a it’s basically, it’s only for people making less than 400,000, they have a kind of a funky calculation.

If you make over 400,000 where it goes away, I can still give things away. I can still take a charitable deduction for it, even if it’s a capital asset. And I can write a lot of that stuff off at my fair market value. Once it’s in a five Oh one C3, I’m not worried about step up or estate tax or anything again, because it’s not mine and my heirs still have access to it.

So those types of strategies will become even more important. which just means. There’s only so much stuff I need to own personally and have access to personally. Sometimes it’s better to get it into a vehicle where we never have to have these conversations ever again, the vehicle doesn’t pay tax.

And I love those because the only conversation I have with people then is how much do you want your kids to be able to take out of the business? And we know it has to be a reasonable amount, so nobody’s going to be buying Lamborghini’s off of your estate. nobody’s going to be able to go in there and just rape and pillage your estate.

The best scenario is they’re operating something that’s in your, that you created, and they’re able to take a salary for the rest of their lives. And then that can go to the next generation. So what Sylvia is talking about is creating a nonprofit. Creating that estate and being able to, what if the guy wants maybe not elaborate beanie, but he wants to take a $200,000 salary for his kids buy a Camry in the process, does that now you have to pay taxes on that.

Yeah. They pay taxes. It comes out. and I’m not talking about private foundations either here guys. there’s a lot of things that qualify as real estate, excuse me, as a charitable activity in real estate. Veterans housing, low income housing, HUD housing, moderate income, housing, housing for, you fill in the blank.

If it’s a disadvantaged group, single moms, we’ve seen it all residential assisted living. you can own a substantial amount of real estate, or if you’re actually operating a charity, doing something else it’s allowed to own passive real estate. So like the California teachers’ union owns a ton of like lots of buildings.

That’s their problem. Like they have a lot of investments and things, but what is it? Therefore, it is a retirement plan for teachers. It’s an exempt organization. So there’s lots of those. And there’s a misnomer that somehow that money is never for your benefit. Now you can take a salary, you just can’t take the profit out.

there’s a, it’s called private a newer minute. Can’t go to the benefit of any private individual, the profits. So I can’t just take it. What I can do is continue to operate it for what I set it up for. And it can, it’s going to grow and it’s going to grow extensively. And then you pay people, a reasonable salary is very subjective, depending on how much you want to do.

Yeah. Then they pay taxes. They take that out. But if they don’t need the money, which is what I see, I’ll tell you, because we’ve done over 4,000 of these it’s a one-way road. People tend to put money into the charities. They take very little out. and most of the kids that I’ve seen as we transition, because I’ve been doing this, over two decades, you start seeing a situation where the kids actually get behind it, and then they’re using it to lower their tax brackets as well.

I haven’t seen it where people are taking ridiculous amounts of money or trying to get access to money because they’re investing through that vehicle. And I like it because all of these conversations become moot. As I say, how much tax am I going to be paying none. You want to give it a house?

You’re going to write off the value of the house against your gesture, gross income. What? I’ve owned this house for 20 years and I only paid a hundred thousand for it. Now it’s worth half a million. Yeah. You get to write off the half a million. There’s an adjusted gross income limit of 30%. So maybe you’re gonna write it off over three or four years, but you’re still going to get a pretty sizable deduction.

People have a hard time getting their head around that. And then that asset is in there and it never pays tax. You don’t have to worry about who dies or any of that stuff. I just find it for again, for the affluent people that have a lot of money, that is something that they definitely should be looking at.

when you’re in real estate, like the type of real estate you do lane, the tax benefits are so ridiculously good right now. You don’t need to. But after you’ve, after you used a lot of the tax benefits for you, if they take them away, then you still have an alternative without doing anything crazy.

Nov 2020 Monthly Market Update

https://youtu.be/M9-A0vG5F1w

All right folks. It is November, 2020 monthly market update. Today’s Easter egg. He would like to download is the full, who he shared jive with. Pretty much all the goodies in their investor files and spreadsheets plus free access to the first three bottles in the e-course. Go to simple passive cashflow.com/club and join in there.

But if you haven’t met me, my name is Lane Kawaoka. I am the creator of simple passive cashflow, all about the stealing, the secrets of the wealthy, but on today, we are going to be recapping some of the news that has been happening this last month. We’ll get into the election a little bit right now. It’s still a little bit of a up, it looks like Biden is probably going to come out ahead.

But what’s teaching points that I’ve been working with some folks on lately. So a lot of people have been taking advantage of the cares act, getting a hundred thousand dollars out of their retirement accounts as we call it. Jailbreaking one tactic that is being used is safe. Investor has a big salary.

So they’re, they’re making over two, $300,000 a year. And they have a lot of money in their retirement account, but when they take money out of their retirement account, they slide it out as ordinary income. So if you’re making over two, $300,000, you’re in the highest tax bracket, it may make sense for you to put it into what’s called a QRP.

Instead, there’s more information at school, passive cashflow.com/prp. It’s another two out there, right? Every situation is a little bit different and the QRP is not the right situation for everybody. But in certain cases, it is, I think what’s another investor in our group, which you guys can join on Facebook.

Just shoot me a message. We’ll get you access to bear. But folks are using, you don’t get any tax benefits. Unfortunately, when you invest via a QRP. So it’s great for investing in Bitcoin or all these things that don’t give you the tax advantages of real estate, or if you’re just a private money lender or a debt investor, which I don’t really see why you would want it to do that in the first place.

But if you that’s what you do, or maybe you do life settlements. Two, that’s a great use for the QRP for my video window. There it is another teaching point here we’ve been using a lot of lately because we are able to be a little more liberal with the deductions. Some of the things that we had, we can do, or by calling, we don’t do full offices.

That’s a bad word. Call them administrative offices. And we do this Augusta rural. A lot of this is in my taxGuy@simplepassivecashflow.com slash tax. I’m not a CPA. I’m not a tax attorney. It’s not giving you any legal advice. This is just to get the juices flowing so that you can also go to your tax professional and pay less taxes.

That’s what it’s all about because you guys are the ones putting money into the economy and investing in. Oh, I had a thought here. It looks like this is probably going to happen. If Democrats would win just an idea. Maybe we should convert more of a retirement accounts. Or maybe take up any of your career pap.

I have one to cash. I’m thinking taxes will likely be going up generally, but understand it is mostly for the higher tax bracket folks. They’re trying to hurt the guys that are $400,000 EGI and above. But if you guys are smart, your AGI isn’t that high and you’re able to bring in a lot lower. So I don’t really want to get into the election or anything like that, but I, frankly, I don’t care who wins.

Because all the tax stuff, I personally fly under the radar and that’s really what the full sibling, passive cashflow gravy train is all about. Investing in deals, getting passive losses, loitering your ordinary income with real estate professional status. It’s all a game to game, paying less taxes equally, all the, all these rules you don’t really apply to you.

So it doesn’t really matter. Who’s in office and Oh, by the way, it’s really more depends. Who’s in the Senate because they really make the laws. My opinion, the presidents come up more of a figurehead us, especially when it comes to taxes and those types of things. But I’m probably going to be having Toby on the podcast next week, discussing implications on taxes based on who wants to be figure out who is actually the winner, but yeah, getting into the monthly news.

President Trump got COVID-19 and I think it got swept under the rug after he got it. And everybody heard the story get closed out, but shock the financial markets. And I’m just like, what the heck does the president getting COVID have anything to do with the market’s going up or down? It’s either that or newscasters are just fishing for news.

Again, the other thing big that’s still at play. We’re still waiting for that second really big, similar plan that. It’s taken a really long time to come through. Democrats want it a lot higher than Republicans and it’s in a stalemate or probably get pushed through here in the next month as selections happen.

We’ll have those talks, but either way, I think a lot of real estate investors tend to be more on the right more libertarian, if anything. But I don’t really care. One bit simple. Passive cash is not about being pulled at and go one bit, but understanding which way things move and reacting the best way as an independent investor.

But typically the Republicans are better for the economy, but if the Democrats win, they’re pretty more liberal with. Pumping fake money into the system. So that can be, I think of it as hell heads. I win tails. I win type of a scenario. That’s really where you should. You guys should get to at some point to figure out where the puck is going and skate to it as the other great ones said, but overall bright outlook for housing, the demand for housing is very strong and the confidence required for individuals to purchase a foam cannot be understated because of the bowl mortgage rates.

And right now it’s pushing up prices in a lot of areas is the low supply. So people aren’t putting their homes on the market. I don’t know if demand is higher or lower than normal. The prices are dictated by supply demand right now, supply we know as well. So that is why I says are going. So I would like the New York times.

So they came up with this article, whereas the model, the temporary laid off right after. Cool. If it happened. And I really bulged out in April and then may, and then has been tracking down in June, July, August, really visualizes how big the temporary layoffs were. And on the right side, here are the Kermit late layoffs throughout the months.

Those of you guys listening in the podcast for miles puts this on the YouTube channel. You can check it out. At simple passive cashflow.com/investor letter, where all these monthly reports will be held in case you ever miss these, we are invested in Biloxi, Mississippi, or Gulf port, and maybe you’ve seen some of the hard rock t-shirts I know that’s the first time I saw Biloxi, but I went and stayed down here on it’s like a casino role on the boardwalk there, but we have a couple of smaller apartments.

Couple of hundred units sizes there, but we chose not to do a cost segregation because in cost segregations, the crossover point to do one and spend five to $10,000 to do one to extract that bonus. Depreciation only makes sense if you’re going to hold onto the property longer than three years. And you’re just not too bullish on Biloxi in general, in a really long long-term thing.

So something it’s a great market, but we opted not to do that cost segregation because once we rehab those units and we’re going to probably just be out, but. This new story popped up. So universally music and Diane Chi U ventures is putting a 1.2 billion entertainment destination in Biloxi is eclipsing the 750 million who refridge resort and casino that the rate Steve, when developed back in 1999, I’m not saying that this one project.

It’s going to sway my thinking on my exit strategy and those a couple of deals, but that’s a lot of money. $1.2 billion, a lot of money to go in on a small town like that. So I’ll be watching this and these are the stories to be on the lookout for just like in Nashville. So Southwest value partners opens a 591 roam brand Hyatt Porto within Nashville.

Now not saying that you’re investing in full tails or anything, but hotels are a great indicator of progress. And Nashville is another market that I watch. In that’s still cash flows and it is a little bit of a buzz around the town of Nashville. Haven’t found anything yet, but always looking like I said, but Nashville is another market to be on the lookout for this is reported by Ari business online, a pretty nice building.

So news out of California and Florida for the Mickey mouse fans out there, Disney to lay off 28,000 employees at the part of, so that ain’t good or they’re closed now. No one’s going to this stuff. So this kind of makes sense. I’ll show these things will bounce right back once the pandemic fades away next year.

Moving to Texas. So business now reports that Texas central Reeses fed approval to move ahead with the Houston Dallas bullet train. So this thing is supposed to go 200 miles per hour and traveled between Dallas and Houston and less than 90 miles. I don’t know when this thing is going to be coming online.

But that’s going to be pretty cool. Texas is amazing. That’s probably why it being more democratic because everybody else, California is running to get the heck out of California. That’s part of it. I think that is why Arizona’s as long as a state to vote Democrat, because heck a lot of people are Californians for X Californians moving over there.

But again, not to get political or anything, but that’s just people moving away and you got to follow where the people are. Texas is on fire still. And something like this, even you can’t build something like this, this will get there a lot quicker, I think, than the Sacramento to California. I used to build railroad as my first career as a project engineer and track engineer.

And I’ll tell you it’s. To build this track. All it takes like moving mountains to get all the land and that ain’t going to happen in a place like California, but Texas is the one place that you’d get nice long linear pieces of land. John Burns reports. They put that together. These meat infographics.

Again, if you guys check out. The investor letters@simplepassivecashflow.com slash investor letter, you can see these right. I’ll usually pull these to Instagram channel or the Facebook page, but they want to compare. What’s a better place to invest Florida or the Southeast three categories here. As far as the housing market, they think Florida has the advantage there.

The rental market, they see it as a tie. And as far as economy, they’re giving the nod to the general South. Benefiting from biotech banking, manufacturing, industrial sectors. The reason they nudged it over Florida was because of Florida service oriented, economic. Like the Orlando was what they’re probably talking about, but Florida Southeast great places to invest, especially if you’re looking for cashflow.

All right. So we’re looking at a chart from Arbor. Ranking the top markets. So Seattle, Phoenix, Austin, San Antonio, Dallas, Portland, Baltimore, Denver of Indianapolis Columbia. This is a list of, this is like, what they see is the new opportunities CEO’s of the top. I don’t really quite buy that. I think sales a great market, just doesn’t cash flow.

So I’m out, but Phoenix, Austin, San Antonio, Dallas. Our next Phoenix and Austin follow closely behind Seattle bending from resilient labor markets. Texas met shows led by Dallas and Houston. Continue to capture an outsize share of large multi-family investment. So little sub-note here. I always recommend reading the whole article.

Maturing millennial households have a growing desire for mixing the amendments of class a multi-family will also enjoy the space of the suburbs. So this is that push for what’s. Being called the term suburban won’t they family. So not really in the CBD for business district, not the marijuana CBD, but that other CBD, but more on the outskirts and suburbs, maybe 20 minutes an hour outside the city center is what they’re talking about.

These suburbs they founded before. That’s what I like to invest in because there’s a nice push towards that. A couple more graphs from Arbor. They’re showing on the left here. Large multi-family lending is going out to Dallas, Houston, Phoenix, Atlanta than DC, New York, Denver, Philadelphia, Orlando sentence only is.

So for those markets, I like a lot. Dallas, Houston, Phoenix, and plans on top for large multi-family lending to round out the other chart, which is they’re ranking at percent share of low count Dallas, Houston v-necks Atlanta and New York. Washington Orlando, Philadelphia, San Antonio. And then, so the biggest and the last chart for Arbor here, they’re trying to show the large multi-family lending.

Now, where is the lending volume per capita happening? So the tops are Orlando, Denver, Phoenix, Las Vegas, Jacksonville, Florida, San Antonio, Austin, Charlotte, Nashville, Dallas. I don’t know all this typically means, but it’s just showing you where the action is happening. Where’s the activity happening a little bit sad.

You guys know a black Panther chatter Bozeman died last month. There was a story here that unfortunately the guy didn’t have a will. So the wife files probate case. So that’s unfortunate that when you don’t have a, will you actually, when you, even, when you do have a will, all your stuff means public out there, would you really want to have in interest?

So that’s like one of those. I think that’s a shitty thing that lawyers do. They shouldn’t make you a will because by making a well, they did sure they get, they get the probate or when you die, really, they want to do it. They should be making you get a trust. So make sure you guys get a trust this year, especially if you have kids.

Friends. Don’t let friends have wills joint center for housing studies from Harvard university must be legit. It’s Harvard says that most whole water’s started do it yourself projects during the pandemic. So normally they’re hovering around the 60% and it went up to even as high as 78% in may of people starting a duet Bureau.

Cell full maintenance project. So this is probably why my lumber prices skyrocketed right before we’re going to sign a contract. Like we love her prices have come back down and it’s probably the same phenomenon. Why you guys can’t buy flour at the grocery store? Cause everybody’s. Bacon sourdough bread or whatnot.

Another thing that I watch every year is this price, water, Cooper. Accounting firm comes up with this. They team up with the urban land Institute to have this conference every year that they call your emerging trends and they come up with this really core board. It’s a nice read. It may not be super actionable.

But they released the top 10 emerging markets that are as follows Raleigh, North Carolina, Austin, Texas, Nashville, Tennessee there’s Nashville. Like I said, Dallas Fort worth. We would talk about Dallas all the time. Charlotte, North Carolina, Tampa, Florida, salt Lake city, Washington, DC, Boston, and long Island, New York, those top 10 merging markets.

From the urban land Institute and price, water merchants in trends. I read this report. I always keep in the back of my hand that they’re capturing a lot of the luxury markets. So in this list, I probably throw out Washington DC, Boston, New York, because they don’t cash flow. So I, as an investor am not hitting that niche national real estate investor.

Reports San Francisco, apartment rents, creator of the 31%. And yet most people are getting the heck out of San Francisco. A lot of the employers are telling their people to work from home because a lot of them are tech jobs and tech guys can work wherever they want for the most part. And if you have to stay at home and shelter in place and can’t go out, why would you want to be in the hustle bustle in the city where there’s in this time?

No social activities. So, this is why people aren’t getting the heck out of San Francisco. A lot of them are moving over to the Bay or Oakland or spreading out elsewhere. It is the view hall report time. Listen, I’m getting, I always get excited every year that you call report gets for these. Here are the winners and losers, California, Seattle, Portland, just get a bomb.

That’s sort of getting people are getting the hell out of town there and they are going to yep. You guessed it, Texas. The Southeast Jacksonville’s labeled all here, Austin and yep. You’re getting the heck out of the Northeast, New York, Boston, all those types of places. And if you haven’t heard it, you need to get out of Chicago.

Cause that’s that’s state is going underwater fast. I’m hoping a lot of people get into turnkeys in Gary, Indiana, which is just on the other side of the border. So they’re getting their beneficiary of a lot of people are trying to get out of the state. Gary Indiana’s to Chicago, Illinois is like people living in Vancouver, Washington, but working in Portland, Uber reports that Las Vegas, top the U S rise of apartment tenants, not paying rent.

Those Las Vegas people, 10.6% of Vegas tenants have missed a rent payment of two, 4.1% year earlier. I don’t know these last, I don’t want to say anything bad, but add, I think like gamblers there, but yeah, this is why I like to invest in more, uh, red States, especially in the South Southeast, it seems to be typical of the, of the California type of, or West coast type of mindset or blame it on somebody else.

If you can’t pay your rent, you never had your savings accounts, but yeah, maybe it’s near side of me. I love these guys. They just can’t work. So when you’re a tourist based economy and the hotels aren’t open, you don’t have very many options, but I don’t know. That’s just me. I think if you can’t page until your landlord and move out.

So if you guys are struggling building your network, we always say building your network network is all about building your net worth. It’s all about surrounding yourself with the right people, going to the local media and the free online forums out. There are some of the worst places to go for passive investors.

Because everybody’s broke, right? They’re all into house flipping and being more active. A lot of people in our tribe are more passive investors that are pretty good with their money. They save them money prudently. So we’ve got a couple options for folks. If you guys are new, trying to build your net worth up to over at least.

Quarter million dollars. And your prescription for that is buying a single family home or renter, especially if you live in a high price area or blue state, I check out the remote investor can keep ADR. And of course that’s at simple passive castle.com session can keep it, or we’ll be starting the next class probably in January, February.

And if you guys are accredited investors and looking, you’d take your way to the next level. One third of our scope is to analyze syndication deals become a sophisticated investor, and at very least. Not go onto those sucker deals. The Daisy chain deals up there. You guys can check that out@simplepassivecashflow.com slash journey.

And this is where we teach and we put our, all our heads together on how you can do the simple passive cashflow gravy train, which is all about paying little to no taxes via getting the passive losses. Um, these larger syndication deals and using that to pair with a real estate professional status tax strategy, a lot of ways you can do this raw, but every situation is different.

This is where we are me with information to take it to your tax professionals, to set this stuff up for you. But we are probably rebranding this as the family office, Ohana, trying to make it more of a community of high net worth investors. And it’s going to be more of a collaborative environment. Now this is the time or I switch gears and I talk a little bit about what I’m up to personally.

Hopefully I’ll give you some ideas and things to work on in December or January, but this always goes and follows the framework of Tony Robbins, six eats, but first is. How do I find growth? What was I working on as a lot of you guys know, I work with a coach and I don’t know my business, but I see it more as like accountability.

I paid people to keep me accountable because I don’t help . It is. And how much time I waste and how much leverage I can get when somebody has helped do that. But we really work. This month. That’s a big, super basic that I wanted to share with you guys. It’s called the RPM tactic, but it’s all about figuring out the first thing.

What the heck do I want? What do I want? Like if you were for spouse giving you a hard time, yelling at you, what do you want? What is your end goal, right? Or you’re not happy and you want to change something. What do you want? And then from there, once you define what you want, then you can figure out what specific actions.

That you wanted to happen and then, but to really make it stick, you need to do what purpose? What do you really, why do you want this? You have to root it in, right? It’s for example, what do you want? I want a six back on washboard. Abs. I want to flex and beach. All right. What specific actions do you have that make it happen better, blah, blah, blah, blah.

Exercise. A lot of people forget, what is my purpose? Why do I really want to do this? Because if it’s simply for vanity reasons, I guess that’s a pretty good motivator. Or maybe you just don’t want to look like you’re lazy at the beach. That can be a big motivator on nothing wrong with that, but maybe you really want to live a long life to see your kids.

But when you’re older, but that’s really important to root that. Why are doing it? How do I find contribution? I recently interviewed the now mayor of Hawaii. Bland GRD is interesting talking to him, getting into him and then talking offline with him a little bit. And this guy’s turn at burden. And that, that older age, I think he’s like in his seventies, pretty amazing watching him go.

But I pissed them off. I told them I didn’t really care about politics and you gotta get all upset with me. And I’m like, I was like, dude, like I do. All right, push your values on me grow. But yeah, I see where he’s coming from, but that’s why he’s putting his time and energy and his passion, his politics.

And I think I saw it right through and I think that it’s. That he’s the guy you want for mayor. You don’t want me, I have more thinking about myself and I’ve just quietly want to grow my empire, not at this point where I want to become there at this point. Call it six. Flustering significance will be closed.

A couple of deals this month. I think it was yesterday. Actually we closed with spring Oaks on Git 40 unit in Conroe, Texas light value. Add stabilize apartments. 140 out of 140 units are already rehabbed the already proving the business plan on the higher rents, great property. And I was there about a month ago.

I felt really confident on that one. And then a couple of weeks ago, it closed on a little 27 unit in Tempe, Arizona suburb of Phoenix, a great debt on both of these properties, both Fannie Mae. Long 12 to 15 year terms, 3.06 on the with spring Oaks deal. And that’s my strategy. These days, you can get it for such a low interest rate, like at 3%, your cash line day one.

Really your downside is pretty low. Really. The only risk is if you can keep the property occupied more than 50 or 60%, it’s usually the breakeven point and you guys have checked out the Huntsville three pack. This was the biggest year to date, but 407 unit. It was three properties. One of the properties took a really long time to close.

He find it close it much earlier than this months, but that kind of wraps up that portfolio. So the first two properties are going awesome. Higher performer rents. Those sedan often move in. I think he was a great year to toot. My horn is always to have a fulfilling life and get a little uncertainty in it.

We had some hurricanes there. Hurricane Delta messed up some of the mobile home parks in Southern Alabama uncle force. We, I forgot what the first hurricane was. I think it was like Sally, but we got through that one with a little bit damage, but Delta, these are some pictures of Delta, but right. Not just working through the insurance and that’s why you have insurance.

So the problem there is you have to put up your own working capital. That’s why you have cash reserves in your budget. So you can pay, you can overlay these types of repairs before the invoices come in, you pay your invoices. And then you get reimbursed by the insurance company. That’s the kind of painful thing, but that’s all we have commercial insurance to cover us for this type of stuff, a certainty.

He was really nice to finally pay out the first. We always tell investors that we restabilize the asset in a couple of quarters and we did, we were able to do this on Huntsville deals. Yeah. 51 grand went out for the first quarter distributions to investors. And some people like to show a bunch of checks.

We don’t do checks direct and positive. It’s 2020. So here’s a screenshot of that. Going out to me makes me feel good. Cash money going out to investors. That’s what right about making money and also celebrating a little bit too. I was in Cleveland, Ohio. We did a little investor reception to celebrate the closing of the Rockefeller.

We rented out a little space in the rock and roll hall of fame. Got to check that out. Cause I’ve talked to some investors and I sell some of you guys. In Houston in early October, too. I had a loyal investor, picnic and boy also, but I want to also announce we are not going to be doing the in-person retreat in Hawaii due to everything that’s going on, but we are going to be taking the virtual and is going to be like nothing you’ve ever done before.

It is not going to be a bunch of lame speakers giving you. They’re saying warm presentation. They give 20 other places. It’s going to be me. I’m going to be distilling the information of all of these little tactics and tricks that we’ve gathered over the past few years. The simple passive cashflow gravy train using passive losses.

The bonus integration. Yeah. We’re going to talk about that. Why you don’t want to use 10 30 ones, the hot air balloon analogy. Yeah, we’re going to talk about that, but we’re also going to implement in a lot of networking. So I’m going to teach these concepts, but I’m going to break you guys up into little mini groups.

And you’re going to be able to teach each other, the concepts and actually talk about specific strategy. Everybody’s going to be vetted coming in here. It’s all going to be pure passive investors, and everyone’s got to apply to get in, and I’m still creating the agenda and be on the lookout for that this next month.

But it is going to be amazing. I’m so excited, but new podcasts and articles that I released. This month, it’s been nice having some help creating these videos, helping me get this content out to you guys. But if any folks have any questions on any of these specific topics, let me know or ask the question in our Facebook group.

Well, we can all chime in or resistance and barriers. I need an intern. If anybody has any type of kid that is willing to do a little bit of prep work and need a little bit of a mentorship, I’d like doing that. So I want to grow this a little bigger. So I bought some decaf coffee, some channels. Stop drinking as much caffeine and I’m trying to grow like the lawn a little bit better.

And so I bought this air rater. It’s like you step on it. And there’s two pins in there. And just even if you do it several hundred times, and this thing is one of the most therapeutic things that you will ever do in your life day, you recommend it. It’s good for your lawn too. And it’s good exercise. It should listen to podcasts.

Or whatnot, but that’s something that I’m working on the side. We’ll see you guys next month, dr. Claire bye.

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