Podcast Archives - Page 7 of 27 - Simple Passive Cashflow

Dumping your 401k, Helocs, 529s, IBC, Spouse Help Accredited Investor Coaching Call

https://youtu.be/Acn5oHx-DRc

Hey, simple passive cashflow listeners. Today, we are going to be doing a coaching call where the topics are going to be withdrawing money from your 401k. Should you do a 5 29 plan for college savings? If not, what should you do? And a little bit review on infinite banking. I know a lot of you guys have been asking about that.

If you’re like, what the heck is infinite banking? And if you guys want to hang out with more of the folks, just myself and the person you’re going to hear on this next coaching call. Join us in Hawaii in January.

Go to simple passive cashflow.com/ 2022 retreat. And we’ll see you there.

Hey folks.

He just went to this syndication e-course. Why don’t you give people a little context before we get going through some of your questions?

Sure. I’m just looking to understand the syndication laddering. I jumped in there’s a little bit of a lag before I start cash flowing. And I’m dealing with spouse support, so she’s in this wait and see game. I am also looking at my 401k, I’m 41 years old. I’m pretty heavy in my 401k accounts. So what I’ve been looking at is what’s the option as far as borrowing and paying myself interest.

And I wanted to see if that’s what relates to this infinite baking concept that you’ve mentioned before and some of your content. And one of my other questions which I put these together about a week ago. You posted something about 5 29 plans and infinite banking. I have two toddlers and I’m trying to go after I’m thinking capture this time. This time my kids are four years old trying to do like a 50% discount on college so I am heavy in my 529s.

How about we come back to the college 529 savings after? Just a quick teasers. The 5 29 plans are like 401ks. 401ks are like investing for the clueless, 5 29 is they’re essentially the same.

Everything we’re gonna talk about 401ks carries over to the 5 29 plans. I don’t know why anybody does it quite honestly. Just because something’s labeled a retirement plan or education plan, doesn’t mean that’s what necessarily you should use it. If you just want to do what everybody else does, it gets killed and has a bunch of garbage options go with a 5 29 plan or 401k.

First things first, like taking money out of the 401k retirement plan. Let’s kinda talk about that first because it’s a very common thing. Most people don’t have too much in their checking savings account. Why would you, that’s just not good use of your money.

But then they started investing and then now they have to go. They start to realize that this alternative investing is real and now they start to go look for low-hanging fruit. So the order of operations is money in your checking and savings, your liquidity, your home equity, and you can get a Heloc or a cash out refinance.

And then in conjunction somewhere in there it might be tied in order of operations. But your retirement fund possibly getting a loan or just similar to like HELOC in that you can put it back, should all this not work. But most people start to get to this stage and they’re like, yeah, screw that 401ks stuff.

Because the issue that I have it is it’s retail investments. It’s all the stuff they want you to invest in so they hit you with these high fees, carried interest. Vanguard, I used to be in that stuff a long time ago and I thought, whoa, it was these are low expense ratios, right?

That’s nonsense! Like you don’t see all the hidden fees behind it, the marketing the salaries, expense, accounts and that’s the problem with the 401ks you’re trapped with that stuff.

I do have a HELOC and it’s untapped. Between the HELOC and the 401k loan. I figured the 401k loan I think now the maximum borrow is 50% or a hundred grand, whatever is, lower, I believe.

Most people take it all at up to 80 to a hundred percent actually, but you must have what’s your house worth now? And what do you owe on it?

My house is worth about 1.8, live in the bay area and I just refiled pulled cash out. I owe about 1 million.

Okay. So you have a pretty good equity position, which is actually not good in our world. Because we’ve got to get that moving. There’s a lot of people in the family office group that are running around trying to find the best HELOC banks.

Usually it’s just a community. They usually can be in like the 3, 4% range easily at 80% on the value so you have some shopping there to do, to go find that community bank.

Yeah, I went with my local credit union and I got a 3.2.

You could probably do better. It should be a lot lower rate for 50% of the value should be able to take it up to 80. But for now you’re good. You’re not going to blow through 500 grand a million dollars. But put this on the docket to be your next three to six month project is to go find that next HELOC . That’s going to get you 80% and that’ll keep it rolling for another six months to a year maybe two, depending how much you want to deploy.

Got it! And so I just figured though that the 401k borrow would be better for me because I’m paying myself interest.

That’s what people say in theory. You’re paying yourself such a small percentage that doesn’t really matter and you’re prepared to pitch yourself repair. You just throw it down the drain in my opinion. Again, follow the numbers. All of this stuff is just, what other people say. If your coworker saying this type of stuff, you need to stop it, question it.

You’re paying back yourself the interest, but then what you got to really think about is the sunk costs or the opportunity loss of keeping it in there. All this money is not making anything right especially the format. I dunno, you can make an argument either way, right?

What’s going to go off the stocks or the house. Both of them is a kind of a crap shoot to me. But most people they go on raid the home equity first because most people were really skiddish about taking money out of their retirement. They say it like that because you’ll get really freaked out when you start to do that type of stuff.

But if it were me, I would feel a lot more skiddish with money in my retirement plan right now, because that all that stuff is just pumped with money. Equity in your home I feel like there’s a little bit more secure, not just because in 2008 real estate, what the hell? That was a real estate crisis. That’s what triggered the recession in 2008. But typically it’s like most times it’s a crash the stock market with home equity values.

Yeah, I agree. I think that a hedge on the 401k with the market would be the way to go as far as pulling money out of that.

Before we move off the house, are you guys going to stay, you got a younger family, you guys going to stay in the house for the next five, 10 years or at least 15?

Yeah. All I gotta say is most people in my community. They say, screw the house. Let me go get like a little bit smaller, like rental or apartment that has a really sweet luxury pool. And let me spend my time instead of screwing around in the yard where somebody else cleans my pool for me but just saying right because you can unlock a lot of equity that way.

Shoot with a million dollars of equity right now, you could put into something AHP. I would have put all my money in there. That’s for sure. But that could give you a hundred grand passive income a year . That pays for 1, 2, 3, 4 kids college today. I’ll be four college kids in the future. There you go! That’s your 529 done. But they’ll choose to just keep it locked up in our home equity, Jack.

Doing the home equity loan, pulling money out that way and not moving.

For the time being that’s a great plan. I think you’re fine with that for the next couple of years. But if I ask that question and some people have that hint of Hey, I want to move in to a bigger house or a smaller house.

Then I say move out now and just dump the equity up now. But if you’re going to stay there long, What I would say is just refinance the whole damn thing right now and suck out all the equity, do a cash out refinance, suck it all out as much as you can. But of course, I think you’re still in the beginning stages, right?

So that’s where you want to use the HELOC a little bit longer just to make yourself a little comfortable. But at some point, you drain the equity because the HELOC can only get you so far. It can only get you to 70, 80% of the value in most cases.

Yeah. I will shop that. I’ll look into that and I’ll even ask my credit union, the next month or so rates are really good right now, too.

What do you think about the syndication in the laddering with the development at county line?

Developments I would personally go to more of a stabilized cash flowing asset, especially if you’re new to this type of world. You think of in deals in terms of risk adjusted returns, right?

Stabilized assets is like buying an existing lemonade stand with existing profit and loss statements. You can see what it runs or a development is just a shot in the dark in a way. Technically, if you could build it there’s more margin room for error but you have to wait a lot longer to see the egg hatch.

The way I did it and the way I preach general wealth building to people is start off with singles and basics. And in the syndication, that is more stabilized assets that give cashflow quickly and have lighter value add or in the rental property world for people under half a million dollars net worth just go buy rental properties one by one like how I did.

Yeah, I think in my situation though, I need to be a little bit more passive. I’m not going to go out and buy individual properties. That’s what makes your multi-family deals attractive to me because I can be passive.

I just have to say it because something Dawn, who is a young, kid’s going to listen to this podcast and then think they’re going to go into an apartment deal and they have no money.

And so I have to say that. But yeah, if you’re an accredited investor, in my opinion, people joke about this all the time in my groups. Can you really tell me any good reason to own a rental property, debt in your name, the headache, the fact that you’re getting abused as a robot rental? Let’s not get started with all this BRRR stuff, right?

I think that general strategy is going into intermittent deals, spacing it out and just dollar cost averaging, same technique they taught you with stock market investing.

My biggest challenge now is just negotiating it with my spouse because the conventional way to invest is just through the 401ks and all these other vessels to invest. I’ve got to convince her that this is going to pay off and be able to produce some passive income but the current deal is two years lagged.

You screwed yourself. You shouldn’t have done that, man!

I know I screwed myself but I think that county line projects going to be fun to watch and be a part of. This is why I’m going back to the 401k, because I think it’s a good strategy with Harton negotiating with her that it’s, if I wanna retire early let’s, use some of my retirement and not really hit the fan.

Which is just an emotional thing, right? Whether it’s retirement or money on your wallet, it’s all the money at the end of the day. I think where people get gummed up, they emotionally feel like 401k, Roth IRA, that’s your retirement. And I even have like sophisticated investors earmarking things in their own mind that way too. So I get it. They think one is more, long-term. One is more short term, but to me, it’s all the same.

You figure out what your asset allocation or time horizons are and money is money.

Yeah, that’s where my current head is at in as far as the syndication deals, you have the one presentation coming up today. I think it’s a Rora.

Do you see the fluctuation or the opportunities to tailing off or increasing? What do you see as far as the market conditions?

Right now, it’s getting’s good, right? Because the residential market has gotten really overheated in my opinion, because of low supply. I think demand has even gone in lower, but because supply has dropped so much, that’s what dictates the prices, which is very emotional driven.

That’s why I don’t like residential properties. But in the commercial world, we haven’t had that big run-up yet. But you’ve seen rents rise the first half of 2021. It’s all completely obvious what’s happening and cap rates are dropping. You’re having cap rate compression.

But it’s not to a p lace where, your average internet investors like jumping into commercial properties quite yet. Right? Maybe this time next year, for sure. There always be deals because what makes for investment? The banks lend money at X and the cap rates are Y and there’s always a difference between X minus Y.

There will always be a differential or always be a difference and when you apply leverage and that’s how you make yield. The cap rates will always be making yielding more than interest rates in a world where gravity works. I’m sure it could go backwards for a little bit.

I don’t think it ever has, but that’s what makes the world run right. I think what you’re getting to is Hey, what if I wait? If you wait, the best time to do anything was yesterday. They always change, like for example, infinite banking they always change the rules.

Best time to get it was yesterday, the best time another one was yesterday. It’s just constantly going to be that, you guys are just like making it tough for your guys doing this. Just be prudent, stoic, and just constantly dollar cost averaging into stuff that makes sense.

And it’s difficult now because you’re getting started. But to me, that’s the outlook that you have, you don’t need to be like me and have a hundred percent of my stuff in alternative investments. That’s for sure. I totally respect if you want 20 to 50% into paper assets.

That’s fine! But over time, the kind of the percentage definitely goes to alternative asset size. You look at I seen as a tiger 21, it’s all $10 million dollar families and above all paper assets. They don’t own like mutual funds and stuff like that.

I do think that we’ll always try to be conventional in some manner from our perspective. But I have a job to do and just convince my spouse that this is legit and try to jump into one of these like more conventional deals with you.

Let’s talk about that a little bit. Your spouse do they work too, or what did they do? You guys single income?

She works. She makes more than me and she’s in tech.

Good for you, man!

She’s really involved in our finances and that’s good I have to say.

Did I send you those videos from our bubble event where we had like a spouse’s panel? I can send. Shoot me an email later and I guess everybody listening, you guys want this spousal tips and webinars. Shoot me an email with the subject line spouse, and then we can send it off to you guys too.

The takeaway is everybody does it differently. It’s just like sick parent. You never tell another person that wants to do cause they always just turn around to get their own way. And you shouldn’t talk about it. But we talk about in our group and we acknowledged the fact that everybody has different marriage structures, different ways of dealing some your spouses, involve, which I think is good.

Some don’t care but tell you absolutely you can’t do anything that’s the most frustrating thing. So I guess be grateful that’s not the case. Sometimes, you have to make deals, right? Like marriages and negotiation. Did your spouse out of your family and their family which have more money growing up?

It was about the same but our backgrounds are completely different. I’m coming from a farm. She comes from the bay area. We have similar backgrounds.

Whenever you’re working with differences and people, it’s always cool to understand the backgrounds of the people then you understand more. Some things I noticed a lot of times is when like the spouse, if they didn’t come from money then they’re really gonna like in the scarce mindset kind of way. Again, not a bad thing. That’s just how they are. They want to cling onto the house so that home equity thing is a big thing.

Which doesn’t seem like the case here. I think that’s the cool thing with people who had money, lower middle class, we’re not talking like low, low end. But they know that there’ll be okay. So they’re okay with you doing things like, taking money out of your HELOC and refinancing or renting. Not owning, you don’t need to own, right? But in this case, there might have an issue with the retirement fund.

I don’t know if you’ve ever had that discussion. Okay, if I were to do one of them take a couple of hundred thousand, which is a very small minority of the whole net worth out of retirements or our home equity. Which one would you prefer? That’s a good starting point. And why?

Yeah, and I do think it’s going to towards the 401k because it affects me and my potential retiring early. And it may be more like palatable to her to accept that.

Something I’ve picked up from Chris Voss seminar he’s said, never split the difference. Funny! He puts you in a high stakes like hostage negotiation. One of the tactics in the book you can pay attention is like, when you negotiate and you’re in a negotiation in this case. Get you label the other side. So then you asked the question, it’s that doesn’t mean that you rather have the security in your house is what I’m hearing.

You labeled them so you get the conversation going, right? No, I’m not. I just think that, and then the retirement stuff is more your longterm thing and you’re, you would retire and that type of stuff, and that’s what our family wants. And then you draw out the information, as opposed to each side stonewall.

But it sounds like you have it sounds like a totally functioning relationship to me. Just got to figure out, you’re not going to go balls to the wall in the first year or two, for sure. But which of the two is the lesser and in this case, it’s the maybe leaving the home equity alone a little bit and going after retirement.

I think that’s what I’m going to do.

Good segue! We’ve talked about the home equity. So what’s your plan of attack is probably the whole the retirement fund. Like you said, you can take a loan on it. I don’t buy the whole thing about paying yourself interest. It’s just like a HELOC that the interest paid as a wash anyway. Next investment you’re just gonna take a loan, the retirement or something like that. Is that the plan?

Yeah, I guess my options would be withdrawal penalty with a penalty or take the loan and then I have my current employer’s account and then I have my own self-directed IRA so those are really like the options I’m playing with.

Okay. You have some IRA, 401k money that has with a previous employer that you haven’t gone over yet? I think one, one rule is you never really want to roll it over. You just want to keep it how it is, because once you roll it off through the existing employer, now it’s probably stuck there.

Actually what I did was I rolled it over into my own self-directed IRA so none of my previous employers have my 401ks.

What’s your plan and that’s talk about it with what the tax implications are?

Currently, my plan would be to take the loan out of my current employer. There’s very little risk that I’m gonna, I’ll work there at least five to 10 years. I had to have to pay the loan back either a time of when I’m terminated or terminate the employment over the life of the loan. I think it’s like a 10 year term.

Again, we’re talking about loans, right? We’re not talking about withdrawals. Okay. So for the folks listening your loans, you’re not taking it out, right?

It’s the withdrawals that now triggers the taxable event shows up as income. What we’re doing here is we’re dancing around it and which is fine for now. If you were more gung ho about this stuff, I would say just take it out. And in this case if we were, let’s just play that scenario out.

What approximately is your adjusted gross income?

Mine’s about 250, individually.

What about combined? Married.

Okay. Sorry. You guys are screwed. You guys are in a tough spot because ideally what you want to do is married filed jointly right now. We try and keep people under 330 cause that’s when you really start to get hammered with taxes. And again, you guys are listening to this in the future, these things, the tax brackets dance around a little bit, but the same idea of poppy ship prevail.

You want it to leak money out of your 401k slowly as withdrawals so you don’t go into that next higher tax bracket. it is whatever, if that’s your plan, but ideally you’d like to stay under there. If you guys made $200,000 a year, married filed jointly, you could take 130 out theory and not be too bad. That probably be a good bet because you’re probably paying less tax brackets today than in the future more than likely.

So I need to encourage her to take a pay cut or change jobs and take a pay cut.

Yeah. Both of you guys make high salaries and for those you guys, in that situation, it might make sense to just suck it up and just work, for burning the candle on both ends a little bit longer.

As opposed to some of our plants that have like disproportionate incomes like doctors and stay at home spouses, that’s the ideal strategy right now. They can do real estate professional status strategy, use the passive losses to offset income. Of course, there’s a lot of hoops to jump through with that rep status strategy.

And we’re not going to get into that now, they have a little bit of options where you guys. Good news. You’re gonna make a lot of money. As far as tax is options there isn’t too many, right? And I think now you start to look at less desirable options or exotic options such as like land conservation easements.

Are you on the lookout on these next solar credits? Coming out with the next infrastructure bill who knows what happens with that. But that’s where I would be looking out to next. Or, if one of you guys are burnt out, our time, right? Like I said, you guys have enough dry powder pretty, you should just be able to make a hundred thousand dollars a year.

The fact that you guys are not is on you guys. That’s just a choice that you guys are making, but you should have that much income coming in that I think that will sustain life for you guys. Most people in our group are pretty frugal. I don’t know why you guys are going to work tomorrow, but you are.

But that just takes a time to understand how this all works because right now, this is what frustrates me. Everybody’s stuck in these 401k, 529 garbage investments and that’s why you all are still working right now.

Make more. And then you try to defer your salary to no, yeah.

Paying at our tax bracket in the future. That’s exactly what the government wants. I don’t think they meant to do that cause I don’t think the government is that smart, but in a way they have a pretty much blank check on all your money right now, the retirement on the 5 29 and not 5 29, because technically you can use it for education expenses.

They can’t touch it. But your 401k, you got to pay taxes on that eventually in your IRA.

And who knows what that is at the moment, we won’t know until I retire.

But I’m betting, that’s going to be higher than what you are now. But the game is what we’re going to try and take it out or withdraw at some opportune time from now to the next few decades, when the opportunity to jailbreak it out, the word tax needs is there.

Again, it’s good right now for you guys. You don’t have very many, right now. But what we do know is like the money is in there now. It’s not making Jack it’s just retail investments, but the idea is to take it out slowly to get it into good stuff, which is still trying to land on your feet a little bit so I get that, but just do it in a tax smart way.

Some people are like, screw this is messed up I’m gonna take all my money out of that stuff, right? Whoa. I don’t know if you can invest that quickly and you just want to be a little smart about this, that’s just going to balloon your adjusted gross income.

You’re going to pay a boatload of taxes on that. Just fly under the radar, stay under a certain threshold, leak it out slowly as the idea. But, for now you’re just going to do alone. And that’s fine. You don’t really trigger taxes at that point. Another hangup people get emotionally is they’re like have to pay to make these loan payments right.

To myself, that’s just an emotional thing for me. If it really bothers, you just set aside a certain amount to extra, to pay.

Yeah, that doesn’t really bother me. It’s just, it’s moving money around in different pockets, right?

Yeah and I think that’s the hard thing , first of all they get emotionally tied that this is a retirement plan. You’re taking money out of your retirement and make no mistake. We’re not doing that. We’re not going and buying like fun vacations with that money for long-term savings in retirement. But it’s not going to be an account with a government for your future.

In regards to the loan, do you know, and there’s certain requirements that I need to abide by to take the loan, right? Or can I just take the loan freely?

I’m not sure on that, but usually they want you to have some kind of hardship thing or you’re buying a house, which should not. So I would think the only thing you guys have is the hardship. I think at this point, it’s going to be hard for you guys. Good luck you can get the loan! All roads just take the thing out.

Yeah we’ll see if we can get it. If not, I guess we’ll do withdraw.

I’m pretty sure you can take a long where your guys at there’s no there’s opportunities for that type of stuff. I’ve seen people like lie, say we’re using it for our home equity because something broke the kitchen bathroom bottle and then turn around and use the money for something else.

I don’t know how legal that is, but whatever I guess. You’re probably not gonna lie. You’re probably come back alright loan is eliminated as sort of option. So you gotta either choose it, withdraw money from your retirement or take a loan from your HELOC. So when you come back to your boss, which is your wife, what do you think?

I’ll be optimistic. She was gung ho for the county line and I think she’ll go for it.

For the loan, HELOC? Yeah. And I would recommend doing that.

I think what I’ll do is I’ll just lay it out, then I’ll try to sacrifice my 401k temporarily, and then that probably won’t work out and then I’ll land into the HELOC.

Yeah, loosening her in a way.

I just can’t share this with her.

Yeah, don’t worry. We’ll probably released this months later so you’ve got a lot of time.

I’ll just look, to hopefully, I can draw on that HELOC that I already set up now any time and when I see a good deal, come by, I’m probably going to jump in.

Yeah and what you have right now, I’m sure it will get you going for the next six months to a year. But you got a lot of equity there so , I would shop around. There’s a lot of disparity between rates and all the values. But what you’re looking for is like 80% on the value, the same rate or better for the most part.

And I think there’s another emotional thing people are like, oh my goodness, this guy’s got 3.2%. I want three, I want to get that. I don’t want to get 4%. It doesn’t matter. Playing a different ball game than most people, because you’re using the money for something else to make more money. I think that will probably get you bonded for a couple of years.

And I think once we get into the first deal and we get that first check, I think it’s going to help me with my negotiations with the boss.

Yeah. I hope so. I really hope so. Yeah. So are we’re good on that subject?

I think the next thing on your list was yeah college savings. So you’re a new father father I’ve taken a conventional road and with the 529 plans and you recently posted about that, right?

Yeah, 529 plans they’re just like 401ks, right? The jacked up thing about them is they keep you within a set of options that they want you to take because they’re high fees. They’re crap. And that’s my only beef with it. If you can self-direct you can self-directed retirement funds. That’s fine. I still don’t recommend doing that. I think you can self-direct your 5 29 self, it’s very limited. If anything, the Coverdell is better. Coverdell is like a self-directed 5 29, there’s more options that you can invest in.

But if you’re investing in real estate pros, tax free anyway, I think that’s why you do real estate. So the gates, all the reason for using this stuff, that’s my opinion. I just think if you invest in cash, you can pay so much less taxes. If you’re smart, because you get the passive to be losses that it negates any of these types of traditional, conventional things.

If you haven’t been tipped off yet, you guys that’s when you get slaughtered with the cows, it’s not a good plan to go conventional in my opinion, but what I would do for education is I would do like an infinite banking policy and just have that as your mark money, especially the kids are a little bit older, just put it in there for safe keeping. But now your kids are younger and my kids like the youngest thing yet for the most part now is the time where you want to be more aggressive, right?

Yeah. So unfortunately I did get aggressive with 529 so at this point, I don’t know how I could get out of the 529 without taking a penalty.

What do you got in there?

I’ve got two kids about 80 grand each.

It is what it is. You can just leave it in there. Start to do, what’s going to do. Not everybody needs to be a 100% like alternative investments. If you want some stocks, there’s your stocks right there. I think that the risk adjusted return isn’t that great. But if you’re trying to satisfy some diversification in terms of different asset classes, there you go.

I would say, maybe stop doing it. You could take it out too, but you already have money to invest, so just leave it where it’s at for now. Just, I wouldn’t put more to it. Does that sound like?

That’s pretty much where I’m at now and I do just designated as like diversification against alternative.

I got some flack for that post, cause like people are like, you’re such a a-hole dare you get rid of your kid’s education fund. Like dude, chill out, man. I have my other retirement and I’ve got all these like money elsewhere just because I don’t call it a 529 plan that you know, it’s not a 5 29 plan.

It doesn’t mean I don’t have a kid’s college, like I’m not heartless other people I don’t know anything about kids. Yeah. So you never want to give parenting advice, but people are like it’s so like it’s very true. Yeah. Very true. Yeah. So for the record folks, I do have a college saving’s plan.

I just don’t put it in that 5 29 plan and I’m sorry if I offend you guys for saying that stuff is nonsense, but it is. You’re putting it in exactly the stuff that they want you to put in with all these big brokerages and their cafeteria garbage options. I’m okay with the 5 29 idea in general, but I’m not okay with the options they gave you to invest.

Very limited!

Yeah, but even with that said, I don’t like the 5 29, because what if your kid doesn’t go to college too? Yeah, to worry about it just make a boatload of money. Something I got really frustrated the other day. A lot of people, especially here in Hawaii. Have a million dollars equity in their houses that are grandparents.

Their goal in life is to pay off their mortgage a million dollars, put it into something I always use AHP. They sponsor the show too, but there’s just an example of a very lazy type of investment fund where you can get 8% I think now when you speak 10%, you speak 12% actually.

Long time ago, if you have a million dollars equity at 10%, that’s a hundred grand a year. That pays for college for three kids today, at private and I forget how much school costs. But I’m like, why don’t you like grandma, grandpa why don’t you get a whole home equity loan and get your money working.

They’re just don’t know about this stuff too but to me is a little selfish because it’s like they’re putting their security higher than they could be paying for their kid’s college today or that could be growing just so much more 18 years from now.

It’s probably bad that I call it selfish. It’s just they’re ignorant to the fact that you can do this type of stuff and if we’re all brainwashed to do exactly what they’re doing right, but I just got frustrated the other day, this is very prevalent,

Very true. Just taking advantage of that gift. You know the gifting.

It comes down to being good stewards with wealth, right? Some people have wealth and they don’t do anything with it. They just squander it for the rest of their life. Other people you know , they understand the risks and prudent debt and they able to have it grow or stay where it’s at.

90% of people or 90% of wealthy family and two or three generations for reason. Alright, good point. . If I were you I know you got other investible funds. I’ll just leave it where it’s at. It is what it is 160 grand in 10, 20 years. Isn’t going to be enough.

They say Stanford and 18 years will be $450,000.

Apparently the side doors closed no, I watched that Netflix special. A bad joke though. The one where all these, like the rich parents were paying for their kids to get in to the colleges. You got to go in the back door and that’s really expensive. It is what it is, with the college stuff for you.

Yeah, I just I’ll look into if I ever need to what’s your on 10% penalty, it’s some money, but it’s not a whole lot.

It’s very similar to some people like have really bad life insurance policies, right? The whole life policies that were just configured the wrong way, their long lost college, high school friends that they never taught. Yeah, it takes them off the lunch, puts them into this really bad policy. Most cases, you can just 10 35 into a new infinite banking, more friendly policy. But in some cases it’s just better just to throw the baby out with the bath water.

Another bad joke too, to just get rid of the life insurance. So the same thought process with the 529. Keep going with it. It is what it is as opposed to withdrawing and starting over again. Yeah. Like the infinite banking comes in because, especially if you have a skeptic spouse, at least that gets your money working 4 or 5% tax-free.

You can sell them on the idea that it’s off the table, litigators, who doesn’t like that and it’s not like you’re putting the money out to an investment where there is perceived risk on, investing in some dishonest person to infinite banking stays. It’s way more I probably shouldn’t say this, but it’s way more secure than any bank or any mutual fund.

It’s a life insurance it’s backed by some of the most like credit rated companies that’s been around since the civil war. If you want anything more secure, let me go to a life insurance company, the good ones, right? The top rated ones, not one of these.

That can be a way, like for somebody in your shoes who has a lot of dry powder. That you’re going to responsibly deploy over the next several years, at least, you’re probably antsy to get it done, but your spouse probably wants to pump the brakes. But as a compromise, maybe just do 50 grand- 100 grand a year into one of these infinite banking policies and invest out of it.

But at least your money is working in that and it’s building up that cash value over time. Everybody over a dollars net worth should have one of these things. It’s a no-brainer. And again, we’re talking to you non- accredited investor who has no money. Don’t do infinite banking.

Don’t get caught up in all the podcasts, marketing hype. It’s not for you yet. There are some fees associated, of course, but in the long run, it makes more sense than that.

Yeah. Cause you’re new to this stuff and share all these ideas. We want to get moving, but yeah, got the ball and chain in a way. The infinite banking is a very logical idea. I think that is very prudent and safe.

Do you have any content on that as far as the background of infinite banking

Yes simplepassivecashflow.com/banking is the place where I through all the webinars and stuff like that. But if people want more in-depth we’ve recorded some FAQ’s, and then if people need like referrals to folks, they can shoot me an email just put IBC in the subject line and I can send that to you.

Yeah, it’s a rabbit hole though. First, like when people come into the mastermind group, is trying to get them to get educated on syndication deals, right? Because the syndication deals is, first of all, you don’t want to invest in a bad deal, with somebody who’s going to steal your money.

So that’s the first thing we try and mitigate. So that’s always like a third of the pop curriculum. Like your first few months are focused on that and then taxes. Especially for somebody in your kind of, income level tax is a big thing, but infinite banking is at the end of the first year, Pete more, most times people who like to lone Wolf and do all this stuff themselves, which I think is dumb because good buck, I’ve took me so long and mistakes and wasted money to learn on my own in my whole, that’s why we have the family office group. Fold your hand and kind of teach you exactly what to do. And then we set you up with people within the group. Who’ve done it already. So you can both build a relationship and a process with that person that you can carry on forever.

Talk, whatever investing or deals do you want to talk about, or, and more importantly, the soft subjects, right? How do you pass this off to your kids? Without them becoming nincompoops.

But then, you talk with them, the pros and cons, how they did their infinite banking policy, why they did $75,000 instead of 25,000. But why did they do $250,000 a year, for example. And then you come up with your own idea, you formulate it, and then we send you off to all the tax legal guys after you’ve already had your plan, because in most cases, if you go off to a professional.

They’re just going to sell you what they’re trying to sell you. There’s so there’s so many things in this financial world, that’s just a bunch of products. You really need somebody who’s going to architect it and that’s going to be you. You gotta be educated in power to talk intelligently and to know what you don’t want.

But yeah, the infinite banking is at the tail end of it. It’s a huge rabbit hole for sure. Huge in terms of burning it. No most people who’ve done it. Say, there’s sort of stuff on it, but just get it then. And don’t complicate it. Just get get like a policy. Like my ch my golden rule is start off with a third of your annual net.

So you guys, I don’t know how much you guys net at the end of the year, but maybe you guys net $120,000 to savings. You could put that to me. Four houses a year. If you want it to, if you want it, if you didn’t value your time and energy, you could buy four axles with that. But my general infinite banking and start off with Elisa third of your debt every year.

And then that way you learn how the infinite banking works. You take loans from that. You invest it, then you have more money. You put it back in there and you learn how it works. And so it’s always good to start off with a little bit of a test investment first and then then go bigger.

My, my first one that I did for myself was $50,000 a year. And then I did bigger after that, after I got the hang of it. But yeah, if you guys net one 20,000 after income minus expenses for a year, do 40 grand every year, but because you have. Like liquidity in a way I think based on the little bit, I’ve refreshed myself in this last, 30 minutes hour talking, I think you should, you guys should probably do 50 to a hundred thousand dollars a year, right?

Because you have all that fullback equity not to check, which you want to do is take that and put it into here for now. You can take it right back with the next day as opponent. That’s the whole point. That’s what you’re trying to do in banking. Yeah. So in fact, I would probably do a hundred grand just shooting from the hip or at least 40 grand a year for five to six years.

I always like to do the shorter period personally. The insurance salesman is always going to try and get you the longer ones. So they get requisitions. They don’t have to deal with you less, every 10 years instead of every six years, but that’s yeah. That’s just my take on it, but we’ve got a lot of content on it.

I’ll just shoot me an email, the subject line, and then I can give you the videos and then I’ll connect you once. You’ve studied up. Okay. Yeah. That sounds good. Yeah, you do something right? Because it’s fun. Stuff is fun. It’s different. And it’s, but it’s totally different. Like we talked about this stuff, cookie. Yeah. I’ve, haven’t heard of it until now. So yeah. It’s interesting stuff. Yeah. And that frustrates frustrating is like everything in mainstream financial advice. If you look up Dave Ramsey, he absolutely heres this whole life thing, afar, he says it’s a total scam. And I’m like dude, you’re not even we’re not even configuring it the way you’re talking about.

And we’re using it for something totally. He says, we’ll get it. If it’s for, if it don’t get whole life, get term life, that’s that’s, what’s like it transformed, but it’s dude, we’re doing it for a totally different way. The wealthy use things very differently. They’re doing this as a way to put money in it.

Suck it right back out as a law firm, ourselves and taking money off the table litigators. That’s all we’re doing. And the fact that it’s like insurance that’s because we can keep it under this what’s called back level. We don’t have to pay taxes. So it’s texting people is what it is.

It’s a text loophole that the Congress people and progress Spain that were just falling if we’re not done. So it makes you wonder who Ramsey’s representing to to poop, right? He’s not representing any. I think he, I think he does a good job. Am and sees the army. A lot of these people, they just cater towards majority of people, the conventional, traditional people, the conventional traditional people are horrible with their finances.

They just can’t seem to save more money than they make. And, or they just don’t make more than $50,000 a year. And I’m sorry, if that’s you, I went to college and I was lucky enough to go. And I’m in the situation where I am. And I think some people in this world are in the same situation, but they play by a different set of paradigms than the people who are still at financial one-on-one level and all that.

So I think Dave Ramsey, I think their heart is in the right place, but it’s totally guided towards other people. Argument about buying a house, not buying house. Like I, I personally believe that you shouldn’t buy a house unless your net worth is two times, three times greater than what the health support.

So if you, if your house is $2 million, you should buy a house to your net worth of 6 million. That’s very unconventional thought. Yeah. House is a Dre. You need to be investing, bring your money. And so sinking in at a house. Not too much just going with the pace of inflation, but for the Dave Ramsey, Susie Orman, and people on the world, a house as a forced savings account, it’s something that they put, a thousand, $2,000 a month to, if not, they’d spend it like little kids. There’s just, there’s paradigms in the world. You need to figure out which side of the paradox.

Yeah, that’s a good point. Yeah. But just do the math. The math, the other day, the math to tell you what to do. Just need to go in with a very different lines. So yes. Bring that paradigm a concept up when I’m negotiating with the boss. Yeah. I do it to myself all the time.

Like I think the biggest thing that I see successful people have is an open mind and they look at something very, without any emotion or prejudices attach, like something that happened to me lately. Like I’m doing this for fun, like this exotic car hacking force. It’s kinda, it’s really cool.

But like the whole idea of leasing a car for some reason, I thought that was a good idea. And that’s too long ago and at least a car a year or two ago, I thought it made sense to me, especially because I was using it for business and I was able to write it off, but what they show me, it was like they showed the numbers, they show how wrong that thinking was.

And the whole premise of all our hacking is there’s a depreciation schedule and it closed and then you want to buy it, but it’s low and that maybe when it comes up or it doesn’t just bleed depreciation as heavily, that’s essentially a hacking at all. But yeah, I was really gung ho about thinking that he says, we’re good now I see the light and I’m sure my ideas would change in the future.

So I reserve the right to change my night. Fine. This is not financial advice. Yeah. But but yeah, anything else? Yeah. The family office mastermind I’ve looked into that. I’m considering it. I don’t think I’m ready yet, but I will probably eventually I don’t think they never ready for it.

I think you just need to do that now. In fact, now’s the time to be doing like you’re starting from square one. Yeah. It’s like shooting arrow. Now’s the time to figure it out, get something with a shooting in the right cow .

I’ll let you know when I am ready and hopefully it’s sooner.

When you got five hours a month to dedicate to something that’s when you know. We have over 75, 80 people in there. It’s not for everybody. Do you want to just keep doing it on your own? That’s cool too.

For me, it’s just deploying my capital. First I got to get through the boss and then I got to put some numbers together, how that investment would return in our household.

I think we have like at least a two X, maybe three X guarantee that you get that first year back.

Cool. Appreciate it! We’ll stick this in the archives with the other coaching calls and then if you guys want to learn more about that family office group go to simple passive cashflow.com/journey and I’ll see you guys next time.

Travel Hacking with Geobreeze Travel

https://youtu.be/kjiVzFbfjRg

Aloha everybody! Those of you guys who’ve been following me for quite a while, it’s been a journey from 2016, doing this podcast. I have always been interested in the financial blogs sphere, podcast space. It was early when I started to read all these financial blogs.

Back then it was silly things like which credit card you would get and you could get these 6% rewards checking accounts. What I would do is I would get these balance transfer offers stick 30 to 40 grand in the bank with all these business and personal credit cards, balance transfers at 0% and make the arbitrage of my 6% rewards checking account as I would go to the bank at 20 degrees outside and ring up 12 transactions at the gas station.

Those are the days where I just would waste my time because money was more valuable than time at that time.

Probably around 2010, I ventured into the travel hacking community a little bit. I went to one of these seminars. Didn’t really enjoy the people because a lot of those people are very scarcity mindset. They collect points, they burn up their time. It’s a hobby. I get it. It’s fun!

It’s like playing an RPG game. Getting points on a video game, but for real life, getting miles on different airlines and using those airline miles in different ways. I know a lot of you guys are into that because if you guys don’t get credit card points or miles you guys don’t spend the money on nice vacations and whatever I can do to get you guys to get those experiences in life.

That’s the point of today’s show is to bring on a travel hacking expert. And this is new to you guys. I think it’ll be a good primer. Some are old to the sport of travel hacking. Maybe in a way I think this would be a good refresher on what’s the newest stuff to be on the lookout.

Hey, simple passive cashflow listeners. Today, we are going to be talking to the creator of geo breeze travel.com and sync up on what’s been happening lately in the travel hacking industry. You guys are probably wondering why I’m wearing this like weird shirt and I’m not in my normal white collared shirt attire.

We just closed the deal in Huntsville and this is their minor league baseball team going up. Probably near one of our apartments. It’s a trash pandas. My dog’s name is Panda. It’s not trashed paddles. It’s trash pandas, but this little stupid panda bear right here, it’s going to make me a lot of money.

Cause we’re going to check in there in Huntsville. Why don’t you introduce Julia on the line here?

Hi everybody. How are you? I’m excited to be here today.

I think a lot of people listening they used to be into financial blogs. Maybe they’ve moved on as life has gotten busier as their network has grown buying rentals, going into syndication deals, but I can speak for myself.

I selfishly brought you on here because you’re a travel hacking expert and I’ve been out of the game for quite some time. I remember over 10 years ago, I went to FTU was that frequent travel university or something like that. My friends and I was like into all this getting all these credit cards getting points.

Back then you could get like 0% balance transfer and then throw them into a 6% savings account and just chart it that way. Let’s give people a little bit of like high level. What are we talking about travel hacking?

For anybody who’s not familiar with travel hacking at all, it’s a way that you can get free travel or a lot of cash back, if you want.

Just by leveraging the loyalty programs that are set by credit card companies or airline companies or hotel companies. And if you’re not aware, there are dozens of different credit card options and different loyalty programs out there. And it’s all about how to strategically approach the game so that you can meet the travel goals that you want.

You can get the travel that you want for almost free, very close to next, to no cost while just learning to play the game and plan strategically, which I think a lot of people in your audience obviously do as they’re researching different real estate and different passive income opportunities.

Yeah and I think that people listening, they’re like myself, optimizers and this whole travel hacking thing. You’re literally collecting points and then you have to figure out where to cash in those points at the highest value and it’s like a video game. It really is addicting. It can be a time suck. Maybe let’s start off with, you have a list here of some highest and, or biggest bang for your buck type of tactics. What’s at the top of your list, Julia?

It’s not a game just for how to use the points, but also even how to bring in those points. And so my number one advice to people is I have a few, the first is, the best travel hack is finding friends who can show you even more travel hacks because so many people do it.

The very unoptimized way of I’m going to watch 14 hours of YouTube videos and read blogs. But really if you just join a community, whether it’s on Instagram or a Facebook group or something, I host different Hangouts. If you just find somebody who’s already into this kind of thing, like you went to the frequent traveler university conference, it speeds it up so much.

If you can just ask your questions there. Secondly. If you’re like, I really just don’t want to interact with people. How do I do this quickly on my own? My advice is to work backwards. Some people will make the mistake of researching different cards and saying, I’m going to get a Chase card and then an Amex card, and then a Citi card, a Hilton card, a Marriott card or United card then I’m going to figure out what to do with all of those.

And that’s a really inefficient way to go about it. Instead, I would recommend start with the goal that you have in mind for free travel and work backwards from there. If you’re telling yourself, okay, I want a free trip to New York city and I currently live in Hawaii.

Here are the airlines that fly from Hawaii to New York city. I want to stay in this area of Manhattan. Here are the different hotels that are servicing in that area. Here’s how many points I would need to get that free flight and to get however many nights in a hotel for free. And then here are the credit cards that can earn me kinds of points that can actually be transferred correctly to that airline or that hotel.

Then it really narrows down how many things you actually have to research and figure out and how many points you need to get in the exact currency that you needed in rather than just shooting all over the place in the dark. Make some travel hacking friends and also work backwards to get to your goal faster.

And then, at some point you have to get some credit cards, right? Where a bunch of points. I think a lot of people in our sphere, we know about the old chase Sapphire reserve card, but is that one of the best today? Or what are the cool kids using?

If you are a very beginner, like this is the first you’ve ever heard about this, the most popular beginner card these days is the Chase Sapphire Preferred.

And as of yesterday or two days ago, March 21st, they just increased the signup bonus to 80,000 points instead of 60,000 points. That’s worth more than a thousand dollars in travel credit. So Chase Sapphire Preferred is one of the most popular ones for beginners these days. We always recommend start with your Chase cards instead of starting with American express or another family like that because of something called the five over 24 rule. Which says that if you have already opened five or more accounts with any carriers in the last five years, Chase is just going to reject you if you apply with the Chase card.

So it’s good to get the Chase cards out of the way first and then you can move on to American express that doesn’t have this rule. You can move on to Citi cards, bank of America, something else like that.

Good advice! I have a love and hate relationship with Chase. I do the tradeline cooking thing where I kind of piggyback authorized users of my cards. People want to learn more about it, go to simplepassivecashflow.com/tradeline. I have a little e-course on that. But Chase cancel all my cards so not like that but nominal rewards credit cards. It’s a great place to start there.

Why did they cut off all of your lines? Too many authorized users?

Yeah, it was getting a little ridiculous. I was turning people a lot quicker than I do these days and I have to log about it. It’s good that you see a company actually has checks to make sure that there’s no weird activities that just bind. I think it’s good business, I don’t know. It’s like surreal but I applied Chase for data shows that they have their S together.

How many points did you lose when they shut you down?

I think at the time, I think I lost myself Westpoint’s 200,000 points and which goes to show, right? Savers are losers. Just like people with all this equity in their house, or, the bank.

There is a strategy called churn and burn where earn and burn where you’re earning points really quickly and then you want to use them quickly as well. You don’t just want a whole bunch of points sitting there in your account, not being used because a lot of airlines will de-value their awards programs.

And so if you just have hundreds of thousands of points sitting there and you’re thinking, okay like around the world trip or something is going to cost 200,000 points. And then the next year they’re like, Oh, now it costs 250,000 points and your points were just sitting there and never use.

Those aren’t going to accrue interest on points. You have to earn them and then burn them pretty regularly. So you want a high cashflow game.

Yeah, I was being an idiot. I don’t know what I was doing. I just wanted to see the points go up again that’s why I was thinking.

A lot of people who are in this hobby are really frugal and they’re just like savers by nature and they don’t like to go out and spend the points but it’s not like money. You don’t save these points until retirement or something. You want to earn the points, know how you’re going to use them and then know how to get more points.

Yeah. I was like that precious guide or what are their rates with my points, but how do we use them? What is the biggest bang for our buck to using these points? Since we get a book, a couple of hundred thousand points or so.

There’s a lot of different sweet spots that you can use for these points. I would say you should definitely learn about transfer partners. A lot of people, once they get the Chase card, they just always go through the Chase travel portal.

And then you’re going to get a set amount there where it’s maybe 2 cents per point or something, but if you could figure out how to transfer them to the different transfer partners, you can get a lot more bang for your buck there. One of them are advanced tricks. For example, if you were to Google United excursion as perk you can

book some kind of triangle itinerary, let’s say from New York to London, to Paris, back to New York and that middle leg is going to be free for United. And so you can super hack that in different ways where I had a hangout and a meet up last night with some people who listened to my podcast and I showed them a trick where you can do two little domestic flights.

It’s only going to cost 10,000 points total and then you just get a free flight across Africa or something. And you save yourself thousands of dollars if you learn the different redemption, sweet spots that way.

Once you’re getting into that type of stuff, to me it gets a little freaking complicated, right? Like all this like field dumping and all these chicks like that at some point, is it, at what point does it make sense for someone to just hire somebody like yourself to book that trip for you and how much do those things take costs? I guess Yeah.

So I would say if you’re the kind of person where you really like watching YouTube videos and really like reading about award charts and learning about fuel surcharges and all of those transfer partners, some people really enjoy it. If you’re a person, go ahead and spend a 14 hours doing DIY. If you’re like.

I really just need to get this free trip. And I don’t know where to start. Definitely hire somebody like me or travel hacking coach. And I do 30 minute free calls all the time just to get people on the right track. And I say, okay, here’s your rough plan? Please use my credit card links. That’s how I get affiliate income.

Or if they want to actually hire me to do a full 12 month structured plan to say, okay, each month, I’m going to check in with you. This is the car that you should get. Here’s where you should be. Just to stay on track and meet the sign up bonuses, because that’s where most of your points are going to come from.

I do that as well. And as far as how much it costs right now, I charge 125 for my coaching package for 12 months. And. That includes two video calls and a monthly check-in for a year, just to make sure you’re staying on track with the credit card plan that we put together so that you can earn the most points.

And then you’re not floundering around and being like, I don’t know what card to get, and I don’t know how to use these points once I earned them. So those are the kinds of things that I help people with. Yeah. So this is makes, makes sense for someone like myself. Like I have a halfway decent amount of points.

I think I need help on the backend like I kinda know what cards to go and get. I love to DYI because I’ve been in tradeline hacking and I’m always trying to get new cards cause after a couple of years and I can start tradeline. I get that but where my big blind spot is I don’t know how to use the points.

So to go someone like yourself I’d just be like, all right I got 150,000 points. Here’s where I’d like to go. Can you just book my flight for me?

That’s what card currency is it with? Is it American express?

I think that my American express, I try and stay with the cash back cards on that more, but I think I have a halfway decent amount of like airline.

I fly a lot to Dallas, so like 160,000 with them. We’ve got like 80 with United and then some with Alaska in September, actually butterfly with Delta too, but I never get enough. Here’s my problem, I’m always traveling for like business. I’m always writing it off. I never really traveled like a hundred percent personally.

Yeah. I haven’t done that for a while, but that’s where I would like to use my points because I can’t deduct that price of that flight. I’m just thinking like most things you hire the expert, you’re going to get the biggest bang for my buck for those points and then we’ll tell us two women.

Maybe tell me how you look at like, all right. Lane scholars points. What would you do? How would you book Meyer to Kurt for me?

Rather than saying, okay, we have all of these different points. Let’s see what to do with them. That’s the position we’re in now. So I could figure out an itinerary that way.

But if it’s somebody who’s just starting out, I would say, avoid that situation. And then instead say, where would you like to go on your personal trip? And let’s work backwards from that? You’re like, what do I do? I have some Delta points. I have some United points, so we could you’re out something like that.

And look at different routing maps and say, okay here’s some sweet spots if you want it to go to this city. But really the best points to start off with are the super flexible ones. The chase points, because they transferred it 28 different people, I think. And then American express is really good too.

I really like the American express points because. The membership rewards points can be transferred to ANA airlines through Japan. And they have a program where you can fly around the world in business class for let’s say 125,000 points or so it might vary a little bit. But 125,000 points, which is two credit card signups.

You get one Amex platinum, one Amex, gold, you have enough points for this and you can fly around the world like in stop in eight different cities, all in business class for just that. So those are the kinds of sweet spots that I can show people how to do and it’s very easy. You don’t have to do 17 different cards, which I think some people fall into that trap of if you don’t know how to do the award side of it. You’re suddenly having to open a whole bunch more cards and spend a lot more effort to get the same kind of redemption.

And I tell people like I’m like a recovering frugal cheapo. There’s two things that I’m fascinated with these days that’s Ford Raptors, these big monster trucks. And YouTube videos of people in first-class like Singapore airlines, Emirates and I don’t know why. But I think it’s really cool! You can get like, How much points do you need to have that kind of experience? And because those are like $10,000 flights, right?

Oh yeah! They go for more than $10,000 so it completely depends how far you are flying. I’ve seen them go for as low as 30,000 points for a one-way short segment.

If you just wanted to do a trans European flight or something. From like Paris to Greece. If it was six hours or five hours or so you can probably find some good sales for 30,000 points, which is half of a credit card sign up most times.

Because I’m here in Hawaii and I understand how you use the American carriers, but I think where I would need your help would be like the foreign carriers, just like the Emirates or ANA.

How do I get to use my points of those way better areas? So I would say researched the Star Alliance transfer partners, and you can go through chase with a lot of those. I like to search for award availability on united.com. It’s probably the most user-friendly and then you can also see the different transfer partners with United.

If you’re trying to say, okay, if I want to fly from Hawaii to tokyo, that’s probably gonna be Ana airlines. Which you would want American express points to transfer to that. But if you want it to do like Cathay Pacific or something through Hong Kong, down into India or something like that, then you can transfer some chase points over.

You can do some research on Star Alliance . So it involves knowing a little bit about the different routes and the transfer partners and also where you want to go.

Yeah. What’s the website that everybody’s using these days for all the route maps stuff like that, where they do, they just go to United or American?

I personally just use United and then I try to see what transfer partners are available from there. There used to be a site called award hacker.com that you could use to try to figure out the routing maps. It’s not that good. Honestly, it just ever since the pandemic, all of the routes have changed.

They haven’t been able to update their website because the routes keep changing so often. So I would almost say instead of a website, find a person who can help you with these types of things. I link to all different kinds of people who do this kind of work in my podcast, where I interviewed travel hackers from all walks of life who are able to get super cool redemptions.

What’s the coolest experience you’ve gotten as a points?

One of the coolest ones I got was super easy. I have the Hilton card where I got a free night certificate that I could use in any Hilton hotel in the world. Pretty much. So of course the next question was what is the most expensive hotel where I can use this.

And it was at the grand Wailea in Maui, which starts at $500 a night and it’s so fancy. Have you been there since you’re in Hawaii?

I’ve seen it. I don’t go anywhere near, cause I probably cost like locals, like 50 bucks to park your damn car so I stay clear those places.

It’s super expensive, but I had a Hilton free night and not only did I get the free night with a standard room, but I wrote to the hotel in advance and said, Hey, if you have any upgrades available, I have status with Hilton.

Can you do me a solid, an upgrade me, do a room and they ended up upgrading us to a $900 a night suite for free. And it was overlooking the ocean. It had a balcony and it came a free breakfast. It came with free dinner. They wheeled in a cart of all these local Hawaiian snacks and champagne and it was incredible.

Probably saved a thousand dollars just off of that one night and just have one credit card that did this. And so if you want to, I can make a link for your listeners on where to get that email template that I use. Oh yeah. I downloaded that from your website. Yeah, we can put, we’ll put the show notes on small passive cashflow.com/credit card, and then we’ll link to your website so people can download that.

But this is the cool thing. Like you had this like template of what you email hotels to get like all the free goodies and stuff like that. It’s kinda reminds me of if you Google the a hundred dollars trip and Las Vegas or fifth or $20 trip, I think it’s now a hundred dollars, but you tip the guy where you stick a hundred dollars and then they might give you an upgrade.

This one doesn’t cost any money. This is just a “Hey, I’m celebrating a special occasion. If you have any availability here’s my reference number for my confirmation. Here’s my loyalty number”. And so it’s just the information to provide hotels to make it as easy for them as possible to make a mark on your hotel reservation and say ” Oh yep, you’re here now we do have an upgrade”.

So that they’re ready for you. Especially do this if you’re celebrating a honeymoon or an anniversary or something, because the hotels really do want to be nice to you, but it’s almost just rude to show up and be like, we’re on our honeymoon scramble now and get it figured out for us with an upgrade.

If you’re being a little bit considerate, giving them some time to figure this out, email them a week ahead or something so that they can make some arrangements for you and they’re not scrambling. Yeah. Like when you arrive and processes, yes. It’s so much nicer for the hotel too, because then they’re not scrambling.

It’s nicer for you because it increases the probability that you’re going to get an upgrade. So have these processes in place templates are great. Any other thing, cool. Chick like that you want to share with folks that one’s a good one.

What else? Really? The other one is just connect with other people and there’s so many free places to do this.

There’s Facebook groups where you can ask people different tricks. I have my free 30 minute calls. I have monthly Hangouts every month where all of us will just ask questions of each other and then group think ways to hack things and it was like $5 to join. And I really only charged money to keep a way people who don’t care.

And also that the people who had to pay at least a little bit will actually pay attention and use the advice that we give. So those are some of travel hacker.com or that website, or like those credit card websites, those forms still good. I know what was another one that I used to stat wallet went away.

I haven’t been on any of these. I always just connect with individual people who run these websites. There’s somebody called pack your bag with points. He runs a Patrion where he tries different credit card techniques and does different experiments and then lets us know which ones will get you in trouble.

And which ones work. There’s a guy who runs a website called straight to the points and he is like really into researching all of these award charts and then has a paid newsletter where he just searches for award availability. There are two first-class seats on these different flights go grab them.

And so you, he just spends his time searching for these award availabilities and then emails his email list about them. So those are some ways to get the next level hacks is probably like something you pay a little bit of money for. You’re going to get a lot of savings.

And that’s a good technique guys.

Like just don’t be a free loader like it’s just a big difference between free lowers and people that pay a minimal. It’s a good appreciation. But let’s let’s end with this, like ciao hacking has sometimes connected with the dark side of the world, which is like manufactured spent. Can you maybe just highlight what is that for people who don’t know.

Yeah. So manufacturer spending for anybody who doesn’t know is a way to maximize the number of points that you are turning through your credit card. So you’re spending a lot of money or it looked like you’re sending a lot of money, but really it’s going straight back into your bank account. So it’s almost like this closed loop, but you’re getting points for running things through the loop.

And in the past, there have been different techniques to do. This. One was when the U S mint used to sell gold coins for a dollar, you would buy a $1 gold coin. With your credit card, they would mail you a bunch of gold coins, and then you would just take them to the bank and redeposit them in the bank. So you were basically buying money and getting points for it.

You can’t do this anymore. You guys know who you are, you guys did it. I know you guys did it back in the day. Yeah. Back in the day, that used to be a thing. So with manufacturer spending, there are all sorts of. Questionable things that people have done in order to turn all of these points. I have multiple podcasts episodes where people laugh at themselves about getting the police called on them.

If you do enough weird gift card things, people will assume you stole the credit card. Or that you’re money laundering or something like that. So it’s sometimes associated with. The dark side with manufacturer spending there, but I have a really good trick for everybody. Who’s listening on how to do a manufacturer spending technique that I would actually encourage because it does good in the world rather than destroying things.

So there is a website called kiva.com, k I V A. And if you haven’t heard of this, you can loan money to small businesses who need money for just a few months. And so you’ll learn however much you want $500. It could be less, I think it starts at $25 and then you loan some money with your credit card so you get points for the loan.

And then six to eight months later, they’ll pay you back with PayPal. So you’ve redeposit that into your bank account. You have to float the money for a few months, but I do this all the time because I feel good about helping small businesses. I get points on the credit card. I never actually had to increase my budget in order to get those points.

I just have to wait six months to get the money back. So that is a good way to turn a lot of points without spending way more money, because some people, they get these credit cards and they’re like I’m just going to buy a whole bunch of like purses and shoes so that I can get more points and that is not.

I repeat everybody. That is not how you should approach this game. Do not buy a whole bunch of stuff from Amazon that you do not want or need just to get points, approach it strategically. I just got a text message here from Bob. Bob wants to know what the interest rate on that Kiva loan yet. So you don’t make any interest.

You just get paid back the principal amount. They do charge interest to the people who are borrowing, but that’s how they do their operational costs.

You’re doing a good thing and you get all the credit card points for it. So if you have to meet a minimum spend, like if you’re earning 80,000 points for $4,000 of spend and you’re like I’ll have $4,000 worth of spend to do, what am I going to do? And then you just loan out $4,000 Kiva.

How quickly do they pay you back? The shortest time is about six months. Okay. Because I got a card that does 2% for general stuff. And all that does to your five to four, like just 2% back on everything. I would say really it’s only, I only do this. If I’m meeting a minimum spend and don’t have a good way to meet it for just general everyday spend, if I’m like, okay, which card do I use for this?

There is an app. It is called card pointers and it answers the simple question. What car do I use for this? So you just tell it all the different cards that you have, and it will say. Out of the cards you have currently available in your wallet. This is going to be the Westland to use for groceries. Use this one for guests.

Use this one for gross for restaurants. So card pointers is a really good app for that. Yeah. I will actually use the blue cash preferred card or American express, excuse me, 6% back groceries and uncle and buy like a thousand dollars worth of Amazon gift cards and other random gift cards from Safeway.

And I have a little shame. That’s what I do. Oh, no, no shame. That’s a really good strategy. It is a good idea. If you’re going to just buy a whole bunch of gift cards from the grocery like that, to also actually mix it in with groceries so that you don’t look like your money laundering, actually also buy groceries and charge those first.

Make sure the first thing going onto your receipt is like a banana or cool. I feel accepted as a safe place. Yes. Yeah, no judgment. No, this is encouraged because this is how you actually optimize points and how you approach it strategically by saying, okay. If I have to go to target anyway, rather than just getting my one point per dollar at target, I should go to the grocery store, get six points per dollar on target gift cards, then go spend those gift cards at target.

So some people are like, Oh, it’s really inconvenient to add in that extra step, but you can get so many more points that way. If you. Figure out these additional steps that you can take. What are you like someone like yourself for I have 20 credit cards. So I think I got them all almost once you get to end game and you there’s really, you’ve gotten all the bonuses right.

For these new cards. What do you do is manufacturing spend you’re really only means to get points. No, because they’re always coming out with new cards and new products. You can always close down a card and then get it again at some point in the future. So one of my first cards when I got into this four years ago was the chase Sapphire preferred.

I used it for a couple of years, got some other cards closed down my chase, Sapphire preferred, and then I’m going to get it again in a couple months because. You have to wait 48 months since getting the bonus last time. And so it’ll be right at that four year Mark. So then I’m just going to open, reopen a card that I already had before.

And so if you’re slowly turning through cards like that, you can keep sustaining the game. Plus they’re just always opening new cards. So you’ve got like a tracker on it, like a sauna four years later to get it. I one’s just burned into my mind because it was my first card, but there is a tool called travel freely.com and it’s a really good calendar app where it will send you email reminders about when your minimum spend is going to be due about three months from opening the card.

You’ll send you calendar reminders and email reminders when it’s about to be your one-year anniversary with the card or any year anniversary with card, because your annual fee is going to come due. So you’ll get an email that says, Hey, do you still want to keep this card? If you do, you’re going to get charged $95.

If you don’t want to keep the card, then you should close down the card. So you’re not doing, you’re not doing any manufacturer, spend yourself. Other than just keep It’s mostly just Kiva. Yeah. But that’s just where your minimum spends to get the bonus since. Yeah. Just the minimum spends. And then also, if any of the cards are doing some kind of spending challenge where if it has a special promo of this month, if you spend at least $1,000, you will get an extra 5,000 or 50,000 points or something, then I’m like I didn’t have anything planned for a thousand dollars.

I’m just going to turn it through Kiva. So sometimes I do that. Yeah. 2%, 2% for six months. So 4% a year. Tax-free right, because they don’t tax you haven’t yet actually on this stuff. I don’t know if anybody’s heard of this, but there was. A couple that was churning through like $300,000. In two years, they got cash back and through manufacturer spending and the IRS says they have to pay taxes on it.

So keep that in mind. Don’t go insane. Don’t turn through $10,000 a day or anything like that. That’s why I always encourage, just do the Kiva thing. If you need to meet some kind of minimum spend Or else you could get eventually caught and have to pay taxes on it. But there are people who try to make that their living is just to turn through points and lots of different ways.

I’m of them more legitimate than others and grab the cash back forward. And then they live off of that. But. Everybody who’s listening to this might be thinking, Oh, that sounds like a genius, like efficient thing to do. It is not. It is, you are driving all over town to get gift cards, to turn into money orders.

If your town even still allows this because it’s very location dependent. And so you are driving all over town. Because no store is going to let you just buy $20,000 in gift cards. They’re going to limit you to $500 or something each time. So it gets really inconvenient. You have to go back every day.

And I think a lot of people, when they’re doing this game, don’t take into account how much their time is worth to be driving around the stress of doing this. People do get their cards shut down. They get their bank account shut down the same banks where they might have their mortgage. So that would be very unfortunate.

You could get kicked out of your local Walmart or grocery store. They might just say you’re not allowed to shop here anymore. And that would be very unfortunate. You could get the police called on you. That would also. Very unfortunate. So I know I’ve been there too, because I’m very into the whole optimization efficiency productivity thing.

And it seems like manufactured spending is like the next logical step where you’re like, Oh, I got to sign a bonus. This is the awesome hat. What’s the next step? Is it manufacturer spending? It is not, that is not the next step. The next step is learning how to strategically allocate things and how to learn a word charts to optimize the redemption portion.

That’s the next piece is don’t just keep trying to say, I’m going to earn as many points as possible. Spend time researching how to optimize the points that you are getting at a reasonable rate, fun stuff.

But yeah, I think once people get to, simple passive cashflow, they start to invest in more passive opportunities and get away from being the landlord. It’s where I’m at in my life. Yeah, we’re busy, but stuff is fun. So I’m trying to find that, get back in the game and trying to find that like minimum effective dose that 80, 20, or maybe the 95 five in this case where I can.

Job a little bit more and have some, extra stuff on the side. It’s perfect too, for people who are into house flipping and real estate, because if you have to go to home Depot a lot, or you have to go to Lowe’s or really do anything with home improvement, because you’re doing real estate, you can get a ton of points that way, just from buying different supplies and.

I don’t know if anybody’s maintaining an Airbnb or something like that, but it also opens you up to a whole bunch of the business credit cards, which are really lucrative when it comes to points.

If you guys are gonna spend the money, do it. But you’re not going to spend the money again don’t make the transaction. I think we always have to end with that common sense.

Yeah. Don’t buy things that you don’t need just to get points instead, strategically figure out how to get more points from what you’re already spending and by doing things like the key metrics.

Any last thoughts, and then you want to give your contact information out there?

You can read julia@geobreezetravel.com. My website is geo breeze travel.com. My podcast is the geo breeze travel podcast, and I am most commonly on Instagram, my handle is also geo breeze travel. And if you guys want that email template to get a whole bunch of free upgrades, I’m going to give that to Lane to put into the show notes.

It’s at geo breeze travel.com/download-gifts. And if you go to the website, it’s going to pop up anyway with it. Hey, do you want this thing sign up for it, but I’ll put it in the show notes for you too.

W e’ll put it at simplepassivecashflow.com slash credit card. And if you guys liked this stuff check out tradeline hacking, simple passive cashflow.com/tradelines but have fun with this guys.

Don’t get in trouble but remember your highest and best use is like yet your guys’ day job. I know you guys are fortunate. You may not like it, but it beats flipping houses and having a second job. Thanks for listening everybody. We’ll talk to you guys next time.

Creating Community With ApartmentLife.ORG

https://youtu.be/7IHIEHqI__w

Hey, simple passive cashflow listeners. Today, we are going to be talking about something we’re doing on a lot of our properties and some tips for you landlords out there to increase the community at your properties. Ultimately, it’s going to lead to higher rents and better revenues for you guys.

If you guys haven’t yet joined our club at simplepassivecashflow.com/club. We don’t bite, it’s free. I don’t know why you haven’t jumped in and hung out with us yet.

The new California SB nine bill. As you guys know, California has the population is increasing and there is a lot of homeless there. Basically, the way they used to have before is there were a lot of these single family home neighborhoods.

It’s one of those bills where it’s trying to distribute wealth and trying to get these traditionally single-family homes to be duplexes or multifamily so it can allow for more dense population growth and lower housing costs. What I think it’s going to be doing is opening up California.

In the short term, it’ll relieve some of that need for housing. A lot of these things take a lot of time and a lot of people freak out when they see stuff like this, they’re like,” oh my God, world is ending the California real estate market is going to crash because now you have all these single family homes now double in model supply and flooding the market”.

It doesn’t happen like that guys. In a year, I don’t think you’ll see a decrease in prices because I still feel like there’s a low enough supply and there’s a decent amount of demand so I don’t see, you’ll see prices go down at all, let alone crash.

But I do think that it’ll start to help out the situation where people need that dying middle market and the lower middle-class housing, or maybe it will not do anything, who knows? But I think the one president sending thing with this whole SB 9 California and Oregon are typically be durable, proactive states with these types of things where you might start to see this other more neutral states where they start to break open a lot of old money neighborhoods and bring in more debts building in those areas.

If you’re a rich person in a single family home neighborhood, you probably don’t like this. But for rest of the majority of the population probably allows and opens up the market a little bit. A lot of people are talking about this last week if you haven’t been paying attention, there’s a bill going in Congress right now to change many things. What this is they’re going after a lot of IRA owners and supposedly the rumor is this may or may not impact solo 401k folks. And so the big changes that are supposedly. Coming down the pipeline.

We don’t know yet and been telling people at my inner circle don’t freak out yet. Don’t be like these guys who watch YouTube all the time. I guess you guys are watching this. So keep watching YouTube. It’s fine. It’s good news. Good entertainment. Congress is saying now you guys can’t invest in their self-directed IRAs of private placements and syndications, which is jacked up in my opinion because it’s like how dare you tell us what to invest in. Some people who are the conspiracy theorists are saying, “well, it’s because the government is getting in cahoots with all of these companies like Vanguard, Fidelity, TD Ameritrade. It’s force them into all these garbage retail products where there’s high fees”.

Maybe that’s the case. It probably is the case, but I just find that connection loose a little bit. But what they’re saying, for those you guys who are investing in your retirement accounts, Lane told you a long time ago, not to do this stuff because I don’t know why you would want to invest in a retirement account into something that’s tax advantage already.

You invest in use retirement accounts for things that are non tax advantage, such as, like crypto, goes up but you gotta pay up bit lower taxes which is why you put it into your qualified retirement plans, such as this or things where you don’t get the bonus depreciation or even passive losses, like hard money lending, which is ordinary income.

What you want to be doing with iRA’s is those types of crypto or not tax advantage things. I wrote a really long article and it made multiple videos on this. If you go to simple passive cashflow.com/qrp, if you guys want the whole argument email me, lane@simplepassivecashflow.com. I’ll give you the big blurb of why I’m not a huge fan of investing in retirement accounts, unless you make over $330,000 adjusted gross income and you already have like maybe more than half a million, million dollars in your IRA. If you’re both of those two such criteria, various portion of people out there where it actually makes sense to have a solo 401k or a qualified retirement plan or self-directed IRA even a Roth case, but a bigger topic. But anyway, going back to the news here, people are like “if you’re gonna not allow me to invest in private placements, what am I going to do?”

And then people are like freaking out. ” Oh, my God. I’m going to have to liquidate my positions”, and keep telling people this hasn’t been signed into law yet, but supposedly what they’re saying is they’re going to give to people two years to transition out of the IRA and to dispose of those assets.

Or you can just take, do what I said, you know what I told everybody to do it. Just take a distribution, pay the taxes and the penalties. It’s not that much, any way.

This will probably change a lot of times that they’ll put something out there just for negotiation to get something else and some other. And call me asking why is this all happening?

You can think uncle Peter Thiel backdoored a lot of like class B shares of PayPal and created like a $10 million plus IRA. And he’s screwed the system. And now the system is looking to get back at him. Unfortunately, the millions of Americans who use a retirement accounts as a mechanism for sheltering taxes is also being collateral damaged.

What I personally think they should do to just fix the Peter Thiel’s of the world is just put a cap at $10 million on IRAs. Most of us fit under $10 million in the IRAs so that would solve that problem. But again, why are they not allowing people to invest in private placements?

I dunno, maybe that’s again, that’s the conspiracy theories out there that think that it’s possible trying to force peopleinto this retail, mainstream wall street products.

If you guys have any questions, comments, type it into the comment box below, I’m sure it’ll make people angry and probably wondering what to do. Well email your Congress person, whoever that is. I’ve never personally done that before, but supposedly that’s what a lot of people do.

I have Pete Kelly here. If you guys want to go to apartment, life.org if you guys want to Google their website, also take a look at what they’re up to. Welcome Pete, thanks for jumping on.

Thanks for having me lane.

So what is apartment life? What is the service that you guys provide?

Sure. Back up a little bit, we are a faith-based nonprofit that’s been serving the multifamily industry for 21 years. And so we help apartment owners and operators with two of their greatest needs, which is resident retention and resident satisfaction. And we have a program that saves our average client $188,000 a year and turnover, marketing costs and staff retention. And the way we do that as we address one of the biggest needs that residents are facing, which is loneliness.

Interestingly enough you’ve probably realized this since the pandemic, but America is dealing not just a COVID pandemic that they’re dealing with the loneliness pandemic. It was bad before the pandemic, but it’s gotten a lot worse since then. In 2019, the insurance company Cigna found that 60% of Americans would describe themselves as lonely.

Now, initially you may be thinking, okay, I’m an apartment owner. Is that a really big deal? If you are an apartment owner, that actually is a really big deal, because what that means is that your residents don’t have any roots in that community and it’s a community just down the road offers a good enough rent incentive.

They’re going to pick up and move and go to that community. What we found is that the more relationships an apartment resident has in their community, the happier they are and the longer they stay. The magic number seems to be seven. If seven of your neighbors, you’re almost twice as likely to renew your lease.

We have a program that facilitates building relationships and apartment community. We have two models: we have an onsite model and an off-site model. The basic idea is that they create this environment where people actually know their neighbors, they feel connected, and they do that through welcoming people throwing parties and events, looking out for opportunities to care for people, connect them to one another. And as they do that, it’s just the sticky community where people love where they live and they don’t want to stay.

At some point, resurface countertops, new flooring, nice stainless steel appliances only can take you so far and especially when competition is getting a much higher for the apartment owners or real estate investors perspective, tenants are gonna go to where the best value is and that value just doesn’t necessarily mean that box for the house that they live in the community.

Whether it’s, as the business owner, you see this as your responsibility or not, it is what it is. And this is where we got to a certain point. We would take over an apartment. We would do all the things you’re supposed to kick out a lot of the deadbeats, the shady characters and the way we feel is that benefits the greater community. That’s what most people want. They want those people out, right? Rehabbing units, exterior improvements, playground equipment, all those such new clubhouse. They start to put the money in, but the hard thing to get the property managers on board with all these extra curricular activities that didn’t really hit KPIs.

A lot of our properties we use third party property managers on. We hold their feet to the fire in terms of expenses, how much revenue, how much they’re leasing. Hard KPI numbers but it’s really hard and for those of you business owners out there who have staff or employees, you guys know it’s really hard to keep people accountable to these more softer KPIs on trackable KPIs.

We decided to bring in apartment life folks into the apartments in order to focus on this one aspect of the business and to really give it the emphasis that it really needs. These are the things like a mother’s day, barbecue or Easter egg hunt. It was really hard for us to get the property manager to do that type of stuff, because as things get busy, what’s the first thing that gets thrown to the wasteside.

Pete, I want you go over those two types of models, like how it works coz the first thing I thought of is ” Hey, this is like those two teenagers of the college kids in the red bull car that run around and spread joy and give free red bull around”. This is kind of the same thing.

It’s like that only they’re there to stay and they keep coming back. Our two models that I mentioned, one is the onsite model and what we do is we place a couple that lives in that community. They’re like the welcome wagon like they agreed every new resident when they move in, they throw all the parties and events.

They look for opportunities to care for people. Sometimes it’s the birth of a child, sometimes it’s a layoff or maybe a neighbor’s car broke down in the parking lot and they just help them out. And 90 to 120 days before that residence lease has set to renew, the team will go by and visit them again and just say, “Hey, we’ve really enjoyed getting to know you. We’ve liked, the feel of this place. And we’re just wondering, are you thinking about sticking around for another year?

As they did that time and time again we see retention go up. We’ve done focus groups actually on this. We’ve sat down with residents and said, “Hey what was it that motivated you to stick around? To what degree did the community make a difference?”

And I can remember one focus group out of South Carolina they said,” rent went up by 18% this year and we’re still here so that tells you how much we value it. That’s the on-site.

Those two guys are they like undercover? Does everybody know that they work as an extension of the property management company or apartment life, or are they seen as undercover, like field tenants that happen to give you a helping hand when you move in to carry your boxes in?

We come and we represent the management company and so rather than doing it undercover. We want the management company and the owner to get the credit for the program and so we just say, we’re apartment life. We’re here on behalf of your management team. We’re also residents. So we also live here.

And so they live in that interesting spot where they’re representing the management company but they’re not technically part of the management team. They’re a third party but they live there so they’re also a neighbor. And so that’s why we love the onsite model is because it’s that mediator between the two entities.

And so residents often will tell our teams things that they won’t tell the management company. And so they’re in a wonderful place to get Intel.

Even though in some cases they are wearing the polo of the third-party property management company.

They are but they relate differently because they really are seen as neighbors and friends. So I think about this one woman in Houston, her name was Kathy, single mom. The team went by to do a renewal visit with her and they were friends with her. She came to all the parties and events and said, “Hey Cathy, are you thinking about sticking around? “

She goes, “no, actually I’m not. I’ve had this bug infestation that the management has not been able to address and I already put down my deposit on the next place and they’re like, oh gosh, we’re really sorry to hear that. We’ve just really enjoyed getting to know you. And we’ve loved getting to know your daughter. And so they politely left and then she wrote him back that night and she goes, I’ve been thinking about you guys ever since your visit and the kind of community that you’ve built here.

And this is the kind of neighborhood I want my daughter to grow up in. And so she goes, I decided to let go of my deposit and then I’m going to remain my lease. And so that’s an example where maybe she was frustrated with the management company, but she didn’t voice it quite as directly but because there was a neighbor there that she knew was associated with the management team. But she viewed them in a different light.

Yeah. Like your resident your RA back in college dorms in a way it’s an intermediary, but understand your guys’ business. Like the people are those intermediaries are they typically younger people or I am assuming they’re getting free rent, that’s part of their compensation? Is it to help the people in those situations?

The economic benefit to our teams is the reduction of rent and that’s, what’s in it for them. I would say our two biggest groups of people who do the program would be young marrieds either without kids or just with one or two young kids.

And then the other largest group would be empty-nesters. We’ve had several empty-nesters that have sold their houses or rented their houses out and said, “Hey, we wanna go back to living in an apartment community. We don’t want to have to sweat mowing the lawn, and we love the idea of getting to know our neighbors.

So they’re usually like pretty extroverted people and you just find them off job boards. Unusual job description, right?

It is! Although we can promote it all kinds of ways, the best source of teams or other teams and so we find that the highest quality coordinators come from other coordinators who tell their friends about it and ” Hey, you would be great at this”.

I’d say the ideal profile, if it’s a married couple, one of them, as you mentioned, would be extrovert. The other could be extroverted, but what we really need is at least one person who’s administratively gifted or organized because there’s a reporting function to what we do, because we can do all kinds of great things.

But if we’re not recording that and sending that back to the management team, they don’t have any idea of what’s really going on there and they don’t know how to quantify the value of the program.

I’m selfishly interested in how you do this because trying to get a little bit better outreach with on the investor relations side, see what people are, what we can do to help.

And as you said, most of the times, the example with the person who had the bugs or whatever infestation, they didn’t say anything, right? That’s very typical of clients. Of course you have the 5 to 10% of people who just complain about every little thing, but the majority of the people are just good citizens.

They don’t speak up. So what is like your guidance on those, your employees? Is there like a spreadsheet where they go down every single unit and they need to have a touchpoint barcodes for them to sign scan? What is the, how do you keep them accountable?

We have an in house tracking system that we use where they can do it in real time or they can do it at the end of the month but they have to do it at least once a month record everyone that they visited. What their sediment score was when on the move in so if they’ve visited somebody, they’ll weave it into the conversation, “basically on a scale from one to five, how would you rate your move in?”.

And anything that is lower than a three or lower that automatically get sent to the management team and so that they know, “Hey, here is a retention alert”.

Because what we find is that people are already making the decision to renew within the first month of living there. And so if there’s anything that the team can do onsite to improve that experience, we want the team to know about that and so that’s one of the things we do. We have an in-house tool that the teams log in and record all this but we also partner with Modern Message. And are you familiar with Modern Message?

It’s an interesting gamification, a tool that has become very popular in the apartment industry, but it’s basically an app or a website that rewards residents for engagement. So you probably have some kind of hotel reward system.

Let’s say you’re a part of the Marriott and every time you stay at the Marriott, you get points and then you can redeem those points per stay. Modern Message done is they created a similar tool for apartment residents and so we partner with modern message. There’s electronic tool and then our team encourage residents to use it.

For our clients that have Modern Message, some of the reporting is actually done through the modern message app and we struck up a partnership with them so that at the end of the month we have an API that pulls the data from modern message and we can print it up in a PDF that’s sent on to our client.

Pretty advanced stuff and then I think that data gets fed in with the property managers, as leasing comes up maybe influences dynamic pricing, maybe it doesn’t. But what about the workload of these people? Is it expected to be a 40 hour day, a week job or meant to be more part-time for them?

This would be a part-time role that they do and their nights and their weekends. Because when you think about your average apartment community, most of your neighbors aren’t around until the nights and the weekends and so we look for people who already have regular jobs, but they’ve got some margin in their life at nights and on weekends where they can serve the community.

Again, one of the dynamics could be: young, married husband and a wife, and maybe the wife is wanting to get pregnant. She’s not wanting to work. She’s wanting to work part time and this is a way to lower their cost of living and in a sense, having a part-time job that facilitates neighborliness and their partner and community.

And then the other type of arrangement you guys do if we don’t have a free unit, you guys just operate on a mobile service. Can I just stop it at certain times of the day?

We do. Our oldest model is the on-site model and we feel that by and large, that’s going to be the most effective longterm in terms of actually building community.

But we’ve seen a lot of our clients have them pleased with the offsite model. For a lot of management companies, they want to throw parties. They want to throw events, but they can’t put a lot of attention in it because of the demands of their job. Working in the office, you’re just worried about leasing and you’re worried about maintenance requests and people paying their rent on time.

So the idea of throwing some kind of event or party that brings community together, it’s just one too many things and so we’ll take care of that. In some situations we’ll do what we call electronic visits where we’ll email out or text out all the new residents and say,” Hey, we’re having an event this Saturday. We’d love for you to come down and get to know your neighbors.

Let’s talk about some of those events. What kind of sizes, shapes have you guys pulled in the past?

If you get on our website, you can see like an insane number of pictures and event ideas. People who aren’t yet our clients will from time to time send out event ideas, some of the examples, something simple, like what we call a wine down Wednesday, where you can come down to the clubhouse, get a glass of wine, get to know your neighbors.

Sometimes communities that have a lot of pets will have what’s called a yappy hour and so we’ll have, bring your dog out. We’ll have a special treats. We’ll array for food trucks to come out. Sometimes we’ll have painting classes that we’ll bring in fitness classes. We’ll bring in a chef and teach them how to make a meal.

Pool parties are a big deal. You’re pulling it up right there at poker nights. You see all kinds of ideas up there. What we tell our coordinators is obviously you need to get to know your community and what works. And so we encourage them, especially when they’re new to trial, a wide variety of things to see what works with their community.

Some events are going to appeal to some of their neighbors and other events are going to appeal to other neighbors and so that’s the other reason you want to do a wide variety is you don’t want to keep bringing out the same 10 or 15 residents, but you want to really throw out a wide net that really helps people we’ll get to know others in their community.

Maybe talk a little bit about as the class changes, the clientele more A-class apartment communities versus the C class side. Do you guys cater more towards the other? If not, what are the events?

Historically we started out actually on the nicer end and so we’ve worked, I would say for the first 15 years of apartment life, class A and class B assets. More recently we’ve been doing more classy and even affordable housing. That’s actually a new division of ours is working on affordable and low income housing. The same principles apply, but rather than just throwing a party, which you can still do sometimes what’s helpful is to have what’s called wraparound services.

And one of the communities that we serve in Salt Lake City, our coordinator, who’s an offsite coordinator, organized 1500 meals in the month of July for 30 families. And with one of the residents who was blind, she helped him fill out lengthy paperwork in order to sign up for social services.

Again, we started probably more in the class A, class B assets but over the years, we’ve realized we want to have a tool in the toolbox to serve any apartment community that’s out there.

Yeah! You want to use the right tools. It reminds me of when the first had the pandemic and all these celebrities had sing that stupid song. It just made idiots of themselves. If you come to the wrong apartment community with the wrong event, you can come out the wrong way a lot of times. You would think a lot of the class C places, they need this stuff more than the class A side.

What we really encourage our teams, whatever community you’re serving throw the best looking event that you can. Cause what we don’t want to do is have like for a class C, like a Wiener boil or something like that, you really want the residents to feel like, “Hey, you put a lot of thought and effort in this”.

We have what we call eight layers of the event. Where the coordinators are thinking very carefully about the ambience, how do you create a sense of buzz around it? How do you facilitate people actually making friendships there? How do you take pictures and post about it on the back end? And so we just want the events to really have a sense of sparkle and shine to them.

Have you ever ran into issues with some tenants being like I don’t want cupcakes or on Thursdays, just cut my rent by 20 bucks. That’s where I really need the help has that ever happened?

To my knowledge, I’ve never heard of a resident asking to cut the program for rent reduction. What we actually find is a lot of residents say, I didn’t know, people still live this way in the United States. I think of one particular couple that moved down to Dallas. In the heat of summer and their apartment life coordinator was watching them unpack their truck. And just really unprompted.

They just went over there and took icicles for the kids or like lollipops or what do you call the frozen obstacles and waters for the parents. And this family happened to be moving in from Oklahoma and the wife, “I didn’t know people still did this in America. This blows me away”.

I was like, “oh yeah we have a great community here. We encourage you to come out to the events”. They became really good friends with them. What we find is that people really want to go, they want to get to know their neighbors, but they have lost the art of neighboring if you will.

And it just takes that one or two instigators, the catalyst to get that culture going in the right direction.

It does and I think all the more, since the pandemic has all of our social muscles have atrophied over the last 18 months. It was that catalyst that you mentioned was needed before the pandemic, but it’s needed all the more now because people really have lost that ability to make small talk and they’re frankly intimidated.

Again, they’re lonely. They want to get to know their neighbors but they almost need somebody to hold their hand and say, “Hey welcome! I want to introduce you to Bob over here. He likes hunting just like you like hunting or he likes fishing like you liked fishing”.

They really want that. And again, the management team is too busy to really provide that kind of level of connection. The most they’re going to do for an event is throw food out on a table and say, “Hey, free food”.

It’s just like you guys at work, if your boss asks you to plan a retirement party for somebody it’s really, is this my job description?

That’s a great analogy and honestly some on-site staff because their interactions with the residents often are pretty negative and needed cause the residents, some are always complaining. The last thing they want to do is throw a party for these complaining residents and so having a third party that you can outsource that to can be a good move.

Is this something, some of the listeners might have single family home. Is this a service that you guys would provide to like single family home operators? As opposed to one apartment where you can control the community. Is this something that you guys have branched off or thinking about branching off into some point?

Yeah, especially for single family build to rent, we have given that a lot of thought because that is a really big deal. And that you see a lot of the big players in the apartment industry going that direction where they’re building whole neighborhoods in single family homes, but they’re all owned by the same entity.

So they’re run very much like an apartment community but they have the feel of single family homes. We’ve met with several people in that space who said, “Hey, we would really like the apartment life model, but we would rather not call it apartment life. And so for that group, we’re looking at the name neighborhood life.

And so a name like that would probably fit better for a single family, residential neighborhood.

Apartments have the common space, right? And like you said, if you can get them to be friends, you just create so much value for the tenants in that type of setting.

It will be more challenging to do in single family neighborhoods. Now, I’m looking out my front window and last night hung out and had a glass of wine with two of my neighbors. We just sat in our lawn chairs and caught up and talked about life and it was great. We didn’t have a common space to meet in.

It would be hard to do Texas in the summer, but we we did at 7:30 at night, so it was a little bit cooler then. Even without a community space, there’s ways to build community that sometimes weather is a factor.

Any other cool events or other things you think the folks would like to know about what you guys do?

One of the other things that we’ve realized through the pandemic is a lot of our clients said you’re the only amenity that’s open right now. And they’ve said, we’ve got a fitness center but we can’t let anyone in there cause we don’t want to spread COVID and so I think that was a kind of an interesting discovery.

We were wondering actually, if we would lose business in the midst of the pandemic, but actually the opposite happened. We had a great year of growth because again, we were the only amenity that was open and some of the needs that we were able to meet were just really cool. Like we had this one coordinator up in the Seattle area who was really burdened by the food and security in his community and he got a lot of food donated.

He just started to reach out to churches and government entities. Before you knew it, he just had this whole operation going, all this food being donated. He was able to serve his apartment community and then the one across the street and it grew into its own nonprofit that has in the last year delivered.

I want to say 8 million pounds of food to apartment residence. Which is just crazy. There’s a lot of needs out there since the pandemic and it’s been a joy to be part of helping people meet with those needs.

I think, you guys are a perfect example of trying and find consultants, you put to work with. You seem to pay more money on the front end, but it’s something that you could have never done in-house. It’s just a very special,unique t alent and focus that you guys provide.

If people want to get a hold of you guys apartment, life.org, is there your URL. Pete, you want to give your information in case somebody wants to utilize you guys?

If you’re interested in talking further, you can email me at Pete Kelly. That’s P E T E K E L L Y @apartmentlife.org and either I’ll follow up with you or connect you with the right regional leader. And if you want to read more about us, you can go to just our website apartmentlife.org.

Thanks for listening guys. I think normally I don’t really talk too much about improving the communities. This is the whole part of increasing value and ultimately that’s how we make money. You don’t make money in my opinion, for a long-term basis by buying something low selling high something, buying something on Amazon, flipping it on eBay.

And that’s what traders do but people who make the sustainable wealth create value. And in this case, improving the units, improving the community with services, such as Pete Kelly’s apartment life, those are the things that create longterm value and create wealth. I probably empathize more with the investors.

A lot of you guys are hardworking folks at home, investing your money the right way in tax advantage things that utilize great wealth building strategies. We try and help you guys out. You guys are people I think of first. At the end of the day, you can think of them as are the clients, really the tenants who pay us rent? Or the clients investors, you could go either way on this?

This is what we’re doing on the tenant side. But thanks for joining! We’ll see you guys next week.

Scarcity to Abundance with “Money Honey” Rachel Richards

Coaching Call with a Million Dollar Investor (Chris)

https://youtu.be/mj51m79IOzQ

On today’s podcast we’re going to be doing a coaching call but a little bit of announcements. We’re going to be unveiling the new Infinite Banking e-course. I put this together to get all our questions on infinite banking. I think a lot of you guys listen to this stuff on a podcast and you hear all the benefits of it.

A lot of benefits, a lot of high net worth investors do it. I think every investor over a million dollars network should definitely have some sort of Infinite Banking policy but it’s not all sunshine and rainbows as you guys know. I do it! At the end of the day, I think the benefits outweigh the cons, but get yourself educated.

Check out our infoPage@simplepassivecashflow.com /banking to learn more there, get free access to that e-course. Probably tell you guys about a couple hours to get through, but again, that’s free. Check that out there. We’re also going to be doing a bootcamp one of these weekends.

Make sure you guys sign up there, get on the email list by going to simple passive cashflow.com/club, to get the invite to that free a weekend boot camp. And some other things that I’m following other than the Delta spike in COVID cases.

Peter Thiel, he screwed it up for everybody. If you guys don’t know the story, but Peter Thiel basically stuffed his Roth IRA with a whole bunch of severely undervalued stocks B shares, whatever you call it, but basically that he pissed off the government.

And now the government is tightening a lot of these self-directed IRA. And pretty much screwing everybody’s even doing the regular Roth and regular IRA. We’ll see what happens. Who knows they might put a capital in the Roths. A one thing I’m looking for is they might be putting like a appraisal requirement on all your assets in there where they make you get. a $5,000 appraisal fee

Which would pretty much Kubosh the whole point. You’re going to have to base so much in fees, but I’m looking for this in the next RISE Act. Something that was put on the faults when Trump was in office, but is coming back up. Of course it’s going to be sold as I forget what RISE stands for, but it’s Hey, let’s help Americans save money.

By changing a bunch of the ways that the self-directed IRAs, etcetera work. But I think it’s gonna screw a lot of you more sophisticated investors up. I don’t do any retirement accounts. I don’t know why anybody really does it. If you invest in real estate. If you guys do crypto, I’d probably do it on crypto, but, check out my long list of reasons why at simplepassivecashflow.com /QRP. But, beyond the lookout for that infrastructure bill, I’m actually pretty bullish overall. There was the recession is over the world’s shortest recession of what, like two months or something like that is over. And looks like rents are coming back up.

I think the rent more terms, how they stay how they are, always offers stability I feel bad for the small landlords. It’s the small landlords who are put in a hard space once all these moratorium are up and things start to open up. Whereas, on the larger apartments, the commercial property managers have a lot more tools at our disposal to adequate the protect ourselves, the landlords.

I’ll be on the lookout for the rise act, the secure act whatever, they’re going to call the infrastructure bill.

And then some of you smart investors out there that utilize the whole buying something under market in your IRA, swapping it over to Roth. That little chikaru you guys like to do that I think is a little risky. I think might be definitely going away as they might put in some kind of nasty language in the RISE act where they’re saying you cannot buy things under fair market value.

Which makes no sense if you’re a real estate investor, you’re always buying under a fair market value. But anyway, we’ll try and be on the lookout together. If you guys want some more insider tips, join our family office. Ohana mastermind, go to simplepassivecashflow.com/journey and enjoy the show.

We are going to be doing a coaching call with a million dollar. We’ll just call it that! Call it a million dollar net worth investor. Chris, he’s been part of the HUI pipeline club for quite a while.

About 2016.

I always remember when we have calls and I remember we were talking when I was at my past day job.

Back when you used to live here?

Yeah. Why don’t you give us a little context on yourself. You’re up there in Washington, where I used to be.

I live in the Northwest. It’s like you said, I work in the power industry as a technician there electrical task 📍 guy.

We have two kids, my wife works and we own a business also. Started chugging along on real estate when I started talking to you back in 2016 had done a lot of actual like futures trading and other types, like stock investing, hoping that would set me free, and learned a lot.

Then my neighbor’s house came up for sale and I started looking seriously into what it would take to have rental properties and dove into bigger pockets and your website at the time of your podcast and just tons of podcasts and got fired up on it. And looking at the slower moving animal that is real estate investing.

What made you finally get rid of like the stocks and options and all that type of stuff?

I don’t do it anymore. It was definitely time consuming and it’s just seems so unpredictable. Just trying to check on, I was doing an option selling and try to do that monthly income model. It was so volatile and just not a lot of fun trying to sleep in doing that thing.

I just ended up really, the fire got lit by this house that was right by me or which I did not buy, but it got the fire lit and I just started digging. And ended up, I got into the turnkey if you want to chat about that for me.

Why did you not end up buying that rental nearby?

The whole bigger pockets land and the financial calculators that you get the 1% rule is really why I did it. Honestly, it would’ve been a good deal for us just because of speculation and the houses have gone crazy around us. But you don’t know and so that’s the very first thing you learn, you don’t go for cashflow.

It would have been a break, even deal for us. As far as the rent, barely making it and no cashflow, but it would have been a great speculation as far as appreciation you don’t know that and no one tells you to do that.

People invest that way, right? Buy low, sell high, go on appreciation. And if you’re bleeding cash a little bit every month, most people that’s how they invest.

I guess I got talked out of it just because I’ve done the speculation thing with the stock trading and stuff. And so I wasn’t really interested in speculating anymore.

I was interested in cash flow and so I ended up not pulling the trigger on that deal and then really did a ton of podcasts on turnkey investing and retail turnkey thing. I ended up all over looking at tons of different stuff and really I just pulled the trigger on ensemble.

And after awhile I was like, I’m just going to do this. It seemed like a huge deal at the time. Now in hindsight, if you haven’t get operator, even though you’re paying retail, it still works. It still makes money every month. I’ve been in that for four years now.

And it’s just been chugging along for better or worse there’s been nothing to do. That’s where I’m at. I was not tempted to buy anymore. There was a fire lit buy pretty quickly by thinking about multi-family and mobile home parks in particular. And I went down that path and that’s been a two year journey of being involved in that.

Let’s get people up and where we are in the scorecard here. Cause this is what evolved really matters is what your net worth is. Your net worth is just shy under a million dollars, just call it that on a good day.

You’ve been pretty good with your money, right? Like most people in our group compiled a bunch of assets, have your liabilities in order. Now let’s take a snapshot of like your monthly velocity. You make a pretty good salary on 9,000 a month. You’ve got some real estate income. The important thing here is in net cash flow 3,600 a month. You’re able to put away and save maybe 40 grand a year. Is that about right?

Yeah, I would say, that would probably be about right. That’d be probably max right now, depending on. This has nothing to do with the business that we own right now, what you’re seeing here. I would say 40 is a good number right now.

That’s awesome! You’re not making a huge salary, like some of these other guys, but you’re definitely in the average of where people are saved. Most guys are between 30 to $50,000 a year. And at that point, you’re moving at a pretty good clip.

You’re not buying a syndication or two every year or two syndications or more, or three houses every year, but you’re steady making progress. And at this rate, you’d probably be a lot different financial situation. I don’t know if you’re gonna be financially free at five years, but you’ve got to definitely getting there probably going to be there and like under 10.

It all matters on your living expenses. And I know the picture here. I can just guess from seeing so many financial profiles like this, I’m sure you can tighten the belt a little bit, but you’re just seeing the light at the end of the tunnel and you’re gonna coasted there.

You don’t need to live in ramen noodles. We don’t. We have some perspective on that for sure. You’re going to live a little bit, and it’s like just there, right? As you lay out the plan, the tightening maker may not. When we talked a long time ago, you were doing the turnkey stuff. I think that’s what connected us in the universe. And then you went off the simple passive cashflow registrar. You became more of a do it yourselfer kind of guy. Tell us how that little experiment went. What did you go off by? What did you do?

I wandered out, I got very interested in the mobile home park thing.

And it’s why I got interested in it because when you look at mobile home parks, what’s interesting about them is that they can be passive in some respects. If the mobile home park is all tenant on homes that is a really cool model where the person that lives there owns her own home, they just climb you rent the dirt to them and you just maintain the property.

That’s not the part that we bought. We definitely saw the lure of the higher rents from owning homes so we bought a park and I have a partner on it. It was just two of us. We bought a park that that has 25-ish tenant and our I’m sorry, we own 25 of the home. It’s a lot of work.

As far as just keeping people in. It’s a low-income housing community is what it is. I’ve learned a ton about it. I definitely get that the tenants own their own homes or I don’t even know their names barely. Actually I say that it’s like, they’re really super easy they just do the thing and take care of their house.

They pay me rent every month. You run into problems in a mobile home park when you’re hunting people to collect rent and they don’t own the house and they trash it. You may have said this before, but it’s like pig pen or something. It gets, they go crazy.

And so you get to rehab or, do a rent to own handyman special kind of stuff, doing a lot of that stuff every year. Pretty much every couple of months with turnover. But the other thing I’ve learned is that, low-income housing is high demand and we never have an issue with vacancy.

You’ll have vacancy just because you’re turning one over, just cleaning it up, but really it is pretty incredible. I’ve seen the whole thing and I do realize that I’d prefer to be more of a passive investor at this point in my life. It’s something you’re always thinking about when it’s yours and you’re the operator you’re everything, and you’re communicating with the manager and doing all that.

That’s the story. The partner you went into was he more sophisticated operator experience with this stuff. Nope. We were both just interested in doing it. Had done like the kind of a Academy mobile home park bootcamp stuff. Exactly. Just pretty much just fired up newbies and dove in.

And the person we bought it from was super helpful. And that was probably the easy part honestly, we had that person helping us and they had tons of properties in that area, they just held our hand on it. And we got go on that way. And yeah, that was the story.

I will say like that the mobile home park education out there. There’s only one group that does it, but they actually do a pretty good job of actually teaching it to you. It’s a shame that there’s a plethora of multifamily crews teaching it but they only teach out how to buy the properties.

None of them actually teach you how to operate it because a lot of them have been operated them thing or own rental or own multifamily in reality. But I think Frank and Dave do a pretty good job. Yeah, you get a lot of operation stuff and they’re available to you, and it’s it was good.

I felt like he showed up with stuff. He just, I, yeah, it was like maternity thing. It was like once it was super scary and then we did it with the mobile home park too, it was like now we’re in it. However many thousands of miles away doing it. Both of you guys are remote?

It’s remote and he spent a lot of time on the phone. The business exists inside my phone? Did you guys know each other or you just happened to meet up randomly? Yeah, meet up randomly! That’s crazy! It’s just powered out and have been so two years in now over two years of doing it and we’re thankful for our manager.

Be cause it’s been a crazy year what really no desire to travel there right now. It’s just spend letting a check along that’s as we can given everything going on and still demand as far as that goes.

How many times did you visit that property?

Once I’ve only ever been there once. The weekend I bought it and I can say that crazy. We got a good manager. She managed a ton of the properties of, or three or four of the guys properties that we bought it from a regular human. We learned our lesson actually right off the bat.

Hiring somebody that was living there in the park. That was one of the low-income tenants. It was a lot of drama that we pretty quickly realized was a mistake. That’s what’s hard with mobile home parks because there’s not that infrastructure, there’s not a plethora of different third party property managers in that asset class.

The two you guys would have had the gun around and interview specific people have trained up on a day, which is hard. Exactly! We’re lured in by the money and doing it. It seemed great and it’s been fine.

It’s a learning experience but it’s pretty time consuming. And for where I’m at in my life, it’s just not the right time. Like I say, it is for sale we’re trying to move on from that and do some other stuff passively. Okay. How much money do you guys have tied up in it and get leverage?

I have about 225 tied up into it for me and I’m hoping to chat with you about deploying that.

You didn’t really make money on this? This is just got your original, down payment back out. We’re not, it’s under contract to sell. We’ll see how, in the end we should make some money, when it’s all done, I’m not going to say what that is until it’s all done.

We need to speculate on it now we’re talking taxes. We need to know. It’s 50 grand or something like that? Oh, it’d be more like about 70 grand. Okay. Here’s what it would be, but I can work with that. Not much. And then maybe you took some depreciation too throughout the couple of years.

I don’t know, maybe 80 grand capital gain plus depreciation recapture. You’re thinking. I think so. You’d have to speculate on that a little bit. I’d have to look back to read that. Okay. A lot of syndications, they’re going to get 50 to 70% of what you put in as passive losses to offset that right away. We can talk about that in a little bit. Like the turnkey in Memphis, how’s that guy going? It’s just smooth. It’s funny. And a super smooth we had the glitch this year with COVID itself.

The person lost her job. It was like a half payment one month and then I got, everything back the next month. It’s been super smooth. Far I’ve had a couple of patients it’s been. It’s a big operator. I’ve been tempted to sell, but I’m like, I don’t know why I would deal with it.

Just selling it. I don’t know. I guess I couldn’t do it a sec. I’ve only had it for four years, so I’ve just been paying interest or it’s the wrong end of the amortization table. I wouldn’t sell them until you’re tapped out on deployable capital and then look to sell it.

It’s not going to be a lot of money there. Yeah. And if it’s work, if you’ve got a good tenant, that’s gold, right? The good tenant is a big thing, but the search to get there is above the cost of the road to get there. Let’s put that on this tab right here, there’s like a deployment plan.

You can put on here what you’re going to sell to get funds and how you’re going to deploy it. That’s how to use this tab. Okay. But I would say. If you have any other liquid cash that you want to invest, or as we start to transition more into what’s the deployment plan now. The deployment plan is going to be the funds for the mobile home park right now.

I have cash sitting around that I’m wondering if I shaded this 45,000- ish cash that comes back in that’s really just the money coming back in from my investments. I could sit on that or not. I’m trying to decide if I should put that like in AHP type deal and I just don’t know how liquid they are.

You’re get the money back out a couple of months to two months. The other thing is there’s always the loan from my 401k, you can always do the 50,000 from that pretty quickly too. Probably faster than getting that money at AHP too. You are running a little fat here on liquidity definitely. I don’t think you need that much, maybe 20 or 30 grand, but yeah, I think that’s where a lot of conventional financial advice is, you need X amount of expenses.

You don’t really need that. If you are able to get it from a credit card line or take it out from your Roth IRA or IRA. You know that we’ve got to get your good to get your money in the game. You’re not $2 million stimulant dollars a year. No, I can flame it. Yeah. I’d like to get it moving. Oh, actually a question I had though for you, and I think as far as deployment, I was thinking about selling the note that there’s two notes up there, just up the page a little bit.

One of those is a, is it a self-directed IRA? It’s fine, but the $30,000 note originally, now it’s 25,000. In my name coming back to me, it seems like it might be better off deploying that into a syndication or something, instead of just income.

That’s taxed, like regular income. It seems like a better option to move it out of there. Sell that and move on and put it into a syndication. Yeah. If you’re only making 9%, age does everything for you and both of my ordinary income. Not saying you would go down one specifically.

I would say, correct me if I’m wrong here, but invest the mobile home park money 200,000 there. And then either the note or you’re gonna touch any of this, the stock stuff, or are you going to keep that where it’s at? Right now, I’ll probably leave that word is other than I may I have the ability to pull that $50,000 loan off my 401k.

Where seemingly unrelated question. But this ties in, what is your adjusted gross income around as a household? A 125. Okay. You guys don’t pay too much taxes. Now, you guys are under the 300 threshold.

This year will be quite a bit different more. We bought a business last year that has got quite a bit of income. We’re trying to get all of our books handled right now. I can’t give you an exact number, it won’t be a crazy high. It might still be under 200.

Next year, will the business do the same thing? We’re going to try to make sure it does. We have plenty of things that you can buy. We’ll keep it down. We’re pouring money into infrastructure right now. We’re we have enough expenses. I think that okay then to zero.

Yeah, the zero that income out. And that’s the goal of the business, right? On taxes. Okay. I’ll leave this alone. You can incorporate in as you feel comfortable with. I would think since you’re not in a high tax bracket, even with the business to take it out slowly would be the thing to do.

If you’ve heard me multiple times, I don’t like these types of retirement plans because you’d rather pay to taxes now. Taxes growing up. Your tax bracket is lower now and then you don’t get the passive losses that play that game from this stuff but if you take the character. Oh yeah.

Okay. You don’t have to decide now, but I would say, maybe think about just leaking out 20 to 50 or a hundred grand every year. Through like a 72 T thing? Or how would you say doing that? No just cash it out. Yeah. Okay. But I’ll just let that stew for you right now.

We’ll see. Exactly. Yeah. That’d be like a chat with the tax guy. No, it’s not tax for the tax guy. It’s a little right here. You don’t have to talk. No tax guy tell you about. It’s which way do you want us to stir the ship man? Yeah. The tax guys down in the engine room.

I’m telling you what happens if you do it. I’m telling you what’s going to happen. We all know. Just don’t worry. Your tax bracket is basically, and how much you’re going to take. And then just wait out from there is what you’re saying. But that’s more of a strategy thing, right?

You need to do the math on. All right. If you take it out and you start investing in cash, what will the implications be? Will you be making more money there? What kind of losses will you be getting? Will there be cost segregations done? That’s what you need. That’s your job.

That is not the job of your CPA tax person. Big thing. It’s your number one expense in life. Got to know what that is. That’s not the job of your tax guy. That’s unfair for them to know. I’ve definitely heard you say that before. It’s getting up to speed on that stuff is really a goal this year, just to be dialed in.

Good questions ask. Yeah, it’s pretty simple. I would say come to the bubble or get around the other people in our tribe. You’re not going to get it if you want to pay somebody to tell you how to do it. I think that’s costly. You guys can’t afford having office consultant under $5 million net worth.

But you’re gonna have to get this from your peer group of other high net worth accredited investors what they’re doing. I would highly recommend that and just getting around other high net worth people is a big thing and yeah not on the bigger pockets. That’s for sure. So I would think about that maybe taking out maybe 50 or a hundred every year and put it to investments, but you got a backlog, you got the mobile home park things first.

Ideally with the mobile home park thing, the way it’s going to work is sell it in the beginning of the year so you have the entire year that builds up your passive losses. Follow up, do you know how much passive losses do you currently have just built up? I don’t know, go look at your form. I think it’s 48 25.

No, it’s not. I don’t know. It’s 48 something. Okay. But if it is a form that has all your passive losses on it, your federal depreciation schedules. Okay. I would ask your CPA for that but they don’t give it to you or they screw around with you. They’re playing games, cause this is a big game that CPA’s played.

They don’t like to give it to you because now they know you’re shopping for a new CPA and that form has a lot of built in formulas and calculations in the spreadsheet. You might have 20 or $30,000 of built up losses, suspended, passive losses to offset that mobile home park sale. Again, I think you said you’re looking at maybe an $80,000 capital gain plus depreciation recapture.

So if you already had $30,000 to spend in losses, now we’re only looking at 50,000. Okay. Different. Okay. Yeah. Okay. So if you went into a normal syndication that does 70%, 80% leverage and does it cost sake and 50 cents of every dollar is, Put back as bonus appreciation. You’re one, you’d knock that out with a hundred thousand dollars investment.

Okay. But, so that’s how you that would probably knock out your, what you’re going to get on that mobile home park. Things move super slowly, right? As you’ve seen the mobile home park, it’s probably going to be quarter two when you actually sell it. But then you have to go in into another deal before the end of 2021 to kind of book that, to offset it.

Yeah. And in your opinion, given where I’m at, would you deploy do that in multiple chunks at a different deals? If they’re available, a hundred thousand electric 5% rule, right? I don’t want you to put more than $150,000 into anyone deal. You. You didn’t follow that role on the mobile home park?

No, I did not. You at 20% of all in it, probably back then your net worth wasn’t as high. So yeah, that was a, that was breaking a Cardinal sin, my friend, but Hey, it’s real estate. It works out well, most of the time. Yeah, it’s true. It’s a forgiving asset class. Slow moving and forgiving.

Yes. Deploying into multiple things this year, that would be hopefully if everything, hopefully deals are available and able to get that deployed. It’s just like when I sold my in 2018 or 17, I sold seven or eight rentals for our capital game of $200,000, but I had gotten two deals and I had several hundred thousand dollars of passive losses built up.

Have you sat the offset, so that essentially doing the same thing here for you,

Get that done. Then worry about the retirement funds, that’s okay. That’s definitely what I’m thinking. I don’t want to freeze stuff up. And like I say, I have the cares act distribution, which isn’t a huge cause you can chop that up into three pieces.

That’s not going to add much. To our bottom line this year, I tell it to you now, because you got to decide in the next few months, whether you’re going to really do this crazy idea that Lane’s talking about. you’re going to take out 30 to 50 grand every year, 30 to a hundred grand every year for the next three to five years.

It’s a slow thing. This note that’s not in your retirement funds? I would unload that as you can, just in the same style is unloading the turnkey. Like maybe just throw the turnkey on Roofstock they allow you to list it with a tenant in place.

Okay. Okay. You’re not obliged to sell it. You’re still making cash flow on it. And then same thing. Like this note, you can sell it while you’re collecting payments at the right price. What I would recommend. You don’t want to really sell this in the next few months, but just put it up anyway.

Just put it up at a, make me move price and see what happens. Yeah. The turnkey or the a note. You mean both of them. Okay. I’ll have to look into that. And then. Yeah, they squeeze down the liquidity. I don’t think you need as much. Yeah, I can definitely deploy that. Yeah. I don’t know if you want a little bit of a cashflow stream.

Maybe you thought 20 grand and HP or something like that before they, their current fund goes away. Pretty straight forward, I think. Yeah. There’s not a ton of moving parts right now. Yeah. It’s just, yeah. We’re waiting on kind of a load of capital to come in and then nothing crazy to do right now.

I don’t think unless I get that. We’ll move forward that your highest and best uses at your day job don’t get fired. I don’t know what all the business is, but it’s the business of a capital intensive business. You need money to do marketing or. Not at all. Nope. It’s a local service business.

And we bought it, it was already cash flowing. An owner finance deal. There’s not a lot to it. It’s not capital intensive at all. We make money. If anything is just time, it’s time, that’s all it is. Yep. It’s learning.

We’re going to build it up to turn it into an asset to try to possibly. Sell that to you at some point here. We’re learning the ropes of that business now, too. I guess we’re glad for it. Mobile home park now, service business, just learning. Yeah. That’s, you guys are in a good spot.

You got a day job. That’s probably low stress makes pretty good money. Yeah, recognize that you can not put your heart and soul into it and put it somewhere else and make money there. And that’s your, all your highest and best use to put your overflow time into the business? I think the only thing for you guys is maybe this is maybe years down the road, but I don’t own that service-based business.

You can turn it into some kind of passive cashflow stream as opposed to right now it’s ordinary, right? It’s a business. Yeah, but maybe you, when you reposition it, you stabilize it, you sell it off to somebody, but you retained investor rights. You find some young whipper snapper who wants to trade his time for money and you just, you maybe you’re still working on it.

Don’t get me wrong. But you change your compensation from, An ordinary income business to more of a K one passive stream. So that’s a conversation you could have with your CPA, but, follow me here. Yeah, you’re the one having steering this conversation. They’re not going to tell you, Oh, Chris, we should turn this into passive income so we can take your passive losses that you have a glut of and offset that they’re not going to come up with that stuff.

Yeah. That’s not their job. Their job is not to transform your life

okay. Yeah. I definitely, I need to get more education around that and, just to know what the right question to ask my dad at this point that’s certainly a goal this year. I don’t know if that’s possible in your business, we have some Doctors, they own a medical clinic and that’s how they do it.

So they changed the color of money from ordinary the passive. So now they’re able to use the passive losses to offset their ankle and they don’t need to be real estate professionals to do that. Okay. Yeah. That’s, the goal is to, is you nailed it yet, finding that young whippersnapper and all that to get them, it would be a good,

it’s not a high tech job. And who cares if you’re getting paid top dollar, I don’t know what your salary from that, but like maybe you were making a hundred grand a year from that business who cares if it’s 50 or 60,000 young worker stuff, it doesn’t get the game. It doesn’t get the perfect picture you’re getting paid and the passive income color, which you can drive down to zero.

What’s your other stuff going on? Yep. That’s the goal. We’re just building it right now. It’s slightly more time consuming. Does your where your guys’ AGI is getting real, super professional status, I don’t think is a big deal. You don’t really need it.

That’s more for the guys above 300,000 a year. Does your spouse work? She runs the business. She’s the sole owner. Okay. We could make, use the owner and free her up if you made a lot more money at your day job, if some people are listening, that would be a move that we look into, but for where you’re at, the way you guys are doing it is optimal.

I think. Okay. It’s just where we are now. We’re, it’s a, it’s learning as we go and seeing what works best for us. And this is, best right now. It sounds like you might need a new CPA,

we’re in the hunt for that right now, actually. There’s a section in the e-course currently that has how do you interview a new CPA? Okay. But I would ask them in your situation Hey, I have this business. Can you tell me about, changing this money from ordinary income to passive income and how that would happen?

What if I were able to do this, how would the passive loss would I be able to use my passive loss to offset my passive income for my business? That’s the main point of doing that is to offset the passive losses from your investments. Is that what you’re saying? You want to ask him that at least that’s my style.

How you ask him not a stump, the chump question. Oh, tell me about non conservation easements, right? But you want to have a dialogue with them and just feel them and see if they, you can work with them. if I have a lot of passive losses, how can I use them?

They’re like, no, you can’t do that. That’s a business. You can’t do that. Then, you’re not working. It’s somebody who’s open-minded who’s creative. Maybe they just don’t have the experience. Okay. I think that’s one way you can ask, that’s the least of my style in our mastermind.

We have people do it different ways to vet the CPA, but that’s my style. It’s I go in there, how can I use the passive losses to offset this cup right here? They’re like, Oh, you can’t do it. That’s not someone who you want to work with.

We want somebody who’s Oh, okay. So this is ordinary income and you can’t offset it with passive income service professional. If we were able to change it from ordinary to passive, right? Like your notes, for example, that’s yeah. Yeah. So to have that intellectual conversation with your CPA is unfortunate.

That’s maybe you have to get up to that level of yourself too. I definitely need to get there, but it’s I feel like I can have a conversation with them. I think that’s what’s hard for a lot of CPAs. Most of their people coming through the door or totally blew this up and stuff.

They’re like, Oh my goodness. Another sucker. You’re only going to have to do 401ks or self related Roths. Sorry buddy that’s all you got. They know you don’t have anything else cooking, just like the average American out there. Right! Yeah. I’ve been on the hunt really for somebody for a while.

At least gonna ask me good questions too. And I’m willing to pay for it for a while for sure. We’re gonna figure that out this year. Cool, Chris, I appreciate you doing this. I think a lot of people, follow the little journey out to mobile home park.

Yeah. Glad to chat with anybody about that. Yeah. There’s a lot of stories. If you guys haven’t please check out the website and join our clubs simplepassivecashflow.com/club and we’ll see you guys next time.

The Practice of Groundedness with Brad Stulberg

https://youtu.be/7cWGKbyouhk

hey, simple passive cashflow listeners. Today, we are going to be talking with Brad Solberg, who is dropping his book It’s releasing this week, the practice of groundedness. We’d like to take a break from the real estate investing tax legal.

Infinite banking, which by the way, we’re also dropping the infinite banking e-course this week. If you guys want to pick that up, go to simplepassivecashflow.com/banking. A lot of you guys are high paid professionals, and what also say are really type a personalities , with the path to financial freedom, you guys realize that it actually is pretty simple.

But how do we create a well-rounded life with happiness and something that doesn’t pressure our soul, which we’re going to talk about today. Brad, thanks for coming on.

Yeah Lane thanks for having me on the show and a chance to talk to your community about the new book.

Talk to us about how you started down where did the book come from?

I like to think about this topic using the metaphor of a mountain and when most people see a mountain, the first thing that they notice is the peak.

That’s where their eyes go, everybody glances up. And the second thing that you’ll notice, particularly if it’s a striking or really prominent mountain is the slope, the steepness of it. No one ever looks at a mountain and says, wow, look at the base of that thing. Yet without a strong and solid base when rough weather comes, the peak and the slope, they can’t hold. They’re not stable. The mountain degrades over time. And in my own executive coaching practice, what I realized I worked with so many very high performing entrepreneurs, executives that have spent so much time focusing on the slope or the metaphorical peak of their mountains and not enough time tending to their foundations or that base.

And as a result, even though they experience great conventional success, they often feel a lack of fulfillment. I call this If-Then Syndrome. They tell themselves a story. If I get promoted into the C-suite, then I’ll be content. If I hit 2 million in saving, then I’ll be content. If I buy this house, then I’ll be content.

And what they find is that once they get to that place where they thought that they’d be content and fulfilled, they’re not. They still want more. Some of this is just. You’re driven. You’re high achieving. You want to strive for greatness, but if that striving for greatness gets way too unchecked, then you don’t have fun along the way.

You can’t experience joy. You constantly feel empty and that ultimately led me to explore , what would it look like to pursue success in a way that is more grounded? Hence the title of the book, the practice of grounded-ness. What does the latest research, what do you ancient wisdom traditions?

What do people that really practice this have to say about building and maintaining a strong foundation? A strong base on top of which any striving can . And the answer, it’s paradoxical. It’s not that you stop striving. You don’t become a monk in a Zen monastery, completely disconnected from the world.

What happens is you still strive, but the texture of that striving changes. It goes from a place of compulsion or need or fragility. To a place of fulfillment and strength. And that’s the practice of groundedness. And then the book, obviously as well, how do you develop this quality? What are the principles that make for a healthy foundation?

And we’ll dig into that a little bit more, personally, like I’ve literally done that in the last five to 10 years where, I have a journal in the form of a spreadsheet of course where I’ve written down, like when I get this, I will be happy when right. And every six months I’ve written stuff down.

10 years ago, it’s funny. It’s I’ll be happy when I have three rentals or 11 rentals, or when I, invest passively in my first invest our apartment. And then it was like moving away from Seattle to Hawaii or having this wanted like a C class Mercedes car. That was a big thing for me.

If you do this, you have to write this stuff down and you don’t just go on autopilot in life. You start to realize that when you put that flag in the sand or, summit the mountain one step over a period of time, you start to realize it’s endless maze, or it’s just a constant path. I would encourage everybody to go through that exercise. It’s probably going to take you guys a handful of years. You guys are really smart and like philosophical about this stuff. You guys will figure it out and maybe six to 12 months. Where are we go from there, Brad?

An exercise in the book in a huge part of the book and it walks readers through this is to reflect on what I call your core values. So these are the things that you most aspire to that make you who you are, or perhaps even if you really admire, look up to someone else, these are the things that you admire about them.

The qualities and characteristics that you see. And want to embody yourself. It could be things like health, creativity, love, family, community, vulnerability, presence, authenticity on and on. You pick between three and five of this. Then it’s super important to define them in very concrete terms.

Lane, let’s say that you tell me a core value of yours is community. That’s really ambiguous and broad. What does community mean to you? Give me one or two sentences and I’m asking you you don’t actually have to do it right now, but really get concrete. What does community mean? Let’s do the exercise.

I wouldn’t say community is a big for you, maybe like honor. Okay, great then how would you define it? Not having like spineless people that just take over on you and I want to personify that, right? I’m not just doing things for money or because it brings me, money in the bank, but do things that Sprite at the end of the day.

If you think about your day to day life or your week to week or month to month life, what practices can you engage in that represent honor?

Do things that make things better at the end of the day for majority of people not just driven by the bottom line, thinking if you can, and I know I’m putting you on the spot here, get even more concrete. What is that? Give me an action that does that.

I mean find people in my network and cut people out that don’t personify that. But then you have those people in your network how are you honorable with them? Okay it’s more for things I’m doing personally?

What are you doing? Yeah.

Trying to figure out how to help them, whether investors or employees.

I would push you to get even more concrete and maybe it is three times a month help an investor or an employee in a way that has nothing to do with your own success or bottom line. That then is how you practice honor.

What the book asks you to do is identify three to five of these core values, get really concrete. Like we just did into practices and then you show up and you practice those values consistently. Start at a very noble or honorable core value, and then you get all the way down to habits you can practice.

And that helps ground you in the present moment because regardless if you get that C class or you get that house or you get that passive income, whatever it is y ou can show up today, act in alignment with your core values. And it’s really ironic. We think in so many bullshit self-help offers tell us this, that we need to be like super motivated and inspired to get going.

But what all the latest scientific research says is actually the opposite. You need to get going to give yourself a chance to feel inspired or motivated. Don’t have to engage in positive thinking or self-talk, or get all hyped up. You just show up and act consistently in alignment with your core values.

And I argue that’s ultimately the key to building this kind of grounded foundation upon which you can strive. There are two ways to strive for that c-Class one is without this foundation and you get there and you might be pretty stoked for a day, maybe even a week, but then ultimately you feel empty.

It’s like what you said, crap. What’s the next thing. The other way is to strive by showing up day-to-day consistently acting on your core values and then the C class you enjoy it. It’s a nice thing to have, but it doesn’t leave you immediately seeking the next thing because you’ve built a steady foundation that day in and day out.

Cause that C-Class gets old and a little dirty. Researchers call this, the arrival fallacy in the arrival fallacy is just that. So many people myself at times included, this is all humans, we tell ourselves a story that will arrive when something magical happens. But the goalpost is always 10 yards down the field.

We never really arrived. We’ve got to learn how to be able to embrace the process of going for outcomes that we care about because it’s the process that makes up our days. It’s about also you could argue it’s shifting from an outcome oriented mindset to a process oriented mindset. And if you nail the process and you enjoy the process, the outcomes take care of themselves.

Whereas if you’re so fixated on these certain outcomes, it can cause you to become pretty anxious and restless.

And I think that’s exactly what I do, when, like whenever we do a deal, I personally find like one little stupid thing. I want to buy on Amazon or like a little reward to get me to that next goalpost.

I also do this with my teams. I’ll tell them like what’s the goal. What’s something that you guys want on Amazon again. Cause it’s easy. It’s like when we hit a goal, you’ll get that. But yeah, I guess what you’re telling me, that’s the wrong way of going about it, right? That’s the achievers.

Again, I want to be clear. It’s okay to Buy a nice watch, buy a nice car, whatever it is . This is not about not achieving or not chasing goals. I think what I am saying is it’s about not getting so fixated on those goals and instead, figuring out what can I do today to show up live alignment in my core values, how can I be present?

How can I be patient? How can I be vulnerable? How can I build community? How can I do these things that I know are going to be the solid foundation? That are there for me. And they keep me strong, regardless of what’s happening externally. This is the stuff where your portfolio absolutely crushes out of your mind performance

and this foundation provides you gravity so you don’t completely go off the rocker and make a mistake. Take a risk that’s unnecessary. The flip side is also we go through a recession portfolio tanks. There’s some kind of external event that you could never imagine. It’s this foundation that holds you up during those difficult times.

And again, the whole argument of the book is so much about the current culture tells us to only focus on the peak of the mountain or the slope. Again, this is the metaphor for our own lives and we neglect these foundational principles that are really the most important thing that support everything else.

What is another common value that you see in, what are maybe a few habits that you’ve stumbled upon that you see a lot of people? I think one that your listenership in particular Lane will resonate with is taking something that is very common in sound investors and applying it to all of your life, which is don’t go for like big heroic efforts.

Don’t try to hit home runs just consistently put the ball on in play. Small steps consistently taken over long periods of time, lead to big gains. In investing, this is the rule of compounding. But the rule of compounding is also true for developing relationships, for taking control of your health for better nutrition, for really any kind of daily practice.

Again, the current culture says. You should find a way to hack your way to greatness. There’s overnight success, take 19 different supplements and you’ll be Superman or superwoman and none of that’s true, of course. The real way to get long-term gains no different than investing is to be patient.

And take consistent small steps over time. It doesn’t mean that you shouldn’t adjust your strategy as you go, but if you try to swing for the fences, you often strike out. So it’s much better to just have small, consistent gains. That’s how you build a durable base. So that’s one key value of groundedness.

Another key value of groundedness is this notion of accepting where you are to get where you want to go. So often we don’t see clearly the current situation that we’re in. We put on our like rose tinted glasses and we tell ourselves a story that it’s better than it really is, or it’ll quickly change, or, a whole bunch of these kinds of stories that dilute ourselves from actually seeing reality for what it is.

And it feels good in the short term, but in the long-term it’s detrimental because if you’re not clear about what’s actually in front of you, then you can’t take wise action to impact. So there’s a practice in the book around self distancing, because so often we’re better at giving advice to our friends than ourselves.

For areas of our lives that we’re really struggling with the exercise is pretend that a close friend is in the exact same situation as you. What advice would you give that friend and then go do that thing so often. People give advice to a friend that’s very different than what they’re doing it’s so simple, but it’s hard.

The example of this is I’ve worked with some elite athletes and they hate being injured and I’ve coached elite athletes that are literally limping out the door with a sprain hamstring to go do their workout because they don’t want to miss it. And I say, Jim, if you saw a training partner, limping out the door to do a workout, what would you tell.

He’s like, I tell him just rest, take one or two more days off. So you don’t blow up your hamstring. And then it’s why are you limping out the door to do a workout? Like you need to follow that advice yourself. Acceptance seeing situations clearly, even when you necessarily , even when you don’t necessarily want it to is another key principle.

Community, we talked a little bit about this, but investing in relationships, realizing that if you are going to take this process view of life much of what makes a process fulfilling and enjoyable is the people that you’re along the ride with. And I think what happens too often with high achievers is we’ve become so focused on what’s out in front of us.

So focused on efficiency and optimization that it cannibalizes the time and energy that we need to build those close relationships. So it’s a little bit about reprioritizing, the role of community in our lives. Obviously COVID has made that challenging over the last year and a half. But I think we’re seeing even more so just how important it is because we’re realizing like, wow, it’s really tough to be isolated.

So those are just a few other examples. That community thing is a big importance and especially in investing. Lot of people , they listened to the podcast while they’re doing chores or just stay in their boxers on their computer.

These are the guys who go through this syndication e-course . But the whole point is you get to know a little bit baseline so that if you do happen to find other accredited investors, you can build those relationships. And that’s the community aspect of it.

And we do a lot better in communities too.

We like to think and tell ourselves a story that we’re the center of the universe, but we’re actually not. We’re just a little speck and the people with whom we surround ourselves have an enormous impact on us. So the best way to be a really thoughtful, patient, consistent investor is to surround yourself with really patient thoughtful, consistent investors.

The best way to become a great athlete is to surround yourself with other great athletes. The best way to become a loving patient parent is to develop relationships with other loving patient parents. And again, I think what happens in our like outward focused optimization hustle culture. Because we spend so much time pushing forward for these things out in front of us, that we neglect the time and energy to build those communities.

Going back to the whole community thing your network is your net worth is what we always say. I still have free onboarding calls if you guys want to get signed up for that fees to go to the website I think it’s simplepassivecashflow.com/contact but we asked you guys to join the club first, do your pre-work first before booking that call with me.

Some strange people that they’d like to do everything by themselves. They’re most of them are introverts office, but these are the guys like investing in notes and private money lending and there they stay to themselves. To them, they think 10 31 exchanges is a good idea.

Their strategy is just whack, right? And there’s a huge difference between those people like that and people who get all these other investment constants that we get, the biggest difference is like those people don’t interact and play nice with others, from somebody who sees a whole bunch of different people, the successful people and the people, they might have a semi high net worth, but they’re just doing it the wrong way.

They’re driving around with a handbrake on. It’s the ability to who you know, and collecting the best practices from your network so just another plug for community there. But Brad, your kind of mindset I like I really personify with the stoicism type of mindset.

For those you guys not aware of that. I’ll let you define that for us.

Yeah. So the Stoics, it’s a group of thought that came out of the ancient Roman empire. And it is very much one of trying to cultivate equanimity. So inability to absorb life’s highs and lows and counter to common belief.

Stoicism is not about not feeling emotion or not showing emotion. I think a lot of people are very misconstrued and confused about that. Cause we hear oh, you’re so stoic. You don’t show emotion. Now the Stoics had tons of emotion, but what they realized is that the human life is going to contain all kinds of highs and all kinds of lows.

And if you’re going to have skin in the game and you’re going to care deeply about pursuits. Eventually those pursuits are going to break your heart cause they don’t always go your way. And what stoicism teaches is that you take the highs and you smile and then you kiss them goodbye and you take the lows and you let them hurt you.

And then you kiss them goodbye because everything’s impermanent. There’s this quote at the start of the book from a stoic philosopher Epictetus that said people complain that their hands and feet are hurting in callous. Of course your hands and feet are hurting if you’re going to live a life and you’re going to use your hands and feet, then your hands and feet will become hurting in callous.

The point being that there is no free lunch. And if you want to have skin in the game and you want to put yourself out there, it is going to be distressing at times. And we have to accept that. And if we refuse to accept that, what ends up happening is we don’t take risks. Our lives become smaller, not larger, or we dilute ourselves and we’d pretend that none of that bad stuff’s going to happen.

And when it does, we get totally surprised and completely blown apart.

Another stoic lesson that I like is the obstacles the way, when things are getting tough, that should be a good sign for you that usually makes most of the other competition give up. And when you get past that obstacle, things are going to be much better for you doing the lower competition.

Look, I talk about being at the point of discomfort. So growth comes from being a little bit uncomfortable. If you’re always comfortable, you’re probably not growing. This is true in any domain of life. So it’s really important to identify what areas of my life do I want to grow in. It could be anything from lifting weights, becoming a better investor, being in more intimate relationships.

Learning more about NASCAR, you name it. And if you’re completely comfortable in those areas of your life, then you’re not setting yourself up for growth. Now this isn’t about jumping off the deep end that just leads to anxiety. That’s no fun. It’s about finding just manageable challenge is what I call them in the book.

Things that are adversely slightly outside your comfort zone, and then going and pursuing those things. Again, you don’t want to do this in all areas of your life at the same time, either because that can be overwhelming. But for those select areas that you do want to grow in, it’s so helpful to make yourself a little bit uncomfortable.

I see this play out and I see people get a lot of success with this especially like most of our listeners are introverts. They don’t really get it. They’re a little scared of people. They come out to the Hawaii meetup and the retreat and they meet their tribe.

More introverted people that are interested in these types of financial topics and their financial fat fanatics. But yeah, I think a lot of you guys, I don’t want to pigeon hole the audience, but I think a lot of you guys out there do subscribe to the stoic philosophy and I think it’s your jam.

I do think there’s a lot of misconception around introvert too Lane. I think that introverts and I’m an introvert. We get this wrap is being like very much wanting to be isolated and left alone. And what the research shows is that’s not the case at all. What introverts generally want is really deep connection in focus and conversation.

If you go to a huge party, which most introverts don’t like doing, it’s hard to have that, especially if it’s a deep party where you don’t know anyone. You’re not going to get that one-on-one intimacy or finding your tribe. Whereas most introverts thrive in small groups of like-minded people. So it’s not that

I’m either in or out it’s do I thrive walking into a room with all kinds of people or do I want to be a little bit more deliberate and intentional about how I build that community? So for introverts is kind of like, you know, you’re getting out of your comfort zone and when you feel that typically is a good sign, And so the other two that I wanted to briefly go over Brad, if you could help us explain you also follow the ancient wisdom of Buddhism and a Taoism what are the kind of like the two big takeaways from those two, for those people who aren’t super familiar.

Yeah. So like stoicism, a huge takeaway from Buddhism is this notion of impermanence, which is the everything changes. As an investor, it’s really important to remember that because it prevents you from clinging to the highs and then being really disappointed when they’re no longer high or getting so caught up in the lows that you become despairing and depressed.

So you could sum up Buddhism. In two words are the teachings of Buddhism, which is everything changes. And. I actually think that’s really empowering because what it means is that the future is not yet determined. And if we can build again, the strong foundation of grounded-ness to support everything else that we do in our life, the stuff that comes and goes and changes will be able to hold all of that.

See it clearly, and then take wise action as a result. And Taoism is very much about paying close attention to what is going on around you. Ancient houses and they called it the way and the way is the flow of the universe. And what Taoism teaches is that we are always operating in harmony with what’s around us at the highest level.

Alluded to this earlier, you never really go at it alone and paying attention to what’s happening around you is so important for yourself. And I think all of these ancient wisdom traditions, they really point toward the value of I’m going to sound like a broken record, but accepting and seeing things clearly so that you can take wise action being really present

that’s a part of seeing things, clearly paying close attention. Patience which is letting things unfold on their own time. Taking small steps for big gains, realizing the consistency compounds, not trying to always hit home runs, but being really deliberate and just walking a long path, having a long view and vulnerability, which is about putting your skin in the game it’s really easy to fake it and be too cool to care.

And I believe that’s a protective mechanism because you’re scared to actually try something because if you try something you could fail and you have to be okay with that.

Other than picking up your book, the practice of groundedness on Amazon. Brad Stulberg , B R A D S T U L B E R G, any other last parting thoughts?

I really appreciate you having me. If you all liked what I had to say I’d be honored if you read the book. I tried to write it in a way. I guess this will be my last thought. I wanted to close the knowing doing gap in this book

so many books are all about knowing. So they help you understand the topic.

Which is great, but they miss the doing part. Which is okay, now that I understand these principles, now that I understand this philosophy, now that I can express this mindset, how do I actually show up day in and day out and implement it.

In every single page of this book I checked against the criteria of, will this be valuable for someone to actually do something in their life that is productive and different as a result.

And I think that for anything that you read, whether it’s my book or something else. I would really push yourself to realize it’s one thing to know and be able to talk about something. It’s another thing to do it and practice it, which is why the title is not just groundedness. It’s the practice of grounded.

Yeah, thanks for thanks for doing that because that’s, it drives me crazy. And why don’t I try not to read too many books? Cause like they like tell me all these stupid scientific studies, like what’s the one, the power of habit. That was a horrible book. It just told me all these stupid like scientific studies and nothing like nothing practical that I could implement.

It just wasted my time. I hope that if you guys read my book, it’ll be a very different experience because I tried to write like the kind of anti at that book. I want every single page to be hey, here are concrete practices that you can implement in your daily life that will make you more grounded.

And I think that’s maybe that’s a type a and me like everything. I do everything I spend my time on. It should create some kind of habit change or actionable item if it isn’t, it’s just wasting your time. Yeah. But I need to be more grounded. Shut out a little bit too. You’ll read the book and hopefully your whole community does too.

I appreciate you having me on the show today.

Thanks, Brad. Again, the practice of groundedness and get out of your comfort zone guys. Join our community simple, passive cashflow.com/club. I don’t know why you haven’t signed up yet and reach out to me.Book your onboarding call.

I won’t fight. I’m a real person. So many people have been listening for two to three years. And it just finally now picking up the zoom call and talking to me. Those are your action items. Pick up practice of groundedness, read practice in pick up the phone and call Lane, or schedule your onboarding call. I won’t yell at you guys.

I promise. All right lane. Thanks for having me on. Thanks everyone for listening. And if you pick up the book, I appreciate it. Take care of everyone.

September 2021 Monthly Market Update

Welcome everybody. This is the monthly market update for September, 2021. If you guys want to check out past episodes, you can go to simple passive cashflow.com/investor letter, and we are going to be going over some teaching points and some articles that I’ve stumbled across over the past. Some freebies for you guys, if you guys are interested in learning more about this thing, we’ve been talking about quite a bit, infinite banking from yourself.

What the heck is this? Why do the wealthy do this? Why does Lane say it’s not for people under a quarter million, half a million dollars net worth? Come and check it out on Saturday, September 4th from 9:00 AM to 11 Pacific time. If you can’t make it shoot me an email at lane@simplepassivecashflow.com. I will send you the recordings, but we’ll also be put a page for you guys together, which you guys can access@simplepassivecashflow.com slash banking.

And also my book is coming out. If you guys want to help me out with the review, should meet email and get you guys access to that. Just finished up the audio book. I know how you guys are, ” another book”. You can listen to it on two X speed and you can probably knock it out four to five hours.

What does infinite banking? Why do you do it? Well this is why we do it. Take an example somebody stuff’s a hundred grand in there. You create this phenomenal where you bake from yourself for infinite banking, where you now you’re able to take a pretty substantial loan against your policy.

Now you put that into other investments, such as syndications, private placements, rental properties should something happen in life you’re able to take the money out. That’s what that little cone comes in the middle of the road. You have your genuine income within the policy. The policy grows tax-free and that’s why we’re using the life insurance as a loophole here, guys. You also enjoy the benefits after asset protection with it being a life insurance.

And I, you stop worrying how to grow your wealth and worry about teaching the next generation, how to do all this stuff. If you guys haven’t met me before my name is Lane Kawaoka grew up in Hawaii, was in Seattle from 2003 to 2017. Got a couple of engineering degrees, but more importantly started investing in 2009.

2015, I had 11 rentals, but as of late, I’ve been more involved in private placements and syndication. Currently over 6,000 units now are working on our 37 38 project.

I also have a podcast, simple passive cashflow. And for those of you guys who like the shorter form quick tip podcasts can check that out. Quick tips. I think it’s quick financial tips from the rich uncle. If you wanna go on search that on iTunes, Google play.

But let’s have at it teaching points.

This is a chart of different cap rates in different markets. Now, of course, you could probably break down and take one market like Dallas in dozens of different sub markets and asset classes and different classes of assets, such as a, B and C D class . But this is just, comparing geographic locations San Francisco, New York, LA San Jose Portland, or have some of the lowest cap rates.

Which means is you don’t get the yields there, which also means that it’s a lot more stable. This is where a lot of the insurance companies will invest so they’re going more for capital preservation. But we as investors, we’re obviously not blind to the higher cap areas.

Some these are all major markets. If you’re in more of a tertiary market, that’s smaller, you’ll probably see caps on the five to 7% range. You’ll probably be talking to them for a pulled up ton at that point. These there’s different ranges of these markets the lower the cap, basically the means the more stable the market is.

But that doesn’t necessarily where the better returns are. Obviously, the places that we like to invest are in the middle of they’re good solid markets, but still good cap rates. So we can get yield.

For more information about this, check out, the guide at simple passivecashflow.com/vacation and we’ve got about 12 people checking in now, the live feed. This also gets put on the podcast form and the YouTube so you guys can enjoy all the pretty pictures and I have access to the comment feed.

If you guys want to ask live questions, as we go along, feel free to do so. Somebody told me this on one of our investor calls this past month Dunning Kruger effect. It’s a kind of starts off like this where you don’t know what you don’t know, and you realize that you don’t know, and then you start to hit a point and inflection point when you really start learning and eventually head office in a mastery.

Now, a lot of people, they still invest in their 401ks, Roth IRAs, and supposedly BofI ETS, that’s I say, you don’t know. This is like the 5 29. There’s just investment plans for the clueless, in my opinion. Get educated check out more of our content and here’s a text, the spade to be a joke.

You guys or gals are always trying to get your spouses to read that purple book. Rich dad, poor dad. Just tell them that, your ex stopped by your work today and then they’re going to get their attention. And then you hit them with she wanted you, or he wanted you to read rich dad, poor dad, happy face.

Anyway, moving on. The difference between sophisticated investors and accredited vestors really isn’t much. There’s a lot of accredited investors that don’t really know much. Typically sophisticated investors are more, but they have lower net worth . And that’s where we want to get everybody.

We want to get everybody to be speed semi-educated so that you can make the right investment decisions for them. Ultimately you guys own it. None of this in this presentation is supposed to be equal advice. If not, you’re an idiot, let’s face it. You’re going to take Eagle tax advice from some guy in the internet that happened to, use the tactics for his advantage.

You’re an idiot. This is just for entertainment. But sure you go pay a CPA lawyer, five, $600 per hour, most of those guys haven’t figured out how to leave their day jobs behind. One thing I wanted to point out this one when you have a lot of LLCs, you will get a lot of solicitations in the mail.

A lot of you guys will want rental properties are probably hit up with dozens and dozens of yellow letters, trying to get you to buy your house for pennies on the dollar, because they think you’re an idiot. I guess it works some of the time. Here are some correspondences I got from a LLC servicing company

and it’s confusing. I think when you first get your LLC set up, you get your registered agent and you’ve got the servicer, you’ve got the place your PO box goes to. It can be confusing and don’t forget the old people who solicit you to get those stupid posters that post the minimum wage that you don’t really need in my opinion. But who am I to say?

I think it’s important to check up on, where are these people saying any of these bills that do you need to pay these. One thing that tipped me off or what I got attention to was we see on this left side, typically spoof emails will not address you by your first and last name.

They’ll give you a generic name like you’re the same valued client. And then the first paragraph here is just scammy and they say, congratulations, it’s your company’s first. Our anniversary is time to pay your bill for your annual dues. I eventually found out that this invoice was legit, but I am going to use my other lawyer to just be my registered agent for me.

So instead of paying 350 bucks, I’m going to pay about $67 for LLC.

Another plug for learn how the wealthy bank from themselves go to simplepassivecashflow.com/banking to sign up for the free e-course and the live training this coming weekend. And you’re catching up this stuff late. Go ahead and sign up there so you can get you those videos.

Now, here is a flow chart that depicts when do you do a HELOC or cash out. Now, the reason why I put this in here is a lot of people realize that, yeah, I want to an alternative invest and get all that garbage in the 401k mutual funds. And maybe I’ve been doing some crypto, but that stuff is super risky at this point.

I want to invest in real estate and other alternative investing can take control over my financial picture. So you burn through your cash, right? Not many people have that much cash and I don’t, I’m smart. I have it in my infinite banking policy where I keep my dry powder, but for most people coming in, they don’t have that set up and they burn through their cash to invest.

Where do they go find their other, 30, 50, a hundred thousand dollars today? A lot of times it’s either going to be in their primary residence or the rentals or their retirement funds. Typically I would recommend people to go and rate the equity in their house. So their rentals first, before they go to the retirement fence, unless in some sense, some situations, the client will be like, I’m just freaked out about the stock market.

What you have good reason to be, because it’s all fake money in there. They’ve been pumping that into the system . We could probably debate this for quite a while. Now, this flow chart helps you choose whether it’s a HELOC from your home equity, which is cool because it’s reversible, right?

Should you not like to alternate invest? You can put it right back into the house. You don’t have to pay a lender that origination fee to get the cash out refinance, which is on the right side. The HELOC is sorta reversible the bad side of what the HELOC is that, if anything happens to the economy, the banks can pull those notes and pull the lines at any point where they cash out refinance you’ve pulled that equity.

They can’t come after it after that. Different circumstances. I tell people, Hey, do you want to live in that house for one and five to 10 years? If that’s the case, I would probably push it more towards this right side, getting the heat. Or sorry on this right side of getting the cash out refinance because it’s more of a long-term thing.

If they are going to be living in the house for just a little bit longer, I’d probably lean them towards getting the headlock and then just selling that house at some point. But if you don’t know, I would say maybe, default would be, he locked first just for a short. Until you get proof of concept, then you tap the equity more permanent via cash out refinance for more information about this HELOCs to go to simple passive cashflow.com/HELOC.

There’s full page on that type of content. I’m now getting into some of the headlines. Jobless claims reach the fresh pandemic era low of 348, 000 . Unemployment is definitely coming down weird. I’ve been seeing a lot of like commercials trying to get people or hire people, or looking for good people to work for us. I’ve never seen that in my lifetime where paid advertisement is going out to not for customers, but people that work at their freaking company. I don’t know. It’s weird. Perhaps that means companies want to burn up their PPP loans.

I don’t know, maybe that has to do with it, but I think people are looking for good people to hire at this point. Or I guess the other thread is, people will like to complain that, people are lazy sitting at all Belkin they’re on our plug checks, which we don’t want to get into that argument space.

Now this is the census here. This is discussing the demographics change in different ethnic groups and some of the biggest movers and shakers, Texas, Florida, California, Georgia Washington. And if I were to summarize this for the people listening in podcast land generally, all of these are five states.

The population is going up, California. Only going up by 6%. Texas, Florida, Georgia Washington are going up by low double digits. But the biggest differential I see is the Hispanic population. And those states are going up by 21 to 40%. White alone category here is staying pretty flat-line and actually decreasing by 8% in California.

You can see these other ethnic groups. I guess the message is minorities are taken over and that’s what’s happening?

Monthly report. This is from JP Morgan. The job tracker based on alternative data, this is the total employment. Overall the trend is strong.

It’s been four months since we had the disappointing 2 69 K report in the report in early September is close to a million. The fed could easily make the argument that goal of substantial, further progress has been achieved, which means, there isn’t much of a reason to keep putting in stimulus, but they still.

And the stuff that I’ve been hearing about quantitative easing pumping fake money into the system is probably going to be going on for at least another quarter or two. If I was a gambling, man, I’d probably say over a year, at least, but who knows? And I don’t invest in stocks.

I don’t really follow this stuff too much business or. Came up with the school map, with the best paint states for tech workers in 2021, a lot of you guys out there are computer programmers. Let’s see the top. I’m gonna read them out in terms of the top. Washington best I guess the average is 122 grand. Next is California at 116 brands.

Number three is DC. Number four is Virginia. Number five is Massachusetts. Six is Maryland seven, New Jersey, eight or nine Colorado. Those are your top 10. And for those you guys are just curious, Texas is at number 14, Georgia is number 19. Florida is kind in the middle of 27th . The ones that are bad or where are the non-tech areas?

Montana and North Dakota.

Mississippi. Wyoming is dead last.

Now this is a chart that we talk about quite often. It is modeling the cap rate in the deal. . Which has been slowly coming down over the last decade. This is where people come to complain about cap rate compression yields are lowering and this is what like drives me crazy.

Like people are like I’m not getting 130% return in five years. I’m only getting 110%. Dude because the yields are generally going to lower. This is marketwide. . The dark blue is the ten-year treasury rate, which moves around with the interest rates and for investors, they say this time and time again, it all is this teal minus the dark blue, which is the cap rate minus interest rate.

That is the Delta that investors make the spread. And of course they applied leverage onto that to leverage that yield. And that is what investing is. They move up and down together. If interest rates go down, cap rates go down and people always freak out that interest rates will go up.

Cap rates are going to go up and interest rates go up. The reason why they push it up or they let it go up is because the economy’s doing really well. And therefore, if you want rental real estate or any assets, you’ll probably be the beneficiary. Some of that flow into the market and good economy.

One thing I’d like to point out on this diagram, to me, cap rate compression is when you have a temporary squeeze where it comes off of the historical averages, where say in mid 2018, there was a bit of a squeeze right here in terms of how much delta there was, or in terms of investor returns. There were the times when you want to get involved or, around when there was a larger, healthier Delta, honestly you can’t really time.

That type of stuff, it is what it is. And by the time you’ve gone into a deal, the market has moved a little bit anyway, but I think one thing is for certain except the 2006 to 2008 era. Like you’re always going to have the cap rates higher than the interest rates.

I think that’s just a fact of life. That’s a basic fundamental

. Cap rates lowering . Now this is comparing the major markets that lower cap rate markets like your San Francisco Portland. Austin, Texas is like your, where you have your lower caps and your non-major markets where you typically have your higher caps, but overall they’re all coming down.

But I think one thing, like if you look at this as it’s coming down, I think you have good stable cap rates for the most. And then here was that other slide we showed earlier with the, the lower cap rates area were places like San Francisco, New York, Los Angeles, San Jose, Portland, Austin, Boston, Seattle, places like that.

Top five multi-family markets for red growth. This is from Yardi matrix. And in order it is Boise, Phoenix, Spokane, Tampa, Inland Empire. But then I started to look at this chart and I started to call it BS here because not all of these are major markets. And I put here in red, the population of these markets, everybody talks at it depends who you hang out with.

I would say unsophisticated investors always talk a lot about what because it’s jumping like crazy. But Boise is a really small market guys. It’s like a quarter of a million people. I think Hawaii is way bigger of a population thing. Whereas Phoenix is a major market.

61.6 million people live in Phoenix. Spokane Tampa are on this chart and Spokane is even smaller. And Boise yet 217,000 Tampa was a little bigger, but still under half a million population.

To me, a major market is going to be at least half a million or definitely getting over a million. I think this is a bogus chart here. Inland empire, shoot what’s inland empire. Do you like, do you call Rancho Cucamonga, inland empire? Do you call Ontario?

Ontario, California in an empire. I know certainly San Bernardino is in an empire, but they have about a quarter million population. why do you guys call it in an empire? It’s like a, this is a bad imagery, but it’s oh, you go to the barber.

And then like you tell the barbers like how far do you want me to cut down your neck? Like some people they got, yeah. They got the hair going all the way down to their neck or their butt. It’s the same thing. Where do you draw the line to get this data? But anyway, don’t want to offend anybody.

Of course, people get the offended these days. But here’s another chart, small and mid-sized that shows with the most economic growth in Read the small markets, mid-size markets and then the larger markets. The small markets, again, you gotta be careful investing in smaller markets because it’s not a stable.

Sure. You can get a lot of, yields there for the short-term, those would be Spartansburg South Carolina, quarter lane, Idaho, Sebastian bureau beach, Florida, Winchester, Wyoming. . Those are your small markets now, your mid-sized markets. Number one, Huntsville, Alabama. Number two, north port Sarasota, Florida, three port St.

Lucie, Florida, four Boise city, Idaho five over Utah. And then your major markets. Number one, Nashville Davidson Franklin, Tennessee. Number two Raleigh, North Carolina, number three, Austin Roundrock Georgetown, Texas for Jacksonville, Florida, five Orlando. Those are your top five for your large Mitchells.

I don’t know how they came up with this composite score. It has to do with percent change in total employment, unemployment rate average monthly building permits per a hundred thousand and average monthly home sales per 100,000 did we talk a lot about the south and Midwest? They’re landlord friendly states, good economic growth.

But what are some of the Western markets? I’m not a big fan of investing in Western markets because they’re typically more bluer states, a little tougher for landlords out there. But, Western states getting beat up in the pandemic. Maybe the current intuitive thing is from an stoic investor is to go in now, right?

Maybe it’s the time to go and do a development in New York city just saying. Those top Western markets for growth is Boise, Phoenix, Las Vegas, Tucson, Colorado Springs, Reno, Albuquerque, salt lake city.

All with huge rent growth, you could probably make the argument that all the tide raises all boats Arbor released their quarter to 2021 single family rental investment trends reports. This is not apartments this is more single family homes. Some of the key findings were occupancy rose to 95.3% highest level since 1994.

They can do occupied rent growth, accelerated 12.7%, a record high and cap rates dip to 5.8% of its rising asset valuations.

There’s a chart here showing single family loan to value ratios. Now, my takeaway on this is I think everybody’s like thinking what is the bubble going to happen? And, typically people who raised that question up on internet forums, BiggerPockets. People who’s only been around for one and a half years in a freaked out because the prices went up in the last 12 months.

One thing I look at is, like the loan to value are people like over their head of debt? They’re still in this band that they typically been in between 63 and 68% loan to value. Granted, you could probably make the argument that the home equity values went up.

So their loan to value was down. At least we’re not saying like that this thing’s spike. Cause the scary thing is like when the loan to value spikes, that’s when you know that people are using debt, like the unsophisticated people that don’t invest for cashflow are going after debt.

I think of the big shore where the taxi drivers and the strippers are buying rental properties or just banking on appreciation. Now, one thing that’s interesting here this chart investor percentage share of single family home purchases. This is showing how much mom and pop investors are buying the stock out there versus the institutions.

And this is going to be a story of moving forward, that the institutions are starting to get to the game of residential real estate. Why? Perhaps it’s something good to invest in whether it is, that’s what the smart money is doing. So in 2000, investor share was a little lower than a three to 4% range that has peaked in 2011.

Where I went all the way up to 9%, but since 2011, it’s been steadily declining, which is saying that it’s probably the institutions are buying more of the stock. That’s coming out,

Freddie Mac release. This is their interest rates. You can get Freddie Mac Fannie Mae loans, but I think this is just a good indicator of what’s out there or how historic rates are trending. These might not be the rates you’re personally looking at, especially if you’re working with a Daisy chain lender that marks it up, whatever the heck they want.

This is like the relatively how interest rates have been tracking, earlier in the year we hit a low and then things came back up, but we’ve been kinda summing back to those old time goals. Once again. Newer investors, they really freak out about interest rates going up by a 10th of a point.

But like I said, if you will look at that chart with the cap rates versus interest rates go up, stoic investors like cool, man, that means that the economy is doing well at my rents are going to be going up. And my cap rates are probably going to be going up to a, this is a chart showing the employment, rebounding across all industries.

the takeaway is the leisure here got absolutely killed and is about, I want to say 60 to 70% of where it was pre pandemic,

whereas, government workers on scale healthcare education. A lot of these. In information, financial professional services. Most of these definitely took a hit. But nothing like the leisure sector,

This is the stuff that you have to deal with when you’re a rental property owner. Most of the accredited investors are like, why the heck would you want to own a rental property? It’s a pain in the ass. I don’t like legal liability, just give me a syndication.

And these are the exact reasons why, this is what changed. That was a big occurrence for investors were rent, extension, having to do rent, forgiveness, nonsense. They had to decrease their rents, miss payments. The decreasing rents that’s all like it’s all the commercial professional property managers that are just killing these tenants in my opinions with five to 10% rent growth, the mom and pa investors

to me, they just don’t have the or the market data to raise the rents where it should be another reason why the mom and pa investor gets left behind. Deferred maintenance is a big thing. The only things that went down as a common currency were charging rent fees. They stopped doing that because they were desperate for renters and increasing rents, which is the

inverse of decreasing rents. Fun things here from shopping center business taco bell is releasing a new concept of drive thru lanes here. It’s a cool, it’s got this light pink or purple pink hue to it. New concept. It’s a two-story restaurant where you drive underneath it, and then it’s Jack in the Box

they’re going to build 64 new restaurants as part of the 16 franchise development agreements across Arizona, California, Idaho, Texas, and Utah. The goal Jack. Another thing that you guys might’ve seen is only fans. They’re not going to allow sexually explicit content anymore their the entire business model was gone. And this is the way I feel about short-term rentals, right? Everybody’s like I’m making a killing with this stuff, but short-term rentals are discretionary items. It’s what people spend their money on in good times. And when in bad times are pandemics where you can’t travel, it goes kaput

and just like how the government got rid of only fans sexually explicit material. The government can just remove and create some kind of law that takes them away. Do I think that is right? No, because they ultimately feel like it’s the big hotel industry and the big players lobbying against Airbnb and VRVO people at the end of the day, but it is what it is.

This is why I like to invest boring workforce style house. You guys want to get more into our inner circle check out our family office, Ohana mastermind to learn more about a simple passive cashflow.com/journey. It’s all about who you know, and building your peer network of other peer passive accredited investors.

And again, if you guys want to check out my book, go to simple passive cashflow.com/book, you guys can help me out. We’ll get you guys a copy when comes up, but I need some help. People who want to give me some views, go ahead and sign up there, shoot me an email.

And this is the point where you guys can put in some questions into the chat box, but there’s some personal stuff I’ve been going on.

So in terms of growth, yeah, I think everybody’s got goals they’re working on. I think things that like the way this year has been going it’s with the whole Delta pandemic and everything. It’s just been a little slow. I’ve been forced to stay at home lately, so it’s it’s been a bummer.

I want to see all you guys how I’ve been making contribution back in the world. One little thing at a time you guys asked for the infinite banking I-Corps. Here it is. We’ll get it for free, simple classic castle.com/banking. For those you guys who make under 50, 60 grand a year and network under a quarter million, this is not for you.

Do not waste your time with this stuff, right? This is more for the people with a little bit more dry powder and the higher net worth folks. But you can still get it for free. And I know you guys like free stuff. Three significance here. If you guys haven’t checked out. Our Facebook groups, which are mostly on invite.

I used to have calls with everybody. When I first started to do these things, slightly opened it up a bit. A lot of people are inviting their friends, but you guys can join our Facebook group, the Cooley passive real estate investor, Ohana for sophisticated and credit investors there.

And if you’re in Hawaii, we’ve got aria. They’ll have that. Oh for you guys to join up there. We’ve also got the subgroups. I think you guys can get these links and simple pass a capsule.com/networking. And if you haven’t lately go to simple passive cashflow.com and check out all the little links at the top and go handle on that stuff.

There’s all that stuff is for free, right? The whole point is that you guys don’t spend your money on some stupid guru charging 10, 20, 30, $50,000 of charge after upcharge. In terms of uncertainty? I’m a little worried that we may, I think we will, but we may not have the the January retreat in 2022 of you guys want to get the latest on that.

Go to simple passive cashflow.com/ 28 22 retreat. I just had a call today. Unfortunately we can’t have it at Bishop museum. That would’ve been cool. They’re already booked. But here in Hawaii, there’s a big Delta, we’re getting our kind of our first wave in terms of COVID with the, that the Delta variant.

But, my outlook is that the stoic philosophy of the obstacles were right when you have uncertainty, you, and you’re uncomfortable. That is typically when you’re going to be hitting gold pretty soon. So suck it up, but then good days are right. One thing I liked that has uncertainty in my life is the one thing I can count on is whether interest rates go up or down or even go up, which is some people think is bad.

The cap rates usually bounce along with it. And as investors, the cap rate is usually higher than interest rate is which you borrow. And then you apply leverage via good leverage. That is how we make money folks. It is simple as that. And that allows me to have some certainty in this crazy world. I’ve been hearing a lot of you guys.

Most of ha I guess, half of the people coming into our tribe these days are off of referrals. So I really appreciate you guys telling your friends about simple passive cash flow. I think a lot of you guys feel my pain where, people think you’re crazy and. I call them muggles. If you watched the, not the Lord of the rings, but Harry Potter muggles are like the non magic wizard people right there.

The people, the regular people, they’re the non-believers in a way. So don’t worry about the muggles. A lot of my friends are muggles. That’s cool. But if you guys realize that there’s a better way of doing this without the high fee. A lot of middleman, 401k, each fund, give your money to a financial planner who doesn’t really know anything like it just gets paid off permission.

Join our tribe and join our club@simplepassivecashflow.com slash club. Some things I’ve been buying for two dads about this, like both sleep buds. I tried out for our one night. I think I might return this thing. I don’t think it’s the greatest. I got desperate. I got a three month year old. I don’t get much sleep.

I got desperate. I bought it like when I was like, probably be returning it. But anyway, if you guys want to get the I released a free, basic financial, e-course probably better for the kids. If you guys got basic financial skills, this thing would probably be pretty basic for you guys.

But if you guys want to go text the word BASIC to 3 1 4 6 6 5 1 7 6 7. And for those of you guys want to get access to the free remote investor light course can text the word you guessed it. REMOTE to 3 1 4 6 6 5 1 7 6 7. Tell your friends. Again, none of this was made to be legal advice.

And we’ll see you guys.

Fun Story – Operating/Investing ATM Machines

https://youtu.be/AvAdSmFNEE0

hey, Simple Passive Cashflow listeners. Today, we have a simple passive cashflow who we deal pipeline club member. Who’s invested in some deals and has an absolutely crazy story to share with you guys. Now, the people that sign up for our group and especially come out to our events are definitely not average.

I think a lot of you guys say that. Yeah, I can’t talk about like how much money do I take out of my retirement account? To make my AGI not go over a certain threshold. So I don’t pay those taxes. Not buying a house to live in. Like my friends, family, coworkers, think I’m absolutely crazy.

And I have nobody to talk with, but if that’s you guys need to get involved with our tribe go to our networking section and events section on the website to learn more how you can get more involved or if not, just join our investor clubs, we’ll pass the cashflow. Dot com slash club. But everybody, I think in our group the common thread I see is, we’re not trust fund kids.

A lot of us are first generational wealth. Which means our parents did not have a million dollars. My parents, even on real estate, they told me not to ever buy stuff and have people live in. Cause people screw it up. Boy, were they wrong? But everybody who comes in there they’re very frugal, actually a lot of people did a lot of crazy stuff in their twenties, such as travel hacking.

If you guys remember the mint coins where you. Buy $10,000 of coins and take it to your bank. So you can get the 2% on the credit cards. Had a one guy who rented a storage closet, so he could build the Ikea furniture. So you could sell the pre-made furniture on the internet. Daniel, Yeti, crazy stuff like that.

Okay. From your earlier days, when I was 18, I got bit with the network marketing bug, the multi-level thing. So I tried that for a long time going from different one, the different one, I was hanging out with the people that were making all the money. That’s definitely not making the money.

That was not so great, but it did open me up to the idea. That’s when I found out about That little purple book that most people read that got me into thinking about real estate, but I never did anything because I was so young and I didn’t have any money. And so I just never did anything with it, but nothing really crazy, like what you’re talking about, but I definitely did some different things that I guess most people don’t do.

I know in my. In my late teens, I did the Apple Rama’s so I could get a whole bunch of credit cards and business credit cards. So I could get back in those days, you could get like 6% interest rates in checking accounts and savings accounts. So I got, I racked up like 50, a hundred grand. This is during college and I just milked it for five, 6%.

And then in my early twenties, To my thirties. I did that. Those rewards checking accounts the ones we have to make full debit card transaction and get East statements. I had four of those accounts because a lot of the times you max out at 10 grand per account, some accounts I could set up with Venmo or PayPal transactions, I could do that from the comfort of my house, but there was always that one that I had to actually go to the freaking gas station and pump.

12 transactions, but you couldn’t do more than four because they would flag your account and And they’ve shut you down. And they had called my cell phone that was like the low point of my life doing this stuff. I was like, what am I doing? It was like 40 degrees outside driving around to all these crappy gas stations and pumping small micro-transactions.

So I could hit my 12th transaction so I can get my three, 4% at the time. I’m a recovering. Covering person today, but so Danielle is, I’m gonna be talking about a really cool story and it’s just mainly for fun. I think we don’t recommend people doing this strategy at all, but I think how we first met, you came in through the investor club, we connected and then you actually came to some events, but I don’t know, maybe I think you misinterpreted what I said.

I think he said You’re not allowed to invest. I told you, you can’t invest with me because you don’t have enough money. Is that she thought, I thought you had said you wouldn’t let me invest all of it. So I had made in what I thought was a substantial amount of money in the stock market fairly quickly.

And I was like, wow, I have some money now. I want to do real estate. And so of course. Got to you. And I think, I remember you saying, okay, you can’t put it all in right now, so you eat, you can do something. So I took some and started with you, but then I took the other half and I was like, okay, what can I do?

Did you look at like turnkey rentals, you go down that road. I did. That’s where I started was okay. I better get a single family home. Let’s start looking into that. I started looking into that and then I started finding the turnkey rental companies that were out there and I was following the breadcrumbs, so to speak.

And I just kept thinking to myself once I do one or two of these. There’s gotta be a bigger way of doing this. I was thinking, what about the people that do the apartments? Maybe I could check in to how they do that. They must pull their money together and started looking around. And that’s when I found you started listening to what you were saying.

And I was like, this is it. This is exactly what I’m wanting to do. And so I set the single family home part aside. And just went straight in and took my other half of my money. I was like, okay, what other kind of business can I do now to make money? And I had originally looked into doing vending machines, cause I thought about that a long time ago.

So I started looking into that again, cause I didn’t want employees, I didn’t want overhead. I didn’t want a building. And I saw this little ad. While I was looking around for ATM’s, which isn’t a vending machine, they just spending cash. So I started looking into that. So how that got started.

Yeah. It’s funny how, when you told me this, I was like, Oh, you went into these the ATM funds that everybody goes into, you hear about that. I’m not a big fan they’re decaying assets or how the fund is created they are a little misleading with how they also put in like the tax benefits there as returns, which is, I don’t think is what you should be doing in a performer.

Anyway, we’re not really here to discuss that stuff. That’s more for inner circle type discussions, but I was like, Oh yeah. Okay, cool. Daniel did a ATN and I tell him, I bought ATM machines to take us through. How you did this and how does it all work? I first started looking around online to see what this was all about.

There were a lot of YouTube folks out there that were promoting doing it yourself, which I guess most people. Don’t know that you can do it yourself. I started checking those out, listening to videos and podcasts and things about that. Just to learn, I liked the idea of how it was similar real estate in that these are things that you can own.

These are things that you can depreciate. These are things that cashflow we’ll call it. Half passive income because you do have to do things with it. And so I was looking at that and then I found out there was another way to do it besides doing it on your own. And , that a company offers you to able to join with them and have them do most of the work, the calling the contracts.

The leads, all of that. I wanted to go that route because I don’t like rejection. I don’t like meeting people and them telling me no all the time. And so I decided I’m going to go that route. Like a ATM turnkey ATM and to me, that’s the daunting part. I don’t know too much about the business, but like you have to make a deal with the corner deli or the shopping mall to put that thing in there.

The one part of this where you don’t have the technical expertise, so that industry knowledge and so they would set up the leads where I could then go and visit the hotel or the mall or the event center or whatever it was. And so I went that route and actually even went further than that

and decided I was gonna buy into an existing what you might call a route.

Where there were already ones placed already making money, and I’m just buying it from somebody else, stabilize asset or stabilized cash crop. Exactly. Or you can start from scratch. So I did both where I bought in, but then I also started myself trying to get my own. And so I did both of those and.

Obviously it costs more money to buy in than to start from scratch. And it’s definitely more lucrative to start from scratch, but it also takes a lot longer and there’s a far more rejection involved in doing it on your own. So to speak, trying to find your own leads and that kind of thing.

It varies depending on how you do it. And not that they. Always have it where you can buy in. They don’t, they just happen to be doing an acquisition at the time. And so they funnel those out to those people that want to do it that way as well.

Now there’s a lot of this stuff. You gotta be careful here.

Daniel can reveal all the numbers and everything. I think he likes beer. So if you guys see him in real life, I’m sure you can bribe him. And he’ll tell you all the dirty little secrets, but

just to give people some magnitude in their head, was it one of these ATM machines cost?

if you were to do it on your own and if, using these kinds property management type of companies that kind of gets you going. , I think an easy way to think about it again, not an expert, but from what I’ve learned, you can get an ATM for a couple thousand. If you want to go turnkey, let’s just call it just double that.

So 4,000, let’s just say then of course, you’re going to have to put money in and that is going to depend on what type of place you put it in. So if you’re in a mall, you’re going to need a lot more money than if you’re at the tattoo shop around the corner. The amount of investment on that side of it varies drastically.

And then of course, how busy the place is, will determine either how often you go or how much money you choose to put in at the time. that’s an easy way to think about the cost of the ATM as far as. The cashflow again, that’s going to depend greatly, but let’s just say an average of $300 a month.

Two to $300 a month is a nice, easy way to think about it. The annual lies, that’s a few grand. Yeah, 3030 500 somewhere around there. And you’re going to spend anywhere from two to 4,000 on the machine, the cash to put in it. So let’s just say $10,000. one, that’s how I think about it. Like when I was finding out about the turnkey rentals and everything for the real estate, okay. 20,000 to get you a hundred thousand dollar home. I think about these the same way, $10,000 to get me a home, but I’m going to make two or $300 a month, which may be somewhere, which is on par, right? Yeah. But as one of the podcasters would say, there’s no tenants, toilets or trash with this.

I thought that was a pretty funny way to think about there’s no leverage to involve. You’re buying these ATM’s cash, right? You can’t leverage. , you could possibly, once you get more. At this, you can probably get a business loan, I would think. But at this point starting off, it’s pretty lucrative actually has got my wheels turning.

It com it could be. you’re making about what a hundred. I got some random questions. The repairs, do these things break, what do you do on it? Because then what typically breaks on these things? Usually around 10 years or so before, you’re going to have to start replacing parts 10 to 15 years. And at that point you might replace a card reader. The piece that actually reads the card that goes in or maybe the speaker. Just little things. There’s not major that I have been made aware And obviously I haven’t been doing it 10 to 15 years, but there are people that I’ve met that have been doing it 15 to 20 years.

, I think that’s the most. Detrimental part about the businesses I’m buying this piece of metal and it’s just going downhill and it’s not something where I can just, Oh, Hey, I’m going to upgrade this and it’s going to be awesome. No, you’re going to have to buy a brand new one. And so it’s like just starting over.

It’s like a car, a depreciating asset. And. When these things break, right? I’m sure you had little mishaps, like you just call somebody and they go check it out themselves. If you, you don’t have to go out there and do diagnostics on yourself, cause you don’t know what you’re looking at.

I do. And I have access to technical support to help, but yes, I do everything , that could be a hurdle for a lot of people would, if people are very on. Technically inclined. They could just call a dude to go do that for them. I know that there are people that you can call that, do this kind of thing.

I haven’t done it it’s not that technical. more, unscrew this and turn that and okay. Put that back in and screw it back on. It’s not too techie. that makes sense. But you got to watch your six in case someone comes up hits you in the back of the head, right? Yeah. You want to go when nobody’s around?

Sure. Okay. So tell us, okay, now this is the fun part. You gotta feed this machine and Daniel’s not made of money, so he’s not stack overflowing this thing with the 110, the 50 grand in an ATM. You can’t even put that much. And if you wanted to, , you got,

Cheaper real estate. So the throughput on these things, isn’t super high, I’m assuming. So you’re how often are you refilling these things with five grand, 10 grand or something? Something like that every week or two just depends on the location and how it does. You got half a dozen of these things?

Yeah, I have eight technically. Okay. So how much take us through that day and what, when you go, so it’s just a route that you drive, right? You’re like a paper boy. Yeah. I go, I get my stuff ready. I go, I fill them up. I download the transactions on a little SD card and I go home. It’s really quite boring, but that’s what I love.

You’re missing out the good part. You go to the bank, you pick out. Oh yeah. I forgot about 40 grand of cash telling you. I’m telling you the first time I went, it was a little dicey. So I go to the bank and I’m like, all right. Give me 40,000 or whatever. I don’t remember what it was, but it was a lot of money and these were not hundreds.

So it was more than you would think. And so they’re just bringing their like, stacking, just. Stacks is like a movie. I felt I was like looking around. Is anybody else here? I was it was fun. I felt like I was robbing them, but yeah. How much shoe boxes of money is that 40,000? It’d be like. It’d be like that.

Okay. Just one or two for stacks of 10,000 or something. Yeah. You should make like a YouTube channel, just like you going to the bank and like getting all this money and putting it in your car or at home and just stalking people like that type of stuff. Oh yeah. It’s all over.

It’s already out there. I couldn’t do any better than whatever is out there already. You can watch people do their little videos. It’s funny. You’re taking this money around and you gotta be safe, right? Gotta be cool. Yeah. I am, I guess maybe lucky enough.

I don’t know. When I go there I go. When nobody’s there. So either before the place is open or whatever, obviously I know somebody that’s there, it’s very low key for me, which I’m very happy about. I would definitely not want some convenience store where I have to go. And there’s, 20, 30 people in there that’s not smart.

. Cause the institutional guys. Are sending in two dudes about two times your size with guns and a van truck. Got it. Oh yeah. And it’s even funnier to me. Sometimes I’ll go to a particular place that I have and the armor truck is outside. I’m just laughing because they have no idea what I’m doing.

And if they know they would probably laugh as well. Are you like trying to lift weights? At least look the part or I just try to look like your everyday Joe walking around. I think I do. Okay. I hope you you don’t have your like air buds in your ear. ABC have some situational awareness.

Yeah, I don’t, I’m good. I’m watching around. So one question I always ask for, like, when you vet any investment, is that aspect of insurance, right? What is the worst skin happen? And that’s okay. If you can mitigate that like some agriculture deals you can ensure the crop, in case it burns or there’s a flood.

What’s another one. Like some guys like to play around with like sports cards that just stresses me out. You’re not keeping that stuff in a safety deposit account. Most times you’re docking at it in your bedroom and you can smudge a corner. Your house could catch up fire, maybe it can fall on your homeowners insurance, but is there any insurance at this stuff? What if somebody does whack you in the back of your head and takes your money and, or steals the ATM machine? That’s very common. You see it in all the movies, they chain it to the back of the check and drag it around main street.

I guess the way I think about it is the type of locations that I chose to go with are more, the, I don’t want to call them higher end, but just less in areas where that kind of thing goes on. So convenience stores obviously are going to have way more opportunity for them

to hook that thing up and rip it right out. Whereas mine is in a location where it’s not even near the front door, so it’s just literally not possible for anybody to do that. Not to mention you can bolt them down. To the floor. That definitely helps a lot, most times in my reading and looking around as they’re stolen, because they’re not bolted down, they just throw the ATM in there and not too difficult to rip out.

Cause it’s not anything to rip out. You just take it. Yeah. I haven’t really had to think about that much. Thankfully I don’t think about it. But as far as insurance, I know you can insure the ATM and I’m required to through what, the way I do it. But I don’t believe you can insure the cash.

I’ve heard some people say you can, I’ve heard other people say you can’t. My research says can’t. So I wonder if they take it. Yeah. But once it’s in the machine is locked up. You’re covered at that point. Maybe you can cover it on your, like your homeowners. Of course.

You’re going to have to talk to your insurance guy off the record first to change because they may not like this idea. They won’t, I guarantee they won’t it’s just even getting a bank account is not easy. Yeah. This is like a money laundering stream. This one. Absolutely. Yeah. I, it’s funny just thinking about it.

Your broker brings you the location and you’re vetting it from there is your top of funnel filtering process. Then if I say, okay, go then they’ll try and get the deal. Okay. And the deal is how much do I make? much do they make that kind of thing?

So where is this all going? Are you just gonna fill it out? The goal, the end game is sell them hopefully in five to 10 years. It’s not like it can grow like. You can’t grow. It just does what it does. There’s nothing you can do to make it any better. And so that part, I really disliked.

So it makes sense. There’s no value add there’s no ability you can’t increase anything. There’s nothing you can do. Literally you can’t increase the fee structure. That’s them. That’s a no, I can’t change it. And the kinds of deals that they get when they sign the contracts are usually one to three year contracts.

After that, I haven’t been doing it long enough to know what happens after that. What if they say, no, we’re done. Get your ATM out of here. I guess I go find another place. I wonder if your broker’s business plan is that you’re captive to them. But maybe you can be your own like kind of commercial real estate broker and find other ATM folks.

So maybe that’s another part of this business you might want to build out where you start to build lists and cold call, cold email, different owners and make a deal with them. Hey, how would you like to have ATM machine? Here’s the splits and trying to cut, cutting that company out if you’re so inclined, right?

That’s how you want to use your time. Technically, I can’t do that, but if I didn’t go the route I went and you did it on your own, that’s exactly what you would be doing. You’d be going and meeting owners of businesses and trying to see if they’d let you put it in there. A lot of times you might not even pay them anything.

And that’s how you can technically make more money doing it on your own. But it comes with also other things that you have to deal with. The people that call when they say. That it didn’t give me money, but took my money, but it didn’t give me the money. I don’t not want to deal with somebody calling me and 2:00 AM, however, an issue, no way I don’t have to deal with that, but I’m sure there’s like a service or you can just outsource that part too.

Or if you want to stop doing the driving around with stacks of cash, you can outsource that. I assume. That gets into A little bit dicey thing where they’re walking around with my $20,000. And obviously I can know if they don’t put it in there, but it would take some time to figure that out and then they could be long gone.

I don’t know. I don’t, I have trust issues. I think we talked all about the bad stuff, but some of the good stuff it’s okay. Not only having $40,000 of cash in front of you taking selfies with can be a little therapeutic, but you mentioned to me last time we saw each other that you enjoy the taper out aspect.

Yeah. I liked driving around. I liked doing my own thing. I like being low key. I just do my thing and it works for me. I could be out doing whatever whenever for however long. And. I can check on it anytime I want online, see exactly what it’s doing, how much it’s done, how much is left.

And cool. It’s almost like checking my stocks. So I got addicted to checking my stocks when I was doing that. And so this kind of gives me that outlet as well. A little bit are you more from a tax perspective? Are you like what expenses you’re incurring? Like you writing off?

Mileage and definitely mileage administrative office reimbursements the accelerated depreciation. I did all of that. It’s really pretty cool. But I definitely had to get a CPA who knew what they were doing. So thank you for that, by the way. It’s nice to have somebody that knows exactly what to do and exactly how to do it.

Now you can justify buying a big lifted truck. That’s part of the branding. Yeah. No, thank you. It’s good. You could also justify a big pit bull or any kind of cool dog that makes you feel safer to go on your runs with you and a gun, that could be a business success.

I don’t know. Is there anything else that you could write off that would be necessary? Not really anything else, just normal expenses buying paper and different things like that. The bonus depreciation was definitely the biggest and most lucrative depreciate thing that I could write off.

So that was very helpful. Yeah. Maybe a gym membership. Maybe you could put down in there too. You could, or maybe a tattoo invented tattoos on your ear. That’d make you look a little bit more. The part I definitely don’t look the part I know. Cool. Yeah, any other insights from this?

A little fun when you making activity? I only if you’re going to do it all from scratch. If you’re going to buy in, it’s fine. It’s just when I compare it to what we’re doing in the Hawaii club, it doesn’t really compare unless you do it all on your own, and it’s going to take you a while to build it up.

So if you’re willing to do that or you like doing that might be something to do, but I liked the more passive route than the half passive route, especially if it makes the same or more. Yeah. I think what I like about this stuff, and a lot of people have that itch, right? Checking your stocks, seeing the money, hits your bank account, whether it’s like a short term rental, something like this, or some kind of side gig, or maybe note investing, something that a lot of people live in places where they can’t invest.

Something that is fun, like a hobby to them to justify some expenses. I think this is add that to that list. Yeah, I agree with you. Definitely. Thanks for jumping on Daniel and a lot of cool stuff you guys are doing. Like of course this is the simple passive cashflow group where we try and keep things simple and passive and very unsinkable and not passive at all.

But I think it’s a lifestyle and you always had the wheel spinning. Come in check us out, meet folks like Danielle here is a crazy stories when she, when they happen, hopefully they don’t happen. And yeah. Thanks. Thanks for joining us.

And we’ll see you guys on next week. Bye. Thanks.

Quick Announcements + Special Events + Intro to Infinite Banking

https://youtu.be/o7T36FPx5x0

This is a special announcement. We are doing a special webinar on September 4th we’ll try and get it done in a couple of hours in a cram school type of format, where we go over the infinite banking policy. A lot of you guys had a lot of questions and we’re going to be unveiling the new free banking.

E-course have you guys come to that. You guys can get free access to. More details, go to simple passive cashflow.com/banking. And again, that’s on September 4th. We’re going to be starting around 9:00 AM and going to 11:00 AM. Pacific time. The next announcement September 18th, there’s going to be a tech seminar put on by Anderson, September 24th.

We’re going to be doing a little get together in Houston, Texas. We’re going to be trying to do another get together in quarter four in Northern Cal and Southern Cal. Full members, the family office, quantum mastermind members get first access to that. As we’re trying to keep it small, more intimate, you guys want to learn more about joining the exclusive inner circle.

Go to spool, pass a castle.com/journey. And if you guys want any more details on these full new events, coming up, go to simple passive cashflow.com/events and check out all the future events we have coming. We’ll see you guys on Saturday for early in the morning,

we’ll teach you guys all about infinite banking

now for some of these events, you’re going to need to. Access past the member site. Go and sign up@simplepassivecashflow.com slash club and sign up for a free account there. There’s a lot of things I can’t really put up there on the internet, on the public site. We try and restrict and get all the good stuff in that member portal .

What are you waiting for? Sign up.

Announcing my new book coming out next month. If you guys want to help me out with a review, I’d like to get you in advanced copy and the audio book should be an emaLane@simplepassivecashflow.com.

And I appreciate you guys helping me find the book when it comes out. That’s probably the only way I’ll probably make my parents proud of me by having an Amazon bestseller. Cause after all they still wonder what I do these days. If I’m not an engineer, they think I’m like a real estate agent.

Help me make my friends proud and thanks for supporting

we’re going to be going over the infinite banking scheme that you guys have been hearing about profusely from a lot of podcasts out there, they get like an insurance salesman and they talk about how the wealthy do this. I personally do this.

I started with a $50,000 a year policy back in 2017, 18. And now I have a bigger one and a lot of people in the family office group are using these policies. We want to give, this is a primer really quick presentation. These are the slides we’re going to be going through today. This is going to be a little bit of a high level 20 something slides.

If you guys want to go through the company of men on the simple passive cashflow.com/bank, you guys can be to this year as we go through this presentation, but we’re going to be doing a special a couple of hours cram school, . We’re going to be going to this a lot more in detail on September 4th. If you guys are somehow watching this video, after that date, all these videos will be posted@simplepassivecashflow.com slash banking.

Or it will be put into the e-course a much more in-depth and curated course, which you guys can go through and learn about this stuff, 📍 but let’s get into it. If you guys haven’t met me before, my name is lane Colwell. I run simple passive cashflow.com. Here’s my bile.

The other person helping me present today’s tether for the Kala. Do you want to introduce yourself real quick, Tyler? Sure. Hi, 📍 I’m Tyler . I’m currently residing in Honolulu. Hawaii. I grew up in Hilo, went to university of Washington. Got my degree in engineering. And then I was an active duty Navy officer about eight and a half years.

Transferred out to the civil service. Or I was a project engineer, construction manager, eventually first-line supervisor, and then the chief engineer in the end up in 2001. Retiring from there. And as far as from my real estate experience, I’ve been investing in real estate since 2002, where I bought my first single family home in Jacksonville, Florida.

I did house hacking then they didn’t know that term, but that’s basically what I was doing. Auto fuel more over the next few years got overwhelmed, stopped married with kids and put investing on hold until. 2018 or so when I met lane with online, with simple passive cashflow and ever since been so deep into syndications currently have about 24 active syndications going on.

And enjoy that. And that’s what allowed me to basically retire as far as for my insurance experience. I got my first policy about three years ago. I looked at trying to get, understand how that works. So I got licensed and then eventually started actually writing policies and I’m currently.

I’m licensed in many states across the United States. So Tyler he is an investor first and this whole discussion on this infinite banking concept that we’re going to call simple, passive cashflow banking here in the future. I been a lot of it is stemming from, how do we use this liquidity in these insurance policies to do what we do, which is.

Totally different than what most life insurance salesman of create and customize this stuff for. Those guys just don’t get it. They don’t understand how the wealthy used this. These policies basically gets whole life insurance over-funded, but configured in the right way with lower fee structure. Just making it better for the investor to use for their investing purposes.

But, yeah. So where this all came from, I asked Tyler A. Long time ago, Hey, if you’re interested in this stuff, go get a license. And then cut the fees down for me and my friends. And he went and spent what, a couple years learning that’s what you get. When you get an engineer to do this stuff, they actually read everything.

Let’s start off here. I think a lot of people, they go online, they look up whole life, infinite banking and everything that comes up is it’s a scam, right? Dave Ramsey will absolutely, talk really badly about it. But I think the difference here is we’re not configuring this, like how most people do where they’re configuring it for high death payout and high interest rates.

We’re doing the complete opposite work at food bank for higher liquidity instead, so that we can take the money and invest it in, producing assets, such as real estate, or, if you guys still want to do your stocks and mutual funds, you can still do that.

So we’re taking the traditional finance method and turning it around. This is typically how. Normal people do it, they put it in the bank, it deflates and value with inflation and inflation is running rapid. And that kind of makes it even more case to do this.

Tyler wants you to talk to us about some life insurance works. I think that the main point here is that if you search online, you may hear from some financial advisors that, whole life is a bad investment. Don’t do it. If it, it’s just that it’s not structured correctly.

The ultra Walty or wealthy, or even banks, they own tons and tons of life insurance. And the reason for that, it’s a safe, secure assets. And it’s liquid. So this slide is just basically showing that banks on and hold a lot of assets of their assets in bank owned. Life insurance is basically life insurance that is owned by the bank.

So it’s called Bali. But yeah, if you look at any large bank on their asset sheets, they have tons of life insurance.

The thing is, they like the pros. This is what they. And effectively what we’re doing here is getting rid of that, man.

This is the loose framework and we’re trying to bang from ourselves and that term, it sounds school, right? Like instead of using a bank that the bank is able to leverage our money and go invest. We’re doing this on our own, working directly with the insurance company, which by the way, to me is a lot more secure than any bank FDA.

Sure thing out there of insurance companies are some of the largest companies that have the longest track record. When you have a contract with an insurance company, it is very secure.

Like a lot of you guys jump into these apartment buildings and you guys know we never buy a class assets, a class locations because the returns just aren’t there. A lot of times the insurance companies are the ones buying those large class, a assets in the class, eight areas because they are going after capital preservation.

lot of times is their cap rates are anything from two to 3%, but they don’t care. Because they want to just preserve and they don’t need to make that high rate of return. They’re in the game of just being secure with people’s money, but not every life insurance carrier is weighted the same.

Tyler, I want you to I think everybody has a little bit different definition of what infinite banking is. Depending on the way, people understand things, different things resonate with different folks, but why don’t you take a first crack and what this is, or something never heard of that.

I best define infinite banking is it’s really a process in creating, private vault for you to use as your bank and overall it’s a process. The vehicle that it uses is holding. Insurance and its dividend paying whole life insurance is the product of choice that I specifically like from multiple reasons that we’ll go over.

But that policy then is you overfund it. And in that way it has a cash value that you can ask. Your cash at any time via policy loans. That’s the overall concept. And as you pull that out, the money still continues to work in their vault or in that, in your account. And you’re able to deploy that elsewhere and pretty much have your money work in two places at once.

The way I personally use it, when I had a policy, when I first started to do $50,000 a year, after a couple of years, two, three years, I had at least a hundred thousand dollars of cash value built up in there. And, I always try and keep my liquidity low in my bank.

You never want to have too much cash making nothing, that’s why the next money is in your infinite banking policy to cash value where it’s making it a nice little tax-free yield that’s the first component of why, we’d like infinite banking so much when the money is in.

I would call this a government in full, but it’s just for some strange reason when it’s life insurance, your yields, there are tax-free. That’s a place to store my liquidity. And then when I need to go into a dealer too, and need to drain that liquidity, I have it, but at least it’s not sitting in my normal checking account savings account.

Not doing anything.

The guaranteed growth. The use of the whole lot. Insurance. It has a guaranteed aspect of it. Current gross rate of that is 4% that is about to change, but the policies are ranging from three, three, 3%. It’s three and a half percent uncorrelated not tied to the stock market directly.

On some policies you may have the choice and you can be in control of that, of how much funds are correlated. But one of the main benefits for investors that this is not correlated to the stock market

protection. It is a product. So there is a life, the death benefit portion of it. But in addition to that in states, It varies, but there is also some liability and bankruptcy protection with the cash value or the death benefit over your policy.

Some of our doctor clients, what they like to do is they stuff a lot of cash in here mainly for this protection aspect, right? There’s all these different asset protection strategies out there. There’s not one that’s going to get you to trying to build your castle with multiple layers of protect.

And diversifying. So by putting some money into your life insurance policy, you’re shooting at one part of your portfolio, your network. Yeah. And the liquidity, that’s one of the main appeals for investors where your funds are not tied up. You have access to them.

And it, you would have access to it in the forms of policy loans, and that’s what keeps it also tax-free where you have access to the growth and of your policy. I think a lot of us, myself included my wife, Tyler’s wife, we all got swindled at some point in our early twenties, maybe early thirties where, a long lost college.

Classmate or high school classmates calls us up for lunch and China’s and stuff us into one of these badly customized, full life policies. Typically the way that they’re structuring it, it’s not built with good liquidity customization, as you can see this is a lever here. There’s. If you were to imagine there’s different ways, you can customize these different components.

A lot of these guys, they will ratchet up like the growth rate, but that’s not the point, right? The point is we can get much more, better returns outside of these policies. So this is why it’s counterintuitive to a lot of these life insurance agents who just aren’t real estate investors. And, we’re just glazing over the top.

A lot of this stuff, a lot of this is in that infoPage@simplepassivecashflow.com slash bank. You guys can get access to the e-course for free there. And then, we’ll be doing that cram school later on where we get to go into this in more depth and ask any particular questions.

I can summarize, I the purpose of this is basic to really emphasize. That it’s really the design of the policy. That is the most important factor. You could have the same product at the same insurance company and they would perform much differently and that’s all based on the design.

Yeah. And this is the classic. Hey, let me just shoot Layne an email ASCO, Hulu, the CPA lower he’s using, or are you guys going to. Mass mutual Penn, whatever, like top AAA rated life insurance company. And let me just go work with them. Whether you work with them or us, like everything is the same except the design.

And that’s the critical part of what we’re talking about here.

I can cover this all. There’s two main factors of the policy design. The two things you must maintain, so instruct to keep it an insurance product, which then reaps the tax benefits of it and the tax treatment. You need to meet some IRS limit. So there is some limits in there and you people may hear the modified endowment contract or the seven pay limit that keeps it an insurance product where it’ll be tax favored.

And along with the design maximizing the cash value. So you have the liquidity early to go use and do investments as you choose. And those are the two main levers in the design that you’re playing around with and, way back long before there was simple, passive cashflow, a lot of smart people figured out that, with being life insurance, you could have your yields in there grow tax-free.

And of course, there’s always people out there that get a little greedy. So that’s where the government started to put these limits in there that you have to have a search and above the actual life insurance, you don’t get a dollar of life insurance, but stuff like the zillion dollars in there and still make it tax free.

People did it, which is smart actually, there’s limits to it today. And this is what we’ll go into more detail in the e-course and then in the cramps.

Yeah. And just that IRS limit that’s based on the insured’s age, gender, and the amount of death benefit there is. We’re designing it a specific way to minimize fees. The death benefit is needed there in order to be able to max fund it to your targeted amount that you want. And one common question that comes up here.

Some people who think that they’re older in their fifties, sixties, they think that this is going to be more expensive. And then, guys are typically a little bit more expensive than females for some strange reason. Really at the end of the day, it really doesn’t matter.

Like we’ve compared policies from, 30 year olds and 50 five-year-old. It the cost of insurance really doesn’t matter. And why is that? Again, we’re not really doing this for the death. Hey, out again, we’re just, we’re doing this just to call it life insurance and the bare minimum so that we can have this policy book tax-free to be able to stuff cash into it.

And that’s, I think where a lot of people, they missed the boat on this. This is, yes, this is, there was a debt payout for it. It is life insurance. But that’s not the purpose. And that is why, the agent, the gender, and, people also say Hey, can we ensure my kids will talk all about that type of stuff?

And the e-course in the webinar, this doesn’t really factor too much into the cost of this.

And the the second main limit other than the IRS limit, when designing that we have to be careful of is just the individual policy limits. Each individual company has some limits. And specifically one of the main ones that they’re starting to limit is the amount of paid up additions, one can put in.

So each company has different limits. For example, one company may have, you can put up five times the base premium or 10 times the base premium. We just have to design it accordingly for that specific company. And that’s where the flexibility comes into play. That helps decide which company is best suited.

This is when I was learning this stuff. This stuff gets to be really complicated and it changes all the time. When I was just learning about this, I thought it was pretty simple, this is something that I learned and realize, we need to have somebody that’s under the umbrella of our group.

Kind of be on the look out for all , these changes. Coming down the pipeline to keep us out of trouble, but also optimize getting the best policy for our situation.

Where does your payments go? So every year there’s a premium payment. There’s two main places that your money goes. One is to the base premium. So that’s basically to cover the cost of the insurance. That base premium is specifically what we want to drive down as low as possible, because that is a pure expense to you as a client that paid up additions, that’s really a cash.

Very little fees on that. , you almost see one for one cash value increase on any paid up additions that you contributed. There’s different premium splits. Some people may hear, 50, 50, 30, 70, 10, 90 traditional whole life. Normally you may, have seen in the past, that’s really a hundred percent.

Base premium. That’s why it takes 15 to 16 years, maybe for you to break even on your cash value for the amount of premiums you paid. And we’re able to modify that so that, you’re breaking even sometimes years, between years three and four, five, usually at the end. And that’s the use of this premium splits was also introduces a lot of flexibility that you may have throughout the year.

Most of the credit investors over a million dollars net worth, they’ll probably do a policy where they dump a hundred grand in here. Add another couple of zeros onto them. And again, what, the way we’re trying to do it is we’re trying to minimize the amount of base premium. So the paid-up additions can build up our cash value so that we can take this out the next day as a policy loan and stick it into a multitude of different deals that make a much higher yield and sort of the industry secret of life insurances.

If you’re a sales. And you’re just worried about your commissions. You try and trick your clients into getting as much base premium, the more life insurance, but that’s the complete opposite that what we’re trying to do here with simple passive cashflow banking. Not that we’re, we want to maximize the paid-up additions, typically going much better than a 50, 50 premium split.

That’s less insurance premiums and fees for us. But that’s better for the client at the end of the day, so they can keep most of that cash value, but that’s typically what’s wrong with most normal, full life insurance. And I think this is why, Dave Ramsey, all these online, Google’s kind of actually demonize this stuff.

And I went to if you’re doing like a 50, 50 premium split and a lot of this is going to your base premium, this is where most of the commission certainly calculated.

This is an extreme example that 10 90 premium split, in some cases, some of the people in the family office group have found that the 70, 30 premium split is actually better. That’s an I actually use, this is just more of the extreme about that example where you’re still complying with those mech limits.

So you’re getting the tax free treatment. But you’re stuffing as much money into the cash value and you’re minimizing your feet on this side.

One unique way that someone explained it to me, as far as understanding the premium PUA relationship was relating it to your house. The base premium is like your mortgage. So that’s an expense or a cost that you have to for your house.

By slowly paying down the principle. So base premiums does add a small amount of cash value. Just like how paint on your mortgage slowly pays down the principal. You can think of your paid up additions as if you were to do a renovation where you spend, $50,000 to renovate the kitchen, that $50,000 spent on the kitchen basically increase the value of your house.

Hopefully not almost exactly the same or even more so that’s the home relationship as far as the base premium, paid up additions to mortgage and our renovation. Again, different ways to understand this and to me personally, and it really took me about a year and a half to really grasp this school.

And the differences between typical whole life insurance, configuring it in a way and using it in a way that the wealthy do have for some of you guys use that strategy where you’re taking a hilar out on your mortgage and paying down your mortgage with simple interests versus amateurs interests.

It operates in a very similar way. And in fact, when you’re using a whole life overfunded or infinite banking or whatever you want to call it, simple passive caching that. It is superior to using a hilar in my opinion. And I actually think that’s, this is a lot better than using a 5 29 plan for your kids’ college savings too.

How do you access the cash value within your policy? So that’s in the form of a policy loan with the low interest rates, there are other ways also of accessing the cash value of basically collateralizing your cash values through a traditional. That is also an option, but for here specifically how a policy loan.

This is a loan you’re taking through the insurance company. You’re basically utilizing your cash value that you have in there. You’re usually able to take about 95% of that cash value in the form of a policy loan. Your cash value actually stays there in the account. But your death benefit is collateralized.

From the insurance company, they’re basically able to give you the loan because they know at some point. If you pass away and you don’t pay back the loan, they’ll basically just decrease it from the death benefit of your policy. So whenever you take out a loan there’s an interest charge to it.

However there is no payment or set payment plan. You are in control. You can choose to pay it back or not. Very similarly to a Heela. They’re very similar. And tie it in with the other slide up here. This is the cash value, right? We’re stuffing money into the cash value.

And this is what we’re taking the volts out of to put into deals. If you want to buy jet skis, at some point, you can use the money for that. You don’t have to ask the bank or tell the bank what those annoying questions that the hilar application always has. You’re in control.

And, some of the people in the family office group or, going to another bank and collateralizing this cash value policy getting anywhere from both 3% interest rates. And for some of you guys who are good business operators who drive your adjusted gross income very low at the same time, it screwing yourself by not being able to get a loan for a home.

This is a great way you buy the home cash. But you dip out of your cash value of your life insurance policy to essentially put debt and, get your leverage up, which is always a good thing. If you can pay your debt service. That’s just one of the merit of different ways that we’ll go into more detail and we’ll ask individual questions on the webinar next week.

But, this is if you’re seeing how the wealthy are doing things, it gives them a lot of options and it’s something that they control that they bank from themselves.

And this slide was basically just go over an example. If you were to take on a loan to invest in real estate. You can create some sort of arbitrage use of the cashflow from your investment to also cover your debt service team for the policy loan. And as Leanne mentioned, one of the, one of the big benefits is that the policy loan interest is calculated as simple interest.

The cash value continues to grow in your policy, but it’s compounding interests or compounding dividends you’re receiving.

A quick policy example. So this is for a 50 year old male. And when you’re looking at this, the target amount that this individual would want to put in is 50,000 per year. So you’ll see that. And then the breakdown of the, that amount is pretty much a 10 90 split. So the base premium is here.

The 45 45 is what is required annually. And that’s 10 per that’ll cover the base premium. And the about the 44,000 or 45,000 of P Louise is truly unscheduled, or you’re able to stuff that in throughout the year here shows it where you’re funding it for seven years and you are after that seven years, we’re basically doing what you call a reduced, paid up option.

So you’re eliminating any additional premiums needed from there on out. And then you’re just letting the cash value and the dividends girl throughout the year. On this specific policy, even as of 50 year old, you’re breaking even at around year five. In cash value or between years four and five.

And you from year one you’ll have liquidity or your cash value is about 88% or so of what you’ve contributed. So you still have you lose some of the quality up front and that’s the cost. That’s the main cost of starting these policies. But from then on, it truly feels like a deposit where that 50,000 you’re putting in every year, your policy cash value is growing by larger than 50,000 from year two on.

And this is I think this is where people get very confused, right? Because the difficult part of this industry is an insurance agent and ratchet up and take whatever fees they want like a home loan, but worse. So that the way. Shop this stuff around is to figure out what Tyler is saying.

That break even point when dad is, that’s the quick and dirty way of comparing policies and colors always does that for our folks. We always beat them anyway, but that’s the quick and dirty way of comparing the policies that you have now. Of course, there’s some, different nuances with certain kind of exclusion.

That different types of more flexibility of one year being able to pay your rider or the other you’re taking off those types of things that we’ll get to more detailed in the e-course and the webinar, but, for the most part that’s, if you just ignore one thing from this little webinar

A question we also get often is what, the policy loan rates. The normally most insurance companies for their variable interest rates, it’s based on the moody AAA corporate bond index. Granted we’re in this super low interest environment. It’s two point something percent, but the company also has their floor, their limits, as far as how low their policy loans will go.

Most of them are all at the company policy floors, which is hovering around four and a half or 5% as far as their variable interest rates. The company declares these rates annually, it becomes effective on your policy anniversary date. It’s that policy anniversary date may be different for everyone yet.

The company does declare it annually. And the good news with it. If your variable interest rate can increase by more than 0.5% every year. But it can go down. It has no limit on going down, but keep in mind that, the corporate bond index that, that, that doesn’t fluctuate, like what normal interest rates fluctuate.

It is a slow moving number. But there, there is some safeguards in there where you’re not sure. Get blindsided by this large increase in policy loan rates.

We have a lot of FAQ’s that we’ll talk about in the e-course, here’s some of ’em, the difference between the whole life and term life.

I’ll talk about, when you use one or the other we also discussed IUL, no, people always have that question and that’s the way we do, everything is a lot of this is products. But when is the product right for you? I honestly don’t care which one you use.

It’s I care when it’s the right one and I’m the person let’s say when you do term, when you do whole life, and the such we’re going to talk a little bit about. There’s a lot of rogue insurance companies that have really like loose standards, , it doesn’t make sense when you actually are with a company you want to be with a secure company.

We’ll talk more about that small insurance companies for as large insurance companies. Talk a little bit about different ages, who to get the policies on a lot of business owners out there. This is definitely something to think about, getting it on key employees. This is what all like the big boys, like Walmart.

Talk a little bit about taxes. And again, all this is in the e-course which you guys can get access to@simplepassivecastle.com slash banking. And we’ll talk about this on the webinar. We’ll be going to the cram school format. We go into this stuff that much more to tell us.

Here’s the big picture and the toddlers, you never seen this slide. I made this yesterday. This is the roadmap here. Step one, put a hundred grand in and not say you got to do that, right? We help you figure out what’s the comfortable level for you to start.

When I first started doing this a few years back, I did that $50,000 a year for six years. Today I’m doing a much larger one and I always tell people to start off small and probably, makes more sense for the agent to have you do a bigger policy than you’re comfortable with so that you can teach him to collect his commissions.

That’s not where we’re about here. We want set people up, you stuff a hundred grand in there in this scenario or 10 grand or whatever you want. Step two, you start to establish a banking firm yourself system, and you are able to take a big loan from that cash portion.

We’ll talk more about detailed on the next in the e-courses in the beginning is when it’s, the cash value loan is going to be the least. You’re going to be able to take the lease out in the middle. But as time goes by year two, year three, you get typically 90% of what you put in and your 4, 5, 6, it’s essentially everything.

Again, these are front loaded into this stuff, but in the first year, just to using that as an example, as being the worst case scenario, and you’d take that 85 grand on your original hundred grand, we stick it in a deal and you make more money that way. Step three here, you’re leveraging money in two different places.

Step four is once you’ve act, once you’ve invested the money into a deal or you’re producing income there, which is paying back the loan, right? Just if you would have taken the money out of your heat, lock out of your house and invest it in deals and use that money, the payback. Or what a lot of people just simply do is you just take it a little bit extra and put it on the side.

So they’d know they can make their debt payments for the next year or two. That’s just more of a mindset security thing. Like Tyler says, there’s a lot of flexibility on paying back these life insurance policies. We’ll talk about worst case scenario, which isn’t that bad, not paying back your principal and not paying back your.

It’s not the end of the world. It takes a lot for the policies to decay it. Cannibalize itself is the term that we use. And we’ll talk about exactly when that happens. When you’re customizing the amount of your policy, those are the things that you did have in the back of your head to be able to meet your commitments.

And then the step five here, you have your income generating assets paid back the loans of the policy. Or like they said, just keep that stockpile on the side and just pay it back when you want. That’s what I do. I’ll take a loan out. I’ll go into a deal. I’ll take a loan out and I may not pay it back for six months or a couple of years.

I just whenever I get a glut of money or when the deals exit, like we just had a deal exit a little while ago, Tyler was limited in that one. That’s what we did. We take that money. We put it back into those cash. That’s how we use these policies. Really no real motivation to really payback the policy because it’s ours.

Life happens here, a little cone I put here, so you have unexpected expense loss of job. College savings. Use this cash value as your emergency savings account while let’s making yield, give a nice four or 5%, but it’s making a tax. In actuality, you could probably argue that to making five, six, 7% potentially, or even 8% for somebody you hide in cupboards is not there.

, step six is, grows over time. And then you start to get a handle how to use this account, right? Like I’ve gotten a handle how to use it. I take it out. I put it into deals when it deals cash out. I put it in here, but then I go into two more deals. In the time being it becomes a very fluid kind of state and it’s very similar to it.

You guys have gotten really accustomed to managing your passive activity losses on your taxes to offsetting your capital, gains it, depreciates recaptures on deal exits, and then a sub seven all this time. You’re enjoying the benefits of asset protection. And at the same time, if we always joke, if I died or toddler died or wives are gonna be,

it’s sad, but they’re going to be set. I always ask what would you do if you had X amount of money? If I die, she just tells me to go play theater again, but yeah, you’re setting them up. And it, we’re technically not doing this for death payout, but that’s some of the, also the benefits to them. And Tyler, is there any kind of other he wants to get assisted living benefits.

There’s disability, there’s all these types of things that can be put in there too. Definitely. I think the biggest thing is truly the flexibility the flexibility of funding, the flexibility of what you can use it for, you are in control. Personally, this has replaced the five to nine a long-term care plan.

All of those other things that I would normally contribute to where it locks in money, or even remember my retirement plan all of these will cover that you’ll be able to contribute. It grows. We’d like to call this the, an asset where you’re doing this in addition to what you were doing already.

You don’t have to choose between a policy or a syndication deal. You do the policy and you do the syndication there layer. So you’re just enhancing what you were going to do. Already, but surely the flexibility if it’s properly designed allows you to choose what you’re going to do with this and allows you to set it up super benefit, your self while you’re living along with legacy planning for your beneficiary.

And in the course we’ll outline all the advanced strategy. What people typically will do. They’ll dump in a bunch of money the first year, sometimes based on where your birthday is, what part of the year it is, you can backdate and double this about and get her to the jumpstart on it.

And then, these guys are dumping money in there quick, so they can quickly put it into the next deal. Usually it takes another like a week or two to get this stuff really wrapped. Get all the banking relationships, direct deposits all set up, once it’s all set up, it’s as simple as calling up that life insurance company or just going into their online portals.

And in that direct deposit to your account, then you are off your funds that you signed your PPM and other certifications. You’re set, you’re making money to places and, that’s where we get to at the end step eight, you stop worrying how to grow your wealth because you’re optimized.

What’s the passive cashflow is it’s not that hard. What we outlined here is exactly what the wealthy do, but it’s a little bit of a twist, right? We’re using the same technology, the same product that is full life insurance, where we’re configuring in a very special way that benefits what exactly what we do.

If you guys are real estate investors or you invest in other types of deals. This is your jam guys. This is exactly what you guys need to be doing to augment and make money at both places and get the asset protection. But even if you’re not real estate investing, like Tyler said, for a lot of people, this replaces the 5 29 plan or any long-term type of insurance options, or just a place where you just get cashflow building up.

It’s a lot better than in your bank and it’s something that you can try.

But anything else you think I missed out Tyler? No, we’ll go over a lot more in details and answer specific questions during the e-course. Make sure you guys sign up here. If you guys are listening to this video or after 20 20, 1 of just check out this website here, it gets signed up for the free I-Corps.

And if you guys have any questions contact information, this was up here earlier. We always tell people, get educated and then we can help you guys out, whether it’s taking a look at your current policies or getting you set up with fresh new ones, get this infinite banking set up for you sooner set up.

Thanks for listening guys. And we’ll see you guys next time.

Near Death Experiences with Kathy McDaniel

https://youtu.be/_Mhh74obBWs

Hey, simple passive cashflow listeners. Today, we have Mary McDonald here who is an author of a great book that you could find on Amazon called misfit and hell to heaven. Ex-pat so the reason why we are bringing. Mary onstage is because we like to do one of these touchy feely podcasts, know, maybe at least every couple of months, because a lot of the listeners who are listening are financially free.

You’re definitely on the right path to get there. Me certainly, I’m not to where I want to be, but I know. I’m on that flight path or that trajectory to get there. So I really try and make a conscious point to smell the roses along the journey. And you hear it all the time, even though you have hardly think it’s stupid.

Everybody says it’s all about the journey. Easier said than when you get there. Of course. But today, if you’re kind of rushing around trying to put on your own oxygen mask, trying to get your rentals or build your portfolio streams of income. Maybe take a break and, really embody what we’re going to talk about today,

but, um, It’s marihuana. give some quick background on yourself. You used to be a property, just like the rest of us were rental property owners. I started out just went to school and had, was an English major and then got married, had a couple of kids. Got divorced and then needed a job. So I was lucky I had done some bookkeeping for a bank.

So I went to work for a property management company. They had about a hundred units. And so I was thrown in the middle of that. There was two young men that had done. It started off as sheet metal workers and they started buying properties, rental properties, one at a time. And now after just a few years, they quit their sheet metal working and had all these properties all over town.

So a lot of them were run down. They bought them out. Discount, but they didn’t really bother fixing them. So it was a bit of a challenge for the type of tenants they drew. And it became my mission to get in there and organize everything, to bring the units up to a more habitable condition.

And then we better tenant that could afford to pay. Anyway, it was a, about a seven or eight. Project and I loved it. I loved working with people. And then at one point they said gee whiz, why don’t we start a property management company of our own. Kathy. My name is Mary Kathleen. I go by Kathy.

You go and get your real estate brokers license and we’ll do this well. We had a falling out over percentages, of course, when it came to it. So I started my own company. I left them and started my own company. It was the second one in town. So I had another lady ahead of me that I could see.

How she was doing it, but I loved it and it grew I, I hired my sister. I hired my daughter. We had a really good reputation. I was known as the land lady and I had oh gosh, I had probably. 35 units that I manage full-time and then I did hundreds of leasings. We lived in a university town, so there was lots of tenants that came in that were students, but I love this.

And I had a fiance that I was crazy about and life was good. And then things started coming apart. My fiance got transferred to the east coast. I didn’t want to leave my family and my business. And so we decided to split up. Soon after that he discovers, he’s got leukemia. He’s got to go get treatments in Seattle.

They’re going to try and save him at a research hospital. He was only 53 years old. We’ve been together for eight years and he needed a caregiver and I said, sure. So I dropped everything and it was only supposed to be a couple of months, get the treatments and then we’ll see how it goes.

Everybody was feeling good about it. We got up there and he would rollercoaster up the wood and hit the bottom. Then he’d beat up. And this other woman and I ran ourselves ragged for seven months taking turns, sleeping and driving and take him to the hospital. At the end of the seven months, he passed away and I was.

And physically, emotionally, mentally I didn’t know whether to go back to Santa Cruz to stay in Seattle, but I got the flu and in my run down condition it went to pneumonia and then to ARDS, which is very much like COVID, it’s a lung failure. My friend took me to the hospital.

Thank God I, my heart stopped and the ambulance that got me started again. And next thing I knew there were saying, Kathy you’re going to sleep. You’re going to sleep. You’re going to be fine. I was in an oxygen tent. Everybody was panicked and they intubated me and put me in a coma for about three weeks and really didn’t expect me to live.

Supposedly I’m laying there asleep, but I wasn’t, I slipped over to the other side. And the first thing I realized when I got back is that I never really knew I was dead. You don’t feel dead. You’re just still you don’t really have a mirror to reflect and say, whoops, I don’t have a body. You’re just you.

Opening my eyes in that situation was not good. I could tell something was wrong. There was this accurate smoke and a reddish glow. And then this horrible voice came at me with, do you know where you are? And I said, hell. And it just laughed this boisterous Bela Lugosi laugh.

I took off running because I used to do, I was terrified. It was a long process in that place. I went from being in this horrible bombed out city with these creatures creeping around to different sections of hell. At the time again, I did not have the luxury to be logical and sit down and say, wow, I wonder what’s going on at all times.

I was literally what I thought running from my mother. I, was given tasks by these demons that were really just cat and mouse games. They were playing with me. The tasks were impossible or they were disgusting or just terrible. Take my word for it. That I refuse to do that. Every time I refused to do something, I was thrown into a worse situation.

They kept saying that I should disappear. I should just give up. I was never getting out, but there was just something deep inside of me that thought, no, I’m a fighter man. I’m a survivor. And I will get out of here. At the very last section, I didn’t know it was going to be my last section and I never quite last my last sense of humor.

Okay. I did something and it’s all explained in the book, but it had to do with singing a Christmas Carol in hell and that’s not done. So with that Christmas, Carol coming to the words of Jesus. Boom. I found myself in this huge white light space and I was filled with joy and love. And it sounds so trite.

You hear people talk about this all the time, but when it’s you, it’s a totally different party. I knew again, I did not know I was dead. I just knew that I’d forgotten everything that had happened before. I had no recollection of hell no recollection. Of my family on earth, my job, nothing. I was just in this totally wonderful place that I didn’t ever want to leave.

And when I looked up and looked around, I saw my friend, the one who had died and I thought, oh my gosh, it was so thrilled to see him because he looked great. The last time I’d seen him, poor thing. He was bald. He was all purple with all the bruising and wasted away. And now we look fabulous and I, started to say something and I thought that’s when the recollection here, I thought, oh my God, he doesn’t know he’s dead.

And he started to laugh and I thought, wait a minute, if he’s dead, maybe I’m dead. And the thought of it sunk in, all right, bingo. You’re totally happy. You’re in this wonderful place. And you’re with your friends. I was astatic. I thought, oh my God, I made it to heaven and this is going to be great.

But then, and where all the angels like in the garden and stuff what’s going on. So he had been showing me something in this book. And when I came back, I couldn’t remember what it was, but I know now it was probably what I had to come back and do before I could return, because he said, now, Mary Kay, you’ve got too much left to do.

And it was like no hole. I was not going to go willingly. He just kinda smiled and shook his head and I woke up in the. I see you unit and there’s my family around me. I think they’re my family. I’m really not sure. My poor mind is full of drugs and I’m back. And I just remember being in heaven just a little while ago and how I had too much to do, but how could I do that?

Right now I was down to 86 pounds. I had no muscle mass. I couldn’t breathe on my own. I couldn’t move. I could blink and move one finger. And I was thinking, how cruel was that? You’ve got too much left to do, and you can’t even breathe on your own. I really feel for the COVID people and their families, because just because you survive three weeks in a coma, doesn’t mean your work is over.

They sent me to a rehab abilitation hospital for physical therapy. I had to learn how to do everything again, my muscle mass had evaporated, so I didn’t know how to crawl swallow. Tie his shoe walk, go up steps, nothing. I had to learn all of that all over again, just like a baby. And it took a month before I was able to walk to make my bed.

They wouldn’t let me go home unless I could do a few basic survival skills. But I did get home. And I had been dating this nice man that stood by my side unknowingly and during the whole coma, we got married and I tried to get back into my life. However, I was rather depressed about my. Financial situation.

I quit my job and sold my business to come help my friend and all that was gone. I had no home. I was 53 years old. I had just married somebody that I’d only known for about eight months and I was supposed to be doing all this work so I could go home to heaven. It was not good.

However, the real estate instinct in me kicked back in my husband and I said, let’s get a home. We need a home. We bought a Jeep home, lived in that for awhile. Then I had an inheritance. I bought another home. We rented out the first home and we started buying rentals up in Washington. The the real estate was practically free after living in California.

So you could buy rental, put the minimum amount down. And the rent that came in covered the expenses almost. So we started gradually building that back up. I read everything. I could get my hands on for the new things that were coming in. I found lending club. That was an organization I saw on 60 minutes where you lend money to other people through this company and they can skip the bank fees and all of that stuff.

And then they give you back a decent percentage of interest. So you’re helping people with your money. I liked the idea of that. I started doing that when they opened, I can’t remember how many years ago now, seven or something, but I’ve gotten a steady six and a half percent. And I pick my own people that I want to lend to that tells you who they are, what they do for a living, why they want the money gives you a credit report.

Anyway, it’s a hands-on kind of thing. And you feel like you’re helping people. I liked that. I liked also after coming back from this near death experience, this incredible. Feeling of needing to help people in worse situations than myself became almost overwhelming. I got great joy from giving money to homeless people.

People standing on the corner with a sign, give me, I just got such a sense of money, helping people, not only just helping myself. So that, that became very ingrained in me.

Like you had empathy the thing and the gave you empathy to see it from those people, the needy person’s eyes, or was it more, am I going to be I’m on earth for a little bit more? What it was this money, but what else could this money be going for? It was so interesting being dead because you didn’t have anything.

Physical you had you, there was that whole thing of you can’t take it with you became abundantly clear. I had no jewelry on, nothing that was there except my soul and what I did on earth that I brought with me, which was the good that I did. I brought with me. So when I saw it. People. I got, I had this thing after being in a wheelchair for quite a while.

I had this thing about being invisible. When I was in a wheelchair, it was an awful feeling. So when I got out and I would see somebody particularly homeless people in a wheelchair, I would go out of my way to look in their eyes and say hi, and just get shock on their face. Oh dude, I’m not invisible anymore.

Same thing. That sounds like it’s like you had that higher level of empathy, or you are aware a lot more aware of other people’s yeah. Sense that we’re all one, we’re all pieces of God. One person is not any more valuable than another. What you have is not as important as what you do.

And that’s what really brings you joy. It just seems to me that, money is a wonderful thing and it’s because you can use it to do things just to afford it or. Just only for myself, just brings a hunger for more. That’s what I found. I still love my real estate. I love what it can do for people.

I have a real empathy for homeless. My book I didn’t get into it to make money. I know I was sent back to write it. The book . Is more than just that one little three or four chapters about how it’s about my whole life and my family’s lives going way back, a couple of generations up till now and how we all struggle with things.

And we have to help one another. And I don’t know, I just feel like. The homeless are the people that need the most help. So I’m an advocate that direction, any money I make, half of it.

You’re in Tacoma and I’ve already given them a lot more than I’ll probably ever make, but it’s always worth it. Just go downtown sometimes and drive around and see the people sitting around the corner, particularly up here when it gets cold in the winter with nothing. If it doesn’t move you It probably something you should think about, but yes, we all have to provide for ourselves and our family, but there’s that need to also share.

And that’s what we usually teach our children when they’re small share, but we can’t lose that lesson. So what this is called the is NDE near death experience. It’s like an epiphany moment. Very, I don’t know what you would call, like a lot of you guys look like talk to has some kind of experience at work where you get fired, or you get passed up for a job or.

You go to someone’s retirement party and they have crappy Chinese noodles to wish somebody off for 50 years of hard work and dedication. And it’s similar. It’s a turning point in your life that you see another perspective and it takes you down another path, but it gets Kathy you’re in this realm of NDEs.

Do you see any, how other people react to it? Have you seen any other perspectives that you’ve seen from other people’s the, that you’ve spoken to as you shared your experience, it’s very lonely when you get back from a near-death experience, because most people don’t believe you. They don’t have any understanding.

The only ones would be sometimes emergency personnel who’ve seen this before. They’ll believe you, but your family doesn’t want to hear about it. They tell you it’s it was the drugs. Didn’t really happen. It was a dream, but this is a life altering experience. This is something that doesn’t go away and it changes you forever.

And it took me about 10 years to get up to them. N, which is the international association of near-death studies in Seattle. To where I found an organization of hundreds and thousands of people all over this world that have had NDEs and to go to their annual conferences and and the monthly meetings, and just be surrounded by people who have had this experience and who are also changed and are living in the world.

And they love living in the world, but they can’t wait to get home. That’s what changes you, you lose all fear. Nothing really can throw you off the rails much anymore, whether it’s politics or money or whatever, it’s all going to be okay. This life is really just a place. And I’ve learned from other people we choose to come down here and be who we are and learn the lessons we want to learn.

And God isn’t picking on us is something we’ve chosen. So I can give up victimhood. I can stop saying that person was mean to me. If they hadn’t done this, I picked every single thing that happened in my life. And so something weird happens that I don’t, like I say, wow, I wonder what the lesson was there.

But I look forward to going home and being, and having a that’s just indescribably. Great. But while I’m here, I’m going to enjoy the ride I’m going to do what I think I’ve been sent down to do. And just give people hope and give people a little hint that it matters.

What you do here? Most people up there get a life review. God’s not up there with a book saying, okay, you did this, you did that. God does not judge us. We get a life review and it’s not even a matter of judging ourselves. We just get to see what our actions did to every single person we ever came into contact with our whole lives and to feel how they felt when we interacted.

So when we’re interacting with people in a loving and kind way, we’ll be able to feel that if we’re being mean and stingy and hurtful, we’ll be able to feel that too. It can’t help, but change you, having that realization, having that happen to you? Yeah, I’ll say like in our community I now doing this podcast since 2016, hundreds of thousands of people I’ve come into contact.

I still do free initial onboarding calls to new folks who joined the club. It’s civil, passive cashflow.com/club. But I see so many different financial profiles. And more importantly, I see the similarities with the people who are going to reach financial independence and happiness, and those who don’t and those guys who don’t, they have this, what’s in it for me type of mentality.

They’ll come into the free, I have a free Facebook group, which is a kind of a a neat wait. So I can filter people into the community. These are the guys who is intermittently coming into the group and asking some random, okay, does anybody have a referral for this? Does anybody for this?

Everything’s me. They’re so stingy with their money, like you said, right there. And I get it. I was the same way, and that’s why I pick it up so quickly because I was that same way. It’s the people who. From what some of my mentors that spend money freely, especially on like expanding the business, or going on a trip to go visit a property. I see the stark contrast between somebody who doesn’t want to spend $50 on some kind of ebook to learn, or, and they continuously go to these free resources. CFEs is what I call it. Chief easy. And it’s funny because they don’t realize what they’re doing and everybody else who’s in the inner circle, who has that more abundance mindset.

They can point these people out super easily, and they distance themselves from those individuals. And unfortunately, these individuals never know, but I’m saying this because. Maybe take a self-awareness check of yourself. Are you somebody who, when money stops at you, do you afford money?

Like Scrooge McDuck? It’s okay to like, to see the numbers rack up in the bank account. I love doing that. That’s one of the fun things I like to do in the week is just check my bait count. I’m not going to lie, but are you somebody who. It’s hard to give away, especially to other people or to, do you spend money on education or meeting other people to expand your network, to expand your net worth?

Or do you hold it back for that next investment? But don’t want to get too preachy here, but I’m just saying, Hey, us in the inner circle we see these stark contrasts and these people never again to there. Because they have that type I agree with you. And not everybody has to go through and NDE near death experience to see that the other side, hopefully this worked for a lot of you guys.

Maybe next time we’ll do a wash, the cust ceremony, just kidding. But sometimes that’s what people need. Right. So people are so like, they’re still stuck. Serious. They get too serious. You got to lighten up. And that the last thing I’ll end with, and this kind of goes in with our retreat that we do every year.

And the communities that we try and foster is at the end of the day, y’all are going to be financially independent and likely five to 10 years. If you invest in the right side, You need to get on the simple passive cashflow gravy train, you get the passive losses, you pay less taxes. It’s math.

You’re going to be financially free five to 10 times faster than most people. The currency of the rich is relationships. I see it on Facebook all the time. Somebody posts something and nobody cares because that person is just one of those CFE guys. Cheap, easy. They offered no value to their people around them.

Who are the cool people in high school? The cool people, other than the cheerleaders and football players, blah, blah, blah, or the people who added value to other people. And that is ultimately when you’re older and you have the money you’re going to wish you had that. All right.

Any last thoughts before we wrap up? No just for fun, you can go to Amazon and buy misfit and hell they have an ex-pat. It is get a lot of humor in it. And I think a lot of people resonate with the type of families that I grew up with. And the bottom line is just to be loving and kind,

so we are not advocating going in engineering your own near death experience. There is no NDE in a bottle at this point. So the best we have is to learn from others. That’s right. That’s right. You’ll learn soon enough. Thank you. Yeah. Thanks for coming on Kathy. And everybody else maybe check out the networking section on.