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https://youtu.be/WY9E4kWFz50Yeah, I think it’s, I think there might be a divergence within like residential stuff, which you guys work with. And then the commercial assets, like I haven’t seen the run-up in prices in commercial assets, maybe like a quarter point across the board of cap rates, lowering. By the way it’s you guys means that the prices are going up when the cap rates are what they sell for lower, but nothing nearly is like the residential.
Well, that’s what I’m like. I lower my like waterline for like people to buy turnkeys to me, buying turkeys make absolutely no sense right now. But so if I were to understand how you’re thinking and summarize it, you’re thinking this is the opportunity to sell residential properties. What do you think? A lot of people in the middle of the pandemic, the summertime, we’re creating a lot of videos, the YouTube.
God love them. Right? They’re always doing those tweetable or those SEL terms where the world’s going to end. There’s the way, lots of foreclosures. Is that really going to happen? Where you put, I put my money on that. I think that will be a big disruption. I think I was Dallas, Texas last week for a couple of conferences, had a meeting with some, the manager of the billion dollar fund that we were talking about what they’re thinking and it lines up with I’m thinking this cycle will end and we’re not sure if it’s going to end in six.
12 months, 18 months, but this high that the cycle will end and then it will go the other way. And the managers words, it will lead to an extended period of depreciate. And we’ll see these prices steadily declined. Oh. And his thought was late. This decade, our economy is really weak right now and the fundamentals are not good.
I think there’ll be some significant challenges ahead had they’re not reflected in the current real estate market, but at some point they will be. And most of the rosiness today is a result of that. A good chunk of it is government intervention, which is the record, low interest rates are near record low.
And then all of the stimulus money that has been pumped into, into the, the economy, uh, over the last year that’s been, I think that’s, there’ll be another side of this that will pay for it. I think. 2000 5, 6, 7. It was such a dramatic run-up there had to be a turn and eventually it turned in late oh seven and through oh eight.
And it became a people were at that point, but you got to, oh, nine, 10 people are looking back at oh seven and oh eight and oh six and thinking, what were they thinking? Why did they think this would keep going up? Why were they paying so much for houses? And I think right now, fast forward a year, two years, three years at some point.
There’s going to be people looking back and saying, what were they thinking in 2021, people were paying for assets, be it a mortgage or real estate. I’m happy to sell into that market. In fact, I’m thrilled to sell in that market, but I’d be really scared as a buyer I’m having to buy. And I know talking to some of the funds, they have to buy, they have money.
They can’t not use it. And as they have to buy, they’re buying with expectations of very modest. Like low single digits that they have here, they’re getting four or 5%. And that is not even three-and-a-half percent people. It’s better either. They have a super cheap cost of capital, which some of them do, or it’s better than not investing the money at all, but I’d be nervous if you buy something and you’re getting three, four, 5% return.
And then the market turns and suddenly you lose your road, your principal, that would be challenging. So my thought, if you own real estate or you own a mortgage or any kind of type of asset with the exception of probably hospitality or our office buildings, which are probably you sell in today’s market, you probably won’t do well, but everything else by and large, not residential real estate, anything to do with that, I think it’s definitely, yeah.

AHP Servicing Financial Review w/ Jorge Newbery

https://youtu.be/NpDAlroiKHk

Hey everybody, we are going to be doing a deep dive into the 2020 financial audit of servicing. If you guys haven’t heard about this, go to my website @simplepassivecashflow.com/AHP. I’ve known George since 2016 more poorly. I’ve floated a 60 to a hundred grand in his fund.

Got a nice cool. Return every single month, like clockwork. If you guys go back@simplepassivecashflow.com slash HP, you’ll see all the past webinars we’ve done on this fund. One of the things I personally invest in, but the question that comes up a lot of times is, as a fund, it’s hard to determine other than, talking to other investors had they had a good experience, but supposedly the financials are audited.

But look around. Nobody knows what the heck that means. So we’re going to dive into it today and George has got the report up and I guess let’s get into it. Welcome George. Hey, Eileen. Thanks for having me on. these reports can be pretty dry and overwhelming.

Maybe walk us through what are things, this is the HP. Audit obviously, this is something you can do with any private fund that you’re investing in or possibly wanting to invest in. But maybe George take us through how these reports put together and who does it?

How do they go about it? Sure. So we have all. Regulation eight plus companies generally are required to file audited financials with the sec through their Edgar system. And in fact, I believe that’s a requirement of most, if not all publicly traded companies.

And The reason for it is you want to know if you’re investing in a company and like you said, you don’t know the minutia, what did they invest in today? What did they sell today? So the independent auditor’s report will be an independent company.

That’s engaged to review all the financial records of the company and then issue a report. And so we do this every year. We’ve been doing it since we started our first regulation, a plus fund in 2016 and we get these done and then they’re filed with the sec and they can be reviewed there. This was a challenging year, 2020, but this will show how we fared and then I can go through each page and interpreted, everyone can interpret for themselves, but I can certainly share some context about how we did last year and what the state of HP is right now.

And of course, this is obviously George is the principal HP, and you guys can look at the numbers on your own, but, as I always do it, like with our apartments we have the PNLs and all the line items, I usually look at a certain things I personally do it and we’ll see how it kind of George does it.

And, but you guys can all have a C dig through this stuff, find your own. Yep. I’ll try to add some color. So it may all make sense. And certainly if you’re an investor HV, or even if you’re not, if you’re considering an investment in HP, we definitely encourage you. If you have questions on it or anything else about HP to reach out to us and we can assist we’re at HP servicing.com and this little plug in there, Jane.

I’ll dive in and go through this. This is Richie may that’s our auditor. You can choose through any. There’s a number of auditors in the country. Richard Mays has a lot of expertise in the mortgage industry, which is why we chose them. They do a lot of mortgage servicers, originators companies and invest in mortgages.

They have a lot of experience.

There’s a whole bunch. You can access this. This is on the SCCs website. We can also provide your copy. If you go sec filings or Edgar HP service, and you’ll see all our filings since the beginning of when we first filed with the sec in order to do the HP servicing offering.

that’s on their 20, 15, eight pluses on there. And. This first page is simply, some background on the audit and the auditor disclosures and whatnot. So not really too much meat there, but certainly something that anyone is welcome to to read same with the second page, but then you get to the meat, we started out with a balance sheet and then we’ll get to the profit and loss, but basically it’s showing and this report what we held.

On our balance sheet at the December 31st of 2020. And it also compares it what we held on our balance sheet on December 30, first, 2019. At the end that year we had 665,000 in cash. Some of these are fairly easy I’m going to mention them anyway. So cash.

End of the year, 665,000. We had an escrow cash of over $3 million. as our servicing portfolio has grown. we’re servicing both loans that we own, and that is own. We do continue to hold more and more cash and in escrow Accounts receivable. This is money that we’ve advanced sometimes on behalf of third parties.

So if somebody has a loan that we’re servicing, we may advance money on their behalf to let’s say, pay a legal bill or pay taxes. It’s typically repaid the next month when their remittance comes through and we can apply the payments that they received against the amount that we’ve advanced.

In this case, it’s almost a million bucks, $922,000. Here’s the biggest item though is mortgages that we held for sale. And they categorize basically all the mortgages that we purchased as held for sale. These totals, you can see just over $37 million. I’m looking right here. can see my cursor.

So just over $37 million in mortgages. Now a key item to understand is this is basically what we paid for the mortgage. So if we buy a mortgage. Where a family owes a hundred thousand dollars and the home is worth $150,000. And we buy that mortgage for $50,000 using very round numbers.

Then it’s booked at 50,000, even though they’ll oh, 150, we book it at what we paid. We don’t realize a gain or a loss until the asset is actually disposed of. This 37 million is what we actually paid for those loans. A note receivable third-party this is if we make any advances on loans that we actually own, or two entities that were related to, I’d say specific like 20, 15, eight, plus if we made advances on or legal or anything for them, that would be included in their prepaid expenses.

If we paid Prepaid and expenses on behalf of the company that we expect for services that not yet been rendered, that would be in the $300,000 other assets, property, and equipment any kind of computer equipment servers Would be included in there deposits, probably our security deposit on our bill, on our leases and other things like that.

$40,000 in the end, $45 million in assets. Now what do we owe? We have out 1.3 million in payables. These can be any kind of bills that we owe 1.1 million in escrow liability. So this is in all likelihood. This escrow that we’re holding $3 million. It’s probably offset by. We probably owe some of that.

So 1.1 is likely money that we owe that produces that cash probably down to 1.9 short-term debt. We borrowed money on a credit line or something like that. Short-term $662, I’m sorry. $662,000. Long-term debt. If we are long-term note we had last year, we bought a lot of loans. We spent almost 50 million at the end of the year.

I think we bought a significant number and We borrowed $14 million against the notes that we purchased. In fact, that was all incurred in the last six months of last year. But it’s what, like the number of the average one, the value on that stuff, and then the rate

it’s very light leverage still. It’s very light level. Yeah. We bought about in the last six months of last year the ideal strategy for the performing stuff, to use on that. We just use it to, if we had enough money to close, so basically we bought about $50 million.

I think it was 48 million in change that we spent for loans where the amount due on the loans was about a hundred million. The property values back in those loans was about 120. That’s what we purchased between July 20 20 and February, 2021. That’s pretty aggressive for us. And we bought these a great prices.

I think on average, we’re talking about 50 cents on those. And again, you look back to last June through November, which is when we made the deal. Some of them didn’t actually close to February for different reasons, but that’s when we made the deal and set the pricing, it was still pretty uncertain, the real estate market was surprisingly doing well, but I don’t think people would consider it

we’re acknowledging that it was doing great. And so as we kept buying the pricing was very attractive and we’re seeing that some of those loans were exiting right now and 2021 at significant markups, because back then you buy a loan it’s based on what’s the value of the underlying property.

And if that value goes up, people are willing to pay more. And also if we ever sell the property, let’s say we get an REO or a deed in lieu and we’re selling it. We thought it was worth a hundred last year and now it’s worth 120 and we’re selling it. That’s great. So we’re seeing a ton of that happening now.

And I think we’ll continue to see that through. I would expect certainly this year and probably sometime into next year, I imagine there’ll be a A point where this goes the other direction and in my mind strategically. We want to sell as much as possible today. If we get an REO, it will sell at a big premium, typically over what we paid for it, whether it was last year, early this year, or even or before COVID but also all the loans that we modified, we didn’t sell loans.

Since I came back as CEO in, in mid 2019, I said, Hey, no more loan sales. Let’s just hold everything we had. And we did that. But now these loans where we modified the loan and people are paying we’re now selling these loans at the average is mostly they’re selling for over 90 cents, which we typically bought them at 50 to 60 cents or less.

So that’s. Resulting in some significant gains this month we’re selling about 5 million next month, we’re selling about 9 million and we’re working on another pool that we’re probably closing in July or August. Those should provide some significant liquidity and we’re hardly buying anything right now because we see so few opportunities out there that have attractive pricing.

So back to the audit So member’s equity. That’s how much equity is in the company, $27 million. They add up the liabilities and the equity to come up with a total of $45 million now profit and loss. How did we do last year? We lost money. We earned asset management fees of two oh nine loan servicing fees of six oh nine interest income of nine 21.

Gain on on sale of mortgages, seven 24 other income, one 63. So we made $2.6 million last year. Significantly offset by expenses. We had over $4.4 million in expenses. In salaries and wages occupancy, basically rents and equipment 346,000. Admin nine oh six oh four professional services like attorneys just over a million dollars advertising.

115,000 depreciation, one 33 interest expense four oh two. So total loss of 4.4. Now, why is that? Why would we lose? We’d be losing money while ASP servicing is two things are the money that we raised goes for two purposes. One is to buy mortgage loans. Two is to build out a national mortgage servicer.

So that’s why, we’re all the salaries that’s because we have a national mortgage servicer that we built, which is licensed everywhere, except for the state of New York. We’re still working on getting her license in the state of New York has taken a long time,

 

where’s the interest paid to the investors.

We’re fortunate that is. Distribution. So next page. Right here. So we can jump there right now. Member equity, this is we’ll go for each year. We started out in the first year. We were active for two months. We raised 3.9 million. And then the next year we had $15.7 million come in as investments in 20 19, we distributed a 4.3 million so at the end of 2019, we had $12.9 million outstanding to investors that rose a lot through 2020, we raised over $20 million and we distributed Around a million dollars.

We didn’t do too many ramps with, so we distributed just over a million dollars and we lost $4.4 million. So basically think about this when we raise we’re always bringing in money every day from interest payments. We’re bringing in money from. Loans that are sold Oreos that are sold.

I shouldn’t say loans that are sold like short sales, REO sales. And so that’s the money that we pay out to investors in our monthly distributions. Overall, still we lost $4.4 million last year. So our total on sanction investors right now, 27, or right now as of December 30, first, $27 million,

the 10%. Back to investors 1% every month. Which line is that again? It’d be member distributions right here. 1.1 million. Okay. So that didn’t skip a beat. It came a little tough in March and April and bear in mind. Roughly half of our investors, because we’re still in the capital raising phase reinvest their money.

So they simply, instead of getting money out the door, that money is added to their investments. So with the reg a plus offering, you go out to a whole bunch of the masses. How many investors isn’t this whole there’s over 1300 investors. Wow. So you’re saying George and email.

It don’t expect an answer. Yeah, I know we have our investor relations. Michael Distasio is our primary contact in investor relations. He’s the one who’s normally responding to emails phones and other outreach. If you email me, I’ll definitely try to assist.

I usually forward it to Michael, unless it’s something that’s particularly out of the ordinary. I think you’ve told me this before, but now that we have the financials up, What is your logic on, like how much cash to keep on hand to be able to go after a good opportunity?

Or do you just raise it? We just raise it or we borrow it if we get caught short and we have a closing, like that’s next week or at the end of the month or something like that. So we don’t have Hey, we always want to keep a certain amount of cash on reserve. Literally money does come in every single day.

We usually know if there’s a big purchase coming up. That if we get over short money, we can usually borrow it on a short-term basis. So I’m not, keeping cash on hand, we’re paying investors or return on that. So I don’t try to keep anything significant dilute your investor pool.

What is there a certain percent number that you’d like to keep as cash? No, it’s a couple hundred thousand, $200,000. I think people will get nervous if they say, oh, we’re, we only have a hundred thousand dollars in the bank just because there’s always pay, just as money comes in every day, there’s bills that come And once in a while, it’s like an emergent, Hey, we got to cover this taxes today or something like that. So there’s always typically a hundred or 200, lots of times more and we try to manage that. Sometimes we’ll get Significant payoffs or Oreos or significant money comes in or investments come in and it’s not readily deployed.

We sweep that money to a money market account. So we’re earning some anemic rate of interest, but at least there’s a little bit of money versus sitting in the kind of operating account order earned zero. So that’s done regularly. It doesn’t add up to much, but it’s something.

Just a, I guess a personal question. What do you think about sweeping that money into a block five or like how Elon is putting money in Bitcoin? What is your thoughts on. I’m sure it goes against the PPM. Yeah, you’re right. In our STC offerings statement, we’d have to disclose that.

I don’t know. I guess the only reason to keep cash on hand is because we may have needs payables and stuff like that, acquisitions, but it is not I’d be a little nervous if we did that and then it wasn’t readily available when we needed it. So I think, These sit in the bank either in an operating account or in a money market account.

And definitely not Bitcoin. I don’t know how it’s doing today. I was reading on the news the other day. It seems to take a big hit. Went through the numbers and let’s get into how did the business go last year? I know you’ve mentioned March and April and I feel your pain.

I was a little. Afraid myself of what would happen with collections and March came. And then I was really afraid of April, right? Because that was when the lake happened. You would think people exhausted their cash reserves in their bank accounts that maybe can’t pay rent. But yeah, take us through 20, 20.

March and April were really tough. And even in may we were anxious that this was it, we had seen a big run-up for years ever since the 2008, nine, 10, 11 things started creeping up in 12 and 13 and primarily real estate values increasing.

And that had gone on for a long time, 18, 19. I kept thinking it was going to turn and and then COVID hit, I thought, okay, this is it. There’s usually a trigger that emotionally people say. That’s it, things are collapsing. And I was braced for that. And I was really concerned because we have tens of millions of dollars in assets and the potential, they’ve they could have gone down 10, 20, 30% and that would have been have a significant negative impact.

But the opposite has happened. They’ve gone up 10, 20, 30%. And I don’t think anybody expected that in March and April when our phone suddenly start lighting up from customers who were historically paying. And now they’re saying I just can’t pay, I’ve been laid off.

I don’t know if you remember the number and unemployment of our car correctly. It was spiking into the, 10 million, 20 million some. Huge numbers. And if I’m recalling correctly and all of a sudden, a lot of people were laid off. A lot of people couldn’t pay. We were giving forbearances because these are people that historically were paying income interrupted.

They needed a cup, a little break, but now our income started. Drawing up and then most challenging is we had a decent number of Oreos when an REO cells, that’s a big infusion of cash, anywhere from, tens of thousands, sometimes hundreds of thousands, and that stopped in most parts of the country.

Many parts of the country. We couldn’t complete a sale. We couldn’t get the deed. Some of the county recorders closed. The sheriffs maybe had the deed from a foreclosure and they wouldn’t issue the deed and that went on for months. So it really challenged our cashflow.

But we started seeing funds also getting nervous and they started selling a loan. So in June we said, Hey, we’re going to start buying opportunistically and that’s Turned out to be a good bet. And things have gone up significantly since then. And now it’s the opposite side.

For seven, eight months, we were aggressively buying, every dollar. We were paying distributions but just about every other dollar we had, we were buying loans. And now it’s the opposite. The last pool of loans we bought. Of significance was in February right now, we’re selling aggressively everything that we can sell.

Everything. that’s REO, we’ll sell everything. That’s a performing loan. That’s been, we modified and is now performing. We sell, there’s no extra value we can add to either of those situations and to exit into this market is great. The loans that we hold that are unresolved, that we’re still working on the homeowner with a modification or to complete a foreclosure, any of those things we’re holding onto, we’re going to take them to a resolution.

And then sell them and again, we’re not buying. So what we have is what we’re focusing on are I really want to get these things max resolved as many as possible and sold, by the end of this year. And I think for the next, six, seven months to get to the end of the year, it’d be a great opportunity to sell.

You mentioned you sold some of your apartment buildings. I imagine you did well, probably a lot better than you thought when COVID first hit that things you could sell stuff so strongly. We’re doing that and I think the buying opportunities will be limited and what you can buy.

There’s certainly stuff to buy, but you have to pay a lot. And so we will be on the sidelines as the buyer, but be out there aggressively selling. And I think that would be is the thing to do there’s time to buy at a time to sell, I think right now it’s time to sell. Yeah. I think it’s I think there might be a divergence within like residential stuff, which you guys work with.

And then the commercial assets, like I haven’t seen the run-up in prices in commercial assets, maybe like a quarter point across the board of cap rates, lowering, which by the way, it’s you guys means that the prices are going up when the cap rates are what they sell for lower. But nothing nearly is like the residential world.

That’s what I’m like. I’ve lower my like waterline for like people to buy turnkeys to me buying is make absolutely no sense. Right now. But so if I were to understand how you’re thinking in summarize it, you’re thinking this is an opportunity to sell residential properties

What do you think a lot of people in the middle of the pandemic and the summertime will creating a lot of videos that YouTube offers. God love them, right? They’re always doing those tweetable or those SEL terms where the world’s going to end. There’s the weight loss of foreclosures.

Is that really gonna happen? Where are you putting your money? I put my money on that. I think there will be a bigger disruption. I think I was in Dallas, Texas last week for a couple of conferences, had a meeting with some manager of the billion dollar fund that we were talking about.

What would they thinking? And it lines up with I’m thinking this cycle will end and we’re not sure if it’s going to end in six months. 12 months, 18 months, but this high that the cycle will end and then it will go the other way.

In the managers Words it will lead to an extended period of depreciation. And we’ll see these prices steadily declined and his thought was late this decade. Our economy is really weak right now. And the fundamentals are not good. I think there’ll be Some significant challenges ahead.

They’re not reflected in the current real estate market, but at some point they will be. And most of the rosiness today is the result of, a good chunk of it is government intervention, which is the record low interest rates are near record low, and then all

the the stimulus money that has been pumped into the economy over the last year that’s been, I think that’s there’ll be another side of this, that we’ll pay for it. I think about 2005, six, seven, it was such a. Dramatic run-up, there had to be a turn and eventually it turned in late oh seven and through oh eight.

And if it came a people were at that point, you got to, oh, nine, 10 people are looking back at oh seven and oh eight and oh six and thinking, what were they thinking? Why do they think this will keep going up? Why were they paying so much for houses? And and I think right now, fast forward, A year, two years, three years.

At some point, there’s going to be people looking back and saying, what were they thinking in 2021 people are paying For assets, be it a mortgage or a real estate. I’m happy to sell into that market. In fact, I’m thrilled to sell in that market, but I’d be really scared as a buyer I’m having to buy.

And I know, talking to some of the funds, they have to buy they have money. They can’t not use it. And so they have to buy they’re buying, with expectations of Very modest yields like low single digits that they have here. They’re getting four or 5%.

And that is not even three and a half percent people. It’s better either. They have a super cheap cost of capital, which some of them do, or it’s better than not investing the money at all, but I’d be nervous if they, if you buy something and you’re getting three, four, 5% return, and then the market turns and suddenly you lose your road, your principal That would be challenging.

So my thought, if you own real estate or you own a mortgage or any kind of type of asset with the exception of probably hospitality or our office buildings, which are probably you sell in today’s market, you probably won’t do well, but everything else by and large, not residential real estate, I think to do with that, I think it’s definitely time to be a bestseller.

You think It all indication because of the stimulus money and things move slowly. What we have, pretty high, maybe single digit GDP growth, these next couple of quarters, at least. Yeah. That could be the case. But I think it’s slightly artificial just because of the stimulus, I think that’s driving it.

It’s not the That the economy is doing as great as the numbers may reflect. So at some point maybe once that burns off, people are going to have struggling to pay their mortgages. And that’s going to start the foreclosure that perhaps they come in and move into our apartments. Yeah.

Reversal. The reality is, think about this the rallies, there’s millions of families who are having trouble making their payments right now. You just wouldn’t know it necessarily because there’s millions. There’s a significant number of millet. There’s millions that are in some kind of forbearance or other types of a payment plan.

And that is, I, in my mind is masking the underlying challenges, which will, you know, once the foreclosure moratorium, Zen. Once you know, the forbearances and it’s pulling up the covers. What’s really going on down here. And I think that’s when we’ll start seeing some disruption that’d be a trigger.

Now what concerns me and what we’re trying to get ahead of is once these foreclosure more attorneys lift, there will be In my expectation is that there will be millions of loans that are suddenly moving through the foreclosure process that will clog the courts that will just clog the whole system.

Now, what if we have a loan today and we’ve exhausted the options of modification or any type of consensual solution, we are trying to move that. Forward as fast, as possible. And also as far as possible, recognizing that in some cases we can’t complete the foreclosure because of some kind of restriction like a moratorium.

And so we move it to that point and then the foreclosure moratorium is lift and we can, we’re far along in the process. And part of it, there is a little bit of it that some consumers, some borrowers maybe You are saying, Hey, I’ll just deal with this. Once they can actually foreclose on the home.

And then I will be more than maybe I’ll do a modern or something like that. And that’s fine. We’ll work on some mods then, but some people are just not responding to any kind of outreach today because they know that we can’t foreclose on their home and that’s a little bit frustrating, it’s the way it is and we will recommend it.

But I think there’s a lot of struggles right now. Families that are hidden by all the government intervention that foreclosure moratoriums is extra stimulus money, the extra unemployment money, there’s a lot of stuff that is propping.

This country’s economy up. And I think that kick out a couple of stilts and we’ll start seeing some adjustments and things won’t be so rosy and people won’t be making multiple offers, sight unseen, no contingencies, all this stuff that we’re seeing today, which is great if you’re a seller, but not so good if you’re the buyer who is looking in two years and saying, oh my gosh, oh, 20% more than my house is worth.

Which is what happened last time. And then people stopped paying and then people who aren’t even in trouble say I’m not going to pay because I own, 20% more than my house is worth. It does make sense, which is what happened last time. And then it just starts this thing where people go, everything collapses the other way.

Sounds good to me. Cause I got a couple more properties. So single-family homes that I’ve reluctantly done the purchase strategy with we’ll probably sell here in the next year, hopefully. And I think that’d be great timing for me. Yeah. Exit. My message is to sell while you can.

For HP servicing, we have two things. One is we built a service or partially in anticipation that we want to be ready for the next turn and for the next downturn. And We will be here once there’s all that disruption occurs, we expect that our servicing portfolio will significantly grow.

And now we can grow as a company. So that’s a period. Those periods of disruption is where you can take market share away from the market leaders and hopefully become a market leader ourselves. And that’s when you guys start thinking your chops with all that stress out there.

Exactly. It’s a stretch. it’s an opportunity to make money, but it’s also opportunity to help people. They can’t be one in the same thing in our attention, this and do that. One of the big questions that my folks have asked me, or they asked, I got a question like that somewhere every month is HPS retentions.

And some people I’m just like, seriously, it’s not like a fricking bank. You can’t just put money in a fund and expect it to come back out, maybe comment on there was a big, a lot of people that panicked right in the beginning of COVID that wanted their money back and it’s just that’s not how it worked, guys.

I know that we had one internet trouble that was like, HB is horrible. I like it. When you look at them profile and it says, who’s this ? There was one guy who had a hundred dollar investment who was waiting on his redemption and he was like, every place he could go, he was like, this is terrible.

It was a hundred dollar investment. Here’s where we are with redemptions. That’s why not a credit investors , you don’t want them. Yeah, we do, but we didn’t expect this to happen, but here’s what happened. We offered redemptions best efforts redemptions.

So if somebody requests their money back, we would undertake our best efforts to redeem that money within 30 days. And we started offering them in 2016 with the first regulation A-plus offering 20 1500 plus. And we were able to consistently do them within 30 days. And COVID hits.

We had, and that’s what I did. I took her ademption at one time, I needed to take some money and go into a syndication deal. That was more long-term. That was more of an equity deal. And then I put the money back. I think I took a month or two to process it. That was the reason why I went into the fund because there was like, there’s nothing out there that has something that even resembles redemption, but I knew very well.

I’m a responsible investor informed investor, knowing that, Hey, it’s up to you guys to see if it works. The most important thing is the fund and the whole investor base. Exactly. I’m glad you brought that up because last year we could have just simply said, Hey, we’re just going to not buy anything.

And every dollar we get our hands on returned it to, that comes in and revenue return it to investors. But for the investors that are staying in this that are in it for the long haul, that would have been the best strategy. We were seeing great opportunities. We spent a lot of money last year, almost $50 million or over the period from July, 2020 to February, 2021 in buying loans.

And those investments appear to be paying off very well this year as we resolved them. But now our focus is returning money. We don’t see opportunities. You’re absolutely right. We have to look out what’s best for the company.

And we want to honor redemptions. I think we’ll be back to honoring redemptions within 30 days this summer and right now without buying anything new and of significance and selling as much as we can, we’re starting to see big cash come in. In a nutshell on the redemptions.

So we’re having big cash come in and we are starting to redeem significantly. And this month, I think we’re in a process around 200 redemptions, a couple million dollars. There’s probably another 2 million that we probably right at the end of this month. And then through Late June, July, I expect we’ll probably have about close to $8 million.

That’ll come in. And a good chunk of that can go to redemptions as well. I was curious because you had a big backlog, right? And they were sitting in there when you’re like, Hey, we lean, it’s your turn. What percentage of people are actually following through now that we’re on the other side of COVID it’s like you’re just getting scared.

You’re absolutely right. I think yesterday we sent out about 100 emails to investors saying, Hey, we have money available to redeem. We’re seeing about 25% maybe even a little bit more that are saying, Hey, don’t worry about it. And and they don’t need it anymore. So that’s fine.

That means we just , move down the road to the two additional investors we have. Currently, and ever since COVID started, we’ve been. Processing redemptions in the order received. Whoever requested earliest, those are the ones getting redeemed. And we got wildly behind , in March and April last year, we had a huge number of redemption requests.

But now we chipped away at it through the year. Now we’re making big strides and I think we’ll start seeing over the next couple of months They’re getting actually caught up in being back to the point of where we are reviewing within 30 days.

Yeah. It’s harder than I thought. I’ve not thought it’d be more like half, but that’s a surprise. I’ll make people actually follow through. Yeah. I know actually a fair amount. Yesterday we sent out a hundred. I’m not sure what, number previously it’s been more modest numbers.

I’d say about 25%. Maybe a little bit more, based on what we had through the beginning of the end of last month, we forecast a 25%. We’ll cancel it. It may even go up and you’re right. I wasn’t really focused on it, but now that COVID has easing people, seeing the market NHP getting stronger, I think they start thinking, Just leave it in there, if that’s all your true friends are I understand some people were calling in, Hey, I need money for payroll.

I got a margin call because you remember a year ago or when COVID first hit, the stock market was wildly fluctuating, and a lot of people lost a lot of money. And they needed to cover stuff. So I get it. And people also. You mentioned big landlords their forecasts were like a huge number of people were not going to be paying rent that never really materialized as much.

Certainly it was an impact, but it wasn’t as severe, I think as people were nervous about, but all those things were factors. And I certainly understand people’s concerns. If people needed to bail, we’ve done our best. I appreciate patients from those investors. And I think the extent you still need the money we are working on getting those back in and we’ll probably be completely caught up in the next couple of months.

Maybe part of that’s my fault too, because I wrote that article spool pass a castle.com/oh, fund. I use you guys as like an opportunity fund that kind of siloed money as I’m waiting for another deal to come by. And this is a lesson learned on my part. I should not have the expectation to get at that money.

Within a couple of months. I need to have some other dry powder elsewhere. A lot of people, I do know a lot of rehabbers and investors who they’d get, close the sale. They would put the money with us and it worked pretty well. Through we were able to get the money back promptly before COVID hit.

And I think it works so people needed the money, Hey, entered under contract. I need the money in a month or two. They got it, but COVID hit. And that was no longer The issue, so what’s coming up next. I’m in that other fund. That gives 12%.

Cause I was one of the early adopters you’re kicking me out now, our first fund you’re right. First regulation A-plus fund was 12%. That’s 2015, eight plus it’s been close to investments since 2018. It’s now been five years, or I should say not now,

next month in June, it will be five years since we launched that fund. And that is the end of that investment term. So we will start redeeming those investors who’ve been in there for five years starting next month. It coincides to me, the timing is actually good. We’re catching up with the old redemptions.

We now start redeeming people who haven’t even asked their money back, but it is five years. We want to honor What we agreed to at the beginning, which is, we’re going to return. Our goal is to return our money within five years now, the good news to that you may see it as bad news, but the we have another fund that will be opening up which is HP title.

And people are welcomed there was sending out emails, just like we’re sending out right now for redemptions. Hey, your money is due to be redeemed. We now have money available to redeem it. You can either have the money back, or if you elect, we can invest it in the new fund, which is HP title, which should go live.

Probably in July, maybe end of June. And that one pays 7%. So it is a return. , I think that’s better align with what the market is today. So that goes live, as soon as that goes live, we closed investment into HP servicing and we opened it up into HP title.

So that’s the reality of 7% in today’s market is a strong return. But I guess that’s for every investor to decide after themselves what makes the most sense to them? The OGs and that first fund myself included. I don’t know if I was one of the early people in that fund.

I get a run rate of five years, they’re going to contact me and then a year or so. Yeah, the five-years comes from when you first invested . I don’t remember the exact time that you invested, but whenever that was, it’d be five years from them. Now that said our goal is to start.

We’ve been behind our redemptions. We’re catching up. We’re going to get to the point where we’re caught up with the 30 days. And now we’re redeeming those investors that are maturing on five years, but our goal, I see it now us getting ahead and actually returning money even before the five years that’d be our goal.

The rally is the there’s very little opportunities to redeploy that money. There’s very few buying opportunities. As a result, the best thing we can do for the company is to return the money, even if that’s earlier than the five years, rather than continue to pay at 12%.

And the opportunities to deploy that money right now are typically under 12%. I’m enjoying my time in that first fun house. So you just take your time, redeeming me out. I’m fine. Hanging out, but. If I’m reading between the lines here and for the people, who’ve actually stayed to the end of this thing video.

So what I, if I’m, you’re smart, you’re in the first one and you have some liquidity, you throw it in the current fund servicing before it closes. That’s the ninja.

actually we do, there’s actually some investors that figure that out too. And this is not figured out in a good way or bad way, but today you could redeem your 12% investment and put it

in the current fund, which is phase 10%. So absolutely you could do that. Now your question is, will they align if you’re wanting to do that, you probably should get your request in because the question is and there’s a reasonable likelihood of who knows the time is going to be pretty close, but if you’re afraid of redemption in today, there’s a decent chance that you could transfer it into 2015 flood.

From 2015, eight plus into HP servicing and during the 10%, instead of the 7%. Okay. I have, and have everyone requesting more to this tomorrow questions now, so nobody catches on and what’s going on. The whole, new fund is going to be 7%, which I think is pretty decent out there because yields are going down.

Bore chasing yields, they’re looking for safe places to put their capital. It is what it is. If you guys can find something better with some potential possibility, let me know. Lane@simplepassivecashflow.com. I’d like to invest my money in that, you can’t really find anything out there that does the same thing, at least in an audited legitimate company, you can invest in how slipper Harry, that also is working his engineering job on the side, flip a house. Giving them a private money lending know, but I think our friends with suits would probably call that junk box or bad paper. But but yeah, any other questions I think you get asked a lot, lately, those are the main ones.

And so we still have a lot of investors coming into HP servicing right now we finance we’re not really buying aggressively on the market, but we do have a platform on called pre reo.com. Right now, HP servicing is financing the loans where people are putting down 25% and we’re financing the 75%.

So we’re doing that and that earns us, modest markup And so that’s basically it I think closing note, everything we’re doing right now as a servicer is HP servicing. And soon to be HP title is to gear up for what I talked about a bit earlier is that downturn in that downturn we expect there to be significant direct disruption, and significant opportunity there will be our hit, we’ve built this national servicer.

We have a reputation for resolving distress deals right now there’s limited distress. So I’m not as much as demand for our services fast forward a year, or thereabouts. We expect that there’ll be a significant demand for extraordinary demand for our services. And we want to be prepared for that.

So that’s what we are. Our big focus is here. Have you ever thought about doing like a growth fund, a little bit more higher risk, but they get equity upside and then complementing that with like the current fund, if you guys do now, when the impending actions happen or like that market conditions happen.

No, I think we’re going to move. Right now, everything we’re trying to do is to. Be prepared for that next downturn. And I think, we’ve been buying and I know I’ve shared this with you and your audience before we’ve historically bought the most challenged loans where we get the greatest discounts and then we try to create value and add value to them and that’s worked, but it’s also means everything’s a customized solution.

It’s less scalable, repeatable as we would like. We’re trying to grow and scale this and how do we best scale? So our HB titles focus will be to buy defaulted mortgages, just like we’ve always done except only government backed default mortgage.

Let’s think FHA VA, USDA and these are where there’s government guarantees. We’ll probably pay more, but there’s a government backing. We’re going to be able to to the extent money’s lost, we can we can make a claim that backing and these ones. We see a big opportunity there.

It becomes much more repeatable, much more scalable. We can’t customize as much. We’re going to need to follow the FHA guidelines or the USDA guidelines or the VA guidelines in order to. How we interact with the customers, but we think we can use our high touch expertise and still work within the government guidelines and then turn in claims for when we don’t recover all the money and and we buy these discounts.

There’s a, built-in we buy them at 80 cents and we exit we’re eventually going to get, X amount of dollars depending on the backing that becomes more repeatable and scalable. I see that’s where our big growth is, that all said we probably won’t have, we’re actually going lower risk than higher risk, mostly because we want to scale the whole operation.

It’s like me buying class B assets. As opposed to slumming it in the class C with the headaches exactly right. Your potential return is lower, but it’s something you can do a lot more of. That is exactly the same thing. I can see we’re both evolving in different ways, daddy syndrome.

Exactly. It’s so less, more conservative, less headaches. Hopefully neither of us will be working around the clock. Yeah, exactly. George, you want to put your information out there. People would get ahold of you guys. If you guys want to learn more about HP, you can check out our old videos@simplepassivecashflow.com slash HP.

But. George wants, you guys dropped the, you guys always changed the URLs for the new funds, but what is it? It’s AHP servicing.com is where the current fund is open. And reach out to us there, HB servicing dot com. All our contact information is there and you can invest online or reach out to us with questions.

Guys thanks for listening. And I hope this was useful. I know a lot of us in our group invest in HB. They got a little nice liquidity sorta semi liquidity there and for a nice monthly yield. Thanks for joining us, George. We’ll see you next time. All right, thanks.

I’ll talk to you later.

Should You Use an LLC?

https://youtu.be/1ZPK_L_Mpso

Everybody thinks that they’re super protected with an LLC, right? Why all being Abada tell us like the dark side of these LLCs, are they truly Bulletproof there’s there? There’s nothing. That’s truly Bulletproof, especially if it’s purely domestic, like whatever you create, eventually, if you get to a high net worth.

So like you have over a million of unprotected net worth. Of assets, you should start adding some sort of offshore component to it because we have, what’s called the U S constitution, full faith and credit clause. So it’s always going to limit anything, purely domestic LLCs. I’m not going to like cuckoo all over them.

They’re I use them. They’re a foundational level, but there’s a lot of things that aren’t just being. Spoken about them. And a lot of people being misled, I think either intentionally or not, or just from lack of knowledge on what happens in court by can these things called jurisdiction and legal, nexuses availing yourself of state rights and that’s where this needs to get sorted out.

And then I’m going to pick on California a lot here because it’s the most, a lot of people live in California. There’s a lot of money in California. I mean, you have a lot of California investors investing all over the state. So I think it’s a great example of a state. To use. And so I want to start with, like, I think the big misconception is with charging orders and what a charging order is, is trying to limit the member of an LLC legal responsibility to paying a judgment.

They try to keep it within just the LLC a court order just within the LLC. And so you hear these states. And there’s a lot of confusion over where do you go? Do you go to Delaware, Wyoming, Texas. And at the end of the day, it really just comes down to what are you holding? So let’s just stick with the example of the state I’m talking about.

Let’s say it’s California real estate, and you own some California real estate. You’re a California resident. And you went and set up a Wyoming LLC because you read it on the internet or your CPA told you to go ahead and do that. What you did is just convert your Wyoming, LLC to a California LLC, because you’re doing business in the state of California.

And not only are you going to pay the franchise tax, but if you ever have a liability issue in California, the judge in California is going to apply what law, California law, not Wyoming law, because you’re a resident there, the properties there, the lawsuits coming through there, a California judge doesn’t give a hoot that you have a Wyoming LLC.

There’s no legal nexus there that Wyoming LLC just did a fancy thing called legally available. For the protection of laws of California, as, like I said, that’s the state, the assets in that’s the state, the injury or damage occurred in. And this can go for any state. If you had an asset in Ohio and you put it in an, a Wyoming, LLC is the same principles that apply.

And so I want to harp on this just a minute longer because I do get a ton of calls on this and clients just confused as heck on what they shouldn’t stuff into a Wyoming, LLC. And it’s because just by simply owning an out-of-state LLC. You have to register that LLC is doing business in the other state, but you have to register it in California and pay the franchise tax.

And this is just basic case law. And once you do that and you, again, avail yourself of the privileges and laws of that state and given that state jurisdiction, there’s a great case. Indian palms country club association versus anchor bank in 2015. And it lays out all the multiple standards, like the legal standards that you’d have to meet to successfully beat a piercing, the corporate veil argument.

And so for sticking with California, now that LLC is registered and paying the franchise tax in California, you just gave California jurisdiction over the LLC, plain and simple. And you’re a resident of that state. There’s another caveat against you. And then you have a California asset in an out-of-state Wyoming, LLC, or Delaware, LLC in Nevada, LLC, with no connection to Wyoming whatsoever.

You just did this fancy word. I told you about avail yourself of the laws of California. And so you just transferred that Wyoming, LLC to a California LLC by was called a direct, substantial and systemic contact, California. Something I see common, cause I always see the tail end of this. Especially when my clients work with me and there we’ll have us, most of the time is like the lawyers just going down their check sheet and the sales form and ask the client like, Hey, do you want to be anonymous?

And then the clients always say, oh yeah, I would like to be honest. All right, sign you up for this thousand dollar Wyoming. And we’ll see, which is also a pain in the butt to upkeep in the future. That’s the classic case. And I tell my guys like, all right, like how you’re saying, it’s not truly anonymous, but like anybody who’s going to get sued, they’re going to Pierce right through that.

It’s just going to make things a little bit harder, right. This day and age, nothing ominous. And that was going to be my next blow up of this whole thing of an amenity. And so it’s a big concepts, a big misconception. And I think that. People just think that you can create this anonymous Wyoming, LLC. It sounds so cool.

Like I can just disappear and ghost a lawsuit and I’m like the legal system doesn’t work that way. Like one, if you’re creating these LLCs, you have to also pay for a registered sir person like service of agent and that costs money, their sole job. Is to say, Hey, congratulations, your LLC just got sued.

You’re served, go find a lawyer, defend yourself. And then the simple reality is that once a lawsuit’s filed and starts and you’ve been served because you’re not going to avoid the legal service, the legal process starts. And this is thing called legal discovery. And then you’re going to end up going into court.

And the judge is going to say, Hey, you’re getting sued for $1 million or whatever the law and the number is like, here’s an asset declaration list. All of your assets. To make sure that there’s something that can be collected on. And at that point you can do one of two things. You list your assets or you lie and commit perjury and say you don’t own them.

Or the LLC doesn’t own any. And then that’s called perjury. You go to jail, you get sanctioned, your lawyers get sanctioned, and a lot of bad things happen to you. So there’s no such thing as an amenity. Once a lawsuit starts and amenity works in the sense of. I own an LLC. I want some privacy to where someone can just look up my house residence and go egg my house and harass me because they don’t like it.

And if they’re resourceful enough, they can find all that stuff. I have access to all that stuff. I just use a scraping program and a skip tracing program. And I can find where you used to live, which your cousin’s name is where they live, but their number is what’s your dad’s name. No, exactly. So I think that a lot of these burns are just.

Spraying on the naivete of a lot of people and the idea of, oh, wow. So you’re telling me I can just become a ghost by creating this anonymous LLC. And no one will ever be able to find me. And if I did get sued, I never have to respond and show up. Sorry. Like, you’re going to have a default judgment entered against you and you wouldn’t even be there to know.

And then you’re going to end up having to pay the maximum amount because you didn’t even try to defendant along the lines of this. Anonymity thing is more from a tax perspective. Again, Brian’s the lawyer on hand here, but just speaking for taxes, this is corporate transparency act that got enacted in January, 2021.

So now I guess what they were trying to block was people were just making all these random LLCs and none of it kind of points to them personally. And they were possibly hiding a bunch of nefarious action or maybe just hiding disproportionate amounts of income and expenses likely it was happening as most good business operators try to do to some extent.

But now on a lot of key ones, we have to put social security numbers on there, even if you have LLC. So a lot of investors got an upset with us and it’s like, Hey man, it’s not our fault. We’re just following the corporate transparency act. So even now the IRS is like blowing this way up. There’s nothing that’s transparent.

There’s really nothing. And that’s a real like asset protection for it to work. You want it, you do not want to be not paying your taxes. You’re going to have to pay your taxes. Otherwise that’s tax fraud. And the system blows up or you don’t want to be committing fraud or fraudulent transactions and things like that.

So whenever you’re creating an asset protection plan, it has to be taxed neutral, and this whole idea of an amenity and hiding if you assets. That’s bad. Like IRS is going to come down on you. Like the judge is going to come down on you. So fraudulent transfers after a lawsuit. That’s why you have to be proactive.

When you create these in Korean, before issues, before problems, these are all the things that you need to think about. Get your system set up as a business structure early, and then let it grow with you. But like you said, like even the IRS is cracking down on asset disclosures. We have a system that’s as strong where you don’t have to hide.

Syndication Tips for LPs

https://youtu.be/h-hnc9lsvcI

Probably investing has been extremely competitive over the last few years. And despite the continual cap rate compression, bringing down investment returns, we strongly feel that cashflow investing in recession resistant assets is still a prudent strategy over holding more than 20% of your equity on the sidelines.

You guys are watching on the YouTube channel and the behind me, that’s a who’ll to one of our stabilized assets in Houston, Texas, but I wanted to take today to just talk about what’s been happening in an apartment investing lately now. Probably investing has been extremely competitive over the last few years.

And despite the continued cap rate compression, bringing down best returns, we strongly feel that cashflow investing in recession resistant assets is still a prudent strategy over holding more than 20% of your  equity on the sidelines where it’s not making anything there. The last decade, some say has been the golden age of apartment thing, especially in the state of Texas.

However one has to suspect that we cannot sustain this type of thing. Current growth, which is always what your purveyors are going to be saying. But as the person I’m thinking about as addicted, what the last five out of the last two recessions in the last 20 something years for our clock is always right.

Twice a day is the same. They’re just here to sell books. They’re not investors, they’re just economists. They’re just like the weather now in market reversion or living off is bound to happen. We want detect our capital while it’s growing. As best as we can. How do we do it? Our goal is to stay in the game, get cashflow and mitigate our risks by conservative underwriting, using data or network of our operators, which is in the ground due diligence data that is not available to the public such as CoStar, which owns apartments.com and is big glomerate data.

There. We get the market rent, roll vacancies, or should cavalry. Et cetera. In 2019, I had seen a couple of tricky methods that do operators, will I in their underwriting, I go into this great detail in the syndication LP course, which is for purchase. You go to simple passive slash versus, and you can check out all the other eCourses we have.

Now this course I developed exactly for the passive LP investor. So if you’re busy, This is the best way you’re going to get up to speed with evaluating which investments to people like into. But anyway, let’s get into these tricky methods. First, as I discussed many times before you have to look at this cap rate to reversion cap rate, and I named this, the cap rate gate, where lore than reversion cap rate exit is used.

Normally, I like to see a 0.5 to 1% increase on your projected reversion cap rate to your prevailing cap rate. And the reason why I want to assume that the prevailing cap rate is lower than what we assume is in the future. Assuming that you’re going to be selling in a junker market, if it goes better.

Awesome. More money to us as investors, but let’s assume that we’re selling in a worst soft markets. That’s the reason why we’re assuming that we’re taking the prevailing cap rate. See it’s a five cap and we’re adding a half a point to a full point, right on top of that for the version cap rate in your underwriting to make it five and a half, or maybe you get 6%.

This is where I like to afford a lot of the contingency things. Aren’t going to go perfectly. There’s a lot of infant life and things typically go wrong. So by doing this, you can put a lot of contingency in here, which is ultimately helps you when things go well, now, many institutional operators would ask them this, what are they using?

They’ll admit to be using a negative quarter 0.2, maybe at most, a quarter point increase. Factor in reversion cap rates. So the way we’re doing is actually they’re going a quarter point expansion. We’re going what two to four times that, but Hey, they can do what they want to do. Now. Second being more aggressive on operational components like rent growth and expenses compared against the projection of market analysis.

Oftentimes taking the acception to bump the rents any more than 12 to 15%, I think is crazy. Unless you’re doing a super heavy amount of value, add where you’re doing maybe eight to $15,000 and you have per unit. Now, maybe you might see that 12 to 20% bump. I think I’ve seen a deal the other day, where they were expecting to bump the rents up 40%.

That’s not going to happen in my opinion, if it is, maybe I didn’t look at the DME, but I didn’t run the comps. But when I just saw that, I was like, whoa, that’s a big job. There’s certainly going to be a lot of vacancy as. Your tenants gave you the middle finger as they balk and don’t renew. Now, every deal is different.

Then of course you could be legitimately lower rents, but I think whenever you’re going over that 12 to 50% range, you’ve got to be really scratch your head and really verify those comps. I know we’ve had it. We’ve had deals where the rent sores legitimate under the market, but that’s very rare, especially in these days where it’s very competitive.

Now, another trick that folks like did you in this business inflating other income or non rental revenue, such as trash filet, additional storage fees, reserved parking or covered parking in Texas. That’s a big one for those like hailstorms money for vending machines, wanting to throw up laundry machines or any type of service that may or may not be tested by the current clientele.

This has been a way to sneak deals past even the most astute, passive investors. Well, understanding of underwriting, just put stuff into other income category. Because most people don’t look there now, the way we do it is like we come up with our operating budget and rehab budgets with of course deferred maintenance, because that has a bit of a bit us in the butt in the past.

So made that lesson learned, but we independently use the knowledge of our past projects. And it’s great when we have so many properties in that same area that we can benchmark against. We also use the big data from sources like CoStar or the Reece report to give us insight on the operating budget of other comparable buildings in our.

Cincinnati now the second piece of that, and like I said, we, this is independent. Our property manager, even before acquisition is walking all of the units and coming up with their own operational budget, we have budget. So two things there, right? What can we run the property at? And what big deferred maintenance item or what things that they think they can.

Revamping that, and they were coming up with that budget from there, we’ve come up with our numbers, independent, put our heads together. We don’t really peak at what our property management is doing. The team comes together. We create a budget and of course, add someone for contingency and especially in the rehab budgets.

Now the sequence creates a level of expectation that the property manager is held accountable for with the bottom line or the profit and loss statement, being the assumed performance rubric, which means if the property manager comes up with a budget, we’re holding them accountable to that. They don’t hit it.

They’re a gun for hire. We can always fire them and get another one. That said overall yields might be dropping. However, we don’t undertake a project unless we underwrite it the right way and feel more than comfortable in taking on investors. But at the time, I think, you know what, you’re probably seeing a lot of strength in multi-family apartments and you’re starting to see some institutions, especially from the retail sector or some office coming into this multi-family apartments is seen as a safe Haven.

Maybe it may not make sense to be in apartments. Of course that’s on the high level. And I think a lot of investors, they listen to a lot of podcasts and they start to get these ideas in their head and they’re not digging into the exact deal. We’re not going into a deal unless it’s one in a thousand and that one in a thousand kind of defies the generalities.

It’s the same. Like all boys are bad when they’re teenagers, they might be on average. But I think if it was yours, you’d probably say mine’s a special right. Kind of the same thing here. Sorry. If I offended everybody. But we’d like to think that the deal that we’re picking, the reason why we’re picking that one is because it’s a one in a thousand deal that sort of the FI’s generalities.

So, yeah. Even if though apartments are getting more and more expensive, trying to pick that diamond in the rough, and this is where I say, like, I think the same example can be where investors are looking at a certain market and say, I don’t like that market. Have you even looked at it? Have you been taking a look at not the MSA, but the market, but only that some market, but what is it on that block?

What’s the vibe of the area. But just some things to be on the lookout for. If you want to learn more about this, go to simple passive cashflow.com/syndication. And thanks for listening guys. Please share this with your friends.

this website offers very general information concerning real estate for investment purposes. Every investor situation is unique. Always seek the services of licensed third party appraisers inspectors, to veffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffrify the value and condition of any property you intend to purchase. Use the services of professional title and escrow companies and licensed tax investment and or legal advisor before relying on any information contained here in information is not guarantee as in every investment there is risks.

The content found here is just my opinion and things change. And I reserve the right to change my mind above all else. Do your own analysis and think for yourself because in the end, you’re the only person who is going to look out for your best interests.f

Why was Cryptocurrency Created?

https://youtu.be/qDfVngkOYeo

When you look at things like, for instance, remittance, remittance, meaning sending money overseas, and you look at the countries we talked about at the beginning, Nigeria, Vietnam, Philippines, one common aspect of all those countries. My wife actually being Filipina and having family back there as a business factor, money is constantly being sent from the us back to the Philippines.

And when we use the traditional bank wire systems with system or Western union or places like that, To send that money. It’s massively inefficient. It’s very slow. It’s very expensive. For instance, sending $200 from here to the Philippines with a service like Western union is likely to end up with the equivalent of $150 in purchasing power.

Landing at the end point, terribly inefficient. But if we use cryptocurrency, we can see like 98, 99% of that value move and we can do it instantly instead of over three days or five. And that’s the trouble, right? Like these large companies like PayPal or the credit card companies, they’re all getting their share.

And the buying power, the transaction between buyer and seller is being wasted. Exactly. And they’re able to do that because in large part, it’s an oligopoly. It’s a very small group of companies who coordinate and control pricing in those markets. In any market. Your viewers are obviously more financially astute than the average risk and reward are generally tied to each other.

If, as an example, I’m going to send $200 to the Philippines and I show up at a bank or a Western union office, and I hand $200 in cash. To them to start that transaction there essentially is no risk in that process for any of the people providing the service throughout. And I’m not denying there is some service being performed, but the risk of taking a 25% cut doesn’t make any sense.

And that’s what happens when you have monopolies and you have oligopolies and the banking system is probably no better example of that in the world than the banking system.

June 2021 Monthly Market Update

https://youtu.be/Ej3gVGwhRj4

What’s up everybody. This is the June, 2021 monthly market update, where we go over all the important things that have been happening in the news that will impact your investing. But so let’s get into it. Easter egg for this month. Little bit of a joke here. It’s a little Mimi here. Taxation is theft.

Where person didn’t leave a tip, but they left it in a cash tip so that the federal government and state does it take their cut. And they’re exactly right. The middle class is the people that get 30 to 60% take in front of in taxes. If you guys want to learn more, go to simple passive cashflow.com/tax and join our private investor group@simplepassivecashflow.com slash club.

Like joining there. You’ll get the free light remote investor. E-course six or seven hours of videos to edge. Get educated. It gets started in investing again, go to simple passive cashflow.com/club. You guys haven’t heard me before. My name is lane Coca cellmate, professional engineering license. If you guys like this said more, check out simple passive cashflow podcast.

And for those you guys are already listing on the podcast form. Can also check us out on the YouTube channel, where we have all these great slides and graphics. Me, I like graphs stuff, check out all that on the YouTube channel.

So some teaching points as we start out, stuff, eating the chicken here, showing the KFC. Chicken poop and start eating the eggs first for cashflow, right? Create streams of income. Don’t eat the chicken, eat, the eggs that they hatch the golden eggs. Don’t kill the go to groups.

It’s the same. And again, act like an accredited investor. I had an investor today saying I don’t have enough money to invest. I’m like, but that’s not the point. The point is stopped doing all these things that are hurting you like buying a house to live in. Investing in the wrong stuff, like your 401k and doing things the wrong way in terms of tax, I’m gonna drop the link here.

Simple pass a castle.com/tax. Little gear here is looking at the back of another year. It’s like the IRS taking money from you.

And then, get that. Remote investor eCourse light for free, by going to simple passive cashflow.com/club or a shipping email land, simple passive And we’ll get you access to that. And then you’ll learn the secrets of investing. And a lot of it is just not in textbooks, such as this one.

No, I a meme here where the person said on social media, the bar, random people, jogging for no reason, the higher the rent is going up. Yup. That’s about it is we don’t invest in those areas where people will go jogging in the middle of the night. It’s no secret that we don’t invest in the nicest yuppy areas at the same time.

We’re not in dangerous areas. The class C or T Airbus worse. We stay in that sweet spot. And that is the kind of the secret sauce investigate, good areas to the lower middle-class wrong. Give them good housing and treat them with respect. In turn, they pay us a good return on our money.

A lot of other podcasts, if you guys missed out this month, we had a couple podcasts on cryptocurrency and you guys want to go back and check those out. My new rich uncle channel, which is geared more towards the younger folk. It was supposed to be a little bit quicker, for a lot of people, they don’t have too much money to start investing or start investing seriously as an accredited investor.

So where do you start? So check out my rich uncle channel or give it to the kids. Some Warren buffet highlights from his latest Berkshire Hathaway report where he’s talking about. Inflation coming. And the shorter, the story is by assets that produce cash flow. That will go up with the pace of inflation.

Those people not able to invest are going to be the losers here. Unfortunately. We also talked about preferred equity versus traditional equity to treat it different ways to invest and yeah. More stuff to come next month on the simple passive cashflow podcast.

We had talked about if you guys are missing out a lot of this discussion in our simple passive cashflow, we Facebook group, you guys need to find us on Facebook and join us as we’re always talking about new things, not always real estate. Talk about crypto, such as the latest happenings with tether here.

But yeah, let’s get into the report here. So the first thing wanted to talk about is inflation as Warren buffet outlined for everybody inflation is here and it’s probably here to stay price a lumber skyrocketed more than a few times what it used to be, but not to freak out, right? If you’re a home builder, you’re going to see the price come back at you when you actually sell the houses.

This past month, we had a big dip of Bitcoin or all cryptos for the most part. It is not a mature market. And the reason why I say that is, and if you look here, Elon Musk was the guy who supposedly. Tripped up the latest bull market as he tweeted that Tesla would stop accepting Bitcoin payments.

Sighting. I feel as a bogus thing saying that, he doesn’t like how it’s hurting the environment. It’s not like the people mining the stuff like they’re getting the energy. From pretty hydroelectric, solar. They’re not getting it off the grid for the most part.

And I think he’s not dumb enough to not know that. So it’s just another example. I think Elon is just trolling everybody and it just shows that cryptos are still a very immature market or what. No guy can move the market as he did. It gets people into storage clean so he can place swing trades.

Unfortunately, a lot of people like really buy into this stuff quite a bit. And it’s not the people that are very wealthy that cannot get hurt situations like this. A lot of people in my world, they like crypto, but I’ll keep it within reason, maybe with one, the 10% of your net worth, if that.

The less network you have, in my opinion, more conservative, you have to invest in investment cashflow as opposed to these ACE semester risk type of pull dates. I’m definitely not a big fan of alt coins, which I feel like are startup investments, very asymmetric risk type of investments.

Bitcoin and Ethereum are the blue chip type of cryptos, but these stills swing up and down quite a bit. And of course the more conservative way of playing this stuff is not the odd points, but the staple points, just getting a nice little yield farming from there.

So this survey put on by UCO on behalf of bank rate and April, 2021 showed that homeowners most common regrets about purchasing their current home. And it showed the difference between a home owners of all ages and then the millennials. So the top ones where they had no regrets, then maintenance and other costs of two.

I bought a too small of a house, bad location. Didn’t get the best mortgage rate. And then these are some of the lower row. Common regrets, butter, too big of a house mortgage payment, too high overpaid, too much, not a good investment. And lately I’ve been thinking, there’s no rules of thumb out there for this type of stuff, but I felt like, if your net worth is not one or two times the price of your primary residence, Ellie, you should buy it.

And it probably disqualifies most people out there. So if your net worth is, quarter million dollars, don’t think you should buy a house. That’s more than $150,000 in that case. You don’t buy a half a million dollar house until your net worth is a million dollars in my humble opinion.

And that probably upsets a lot of people. Cause they’re like, oh man, we’re going to buy a house. Like we’ll go invest and do something financially responsible and grows your money the right way. And then go buy a house. A house is a financial tray, but then again, my big cabinet is for most people out there are financially irresponsible.

They can’t seem to save, or then they make, and they can’t control their spending. Therefore, a house. Might be a good option for them because it is a force piggy bank for those people. But for most of you guys listening, you guys are pretty good with your money. You’re financially responsible. I know a lot of you guys backs out the 401ks, do things like that until you learn about real estate on alternative investing and for you folks, I wouldn’t buy the house quite yet.

So yeah, your net worth is at least two times your what’s the posture you’re looking to buy.

For sure.

All right. So I got a display of the back here of 2020 population, net migration by county. Now this is a big one. I think you’ve seen so many of these maps with states net migration, which is good, but. I think a lot of stuff gets mixed up in the shuffle, right? Because most people are clustered in a few cities in every state.

And it is a little misleading when, Texas is a big state for example, most of the growth has clustered in those top five cities in Texas. But here we have it broken down by county where the red places are, the growth in counties ended up blue is where the people have been moving out.

And I think this is a lot better way of figuring out are you in the best thing in the right place with the Tradewinds behind your back in emerging markets? I just got done watching a YouTube of Boise, Idaho. They said that the prices have gone up 30 something percent in the past year.

I’m not a fan of Boise by any means. I know it’s like people are moving out there, but. I think the reason why I’m not a big buyer of it is because when I, when I looked up the population, it’s barely anything, it’s a very small tertiary market at the end of the day.

I want to usually invest in a place that at least half a million population or greater. And a lot of people that move there or California, and so they can remote work. But what happens when. No, the bosses want everybody to come back to work, which I feel like will happen at some point. I think some people, they like to invest off headlines, but if you asked me I am not hugely bullish on a place like Boise long-term.

So next came from an article done by Harvard and they analyze are millennials so different than the generations before them. So there’s four major differences or things that have talked about. So first is marital status. They said millennials are less likely to get married than earlier generations.

I was reading, I forget where I heard it, but like they said, divorce rate through the pandemic is down, but then they said, it’s because people are getting married in the first place. So this article confirms that too, as far as home ownerships. Millennials have been less likely to be owners than previous generations of the same age.

The gaps between them of narrowing home-ownership at the age of 30, among the early nails was about 41% when it was 50.5% of budget X-ers at this point. So less people buying houses, and this is what we like. Hey, Rutgers for life guys. Keep doing it. Average personal income, despite the popular media patrol of struggling millennials, their average personal income has surpassed that of earlier generations as their age into the 30th.

Now, I don’t know if they took into account inflation cause you know how these articles are never really done by data, people that is more English majors that kind of just look at stuff and don’t really adjust for inflation and things like that. Maybe that had to do with also the poor early millennials were the ones that came into a 2008, 2010 type of job market post recession.

I don’t know. Multi-family residence shares. Millennial generation is about living in multifamily housing far more frequently than the boomers did. They’re falling their parents’ migration into single family homes and millennials are not forever young and it’s time for many to events that they might have to live and get a bigger space.

And that costs a lot with these types of single family homes. Tax changes now, Biden is asking Congress to enact legislation that would disallow 10 31 exchanges for gains greater than 500,000. Now this will change probably several times before it really gets solidified, but I think if they let people on their $500,000, 10 31 exchange go, I think

that’s a fair deal, not to get political or anything. Those people who have like left properties appreciate greater than half a million million dollars. They’re Asante. And, I’m all for wealthy people who are not smart and especially not motivated. That was just very indicative of second generation wealth.

So lose it and give it to those who Work harder and actually put focus into growing their wealth and wealth management. What’s the same 90 something percent of wealth leaves. So family Intuit to be generations. I dunno, I guess some people would argue with me that they deserved it.

I don’t know, but I just see a lot of. Trust fund kids and they just don’t deserve the wealth. They squandered it and sadly for them. They’re not motivated to do anything about it. One big thing that I saw in a year, this is probably not going to affect too many people, but it’s something to be aware of as the caring interest plays a role in every private equity investment, where the mutual fund leaders.

They get paid on carry interest. If you’ve ever heard of the term 220, that’s how the industry standard compensation where fund managers or mutual funds, they get like 2% asset management fee to keep the lights on, but they also get 20% of the upside for managing your money.

So that’s called carried interests. So right now, the carried interest is taxed differently. Where in the future, Biden’s looking to tax that at a higher rate, who knows how this will come out, I think it’s gonna spook out some of the rats in a way. The, each of fund folks, the big players are going to find another way for them to take compensation.

Cause for awhile, They were hiding a lot of their compensation, like at a lower tax rate under this carried interest benefit. So next time you want to sound cool in front of your friends. When you actually have a real lifeline party, you can discuss the benefits of the carry interests of wealthy fund managers.

Porter one completions. This is the construction from CPR E so RAC 2020. I think it’s obvious, like construction fell way off. Some people could say because of the commodities, lumber prices went way up, but it’s just a sign of the times. Uncertainty makes people stop building. It makes people stop taking risks.

And I think it’s a great time to build right now because prices are going up and again, the fundamental, so it’s the same, people need a place to live, but it’s just interesting to see the trends and like how there’s healthy building. Maybe some people would say over supply or over-building we definitely didn’t ever hit over supply.

We’re still at a housing deficit. But how things just slowed way down quarter one 20, 22 quarter one of 2021.

We said before a Warren buffet is very hyper aware of inflation. And so is his other older elderly friend, Sam Zell, who I like to watch. And Pete what he does from time to time, he says he’s buying gold with. Inflation reminiscent of the seventies says obviously one of the natural reactions is to buy gold.

He said, and it Bloomberg television interview. It was very funny because I spent my career talking about why would you want to own gold? It has no income. It has costs to store. And yet when you see the basement of the currency, you say, what am I going to hold on to? So this is where I’m going to I agree with inflation, but I disagree on though. What the beans, I think the way to do duet is with real estate. And I think at some point cryptocurrency will probably lead to wrong gold as the means, or mitigating against inflation. Right now I think cryptocurrency is a trillion dollars where gold is around 10 times that, so it’s nowhere near more than gold, but it’s the fastest passive asset to get up to that one.

Trillion mark, thus far as history. If I were to put a bet, I put it on crypto over overcoat, but I like real estate because it pays the income in the process. Commercial property, executive reports, the top five Sunbelt markets for industrial construction. Number one, Dallas, number two, Houston, number three, Phoenix.

Number four in an empire, which is out there in San Bernardino, California, Colton, California, and number five Fs Dallas Houston, Phoenix empire office.

Another article from Harvard university. If you guys looking for a good read, these guys don’t get too much notoriety, but these guys pump us good articles. Not really thought provoking once too. So they said here are millennials leaving cities. They say yes, but young adults are not. So I have a graph year of how the different age ranges are changing from the top 50 MSA, which are the bigger cities to smaller MSCs and how it’s transitioning over time.

I don’t know. Some of this stuff is I think people are moving out of the cities into the suburbs. Because when people would rather be in less crowded areas, there’s no point to commuting all this time. People don’t need to be in the same office as they once did back in the stone age before zoom and all these interim, even in February email, or when everybody had to get on a conference call, that was a big technological boost. But I feel like, young people. They still want to be where it’s boffin, right? Where the big cities are now, some of the smaller MSEs are having more uptown type of fun, leisure life areas. But I think regardless either in one camp or the city or the suburbs, I’m neither, I’m like populations going up, both are increasing both ways.

So new mark had a report here. This is from their multifamily capital for where they cited the lack of housing supply. The can line is the case. Should the us national home price index, which has been steadily increasing for a decade. No surprise. There. And the blue lines are the buck, the supply of hall, which went down in the past year.

And that is the reason why residential prices are higher. I wouldn’t say that there’s more demand. I don’t know if it’s more, I dunno if it’s less, but what I am searching and it can be measured is monthly supply of houses again, supply and demand. That’s what dictates the price. The supply is down.

Therefore, even if it’s more or a little less demand, the price goes up and that’s what you’re seeing. House prices go across the country. It makes absolutely no sense to me. That’s why I don’t do residential real estate because it’s based on emotion. You’re not really seeing this type of run up in the commercial world.

All right. So this next article from John Burns real estate consulting. So they forecasted how the affordability, which is defined as the. Medium parcel of income and the annual household costs, which includes mortgage plus taxes, insurance, and mortgage insurance for it equal to 80% of the median home price.

So in a nutshell, all affordable are houses based on what people can afford today. In 2005, 2006, you had a scale of 10. In 2009 to 2012, you had a scale of zero and it’s stead means the past decade it’s been going up and down, but steadily moving up to over the media where we are now we’re at baseline five and John Burns is forecasting that in the next few years, it will be keep going up and up to almost to where we were pre recession.

So I think people are scared to death that the recession is here moving. I don’t think based on this chart right here, we’re still another handful of years away. If you’re sitting on the sidelines, you’re probably going to miss out on one of the best bull markets in your lifetime postman, but Hey, we just want to see and watch the wave pass you by that’s your own life to deal with.

But I think the one risk that is looming is there’s a lot of people in forbearance. And for a lot of these people, they went in forbearance. The thing that sucks about forbearance is not like your payments stop big pile up. So people could be looking at, and you’re from like 10 to $20,000 of built up payments that they have to pay when the forbearance burns off, which you would think would be happening soon with.

The country, 50% vaccinated, everything opening up again. You got a hundred something. People at the Indy 500, you got real people at festival game. It’s things are opening up again. Therefore you would think the government would be like, all right, guys, y’all got to pay your rents again.

You got to pay your mortgages again. The freebie dance is over. And the theory is that it’s going to trigger a lot of foreclosures and on my last podcast with George Newbury, which you’ll see here in the next month of the latest update with HP, we’re going to be walking through the financials.

I asked George, Hey, what do you think about all the residential stuff? And he feels like there was definitely going to be a lot of foreclosures happening in disk and possibly a cool off the obscenely hot residential. Properties. And honestly, I don’t really care because I don’t own a primary residence.

And I invest in commercial real estate, which is a little bit insulated from all that madness and emotion in the residential world. But I’m not really interested in it, but if I was betting, I feel like in the next year or two, you’re going to see the prices start to cool off. And people get foreclosed.

And I think that’s why it’s smart to own commercial assets because they all get the rent.

If you guys haven’t checked out our mastermind group, the family office on a mastermind, check it out and apply it. Simple passive cashflow.com/journey. Prices are going to be going up here in the next month. So join now for it goes up just like a house. Price keeps going up. You’re going to what she did it six months ago.

And if you guys are still trying to buy your first rental property, check out the incubator and the rental e-course by going to simple passive cashflow.com/turnkey and simple passive cashflow.com/incubator. But again, if you guys are accredited investors already got in your portfolio, boy. Look to joining our group of accredited investors in the family office upon a mastermind, we are the only pure passive accredited investor.

Nope. And one of the question always happens is people are like, I don’t have the time for that. I’m like, dude, you don’t have the time not to do this. Like the time commitment is just like a few hours every single month. But the big thing is we put you in the ethos of 50, 60 other pure passive accredit investors, and you build a relationships with the right people, none of this, going out to the local trolling on some fee internet form with a bunch of broke guys wasting your time on the one time that your spouse lets you to go outside the house or the one weekend that you can go to some kind of conference the year.

Like trust me, I’ve been there. I’ve wasted so many weekends of my life. So many thousands of dollars going to fake real estate conferences, just to find other people that are rogue, trying to get unbroken, to have that get rich mentality. You’re not going to find another group like this who are already high net worth accredited.

You’re passive investors that have good paying jobs and understand that the highest and best use is at their job, but they want to understand the systems of analyzing syndication deals, the tax, the legal and the network. Of other pure passives like yourself. So check that out. That’s all I’m going to say about that.

A little bit, update on my life as we transition to what I’d been up to. Something I’ve been doing for growth this past month these are short the monthly definitely fly by. We’re already halfway through 2020. Yesterday or a couple of days ago, Memorial day, I did the birth challenge once again.

And this year I didn’t deal with the weight fast. My fitness has been sucking as a plate as I have not been going to the gym. I just do the zoo workouts, which had been very convenient and it really good for productivity on my business side, because I don’t go to the gym for an hour a day.

But I don’t have that peer group around me to peer pressure, me to putting more weight on the bar or shaming me that at the last person. So I probably got to get back into gym, but for the Murph challenge, which is a mile run, a hundred pull-ups, 200 push-ups and 300 air squats. And there’s me, the arrows pointing to me.

That’s me in the middle of one of my 300 air squats there, as you can see, I am pretty much at parallel, so nobody can give me any crap for that. So that was my thing for growth this week. How did I contribute back? I’m seeing my mission these days that help people get more educated about this stuff and.

There’s so many people out there that are accredited that kind of wastes their time buying rental properties. Again, if you guys are younger and like when I was in my twenties and your network is under half a million dollars, it’s like adolescents. You have to go through the stage of wanting rental properties, but there’s a message on our Facebook group that somebody left on one of their tenants, as they’re doing the move out, their last tenant accidentally left their handgun on the kitchen.

Countertop and the property manager freaked out and this is not something like an accredited investors should deal with, this type of stuff. Move off to bigger and better things that are more passive or liability, debt and guarantee.

Another thing I like helping people out is, I think it upsets me when I see a lot of young people under a quarter million, half a million dollars network buying houses. Cause that’s not what they should be doing. It’s not a good use of money. And here’s a little meme of making fun of the Japanese people I’m Japanese.

So I think fun in Japan because they’re all happy when they want the 20, 20 Olympics, and that’s how a whole leadership is. Everyone’s yay. Congratulations. How’s your home. As it’s nice to be a whole honor. And then you move in and you realize the damn thing costs all this much.

You gave away this big chunk of money that you could have bought a handful of rentals with. You got this big mortgage payment, you have no cash flow, which is your oxygen, which is your ability to buy more rental properties or do syndication deals. And you’re house rich, but cash poor and you’re stuck.

And this is what society wants you to do. Your boss probably wants you to buy a house because once you buy a house you’re stuck, you’re slave to him. You have to do everything. He says as opposed to what I was, I didn’t listen to my boss. Cause I had rental properties. I could choose what I wanted to do.

Yeah. About this controversial subject. Go to simple, passive castro.com/home, but it’s one of my missions and contribution back, especially the young people being misled, some things that I’ve been proud of and derive significant off of, we closed the rig properties this past month.

First one was a small 96 unit in concert, Alabama, which was pretty screaming deal under market events by at least a few hundred dollars. And not just saying a few hundred dollars because most times when you hear that it’s never a few hundred dollars. It’s really like $125 really. But Donna is legit like $300 on market.

I think the average rents, or like in the high four hundreds per month, this for a classy property. Oh, he closed 126 units in Houston and then another 300 unit in Houston also, which has been our biggest property to date. Definitely moving up the the better assets scale and on one of our properties, we refinance.

To a lower rate, we paid a little bit paid like 13 grand, but we were able to lock up a $32,000 per year savings. I call that a pretty good cost benefit analysis. So we raked locked at 3.18 and we use the FHA model for those of you guys aren’t familiar with these. Normally we do Fannie and Freddie Mac.

FHA loans are longer. Amateurization 35 year app and lower rate would be a quarter point half a point less than their Fannie Mae Freddie Mac counterpart. The only problem with the FHA loans is that they take forever and a day to originally difficult in terms of uncertainty. This is.

Kind of what we deal with, right? Like I think all signs point to a good few years ahead of us. I’m very bullish on what you were going to see for GDP growth. The next sport into Porter after talking probably four to 7%, but what’s going to happen with the foreclosures and the residency. If I was ordering rental property right now, that is impacted by residential home prices.

I’d be a little uncertain right now. I don’t care because I own commercial assets. So the insulated from that, and actually benefits a little bit as people get foreclose, they got to come back to a class B or C apartment, but you’re always going to have times of uncertainty, but how can you move forward in a strategy where you’re hedged to the downside, but you can still partake in this case, the potential bull market.

Another uncertain thing we’re dealing with is the lumber prices, right? We’re trying to build 230 units apartments. And this is a one of the security cameras of we’ve got the structure up and we just bought the last trunch of lumber. So we’re good, we locked in that lumber price.

We paid the higher price because the team felt you know what? We don’t feel like the price of lumber is going down because when inflation is here, how else are we going to pay for all this government stimulus money? There’s several trillion dollars pumped into the system. And it’s been unprecedented, nothing like in 2008 was books, anything how it was in the last year, on the last thing in terms of love and connection.

I I’ll be honest. I haven’t left the house very often cause they’re having a kid here soon and I don’t want to be the person to mess it up for everybody. I got my COVID shot. I got really sick for a day. But I really would like to be able to meet everybody again. I don’t know if I’m going to be able to see everybody this year, but for sure.

You guys out there. But the 20, 22 retreat on the calendar or Martin Luther king weekend here at Honolulu, Hawaii for all indications, I believe it’s a goal. So put it on the calendar and we will look forward to meeting all of you guys. I think I’ll be on a lot of good feedback from the virtual mastermind this year.

And a lot of people realized, wow, I didn’t realize this was such a big thing and more importantly, So it’s a hydraulic people, high net worth professionals, people first-generation wealth that, are frugal, good values. I want to pass it down the right way to their families legacies.

And that’s what we’re all about. I don’t think you’ll find a higher quality caliber of folks that are cool and no better place than coming up to on a little for white and hanging out for a weekend in january 20, 22, if not, hopefully I see you guys before that, but I think that is something circled on my calendar that is going to happen.

As you guys always like to see the things I’ve been buying and life and Sam or buy much stuff, because everything is for that kid. That was baby stuff coming in the mail. I stopped even checking the mail personally, because I know it’s not for me, but I did buy these Feasible your glasses.

Cause it’s been getting hot here and I don’t like my drinks to get water dumped by the ice. So I bought these twenty-five bucks, not a bad do dad’s spent for myself. Do you guys have any questions here? Type it into chat, but we get some of it here. So Justin has. What about the 1% physician loans?

These things they’re just marketing tools. The lenders just tell you, they’re like physician notes. I’ve been, then the next guy comes. They’re like, oh, these are the teacher lawns. Yeah. And then they say, oh, these are for the engineers. It’s like when you go to the car dealership, they ask oh, do you work for we have a government, it’s just marketing to make you feel significant.

But. No, they’re not really that great the best molds are the governments Fannie Mae, Freddie Mac, and that’s the baseline. All these other loans are just not as good as that they’re priced up in a way. But that’s just my take on it. And this depends what circles we hang out in, right?

If you’re in single family, home Bora with bunch of non-accredited investors. They’ll call these Fannie Mae Freddie Mac loans, the golden tickets. They’re so good, but they’re not that great. Fannie Mae Freddie Mac loans. Aren’t that great? Yeah, it’s good that it’s 30 year debt and it’s semi low rate, but it’s the fact that the government is backing the loan.

Should it fall through? It doesn’t discount the loan that much. The biggest thing, it’s an investor’s buying the right deal. That’s what’s really going to move the needle, then finding them all the bones are okay for the most part.

And then, so wrapping up here, make sure you guys check out the tax guides that we’ll pass a castro.com/tax and get the free light remote investor. E-course by going to simple pass the castle.com/club. And we’ll see you guys that stuff and everybody. Bye.

How Much Money Should You Start Investing in Syndications?

https://youtu.be/zuiS9q_xnDo

So another question here in one of your podcasts or investors calls you had recommended not to deploy more than $250,000 in a year. Is there any checks reason for this. I don’t remember the context of this. I think what I was getting at a lot of investors don’t need that rich debt or that book, that purple book that is the red pill of finance for a lot of people.

 

And they’re like, oh my God, I got to get out of this like crap and investing in for all my life. And they go bonkers. They’re going into all these alternative investment, private placements and syndication deals. And I’ve had people that invested half a million, million dollars at nine months. I personally am.

 

Whoa. That’s a lot of them investing because the thing is let’s heart about syndications. Anybody can put one together, right? Anybody can invest in it, but like in terms of putting them together, anybody can do it. You just pay $30,000, supposedly you can magically do it. So I say that jokingly, because. Not everybody should do it.

 

And I sure as heck am going to invest in those deals, but those sponsors, how do you determine who’s legit? It’s really hard to determine who’s legit. And if it were me, I would take the approach of putting my money in going with the minimum and seeing how it works, call me crazy. But I think that’s a prudent strategy, especially when a lot of people that come into our group, they’ve been investing in the regular 401k stuff that traditional.

 

Investing model for 10, maybe even 40 years, we have a huge range of ages in our group. Don’t throw it away on some bozo who you just met. I just, today someone just mentioned that, yeah, they lost a hundred thousand dollars investing with this other sponsor and they’re happy that they found this, but that takes some luck.

 

And I think to really feel confident to going that you’re putting your money with good stewards is to build your network with other passive investors. So that you feel comfortable knowing that other people have had good success in the past, but likely. Yeah, a lot of us and myself included, we don’t have any people who are investing in these types of options, the investments, most of the people that we associate with or go to work with, or our families or parents just invest in the traditional mainstream retail stuff.

 

So we don’t have that network. But what I’m saying is that’s why we created simple passive cashflow. So that if there is an opportunity to find like-minded individuals and you do. That’s when magic flip things happen. And if you want to stop screwing around, that’s where you joined the family office, Ohana mastermind the fault.

 

I’m just saying, but I think that’s the way into it. And maybe I slid the $250,000 in one year thing. I think maybe where that came from was like, maybe you can go onto a handful of deals in that first year with, you know, minimal investments being anywhere from 50 to a hundred thousand dollars. So you could go onto a few deals and you can sit and wait and watch, see how the sponsor performs.

 

Did they run off with your money to Mexico? They say that they’re going to do it. Quarterly distributions are when they said it was going to, so that would be the way I would do it. When I started to buy rental properties, I bought my first three in Seattle and my big first pivot point as an investor was investing site and scene.

 

In Birmingham and left Indianapolis 2012, 13, what did I do? I bought one property in Birmingham. I see how it worked. I pause for six months to a year, and then, you know what the damn thing works. So I’m loaded. I unloaded all those Seattle properties that have poor cash flow. And I went into and parlayed my money into those other investments.

 

So to me, I’m not saying that you’re going to do this, but I like the approach of getting proof of concept and then going all of that.

Intro to Cryptocurrency w/ Bob Burnett (Part 2 of 2)

https://youtu.be/sbVbyAdbFqk

 Hey, simple passive cashflow listeners. Today, we have part two  of the crypto currency,  alternative Bitcoin, all things crypto and why this is, the big theme here is freedom, right? Professor for freedom, but this is taking the control out of governments and where monetary policy is going.

 

If you guys want to go back to the first podcast we did. I would go check that out first. We  also have a pretty nice slide deck here that Bob’s been presenting displaying on the screen. So your podcasts guys want to go over to the YouTube channel, or I will also put them@simplepassivecashflow.com slash crypto, but so we will start get rolling.

 

Picking up midway here with Bob Burnett. And here we go. Yeah. All right. Hey, thanks for having me back lane. As this is a topic we could probably do part  three through 12 too, but  we’re going to try to pack this in and get all the pertinent information to everybody here in today’s session.

 

A lot of what we talked about for those of you who maybe are a week or so from having listened to the part one was we talked a lot about freedom as lane said in the introduction, what is the ethos of especially Bitcoin? It’s about separating money from the control of government.

 

And a lot of the reason behind that is essentially history has shown that over time when government controls money. Either it has shown itself to be inept at doing so or corrupt in doing so and frequently both. It would be my opinion. And we’ll talk a little bit about it here further today that, we are in the midst of that very thing happening right now.

 

And maybe to apply this to those of you who are business owners or certainly managing your own wealth, we’re all doing that. There’s a great story. I want to start with today to talk about this. And the story is about a company called micro strategy. It’s run by a guy named Michael Saylor.

 

Michael is an aeronautical engineer. He founded a software company, a data analytics company called micro strategy. I think about 25 years ago. And  I find a lot of a kindred spirit with Michael I’m an engineer myself. And I think very similar to similarly to him and what Michael had to do was he had make a decision as a CEO starting about a year ago.

 

And his decision was this micro strategy is a public company. They had $500 million of cash on their balance sheet. And in March of 2020, And as we all know the world turned on its head. In March of 2020, Michael saw the fed pumping money into the system at unprecedented rates. And he realized what we talked about somewhat in the earlier conversation that growth in the money supply is actually the definition of inflation.

 

And he was seeing massive pumping of money into the system. And he said, Hey, I have $500 million in cash. If I don’t do something with this cash, it’s going to inflate. And again, he went through some very similar analysis that I went through and reached the conclusion that inflation. Was on the verge of being double digit.

 

And so even if we use the low end of that threshold, it meant that if he didn’t do something with the 500 million, which was sitting in cash and inflation was at least 10% in a year, he would have lost $50 million in purchasing power. And he felt a ethical, moral, legal obligation for his shareholders to go find a way of protecting that value.

 

So he went through all the standard exercises. Is there something happening in the bond market? Clearly 50 basis points returns on 10, 20 and 30 year treasuries. Doesn’t do it. He looked at gold. Gold was starting to become less and less appealing. It hadn’t performed well in 2008.  It was showing kind of its age.

 

He looked at equities and said there’s a bubble going on. I don’t have faith in equities. So he ended up surprisingly, at least to him at Bitcoin. And you can imagine the scene a fortune 1000 company, a very distinguished board, and Michael walks into the boardroom and says Hey guys, we have 500 million in cash.

 

And we need to protect it. I’ve gone and studied every possible angle for this. And I think we should put it in Bitcoin. And  I’m sure it was crickets at that moment. Just, dead silence. And I know overnight he wasn’t successful, but over the course of a couple of months, he continued to educate himself and the board about Bitcoin.

 

And ultimately he convinced them to take 275 million of the 500 million and buy Bitcoin now being a software company and being a smart guy, he said I’m not just going to go buy $275 million worth of Bitcoin. And he set up a bot with his team to buy $2,000 a Bitcoin. Every second, I believe it was for something like 40 days.

 

That’s how long it takes to buy. It was every second or every minute, whatever the math is. And so he deployed that and then he went to the marketplace after he had finished it and he announced to the world, Hey guys, I have purchased $275 million worth of Bitcoin with our 500 million and treasury.

 

The wall street analysts just crushed him instantly. But interestingly, the market didn’t, the market responded very favorably to his move, his company’s move and the stock price started to go up. And it Rose something on the order of 25 to 30% over the next month. And in parallel, Bitcoin kept rising and the faith of him and his board in this strategy started to increase.

 

So by the late June, he went back to the board and said, Hey guys, we really only need $25 million of operating cash. Let’s take the remaining 200 million we have and buy more Bitcoin. And the board passed the resolution and they went and did the same thing early July. He was back into the marketplace saying by the way that 500 million is now 475 million in Bitcoin.

 

But by that time, Bitcoin had already started arise. He was up several hundred million dollars on that purchase. And if you look at a Bitcoin price chart, you’ll see that through the summer, your thing was still increasing. So then he said, and made what I find to be a brilliant move.

 

He said, Hey, money is cheap right now, the Fed’s paying like 50 basis points on a 30 year treasury. So why don’t I go do a convertible note offering to the marketplace and raise another 500 million I’ll offer 50 basis points of return on a five-year convertible note. And he went in and I got the board approval for that raise $500 million  essentially for free, took that $500 million and bought more Bitcoin.

 

So he’s now in at $975 million, a Bitcoin purchases and micro strategy became somewhat of a superhero in Bitcoin circles and other people started paying attention. So it turned out that so many people wanted access to convertible note. He got oversubscribed. So he went and did it again. So it cut to the end of the story.

 

Now they’ve continued this strategy of taking any free cash coming into the company to buy Bitcoin. And they now own 91,000 Bitcoin. And at current valuations that means they have over $5 billion of Bitcoin. And so in the space of one year, Michael Saylor took the corporate treasury of $500 million in cash and turned it into $5 billion worth of Bitcoin.

 

And he has become champion of this cause telling other CEOs, public companies, private companies, big companies, small companies, basically saying if you have corporate treasury and you are not putting it in Bitcoin, you are doing an irresponsible thing with your company treasury and not basically performing your fiduciary duties to your shareholders.

 

So it’s a story that I think everybody, listening, whether it’s managing the corporate treasury of your personal wealth or the corporate treasury of a company that you may be influential in or run, this is something I think that we all have to seriously look at. I will share with the listeners that for my companies, which I run  three mining companies, some Bitcoin and Ethereum that we hold all of our corporate treasury just like Michael Stratton.

 

We’ve been doing it for several years. We hold our corporate treasury in cryptocurrency and it has been phenomenally successful for us in our little world. We’re not anywhere near the measure of micro strategy, but it’s been fantastically successful for us.

 

What Michael did not go unnoticed though. And so what people are latching on, right? Cause Ilan is, yeah. I don’t know if the it’s very high-profile right, but he’s basically doing the same thing. Yeah. And Elan did it because of Michael and so that’s, I think a lot of people are aware of what Tesla did.

 

But they did it because of what Michael did and taught them. And Ilan paid attention. Michael held a conference. Those videos are available still out on the internet. I would encourage you to look for like Michael Saylor corporate treasury conference. If you Google that you will find it.

 

And one of the groups that showed up by he had 8,000 participants over 20,000 people sign up for this conference and all of them were CEOs and CFOs of companies. That was a requirement to be in the meeting was to be part of that. Tesla did the same thing. They went out, put a billion and a half into it on January 1st, 2021.

 

And now less than four months later, they have basically doubled their money. And now sit on $3 billion of Bitcoin. And it’s successful as. Tesla is then they’ve made more money on that than they have in anything they’ve ever done in their history. So it’s just a phenomenal story to show the commitment of Ilan and Tesla to this though, I found this to be the most interesting news.

 

Not only did they put the billion and a half in, they said, we will now accept Bitcoin as payment for our cars. And if we do get payment in Bitcoin, for one of our cars, we will not sell the Bitcoin. They’ll cover the cost of the car  through other financing mechanisms. But if they get Bitcoin, they are not going to sell it.

 

They aren’t selling their corporate treasury and they won’t sell any money that they acquire. So that, to me, that speaks volumes of. How strongly they feel about Bitcoin now, don’t you think I’m a fan of Bitcoin, obviously you are, but for a publicly traded company to throw their cash reserves into something relatively new, like this, and that’s typically not what  publicly traded companies do.

 

It’s probably going to work out best for them at the end. Like how Steph pro jacks up at three from half court all pretty much goes in most of the time. But is it, that’s shot is obviously like a little out there, right? It’s the same thing here.  I understand what you say.

 

And I think that would be the initial impression of the vast majority of people,  elan may seem like a bit of a Maverick he’s not stupid. And he also, I think to turn that around I’ll pretend I’m them or I am them because my company does it, I would say, Hey, if I have a couple million dollars, let’s say in my corporate treasury, and I keep it in dollars.

 

If I keep it in dollars, then I am accepting 10% degradation and purchasing power year over year. And I think that’s the key thing, right? Yeah, I think we generally agree the crypto Bitcoin is going to go up, but there’s like that added fear that why you want to get out of right. And so it’s two prong, right?

 

Maybe it’s maybe this is not a great example, but it’s you want to go off and move off on your own. Cause it’s cool. But maybe your parents are driving you crazy, right? Yeah. The second reason why to move out well, yeah, 

 

so if I’m CFO of a company, or CEO of a company and I have a certain treasury that I’m managing, and there was a fictitious investment out there that I knew for a fact would slightly outperform inflation and it was guaranteed. Then I think my fiduciary responsibility would probably be to place my money there, but such a thing does not exist.

 

And cause if we go through it, we’ll gold offer that guarantee. No will treasuries. Absolutely not. Is some sort of basket of equity assets going to do that. Nope, Nope. That won’t do that. Can I put it in something like real estate? Maybe that might be the only thing, but  it doesn’t offer the liquidity.

 

And there are still some risk of course of booms and busts within that. Bitcoin certainly has that same variability as measured back in dollars, but the last 12 years show it to be the highest performing asset in history. Nothing in that 12 year history can match what Bitcoin’s done.

 

You might find individual things for six months or a year or two years, but you’ll find nothing. That grew like Bitcoin grew between inception and March of 2020 at 200% compounded annually. And now it’s accelerated. Normally  if you see some sort of investment opportunity that offers 200% compounded for some period of time, there’s a fall off Bitcoin is the fastest thing in history to reach a trillion dollars in market cap, and only a handful of things I’ve ever reached a trillion dollars in market cap.

 

And I think that trillion dollars, by the way, presents a phenomenal amount of stability to these organizations. So it’s almost like a positive feedback loop. Sometimes we talk about it that. Some people say Bitcoin is a speculative asset. Yeah, it is. It is. But almost everything is a speculative asset to some degree or another gold is primarily a speculative asset.

 

As an example, it has certain utility if we talked about its industrial usage or its uses in jewelry it would have a certain value that might be a couple of hundred dollars per ounce. Most of its value is its monetary value, which is purely speculative.

 

So a lot of goldbugs will say, there’s no intrinsic value in Bitcoin say and that’s one of those murky sort of things, but okay. Let’s say I agree with that argument. I would say most of gold is speculative. There’s only a tiny amount that is intrinsic value.

 

So the question is, as you pose at the beginning here, lane is, what do you do if you’re a company like these guys sitting  on hard cash, what do you do with it? It really presents a problem in today’s world. It’s one thing, even in the world where inflation, if you believe the fed and inflation is two or two and a half percent, even then you have something to think about is sitting on cash, a good deal, especially when treasuries are well below the rate of inflation.

 

Typically that’s been flipped, right? Typically you’ve had the ability with treasuries to get a fair value on it, and you could keep pace with inflation, but there are a lot of people now that say basically the bond market is dead. That’s a hundred trillion dollar market. And that money has to go somewhere, where’s it going to go?

 

I personally, I think it’s going to go to crypto currency. I think it will go into,  real estate as the primary two things, because I don’t think anything else we can really rely on. Yeah. And I think like I’m just playing devil’s advocate here, Bob I’m aligned with you on the book of those things.

 

But I think from the standpoint of just seeing dollar the dollar as a sinking ship, and that was the theme of our part one, right? Question the dollar. We don’t know what this other stuff is going to do. We don’t know, but we do know that dollar thing is sinking. And if you’re on a sinking raft, like you’re on a sinking boat, you might jump on a different boat that at least appears to be floating right now. Take your chance on that one. This one’s going down, maybe that’s a good analogy. And I think you made me think about like a way of thinking about your portfolio.

 

Like how, if you’re you have a real estate allocation, your portfolio, one way to look at it is just geographic. Like I personally like Arizona, Texas, Alabama, Florida, right? Like I just rattled off four or five States. Yep. I’m going to bet on those five States over the other 45, any day of the week, it’s like here, right?

 

You’re betting on real estate and crypto out in all these other asset classes. And, it’s just hitting the right side of the couch here and you’re probably gonna hit it and do well by having that strategy. Yup. Yup. I think that’s well said lane. Okay. Let’s personalize things a little bit too.

 

So we talked a little bit about the corporate side. I want to share a thought with you. It’s a concept I’m promoting within the cryptocurrency community. I call it the sat cap and it stands for Satoshis per capita. And the concept is this it’s summarized on this slide for those of you watching. But basically there are about 7.8 7.9 billion people in the world.

 

There are just over 18.6 billion Bitcoin in the world. If you remember, we mentioned earlier, Bitcoin is the visible by a hundred to the a hundred million place. And the smallest divisible unit of a Bitcoin one, 100000000th of a Bitcoin has called us to Toshi. So if you take that all the Bitcoins supply and you divide it amongst all the world’s population, you end up with this number 230, 6,000 Satoshis.

 

So that number  is what I call one sad cap, and it can be purchased for about $128.  So it means that you can purchase today, even if this whole concept of Bitcoin and cryptocurrency is new to you. And you look at everything I’ve said thus far, and maybe even what I will say with some degree of skepticism what I would encourage everybody to do is at least go buy this much Bitcoin.

 

Okay. This is your share, scrape together $128 and go buy 236,000 Satoshis okay. And at least now you’ve secured your place in this sphere.  Because one of the things that I’m going to tell you is I think that over the course of the next decade or so, there is a fair chance that the global reserve currency will become Bitcoin, not the U S dollar or at least they will co-exist.

 

And so if that happens and you say all the things in the world, all the real estate, all the equities all the cars, all the, everything is going to be valued in Bitcoin. It means that the value of the world there’s this, there’s a symbol, it’s says infinity over 21 million. And that’s common in the Bitcoin world where we say,  

 

everything maybe will ultimately be valued in Bitcoin. Right now there’s about 300 and $50 trillion in global assets. At least it’s the number  I’ve seen in somewhat believe if you do that, what you find out is that  each Bitcoin should be worth about $17 million. So I know that sounds like a completely wild ass number, but that’s what happens if Bitcoin becomes.

 

The global reserve currency, and we value things primarily through the optics of Bitcoin. And now  that might sound a little crazy. This Bob guys out there, but remember it was as recently as 1971, we valued everything in the world around gold. So the dollar, while it was the global reserve currency was still pegged gold.

 

And it came back to, Hey,  all the world’s wealth was ultimately the nominated in grams of gold. I’m not saying the U S dollar will go away, but what I’m saying is I believe there will be some sort of monetary system in the future where Bitcoin provides what I call the base layer of money, the ultimate settlement layer of money, and it’s all valued.

 

So if you’ve secured. Your piece of the world pie you, aren’t going to be left behind, right? So  if I’m wrong completely, you’re out 128 bucks. Hopefully everybody listening  would be able to survive that financial blow if that were to happen. But I think I know your theme often in what you talk with is  your passive cash flows and things like that lane.

 

And  I follow the same philosophical approach, but what’s also nice is when you have an investment that is so asymmetrical. So if the upside is growth from 54,000 to 17 million, if that’s your upside, but your downside is this, it 54,000 to zero that in the odds of zero of this thing, going to zero 

 

are almost infant testable. There’s never been a case in history where something reached a trillion dollars in market cap and then failed. It’s never happened if you don’t mind, if you could define like asymmetric risks because I find that a lot of, new investors, which typically are podcasts listeners they’re just skimming the surface a lot of times getting started.

 

And I do free investor calls for folks who sign up for the investor club. And I don’t know, I’ll get wound up a little bit and start naming these things off. And then I noticed that they just shake their head knocked. Yes. But they don’t know what I’m talking about. I think this is a good point for just their education.

 

Sure. So the asymmetric risk, it means that your risk of being successful. Is wildly greater than your risk of being unsuccessful. Now it could be the other way, by the way, I’m looking at this as a positive asymmetrical risk. So we’re saying, Hey, this thing has the possibility of 

 

somewhere on the order of a 350 X rate of return that’s the upside and the downside is a possibility of zero but very little downside opportunity. So the ability to scale up and the likelihood of scaling up on an order of magnitude. Is quite reasonable. And the likelihood of falling back down is very low.

 

We’ve actually seen. Just in the course, since we recorded a phase one and phase two of this podcast, we’ve seen Bitcoin soften a little bit, but it went down to 48,000 and it bounced back up to 54. It has some massive support levels at some pretty high numbers. No. So hopefully that helps.

 

Again, it talking a little bit more about money. We talked about freedom  lane led in on that, talked about freedom. And I like to look at, what happens with the poor and these big monetary systems? When you look at macroeconomic stuff and what you’ll see right now are some people like Janet Yellen, for instance, who’s the U S treasury secretary spouting frequently about doing things in a way to help the poor and lift people out of poverty and fight environmental issues.

 

And I’m going to call bullshit on that people in these political circles have learned the right words to say, but their actions don’t support the words. And this is a classic example because  there’s an economic principle. It’s called the Kantian effect. And I believe it is in hyper mode right now.

 

And this chart summarizes what happens. So let’s just look at high net worth people and low net worth people, as groups, high net worth people keep a very small amount of their holdings in cash. And you’ll see a lot in stock, a lot in real estate, some in collectibles, some in privately owned entities.

 

The poor on the other hand, keep the vast majority of their wealth in cash in savings account, or literally in cash, maybe up to 90% somewhere in the low 90%, they have a very small amount of stocks and bonds often through an employer 401k plan or something like that. Very few owned real estate, very few heaven collectibles, almost none have privately held businesses.

 

So what happens is when inflationary pressures come into the market and remember the fed by definition says, we are going to manage to 2%, even though it’s really 10, but even  they admit they are going to manage to an economy that has inflation. It does very little to hurt the rich. Why? Because the rich have very little in cash and they have things like real estate and stocks and in the future, a lot of cryptocurrency that are insulated and maybe even benefit from that inflation, but the poor are on the exact opposite end of the spectrum.

 

So what I’m saying is the politicians like to talk about taxation and using taxation to try to redistribute wealth and attack the wealthy. But the reality is if they really cared about that, they would completely change their monetary policy and help the poor people have a mechanism where they could have cash, they could save cash and eventually use those savings to get into better performing assets.

 

This is again, an important part of, why Bitcoin and the inflation policy that in an ax is very good for the world. And  this is not just the U S on a global basis the way things work now one other monetary thing that  I’ll walk you through.

 

Cause I talked about global reserve currency, and so the us has been the global reserve currency for something on the order of 80 years. Maybe a hundred depends.  It’s not like a declared thing. It happens. And the U S took over from the British pound somewhere between the end of world war one and the end of world war II.

 

So we’ve held this position for a long time. Now, history has shown that on 80 to 150 year cycles the global reserve currency has gotten replaced on this cycle, the Portuguese than the Spanish, then the Dutch, then the French, then the British and now us, right? So we’ve been on this for several hundred years.

 

We’ve gone through these patterns and on the surface you might say that’s a very powerful position and the us. Should fight to maintain it because as some of you may know, we use it somewhat as a weapon. We are able to put sanctions on countries like Iran and North Korea, and we use locking out the money supply.

 

And  that may be a good thing. That is a purpose of it, but here’s the problem. And it’s a sob effect of something called the Triffin dilemma. But to summarize the Triffin dilemma, it says for a country to be the global reserve currency, it must be a net importer of goods and a net exporter of money.

 

In other words,  if you want to be the global reserve currency or the world even declares you of the global reserve currency, the only way it will work is if there’s a whole bunch more money outside of your country than inside your country. And in the early days of this, let’s say in the post world war II period, the us was a massive percentage of the global economy.

 

And so it didn’t take as many dollars to be outside the us as inside the U S for this to work. And also the world still needed our manufacturing and production capability because a lot of it, especially in Western Europe and in Asia was destroyed, they didn’t have factories, but as they rebuilt and they brought those factories back up they now had the capacity to start building goods for the world.

 

And so I’m going to give you an example of the effects. Of this that you won’t hear from any politician. So then we’ll give an interesting example. I call it the potato example. Okay. So imagine we’re going to start all over  that there is no global reserve currency at a given point in time.

 

So we’re going level set. Okay. And the us is producing its goods and South America and Africa. And after they’re all producing their goods and their own little economies, and we decide we’re going to open the world up to commerce, but we need one of the currencies to be the global reserve currency.

 

So by decree that it’s decided that the us will be that currency. Okay. Now let’s say then that in Peru, There’s a decision by the government that they want to build a massive bridge and it’s a $5 billion project. Okay. And that they searched the world for the best team in the world to build this bridge.

 

And they find a team in Germany. That’s the best to do that. Now the Peruvians don’t have any euros and the Germans don’t want Peruvian pesos. So the decision logically would be well, let’s use us dollars, but it turns out the Peruvians don’t have any us dollars. So in order to build the bridge, they’re going to have to go get $5 billion.

 

And the only way for them to get dollars is of course, to sell something to the U S we’re $5 billion. So the Peruvians look at their economy and say what do we have? We have a bunch of potatoes. We’re really good at growing potatoes. So the Peruvian send one of their sales people over to the U S and they go to Walmart and they go to all the big grocery stores and they say, Hey, we have these beautiful potatoes.

 

We’d love you to buy potatoes from Peru. And all of the U S suppliers say why would I buy potatoes from you? I can buy perfectly good potatoes from Idaho. And they say they go back to the government, say nobody wants to buy our potatoes. And they say there must be some price at which they would buy potatoes.

 

So the salesman flies back over to the U S and he goes back and he says what price would it take for you to buy potatoes? And they go if you’re serious, it would take you under cutting the Idaho potatoes by 15% for us to buy the potatoes. So they go back and they sit in the proving us as well.

 

Okay. We’ll subsidize you the Peruvian potato farmers. So we can get these us dollars in our treasury to pay for the bridge. And so the proven guy calls up the Walmart buyer and the, Hy-Vee buyer and the Ralph Spire and wherever your grocery stores are and says, we’re in.

 

So suddenly they start buying a bunch of potatoes from Peru. Now there’s an outcry, of course, from the Idaho potato farmers who suddenly have seen their orders slashed. And they erupt saying my God the Peruvians, the government is subsidizing all the purchases of these potatoes and we can’t compete.

 

So they go to their Congressman and their Senator and they say, my gosh, we have a problem. We have to protect the Idaho potato farmer. Now, then the whole discussion of what we’ll do. We need a tariff  on Peruvian potatoes to protect the Idaho potato farmers. So I tell you this whole story, because in the end, this is what really happens.

 

We can boil it down. But when we talk about things like manufacturing jobs, being exported all over the world, a lot of it, and we talk about evil practices by the Chinese or the Vietnamese or these other countries about undercutting us production costs. We have to remember that a large part of this problem.

 

It’s self-imposed we want to be the global reserve currency, and this is a side effect of that. Now, no politician wants to talk about that, but the reality is we can’t move massive amounts of manufacturing, jobs, and production back to the U S and still be the global reserve currency. So interestingly, the path to refreshing and giving American manufacturing or any countries manufacturing, a level playing field upon which to participate is by having a currency, which is not managed by a government.

 

If you have  a currency not managed by a government, it doesn’t have the Triffin dilemma tied to it. It’s going to take a while I think for people to understand this. And hopefully I’ve explained this to you in a way that at least sinks in a little bit and maybe lane, you can help me a little bit here too.

 

And, if I’ve skipped over something or there’s a gap, let me know. But I find this to be a very important point that maybe being the global reserve currency is actually not a good thing for the U S in the long run. Why does the United States want to be the global reserve currency?

 

I think because of power because they can sit in the middle and they can dictate whether or not money can move. Cause it still has to clear through something  that the fed manages and it allows them to do things like freeze, the bank accounts of the Iranians and the Syrians and the North Koreans and the Venezuelans.

 

So it’s been used as a political weapon. And it’s a financial weapon as well. The strength of the dollar is in part because of its position as the global reserve currency, it creates demand for the dollar. And for instance, illustrated, in this example, it allows us to buy in this example, potatoes 15% cheaper than they should be.

 

So that’s a benefit to the U S as a consumer, but there’s always a price to pay. And the price to pay in this case is, yeah, you can use the dollars. You already have more efficiently as a consumer. But you can only do so by ultimately creating an environment in which jobs are harder and harder to maintain in the U S but as I said no politician wants to blame the Triffin dilemma on why jobs are being extorted.

 

They want to blame it on the other administration. The Republicans want to play in the previous Democrat administration and the Democrats want to blame the previous Republicans. And it’s neither. And by the way, neither can solve it. That’s the other thing is that they all say they can solve the problem and they can’t.

 

And I think finding a group of people that can look at this eyes wide open is difficult. And luckily I think we’re in a position where Bitcoin may force it regardless. So surely is a dilemma, right? We’re on team USA. Most of us listening. Yeah, I think maybe I’m just summarizing the way I see it, but it seems a little unfair that tactics that would fall, Hey, that’s the flag.

 

We also limited in the morning right. At school. Yeah, it’s a, out of a team, two things here. Yeah. So Bitcoin is going to disrupt this thing. What would be the smart thing for the United States to do a position themselves with this corrupt structure happening?

 

The smart thing for the U S to do would be to start acquiring Bitcoin, to allow people to pay taxes in Bitcoin, to use some of the resources of the U S government to mine, Bitcoin and start building, the U S treasury is no different than the micro strategy story or the Tesla story. Start building a reserve in Bitcoin.

 

And I don’t know. I think they’ll do it. In fact, I’ve got a few things here to show you that makes me believe that they should dang it. But it’s like the right thing to do. Yeah. But I will, I’ll say this, I try not to be political and I’ll share with your listeners. I don’t align myself with the Democrats or the Republicans.

 

I’m definitely independent. And if you put a gun to my head and said, you have to pick some party to be probably be with the libertarians. But I think like I said, I think political system, we won’t go down this rat hole far. I think the political system is set up around these two to six year cycles of reelection, and it forces a series of lines to just prepare actuate people in that cycle.

 

And the monetary system  is a very key part of politics. And if, and when the U S loses control of it, it forces a whole different kind of politics because  like right now, I gave that example of, building a bridge while they’re in the us. We wanted to build a $5 billion bridge.

 

We would have to handle it differently. We would either have to increase taxes or we’d have to print more money. And because the politicians never want to raise taxes, they always choose printing money, and there’s a limit to how much taxes you can raise, right? So our GDP as a country, It’s $28 trillion.

 

So annually. That’s the most, you could raise taxes too, right? You could, most you could do is tax at a hundred percent of GDP and capture all of it of course, way before you got to that point, GDP would drop off the cliff because people would say why am I working? I’m being taxed at a hundred percent level.

 

It presents this dilemma. I’m where we keep trying to add things in. Like I said, I’m not being political here. I’m just being matter of fact, whether that’s to build new bridges or add social programs or add UBI or, whatever it is, the price that we’re paying for that is inflation because there is no mechanism.

 

I don’t care what anyways, there is no mechanism to tax people to pay for that stuff. There is zero capacity for that. It won’t work. The only way for them to get there is to print money. And that’s just, paying tomorrow a much deeper price than you would pay today for something, I don’t know.

 

It’s that high time preference thing. It’s a kind of lighten the mood. You don’t blame them, it’s everybody knows this dilemma. What’s going to happen at some point. You’re in the sunset portion of your career. You just let it go right.

 

As the kids say these days, just let it air it out. Yeah. That’s a millennial term for you. Yeah, it is true.  It’s funny. I have I’m very active in, for instance, the Twitter community and In fact,  my moniker is a boomer BTC. And I acknowledge I’m in the boomer generation and I sometimes face some hostility from millennials and gen Y and gen X who say, Hey, 

 

your generation is to blame for the mess that we’re in and all of this debt and all these social problems are your fault, and so I’ve born the brunt of a lot of that venom, even though I believe I’m a voice trying to fight all that stuff, but still they just, boom, attack me out of my gray hair but I get it, but I get the anger.

 

I understand the anger because I have grandkids and I have kids and I worry about it. It’s why I’m so passionate. So I come on shows like this. I like to talk about this stuff because. Something has to change the way to make the world better, has to come from this grassroots system. And I think it’s the only way 

 

there’s not going to be a willing relinquishment of power from the existing base, whether that’s political or economic, it’s going to have to come from a movement to rest control. And I will say it’s a good segue to this slide. I have up that the fighting of this from. What I’ll call the establishment is starting to get very serious.

 

You can almost see and hear the fear and trepidation and the voices of some of these people. And we’re starting to hear, Hey, Bitcoin, it’s for criminals. Oh, it’s too volatile. Oh, it’s a bubble. Oh, it’s going to ruin the environment. They have all these mantras about why it’s bad. And this is all new and, but  they’re the classic sort of things.

 

By the way, many of them are very similar to the internet itself. If you go back those of you old enough to go back to the, say, the early and mid nineties. The same things were said about the internet, Oh, it’s too risky. Oh, it’s all criminals and pornographers. Oh, it’s gonna damage the youth.

 

And people will never stop, and what we need is more newspapers and we need better journalism and we need, there were mantras like that. And they went well into the early two thousands where people kept that up. As I mentioned, I’m often the brunt of it.

 

Even personally, for those of you who can see this, but I’ll read for the audio people. I got a tweet about a month ago. Directed at me because of my participation in Bitcoin mining. It said we need all the renewal bull energy. We can get. You’re taking these resources away from serving legitimate needs, without creating anything useful in return.

 

You’re part of the problem. So stop congratulating yourself. I’ve got to say that as Bob congratulations, man, you’ve made it. I was so happy when somebody like left A troll, posts on my YouTube channel, brought tears to my eyes because it seems like he made it right. But he actually cares the troll.

 

You. Yeah. Yeah. So they’re listening. Somebody’s listening. Somebody cares. I’m a threat now, my message is the fret and that’s wonderful. That’s why I’m proud to share it with you today. Hey, I’m okay with this and  I’m gonna play here just I did last time too.

 

 I’ll share a Janet Yellen. Who’s the us treasury secretary. From two months ago, February 23rd of 2021. I’ll share a little video clip of her.

 

I don’t think that Bitcoin, I said this before is widely used as a transaction mechanism, to the extent that you used. I fear it’s often for elicit. Finance. It’s an extremely inefficient way of conducting transactions and the amount of energy that’s consumed in processing. Those transactions is staggering.

 

That was on a CNBC interview and the interest of time, I’ve got a similar one from Christine Lagarde. Who’s the president of the European central bank. And  she calls Bitcoin funny business, a lot of funny business being conducted on Bitcoin, but I actually have some stats that I think are very interesting and that’s that because the Bitcoin blockchain is public and there’s a lot of analysis that can be done on that blockchain.

 

There’s an organization that tries to trace. Illegal or suspicious activity on Bitcoin. And it looks like about one to 2% of the money moved on. Bitcoin is in that category. It’s going to funky places. The current monetary system, though, it’s probably more like five to 8% is of this. And, to support that what I find very interesting is we’ll start with Christine, the guard, Christine, the guard used to be the head of the IMF international monetary fund. And at the same time she’s talking about Bitcoin being part of the funny business.

 

She’s actually a convicted criminal who was convicted of a massive illegal government payout through the IMF. And Janet Yellen who defends the banking system is remiss in overlooking  that last year there were $15 billion worth of fines to us banks for money laundering related offenses.

 

So  this is the point being that this is the pot trying to call the kettle black.  It’s a ridiculous inference for them to go after it. But as I said, I think there’s a lot of fear out there and these attacks are gonna keep on.   So let’s talk about one of the things that people say in fact, even Janet Yellen refer to it as well,  Bitcoin it’s not used in transactions today. And to keep this short, what I’ll say is Bitcoin was never designed to be what’s called a transactional part of the economy.

 

It’s it is a little more akin to the role that gold played when gold was in the gold standard, where it’s a store of value. If you want to infrequently move relatively large amounts of money around it’s phenomenally efficient and secure. If you want to buy a a cup of coffee or a happy meal from McDonald’s or something like that in its native form, it’s not the most efficient way.

 

But what it does have is it has this ability to sit at what’s called the base layer of money and work with large payment processors or organizations and move money. So what’s happened now is we have PayPal, Apple pay, MasterCard square American express MasterCard. They all now support crypto currency.

 

So think of it as the difference between, you can move money from inside the bank to cash. And so the cash kind of transactions are occurring at in Bitcoin, where we would call off chain, meaning they’re not tracked by the network they’re tracked inside MasterCard or visa or PayPal.

 

And then. At the end of the day, those organizations settle up with the main Bitcoin network, like a block fire or Jim or NY or point base. Those would all be exactly that they’re exactly the same. They’re sitting up a layer over the base layer. And so it, as you said, yeah, if you’re on Coinbase and you buy Bitcoin you’re buying it from Coinbase.

 

If you sell it, you’re selling it most likely to somebody else within Coinbase. And then at the end of the day, or on regular intervals, Coinbase will settle up back with the Bitcoin network. We’re seeing acceptance though. We talked about Tesla before, but home Depot and Starbucks has mechanisms and whole foods and Twitch, and you can buy Mavericks tickets, I think you can buy the Miami Marlins season tickets this way now.

 

 There is a slow momentum. I don’t think it’s fundamental to Bitcoin’s success, but it’s certainly I think they’re just doing it to be cool and hip, but that’s the. Yeah. It’s the early adopters. Yeah, I think so. I think there’s a certain panache to it because certainly the, these organizations, when they announced, they now accept Bitcoin, get that on the other hand, just yesterday, the CEO of PayPal said when they opened this up it was about four or five months ago.

 

Now he said it’s orders of magnitude more successful than they thought it would be. I just don’t know how successful they thought it would be. So that’s, maybe they didn’t think it was going to be successful at all. So maybe that’s another thing statement or maybe they thought it was going to be semi-successful and it’s wildly successful.

 

I really don’t know.  But regardless it’s here and it’s being used and it’s being accepted. We’re also seeing the more prevalent use of Bitcoin ATM’s. And a lot of the people listening might find keep your eyes open as you’re walking around, you go into a convenience or a shopping mall or someplace where ATM’s are.

 

You might see a box there that’s a Bitcoin ATM, not a traditional ATM. And what that allows you to do is it’s a two way transaction, mostly used for deposits. So you can basically take cash, go to the machine, the posit it and buy Bitcoin on the spot that you could cash it out. But it was interesting. My wife found one a couple of weeks ago, she went into some convenience store somewhere and said something.

 

So I saw it and it had an out of order sticker on it. And she said what’s wrong with your Bitcoin ATM? Are they going to get it fixed? And she said it’s actually not out of order. It’s just full of cash. Won’t accept anymore. I thought, wow. That was a very revealing state that’s here in South Florida, that’s happening.

 

So anyway, let’s th there are different ones to be involved in the cryptocurrency world. One way is mining. Another way is there’s a lot of opportunity in private placements right now. There are, of course, the alt coins. There are some companies that are directly involved in the industry, and then there are some funds, so we’ll dig a little deeper into each of those I’m going to come back to this one.

 

So first is the alt coins. There are something like 25,000 alt coins now picking the right ones is very difficult and I don’t have enough time in the day to examine all of them, as you can tell from what I’m talking about here to them, very. Bitcoin passionate, but I do have some money in a few other places.

 

And I’ll share that with everybody here today. But I do want to say that things like doge coin have gotten a lot of attraction lately.  I’d be surprised if some of the people involved haven’t at least heard of it if not even tried it, but, unfortunately I think those are the type of coins that are very dangerous because in essence, they don’t do anything.

 

They have no intrinsic value and they’re very subject to the boom and the boss. Yeah. And I think that’s important for people to know what that thing is. I’ve been calling it douche coy because that’s exactly like Bob said, it’s useless. It has really bad technology, essentially bad a perhaps management, but it’s a,  penny stock, a micro penny stock.

 

And it’s been doing pretty damn well, but that’s just indicative of the overall crypto. Right market. It’s like buying what’s a crappy retailer, like a Kmart or something like that. Yeah. Yeah. That’s a great analogy. Yeah. You could buy Kmart, stop game stop. But some take some crappy like company and it’s like actually doing really well, it’s a speech of garbage.

 

It’s like bowls out of its competitors. Yeah. And, you can sustain it for a while. It can rise up and, but it’s that greater fool philosophy of investing, hopefully you’re not the last one in, because the last one in is there, there is going to be somebody that buys at the top before it crashes this chart.

 

For those of you can see it plots the top 2,412 coins over the last dozen years. And you can see that beating Bitcoin is pretty hard to do. And why am I so strongly in Bitcoin? Because of this chart that at moments in time, there are going to be plenty at any moment in time, there’ll be examples of a handful of things that are outperforming it, but it has absolutely slayed the overall market.

 

 I think the same way, like in this world of digital companies you take your grub hub. I don’t know all the food delivery people or I know Uber and Lyft, right? Yeah. There’s always going to be one or two MI competitors or back in the old days. People didn’t research stuff.

 

There were so many different grocery store chains, different shopping mall , or, those companies that you go to, there were so many choices and many people could compete, but in this world where education was the best product, the best provider is so prevalent. You have a much more educated at SUMAR, normally there’s only one or two eats the cake, right?

 

And one could say that this is not good for having raising children, because if they’re not the best, they’re going to be the, just another loser out there where it used to be back where everybody could be successful. But it’s, I kinda got off my point there, but if you’re taking this with cryptos, that would mean that my thesis would be like only the top few are gonna probably be surviving, eating the cake.

 

All these other outgoings are going to go away. I don’t know what you think about that. Yeah. Yeah. I agree with you. And I think if you look at the internet which is, quasi analogous if you won back the clock 25 years, we all knew that there were going to be some form of E retail that would take off at that point in time, it would have been hard to identify to Amazon as the King.

 

But at some point, I don’t know when the exact year was, it may have been as early as 2001, 2002, it became pretty clear that they were going to be the King and they have continued to eat. And other people may have come out with other platforms that. For whatever reason, at least some group of people believe they were better technology, better user interface, better, this better that, but Amazon had too much momentum.

 

It had, we call it the network effect. The network effect was too strong of Amazon and all other solutions, even superior solutions. In theory, couldn’t overcome the advantage and Bitcoin’s at that point too, maybe you could say the same about Facebook. You could probably say the same about Google.

 

You could say the same about Apple. That they’ve all reached this point where, there’ll be other things, like Facebook’s success is massive and little things like, Instagram and Tik TOK and other social media platforms came out.  And same with Google.

 

But there’s other search engines, but there’s no doubt who’s a King is. And so when you come into this space, realize that there is a King and that there is only one project that is money that’s what Bitcoin’s job is to be a new form of money. Now, there are other projects. I’ll give you a couple that I like, because they’re not trying to be Bitcoin.

 

They have their own niche, they have their own thing. But I would also say that they’ll never be as big as Bitcoin. None of these other ideas can scale. There may be what’s a good example. While Amazon may exist, there may be somebody that specifically sells shoes or watches, or there was only going to be one line, right?

 

These other things we’ll get some scraps like the hiatus. Yeah, like we call this like the land grab  in modern day business. There’s always a land grab even the first and you can get out there and grab your land. You’re going to be the lion. And I think this is a great way to understand we work, right?

 

We work understood that they need to come on by clients. That’s essentially what they did. And they part it with stupid money, but eventually they realized that people actually wouldn’t jump on board on the scene unless they were spending a crap ton of money on advertising, which is why the thing ran into issues.

 

But if you out there have an idea, just power it with a lot of advertising and marketing. And maybe you’ll be the lion. Yeah. Yeah. And there’s nothing wrong with being, a scrappy or there’s some pretty big scraps out there. I’ll segue here, a theory com, which is by far the second largest cryptocurrency and has about a $250 billion market cap.

 

So it’s, a reasonable I have been a supporter of a theory from since 2017. I have a company that is involved in a theory of mining, but I will say that part of the Ethereum crowd, I think, is getting a little overcooked right now and starting to think that they have some chance of usurping Bitcoin.

 

And I think that’s actually dangerous for them  that. They need to keep their vision and their focus on the things that they do, which is support, decentralized, finance, support, tokenization of other assets. They are also known as the world computer. So you can tap into it if you want to do mathematical modeling or rendering or things like that.

 

 There’s a very powerful network there. So I do support them. I say it with an Astros right now that I’m getting a little bit of reservations about some of the direction of that one,  but I do own it. It’s my second biggest holding one that I really like though. That’s very exciting. It’s called file coin.

 

And again, I’m not here to be political, but I think hopefully everybody’s aware that there’s a massive cancel culture going on in the world today. And I’ll be honest. I even worry about myself being censored. I say some things that I’ve been critical of our treasury secretary here today. And so I worry about myself being canceled at some point.

 

One way to fight that is to move your storage. So if you have a blog, if you have a video stream, just like lane housing in his website, one way to protect yourself against getting canceled is to not use one of the big data center companies. One of the cloud providers, Amazon Google, Microsoft, they control 80% of all the data in the world is held by those companies file coin is a decentralized storage system that can’t be stopped or turned off.

 

So essentially it leverages hard disc space scattered all over the world. I have a laptop I’m using today to be with you and lane may have his desktop and we have some unused disc space. We contribute that to this file coin network, and it stores our web files or photos, our blog files, whatever in this distributed manner.

 

And it’s only the private key that we individually possess that can modify any of those files and delete or add to any of the files in our structure. I really liked that one. I think it’s a very important part of the coming world. There’s a complimentary coin called handshake. Handshake is the concept of unstoppable domains.

 

In brief terms for listeners, if you have a web addressed, let’s say yahoo.com.br for Brazil. Okay. yahoo.com. That BR what happens is when that, when you plug that into a browser, The browser looks at that address in reverse, it will say, it’ll look to the.br first it’ll look at basically a domain for Brazil, and then it will find the dot comes under that.

 

And then it will find Yahoo and then it will serve specific stories. So it goes in that tree. So that, that BR is administered through a group called ICANN and is essentially a group con controlled in a manner that an individual government in the, in that case, Brazil could say, I don’t like what’s going on@yahoo.com under my domain.

 

I’m not gonna let anybody go to that website anymore. Or somebody types that in, it’s not going to go to the files that Yahoo wants. It’s going to go to my government propaganda site. And that, by the way happens in several countries around the world, you can guess places like China and North Korea don’t use that, or they use that  as a weapon.

 

So what it also means is that if you had a website and even if you had the file scattered about, if you don’t have the domain also secured in the same way you, you are subject to being censored. So anyway, a combination of handshake and file coin allows the creation of websites that can not be stopped.

 

Nobody can stop the address and nobody can stop the file serving. So I think it’s an important part of, creating a culture  in the future world that gives people that have a message and have a voice a way of getting that out there. And then the final one I’ll talk about is coin a chain link.

 

So chain link is it’s a, it fits well with other coins, like Ethereum does in that it provides data feeds into what are called smart contracts. So the, one of the other advantages of Ethereum, I forgot to mention is the concept of a smart contract, very powerful mechanism, and in the real estate world, I think we’ll see a lot of changes in this way.

 

So things like title transfer can happen. The blockchain and chain link can be part of the data set that can provide those feeds. So anyway, those are for, if you decide you want to stray from Bitcoin, which I’m not really recommending that, but if you feel compelled to do that, be careful where you stray.

 

There’s a lot of landmines out there. These are four I’ve done research on. I have some money in all four of them. But the vast majority of money is still that I hold is in Bitcoin. And that would be my number one recommendation. Yeah. I think the investment thesis with those folks is they’re like Bitcoin is a household name.

 

Even like the 99% are talking about these days. They’re thinking it’s of the overheated and they think they’re going to get a little bit more bang for their buck with something less mainstream, whether it’s right or wrong. I think that’s what is people’s heads. Yeah. I know that we’re probably running close to where we probably got to wrap up lane.

 

So I just want to say couple other things here real quickly. So one is. There are ways of investing. If you’re not comfortable directly involved in cryptocurrency, there are ways to get it. So if most people have some exposure mechanism to invest in equities gray scale, QB, TC micro strategy marathon and riot.

 

Those are basically stock tickers, that you can go purchase and you’ll find that the performance of that stock is highly correlated to what goes on in Bitcoin. So it’s a nice way of getting involved.  Coinbase has already IPO mode. There are some others that I think will IPO in the next year, crack and block fi bit main bit fury and lightening labs.

 

All those, I think there’s probably something coming. But. Here’s some things to avoid, and I’m almost more important than what you do is what, you need the landmines. If you’re going to invest outside of Bitcoin or even in Bitcoin, hopefully we’ve given you enough education today that you have a basic understanding, but, make sure you understand it.

 

A lot of these coins don’t really solve a problem. Go read about it. And if the problem they claim that they’re solving, doesn’t seem like something’s, we’ll call it a hair on fire problem. Then it doesn’t matter, right?  Don’t get involved. There are three projects that I really don’t like, I don’t like the people behind them and I don’t like the economics of how they’re run ripple.

 

And then two Bitcoin derivatives, Bitcoin cash. And Bitcoin has fee. If you do decide to get into Bitcoin, buy the real Bitcoin,  with the symbol BTC don’t buy BCH or BSV BTC is the one you need to buy. These are I’ll essentially call them imposters be careful with those. So I want to go back here to this slide and maybe use this as a closing one.

 

I think when you step back and you look at everything we’ve talked about think about Bitcoin as having one of seven eventualities. Okay. The first one is. That let’s say you hate everything. I’ve said you believe it’s a complete basket case. And it’s going to implode my advice to you would be to take something on the order of one to 2% of your net worth and still put it into Bitcoin or a Bitcoin related asset, because  at a minimum, the sat cap I talked about before, but I think most of your listeners are a little more savvy and say, put one to 2% in if you hate everything I’ve said.

 

And if I’m right and you’re wrong, you’re going to be in a phenomenally good position 10 years from now. And if you’re right and I’m wrong, this shouldn’t hurt very bad badly. Okay. So second position is, let’s say it just is what it is. It’s reached a stability point. It’s not going to do much better call it the status quo position.

 

I believe it’s proven itself at the level that I would put at least 5% of my money into that level. Let’s say it’s going to tick up from there in a scenario, number three, where it’s used on large scale international commerce, it’s maybe used in remittances moving money from, one country to another.

 

That means it’s still has upside and I’d look at 7%, again, in the interest of time, I won’t walk through all seven, but we’ll see that as you get to like position number six, it’s now taken over gold as the major store of value asset in the world. And completely display.

 

If so, I view it as something where you justify something about 25% of your  portfolio. And if you think where I do that, it’s on a March over the next decade or so to essentially becoming the world’s currency, then I’d look at something around 30% allocation. Now I shared with you I’m over twice, that number myself,  this is not advice.

 

This is the way I’m looking at the world but I think, look at where you are in this spectrum and really sit back and think about it. And I’m not saying  even if you’re a person in scenario number five, which is that it becomes  a currency for maybe some second and third world countries and plays a major role in the world.

 

And that would equate to a 20% allocation. I’m not saying do that tomorrow.  Go sell some properties or go sell some gold tomorrow to do it, but set yourself a plan over the next 12 months over the next 18 months. How do you March your way to this position and whatever position you get there, do it in a dollar cost, average manner where  you’re going to do, if the, if that’s the case, if you’re at zero today and you want to get to 20, do 1% over the next 20 months and you’ll hit some peaks.

 

You’ll hit some valleys, but you’ll get there in a very manageable way without. Taking too much risk. Plus if you decide that you’re either over allocating and under allocating, based on where you sit on this slider, it gives you that chance to do it. So if you become more pessimistic while you just stop early, and if you become more pessimistic while then you keep going.

 

Or missing number eight Dodge Clayton to the moon, 100%, there you go. Yeah. You gave away my secret lane. Yeah. That’s the way you’re going to get financial freedom. Perhaps. That’s a different strategy. Yeah. So I’ll relay my thoughts and you and I aren’t getting any financial advice here.

 

Just a couple of guys talking, right? You guys are gonna take this as financial advice. You guys are idiots, listen guys, a podcast, but the investment level, I liked this. I liked how you outlined it here. Different levels of your thesis that somebody has, for the most part, I guess what you’re generally saying is like one to 10% ish, but then how does that change say if so, what I’m telling my guys and my family office, Ohana group is like part of this, you might be a three, right?

 

Which puts you at 7% of your assets. But if you have a Lord net worth  under a million dollars net worth, maybe you should do less. And if you’re higher, two, $3 million or more, you’d have more play money, even if that money is not needed to put food on the table and I think you would go higher.

 

Then the lower net worth guys, because you have more discretionary money. Yeah. And your time preference too. I’m 56 are obviously much younger than me lane. We have a different time preference and although I still view myself as even though I’m 56 I still think I’m going to live 40 more years of an active life.

 

And so I’m still thinking long-term, even though I’m at that age and I’m willing to wait. But I think that is important. So I think that’s a very Sage thing that you’ve said though, that, depending on where you are on this, move that investment level up or down.

 

 And hopefully it will change over time. I’ll tell you this though. I shared with you that I’ve got about two thirds of my net worth. In currency? The reason I have about two thirds of my net worth in crypto currency is I was at about the 30% this time, last year. And that portion of my portfolio did so well.

 

It’s now two thirds. So I didn’t lose anything in the other side that I met, but I had this massive multiple on this side. And that’s the other thing that can be going on is this could radically change where you plan for five and now you’re at 12.

 

Now that would be up to you to decide at that point, if you want to downshift or not. But  I do want to close with you,  that fought of taking things off the table is a little different in this world. Okay. Because. The only way to do what you’ve said is to move money back into the Fiat’s system.

 

And the reason I didn’t rebalance my portfolio is that I do not want, this is my philosophy. When I move money over, especially to Bitcoin, I don’t move it back. I’ll leverage it, but I won’t we’ll move it back. I think where you’re a little bit different. Bob is you actually spend a lot more time on this than the average cat out there.

 

80% of my portfolio is multifamily apartments because that’s what I do. So don’t pay attention to me guys out there, right? Yeah, everybody’s a little bit different. And I think that’s another way to look at  these numbers, if you’re going to play around with this stuff, Now it comes down to your best alternative.

 

If you are out there and you’re unable to build relationships and don’t have the time to go into real estate deals by rentals, then this is easy stuff to get into, and it’s a loan. Some people can say that is a bad thing. I generally am in that campus.

 

Something is easy. I’m a little hesitant. And that’s my only pause with this stuff. I want to be in stuff where that’s a $20 million asset that not any Brony can get into, to me, I like that unfair advantage, but I don’t know. Just different ways, just bringing out some different points cause not, we’re not giving you financial advice, but we’re just linked some ideas for, everybody’s got to pick their own path.

 

Yep. Absolutely. And I do what you’ve said lane. And I think that the one thing I’ll say is that, I’ve been deep into this space for four years, and I came into it with a pretty, let’s say advanced technical knowledge and knowledge of economics as well. And just like you and your world have a level of expertise, I have a certain level of expertise here and I think to get to my level of knowledge and confidence, you have to go down that rabbit hole that deep 10,000 hours, perhaps.

 

Yeah. Yeah. It is. It is a 10,000 hours and it may not. Seem like it on the surface, but, I can say I have my 10,000 hours in here in cryptocurrency, both directly. And so she, when you add in some of the indirect technical knowledge in economics studying that I’ve done. But I think, much like guys like you with what you do and what I do, hopefully for the listeners,  if you don’t have a chance to do that deep dive Hopefully we can shortcut you to some of the highlights and get you where you can at least get a taste and get started.

 

And I think what you’ll find is , I’m sure this happens with your folks lane, with what you teach them. Once you get in and you start using the system and understanding thing, and you have a little skin in the game, your incentive to go further down into the rabbit hole and dig deeper and acquire knowledge will go up and it becomes a positive feedback loop of the more successful you are, the more you want to learn the more money you make.

 

And it just feeds all on itself. And I think that’s what you and I, both advocates of whether it’s real estate or Bitcoin, like you’ve outlaid it here where it’s simple and it gets started. And this is what drives me crazy with wall street products. Is they try and make it maybe using, yeah.

 

You’ve outlay the starting point here and for people to dive into that rabbit hole and the truth is you don’t need to put in   10,000 hours, but there’s a certain minimal level, maybe call it 500 hours, a thousand hours, maybe less. I don’t know, but just like with real estate, there’s a certain amount of hours. Just do like you guys like talk about syndication deals a lot, just do my syndication. E-course just stop listening to all these random podcasts out and just do the freaking syndication e-course and 10 hours. You guys will know a lot more than most of these passive investors investing in my own payment.

 

Something like that is the minimum effective dose to getting a lot more bang for your buck. And I think with Bitcoin is no different, correct. Correct. I a hundred percent agree. That was my sales pitch your podcast. And I hope your listeners pay attention to that too, because I think, the funny thing is, I talked to a lot of people and I don’t just talk about cryptocurrency.

 

I talk about this concept of, I call it seceding from the financial system. And honestly, I believe there’s only three ways to do it. And I believe it’s cryptocurrency. I believe it’s the kind of the real estate and business ownership principles that you’re preaching about. And I believe there’s a mechanism through whole life insurance contracts to manage your money.

 

I think everything else you’re not in control, you’re very exposed and. Since these things are there for you, they’re right in front of you take advantage of them and use them. And it doesn’t matter whether you’re a young guy, like 20 years old, just getting started, or you’re an older guy like me, it’s not too late to get into any of this stuff.

 

I honestly didn’t learn about a lot of this stuff until well into my forties. And thankfully I did, I’ve said all the would’ve should’ve could’ve if I had started 20 years earlier, but can’t change that. So just do the best you can, where you are. And then start. All right. Bob, any parting words you want to people want to learn more about just like your stuff.

 

You’re welcome. I am on Twitter boomer underscore BTC.  I’m on there daily. I do have a YouTube channel under the same moniker. There’s a little bit of content there. I’ve got several videos. I’ll be shooting soon there. And then you know what I do in the whole life insurance, infinite banking world, you can find on create tale one.com.

 

Anybody wants to talk about any of those things. I’m happy to help, and you can DM me. You can reach out to me. I do a pretty good job of responding to everybody that takes the time to talk to me. You’ve heard it there, guys, as better go check it out before it gets bulls from the face of the earth is as things like certain drugs, once it works, they make it illegal and they get rid of it.

 

Yeah. That’s a joke for the person.  We’re just having fun. Not too serious. All right guys. Hope you guys enjoyed it again. You can check out this and part1@simplepassivecashflow.com slash crypto. And we’ll see you guys next time. Thank you.

What is Bitcoin?

https://youtu.be/NontxQLQbL4

Well, one of the things I’ll say here is I think people often have a hard time figuring out what Bitcoin is. So they like to compare it to things that they already see. Is it like this stock? Is it like gold? Is it, but the problem is. It’s so many things. I think you have to really say it’s something unique in and of itself.

 

It’s a monetary network, a decentralized monitoring and work. It’s a protocol like the internet of course, has a money characteristics, very strong as a store of value, some value as a medium of exchange. It has the ability to be a unit of account. Although right now it’s, doesn’t really have a lot of that.

 

And I think when people think about, should I put some of my net worth into it, how do I think about how do I evaluate it? It gets really difficult. And I think people get stuck on that. I say that you have to think about it completely differently if you’re a trader type person, which I am not. But if you are, it’s going to be very tricky because I think a lot of the things you think you may know about.

 

What a certain trading pattern looks like, or a certain shape of a curve or a certain pattern. You may see that in Bitcoin and say, oh, if this was happening in a stock, it would mean that I buy, or I sell, or I do this, but. Don’t think that you can apply those same curves to Bitcoin. It might work one time and then be an absolute dumpster fire.

 

The next time Bitcoin doesn’t follow those patterns. And again, it’s not a company, there’s no leader. It has no head. It isn’t beholden to anybody. That’s a big thing. But the last thing I’ll say about it here is this is the way I look at it. I don’t measure it in dollars. So I view Bitcoin as in the merging parallel financial universe.

 

And if I move some part of my wealth, From the existing, see out universe, primarily dollar base. And I move it over into the Bitcoin universe. I don’t intend on it ever going back. Okay. That I am not. In fact, I don’t like to use the expression. I bought Bitcoin. I’m more likely to say I sold my dollars and acquired Bitcoin.

 

And that’s one thing I think people often. Kind of mistake when they think about money is they forget that it’s always a two-sided transaction. Whether you’re buying a house or a pack of gum, you are selling your dollars and you’re getting this other thing, whether it’s a commodity or an asset. So if you bring.

 

That if, if let’s say it was an asset, when you bring that asset back to dollars, you’re bringing it back into this scary thing. We’ve talked about inflation a little bit already. You’re bringing it back to this thing that is not working for you. So if you do that, you better get it somewhere else quickly.

 

Because it’s a horrible store of value. It may be one of the worst stores of value of all time. And so, anyway, this is a important part of, I think, about trying to get the right mindset, to think about how Bitcoin works and, and how it might fit in your world. .

Beyond Accredited Status – The SPC Mission

https://youtu.be/t5LMlhVxx20

Hey guys, on today’s podcast, you’re going to be learning about how this will pass a casual mission has been changing and a little bit about masterminding and what happens when you go beyond accredited status and the still idea that I’ve coined the phrase called first-generation.

Personally. , my parents didn’t have a million dollars and, , we’ll be the first generation to go over that threshold. But the journey doesn’t end there, right? In this day and age one to $3 million is not much. It’s, you’re getting off the ground, but what do you do?

And create that legacy. We always talk about getting over that four and a half million dollar network status, because at that point you’ve put yourself on a platform to take it beyond. But at that point you’re comfortable in life. If you haven’t yet, please join our investor club@simplepassivecashflow.com slash club.

Join our email list and enjoy the show as I’m being interviewed in another guy’s podcasts, he’s asking really good questions to me. So I thought I’d also share this with my group. When he treats me

Is going back. So when you’re talking about, okay, I’m in this job, here’s something that can get me out of the rat race at that point.

What did being outside of the rat race mean to you and how has that changed over time? I’ve switched from one hamster wheel to another, ? I’ve gone down this path of putting together a real estate opportunities and I’ve turned it into my new profession. . So I’ve just traded one rat race for another essentially.

But there was a point in there where I was financially free and I realized the point where, for a couple of weeks there, I was this is fun, right? I don’t need to work anymore. And I think you see a lot of personal finance bloggers go on this path, where

they’re just going to go travel abroad for a couple of years. For me, it was a lot quicker than that. It was just maybe a couple of weeks where I was like, yeah, this is late. Taking pictures of my food. I’m posting it on Instagram. It’s lame. . There has to be more to this than just drinking pina coladas with endless time on my hands.

And that’s where this mission came in and when people have different missions, . And when I implore people to help some people trying to find their mission, it’s usually what pisses you off in life. Or at least that’s for me. For some people it’s, battered women, they want to help them louder or homeless dogs, or, for me, it’s just there’s so many hardworking professionals out there that. Worked so hard and did everything that they were supposed to do, pay their taxes by their house to live in which I don’t necessarily agree with. And especially invested on these mainstream, , retail wall street products, where ultimately their returns were just stolen from them.

This is the wrong that I want to correct. And if people just bought a handful of rental properties, I kinda just pressed on with that route. They’d be financially free and by five to 10 years, and that hope and pray in 40 and 50, like the traditional method of it is simple, but it’s very counterintuitive what the wealthy do compared to what normal people do.

But it’s not that hard. And I think that’s why I’ve tried to create simple, passive cashflow.com in such a way to. Distill what the wealthy do, show the paradigms on why you would do it and when you would do it and then put it out in a simple manner that the lay person can understand.

And is your club you’ve met your teachings purely around property, or are you looking at other various sort of passive? Obviously there’s the industry side of the country out of club things as well, which goes a little bit beyond property, but as a general rule, is it in that sort of space where you’re going into all sorts of.

Yeah. I started with investing in stocks and real estate first, but the reason I keep coming back to real estate or kind of three big things, like first real estate is a hard, real asset. It doesn’t just bounce up and down like paper stocks, right? It’s a commodity, right? The brick, the wood, the land, it’s a real asset that sort of acts like a commodity.

The second thing is like a cash flows, right? Cryptocurrency doesn’t really cashflow stocks don’t really cashflow, right? Cashflow is what puts food on a table. And that’s what real estate does, especially when you go after 1% went to value, ratio properties are better, and the last one is like the tax benefits.

Someone needs to make three or four times as more than me in crypto. I keep the same amount of money at the end of it than I do with real estate because of the great tax benefits. And this is where, you start to get insight into how the wealthy do things. Yeah. They invest in better assets, better deals, but when these deals they can do cost segregation, supply all this passive losses out of the investment and use these passive losses to choose how much taxes they would like to pay.

That’s when you start to realize while this is a kind of a twofold kind of strategy here, the whole tax game. Yeah. And going back to your shift in terms of, getting to that point, your financial free a couple of weeks ago and board realizing what your mission was, the thing that pissed you off, and then now driving forward from there.

How is it different from having a mission-based. Business that you’ve got now compared to where it was before. How do you feel about the, what you’re doing? And when I started my podcast back in 2016, it was just a means for me to, a lot of my friends were asking me how do you get buying all these properties that you don’t even visit that are like a couple of thousand miles away?

When I was buying these turnkey rentals at Birmingham, Atlanta, and, I would explain to my friends over lunch, How would do it. And of course, nobody does anything, so I started to make the podcast right, as a way to report the dab thing. So I won’t have to keep repeating myself.

And that was how it started. But then throughout the years, I became more of an accredited investor. The topic materials has changed to more private placements in syndications taxes, legal. And legacy creation. And that was where I started to grasp upon the mission. The mission is that kind of help work and professionals out there learn and see the differences between mainstream financial advice that is put out there.

And what are the real wealthy people doing? And then distilled that and into actionable steps for regular people were really good, hardworking people. It’s the shrinking middle class. They’re endangered species. That’s the target. So how has your relationship changed with your business now that it’s more mission-focused.

I think it it helps figure out like, every day you’re making binary decisions. Should I do use this color or that color? Should I send out this email or that email? Should I put this in my funnel sequence or not? It just kinda clarify as everything, right? What’s the mission?

The mission is to help out, that one dude out there, Andrew, . He’s struggling. He’s struggling to get by. He’s a good saber of this money, right? He’s not financially responsible, but he’s just not seeing she stopped getting any traction. He’s saving up his money, but it’s very slow and he’s paying a lot of taxes at the time.

What does Andrew one, right? What color would I use here at that? But speak to NG one. I know that’s a little weird, but what can I write in this one paragraph here that will resonate with Andrew or have him understand it? And I think a lot of this is like that sort of simple passive cashflow.

The simple part came in. There’s all this noise out there. There’s so much stuff out there. And the truth is. What the wealthy do is very simple. . But the trouble is like getting rid of all this noise for Andrew to understand, all right, what does he do next? Because this is all new to him. And there’s a lot of noise out there. There’s all these lawyers selling this entity, that entity, there’s all these CPAs selling to the strategy of that strategy. You’re infinite banking. This that, that, what is the path? What is the order to implement these strategies? ? What is the simple prescription?

So it gives you clarity at the end of the day, isn’t it, as that’s the word that’s coming through for me there, it’s just, it makes your life a lot easier when you know, what is he doing? . People are strung out. They’re working their butts off, especially with people in my group.

. They’re high paid professionals, high responsibility. They just want to be told what to do for some of the stuff, . Just like when I go into the CrossFit gym, I want to just turn off my brain. I’m just like, tell me what to do. I am running a hundred miles an hour all day at my business. And I’m sure everybody feels the same way at the professional occupations.

Just tell me what to do. . I will listen and I’ll drive a hundred miles per hour, but just tell me what direction to do. And then the hard thing is in this financial world, it’s there’s a lot of, , Bad habits that we’ve been taught by our parents by society. And the real secret sauce is implementing this stuff, right?

So take one thing. If in a banking using whole life insurance, and I think we’ve all heard what how bad whole life insurance is for you, not the case. If you tweak it a certain way, the way the wealthy do it, but also implemented at the right point in your timeline, in your journey.

It has a huge component of a wealth building strategy for the high net worth. But we’ve been all brainwashed by all these, like generalities, right? About sorts of things.

And it’s ironic, isn’t it? That you say that those people in the corporate world are absolutely best placed to. Leverage things up and make the best use of these skills. They just don’t know them. But it is ironic, but then it is not because if everybody did what I said to do by a handful of rentals, get out of these feed later and products invest tax advantage ways. Most people are able to leave the rat race in five to 10 years. Would get our coffee, right? Who would build our bridges with design, the bridges who would push the government paper, who would do surgeries, who would clean our teeth?

Society would likely crumble. Like we have this happen, ? Not everybody can be financially free.

Who should be there. Those who are worthy, that are going to hopefully take the information and do something greater with it. But I don’t know. Maybe it’s just, this is a political statement, but I honestly don’t think that you take a hundred people turn on financially free. I’d say a majority would probably just go and travel abroad to take Instagram pictures of their food that they’re eating.

. But maybe that’s small minority that do get financially through. We’ll find that residents frequency, that they end that their highest and best use that their God-given talent that they’re put on earth to do. And they would make a bigger impact than the other 95% of the people that were financially free.

That’s just me being optimistic. I think it’s a fair reflection on the variety of humankind. Isn’t it? And know that’s the truth of it. Isn’t it. And being fairly flippant in that question, but it’s true. There’s that moralistic element of when we push things in a certain direction, whatever everybody works to do that, but the truth is you got, as you say that just never going to happen because we’ve got a wide variety of, yeah.

They do this in China, right? That’s effective, but communism is right. They give everybody that bare minimum. . They don’t have to really work for it. But what do people typically do they just watch Netflix to chill, right? Yeah. In a theory, it works, but in real life, I think from my point of view, it doesn’t work.

Yeah. And that small 1% or whatever you said, the way they’re actually, then you’re leveraging that freedom or financial freedoms really use their gifts for the betterment of mankind. Do you get to see that with some people you get to work with people in that space? Yeah, , we have a higher level mastermind.

We call it the family office, Ohana the goal of that is to get people from $1 million over $10 million net worth. And that’s the first threshold is getting people that four and a half million dollar Mark. That is a Mark that a lot of people in our world we talk about, right? Because at that 0.4, $5 million net worth, you’re able to pass down a substantial amount of money to your kids.

And they can really try hard to screw it up. And it’s really hard for them to do that. . A million dollars, $2 million is nothing today, ? That’ll be gone in a generation easily. In fact, I think the statistics are like 90% of money is lost in two to three generations. Garren’s it’s gone, but if you can get up to that four and a half million dollar Mark you’re set and something happens along that way.

There’s a phenomenon of like, when you get on an airplane, they always say if there’s any problems, put your own oxygen mask on first, then help out your kid. . Same thing here. There’s a point where people are trying to put on their own oxygen mask, which makes sense. It’s not selfish. ? Some people call this the scarcity mentality.

And I don’t really call it like the say you’re selfish. . But yeah, you get yourself to a good place. First. He stayed first. I think that’s what I call that is getting yourself to four or $5 million net worth. After that point, you hopefully your mindsets. you’re in a good place in your mindset starts to you.

Have you start your transition from scarcity to abundance mindset. When you start to look around and send the elevator back down for others, help out others, figure out what is your highest and best use and kind of help the world. Make a world a little bit better place in your unique calendar, where not everybody who I get from 4 million and go up.

Take that next step to make a platform and create better good in the world. It’s a minority, but if they never ever put their oxygen masks on in the first place, they would have never done it after that. And it’s the old phrases that gets misrepresented is the it’s better to give than receive.

And it’s the people interpreting correctly. And I think it was Francis of Assisi that actually comes from, and the original quote is actually what you’ve just said. It’s better to be in a position to be able to give. Then it’d be in a position where you have to receive. So as exactly that, get yourself up to a point where you are then able to.

Help other people out. Exactly. Money is not everything, but it sure makes life, a lot easier. And it gives you options and money is also a magnifier, right? If you’re a good person, it makes you better. If you’re selfish and only things for yourself. And we’ll you’ll turn into that more.

So it magnifies who you are. I’m interested in that point. Cause it says something here. Have you seen that? In reality, is that something you’ve witnessed? A lot of people come into my group are very frugal, right? They’re first generation immigrants. . A lot of them are Asian.

They’re cheap. They’re super cheap. . And that’s good. I think when you’re starting out . That immigrant mentality, . You’re not spending money on stupid things and that’s how you grow that initial capital to invest. But at some certain threshold that really holds you back and it holds you back in terms of building relationship with other key partnerships, and maybe you’re not doing business each other, what you’re getting trading knowledge.

. And that scarcity really holds people back is what I see. And , it shows up in very small ways, but I think people inherently, , they know you know what I’m talking about when You just feel it right when somebody is like that, when they’re more, that scarcity mentality, they’re just a little cheap or, they’re just not free they’re not a magnetic personality, for the guy who’s just fun, love and buy drinks at the bar for everybody. And not saying you have to buy drinks at the bar for everybody. But metaphorically right in that setting, that’s what that person will be doing in other non-alcoholic situations.

Yeah. Yeah. Or some people were energy they help out other people and it’s free. It’s free flowing and there’s other people where energy stops with them. And they think about themselves only, right? Yeah. You’ve got a podcast, you’ve got a platform.

You wouldn’t be doing it unless you feel like the world is energy flows with us. But there’s a lot of people listening right now better. I’m not saying that you’re bad people out there. But maybe think about people in your network. There are people out there that the energy kind of stumps,

they just think about themselves and not saying that they’re bad people, but what I’m saying is like maybe we have to get their oxygen mask on first. We have to make them feel comfortable, get them in financially abundant thinking so that they do feel safe to them bust out and then become more free giving abundant mindset.

It’s not that they’re bad people, but the situation, the environment has created that type of personality. I think the key thing that you said there is in there is that, whatever mindset anybody has, it has a value for the right context. So that frugality, you said it was the really useful right.

To start off with at the beginning, but then the context shifts or moves. So it’s really common at all levels of. Entrepreneurs, whatever it is that the mindset that has got somebody to a certain point is then the mindset that hold them back from getting to the next level. There’s a whole book on it by Marshall Goldsmith.

Actually. What got you here? When, what got you here, won’t get you there. And so the mindset has to keep continually shifting to move forward, right? It’s moving from starting strategy to mid game strategy and maybe end game strategy. First-generation most of the people in our community are first-generation wealth.

We weren’t born with a million dollars. Her parents didn’t have money. . So we come into this with a lot of baggage, . This frugality mindset. And that’s great, right? Because, we save our money, we grow our net worth and we become first-generation wealth. And how I define that is the first generation to hit.

I don’t know, some arbitrary number, like a million dollars net worth. . That’s pretty decent. , but how do you take her from a million dollars to $10 million? Whether it needs to be a transformation, going through that next stage of becoming and how do you groom generation G2 G2 wealth. That’s the next stage?

And what do you do for your own mindset? How do you keep expanding your head space? I’m a conscious of this. I’m aware of this. I don’t have everything. I’ll figure it out. . But what I do know is magical things happen when you have. People are like-minded that are similar on the path as you, around you in close vicinity.

And that’s what a mastermind group does and for anybody everyone’s slightly different level or different perspectives, so everyone brings their own dynamic and no, one’s exactly the same blueprint. So it’s not like you’re just regurgitating the same stuff.

There’s always a new spark coming off from somewhere. But the problem is at least, filling the room up with people who are broke. And I consider broke under a million dollars. Yeah. You might make six figures, but you’re broke. If your net worth is not well above a million dollars, you’re still trading time for money.

And there’s a difference between people who trade time for money and people who have their money working harder, making more money for them. . Metaphorically. That difference that person has their oxygen mask on and the other person is comfortable enough to take it off and not give the oxygen mask to others.

. But the trouble is well, how do you find people like this? Because high achievers. They have reached this scale on their own, not by being a trust fund kid. They’re hard to find and . They don’t wear different clothes. They don’t have different color hair. ? Yeah. They may tend to hang out in different places, but it’s very difficult to determine those people who are up to the stage and just happen to finance a nice house or a finance, a nice car, buy everything on debt.

. And these are some of the, the more soft topics that we discussed in our mastermind within closed doors, it’s safe environment. And I think I would encourage everybody out there to find your little group of like-minded people that are also thinking about this stuff, because the informal groups with cliff and Larry at the office, got it all wrong.

Those aren’t going to help. That’s just going to hold you back. Your network is your network. As we say. Perfect. Before we wrap up, is there any final thing you’d like to any key message you want to get across over and above what you’ve already said? Obviously the key things coming through nice and clear that you got to get your money to work for you and get the mindset of shifting away from what had been the old traditional ways of thinking and start thinking about how to make it work properly.

Yes. Surround yourself with the right people and start educating, right? Depending where you are in the journey, it might just be buying your first rental property. If you’re under a half, a million dollars net worth. That’s how I started.

And it just takes a while. It is not a get rich quick thing. I bought my first rental property when I had no net worth. Just out of college at 2009, it took me damn near six, seven years to get up to 11 rentals properties. And did you say that, that main line there of, getting yourself in a good position, all that does is enable you to help more people if that’s what’s important to you. So it’s not about in and of itself earning the money.

It, that enables you to do other things from there, isn’t it. And if helping other people, it doesn’t come naturally to you. That’s cool. You’re not a horrible person. I wasn’t like that. I was just pretty selfish and just thinking about myself, , So it says nothing.

We don’t want to shame anybody because we’ve got different needs. So when we first start out, then actually, we’ve gotta be looking after itself, but when you get to that position, your view shifted because you got to the point where you realize actually. The reason I start out in the first place I’ve done that.

I’ve achieved it and now I need something else. There’s something else that needs to come from it. And then you’ve turned it into a way that yeah, you’re still benefiting out for a minute. I’m not knowing no one’s saying that’s not happening, but ultimately it’s a drive to educate more people and get other people to come up and as we go through our own journey, these hour, Requirements shift and change and what becomes important to us?

Yeah. The one theme is I think you got to figure out what is your highest and best use to help other people? I think that’s a pretty consistent theme. Once you get to certain levels of the question is what it is, right? Like for me, it’s finances, money investing. Other people might, might be a gym trainer, they enjoy doing that. That’s their God-given talent. Other people might just be, you’re really good doing a knee surgery I’m cool. . Whatever you want to do, find some way to connect it, to helping people in their darkest of days.

I think that’s where a lot of people find true fulfillment. Yeah. Yeah. And so final question, which I ask everybody on these podcasts and you’re no exception you don’t get away from it. It touches on that lane. What is it that makes your bits Dingle? , I just see a lot of hardworking people out there.

Kind of doing it the wrong way. They’re driving around in the Ferrari with the pen brake on they’re doing all these things that kinda just hold them back buying a house to live in before their net worth hits a million dollars . I don’t really agree with that. Investing in retail type of products, , in non tax advantage things,

there’s just a lot of people pay a lot of taxes and they don’t really need to legally, what if they just educated itself a little bit, ? You don’t need to be spend all your time doing this stuff to relearn things. There’s a lot of people that have forged the path and found the simple, passive cashflow way.

Excellent. Thank you lane. So if people need to find out more, your website’s simple, passive cashflow.com has huge amount of information on there. Brilliant.