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Things that you can’t learn in college

Things that you can’t learn in college:

  1. Schools teach concepts but it does not really help you learn personal branding, networking, and creativeness as trends change. They teach you what happen in the past which may not help you in the future
  2. They don’t teach you to be a good speaker you absorb material
  3. You don’t get the repetitions to get better. You take one test (a pretty bad indicator of mastery)
  4. Colleges teach you processes and rules which does not help you develop your creativeness or much critical thinking. If you are not creative (how do you know if you are not put in that position) then yea I guess you can be a worker bee. Maybe there would be more leaders if the school system would be more focused on it.
  5. Tests require read, studying, and answer… by the real world requires you to test, test, test and fail fail fail.

Cons of the BRRR Strategy

https://youtu.be/blqXBWlg3lQ

0:24
Today we’re going to talk about the cons of why you should not be doing these burbs. So for those of you guys don’t know what bearse stands for its acronym for by rehab, rent, refinance, repeat. It’s this clever little term created by folks on the internet, where you pick up a property, you rehab it, and you increase the value of it, you rent it out in the meantime. But then the trick comes is when you get a loan on it from a bank, and you get all your original capital back out. And a lot of times, in theory, you can get all your initial capital and be sort of in the deal for nothing. If you’ve done one of these deals before. Well, good job for you. You’ve probably made a bunch of equity this way and likely gotten into the deal for no money, like I said, but from my outsider’s perspective, it’s successful most of the time, like 70%, but it always takes time.

1:19
So as higher net worth investors, like in our group, for some of us, at least time is more important than getting the best deal or in this case, free equity. When you add in the element of the risk, it takes the decision closer, most accredited investors would not bother with a turnkey renter or any type of bur because of the scalability. The sub $200,000 net worth bro might be really excited about getting into a cool $60,000 property with no equity after doing a successful for over $20,000 of manufactured equity means very little for an accredited investor. So if you’re going to do these things, here are some considerations for you to think about. First, have you done a partnership with this general contractor before is this small time general contractors or larger, bigger size builder, a lot of our apartment deals. That’s why I like this commercial world because a lot of our contractors and vendors are big companies with a lot of times 510 million dollars plus of insurance.

2:19
So just on that scale, and they’re much more sophisticated than your run of the mill general contractor that run that drives a little Toyota truck around. So I’d be very skeptical of the deal. Unless you’re incentivizing the person who is your builder or your rehab or your general contractor to do a good job and not cut corners behind your back, especially if you’re a remote investor, like a lot of us are, really there’s no recourse for you to kind of have oversight. But some people will have like an inspector kind of verify this stuff. But to me, it’s just a matter of time before you get screwed over. So maybe I’m just cynical, but I feel like this business proposition puts all the risks on you, the investor, and you basically are giving your GC or rehab or free rein to possibly the screw you over.

3:10
So right now I’m actually doing one of these on one of my properties where I have property as is value of $160,000. in Birmingham. It’s actually I’ve held this property for a number of years and then saying I’m going mostly to syndications of private placements for the scalability. And I feel they’re stronger returns risk adjusted returns. So I’m looking to rehab this property, the rehab estimates around $40,000. And there’s seems to be a bunch of margin the ARV or after repair value is about $250,000. So one of the things that could possibly go wrong here are another renovation could easily go over, as most larger renovations typically do. What many translate to a 25% overrun on the $40,000 estimate is in total, in the realm of possibility. That could be a swing of plus about 100,000 or $10,000. So let’s say the builder has other high paying renovation jobs are priorities that he would rather concentrate on. And your project kind of falls by the wayside. At least the schedule goes back a lot of these markets, if you don’t get the property on the market by September, October, you knew you’re waiting another three to five months to really get it back on the market in March, or the summertime of the next year. And in the best case scenario in this situation. Maybe I make an extra $20,000 of profit here.

4:40
But the question is, is it really worth the time and the headache The other thing to think about is your why and huge sums of money. A lot of times these guys will want to do want all the money up front which I would never recommend you always want to have some kind of a draw schedule and to be able to control the funds Granted, the general contractor needs to purchase supplies, and probably backfill the payments on their past project not associated with you too, because it’s this big, continuous cycle. And that’s, that’s why I don’t really like working with these general contractors, because a lot of these guys, their net worth is under $200,000. And they frankly just are insolvent. And when things get really tough need to pay off, pay their family bills, and put food on the table, they’re going to screw you over the person who’s potentially 1000 miles away, that has really had no recourse.

5:34
So at the very least, make sure you have some kind of draw schedule or control, create project completion milestones. And just like when I was a project engineer, it all comes down to your scope, schedule budget, like we’ve talked about the budget there, but also the scope, what are you guys working on, create a full scope of work and sign construction contract. And then also, no contract is complete without a detailed schedule. So the reason why you get the schedule is because now you can point to certain milestones along the way and hold them accountable for it can’t just be completed by a certain date. And, and needs to be some level of detail in there. because inevitably, things will pop up. And there’s, there’s some of the internal milestones that are in the control of the contractor, you can hold them accountable to them much easier.

6:23
Of course, I’m kind of glazing over the top of a lot of this stuff. And like it’s just from the my perspective, for a lot of working professionals that we work with even a lot of doctors, lawyers, engineers, folks making over 100 200 $300,000 a year to get a 20 to $30,000 equity by doing one of these burrs that take anywhere from three to nine months, it’s just not worth the trouble. Now it’s, it’s fine. If you don’t have that much money, your net worth is under a quarter million or half a million, this is the stuff that you potentially have to do. But the way I grew my net worth from zero to half a million was I just bought that first rental property then I bought the next 134 years later, I didn’t get up to 11 rental properties until I bought my first one in 2009. And I didn’t get that loved one until around 2015 16. So what a lot of people don’t realize it took me almost a decade to get up to that stage. And I just closing things out focus on being an investor, not a landlord. They’ll do the math here, like picking up single family home rental properties, that cash flow 300 bucks a month, you’re going to need 20 or 40 of those things to replace your income.

7:37
Again, I had 10 of these things. And I had an eviction or two every year and three or four big things that happen such as like a trap going out or some kind of plumbing leak. But imagine if he had 30 of those just three x those numbers now you’re talking about an eviction seemingly every other month and some kind of big catastrophe every few weeks. Not directly investing in turnkey rental or small multifamily is a great way to start to build up and learn but to create that war chest to go into more scalable investments should be the progression and that’s personally why I do private placements in syndications today.

8:14
Now if your net worth income minus expenses under $300,000 are you’re barely able to save $30,000 look syndications are not for you. Stick with these turnkey rentals or even do these burrs that were kind of against in this whole video you’re going to have a little more gains that way what you’re doing is you’re essentially trading your sweat equity for that extra equity at the end. If you guys have any other questions please submit it to simplepassivecashflow.com/question and we are also starting a new program to help all newer investors trying to pick up their first few single family home remote rentals. Check out more details of that at simplepassivecashflow.com/incubator.

What is an Accredited Investor?

https://youtu.be/JffG2-GfQlA

What is an accredited investor? 🎥 Quick Video

  • To be an accredited investor, a person must have an annual income exceeding $200,000 ($300,000 for joint income with your spouse) for the last two years with the expectation of earning the same or a higher income in the current year. An individual must have earned income above the thresholds either alone or with a spouse over the last two years.
  • Net worth exceeding $1 million, either individually or jointly with their spouse. Note – this is often the harder one to achieve as we find high incomes are not uncommon.
  • An entity is considered an accredited investor if it is a private business development company or an organization with assets exceeding $5 million.
  • Also, if an entity consists of equity owners who are accredited investors, the entity itself is an accredited investor. However, an organization cannot be formed with the sole purpose of purchasing specific securities.
  • In 2016, the U.S. Congress modified the definition of an accredited investor to include registered brokers and investment advisors. This continues to open up with new changes – If a person can demonstrate sufficient education or job experience showing their professional knowledge.

https://youtu.be/z5WHIa5FFng

Pondering how a person can be called an Accredited Investor? Do you need to be one to get access to private investment opportunites?


What do Accredited Investors Invest in?


Join our Private Investor Club

What qualifies as an accredited investor?

An accredited investor is an individual who has the institutional knowledge, experience, net worth, and/or financial sophistication to evaluate an investment opportunity.

Defined by the United States Securities & Exchange Commission as someone who makes a minimum of $200,000 ($300,000 if filing jointly) or has a net worth of $1 million dollars excluding personal residence – although one could easily do a cash out refinance or HELOC to get the equity out of the primary residence in order to put you over the $1M threshold if needed.

 

Importance of being an Accredited investor

The significance of being an accredited investor is that you can invest in things that those with less money, cannot which are mainly deals such as Reg D 506C offerings which are mass marketed and therefore can only allow Accredited investors.

 

Alternatives to having accredited investor status

If you are not Accredited don’t worry! Most deals out there are done through private networks and not mass marketed – these Reg D 506B offerings are accessible to “sophisticated investors” which has a much more nebulous definition but essentially says you know what you are doing even if you don’t have that much money.

In Reg D 506B offerings which require you to have a pre-existing relationship with the sponsor, you have the ability to invest if you can qualify as “a sophisticated person investor” which has a more ambiguous definition but essentially says you know what you are doing even if you don’t have that much money. 

These laws were put in place long ago to “protect” the average person (non-Accredited investors) from predatory activity. The irony of this all is that there is no protection for the average Joe, or pension funds for that matter, against investing in a wildly bloated stock market at record valuations and being mislead by a commission based financial planner. Every major trader out there knows we are in a bubble but there is no protection for individuals dumping money into their retirement accounts to buy mutual funds. It’s an archaic system which makes little sense and I have always felt that it was the little guy (non-Accredited investor) that need access to good private alternative assets the most!

Certainly, there has been some recognition of this fact. The 2012 JOBS act made it easier for Main Street America to participate in “alternative” investments via crowdfunding and made it easier for sponsors to advertise previously unknown opportunities. However, we have a long way to go because it is not practical for a syndicator to raise private capital with current crowdfunding laws because the maximum that can be pooled together is very small.

I am not a fan of crowdfunding websites. When I invest personally, I need to know the lead syndicator personally. None of this “we met at a local event and he pitched me his deal”. If a guy does not have a list of solid investors they must lack the track record. Also I did a podcast with Amy Wan a syndication attorney talking a lot about this topic.

 

How do I get qualified as an Accredited investor?

For Reg D 506C offerings where third party verification is required… the steps involved with qualifying include a bank statement from a financial institution that has been approved as a bank, a mortgage (with a qualified purchaser), joint net worth or income of more than $200,000 to qualify as an accredited investor, or a non-bank financial information, including the net worth of $1M not including equity in your primary residence. (Because your home is not considered a good investment in our community)

 




Tax Hacks for Accredited Investors

Types of investments an accredited investor can make

Now that you’re an accredited investor, you started asking yourself “what type of investments should you get into to increase your net worth by getting away from retail investments?”

The golden rule is to work with investment firms that have a proven track record. 

 

Potential SEC changes

Some rule changes rumor to pushing the threshold for Accredited investor status to $5 million or more of net worth. Or creating a new level of investors such as Accredited investor plus.

Go ahead and start your journey towards becoming an accredited investor.









SimplePassiveCashflow.com is for working professionals who are looking for diversification and better returns outside of traditional investments such as mutual funds and stocks.

The Hui Deal Pipeline Club is a free investor club where I filter investments and underwrite the numbers and partners myself. And put my money and reputation on the line. Unlike other investor lists and groups, my investors have personal access to me and know that I personally have skin in the game investing alongside with my investors. 

*We even accept non-Accredited investors and have turnkey rental opportunities. But only Accredited investors get free books (input address below).

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Not going to lie, you are going to need money to invest in these deals. If you are low on liquidity we still support the mission of getting people out of the corrupt Wall Street roller coaster and into Main Street investments consider joining the team!

I started this investor group because I wanted to create a community and personally see each of you get to your goals financially.
I don’t see myself as a guru but a facilitator of this great Co-op group of investors to crowdfund due-diligence and bring opportunities to the group Now that I am a full time investor I have the ability to travel for due-dilligence, join masterminds like the Collective Genius, and have calls with all the members in my investor club.

There are other investment companies out there that will train their investors down to 5-12% IRRs with a lot of risk – I won’t work with them. At the same time I value working with inexperienced syndications who have no experience even doing small residential single family rentals of their own or started with a small apartment to learn operations and proper analysis. I don’t “do deals to do deals” to pick up acquisition fees.

By investing alongside with you folks I am in the GP side and looking to expand my track record and gain experience the right way.

Please know that I take great respect in running my syndication business as I am well aware that each deal I put out there is putting my brand reputation on the line. I intend to be here for a long time and hope that you will keep coming back and bring your friends.

Hui (hu ee) – Definition: to join; meet; unite; form a club; partnership; union

Some investments (syndications) that I am involved with require you to be an accredited investor. Others are simple solo investments or small JV projects.
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Tax Tips and Best Practices

https://youtu.be/aqPWoki-MP8https://youtu.be/FTj-nJEGi-4https://www.youtube.com/watch?v=zCW-MbPxJxMhttps://youtu.be/umCsNG8sLNc

What Are the Best Multi-Family Markets?

https://youtu.be/mjgXzQbKUu0

0:00
What markets are best for multifamily now? I’m not a big market fan. I mean, of course, like the where’s the population job growth mostly in the south southeast. But I think if you don’t have a clue how to underwrite deals, yeah, you look at what markets are hot, and you just kind of throw a dart, right? But it’s all property specific. Right? What are what are the current rents? And what are the market rents in that sub market? And how much is undervalued?

I mean, I’ll buy a property in freakin Alaska, if the if the market rents were undervalued by a lot, essentially, I’m going to put it into my model and factor in a lot of this stuff in and see which is the stronger deal and go into that. But I think what you see on a lot of like podcasts or like forums is a lot of the surface level questions like what what are good market, like, I think, like Dallas is a great market. But the problem is every like sucker out there is looking in Dallas, which pushes the prices up. So I don’t think you can look at it from that point of view.

I mean, again, learn how to underwrite deals and you can kind of cut through the noise. If you’re not willing to do that. Or you’re just kind of looking for some, maybe you don’t know too much and just want to throw a dart somewhere, you know, south southeast areas, population areas that are going up or like Florida. Orlando is a big one Atlanta, Birmingham, I like single family homes and turnkeys there but they don’t have the density to do multifamily. At least you know, not to get above 100 units.

We love Huntsville. Huntsville is one of the top of egos like the top three rent increases for the last 12 months. You know, all the Texas triangle Dallas Fort Worth Houston, South Carolina, the Carolinas, the banks really like those type of areas now, but mostly on the southern southeast area. But don’t just take that and go and run deals in those areas. It’s all about the specific deal.

Oct 2020 Monthly Market Update

They you and try to rent them out and then became one. All right, everybody, this is October 2020. Monthly market update, you guys can find pass reports at simple passive cash flow calm slash investor letter. But let’s get going here, we always start off with a little bit of a free easter egg giveaway. And this month, we’ve actually got two of them. So I created a version of the Miracle Morning for real estate investors, which you guys can go and it’s quick PDF download, change your mornings and achieve your goals. It’s a quick read. To get this email me at Lane at simple passive cash flow calm. And also, you guys can get a downloadable return on equity tracker. So this is what I talk about a lot as one of the most common mistakes real estate investors make where they buy and they never sell. Well, I’m not saying you should sell but you definitely should be either doing a refinance or a HELOC, at least to be pruning that equity off. Because Have you seen it with turnkey rentals, you can make 30% pretty easily your first year, but that eventually tails off as you are your property gets more and more paid off your appreciated property appreciates. The money you make sort of stays the same rents typically increase a little bit but they generally stay the same. But the deployable equity that nominator the question of the equation, right the increases so this makes your return on equity goes down sophisticated investors always read leverage their equity to keep this return on equity high. Of course, let’s not be a bonehead, we have to look at our cash flow levels. But this spreadsheet allows you to figure out where is your lazy equity, you can go and get it at simple passive cash flow calm slash r o E. So here we are, if you guys want to join our community, go to our Facebook group. And you can check us out on I do these slides in the YouTube channel. And also this is recorded for podcasts for

Unknown Speaker 2:08

support passive cash flow podcast but doing it since 2016. First starting off with a little bit of a teaching point this month is even been looking at refinancing a lot lately, all time lows, and people are always asking Should I get a refinance. But we’re always remember, like the lenders are always pushing you to get a refinance. And it may not make sense for you there yet may they may call it a no fee refinance. But all they’re doing is they’re increasing the rate a little bit to kind of hide those fees. So astute investors know that you need to take into account rate and feed and see if it makes sense. There’s always a crossover point, you need to figure out what that crossover point is. But here’s on the screen, here are some rules of thumb on a 6% 5% mortgage and what the payment will be how much you will save, you use that return on equity spreadsheet, a lot to figure out, maybe you might want to just dump the asset and sell it and buy two to 10 more houses or three more syndication deals, creating like a lot more maybe three times and see your cash flow at that point certainly up multiplying your return on equity. Now we’re going to get into the monthly report this month. Some general thoughts on the economy’s takeaways here this past month, encouraging signs of GDP growth, we’ve seen some splurge spending, which is a pent up demand. This is what I think is going to be happened in 2021. Generally, people are shopping people who have got good jobs are looking to spend some money next year feeling get the heck out of their house, of course in a lot of people are struggling. But it’s unfortunate, right? Like you there have the haves and have nots kind of a situation here. Devin, definitely a progressive tool for different asset classes getting impacted very, very differently. I will go into this, this report will also have I’m going to be doing a little bit of a breakdown for different asset classes like office space, mobile, home parks, retail, multifamily, of course. And we’re talking about the real estate sector, and you have different asset classes. And within each of those sub asset classes are as well as sub asset classes where you’re talking about different types of offers, or different types of areas, different types of a Class B class and you can break it down from there. So a lot of news articles, they are very broad, right, because most people don’t dig into this stuff. But my hope is to educate you guys to a point where you haven’t read between the lines and we still wouldn’t be Watts’s. At the very least we’re not just going to read the headline, right? Not always up getting into a point of reading the whole article, but picking out the one line in that article that’s really important that maybe may or may not align with the headline, the clickbait One of the the books that came out of the ITR report that I don’t refer to a lot is if you wait for the macro economy to enter a full fledged recovery, you will fall behind the curve and the ITA report is a paid report that I pay for. And it is one of those that I think it’s a great resource if you guys are looking to get away from the mainstream media, which I think is a lot of garbage. That’s something to go and subscribe to. Also, the Richard Duncan is another great resource that you guys can learn more about down and support passive casserole.com slash Duncan, but budget threats to wash, like the onset of the flu season once the month momentum in total retail sales, what’s the feds doing oil prices? And the thing about I’ve always watched is us intermodal rail traffic, because I worked for what are the four major railroads for about seven years, they are definitely a leading indicator of what goods and services what goods are our big move on the rails, especially the raw materials like the lumber, they they’re a precursor to when the the raw materials first before it gets put into service several months later. So there’s some chitose there in the first half of September, uncertainty regarding unemployment benefits as the next MLS fun is working its way through the system, there’s always going to be risks, right? How else do you get people to watch the news, if there were no risk, nobody would ever watch you. And you wouldn’t have any advertisers on there. But for my syndicator point of view, talking to some of my peers, you hear a lot of rumblings about stimulus burning off, I would say we’re we’re not too concerned about that, especially if you’re, you know, good stable market, certainly away from the States. We were much more worried about the April May 2020. Collections First, the first stage of the COVID coming out how that will get what’s gonna happen pulling up the yardie matrix, one of great data sources out there in their August 2020 report, they showed that multifamily rents increase by $1. In August, over year over year basis, national rates declined by point 3%. And whenever you read this, you got to take it with a grain of salt, right. But they’re combining markets that I would never invest in one city never. But markets like San Francisco, Seattle, New York, the lifestyle asset class continues to be hit the hardest and like so asset class is the luxury stuff again, stuff we don’t invest in, we invest in what they call renter by necessity. So that is, as the name implies, you’re renting because you need to because you can’t afford it in house. So that’s a we like to invest in to provide good quality housing for those folks. So they held up well since the beginning of the pandemic care report with only eight of the top 30 market experienced negative friend growth in August, and also the Bay Area’s die.

Unknown Speaker 7:57

been investing with hp since 2017. To buy distressed mortgages and discounts to offer struggling families sustainable solutions to stay in their homes. When homes were vacant. He recognized that lenders frequently struggled as they tried to limit their losses. That’s why owner George Dewberry founded pre reo, a platform that gets these vacant properties into the hands of local investors like us during the foreclosure process, which mitigates losses to lenders and accelerates returns for investors a win win. I’m very excited about this platform that connects local investors with board appointed receivers in their area to cost effectively repair, lease and maintain and rent vacant homes during the foreclosure process and ultimately make a profit. I’ve been checking out local properties here in Hawaii. And I think it’s a great way finally pick up my home to live in. Even though I think homes, the buyers aren’t the best, you can learn more about pre reo by going to simple passive cash flow calm slash

Unknown Speaker 8:55

v Rio.

Unknown Speaker 8:59

I think a lot of people are running over to the sacramental part of the bay to seem to sum up ticket prices there. But yet people have finally got the group that that great. Second reason to get the heck out of this this overpriced city of San Francisco and the Bay Area. Again, the first was just generally it was too expensive. But now close quarters and a lot of social events are happening. It doesn’t make any sense why stay and why they love the tech couple years there are allowing their employees to go to sometimes next summer to work remotely. Now I will cabinet saying that not all office is out of business. Maybe look at all the places that aren’t tech hubs where you can do remote work, you see that a lot of those events kind of kind of change strong. And I think all of us agrees when maybe not us listening. But definitely in amongst our peers. There’s varying levels of productivity, I think generally would say that Yeah. offices nonpoint man, but let’s start at the top. What they found is that’s usually the feeder that everybody starts out with a single family home. So they typically multifamily not seen multifamily is the best asset class. But it is a great starting point. And that’s is where we will begin. business now reports that class B assets are the sweet spot and we’ll take family right now. And they are CD D showcase in resiliency during an economic downturn. RV business online reports on Marcus and Millichap that won’t take family fundamentals progress as government assisted waves, the kind of blue mesh type of headline article, but hey, I actually read the thing here and I pulled up this where they’re saying July 2020, available supply dropped to the lowest point since 1982. Meaning not everyone wanted to make the leap into home ownership can do so. So a lot of people with the rates low. We saw it we did see a lot of in our more higher end apartments, people opting to go and buy a part of buy a place to live in and moved out, we had a little bit of turnover for that. Obviously, that’s not happening in the B class C class type of stuff more than a B plus a minus type stuff. But getting back to the article for this reason Marcus and Millichap believes Class A garden style suburban rentals with larger square footage and Apple outdoor space will benefit in the future. Or a business also also reports the US economy adds 1.4 million jobs in August. And now unemployment rates return to single digits. So I think we had like a get a Yeah, I mean, it was just a bloodbath in March in April, which makes sense because we shut down the country. But it does seem like we are coming back unemployment rate dropped from 10% 10.2% to 8%. Last month or so property executive reports. And now we’re starting to go into some different asset classes, right. So you can see how things are recovering amongst different asset classes. And us investor takes this into account, I take the standpoint of I’d like to be diversified in all asset classes for at least being able to learn and to know what fields to go into. So that when when the world eventually changes every three years, we kind of move from one asset classes to another. So Blackstone, which is that big fund out there, and which I call smart money. They just bought almost half a billion dollars of hard assets. So they’re a buyer of mobile home parks. Bobby, because mobile home parks, if you ever been to a to one night, they’re not Schiller parks right there, these are pretty nice places to live, they, they’re cheaper. And they are good for people who enjoy their space, right? So they’re very pandemic friendly. Dallas developer from the Business Journal reports that the demick has slowed demand for luxury high rise apartments. Most of us will say no, no duck, commercial property executive now we’re talking about office space here, recreating office for the foreseeable future. So talking about some trends that you’re seeing in office, I think a lot of us see, it seems like a big part of my community lives in the West Coast. And we’re currently seeing what’s happening in San Francisco, Seattle, just got to remember that those are predominantly tech type of

Unknown Speaker 13:34

industry that are using that office, which is not the case in the rest of the country. So some office space needs to be decrease. They say in this article, but some firms are, and I quote twice as much space for social scene is so a firm will double down. There’s gonna be somebody went out of business not using a space so they are acquiring more space that they can adequately deal with their employees with the space he did socially distance. I would say a lot of other places other than tech hubs are realizing that their employees are really useless when they stay at home. And they play with their cat all day long while they’re supposed to be doing work. That’s me, talking to another recent investor saying brought up another point that we don’t have that mentorship. You don’t have that. That transmission of knowledge from senior employees down to junior employees. I mean, just imagine if you were coming out of college and your first day at the job was oil back at your house. That ain’t good at all. I think this whole trend is pretty temporary. But I also have the five word where are they building stuff right so Manhattan, Chicago, Boston, Los Angeles, Washington DC is where the inventory is happening. Here are where your tech your we call them assume communities because of the reliance on Zoo or just working from home. Starting at the top, San Jose, San Francisco, Los Angeles, San Diego, Denver, Salt Lake, Seattle, Portland, Sacramento, all those are West Coast tech hub cities and not until we get to the eighth or ninth position to be see Boston Austin, Washington DC New York, Phoenix, Minneapolis St. Paul. So what we’re seeing in these those are the top areas where most people are telecommuting began you don’t a lot of tech hubs again, pointing that out. Multi housing news reports American landmark denser begins Orlando developments now we’re talking about hotel stuff like tourism type of stuff. So I don’t know too much about hotels and leisure and like the high end stuff like that one, I I know that it’s very it does really well, good times, people were flying high with their short term rentals. But depending where you are, you could be shut down. Another article with Blackstone right? The Smart Money guys. So blacks Wall Street Journal reports that Blackstone is ready to lend after basic record property debt fund. So they are ready to get after it, which shows the Smart Money is acquiring Blackstone, they just bought back a billion dollars of mobile home parks. Now they’re loading up to people going after Warren properties. Yeah, I mean, it’s funny, right? Why is the smart money to eat this. But why is everybody having the same line of Oh, I want to see it how I want to see a vaccine first, or I’m uncertain, or I want to see who wins the election. Just making the observation. Commercial Property executive reports that ball dry giant strikes a $80 billion deal for JC Penney for Simon group. So the mall is buying JC Penney, and most of us know that JC Penney is the cleanest place to shop. And I don’t I’m not a big fan of commercial, retail, storefront type of stuff are certainly not walls. I think that they’re slowly going away. I don’t think e commerce is here to take them out in the next five years. But I think it’s a lowering trend. Like I don’t think people are going to use ATMs anymore. I just generally don’t agree with Yeah, that kind of usage. But I’d like this, this article is cool, because it’s like, people make make money. Real investors investment. There’s blood in the streets. And Who woulda thought buying a JC Penney, but I hope Simon does really good with it. Right? I mean, that’s what people talk a lot about, like all these guys not paying taxes. Well, they’re the guys who invested the year to before I wouldn’t when they put in extra funds to be able to deduct in the next tax year. Right. They kind of deserve deserve the text funds, because they’re the ones getting the reinvestment, when most of the country are just sitting around waiting. A couple articles here on a couple of asset classes. We don’t talk about too much senior housing, reads take stock a month added turbulence not it was aren’t going too well in senior housing, because if you had a senior housing, you probably stricken with operational costs, having to wash things every 50 seconds or whatever, right? I mean, there’s just more operational costs. And people think people ask me all the time, what I think about assisted living, I think it’s great. Silver wave is coming. But it’s not a real estate, investment. It’s a business, it’s no different than investing in a Burger King, or some other franchise. I kind of stay out of that type of stuff, operational businesses, preferred apartment communities exits student housing market is. So you have a big week, China unload some of their apartment communities for student housing. And again, student housing. I never liked it. I just never really liked catering to one little full for such as students. I would I prefer to go after workforce housing, because that’s the largest competition and so the message here is to stick to the basics. And the last asset class I’m kind of talking about today is if you’ve been watching, like a lot of TV, maybe you’ve been seeing the new Dave and Busters commercial, which I think is probably my pick of the Year for best advertisements on TV, but they have this like Asian girl who is a really good actor, she portrays herself as having a very low self esteem. She does that Dance Dance Revolution game every time she does a great step. She’s like, because Perfect, perfect, which makes you kind of want to go to Dave and Busters and play around and play some video games, but apparently they’re spending all that money on advertising. To get me to do that, because inner busters reports 85% dropping 40 revenue source with bankruptcy.

Unknown Speaker 20:09

So I don’t know, maybe the advertisements just last ditch effort. Or maybe it’s just a really good commercial and it got my attention. For those of you guys listening, watching on the YouTube channel, I have a 3d map from how much dotnet of the US cities with the highest economic output. And it’s kind of a cool 3d map with bunch of cones, and each cone represents how much money is being generated there. And, of course, New York, Boston are kind of the financial centers. But some of the surprising ones well, Chicago’s there to Los Angeles there to think surprisingly, is San Francisco is really not that big. Oh, it’s only half of 540 9 billion were of Los Angeles is $1 trillion. Houston is half a billion dollars. And Dallas has half a billion dollars, which is equivalent of San Francisco. But not not saying that these are the places you want to invest, but sometimes you just have to look where the money is going. Housing why reports that the Fed expects low rates to the year 2023. And I think we’ve seen pretty much rock bottom rates for the last was like, five, six months now. So they released the statement once they were all 17 members of fullback, which stands for the Federal Open Market Committee. He said that they expect to keep the central bank’s bank benchmark rate near zero at least next year and 13 estimated it would stay there through 2023 a little bit of a pop culture here. So ti the rapper I think he went to jail for a little bit a few years back but now he’s back out and he’s urging people to ditch cargar Cartier watches and believe baton sway to buy property instead. I don’t know if he’s talking about like we’re gonna stay for rentals or just buying it but we were he’s saying we were actually as a kind of a cool voice so I’m gonna tell it in my tea. I was we were just in a studio having discussion I just felt the need to actually that’s not very good. So he says that it’s just the Share it he says in the clip all y’all getting that money from the government. Eight no more partiers and eight or Todd’s you got to get some property please. Please y’all will get some property. So listen to TI get some property, lower interest rates. If you guys are looking for your first rental property, turnkey rental remote rentals. We got the group for that that’s the revolt investment debater and you can also check out the E car so you just want to study alone, I guess. Simple passive cash flow.com slash debater. And if you guys are more of our credit investor want to build your network with other credit investors to stay close to the in crowd to know who to work with what to do, how do you do your taxes, go to support passive cash flow calm slash journey and live for our group there. This is the part where I go over my little personal updates this past month and always trying to improve myself and the first one is growth. So I found this little article here that I tried to apply by this month. It’s from that episode or love it or even first first tip here is being quite passionate towards yourself. It’s okay to not be okay. And I think I put this in here because with the whole pandemic, there’s a lot of people out there having a hard time. You know, especially the extroverts, right, they want to be out there, people shaking hands, hugging people, maybe the introvert out there happy plans, maybe they’re not they never know, but yet just be more compassionate towards one another. Tip number two, develop a routine. Engage with search at anchor points or actions throughout the day to help route you. Sometimes I make myself go crazy. I feel like every day is the same I get a check. We do the same thing. I like routine. Number three, consume media that helps detach. Helps you detach from reality take a break from what is overwhelming you. It’s okay to distract yourself. I think unfortunately, he’ll do this a little bit too much. It’s think this one is assuming that it’s a minority part of your day. Before solve problems in your everyday life. Doing this can help with small barriers that can add up and increase the feeling of overwhelm. So what I personally do is once a week I kind of take inventory of my bigger projects. I have and likely I have

Unknown Speaker 25:02

probably been on my list for two or three weeks at that point. And I try and break it down into little steps. So try that out, see how that works. On number five, be grateful for the things that you have, it can lift your spirits, and the spirits of those who receive gratitude and gratitude. If you Google that term, and you look for all these articles on it, it is definitely one of those hacks out there. Or if you just change your mood and outlook, instantaneous, you share how you are struggling. So everyone is struggling in some way or another suffering is universal, and reach out to other people. And maybe they can empathize with you. Or maybe you might find somebody who’s struggling even more you can help them. But think you’re you guys aren’t alone. That’s why we stress community in our. And yeah, I’m a little wary, I say if you need something, let me know.

Unknown Speaker 25:53

But I talk to your circle of friends,

Unknown Speaker 25:55

right? I mean, or, and I think reach out to people in your circle, see if anything is going wrong, and just audit a little bit. So why we got contribution, we have over 350 investors in the investor club, and hopefully a year like they’re all on the road to financial freedom, investing in real assets, where they know the people they’re working with, and not getting screwed over by retail investments that may just make Wall Street rich. How am I going to get your significant system this month? Will I’ve been times I’ve been trying to be like Simon properties and trying to by being a little bit of a venture investor. I’m not buying JC Penney, I wouldn’t do that personally. What I am looking to, to invest in things that are definitely I think if people hear about it, they definitely agree to have a teacher reaction. For those who are closer to be in my community, certainly in my mastermind group reach out, I shall explain. Some big things come in, I have a little bit of uncertainty out I get a little bit of spice in my life. Well, I joined a second mastermind currently in a real estate mastermind, called the collective genius where I rub shoulders with a lot of high performing real estate investors and operators. But I’ve joined a second mastermind that is more entrepreneurial, it’s a it’s a digital online mastermind. A lot of high performers really cool actually got a really a lot of good ideas to have my next mastermind, which we are looking to have it in January, I’m still on the fence a little bit if we’re going to have it with all that is happening in Hawaii and how people are generally a little bit conservative up here. And we are a little bit behind the rest of the US mainland in terms of pronoun cases. But I got a lot of really original ideas and creative ways to use that platform. It takes a little bit of planning, but I kind of think I can make a better event virtually, then online. How did I get a little bit more certainty in my life? Well, during that mastermind, we had Derek Silver’s gave the keynote. And one quote that came out of that was scarcity comes clarity. So I think a lot of people suffer from abundance of choices. And maybe I did that in the last 30 minutes where I overwhelmed you with multi family assisted living, David busters, office retail, I’m missing some. But yes, so many choices to invest in. This is very synonymous with often markup. Gladwell is the book, The Paradox of Choice. The more choices you have, the more unhappy you are. When things are simple, you feel like you’ve made the right choice. And whether you make the right choice or not, you’re happier. So I think in terms of investing, just try and find deals that cash flow better at good areas. That’s my thesis these days, and lock it up with good debt. That will be your friend when inflation, inflation ultimately comes. But I just try and keep things simple and look at one thing at a time. A lot of investors get overloaded with choices, pick one and go deep. Don’t be one of those investors that just kind of looks at MSA data, or Oh, yeah, in industrial properties are good or office space is bad, or what they found me is good. You got to dig a little bit deep. And I think the only way to do that is to grow your network around you. I was just talking with a bunch of family offices today. It’s amazing how differently they think than the average person. It’s not like they’re smarter. It’s just more connected and they serve around just their circle of people is so much more different. How did I get a little bit loving connection this month? Well, I didn’t. I made a stride in that. That direction and I bought myself a pool table. Because full table is the watering hole of people people like to gather on the pool table. So if I get it I hopefully people will come and click Boise and hang out be my friend. Some new podcasts and articles that we released this month of had George with hp. Talking about pretty Rio, we had Russell gray talking about how to hedge against the recession, talked about the know how inflation is coming. I had a few short videos on how to use a 15 year mortgage or a 30 year mortgage. Those are all in the YouTube channel. You brought even Brazil to talk about costing patients and mice a little hack there but asked me doing that with your home you live in and moving out and moving back in. Talk to your CPA on that one. But yeah, getting created there I like it. I found this neat little card the x one credit card that’s supposed to give you four x reserved reward points and how to live a fulfilling life a little bit more type of podcasts. But yeah, try and sprinkle those in every once in a while. If you guys are looking for more, get a good topic for the podcasts that we know some resistance and barriers and noise for ask for you guys to help me out. I’ve been frustrated I can’t travel I was used to going at least six trips a year maybe seven or eight trips a year the six for like business to check out properties but this year I’m grounded. But by the time you guys probably listen to this I made I’ll be making a trip up to Cleveland to Sydney. Perfect. A lot of you guys there do dads I put this in here because if you’re going to buy something dammit call it a dude that call it a waste of money. And the thing I bought this this was a very expensive frog Ling’s slow juicer and this thing is pretty cool. He put like big carrots and whatever into it, it just uses that had got a bit I was spending like I think like 4050 bucks a month on those pre made juices. So spending a lot of money on that. So I figured I was just doing myself and actually pretty fun. I don’t know it’s kind of like an adult coloring book Zen type of activity that make juice and in health as well right so I figure it’s a good investment and then also kind of getting into work gardening these days. So I have like a worm farm. So this is like a pump where you put like the worm droppings into a bucket and you Airaid it and then it becomes like the world’s best organic fertilizer

Unknown Speaker 32:44

this thing is a little object that you stick like bottles in and then you can go on a trip and your plants will die and she didn’t water it but I like gardening yeah so just wrapping up here just a reminder that the easter egg go and grab it it’s the Miracle Morning for real estate investors email me at Lane at simple passive cash flow calm and also don’t forget that return on equity tracker simple passive cash flow calm slash bar he can get access to this and more at simple passive cash flow calm slash club. Those are our club members. And Robert not giving any tax legal advice here and we’ll see you guys next time but 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 verify 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 adviser before relying on any information contained herein information is not guarantee as an every investment there is risk. 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 interest

Transcribed by https://otter.ai

Understanding Return on Equity – Example

https://youtu.be/6VcYyrUevlM

To get FREE Anaylzer go to simplepassivecashflow.com/roe

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Investors sent in their property lists. And we are going to figure out which ones to unload first based on my rules of return on equity. So for those of you guys don’t know what return on equity is, it is a metric that not a lot of investors go by. But I and a lot of other sophisticated investors monitor very closely as we’re always pruning our investments, a big misnomer out there that people talk about a lot is buy never sell, which I think is half true. investors need to look at return on equity and figure out which assets to sell, refinance, or maybe use a HELOC on, basically you’re trying to find her dead are lazy equity, that’s not doing anything. And we are going to go down this list, I’m going to show you how to do this in this little example. 

But like when you first buy a turnkey rental, you’re making around 30%. At least I’m thinking, you can check my math here at school passive cash flow, calm slash returns. And I walked through a little whiteboard example showing everybody exactly how I come up with that with cash flow, mortgage, paid down tax benefits, and any bit of appreciation. Let’s go through this list right here. And let me show you how you manipulate this spreadsheet. Again, this is one of the cardinal sins that most investors make is they never sell and they have a huge equity position, which tends to happen over time. But they need to get that equity moving. One of the biggest mistakes I always hear is like well up cash line, it’s like, well, yeah, your cash flowing a lot. But your return on equity sucks. So you got to do something about it. 

So this investors very smart, they realize that they need to get this equity working hard, certainly harder than that at their day job. And we’re going to help them do that. So first formula I’m going to do here is just setting the status, all right, the value of the property is $1.1 million, what I’m going to do is I’m going to apply a 90% multiplier, just assuming that maybe this is just a little bit too high, and to account for closing costs and commissions. From there, we are going to subtract the debt service, so they currently own $352,000 on this property. And that is how we come up with a rough estimate of how much Lacey debt equity. So I’m going to cascade that down a spreadsheet.

2:17
Just cut and paste that down. And I’m just gonna sub this up to see how much of a problem we have here.

2:24
So about $2.3 million in equity. And on some kind of one to see a high level what we’re we’re at, actually, I have to figure out the some of the values of the property minus the some of the bolts course I’m missing out the Commission’s but I just kind of want to see where we’re at. So that’s 2.8. So that’s how much those loans and commissions and closing costs, whether or not that loans but the commission closing costs are what I call friction costs, are taking out almost half a million dollars right there. 

Maybe one day, I’ll be one of those douchey luxury real estate brokers and only work with clients selling two to $3 million houses, maybe I don’t want to do that with my life. But anyway, figuring out, let me sell them. This is the amount of equity and this is the amount of purchase price. So I’m gonna go this number divided by this. And currently there are right about on average 57% equity, which is not good. Usually, at full power, you’re going to be at 80%, just to typically be the max leverage, but it’s definitely getting to the side where I mean, it’s a good thing, you got a lot of equity, but it’s a lot of debt equity. So next process is like alright, figuring out which of these properties that we need to go first. So what I’m going to do is figure out what the how much money we’re making money we are paying

3:55
for via let’s just go by that. So on this first one, we make money with the rent. So that’s the primary residence to start off with.

4:06
This one’s bringing in 5000 bucks a month. And I’m also going to subtract these he wastes they put it down. And this is the reason why we don’t like conference. So you always have to pay these things. I don’t know exactly what this means by extra costs here, I’ll just add subtracted and also subtract out the Buffy mortgage peanuts, I would run these numbers a little bit differently. But that’s good enough for government work is what I say. That is how much money they are making believe on a must be on a monthly basis. So let’s multiply that by 12. So they’re making 30 grand. So you want to take that their return on equity is calculated by how much money you’re making, divided by how much equity you have in the deal. So if your denominator which is the number at the bottom goes up, which in this case, it’s the $475,000 this number gets smaller. It’s

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smaller, so they’re making about 7% on this property right now, that’s not good. So as we cascade this stuff down, there were a ton of equity on the primary residence is obviously zero, because not making any money, you’re probably losing money, that is a liability, right? They’re not an asset for these properties actually losing money. But to the pier, here’s kind of where the art comes into play, you can either look at it from perspective, all right, which property has the worst return. And so that is obviously this one and this one here, but we’re humans, and this is art. 

So obviously, like, there’s some utility to having a primary residence because that’s where your, your house resides. And that’s where you live. So maybe you don’t want to sell that one. First. Again, we’re trying to find the border operations border that we got load, so or refi. The next thing I’ve kind of take into account secondly, after the return on equity is how much equity requires you to extract out of it. So if you know say, this one, we’re losing the most amount of money, this is probably first on the chopping block. But because it’s so small, it’s not may not be worth the effort. And likely, what we want to do is we want to list multiple properties on the market. And kind of the attitude of you know, some of them were more in a hurry to sell some we might fold out for even better price. So the way I would do this kind of spot checking this is the first time I’ve seen this, the first two that stick up in my head are this one. And just I want to highlight the lowest three from a return equity perspective, but I want to highlight the big ones, which ones are going to really move the needle. And that is, which ones are the ones with the biggest bang for our buck, which is definitely these three. So fortunately, there’s no overlap here, other than the primary residence as a primary residence, that’s probably have to go but I don’t want to upset mama bear. 

So we’re just gonna leave that one on gone, we’ve got plenty of equity to play with here. So there’s no obvious winners, which ones to put on the chopping block, but just kind of I’ve done this buttock a zillion times. And what I would recommend selling would be this one first may not be the lowest return on equity, but it’s certainly a nice little pop there. And I would sell this one, but then I would sell this one, and I would sell this one, this one, these are all kind of the same. And then at some point, when a boss says, Okay, I guess or what do you take maybe one of these rentals, take the money and buy a bigger house, right? So this is where you buy a mansion does a good job up to this point, right? I mean, this is where people say, Well, you shouldn’t buy all this like do dads or like expensive stuff, but man like you earned it, you did a good job here, go out and buy a big ass house for all I care. Next, what I’m looking at is an act. This is probably where we got to get the investor on the line. I don’t know the full story on these properties. I don’t know what all these are, to be honest, these duplexes and fourplexes, maybe stick on the market owner occupied. Now even though I list them as five, knowing that these gonna, these are going to be four times as hard to sell as these other single family holds. And this is why for higher net worth investors, I don’t recommend getting a two to five unit. I just say if you’re going to do single family homes, it’s great because you have great exit strategy. As a high net worth investor you’re going to go to syndications very quickly. So you don’t want to be screwing around with this stuff. Because the the duplexes and triplexes fourplexes huge send it selling it to the cheapskate investor who wants to find the deal and their pain, you’re just gonna bang your head on the wall, especially when you get to one of these guys who are like think that they’re a pro, but they’re just a douchebag, who wants to retreat you for all these little nitpicky stuff. So I would list even though I haven’t listed as five, I probably list it like soon just and not be too motivated to sell it. Somebody wants to pay your crazy price for B and that’d be my general consensus with all these properties right here. Just put them all on the market, see what happens. 

But generally, you’re trying to go make a go at this order. This is really your motivation. Whereas when I’m saying like these guys, they just want to sell it, or they want a little bit of a price concession do Just do it. Or as these other ones you might want to stick to your guns or stick to your price that you think that it’s valued out here. The other side of this is like alright, where as you start to extract this money out this money right here, it’s $2.3 million. You can’t it’s got to be hard to invest that in the beginning, especially if you have no contacts. You don’t know who to trust, but you’re basically you’re trying to do is build a appointment schedule right here and I’m just doing it very simplistically, you know, you got 2020 2021 2022 for most investors under one to $2 million dollars net worth. I’ve never done any rental properties never syndication before. I would say no stick to like a few deals at first, right? That’s 15 grand minimums, and maybe deploy to

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hundred thousand dollars in the first year. But after that, hold the horses a little bit right pump the brakes. Of course, if you have if your net worth is higher than that for $5 million plus this, the other side of you got money sitting in the bank doing nothing, right. So you may want to push it a little bit harder being more aggressive. Now this is a just in time exercise here, you want to sell these acids and hot potato them into deals, minimizing the full period or the time it just sits in a bank not doing anything. So I would imagine selling these properties probably in a period of two to three years. It’s taken a while. 

So I’m just gonna run the rental value ratios real quick on these properties to say I probably should have done this earlier. But this also helps determine another way of determining which properties to model first. She besides the probably the best right here. These other ones are well under 1%. Yeah, on both of them should unload him yesterday, people always ask like, Well, I have a rental property in California. And I’m like, Alright, stop right there. rents value ratios, California ain’t gonna work unless you’re in a war zone. To get more nitty gritty here, it’s if it’s under 1% to value ratio on load, unload that thing, it’s just not even worth it. Especially when a lot of you know other properties that we’re buying, like, you know, one well over 1% of the value ratios in broad markets with force appreciation. So I guess for this client, this client is pretty high net worth. So I would probably make this deployment schedule a little bit aggressive. So assuming that a cash saw half a million dollars every year on this. And so all the assets by the time 2024 comes around, I probably do something like 500 grand, that’s roughly kind of like the how you would patient deployment schedule. 

And this is where other more advanced concepts come into play. And like, you know, to lower your bid put me not making anything like infinite banking, which users will life insurance in a tax free via goal. Yeah, this just shows an example on figuring out your return on equity. What are you trying to sell first? And then what are you trying to deploy it into? Another piece of this is where I help clients all the time, and where I kind of empower people in the mastermind. And you can learn more about that it’s simple passive cash flow.com slash Johnny. But it’s like you know, you don’t want to sell these assets, you got to be mindful where number one your adjusted gross income is, you don’t want to be looking up into the next tax bracket. And guys, if you’re under 200 $300,000 AGI, don’t freak out about it. Most of my clients are well above that, that’s when you have to seriously think about no BGG con when you sell these assets and kind of take the capital gains slowly over time. And then also, if you’re, you know me, you may be taking money out of your retirement accounts too. That’s another thing to think about. So when you take money out your retirement accounts, it also shows up as ordinary income. So another thing that’s at play here is you have a portfolio like this, you would likely have a good amount of passive losses from the depreciation of these. 

But you also have to, as I go into this, it’s complicated, right? But it’s just something is what I do, right, this is what I do for folks and help them understand it so they can make their own game plan. But as they start to deploy into these deals, hopefully they’re doing cost segregations. In these deals, where they’re getting at least half of what they put in to inject brand, they load up 200 grand in deals that hey, Bobby should be getting more than $100,000 of passive losses, which they can add to their current passive loss, a stock fold to then use to offset these capital gains, but they do happen to that’s kind of getting three layers deep there. But these are the things to be aware of. And I think every investor needs to understand that. I don’t think that this is the responsibility of your CPA, like the CPAs job is to do your taxes for you. Not plan this stuff. This is your job guys, family offices, on millionaire families and above, people that do this for you. But look, when you’re under 10 million bucks, you got to do it all yourself. And fortunately, most CPAs out there just don’t know how to do it because that’s why the CPA has a day job off. their net worth is not over 123 $9 they don’t do this stuff. 

And that’s where we can kind of help but for free freebie go to simplepassivecashflow.com/ROE to download a spreadsheet very similar to this is more of a worksheet that you can plug your investments in and see where you have your lazing equity at to help you determine which properties to sell. What’s the poop down here what needs to go? It’s an unlock sheets the spreadsheet you guys can have. So you can again search out that debt equity and don’t be an unsophisticated investor that just buys properties and holds it till it’s paid off. I think that’s one of the worst things you can do especially from like a liability standpoint. I mean, if you have a paid off property, everybody knows where to see. Yeah. And that gives me

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Tax any legal advice here this whole video but just giving you guys good information and yeah check out what we have to offer it simple passive cash flow calm. See you guys later bye!

Is Gold a Good Investment?

https://youtu.be/z4SyyVMIo04

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But what’s the real play here, especially for guys who have less than a million dollars net worth. So people who are buying gold right now or buying it as an alternative to having something liquid that hedges against $1 collapse, right. 

That’s why people own gold, but you can’t gain purchasing power with gold, you only retain it which is worth doing. But when you pair gold with debt, now that’s different. 

Let’s say for example, I go pull a couple hundred thousand dollars out of a piece of real estate and I take half of it, I put it into gold, and then the gold doubles in dollar price because of inflation. Now my gold will pay off all my debt and so the debt and the dollar go together. 

And the problem with going into debt to buy gold is you have to make the payments unless the thing that you go into debt with provides the payments then when you pair gold with debt, and real estate, now you have a chance to outperform in an environment where the dollar is falling. 

And so that to me is the way to play this game right now because all of the pressure to support the entire global economy is landing squarely on the dollar.

2020 Real Estate Crash – Save Money or Invest Now?

https://youtu.be/Dp5O508bTys

0:00
It seems like everyone is talking about the market being at peak right now. And personally, I think things rings true for multifamily, even more so than other asset classes, given the situation, how do you personally decide how much to invest in opportunities today versus staying liquid to invest potentially greater opportunities in one or two years, my investment philosophy is when I have liquidity, I’m going to invest it again, some of the rules that I follow is I don’t invest more than five or 10% of my network into any one thing to get diversification that way.

I’m spreading around my portfolio in two big ways. The first way is different geographic areas. And then the second is different asset classes. I mean, most of my holdings are in apartment complexes and some mobile home parks. But I haven’t really branched out too much into self storage or some different asset classes, I definitely have done a bunch of development. And getting more into that. 

But diversifying into different opportunities is is a good way, I think for anybody. And that’s what I’m doing for myself. As far as A, B and C class properties. I think I’m kind of moving on from class C and Class C, I think everybody gets a little blue eyed over there, you can get 10 plus percent cash flows, but it’s a hard clientele like classy tenants, they’re hard because they don’t have too much cash savings and collections is very difficult for that type and often new trading a lot of sweat equity, especially as offered Of course, for that, but even as an LP investor investing in C class deals, cash flow is very hiddenness. 

One way I balanced staying liquid, I use infinite banking. So if you guys want to learn more about that go to simple passive cash flow, calm slash banking, but it’s a technique that a lot of wealthy families will do to use life insurance as a means to not pay taxes because it’s a little tax loophole. You don’t pay taxes on life insurance, and when it is life insurance, it is very hard to get sued for that money.

How to Lead a Fulfilling Life w/ Mariko Frederick

https://youtu.be/hthUUGjsxUs

Hello, simple passive cashflow listeners. Today. We are talking to Merico Frederick, give me a little bit different today, a little bit more touchy, feely. I’m not too much of real estate or wealth building today, but we’re Rico does work with a lot of high end professionals, Olympic and professional athletes, CEOs of seven and eight figure businesses.

And she is a transformational speaker and performance coach. And she is founder and CEO, so pro priority and, that she would bring her on and kind of talk about some findings, with folks that are, you know, sort of listeners of this podcast and insights. but welcome. Merico. Thank you. Thank you for having me on today.

Yeah. So let’s get right into it. you know, you, you and I were kind of talking before and, you know, you, you work with a vast variety of high level performing folks. I would say the people that kind of listen to this podcast primarily are working professionals, but man, these guys are high performing folks making over a hundred, 200, 300,000 a year.

various level of white collar jobs or medical professionals. yeah, let’s talk about some of those, the findings from, you know, kind of those, that cohort. Sure. how can we go deeper into that? So Merico w you know, a lot of these people, they, they come to you. What is the first motivation that they’re feeling that kind of triggers them to find somebody like yourself?

Yeah, their finger on exactly what it is. So Merico, so a lot of people are coming to you for help getting unstuck. What are some of the motivations that maybe if somebody is listening right now that they’re feeling that kind of triggers a lot of your clients to find you in the first place? Sure. So most of my clients have a feeling inside.

They can’t put their finger on it, but they just know they’re meant for more. They feel like they have another purpose purpose. Most of my clients, very well financial we’ve done big things in their life. Still fight that or they’re meant to do. And so they, I love working them because that’s something I’m able to help them with is discover exactly what they’re meant to do before they leave this world.

Is there any, some kind of like a trigger, cause I know when people kind of find simple passive cash flow or they start to do that dive late into the evening on Google. How do I quit? My job it’s usually because of some big event. Is, is that some of your findings or is it just a general buildup over time?

I’d say there’s two types of people. So one type is they know they’re meant for more. And they’re really seeking me out to figure out what that is. I do a lot of work by referrals. the other is

they have accomplished so much in their life, but they feel unfulfilled. And so on the outside, when you look at their life, they have made, You know, very good money and they have accomplished things that not a lot of people in the world can say they’ve done. And yet still feel like quote, empty inside or they’ll come to me and say, I kind of fell dead inside and that’s not something they can talk about because on the outside, their life looks really great.

Now, what are some of the barriers for why someone would, you know, not kind of white knuckle it, or keep, keep moving forward? I mean, I think a lot of us have this mindset or at least I do that. Hey, life’s, life’s tough. Suck it up, you know? Yeah. And so a lot of those people have done that. They’ve gone through that part and that’s why they’re so successful is they did get through that.

They do have a really solid mindset around money, but what about the rest of their life? What about their legacy before they leave this world? Because once you have attained a certain amount of money, it’s like, okay, but what’s next? I have all this money. I have these accolades now, what do I do? How do I feel fulfilled?

How do I wake up in the morning and really feel happy with my success? No. I think a lot of barrier is, is for a lot of people, as you know, just time, you know, especially if they have a family, you know, to go spend some time when somebody’s kind of talking these issues out or not, they’re not really issues.

Right. They’re just, they’re kind of more barriers. And like, how would you say, like how, how does this kind of work into someone’s busy schedule? Oh my gosh. So great question. When we’re thinking about abundance. one of the things I learned when I died, well, I usually don’t say that I died because there is no death.

When I left this world, I’ll tell you I never more alive. but when I left this world, it realize there’s a lot that happens when you, when you leave this world. But one of the nuggets that I brought back was that we tend to and specific money cage. Oh, abundance is part of a creative energy. And so we, you know, if you’re really thinking I’m a little bit conscious, you can say, okay, money is created not.

when you think of music, poetry, that’s creative energy. And right now, especially during the pandemic, we’re not worried that we’re going to run out of music. We’re not worried that we’re going to run up, run out of poetry or artists, but we’re worried that we’re going to run out of money. And interesting money in my experience in, in, in death is that money, is it?

Same category? as abundance, abundant creative energy, right? So whether you’re creating music or creating money, it’s the same energy, it’s the same concept and we have access to it. And so just the way that it really has to do with your mind and your beliefs around. And so I would say that most people on the planet have some thinning belief.

Funny and that they either money has, it’s hard to earn. That’s a belief. It’s not a true one. Or money is hard to come by. And those are not true. And when you leave this world, you realize all that, right? And then it’s like, Oh my gosh. I was believing in, in, in, in lack. And so when I came back, I realized that abundance is literally all around us.

And so to answer your question, you really have to be tuned into it. You have to change mindset, you change your conversation about money from the moment you wake up moment and you go to bed. And just to give people a little bit context, you know, you kind of referring to, how you kind of your near death experience, Rica doesn’t really like to get into it, but for the most part, you know, she had, she had Lyme disease and, you know, kind of had this epiphany, kind of in, in, in the low period of that.

So, was that kind of epiphany kind of, came at to you at a certain point? Or was it, you know, did it take days to sort of. come together for you. Okay. Both. So when I came back during my death, I had what I call a download. It felt like I was being, first of all at my death, didn’t feel I’m sure I wasn’t.

So it happened at home. So I wasn’t connected to, you know, machinery at a hospital. but my husband will tell you it wasn’t very long, you know, may have been just a matter of minutes, but on my end it felt like I was there for 800 years. So for me it felt like I lived a whole lifetime there. so when I came back, I had gotten kind of what I call a download.

I’d gotten a lot of information to bring back and they told me it wasn’t my time. I had to go back and help people. So when I came back, I understood it, but I’ll bet it took me a good decade to unpack it and be able to understand it in a way that I was living it. Plus I went through a long term illness and so I understood it on one level, but how do I make it?

How do I live it? Right. That took a decade. Yeah. Would you say it was more, you needed to help people or was it that you needed to make a bigger impact or legacy in the world? Which of the. The two did it skew towards

Hm, legacy, definitely. I know that I’m here to impact a lot of people. I know that when I came back, I knew I was here to, to, to help millions of people around the world. Now that said, when you come back and you can’t even stand up or go to the bathroom on your own, I had to kind of, I had to kind of, I had to understand in a way that I was a time, which I needed to.

People I think because, because the big of what I was here to not moment coming back after the spread. Yeah. And I think, you know, most of the people I’ll have the nice, they’ll do free calls for, you know, new folks that we do a pipeline club. I mean, you guys can send up for that. It’s simple, passive cashflow.com/club.

but I’m talking to a lot of people who are, you know, they’re kind of getting started on this journey and, you know, they’re, they’re kind of thinking about themselves first and I’m not saying that in a bad way. I’m just, they’re just trying to get themselves settled and get them, you know, it’s kind of like just getting back to baseline.

in your circumstance and, you know, I think at, at, at a certain point when money is really not an issue and, and you’re kind of just, you just kind of thinking about what’s bigger, what kind of impact you’re going to make kind of legacy you’re going to make. but it’s a face thing you can’t, you can’t, I don’t think you can just skip right to going to legacy.

I think you have to get yourself up the baseline. And put your own oxygen mask on first, but I mean, what’s your, what’s your opinion on that? Helping folks get, I mean, you’re right. It, yeah, it takes, it takes years to understand what that really is. And, you know, oftentimes people have more than one legacy, right.

So if you’ve been a professional athlete, that’s one legacy, but what’s after that. and so because we are unlimited, that’s the other thing we’re unlimited. So in our human. In this world, we feel very, we feel the limitations of, of this world, but when you leave it, you know, Oh, I was unlimited the entire time and I had no idea.

but what I would say as far as, as far as, how. We tend to be raised from, from children to think, what do you want to do when you grow up? What do you want to be when you grow up? And so I feel like culturally, we planning for middle age planning too. Cause when they say, what do you want to be when you grow up?

They’re really thinking that at least in my opinion, what do you want to be when you’re 30 or 40? Right. And not, who are you when you leave on your last breath? And I have a lot of my clients do this exercise of on your last breath. Who are you? Who were you? Who were you here to serve? You do that, right?

Because when we think of that, we think of the entire life. Then when we go back and we, these are the people that I know that I’m here to help that I know this is what I’m here to do, and it’s easier to go back and do that. Yeah. So I, I have a, Little business and life coach now. And we’ve kind of come to a point or they’ve kind of made me see that my big motivation is I’m a big ego guy.

I want to create big legacy and big impact. And I think about this all the time when I’m, you know, w we’ll we’ll bring on a new client, into the mastermind, they’ve got to pay some money to get into that group. And then I take that money and I. Put it right back into something, you know, I pay a virtual assistant to do something, or I buy some ad Facebook ad, you know, few thousand dollars of Facebook ads.

I’m like, where did all this money go? You know, like I did this to kind of be financially free, but the here I am just burning it up again, putting it right back in the business and then for what? Right. And. It’s kind of like, I kind of created that short circuit where it, well, you know, it’s for legacy it’s for impact it’s for doing something bigger and you know, I’ve got the basis covered today.

And I think the other thing that you’re doing, is you are creating a network of people. So in my world, I call it my tribe. Right. So the cost. Of doing business, the cost of being in your mastermind, the way I see it is that’s the cost of being with, with these greater minds. It’s the cost is the price of admission to get into a mastermind and be with people that are like minded, because the conversation that are going on in, in your mastermind is not what’s going on in the rest of the world.

And so you need to bring those people together to say, how can we talk about money, about abundance, about wealth. About legacy in a way that’s more of an expansive conversation. And so the cost is saying, okay, and the people that, that aren’t willing to pay that cost that entering that entrance fee are going to there they’ll have a different conversation somewhere else.

Right. And so it’s, I think it’s beautiful because people need to be around people who are abundant in order to become abundant. Right. And you know, all I know is like a few years back, I couldn’t stand just talking to regular folks at work about normal financial building stuff. Right, right. You go pass them.

Yeah. nothing wrong with that. I used to do that for a long time. Not at all, but I think if growth is good and we do past relationships, and I think that that’s a really difficult thing for people because they want to hold onto all the relationships. Meanwhile, they also won’t want to grow past it and they want to go into a next level with abundance, with wealth and with their legacy.

And so it’s a matter of how do I navigate that and keep relationships that are really dear to me and also allow myself to grow. And that’s where, you know, masterminds are really. A wonderful place for that to happen. So you’re working with a lot of high end clients. you know, a lot of people work in day jobs.

What are some of the findings of the things you work through with those folks? the Tiffany’s they have guilt big one. So in leaving women, they know, or you need to do a lot of times what stops them up. Could you repeat that? You cut it up. Which part, the whole thing. Yeah.

Guilt. I would say the biggest factors because when somebody says, okay, when we see, okay, this is the bigness, this is what you’re meant to do before this world, but that might involve leaving their job and that right. Like their job, but they feel sometimes guilty. Well, but my company needs me. What would they do without me?

Right. And so actually guilt is a big one and I usually will tell them, well, you know, that company doesn’t care the next day. If you laugh, They wouldn’t care about you, but that’s just me, but how do you kind of work through that? I mean, you know, people, people think that they have, you know, if they left tomorrow, the whole world would crumble.

I think what you do is you have to, into your next four, you get there. Meaning, you have to step into the mindset. You have to step into feeling that next level of who you are before you become it. So, so part of what I do is I help people become the person that they need to be in order to thing they’re meant to do.

Right. So that’s a big mindset shift, and there’s a lot of action around that, but you literally have to feel it before you do it. So you have to like. We really have to believe in. You have to believe in your dream. if it’s not something you’re passionate about, then don’t do it because there has

to be a drive, right? In order, in order to be willing to quit your job, you have to really love what you’re doing. Obviously. So, is it kind of like you have to know what kind of legacy you’re going to create before you kind of get off of this current, your current job or your current path? Is that a key part of it?

So you don’t have to know the specifics, but you kind of have to be able to feel what it is, right. If you have no idea what it is, there’s, there’s no reason to quit your job, but if you are specific about, this is what I’m here to do. and you are in the financial position to quit your job or B both have your job.

And then on the side, You’re working your business, you’re growing your business. It doesn’t all have to happen. and so that really just comes down to time management. What are you doing right now? You know, what are you doing next? What’s up on the possibility list? What could you do? But you don’t need to carry that with you.

And that’s something that also stops people up. We look at all the possibility, okay, this is, this is what I want to do. And it’s, you know, it’s this big thing in the world. You can’t carry that around with you all day. That idea there’s too many working parts in that idea. So you have to really use time management skills and say, what am I doing right now?

What’s what’s on my schedule next week. And then you create like this possibility list of like, okay, and these are all the things that I could do, but I don’t, I’m not doing it right now today. And then you take some of the things that you could do and chunking them down to where you’re getting. You’re sort of chipping away at them.

one conversation that came up a lot during our last, Hawaii mastermind was, you know, a lot of people are already on the path of investing. You know, they pulled all their retirement funds. They’ve got things deployed and good cash flowing assets. but they’re realizing like, wow, I’m gonna need to invest a lot more.

And this is not a get rich quick thing. And I’m like, yeah, man. But then it’s it’s then I’m like, yeah, you better get comfortable, comfortable, buddy. Like, it’s going to take awhile. but they don’t have, maybe they just haven’t spent the time to kind of figure out what is that bigger thing that they’re going to need to create, or maybe they don’t want to create.

Maybe they’re totally happy. You know, they’re happy at their current job and you know what, what’s kind of the advice for those types of folks. Yeah. So. Why you’re doing what you’re doing. Right. So I know, I know why I show up. I do. I know I I’m, I I’m doing this. Cause I don’t want anyone to die with an assignment on their life.

I don’t want any leave this world unfinished. Right. We don’t get to go time, but I don’t want anyone if I can help it to leave this world and go, Oh my gosh, I didn’t finish. I could have done this big thing, but I wasn’t, I didn’t, I just got stuck. No. And cause that’s, that’s a, that happens. And so I think for people that really.

No, you know, they, they really feel like they want to do something bigger. They need to know why is it the right, not going to be instant. And so your why is going to get you to the heart. Your why is going to be, you know, thing you give up and putting forward. And if you don’t know, well, I’ll give up. So you really have to have a strong sense of why am I doing this?

I guess like, you know, one thing I’m, I’m kind of saying here is, you know, and let’s just say you make 80 grand a year and you save a whole bunch of it and you, you, you like you travel the world and you know, you’re good, right. If you’re good, you’re good. And also if you’re making $500,000 a year and that’s really all you really want to do and not really, you know, take up a, a side gig or a business or create a huge legacy.

You know, nothing’s wrong with that too either? Well, I think sometimes the legacy is your family, right? The legacy doesn’t have to be big. The legacy could be literally being the most amazing parent you’ve ever been or friend. So that’s the other thing, right? We, we, we tend to believe that a legacy has to be this big thing.

And sometimes it’s very quiet. Sometimes it’s something that nobody else notices. Right. We have those people in our family that live literally we’re the glue to the entire family. And that’s C I think that’s beautiful. I think that’s a well lit, so it’s not just about making money and being abundant.

It’s well, abundance elevate, right? Abundance is friendships, family relationships. All of it. Right, right. I think a lot of people listen to these podcasts and, you know, they hear about, you know, doing these big things, but that’s not for everybody. I mean, it’s, we don’t want to shame anybody. It just, you know, kind of playing the role kind of, you know, making your own world better place.

Right. That’s I mean that honestly, if you don’t have that nailed down, then the big system is not going to fix it. It’s not going to fix it, right. You really have to be, be, and continue to become a person that you really are happy with. And so that’s some personal development, right? You gotta kind of look at yourself and say, am I a good person?

Am I, am I a good friend? Am I a good father? Am I a good mother? That does have to come first. Okay. Yeah, I think, I think I see in like, you know, the real estate, for example, people with like these thousands of units, they’re kind of weird people, in my opinion, they’re kind of kooky. I always tell my, my clients, you know, let’s figure out what your end game is, you know, define your end game and work towards that.

And then when you get it stop, you know, I, and I use the analogy of like, people are on a train or the subway, you know, people always get off before the end of the line. The only people that I won’t get off or the weirdos, the homeless people. And the people that don’t really like, they’re just weird.

They just stay to the end. And that’s kind of like the, you know, the people that keep, keep trying to achieve and do more and more, more, but for what no reason, I mean, I mean, it’s cool. And sometimes people just like to ride the train, ride the subway, but that only happens and you know, some romantic comedies, I guess, but.

Yeah. I mean, I D I S I see the downside with some of the people that keep going and going and going. Yeah. I feel like that’s all they have because they didn’t build a life as well. And that can be weird. Any last thoughts, to kind of part on, the listeners here, if you think we missed. Go for it. I think that that’s really a big message here is just go for it.

You know, big don’t leave anything on decide what playing big means to you. Right? So like we said, playing big could mean, scaling down on work and becoming parents playing big in, you know, launching a business and, and drown the entire. But you decide what big means to you and don’t leave it undone.

Well said, Mariko’s website is so priority.com. You guys want to check her out and any other ways they get ahold of you, we’re gonna put up. Sure. I’m on, I’m on Instagram at spelled M a R I K O. and on Facebook, the Matico Frederick. All right. Well, thanks for listening everybody. We try to throw in one of these, You know, more life building type of less hardcore investing math science podcast once in a while, if you haven’t done.

So please check out the website. I’ve been doing a lot of upgrades there@sevillepassivecashflow.com. Lot of ultimate guides like for taxes, trade lines, legal, all sorts of fun stuff. So, we haven’t connected please. let’s get on the phone. She meant email lane and civil, passive cashflow.com. And we’ll see you guys next time.

Watch This First Before You Follow These Billionaires

For George Soros, he bought t mobile and the biggest cell was peloton interactive via the biking people. Car iPod, he got LNG. And he sold HP and David Tepper bought T Mobile T Mobile again, he’s bigger sellers. amazon.com. JOHN Paulson biggest purchase was Bausch health companies vhc. And he sold fire call. Now the teaching block here is just because a big whale is doing something doesn’t mean that you should be doing it. These guys are wealthy billionaires. It’s very different from what 100 millionaire family office should be doing a $10 million net worth guy a $1 million net worth guy and possibly what you are doing at home