You print too many dollars and people lose faith in the dollar. The only reason we’re able to pull this off is because we issue the world’s reserve currency and the whole world has to suck up all these dollars. The problem is if someone were to come along like a china and say, hey, we’ve got 20,000 tons of gold, not eight, and we have a big manufacturing economy, and we’re willing to back up our currency with gold, then everybody would move out of the dollar and into gold, and the dollar would collapse. All those excess dollars would come home, and we would end up in America with hyperinflation. And that’s the kicker, right? You hear all the stories about Zimbabwe and all these other countries have ever had hyperinflation, they don’t have that kicker that the United States has. Yeah, I mean, our exorbitant privilege is that we have the ability to print as many dollars as we want, spend as much money as we want, and the rest of the world has to provide it for us because there’s always a bid on the dollar just like there’s always a bid on goal.
Blogs
Repo Market Using COVID as a Cover-up? w/ Russell Grey (Part 1 of 2)
0:00
Introducing the new remote investor, incubator and ecourse we had the mastermind and we are going to break off from that being mostly an accredited investor group. And I wanted to create something that was helping out the little guy get started guys getting their first properties. And we’re calling this the incubator group. Get More details at simple passive cash flow, comm slash incubator, but basically what we’re doing here is we’re getting a group of professionals looking to build your network with others starting this journey to financial freedom, the ecourse that’s going to accompany this group is going to have eight modules in a closed membership site plus two bonus modules and download kit all geared toward educating the remote investor in this group, we’re going to have biweekly zoom video calls. And if you join up, you’re gonna get all past turnkey rental recordings. Now these calls are designed to ask whatever questions you have and hear the other questions from other investors in your shoes and we’re going to run this like a boot camp style. This is going to be a five month program. We’re gonna walk you through the best practices for tax and legal as you acquire your first remote rental. We’re going to walk you through the due diligence and offer process we’re going to have staff membership coordinators for extra support to get you over the sticking points to connect you with
1:16
one of the biggest
1:23
you guys were basically spoon feeding this to you if you’ve been on the fence and it’s time to get your first rental property go to simple passive cash flow calm slash incubator and by the way for those accredited investors, we are looking for new members go to simple passive cash flow calm slash journey and join the flagship simple passive cash flow mastermind there after the pandemic to new world out there having a network around you is so much more important.
1:58
This is the story of About a dude named Lane he moved to the mainland and bought one place to stay. And then one day he went try to rent them out. And then he became one real investor.
2:12
Hey simple passive cash flow listeners today I have Russell gray one of my mentors that kind of got to me where I’m at today. How long has it been almost like four or five years now since we first met I listened to the real estate guys, podcasts. You guys check it out in iTunes, Google Play. It’s one of the few podcasts out there that wasn’t designed to put you into some syndicated deal. It’s more of an educational podcasts that I clicked on to a long, long time ago. And I eventually met up with these guys join their mastermind a few years back and things like there’s so many influences you guys had on kind of what I do today like interacting with my investors one on one phone calls, which I still do, but you guys can still go on the website and book that if we haven’t had a chance to talk but should you say Russell gray, how’s it going?
2:57
Good. Happy to be here. Excited to end Congratulations on your success. It’s always fun when people come into our world and then take the things they learn and act on them. You know, our motto is education for effective action.
3:08
Yeah. And the kids always come back right one of these years I got to come back to the goals seminar, which you guys do I think, what every January, February Yeah, I mean, I originally went to your guys secrets of successful syndication, which is a great precursor on how do you do bigger deals, but I think most people will say your guy’s goals seminar, people who come routinely say, that’s your guy’s best at that you guys put on, you know,
3:29
we don’t do a lot of events where we looked at the marketplace and looked at what people needed and what we felt like we were qualified to do, and we tried to stay in our lane. But you know, after the 2008 crisis, we just thought there was going to be a huge opportunity in private capital and syndication was going to be the way to go. And we didn’t see many people out there really teaching it or doing it and those that were were more interested in raising money than they were interested in and really seeing people become successful real estate entrepreneurs. So we did that course back from the time we were working with anybody Real estate investors and you know, we still do that or you know, encouraging people to be syndicators ultimately real estate, whether you’re doing it in your own account or you’re doing it on behalf of other investors as a business or whether you’re investing passively through a syndicator however, you’re approaching it. It’s just a vehicle to accomplish your goals which presupposes you know what those goals are. And so before you start investing, you need to have a team before you have a team, you need to have a market that you think has the right conditions to deliver the kind of financial program you’re looking for. And before you can pick that market, you have to have an idea what you need your money to do for you. So you need a personal investment philosophy and that personal investment philosophy grows out of your personal goals. So we do that. And then we do the annual summit, usually for 17 years in a row on a cruise ship this last year. We had to do it. We call it summit on screen or somebody in place because we did it virtually but it was great. We had Kiyosaki and Chris martenson and Adam Taggart, G, Edward Griffin and Peter Schiff. And Tom Hopkins, you know, a whole cast of the regular real estate thought leaders that we’ve had. So it was another great event. But those are primarily it. I teach a sales training class once a year that we cancelled this year because of COVID. And the rest of the stuff that we promote are really things that we see other people doing that we think they’re doing well.
5:17
So check out the real estate guys and subscribe to the newsletter, Russell writes it himself. And I thought I’d bring you on and kind of talk about some of these concepts that you’re talking about in your newsletter. And this is what frustrates me about mainstream media is nobody reads more than 500 words, right? Nobody has that capability to do stills it’s always on based on headline. And I guess the first topic I’d like to unpack for people is this repo market. And you know, if you haven’t heard about this before, I mean, I haven’t started to read your content, probably like what the heck is this? Right? Yeah. For people who have no idea what this is, maybe take us back to when this story first broke?
5:52
Yeah. So there’s a lot of components to the financial system. Think of it like an automobile or a big building. You know, there’s different systems. There’s different pieces of substructure that kind of put the whole thing together. And some of it is, you know, you see it, you understand it, there’s like if you get in a car, you see the steering wheel, you can see the controls, you operate the seats, there’s things you see. And there’s a whole lot of stuff going on under the hood and in the chassis that you don’t see. And so the financial system is like that after 2008 when things that were way off the radar of most people, even myself and I was in the mortgage business at the time, you know, these derivatives and mortgage backed securities and collateralized debt obligations, and all these structured investment vehicles and all this stuff that was happening in the bowels of the financial system under the Wall Street gamblers, operating all that machinery, I took a real interest in it and I started realizing like I if I start watching this stuff, I might not understand it. But at least if I see smoke coming out from under the hood, then I’ll know that I should call somebody smarter than me like you know, a financial system mechanic and go Hey, what the heck is this? Well, that’s what happened in September. I saw a headline that interest rates in the repo market had spiked to over 10%. Well, you know, anytime interest rates spike, it’s because people are charging a risk premium. It tells you there’s more risk in the system, you just look at what interest rates are, the lowest interest rates typically are treasuries because you’re borrowing and getting paid back in dollars, and you’re borrowing from the people who issued the dollars. And so they’re considered to be the safest investment you can make. And we could debate whether that’s true or not, but from an interest rate perspective, that’s the way it is. So anything that moves out the rings of risk from that center point of the riskless investment you add interest to as risk premium Think of it like an insurance premiums, that’s kind of way interest rates work. So spiking interest rate tells you that there’s more risk in the system. So it’s like okay, I looked at it so there’s there’s something going on, right because these interest rates are 10 times what they should be and they boomed and the feds response was to pump in 100 $200 billion a day. And of course, you know, we hear these big numbers all the time. And we think they just kind of go in one ear out the other. We don’t have any context to understand. But back at the height of the 2008 financial crisis when they were doing quantitative easing, which was basically papering over bad debt by printing money, they were printing at 5 billion a month, and in September way before COVID-19, way before economic shut down. The Fed was pumping in as much as a trillion dollars a week. clearly something was wrong. So I dug into what the repo market is and just to keep it super, super simple, it’s basically a pawn shop for banks. So imagine a pawn shop, you’re short on cash, and you’re like, Okay, what do I have, I got a, I got a watch or I got a gun or I got, you know, some old jewelry, and you go down to the pawn shop, and you basically sell it to the pawn shop operator, but you have the ability to redeem it in a certain period of time and they charge you interest for the use of the money but presumably, whatever you are Hawking your asset for is important enough that the premium you have to pay to get access to that is there. And of course, the interest or the rate that you pay is, you know, kind of based on the risk. So anyway, so banks are showing up in the repo market and they’re bringing in their treasuries and they’re Hawking them. They don’t want to sell their treasuries or they don’t want to be divested of them who have the right to get them back it basically seeing the banking system is low on cash. That’s what activity in the repo market is and just like maybe you’re not proud to tell all your friends Hey, I had to Hawk my watch, right? the banking system, they’re not like proud that they had to go Hawk their treasuries to raise cash, it’s an indication of dollar shortage in the system. And the Fed accommodated that by printing a lot of dollars, and
9:42
what did they need that liquidity for to pay off their notes? So why did things come to that? Do that
9:47
something’s going wrong. I mean, you don’t know it’s the smoke coming from under the hood? It’s like, Well, okay, nope, we don’t know. I called Chris martenson because he’s a smart guy. And he watches this stuff, too. And I said, Hey, Chris. In fact, I think we did a show on it with him. I know I wrote a couple of newsletters about it. We did a cruise in the news episode, but I’m pretty sure we did a radio show where we actually interviewed Chris martenson. From peak prosperity. We talked about it. And he was in the same place because yeah, clearly something’s wrong. We don’t know what it is. But there’s a lot of smoke coming from under the hood. So we all agreed, hey, this is something we should be watching the indication that there was a real problems when interest rates spiked to 10%. Because when interest rates went that high, that tells you that whoever is bringing the dollars in lending money that they’re fearing counterparty risk, they wanted 10 times the risk premium. That’s the concern is this person may not pay me back. Okay. So that’s where the concern was. And so why would these banks not trust each other? That’s a concern. So you know, nobody knows what the answer is, but they were pumping money into it right up until COVID-19. And then when COVID-19 hit, they pumped money into everything, and this whole repo thing just kind of faded away, but it was really like the canary in the coal mine and the post mortem on what is been going on in the banking system is probably not going to happen until we get to the other end of this just like a lot of what happened in 2008 didn’t come out into, you know, really a public understanding until people kind of sorted through all the rubble and reverse engineered what happened and explained it. And there were a lot of great books written about 2008. I think there’s gonna be a lot of great books written about 2020. But we’re not there yet. This COVID-19 could be and again, I don’t mean to be a purveyor of conspiracy theories, but there are smart people that I hang out with, as you know, and a couple of them are convinced that this is an overreaction to a real disease for the purpose of being able to take extreme economic measures, printing money, spending money in order to cover up a problem that pre existed and the symptom of that problem was what happened in the repo market. And that’s about the extent of it from my perspective.
11:50
If you’ve been following my journey, I’ve been selling my initial real property and transitioning into syndication deals lately. For more purely passive investment strategy. One critic Part of my portfolio is the American Home preservation fund, or what folks in the we call HP for short. George Newbery once apartment owner, operator and mentor to me, is now sponsoring the podcast is private fun, which by the way, also accepts non accredited investors cuts the middlemen out and allows you to invest directly with him to fight the mortgage crisis in America. join him by purchasing distressed mortgages while getting a double digit annual return paid monthly. Find something else better out there. Well, let me know. Feel good knowing that you are helping families stay in their home after buying their underwater note at a huge discount, invest as low as $100 by going to HP servicing comm slash investors. And if you want the free burns on book, please send me an email Lane at simple passive cash flow calm
12:54
Well, that’s your light bill.
13:01
Yeah, so when people say, you know, the Fed is printing money, right, where does the money flow into like bank stocks or
13:07
Yeah, so technically they don’t print money. There’s a fairly infamous or notorious interview Ben Bernanke on 60 minutes, probably back in 2009, or 2010. Trying to explain quantitative easing, and in the one breathy saying we don’t print money. And on the other breath, he’s saying it’s effectively like printing money. But what it is, is they just add digits to a computer screen. So it’s all digital. They just they conjure these numbers out of thin air. And the way they put the money into play is they purchase treasuries. So the US government needs to spend more than it brings in which it’s very good at so that it can issue new treasuries. And when those treasuries are issued, they’re sold on the open market through market makers and those market makers individual investors around the world sovereign wealth funds, governments, other central banks. All by treasuries for their reserves, the Federal Reserve manipulates interest rates by bidding on those bonds also through their FOMC, which is the feds Open Market Committee. And what they do is they set an interest rate target. So when the Fed comes out and saying, Hey, we’re we’re lowering the interest rate, what they’re doing is they’re lowering their interest rate or changing their interest rate target. And the target is what they’re aiming at doesn’t necessarily mean what they hit. And they certainly don’t dictate to private lenders what rates should be. But again, if you go back to my early explanation, that treasuries are at the center of the rings of risk for interest rates. If I raise that interest rate at the core, then everything else outside pushes out, and rates go up. So if that ring that the Treasury is in and the interest rates shrinks, then everything that has a risk premium built on it shrinks to and so mortgages are a ring of risk out from treasuries they’re considered To be very, very safe, but not as risk free as Treasury. So mortgage rates are higher than Treasury rates. And if Treasury rates go up, mortgage rates go up, if Treasury rates come down, mortgage rates come down, alright, so the Fed goes out and they they print money out of thin air actually conjure money onto their computer system, and they bid on the bonds in the open market. And in order to drive the rate down, they have to bid the price up. So it’s just like cap rates on apartment buildings. If your audience is primarily real estate investors as ours is, then they understand that right if I go buy a property, and it’s got a five cap, it’s listed as five cap and it sells for a four cap. It isn’t that the rent changed, it’s that the somebody bid the price up, they bid the price up higher, which means that the return on invested capital the purchase price went down. There’s an inverse relationship between yield net operating income and a cap rate. There’s an inverse relationship between the cap rate and the price of the apartment building, the higher the apartment building price, the lower the cap rate and vice versa. Same is true with treasuries. So the Fed creates interest rates by bidding on those bonds bid it up drives interest rates down. So that explains negative interest rates. Because you say, Well, why would anybody buy a bond at negative interest rate? Because they’re convinced that the Fed is going to come in and bid even more for it. They’re speculating on the price of the bond. They’re not buying the bond for the yield, there is no yield. They’re buying it knowing that the Fed is going to buy even more, and I could tell stories about that out of the news, but I’ll let that lay. Did that answer your question? Lee?
16:35
Yes. So manipulating, so when they create like a $2 trillion stimulus package? Is that their mechanism for putting cash into the system?
16:42
Yeah, well, they buy the treasuries and then the government spends the money. So there’s there’s what’s called a fiscal stimulus, which is when the government and the Federal Reserve and the government are not one in the same if you’re not sure about that read the creature from Jekyll Island G. Edward Griffin does a great job explaining it but the Federal Reserve A private banking cartel and they have a contract or a deal that’s baked into the 16th amendment that allows them to issue the currency instead of the Treasury. That’s why you have Federal Reserve Notes and not Treasury notes, or treasury bills. And they then manage the money supply theoretically, outside of political influence. They’re supposed to be independent. So this was what the system was set up in 1913. Of course, it’s like most systems changed quite a bit over time. And some could argue it’s become a bit corrupt and politicized, but be that as it may, the Federal Reserve prints the money and then they give it to the government by buying the bonds. And then the government puts it into circulation by spending the money. So monetary stimulus is the Federal Reserve, lowering interest rates, which is effectively meaning they’re going to print money to buy more bonds, but it has to be married to fiscal stimulus, which is where the government spends the money and puts it into circulation. And of course right now both of those things are happening. We have a thing Three and a half trillion dollar deficit. So we’re spending gobs and gobs and gobs of money. We’re injecting it directly into people’s bank accounts. And the Fed is printing trillions and trillions of dollars. In fact, I read an article the other day that the Fed has purchased 100% of all Treasury issuance, in other words, every IOU every bond, every borrowing that the federal government has done in 2020. The Fed has purchased China hasn’t purchased it. Japan hasn’t purchased it. private investors haven’t purchased it. Nobody’s purchased it. But the Fed net. I mean, there’s been trading for sure, but net net, the Fed has printed more money or as much money as bills have been issued or notes have been issued by the Treasury. So that’s it. That’s how the money gets in play. Now they’re buying ETFs you know, Bond ETFs are buying commercial mortgages. They’re putting money in through Fannie Freddie. So they do it by funding credit markets. The short answer, maybe I gave too big of an answer, but the short answer is they print money out of thin air, and they purchase debt instruments in the credit markets, primarily treasuries, but now money Other things, and then that money finds its way into circulation, we’re probably a hop skip and a jump before they start buying equities, stock ETFs and so on to prop up the stock market. It’s a full court press to prevent asset values from collapsing because that’s a natural reaction to a cessation of economic activity is asset prices collapse problems when asset prices collapse? It takes credit markets with it, because debt goes bad and that’s the big risk right now.
19:27
So when COVID hit and people lost a third of their portfolio in their stocks, and then it kind of bounce right back up. Is that a byproduct of just more money flooded into the system and not really what the headlines on Yahoo Finance says that, oh, people are sentiments getting better. What’s
19:45
the I mean, that’s ridiculous. I mean, get the Atlanta fed coming out going GDP is going to be negative 40 or 50%. They’re coming out with these unprecedented unbelievably horrible things. We got 40 million or whatever people unemployed, right? Unemployment rate. And then the Great Depression, there is no logical reason based on earnings for companies to stock to be going up. There’s nothing that looks good economically. The stock market though, has become a proxy or a barometer in many people’s minds for economic health. And it’s not true. And of course, it creates a huge amount of income or wealth inequality because the people who own stocks are the beneficiaries of the free money and the people who don’t are on the outside looking in just watching the cost of food and other things that they need go up. So there’s a reason why a lot of people are angry right now whether they understand the economics underneath the disparity or not, but this isn’t a left or right issue. This is a big government, big banking system, big corporation. It’s the big guys versus the little guys and the little guys get crushed when these types of games get played.
20:51
So right now we kind of establish that something’s happening. Something’s under the hood that’s smokin and I just want to kind of speak to little guy, the person listening on the podcast right? Now they’re going to hear that and they’re going to say, Oh my goodness, maybe I should put everything in gold or put cash under my mattress or dig a hole. Well, what’s the real play here, especially for guys who have less than a million dollars net worth, you can’t just buy gold, you got to grow your money to
21:15
well, gold is not an investment. And gold only preserves you against the failure of a currency. So I think the first thing is to understand the context and kind of the sequence of events as this thing rolls out. So we had a health crisis, whether it was real or perceived, whether it was overreacted to you can’t worry about that. The fact is, they shut the economy down worldwide and they’re opening it up very slowly, and maybe it’s going to be open it up a little bit and pull it back. The short of it is the health crisis led directly to an economic crisis and the economic crisis means businesses stop generating revenue, employees stop getting paychecks, which means that businesses and employees that have debts can’t To service those debts. So there’s been some temporary injections and some getting out in front with forbearance agreements and workouts and all this different stuff that’s been going on unlike how they handled 2008. But at the end of the day, those are temporary stopgap measures intended to keep the wheels on the bus until economic activity can restart. It’s kind of like being put on a heart lung machine until you can start breathing and your heart starts beating on its own. That’s where we’re at. We’re on life support, and that life support is coming directly from the Fed. So the economic crisis is the cessation of cash flow, think about having an economic heart attack currencies not flowing because people aren’t able to buy they’re not able to go out they’re hesitant to spend, they can’t make payments, right that that’s an economic heart attack. That’s where we’re at the next level is a financial system meltdown. And that happens when the banking system and the bond markets and credit markets begin to fail. There was some indication there were problems in those markets. For as we talked about in the repo market, they needed huge injections of cash. So there was already problems all COVID-19 was did was accelerate what was already happening and maybe provide cover for an extreme reaction that maybe they wouldn’t have been able to pull off outside of a very visceral, very visual, understandable crisis. People don’t understand financial crises. It’s all geek speak. But you can understand if you go out to the grocery store, and everybody has masks on and you can’t stand the six feet apart and all the restaurants are closed, all sudden, it’s like very conscious, hey, there’s a big problem here. And if you tend to believe the narrative, then you accept it and you accept whatever needs to be done to fix it. Again, I’m not saying that there’s a nefarious motive behind it, but I’m just saying people are a lot more forgiving. Of these extreme debts. Extreme spending measures extreme expansion of the Fed’s balance sheet because they are believed Meaning that we’re in the midst of an unprecedented crisis. And the idea is that extreme times, you know, require extreme measures. So health crisis to economic crisis to financial system crisis where the credit markets collapse, like we had a mini financial crisis in 2008. Here’s the next crisis in order to save the financial system. And to put the economy on life support, the Fed is printing and the government is spending trillions and trillions and trillions of dollars. So to give you kind of a historical perspective, in the entire history of the United States up until 2008, or the entire history of the Federal Reserve from 1913, up to 2008, almost 100 years, they grew their balance sheet to 800 billion after the financial crisis of 2008. By 2012 or so their balance sheet had grown from 800 billion to 4.5 trillion. They tried to taper and they tapered it down to 3.7. They raised it or tried to raise interest rates by 50 basis points half a percentage. And the result was the stock market started to retreat and the economy started to slow down. And so they realized that was going to be a problem. And so they lowered interest rates and they stopped tapering. Soon as COVID-19 hit their balance sheet has exploded to over 7 trillion. So it’s more than doubled since COVID-19. The last four months, the Federal Reserve has gone from 3.7 to over 7 trillion that’s all freshly printed money that is, is working its way into the system. It’s propping up the stock market. It’s keeping interest rates down when there’s tons of risk and people should be charging a risk premium, but you can’t because there’s too much debt in order to stop all that they’re printing dollars. Here’s the thing if you print too many dollars, and people lose faith in the dollar, now you’re Zimbabwe you’re Venezuela. Going back in history, you’re why Mar Germany, the only reason we’re able to pull this off is because we issue the world’s reserve currency and the whole world has to suck up. These dollars problem is if someone were to come along like a china and say, hey, we’ve got 20,000 tons of gold, not eight, or four, and we have a big manufacturing economy and we’re willing to back up our currency with gold, then everybody would move out of the dollar and into gold, and the dollar would collapse, all those excess dollars would come home and we would end up in America with hyperinflation.
26:25
And that’s the kicker, right? You hear all the stories about Zimbabwe and all these other countries have had hyperinflation. They don’t have that kicker that the United States has.
26:33
Yeah, I mean, our exorbitant privilege, if you will, is that we have the ability to print as many dollars as we want, spend as much money as we want. And the rest of the world has to provide it for us because there’s always a bid on the dollar just like there’s always a bid on gold. So people who are buying gold right now we’re buying it as an alternative to having something liquid that hedges against $1 collapse or Just a continuation of 113 year, a downward spiral of the dollar, 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 and 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. Now can you think of a vehicle that you can purchase with debt that actually provides the payments to make the payments can you think of one
27:45
of these couple of guys, they built their whole platform on real estate?
27:50
Real Estate and so what I found is that I’ve kind of crossed over and become this bridge between the gold community and the real estate community from a financial strategy. perspective and 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
28:23
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 and 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 advisor before relying on any information contained here. Information is not guaranteed 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 have your best interests.
How can I use part of my Roth IRA to buy passive income property?
How can I use part of my Roth IRA to buy passive income property, what you’re going to need to do to investor author is you’re going to need to probably move over to a IRA custodian that allows you to self direct. Now, a lot of these guys like Vanguard or fidelity was at something America with these big firms that offer investment options. They have what I call a fake self directed IRA accounts. We’ll call it self directed IRA accounts, but all it really does is allow you to invest in dirt or other garbage mutual funds and stuff like that. They’re not true self directed IRA accounts, what you’re trying to find as a self directed IRA custodian, such as you know, a lot of our investors will use quests, I used to use IRA services, they’re pretty good, cheap option, but these guys they’re just custodians who just hold on to your money and they administer the money. Once you get the money to these guys, then you can invest it or where you want. Of course, there’s you know, you have to follow a prohibited transaction. rules you can Google that I think you can’t buy things like artwork, or there’s all this list of like things you can’t buy. But if you’re buying income property, you should be fine. Some things to know when you’re transferring from your current IRA company to the IRA, self directed IRA custodian, it’s going to be hard, these guys aren’t going to make it easy for you, you know, you’re breaking up with one company, the customer service on that end is not going to be as good as it was on the way and so it might take two or three months, or two or three weeks of you constantly kind of badgering them. But once you kind of get it out of there, and you have it in the account, some of them will set up like a checkbook IRA, where you can just easily make or write a check. The one I had, I had to do all this paper, you know, a couple pages without what I was investing in, and then the key is that they they’re sending money on your behalf and you’re kind of staying out of it so that you don’t blow up your IRA account. I personally am not a big believer in any retirement accounts, Roth IRAs or Any pre tax IRAs unless your net worth is over two to $4 million. At that point, maybe you should do a Roth, a lot of like syndication deals and just real estate in general, you get a lot of good tax benefits from depreciation that comes from the property. When you’re investing within a IRA account or retirement account, you do not get to partake in those advantages. Another reason why I don’t like IRA accounts is because you have to wait till you’re like 60 or 70 years old. I’m trying to live for today I want to, I’m trying to I’m buying income property so I can create mini pensions today and work backwards and create cash flow today that grows and grows and grows so I can buy more and more investments so I can grow more and more. I am probably going to reach retirement, the pinnacle of retirement what we all think, which is more of a financial freedom number well before I hit 60 now not saying that’s for everybody, but I think for a lot of us who are investing the right way, it usually takes five to 10 years of doing this method. To be out of the rat race, and at that point, you’re not going to want that money locked up in some Roth IRA account or IRA. So that’s why a few years ago, I made the conscious decision to never invest in that stuff ever again and I just invest out of my own liquidity out of cash accounts.
Sheltering Capital Gains Without Painful 1031 Exchanges
So I’m cashing out some of my real estate that was inherited because the net income is very low given the asset value considering cashing out on a property that I bought 30 years ago in Arizona even though the rent ratio is amazing the income to asset ratio is low thought is to hold on to cash and wait for a buying opportunity which seems to be coming however, we’ll end up with a 30% capital gains federal and state on 500 to 600 thousands of capital gains the first thing I always ask folks like this is like what’s the rent to value ratio fits under 1%? Well, it’s not going to cash flow so you should probably sell it It could appreciate but that’s just not what the kind of investor I am I want the Sure thing which is cash flow as opposed to hoping and praying and gambling that the property value is going to go up. Somebody might get lucky and rub it in my face but you know, I’m more about cash flow and and that type of stuff these days. Once you’ve determined that you got to sell the property
You got to figure out how much capital gain you’re going to have. And this person mentioned, they’re going to be looking at 500 to $600,000 in capital gain. Now you have a couple options. You can do a cash out, refinance, buy some other properties, maybe you go into some syndications. And then you build up some passive losses from those syndications and then sell the property and then realize those capital gains. But by doing that strategy, you’re able to build up the passive losses that kind of cushion your fall, there’s a 1031 exchange option, but I think 1031 exchanges are pretty horrible because think about like this analogy is like you’re kind of in a in a hot air balloon, you’ve been in this boom for 30 years, and you’re now you have to look at like a 500 to $600,000 capital gain or dropping of air balloon, you’ll probably break a bunch of legs at that point, but by doing a 1031 exchange, you’re kind of delaying the inevitable you’re going to be in the situation again, but unfortunately, you might be looking at a 1 million or a million and a half capital gain way. I think
Kind of kind of mentor my folks who’s like just cut bait Now jump out of the basket. And you might break a leg leg or sprained ankle, if you’re at a height of like 50 feet. $100,000 is a lot of capital gains. So likely, what you’re going to need to do is cushion your fall. And in this case, practical advice is to go into some deals, get some passive losses to cushion your fall, maybe you invest $100,000, and you get a $98,000 in passive losses that first year and you go into three deals like that to you now you’re almost the $300,000 cost of losses. Now you take that $500,000 long term capital gain, and you minus that passive losses, and now you’re only looking at a $200,000 capital gain. At that point, say your adjusted gross income was 100. You know, you add that to the 200 and you’re at 300. You’re not in a bad tax bracket at that point, if you kind of sheltered the big stuff out of the you know, $326,000 and above that, those are
A couple ways of doing it. Every situation is different but that’s the way I would think of it. You know, we talk a lot about this stuff in our in our mastermind group about, you know, strategizing specifics about this one piece of the puzzle I don’t have that this person didn’t put in here. It’s like, I want to know what your adjusted gross income because maybe you’re not working this year and your AGI is really low. Well take it out. Take just take the capital gain hit on the chin
How to invest proactively in a Pandemic?
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Source: Richard Duncan
Our government is giving huge tax incentives for those who invest into our country.
https://youtu.be/aqPWoki-MP8https://youtu.be/FTj-nJEGi-4
What is making the stocks go back up?
The country effectively shutdown for half of 2020, unemployment is high (expectedly so with a slow ramp up), yet the stock market is on track to be at all time highs by the end of the year?!? WTF?!?
Call me crazy but this sounds fishy!
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In case you missed it at least 3 Trillion dollars of economic stimulus has been flushed into the system. Could this be what is pumping the stock market with fake money? When is the air going to be let out of the stock market again? Do you remember how you felt back in March 2020 when stocks lost a third of it’s value? Don’t forget that. The Cares Act now allows for a 100k withdrawal from your 401k or TSP penalty free till the end of 2020 and possibly till you file your taxes in 2021. This is the time to get out of frothy paper assets and into real hard assets. |
| Never forget! Do yourself a favor and get out of fake assets and into real assets that produce cashflow. |
https://youtu.be/2t6t4Lw5Mu0https://youtu.be/UrSzupI0H28
Why real estate? Is this another 2008?
The great Recession of 2008 was a systemic failure in the real estate market caused by bad mortgages, rampant home flipping and speculation, and overbuilding all contributed to the last financial meltdown.
NINJAs (No income no job no asset) were being approved for multiple home loans on the belief that housing prices would just keep going up and these loans were packaged off and sold as Wall Street derivatives.
https://youtu.be/iDcbUAh731s
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This time around, there is a growing demand for affordable rentals housing due to increasing population, less homeowners, and the constant separation of the haves and have-nots 🙁 the much-stronger housing market isn’t the driver of the crisis—it’s the effects from COVID-19 a medical crisis. It is a true Black Swan event.
What Could Cause the Stock Market to Fall?
- A severe second wave of the Coronavirus
- Insufficient additional Fiscal Stimulus (which would make the bad economic fundamentals even worse)
- The possibility that the markets have already priced in all the impact that the Fed’s new money creation will have on stock prices
- If the Fed signals it will create less than $120 billion a month, a new “taper tantrum” would be likely to cause stocks to plunge
- A political crisis in the run up to or the aftermath of the November Presidential elections
- Any number of other unforeseen developments
Is this a time to sight tight and not invest?
You could do this and make 0% on your money or load it into deals that make sense, tie up good long-term under 4% debt, and hedge against inflation as the country looks for revenue sources such as taxes or debt minimizers with inflation.
I have taken a “load and stabilize” approach to my investing where I…
- Load into some good deals (one at a time or every few months)
- See them stabilize (harden into recession-proof after a few months)
- Repeat the Process
Some may even see this as the “dollar-cost-average” approach which is similar to what were taught in stock investing 101.
I have seen pricing on assets increase every year since 2009.
I felt what you are feeling back in 2012… if I would have stopped I would have missed out on another great run!
I felt what you are feeling back in 2015… if I would have stopped I would have missed out on another great run!
I felt what you are feeling back in 2018… if I would have stopped I would have missed out on another great run!
After seeing this phenomenon happen for a few times and seeing a lot of people who never got started, I realized and had proof of concept that as long as I go into conservatively underwritten deals that cashflow I am pretty much untouchable or going to do a lot better than waiting on the sidelines.
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| Collections Post-Covid in comparable Assets we operate: |
COVID19 came and I was a little worried to see how April and May collections were. But collections remained strong and came down only 2-8% across the 3,500 unit portfolio. In some assets, collections improved! Commercial real estate pricing was pretty much unchanged and experts say that at most Cap rates went up only 0.25%. (Excluding commercial retail storefront and short term AirBNB type rental who got killed)
Now, you can see where I am coming from in my neutral-aggressive stance.
Combine that with the fact that I am around higher level Accredited investors these days who have seen the ups and downs and they say NOW we see the separation between the faint of heart and those who take their family’s legacy to the next level.
Of course… don’t be silly and choose investments in good sub-markets and have sound underwriting to ensure cashflow.
Warren Buffet said “be fearful when others are greedy, and greedy when others are fearful.”
John D Rockefeller said “The way to make money is to buy when blood is running in the streets.”
The Fed has pretty much doubled down and planning for additional stimulus plans which is ensuring the nation moves past the current COVID crisis with Infinite Quantitative Easing commitments through the year 2022 and beyond. Get on this wave now!
Source: Richard Duncan
https://www.youtube.com/watch?v=M8jJ2iiDMes&feature=youtu.be
We were able to get a lot of interior footage on Harbor Village units on this last trip out to Huntsville!
Also included are drone shots of all recently acquired properties.
2nd half of video is Garden Place and upgraded and non upgraded units in Treehaven which are our other class C properties.
Now what?
Let’s reconnect, huddle up, and get a game plan for you as this is we start to build a legacy!
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The population is still going up…
Between 2010 and 2017, population growth averaged 5.5% for the US as a whole. Delaware boasted the highest growth rate, 15.3%, over these years. A state with a relatively small population, however, needs fewer new residents to achieve such a high growth rate. The double-digit rates recorded by Texas (up 12.6%) and Florida (up 11.6%), both high-population states, are therefore that much more impressive. There were three states that posted population decline between 2010 and 2017: West Virginia (down 2.0%), Vermont (down 0.3%), and Illinois (down 0.2%). – ITR – 19.02.28
Since I feel we are in the 9th inning of an 11 inning ball game, I decided to pass on a recent Class-A apartment deal in a secondary market.
Here is my thought process…
First off, Robert Kiyosaki has a saying: “There are three sides to a coin.”
People like to argue that it is either a good time to buy or a bad time to buy. For example, they say that “MFH” is overheated or commercial is getting killed by Amazon and e-commerce. I think these are mental justifications by tire-kickers who are scared to act. I mean really how many of these people are under the accredited status (not sophisticated) or have not obtained their “Simple Passive Cashflow number.”
Lane Kawaoka
Simplepassivecashflow.com
Sophisticated investors still trying to grow on the edge of the “coin.” They buy deals out of the reach of amateurs due to the amateurs’ lack of network/knowledge. These opportunities are undervalued, with undermarket rents, with value-add opportunity. Sophisticated investors are patient; they don’t stray from standards that force them to get crushed in a market correction. (Cashflow from other investments makes this possible.) They invest following the macro- and micro- trends and don’t gamble on gimmicks such as guessing where Amazon’s next HQ is going or where the hurricanes just drowned a market.
The trouble is that an unsophisticated investor or an outsider (in terms of having a poor network) is figuring out which of these deals transcends the two sides of coin and is on the edge. Stating the obvious (though often ignored by many)… starting out as an investor is going to be slim-pickin’s due to the lack of network. But you have to push through this rough part. You are not able to decode the noise until after a few deals or having someone mentor you.
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With that out of the way let’s continue…
Real estate is one of the best risk-adjusted investments out there. In private placements or syndications, we are able to crowd-invest in larger & more stable assets while maintaining control with operators who are aligned in our best interests. By going into a project properly capitalized with adequate capital expenditure, budget, and cash reserves, you are able to remain steadfast through softness in the market where rents stagnate and vacancy decreases.
(If you are starting out you should start with turnkey rentals even though they are much more 🎥 volatile)
Pause there. In troubled times what happens?
People lose their jobs and there is a bit of shuffling, let’s take a look at different the different property classes:
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Yea, people need housing, but there will be some vacancy as some people will lose their jobs and be displaced elsewhere.
Following this train of thought…
In a recession, the high end or class A will be hurt the most. It is Class A workers who fulfill much of he discretionary services. We are already seeing softness in rent by rent decreases in class A of the high-end markets such as Seattle and San Francisco.
For example a once $1,700 one bedroom is now $1,625.
Most deals model for 1-5% in annual rent increases or escalators. Other than the Cap Rate to Reversion Cap Rate truck, this is the second most manipulated assumption in investment modeling.
In this unfortunate but natural event, the A-Class renters will fall to class B housing. Some homeowners will even lose their jobs creating foreclosed investments for smaller investors in the single-family home scale.
What’s happens to the B and C class renters?
It is likely that they will also lose their jobs at higher or lower rates, but that is up to debate. In the same fashion as the A-Class renters, the Class B/C renters will downgrade to make ends meet.
I imagine this similar to a game of musical chairs (where the chairs are getting crappier and crappier). Or it looks a lot like the natural housing shuffle in the summer near colleges with people moving in and out. The landlord/investor is likely to see increased vacancy.
Multifamily occupancy varies from 85-95% in stabilized buildings. Some markets are hotter and some are colder. It is important to use the correct assumptions depending on the markets. For example, Dallas typically sees 92% occupancy while Oklahoma City sees 89%.
One of the reasons we love multifamily is because of the decline of the middle class and the need for more scalable workforce housing. [And those millennials can’t save] The population is increasing too.
[I like to use this image cause I make fun of millennials… this is the millennial version… cause they can’t seem to afford (or want) to own anything]
When I travel to Asia (which I see as a more mature society, for better or worse) there is a much larger wealth gap than in the USA. People are living in cramped apartments or very rare single-family homes. And they are driving a Mercedes on barely enough money to share a family moped. This is the trend that the USA is following.
As with many things, you need to look past the headlines and the general data. Instead of analyzing a whole asset class, as the media likes to do, let’s break down vacancy in terms of classes.
Here are some typical vacancy rates (notice the spread).
Class C 4.5%
Class B 5.0%
Class A 5.5%
Why? Because there is just more demand for the lower class properties because there is more demand than supply.
Many times the business plan is the be the “best in class.” For example, businesses want to be the best mobile home park or best high end remodel because you attract the richest customers in that niche.
I like to monitor the number of new units coming online because that is your downward pressure. It is rare that new builds are for Class C or Class B.
The micro-unit trend is an attempt to build for Class C and B tenants due to the need. But often the numbers don’t make sense when you have purchased the same building materials and mobilized the same crews to build a Class B asset as opposed to a class A asset.
Let’s go through that Armageddon example again.
Class A will have to drop rents severely and see great vacancy.
Class B and C will see vacancy come up too as people are losing their jobs but should see some absorption from ex-A Class tenants.
Mom and dad will also see some absorption as deadbeat son or daughter move back home.
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Note: one can argue that class A+ will not be affected at all which I believe is true. That’s why we are trying to invest right to enter that untouchable status.
I remember when I sat through the same economic presentation at work from 2010-2014. The sentiment at the time was that it was going to be an extremely slow recovery. It makes sense that the length between the 2008 recession and now is very long which is why I mentioned an 11-inning ball game.
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This is why I took a step back from some pretty Class A deals because I asked myself the following questions:
1) What will happen to the rents if IT should happen?
2) Is the modeled 90% vacancy rate going to get blown up?
Class B and C apartments in strong submarkets will perform best over the long term. If you ensure the loan term is long enough so you don’t get hurt then you should Outlast the bumpy ride ahead.
Beware of the self-destructive behavior of not investing. You know what I mean… are you someone who self-sabotages?
Understand the micro and proceed if the numbers make sense.
I have to admit Class C and B assets are boring but work especially in a seller’s market because 1) they cashflow and 2) have a forced appreciation value-add component to give you levers to pull in tough times.
Again going back to Mr. Kiyosaki’s three-sided coin quote, investors go through three stages:
Go into MFH… Duh (I did well at single-family rentals let me try apartments)
Be a contrarian investor so go into other asset classes most decent investors are afraid or don’t even know about
Do special projects such as Affordable house taking advantage of tax credits or specialized operators (ie take abandoned big-box space like movie theaters and convert to the latest consumer needs)
Experienced investors who were in the downturn in 2008 say its interesting that the sentiment in 2006 was exuberance that it was going to keep going up. Now in 2018 the sentiment is fear… This is a good thing. Remember that in this market we still have:
- Historically low-interest rates
- Historically high rent increases (not 8% anymore but still 2-4%)
- Historically low vacancies
Things to monitor if you really need to geek out on numbers:
- 2 and 10 yield t curve. When that crosses you have just-a matter do time. Because its a measure of fear.
- Automation and AI – huge shifts in jobs. People need to work but technology has been increasing since the beginning of time.
- Wage growth
- Bankers prospective: how deals are getting funded and by who (institutional or dumb capital)
There is a saying out there that real estate is location specific. However, when I invest in more stable asset classes it’s a National market based on the economy both USA and international. When you invest in a micro-economic fix and flips then it’s location specific. When you invest in commercial assets it’s with more stable tenants and based on the aforementioned larger economy. How affordable is rent really? – “During the same span, median effective rent nationally has risen by about 26%. That rent appreciation pushed the median monthly rent nationally to around $1,220 per unit to end 2018. With the US median household income being just over $62,000, this rent accounts for 24% of monthly income. Using the typical benchmark of monthly rent being 30% of monthly household income for affordability, a margin remains for renters.” – [If you stick to using 2% and under rent growths and stay away from Tier I or Primary markets you should be fine] – ALN 19.02.24 A lot of people point to the Yield-Curve as a big indicator. In the end, I do believe that real estate will go down because of consumer instability. But if you have stocks you should sell those before even thinking of lumping it into cash flow type rental real estate. 
“The guy not investing right now and hoarding cash (with net worth of under $1M… because if you can live off your cash flow then cool you can do what you want) is just afraid and lacks deal flow. Its like the person who complains that there is nothing to do during the weekend in LA (insert city with a vibrant scene) when in actuality they don’t have any friends (lack dealflow)… and by the no one likes (has a bad attitude and that person who makes excuses”
Lane Kawaoka
Simplepassivecashflow.com
Doomsday theory: Everyone talks about national debt but we are far far behind debt to GDP ratio that of Japan. When Japan hits the wall lookout. Here is my theory… watch out post-Japan Olympics when they have to let loose the belt (after a holiday period of excess calories). Leading up to a period where Japan has to save face while they are in the Olympic spotlight (and I’m not being racist cause I am Japanese and it is a thing). I don’t have the latest data but Japan is at around 250% where the USA is at 100%. Household debt KPIs: student debt, car loans, housing debt. Which is why I like these assets that are used by the poor and middle class! #RenterForever Lane’s theory: I’d rather be in deals that cashflow today that do better in a recession like Class C and B assets. Say it cashflows a 8%.The guy who is stilling on the sidelines with the “hoarding cash” mindset will lose because they will make 0%.
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I, on the other hand, might dip from 8% cashflow to 4% cashflow. On paper, I might be in a market with compressed cap rates but hopefully, I have forced appreciation potential if I really needed to sell – the counter move is to get 8-12 year debt to effectively bridge you to the next side of the market cycle. In the meantime you cashflow 4% which is 4% more than the “hoarding cash guy”. In addition, remember back in the 2008 crash. 2009-2012 people did not know if that was the bottom and it was so hard to close deals in that Phase IV (see below). “Hoarding cash guy” in 2009-2012 and the few years after the next recession will likely be in the same clueless situations. Wouldn’t you like to be in solid Class C and B assets that continued to cashflow?!? 4% x 4 years is still 16% ahead! Now if you are “hoarding cash guy” with no deal flow then I get it. Saving cash is the best thing to do for the guy with no deal flow or does not know how to run the numbers. I guess everything does suck.
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[Investors are chasing for decreasing yield these days] – REI.com – 19.03.4
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[Sophisticated Investors know interest rates and caps go up and down together and their money is made in the delta between the two] – REI.com – 19.03.4
Of course, all the Pro-Apartment publications will say this: Get Ready: Recession-Proofing An Apartment Portfolio – National Apartment Association 19.03.7
But enough of this doom and gloom because most gurus out there call recession everyday just so they can have Tweetable content. And they make a living selling subcriptions to their $79/month newsletter. But we are better than the average investor! And understand that future softness could very well be slowdown before the next great bull market.
Take care of yourself!
August 2020 Market Update Investor – Investor Letter #16
All right, everybody, this is the August 2021 fi market update. I’m your host Lane Kawaoka. But before we get started the free easter egg giveaway, and we are going to be giving away a buy and hold analyzer for rentals. This is you can use it in Google and Excel for explanation of all expenses for you to make your own performance and vet your own rental properties. For check performance given to you performer means means toilet paper, French, just get rid of it, analyze it yourself, run your numbers yourself and allows you to perform some sensitivity analysis on your own You can get access to that by going to a group putting in the numbers on the Facebook posts, or you can shoot me an email at Lane at simple passive cash flow calm. And, you know, I’ll send it over to you. If you guys want to check out more content on our Facebook group and listen to my podcasts, which has been going on since 2016. found on Google music, Spotify, e to YouTube channel is getting pretty big and robust now. We’re also on iTunes and iHeartRadio. Alright, so first things first, a little bit of teaching points for everybody had demick proof investing. How do you invest in stuff that won’t get destroyed in a pandemic? Well, things that are probably going to remain strong, as we’ve seen through the last few months, do my 3500 units that I own workforce housing. These guys still PE so Class C and maybe try and stay away from class C stuff but definitely the class VNA tenants, their paint, garden style apartments so a garden style apartments are these are the two story or 123 story apartments where it’s sort of think of it like a motel where you drive up to, it is not a high rise apartment. It is sort of medium to light density. And for those people who are unable to afford a house, everybody says they want to you know, get away from other people and have their own house but very little people in America can afford houses to live in. garden style apartments are the best of all worlds you have your space. It’s pretty affordable for them and this is why I choose to invest in these type of card itself apartments and other medium dead suburban locations that would be not in the urban sprawl, urban area, the downtown area but mostly in the suburbs. Areas maybe right near the loop track you know 20 to 30 minutes outside the city center things that I stay away from our elevators you just can’t socially distance in an elevator that’s urban areas of things with no cash flow right because they think you’ve seen an epidemic that things that aren’t producing income to pay his expenses are going to get hurt a lower end tenants and this is where I said you know, maybe stay away from class C tenants definitely Class D and worse. That’s always been a fundamental that we followed a short term rentals are getting killed. Although I hear a little bit of resurgence and some of the some areas of Florida as people there’s some pent up demand coming back online but you know, if you live in Hawaii, you’re getting killed with these short term rentals and and that’s why I told you not to do them in the first place. Pro tenant states. So these are like the California these other places love blue states where there’s more tutorials on no evictions offered A space you know, a lot of tech workers and a lot of them are just told that they may not even come back to the BDM next year if if ever, a lot of people have just told their employees just to work remotely from now on San Francisco Bay Area’s getting killed. Again, this is why we chose not to invest in these type of primary markets. JOHN burns came up with a report and the question is, are you or do you know anybody else living with their parents? Well, they came up with this little stat that for those adults ages 23 to 30 living at home what’s your mom and dad has drastic be bingo going up 30,000 people in March, and then in April a million people and then may another million 1.1 folks moved in with the parents so that is on the rise. And that leads us to a read cafe article or the takeaway here was a quarter of renters now say they will never buy a home. So if you’re looking at This in the YouTube channel you’re seeing and that cool little chart where they surveyed about 7000 renters in May, you know a lot of people just don’t plan to buy a house, you know, I don’t, I don’t buy a house to live in. And if you’re living in a rent to value ratio under 1%, I would urge you to do not buy a place to live in, but instead, invest that money. Check out my article, simple passive cash flow, calm slash home talking all about this very controversial topic, but look at it this way, right? You don’t spend money on a big down payment, and you go out and invest that money and you make cash flow. And it’s basically an arbitrage and I know everybody teaches you otherwise. And I would say for most people, it makes sense because most people aren’t finance financially responsible. So home is sort of a forced savings account for them because if they didn’t put the money into a mortgage that got locked up, they probably spend it but you know, those of us who kind of follow our group are of our tribe, simple passive cash flow, folks, and we’re pretty responsible for our money. We don’t spend our money frivolously. So for those of us it probably makes sense to rent our primary residence, use that equity to go and buy assets and then you know, we don’t have that big mortgage payment, and then we can go out and buy more properties or syndications quicker. You can also probably live in a nicer place to the whole thing of homeownership, I think is a little overrated, but just to just hear giving ideas right, full map of estimated net worth of everybody who every person, each state who is the richest person, so Mark Zuckerberg is at 1 million billion dollars in California. Washington have just Jeff Bezos hundred 17 billion boy is pero dahmer. I don’t even know who that is. A Alice Walton 51 billion. We have a lot of Texas people. Some no We have with some people in Maryland in DC, Ted Lerner family. Ray Dalio is up there in Connecticut at 18 billion. Yeah, a lot of us in our group are California, Oregon and a lot of people in Oregon Phil Knight, and family 40 billion other folks on the west coast. It’s kind of a fun, a fun article. They’re most and least affordable cities from home ownership. It’s kind of a no brainer here but in graphical representation from NAR realty data, the West Coast is probably some of the most unaffordable areas but in there The worst is San Jose, California. And one of the better areas is Spokane, Washington. And I think we have actually a participant from the area of Spokane Washington, shout out to FM is listening. So we like to invest in the south and south east. Phoenix is one of the least affordable places in the south south Phoenix is actually pretty good market, in my opinion, and it’s not too expensive. A lot of people from California move out there. But in terms of the South, it’s one of the more expensive places. Amarillo, Texas is one of the most affordable ones. Kind of a nice little, little fun map to see where’s the nice places to live. And I took a screenshot of some of the chatter that’s been happening in our private Facebook group, or I’m seeing people move out of San Francisco Bay Area lower cost areas in Campbell, California since COVID has enabled them to work remotely. Real Estate seems to be picking up in those areas of Sacramento or El Dorado County, is you don’t get much more for your money while still being you get a little bit more for your money while still being relatively close to the epicenter that is San Francisco and San Jose. Another person commented rents on average in San Francisco are down 12% Because as much as 20% in some areas now, that’s just one person from the UI. But to be honest, I go, I use my network a lot. I mean, a lot of you folks are my eyes and ears out there. And hearing stuff like that is a lot more reliable than what you can find in the news a lot of times and you know, nothing beats going into Facebook marketplace and seeing what the rents are doing, especially for someone who’s been following up on it, and kind of watching it watching the needle. Like a lot of you guys have this data that we read from these news article, there’s quite a bit of lag, typically, where saving for a down payment is the slowest, Hawaii, District of Columbia and California. These are three places where the median home values in DC and Hawaii are a little over $700,000 That sounds about right. I mean, you can’t pick up a house here, away. I mean, yeah, you could pick up a house but it’s gonna be kind of crummy for 600 grand Hello. Foreigners just under $600,000 median home value, if you working with a down payment of 20% time to save for a down payment is 9.1 years for Hawaii, 8.7 years in DC and 7.8 years in California. So if you can save up enough money to buy a house, well, there’s only 3030 or 20 more years you have to work more than likely. So I asked the question why buy in these kind of places to be honest, this invests, but I’ve been told I need to be a little bit more less controversial. You know, if you can’t save your money, then please buy. If you can invest, I think I think you’re going to end up better off than the most. Both day housing news reports such senior housing occupancy slips to an all time low. Now a lot of you guys have mentioned to me that, you know, you see senior housing, the trends, they call it the silver wave. I totally agree with you guys. So, senior housing is going to be in a huge demand assisted living. But I don’t think the silver wave is quite here yet. And it’s a very hard operational asset class. And to me, it shouldn’t really be in the real estate category. I mean, it’s an operational business to me, definitely not for mom and pop investor to operate in a mom and pop operator could possibly invest in apartments and be okay, but definitely not senior housing. The occupancy fell 2.8 percentage points in the second quarter dropping to 87% to 84%. So yeah, this I mean, this is some of the fallout from Colvin, senior housing, I wouldn’t want the liability of that right now. Commercial Property executive reports that the top five secondary markets for self storage default, I’ve been looking into Self Storage lately. I haven’t jumped in quite yet. I originally, you know, one of my things I don’t quite like about self storage is to have You can develop this stuff so quickly and typically you don’t compete directly with what you’re doing. Yeah, there’s not really any class B or C till storage out there like how you buy Class B and C apartments and then when a Class A apartment or a house, a self storage company comes online, it’ll compete directly with you whereas like, you know, we’re buying Class B apartments and in a class A apartment gets split across the street. Well kind of competes with us but not really we’re you know, you’re in a different category for customers. But on this some of the top five secondary markets for self storage development, Augusta, Providence, Knoxville, Rochester, Rochester, Springville, self storage, I think the appeal there is you have no tenants in you know, they have no right it’s just stuff that you’re not going to have any it’s going to take a lot for there to be some laws against no evictions or kicking you out on the street for that. So that’s, that’s why it’s very in favor of the landlord or the operator. Not all markets have come down a little bit since COVID kind of cooled off the market and temporarily, co stars reporting the Huntsville apartment market rising remains resilient and dynamic. But little graph of the same store asking rent just keeps going up through what was called Mr. March in March. That went up from 93 cents to 95 cents or in that market. So I can fully attest to that, because it just keeps going up in the stronger markets. I think part of that is just job growth. On the contrary, Jacksonville found the multifamily Market Report is seeing a little bit of a slide 30 basis points in rents in the last three months. Well, some people you know, some of my peers that have deals in Jacksonville saying that their deals or aren’t seen this, but you know, this is just big data, right? We’re trying to share On a market, commercial property executive also reports construction costs decreased for the first time in a decade, the covid 19 pandemic, and increased competition among contractors are key factors behind the client. So you know, as, as a lot of operators are, are on contractors or developers builders are kind of taking their foot off the gas pedal in terms of future deals, they might also slow down into existing ones too, and, you know, less competition coming online and generally kind of slows down the pace of construction and that ultimately impacts the contractors I think you would have asked this about six months ago you know, one of another reasons why I don’t like doing that silly first strategy, which is too much effort at too much risk is because much of the last few years has been a contractors market, right contractors, any if you’re not a contractor and you’re not working, something’s wrong with you. It’s hard to find contractors up to this point because everybody to work in. It’s really hard for unsophisticated new investor, especially when you’re trying to do it remotely, to find people good people to work with. You know, you got a question, why is this person not working and want to work with me? Well, maybe you’re paying a stupid price to that could be another thing that’s very typical revolt. Investors. Now, now, it’s kind of a good news, right, generally, you know, things are kind of cooling off less competition. So now’s the time to go and build right. I think a lot of newer investors are scared, right? This is the time where you can go in and you can do get this work done a lot cheaper. You know, overall, unemployment is higher. Now these construction guys, the jobs have been absorbed. yardie came up with a report on multifamily and I’m just going to read some of the key findings here. The US multifamily rents decrease by $2 in June, you know, not that much falling to an average of four 1300 $57 and this is all inclusive of you know, ABC class average rents just continuing the four month trend of declines which makes a lot of sense right? I mean went to dang pandemic, you’re expected you know rents to retrace a little bit. Average us rents declined by point 8% in the first half of 2020. And then point 4% in the second quarter. This is a stark contrast from 2.6% rent growth in the first half of 2009 and 1.2. A most people will argue that on average 3% is annual rent increase per year. That’s kind of just follows a pace of inflation. If a market is super hot, like how Dallas was in 2013 and 14 or how Phoenix has been lately, you can see a big pop you know, a market you know, Mark get more of like a MSC, of like a spectral Five to 7% a year. So to see a rec growth of almost zero, that makes sense when this is going to happen from time to time. And this is why on those annual rent escalators, you don’t want to see something too high. I don’t be underwrite more than 2%. Typically when I’m looking at deals, you know, I’m assuming it’s going to go up a little bit, but I want to under pace inflation, which is typically thought of as 3%, where the losers will, it’s the West Coast and tech home markets, as we were saying, hit the hardest in the first half of 2020. That’s the beginning of the year, rents are down 4.6% in San Jose and 3.8%. In San Francisco. Our business online reports that us multifamily originations to decline 20 to 41% in 2020, says Freddie Mac, so all this is is less people are doing deals and yeah, I mean, the last three, four months haven’t really seen that. Very much come through the inbox, probably I would say, unscientifically, I would say maybe a 10th or, you know, 20% of what kind of volume of syndicated deals I see has been coming through. Part of that are that they think most, most investors are just freaked out and scared and people can’t raise the money for it. Part of another part is that, you know, Fannie Mae, Freddie Mac, and they kind of lead a lot of lenders. They’ve kind of restricted a lot of the exemptions they will give that makes these loans extra extra sweet for syndicators and investors. We are at all time, interest rate lows. If you haven’t been seeing this, probably been living under a rock. But yeah, we’re seeing in the multifamily space like 2.9% interest rate is obscene. It almost makes sense for people to buy lukewarm deals, right. I mean, Think about it like this, it’s not going to be a sub 3% forever. If your cash flying like you want to lock up all this good debt now, I mean, there’s all signs point to inflation, how else are you going to pay for this three, four or five $7 trillion of stimulus that’s coming. If you have a primary residence, you might be looking at refinancing your home, but I would be careful, right? Because these lenders are really tricky. They love to get these origination fees typically 1%. So they’re always trying to trick you guys into refinancing. I’d say be careful, right? If you already have a low percent mortgage under 4%, I mean, it may not make sense. Remember, like if you had a 30 year mortgage and you know a few years went by you have 27 years left by them refinancing you again, they put you into a new mortgage. So what you really want to do to compare apples to apples is to say, hey, run my run my numbers, I want to put it as a 27 year mortgage. So I can Compare it to the monthly payments, and I want you to make it a no Fee Loan. Now you these guys can play around with the points and fees. And a lot of times they’ll make it a no Fee Loan sitting. So yeah, see it’s no fees, but then what they’re doing is they’re increasing the percentage slightly. So if the base would be was like three and a half percent, they might increase it to 3.75 to make it to take out their fees there so they could get paid. These buggers are tricky. So do the math for yourself. And if you can’t do the math, find a network and you know, we talked about this stuff in our mastermind all the time. I would say if you’re looking to stay in your home for a long time, more than five or 10 years it might be make sense to refinance it but yeah, if you’re not make sense to just sell the asset now if it’s not a good rental property or and get the equity out now, or just let the mortgage ride for the time being and and I’m avoid pain those friction costs which are those loan origination fees
been investing with hp since 2017. By distressed mortgages and discounts to offer struggling families sustainable solutions to stay in their homes or homes were vacant. HP recognized that lenders frequently struggled as they tried to limit their losses. That’s why owner George Dewberry founded pre aureo, 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. Winwin 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 home’s the buyer on all the best you can live with About pre Rio by going to simple passive cash flow calm slash v. Rio.
Sam Zell, this is a smart guy. If you haven’t heard of him, you should probably Google him. But he’s kind of like a czar of investing. He’s less known than Warren Buffett. But he’s, he probably invests in more like more trends. So I think he’s one that a lot of people like to follow. But he’s kind of predicting a U shaped recovery likely beginning in the fall, saying we basically improve someone I think that we’re going to have some kind of slow period improving toward the end of the year. That’s very different from a radical Vshape. Again, he’s he’s kind of thing it’s going to be more of a U shape. So Sam cells, you know, he’s invested in I think he was one of the first guys to jump on the mobile home park bandwagon. But yeah, smart guy and a good person to kind of follow see what he’s doing. And, you know, I think a lot of people will say, Well, yeah, Sam’s They’ll says in the fall, start investing in the fall or shortly after like, no, that’s not, you can’t do that, like you kind of miss out on some of the best bull market. And that’s all I got to say about that. This take a little break here for another giveaway. The other second easter egg here is amortized mortgages suck. You want to use your key lock, if you’re looking to pay off your mortgage a fraction of the time do you want access to this shoemoney McClendon simple passive cash flow after joining the club, if you have not a part of our investor club, go and join that simple passive cash flow calm slash club, but this is the mortgage rate arbitration game where you’re using your healer and you’re paying, you’re paying down your amortized loan with simple interest. And trust me this works. You would say I read a little process here. You can probably read this on the YouTube channel or on the video version, but If you guys are listening in the podcast form, just go ahead and shoot me an email Lane at simple passive cash flow. I can give you all the tutorials and videos on this, but it works. You, you pay off your he lock, you replenish it with your cash flow, and then you magically your mortgages gone in like five to seven years. Sounds cool. But I would caution a lot of people like the strategy is not for everyone. And it is nothing compared to actually investing in good hard assets that pay cash flow. And I think this is where a lot of people get confused, right? They’re like, well, I want to pay off my debt. Well, paying off your debt is not aligned with financial freedom. In many respects, debt is the best part of this whole thing. Like I said earlier, inflation is going to be going up because we have all this free created money, especially in the last few months. What the government is going to do is just inflate the money supply to make their deaths. smaller portion. So what you want to be doing is grabbing as much hard assets that have good debt associated with them. So you can pay it off with future money, whether that is buying a rental property or going into a large syndicated deal at 2.9%. I mean, it’s a no brainer. Don’t take your money. Well, I’m not saying don’t. But if you want to be smart about it, and you want to do the best strategy, in my opinion, don’t take your money that you have in a HELOC and put it to pay off your debt. Again, the debt is is you want that you want to lock up but you don’t want to go pay it off. Instead, take that keylock money and go buy rental properties or go into leverage deals with that. I talk a lot about this in the tutorial. It’s somewhere on my YouTube channel. But if you guys can google it on there too. And a lot of people just don’t understand it. The thing they want to be debt free, which is you know, I guess that’s that’s One thing I think they’re getting it confused with consumer debt, right? Like, you definitely don’t want to be leveraged on your credit cards at 20%. But when you have to read a 5% interest rate on assets that produce income that’s you want to load up on that stuff as much as you can get. I wrote an article on Forbes on this, you can check out at simple passive cash flow calm slash debt. So it’s a very big paradigm shift. Of course, if you haven’t checked out we created a new spin off group for new investors looking to pick up their first few rental properties or remote rentals. turnkeys. We are starting that on August 15. Two if you want to join, go to simple passive cash flow.com slash incubator. If you’ve got any friends who’ve been bugging you, about how you’ve been investing in real estate, and tired of bugging you, and you just want them to work under our umbrella with the people that we’ve worked with in the past, they don’t have to go around and blind date a whole bunch of providers. brokers, this is the group for you. But if you’re more of an accredited investor looking to get associated with our, our close knit inner circle, check out the simple passive cash flow, passive investor etc and master mastermind simple passive cash flow calm slash journey to learn more about that we’re transitioning over into my personal section of the monthly report. And for those of you guys have are on watching, if you guys have any questions, feel free to type it into the question answer box and we’ll kind of get to at the end. But these are the six tenants that I kind of rolled through every month. First one is growth. I’ll be honest, I hadn’t really done much part of this month was me stuck at home because I had gone to Birmingham, Cleveland and Dallas. And boy still has this two week quarantine rule where they actually did text me to see if I was at home. So I got this basketball that’s connected I don’t know how it’s done as some kind of electrode in it, but it’s connected to this app. So I’m trying to get better at dribbling the basketball. sounds silly, but trying to play out these things. It’s fun to me trying to get some hobbies. How did I get a little bit of contribution to my life? Well, if you missed it last Saturday, I spent six and a half hours and I drank two coffees to educate a lot of investors who are looking to pick up their first few rental properties. Who is a no BS, no frills, all education, training. If you guys would like to get access that shoot me an email, I might package it up into the E course. Or actually we’ll go into the E course for remote investors. So if you guys want access to that, go to simple passive cash flow.com slash incubator two, you can just buy the course right there, or we’ll probably do as a package up these videos hopefully in a smaller product. Yeah, probably sell it for like 20 bucks or 50 bucks just enough for you guys to not just think it’s worth nothing and it’s free. Significant. So we closed 179 unit deal. Yeah, the second one this year not too many deals this year with all that’s going to be going on but we got 3.1% Freddie Mac non recourse debt. Amazing, amazing 3.1% this deal was more of a yield deal. Not too much value add, but in a great area of Irving, Texas. I mean you can’t go wrong with this thing. I mean, you know, again, it’s a yield play. So your plays are not a heavy value add. It’s just, it’s cash flying day one. And you know, it’s 97% occupied. Yet To me, this is kind of like blue chip stock in your stock portfolio, except I have no stock. So for me with my 100% alternative asset portfolio, this is some of my very conservative side of my portfolio. How did I create it? uncertainty in my life. Well, I don’t know, if we’re going to be doing a 2021 we mastermind in Hawaii. I still think we’re going to do it. But you know, with the whole second wave going on and everything, you know, we don’t know I’ll probably decide here in the next couple months. But uh, yeah, I mean, check out the video we did on the last year’s one simple passive cash flow calm slash, who we three if you guys have any feedback, you guys really want to have it? Let me know. Maybe we might even do like a smaller one. Maybe that’s a safer way of doing things. Just keep it small hundred I have searched at my life will workforce housing works. It works. I gotta admit, through April and May I was a little worried that people weren’t going to pay the rent, but Dang it, they paid they paid and now I’m even more like confident in this overall strategy of investing in workforce housing. What is workforce housing? Well, that’s Most of America, right? Dang it like doesn’t that makes total sense to invest in something where the majority of people in America need that product. So yeah, workforce housing, we’re pretty confident that and i’m actually going after more higher risk projects these days, because I’m pretty confident in the backbone of my portfolio. Again, I’ve talked a lot about this, you know, these days, you can either be in a more cash flow play and maybe see an equity multiple, two times your money in five to six years with cash flow with, you know, cash flow is great, but you know, it’s, it’s kind of slower, right? Cash Flow is cool, especially when you have a day job to leave your day job. But, you know, legacy wealth is created with no more risks for exponentially more return. Right? So that’s the, that’s where you take nothing, a raw piece of land, and you put a building on it, and you rent it up. These development plays and you know, this is where I’m learning that these accredited families. This is where they live. This is this is where they create that legacy wealth. They don’t need the cash flow, they could care less if they invest 50 or $100,000. And they got a couple grand every quarter. They don’t care, don’t care. In fact, it’s kind of a burden for them. They’re coming in wondering like, what’s this? So my direct deposit statement? And I think the reason why they like development deals is because it’s a shorter time horizon to they get sort of instant feedback, good or bad. Right, and then they can move the money into the next project very quickly. But yeah, I mean, as investors, you have choices, and you have to set a line with your investment philosophy, but me personally, I’ll probably still do a majority of my stuff in cash flowing plays workforce housing again, but trying to go after some nice home runs here and there. How do I get a little love and connection in my life? Well, last weekend we celebrated here in Hawaii. We did a little get together with a few of us here in Hawaii and celebrated the closing of the last deal. At some wine has Some food it’s nice to get around real people not that hang out with my wife every night wasn’t getting boring, but it’s nice to get some different players in the mix. People is all what makes a difference. And relationships is the currency of the rich, I would argue have the right people write some new podcasts and articles that I released this month we talked with mythic markets.com who allows you to invest in geek stuff like Spider Man comics magic cards. I’m waiting for Thor’s hammer to come out. Actually, I mean, like look like a lot of people say that when I bring out something on the podcast. I’m immediately vouching for them. I am not doing that. Just because I bring someone on the process does not mean i think that they are safe to work with. HP is different, right? HMP is a sponsor of the podcast and they brought out number two right here. The person reo service. I definitely believe in hp. You know, personally knowing the owner George Newbery there, if you guys want to, you haven’t got a copy of his book, let me know. I think you guys can get that. It’s simple passive cash flow, calm slash hp. And you can also learn about pre reo there at simple passive cash flow.com slash pre reo, but p o is kind of a cool thing I’ve been looking at there every month or so see what’s around my local area here in Hawaii that I can pick up pre reo, REO properties, if you don’t know our properties that someone has run in tough times and are in foreclosure. The pre reo are the properties that are owned on the bank that are typically in judicial states where it’s harder to collect in general. So the bank is just like Screw it, we’ll just sell it pre reo. So by going through the service, you’re able to jump over a lot of mom and pop investors and they have like a nice little feel There. So check it out, you know might not be for you, you might be a passive that actually you might be a passive investor. But this might be appealing because you wouldn’t buy something that you don’t live near that you can’t check that you don’t have a competitive advantage. So I would say it’s a great way to find a primary residence, political prop bets. predicted.org did a little review on that. This is a cool website. It’s kind of for fun, you can bet on the election. And I think you can only bet up to 1000 bucks. So it’s kind of play money. But I use this as a means to figure out who’s actually winning in the polls. Because the people it’s a very small sample size, but the people who are voting on you know, who they think is going to win is actually putting up money so it’s not like, you know, most office bets or opinions where Yeah, people have an opinion, but very few people put their money behind that. Check out the website, not saying that it’s safe or anything like that, but it’s a cool place to To see, you know, different election how things are tracking in one place. Number four here investing in fine wine so very much like the mythic markets.com company these guys invest in real lots of wine. Actually, this one’s more appealing to me. I think, to me, that’s kind of cool. Owning a winery or investing in fine wine. And it seems more cool to me. You think? I mean, whatever floats your boat, right? So people, it’s like sports cards that has been kind of on the uptick this past year, especially with the land stance and everybody’s stuck at home. I also wrote a article on due diligence again, you can get that at simple passive cash flow, calm due diligence, which is just a sample what’s in the passive investor accelerator. And we’re also putting together a lp guide syndication course. So we’ve collected all the notes over the past couple years, I’ve taught people and putting it all into Nice ecourse so if you’ve checked out the new remote investor ecourse that we launched last month, this is going to be in the very similar format. We also had a live coaching call with another credit investor lawyer. So if you’re a lawyer or you’re another credit investor, check that out. People like those. If you go to the YouTube channel, there’s a section there with all the past live webinars, a live coaching calls, that you can vicariously live through other investors in Hawaii, and self directed IRAs to invest your retirement funds. We kind of talked about, you know, when is it not good to use an IRA or a QR p? I’m not a big fan of retirement funds. I don’t have any. I work with clients that we kind of strategically withdraw to retirement accounts so that we’re keep one eye on our AGI level. So we don’t pay too much taxes because when you take out the money out of your retirement accounts, you it comes up as a active income generating They’re some of the issues I’ve been running into is not enough reading time. I’d like to read more books. Some cool doodads I’ve been buying I bought this like stream deck is a total geek item. But if you’re at your computer for more than six hours a day, you might want to think about getting this. So what it is you can it’s it goes next to your keyboard and it’s a hotkey pad. So you can program each of these buttons and each of these buttons is not just like I thought it was like a little sticker you put on there but it’s like an LED screen and each of these buttons you can program it based on what program you’re and and it’s pretty amazing. It’s pretty cool. Like I mean mines is super basic. I just have cut paste copy, reply to email, archive email, TV, email, close the window, trash this thing go to this website, play my music, undo but you know, time is money and this is really cool. This this got created by a bunch of like gamers if you guys haven’t heard of Twitch and the eSports revolution This is a byproduct of that. Some of the lessons learned here I be very careful not to offend anybody here. I don’t mean to but you know, with all this pandemic going on you were mastered, do not do when the country right, it’s very left versus right. And one thing one truth I understand is if you’re on the left, you can’t see the right if you’re on the right you can’t see the left. It’s It’s It’s amazing as I travel throughout the country as I go and travel and in Huntsville, and Cleveland, how different people are in places like California or the East Coast or Hawaii. It’s It’s amazing. People think that America is one united country, we are a country of 50 individual states, some states are very divided amongst themselves. And you know, I think we all see a little bit of like schools opening what do you do, right, I think I think this is the time where we all need to have a little bit more compassion towards everybody. I mean, nobody’s gone through a pandemic. I mean, we’re all trying our best. And you know, there’s no reason to get all emotional on each other. You know, it is what it is trying to be safe and don’t take things too personal. Join our book club, simple passive cash flow calm slash lien hack we are reading what would the Rockefellers do, which is an application on how to use infinite banking? If you haven’t heard of infinite banking go to simple passive cash flow, calm slash banking, but if anybody doesn’t have any questions into the channel, you guys can type it in. So someone asked here on the YouTube How do you invest in these apartments? Well, it’s just like buying a single family home rental, but add another couple zeros on to it. But a lot of these apartments are very big right inaccessible, most investors so popular method for purchasing apartments is a syndication model. So the analogy I like to use is an airplane. So in the airplane, you have a cockpit of general partners to operate or sponsors were these are the guys who find the apartment, they find the lending, they put the lending in their name, they operate the deal, they make distributions, they kind of do everything. And so passive investors are able to board the airplane, invest in the deal as a passive investor, LP investor, and typically just invest a small sum of money of anywhere from $25,000 to $100,000. As the minimum investment and buy in as a fractional share of this airplane or apartment building, of course, when that happens, securities laws are triggered. So it’s important to have a good lawyer to create documents so that passive investors are protected and general partners are protected to know as soon as you bring on a passive investor, you’ve triggered these securities laws, because why is the is the federal government involved in sec well You’re essentially taking an asset and you’re breaking it up into fractional shares at that point. It’s not like, you know, you have a property and then you know, you partner with a buddy. And you know, both of you guys have collateral. In this case, you’re handing out fractional percentages ownership of an LLC that owns a building. So in the other case, where it might be okay, because you have title to the property, when you do a syndication, passive investors, they don’t have title to the property. They own a fractional share of business, again, an LLC, in a lot of cases. So it triggers securities laws. So passive investors are able to invest, you know, typically around $50,000 and invest in a couple few dozen, you know, firstly stuff a few, but then they grow it to a few dozen properties and assets. And this is something that I learned a while back after I had 11 rental properties, you know, I realized that rental properties just aren’t scalable. You’re going to have a lot evictions, you’re gonna have a lot of things that happen, even if you have property management to deal with all your issues. So that this is where I joined different mastermind groups got around higher level and accredited investors. And I realized that this is how the wealthy invest as private equity investors. So they’re close. They’re, they’re aligned with the operator. They’re not just, you know, investing in retail investments. I think that’s the main thing, getting away from all these like mutual funds and other options that have huge, huge hidden fees involved and getting more closer and cutting out the middleman. And that’s what this is all about. But there’s no more questions. We’ll see you guys next month. And you guys can access all these paths, monthly updates at simple passive cash flow calm slash investor letter, and we’ll see you guys next time. Bye.
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 and 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 advisor before relying on any information contained here. Information is not guaranteed 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
Turnkey Remote Rentals: What to look for?
Newer investor asks, you know, what are some things that I look at when I look at, you know, help people get some turnkey rentals or getting started, I wrote a few here to new roof and new h vac. We also like to try and get this sewer inspection line done. And then of course, a lot of safety issues that are kind of easy to fight on those inspection reports. In the E course, we have some videos where I walk through inspection reports and kind of notate what we’re going to ask for we shoot that email over asking for a little bit of a seller concession. And it’s important to ask like reasonable things such as safety, right, like electric outlets, not polarized or broken window or something like that. But you lose a lot of reputation when you start asking for really stupid things like oh, this step is not exactly level with the other stuff and it’s out in the back porch. I don’t really have any opinion. On basements, sometimes it can be just have to check if the square footage is counting that basement or if it’s considered another bedroom because you can’t just go off of the spec sheet of how many bedrooms it is. And with a lot of these turnkey commodities, the number of bedrooms is a big factor. For example in Birmingham you know if you have a three bedroom, two bath you’re probably going to be looking at anywhere from 800 to 1200. But if you get that fourth bedroom in there, now you can bump that up another couple hundred bucks either way and a lot of that is especially due to like if you have section eight, those coupons are are usually you know, lined up where they can get their coupon goes up and down. How much the government covers based on how many bedrooms is a big determining factor and not really the square footage and you know, with the bathrooms I would say it’s an extra perk but you know, having us two and a half three bathrooms doesn’t really impact the rent prices being brought in. I would say if you’re trying to sell the property You probably don’t want to have a one bathroom in there like a three bedroom, one bath. This is just somebody who wants to live there as a primary residence and really take exception to that you can’t have a family really with one bathroom. You know as you get more bathrooms is more and more things to break, more toilets get clogged more more things for you to fix, prefer all electric, no gas, something. Another thing to think about is section eight tenants. They don’t like a separate gas bill, they’d rather just pay one bill with electric and a lot of that has to do with section eight tenants don’t have the best credit and a lot of these service providers will need them to run their credit to get it in some lower end properties like C and D class apartments. It can be an added service to have the owner Austin in that example, to pay the utility bill on their behalf and sub charge them a little bit more than what it normally is. Just So that we’re covered because the tenants they can’t get a electric account in their name or they might have to put down a bigger down payment, which they don’t have. So it’s all about figuring out who your customers which could be a Class D or C tenant in that case and figuring out what they want.
Accredited Investor Coaching call w/ Dr Kim
0:00
If you get a good tenant, they’ll stay in there for a long time. And that’s really very magical moment when that happens. This
0:08
is a story about a dude named Lane he moved to the mainland and bought one place to stay. And then one day he went try to rent them out. And then he became one real investor Tell me
0:22
a simple passive cash flow listeners. Today we are going to be doing a live coaching call with a physician who is fits in the category of a lower net worth but a high salary. Definitely be on the road to being an accredited investor here in the next few years. Introducing JP Kim who took me up on the offer to record their coaching call, which is still open for folks and if you guys haven’t connected with me, please sign up for the investor club at simple passive cash flow comm slash club and I reach out this cam. Thanks for doing this. I want you to give folks a little bit of quick background on You know, or you have kind of been doing the last 20 years of your life
1:03
for the last 20 years. Okay.
1:06
Well, I, I was a non traditional medical students so I decided to go into medicine enter medical school in my late 20s. And then I graduate from med school after five years and then I did my residency training. I got out of training about five years ago and then I’ve been working as a locum tenens traveling physician, seeing geriatric patients in three states, California, Arizona and Indiana. So I I started my job as a 1099, you know, independent contractor physician, so I’m not I’m not in a hospital. I’m not a hospital employee or clinic employee. I’m considered an independent contractor person. So I I only get paid when I’m working. You know, there’s no like paid time off or anything like that. The company That I work for, luckily pays for my travel likes, if I had to move to a different state, the airfare, the hotel accommodations, and then the rental car expenses are all paid for. So as a single person, it’s been a really exciting journey past five years. The money just keep stacking up,
2:21
right? I mean, no
2:22
expenses. I don’t really have any expenses. So like, I don’t have to pay for my own primary residence mortgage or rent, because it’s all you know, being paid for by my company. Yeah, I know, I don’t have a car payment. I used to have a car that I sold because I don’t use a mic my own car anymore. I always get to use a rental car to drive around. So it’s a very unique situation. But then, in about four years ago, I started noticing that, you know, I’m only making money while I’m working. And even though I like to travel and stuff like what if something happened and I can’t work anymore than My income will stop coming in. So I had read Robert Kiyosaki his book, Rich Dad, Poor Dad and the cashflow quadrant. And it really made sense to me that like I should start, you know, buying income producing assets that bring in positive passive income. So even when I’m not working, I still have enough income to pay for all my expenses so that I can help maintain a good quality of life. So I started taking, like the rich dad education seminar, I started attending some of these conferences, and I hired some mentors, who were really successful in real estate investing and learned that buying and holding cash flowing income properties as a way to is the way to get started. I was initially in California when I was working in 2017. That’s when I was going through all the real estate investment education. And I tried to buy a house there, but it was it was extremely Very expensive and competitive to to get a good deal. So after trying for several months, I kind of gave up there but then I started my fellowship at University of Arizona in Tucson. So I would go to Tucson and I noticed that in Tucson It was so much more affordable to buy houses there in comparison to California. So I thought, I thought okay, maybe I’ll buy my first single family home in Tucson, so I just kind of found a property that was going to cash flow. And I got it under contract in in late 2017. And then I closed on it using a conventional loan with 20%, down in early, early 2018. And then I was able to find a property manager who could manage it for me while I’m traveling. And they found a tenant right away and then so the tenant moved in and then they were paying down the mortgage. So it’s been pretty good and then right after that, I decided that I had since I didn’t have a primary residence, I learned that some people do house hacking. So they can use an FHA loan. So a very low downpayment loan to purchase up to a four Plex. So you can you can purchase your primary residence, that can also be a rental property at the same time. So the rent, you can live in one unit and then rent out the other three units and have that rental income from the other three units cover for all your mortgage, your expenses. So that’s what I pursued for the next few months after I closed on my first property in 2018. And this is all under the guidance you had paid like quite a bit of money right for like, quote this coaching, right? Yeah, yeah. So I spent the entire like 2017 going to all these symposiums How much did
5:49
you spend like for all this stuff? And why?
5:53
That $26,000 plus traveling fee, I would say about like, 30 grand on that.
6:01
Yeah,
6:02
I mean, I mean, I’m actually calling on my mission just kind of destroy these type of companies out there taking this money. I mean, I think you’re fine. Like you you had money to invest. So it kind of made sense. I mean, it’s a starting point, right? What a problem like a lot of these guys, they cater towards people without any money. And you’ve kind of reached the, the limits with them kind of where your net worth, or earning potential is, like a lot of these guys, like the best stuff they have for high paid working professionals is the house hacking thing or quadplex, which I think as you’re seeing as you kind of go through our group, I mean, it’s it’s the tip of the iceberg, what the wealthy people are doing, and they just don’t have any insight into that type of world.
6:44
Right, right. But because I had never bought a house before and I never owned any property before. I think it was a good learning experience, just to know, just to get to know how your qualifying for loan works and how to how to put it off.
6:56
right and i think you know, like that. Just kind of Your profile here we have a lot of folks that are kind of in your category where lower net worth kind of starting out in wealth building, again, net worth of a quarter million dollars. And but very high earning potential. Your current active income is about $20,000 a month. So do the math that’s around, you know, quarter million dollars. I mean, most, most doctors are making over, you know, specialists, especially they’re making over three to 500,000 at least a year. So a lot of this is, you know, I think you found this at the right time, and we’ll get you to where you need. We’ll take you from 25 miles an hour up to 70 pretty quickly here.
7:46
Well, yeah, that’s great. That’s Wait,
7:48
that’s the plan.
7:51
So um, here’s the big question. I asked a lot of people, so we have your net worth here. And then your active income is about Not quarter million a year. But you know, with your expenses right now how much you actually stick in the bank every year? How much of it Do you not spend on like food or your lack of car, you said,
8:12
save a lot of money because I don’t really, I don’t have kids yet I’m not married. And I don’t have to spend money on utilities or car payment, like car registration fees or insurance. So I would say like, maybe like 70 of my 80% of my monthly income, I’m saving in the bank, and I’m using it towards either downpayment for for investing or I’m using it for going to these networking events, conferences for real estate investing. I’m also in the process of learning how to build an online health business as well to build another stream of passive income. So for that, I mean, I’m, I’m pursuing like a mastermind group as well, mastermind education So I basically I spend most of my money on on those things, educational activities and self development, growth books, courses,
9:09
just to get it sounds like it’s, you know, 80% of a quarter million. I mean, you’re able to put away 150, at least a year, which is phenomenal. I mean, I, let’s say most people in our investor club, some of the beginners are at 30,000 a year, some of the ones are a little bit better than most are about 50 a year. But I mean, in theory, you’re able to buy 123 probably five turnkey rentals a year, right, which is phenomenal. Not saying I mean, you wouldn’t want anything to do with rental properties. I mean, it’s just not scalable for your, your, your earning power at this point. But I mean, just it’s just the kind of thing.
9:46
Yeah, so owning the single or
9:52
have a good property management company employees. And I had I had to go through a lot of trials and errors during that because because good ones, they got burnt out easily and they quit after a few, you know, a few months, and then I would get a new property manager on that I never had a rapport with and then they would do something that would just that wouldn’t be in alignment with my my investment goals. And then I’ve had a lot of turnover from with my, with every single one of my properties. And that’s been costing me a lot of money. So I’m noticing it wasn’t, I mean, it’s so much headaches that I don’t really feel like I want to pursue buying more or more of these properties anymore. by attending some of the events where there’s more seasoned real estate investors, I learned that people with high net worth and you know, billionaires, they tend to invest in syndications. They network with people who find a really good deals. So it’s like a totally passive investment so you don’t have to be so involved in managing your property manager so that you You can just do invest your money sign that sign the documents and then you just get your your cash flow and then your your appreciation and then all the tax benefits coming in but without having to deal with those headaches. So right. I just learned about that in October 2019 by going to Hawaii and that’s where I met you lane. Right. And then I learned about your syndication deal. So, in February 2020 right before the covid pandemic hit us I I invested my you know, in my first syndication deal, which has been good so far, right?
11:42
Yeah, yeah, checks are coming out here soon.
11:46
We after we read after we closed on the deal, so my goal for the rest of the year is to network with other syndicators and then just learn about these syndication projects and I’m hoping that I can sell these the single family home And for four Plex. Luckily, the Tucson market has been pretty hot. And the the property values have gone up. And I’ve met with the, with a realtor or listing listing agent who who did, who kind of did the comparative marketing market analysis recently. And she says that I will be able to sell those properties at a significant profit. So my goal is to sell those in the next within the next month or so and then use the game to to participate in more syndication deals by the end of this year or early next year.
12:40
Well, and, and a lot of, you know, I would say you’re, you’ve got a lot more time on your hands than the average folk out there. So you’re able to kind of go around and network a lot more travel around the conferences, which is exactly what you need to be doing as a passive investor since your network is your net worth. But for those of you guys listening, you know, that’s why We have the passive investor accelerate mastermind, it’s our online group of it’s kind of a pay to pay program. But you know, it’s the way of building relationships with those, you know, high net worth mostly accredited investors to get deal flow that way and build relationships. jp, let’s you had some, you know, a few questions you had, I think the first one was like about student loans, once you kind of go over, like what you what you are doing in that category for you up to now and then we can kind of talk through the path for it there.
13:30
Yeah, so when I was grad when I graduated from medical school back in 2011, I had about a little bit over $200,000 in student loans. You know, during residency, I was only paying off a little bit like minimum amount and it was only paying off a little bit of interest, so kept on going and growing and growing. So once I, you know, finished, got finished with residency training and started working as a local physicians, you know, making like six figure income was paying off my loans back then the loan payments, the monthly payments were over $3,000 a month, I thought it was kind of high. So by then I had established better credit, my credit score went up. So I checked in with some, like student loan private student loan companies, and they were able to refinance me at a lower interest rates. So it was able, I was able to lower my monthly payments down to 1200 and $48 a month.
14:32
What What did the rate go from? And then now it’s what 5.8 All right. Well, yeah, initially,
14:38
my my student loan rates were like 8.75% when I came out of med school, so now I refinance, to like 5.875%
14:52
were those first loans, the higher rate ones were they like government subsidized or like kind of like a Stafford Loan or anything like that. Or would they just privatize government subsidized loans? Yes.
15:04
Okay. So I think I think that’s, there’s a lot of US companies like so fi that will do it. And we have some of the resources on my website that will do this for folks with a lot of student loans. I’m a little skeptical, though. I mean, I think I mean, everything from the high level looks fine, like the interest rate lowers, and obviously, that lowers the monthly payments. But what I’m concerned with, and I mean, what you’ve done already is done, it’s over. But if you guys are listening to this in the future, I think something to look into, is where you’re going from like a government subsidized loan to a privatized loan. I don’t know. I mean, even if it’s a lower interest rate, you may or may not be worth it. But just something to think about if you guys are doing this in the future, if you guys are listening to this, but did you did you do any kind of research on that? I mean, I mean, you just kind of looked at the interest rate. I mean, you’re gonna pay it off. Anyway, I guess. It’s just more about payment,
16:01
right? So I was debating if I should focus my efforts on, on paying off the student loan first before jumping into real estate investment. But then when I hired the real estate mentor, she mentioned that dumping all that money into trying to pay off the student loan first is actually it’s a sunken cost. And because if you if you find good real estate investments, and you can bring these income producing assets that will bring in more cash flow than the monthly payment, or student loan payment, so even if I were to not work, the income producing assets will pay for my student pay down my student loans, and then when the student loans are all paid off, I’ll still have those assets. Right.
16:48
Right. Exactly. And, you know, kind of, for me to explain it in a different way. A lot of you know, just interest rate arbitrage from a certain extent So, I mean, I have an article at simple passive cash flow calm slash returns, where I kind of just break down the returns that you get from just a typical turnkey rental and you’re looking at 20 plus percent. I mean, 20% is greater than 6% here, so it’s a no brainer, right? But, you know, most people are able to make more than eight to 10% in their, you know, crappy stock investments, right? So you can see why for most people, it would make sense to pay off your your student loans or pay down your mortgage first, but I mean, maybe since I mean, you’ve come to this, this realization, what was for you that kind of tipped the scale in your head that kind of get it? If you think kind of remind remember, sick kind of lot of people are just on the fence, right?
17:48
Well, I mean, there’s always an opportunity cost of doing something so if you spend all your effort on paying off your student loans, your that’s going to delay being able to buy income producing assets. If you Like, like my mentor said, if I if I’m able to buy a income producing asset that not only has good cash flow, but also appreciation, and then the tax benefits, then that really Trumps you know, the interest rate of a student loan. So she was telling me just set you know, refinance my student loans to the lower monthly payment. So you can always pay more if you wanted to pay sooner, but if you but if you keep your student loans at a, you know, higher monthly payment, what if something happens, you lose your job, you get sick, you get into a car accident, then you can’t make your loan payments, and you’re more likely to default on it right? It looks better on your credit. So she was telling me it’s easier if you just kind of refinance it and minimize your monthly payments. And then if you feel like if you’re making good money at certain points in your life through your cash flowing assets, then you can choose to make extra payments to pay down your principal and paid off sooner. But like it just gives you more options to refinance it and minimize your payment obligations as well.
19:00
Well, so good doctor, well said.
19:04
And this kind of carries over also to the whole argument of you do like a 30 year mortgage or a 15 year mortgage mortgage. Right? Like, I mean, like you said, in our camp, we do the longest that we can. And if we choose to, we can pay it off, but debt elimination and is not really correlated with financial freedom. But yeah, I agree. Yeah, delay, you’re paying off your your student loans as long as you can, you know, a lot of people are doing they do this like 10 year, and they work in like a low income area, and they forgive other student loans. Have you kind of looked into that option?
19:40
I looked into that option, but I also heard that if even if you get your loans forgiven, you get taxed on that amount. So you’re gonna have to pay tax during during that time when you get forgiven and it’s really hard to qualify for that too. Yeah, I mean, I’ve heard people you know, spending all that time doing public service and then after After the term, they realized they didn’t qualifier so
20:06
been investing with hp since 2017. To buy distressed mortgages and discounts to offer struggling families sustainable solutions to stay in their homes or homes were vacant. HP recognized that lenders frequently struggled as they tried to limit their losses. That’s why owner George Dewberry founded pre aureo, 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 to finally pick up my home to live in. Even though I think homes, the buyers are the best You can learn more about pre Rio by going to simple passive cash flow calm slash v. Rio.
21:09
Yeah, I,
21:11
I’ve heard of this, this these companies that they’ll put your stuff in like an LLC, and then they create a nonprofit. And then what they’re doing is they’re gonna show it give you a kinetic excuse to write it off for a nonprofit for 10 years, which I think is kind of shady. Or you can create your own nonprofit and kind of do it but that’s like, you know, that’s more more technical, I guess, then what we’re looking to do. But, yeah, I mean, any other questions on the student loan thing or what’s kind of the next issue at hand that you want to tackle?
21:46
So I have different arguments about you know, so my rental properties right now I’m going through some turnovers because one of my tenant died. She was an old lady. She was really good paying tenant and then now that she died unexpectedly. In May, we’re having to find a new tenant we’re dealing with, like, you know, turning over the property. We are, of course, increasing the rents, but it’s going to take, I don’t know, maybe it’s going to take maybe a few days or weeks to return it over. There might be more than maintenance issues. I’m kind of waiting for that call from a company manager about what’s going to happen about maintenance issues. So is it really worth keeping those properties? So I’m right now I’m deciding if I want to just sell them,
22:28
when which which property? Is this or what’s the what’s the monthly rents on this one?
22:34
Or if some people were telling me I should keep those rental properties because I have direct control over it? Because, you know, sometimes if you get involved in syndication deals, sure. It’s passive, but you might lose control over your money.
22:49
Which which rental property are we talking about here? Just the 1200 a month one?
22:53
Well, I was thinking about selling both
22:57
and what are the rents now
23:00
single family home brings in 11 $95 per month of rent, and then the mortgages 860. And then the four Plex the rents are like 30 $100 a month and the mortgage is 1600 and $9.
23:16
So, I mean, just to kind of follow my logic here, like with your net worth and your kind of your, your high value in time as opposed to money. If you had, like $60,000 property pieces of junk, I would say yeah, unload it, like yesterday, near single family home, it’s probably it’s a decent property, right? It’s more of a B class property and then your duplex and that’s probably a lower class asset. But you know, I mean, it’s there’s some decent scale on that thing. I would say you know, right now you’re you’re kind of one foot in the syndication private placement world in the other foot still in direct ownership, right? You a lot of investors in my group They’re kind of been very the same thing. And at some point, and I think we could both agree maybe in the next three, five, certainly before you know, you retire, you’re going to be all in on the private placements and syndications. But, look, I mean, you got to just when you’re comfortable, you know, you sell these assets. But I have no problem. You know, you kind of holding on to it a little bit longer. You know, if you have enough time, right? If your life gets busier, then yeah, you unload them, but I wouldn’t be buying more properties. You know, I mean, like direct ownership. And yeah, if somebody had the same situation, but they had like, lower crop class properties, more headaches. Yeah, I would try to unload them as soon as possible. That kind of makes sense.
24:44
Yeah, so I’m looking into maybe selling the four Plex because the type of tenants that I’ve been attracting were like lower income people and then we had to go I mean, we had to deal with evictions.
24:59
Which is Not so cool.
25:01
Yeah. And I get the feeling like just your personality, you kind of, I mean, you’re not too bad. But you know, you stress out about this stuff a little bit, right? Like you’re kind of a hands on person in a way.
25:12
No, I like to have a little bit of control over my properties. But at the same time, I didn’t like I really did not enjoy it hassle dealing with the eviction, like my property manager. I mean, she was a new new person that I’d never met before. So I had to kind of wait and see to see if we had an a rapport. Sometimes we had some conflicts, and that that caused a lot of stress. So I’m kind of debating if it’s really worth having to deal with that situation anymore. So luckily, I will be making a lot of profit if I if I were to choose to sell this in the next month or so. Because the Tucson market, they weren’t really affected too much by the pandemic. I mean, they’re their business are still operating and people are still working. So The tenants had been paying rent, you know, a lot of people are still paying rent. And they say the rental market is pretty hot these days. So they’re able to find tenants right away good paying tenants. So, if the listing agent turns out that she’s able to market the property really well, that I will be able to sell it at a pretty good price, and then move that money over to doing more syndications in the future, you know,
26:28
yeah, so what I mean, I made this decision that I was going to I was in one foot in syndication one foot and my 11 single family home rentals back in 2015 16. And then, in 2016, I kind of made that defining point. You know, I think your podcast ad I think was that was that point where I just where I kind of made that decision and for you, this could be three to six months from now, right? When you finally make the decision, it could be a year or two but I took it took me all of 2017 the cell actually hurts yet 2018 to sell seven properties 2019 to sell two and 2020 to sell the remaining two. So you don’t really need to sell this right away. But I would say, maybe the best strategy for now I don’t, I don’t, you know, you don’t need to do something out of haste, but maybe put the duplex on the market and just let it sit there for whatever it takes six months to two years and get your price that you want. You know, you can be that unmotivated seller and maybe do that the same thing for that single family home. I mean, with a single family home, what I would do is if the tenant if you have a good paying tenant, those guys are gold. Maybe you haven’t realized that yet. Because people get it they internally understand that after about a few years of rental property landlording if you get a good tenant, they’ll stay in there for a long time. And that’s it. Really very magical moment when that happens. But if you might have that in this property, and if so that’s cool. But as soon as this current tenant moves out, what I would do is I would fix it up to go retail. So you might have to put in 1020 $30,000. But you’re going to sell this to a nice retail buyer who’s an emotional buyer is going to pay, you know, potentially over 200 250,000 for this thing, and that’s your exit strategy. But you know, that Domino could could topple six months from now, three, four years from now, we don’t know. But your destiny is shaped in your decisions, as Tony Robbins says, and yeah, you’ve made the decision, you’re going to move to private placements, but you don’t need to take the action on it now. Just let it let it happen. Okay. But I think that’s the by doing that strategy, you’re able to extract the most amount of dollars out of it. And, look, I mean, there’s still good rental properties or cash flowing for you. I would say the other question I had that maybe it may impact this decision. is how much liquidity Do you have right now? And how much dry powder? Do you have to invest? sure the deal come up, you know, next month in the in the syndication deal. I’m just looking. Yeah, that number kind of at the top of your head, how much liquidity you have to go?
29:18
Well, assuming that I’ll be continuing to work. I mean, luckily, my job. I mean, I didn’t really get impacted so much with the COVID-19. I know a lot of doctors got furloughed and we had to stop working. But for me, I was doing telemedicine, I had consistent income. So I still making money and I’m still going to be working. I’m still working. So I will continue to have $20,000 $20,000 per month.
29:44
Yeah, you’re saving what 80% of that amazing, right? But currently, I’m just I mean, looking at some of these accounts. I’m in it looks like you have not including our self directed Roth which you can take that out context free. Because you’ve already paid the taxes and penalty free on the on the contributions, but, you know, you probably have about 100 grand on liquidity. So that’s enough to go on to two deals at 50 grand. I mean until you burn through that I wouldn’t I see no reason for you to unload these two rentals. I mean, maybe if you had no liquidity then it would be you’d be a little more motivated but yeah, just you know, this is where your your lazy equity is not doing anything. Get that working first before you you get this stuff for me and for the bottom as much money as you’re able to save. You may never run out quiddity
30:43
is a cool place to be.
30:44
Yeah, but it’s assuming that I’m still healthy that I never get coronavirus infection, you know, and I’m still you know, working at my hundred percent capacity. Yeah,
30:52
I mean, you know, you know, you’re you’re kind of amazing because most doctors I come across, they have this false sense of self Security where they think that well they make so much freakin money. Right? And they never think to invest outside of the normal financial planner stocks. I mean, it’s good that you’re investing in this stuff that you’re very unique.
31:13
Right? Well, I made that mistake during residency. So I What, what I did was that I did contribute to my 401 b during residency training. And the residency director had some some GL advisor, like some company who was like a financial manager company for physicians. They came and gave a presentation and they talked about how they can manage the doctors money because the doctors are so busy
31:38
doctors, which is a complete scam. Usually these guys get kickbacks for that. And
31:44
so I actually hired them to manage my money and what happened during those during those several years that I was in residency, they were managing me money, I would maximize my contribution to my Roth IRA, 401 b and everything. And then they were they were invested. That into like mutual funds, but like, the money wasn’t growing, you know, except for me country contributing. And then towards the end, like after like a year after I got out of residency all of a sudden I found out that that company was prosecuted because they were they were caught frauding with the investors money so they totally like went out of business and all of a sudden my my 401 b money and then my Roth IRA account money was left without a manager without a financial manager and I was like, holy crap, what am I supposed to do and I had no knowledge about finances. So that’s when I like started reading, you know, Rich Dad Poor Dad cash flow game, and that’s when I started scrolling through Facebook to look for information about real estate investing. And then when I you know, that’s when I went, Oh, you know, with mutual funds and stocks, you really don’t have any control over your money, right. And then You can’t stick it out until you’re certain age, whereas real estate you can, you can really find the right cash flowing investments and start making money right now start making cash flow right now that’s generating passive income that can cover for my student loan payment. So that’s, that’s the route that I took after I after making that huge mistake. But luckily, during that time, we just kept it at, you know, at the same amount
33:24
when it comes to something. That’s an amazing story.
33:28
I mean, I don’t know where’s your Where’s your headspace on it. I mean, in in hindsight, I was probably the best thing to happen at the time. Right. So you know, you live and learn, right? Yeah, I mean, so many doctors out there that are just totally still believing in the Easter Bunny and the tooth fairy is going to give them money. 401k is going to work right. You know
33:48
what, like a lot of doctors, you know, when they were hit by COVID. They’re realizing
33:54
everyone’s just kind of in a panic mode. Right now. We’re like learning how to invest in generate other You know, multiple students with passive income so a lot of doctors are getting into the investing world right now, like outside of stocks and mutual funds. Realize like our job is no longer secure anymore and like, the way like the hospital ministration cheated a lot of doctors like rolling doctors and cutting, arbitrarily cutting their salaries to like, you know, if I have a lot of private practice doctors, you know, the doctors, orthopedic surgeons or neurosurgeons or, you know, plastic surgeons, they a lot of they make all their money through elective cases and they’re not able to operate their business and they, they still have to pay their employees, you know, you know, fixed salaries, but they don’t have any revenue coming in because the COVID-19 and now they’re all realizing, oh, you know, we’re not no longer high income earners anymore, you know, during this pandemic, so, I think a lot of doctors are scrambling right now to learn about other other passive income generating opportunities.
34:56
Yeah, I mean, we have like a lot of guys in our kuih that work. You know, general dentists and they were all out of the job. And yet they were the ones gone through life in residence or all their training, thinking that everybody’s going to need their teeth clean come hell or high water, but well, boy, were they wrong. But I mean, at the end of the day, it’s
35:17
like, multiple streams of income is what reigns supreme.
35:22
Right? And there’s no guarantee in anything, right? Yeah.
35:29
But um, let’s say you have one last thing here. I wanted to get to you have you you’re in a place in life where you’re not, you know, you’re not accredited yet in terms of network. But you’re going to be there very quickly. And I like how you kind of like you have some bigger goals, right, that are kind of bigger than yourself, where you want to build enough wealth to build a new medical school at your alma mater, maybe talk to us about how that idea came about. And how, how kind of you’re pulling yourself to that goal,
36:01
well like for me, like personal experience, I went to college on a full scholarship. So when I graduated from college, I didn’t have any debt. But when I went to med school, I had to take out like significant amount of student loans like more than $200,000 even though I went to a public school in California, and it just really it’s been, you know, weighing down heavily on my chest like I always feel like I have an elephant sitting on my chest and a lot of doctors come out there to like he said, You know, my my medical school, going going to medical school, I had to take out a lot of student loans and coming out of training, I always felt this heaviness in my chest with that debt, burden of debt, and, and then the lack of financial education. So I really want to contribute to the society by utilizing my knowledge of business investment. To starting a medical school that focus on integrative medicine but also like on business and investing education so that the future doctors can come You know, they’re not only good clinicians but also really savvy business investors too.
37:16
So what’s um, how much money are you going to need for that? Or what’s the what’s the plan timeline like that.
37:24
In the next 10 years I you know, want to build wealth through doing real estate. It’s mostly like passive syndications and also network with other high net worth people and collaborate so it’ll be about at least 100 million dollars to do that project of building a new medical school and also want to make it very tuition free for all the students who get accepted. So I’ll have to have like a scholarship foundation as well which is like a nonprofit. So once I have a you know, a nice vehicle of money making money More money every year, that can be a lasting legacy that, you know, continues on and on even after I die, you know, I can hire people who can carry on the legacy. I mean, if I have a goal like that, that will keep me motivated to keep pushing through all the hardships and challenges in life. Right?
38:18
Right. Right. And you know, kind of very similar, just different, you know, different end goal. I don’t want to make a medical facility but I would rather I’m trying to create like a financial education program that’s more free and affordable for networking professionals. The LLC is called f5 for the worthy you will find that financial independence is not for everyone, but I kind of want to bring it to the working financially responsible for masses. So yeah, I mean, exactly what you’re doing, you know, trying to put my own oxygen mask on for for now, pretty much there. But um, you know, you need capital to make these big dreams happen, right? So, so for me maybe would be a few more years, maybe 510 more years to get myself up to that point where I’m set up personally and then maybe even the next year or two, I start the nonprofit LLC. I know you’re a little familiar with that. But um, yeah, I’ll let you know how it goes. I mean, the that’s really how big things happen and how money can grow tax free. There’s so many benefits of being a nonprofit. And it’s all predicated, of course, you using that money for good, right? Not just personally benefiting from it. But if you have some bigger dream, that nonprofit is the way to go. But of course, um, you know, there’s definitely going to be some learning lessons down the road, but I’ll let you know how it goes.
39:44
Yeah, yeah. I mean, we’re both. I mean, we have
39:49
tax advisors and CPAs who were really
39:54
they specialize in, you know, real estate investing and then setting up these business entities and nonprofit organizations to protect you from having to pay too much income taxes, right? So I think that helps to, you know, legally minimize income taxes and you can generate more profit and then use that money towards investing in more income producing assets and go from there. So, I think we’re all learning,
40:19
right? And if you guys want to, um, I have a little working page on this whole concept of a nonprofit and simple passive cash flow, calm slash legacy has a whole list of things on there that the benefits to having a nonprofit, you know, like, just kind of reading some of them real quick. I just looked it up. Actually, I don’t have it up. But like things like you until you look forward. Like you don’t realize how many like tax benefits nonprofits have and that really helps you grow your money on restricted to kind of do these bigger, bigger things. But um, Miss Kim, anything else you want to talk about or think for now?
40:59
Oh, Do you have any recommended resources to, for me to keep expanding my network? You know, I need to I mean, in order to get to where I want to be quicker and faster, I need to leverage, you know, good people, right good network and people with the knowledge, the skills and then people who have already have good networks.
41:21
Yeah, I mean, like the, like, the best thing that my guidance for that is like, you got to start with the right people, right. So people with money, and going to the local Ria, and, you know, a lot of free internet forums out there, we all know those websites are some of the worst places to go, because they’re just the cheapskates that are trying to get rich get rich quick. I mean, I’ve I’ve been fortunate to do this podcast where I just attracted you know, all these passive and high net worth passive accredited investors and I find the ones that are kind of thinking the same way as us and, you know, they join my passive investor accelerator mastermind, you know, maybe we can move Work out something I mean, as a current investor in the week club, you know, we can talk offline about that. But for other people listening in you know, that’s that’s kind of the option, right? Like you can either fly I mean, I did it for years, right? You go to all these silly like real estate conferences and you just find it’s a big pitch fest with people on the stage. They’re really not that proven. It’s just like there’s all these Internet’s and ships and stations overnight in real estate and you start to realize that you go there and you meet you meet a lot of cool people, you have some cool drinks but like you, you you go home with like a dozen business cards, and never never formulates to anything and you wasted like $1,000 in the conference and other thousand dollars on the hotel and food and all your time you spent you wasted that you only have so many vacation days. I mean, you really have to be selective. I mean, you know, I would I would invite you out to like the hooey mastermind that we have once a year in January. Last Yeah, last time we did was you can check out the video at simple passive cash flow calm slash QE three. Sure the next one will be called hooey for. But yeah, I mean, just I try and cultivate a group of like high quality genuine people, you know, that have, you know, bigger goals outside themselves. So it’s a good community. And, you know, we kind of kind of play watchdog out for each other, but that’d be my suggestion. Yeah, I mean, other than that, you know, you have the other options are going to the country club, or I know some guys they go to like the cigar room, and they kind of rub shoulders with high net worth people. But the problem there is you’re meeting with a lot of second third generation wealth, right? Like you and I are first generation wealth. We’re kind of building this legacy now. We didn’t nothing really got given to us. So it’s a different mindset. They’re the very narrow band of people you’re trying to find. Yeah, thanks for doing that. So we can do do a little check in next year to you probably get a lot different place, I mean, you’ll probably be very well fit the next three years. If you kind of keep hitting on this trajectory,
44:12
we’ll see how it goes like I will I do want to attempt to sell these rental properties that I have so that I have more cash and more liquidity to kind of jump into the good syndication deals in the next few months or so. So keep me in the loop please. Okay, okay.
44:31
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 and 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 here and information is not guaranteed, as in every investment there is risk. The content found here is just my opinion and things change. 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
45:07
interests.
Investing in Fine Wine🍷
Try Wine Spies – Get $10 Credit
https://youtu.be/Nmj5Hc7MJ6I
Unknown Speaker 0:00
Introducing the new remote investor, incubator and ecourse we had the mastermind and we are going to break off from that being mostly an accredited investor group. And I wanted to create something that was helping out the little guy get started guys getting their first properties. And we’re calling this the incubator group. Get More details at simple passive cash flow, comm slash incubator, but basically what we’re doing here is we’re getting a group of professionals looking to build your network with others starting this journey to financial freedom, the ecourse that’s going to accompany this group is going to have eight modules in a closed membership site plus two bonus modules and download kit all geared toward educating the remote investor in this group. We’re going to have biweekly zoom video calls and if you join up, you’re going to get all past turnkey rental recordings. Now these calls are designed to ask whatever questions you have and hear the other questions from other investors in your shoes. And we’re going to run this like a bootcamp style. This is going to be five month program, we’re going to walk you through the best practices for tax and legal as you acquire your first remote rental. We’re even walk you through the due diligence and offer process we’re going to have staff membership coordinators for extra support to get you over the sticking points and to connect you with the right people in the group. Even if you’re shy. One of the biggest reasons for join is access to our ever changing Rolodex of top turnkey companies, brokers, property managers, insurance companies. Hey guys, we’re basically spoon feeding this to you if you’ve been on the fence and it’s time to get your first rental property go to simple passive cash flow calm slash incubator and by the way, for those accredited investors, we are looking for new members go to simple passive cash flow calm slash journey and join the flagship simple passive cash flow mastermind there. After the pandemic to new world out there having a network around you is so much more important. shoot me an email Lane at simple passive cash flow if you’re unsure if the incubator or if the credited mastermind group is for you, but let’s get you connected with other people and don’t go it alone Hey simple passive cash flow listeners. Today we are going to talk about investing in wine now not the securitized crowdfunding way, but the actual owning the actual bottles, the real assets. So today I have Anthony’s on. Thanks for Thanks for joining us, man. Thanks for having me. We’re happy to be on beyond here. So you guys want to Google this at the same time, you guys can Google their company, venal vest, but this is something that I’m personally interested in. I like that kms wine the cab, it’s like 100 bucks.
Unknown Speaker 2:35
That’s a good one a go to you know, it’s a good with a nice barbecue or steak.
Unknown Speaker 2:40
Yeah, but you guys are buying a lot more better ones and your guys system,
Unknown Speaker 2:45
I would say better from an investment potential, you know, tastes objective, but, you know, we’re looking for wines that are going to be bringing, you know, a solid double digit annual return over the next few years.
Unknown Speaker 2:57
Cool. So yeah, let’s get into this. I also have this displayed on the YouTube channel if you guys want to get access to that and I have a big menu of all kinds of things in the world you can invest in I’ll put the section probably at simple passive cash flow calm slash wine, you guys want to check this out in the future and and you can the root folder for this is simple passive cash flow comm slash menu which has all the different things out there that you can invest in now once you kind of take away anthon will kind of go through this deck.
Unknown Speaker 3:27
Yeah. So I’m Anthony, I’m one of the cofounders and CEO Urbino best. And you know, I first learned about investing in wine a few years ago, I sold I sold my first company so I was looking to invest and didn’t want to put it on the stock market. So I had some in real estate and actually stumbled upon a report talking about the historical returns of fine wine which you can see here. You know, 12% annualized returns actually has beaten out the s&p and relatively low volatility too. So that really just piqued my interest. I really dove into this space. And, you know, I had the general concept that wine gets better with age probably more expensive as well. And as I dove into it, I realized that even though it’s getting good returns, it was pretty tough to manage. There’s not too much info out there about which wines to invest in. I didn’t have a massive wine cellar. So handling third party storage, shipping all around the world was pretty cumbersome. And then finally, real liquidity standpoint, there’s a ton of places where you can buy and sell wine today, but how do you know that you’re interacting with someone who’s trusted? How do you know you’re not getting ripped off with a price there’s really no you know, index for wine that is globally recognized. So those are kind of all the problems I saw on the space that I thought could really be improved and that’s why I started this company.
Unknown Speaker 4:46
I bought a four pack of key messes in from eBay that were like some normally that’s what 100 bucks 90 bucks he I bought it for like 70 bucks, but when I got it I it seemed a little fishy to me.
Unknown Speaker 5:01
Tastes wasn’t exactly what I thought it was.
Unknown Speaker 5:03
It was a lot of fake wine out there.
Unknown Speaker 5:06
Yeah, maybe I bought that. But what, you know, as we’re talking earlier, what from your background kind of brought you into this? Because you’re the co founder of this company. What was I mean, everybody’s interested in wine. Right. But what what from your background and kind of gave you the ins to kind of start this?
Unknown Speaker 5:23
Yeah, so I really just grew up with it. I have some extended family in the wine importing industry. I grew up in Beijing. So during the entire craze in the mid mid 2000s, of lot of Chinese people just kind of getting to know about French wine, Bordeaux, burgundy. You know, part of that kind of being a part of a wine importing family. Just really, I think piqued my interest in it. I always thought owning wine was really really cool. And was just was a pretty dormant passion of mine, I’d say until I read that report and kind of just ignited everything again. Cool. Cool. So,
Unknown Speaker 6:00
you know, like you guys are able to get connections from the suppliers that a big kind of leg up as a group from your network.
Unknown Speaker 6:08
Yeah, I think something about, especially like, the high end like top, you know, top couple percent of wine is that it’s very, very hard to get, you know, it’s always in globe, you know, globally, demand is always going to be outstripping the supply. And it’s very hard to get to so access to the big thing, you know, even if you can get it, it’s probably marked up hundred 200%. And you’re not actually getting it for its true value. So, you know, we, with our connections, and, you know, with our team, which has, you know, members who are masters, Somalis, writers, directors at three Michelin starred restaurants, been in the industry, they have great relationships with some of the top wineries in the world, we’re able to get that insider access, that traditionally is not available to the public wanted to kind of look at some of the factors so as I mentioned, with having knowledge to once again Pick out, being able to store the wine properly and make sure that it’s actually aging in the right conditions. And then finding liquidity when you actually want to exit your investment. It’s a big issue. So, you know, we can go on to the next slide, and I can talk about what we do at the end of last.
Unknown Speaker 7:15
So is there was your family kind of, are you like the Asian Gary Vaynerchuk, then or is that similar? What
Unknown Speaker 7:20
was on that level? Yeah, much, much smaller time. But he’s, you know, I was he he really popularized, I think people just becoming more educated about
Unknown Speaker 7:30
wine. So that’s something that’s a question that came up right when I saw this as like, Alright, where’s this wine stored? It’s not like in your house that you get to impress all your buddies.
Unknown Speaker 7:39
Yeah, so we have six storage facilities globally, strategically located in and near to the biggest wine growing region in the world. So we want to know that in California, we got one in the UK, a couple in France, one in Italy, one in Denmark, and we want to make sure that the wind moves the minimal distance as possible. to not disturb it and make sure that we’re able to make sure its condition is as like kind of pristine as possible. So after we buy it for you, we’re able to have a temperature controlled humidity controlled, actually one of our warehouses, the British Royal Family stores, they’re one in the same spot as us. So it’s really just kind of top notch storage facilities. And with the V Nova solution, you don’t need to know anything about wine investing, to get started, the inputs that we take are like, you know, how long are you looking to hold this asset? Or how much are you looking to invest? What’s your risk appetite like, and we’ve developed an algorithm and also portfolio advisors that can then automatically construct a portfolio for you based on those practices, deploy your capital for you, and also actively manage that portfolio of lines on your behalf. And for the, for the end client. It’s a fully digital experience, you know, like you see in that screenshot. It’s a dashboard that you can track your wind price over time. There are updated in real time, and you can see exactly what you own kind of like a, you know, like a robin hood or like a Schwab brokerage account.
Unknown Speaker 9:07
So when they when you buy a bottle you’re not like buying like a half a bottle you got to buy in increments of the bottle than that.
Unknown Speaker 9:14
Yeah, so usually buy it in cases of six or 12 because that’s what the most kind of liquid unit of measurement is, you know, it’s it’s tough to just buy and sell individual bottles because you don’t really know what condition they are but when they’re in the case, they’re kind of packaged the right way. It’s like kind of the industry standard in terms of what people like to buy in and the quantities that they buy it as well.
Unknown Speaker 9:38
So the normally if you’re buying at a case at 12 at 100 bucks per you’re looking at least a grand
Unknown Speaker 9:45
Yeah, so it’s a grand to get started on our platform.
Unknown Speaker 9:48
And then what what are what is kind of the average is like we see like on here they commence I’ve never heard of that 500 bucks a bottle is I mean, what’s the kind of the median and what’s kind of the higher end price per bottle
Unknown Speaker 10:00
I think it really depends on how much you put in. Because, you know, there’s bottles that can range up to thousands, even 10s of thousands. And some of our higher level clients, you know that the bigger portfolio sizes, it opens you up to more of the wine universe available to purchase. But our average consumer goes around like six $7,000 worth of wine, you know, that’s 5060 bottles, you know, things you know, things that are ranging from 100 something bucks to up to 500 bucks a bottle.
Unknown Speaker 10:28
So when you’re starting this company in the early stages, were you like walking around with like, 10 bucks 10 grand bottles of wine? I mean, what was
Unknown Speaker 10:38
in your hands?
Unknown Speaker 10:39
I mean, I mean, some of these bottles are Yeah, they’re 10 grand, they’re 2020 grand, you know, it’s uh, it’s pretty surreal, but just so treated as an investment, right? Like you hold you hold the bar gold, it’s gonna be pretty, pretty pricey as well.
Unknown Speaker 10:53
Yeah. Do you drink your own supply? Or what’s the average
Unknown Speaker 10:57
of my I think that’s also a good thing about having the storage out of sight out of mind is you know you have some friends over and you have a couple bottles have a good time. It’s really easy to just like reach into the back of your cellar and accidentally pop something back could be thousands to thousands of dollars. So what I drink is much cheaper than that. Okay, what do you drink by the way? I mean I love I love serraj so either from like northern road or from like Santa Barbara I think that’s like my my go to bridal. Yeah, that’s that’s kind of what I’ve been drinking now.
Unknown Speaker 11:34
You want to find deals on real estate before they’re on anyone else’s radar. I recently came across pre aureo a new opportunity from one of my mentors George Newbery founder at HP. On this new platform, real estate investors can partner with pre reo on the purchase of delinquent first mortgages secured by vacant properties directly from lenders. This is huge because normally mom and pop investors like us only have access to REO properties. Usually investors are not able to access these pre foreclosed properties and have to wait until they are foreclosed. But with the help of pre reo investors can easily search and bid on pre Oreos offered at a sizable discount. Connect with experts that are familiar with the P reo process and generate financial returns while making positive impact in their communities. Take advantage of this unique opportunity to expand your real estate portfolio. You can learn more about fi reo by going to simple passive cash flow calm slash pre reo. Cool so so kind of getting back into the storage correct me if I’m wrong, but my my assumption is like that’s like a commodity, right? There’s a lot of storage facilities out there. It’s a totally legit operation very secure is just you guys have built a contract to kind of support your whole operation.
Unknown Speaker 12:55
Exactly. Because you know why people have been storing wine for decades, even centuries. The biggest thing Like, you can’t really do it profitably unless you get economies of scale. So by working with a platform like Coronavirus, we’re able to pass along those savings at scale so that it actually becomes profitable for you to store and manage and invest in wine.
Unknown Speaker 13:14
So if you have like a 500 Well, I guess it wouldn’t be a $500 bottle, but it’d be a $5,000 case, how much would it be per year? Or how do they charge you to store that
Unknown Speaker 13:25
in the so cars like an annual annual management fee based on the value, so with our fees on vino bus, we charge consumers 2.85% annually to manage the asset. So that includes everything from sourcing to fraud detection, to storage insurance, as well as the active managers, all that’s kind of included in ours in our fee structure.
Unknown Speaker 13:49
So these are the questions as an investor you guys want to ask, you know first, like the fraud detection, that’s like when you buy a piece of real estate, you have the title, search and you make sure that the title Clean, you know, I’m assuming if you want to talk to that at the end, like what’s the what is the procedure for the wind to get legitimized? Yeah, cuz like,
Unknown Speaker 14:07
like you mentioned, like there’s a lot of fake wine out there, right? There’s a lot of fake everything. First we have our team be able to inspect that a, it’s authentic, it actually came from the winery, not some, not some person who have remodeled it, and that it is in excellent condition, because, you know, wine is a living thing, right? If you leave in the sun, it’s going to be turning into vinegar and be worthless. So we inspect the condition inspect that it’s authentic. And then when we put in our, in our storage, we actually have an insurance policy that then covers it against all sort of future damage breakage, and it’s insured at its full market value. So you know, we don’t have FDIC in the wine industry, but this is like pretty much, you know, the next best thing
Unknown Speaker 14:48
Yeah, and that and that insurance thing, just like you insure real estate or your cars, that’s a big thing for investors. You know, there was an investment going around last year was like buying some kind of citrus fruit. In different country or you know, any kind of crops, right, you want to, you want to be able to know that if there’s a fire Well, no big deal, you know, it’s insurance not for you’re not gonna be a total loss.
Unknown Speaker 15:11
Exactly. Exactly. Awesome. So, you know, wanted to kind of talk about portfolio construction, right? Because if you’re more on the aggressive side, just like stocks, there’s going to be emerging markets, there’s going to be newer wineries that have potential to outperform the index. And if you’re more on the conservative side, there’s more like your equivalent of blue chips, right. So in this case, it’d be usually wines from from France and from Europe. So Bordeaux, Burgundy, champagne, those are definitely like wine growing regions that have been growing wine for centuries. So we have hundreds of years of historical pricing data we can predict with our AI model with a very high degree of confidence what future returns will be and then there are kind of emerging markets you know, whether it be Australia ci, lay some newer parts of California in Italy or the road and So that’s kind of how we look at portfolio construction making sure that people stay within their risk ranges and that we can give them the right sort of expected returns when you’re looking at this holistically as an alternative asset within their entire portfolio.
Unknown Speaker 16:15
So we had another similar investment on the podcasts of art, I think the the URL was masterclass.io. But you know, the blue chips are like the I mean, if you can get your hands on like the Picasso’s or like all the classical guys but the the new up and comers are like the Andy Warhol I didn’t know who that is apparently, he’s pretty famous, but what are what are some of the like the new I mean, do people even know I mean, I mean, you’re you probably like land you dude, you don’t even know these, these kind of why? Even why even tell you? But I mean, what are some like names or brands that are examples of the two
Unknown Speaker 16:51
so I can give you a good example. So there’s someone called Erickson so he came from one of the most famous wineries in America called screaming Eagle, those bottles retail thousands of dollars, and he loves to go start his own winery. So that’s an example of an emerging kind of winery to look at because it’s someone coming from, you know, a top top winery leaving to start his own brands even though there’s no historical track record per se. You know, it’s someone who’s very very well regarded like say, if you know, the CEO of Apple loves to go start his own new company, people are gonna think it’s hot. Yeah,
Unknown Speaker 17:28
I was thinking like David Beckham coming to the LA Galaxy.
Unknown Speaker 17:32
Yeah, that’s, that’s exactly like that, right, like newer, smaller market unestablished. But, you know, there’s gonna be a following
Unknown Speaker 17:38
so what is like what is the the typical returns that people can kind of expect from you know, doing like more of a blue chip kind of a classical portfolio or more up and coming a little more riskier? What’s
Unknown Speaker 17:51
Yeah, so I’d say with like, our kind of, like, if you’re just tracking the index, you’re gonna get 12% annualized returns, you know, that’s, that’s over the course of decades. That’s what we are. been seeing over the past few years, more aggressive portfolio is going to be ranging up, you know, 16 18% annualized returns. And then if you want to go like super, super conservative, I think our conservative investors have averaged closer to like 8% annual returns.
Unknown Speaker 18:14
And that’s all inclusive of like what you said at 2.8%. About that’s, that’s how you guys make your money. Yeah, so those numbers I’m quoting are before your fees, you take off the fees on top of those returns. Okay, so if you’re if you’re saying 12% analyze returns, they’re sitting at what a nine point something percent per year. Exactly. Okay. I mean, it’s, it’s a hard asset. It doesn’t cash flow, but it’s really cool. So I think I mean, I think that’s the appeal. Right? You say you own these these bottles somewhere? I mean, are what are clients doing? Like they want to show it off? Right? Do they get to see hold the bottle or get to visit it at the safe?
Unknown Speaker 18:57
Yeah. So if they want to visit it, they can can do it anytime they want to take it out, drink it, they can do that anytime. So I think that’s one of the benefits of not securitizing or not owning fractional shares that represent an asset, actually owning the asset is that at the end of the day, you have the direct benefit of owning that physical asset and you can do whatever you want with it at the end of the day. So a lot of our investors like maybe they want to know more about wine or maybe they want to get something for like their, their kids birth year to share on their wedding day, right? So they’ll buy 10 cases and you know, 10 years later they’ll sell off five and then use the profits generated from that five to basically drink nice wine for free with the other five
Unknown Speaker 19:40
Yeah, I’ve thought of like you know, a lot of the deals that we’ll do are like five to seven years, you know, go and buy a bottle case right now and then have it just sit in your safe for five years without turning into vinegar at my house. So guys, um, you know, a couple takeaways that are very similar. Are these the reason why I kind of bring these kind of off the wall investments is it kind of it helps us as passive investors kind of understand and value these type of investments. So for example, Anthony was talking about, you know, legitimising the wine and and I don’t know if it’s some kind of barcode or you know some certified inspection process but you know, like I was looking at life settlements which is you know, you’re you’re kind of buying the asset is a piece of paper a contract with the individual so on their passing but the when I was looking into this one particular one I wasn’t able to get it verified yet so the Emeritus or Northwest feature on the top but I didn’t know if it was just like a fraudulent piece of paper and that’s what made me uncomfortable, but in this case, anti right like these things are some some third party is backing them. Is that how it’s done?
Unknown Speaker 20:54
Exactly. So you can independently audit your ownership every single investor when They come onto a platform and they buy a bottle, you know, there is a paper trail so you can see, and you can visit and you can actually touch your actual asset, you know, we try to make it as as direct as possible in terms of adding you have the kind of confidence you need to invest in something new that you may not be familiar with.
Unknown Speaker 21:17
And another thing that Anthony mentioned was, you know, I forgot who was that that guy that had the wiring that was moving wineries?
Unknown Speaker 21:25
Well,
Unknown Speaker 21:26
yeah, and Eric’s and he’s kind of like the, I would call them the brains of the operation. So I was looking at oil and gas investment and I actually went down there and I met the in the oil and gas investment, it’s, you know, just putting holes in the ground, but the geologists is kind of the the guru, the brains of the operation. So I met him and his dog down there in Texas, and that person is the person that you kind of bet your money on. And in this case, that’s the brains and I guess you could call it similar with you know, apartment vesting, which would be like the owner operator. In that case, but, you know, when you’re investing, you need to figure out where’s that, where’s the brains of the operation, the intellectual firepower of the investment, because that’s, you know, you’re trying to pick the winners here. And, you know, a lot of times you have very little, you may not know too much about the investment. But in some cases, it’s better to go with the proven folks even though past performance does not indicate future success. But in this case, it’s just what sugar and water I don’t know what makes wine grapes or something like that, just grapes. And anything else that you know, that kind of takeaways that investors can take from this or anything else we missed?
Unknown Speaker 22:38
Um, I think the interesting about wine is that it’s, it’s pretty uncorrelated to the market. In good times and bad times people can be drinking wine. And what really drives wine value is that it needs time to age and get better than the bottle. And as it gets better in the bottle, people are drinking from that annual supply, right? So supply dwindles crops up demand. And you know, we’ve seen it even this year with the stock market volatility. In the first quarter when the s&p was down, I think like 20 something percent. You know, our investors are up, and they’re up on this year too. So, you know, it’s not going to be something that’s like Bitcoin or hot tech stock where you’re getting, you know, 50% in a year, although there are some like that, but it is something that’s steady. It is something that is new that, you know, hasn’t really been available unless you’re ultra, ultra wealthy or ultra well connected. And we’re just looking to give this access to more people.
Unknown Speaker 23:35
Now. I’m actually happy I’m in the opposite seat because most times I’m in your seat people are pegging me with hard questions. So here’s a card question these days with the whole rise of of craft beer, because people are cheap, don’t have much money. You know, people are moving more towards that as an also marijuana. You know, eating brownies is probably a lot Well, I don’t know I don’t want to say if it’s healthy or not, but healthier than drinking alcohol, I mean has is that impacting wine prices as a whole,
Unknown Speaker 24:09
I think on the lower level, so like, you know, grocery store wines, definitely, I think as technology has gotten better, they’ve been able to create wine more cheaply and sell it for more cheaply. But this segment that we’re looking at is like, you know, pretty much the top top like 5%, and that is going to be still very, very much so untouched, you know, it’s a luxury segment, people are still going to be wanting these brands, you know, like the equivalent of like, the Ferraris and blue buttons in the wine world. And I don’t think, you know, something that is happening on kind of the lower segments will really affect what we’re doing here.
Unknown Speaker 24:47
And then, you know, as an investor, you know, you always want to be looking at the exit strategy. You know, don’t buy anything that you can unload at any point, even though you know, you got to assume these things are illiquid for the most part, but what’s the what’s the Like if somebody wanted to unload their their case, is that really easy? Is there like a steady supply of buyers? And then, you know, do you guys, do you guys make money off of the commission off that sale? Or is it all encompassing the asset management fee?
Unknown Speaker 25:15
Yeah, good question. So we don’t charge anything extra to liquidate. We don’t have any sort of like minimum lockup periods or anything like that. Because we’re working with wine. And you know, it is a consumable. So if you want to exit, we’re not only selling to other wine investors on our platform, but think about all the retailers distributors, hotel restaurant chains that are all looking to buy wine and consume it. So because of that the liquidity is a lot better the way we’re the way that we’re doing it than a lot of other alternatives. Well,
Unknown Speaker 25:46
so Anthony, once you get your contact information for people to get ahold of you, if not, I can put it at simple passive cash flow calm slash wine Are you guys should know.
Unknown Speaker 25:57
Just feel free to email me directly. If you have any questions. It’s Anthony vino best CO and you know you can browse our website and make an investment directly on there. Cool.
Unknown Speaker 26:08
Well, yeah, thanks everybody for joining us again check out all different types of investments it’s simple passive cash flow.com slash menu you know, I think there were like musicals and all kinds of things you can invest in. Maybe one day I’ll buy like the Backstreet Boys I wanted that way royalties, and a bottle of 12 pack of one of these fancy wines. But if you guys haven’t done so check out our investor clubs both passive cash flow calm slash club, and you’ll get access to the first three trial ecourse sections there.
Unknown Speaker 26:46
This website
Unknown Speaker 26:47
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 advisor before relying on any information contained here and information is not guaranteed 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 interests.
July 2020 Market Update Investor – Investor Letter #15
Unknown Speaker 0:00
Introducing the new remote investor, incubator and ecourse we had the mastermind and we are going to break off from that being mostly an accredited investor group. And I wanted to create something that was helping out the little guy get started guys getting their first properties. And we’re calling this the incubator group. Get More details at simple passive cash flow, comm slash incubator, but basically what we’re doing here is we’re getting a group of professionals looking to build your network with others starting this journey to financial freedom, the ecourse that’s going to company this group is going to have eight modules in a closed membership site plus two bonus modules and download kit all geared toward educating the remote investor in this group. We’re going to have biweekly zoom video calls and if you join up, you’re going to get all past turnkey rental recordings. Now these calls are designed to ask whatever questions you have and hear the other questions from other investors in your shoes. And we’re going to run this like a bootcamp style. This is going to be five month program, we’re going to walk you through the best practices for tax and legal as you acquire your first remote rental. We’re even walk you through the due diligence and offer process we’re going to have staff membership coordinators for extra support to get you over the sticking points and to connect you with the right people in the group. Even if you’re shy. One of the biggest reasons for join is access to our ever changing Rolodex of top turnkey companies, brokers, property managers, insurance companies. Hey guys, we’re basically spoon feeding this to you if you’ve been on the fence and it’s time to get your first rental property go to simple passive cash flow calm slash incubator and by the way, for those accredited investors, we are looking for new members go to simple passive cash flow comm slash journey
Unknown Speaker 1:43
and join the flagship simple passive cash flow mastermind there. After the pandemic to new world out there having a network around you is so much more important. shoot me an email Lane at simple passive cash flow if you’re unsure if the incubator or if the credited mastermind group is for you, but let’s get you connected Other people and don’t go it alone. Hey everybody, this is the July 2020 monthly market update, where we go over the latest headlines and I add in my commentary on what’s been going on in the world of real estate and the macro markets. You guys can check out past episodes at simple passive cash flow calm slash investor letter. But let’s start with the giveaway real quick for everybody. I call these the easter egg. You guys can get access to the COVID-19 response folder and I’ve been kind of adding things to this over the past few months in there you’ll get the Small Business Administration loan docs, sample landlord repayment agreements so that you can make deals with your tenants small business owner guidelines and great medical paper done by University of Hawaii while on COVID-19. Get all that and more by texting the world symbol 23146651767 and also Introducing the new incubator group for newer investors looking to get their first few remote rental properties or turnkey properties, we pretty much guide you through the process. And we put the group around you that’s doing the same thing so you can build your peer group network. Learn more about that at simple passive cash flow, comm slash incubator, and we are also doing an August 1 full day workshop. We’re doing it virtually since you know, we’re kind of coming out of the pandemic here. Some people are still afraid of going out in public so you guys can join in. It’s about from 9:30am to 3:30pm Pacific. You could check this out by going to all our events section at simple passive cash flow calm slash events. If you guys haven’t met me before, my name is Lane Kawaoka prefer still got my professional engineering license, and I have a podcast it’s simple passive cash flow calm and on Spotify, Google Play YouTube, all of the such if you’re not part of our community Check us out on Facebook, great group on there. And I also have a local group here in Hawaii. But let’s start with a couple teaching points. So here’s a little table that I found outlining why all we do passive investing and not wholesaling or flipping. And this is why I love house slippers because they all pay my taxes for me, they definitely pay their fair share of the taxes here. So on the left side, you see some of the the taxes that are put forth for rental buy and hold investors, how you can get around the self employment tax which is can be up to 15%. And how you don’t have any depreciation with wholesaling flipping, no bonus depreciation there, you know, we’re writing off almost a third of the building in year one, which can be huge tax write off negative k ones. You learn more about that it’s simple passive cash flow, calm slash cost, say CLS t SDG and second teaching point here. This is the difference between the idle and the PPP loan, I am currently applying for this, see what I’m getting, I think I’m gonna be able to get a 3.75 fixed interest rate with a 30 year term, but I don’t think I need it, you know, I mean if there’s no really sense of taking on that if you don’t need it, so I just kind of did it for the process and kind of let you guys know all about it. And so here’s a little table. Again, if you guys are catching this up on the podcast version, we also put this on the YouTube channel. As you can probably just google simple passive cash flow on YouTube and you can find our channel a lot of cool stuff on there a lot of things that aren’t don’t find the way to the podcasts or the website or put up on the YouTube channel. Because apparently that’s how people find things to say the least that’s how I learned a lot of my stuff these past few years just googling it and YouTube in here, we get into it. I’m going to kind of go through this pretty rapidly. A lot of news, but yeah, let’s kind of start off with the big elephant in the room which is still Coronavirus. This is a article about been checking that’s done by the New York Times, which is the Coronavirus vaccine tracker. And they update this pretty frequently. And they actually have one approved vaccine approved for limited use now before the last time I checked this last month, they had a bunch in phase three and phase two, but nothing approved. So, you know, good news moving forward. I think Fauci was kind of alluding to something like this coming on the way I I kind of looked at it the way his commentary went, but a good news. I mean, we’re getting there. And I think it’s happening a lot faster. And I hear of all all, all kinds of investing, and venture capital, this government funding going to folks expediting this tech scene, one of the big news for those still picking up single family home rentals, or loans in their own name. You know, I think a lot of us are kind of getting on the bandwagon of being more of a passive LP investor, where the nice thing is you don’t need to get the bone in your own name. That’s sponsors are for to kind of Get the net debt in their name and to run the deal. But if you’re still, you know, picking up deals on your own and getting those Fannie Mae Freddie Mac loans which you get 10 years in your name 10 in your spouse’s name, it looks like they’re saying that the debt to income requirements are going away as a qualification criteria. So if you have been falling out lately, debt to income ratio, I mean, there’s a few ways to get there. I really don’t know how to calculate exactly but it’s taking a ratio between how much your debt payments are every month and then how much you’re able to income you’re having. This is going away and I know some guys who have large mortgages because they live in places like Hawaii or California where you really shouldn’t be buying a primary residence in my opinion, you guys can check out my commentary on that at simple passive cash flow, calm slash home, very controversial topic. So I’ll let that go for now, especially for the younger folks out there trying to build their net worth over a million dollars, I would say stay away from home ownership. Use your money to invest your debt to income ratios was really bad because you have this large house that has a big debt payment but very doesn’t bring any income. I mean, that there should tell you right there that it’s not a good thing for your balance sheet. But apparently this dti requirement is going away. And of course, the comments that happen on our Facebook pages are different places or you know, the world is ending, you know that it’s the return of the Ninja loans. I don’t think that that’s the case, these lending standards loosen up very slowly. And this has been happening over the past five years. I’ve been tracking it very closely. And I’m not getting too excited about this, but it’s just a general movement towards opening things up. And this is just a different way of stimulating the economy as opposed to lowering rates. A little report for you, those of you guys living in Southern California, Los Angeles multifamily market is not doing too well. Listen. And a month after California Shelter in Place Order went into effect. La multifamily data started showing early signs of headwinds, the average rent collected by 10 basis points or contracted by 10 basis points on a three month basis as of March. So if you guys are looking on the YouTube, you guys are seeing the charts up there. Yeah, not looking good. And this is why I don’t invest in primary markets like California in first place, invest for cash flow. The next headline we’re talking about the stimulus for is here, the House of Representatives passed the moving Florida act. I don’t know how they keep coming up with these cool names. So it’s an infrastructure we’re building plan. More than 2300 pages if you guys would like to read it all this explaining exact detail how the $1.2 trillion is being spent. Wedding encompasses all types of infrastructures such as air, air, rail highways, bridges, transit systems, alternatives. Your automobiles, broad, broad brand and all types of energy schools housing, water. Now, when I was still in corporate America, I was spending the 2008 stimulus funds, which seems very similar to this. That was the High Speed Rail back then. And I’ll tell you the money doesn’t really find its way into the system into many, many years later. I’ll be as far as 2012 to 2014. So what is that three, four years later? So, but it’s still saying should that act pass the Senate, which is unlikely based on the comments from the Senate leadership, and those of you guys who are not aware the house controls is controlled by the Democrats, that senate is controlled by the republicans and a lot of heavy spending acts just don’t make it through the Republicans. But some of the highlights, I mean, not saying that it’s going to it’s going to be like this exactly, but this is the trend right and this is how you can kind of see where the puck is moving towards like Wayne Gretzky says. So The same new markets tax credit, national funding would increase to 7 billion from 5 billion the rehabilitation tax credit application percentage, which increased to 30%. This is the one I’m excited about the renewable energy production credit will be extended through 2026 instead of 2021. We don’t know if that means your solar panel cells will be still getting you that credit. But um, you know, that’s the way they’re pushing and think how this impacts a lot of us especially in the mass, right, we talk about, you know, how to mitigate our taxes a lot. You know, one of the big ways obviously is you know, bonus depreciation by going into good deals that do cost segues, that’s number one. But for those with a active w two income, and don’t have the real estate professional status, their only options are land conservation easements, and oil and gas deals to also active w two income now, you know, I don’t really want to go into details on that. But you know, like the land conservation easement rents are becoming much, much more controversial and oil and gas kind of sucks these days, right? I mean, if you’ve been watching the news, well, you went like negative on the futures or something like that. So the only third waves, you know, these solar energy credits and but 510 years ago, there was this big thing where you could spend money frivolously why I don’t want to see that word. But people were basically using this as a loophole to get write off on taxes. And this looks like potentially one coming so I would be on the lookout for this to Procter and Gamble sells their headquarters in San Francisco and moves across the beta Oakland, which is a trend towards moving to less priced areas. On CBR. He came out with a great Report. Here are some of their findings turnover, which is defined as the percentage of total rented units not renewed each year. I repeat that again because it took me a few times to really grasp it. So turnover is The percentage of total rented units not renewed each year fell from 47.5% in 2009 to 42.1%. April, the lowest level in 20 years, the decline in turnover has has accelerated due to fewer tenants moving because of COVID-19 economic downturn, turnover up rises each spring, but declined this year due to lockout mandates and economic concerns. So the way this really plays out, I can say like, you know, through our across our 3500 unit portfolio, right as landlords you’re kind of I was a little stressed out, you know, April May collections. Obviously, they turned out fine. I’m more than impressed what happened and I’m even more like bullish on multifamily workforce housing, right, because I think we saw the strength through a pandemic, but what they’re saying is, you know, people weren’t moving out because people were shocked at literally sheltering in place and they weren’t looking for a new place to say and landlords and in US included you know, we’re very accommodating towards people you know, but I think turnover should probably pick up here is south and west regions typically typically have higher turnover rates by and by property type Class A assets typically have higher turnover rates. So people have been asking, you know, after the pandemic, what are some changes that are going to be designed into houses and apartment? Now I don’t know if this is the case. I think this is just an article made to satisfy a consumer reader need but this article is design changes for life changes created by john burns group, first thing that they’re citing is you know, people are going to work from home so flex spaces that can accommodate the home officer for like Nokes are going to be kind of popping up or they they won’t I don’t you know, I don’t know, who knows in like six months, maybe everybody’s forgotten about this endemic thing. I can tell you maybe like six months ago everybody was sort of freaking out about, you know, workplace or school shootings and they’re saying things like, oh, they’re gonna they’re gonna design all these buildings with curved hallways and bullets. It’s hard to kind of shoot people if you have curved hallways and obviously now nobody cares about that stuff. It’s just times of change and you will have forgotten people forget very quickly. But anyway, getting back to the article here so there’ll be also changes in the kitchen design, the fewer people are going to want the great big open rooms that the to include the kitchen with more now one in the kitchen to return to having some separation to hide the smells, mess and noise, grow garage configurations. Now that families will not be able to have fewer cars per person opening up the garage to multiple configurations. Front Entry, the public entry will still need great street appeal and allow for secure package drop off and I guess, you know, Uber Eats or Postmates But the festival also need better drops on air for shoes, packages, leashes, etc. These are called mud rooms will migrate from colder climates to provide a buffer between the outside and inside. Another thing that’s emerging is home management centers. So this is where all the technology is stored, like the Wi Fi and all the other appliance tech items. You know, think of like your your battery for your your Tesla home battery system, you have solar power cells, some people will say the laundry room will kind of hold this type of stuff. And then as far as bedrooms for space efficiency of the guests back bedroom and their home office will likely be the same space for many families. For more other families. They would prefer a small bedroom for sleeping only with the square footage devoted to other spaces, so others will want a larger bedroom that will accommodate even more uses, including TV and watching and this has been happening the last 2030 years where previous Yes, the larger bedrooms but now the bedrooms are smaller and then the square footage is being transferred to living areas.
Unknown Speaker 17:07
If you’ve been following my
Unknown Speaker 17:08
journey I’ve been selling my initial real property and transitioning into syndication deals lately for more purely passive investment strategy. One critical part of my portfolio is the American Home preservation fund, or what folks in the we call HP for short. George Newbery once apartment owner, operator and mentor to me, is now sponsoring the podcast is private fun, which by the way, also accepts non accredited investors cuts the middlemen out and allows you to invest directly with him to fight the mortgage crisis in America. join him by purchasing distressed mortgages while getting a double digit annual return paid monthly. Find something else better out there. Well, let me know. Feel good knowing that you’re helping families stay in their home after buying their underwater note at a huge discount. Invest as low as $100 by going to HP servicing comm slash investors and if you want the free bernsen book, please send me an email Lane at simple passive cash flow calm.
Unknown Speaker 18:11
Well, that’s like
Unknown Speaker 18:19
this article came from Wall Street calm sort of alternative news source but very great, great insight. So they have on the left side here the cities with the biggest percent increases in one bedroom rents. Number one was Cleveland, Ohio of a year over year change of 16%. Indianapolis was next, Columbus, Ohio, Rochester, New York, Chattanooga, Tennessee, Cincinnati, Ohio, Philadelphia, Pennsylvania and St. Louis, Missouri, rounded out the top eight, a lot of Ohio this there. And then on the right side here the 17 most expensive us rental markets, who you don’t want to live in to San Francisco, California, New York and Boston, San Jose, Oakland are the top five in there also la Seattle, San Diego, Santa Ana, Honolulu, Hawaii and number 12. And then but the important thing is important things that I want to point out are the big movers are San Francisco number one cent San Jose number four, the most expensive ones. They almost drop off San Francisco drop 11.8% median asking rents from a year ago in San Jose dropped 8%. Now this is something I’ve been hearing just from my buddy’s living in the Bay Area that rents are dropping and this supports that entirely. You can see number five there Oakland, California went up four and a half percent even though it’s in the Bay Area, but it looks like there’s a lot of people are just running away from the San Jose’s and San Francisco to go to Oakland and you know, that was the last article we just talked about right Procter and Gamble moving headquarters from San Francisco to Oakland. I get to go wanna stay wars are pretty feeling pretty dumb right now moving from Oakland to San Francisco, but I’m sure they have the money. I think that’s all that’s all been syndicated and their model building the equity for that Golden State Warriors with all syndicated by big, passive investors. So that was interesting. I found that out when you know, I think there’s like that one guy who kind of pushed one of the players during the Toronto Raptors game and then they said he was like one of the passive investors in the deal. But john burns comes out with this summary image for the U haul report. And the U haul report is something we we love to watch this because the U haul report captures where the trucks are moving in one way trips. We like the U haul report over the fan line report because the U haul report is sort of the budget way of moving and as workforce housing Class B and C no regular blue collar folks or folks like myself who are cheap. This is how you Move your butt over to the next place you’re going to live. And then you hopefully have some beer and pizza for your buddies to help you. So the places that they’re moving towards the places all in red are in the Bay Area in Southern California. And the green dots are Seattle, Portland, all pretty much all Texas, a lot of Florida a lot in the south southeast. And they are moving away from getting the California’s and I think believe that Chicago and all the Northeast, it’s all right up there. Thumper came up with a lot of great data here on where bedroom rents for tracking some of the big takeaways here when we kind of talked about this, but again, yeah, I mean, declines in your your kind of more big city areas. Of course, as an investor, you’re always looking at the sub market. You know, for example, if you’re investing in, you know, like Dallas, right, I mean, Dallas is made up of a couple of dozen sub markets, so you can’t just frankly Look at Dallas for data. Great place to start, but you got to dig in. That is if you’re more sophisticated investor. If you’re not well, you should probably just passively invest because this probably ain’t the game for you. I’ve caught on got screenshots of all the data here. So if you guys want to check this out on the YouTube channel, you guys can check it out there. But I also put this all my our Facebook group and then if you guys want to find me on Instagram, I’ll usually post it on there. If you guys are first time homebuyers and rental property owners, don’t do it alone. Make sure you join us on August 1 for the full day workshop, you there’s a URL to register. It’s a little bit hard to remember but you can find it by just going to simple passive cash flow comm slash events. Also having a afterparty in Honolulu, if you guys can make that and, you know, people are always asking, you know, like they’re getting confused by all these masterminds and groups. We have kind of two programs that we the flagship Group is the mastermind and accelerator which is you guys can find information at simple passive cash flow calm slash journey. Now, this one’s sort of becoming the accredited investor Group, a lot of people are, you know, they they’ve had a little bit experience with single family homes but they just want to invest as a passive investor and want to build their network with other credit investors and learn how to get syndication deals, whereas the incubator group is more of a way to get your first rental property get your feet wet, especially if you’re a non accredited investor. And there’s gonna be probably a lot more hand holding and granular level tactics and steps to follow in this group that will help people and this is kind of my my way to kind of help people get started. I mean, when I got started, there was really nothing I had to kind of fumble through it myself and I got lucky I work with the right people. The moving on on the monthly report or real page reports as apartment demand rebounds, rent cuts disappear in most market. So there’s a nice little chart kind of showing the actions From March, April, May June, on new lease volume has changed and the executing new lease Oh, this is kind of funny slide. Well, it’s not it’s a bunch of bankruptcies but so chapter 11 bankruptcy for 24 Hour Fitness you know you I think you’ve been hearing that these guys weren’t doing too well and I think the COVID-19 and all the negative laws against you know, do you need to wear a face mask or disinfect and they just couldn’t stand business. So they’re closing 132 locations 41 in California and 26 in Texas, and then about a week later GNC files for chapter 11 bankruptcy plans to close 1200 stores. Now I don’t know that those two are related. Probably not. That’s just a kind of a bad joke, but also at&t to close 250 at&t mobility and Cricket Wireless stores, too. That’s pretty much the end of the monthly report. Usually we try and end with something I guess that was the joke. That was the joke guys, you know, 24 Hour Fitness closes, therefore people can’t get their supplements. Well, they don’t need their supplements anymore, apparently. But now I’m going to roll into my personal report what I’ve been kind of up to this last month and I split them up into six sections based on the Tony Robbins six needs. And this is the way I check myself every month that I am scoring points where it counts, because if not, what is the point? The first category here is kind of how did I get growth? How am I working on something getting better? So we closed 140 unit Class A apartment in Lake Dallas. It took forever to close this deal because it was a HUD loan. So HUD loans are probably a higher level on the Fannie and Freddie loans. There. We had a 35 and a half year amortization period. When you add it up with the other loans. It was like a 2.9% interest rate. So pretty amazing. And this was a class asset. So something I don’t really have to worry about and through pandemic, yeah, this thing cash flows. Number two contribution. How did I leave the world a little better place? Well, this is the incubator group. And this is the group for those looking to pick up their first few rental properties. I wanted to find a way to fight back against the evil real estate empires out there that will trick people to come to these conferences, teach them how to raise their lines on their credit cards, and kind of swindle them into crappy real estate education that really everything can be found there on the internet, including my own and charges guys like 20, Grand 30, Grand 40, some even 50 or $100,000. With after it’s all said and done with all the upsells. Now financial freedom is not for everybody, but you know, for those willing to put in the work. I think that You know, it can be attainable by everybody, especially for those, you know, hard working guys and gals in, you know, corporate America. You know, a lot of our folks are hard working doctors, lawyers, engineers, I see no reason why you can’t get financially free in less than 10 years if you’re able to save at least $30,000 from your day job. So, if you guys are new to the group, check out the incubator group. We are starting the next group on August 18 or August 15. So if you haven’t, this is an application only. So check that out simple passive cash flow comm slash incubator number three significant so I found this little meme out here says little Wolf, leading the pack and this is the way I’ve kind of found significance for the stuff I do. This is why I work 12 hours a day even though I don’t need to. It’s because a lot of people out there they read, listen to a podcast or to read a few books and get this idea There’s something better than just going to their work every day. And Little do they know well most people don’t realize how much they’re getting screwed over by mutual funds were taking about a third of their profits whether or not the price of the stock goes up or down. And for those who do realize this, they start to come into this world of real estate investing but you need the people and you need the insight and and the stuff that I do is not really that hard is at least what I think. I mean, it’s just stuff I picked up along the way and it’s not too hard to kind of just help people along the way give back and know that’s what the incubator group is and this is why I feel special, I guess. The hot it I have a little uncertainty in this time. So of course the whole Corona virus thing has been a stressful thing for myself and everybody. I, you know, oh, here’s the Coronavirus tracker and I had a screenshot of last month’s where they were at you can see how much things have changed over the past month in terms of where the vaccines Are you know will it be a V shaped checkbox U shaped L shape? correction? Well, nobody knows. Um, but you know, I, from my perspective, I don’t really care because
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here’s everybody’s most for the most part paying at places I I’m investing in and, you know, I know a lot of times this is just a storm if you can get out, he can survive through it will be stronger at the end. And it’s the people who are investing in things like hotel investments or short term rentals, Airbnb stuff, or Yep, you know, those, those kind of sexy boutique, the luxury type of developments, you know, those are people getting killed right now. And this is just a fat cutting time. For my opinion. This is where the workforce housing shines the best. How do I get some certainty this month? Yeah, I’ve been the trade lines have been chugging along. I mean, I think I make I make probably like 100 or 200 bucks every week or two by two In this, I know I’m up to like $11,000 total doing this, if you guys haven’t heard of trade, what the heck trade lines are. So you can add somebody to your credit card as an authorized user. It sounds a little crazy. But look, I mean, I’ve done my risk analysis. And to me, I think it’s a good amount of risk, I have found ways to safeguard myself by putting alerts on the credit cards, actually not even activating the credit cards. And then making a nice little side change on the side. And I think a lot of people like this because you just get a notification on your phone that you sold a trade line that might be 100 or $300. And it’s like, it’s easy money. And, you know, I’ve heard somebody said that, you know, when that $200 trade line gets sold, they take 100 bucks and they give 50 bucks each to their kids. And everybody’s having an awesome day that day. So you guys can read more about that simple passive cash flow calm, straight line. And last but not least, how did I get a little love and connection this month? Well, I went on a trip, I actually left Hawaii amongst the pandemic and I went to Huntsville. There we are on the left filming some apartment tours, some of the assets we own down there. And we went to Dallas met a lot of you guys out there. I think there are like 25 folks that came out. Unfortunately, we all couldn’t take a tour because there were some restrictions on how many people could visit but we all got to meet a lot of you guys in person. That was cool. And then you know, went up to Cleveland checked out the the Rockefeller and all these cool places got to spend time with the wife and that’s it’s all about go and travel Onix business expenses to some new podcasts and articles I put out this past month people really liked the David McElhaney Cast they were recorded before the pandemic all happen. But a great commentary from a different perspective. I’ve been kind of falling more family office, and more industry type of influencers. To me a lot of podcasts these days are just done by guys who, you know, want to syndicate stuff or really have no experience doing what they’re doing. So I’ve kind of frankly stopped listening to podcasts you pay for what you get. And it doesn’t take much to do podcasts. I can do on number two legacy. So this is a cool, there’s a little download with this one. So if you go to simple passive cash flow, calm slash legacy, there’s a net worth tracker on there, but a whole bunch of ideas, especially for those of you guys building your estate trusts, which, you know, we try and help folks in our passive investor accelerator for the accredited guys, or a lot of that is you know, just little ideas. You have that you have From your network number three, the cons of the birds, I’m really not a fan of the birds. You know, it’s all the kids doing it, which is great. If you don’t have a net worth of at least half a million dollars, you got to take some risks. Number four, why would you do a bridge loan and apartment syndication? There was a I did a video on bridge loans. Number five, I had Benjamin hardy who wrote willpower doesn’t work. And then he has his personality isn’t permanent, which he actually sent to me a couple of weeks ago. So that was kind of cool. Great. I think that was a pretty good podcast. I mean, I’ve been doing a little bit more like, like a donor lifestyle podcast here and there. Because let’s face it, like you know, once you’ve listened to 100, something podcasts a simple passive cash flow. There’s not much to this passive investing thing. And I mean, it’s more about enriching your life.
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And then, you know, same thing, the workplace culture and the young professional advice from Peter YAHWAH. It’s the reason I’m brought him on board was because a lot of investors that listen to this podcast are, you know, older and they have kids. So I was trying to bridge the gap between, you know their kids, and at least I was trying to. And then last but not least, it’s self directed IRAs to invest your retirement funds. If you guys need a referral to like a QRP, solo 401k or self directed IRA, let me know. Um, you know, there’s a myriad of these guys. And everybody kind of uses the same few ones. For the most part, there’s really no real reason to kind of waste time betting stuff down from a list of 100 you know, stick start with this top three and just go from there as my opinion, some of the barriers that I’ve been working through so I came home and the State of Hawaii wants to quarantine me 14 days. So I think I’m on currently day four. I’m in high spirits. I have lots of fresh juices and pre made meals. My unfortunately my co2 tank that I make gobs and gobs of soda water, every day is is down. I might have to sneak out of the house and refill my co2 contain this slide I usually put what I bought, which are doodads things that you burn your cash on. But I don’t know about you guys, but this pandemic, I haven’t been buying too much stuff from Amazon. I don’t know, let me know if that’s the same thing with you guys. And some of the lessons learned. So I read this book, everything is F by Mark Madson. It’s a kind of a philosophical book, that he uses the F word a lot. And it’s kind of comedic In my opinion, if you like that type of stuff. He’s low on the word, raw and rebellious type, kind of the message of the book. It’s a book about hope, by the way, despite the name, everything is F. I think a lot of us realize like there’s a lot of media out there and it’s designed to kind of put you in a tailspin. span and keep you glued to the screen. And it’s a book that kind of keeps things in perspective. And ultimately, we’re all here to find the truth. Right. So we are doing another book club, I think on October 31 is the next one and we are reading what would the Rockefellers do? And you guys can sign up for that at simple passive cash flow calm slash lane hack. And what we do is we just hop on a call once a quarter and talk about the book and one last easter egg for you guys, if you guys want to download and I just revised the 2020 buy and hold analyzer for single family homes in Excel or Google Sheet format. You were the people the reason why people like it is like I put down all the expenses you should have for your rental property. And there’s some footnotes and some guidelines what it should be. So that’s a $1,553 value all for you for free. Just have to text simple to the word simple 2314 6651767 check out the other too much good stuff on the website and remember, this is just a infotainment podcasts. And we’ll appreciate you guys kind of supporting the show for this long and if you guys have any other questions shoot me an email at Lane at simple passive cash flow calm and if you haven’t gotten on the phone yet, let’s set up a call and let’s get to know each other better. And I will see you guys next time bye.
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This website
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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 or legal advisor before relying on any information contained here in it. Information is not guaranteed 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 interests.