For most investors able to save $30-50k a year and buy a rental or go into a syndication a deal.
Blogs
David McAlvany: Who wins election? Pre-Covid – Part 2 of 2
China/India, macro economic trends, w/ David McAlvany
Explain your business and clientele
Where do you think this economy is going
China growth is slowing
2.9% projected growth – 2.5% is technically in a recession
Corona virus is impacting growth
Europe lacking main growth indicators
US markets have never been better
Why gold?
How is gold better than mix commodities such as real estate?
TRANSCRIPTION:
0:00
So significant issues, significant issues for us to address for our policymakers to address. And as far as I’m concerned, this is not a time to put a tremendous amount of faith in a few guys and gals with PhDs, I think they think they know more than they do. This is
0:16
a story about a dude named Lane, he moved to the mainland and bought one place to stay. And then one day he went to try to rent them out. And then he became one
0:27
that still makes
0:30
us in China, or what the the kind of the leading indicators, right are the big folks in the boat that can potentially tip us over? What are some of the trends domestically that you’re kind of looking at or following?
0:41
Yeah, you know, one of the things you know, where we met, one of the things I wanted to highlight in the presentation that I gave you a month ago, is that we’re doing pretty well in the US. In fact, in some respects, by some measures, we’ve never done better. And so what does that mean when you’ve never done better you’ve got household net worth here in the United States at 113 trillion dollars, it’s never been better. I can tell you in the past when things have never been better, that’s usually been the end of a trend, not the beginning of a trend. If you just look at sort of, again, going back to that idea of business cycle, moves from sort of low levels to high levels and kind of oscillating back and forth, you go from employment, like what we have now, if 50 year, records of low employment, this is fantastic. Everybody’s at work, everybody’s being paid more. But it’s important to keep in mind that these things tend to ebb and flow. And it’s been 50 years since things have been this good. What happens generally, when you get to these kinds of points is that they are in fact inflection points where it hadn’t been this good and 50 years networth hasn’t been this good ever and you start seeing reason actually for mean reversion. mean reversion is just a fancy way of saying, We operate according to a law of averages and if things are great, now they’re not always great and They’re they’re typically pretty good. But if they’re super great now, the law of averages and mean reversion suggests that we we’ve got some downside downside in the stock market downside and bonds, you know real estate’s tricky because real estate is tied to interest rates. In many respects, if you follow a real estate portfolio, it’s it’s very similar to a bond portfolio where the cost of capital, the rate of interest is one of the key defining factors in value. If you look at cap rates, we could never have compressed cap rates like we have today, if interest rates weren’t on the floor globally and here in the United States, with rising interest rates comes rising cap rates. And yeah, I think we know what that means in terms of value for the asset as well. So the real challenge in the Americas is will the investor today benefit from Central Bank intervention in the market in order to extend these trends? keep interest rates low not because of a normal natural market? function. But just because by policy edict we want rates low, we’re going to sit on them. You know, when I went to school, the idea was that interest rates were determined by buyers and sellers not by policy edict. Right? This is the nature of the free markets correct. Where interest is is is a component, and it reflects risk, and it reflects the solidity of the borrower. And if you’re not a good borrower, you pay more if you’re a very good borrower, you pay less. Well, today, interest rates are being crushed down to very low levels across the board, by policy edict. So we have a scenario unfolding, where you could see pressure on stocks, bonds and real estate, except that real estate is in this weird category. Where if they’re able to effectively hold interest rates low indefinitely, who knows what happens to the value of real estate, people are clamoring for income people have to have income, our demographic thick, sort of big in the Python so to say is this move of baby boomers towards retirement is you probably know the numbers at least 10,000 a day, who are retiring and guess what they want, they want their retirement assets working for them paying them for something, right. And it used to be that if you had a million dollars and you’re earning 5%, you can have a laddered cd portfolio at the bank, take very little risk, never go into principal and have $50,000 a year supplementing your Social Security income, you can’t do that anymore. Today, if you’ve got a million dollars sitting at the bank, you can buy a few cups of Starbucks throughout the year. That’s it. That’s it. So you know, real estate as it is a very interesting thing. I think there’s some vulnerabilities there. But, you know, as you said, this gets very specific. We’ve talking very macro to do well in real estate, I think is to hone in on the property and try to adjust many of the risk variables by preference preference. For a certain style of property, a certain place for that property, it doesn’t come back to the three words that you think everyone knows about real estate, location, location, location.
5:12
I think and, you know, kind of going back to what you’re saying, I think there was a statistic that somebody threw throughout that, that mastermind were very soon there’s gonna be more like 60, people turning 65 and babies born. And they’re going to want to convert their assets that they that they accumulated to this accumulation mentality, which I think is wrong. And finally transition into cash flow, the stuff that we aspire to now, and then kind of going back to your earlier point, in like, as an investor, I don’t care what the interest rates are. Because as an investor, I make money off of the delta between interest rates and cap rates. I think I think you kind of mentioned they kind of float based on one another. They kind of track the same way. I’ll throw out a recommendation For folks listening, and maybe you can do one to David, but, you know, I’ll say like, Look, don’t don’t just stop investing. But if you have equity not doing anything that just went up with the tide, like like that $500,000 in your primary residence not doing anything, I think it’s time to get that out or cash it out or get a new loan and lock in those long term interest rates, especially if you’re going to retire soon and lose that w two documented income. But any other ways you see playing this?
6:31
I think in in the years ahead, I would encourage kind of a low debt approach. And, you know, the strongest position to be going into a period of mean reversion is having lots of liquidity and low debt. Right, that gives you lots of opportunity where others are hamstrung and have to play the patient’s game, seeing cap rates at these levels. Again, the cycles run from double digit cap rates down to low single digits, and we’re met the low single digit into the range. We just saw Simon properties gobble up Topman, for, you know, a fairly significant price paid. And it was in the high fours. This is this is retail property, retail property in the high fours in terms of cap rates, in my opinion is paying through the nose that was a good property portfolio. And Simon’s no no slouch when it comes to knowing how to extract more value out of a property. But nevertheless, these are probably some of the lowest cap rates Simon properties ever, ever paid. And I think that’s that’s worth keeping in mind. Maybe they can turn a four and a half into something higher by the magic that they work internally. To me one of the best things that an investor could do today is hedge some of their bets. We like gold, not just because we’ve been in the business for 50 years, but because we see some macro factors which are going to drive more interest in that direction. So both from a game perspective, it’s attractive goals. silver, platinum palladium. These are areas of interest, particularly gold and silver. And so from a growth perspective, very intriguing. You’ve got so many people on one side of the boat, dow and NASDAQ and s&p hitting all time highs in the month of February 2020. And who knows where we go March, April, May. But typically you have a strong run in equities up through April. And this is where you’ve got investors who are contributing to their IRAs and their 401 K’s they’ve got the tax deadline in mind. So there’s a little bit of a push an extra push into the capital markets. And then after April there’s there’s there’s less capital flowing into the stock market. I would guess that after April, we might discover some significant weakness in the stock market. And when you begin to see that mood shift, and there’s not just easy money to be made you buy Tesla today and tomorrow it’s up another $300. I mean, this is this is increasing. Val at this point with some stocks, if that’s not the case, then the whole mindset the whole mood shifts, and this is where gold benefits tremendously when there is any inkling of fear or need to hedge positions in the marketplace people go for the gold so we launched a program called vaulted a year and a half ago. It’s a savings program with the Royal Canadian Mint where you can own physical gold you can buy $5 increments, $5,000 increments $5 million increments and you own kilo bars at the Royal Canadian Mint. If you want them delivered, you can have them delivered to your door. If you want to keep them there, you can buy it and sell it on your computer screen very inexpensively. Best counterparty risk you’ll find Royal Canadian Mint and it’s a very easy to use App takes less than 60 seconds to open an account@vaulted.com. To me that’s an entry way to sort of test the waters with gold get to know the market begin to watch the price and be able to dollar cost average into position in the metals. I do see a significant mood shift beginning to occur and again, we will at something like the Coronavirus, maybe it passes. Maybe by the time you’ve published this, it’s a non issue. Maybe by the time you publish this, it’s five times the issue. I think what I look at on a bigger scale is effect that we’re already in a declining trend in terms of global growth, in part because we’re having a harder and harder time servicing the debts that are already outstanding 250 trillion dollars. trillion with a T is our global stock of debt that’s 320% of global GDP. We don’t have an engine, a global engine and big enough to service this debt, with even a minor uptick in interest rates. So significant issues, significant issues for us to address for our policymakers to address. And as far as I’m concerned, this is not a time to put a tremendous amount of faith in a few guys and gals with PhDs. I think they think they know more than they do. And so the guys at the ECB the pboc the boj All of the acronyms that are for your world central banks, they really think they’re smart stuff. And they are smart stuff. But you have to recognize what you know and what you don’t know. And they don’t know everything. But they pretend to and that’s their policy seem to reflect. We know everything and we’ve got it under control. If they miss even a little bit, and there’s a repricing even a little bit on 250 trillion dollars in debt, you’re talking about making the global financial crisis of 2008 and 2009 look like shot look like look like child’s play. So I would hedge bets I would certainly continue to invest in income producing property. I’m very interested in that myself but make sure that you have a balanced asset something that is very safe, very stable, under any circumstances. I think gold deserves a place in the portfolio vault it’s a great way to get to get that process started.
11:49
Yeah, something I’m kind of looking into also, you know, I think for guys that are it’s it’s a little difficult, right, like these podcasts are free, right? And all kinds of people download these things. I mean, the folks that I kind of work with, and I’m sure you kind of work with, you know, there are mostly accredited investors. And I think, you know, the hard metals definitely have a place in it. But the trouble is when you get these, like 22 year old kids with no money, and they think that they buy gold, and it’s like, dude, like you should go buy a rental property, you know, you don’t have any money to protect, you got to grow it. That’s kind of that that paradigm shift or that paradigm that I think people need to be aware of when you listen to different different folks, you know, I think David and I would kind of cater to the more of the higher net worth folks these days.
12:33
Yeah, I mean, I will say that I’ve benefited personally from the real estate market over the last 20 years, but I personally have benefited more from the gold market over the last 20 years. I’ve seen five times increase in my gold position 500% gain, which far outstrips anything you could have had in the s&p or the Dow or the NASDAQ over the last two decades. I think the only place you might have done better is if you’re compounding at a high double digit rate, you know, 15 to 20% a year because you owned the right kind of passive income property. So they’re their places to go off the market. So to say off the publicly traded markets, I think one of the approaches that we take with the precious metals is a growth oriented approach where you know, certain products, gold versus silver, for instance, trade in a historic ratio, a relationship between each other. And today, that ratio is at an extreme at 88. To one the highest it ever gets is 100. The lowest it gets to is 15. If you play this ratio back and forth, you can take a few ounces and multiply those ounces, you know, over a course of time to turn 1000 ounces into 10,000 ounces that can be done that can be done. And so that’s one of the ways that we approach the metals market through our advisory service is to compound ounces. So if any of your listeners are interested, we actually have a great write up on compounding ounces. It’s a very smart way to approach the gold market for someone who wants a long term allocations, either gold or silver may not add any more money to that segment in their portfolio, but still want to see the number of ounces that they control grow. If you could compound square feet, if you could compound acres, we’re doing the same thing with ounces. You just it’s it’s something that’s easy for us to do, because been doing it for 48, almost 50 years love to love to help anybody and for us, it doesn’t matter if people are working to $5,000 or $50 million. I’ll be quite frank, it’s it’s a lot more enjoyable to work with people who don’t have that much money because they don’t think highly of themselves. We have billionaire clients, and generally speaking, they’re a pain in the butt because they do think that they’re like one step away from God, and they’ve forgotten where they came from. Oftentimes, they’ve forgotten what it took to make the money and pride dominates and just as human beings sometimes money doesn’t make you a better person. I have no preference. I have no preference. I like to help people. That’s why with the vaulted program, we Put no minimums on it. I mean, I had my kids in mind if they want to put $5 into gold they can. Zero respecter of persons or net worth in that respect. Don’t get me wrong. It’s it’s not it’s not an unfortunate thing to to write a trade for 50 or 100 million dollars. As a firm, we don’t have to cater to just the superwealthy.
15:19
That’s the nice thing about working with private equity folks. And for those who don’t know, private equity is I would call it like, you know, net worth 500,000 to 5 million I guess, but when you get above that 1020 hundred million, you’re more into the family office world and that’s exactly what David’s mentioning, they’re kind of a pain in the butt. Yeah, they can write a check but if they’re all skiing, you’re not doing any deals, whereas the private equity guys are kind of just working professionals get a little bit net worth and you know, they’re most most of my investors pretty appreciative, you know, kind of the work we do so some don’t, and then we, we don’t work with them anymore. But for the most part, got a good working hard folks doing this stuff. And you mentioned earlier, I’m April what’s what’s going on there? For people who aren’t aware,
16:03
we’re talking about April and kind of seasonality within the stock market, it’s not uncommon to see your best six months of stock market performance leading into April, there’s been an old phrase on Wall Street, if you’re looking at the stock traders Almanac sell in May and go away is is the phrase, because you’ve got your best six months of growth, which end in April. And again, a part of that dynamic seasonally is because you’ve got a lot of retirement dollars that are being automatically allocated to stocks when money comes into 401, KS and IRAs and whatnot. And it’s just automatically put into the stock market through mutual funds or exchange traded funds or what have you. It ends in April, with that priority being April 15. And the tax deadline you have to make your contribution by April 15. So that’s that’s the way people act. That’s the way people behave and there’s a benefit to those who are on the growth side, but it’s also worth mentioning And I mentioned April, because typically your worst six months began in May. And if you looked at a 10 year period or a 50 year period, or 100 year period, if you were a stock investor, and you just invested in the best six months, and then were in cash for the worst six months or sitting in gold, for the worst six months, your returns would be tenfold better if you just avoided the worst six months and got out of the stock market for the six months. So what is very interesting to me, is we have that timeframe, matching up with non resolution with the Chinese economy. Keep Keep in mind, when we talk about the Chinese economy earlier, this is one of those critical things. You know how important Christmas is for us. If you’re a retailer in the United States, how much of your business is done between Thanksgiving and Christmas 60% 70% of annual sales happen in a short period of time? Well, you have a huge amount of consumption and economic activity that happens around the Chinese Lunar calendar. The new year is when people are giving gifts you actually see a boost in the price of gold every year around the Chinese calendar because people are traveling giving gifts. It’s it’s like our Christmas, okay? It’s it’s a very fascinating thing to see happen this year. Everyone was was acting like a shut in. They didn’t go out for meals, they weren’t buying gifts. They weren’t traveling. They weren’t buying gold. They weren’t doing anything. So again, we factor this into 1.5 billion people who are not spending for one week or two weeks or three weeks duration is a big deal here. The Coronavirus is a big deal or not a big deal as it relates to economic growth in China and for the world based on duration. If people are not getting out and spending and it’s only for a one week period, it’s just no big deal. No big deal. I mean, I’m not I’m not trying to minimize the loss of lives. That is a big deal. But I’m just saying from an economic perspective, the longer this carries on, there’s hesitation to spend, there’s hesitation to buy real estate in China. To buy a new car to go out and eat, and this is going to have a major impact on the global economy and the mood that we have coming into year end 2020
19:11
it’s simple passive casual listeners I’m wearing my sleep shirt here because we make our money in our sleep one of those things that I’ve been playing around with this tradeline hacking and if you haven’t heard of that, it’s a great way to make some side cash hundred a bunch of books off each credit card every month to learn more go to simple passive cash flow comm slash trade lines and check out our E course to learn all about this cool way to make some money on the side balance take it out look for the gold section in the the investing menu at simple passive cash flow calm slash menu. And for those of you guys haven’t checked out that page, that’s kind of the starting point to check out any of these types of you know, all these different asset classes you can invest in whatever you want out there. So check that out. But before you go, David real quickly not to get political or anything like that. Who’s gonna win election and what does that mean? is another four years of good times ahead?
20:07
Yeah. So many times, you know, we have this idea in the stock market of the there being an efficiency, where prices are reflecting all the knowledge that you can have at a certain point in time. If you look at the stock market today, we are, you know, in the 29,000 range at this recording, and that doesn’t seem to be much of a concern for change. The stock market and its pricing would tell you Trump’s a shoo in Trump, Trump wins. Maybe he introduces even more tax benefits. Maybe he does some major infrastructure spending and taps the fiscal side. While he continues to pressure Jerome Powell on the monetary policy side, to sort of boost the system a little bit into the election and after the election, but today, the stock market would signal to you that Trumps Trump’s gonna win if Bernie Sanders gets the nomination. Elizabeth Warren gets the nomination, then I think you could see the stock market begin to sell off considerably. And if they win, then you’re talking about a 40 to 50%. decline in equities, a total bloodbath, a total bloodbath, because you’ve got some personalities in the Democratic Party, that prize the idea of redistribution of wealth. It’s not about economic growth. It’s about taking a static pie and making sure that some people get a larger slice of it. But I think Trump, generally speaking would say, let’s grow the pie. Let’s grow the size of the pie overall, and then see how it shakes out. Whereas particularly with Sanders and Warren, I don’t get the same impression with a Budaj edge, or I mean, there’s, and certainly with Mike Bloomberg, there’s a more moderate position who gets the nomination I would watch the stock market like a hawk because again, the stock markets going to give you almost like a litmus test of status quo is okay as far as the stock market is concerned, if it’s been good for four years, let’s get another four years just like this. Right? That’s that’s what you see in the state. Stock Market being 29,000 plus the nomination on the Democratic side and ultimately if the democrats do in the only hope that stock investors have of, of being okay is if a Bloomberg is is is the winner. There’s a whole bunch of people in there that between reckless fiscal spending well, frankly, the republicans are just as reckless on the fiscal spending side, they just choose different projects. But in terms of the tax side, the markets will get very, very concerned. And it’s been interesting. It’s been interesting if you’ve if you’ve watched the headway that Sanders is making. He has a lot of grassroots support. A lot of grassroots support. DNC doesn’t like him. the DNC would much rather have a moderate DNC, I don’t think knows what to do with Budaj edge quite yet. Maybe a little young. Sanders is like in his like an animal off the leash as far as the DNC is concerned. They can’t control him enough. He’s too much of an idealist. He’s too much of maybe even a radical, unmolested side who ends I still think Trump wins? Can that extend the growth trends for another four years, we’ve already extended the growth trends to 11. We’re already long in the tooth in terms of what would be normal and expected for the next recession. On a normal timeframe, we should have a recession or should have had a recession over the last year, two years, three years hasn’t happened, doesn’t mean it won’t happen. But what has allowed us to go this far? Certainly, money printing has been a part of that. You know, I’ll just leave you with this thought because the fourth quarter of 2018 was very critical. We had the stock market selling off major pressure, if you’re looking at the way insurance was treated against default on some of your large banks like JP Morgan, Goldman Sachs, tremendous amount of pressure fourth quarter of 2018. Jerome Powell comes out and says, No, no, no, no, we are not going to raise interest rates anymore. We’re going to lower interest rates. So major U turn in the first quarter of 2019. And then of course, they start started their their asset purchase program in September of 2019, which is also a very big deal, expanding their balance sheet. Okay? There’s a reason why there’s peace and calm in the market today. And it’s called excess or ample liquidity from the world central banks. This is not a good position to be in, it really isn’t because the strength we have is artificial strength. It’s like thinking that if I have a 15th cup of coffee, somehow I’m going to go and exercise that much stronger. Come on takes more than caffeine to be nutritious, nutritious and fit and feel good, right? But that’s the way we’re operating on on an intoxicated level in the markets. And it’s on the basis of way too much liquidity flowing from the world central banks, including the Fed all that to say, I don’t know, even if Trump wins, I don’t know that he can hold it together. Maybe more business friendly policies. Maybe in the end, it’s less destruction that occurs in a market correction. But, I mean, I still believe in the business cycle where you have abin flow Have good times and bad times. I think this is one of the reasons why I love what you’re doing with whether it’s the mobile home syndication or the apartments, where you have, you know, assets that are not priced every day in the marketplace, like a stock or a bond, but where you do have consistent and predictable cash flow, that’s beautiful. That’s beautiful. It allows you to take a long, longer term perspective and and that short termism for stock and bond investors is sometimes how they end up hurting themselves overreacting to the market volatility. volatility is normal. volatility is normal. Not afraid of it, but most investors don’t know how to handle it. long winded answer to the Trump question. There is more to the story in terms of economic success, even if he wins.
25:48
I’ll tell you how I’m playing the game these days. I mean, I kind of space out when I go into deals and then I go into cash flow deals and I have no stocks, no equity, so I don’t really care. That stuff, but you know, the tide rises all boats and I go into deals that are cash flowing from the get go and when you take over a project, your occupancy will normally dip from like 90%, maybe down to 70 or 80% in the most of the worst cases. So it usually takes about three to six months to get it back up to stabilized. So in that period I try and only have one or two of those out at a time. And then I go into the next one. So that’s kind of been my operating procedure up until the election comes and I don’t know, I mean, what’s your thoughts on this? I think if Trump gets in I might be going in Tuesdays at a time I mean especially because I I’m in dozens of dozens of deals at this point already have that base of stabilized cash flowing class bc assets. That’s just my situation, right like lanes not saying go all in if Trump wins, lane saying that is what I’m doing based on my situation based on my portfolio. What is your thoughts on that? Should I should I Going on chip. Oh, could you fall once he wins?
27:02
No, I wouldn’t. Because again, I think my primary concern is that your financial markets are, they’ve got a lot of internal weakness. You know, prices look good. But sometimes just on the surface doesn’t tell you everything. If you put lipstick on a pig, it’s still a pig. And so that’s basically what we’ve had the world’s central banks putting a lot of lipstick on the financial markets, and I think it looks a little bit better than it actually is. So to go into a recessionary period, I would suggest still sort of some caution. I still like liquidity, I think having cash having metals, you know, these are this this is not so that you are, you know, saying no to deals so that you can say more to deals that are priced even better. There’s this normal thing. I’ve had friends and family friends going back decades, being in the financial world as long as our family has. We’ve had real estate Developers as good friends for a long time, every one of our real estate friends, real estate developers goes broke three, four or five times in their career, because they’re always getting too far out over their skis. They always get too far out over their skis and they hit a minor bump and it’s just a catastrophe total yardsale lose everything start over again. The smartest guy ever knew in real estate was a guy who was selling homes for three to $4,000 a piece in 1935 36 and 37. He took his single family home fortune moved to California, bought 1000 acres in Napa Valley, and ended up building an apartment complex portfolio in San Francisco in the Bay Area, have read about 1000 units as an operator. He’s not reusing anyone else’s cash. This is just him, but he never had any debt. He never had any debt on his real estate. And he go through an economic cycle where you have a recession, and all of a sudden everybody who’s over leveraged and barely cash flowing, their occupancy rates drop and they lose their properties. Guess who was there to buy those properties for 70 cents on the dollar 60 cents on the dollar. What do you think his internal rates of return were on those purchases? When he ultimately as you described, it stabilizes the property. He’s got no debt on it. He had the ability. See, this was his advantage. He had the ability to cut his rents in half in a market downturn, stay 100% occupied and wait for his neighbor to go broke position, a strength baby position of strength. Amazing. There’s a guy who built multiple fortunes. And you know, ultimately, before he passed away, he lived up in Spokane, Washington, and his kids always wanted to know real estate, real estate, real estate, what should we be doing in the year 2000? You know, when he told him go all in on 100% of your assets in gold, that’s what I’ve done. He was completely out of real estate and stayed there until the day he died. Now, I’m not suggesting that that is the ultimate solution. But this is a guy who could see trends, macro trends and said, Yeah, you know what, things were a little crazy. He thought the real estate market It was crazy in 2003, and four and five before it went really crazy and five, six and seven, but he would have been the guy to take several hundred million dollars and put it to work in 2009 10 and 11. And his several hundred billion dollars would be a couple billion dollars today. Again, he he missed that cycle because he died. But he would not have missed that cycle on a strategic basis. He would have been reserved, he would have he would have had cash and been able to buy things for pennies on the dollar. And I again, it’s just 11 years growth, it’s great. Net Worth household that worth has never been this good. It’s beautiful hundred and $13 trillion. That’s amazing. I’m not complaining. We shouldn’t complain. If it bigger if it goes to 120 trillion. That’s great. But these things are cyclical, easy, come, easy go. So if we if we get too enthusiastic on the momentum slide up, then you don’t have enough as much flexibility to do Deal with a normal downside volatility move. And that’s where I think at this point, given the time factor, this is where we should be, we should be adding to cash adding to gold, be a little patient. And wait not on the basis of the election but wait on the basis of value being in front of you saying yes, that’s a great deal, then I would be putting all in I wouldn’t be doubling and tripling quadrupling. I would be, I’m with you. I’m with you. My time sequence might be a little different and it’s not tied to Trump. Now because Trump hasn’t done a decent job with some things in the four years that he’s had. But I think this is a bigger thing is bigger than him. The global markets and the US markets are more than one man.
31:44
All right, so if you guys got your Tesla stock, sell that and maybe consider putting into gold, check out the show notes. Simple passive cash flow calm slash menu. Look on that menu for the good section. And thanks for jumping on David be shaded. Yeah, we’ll split this up in a couple of episodes for people.
32:02
Tech the later man. Okay great thanks
32:10
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These days, your house is more than your home. It’s your home base, your safe spot, your office, your kids’ classroom, your entertainment space. Now more than ever, it’s the center of your life. If your situation has changed or if you’re out of work right now due to the Coronavirus Pandemic, the last thing you want to think about is not having enough money to pay for your home. Thankfully, you have options, but they can be confusing. That’s why we’re here: to help you understand your options right now-and figure out which option is best for you later, based upon your individual financial situation.
What help can I get now?
Under the CARES Act, you are eligible for a forbearance if you have a federally backed mortgage loan. It’s the first option if you are experiencing a hardship due to the Coronavirus and meant to help you before you fall behind. As a borrower, you may request a forbearance on your federally backed mortgage.
- A forbearance is a temporary suspension of your monthly mortgage payments.
- It does not mean your payments are forgiven.
- It’s important for you to know that once the forbearance period has ended, the suspended portion is due—but you will not have to pay it back all at once. You have options.
- The CARES ACT allows a borrower to have an initial forbearance period of 180 days regardless of their delinquency status. After that, if you’re still financially impacted by the Coronavirus Pandemic, you can extend up to an additional 180 days.
It’s not always easy to see whether your mortgage loan is federally backed. Or, in other words, who owns your mortgage loan. Many mortgage loans are sold and the servicer you pay every month may not own your mortgage.
There are some online tools you can use to look up who owns your mortgage:
- Fannie Mae: https://www.knowyouroptions.com/loanlookup
- Freddie Mac:https://ww3.freddiemac.com/loanlookup/
Loans insured or guaranteed by FHA, VA, or the USDA are also federally backed loans.
When might deferral be an option for me?
A deferral program was just announced which will go into effect on July 1, 2020 for Fannie Mae and Freddie Mac federally backed loans. It is only available after your financial hardship has ended or the forbearance periods are exhausted. A deferral enables you to avoid having to pay your suspended mortgage payments all at once typically by adding a non-interest bearing loan at the end of your mortgage, but repayable if you sell your home. Depending on your individual financial situation, we will work with you on available options. Other options available also depending upon your financial situation and the type of loan you have include:
- A reinstatement, which means paying what you owe on missed payments if you can afford it.
- A repayment plan, which means spreading what you owe on missed payments over a short period of time.
- A loan modification, which modifies the terms of your loan permanently in order to change your payment amount.
How will visiting www.loanadministration.com help if I have questions during this time?
The website is your key resource for information, guidance, and tools. It’s also the place where you may request a forbearance if you have a hardship due to Coronavirus. To get started, just visit www.loanadministration.com, complete and submit the request form.
If you’re already on a forbearance plan, there is nothing more to do right now. We will be in touch with you to discuss your options before your forbearance ends.
In the meantime, please stay safe and stay well.
Confirmation of approval!
Thank you for reaching out to us about mortgage payment assistance options. This email confirms that your forbearance plan is in effect. A forbearance plan is a temporary suspension of your mortgage payments, in this case, due to the Coronavirus Pandemic. It is intended to allow you the time and flexibility to manage the challenges affecting your ability to pay your mortgage.
We are here to assist you now and when your hardship is over.
The federal CARES Act (the Coronavirus Aid, Relief, and Economic Security Act) offers mortgage assistance options for borrowers who have federally backed mortgages and who are experiencing financial hardship as a result of the Coronavirus. The mortgage assistance option available is forbearance.
Prior to the end of your forbearance period we will work with you to determine your best options based on your financial situation. These may include:
If you are still impacted by the Coronavirus Pandemic:
1. Extension of the Forbearance Plan: The ability to extend the forbearance period. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account, if your hardship continues.
If your financial hardship has ended, there are additional options available to assist you with the suspended payments:
1. Loan Reinstatement: Bring your mortgage current by repaying your suspended payments in one lump sum. Please see the total amount due on your statement.
2. Repayment Plan: The total amount of suspended payments is spread out over future payments until the full amount is repaid. *
3. Loan Modification: Permanently change the terms of your mortgage to bring it current. *
4. Partial Claim (for FHA-insured loans only): A Partial Claim is a no interest junior loan secured by your property. No payments are due on the partial claim until the payoff, maturity or acceleration of your insured mortgage, including for the sale of your property or a refinancing, or the termination of FHA insurance on your mortgage. If you are not eligible for the COVID-19 Standalone Partial Claim, you will be evaluated for the FHA’s other loss mitigation tools to help you repay the balance owed over time.
*Available options may vary depending on investor guidelines. Additional eligibility requirements and documentation may be required for these options.
Important Information to Come
In the next several days, you will be receiving a letter that provides the details of your forbearance plan. Please carefully review all the information provided in the letter including the options that may be available to you after the forbearance plan period.
A Note About Automatic Payments
If your automatic monthly draft was set up with us, your payment will be stopped when your forbearance plan begins.
If you set up monthly drafting (bill pay) with your financial institution, you will need to contact them directly to stop automatic drafting.
Transcription:
In this short video, I’m going to show you guys how to put your loans into forbearance and I’ll walk you through some of the screenshots on it. This is the story but if you’re using the internet and one day he will try to rent them out. And then he became one, stop me. I got this email recently from my mortgage company. Actually, this is my servicer send lar, email saying that due to the Coronavirus and all the challenging times, the job brought this up to my attention that a forbearance in a temporary suspension of your monthly mortgage payment does not mean your payments are forgiven is important for you to know once that the forbearance period ended the suspension portion is due and you will not have to pay it back all at once you have some options. The Cures Act allows a borrower to have initial forbearance up to 180 days regardless of the liquid status. Scrolling down on this For Fannie Mae and Freddie Mac, every bank loans, see how we can do this to make you want to click on the link here and I’ll walk you guys through me trying to apply for this thing and see really how hard it is to put your loan in forbearance. So my lender on this particular property, it’s a turnkey rental in Birmingham, Alabama. But that doesn’t really matter. The only thing that matters is I’m using settler A lot of you guys are using some different servicers. On these servicers work with you know, folks like Wells Fargo Bank of America, servicers just is the person that interacts with you and collects the payments and that you basically these days, you just do everything through this internet portal. So I’ve logged in here and what you want to look for is something that says some kind of Coronavirus or forbearance option, usually have a flag in here it is for me, so I’m just going to click right here. Basically, they want you to certify that you’re telling the truth and everything. So acknowledging here I’m going to put in my low numbers of security number properties and press Next. Next screen, they’re asking if there was a financial hardship due to Corona virus. Yes, we were impacted. And remember this is they’re asking if you’ve been impacted, not necessarily infected. And that’s I think that’s what’s throwing a lot of people off. Of course, I’m not giving any tax legal or professional advice here, I’m just doing a holiday, how I would do it. Here’s kind of the forbearance option number forbearance is not really like you’re getting your payments, forgiven or anything like that. It’s more that you’re getting your payments delayed, which is nice, I mean time value of money. I’d rather kind of hoard cash a little bit, especially if you’ve got some other liabilities going on delay and basically they’re going to tack it on at the end and Right on the third or fourth month, your next payment is due anyway. Can you do the process, they kind of spell this out a couple ways just because there’s so much confusion over it again, they just pretty much tack it on at the end and you got to make sure you got this money. At month four or five or six, I think how long you’re going to do it. There’s a couple options here. Whether you want to take the three month forbearance options, and I think that’s they’re going to give that to everybody. But if there’s an option here, if you want to extend it out, you’re probably going to have to send in some a little bit more proof. You know, I want the longest term but the least least amount of headaches in interaction with you guys. So yes, and yes, Smith, see what happens. This confirms that you have been placed in the forbearance plan I think that’s it and there’s no other screen. So I think that’s about it. I usually set up auto payment on all my loans. So what I’m thinking is hopefully they just won’t fall. next few payments but I got the money in the bank anyway in case they do I just mainly did this to show you guys who are in some financial trouble out there that you know this is an option and it’s pretty simple to do you don’t have to talk to anybody. If you guys want more help with this, check out our newly started incubator group for new remote investors check out our podcasts will pass the cash flow.com and please share this with your friends and subscribe to the YouTube channel. I’ll see you guys later
this website offers very genuine 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 guarantee as in 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.
#Mindset – Getting through the everyday grind
Reminded me a lot about what people going through their daily life on a weekly basis, kind of getting knocked down. So this workout, pretty easy three rounds of 40 single dumbbell step back lunges. So pretty simple with a dumbbell in your hand 30 single dumbbell I did them as snatches, and then 24 beats three rounds, but here’s the big kicker and this was the game changer this little. Okay. On the minute, you have to do 20 double unders which is do a jump rope two times. So every 660 seconds before you get working on what you would like to do, and this is ultimately how you score in this workout. You have to get this thing done. Every single minute on the top of the minute for anybody who’s ever done double honors, I mean, if you can get them done pretty smoothly without messing up. Don’t take About like 20 seconds, 25 seconds. But the time cap on this workout was 25 minutes. And I didn’t even get past the second round. But I guess what it reminded me about and what I was kind of thinking about. You know, for a lot of folks that have a day job and even entrepreneurs, you have the the mundane stuff that you have to do every day, which is very similar to this on every minute on the minute 20 though on there, so you have to get that done. And it can be overwhelming that you really never get to the important stuff, the stuff that moves the needle for you. And it can be very mentally draining and on motivating. I mean, in this workout alone, I mean, there are a couple times that I just just like Screw it, I’m not doing anything. I’m just gonna rest up to do the start the next minute on the minute with 20 double unders and then attack this. So I totally get it and the sad thing is that this is how a lot of people are in their daily life. A lot of people with mobility An investor accelerator are busy. W two workers. They’re bringing in 100 200 $300,000 a year their day job, but they got to work 60 7080 hours a week. And then on top of family stuff on top of that. And that’s what I kind of see as the on every minute on the minute as a 20, double unders, they’d like to get to this. But every day they have to do that. And some days are just debilitating that this is all they can get done. And a couple strategies that came to mind number one, sometimes maybe, maybe you just have to blitz get through this. But really Blitz through this because this is really what’s going to move the needle. This is the the researching on talk, getting on the phone and talking to somebody about buying that first rental property or that property manager or just sitting down for 30 minutes to an hour after everybody’s gone to sleep. Or maybe you do it in the beginning of the day. A lot of people do the five, six o’clock wake up routine, and they knock out whatever they need to do before. They go to their day job. Another thing that came to mind is you know, just get through the the 20 double unders or your day job or whatever you need to get done. Or for me, it’s just the normal emails, just get through it as best as you can. You don’t need to race through it in 15 seconds and zip through it, just get through it. conserve your energy to what really matters. And for those of you guys up to the challenge, we are doing, Murph 100 push ups 200 100 pull ups 200 push ups 300 air squats and then a couple miles of running and you can also do it here on mode with a 20 pound weight vest but it’s just a we’re doing that for Memorial Day so if you guys are interested let me know shoot me Matt lane at simple passive cash flow calm and I’m just kind of a different mindset twist on you know a lot of this past investing so shouldn’t take more than two, me two to five hours a month. And if you are you’re doing it wrong. But even those two to four or five hours a month can be sort of like getting this done. Because you have that day to day you have to get done.
Lane’s Story – How an Engineer Achieved Escape Velocity
We work with hard working professionals looking to opt out of investments for the clueless. I mean mainstream investing, we work with people, we have a direct relationship while enjoying higher returns and a quicker path to financial freedom. I personally move my endorsement from turnkey rentals to syndications as my network has grown, however, the downside of many of these deals is that you need at least $50,000 to invest and the frequency of deals that meet my criteria is sporadic. Check out my article about passive cash flow calm slash fund and learn how I always have cash on hand by using the American Home preservation fund as part of this one two punch to be ready for a great deal while still making a double digit return. I’ve been investing in HP since 2016. HP is a crowdfunding solution to the mortgage crisis in America. We’re collectively the fund and investors like you pull their money together and get great bulk discounts and distressed mortgages. It’s a business model that I think gets stronger Should a bump in the economy come because this is where there will be even more distressed inventory for HP to purchase. The American Home preservation fund aims to keep people in their homes so you can make a 10% return while making a positive social impact. Invest in as low as $100 by going to HP servicing.com slash investors. And if you want the Free Bird zone book and learn about George Newberry story, please send me an email at Lane at simple passive, casual calm. This 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 May. Hello simple passive cash flow listeners. This is Episode 200. Now we’re not gonna have another drunken episode like Episode 100. But I still wanted to get you guys to know me a little bit better if you’ve been new to the podcast or listening from the start. Since I started this podcast in 2016, in the last a year and a half or so, our hooey deal pipeline club which if you want to join us go to simple passive cash flow calm slash club has raised over $30 million to go and acquire over a quarter billion dollars of real estate. We are currently in way over 3500 units. And we’ll see what we keep doing in the future. I think we’ll still pick up deals at cash flow and I think we’re pretty good and in the face of recession, to join us and join also our networking to go to simple passive cash flow calm slash club, and something I’m even more proud of is creating our community. A lot of us got together back in February what I call it the hooey three multi day I think it was three or four days of masterminding in Hawaii and we’ll probably do the same thing in 2021 probably Martin Luther King weekend. If you guys want to check out the highlight video To simple passive cash flow, calm slash hooey three and check that out, and I’m here I go read in my chapter. This is audible, the engineer who escaped the rat race and achieve escape velocity by Lane Kawaoka.
I walked the linear path for much of my life. raised as part of disappearing middle class program me to study hard in school, checking the boxes on extracurricular activities, cramming for the CTS and getting a high GPA to get into college, or to live a practical life. Growing up, we were told to waste nothing and turn off the lights every time you leave a room. I still feel guilty to order a soft drink at a restaurant as opposed to tap water. In college, while all their courts were playing frisbee in the quad, I was stuck in the basement of the industrial engineering lab. What why was I not playing in the sun because Google told mean, what the highest paid undergraduate professions were driving on autopilot for much of my early 20s. I went for a higher level master’s degree and tested to become professionally licensed as an engineer for the job security. Upon entering corporate America, I spent my first five years of my career working for a for profit private company as a construction supervisor, managing a bunch of entitled journeyman who were older than my parents. Facing the rigors of junior level employment. I played my role as a young guy traveling 100% of the time for my company, sacrificing quality of life as I navigated the operational clusters, toxic management and other backstabbing pawns in the company. I have a lot of scar tissue from the decade of working for the man, not to mention building someone else’s dream. You tell me how engaged you would be if meeting poke protocol was to sit next to your supervisor. And not speak unless directively instructed to or if you were asked to address a director to levels up by Mr. or Mrs. title. One day an internal company email went out notifying of a friend slash ex direct report who had died in a work accident. My boss was uncompassionate about the situation looking out for the big bad machine first, mostly his annual bonus and agenda. This really put things into perspective for me. As a corporate Road Warrior, it was novel being on a company expenses all the time and maxing out on airline and hotel points. But you can only have steak and lobster so many times. The only people who cared about my platinum status. Were the other suckers in first class who are working for the paycheck or it and acceptable quarterly review. Although I’m grateful that I had a well paid job post 2008 recession treated the most important resource time for money, the linear path and still delayed gratification, living below my means and an overall scarcity mentality of saving money instead of earning more, being more, I was in trance by the face of Wall Street marketing to blindly put money into a company sponsored 401k plan only to hope and pray that compound interest would carry me to a secure retirement. Let’s not even talk about the student loans I have. I knew where this path was going. I mean, I did the math, and it told me so this is my story of how I freed myself financially, how I took ownership of my life direction, and the series of events that allowed me to find my calling. Seeing the economic matrix, a steady diet of ramen noodles and a free birthday latte per year, made it possible in 2009 to purchase my own home too. Live in being a bachelor who has only home on the weekends, I realized that having this large home was a waste of money. I made the decision to rent it out and become a real real estate investor. You might be thinking that this was the big change. But at the time, it was simply a lot of beer money after collecting the rents and paying the mortgage. I don’t know if it was the beer or being loved drunk with cash flow, but I opted out of the linear path in my early 20s. From that point, I don’t know powered podcast books and other online forums on every keyword iteration of passive real estate investing, and a few hundred dollars a passive cash flow per home. The process was simple. Buy a rental property where the income exceeded the expenses in the mortgage, then rinse wash repeat. Like a space shuttle that accelerates through gravity and escapes the atmosphere in zero G. This was my way to financial freedom. Up to that point, the biggest breakthrough in my life. was discovering the mp3 format that compressed and played music digitally in my teens. Using this intellectual technology I progressed intentionally, to 11 rentals in 2016.
At that time, a few of my friends wondered why my ramen noodle dialog was being replaced by Starbucks coffee and yummy double bacon and egg breakfast sandwiches. They want a piece of the action to da It was about seven years later since the little red hen who did all the work by herself. As much as I liked helping people. I got tired of answering the same questions. So what does any other late Gen X millennial do but start a blog? Unfortunately, the words I write even if spelled correctly do not usually make proper statements in English. So I uploaded my simple passive casual podcast to iTunes where I could ramble and honestly talk about what I was going through as an investor. I began living markets consciously opting into more meaningful engagements with people and projects and searching for meaning and purpose. It was big. I was beginning to ask myself after sitting on the beach with my unlimited supply of pina coladas and time than what needless to say my motivation for working in a hostile work environment that I once tolerated dwindled, so I switched to work in the nonprofit public sector. I started to see the economic matrix where people essentially traded time for money and the rich let others build their dreams. being an introvert, I was paradoxically energized to see my audience grow. As I began in person meetings and online groups I sponsored. I provided hundreds of free coaching sessions to guide newbie investors. With my engineering background and a little bro science. I saw patterns arise in the stories from well paid professionals who were led into an unfulfilling life. On a line with their passions, abolitionists, Henry David Thoreau said, the mass of men lead lives of quiet desperation and go to the grave with the song still in and people do not have any time to look inwards and are consistently living with anxiety and self doubts because they are working like machines in order to meet their basic needs without the financial freedom to find their true passion. Why did so much hard work leads to financial scarcity and lack of fulfillment. This self searching group of hard working professionals searching for more, all had a common thread, a moment that pushed them over the edge and made them realize that the path they were on was unacceptable. These are some of the tipping points that I’ve gained from my many chats with investors. Seeing younger, less experienced workers get Red circled as future management and advance meant through the company Fast Track being fired to cover up shortcomings in a budget, internal theft by upper management and affair by a superior lead to bankruptcy of a startup company, affecting many innocent employees. Chronic drain of working with deadbeats getting lost in office politics of getting your objectives completed when they do not align with your boss’s objectives. A retirement party for co workers catered with crappy Chinese noodles due to the cost control when you don’t get the job because you don’t have enough gray hair when you don’t get the job because you have too much gray hair, being criticized for not being business devotee from those who live paycheck to paycheck themselves when you have a personal portfolio of a few hundred friends All units. That was me sending through LS meetings that should have been suffice with an email. circle jerk meetings where the boss’s dumb ideas are exalted by their minions. When your boss with no technical experience misuses terms like artificial intelligence, big data, machine learning and deep learning, being enslaved with the golden handcuffs, seen an ambulance come to the offense routinely during the layoffs season. Being around the negative w two work workers speak and adopting the prevailing victim mentality. The Road Warrior gets in early quit on Friday Friday morning to see the spouse at home with the poor boy watching your friends receive the Seiko stainless steel watch retirement
if you found a calling and something you’re good at and truly love doing good for you. Keep doing what you’re doing and consider yourself lucky. If you relate to any of the moments above read on the one idea. My online journal, my podcast resulted in the many emails of gratitude and acknowledgement because that was empowering people with the How to and inspiring them to take the leap of faith to change your financial life forever. I suspect that most effective part of my message was showing people that if me, a little awkward engineer could do it. How bad could it be? I started uploading my peer group and through osmosis This brought me to a Tony Robbins event I literally walked on burning coals. There were a multitude of top down and bottom techniques Tony Robbins spoke about during the intensive four day event. One of the lessons was things happen for a reason. And boy was I glad I did not leave to use the restroom when he outlined the six human needs. Number one growth to contract bution three significance for uncertainty, five, certainty and six love and connection. He was the game changing moment. Tony Robbins said the most important thing is contribution because the secret to living is giving. If you catch on to that, you realize that there’s nothing you can get that comes close to what you can give. Life is calling all of us to be more than just about ourselves. And that is when we get that spiritual hit. Apparently Mr. Robbins did not endorse the mission of sitting on the beach with unlimited supply of pina coladas and taking food porn pictures, while gallivanting the world as a tourist, like many of these other financial independent guys out there, nor did he support playing it safe with a bunch of passive investments. Later that Easter, I was baptized and the message was to go forth and help others. Then another of my mentors realized They legend Robert Helms said, when you are successful, you have an obligation to send the elevator back down.
I made it to my penthouse, and now
this elevator, I’m going to send back down to help other folks. We all have a finite time on Earth, an empty canvas to create a legacy. This is one my shot. opting out of the linear path was not about getting financially free and safe sailing off into the sunset, but it was about standing up for change and creating the greatest impact. The fan mail all followed a common thread of pain, many hard working professionals who are busting their butt on the linear path, or being misled down a comfortable life of unfulfillment. Many of them are enslaved by the golden handcuffs, running in the hamster wheel of the day job working for somebody else. Some like doctors, lawyers dentists, accountants and engineers make more money to get the big house and nice car. But in the end, they are just a bigger hamster. dogma of Wall Street. Buy and pray method is a cover up to insidiously steal investment returns from people who are doing all the work. Life is a three phase screwjob. Phase One, you enter the workforce with the worst jobs and the lowest pay. Time is abundant. Phase Two, when marriage and kids enter the picture, and alien grandparents too. This is the time when one should be excelling at their time consuming career. Money is abundant. Phase Three your teenage kids hate your guts and your health starts to fail. Time is abundant. The next chapter My mission is to teach empower good people to realize the powerful wealth building effects of real estate So they can spend their time on more important ventures and passions instead of working long hours and worrying about their financial troubles. In real estate, we use leverage and by teaching others, I’m leveraging other people to achieve their financial goals in hopes that they will to send the elevator back down for the next person. Simple passive cash flow calm seeks to educate those looking for diversification, and better returns outside the traditional investments such as mutual funds and stocks. This is part of a large effort to redirect billions of dollars going to the corrupt Wall Street rollercoaster, and help the shrinking middle class find safer and more profitable investments in projects that benefit Main Street, such as affordable workforce housing rather than luxury housing for the rich. The true meaning of wealth is having the freedom to do what you want, when you want and with whom you want. Building cash flow via real estate is the simple part. The difficult part occurs after you are financially free to find your calling and fulfillment. But that’s a great problem to have. And if you guys haven’t yet please book a call with me I’d like to get to know all my investors personally and if you’ve been listening to this podcast for a while we’ve never connected shoot me an email at Lane at simple passive cash flow and I’d like to hear from you.
Aloha this website
offers very general information concerning real estate for investment purposes every investor situation is unique always seek the services of licensed third party appraisers inspectors to verify the value and condition of any property you intend to purchase. Use the services of professional title and escrow companies and licensed tax investment and or legal advisor before relying on any information contained here and information is not guarantee as an every investment there is risk. The content found here is just my opinion and things change and I reserve the right to change my mind above all else. Do Your own analysis and think for yourself because in the end, you’re the only person who is going to look out for your best interests.
Exit a boring Zoom call due to technical difficulties
If you want to skip out on a Zoom meeting, or at least give the impression that connection difficulties are making it impossible for you to attend, do two things. First, get your fingers positioned over the ALT + V and ALT + A keys to turn off your webcam and audio, respectively. (Command + Shift + V and Command + Shift + A on your Mac.)
Then, right-click on yourself and select “Rename,” if it’s available. Once you’re ready to “depart” the meeting, replace your name with “Reconnecting…” but don’t click OK just yet. Hit ALT + V and then ALT + A to drop your video and audio, and then click on OK to change your name. With luck, it’ll all appear pretty seamless—your mic and webcam suddenly cut out, and you’re now struggling to “reconnect” with great difficulty.
May 2020 Market Update Investor – Investor Letter #13
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Costco there was a little flyer in the lunchroom saying that the last day for complimentary food and drinks at the food court will be Friday me. Which kind of is a sign of the times is like we’re getting back to swing of things. The pity party is over and we’re getting back to work. This 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. All right, welcome, everybody. This is the May 2020 monthly market update. You guys can access a lot of past my update everybody at simple passive cash flow calm slash investor letter, but we’ll get going here. Obviously a lot of this this month will be surrounding the COVID-19 demick in news
1:01
affecting our real estate investments
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from there, if you guys haven’t heard about me My name is Lane Kawaoka a professional engineer or ex engineer, I’m still have the P. I have a podcast called Simple passive cash flow found on iTunes, Google Play I Heart Radio and also have a pretty robust YouTube channel and if you would like to join our tribe, we have a free Facebook group for to get to know folks in our group a little bit better. So I’m going to run through there’s quite a bit of articles this month. If you guys know my style run through it pretty quickly, but here we go. The shopping center business reports that gap Macy’s koehlers bowls and to furlough most employees as stores remain closed or and COVID-19 and demmick are up Business Online reports that Under Armour to furlough 6600 workers beginning April 12. And I’m going to go a little bit chronologically here to kind of recap the month of April. So I put it this way, because hopefully it puts things a little bit more context for everybody to see how the story unfolded. Of course, March was the first last month march was the first month that COVID-19 kind of took effect. In my opinion, that second third week of March is when things emotionally turn towards kind of the fear base. And what we’re going to kind of see is how the story kind of unfolded here with a lot of big businesses furloughing and people having to stay at home. Commercial Property executive reported beginning of April that us braces for more job losses. Economies expect this week’s unemployment claim number to jump well beyond the record three people 3 million filed last week. And then later on, they reported unemployment ployment claims top 6.6 million. And I do believe later on the month, you know, these numbers and estimates have increased. So with people unable to go out a lot of restaurants and other industries just not able to make money.
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Unemployment, skyrocketed.
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Also in the beginning of month, April 3, Warren Buffett, Berkshire Hathaway sells part of their Delta Southwest Airlines steaks, sold about 18% of his Delta Airlines and 4% of their Southwest Airlines. So this is right after I’d say a lot of the big Fallout, the initial fallout of the stock market. A lot of this is you know, kind of duh, obviously this stuff happened. GDP fell at 400 Point 8% annual rate the first quarterly drops since 2014. Worst dropped since 2008. Consumer spending plunged 7.6% the most since 1980. It accounts for 70% of the GDP. Services drop the most on record driven mostly by one industry, health care and demick require providers to pull back on most often drivers like electronic procedures and routine visits. I know in our who invested group, like a lot of the dentists really got hurt bad and a lot of the non emergency doctors wouldn’t take in and do their procedures. So it’s really unusual how this pandemic impacted some people very greatly. And others they were relatively unimpacted next quarter economists are projecting at least a 30% annual decline or a business online Line reports that US economy loses 700,000 jobs in March due to efforts to contain spread of Corona virus. And you can see if you guys are tuning in on the YouTube channel when we do this live you can see sort of the comparison
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on on a graph of how
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the monthly change in job gains normally were hovering around 100 to 200 jobs have created 200,000 100 to 200,000 jobs created July, August, September, October, November, December, January, February, then in March and negative 700,000 per week in review them. I have a couple of these reports in here. This came out in the beginning of the the month. So again, kind of showing how things progressed. Some of the you guys can read it. On the screen here, those of you guys are on the YouTube but I will read some of the highlights here. So they’re commenting and appearing to be past the peak of infections but the US US GDP is expected to contract severely in quarter two, before giving up to stronger growth starting in quarter three supported by government stimulus and pent up demand. They’re calling calling for a second half of the year recovery. Certainly going into 2021 things are looking strong from this and a variety of other sources and this, this is reported by CBR ri. Some of the other highlights here Dallas Fort Worth Houston, Atlanta are hopeful markets to watch as their economies begin to open in phases and these are a lot of the early adopters of those trying to get out there
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quicker than others I do believe in.
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In Texas, a lot of the restaurants are kind of open at this point. I’m glad Her talking to some other partners, frontline workers get access to 3 million hotel guest rooms. And this is one of those, you know, kind of warm and fuzzy articles, where despite the suffering of massive pandemic business loss, the lodging industry is pulling together to provide temporary housing for workers on the front lines. Part of this is probably got to be some kind of trade in the background with the government and the hotel industry. But it’s the right thing to do. I think these are some, you know, some nice, people aren’t staying in hotels, right? hotels are hurting really bad. We’ll kind of get into some of the data that supports that here in a little bit later. The question that’s on everybody’s mind and honestly, what made me a little anxious this month and last month, is are people going to pay their rent? Wall Street Journal’s tried to scare everybody by releasing this article. That headline, nearly a third of us apartment renters didn’t pay for rent. And I don’t know where the heck they’re getting their data from. But this was entirely not true from my point of view, and, hey, maybe they’re just, they’re just taking their survey from a lot of more primary markets, like California, where people got it in their head and they don’t need to pay rent this month. I don’t know where the heck they get that numbers from Instagram. But this is an example of fake news, in my opinion, I mean, Wall Street Journal wrong, but depends how they sampled their data. I like to use these more industry publications multi housing news, reported that the majority of residents paid April rents reported that nearly 70% of rental households across the nation paid their rent this month and then that that was the first week of April. And then the they reported later on the month that rent payments hit 89%. And this is pretty typical what we saw across our portfolio, you know, anywhere from a normal normally collections are in the 95% range, you know, you’re gonna have people not pay period any month. But the impact that Coronavirus and the pandemic had to that number was we saw in the month of April and a little bit for that was a maybe a few point decrease from there. And that’s what is kind of shown across the multi housing news. Another source commented that the rent payment rate at 93% of prior month so it’s, I think this is to be expected. This is what sort of what I personally inspected across my portfolio. You know, there were some slight decline in collections but it is wasn’t a big deal. And those who were going through some trouble we were able to make individual plans with and they eventually caught up later, at the end of the month. Thus far, it is the first week of May. This is not not good data, but thus far it looks like collections are tracking maybe a little bit less than what it was in May. But still overall, I’m, I’m pretty, pretty relieved from what I’m seeing.
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We’re going to kind of dig into some of the individual asset classes and see how they’re, they’re faring. But multi housing news is has an article will student housing be impacted? And Heck, Yeah, it is. A lot of kids had to get pulled out of colleges couldn’t finish up the year and a lot of parents, here’s the deal. A lot of parents are the ones who make the financial decisions and a lot of parents are a little apprehensive is their kid going to go back to his or kids school is going to open a time. So a quote that I pulled from here is, it was common that I think the reality is in a fairly likely scenario that some of the pre leasing will be backloaded until parents and students feel comfortable with the university’s fall semester will open. That’s a wait and see. And this is this is why in my box, I don’t really focus on student housing because very impacted by times like these office leasing now commercial property executive had an article and they quote, tenants and landlords are all trying to work together on understanding the respective needs for one another. I’d even go as far as say lenders are doing the same thing. Everybody is trying to play nicely in that sandbox. And we can all understand that right now. People are not going into the office. They are taught to work from home for the most part, and that this is dropping the demand for housing or for office space. And maybe it might lead to a longer term trend that people don’t need to go into the office. We didn’t need all these good meetings to get things done we’re good with work working virtually I know I am. Short term rentals. I think these are the ones getting killed the most there was a great article. You guys can check out CB lab COMM But was entitled can Airbnb survive Coronavirus, air DNA which is a great source for data for you guys who do do short term lease lease rentals. They said that there was a dropping 80% compared to the previous week in the beginning of March. bookings in New York City, San Francisco and Seattle had dropped more than 50% compared to the week beginning January, and drops over 35% in Washington, DC and Chicago. Again, this is another reason why I don’t invest in short term rentals. And you guys, there’s an article I wrote about the cons of short term rentals at simple passive cash flow calm, slash STL. For short term rental or str. Slash str is that URL. Another image of some of the Airbnb bees from air DNA showing on a graph. All much of a decline from the beginning of March to the end of April. In terms of bookings contracted, I think a lot of like, you know, here in Hawaii, and I’m sure this is across the nation. There was a lot of government regulation over they wanted to shut down down these short term rentals and people who had short term rentals, they’re desperate they need to pay their mortgage because they weren’t getting any, any type of tenants to come through. So they’re being very strategic or tricky on when they would list it so they would hide it away from their the government regulators. Again, which I don’t really condone doing that type of stuff. I don’t stick to a normal investment like workforce housing, something that that everybody needs. So here’s a graph that retreat advisors put together where they just put all the asset classes on a graph and show which ones get impacted the most. Some of the more sensitive to a pandemic short term rentals sniffs which are assisted living developments senior house Students housing, gaming, lodging I think these are like a lot of the hospitality think Las Vegas. And then strip malls and malls are impacted some of the things that aren’t the bottom of the list of you know, little impact or short term rentals, apartments, industrial storage.
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And that that leads to the, you know, what should you invest best value in a downturn might be workforce housing says multi housing news. They came up with this white paper, assessing the impact of a recession related to COVID-19 crisis might have on apartment properties. So they came up with this analysis on Which they created this category of vulnerable industries, which is comprised of those who work in hospitality and food. So you know, thinking restaurants or people like that. And, and like hotels or casinos, that type of stuff. They took those type of people who are getting hit the hardest. And they tried to figure out where did these people live right like if you if you are a landlord, you have one of these people working or paying your rent. So they realize that 52% of these guys are living in houses, they’re renting houses.
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Another 28% are in single family home.
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And if it sorry, the 52% was houses that they own themselves 28% our rent, they’re renting single family homes and just 18% of these guys are In apartments while they found the rentals. So, again, the conclusion of this article was that a vulnerable industries hospitality and food, only 18% of these guys are an apartment and therefore the single family home landlord is going to get hit harder. things to think about right because you know, you try and bulletproof your portfolio to whatever can happen. And pandemic is just one of those things that we have just added to the list. So CB re came up with this executive summary in the beginning of April. Some of the highlights here are, you know, all this will lead to increased multifamily vacancy and declining rents over the next two months. And they expect the multifamily market to bottom out in quarter three and begin a recovery in 2020. For. So they’re seeing us kind of popping right out of this overall vacancy expected to rise at 2.7 percentage points to 6.3 in quarter three and fully recover in 2021. The Federal Reserve pledged to keep interest rates near zero until full employment returns and inflation exceed so so that’s something to keep in mind for those of you guys who are always constantly monitoring those, those rates and wanting to refinance or or pull money out.
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CNBC reports that JP Morgan Chase to re raise mortgage borrowing standards as economic outlook Garcons. So, people are saying, well, like there’s gonna be a lot of distress inventory of this COVID-19 thing which I don’t really quite buy. I mean, if it was if it gets that issue I probably wouldn’t buy it. But the problem is with this theory is like, what’s happening is the lending market is getting more difficult. So if your deal gets better, which I’ll argue that may or may not be true and your lending gets worse, then is it really a better deal, I mean on lending as part of this whole equation. So, from from, you know, middle of April, customers applying for a new mortgage will need a credit score of at least 700 and will be required to make a down payment equal to 20% of the home value. So that credit score need is coming up. So the change highlights how banks are quickly shifting gears to respond to the darkening US economic outlook. So what does that mean? Well, more apartment renters and people renting because they can’t meet the qualifications to buy a house. And I think this also means Lower condo prices, because they’ll be less demand for condos. Because a lot of the guys who are on the bubble with lending are the guys who don’t have much money at all. So they’re trying to get into condos as opposed to you know that that second or for lifetime house, the bigger house. Other developments and this is more affecting us on our our multifamily apartments or bigger commercial deals, people are always asking, you know, how does it impact us? So, fannie and freddie mac backed agency that is now requiring six to 18 months of payments in reserve. And this just means that we essentially we can kind of borrow less less proceeds, which slightly lowers returns, not much but it you know, this is all just kind of moving the needle very slightly. It depends on the debt service coverage ratio of the deal. But this can have a negative impact on whether a deal works or not. There have been also some changes in forbearance based on some of the agency debt and ultimately I think this flows down to the single family home mom and Paul landlord. See some of the the guidances and the policy that the Fannie Mae Freddie Mac, the big guys rolling up to the bigger operators in syndication deals, top 15 fastest growing mega cities on on here. First one is Gonzo. I don’t know if I’m saying that right. Cairo, Jakarta, Indonesia Tokyo at 33 million New Delhi but the point of putting this up The discussion that was happening in this article is, with this whole pandemic, thing may potentially being a part of our lives in the future. Perhaps these mega cities are less of a option people is going to be, you know, people are going to want more space, they’re going to want to move to the suburbs. The United States biggest city, which is New York has 15 million people, which is only 15 on this list. So that’s the question, right? Are these bigger cities? Are people going to want to live downtown? Are they are they going to want to move out to the suburbs and have more space? I think these are some of the more the macro trends. If you’re an investor and you’re buying an individual deal, that makes sense. I think it’s sort of it’s sort of this doesn’t matter to you. I mean, I think this type of data is for the guys who are investing Like 10s of millions of dollars, and they’re buying it on an institutional level, but you as a mom and pop investor should always be buying the outlier deal that doesn’t matter if it’s in the deep in the heart of the city or out in a tertiary market. I think that the biggest things are are you buying at a discount? Are the rents undervalued and his ability to pump rents? We talked a little bit about which asset classes are hurting the most and which ones are more resilient. This is a slide on which sectors
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and mainly what markets are to be on the lookout for.
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As I mentioned earlier, some of the biggest impacted
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sectors are leisure and hospitality employment. And those ones that the top some of the top 10 are Las Vegas. Orlando for Mickey Mouse the Florida coast Orange County and then San Antonio, San Diego, Miami, Austin Charlotte Los Angeles. So not saying that there will be a you know, these are at risk thing not to say that there’ll be another pandemic in the future, right? Who knows, but this is just another thing to kind of keep on your radar. Add your add on to your laundry list of other things tornadoes, floods, hurricanes, locusts and append them. Which industries did better this past month? Well, grocery stores went up 26% and the losers were closing clothing. I’ll be closure of all the malls and people just aren’t the only way to impress anybody. You don’t need to buy clothes again. Your times had a cool article. I like how they have you know, their interactive graphs. You know, people are spending more money on groceries, less on travel. shopping and transportation, who are the winners, shops, supermarkets, General merchants and e commerce. Home Improvement saw an increase. I don’t know how they became essential stay at home or so they’re able to stay open. But I went to Home Depot to buy some seeds to plant in my garden because I was bored and then the line was like going outside. And some of the losers were airlines cruises fitness. A lot of gyms are hurting. movie theaters lodging and apparel. Alcohol sells well. I’m just another way of you know, movie theaters. I’m sure some of the losers movie theaters, events and attractions, toys, entertainment, book retailers arts and crafts, music sporting goods were some of the big losers. Some of the winners were gaming and video streaming and music streaming. So a lot of people playing at home playing video games, passing the time. Again, I I bought one of the Echelon bikes that you work out and there was like a one month backlog. And I also bought a better webcam to come to you guys at 4k and that thing is still on backorder last month we reported that Cheesecake Factory was going bankrupt. Well, the RV business online reports that Rona capital invest $200 million to keep them alive. So you guys can continue to have your cake. At least that’s the ticker symbol for Cheesecake Factory or a business online officer reports at Amelie buys multifamily development site on South Broadway in Denver. Now for those you guys know who Amelie is Emily is a developer that focuses on residential Class A. So these are pretty hip places to live a lot of like, I would say like the yuppies will live in Emily’s they’ll have a movie theater inside the amenity someone might even have bars. I would call them Class A rentals more than luxury type. But you know they’ll they’ll build in a lot of the big sick primary markets and big institutional player but when the way I read this type of article is like, I’m kind of seeing that all Mali, their their institutional player, they’re going to do the research, but maybe when they go on ups, maybe when I think that a, by the time they actually build the thing, the market has maybe got an overheated, starting to pull down. So you guys can interpret this type of news however you guys want, but that’s just my two cents. Commercial cmbs late payments starting to mushroom. So this is another kind of stress tests on different asset classes on some of the late payments. delinquency is starting to happen and well, below you’ll see a lot of these hotel retail multifamily industrial office all had sub 3% delinquency, and hotel jumped all the way up to 20%. One every five hotels are behind on their payments. One on every 10 retail 10% are behind on their payments and multifamily industrial and office are all around 5% or less so they are less impacted by this bill. Again, you know, this is a data hotel and retail are getting killed out there. One of the biggest
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hot topics that’s been happening in our Facebook group is people are complaining that they can’t evict people. And so here is a map put together by Marcus and Milla job, outlining which states have moratoriums on eviction.
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Most of them do at this point.
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Some of the ones obviously a lot of the blue states will have this. Some of the states with no programs are Oklahoma, Arkansas, Missouri, Georgia, South Dakota. Well, no one who lives in South Dakota and nobody cares about that. states that suspended court eviction proceedings, not necessarily had an eviction moratorium where New Mexico Wyoming, Idaho, North Dakota,
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Maine, Vermont,
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and
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I don’t know what that is. I don’t investor near Kentucky, and Virginia. Hey, simple, passive casual listeners. I’m wearing my sleeve shirt here because we make our money in our sleep. One of those things that I’ve been playing around with is tradeline hacking, and if you haven’t heard of that, it’s a great way to make Make some side cash hundred a bunch of books off each credit card every month. To learn more go to simple passive cash flow calm slash tradelines and check out our E course to learn all about this cool way to make some money on the side. We’re going to get into a little bit of actionable things you guys can do and I’ve been, I have been keeping a list and a running note sheet of all the COVID-19 cares act. developments at simple passive cash flow calm slash COVID-19. serve a living guide. Always consult your CPA attorney and do your own due diligence but here Here are some of the developments that happened this past month. So you guys should have received your your share of the 16 million checks the most checks through direct deposit, may 4 Iris will start the seven paper stimulus checks. And I’m pretty impressed how much how quickly they actually moved in and actually got the eight out to where it’s needed most. One of the biggest perks of the cares act is that you’re able to take $100,000 out of your retirement funds and what I call jailbreaking getting it out of those property mutual funds and into real investments. So the cares Act allows each person so you can you can take 100 grand and your spouse can take 100 grand penalty free normally there’s a 10% early withdrawal penalty, but with the care under the cares act, as long as you’re impacted by the COVID-19 thing, which in my opinion, are to consult your own professional or get a new professional. We are all impacted. So you might, you might be able to take that out and pay the taxes back in three years, I think is the what the guidance to say. If you don’t want to withdraw, maybe you want to, now’s the time you’ve been mulling it over at home, you want to do a rollover. Here’s a nice rollover chart. Whether going from Roth traditional simple IRA, SEP IRA, 457 403, B or any design Roth account, a lot of the retirement information is located on my GOP site at simple passive cash flow calm slash q RP, which is short for a qualified retirement plan. So here is a map of the United States showing which states small businesses were able to get the payroll protection aid. A lot of during the first 10 days of the federal government small business rescue program. It was crazy guys. I mean, the money was just going out and One of the headlines was that the bigger companies who were asking for more got help first because the lazy banker just want to get it out. And it’s easier when you disapprove the top five guys and instead of the bottom 5050 something guys, I guess you don’t blame them when the goal is to get the money out. Again, a lot of more COVID-19 developments we have a great webinar that we did on April 15 with my CPA, again that that video is hosted at simple passive cash flow calm slash COVID-19. So if you guys haven’t been keeping up in March, beginning of March, the Fed drop the funds wait rate to zero percent. And the analogy I like to use is we gave up all our dry powder at that point and I was actually kind of surprised they they dropped it so quickly. Normally they’re dropping the rate, maybe a quarter point more half a point but they dropped to think like a full point or more just in a matter of a few weeks. So no more dry powder, which is a little scary, but then they came through later on and signed the cares Act, which is 2 trillion or minus would be a gazillion dollars. In my opinion, you got to pay that back probably with higher taxes in the future. Some of the provisions of the COVID-19 cares act enacted on March 27, was a five year carry back on net operating losses. And I would consult your CPA on on a lot of these things. On one of our deals, we had submitted the K ones back to the CPA
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to take advantage of some of this stuff. Here’s some markets likely to experience a longer post COVID-19 recovery, Florida because of the high population of visitors and 19 percent of their population is over 65 and older, New York mostly because of the density. They might have a lot of people moving out is what they do they say and off 63 million tourists per year so a lot of visitors there. And Illinois because of everybody knows Illinois everybody wants out of Illinois. One of the reasons the high corporate taxes, they have a 45% increase in January 2020. High property taxes. People are just leaving that city that poor city of Chicago source on this a CL and Associates a markets likely to exceed a long recovery. Again, more California. They locked out 40 million people for many weeks is economic, devastating high gas taxes, unfunded pension liabilities and they ranked Number 48 of all US states and overall economic freedom. Well, that’s why they call it the Socialist Republic of California. Nevada is another one that’s going to see it hard. 56 million tourists 50 million are in Las Vegas. Just going to be those casinos and hotels are going to be hit the hardest. airline hub cities like Dallas, Atlanta, Chicago, New York, Denver, Orlando, Washington, DC, la Seattle, Charlotte, Houston, Seattle, are among the top airports for passenger traffic. And then oil dependent markets because you know, behind this COVID-19 there was just another big headline of all the crude oil dropping prices. A lot of these are like Houston, real estate sectors likely to experience and how enhance building operation regulations, which is typically not good for the mom, Pon vesser. Sometimes the institutions can actually benefit from this. But these are lodging facilities or apartment communities, retail centers, gaming facilities, health care, office buildings, commercial conference facilities, entertainment centers, outdoor assembly venues, I’m sure they’re going to tell everybody to wipe surfaces like five times a day or do whatnot. It’s just going to make business harder in these sectors impact on COVID-19 on development. You could see incorporating more hands free amenities like motion, active doors, restroom faucets, tissue dispensers, parking gate, doors and building designs. You know, more point of sale stuff come out. I mean, like when I would go pick up my food it just kind of befuddled me how you saw that like sign the credit card thing and put the credit card and I guess or like press the screen I’m like, can’t they like just call it good and as soon as it touches touches, utilization of new building materials, inclusion of pandemic in forced mature clauses in construction contracts. I know on our syndication documents I think that word got like thrown in in like future feature versions, which is just added to the laundry list of things that can go wrong. upgrades to h fac systems regarding air quality and circulation and regular on site health inspections during construction before certificate occupancy is cut. But it’s not all doom and gloom why real estate will remain a preferred investment class. Post COVID-19 is still in a low interest rate environment. Americans need a place to live like apartments they need a place to shop like grocery anchored retail and produce distribute goods in warehouse and distributed facilities.
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Continue strong demographics, population still going up and favorable tax treatments with all the goodies in there like the 1031 carried interest, capital gains opportunity zones, cost segregations etc. So I’ve been watching a lot of other informational videos with my time and one of these is some content done by Richard Duncan economists. Um, you can see some of his past work and podcasts at simple passive cash flow calm slash Duncan, but I subscribed to his newsletter, it’s a paid program. So it sounds like some free stuff. But you know, he he kind of outlined some demand shocks as inflationary demand shocks that will increase demand and push prices higher. And that’s what happens in a war and the deflationary demand shock that increases demand and pushes prices lower like however in a Coronavirus example Like this. So that’s how a situation where a war, inflationary demand is and a deflation in demand like how we’re at now. It’s just interesting that like, kind of hear from more academic viewpoint of what what’s happening here. Some of the supply shocks were decrease supply push prices higher was the oil shocks in the 1970s and other deflationary supply shocks increase supply and push prices lower, which can be a event like the general globalization. There was a big controversial headline that came out where California was forcing landlords to reduce rents by 25%. Even if a tenant cannot demonstrate their hardship or need, allowing judges and the court system to set rents and change the rental agreements already in place. I’m not going to read the other two books. point, but you guys are probably getting upset. But hopefully this does not go through in California. But this is another reason why you don’t invest in California or if we state that stuff kind of happens. More than a third of the population lives in states that are partially reopened or will soon This might be obsolete by now. I think the things to watch out for are Texas and and George are are some of the front runners in this and see how they react. I think most people who are kind of, you know riding that the fear train, are scared of that second wave. Will it happen? Will it won’t? I mean, it probably will. But yeah, there’s there’s two kind of voices out there. One that you know, says you know, enough is enough. We need to get out there when you get the economy going. And of course the other one is, you know, we need to kind of protect human life. One of the best models I’ve seen of this Is this thing right here, that kind of predicting that we got to the peak? Now we’re gonna see the second third wave. And then how does the vaccine fall into all this? I’ve been following a lot of the vaccine happenings at stack news.com. But everybody’s, you know, thinking that it’s either going to be later on this year or, you know, some people are like, well, three years from now. It’s been affecting the stock market every day. And that’s why I don’t invest in the stock market, so emotional. Whereas I think, you know, where we’re tracking with collections and May, and how we’re already kind of getting back to work. I think the impact is very little. I don’t want to say that too soon, because I don’t feel like we’re out of the woods. But you know, that’s why you invest in real estate and especially cash flow for these situations like this. All different ways that people are kind of viewing this pandemic and how we’re coming out is going to be at Nike swish is going to be a V is the beginning of the end or, you know, some people are even optimistic. One quick reminder that that, you know, some of the older HIV AIDS SARS MERS Ebola measles Zika virus, you know, the six months after show, sometimes a quite a big, big of a gain. After SARS, things bounce 14 and a half percent. Stock market returns are going to go up and down.
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But I think you know if that’s why, again, you invest in real estate, this was a model that I made last month, which kind of showed Well, at what point does my real estate book down in value? Well, the first step here was the Black Swan event happened which is the Coronavirus then fear set in I will say this was probably in the beginning. till March 15. And then when the stakeholders began, business income definitely decreased. Companies cut jobs as as outlined early in April. But I don’t think we got to a point where the tenants couldn’t pay the rent. And again, I don’t want to jinx thanks for myself. But um, based on where collections are, I’d say the books kind of stuck between us tenants can pay rents, and we didn’t really see market vacancies go up. Hopefully this this, the trend doesn’t continue. But there were a few other stock gaps to happen before our prices go down, which is decrease market rents, which impacts lower operating income, which means less income for properties. And then that impacts the macro market to be higher cap rates, which equates to lower property values. And this is why we invest in real estate. I think after all, this is all said and done. People are Gonna be just dumbfounded. How much was $2.3 trillion was spent to basically have people stay at home and not just stop the economy. How are we going to pay for this? I don’t know. But it’s probably going to be higher taxes in the future or finding some ways to get at the retirement funds of everybody. Investors are kind of cheering in their homes because when you own rental properties, you own commodities, you want houses and as things inflation starts to happen to pay off all these debts, I’m pretty much riding on the right side of the wave of this thing is your properties kind of go up as inflation starts to happen. The kind of wrap things up the with the news, you know, to take a page out of Edward de Bono’s philosophy yellow hat which is the optimistic hat to counteract all the fear mongering out there. Here’s some of the good things that’s been happening you know, appreciation for stay at home spouses. I don’t think people realize how much work that was to, to watch the kiddos, people getting outside and walking around and embracing physical fitness. I look outside in the evenings it looks like Halloween out there with all the people walking around, although they’re not wearing any costume. Virtual Learning being accepted. And I think in our corporate settings, less streaking meetings. Amen to that. We’re actually getting things done and we don’t have to see each other face to face. People. I think what’s nice is people are questioning the news and media. There’s so much information out there and people have their smartphones and their computers and trying to figure out you know, the nobody knows what’s really the fact out there. There’s some reports and some real like, like videos of like hospitals. being filmed and yet there’s other things that are being recorded. Number five here appreciation for teachers who watch our kids. I think this week is Teacher Appreciation Week.
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So if you have a teacher, I would encourage you to get them something nice even though there’s not going to be that last day of school for them on number six time with our smaller family units. And let’s face it, if you’re kind of listening to this economic report, you’re probably in the upper half of the economic scale and you may be doing the white collar warranty. Nothing wrong with that. It’s just, you know, I think we can all be fortunate that we are able to just call grubhub and get takeout and, you know, we we have our jobs and we’ll continue to bring in our salary and income. And at the end of the day, this is just a time where we We just work closer to our immediate nuclear family. And another cool thing or the creation of virtual wine tastings and zoom cocktail parties. We had a couple of these, these with our simple passive cash flow group and our mastermind recently, a lot of fun. And it’s a thing now for wine tastings, check it out. More VOD, some other trends online shopping more effective through Amazon and visa remote base environments, outsource it. contactless transactions coming. I think you’re going to see about a lot more and more telemedicine for medical and veterinary clinics. So that kind of wraps up the the monthly report. Um, the next few slides are about what’s going on with me personally, as I kind of make my way through this world. I’m always trying to find ways to grow and This month what I put together was I created a completed my trade line course, which I’ve been working on in 2019 to guinea pig for you guys. So I made $10,000 putting authorized users onto my credit cards and in my spare time and so I put a resource out there for you guys to check out simple passive cash flow comm slash trade lines. There is also a company force along with that if you guys want to dig into it and actually do the hobby make up the six five figures I guess I guess you could make six figures you have enough credit cards. Next on my list is I’m I’m trying to help out people getting started with this real estate thing and I’m trying to work on the turnkey remote rental course already have a couple modules in my ecourse and simple passive cash flow calm slash course but I think then the feedback I’m getting from a lot of people appreciate the feedback from a lot of you guys that said, it’s just a lot of stuff. So I’m trying to break them out into more individual shorter courses for you guys. How I get contributed to this world this month? Well, we a lot of the K ones come back and we gave our passive investors a lot of great losses on their taxes. Here’s an example k one from one of our investors who put in $100,000, they got back $98,000 of passive losses on line two, they’re also way I tried to communicate, contribute to the community was I gave away my ecourse access for the quarantine time because I figure a lot of people are busy or not doing anything at home, they got a little more time on their hands. And look, these are interesting times uncertain times, whatever you want to call it. And I just feel like people needed a break. So I just figured I’d give it away for free. For the time being, it’s normally 800 bucks. Hopefully, if you guys like it, you guys will pay for it. So we can try and find and use the money to improve the program for the next guy coming through. But for just the rest of this month, that coupon code is cool. Okay, oh, you have access to that expires at the end of this month. However, other ways that I got significant this month, my stocks did not go down 30% in value, so I felt very special about that. I didn’t have stocks, I don’t invest in that stuff. And it didn’t go employed. There’s always a you always have to try and create uncertainty in your life, um, and there was a lot of uncertainty in my life. staying at home just watching I would watch a lot more news than normal.
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And there’s always a little low level of anxiety that is my tans going to pay rent and as of today, With me looking Okay, with a little bit easier, one month at a time, and I think we’re kind of coming out of it, but I’m not going to jinx myself. Some things I achieve certainty. So we lock, the lending market kind of froze up there March. But we have our lenders locked up for our next project. And things are looking good there. So it’s always nice to have some certainty in your life that you can kind of move forward and kind of tackle the next project. I think it’s hard to find love and connection in our lives these days. But you know, virtual cocktail parties was one way of doing it. But soon we’ll be able to get out there and hang out with each other. Once again. Some new articles and podcasts I like to highlight again, the trade line article, learn how to make I made $110,000 in 2019. And I’ll continue to do so simple passive cash flow calm Straight lines and the cares act guide, double pass a casual comm slash COVID-19 to see how you can get some of your whether it’s the PPP, Hero protection, or the idol grants, or some of those. Some distractions I had to deal with is, you know, being at home and kind of a lot of the world slowing down a little bit, I have no excuses not to get anything done. And there is time to do, what, what I need to do. It’s just of all a matter of priorities. And this is why I encourage all of you guys to get a coach, my coach really helped me define what I needed to get done and what are the barriers and also man, like I said earlier, like my coaches effectively just calls me on my Bs and keeps me moving. And some people aren’t willing to pay a little bit money for that, like Well, that’s cool. But um, all people in my peer group who do Real Estate and you know, entrepreneurs will swear by it their their coach, which is kind of a glorified accountability partner but um you know some people believe one thing somebody the other All I know is I want to be like one subset and seven to follow what they do some fun things I bought this month we call them doodads because they don’t put money in our pocket, but let’s just acknowledge the fact that we’re just blowing some cash on that. I bought that Echelon mirror. actually haven’t used it yet. But I got it working all over report next time on how it’s been working. And I really like popcorn. So I found this thing on Amazon where it’s like a 10 pack variety set. I didn’t know there was 10 varieties of popcorn. But you can you can see which one you like the best. I like that mushroom one out on the left side but they give you like 10 bags 10 different varieties of popcorn kind of cool. Some of the lessons learned I had this month was the pay consultants navigate that PPP of idle grants and loans. Um, this is something I’d really like to spend my time on. You know, I have the COVID-19 guide that you guys can pick through and to see if it’s appealing. But, you know, I’m kind of changing the way I do business where I stopped trying to be cheap, easy and free. Because normally I get hurt, hurt doing that. So weighing back to see what I get from the PPP and idle grants. And as a group, we have a book club, you can join that at simple passive cash flow calm slash lien hack. And the title that we are reading by Mark Manson is everything is theft. I thought it would be a cool book about
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with everything uncertain in the world.
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It’s a book about hope, and I like Mark Manson. He’s kind of got a more of a stoic viewpoint on the world. And
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it’s a good book on philosophy.
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And again, if you guys are interested in joining the passive investor accelerator mastermind we do a couple calls on Mondays every month, you get the course for free, we have 50 plus numbers in there now most of which are accredited. So if you guys are tired of kicking tires with the other people at the local Ria, who don’t have money, or the other trolls on the online, free online forums out there, and you want to actually build real relationships with real people who are sort of filtered and coming into this community, go to simple passive, casual comm slash journey, we just got a membership coordinator to help facilitate some of the networking because it’s all about getting people to connect within our group and to extract the most value we can for each member and they kept things off Here’s a little thing I found on Reddit I guess at Costco there was a little flyer in the lunchroom saying that the last day for complimentary food and drinks at the food court will be Friday me, which kind of is a sign of the times is like we’re getting back to swing of things. The pity party is over, and we’re getting back to work. So again, a lot of this stuff here. Consult your own legal professionals. This is information is presented for informational purposes only. But unless we have any questions we’ll see you guys next month. Oh Ha.
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This website offers very general information concerning real estate for investment purposes every investor situation is unique. Always seek the services of licensed third party appraisers inspectors to verify the value and condition of any property you intend to purchase. Use the services of professional title and as 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.
Boasting your credit score hack – Using Others Credit Lines
Why would these authorized users buy trade lines? And why would they pay $502,000 to these brokers first, a lot of them, they want to get a credit card approved to get the best rates on the loan. I mean, if you’re sitting at a 600 FICO credit score, you’re going to get the best score I believe at like 656 80. And that could mean a difference of paying like a half a point, quarter point less, which we all know that could be a lot of money at the end of the amortization schedule. A lot of these guys are more sophisticated people in my opinion, from what I see they’re not broke people trying to get their credit score from 300 to 450. So they can go out and get a car loan. They’re interesting that a lot of them are business owners and they’re trying to just optimize their credit to get a massive business loan.
Go to SimplePassiveCashflow.com/tradelines and check out the E course which is on sale right now.
Simple Side Hustle I made Over $10k a Year
What is tradelines? If you guys have credit cards, there’s a function on your credit card called as an authorized user. So what authorized user is this person pretty much piggybacks on your credit. And now when the credit bureaus check, it can also report on your authorized user credit, the authorized user or the person piggybacking on your account gets a boost and credit score and then they pay you for that. So that’s where this becomes a nice little way of making some side change. To me. I think it’s so fun when I get an email saying that I just made 200 bucks and I like to go out to nice restaurants once a while and it’s nice to know that my little hobby trade lining pay for it, go to SimplePassiveCashflow.com/tradelines and check out the ecourse which is on sale right now.
Quick & Easy 10k in 2019 With This Wealth Hack
This is a nice way to make 10 grand on the side, the way it works is authorized user goes on your account for a couple of months, and then you take them off. And most cards you can have two authorized user per card. So if you do the math, it’s like one every month one of these things every month on average, to add and take off an authorized user takes about five minutes. So let’s just say you had a car that was 15 grand credit limit, and it was got a back in the day, 10 years plus and the broker is telling you, we’re going to give you 200 bucks every time an authorized user signs up after the two billing cycles typically go around. So the broker will tell you, hey, add this person on this account. Here’s other social security birthdate address name, you add them on your account. A lot of times this can be done through your credit card portal. And then in a couple months, you get an email from the broker saying hey, everything’s all good. You can remove them now But yeah, I made 10 grand doing this in my 2019 year, go to SimplePassiveCashflow.com/tradelines and check out the E course which is on sale right now.