How much money can I make during the straight line and stuff, that’s a combined factor of how much credit card limits you have, how old your card is. And basically, the longer the credit card is, ideally, you want to be above two to five years to get the highest price. And then the more credit limit you have, the better it is. So before you get started with, you know, sending your inventory over to the credit card authorized user brokers, I would try to call up your credit card companies and get that credit limit increase as much as you can. There’s a lot of techniques out there to do this. So you can Google it. I just trying to tell him I have a lot of income and a lot of business income to get that credit limit increase as much as I can. You know, every few years, every couple years, I try and get new cards so I can keep building the pipeline. A lot of times they won’t take these cards if it’s less than two years. So keep building the pipeline. A lot of these credit cards, you can cycle up to authorized users. And when you’re cycling on each authorized user for two months, then you can do the math, you can cycle these cards quite often. Some cards like Chase, I’d be very careful. They’re a lot more sensitive than the rest, of course, at this time of recording this as the case but these things can change. Again, that’s why I would really urge joining our Facebook group to be on the forefront of the latest happenings. This is the story part of the game playing. Then one day he went try to rent them out, and then he became one religion but still may
Now our trade lines safe and that this comes up again and again. And look, I’m not going to warrant your identity being stolen from you. But I will tell you that I’ve been doing this for over a year and nothing has happened to me in the past and I’ve been around other people doing this, you know, trying to trade pacts how to, you know, best optimize this and protect yourself. Again, that’s in our secret Facebook group that we have, you guys are welcome to join as ecourse members. But you know, that’s why we try and stick to these, these brokers that play the third party between you and the authorized user. Make it so that this is a secure process as possible. Make sure you don’t have the credit cards sent out to the people you know, have it sent to you personally and I’ve never activated them. And now would be a good time to create an account on something like Credit Karma to monitor your credit scores or any kind of alerts that might be popping up. And I’ll just get into the habit of checking in on your credit card statements to see if there’s anything fishy. A lot of times you can catch it early, you can just kind of wipe it from your account. Since doing this, I haven’t really seen a drop in terms of my credit scores. But another best practice is to make sure that you set individual alerts in with the credit card company, you know, like more than a $1 transaction shows up. So you can be alerted to if anything fishy is happening. I don’t know about you, but the way I look at this world today, where we’re all connected with the internet is you know, the hackers have access all the information out there at will and it’s just a matter of time to one of your card cards gets compromised. So whether you do trade lines or not I always just get into the habit of just monitoring your transactions knowing it’s just a basic fact of life at some point. You know, based on all the online accounts that we have and credit card transaction online purchases we make you know those unscrupulous guys will get ahold of our information. So the best way to mitigate that is to just accept it. But to verify the transactions that are happening and to be vigilant, more and more tips are being shared in our Facebook group. Is this going on as being the next one day he went try to rent them out, and then he became one real investor me
Alright, first off, what are trade line, you’re putting somebody on your credit card as an authorized user, and then the authorized user is going to get a nice little bump in their credit score. And whether it happens or not, well, it doesn’t really matter, but they’re paying you money to do this. And what the intention is, is that the credit bureaus will check that you’d be attached as a credit card authorized user to you. And that person might be able to use that to go and apply for a new mortgage at a better rate, they might be able to get a loan for their business. You know, we’ll use brokers that is sort of the intermediary between us and them to kind of keep things secure. You know, again, safety is our number one thing, why do people buy the trade lines again, you know, they might want to try and get new credit cards, trying to get the best rates from the loan. Business Loans, you know, it’s it’s kind of neat when you get the request to add them as authorized users, you’ll get social security numbers from them. You’ll get their address. And I’ve done a little bit of googling and seeing who the heck are these people? And a lot of times, it’s not who you really think it is. It’s you know, sophisticated business people trying to get loans. I mean, you know, who thinks of this stuff, right? I’m who, who would have thought before you bought this ecourse that you could make monies with trade lines. But there’s another side to this of people using trade lines to increase their credit score, you know, so if you’re trying to get above that 650, Mark, or 680 mark for the best Fannie Mae, Freddie Mac loan rates out there being an authorized user using these services, but on the other side of the spectrum, or maybe you get on one of your friends or one of your family members as an authorized user on their cards, if they have a strong credit card. Definitely This is something that’s not very talked about very much. But, you know, let’s use a story advantage and keep going to the course. This is the story but as you gain the benefit, one day he went try to rent them out, and then he became one But still may
0:00
So I walked away from a 20 year career and it like a sea level. Sea level it career I spent my whole life building killed it. So go all in on real estate. This is
0:15
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. That’s still me.
0:29
A simple passive cash flow listeners today I got I got snow pentas one of my partners of mine and we are going to get to know him a little bit better.
0:38
How’s it going? Oh, man, I’m awesome. psyched to be here. How you doing man?
0:42
Good. Good. Hit that subscribe pillow and mash up button hit the bell, right.
0:48
I know. I should get the bell up here. So I should do?
0:52
Yeah, so a lot of you guys don’t know what to talk about. We do this on YouTube, and we throw it up on there. So pretty much all My content today is found on the podcasts. It’s also on the YouTube, I’d say more stuff on YouTube these days. But yeah, let’s get to know you a little bit better. I guess you know how much simple passive cash flow Are you making today? And how are you doing that?
1:14
You know, right now everything’s invested in real estate, so I just do multifamily real estate Currently, I’m all in on multifamily. So, to that end, everything that we got everything that pretty much passively comes in is usually poured directly back into the business, right. So whether it be in terms of earnest money, whether it be in terms of just putting, you know, eating my own dog food, so to speak, put it into the deal itself. So really, I mean, aside from a couple hundred grand that’s pretty much it. And after all that I pour everything right back into the business, so it’s right now we’re in growth mode, you know, and that’s all I’m focused on at this point.
1:53
I mean, I had Mike mccalla Wits on the podcast recently he wrote the book. Profit first and I was telling him it’s like, yeah, I mean, we don’t really take a profit. We’ve just put it right back in equity and the deals and hopefully the magic happens.
2:08
That’s, that’s, that’s it. That’s it. I mean, the thing is, though, is that we’ve we’ve done a lot of deals, I know that we’re doing right, right now, we’re really, really good at picking the right deals. And we’re very, very careful with how we underwrite and how we get in on it. So I would say that I, it’s less about hope and more about we know what we’re doing.
2:31
This I think we do at
2:34
what point did you kind of come to this more abundance mindset side where you felt like you had enough money to put food on the table and, and you don’t have to worry about paying the bills with a salary. Yeah, man,
2:47
you know, well, a part of it is that with my journey, the way I did it was I used to have a corporate america job. I used to be a CIO Chief Information Officer of publicly traded companies did all that and it wasn’t Until, and I was also doing single family to at the time right long, like I’ve done six single family small multi family for 16 years. But I’d say about going on four years ago decided you know what? multifamily is where it is a friend of mine told me about multifamily and this is what it needs to be doing. So when I decided to transition from this single family, small multi family to doing big multifamily, that’s when first that’s where the spark went off is that I mean, I decided that’s what I’m going to be doing. And I gave myself a timeline, I gave myself a basically a goal. To say that on this day, I’m going to be I guess, I’m going to take out my last consulting gig and I’m going to focus on just building up the business while working at a regular consulting gig and packed up everything moved to Cleveland, Ohio, where I’m at right now and really got to work on working as a consultant and building this this multifamily real estate business and true to form just like I set out in my goals that I write every day religiously. I set up my goals to really define what I’m good at how I live my life that far off. That’s what I do. But I decided that that within within I think it was a 12 month period from making that decision. You know, I hustled man, I hustled hard, that’s what it took to get there.
4:26
And people always like to kind of understand you know, what were you in that situation where you finally made it? You know, say I was gonna go from single family to multifamily and more as an operator, then sure, passive investor, but like, How long were you doing the single family homes? How much how big was your portfolio at that point? So you decided and then how did the day job overlay on top of this? You know, were you kind of still working the day job while doing the multifamily kind of explain the the timelines holidays? Sure,
4:55
sure. Sure. No, I actually started single family 16 years ago, maybe a little longer when I was working at a company in Virginia and I was a CIO I was making great money and the reason why I got into multifamily or single family at the time and small multifamily was just to be a backup in case something happened with my job that’s the only reason why I did it. You know, wasn’t about it wasn’t about building legacy wealth. It wasn’t about trying to build something big is all about in case something happens I’m going to have some extra income right? So I started focusing on single family small multifamily and really tried to build that portfolio up. I think by time I finished up by time I left Virginia that no but four years in my started all that might have had like small portfolio like under under 100 units, like it would fluctuate between 80 to 100. And you know, nothing crazy, but then it was, but I I pretty much kept it pretty, pretty. flat for many years, just had some things going on in my life at that point and especially 2008 backed away from from all that. But I would say that the last job that I had brought me back to Virginia, I started selling off all my assets. And I was talking to a friend of mine, and his Real Estate Attorneys again going on about four years ago, he says, So tell me about hey, how who, who buys these big properties? Who how’s it, how’s it done? And he explained, multifamily syndication to me. So once I understood how it works, and what it takes to really put a deal together, I’m like, Well, I could do that. I work in corporate America. I’m not afraid of the numbers. I’m not afraid to do the hard work. So that’s exactly what I did. I just put myself I just got committed to studying every single thing I could find on multifamily syndication, syndicating deals overall, and got myself in front of some great mentors got myself in front of some great people that helped me build The business and that’s really what it took. You know, it’s not gonna say by any stretch, it was easy. But you know what? It was totally, totally worth 100% worth it you know now I’m all in on this real estate all in 100% on it.
7:14
At what point did you quit the day job in there was that
7:17
Oh, so so that was that? Yeah, so that was I quit the consulting gig, the one I mentioned earlier. It’s been three years now three years ago. And you know, I’ll tell you what lane I’m not gonna say it’s all sunshine and rainbows every single day of my life these days, you know, hey, there’s there’s everyone’s got a bad day ever. Sometimes they face some pretty bad stuff. But there’s not a single day I would ever I would never I would never even think about going back to that. Just I just don’t, I just didn’t think about it. You know, I, I am very pleased with how, how we’re growing the business and very pleased to partner up especially with people like you to really, really build something that’s really cool. You We got some cool stuff in the pipeline here that is just awesome. You only get to do that and build those opportunities when you really commit yourself wholeheartedly to to a project. So the only way to get it done
8:13
submit a lot of the guys this thing, they’re still in their day jobs. Or maybe they’re even haven’t even started investing yet. You can kind of go back to your single family home days. We call this the Han Solo moment. It’s like, you know, Star Wars Han Solo and Chewbacca or just lowlife smugglers and then Luke and Leia, you know, it could be the right people or the right idea. And then their their life to that pivot point for you. What was that pivot point? Or if there’s some kind of story from your corporate day that you can be like, that was the moment that change
8:47
my path? Well, you know what it was, it was happen a couple times, but it didn’t. It’s funny how it didn’t click, you know, till till the second time, really the first time when I was doing Working as a CIO as a young 3030 something year old guy working at this publicly traded company running global technology in my early 30s is ridiculous, right? It’s crazy. managing these multimillion dollar budgets. And I know like I said it started doing the single family thing. And when when things got when the company decided they’re going to make a change, even though the company was doing great, I was performing very well. My team was doing great, we were keeping it so we kept all the systems up and running, we’re innovating. The company decided we’re going to make a change. So they come to you and they say, pack up your stuff, get lost, you’re done. Now, I’ve focused everything I put my whole heart and soul into that company, right like any good C level executive or any executive for that matter, pretty much anybody listening you should be doing if you’re working for a company or you’re going all in on the company’s what you’re doing right? But what I did not do to my own detriment was really focus on building that passive income on my own for my own self and for my family. That’s where I did not do that correctly, you know, I should have I should not have relied on these, these outside forces to really take care of me and my family like I did. You know, that’s that’s what that’s what killed. That’s what killed me right there, you know, and allowing that to happen. not once, but twice. The second time, though, was was the time on I’m like, I’m not gonna do this ever again. I’m never doing this again. I’m not gonna put myself into the into predicament like this. And that’s why I decided that real estate was it because despite all the problems I had, over the 16 years that I’ve been doing this, from going to job to job to job trying to hold my head above water with these different companies. That real estate kept on throwing off money every month, every quarter every year. I’m not going to say that it was always like You know $100,000 a year coming in from real estate most saying that it was just passive income. But that’s one thing is for certain is that that money came in, you know and that’s that’s the thing I realized I’m like, you know what, I’m not doing the corporate thing anymore I might do one last gig I’m gonna do a consulting gig and I’m just gonna go all in on real estate So I walked away from a 20 year career in it like a sea level. Sea level it career, I spent my whole life building killed it. So go all in on real estate. So I mean, take some take some courage to do something like that.
11:36
For the first time they told you to get loss. Yeah, they told you to pack up you didn’t have any anything in your portfolio at that time then
11:45
I had like some single families and some small multifamily that’s it
11:49
well, at least you had the you had the kind of the proof of concept at that point, right. Yeah,
11:53
yeah. Yeah. Well, that’s exactly it. Yeah. Because even though and that’s the thing, though, it’s like they so they ripped me. I’m at home with Giant house that giant mortgage and car payments and I’m like, oh, man, what am I going to do now? Unfortunately, I still had some some money coming in, you know, to support me. But that’s that’s the power of the passive income, you know is that money kept on coming in, right? And help kept me above water thankfully because if I hadn’t done that, if I had discovered the power of real estate, man, it would be a different different life story we told you today.
12:26
So that time, how did your portfolio take the next step in the next like, month or two after? Well, anything changed like after that after that fire lit under your butt?
12:38
Yeah. Well, you know, the thing though to it, unlike some other people you might have had on your show for me, it was I didn’t add anything new. Right. I was because at that point in my life, my mindset was not was not set properly. Right. I was still thinking like an employee. Right. I was still thinking like an employee. Again, nothing wrong with thinking like an employee, but other than the fact that oh my god, I need to get a job, I gotta get a job like right now I gotta send out resumes right now Hurry, hurry, hurry, you know. So even though as an entrepreneur and as a kid, that’s all I ever wanted to be as an entrepreneur, I put that aside, so I couldn’t be an employee. Right. So I think that the fire didn’t happen until later. You know, until that until more recently, when I decided that, you know, after getting fired from yet another job, I was like, you know, I’m not doing this anymore. That that really, really kicked off. me doing this thing wholeheartedly. 100% all in, you know. So I think that that early on. I don’t think it was ready. You know, it was one of those things that that I’m sure you might have heard. I think it’s an old proverb. It says something like when the student is ready to teach yourself shall appear. I think at that point, I wasn’t ready to be taught, you know, I wasn’t ready. I was still in the mindset of an employee. I wasn’t doing self improvement. I wasn’t reading books away. I’m reading books today I was doing a these things that any successful entrepreneur should be doing, you know, to really be successful. I wasn’t doing that, you know, to my own detriment. I needed to be doing that stuff. I do it today. But, you know, it’s why this is I just wasn’t doing before you know.
14:21
So let’s kind of talk about this, this topic of you know, where do you go LP or GP, you know, you’ve got a few rental properties, you’ve got some experience under your belt, but, you know, you start to realize it after having five 810 single family homes, just not scalable. It’s not going to get a substantial passive cash flow coming in every month. You’ve you’re, you’re obviously a success story, but I’m sure like myself, you’ve seen a whole bunch of guys fail at this. Oh, yeah. Any comments on like, the percentage of people that try to take the next step and what is it if you can talk about like, you know, people trying to make this decision on Their own in their head right as they work their hundred 200 k job on the side too, right? Yeah,
15:07
yeah. I tell you what lane I mean
15:12
to, for many, many people, there’s guys out there on the internet. They’re putting up these courses Hey $4,000 I’ll teach you everything you need to know. Do it Sign up now. Man, I tell you, I mean, hey, listen, we have a program, happy to sell it. However, what you don’t see is the amount of work that goes into finding and putting together a deal. That’s an obscene amount of work. And we might go through a lease 100 deals before you find one. Right one that actually pencils out, and has shows a glimmer of hope that it could be something that you could invest in and get a nice return to hit the targets that we establish right Not including all the relationships you have to build with the brokers. So that’s that in itself is a full time job calling on brokers Hey, buddy How you doing? Got any deals for me? Hey buddy hi to continuously making phone calls talking to brokers. That’s how we that’s how we find our deals. Anyway, we’ve got our deals primarily through broker broker relationships, right? Then of course, vendor relationships, right and maintain those relationships, maintaining relationships with our lenders, as well. And the lender brokers who I mean, I’ve already talked to, to my lender broker four times this morning on a variety of different deals refinancing three deals right now, you know, so it’s like all that. Everything I just mentioned is a full time job. So as an executive, as a C level executive or hell any executive for that matter, even even if I’m working at a company as a developer, I don’t know how I would do that. And also try to do what I’m doing today. It’s it’d be extremely Ordinarily hard. That’s kind of the reason why we what I would do anyway, if I were in that predicament is just partner up with, with a good solid operator that knows what they’re doing. They have a great team. And they know how to underwrite deals, they know that the dealer put together then they know the reasons why it’s a great deal and go all in on that. I mean, in reality, they get equity in the deal. They get, they get a return, they get all the tax benefits. It’s not a bad gig, you know, sign a bad gig at all for an LP. You probably see a whole bunch of these guys just like I call it like the dreamers. Oh, you just I just want to highlight what you said there. Like, obviously, you have to work hard and everybody knows that and these guys will like, Yeah, but I’m, I’m special. You know, I work really hard. I’m like, Alright, do you do have a college degree like, I mean, not saying that. That’s important, but you know, that’s why I like working. One of my criteria is that you are a professional. Right and Not saying that college is worth anything I’m actually kind of against the whole traditional educational system but shows a level of commitment that, you know, most people come into this. What’s that? What’s that, um, that movie with the flying dog never ending story or something like that.
18:20
Like he goes to like the thing and it’s zapped somewhat the lasers. Like you’re not worthy, you’re not worthy. Yeah, a lot of people just are just gonna get zapped with the lasers. And yeah, I think what you said there like, you have to work your butt off but you also have to like have these special skills of like, navigating key relationships with brokers, lenders, etc. Partners,
18:43
man, that’s what
18:44
these hard workers cannot.
18:47
They can’t do it, man. I mean, listen, I don’t want to sound like you know, I get down on people that don’t have to work but I mean, yeah, I meet them. I meet him at different events and they say they want to become a syndicator and They don’t dress the part. They don’t act the part. They don’t say the right words. They can’t spell and lie. That it’s and I’m not saying that, that, you know, this is harsh I say it’s exclusive little club or anything else like that. It requires a great deal of effort. That’s all I’m saying. It’s like, it’s it’s very hard to convey over a podcast or or it’s just difficult to convey that way but it tight. I started you know,
19:34
I started on a real estate conferences because I find the other guys the guys who listen to like thousands of hours of podcasts, and they tell me things I don’t know about this weird calculation of some noi thing or I’m like, Alright, man, like, you know, the academics. Yeah, well, I know all about that I’ve seen you know, like, let me tell you, like, Oh, okay. Adios. Have you done you know and but then you ask your buddy and you’re like, yeah, that guy isn’t the jack you know? Yeah, that’s all I got and they just the part two right?
20:09
There was one so one of my students he actually went to a seminar and someone the headliner at the seminar actually said to a group of 200 people fake it until you make it like, Oh my god, no, man, listen. You know, guys like us, we have a fiduciary responsibility. Right? That’s that is key. We have a responsibility to our investors, we have a responsibility to our families. We have a responsibility to the people that invest with us as well personally, friends and family aside from aside from other investors to and to everyone else that is relying on that project’s success, right. There’s no time for fake it until you make it right when you when you’re when you’re messing with other people’s livelihoods. There is no faking. My opinion, that’s just what I think, you know, it’s like I would never ever say that and I would never recommend to someone fake it until you make it. It’s more like, study learn, understand how to put this deal together partner up with someone that knows what they’re talking about. Work with them get to know them. It’s a long long long journey this this was not something in my case. Anyway, that happened overnight. It took took me 16 years, right took me 16 years to become an overnight success. Right. That’s that’s how it is in this business in my opinion, anyway.
21:34
I mean, and then also, like, you can’t do this while you’re working a full time job now. Like maybe pick up your first small apartment building but you know, I yeah, it gonna work. It’s just not possible.
21:48
I mean, it might be possible to get like, say a 30 unit. You know, handed over a third party management and you’ll probably get the price steal from you is what they’ll do more than likely What I mean by that is that because you’re focused on your job like you should be, it’s gonna be very difficult to also watch all the expenses on on this third party and what they’re doing. Right? And how do you negotiate that contract to, by the way, right? If you’re doing 30 units, you’re starting off 30 minutes, that means you’re paying 10% we’re not paying anywhere near 10%. Right for our for the management of our assets. But what they’ll do is they’ll cut you a break. You know what, just for you, lane, I’ll do it for you for five and you’re like, Wow, cool, okay, but then they start, start fluffing it in with all this extra stuff. You know, oh, we took a trip, please. The door lock, painted a room that didn’t need to be painted. And they’ll find ways to get their money out of you. Right. And having those relationships like I said earlier, it’s like that’s another vendor relationship. You got to keep a close eye on what money gets spent. Right, what money gets spent on what assets and you notice, for instance, we do this all the time in our office, to assets side by side to different location. How much are we spending on a unit turn over here versus over here? Why is this one less than this one? What’s going on? Let’s have a call, let’s figure it out, right? Or is the two different vendors to me too, they take this vendor and put them over here, right as well, right? different things like that. It takes time to run those analysis and know how to really figure out how to do that kind of stuff. If you have 30 units. It’s very hard to find someone that’s going to care. And that’s that’s probably the biggest issue, you know, with some of the smaller deals anyway.
23:27
Yeah, I’ve kind of found that you really need to be above 80 or 100 units. I mean, everybody talks about it. So this is another one of those things, these podcasts like rupees book rupees. A know these rules like oh, you need to be over 56 units to get a property manager in the office. But in real life, you need that person and the handyman. Yeah,
23:48
yeah, yeah, for sure. For sure. I need an even 56 units, depending on where it is, uh, I don’t know if that’s feasible. Honestly. It’s more like 100% Canyon is probably the minimum but yeah, man, I mean, and now nothing wrong with say starting off with 30 units and two months later buying another 56 units and two months later, if you want to do it that way, I suppose you could do it that way as well some really really wants to do this on their own. But man, I can’t I can’t even imagine working on an office job and trying to run that number of units, three different properties by yourself, like keeping it as an asset manager as hard man, that’s hard work. It’s hard work for what like what is the overall goal you know if the goal is to get that passive income. difficult to do, man that’s that’s that’s tough work. That’s tough work.
24:38
If you’ve been following my journey, I’ve been selling my initial real property and transitioning into syndication deals lately for more purely passive investment strategy. One critical part of my portfolio is the American Home preservation fund, or what folks in the hooey call HP for short. George Newberry once apartment owner, operator and mentor to me is that Now sponsoring the podcast is private fun, which by the way also accepts non accredited investors cuts the middlemen out and allows you to invest directly with him to fight the mortgage crisis in America. join him by purchasing distressed mortgages while getting a double digit annual return paid monthly. Find something else better out there. Well let me know. Feel good knowing that you are helping families stay in their home after buying their underwater note at a huge discount, invest as low as $100 by going to HP servicing comm slash investors. And if you want the free bernsen book, please send me an email plain and simple passive cash flow calm.
25:42
Well, that’s a light bill.
25:49
So we’re in this COVID-19
25:53
crisis. We’re just another day at the office for folks like you and me but right but I know you’re you can’t go as much water like a two week experiment that you’re kind of tinkering on, or a six and a six month project you’re working on, you know,
26:09
I don’t have a six month one but I do have a year one so back in December, I create a list a book list, right of all the books I’m going to read for 2020 I create a list on a sheet and then I have a checkbox check check off every single one every so book a week, basically, right I got I got a hold of all the books, put them all on my phone. Right now I’m reading The Autobiography of Albert Einstein. And yes, very interesting guy. But the books are mainly consist of autobiographies. For people that overcame some really hard times. You’d be amazed at the hard times that Albert Einstein had as a young scientist, but what it took to overcome something would listen to a lot of eyeless a lot of stuff on sales and marketing as well social media marketing and also on on sales, you know, so it’s those things that pretty much make up the book list, right? And much of my, my real estate stuff is all made up of I do listen to some real estate, but most of it is just by networking, masterminds, things like that. That’s how I that’s how I engage that through real life problems and resolving them. So, yeah, that’s definitely a lot of fun. But yeah, I mean, try reading a book a week, that’ll change your life. I promise you, I’ll change anybody’s life.
27:28
It’s good stuff. It’s awesome. Any kind of like, personal, like, two week project, something, uh, you know, thinking in the daily routine or something like that,
27:38
you know, uh, trying to work out at home. So, so far, since all this stuff happened. I can’t go to the gym anymore. I can’t go to CrossFit. Right, which is what I was, which is what I usually do. So now I’m having this so far. This is what week two, this was discovered it thing. Now. It’s all about working out at home and Tire man it’s it’s tougher to do at home than it is to work out at the gym with a group of other motivated individuals. It’s it’s tough but I will make it I’ll get I’ll get through it.
28:12
I do CrossFit too and then like yesterday I got bumper bumper plates at home I got my patio but I was just I just put in like 135 which is like nothing and I just dead lifted it like 10 times I was like that was boring
28:27
it’s easier to do when other people are around right? Yes, the thing you know, it’s I don’t know. I don’t know what it is. It’s kind of like there’s other people there and there’s just more energy in the room. I think that’s what it is.
28:38
Yeah, total accountability. thing like getting the the mirror or the bike thing the peloton or at clon I don’t know what it’s called.
28:48
Yeah, the peloton. peloton Yeah,
28:49
but they told me that the bike there’s so many orders for the bike that it’s not gonna be here till like May or June,
28:56
right by then this thing will should be over.
28:59
Yeah. Yeah,
29:01
I mean it’s got to get over soon sooner than later I would imagine
29:05
yeah for sure. We’re just lucky it’s about the Spanish Flu then all the crossfitters would be dead you know the Spanish Flu when after like there was a stronger immune system the more like it attacks yourself. Something like that.
29:20
Oh, really? I have no idea. All
29:22
right, all like the young guys here like super fit. They all died.
29:28
Wow. All right, man.
29:33
Um,
29:36
what is your simple passive cash flow number that you’re shooting for these days? What What is that for you? on a per month,
29:46
you know, per month, you know what it’s like what we did, my wife and I, we, we basically cut our expenses. early on. Anyway, we cut all of our expenses so we can just focus on building the business. Part of it is the sacrifice and got to keep in mind, you know, I’m the guy that had the corporate america job making bank at the huge house with granite countertops and cathedral ceilings. I had three cars at a Corvette at a Hummer Mustang convertibles and all this stuff, right? Got rid of it all to focus on building the business. Right? So back then, it was it was only like 10 grand a month, you know, it cut out everything. Everything was cut out. Right? So it really wasn’t that much. And, you know, and any money that we get is all thrown back into the business over and above that number. You know, that’s that’s basically how we did it. You know, it’s it’s, um, yeah, that’s that’s pretty much it. You know, it’s, it’s not a big number when you think about it, because by the time you think about it, you know, the government’s gonna steal half of it, right, you know, taxes. And then then you have to live off the rest, you know, cover your expenses, so Not much not much at all.
31:04
Yeah, and a lot of it is like equity that you kind of roll into the next one and the next Yeah, that’s right. Well I mean what’s your What is your your wife say when you kind of say hey it’s it’s gonna work just give me four to six years the magic will happen you know you’ll see it or you start your life will start to change you know that is that kind of which a deep discussion or
31:28
not you know i i am i’m very very very lucky that my wife I met her before before really I got into all this stuff like as a full time gig the way I’m doing it now. So she, she knows me She knows the story. She knows my personality. And she often tells me she goes I have no doubt I have 100% certainty that you are going to do exactly what you say you’re going to do. She has no zero doubt She believes in Me 100% she’s on board, you know. So I am extraordinarily lucky that my wife is on board. She believes in me, she believes in what we’re doing. She’s she sees it already. I mean, isn’t like this is all like, pipe dream stuff. You know, I tell her. I’m closing this deal on this day, boom, it happens. She’s like, she’s not surprised anymore. She couldn’t be surprised a long time ago. Right. But, yeah, it’s having a spouse, especially in this business. And that will support you is extraordinarily hard. You know, it’s because yeah, I mean, I’ve, my, my friends that are in this business that are like top performers. I mean, that’s one common trait is that their their spouse at home supports them. 100% and I’m happy to say that my spouse is in the same boat now. It’s awesome. It really is. It’s great.
32:54
It’s great. I have the reluctant spouse guide on my website, guys. Simply Passive cash flow calm slash spouse. It’s not a joke. It’s for real.
33:04
No, I know I know it’s real no I got
33:06
it. I got it. What do you guys do when you close a big deal but anything specials or some kind of
33:13
sushi man, sushi? That’s just
33:19
like a little celebratory thing. When my when my other partner comes into town, it’s usually vegan food, you know, he’s a vegan. I’m vegetarian, so it works out great. You know and it’s that’s a little celebratory thing you know that’s by with the wife anyway. Yeah, we I think we always celebrate something we celebrate in a very small way. It’s it’s sushi, some very small we don’t. For right now for the time being. We are very, very careful with how we spend money necessarily invest, we do invest our money, but how we spend our money on things like that. We’re very very careful. how we how we do things, you know, we’re not reckless or careless or anything else like that, you know, it’s very important that we spend money where it needs to be spent properly. For us anyway, it’s how we do it. Yeah, that’s how to do it
34:13
that said, What is something you recently bought? or thinking about burning your cash on over time savings or improvement of quality of life?
34:22
Well, you know what, doing this stuff is a real big deal for us. You know, it’s like we have the bulletproof cash flow podcasts that we do right. And I upgraded the camera got a new camera coming in. That was like 200 200 bucks. The Logitech one, but if anything is gonna help get our word out there. No, no, no, no, it’s actually it’s a used camera man. Okay, so use when it’s easy to use canon t three i. So, yeah, we’re going to hook that up and we have a whole bunch of new equipment coming in just to really improve the audio and video Right But like I said, Yes, we’re just very very careful with how we invest not only do we invest our money outside properly other people’s money we invest our own money very carefully as well.
35:13
It’s funny because yeah, those those Logitech guys, they barely send out emails, but they sent out this like, new 4k camera.
35:20
Yeah, the Bri. Oh,
35:21
yeah, yeah. The fria I bought it. Well, not the real the real for the windows one, but this one’s for the Mac. It’s like,
35:28
okay, okay. Okay, so that one is, I don’t want to geek out in front of front of your audience. But yeah, the debris out of the bruise is supposed to be a really good camera.
35:40
Yeah, so people can see like, the crusties I have in my eye for waking up super early. That’s not the best thing.
35:49
That’s right. That’s right. You want to zoom in and check it out. There we go.
35:52
Yeah, not too. Not too close. But yeah, if you’re on the YouTube channel, you can check that out. Yeah, there you go. Something that you recently changed your mind on because often ego gets in the way of greatness. And I see a lot of people, they just have some messed up thoughts and I’m like, All right. Okay. Sounds good, dude, you know? Yeah,
36:12
yeah, yeah, yeah. Yeah, you know, um, I wouldn’t say it’s recent. But I’ll say that it’s, it’s so much changed my life when I realized that. So back when I was an executive at, you know, working as CIO, I thought that all it took was for me to do a good job and keep technology up and running. And if I do that, I’ll get paid and everybody will be happy. systems are up. I’m innovating. Everybody’s getting paid. What can go wrong, right. And then they hand me the box right at the end of it all. The that was wrong. That’s incorrect. Totally wrong. The way that it’s supposed to be. Then one thing I did not do It did not network with the people that worked at the company. I pretty much kept to myself I focused on I got there early, work my ass off, sit there too late, you know, I was putting in 1213 hours a day at this company. Right? And, you know, it’s working hard for them. That’s why it’s supposed to do right. And I still got handed the the box now. And meanwhile, there’s guys, they’re still working at the company that were known to be somewhat of questionable character. They’re still working there. Why they took the time to network with the other executives. And they and they went to all the meetings, they went to all of the the conferences and things like that to getting to get really engaged with the community with the community of the business and also the community outside of the businesses. That really connects other people in that in that space. I think Mac cases, finance, right? So other people in the finance in the finance world knew of the company and knew of that individual made them worth more money. Right? It’s kind of like the same thing that we do ln, you know, it’s the same thing. I mean, we got to do the same thing we’re getting out there, we’re building our personal brands, we’re getting out there, we’re building our businesses, it’s the same sort of thing, you can’t come out of nowhere and expect to buy a 200 unit property if nobody knows who you are and what you’re about, you know, it takes time to build that, you know, takes time. So that’s, but anyway, I was totally wrong about that, you know, now, this business is all about partnerships. This business is all about delivering value to other people, in a way that you’re giving someone, everything you can, you’re giving your partner’s everything you can know everything, you know, and and that’s, that’s how I operate anyway, if I do everything I can from my partners to try to make things easy for them knowing that in one way, shape or form, it’s all about Come back. That’s how I do business. So,
39:02
yeah, it’s um, I mean, you can see it in your investors, right? Like, I know, like a lot of my guys are engineers. So it’s the typical person is, if they’re under a million dollars net worth, they’ve kind of saved their way up to that like 700 to 800,000. And there are total like, like developer type or person or compute in their cubicle. Not really expanding outwards, were the guys who are a million and a half $2 million net worth and above. Obviously, they’re already investing. But they’re the ones that got out of the engineering role and more into the sales engineering role. Right?
39:42
That’s right. That’s right. Well, hey, listen, you can never ever, ever save your way to prosperity. It has never worked. It never will work. The only way you can. You can be wealthy is to invest. That’s the only way the only way to make it happen.
39:58
It just it just kind of Interesting that it’s kind of coupled where the guy who has that mindset where I’m just gonna keep pounding away at what I’m doing not talking to anybody is also the guy not investing their stuff outside of Wall Street type of instance. Right?
40:13
That’s right. That’s 100% true. Yeah, yeah, yeah. Okay, I’m doing I supposed to be doing Right, right. I’m doing I’m supposed to be doing I’m working away.
40:21
Okay. And everything.
40:23
Oh, yeah. Oh man, I was doing all that stuff. I was putting all my money in this 401k thing. I was doing everything that I was told to do. Everything else I went to school. I got two masters degrees. I was a good CIO. I went to corporate america and then they hand me the box. I’m like, Wait a second. I did everything I was supposed to do last night. No, I was not
40:47
that’s why I was saying man I’ll never go to that place ever again man. So happen
40:52
yeah away and select lies with doctors, right? Like, I don’t. Most doctors who aren’t investing their net worth really never get above one to $2 million. Right? But the guys who are holy crap, they’re like four and a half $10 million
41:09
a day. But my one partner, she’s, she’s a young doctor, and she’s a partner on one of my deals. And she’s been able to blow up her net worth tremendously, not just on that deal. But she has the mindset that you just said, you know, she’s she’s investing in other deals as well. Right to help grow her net worth. She’s gonna be very, very successful. She’s in her early 30s. She’s making great money already as a doctor, and she’s blowing up her net worth even more. So yeah, she’s doing great, but the same thing. You know, she’s she’s focused on putting money aside, you know?
41:44
So this is a seller’s market and, you know, kind of in the middle of a crisis, and I’m sure it will go away here in the next few months or whatnot. What should people be focusing on investing in?
41:56
Oh, wow, the stock market is where it’s at, man. I thought
42:01
you’re kind of serious because people will say that
42:04
I’m like, Alright, man. It’s ridiculous, man. I don’t I don’t get it. And I used to do that, you know, as a young kid when I was when I didn’t know any better about real estate or anything else like that I was, I would sit up, sit in my office. And you know, when the boss isn’t looking try to do some day trading and all this other nonsense, man. It’s ridiculous. It’s crazy. I mean, think of it like this, right? So I had a friend of mine, he was gonna throw like $200,000 in some stock or something. And I’m like, once you throw down a deal, man, throw down on a deal. It’s like, Oh, I don’t understand the real estate, business. yada, yada yada. So I’ll put it this way. All right. It is at that time was May the first right. I said may 1, great. What’s your stock? What’s your stock gonna be worth on May 30. He’s like, well, I don’t know. I said I could tell you how much money is gonna come in on May 30. From my rentals, I know, because I have legal contracts, called leases, with all my tenants that say they’re going to pay me. Every month that money comes in, right? It’s predictable. You’re building up equity in a cash flowing asset, you could force appreciation on this asset, you get all that you get, then you also get depreciation on the asset to mean that you can’t do that with a stock. You just can’t do that. I mean, if you were told my buddy, this tells, like you go to Bank of America right now see if they’ll give you a loan to go buy their stock, no one even do that, because they don’t believe in their own company enough. It’s crazy, you know, it’s crazy, but it to me, it’s like, it’s like gambling. It’s like gambling at a casino, you know, because you don’t know for sure. What’s going to happen tomorrow. Right? Whereas with real estate, even during this crisis right now, I mean, we’re still buying. I mean, I’ll look I’m looking at assets now. You know, and the thing is, though, is that At the end of this crisis, it’s not gonna matter, the assets still gonna be there, it’s still gonna throw off cash flow, and we know what it’s going to do because it’s very predictable people no matter what you do, in masses, Maslow’s hierarchy of needs. Everyone needs a place to live, no matter what they don’t need an office, they don’t need a piece of paper, this is stock on it, what they do need is a home. Right? And that’s what we do we give people homes and this is that’s why it’s like, especially this kind of stuff that we’re doing. It’s a it makes total sense to do and we’re not worried about it. You know, it’s they should be investing if people need to be investing in real estate, they should have been investing real estate all
44:40
obviously, you kind of know you can put it on a model and you can kind of tell from deal to deal but for somebody sitting at home who doesn’t have a network, nor has any kind of underwriting experience, what anything that they should kind of stay away from in the world of real estate at this time. Oh, yeah.
44:58
I mean, it’s you know, y, d cos assets, those are the probably the ones that are pushed the most all over all over the place. I mean, especially, that’s not to bash on loop net. But loop net, unfortunately has has a lot of this bad inventory. And what I mean by that is there’s the promise of the super high cap rate, you know, I’ll give you a 15% cap rate, oh my god, the cap rate, the cap rate, the cap rate doesn’t really matter all that much. It’s not the cap rate. It’s the margin you’re looking for, right? The cost of money versus the cost of running the asset, you know, what’s the difference? That’s what you’re looking for. cap rate is important missing. It’s not important, right? What I am saying is that people are getting out there pushing this these super high cap rates and when that person goes and buys a deal, which is usually in a D class area, they get burned, and other stuff with it with a non performing asset. Because everybody was just heads on beds, they just previous owner who approved the seller, rather just put a whole bunch of people in there, drive the occupancy up, unload the property and got rid of them all happens a lot, especially in D class assets. You know, it’s very seedy type of business. Stay away from those places, you know, just don’t do those. Just especially if you’re out of state. Don’t do that. You know, I personally stay away from it. Some people specialize in that stuff, all the power to you go ahead and do that. For anyone that’s in this business and even as a limited partner, stay away from D class assets, invest with a good operator that knows they’re doing with C’s and B’s and A’s that knows how to run a proper asset. Make sure that performs that’s the best way to build great wealth and still enjoy all the benefits that come with managing and running and multifamily asset. I mean, for a passive investor in that way it works out super, you know, they get all they get the benefits without taking on any of the risk, really, it’s very low risk. Very low risk for an LP.
47:02
Yeah, we’re kind of looking at getting away from the class C stuff, which is probably what you’re talking about, you know, like, you’re saying your class D. But for me, it might be a Class C or definitely what a what a broker would call that Class D, or Class C, because they’re always trying to make it sound better than it really is. But yeah, just not worth it. I mean, those are the guys who get hammered the most and this in any kind of weakness, I mean, they get fired for so that they don’t have any savings to
47:30
That’s right. They live hand to mouth, they typically have salaries that are hovering, usually at $30,000 probably even less than that. You know, absolute poverty, you stay away from those places, you know, it’s just not worth the hassle. never buy cheap real estate. There’s a reason why it’s it’s, it’s cheap. No, it’s not. It’s nothing that you really want to be investing in. You just don’t want to be investing and stuff like that. You know, it’s it’s not worth the hassle. Not worth the risk. It just isn’t, just isn’t worth it.
48:03
And to wrap things up our last closeout question is the Tony Robbins question of the art of fulfillment and the science of achievement. So first what is your secret or hack to the science of achievement? Any kind of rituals or things that you found lately that has helped you be more productive?
48:24
Yeah, I mean, I’ll tell you, I’m getting up early in the morning. Going through CrossFit first thing, you know, early, like, you know, you’re waking up at like five o’clock in the morning, to go to CrossFit for six months when we come home. The world is still pretty much asleep at that point, or at least I’m not on the phone anyway. I sit down, I write out my my journal. And then I write out my goals. Right, right. Just one page of the journal one page of the goals like what, what happened yesterday, go and how’s my tomorrow going to be? Right? And when I say tomorrow I don’t mean just like daily goals I’m saying like, what is my life going to look like and I write these goals as it’s already happened. Right and that’s important because I’m programming my subconscious to look for those things to build success you know and I often do that too if you know if today doesn’t go my way I’m writing on my journal and writing in my my goal sheets, preparing a new one just to keep me on on target. But you know, that’s that in itself. That function going working out my body and then working out my mind and then I’m ready for the day that has made all the difference in the world that has changed my life. That those those two things you know, it’s it’s I’m sure you hear about it everyone talks about it on their on these podcasts, maybe or read about it in books and you might think it’s all Fufu nonsense. I promise you that stuff. It works hundred percent. It’s amazing. It’s a life changer. Absolute life changer.
49:59
And what is A secret or hack to the art of fulfillment, any way you contribute back, or how do you kind of keep things in perspective?
50:07
Wow, you know
50:11
that so one of the things that I wanted to do in my journal was that I write about is Oh, I do want to help the children of Cleveland, right? So in December, and I actually wrote it down in my in my, in my goal sheet what I plan on doing charity wise too much. It’s funny, you brought up Tony Robbins, he started his charity, thanksgiving charity, right? I want to do the same sort of thing. So what I’m doing is and I write it down in my goal sheet, I write it down. I want to help these kids. I want to help this kid. So part of what I’m doing is of course, for building wealth for myself building wealth for my family, my investors, I’m setting aside resources so I can do just that. You know, I’m not gonna play something. I can do it yet, but it’s going to happen hopefully this year, right? And with that in mind, that’s how it gives me something to work work for, you know, it gives you something to look forward to as well, because I do get joy just by helping some other people and I’m not expecting anything back. You know, that’s how I do things. I just don’t expect anything back. I just want to give as much as I can. And you know, and hopefully help out these these people make a difference to someone’s someone’s world. You know, that’s, that in itself means a lot. So that’s, that’s how I do it. That’s how I do it.
51:28
Awesome. Yeah, so we’re something I’m trying to do on my site is to get more involved in donors choose if you heard of that website, you can kind of donate to teachers who have like elementary or high school projects. And I have I’m getting going to get ready to launch that to my group, but I want control over what projects we give to Mars financial education type, as opposed to like interpretive dance or building a canoe, kind of a project.
52:00
I have control you know,
52:01
man, I tell ya know, I love it because I know it’s exactly what I wanted. What I want to do with with these kids and you know here in Cleveland is that it’s probably the same journey that you’ve been on, same one that I’ve been on, you know what lane, you you go to school, you, you get a job and that’s it, you go put your money in a 401k you get old and you die and that’s how you’re going to be and then you’re expected to be happy that way. That is not a way to live a life to your full potential. You know, in my opinion, I mean, that’s not my full my full potential anyway. And throughout all of that, the one thing that we’re not taught in school in grade school, high school, college is wealth, wealth building, we’re not taught that, you know, we’re not taught at least I wasn’t, you know, to learn that on my own. I’ve learned afterwards with mentors. You know, and that’s, that’s huge. No, I love that idea, man. It’s a great idea, you know, built tied into some sort of some sort of mentorship program maybe or some way to some way to really introduce finance and Financial Intelligence to some of these kids just be awesome nuts. It’s remarkable interpretive dance. It’s not gonna get you a job. Just Whoa. Well, the ricotta job, Johnny Why?
53:15
Yeah. Making pot, right? Yeah, Fox Fox.
53:22
But yeah, you want to get your contact information. People want to get ahold of you. And we’ll put this all in the show notes. If you guys go to simple passive, casual calm.
53:29
Absolutely. Absolutely. Now if they if they message me at info at bulletproof cash flow, you can find me on Facebook. I’m on I’m on LinkedIn, find me on LinkedIn, too. And of course on Facebook as well. Follow me on Instagram. We’re all over the place very just just google bulletproof cash flow. You’ll find me you’ll find me.
53:48
Alright, man. Well, I guess I’ll probably see you shooting emails out to me and spin around the dropbox when I’m still up at night and you’re getting going in the day
53:57
out. You’re doing awesome. All right, that’s gonna be fun. Thanks. All right thanks so much.
54:07
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 valuing 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.
0:00
Today we’re going to be briefly talking about LLCs. But mostly we’re going to be going over the cares Act, the stimulus plan from the COVID-19, pandemic quince with Anderson advisors.
0:13
This is going to be the thing he will try to rent them out. And then he became one real investor me.
0:23
Thanks for joining us. Today we’re going to be briefly talking about LLC. We’ve had a lot of new people join the group, but mostly we’re going to be going over the cares Act, the stimulus plan from the COVID-19 pandemic. But I wanted to introduce Clint Coons, who last time we we saw each other was October in Maui. Yeah, it was a long ago, huh?
0:45
Yeah, better times. Right.
0:46
Right. Right, how quickly time is can change and I, I’m pretty optimistic that we’ll come kind of come right out of this. It’ll take a while but it’ll be life as normal.
0:58
Again, one of the first places we’re heading to it. Big Island. I was talking to my wife about it soon as this calms down, we get on a plane, we’re out of Washington for good prices.
1:07
Oh, oh, for those you guys don’t know, Anderson does a mastermind in Maui. I don’t know where it’s gonna be this year, but I went to the one in Maui last year had a great time. I’m one of the big takeaways. I think you said this cleanse? You I think you said this not totally. But you guys took a hard stance and you know, protecting clients and you know, a lot of people in the room, they work hard to build this net worth. Right. And, you know, we’ll be damned if somebody like takes it from us. So maybe we can kind of lead off a little bit with some of the basics and LCS and then, you know, get into the kind of the what people kind of showed up today for for the careers as
1:52
well, you know, I mean, it really goes hand in hand with what we’re talking about when you think about asset protection because the way I look at it right now if you’re a real estate State investor, you’ve got some serious concerns that you need to be protecting your assets from. We can all appreciate, you know, if we have tenants in our property that they slip and fall, things like that, that they can sue us for, for the injuries they sustained. But now we have a new dynamic. Now it’s this virus. And if you have someone go out to your property, let’s say to fix something because the tenant is telling you, hey, the toilets not working, it’s clogged up or the sinks, no longer draining, and you send someone out there and they can track cobit you could potentially be sued by that individual or vice versa. Maybe it’s an elderly couple, that is your tenant and you send out someone who is you know who has it but doesn’t show any symptoms, so they have no idea and then they pass that on to that individual, your tenant or you have a multifamily property and it’s runs rampant your multifamily like it does in a nursing home just because it’s everywhere. in there, and you’re not doing a, they say, a diligent job to disinfect the building. So you have what is referred to as a sick building, you can just extrapolate all this out. And, you know, my mind can extrapolate out every single way in which you could go after somebody for this because I just don’t think that way, I’m not one of those types of attorneys. But there’s enough of them out there that will find these little threads and make these ridiculous arguments to shake people down. And as a result of it, you know, you’re gonna be left holding the bag here, and you’re gonna have to defend yourself. And if your properties and your assets aren’t protected, then it’s gonna hit you individually. And the thing about it, people think, well, I have insurance insurance doesn’t cover it. I mean, they’ve already come out insurers, they’ve been interviewed on the news and they say, yeah, this is a this pandemic, this virus, it’s not covered under the policies. So now you have to fight it. And in fact, the first case that while there’s been a couple cases one cruise line, Carnival Cruise Lines been sued class action against them. Then they sued the country of China. We’ll see where that goes. And now they’ve actually I just saw a lawsuit was being brought against Walmart. And, you know, Boeing where I’m from Washington State, they’re talking about suing Boeing because people have contracted it while working at Boeing. They’re saying Boeing didn’t do enough to provide a safe environment. So unless caught while state houses legislature step in and stop this, and do not allow people to bring a cause of action for contracting COVID. It’s going to run rampant that attorneys are going to take it and use it to shake people down. So what I tell people is you should be taking your assets and making sure that they’re protected before the harm occurs in the separate limited liability companies that limit your liability exposure. So oftentimes, we’ll set up structures where we use an LLC in Wyoming that provides anonymity because the thing is, you don’t want people to know what you have. An attorney finds out you have six different properties, you know, it’s going to embolden that attorney to go after you that much Harder, whereas the individual that doesn’t appear to own anything, well, then you got to ask yourself is it worth my time because there’s no insurance there to collect on, the only thing I can collect on are hard assets. They have no hard assets that I can discover other than this one property and it’s pretty much fully encumbered. Now, it’s probably not worth the effort. So we started with a Wyoming LLC, and then we create special purpose limited liability companies in Hawaii, if that’s where your property is located, or, you know, maybe it’s in Tennessee or Indy, wherever, wherever it’s located. And then in those special purpose, LLC, all that hold the property all flow back into the Wyoming LLC. And so this provides anonymity and a nice layer of asset protection from personal creditors. I can tell you a story one of my clients. She sent me an email about a year and a half ago now. And she was really frustrated because she had this $2.2 million dollar judgment against two Hawaiian real estate developers. And in her email, she said, Clint, I don’t get it. I’ve been pursuing them for over a A year and a half, you know, they’re living in plain sight and luxury condominiums in my neighborhood and they’re driving Tesla’s and Mercedes. What do I do? And I said, Well, do you have a copy of their structure, you know how they’re set up, and she sent it over. And first thing I do is make sure that wasn’t my client. So I saw these LLCs on the page started going, Oh, this could be someone we structure they weren’t. But it just goes to show the frustration that someone can face. You know, when they’re in that situation, they look at a structure and they can’t grasp on anything, they can’t collect on anything. And this is where we’re telling people that you should be placing your assets so that you could be not the Hawaii real estate developer that possibly took my clients money, but you could be protected from frivolous claims. And so we can appreciate the fact that we can have issues with tenants but here’s another angle here. So in 2008 2009, we had a lot of real estate clients that gave back their properties because they banks were coming after him because of values were inflated the mortgages they had in the properties and versus the rents they were collecting. They just couldn’t meet the mortgage payment. So they wanted to walk away. And those that followed our device and put together the proper structures, they did, okay. Those that did not, and didn’t see the need, because they were so focused just on the liability that comes from the entities themselves. I mean, think about that, you know, you as I talked about, you can understand there’s property liability. But on the flip side of that, there’s your personal liability that you yourself, create liability for your assets. And so what I’m about to tell you here is that how that comes back in can bite you if you’re not thinking about it, you’re not thinking about this as a business and looking at all the various angles where someone can sue you. So these individuals, they put themselves in the situation where they didn’t recognize that their savings account should be protected, their brokerage account should be protected. Their secondary residence should be protected and they kept them off. In their own name, because that’s what people do. That’s what CPAs tell you to do. Well, when the lenders came back after him for deficiency judgments on these properties, guess what they had all these assets were exposed, and it took many people down as a result of that. So how does that apply? Now let’s fast forward. Can you imagine what this might be like, if this goes on for another six or seven months, and you don’t have tenants that are paying you, then you’re trying to seek an abatement on your mortgage from your lender, and they’re not willing to do it, or they are, but they’re only looking at a three month abatement. I’ve been working with several of our clients just on the abatement side, and the lenders are going out three months, six months, haven’t got a six month abatement on there. And they they’re very specific that at the end of the three months, all the payments need to start up again. So if you find you’re in a situation where you the payments need to be paid right away in three months, and if you don’t, it automatically throws you into default, because that’s what they’ve been writing into these agreements. Then you’re in the situation you have No rent coming in, you have money that needs to go out. What do you do? Well, we’re going to show you some things that you can look at here in just a moment. But it could put you in a position where you have now personal you have judgments from lenders that are looking to seek your assets. So what steps have you taken now to ensure that that’s not going to happen that they get a judgment against you and it’s not the judgment, they will be just like my client, they’ll be looking at you and saying, I don’t understand. This person I have a judgment against is living in a luxury condo and they’re driving a Tesla, but I can’t get paid. So that’s what we’re, we’re focusing on with asset protection is creating that type of structure with that makes you you know, I’m not gonna say impervious because we can’t ever use that term because you never know what a judge might do, but it’s gonna make it extremely difficult. The idea is to make them go away. Are
9:49
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11:11
So the LLC using structures like that land trusts are things that we utilize corporations in your business as well. You know, one of the basic tenets that I teach people that you think of asset protection for real or planning for real estate investors is a three legged stool. You have asset protection, tax planning and business planning. And a lot of people love asset protection. They want to make sure that no one can take anything from him. I get it when I started out, that’s what I did focused on. And then you learn about taxation like wow, Real Estate’s awesome, I can reduce my taxes and I can do this and that and then you get focused on that you try to reduce your taxes down to zero if possible. I used to do that. And then you understand that when it comes to business that is growing your real estate portfolio, that although those two legs on the stool are admirable and you need to focus on those, that business planning leg can be just as important if not more critical. And a real estate investor can miss that in their planning. If the person that they’re working with does not understand this, they can put themselves in a situation by creating entities that actually hurt rather than help grow their real estate investing portfolio, because lenders look at them, and they don’t like what they see on their tax return. They don’t like the way the assets are structured. And as a result of that, it makes it difficult to qualify for loans and you go through multiple extensions. And finally, the seller just gives up on you takes your earnest money and walks away. So this can be a problem for investors if they don’t look at using all three legs of the stool in harmony when they’re putting their plans together. And unfortunately, what has happened now, because of this pandemic, it has reared its head again for real estate investors because everybody just kind of you know, they get their structure set up and and it’s working for them they say because the properties in the LLC, and the The taxes and accounting, the bookkeeping, oh, you know, I’ll get to that at the end of the year. And then they’re not diligent about doing the things they should be doing throughout the year. Because they run it that way for seven or eight years, it’s never been a problem. And then something like this hits, right. And now you’re running around and thinking, alright, what do I do now? There’s programs out there, and I want to qualify for them. Great, I’m gonna throw my hat in the ring. But the problem is you throw your hat in the ring someone’s gonna throw back at you, because it doesn’t have the requisite information they need in order to allow that hat to stay in the ring and then all falls back on the fact that when you’re running your business, your real estate investing, actually, you weren’t treating as a business. You were you had the investor mindset. And so this planning that we go into is about taking you out of the investor mindset and building a business mindset around what you’re doing. So that when things like this Do come up, you have everything all your ducks in a row. When I start talking about this, the various details of the cares act that the I can apply to you. It’s something that I’ve been living every day for the last two weeks and working with clients and dealing with their documents and in their situations. And it’s so frustrating, not only for them, but also for myself because they want help. But we can’t necessarily deliver with that help, given the fact where they’ve already put themselves in. So it makes it a more challenging environment. And so you want to be ahead of this, and making sure you’re doing things the right way from the get from the outset, and not one of those that, you know, you’re thinking, I’ll just get to it later. That’s not that important. Right now, it’s not on my priority list. Listen, you don’t know what’s on your priority list. You don’t know when later is going to be today. And if you adopt that pro approach, you’re going to find that you’re going to take yourself out of certain situations that had you been properly prepared, you could have been ready to take action and that is key and that also goes with investing in general. I’m being interviewed tomorrow by Forbes for an article on real estate investing and When I was talking to the interviewer who set all this up, one of the things I brought up is that, you know, we’re real estate investors often miss this is that they don’t see the opportunities when they’re coming. And then when the opportunities are there, they’re not ready to take action because they didn’t see it. They didn’t take the steps that were necessary ahead of time to put themselves in the situation to take action. And this is just from my own investing experience having been there. I’ve seen it and just I just closed on a property last month, a multifamily property. I was in the position to close on that I’d been ready to do it and the seller would not take action, because he didn’t like the terms. That was in January. We sure did change his tune at the end of February because he panicked. And he said, Are you willing to buy my property? Can you close right away? And he’s like, yeah, nothing’s changed, but that’s going to be on my terms. And so I got this property on my terms. And I could go on I’ve many stories like that, that when you’re in a place To take action because you’ve structured yourself the right way, you’re going to be able to grow your business that much quicker. So with that, I think we can dump into the cares Act, or is there anything else you’d like me to cover Lane?
16:13
Yeah, just one, I think, you know, on the commercial side, we’re talking to our lenders. Mm hmm. But um, you know, you kind of brought up the word of Batman. I don’t know if everybody’s too familiar with that. But you know, if you guys are having trouble making your mortgage payments, you guys need to have your lawyer talk to your your mortgage or your loan servicer because they know how to talk to them. Obviously you don’t want to stick right. So that’s what he’s referring to there. And you know, this is this this hour that Clint graciously given us here is this is not intended to be a sales thing or anything like that. If you guys want to, you know get on the phone with these guys and talk, tax or legal or anything you guys got going on. There’s a link on my simple passive cash flow comm slash tax. We’ll also put the replay to this video later. Again, that’s simple passive cash flow. COMM slash tax. We’ll have it live right up here. But yeah, let’s unpack this carrier Zach and see what goodies there is in that $2 trillion for us. I just got my stimulus check yesterday, or your direct deposit. Yeah, huh?
17:20
What the EDL or the PvP
17:23
just the 1200 bucks per person.
17:26
Oh, the 1200 bucks per person that
17:29
you guys are helping me with the PPP stuff. Let’s see what we got there.
17:33
All right. Okay, well, um, I’ve given this presentation now probably
17:39
15 times in the last two weeks. I gave it three times yesterday because people are so interested in this topic right now. Because there’s a lot of information floating around out there about the carrier Zach, my partner, Toby and I, we dug really deep into it. The day it was released and spent a couple days just poring through it. And going back and reading and then paying attention with the SBA guidances been coming out consistently as this drip. And that’s really I think, spurned a lot of the, the miscommunication or the confusion is a better word. In fact, I was in the New York Times two weeks ago, and then in another public news publication just this week, and the information that we were talking about in those articles, actually, some of that’s been changed and in I think they need updated because at that time, that was how the cares act was being interpreted for the for the information we’re discussing. And now because of SBA guidance, it’s changed so what I’m going to be covering is what the current guidance states not what was two weeks ago if you maybe you’ve caught one of my presentations and so there’s been some minor tweaks here
18:48
and this is why I just I’m just having you guys do this for me, is I’m I’m kind of a do it yourselfer. And I’m trying not to do that and I said screw it because this thing just changes To down lunch, and then like, I don’t have the time, my highest and best use is working on my business finding deals and
19:07
Yeah, exactly. I mean, it’s not only that it’s, you’ve got the SBA that’s changing, and then you have the lenders, you’re working with it or changing it.
19:16
You know, just as a high overview on what’s happened here is that these programs get released, and everybody’s like, Oh, great, this money is going to be available. And I’m going to be able to apply and I’m going to, I’m going to get this funding right away. But what happens is that you’re working through banks. And you know, the way it’s like when you go to a bank, depends on who you get, right, who’s going to help you out. And whether or not it’s in the bank’s interest to want to help you out. Because with some of these programs, with one of these programs, there’s a financial benefit to banks. And so that’s really been part of the problem with the rollout on this program for small businesses and so we’ll get into that, but but it’s been an eye opening experience for from my end and there I thought I’d go this deep into to working with seven eight lenders, like I have or deal with the SBA. And so it’s been been an interesting experience. And so, you know, collectively at Anderson, we have, if you don’t know about us, we have about 200 employees and we’re spread out over multiple states, Washington, Nevada, Wyoming, Utah, name a few. And we work primarily with small business owners and real estate investors. And so that I think that really makes us unique. And why we’re able to talk on this subject was, I would say, some authority is that we’ve spent so much time now dealing with this subject matter and helping clients out making these I think on the LDL side that we’ll be talking about, we’ve made over 700 at file over 700 applications for people. And so it’s a learning experience, but there’s a couple different components to this that we’re going to cover. I’m not going to get into the the personal side so much as far as the you know, we’re not going to cover the rebate checks that are coming out tax credit checks, because that is what It is what I’m going to focus on is the aspects of the plan that can be available to you. If you have if you’re an investor, if you have a business or you’re just an individual that you you have potentials to get funding right now, in the in the best one or the easiest one, the quickest one would be through retirement plans. So what they’ve done is they’ve modified the distribution rules. So that was one of the things that came out of the cares act. They changed the distribution rules for retirement plans, or IRAs. You’re familiar with this, that if you took money out of your IRA, Roth traditional, or 401 K, money’s going to be taxable to you. So if you went up and you wanted to pull out $60,000, tomorrow and you’re 38 years old, that’s a taxable distribution. And on top of that, you have to pay an extra 10% early withdrawal penalty. So people will pull money out of these retirement plans because they don’t want to get dinged with the 10% early withdrawal penalty and they want to pay income tax on that money. They don’t have to what Congress did The cares act is they eliminated the early withdrawal penalty. And they deferred the imposition of any tax until December 31 of 2023. If you pull money out of your plan, but they kept it, they said you can pull out up to $100,000 out of your IRA Roth combination their 401 k as a distribution and what it’s going to be treated as 60 day roll. So, if you were to, prior to all the cares act, if you were to go to your IRA pull out the entire amount, say $75,000. You wouldn’t be taxed on that money provided you placed it into a new IRA or qualified plan within 60 days. That’s called a 60 day rollover exemption, but with the cares act, they allow you to keep that money outside of your plan until for three years till December 31 23. You don’t have to pay interest on it. You’re not paying taxes on it as long as you pay that money. Back to yourself. plan by December 31 of 2023. That’s a tax free distribution to you for a limited period of time. And so this is for some individuals an instant source of cash that they can use to meet their short term expenses that are referred to or COVID related because that’s in the court and the Cures Act, it states that it needs to be because of the economic impact of COVID on your life, the pandemic, you need to have access to these funds. Alright, so how has your life been affected? This comes up a lot. You know, why would I need $100,000 out of my plan? What things cost more, right? What does toilet paper cost? Now? It’s gone up. You don’t want to go to the grocery store because you’re concerned so you hire someone to bring you your groceries. My parents told me this was nuts. They ordered some groceries, I forget what the website was called. The guys went to Safeway, picked out all their groceries brought it out to their house they bought, I think was about $85 worth of groceries, but their bill was 160 my mom I was just flipping out, because I can’t believe they charged me $18 I said, Well, you didn’t have to go in the store, you weren’t put at risk. So you know, you have other costs. Now, if you can’t pay your mortgage, because your tenants on your properties aren’t paying you or you know, you have other costs of carrying costs, because your contractors aren’t coming out to the property. So you’re not moving the property. If you’re trying to do a rehab. As long as you have something like that you can establish it, then you qualify for this distribution, and it’s per person, right? So each individual can can pull the monies out. Now another option you have in addition to the penalty free distribution is alone. So can we
24:38
go back there? So you know, like, you don’t have to be infected by the virus, you just have to be impacted. impacting people get freaked out a little bit. They’re like, Oh my god, what if the IRS comes back to me and like, asked me, How do I use my 100 grand for you know, like, maybe if you can talk a little about of substantiating the claim or is even the IRS even gonna bother with little I don’t think they’re even going to bother with you.
25:03
But if they did, so here’s here’s a classic example. Somebody asked me, he said, Now I’m gonna pull that money out, I’m gonna put it into real estate, said No, you’re not. I said what you’re going to do is take your other money that you have that you’re paying your everyday expenses for, and you’re going to put that into real estate. You’re going to use this money to cover your expenses. I mean, you have a stay at home order there in Hawaii. Yeah, non essential businesses. You’re not working.
25:30
Yeah, I didn’t. I didn’t ask the question. I don’t I don’t think twice about this stuff.
25:34
Yeah, you know, I’m saying that’s why I’m these are rhetorical questions. Hey, I can’t work. Governor told me I can’t work there. shut my state down. I’m unemployed. How do I pay my bills? Right. How do I, you know, I like to have a bottle of wine. Well, not every night but you try to stretch it out. I’m gonna
25:51
need to write you going crazy at home.
25:53
Exactly. How many of you livers are getting a workout right now across this country. So I’m in It’s fairly simple, I think to to establish that it’s COVID related, that you need this money and I don’t see the IRS coming in and checking things more one of those were just get the money paid back by December 31 of 2023. So, if you’re thinking about how to use like I’m saying take your other funds, use your other funds for investing live off of these funds right now. I’ve talked to some people strategized about IRAs say they have an interest in an IRA in a syndication. You know, what comes up in that situation is that if they don’t roll it into their own 401k plan, they haven’t set one of those up. The issue you have with syndications and IRAs is you have UDF I unrelated debt financed income so you can be taxed on you. Typically, it’s 70% on a liquidation of that that investment of the income that comes in unless you have enough depreciation to offset it. It hasn’t been used up. So if I have that interest Say hold $100,000 interest in a syndication with retirement plans, you don’t have to just take out cash, you can take out what is called an income distribution. So we’ve talked about this once you pull the syndication interest out, so you avoid the tax when it’s the prot when when there’s a liquidation event of that asset, because now it’s no longer held in your IRA. So you don’t have that UDF fi tax there. Yeah, you’ll pay tax and your your long term capital gains rate of 20%. Whereas if you left it in the IRA, you pay tax at 37%. And then whatever your income tax rate is when you pull it out, so that could be possibly, you know, it was 60% could be gone. Now, we’re going to lower that down to 20%. And then, with that interest, they asked you, why did you take that interest out? Well, I wanted the income that’s coming in off the asset so I can cover my living expenses because I’m not working. And then by 2023, you pay back cash, you don’t have to put the interest back in that came out as security. So that may sound a little complicated to you when you’re listening to this but I just want to say Once you understand that there are planning opportunities here for people if they only know where to look, and they get the assistance of someone that understands this. So think about it that you know, this, this is a great tool that’s been bestowed upon you. And you have until December 31 of this year to make the withdraw to the entire year. That answer your question.
28:24
And I think this is a no brainer. I mean, I talk to clients all day long, trying to get money out of your 401k retirement accounts and get it on the playing field invests. Yeah, I mean, it’s, it’s like one of those 10% off deals not 10% 10% early withdrawal penalty. Yeah, I mean,
28:42
well, you mean, you’re talking about getting on the playing field. So another option that I I’ve been telling people is take your IRAs to put that piece on the board so you can use it in a more effective manner. Set up your own solo 401k. Let’s roll the funds in the positive in there. If you’re married, take your spouse His funds and put them in there. And now you have this pool of cash, that when we talk about being ready for when opportunities come along, now you can deploy, you can you can be there to take action because maybe you don’t have the cash personally and it’s all inside your retirement plans. If you don’t take the money out, you want to leave in that tax deferred environment will lease you’re able to execute right away because you’re in control of your own solo 401k. You have checkbook control over it, and you don’t have the UDF issues that come along with invest in syndication. So I think that’s a better move.
29:34
I’m super excited about a new program I’m rolling out that’s going to reinvent scammy Real Estate education programs. So excited like Marie Kondo cleaning stuff up excited. Announcing my new mastermind program, which consists of a closed members site with 27 packed weeks of content, plus bi weekly group video conference calls to us whatever half of the calls will be centered around Growler investing tactics, and the other half will be holistic wealth building strategies that I have Learn from the wealthy. That’s 25 plus hours of group coaching and masterminding and the secret Facebook group too. I know what you’re thinking none another flippin Facebook group. Well, this one’s gonna be different, more intimate, exclusive, and no cheapskates or shady vendors in it. I’ve been coaching individual clients over the past couple years and they figured out what you guys need in a way to provide it in a cost effective way. Learn more go to simple passive cash flow.com backslash journey and join for the first cohort fills up and introductory pricing goes away. Yeah, we talked a lot about herpes and Anderson can make a cure for you guys, too. Yeah. Going back to the hundred grand thing is that person like you get in? So really 200 per couple then.
30:50
Oh yeah, you will use this next strategy you could actually have $400,000 for your family outside of your plans for investing.
31:00
A lot of money.
31:02
And so the way you do that is if you have a QR P and it doesn’t have to be your own. We’ve done this for several individuals where they’ve taken their IRAs and rolled them in to a solo 401k. Because right now, they’ve increased the borrowing limits on your retirement plan. It used to be that the borrowing limit was 50% of your plan balance or $50,000, the lesser thereof. So if you had 60,000, in a retirement plan, the most you could borrow out is 30,000 bucks and you had to repay it within five years. Well, what they’ve done with the cares actives, they’ve changed the limitation, they’ve upped it to $100,000 or 100% of your bested bounds, the lesser thereof. So in my previous example, you could actually pull out the entire 60. Now instead of having to repay within five years, they give you a one year holiday, and then you have five years Just start making your repayments on those funds. So you have a year where you don’t have to pay anything back. Now, this particular provision, unlike the withdrawals, that goes until December 31, this provision only is effective until September 27 of 2020. So you have to pull the money out before September 27 to 2020 under the loan. So, you know, if you think about it, now, you’ve got two options here to hit two ways to hit your funds. You’ve got the distribution and the loan collectively, that’s 200,000 that is available to you. So I think this is another avenue we explore when we’re thinking about where do I get those proceeds that I need currently, rather than wait for the government for these loan programs. We’ll talk about two of the main loan programs. I can go right into my retirement plans and those funds are there. Sometimes Sometimes I’ve talked to people and they say, well, that’s just accessing my own money. It’s not free money from the government. I know. Definitely. It’s your home money, but it’s money that you didn’t have access to before. And now they’re giving you access to it penalty free. You have to look at it from that perspective. But now you can do things with those funds that ordinarily you might have been looking at going well, it’s locked up. It’s not benefiting me now. I have to wait till I have gray hair before I benefit from this Not anymore. Now you can benefit from it starting today. So I think it’s a another option you should consider under the cares act when you want to tap into funds. Okay. Next one here is the economic injury disaster loan. So this is another major piece of legislation that they modified with the cares act, and it’s designed to help out individuals that are on it in a declared disaster area, economic disaster area, all 50 states fall within this category now. So wherever you live wherever you own assets are all within disaster areas. And so the purpose of an ideal loan, that’s how it’s typically referred to as an idle loan, is that this SBA loan has been around forever for a long, long time. And it’s to help people that have been injured economically as a result of some disaster in their area, like a hurricane that comes through or massive flooding that comes through and wipes things out. And so then the federal government steps in and they issue out these, you know, pretty much lower interest rate loans to individuals that have been affected by this. So to help get them back on their feet, so that they get they can maintain some semblance of their life. Well, right now, what they’ve done is they’ve expanded this program for individuals so that you can apply for this and this is what I really typically refer to as the real estate investor. Loan. Because if you have rental real estate, yes, you’ve been affected. I’ve already been affected last month on a warehouse that I own tenant said listen And I’m not paying your rent for three months and maybe a little bit longer, but I can’t pay rent for three months. And if you force me into it, I’m just gonna file bankruptcy because I am completely shut down and said, You need to work with me. So I worked with him. The fact I worked with him, doesn’t relieve me unless I get an abatement from my lender have the obligation to pay $12,000 a month on that property. So you can see the ripple effect here that happens when somebody stops paying your rent, that falls back on you. You still have, you know, the utilities, the the taxes, the insurance on the property in the mortgage, who’s going to help you with that. Now, there are some government programs out there that are attempting to do that. But at the end of the day, it’s still your burden. And what you find with residential property that I think is extremely troubling is that in some states, you have governors that give people the impression that they don’t have to pay rent. Not that there’s been any mandate by the government or city He’s that state that there’s a rent holiday, so to speak, they just throw it out there that you shouldn’t be obligated to pay rent during this economic hardship time. And so what does that do it, it tells people, hey, I don’t need to pay rent, even if they have the money, they assume that it’s it’s free to them. And it’s not, because there’s a cost for everything. So what happens now is that if you’ve been damaged, or you think you’re going to be damaged by this, then you want to take advantage of what we call the ideal loan you can apply for through the SBA. And rental real estate is eligible for this loan. And so what it what they allow you to do is you can now borrow up to $2 million, and you have 30 years to repay it back at 3.75%. That is a great loan to get right now, when I say up to $2 million, it’s going to be based upon your economic needs. So you just don’t walk in and say I need 2 million bucks, give me the max, because it’s not going to happen. They’re going to you’re going to have to demonstrate what your need is and so The way we do that the way you qualify for this as you show them, you know what your rents are right now and what your costs are. And so what we’ve been doing with the cost is we say, all right, management fees, mortgage interest rents, I mean, our rents, excuse me, taxes, insurance, utilities, anything that you pay contractors that you’re bringing into work on, on your property. Those are all expenses that you have. Now, you look at your rental income, you say, here’s my income, I expect this income to lose 80% of it over the next couple months, because tenants can no longer pay their rent. So I need money to continue to pay these expenses that are going out. So when we’re looking at applying for this loan, we make the initial application and then it’s a typically a three to four week process before you hear back from the SBA, then we come back to them as our clients accumulate all this information together, and then we submit that to justify what are the amount of money we need. So where does that put us does it put us 2 million No, probably puts you somewhere between 50 to $200,000, which is the sweet spot for this new program or for this program, not new program for the changes they made under the changes the cares act, you don’t have to give a personal guarantee for a loan up to $200,000. So that’s basically you can get an unsecured loan for 200 grand, those are very difficult to come by. I’ve never received an unsecured loan for $200,000 before and an applicant you know, that applies. It’s only based upon your credit score right now. It’s all they can’t require your tax returns even better, because I was talking to an individual yesterday, and they were working with him. He goes, listen, I haven’t filed tax returns in four years. I got I can’t qualify like hey, you can qualify for an Ei DL. They can’t ask for the tax returns. They don’t qualify on it. They only qualified in your credit score. Your credit score is good. He goes yeah, I got great credit. Well, there you go. Then you qualify. So it’s amazing. Seeing how this program can work for you if you know how to set in the set up the application the right way to take advantage of it. So the ideal, it’s great for real estate investors, because it’s set up to cover your economic damages As a result, the pandemic. And what they also throw in the back end of this was this grant. And when we read the cares act, it states in there that when you apply for your ideal loan, you can also apply for an ideal grant of up to 10 grand. And within 72 hours, they will issue you the money right to your bank account. But Wow, that’s cool. That’s free money right there. So everybody wants to apply for the grant. Well, when we started making these applications a couple weeks ago, no one was receiving grant money within 72 hours. Now finally, you’re starting to see some grant money come out. But again, the SBA came out and they move the ball. They changed the rules of the game and they said It’s, in order to qualify for the grant, you actually act must have employees. I’m like, wait a minute, doesn’t say that in the cares act. Let’s see, the Congress gives SBA the right to interpret the cares act and to issue guidance on it. So they decided to qualify it and state that it’s only available to people that have employees, and they’ll give you $1,000 per employee. Well, it’s nice to know that now, I wish I would have known it, you know, two weeks ago. So this is what I’m referring to when things are changing. So now with the applications that we’re submitting, we’re making sure that people have employees, we’re writing them down on their I don’t care if they don’t get paid or not, we’re still putting them down that they have employees, because the payment portion is important for the next type of loan we’re going to discuss. So as a real estate investor, you’d want to make this application as well and go for the grant money if it could be awarded to you because it’s free money. You do not have to pay the grant. It’s not tied to the idea alone. So if you don’t get the idea alone, you still get To keep the grant money, and as I stated, We finally some, some clients are starting to receive these funds that are being distributed out to them, they go right into your bank account. But again, it’s just one of those processes where things are kind of always shifting and new guidance is coming out pretty much on a weekly basis on how these things are issued.
Lane has touched on a few of these things is why ambass again, we’re open to accredited and non accredited investors, the minimum investment is $100 you’re investing in a business you’re investing in HP servicing, which is uncorrelated to the market, we collect fees and a down market and and up market, investors get their share of profits. First up to 10% liquidity if you need your money back, we will undertake our best efforts to liquidate the investment and get your money back within 30 days. I should have slides a little wrong here, so I’ll correct it. If it’s liquidated in the first year, the returns are reduced to 8%. In the second year, they’re reduced to 9%. If you hold keep the money in the fund for at least two years, then you get to keep the full 10% and everything we do is done with a social impact in mind. Our mission is work with these families who are struggling with their mortgage in order to find sustainable solutions that oftentimes other lenders are not willing to consider.
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Here’s one of the new programs with the cares act. This is you guys can go to sba.gov funding boss programs. So these apply to if you’re a gig worker, gig economy and 99 worker, a one person business independent contractor, you hire self employed, essentially, you’re eligible for a payroll protection loan as long as you have a business with less than 500 employees. So you might be a W two working professional and have a real estate portfolio. And I think you still might this might apply to you. I’m working with some consultants who’s going to pretty much do all the paperwork for you guys, and make sure they do it right. And if you guys don’t get paid your $10,000 grant, which is penalty free, tax free, interest free, they won’t charge you anything. So if you guys are interested in matchmaking online, it’s simple passive cash flow. But if not, you should be able to go to this website sba.gov. And Hi there.
The Hui Deal Pipeline Club is a free investor club where I filter investments and underwrite the numbers and partners myself. Unlike other investor lists and groups, my investors have personal access to me and know that I personally have skin in the game investing alongside with my investors.
Taxes – In the beginning of the acquisition process you have to assume part the taxes as a certain percentage of the market price. However keep in mind that every county calculates this differently and re-assesses the tax basis for properties especially when the property transfers ownership. Best tip is to get around other passive investors in that area to ask them what the change as been or to assume that taxes will go up 10-80%.
Insurance – You can take a certain percentage outlined in the spreadsheet, ask the current owner (if you believe them), or what we suggest is to get one of our insurance referrals within the mastermind to give you an actual value.
Management – This is typically 8-10% of the rental revenue plus 50-100% of the first months rent. The property management can also collect additional fees by splitting late fees or charge for renewing previous tenant leases. This is where it is important to have peers or a mentor to save you hidden dollars here. Also make sure you pick a good one with this guide.
Vacancy/Turnover Expenses – Typically it takes 2-6 weeks to do some touch ups around the property after a tenant moves out to when the new tenant moves in. 4 week vacancy is 1/12th loss rents and needs to be accounted for as a “Vacancy” expense line item. This is where most novice investors fail to account for.
Maintenance – I have always been told to put aside 10% of the rents or 1 months rents as money set aside to fix random things in the property. Also remember that when you old tenant moves out you might have to fix a thing or two (or $20,000).
Also don’t forget about contract services such as lawn/yard service, snow removal, pest control, or pool maintenance.
Warning: Some nerve-racking property inspection. Don’t watch this if you’re having your meal!
Cap Ex – This is not in your net operating income for all you geeks (engineers) crunching numbers but this is another 10% or so going to a cash reserve account to pay for broken stuff down the 2-15 year road. This money is to pay for large ticket items. I say geeks because experienced landlords know that its very hard to predict this stuff and it is a waste of time to track and build models to predict this stuff. In reality the best thing you can do is spend your time not in Spreadsheet Land but find more deals to decrease your risk but making more cashflow! Easier said than done when you are limited with fund and getting started which is why you get a mentor to mitigate your risk and understand that these scary things is exactly why you should push forward because most people will back out and thin your competition.
Utilities – In most single family homes the tenant is in charge of the utilities (electric, gas, trash, sewer, water) which makes you life easier. However in 2-4+ unit arrangements the responsibility is all over the place.
HOA Fees – It worth mentioning but check if your property has this. Condo or townhouses typically have a HOA monthly fee and is why we don’t recommend them as investments in addition the face that it is a nightmare dealing with their governance system.
Other expenses not associated with rental property but more as a part of your investor business:
CPA to do your taxes
Lawyers to deal with lawsuits
Most times a professional property management company will handle evictions and pass through costs to you.
