Tag: fundamentals

Podcast#084 – Interview with Mark Walker & Dealing with Very Shady Characters

Mark Walker is founder of Luxmana Investments, which focuses on residential and multifamily investments. Mark quit his corporate job and is now a multifamily investor.

1) How much simple passive Cashflow are you making today and how are you doing it?

(You don’t need to give a number if you would like privacy. You can be vague such as halfway to quitting my job, cover my mortgage, make 25% of my expenses, over $10k, although people like when people open up the kimono):

My passive income is more than 200% of my expenses. I have a portfolio of 22 SFR’s in Denver, Colorado, and a 64-unit apartment complex in Dallas, Texas. I also have a small equity position is another 96-units in Dallas, TX, but I am not the managing member of that.

2) What is your Han Solo moment – Han Solo and his buddy Chewbacca from Star Wars were cruising around the galaxy as lowlife smugglers but then cross paths with Luke and Leia and his life took a pivot point. Describe the resistance that was the catalyst for change:

I met a general contractor in 2010, and we decided to do a couple residential development deals together. Through that relationship I was introduced to several people who were instrumental in me taking the next steps to build my passive income portfolio from there. Combine this with the fact that I was becoming increasingly frustrated with the corporate world, and that drove me to become even more focused on escaping the rat race.

3) Did you “burn the boats” or did you let it happen naturally? Was there an internal (you decided to make a change on your own – what was thought process?) or an external trigger (ie got fired from your job)?

I decided to make the change on my own, as I desired financial freedom and to spend more time with my family. The external factor of becoming frustrated with the corporate world was not the primary driver, but it did add to my motivation.

4) What was your worst life/business moment and what did you do after? Lesson learned?

In the 2005/2006 timeframe, I moved forward on a real estate opportunity which turned out to be fraud. I can certainly elaborate on this, but long story short: I testified to the Grand Jury to help get this indictment, and I was the second person they put on the stand at the official trial. The offender received a 130+ year prison sentence, which was the largest sentence ever given in the State of Colorado at the time for fraud. I learned about the importance of “trust, but verify.”

5) Current 2-week experiment and 6-month project? (90-180 day goal) A mark of a high performer is to put your ego aside and accept the help of others and mastermind maybe folks can help you by you asking.

My top two goals in 2017 are around family and health. If I can find and do one 50+ unit multifamily deal in 2017, that will be icing on the cake.

6) What is your simple passive Cashflow number? Now imagine you had 2x that amount… Describe your ideal day, detailed routine, and what projects you are working on.

Simple passive cashflow number is $20K/month. If I had $40K/month, it’s full retirement in Central America. It would be lots of days in the sun with my wife and daughter, plus exploring this region of the world. We would, of course home school our daughter.

7) Something that you have recently thought about “burning your cash” on for time savings or an improvement in quantity of life.

Tesla P100D – so incredibly impractical, but really cool.

8) Tony Robbins identifies two large concepts that we are continually struggling to gain perfection at: #1-Art of Fulfillment and #2-Science of Achievement. If you died tomorrow and I were to email this to your kids a couple decades later… this is what they would hear.

a) What is your secret/hack for the “Science of Achievement?” Any secret habits to share?

Never stop learning. Learning leads to action, and action leads to success.

b) What is your secret/hack for the “Art of Fulfillment?”. How you do contribute back?

There should always be a reason other than money for why you do anything. For example, I didn’t build a passive income portfolio because I wanted to buy a fancy car, bigger house or a Tesla. I did it because I wanted to be financially free so I could spend more time with my family and positively impact other people. So, I contribute back by giving people a great place to live, but I am also able to give more of my time (e.g. Salvation Army, etc).

9) Anything we missed and contact info if you would like anyone to get a hold of you. URL?

I would like to give the listeners a free gift as a thank you for listening: 10 “Not So Obvious” Ways to Boost Your Multifamily Property NOI. You can get it at: http://www.luxmana.com/simplepassivecashflow

Defaulting on my mortgage & Credit Score Impacts

I recently attended a local real estate Meet-up and there was a talk from a lender. Instead of wasting your time traveling there and inevitable fluff in these meetings… here are my takeaways from Credit Score SME presentation… 

1) Previously 50% utilization on each credit card (not an aggregate of all cards) is now 30% to have an impact on the score. Things are getting stricter.

2) They now look at “payment acceleration” meaning paying the minimums every month is looked down upon. Might want to pay 50 bucks one month then 55 then 60 then 65…

I recently had the experience of missing the payments on two of my mortgages and went into default for 30-60 days and got register mail sent to me for being a naughty boy. My autopayments got backed up and the mail got sent to my old address in the move to Hawaii. Things are fine now and I got everything caught up. In the end, I saw my score take a 60 point hit, but I don’t really care because for commercial loans it does not really matter what your personal fico is. It just can’t be terrible. And by the way I got caught up and saw some of my credit card interest rates go up.

credit score

After

A lot of you guys who book a call with me are using HELOCs to purchase more properties. The optimum credit score for that is 620.

Also wanted to thank you all for the support this year and wanted to give people of big plans for 2018! Let’s work together to redirect money from the Wall-Street casinos and corrupt financial institutions…To help the endangered ‘Middle Class’ savers find safer, more profitable investments in Main Street opportunities benefiting local communities. Please email the website and podcast to a friend. And remember If you or someone you refer invests at least $50K into one of my future deals you will be invited to my exclusive Ali’i Mastermind with other 12-20 other serious investors to discuss deals and our own portfolios.

Podcast#082 – Fundamentals – Interview with Brad Baldridge

Paying for College Expenses with Coverdell, 529s, and hacking the Financial Aid

Brad Baldridge is a late-stage college planning specialist. He helps parents of high school students plan and pay for college using strategies such as merit aid, need based aid, tax planning, savings and investing for college, negotiating with colleges, scholarships and loans. Over the past 10 years Brad has directly helped hundreds of families plan and pay for college. He has provided in-depth college plans resulting in increased financial aid, scholarships, identification of the right schools at the right price, and better loans.

• Coverdell has low contribution limits (2k per year) but the good thing is that it can be used for a wider range of education expenses

• 529 is State sponsored and some states have special breaks based on where you live

• Do the Coverdell first and then the 529 in most cases

• Tuition, fees, computer, room and board, prescribed supplies, and groceries. Up to the cost of what the dorm would be. Sorry no beer

• Need to start before high school or even when a toddler

• You can transfer it to another brother or sister

• Its rare to have too much money in a 529

• Consider making a higher rate of return outside a 529

• A 529 has a menu of choices just like the 401k

• Show that you own nothing so that you don’t make to much money to qualify for financial aid

• The net value is what is important for financial aid

• The look back is two years (prior prior year) but this changes from time to time

• What about putting funds back in the grandparents generation? Gifts from grandparents are reported by income. So time it for the last year of college.

• Can’t use trusts to hide the asset, but can use irrevocable trusts

• There are tax credits but check your taxable income so you don’t

 

Thank you Brad Baldridge for joining us on Simple Passive Cash flow!

Podcast#62 – Fundamentals – 3 Things to do this summer for your rentals

Ask assistance from your property manager for your tenants about lease option. An option for the tenant to purchase the home.
$100 or $5000 lease option fee. A win-win for yourself as a home owner and for the tenant.

Hi property manager,

With the summer coming up and rent up season approaching I was wondering if you would be able to ask every one of my tenants if they were interested in purchasing the home via lease option.. Here is an idea on how to have a conversation about the proposition..

1) Praise the tenant for a good track record.. And let them know we are looking to create a win-win situation.

2) Ask if they would like to own their own home one day.. This also provides us information on if we need to plan for vacancy.

3) Present the lease option deal idea, if the rent is 1000, ask to raise the price to 1100 (+100) and 50 dollars goes to a deposit account and 50 goes as a fee as a deposit.

We can work on the exact contract with a lawyer. This is offer is not for everyone but is ideal for someone who has to recover from bankruptcy and/or has a credit score improving… Once they are signed on with the lease option this should greatly eliminate service calls making your job easier… Also when we sell you will be the agent on record on can have the commission$… Please report back on the following within the next month after you have had a brief conversation with the tenant: 123 Main Street:

1) Interested in buying this home? if not why/when? any issues with current living conditions? 2) What are their barriers to a lease option? (credit score, job/location stability) —

2) What are their barriers to a lease option? (credit score, job/location stability) —

3) Present the lease option deal idea, if the rent is 1000, ask to raise the price to 1100 (+100) and 50 dollars goes to a deposit

 

Are we in a Recession?

Many of you have been hearing me show my frustrations over the lack of deals since we are in a seller’s market. I don’t have the answers but I do ask the right questions… and that question is are we ‘already in a recession’?

Recessions are loosely defined as two-quarters of stagnant GDP growth. I don’t really know what goes into those numbers but I can tell you that the explosive rent growth in markets like Dallas are starting to stagnant (still increasing though).

Take a look at these articles and email me your feedback (Lane@simplepassivecashflow.com).

http://www.zerohedge.com/news/2017-06-11/restaurant-sales-traffic-tumble-industry-hasnt-reported-positive-month-february-2016

[Americans are minimizing discretionary spending on Main Street]

http://www.zerohedge.com/news/2017-06-10/us-weeks-away-recession-according-latest-loan-data
[The real Americans are decreasing their home purchasing]

Everyone talks about every 8-12 years we are due for another correction. There is some validity to it, however, the past does not predict the future.

 

Today is a different day with the internet product cycles are compressed and this helps smooth out market fragmentation. Unfortunately fear and greed make up a large portion of stock evaluations which is extremely difficult to model or predict.

Podcast #59 – Interview – Amy Wan – Advises on syndication/crowdfunding law & fights for the bootstrap entrepreneur

 

-family has RE background

-did private money loans, fundrise e-reit
-was GC of a private money online lender
-now, does the equity piece as well with Trowbridge sidoti
-turnkeys, but just started a company that’ll help RE syndicators, so the money is going towards that.
-Recently invested in a business coach that is providing great accountability mechanisms. I just started using productivity planner + 5 minute journal.
-Follow the money (instead of wasting time on little things), my life mission is to democratize law for the people, but it has to be substantial improvement. I’m not happy with the way law is practice today and how attorneys and clients are supposed to interact.

Here is my best attempt at explaining this… An accredited investor is a defined by the United States Securities & Exchange Commission as someone who makes a minimum of $200,000 ($300,000 if filing jointly) or has a net worth of 1 million dollars excluding personal residence. The significance of being an accredited investor is that you can invest in things that those with less money, cannot. You can also be something called “a sophisticated investor” which has a much more nebulous definition but essentially says you know what you are doing even if you don’t have that much money.

These laws were put in place long ago to “protect” the average person from predatory activity. The irony of this all is that there is no protection for the average Joe, or pension funds for that matter, against investing in a wildly bloated stock market at record valuations. Every major trader out there knows we are in a bubble but there is no protection for individuals dumping money into their retirement accounts to buy mutual funds.

It’s an archaic system which makes little sense. Certainly, there has been some recognition of this fact. The 2012 JOBS act made it easier for Main Street America to participate in “alternative” investments via crowdfunding and made it easier for sponsors to advertise previously unknown opportunities. However, we have a long way to go.

I would advise you that you need to know the lead syndicator personally. None of this “we met at a local REIA and he pitched me his deal”. If a guy does not have a list of solid investors they must lack the track record.

Contact info:
Crowdfundinglawyers.net
Amywanlaw.com
@amyywan

“In the end, you want to buy direct as possible. Buying REITS is the same thing as buying mutual funds with a bunch of middlemen. Crowdfunding sites remove a few layers but as a syndication working with a Crowdfunding site is very expensive way of acquiring capital. Sometimes I wonder who are the people using this high cost of private equity… Perhaps they are “desperate syndicators?”

 

Podcast#55 – Fundamentals – Ask Lane – U Haul Crane Report, Turnkey Apartments, Clay Pipes

Van lines and U-haul report
Similar to how there are turnkey providers for single family that manage everything, is there anything similar for multi family/apartments? spring lake plumbing and tv clay pipes
http://assets.rlb.com/production/2016/06/22082434/RLB-Crane-Index%C2%AE-North-America-January-2016-1.pdf
https://www.google.com/search?q=Rider+Levett+Bucknall+North+American+Crane+Index&oq=Rider+Levett+Bucknall+North+American+Crane+Index&aqs=chrome..69i57j0.343j0j4&sourceid=chrome&ie=UTF-8

I was having a lot of trouble with the plumbing getting clogged up in this particular property. Especially when it rained.

Come to find out the roots outside the home were growing in the pipes. These pipes were made out of clay and the roots like to find the water source and break the pipes. The solution is to get a Backhoe and operator for half the day to dig up the old pipes and replace with PVC. Where did I get this info??? My day job as an engineer 😛

 

Podcast#54 – Fundamentals – Debt Deal vs Equity Deal

Debt deal typically has less risk but less reward. Below are a couple of my guys (below) who lent money to as the Private Money Lender are sure happy after their hard work and risk. Lucky guys! They sold for $15,000 over anticipated. But for me as the debt investor, I saw no equity upside.

Equity deals have a lot more options on how returns are paid out. You partake in the upside returns and downside risks.

Well, at least the bought be dinner while I was in town.