proTip Archives - Page 4 of 18 - Simple Passive Cashflow

AHP’s New Fund With Jorge Newbery

https://youtu.be/tJ35PBYyIfo

Today, we’re going to be talking to George Newbury, get the latest on his newest AHP fund. The guests that come on, or I would say in any podcasts that you listened to, a lot of people will just go on podcasts, track record and verification, isn’t there like how it is with George, I’m actually investor with him. I’ve been investing in his fund for the past three, four years Monthly dividends like clockwork but just be aware of that.

We bring in people that I trust I think a lot of people listen to a lot of podcasts. You jot down some names and numbers and you feel like not some random person off the street, but in actuality, you are totally investing some off the street that happens to be able to email the podcast calls, to get an opportunity to pitch an audience out there.

So if you’re one of those persons, don’t do that, guys, you will probably win the financial Darwinism award b y doing this, it is not smart. Build the right people around you, organic relationships with other accredited investors. Unfortunately, a lot of these people, they’re not at the local area.

They’re not on the free forms some Facebook groups are not the places to find other pure passive accredited investors, but they are out there. If you guys are looking to join our inner circle, join the family office Ohana mastermind. Go to simple passive cashflow.com/journey.

Thanks for all you guys. Who’ve been reaching out to me. The daughter is about four months old now. Very happy and healthy. We’re very glad of that. For some of you guys who are not parents yet . Oh boy, boy’s life going to change for your guys.

Something that I’ve been thinking about lately is I’m actually deathly afraid of passing down the wealth to the next generation. 90% of wealth leaves families in two to three generations, most likely because I don’t know what it’s, because either there’s no motivation to do anything or.

There is no need to do a thing to get off the ground and moving. But that is why I surround myself with my family office, Ohana mastermind as we source the best practices for not only finding deals, who to stay away from taxes, legal, infinite banking, but more of the soft stuff, right? Like how do you teach your kids?

You give them an allowance, how you teach them about money investing, et cetera, and what actually works. A lot of that stuff just isn’t written out there. And I also feel like a lot of the events that we put together you bring the kids, they see other people different age ranges. I never listened to my parents and I don’t really think that, if you have a voice to your kids who consider yourself lucky, but maybe if you have somebody else in your inner circle that can help translate, investment financial literacy, I think that’s going to be your best shot.

So you guys want more of these legacy building ideas, go to simple passive cashflow.com/legacy. And thanks for those of you guys who showed up to our Saturday cram school to learn about syndication. We posted the video at simplepassivecashflow.com/syndication and enjoy the show.

Hey simple passive cashflow listeners today, we are going to be talking to George Newbury, CEO of Pre REO, or as you guys know, it also as AHP.

We’re gonna be talking about pre REO one of the new opportunities and then the next fund that George is going to be taking you guys keep asking why does the name keep changing?

A lot of these funds there’s just a sunset date on them in terms of sec can only raise money for a certain amount of time. But I guess George maybe take us up to the top. Cause I think a lot of people have been investing in AHP from back in the day, what, 2017-18, and then the names get confusing.

Yeah. So they’re different , I appreciate that lane so yes each fund is a different fund, a completely distinct separate company, and that we raised money for. And you’re right, the sec allows you to raise money for two years or allows us or anyone to raise money for up to two years, if it’s a regulation A-plus offering.

So each of these are raised in the regulation A+ over two year period, then we have to close the fund. And typically we make the funds a total of five years from the date of the original investment. So our target has always been, Hey, if you invest today, we’ll get your money back in approximately five years.

And that’s been our goal and we did for 5 0 6 C funds, which are accredited investors only, although all those investors have been paid back and then we Now we’re working on we have to close funds that are active. One is AHP 2015 A+ and one is AHP servicing.

And now we’re just launched recently launched the pre REO fund and they will have one more coming up. That’s actually should be going Very soon, which is AHP title. Right now today, as we speak, there’s two close funds that are still have investor money in 2015 A+ and AHP servicing and then investors can today invest in pre REO and AHP title.

Yeah. So some of you guys are aware of the A-plus offering. It’s unlike the 506 B and 506 C and you guys probably scratch your head. Why are they talking about deals on an openly advertising podcast ? It’s because the A-plus offering allows you to do it.

And the second reason why we’re talking about is I’ve invested in the first fund myself. I trust George and that’s why I’m willing to have him on the podcast. And I know you guys listen to a lot of podcasts and a lot of these podcasts, they just get whoever your Brony to come up on the podcast and try and sell whatever random fun.

But not bananas in Guatemala or whatever in some other random country. If you guys are going on podcasts, trying to look for your next investment, dude that is not what you want to be doing. You want to be building relationships with real accredited investors instead of trolling up podcast land, because there is little due diligence.

And by honestly, don’t do that guys. You guys will win the financial Darwinism award by doing it and the funny thing is when you don’t know anybody, you got nobody to tell that the deal went south and you got your money stolen from you. And then you feel, you want like one of these people with, no peer group and we’ll just complain on Biggerpockets or something like that.

But anyway, I trust George and this is why we’ve brought him. Several times and I’ve invested my own money with them. And I put enough to initially you guys paid my car loan for quite some time, but getting a new car, maybe I got to put more money into the next fund to make that car payment.

Let’s talk about pre REO crowdfunding.

Sure. Let me backtrack real quick to give people an update. Cause I know a lot of investors have invested in AHP 2015 A+ and AHP servicing

Actually that’s me I’m interested. So exact money in that one in 2017-18.

Exactly and the market everyone knows it’s not news to anybody that the market is just red hot right now and that includes for mortgages. We have millions of dollars in modified mortgages. These are families who we’ve modified their loans for that we are now selling and we’re selling them at a at 90- 92 cents of unpaid principal balance, which historically we would sell these in the sixties and seventies.

So it’s just a dramatic uptick. So we are selling everything we can we have enough money right now to catch up on all the redemptions from the COVID era. So it will be completely up to date with the redemptions. We expect to the next few weeks to announce to investors that we’re going to start redeeming all the first investors in both funds.

And we expect to redeem on an accelerated schedule over the next several months. And my goal is to, and we expect to do it is in 2022 that both the existing funds, 2015 A+ and AHP servicing will be all those investors will be fully paid off. My concern in the market right now is it is very hot, but that won’t last forever.

And I don’t want to be looking, a year from now. It could be looking back and say, oh, if only we had dispose of our loans in the first quarter of 2022 or the fourth quarter 2021. We could’ve made this and today we’re going to have to settle for this. So I’m trying to avoid that.

I may be getting out a little bit early, but we do have an opportunity to take advantage of the market that it exists today and repay all the investors. And that is our goal over the next late fourth quarter, 2021 through 2022. So that’s an update. So people should expect their money back early, earlier than the five years in most cases.

The good news is we have pre REO and another fund upcoming AHP title, which they can invest, roll that money into if they so choose.

We talked about this on the last time you’re on the podcast, but to the financial audit, you took us to the audit and then you, at that time, I think that might’ve been half a year ago.

And I think that the climate is still the same in a way, right? You are talking about selling off assets to take advantage. So it’s not much change there, but for the pro tip for folks as if you’re in the fund that it’s going to be exiting soon. It makes sense if you want to stay within the AHP family is to get it out now before George is forced to give it back to you in the fund closes and perhaps get it into the next fund that’s coming.

And the good news is the two new funds we just opened up. They’re open for two years. So whether you’re out in two months or in six months when you get redeemed, it you’ll still get your arm. You’ll still have the ability if you choose to roll them into one of the two new funds.

Your team just sent me an email saying, Hey man, like if you want us to put the dividends and roll the dividends over into the new one that’s another idea.

Yeah, absolutely. This is one which we didn’t do before. We can just now do it, is that if you aren’t a best from 2015 A+ or AHP servicing, then you can’t reinvest those dividends any more because the funds are closed.

However, you can direct us to reinvest into pre REO or AHP title, if you choose. So you can, have the option of making that selection. If you don’t choose either, then you continue to get them in cash.

And at one time it was difficult to do it, because people had to resigned docs every single time. It wasn’t that hard but now

It’s a one-time yes. They go in and sign the new investment docs one time and then we’ll continue to do that until they tell us that an investor chooses not to do it anymore. Okay so let’s talk about pre REO, I think is an interesting, probably to your audience for two reasons.

One is as a crowdfunding investment opportunity, and two is as an investment opportunity just to buy pre Oreos, which we now have people who have bought. And I know we’ve talked about this before. You were actually one of the first to share the news about pre REO, but we now have a lot of repeat investors.

We’re getting a lot of sellers on there and we have some investors who have made, because many times they bought, in the last year and some have exited already. Some of them are doing extremely well with pre REO. So I’ll share how this works, how pre REO works and then talk about how people can participate, whether it’s crowdfunding or directly in pre REO.

I’m sharing some slides that often do to you too. I utilize to introduce pre REO and a brief history. Many of you know this, but in 2008 I founded American homeowner preservation, which was a 5 0 1 C3 nonprofit, which had a mission of keeping families at risk of foreclosure in their homes.

Now we had thousands of families come to us. We were only able to help a modest percentage. And what we did is we found that many banks, mortgage holders, servicers were not receptive to solutions that really made a lot of sense. So we changed our approach and we started buying the faulted mortgages at discounts, and then sharing those discounts with families typically in the form of favorable modifications.

Is where the investment opportunity began. Hey, we can we money to buy these mortgages and we need investors. And 2013, we started crowdfunding. But one asset typically performed the worst out of these pools that we bought. And these were first mortgages secured by vacant properties that were in judicial foreclosure states.

Now we could connect with the homeowner and pay them cash for Edina loo. We could do well Coleman or was PA had passed away or there was no one we couldn’t reach the homeowner, then we’d have to go through foreclosure. And the problem with a first mortgage secured by a vacant property is that we would need to maintain the home.

We can’t, the homeowner’s gone. So the city looks to us or whoever the mortgage holder is to maintain the home. And this is as simple as cutting the grass or shoveling the snow. But also if the property is broken into or falls out of compliance, the city can actually require us to bring the property up to code.

And sometimes we were doing all the work to these properties and making them essentially rent ready. And then they’d sit there for six months a year, sometimes two years a while it went through the foreclosure process. And typically some states that are non-judicial like Texas or California, Arizona, the foreclosures move pretty fast.

You can get them done in six months, but in other states where you have to go through the court system, which is like New York, New Jersey, Florida where I am Illinois, Ohio, and states like. It can take a year and sometimes in, and the extremes will be New York and Hawaii which can take 2, 3, 4 years to complete a foreclosure.

Right now my latest research I saw Hawaiian Yorker kind of neck and neck is the longest foreclosure states to the longest and most expensive states to complete a foreclosure in so this property. think about that. We’ve now the city has ordered us to bring a vacant home, into compliance, make it essentially rent, ready, a home that we don’t own.

We just own the mortgage. So we came up with the idea of, Hey What about if we appointed a local real estate agent as a receiver and they could get a court order, which allows them to do any repairs that are still needed and rent the property during the foreclosure term. And if we could do that, then the rent that’s collected will help offset the costs of any maintenance taxes, insurance go be applied to the loan.

To the extent there was excess. And most importantly it’s a lot easier to maintain an occupied than a vacant one is much less susceptible to vandalism and things like that. And also the the insurance is cheaper, just so many benefits that we can get it occupied. So we started doing that and we had some success with it.

But one challenge we had or one concern was because we’re in Chicago and these properties, mortgages and properties are scattered across the country. We would sometimes think we weren’t sure if we were getting the best prices on, contractors, sometimes they take advantage. We felt like they were taking advantage of us a little bit because we were, a thousand miles away.

So in my mind, I thought, Hey, the ideal solution here is to have a local partner. Somebody who knows the market knows contractors and can help and can have a financial interest in the outcome of this, and they could be our partner on these mortgages. And that was the vision that created pre REO in 2020.

And the goal was to get first mortgages secured by vacant homes, into the hands of local investors during the foreclosure process, instead of waiting till it becomes REO, they could actually get control of the property during foreclosure and that was the original vision.

We’ve talked about this in the past and just to connect the dots for people like the large institutions, they bought a whole bunch of little rental properties back in 2010, and now they’re doing a lot of this build for rent things.

And in my opinion, they’ll probably go through a lot of groaning cranes because large institutions just they’re not good at operating stuff there. People don’t care. They’re just people in suits in Chicago and New York just clicking buttons. And they barely want to go to a lot of these flyover states and we’ll buy a lot of these properties from insurance companies or these kind of more institutional sellers.

Because they don’t have too much skin in the game from a management perspective. So this is exactly like George and his company is like an institution right. They get great deals than the mom and pop investor can’t get access to. And that’s their competitive advantage. If you’re, if somebody’s buying 1, 2, 5, 20 notes, you’re just buying junk from some other guy or with George passed up years, dozens of hand handles and Daisy chain deals over.

But the problem that the institutional guys have is they don’t have foot soldiers. And that’s the kind of the bridge that as an entrepreneur, that’s the segment that you’re trying to cross that gap.

Absolutely. We’re trying to get the institutional seller, provide them a vehicle so that they can connect them with with a local investor. That’s what we’ve done. Right now it’s actually working. We have an institutional seller so originally it was mostly AHP assets on the platform. But right now we have some of the biggest funds that are backed by some of the biggest names on wall street that are posting assets on pre REO. Now the majority of the assets come from third parties from institutional funds rather than from AHP.

So we seeded it to get it going, but now it’s going, which is great. We’re the marketplace and in the middle collecting a fee on each transaction and more we had a one of the keys I’ll get to it as financing and that’s where the crowdfunding comes in. But let’s talk about pre REO the marketplace.

So this is actually, people ask what is pre REO? Pre REO is an online marketplace that connects local real estate investors with lenders. And these are, again, typically institutionals institutions that are looking to sell them. When it first mortgages and REO properties, and these are all over the country.

We’ve had a bunch of Hawaii. We’ve had there we’ve had some million dollar homes. We have some homes that are worth, under $10,000- $20,000 and everything in between across the country. I think we’ve offered in more than 40 states. Originally I envisioned mostly lower value.

But today we just listed to a $4 million homes in in New York, on long island. And there again they’re the first mortgage that’s secured by the formulate our home on long island. So we’re seeing some, and we have some in Brooklyn that are million dollars and all over the country.

Once in a while, you’ll see these million dollar homes. Now pre REO has evolved, that original vision that I shared, it was a first mortgage secured by a vacant property. But now it’s evolved. Now it’s first mortgages that are delinquent secured by vacant properties or occupied properties.

There’s you know, as we talk to more and more institutions, they’re saying, Hey the mortgage is backed by vacant properties. That’s maybe 15% of our portfolio. There’s a whole nother 85% of our portfolio. That’s occupied by owners or tenants. Can you list those? And we started listing those and those were bid on just as aggressively as the vacant ones.

So it’s become a marketplace, right? For simply delinquent first mortgages. And now we actually, next month, we’re listing a, we’re entering a new marketing agreement with a a group that does small balance commercial loans. So these are like strip malls, small office buildings retail, stuff like that.

Tons of defaults in that arena right now. And so that we’ll start seeing creeping up. There’s some hotels, I think, in the first batch that are going to creep into the onto the platform shortly as well.

So here are all the problems that we’re trying to solve with pre REO institutional sellers. They often realize that by selling to the local real estate investor, who would bought, who really would be comfortable owning the property that buyer is most likely the best buyer for the mortgage. But as we talk to sellers, the vision was, Hey if I get to sell my mortgages to a hundred different buyers, then that means we have to do know your customer checks on a hundred different buyers.

The big institutions usually have to do backgrounds on each of their of their buyers. That’s a hundred different KYC checks. It’s a hundred different contracts and they thought there’s no way it’s whatever gain we get by maybe selling for an extra 5 cents or 5%. We’re going to get back with, going back and forth on all these different contracts.

Not worth it. We’re not going to do it. So we came up with a solution and the solution was to put all the loans that are transacted on pre REO into our trust and the trustees U.S.Bank. And so now going to the sellers, okay. The buyer is only one buyer for all these loans. And it’s a trust and it’s U.S. Bank as the trustee.

So they know your customer checks. It’s fine. It’s only one contract. And then we sell a participation interest to each of the local ambassadors, and it’s a participation interest in a specific asset that’s held in the trust. And so that was really the key component that has made this really buyable.

And the other problem that the trust has solved is that about half the states in the union require that you have a license to hold or enforce a mortgage. So I’m in Illinois. If you want to start foreclosure on a mortgage here. You need to have a debt collectors license. And if you don’t, you can’t foreclose.

Now, if you did foreclose , then that could be used as a defense by the consumer to delay or stop the foreclosure and also potentially regulators could find or otherwise provide come after you. I haven’t heard of that happening in Illinois, but I have heard in Pennsylvania, there’s been a number of smaller investors who bought defaulted mortgage loans in Pennsylvania, and they’ve ended up getting fine sometimes substantial.

$50,000 and orders to divest themselves of these mortgages. Some servicers have some smaller servicers and mortgage buyers just aren’t buying in Pennsylvania. Georgia is also enforced this. Massachusetts has enforced this other states. Don’t enforce it proactively, but it is still a big risk.

But the great news is if a loan is held, a mortgage is held in a trust and there’s a national bank trustee. Just like how we have it set up then that compliance, you don’t need a license that complies with all states for the licensor requirements. So it checked that box as well by holding them in a trust.

So now an investor who buys just one loan can be compliant in by holding it in our trust. That’s the other problem that we’ve solved. The other big one is that Difficult historically, to borrow money, to buy mortgages or to against a mortgage. So think about if you like all the properties that you buy Lane, multi-family properties, you oftentimes are getting a mortgage and they record a mortgage when you sell the property or refinance.

The mortgage is recorded there, you gotta pay it. But if you want to get a loan against the mortgage, that has been historically difficult. You’re trying to collateralize a mortgage. By using the trust, now we actually take title to the property, provide the participation interest to the local investor, and that allows us to finance.

And if they were to default, there’s a rapid 30 day forfeiture action that we can take. We basically send a notice to the investor. Hey, you’re in default, you have 30 days to bring the default current or to cure the default. If they don’t do it, then they forfeit their participation interest.

It’s something where we don’t get bogged down in a longterm foreclosure or some other type of court action like that. And all these investors are putting down 25%. So the likelihood, especially in today’s market, if anyone defaulting is very modest. The final problem that we solved as local investors.

Today, our star for deals the REOs with the foreclosure merge moratoriums and all the competition in the market. It has been very difficult to have a steady flow of real estate opportunities if they’re buying the properties, but if we move them up the food chain and start buying defaults and mortgages, there are a lot of opportunities and at significant discounts, the average note on our platform is sold right around 75% of the value of the underlying property. So if a property is worth $200,000 that’s probably being offered at $150,000 to buy the mortgage.

So basically our pre REO is providing the opportunities. So you can go identify mortgages that you want to buy you. We also provide you the capital? We provide resources like a service or a law firm. A trustee that can all help throughout the process and a compliant holding vehicle for all the investors.

So it’s really solved a small mortgage investors even a smaller funds, their challenges at finding opportunities, finding money and finding a vehicle to hold the asset. We right now both on the buyer and seller side, we’re seeing a lot of interest next month. We expect to list over a thousand properties in one month on the platform, which is a huge infusion for us this month in October, we should list several hundred next month to be first time we go over a thousand and That is just in time for year end, where we think there’ll be a motivation for funds to sell these at attractive prices. So we do see a big opportunity in the next time and the next 60 to 75 days where for the year end, there’ll be some great deals for investors.

This is where if you people have been watching my monthly updates like Adam came up with some data that saying those people who are house flippers their return on investment is almost like a 10 year low, because so much competition in the market.

So if you’re looking for a different faucet for deal flow, this is where to get it. Granted most, you guys, my audience George, most of ’em are high income earners, passive investors. So they’re more looking for the fun.

Absolutely.

The appeal to the other guys that are more passive investors is maybe it might be a great way that you can find something in your backyard, that something to tinker around and get to get real estate professional status, some kind of thing to screw around with to get that 750 hour.

So you use the passive losses to possibly lower ordinary income, or maybe I buy a house one day here in Hawaii, but I want to get a good deal on it. That’s where maybe it might come down. Like one of these days. Although that one a Millani on there has been on there for, I don’t want to live in there. It’s too close to my parents.

It’s odd. I wouldn’t have suspected. Hawaii has as many assets as we see. We see a lot in Hawaii which historically is not a place that we see a lot of non-performing mortgages, but there’s been a lot especially condos but also some houses.

I want that house that’s $6 million that was worth 10 million that the bank foreclosed on.

You never know. We had two, $4 million assets that weren’t in Hawaii today. But there are some multi-million dollar assets that have been listed on the platform. I’ll tell you there’s one gentlemen, one pre REO buyer who said the best deal he ever did in his life.

And he’s been doing this for a living for years, was on pre REO. He bought the first mortgage secured by a a home in singer island, Florida last year. And I think he bought it for. Under $2 million, just under $2 million. He thought it was worth 2.5 to $3 million and six months later he completed the foreclosure, the tenant.

He paid the tenant $25,000 to vacate the home and he got excited. He called me a few months before it was foreclosed on and said, Hey, the broker says I can probably sell this for three. And then right when he got the tenant out the broker said, Hey, list is a 3.5.

He ended up listing at 3.8. He ended up listing a 3.5 and getting multiple offers and taking off at 3.8, made over a million dollars on one single pre REO asset, which is just insane. And that’s the record deals that I’m aware of so far. You should have got an equity on that line. Cause he essentially, you guys just play as the 12% note we get.

Today we get $2,000 of 2% of the acquisition price. Plus we get the 12% then he put on 25%. So in this case it was a half a million dollars on that he put down. So he put down it’s a big amount of money. He was the risk position. That’s, I think what’s attractive, especially going into a potential, uncertain market of the future, where there’s an investor putting down 25%.

There’s a discount of 25% off the current value of the property. Then the local investor puts up 25%. So the money that we’re putting up is in a pretty secure position, even as this market starts getting on, getting a little shaky in the next year. Which is likely to happen.

I think we’ll be in a very protected position and hopefully everyone does really well, but ultimately there’s going to be a downturn. And I think that 25% discount plus a 25% down payment will keep us in a very protected position and still generate a good return for our investors.

Be good for folks like myself, have trouble qualifying for mortgages or car loans because of our business owners, you guys, it says nice. You don’t have to Dick around with a bank. You guys are just the private lender.

Exactly. We do some very basic qualifications but if you have decent credit and if you’re an investor, the things that may.

Yeah, too many properties or whatnot that may bar you typically, that’s not going to be impediment with us. We’re making common sense logical decisions and in our underwriting, and basically we feel very comfortable the 25% down payment on something that’s already discounted and something that we could forfeit within 30 days of you ended up defaulting. So it does have a a lot of protections for the lender.

Can you take me through maybe not that particular Asur, maybe it is, but like, how does that note trickle? Like where does it originate from what was it in like a lot of 500 to bot.

No. Initially some, most of the ones came from AHP, so they were in like a big pool that we bought and maybe they were vacant initially were all vacant.

So we take the vacant ones that were in long-term foreclosure states and put them on the site, with anticipating people would use the receivership actions. Now from third-party funds, some of them are laid in the foreclosure process. Many of them are occupied. So receivership doesn’t apply on those, but people are just buying them.

And so they may I think for the sellers in their minds, they can pick up more and more or less 5% more than they could buy simply selling it in a big pool to a national investor because that national investor is going to say, okay, if I foreclose on this, I’ve got to pay a commission. I got to do this, that and discounted a little bit for a local REO ambassador here.

We’re selling it to the local REO investor in many cases. So they are comfortable with, paying a little bit more, but now they’re buying the mortgage which they otherwise couldn’t do. The sellers that we work with, none of them would be selling these individually. It’s always going to be in pools of, a hundred or even 500 or more.

And now they’re selling them, effectively one by one, and they’re get taking bids one by one. But the key is the process is that when we close these, we’re typically closing multiple ones at a time and we do one or two closings a month with each fund and so we grouped their assets together. So for them it’s not burdensome to have too many contracts or anything like that.

So I’m just going walk to the steps. It’s hard to follow for myself. So like I go to the website, I look for a property that I’m like, Hey George, I like this one. It’s a million dollar property.

I think it might be worth maybe a little bit more, hopefully a million and a half. But I put down 25%. And I, which is 250 and I pay your guys’ listing fee of two grand, right? So 250, 252,000.

Actually it just changed. So now we got 2000 or 2%, whichever is higher. So in that case you actually played 20 grand. I we’re seeing traction. It makes sense. It’s still a great deal.

I give you about 250 for that property. I take ownership over it is somebody still take ownership for them? To be clear, you’re buying the mortgage. So you take ownership or participation interest in the mortgage. And as part of the cap, the participation interests, you have delegated authority.

So you make all the decisions. Do we proceed with foreclosure? Do we take a modification if the homeowner asks for that? Do we, what do we set if it goes to foreclosure sale? Bidding, where do you set the bid at? Okay. Now it’s foreclosed on, do we sell it as is? Or do you want to do repairs to the property?

These are all decisions that you get to make on the loan. So you’d work with AHP servicing. The servicer will be in constant contact with you in terms of, what. What’s needed, for you to approve, because you’re basically controlling the destiny of this particular mortgage, but yet that’s what you own.

You own a participation interest in the mortgage and after we’ll get the 12% Everything else goes to you. So you get all the upside. So that guy that made a million bucks, we got 12% on our money. He made, a million plus bucks and that is, he gets to keep the upside and that’s, just like when you buy a house or a multi-family building, the lender gets a predetermined return and then the owner takes the risk.

They can make a lot of money, they can make a little money, they could lose a little, lose a lot. That’s what the owner gets, but ultimately the mortgage holder or the debt provider gets a predetermined return. And in this market, that’s where. That’s the way to go in and out in uncertain times, that’s the position that we want to be in the investor that takes it over.

What are most people doing? They can’t do the heartless fraud and. AHB serving. We want about, Nope. I want to make deals. What are the percentage of where people are doing? Yeah. Good percentage. We’re just going to go through the process and go to foreclosure. They’re already, almost all of them are already in foreclosure.

However, I’d say there’s going to be 25 to 30. At some point, want to do some kind of deal like a mod. And my messaging is if a homeowner says they want a mod and they qualify for one we’ll present it to the investor and I encourage them to take it. Or if it doesn’t make if it’s not quite rich enough financially, they can counter it.

But. Reject it. And here’s why, because if a homeowner really wants to stay and the investor really wants to get them out and get the home there’s a reasonable likelihood that Comodo will get an attorney and fight the foreclosure, which could add months or years to the foreclosure. And in those, in that period, the homeowners.

Tourney not paying you. The lender is the investor will then be paying the attorney as well. It will not be a happy outcome. So my, my purse, what I share with most investors is that if you do five of these, you probably get REO on maybe three of them. There’ll be two where you do a mod or some other, maybe a deed in lieu or short sales, something like that.

And that is you have to account for that and be prepared for that. And that really is the right thing to do. And the other part is the investor will say wait, I don’t want a mod because I need to be collecting payments for the next 20 years. I want to get in and out of things, make my money and do it again.

And I say, okay, wait, look at it a little bit differently because today, if you do a modification about on a loan, which you just bought it, let’s say 75. And the homeowner gives you a down payment. Maybe they may give you a lump sum of five grand. Then they paid monthly payments for six months on time.

Maybe you’re getting a grand a month when that started. They made six payments on time. You can sell that loan at probably 90% today. We’re selling our performing loans at 90, 92%. And that will so you’ll make a profit. So you’re starting to make money now. Quite so much as if you actually got titled to the property where you’re going to make a good return.

So do these on an ongoing basis. You get some RTOs, you’ll get some mods, but in all cases there’s opportunities to make money in HBS servicing. We’ll do. We sell it alone. Okay. Actually, I wasn’t aware of that exit strategy, so yeah. And this is an odd one and that came out of pre REO.

So the institutional buyers, when it’s a non-performing loan, the best buyer is the local investor. But when the, when a low, a smaller seller is trying to sell a re-performing loan. Selling them one by one. You’ll probably get the worst price. The best price will be if you can aggregate a large pool of them.

So what we’re doing now is some of the premier investors have agreed to modifications on their loans. And now the people have paid several months on time. We’re putting them in large pools that we offer, which are, they’re not as large as I’d like, but maybe they’re $10 million. And it’s a combination of HP owned assets plus pre REO investors, even some other smaller investors.

And then we offer them to large institutions to. To buy. And when they buy when they make a bid, we’ll come back to the investor and say, Hey, do you accept this? They accept it. And we close. Then we get a 2% fee. And that has worked out well because we’re selling these things at say 92 cents. If they sold them directly on their own a, the institution wouldn’t buy it.

They’d probably be selling. 10 10% less than that. If not even less than that. And I, to give you an example, the last couple of wires we’ve gotten where it came from, Goldman Sachs. These are funds that are backed by Goldman Sachs or other large wall street banks that are buying these these re-performing assets.

And and so that’s. Ultimately pre REO is making money, when they’re non-performing and being sold. And also when they’re re-performing and being coming from institutions and going back into institutions so we see opportunities from both sides. And we educate the investors that this is, you need to be prepared for any of these outcomes and and act accordingly.

But if you do so you can make a there’s the opportunity to make money, regardless of the. Yeah. Cause I, I know you, you have a soft heart, right? Like you want get these things, but you’ve already tried. So it’s Mr and Mrs. Late payments, we want to work with you, but if not, we have to ship you off to our pre REO sharks.

And they’re not, and again, as people, some people will not reach out or respond to. The outreach until there’s Hey, there’s a foreclosure sale next week. And now they want a mod after six months or a year, but that’s what happens sometimes. And again, I still, I encourage investors if we can make it financially viable on both sides to go ahead and seriously consider taking that model.

Yeah. Yeah. Most real estate investors, not in our community. But you know which one I’m talking about. The people that it’s like, they don’t like, they like to be their own landlord. Cause they don’t want the property manager 8%. That’s the scarcity, mind people, typically real estate investors are always the ones that, oh, can I get a discount?

Can I get a discount? Like they’re the ones that the shark. Looking to foreclose these people, as soon as they take over the asset, because time is money and velocity of money, but you guys you keep it honorable, right? Yeah. Yeah. Absolutely. If you do the right thing in the annual do better in aggregate, you may not make quite as much as you could on an individual asset basis, but on the, in an aggregate you’re going to do better.

And as an entrepreneur, George, you’ve done it again. You’ve made little points here and there and that’s an, and you feeling filling the void. So what the needs in the marketplace for the flyers and south and collecting a fee here and there and collecting a spread on the money? It is I actually pre REO.

We see a big. We see a potential for a lot of growth. To the point where right now people are saying, Hey, I bought, I’m buying this loan from some other fund. They didn’t get it off pre REO. Can you provide the financing? And we’re saying, sure, we’ll do the financing. So we’re right now we finance on an off platform deals.

And And, the majority of people are buying on pre REO, it’s not to say every loan is, has to transact on pre REO. They could they may have a relationship at a fund and they want to buy something, but they need the financing. Even a small pools were financing. But again, that there’s a huge need for financing for smaller buyers in this market.

And the buyer doesn’t have to be tiny, even for some buying a few million bucks, they may need financing. So we see it as a big opportunity. If something comes up, man in Hawaii, let me know. And I’ll I’ll do it. I’ll be a Guinea pig for everybody. Absolutely. Go on pre reo.com. I know there’s so I know we’ve had it Hawaii assets.

I’m pretty comfortable. I’m pretty confident that there’s some there right now. I don’t want a three about a week ago. I just don’t want to buy anything on the east side. I don’t know. Hawaiian. Yeah. Yeah. I’m not going anywhere on that side, but So there’s, we, you go through this, the lender, HP financing is the lender, and this is maybe a good transition into the fund. Is that the fund that’s getting these loans? Is that hard for the last year? Yeah, so sure. HP servicing has been funding pre REO loans for the last year. That’s all transitioning right now. They’re all being funded with pre-op by pre REO.

With this new crowd funding offering. So think about that in the past, HP servicing was a 10% fun. So we have money coming in at temper, our repeat behind crowdfunding investors, 10%. And we loaning out a 12%, pretty skinny but it worked right now with the lower interest rate environment we pay crowdfund investors 7%, whereas loaning it out of 12%.

So there’s a five point spread in the middle. And are you guys still doing that? You had that pre REO e-course at one time. Yeah. And we’re doing a new one that is still live at dot com. There is an e-course there’s another one we’re going to do a live one in in December. We record it and share it with make it available.

In perpetuity on online. But yeah, that one, there’s a new one coming up in December. A lot of things have changed since last November when we did that one. So we’re wanna include all the updates in the new one, in the new opportunity. In the new e-course yeah, something I’m thinking of this.

I’m not a big fan of retirement funds, but if you guys got them, the bad thing about note investing is you don’t get the passive losses at the least. But this would be something idea that you would do with in a retirement account, especially when there’s a high potential for explosive gains.

If you were to sell the property. Yeah. Yeah. People have bought P people have bought pre REO with their IRA account. There’s nothing, no problem. Doing.

And let me I got to share about the crowdfunding part of it. And here it is. So this is just so everyone understands on the crowd funding opportunity. It pays out 7% just as all the HP funds, in the past we distribute every month, it’s open. This is key. It’s open to accredited.

And non-accredited investors. That’s a big for regulation. A plus that’s a big benefit that almost anyone can invest. There’s some limits in terms of what, how much a non-accredited investor can can cannabis. But you’ll see that, they’ll see that on the site, the minimum investment, only 100 bucks and that is, we want to make it as accessible as possible to everybody.

And this offering is qualified by the sec to raise up to 75 million through regulation. A-plus. What is that like the BDN or average investor? 7,000 bucks is our average investment. Ooh, wow. Oh and then I guess the other question I had with this prod funding method. Like liquidity, right?

Like when, if the people need their money back, how is that? Sure. This has been a, so historically HP has offered this, I think since 2016, that if an investor needs their money back, we will undertake our best efforts to return it within 30 days and pre COVID. We were consistently able to do it. COVID hit.

We were unable to do it. We just caught up on the COVID air redemptions and the going forward, we don’t expect another situation like that. So we do expect that we’ll be back to returning money within 30 days upon request the or at least undertaking our best efforts to do that. Now, key caveats, all that is if the investment is redeemed in the first.

Year then the return goes from 7% to 5%. If it’s redeemed in the second year, it goes from 7% to 6%. If the investor keeps the the investment outstanding for at least two years, they can request redemption at any time and they’d be able to keep the full 7%. And I think this is for investors.

I think they just need to get a little more sure what this, like these investments, the reason why you’re not making 0% is that there is some liquidity. Like you can’t just assume that you’re going to get the money right back. I still think what you guys do for investors is, pretty amazing.

If you can even there’s even a possibility of redemption. You guys are using in liquid investments at the end of the day. Yeah, investors can’t really expect to get money back and forth and use it like an ATM. Although I know investors have used in the past and they got comfortable with that.

And then when COVID hit, it became difficult to get the money out. That’s something that luckily, the market’s gone the way it has. It’s now gotten returning to the point where, we expect to be returning money early on those two legacy funds.

And I think in the two new funds, I, a pre REO and the soon to be launched HB title, and those you’ll be able to Yeah, I think we’ll be back on track in terms of getting money back within 30 days when needed. Yeah. And everybody asks that question that comes up a lot of times in HP and pro is always in there.

Part of the solution is oh, what do I do with my short-term liquidity before I look up from our longer term or asymmetric type of risk deals? Are those more. And I tell everybody that’s where you guys have to join the mastermind group and stuff’s going around and doing it all on your own, just suckers, like seriously, like you’re not going to find out if it’s different for everybody, finding opportunities is through your network and it’s different for everybody. And everybody’s trying to do this all by themselves. These should be crowdsourcing, best practices for other people. I’m just, I’m not going to tell you guys what to do out there because you, then you guys will get mad at me.

Just like how you got mad at George, because you can’t redeem your $7,000, the first one, right? You guys, these are the tools you guys need to put these tools into the right border and the right name to say and understand what you’re working with. Those pros and cons to everything. I still invest with.

But I have it within my holistic liquidity opportunity fund. I think you guys can still get that article at simplepassivecashflow.com/poolfunds. But as part of the education process, I guess a lot of people alternative investing or private funds are still new to a lot of people agreed.

It’s a new experience and lots of times when things are going well, it’s like today with the real estate market where everything’s going so strong, people forget that, Hey, at some point it won’t be so strong and property values will go down right now. They’ve been going up like you forget people, forget that in 2008 it was really tough to sell properties.

Property values are going down each month and, that went from 08, 09, 10, 11, 12 up into maybe even 13 where things were a lot different than it is today. Remember, all these things are cyclical and that will prepare for the worst, but prepare for the best, but be prepared for the worst as well.

So call to action guys, if you guys want to learn more about this, we’ll stick it in the infoPage at simplepassacastle.com/AHP. We’ve got several other webinars we’ve done on this in the past. And if you’re interested in getting involved in that pre REO thing, us go to simplepassivecashflow.com/preREO and drop a comment into our Facebook group.

I’d be curious. I’d like to find somebody who’s doing and not just, staying to themselves and keeping it to themselves. I’m interested in this type of stuff.

There’s Hawaii on there there’s opportunities in your backyard probably, or maybe your parents backyard.

It’s astounding how many especially when we get the hundreds and the thousand next month, I think they’re going to be all over us. There should be opportunities in the majority of the markets.

But all right, guys. Thanks for joining us. Thank you, George. And we’ll see everybody next time.

Dumping your 401k, Helocs, 529s, IBC, Spouse Help Accredited Investor Coaching Call

https://youtu.be/Acn5oHx-DRc

Hey, simple passive cashflow listeners. Today, we are going to be doing a coaching call where the topics are going to be withdrawing money from your 401k. Should you do a 5 29 plan for college savings? If not, what should you do? And a little bit review on infinite banking. I know a lot of you guys have been asking about that.

If you’re like, what the heck is infinite banking? And if you guys want to hang out with more of the folks, just myself and the person you’re going to hear on this next coaching call. Join us in Hawaii in January.

Go to simple passive cashflow.com/ 2022 retreat. And we’ll see you there.

Hey folks.

He just went to this syndication e-course. Why don’t you give people a little context before we get going through some of your questions?

Sure. I’m just looking to understand the syndication laddering. I jumped in there’s a little bit of a lag before I start cash flowing. And I’m dealing with spouse support, so she’s in this wait and see game. I am also looking at my 401k, I’m 41 years old. I’m pretty heavy in my 401k accounts. So what I’ve been looking at is what’s the option as far as borrowing and paying myself interest.

And I wanted to see if that’s what relates to this infinite baking concept that you’ve mentioned before and some of your content. And one of my other questions which I put these together about a week ago. You posted something about 5 29 plans and infinite banking. I have two toddlers and I’m trying to go after I’m thinking capture this time. This time my kids are four years old trying to do like a 50% discount on college so I am heavy in my 529s.

How about we come back to the college 529 savings after? Just a quick teasers. The 5 29 plans are like 401ks. 401ks are like investing for the clueless, 5 29 is they’re essentially the same.

Everything we’re gonna talk about 401ks carries over to the 5 29 plans. I don’t know why anybody does it quite honestly. Just because something’s labeled a retirement plan or education plan, doesn’t mean that’s what necessarily you should use it. If you just want to do what everybody else does, it gets killed and has a bunch of garbage options go with a 5 29 plan or 401k.

First things first, like taking money out of the 401k retirement plan. Let’s kinda talk about that first because it’s a very common thing. Most people don’t have too much in their checking savings account. Why would you, that’s just not good use of your money.

But then they started investing and then now they have to go. They start to realize that this alternative investing is real and now they start to go look for low-hanging fruit. So the order of operations is money in your checking and savings, your liquidity, your home equity, and you can get a Heloc or a cash out refinance.

And then in conjunction somewhere in there it might be tied in order of operations. But your retirement fund possibly getting a loan or just similar to like HELOC in that you can put it back, should all this not work. But most people start to get to this stage and they’re like, yeah, screw that 401ks stuff.

Because the issue that I have it is it’s retail investments. It’s all the stuff they want you to invest in so they hit you with these high fees, carried interest. Vanguard, I used to be in that stuff a long time ago and I thought, whoa, it was these are low expense ratios, right?

That’s nonsense! Like you don’t see all the hidden fees behind it, the marketing the salaries, expense, accounts and that’s the problem with the 401ks you’re trapped with that stuff.

I do have a HELOC and it’s untapped. Between the HELOC and the 401k loan. I figured the 401k loan I think now the maximum borrow is 50% or a hundred grand, whatever is, lower, I believe.

Most people take it all at up to 80 to a hundred percent actually, but you must have what’s your house worth now? And what do you owe on it?

My house is worth about 1.8, live in the bay area and I just refiled pulled cash out. I owe about 1 million.

Okay. So you have a pretty good equity position, which is actually not good in our world. Because we’ve got to get that moving. There’s a lot of people in the family office group that are running around trying to find the best HELOC banks.

Usually it’s just a community. They usually can be in like the 3, 4% range easily at 80% on the value so you have some shopping there to do, to go find that community bank.

Yeah, I went with my local credit union and I got a 3.2.

You could probably do better. It should be a lot lower rate for 50% of the value should be able to take it up to 80. But for now you’re good. You’re not going to blow through 500 grand a million dollars. But put this on the docket to be your next three to six month project is to go find that next HELOC . That’s going to get you 80% and that’ll keep it rolling for another six months to a year maybe two, depending how much you want to deploy.

Got it! And so I just figured though that the 401k borrow would be better for me because I’m paying myself interest.

That’s what people say in theory. You’re paying yourself such a small percentage that doesn’t really matter and you’re prepared to pitch yourself repair. You just throw it down the drain in my opinion. Again, follow the numbers. All of this stuff is just, what other people say. If your coworker saying this type of stuff, you need to stop it, question it.

You’re paying back yourself the interest, but then what you got to really think about is the sunk costs or the opportunity loss of keeping it in there. All this money is not making anything right especially the format. I dunno, you can make an argument either way, right?

What’s going to go off the stocks or the house. Both of them is a kind of a crap shoot to me. But most people they go on raid the home equity first because most people were really skiddish about taking money out of their retirement. They say it like that because you’ll get really freaked out when you start to do that type of stuff.

But if it were me, I would feel a lot more skiddish with money in my retirement plan right now, because that all that stuff is just pumped with money. Equity in your home I feel like there’s a little bit more secure, not just because in 2008 real estate, what the hell? That was a real estate crisis. That’s what triggered the recession in 2008. But typically it’s like most times it’s a crash the stock market with home equity values.

Yeah, I agree. I think that a hedge on the 401k with the market would be the way to go as far as pulling money out of that.

Before we move off the house, are you guys going to stay, you got a younger family, you guys going to stay in the house for the next five, 10 years or at least 15?

Yeah. All I gotta say is most people in my community. They say, screw the house. Let me go get like a little bit smaller, like rental or apartment that has a really sweet luxury pool. And let me spend my time instead of screwing around in the yard where somebody else cleans my pool for me but just saying right because you can unlock a lot of equity that way.

Shoot with a million dollars of equity right now, you could put into something AHP. I would have put all my money in there. That’s for sure. But that could give you a hundred grand passive income a year . That pays for 1, 2, 3, 4 kids college today. I’ll be four college kids in the future. There you go! That’s your 529 done. But they’ll choose to just keep it locked up in our home equity, Jack.

Doing the home equity loan, pulling money out that way and not moving.

For the time being that’s a great plan. I think you’re fine with that for the next couple of years. But if I ask that question and some people have that hint of Hey, I want to move in to a bigger house or a smaller house.

Then I say move out now and just dump the equity up now. But if you’re going to stay there long, What I would say is just refinance the whole damn thing right now and suck out all the equity, do a cash out refinance, suck it all out as much as you can. But of course, I think you’re still in the beginning stages, right?

So that’s where you want to use the HELOC a little bit longer just to make yourself a little comfortable. But at some point, you drain the equity because the HELOC can only get you so far. It can only get you to 70, 80% of the value in most cases.

Yeah. I will shop that. I’ll look into that and I’ll even ask my credit union, the next month or so rates are really good right now, too.

What do you think about the syndication in the laddering with the development at county line?

Developments I would personally go to more of a stabilized cash flowing asset, especially if you’re new to this type of world. You think of in deals in terms of risk adjusted returns, right?

Stabilized assets is like buying an existing lemonade stand with existing profit and loss statements. You can see what it runs or a development is just a shot in the dark in a way. Technically, if you could build it there’s more margin room for error but you have to wait a lot longer to see the egg hatch.

The way I did it and the way I preach general wealth building to people is start off with singles and basics. And in the syndication, that is more stabilized assets that give cashflow quickly and have lighter value add or in the rental property world for people under half a million dollars net worth just go buy rental properties one by one like how I did.

Yeah, I think in my situation though, I need to be a little bit more passive. I’m not going to go out and buy individual properties. That’s what makes your multi-family deals attractive to me because I can be passive.

I just have to say it because something Dawn, who is a young, kid’s going to listen to this podcast and then think they’re going to go into an apartment deal and they have no money.

And so I have to say that. But yeah, if you’re an accredited investor, in my opinion, people joke about this all the time in my groups. Can you really tell me any good reason to own a rental property, debt in your name, the headache, the fact that you’re getting abused as a robot rental? Let’s not get started with all this BRRR stuff, right?

I think that general strategy is going into intermittent deals, spacing it out and just dollar cost averaging, same technique they taught you with stock market investing.

My biggest challenge now is just negotiating it with my spouse because the conventional way to invest is just through the 401ks and all these other vessels to invest. I’ve got to convince her that this is going to pay off and be able to produce some passive income but the current deal is two years lagged.

You screwed yourself. You shouldn’t have done that, man!

I know I screwed myself but I think that county line projects going to be fun to watch and be a part of. This is why I’m going back to the 401k, because I think it’s a good strategy with Harton negotiating with her that it’s, if I wanna retire early let’s, use some of my retirement and not really hit the fan.

Which is just an emotional thing, right? Whether it’s retirement or money on your wallet, it’s all the money at the end of the day. I think where people get gummed up, they emotionally feel like 401k, Roth IRA, that’s your retirement. And I even have like sophisticated investors earmarking things in their own mind that way too. So I get it. They think one is more, long-term. One is more short term, but to me, it’s all the same.

You figure out what your asset allocation or time horizons are and money is money.

Yeah, that’s where my current head is at in as far as the syndication deals, you have the one presentation coming up today. I think it’s a Rora.

Do you see the fluctuation or the opportunities to tailing off or increasing? What do you see as far as the market conditions?

Right now, it’s getting’s good, right? Because the residential market has gotten really overheated in my opinion, because of low supply. I think demand has even gone in lower, but because supply has dropped so much, that’s what dictates the prices, which is very emotional driven.

That’s why I don’t like residential properties. But in the commercial world, we haven’t had that big run-up yet. But you’ve seen rents rise the first half of 2021. It’s all completely obvious what’s happening and cap rates are dropping. You’re having cap rate compression.

But it’s not to a p lace where, your average internet investors like jumping into commercial properties quite yet. Right? Maybe this time next year, for sure. There always be deals because what makes for investment? The banks lend money at X and the cap rates are Y and there’s always a difference between X minus Y.

There will always be a differential or always be a difference and when you apply leverage and that’s how you make yield. The cap rates will always be making yielding more than interest rates in a world where gravity works. I’m sure it could go backwards for a little bit.

I don’t think it ever has, but that’s what makes the world run right. I think what you’re getting to is Hey, what if I wait? If you wait, the best time to do anything was yesterday. They always change, like for example, infinite banking they always change the rules.

Best time to get it was yesterday, the best time another one was yesterday. It’s just constantly going to be that, you guys are just like making it tough for your guys doing this. Just be prudent, stoic, and just constantly dollar cost averaging into stuff that makes sense.

And it’s difficult now because you’re getting started. But to me, that’s the outlook that you have, you don’t need to be like me and have a hundred percent of my stuff in alternative investments. That’s for sure. I totally respect if you want 20 to 50% into paper assets.

That’s fine! But over time, the kind of the percentage definitely goes to alternative asset size. You look at I seen as a tiger 21, it’s all $10 million dollar families and above all paper assets. They don’t own like mutual funds and stuff like that.

I do think that we’ll always try to be conventional in some manner from our perspective. But I have a job to do and just convince my spouse that this is legit and try to jump into one of these like more conventional deals with you.

Let’s talk about that a little bit. Your spouse do they work too, or what did they do? You guys single income?

She works. She makes more than me and she’s in tech.

Good for you, man!

She’s really involved in our finances and that’s good I have to say.

Did I send you those videos from our bubble event where we had like a spouse’s panel? I can send. Shoot me an email later and I guess everybody listening, you guys want this spousal tips and webinars. Shoot me an email with the subject line spouse, and then we can send it off to you guys too.

The takeaway is everybody does it differently. It’s just like sick parent. You never tell another person that wants to do cause they always just turn around to get their own way. And you shouldn’t talk about it. But we talk about in our group and we acknowledged the fact that everybody has different marriage structures, different ways of dealing some your spouses, involve, which I think is good.

Some don’t care but tell you absolutely you can’t do anything that’s the most frustrating thing. So I guess be grateful that’s not the case. Sometimes, you have to make deals, right? Like marriages and negotiation. Did your spouse out of your family and their family which have more money growing up?

It was about the same but our backgrounds are completely different. I’m coming from a farm. She comes from the bay area. We have similar backgrounds.

Whenever you’re working with differences and people, it’s always cool to understand the backgrounds of the people then you understand more. Some things I noticed a lot of times is when like the spouse, if they didn’t come from money then they’re really gonna like in the scarce mindset kind of way. Again, not a bad thing. That’s just how they are. They want to cling onto the house so that home equity thing is a big thing.

Which doesn’t seem like the case here. I think that’s the cool thing with people who had money, lower middle class, we’re not talking like low, low end. But they know that there’ll be okay. So they’re okay with you doing things like, taking money out of your HELOC and refinancing or renting. Not owning, you don’t need to own, right? But in this case, there might have an issue with the retirement fund.

I don’t know if you’ve ever had that discussion. Okay, if I were to do one of them take a couple of hundred thousand, which is a very small minority of the whole net worth out of retirements or our home equity. Which one would you prefer? That’s a good starting point. And why?

Yeah, and I do think it’s going to towards the 401k because it affects me and my potential retiring early. And it may be more like palatable to her to accept that.

Something I’ve picked up from Chris Voss seminar he’s said, never split the difference. Funny! He puts you in a high stakes like hostage negotiation. One of the tactics in the book you can pay attention is like, when you negotiate and you’re in a negotiation in this case. Get you label the other side. So then you asked the question, it’s that doesn’t mean that you rather have the security in your house is what I’m hearing.

You labeled them so you get the conversation going, right? No, I’m not. I just think that, and then the retirement stuff is more your longterm thing and you’re, you would retire and that type of stuff, and that’s what our family wants. And then you draw out the information, as opposed to each side stonewall.

But it sounds like you have it sounds like a totally functioning relationship to me. Just got to figure out, you’re not going to go balls to the wall in the first year or two, for sure. But which of the two is the lesser and in this case, it’s the maybe leaving the home equity alone a little bit and going after retirement.

I think that’s what I’m going to do.

Good segue! We’ve talked about the home equity. So what’s your plan of attack is probably the whole the retirement fund. Like you said, you can take a loan on it. I don’t buy the whole thing about paying yourself interest. It’s just like a HELOC that the interest paid as a wash anyway. Next investment you’re just gonna take a loan, the retirement or something like that. Is that the plan?

Yeah, I guess my options would be withdrawal penalty with a penalty or take the loan and then I have my current employer’s account and then I have my own self-directed IRA so those are really like the options I’m playing with.

Okay. You have some IRA, 401k money that has with a previous employer that you haven’t gone over yet? I think one, one rule is you never really want to roll it over. You just want to keep it how it is, because once you roll it off through the existing employer, now it’s probably stuck there.

Actually what I did was I rolled it over into my own self-directed IRA so none of my previous employers have my 401ks.

What’s your plan and that’s talk about it with what the tax implications are?

Currently, my plan would be to take the loan out of my current employer. There’s very little risk that I’m gonna, I’ll work there at least five to 10 years. I had to have to pay the loan back either a time of when I’m terminated or terminate the employment over the life of the loan. I think it’s like a 10 year term.

Again, we’re talking about loans, right? We’re not talking about withdrawals. Okay. So for the folks listening your loans, you’re not taking it out, right?

It’s the withdrawals that now triggers the taxable event shows up as income. What we’re doing here is we’re dancing around it and which is fine for now. If you were more gung ho about this stuff, I would say just take it out. And in this case if we were, let’s just play that scenario out.

What approximately is your adjusted gross income?

Mine’s about 250, individually.

What about combined? Married.

Okay. Sorry. You guys are screwed. You guys are in a tough spot because ideally what you want to do is married filed jointly right now. We try and keep people under 330 cause that’s when you really start to get hammered with taxes. And again, you guys are listening to this in the future, these things, the tax brackets dance around a little bit, but the same idea of poppy ship prevail.

You want it to leak money out of your 401k slowly as withdrawals so you don’t go into that next higher tax bracket. it is whatever, if that’s your plan, but ideally you’d like to stay under there. If you guys made $200,000 a year, married filed jointly, you could take 130 out theory and not be too bad. That probably be a good bet because you’re probably paying less tax brackets today than in the future more than likely.

So I need to encourage her to take a pay cut or change jobs and take a pay cut.

Yeah. Both of you guys make high salaries and for those you guys, in that situation, it might make sense to just suck it up and just work, for burning the candle on both ends a little bit longer.

As opposed to some of our plants that have like disproportionate incomes like doctors and stay at home spouses, that’s the ideal strategy right now. They can do real estate professional status strategy, use the passive losses to offset income. Of course, there’s a lot of hoops to jump through with that rep status strategy.

And we’re not going to get into that now, they have a little bit of options where you guys. Good news. You’re gonna make a lot of money. As far as tax is options there isn’t too many, right? And I think now you start to look at less desirable options or exotic options such as like land conservation easements.

Are you on the lookout on these next solar credits? Coming out with the next infrastructure bill who knows what happens with that. But that’s where I would be looking out to next. Or, if one of you guys are burnt out, our time, right? Like I said, you guys have enough dry powder pretty, you should just be able to make a hundred thousand dollars a year.

The fact that you guys are not is on you guys. That’s just a choice that you guys are making, but you should have that much income coming in that I think that will sustain life for you guys. Most people in our group are pretty frugal. I don’t know why you guys are going to work tomorrow, but you are.

But that just takes a time to understand how this all works because right now, this is what frustrates me. Everybody’s stuck in these 401k, 529 garbage investments and that’s why you all are still working right now.

Make more. And then you try to defer your salary to no, yeah.

Paying at our tax bracket in the future. That’s exactly what the government wants. I don’t think they meant to do that cause I don’t think the government is that smart, but in a way they have a pretty much blank check on all your money right now, the retirement on the 5 29 and not 5 29, because technically you can use it for education expenses.

They can’t touch it. But your 401k, you got to pay taxes on that eventually in your IRA.

And who knows what that is at the moment, we won’t know until I retire.

But I’m betting, that’s going to be higher than what you are now. But the game is what we’re going to try and take it out or withdraw at some opportune time from now to the next few decades, when the opportunity to jailbreak it out, the word tax needs is there.

Again, it’s good right now for you guys. You don’t have very many, right now. But what we do know is like the money is in there now. It’s not making Jack it’s just retail investments, but the idea is to take it out slowly to get it into good stuff, which is still trying to land on your feet a little bit so I get that, but just do it in a tax smart way.

Some people are like, screw this is messed up I’m gonna take all my money out of that stuff, right? Whoa. I don’t know if you can invest that quickly and you just want to be a little smart about this, that’s just going to balloon your adjusted gross income.

You’re going to pay a boatload of taxes on that. Just fly under the radar, stay under a certain threshold, leak it out slowly as the idea. But, for now you’re just going to do alone. And that’s fine. You don’t really trigger taxes at that point. Another hangup people get emotionally is they’re like have to pay to make these loan payments right.

To myself, that’s just an emotional thing for me. If it really bothers, you just set aside a certain amount to extra, to pay.

Yeah, that doesn’t really bother me. It’s just, it’s moving money around in different pockets, right?

Yeah and I think that’s the hard thing , first of all they get emotionally tied that this is a retirement plan. You’re taking money out of your retirement and make no mistake. We’re not doing that. We’re not going and buying like fun vacations with that money for long-term savings in retirement. But it’s not going to be an account with a government for your future.

In regards to the loan, do you know, and there’s certain requirements that I need to abide by to take the loan, right? Or can I just take the loan freely?

I’m not sure on that, but usually they want you to have some kind of hardship thing or you’re buying a house, which should not. So I would think the only thing you guys have is the hardship. I think at this point, it’s going to be hard for you guys. Good luck you can get the loan! All roads just take the thing out.

Yeah we’ll see if we can get it. If not, I guess we’ll do withdraw.

I’m pretty sure you can take a long where your guys at there’s no there’s opportunities for that type of stuff. I’ve seen people like lie, say we’re using it for our home equity because something broke the kitchen bathroom bottle and then turn around and use the money for something else.

I don’t know how legal that is, but whatever I guess. You’re probably not gonna lie. You’re probably come back alright loan is eliminated as sort of option. So you gotta either choose it, withdraw money from your retirement or take a loan from your HELOC. So when you come back to your boss, which is your wife, what do you think?

I’ll be optimistic. She was gung ho for the county line and I think she’ll go for it.

For the loan, HELOC? Yeah. And I would recommend doing that.

I think what I’ll do is I’ll just lay it out, then I’ll try to sacrifice my 401k temporarily, and then that probably won’t work out and then I’ll land into the HELOC.

Yeah, loosening her in a way.

I just can’t share this with her.

Yeah, don’t worry. We’ll probably released this months later so you’ve got a lot of time.

I’ll just look, to hopefully, I can draw on that HELOC that I already set up now any time and when I see a good deal, come by, I’m probably going to jump in.

Yeah and what you have right now, I’m sure it will get you going for the next six months to a year. But you got a lot of equity there so , I would shop around. There’s a lot of disparity between rates and all the values. But what you’re looking for is like 80% on the value, the same rate or better for the most part.

And I think there’s another emotional thing people are like, oh my goodness, this guy’s got 3.2%. I want three, I want to get that. I don’t want to get 4%. It doesn’t matter. Playing a different ball game than most people, because you’re using the money for something else to make more money. I think that will probably get you bonded for a couple of years.

And I think once we get into the first deal and we get that first check, I think it’s going to help me with my negotiations with the boss.

Yeah. I hope so. I really hope so. Yeah. So are we’re good on that subject?

I think the next thing on your list was yeah college savings. So you’re a new father father I’ve taken a conventional road and with the 529 plans and you recently posted about that, right?

Yeah, 529 plans they’re just like 401ks, right? The jacked up thing about them is they keep you within a set of options that they want you to take because they’re high fees. They’re crap. And that’s my only beef with it. If you can self-direct you can self-directed retirement funds. That’s fine. I still don’t recommend doing that. I think you can self-direct your 5 29 self, it’s very limited. If anything, the Coverdell is better. Coverdell is like a self-directed 5 29, there’s more options that you can invest in.

But if you’re investing in real estate pros, tax free anyway, I think that’s why you do real estate. So the gates, all the reason for using this stuff, that’s my opinion. I just think if you invest in cash, you can pay so much less taxes. If you’re smart, because you get the passive to be losses that it negates any of these types of traditional, conventional things.

If you haven’t been tipped off yet, you guys that’s when you get slaughtered with the cows, it’s not a good plan to go conventional in my opinion, but what I would do for education is I would do like an infinite banking policy and just have that as your mark money, especially the kids are a little bit older, just put it in there for safe keeping. But now your kids are younger and my kids like the youngest thing yet for the most part now is the time where you want to be more aggressive, right?

Yeah. So unfortunately I did get aggressive with 529 so at this point, I don’t know how I could get out of the 529 without taking a penalty.

What do you got in there?

I’ve got two kids about 80 grand each.

It is what it is. You can just leave it in there. Start to do, what’s going to do. Not everybody needs to be a 100% like alternative investments. If you want some stocks, there’s your stocks right there. I think that the risk adjusted return isn’t that great. But if you’re trying to satisfy some diversification in terms of different asset classes, there you go.

I would say, maybe stop doing it. You could take it out too, but you already have money to invest, so just leave it where it’s at for now. Just, I wouldn’t put more to it. Does that sound like?

That’s pretty much where I’m at now and I do just designated as like diversification against alternative.

I got some flack for that post, cause like people are like, you’re such a a-hole dare you get rid of your kid’s education fund. Like dude, chill out, man. I have my other retirement and I’ve got all these like money elsewhere just because I don’t call it a 529 plan that you know, it’s not a 5 29 plan.

It doesn’t mean I don’t have a kid’s college, like I’m not heartless other people I don’t know anything about kids. Yeah. So you never want to give parenting advice, but people are like it’s so like it’s very true. Yeah. Very true. Yeah. So for the record folks, I do have a college saving’s plan.

I just don’t put it in that 5 29 plan and I’m sorry if I offend you guys for saying that stuff is nonsense, but it is. You’re putting it in exactly the stuff that they want you to put in with all these big brokerages and their cafeteria garbage options. I’m okay with the 5 29 idea in general, but I’m not okay with the options they gave you to invest.

Very limited!

Yeah, but even with that said, I don’t like the 5 29, because what if your kid doesn’t go to college too? Yeah, to worry about it just make a boatload of money. Something I got really frustrated the other day. A lot of people, especially here in Hawaii. Have a million dollars equity in their houses that are grandparents.

Their goal in life is to pay off their mortgage a million dollars, put it into something I always use AHP. They sponsor the show too, but there’s just an example of a very lazy type of investment fund where you can get 8% I think now when you speak 10%, you speak 12% actually.

Long time ago, if you have a million dollars equity at 10%, that’s a hundred grand a year. That pays for college for three kids today, at private and I forget how much school costs. But I’m like, why don’t you like grandma, grandpa why don’t you get a whole home equity loan and get your money working.

They’re just don’t know about this stuff too but to me is a little selfish because it’s like they’re putting their security higher than they could be paying for their kid’s college today or that could be growing just so much more 18 years from now.

It’s probably bad that I call it selfish. It’s just they’re ignorant to the fact that you can do this type of stuff and if we’re all brainwashed to do exactly what they’re doing right, but I just got frustrated the other day, this is very prevalent,

Very true. Just taking advantage of that gift. You know the gifting.

It comes down to being good stewards with wealth, right? Some people have wealth and they don’t do anything with it. They just squander it for the rest of their life. Other people you know , they understand the risks and prudent debt and they able to have it grow or stay where it’s at.

90% of people or 90% of wealthy family and two or three generations for reason. Alright, good point. . If I were you I know you got other investible funds. I’ll just leave it where it’s at. It is what it is 160 grand in 10, 20 years. Isn’t going to be enough.

They say Stanford and 18 years will be $450,000.

Apparently the side doors closed no, I watched that Netflix special. A bad joke though. The one where all these, like the rich parents were paying for their kids to get in to the colleges. You got to go in the back door and that’s really expensive. It is what it is, with the college stuff for you.

Yeah, I just I’ll look into if I ever need to what’s your on 10% penalty, it’s some money, but it’s not a whole lot.

It’s very similar to some people like have really bad life insurance policies, right? The whole life policies that were just configured the wrong way, their long lost college, high school friends that they never taught. Yeah, it takes them off the lunch, puts them into this really bad policy. Most cases, you can just 10 35 into a new infinite banking, more friendly policy. But in some cases it’s just better just to throw the baby out with the bath water.

Another bad joke too, to just get rid of the life insurance. So the same thought process with the 529. Keep going with it. It is what it is as opposed to withdrawing and starting over again. Yeah. Like the infinite banking comes in because, especially if you have a skeptic spouse, at least that gets your money working 4 or 5% tax-free.

You can sell them on the idea that it’s off the table, litigators, who doesn’t like that and it’s not like you’re putting the money out to an investment where there is perceived risk on, investing in some dishonest person to infinite banking stays. It’s way more I probably shouldn’t say this, but it’s way more secure than any bank or any mutual fund.

It’s a life insurance it’s backed by some of the most like credit rated companies that’s been around since the civil war. If you want anything more secure, let me go to a life insurance company, the good ones, right? The top rated ones, not one of these.

That can be a way, like for somebody in your shoes who has a lot of dry powder. That you’re going to responsibly deploy over the next several years, at least, you’re probably antsy to get it done, but your spouse probably wants to pump the brakes. But as a compromise, maybe just do 50 grand- 100 grand a year into one of these infinite banking policies and invest out of it.

But at least your money is working in that and it’s building up that cash value over time. Everybody over a dollars net worth should have one of these things. It’s a no-brainer. And again, we’re talking to you non- accredited investor who has no money. Don’t do infinite banking.

Don’t get caught up in all the podcasts, marketing hype. It’s not for you yet. There are some fees associated, of course, but in the long run, it makes more sense than that.

Yeah. Cause you’re new to this stuff and share all these ideas. We want to get moving, but yeah, got the ball and chain in a way. The infinite banking is a very logical idea. I think that is very prudent and safe.

Do you have any content on that as far as the background of infinite banking

Yes simplepassivecashflow.com/banking is the place where I through all the webinars and stuff like that. But if people want more in-depth we’ve recorded some FAQ’s, and then if people need like referrals to folks, they can shoot me an email just put IBC in the subject line and I can send that to you.

Yeah, it’s a rabbit hole though. First, like when people come into the mastermind group, is trying to get them to get educated on syndication deals, right? Because the syndication deals is, first of all, you don’t want to invest in a bad deal, with somebody who’s going to steal your money.

So that’s the first thing we try and mitigate. So that’s always like a third of the pop curriculum. Like your first few months are focused on that and then taxes. Especially for somebody in your kind of, income level tax is a big thing, but infinite banking is at the end of the first year, Pete more, most times people who like to lone Wolf and do all this stuff themselves, which I think is dumb because good buck, I’ve took me so long and mistakes and wasted money to learn on my own in my whole, that’s why we have the family office group. Fold your hand and kind of teach you exactly what to do. And then we set you up with people within the group. Who’ve done it already. So you can both build a relationship and a process with that person that you can carry on forever.

Talk, whatever investing or deals do you want to talk about, or, and more importantly, the soft subjects, right? How do you pass this off to your kids? Without them becoming nincompoops.

But then, you talk with them, the pros and cons, how they did their infinite banking policy, why they did $75,000 instead of 25,000. But why did they do $250,000 a year, for example. And then you come up with your own idea, you formulate it, and then we send you off to all the tax legal guys after you’ve already had your plan, because in most cases, if you go off to a professional.

They’re just going to sell you what they’re trying to sell you. There’s so there’s so many things in this financial world, that’s just a bunch of products. You really need somebody who’s going to architect it and that’s going to be you. You gotta be educated in power to talk intelligently and to know what you don’t want.

But yeah, the infinite banking is at the tail end of it. It’s a huge rabbit hole for sure. Huge in terms of burning it. No most people who’ve done it. Say, there’s sort of stuff on it, but just get it then. And don’t complicate it. Just get get like a policy. Like my ch my golden rule is start off with a third of your annual net.

So you guys, I don’t know how much you guys net at the end of the year, but maybe you guys net $120,000 to savings. You could put that to me. Four houses a year. If you want it to, if you want it, if you didn’t value your time and energy, you could buy four axles with that. But my general infinite banking and start off with Elisa third of your debt every year.

And then that way you learn how the infinite banking works. You take loans from that. You invest it, then you have more money. You put it back in there and you learn how it works. And so it’s always good to start off with a little bit of a test investment first and then then go bigger.

My, my first one that I did for myself was $50,000 a year. And then I did bigger after that, after I got the hang of it. But yeah, if you guys net one 20,000 after income minus expenses for a year, do 40 grand every year, but because you have. Like liquidity in a way I think based on the little bit, I’ve refreshed myself in this last, 30 minutes hour talking, I think you should, you guys should probably do 50 to a hundred thousand dollars a year, right?

Because you have all that fullback equity not to check, which you want to do is take that and put it into here for now. You can take it right back with the next day as opponent. That’s the whole point. That’s what you’re trying to do in banking. Yeah. So in fact, I would probably do a hundred grand just shooting from the hip or at least 40 grand a year for five to six years.

I always like to do the shorter period personally. The insurance salesman is always going to try and get you the longer ones. So they get requisitions. They don’t have to deal with you less, every 10 years instead of every six years, but that’s yeah. That’s just my take on it, but we’ve got a lot of content on it.

I’ll just shoot me an email, the subject line, and then I can give you the videos and then I’ll connect you once. You’ve studied up. Okay. Yeah. That sounds good. Yeah, you do something right? Because it’s fun. Stuff is fun. It’s different. And it’s, but it’s totally different. Like we talked about this stuff, cookie. Yeah. I’ve, haven’t heard of it until now. So yeah. It’s interesting stuff. Yeah. And that frustrates frustrating is like everything in mainstream financial advice. If you look up Dave Ramsey, he absolutely heres this whole life thing, afar, he says it’s a total scam. And I’m like dude, you’re not even we’re not even configuring it the way you’re talking about.

And we’re using it for something totally. He says, we’ll get it. If it’s for, if it don’t get whole life, get term life, that’s that’s, what’s like it transformed, but it’s dude, we’re doing it for a totally different way. The wealthy use things very differently. They’re doing this as a way to put money in it.

Suck it right back out as a law firm, ourselves and taking money off the table litigators. That’s all we’re doing. And the fact that it’s like insurance that’s because we can keep it under this what’s called back level. We don’t have to pay taxes. So it’s texting people is what it is.

It’s a text loophole that the Congress people and progress Spain that were just falling if we’re not done. So it makes you wonder who Ramsey’s representing to to poop, right? He’s not representing any. I think he, I think he does a good job. Am and sees the army. A lot of these people, they just cater towards majority of people, the conventional, traditional people, the conventional traditional people are horrible with their finances.

They just can’t seem to save more money than they make. And, or they just don’t make more than $50,000 a year. And I’m sorry, if that’s you, I went to college and I was lucky enough to go. And I’m in the situation where I am. And I think some people in this world are in the same situation, but they play by a different set of paradigms than the people who are still at financial one-on-one level and all that.

So I think Dave Ramsey, I think their heart is in the right place, but it’s totally guided towards other people. Argument about buying a house, not buying house. Like I, I personally believe that you shouldn’t buy a house unless your net worth is two times, three times greater than what the health support.

So if you, if your house is $2 million, you should buy a house to your net worth of 6 million. That’s very unconventional thought. Yeah. House is a Dre. You need to be investing, bring your money. And so sinking in at a house. Not too much just going with the pace of inflation, but for the Dave Ramsey, Susie Orman, and people on the world, a house as a forced savings account, it’s something that they put, a thousand, $2,000 a month to, if not, they’d spend it like little kids. There’s just, there’s paradigms in the world. You need to figure out which side of the paradox.

Yeah, that’s a good point. Yeah. But just do the math. The math, the other day, the math to tell you what to do. Just need to go in with a very different lines. So yes. Bring that paradigm a concept up when I’m negotiating with the boss. Yeah. I do it to myself all the time.

Like I think the biggest thing that I see successful people have is an open mind and they look at something very, without any emotion or prejudices attach, like something that happened to me lately. Like I’m doing this for fun, like this exotic car hacking force. It’s kinda, it’s really cool.

But like the whole idea of leasing a car for some reason, I thought that was a good idea. And that’s too long ago and at least a car a year or two ago, I thought it made sense to me, especially because I was using it for business and I was able to write it off, but what they show me, it was like they showed the numbers, they show how wrong that thinking was.

And the whole premise of all our hacking is there’s a depreciation schedule and it closed and then you want to buy it, but it’s low and that maybe when it comes up or it doesn’t just bleed depreciation as heavily, that’s essentially a hacking at all. But yeah, I was really gung ho about thinking that he says, we’re good now I see the light and I’m sure my ideas would change in the future.

So I reserve the right to change my night. Fine. This is not financial advice. Yeah. But but yeah, anything else? Yeah. The family office mastermind I’ve looked into that. I’m considering it. I don’t think I’m ready yet, but I will probably eventually I don’t think they never ready for it.

I think you just need to do that now. In fact, now’s the time to be doing like you’re starting from square one. Yeah. It’s like shooting arrow. Now’s the time to figure it out, get something with a shooting in the right cow .

I’ll let you know when I am ready and hopefully it’s sooner.

When you got five hours a month to dedicate to something that’s when you know. We have over 75, 80 people in there. It’s not for everybody. Do you want to just keep doing it on your own? That’s cool too.

For me, it’s just deploying my capital. First I got to get through the boss and then I got to put some numbers together, how that investment would return in our household.

I think we have like at least a two X, maybe three X guarantee that you get that first year back.

Cool. Appreciate it! We’ll stick this in the archives with the other coaching calls and then if you guys want to learn more about that family office group go to simple passive cashflow.com/journey and I’ll see you guys next time.

Travel Hacking with Geobreeze Travel

https://youtu.be/kjiVzFbfjRg

Aloha everybody! Those of you guys who’ve been following me for quite a while, it’s been a journey from 2016, doing this podcast. I have always been interested in the financial blogs sphere, podcast space. It was early when I started to read all these financial blogs.

Back then it was silly things like which credit card you would get and you could get these 6% rewards checking accounts. What I would do is I would get these balance transfer offers stick 30 to 40 grand in the bank with all these business and personal credit cards, balance transfers at 0% and make the arbitrage of my 6% rewards checking account as I would go to the bank at 20 degrees outside and ring up 12 transactions at the gas station.

Those are the days where I just would waste my time because money was more valuable than time at that time.

Probably around 2010, I ventured into the travel hacking community a little bit. I went to one of these seminars. Didn’t really enjoy the people because a lot of those people are very scarcity mindset. They collect points, they burn up their time. It’s a hobby. I get it. It’s fun!

It’s like playing an RPG game. Getting points on a video game, but for real life, getting miles on different airlines and using those airline miles in different ways. I know a lot of you guys are into that because if you guys don’t get credit card points or miles you guys don’t spend the money on nice vacations and whatever I can do to get you guys to get those experiences in life.

That’s the point of today’s show is to bring on a travel hacking expert. And this is new to you guys. I think it’ll be a good primer. Some are old to the sport of travel hacking. Maybe in a way I think this would be a good refresher on what’s the newest stuff to be on the lookout.

Hey, simple passive cashflow listeners. Today, we are going to be talking to the creator of geo breeze travel.com and sync up on what’s been happening lately in the travel hacking industry. You guys are probably wondering why I’m wearing this like weird shirt and I’m not in my normal white collared shirt attire.

We just closed the deal in Huntsville and this is their minor league baseball team going up. Probably near one of our apartments. It’s a trash pandas. My dog’s name is Panda. It’s not trashed paddles. It’s trash pandas, but this little stupid panda bear right here, it’s going to make me a lot of money.

Cause we’re going to check in there in Huntsville. Why don’t you introduce Julia on the line here?

Hi everybody. How are you? I’m excited to be here today.

I think a lot of people listening they used to be into financial blogs. Maybe they’ve moved on as life has gotten busier as their network has grown buying rentals, going into syndication deals, but I can speak for myself.

I selfishly brought you on here because you’re a travel hacking expert and I’ve been out of the game for quite some time. I remember over 10 years ago, I went to FTU was that frequent travel university or something like that. My friends and I was like into all this getting all these credit cards getting points.

Back then you could get like 0% balance transfer and then throw them into a 6% savings account and just chart it that way. Let’s give people a little bit of like high level. What are we talking about travel hacking?

For anybody who’s not familiar with travel hacking at all, it’s a way that you can get free travel or a lot of cash back, if you want.

Just by leveraging the loyalty programs that are set by credit card companies or airline companies or hotel companies. And if you’re not aware, there are dozens of different credit card options and different loyalty programs out there. And it’s all about how to strategically approach the game so that you can meet the travel goals that you want.

You can get the travel that you want for almost free, very close to next, to no cost while just learning to play the game and plan strategically, which I think a lot of people in your audience obviously do as they’re researching different real estate and different passive income opportunities.

Yeah and I think that people listening, they’re like myself, optimizers and this whole travel hacking thing. You’re literally collecting points and then you have to figure out where to cash in those points at the highest value and it’s like a video game. It really is addicting. It can be a time suck. Maybe let’s start off with, you have a list here of some highest and, or biggest bang for your buck type of tactics. What’s at the top of your list, Julia?

It’s not a game just for how to use the points, but also even how to bring in those points. And so my number one advice to people is I have a few, the first is, the best travel hack is finding friends who can show you even more travel hacks because so many people do it.

The very unoptimized way of I’m going to watch 14 hours of YouTube videos and read blogs. But really if you just join a community, whether it’s on Instagram or a Facebook group or something, I host different Hangouts. If you just find somebody who’s already into this kind of thing, like you went to the frequent traveler university conference, it speeds it up so much.

If you can just ask your questions there. Secondly. If you’re like, I really just don’t want to interact with people. How do I do this quickly on my own? My advice is to work backwards. Some people will make the mistake of researching different cards and saying, I’m going to get a Chase card and then an Amex card, and then a Citi card, a Hilton card, a Marriott card or United card then I’m going to figure out what to do with all of those.

And that’s a really inefficient way to go about it. Instead, I would recommend start with the goal that you have in mind for free travel and work backwards from there. If you’re telling yourself, okay, I want a free trip to New York city and I currently live in Hawaii.

Here are the airlines that fly from Hawaii to New York city. I want to stay in this area of Manhattan. Here are the different hotels that are servicing in that area. Here’s how many points I would need to get that free flight and to get however many nights in a hotel for free. And then here are the credit cards that can earn me kinds of points that can actually be transferred correctly to that airline or that hotel.

Then it really narrows down how many things you actually have to research and figure out and how many points you need to get in the exact currency that you needed in rather than just shooting all over the place in the dark. Make some travel hacking friends and also work backwards to get to your goal faster.

And then, at some point you have to get some credit cards, right? Where a bunch of points. I think a lot of people in our sphere, we know about the old chase Sapphire reserve card, but is that one of the best today? Or what are the cool kids using?

If you are a very beginner, like this is the first you’ve ever heard about this, the most popular beginner card these days is the Chase Sapphire Preferred.

And as of yesterday or two days ago, March 21st, they just increased the signup bonus to 80,000 points instead of 60,000 points. That’s worth more than a thousand dollars in travel credit. So Chase Sapphire Preferred is one of the most popular ones for beginners these days. We always recommend start with your Chase cards instead of starting with American express or another family like that because of something called the five over 24 rule. Which says that if you have already opened five or more accounts with any carriers in the last five years, Chase is just going to reject you if you apply with the Chase card.

So it’s good to get the Chase cards out of the way first and then you can move on to American express that doesn’t have this rule. You can move on to Citi cards, bank of America, something else like that.

Good advice! I have a love and hate relationship with Chase. I do the tradeline cooking thing where I kind of piggyback authorized users of my cards. People want to learn more about it, go to simplepassivecashflow.com/tradeline. I have a little e-course on that. But Chase cancel all my cards so not like that but nominal rewards credit cards. It’s a great place to start there.

Why did they cut off all of your lines? Too many authorized users?

Yeah, it was getting a little ridiculous. I was turning people a lot quicker than I do these days and I have to log about it. It’s good that you see a company actually has checks to make sure that there’s no weird activities that just bind. I think it’s good business, I don’t know. It’s like surreal but I applied Chase for data shows that they have their S together.

How many points did you lose when they shut you down?

I think at the time, I think I lost myself Westpoint’s 200,000 points and which goes to show, right? Savers are losers. Just like people with all this equity in their house, or, the bank.

There is a strategy called churn and burn where earn and burn where you’re earning points really quickly and then you want to use them quickly as well. You don’t just want a whole bunch of points sitting there in your account, not being used because a lot of airlines will de-value their awards programs.

And so if you just have hundreds of thousands of points sitting there and you’re thinking, okay like around the world trip or something is going to cost 200,000 points. And then the next year they’re like, Oh, now it costs 250,000 points and your points were just sitting there and never use.

Those aren’t going to accrue interest on points. You have to earn them and then burn them pretty regularly. So you want a high cashflow game.

Yeah, I was being an idiot. I don’t know what I was doing. I just wanted to see the points go up again that’s why I was thinking.

A lot of people who are in this hobby are really frugal and they’re just like savers by nature and they don’t like to go out and spend the points but it’s not like money. You don’t save these points until retirement or something. You want to earn the points, know how you’re going to use them and then know how to get more points.

Yeah. I was like that precious guide or what are their rates with my points, but how do we use them? What is the biggest bang for our buck to using these points? Since we get a book, a couple of hundred thousand points or so.

There’s a lot of different sweet spots that you can use for these points. I would say you should definitely learn about transfer partners. A lot of people, once they get the Chase card, they just always go through the Chase travel portal.

And then you’re going to get a set amount there where it’s maybe 2 cents per point or something, but if you could figure out how to transfer them to the different transfer partners, you can get a lot more bang for your buck there. One of them are advanced tricks. For example, if you were to Google United excursion as perk you can

book some kind of triangle itinerary, let’s say from New York to London, to Paris, back to New York and that middle leg is going to be free for United. And so you can super hack that in different ways where I had a hangout and a meet up last night with some people who listened to my podcast and I showed them a trick where you can do two little domestic flights.

It’s only going to cost 10,000 points total and then you just get a free flight across Africa or something. And you save yourself thousands of dollars if you learn the different redemption, sweet spots that way.

Once you’re getting into that type of stuff, to me it gets a little freaking complicated, right? Like all this like field dumping and all these chicks like that at some point, is it, at what point does it make sense for someone to just hire somebody like yourself to book that trip for you and how much do those things take costs? I guess Yeah.

So I would say if you’re the kind of person where you really like watching YouTube videos and really like reading about award charts and learning about fuel surcharges and all of those transfer partners, some people really enjoy it. If you’re a person, go ahead and spend a 14 hours doing DIY. If you’re like.

I really just need to get this free trip. And I don’t know where to start. Definitely hire somebody like me or travel hacking coach. And I do 30 minute free calls all the time just to get people on the right track. And I say, okay, here’s your rough plan? Please use my credit card links. That’s how I get affiliate income.

Or if they want to actually hire me to do a full 12 month structured plan to say, okay, each month, I’m going to check in with you. This is the car that you should get. Here’s where you should be. Just to stay on track and meet the sign up bonuses, because that’s where most of your points are going to come from.

I do that as well. And as far as how much it costs right now, I charge 125 for my coaching package for 12 months. And. That includes two video calls and a monthly check-in for a year, just to make sure you’re staying on track with the credit card plan that we put together so that you can earn the most points.

And then you’re not floundering around and being like, I don’t know what card to get, and I don’t know how to use these points once I earned them. So those are the kinds of things that I help people with. Yeah. So this is makes, makes sense for someone like myself. Like I have a halfway decent amount of points.

I think I need help on the backend like I kinda know what cards to go and get. I love to DYI because I’ve been in tradeline hacking and I’m always trying to get new cards cause after a couple of years and I can start tradeline. I get that but where my big blind spot is I don’t know how to use the points.

So to go someone like yourself I’d just be like, all right I got 150,000 points. Here’s where I’d like to go. Can you just book my flight for me?

That’s what card currency is it with? Is it American express?

I think that my American express, I try and stay with the cash back cards on that more, but I think I have a halfway decent amount of like airline.

I fly a lot to Dallas, so like 160,000 with them. We’ve got like 80 with United and then some with Alaska in September, actually butterfly with Delta too, but I never get enough. Here’s my problem, I’m always traveling for like business. I’m always writing it off. I never really traveled like a hundred percent personally.

Yeah. I haven’t done that for a while, but that’s where I would like to use my points because I can’t deduct that price of that flight. I’m just thinking like most things you hire the expert, you’re going to get the biggest bang for my buck for those points and then we’ll tell us two women.

Maybe tell me how you look at like, all right. Lane scholars points. What would you do? How would you book Meyer to Kurt for me?

Rather than saying, okay, we have all of these different points. Let’s see what to do with them. That’s the position we’re in now. So I could figure out an itinerary that way.

But if it’s somebody who’s just starting out, I would say, avoid that situation. And then instead say, where would you like to go on your personal trip? And let’s work backwards from that? You’re like, what do I do? I have some Delta points. I have some United points, so we could you’re out something like that.

And look at different routing maps and say, okay here’s some sweet spots if you want it to go to this city. But really the best points to start off with are the super flexible ones. The chase points, because they transferred it 28 different people, I think. And then American express is really good too.

I really like the American express points because. The membership rewards points can be transferred to ANA airlines through Japan. And they have a program where you can fly around the world in business class for let’s say 125,000 points or so it might vary a little bit. But 125,000 points, which is two credit card signups.

You get one Amex platinum, one Amex, gold, you have enough points for this and you can fly around the world like in stop in eight different cities, all in business class for just that. So those are the kinds of sweet spots that I can show people how to do and it’s very easy. You don’t have to do 17 different cards, which I think some people fall into that trap of if you don’t know how to do the award side of it. You’re suddenly having to open a whole bunch more cards and spend a lot more effort to get the same kind of redemption.

And I tell people like I’m like a recovering frugal cheapo. There’s two things that I’m fascinated with these days that’s Ford Raptors, these big monster trucks. And YouTube videos of people in first-class like Singapore airlines, Emirates and I don’t know why. But I think it’s really cool! You can get like, How much points do you need to have that kind of experience? And because those are like $10,000 flights, right?

Oh yeah! They go for more than $10,000 so it completely depends how far you are flying. I’ve seen them go for as low as 30,000 points for a one-way short segment.

If you just wanted to do a trans European flight or something. From like Paris to Greece. If it was six hours or five hours or so you can probably find some good sales for 30,000 points, which is half of a credit card sign up most times.

Because I’m here in Hawaii and I understand how you use the American carriers, but I think where I would need your help would be like the foreign carriers, just like the Emirates or ANA.

How do I get to use my points of those way better areas? So I would say researched the Star Alliance transfer partners, and you can go through chase with a lot of those. I like to search for award availability on united.com. It’s probably the most user-friendly and then you can also see the different transfer partners with United.

If you’re trying to say, okay, if I want to fly from Hawaii to tokyo, that’s probably gonna be Ana airlines. Which you would want American express points to transfer to that. But if you want it to do like Cathay Pacific or something through Hong Kong, down into India or something like that, then you can transfer some chase points over.

You can do some research on Star Alliance . So it involves knowing a little bit about the different routes and the transfer partners and also where you want to go.

Yeah. What’s the website that everybody’s using these days for all the route maps stuff like that, where they do, they just go to United or American?

I personally just use United and then I try to see what transfer partners are available from there. There used to be a site called award hacker.com that you could use to try to figure out the routing maps. It’s not that good. Honestly, it just ever since the pandemic, all of the routes have changed.

They haven’t been able to update their website because the routes keep changing so often. So I would almost say instead of a website, find a person who can help you with these types of things. I link to all different kinds of people who do this kind of work in my podcast, where I interviewed travel hackers from all walks of life who are able to get super cool redemptions.

What’s the coolest experience you’ve gotten as a points?

One of the coolest ones I got was super easy. I have the Hilton card where I got a free night certificate that I could use in any Hilton hotel in the world. Pretty much. So of course the next question was what is the most expensive hotel where I can use this.

And it was at the grand Wailea in Maui, which starts at $500 a night and it’s so fancy. Have you been there since you’re in Hawaii?

I’ve seen it. I don’t go anywhere near, cause I probably cost like locals, like 50 bucks to park your damn car so I stay clear those places.

It’s super expensive, but I had a Hilton free night and not only did I get the free night with a standard room, but I wrote to the hotel in advance and said, Hey, if you have any upgrades available, I have status with Hilton.

Can you do me a solid, an upgrade me, do a room and they ended up upgrading us to a $900 a night suite for free. And it was overlooking the ocean. It had a balcony and it came a free breakfast. It came with free dinner. They wheeled in a cart of all these local Hawaiian snacks and champagne and it was incredible.

Probably saved a thousand dollars just off of that one night and just have one credit card that did this. And so if you want to, I can make a link for your listeners on where to get that email template that I use. Oh yeah. I downloaded that from your website. Yeah, we can put, we’ll put the show notes on small passive cashflow.com/credit card, and then we’ll link to your website so people can download that.

But this is the cool thing. Like you had this like template of what you email hotels to get like all the free goodies and stuff like that. It’s kinda reminds me of if you Google the a hundred dollars trip and Las Vegas or fifth or $20 trip, I think it’s now a hundred dollars, but you tip the guy where you stick a hundred dollars and then they might give you an upgrade.

This one doesn’t cost any money. This is just a “Hey, I’m celebrating a special occasion. If you have any availability here’s my reference number for my confirmation. Here’s my loyalty number”. And so it’s just the information to provide hotels to make it as easy for them as possible to make a mark on your hotel reservation and say ” Oh yep, you’re here now we do have an upgrade”.

So that they’re ready for you. Especially do this if you’re celebrating a honeymoon or an anniversary or something, because the hotels really do want to be nice to you, but it’s almost just rude to show up and be like, we’re on our honeymoon scramble now and get it figured out for us with an upgrade.

If you’re being a little bit considerate, giving them some time to figure this out, email them a week ahead or something so that they can make some arrangements for you and they’re not scrambling. Yeah. Like when you arrive and processes, yes. It’s so much nicer for the hotel too, because then they’re not scrambling.

It’s nicer for you because it increases the probability that you’re going to get an upgrade. So have these processes in place templates are great. Any other thing, cool. Chick like that you want to share with folks that one’s a good one.

What else? Really? The other one is just connect with other people and there’s so many free places to do this.

There’s Facebook groups where you can ask people different tricks. I have my free 30 minute calls. I have monthly Hangouts every month where all of us will just ask questions of each other and then group think ways to hack things and it was like $5 to join. And I really only charged money to keep a way people who don’t care.

And also that the people who had to pay at least a little bit will actually pay attention and use the advice that we give. So those are some of travel hacker.com or that website, or like those credit card websites, those forms still good. I know what was another one that I used to stat wallet went away.

I haven’t been on any of these. I always just connect with individual people who run these websites. There’s somebody called pack your bag with points. He runs a Patrion where he tries different credit card techniques and does different experiments and then lets us know which ones will get you in trouble.

And which ones work. There’s a guy who runs a website called straight to the points and he is like really into researching all of these award charts and then has a paid newsletter where he just searches for award availability. There are two first-class seats on these different flights go grab them.

And so you, he just spends his time searching for these award availabilities and then emails his email list about them. So those are some ways to get the next level hacks is probably like something you pay a little bit of money for. You’re going to get a lot of savings.

And that’s a good technique guys.

Like just don’t be a free loader like it’s just a big difference between free lowers and people that pay a minimal. It’s a good appreciation. But let’s let’s end with this, like ciao hacking has sometimes connected with the dark side of the world, which is like manufactured spent. Can you maybe just highlight what is that for people who don’t know.

Yeah. So manufacturer spending for anybody who doesn’t know is a way to maximize the number of points that you are turning through your credit card. So you’re spending a lot of money or it looked like you’re sending a lot of money, but really it’s going straight back into your bank account. So it’s almost like this closed loop, but you’re getting points for running things through the loop.

And in the past, there have been different techniques to do. This. One was when the U S mint used to sell gold coins for a dollar, you would buy a $1 gold coin. With your credit card, they would mail you a bunch of gold coins, and then you would just take them to the bank and redeposit them in the bank. So you were basically buying money and getting points for it.

You can’t do this anymore. You guys know who you are, you guys did it. I know you guys did it back in the day. Yeah. Back in the day, that used to be a thing. So with manufacturer spending, there are all sorts of. Questionable things that people have done in order to turn all of these points. I have multiple podcasts episodes where people laugh at themselves about getting the police called on them.

If you do enough weird gift card things, people will assume you stole the credit card. Or that you’re money laundering or something like that. So it’s sometimes associated with. The dark side with manufacturer spending there, but I have a really good trick for everybody. Who’s listening on how to do a manufacturer spending technique that I would actually encourage because it does good in the world rather than destroying things.

So there is a website called kiva.com, k I V A. And if you haven’t heard of this, you can loan money to small businesses who need money for just a few months. And so you’ll learn however much you want $500. It could be less, I think it starts at $25 and then you loan some money with your credit card so you get points for the loan.

And then six to eight months later, they’ll pay you back with PayPal. So you’ve redeposit that into your bank account. You have to float the money for a few months, but I do this all the time because I feel good about helping small businesses. I get points on the credit card. I never actually had to increase my budget in order to get those points.

I just have to wait six months to get the money back. So that is a good way to turn a lot of points without spending way more money, because some people, they get these credit cards and they’re like I’m just going to buy a whole bunch of like purses and shoes so that I can get more points and that is not.

I repeat everybody. That is not how you should approach this game. Do not buy a whole bunch of stuff from Amazon that you do not want or need just to get points, approach it strategically. I just got a text message here from Bob. Bob wants to know what the interest rate on that Kiva loan yet. So you don’t make any interest.

You just get paid back the principal amount. They do charge interest to the people who are borrowing, but that’s how they do their operational costs.

You’re doing a good thing and you get all the credit card points for it. So if you have to meet a minimum spend, like if you’re earning 80,000 points for $4,000 of spend and you’re like I’ll have $4,000 worth of spend to do, what am I going to do? And then you just loan out $4,000 Kiva.

How quickly do they pay you back? The shortest time is about six months. Okay. Because I got a card that does 2% for general stuff. And all that does to your five to four, like just 2% back on everything. I would say really it’s only, I only do this. If I’m meeting a minimum spend and don’t have a good way to meet it for just general everyday spend, if I’m like, okay, which card do I use for this?

There is an app. It is called card pointers and it answers the simple question. What car do I use for this? So you just tell it all the different cards that you have, and it will say. Out of the cards you have currently available in your wallet. This is going to be the Westland to use for groceries. Use this one for guests.

Use this one for gross for restaurants. So card pointers is a really good app for that. Yeah. I will actually use the blue cash preferred card or American express, excuse me, 6% back groceries and uncle and buy like a thousand dollars worth of Amazon gift cards and other random gift cards from Safeway.

And I have a little shame. That’s what I do. Oh, no, no shame. That’s a really good strategy. It is a good idea. If you’re going to just buy a whole bunch of gift cards from the grocery like that, to also actually mix it in with groceries so that you don’t look like your money laundering, actually also buy groceries and charge those first.

Make sure the first thing going onto your receipt is like a banana or cool. I feel accepted as a safe place. Yes. Yeah, no judgment. No, this is encouraged because this is how you actually optimize points and how you approach it strategically by saying, okay. If I have to go to target anyway, rather than just getting my one point per dollar at target, I should go to the grocery store, get six points per dollar on target gift cards, then go spend those gift cards at target.

So some people are like, Oh, it’s really inconvenient to add in that extra step, but you can get so many more points that way. If you. Figure out these additional steps that you can take. What are you like someone like yourself for I have 20 credit cards. So I think I got them all almost once you get to end game and you there’s really, you’ve gotten all the bonuses right.

For these new cards. What do you do is manufacturing spend you’re really only means to get points. No, because they’re always coming out with new cards and new products. You can always close down a card and then get it again at some point in the future. So one of my first cards when I got into this four years ago was the chase Sapphire preferred.

I used it for a couple of years, got some other cards closed down my chase, Sapphire preferred, and then I’m going to get it again in a couple months because. You have to wait 48 months since getting the bonus last time. And so it’ll be right at that four year Mark. So then I’m just going to open, reopen a card that I already had before.

And so if you’re slowly turning through cards like that, you can keep sustaining the game. Plus they’re just always opening new cards. So you’ve got like a tracker on it, like a sauna four years later to get it. I one’s just burned into my mind because it was my first card, but there is a tool called travel freely.com and it’s a really good calendar app where it will send you email reminders about when your minimum spend is going to be due about three months from opening the card.

You’ll send you calendar reminders and email reminders when it’s about to be your one-year anniversary with the card or any year anniversary with card, because your annual fee is going to come due. So you’ll get an email that says, Hey, do you still want to keep this card? If you do, you’re going to get charged $95.

If you don’t want to keep the card, then you should close down the card. So you’re not doing, you’re not doing any manufacturer, spend yourself. Other than just keep It’s mostly just Kiva. Yeah. But that’s just where your minimum spends to get the bonus since. Yeah. Just the minimum spends. And then also, if any of the cards are doing some kind of spending challenge where if it has a special promo of this month, if you spend at least $1,000, you will get an extra 5,000 or 50,000 points or something, then I’m like I didn’t have anything planned for a thousand dollars.

I’m just going to turn it through Kiva. So sometimes I do that. Yeah. 2%, 2% for six months. So 4% a year. Tax-free right, because they don’t tax you haven’t yet actually on this stuff. I don’t know if anybody’s heard of this, but there was. A couple that was churning through like $300,000. In two years, they got cash back and through manufacturer spending and the IRS says they have to pay taxes on it.

So keep that in mind. Don’t go insane. Don’t turn through $10,000 a day or anything like that. That’s why I always encourage, just do the Kiva thing. If you need to meet some kind of minimum spend Or else you could get eventually caught and have to pay taxes on it. But there are people who try to make that their living is just to turn through points and lots of different ways.

I’m of them more legitimate than others and grab the cash back forward. And then they live off of that. But. Everybody who’s listening to this might be thinking, Oh, that sounds like a genius, like efficient thing to do. It is not. It is, you are driving all over town to get gift cards, to turn into money orders.

If your town even still allows this because it’s very location dependent. And so you are driving all over town. Because no store is going to let you just buy $20,000 in gift cards. They’re going to limit you to $500 or something each time. So it gets really inconvenient. You have to go back every day.

And I think a lot of people, when they’re doing this game, don’t take into account how much their time is worth to be driving around the stress of doing this. People do get their cards shut down. They get their bank account shut down the same banks where they might have their mortgage. So that would be very unfortunate.

You could get kicked out of your local Walmart or grocery store. They might just say you’re not allowed to shop here anymore. And that would be very unfortunate. You could get the police called on you. That would also. Very unfortunate. So I know I’ve been there too, because I’m very into the whole optimization efficiency productivity thing.

And it seems like manufactured spending is like the next logical step where you’re like, Oh, I got to sign a bonus. This is the awesome hat. What’s the next step? Is it manufacturer spending? It is not, that is not the next step. The next step is learning how to strategically allocate things and how to learn a word charts to optimize the redemption portion.

That’s the next piece is don’t just keep trying to say, I’m going to earn as many points as possible. Spend time researching how to optimize the points that you are getting at a reasonable rate, fun stuff.

But yeah, I think once people get to, simple passive cashflow, they start to invest in more passive opportunities and get away from being the landlord. It’s where I’m at in my life. Yeah, we’re busy, but stuff is fun. So I’m trying to find that, get back in the game and trying to find that like minimum effective dose that 80, 20, or maybe the 95 five in this case where I can.

Job a little bit more and have some, extra stuff on the side. It’s perfect too, for people who are into house flipping and real estate, because if you have to go to home Depot a lot, or you have to go to Lowe’s or really do anything with home improvement, because you’re doing real estate, you can get a ton of points that way, just from buying different supplies and.

I don’t know if anybody’s maintaining an Airbnb or something like that, but it also opens you up to a whole bunch of the business credit cards, which are really lucrative when it comes to points.

If you guys are gonna spend the money, do it. But you’re not going to spend the money again don’t make the transaction. I think we always have to end with that common sense.

Yeah. Don’t buy things that you don’t need just to get points instead, strategically figure out how to get more points from what you’re already spending and by doing things like the key metrics.

Any last thoughts, and then you want to give your contact information out there?

You can read julia@geobreezetravel.com. My website is geo breeze travel.com. My podcast is the geo breeze travel podcast, and I am most commonly on Instagram, my handle is also geo breeze travel. And if you guys want that email template to get a whole bunch of free upgrades, I’m going to give that to Lane to put into the show notes.

It’s at geo breeze travel.com/download-gifts. And if you go to the website, it’s going to pop up anyway with it. Hey, do you want this thing sign up for it, but I’ll put it in the show notes for you too.

W e’ll put it at simplepassivecashflow.com slash credit card. And if you guys liked this stuff check out tradeline hacking, simple passive cashflow.com/tradelines but have fun with this guys.

Don’t get in trouble but remember your highest and best use is like yet your guys’ day job. I know you guys are fortunate. You may not like it, but it beats flipping houses and having a second job. Thanks for listening everybody. We’ll talk to you guys next time.

Creating Community With ApartmentLife.ORG

https://youtu.be/7IHIEHqI__w

Hey, simple passive cashflow listeners. Today, we are going to be talking about something we’re doing on a lot of our properties and some tips for you landlords out there to increase the community at your properties. Ultimately, it’s going to lead to higher rents and better revenues for you guys.

If you guys haven’t yet joined our club at simplepassivecashflow.com/club. We don’t bite, it’s free. I don’t know why you haven’t jumped in and hung out with us yet.

The new California SB nine bill. As you guys know, California has the population is increasing and there is a lot of homeless there. Basically, the way they used to have before is there were a lot of these single family home neighborhoods.

It’s one of those bills where it’s trying to distribute wealth and trying to get these traditionally single-family homes to be duplexes or multifamily so it can allow for more dense population growth and lower housing costs. What I think it’s going to be doing is opening up California.

In the short term, it’ll relieve some of that need for housing. A lot of these things take a lot of time and a lot of people freak out when they see stuff like this, they’re like,” oh my God, world is ending the California real estate market is going to crash because now you have all these single family homes now double in model supply and flooding the market”.

It doesn’t happen like that guys. In a year, I don’t think you’ll see a decrease in prices because I still feel like there’s a low enough supply and there’s a decent amount of demand so I don’t see, you’ll see prices go down at all, let alone crash.

But I do think that it’ll start to help out the situation where people need that dying middle market and the lower middle-class housing, or maybe it will not do anything, who knows? But I think the one president sending thing with this whole SB 9 California and Oregon are typically be durable, proactive states with these types of things where you might start to see this other more neutral states where they start to break open a lot of old money neighborhoods and bring in more debts building in those areas.

If you’re a rich person in a single family home neighborhood, you probably don’t like this. But for rest of the majority of the population probably allows and opens up the market a little bit. A lot of people are talking about this last week if you haven’t been paying attention, there’s a bill going in Congress right now to change many things. What this is they’re going after a lot of IRA owners and supposedly the rumor is this may or may not impact solo 401k folks. And so the big changes that are supposedly. Coming down the pipeline.

We don’t know yet and been telling people at my inner circle don’t freak out yet. Don’t be like these guys who watch YouTube all the time. I guess you guys are watching this. So keep watching YouTube. It’s fine. It’s good news. Good entertainment. Congress is saying now you guys can’t invest in their self-directed IRAs of private placements and syndications, which is jacked up in my opinion because it’s like how dare you tell us what to invest in. Some people who are the conspiracy theorists are saying, “well, it’s because the government is getting in cahoots with all of these companies like Vanguard, Fidelity, TD Ameritrade. It’s force them into all these garbage retail products where there’s high fees”.

Maybe that’s the case. It probably is the case, but I just find that connection loose a little bit. But what they’re saying, for those you guys who are investing in your retirement accounts, Lane told you a long time ago, not to do this stuff because I don’t know why you would want to invest in a retirement account into something that’s tax advantage already.

You invest in use retirement accounts for things that are non tax advantage, such as, like crypto, goes up but you gotta pay up bit lower taxes which is why you put it into your qualified retirement plans, such as this or things where you don’t get the bonus depreciation or even passive losses, like hard money lending, which is ordinary income.

What you want to be doing with iRA’s is those types of crypto or not tax advantage things. I wrote a really long article and it made multiple videos on this. If you go to simple passive cashflow.com/qrp, if you guys want the whole argument email me, lane@simplepassivecashflow.com. I’ll give you the big blurb of why I’m not a huge fan of investing in retirement accounts, unless you make over $330,000 adjusted gross income and you already have like maybe more than half a million, million dollars in your IRA. If you’re both of those two such criteria, various portion of people out there where it actually makes sense to have a solo 401k or a qualified retirement plan or self-directed IRA even a Roth case, but a bigger topic. But anyway, going back to the news here, people are like “if you’re gonna not allow me to invest in private placements, what am I going to do?”

And then people are like freaking out. ” Oh, my God. I’m going to have to liquidate my positions”, and keep telling people this hasn’t been signed into law yet, but supposedly what they’re saying is they’re going to give to people two years to transition out of the IRA and to dispose of those assets.

Or you can just take, do what I said, you know what I told everybody to do it. Just take a distribution, pay the taxes and the penalties. It’s not that much, any way.

This will probably change a lot of times that they’ll put something out there just for negotiation to get something else and some other. And call me asking why is this all happening?

You can think uncle Peter Thiel backdoored a lot of like class B shares of PayPal and created like a $10 million plus IRA. And he’s screwed the system. And now the system is looking to get back at him. Unfortunately, the millions of Americans who use a retirement accounts as a mechanism for sheltering taxes is also being collateral damaged.

What I personally think they should do to just fix the Peter Thiel’s of the world is just put a cap at $10 million on IRAs. Most of us fit under $10 million in the IRAs so that would solve that problem. But again, why are they not allowing people to invest in private placements?

I dunno, maybe that’s again, that’s the conspiracy theories out there that think that it’s possible trying to force peopleinto this retail, mainstream wall street products.

If you guys have any questions, comments, type it into the comment box below, I’m sure it’ll make people angry and probably wondering what to do. Well email your Congress person, whoever that is. I’ve never personally done that before, but supposedly that’s what a lot of people do.

I have Pete Kelly here. If you guys want to go to apartment, life.org if you guys want to Google their website, also take a look at what they’re up to. Welcome Pete, thanks for jumping on.

Thanks for having me lane.

So what is apartment life? What is the service that you guys provide?

Sure. Back up a little bit, we are a faith-based nonprofit that’s been serving the multifamily industry for 21 years. And so we help apartment owners and operators with two of their greatest needs, which is resident retention and resident satisfaction. And we have a program that saves our average client $188,000 a year and turnover, marketing costs and staff retention. And the way we do that as we address one of the biggest needs that residents are facing, which is loneliness.

Interestingly enough you’ve probably realized this since the pandemic, but America is dealing not just a COVID pandemic that they’re dealing with the loneliness pandemic. It was bad before the pandemic, but it’s gotten a lot worse since then. In 2019, the insurance company Cigna found that 60% of Americans would describe themselves as lonely.

Now, initially you may be thinking, okay, I’m an apartment owner. Is that a really big deal? If you are an apartment owner, that actually is a really big deal, because what that means is that your residents don’t have any roots in that community and it’s a community just down the road offers a good enough rent incentive.

They’re going to pick up and move and go to that community. What we found is that the more relationships an apartment resident has in their community, the happier they are and the longer they stay. The magic number seems to be seven. If seven of your neighbors, you’re almost twice as likely to renew your lease.

We have a program that facilitates building relationships and apartment community. We have two models: we have an onsite model and an off-site model. The basic idea is that they create this environment where people actually know their neighbors, they feel connected, and they do that through welcoming people throwing parties and events, looking out for opportunities to care for people, connect them to one another. And as they do that, it’s just the sticky community where people love where they live and they don’t want to stay.

At some point, resurface countertops, new flooring, nice stainless steel appliances only can take you so far and especially when competition is getting a much higher for the apartment owners or real estate investors perspective, tenants are gonna go to where the best value is and that value just doesn’t necessarily mean that box for the house that they live in the community.

Whether it’s, as the business owner, you see this as your responsibility or not, it is what it is. And this is where we got to a certain point. We would take over an apartment. We would do all the things you’re supposed to kick out a lot of the deadbeats, the shady characters and the way we feel is that benefits the greater community. That’s what most people want. They want those people out, right? Rehabbing units, exterior improvements, playground equipment, all those such new clubhouse. They start to put the money in, but the hard thing to get the property managers on board with all these extra curricular activities that didn’t really hit KPIs.

A lot of our properties we use third party property managers on. We hold their feet to the fire in terms of expenses, how much revenue, how much they’re leasing. Hard KPI numbers but it’s really hard and for those of you business owners out there who have staff or employees, you guys know it’s really hard to keep people accountable to these more softer KPIs on trackable KPIs.

We decided to bring in apartment life folks into the apartments in order to focus on this one aspect of the business and to really give it the emphasis that it really needs. These are the things like a mother’s day, barbecue or Easter egg hunt. It was really hard for us to get the property manager to do that type of stuff, because as things get busy, what’s the first thing that gets thrown to the wasteside.

Pete, I want you go over those two types of models, like how it works coz the first thing I thought of is ” Hey, this is like those two teenagers of the college kids in the red bull car that run around and spread joy and give free red bull around”. This is kind of the same thing.

It’s like that only they’re there to stay and they keep coming back. Our two models that I mentioned, one is the onsite model and what we do is we place a couple that lives in that community. They’re like the welcome wagon like they agreed every new resident when they move in, they throw all the parties and events.

They look for opportunities to care for people. Sometimes it’s the birth of a child, sometimes it’s a layoff or maybe a neighbor’s car broke down in the parking lot and they just help them out. And 90 to 120 days before that residence lease has set to renew, the team will go by and visit them again and just say, “Hey, we’ve really enjoyed getting to know you. We’ve liked, the feel of this place. And we’re just wondering, are you thinking about sticking around for another year?

As they did that time and time again we see retention go up. We’ve done focus groups actually on this. We’ve sat down with residents and said, “Hey what was it that motivated you to stick around? To what degree did the community make a difference?”

And I can remember one focus group out of South Carolina they said,” rent went up by 18% this year and we’re still here so that tells you how much we value it. That’s the on-site.

Those two guys are they like undercover? Does everybody know that they work as an extension of the property management company or apartment life, or are they seen as undercover, like field tenants that happen to give you a helping hand when you move in to carry your boxes in?

We come and we represent the management company and so rather than doing it undercover. We want the management company and the owner to get the credit for the program and so we just say, we’re apartment life. We’re here on behalf of your management team. We’re also residents. So we also live here.

And so they live in that interesting spot where they’re representing the management company but they’re not technically part of the management team. They’re a third party but they live there so they’re also a neighbor. And so that’s why we love the onsite model is because it’s that mediator between the two entities.

And so residents often will tell our teams things that they won’t tell the management company. And so they’re in a wonderful place to get Intel.

Even though in some cases they are wearing the polo of the third-party property management company.

They are but they relate differently because they really are seen as neighbors and friends. So I think about this one woman in Houston, her name was Kathy, single mom. The team went by to do a renewal visit with her and they were friends with her. She came to all the parties and events and said, “Hey Cathy, are you thinking about sticking around? “

She goes, “no, actually I’m not. I’ve had this bug infestation that the management has not been able to address and I already put down my deposit on the next place and they’re like, oh gosh, we’re really sorry to hear that. We’ve just really enjoyed getting to know you. And we’ve loved getting to know your daughter. And so they politely left and then she wrote him back that night and she goes, I’ve been thinking about you guys ever since your visit and the kind of community that you’ve built here.

And this is the kind of neighborhood I want my daughter to grow up in. And so she goes, I decided to let go of my deposit and then I’m going to remain my lease. And so that’s an example where maybe she was frustrated with the management company, but she didn’t voice it quite as directly but because there was a neighbor there that she knew was associated with the management team. But she viewed them in a different light.

Yeah. Like your resident your RA back in college dorms in a way it’s an intermediary, but understand your guys’ business. Like the people are those intermediaries are they typically younger people or I am assuming they’re getting free rent, that’s part of their compensation? Is it to help the people in those situations?

The economic benefit to our teams is the reduction of rent and that’s, what’s in it for them. I would say our two biggest groups of people who do the program would be young marrieds either without kids or just with one or two young kids.

And then the other largest group would be empty-nesters. We’ve had several empty-nesters that have sold their houses or rented their houses out and said, “Hey, we wanna go back to living in an apartment community. We don’t want to have to sweat mowing the lawn, and we love the idea of getting to know our neighbors.

So they’re usually like pretty extroverted people and you just find them off job boards. Unusual job description, right?

It is! Although we can promote it all kinds of ways, the best source of teams or other teams and so we find that the highest quality coordinators come from other coordinators who tell their friends about it and ” Hey, you would be great at this”.

I’d say the ideal profile, if it’s a married couple, one of them, as you mentioned, would be extrovert. The other could be extroverted, but what we really need is at least one person who’s administratively gifted or organized because there’s a reporting function to what we do, because we can do all kinds of great things.

But if we’re not recording that and sending that back to the management team, they don’t have any idea of what’s really going on there and they don’t know how to quantify the value of the program.

I’m selfishly interested in how you do this because trying to get a little bit better outreach with on the investor relations side, see what people are, what we can do to help.

And as you said, most of the times, the example with the person who had the bugs or whatever infestation, they didn’t say anything, right? That’s very typical of clients. Of course you have the 5 to 10% of people who just complain about every little thing, but the majority of the people are just good citizens.

They don’t speak up. So what is like your guidance on those, your employees? Is there like a spreadsheet where they go down every single unit and they need to have a touchpoint barcodes for them to sign scan? What is the, how do you keep them accountable?

We have an in house tracking system that we use where they can do it in real time or they can do it at the end of the month but they have to do it at least once a month record everyone that they visited. What their sediment score was when on the move in so if they’ve visited somebody, they’ll weave it into the conversation, “basically on a scale from one to five, how would you rate your move in?”.

And anything that is lower than a three or lower that automatically get sent to the management team and so that they know, “Hey, here is a retention alert”.

Because what we find is that people are already making the decision to renew within the first month of living there. And so if there’s anything that the team can do onsite to improve that experience, we want the team to know about that and so that’s one of the things we do. We have an in-house tool that the teams log in and record all this but we also partner with Modern Message. And are you familiar with Modern Message?

It’s an interesting gamification, a tool that has become very popular in the apartment industry, but it’s basically an app or a website that rewards residents for engagement. So you probably have some kind of hotel reward system.

Let’s say you’re a part of the Marriott and every time you stay at the Marriott, you get points and then you can redeem those points per stay. Modern Message done is they created a similar tool for apartment residents and so we partner with modern message. There’s electronic tool and then our team encourage residents to use it.

For our clients that have Modern Message, some of the reporting is actually done through the modern message app and we struck up a partnership with them so that at the end of the month we have an API that pulls the data from modern message and we can print it up in a PDF that’s sent on to our client.

Pretty advanced stuff and then I think that data gets fed in with the property managers, as leasing comes up maybe influences dynamic pricing, maybe it doesn’t. But what about the workload of these people? Is it expected to be a 40 hour day, a week job or meant to be more part-time for them?

This would be a part-time role that they do and their nights and their weekends. Because when you think about your average apartment community, most of your neighbors aren’t around until the nights and the weekends and so we look for people who already have regular jobs, but they’ve got some margin in their life at nights and on weekends where they can serve the community.

Again, one of the dynamics could be: young, married husband and a wife, and maybe the wife is wanting to get pregnant. She’s not wanting to work. She’s wanting to work part time and this is a way to lower their cost of living and in a sense, having a part-time job that facilitates neighborliness and their partner and community.

And then the other type of arrangement you guys do if we don’t have a free unit, you guys just operate on a mobile service. Can I just stop it at certain times of the day?

We do. Our oldest model is the on-site model and we feel that by and large, that’s going to be the most effective longterm in terms of actually building community.

But we’ve seen a lot of our clients have them pleased with the offsite model. For a lot of management companies, they want to throw parties. They want to throw events, but they can’t put a lot of attention in it because of the demands of their job. Working in the office, you’re just worried about leasing and you’re worried about maintenance requests and people paying their rent on time.

So the idea of throwing some kind of event or party that brings community together, it’s just one too many things and so we’ll take care of that. In some situations we’ll do what we call electronic visits where we’ll email out or text out all the new residents and say,” Hey, we’re having an event this Saturday. We’d love for you to come down and get to know your neighbors.

Let’s talk about some of those events. What kind of sizes, shapes have you guys pulled in the past?

If you get on our website, you can see like an insane number of pictures and event ideas. People who aren’t yet our clients will from time to time send out event ideas, some of the examples, something simple, like what we call a wine down Wednesday, where you can come down to the clubhouse, get a glass of wine, get to know your neighbors.

Sometimes communities that have a lot of pets will have what’s called a yappy hour and so we’ll have, bring your dog out. We’ll have a special treats. We’ll array for food trucks to come out. Sometimes we’ll have painting classes that we’ll bring in fitness classes. We’ll bring in a chef and teach them how to make a meal.

Pool parties are a big deal. You’re pulling it up right there at poker nights. You see all kinds of ideas up there. What we tell our coordinators is obviously you need to get to know your community and what works. And so we encourage them, especially when they’re new to trial, a wide variety of things to see what works with their community.

Some events are going to appeal to some of their neighbors and other events are going to appeal to other neighbors and so that’s the other reason you want to do a wide variety is you don’t want to keep bringing out the same 10 or 15 residents, but you want to really throw out a wide net that really helps people we’ll get to know others in their community.

Maybe talk a little bit about as the class changes, the clientele more A-class apartment communities versus the C class side. Do you guys cater more towards the other? If not, what are the events?

Historically we started out actually on the nicer end and so we’ve worked, I would say for the first 15 years of apartment life, class A and class B assets. More recently we’ve been doing more classy and even affordable housing. That’s actually a new division of ours is working on affordable and low income housing. The same principles apply, but rather than just throwing a party, which you can still do sometimes what’s helpful is to have what’s called wraparound services.

And one of the communities that we serve in Salt Lake City, our coordinator, who’s an offsite coordinator, organized 1500 meals in the month of July for 30 families. And with one of the residents who was blind, she helped him fill out lengthy paperwork in order to sign up for social services.

Again, we started probably more in the class A, class B assets but over the years, we’ve realized we want to have a tool in the toolbox to serve any apartment community that’s out there.

Yeah! You want to use the right tools. It reminds me of when the first had the pandemic and all these celebrities had sing that stupid song. It just made idiots of themselves. If you come to the wrong apartment community with the wrong event, you can come out the wrong way a lot of times. You would think a lot of the class C places, they need this stuff more than the class A side.

What we really encourage our teams, whatever community you’re serving throw the best looking event that you can. Cause what we don’t want to do is have like for a class C, like a Wiener boil or something like that, you really want the residents to feel like, “Hey, you put a lot of thought and effort in this”.

We have what we call eight layers of the event. Where the coordinators are thinking very carefully about the ambience, how do you create a sense of buzz around it? How do you facilitate people actually making friendships there? How do you take pictures and post about it on the back end? And so we just want the events to really have a sense of sparkle and shine to them.

Have you ever ran into issues with some tenants being like I don’t want cupcakes or on Thursdays, just cut my rent by 20 bucks. That’s where I really need the help has that ever happened?

To my knowledge, I’ve never heard of a resident asking to cut the program for rent reduction. What we actually find is a lot of residents say, I didn’t know, people still live this way in the United States. I think of one particular couple that moved down to Dallas. In the heat of summer and their apartment life coordinator was watching them unpack their truck. And just really unprompted.

They just went over there and took icicles for the kids or like lollipops or what do you call the frozen obstacles and waters for the parents. And this family happened to be moving in from Oklahoma and the wife, “I didn’t know people still did this in America. This blows me away”.

I was like, “oh yeah we have a great community here. We encourage you to come out to the events”. They became really good friends with them. What we find is that people really want to go, they want to get to know their neighbors, but they have lost the art of neighboring if you will.

And it just takes that one or two instigators, the catalyst to get that culture going in the right direction.

It does and I think all the more, since the pandemic has all of our social muscles have atrophied over the last 18 months. It was that catalyst that you mentioned was needed before the pandemic, but it’s needed all the more now because people really have lost that ability to make small talk and they’re frankly intimidated.

Again, they’re lonely. They want to get to know their neighbors but they almost need somebody to hold their hand and say, “Hey welcome! I want to introduce you to Bob over here. He likes hunting just like you like hunting or he likes fishing like you liked fishing”.

They really want that. And again, the management team is too busy to really provide that kind of level of connection. The most they’re going to do for an event is throw food out on a table and say, “Hey, free food”.

It’s just like you guys at work, if your boss asks you to plan a retirement party for somebody it’s really, is this my job description?

That’s a great analogy and honestly some on-site staff because their interactions with the residents often are pretty negative and needed cause the residents, some are always complaining. The last thing they want to do is throw a party for these complaining residents and so having a third party that you can outsource that to can be a good move.

Is this something, some of the listeners might have single family home. Is this a service that you guys would provide to like single family home operators? As opposed to one apartment where you can control the community. Is this something that you guys have branched off or thinking about branching off into some point?

Yeah, especially for single family build to rent, we have given that a lot of thought because that is a really big deal. And that you see a lot of the big players in the apartment industry going that direction where they’re building whole neighborhoods in single family homes, but they’re all owned by the same entity.

So they’re run very much like an apartment community but they have the feel of single family homes. We’ve met with several people in that space who said, “Hey, we would really like the apartment life model, but we would rather not call it apartment life. And so for that group, we’re looking at the name neighborhood life.

And so a name like that would probably fit better for a single family, residential neighborhood.

Apartments have the common space, right? And like you said, if you can get them to be friends, you just create so much value for the tenants in that type of setting.

It will be more challenging to do in single family neighborhoods. Now, I’m looking out my front window and last night hung out and had a glass of wine with two of my neighbors. We just sat in our lawn chairs and caught up and talked about life and it was great. We didn’t have a common space to meet in.

It would be hard to do Texas in the summer, but we we did at 7:30 at night, so it was a little bit cooler then. Even without a community space, there’s ways to build community that sometimes weather is a factor.

Any other cool events or other things you think the folks would like to know about what you guys do?

One of the other things that we’ve realized through the pandemic is a lot of our clients said you’re the only amenity that’s open right now. And they’ve said, we’ve got a fitness center but we can’t let anyone in there cause we don’t want to spread COVID and so I think that was a kind of an interesting discovery.

We were wondering actually, if we would lose business in the midst of the pandemic, but actually the opposite happened. We had a great year of growth because again, we were the only amenity that was open and some of the needs that we were able to meet were just really cool. Like we had this one coordinator up in the Seattle area who was really burdened by the food and security in his community and he got a lot of food donated.

He just started to reach out to churches and government entities. Before you knew it, he just had this whole operation going, all this food being donated. He was able to serve his apartment community and then the one across the street and it grew into its own nonprofit that has in the last year delivered.

I want to say 8 million pounds of food to apartment residence. Which is just crazy. There’s a lot of needs out there since the pandemic and it’s been a joy to be part of helping people meet with those needs.

I think, you guys are a perfect example of trying and find consultants, you put to work with. You seem to pay more money on the front end, but it’s something that you could have never done in-house. It’s just a very special,unique t alent and focus that you guys provide.

If people want to get a hold of you guys apartment, life.org, is there your URL. Pete, you want to give your information in case somebody wants to utilize you guys?

If you’re interested in talking further, you can email me at Pete Kelly. That’s P E T E K E L L Y @apartmentlife.org and either I’ll follow up with you or connect you with the right regional leader. And if you want to read more about us, you can go to just our website apartmentlife.org.

Thanks for listening guys. I think normally I don’t really talk too much about improving the communities. This is the whole part of increasing value and ultimately that’s how we make money. You don’t make money in my opinion, for a long-term basis by buying something low selling high something, buying something on Amazon, flipping it on eBay.

And that’s what traders do but people who make the sustainable wealth create value. And in this case, improving the units, improving the community with services, such as Pete Kelly’s apartment life, those are the things that create longterm value and create wealth. I probably empathize more with the investors.

A lot of you guys are hardworking folks at home, investing your money the right way in tax advantage things that utilize great wealth building strategies. We try and help you guys out. You guys are people I think of first. At the end of the day, you can think of them as are the clients, really the tenants who pay us rent? Or the clients investors, you could go either way on this?

This is what we’re doing on the tenant side. But thanks for joining! We’ll see you guys next week.

Scarcity to Abundance with “Money Honey” Rachel Richards

Tips on Who to Trust in Getting an Insurance Policy

Best Way to Define Infinite Banking

https://youtu.be/AHAdPH_UzIA

I best define infinite banking is it’s really our process. In creating private vault for you to use as your bank. And overall it’s a process, the vehicle that it uses his whole life insurance and its dividend paying whole life insurance is the product of choice on that. I specifically like from our multiple reasons that we’ll go over, but that policy then is you overfund it.

And in that way, it has a cash value that you can access your cash at any time via policy. That’s the overall concept. And as you pull that out, the money still continues to work in your vault or in that, in your account. And you’re able to deploy that elsewhere and pretty much have your money work in two places at once.

The way I personally use it, when I had a policy, when I first started to do $50,000 a year after a couple of years, two, three years, they had at least a hundred thousand dollars of cash value built up in there. I always try and keep my liquidity low in my bank. You never want to have too much cash making nothing, but that’s why the next money is in your infinite banking policy to cash value, where it’s making a nice little tax-free yield.

That the first component of why we like infinite banking so much when the money is in, I call this the government in pull, but it’s just for some strange reason. Yeah. Life insurance, your yields, there are tax free. That’s a place to store my liquidity. And then when I need to go into a dealer too, and I need to drain that liquidity, I have it, but at least it’s not sitting in my normal checking account savings account, not doing any teeth growth, the use of whole life insurance.

It has a guaranteed aspect of it. Current gross rate of that is, 4% that is about to change, but the policies are ranging from three, three, 3% to three and a half percent uncorrelated not tied to the stock market directly on some policies you may have. And you can be in control of that, of how much funds are correlated.

But one of the main benefits for investors that this is not correlated to the stock market protection, but it is a product. So there is a life death benefit portion of it. But in addition to that in states, it varies, but there’s also some liability. And bankruptcy protection with the cash value or the death benefit over policies.

Some of our doctor clients, what they like to do is they stuff a lot of cash in here mainly for this protection aspect, right? There’s all these different asset protection strategies out there. There’s not one that’s going to get you to trying to build your castle with multiple layers of protection and diversifying.

So by putting some money into life insurance policies, Think that one part of your portfolio. Yeah. And liquidity, that’s one of the main appeals for investors where your funds are not tied up. You have access to that and it, you would have access to it in the forms of policy loans. And that’s what keeps it also, tax-free where you have access to the growth and all of your policy.

Tips to Find the BEST WINE

https://youtu.be/Ndt8KOLU8mA

So you guys are the experts with this. Like, you know, I, I hear two big tips, right? From suppose the wine snobs, which everybody calls themself, a wine stumped. It’s like, hello everybody. I’m an audio file. What do you have apple air? Right. Not an audio file, whatever they call it. I don’t know why, so that people will say, Hey, find something that you like in your palette, doesn’t matter how expensive it is.

And you got guys who are more like, if there’s the numbers, right this 96, 97 points. Yeah. What is your opinion on like, all right. I don’t know what I’m looking at. How do I pick a good one? How do I go about doing. Yeah, it is really hard and it tastes is so subjective. So it is difficult to try to boil it down into a hundred point scale.

And obviously the a hundred point scale has been highly debated for decades. Now, I think ultimately it’s, it’s still very valuable for people because once you start getting into the high nineties, especially like that 98 point Dow. And especially if you start seeing that it’s got. Scores from three different publications.

So there you go. That’s the wine spectator to Canberra and Venus each giving a 98 point score. You can be completely confident at the very least, even if it’s not your taste. That is a well-made wine. There’s no flaws in it’s in balance. So there, there are a couple. Things that are objective rather than subjective when it comes to wine, like, is, is it oxidized?

Is it, does it have some sort of acetone issue? There’s all kinds of different flaws that can be in a wine that just make better characteristic of poor wine making. At the very least, when you start to see the high scores, it doesn’t have any of those problems. And that’s helpful at the very least there, there is something to be said about the particular, the particular.

Place that those scores are coming from. So some reviewers tend to give out a little bit more freely high scores than others. There’s not that many scoring publications that you have to care about. So you can pretty quickly learn what a 93 means from this place versus this other place. If you are more numbers, minded person, you can pretty quickly start to cut through the BS and see where those scores are actually in value.

But that being said, Yes. So use it on wine searcher and you can, this is where it’s great. You can see the price over time and then yeah, exactly. Wine searcher is invaluable resource for anybody. And what’s so cool about it is you can pop on there really quick. And see what people are paying for. It can usually see all the scores.

It depends on how popular and common the wine is. Thousands, probably the most famous port in the world. So there’s a ton of information on it on here, but then it’ll actually link to all of the individual sellers shipping offers you can see. And so we’re beating we’re sometimes there’ll be some stuff on here, like some random retailer in the middle of Kentucky.

And if you actually call them. I don’t even add the wine. It’s not, we’re not trying to beat those kinds of offers, but we’re definitely trying to beat all the real offers that are out there and we do a good job doing it. And I actually really appreciate that transparency. Yeah. If you guys are listening to this on the podcast or playing around with us on the unit, Version.

If you guys want to go to the YouTube channel or go to simple passive cashflow.com/wine, and we’ll keep this stuff for you guys to refer to, but we have we’re poking around wine spies.com and wines-searcher.com but school site. But one mistake I’ve made. I’ve bought some wine off eBay. I think it was like oxidize or fake.

I’m guessing I still drank it lately. I just been buying it from Costco.

Smart Tip for Your Student Loan

https://youtu.be/wSMWaqSP4cA

📍 And student loans, like you don’t have too much of it, but tell us a little bit, like where you started off with your strategy. Get to this. Yeah, so a little bit, it goes back. So I did a co-op program. So I, it was a work study. I did five work sessions over five years. And so I graduated with about 18 months of experience and they actually paid extremely well.

I was. Probably close to what a full engineer was making my final year. And they were also paying for my housing in Chicago, which was tax-free. So that ended up putting me in a position when I graduated college with a, roughly 20,000 in cash and 30,000 in student loans. And so I started rapidly paying down the student loans and then for the first eight months of my working career, And then I kinda got the bug of, I wanted a new car.

And I had always told myself once I paid off my student loans that I’d get a new car, but I ended up deciding that I wanted the car sooner. And so that’s when I took out a more expensive car loan for me. And so I, at that point I reduced my student loans to the minimum payment and then had been paying down my.

Yeah, man. What’s life without a nice car getting the financial independence. I actually just refinanced it from the, so I extended the paydown a little bit, so we reduced it from 6 55 down to 4 52. And so I’m just going to make the minimum payment on all of these loans with my plan and then take the extra cash and invest it. .

4 Reasons You Don’t Need a 401k

https://youtu.be/DK1Sb59GfzM

When I first started getting into financial independence, the first things you find are index funds. And so I just haven’t really looked at it since, and in my opinion, it’s not a significant dollar amount in terms of if the market dropped 50%. Yeah. I’d lose 10 grand or 15 grand. It’s not like I’m sitting there with hundreds of thousands that I would lose a ton of money.

Yeah. Let’s keep it on red mentality. Just let it ride significance. Not make sense. And also with my logical and with my mindset too, could I ever run my bank zero, like really low to invest in a deal. And so I’m always going to keep some cash available and this is being a little bit more aggressive and the cash is a little bit more conservative and all this stuff for you.

Like I’m getting really nitpicky. You’re not working with too much, but this is the foundation for when you get over half a million, then you won’t really care about all this stuff. If you were to take this and maybe think about taking the Roth out, because you’ve already paid your contributions into it and just taking it out cash to invest it.

We talk about this a lot. Why do you not want retirement accounts? Number one? You’re going to be retired well before you’re 50 on the way to your sending to get it. Number two, your tax bracket is probably a lot lower today. So you want to pay your taxes on it today, then in the future, number three, where this country is going, taxes are going to be going way up.

But what a lot of people don’t realize is number four, when you invest in a retirement account, you don’t get the passive losses from your investments. So that is you need the passive losses, especially from the syndication. To get out the simple, passive cashflow gravy train, which is all about lowering your W2 activity, come and paying little to no taxes.

You don’t get that opportunity to do that. Yeah. You got to get real estate professional status at 750 hours. You don’t get to do that until you get those passive losses. So that’s the fourth reason why you don’t do retirement accounts, but something to think about, like Richard, like just maybe take out the Roth because you already paid a tax on it.

So it’s not really that big of a deal. And at least take out the contributions. You not the gains because you take out the contributions. You don’t need to pay the penalty. 10% penalty. So drain that out. But at the same time you want that magic number. I don’t know what that is in your head, like 20 to 30 grand of emergency savings.

But if you have to increase it, we’ll then put money into your 401k via the match. .