Tag: investing

Coaching Call: Starting Out In Syndications | Should You Do 1031 Exchange

What’s up folks? On today’s podcast, we are gonna be doing a coaching call where we go over the beginner questions on transitioning. Maybe you’ve owned some rental properties and you may be thinking you’re gonna 10 31 into a syndication or into a bigger deal. Guess what? , as far as I’m concerned, 1031s make absolutely no sense unless you’re going to 10 31, like something bigger than a two or 3 million capital gain and depreciation recapture.

So what we’re gonna be going into in detail today on this call is, how do you use the passive losses or how do you go into deals to get enough passive losses to totally offset the capital gain and depreciate, recapture on everything that you’re selling previously? Just experience sharing here, 2015 when I realized the old turnkey rentals wasn’t all what it was said it was going to be. And yeah, back then the pricing on that stuff was a lot better than it is today. I saw the light and I sold pretty much all my. Turnkey rental rentals in 2015. I think I sold six or seven out of the 11 of ’em that year, and I had a big capital gain in depreciation, recapture about $250,000.

But since I was investing in syndication deals prior, I had a lot of suspended passive losses built up. And I believe the form is the 82 85 form. All you guys should have that. Take a look at there and see how much suspended passive losses you have. Great exercise for you to do every single year. And also I just uploaded in the syndication e-course a video where I go through my K one tracker on how do I keep track of my suspended passive losses in this year, and then go look at my 85 82 form for previous years.

But anyway, Hope you guys enjoy the show. Make sure you sign up for the club at simple passive cash flow.com/club. We just recorded the quarterly kimono report and we’re going to be releasing that to you folks. The part one and part two. Part two goes out to the investors in actual deals. We go over all the deals that we’re in in a very transparent form, right?

There’s a lot of people out there. They say they’re in a lot of deals, but they never really, you never really hear. This stuff, nor can you really interact with other investors within the group to figure out if it’s all true or not. And this is what’s hard about being a private investor in these private syndications.

It’s really hard to do your own due diligence, which is why I have always said the. . The only way to really do this and make sure you don’t step on any landmines, and I’ve stepped on the landmines myself working with, dishonest people and people who just are faking it till they make it.

The only way to really figure out who’s legit in this business is to surround yourself with other purely passive accredited investors. Not these, fake it to you make it general partner wannabe groups, but real accredit investor, purely passive groups. I truly believe that our group is the, really, the only one out there with kind of that already have infrastructure in place.

Our family office group, we’ve started it, I believe around 2018 and really got it going 2019 and into the pandemic. I think we’re well over a hundred members in that group right now. . But if you guys wanna get more information about that, just come in, join the group@simplepastacastle.com slash club.

That form will take you maybe about a minute or two, but then we’ll set up that onboarding call with myself to get to know each other. That gives me the opportunity to see what you’ve got going on and maybe do a little bit call, like how we’re gonna be showing today on today’s podcast. But anyway, enjoy the show.

All right, folks. We’ll probably going to add this to the e-course at some point, but we have, we’ll just call them. Bob, and Amy, if I can remember that name right there, names real names so will remain private. But Bob and Amy have been investing a little bit and have some great questions.

And I think these questions are. Going to be very indicative of somebody. Who’s been through a lot of the initial education. So I’m very excited about this what we’re going to be talking about today. Hey guys let’s get this kicked off, have a good conversation here.

Hopefully other people can learn something.

Where do you want to start? You bring the questions I got I’ll try and break down some ants. Okay we’re in our later career years, put it that way. And we’ve been doing, buy and hold and we’ve been doing deeds and we’ve done some hard money loans and. And we finally got into one of your syndications.

So we were actually getting into that now also. But we’re trying to get out of our nine to five, but it’s never nine to five anymore. It’s more like six to four jobs. And so we’re looking more at investing for. More like replacing that income. Yeah. So in other words, we’re approximately is your guys’ adjusted gross income. And let me pause this.

So yeah, just profile, I move on just real quickly. A lot of it just breaks out the numbers. Where’s your adjusted gross income at today. And what is your net worth approximately? Yeah. Let’s see. What is our adjusted? Gross is like a one 70, like about 170. Okay. Approximate net worth approximate net worth is. What about. To, to something that’s went to probably about what somewhere between two and a half and 3 million. Okay. So from adjusting girls skate com side, just before we move on, you guys are not in the highest tax bracket. You’re not both below this red line of 340,000, like some of the investors, therefore, a lot of the cost segregation bonus appreciation stuff lead doesn’t really pertain to you guys too much unless you guys are selling other assets.

If that’s the case, we can talk about that later on. But but yeah, so I know you’ve got some syndication related questions, so let’s let’s start going down the list. Yeah. So we’re, know your specialty is syndications and so we’re looking for some information possibly on what type of syndication would be best for.

Someone at the stage of retiring and getting out of their normal career job into more just doing investing. Yeah. At this you can syndicate anything, right? You can sit indicate a pizza franchise, a burger, join a real estate. Real estate, you can develop properties. You can. Bye in the hope and pray property, you can do value, add, you can do different degrees of value add, right? So you can syndicate whatever you want. I think the essence of your question is what type of risks for bore profile, or it makes more sense for you guys is the question.

And the way I look at your guys’ profile, two to 3 million can mean different things to different people, right? If you guys want. In your forties or fifties, two to $3 million, isn’t too much money and you still have to grow your net worth. But it sounds very morbid, but if you guys were in the late later stages of life, two to $3 million is perfectly fine and you’re already at end game already. So when approximately were you guys at age wise, which you say We’re not quite 60 yet.

So plenty years ahead. Yeah. So for the most part, you guys still have to grow your network. Cause two to $3 million isn’t much see states, right? That said you’ve got more than most people out there that doesn’t say much. But two to three minutes to take $2 million at 10%. What does that 200 grand of passive income a year at 10% that said you would need to get fests that tire $2 million, right?

10% stuff, which isn’t going to be the case most times. And what it’s going to come down to is I’m sure you guys are familiar with asset allocation picks, right? The essence of your guys’ question is like what kind of reward risk reward profile you’re going for? Are you looking for something that’s 10%, 12%, 13%.

20 to 25% a year. Maybe we start there, right? Like I think for most people you guys probably fit this mode, investing in deals where it’s stabilized from the get go, or it’s at least, if the economy takes a tumble backwards, you at least hold onto the asset. So deals that are more, what I call the chocolate type of deals.

If you saw that other. Article that I wrote the other a few weeks ago. Those are more higher risk, higher return. Doubling, tripling your money in maybe two or three years, you don’t really eat to do that at this point. Maybe if your guys wasn’t like a million to $2 million net worth or less, that would be more lined up your ad.

Put, if you could consistently grow your money yet 10 to 14%. Conservative fee is stack winning. Is that sound okay to you guys? Or do you guys want to be more returns? No, that sounds good because we have been, we had several condos. And self-managing and the return there, all the condos were in Hawaii.

So their return wasn’t that great. It’s only five to 7%, but part of that problem was like, you paid a down, right? Your equity position was large, is what this image is pretty much displaying. A, you should have read, leverage it, got that return equity up higher, but that just happens over.

Yeah we’ve gone through the hilar process and the views that for more, investing, using the equity on the properties, but we’re now, we’re now, going through the process of selling those off and investing in, in, better returns. You guys are still, probably in the simple passive cashflow 2.0 stage strangest thing from the rental properties, which are high risk, high liability, big pain in the butt for Paul cheat returns and going to be more of the passive investor.

And maybe in five years, you’ll be transitioning more to this simple passive cashflow 3.0 side, where at your guys’ age, if you guys were. Three and a half to 5 million. Then I would say you were there and then you could probably just invest some equity type of positions and be totally fine.

But just to get a sense, like personal finance point of view, do you guys have kids or just you guys just us and. Out of the what’d you, your guys, you said your AGI is about 1 50, 1 70. What do you guys save every year? I’m just trying to get a sense of your price burn rate or how much money you guys spend on fun stuff.

Yeah. Expenses wise, like you guys say 50 grand a year or 80 grand a year, or are you guys pretty cheap and able to save a hundred?

We’re pretty cheap. You gotta be when you’re investing as a private money lender. That sucks. I guess you could say. Yeah. So 60, 70 about is that believe me, I’ve seen very many levels of cheapness, so I’m looking it up.

But yeah, I don’t know if we have our, I don’t know if we have it written down anywhere. Yeah, but just gut feeling like every year you save more than 50 or 66.

Is that, what does that says last year?

Oh yeah, probably around. Probably right around. Yeah, right around 50. Let’s say wait. That’s how much we spent. Oh, okay. So we’re saving we’re saving 120 a year. Geez. Wow. You guys are pretty cheap. Isn’t that? The that’s what you got, I’m looking at I’m checking the most of the money you guys make, you guys say is basically you’re telling me over half. Yes. Okay. You guys are just really typical white Nepal sabers.

Oh yeah. Yeah. Okay. And in that case, have you heard me talk about this concept of ed game? Like four to $5 million network? don’t know if I’ve seen any I talk a lot about this and the family office group that we had we talk about this concept of getting ourselves to financial independence and then so that your money can grow and you can pass your wealth off to a couple kids who live like trust fund kids, essentially dwindle away, but long after year old dad so you guys are there in a way.

You’re not two, four or $5 million, but number one, you don’t have kids. Number two, our group is a bunch of pretty like frugal people. You guys are definitely more frugal than the average person. Oh yeah. I don’t know if that’s a compliment or not, but maybe it is in our group, but so th.

When I say most people in our group are making 200, 300 plus a year, they live in California, much more higher expenses. For them I say four or $5 million net worth. But for you guys that might be a tad under there. You may be on the bottom limits of this concept called end game. So for you guys might be to this guy wearing the green shirt.

And you might be in this position to just invest in more conservative type of deals and you don’t need to double your money every three to three years in development deals or riskier deals. So I would say at the most just focus on the vanilla deals where it stabilize cashflow line, or maybe do some private equity.

But the tricky part is. And again, telling you where to be centered around, but it’s up to you to create your portfolio. So you get that on your weighted average, if that makes sense.

Me personally, like I’ve got all, I’ve got a lot of, bit different deals. This is where, in my opinion, where I want to personally be like, I want to invest in more or. Value add type of deals that are a little bit cleaner class B acids. So that’d be centered around where my cursor is, but all of a sudden, a lot of deals are in that, right?

They’re all over here on the outside of that bullseye target, but the weighted averages, there is the point I’m trying to make for you guys, you might want to have in this. Mindset as me like same B class. Like definitely not C class assets. Cause they’re just a headache. Although you’re just passive investors, you don’t have to deal with that, but they’re still from a passive investor perspective.

Cashflow is more sporadic in class C properties because tenants, they just don’t pay with a higher frequency we’ll figure. But maybe you guys might work. I’m more of a here. Maybe we see the same way, right? We want better cleaner assets, 1960 seventies and 1980s, which is right here where my cursor’s moving back and forth.

But maybe we’re, I’m up here and I’m wanting to grow my money at the stage of my life. You guys might be a shy under here, so maybe more what we call a deep field type of deal. Or it could be, you just invest near, but you do some private equity down here and the weighted average is right here.

That makes sense. Yeah. Yeah.

But yeah. Does that kind of solve that and then give you some food for thought or the other oh yeah. Confirmation. Yeah. You guys don’t, you guys aren’t really like this, but like some of my investors they’re like, all right, I need the class to beat less class assets in that are little bit at more than value add or like value add.

And they get very precise with this and just know that nothing will ever just hit your box. You got to expand the strict. And you have to invest, especially if you have lazy dead equity it’s so that B S equity in your home that should be put to work and grew in your rental properties. I know you guys have that there or equity is if you have stocks mutual funds, that type of stuff with bonds.

I don’t know why you’d want to hold bonds at this stage.

That’s the biggest thing, right? I think that’s the biggest problem that most people have is they think that this is their strike zone and they’re very patient looking for what’s there, but they got a million dollars, not think Jack for them, that’s where the low-hanging fruit for them. So that’s where we come up with.

Deployment plan where it’d be put the years up on the top. Then we hear like the four sources of money, for you guys are saving, let’s just say you’re saving $50,000 a year, right? This is what your money is coming through. And maybe you quit in 2025 is what this is saying. And then cash may, you may not have too much cash, but you want to deploy that at some point.

And then the other two sources of capital is your home equity, which you can tap via hilar where you finance or selling the assets. I would suggest with it being polite properties with a, just speak, generally bad rental properties through states where you have bad laws and it’s more an appreciation play, which doesn’t help you at the stage of your guys’ life for qualified retirement plan money, which isn’t your retirement.

Self-directed IRAs, 401ks, et cetera. So you start to build this plan where you draw it out and you’re taking money out, not so that your AGI blows up by taking out the IRA money out prematurely. But you leaking it out slowly as the general idea, but this is the name of game you’ve got to deploy it.

Cause I’ve had investors. Say I’m in a dozen deals, but it’s still a while to being to financial freedom. I don’t like, yeah. A dozen deals at $50,000. It’s just like half a million dollars, half a million dollars deployed. Isn’t going to get you anywhere at this know, especially from a cashflow standpoint, you can do the math on that five, 8% on I went to grant is nothing.

What do you got? We got there. You got questions.

Oh so we’ve got a bit in the self-directed IRAs and the 401ks. We’ve got some money in there and I know you’ve gone over. Starting to pull money out of there, but we’re at the 59 and a half, so we can start pulling money out. Yeah. Let’s kinda talk about this cause like how much money would you say you had in the foam equity out of your let’s just call it $3 million net worth.

How much is like as home equity in your rentals and your primary residence. 625. Okay. And then your retirement funds, how much would you say? I’ve got

three to 400,000. Okay. Perfect. It just like the last guy. And it’s more than one. We’ve got a couple of, yeah, but you’re not working at those companies anymore, so it’s fair game to take them out. One of them yeah, I’ve got an ESOP that I’m still working, so that’s still growing.

Okay. But yeah, the result of you taking money out of your IRA. You’re at art you’re I think you’re at that age where you’re not going to hit get the penalty, which is fine, which isn’t much anyway, 10% who really cares about that. The biggest thing is when you take the money out, your AGI will go up and that may push you into the 22% into the 24.

Or what we don’t want to happen is to go over the 32%. So let’s just say your age has one 50. If you take out a hundred grand, it’ll push you to two 50, which is still cool. It’s no big deal. So 24%, but if he pushed you to take, if you take out an additional hundred, which is 200,000 a year, go from one 50 to three 40.

Now it’s starting to hurt a little bit more. This is subjective, right? Most of our clients are in your guys’ situation of that AGI between one 50 to three 50. So that’s the general thought, of course this is personal finance, right? This is you guys need understand how this works and make the best decision and surround yourself with other like-minded individuals.

I don’t understand that stuff too, to ultimately get the best decision for you guys, but let’s just let’s just let’s just go with this right. And see where it takes us. So if we take out. A hundred. What I say a hundred, say we go 150 in the first year. That’ll take you. You’re still under that three 40 line.

And then maybe you would do 150 or 150, or, maybe you just play it out like this. I would rather see you take the money out of your home equity first quicker, because to me, this is the money not. It’s the boss most, yes, there, basically. If you’ve heard the analogy of the wartime general, the, all these dollars right here, you have, or think of them like sold shoes, you’re trying to fight the war. You got 600 of them right here. These guys aren’t doing jacks. Neither of these guys much, but at least they’re like sharpen and pencils are cleaning their guns.

They’re doing something. We know we got to get them out, doing something, they don’t need to be doing kamikaze runs or shooting on the front lines because you guys are already at end game, like you said, but we got to get them out doing something at least harvesting, passive losses for you, but let’s just not do this out of haste.

Do it too quickly. Where your AGI goes up, but I guess just to throw something out there and I’d like to hear your thoughts on this, what I would do is I would go heavy on the hilar first, and I’m just going to do some kind of cascading numbers here to get to your 600. The reason why I’m leaving this at 1 5100, 100, 100, or I really, maybe it shouldn’t be 1 50, 1 50, 1 50 to get it all out in a few years.

I’m just trying to stay under that three 40 AGI, just so that when you play around with these numbers yourselves, you know why I’m playing it. But then this is to me is the biggest thing here.

Yeah, we try to use our Wheelock for investments. That’s what we do now. We’ve got some hard money loans at 12%. So the hard money loans, I would be very cautious of those number one that is ordinary income. You do not want. And number two, you don’t get past losses, private money, and number three, be very careful who you lend money to because there are a lot of people out there that act as marketers too.

And they run these like lending platforms where they act as a conduit to put your money with lower grade operators. People that really should be charging. You should be getting for the level of their expertise or track record. You really should be getting 15 to 20% return on your money, but the middleman was marketing you, that loan is taking the Delta.

That’s very common. But I think just for the sheer ability of getting passive losses and it being not the board is why you’re trying to get away from the private money. Plus all your money is tied up in one deal too, but yeah as you phase out of that, the idea is you’ve got to sell the rental properties.

Cause most of your stuff is in a vocab area, right?

Yeah. No mainland metals, no. We have a property on the mainland, but, and we Airbnb it. Yeah. That’d be the last set I sell. Yeah, that one’s right. That one’s been handed down in the family. That one won’t be going anywhere. Oh, why you say that? Bush? No attachment. Amy’s dad built it.

They want to sell it.

And I think about it when people start to see you, cause they trip and fall. Maybe you might want to reconsider that one, but Hey, I’m okay with it. We can decide in 20, 26, but it’s working and that’s all I’m happy. What to me is the biggest thing is. For hardworking folks.

Like you guys work hard more, especially you guys saved really hard. What your money’s not working for. You’re working harder than your money. Yup. So let’s go off the low hanging fruit first. So that’s the home equity in the local rentals and the primary residents get a hilar, but at some point you have to make the decision to sell those assets.

Unless you think that there are good investments, which are there in our hall, either not put at best, they’re just right. Yeah. We’ve sold two of the four already. And of course there, 10 31 exchanges oh, we don’t want to do those. Yeah. We don’t do any of those type of stuff.

We. Had somebody help us out. We did some I dunno, outside the box workings with those properties. So you used to own property, so that’s the hard part. And in the next three to five years, you’ll be in the same predicament. Yeah no, we don’t, yes. With the the remaining amount, which is.

What less than half, about half the value of the property was yeah, the we there in DSTs. Oh, no, you did a DST and those DST guys get paid so well with all the fees with that stuff. Unless you’re take kicking a capital gain of over a million or $2 million, those types of things are complete scams.

Should be able to offset those, that tax school gain with passive losses.

We might not be doing, don’t be doing it again, shoot. I did it too. I did a 10 31 back in 2000 and well. 14. I don’t know. I got, been there, done that I made the same mistake. Just don’t make the same mistake again. The analogy I use for the 10 31 or DSCs is it’s like a hot air balloon, right?

The hot air balloon goes up when you buy the property, it starts to go up and you can sell it and take a lot and pay your taxes and jump out of the hotter. And in the beginning, the higher balloon necessarily it’s four feet under. You jump out. Ideally you start to get on the passive investing bandwagon.

You start to get these passive losses piling up through normal depreciation bonus depreciation. You’re going to start to accumulate excess suspended, passive losses so that when your hot air balloon goes up and you jump out, you have a pillow of passive activity losses. So that’s what happened to me back in 2000 and.

17. So that’s down here. I had a $200,000 on Jeanette, $8,000 capital gain depreciated capture, but because I was investing into vacations and private placements, which did a lot of cost segregations, I had several hundred thousand dollars of passive losses and I strategically views 200 of it to offset that gate.

And thus. Allowed me to not to have to do a 10 31 exchange, which again, going back to the higher balloons, it’s like the hotter blade continued. When you go into the next property, you go into this hotter bunny Eagle higher. So the next time when you have this debt equity in the asset and you want to get it out or solely.

Instead of four feet up in the air. Now you’re 20 feet up in there. You jump out of that hot air balloon. You’re going to break a leg at the very least, not even hit your head a die. And that’s essentially what the 10 31 it’s ESTs do they see you’re stuck in a spotter for me, and it makes it harder, harder for you to accumulate for more passive activity losses that we can have you jump out and get to more of a portfolio where it’s all broken up into little pieces at a time.

Then these bigger chunks and that’s what we don’t want. We don’t want our portfolio for any one of our, any one asset to have more than five to 10% of our net worth into one thing. That’s not diversification, you’ve done the T the DST I, the psycho I did the 10 31 exchange. The best thing you can do right now is to start keeping passive losses because you’re in this.

You should’ve got out when it was four feet, you’re eight feet, 10 feet in the air, but there’s still a chance Bob and Amy, you get a much passive losses. You can offset it. Just like how I personally did it right here when I finally got out of that. But it was one of those things. Like you have to get around other high net worth investors and get away from the salesmen selling these DSTs these sub 10 30 ones.

It from a high, from like a marketing perspective, the layer taxes. Yeah. Yeah, that’s right. But they’re just trying to sell their product. And the product is not really the right tool for the job. And in most cases, the situation where a DST 10 31 exchange makes sense is say like a client is selling a dentist franchise that they started for $10,000.

And now they are selling it for three to $4 million. At that point, it’s pretty hard to accumulate that much passive losses. So the option that a lot of high net worth people will do at that point is the DST or monetize stall. So something like that, because it’s just such a huge capital gain depreciation recapture.

But if it’s less than like a quarter million, certainly even less than half a million, sometimes even a million dollars. I’ve seen people get a million dollars plus a passive activity loss. It can’t be done to get you or that hotter, but just food for thought now. Okay. Yeah. But a lot of this is simple.

But the hard thing is that there’s all these kinds of products out there. Like DSTs qualified retirement plans. Is that a lot of my huge fan of everybody just trying to sell you stuff right. I think it for me, I don’t give a shit what you do. Like I just tell you what makes sense to me and what other people I’ve learned from do I don’t care what you do, I just don’t like this.

You spend $4,000 on something that only is really good for the person selling you at and not the best for your situation, but I’m not getting financial advice. Of course. Not at all,

but yeah. Yeah. But I think, like I said, man, like I did the same thing. So welcome to the club. I, after a while you stopped listening to these, get salesmens in suits. All right, what’s next? What’s next? You guys got a good one.

Got a you hit it a little bit tax questions though, but go ahead.

Yeah, Amy’s got some tax questions, but I’m not a CPA or a tax attorney, but try my best their job is really just to do the forms. Yeah. I think you hit on it already with the accumulated passive losses. Yeah. Go look at your I think it’s 80 to 8,500. I think it’s on the taxpayers of opacity, castle.com/tax, but that form will have the breakdown of how much it passed suspended, passive losses you guys have because you guys have been investing for quite a while.

So you should have most cases. People have more than they think they have put it that way, but a little trick of the trade, like CPAs, don’t really, don’t like to give that to you because they want to know when you’re shopping and. So most cases you won’t have that form in your documents. You certainly won’t have all the backend computer calculations.

It’ll just be the PDF printout, which is useless for our planning purposes. It’s useful. If you have the numbers there. To go elsewhere to portable or go to a better CPA. That’s actually good. Which in our world, 95% of my clients, they typically change their CPA.

What do you got there?

As you guys have seen the syndicator or the investment side, right? The three steps of simple passive cashflow first step invest with honest people that aren’t going to steal your money or use money, right? That’s the simple part. But that’s the part that unlocks all this other stuff, which is part two, the taxes.

You can’t really do this unless you have the passive activity losses to start to maybe implement real sick professional status to. So you have to go into the deals, unfortunately, which is I think the hardest part, who do you trust? Because anybody can do deals these days, right? Like not most people, they, if they’re new, if they’re under a half, a million dollars for half a billion dollars, $500 million of assets, and we’re well over a billion dollars at this point in 2022, But trying to find reputable operators that kind of give your money to, to be good stewards with your investment capital.

But then they’re really like, it’s simple, right? From the investment side, what you’re looking for. The biggest, low hanging fruit is the taxes. And then the, like the infinite banking too. We can talk about that also, but those that’s like 1, 2, 3 step. All this other stuff, DSTs cure pure BS, all these other products out there that to me are extraneous and in certain situations it makes sense.

And that’s my job is, based on your guys’ situation, it doesn’t make sense. Like for example, I think a cure appeal only makes sense. If you will have an extremely high income adjusted gross income of over 3 43 50, plus which you guys don’t. So does it make sense to use it? Okay.

So step one, you’re saying, they deal with the honest people. So you’d have to basically you’re building your your team basically. Yeah. But you’ve got to go about it a little bit roundabout way, right? Like eight, I think going on the internet, going through the podcast logs, finding people to work with is the wrong way to do it because you’re just finding the people who are good at.

Yeah, this is where it’s. There’s a kind of my spin on it. You have to find other colleagues and peers and credit investors around you that are already investing in this stuff and build long time relationships. I don’t know if you guys have ever come out to us, we’ll pass a cashflow event, but that’s the stuff you need to be.

You need to come out, break bread with people, build organic real relationships because. That’s where you’re going to find out the goods, who to invest with who to stay away from in the initially. The networking and social capital is really the currency of the wealthy. And like you said, you guys are already there to engage.

It was just it’d be good to find people on the same trajectory as your guys’ selves, this blind. Do you have another meetup in Hawaii? No. I would suggest joining the family office Ana it’s a pay to play program, but it’s hard and while you’re right, there’s barely any people, they only meet up groups or like the free ones, which are a bunch of broke guys trying to flip houses or wholesale houses, or do a bunch of birds.

Which in my opinion, what you do is when your network is under half a billion dollars, but that’s beta play, man. That’s what I mean. I went from 2009 to 2015, trying to do it all myself and I never wanted to pay for anything, but then I hit the wall and until I started to pay for mastermind groups to get around other higher network investors, just look at my unit count, didn’t really tick up. That’s why I started to do that. That’s you can try and do it on your own. But I think in Hawaii, it’s impossible to find other people, this type of stuff is you can’t go to wildlife country club because it’s just a bunch of rich trust fund kids there, or high-paid executives who do things differently with their money, not investing in workforce, boring investments, such as we do.

Okay. But yeah, you guys are investing far. The part of the club just know that the network is not completed.

Network is a separate part, a mastermind group, family office salon, a simple passive castro.com/journey for more details. But I think that’s the next step. If you’re investing more than a quarter million, I think it’s a no brainer at that point.

But yeah. You guys have been progressing pretty nicely, right? That’s good question. That seems like a lot of these concepts it’s it’s hard because it talks about this type of stuff.

Your 401k. Who talks about even private money lending on house flips. And we’re like 10 levels above that at that point. Yeah. When you talk to friends and family and you say, oh yeah, I’m going to syndication. They’re like, you’re in the mop. Yeah. That’s what I said. In 2013, I was like, isn’t that look like on this games?

Come on.

Yeah, but now nowadays, that’s where all my money is scattered amongst other people

still sounds, seems a little crazy to me still though, but I think that’s when you find other people that kinda, this is all the way they invest and you start to realize it is a very small community of. Passive investors. It is a lot more comfortable, but I think the hard part where you guys are at, and you just need to have a handful of close compadres, organic relationships around you, that also are starting with you guys.

And that’s the next step. Yeah. Yeah, any other final question, syndication, personal finance tax legal in front of banking.

This is kinda your, this was your guys. This was your guys slide, have you ever had to try and get a hilar on. LLC owned property, rental business property. It shouldn’t matter. He locks are always difficult to get on non owner, occupied properties, regardless if it’s an LLC or not.

If you’re working with the Hawaii banks, the blade banks are very bureaucratic and logical. And if you think they do, because they have no competition here, so they don’t have to. Do anything that’s outside the little box. So that might be the reason why you’re running into that problem. I would just go to a maintenance thing for that type of stuff.

Better rates or competition there. Yeah. But what is this for? Hawaii rental? Yeah. Yeah, just dude, just sell it. What is the, what is it worth today? We’ve got two different condos yet. One one’s about

2 65, the other one’s about 400, 400.

What is that moment? Is it.

Yeah, dude, it’s less than half a percent method evaluation and you having it backed up the eight. What is the HOA is on that thing?

No, it wasn’t that much. Oh, it’s 600. Yeah. So you’re making like 1500 on a $400,000. You take that money and you buy the equivalent, you could be buying for eight minus units on the main land, each writ running for a thousand bucks. No, but Hey, it’s your life? Just don’t complain when you don’t feel like you’re at financial freedom with your buddies, not for you.

And that’s a clear indicator that you must not working for your $400,000. It’s only $1,500 of revenue when you can get it to the mainland and make $4,000 and you could also be doing value add rental.

Yup. So yeah we’re getting there. Yeah, you’re getting there. And part of this is it’s a slow thing too, right? It takes a couple years to get to the swing of things cause it’s to get it. But I think it sounds like you’re heading the right direction. Like you’re thinking about what’s the next, I got my herd of cattle here, which was just the next set of tickets to the slaughter house and having nearby with, I would say that’s $400,000 or you can look at it two different ways.

First is. Which of those remaining combos are boy rentals is the most pain in the butt for you. I would probably do that. Or then just look at it from a pure numbers perspective and the pure numbers perspective. It’d be like, what trend do I have the most debt equity yet? Like the $400,000 one, or which one has the highest or the lowest loan to value would be the numbers, but looking at it.

Those are the two lens you can look through to figure out what kind of rebel you’re adding to that night. Yeah. Yeah. They probably have Hawaiian dates, right? These continents or these cattle?

No, neither one of them. Yeah.

Or they say never be here, farmer that’s right. If you want to eat them or one of the condos we actually bought in the foreclosure. Yeah. Then you should have said she should sell it. Cause you have some good equity and it was just like, people ask us like What do you guys sell these prop?

What are your exit early? If we, hit our business plan, we get hit, more than 20% a year. We can exit early. We’re going to do that because some of the property, like you guys in terrible jokes, maybe you guys are in that, but like Terra Oaks, we picked up a bat, a pretty good price.

That’s why I’m earmarking that with, to exit. Like the same situation, you guys picked up that foreclosure at a good price for us. Like we were still going to the value add process. And then when that callous factored up or take it right.

Land Conservation Under Fire: How the New Omnibus Bill Impact Conservation Easements

What’s up folks? I’ve been getting a lot of questions on land conservation easements after the omnibus bill seem to break the conservation easements at a two oh and a half x multiple. Is it true? Are there loopholes? We’re gonna be going through both sides of the argument here so that I kind of stay in the middle and kind of say that I just gave you all the information that I tapped from my sources.

Ultimately, you gotta make. Station, but here we go.

Hi, my name is Lane Koka. I run the Who We Do Pipeline Club. If you guys would look on to join and get involved in our deals, go to sy paso castle.com/club. Um, if you haven’t heard what a land conservation easement is, You know, you’ve probably been living under a bus or some rock or something like that, and you’re probably not an a credit investor.

If you’re not an a credit investor, don’t listen to this video. It’s just, uh, not gonna help you out very much. What this is for high income earners that are making over three to $400,000 adjusted gross income every single. So a bunch of higher roller cokes. This is something that the IRS has on their kind of watch list.

Nothing that I’m talking about is going to be construed as tax legal advice, blah, blah, blah, blah, blah, blah. This is kind of the latest and greatest of what’s been happening. What I’ve been hearing from my insiders on this issue that is all kind of stemming from in December of 2022, this omnibus bill kind of came forth and changed a lot of the tax governments and how this stuff was gonna be viewed by the IRS from the 2016 latest.

But so we don’t lose anybody here. What is a land conservation easement? But basically it is sort of like a donation, right? Where donations, if you guys aren’t familiar, you donate something and you get a tax deduction on your taxes. Real simple. But in this case, what people are doing is they’re going into syndicated land conservation easement deals where a piece of land is syn.

And that piece of land is donated to be put on a conservation easement list where there will not be any type of development. Basically, the land goes to the ducks and the wolves, basically. Nobody else can build on it. It is kind of for the sake of the environment, and this is kind of a good thing in the long run if you’re kind of one of those green people.

But the main thing we’re talking about here is the tax side. What people are doing, or what they were doing is they’ve got a million dollar piece. But they’re getting it reevaluated for a higher and better use. Maybe that land can be redeveloped to put solar panel cells or put a big high rise casino on.

Of course, that wouldn’t be very practical, right? So there’s a level of how practical the ski land can be developed. Some cases it could be developed, you know, 20 x 30 x and that was what people were doing at one time. If you’re kind of following me, What they were doing was buying a piece of land, you know, for a million dollars and saying that it’s worth 20 million in their deduction.

Now, sort of along the years, certainly around 2016 to 2020, these kind of ratios came back and kind of got rained back to earth and the five x multiple put in a million dollar property and you get it reevaluated. 5 million. To get the deduction for the people in these deals still can provide a net positive for a lot of.

Take somebody making a million dollars a year, if they’re able to drive their income down to 50% of that to $500,000, they just shelter that $500,000 from that highest tax bracket, and especially if they live, you know, in state taxes too. And that could mean that their AGI goes from a million down to half a million, but more importantly, they save 50 cents on every dollar on that delta.

So that means that they just saved a quarter million dollars in taxes right there for putting in an investment of maybe a hundred thousand dollars. Again, that five x multiple a hundred thousand dollars infusion of. To get a $500,000 deduction in their adjusted gross income, and that equates set 50 cents on the dollar, a $250,000 gain back, so pretty dang good investment, right?

Something that kind of takes overnight in a way less a hundred thousand dollars and get two 50 back, right? That’s more than double your money. Now, what was been happening in years prior to 2023? Is that these ratios were being pulled back to a five x with the omnibus. There is a little bit more of a ruling system around the governments of this multiple, and that multiple now is two and a half x.

Now, using that same example, right, A guy, you know, using one of these syndicated land conservation easements, they’re adjusted gross. Is a million dollars. But instead of that, that five x multiple, now they’re only kept at two and a half X. So they’ve gotta spend, say, a hundred thousand dollars to get $250,000 of AGI differential.

So that means with a hundred thousand dollars, they can lower their just gross income from a million dollars. Down to $750,000. Still a big amount, but is it worth it? That delta of $250,000 may only mean a, you know, tax savings of $125,000 at 50 cents on the dollar there. Remember, they spent a hundred thousand dollars.

In this investment. So that means they’re only gonna get back $125,000 a delta of $25,000 to the positive. With that, it kind of negates the whole purpose of doing this whole thing unless they’re doing it for the benefit of the ducks and the air and the rivers and you know, all the Pocahontas environment type of stuff.

But is it worth it? Right. And this is kind of what the Omnibus Bill has kind of put. Now I’m gonna be going kind of through my notes here of what I’ve been kind of collecting from my sources that wish to remain anonymous, and that’s kind of the world that we live in this stuff, because a lot of this is not to be considered as tax or legal advice.

If you’re somebody who wants to do this type of stuff, well make sure you work with the right people. This is why people join our mastermind group, our inner circle, and join our club, right to learn about things just like this and deals and you know, where do you invest. Again, you guys can join that at simple passive cash flow.com/club.

A lot of this is based on your personal financial situation. This may not be for you, but certainly if you’re making over, you know, a few hundred, 400, $500,000 adjusted girls income. Probably is something you should learn more about. I’m gonna be going into a little bit more of these details from my notes.

So in years prior, you could kind of be in a deal and as long as you’re in the deal for one year, you could kind of make that election, or the syndication could make that election to make this donation. But now with the omnibus, now they’re saying you need to be in it for three years. Now I don’t know where this magical three year comes from, right?

A lot of these bills and government, you know, regulations don’t make any. The closest thing I can subject that where it comes from is maybe they’re trying to emulate long-term passive income, which, you know, my CPA tells me to hold onto an asset more than a couple years to get at better capital gains treatment. But it is what it is. Three years is what it says.

Another nuance is in years prior, you know, when people were going five x 24 x, 15 x under multipliers, there was some wiggle room. Now what they’re saying is if you go any higher than 2.5, you essentially brick your entire deal. You know, in years prior, you would’ve gone up to maybe 2.4, 2.5.

 

Anything higher than that would’ve just been, eh, yeah. You know, you’re not gonna be able to count that. But now they’re saying if you’re going higher, It’ll get all disallowed and thrown out Again, these are just, you know my notes, right? Not saying that what will happen if you get audited and what will really happen in the enforcement.

 

These are just kind of ideas that have been thrown around that I just want to kind of put into your guys’ head. For some of you folks who did conservation easements in years prior, maybe in 2022, and you’re probably freaking out, you’re probably like, oh my goodness, my conservation easement is gonna get thrown out because it’s higher than 2.5.

 

Here’s the deal from what I’m hearing, as long as your deal was first off, voted for, it was filed into the law in that jurisdiction and everything was kind of wrapped up in a bull before the omnibus came. Through in December of 2022. You should be fine in terms of being kind of grandfathered under the old regime.

 

Now, of course, you know, nobody wants to do this and I don’t really, I don’t condone any of this, right. But there’s a probably gonna be a lot of people out there who are doing this stuff, who made back date documents, forge documents to get it in before the conception of the omnibus bill in December, 2022.

 

I’m not, I’m not condoning any of that again, right? That’s not good. But I, again, I think I’m saying that because we talk a lot about entities, legal protection. When people wanna sue you for frivolous reasons, that’s the kind of garbage they’re going to do and pull on you. And this is why having, you know, if you’re a higher net worth individual, just having some LLCs probably isn’t gonna help you too much in terms of protection.

 

And this is why, you know, the wealthy people go through great extremes to totally eliminate liability or more protect themselves to a certain higher. Because there are a lot of unscrupulous people who do stuff like this, and it’s very easy kind of to fudge a date here and there. All somebody has to do is the CPA Turner who’s gonna be doing stuff like this.

 

Hey, gimme an extra X amount of dollars, it’s a consulting fee, and I’ll make this work for you. Scribble some dates back here that are completely illegal. I hear about it now. The omnibus bill is pretty rock solid in terms of saying, Hey, 2.5 x multiple, no more. There are some hopes here. Now the new commissioner is coming in and we don’t know how that person is going to be.

 

Are they going to audit this stuff? Well, we know that the old commissioner would audit everything from 2016 and beyond, so we know that for a fact. But what to what? Right. So one of the due diligence things when you do look at these types of deals was to go into a deal that had a healthy legal budget.

 

Why? Because if you had a healthy legal budget, maybe seven figures, to keep a battle going, at some point it may not be worth the effort for the iris to fight you, and it will just lead to a. These things are always settled. It just really never gets to the end, like law and Order where there’s a judge that says this or that, it typically gets settled just like any other litigation.

 

This one’s no different just with tax court. So if you’re able to fight it and be a pester, the theory is that you can, you may be able to get a better multiple or just ski through the system on escape. That is if they audited you, which if you work off years prior, you probably. But I think this is the biggest thing that people who are still doing this conservation easements are kind of looking towards as they’re kind of saving grace of, well, you know, at least I got the tax savings in the meantime.

 

And if I grew my money, if I double my money in the last two to three years anyway, or maybe even five or six years, by the time this work its way through the audit system as I would imagine something like this would just taking forever. You know, you’ve gotten that time benefit of money. Now, maybe the counterpoint to that is they, maybe they would backdate the penalties and.

 

And this and that. But if you’re able to grow your money, maybe you’re able to beat that taxes and, and, and penalties. Just another thought. Now we’ve kind of beat up this conservation easement. At this point, I would probably think at home that, yeah, I’m not gonna do this stuff. Now the other side of the coin is, here we go.

 

And again, no tax legal information on my part. I’m just telling you what people on the streets are talking about, that I kind of interact. So first off, we kind of mentioned it, right? Let’s just say the evaluation is two and a half or five x is what it used to be. There’s a certain amount that your evaluation can go down to that you still get a net positive benefit to.

 

That’s up to your personal situation, and I think that’s something that I can kind of help out in helping you determine if it makes sense for you or maybe there’s just some other mechanism, maybe real estate, professional status and passive activity. Losses are just a better way of going than this.

 

Little bit more risky. We’ve got the Tax Pal fund. I’ll get more into that at the end of this video as a more safer option, in my opinion, to get passive losses that are not recaptured. But you know, this is the counterpoint, right? This is kind of the devil’s advocate approach. One thing that I think people have to realize is why do you have this whole conservation easement thing in the first place?

 

Well, the purpose of it is to designate land that you cannot develop it for the sake of the environment. And whether you kind of believe. Yes or not, kind of do need it, and the government wants a certain degree of this right now. This is just a tug of war game. The omnibus bill has pushed things very in favor of just killing all these conservation easements.

 

The good ones, the ones that want to go through are not because of this is kind of killing the deal. The only people who are able to do this are big, big players not to doing it in the syndication space or so they. And these are kind of the loopholes. They’re kind of being evaluated by a lot of people right now.

 

If this year kind of passes by and maybe 2023 passes by and there’s not that much land being designated conservation easement, they may look to ease back on some of these regulations. Or what I kind of feel like is they put these types of loopholes in here. So as a means to allow for future land conservation easements, it’s actually to fulfill it Our.

 

But they kind of have the ability to award it specifically, or for people who have the legal team to fight it through. That loophole that I’m kind of getting at is right now there are regular conservation easements and these simple conservation easements. Regular conservation easements, the rights are kind of given up.

 

Land is not really donated, and those are more the traditional conservation easements that I think a lot of us are used to. You are able to, in the syndicated deals, you can use the benefits up to 50% of your adjusted gross income. If your adjusted gross income was $1 million a year, you could buy up all these conservation easement.

 

Maybe only at a two x two and a half X multiple. Nowadays, we don’t know yet, but you can drive it down to 50%. The other method is this fee simple, which may not be under the omnibus jurisdiction, and I’ll explain why later, but what they’re saying is you can possibly still use these fees, simple type of arrangements where the land is completely given up.

 

It’s not just the rights. Be simple, just donated and given away. The downside to this is instead of a 50% ability to lawyer h ei, you pony unlimited to 30%, which may be good enough. And what I would probably recommend most people to do is see your tax mitigation strategy, not as just a one trick pony with conservation easements, for example, but to use a conjunction of different mitigation.

 

And this kind of actually forces you to do that because at 30% maximize use of this, what’s happening is say, take that guy who has a million dollars adjusted gross Inca. 30% of it means that he’s only able to go from $1 million to $700,000 ei. And if you’ve seen our tax videos in the past, I always try to get people around $340,000 married, filed jointly, or maybe even around $200,000.

 

So obviously if this guy’s at $700,000 right now, there’s a lot of room of improvement here. Maybe they implement real estate professional status, or they have a lot of passive income and they use the passive losses, which again we’ll talk about here at the end of the video. But they use those passive losses that drop them from 700 back to 300 or 400 wherever they really want to follow that particular year using conservation easements.

 

But again, this be simple conserv. When I started to first hear this, I was like, I thought the omnibus bill was calling out all conservation, syndicated conservation easements as a whole, and to me this was a head scratcher. I personally don’t do the conservation easements, but I know a lot of my clients use them every single year.

 

Which is why it’s important to get around other people actually doing this type of stuff, because if you google this stuff on your own, you’re gonna find all the content marketers who are posing as CPAs that wanna put out a puff piece like this to make them seem really conservative. So most people will go to them, but there are a lot of aggressive folks out there that are investing in the right things that the IRS wants, that wants to mitigate their taxes as much as legally possible, who are looking for the.

 

So where’s this like little crevice that lawyers can kind of get in here and break up the whole omnibus thing? Well, it seems kind of strange and stupid. I kind of think it’s a little stupid, but the way it was written into omnibus, it doesn’t specifically call out the whole nuance between free, simple, and regular easements.

 

So again, where does this lead into? Well, it leads into, well, when the conservation easement deal is being audit. It will eventually go into this audit, and this is where we pay lawyers to do this stuff. And if anybody has done silly things for some legal reason, this is the reason why we have lawyers, and thus conservation easements may not be dead.

 

But in my opinion, at the very least, you can’t use that 50%. You had to go with the fee simple and do the 30% is what I’m. And maybe that two and a half multiple lies. Again, I don’t know, I just personally think it’s just better to use passive activity losses to lawyer your passive income completely and to dwindle your ordinary income amount over time.

 

To do this, you’re gonna need to get rid of your traditional investments and get into alternative investments that give you passive activity losses, and to do this a very old fashioned and clean way without having to use conservation. To me, conservation events are kind of like a wonder drug, whereas using passive activity losses offset passive income to cancel that out, or maybe to use a conjunction into real estate professional status to use your passive losses to lawyer AGI at that point.

 

That’s very basic stuff, and that’s kind of like good diet and exercise in a way, instead of just using the magic wonder. But however you guys wanna do it, and I think this is really gets into your own personal situation and your own risk tolerance you have with this type of stuff. I’ve been very clear, I’m not getting tax or legal advice, but I think this is where you need to have a group of community around you.

 

And that’s why we always, you know, have these events where people get to see each other face to face and talk about things like this instead of just Googling stuff amongst. Now I’ve mentioned, you know, how do you get these passive activity loss, which I feel is like, is a lot better way of mitigating tax.

 

Good old fashioned passive activity, losses, depreciation to knock out your passive income. If you’re somebody who has moved off of your W2 job, your business, your ordinary income, now all your income is passive income and therefore you could drive your income down to none. That’s kind of like how I live personally.

 

I pretty much just have passive income these days, and I’m able to use the massive amount of losses I get from real estate to knock it out, and therefore my adjusted gross income is pretty much nothing. No. Completely legal. So what we have is our taxal fund where what we’re offering investors in addition to a little bit of returns, is you are going to be putting in a dollar to get $1 of passive activity losses.

 

Now normally with passive activity losses, when the deal is exited or the asset is sold, you have to recapture those losses, which can be a bit of a drag. But we’ve talked about other strategies to mitigate it in other videos. But in this actual opportunity that we have, the passive activity losses will not be recaptured.

 

In fact, if the asset is ever sold me as the general partner will be, recapturing it on my side, shielding that recapture from you. So this is kind of a game changer. So way you use this is maybe your, you’ve got half a million dollars of passive income and you wanna bring that down to 300. So you need a couple hundred thousand dollars of passive activity losses.

 

You go look at your 85, 82 form, you, you don’t have it there. Or maybe you only have a hundred thousand. Well, you may need to buy some, and the tax power fund that we have will provide that. We have a lot more information for folks that are in our investor club, if you wanna check that out. Simple paso castle.com/club.

 

But I think it actually makes this kind of arrangement a lot. More desirable, especially when you combine the fact that bonus depreciation is not a hundred percent anymore as it was in 2022. In 2023, it’s down to 80% and in 2024, it’ll go down another 20% down to 60% until it con completely phases it out, and there’s nothing out there that gives you passive losses that you do not have to recapture.

 

This is the only thing I’ve heard. So it’s a tool and it may be a tool for your situation. What I would say is join the investor club, so paso casual.com/club. Check out the webinar we have, it’s about an hour and a half. It’s a little technical, but if you are into saving taxes, and you certainly should, if you make over half a million dollars a year, taxes is probably your number one expense.

 

And with conservation easements through this omnibus bill getting tougher and tougher. Sure. There may be some hope. As I alluded to in this video, it just seems like it’s getting harder and harder. Right? Just like infinite banking or credit investor banking. You know, the terms are just kind of getting worse over, slowly over the time horizon.

 

But the big thing is the best time they get it was yesterday before they make it even worse. Right? Same thing. But anyway, let’s end of the video folks. Thanks for listening. If you guys have any other questions or specific questions about this, put into the common box below, we’re gonna be releasing other videos that you guys ask us to do. Our email is team@schoolpassivecashflow.com. Share this with a friend. Thanks.

 

2023 Investor’s Mortgage Update (Turnkey Rental)

What’s up, simple Passage Castro listeners, today we are going to be talking about mortgage loans for some of you guys who have rental properties, the turnkey or even your primary residents. I think recently, or last year we went to 5 0 6 offerings. Therefore, we only allow accredited investors.

So what do you do if your net worth is half a million dollars and. We’ve shut your doors on you. Maybe we’ll do a reggae plus offering in the future that will allow non-accredited investors to come in. But at this point on, don’t hold your breath on that. For more information, go to simple passive cash flow.com/club. And check out the new pet fund there where we’re paying investors, 12 to 13% monthly based on debt, because this is a strange time.

And we’re recording this in January of 2023. And I haven’t talked to Graham in quite some time. I think the last time we saw each other was at a event prior to 2019 and at the time we were still helping out investors pick up turnkey rentals and we had this program called Incubator, which if you are a non-accredited investor and you would like to sign up for the.

We’ll probably just give that to you for free. It was over 20 hours of coaching calls and I enjoyed doing it. Most of our investors are credit investors and have moved on. But we wanted to do this podcast for you guys to just catch everybody up real quickly. If you have rental ties or you are non-accredited investor looking to get a turnkey rental property, going on with the mortgage lending world where the Fed is jacking up interest rates?

As to date, 3% in the last what? Couple quarters, just unprecedented. But Graham, why don’t you introduce yourself and then your partner there, Aaron, and some of the updates ? Thanks, lane. Good to see you again, by the way. Yeah.

It has been since 19, I believe. My name is Graham Pham. I’m with Highlands Residential Mortgage. My production partner, Aaron Stelli, has joined me today and spoke with. I don’t know, 30 days ago or so, I said, Hey let’s talk about what’s going on in the market on the residential side as well as the like you said, the turnkey side, the one to four category.

It’s still a viable category. It’s it is starting off with newbies as you pointed out. And, but you gotta start somewhere, right? And the newbies need to, they. One to 10 properties, then they sell it all, do an exchange, and they graduate into your accredited program is typically how most people that have gr grown their wealth over the years.

It’s a simple graduation into the commercial end. But we wanted to talk a little bit today about, what’s happening with the market. Yeah. The Feds have have done a number on us. They, I’ve known Ohio, I think it’s six or seven increases last year on the Fed rate.

And the fed rate’s a little bit different from the interest rate. It does have a lot to do. With the cost of money and people say the fed rate is at this, but that doesn’t mean the interstate is at that. Okay. But it has pushed our interstates up. We’re probably, like you say, three points higher than where we were probably this time last year.

And has it slowed the. Newbies down. Yeah, because the newbies, they don’t know. Okay. They’re nervous, they’re scared. Plus they came off covid, 2021 with bottom basement pricing on rates and they expect to get that again. That ship sailed. It’s not coming back. Okay. Wall Street, is addressing the whole situation.

Cautiously, if you will. And the reason being is because, back in 17, 18, and 19, we were originating notes at a higher note rate as well. And the guys on Wall Street were buying these mortgage backed securities from FA and Freddy, and they were hoping to keep ’em on their books for a certain period of time, say three to five.

So they can make some money. That’s typically their mo. But what happened on the 17, 18, and 19 notes, it all got refinanced. And so they experienced a thing called E P O, which is early payoff. And the early payoff took the profit right out of the guys on Wall Street, and so they got stoned. They don’t wanna get stung again.

So they know this inflation that we’re dealing with right now is cyclical happened back in the eighties and nineties with Greenspan. Now it’s happening now. So we are eventually going to run into a recession wall, and when that happens, which say six to eight months from now, the rates will come back down and people that are securing loans today will probably come back and do a a refinance.

And what this one is this a 10 year. This is just the interest rates. So yeah, this agreement. Yeah, this is the interest rates. Okay. And then I believe that. All right. I guess Graham, once, don’t you go over like just little education for folks, right? You mentioned it earlier, the fed jacks up rates, right?

The fed rate. But then that doesn’t necessarily mean it impacts these rates. One for one. Maybe explain the disconnect there, just so people can sound cool in front of their friends why they’re not doing the stock market so they can explain it concisely. Or better yet, to their spouse. They don’t spitter and sputter over their words and say, no, you can’t buy a rental property or a syndication deal.

Give them the elegant way of putting it. When we have a fed increase, does it happen? Sometimes it doesn’t. You’re absolutely right. And there’s multiple factors, which I really can’t get into because I’m not an expert in that area. But one of the things I can tell you right now is that we have had an increase in the rates.

We probably topped out pretty well, and I’m trying to th see this chart here. I would say probably September was September, October was our worst month, but it’s been coming down since then and it’s been settling out, which is good. And people go to say, okay. What are investor rates right now on a single family residence?

They could range anywhere from six and a half to 7% right now. And people are going that’s not, that’s not healthy enough to gimme cash flow. That’s true. But as we discussed Lane, they’re, we’re the theory of, marrying the property and dating the rate is where most of these investors are taking a look at.

So I’m gonna buy a property, I’m gonna yield $150 a month cash flow. But six, eight months from now, I’m gonna read Financee saying we’re gonna get that thing more like in $300 of cash flow. But they’re buying these property cuz they’re more readily available out there. and they haven’t been in quite some time.

The inventory’s been very scarce and mostly the term key providers, as you alluded to, they’re doing more new builds because they just are running out of inventory. I don’t have any commercial loans or any syndications going in. I’m not the expert in, I or I stay in my own lane, in my own little box, but I do actually have up to 43 properties right now, and I can certainly exchange ’em all into your program. But, quite frankly I’m pretty satisfied with the cash flows that I’m getting.

But right now, I think my advice to people right now is don’t get scared by these rates. Anything below 7%, it’s a good rate. I’ve said that for years, and it’s true the cost factor sometimes has been higher than what we expected because of the appreciations, but those costs are coming back down, or should I say the prices, those sums are coming back down.

We are now in a full tilt seller’s, or excuse me, buyer’s market, which is good for the investor. If the investor understands that, then they’re gonna take advantage as we have transitioned to this buyer market for several months now keep in mind as a buyer, as you are maybe trying to build your portfolio is now that we are in this buyer’s market, we’ve seen the rise of seller credits coming back. Borrower might not necessarily be happy with their rate at six and a. We’ll get the seller to pay it down to 6%.

We’ve seen that just the seller buying down the rate and forms of points. For the interest rate. We’ve seen seller credits making a comeback the past several months While interest rates are currently nowhere near the lucky area we were at, so to speak, in just the interest rate world during the covid years.

Keep in mind there’s some more negotiating power that just wasn’t there during 18, 19, and 20. So we’ve seen really that kind of turnaround and a lot of times that can make or. That deal for the borrower as well, if you know all about that cash flow sometimes. That’s an excellent point, Aaron and a lot of the providers, the turnkey providers that are starting to retain more of their inventory than they would like simp because they’re the buyers themselves are a little reluctant to start buying. So they’re incentivizing, if you will, and they’re providing points.

And the reason why they’re doing points, not only to help relieve and make the buyer feel better, but where we are in today’s world, reflecting back to my original statement about wall Street recognizes that this thing is cyclical.

They recognize they’re gonna experience an early payoff in the next six, eight months. Consequently, they’re not juicing the rates. Like they have been before. I’ve been at this 25 years, I’ve always had the ability to do par pricing. Par pricing is a zero point loan, which means I don’t charge anything. I don’t give you any credits.

We haven’t seen par pricing probably for six months up until probably the last 30 days. But primarily on a 25% down, but not on a 20% down, you’re still looking at least a point and a half to two points to do a 20% down because the adjustments are more than doubled. The turnkey providers recognize this.

They say, okay, let’s get this buyer incentivized. Let’s just pay for those two points. And in the lending world for Fannie Mae, that is capped at two. You can’t go any more than 2% on Fannie Mae. The commercial world’s completely different. I, Elaine, you can share with me what some of the sellers in the commercial world is doing.

I think a lot of I think in the commercial world might be legging a little bit, right? As you mentioned, you might say you might guys might be calling it a buyer’ss market, which is this. But at this point in the commercial world, the buyers. Not realizing it’s a buyer’s market yet, because, it’s based on net operating income, not just comparable sales.

Like how residential. So I, I think maybe traditionally this has been the, what the case was and, but certainly what it is now, right? Where the commercial world is, just moves a little bit slower and then potentially legs. But going back to the turnkey world, their product is not really a, a home, right?

It’s a turnkey product that provides cash flow and when you add up the tax benefits, mortgage, pay down, appreciation, et cetera, you guys know the website, simple passive cash flow.com/returns where I add up all the stuff on the whiteboard, you’re making like two to three times greater at least than the crummy stock market traditional investments there.

I to backdate some of this stuff when I was buying this stuff prior to 2015, we would be able to cash flow, what, like 400 bucks per property with full expenses. Then that went to 200 bucks in 2019. If you guys, this is all new to you guys and you’re still in the market for turnkeys, make sure you grab the analyzer.

It’s old, but it still works. Simple passive cash flow.com/analyzer. But nowadays, as the price went up, there was negative cash flow, but. As silly as this sounds, it doesn’t really matter. It’s all what’s your other like in a negotiation, what’s your best alternative to negotiated agreement?

Your batna in this case, where else are you gonna put your money? You gonna put in the stock market where you’re gonna lose another 10, 20% this year? Or are you gonna put it into a hard asset, like a semi negative cash flowing property, like a turnkey, or in this case, it makes sense why they throw you points your way to get your cash flow.

So they can get their pricing, run their turnkey operation business. It is what it is, but you as the investor need to make that personal finance decision what you got in your portfolio. And is the turnkey rental or the syndication better than what you got? And that’s the name of the game, in my opinion.

You know you have to analyze the market and then you gotta pick your poison. Okay? Each market has an A, a, B, C, D property, okay? Typically, your A properties are not gonna bring as much cash flow because they’re newer in a better neighborhood, so forth and so on. Whereas the D, c, and D properties are gonna have a little bit better cash flow because they’re a little bit older.

And maybe in a little bit, not so desirable neighborhood, so you can get close to the 1%. And I think we’ve thrown that terminology around for a long time. 1% rule was something that we all lived and breathed for many years up until probably like you say, 19 or 20. And we started losing that 1% because the cost kept going.

Yeah. Then they went to 0.9, and then they stopped doing turnkey rentals in actually decent markets like Atlanta. Maybe you could throw Birmingham in there, which people are probably shaking their head. Birmingham is a decent market, and then I almost fell off my seat the other month when somebody said they were buying rental properties in B.

My goodness. Baltimore is the hood guys like straight up. That’s de class war zone properties, but hey, it makes the 1% real maybe, right? Is it, are those properties hitting 1%? They’re selling out there? No, not quite. It’s very hard to hit 1% of these days. Yeah. If, yeah, if you’ve been to Baltimore, they, they had these houses called row houses and if you’ve driven those neighborhoods, some people that live in a very nice neighborhood, it doesn’t, you don’t count Lane and you’re out in Hawaii people that live in a nice metropolitan area like Dallas or Atlanta, and then they go into Baltimore, sometimes that, can be viewed a little bit negative, but these are older properties.

They’ve been there for very, quite some time. Are they a C and D property? Maybe not. Maybe not so much. It depends. I’m not an expert on Baltimore, but we still have a lot of activity in Baltimore, believe it or not. Yeah, I mean it’s certainly far from the days when I think you. I think you landed on my, one of my properties way back in 2012 or 13 when I was buying that stuff.

And it was a nice, at the time of 70, $80,000 property in Birmingham in a B minus area. Today that would be like 120,000 in a still B area, but that’s just, the best time to buy was yesterday. I think that’s the thing that guess maybe that’s the point we’re trying to push home, right?

If you’re out there doing nothing, You’re just sitting on cash and your net worth is under two to $3 million. You gotta do something with it. Heck, go buy a turnkey rental. Heck, even in Baltimore I guess. But you gotta do something and this is the name of the game is get your money working, get it out of the regular stuff.

But with that I’ll get off my, I’ll get off my soapbox I guess. No. I’m mainly talking to the non-accredited guys cuz you guys gotta do something and you guys, that’s where I hear the most excuses. I’m just gonna sit on my money. It doesn’t cash flow you. No, please do not sit on your money. I’m still actively buying,

from the standpoint of appreciation, depreciation, I don’t think we’ve all caught up on caught up on that number itself. On paper just yet. California and the, new England, New York, and all the East coast. Those don’t really factor in because, those aren’t the markets that you and I are in, like Birmingham or Atlanta or.

Memphis, these type of markets. We haven’t really seen the depreciation yet. Now the appreciation was going up over the last four years, but it’s now starting to level up. We haven’t seen it go down yet. Okay. Will it? Probably, but I don’t think it’s gonna go down a lot, be honest with you. So let’s just say investors have their rental properties, or maybe they’re getting out of like the turnkey.

guess first of all, if you guys are in the investor club maybe we can swing it to another unsophisticated, non-accredited investor. So make a little P d F flyer and maybe we can move it for you if sucker is born another day. But what if you people wanna hold onto those things because sentimental value, whatever.

What are some options that we can do to pull out some of that equity? Because, likely if they’ve held onto the property for a little bit of. The property maybe went up from 90 grand to not 120 grand. They may, and with their 20% down payment, they may be sitting on 50 grand of 40 grand of debt equity there.

What are some options that they can use to, to tap that, that equity? That’s exactly what I’m doing. I’ve got three properties that were new Bill, 17, I think it was 17 when I bought ’em, and they built up probably 70, 80 grand of equity. Another property I have in Dallas, they built up about $170,000 worth of equity.

So am I cashing them out? Absolutely. Taking my money going elsewhere in this case and going back down to Florida. But yeah, you got some some equity there. You could do it one of two ways. You can get a ca a, a cash out refinance, which is what a traditional Fannie Mae loan will do.

And on the single family, you can go up to 75% on the two to four unit, you go to 70%, but you could also get a heli, which is extremely challenging right now. HELOCs are readily available for primary residents, which a lot of people still use, especially on the West coast cause they’ve got so much equity in their primary residence, they’re utilizing the HELOCs.

But what the HELOCs are doing right now, because the primary rate has gone up, the primary rate is sitting at seven and a half, and typically a HELOC is usually prime plus something either a half a point or a point. Now you’re at eight and a half. Or if you do a cash out refinance on a 30 year fixed rate, we’re still in the upper six.

So it’s a much better bet. Even though you’re paying interest only heloc, you still got a much higher rate of interest. Yeah. The nice thing about the HELOC is, you don’t have any costs, but the bad thing is they’ll sandbag you on the valuation. So what that means is maybe your property is worth one 20 and you have 50 grand of equity there.

use their pencil and say, ants worth 1 0 5. And then you’ll walk and be like, all right, I got screwed there. I guess I’ll take it. But you’re not gonna be able to squeeze the towel and get all the equity unless like you said you refinance it. There. But that’s why we say, try and get HeLOCK first.

If this is all new to you guys, get it rolling. Get the money, put, get into something by rental properties syndication to you, or make 12% in the pet fund. Something like that. Get it going. And then once you’ve tapped that initial equity tranche, then you gotta get at more of it, get the refinance.

But let’s just say some, I invest, some of my investors grammar are semi-active investors. They do syndication deals and they may go after some of that burr stuff. And what’s, what are like, you guys have this kind of three year. State the rate program or something like that.

Maybe it’s quick bit about this thing. We actually do if you originate alone, say in the next six months with us and at an elevated rate. Cause we don’t know what tomorrow’s gonna bring and it has come down a bit. But we know once it hits the recession law, it’s gonna come down even more.

We recognize that. So we want to keep activity going in the investment community. So buy the rate, buy their house today, marry the property date, the rate, because in 6, 8, 10 months down the road, the rates are gonna be decked back down. Give me a call, we’ll refinance it. We won’t charge you any closing costs, and you get your cash flow more in line.

So that’s something we’re doing for a lot of our investors. And is that Fannie Mae, Freddie Mac loan? And who backs that? Is it like a rate cap insurance company? And I guess for your listeners, for new guys ear mouse on this is more technical stuff. Not super important. Just my, I’m just I’m just wondering.

No we strictly do Fannie Mae loans. We do some D S C R lending, but the rate is much higher. The D S C R lending back in March of 2000. Okay. That’s when everybody said, okay, COVID, it’s here to stay. And everybody left the playing field. Jumbo commercial. D s, DSCR R, everybody left the playing field except for Fannie Mae.

For about six, eight months and you probably recall this lane and then eventually stay started coming back on the playing field. We’re starting to feel a little bit of that right now. Some of the capital markets are starting to get a little bit nervous, and I say some of the capital markets non Fannie made Freddie Mac, which are government backed, are starting to throttle back, which, and I’ve seen companies even go out of business.

We had one that we were doing along with just Monday. Can, the CEO o said, we’re not taking any more loans, and they were doing, gosh, billions of dollars of loans a year and they just decided to stop, for whatever various reasons. So it’s a kind of a fickle market right now and some of that will probably affect, some of the commercial lending as well on your side.

Whether it’s got to you at this point, I don’t know. But the D S C R lending stuff is, they’re starting to get nervous. They really. Yeah, so it, it seems to act really similar to like, when we go into one of these, if we do a bridge note, lot of times we’ll buy a rate cap, right?

To combo that little bit more risky strategy so that, say we buy a rate cap of, we don’t want the interest rate to go up more than 2%. Which could protect us in this environment where it goes up 3%. And with, lot of that, if my understanding it’s like third party insurance companies will ensure the lender.

So it’s not the lender putting up the money. I’m wondering is that kind of the same thing going on because it, it seems a good deal for the consumer, risky for your guys’ end because everybody’s betting on the Fed raising a couple of times this next year, like a 0.5 and a 0.5 again, and that means interest rates will grow up.

So that I’m sure you’ve built in some buffer into this three year date program, but Is there like a third party insurance company ensuring the rate jump or no the program itself is an internal program. Okay. We’re willing to take on the expense, if you will, and because our closing costs are nominal.

There are three. $1,300. We’re gonna waive those closing costs to get you back into a better rate. Okay. We don’t have, all of ours are government backed. They’re not insurance backed. That’s mainly primarily for the commercial market. Fannie. Like I say, we were, Fannie Mae was the only people left standing for six months back in 2020.

That’s the only people that were doing loans. And then they, and that started to turn back around and all the, everybody jumped back in the playing field. But no, we’re not insurance backed. Okay. Okay. So ensuring it in-house is what I’m hearing. And if interest rates jump another 2% and people actually call you guys on it and refinance or change it.

Then I guess you’re just working for free, right? ? You just originate a loan for free. Everything has a cost. Yeah. And we’re gonna try to minimize that cost as much as we possibly can. We still want to help out the consumer. I and as far as your prediction on increasing the rates, I have a strong suspicion that the economy is starting to slow.

And we’re seeing those effects in the race. Cause they have come down a little bit since probably November. And which is good. And how long will they sustain there? It’s a great question, but a lot of good numbers. A lot of good data’s coming in. C P I numbers have been good. G D P numbers have been good and we just hope that’s gonna sustain itself, so we won’t have to do any more Ray hikes.

Once again, I’m not running the administration. Yeah, I’d like to see what’s in your crystal ball. The way I see it, the data is saying that we’ve come up the high of 9.1% inflation. We’re now dancing in like the six and a half range. The stuff they’ve been doing, onslaught rates has been working.

Not to say it can’t jump up for a month here or there, or even come down even quicker. To me unemployment is still unimpacted at 3.5. That’s super, super low. So there’s some B dry powder there, but I think once we get under 5%, that might be a trigger for the Fed to really ease up on the rate hikes and I agree.

I just hope it doesn’t get that far. I really do. I think the next 30 to 45 days is gonna be interesting. I think they meet, I think Powell’s supposed to talk on Friday of this week or next week. I can’t remember to give a recap, if you will, of where his agendas are, and I’m hoping it’s gonna be positive or he’s gonna say, okay I’m feeling comfortable with the economy right now, but once again, we’ll have to wait and see what he says.

Yeah, I’ve got a lot of properties waiting to refinance and, So I’m chopping at the bit. I’m just maybe a little bit more pessimistic. Like I think we’ll hover around this 5% mark and we’ll it’ll just be in the doldrums a little bit, at least, that’s what I’m pessimistically thinking.

It’ll be like this for another six months to maybe a year, unless the, I don’t know when the next election is. Maybe the Congress will get pissed off and tell the Fed that you guys need to stop screwing around with the rates and lower it again. This not a politics. Yeah. Yeah. This is not a politics show.

Yeah. . Yeah. No, I think if we hold on for the next six months, I think we’ll start seeing a lot better improvement. Yeah. The next six months is gonna be challenging. One topic that comes up a lot from my investors, and I’m not a huge fan of is all in one loans. You wanna define that and maybe let’s talk through some of the pros and cons a little.

As I mentioned to you earlier we have that available. I do know it’s a working tool similar to a heloc HELOCs a great instrument. I love it. I ha I’m in, I highly recommend it even on, if you can get one on an investment property, which is challenging, but on, on a rock find, you can use it.

And I use it all the time. You find a property that you didn’t weren’t expecting and you didn’t have the available cash at the time, tap in your helo, go buy the property and then pay it back. So it’s a working instrument that’s very similar to what the all in, what is. Okay? A lot of you can secure a loan on a primary, or excuse me, on an investment property, and let’s just say you, the loan amount is a hundred thousand, but they give you a loan.

Tap, if you will, for 200,000. So you go tap into more equity if you want, or pay it down. Very similar to a heloc. I’m not an expert in that area. It’s a very complicated product. Actually I let my competitors run with that one cuz I stay focused and in my lane on the Fanning and Freddy stuff. But I, in some cases it’s not a benefit to the client.

It’s a very narrow niche. Okay. So I wish I could expand a little bit more cuz I just don’t sell a. Yeah, come on Graham. You’re the mortgage broker. You’re supposed to sell everything, right? No, but yeah, Graham, I’m a mortgage banker, just to let you know. And I, I’ve been, like I say, we did about a hundred loans last year and all are Fannie Freddy.

Okay. So that’s hundred month last year, Graham, you what? I said a hundred a month last year. Not total. Yeah, I’m sorry. Sorry. A hundred a month. Correct. Yeah, so here’s my two bits folks. Like the reason it’s not a fanny Freddie Mac backed loan, which you guys don’t really care about on the interest side, on the insurance side, on the backend, if that’s just who holds it.

But what that means for you is the terms aren’t as good and what terms mean are rate and other like loan of value essentially in the residential world. But a consumer, it’s not really the best option because again, the terms aren’t as. When you have a, one-off loan to a one-off tie to a one-off asset like a Fannie Mae, Freddie Mac.

And what I see is it’s one of those sucker products that mortgage brokers have. That kind of, all right, my client is super confused. They don’t know what to do. It’s hard for them to do paperwork cuz it’s face is a pain in the. And let’s just get ’em into this biggest loan that we have possible.

And just that way I can extract my or mortgage origination fee and get paid so we can all, I can have my salary right. And feed my family. But it may not be the best thing for the investor cuz now you’ve given up your flexibility too, that like selling off one of the properties you can’t do that.

You gotta sell ’em all or it’s really hard to. Create a loan where it’s piece, your ability to sell off individual assets one by one. You’re talking about like a commercial loan with release clauses? Yeah. Yeah. It just never really happens like that. No, unfortunately we don’t do those type of loans.

But I think I’m just, and when you talk about this kind of stuff, it’s almost, it makes me think way back before 2008 when we had the option arm, which was an excellent instrument that was utilized by a lot of investors. But unfortunately it was abused by a lot of brokers. to get people in houses they couldn’t afford.

And that’s, a lot of people blame the option arm cause of the deferred interest and all this. And I think it’s a fabulous product. I’d love, I wish they could bring it back, but unfortunately dod Frank Dak will not let ’em do that. Yeah. Yeah. That and interest only 40, 50 year mortgage. Exactly.

And I think that’s important to know, right? Cuz like a lot of new investors, they freak out and they’re like, oh my God, there’s gonna be a 2008. Like it’s still really hard to get a mortgage. A lot of you guys are accredited investors, multiple six figure salaries, and it’s, you gotta show a lot of legit documentation to get mortgage loans, right?

It’s not the wild West days of pre 2008. Anymore? There’s no liars loan out there anymore. There’s no stated income anymore. The closest we come to a stated income is like a bank statement loan. Show me your bank statements cuz a lot of people, they’ll write off everything they can on their taxes and nu down their net income to nothing where they can’t qualify on a traditional loan.

But, so now we go into a like a bank statement loan, which shows that an incoming cash flow from whatever business they’re doing and shows enough to. A loan, which is called a bank statement loan. And we are doing those. Yeah, I almost lost all my hair with this experience. A few months ago I started to look for a house to live in.

I still rent, right? Cuz here in Hawaii or even in California, it makes, to me, it doesn’t make any sense to rent unless your net worth is two or three times greater than that of your house. They’re better off investing your money or actually growing your net worth. But I, I was like, the prices are lower now.

It’s a buyer’s market like you. Let me zig when everybody’s zagging and buy a freaking house. But then I tried to get like qualified for a mortgage and it was like impossible. First of all my like I don’t pay taxes like cuz my income is nothing. Cuz it’s all passive and I use passive losses is zero it out.

But it like to get it through like a mortgage lender for a primary residence for me. Like it just wasn’t happening. And I just got really frustrated with the whole system. It’s like, how the heck can I not qualify? For mortgage. You actually can on the bank statement loan because you got a lot of incoming cash.

And it’s all evaluated from the bank started to show. Yeah. So we did that. So like the bank, we tried, we went down the route of, I guess this is more for the business owners out there who don’t have clean 10 90 nines or W two s no, W two s, W2 s the cleanest way. So we went down the bank statement.

and they just couldn’t make sense. Like the mortgage broker I was working with was like, I’m like, they got befuddled. Cause I had more than like I got 80 something K one s and like things coming in my bank account and they’re, they were trying to make this like spreadsheet with all 80 something of ’em.

I’m like, are you kidding me? I hope you guys didn’t do this. I hope you sent it overseas for somebody to make a spreadsheet and waste 40 hours on this thing and it. It was a waste of time, cuz we all know what was gonna happen. It wasn’t gonna add up to enough. But then they went down the debt service coverage ratio, like you said, approach.

But we’re not renting it out. Then they went down the 10 99 approach and that didn’t add up. That was close. That was the closest thing. But I noticed at that point I had drifted out into the outskirts of non Fannie Mae, Freddie mc. and I was getting really horrible terms and I’m no dummy.

And I told them, if it’s not a Fannie Mae, Freddie Mac I’m, I don’t wanna pay these like semi usy rates. So I told ’em like, all right, I give up. I’m just gonna buy cash with this thing when the time comes. And then when I talk about in my next book, for you guys who are higher net worth the ticket for hot multimillion dollar homes is you don’t get the mortgage on them cuz you max out at $800 million jumbo loans.

Instead get the debt on your stock market portfolio or your infinite banking, get the loan there. I’m looking at, like with JP Morgan private client, so SFR plus 2%, so right now that’s 6.2%, but in normal times or last several years, that could have been like a 2% three. Mortgage payment, doing that type of stuff.

But if you have some high network clients that are with some of the bigger banks in the private banking world, that a lot of times those those banks, especially if you have a lot of money in their bank, they’re pretty forgiving. They really are. And definitely take advantage of those.

Yeah. What do you say, what’s your take on if a guy’s buying a, I don’t know, three, $4 million house. What is the best solution If he wants to throw on some, any good at real estate investor wants to get some debt and not just have it paid off cash. But what are they just screwed?

Or what’s the best? Now you fall into the jumbo world. And the jumbo world is more critical than the Fannie Mae world, believe it or not. Their debt income ratios are less, their credit scores requirements are a little higher. Their underwrites are a little more challenging. Yeah and those type of worlds, it can be very difficult.

It’s a lot easier in the Fannie Mae world. So when you get in those higher loan they’re very challenging. Most, as most of our stuff and our bread and butter is the turnkey stuff, so a lot of times we don’t play in that category as much. We would like to, but it’s very challenging.

Is jumbo. Jumbo loans, like over eight, 500, 800,000, it varies on the state. Seven. Yeah. 7 26 2 is the latest conforming limit. So 726,000. But depending, especially on the West coast, different counties that does go up. It is a sliding scale but just your standard conforming limit across the US is that 7 26.

For a single family. Median home in Hawaii is like 1.1, I think. , , but So are the jumbo loans, are they all Fannie Mae, Freddie Mac, or are some of ’em Fannie Mae, or are they all non-conforming? All non-conforming. Oh okay. Yeah. Like you say Aaron says that it’s a sliding scale, but the general, as you say, 7 28, 7 20.

Yes. 7 26. 7 26, which is pretty much across the board except for some of the other areas like California. They have a high balance areas. Key West Florida High, very high. One of the things, another strategy that you probably know Keith Wek, he always touts the fact that he bought fourplex with an FHA loan.

And you could actually do that today and you could actually get an FH loan, a loan up too close to a million dollars, which is crazy in some of these markets. Yeah. Great for the non-accredited guys, we’re gonna need like damn near 10 of those fourplexes to make a dip in our.

Good for our kids. I think, to maximize their debt on portfolio yeah, it’s just a bad Yeah. It’s just it’s tough, right? when first word for problems, but I always tell my guys get that money working, right? Even. Yeah. You used to be, you could get a HeLOCK for 4% and then you put it into something making plus 10.

And now the hard thing is as you sat around on your butt, now the helos are what, at 6% or seven, right? Sometimes they’re even seven. The prime is at seven and a half. Yeah. And then whatever add your bank has chose to give you, that’s what you put on top. Yeah. So it’s they’re borrowing at seven and now deals aren’t as strong.

Like the best, the more con, most conservative thing is that we have is the pet fund making 12%. So 12 minus seven, the spread is five. I mean you should still do it, but like that spread is smaller. It takes some more conviction in Kones to do what is financially right. And then here I am now I’m working with this debt service coverage ratio, 10 99 loans and they’re quoting me like nine, 10%.

Yeah. I’m like, I should still listen to this guy Lane who said if as long as the spread is there, just go for it. 12 minus 10. But I just couldn’t do it. Ah, so I, I guess that’s a confession on my part. It was just that I was, I got rate shocked at that 10% level for that type of, and I still had to put 40% down payment for that.

We’ve got one going right now for a guy in Texas and he’s doing a, he is got a million dollar home and he wants to tap into his equity. We’re doing a half a million dollar loan for him. And he’s doing a bank state loan, but he actually ended up with around seven and a half, which is not bad because he was turning down multiple times because he does his income taxes very similar to you, which it doesn’t show any income.

So he got turned down three or four times and so we said, all right, let’s do a bank statement one, which actually makes sense mck, because he had a lot of cash flow coming in, so it the bank statements do work from time to time and so that’s 50, he did what? 50% down payment on that thing or how much down?

We do have a 50% L t V, but I don’t think it’s contingent on the L T V. We could have gone up to 80% if the bank statement income would allowed him to do that. Got it. Got. Yeah, I guess that this is more advanced level stuff, but at, at some point you guys have to figure out where do you apply the debt?

Where is your best source of debt? Is it the home mortgage at 5% to 10%, like Graham stain? Is it in your infinite banking at your, it’s some semi fix that, that one doesn’t fluctuate too much. It’s around five, 6% or your security back line of credit at. 2% to 6% in floating there and you have these three options.

It’s like wildcat football again. . It’s just like when we develop a property, we do develop it. Do we keep it? Do we sell it? , do we refinance it? Do hold it short term? We’ve got three options. And then think that’s what, where people want be getting to at some point. Yeah, anything else Graham, they, for folks still with their turnkey or with their primary residents to get the equity out?

It’s pretty much the, those three loans are still available. And once you do get the equity out and you wanna inva invest and if you still wanna do it, in the turnkey world, this is actually a pretty good time because the inventory’s up, the sellers are starting to see the pressure, and they’re starting to get more concessions.

And even the sell, the sales prices are coming down just a little bit, not much, but and once again, these are for the non-credit guys, not necessarily the type of programs that you solicit. Yeah, and I would kinda piggyback on that, just summarize and, definitely seems like a lingering theme throughout this call has just been that a lot of cases time is the biggest enemy.

And sitting on the sidelines waiting for things to change. And as you do, weigh your options, just keep in mind, like Graham mentioned, Seller credits are out there. Our refinance program where we waive their fees. So there’s tools, there’s benefits out there that can act as that encouragement to help you get off the sideline and keep that ultimate goal of whatever you’re working for.

Keep that in motion. Don’t put it in pause. Yeah. Yeah. I think said, Aaron. I think I definitely put in my propeller hat on this talking about secure back line of credits, et cetera. But yeah you, I. I think, so this is a problem that we have in our mastermind group is like we try to over-optimize things and some of the new people, or especially like the podcast listeners, would probably be in this realm where you hear this stuff and you just are confused and dazed and you don’t do anything.

And it’s like you’re sitting on a couple hundred thousand dollars of debt at lazy equity in your primary residence, or 30, 40 grand in your, one of your turnkey rentals that you need to, get it re-leverage and moving. If that’s you, that’s, we’re talking to you, we’re all looking at you in the YouTube.

I like that term. Lazy equity. I like that. But yeah. Don’t you guys drop your information just in case people wanna rejigger get some cash. Or maybe go buy the dream home that now is the time to buy it. Cause it’s a virus market. Zig, when everybody’s sagging, you can always reach us at 8 5 5 3 2 6 6 8 0 2 or you can hit us at the parham team@highlandsmortgage.com and my, anyone of my teammates will jump on it typically myself.

2023 Tax Action Plan For Passive Investors

What’s up folks? On this video, I’m gonna be going over the action plan for your 2023 taxes. I’ve been going over what really moves the needle and what really doesn’t work. I think the stuff that is out there in the mainstream, and this is how I’ve found to lore my adjusted gross income drastically over the.

Just a little bit. No, I’m not a cpa. I’m not a lawyer, but I also don’t have a day job like a lot of those guys, and this is a lot of the stuff that I’ve learned from working with other accredited investors through our business and just through my own travels as an accredited investor and an owner of 8,500 rental properties. Here we go.

The first thing I’d like to just identify, we’re not gonna be talking about the lay mold stuff like the 401ks, the Roth IRAs, even solo 401ks, IRAs, stuff like that. . These are all things that I put in the category of small ball type of tactics, small ball, and if you don’t know baseball, right?

This is all kind of stealing bases. Taking walks, little base hits what I wanna do because my time is short and your time is short, as a higher income earner is. Really focus on the big rocks as opposed to the things that don’t really move the needle. Yeah. At some point, these things, which you maybe should jot down or just check out on the YouTube channel, take a screenshot yourself for later, are things that I call optimizing.

the big rocks out of the way, but just in case you want to know what I’m talking about, and you’re somebody who likes to focus on the small stuff. I personally did at one time myself. Again, that’s putting me money into tax-deferred accounts such as IRAs, solo 401ks, or playing around even Roth IRA accounts.

All that stuff just shifts the taxes around. And if you’ve taken a look at some of my other stuff on my past Podcasts  you guys can check that out at simplepassivecasual.com/QRP. I really explained the reasons why. There’s no reason that you should be in any of these kind of so supposedly tax shelter accounts, unless your net worth is, I would say four five plus million net worth.

or you wanna really hold non-real estate assets for some strange reason. The next kind of item here is, timing your game harvesting. If you’ve suffered a loss in crypto, which you probably did in the last couple of years, wouldn’t be a bad idea to sell the assets and buy it right back.

Crypto and taxes are its infancy. There’s not really this like 30 day wash rule that you have with stocks. I guess you can make lemon with lemonade or and get the deduction there. But that’s another. . The other one is, income shifting. , this is the whole paying your kids concept.

The whole idea is, your kids don’t make as much money and you’re in, they’re in a lower tax bracket as you. Therefore, if you throw them a bone, throw ’em like five, six grand. You can shelter some taxes that way at their lower tax rate as opposed to your higher tax break. And again, here’s where I’m talking about like small ball kind of things.

Whoop, they do. If you save 10% on your taxes on that six grand right? Yeah, you’re saving money and I don’t wanna phoo this, but again, these are small ball type of activities.

Even smaller than that, buying things that you may need for your business or your real estate rentals or helping you become a better investor. Maybe an iPhone, maybe a printer, or some iPads, maybe even a watch for all I know, right? The, it has to be reasonable, one part of your business. Running these things to your business is a great way to pay for things that.  bought anyway and gotten a sort of discount on it because it was a deduction.

Now when you really add this stuff up, does it really move the needle? No, it doesn’t. And it is this same thing like. Buying a rental property next to you.

Know your relative’s house. Your family’s house. And I always tell people like, yeah, it makes sense, but like really how much money you’re really going to is the delta there? How much money would you go to see grandma’s house? You really spend there to be able to deduct and justify to, I would much rather be in a better location, better submarket, or even a better value idea like a syndication.

Who cares if it’s next to grandma’s?  and where you can get the, write off some personal things right there. And this is a another example. Play the big game, the big picture. And this are these small ball activities. The last thing that I think a lot of business owners will do is like a S-Corp strategy where they’re playing these salary dividend split.

As W2 workers are 10 99, most of you guys are getting killed with pseudo faf fica South self-employment taxes which get added on top of your federal and state taxes. But when you have a scor, you’re able to carve off salary portion and then the dividend portion. Then dividend portion is the portion that doesn’t have to be subjected to those extra layer taxes.

Kind of a cool thing. , but again, these are small ball activities. Those extra taxes might mean an extra 10, 15%, but on how much, like a hundred grand. Yeah. I guess that might move the needle. Might move in if your, you’re moving $500,000 in a dividends, but at that point, you’re probably better spent, minding something else or what.

I’m gonna be going into. But I’m gonna be going into really the big things that I focus on my clients. The first one, especially for the high income earners, making over $340,000 is charitable donations.

Yeah, giving us stuff away at a Goodwill, but what I’m really talking about here is land conservation easements. Now, I’m not gonna be going into this particular one because it is a Pandora’s box of really explaining it. What I would recommend is go to my website and signing up at simplepassivecashflow.com/club or you’ll get a lot of free content to learn about these types of more advanced tax tools.

But what I also wanted to really go into was, A lot of this stuff is predicated on managing your adjusted gross income, not just deferring, right? Deferring was part of the last slide where it was small ball activities. What I’m talking about is just lowering your AGI.

Through a couple of ways, which I’m gonna get into here, but if you’re able to lower your adjusted gross income, now you’re able to pay lot less taxes. And the more you lower it, the better it gets. So if you’re making $400,000 and you’re in this 32% tax bracket and we lower it a 200, not only do you shelter that $200,000, don’t pay taxes on it, but it’s at a higher rate, right?

And that’s because our tax system is this progressive tax. What I recommend most of the clients do is really try and get to this red line here that I have shown, and this is a point where the break between the 24 to the 32% range, which is a big gap these days, I’m actually saying, maybe even try get into the $200,000.

A g I range at 22%. Of course, I’m talking for merit follow jointly. The, for the single folks. It’s a little bit different on the left side of this single filer status here. But, this is the concept of this is the big things as opposed to the small things that you should be looking at.

The question is, all right, cool. I get it. And this is the 1 0 1. In fact, this is more like the 2 0 1 tax class. How the heck do I do this right? Easier said than done. Here’s a little bit of review for some people who are brand new at this. . And you guys can check what I’m, I’ve got this diagramed in the right way.

On the left side here, I have ordinary income. Ordinary income, boo bad, ordinary income is like the W2 income or, and even 10 99, it gets hit with all these taxes, your ordinary tax and your FICA social security, about 15% on top of the zero to 37%. . We don’t like this stuff. Why? Because it’s high tax. What we want is on this other side of the fence, which is the passive income.

Passive income is cool, right? Passive, right? But other than the fact it’s from a tax standpoint, it’s actually defined as passive income, which can be offset with passive losses, passive activity, losses, suspended, passive activity, losses. We’re gonna use just the short word as pals, P A L S. Kind is cool, right?

Cuz they are, you’re a pal in this respect because you can use these passive activity losses, which you get from large syndication deals or rental properties. The fact that real estate degrades over time on paper, these are losses that you can take to offset your passive income. And when you are in larger syndication deals that do cost segregation and aggressively right off the.

which is a good thing. You’re often able to take, create a surplus of these losses and show a big red. One of the things that like really boggles my head and my clan’s head is in we try and show this to the banker or the mortgage lender and they look at like your tax profile, and you’re like, but you’re losing money.

Yeah, heck yeah, we’re losing money because all the depreciation and they just don’t get it. And just like how people don’t. Forget the 401ks. Forget the Roth IRAs. Forget the IRAs, right? That’s all deferring. What we’re trying to do is lower our a g I today doing these types of things, so getting back to using passive activity losses to lower our passive income.

Again, that’s zeroing that out. Now we cannot use passive activity losses to offset ordinary income right from our day job or your business because it’s separat. , there’s this red line of do not pass, sir. Now, the only way to get past. , there is a way to use their passive losses off offset your ordinary income.

And we’ve done this many times with clients, a high paid doctor making a million dollars, lowering their income to whatever they want, depending how much passive activity losses they have. They do this with a thing called real estate professional steps. We’ll call it reps for short. Now I’m not gonna get into too much of the detail.

Again, sign up for the club, simple passive cash.com/club. You get the eCourse and also check out the taxPage@simplepassivecash.com slash tax to learn more on how to qualify this and to review what we’re talking about. But in a nutshell, if you are able to qualify for real estate professional status now this kind of red line of demarcation goes away and it’s a bit of a free for.

A good free for all for you because now you’re able to use these losses that you get from the real estate to offset and lower your income. And this is where, a high paid person getting, million dollars of income a year, all ordinary income is able to use the losses from the real estate to lower that to whatever they want.

Now there’s a kind of a overlying portion of this that I think gets lost and this is where I come in, for those of people who, sign up for the club form and we get to know each other, I can help you walk through your personal situation accordingly. And then this is really gets into personal finance, whether rep status makes sense and where you are in terms of ordinary to passive income.

Most people I work with, they have a mostly ordinary income, right? They’re doing it the traditional way. They have traditional investments, stocks, bonds, mutual funds. They don’t really have too much alternative investments and pause there. I don’t know why they call it alternative investments when you know real estate is an alternative investment, but

I don’t know why you would call it alternative when it seems pretty traditional to me anyway, but anyway, that’s the terminology we’re using. It’s an alternative investment and real estate is. Something that per the iris code gives you a lot of losses. Again, pals. Our pals, we like ’em and at this point we’re able to get a lot of these losses to play these different games at our taxes.

But if you look okay, what do I do? Here’s what I’m saying, you gotta move away from the traditional investments because that stuff is portfolio income there and there’s no losses. You can’t do anything. And this is exactly what the government or society. , they want people to stay in that garbage so that they pay a lot of taxes.

And oh, by the way, the big brokerage fees are killing you in this process. , when I owned a rental property, I was making like two, three times better than what I was in the stock market. If you don’t believe me, check out an old video I did at simple passive cash flow.com/returns. I go through the numbers and show you exactly, the returns on an investment so you know how you’re making money through cash flow appreciation, the tenants are paying down your mortgage, and that these tax benefits all combined two to three times greater than what I was getting in that 401k nonsense.

But until you start to see this stuff for yourself, you don’t really get it. Hopefully you got from this video, you know this other alternative goal, which is forget about deferring with all the traditional stuff. Get into alternative investments so you can get these losses and over time your passive income will grow also, but also grow as a percentage in terms of.

In comparison to ordinary income because once that happens, now you don’t need that real estate professional status tag, right? If all your income was passive, which is personally where I’m at and a lot of my clients at who invest quite a bit, right? They have a lot of assets real estate assets that proves to a lot of passive income, and especially when they leave their day job, most of their income is passive income and they don’t need rep.

To offset that if they have the passive activity losses. So it becomes this kind of strange paradigm as you move through this financial journey the right way, in my opinion. Picking up alternative investments for the passive losses and then you start to get from, you start to get away from ordinary income and go to passive.

It almost is like you’re. Running paying a lot less taxes, a lot more like cleaner, a lot more efficient way of doing this. And that’s just it just makes so much sense once you understand this whole paradigm

And this is my bucket system that I talk a lot about people, the people ask should I do a Roth theory and Ira solo 401k? To me it doesn’t really make sense until you have today’s cashflow. Figure it out. And what is today’s cashflow bucket? What’s this whole bucket system?

I talk about a lot about my clients. The whole bucket system is. Imagine three buckets. The first bucket is get yours today, right? And I define this as 10 to 15, maybe in $50,000 of passive income a month. Typically that’s gonna be anywhere from three to 5 million net worth. Accumulate that much, and at least that much assets to produce that for you so that you’re living on good life.

That’s a great life. And at that point, you can’t really spend. At that point, that bucket fills up and it’s then the overflow spills into that next bucket, and here’s where you start to fund those self-directed IRA accounts, the solo 401ks, that type of stuff. But if you notice the way conventional financial dogma is structured, , it’s, they say to fill up this stuff first, and to me it’s completely backwards.

And the sad part that I see is that people never get to filling up their today cashflow bucket and they have to keep working. Maybe that’s how they created it so that we all keep working maybe, but, , you know that at that point, once that bucket gets filled, then you start to fill up nonprofits and make me make a mini foundation.

But most people don’t get there. And I think that would, at that point, you would probably have to come out to an event, learn the insider secrets at that point. But for now, just, in a quick YouTube video, just understand, create your cashflow bucket today outside of the tax.

Vehicles so you can get the losses. So you can use these losses to offset your taxes to date, and that’s how you’re gonna have more money to invest. Do other accredited investor banking. That’s another tactic that we have and that’s also in the e-course that you guys can get at simplepassivecash.com/club signup there for free.

Confession… At What Point Did I Feel Enough Was Enough?

What’s up folks? Now on today’s video podcast, wherever you’re watching this a little bit of a confession. So I guess the story starts off, was talking to one of my buddies and we’re talking about another guy who, we always talk about some of the people that are the next level above us that kind of keep things in perspective and learn what the strategies and the path to follow.

As we’re all on this, road of, leading a private equity front and bringing passive investors along with us like you guys, and. , the story that came up was like, this guy that we’re talking about who was high up there and they just wholesale it commercial property for a $3 million profit and there was no feeling there. When, no feeling there, the guy didn’t really care and he made that confession to my buddy. And we both joked and laughed man, that’s a lot of money, right? To just just show up here in your bank account. And number one, how cool it would be to be there and how messed up it is. But then really started to think to myself and this is what I’m talking about now, which is, at some point, we’re not so far off from that maybe I shouldn’t be putting out this on the internet or out there in the world.

The other day I was investing and the deal cashed out and I got a couple hundred thousand dollars just dropped into my account and I’m like where did this come from? I knew I’m not super oblivious, but it’s hard when you have 80 to a hundred, K one s and different things I’m in and I’m I can remember not too long ago when.

Getting, $20,000, $15,000 from that one deal. I did, meant a lot. And it was, we would celebrate and, it was a big thing. I would actually. Just you’re taking a vacation, you anticipate the buildup prior to that and it’s and then you see it drop in your account.

In this case, I don’t even remember the damn thing was coming and I just came and went and I actually forgot about until, again, me and my buddy were talking about the story and I started to self reflect And I can even think a little bit before that, right? I think a lot of investors, are in these shoes right now where you’re going to your work every day.

And I’m wearing like my, my prisoner wine shirt, , outta respect, because I was there one time too, right? I would save my money and, every month they would go up maybe a few thousand, $5,000 a month, and at the end of the year, I would have enough money for, I, when I first started a turnkey rental, which I don’t know why any credit investor would own those things.

That’s eventually was became, $50,000 minimum to go into a deal and then eventually, was the seed money as earnest money into my larger commercial assets as a general partner. Like that money would build up slowly over time. And this is why today I, I don’t.

Feel that taking lightly, taking money from investors. Cuz I know 50, a hundred thousand dollars for most people, even for a lot of our accredit investors, that’s the lifeblood of one year. That’s the heart, sweat, and tear of 360 something days out of the year where you’re saving money and yeah, you’re buying things here, there creating experiences, but You know that, that money that kind of builds up and, within our family office group, I can reflect having these discussions where, now we’re writing these checks of a hundred, 150,000 into this deal. That deal, it, it seems a little bit like monopoly play money a little bit. And we always talk about how is it.

We knew the value of the dollar, but it’s hard for the kids to pick up on the real value of it. But, I guess that’s another topic to be discussed in the future. But I guess what I’m saying is money when you start to extend on that hockey stick, you start to become really desensitized to it.

And, it makes me a little sad in a bit like,  the happiest times for me was when, that deal panned out and we, I got this big lump sum of money and I would, open up a hundred dollars bottle of wine. Maybe today I’ve got a couple of $250 bottles of wine. Like I got the Caymus special re reserve and I’ve got.

Stag sleep Cast 23, which I haven’t drunken those yet. I don’t think I’ve drank more than $300 bottle of wine yet. I have ’em, but at this point, when a deal goes full cycle, that’s what, I just do a hundred dollars bottle. You, it’s my limit. But like I can see I guess wine is a great example of something that.

It builds and builds something that yeah, you pay for value, but at some point you have that diminishing returns concept coming up and it keeps going and going and it is just from a dollar’s perspective, the price of these extravagant things or lifestyle, it keeps going up and up and maybe that’s a great way to run a business of high net worth people buying these high end things.

But like from the user’s perspective, like I don’t get that, like that jolt. I don’t get. Excitement. The buildup, like I said, with this money dropping in my account haphazardly of course I’m gonna take that money and go put it into my infinite banking, and which you’ll see later on this year, our credit investor banking a little bit different.

Life insured mechanism for cash reserves for myself to, backstop the opportunities that I am going through and dealing with these days. The takeaway. Take your money and hide it from yourself so you don’t spend the damn thing. Because even myself, like a person who has good money, values and systems, I gotta hide it from myself too, no different than anybody else or somebody in the beginning levels of personal finance.

That’s another segue there, but I think it’s the point that I’m trying to make here you’re building up this money and the zeros just keep adding and adding. So I totally understood when, in the story where this guy makes this huge windfall and he doesn’t feel it, and how a sad thing it is, and I don’t have an answer yet.

I just wanted to share this kind of predicament or. Speaking first world problem, of course, but this is, I think where the solution is in the future is, finding things that you know, bring you joy. The smaller things that may or may not cost money. . I think you guys maybe get the gist of what I’m talking about, or, appreciate the small things, appreciate the small wins that are on the way, or at least enjoy this journey despite how many zeros or lack of zeros you have, whether it’s your first deal or I think what I’m speaking to are the people who are in multiple deals, and you’re on the rails in terms of this quicker path to financial freedom.

Better deals in alternative assets that don’t go up and down in the economy. The tax benefits, the infinite banking, when you come, all these three strategies together, you’re on this rail, this railroad that tracks that gets you a lot faster. And at that point I tell a lot of people just relax and enjoy the ride.

You’re on cruise control. You’re on the moving escalator. Yeah, you can go a little bit faster, you’re gonna get there in heck, a lot of less time than you. So otherwise, would you previously thought or much more exceeded your expectations?

There was a comment that kind of, this all came about this morning to me and I wanted to just capture this for you guys. Comment came through on investors said pretty high net worth investor said that you. . People think that when you become wealthy, all your problems just go away.

And I do think that’s true in, as we reflect on what I’ve this kind of what transpired, however, let me look at my response here. Yeah. As p Diddy, puff Daddy, however you call it, mace, Harlem World said More money, more problems. Yes. Different problems. And I guess what I’m talking about essentially here is

desensitization, I dunno if I’m saying that word right, but of desensitization of wins and celebrations along with the way, and if that’s the kind of their point system in life, then what a sad thing that Azure net worth grows that you don’t. The jolt or the joy from these types of events along the timeline.

However, if you are still trying to get on this moving escalator, don’t just think more money, more problems as a poo thing. You guys gotta get more money because one thing I know is. Creates more opportunities and allows you to have the freedom again bold, that word freedom to do what you want, with whom you want, et cetera, et cetera.

And ultimately to free you up to maybe you’re doing this, gonna just do the same damn thing you’re doing now, whether it’s playing doctor or maybe as an engineer in a great part of a team, working for great people, doing some cool stuff that allows you to. without having to worry of, being fired or, having to just go somewhere else and take a cut and pay.

Do it not for the money. . And it also buys not $20 crappy wine. And oh, by the way, we are unrolling out the the new private label. So for those you guys who refer friends and family, that’s gonna be a little perk of that it’s actually like a hundred, $140 bottle that we have for those folks.

So it’s not just a piece of garbage wine. I wouldn’t put that out there and put, wouldn’t put the simple passive cash flow name on it, and it’s gonna be branded under the off market.

We’re talking about more money, more problems still buys you freedom, better options to do what you want, with whom you want, et cetera, et cetera. I think that, something I said before is, money isn’t everything.

but it sure makes a life a lot easier, in certain respect. But there is definitely a diminishing return side, and I definitely see that. There’s articles written about the $75,000 a year rule. Who knows what that is? With inflation, it’s probably like $120,000 right now, but, What I see it as more like I see most of the investors out there, it’s like somewhere around 20 to $40,000 of passive income every month is enough.

Which is why I always say if you backwards engineer it, At that point, four to 5 million net worth is that sweet spot number, which we try and guide, get, guide you guys towards. And if you guys need, have any help with that, that’s what our inner circle community, the fum is all about There.

But anyway, that’s the confession today. Now I might get some hate mail here. If you have any strong opinions on this drop us an email or put a comment into the YouTube channel box. I’ll try to answer it. And if you don’t and you think I’m an a-hole and you know this pompous person with W first world problems, then that’s fine too, but I guess the reason why I wanted to bring this up is, like I help a lot of people who where was I was, buying rental properties, getting, your non-accredited investor status, getting to accredited investor status, and of course our big wheelhouse is get, moving you past that.

and, for the people who are still in the trenches, cuz they still talk to some of you guys from time to time, you guys do join the club. We can’t really work with you. I share like the remote rental e-course and resources that I would do at the time and a lot of this is just.

Staying the course and living time. This is not an altcoin kind of thing. This is not like investing in Tesla that goes up and down. And man, what a life to live if you’re doing that, I think there’s more important things to be stressing about over that ticker or playing the Osage, sticking your head in the ground with that.

But that’s another video of course. Like that. What I see from people, they, a lot of you guys out there, you guys are good, hardworking folks out there and you’re on this path. And especially when you implement all these strategies is like, what I see is relax, chill out.

And I get it where the stress comes from. Until you’re there, you’re still running. and it’s totally a admirable, makes total sense, right? Don’t let the turtle behind you catch up to you the, with the turtles and the hair analogy. But if you’re going to, if they’re not racing the turtle, and it’s just a race with yourself and you’re going to get there and be the winner and beat your alternative self.

Who is investing in stocks, bonds, mutual funds, random cryptos that pop up here or. . And you’re gonna get there in a third of the time, then enjoy the things that are happening today. Maybe you have younger kids. I try to be more and more present. I catch myself too, right? Like I, I’m always working and stuff like that.

But, those are, I think those are the things that, the things that really bring you joy where the, the big windfalls. Yeah. We’ll celebrate it. But I’m telling you, you’ll get desensitized to that and you’re just gonna write another check to invest more and it’s just gonna keep going.

That if you take my experience it’s just a kind of a game of diminishing returns. And there’s something else. I haven’t really figured it out yet. I have a feeling what it is. , there, there has to be something out there that kind of just brings you joy and that you are finally allowed to really focus on.

And I think this is where, you have like monks and like people who are very low net worth that are very happy they figured it out. But again, there has to be a nice little sweet spot in here, right? You can be a millionaire and be very conscious and appreciative of the small things. , but having your net worth keep growing.

And I think that’s the why, the reason you guys listen to this channel and at least that’s my goal and that’s what I’m trying to help you guys. Not only grow your financial wellbeing, but also the other softer side of this is, it’s taking more of a holistic approach. But anyway, if you guys like this type of, UY selfie stuff or you have any other comments, let us. And we will see you guys on the next video.

Coaching Call: Doctor With 2M Net Worth + Dozen & More Deals!

What is up? Investors Happy 2023 if you haven’t heard of it yet, or you’re still making that mistake of writing in 2022, but here we are, another year, and another new group of folks coming to the retreat. and I am excited. It always we’re getting better and better at getting people over the hump of, investing in alternative investments, getting over that queasy feeling that, taking out debt outta your home and getting your lazy equity outta different places and putting into stuff such as real estate that can power other tax benefits and better returns.

Today we’re gonna be doing a coaching call, and if you guys like these coaching calls, you guys can volunteer for one for yourself in the future. Make sure you join our investor club@sypasocasual.com slash club and email the team and we’ll try and get you lined up if you guys are more than willing to do something like this in the future.

Now as I’ve been getting better and better, I’ve been seeing different case scenarios such as the doctor that we’re having today. And you know what, I wanted to just briefly talk specifically today, and this probably was one of these categories.

A lot of people here are first generation net worth. You weren’t born with money, you weren’t a trust fund kid. Now maybe some of you guys are, and I would probably, I look down our larger investor list. I think more than 800 of you guys. The US said at least $50,000 with us thus far. And I would probably say less than maybe 5% are people who were born with more than a million dollars net worth.

So that means most of you guys out there are folks who’ve saved hard, worked hard, maybe put your money in the four oh places you shouldn’t have. And I think you’re starting to learn what a mistake that was. , it’s all a transition. It’s all part of the journey. And what I’m seeing is, you have to have a high amount of W two or 10 and nine income, or in other words, ordinary income.

And you, if you’re a good investor, maybe you have some stocks, funds, mutual funds, or playing around with that type of stuff, and you have portfolio income. Portfolio income, order income bad, right? Because passive income is what we want, not only for the fact that it’s, it’s passive lay on the beach mailbox money, but more in terms of taxes, right?

Because when you talk about passive income can be offset with passive losses. Pal is what we call for short. The new tax PAL fund that we have coming up which you guys can get access to the info page through the member site is going to give you guys passive losses so you can knock out those passive income and offset that.

Now, for a lot of you guys, especially the people starting out, you have a predominantly majority past. Ordinary income, and you’re trying to get to that point where you can cap more and more of this ordinary income. And if you’re watching the YouTube channel, you’re seeing me put my two hands together and be a big kind of needle showing that the majority is ordinary income.

And over time, as I’m getting my arms, the other way, the needle goes back to more passive income. To a lot of myself and a lot of the higher net worth investors who have gone to many deals and gotten a. Passive income, passive losses, you start to get to a point where most of your income is passive as opposed to ordinary.

And the reason, part of the reason is, or maybe even the biggest reason other than the better returns, but the fact that you can offset the passive income with the passive losses and stay a whole boatload of taxes right there, that you wouldn’t. Able to do and shelter yourself on the ordinary income side.

I’m, we’re all running these synergizing, these ideas are much better in my next book, which is gonna be rolling out, hopefully by the end of this year, where it’s gonna be talking about these, these nuances of really, we’ve, I think in the past book we talked about a lot of these in generalities, but what are like the steps?

And real briefly, I’m gonna be going over this before we go into the coaching call, what I’ve. Putting together here is this idea of there are different use cases here for different people in terms of, a lot of you guys just, depending on if you do income household some people are single and that’s cool, but I would say the majority of our investor group are married with kids and have, small, two large families and with the two people at the house at least I don’t think we have polyamorous folks out there. I’ve never seen people with more than three incomes. Some people joke that their rental properties or their syndications are multiple spouses, but for the most part, there’s two people kind of building widgets, right?

Or in their income. A lot of putting. Putting ordinary income into their income pile, and that’s what you’re gonna need to do, especially when you’re not a trust fund kid. You don’t have a lot of money to begin with. You have to build your net worth to a million, 2 million, and I’m gonna say loosely two and a half million with a range of a million there, because this is the point where you’re building that critical mass.

To be able to get over this hump. And that’s what I see is down. Now, once you get to two, two and a half million, you’re coming downhill and you’re gonna hit that four or 5 million in-Game Mark. But there are few use cases here. A lot of your folks, especially when you and your spouse are making about the same amount as high income earners, it makes more sense for you to both work your day job not do rep status and burn the afterburners, hopefully, and at some point shut it off. And what we call this is , there’s the, I call this like the Ford Raptor, big truck, you gas guzzler kind of snare where you’re working hard, making a whole bunch of ordinary income. You’re still saving it to put to investments and put to the simple passive cash flow cycle.

And, but you are paying a lot in taxes and that’s just how it is. When you have ordinary income, you’re gonna have to pay taxes on it. There’s no way around it. When you have a big truck like that, you are gonna pay a lot of gas. the next stage. On the opposite side of the spectrum is the, I’m not a big fan of Teslas.

I don’t have one, but they’re clean, efficient energy electric. Type of car and it goes fast too, which is cool. And they’re sleek. But in this analogy, what I’m gonna pull from it is it’s like switching over from like this gas going to electric and what that is, it’s like cleaner, efficient, seemingly if you don’t count all that damn coal that battery, the lithium charging up, the lithium battery and all that stuff.

But if you’re just looking from the cart point of view, if you follow me with this kind of loose analogy, is, or at least people who are more experienced, like I said, like myself or people in dozens of deals, most of their income is passive and that way it’s very clean and efficient in terms of taxes that their passive income is essentially wiped out by.

Passive losses or most of it is, and they don’t pay that much in taxes. A lot of folks, who’ve been investing, go look at your 85, 82 form, you probably have more than a quarter million, half a million in passive losses. Some of you guys have a million or few million dollars that spend a passive loss and yeah.

If you got around a lot of the other accredited investors that are doing this too, you probably scratch your head around and you’re wondering, when am I gonna pay any taxes? In fact, and you may. , and that’s the Tesla kind of side of it, which it’s electric now for a lot of you guys.

And this is where it really gets more personal finance. This is the Prius and yeah, of course the Prius is a much Suckier car than the cool Ford Raptor, which I personally own, and a Tesla. But the Prius was the only car that I could think of that, is a hybrid where it uses gas and it also switches to electric.

and this it’s, this is a tough place for a lot of folks. It’s maybe the incomes are disproportionate where you have a guy who makes. Some gal makes 200,000 and their spouse only makes a hundred together. They make a great salary, right? $300,000 a year. But it’s a little bit disproportionate and it makes sense for them to keep working, but maybe one or the two don’t like their job.

And there’s kind of two case scenarios where. Maybe the higher income earning one, the person making $200,000 a year isn’t doesn’t like their job. And ideally they’re the ones that they want to quit or go part-time first and get rep status. Now that is tough because they make more money. and oftentimes what I’ll advise based on their personal situation, this is where, nice to come to retreat, build a relationship, and understand this.

Or you can learn this from your peers, which is why people join the family office group to synergize over these, these bigger concepts or these more, less high level financial topics. It gets into more personal finance. And for these people it may just mean to just suck it.

and you are the breadwinner and you’re just gonna have to keep working even though you don’t like your job more than your spouse. And where it works better is around, for these Prius owners, all these are Prius owners, right in the middle, in this hybrid. They don’t make too much.

But you have the person who doesn’t like their job making a hundred grand a year. Stop working. Go part-time or just quit working at all. Then, your breadwinner can carry your household and this is where I think is a huge improvement in quality of life.

Maybe that person can get rep status and now take down that barrier where you can use your pals, your passive activity losses to offset all your ordinary income. Now you’re seeing why people are diving into our next tax PAL fund and using these things and using a couple synergic strategies. And two, of course consult your own tax attorney, c p a.

If you guys, most people need a new one. 95% of people, I would say, change their CPAs cuz they don’t know. They have, that’s why the CPAs have day jobs. They haven’t figured this stuff out. But if you guys need a referral, let me know. Shoot us an email. This is a beautiful situation.

Right now. The person who doesn’t like their day job doesn’t have to work and they can spend time with, most of you guys do have kids out there, quality of life, right? It’s great. And sure you’re not like burning both ends of the candle. With ordinary income. And if you’re making $300,000, you’re not able to save a hundred grand a year, and it goes down to maybe 50,000 a year, but, We don’t need that much.

My whole simple passive cash flow prerequisite is, being able to save 25, $50,000 a year, that’s really all you need to do. Some of you guys blow that outta water, a hundred, $200,000 a year, that’s great, right? That’s just gonna accelerate you to get there and blast past 5 million, $10 million net worth.

But that’s not needed in this case. Of course there’s, I think, what we might talk about today with our coaching call participants, doctors typically doctors, dentists, or folks at high income earners that make over 300, $400,000 a year by themself. It typically makes most sense for them to just get rid of the spouse’s job and have them do rep status, especially if you’re above that $340,000 a e i for 2023.

So there’s a few Prius scenarios. What I wanted to say was like, every, there’s a few scenarios here. There’s the raptor, there’s the few Prius scenarios, and then there’s a Tesla scenario. And this is why, I think what makes it a little confusing is because you’re getting advice from all kinds of angles, yet, you don’t know who to really trust and you know what’s really for you.

And that’s my kind of, my job is to simplify things. So if this is new to you guys, welcome to the channel. Welcome to the podcast. Join the club. I give everybody kind of a short time to, if I can get in there and just punch you in the right direction.

And, I still do these onboarding calls with you guys. Would like to get, let’s know you guys a little bit and share this with a friend or interact with our community because likely your friends are co coworkers, family not doing any type of this stuff. Join the simple passive cash from a clan.

A simple passive cashflow listeners today, we have a, another coaching call and you guys love these things. You guys eat this up like candy, it’s like financial fans, lawyers call it that. So I have Brian on the line. He is a doctor and he’s been heavily invested in private placements since. So I’ll have Brian tell his story a little bit, but so do other great accredited investors all here.

So enjoy and thanks for jumping on Brian. Yeah, a little background on me. I am a physician and kind of fell into the standard path, what physicians are told to do and channel all of your. All your earnings and into your 401k and get a nice little stash of equities going.

And maybe if you accumulate enough, by the time you’re 60, you can retire. And a couple of years ago I was on vacation in Asia and I discovered that I didn’t want to work. Ideally I wanted to be totally retired by the time I was 55. I was about, I dunno, 47 at the time. And I looked at my portfolio and discovered that.

Pretty much, all of it was equity and bonds and it was yielding about 1%. And I was thinking there’s no way I’m ever going to get to where I want to be with 1% yield on my portfolio. So that’s when I started educating myself on passive investments in alternative investments. And was there some kind of like thing that happened at work or you just had some free time on vacation?

Oh yeah. No, it was just. For the first time, in about five years, I had a nice two week vacation and we decided we were going to go to Asia and we had a lot of downtime and you just, I kinda self-reflect and thought I really liked this relaxing stuff I could get used to this, can turn in my 80 hour work weeks for this.

Certainly. So yeah, I guess that was the epiphany. It’s there’s more to life than slogging in the office, 80 hours a week. And you’re married. You got kids. So I have a long-term partner. I have two kids. Daughter is a freshman in college and son is a sophomore and got divorced about five or let’s see that’s about eight years ago now.

And still so paying some of that off. I have two and a half years left of that. And then it’ll be clear that. So at this point in the game, are you doing. So let’s just paint a story. You, did you buy any rentals? Did you go through that? Yeah, I did. I did. I bought a single family rental on the east coast in 2007 in a nice little seaside town that had a lot of vacationers from Connecticut and New York.

And got it. Ready to roll. In 2008, then you know what happened in the market in 2008 and it lost about half its value. And so that wasn’t the best experience ended up having various tenants. Some were good, some were bad. One of them ended up being a mobster. After finally getting out of that deal after about 10 years and not making any money out of it, I soured beyond to honor the single family thing.

But when did you start to get into the private placements? That syndication 2018 was my first one, actually, maybe 2017 was my first one, but I really started taking the plunge in 2008. Okay. So yeah, the whole 10 year period. You just work the day job and manage your work in the day jobs, shoveling everything I could and to index funds and all that good stuff.

Yeah. That’s unfortunate. What has been a one or two years later, maybe it would be different, right? Yeah, the syndications, thank God because it’s essentially, the value add deals are doing what I would want to do if I was doing it myself, but there’s teams of professionals that are doing it that are actually good at it.

Like I know where my strengths are and being a landlord is definitely not one of them. Yeah, the property manager is definitely not one of them. Yeah. It all comes down to what your highest and best uses. Like you might be at eight out of 10 in terms of being a landlord, which might be a hell of a lot better than the average Joe listening out there.

Who’s a five and a half out of 10, but because you’re a nine and a half doctor making that hourly rate, it just a no-brainer you spend your time on what’s your highest and best uses. And you focus on that. See, we’re also showing on the screen here. If you guys check this out on the YouTube and I would probably suggest handing off to YouTube channel for this one Brian’s got a plethora of different, all kinds of syndications as private places for the, what are you looking like more than a couple of dozen of these things?

I think it’s, I think it’s up to 22. Yeah, very, yes. Investments between 25 to a hundred, $200,000 minimum. Take us through the, like, how did you first discover syndications and what was your kind of first steps? Because this is the hard part, right? Like you hear about this mythical creature called private placements in syndications where there’s value, add there’s cashflow.

You don’t do anything as a passive investor. You don’t get dead in your own name. You don’t get the high liability, which is a huge deal for doctors. And it all sounds amazing, but you’re stepping out into the a bit. How did she step forth into the, yeah, so the, probably the first thing I did is I found a community of people online and they were.

Vetting some investments and I didn’t, I knew nothing, absolutely nothing. I didn’t know it, a debt fund from a, from a syndication from I mean I knew absolutely nothing. And the people in the group said, Hey There was a triple in lease fund, which is basically a fund that takes over the leases for Walgreens and Rite aids and, Michael’s stores and stuff like that.

And you get like a monthly check every month. And that was probably my first. My first swing and I just went, I cause everybody in this community said, oh, it’s great. It’s great. It’s great. And then they said, Hey, this this is a really good sponsor. If you want to get into apartments, I’m like, oh, okay, cool.

Except they’re like stabilized class, a San Diego. Type apartments. And I didn’t know anything about a, B, C any of that at the time. So I just thought, oh yeah, these guys recommend it. That’s good. So I jumped into that and I still have that. And that’s probably been my worst performing investment since I started.

There’s just the cashflow in that thing is like one and a half percent, I think. Yeah. Class a. C class classic in California. Doesn’t cashflow. I saw a deal. I’m not going to say where it is, but it’s near Disneyland. And I felt like I should put in a bunch of grand just so I can write off my trips to Disneyland.

That’s really the only reason why we do pop up meetings when I go to Southern Cal or Cal. So I can write off my personal trips. Know why you’re investing, right? Yeah. But I decided, I didn’t know. I was investing just going through this I got into some more clubs and met some more people, and then I discovered value add, and the numbers of value add, made so much more sense.

It’s okay, you take this property that this mom and pop wants to get rid of for $25 million. And if you can get it up to par, renovate it, get good tenants in, you can make it, just like that. You can force the appreciation. 31 30 $5 million and. Boom. You’ve, you have an instant return right there.

So the numbers of that made sense to me. So it was like, okay, I gotta find some more of these deals. So just some trial and error and found a couple of sponsors that I really like. I’ve been back to do a couple of deals with, and there’ve been some shiny objects in there. I think I’m in like muse of music royalties.

I saw that. Yeah. I wouldn’t recommend that. At least not in a taxable account. There are no tax advantages to music royalties, and that’s been a stinker, but. If my life settlements, if I was going to do that, I want to invest in like specific songs as opposed. I think he did a fun, he did it. Yeah.

Yeah. Yeah. There’s no fun. No, say it all. No final. And it’s pretty funny too. Cause they send you like the list of the sign that they bought rights to. And you’re like, nobody who listens to this crap. It was listening to that. And about 30 years, what do they do? But that’s probably what makes it a good investment, right?

Like you’re not going to like a Beatles song or instinct song, actually, boys SBA class. You’re always going to over pay for that stuff. Like a sexy California class C property. Yeah. Someone told me once that I forget the exact quote, but it was something like, you never want to show off your real estate portfolio at a cocktail party.

Yeah. So just saying that you don’t want it, you don’t want to buy the shiny as class, a assets. You want to buy unloved, class B minus C that you can make into a nice class B. Yeah. But as you can see, what’s happening in this podcast right here, I’m digressing and going down this rabbit hole, that’s like.

Half a percent of your portfolio and it doesn’t mean anything. It doesn’t return it, but that’s all we want to talk about. Don’t do what I did. Okay. So going back, so a lot of the listeners, they jumped into this world and it is very laughable after the fact, that you just jump into stuff off random referrals and recommendations, but it is what it is. That’s what you do. What are some things that you. Thought initially that you later learned to be not. You got. Tiffany, kinda like I said is more of a live where you want to live, but invest where it makes sense, just because, oh, it’d be so nice to live in San Diego, but it doesn’t necessarily mean you want to invest there.

Like you want to invest where the numbers make sense. Like Huntsville, Alabama, do I want to live in Huntsville? I don’t know, but the numbers, if you look at the numbers of Huntsville, Alabama to invest there absolutely totally makes sense. So I think, yeah, definitely look at the numbers more than the emotions of the investments.

That was the, that was a big one. Try to expand your, talk to as many people in your network as possible because you will learn about some stinkers sponsors and you’ll learn about some really good sponsors. And. No, this alternative investment space is all personal connections. You’re not going to be able to go check a Google review on a sponsor.

So it’s all word of mouth from people who’ve been there, done that. And I’ll just say cause it frustrates me. We have people like, I don’t want to do the family office, a Honda mastermind. I want to start investing a little bit. I’m like, dude, you’re the most exposed right now. This is the time to do.

Yeah, but anyway, you get off of that, but yeah, what, most people that don’t have a single friend or family person that invest in this type of stuff, they’re all investing in the wall street garbage. What do you do? Where do you go? I always tell people that, there’s the free stuff, but I always tell people to be very careful about that stuff.

You always got some shady people trying to sell IUL, ELLs and random stuff like that. You gotta be careful. Yeah, absolutely. Absolutely. Yeah I don’t do IUL, but I am a huge fan of the the infinite banking, the cash value life. God, I wish I knew about that about 20 years ago and we are doing that for our community.

You guys can get the free e-course at simple passive cashflow.com/bank. Yeah that’s a game changer right there. The other thing I wanted to tease out of you is, like you mentioned meeting other people, you’re a fun guy, you, a lot of people are very abundance mindset.

Once you find the right people that aren’t the salesmen or the syndicators of the sharks, trying to find those pure passive. Are there some ways that you build those connections? It, was it just an expensive bottle of wine or no, it’s funny you realize that the whole like passive investing space, it’s a pretty, it’s a pretty small club.

And I actually, lane, I, I. Met you through another friend that I knew from another investing club and you spoke at his club and I’m like, oh, this guy lane just got to figure it out. I got to meet this guy. And it’s just, I think it’s just, you can’t. Go in your little shell, it’s find your people.

And then by, by talking to your people and your network, you’ll learn about more people and you talk to them and you’ll, they’ll tell you to talk to some other people and you just keep expanding your horizons there. Yeah, you can’t shell up. You gotta be, you gotta get out there and actually talk to people.

Yeah. I just got off the phone with somebody and I was like, dude, you gotta get out there. If you’re unwilling to meet other people, you’re just going to be stuck. You’re. That lonely guy who has 20 rental properties and he’s cranky all the time. And if the best thing you got is investing in these garbage, private money lending deals, reinvesting in class C paper and no ordinary income.

Exactly. No, like just keep at it, just put yourself out there and it might take a few years, your course is great. Just learn as much as you can. Because no, one’s gonna, you’re going to have to find this stuff out for yourself. No, one’s no, one’s gonna, you’re not going to have a a rep come into your office and say, Hey, look at this, look what I’ve prepared for you here.

It all is, you really got to get under the hood and learn. And I find it interesting. Much more expense, more, it’s more interesting than learning about stocks and PE ratios and book devalues and all that. Yeah.

So last thing I want to tease out of you and then we can go into your overarching questions that I can do to help, you’re a very, you’re not like in the weeds type of person, which is why you’ve actually invested and they’re seeing the good results.

I think that’s the right attitude. You open up a pitch deck. Are you checking your inbox, seeing a bunch of deals? What are like the first couple of things you’re looking at? Just from a real high level? How long do you even look at that deal? So I think number one is the sponsor. What helps is if it’s a sponsor that I’ve invested with before and I trust.

The, you don’t want to read the thing. You got to read a little bit, but for the most part, it’s okay, I know what I’m getting with this deal so I can just skim over it. What have you. Yeah, that’s a tough one. So if it’s say we’re looking at a multifamily deal. First thing I look at is the market, is it a market that I believe in?

Is it, something like a Phoenix or a Dallas or a Huntsville, or is it, San Francisco? It’s do I even want it, do I even want to be in this market? Bird’s eye view look at the market. So I, okay. Is it the market I want to be in? And then I look at what kind of deal is, this is a class, a stabilized asset type deal.

Is it a super heavy value add like C minus they want to bring up to a B, or is it a, somewhere in between? I the kind of, in-between like maybe C plus that they want to bring up to a B minus or a B minus. They want to bring up to a B plus, I think that’s the sweet spot as far as value add.

And I do like value add as opposed to stabilized. I get personally get scared on development deals just because I want to know that the money’s going to come in sooner rather than later. Obviously the returns are bigger. Potentially in the development deals, but I just, my, my sweet spot is the little value add.

So then once I, once I check those boxes, then I look at it and look at the numbers a little more and say, okay they say that they’re projecting 17% IRR and. Do P 2% return on equity and five years and whatnot, how are the numbers going to make that work? So then I look at and you always gotta remember, you can only trust the proforma so much, it’s kinda it’s like doing a medical study.

You can make the data, say whatever you want it to say, again, it goes back to the sponsor. If you know what you’re getting, you can, you can take the numbers a little more seriously than someone you never did, but still. I want to see what they’re planning to do for the value, add what they’re planning to do.

As far as rent increases, how much that’s going to increase each unit, what that’s going to do to the overall value going forward? What the like the debt service coverage ratio is those types of things. Like how many people are. Are, how many tenants can they lose before they can’t pay the mortgage type thing, breakeven point and the break even point and those types of things.

And if it seems like, checks all the boxes and take the next step, talk to the sponsor, see what they’re all about and go from there. Did you do this by syndication? E-course any kind of, there’s such a things in the numbers to look out for. I did. Yep. Yep. I did do it. You have to remind me what, which ones you’re getting at though.

Like the reversion cap rate increases per year, the annual escalators become expensive. Yeah. So rent increases per year. If they’re projecting over 5%, I kinda, have to look a little closer to say really reversion cap rate. Ideally, I’d like to see 1% above where they’re buying it out.

If it’s a super hot market, I may go down it’s maybe 0.7, five. It has to be really compelling if they’re presenting an exit cap rate that’s 0.5 or less. I think that’s bordering on speculation. So yeah, I mean it’s, after you look through, if you just kinda, you get a sense of what you want to see in the big picture and it’s it’s unconscious, you just go, it’s oh yeah, there’s the cap rate.

There’s the excess cap rate and that, comes to practice, I guess you just gotta do a bunch of them. And then you’re like, yeah, that makes sense. Oh, that one smells fishy. Yeah. Yeah. And then you parlay that in meeting other people, talking the story about this type of stuff. Yeah, totally.

Do you like those kinds of, you mentioned you liked those class C plus. Hi cashflow deals. You’d like those kinds of deals that people do in like Memphis. They’re a little bit more higher cashflow. I haven’t done any Memphis yet. I’m looking at one in Indianapolis and again, goes back to my markets.

Like I’m not real sold on Indianapolis for a market, but the cashflow in this one deal looks pretty kid. So looking at the numbers. My, I kinda like to balance my portfolio. Okay. Half of it is more of an appreciation play, like a heavy value add that doesn’t cash flow a lot. And then the other half is the more, we’re looking at cashflow between six and 9% type thing, still safe assets, just a little higher yield.

Yeah. I haven’t done Memphis yet. I just haven’t. I was just curious. I don’t have any good reason why, and I’m open-minded but that’s a good example for folks like, this is where these are the conversations you have. I don’t know when this podcast were released, but we’re having the retreat in January.

Probably have it again the next year, but that’s where you have those evening cocktail discussions, or if you’re not a night person, that’s where you have breakfast. People are encouraged to have informal breakfast as with each other, have these kinds of conversations. And, you just get your mind open to people’s arbitrary.

Here’s what I like to invest in my personal portfolio, whether it’s right or wrong. Just another few point, totally BS. Nobody is writing some stuff, the end of the day you’re picking pick and resources. Exactly.

But what can I do to help Brian? You think you’ve given the folks a lot of good information. Yeah. One of the things look looking at my portfolio is a little more than 50% of it is tied up in a solo 401k. And the problem with that is there’s obviously no depreciation benefits to being in there. The cashflow is, it doesn’t really do much good imprisoned in the solo 401k, and I would like to start getting that out.

And I’m only 50, so it’s nine years before only like saying that, yeah, it’s nine years before I can start doing it without penalty. And I know you’ve walked some people through how they can gradually exit the solo 401k is, or the work 401k is and try to minimize the tax. Getting out of that what’s your, and by the way, like you, I think he did this exactly the right way for your income level.

Whether you did it on purpose or not, but just for a review for some folks, you can guys can go to simple passive cashflow.com/qrp to read about this whole argument. But generally you want to take, not invest in these retirement accounts because you don’t get the passive activity losses to play different games on your tax.

But the only reason why it makes sense is number one, you have to have a high income you’re already in the highest tax bracket, which should Brian is already number two. You have to have a lot in your retirement. What, a lot more than half a million in there. If it’s less just take the sucker out, it’s just going to befuddle and confuse your life, simplify things.

And what Brian did here, because he qualified. He’s in both of those camps, essentially what he did is he played. You put some stuff into these retirement accounts just to delay the taxes cause he’s already in the highest tax bracket once again. So then now there’s a point, here’s a point where he’s already got him proof of concept with these couple dozen deals and he’s looking for more capital to harvest and now’s the time that we can strategically take it out.

So here’s, let’s go to the questions here, Brian. Where approximately is your AGI. So this year, make it up this year. It’s probably going to be a three 50 K, but next year I’m cutting back considerably. So my bet is next year, it’ll be somewhere around 200 to two 50. Perfect. Must’ve been thinking about this.

This is all coming to comment play, right? When you’re in investing this much, you ideas to quit your job at some point, or to titrate down like how you are. So what you’re having is this opportunity where you want to stay below the highest tax bracket. So anything, when you go over three 30, that’s when you’re in the red zone.

So if you go down the 200, you could ideally beak out one 30 every year. Okay, but let’s before we go there you’re married, filing, jointly, actually hit a household. Okay. Okay. Yep. Is your significant other partner? They work in or what’s yeah, she she’s a nurse and we, we have, we’ve lived in the same household for quite a while, like six plus years, but we just said, we’re not getting married ever again.

Yeah. It’s archaic.

yeah. It’s just that just for us, we’re much happier and she keeps her finances under her belt and I keep mine under my belt. Yeah. Some people think marriage is forever. Some people think of it as, Hey, let’s just renegotiate every day. Everyday you, you don’t sell as another day chosen to buy it’s the same for rental properties, of course, which, by the way, I’m selling out my second to the last one.

Very happy. I thought that so in Y in Birmingham, yeah. Yeah. Yeah. Together, you guys make you guys, aren’t going to be doing real estate professional status. Are you guys thought about that? That might be another talk to have down the road is once I’ll be part-time next year.

You know how to go. I guess the question there is how to get reps without being the landlord. You’ve got to talk to the right CPA. Cause I have a bunch of people who are exactly like you, where you have a boatload of investments and I’ve seen it where they work. They’re still full-time jobs and their CPA is yeah, man, I’m just gonna check this box off for you now.

Totally defies all the little rules, but it happens. You can bet your butt, that Donald Trump is checking that box and real smooth. But he’s obviously the president of their freaking United States for as a full-time job plus. But how can the men not check the real estate professional? He’s checking the box.

Yeah. Maybe he should, technically he shouldn’t right. Is what we’re trying to say, but, that’s where you’re going to work with your CPA. In my non-tax legal opinion. You have a lot of stuff. It’s becoming a full-time job. I actually think you have too much stuff. You should probably go down a little bit and bump, bump your minimum investments up.

But that’s another side thing, but I think what you’re doing is very typical for people getting started, right? Like you go into a lot, you’re trying to see which jockeys are gonna invest more heavily on in the future. So this is very typical, but. But yeah, real estate professional status may be going KP on some deals.

Get some of that carried interests in there. As a loan guarantor to that helps to build the optics, but don’t listen to me talk to your CPA but what that will do, that will be a big thing because now you can, instead of just taking. The default I think is to take out that one 30 or so a year.

So stay right around that three 30, I think that’s the default, that’s the prudent thing to do here, but if you want to get a little more, how much do you have in your retirement accounts now? Just say I think it’s around 1.2 million. Yeah. So it’s going to take a lot of years to leak it out.

A pain to do, to do this. It’s going to take you a decade to do. That’s just, this is use that as the bookend, right? I think that’s a no brainer. You want to take it out. You don’t want to leave it to when you retire because your income is probably going to be higher in a decade.

So you want it to get it out now under that three 30 mark or whenever that changes next year and the year prior. So one 30 a year. You’ll get it out in 10 years. What I, if it were me and I was going to be playing it a little bit more aggressively, what I would be doing is I’ll do real estate professional stuff.

You got to jump through the hoops to get that, obviously, maybe I’m sure you have a boatload of passive activity. Losses builds up right on your 80 to 84. Do you know how much? Half a million probably around there. Yeah. And you’re guessing, and you’re a prime example. People always ask the question.

What happens when I exit a deal and I get my $50,000. Dude, you should’ve been like Brian, you should invest in a dozen plus deals. So you have, you’re sitting here and passive activity loss, Nirvana, and you’re untouchable. Yeah, there’s a deal that went full cycle this year and it was a pretty, pretty nice gain. And I’ll be okay, but a lot of the other guys in the deal, they’re like, oh God, I gotta get something before the end of the year. I gotta share this. I gotta buy something. I got buy this.

It’s yeah, it’s funny. We have guys like yourself. This is the one at school. When you come on their cheat and you meet other people like this, but they have a rap sheet of a dozen plus deals.

They have a half, a million million dollars plus a passive activity losses. And they’re like, yeah, man, I haven’t paid like taxes in seven years. I feel like I should, like at some point, I don’t know if I’d ever get to that point, but I’ve definitely paid enough in my first 30th, so years of work.

Yeah. Yeah. But you’re cutting to the point where you technique, especially FICO real estate professional status, you really shouldn’t pay taxes. You shouldn’t need to pay tax. You can, if you want to hold the passive activity losses to the end, but the way my CPA does it is he just burns up my passive activity losses.

So I pay zero taxes. Gotcha. And, you only live once, right? Or may never see the next time. Yeah. Have you ever heard? I was talking with someone and they said, oh one way you can get reps hours is to take over a triple end, lease for a Walgreens or something like that. Have you heard of anyone doing that?

Yeah. So the easy, like low hanging fruit is like a short-term rental. Maybe your spouse enjoys doing that, or maybe you enjoy. I would not recommend buying some crappy class C rentals. That’s like going backwards or like you said, getting a little triple net, but then the problem with that one is big money.

And kinda gotta be, know what you’re doing when you’re doing that type of stuff, but it is relatively easy. That’s it? I don’t do it. I don’t know. I’m just talking about it, but here. Yeah. Those are your three options, but that’s where you talk to other people doing this and similar situations.

It’s I’m working my doctor job on the side. What are you doing to get the rep status? And so 130 K taken out of that a year. So I’ll owe a third of that, which is what about 45? K? Yeah. But what I would recommend is make for you, it makes a lot of sense to make that jump to rep status, especially peak Fisher point depart time.

And especially with, in my opinion, with your rap sheet here, you have a lot of stuff. You might be a passive investor, but the scene is like a full-time job that somehow you can justify. It takes a good amount of work just to stay on top of everything and don’t waste it on just practicing right.

For your CPA now, or that totally. You don’t want to talk to have your CPA talk to them. Of course, that’d be. Oh, no definitely doing 40 hours a week working on that. Yeah, definitely. Yeah. But yeah if you were to do that, maybe I would two X that and take out 200, $300,000 out of there every year, extinguish that with most of your passive losses.

And then now you’re out of, you’ve withdrew the whole thing out in a handful of years instead of a day. I would play it that way. Yeah. I’ll wait and see if the reps happens or I guess when the release happens, one of the other things I’ve been doing, how I’ve been paying my.

Life insurance premium is with the solo art 401k. You’re allowed to take a $50,000 self-directed loan. And so what I’m doing is I’m taking $50,000 out of that, just paying myself back in that. And then when it’s time for the next premium, just taking that loan out again and paying it back. I still have to pay it back, but nice being able to pay yourself back.

And yeah, that’s a nice little hack there. Yeah. But yeah. Just the hard thing is this is an art form. Like we don’t know what’s going to happen with bonus depreciation in a couple of years. It’s supposed to phase down a little bit. In 2024, it’s still going to be fine, but we don’t know if that’s going to get extended.

We don’t know if you can use a hundred percent of your losses to offset your income, but we don’t know if that’ll be Kat, like how like conservation easements are all a gas where it’s your captain, like 30 or 50. We don’t know how the world is going to change it, that type of stuff.

So a lot of this is a risk and uncertainty, which is most people aren’t comfortable with that type of stuff. And it’s not an exact science, but that’s why I would say, like right now, there’s a clear path on how to get it out in a few years with if you’re able to rep status. And I would take it before it closes up.

That said you could sit around for three years and something really video will Wade better could come down the road. But you’ve also missed out on deploying those funds to right now, it makes so much more sense to have that, not locked up in jail, give it so much more flexibility and yeah. And when you crack those open those retirement funds, then you get more passive losses from that.

So it is a multi-gender dimensional. But that’s how I would play it. I would take it now, or in the next few years with rep status, start researching rep status more. And I that’s where I’ve, it’s really suggest meeting other people that are doing the rep status because now you have a specific target, right?

You’re trying to find those right people to high income earner. With disproportionate incomes that were ideal. You’re unusual where you’re the high income earner yet. You’re great. Part time. Normally that doesn’t happen, right? Yeah. Not really other people’s relationships. You just suck it up and go to work. And then the other person takes over their rep status, most cases, but where you do it all, man.

I’m gonna do it all. Yeah. Yeah. Make them make the money and bring it home. Cook the baby. Also do a 750 hours of the side, right? Yeah. It’s all in documentation. Yeah. Yeah. Any other questions you got or anything you want to talk through? I don’t know.

I think you said maybe I’m a little over diversified, but just going forward, what I, what. Bird’s eye view of what I should be focusing on going forward. It’s, I love multifamily, but I think I’m about like 65, 70 5% or, yeah, multifamily. And I’m trying to get in a little bit of self storage here and there, and a little bit of mobile home parks, but I don’t know if there’s any other directions you think I should be looking into.

Yeah. Just the fact that, your percentages, you’re probably a lot better than most people. Again, like most people who are new, they go into all a bunch of stuff like the Las Vegas and Fay, and they just file, they just go into all these random asset classes, in my opinion, that the way to do it is going deep with one asset class, it learn it, learn the people and then branch out.

As you find other passive investors who also investing in self storage deals, office deals. I’ll just say for myself, right? Like I’m an operator of apartments. I know that a thing or two about that. So I would say 80 to 90% of my stuff is apartments. Vast majority. I don’t know exactly. But I, when I go outside of my comfort zone, apartments, office, self storage, mobile home parks, I want to invest with the institutional operators, especially when I’m not controlling my own debt.

No everybody listing here is our passive investors. You guys don’t have the luxury of being, behind the curtain, on the operation side of apartments. So they have take it for what it’s worth. But yeah, when I invest in stuff where I’m an LP, I don’t want to invest with somebody who just did a weekend bootcamp or on their first dozen deals.

I want somebody who’s more institutional, even though I’m willing to give up return. I’m okay. Doubling my money every 10 years instead of every five. Does that make sense? No, that makes sense.

But if you’re a passive investor and you don’t know one from one first of all, you should know you should meet the other people doing it too, but then maybe if that’s the case and it’s all shades of gray to you anyway. Maybe just to diversify or I guess, yeah. You were saying before, do you have any advice, w you wish you could give to your rookie self when you’re just starting doing this and that would be.

No exactly why you are investing in a certain investment. Like when I was doing it before, it was just dartboard, it was like, oh, this looks good. Throw the dart, oh, this looks good. Throw the dart, throw the dark. And now it’s okay here’s what it looks like. And here’s what I need.

And oh, I need some more higher yielding, higher using plays. I need to start looking at some more, some more of those deals or, oh, I just, I need more cash flow from this. Maybe I’ll double down on the ATM investment or, really think about before you, you pull the trigger, what that’s going to do to the portfolio as a whole.

Yeah. Yeah. But I think one thing. That was really good as you got your skin in the game, that we can have conversations, other paths and investors that you’re not just some newbie accredited investor that has invested in check and adds no value. And that’s why I say go learn one thing first. So you can use that as your ticket to get in cahoots with other people.

Totally. I totally agree. Yeah. But know why you’re doing it just don’t do it because everybody else is doing it. That’s the other thing, right? You have a lot of, there’s a lot of like doctor groups or investor groups where they all like group think their way into, oh, this, these guys are good.

These guys are good, but I would never invest in them because you have this thing called sponsor creep. They become more institutions. Yeah, we’ve got people lining up around the block. It’s I think everybody who’s listening who has gone through the single family home, like turnkey circuit, like they know that there’s two or three companies that everybody talks about, but you only buy from them.

If you’re a sucker that wants to pay 10 to $20,000 over market price. Sure. They’re reliable. That’s the way to invest in my opinion. And it goes same for this type of stuff. There’s some people. They can put garbage out. People will invest because they’re more institutional operators.

Any last thoughts or any questions come to mind, Brian? No, this is helpful. And that is a lot of fun. If you guys want to do one of these calls, even if you’re less experience reach out team@simplepassivecashflow.com. And we mentioned the retreat.

We’re not doing like a really open house type of events these days. I think we’ve realized that a lot of people have figured it out that simple passive casual is a bunch of passive investors. So we got a bunch of those, like newbies syndicators poking around and we have enough live investors, like 700, if you guys out there.

So everything is more closed circuit only to passive investors these days. So that’s kinda why things are the way they are. But yeah. Thanks for listening folks. And we’ll catch you guys next time.

But anyway, enjoy the show here.

How to Monetize Your Passion & Thrive

What’s up, podcast listeners? Now the changes are gonna be coming down the pipeline. For those of you guys who really like those monthly update reports, we are going to be stopping those. I’m sorry. Apparently people’s attention spans are super short these days. So what I’m gonna be doing on a weekly basis on the podcast is doing more of a really quick.

Five articles that I think pertain to real estate investors or investors in general for you guys. Add my commentary. So you’re gonna start to hear these podcasts on a weekly basis throughout the year. If you don’t like it, you can fast forward through it and then skip to the normal, routinely simple, passive casual flow, regular podcasts.

But that’s what’s gonna be coming down in the pipeline in 2023. If any other suggestions you guys have, what do you. What do you guys don’t like? Please let me know. T sensible passive cash flow.com. If you haven’t yet joined our investor club, what are you guys doing? We’re starting to make the first monthly payouts of 1% every month or 12% on annual basis which is structured around our pre equity plus fund or PET fund for short, which is essentially a debt fund, right?

It’s I think it’s the kind of the prudent strategy today. With interest rates sky high, where they’re at, it’s just hard to make deals, pencil, and I, quite frankly, I don’t know how people are making deals work. Actually. I do know how a lot of these newer operators who are trying to build a name for themselves and actually given the opportunity with all the big smart money like us who have over 1.2 billion of assets and ownership.

We’re sitting on the sideline. A lot of these newer people are willing to take chances and getting deals done. At this point in time for our investor group, I feel like the preferred equity approach, which is the debt side, is a little bit more of a prudent strategy at this point in time.

I saw yesterday that apparently inflation went down a little bit to 7% off the highs of nine. Good news. It seems like the Fed increasing interest rates is, seems to be working and, they just announced a half a percent bump instead of a 0.75 bump. So hopefully we’re seeing a light at the end of the tunnel.

. I’m still anticipating maybe at the summertime things really get going, you still gotta get your money moving, right? I’d say if you got several hundred thousand dollars of debt equity in your home, get that out as a HELOC put into infinite banking. Make money there.

And then also put it into something that is making you a nice, high single digit yield to arbitrage off that. For now or if you find great deals out there, put it in there too, but, , right? What are we talking today? Chris is gonna be on this show. A lot of our investors these days are more accredited investors, guys who not really care if they take gas from Costco, right?

And save 10 cents, 20 cents a gallon there. Or screwing around with, credit card hacking, all this type of stuff. Because why? Because after a certain point when your network gets passed, a million, $2 million, all these small ball types of things is really just burning up time and you start to realize time is more important to you than a lot of the cheaper things that I personally used to do, which I have a list at sy paso cash flow.com/cheapo if you guys wanna read that during the the Christmas break here.

Like what do you do when you’re trying to find that passion, but you also wanna align it with taxes for that combo. And this is, this podcast today is more for people around a million, million and a half net worth or less. Trying to find that passion, trying to find that EK guy and what is EK guy?

Something that you love to do, what the world needs, what you can be paid for, and what you’re good at. And this is very different than, something that you love. That you can’t really monetize, like pottery or some random hobby or golf for an example. What we’re talking about are things that you can monetize because the world needs it.

And I’m not saying money is the most important thing, but in our world, the way it works is you. When you create value for other people, you are typically reward with money. So it’s indicative of, or byproduct of one or the two. But this concept of Iki guy a lot of people I talk to these days are high paid.

Professionals, they make multiple six figures. . And sometimes it’s I hate to be a jerk man, but you’re probably better off staying at that high paid job, at least till you can hit your passive cash flow number of 10, 20, $30,000 a month and then just shut off the engines and, go garden and play golf from there.

For some people, they wanna take the approach of, and they’re really unhappy what they’re doing and for those of the people you. We have these calls, they may suggest, taking money outta retirement earlier than later and more aggressively. And there’s some other tax strategies to mitigate that in the meantime, but they just don’t like what they’re doing for work.

And this may be you guys out there and maybe this is a ponder this like how much more can you work at a job that, yeah, you pay get, you get paid pretty well, but you don’t really enjoy. And maybe that there’s some way you can find this concept of icky guy with some other side gig or hobby. That said, most of the people that listen out there are not business owners.

They, you guys don’t have any business aptitude. They’ll be one of, don’t wanna be offensive, but I just want to, state the office. Most people who start businesses don’t make any money and they don’t get anywhere. And, I guess what I’m saying is as I think of raising my own children, I, I think a lot of people say, yeah, you need to be entrepreneur.

You need to be, not be a another government or byproduct of the education system and work in a big company. , but I’ll be the first one to tell you. As a business owner, most people cannot run successful businesses. They don’t have the aptitude for it, and they don’t get lucky with some kind of traction out there.

They don’t, the business doesn’t sell anything. It doesn’t get going. There’s no traction. I think I’ve been blessed to create this simple passive cash flow podcast back in 2016. A lot of you guys seem to like it. But I consider myself very lucky to be in this position. We’ve hired staff to help me amplify the message, but most people never get to that point.

Just look at all like the spinoff of podcasts and YouTube channels these days. So I’m not saying that, don’t go after your dreams, but it’s gonna be no different. The message I send to my kids, which is, yeah, you can have your dreams, but By, you need luck for it to get traction.

But for consider the traditional path of going to school, studying hard, going to college, and working in a J O B, nothing’s wrong with a j o b. If you can save 25, a hundred thousand dollars a year to put to rental properties or syndications and implement these simple strategies that we identify for higher net worth, higher paid and accredited investors to acceler.

To financial freedom. And what we’re gonna be talking about today is this kind of concept of guy. Chris calls it the divine genius. How can you also find something that you like? Can you can maybe monetize it on the side and get a little bit of tax benefit side action there, right?

If you have a hobby that you turn into business and run through a lot of your personal expenses to it. That’s what we’re talking about today. And So again, thank you all for listening to the show this past year, and if you’ve been listening, in years prior, really appreciate it.

It’s allowed our group to, I think raise over 160, 170 plus million dollars that you guys have entrusted to us to purchase, well over a billion dollars of assets that we judiciously run on your guys’ behalf. And although the group has gotten. Still wanna get to know you guys, if you guys, we haven’t had that onboarding call, please book a call.

I’d like to see how I can help you guys out. That’s really what I enjoy. That’s my personal guy. I enjoy connecting with people on a one-off base and setting them straight. After that, you gotta join the mastermind group. I just don’t have time for, everybody and, hand out free advice.

But, if I can give somebody a quick 10, 15 minutes and compress learning cycles and putting ’em in the right path, that’s really what I see as like my gift to the world, or my divine genius as Chris calls it. But hopefully we’ll see you guys in Hawaii next month, January 13th to the 16th.

It’s not too late to sign up. We’ll probably be increasing the prices very early in January as we lock in our headcount, as I gotta pay the bill for all the cool events we’re gonna be doing and the great food and some other surprises. So if you that’s interest to you guys, go to simplepassivecashflow.com/2023retreat. And if not, thank you very much. And here is the show. 

Today, we got Chris miles is going to talk about monetizing your divine genius myself. And that sounds a little bit to the normal, simple, passive castle listener. But trust me, this is going to be saving you on taxes at the end of we’ll come around full circle, but how’s it going?

That’s awesome. Wayne, how you been, man? Chris was on the podcast way back when, in August, 2016, we had to go back. That was podcast number 21. And I can truly say that Chris is a good friend of mine, and there’s a little bit of like show, business, podcasting, etiquette, where like he call everybody your friend.

But, and then maybe if you’ve met the guy before you call them like a good friend, but I’ll call you a true. I don’t know what that means, but that’s awesome. It means we’ve talked since then over the last three years. Yeah. We’ve talked at least twice. No. We actually talked pretty routinely, so we’ve done a bunch of work together

so today we wanted to do a podcast on finding your divine genius. And yeah. Why don’t you what does that mean to you, Chris? When you work with. Our divine genius is what is it we can bring uniquely to the table that no one else can. What is it that we can really bring to the world?

So combining our talents, our passions, or our values or mission and everything that combines us being who we are, the best version of who we are and using that to deliver the greatest amount of value to. That’s basically the easiest way to describe it. So I describe it, the same thing, but in a different term eeky guy, which is combining like four things, right?

I think a lot of us have heard this term combined with the three things it’s find out what you’re good at, find out what your passions are. And then something that you can make money with the fourth and final ingredient, which unites the. The power Rangers creating the Zuora on or whatever that thing was, is the, is it good for the world?

So I think you look at like my website and your kind of platform. It’s we’re both good at talking about money and we’re obviously very passionate about. And you know what, there’s ways we can monetize it. And I’ve been starting that group coaching mastermind I was telling you about, and then it’s good for the world.

It’s getting people financially free and getting them outside of the wall street garbage. Yeah. That’s amazing. Another example is like the guy who likes to make pottery, so he’s like good at it. He’s passionate about it. But it sure as heck doesn’t make money. No icky guy, right?

No. So a lot of this is like trying to find a hot. So that you can make some money, but also at a means to write off taxes too, right? Yeah. Everybody talks about do what you love and the money will follow. They’ll tell you that kind of stuff, but the truth is that there’s a lot of people that love to do stuff, but there’s a lot of broke, passionate people out there, passion doesn’t pay the bills alone.

And so it, to me, like I revamped the phrase to be, do what you love that others love you doing. And then the money can follow. And I’d say can, because it doesn’t necessarily mean it will, because you could be awesome. What you do. You could be very passionate about it. You love it.

Others love you doing it, but if you can’t, if you don’t have the right business sense, if you don’t know how to actually monetize it right, or don’t know how to market it, or those kinds of things, you could actually end up not making any money. You could be this really, this alone genius.

I was lonely genius. And we definitely want to be there. And so that’s where, yeah. If you can find something that you love to do regardless of the money and you’re great at it. And people, it solves some sort of problem for people, even if it’s, it doesn’t have to be like a massive world problem, like solving world hunger.

It can just be like something that actually really entertains. There’s, if you ever watched, like America’s got talent, you can see that show up sometimes. Yeah, it might bring on tons of magicians or tons of comedians, but, there’s the guys like Piff the magic dragon. How many communities, come out on stage and a big dragon outfit, like it’s just, it’s just goofy, but it’s unique. It’s something that we remember.

And so finding your own unique twist to things, and then, actually doing that’s where there’s some real, that’s a real secret to creating more money or at least. Since a lot of us are professionals and a lot of engineers and going to make money too. And I don’t know where I got this phrase from, I think it was from you, but. The phrase that really sticks with me is people who create value our reward or reward with money. Yeah. The oldest form of value created.

Yeah. Yeah. So I’m always like, people who to buy and sell stuff on eBay or Amazon and like to do all this arbitrage stuff that creating value, you’re not creating like tangible value. It’s like gimmick. And we all know what happens. Gimmicks eventually go. I know, you’ve talked about this with like multilevel marketing in the past, if you want to expand on that.

Yeah. It never marketing too. Definitely that, that comes up a lot because, for example, it never marketing. They always say, Hey, just do what the leader does and just do it the same way they do it. And so you get a lot of these copycats out there that just don’t work. And you were never meant to be a copy, and it’s kinda like you ever seen the movie multiplicity with Michael Keaton where he clones. I think it was from like late nineties, early two thousands. I can’t remember. But in that movie, he clones himself to do more. The clones got jealous because they’re like, Hey, we’re doing the work while the original guy is, he’s just out there playing, so let’s make our own clone so that, the clones got together and made their own clone.

So it’s like a copy of a copy. And the guy was like, totally, an idiot, so their copy of the copy. They’re like, you know how you get the original, you make a copy and then you make another copy of the copy. It gets less, less pronounced, the ink gets faded. It’s kinda like that.

And that’s kinda what happens to people with business. Even people that are like trying to be coaches out there or whatever, or network marketing, they try to imitate these people. The problem is you’re not them. You can’t be the best at being somebody else. You can only be the best at being. And so finding your own unique flavor to things unique way of doing stuff, that’s really the trick.

And when you start to really own that, and I know, because I used to be the guy that would try to imitate certain behaviors or marketing type things or sales strategies or whatever it would be. And people would say, ah, weird, or like I wouldn’t be comfortable being a.

Like in, in front of a room, so I try to be polished for example, are too polished. And then eventually I just stopped. I stopped caring, I just said, I don’t care. Like I’m just going to do my thing and I’ll do it, do the best I can. And the funny thing is that’s when people start to warm up to me the most, and more people are attracted to me, in fact, better people that are a better fit for me when I’m consulting or when I’m helping people out, whether it be on the insurance side or wherever it might be that people just match it up perfectly.

And that’s because if you are who you are. The right. People show up the right team, the right people to come to support you. And it just makes it a lot more fun. Yeah. And I think you also told me about this. You’re into numerology at one time. I don’t know if you still are. And I was kinda like really but then I started to think of audits.

You got to figure out what, how you are and that’s how you got to create your business or operate out of. Yeah. I don’t know much about numerology really. There’s a thing that I use, like human design. That’s pretty cool. Combines like astrology with some other things too, which I’m normally would be.

Okay. That’s bull crap, but I actually found out that one actually really worked for me. And among many things. So like finding your strengths, if you’re trying to find talents or strengths I used to be a sociology major, so it was all about running tests. Test the measuring and trying to figure out like, finding different things about people and group behavior and things like that.

And so tests I’ve used, like Myers-Briggs, a personality tests. I’ve used the Colby, a index, which is it’s pretty good. That’s more of like how you operate type of test. It’s similar to disc. Some people might use disc. I know Tony Robbins has that on his website for free. So Colby, you gotta to pay 50 bucks for, disc is free on.

There’s things like that out there. Human design, I’ve actually used that one a lot. That one’s helped me a ton on knowing how I should be working and operating, so for example, some people are not meant to just go hardcore, right? Like only a third of the population should be doing, being the type of people of say, got to make it happen.

Like those kind of people. Sometimes there’s different ways of making it happen that are actually more productive for you, depending on who you are. And then another one too, that I do is it actually an easy exercise that anybody can do is what I call a strengths feedback, exercise.

And so what you do is you basically just email or call, you can call people, you can email or text people and just ask them, say, Hey, what are like the top three or four things about me that you think make me different or make me unique, or maybe things you can count on me. Or ask me three words, that come to mind. You make it simple. I’m sorry. Say again. What are three words that come to mind when you think of. Yeah, you can just say words. I always like to have them expound on it because sometimes people have different meanings to words. And so what you might interpret their word to me might be completely different how they describe it.

So if they give you words, have them expound on a little bit, so they can tell you what that really means to them. And that’s money. Like for example, I had a lot of people that do. Yeah. Even though I didn’t feel it at the time I did this back in 2007, I think it was. And they would say things like, yeah, I see like a leader or I see you as a teacher or even your different teacher.

Cause you’re entertaining work. You teach things very simply. Or, you’d like to use like multimedia with your teaching, which I really like, or things like that. Or people would say yeah, you’re loyal almost to a fault, talking about, personal relationships and stuff.

And they would just bring up all these things. And eventually when people would all say some of the same stuff in the economic sense, I call that get a clue because they’re all saying the same thing. And in fact, you have to have people have known you your whole life. You can seriously ask people.

Maybe we’ve known you for a few months, just their first impressions. And it’s amazing that people that might’ve changed your diapers right back in the day might be the same, might say some of the same things as someone who just met you a few months ago, I’d say. And that’s how, like everybody else sees genius, but you usually don’t see it cause you just live with it day to day.

It’s just part of who you are. But for them, they see it and they think, wow, that’d be so cool if I could do that. Or yeah, when you do this, it just, it blows my mind. And so that’s just money right there. If you can find even some of that, that can give you a good step in the right. So another one is like StrengthsFinder 2.0, Pete laundry.

We’ll talk about that book. Is that kind of aligned with the other Colby strengths finder, exercise and human design where the Google terms people can look at? Absolutely. Yeah. All of those things can be great contributors. I really don’t think there’s anything bad about trying anything that helps you understand more who you are.

So that’s step one, find your strengths and talents. And then next thing is figure out what your passions are, right? Yeah. So I do, what’s called a passions test, it’s not mine. I don’t remember who came up with it, but basically to say, find out things that you are passionate about, make a list.

It could be like 10 to 15 different. And then start to rank them, start to find out like, what’s number one, number two and that kind of thing. And I’ll tell you, in fact, it’s interesting because I’ve had people tell me before they say, you know what, Chris, I’m not really like super passionate.

I don’t get really excited. Like I had a guy from Alaska that told me that he’s I don’t get excited about anything. And I known him just enough to say, yeah, you don’t get excited. Like you don’t get like all hyped up. I’m not a hype-y guy. So I asked him, I said is there anything that fires you up, like ticks you off or pisses you off?

That’s yeah, exactly. And he had a whole list of that. So we, we started going down that route. He’s oh yeah. Politics, or my family. It’s okay, we’ll go deeper. What about your family? Like, why just, I’m really protective of them. I’m really like, it’s important to me to prioritize them okay, all right, now we’re getting somewhere and know, get a bigger list than just saying, what are you excited about?

But yeah, just doing that and then going through and just ranking, I was like, what’s the one that’s if I had to choose between two and I used just compare two at a time, it’s almost like a, I call it my M and M game. When I was a kid, this kind of a weird when I was like around 11, 12 years old, I would take two m&ms and I would smash them to get.

And I would see who would be the winner. It’s it’s almost like moral combat, smash together. The ones the winner goes against the next Eminem and smashes and whoever wins at the end, that’s the ultimate champion. And I was always rooting for green because I love green, and and that’s kinda what I do with this list.

I’ll say, all right. Number one to number two on this list of 10 or 15, if I had to choose one, which 1:00 AM I more past? All right, we’ll keep it. Number one. Number one on compared to number three, which one I’m more passionate about? I think number three, wins. Number three, to number four, number three, number five.

Whoever wins. You just keep going through that list. And that one that wins out is the number one. And then just do the same thing for number two. You take that one off the list, and then you start doing that comparison again, and you can come up with easily, like three to five strong passions that you have.

Naked started saying, all right, how did this with my talents and my passions combined together and work together, trying to find global problems or, things, problems to solve. Cause that’s people pay to solve problems. Yeah. And that’s usually the next thing I’ll do is I’ll start making a list of what are things that I hear people complain about that maybe either I would want to solve?

I think I have. Or, maybe it’s just something you just think would be cool to solve. You may not know the solution, but maybe you have to bring your own unique flavor or twist to it. And that’s really, the point is all right, with these things, I am passionate about what are they, that kind of thing.

So most of the people listening are high-paid professionals. They’ve likely got kids busy life. What are some Epiphanes you’ve seen come up through this process that maybe might resonate with somebody. Kinda inspire them to do these exercises because I think a lot of people are like, I’m just too busy.

I might, I make 200 K at my job. I don’t need the side hustle stuff. Yeah, but that’s not the point. The point is the, punch through the object and find out some kind of passion, that makes you have money and you can write off some stuff. Exactly. So that’s the key is if you truly were trying to worry about the money too quickly in this process, You actually end up falling flat on your face, right?

Cause it can happen very naturally. And so the best thing you can do, especially for. Is find ways to apply these strengths and these passions to different places that you’re in, right? Whether it be in the workplace at home with your family or kids if you volunteer, do community stuff with your neighbors, strangers on the street, and try out using some of these things, if it’s just like I’m going to use one strength or here’s a passion on my bill tie in.

So give an example like for me, I remember when I was stock coaching back in the mid two thousands. I wasn’t like I wasn’t hired because I was the most brilliant trader they hired me because I was a good coach. So they said we’ll train you the way we want you to be trained, wants you to teach these people, but we’re hiring you mostly because you have good coaching skills.

So already, I was like the handicap kid they weren’t expecting much enemy. And so I started to do that and I pick up and learn things. And one of those people, I just pick up on certain things, especially financial concepts really easily. And so I picked up on it. I was like, okay, cool.

And then I started perfect on it. And you know what, these guys, they did this, maybe we can make this a little bit more effective here. And then I started to tiny passions because I was getting bored. I was doing a good job, but it was and so when I would teach them about trading stocks and options, there will always be like this flexibility.

There always be out of the 16 sessions I would do with people. There’ll be about seven or eight that you can just be flexible with, follow up on their trades, keep them accountable. And that would be the time I would take the opportunity to go teach something different or something more maybe about economics or something like that.

And we would have such fun conversations talking about that. Cause they would be intrigued. They’re like, oh, this is cool stuff. I like it. Some people call it inner market analysis, but I would just talk about that kind of thing. And they would have so much fun with it. That what was interesting out of 60 coaches, I was like ranked number two with the positive feedback, I would have been number one, but there was a guy who was coaching, double the clients as me.

So he got technically more positive feedback than I got. But for percentage wise I probably had the highest positive. And and it was funny because I was the guy that predicted not to make it right. So that was a big thing there. Other things I’ve learned too is I remember, learning about being a leader and a teacher, and I have a mission statement that says, through powerful conversations and faithfulness, I establish higher standards of service, perseverance, and stewardship to create happy fruitful.

Basically my whole thing is about raising the bar. That’s kinda, my thing is raising the standard, raising the bar, just take it to that next level. That’s kinda like my whole life mission in general. And by the way, mission statements do help a lot sometimes in this case. And I remember, I was volunteering at my church and then they asked me, they said, Hey, can you take care of the two year olds?

And I’m like yeah. I could teach the adults. I’m a good teacher. I’m a good leader. Like, how do we teach the adults? No, we need help with. Like, how am I supposed to be a leader and a teacher to two year olds? And then it dawned on me after a little while I was like, wait, I may not be able to teach by word, but I can get on my hands and knees and interact with them, and play with them.

And I did. And the cool thing is that pretty soon they started responding. And even after I was done volunteering my time there, a lot of them would come up to me when all the parents come pick them up, they would just put their arms up. Like they want me to hold them, that was pretty cool, even though there’s other women there who are much better caregivers than I was right.

Naturally while it was women would just sit there and gossip, I would actually be there and involved with the kids and create that connection. That’s just the name of feud. That’s just a normal life, but I understand, I take all those same things and I applied my business too. I still connect and do things with people in business.

I teach a lot and in fact, I am a teacher. That’s the thing. Get me to retire, which I’ve been financially independent twice in my life. Each of those times I could retire. I don’t, because I have this passion that I want to keep teaching and help people take it to that next level to not be mediocre, just like you teach on the show.

And so those are the things you can start integrating and naturally money just follows. It’s really easy, especially if you start to figure out and hone in really what is your genus and just focus on. So you seen a lot of epiphanies happen and when you’re coaching folks, what are some examples of those that you’ve seen?

Like just people may not make resonate with another working professional. Yeah. I had somebody, I got a few examples. I had a guy, for example, he was a. Okay. I’ll actually I’ll use a woman cause she’s she was actually worked in the it field. So I figured if you got some working professionals, get somebody in it.

We did some of this process with her and she was really passionate, actually. Not about doing tech stuff. She was really passionate about the healing side of things. Like really helping people emotionally heal naturally because she had experiences too. And by the way, one of the coolest things you could ever do, if you’re ever going into the role of trying to provide value or teach something or help people through.

Is do something that you overcame yourself, right? Like for me, one of the biggest things that helped me create help people create more cashflow is that I went through a recession where I went over a million dollars in debt. And I had to avoid filing for bankruptcy. So all those kinds of things and the things I learned going through all that crap is the very things that help my own clients free up 100, over a hundred million dollars of cashflow over the last nine years.

Because you have to figure out the strategies behind that. Yeah. Cause people kept telling me, I want people to hire me, but they kept telling me why can’t find the money. I’m like I can find the money. Not telling them, Hey, I’m broke right now. This is back during the recession, right?

Hey, I’m broke. I had to find money. So I bet you, your situation is better than mine. So your should be easy for me, and that’s how it happened. With this woman, like her thing was healing of the emotional healing stuff. She’d gone through a lot in her childhood and had to work through that as an adult to function.

And so she started do that kind of stuff and she just had a find. Modality, the nice thing that kind of matched up with her. And even when she found it still, as she did it, she morphed it a little bit and try something a little bit different. And she brought maybe this little thing in for healing and this and that.

And we came her own thing. And so pretty soon, even though she’s doing still working it, like she’s still, an it manager at her work making a good six figure income on the side. The thing that actually gets her fired up is that she’s doing this. And she has a side business, a side hustle.

So she does like coaching or like basically like like healing, coaching, like a energy healing type stuff. Reiki you’ve heard of Reiki that kind of thing with magnets and things like that. So she does exactly. Yeah. I don’t know how she does it. She does, but it’s pretty cool.

It’s kinda like a chiropractor I knew in Denver that she it’s seriously not touching it, but she just do this like down people’s backs and they’re like, oh, I feel so good. I’m like she didn’t touch you. What would the heck did she do to you? And I was too scared to try it myself, another person that a good example is the guy out in Washington state.

He really loves. Working with kids like specifically teenagers, and he was working a job full time and he was coaching a baseball team during the summers, like as teenager baseball team, it wasn’t a high school team. It was like the city league type thing. But they would go to state or even interstate championships and win, or at least play and get runner up.

He was really, they were a really good team. In fact, they would perform better than the high school team would do with those samples. And so we, he asked me, he’s okay, Chris, I got to figure out how to make money with this so I can do what I love. And after some time we try to figure it out.

It actually got really hard and we’re like, and I asked his wife, I said, how was he during baseball season? And she said, oh he’s so happy. He’s like on cloud nine. And I tell you the guy’s just energetic. And I’m like, okay, cool. Do we necessarily have to make money? Doing baseball.

You know what if we just said, this is like your outlet to just fire you up, that keeps you doing. Cause you got a job that’s flexible enough that he could take off work and do and will do what he wants. So why don’t we just keep doing that? And they’re like, oh, that takes so much pressure off. Funny enough. A couple years later, he got offered a position with the varsity team. I think you start with JV. And then he got moved up to varsity. He started coaching and making money anyways. And that, that, that path came. He just did something he just enjoyed and his whole thing, wasn’t just winning baseball.

His thing was teaching these teenagers, these young men to become real men to become productive citizens. That was his whole passion had baseball was just an outlet, but the passion was training these youth to become real men. And so I met and that’s what he’s done. And now they actually, I, the last I saw they’re doing like couples, marriage type counseling stuff.

I don’t know what the heck they’re doing now, but it’s cool to see the evolution of the last decade, how it takes them. And now they’re making money. In other ways, anything more for the introverts out there, maybe just with a, making some kind of arts and crafts or musical.

Instrument. Sure could. I’ll tell you if you’re a handyman right now and you live anywhere near me, you’re hired, there’s seriously, like there’s a lot of needs out there. And I’ll tell you, these handyman do not have personal skills, like people skills or not their thing.

There’s lots of things you can do. I know the person that’s there. She’s not very, she’s definitely not a person. You try to strike up conversation with because it’s just not, it’s not going to go anywhere. She’s just an introvert and that’s fine. There’s also things you can do to, even if you want to be in business, you want all the tax write-offs like we talked about at the beginning of the show.

The thing is you could also be a partner because what if you’re the person that’s just perfect being like the COO, right? Maybe you’re the person that’s best on the backend while somebody else is better to be the front man of the front line. But you’re the person on the back to make sure that it actually works or that, things are being fulfilled on.

So there’s a lot of roles you can do and play in and make great money and you can even be in business, but not have to be the face. That’s not real. That’s not required at all. All right. The book, the E-Myth by Michael Gerber comes to mind. There’s the visionary, the operator, like the CEO, like you said, and then there’s all kinds of technicians in businesses.

You need those three characters in every business and you may be just good at sales or you may be good at just making baking or whatever. Yeah. But the link up with those other people is the key. Yeah, that’s right. That’s the thing. You don’t have to be in an alone. It’s kinda if you’ve ever watched YouTube videos of the piano, guys, you ever seen those guys, right?

They take, they do cover songs. And they, and especially, you’ll see, the piano player, John Schmidt, and then you see Steven that’s the cellist. And and that’s, it’s funny because I remember seeing John Schmidt around here locally in Utah, because that’s where these guys are from.

And I remember seeing him be up there and I was like, I don’t even know who that guy is. I just know he’s performing. He was just the piano player and he could play upside down and do all that kind of stuff. But he didn’t really get popular until he started bringing on other people. So he started bringing on like the cellist that brought in a whole new thing and they did, Viva Lavita and love story.

Taylor, swift and Coldplay. They did a little mesh up that that got millions and millions of views. And then they just kept going and they had camera guy. Other people to help support that. And now, these guys go perform and they sell out stadiums and stuff. I mean that just all, these are your guys that were talented individually, but bringing them together that teamwork, that’s the thing that allowed them all to shine together.

They were better synergistically together than they were apart in something. I I was listening to Tim Ferriss’ podcast to stay. He said something pretty cool. He said you don’t need to be the top 1% of 1%. Like Michael Jordan, all you gotta do is figure out like three things that you’re in the top 10% in that here’s the key.

It’s people aren’t good at that. Typically like for example everybody can speak a foreign language, right? Yeah. And it’s no big deal. It’s a commodity, $20 an hour person. But you combine that with two other things that people aren’t good at and Kaboom. There you get now you’ve got a niche.

Yeah, exactly. That’s thing I was gonna say too, is when you blend it all together, think of that we’re in the financial space. And the cool thing is and remember my wife has also the financial space too. And I remember she saying yeah, I guess we’re in competition with each other.

This is before we dated or anything. So I guess we’re in competition with each other. I’m like, no, we’re not because you can’t compete with me. I’m sorry, but you can’t do it. I do. And then to save it. I also said on the flip side, I also can’t do what you do either. So that’s the beautiful thing.

Cause we were both serving the same market, but we were two very different ways of approaching it. Lane, you and we hit some of the same spots sometimes, but we’re two very different people and we have our own unique flavor, our own unique recipe that goes with it. And when you start combining these things to get.

That’s what makes it cool. It’s like my friend who’s he’s one of the, he’s a very popular actor out there. He’s always like a supporting actor. He’s also really funny, even though he’s always in dramas, he always, he’s always typecast as being like a general or a police officer or something.

But he’s a hilarious guy and he would always try to do things to mix it up. Whenever he would do auditions, he would try to do something different. And even when he would be on his own, just to practice on the side, he would say, tons of people have eaten raisins, but how many people have eaten raisins out of a freezer?

How many people have done that? And wait, let’s take it another step. Let’s take raisins down a garden hose into my mouth, out of the freezer. I bet you nobody’s done that before. So he’s having his friend put, raises down there, trying to feed it out of the hose and they’re cracking up so badly.

They came to hardly do it. Or he would go to his auditions, you put maple syrup in his shoes, so people would be like, wow, it’s sounds like pancakes. What’s going on? Like that’s the kind of thing. If you mix it up a little bit and just put your own flavor and twist, that’s the thing it’s I don’t worry about competition.

I know that doing what I do best, no one can imitate it. Even when people try to imitate my stuff and teach my stuff. A lot of times they’ll regurgitate it. It’s just not the same. It’s like a copy. And so that’s the thing is you don’t worry about people ripping off so much because if you know that it’s you’re the innovator of what you do best other people will just have to follow suit with whatever you’re doing.

They can’t create, they have to do their own. I call that the idea that when I look at successful people, that’s usually their contrasting binary strengths, like dirt, no Vince ski seven foot, or, but he can pop threes on a guy that can bench press three 15, but he’s a, I can do walking hand. Or the financial planner. Who’s pretty cool. And funny and charming at the same time.

Those are things they get paid. So if you could combine certain talents with another secondary talent or tertiary talent, then Kaboom. Yeah. I’ll give you another example of, if say you decided to go in the place where maybe you have to put yourself out there, like you’re going to start a business.

Maybe you’re going to go into marketing yourself and things like that. I found some really cool tricks with finding your marketing voice of. Cause, for example a lot of times people will ask me and maybe lane you’ve been asked this too. They’re like, oh, that’s so cool. You have a podcast.

Maybe I should do a podcast too. I don’t know if you get asked that, but I get people ask me that all the time, like maybe I should do a podcast. And and I was like maybe not. Cause it may not be your thing. And so when I do that, like a lot of times I’ll get, people will say what is that thing?

And some people have natural tendency towards certain areas. So there’s really three areas you can look at for a marketing voice. One is course your words, two could be your face or, how you show up and then three could be like your content, right? Like your writings, blogs, things like that.

And a lot of times you get people and you’ve probably seen this two lane, like being out there. There’s some people that just amazing on video. And sometimes it helps course if it’s like a beautiful woman or a good looking guy, or sometimes just really charismatic, like they just they’re just lit up.

They’re the kind of people when you, when they walk into a room, people like, wait, who is that? Like they just grab your attention. They could be doing nothing but walking. But somehow they grab your attends. Those people shouldn’t be worried about doing a podcast or if they do maybe doing like a visual podcast Navy, but for the most part, it might be, what can we do to get them more on video, get them more seen.

They can be more on stages. There’s things like that. Like I actually love being on stages, but I realized for myself, my voice is more like the second one, which is more of an audible voice. And I learned this at a really out of experience because I had. That would reach out. They would hear my podcasts or hearing me on other podcasts even, and they would reach out and remember they talked to my sales manager and let’s say, my sales manager would say why are we talking?

They say, I don’t know. I just really like Chris. I just trust them when I hear his voice. And so I just want to know what the heck is. And so I did a horrible, such a horrible job selling myself. People even know what I did. But they were, but it was such a way that my voice that they would trust it, they’re like I don’t know.

Like I just feel like I should work with them. What does he do? Whatever it is, I’ll do it. And that got me to realize, wait, why am I spend all this time trying to do videos and trying to get on tons of stages when really my voice can be it. And so from that point, that’s when I started doing a podcast as well.

That’s why I created the Chris miles money show five years ago was, Hey, I’m already doing, it’s already working. And that’s why I got an EO fire. It was actually that’s when it hit me. It was like, oh, these people just heard me. And it was enough. And build that relationship. And so for me, I use audio like crazy, but videos are hardly ever.

And the content, I’m not big on content. Some people are just better writing than they are speaking or anything. I don’t know if you’ve ever met the author that you’ve loved the writings and then you meet them in person, you think, oh, wow. That was awkward. Or shall you hear them speak on stage?

And they’re just not the same. I think Michael Gerber, guy’s pretty horrible on podcasts. People say, and they’re like, oh, that guy’s bombed. But he writes these books, like the email. Yeah, it’s you almost want to say, yeah, just go back to writing your books. It’s cool. It’s good.

Just write your books and it’s great. You’re right. Like it’s, it’s a book that’s changed so many business owners lives, and that’s somebody who doesn’t necessarily have to get up on stages seriously. Like he could just do it through his books and get other people on a stage.

If he wants to do that, get somebody else to sell his system, or maybe he just shows up to say hi, and then he walks off, that kind of thing. But. Really, those people, John Maxwell, I know he’s pretty decent on stage from what I’ve heard, that guy, he’s pumped out.

I don’t know how many hundreds of books, and, but we all know him just because of his books. Not necessarily because of his speaking or because of any podcasts he does. It’s just purely the writings. All right. So another while you’re saying that a couple other No, I’ve met a guy through all these calls that I have.

You guys can still book a call with me and chat if we haven’t chatted before. But I hear all these side gigs. One of them was like the, he does voiceovers and animation likes doing that. He just does puts it up on Fiverr. Another guy he does like wedding. He does like the MC for weddings.

He’s a, more of an introvert. I think he’s an engineer too. He says, like people need to get up and part, I need that leader to get them going. So he just steps out of his shell and does it yeah, the, those are great ways to make an extra five, 10 grand a year, and then you can go that into turnkey rental.

That’s yeah. Great. And that’s a cool economic engine you can create because we can generate more money, more income, fast without money in which a business and delivering value for people does. That’s, that just accelerates all your goals. You’re trying to hit when you’re trying to do real estate stuff.

Yeah. A lot of people like to do the silly travel hacking stuff which I thought it was silly until you can pair that with trade lines. If you guys want to check that out, civil pass, a casual.com/trade lines and yeah, I’m making like 10, 20 grand a year doing that little site. So exactly. But yeah, Chris, you want to give folks your contact information to get ahold of you and.

And if they want to continue this thought process with you and maybe do some coaching about, finding the site. Yeah, for sure. Yeah. If you’re trying to find that side hustle and especially trying to get out of the side hustle or make your side hustle your main hustle, right?

Yeah, like the best way to contact me is either one. You can go through my website, money ripples.com. You can message me through there. Also, you can actually follow my podcast, the Chris miles money show. I’ve got several episodes regarding monetize your divine genius. Think different things about, business that can help you grow that plus others on, on personal development, on money and things like that too.

Yeah. A lot of things for free on there and, but she got a pay to play after a certain point and get Chris’s valuable time later on, but it’s probably worth. thanks for joining us, Chris. And we’ll see you guys next time.

 

[ NOT FOR PODCAST For letter cover]

They were better synergistically together than they were apart in something. I I was listening to Tim Ferriss’ podcast to stay. He said something pretty cool. He said you don’t need to be the top 1% of 1%. Like Michael Jordan, all you gotta do is figure out like three things that you’re in the top 10% in that here’s the key.

It’s people aren’t good at that. Typically like for example everybody can speak a foreign language, right? Yeah. And it’s no big deal. It’s a commodity, $20 an hour person. But you combine that with two other things that people aren’t good at and Kaboom. There you get now you’ve got a niche.

Yeah, exactly. That’s thing I was gonna say too, is when you blend it all together, think of that we’re in the financial space. And the cool thing is and remember my wife has also the financial space too. And I remember she saying yeah, I guess we’re in competition with each other.

This is before we dated or anything. So I guess we’re in competition with each other. I’m like, no, we’re not because you can’t compete with me. I’m sorry, but you can’t do it. I do. And then to save it. I also said on the flip side, I also can’t do what you do either. So that’s the beautiful thing.

Cause we were both serving the same market, but we were two very different ways of approaching it. Lane, you and we hit some of the same spots sometimes, but we’re two very different people and we have our own unique flavor, our own unique recipe that goes with it. And when you start combining these things to get.

That’s what makes it cool. It’s like my friend who’s he’s one of the, he’s a very popular actor out there. He’s always like a supporting actor. He’s also really funny, even though he’s always in dramas, he always, he’s always typecast as being like a general or a police officer or something.

Why Choose NON- RELIGIOUS Health Share Plan | Health Insurance Alternative

Folks on today’s podcast, it’s a follow up to the last health insurance alternative. A lot of you guys are quitting your day jobs eventually, and the question comes up, what the heck do I do for life insurance or not life insurance, for medical insurance to pay my bills in case I get sick or, something bad happens to me.

So we’re gonna be going to this today with another alternative. Just to get that in your ear and you of be thinking about it. This is the kind of stuff we talk about at our events, which is gonna be coming up very soon. Time is running out to sign up for the retreat. Go to simplepassivecashflow.com/ 2023 retreat and sign up there.

Actually apply there if you are not in our family office group and you’re a newcomer, but really there’s no other way to build relationships. Investors meet myself. Ask all the questions you’d like, or even the hard questions. I think that’s why we create this intimate environment where you guys can ask those difficult questions.

But something I’ve been working on I decided not to go for and buy a house to live in because, My problem is I don’t have a W two day job and clean financials. So what mortgage lenders will do for people like me is they need to get me past this income verification.

They wanna know that I can pay, that I have income, but because I have no W two salary I have, they have to look at my, either my 10 90 nines, which I report. or they look at my bank statements and they go through all my stuff. And as you guys know, mortgage lenders are in the box thinkers.

They don’t really understand. It’s pretty common that, in investors, they bang their head against the wall because the mortgage lenders like you lost all this money on this K one. It’s yeah, you’re supposed to lose a lot of money. It’s all depreciation and paper losses, which is supposed to offset and lower my taxes.

But it hurts you in this situation. But there are lending options as I discovered for folks like myself and a lot of you guys out there who show a lot of negative losses from the K one s on your tax forms to save thousands of thousand dollars in taxes, which is in what my opinion, how you’re gonna do it.

The trade off is when you’re trying to get a home loan and especially a home loan, over that ju loan size, to buy a 1, 2, 3, 4, $5 million house and above. In this tough situation. But just to, so you guys don’t have to go through the brain damage, like once you get past the income verification, which I did, right?

I got past that dungeon stage. Basically, it’s credit score determines your amount of how much loan you can get. They’re quoting me. I need, they need to see 50% loan, the value or loan to income. So they figure out what my income was. I didn’t review it, but whatever it was decent enough.

And then that’s how they figure out what’s your maximum monthly payment is. If you guys wanna hear more about this in detail, we had a podcast about this in the last year, non qualifying co mortgages, and he locks with Benson Pang. If you guys wanna go check out the website on this, but you know the quotes that I got back were.

Nine and a half to 10 and a half percent. And I’m all for taking the arbitrage between, the your cost of borrowing your money and then go invest it and make more other places. But, That really tests my fortitude, right? It’s not like you’re paying four or 5% in an infinite banking policy and you’re gonna go make 15, 20% plus because now the interest rate is higher and also the yields have dropped in deals because the cash flow is a lot lower and due to uncertain times worth where interest rates are at right now.

So that will change probably next year. At this kind of point in time, I was like, yeah, probably not the best. And I gotta admit, I was a little sticker shocked by the monthly mortgage rates there. But, it just and it pissed me off and it’s you know what, I’m just gonna go pay cash for this thing, and I don’t want the mortgage lender to get 1%, 2% on this thing.

I even looked. So this is 30 year fixed mortgages. And I also found that, in this non qm, non-qualified mortgage world where they actually treat you like adults and let you make choices even though they may not be good for you, that they also allowed for some interest only for the whole note.

Which was, you, I, from what the comparison I made, like you’re paying maybe half a percent higher. So if you’re paying. Point 9.5%, it bumped it up to 10%, so not much. Definitely made the payment come down maybe by 10% per month. But, in, in theory, if you’re a, use debt to your advantage purists, right?

You want to get that interest only, but obviously that, that clashes with, I think, most conventional thinkers out there. Still at the end of the day, I kind felt like, just buying a house just was a, I think this is where it comes down to more personal how you are, how you view life and like I’m more to spend money on experiences and things.

I’d rather go and spend a few thousand dollars a month, or heck even $5,000 a month on meals with others. Time savings, spend time with my family or just have less stress of doing, saving money. Like drive, driving to Costco to stand in that awful line.

To save $10 or for me, $30 in gas cuz my gas, my tank is pretty big. But It’s or spend that five, $10,000 plus on a mortgage at a very high interest rate. I think it made that. Made it very obvious and I don’t know what I was thinking. I’m sure a lot of you guys cut waiver on like bad purchases like that, it just, I think for me going through that exercise I was interested and I also wanted to share a lot what I was seeing in the non QM world in terms of mortgages and but also it was a good exercise for me to you.

Reiterate what is it that’s really important to me? What is my ideal life? And, if you’re somebody who wants to buy a big house, because that’s important, that’s totally cool. I no qualms about it. And I think it’s great that you own it. But if you’re somebody who’s on the fence and, you can’t have everything, but you have to figure out what is the most important thing here.

That’s, I think, the message and that’s my takeaway, if you guys want more insights on this, catch up with me in Hawaii when you guys come here in January for the retreat. There’s still time to sign up for that and if you guys are new to the group, join the club.

Simple pass at cash.com/club and we’ll also gonna be doing an Ask Lane show, so make sure you’re on the email list. You can sign up on that list and you can submit your question at simplepassivecashflow.com/question will air it on the show and enjoy the podcast.

Hey, simple passive castle listeners. Today, we are going to be talking medical sharing. What do you do after you leave that w two job and you leave that health insurance behind some other cheaper alternatives and something that I’m personally looking at lately, but don’t you introduce our guest Thomas Lindsay on everyone, Thomas.

Hey, how you doing lane? Thanks for having. Yeah. So Thomas helps people transition from get out this healthcare dilemma that we all will find ourselves after we finally fire the boss and leave that pushy W2 job behind. So let’s start from the top, right? You get health insurance, and maybe we can talk about how it’s a little bit you.

It’s expensive. Why is it so expensive in a normal study? It’s expensive because the insurance companies and the hospital systems like it expensive they make their profits are a percentage of the cost. So one of the things that happened with the ACA is that they said that you have to spend 80% of the premium on.

Medical care, right? And then the rest could be used for administrative expenses, including profit. How do you grow your profit? If it’s based on a percentage of premium, you grow your premium, right? And therefore you grow your profit, you can’t shrink premium and make more profit. You make less profit.

The whole thing and it’s, and it was that way before the ACA I think the ACA just really accentuated the storyline, which is the more premium people pay, the more the insurance companies make. And it’s just a, it’s really a dirty little system where consumers are, left to think that this is somebody else’s money.

I buy insurance and then the insurance company. Pays for my medical expenses. And I have no idea how much it costs. I have no idea how much they’re being billed, how much they’re paying. I think they’re working for me in my, on my behalf to keep costs down, but they’re not right. And a lot of my investors that are doctors or dentists, they see this from the other end.

They’ve gotta do all this coding. Actually. I have a few investors that are actually the coding people. Who support the the medical staff doing all this stuff and, that’s not cheap, right? No, there’s it’s over, it’s 33 to 35% administrative burden essentially. And it’s ridiculous. Cuz when you have that third party in the middle it just creates. Excess costs.

So for a normal person leaving the W2 job, and I’m assuming that traditionally those people you would go and you’d get like a bronze, gold, silver, or just a right open market plan. Is that correct?

Yeah. You have a, yeah. You have a couple of options, right? Once you. No longer once you’re no longer part of a group health plan. You can either go to the exchange or go to the private marketplace or get an association plan. So if you’re a CPA and you’re part of that association, then they’ll have an association plan that, that you might be able to access and use, but those are your three choices.

They’re all terrible, right? Because the premiums are high, the benefits are low. It’s a poor value. And, but that’s all, but that’s, what’s available to the individuals. And what is that? What is the somebody who is maybe 50 years old, pretty good health single person. How much would they expect to pay?

Once they leave their corporate job per month on health insurance on. If it’s just them or them and their spouse, yeah, they’re gonna pay, they’re gonna pay six, $700 in employee, an individual premium and a family of five that kind goes up two or three. If you’re a family and you, yeah.

If you’re 50 years old and you have family coverage, you’re gonna be, in the 1700 to 2000 plus range for any kind of. Benefit, right? Yeah. Yeah. Which isn’t a, that much actually. Traditionally people think you don’t wanna leave your day job just cuz you are gonna have medical insurance, but I always tell people, Hey, do the math, right?

If your medical insurance is gonna be a thousand, $2,000, that may just mean like a few rental properties. There you go, you don’t need to stay at your crappy job for the extra 15 years or stay the extra four years to get that supposedly grandfathered health insurance plan. Yeah. It’s real short term thinking, right?

You, a lot of the stuff is like we’re brainwashed. I thinking like the health and coverage is this magical benefit, but yeah, it all costs money at end of the day. And it costs. I guess what we’re saying here, if you go to the normal, bad options, you’re gonna spend to a thousand of $2,000, we can do better than that.

That’s why you listen to podcasts and listen to stuff, but we’re gonna talk about medical cost sharing today, which I guess maybe you’ll start at the price, right? Like how much does this typically cost in comparison to the normal. It’s gonna be about 60% less than what you’re currently paying and you’ll get, you’ll have lower out of pocket expenses typically as well.

So not only is it cheaper from a monthly cost standpoint, but when you actually go to use the benefit, when you actually go to get medical care, you’re gonna pay less. Out of pocket with most of these health share plans and specifically with Soldera. Yeah. So take us how, what is this thing and, how does it work?

How is it that it’s saving the costs are so much lower? Yeah. It’s saving because it puts you as a consumer in charge of your care. And also. It, you are shopping for the healthcare, right? So you’re a cash pay customer and the health sharing organization will reimburse you for the expenses that you incur that are beyond your chosen level of self insurance in essence, like the deductible, right?

If I’m gonna pay the first 500 of each need then everything after that would be shared among the community. But the way it works is you present, let’s say you, if you’re going for, voluntary procedure or appointment you can either there’s no network, so you can go wherever you want.

You can choose your own doctors or hospitals or whatever. You can either call and talk to the care logistics team and they’ll hook you up with a provider or you can do that yourself and go where you want, but you present yourself as a cash pay customer and they will bill you, you might have to pay something up front when you’re there.

But you wanna pay, you don’t wanna pay any more than your chosen, what they call initial UNS shareable amount. So you don’t wanna pay any more than that. And then have them bill you, and then when you get those bills, you send them into Sedera and then they share them among the community and send you the money to then pay the provider.

So it’s different in that regard, right? Normally with insurance you. You show up, there’s gonna be a copay and a deductible, and even you might even know that there’s co-insurance, but you really don’t know. You wait for the provider to tell you what that is, and they have to look at your card or maybe even call the carrier and then charge you accordingly.

And then they build the insurance company and then the insurance company pays them. And if there’s something that you owe you’ll get. You’ll get a bill for that. And it’s like a paperwork nightmare. You get bills, you get explanations of benefits and you really don’t know what anything costs and you don’t care because it’s, somebody else paying for it.

Or you think the insurance company’s really looking out for you and keeping the costs down, but you’d be, you’ll be shocked when you go from that model to this model. where you actually are engaged in the process and you are aware of what’s being billed. It’s a game changer. So one, one con obviously that you just mentioned is, know, you gotta come out with a little bit of money out of pocket which is probably no problem.

Average listener here. They’ve got a few 10 grand sitting in the bank. 50 a hundred grand in their life insurance policy. They, so they can come out of pocket a little bit. So then you take the, when the real bills come through the majority of the costs, they take that to their the medical share group, which H how many people are typically in one grouping?

It’s the entire community. So with Sedera there’s a little over 17,000. Members that are pulling their resources together. And there’s all kinds of medical sharing groups out there. Some of ’em are small, some of ’em are pretty large. So you can build some of a steady state.

Cause I think I’ve seen some really small ones where it’s maybe like a few hundred people or I don’t know how their, exactly how small is, but the medical sharing facilitators. They bring in the bills and they call up client, 57 and 84 and 236 and say send Tom a check for it this much, and this much.

Yeah. That’s a real convoluted way of doing it. So two things I would say to that is one anything below a thousand would. I would not want to be a part of Ty if you’re a large employer, then when you get to a thousand employees, maybe 1500 employees, that’s when it’s makes sense to start self-insuring to where you’re, you are up to a certain point, right?

You. But before that you don’t wanna be, there’s not enough people yeah. To spread the risk, not enough steady state, keep the costs down. Yeah. Yeah. So I would say that. And then to your, what was your other point? You, you said something else and I just I guess another question I have is oh, people are like, alright, this isn’t like a huge institution.

Even 17,000 is a smaller number. I think people are worried, especially people that are they have some money and they, maybe they take care of themselves cuz they know, fitness is the real wealth after a while. How do I make sure I don’t get into a group of, four foot, five, 300 pound people who eat Twinki for lunch every day.

That’s a great question. And the, yeah, there’s really no way of doing that. At a certain size, it’s gonna be the average of, America, which is not right. The average is not good, but the way costs are controlled is makes all the difference in the world. So one there’s preexisting condition exclusion.

So any condition or any, anything that you have that’s been treated in the past three years or been diagnosed in the past three years? Or that you’re even you’re aware of, and maybe you didn’t even get treatment, you have that issue that’s not shared. Not fully shared among the community until year four of your membership in year one, they don’t share anything in year two, they’ll share, up to $15,000 towards that condition.

And then year three 30,000 and then year four. It’s fully shareable. So that’s one way they do it with, preexisting condition limitations, and then through the cost control mechanisms that they have in place. And just getting actual fair pricing from providers instead of paying, the inflated costs that the insurance companies pay.

And then other services like second MD, if getting a second opinion, they also don’t. Don’t pay for things like if you’re drunk and you get in a car accident, that’s not shareable. If you just like breaking the law, like there’s some religious affiliated, which the one that you’re working with they’re not religious affiliated, but I know some of the religious affiliate, they won’t pay for things like abortion or correct some certain other procedures.

So you gotta be careful about those too, right? And so that’s how, some of the ways they control the cost and make sure that it’s, it’s really for, situations where, you’re in an accident or you’re you get ill and it’s not self inflicted. It’s not, something you didn’t need to have, something voluntary.

So those are ways to control the cost. And it’s amazing what you can achieve when you do that. You can significantly reduce costs by more than half utilizing those tools. Yeah. And I think it’s just another example of, look, if you’re just gonna do what everybody else does, you’re gonna get slaughtered with everybody else.

If you invest in the 401k, you’re gonna work at your day job for 50 years. If you invest, if you use the same healthcare. Coverage is everybody else you’re gonna pay two or three times the price. But like anything else it’s, it’s not without a little bit of work. And but what I keep telling people, especially in the past investors, seller and mastermind that I have, it’s not that hard to be an astute investors.

You don’t need to underwrite deals. You don’t, you don’t need to like go travel. There’s just certain things that you need to do. And this is just a small example of that, there’s some tricky things here. But yeah, I guess Thomas, like where do we start? Like somebody’s quitting their job in the next year or two, maybe take us some practical steps of, know, engaging with a company like yours, but what are some ways of comparing different options?

Yeah, step, step one would be to, evaluate your own current health situation, right? To determine whether do you have a preexisting condition? Are you getting regular treatment for that? How much does that cost? If you can. You can do a little bit of homework. Just because you have a preexisting condition doesn’t mean that you won’t be better off in a health share arrangement.

You just need to look at the, how much that actually costs you. Then look at the health share and say, okay, how much are they gonna share towards this in year one, year, two, year three. And how much will I be saving when I, ditch my insurance and go with this route? Because I can use that savings to help.

Cover some of those costs, right? So you gotta do that analysis. And then there, there are several, there’s probably only really five health share organizations that I would consider. And so you’d go and do a comparison to see, who’s got the best best for you membership benefits for you, right?

Got it. So those would be, those are really the two steps that, that she need to take to get the ball rolling. Yeah. And what would you say like less than half or about 50% savings, the the typical on these things and, yeah, I would say 40% plus easy. I saved 62% when I switched.

After I left my corporate job and then I lost, I couldn’t afford the Cobra premium, cuz my income was cut in half and I went without actually for a while trying to find something that, that I could afford. And that’s when I found the medical cost sharing and I was paying. $1,750 and it went down to $487 in essence.

So I think that’s actually more than 62%. But yeah, you guys can I’ll put all this information along with other information about the subject simple, passive, casual.com/healthcare. And this is something I’m looking into these days. I’ve got health insurance through my wife, but I want to quit that silly W2 job.

And that’s really the only thing holding me back. And I know a lot of people back from putting the day job is just this, what are we gonna do for healthcare, right? Yeah. Somebody I heard use the term spouse with benefits. , that people are looking for, spouses with benefits or that’s the reason, the only reason that the spouse is working is so that they have the health insurance.

it’s a, it can be a game changer. It was for me and I’ve been in insurance, my entire career. I’m a, I’m an insurance professional. I’ve I as a, in my corporate job for 23 years, we did payroll, HR, employee benefits and work comp insurance for employers all across the country.

And we would provide health insurance plans on a group basis. would put together self-insured plans. And so I’ve been in this space, my whole career. I just never realized as an individual out, a free range chicken out in the wilderness, how difficult it was and how expensive it was to find healthcare until it happened to me.

And I was super grateful to have found this this alternative. And so I’m a huge advocate for. And, again, I, when I first came across it as an insurance guy, I was let my red flags go up and I’m like this is not. Yeah. I For me it was, it sounds too good to be true, but then when I start to, travel and I meet in other investors and join different masterminds, these are the things that we talk about, like which, which Medi share are we using or healthcare sharing plan.

Somebody mentioned to me like, there’s one with. bunch of CrossFitters like those kinds of people with eight packs and can I don’t know if they make ’em run like a run test or what, but. Someone mentioned there’s some health sharing plans with that I wanna get in those, those guys don’t there you go.

Get sick. yeah. There’s one affiliate for Sera out of California who has a CrossFit. And so he promotes it among his CrossFit membership and I think he’s rolling it out to other CrossFit, specifically to CrossFit companies yeah. To offer to their me. So for the insurance company it behooves them to get those type of fire breathers in their community.

Cause totally. Yeah. They want the people who are health conscious, who, doesn’t mean you have to be, you don’t have to be a health nut and, or, or being Superman shape. But just, Caring a little bit about, yourself and eating in things in moderation and getting exercise and moving around, it goes a long way to reducing how much burden of a burden you are on the healthcare system.

Yeah. I’ll be on the lookout for that one, but anything anything else we think we missed that, that kind of folks knew newer to this, they need to know about. Yeah, just, there’s a, you wanna look at what the preexisting, first of all, I would say, this is definitely something everybody needs to take a look at.

There’s no reason that you need to continue to do the same thing over and over again, like you were saying earlier and expect a different result, right? The 401k healthcare, get all that stuff. Yeah. Costs. Aren’t gonna go down. And it’s not gonna get less expense. And this is a way where you can take control and have a little bit of individual responsibility in the system and really fight back against, the huge corporations that control healthcare in this country.

So wear it with a badge of honor and go out and help make a change, and cuz that’s the only way things will change is once the insurance companies fill that. But definitely check it out. Fight the power. And what’s your contact for people to get ahold of you ask more questions.

You can reach us@gotpurehealth.com. You can find me on LinkedIn, Thomas rock Lindsay. And then, yeah, I’ll put this all up on simplepassivecashflow.com/healthcare along with a lot of other things I’ll find on the subject. We’ll figure this out together, folks and this would be another good option, joining that simple passive cash flow accelerator program, you get in and you build relationships with other sophisticated and accredit investors and you talk about this stuff, it’s just not something you’re gonna just walk down the street and say, yeah, I do this for my healthcare.

It’s a little personal. So we make people sign confidentiality agreements. So we can talk about this stuff freely. Thanks for joining us guys. And we’ll see you guys later. Thanks lane.

Why Leave Your High Paying W2 Job | Lane Kawaoka as a Guest on W2 Prison Break Show

What’s up folks? On today’s podcast, you’re gonna be hearing a little bit more in depth in my story. I get interviewed a lot and it’s very rare that you get interviewed well, like on this recording that we’re gonna share with you guys so you guys know, there’s a lot of podcasts out there, but, we try to keep things cool and authentic for you guys.

And part of that is, not just sugarcoating the narrative that a lot of people will put out there. With that in mind, if you guys have any questions we probably need to do another, Ask Lane show where we open up the question bag. But if you guys have any more relevant, to what’s gonna going on lately go ahead and email it in at the team@simplepassivecashflow.com

We’ll get it. Show going here in a bit on that. If you haven’t yet go and sign up for the club simplepassivecashflow.com/club. You get access to. All the e-courses that we have for free, The Infinite Banking e-course and then a lot of insider information as well as deal access there. And you can also take a look at all the other past deals we’ve been doing for the handful of years prior to this.

I think maybe we started doing this, maybe 2017 was our first syndication transaction. But yeah I feel like we’re not the new guys anymore, right? I think you can tell who is fake if you make it. It’s one way of doing that is just seeing how many assets they own.

Today we own $1.2 billion of assets under ownership. And I’ll be the first one to tell you, 2019, when we are around that half a billion dollar mark, we were getting our feet under. Since then we’ve expanded the team. I personally am not really in the day to day, nor are the principles and partners not in the day to day as we’ve hired that out to industry professionals.

What does that mean? People who’ve been property managers for a long time and have. This is what they do for a living. And we go on and headhunt the best people and bring them in house to asset manage for us. Very different from, I, I think there’s a lot of people out there that think, it’s the bigger pockets mindset, right?

Somebody who just doesn’t like their day job can be a. Real estate investor. I do believe to some point, but when you start to run thousands of rental properties and accept other people’s money in the terms of the syndications, I think you need to really hire a professional to do something right.

And I just don’t wanna discredit people in the real estate investing, real estate operating asset management industry, You. Yes, you don’t need a college degree to do it, but I think experience in this industry is very valuable, which is why we’ve hired people who are much better than you know myself.

And I’ll just, I’ll call myself out on that. But if you guys want to get more involved with us, join the club. We’ll simplepassivecashflow.com/club. Beyond the lookout as we’re gonna start to put out the. The info pages and the signups for the annual retreat here in Hawaii, January 13th to the 16th.

Make sure you apply and if you are on our investor club list, you can’t just come, you gotta just, you have to book that onboarding call with myself so we can get to know each other. And even if we’re not a good fit, I always try to make it a point to point you guys in the right direction cuz it’s, that’s ultimately what I’ve found that I enjoy doing for some strange reason.

So we open up your balance sheet and we look in. It’s basically a short period of time where you get to ask the questions and send you off on your merry way. For a lot of people it can be life changing and that’s, I personally like to be that person to make that impact for you. So make sure you guys sign up for that after signing up for the club and enjoy the show.

Lane, welcome to the show, my friend. Good to see you. And I look forward to the discussion today. Thanks for coming on. Yeah. Thanks for having me love everybody. Yeah. And before we get into your W2 prison break story, which is an awesome one right now, you’re doing some great things. We’re gonna definitely dive into it.

Just, I, to expand on the intro that I gave your bio kind of gives us some background on you. Take us back to the early days when you got outta college and started working and ultimately what led you to where you are right now? Yeah, I grew up in a household where your chocolate goes to school, studies hard, is a good kid, and invests in your 401k and max that out.

Just work it and grind at a job and work your way up the ladder for several decades. Yeah, I was always, we were always taught to save, like when we went to restaurants, we never bought soft drinks. Those are always costly, we are pretty frugal with our money.

. I was able to save, 80 grand in a couple years working and to buy has to live up in Seattle. And that was that program. I call it the linear path. Cause you just follow it, like your brain dead and just good boys and girls just following that path. And that was me like right outta college.

I was a construction supervisor out there. And a hundred percent travel. And I knew you had to pay your dues. But very early, I was like, this sucks, like this engineering job sucks. Yeah. Another fun thing people like say, oh, it’s good to be outside outdoors.

And not stuck in office. I’m the opposite. I went to the, go to the office every day. So be the same thing. Go to the gym the same time. That was more like me, but , that was how, how I was in my early twenties. And you were in engineering, it sounds like that’s correct. I got a bachelor’s in industrial engineering because I wasn’t smarter enough to get it in computer science, electrical, chemical, and not smart enough to get it in like mechanical or civil for undergraduate.

Yeah. So I went to project management, right? There you go. And you mentioned about you were being taught to save. Hey look, my parents did the same thing too. We were frugal. It’s invest in, I drank the Kool-Aid too. Invest in your 401k and save and get a good job. And. Hopefully you retire when you’re 65 and you’ll have enough money to live for the next 20 or some odd years.

What did you do with that? You saved up the 80 grand. So obviously there was some benefits there, you learned those lessons. What did you said you bought a house with the 80,000. Did you buy a rental property or did you buy your main residence? Yeah, I bought the main resonance first because that’s what everybody says to do.

Get on the escalator of wealth building and oh you’re paying rent and throwing money down the tube, which in my opinion is totally false. I don’t know people get that from, but I blindly followed the dog. One, bought a house live in and, appear this 20 something year old kid is living there all of himself and he’s traveling a hundred percent for work.

So what does a cheapo do? I started to rent it out. And I just lived off the company dime, living in hotels for several years up straight. And I, I tell people it’s not what you make, what your top black income is. It’s more what you save. Now, it’s making close to six figures, but like nothing like how kids are making these days, or I know a lot of your guys are making like two, 300 plus thousand.

A lot of my clients make over 500, 600,000 as doctors. It’s all what you net. And at that time, making a hundred grand, I was able to save sometimes 80, $90,000 a year, just paying taxes, basically. So all that money went to buying more and more rentals after that first one, I got that taste of cash.

So I was like, wow. The tenant’s paying down my mortgage, I’m getting the equity appreciation there. I’m getting cash flow, which I can feel like I can finally spend it, cuz it feels like free money. And then I’m getting the tax benefits and then the appreciation to which I don’t really count on, cuz I don’t believe in gambling on appreciation and be going cash flow. But when you add those four up, you’re making like 20, 30% plus and your returns on your money. And I. Why the heck am I doing this? Eight to 10% nonsense.

Great insight. So it sounds like you had a pretty significant mindset shift early in your W2 career. And that really helped you, understand that, Hey, there’s I can leverage my W2 job, you’re out traveling. You’re not really there. So you just said, Hey, let’s rent this thing and you got a taste of the passive income, and then you started acquiring some more properties. And we talk about that a little. And before I go any further, I know people have heard this before, but we’re not talking about wholesaling and flipping houses to me.

That’s what you do when you’re broke. For many of us with good paying jobs and, are busy managing our, like our day job. So we don’t get fired the stuff on the side. it needs to be passive. So I was buying these what they were called, turnkey rentals. Sometimes folks out, out there, like the flyover states where the numbers work way better.

One of the things we look for even today, when I buy large apartments is like this 1% rent evaluat ratio. So you take the monthly rents divided by the purchase price and it needs to be 1% or higher for the numbers to work for the cash. Why is cashflow important? Obviously you get paid every month and, but in case of a recession, you’re not, out on the code, right?

You can pay your debt surface. We, we don’t really look at like loan, the value. We look at debt surface coverage ratio for some more sophisticated investors out there of debt surface coverage ratio, 1.2, five or greater. Like going into these types of deals, you. It’s typically not gonna be where you live.

Most of my clients live in Washington, California, New York. It ain’t gonna be there. Those are called primary markets. So I was buying in lot of these secondary ter rate markets like Birmingham, Atlanta, Indianapolis, Kansas city, Memphis, little rock, places like that. Not the funnest places to go and visit, but they have these great rent value ratios that allow you to cash flow.

They don’t appreciate as much. No, I don’t really care about that. I don’t care about what cash. So I started to buy all these 20 key rentals and just all my money plowed to just down payments on these things over the next several years. Did you, okay? This is great. This is great stuff. So you’re not living in, you’re not living where you’re investing.

Which I think is a misnomer for a lot of folks who are, working in a job that they want to get out of and maybe create some cash flow. So you did this all virtually, essentially, and maybe touch a little bit more on what you mean by turnkey. Rental. And how active were you in managing these properties that you ended up purchasing in other states?

Yeah. This is actually like a product that people will sell Turkey rentals. If you Google it things will pop up. Guys, providers will pop up and supposedly there’s different layers of turnkey, essentially the idea is house flipper out there will go buy a beat up piece of junk and they’ll fix it up.

They’ll but they’ll put it put like a renter type of standard type of stuff. It won’t be like super pretty, but it’ll be like really durable and good enough, for government work or for, class B and C renters for the most part. So they’ll fix the roof, the flooring appliances, the new page job they’ll fit all the interior stuff.

And. Sometimes these guys will even put a tenant in there for you and manage it for you. I always recommend my folks to get a third party property manager to get this all in place. So you don’t, you buy from somebody else, it’s a great way for like new investors to put on the training wheels as a landlord.

But this is what I did, I bought from 2012 or 2009 was when I bought my first rental . So 2015 is when I stopped by these little rental properties, I got up to 11 of ’em and I think they’re a critical part of wealth building, but if you’re already in a credit investor or million dollar network or greater making more than two 50 a year it’s little rental properties are a pain in the ass and they’re still have some little bit of li legal liability and the debt’s in your personal.

Syndications and private placements might be more of your style. That’s where I switched. So for 2015, with 11 rentals, each rental gives me like a couple hundred bucks, few hundred bucks, a cash flow every month. So you add that up. I was positive cash flow, 3000 bucks, which was BEC a lot of that’s when it’s real, estate’s tax free.

So it was essentially like half my paycheck. I saw the like to financial freedom. Yeah. And I actually saw this very early on and my, my attitude towards work changed pretty drastically in the first, even the first several years doing this where I was I don’t really need to do this too much longer.

Yeah. So you were planning the exit. You were you saw it as you said. Yeah. Yeah. My first job was pretty hard. I worked for a very conservative company where, quality of life is low, but the pay is a little higher. And maybe that was probably a good thing too. Yeah.

Because it cl it heated up the wa falling water and it made me really hate my. And wanna get out even more and more motivation to saving, to put the down payments and more properties. But that was I would say my attitude definitely changed after a while. Like I became apathetic in a way where it’s I don’t have to keep doing this.

Like I make more than you guys at me. It’s start to realize. 95% of people out there. They just are really bad with their money. They can’t save it. They spend more than they make. And, let’s put aside the folks who don’t go to college. Not saying college is really that great at anything, but don’t go to college, don’t get a professional career.

A lot of those people, it’s an income. They just don’t make enough money. If you don’t make 50, 80 grand in this country with a family, you’re not making enough money. Quite frankly. Yeah. That’s a different problem. I don’t know how to fix that. There’s so many websites, debt, consolidation. I don’t know about that, but I was good with my money.

So a lot of folks that I think are listening resonating with this, right? You make six figures, but there’s this kind of money mindset out there. Like Dave Ramsey, C you Orman the saver mentality. What I tell people a lot is that’s good for people who, number one, don’t make that much money. Or number two, maybe you do make a good salary, but you suck at your personal finance.

You can’t really keep a budget. And I would still argue that most people are like this. The people who cross over, like people like myself, right? We save a boatload of our, into 401k, even though we shouldn’t be doing that. And we were on this fast pass to financial independence, need to get rid of the Dave Ramsey, Suzy Orman save, say, save.

And you gotta get into being buy assets with good debt and leverage your debt and in a way, be on the offense. People don’t realize that there’s these two paradigms and the two some people call it the rich dad, poor dad mentality to operating system. I call it the simple passive cash flow.com mentality.

Cause actually tell you guys what to do, buying little rental properties to your network, cuz half a million million, then go into syndications and private placements. After that. But that, that’s what I followed. I followed this journey. Once I got to the accredited status, I started to go into syndications in private placements and I started to dump the low, annoying rental properties.

But the annoying rental properties to me was a way how I learned and it helped me really do due diligence on the larger deals as a passive investor. And Yeah. Yeah. Great share. Can you talk about, and I love the simple passive cash flow.com. That’s your, that’s where you teach people how to do this.

And basically follow this path that you’ve developed, which are gonna get to there’s. So a lot more here, maybe talk about one of your first syndication deals. Cause you did make the leap from single family too, to, to syndications, to mal. Yeah. I already had that mindset of these rental properties are a pain in the butt.

It’s not scalable. Yeah. For if, like I said, I had 11 rentals and maybe a few hun $3,000 and pass the cash flow every month. And it was a bit of a headache because with 11 rentals, just to give some people some insight. I had maybe an eviction or two every year, which are a little annoying.

Of course I have a property manager on all these properties. I’m not some idiot who runs this stuff myself remotely. There’s somebody else that takes 10% of the rents that does all my dirty work for me. Yep. But yeah, to deal with these evictions and these, every quarter, you’re gonna have some big kind of catastrophe.

If you have a love of rentals, it’s if you have 10 sons, one of ’em is gonna go to jail every decade, like that’s just the odds. I’ve never heard that before, but yeah, I guess that makes sense. I don’t have sons, but I just see it on TV and, I just see it out there, see if Felic, some kids gonna go to jail, typically a dude . But yeah I, you see where this is going, and totally I’m like, then I started to join. This is where the big thing aha moment for me was I started to interact with other high network accredit investors.

And these aren’t, super rich people, but they have a million dollar net worth or greater. And a lot of ’em were. Of my pedigree I was an engineer, there are a lot of engineers. There’s a heck, a lot of engineers as investors, doctors, lawyers, dentists, accountants, pharmacists, lot professionals also working their day jobs because it’s a great way to, build up that cash to buy more rentals or go into more deals.

But they’re all their main thing was that they were, you. Dumping their rentals and going into these Archer syndications. And I just saw the writing on the wall. And when you meet people who do what you do and they say I used to do what you do, but now I do this. That’s probably one of the best arguments for me that I at least start to look into these large syndicated projects.

But when I first started saw this stuff, I thought they were like Ponzi schemes. But then I started to get to know the people build relationships. And that’s what this world is. It’s a people game, building relationships, the right operators and building colleagues and peers of other passive investors to know who’s legit in this business.

The trouble is everybody’s got podcasts these days. Everybody’s got books. So it’s really hard to determine who’s legit in this, fake it to your, make it type of world that the general partners live. Which is why I tell everybody and how, like my whole method is like building relationships with other passive investors is why we have a community for this.

And you just basically copy what other passive investors do, that have gotten good returns from people having gotten their money. And this is the essence, like this is the country club deals. This is the virtual country. In a way. And this is the way that a lot of investors invest and we can get into it later, but it really opens up the taxes because now when you’re going into these deals, a lot of these deals do cost segregations, which if some people are rental property owners, you can deduct 1 27 of the value of the home every year and take that as a paper loss.

But with this stuff, you could deduct one third of the property all in the first year. Yeah. Like it could be like a 10 or 20 X that deduction, and now you can implement certain strategies. The typical one for my clients are like, you have a couple, one higher paid person and maybe another lower paid one that we wanna have ’em to stay at home and play with the kids and enjoy life.

Now that person can implement real estate professional status rep status, which is a checkbook on checkbox on your taxes. There’s a few loopholes that jump through, but once you do that, now you can use the passive losses to not only offset all the passive income, that’s the gimme, but use it to offset the ordinary income, which I know a lot of you guys have high w two or 10 99 salaries.

And you can basically, if you can pay whatever taxes you want. At that point. Correct. And as you alluded to earlier, it’s not what you earn. It’s what you get to keep, right? This is right. This is a tremendous way to reduce your tax liability. And even to, to zero in some cases, I’m sure. Yeah.

I don’t pay taxes equally. I have million plus bucks of passive activity losses. To use at my disposal. Yeah, there’s a strategy to it. And unfortunately, a lot of CPAs tax folks don’t really understand this stuff. That’s why, like a lot of this stuff is if there’s one big piece of financial advice, never take financial advice from people who are not financially free themselves.

Like, why would you wanna take financial advice from a CPA? The dude has a job at J B. He works for a paycheck. He hasn’t figured this stuff out. Yeah. Show me your income statement. Show me your net worth. Yeah, i, I don’t income. It’s all what you keep and what you accumulate at the end of the day.

There’s a lot of people with high incomes that aren’t the most sophisticated investors. or money managers. And it’s all net worth to me is what your age is. So when did you great stuff? It’s you’re now in these multi-unit deals and you’re buying a lot of commercial assets if you will.

And you’re up to several thousand units now, but when did you start. Really think about, okay, I’m exiting my W2. yeah, I did this. So know, switching back to the W2 world I did change jobs few times actually. I started to work for the government and , I actually, the job became pretty I actually enjoyed it at that cause I enjoyed the full workers.

I liked the management. I didn’t like what I did one bit, but I mean to me, there’s like a triangle of who do you work for? Who do you work with or your subordinates, and then do you like the work that you’re in? I think if you have two out of three of those, you can be pretty damn happy.

You can’t have one or not. Yeah, I guess what you’re trying to find is something that’s all three, which. Good luck but some of my doctor clients have it, because they, if they happen to be, have a good boss, that’s the hardest one. They work with people and they, they often work with people on their worst day and that could be very enriching.

And then they obviously, they may like their coworkers to have a great team environment. That’s the perfect environment where you can make a full load of money doing that. Most of them work two to three days a week. But they typically do once they find this stuff. But for me it was like just downgrading to like more quality of life, less work responsibilities, but after a while, I went into some bad deals with people as a past investor.

Then I realized that I needed to control the capital stack myself and, that’s why I started to do deals myself. And then my impressions would come in and that was it I felt felt a little irresponsible, like bringing in my constituents that here I am working this W2 full-time job on the side.

Little Iwan still. So I eventually cut the cord on that, but if I wasn’t like a general partner geo operator, Probably, that would’ve been a great, like I could have probably still doing it today. Like I enjoyed the work somewhat. It was cruise. I got to do my investing, passive investing thing on the site, which isn’t that hard.

Yeah. To be a passive investor, maybe takes five hours a month to do it. Yeah. That’s really all it takes. Yeah. Great. Yeah. But that, yeah that’s what. I couldn’t just stayed in that job and just kicked back and cruise, but, I think I quit around like 2018, I think. 18 all right.

So you’ve been here for about a little over 10 years in W2. Yeah. But the w two really helped me, propel our company and, build our organization that, I, and I think for my kids, I’m not a huge fan of college and higher education. But I do think that it gets you in a position to compete and get into a fortune 500 company.

And I’m not a huge fan of fortune 500 companies cuz of bureaucracy and everything, but it helps puts you into a system and you can be on the inside and be a. You can learn how their systems are. And a lot of those systems I implement today, minus all the BS, essentially. It goes without saying congrats on the on the exit there, but talk about your company now, you’ve got this big real estate company.

You’ve got over a billion assets under management, over 8,000 units. Talk about what, talk about your business and maybe a little bit about what, like a typical day looks like for you? What are you doing? Yeah, today it’s changed a lot. In the beginning we were running around.

Doing everything, managing the manager, working with investors. When we went over, I would say 500 million of assets on their management. It became unscalable to do it like that for ourselves. And that was a period where we had to reinvest a lot of our. Profits into other staff with who did our job a lot better than us.

So some of the key hires other than, investor relations staff and, marketing staff, but the key hires are like, hiring other property managers. But the property managers who did, were in the industry for a decade plus, and they have this insights, it’s just if you came at, and play doctor or computer scientist or computer engineer for a day, you just can’t do it. Like even if you studied up for six months to a couple years, you just can’t do it. And. Here I am, I guess I’m a semi smart dude, right? But I don’t know, like the little nuances that somebody who was, worked at a 30, $40,000 leasing agent job and stepped up to a property manager that maybe started their own property management company.

Those are some valuable insights that kind of, we have as our operations staff now that we’ve engulfed. So we’ve, our role has changed from, doing everything, to just creating the org structure. And that, that was not one of my forte. So we have some C level staff that help us do that.

But these days it’s more like guiding the direction and business development. Cuz that was essentially what got us started was the key relationships and continuing to build key relationships in the future, like with banks and with equity partners and stuff like that. What is the, sorry, go ahead. Oh, I think still.

I have a life coach and he tells me you need to figure out what you really enjoy out of all these random things you’re doing. And for me, it’s interacting with investors, give them that all home. And you’ve been doing it all wrong of 401ks, this bunch of retail investments that just, go out to the clueless and you need to get into like deals where, people and where.

It does well in recessions and then you you implement that, then you get the cost segregations and the depreciation and losses to do different games on your taxes. Then you do a little bit infinite banking, which is like cash value, life insurance at a 90 10 split with 20 10% being insurance.

And those are 1, 2, 3 combos. Like it’s a powerful thing that is very counterintuitive to how normal people do finances or people still in that Dave Ramsey school of thought. It’s a game changer and it allows, people who’ve been working so hard, I’d say our average client, 1.5 million net worth in their early forties with two kids, you change one thing around now, one spouse doesn’t have to work and now they’re, they see the light instead of now they’re 20, 30 years of working.

It’s really five years ahead of ’em. It’s totally transformational within, these individual families and, putting on the events and then meeting other people who have taken the red pill of finance. That’s what I enjoy. Awesome. And you, so you’re putting on some events too. Talk a little bit more about about that.

It sounds like you have events for your clients. Yeah, we’re a kooky bunch, right? Like we are our deep down core is like we’re savers. We delay grad and we get off on that. People come to, we do in Hawaii, like people come to Hawaii, nobody stays at the high end stuff. That’s not good use of, that’s not good value.

They stay in like kind of the more boutiquey, three star, four star hotels. A lot of these guys are very affluent, especially once they start to invest and. It’s lonely, right? All our friends and family are investing in like the 401k or some of the, the more aggressive ones are doing crypto and Bitcoin or worse out coins.

And it’s just here. We are investing in very stable, boring assets. Like I almost call it like investing in blue overalls and machines and hard work. We buy. 1960s and 1990 properties that caters towards the lower middle class, a grungier demographic. It’s not sexy. We slowly and it takes a while, right?

It’s not a get rich quick steam. We go in and we rehab units slowly as 10 minutes, move out takes forever, takes, several years. but in recessions, it performs pretty well. And in good times it outperforms a lot of the good stuff. Yeah. And it’s like this idea of doing this with so many people is crazy too, that like when people, assemble, I’m going out to like LA next week and Arizona, and just to do a little pop up.

Meeting, but when people assemble and they’re like, yeah, I don’t do the 401k because like all the reasons lane said it totally makes sense, but like none of my coworkers, I can’t, they start to become very distanced from most of their coworkers, because none of that stuff, when they actually use their head and get away from the financial dog mouth put on by all the fan guards, alies all these institutions that want you to put your money in that stuff.

Yeah. They’re. It makes no sense, but I still, people are still like, they’re stuck in that spell. But when I come here, I can have great conversations and we disclose what our net worth is, what we’re investing in. And these, we can talk about these alternative investing ideas, talk about deals. It’s just it’s like a cult to the us, right?

You’re around like-minded people and you’re, you’re all it’s always good to be in, in a different room, especially when you don’t like the one that you’re. Yeah, I love what you talk when you, I love what you say about 401ks. And I saw the light on that too. I always knew it, but I just kept feeding it in cuz it became like automatic, I caution anyone to be very leery of putting your money into into a program, whatever what, for lack of a better phrase, where they control, how much you can put in, they control what you can invest in.

And then. Tell you, when you can take it out, they, and then they tell you when you have to take it out. So it’s just very limiting and it’s all completely one sided. And I saw the light on that. I’m sure you have plenty of thoughts on the topic, but, I got completely out of that.

I, yeah. I, over pretty concisely in a, couple minutes I have four big issues with the 401k. Yeah. Please share type of stuff. Like first, like it’s a lot of it has to do with taxes. . When I put my money, a lot of the whole dogma is predicated on you will be, you’ll get older and you’ll Shivel up and die and make less money in the future.

And at that point you’ll be in lower tax bracket. But not me, not most of my investors, they’re gonna be baller in the future in me in that much higher tax bracket than they are today. Yep. Therefore, you should pay your taxes on the damn thing today. Take it out today while you’re in a lower tax bracket.

Number two. Look where this country is going, how are you gonna pay for all these government entitlement programs with raise taxes in the future? So again, pay your taxes now, get it out. Now the next biggest thing is I think the argument for these 401ks that oh, gross tax free.

When you invest in real estate, that has a bunch of paper losses like depreciation, you can write all a bunch of other stuff. It often is tax free anyway, so that point is negated, but here’s the big kicker. I think, we briefly touched upon this, like how most people are playing checkers, putting money in their 401k or Roth IRAs or whatever.

And we play chess, right? We’re manipulating our adjust gross income on our personal tax return based on what our investments are. And when you play this chess game, instead of checkers, I want the depreciation and losses that come from my investments where when you’re investing, you can invest through a self-directed IRA too.

But when you’re investing through one of these type of programs or solo 401k, it’s you don’t get the passive losses, the flow on your personal tax site. It stays locked up in there. Yeah. And that’s the downside to this. It’s more about using the losses on the deals and the investment ties from depreciation, which is just paper loss to clean up your pay less taxes today.

And you lose that ability when you invest in this insulated 401k or solo 401k. So unless, the only good thing it’s. If you’re investing in non-tax advantage type of stuff. What it’s non-tax advantage stuff like, like your crypto things like that, or if you’re a private money lender in, in, in a, in real estate I wouldn’t do that anyway.

Where you just lend money to a house flipper. And there’s no losses you’re getting paid with a 10 99. There’s no tax advantage with that, that’s the stuff you’re supposed to do it in those type of stuff, but I don’t do anything. That’s not tax advantage really. So love it.

Great share great insight. And something more we can learn at simple passive cash flow.com. I’m definitely assuming that. And then you have a podcast as, as well. Talk a little bit about your. Yeah. It’s basically a fall of my journey. I started back in 2016 when I was buying little rental properties and I would just teach people how to buy, turnkey rentals and yeah.

Back then we had a little incubator group and. Now a lot of the information’s for free. And if you’re just in the game of buying little turnkey rental, you can go to simple pass cash, flow.com/turnkey and get the free guide there. But as I became over an credit investor, and like I said, at that time I was going into a lot of larger syndication deals.

I saw the light and for credit is just, it’s a no brainer to go into these syndicated deals. If you could build relationships and build a community around your. Or join a community out there. And that was where it transitioned and it is, that’s my whole thing is I. I know that there’s something else out there and that’s my job is to cut the corners for a lot of folks, right?

If you’re net worth is a million bucks, you shouldn’t Dick around with little rental properties, you just go to the big stuff, the syndicated deals. But for a lot of my investors that are like one to $10 million net worth what’s after, what do you do after, when you’ve got, five, $10 million plus, and you can comfortably live off your four or 5% off of that.

What are like the 50 million, a hundred million dollar families the family is doing, right? Yeah. That’s the kind of stuff that I try and learn these days and I try and bring it down to my folks and just that insight. Cause you wanna just always be improving as a investor and be, become a professional investor.

The trouble is right. Most people are working their day jobs, so they don’t really have the time to, and, but the, and the issue is interacting with the right higher level people, higher level investors, getting access to those rooms, which a lot of people don’t have the time for nor the network.

But that’s been my passion to uncovering this myself. But even, to implement the strategies for one to $10 million net worth people, I. You look at it and it’s not that hard. Like I said, invest in good deals. Use the passive losses on your taxes, tell your CPA what to do or find a new one.

Yeah, infinite banking and it’s pretty simple, but it’s very counterintuitive to what, like they normally tell us right. To do. Extremely. Great chair. Great journey. Love your story. Just before we wrap up, I got a couple of couple questions for you. I wanted to ask one, do you, whether it’s a morning routine or some habits that you’ve adopted, that you could share with the listeners that have really led to your, to success or keep you up, on the path, if you.

Yeah, I think one thing I do well is I execute I’m the person who will write down my list of things to do, but I’ll actually do it. I, and I think that allows you to constantly innovate and constantly improve. I don’t know what that, if you improve one person every day, at the end of the, you’ll be like 20 something times better than what you.

I’m not a huge fan of like boring routines. I don’t wake up and do yoga. I jump on the emails and put out the fires, just like anybody else. I don’t wake up super early, today was a little early for me. I try to wake up around eight. Nice. If I can. Yeah. And I think like my whole advice from that is Hey, do what works for you guys.

Not everybody is the same, but make sure it works for you. And I would say I’m really good at focusing on what the business is. And for a lot of folks listing, it’s like your own personal finances. What are you gonna do with the investments and taxes? Not what you’re doing with your employer.

You’re building somebody else’s dream with that. Build yours first. Even if it you’re like me. You’re working a day job. You’re sleepwalking through it for a decade. That’s to me, that’s the most important thing is get your own stuff. And doesn’t take that much time to learn, to do what’s right.

And to implement it, especially once what you should be doing. But you can sleep sleepwalk through a job. They take, they pay for your time and your head, but they don’t charge you for your heart. So you you always have those sex, those few extra hours a day to put to where you are doing after you play with the kids and you do your family obligations and you’re tired.

Course, too many people spend so much time, like over the news or like focusing on things that don’t matter. What’s the saying? Most people major in minor things. Tony Robbs both. Yeah. Yeah. Great stuff. Get your own stuff. Awesome. Share. Do you believe in, do you have a coach or a mentor, do you believe in that?

Not really. I think when you’re starting out, I think a coach would be good. That’s the role I play for some folks. My inner circle and mastermind group and. But, you gotta pay ’em right. If anybody’s worth it, you gotta pay ’em and the trouble is there’s a lot of fake gurus out there that don’t really do anything.

They just write books and stuff like that and have YouTube channels. That’s why a lot of stuff on my website is free. I hate that fake picture stuff. The guys that teach people and they mostly prey on not your audience, they mostly prey on the guys who don’t have money and are really desperate.

And they sell ’em on hope and fear, but yeah. Yeah. I would say You need to find a model that’s doing this, but if you’re starting out, there’s a lot of YouTube and podcasts to just start to absorb it. And I would say focus on getting a community rather than worshiping the gods and the gurus.

Find other peers on this journey and that’s gonna be the way to get you off the ground. Of course, I’m super cheap. And that’s how I used to do it initially. But then I saw the light in 2015 when I really started to pay, like five figures plus a year on these mastering groups in education.

And that got me connected with the right committee. Then there’s the freebee free loader tire kicker crowd of peer groups. Yeah. So that was a big thing in hindsight, if somebody’s starting out, so much free stuff out. You should be able to dissect, but just know you’re trading time for money in a way, but I’m always just rolling down the road before you interject any kind of type of money into it.

Like once, once you’ve got some, you might have a rental property or in several deals, then I would say it makes sense to phony up. Once you get proof of concept and this whole thing works and then accelerate it with a better community and network after that, that is actually serious. Go ahead. Yeah.

Thanks lane. We’re gonna, we’re gonna give the website again, simple. Passive cash flow.com. Simple passive cash flow.com. It’s been tremendous, haven’t you? I just, I love the insight. I love the way you think. You obviously think a lot differently now than you did when you first started out, so that’s the, you can see the growth there and really appreciate the share.

Anything else you want to share with the listeners before we sign off or that I forgot to. No, I think some people are saying that eventually you’re gonna quit the day job. I think that’s probably the mindset of a lot of folks, but, speaking from myself and a lot of my folks who are like two to 5 million networks who broke through that part of the stratosphere.

Everybody, you gotta do something with your time and you gotta try and figure out what makes you happy. I do think you have to go through a period, like a little air pocket where you don’t do Jack for maybe six months to several years where you just go weightless.

And this concept of financial freedom to me is kinda like you, you need to save enough money to buy enough assets, to create enough passive income, where it exceeds your expenses. So 10, 20 grand per month. And then you put your. And then you go wait less and you gotta go through this vacuum and air bubble where you’re just floating, but until you’re floating and searching for your next main life mission it’s hard to do that, to search when you’re stuck trading time for money.

So I think that’s what I’m uncovering with myself. And some of my clients have to go to that stage. You gotta get your own oxygen mask in the first year, you gotta get the fi and then the next chapter, your life will come. But it’s a lonely world, right? Not many people get to ponder these types of first world, or I know first world problems, but like the upper 1% first world problems, where you’ve searching for autonomy and trying to find some kind of meeting of what the heck you’re here. when your money continues to compound on itself, where it compounds at a rate where it’s quicker than you could spend at a regional rate of course, but like yeah. Not many people are faced for that.

Most people are stuck in a day job just going at training time for money. Yeah. Don’t have to do that. Great final thought. Appreciate the share. And you are spending some time with us today. I know it’s valuable. Everyone, thanks for tuning in as always to make it great.

Last Call: Less Taxes With Bonus Depreciation

What’s up folks? Lane here. I’m gonna be talking about bonus depreciation and it going away here in 2022, but don’t worry, it’s not going away until the next few years. It’s just stepping down every single year. So first off, what is bonus depreciation and why should you even care about this thing now?

All right, so for you, those of you guys who know, you know, with rental real estate, one of the main reasons why I like rental real estate is because you can depreciate the asset and create a phantom loss or paper loss, whatever you wanna call it. But you can create these passive losses or pals for short.

P A Ls kind of clever, right? But you can take these pals and these passive losses can offset your passive Inca passive income from what you may say. Well, passive income from rental properties. So like your cash flow that you’re getting from it. Or you know, things you’ve held for a while and you’ve sold it.

Um, in terms of real estate, you know, you can use the losses from other investments to knock it out and not pay any taxes. And this is how I’ve kind of lowered my tax bill quite substantially over the last several years. Um, and this is, I think, the biggest thing that I’ve learned. Why do you wanna do real estate and why do wealthy people do real estate?

You know, for a lot of folks out there, before they even start working with us, they’ve got a high ordinary income or active income, maybe from a day job, or maybe they’re a business owner. But you know, we have a lot of clients that, you know, are maybe dentists or doctors making 600, $7,000 a year.

But that’s all ordinary active income. The problem with that is you can’t use passive activity losses or pals to knock it out because pals are, again, only used to knock out. Passive losses can knock out passive income. So what do we do? Well over time, you know, people work with us. They, you know, they join our network.

They get the connections and the deal flow to, you know, go from high active income or income where they can’t really shield themselves. And where, you know, the IRS is just absolutely destroying you every single year, and we’re moving you away from that to passive income. Why? Because you can use these passive losses to shield you.

From the taxes. And a lot of people who invest a lot in real estate, um, maybe not even more than like a quarter of their portfolio could possibly wipe out their entire tax load, um, from doing it this way. And this is the reason why I don’t invest in crypto or stocks because when you sell that stuff, it.

Consider all ordinary income before I go any further. Of course, I’m not a CPA, a tax attorney, anything like that. But hey, you know, um, I’ve been doing this for quite a while myself, and these are just some things that I personally do and also some of my, uh, colleagues who are also professional passive investors do themselves.

So what is this bonus depreciation thing? Right? So I think so. You guys have maybe owned rental properties before? No. You can write off the property over 27 years as a paper loss or depreciation loss, um, which is great. Just 27 years is a really freaking long time. Um, and this is excluding the land portion.

We’re only talking about the, the, um, property improvement portion that you can depreciate because land is not depreciable cuz it just stays there. But the cool thing about commercial real estate, and when you start to do these things called cost segregations, and we’ll get into what the heck a cost segregation is, is you can do these cost segregations and you can aggressively write off the property a lot faster than that really long 27 year cycle.

A lot of times you can write it off the entire building. Third of it in the first year, which we’ve done on many of our past projects, to create a huge, huge amount of these passive losses that dump on ourselves and passive investors, K one s, and now they can take this huge, huge loss and maybe offset their passive income and some of the people doing rep status.

Which is a little bit more of an event strategy that we kind of help people implement along with their cpa they can use these passive losses to lower their income. We’ve got a great example of that. Come to the next slide and how people are lowering their adjusted gross income from a million dollars maybe to a half a million dollars a delta to 500.

And at 50 cents on every dollar tax savings, that’s a quarter million dollar tax savings right there. But getting back to like this bonus depreciation via a cost, eg, right? So what the heck is the cost? So a cost e.g. is pretty much you pay a geeky engineer like how I was at one time to go out and itemize the entire building.

And if this is all kind of go, get you. It really doesn’t. You pay a guy about five to $10,000 to do this. There’s different ranges, and of course you wanna find a good one and we can kind of help you guys out if you guys need any referrals to this. But the engineer needs to actually go out and visit the property and, you know, take some notes and do their report.

But basically what it is, is this large report where they itemized all the little components of the building from, you know, from roof to plumbing, electrical, concrete, you know, everything. Basically what they’re doing is itemizing all the little components into dollar amounts into different categories, and those categories are five v, seven, 10 year category assets.

Certain things depreciate a lot quicker. Certain things to depreciate have a little bit longer lives than they might be in the 10 year category or more. So again, not really needed from a passive investor’s point of view. Passive investor’s point of view is to understand this stuff on a high level to know who to go get the cost tag or which in syndication to invest in that they’re doing a cost segregation, getting the bonus depreciation, and then be able to communicate.

To your CPA and what the heck to do with all this? Because most of the CPAs we find, or at least from what I see a lot of you guys out there, my clients, 95% of you guys have to change your cpa. Because a lot of CPAs just frankly don’t understand it and it makes sense. That’s why the CPA has a day job. They haven’t figured this stuff out yet.

Right. But hey, you know, maybe not everybody should know this stuff because then who would do our tax returns for us? Right? But anyway. So this Costa gets done, it’s passed off, uh, probably in a nice little PDF or Excel format, whatever. It gets passed off to the cpa, um, that you have and that can be distributed out to, um, yourself or as when we do it, we do a big syndication.

We do this all for our investors. We get the Costa, we pay for it, and then that allows us to pass it to our cpa, who then distributes all the losses, the passive losses to all I. Via the individual K one. So it all comes out at the end of the year on this nice little clean one page, K one document.

And what this does is now each individual past investor, or you know, if you’re doing this on yourself, um, doing it on your own properties, Um, you guys can check out the referral, um, partners at simple passive cash flow.com/coste. By the way, there’s some older videos and education on there if you want to do this all on your own.

But you know, you can go over there and, um, you know, you can do this cost segregation and get all this extra depreciation. Now, coming down here, you know, investors. You know, some of these deals I see, you know, you put in a hundred thousand dollars, you may get a hundred, $120,000 of depreciation losses more than offsetting, you know, maybe you made five, $10,000 a year more than offsetting that, and you’ve got this surplus and.

For those of you investors out there, you really want to have this form called the 85 82 form. Every investor needs to have this. If not, you need to ask your CPA for it. And a little dirty trick is the CPA is never like they give you this stuff because then they know you’ll probably just leave them after that point.

But, You know, I always check my 85 82 form and see how much passive losses I’m floating because that allows me to play strategy and whether I deploy the passive losses and activate it, essentially, you know, keeping it from my storage and using it to lower my AGI that year. Or do I keep it because maybe I’m having a big, uh, capital gain the next year or three, four years from now.

Right? And this is where it gets com complicated and every situation is just a little bit different. And that’s why we tell you guys well. You know, join our organization, you know, a book of free intro call with myself. We can kind of walk through this. Um, I’m not gonna give you any tax illegal advice here, right?

But I’m gonna teach you how this kind of works so you can make the best decisions for yourself. Or at the very least, have an educated conversation with your CPA because, um, you guys need to educate yourself. If not just CPA’s, just gonna do it the easy way, right? You ask most CPAs, how do I save tax?

They’re just gonna give you a bunch of lame stuff like, um, you know, do a 401k, do some pretax, post tax, maybe Roth ira, lame stuff, folks. That stuff is like playing checkers where we play chess. So, moving on. So what’s this bonus appreciation thing, um, going on? So in the following year, um, you know, this is gonna be stepping down.

So from the tax cut and job act, uh, I believe that was maybe around when Trump came into office, he signed in this, uh, nice little, uh, carrot for real estate investors. There was gonna be 100% bonus depreciation, and this is gonna be phasing away starting next year, 2023. Um, where right now in 2022, you get a hundred percent of it.

Next year you get 80% and a year after you get 60%, and then the year after that 40% and the year after that is 20%. So it’s phasing away is. Slowly, right. Not to say that 80% isn’t just as good as a hundred percent, and what I’ll kind of cover is that it’s just, it’s not like you’re getting 20% less.

It’s just for the bonus part. Right, so it’s, you’re still getting the normal, regular depreciation, so it’s not like you’re getting 20% and I don’t know exactly how much, and cuz I haven’t seen it, I haven’t compared my K one s from this year to when? Next year. it’s only 80%. But when I look at cost segregation reports from my own viewpoint and look at the numbers, I really don’t feel like it’s that big of an impact that a lot of people are kind of making their way out to be.

I all kind of feel like it’s a little bit of a scare tactic saying You better invest now, right before it’s a hundred percent before it goes down. Um, if you’re a passive investor and. Number one, your adjusted gross income is not higher than $340,000. Don’t even worry about all this stuff. Right? And I, I think this is a big mistake I see a lot of passive investors making is that they hear about these opponents appreciating passive losses, and they’re great.

But they may not be able to use the damn thing. So again, book a call with us, get to know us. Um, we can dive into your strategy, we can talk specifics, but if you are, again, you’re not a high income earner, this stuff doesn’t really, really pertain to you. It’ll, it only may, uh, mean something later on. But if you’re one of those people like myself who, um, likes to hoard passive losses just for the heck of it, even though I don’t need it, it may not be the best thing.

And you should maybe focus on investing. Better investments, better returns than forwarding passive losses that you may or may not need.

Where does that three $40,000 number come from? Well, these are the tax brackets in 2022, and I think they’re gonna be in inflation and adjusted for next year. So the premise is gonna be the same too. There’s, a lot of my clients who fall right around this red line in terms of income, and that’s why I talk about it a lot.

But also when you look at this, like if you look at. The progressive tax system, you know, most people are paying 22, 20 4%, but there’s a big jump between the 24 to the 32% range and that’s where that, this dotted line where I draw this dotted line where, you know, for a starter strategy for, you know, just somebody listing, you know, just kind of the default.

It probably is a good idea. Uh, above, stay above this line or below the line, however you want to call it. Right? Or keep your adjusted gross income under $340,000. Married, followed jointly. I’ll say that again. Keep your AGI under $340,000 adjusted gross income. Um, if you’re single, uh, it’s a lot lower at $170,000 adjusted gross income.

Now, personally, I’ve kind of taken the strategy where I wanna drive my income down way, way. Um, I use this in conjunction with real estate professional status and also I don’t have very much ordinary income, and if all my income is passive, I can use as much passive losses that I have to offset my passive income.

So if I have a million dollars of passive income and I have a million dollars of losses, I can drive my income down to zero if I wanted to. Right. And that. We’ll save that for your guys’ individual calls, right? If you guys, um, choose to step forward with that and, you know, we, we work with the credit investors here, so, um, if you guys are not a credit investor, maybe check out some of the free content.

Send me an email with some specific questions and we’ll point you where this stuff is in the podcast, on the website. But for, you know, kind of a typical client making say $500,000, you know, What are they gonna do to drop themselves down to three 40? Well, they, that’s a delta of about $160,000 that they need to lower their agi.

So if they can turn, if they can create that passive income to get that and also create the passive losses, they can use the passive losses to drop them down. Um, But if they are somebody who just has, you know, and this is probably you listening right out there, you don’t have any passive income. You only have ordinary income, right?

Ordinary income sucks because you can’t use the passive losses to lower it unless you have real estate professional status. And this is again, where a lot of new investors like this idea of passive losses from real estate. But if you don’t have rep status, It doesn’t do you any good, and it doesn’t really help that you’re hoarding these things too much.

And also, if you’re under, you know, if you’re making less than $300,000 a year, you’re not paying that much taxes as it is. You’re in the 22 or even less tax bracket. It may make sense just to pay the debt taxes, right? Not until your AGI goes up higher. Does it really make sense? Pull these levers again, every situation is different and we give everybody a free introduction, one complimentary conference call with myself because, um, you know, time is important, but I like to help out people.

Um, as this was all new to myself and like when I was, when I graduated college, started working for the man as an engineer in my twenties, the most useless information I got was investing in a 401k. And that’s just crap in my opinion. Sorry if you, that’s all you. But you know, welcome to the simple passive cash flow where we do things Definitely a little bit differently.

But what is this sales tactic that, uh, folks like myself are telling everybody, bonus depreciation is going away. You know, well, it’s, it’s phasing down, right? And you know, like next year it’s gonna go down 80%. But, you know, if you were to think about the bonus depreciation portion is just a portion of all the losses that you get.

There’s. A lot of that, that stuff may not be taken in the first year. And, again, I just don’t think like, it’s, like it’s literally gonna step down 20%. So an example would be maybe you invested a hundred thousand dollars and you got a hundred thousand dollars of passive losses because, you know, the deal is using pretty good leverage and that’s how you’re getting that much capital and equity, um, to contribute to so much of that losses.

So in that, Um, what, what I, what I would say like in the next year when bonus appreciation goes down to 80%, it’s not like you’re gonna get 80%, if it was the same amount of capital contributed the same deal, but in the 2023 instead of 2022, at that point, um, I probably guesstimate that it might be maybe like 10% less than what you got.

Still pretty good, right? Um, you’re just gonna have to invest a little bit more. But you know, at some point this stuff is phasing. And the best time to do this was yesterday. Like, you know, we talked to a lot of our clients about infinite banking, right? And how there was last year there was this big, um, harrah over like the 77 0 4 changes or whatever it was.

But you know, this stuff is never getting better, just like investing, right? The best time to invest was yesterday. But, you know, another thing that these passive losses can do other than just manipulating your adjusted gross income from that year is also. Offsetting capital gains. So capital gains is, you know, when you sell an asset or syndication comes full cycle and you get your money back, and you get your nice returns exactly why you went into an investment for the first place.

Um, you’re gonna get this, uh, hit with these capital gains. And this is straight from my tax form. And back in 2017, I sold, uh, I believe this year I sold six or seven of my little rental properties for a capital gain of, uh, almost $200,000. They’re in line 13, $198,000, right? Oh, crap. Right? That’s a lot of, uh, taxes.

Um, if I’m, if I was in like the $300,000 range, Exploded my AGI up to $500,000. But what I did was I used my passive losses because I was investing in syndication deals prior to this, or maybe in the same year. Um, I was compiling all these passive losses via cost segregation, bonus depreciation, and I was, um, I.

I had a pretty good amount just, um, being suspended is what they call it, suspended passive losses or passive losses that haven’t been executed or used yet. And what I did is I just pulled it down from the cloud in a way, um, and I put it there on line 17 to offset it. Boom. Knocked it out, and then paid no tax.

And this is where a lot of like old school investors, they always talk about this 10 31 idea. Um, 10 31 is just another way to defer, but the problem there is you’re putting all your money from one deal to another and the deals are getting bigger and bigger, which totally violates one of my big things. I tell a lot of my investors, you never want to have more than five to 10% of your net worth into any one.

So old school investors, what they’re gonna do is they’re gonna buy a single family home, 10 31 into a duplex 10 and 31 into a fourplex Aex 16 unit. You know? Then they’ve got all this capital gain and the only way that they can get away from the taxes is die. And the problem with doing it that way is everybody knows when you’re a 10 31 buyer, you’re a sucker.

Right? We love it when people buy our apartments that are 1031 buyers because we know that they are motivated buyers. In fact, they’re so motivated that because if they don’t close the deal in 180 days or whatever, that they have to pay all this taxes to the IRS and to get absolutely killed. Right?

Maybe their four might look like this, but like add another zero here at the app. And this is where this whole new school way of thinking of get rid of that stupid 10 31 exchange and break up your portfolio into many, many deals. Like personally, I think I must be in like 80 or a hundred syndications at this point.

And all my net worth is di like very diversified geographically, different asset classes, different deals. Um, I do a lot of apartments personally and we operate that, but I also go into many, many other asset classes that are a little bit diversified on how it’s correlated with the economy, right? We never wanna know what’s gonna happen with the economy and we never know how it impacts anyone.

Asset class sector. So well, from a tax perspective, what this is doing for me is it’s allowing me, you know, these deals that I’m in, they may cash out and gimme a huge gain, which is good. The bad part is you’re gonna get the capital gains and depreciation recapture. But if I break this up so much, And I keep a certain level of passive activity losses on the 85 82 form.

Then at some point I’ve created this Nirvana world where, you know, if I’m in a hundred deals and 10 of ’em cash out, it gives me a whole bunch of money. You know, my passive loss, suspended passive losses, maybe a million or $2 million. But it may go down to 800, but then when I invest, reinvest the money, it’ll go way back up and it just keeps going up and up and up.

And this is kind of the concept of passive loss nirvana. And you really never pay taxes just like you were with a 10 31. But with a 10 31, everything is pegged on one asset, right? Again, not diversified. Um, Just a different concept, right? Like if you’ve been, think you’ve been kind of beat to death by the 10 31 guy or the salesman selling it, you know, you probably think it’s the best thing.

It’s one alternative. And to me, um, a lot of these, what I try and do, and I try things, make, make things very simple, especially for the people in our ecosystem, right? Like, there’s so many things out there financially, but for high net worth, high paid, professional, professional investors, passive, I. Things are very simple and when it comes to deferring taxes, you know, other than you know, the Section 1 21 where you only have $500,000 in your primary residence in opportunity zones, which is something very different to cover, maybe in another video, but.

The only other options you have is deferring it right? And a 10 31 is just one way you’re deferring your taxes, whereas doing it this kind of chopped up method into diversified many deals with bonus depreciation is so much more of a superior strategy. Um, 10 31 is just a tool, right? And it’s all tools.

You only use the tools in the ripe situation, in my opinion, my humble opinion, because apparently I’m not a financial planner, right? I can’t sell you garbage commission products like they can. Um, a ten one exchange is used in certain situations where you have a highly, highly appreciated asset. You know, so for example, like say a, a guy has a business that he started like a dentist franchise for 50 grand and you know, 30 years later it’s now worth 10 million and now you’re looking at a $10 million capital gain that you made 10 31 into something like kind.

But in that, in that situation, I may probably consider more of a monetized installment. So which is more superior to 10 to one exchange, but either. Like before you got to that point, you should have took the money out and invested in a syndication deal, started to compile your 85, 82 form padded with passive losses.

So when this fateful day comes, and it does always come, um, you have these passive losses to as a, as kind of like a pill to sell the asset and offset that. And then if you come short, maybe there’s some other advanced strategies like land conservation easement. Uh, oil and gas deals, uh, what’s in an op, the combo with opportunity zone and your rep status.

Um, you know that there’s a myriad of different ways, and at that point, if it’s that huge of a, uh, capital gain of over a million dollars, $2 million, then yeah, maybe you would need to do a myriad of different things. But if you’re. Average investor and you bought a rental property for a hundred grand and it went up by a few hundred thousand dollars capital gain.

Dude, that’s not that much capital gain. You should be able to invest, you know, several hundred thousand dollars or at least, you know, refinance and get that money out and invest it. And then you should get, you should be able to pick up, you know, a few hundred thousand dollars at least a passive loss is pretty dang easily.

If you don’t know how to do that, you need to get around other passive investors that are accredited and figure out how to do it, because this is, I mean, taxes are your number one expense in life. But anyway, that’s then on my spiel folks. If you guys like this video, Please leave a comment below or ask any questions.

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