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.
