Tag: #LaneHack

August 2021 Monthly Market Update

https://youtu.be/FFi-T4045aw

Hey everybody. This is the August, 2021 monthly market update. My name is lane Coca. I run civil passive cashflow.com owner of 6,000 units plus, and we are going to go and look at what’s been happening in the news lately. That’s going to be impacting investors. If you guys. Had a chance type of comment below, say hello.

And if we if you’ve got any questions, I’ll be trying to manage the comments and answer any questions you guys have, or if you guys have any fun comments, but you haven’t yet grabbed my remote investor e-course so this whole journey I’ve been on started in 2009. When I bought my first rental, then in 2012, I started to go invest remotely in Birmingham, Atlanta, and Indianapolis.

Created this e-course because everybody was asking how to do it. And it’s all the same questions over and over again. So I created this course and I want to give it away for free so you can pick it up by shooting me an email lane at civil, passive cashflow.com and put light in the subject line.

And I will get you access to that.

All right, here we go. What’s up, Jen hee. Hello, a numbness. Facebook. Yeah. How inflation impact you? It won’t, if you’re unaware of it, if not, it’ll just rub money in your sleep, right? Because if you own a million dollars, now that million dollars is probably going to be using fifth five to 10% of its value every year.

It’s ultimately your buying power. It doesn’t matter how much money you have. It’s matter how much the value that it buys. If you guys liked this you can check out the podcast that will passive cash. It’s all about real estate investing for passive real estate investors. And then it’s house flipping wholesaling burst stuff is more passive investing for folks with good jobs.

And it’s also on the YouTube channel for those of you guys are listening in the podcast, but here we go. We want to start off with a few teaching points that people have been asking the the last month and then we’ll get into the monthly market. Now, some people have been saying Hey, I found, some peoples pitching me this deal for 12 to 20% interest rate.

And if I’m lending money on a house flip and first question I asked is like, all right how much experience do these guys have? Because likely what you’re doing is like you’re buying crappy paper. If you guys are familiar with Moody’s S and P in. Credit ratings, they fail rate lenders, right?

And in the same way you could rate the the people you invest with or a house flipper. And a lot of times what’s happening is you’ve got super newbies who still work their day jobs and are doing this as a side gig who you could probably see as effort DP. And giving people really high rates, but, unsophisticated investor will just go rate chasing, but a smart investor will want a good rate, but more importantly, to be investing in a person who is experienced and good.

So maybe that’s an eight class paper in this respect where B paper. And, but that might be more of like a, five, 600. Interest rate that might come in. I got a lot of guys that I know in a mastermind used to be a part of that they can get 5% notes all day long from investors because they have a good long track record and a really reliable it’s the people who are brand new that have to pay 15, 20% plus and beyond the, where, there’s a lot of people that will like like white label and remark it a certificate.

To sell it to unsophisticated investors and create some kind of markup. So for example, what they’ll do is they’ll get some brand new house flipper who can’t get a loan because they don’t have any track record and nobody trusts them and then they’ll go and they’ll lend the money to them and they’ll flip it around and lend money to you.

And they’ll market it as like a B class type of, or B kind of a paper grade. And they. You’ll invest and get 12%, but then they’re charging the other guy 20% on the backend because it’s a really bad investment and they’re making that big spread. I think this is as an investor, you need to know who you’re investing with to make sure that this little don’t man thing put on, because at the end of the day, you’re investing with a complete newbie.

And that’s fine if that’s your investment strategy and you’re going after the, high-risk type of stuff. At least know what you’re investing with. And yeah, there’s a lot of these types of private money or capital groups doing this type of stuff. And this is all done in the household pig world, which I’m really a big fan of anyway, be on the lookout for that.

And then also, big thing that we do with a lot of clients are taxes, right? You can invest and that’s great. Maybe make 10, 20, 30% returns in real estate, which is backed by a heart attack. But for a lot of the high net worth clients, it’s really about, protecting your income make two, three, $500 million a year from your taxes.

If you guys want to check out my personal taxes, go to simple passive cashflow.com/tax, but it’s like the athletes they get really hammered here. Bron James target woods, Anthony Davis Floyd Mayweather. I hope they have, I don’t think they have good tax representation. But it’s the healthy guys who make a lot of income, but don’t pay too much tax.

Yeah. So beyond the smart, you may make under a hundred grand or you may make under $300,000, but hopefully you pay less than 10 or 20% tax

all right. So crypto investing here, if you guys don’t. I look, I watch a lot of Reddit blogs and stuff like that. And this guy is like this little lizard looking creatures called Anan. I think it’s supposed to be a representation of some random anonymous person, average Joe, it’s, this is very typical author to another thing to be on the lookout for is somebody who invests crypto.

And loses their a month of wages. And then now they considers itself a trader and an expert crypto. I don’t claim to know anything about crypto. I do think it’s a good thing, but I don’t know. I just stick to my own lane, which is investing in real, tangible assets. You guys can learn more about simple passive cash with.com/start.

Let’s get into the month. This was a cool graphic that I found it outlined the tax strategy or taxes that citizens paid on average in different countries. And the United States is sitting at 24.5%. By the way, if you guys pay more than that, you need to get on the passive investing Shane and get away from Borden income and find a way to do rep status is all I got to say.

But these other countries pay 30 to 40%. I guess the takeaway is the United States. We don’t pay too much taxes compared to other countries. Now, somebody in one of my groups said those other countries, they have a lot of entitlement programs. The United States is the only one in this group that doesn’t have.

Government subsidized healthcare or free healthcare, like how you having Canada, but maybe that’s probably coming at some point it’s right or wrong. I don’t care. It is what it is, but, I think that my takeaway is like, you’re not taxes probably going to go up. The rest of the world does it.

America could probably bump it up a little bit more and get away with it. It’s even more so to pay attention to your taxes. If you guys need to learn more about that, go to simple passive cashflow.com/tax. All right. So what’s happening in rents? Apartment lists came up with this graphic saying that, so we look at the dotted line was the NEC the national median rent pre pandemic trend, which is just a boring cyclical.

A trend that’s just going upward, with the whole pandemic, everybody got frozen and some rents pretty much just stayed statement. But now what you’re starting to see this first two quarters of this 2021 is rents are skyrocketing. Places in Texas are going up, high single digit.

In places like Phoenix, it used to be 6%, which is still pretty high for a year, but now it’s like getting over double digits there. Different news sources report differently, but rents are going up folks. If you haven’t, if you haven’t caught on to this, you’re two quarters behind the trend already.

And a part of it is pent up demand. But this is, I think it’s good to be alive. But to be a landlord.

John Burns consulting came up with this cool infographic talking the rise of sister cities. So what’s this, the cities are, is like the coma is to Seattle. Canton, Ohio is to Cleveland. Stockton is to the east bay like Oakland. Bakersville is to Los Angeles. Tucson is to Phoenix, Colorado Springs as the Denver Fort worth is today.

Port St. Lucy is the Palm beach. Greensboro is to Durham and Philadelphia is to New York. And there’s a, just to name a few, but I guess the takeaway from here is this is another trend that’s going on the rise of the great MSA. NSA’s where you have mega cities. So I’m not to the, quite the point where Portland and Seattle or combining all in one.

But, like in Seattle and Tacoma, sure. It’s separated by 20, 30 miles depending how you get the ruler out, but it’s becoming one giant MSA and, people are clumping together in these metropolitan areas. And I guess what just thinking from an investor perspective is, like typically you can’t cash flow.

In the private markets and you typically can’t cashflow in the main headliner city, but where you find cash flow is that sister city. And I’m not saying any of these sister cities are good, but it’s just a trend to be on the lookout for, especially if you live near one of these cities and you’re just unwilling to go outside your local area, or you don’t have enough money.

So there’s really not, no, no sense to diversify yet, most accredited investors, they. Wake up to the fact that you want to be a remote investor investing in the top five markets across the country, as opposed to just staying in your regional area or where you can drive to hello, real page reports that DFW Dallas Fort worth leads.

Sean Mitchell, the man performance now, including gateway markets too. So what that means is Dallas Fort worth. Needs quarter two apartment demand, which is net increase in occupied units. So I’m just going to read this from top to the bottom. From the most to the, the bottom of the top 10 lists are Dallas Fort worth Los Angeles, orange county, Houston, Chicago, south Florida, Washington DC bay area, New York, Seattle, Atlanta, Phoenix, and Austin, Texas.

What again, what this is a report of is strong Metro level demand performance now, including gateway markets too. So one, one important thing to note here, and these are larger markets. I guess Austin is small, but I don’t know if they’re including the tertiary markets, which are those smaller markets anywhere from a quarter million to a million population.

And, Los Angeles is number two on here, but I wouldn’t invest there. There’s no cash flow. So depends on what your investment strategy is. It’s

Joint center for housing studies of Harvard university. If you guys like graphs and data and you need to follow, what’s hard, we’re doing these days. They come up with great articles. Really thought provoking. In my opinion, they got a lot of like racial stuff on a bad way, but it’s just interesting to review what the stuff that they come up with.

And so in this article or this graphic, what they’re showing is the leading indicator, free modeling activity. Second quarter of 2021. What you’re seeing here is remodeling activity coming up from the beginning of the pandemic double. Where we are today, where we were, and this rate of change has been steady over time, which makes a lot of sense.

A lot of people are remodeling like second home, make the place that you are a little bit nicer, makes sense, Adam. These guys follow a lot of lender data and. Porting here’s us properties with foreclosure filings in the first six months of 2021 hit an all time low of 65,000. I guess this makes sense because the rent moratoriums, which just got extended, by the way, I think it’s went up to September, October, and just continuing to kick the can down the road, which I think they’ll probably kick the can maybe another month or two beyond that.

But what’s good for real estate investors. Is that it steady, right? They , just like how they said, oh, we’re going to raise rates. All right. It took them like three to six years to finally do it. And it was very slow and gradual at the time. And that’s, I think that’s good for long-term prudent investors.

Again, joint center for housing studies of hard review university reports on inventories for homes for sale fell to a record low in early 2020. I, I said the Harvard guys come up with really good surveys. I just happened to pick our really obvious one. Yes. Supply is at an all time low or at an all time low, but it’s really a low, which is why residential prices are hot and everywhere.

Constant crunchy is hot. If your market is not hot, your market has a huge problem going up more than likely, but, What makes up prices is not only supply, but demand. I don’t know where demand is. We know supply is low, but it’s a question mark on demand. So what I mean by that is, is demand higher or lower than what it was now.

People with money right now, you’re white colored folks have a lot of pent up savings, or are going good for a lot of people because they can’t smell. I guess they’re starting to spend it by going on vacations and that type of stuff. A lot of the data says a lot of families on the higher end middle class and above have a lot of money.

And which makes sense why they’re buying houses due to the also the low interest rates. But I don’t know, it’s hard to measure demand. Supply is easy to measure because that’s just, days on market and how many houses are on.

So this is a graph of existing supply of homes. Again, the supply which we showed on the previous graph is going down, but this is a graph of overlaid on top of it is year over year changes in crisis, which definitely shut up starting last year, right now they’re showing it over 12%.

Yeah, which is really crazy normal historical price increases, just goes up with the pace of inflation. And typically they teach you in grade school where you’re supposed to nod your head and just accept everything that’s in. The book is supposed to be 3%, but a lot of us that are listening right now and know that’s a bunch of nonsense and it’s probably a lot higher than that because a lot of the money that’s in the stock market or pumped into the system is finding their way into the stock market, which is why prices.

I think artificially inflated and why I don’t invest in stocks, but as Facebook user says here, how inflation will impact us? It’s just going to devalue the amount of money that you have, that people who have a lot of debt, especially good debt are going to be the beneficiaries of this and eat. They think this is why a big motivation of what I do is what I do is because so many people have this completely wrong, right?

They want to pay off their debt in their mortgage and have it all paid. Which I think is silly. Like if a lot of people have maybe a million dollars of equity in their house, by the time they reached the golden years, if they took that money and put it into something like HP making eight to 10% a year, they’d be able to pay for two or three kids.

Grandchildren’s college like that, a hundred thousand dollars passive income. But they choose to just keep it locked up in their house.

yeah. Apartment list.com slash research slash category. Headless cool infographic that I have up on the screen now, or essentially rents are rising quickly. Everybody signal captain obvious. Once again, that’s the second point for cap. Th the way that I invest is primarily on the big drivers, which is economic growth and population growth.

And here is the population growth of, from a state level, of course, you always wanted to dive in on the MSA and then dive in another layer of the sub-market, but, from a high level, state level, in the big movers, in terms of populations, Are a lot of it is Texas plus 16% Utah plus 18% Colorado plus 15% Nevada plus 15% Idaho, Washington, Oregon, all double digits, North Dakota.

I understood that out. Nobody wants to live in North Dakota and there was only like 10 people living there anyway. So that went up to 60%. So there’s 12 people there. Now that’s a joke, but. Like a lot of these places like Florida, Georgia, South Carolina, multiple double digit population growth, where a lot of these are have been like low single digits, especially up in the Northeast.

I don’t know what’s going on there. The places that have remained the same or no growth is Mississippi at 0% Illinois, 0%. I think everybody knows about the struggles that Illinois.

Y I was sorry, I just had a kid a couple of months ago. I thought that was Wyoming, but I knew that Wyoming wasn’t there. That is West Virginia actually went up 3% down there. Hawaii has gone up by seven. But yeah, this is just one way of looking at your investments, investing on the trends where the population is growing up, because that’s what drives housing values and the demand for rents.

If you guys liked this, check out our accredited investor group that found that office on a mastermind currently about 75 plus members. Credit only pure passive investors. Only if you’re broke, don’t join us. If you’re interested in learning more about syndication deals, who to invest with more important, who to stay away from taxes, legal and getting to know other people on a personal level, because a lot of us are on this move from a million to $10 million net worth.

So know getting the simple passive cashflow is easy that whole time. But it’s all about, who you take the journey with and getting the best practices for more of the soft skills and the soft tactics on how do you build your family system and, surround yourself with the right people.

If you guys are not accredit investors, but I would recommend checking out the incubator, simple, passive cashflow.com/incubator. Pick up your first remote rental. But now if we’re to the end, if you guys have any questions, please pop it into the show notes,

but I’m going to go into my personal side of the story where I just talk a little bit, what I’ve been doing personally themed through 20 Robins, six personal six human needs.

The first one is growth. This has been my life last month. I just changed a lot of diapers and I don’t get much sleep. Now I totally understand why only a third of the investors or under the age of say 30, right? These are the guys who make $150,000 straight from college in their engineering jobs.

And, or, they’re the max out your 401k guys, but most of the people are older than the age of 36, 40 years, old million million, and a half dollars a net. And they have kids that are maybe five to six years or greater people who have kids from zero to six. That is what I knew before is the Bermuda triangle for anything in terms of even passive investing level active investing.

Now I know why it’s. Sucks. Yeah, it’s rewarding too at the same time, but yeah, it definitely is a time suck and energy suck and it’s hard, definitely hard to spend the time to read anything., if you guys are, that are younger than the age of kids, get your passive income now and get that stuff set up.

I was lucky by getting this all set up because I don’t know how I could do it now.

And enjoy your time out.

The second thing is how does a contribution back to society and the community? There’s a lot of people out there and you guys follow the 40, 40, 40 plan, which has worked 40 hours per week. Do that 40 years retire on 40% of what you’re struggling. All of your life with, and that’s a, the job just over broke or juggling our bills or jail operating business in mild pain and your life doesn’t really start until you stop trading your time for dollars.

So put screen around putting your money to your passive investments so you can get out of that nine to five date. Sure you might like it, but probably would want to do it a lot less. So jump on the simple passive cashflow bandwagon, and let’s have some fun, a little bit of significance here. I’m actually wrote a book folks and this isn’t going to come out until a couple of months later, I think because the one thing that is slowing me down here is I have to read it right now.

I’m doing, I have it right here. I am reading it and I’m going through it very slowly because they don’t have very much time these days and making the audio book because all you guys are too busy to read anything. who reads things these days who actually has time, unless you’re on vacation or something like that, which rarely when does that happen?

But if you guys want to get a copy of my book electronically and you want to give me a, help me out with a referral. I’ll buy you guys a book when it does come out. But I appreciate that, she meant emailLane@simplepassivecashflow.com. You guys can read it with me before everybody else gets a chance.

Some things that, everybody needs a little uncertainty and they’re highly, if not all right now, I like this kind of searching. And then we do the same thing every day. Because I have an eight year old and I’m not allowed to leave my house. If not, I’ll catch COVID or some other element and killed my daughter and I don’t want that to happen.

I am very aware that uncertainty is the spice of life. And without it, you don’t need too much of it, but it helps counteract certainty in your life. So one of the ways I’ve gotten a little uncertainty is we had a fire on one of our developers. You can’t see it too much, but on the bottom left here, supposedly the story that we’re going with too is that there was a lightning strike and it started a fire and it burnt down that whole building.

Good thing. We have insurance and $2,500 deductible. We’ll get it wrapped up. We’re actually ahead of schedule. So it won’t be too big of a deal. That’s why you have insurance, but no, that’s. Got me a little excited on a Sunday afternoon, a little bit, but overall certainty, right?

Things are being built. The value is there. If you see on the upper left hand corner, that’s a big beat we’re competing against, you’re going to kick their butt in terms of schedule. They actually started, I think half a year earlier than us, and we’re already eating them right now in terms of construction.

But our product is a lot nicer to have. Anyway, deals are cash flowing for the most part and heads and beds. Occupancy is very stable. Rents are going up. Likes is pretty good, that’s why you live the simple passive cashflow life. Fortunately I can’t see all you guys. And I think a lot of you guys are, especially in the family office group or going around the country, meeting each other, having fun.

I feel definitely a little bit of FOMO. I feel like I’m missing out a lot, but I am planning the 2022 retreat. So this is going to take place January 14 to 17 and a walk. And one thing I did was I hired an event planner, cause I’m not going to be coordinating all the little excursions by myself anymore.

I didn’t go crazy doing it. I’m a pretty good wizard at the old Google document and like coordinating that type of stuff. But this year, if you guys haven’t been on the pre-survey, please go to simple, pass to casual.com/ 2022 retreat. And please fill that out because that’s going to help me plan it even better.

And that’s going to get you guys on the pre. You get, you’re gonna get access to buy your tickets a lot sooner than everybody else and probably at a cheaper price. That’s for sure. What I learned by doing that survey is a lot of you guys are pretty jazzed about coming to Hawaii, maybe because you guys are stuck at home for an entire year of 2020, and.

It’s going to be pretty big event. I’m thinking 80 to a hundred people at the very least. And I think we’re going to cap it at that number. It’s not going to be like a stupid conference with a bunch of speakers. I’m going to be teaching about, taking money out of your 401k investing in deals.

Other soft topics that I know a lot of you guys like in the family office group, but it’s going to be more predominantly put on building relationships with other peers. Accredited investors, because in my opinion, that’s the really, the only way to find your way in this world family office clients are going to get first access to it, but then it’s, at some point we’re going to be going up to the bigger, simple, passive cashflow community.

Obviously a credit investors are going to get force excess first. But hire an event planner. So that’s fun. And it got me really excited because apparently they know what they’re doing and a lot more, they know this and a lot more than I do go figure. And they do that for this, for a living. Some fun things I found were do dads.

I found Amazon deliver stuff from whole foods and I don’t have to pay a delivery fee. If you guys haven’t found this is the big tiny. I think the bad thing is you can’t get the sale items, but I don’t like the sales stuff to me that I don’t like the chicks in games about the sale items.

I don’t really care, but they see a huge convenience and off the pier convenient for your delivery fee. So if you haven’t checked it out, check that out and that’s it. Unless anybody has any questions.

We’ll see you guys next time. Bye.

 

Don’t Buy A Fixer Upper!

https://youtu.be/6hKezp7iSa8

Guys, this is your rich uncle here today. We’re gonna be breaking down the CNBC article, talking about. Millennials having regrets. And I’m going to tell you ultimately why I don’t think people should be buying their house until their network is two times that, of the price of their home. So yeah. Let me just go down this article and kind of summarize it for you guys because life is short after all.

So they’re saying that millennials are having regrets after buying their current home. The reason why they’re having regrets is. Because you shouldn’t buy houses, you shouldn’t buy a house to live in if you’re responsible with your money and you’re able to invest it in other things that make you a lot more money.

This goes completely against what most people think out in the world. But Hey, go figure, as in many things, the things that they tell you may not necessarily be correct. I don’t live in a place that I currently own. Because I’ve been growing my money tenfold with, by investing in single-family home rentals and now apartments today.

One of the biggest things that people cited was that these folks are underestimating their costs. One of the biggest mistakes you can do is buy a fixer-upper. You hear it about it all the time? My goodness. Stop buying a fixer upper because here’s the problem folks. Yeah, you’re getting maybe a little bit less expensive than you would have bought otherwise, if it was all shiny and new and fixed up, ready to go.

But the thing is say you have to be paintings or maybe 10, $20,000 of repairs in the property that you think you’re going to do yourself. The issue with this is that you can’t finance the repair box. The biggest thing that we talk about as sophisticated investors is, putting the least amount of down to get the most amount of returns for our money.

So if you bought a $500,000 house, you put 20% down payment down. So let’s just say a hundred thousand dollars. But then now you have to, you’ve got this fixer upper. So you got to put 20 grand into it. Now you’re in the deal for one 20, when you really should have been in it for a hundred and people who don’t understand money, don’t understand a responsible use of debt.

Don’t understand what we’re talking about here. They don’t understand it. It drives me crazy. People think that they’re getting it for less. They’re really not because this is not how money works. This is not how it should. Your rich uncle does it. This is not how the wealthy do it. Guys. You guys need to stop listening to mom and dad doing it the wrong way, or all your other coworkers or friends who are thinking, don’t go into debt.

As I say before, you got differentiate bad data, good debt.

So this is what kind of stem is from underestimating. The repairs. And this is drives me crazy about mainstream articles. They always come up with this, like, all right, what should you do? And we started just lane ways, like building up your savings. Come on, give me a break. Make sure you’re thorough.

Yeah, of course, but don’t buy fixer upper skies, buy it all, ready to go or negotiate it into your contract as I’ve done the past so that the repairs get done. Prior to closing so that your lenders okay. With it in the process, and you can wrap up all those repairs that you would have had to put in.

Otherwise, again, let’s just say you had to pay $20,000, right? Cool. You just increase the price of the property, make it a $520,000 house instead. But now you, you put you finance that five 20 and now you’re out of pocket, maybe. 20% of that 20 grand, right? So $4,000 out of pocket. And then, so this is the, this is good use of money and debt.

So they also broke down. I’m going to show you this graphic, that teammate for us. So in this graphic, shows like the difference between a formal owners in general, which are like the general population and the green ones are the Greenies, the younger folks. I don’t know where they were at with these different types of aspects of the home buying process.

The people had no regrets, typically the older people, right? Because they were buying houses where the millennials are just buying houses, just to keep up with the Joneses to be, it makes no financial sense to own a house that you live in going invest the money. Heck, put it into your student loans at six, seven, 8% that you’re paying now, that’s still going to be better than putting it into your house.

I still don’t even think you should be doing that.

Every other population you can see maintenance was a big thing that we just cited there. People bought a too small of a house. See, I think this is this is just a bad data, right?

You should, for every 10% or so people who had that group, Brett. You would think that the 90% of the other ones that they bought too big of a thoughts, in my opinion, depending how the survey was designed, it should be 50 50. These are some other things that people thought of as their kind of regret for buying that big payment.

I don’t really want to get into it today, guys, but go to my room website, simple, passive castle.com/home and read my entire guide to reasons why you should, and obviously you shouldn’t buy a house to live in buying a house to live in is one of the biggest financial mistakes. I see young people making these days, you put that have to put down a large sum of money.

That you would have otherized otherwise possibly bought two, three, four, five rental properties where families are paying down your mortgage for you. That’s the difference when you own your own house, you’re working your butt to pay down the mortgage yourselves and compound that the fact that you’re going to have a much larger mortgage payment.

Now this cripples your cashflow, instead of maybe being able to save 5,000, $10,000 a year. Now you’ve shrunk that down to almost nothing at this large house payments don’t believe the nonsense that other people are saying that rent is throwing money down. The two. Sure it is. But if you have all this money that you would have sunk in there anyway, making a whole boatload of money for you at the end of the day, it’s the combined some of the two, I might be throwing a thousand dollars down the tube paying rent, but I need banking two, three, four, $5,000 a month with my rental properties that the down payment I wouldn’t have had. Otherwise, if I would have sunk it into the down payment of the property and I would also be making a lot more money to be able to accelerate by more and more rental profits.

So there isn’t a nutshell guys again. Don’t buy a primary residence until your net worth. It’s the least one to two times more than that price of the property you’re looking to get into, right? It is a financial drag on your finances. Don’t do it yet. If you guys agree with this, don’t agree. Let’s have a conversation down below in the comments.

I’ll try and answer them all. A lot of this is a lot of people get very passionate about this people. You’re like, oh, where would I live? Right where my family live own or rent something. Go find a unsophisticated landlord that thinks owning a property that where the rent of value. Racials where you take the monthly rent divided by the purchase.

Price is not greater than 1%. Actually think that’s a rental property and it’s not, it’s a bad rental property and bear on sophisticated investor. So therefore you as a tenant need to take advantage of what they do not know. So therefore you need to rent from them.

All right, guys, keep learning the good stuff from your rich uncle here, and hopefully we will get you guys to financial freedom. So take these back.

250k Net Worth Chemical Engineer Coaching Call

https://youtu.be/FcnzpGSAEXk

What’s up investors we’re going to be doing one of those coaching calls that you guys like to buy curiosity learn from other people’s mistakes. Check out all the past coaching calls on the passive investor members I think we’ve got over a couple of dozen of these calls and it’s also found in the YouTube in the coaching call section, but in the members section, which you guys can get access to by joining the club@civilpassivecashflow.com slash club, it’s free.

I arranged everybody by accredited and then crazy accredited section on. So you guys can find where you are. The guy we’re interviewing today, his net worth around $250,000. But, just like a lot of the younger guys in our group, which we have a wide range of investors here from, in Europe, 20 years old, all the way up to 60, 70 years old, Richard here, he’s not making big money yet, but he’s a chemical engineer.

Those chemical engineers, I swear are the smartest engineers. AutoCall no offense to your computer science guys, his net worth wrong. Quarter of a million. Soon, this guy is going to be making some bank, cause he’s only been working for maybe a few years thus far. But he’s doing everything right.

And this is how a lot of you guys are the guys who max out your 401ks, very diligent savers. Maybe you don’t have the whole family and children thing quite yet. It’s something I’ve learning about personally these days. But you’re setting up the framework to get yourself on the path to financial freedom.

Most people come into our group and they’re already in their forties and fifties. And, but luckily they’ve, have time on their side and they’ve amassed a million, $2 billion of net worth. But this guy right here that we’re going to be interviewing today and doing the coaching call. This guy will be availing dollars network easily, late twenties, maybe early thirties.

It’s amazing. And it’s cool to see people get off the straight path. It’s subsequent around doing things like, being achievable. You guys can check all the crazy stuff I would do to save money, which I’m not super proud of, but Hey, that’s what I used to do. And I live very frugally.

Again, a lot of those cheapo tactics are@simplepassivecastle.com slash sheeple. And you know why I’m on the subject, one of the things that got me to the next level from a letter rentals to announcing a few thousand plus was joining different masterminds, actually spending money to get her on the people that took me to the next level.

That’s what the family office on a mastermind is all about. We just bought the pricing a little while ago. We continue to bump the pricing, every couple of quarters to increase the caliber of that group. We have about 70 people in there. And if you guys want to learn more about the group, because you’re tired of hanging out with broke guys or people that are investing in their 401ks and all that nonsense check us out@simplepassivecashflow.com slash journey.

And during the show.

 

Hey, simple passive cashflow today. We are going to be talking to a non accredited chemical engineer. We’re going to be doing a coaching call and guiding him on his way. But yeah. Thanks for doing this, Richard. No, thanks for having me late. I really appreciate you taking the time. Yeah. So let’s give some folks some contexts.

How old are you are? When did you graduate? Bring us back today. And then all of these financial profiles everybody’s situation is different, but I’ll be honest. Nobody’s really a special snowflake. Everybody follows the same five to 10 categories, but tell us a little bit about yourself.

I graduated in may of 2017 with a degree in chemical engineering and I moved to Houston shortly thereafter, where I’ve been working as at a chemical plant the last three and a half years. So I’m 27. Just about to turn 22. And I was introduced to financial independence about two years ago, two and a half years ago by my friend, Jared.

And then I went down the rabbit hole and decided real estate was the way I was going to go. So I’m currently living in a house act, which is a duplex in Houston. I have the one side printed out and then I have a room for rent in my unit, but I currently do not have one. And then I recently in July just purchased those second real estate property.

And I did a successful Burr and basically only left in the financing charges with that property. And so that one’s a pretty successful first hard money loan as well as a refinance. Richard’s a example of a younger guy. His net worth is under a runner on a quarter million bucks. But I would say your in fact, it’s just that you’re pretty connected.

The right people, your buddy, Jared knows another guy that knew me and all you guys are all like each financial independence retire early and type of guys. Sure. You guys get your stuff together. You guys will be on your way in 10 years, for sure. For those of you guys don’t know what chemical engineers are, probably the smartest engineers of the bunch, your salary hasn’t really taken off yet.

You’re still in that first scrappy job, is that I switched companies a year and a half ago, and so I got a bump up to what I would say was the market value for chemical engineers here in Houston. That’s probably about the average for a non oil and gas. But that doesn’t include a bonus this year.

We didn’t get it with the whole markets and the company being a, not the best financial spot. I’m eligible for up to a 20% bonus. When that kicks in, like that could be a significant bump to my salary. Where do you think your ceiling is five years? Five years at this company. I don’t think it would be too much higher.

I could probably see it again. Closer to a hundred at that point without making us promotion up. But it’s a pretty small company. The one benefit I really is it has a good work-life balance compared to a lot of other . Got it. And that’s probably, you got that from your buddies, right on all three trio is you guys are all about quality of life instead of just making a whole bunch of money and spending it for briskly.

Yes. And and right now I’m able to actually work from home. So that’s been saving me a significant amount of money on gas and just all around time. Yeah. So sometimes I look at this in a different order , if you guys are checking out the podcast, go to my YouTube channel, we have the personal financial sheet, but in the upper right-hand quadrant, you have the net worth.

That’s where I take a peak at first, again, about a quarter million dollars net worth. And then we look at how he’s making money on a month to month basis, about $7,000 of salary coming in. But in if he had a bonus, that’d probably be up a little bit. But then I look at use as a cash, which is his expenses.

And there’s a whole bunch of you guys out of the bay area. Who you are that make over 200, $300,000 shit. You’re only able to save about the same of as it’s a rigid here. The thing that we don’t really care about is this net cash flow. That’s all your income minus all your expenses.

And he said, he’s probably able to save maybe 30 to 40 grand per year. That’s pretty good, man. Keep doing that maybe four or five, four years. That’ll definitely start climbing up over 50,000. If you keep buying assets, that would be income.

 

If you’re a guy making over 200 grand a year and you’re not saving 40 grand, at least you got to take the belt somewhere. There’s something going on. I was just talking to a guy yesterday. I made up laugh because it’s I got five kids. It’s okay, that makes sense.

I will say I do have the benefit. I’m unmarried and I do not have any children at this time, so yeah. So you’ve owned some real estate before. Talk to us about how you picked that up. One of these is a house hat the first one that I inquired back in March of 2019 was a house hack.

It’s a duplex townhouse connected units. And the one side’s been rented out from the day I purchased it within an older lady and her son lives there. And that basically covers all of my HOA fees, the taxes and insurance on the property. And so then if I don’t have a roommate, then I’m basically just paying a mortgage and interest in principle, which would be cheaper than, and rent for the size of property that I’ve got.

I’ve had a little bit of difficulty getting roommates. The area’s a little farther than the energy corridor, which is where I was hoping to get younger. College-aged students who wanted to intern or take work duties there, but I haven’t seen as much interest it’s a little bit farther, but.

To hang out with. Yeah, exactly. I did have a roommate for roughly six months of the first year. And then I had one that moved in March of this past year and immediately lost her job afterwards. And so she left and I haven’t been able to fill it since COVID hit. Yeah, that’s cool, man.

But I would say at five, 10 years, you probably don’t want to do that type of stuff. Are you looking to move out or what’s the next month or so about another single family home to here. Yeah, so this one was a, I would say a home run for me. I bought it in July from a wholesaler, used hard money on the deal.

Basically bought it at one 15, put $39,000 into it. And it praised at 2 25. And so I was able to refund it. At a 30, 70% loan to value with a 3.625 interest rate. So it’ll cashflow roughly what like 130 bucks a month. And it ends up being I’m trying to remember the number. It was like a 12% return on equity, plus a, like a F I ended up with you include the debt.

Capital appreciation or the forced equity. I ended up with a 413% return on my investment. So we look at it in terms of that’s all nice and find a Debby after the smoke clears. But what is the, I don’t really pay attention to, oh, it’s cash flow. It seems counterintuitive because we’re all about simple passive cash flow, but I’m assuming your cash flowing on it.

But we look at the net equity here, how much debt equity is sitting in there. And it’s not too much. You could probably pull some of that out or re leverage, but I think this is a good foundation to keep building more and more. And you’ll see in the next two, three years, this will definitely peak over a hundred, this particular property, but. What’s the plan with the house hack. The plan is I eventually want to move out. And so I’m currently looking for another property that I could house back. So I’m looking for a one that’s closer to the center of the city and one that I could live in, like an ADU or a garage apartment, and then get a single family loan on.

Yeah, it’s just a rambling man making money as he moves around town. That’s awesome. Do it now while you’re younger. Yeah, exactly. One thing I would say if you had a little bit of equity in there, like it’d be 60 or grand or more, or maybe you’re there. See, before you move out, maybe try and be leverage the property, squeeze all that out.

As an owner, occupied property, the freight before you moved. Yeah, just a squeeze that lemon right before you lose that opportunity. But right now it may not be worth it, the payload origination fees or that probably not. And honestly, the neighborhood’s a little rougher than I thought it was going to be when I bought it.

And so I’m not sure how long I intend to hold this property. If I can move out and potentially sell this one, I would look, I would probably look to do that before refinancing it. Yeah. What is your thoughts on this whole birth thing? Is it just, are you going to keep doing that in a few years or something you’re going to grow up?

Oh, when your network gets over a certain point? I think I would probably after a while, I’d want to get into more of a passive side, but it’s just at where I’m at to shell out 50,000 in cash. It takes me a very long time to save up for that. And so then I’m doing a deal every year and a half at the, really the earliest.

Yeah. Right now it’s taking you what about 12 to 15 months to save up 50 grand right now. And then that would be a significant portion of my network into one deal that I’m just handed off the money to. But talk to your buddies a lot. Yeah, exactly. So this was my first one doing like a major rehab.

And so I actually didn’t mind the rehab process. I found a really good contractor. He’s really honest. And like he found some things he did not charge me or he finished in the timeline. So with the current job that I have in the flexible hours it’s not that big of a deal. If I need to take an afternoon off and go look at it.

The property or go out there and do my checks on all the repairs. So for me in the time being it’s actually probably the best use is to try and use the burn method to generate equity. Cause it’s, once you have the equity, it’s easier to find cashflow than to take the cashflow and create equity. Yeah. You got to start a fire right now.

You’re just trying to get a spark boy with the burgers. But I would say. Richard’s different than the average person. He’s got a couple things going on for him. Number one, he’s local to the area. So he’s able to do it. He’s not some guy out at California, Hawaii for a property in Kansas city for goodness sake.

And secondly, Richard’s a smart dude. He’s a freaking chemical engineer. He’s in like the contractor, the builder, kind of role. It’s not just some it guy that is trying to manage remote work. So that’s another reason why I’m successful at doing this. Yeah, I definitely would’ve said it would’ve been, it would’ve been very challenging to do that project if I wasn’t in the area and being able to drive out there and check on things and just do the proper due diligence, I would have had to put a lot of trust in them.

If I wasn’t doing it locally. And also one thing with the Houston market is there’s a wider variance in the prices. You can find some pretty inexpensive houses and then you can find some really expensive houses. And so it really benefits the bird because you can generate a significant amount of equity, but it’s harder to cashflow, I would say in Houston, single family houses, but you’re doing what you can work with, right?

Like you’re you just happen to live in Houston and move around. What’s your geographic blends? I definitely like the warmer area, but I’m not D definitely tied to Houston area. I’d be open to other markets or other areas I used to, I grew up in Illinois, so I’m from the Midwest. So we’re going to look at your deposit, your sick, your security deposit, or your savings deposit, checking account.

You’ve got it scattered around. We don’t really talk about this type of stuff, but what’s with chase bank, man, I get into a credit union. No, so the, I just had the chase bank from when I went to college. And so I had a couple of those accounts open and so I just opened a second one when I started saving for my rental property, but look into there’s some savings accounts.

That gives you like two to 3%. They’re called a rewards checking accounts. And I did this for years. Like you have to do like an annoying 12 debit transactions per month, then log in and do these statements. And I would do this for years where I would go to the gas station and call my stupid debit card 12 times.

Oh really? He was incredible waste of time. Back then the interest rates are a little bit higher. Three to 6%. Okay. Jess, I was doing that for 10 years and I just decided like a few months ago I was going to stop doing that stupid stuff. But for you, every little bit counts. Yeah.

I was getting 2% on the discover account. That’s where I had most of my money before I bought the bird property. But I had issues with the payment system. They didn’t, they stopped letting me use Zelle. And then also with that, the interest rate dropped from two and a quarter down to 0.6. Yeah. You gotta play around with it.

Cause like you can also do like little 1 cent PayPal transaction. Yeah. Or another novel is doing a Venmo sometimes fill out about info to debit transactions, but it all, it’s all over the place. You just have to do it 12 times and see if they give you the higher interest rate, but nothing, the old going to the gas station, pumping gas for 36 cents every single time.

But you can’t do that more than three or four times in a roll, if not on the phone, call on your cell phone and say that. That’s happening. So I don’t know, man, I am telling you to waste a lot of time, but I feel like you liked that type of stuff. So whatever floats your boat or there’s commodity direct is another bank account that gives you 1% or 0.6%.

That one you don’t have to play stupid games. Okay. Co-morbidity Comenity and there’s new folks. Is BlueVine is what I’ve been using for business checking accounts. And now it gives you a Dick 1% and that one, you don’t have to do any stupid 12 transactions per month. Okay. So try those two.

But chase is nice because you can wire stuff. Yeah, don’t do that. The Wells Fargo one, like I’d signed up because they gave like a $400 sign on bonus if you hooked up a direct deposit and stuff like that. Yeah. I know. It’s all the time wasters.

Yeah. Okay. You got some term-life it’s this pretty small. Yeah, that was one. My parents took out on me when I was a infant. Yeah.

You’re screwing around with Bitcoin and ground floor is like the startup. Yeah. So the, so it’s like hard money loans. They let you do a very small dollar amount. So with that, like three, just under four grand, I’m invested in roughly 300 different loans. So it’s pretty diversified. And I’ve been getting a 10.8.

Interest on my money. Is that pretty secure or what’s your thoughts on that? So far so good. I haven’t had there’s I’ve I think we’ve lost money on three of the loans that I’ve done so far. And so I started out and basically what I do is that every time I get paid, I put 50 bucks into it.

And then I’m just rolling any money that I’ve made. So I’ve made roughly like 300 bucks over the last like year or so. Okay. I’m looking at the website now. So like they, they diversify it for you over a whole bunch of people. No. So you invest in the individual loans, but they have a very low minimum investment.

So you can invest in a loan as a little as $10. What do you, what’s your increments? How do you break it up? So I just do $10 on all the loans. And now I’m starting to get the point where I. I’ve been putting it in every loan that they basically have. And then I’m starting to get to the point where I’m putting $20 in.

Are you, if I move, sorry, go ahead. Are you cherry picking like the better paper because they grade on a, B and C, so I tend to start with the, and that’s how they also do the interest rates. So I typically am just putting it in mostly the C and D, which is 11%. Normally or higher. But but when I first started, I was just putting them in everything.

And I had just as many loans that like were in category a default as I did in category D. So I figured I’d go with a slightly higher interest rate. Yeah. It looks cool. If I were to do this, I would go to more than a and B type of graded paper. What’s the rate for what’s the rate for AP. So the lowest they’ll go is like 6.4, but like they’ll have A’s that go up to seven and a half.

And then BS will be from like seven and a half to nine. And then CS there’ll be anywhere from nine and a half to 11. And then anything higher than 11 D yeah. Occasionally you’ll see a year and a half, but that they get up to 17, but that’s the highest I’ve seen. That’s cool. I, what I don’t like about these crowdfunding websites is like the broker dealer, the guy administrating, all this stuff is making a huge cut, like huge.

So they’re taking a lot of of the profits on these types of deals. So like for example, if a B class node is giving you 6%, it really should be paying out 8%. A quarter of the profits, but yeah, if you can diversify at school and it’s probably fun too. I bet it’s why you’re doing it to this.

Yeah. I started doing this when I, when I first got into financial independence, like I was like all gung ho. I made an offer on a property and it, I didn’t end up getting it. And so I didn’t have anything and I had to, re-sign a lease for another 12 months. And so at that point I was like I’m not going to be able to buy a house anytime soon.

And so I started doing this as a way to earn some extra money and I’ve just kept going it over the last couple of years. Yeah.

They do have an IRA form. So if you wanted to invest through an IRA, you’re able to do that as well. The downside interest is all ordinary income, right? It’s yeah. It’s interest income. Yeah. But you’re doing also HP, which gives the 10%. What, why do you do grout for, is it just for diversification or you want a better rate or what’s the motivation?

It was just I’d started ground four before I was able to invest in HP. So I wasn’t able to, Jared told me about the 2015 fund, but it was already closed. And so then I waited until they did the 2018, the HP servicing one. But HP probably gives you a better rate than there be glass paper. Yes. Why are you still thinking Ron Flor out of curiosity?

It was just more habit. And also I hadn’t seen the returns realistically from HP. It’s all one company. So I didn’t, it was just more of one partnership if something goes wrong. Yeah, no that’s yeah, that’s good. Yeah. Should I just say diversification, even though it’s a lower rate.

Yeah. Way we do it. I would say the only thing is just as your life gets more complicated and your net worth goes up some better to simplify it. But yeah, you’re learning a lot during doing all these little things. That’s all I did it. I did a whole bunch of stuff that I wasted my time. And Laura, on the topic of wasting time.

What about trade lines is going around with that? I have not. I looked into it a little bit, but I was. A little risky. I don’t know. It seems a little different. I don’t want to get a car consoled. I swear by it, man. You’re making a lot, like you got 11 grand and this type of random stuff that’s comes out to a thousand dollars a year.

Give me a break, man. If you have a credit card, you can make that in yeah. You could probably make that in a year, which just has one credit card with okay. I do have a decent amount of roughly 50,000 in credit card. You need to have the car older than a couple of years.

The longer, the better that’s the jail. I think I’ll be coming up on two years coming up, January timeframe for several of my cards. Yeah. So if you guys want to make, I made tea, I make 10 grand a year during that silly hobby trade nights. If you guys are listening, check out the I-Corps simple, passive cashflow.com/trade lines.

There’s a way to be safe about doing it. But yeah, just, I would say, just learn about it, but that’d be a great way that you could make another five to 10 right there. And that’s big for you, right? Because every year you’re making 30 grand that augments your savings 20%. Yes. And then you got some, your deferred comp TRPs here.

Are you contributing any more money to your retirement 401ks? So not to the 401k or the IRA, the Roth IRA. I’ve only, I still contribute a little bit to the HSA every single year. And I also get a company match, so I come January, I’ll get a thousand dollar bonus just for have an HSA. And then my, the current pension is I have no control over that.

The 5% interest rate on the current balance is what I do. Yeah. Awesome man. Got it. You’re on the right people that think the stuff is garbage. One thing that’s nice about the fidelity, the 401k, they were at my firm, my older, my old company. So I have access to all those funds if I needed to. So in the back of my head, I keep that as a true emergency.

If I lost my job and I needed to keep things running, that’s what I keep that in there. Cool. Cool, great strategy. Most people are there listening. I would say 80% of them are still on the fence. So withdrawing from their 401k because we’ve all been brainwashed. Yeah. Maybe if there’s any kind of words of encouragement there or epiphany that you saw that ultimately made you, I know you had the right people around you that kind of took the poach.

You bought the truck. Yeah. It’s definitely hard turning down the match and what I really stopped was when I switched companies and I just didn’t sign up for the next one. And that was how I jumped off. But it’s definitely not easy. Like I really had to commit to the real estate at that point.

So what is your current company’s match now? So they will do one-to-one up to 600. And my previous one would do a 6% on the first eight. So they would do one-to-one on the first floor and then half on the next floor. Yeah, I was talking to that guy yesterday. Boeing does one, one for one up to 8%, but I was still like do the math man.

It doesn’t make sense. You’ll cross over probably a few years ahead. If you just asked the money, I grew up pasture yourself. And it just depends on what you’re limited on. Yeah. And I’m okay. Like doing the match too, but once you moved jobs, get it out. But that’s another problem. People stay at their jobs a long time, which is pretty rare these days.

Yeah. Cause that was one of the things I did look at doing if they offered in-service rollovers, but both companies I had didn’t offer. Okay. Are you guys, a lot of the younger guys that you guys hop around jobs so much that yeah. Just put it in, get vested and then pull it right back. And we changed companies.

Yeah. And that’s part of the reason too. That was an easier decision at my new company. You don’t, you’re not fully vested on the match for five years. So I was like, I don’t even know if I’ll be here for five years. And so to me putting it in and possibly getting 20% of the match, wasn’t worth it. What are you?

So you said, great idea. If you guys haven’t picked up on that is he’s using this money as its emergency savings account, but what are you, what do you have this stuff sitting in? Oh, index once. Okay. Like a Greek Vanguard 500 type of thing. Yeah. Different mix of whichever one they offer. So yeah. Why not do a money market?

What was your thought process? Or like a, something way more conservative or semi-conservative.

I still it’s. I just left it in. Cause when I first started getting into financial independence, the first things you find are index funds. And so I just haven’t really looked at it since, and in my opinion, it’s not a significant dollar amount in terms of if the market dropped 50%. Yeah, I’d lose 10 grand or 15 grand.

It’s not like I’m sitting there with hundreds of thousands that I would lose a ton of money on. Yeah. It’s keep it on red mentality. Just let it ride. Yeah. Significance. No, that makes sense. Makes sense. And also these are all logical and with my mindset too, I’m not going to ever run my bank.

Zero, like really low to invest at a deal. And so I’m always going to keep some cash available and this is being a little bit more aggressive and the cash is a little bit more conservative. Yeah. And all this stuff for you. Like I’m getting really nitpicky because you’re not working with too much.

But this is the foundation for when you get over a half a million, then you won’t really care about all this stuff, at the year to tweak this, maybe think about it. Taking the Roth out because you’ve already paid your contributions into it and just taking it out cash to invest it.

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

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

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

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

Yeah. But if you have to increase it, we’ll then put money into your 401k via the match. Let’s work backwards. How much of emergency savings do you want to have? You have 37 grand right now, realistically. So the pension is like illiquid, so I wouldn’t be able to get that.

So I have roughly 30,000 in there. I would want at least probably 20,000, because that would give me roughly nine months of if I lost my job and I had just made an investment. Okay, cool. And that number everybody’s different. You’re basically picking that number out of the sky, but let’s go with that. You want about 20 grand in there?

What I would do, I’m sure. More than half of this is contributions. I’ll take that out now. And then maybe in the next six months you replenish, maybe even before the end of the year, you do a catch up a deposit into your 401k and get that match to replenish that, whatever you take out of here and put back in here.

Okay. And then this. I would just get rid of it. Just cash it out. Cause it’s trying to simplify things too, right? At the same time. Yeah, no. So I had actually used, so I had opened that one when I was co-oping to start investing when I was still in college and I actually pulled out the original contribution for the down payment on the first property.

So all of that money is gains, have zero basis. Yeah, I would just get rid of it. It’s just, you don’t need another stupid letter showing up in your mailbox every month, every quarter, simplify life. Of course, I’m telling you to do this because you’ve already shown proof of concept for what you’re doing.

Most guys are still at stage one, but you’ve I feel a little bit more comfortable pushing you in closer to the edge, but you got to decide what you want to do, but that’s a good point. And then student loans. Lucky you don’t have too much of it, but tell us a little bit, like where you started off with Ben and your strategy to get to this point.

Yeah. So a little bit goes back. So I did a co-op program, so I, it was a work study. I did five work sessions over five years. And so I graduated with about 18 months of experience and they actually paid me. Extremely well, I was getting probably close to what a full engineer was making my final year. And they were also paying for my housing in Chicago, which was tax-free.

So that ended up putting me in a position when I graduated college with a roughly 20,000 in cash. And 30,000 in student loans. And so I started rapidly paying down the student loans and then for the first eight months of my working career, and then I kinda got the bug of, I wanted a new car and I’d always told myself once I paid off my student loans that I’d get a new car, but I ended up Deciding that I wanted the car sooner.

And so that’s when I took out a more expensive car loan for me. And so I, at that point I reduced my student loans to the minimum payment and then it had been paying down my car loan. Yeah, man, like what’s life without a nice car,

a guy getting the financial independence. So yeah. So I actually just refinanced it from the. So I extended the paydown a little bit. So we reduced it from 6 55 down to 4 52. And so I’m going to just going to make the minimum payment on all of these loans was my plan and then take the extra cash and invest it.

Yeah. I never liked the cars. So you get a nice car. I would say, are you a car guy or is it, it was just, I didn’t want to always have the crappy car. And so I yeah. A bunch of my friends got nicer cars and that I wanted to keep up with the Joneses and it was a mistake, but I honestly think it was good because it prevented me from buying too much house on the first property.

Cause I could have gone to the bank and said, Hey, I just have a student loan payment of 150 bucks. And they would’ve given me a loan for, I don’t know how much, if you’re a car guy. Lease is what I say. Cause he be getting a new car next year probably, or this year. Another reason why not all people talk about it, but the reason I do that is write it off to the whole thing, these payments, as opposed to doing this silly 50 cents.

So yeah, I don’t do the mileage personally because I don’t drive that much. So it’s 50 cents a mile. It’s like worth it to me. Cause I don’t drive anywhere. I don’t sit on traffic, but you might, but know when you get, if you’re a car guy lease. Okay. Yeah. I’m definitely not a car guy. This is more of a, I wanted to keep up with the Joneses.

So that was my one main mistake. Not stay single the rest of your life kind of guy. Yeah. So I, my, my plan is to just keep the car cause it’s a decent car and yeah. Run it until the wheels fall off. So yeah. Yeah. But these student loans, they’re so low to, you said you paid off some of the higher ones and it’s such a small amount in a logically.

You just keep paying it off. But at some point, just knocking it ahead just to simplify your life too. Yeah. There’s a lot of this. It’s just finding a balance to pitcher your highest and best uses. This stuff. Yeah. Not screwing around with acorns or doing full transactions on your debit card. Exactly. And I realized that too, with that property, it was a little bit scary going through and taking out the roughly 13% interest rate loan to do all the work. But once it worked out, like it was oh, that was all it was. And I’m just looking for the next. Yeah. And that’s where trade line comes in.

Right? Two trade lines is like five, 10 grand a year. For a little effort, I think that’s going to be a big thing for you to help them speed this up. That definitely can get you up to probably about a house every nine months to that. So this is how I see your started progressing. You just keep buying a few more of these, add a few more properties on citizens, real estate or.

Spreadsheet. And then probably that I’ll take you out a few years and then maybe you dabble in some syndications or maybe you really like this stuff. But I’m suspecting, you’re probably going to be a lot more busy at your job somewhere on your five and 10 in your career. They expect you to take management roles.

Which you may, I don’t know. What’s your thoughts on that? Are you going to take that progression tracker? Yeah. I’m planning on being out of there by that point. So yeah. It’s not your gig. Yeah. I think I’d want to go find something else to do by the time. So five years I’d be 32. That’s what I’m trying to figure out a way to do it by then.

Yeah. That’s a, you just have to find a balance in life, right? I’m sure you’ll make a little bit more than seven grand a month and that’s all you really need. You can keep driving to all these, but if you want like event later, you’re going to have to level up. Yeah.

But is plenty getting into their net worth of 200, 200 grand is the hardest part. I feel like it’s just now you’re on the track. Probably net worthwhile, just you’ll see a half a million probably in the next three years. Again. Yeah. And if I could do a one or two more burrs, like I would easily be there at that point.

Yeah. Then maybe two to three to get up to a million. And then you’re off to the races after that point. Yeah. And for example, I would say about a hundred thousand of that was within the last four months, just between my salary and then completing the Burr. I generated $70,000 in equity on the Burr alone.

So I basically made my year’s worth of salary. By doing that one project. Yeah. Why would you want to take a manager role, that deal. Exactly. Rather do some straight lights. Yeah, I guess I got to check out your course a little bit more, but yeah. Any other questions or anything you want to talk about?

At what point would you say I should start thinking about syndications, like investing in those. So for most people I would say get up to half a million at least, but you’re already so connected. That’s how you got into this stuff in the first place. Like you have the great ability to invest via proxy.

You got people around, you already investing in syndications testing the water, so by the time you’re ready, which you could probably do it now. You just jumped right on in, into the lake. No, this is this kind of what I call like investor proxy. If you have a couple of guys here, your buddies I’ve already invested in, they found that they’d found a good operator.

Then just jump in, how bad can it be? It’s the ones where a lot of investors are like really dumb these days and they just want to sound cool. So they say, oh yeah, some really good. And you come to find out that they didn’t even invest their money in it. They just, I don’t know what the heck they’re going off of.

A referral is great, but it’s not as good as like a real referral where somebody is actually investing money with. I got hurt a couple of times where investing with that silver level referral. The empty referral, what I call it, it’s just like when people are trying to find property managers.

Oh, ABC property managers. Good. Do you have any houses with them? Where did you just hear? Because they happened to be the sponsor of their local Rio or whatever. Yeah, no, and actually one of my, my, the person I use as an accountability partner, he referred me to a property manager and so he’s 30 and he has 30 properties of his own and he manages now 50 properties all with his own company.

And so that’s who I’m using. So I treat him as a pseudo mentor as well with how he viewed the bird. But that’s, I think, you’re different than most guys, your ability to do these burgers. Number one, you’re a smart engineer. It’s not, I think that’s not most people and you’re local too.

So at some, it’s probably a grind for you to do this. And so at that point, it’s to get your friends to stop doing this at some point you’re the one who’s going to dictate. But maybe, I don’t know. I don’t get the sense of that. Like you, this doesn’t really get your blood going. It’s not fun.

I don’t see you doing this for a super long time. Yeah, no, I can see. And I tend to find myself I get really focused on a certain area for a couple years and then I’ll get bored with it and then want to move onto the next. Yeah. So let me ask you this. If it’s not your career, And it’s not flipping a lot of houses to inflate your ego.

What do you want to do in five to 10, 10 years when you’re financially free and you have $6,000 of passive income rolling in every year? Yes. I definitely want to figure out a way to fix the education system. So I, cause I would have been a teacher if I didn’t do engineering or teaching paid would engineering paid, but I definitely think our school systems could use an overhaul and figuring out a way and doing a proof of concept.

The being financially independent would give me the time freedom and the resources to figure out how to do that. Teach financial financial education or just some other subject or, other subject, but it would have it would definitely be more of a life. Stuff, not so starting a business entrepreneurs, like using the science, using the math in real world situations, just not a math problem to figure out how to do it.

So I’m not, I don’t have it quite lined out exactly what I want to do or how it would work. But I definitely would, I think our school system severely limits. The growth of a lot of people and you have to do a lot of unlearning once you graduate. Yeah. Fortunately the people teaching it are products of the system.

And yeah, and I’m not blaming the teachers. They’re like, they’re doing their best and they sacrifice a lot. And so I just, it’s hard to teach what you don’t know. So yeah. I’ve tried to go back to some of the local high schools here at my old high school and let’s see if they will.

Somebody to teach this stuff, but they just look at me dumbfounded thing. Are they thinking I’m trying to sell life insurance or something like that. But I’ll let you know how that goes, but I’m not having very much luck on my side, even though I’d like to, I’d like to write the right, the wrong in the world, just like yourself.

But I don’t know. It’s frustrating. And people need it yet. People are. Open-minded to it. And I’m getting to a point where I’m just tired of it all. Just like whatever guys, numbers, speak for themselves. And that’s what that net worth line is not to get sound egotistic, but it’s that’s the score, right?

Who’s figured it out. Who has the best ideas on how do you build a career, how to use the money to grow your network. That’s not everything. That’s just not how the system works. You’ve got to go to school. You got to go get an education degree. That’s what they want. That’s the sound system still.

Yeah. So now that, and then it’s just helping other people. So giving back, whether it’s supporting people in disaster situations or being able to do things that you couldn’t like, that’s what, financial freedom would give me the ability to do that, where it’s more difficult at the time.

Yeah, it’s just going to have to make more money. And so the, money opens doors, I think, if you can brand yourself with the right authority, which you have to pay for, it can open up those doors where you get the authority to help out people in that manner to get past the gatekeepers.

Yeah. I’ll let you know, man, trying to figure it out.

All right. Appreciate it, Richard. If you guys want to do these and participate out there into the free world join our investor clubs, it’s simple. Passive cashflow.com/club. , we’ll see you guys next time. Thank you.

 

How Multi-Millionaires PROTECT Their Wealth

https://youtu.be/6z69B3pP-HU

What are some of those common safeguard? Or maybe not drugs in particular. Cause I think it would be that one off, but other issues into the surface with when these consults with families and how do you protect against how do you write it into a trust? The biggest again, communication is by far the biggest one.

And, but I want to hit that from a different angle that I answer your question in not a different way, but from another issue, critical David York and I he’s a coauthor on our books. But for, it was for trusting the state’s magazine in 2017 and trusted in states magazine. And our nerd world is, are our peer reviewed periodical.

And you got to do annotations and case studies and it’s, I’ll never write one of these damn things again, but we call it Gratz versus graphics. That was the title of the article. Now a grad in our world is a strategy for transferring wealth from one generation to the next extensor grantor retained annuity trust.

So the point of the title was, are you trying to pass on it again, written to our, our colleagues, other attorneys in the state world. Are you trying to help your clients pass on wealth or gratitude? Okay. We took a look at all of our families that again, have done this very well. And one of the things that we found was the biggest deciding factor about whether or not a family stays in harmony, meaning that a year after mom and dad dies, they’re still having Thanksgiving dinner.

Or we have this, the state is saying in the estate planning world that you never truly know a person until you share an inheritance with them because the best families, the claws will come out and people will fireboat fight over mom’s engagement ring. I don’t think it doesn’t say anything bad to the person.

It doesn’t necessarily mean that you’re greedy. I’ve seen a lot of greed in these scenarios, but you lose a loved one and you go through that emotional toil and then you hang on to a personal item. I remember when. Duck hunting with my dad for the first time. And he gave me a shotgun and the use, and I want that, whatever it is, it has this emotional attachment that because of the emotional turmoil you’re going through with that last one, you latch onto that.

I will see people fight over tooth and nail over that. So the point of this is the biggest deciding factor is openness being open with your family and having the open dialogue. And that’s a really counter-intuitive thing. Not so much for our generations. Our generations are getting a little bit more comfortable with it, but you have the silent generation.

There was a reason. They were called the silent generation. They did not want to talk about money. They did not want to talk about finances, include the family. David, one of my partners, he has this great story about this family. He was talking to this with, and the mom and dad looked at him and say, can we, we try to instill our kids, all these financial ideas and how lucky they are all the time.

And we did that recently on a trip because we sat in first class and we made them sit and coach you’re going. You don’t get it, pal, your kids still get it. Your kids still get that they’re flying the Maui that you’re sitting in first class, that there are assets. There don’t act like they’re stupid.

People include them. Let them know though what they’re going to expect, even if they expect nothing. Because then the anger you will, isn’t directed to you, or isn’t directed to their siblings. It’s directed at you. Who’s six feet under and they can jump on your grave all you want. So that the point being opened, the books is a really big thing that I encourage people to do.

And we really feel that kids can start getting involved in some of these discussions in age appropriate way. But his early as five years old, or just lie to them, tell them, it’s your grandparents trust. It’s not yours. No, don’t do that. No. Cause again, that’s our second principal with the first principal of them trusted families as they, like I said, they know who they are and they know who they believe.

But the second principle is that entrusted families. Prepare the next generation for the wealth, rather than concentrating on preparing the wealth for the next generation. And that’s all estate planning is doing right now is concentrating on preparing the wealth without again, the consequences it has on that next iteration, without question, including kids into.

Meetings. I was in meetings with family advisors, financial advisors, accountants. I was told to sit in the corner, shut up and suck my thumb, but I was also told to listen. And if I had a question, I could ask it and so forth, but it was a way for you to start speaking that language. There’s a whole nother financial language that’s out there and you’ve got, gotta be able to speak it.

Pref Equity vs Traditional Equity explained

https://youtu.be/q5i0sG8KCOk

Hey, simple, passive cashflow is listeners. Today. We are going to learn the difference between equity and traditional equity. Seen in a lot of deals out there when go through the pros and cons but before we get started, let me show you a little bit. What’s going on the website got we set dates for the year 2022.

We mashed my retreat this past year. We had to do it virtually, but we’re bringing the gang back together and we’re inviting all people. Bunch of folks those people in the widow pipeline club, you guys can sign up there for simple passive cash.com/club joined there. And, check out this retreat.

I have set up@simplepassivecashflow.com. 2022 retreat is the URL. You can check out all the cool videos that we have, from last year sealed testimonials and see what we got planned during the weekend. This is going to be taking place Martin Luther king weekend, 2022, Friday, Saturday, Sunday, and Monday, packed with fun stuff.

It’s going to relaxing to, you’re going to be in a walkable in Hawaii. I’m going to take you guys throughout the island and it’s a great way to meet other pure passive accredited investors. And we’re going to do it the simple, passive cashflow way. So again, check that out.

And if you guys can please do a survey for me on the top of the page, I haven’t set the pricing yet, cause I haven’t figured out what you guys want. How extravagant you guys want to have this thing? I know a lot of you guys are pretty rich out there, but a lot of you guys are really frugal too at the same time.

But let me know. If you guys want to smoke cigars, golfing or just hike and people, stuff like that. Let me know. Again, do that survey for me, simple passive cashflow.com/ 2022 retreat. If you haven’t done so yet. So you can get a say in what we’re going to be doing this year at the annual retreat.

And if you guys want to join our community and get the free courses that we have go to simple passive cashflow.com/club. And for a special limited time, get my free remote investor light equals. By a sign up for that club and then shipping it. Shoot me a quick email@laneatsimplepassivecasual.com, which subject line L I T E lights team knows to hook you up with that free course.

And here’s the show.

 

 

Hey, investors want to go over preferred equity versus traditional equity.

This is in different deals are called different things. A one 82. Or class ABC. But if this is new to you, we’re going to be going over, the story and how we started to implement these options in. Deals. And, maybe stick the end or some advent stuff some more experienced investors. Maybe this is the tool for the job in the certain situation, the first thing. traditional equity was how we first started out. Very simple deals, a straight split, such as a 70, 30 split with 70% of profits going to. Passive investors and 30% going to general partners. And of course that kind of changes based on a better deal or thinner deal. But, it’s very simple, very transparent. And that’s where we started out with this traditional equity. Option. And then we started to realize that, some investors coming in. They may want a more conservative option. They may not want to be in the deal as long as potentially three to seven years. Or even more. And, or maybe they had a lot more money, they were up to that. And gave me a point where they had three to $5 million and they just wanted a straight coupon paid monthly. They don’t really care about growing their money. More.

Also, there are a lot of. Newer investors that maybe came from the private money lending world. Of course, when they see this stuff, they’re like, why the heck would, I want to give up a huge chunk of money to these unsophisticated house flippers it be ordinary income, which we don’t want passive income. We created this pref equity class, which is a very small layer. It’s very small part of the equity. And so this was born. Perfect equity. We’ll just in this case, we’ll call it AWA of course it’s always called a different things and different deals. So always check the PPM. What the naming convention is used. So we started to go in with two different classes of equity, the preferred equity. And it acts like a debt investment. Where you’re getting a straight preference chart. And you’re from like eight, 10%. Maybe I’m at 11% we’ve had in the past and certain deals can cover it.

It acts like a debt investment, like a private money lending deal. But you are an equity investor. The cool thing about that is you’re getting the piece of your, percent per rata share of the cost segregation. Appreciation and losses.

Implications for pref equity. , like I said earlier, this may be a good thing for more mature investors out there who have a higher net worth. We just want to collect a steady income check or newer investors looking to move away from ordinary income to more of the passive income, or just want to try us out. Right way to sit at the top of the capital stack. With a more conservative option where you don’t have to wait. And maybe a couple of quarters for the DOE to get restabilize, to start to see distributions typically with the pref equity or Awan. In this case, you’re going to get paid out a lot quicker. In the past, we started hanging out distributions right after the first complete month. And that paid monthly distributions after that.

Great situation. If you have a skeptic spouse at home, if you guys are looking for the cheat sheet, Working with a skeptic spouse, go to simple passive castle.com/spouse. Also shoot me an email. I got some videos for you guys. That we did at the last. A virtual mastermind. But great way to show about that. My favorite turn a month or two after you. Initially invested in the deal now, nothing. Gives them more confidence than seen. That almost 1% of your investment. Going in the bank account on our routine Buffy basis like that. And hopefully. Gives your skeptic spouse, the confidence that lets you invest some more, which is ultimately what you want to be doing. Cause where else are there are you going to find better returns out there? That’s backed by real estate. And not only any real estate, but stabilized assets with a great business. The bump, the rents up. Another person that makes it’s great for as investors who. Maybe they want to be a hybrid investor. They want the upside. So they’re going to hop in the 82 or traditional equity piece, but they also want some peace of mind. What’s that steady peak. Income stream. Some people will cobble this. They’ll maybe go 50 grand in eight, two and 20 grand or 10 grand or 50 grand in a one. Great way to play on both sides.

Maybe you just want to put in 10 grants. So your skeptic spouse get to see a few dollars hitting the bank account every month, but you have the majority of it is the equity piece, which is ultimately going to grow or, and have a bigger equity, both the poll at the end.

They’re sharing a couple of examples of some people doing this, make it, how to investor , they learn about all this alternative investing information and they had their paid off house and they realize what a mistake that was. So they get a HELOC on it. And now they have access to $400,000. And, they went in a hundred grand into the deal, but they had stale maybe. The remaining $300,000 and they had another a hundred thousand dollars. Liquidity lack around and they had all this cash, right? Like just sitting around doing nothing. What they decided to do is plop down a couple of hundred thousand dollars to 81. Knowing that they would get that money back. Earlier, and that’s how typically it works. What we’re trying to do is like the pref equity kind of gets us off the ground, gets us rolling. But make no mistake. We’re trying to remove those investors as soon as possible. Typically, once we get a lot of the rents, Stabilize. We get the initial bump, maybe in the first few years, we’re trying to do that. Refinance. To get these people out of the games to make all our. Traditional equity, the two guys. Our return squat. Thanks. It’s thanks for helping us. So the guys, now we don’t need you. You guys are out and hopefully it’s like a mutual thing where investors, another reason why they go into the pref equity Awan is they don’t want to be locked up in a deal that long. And I don’t know where that really comes from. Maybe it’s a non-committal thing. Really? Where else are you going to get better returns, but look. Everybody’s got different situations and even people in different situations want to segregate their portfolio a certain way. Maybe you have some part of your portfolio, a little more conservative. You want to take a little bit more asymmetric risk. Which I don’t think these deals are right when you’re investing in stabilize assets that produce cashflow every month with a good business plan. I don’t really call that asymmetric risk, like investing Dodge Clyde or. Altcoins. Out there. Or doing more of a development deal. It would be an example of more.

 

 

 

Another investor asked me one time, what do you think I should do? I’m torn between the two. They both sound right. I asked him the question like, Hey man, how’s your job, ? Do you think you’re going to get fired anytime soon? The company downsized. The reason I asked that as well. If there, if if you’re a government worker or you have a pretty steady W2 job, Is that a ride? If you’ve got your emergency savings account, a few months of expenses, the kind of tie over to find your next job, or you have opportunities to harvest some cash, maybe from a Roth IRA, cash savings, or he locked your good put in traditional equity, especially if you’re under a million or two network, you need to grow your money. Pref equity. 10 11% a great return, personally, I think you can grow it better in a traditional equity. That’s what you should be doing. If you’re not to two to $3 million and above, you’ve got to grow your money. You’ve got to, use that analogy. You got to score more points. You’ve got to put up more points on the board. If not, you’re not going to win the game.

And the flip side of that is say in an investor, said, I worked for oil and gas industry. Things are weird. Or. I’m on a contract work this year. I don’t know what’s going to happen in six months then I would say, you should do the private equity at the stage of the game. Get your money working and get the cash flow. That might be a better way for that particular person to go. But again, it’s different for every situation, every person. Has different, ideally you’re segregating your portfolio as you’ve seen you see my portfolio. Sometimes I take more risks. , most of my portfolio is pretty conservative. Most of these stabilized cashflow deals. And then the last example, some investors, they have a huge glut of , lazy equity. Maybe even half a million or $2 million of lazy equity that they haven’t done. Like I said, I’ve seen investors, invest a million dollars in the first year with me. But I think that’s an outlier, right? I suggest people try things out slowly. Hang out for a year, make sure we’re competent. I know we’re competent, we’ve done a lot of deals thus far, I’m just being empathetic to new people coming in. Because that’s the prudent thing. That’s the thing I would do. I don’t recommend anything that I don’t want to do. At the same time you got money burning a hole in your pocket and for every million dollars of Lacy liquidity you have, you could just stick that into something at 10%, pretty easy. It’s such as HP. I wouldn’t suggest putting all that money. In one place or all that money in a private equity deal. But, you wanted to apply the funds, but you want to do it prudently. A nice way of doing this is putting a chunk in pref equity to just get it working because the idea is you’re going to get that much quicker. A lot of these deals, they make us put a lot of this money is reserves. So once we hit certain milestones, we refinance the money out, we return a lot of that initial Private equity capital to investors right off the bat. And, maybe originally went in with a hundred grand of equity. Maybe you’re only sitting with 50. Grant in a year’s time, not every year, every deal is different. And I want to say any precedents here, but, the pref equity is a shorter term lifespan. If you’re sticking money in there, you got to think that you’re getting a heck of a lot faster than most people on the , traditional equity side. So it can be a strategy thing. The way of thinking about it is you’re putting loading money in, but you’re leapfrogging it to maybe one to three years into the future that you know, you’re going to get it back. Then you go to be deployed into more of a traditional equity, eight to scenario. I do this a lot of times. It’s kinda like a short term, one to three years. Speed in a way, you want to get your money in traditional equity, but you’re waiting for the deals to come around, which, and they’re pretty infrequent. And if you’re starting out, you may not have good deal flow. You’d likely though, right? So you want to be patient, but you still want to get your money working and that’s what the pref equity option. Allows. Just going over, A scenario here, a hundred K investment with a 10, 11% return. Just using that as a. Example. Annual projected cashflow of. Around. 10 to $12,000 a year, right? That’s 10, 11%. I think there’s a typo in this should be $11,000 for 11%. But as it comes out to be on a hundred thousand dollar investment, a little under a thousand dollars. Paid monthly.

Sometimes, people ask, what if we don’t get paid? A lot of times you have to understand that the Private equity is a very small part of the capital stack. In deals pass. The amount of capital we’ve raised in the Avon portion is very small. Like maybe five or 10. At most, maybe we seen 15%. All the capital stack. Sometimes people get concerned like, oh, there’s a investor class ahead of us. There is, but it’s pretty small potatoes in the grand scheme of things. And we wouldn’t put that. One class in there. If we knew we it off and that’s how we as sponsors response speed. Create the allotments for each of these classes and the It may seem like it’s a little arbitrary, some deals are 10%. Some, these are a week take great care. And there’s always a reason why things as So the Awan is a pref preferred rate of return, which starts accumulating once the property. Closes. we’ve had investors as. Does this compound? No, it does not compound. That’s not. That would make things very complicated. In terms of, paying people back. The compound rate. Normally what we try and do, if things are going a little slower, we will. We may start off the payments slower the private equity guys, our full intention is to catch right up the first year to make people whole at that, whatever the 10 At the end. And, I think at this point, like there’s also a question that came up. Hey, once you returned my money back, let’s just say in year two, there’s a refinance where I gave you half of your a hundred grand backs. You’re in the deal with only 50. And the guy asked. Am I still getting my 11% on my a Or on my 50 I was like, only getting money at your 50 minutes.. I wish if I, if that was the case, I’ve invested that too, but no, you only get money that you’re making in the pref equity on what you have in the deal. Again, our intention is. You out. So our traditional equity investor returns can’t And again, like I said earlier, you’re still an equity investor, even though it acts like a that you have equity, which means, yay. You have the tax benefits and you get your pro-rata share of the The cool thing. And I said this a lot as a little trick or hack I’ve had some syndicators invest in our deal, kind of shows. other people like to invest with us. And when this stuff was all new, there was another syndicator that actually took a big chunk of my pref equity investment. And I was like, are you doing? Talk to the logic. And they told me that, we liked the fact that we can. the money in and get our share of the losses and then get out of the deal sooner than everybody else. But we get out, our CB has told us that we get to retain hold onto those losses until the whole deal exits. So let’s just say. We refinance every, all the pref equity guys out in year three will all that depreciation recapture. Capital gains. They don’t have to pay that. Until the whole deal exits potentially another few years later, or maybe even another five years after that. It’s a great way of kind of stock piling, passive activity losses. If you’re somebody who runs low on that.

Yeah, you will get a one, we’ll get the full benefit of the cost. Based on your pro-rata share of the capital stack.

And said in a different way, one are entitled to the losses. But their original principal. But of course consult your CPA. A tax professional. Here, just getting more into the advance. Aspects of the pref equity. Some people are like, Haley and I trust you. Should I do pref equity on this one or traditional equity? And again, every situation is different and in everybody’s portfolio, you have different applications, and that’s just based on your personal preference. But, this particular individual, I know their portfolio pretty well. They trust me and I know what they’re trying to do. Long term. And in this particular case, there was not a yield deal was more of a medium to heavy value. Add. So there was a lot of upside in that way. And as this says right here, It is less advantageous to do pref equity when your upside is higher. Because you’re giving it up. To use an analogy. It’s kinda LeBron James signing with Adidas, obviously that didn’t happen. And obviously Adidas gave LeBron James a low-ball offer or a much. Lower offer than Nike. In a way. I don’t want to take my 10, 11% straight preferred return even though that’s great. I think this one’s a good one. It’s going to pop. And therefore I wanted to go into the traditional equity. If you want to have a part of your portfolio where you just get a straight 11%, 10% return. You’ve got your deductions, your passive activity losses coming from it. You want to have a part of their portfolio? What I would look for are the more yield deals. As opposed to the more value add type of opportunities with the upside. Now you might have the complete opposite viewpoint at this. And you’re like, the ones with the more value add, those could potentially be more risky. I don’t necessarily agree with that logic, but Hey, that’s you guys, right? You guys can think whatever you guys want. That person may think. If in a more riskier project perceived risks, even though it is real sand stabilize after all, if people need a place to live. They may want to go for the private equity side. It’s just, I’m just giving you guys ideas out here.

So instead in a different way might be more appealing with the 82 and the 81 does not have a large gap.

And said in another way. The more the yield deal. The better candidate. It is for pref. Equity, whereas the more value add the more pop. The potential pop. There could be, It makes I would do the private equity less. But then again, it’s just timing, right? When deals pop up, you don’t really like. And you want pref equity, you feel like that I’d like to have a little more stable cashflow on a month to month basis and the next step comes up and it’s a value add, you got to get what you need, that’s life. I don’t know. A lot of these deals, you can’t really go wrong. Pref equity, eight one. One B2, just kind of personal preference. Digging in here more, since those stuff is the same stuff we’ve been talking about. Difference between private equity and traditional equity. Again, 82 has, or the traditional equity. Has the higher potential returns and one could say, if you’re not getting the upside, why are you playing the game? Maybe like they said, if you got four or $5 million, you don’t care. Already at end game. But, for most people under a couple of million dollars net worth. You got to play the game. And you got to put your money in traditional equity because you need the girl. While we’re on this topic, people are like, I went into the V deals at the minimum. Why am I not to financial freedom? Do you only put in $150,000, $150,000, even if you made 15, 20%, it’s not that much money. You got to put in more money. You gotta do more skin in the game. A lot of these, like what people don’t realize is, most sophisticated investors are putting in maybe 50, a hundred thousand dollars, but they’re going in a lot of deals. They’ve got a big chunk of money and they’re working. And the nice part of that is it’s 82 investors than traditional equity investor to turn to equity for life. Whereas, and in this case it was a 70, 30 split. Whereas the eight. One investors are exited early and do not get the upside. We said this before. This is just saying it in a different way. Equity investors are chipped off the bus, kicked off the boat or whatever vehicle you want to use. We’re basically using them. And we’re paying them for their services of their money. But once we get the money, we’re kicking them off because their equity. They get their passive losses. But they are not entitled to the upside. They just get a straight return. And that is the downside of A1C. The website, you’re just getting your street, maybe 10 or 11%.

 

Or pref equity or move earlier. A lot quicker than eight to investors where the eight two investors typically stage. To the area and at least how I do it. Again, always check your PPM, right? Cause there are deals out there where even a two investors are debuted it out. I don’t think that’s fair. But I’ve seen deals out there where people do that. 82 has a slightly, above break, even point in terms of. Occupancy of gala and whatnot. Gets 12% let’s just say the deal struggles. Technically the A1C guys are going to get people first. But if the one’s at eight tunes, aren’t getting paid. You know that the break even point on all of these deals pretty. Pretty low. Most of the time the deals go stabilize above 90%. No problem. And sometimes even in really hard times, it goes up to 80%. But a lot of these deals, you start to lose money. Again, it ranges, but anywhere from 50 to 70%. The typical program. It’s going to take a lot. For a one and. Traditional and private equity to not get their distributions. Sometimes, of course we always fall back. Because it’s the responsible thing to do. It’s not like we don’t have the money. Losing money. But we always want to be conservative and protect the asset.

This is, a good example is like when we had COVID right. There were a lot of more terms of fictions. There was a lot of insurgencies, a lot of times we held back distributions. On investors, but we still paid out the 81 for the most part. You’ve been through COVID.

Something that we’re working through now and probably after the year 2022. So probably be an afterthought. Nobody will ever think about this again, but. During COVID, a lot of the lenders froze up. For good reason, right? This country has never been through anything like this and it’s unprecedented. When things are uncertain, What banks usually do is they get lot more conservative. And they require a lot of these, what I call COVID reserves a huge chunk of money , I’ve seen it in our deals and you’re from like a couple hundred thousand dollars to $600,000. That they want us to stick in the back. Now the pref equity came in. Great for the situation because the deal with the lender that we had, that’s written into documents is. Once we hit certain metrics or in a couple of quarters into the deal. They are too. Re release these covert reserves and we are going to get it back. And that’s where we like to exit out these private equity investors. It’s great for these situations. And I’ve used this, sane in the past. Pref equity makes good deals better because it allows us the timer, leverage and our debt. By taking on that little, extra debt in the beading. Yes. For paying a little bit higher rate for it. We’re able to time it out at the right exact time. And us to shed that debt. And give most of the returns, the traditional equity investors at that point. And, but the flip side is like in bad deals, pref equity makes it worse. I’ve used this same. Terminology and same verbiage in terms of bridge loans. Using the right situation, bridge loans are the perfect usage of debt. And, it allows you to be very flexible or prepayment penalties and allows you to get the rehabs done. And, Reposition the asset. But in bad deals, it can be very risky. And that’s why sometimes the use of long-term agency financing with big prepayment penalties may make sense. I think this is what’s hard for most passive investors you’re looking for general rules of thumb and there is none. It’s never a case of bridge debt versus agency debt is best. It’s never the case that using a little bit of private equity, in the capital stack is good. It’s hard to tell if you’re a passive investor. But just know that it’s not always, oh, if they’re doing this type of thing, it’s always bad. It’s always on a case by case basis.

But yeah, that’s sorta how that these Clover reserves are working. And , I anticipate after the year 2021, we won’t really be talking about these types of things. There’ll be something else that pops up. I’m sure. We get these coal reserves back based on occupancy levels, relationships with the lender and could range anywhere from six to 12 months. A lot of investors have they’re asking oh, When you think you’re going to get a good chunk of the pref equity back or my investment back, cause I want to kind of time things and I’m like, here’s the situation, right? And we don’t know, it’s unprecedented, nobody’s had their COVID or reserves or these yet. Nobody has gone through a pandemic and had to go to these lenders restrictions or terms. And, so we don’t know, we just know what kind of, what the deal was with the banks, which was based on occupancy levels, good relationship, and six to 12 months. But, as anything. In investing there is risk. You could be in there longer. But. Accumulating your breath, right? Money is good. And that’s the nice thing about being a. Pref equity investor. But yeah, hopefully this helped out guys as a pref equity, traditional equity one oh one. If you guys got any questions, please let me know.

Can You Pass On Your Wealth ESTATE TAX FREE?

https://youtu.be/lxfYnL2MoVw

We don’t know what’s going to happen in the future. It’s very much an art form, but right now you have that opportunity to pitch it out to the running back and get it out. Now, before you take a chance what we are forced to do in the future and also in the future might be good. Potentially. When was it?

George Steinbrenner died? It was the a hundred million dollar in the mid twenties. He died three and a half, $350 million a state that 2010 was the throw momma from the train year. Cause if they died that year, there was no estate tax Steinbrenner was mentioned in the news, but the biggest one was this guy down in Texas.

He was an oil guy. And I think at the time he was the 14th wealthiest man in the world. Again, this is 2010 and I believe it was a $19 billion estate that he had his family. 10 billion, $8 billion. That’s with a B in taxes, just because he died that year. Now, one of the other things though that happened in 2010 is that stepped up basis went away.

Right? When you receive an asset at death, you get it with a clean tax base. So you could say sell it the next day and not have any capital gains tax to pay. But in 2010, when they said you can pass everything to state tax free, if you took that option, it had carry over basis. You had to take in essence what your parents, his basis was in it.

But look, if I can save a 50% a state tax and pay 25% capital gains tax or whatever it was back then, you’re certainly going to take the second option. There’s give and take. But why that’s important now is this is all cyclical and we’re seeing this stuff come back right. They’re wanting to get rid of stepped up basis at death there.

They’re talking about this right at death, whatever your basis in your assets are, as you pass them to your kids, they pass to the kids. And so they’re going to pay capital gains tax and some point on all of those assets. Now, I think that’s going to be a tougher tax, lot of pounds. Because everybody has to deal with that.

He average inheritance is 177,000 and most of it consents of primary real estate, primary residences. And there’s no child that’s going to want to inherit mom and dad’s house without the ability to sell it the next day, tax-free the estate tax it again, it doesn’t affect most people, even if it goes back to three and a half million, most people don’t have $7 million net worth, but you have to also.

Like I said earlier, all of the assets I glossed over this, but I want to touch on it pretty quickly. Life insurance prior to going into law school in 99, I was a life insurance agent, right. And the three most hated professions in the world are attorneys, life insurance agents, and used car salesman. My best.

Friend’s a used car salesman. So I hit all three in some way. One of the selling points of life insurance is that it’s not. Tax. And I have a $5 million life insurance policy on my life and my wife’s the beneficiary and I die. She gets $5 million, completely income tax rate. The only reason for that really is because the insurance companies have this really strong lobby in Congress, and they’ve been able to carve out the definition of income to include.

Life insurance death benefit. That’s it. So the reason, the issue though, is that my wife would now have $5 million of cash as part of her estate. And now is there an estate tax problem, how to plan for that life insurance death benefit becomes a big one. Anyway, I don’t want to, that’s a much more kind of stuff.

Tax issue. And it’s definitely something that can be dealt with, but there is a small window of opportunity that can be going away that portion out. Right. I think it’s important for folks to be aware of this stuff and understand it because things are going to change. And in the very end, you may just be stuck.

It just may be how the times are, but there may be opportunities to. Do that wild cat off as the ball to the right, when we’re all stuck. Right. It’s the way the times are. And we’re just going to have to live through it now, again, I’m not coming from any kind of political side on this. I just, as a tax attorney, I hate.

Paying tax and pay my fair share and all of those kinds of things. But, and by the way, if you ever worked with a tax attorney that likes taxes, you’re working with the wrong attorney, but the point is that there really are planning techniques that can put you in control and you in power of what happens with your legacy at your day. .

Sell Your Timeshares NOW

https://youtu.be/I5KDB8qCTe0

What’s the process. If somebody wants to sell their time share, and then we’ll skip over to, I think most of us don’t really want, we want to buy. Timeshares from these distress buyers or sellers, get into that at the end, but what’s the process. If somebody wants to unload it, they want out of it. What they would do is I recommend that everyone first contact your resource, see if they’ll let you out for free.

That does happen on occasion, usually with a higher end brand. So explore that option first, plus, you want to know that you didn’t go and pay someone to get out of it when. You could have gotten out of it for free through the developer. That would be step one. If that’s not the case, then you know, you need to go through a company that can secure a buyer for you.

And I would encourage everyone to be very careful and not pay anyone up front. And I’m sure that your viewers are. You know, certainly a little more savvy than many of the people that have fallen victim to the scams, but in general, don’t pay anyone upfront. If a client comes to us, all we’re going to need is the deed copy of the deed.

If they have it, copy of their IDs, copy of a recent maintenance fee bill, we can then price it out. We use a calculator, so we already have pricing preset for every resort in the world and get them a quote within minutes. And if they want to move forward, we send them an e-sign contract. Open escrow. And it follows a normal real estate process.

So we’re never paid until the close of escrow and we don’t even collect payment. It all goes through the title company. So it’s a very secure transaction and a guaranteed one. If we are not able to secure a buyer on our own, then we’re going to transfer into our own name and turn it into vacation rental.

But it’s a guaranteed quick process. And what our clients are looking at is, Hey, we don’t use this thing. We’re paying for it every year anyway. And then what’s going up at six to 10%. Okay. Or just throwing money away. Let’s basically stop the bleeding.

Overcome What Others Do In Real Estate

Now, another trick that folks like did you in this business inflating other income or non rental revenue, such as trash filet, additional storage fees, reserved parking or covered parking in Texas. That’s a big one for those late hailstorms money for vending machines, money from laundry machines or any type of service that may or may not be tested by the current clientele.

This has been a way to sneak deals past even the most astute, passive investors. We have understanding of underwriting, just put stuff into other income category because most people don’t look there. .

How to Get Rid of Student Loan

Before we dig into this more, my full philosophy on people come to me. Should I pay off my student debt? Yeah, you shouldn’t write it. You should invest. That’s why, if we’re living the simple passive cashflow thing, so we can make returns at 10, 20, possibly 30% in a turnkey rental, and go look at the rate of return.

You can make it simple, passive cashflow.com/returns or break down a simple, just turnkey rental, how you’re making money. Four ways mortgage paid down, tax benefits, appreciation of property, which I guess you could say that’s getting low. And then of course cashflow, okay. We’re going to pay off the debt as slow as we can.

So to optimize our liquidity going through our investments, but how do we do this smart with these other strategies? Yeah. Cashflow is the hidden gem in the income driven and forgiveness programs. A lot of people don’t significantly pay attention to if you refinance your loan, let’s say you have $500,000 in debt at 7%.

And if you refinance that loan, you’re looking at a five or $6,000 a month payment. Even if your interest rate is cut in half, that’s going to eat up a lot of your cord that are, want to afford it. You have family. What other obligations do you have? What’s your cost of living? You live in San Francisco or in rural Alabama.

All factor into decision-making, but the cashflow is huge. You can use that for other financial objectives, especially like with my dentist who usually don’t work for nonprofits, massive debt all the way up to him.

Fun Cheapo Ideas w/ Marilyn Anderson

https://youtu.be/JndGlTr6hwI

Hey, simple, passive cashflow listeners. As you guys know, I am a recovering cheapo. I call this cafe style, which stands for cheap-ass free and easy. C a F E. You guys can read all about my cheapo adventures@simplepassivecashflow.com slash cheapo. If you’ve got any good ideas, let me know there, but today’s podcast.

I have Marilyn Anderson who wrote the book, how to live life like a millionaire when you’re a million short and we’re going to be going over seven pretty cool ideas just to get the wheels turning on. These are going to be more towards staying at home since the the pandemic everyone’s not going out to large gathering still.

What I realized is a lot of our audience out there, you guys are pretty affluent make a lot of pretty good money. But you guys are still let’s just call it. You guys like to go after value. When we have our Hawaii mastermind retreat the other year, I don’t think anybody stayed at the Hilton or the Sheraton, the five star resorts.

Everybody stayed in little boutiques or with relatives. So I think today’s content will be right up the alley for most of the listeners. But yeah. Thanks for jumping on and let me put up your book so everybody can go get it at amazon.com. We’ll put it up at the end, but yeah, let’s first thing first.

Seven free things to enrich your life. When you’re staying at home. The first one here is unclaimed property can tell us a little bit about that. There is so much money just sitting and waiting for people to claim that, and it’s like, Money that people never knew that they had, and there’s billions of dollars just sitting.

And if people vote to missing money, thought, Tom, and just fill in their name and the state in which they live their name may pop up and tell them they have money. The other thing it doesn’t have most of the States are there, but some are not. So if not you can go to the state website for wherever you live and putting unclaimed property.

And you should do it not just for yourself, but for your parents, for your siblings. And you may find that you have a lot of money. I told a friend of mine to do this, and he fought me all the way. He said, Oh no, this can’t be real. It must be a spam. And. Texas steady at somebody. So he filled out the forms and he got a letter from them in a couple months saying we’re sending you a check and they still thought it wasn’t real.

He ended up getting a check for $12,000. Now some people make that $10 and make it a hundred dollars. They make the 150. Alison powers, but the point is if people have money, they don’t know they have. So that’s an assignment. I give everyone that I talk to is to go to missing money.com for the state or any state in which you’ve lived with a lot of people these days move around.

So if you’ve moved from one state to another, do it for every single state you’ve lived in, put in your city in your name and also do it for your parents, do it for your siblings. And I bet you’ll find some money there. Nine out of 10 of your listeners will probably find some money. I know I did this at one time for the state website and I did find a little cash there, so yeah.

And just in the time you’re talking, I checked my stuff and I didn’t have anything but likely, cause I cleared my name out a little while ago, but yeah, next one. I’m going to Harvard or yell for free. How do we do that? Especially, a lot of these things, some things were available even before, but a lot of people didn’t know about it.

But there are actually about 5,000 different courses from Harvard, from Dale, from Princeton, from universities, all over the country where you can take classes for free and it can be from anything from computers to religion, to science, to technology. And there’s three places that I will tell you about now.

One is edX. Dot org. And one is coursera.org, and one is class central.com. And as I said, the classes and everything, and they’re free, or if you want a certification, you can pay a small fee, but it’s an opportunity either to just enrich your life, you enjoy or advanced your career, or even change your career.

So those are a couple of places I recommend for that. Yeah. And then now there’s a lot of paid ones, right? Like masterclass or teachable. Yeah, but people should also take advantage of these free courses too. Yeah. And if you guys haven’t checked out, we have a lot of e-courses at simple passive castle.com/ e-course the treeline cars, the new syndication LP course, and the Romo investor course are all on there.

If anybody or their kids wants to take courses in screenwriting, I teach those as well because I’m a TV and film writer. So I teach classes in screenwriting all over the world. Actually, I’m teaching a class next week in South Africa, glide to a broad rate show for free. I know

we had a past episode where my buddy, Matt, he would invest in like Moulin Rouge and Hamilton, but now it’s like one of the biggest, yeah, it’s definitely the biggest Hamilton is definitely the biggest.

Yeah. He invested in that and made a killing, but now the stuff isn’t going too well, everything in show business has been pretty much on hold. And the thing is I talk about in my book actually, how, when theaters are going full force and you could pay. $200 a ticket or in the case of Hamilton, what you said hundreds to $2,000 a ticket.

And I would tell people how to get tickets for twenty-five dollars, where in the case of Hamilton tens hours. But now that there’s a pandemic, actually people can see. All these Broadway shows for free. And that is first of all, if you go to YouTube we’ve just put in Broadway shows. There’s about a hundred different Broadway shows from rent to Moulin Rouge, which you mentioned to Aladdin to frozen the musical.

If they have kids or Mathil the legally blonde, I actually watched it the other day. And not only is it the full Broadway production. I think if you have the lyrics, so you can sing along with it and families love to do this. So one thing is, as I said, YouTube, they have all these great Broadway shows.

And if you’re watching musicals, you can’t feel bad. The other place you can go to Broadway HD and they have newer shows. And of course, Now, if you want to see Hamilton, you can see it with your whole family, just for signing up for Disney plus for one month, which costs eight $99 and 99 cents. Instead of paying, two to $800 to see it.

And it’s you have a front row seat because everything is right there in front of you on your TV screen. Green and it is a play it’s not redone as a movie. It’s actually the play Hamilton. So I definitely recommend that. So once things open up again how do you get $25 seats at one of these life?

When things open up again, there’s all kinds of ways to get discounted tickets. Of course, one way is if you’re in New York to go to the tickets booth, but. A lot of the shows. Now the Broadway shows have what I call lottery tickets. And for instance, Hamilton has lottery tickets for $10. And if you’re lucky enough, it used to be that you had to go to the theater two hours before and they would take the numbers out of a hat, but then they were getting too many people blocking the streets for Hamilton.

So instead they started doing digital lotteries. So for shows like Hamilton and practically every other Broadway show. And this is not just in New York, but we chose travel to your. City. If it had a lot of Rio, New York, there will be a lot of reef in your city. And if you’re lucky enough to win the digital lottery, you can see Hamilton for $10 and sit in the front row.

So that’s one way is as lottery, then there’s rush seats. Then there’s a thing called pay. What you can, a lot of theaters will have a night during the week where they have a pay, what you pad and you can pay. If tickets are normally $60, you can pay. $10. You can pay $5. You could pay $1 and it’s a pay what you can night.

So I have all of those different kinds of things listed. Also of course, people, sometimes people like to usher. If you have kids for instance, and they’re in college or something, not only ushering get them into all the shows for free, but they’ll get to meet the people who are in the shows and you’re doing them.

And if they’re interested in a show, but his career, that’s another way. By the way you mentioned that the guy who invested in Hamilton made a lot of money. If you remember the movie Blair witch project, if you had invested a thousand dollars in Blair witch project, you would have made back $7 million.

Of course that’s not the norm, but that is an example of how people made it with a horror movie, horror movies and thrillers are very big for that. Yeah. A lot of very high risk like just like startups. It’s a very small chance of it blowing up, but when it does, it goes crazy. But I like the idea of magazines. You can get a lot of free magazines because that’s how magazines make revenues. So they can, they send out a lot of free magazines to people, so they can go to their advertisers and say, look at all the subscribers we have, even though they’re fake subscribers. Like buying an apartment in St.

It’s 95% occupied, yet half of the people are paying rent, like it’s just it’s you got to make sure who’s actually paying of course, but yeah, good good stuff to think about. That’s like how Vegas is, right? When you’re walking around the strip, they have all this like wholesalers and outlets.

Is that kinda what they’re doing? Or you got to go direct to that. Vegas, you have all kinds of touristy things going on and whatever, but Hey, so actually, if you’re going to bake this and you want to see a show. For discounts. They’ve got all kinds of discounts available for Vegas shows too. When I do mention that and how to live like a millionaire when you’re a million short, so never pay full price for Vegas shows.

Obviously if you’re a, if you’re a high roller, if you do well at the casino, they’ll give you free passes, but there’s ticket booths. All around Las Vegas to get you into shows for discounts or go online before you go there. And there’s all kinds of discounted tickets for Vegas.

And another thing is people like make this. There are bangs now on your phone. Not only do you get the games for free, but you can win money. And I just put on my phone, which is listening to music, you can make money and they say, you can make $600 a year. Just keeping your phone on this app.

And I keep it low because I don’t listen to the music the whole time, but listening to music, you can make money and there’s all kinds of games. But what they do is. When you’re watching the games, they give you surveys or they give you other things to join if you want, but people are winning money on them.

But again, it’s a question of, do you want this stuff on your phone and, or are you lucky? And a lot of this stuff, it takes a little time, but. For me personally, I enjoy getting a good deal, even though it takes a little time. But yeah. Another thing is, if you like to buy things online, which I am buying a lot of things online now they have these places like rocket dim.

Or capital one shopping or piggy. And all you do is you put it on like your Chrome, where you buy things. And I get a check every single month from Rakuten, from things I’ve already bought. I get rebates. So I’ll get a 20, 30, $40 check every month. And it’s from stuff that I just normally wanted to buy.

Yeah. I’m goofy where I’ll go to Nordstrom and then buy expensive like lunch. Cause it’s they got pretty good food there and drink and I’ll go in there, walk around and see what I want to buy. Look it up on the internet or go to Facebook marketplace and buy it there. So I don’t waste my money on, yeah, you don’t have to buy it there as Nordstrom actually matches price.

So if you find it somewhere else, but you start at Nordstrom. If you ask them they’ll match the price for you. We’re not going to match Facebook marketplace for half of what they match Amazon. And we also the same thing with best buy and staples whenever I go to best buy and staples, which is a lot because I buy all my supplies there.

I will never just go to the checkout and pay the price. I’ll always price match. And even if they say something is on sale, as it mean that it’s not cheaper somewhere else. So whether I’m buying a 30. Dollar toner or a $3,000 computer. I will price match it while I’m there. Or you could ask the clerk to price, match it.

And almost 90% of the time you can find it somewhere else cheaper and they will give you that price. Yeah, such an items for sure. Other things. You’ve got to be careful of probably maybe better to buy a new, but. I don’t know. I just liked the socket dude, Nordstrom. I don’t like those kinds of companies.

I think it’s a waste of money. I had a thousand dollar jacket and I saw it at Nordstrom and I loved it so much, but it was way too expensive. So two of my rules are the first one is make an ask of yourself. In my first role asked, so I asked the sales girl, is this going to go on sale?

And she said probably necessary. I said can you call me when it goes on sale? And the other one is make a friend. So I made friends with her and she would call me every couple of weeks and say, Oh, your jackets on sale, your packets on sale. And so I would say, Oh I have a hundred is still too much in 300, still too much.

So she called me when it went out to 200 and I went in there and I was trying it on and I said could you do any better? She went in the back. She said, I’m giving you the family and friends price, $149. And it was a thousand dollars back then at Nordstrom’s. So she used to call me every time they were like good sales and I want to go in.

And then about a couple months later I went and she was no longer working in the Aaron wondered. Did she get fired because she has good prices. That’s the next one here? Take a virtual tour of foreign countries. Yes. Of course. Because of the pandemic. A lot of us are not able to travel now.

And if you like to travel there’s all kinds of places that you can go actually from the comfort of your own living room. And you could take virtual tourists all around the world. You can see the seven wonders of the world. You can see museums, there’s all different rooms in the loop you can visit virtually out of can city.

Other museums in Mexico city in New Zealand and Australia. What I like to suggest, because we are all stuck at home is if you want to go to a particular place and it could be a place you’re going to go to later, or maybe a place you’d never ever get to, make a plan. Maybe if you take Italy, go to Italy for the day.

Not only do a virtual tour, but make food from Italy and make it a whole day for the family where you have, lasagna for lunch and maybe, and Italian stuff, fish for dinner and boat, all the cities and the. Museums and make it a day and you can learn a lot. The thing is there are also lots of those tours, so you learn a lot and also you don’t have to take the plane.

You don’t have to schlep all that time or spend the money and you can see all these wonderful places around the world that you might not even be able to get to. Once things open up again. Yeah, something along those lines is if you go to wine.com and you search for this, but there’s, they have virtual wine tastings at home.

It’s cool. You got to buy their pack, you just watch the video. There’s a famous one where you get the Bonanza, the conundrum, and then the moneymaker right there. It’s fun. If you’re into that, you don’t need to leave your house splurge a little bit on good wine and your house, not the spend 50 cents on every dollar you drive or travel costs.

So that’s another idea there. my thing is it’s not just about saving money, but it’s about enjoying your life. And just because we are in this situation, we still need to take time. And those moments too, and max, what that’s what I believe. And that’s what had a live like a millionaire when you a million short, does it tells you not only how to save money, but also how to Enjoy every moment of your life to the fullest.

Exactly. I’m going to, into your closet, come out with some cash. No, this is good for people stuck at home, right? Yeah. Or even if you’re not stuck at home, it’s good because, like a lot of it has happened. NGS that we haven’t worn in years. We’re talking about clothes and I’ll start with clothes.

I had like jewelry that people had given me, like when I was 12 years old and it was literally sitting in my closet for decades. So I took it out and there’s a place called real, real.com. And it’s a high level consignment shop. If you put something in an assignment shop or a jewelry shop in your neighborhood, you have to.

Depend on people in the neighborhoods to buy it, but on the real, real.com, they. Publicize it to everyone around the world. So if you have find jewelry or you have designer clothes, the real, and they will either come to your place to get it, or you can do it all through the mail. Other places for things that might not be quite as upscale would be Poshmark or Etsy, you can sell things.

And even Facebook has a lot of marketplace groups where you can buy and sell things. Also, if you have. Of household items that you don’t Need you can go to offer up or next door com and sell them I go to the Emmy gifting suites every year, and I always get these fabulous gifts, a lot of which I don’t use.

So I had this beautiful gift box of. I have different types of honey and yesterday I sold it to somebody on nextdoor.com. I just put it up, Aaron. No, I’m not going to use it. I actually got three different packages. So I give some of them as gifts and some of them myself. So if you have good furniture and you want to try swap it out, this is called cherish.com, but there’s all kinds of ways for you to not only make money, but also

to buy things. If you’re looking to get things for less. And the other thing there’s a group called I nothing and buying nothing is in your local area. And there’s people who were just giving things away and. Sometimes it’s like brand new things that they’re giving away and you don’t have to trade.

You don’t have to do anything. If things you have, or you can take things that other people are gifting. I got a brand new shirt for my boyfriend and it still had the price tag of $150 on it. Somebody was just giving it away. There’s also a lot of furniture. If people give away. I see during the pandemic, a lot of people are getting like big desks because they don’t have their offices anymore.

Or they’re giving dressers or all kinds of furniture, lamps. And I have a girlfriend, actually, you can, of course, paint furniture, fabric. I have a girlfriend who actually painted her sofa. Now. I never knew you could paint, but, and one way of course, to learn how to do all this. Stuff is to go to YouTube.

They have all these, do it, yourself, videos of how to do all kinds of things. At some furniture and make it look brand new and make it look special because you can do it so that you have this only one piece that you’ve created. Yeah. Here in Hawaii, we have like bulky pickup days. It’s when everybody puts their crap out on the street.

I’m excited. When I get my new cyber truck, I can go drive around in the middle of the day and pick up some cool stuff. But yeah, that’s maybe that’s too much information, but Hey, just wipe it down. Make sure it’s it’s virus free. Yeah, and then redo it. I once did a, I had an old chest of drawers and my roommate at the time, she was very creative and she took this fabric of different colors and sheet.

We put the fabric on the chest and it was so beautiful. People wanted to buy it from us for tons of money because it was so incredibly special. So there’s all kinds of things you can do. And I liked those other more co-signer websites. That way it’s a little bit more secure. I do have a story where we sell a lot of stuff on Facebook marketplace and I don’t know what I was selling, but it was like a Bose speaker when I was like a hundred or $200 ones.

And I just never used it. I bought it because I had a gift card and then somebody was like trolling me or something. They’re like, Oh, how’d you get it? I was like I don’t need it. And there, somebody was like, Oh, what are you selling it for? And what the heck do you think I’m selling this thing for?

And then there’s this big troll thread of other people. And I’m like, man, like just people have too much time wasting on social media. Yeah. Yeah. You can’t worry about the patrols. It’s somebody, I have books out. I have used these out and there’s always pros. There’s always.

Even who were jealous, who are going to knock you down. But I have also sold a lot of things on eBay. I’m not like a regular eBay seller, but if I’ve gotten things again from Emmy gifting suites that I don’t want and they’re worth a lot of money, so I’ll put them on eBay. And I’m embarrassed to say I got something from buy nothing, a beautiful pair of Marc Jacobs shoes.

And they were too big for me. So I put them back on my thing because I was going to get them, but nobody wanted them while I put them up on eBay. And the next day they were bought for money. Yeah. That’s how I started with this entrepreneur stuff. I would buy and sell a lot of things on eBay.

I would sell my video games. And I don’t know. Maybe if you guys got kids up there, make a deal with them. If they sell it, do all the work, take all the fees, take it to the post office. Give them like half of the cut. Oh yeah. There are people who did that, I used to have a girl who just sold stuff on.

He ban, I would take our, all my. Because that was much easier and I didn’t have to spend the time doing it. Then there are shops that do it too, but they tend to take bigger commissions, but yeah, you can find a friend or someone that, that does it. That’s the easiest way.

Yeah. My wife likes to do that. She likes to waste her time doing this stuff. So sell stuff for her friends. And I think the deal that she has is she takes a 10% cut, but she sends up wasting so much time. Yeah. 10%. I’ll send my stuff to her. I know. Yeah. It drives me crazy. Absolutely crazy.

But cool. Last one here. Get furniture, household items for free. I think we talked about this, but any other. Sites to go to try. Oh yeah. I can tell you for medical procedures or for prescriptions I’ve found sometimes that has lower prices and in copay, and if you go to good rx.com, that’s a good place for checking how much prescriptions would cost at different.

Pharmacies in your neighborhood and sometimes it’s even lower than the pasta with your copays. The other thing is like I went to a periodontist, my dentist had been telling me for years, I needed to have a periodontist appointment and he wanted to do gum flap surgery, which would mean cutting the gums and then grafting from the top of my mouth.

And he said, Oh, it only cost $10,000. And I said, it’s $10,000 and cutting my time. And should I make an appointment? So I said give me some time. And I went home and I thought, what would the author of this book too? And so I went online and I looked for alternative procedures to go to flap surgery.

And I found that there was an alternative called LANAP and there was no cutting, no pain, no recovery. And it was about half the cost of the other. But I went further. I found the place that was about 30 miles away from LA, where I live and they was called millennium dental, and they actually trained dentist and periodontist all over the country to switch to this procedure.

So it wasn’t. Students, but it was actual dentists and periodontists. Who’d been in practice for 10 or 20 years. And this company, they were looking for volunteers. So I went there and I got the LANAP. I had no pain, no cutting, no grafting and no $10,000. I got it free. And I got a girlfriend of mine and for free plus, we got our cleanings free for the next year.

So sometimes if somebody gives you a high price, even if it’s a medical or dental procedure, or if you don’t want to do, you can actually negotiate with some doctors and say I don’t want to pay that to you have to be cheaper. Or sometimes you can offer to if they’re putting a video when their website, you can make a deal.

I’ll let you video me for whenever I’ve looked for alternatives because for instance, rhinoplasty is another one nose job can cost like from 15 to $20,000, but you can get a. 15 minute nose, job that has no pain, no recovery and no surgery. You come out looking better and it’s like a thousand instead of 20,000.

So there’s different ways you can find whether it’s an elective procedure or something like at my periodontist where they said, you must get this and they don’t tell you about the other thing, because they personally don’t do it. And take the difference and go blow it on something else. A Vegas, right? Another thing I was thinking of I, yeah, I had a rock stuck in my tire for the longest time. So I took it to Mercedes and they said I needed a new like wheel or something or new tire. And if they’re going to charge me like several hundred bucks and I was like, are you kidding me?

So I just went to Les Schwab. Down in the shady part of town and they fixed it for I called them and they’re like, Oh, it’s going to be like 29, 99. But of course, when I get down there, they see it’s a freaking Mercedes and they charged me like 60 bucks. But Hey, lot cheaper than buying a brand new tire.

That’s just ridiculous. But of course everything we’re saying here is a little, you don’t be a bonehead. Some of these things like meeting random people on Facebook marketplace be safe about it. Absolutely. Another thing that when things open back up again, I another thing I talk about in my book, one of my favorite tips used to be how you can get a vacation at a four star resort in Spain for six nights for free.

And people would say, how can you do that? And there’s actually a in town that if you’re a native English speaking person, they have four different resorts outside of Madrid and they will host you for six nights with all accommodations, all meals, activities, and why they want you. There is they have Spanish business, people who want to practice their conversational English.

And so the resort hosts. People, whether it’s from England or the United States or South Africa or Australia, but any English speaking people, and all you have to do is enjoy breakfast, lunch, and dinner and activities and pop. And people say, like I say I don’t speak Spanish. And the thing is you’re not allowed to speak Spanish.

She could only speak English. And I have a couple of friends who went and they said it was the best vacation it ever had in their lives. And some people loved it so much that we go back 15 times. So that’s another thing when things open up that I highly recommend. Yes, that’s on that one actually sounds pretty fun.

I do have an experience of my own going and do the Groupon China tour. Which I thought was a complete waste of time. I’ll never do again, but yeah, on Groupon, which also by the way, also does they fill seats at concerts. I’ve done that a bunch of times, but so Groupon has these like international tours and I don’t know if different countries are like this, but I know China’s like this, you go on there and it’s they even pay your airfare.

And it’s like a couple of thousand dollars, but it’s like a five or 10 day trip. It’s all meals, it’s five star hotels, but there’s always the catch. And the catch is that you’re pretty much captive to these like tour buses and then take you to a couple of these boring factory tours where you’re forced to buy stuff and you’re not forced to, but you’re just a time suck.

Thank you to the glass Floyd museum. They take you to the needlework museum. They take you to this clay museum to all, to like by seven years and you’re captive. So it was funny. There was like 20 people in the tour and there’s always four people or 20% of the group there.

they realize what’s happening. And they’re like, screw this. We’re out of here. This Texas, the hotel. We’ll figure it out, but yeah. Be aware of the the Groupon China tour. I use Groupon a lot for restaurants and also for my hair and stuff, but yeah. I still use it.

Now, when all the restaurants in LA are closed, even for outdoor dining, they were open for a while, but okay. Group bonds and use them for takeout now, but group bonds, I tell people don’t even buy the group regularly. Wait, so cause they always have sales for 20% off or 10% discount. So I wait.

So the sales and then I at discounts on my discounts and there’s also restaurants.com. That’s in, every year. City practically well, in the States, I don’t know whether it’s across the world, but there’s 18,000 restaurants where you can get restaurant Factom coupons. And so I use those too, but great restaurants I’ve used that before.

Like you said, you got to wait until the Groupon or the restaurant.com goes on sale, which happens. Most of the time, there’s always like a, I don’t know what it is. 35 or 50%. That’s the magic number, but yeah. Yeah. I wait for the restaurant coupons. Usually they’re like $10 for $25 certificate and they often go down to $5 or $4, but I’ll wait until they go down to $2 or $1 for $25 certificate.

And then I’ll on them at the restaurants that I like. So I’m getting a $25 certificate for a dollar. And then when you go, you have to spend 50. So you’re getting a, $50 meal for say 25, $26. So then it’s worth it. So I’ll one up you right there. You also run it through like Mr.

rebates.com or the Raku con. And they even will usually give you a 20% cash back on those. Coupons. So I’ve gotten it down to a dollar 40 cents for a $25 gift card. They pay you to go. I like it. I don’t do this anymore. Cause I think it starts to be a little waste of time and. Not all the restaurants are that great.

That’s why they’re on the damn thing in the first place. But yeah, like you would, I would buy them in like in 10 packs. You can buy them in five or 10 pounds. Here’s another thing too. There’s a couple of services. One is perfectly Frank and another one is I’m trying to remember the name of it, but they’ll actually pay you to go out to dinner or.

A restaurant club and what it is, you should have a mystery shopper. And I don’t do the mystery shopping thing where you have to go to a gas station or you have to go to target. But on the food ones, if you sign up for upscale restaurants, I have a girlfriend who’s been doing this for seven years and they’ll pay her to go to dinner at the peninsula hotel.

So they’ll pay for her dinner. And then she comes home and she goes out a questionnaire and then they’ll pay her like $60 or $200. Oh, she’s gotten to go to dinner with a friend at a big hotel or a fancy nightspot. So those are fun too. When things open up again, I got a question on that rush rushed on.com thing.

Like my big beef with that is you actually had to go sit down and dine in which now you’re cutting into my T I M E D. Now with the whole pandemic, they allow you to take out now. Yes. Oh, I’m on this. Yeah. I guess it depends where you live in LA everything is closed for any kind of indoor or outdoor dining.

And they want you to take out because the restaurants are failing now. So yeah. I’m using them for for take out. Yeah. And it helps them get their churn, to get people in and out buying stuff. Yeah. I use them all the time. The other thing I do is I go to happy hours.

Cause this is like Ruth, Chris. A lot of expensive restaurants in your neighborhood. If you go to there for dinner, you have two people. It’ll cost you a hundred bucks, but if you go for happy hour, you still get the ambience and the food. And some of them have really nice. Appetizers are like Ruth, Chris has steak sandwiches, burgers and fries, lobster tacos things that are substantial and you can get out of there for $25 instead of, a hundred dollars a person.

Cool. Cool. Yeah, once you drop you out so people can find you and also make sure folks did check out marlon’s book on Amazon, how to live with a millionaire when you’re a million short,

a millionaire.com. Oh, appreciate for coming on the podcast and like again, everybody be safe with this stuff. Don’t be a bonehead, but Yeah, hopefully you save some money and, take the money and put it right back into the economy somewhere else and have some fun. We’ll see you guys next time, but thanks so much